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tv   Squawk on the Street  CNBC  January 19, 2017 9:00am-11:01am EST

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>> good tease. >> thank you guys. >> thanks, robert. >> quick check on the euro here, it is on the move this morning. a little weaker after comments from ecb president mario draghi also moved interest rates. we'll be following the rest of his press conference. >> join us tomorrow. big show from d.c. ahead of the inauguration. "squawk on the street" right now. ♪ good thursday morning, welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. premarket's a bit soft but steady on this day before the inauguration. confirmation hearings on the hill, netflix earnings last night, big calls on coke, tesla, exxon and more. ecb keeps rates unchanged. we are watching draghi and claims hit 2.34, that's a new four-week average cycle low. our roadmap begins with trump treasury, steven mnuchin set to testify before the senate
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finance committee in about an hour. we'll bring it to you live. >> plus netflix boom ten years after launching its u.s. streaming service. netflix crushes earnings expectations. not just its largest quarterly subscriber gain in history. >> and ecb leaving rates unchanged. nasdaq futures pointing to a mostly flat open but dow on pace to drop for a fifth session in a row. first up, more trump cabinet picks heading to the hill for more confirmation hearings including steven mnuchin, president-elect's choice for secretary treasury to appear before senate finance in about an hour. expected to be grilled on his role overseeing foreclosures while running one west which was indymac, also expected to be asked whether he agrees with weaker dollar policy, a lot to get to today. >> look, i was involved with in indy mac, which he bought,
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people are willing to leave their homes before they leave their cars and it was the most reckless there was and they reamed me on it. and this guy went and bought indy mac and we're doing revisionist history. it was indeed the worst bank in the country, i think. you can argue maybe there were some smaller ones, but this guy i think the narrative is going to turn out to be better than people realize. i think people who want to try to take him down -- people in "the wall street journal" today about what he did with indy mac, but i was very close with that situation. mnuchin was the savior, not the enemy. we could write a new chapter, but it would be wrong. >> politico has some of his prepared remarks. in the press it's been said i ran a foreclosure machine. this is not true. on the contrary i was committed to loan modifications intended to stop foreclosures, i ran a loan modification machine. >> look, so did wells fargo, if you go look and see what they
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did. golden west. hard to modify where there's 100% to loan value. which is what they were doing at indy. they were reckless, horrible. they probably still come after me. they never quit. >> it is interesting how we're revisiting the crisis in a lot of ways. we will this morning in that testimony and those hearings, but also moodies agrees, final settlements in terms of the mortgage fraud or mortgage securities fraud that was alleged and been more or less admitted to by so many of the firms that did it that we reported on in its fullness of course back in '08 and '09. when it comes to mnuchin this morning i think on the wall street front people are going to be listening for any tidbits they can get in terms of the outlines of tax reform, what the administration is going to back
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or not back. the only words we've heard from mnuchin were on our air and they've been parched so many times where he talked about high end earners not necessarily having as much of a tax break perhaps as some had thought, this is individual, and also potential privatization of fannie and freddie that helped to send those shares up. wall street is looking for anything they can get on tax reform. yesterday paul ryan was in town. he talked about the border, but it was a wall. made no mention of tax reform. i got reports from a bunch of wall street guys who were there hoping there'd be something. so they'll be listening closely today to mnuchin again to see are we going to hear anything that gives us a better sense as to where things are going. who's the point person going to be from the administration when it comes to negotiating all of that? >> this is the most important of the hearings. i think it's more important than tillerson. tillerson in the end acquitted himself as a way saying listen no one has made as many foreign
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policy deals as i have. mnuchin there's a lot of bad press. there's a lot of belief this guy really gamed things. i have to tell you if he gamed things, what did j.p. morgan do? if he gamed things, what did wells do? this is what they did. this is when they got all their market share. >> right. he wasn't leading financial institution that was knowingly packaging securities and saying they were one thing when they were another. >> right. >> he was potentially foreclosing as a result of the fact that they were one of the larger servers out there. you have to do. >> look, no one knew -- i think people also forget until that era we did not have mass foreclosures on homes. they went back to the '30s and did the stress test and the stress test turned out all wrong and that portfolio was uniquely 9%, 10%. foreclosures were happening so quickly by the week. so i don't regard him as being a goad about that. what i think they -- you know, he flipped it to c.i.t. in the previous administration i
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think we would have said he made too much money. there would have been kind of this rap. i think the republicans are okay with someone making a lot of money this way, but i think we are going to have to find out what is the policy. because we don't know the policy. >> no, we don't. >> we have to figure who is going to negotiate these things. >> right. >> mnuchin is not a tweeter. >> no, he's not. although he did reportedly get some blowback for appearing on squawk. >> yes, he did. >> when that nomination was made public as david said. here's what he said on squawk on november 30th of last year. >> i think we can absolutely get to sustain 3% to 4% gdp. and that is absolutely critical for the country. we're going to cut corporate taxes which will bring huge amounts of jobs back to the united states. >> what do you think you can get to on that? >> we're going to get to 15% and bring a lot of cash back into the u.s. >> i mean nobody's talking about 15%. >> no. >> except in that interview. >> yes. >> that was about it. >> and then the tax neutral for the wealthy. >> yeah. >> a lot of people thought a lot of wealthy people said, hey, this guy at least gives you a
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big tax cut. >> i know. where things are right now in terms of at least talk about the border tax adjustment and whether we have it or not, if you don't get it or get it at a much smaller amount, you're going to have to make it up on the revenue side. people are more talking now about 25%. >> sure. >> which would not be that competitive. >> no. >> you got to get to 20 if you're really going to be serious about competing with the rest of the world. >> how about repatriation? what are you hearing in terms of -- >> same. that i haven't heard much about. >> my take is when i say most important versus tillerson, i'm not saying in terms of stature of president-elect, i'm saying for stocks this could impact stocks. >> understood. because earlier you were using tillerson as a proxy for gop leadership trump relations. >> right. tillerson i think acquitted himself very well. and i think people were a little surprised the fire power of that man, the statesmanship. i think with mnuchin they're going to be saying, wait a second, how about dividend taxation. how about long term cap? >> right. deductibility of interest,
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there's so -- so many things we're going to be dealing with. >> starts off 11.3 and -- >> yeah. >> that's 1.23 million which is really good. are they on fire or they getting back to the 1.5 they should be? but if he says, listen, we don't have the mortgage deduction, you're buying housing stocks off -- toll brothers, sold, sold, sold. >> how about this one if you're from new york or california, you want to ask about the deductibility of state and local incomes taxes? are you going to include that or not? that would crush new york state and california. >> and me. >> and you, well, yeah, you'd leave. >> i'd go to florida like tapper. >> yeah. >> i love tapper, i love everybody. >> the president-elect -- trump is a new yorker. mnuchin certainly was a new yorker. he's from california, but they don't -- they didn't get a lot of voters in those states. >> but they're entrenched interests that have fought all these things. >> that's another one we haven't mentioned, deductibility state
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and local taxes -- >> you know, we're working on a mandate. >> and we've been on mandates. >> yes. we've heard this. let's turn to netflix up sharply in the premarket. poised to open record high again. company beats expectations as more than 7 million subs in the q-4 including 5.1 outside the u.s. this is reed hastings on last night's earnings call. >> international expansion which has been remarkably steady, again, if you don't look at it by the quarter but by the year what we see in latin america is steady growth, europe as a whole has been really picking up on that tune for us and in asia we're just getting started. >> as he went onto say we're going to lather, rinse, repeat again and again. international even going to contribute to operating in q-1. >> this was a joyous note to shareholders. and then a fabulous arc of an interview that he does with the q and a. i urge anyone who owns netflix
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and owns it because they think it's terrific, read his note. he's very entertaining guy. he's brilliant. he's like if you like "breaking bad" and you like "scar face kwtsz, you will love "narcos." luke cage, if you haven't watched, i got to question your judgment, pena is back, pena being many of our heroes in "narcos." he will be "narcos 3." he says people like subtitles, people are willing to watch foreign movies, interchangeable, this was the most exciting set of stats i've seen in maybe a couple years. >> from them. >> oh, my -- >> it's the best quarter ever for them in subs. >> everyone in the country's going to have netflix. by the way on amazon because man in high castle is so good, loves it, more the merrier. >> whatever happened to cash
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burn, market saturation? >> ever heard of amazon? apple should have bought it. >> they did have negative 639 million in free cash. >> nitpicker. that's you. you find things wrong no matter what. >> i'm just saying fourth quarter tax flow negative -- >> have you seen stranger things? >> i have. actually, i did watch that. >> a little too scary. >> it made no sense. still made no sense. >> you probably think the valuation of netflix makes no sense, but i'll tell you stranger things did very well. >> so well. couple analysts actually stepped out in front of the print, namely jpm and deutsche with upgrades, although today fun any wedbush keeps a sell and targets 68 from 60. >> yeah, see, now that guy right now -- i mean, i don't want to point -- cast dispersions on that fella, but that's a tough
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main sell there. >> i'm looking at deutsche bank from october where they initiated sell with a $90 price target. >> i want to talk about that tonight on the show. give me that. >> i kept that in the file. no, this is the file. i can't part with this. >> can you give it to me at 9:59? >> yeah, yeah, they're saying look out in ten years or eight years and see what this looks like and discount back and only have a 7% return annually if you value it at the same level as time warner whatever they were doing was wrong. >> he obviously has never heard of luke cage. >> no, i hadn't either until you mentioned it. >> well, let me tell you carl lucas, it doesn't matter, that is some show. when i say these things, i'm not being facetious. i had reed hastings on in a rare interview where he said, jim, it's not rocket science. did you like breaking bad? yes. did you like scar face? absolutely. oh, my god, narcos. he's a machine learner. he's a machine. he's an algorithm posing as a man. that's what he is.
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>> i don't believe that. >> yes, he is. >> he's got a lot of humanity. >> he's a regular person who happens to be a superhero. not unlike jessica jones, i also love jeff bewkes never heard of, jessica jones is an alcoholic superhero. >> when do you watch all this stuff? >> that was my question, carl. when do you see all this stuff? >> during the day? >> i went to bed at 11:30 last night, thanks to murph, had a big birthday party. >> i'm half as busy as you are and can't watch half the stuff. >> i can't sleep. when i can't sleep, you know what i watch, netflix. when you can't sleep netflix is your best friend. he's like pena. even looks like pena. >> i don't know who that is. >> this morning pacific crest tries to argue there's a fly wheel effect now in place in which new entrants and other traditional media companies have an even harder time of breaking into what netflix has tapped into.
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you agree? >> that sure is what reed's saying. reed's talking about revolution of internet tv. that fella may have a view, but i'm going with reed. we don't talk about reed enough. this guy figured it out. look, i got behind netflix because my kids went to college. and i said, all right, send me the cable bill and they were like, dad, cable bill? we're on netflix. i said, but no -- dad, your ego's that big, aye got to watch you, dad, i'm never watching you. and they've kept their promise. >> when we come back what morgan stanley's james gorman said this morning about the economy as we go into the trump era. we'll check in with sara eisen live at the world economic forum in davos. another look at the premarket. dow and s&p on track now for three out of four weeks down. but the nasdaq is up nine of eleven. more "squawk on the street" in a minute.
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news making interviews continuing in davos, switzerland. let's get back to sara at the world economic forum. good morning, sara. good stuff today. >> good morning, carl. good to see you. all the top anchors are here in davos, and this year they're coming from a very different position as you know fresh off of solid earnings reports, double digit gains in their stock since the election and rising interest rates, the ceo optimism is palpable.
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we talked this morning to morgan stanley's james gorman. here's what he said about the economy. >> i think it's unlikely. i mean 4% would be a massive move. this economy's a $17, $18 trillion economy. china which is the second largest economy in the world is a $10 trillion economy and probably growing at 6%. and obviously that percent increase is shrinking. so 4% is unlikely. but if we're at solid 3% growth, i think that's a really good outlook for the u.s. >> and that was actually a little tempered compared to jamie dimon of j.p. morgan who told us yesterday that 3% to 4% growth is possible with the right policies. gorman doesn't see the risks being priced into the market accurately including the rise of populism which everyone is talking about here and geopolitical uncertainties. we talked deal making with goldman sachs' david solomon newly named -- he says
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confidence is returning to the board rooms but he also says there's some big uncertainties when it comes to deals like tax reform and the regulatory environment. >> we've had a tougher regulatory environment with respect to deals. if you listen to the tone and rhetoric right now, you might expect that there's going to be a little bit of easing in terms of that, but we'll have to wait and watch and see. >> a little bit of easing, specifically in reference to a question on a friendlier antitrust environment when it comes to deal making than the obama administration. and top anchors will be meeting here today in davos with the british prime minister, theresa may, who arrived and spoke this morning. these bankers are trying to figure out plans for a post-brexit financial system in london. gorman telling us hundreds of jobs could possibly be moving from london. actually, that was better than the thousands that some had reported. and in the next hour, carl, i'll be back with you with a conversation with michael dell to talk about big tech in the trump era. for now i'll send it back to you. >> all right. good stuff all week, sara. thank you so much. >> it sure is.
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i've got to tell you, i felt that both james and solomon were muted. and i think that's what happened initially there was this burst of on friday when we had citi, bank of america -- i'm sorry, bank of america, wells and j.p. morgan, they were very e fusive and it's almost like everyone's kind of walked it back since then. a lot of people felt gorman did not talk positively enough from morgan stanley. i think that's nonsense. i think they all just got a bit more, wait a second, the stocks, they've had a big run, goldman sachs don't forget the partner window opens to sell, so i really do not like the idea that you should take your cue from the comments. they have been less -- i think when we get a new president the last thing they want to do is say, yeah, man, we're going to make a fortune on dereg. because it doesn't look good. they're both statesmen, that stock is a great buy if it can come back a little bit.
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>> so you're not frustrated at this narrow range we've been in since mid december despite the better bank earnings? >> i see rails, banks and airlines all have had this phenomenal move, okay, away from the industrials. and they're all consolidating. now, look what happened with the rails. you get one guy saying we're going to cover the rails obviously, but a little catalyst going and then, boom, i just think the banks they need to see something dereg, they need to see something, a rate hike, but boy the money they make on a rate hike. look what they're paying you in your checking account. i'm getting 0.008 on money. jamie is getting a lot of money from me. jamie dimon, listen to me, okay, you're making a lot of money off me. are we going to hear from our buddy? >> joe? usually do. >> yeah, usually i get an e-mail saying, no, we're not making a lot of money and it's our time. they're very -- >> they're on it. >> they do. >> even from davos. >> we'll get yellen again
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tonight at 8:00 p.m. >> raise rate, raise rates. >> we'll count down to the opening bell, take another look at the premarket. "squawk on the street" back in just a moment. elel 2s ineveron .
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it is time for a mad dash on this thursday as we head you toward the opening bell, which is about six minutes away. the rails once again may be a place for some activism, you want to talk csx. >> no, i want to talk sanity. because i'm not sure. i need a reality check. a so-so quarter, last night hunter harrison retired from cp. he's not that young. did pass up 118 million because of separation agreement. >> i know. 72 years old. >> right. what does he want to do?
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apparently he wants to team up with -- >> started a fund who's raised some money may now be going after csx, which is up dramatically after being down yesterday because numbers were not that good. >> they were not that good in particular because coal they lost the contract. union pacific by the way is much better coal. >> right. >> so what's up? csx, norfolk southern, union pacific. >> is hunter harrison that effective an operator that everybody thinks if they were to succeed in getting what they want that he somehow will take over and boom? >> i think james squire would say norfolk southern when they came to them in november of 2015 and said, listen, i want to buy for $30 billion now $32 billion now $33 billion he was aggressive enough to be able to do something that was unheard of. can pac doing a hostile on norfolk? yeah, people saying cash flow $55 a lot of people negative on csx because they just heard the call -- look, 80% of business lines are going to be better. u.n. yo pacific by the way islo.
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you asked about mexico, u.n. yo pacific is killing it in mexico. not that anybody cares -- >> jim, we got to go. >> no. >> i'm looking back i've been doing this so long. over ten years ago i was reporting on a nasty proxy fight taking place in 2007 for csx, five board seats. it was the children's fund that was going after them. >> remember those guys? >> they've been through all this before. mike ward fought them off. >> survivor. >> yeah. we'll have more on we'll take a look at that stock as we get to the opening bell of course and we'll have mnuchin coming up in terms of testimony as well from potentially the incoming treasury secretary. >> and maybe pena from netflix who is david's doppleganger. >> if you say so. opening beafter this.
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♪ you're watching cnbc "squawk on the street" live from the financial capital of the world. busy floor this morning. opening bell in just about 30 seconds. the news flow is running as hot as the economic data, jim. starts, claims, philly all backed up essentially what yellen said last night. and that is if you wait too long, you could be in for a
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nasty surprise. >> yeah, we have a hot economy. and i have to tell you draghi is manipulating the currency over there big time because they're claiming europe does not have a hot economy. other than italy i just do not see -- [ bell ringing ] -- everyone's fighting the war, but yeah, we got a hot economy, airlines tell you that, rails tell you that, banks tell you that, do not confuse. >> that's the s&p at the bottom of the screen, big board 2017ipo workshop for emerging growth companies, at the nasdaq root9d. >> check point had a number today for cyber security, this is the news day to end all news days except for the next ten days. >> we're going to watch for mnuchin. senate finance of course hearings today. journal tries to argue trump should be cheering the
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greenback, you get wages and assets up, consumers happier if they would be trade normalized with a weaker dollar. >> king dollar's a controversial thing. you want a job in order to be able to have dollars in order to be able buy things. it's a chicken and egg thing, some people say cart/horse. >> well, if the border adjustment tax is included in any tax reform proposal, it will rely on a far stronger dollar than we currently have to offset the impact on consumers who conceivably will be paying more for their clothing, for virtually anything they're buying at walmart and a lot of places. it will be tough on walmart. walmart is sourcing from the u.s., but you know what i mean. >> look, if you don't -- there are sections of this market that you can't touch. retail is very, very hard with the exception of ulta because that's the ultimate selfie. i have to tell you i'm waiting for the drug tweet. maybe it's tomorrow. and then the other side is cable, entertainment. i saw someone again saying, hey, listen, disney too early. look at netflix.
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now netflix i want to get this in front of everybody, carl, there was a show called "narcos," but there is a player, the most exciting player in the international scene, his name is pena, and you know what, if you can imagine faber with a mustache -- maybe we even have a picture of pena. >> there it is. >> oh, my -- >> really? >> call jenny, david, it's you. >> members only jacket and i think you'll be set. >> don't have to do a thing. get the sunglasses and get a -- yeah. i mean, come on, call us in. call it. >> that guy's cool. thank you. that guy looks very cool. >> it's the coolest guy on tv. other than luke cage. >> looked tough. but luke cage is a superhero. >> this guy's a superhero. don't underestimate him. taking on a cartel. >> that netflix stock price is also pretty superhero at 14.2%
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this year. >> how's that guy -- where's the target, guy? >> the deutsche bank? i'm going to give it to you. >> i'm going to need that. i don't mean to humiliate him. he's probably a nice guy. >> he is. >> most notably this upgrade from adam of tesla now at the highest since april of last year. >> we thought they were going to make 114,000 cars. looks more like 183,000. could you really be off by that many cars? and reduce competition. well there you go. i mean this -- this tesla is so heavily shorted. when you say something positive about tesla, it's like 100 people telling you don't know what you're talking about. >> turning into a tesla netflix year again so far 18 days in. the best performers of any stock i'm looking at. >> does f.a.n.g. have two letters? >> part of his argument is that the political environment, the
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changing environment is actually more benign for tesla than you might have expected exiting '16. >> that's a really good point. >> when the trade was short tesla, go long exxon. >> yeah, look, there were a lot of people said they bought a company that was bankrupt when they bought solarcity. no one in the research even talks about it anymore. >> not to mention talking about all the jobs they're going to add. >> oh, my. >> but they certainly could. >> trump can't hurt them if they're adding jobs. >> they certainly could because they've added an awful lot of jobs over the last five years and probably will as part of their existing plan as so many of these other companies keep putting press releases out for existing plan. but to curry favor. they can do that. but he met with them a couple times already. i'm sure he's made the point. >> he said musk is a charismatic guy. my meeting with him is a little suboptimal when he said i was a simulation. >> yes. >> i didn't really appreciate that. he said it was likely i was a simulation. >> i know. we all know. >> there's about 50% chance
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fortunately that brian krzanich is -- >> coke gets a downgrade this morning. >> yes. >> over at wells. market perform, talking dollar strength, lack of m&a, challe e challenging e.m. macro. >> yeah, that was really a down beat. that was like, wow. i think muhtar kent has set the company up for a coca-cola light, good number os, what am going to say, it's challenged, it's a carbonated soda company and people don't really like carbonation. they don't have that blended business model thatt indra nooy has. >> i've seeaten sabra. real people from the mideast say you can't eat that stuff, that's not real hummus. >> i had good hummus in jordan.
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>> yeah -- that's no sabra. >> i've agreed finally we know something that the hummus we get here -- >> you said it good too. >> i'm from philadelphia. it's like gasoline, town, murry christmas. all right. go ahead. >> csx now the gain 17%. i think it was doug kas this morning said afterhours trading was about as crazy as it gets. >> well, it's been a long time since i've seen. it's like the alan -- remember the late -- i hear general foods is going to get a bid. this was amazing. it just tells you if -- canadian pacific is up five because that guy said the new ceo of the canadian pacific said i think the deals are inevitable. he did the inevitable thing. it is amazing a lot of people bet against csx because the quarter -- >> is hunter harrison worth that much? i got to go back reading from a
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story i did over ten years ago when i said the children's fund, jim, listen to what i wrote at the time, they were calling for a split between the jobs of chairman and ceo, an alignment of management compensation with shareholder interest and acknowledgment on the part of the board that csx lags competitors in key opt metrics, this was over ten years ago. the children's fund when they made a run at getting five directors at csx and were successfully rebuffed. >> well, did you hear the language in the press release? >> by who's still the ceo. >> he's a survivor. listen, mr. harrison approached the board, this is the gentleman who has left. mr. harrison approached the board to discuss retirement from cp and potential related modifications from employment that would allow him to pursue opportunities in other class one railroads. they could have said, listen, we want you to -- he wanted to go buy one himself. did anyone look at the
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fundamentals? sorry, i sound like david pena faber. the fundamentals. sorry let the facts get in the way of a story. periodically i have to do that. >> i'm glad to hear it. >> couple more to get on the record? >> sure, let's go. >> costco, goldman adds conviction -- >> if you listen to the readthrough on the citi call, ceo talked about how terrific the credit card -- a million new credit cards. this is america's best lose that business to costco, costco shouldn't be down what the heck about that. what i love is food deflation is ending. that's also behind wells fargo read of why they like kroger. food deflation killed costco if you go on the conference call they talk about it extensively. this is good news. two upgrades. big upgrade with goldman buy to conviction buy. they took restoration hardware, boy, they had a lot -- this furniture business is bad business. they took the wood to gary freeman at restoration harbor said inconsistent. >> and they're busy over there. add panera to a buy.
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>> my travel trust owns that one too. it was like the trifecta with the goldman guys. they put out so much research. could they save it a little? but that was a very aggressive call. they went sell to neutral -- i still believe that aap, advanced auto, something going to happen there. >> you do? >> yeah, i do. i think so. goldman with a cold stock mobileye that was when like thing was flying it was like groupon -- groupon, david, geez, looks like it's not too early. >> no longer too early? >> no. positive comment on groupon today. and then i would tell you the second guy in a row to say that the steels are overvalued. citi goes buy to hold, letter x, hold to sell ak steel up 68% since the tariffs. second one in a row. oversupply coming in steel according to them. >> wow.
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>> wing stop they like at goldman. i've had their wings. >> really? >> yeah, wings aren't bad. you like the wings? >> i've never been. >> never had the wings? >> david doesn't go out. we establish this about this time every day. >> do you go to gnc? how about dollar tree, probably never been to a dollar tree. >> never been there. >> david, the sunglasses, you wouldn't know the difference between that and my raybans. >> that good? >> people say, wow, those are nice rabans, those are a -- >> in chinatown you can buy those too. >> that would be a border tax situation. you should go to dollar tree. it's really terrific. >> okay. >> especially around the holidays. eat off the floor dollar tree, candy aisle, off the boxes are smaller for sugar babies and stuff, they have cow tails. i'm just saying. hard to find otherwise. >> dow's going to start the morning once again in a tight range up two. let's get to bob pisani. bob. >> good morning, guys. very modest followthrough the
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last hour gains we had yesterday. take a look at sectors, industrials are leading here and for very obvious reason, that's because the transports particularly the railroads are strong. banks are flat. materials, techs okay, health care lagging again today. that's happened a lot this week here. put up the railroads, you heard the guys talking about that speculation about again canada pacific, excuse me, for csx. but i want to focus on union pacific because they beat by six cents. revenues were in line. but lance fritz, the ceo, had some positive comments. you know what's going on with coal, but they focus on other areas, higher energy prices, favorable agricultural markets, improving business and consumer confidence all support a return to positive volume growth, which is a big topic for the railroads. some positive comments. i think that's helping the railroads in addition to all the speculation surrounding csx. finally, we have a major downgrade of exxonmobil. we've been talking about this for two weeks. exxon's trading at more than 20 times 2017 earnings, and they're expecting big things out of them
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this year. more than 100% increase in the earnings this year. that's a lot to ask of them, ubs downgraded it today saying it was expensive. what we've been talking about, subpar metrics overall. there's a lot of companies, several smaller companys that have sell ratings. not a lot of the big houses, but ubs is being joined macquarie, raymond james, wolfe also with sell ratings. as for the mnuchin testimony today, the street is really focused, this is the most important hearing so far for the street. remember the market rallied on hopes of a tax cut and a stimulus program. it stopped in mid december. we're waiting for more info. recently the focus has been on obamacare and trade. a bit of a quagmire traders think and that's why we're not going anywhere. so the issue can mnuchin and trump refocus on the tax cuts and the stimulus? and we want tax cuts because that's what moves the earnings picture. so we had goldman sachs estimating if you go from a tax rate of 35% to 15%, you could
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boost s&p earnings 16%. that's huge. that would move the dollar in a big way. tobias at citi group said the real effective tax rate for most corporations is 27%, not 35%. the effective tax rate. right now at 20% -- at 27%, 2017 earnings they're at $128. if you lower it modestly to 20% effective tax rate, suddenly an eps of $140. that's more than 10% boost. these are huge numbers. so the street is focused on tax cuts because that's what's going to move the dial on earnings. the hope here is maybe we get a little reset from mnuchin. everybody knows congress does tax legislation, but they set a lot of the sort of emotional and intellectual agenda for things. finally, i want to note we've got our first significant ipo of the year. yes, they're still around and this is going to be an interesting one. keen group, essentially a big oil and gas fracking company. the price talk was 22.3 million at 17 to 19, they upped it, so
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there's a lot of interest in this. they're very big in the bakken. they're very big in the permian basin here. and we'll see here not only is this a test of the ipo but also a test of the whole interest in the oil and gas business. right now the dow down two points. david, back to you. >> thank you very much, mr. pasani. all right. want to talk a bit about the end of a spectrum auction that is now approaching. we've been waiting for this for some time. this is the reverse auction that's been going on of the spectrum owned by the broadcasters that has been in the process of being auctioned off to players in the wireless market. and others who typically don't always play in the wireless market. we'll get to that in a minute. why today am i mentioning it? because we're in the final phase. as of yesterday the forward stage in the incentive auction cleared the first and second criteria for its closing, which means we could see an end to all of the bidding by let's call it the end of february.
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and any collusion period would go away by the end of march. any collusion means you can't talk to anybody. if you're t-mo for example and you're sprint, you can't be talking about anything because you conceivably could collude on any bids. we don't know who bid in this auction, but analysts can make decent guesses in terms of where some of the companies had come in. j.p. morgan does just that this morning saying they see t-mobile perhaps the biggest bidder, at&t and our parent company comcast could have been an acti iive bidder. other names you might expect verizon, how big, did they, dish, how big, were they, we'll find all the answers again by the end of february, early march is when we should find it. but perhaps the most important part of knowing that we're at the closing stages of this auction is that the anticollusion period will also expire in mid march and therefore everybody if they want to can start talking to each
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other. and when we talk about potential deals in this sector, well, we can come up with a lot of different combinations, but one that certainly has been brought to the fore as a result of an interesting visit that was made to trump tower a few weeks back is sprint and t-mobile. remember when masa son made his visit, promised all the jobs, held up his sheet there with softbank's name on itd, of course which he runs which owns 80%-plus of sprint and also had some foxcon on there, people saying what's that all about and the jobs. what a lot of people believe it really is about is his attempt to try to deal and get a deal done yet again to bring together the number three and four players on our wireless market in this country namely sprint and t-mobile. t-mobile 65% owned by deutsche telecom. by the way the best investment they've ever made. ebitda's been growing like that, growth has been strong, the currency has been so beneficial to them in terms of the dollars they've been earning here and how they've been able to then bring them back and what that
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has meant. but it doesn't preclude the idea that deutsche telecom would be at least open to a larger player in which it still had a significant equity stake and therefore exposure to the u.s., but some more scale. and so if you were to think about a deal like that and the economics of it, what would they be willing to accept? who knows. would they want marcelo to run it? probably not, probably want their guy john legere, why wouldn't they and would masa son let that happen to get a deal done? my guess is sure he would to get a deal done. who knows. but we're going to see a lot more potential talks when this anticollusion period expires less than a couple of months from now. and that just doesn't include t-mobile and sprint. you got to throw in the likes of verizon and their willingness to do something given some comments we've heard from lowell mcadam. you've heard about charter. i don't know, that deal would be so dilutive on eps, on cash
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flow. of course enormous our own parent company, comcast. we like to do big things too. we went after time warner cable, didn't work out. we do big things. you can't rule us out either in what many believe will be a hands-off fcc. so that's why it bears watching all -- on all fronts in terms of what will come because we're at the end. by the way, the auction itself not that great. about 18.2 billion right now. there had been expectations they would raise more. broadcasters get about 10 billion, rest would go to treasury. it will go up a bit but not quite as much as anticipated going in given the last spectrum auction, aws auction which garnered $45 billion. >> dynamite reporting because people have been saying over and over again why does t-mobile go up? i say listen because they could one day be in talks. john legere doesn't like it when you say anything good about sprint, not at all, but that doesn't mean that there can't be -- >> you know, masa wants it.
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who knows, germans are the key. >> why wouldn't the germans want the ca-ching? >> i think they want to keep themselves from exposure. this market's been too good to them. let's get to santelli who also goes by rick, joins us from the bond pits at the cme group in chicago. rick. >> call me anything but late for the fed tightening. listen, if i look at the data points, janet yellen may barely notice, but the markets are noticing. let's look at starts we had today. second best level since the summer of 2007. philly today, the best highest read, and i know it's volatile, so is housing, since november of 2014. so you look at a two-day of tens it shouldn't be shocking. we've had big reversals this week, two-day to the upside, maybe with draghi speaking today at the ecb meeting, two-day of bunds not that dissimilar of a pattern.
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here's where you can really tell. let's start around mid november right after about a week and a half after the election. let's look at tens. they held about where we've been discussing on santelli exchanges. low 2.30s. look at the dollar index held at its breakout point as well, 100. if you look at bunds a bit of a different pattern. more like a v-looking pattern. that's because in my opinion our policy's pulling them up. and mario draghdraghi, kuroda, better pay attention. we're going to be a magnet to much of what we're doing on our central banking policy. look at euro versus dollar, if you look at a one-week chart where is it exactly right now? right now we're a little above 1.06. exactly where we were last thursday, a little above 1.06. context you say? well, 1.0388 was the 14-year low and that was right before christmas. carl, back to you.
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>> thank you very much, rick santelli. when we come back, steven mnuchin heading to capitol hill for his confirmation hearing. the president-elect's pick for secretary treasury to face the senate finance committee. we'll bring you live coverage. dow really pinned down here down five points at the open. we're back in just a moment. we're not going to go to break. mike pence in washington. i think this might be sean spicer first on d.c. briefing, take a listen. >> -- the progress that we have made at the president-elect's direction preparing a team that will be ready to serve the american people and make america great again on day one. i'm grateful to be with all of
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you today. before i give you a brief summary, let me first express our thoughts and prayers on behalf of the president-elect and myself for president bush and barbara, they're on the hearts of every american. this morning we understand they had a good night last night, but we encourage every american to remember president bush and his wonderful wife barbara in their prayers. 72 days ago we elected donald trump to be the 45th president of the united states of america. 71 days ago donald trump set an ambitious schedule prior to this inauguration. and he asked me to chair the transition effort. and i was grateful and honored to be given the opportunity to do just that. when we took over, i was impressed frankly with the work governor christie and the transition team had done prior to the election. more than 170 interviews had already been done prior to
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election day. and i'm pleased to report that as of this morning's announcement for our secretary of agriculture all 21 cabinet nominees have been named, 27 total individuals have been named that require the consent of the senate. and we have 536 beachhead team members that will be reporting for duty at agencies following the inauguration bright and early on monday morning. there are many people to thank in this regard. and i'm really here just to do that. there is a memorandum that will be in your possession by the end of this briefing that i'll be conveying to the president-elect today to give him a full report on the transition efforts in the progress that we've made. allow me to give you a couple of top lines. in addition to the hundreds of interviews and meetings that the president-elect has conducted in the course of this transition, i'm pleased to report that the
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presidential appointment team's conducted more than 170 interviews prior to the election, more than 200 people since the election have sat down with what we call our tiger teams for full vetting and full review. i'm happy to say the interests of the american people in this administration has been overwhelming, more than 86,000 resumes have been submitted to the transition and over 4,000 candidate referrals. on the eve of the inauguration as i mentioned our beachhead teams are ready to land and go to work in these various agencies of the incoming administration. on legislative affairs we organize more than 90 volunteers to create and execute a confirmation strategy to support the 27 publicly announced senate confirmed nominees, designees attended so far more than 370 visits with senators. and we'll continue to work very, very closely to support their efforts as they move toward
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confirmation. policy implementation has been very brisk in the course of this transition. specifically we focused at the president-elect's direction on a day one, day 100 and day 200 action plan for keeping our word -- >> we take you across to senate finan finance, steven mnuchin making his way through the hall. let's take a listen. >> please let him get through. >> we'll ask questions in here. >> thanks, guys. >> thank you. let's please let him get through. >> mr. mnuchin, what's your position on the border tax, sir?
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>> come on, guys. >> all right. you can hear the media trying in vain to get a discussion of border tax in that hallway. probably not going to happen, jim. >> no, no. >> you do expect to get a little more substantial once he takes the microphone. >> i remember when i was a younger reporter have to do those and chase those people. my editor would say, anything, anything. so i would say, how about get out of my way? >> yes. what is on "mad money" tonight? >> well, we got a couple that are really red hot, dexcom got approval from the government to market their fantastic insulin monitor for diabetic. and ppg just reported a great quarter and they're talking it up. that's a first industrial that's reporting that's giving you a lot of hope. and hope is being verified by the facts, pena.
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>> tonight you'll have ibm and am and schlumberger. >> i really want to go out with my wife, i have to figure out how to handle this, set the alarm at 2:30 and no netflix. >> 2:30? >> 2:30. >> that's insanity. >> no, it's good. it's playoff time. you want to play playoffs or just be a regular season? got to up your game, man. >> i'm upping my game. i am. i'm upping my game. i'll be up at like -- >> this is the actual championship. not a wild card. >> jim, we'll see you tonight 6:00 p.m. eastern time. when we come back, the confirmation hearing for treasury secretary designate steven mnuchin. dow's down three. anni
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♪ good thursday morning. welcome back to "squawk on the street." aisle carl quintanilla with kayla tausche, david faber at post nine of the new york stock exchange. all eyes on capitol hill.
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senate finance committee holding its hearing to head steven mnuchin of the treasury. we'll take you there live when his testimony begins. sara will join us from the forum in switzerland. in the meantime dow not doing much, watching oil as well. top story this morning, donald trump's pick to head treasury appearing before senate finance right now. steven mnuchin said to address tax policy, potentially facing grilling from democrats for his role at one west, the lender that he chaired. in a few moments we'll talk to former deputy treasury secretary who also served as acting treasury secretary between geithner and lew. but first to eamon javers who is outside. we just saw you in that hallway a few moments ago. hey, eamon. >> hey, carl, that's right. i'm outside the senate finance committee, steven mnuchin just a few moments ago walked in this door behind me private members only entrance. you can see to my left members of the public have gathered. they've been lined up all morning and they've been letting
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them in in batches throughout the day. this will be standing room only hearing today and we'll wait to see if protesters have infiltrated members of the public here to disrupt the hearing. i had a chance to ask him how he was feeling today, he said he was feeling terrific, it's a real honor to be here, he said. he was escorted into the committee by senator o ren hatch. clearly republicans are going to mount a big defense here. democrats tell me they are primed this morning, they feel that mnuchin is one of the trump nominees that they might be able to remove early on here in the process. they think he's vulnerable on these issues of foreclosures and of one west bank. they're going to bring up those issues. and they're also going to bring up the issue of russian sanctions. remember the treasury department plays a key role in that whole process as well. so we can expect that mnuchin will face a barrage of questions here today as he faces the senate finance committee, carl. >> eamon, thank you for that setup. helps a lot. as we said earlier, joining us this morning former deputy treasury secretary served as acting treasury, between
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geithner and jack lew. mr. secretary, thank you for being with us. >> carl, good to be here. >> something mike allen wrote earlier in the week, the democrats if they hope to topple any pick, mnuchin is it. do you agree? >> well, we're going to have to see what transpires here, carl. today i think this is an important opportunity for mr. mnuchin to answer questions about who he is and what he's done and what his experience is in addition to what his views are on the extraordinary number of critical issues he'll be faced with if he's confirmed to be the treasury secretary. >> when we think, neal, about the appointees or designates that have gotten the hardest grilling from congress so far, it's those who have no prior government experience. do you think that makes mnuchin, tillerson, devos especially ripe targets for senate? >> well, i think it depends on each nominee. i think what we know for sure about steve mnuchin is he's had lots of experience working in the markets and in big financial
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institutions. i think the real question is how well does he understand the problems of main street? and how clear is he about the need to address issues of economic inequality, of wage stagnation, the kinds of things that are really holding our economy back and so important to the economic progress of our country. >> how much traction do you think this line of questioning is regarding one west when there is so much policy to get to? >> i think it's important to understand what the history of all this is. we just had a huge financial crisis. the housing industry and the mortgage markets were an important part of that. and i think it's important to just get to the bottom of what the facts are so that we can all understand what they are. obviously there are lots of other issues that are also important about tax reform, about the debt limit which is going to come back to being a live issue very quickly, about financial regulation, about international economic policy and so forth. but i think it's absolutely important and fair to be asking the nominee about what he's done in his past and how that relates
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to big issues that the country has just quite recently faced. >> you mentioned tax reform of course an issue that many of our audience will be very much focused on. i'm curious it's not as though there weren't at least some attempts made during the obama administration to attack tax reform both individual and corporate. where did that leadership come from? and where's your expectation where the leadership will come from from this administration on that issue? >> well, you know, traditionally, david, the treasury department's been from the executive branch's perspective, the leader on thought leadership and driving forward tax reform ideas and interactions with the congress. obviously this is an issue that's very complicated. we're going to require the executive branch and treasury working together with leadership in congress on both sides of the aisle. and i think, you know, the thing to keep really first and foremost in our minds is that our tax code needs reform. there's no doubt about that. what it needs, however, is it to
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be more fair, more rational, less subject to gaming. and i think there's been a little bit too much focus on relief for the wealthiest part of america. again, i think the real critical issue for the country is how are we going to tackle these issues of economic equality and get main street working again in ways that are good for communities across the country. >> we'll be looking for comments that point to that. on border adjustment, as david says, i noticed yesterday goldman took their expectation for a border adjustment from 30 down to 20. then you had kevin brady on our air defending that element of tax reform saying it was pretty simple, that house gop leaders and trump are on the same page. how likely do you think it is? >> well, i think it's hard to give you an actual probability. i'd note the president-elect seems not to be so much on board by this at least by public
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discussions. and i think it's probably not the best idea. i think it's likely to be reg s regressive and raise prices for middle americans in all kinds of ways that aren't such a great idea. and i think, you know, tax reform is very complicated. and when the president-elect expresses doubt and when big chunks of, you know, america are not so sure about this being an unimportant part of tax reform, i think it's going to be a tough road ahead for this idea. >> neal, i mean, let's say you're sitting on that committee today knowing what you know of course having been in the job, what would be your number one question to mnuchin? >> well, i think it's important to hear what he thinks about how to get mainstream america going again from an economic perspecti perspective. i think it's important to hear him say that the full faith and credit of the united states is a matter of sanctity. that it's not a bargaining chip. that it needs to be respected. and i think it's important to hear him talk about financial regulation because there's been a lot of talk about generic
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deregulation but it's not so long ago that we remember our financial markets and our economy were in meltdown mode and at least one of the reasons for that was inadequate regulation. i think those are questions that are hugely important to the future path of the country from an economic perspective and more broadly and indeed for the world. i would hone in on those things as being incredibly important policy matters that he'll be right in the thick of if he were to be confirmed. >> neal, like you say, treasuries roll in a lot of that policy as simple thought leadership and driving the conversation. what's the risk that mnuchin in talking about specific policies where treasury doesn't have a specific role on the risk of getting out ahead of congress and offending them that way? >> well, i think these are always conversations between the treasury and executive branch more generally and the congress. and i think it's important for the incoming administration and in this case the new treasury secretary if it's mr. mnuchin to be clear about what are they for and why are they for it and to work with congress to try to move policy in the directions that they think are the right
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directions. and as i say i think that's a critically important role for the treasury and for the treasury secretary in particular. and i don't think it's a problem for him to be articulating his vision. obviously he's going to have to work with others in the administration and in the white house and elsewhere and of course in congress, that's the natural process. >> as we're speaking oren hatch is saying no one has credibly alleged that any laws, regs or industry standards were violated by companies run by mr. mnuchin. we'll listen for that. one last thing here, you mentioned, neal, the sanctity of the full faith and credit of the u.s., may be unintentionally referring to something trump once said on our air during the campaign that somehow that might be open to negotiation one day. would you expect mnuchin to back that up in any form? >> well, i certainly hope not. it's not just the president-elect who's made sort of loose comments about this issue, but in various parts of washington. i think there's nothing more important to the economic
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success and stability of our country than the full faith and credit of the united states financial obligations. and i think it's something that the treasury secretary has to be dead clear on. it's not a bargaining chip. it's not something for negotiation. it's been at the bedrock of our country for the whole history of our country. and it's something he or all people whoever the treasury secretary might be needs to be very, very clear about. >> neal wolin, appreciate you helping us talk about the hearing. >> when we come back on "squawk on the street," just one day until inauguration. we'll be joined by a member of the inauguration committee, continental resources chairman and ceo harold hamm. and we're keeping an eye on capitol hill with that confirmation hearing for steven mnuchin for treasury secretary getting underway. we'll continue to monitor that and take you there as soon as his testimony begins. much more ahead. stay with us.
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as we await the mnuchin hearing for treasury secretary to begin, let's bring in our sara eisen who's at the world economic forum in davos. she just spoke with dell technologies chairman and ceo michael dell. sara. >> david, you knew bankers would be optimistic coming into davos this year as shares have surged since the election, but the tech leaders have been a different direction in the trump era. certainly during the campaign was contentious, publicly attacking jeff bezos, michael
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dell says he is hiring in the u.s. as he completes the blockbuster acquisition of emc. i found it interesting especially when i asked him about trump's relationship with technology, dell was pretty upbeat. listen. >> there's definitely feeling of optimism, i'll tell you in europe our business is doing quite well. in asia it's doing well. in the united states our large customers are moving into offense. you know, we've seen a lot of the optimism that's been talked about on your show. if you step back and listen to what the administration is saying about tax reform and regulation and investment in infrastructure and innovation, we're optimistic. >> dell played down the trade protectionism threat despite having a huge overseas customer base. we also talked about one of his personal investments in the past when he bought indymac as a part of group of investors along with paulsen and soros.
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who led that group of course? steven mnuchin. >> this was not business of our computer companies. >> right. >> msd capital. but he did a great job running one west bank and we've had positive interactions with him, think very highly of him and he's one of the many in the administration that, you know, gives us confidence that this is heading in the right direction. >> david, despite dell's vote of confidence, congress likely to be tougher today, especially on those questions about mnuchin's role in the housing crisis whether at one west who took advantage of homeowners. dell would not comment to me on whether he thought that would hold back the confirmation. back to you. >> thank you, sara. sara eisen from davos. just over 24 hours until the inauguration of donald trump as president of the united states. joining us now, a member of the president-elect's inaugural committee, continental resources founder, chairman and ceo harold hamm. mr. hamm, always nice to have you. energy certainly going to be a focus for this administration.
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how quickly do you think it will be after he gets into office that mr. trump starts to reverse some of the regulations that i know you have termed onerous when it comes to your industry? >> well, i think it will be immediate. you know, we've seen so many of these executive orders that just covered everything. and obviously that's going to be a day one agenda is to get rid of those. when you ask everybody what they want the most, tax reduction or get rid of the overregulation, everybody first thing they say is get rid of the overregulation. it's hurting everybody. it's not just business, but you know consumers are also paying for that. so it's very costly to the american economy. and we've seen, you know, the disastrous results of that this past eight years. >> right. well, what would be an example then of something you expect to be overturned? when you talk about the disastrous last eight years, i'm curious as to what perhaps you're focused on there that
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will change. >> well, first it's methane rules. gosh, they made this stuff up like we tried to sell every fmc of gas that's been approved, we have -- flow right into pipeline as soon as we're done and yet they're out there with cameras and everything else to see if you've got one mc up of gas being emitted from any place, you know, we have more natural gas escaping the streets here in washington, d.c. than we do the entire industry. >> harold, the president-elect has said in his first 100 days that he plans to lift the restrictions on the production of $50 trillion worth of job producing energy reserves, shale, oil, natural gas and clean coal, where do you expect restrictions to be lifted first? and what sort of price impact will that have on the market whether it's consumers and what
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prices they're paying or potential exporters and bha they could -- what business they could do once those reserves are tap tapped. >> first there's just dozens, hundreds if you will of over regulation examples. in all those areas. oil, gas, plain coal power, the government has been into picking winners and losers as you know for the past eight years. and certainly need to get out of that business. yes, it effects everything. exports a good example of that. we need to be making the very most of this energy renaissance brought on by horizontal drilling. give us the largest reserves of natural gas everybody thought we was out in 2005 and now we have the largest gas build in the world with the marseill cellus.
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it's tremendous what's come about and certainly the crude oil is another good example. permian is a bright and shiny st star. >> one would imagine it's going to be an environment that will be very, very good for a company like yours. at least with pruitt at epa, with perry at energy, mentioning the policies that you expect will be overturned, but i'm curious about the market price for the actual commodity, harold. what are your expectations there? is this going to actually mean that a lot of producers are going to ramp up production? or is the market ultimately going to still be the key measurement in terms of whether we get more stuff out of the ground? >> well, let's take a look here. we've gone two years in this current market. you know, while demand has increased 1.6 million barrels a day last year, 1.3 -- excuse me,
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1.6 million barrels in 2015, 1.3 in 2016, certainly u.s. producers ought to have some share of that. so going forward we deserve to get some of that back. we've cut production in the u.s. over a million barrels a day while both russia and the saudis have increased their million barrels a day. so it was a wise thing they did to back off and we'll regain some production back here in the u.s. certainly. people get carried away i don't think so. we've got a governor role that the saudis have stepped in. i think that's a price ban between $55 and $65. so is that going to mute some of the growth that everybody's expecting? i think it will. >> i'm curious to know, harold, what you thought some of the saudis comments earlier in the week that this cut might not last past june given the level
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of compliance. is there a danger that in the back half of the year they turn right around make another run at u.s. shale try to look like the good guy around the world? >> i don't believe that's going to happen. i don't think there's going to make another run at it. certainly that tends to dampen a little bit. you know, this deal's not forever. don't get carried away, don't get out over the skis and borrow too much money at the bank, run your debt up. it could happen again certainly that will dampen enthusiasm. as i think it should. >> but you seem to be at least, i mean, the margins in your business should get better though, right? given certain things you'll no longer be required to do under a trump administration, even if the overall price of the commodity to your point isn't necessarily going to be going up too much. >> well, let's look back at what's happened over the last couple years. you know, efficiencies gained just by our industry have been
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tremendous were able to find twice the reserves today with the same capital that we did in 2014. it's not anything to do with president obama. it was basically efficiencies of technologies and innovation that's been brought up by independents like myself and others in this industry. so we're able to compete and bring those margins back. and certainly, yeah, price it's had a huge effect to do with our business and we all realize that. and we won't hide from that fact at all. but certainly we've been able to do a lot here on our own to bring those margins back for our industry. >> well, mr. hamm, we appreciate it. and enjoy the inauguration tomorrow. i assume you will be there, right? >> i will be there. it's great to, you know, see these candidates, these nominees
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go through this process. steve mnuchin i've gotten to know him. he's a great guy, great man. all these are very qualified. a lot of enthusiasm, exuberance in the business world today, you know, with president trump coming into office. good to be here with you. >> all right. well, you're sharing a screen with that mr. mnuchin you just mentioned. mr. hamm, thaungs for joining us. harold hamm of course continental resources. >> thank you. also in washington this morning incoming white house press secretary sean spicer holding his first televised news conference. he's talked about keeping some obama administration officials in some critical roles. talked about jobs and i think now talking some tech. >> -- concern for getting america back on track. and he is really not concerned with the past. major garrett? >> sean, can you reconcile the vice president-elect's statement that you're ready on day one with your comments that there are continuity of government issues created by the stall of
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senate democrats. you can't have it both ways. >> sure you can. as i've noted we've appointed over 50 people in critical positions to maintain their office until we can find a successor for this administration. so we've looked through the entire government and found areas where there's a critical need to maintain someone. in an area where a department for example the secretary won't be available, there's a continuity in government place to ensure that the highest level person assumes those duties -- >> those are place holder people until your cabinet secretaries are confirmed. and they can't carry out the mandate -- >> sure they can. right, but there's a difference between acting agenda and making sure if there's an issue or concern, continuity of government is if there's an attack or some kind of weather incident that occurs where each of our departments have to be called into action to support the american people. we're ready to go. make no mistake, we're ready to go on day one. so there's a big difference between being ready to go and starting and enacting some of the things. there are limitations to what some of these individuals can do
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in terms of enacting the agenda. but in terms of being ready to go and being able to respond to an incident, we're ready to go at 12:01 tomorrow. >> are you going to keep him for the entire duration -- >> we'll have to evaluate. right now focus was on continuity of government and on a case by case basis work with those individuals and the departments. yes. >> shannon -- on trade, is the president-elect going to wait until his cabinet is all in place before beginning negotiations with mexico and canada on naft or if the ustr and secretary of commerce are not in place, will the president go and contact those countries' presidents to get in talks directly? >> i'm not going to get ahead of him, but i will tell you part of what he announced in the executive order list around the thanksgiving time included the actions on both tpp and nafta that would be done by executive order. i think you will see those happen very shortly.
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when and where in terms of where that cabinet piece falls in, some of it has to do frankly right now with senate democrats. but i don't think he's going to wait. he's made it very clear some of those things are huge priorities for him. yes. >> channel 4 news, i'm wondering you said yesterday there will be a couple of visits next week. >> right. >> theresa may, top of the list as far as -- >> i was talking specifically about agencies and departments. >> there are no foreign leaders expected next week? >> nothing is expected next week in terms of foreign leader visits. we'll have an update on that at some point. phil. >> you talked about some of the agencies and contingency plan, but can you address the national security council in the white house? only a couple of people i believe have been appointed so far. are there going to be more appointments before tomorrow or over the weekend? what are you doing to make sure -- >> yeah, i'm not sure that's true. we have a great group of folks been in constant contact with the national security council and homeland security council. so you have general flynn and mcfarlane on the national
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security front, as i mentioned several individuals within both the homeland security council and national security council that are being held over in critical positions and they're working with it. the other issue is there's a lot of individual who is are detailed and are going to be staying onboard. the contact and level of support back and forth the national security council alone has been tremendous. we've had reams of briefings and people that have come over and met with the incoming national security council. that is one area where frankly they have been very, very aggressive and robust with both meeting with their counterparts and ensuring that the team is ready to go day one. katie. >> ethics experts and former white house lawyers have expressed deep concern over donald trump's plan to separate himself from his business. the oge director said handing over control to his son is not enough. called it wholly inadequate. given he has released his taxes, given that 74% of americans want him to release his taxes, will
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he at least give a list of who he is in debt to? and if not, why not? >> i think that question has been asked and answered a hundred times. katie -- no, i get -- i heard the question. so i think the president-elect has made it very clear he has no conflicts by law. he's gone above and beyond in terms of separating himself from his business, hands it over to his kids and puts in a rigorous plan to ensure no conflicts of interest occur. he's gone above and beyond whatever was required of him. he has no conflicts by law, so what he's done is extraordinary to ensure his focus is entirely on helping this country move forward. fr francesca, thank you. thank you. >> could you give us more color, more information on how the president plans to spend at the white house and also clarify that those departmental meetings that are coming up like the cia will also be taking place next
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week? >> as i mentioned, i'm not going to get into the schedule at this point in terms of what he's doing. but as i read out the schedule so far as to what he's doing. he's going to -- you know, there will be time carved out for executive order signings as he chooses. there's a lot of work that's going to occur over the weekend in terms of meeting with staff, getting prepared and then as we get closer to monday we'll have an update on the schedule in terms of where he might be going or other signings that will be conducting. yes, ma'am. >> i was wondering, there's a lot of rumors going around about the first executive orders. can you clarify whether or not he'll issue an immigration executive order on monday or some time next week? i know you promised that you would give us more details. there's a lot of concern about what he'll come up with in terms of immigration. >> a, as i said earlier, we'll have an update on the schedule.
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the president-elect is still working with the team to decide how he wants to sequence these things. i will refer back to the video, he laid out clearly what top priorities will be. i think it's no surprise to anybody that immigration, job creation, manufacturing, tax reform are all at the top of that list. so it's just frankly a question of sequencing. but right now he's committed to getting those things done and we're working on the timing. zeke miller. >> thanks, sean. in terms of the campaign against isil or isis, the ongoing strikes, u.s. troops on the ground in training over the past weeks, will those all contin continue -- provide any new orders along that front at 12:01 tomorrow to change the current isis -- >> with respect to isis, i mean, i think he's talked about very clearly that he wants a plan from the joint chiefs very quickly to combat isis. how we look at a whole government approach to that.
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he continues to meet with his national security team about what's in place and what he needs to do, but i'm not going to get in front of what decisions he'll make tomorrow. we'll announce all that, but again, i think what we've ensured is that for the time being we've got a team in place that will continue to advise him and make sure that the country remains safe and priorities are carried out. shane. >> sean, last week trump's lawyer talked a lot about separating from his business interests both last night and today he's scheduled to visit -- promote the dining room there, food there. >> he's going to his own hotel? i think that's pretty smart. again, i think the idea that he's going to his own hotel shouldn't be a shocker. it's a beautiful place. it's somewhere he's very proud of. and i think it's symbolic of the kind of government that he's going to run, on time, under budget -- excuse me, ahead of time and under budget. same kind of theme that the vice president-elect expressed earlier this transition 20% under budget, $1.2 million
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returned to the treasury. he's very proud. it's an absolutely stunning hotel. i encourage you to go there if you haven't been by. but i don't think the idea that president-elect trump is having a reception at the trump hotel should be a shocker to anybody. yeah. >> now that cabinet positions are filled, what message do you have on capitol hill when it comes to speed of confirmations? >> look, i've talked about this before, but it's important that we get these individuals up in front. there's no one really questioning their qualifications or their caliber or their ability to leave their department, their understanding and grasp of their issues. these are amazing individuals that have a commitment to acting an agenda of change. so my message is simply let's get it done. this is not time for partisan politics. this is time to get the american -- to ensure that the american people have a government in place that can get that done. yeah, in the back. >> coming from israel regarding
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the middle east, there are plenty of -- president might move from tel aviv to jerusalem, can you confirm if he's decided to do that? >> i can tell you stay tuned. there will be further announcement on that. the president has made very clear that israel is not gotten the attention it deserves or the respect in the last eight years. he intends to really show his respect for israel, the importance of it in the middle east and he's continued to talk with his team both ambassador designate freeman, jared kushner, others, rex tillerson, about how we're going to work with israel. i think first and foremost how to make sure that we continue to support ally israel. that is something that's going to be the priority of this administration. yes, ma'am. >> you said the president was focused on finding the best and
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brightest people for his government, but i wonder can you understand that with 56 million of hispanic people in the u.s. it's like adding offense to the injury to say there was not bright enough -- >> that's not what i said. he has tremendous respect. again, i think you have to look at the totality of diversity that exists within this cabinet. there are so many ways to express this both in terms of gender and background, race, ideology. he continues to put together an amazingly diverse cabinet. i think if you're looking specifically at hispanics as we move forward, we have 5,000 jobs to fill. there's going to be a tremendous number of hispanic americans that fill those posts. i caution people to stay tuned. lots of great things are coming. >> all right. that is incoming white house press secretary sean spicer. his first on-camera briefing to the press in washington, d.c. going over a number of different topics. among them keeping some obama officials in critical roles like
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the u.s. envoy to fight the islamic state, undersecretary of state for political affairs returning some unused transition funds about a million dollars back to treasury, timing on a jerusalem embassy announcement, obviously diversity if not in the cabinet but at least in the amazing number of people you have to hire just points to the complexity that's involved in a transition like this. john harwood, so many headlines flying today. we're about to get a lot more at senate finance. what are you watching this morning? >> well, he also -- sean spicer criticized democrats for not being cooperative and moving along a sufficient number of nominees to cabinet posts. i expect that is going to be a drum beat we continue to hear as more and more of these cabinet nominees in their confirmation hearings find themselves subject to criticism from democrats, not so much from republicans but in some cases they will. and that is going to create some
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static and make it difficult to fill out this government as quickly as donald trump would like. we expect that people like jim mattis, the nominee to be defense secretary, mike pompeo, the cia director choice, are going to be confirmed rapidly, probably tomorrow. as president-elect trump becomes president trump. but steve mnuchin is going to face some tough questions at his confirmation hearing today about foreclosures, about ties to wall street, all that sort of thing. and we've had similar questions about rex tillerson, his ties to russia, his ties to the fossil fuel industry and rick perry's on the hill this morning. interestingly rick perry has said he regrets having called for the elimination of the energy department. said that he does believe that climate change is real and partially caused by human activity. those are things that would be seen as steps forward by democrats. >> a moment that you remember
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well, john, that perry moment. by the way, live shot of midtown manhatt manhattan. donald trump president-elect expected to be leaving trump tower on his way to washington for the inauguration tomorrow. you saw jeb hensarling speaking at senate finance. we expect mnuchin to speak right after that. so very quickly, eamon javers, one more time, what should we be listening for in the hour ahead? >> well, what we've already heard, carl, is democrats come sboog this hearing today loaded for bear. they think mnuchin might be politically vowel nulnerable he. going to hold mnuchin to what he calls the mnuchin rule and that's a comment mr. mnuchin made on cnbc right after he was named as a treasury secretary pick by donald trump in which he said there would be no absolute tax cut for the upper classes because they'd be pulling back as many deductions as they would be giving tax cuts to upper class folks here in the united states. so very much suggesting they're going to hold him to that. there's some questions about whether mnuchin got out over his
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skis in making that comment in whether the trump transition will be able to deliver or wants to deliver on that promise. widen here this morning saying very much they're going to hold him to it, carl. >> eamon, there were questions about the expeditious manner in which the incoming administration named some of these designates. and there were questions about -- there are questions about some of the vetting and whether in fact there would be vetting in the senate. we are getting questions to steven mnuchin. let's get to the hearing now. >> what have you done with my -- here it is. senator, i've got a valium pill you might want to take before the second round. just a suggestion, sir. >> just another suggestion. we've got a lot of colleagues waiting, if you could be brief, it would be helpful. >> i'm going to be very brief. mr. mnuchin -- from the
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distinguished ranking member's remarks, i understand you were in charge of the great recession banks -- >> mr. chairman, mr. chairman, i hope that that comment about valium doesn't set the tone for 2017 and this committee. i like senator roberts, but i just can't quite believe that he would say that to a distinguished senator from oregon. >> i said that to the president of the united states at one time. >> perhaps you did. and i would hope that that doesn't set the tone for the session, okay. >> all right -- >> order! >> the relationship we're building is so different from this. >> i have the time, please. >> this is outrageous. >> i don't know about outrageous, but i think just a little pinprick of humor might help this committee from time to time, which i engage in. and i appreciate the gentleman's contribution with regards to the committee, he's a good member of the committee. we've worked together on the ethics committee. so i'm sorry if i have, you
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know, incured your wrath, sur e s -- sir, we'll be all right. >> mr. chairman, we have many colleagues waiting -- >> i'm done. i'm done. thank you. >> okay, mr. mnuchin, we would take your statement at this point. >> thank you very much. chairman hatch, ranking member wyden and members of the committee, it is an honor to appear before you today. i am grateful and humbled by president-elect trump nominating me to serve as secretary of the treasury. it is truly an honor and a privilege to be considered for this position. thank you to all the members i have already had an opportunity to meet with during this process. i enjoyed meeting with you and learning more about the issues that are important to you. for those few members that i didn't get a chance to meet with, if confirmed, i look forward to meeting with you as
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well. i would like to thank chairman hatch and his staff for taking so much time to work with me and support me through this process. in addition, i would like to introduce my fiancee louise linton and my children, emma, jp and dylan who are here with me today. and thank them for their unwavering support. i would also like to introduce my brother alan mnuchin and his wife alesandra and my father robert mnuchin who has always supported me and taught me that hard work, determination and the ability to bring people together can make anything possible. i would like to acknowledge my late mother, elaine turner cooper, who was an inspiration to me. i would also like to acknowledge my grandparents, emanuel and matilda turner, who are also a tremendous influence in my life. my grandfather was a first
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generation american whose father emigrated from europe. he truly embodied the american dream. he started out blowing glass bottles by hand and later built midland glass into one of the largest glass manufacturing companies in the united states with five factories employing thousands of workers. my first job ever was in his factory when i was in high school. it was there that i first learned the importance of humility, hard work and commitment. for those of you who don't know my background, i studied economics at yale university. at the age of 22, after graduating from yale, i got a job at goldman sachs where i spent the next 17 years. i started on a folding chair in the mortgage department. nine years later after many sleepless nights i was put in charge of mortgages, u.s. government bonds, municipal
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securities. several years after that i worked directly for future secretary of the treasury hank paulsen as the firm's chief information officer. in that role i oversaw 5,000 people and a $1 billion budget. while at goldman sachs i learned the importance of the financial markets in providing liquidity and capital to business, governments and consumers. a few years later i decided to leave goldman sachs to build an investment business. after working briefly at esl investments, i started my own investment business doing capital management. throughout my career my commitment was to my clients and shareholders for whom i worked tirelessly to get the best results. 30 years later my commitment is now to the american people for whom i will work tirelessly by
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helping to grow our economy and create jobs. i'm eager to share with you why i believe i will serve well as america's next secretary of the treasury. but first, i want to correct the record about my involvement with indymac bank. since i was first nominated to serve as treasury secretary, i have been maligned as taking advantage of others' hardship in order to earn a buck. nothing could be further than the truth. during the summer of 2008 i saw the devastation that was caused by the housing crisis when i watched people line up to get their life savings out of indymac bank. it was the middle of the financial crisis, and despite the global panic, i saw a way to save the bank. i applied for a banking charter and submitted a bid to the fdic for indymac. on december 31st, just before
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midnight, we signed a binding agreement with the fdic. they later confirmed that our bid was almost a billion dollars higher than the next best bid. we were willing to invest $1.6 billion into the most costly bank failure ever to the fdic deposit fund. we did this because we believed in our ability to rebuild and create a successful regional bank. we believed in the recovery for the american economy. let me be clear, my group had nothing to do with the creation of the risky loans and the indymac loan portfolios. when we bought the bank, we assumed these bad loans which had been originated by previous management. some of those individuals had to answer to federal authorities for their bad lending decisions. we invested $1.6 billion into a
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failing financial institution when most investors were running for the hills. re we renamed the business one west bank and saved thousands of jobs. we developed a prospering community banking franchise in southern california as most banks were pulling back. over the next two years we bought two more struggling banks from the fdic. first fed of santa monica and la jolla bank, both through competitive bidding. combined we had almost 70 branches and built a robust lending business especially for small and medium size businesses. as chairman of the bank, i met with hundreds of business people from all walks of life who were seeking loans to grow their business and prosper. like many banks at the time, indymac and its reverse mortgage division, financial freedom, was unstable due to the large amount of distressed credit mortgages
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in its portfolios. we bought indymac these legacy loans were included in the purchase. the responsibility landed on me to clean up the mess others made but we inherited. we worked very hard to help homeowners remain in their homes through modifications wherever possible. ultimately one west extended over 100,000 loan modifications to delinquent borrowers to try to help them out of a bad situation. i am proud of the fact that loan modifications started at indymac under the leadership of the fdic. however, the fdic loan modification program did not work for everyone. when the fdic took over indymac, they estimated that more than half the foreclosures would not meet their test for a loan modification. and they demanded many policy conditions, extend assistance to
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sympathetic borrowers by establishing affordable and sustainable payments, by borrowers increase the net present value of cash flows to the owner of the loan and stabilize housing markets. my group had to adhere to servicing agreements that limited our ability to make loan modifications that could have helped more borrowers. in the press it has been said i ran a foreclosure machine. this is not an accurate description of my role at one west bank. on the contrary, i was committed to loan modification intended to stop foreclosures. i ran a loan modification machine. when we could do loan modifications, we did them. but many times the fdic, fannie mae, freddie mac and bank trustees imposed strict rules governing the process of these loans. i am proud to be able to say that our bank was able to do
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over 100,000 loan modifications that allowed people the opportunity to stay in their homes. unfortunately not all the homes were able to be saved through these programs. and despite my best efforts some were sadly subject to foreclosure. so sincere was my concern over this that in 2010 i instructed my lawyers to sue hsbc as trustee of the securetized loans to allow us to do loan modifications on loans and mortgage trusts that they oversaw. we won on summary judgment and were consequently allowed to do more loan modifications and keep more americans in their homes. similarly, in 2015 when hud issued mortgagee letter 2015-11, i wrote hud and asked them to change the policy so we didn't have to foreclose on senior
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citizens that were behind small amounts of money on taxes and insurance. i was so troubled by this that i discussed it with our primary regulator, the office of the controller of the currency. unfortunately, hud did not agree and we were forced to foreclosure on senior citizens even if they only owed $1. not complying with these hud policies would have subjected the bank to penalties and losses from hud. despite our inability to save every home from foreclosure, i am proud of the fact that one west bank was the only one of 14 banks that was able to complete the independent foreclosure review that was conducted by the occ. every one of the 175,000 borrowers that were in the foreclosure process during 2009 and 2010 were able to have an independent review of their
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loan. we have a very low error rate and independent government reviews routinely showed that we had the most effective loan modifications of any bank. if we had not bought indymac bank, the bank would likely have been broken up and sold in pieces to private investors where the outcome for consumers could have been much more bleak. overall i helped many homeowners stay in their homes and escape financial ruin through my management of one west bank. my experience confirmed that we must identify and eliminate unwise and burdensome policies which contributed to the disastrous outcomes that came in the wake of the financial collapse. many americans are still suffering from the disastrous rippling effects the 2008 crisis had on our nation.
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faithfully ensuring this doesn't happen again means careful oversight of a financial system which prioritizes the needs of every day americans over the wishes of financial institutions or the federal government. i felt great yaempathy for millions of americans who lost their homes because the system failed them. it confirmed as treasury secretary i will work diligently and compassionately for the american people so we never see anything like the meltdown of 2008 ever again. i was deeply honored when donald trump asked me to join his campaign as finance chairman. i had the opportunity to travel with him and hear firsthand from hard-working americans about their concerns for the american economy. over the last year i visited over 50 cities in 26 states.
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i remember attending my first rally with him in indianapolis. it was an unforgettable experience. as we arrived into the stadium packed with 20,000 people i saw the excitement people had for a trump presidency. on our trip to flint, michigan i went to the president-elect to visit the water treatment facilities and saw firsthand the crumbling pipes and devastation caused by that lead tainted water. we met with water engineers and saw the impact on that community and families that lived there. across my country with the president-elect we heard the pain and heartbreaking stories of americans who lost their jobs to workers from foreign countries. we heard the concerns of people in small business burdened by high taxes just trying to make
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ends meet. in my meetings with you over the last month you shared concerns of your constituents like farmers, or workers who are nervous whether their retirement accounts will be safe from ruin. one of the greatest reasons i was drawn to president-elect trump's campaign because it was committed to stimulating all americans whether they arrived in rural north carolina, the coal country of ohio, or west virginia. or any place in between. i share the president-elect's goal of economically empowering every citizen. we will not rest in our mission until that's a reality. among president-elect's signature issues in this campaign was reviving trade policies that put the american workers first. i will enforce trade policies that keep our current strong on
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the world exchanges and create and protect american jobs. we will also make america the best place to do business. sensible regulation is a necessity for healthy markets. however, i saw firsthand how regulatory excess can inhibit lending by financial institutions resulting in a lack of access to capital for small businesses and entrepreneurs. alexander hamilton remarked that wealth of a nation may be promoted by quote multipling the objects of enterprise. hamilton knew the unique value entrepreneurial activity to a thriving economy. from our nation's earliest days it was the entrepreneurial spirit of the world. we need to unleash that power to generate jobs and create abundance for americans of all
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background. we will work diligently to limit regulations, lower taxes on hard-working americans and small business and get the engine of economic growth firing on all cylinders again. in this age of unprecedented online attacks, we must also be vigilante about cyber security. if confirm as secretary of treasury i'll use my expertise in technology to protect americans information at the irs and keep our financial architecture safe from malicious attacks. i will use the treasury department's office of terrorism and financial intelligence to stop the financing of terrorism. i will partner with our government agencies in sharing our goal of allowing financial markets to operate free from digital and physical threats. if i am confirmed as treasury secretary, i promise i will work whard this committee, all
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members of congress and the administration to put forth policies that will help american families reach and maintain prosperity. we will make america great again. thank you and i look forward to answering your questions. >> thank you, mr. mnuchin. we appreciate your questions. i have some obligatory questions i ask of all nominees. first is there anything you're aware of in your background that might present a conflict of interest in the duties of the office to which you have been nominate snood i have not. i have worked with teethics office and signed an agreement with them and disposed of all my investments that could create any conflicts. >> do you know of any reason personal or otherwise which would prevent you from honorably discharge the duties of the office to which you expect to be nominated. >> i do not. >> do you agree without reservation to respond to any
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reasonable summons to appear and testify before any duly constituted committee of the congress if you are confirmed? >> absolutely. i look forward to it. >> finally do you mitt to provide a prompt response in writing to any questions addressed to you by any senator of this committee. >> i provide over 5,000 pages to the staff. i think i have the record of that. i commit if there's any additional questions i'll respond to them promptly. >> all right. i have to go outside here for a minute so instead of my starting the question period, we'll turn to the ranking member, my partner in this matter, and then i'll ask questions when i come back. >> thank you very much, mr. chairman. mr. mnuchin, medicare finance is about tax and it's your responsibility if confirmed the attempt to repeal the fieshl care act, medicare solvency is threatened.
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what steps are needed in your view to strengthen this program that every senior in america relies on? >> well, first of all, senator, thank you very much and i very much appreciated the opportunity for us to meet yesterday. and especially the opportunity to talk about tax reform with you which i think is very important. i completely agree with you that medicare is very important and a very important program and the safety of that is an important issue and if confirmed that is something that i look forward to working with your staff on and make sure that we have the appropriate policies. >> if you're confirmed you would be the managing trustee for medicare. wouldn't you like to offer something by way of discussion about what you would be doing if confirmed? this is an important part of the job. >> senator, i acknowledge it's a
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very important part of the job. and there's many parts of this job that i consider myself an expert on and understand and there are certain parts of this job that if confirmed i will work diligently with this committee and others and there is, obviously, a significant step. this is a significant issue. i'm committed to being very responsible in my position there and make sure that i properly provide the support from the treasury department and i would take my responsibility very seriously. >> i would just tell you that without any specifics on a matter that is so important we have direct responsibility over, i find it very troubling that you won't discuss medicare. so let's go terrorism financing. countries fighting isis, and other terrorist groups, the treasury department plays a key role in fighting this battle. what would be your

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