being jeb, that will drive him a great deal into the distance. maria: thank you very much. great show you guys. have a great day. "varney & company" is next. stuart stuart have a wonderful show and see you tomorrow. stuart: we'll do our best. watch out, some want a carbon tax. the left takes marching orders in the times and european oil companies agree with that. president obama needs a gusher of carbon tax money and again, i say, watch out. we often say that streaming is king. today apple may join in. $10 a month with well paid deejays we hear. things change when apple moves in. and a stock hit an all time

high. a prison break, a female staffer at the prison is under investigation. "varney & company" about to begin. ♪ what music is that? "i'm back in the saddle"? >> it's monday. stuart: no i did not win the triple crown. new time for varney a success thanks to you. we're back in the saddle. i've got general jack keane, art laffer and arnold peters. and we have the rider of seattle slew.

and start with this president obama talking climate change at g7. guess what? the new york times using that an opportunity to call for a carbon tax. here is the full quote from the editorial. a carbon tax would raise the price of fossil fuels that would generate more emissions on coal. this would demand tax for high carbon fuels and lower emissions like natural gas. mary, i suspect that would generate tens if not hundreds of billions of tax dollars a year. >> god forbid you give the american consumers a tax cut or embrace the greatest innovation the country has produced in the last decade. this is the tax and spend politics. the economy stinks and his agenda has failed so he has to focus on something bigger and

global climate change. stuart: i don't think we'll get a carbon tax. >> you couldn't get a carbon tax through the pelosi concert. from g7 angela merkel is calling for ending fossil fuel use by the end of the century. that's an awfully long way, 85 years? >> a long way to go. carbon change was on the agenda of the g7. stuart: i have to ask this question, which would rather have, a cut across the board in income tax rates or a carbon tax? >> would we rather have employment and growth today, other than spending billions in keeping millions in poverty for a possible problem sometime maybe hundreds of years in the future? i think i'd rather have employment. stuart: i take your point. and then we have mcdonald's, their news today, reporting sales numbers for month of may.

by the time this is the last time they'll do monthly numbers, down 2.2% that's down right, cheryl? >> it's down across the globe. u.s. 2.2%. middle east africa 3.2%. the only country that seems to want to go to mcdonald's, australia. their global numbers would have been much worse if it weren't for australia, the on up-tick they saw, but they talk about competitiveness chipotle and organic food mcdonald's still in trouble and they've got the marketing plan that we have yet to see any results from. yes monthly numbers going away. stuart: you can't ignore the strong dollar. that hurt them overseas when the dollar goes up 20%. >> i think that's part of the problem. u.s. down 2.2%. they've got an image problem a customer problem they don't have the younger generation and i don't know how they're going to bring the kids back.

stuart: we don't talk about them as an economic indicator. when you say oil drops domestically 2.2% you think it's a sign of a slow economy. >> i'm telling what they're good at big macs and fries. stuart: give it to me fast. >> give it to me fast and good. stuart: i don't care whether it's good when i'm hungry they used to do that. now they want to know do i want pickles and onions. moving on. the apple developer conference kicks off in san francisco today. apple is expected to announce a music streaming service, $10 a month maybe. all right, cheryl. everything changes. >> right. stuart: if apple gets into a business. >> yes. stuart: do you think that streaming changes? >> i think that streaming is -- they've already got apple internet radio and that's actually caught on. to pay $10 for that sure. is it going to be rough news for pandora? yes. for spotify?

yes. apple usually dominates. are we going to do anything about an apple car, hear anything about an apple connected home? all of those things could be on the table today. stuart: at $10 a month streaming service, i mean i wonder how many subscribers could they get, you're talking serious revenue. >> exactly. if you get apple radio free right now on your mobile device if you want it, but you have to listen to ads, in this generation and frankly a-d-d, nobody wants to listen to it. stuart: what about a deejay his name is drake, possibly 90 million to be the deejay on apple streaming? >> i've heard about it. i would ask nicole petallides about that it's not my generation. i think he's hot, all i know. stuart: before we ask lauren about that netflix, this is a good one. expanding service, streaming service to southern europe.

adam shapiro in the news room where are they going? >> it's going to spain, italy and portugal. they're going to offer high definition and hd 4-k with localized versions of the produced series and films. it will be roughly eight euro a month for the service. they already do this in places like germany, austria, switzerland france luxembourg. about $9 a month. it's closer to 200 countries by the end of the year 200 where they offer netflix. to give you a perspective what netflix has done in one year. on this day in 2014 the stock was roughly 423 a share and i can't believe i said only at. but now $633 and it's up 85% year to date. this stock is on a roll and these announcements are just part of the strategy to go even more global stuart. stuart: a good shot that

netflix gets to an all-time high again today. what it's going to do is beat 633.78 and you get a new all-time high. and suspending the run, warren run campaign in favor of arch rival elizabeth warren running for presidency. moveon.org is indeed moving on. that means, surely that hillary is the candidate for the democrats? >> i think that groups like move on have figured out nothing will deter hillary clinton from running for office. it doesn't matter how many scandals, stuart. if there's a federal indictment, and hillary clinton would run for president. she's got a formidable campaign machine behind her. and move on says they're giving up. and she's already started the cfpd, constitutional agency browbeating the sec.

why would she run for president? >> she's a candidate. >> just like money, they want to back the winning horse. pardon the pun. and why waste their time pushing up candidates that don't have a chance. stuart: if you spend money, you tend to spend it on a winner. at the moment there's no question that hillary clinton looks like the winner for the democratic nomination not necessarily the white house. >> i don't think that 70-something socialist is going to challenge hillary clinton and then martin o'malley-- >> i can't get the significance. would that be-- >> bernie sanders. martin o'malley was so bad in maryland, maryland elected a republican governor. stuart: tax the rich. come on. time we move on. other headlines, in case you missed them. lauren has them. >> hi good morning everybody. the poor rich people. in easthampton, new york they

can't take uber rides anymore bus the easthampton town requires all taxi drivers to have a physical address in that town. that would be nearly impossible for uber drivers. you can take a uber to easthampton, but not in easthampton. and credit card readers z-66-816. many never change the default passwords on the readers and get this they've been the default in many cases since 1990. getting access allows thieves to infect machines with malware that can steal customers' information ala, target. everyone passes the blame because the retailer or this person person's responsibility to update them and nobody does. stuart: that's brand new. we're a news show and that's

brand new. what do you think of that? astonishing. >> it is astonishing and now we told everybody how to do it. >> now they'll change the default passwords. that came from a conference last week. stuart: look what i've got next. the epa put out a report that they can't find that fracking harms drinking water. another free commercial for gopro this time from space. a spacex rocket flying into orbit a gopro attached. watch this. ♪

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>> the news item that broke at the top of this hour from the g7 meeting. those leaders are calling for ending fossil fuel use by the end of this century. it's a long way away, but they

want zero fossil fuel use by the end of the century. pushing for climate change. and we have secretary jack lew speaking in new york city defending the obama administration's stance on the nuclear chance in iran. he is booed. and we'll play the sound bite and get general jack keane's response to what he had to say. now this from the epa reporting on the fracking getting oil and gas from deep underground. what they said. >> we did not find evidence that these led to systemic impacts on drinking water. joining me the producer of the documentary "gas land." >> i took that as the conclusion, you disagree with.

>> that's what i took as the conclusion. the epa took back because it led to a lot of speculation. there is a pattern with the obama administration specifically with regards to fracking and epa. now this report is a thousand pages long. nobody expects over the weekend to have read the entire thing. within the report is damning evidence about fracking contaminating waste water in pennsylvania and-- >> wait wait wasn't that the way that fracking was conducted, how it was done as opposed to the process itself. >> no what the report says was that fracking contaminates waste water-- not waste water, ground water. the epa time and time again on this usual. it has actual science in it and slap on top of it a press release, nothing to see here.

we saw that in 2012 and pennsylvania-- >> hold on a second. >> you want me to get my point out i will. stuart: why would the epa, which i thought was definitely anti-fracking, this he don't want you to frack. why would they come out with a 1300 page report which concludes we did not find evidence of-- >> it started at the behest of citizens and-- they want to expand fracking and they are dialing back the investigations which started much, much earlier in the administration, when the administration didn't know what their position was, so what you have-- i know for a fact. stuart: you think the administration wants to frack? >> absolutely, they do. this fracking policy is squarely on the shoulders of the obama administration. stuart: really? >> for the past three years-- >> that's news. >> i have investigated obama administration's epa and watched them time after time after time betray their own science.

what you're seeing is a deeply divided epa which has scientists in the field going out there and they are investigating this issue and coming back with evidence that fracking contaminates ground water and then over and over again the head office the pr office issues press releases that says oh actually nothing to see her. we saw this enin 2012. epa said do not drink your water in private letters and then in the press came out and said actually this water is safe. these were things directly contradictory. stuart: it is a deeply divided epa. if you're saying that. >> epa is under incredible influence of lobbyists and that's been proven. and-- >> by the way, i own property in that area on top of the-- >> and you would not frack there. >> i bolted 12 years ago, way before fracking was talked about do you know why? >> you said you would not frack there. why would you not frack on your

property and prescribe it for-- >> i'm in the watershed and let me finish my story. when i bought it 12 years ago it was a joke in the area. before fracking appeared. a joke if you turned the tap on, you could light the water, way before fracking. >> that's not true. stuart: what, are you kidding? >> i am your neighbor. stuart: i was there i brought the property. >> this did not premier in the middle of a vac vacuum. there are 470 scientific reports peer reviewed that states that fracking-- >> i'm wrong about lighting the tap water before fracking appeared? . i did it myself. >> i believe you're lying right now. stuart: lying? >> the point-- >> this interview is over young man. this interview is over. i'm not lying, i did it myself. >> thank you, goodbye. >> if you said you did not want-- >> you're out of here son. you're out of here. don't call me a liar.

don't do that son, don't do it. >> you're clearly-- >> that's it thank you very much sir. will you please leave? it's the story everybody is talking about, not this one, another one. the prison break in new york two convicted murderers using power tools to escape a maximum security prison. we'll have an update in a moment. >> we'll go back and piece together what they did. it's elaborate, sophisticated, it encompassed drilling through steal steel walls and steel pipes so this was not easily accomplished.

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accident. switch to liberty mutual insurance and you could save up to $423 dollars. call liberty mutual for a free quote today at see car insurance in a whole new light. liberty mutual insurance. >> new development in the prison break case in upstate new york. did a female prison worker help the killers escape? a female staffer is being interrogated. adam shapiro come on in you've got to take me through the prison break. it was a complicated deal. >> very much like the shawshenk redemption. they definitely did this over a period of days and we're talking two men in particular

richard matt and david sweat, both convicted killers and matt is especially dangerous, he killed and dismembered a former boss. they broke out of the clinton correctional facility. first in over 150 years. and here is what the governor said to bartiromo. >> there's no doubt that this was an intricate plan that was well-executed and they had to be at a minimum, provided assistance. >> and the governor said that it took several days to accomplish what they did. he went on a tour of the prison and saw how they actually broke out. they put dummies in their beds with hoodies and that's how they fooled the guard. a question that no one has been able to answer how could you not hear the noise from the cutting of the steel to get out of the original cell. they believe they had assistance and they've got 300 leads they're pursuing. stuart: and they are still on

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>> james for a three and nails

it! >> he's good. lebron james put up a triple-double singlehandedly in game two of the nba finals. tuesday night it's in cleveland. we're moments away to be precise with the opening bell of the new york-- you see the opening bell ringing there and we're expecting a very very modest decline, pretty flat market. joining us to put her off. sandra smith wants to be on television. she doesn't get enough time already there she is top left. next we have cheryl casone and bottom left there is -- that's larry levin. you know and keith fitz is joining us from seattle. sandra, i know you want the air time. go to you first. ceo's at deutsche bank stepping down and that's got nothing to do with american pressure that's the bank in trouble. sandra: deutsche bank skyrocketed on this news because the company has been an

absolute disaster. so if anything shareholders are saying that this is good for the future of the company shall the shake-up in new leadership. stuart: i'm used to the new york state attorney general beating up on the banks and that's why they go down. this time they're beating themselves up. check the big board, i'm going to call this a dead flat market to open up this monday morning and i mean dead flat. actually, okay, dead flat i'll leave it at that. look at netflix, please. i i believe it opened at a new all-time high because-- yes, it is. 633.78 was the old high and now 634 and change it's expanding to italy, spain, portugal. cheryl, can they get enough subscribers to get it higher? >> in the new countries, this could be 41 million new subscribers so the potential numbers are big for the company if they can get it up and running. the cost $9 a month for streaming. dollar versus euro weakness.

will the customers come in? actually i think they will. you see how americans have embraced the technology of netflix and i think the global markets could be a boost to the stock. stuart: i never thought i'd see netflix at 634, there they are, 633.83. look at diageo there's speculation about a takeover from a brazilian billionaire. and so many brands smirnoff and others. if it happens that would be a gigantic deal wouldn't it? >> it would be a ginormous merger, acquisition, whatever you want to call it. he's either acutely aware of the rising cost of capital if the fed is raising rates, if

he's working with berkshire hathaway, but if he's inherently aware of the value of the brands. stuart: he's not trying to bring in other brands for a superconglomerate he likes those brands. >> rumors of course and i'm hesitant to buy because of a rumor. but this guy is not stupid. he has successful mergers and he knows what he's doing. that's significant in this transaction. stuart: apple developers conference starts in san francisco. the stock usually goes down on the news at that conference. well, the conference hasn't started, but it's absolutely unchanged. now pandora's stock could take a hit if apple announces a $10 a month streaming service, as they are expected to do. we'll keep you up-to-date on that one. of course we follow mcdonald's very closely. sandra, give me the latest on

seams overseas and here in america. sandra: not so good u.s. sales down 2.2%. asian sales down 3.2%. the only bright spot was europe where sales were slightly higher. mcdonald's the ceo says they've embarked on a turnaround plan a tough road for mcdonald's competing with chipotle and other fast food that's offering more freshmen use. mcdonald's is now toasting their buns for the consumers. stuart: and finding a strong dollar overseas. sandra: currency is a huge problem for mcdonald's. mcdonald's has been criticized by analysts who say you've got to reinvent yourself and make yourself popular in a market for a consumer that's health focused and they can't do it. they add to the menu and slow down the service. stuart: larry levin, i've got a problem here. a go nowhere stock market oil pretty much flat and gold not doing much at all. it's your job to tell me which

market is going to show a breakout, a real big breakout in any direction. tell me. >> i kind of hate to say this stuart, you've got to be a buyer of puts. we saw obviously on friday the jobs report came out very very good. one downside to that a lot of those were low paying jobs, but still the number was very very good and because of that certainly the fed is going to raise rates sooner than later and i think that's going to be an issue here. usually we would see markets moving higher and that's a negative sign to me, again, if you're looking for something to buy it's probably puts to protect yourself. stuart: you almost go the buzzer. when you say puts you expect the stocks or something to go down, is that correct? >> correct. stuart: thanks larry. watch out for that buzzer it's always ready. we could get news this week from the fda on two new drugs

to lower cholesterol. which drugs are we talking about, nicole. nicole: we're looking at amgen and cholesterol, no one wants high cholesterol, don't want the risk of heart attack and stroke and everybody knows some of the popular names, lipitor and also crestor. it turns out these are injectables and different ways to prevent the cholesterol from getting into your body. it could be very costly it could cost $1,000 a month, $10 billion a year in sales, but so far they're doing well here moving this forward. and some people can't tolerate the other drugs, the statins, lipitor and crestor. stuart: i'm going to bring you the etf on cyber security a basket of stocks basically represented by that etf. it's up 20% this year. keith in seattle, you like this a lot, don't you, this particular etf? >> absolutely.

if you're not investing in cyber security after the government hanking, the bank fraud preaches at target and retailers are' being naive. there's billions at stake. hack is easy way to play that because it's a basket of cyber security companies. stuart: assuming that the security companies can keep us secure, a nice assumption to make. everybody, we're going to move on. we have president obama calling climate change an immediate threat to national security. an immediate threat. here is the former undersecretary of state a man i've known for literally decades always on the inside of government and wall street aren't you? >> i try to be. stuart: well you are. what is the greatest immediate threat to our security. is it climate change? >> well climate change is certainly a long-term threat to security and the welcome-- well-being on everybody in this country.

stuart: do you buy that? >> i do. there are lots of disruptions that occur water, storms pervasive things in a lot of countries. the far more immediate threat is what putin is doing in eastern europe and trying to divide western europe and i think this is something that really needs to be dealt with. he is not only banking on russian strength he is banking more and more on western weakness. he's trying to divide countries by supporting right wing and left wing populous parties so they won't support, and they'll take weaker on issues like sanctions and nato. stuart: he's trying to break up nato. he doesn't like nato aligned against russia. >> he's trying to weaken europe and nato dramatically. stuart: how close to success do you think he is? that's a big thing to say, breaking up nato. is he close? >> i don't think he's close to breaking up nato. i think the country in the region understand that nato is

important, but he can weaken support for nato so that countries that are members will not support tougher nato action against him or even tougher sanctions against him. stuart: has he neutralized europe? >> he hasn't quite yet, but he's weakened its cohesion and certainly with countries like hungary italy, the czech republic and even france he's trying to burrow in to weaken their willingness to support governments taking action against russia. stuart: to what degree has putin have angela merkel and germany over an energy barrel? doesn't he supply them with a lot of their natural gas? >> he does, but i will give enormous credit to the germans and chancellor merkel. she don't forget comes from the eastern part of her country. she understands the importance of standing up to the russians. i give her a lot of of credit

for trying to lead europe in a resolute policy against putin. stuart: okay. if you have the power, and i know you've often had a great deal of power in this government, would you arm the ukrainians, give them arms do something for the poles to oppose any russian incursion or bolster them? >> i'd certainly give more to the poles and the baltic states. stuart: would you give them a weapons system for incoming rockets? >> a defensive system if there's any potential threat i would certainly give them a defensive system. and ukraine is a somewhat different problem because ukraine has so many other issues, you could -- if you do give them more weapons, what's the outcome? is it really going to strengthen them? because the russian army has so much more power than they do would it mean very much. stuart: that's so true. >> doing something symbolic doesn't interest me in terms of strategic efforts.

what you need strategically is that nato countries are getting strong support from the united states and that's critical. stuart: you've been on the side -- you've been in government and you know the diplomatic side of government well. you're also a wall street guy. tell our viewers where is the best investment opportunity around the world. not individual companies, but which stock market in the world do you think is the best place for money right now? >> well it's hard to say. i think the asians are by and large it's hard to name individual countries, but i think asia by and large still represents a positive growth story. particularly because china is now going to be investing in a lot of infrastructure in the asian region. this is something very important. the asian infrastructure bank that the chinese have initiated there's a slow growth fund. asian infrastructure by and large is important. two themes i think are important in asia infrastructure and urbanization

and it seems to me that stocks in countries that focus on those two sectors are going to do very well in the future. that's where the future's going economically in the region with chinese money and their own money. stuart: bob, always a pleasure. welcome back after all of these decades. >> always a pleasure good to see you. stuart: thank you. and in our 11 a.m. hour the jockey who road seattle slew to victory in the 1977 triple crown will be with us. and with american pharoah's victory there's money to be bad. and at 11:35 this morning. this is where we're going down down 15 16 points, that's it. first, a mistress suing her ex-lover for 2 million because he didn't divorce his wife and then the obama administration's war on guns. now the white house is going off youtube videos and some are

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>> look at netflix. yes it's a bit lower now and that opened higher opened at a brand new all-time high. why? because netflix is expanding into pre-european countries, spain, italy, portugal. look at deutsche bank what does it say when the two co-ceo's goes down and the stock goes up nearly 6%. [laughter] >> it means that the investors didn't like the two co-ceo's i guess. the judge is laughing. wait until you hear this one. a retired media executive is being sued by his ex-mistress for $2 million. why would that be? because he wouldn't divorce his wife, sandra. sandra: apparently she thinks that it was her job to be his mistress because she's suing for this money for six years of unpaid work as she calls it, but the man's wife wouldn't divorce him saying quote, according-- i will see them bury you six

feet under before i grant you a divorce. i'm the last mrs. greenwald. the guy is former media executive and he's retired, and she is 67 he's 88. [laughter] and she thinks she rightly owns the dough, what do you think. stuart: i think i'm going to follow it up. >> the work part for unpaid work. that's a legal paper that she put that in. stuart: i have a constitutional score on my right and i'm not going to refer this case to him on safe grounds. judge it's like novel courses of action. she might win. the n.r.a. says the state department is going to propose new rules cracking down on on-line chatter and videos about guns and ammo. all right, judge napitano is here, as you saw. now judge, i could go on-line and i can go to youtube, i can learn how to modify a gun, fire

a gun, make ammunition. the government is not happy about this. what can they do about this? >> nothing. you can go on-line and learn how to make a bomb. go on-line and examine information about any topic that your mind could conceive of. lawful, unlawful moral, immoral appropriate, inappropriate. we also have a supreme court of the united states which is the most pro first amendment supreme court in your and my lifetime. well in my lifetime anyway yours would be a more expansive time period kidding, of course. stuart: thanks. ashley: and think what the state department is trying to do here. they're not trying to punish speech, they're trying to prevent speech. that's called a prior restraint. they basically want to tell you ahead of time what you may not say. the courts have only upheld that in the rarest of circumstances, like somebody learns where troops are going in the midst of a battle and

the court will enjoin them from publishing that. it has to be something so life and death direct related before the courts were permit add prior restraint. this is going nowhere. i fully agree with the n.r.a. even if i were not pro second amendment the n.r.a.'s case forech is very strong. the government can never be in the business of telling you what to say and not to say about matters of public interest. stuart: i think the internet is a bastion of free speech. >> yes, it is. that's why the government wants to regulate it. stuart: there's an awful lot of deception, lies i mean it's just riddled with falsehoods, but it is raw, naked, free speech. >> absolutely. the state department is in the position of -- in conjunction with the treasury department telling you what goods and services an american can buy and sell. so their theory is if we ban the sale of certain foreign weapons, we can ban you from

discussing how those weapons work. that's rubbish. you absolutely can criticize the state department for what it's banned you can discuss what it's banned and you can argue that it's inappropriate and the government is in no position. stuart: how do you look at politically correct speech or incorrect speech on news or talk radio? that is under pressure. >> political correctness and incorrectness is not enforceable by force of law, it's enforceable by opinion and people can collectively form whatever opinions they want. stuart: boycotts. >> correct, corrects. if you don't like a political speech of a particular comic's show, you change the channel. stuart: you can organize a boycott of the sponsor of that

particular program. >> that's allowable. stuart: it restricts free speech boycotting the advertisers. >> but it's a restriction generated by the listeners not by the government and that's the difference. the listeners can look at free speech, when how they want. the government has no business there. >> do you accept that from a country with no constitution? >> i left a long time ago. thank you judge, appreciate it. millennials, oh do they get a bad wrap, but up next someone who says no they're actually the newest greatest generation. ♪ my generation baby ♪ ♪

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>> good monday morning. the dow has turned negative down 40 points. as commencement season winds down, recent graduates try to get into the workplace. some argue that this generation of millennials is entitled and lazy.

and some say i see talented and socially commitmented young people already transforming the work of the business world. the president of hearst business media, give me an example how they're transforming the business world, the millennials. >> let's start with the poster child, it would be facebook. facebook was founded in 2004. it's a decade old, founded by a millennial. built by millennials and the original adoption was millennials. today there's 1.4 billion monthly users using facebook. stuart: but it's a couple of millennials create this wonderful business enterprise, does that mean that the entire generation is the greatest generation? >> i'll stay with facebook for one more comment. i believe that facebook is the most important media event intention in the last decade. now let's take media again--

>> why? >> why? 1.4 billion users on a monthly basis. that is a scale that's extraordinary. stuart: does that answer to the criticism of millennials that they feel entitled? i mean a whole bunch of them feel entitled to their parents' money when they leave college. >> when you look at millennials from that perspective they represent 34% of the work force. by 2020 they'll represent 50% of the work force. if you look at the unemployment rates at the millennial group, right now it's about 40% of the unemployed. so it skews slightly higher than what they're participating in the work force, but the 34% of those that are working are working significantly for people like me. stuart: okay. i'm sorry, i've got to leave it, but that's a very interesting premise, the new greatest generation. great stuff. thanks very much we appreciate you being with us.

all right, jack lew, treasury secretary, he tried to sell the pro iran nuke deal, he was booed loudly. general keane on that top of the hour. a new hour of varney. the real question that needs to be asked is "what is it that we can do that is impactful?" what the cloud enables is computing to empower cancer researchers. it used to take two weeks to sequence and analyze a genome; with the microsoft cloud we can analyze 100 per day.

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>> new this hour here is what we have. president obama says climate change is a real threat. meanwhile the new york times calls for a carbon tax. general jack keane on that in just a few minutes. plus, circuit gets booed at a pro israel event. i mean booed. he was trying to defend nuke talks with iran. the return of a cold war era, maybe. leaders desperate to control russia with sanctions while putin tells the world, do not be afraid of me. the second hour of "varney & company" starts right now. ♪

oh, look at this american pharoah won the belmont stakes and the triple crown. the first horse in 37 years to sweep the derby, the preakness and the belmont stakes. he's he's the only horse to win while undefeated. and john cruguet road seattle slew, and he'll be with us in the next hour. and slipping we're down 42 points and the dow is now negative for this calendar year. and opening at a brand new all-time high down a buck 50 at 631. the news there, it's expanding into three new european countries. that would be italy, spain, and portugal. all right. and then check mcdonald's, another bad sales number.

its u.s. same-store sales is virtually flat. deutsche bank what do you say to your leadership when both ceo's resign and the stock goes up. look at that. >> some said that iran would cheat that our sanctions would fall apart and that this program would allow iran to move closer to acquiring a nuclear weapon, but none of that came to pass. >> ladies and gentlemen, please let secretary lew speak. stuart: oh. he was booed there. had a hard time making miss speech. jack lew heckled significantly as he tried to defend the president's iran nuke deal. general jack keane is with us. general this is not necessarily your area in particular, but this shows

hostility to the secretary treasurer what's your comment on what happened to jack lew there. >> it's amazing he thinks he can go into a pro israeli group like that and anybody looking at it knows it's a disaster. the people close to israel know it's a threat to them iran having a nuclear weapon and they know what the facts are. the fact are that they stay in place and research at military sites stay in place and the president is willing to remove as soon as the deal is likely struck by the end of this month which means that iran has a huge cash influx to support their proxy wars around the middle east. none of that makes any sense. stuart: on a similar vein the g7 meeting is wrapping up. they were discussing threats to

america and threats to the west and threats to nato. do you think the g7 nations have the will to push back against russia forcibly and push back against china, do we have the will? >> no the europeans are feckless on this and so is the united states. putin is likely today as we're talking stuart the most feared and most respected leader in the world today. very popular in his own country as well. he's been able to achieve annex asian of crimea eastern ukraine. he's going to stay continue to do this. no one is intending to stop him. they don't have the will. they may impose more sanctions on them he's going to ignore that. things that would matter we're not doing. that is providing aid to the ukrainians, lethal force on the battlefield. moving significant forces to

baltics so putin doesn't challenge step two. he's going to take advantage of it. stuart: you don't see any will on the part of this administration 0 or the europeans to push back forcibly? >> absolutely not. they've thrown their hand in a long time ago. all you're going to get is rhetoric. there may be increase in sanctions and even the europeans are pushing back on that and if it is it will have no impact on putin. stuart: how about china? are they a really serious threat to us? >> well what's happened with china is i think many people look to china for years and believed that they for a long time, they had a defensive military strategy. i was one of them. just recently they have changed their strategy and that is they clearly want to dominate the western pacific and they're going to be much more aggressive and much more assertive in doing that. you can see that being played out now as they're building

islands in the south china sea. so china clearly sees the western pacific as a role that they believe they should dominate in that region much the way that the united states and our allies have done for years. they think that's over. thr he a -- they're going to take advantage of it. the fact that we're not pushing back on the cyber attack they launched in the united states last week at least came to public notice last week is extraordinary. there's no response from the united states. stuart: in a moment president obama is going to hold a news conference at the end of the g7 meeting and we're going to go to it. before he appears, i get the impression, general, you don't like america's foreign policy at the moment and don't like america's retreat? >> absolutely not. when you think about what's happening the radical islam morphed into a revision-- russia and china are seeking regional domination and nobody

is pushing back on what they're trying to achieve. advanced countries like russia and china who have advanced cyber capability are launching persistent cyber attacks on the united states with success and no pushback. when you look at that cleared out security of the united states is much more in jeopardy than it had been years ago. general jack keane, thank you for joining us this monday morning. appreciate it sir. thank you. >> good talking to you, stuart as always. in a minute president obama is going to appear at the summit. the summit is over and he's now going to wrap it up i guess, and answer questions from the media. and he will be appearing very very shortly. steve moore is with me essentially an economist. en i don't why i said essentially an economist, but you are. i want to know why -- i don't think that the economy, i'm sorry steve, we'll get to you. the president is about to speak let's listen in.

>> let me begin by once again thanking chancellor merkel and the people of bavaria and germany for their hospitality here at the g7. my stay has been extraordinary and wish i could stay longer and and, you know, one of the pleasures of being president is scouting out places that you want to come back to where you don't have to spend all your time in a conference room. the setting is breathtaking. our german friends have been absolutely wonderful and the success of this summit is a tribute to their outstanding work. the g7 represents some of the largest economies in the world, but in our g7 partners the united states also embraces some of our strongest allies and closest friends in the world. so even as we work to promote the growth that creates jobs and opportunity, we're also here to stand up for the fundamental principles that we share as democracies, for

freedom, for peace, for the right of nations and peoples to decide their own destiny, for universal human rights and the dignity of every human being. i'm pleased that here in krun measured america and our allies stand united. we believe the way to sustain the economic recovery is by focusing on jobs and growth. that's what i'm focused on in the united states. on friday we learned our economy created another 280,000 jobs in may, the strongest month of the year so far, and more than 3 million new jobs over the past year nearly the fastest pace in over a decade. we've now seen five straight years of private sector job growth. 12.6 million new jobs created, the longest streak on record. the unemployment rate is nearest the lowest rate in

several years, americans workers continue to rise and since i took office the united states has cut our deficit by two-thirds so in the global economy america is a major source of strength. at the same time we recognize that the global economy, while growing, is still not performing at its full potential and we agreed on a number of necessary steps. here in europe we support efforts to find a path that enables briefs to carry out key reforms and return to growth within in strong stable and growing euro zone. i updated my partners on our efforts with congress to pass trade authority so we can move ahead with tpp and p-tip here in europe standards to protect workers safety and the environment. we continue to make progress toward a strong global climate agreement this year in paris. all the g7 countries have now put forward our post 2020 targets for reducing carbon

emissions and we'll continue to urge other significant submitters to do so as well. we'll continue to meet our climate commitments to help developing countries transition to low carbon growth. as we've done in the u.s. the g7 agreed on the climate risks in the development assistance and programs across the board and to increase access to risk insurance to help developing countries respond to and recover from climate-related disasters. and building on the power initiative i launched two years ago the g7 will work to financing more clean energy projects in africa. with respect to security the g7 remains strongly united in support for ukraine. we'll continue to provide economic support and technical assistance that the ukraine needs as it moves ahead on critical reforms to transform its economy and strengthen its democracy. as we've seen again in recent

days, russian forces continue to operate in ukraine, violating ukraine's sovereignty and territorial integrity. this is the second year in a row that the g7 met without russia, an example of russia's isolation and every member continues with sanctions on russia for its actions against ukraine. it's important to recognize that the russian economy has been seriously weakened. the ruble and foreign investment is down, inflation is up. the russian central bank lost more than $150 billion in reserves. russian banks and firms are virtually knocked out of the international markets. russian energy companies are struggling to import the services and technologies they need for complex energy projects. russian defense firms have been cut off from key technologies. russia is in deep recession, so, russia's actions in ukraine are hurting russia and hurting the russian people. here at the g7 we agree that even as we will continue to

seek a diplomatic solution sanctions against russia will remain in place so long as russia continues to violate its obligations under the minsk agreements, until they're fully implemented which means the eu sectoral sanctions beyond july and if needed we stand ready to impose additional sanctions against russia. beyond europe we discuss negotiations over iran's nuclear program and we will remain united headed into the final stages. talk. iran has a historic opportunity to resolve the international communities concerns about its nuclear program and we agreed that iran needs to seize that opportunity. our discussions with prime minister ibadi of iraq president of tunisia and of

nigeria a chance to address the threats of isil and boko haram and work with our partners to counterterrorism efforts. as many of the world's leading global development, joined by leaders of ethiopia liberia, senegal and the union, we maximize our partnership developments. we continue our landmark initiative to promote food security and nutrition, part of our effort to lift 500 million out of malnutrition and work to get ebola cases down to zero and as part of the global health agenda i'm pleased to announcement that the g7 made commitments to help 60 countries achieve targets to better prevent, protect and

respond to future outbreaks before they become epidemics. i want to thank chancellor merkel that included in the summit was education and focus on women and girls. the g7 committed to expand in our own countries and increase technical and vocational training in countries which will help all of our nations prosper. i want to thank angela and the people of germany for their extraordinary hospitality. i leave here confident when it comes to the key challenges of our time america and our closest allies stand shoulder to shoulder. with that i will take some questions and i will start off with jeff mason of reuters. >> thank you, mr. president. after your meeting here you mentioned greece in your opening statement. do you believe that the europeans are being too tough on greece in these talks and what else needs to be done on both sides to ensure there's a deal and to ensure that isn't

undue harm to the markets as you talked about. and the french told reporters today that you said at the g7 leaders, that you're concerned that the dollar is too strong. what did you say exactly and are you concerned that the dollar is too strong? >> first of all, don't believe-- i did not say and i make a practice of not commenting on the daily fluctuations of the dollar or any other currency. with respect to greece i think that not only are g7 partners, but the imf and other institutions that were represented here feel a sense of urgency in finding a path to resolve the situation there. and what it's going to require is greece being serious about

making some important reforms, not only to satisfy creditors, but more importantly to create a platform whereby the greek economy can start growing again and prosper. so the greeks are going to have to follow through and make some tough political choices that will be good for the long-term. i also think it's going to be important for the international community and the international financial agencies to recognize the extraordinary challenges that greeks face and if both sides are showing a sufficient flexibility, i think we can get this problem resolved, but it will require some tough decisions for all involved and we will continue to consult with all the parties involved to try to get to that outcome. >> do you think it will happen

before the deadline? >> i think that everybody wants to make it happen and working hard to get it done. >> thank you, mr. president. how frustrated are you that after you personally raised your concerns about cyber securities with the chinese president that a massive attack on u.s. personnel files seems to have originated from china? was the chinese government involved? and separately as a sports fan, can you give us your reaction to the fifa bribery scandal? thank you. >> with respect to fifa i cannot comment on a pending case by our attorney general. i will say that in conversations i've had here in europe, people think it's very important for fifa to be able to operate with integrity and transparency and

accountability. so as the investigation and charges proceed, i think we have to keep in mind that although what side of the atlantic you live on it's a game, but it's also a business and it's an incredible source of pride and people want to make sure it operates with integrity. the united states by the way, since we keep getting better and better at each world cup, you know we want to make sure that union a sport that's gaining popularity is conducted in an upright manner. i don't want to discuss, because we haven't publicly unveiled who we think may have engaged in these cyber attacks,

but i can tell you that we have known for a long time that there are significant vulnerabilities and that these vulnerabilities are going to accelerate as time goes by both in systems within government and within the private sector. this is why it's so important that congress moves forward on passing cyber legislation, cyber security legislation that we've been pushing for. why, over the last several years i've been standing up new mechanisms inside of government for us to investigate what happens and to start finding more effective solutions. part of problem is that we've got very old systems and you know, we discovered this new breach in opm because we've initiated upgrading old systems

to address existing vulnerabilities and what we are doing is growing agency by agency and figuring out what can we fix with better practices and better computer hygiene by personnel and where do we need new systems and new infrastructure in order to protect information not just of government employees or government activities, but also, most importantly where there's an interface between government and the american people. and this is going to be a big project and we're going to have to keep on doing it because both state and nonstate actors are sending everything they've got at trying to breach these systems. in some cases it's nonstate actors engaging in criminal activity and potential theft. in the case of state actors they're probing for intelligence or in some cases

trying to bring down system in pursuit of their foreign policy objectives. in either case we're going to have to be much more aggressive and attentive than we have been. this problem is not going away. it's going to accelerate. that means that we have to be as nimble as aggressive and as well-resourced as those trying to break into these systems. justin. >> thanks, mr. president. i want to ask about two things that were on the agenda at the g7 this weekend. the first was the islamic state. you said yesterday ahead of your meeting with prime minister cameron, that you assessed what was working and what wasn't. i'm wondering what is not working in the fight against the islamic state and bilateral prime minister baddyhi steps up assistance. and on trade, chancellor merkel

says she was pleased fast track authority i'm wondering if you gave her or other leaders assurance that it would go through the house. if it doesn't, what does that say about your ability to achieve with congress. >> i'm not going to hypothesize about not getting it done because we're going to get it done. we'll get a vote because it's the right thing to do. with respect to isil we have made significant progress in pushing back isil from areas in which they had occupied or disrupted local populations, but we've also seen areas like in ramadi where they're displaced in one place and come back in in another. and they're nimble and they're aggressive and they're opportunistic. so one of the areas where we're going to have to improve is the

speed at which we're training iraqi forces. where we've trained iraqi forces directly and equipped them and we have a train and assist posture, they operate effectively. where we haven't morale lack of equipment, et cetera may undermine the iraqi security forces. we want to get more iraqi security forces trained well-equipped and focus. and we're reviewing a range of plans how we might do that essentially accelerating the number of iraqi forces that are properly trained and equipped and having focussed strategy and good leadership and when a finalized plan is presented to me by the pentagon then i will share it with the american people if not, we don't yet have a complete strategy

because it requires commitments on the part of iraqis as well about how recruitment takes place and so the details are that are not worked out. >> would it be fair to say additional u.s. military personnel is a part of what's under consideration? >> i think what's fair to say is that all the countries in the international coalition are prepared to do more to train iraqi security forces if they feel like -- that additional work has been taken advantage of and one of the things that we're still seeing is in iraq, places where we've got more training capacity than recruits and part of my discussion with president ibadi, how do we

ensure more troops come in. our outreach to sunni tribes. we've seen sunni tribes who are not only willing and prepared to fight isil, but have been successful at rebuffing isil. it's not happening as soon as it needs to. one of the efforts i'm hoping to see out of the prime minister and the iraqi legislature when they're in session is to move forward on a national guard law that would help to devolve some efforts in places like anbar and local folks and to get the sunni tribes involved more rapidly. and this helps to get the precursor of isil during the iraq war in 2006. without that kind of local participation, even if you have

short-term success it's very hard to hold those areas. we've got to make a lot more progress is on stemming the flow of foreign fighters. now you'll recall that i hosted a u.n. generals security council meeting specifically on this issue. and we've made some progress, but not enough. we're still seeing thousands of foreign fighters flowing into -- for syria and often times ultimately into iraq and not all of that is preventible, but a lot of it is preventible if we've got better cooperation, better coordination better intelligence, if we are monitoring what's happening at the turkish-syrian border more effectively. this is an area where we've been seeking deeper cooperation

with turkish authorities who recognize there's a problem, but haven't fully ramped up the capacity they need. and this is something that i think we've got to spend a lot of time on if we can cut off some of foreign fighter flow. we're able to isolate and wear out isil forces already there, we're taking a lot of them off the battlefield. if they're replenished, it doesn't solve the problem in the long-term. the final point i made to president ibadi, the agenda is as important as the fight out there. if sunnis kurds and shia all feel as if and within a political structure can meet their need for security

prosperity. nondiscrimination, then we'll have a much easier time and the good news that prime minister ibadi is committed to that principle and he's inheriting mistrust of a lot of groups in iraq and he's taking political risks and undermined by other political factions in iraq and we've got to continue to monitor and support those on the right side of the issue. >> okay mr. president, you mentioned that the u.s. and the european allies reached a concensus on extending the sanctions against russia. and violating the minsk agreement. without a permanent u.s.

presidents. celebrately i wanted to ask you about the possibility that a court battle could extend your term. and without accomplishing your goals on immigration. on ukraine and russia and minsk. there's strong concession that you need to keep pushing russia to abide by the terms of the minsk agreement and need to encourage and support ukraine to meet its obligations under minsk until it's completed sanctions remain in place, there was discussion about additional steps that we might need to take if russia working

through separatists. aaggression and inside of ukraine. those discussions are taking place at a technical level not yet at a political level because i think the first goal here going into a european counsel meeting coming up is just going over the existing sanctions. but i think at a technical level, we want to be prepared. our hope is that we don't have to take additional steps because the agreement is met. and i want to give enormous credit to the president who gave extraordinary patients in trying to get that done. ultimately this is going to be

an issue for mr. putin. he's got to make a decision. does he continue to wreck his country's economy and continue russia's isolation in pursuit of a wrong-headed desire recreate the glory of the soviet empire? or does he recognize that russia's greatness does not depend on violating the territorial integrity of sovereign countries. and as i mentioned earlier the cost that russian people are bearing is severe. that being felt, it may not always be understood why they're suffering because of state media inside russia and propaganda coming out of, you

know state media in russia and to russian speakers. but the truth of the matter is that the russian people would greatly benefit and ironically, one of the rationals that putin provided for was to protect russian speakers there. well, russian speakers inside of ukraine are precisely the ones who are bearing the brunt of the fighting. their economy collapsed their lives are disordered, many of them are displaced their homes may have been destroyed. they're suffering, and the best way for them to stop suffering is if the agreement is fully implemented. oh emigration. with respect to emigration, obviously i'm frustrated by a district court ruling that now is winning its way through the appeals process. we are being as aggressive as

we can legally to first and for most appeal that ruling and then to implement those elements of emigration executive actions that were the not challenged in court. but obviously the centerpiece one of the key provisions for me was being able to get folks who are undocumented to go through a background check criminal background check pay back taxes, and then have a legal status. and that requires an entire administrative apparatus and for them to apply and come clean. i made a suggestion that we should not accept applications until the legal status of this is clarified.

i am absolutely convinced that this is well within my legal authority, the department of homeland security's authority. if you look at the precedent if you look at the transitional discretion that the executive branch possess when it comes to immigration laws, i am convinced that what we're doing is lawful, and our lawyers are convinced what we're doing is lawful. but, you know, the united states is a government of laws and separations of power. and when a -- even if it's an individual district court judge who is making it determination, we've got to go through the process to challenge it. and until we get clarity there, i don't want to bring people in, have them apply and jump through a lot of hoops only to have it deferred and delayed further. of course there's one really great way to solve this problem. and that would be congress

going ahead and acting. which would put out the need for executive actions. the majority of the american people i think still want to see that happen. i suspect it will be a major topic of the next presidential campaign. and so we will continue to push as hard as we can on all fronts to fix a broken immigration system. administratively we'll be prepared if and when we get the kind of ruling that i think we should have gotten in the first place by our authorities to go ahead and implement. but ultimately this is never fully replace the need for congress to act. and my hope is that after a number of the other issues that we're working on currently get cleared that some quiet conversations start

back up again particularly in the republican party about the short side of the approach that they're taking when it comes to immigration. >> thank you mr. president. more than six million americans may soon lose health insurance at the supreme court this month to the affordable care act. a growing number of states are looking for assistants as they face the prospect that their residents may lose federal insurance subsidies, and their insurance markets may collapse. yet your administration has given very little to no guidance on how states can prepare. what can you tell state leaders and advocates who worry that health care markets across the country may be throw into chaos. >> what i can tell state leaders is that under well-established precedence, there is no reason why the

existing exchanges should be overturned through a court case. it has been well documented that those who pass this legislation never intended for folks who were going through the federal exchange not to have their citizens get subsidies. that's not just the opinion of me that's not just the opinion of chemicals. that's the opinion of the republicans who worked on the legislation. the record makes it clear. and under well-established statutory interpretation approaches that have been repeatedly employed not just by liberal democratic judges, but by conservative judges like the current supreme court

court. the excerpted statute of the current meaning and what the overall statute provides for so this should be an easy case. frankly it probably shouldn't even been taken up. and, you know, since we're going to get a ruling pretty quick, i think it's important for us to go ahead and assume that the supreme court is going to do what most legal scholars who have looked at this to expect them to do. but, look, i've said before, and i will repeat again. if, in fact, you have a contorted reading of the statute that says federal run exchanges don't provide subsidies for folks who are

participating in those exchanges, then that throws off how that exchange operates. it means that millions of people who are obtaining insurance currently with subsidies suddenly aren't getting those subsidies, many of them can't afford it, they pull out, and the assumptions that the insurance companies made when they price their insurance suddenly gets thrown out window. and it would be disruptive -- not just, by the way for folks in the exchanges but for those insurance markets in the state generally. so it's a bad idea. it's not something that should be done based on a twisted interpretation of four words in as we were reminded repeatedly a couple thousand page piece of legislation. what's more the things working. i mean part of what's bizarre

about this whole thing is we haven't had a lot of conversation about the hoards of obamacare because none of them come to pass. yet 16 million people have gotten health insurance. an overwhelming majority of them are satisfied. it hasn't had an adverse affect from the ones who don't. and they get additional protections with the health insurance that they do have. the costs have come in substantially lower than even our estimates about how much it would cost. health care inflation overall has continued to be at some of the lowest levels in 50 years. none of the predictions about how this wouldn't work have come to pass. and so i'm -- a i'm optimistic

that the supreme court will play it straight when it comes to interpretation. and b i should mention that if it didn't, congress could fix this whole thing with a one sentence provision. but i'm not going to go into a long speculation anticipating disaster. >> you're a plan ahead kind of guy. why not have a plan b? >> well, you know, i want to just make sure that everybody understands that you have a model where all the pieces connect. and there are whole bunch of scenarios not just with relation to health care, but all kinds of stuff that i do

where if somebody does something that doesn't make any sense then it's hard to fix. and this would be hard to fix. fortunately there's no reason to have to do it. it doesn't need fixing. all right? thank you very much. thank you the people of germany. you were wonderful hosts. . stuart: there you have it. the president has just made a series of statements about all kinds of issues. if i may summarize, it is everything is fine. the economy is doing well, overseas is doing well. don't worry about anything, and then at the very end he had to answer a series of questions about obamacare, and what happens in the supreme court about the issue of subsidies. chomping at the bit on my left-hand side right with me is steve more. >> for 45 minutes . stuart: listening to spell your what the president had to say about obamacare. one particular comment steve and i want your comment on it.

the president said we have not seen the horrors of obamacare. all of the predictions have failed to come to pass. >> actually, well, look, the latest statistics on what's happened with people's premiums. you reported this last week. 30 40, 50% increase of premiums, how is that working? look at the number of people who lost the health care they had through their employers. millions of people. look at the cost of the treasury. the cost of obamacare are up 30% the last year. that's the reason we're not bringing this budget down. and people are realizing especially young people, stuart, that this is a lousy deal for them. young people could get a better deal at half the price. so to say that this is working is an extraordinary thing. like, i would say that the theme of this press conference is president obama living in some kind of alternative universe? the things everything in the world is going just fine?

the economies of europe and asia and the united states are in shambles right now and there's no leadership. where is the ronald reagan? where's the winston church hill? it's not out there. . stuart: i'm going to get back to you in a second. katie is with us, and i want you to deal with foreign policy. again, i have to repeat it. surprised that the president sort of said everything is going just fine. and you say. >> happy talk. a lot of ahappy talk. and it's not that everything is just going fine. we all agree, all of our colleagues, sanctions against russia, they're going to continue. iran we all agree it's a historic opportunity. iraq well, there are a few things we have to work out. speed up the training, but the plan is essentially working cyber attack, it's all congress any fault and finally we have russia just where we want them. they are isolated, the world community is abandoning them.

. stuart: he did say that. >> the beginning and the end of the press conference he said they're isolated. the russians have just signed a deal with china. they're signing deals with egypt to supply them. they're actually cozing up to iran and putin is poised to see something in ukraine. probably in the next two weeks. . stuart: let me pick up on that. putin is poised to do something in ukraine in the next couple of weeks. >> yeah. we see more aggression on that boarder. putin has made it clear i think to what he is going for by the end of his days if he wants to do to nato what he did to the united states war act. now, they're not a member of the nato, so it knows trigger any action, but to see how the other countries in the european community or allies are responding to putin maybe

they'll continue the sanctions, but the talk is very definitely not what back home said. the europeans don't want sanctions, they're not going to stand up to putin they may not care about ukraine, but not next up pone you had up. >> stuart there's no theme of this press conference is that this president think so he's an imperial president he doesn't have to listen what the supreme court says, individual's to to listen congress whether it's immigration or health care, he feels he should be able to do this all his own, and that's not the way our american system of political system works. . stuart: i want to pick up on what he said about climate change. that was very much a priority. >> it is. it's a big problem. i mean here we have, you know, as i said the economies in europe are crumbling asia is fighting recession, we have negative growth last quarter and this president is going to this meeting with all the economic leaders and talking about climate change? if you ask the american people

rank the 20 issues, climate is 19 or 20th on the issue. what do people want? they want jobs, growth, security. and the president, i think you don't concentrate on everything. if you make everything a priority then nothing is a priority. . stuart: "the new york times." i was reading it sunday morning, they're calling for a carbon tax. >> yeah. stuart: right here. >> every government would love to have a carbon tax. a huge gusher of relevance . stuart: this is tax on all fossil fuels. you tax it. >> right. stuart: and hopefully -- theoretically you use less of it so there's less carbon admission. but the numbers are astronomical. >> well the european companies when they have val added taxes. this is like a new value-added tax that would take 3 4 5% of our gdp. and you really nailed it. who has the most coal in the

world? the united states has? who has the most natural dass gas? the united states. why in the world would we want to tax the one resource we have more of than anyone else in the world? they're laughing at us; right? >> the energy sector and, you know, it wouldn't offset carbon production by developing countries that would not have a carbon tax. they would still be boosting carbon into the atmospheric without a carbon tax. >> by the way, every european country, every asian country is talking about building more coal plants. they come to these treaties and tell mr. obama, oh, yeah we'll do it. and they never do and they're laughing at us. . stuart: one last comment. and this is what truck struck me about the whole press conference. the man lacked force and fire. it was -- i'm not going to say he mumbled, but he was not clear. he was not clear. he didn't stand out and is

this this and this. >> well, he's a leader from behind he's not going to make any decisions that people are going to get offend, i'm not going to offend anybody and i'm not going to get in trouble and, by the way the big problems, isis, iran's nuke russia, i'm going to put those to the next guy . stuart: yeah not much coverage to that. >> no. stuart: thank you very much indeed, everybody. check the dow jones industrial average. there was zero movement in the dow throughout the president's press conference. it started at 31, it's now at♪ ♪ ♪ 30. more "varney & company" coming up for you your clearance. so why would you invest without checking brokercheck? check your broker with brokercheck. the real question that needs to be asked is "what is it that we can do that is impactful?" what the cloud enables is computing to empower cancer researchers. it used to take two weeks to sequence and analyze a genome;

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stuart: more problems at the tsa. a new report from the department of homeland security says tsa missed 73 workers who were on a government terror watch list. you better explain this one.

>> this is pretty good. this is dated june 4th, 2015, so this is just last week. and this says that basically under terrorism related activity codes the tsa does not have the authorization to fully screen potential employees at airports, some of them forking airlines, so basically the tsa is missing. there were 73 people that should not have been hired in airports across the country because the tsa did not have enough provision to go and investigate whether or not they were on terror watch list and 73 of these people were on terror watch list . stuart: 73 people were employed at airports as vendors or whatever. >> some were airline workers as well . stuart: and they missed it because they had to miss it because they weren't allowed. >> they don't toast all of the watch list provisions if you will, the codes if you will. they don't have the information. and, by the way, the tsa, this is a money issue as well. the tsa have a lot of screening to local airports. >> yeah. there's a lot of guns and bombs at the tsa. the tsa was online launched

after 9/11, it's a young agency so it's it's missing a lot. those terrorists came things on student visas and then they just put their initials and no social security numbers on their job applications to be airport workers . stuart: and then last week we brought the story of it was a 95 or 96% failure rate to detect weapons and bombs going through the tsa process. >> that's right. and they're testing their own workers, having agencies go in and poess as passengers. one worker had a fake bomb strapped to their back. missed it. i mean these are egregious violations . stuart: and the guy who ran the tier for several months and who is responsible for that 95%er or rate, he found the fired. >> no. stuart: he was put aside. >> reassigned . stuart: you can't fire a government worker even when they put us in great jeopardy. >> uh-huh. stuart: thank you, ladies. i think we got that straight. two hours coming up. we have a triple crown winning

jockey. a reagan economist and one of your favorite military voices coming up in hour three. here's one of the highlights that you may have missed. >> but the man's wife wouldn't divorce him saying quote -- i will see them bury you 60 under bring grant you a divorce. i'm the last mrs. greenwald okay? the guy's a former media executive. he's retired. and she's 57, he's 88,. [laughter] . stuart: i don't think i'm going to follow this up with anything. [laughter] you are looking at two airplane fuel gauges. can you spot the difference? no? you can't see that? alright, let's take a look.

the one on the right just used 1% less fuel than the one on the left. now, to an airline a 1% difference could save enough fuel to power hundreds of flights around the world. hey, look at that. pyramids. so you see, two things that are exactly the same have never been more different. ge software. get connected. get insights. get optimized.

stuart: if you want to know what the left is going to do next. read "the new york times" editorials. so watch out. everyone because the times wants a carbon tax. now, when i say everyone, i mean everyone. because we would all pay through the nose. up goes the price of coal, oil, and natural gas and of

course electricity. heating oil and yes gasoline. the times is very much in sync with president obama on this. he's made climate change a big part of his agenda, the theory is that if you raise the price of fossil fuels of carbon tax we'll use less and carbon omissions will decline. i think there's something else going on here. it's called relevant revenue. tax revenue. a carbon tax would be producing hundreds of billions of dollars a year. to the left and regrettably to some on the right, that is ircystable. all that money flowing in every year? what an pet projects that would pay for and all the time they could claim to be doing good for the plant. and look at this. top executives at european oil companies just came out in favor of a carbon tax. and you know how president obama wants to make america more like europe? yeah watch out.

♪♪ ♪ . stuart: i repeat. watch out. let's get right at it, shall we? joining me now former economic advisor to president reagan. okay., art let's suppose that a carbon tax were imposed in the unlikely event that it happens, let's suppose it did. that would be an incredible amount of money flowing into the coffins of treasury in washington. what would it do to the economy? >> well, if it were just the carbon tax, it would kill the economy, it would be a disaster. but, you know, there's a new move coming, and it may just be that if we got something we could get a carbon tax with 100% offset income tax. now, an income tax dollar for dollar does a lot more damage to the economy than it does a carbon tax. so if we could get legislation

swap the two independently support it every day of the week and twice on sunday. i don't know that we can get it, but honest that's the way to go to get a compromise. "the new york times" is so silly. . stuart: well, "the new york times" what they want to do is that they know the biggest gusher of money as i call it coming into washington. they would want to reroute that money, give it back to the poor or to middle america so the rebates of the carbon tax. >> yeah. but the answer to them is the price of gasoline has fallen a lot. and that has benefited the poor, the distant franchise and the electricity users and all that. if they're ever going to do a carbon tax now is the time to do it without any tax credit or any other pandering to the poor, they've been benefited by the drop and now is the time if they would do a could she tax and dollar for dollar personal income taxes, i think it would be spectacular . stuart: well you're talking

about something which might happen. >> it might . stuart: we've got a republican congress. >> yeah. stuart: who knows what's going to happen in 2016. >> i have been but that's all right . stuart: i know you think you know. >> i know . stuart: if we've got a republican in the white house in january 2017 and a republican congress, it is entirely possible that you would have a carbon tax totally offset by lower income tax rates at the federal level. that would be a huge possibility. >> that would be a huge positive for the economy. i wrote this a long ago, this is the one article "the new york times" would publish of mine. but it's the right thing to do. we don't know if there's global warming or not but there's a logic to it that makes sense and why not have a carbon tax offset by a rate reduction and it might alice offset some of the carbon problems . stuart: well, i know -- i think you're fairly close to hillary clinton. i know you voted for bill

clinton twice, didn't you? >> i were. i would never vote in that party's primary, so i voted the two general elections . stuart: so is it possible that you could have a quiet word with the hillary camp and say you know. you really want to get things going? get your carbon tax and lower income tax rates. you can do that. you have access to that level. >> well, i'm already talking with a senator called shelton white house. he's a democratic who's very much into the income tax. and he's moved a long, long way. his bill isn't there yet. bill it's got a lot of income tax reductions, in his bill and then like that other stuff in there that we've got to get rid of. but, you know, they are moving. al gore has moved dramatically dramatically. he wants a tax reduction. that's a big move, and it's not a quite big move as you're getting a three hour slot and having my two best friends

ever and of course you have elizabeth macdonald who is my hero of all heroes next to you of course. we're moving in the right direction . stuart: the right direction for you is to move away from tax being income. moving toward tacking consumption. that's what you want to see. but they won't have that. they don't want any of that. >> of course they do they're just not beaten up enough, they'll come to it, they always do, stuart. they did in the 1980s. i mean we got this 86 tax act with a vote of 97 to 3. all those lefties came with us because we know we're right. and they know we're right on this issue as well and as soon as they get up with their frustrating around, they'll do it. . stuart: so who are you having lunch with a napkin the way you did back in the '70s with ronald reagan. >> i'm meeting with a lunch.

we've got some great candidates out there stuart. these people are very, very impressive and they're doing just what they should do. if they're competing for the electronic, the dollars and once they get all the stuff together, pop you're going to get a great candidate to take on whoever the democrats choose to nominate, who have she or he might and i think we're going to have a huge win in 2016 . stuart: you know, what a difference. i was kind of down going into this interview, kind of -- it was not a terribly impressive press conference from the president. market doing nothing. i've got three hours on the air these days, and on comes art, making me cheer and feel ready to go for the third hour. well done. >> well, thank you. it's a great world stuart. i mean when you look at what happened in 2014 to the senate, to the house the state legislatures, pro growth, look at what happened to cameron. i mean . stuart: yeah. >> now, he did it by cutting

the rate from 50p to 45p. imagine if he cut it to 35p? he would have won even the scottish nationalist float scotland . stuart: let's not get carried away. come on. >> isn't it wonderful . stuart: yes. >> but i was just over in ireland, by the way. do you know why everyone is investing in ireland stuart? . stuart: low taxes. >> because capital is always doubling . stuart: i didn't know that was coming my way. >> i'm sorry. . stuart: you've got a smile on your face, and that's more. >> thank you . stuart: we'll see you again very very soon. >> thank you . stuart: check that big board. virtually no movement today. the dow has now turned negative for the year, but today -- pretty flat. netflix, though, that opens at a new high announcing it's going to expand it's service to europe and awful close to a all-time high. more negative to mcdonald's.

the u.s. same store sales down 2.2% last month. mcdonald's stock again, dead flat $95 a share. and now that stock is up what? nearly 5.5%, both of its coceos announce that they're resigning, what does that mean to the stock? when the stock goes up when they go down. i guess that means they weren't good at their job. it wasn't america that pressured them, it was in their internal bank. >> absolutely . stuart: coming up later this hour. some big words in sports, american pharaoh making history, winning the triple crown, first time in many many years we're going to talk to the jockey to the triple crown victory. and a prompting young star in the 49ers reswines says he's worried about what the game is doing to his body. fox sports 1. nfl insider pete breaks that down for us.

all coming up at 11:30, 22 minutes away. and a prison escape. straight out of the movie. two contradicted murderers flee the prison in new york. was it an inside job? >> well, the governor is actually saying they were on a tour at the facility, and he was saying they had to have help there's a woman who works at the facility who is being questioned, she's not a correction officer but she works there. and contractors who work at the facility, it's over 150 years old perhaps they had assistants from them. they received 300 leads that they're pursuing on this. they have 200 people in the manhunt to find these two men. their names are richard he's 48 years old, and he kidnapped his boss, killed him and dismembered the body. and 38 years old involved in a killing of a sheriffs deputy.

so you have the governor saying someone had to assist him. the key here. they had power tools with which they cut through steel and steel pipes and on anybody heard this? how did they get the tools and the governor said it took at least three days of planning and work. so who at the prison did not hear this and who is going to lose their jobs? quite a few people i would suspect. . stuart: thank you for okay top of that one. look at apple please. it's holding its annual worldwide conference today. we're expecting to hear new software updates and more permanent a $10 a month news streaming service. jolene content in san francisco for the event. spottify ceo says free music services like his are going to save the music industry. apple is going to make us pay. who has the right strategy here? >> well, if apple does indeed, stuart unveil, i mean the streaming service it would actually look kind of like

speedway's streaming service that is paid with no adds, apple expected to unveil something for about $10 a month. so what daniel told the ceo of spottify, he says that this type of streaming service would actually allow the music industry to expand by ten times. and so, stuart, it's a back and forth here, but we do know that i can they've dominated in more than a decade, they're actually down and people are going with that music option, even if they're paying up to $10 a month . stuart: not bad jolene. thank you very much. we'll get back to you later. president obama making climate change a big prior to at the g7 meeting. he's called it the biggest national security threat and most immediate national security letter that our country faces. colonel ralph peters up next. he disagrees with me on this one. will he give me a hard time as he did rand paul. >> he's not protecting the

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stuart: there is a barons bounce modest, but is there inspect s&p fills rose veldts picked over the weekend barnes & noble there it is. he says he could go up 10%. >> well, book sales are stronger than people realized, people think e-books are taking over, that's that's it not true. people still go to barnes & noble to buy books. and this summer, barnes & noble is going to be splitting the company up into two parts. the bookstores and the college bookstores. they've managed 700 college bookstores around the country. that's an important business that investors don't really appreciate and when it's split out as its own company, they will appreciate it. i think they're going up to

thousand bookstores, harvard yale . stuart: 1,000 college bookstores. >> exactly. 1,000 college bookstores . stuart: my take away from what you just said is that book sales are actually doing very well. i thought they were falling like newspapers and going down all the time. >> no. sales are stable. it's a stable business. entertainers and noble is barnes & noble is a big sale that's appealing to investors. . stuart: phil, always a pleasure. thank you for being with us. >> thank you stuart. . stuart: back to that breaking news we brought you last hour, the tsa who hired workers who were on a terror watch list. >> this is an internal report of the department of homeland security that basically these 73 workers were on terror watch list but yet were employed in airports across the country. whether they were either employed by vendors food vendors for the airports or by the airlines themselves, which was a troubling side of the

story because frankly if you have an airline id, you get access to the tarmac. 83 people missed by the tsa. these people should not be working the airports in the country, and they were. this report just came out last week . stuart: thank you so much,. >> yeah. stuart: president obama speaking last hour. listen to what he said about our strategy against isis. >> when a finalized plan is presented to me by the pentagon then i will share it with the american people. we do not have yet a complete strategy . stuart: let's see what what colonel ralph peters think so about that. valley of the shadow, all right. come on in, ralph. what do you make of the president's marks of isis. >> accidentally honesty. i mean after all these years we don't have a strategy, and we don't have a strategy. and the reason we don't is not behavior in the pentagon, it's

because of obama wants the impossible. he wants to defeat islamic state, but he doesn't want to hurt anybody. he doesn't want collateral damage. he doesn't want civilian casualties. you can't do it. and this cloud cuckoo land that obama lives in is so dangerous to us on such a wide range of issues, but if you are unwilling to fight with no hold barred against an enemy willing to fight with no holds barred the enemy will fight is going to get the better of you despite all your technology despite all your wealth . stuart: okay. i want to bring up an issue where you and i disagree and where maybe you do agree with the president. president obama made a big push about climate change at the g7 summit. and we've got an editorial in the new york times calling for a carbon tax to fight global warming. you agree with the president on this i think? you do believe that climate

change is an immediate threat to our security; right? >> stuart, i'm going to have to take a break and call my lawyer because i may slander. no, i do not agree -- stuart: hold on a second, ralph, orthoprogram i was called a liar to my face by someone sitting right next to me on this set,. >> no, he was calling you a liar lyre because he thinks you're the mousse of financial innovation. in a mode staying to the crowd. so don't worried about that. but -- no, i take the environment serial. i'm probably most the environmentally minded person on fox. but i want it to be rational. i don't want to live in a log cabin with candles i had to make myself. but at the same time i want to make measures to protect our economy. i do not favor this carbon tax at this time for these reasons.

first of all we're making progress. make more progress, but we're making progress. it's not an immediate cataclysmic threat, and, first of all exploding carbon based pollution is in india and china and other developing countries, although china well developed, they're just buccaneers, they don't care. and the third reason when i listen to politicses in this carbon tax it's twisted, they want to increase tax on corporations and carbon products carbon fossil fuels themselves, and then they want to give subsidies to lower income families to offset that, which would encourage them to use more fossil fuels. i mean how does that make sense exactly? and the last reason, which is very very important. because security issues are so inrelated and complex. we don't need a comprehensive tax of this nature now that

would further cripple a global recovery. we need to get healthily financially for our own security . stuart: well done, ralph. you just wrapped it up nicely and i'm glad you're not going to sue me for slander and i'm very glad that you're with us today -- >> wait. wait. wait. the lawyer in my ear is saying you're very few very wealthy and i should really do this. what do you think? . stuart: i think the lawyer is wrong. i do like the book though. the gook book was brilliant. >> thank you . stuart: paint good read about the civil war that's the one. >> thank you . stuart: demand for honey rising just after the bee population may be dying off. next flock as in jeff at a honey farm with details. do you think he's going to fair better with the bees than he did with the wolves? roll tape. >> and i'm here to tell you they're back. .

stuart: well jeff. >> i wasn't even rubbed with meat bring walked in here. believe me

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stuart: check this out. you are calling the fish called the climbing perch. it can walk on land, stay under with a uttered for days, climb trees even. the department of agriculture says the fish can choke birds. the fish is not native to australia. and officials are working to prevent the fish from reaching australia. good luck with that huh? >> nice accent . stuart: well, my grandson from australia is coming and i'm working on it. the demand for honey so the rise just as the population of bees is on the decline. flock at a bee farm, do not get stung jeff. >> oh, stuart where you send me, i really -- have to question. you are looking at a very -- well well, what are we look at there?

>> this is a queen cell, so this is going to be a new queen honey for us to make more hives here . stuart: you said we don't need protective gear here. >> no. bees don't want to sting, that's the last thing they want to do, they sting and they die when they do, so they don't want to. . stuart: can you show me over here now explain what these are and walk me over here. >> yeah. so those are nukes like a nucleus starting package, like, four or five rephrase four or five frames. >> it's amazing to me to watch this. oh dear. oh, boy. >> so here's what we have here. we were doing some ipm. we put some medium frames in, and so the bees will build on

any space. >> what happened there? >> don't worry about it. and i didn't want to throw this away, so now what they're doing is keeping it warm so that when it's ready to be hatched, it again propagates. >> we're going to be here all day unless of course we're called away on a 9-1-1 call. but you've got bees everywhere. >> got bees everywhere. i think i picked up 100 packages this week, 3-pound packages of sensitive hygienic bees they're italians, 1.2 million bees that i picked up this week. . stuart: all right jeff, we'll leave you to it. you ever going to be there the rest of the day and any time now. good luck, everybody. next case. history made this week weekend, american pharaoh the first horse to win the triple county in 37 years we're going to talk about to the jockey who won in 1977.

and anthony davis retires he's 25. he was due nearly $4 million, and he just walked away from it

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stuart: it's been like this all morning, the dow down about 30

points, and that's where we are. american airlines dropping more than 5%, raymond james downgraded american airlines, they say it could suffer this summer with, quote somewhat muted demand. they're blaming weaker economic growth. down 5.5%. now look at apple. worldwide developers' conference starts today. new software may be, and possibly a new music streaming system, $10 a month. no change for apple's stock thus far today. barnes & noble splitting one unit's going to sell textbooks for colleges one's going to be plain old retail. it's the barron's bounce stock of the day, ands it is bouncing nearly 1.7%. history has been made. american pharoah winning the belmont stakes on saturday making him the first triple crown champ since affirmed in 1978. look who's here, the man who wore seattle slew to a triple crown win in 1977. jean krueger.

>> very good. stuart: i want to compare the two horses, i want to run the video of the final as they came into the straight. let's run that, please, because i want to have jean here commentate on the horse's performance. it seemed like he was pulling away as he crossed the finish line. was he? >> seattle slew was -- [inaudible] and that owned up. stuart: as you were riding towards the finish post back in 1977, you thought they were all going to come and catch you -- >> i know i was the winner. i allowed my horse to run. stuart: did he have the strength and the power at last minute? >> he did. i look left and right, and i know i was home free, so i stand up. stuart: that must have been a fantastic feeling. >> it was a good feeling. that was a good day. stuart: good? it was fantastic. [laughter] now, american pharoah i am told

that the owner wants him to keep racing. i know there's some risk in that because he could be injured but they want him to take part in the breeders cup. that adds to his value, i take it. >> he's going to run this year, if he's okay, they're going to run next year. stuart: but this year he may still run again. >> oh, yeah. if he does, it'd be good for the people because he's a very good horse. stuart: now, i've heard that every time he, i think he covers a mare, every time he goes to stud, he could make 40, $50,000? >> oh, sure. 30, 40 million for a horse. it'd be 500,000. stuart: each time he goes to jump a mare, that's the expression? [laughter] >> 0000. -- 500,000. that's the french way, no? [laughter] stuart: thank you. now, he could do 300-400, he

could jump 300-400 mares per year? >> i don't know about that many. he's going to be busy i'll tell you that. [laughter] stuart: if he wins as i understand it if his baby horses that he produces, if they win then the value of him goes up. >> oh, i mean yeah, going up. yeah. stuart: that's extraordinary. >> i know. stuart: okay -- >> my horse was very good, seattle slew, no guarantee. stud charge was $500,000? >> and that was a few years first three or four years, 500,000. no guarantee. the mare doesn't get a foal, that's too bad. stuart: one last question because this is a financial problem. i don't know how much you made for being the jockey, but i'll bet it was nowhere near what hector made -- >> no.

then it was 150,000. the purse. stuart: can i ask, what did you make for being the jockey in the belmont stakes in '77? >> 10%. and you've got to pay 25% of your money to your agent and 5% to your -- [inaudible] and then the tax, you don't get too much left. i make more money now today i pay for people that contract everything. stuart: contract. >> because that horse -- stuart: you're making more money now? >> oh, yeah, sure. stuart: well, congratulations. [laughter] >> and i love fox, i watch 24/7. stuart: oh give this man more time. [laughter] thank you, jean, we appreciate that. >> you're welcome. stuart: hold on i've got another sport -- you've got to sit. you can't leave the set until we say. okay, here you go. another san francisco 49ers'

player retires. it's the defensive tackle, anthony davis, he wants time for his brain and his body to heal. pete schrager is here from fox sports. it seems to be a rash at the 49ers. >> chris borland, the 23-year-old linebacker retiring to maintain his own brain and body, and now we've got here anthony davis who's a star offensive tackle, and then you had patrick willis retiring for different reasons. the thought is this might be the tipping point, these players giving back money saying i'd rather have my own brain health and be able to have the right mind and body moving forward. i've already made enough money, i'm going to step away from the game. stuart: is it all about concussion? >> davis' situation is interesting because the 49ers, borland came out and had a whole press conference, it was the whole thing. davis kind of dropped this bomb on the 49ers but they knew he wasn't in camp with them all season, so they thought he's been kind of hard to get ahold of what's going on here?

he comes out with this statement, they didn't pick anyone up in free agency now they've got a rookie starting at tackle which is a big position for colin kaepernick, their quarterback, to protect his side. it's only happening so far with the san francisco 49ers, but jake locker, who is a star quarterback at the university of washington, played with the tennessee titans, he also retired this off season. he's only 26 yeared old and said it's just not worth it, i want to do other things in life. stuart: do you think more people are going to do this? >> yeah because they're making so much money in those rookie contracts. you get 3 4 $5 million, and if you don't feel comfortable playing, you're getting hit in the head consistently, maybe i do something outside of financial altogether. stuart: come on, you know the thrill of walking ott onto the field you're all padded up, you're ready to go, you're pumped, and you're going to walk away from that? it's not just the money, it's the occasion. >> and it's the fame the glory, the feeling of camaraderie. these guys have known football.

it's regimented, hey, 9 a.m., we have practice. and then they're being released out into the world, it's almost, okay now you're out there in the free world, we'll see if any of these guys come back because they're so young maybe a year or two away from the game they think, you know what? i need that money and lifestyle. stuart: why do you think i'm still sitting on this set? it's the fame, you see. >> i watch you every day, man. i'm a big fan of fox. the two of us right here. >> that stupid helmet. >> a lot of people do agree. stuart: take the helmet away. >> the players won't be using their heads. he's right about that. stuart: you see the man's got -- he's european. i'm telling you. >> i could talk seattle slue as well at some point. stuart: thank you very much, indeed. california's drought so bad that symptom enterprising criminals -- some enterprising criminals are now stealing water. we've got the details next. ♪ ♪

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it is now in negative territory for the year 2015. the s&p 500 down 6, the nasdaq composite down 23, and we're seeing technology stocks industrial stocks consumer discretionaries under pressure. here are your dow moves, telecom is a bright spot and that's why we see verizon with an up arrow. intel to the downside. airlines have been under pressure, raymond james did cut american airlines, for example, to market perform and united continental also getting cut all of them to the downside 45%. and taking a look at sears after their quarterly report, smaller loss than expected, stock's down 2.6%. much more "varney & company" coming up after the break.

stuart: well, i've got a fascinating update on president obama's comments where he said just about an hour ago that he still does not have a complete strategy to fight isis. now, the pentagon is walking it back. one official told fox news that the president was not talking about the isis strategy but was actually talking about how best to train and equip iraqi forces. and then another official told fox news that they've given the president loads of options and that he hasn't acted on them. here's the quote. what the [bleep] was that? weave given him loads or -- lots of options he just hasn't acted on them. let's bring in neil cavuto,

breaking right now, neil i'm sure you're going to follow it on your program next, but what do you make of this? the pentagon obviously annoyed at what the president has to say and now walking back the commander in chief's comments. >> well, when i was watching the conference on your show here the way he was sort of working in concert with our european allies with whom we are coordinating a strategy, i'm just sort of paraphrasing here, that came shortly after remarks about what he was going to do with the health care law if it was effectively shot down or subsidies shot down by the supreme court or before i should say. it raised some serious doubts about what he is planning on and what he is preparing for. in this case both on isis and in the case of the health care law potentially going ca bloo by, he seems to be apart from reality here. and for defense establishment types to hone in on isis remarks only serves as a reminder that

they're still burning from the old jv comments about a year ago. these comments are not helping him. stuart: i'm sure you'll have more on it. you're coming up in about 13 minutes, i do believe -- >> i am indeed. stuart: thank you very much, neil, we'll see you shortly. the california drought creating a black market for stolen water. in one case a 500-gallon water tanker just went missing from a highway offramp. here is kabc radio host john phillips. is this becoming common john, stealing water because it's being rationed? >> well, everyone focuses on that 500-gallon tank that was jacked in oakland outside of california, but inside of california all of us know that anything that's not bolted done and surrounded by an alligator-infested moat gets jacked in oakland. that's the city where jerry brown used to be the mayor he went to the democratic convention and he came back and found his car up on blocks tires stolen.

the big thing that everyone's worried about is if the farmers start to steal the water, because that's where the water is consumed in the state of california. and there's actually, stuart, a pre-existing infrastructure for farmers to steal water. it happens in humboldt county where all the marijuana growers are which, of course, is still illegal federally so they have to find illegal ways to consume this water. marijuana takes a lot of water. everybody focuses on almonds, and they make the almond growers theville rains -- villains, but marijuana's almost as bad. stuart: we didn't know that. that's not been high on the radar screen. i want to ask you about how californians in general are taking to these water restrictions was the rationing is -- because the rations is pretty drastic. >> that's right. they've turned everyone into mrs. kravitz where everyone's looking over their backyard fence and seeing if you're watering your lawn neighbors are ratting on neighbors. it's kind of nasty. i had a friend who was drought-shamed for eating

almonds at work because they require so much work. stuart: you've got to be kidding me on this one. >> yes. and he should have been shamed because they were the unsalted ones which is not acceptable under any circumstances. stuart: what's the attitude towards governor brown? he's imposed this rationing. he doesn't say that he's going to build a new reservoir, he just imposes the rationing. is he less popular now because of this? >> well, governor brown announced over weekend that as part of his sacrifice to to the drought he's going to stop sharing as much as he used to. stuart: no wait a minute, are you serious? >> yeah. now, we all kind of suspected that he was a dirty little flower child but now we have it confirmed by the governor himself. stuart: is this kind of thing common in california? is this kind of talk across the backyard fence, is that what people are concerned with, water rationing? >> yes. no, it's horrible. in my neighborhood, one of my neighbors just told me over the weekend that somebody ratted her out because she was watering her lawn after 7 a.m. stuart: and this is not allowed

or something? >> it's not allowed in this city it's not allow inside the state of california. the restrictions -- stuart stawrt in your house john, how much water do you have to drop your usage? is it 25%? >> yeah. you can't -- the hard part is, essentially, you have to let your lawn go dead which it's 105 degrees right now where i'm sitting, and if you're not watering your lawn throughout the day, it's going to go brown, and that's what's happened all over the city. you look at these beautiful homes, there's a golf course across the street from where i live, stuart, that is dead. the lawn is dead can. the whole thing looks like a sand trap. stuart: wow. okay. all right, john. come back and see us again soon, please, because this is one extraordinary developing story here and we appreciate you bringing it to us. john phillips. >> absolutely, thank you. stuart: how do you sweeten a real estate deal in a very crowded market? how does free pizza for life? cheryl has details after this. ♪ ♪

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stuart: if you want to buy a home in a popular housing market, you've got to stand out from the crowd. we have a case here of one buyer, he wanted to buy this house, so he offers the seller free pizza for life.

did it work? >> well yes, it did, actually. and it's a she. she owns an italian restaurant in portland oregon, she was one of several bidders for this home wanted to buy it for her son so he could live there while he went to school. and then she realized she was going to get outbid, she offered 26,000 above asking on the home, then she threw in at the end of it i'll give you free pizza for life. so basically these people said, you know what? that's great. we like that you want to put your son in here, and the house is yours. so if you do the math, okay so it's one pizza per month for life right? for the seller. so that's -- 40 years, that's 480 pizzas. if it's $20 per pizza, that's the average value, that comes to about $10,000. >> how's the sauce? >> exactly. >> that's the real issue. >> yeah. stuart: very strong, good point. >> thank you. >> low inventory. stuart: i didn't know that

portland, oregon, was such a hot real estate market that buyers had to bid over and above the asking price. >> no, actually, portland has gone a little bit crazy. in fact, if you took every home for sale right now in portland, oregon and sold it within two months the entire city would have nothing for sale nothing. that's two months' inventory, basically. >> stuart: that's highly unusual. >> that's a very tight market. new york city's got four months right now. stuart: interest rates, as in mortgage rates, are rising. the 30-year fixed is now well above 4 percent %. i think -- 4%. i think people want to get in before they rise any higher. by the way, session lows on the dow industrials down 46 points. >> you would call that a go-nothing market. stuart: a go nowhere. however, you don't know what's going to happen tomorrow morning, it's 17,8 now, which way do you think it's going to go? >> i think we're going to be flat --

stuart: that's not an answer, break out up or down? >> up. a greek deal might be a sigh of relief, and it'll go up. >> if you're going to make me pick, then i would say down because we've had a heck of a spring. stuart: okay. we'll leave it at that. we're down 46 right now. more "varney" after this.

new york state is reinventing how we do business by leading the way on tax cuts. we cut the rates on personal income taxes. we enacted the lowest corporate tax rate since 1968. we eliminated the income tax on manufacturers altogether. with startup-ny, qualified businesses that start, expand or relocate to new york state pay no taxes for 10 years. all to grow our economy and create jobs. see how new york can give your business the opportunity to grow at ny.gov/business

i heard i could call angie's list if i needed work done around my house at a fair price. sure can. so i could get a faulty light switch fixed? yup! or make a backyard pizza oven? oh yeah. i can almost taste it now. tastes like victory. and pepperoni... >> i do believe you are lying right now. stuart: lying? >> yes, i do. >> no, no, no, stuart, he was calling you a lyre because he thinks you're the muse of financial mavens. [laughter] stuart: that was colonel ralph peters not trying to justify one of our guests calling me a liar. [laughter] all right, here's what else some of you had to say. one viewer says this about the california water thieves: environmentalists may want to rethink efforts to place fish above humans. good point. alan says this about another 49ers' player getting early

retirement: more nflers are watching smart guys on "varney & company" and thinking i can invest early and live just fine. again well said. my time is up. neil cavuto it's yours. neil: all right, stuart, thank you very, very much. the president just leaving germany a few seconds ago but leaving a lot of questions in his wake right now. did the president really say we do not have a coordinated plan even now as to how to deal with isis? some defense wags' tongues are going nuts. secondly, on the health care law and if the supreme court ultimately shoots down those subsidies, does the administration have a backup plan for that? again, the president seemingly making it clear in germany today, no. we just don't see that happening. hanging on hope and luck and it's lunchtime on east coast of america. cavuto coast to coast begins now. we are watching, among other things, a