currently offered. >> i haven't. >> michele obama so mad at us today. first talking about fritos, dorito, cheetos and how much we love them and now talking about sausage egg mcmuffins in the afternoon. >> they're great. love breakfast for dinner. >> join us tomorrow. "squawk on the street" is next. good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with david faber, sara seisen, michael santoli. volatility somewhat muted as we juggle adp, m&a in the food space, pepsi earnings and fbi director comey on the hill. europe higher as bank fears subside for the moment. oil is higher on that bigger than expected api draw last night. our road map begins with a major post-brexit deal. danone buying whitewave for $12.5 billion. we're going to break down the

details, talk about what it means for the industry and business in europe. >> shares of pepsico on the move after beating street expectation. we're going to talk to the company's cfo hugh johnston in a few moments. >> expecting fireworks today on capitol hill. fbi director james comey set to testify about the hillary clinton e-mail scandal. we will bring it live in whitewave rising in the premarket. the organic foods makers agreeing to be acquired by danone for $10 billion in cash. the deal values whitewave known for brands like silk and horizon organic at 6:25 a share. danone says the merger will double the size of the u.s. business and we will talk to the ceos of both companies tomorrow here on "squawk on the street." north america now will be about 22% of their portfolio from 12 about now. a big bet on america. >> an important deal for danone. of course as you say, getting larger in the u.s. whitewave has been no stranger to those who believed it would

be part of food consolidation and as sara eisen told us a number of years ago. >> wow. >> as one of the big growing food companies and you don't see a lot of growth in food these days, and so the multiple here, fairly high, some would say at as much as 21 times forward ebitda. get a load of that. at the same time, i will tell you, there are some shareholders of whitewave who are hoping actually for an even higher price than the $56.25 we're talking about all in cash. the deal will be almost off the bat. danone, will they borrow at negative rates to pay for this? if they aren't they're going to come awfully lost close. the cost to capital will be virtually nil that helps make any deal acreed different. they're citing $300 million in synergy which will have the effect of lowering at least the effect of multiple that they're paying for that ebitda that we're talking about. but again, it is growing. sara, no shortage of potential

suitors here at least some have thought about. i've been trying to understand, though, whether there was a real process run. for those who might be looking for an opportunity to buy whitewave right now thinking maybe somebody will come over the top, it's hard, i don't have a lot of great reporting to tell you about at this point, they did only sign on the danone side about a month ago. people close to the situation indicate they've been talking seriously let's call it for two months. one would imagine you can talk for a few weeks and then you get really serious and start to look at information that is not made public by signing the mda. it's unclear whether or not they really entertained other potential buyers. whether it's general mills. >> kellogg. >> kellogg or pepsi. but goldman sachs and their bankers are not exactly strangers to the idea to make sure to get a market check. we will have more on that. there is a hope amongst some of the large shareholders and is some have been active in the stock including the guys at hudson capital who think you know what, maybe we could have

done even better although the premium is not bad given that this thing has always had a takeover premium in it to a certain extent once it got out of spin off jail. >> really been one of the big winners among spinoffs from dean foods. the dwarfs what dean foods is now in size. the stock is trading as though they're leaving open the possibility of another bid. trading tight or above in the premarket what the bid value is. and i think maybe if you think it's worth more it's also because of scarety value. not just about multiples of cash flow and earnings. there aren't these many established healthier food companies. >> in a post-brexit era two of the largest deals have involved food in hershey and this. the fifth biggest ever by a european company in the consumer staple space. those looking for a sudden death in m&a, been disappointed so far. >> yeah. i mean i think a part of it, obviously mondelez/hershey we'll see if anything does come to

pass. it would seem there's a high hurdle to seeing a deal ever, but cheap borrowing has been one -- even cheaper has been one of -- effect of brexit and certainly the fact that danone can borrow such low rates has to help not that they wouldn't have done this and couldn't have potentially borrowed at fairly low rates. the helps the look of what you're paying. >> something else going on here which is emblematic of what's happening in the food and beverage industry the giant companies just cannot find top line growth and they have not been able to innovate themselves enough to keep up with the consumer, where the consumer has gone, to plant-based dairy, what whitewave does, and some of the organic brands and that is why, thank you for the credit, i mean these brand have been scooped up. annie's got bought by general mills, bolder brands got bought -- there aren't that many left. a lot of the focus will turn to haynes celestial. >> and rumored lately as well as potentially -- >> wasn't seen as a pure play

like whitewave which is so focused on dairy and that's why a lot of people, including barclays say that danone is such a good fit as opposed to a general mills or kellogg, because it has the dairy pedigree, the world's largest yogurt maker and a good fit and the international scope and that was always a struggle for whitewave. it didn't have the scale to go internationally. >> think about that dynamic is like pharmaceuticals/biotech. the big european and american pharmaceuticals companies have no growth and they have to buy the innovative fast-growing brands which we saw yesterday with sanofi and medivation. >> as we watch the stock price indicated above where the deal is, keep in mind the break fee equals about $1.75 a share. more or less typical about a 3% overall, $310 million the actual number. that gets added into anything that any potential acquirer here who would want to go over the top has to pay. we'll see. you can see the positive reaction in danone shares. that becomes important. even with that fairly high multiple that they're paying,

their shareholders at least rewarding them this morning. overall, multiples we should point out are high in the group. general mills which is not growing fast at all to your point about top line growth or lack thereof, has an all-time high multiple high teens. >> they pay high dividends and in this yield starved world, consumer staples have been bid up. which is why a lot of people say you're going to start to see the deals because they have the stock to be able to do that. >> finally, greg engles will join the board of danone and big payday for him. $400 million. >> as he will join the board. we know who is smiling this morning, a guy who normally sits here calling for this for, i don't know how long. >> right. although a lot of people said it's so expensive, who's going to buy it. now we know. >> all right. we'll see the gentleman here tomorrow. ahead of tomorrow's key employment report the government data which was out tomorrow morning, we did get the adp private sector reporting showing

172,000 jobs were added in june. that beat expectations, payroll gains for may were revised downward by 5,000 to 168,000. meantime initial jobless claims that came in well below forecast, down last week by 16,000. to 254,000. so the expectation is we'll see a better jobs report, 170,000 is the consensus estimate, carl. >> two days after recommending that hillary clinton should not be charged for her handling of classified e-mail, james comey bracing for the capitol hill hot seat. in about an hour from now, the fbi director set to face a grilg from the house oversight committee and hampton pearson is on capitol hill to help set that up. good morning, hampton. >> hi, carl. right you are. the fbi director is expected to face tough questions from republicans on the house oversight committee about his basic decision and recommendation not to recommend criminal charges against hillary clinton for her use of a private e-mail server while secretary of state.

now, joining the director at the witness table will be the state department inspector general, steve linick, and also representing the intelligence community inspector general charles mccullough, the two government trouble shooters who basically began the clinton e-mail probe. the fbi director will face questions from house republicans about his calling mrs. clinton's actions, quote, extremely careless but not rising to the level of gross negligence as far as her handling of e-mails and classified materials. the oversight chairman jason chaffetz wants to ask the director about what looks like a double standard where hillary clinton is concerned. >> it does appear, based on the fact pattern laid out by the director, that if you had done those things, you would probably be in handcuffs. you would probably be going to jail. and probably should based on statutes. so we want to ask him about that. >> now late yesterday the attorney general loretta lynch

officially closed the investigation, accepting the recommendations of the fbi director that no charges be brought against any individuals. the committee in light of that, may ask for the release of more documents in what was a nearly year-long probe. carl? >> hampton, we will talk to you soon. thank you very much. and meanwhile, in washington, d. d.c., presumptive nominee donald trump is meeting with congressional republicans. larry kudlow is at that meeting and going to join us live from washington after it ends. >> up next pepsico poised to open. we'll talk to the cfo and vice chairman hue johnston in a live and exclusive interview. more "squawk on the street" coming from post nine on the new york stock exchange when we return. ader offices. steve, other than making me move stuff, what are you working on? let me show you. okay. our thinkorswim trading platform aggregates all the options data you need in one place and lets you visualize that

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you do with comcast business. it's reliable. just like kung pao fish. thank you, ping. reliably fast internet starts at $59.95 a month. comcast business. built for business. mccullough. pepsico kicking off earnings season out with second-quarter results that beat both on the top and bottom lines. the company also raised its profit forecast and the stock is higher in the premarket near an all-time high. joining us now from purchase, new york, hue johnston the fco and vice chairman and also a member of the global council. >> great to be with you this morning. >> tell us how you manage to achieve 3.3% organic revenue

growth in what they called an incredibly volatile macro economic environment. >> i think that's right. it's a volatile environment and we assume that's going to be the case going forward. what you saw was solid revenue growth and very strong bottom line driven by two things. number one, our revenue growth is really being fueled by innovation, which is a product of the investments we've made in r&d and doubled r&d over the last five years, and the investments we've made in commercializing new products. our innovation right now couldn't be stronger and combine that with the ongoing terrific cost control you're getting consistent results that investors seem to be pleased with. >> north america continues to be strong and frito-lay as well, but the beverage business continues to be a weak spot. what's the plan for turning it around? >> well, i think overall, in benchg

beverages we're doing pretty well. 2% volume growth around the world. north america with 1% revenue and 6% profit. obviously the profit was pretty good. revenue, we would obviously like that to be a little bit stronger, but frankly, with the late start to the summer this year, i think you're going to see better beverage results in the balance of the year. you know, even more importantly, is, again, i'll take us back to all of the innovation that we've got coming out, whether it's mountain dew black label, aquafina, naked cold press, propel fitness water, we have a stream of innovation that will continue to drive the top line because consumers are willing to pay. >> about what diet pepsi, taking out the aspertain and now going back in, when do the diet sales come back and explain the u-turn on ingredients. >> yeah.

we're going to offer both. what we've done is listened to the consumer. some consumers don't want aspartame and we have a product for them. some say i love my old diet pepsi and we have a product for them as well. we're giving the consumer choice which what is pepsico has always been about. to tell you the truth the conversation i think is less about csds or die et sodas. it's about the broader beverage category and if you look at the broad selection of offerings we have, whether it's gatorade or naked or trop can na, we have such a good variety of carbonated and noncarbonated products that enables us to be the leader in north america that wherever the consumer wants to go we have a category leading or a category number two product available for them and we're innovating to meet their needs. >> speaking of adding categories as you know whitewave was scooped up by danone. did you look at this at all? >> well, as you know, we never talk about any individual company. what i would tell you broadly

is, and you made a comment earlier i think was particularly insightful, a lot of food and beverage companies are struggle fog are growth and trying to reshape their portfolios to hit their expectation. over the last ten years we've reshaped our portfolio already to be consistent with expectation whether it was acquiring quaker or tropicana or gatorade or izzy or naked. so we actually are very happy with where the portfolio sits right now, and it's capable of generating the growth that we've committed to externally. i think a lot of other companies are operating a bit more from a position of defense. regarding m&a more broadly, i think it's fair to say we look at basically everything. we look at every opportunity that's out there and if we don't buy it, it's because we didn't want it. i would say that across every single company that's out there. so i think we're in a position right now where we have one criteria, create value for shareholders and we'll do a deal if it's going to create value but right now, we think we have the portfolio right and we are

operating from a position of strength and don't feel the need to do anything. >> well, that's interesting. on that note was going to ask about hershey, which is in play right now with mondelez making a bid. i'm wondering if you would be looking to add more to the snack side or to the beverage side at this point? >> yeah. again, we have a set of criteria strategically that take us to higher growth in more attractive areas. we have a set of criteria financially around getting good returns and getting acree shun off of deals we look to dealdo. we don't feel pressured to do anything. we've told investors we expect to do tuck-in acquisitions and that's a stranggy i think we're going to continue with. >> want to ask about the international backdrop which has been tough. as you mentioned specifically russia where you have a good chunk of sales. the uk. clearly the british pound plunging is going to impact results later on. and latin america which continues to be a headache. >> yeah. as we look around the world,

obviously the world is a volatile place right now, but with the geographic portfolio we have, you know, for brazil, faces challenges, mexico, russia which faces challenge, we have an india. we couldo have a nicely balanced portfolio. in terms of the uk and western europe it's so early in terms of brexit. it's difficult to ascertain, what, if anything that's going to mean. from our perspective bus because we tend to produce locally farm to shelf changes in trade rules aren't likely to have an impact on us. because it's a developed market i think consumers will pay for the innovation we offer as we bring them products and exciting new brand campaigns. >> last time we talked to you just joined the twitter board, now that you have been on there and gone to a meeting what do you think of jack dorsey one year into his return as ceo? >> well, i'm not really here to talk about twitter but i will tell you, i think it's an

absolutely dynamite platform and we have a great leadership team throughout led by jack. i'm happier to have joined twitter than i was when i first joined. >> fair enough. thank you, hugh. good to see you on the pepsi earnings. hugh johnston cfo and vice chairman of pepsico. >> when we come back, the ekts strategist in how to play the region in light of the brexit fallout. tight range. still more "squawk on the street" from the nyse is straight ahead.

hello prashant bhuyan. co-founder of the fintech services start-up. hello watson. your analysis of social media and conversations on various trading floors, helps us uncover insights. insights that help investors predict market closes, well before markets close. you know, your analysis has helped us improve our predictive accuracy by over 500%.

550.2, to be precise, but we can always do better. i like your attitude watson. thank you, hugh. street" from the nyse is

seven minutes to the opening bell. let's bring in oppenheimer funds chief investment officer to talk about the markets and what we might expect if the days and weeks ahead. >> good morning. >> we're basically within a stone's throw of making up the brexit losses but you said the impact will be significant to certain parts of the world. is the market missing anything. >> i think the market is not missing anything yet, because economies haven't really slowed down, but i think there's really no positive way to spin the story from an economic standpoint. it will have some impact. hopefully it's modest. but i think what the markets are reacting to more than anything else is the policy support, expectations that central banks are going to be providing high level of policy support. >> and yet at the same time, the argument continues that their effectiveness is waning, that private credit isn't being created at the level you need to get the gdp number where you need it to be. >> sure.

i think central banks have been very successful in supporting asset prices. but perhaps not getting growth going to the level that they wanted to go. >> we have a big jobs report tomorrow coming off of a very weak report in may. only added 38,000. does that make tomorrow even more important for the fed and the markets? >> well, i think that tomorrow's job report is going to be ignored unless it is really, really strong. then we probably give up some ground on -- in the bond market because brexit is going to overwhelm any positive story that you may have with respect to jobs or u.s. economic data because it's dated. we're waiting for new information down the road. >> i guess the question right now, does the market seem to be pricing in more minimal growth, lots of policy support, very low interest rates, where does that leave you as an investor? do you essentially sort of ride what's been working already? >> i guess you have no choice. that is what has been working for the last seven years and

that's how it will work for the next few. i think the choice you have to make is from a valuation standpoint, what is the most attractive part of different assets you can go. is it equities, government bonds, credit, commodity, u.s. overseas, i think those are the real decisions you have to make. >> where do you come down on those? >> i think u.s. is a safe haven. in the u.s. i think credit is a good asset class because growth is enough to support credit but ekts valuations may be higher. the real winner or real relative winner in this whole brexit saga may end up being emerging markets because they get the policy cover they need to restructure their economies and their valuations are quite attractive. it's the u.s. and emerging markets from an equity standpoint, credit is what the sweet spot is. >> thank you for setting up the market day for us. we are a few minutes away from the opening bell.

citadel's ken griffin will get ready to ring it. they have news. i'll get you up to speed on that in a moment. .

you're watching cnbc "squawk on the street" live from the financial capital of the world. the opening bell in about 60 seconds. live shot of the podium has citadel bringing on kevin turner the coo of microsoft, to run their market making business. what a resume for him. started as a cashier at walmart, eventually made his way to run sam's club. he was cio. moved to microsoft. where had he's been about a dozen year. big get for citadel in this case. >> guessing kind of reinforces what citadel is as a company. a tremendous technology-driven global business. you're not going to have somebody run as coo somebody who has got, you know, trading smarts. it's actually about the computer blue brinprin blueprint. >> part of their business and

our market. with that the s&p needs about 30 points to get to its pre-brexit level of 2113. dow, 18011. there's the opening bell and the s&p at the bottom of your screen as we said at the big board citadel's founder ken griffin and at the naz da sifma fostering nomg and understanding of the -- fostering knowledge and understanding of individuals for all backgrounds. we'll watch whitewave and pepsi to start already having discussed those two names. we heard from hugh johnston a moment ago. >> pepsi is number two in the top of the list of the s&p 500 set for a good day of what could be limiting the games as a stock that is already at a record high as consumer staples as a defensive group that pays dividends has been bid up and super charged by talk of m&a chatter. mondelez bidding for hershey and the whitewave/danone deal today.

let's check on whitewave. which before the market was up double digits heading toward the offer price. david, questions about whether you could see a counter bid. whitewave trading at 56.58. so right around that price. although it looks like these two are in business together with gregg engles the ceo of whitewave in france right now joining the board and sealing the deal. >> joining us tomorrow. clearly you have to note that it is trading above the bid price. it's an all cash bid. it's not as though it's moved up as a result of danone stock moving up. it is simply above that. buy it right now and the deal holds you will lose money. to your point there is at least some speculation that perhaps there will be others that take a look here. now, it's hard to understand the full process that took place here. clearly there was no public auction. doesn't appear there was a private auction where they aggressively reached out to other potential buyers. they did sign the nda, known about a month ago people familiar with the talks tell me danone got the deal done let's

call it in the last two months and we have he known, sara, gregg engles was potentially a seller, he will benefit personally to the tune of $400 million. >> everyone saying finally. >> it's taken a while. you can't do anything for tax reasons after -- for two years after a spin but that clock expired a while ago. the stock had moved up. it moved down appreciably when it did not appear that there was a deal on the horizon. and then recently it's been inching -- not recently. for much of this year higher. >> since the full spin of foods. it's been a year that they've been -- >> a year they've been able to be able to do it. >> there was a period of risk aversion where all of those sort of faster growing smaller names were getting slammed and a lot of people thought that the bigger names that were doing well would come in and swoop in and buy. >> yeah. >> that's what they're doing, which means we're also going to be watching happen celestial in the -- hain celestial the obvious next candidate where the

consumer is going, bolt on acquisition type candidate and it's up about 10%. >> wow. it's up, having a good day today. should point out on the danone deal for whitewave, it's about a $310 million breakup fee. so certainly not large, more or less in line with what we see to happen a bit smaller but not necessarily an obstacle if there were real interest on the part of a general mills or something like that. if they wanted to pay that. about $1.75 a share additional. >> the market is paying up a little bit for the optionalty maybe something else goes on here. >> oil leading the market for the most part as we got that bigger than expected draw last night from api. we're going to get to eia later than usual today at 11:00 a.m. eastern time. watch the disk makers as well. western dig raising their q4 fiscal q4 revenue and profit outlook, micron's higher, seagait higher, even after the

tear that some of names have been on. >> on a tear, yet still, they screen out as some of the cheapest stocks out there for good reason and cyclical tough business, but i think a little incremental good news in a western digital. they are integrating and acquisition and all the rest, enough to get value buyers in there. >> unlimited lb, june comps were a nice beat up 6 above the 1.9 estimates, july comps down low single digits to flat and the trouble with retail is with us and going to stay that way looks like. >> a lot of these retailers cannot seem to string together multiple months where things are working. so it's kind of fits and starts. it was a bit of a surprise to a lot of people who felt it was best in class in terms of the mall retailers a while back when they disappointed and now as you say they kind of temper a good june with a little bit of a warning for july. >> we got adp report and it was better than expected at 172,000 jobs ahead of tomorrow's big

jobs report. yields moving up and the two sectors in the red are telecom and utilities either on top or bottom depending on which way treasury yields are. this is a week, yesterday, we saw record lows for the 10-year and 30-year. >> although the yield did bottom right in the morning, you got that pretty good ism services number and ticked up. i will mention in telecom, you did get a downgrade of at&t from citi this morning seems like a valuation call. price target moved to $46 a share, that's above where it closed yesterday, about 43.10. in this market you could probably say as an investor if you think the stock is getting to 46, i'm getting a 4.4% dividend yield that gives me a an 11% potential return and a neutral rated stock. so many people are buying stocks because they don't think the stock market will do much and they're buying this kind of stock. it is giving back a little bit today, at&t. >> verizon reports on what -- essentially will be a price increase, i guess in terms of

some point although others are arguing you're getting more data than you otherwise would have, they're reprising certain plans of verizon. >> did you see that yesterday? >> i didn't. >> the twitter wars resume with ledger -- i think the hash tag is #verizonmath as they try to argue you get a better deal. >> the deal investors have been focused on to mike's point 4.04% on verizon shares a bit below that of at&t. they've both been strong performers this year, respectively call it over the last 12 months up 18 to 19% for both stocks. >> brings to mind citi downgrading to a neutral on valuation, although they take the price target from 42 to 46. talk about a reach of a yield as their poster child right there. >> that's been the one. they're not without growth these companies, obviously, not fully dine na saurs even though they have a lot of debt and financial engineering to make the dividend as some of them do. you can get 11% return even if it's up to the $46 price target

plus the yield. maybe that's good enough for some. i would point out on the utilities technology analysts saying it's about as good as it gets in terms of the recent outperformance of the utility sector, in the short term, not that you have to run away but basically on a hot streak, usually where it's time to take some off the table and just wait if you're attracted to buying these. >> did want to mention shares of ge not -- i tend to note it because for so many years it was our parent company but they've been moving well lately since they got that desiffy notice the ability to say ge capital no longer, of course, considered a systemically important financial institution. that stock approaching $32 a share, positive for the year to 2.5%. much of the year it spent in negative territory. and, of course, can't be hurt by the fact it has almost 3% yield, nothing like the telecom companies we mentioned. approaching its 52-week high of

32.05 is ge. >> it's a little snarky but if you know tis every time ge is looking to break out it's kind of late in the market move. it's, obviously, been on this stair-step higher for a while. could not get above 30, forever below 30. we'll see if it means people are looking for the big, simple names or at least familiar names. >> you would think as an industrial company with international sales, potentially at least hit by a strong dollar and also europe and capital spending, you would think there might be some trepidation there. >> it's true. although i mean in machinery group has been strong. within capital goods in general you have some strong pockets. it always seems like ge there's always something kind of, you know, a to be sure clause. you have the oil and gas and everything. >> always something. >> aerospace. >> finally watch shack today. initiated underperform at webb bush. their target 30 arguing the company has to sprint to simply remain in place given its current valuation. dow is up 36. bob pisani is on the floor.

>> good morning, carl. it's simple you got the 10-year behaving, the dollar behaving and oil up fractionally. put that together and you have a calm open slightly more stocks to the upside than to the downside. no dramatic price moves. eurozone take a look, three days of declines and that's reversed today essentially, fractional gains, some 1%. the ftse 250, broadest reputation of what goes on in the uk market, finally a bounce there and nice bounces in not just the banks but the material names as well. bhp bulletin, glen corp, they're up nicely. there was an upgrade there. jeffreys and ubs raised the price target and that's having a little effect. glencore had a terrible year, bouncing back today. looking for sectors in the united states, modestly upside for the banks again, energy and technology. health care. utilities which had been a market leader with telecom to the downside. this started reversing

yesterday, the trend started yesterday here. there is the s&p 500, for everybody that talks about the trendless market we have i remind you we are 11% above the lows we saw in february. we were down around 18.30 or so. looking for a trend it's not -- it's a little difficult to discern. we are getting a move up in health care, small breakouts there. that is nice. transports are trending down. i was making a joke yesterday about the newest acronym i hear on the trading desk and that's stub, meaning staples, telecom, utilities and bonds, the constant everyday play around defensive names and my joke is any time trading desks put a name on something that means it's at a top sell that trade. that's reversed a little bit today. one of the things that's odd about this earnings season is how quiet it's been. normally you get into the first week of july, and we've got a dozen, 20 companies out with comments trying to essentially get ahead of their earnings. often these are disappointing. what we've heard is essentially nothing. it's been dead quiet out there in terms of earnings.

possibly because people haven't wanted to say anything around brexit. i'm waiting. vice president heard it. people want to hear about what people have to say about brexit. pepsi didn't say anything this morning. nothing in the press release about brexit. the earnings call is still going on, but didn't hear anything early on. the guidance is good, numbers were good by the way, 471 the guidance for the full year, 473 the consensus, good enough for government work. organic revenue growth 4%, pretty good. they did not talk about brexit. they did mention the volatile global macro environment but a lot of people want to know the impact on revenues because they get about 45% of their revenues outside the united states. and they did note the impact would be about 4% on their revenues. so remember, if you're down 3%, on revenues this quarter which what is they are and you have a 4% impact that's pretty noticeable overall. this dollar is continuing to impact people. there's pepsi and you're looking at a five year, not to quibble about a half a point or so but pepsi is essentially at a

historic high right now. dow jones industrial average up 51 points. back to you. >> bob, thank you very much. let's head over to the bond pits now. rick santelli at the cme group in chicago. good morning, rick. >> hi, sara. how do you make a 141 yield in the 10s look like there's actually selling pressure pushing yields higher? of course you start out with intraday trades. yesterday around 131, 132. one week chart of 10s and realize it was the upper 160s kind of when brexit hit the wires, that if you're a traditional technician, you're going to look at where the breakout began to the downside yields and upside in price and that's your threshold. you're going to pay attention to. do we get back into that pre-brexit range? or do we challenge more lows first and that's what traders are looking at. if you look at a one-month bund, you know, once again we go from minus 20 to minus 15 minus 14, and it looks like there was some

selling pressure and, indeed, i guess you could call it that. but in the end, it's more of that investors have taken their foot off the gas and makes many investors nervous to see the negative rates not to mention how nervous the bankers are trying to deal with them or their investors in the banks trying to profit in that environment. lqd, the etf, investment grade, throw out a 10-year chart, we're into the high price of the year, getting ready to challenge all-time highs. two-week of the pound dollar and pound versus the euro, not a lot of action and sight for reversals even of barely stabilization at this point. finally 30s minus 5s we used to talk about 10s minus 2s we did an exchange about this yesterday, we continue to see rather dramatic flattening in most of the curve, 30s minus 5s has a little more horsepower. sara, back to you. >> i'll take it, mr. santelli. thank you very much. rick santelli. let's catch up with our

julia boorstin who caught up with liberty's john malone out in sun valley. julia? >> thanks so much, david. that's right. we just spoke to media mogul john malone and with viacom's future in question here's what he said when asked if he was interested in buying a stake in viacom studio paramount. >> that would not be where i would go if it was my decision. but they, you know, they've got some great assets. right at the moment because of the turmoil they're substantially undervalued. >> malone also said he thought cbs and less moonves would do a terrific job if cbs and viacom were combined and he you the ceo of the joint company. malone had no idea what shary red stone has in mind and what kind of estate tax issues they'll have to deal with. of course shari redstone is here as is les moonves and no sign of

fell leap du monde yet. >> thank you very much. when we come back how to play asia in the wake of the brexit vote. we will talk to goldman's chief asia equity strategist tim mo and later this morning fbi director comey on capitol hill preparing to defend his recommendation not to charge hillary clinton. he will face questions from the house oversight committee and we will take coverage of that later on. this woman owns this house, with new cabinets from this shop, with handles designed here, made here, shipped from here, on this plane flown by this pilot, who owns stock in this company, that builds big things and provides benefits to this woman, with new cabinets. they all have insurance crafted personally for them. not just coverage, craftsmanship. not just insured. chubb insured.

the uk's decision to exit the eu has sparked all sorts of contagion fears reaching asia. wide speglation the bank of japan will continue to ease and the continued yuan weakness in china is a concern for investors. how to invest in asia timothy mo the head of macro research at goldman sachs lowered his growth research post-brexit and joins us at post nine. >> great to see you too. >> have your views on asia changed after brexit? >> they have. so to boil all the different micro changes we've made to gdp growth and interest rates and so forth the bigger picture is we've had a growth and rate

shift so we basically dialed down growth for parts of the world, less so for asia because the impact is mild, we've toned down our policy forecast and interest rate forecast, a growth and rate shift. what that means is that generally advantages the domestic part of asia and also the interest rate sensitives and so what we -- we made a couple tweaks to allocations, favoring south asia over north asia and one of the strategies we particularly like is a dividend yield strategy because the a world where rates are lower for longer there's a huge appetite for income and we've identified a list of names that have a 5.5% dividend yield which in today's world is pretty attractive if they're covered by good cash flow. >> one of the questions that investors in this country have about china is the currency, now that it's back down to 5.5 year lows. we started the year worried about china, worried about its falling currency. this time feels a little different. >> it does. what's interesting is we've just recently gone through the highs

in terms of the cny rate. it's weaker more than what we saw in january, and in january/february there was this concern about china's policy and i was in new york at that time and most people thought that the currency would depreciate 20% tomorrow and now we're through those highs and the degree of calm about the currency is much more palpable. the key reason is that the policy makers in china have done a much better job of guiding the market. much better communication in marketing so instead of surprising the market with the one off jumps that flips people out and say is there a whole lot more coming, the market is really uncertain, there's been a much more calm and guided fashion of things volatility is low even throw price has gone to new highs. >> hard to imagine how it could have been worse than it was -- >> very true. >> are you suggesting they actually learned from that experience? >> it certainly seems so. from our interactions we've had and all the communication we've

had, our reading of the tea leaves is that, you know, there has been a so-called adaptive response and that they've learned that communication with the market is, indeed, important. >> where is japan in terms of policy? you see kind of the yen rallying back to pre-abe levels and the rest of it. seems like it's considered a source of potential risk to investors here than anything else. what can policy do from here? >> yeah. it's a good point. and to be frank, we feel that there's a bit of a bind for policy makers in japan. it's not clear that the previous move towards negative interest rates was effective. quite the opposite. and i think a large part because the expected response that was supposed to elicit did not happen because you have an older demographic and when you charge them for putting money in the bank at negative interest rates you don't get people to spend more you get them to hoard more and get this paradox of thrift so to speak. so having interest rates go in further negative wouldn't seem to be the paltive, there's talk

about trying to steepen the yield curve which might be helpful for the banks but it's not fully clear how that's going to happen. with the yen around about 100, that's really prej dish shall to corporate profits in japan, why top petition h t top picks has been weak this year. >> has abe nom micks failed? >> hasn't worked as well as they hoped, put it that way. >> good to see you, asian strategist at sghoost we're counting down to fbi appearance comey's appearance on capitol hill. live coverage of that in a moment. the dow now about 20 points, 30 points away from those pre-brexit levels. we're back in a minute. ♪

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not if you just put the finishing touches on your latest masterpiece. timing's important. comcast business knows that. that's why you can schedule an installation at a time that works for you. even late at night, or on the weekend, if that's what you need. because you have enough to worry about. i did not see that coming. don't deal with disruptions. get better internet installed on your schedule. comcast business. built for business. live shot of capitol hill where in a few moments fbi director james comey will testify before the house committee on oversight and government reform regarding his decision and the fbi's decision to recommend no charges against hillary clinton regarding her e-mail on those private servers. we'll be hearing from chairman

jason shachaffetz ranking membe elijah cummings. we expect it to go 90 minutes, trying to set up what it means following the fact. but to call a hearing essentially a snap hearing, within 24 hours or so of the director's appearance on tuesday, in the words of some people today, the fastest congress has acted on anything in a long time. so that's to come after a short break. meanwhile the dow is up almost 60 points. don't go away.

good thursday morning. welcome back to "squawk on the street." i'm carl quintanilla, with sara eisen, david faber and mike at the new york stock exchange. we are waiting fbi director james comey getting ready to testify on capitol hill on details of the investigation into hillary clinton's use of her personal e-mail server while secretary of state. the hearing comes as u.s. attorney loretta lynch says she is accepting the fbi's recommendation and will not charge mrs. clinton. live to the hearing as soon as it begins. in the meantime, though, we're going to bring in a couple guests to talk about this and help set it up.

here at post nine with us, we're joined by former adviser to both the obama and kerry, edwards campaign, and from washington, d.c., former jeb bush 2016 communication director tim miller a senior adviser to the anti-trump principles pact. good to have you both. >> mark, the strategy from the gop to call the hearing so early smart or not. >> probably not. really good at making hay politically with the house government oversight committee, the benghazi controversy, the irs targeting, so when they don't have any evidence of actual wrong doing what they'll do is try to fan the flames of theses political controversies because they're hopefully trying to bring down secretary clinton's poll numbers. it's a political strategy. if they had waited on this they could stretch it out. they're basically stretching it into a two, three day story from

a political tactic standpoint. they could do it next week and make it a week-long story if they want to. >> i'm not sure that's true, though. mark, it seems like the american people, there is anger out there and it doesn't seem like just a partisan issue and seems like a question of character and he did raise a lot of questions in that news conference about why they weren't going to prosecute when he mentioned that there was clearly some damming evidence and lack of judgment. >> he said there was lack of judgment and no reasonable prosecutor would pursue criminal charges and i think, you know, look that's not hillary clinton's like proudest career moment to be escaping what reasonable prosecutors would call criminal, but i don't think -- look, having the political wing of government come after the fbi, just to figure out wrongdoing, lawful, unlawful, they don't see the world -- james comey don't see the world like a lot of us in politics through a political lens they see it in a criminal or not criminal way.

there is no evidence to support criminal charges or that there's no precedent to support criminal charges and for jason chafe fits and the house republicans to second guess that is disengine was. >> you see -- one second, tim. that's chairman chaffetz speaking to ranking member comings. i want to bring you in and john harwood to set this up because part of the intent here, john, is to uncover whatever additional evidence there is. we already have speaker ryan today asking the dni to remove secretary clinton's classified status. >> well so it's a double-edged sword for republicans. on the one hand, as our previous guest just indicated, republicans are able to extend attention to the story using this hearing, something donald trump, by the way, stepped on last night with his remarks about saddam hussein and the

star of david tweet, getting back into that. but they can extend it. on the other hand their tone is going to be important because republicans don't want to take this transform a situation where james comey sharply criticized hillary clinton, things that republicans can repeat all the way through election day, and turn this into an adversarial process with comey. in other words, switch it from a fight to hillary clinton to a fight with the fbi, a lot of republicans were concerned that james comey did not recommend charges and, of course, now loretta lynch has accepted their recommendations, but republicans have an opportunity, given what comey has said about hillary clinton to exploit it, but turning it into a fight with the fbi may not be a smart thing to do. >> we see comey taking his seat. we expect him to start speaking in a moment. hampton pearson, who is also watching this for us, john raises the possibility of more language interest comey coming as we heard on tuesday, but is

there also the possibility that his language on tuesday was so strong, that today might sound like a walk back? >> i think what the -- looks like the committee may want to get into and let's assume i know it's a little facetious we take the high road here, suppose they actually want to talk to the director about okay, what are perhaps the policy implications going forward if we, congress, want to take a long, hard look at rewriting this law and especially some of the aspects of the espionage standards going forward. what do we, as lawmakers, have to do to get to that higher standard. there is that opportunity for that. the other practical problem, frankly, for the committee, republicans or democrats, they've had little or no time to prepare. remember, the fbi director has been living with this evidence for the better part of a year. he can go granular if they want to get into the specifics of the facts and how the case was built or not built you know.

he has that command and that mastery of a lot of detail of really what's in the investigation and the lawmakers frankly on both sides are going to be shorthanded to ask him kinds of questions that may move him off that core decision not to charge. >> yeah. hampton pearson, john harwood, tim miller, mark hanna, thank you for that. i believe we're about to hear from chairman chaffetz. take a listen. >> i'm here because we're mystified and confused by the fact pat than you laid out and the -- fact pattern that you laid out and the conclusions that you reached. it seems that there are two standards and there's no consequence for these types of activities in dealing in a careless way with classified information. it seems to a lot of us that the average joe, the average

american, that if they had done what you laid out in your statement, that they would be in handcuffs. and they might be on their way to jail and probably should. and i think there is a legitimate concern that there is a double standard. if your name isn't clinton or you're not part of the powerful elite, that lady justice will act differently. it's a concern that lady justice will take off that blindfold and come to a different conclusion. hillary clinton created this mess. wasn't republicans, it wasn't anybody else. she made a very conscious decision, on the very day that she started her senate confirmation, she set up and got a domain name and set up a system to avoid and bypass the

safety, security, and the protocol of the state department. classified information is classified for a reason. if it were to get out into the public there are nefarious actors, nation states, others, that want to do harm to this country. there are people who put their lives on the line protecting and serving our country, when those communications are not secure, it puts their lives in jeopardy. this classified information is entrusted to very few, but there is such a duty and an obviouslin to protect that, to fall on your sword to protect that. and yet there's -- there doesn't seem to be any consequence. i was talking to trey gaudy and he made a good point to us yesterday. mr. gowdy said in your statement, mr. director you mentioned that there was no

precedent for this, but we believe that you have set a precedent and it's a dangerous one. the precedent is, if you sloppily deal with classified information, if you're kacavali about it -- it wasn't an innocent mistake, this went on for years, that there's going to be no consequence. we are a different nation in the united states of america. we are self-critical. most nations would never do this. but we do it in the spirit of making ourselves better. there will be accusations about political this and political that. i have defended your integrity every step of the way. you are the definitive voice. i stand by that. but i am mystified and i am confused.

because you listen to your fact pattern and come to the conclusion that there is no consequence, i don't know how to explain that. we'll have constituents ask us, get mad, they're frustrated, they've seen this happen time and time again. i don't know how to explain it. and i hope that it -- through this hearing we can stick to the facts and understand this because there does seem to be two standards, there does seem to be no consequence and i want to understand that and be able to explain it to the person sitting at home. that's why we're here. and so i yield back. now i recognize the ranking member mr. cummings. >> director comey, thank you for being here today. i want to begin by commending you and the public servants at the fbi for the independent

investigation you conducted. you had a thankless task. no matter what recommendation you made, you were sure to be criticized. there's no question that you were extremely thorough. in fact, some may even say you went too far in your investigation. but, of course, that was your job, that is your job. secretary clinton has acknowledged that she made a mistake in using a personal e-mail account. you explained on tuesday that she and her colleagues at the state department were extremely careless with their e-mails but after conducting this exhaustive review, you determined that no reasonable prosecutor would bring a case based on this

evidence. and you and the career staff recommended against prosecution. based on the previous cases you examined, prosecutors had gone forward they would have been holding the secretary to a different standard from everyone else. amazingly, amazingly, some republicans who were praising you just days ago, for your independence, your integrity, and your honesty, instantly turned against you because your recommendation conflicted with the predetermined outcome they wanted. you had one job. and one job only. to prosecute hillary clinton. but you refused to do so. so now you are being summoned here to answer for your alleged

transgressions. and in a sense, mr. director, you're on trial. contrary to the claims of your critics, there is absolutely no evidence that you made your recommendation for political reasons, no evidence that you were bribed or coerced or influenced, no evidence that you came to your conclusion based upon anything but the facts, and the law. i firmly believe that your decision was not based on convenience, but on conviction. today, house republicans are doing what they always do. using taxpayers' money to continue investigating claims that have already been debunked, just to keep them in the headlines one more day. when they hear a political siren they rush towards it over and over again, even if the evidence

is not there. exhibit a. majority leader kevin mccarthy, who admitted on national television, that republicans established the benghazi select committee to bring down secretary clinton's poll numbers. i didn't say that. mccarthy said it. the fact was confirmed by republican staffer on that committee who reported that he was fired in part for not going along with the hyper focus on secretary clinton. i give house republicans credit, they are not shy about what they are doing. they've turned political investigations into an art form. if our concerns here today are with the proper treatment of classified information, then we should start with the review of our previous hearing on general

david petraeus who pled guilty last year to intentionally and knowingly compromising highly classified information. the problem is, mr. director, we never had that hearing. this committee ignored that breach of national security because it did not match the political goals of the house republicans. if our concerns today are finally addressing a broken classification system, in which security levels are arbitrarily changed up and down, that would have been a legitimate goal. that would have been a valuable addition to reforming and improving our government. after all, we are the government reform committee. we could have held hearings here on zika. the zika virus. preventing gun massacres like the one in orlando.

or a host of other topics that could actually save people's lives. but that's not why we're here. that is not why our chairman called this emergency hearing 48 hours after you made your recommendation. everyone knows what this committee is doing. honestly i would not be surprised, and i say this with all seriousness, i would not be surprised if tomorrow republicans set up a new committee to spend $7 million plus, on why the fbi failed to prosecute hillary clinton. director comey, let me conclude with this request, even with all that i have said, i believe that there is a critical role for you today. i've listened carefully to the coverage on this issue and i've

heard people say recently as this morning, three hours ago, that they were mystified by your decision. as a matter of fact, the chairman repeated it a minute ago. and so there is a perceived gap between the things you said on tuesday and your recommendation. there's a gap, mr. director, so in this moment, and this is a critical moment, i beg you, to fill the gap. because when the gap is not filled by you, it will be filled by others. share with us the american people, your process and your thinking. explain how you examined the evidence, the law, and the precedent. describe in clear terms how you and your team, career professionals, arrived at this

decision. if you can do that today, if you can do that, that could go a long way towards people understanding your decision. finally, i want to make it clear, that i condemn these completely unwarranted political attacks against you. they have attacked you personally, they have attacked your integrity, they have impugn your professionalism and suggested you were somehow bought and paid for because you made your recommendation based upon the law and the facts. i know you are used to working in a world of politics, but these attacks have been beyond the pale. so you do not deserve this. your family does not deserve it. and the highly-skilled and dedicated agents of the fbi do not deserve it. i honor your professional and

service to our country. even if it takes until hell freezes over, i beg you, to close the gap. tell us what happened between what you found and your decision so that not only the members of this panel and this congress will understand, but so that americans will understand. if you do that, if you do that, then it will be all worth it today. with that i yield back. >> mr. chairman -- >> i think hold on one second. with your indulgence, for the ranking member of which i have the greatest respect, you asked for a hearing on general petraeus and how that was dealt with you got it. we will have one in this oversight committee and the record will reflect that in the judiciary committee i repeatedly questioned attorney general holder, i repeatedly questioned the fbi director, about the disposition of that case, probably more than any member in the house or senate, and if you want a hearing we'll do that.

>> does the gentleman yield? >> yes. >> thank you. >> number two, you complained that we haven't done a hearing on zika. the oversight and government reform committee i believe was the very first committee to actually do a hearing on zika that was chaired by mr. mica. i'm proud of the fact that he did a zikaing her hearing and we did it first. >> gentleman yield? >> yeah. >> can we have another one the problem is still there big time. >> absolutely. >> mr. chairman, i just -- unanimous consent request we put a day to the hearing and a time. >> and the ranking member knows we have held multiple hearings on the criminal justice reform. you asked for it, you're passionate about it, and we do that as well. so to suggest we haven't addressed some of those issues is inaccurate. >> i don't think i did that m chairman, but again, as late as yesterday with the problem in

minnesota, with an african-american man being killed, i would like to have some hearings still on the criminal justice system. thank you. >> thank you. >> without objection. i'm going to work with you on that as i have every step of the way. >> thank you, mr. chairman. appreciate it. >> the chair is authorized to declare a recess at any time. we will hold the record open for five legislative days for any members who would like to submit a statement. our distinguished witness for our first panel, welcome the honorable james comey, director of the federal bureau of investigations. we welcome director comey and thank you for being here pursuant to committee rules. all witnesses are to be sworn before they testify. please rise and raise your right hand. do you solemnly swear or affirm that the testimony you're about to give is the truth, the whole truth and nothing but the truth? thank you. let the record reflect that the witness answered in the affirmative. mr. comey, the floor is yours. you can take as long or as short as you would like.

if you have any written statement that you would like to submit afterwards, we're happy to do that as well. it will be made part of the record. the time is now yours. director comey, you're recognized. >> thank you, mr. chairman. mr. cummings, members of the committee, i am proud to be here today representing the people of the fbi who did this investigation as they do all their work, in a competent, honest and independent way. i believe this investigation was conducted consistent with the highest traditions of the fbi. our folks did it in an apolitical and professional way, including our recommendation as to the appropriate resolution of this case. as i said in my statement on tuesday i expected there would be significant public debate about this recommendation and i'm a big fan of transparency so i welcome the conversation we're going to have here today and i do think a whole lot of folks have questions about so why did we reach the conclusion we did and what was our thinking. i hope very much to get an

opportunity to address that and to explain it and i hope at the end of the day, people can disagree, can agree, but they will at least understand that the decision was made and the recommendation was made the way you would want it to be. by people who didn't give a hoot about politics but cared about what are the facts, what is the law and how have similar people, all people, been treated in the past. maybe i could just say a few words at theeginning that would help frame how we think about this. there are two things that matter in a criminal investigation of a subject. what did the person do and when they did that thing, what were they thinking. when you look at the hundred years plus of the justice department's investigation and prosecution of the mishandling of classified information, those two questions are, obviously, present. what did the person do, did they mishandle classified information and when they did it, did they know they were doing something that was unlawful. that has been the characteristic of every charged criminal case involving the mishandling of

classified information. i'm happy to go through the cases in particular. in our system of law, there's a thing called mens rea. when you did it, this phrase means, what were you thinking. we don't want to put people in jail unless we prove they knew they were doing something they shouldn't do. that is the characteristic of all the prosecution of mishandling of classified information. a statute passed 1917 on its face makes it a crime a felony for someone to engage in gross negligence. maybe in that circumstance you don't need to prove they knew they were doing something that was unlawful, maybe it's enough to prove they were just really really careless beyond a reasonable doubt. at the time congress passed that statute in 1917 there was a lot of concern in the house and the senate about whether that was going to violate the american tradition of requiring the that before you lock somebody up, you prove they knew they were doing something wrong and so there was a lot of concern about it. the statute was passed.

as best i can tell the department of justice has used it once in the 99 years since, reflecting that same concern, i know from 30 years with the department of justice, they have grave concerns about whether it's appropriate to prosecute somebody for gross negligence, which is why they have done it once in a case involving espionage. when i look at the facts we gathered here, i see evidence of great carelessness, but i do not see evidence that is sufficient to establish that secretary clinton or those with whom she was corresponding, both talked about classified information, on e-mail and knew when they did it they were doing something that was against the law. so given that assessment of the facts my understanding of the law, my conclusion was and remains, no reasonable prosecutor would bring this case. no reasonable prosecutor would bring the second case in a hundred years focused on gross negligence. and so i know that's been a source of some confusion for folks. that's just the way it is. i know the department of

justice, i know no reasonable prosecute wear bring this case, and i know a lot of my former friends are out there saying they would. i wonder where they were the last 40 years because i would like to see the cases they brought on gross negligence. nobody would, nobody did. my judgment was the appropriate resolution of this case was not a criminal prosecution. folks can disagree but i hope they know that view, not just my view, of my team, was honestly held fairly investigated and communicated with unusual transparency because we know folks care about it. so i look forward to this conversation, i look forward to answering as many questions as i possibly can. i will stay as long as you need me to stay because i believe transparency matters tremendously and i thank you for the opportunity. >> thank you, director. i'm going to recognize myself here. physically, where were hillary clinton's servers? >> the operational server was in the basement of her home in new york. the reason i'm answering it that way, sometimes after they were

decommissioned they were moved to other storage facilities but the live device was always in the basement. >> was that an authorized or unauthorized location? >> it was an unauthorized location for the transmitting of classified information. >> is it reasonable or unreasonable to expect hillary clinton would receive and send classified information? >> as secretary of state? reasonable that the secretary of state would encounter classified information in the course of the secretary's work. >> via e-mail? >> sure. depending upon the nature of the system. to communicate classified information it would have to be a classified rated e-mail system. >> you did find more than 100 e-mails that were classified that had gone through that server, correct? >> right. to an unclassified server, correct. >> yes. so hillary clinton did come to possess documents and materials containing classified

information via e-mail on the unsecured servers, correct? >> that is correct. >> did hillary clinton lie? >> to the fbi? we have no basis to conclude she lied to the fbi. >> did she lie to the public? >> that's a question i'm not qualified to answer. i can speak about what she said to the fbi. >> did she -- did hillary clinton lie under oath? >> not to the fbi, not in a case we're working. >> did you review the documents where congressman jim jordan asked her specifically, and she said, quote, there was nothing marked classified on my e-mails, either sent or received, end quote. >> i don't remember reviewing that particular testimony but i'm aware of that being said though. >> did the fbi investigate her statements under oath on this topic? >> not to my knowledge, i don't think there's been a referral from congress. >> do you need a referral from congress to investigate her

statements under oath? >> sure do. >> you'll have one. you'll have one in the next few hours. did hillary clinton break the law? >> in connection with her use of the e-mail server my judgment is she did not. >> did you just not able to prosecute it or did hillary clinton break the law? >> well, i don't want to give an overly lawyerly answer, the question i look is there evidence that would establish beyond a reasonable doubt that somebody engaged in conduct that violated a criminal statute and my judgment here is there is not. >> the fbi does background checks. if hillary clinton applied for the job at the fbi, would the fbi give hillary clinton a security clearance? >> i don't want to answer a hypothetical. the fbi has a robust process in which we adjudicate the suitability of people for employs in the bureau.

>> given the fact pattern that you laid out less than 48 hours ago, would a person who had dealt with classified information like that, would that person be granted a security clearance at the fbi? >> it would be a very important consideration in the suitability consideration. >> you're kind of making my point, director. the point being, because i injected the word hillary clinton you gave me a different answer. but if i came up to you and said this person was extremely careless with classified information, the exposure to hostile actors and used, despite warnings, created unnecessary burdens and exposure, if they said that they had one device and you found out they had multiple devices, there had been e-mail chains with somebody like jake sullivan asking for classification changes, you're telling me that the fbi would grant a security clearance to that person? >> i'm not -- i hope i'm gig

giving a consistent answer. that would be an important consideration in a suitable performance for anybody. >> personally i think that sounds like a bit of a political answer because i can't imagine that the fbi would grant the security clearance to somebody with that fact pattern. do you agree or disagree with that? >> i just say what i said before. it's very hard to answer a hypothetical. it would be a very important consideration in suitability determines determination. >> did hillary clinton do anything wrong? >> what do you mean by wrong? >> i think it's self-evident. >> i'm a lawyer and an investigator and i hope a normal human being. >> do you really believe there should be no consequence for hillary clinton how she dealt with it. >> i hope folks remember what i said on tuesday. i didn't say no consequence for someone who violates the rules regarding the handling of classified information. there are often very severe consequences in the fbi involing

their employment, pay, clearances. that's what i said on tuesday. and i hope folks walk away understanding that just because someone is not prosecuted, for mishandling classified information, that doesn't mean if you work in the fbi, there aren't consequences for it. >> so if hillary clinton or if anybody had worked at the fbi under this fact pattern, what would you do to that person? >> there would be a security review and an adjudication of their suitability and a range of discipline could be imposed from termination, to reprimand and in between suspensions, loss of clearance, so you could be walked out or you could, depending on the nature of the facts, you could be reprimanded. there is a robust process to handle that. >> i've gone past my time and yield back. i recognize the ranking member mr. cummings. >> thank you very much. director comey, i would like to thank you for being here today especially on such a short notice. you and your staff should be commended for the thorough and dedicated review you conducted.

unfortunately, some of my colleagues are now attacking you personally because your final recommendation conflicted with their preconceived political outcome in this case. some have tried to argue this case is far worse than the case of general david petraeus. who was convicted in 2015 of knowingly and intentionally compre micing highly classified information, in fact, one vocal politician we all know said this and i, quote, if he isn't indicted the only reason is because the democrats are protecting her. she is being protected 100% because you look at general petraeus, look at all the other people that did a fraction of what she did, but she has much worse judgment than he had, and she's getting away with it and it's unfair to him end of quote. director comey, you were the director of the fbi when general petraeus pled guilty, is that right? >> yes. >> if i understand that case

correctly, general petraeus kept highly classified information in eight personal notebooks at his private residence, is that correct? >> that is correct. >> according to the filings in that case his notebook included the identities of covert officers, they included war strategy, intelligence capabilities, diplomatic discussions, quotes and deliberative discussions from high lel national security council meetings and discussions with the president. general petraeus shared his information with his lover and then biographer. he was caught on audiotape telling her and i, quote, i mean, they are highly classified. some of them. they don't have it on it, but i mean there's code word stuff in there end of quote. director comey, what did general petraeus mean when he said he intentionally shared, quote, code word information with her? what does that mean? >> the petraeus case, to my

mind, illustrates perfectly the kind of cases that the department of justice is willing to prosecute. even there they prosecuted him for a misdemeanor. in that case, you had vast quantities of highly classified information, including special sensitive compartment information, that's the reference to code words, vast quantity of it, not only shared with someone without authority to have it, but we found it in a search warrant hidden under the insulation in his attic and then he lied to us about it during the investigation. so you have obstruction of justice, intentional misconduct and a vast quantity of misinformation. he admitted he knew that was the wrong thing to do. that is the perfect illustration of the kind of cases that get prosecuted. in my mind it illustrates importantly the distinction to this case. >> general petraeus did not admit to these facts when the fbi investigators first interviewed him, did he? >> he lied about it. >> but he did admit to these facts in a plea agreement, is that correct? >> yes. >> here's what the department

filing said about general petraeus, i quote, the acts taken by defendant david howell petraeus were in all respects knowing and deliberate. and were not committed by mistake, accident or other innocent reason, end of quote. is that an accurate summary in your view, director comey? >> yes. it actually leaves out an important part of the case which is the obstruction of justice. >> was he charged with obstruction of justice? >> no. >> and why not? >> a decision made by the leadership of the department of justice not to insist upon a plea to that felony. >> so, the question is, do you agree with the claim that general petraeus, and i quote, got in trouble for far less? end of quote. do you agree with that statement? >> it's the reverse. >> what do you mean by that? >> his conduct to me illustrates the categories of behavior that mark the prosecutions that are actually brought.

clearly intentional conduct. knew what he was doing was a violation of the law. huge amounts of information that even if you couldn't prove he knew it raises the inference he did it. and an effort to obstruct justice. that combination of things makes it worthy of a prosecution. a misdemeanor prosecution, but a prosecution nonetheless. >> sitting here today do you stand by the fbi's recommendation to prosecute general petraeus? >> oh, yeah. >> do you stand by the fbi's recommendation not to prosecute hillary clinton? >> oh, yes. >> director comey, how many times have you testified before congress about the general petraeus case? do you know? >> i don't think i've ever testified -- i don't think i've testified about it at all, i don't think so. >> with that i yield back. >> i have to check the record but i believe i asked you a question about it at the time, but maybe not. >> you could have have. that's why i was scrunching my face. could have been a judiciary committee i was asked about it. >> yeah. we'll now recognize the gentleman from south carolina,

mr. gowdy, for five minutes. >> good morning, director comey. secretary clinton said she never sent or received any classified information over her private e-mail, was that true? >> our investigation found that there was classified information sent. >> it was not true? >> that's what i said. >> okay. well, i'm looking for a shorter answer so you and i are not here quite as long. secretary clinton said there was nothing marked classified on her e-mails sent or received. was that true? >> that's not true. there were a small number of portion markings on i think three of the documents. >> secretary clinton said i did not e-mail any classified information to anyone on my e-mail there was no classified material, that is true. >> >> there was classified information e-mailed. >> secretary clinton used one device, was that true? >> she used multiple devices during the four years of her term as secretary of state. >> secretary clinton said all work related e-mails were returned to the state department. was that true?

>> no. we found work related e-mail, thousands, that were not returned. >> secretary clinton said neither she or anyone else deleted work related e-mails from her personal account. was that true? >> that's a harder one to answer. we found traces of work related e-mails in -- on devices or in space. whether they were deleted or when a server was changed out something happened to them, there's no doubt that the work related e-mails that were removed electronically from the e-mail system. >> secretary clinton said her lawyers read every one of the e-mails and were overly inclusive. did her lawyers read the e-mail content individually? >> no. >> well, in the interest of time and because i have a plane to catch tomorrow afternoon, i'm not going to go through any more of the false statements but i am going to ask you to put on your old hat. faults exculpatory statements are used for what?

>> well either for a substantive prosecution or evidence of intent in a criminal prosecution. >> exactly. intent and consciousness of guilt, right? >> that is right? >> consciousness of guilt and intent? in your old job you would prove intent as you referenced by showing the jury evidence of a complex scheme that was designed for the very purpose of concealing the public record and you would be arguing in addition to concealment the destruction that you and i just talked about or certainly the failure to preserve. you would argue all of that under the heading of content. you would also -- intent. you would also be arguing the pervasiveness of the scheme when it started, when it ended and the number of e-mails whether they were originally classified or of classified. you would argue all of that under the heading of intent. you would also, probably, under

common scheme or plan, argue the burn bags of daily calendar entries or the missing daily calendar entries as a common scheme or plan to conceal. two days ago, director, you said a reasonable person in her position should have known a private e-mail was no place to send and receive classified information. you're right. an average person does know not to do that. this is no average person. this is a former first lady, a former united states senator, and a former secretary of state that the president now contends is the most competent, qualified person to be president since jefferson. he didn't say that in '08 but says it now. she affirmatively rejected efforts to give her a state.gov account, kept the private

e-mails for almost two years and only turned them over to congress because we found out she had a private e-mail account. so you have a rogue e-mail system set up before she took the oath of office, thousands of what we now know to be classified e-mails, some of which were classified at the time. one of her more frequent e-mail comrades was hakts and you don't know whether or not she was and this scheme took place over a long period of time and resulted in the destruction of public records and yet you say there is insufficient evidence of intent. you say she was extremely careless. but not intentionally so. you and i both know intent is really difficult to prove. very rarely do defendants announce on this date i intend to break this criminal code section. just to put everyone on notice, i am going to break the law on this date. it never happens that way. you have to do it with circumstantial evidence or if you're congress and you realize

how difficult it is prove specific intent, you will form lathe a statute that allows for gross negligence. my time is out but this is really important. you mentioned there's no precedent for criminal prosecution. my fear is there still isn't. there's nothing to keep a future secretary of state or president from this exact same e-mail scheme or their staff. and my real fear is this, what the chairman touched upon, this double track justice system that is rightly or wrongly perceived in this country. that if you are a private in the army and e-mail yourself classified information you will be kicked out. but if you are hillary clinton, and you seek a promotion to commander in chief, you will not be. so what i hope you can do today is help the average person, the reasonable person you made reference to, the reasonable person understand why she appears to be treated differently than the rest of us

would be. with that i would yield back. >> i will recognize the gentleman from new york, miss maloney. >> director, thank you for your years of public service. you have distinguished yourself as the assistant u.s. attorney for both the southern district of new york and the eastern district of virginia. that's why you are appointed by president bush to be the deputy attorney general at the department of justice and why president obama appointed you as the director of the fbi in 2013. despite your impeccable reputation, for independence and integrity, republicans have turned on you with a vengeance, immediately, after you announced your recommendation not to pursue criminal charges against secretary clinton. let me give you some examples.

representative turner said, and i quote, the investigation by the fbi is steeped in political bias. end quote. was your investigation steeped in political bias? yes or no? >> no. it was steeped in no kind of bias. >> thank you. the speaker of the house, paul ryan, was even more critical. he accused you of not applying the law equally. he said your recommendation shows and i, quote, the clintons are living above the law. they're being held to a different set of standards that is clearly what this looks like. end quote. how do you respond to his accusations that you held the clintons to a different set of standards than anyone else? did you hold them to a different standard or the same standard sp. >> it's just not accurate. we try very hard to apply the same standard whether you're rich or poor, white or black, old or young, famous or not known at all. i just hope folks will take the time to understand the other

cases because a lot of confusion out there about what the facts were of the other cases that understand good people, reasonable people, leads them to have questions. >> senator cruz also criticized you. he said there are, i quote, serious concerns about the integrity of director comey's decision. he stated that you, quote, you had rewritten a clearly worded federal criminal statute. did you rewrite the law in any way or rewrite any statute? >> no. >> now i hesitate, i truly hesitate, to mention the next one. but donald trump took these conspiracy theories to a totally new level. he said and i quote, it was no accident that charges were recommended against hillary, the exact same day as president obama campaigned with her for the first time. so did you plan the timing of your announcement to help

secretary clinton's campaign event on tuesday? >> no. the timing was entirely my own. nobody knew i was going to do it including the press. i'm proud of the way the fbi, nobody leaked that. we didn't coordinate it, didn't tell -- just not a consideration. >> mr. trump also claimed that secretary clinton bribed the attorney general with an extension of her job and i guess this somehow affected your decision. i know it's a ridiculous question but i have to ask it, did you make your decision because of some kind of bribe to the attorney general? >> no. >> i tell you, are you surprised, as i am, by the intensity of the attacks from the gop on you after having made a decision, a thoughtful decision, an independent decision, with the professional staff of the fbi? >> i'm not surprised by the intense interest and debate.

i predicted it. i think it's important that we talk about these things. they inevitably become focused on individual people. that's okay. we'll just continue to have the conversation. >> i believe that what we're seeing today is that if the gop does not like the results of an investigation, or how it turns out, and we saw they originally were lauding you the minute you made your announcement, they're now attacking you. the same people. and now, i predict they'll be calling for more hearings, more investigations, all at the expense of the taxpayer, and they do this instead of working on what the american people really care about, they want congress to focus on jobs, the environment, homeland security, security of our nation, affordable child care, affordable college education, and an economy that works and helps all people.

i thank you for performing your job with distinction and the long history of your whole profession of integrity and independence and thank you very much. my time has expired. >> thank the gentlewoman. the gentleman from ohio. >> thank you. thank you for being with us. on tuesday you said any reasonable person in secretary clinton's position should have known that an unclassified system was no place for these conversations. you said on tuesday some of her e-mails bore classified markings and you also said on tuesday there were potential violations of the appropriate statutes. now i know a bunch of prosecutors back home would look at that fact pattern and evidence, even referenced it in your opening statement, some of your prosecution friends in the business have been on tv saying they would have looked at the same evidence and taken it to a grand jury. but on tuesday, you said, and today in your opening statement, you said, no reasonable prosecutor would bring such a case. and then in your statement tuesday you cite factors that

helped you make that decision. and make that statement. and one of the factors you said was, consider the context of a person's actions. typically when i hear context in the course of a criminal investigation, it's from the defense side not the prosecution side, it's at the end of the case after there's been a trial and a guilty verdict, and it's during the sentencing phase. mitigating circumstances. that's the context we typically think about. you said it on the front end, consider the context of the person's actions and so i'm curious, what does consider the context mean? because a lot of americans are thinking what the chairman talked about in his opening statement, that there are two standards. one for we the people and one for the politically connected. a lot of folks i get the privilege of representing back in ohio, think that when you said consider the context, they think that's what mr. gowdy talked about. the fact that she's former first lady, former secretary of state,

former senator. major party's nominee for the highest office in the land. and oh, by the way her husband just met with the individual you work with at an airport in arizona five days ago. so, you >> but tell us what consider the context means. >> thank you. what i was trying to capture is the fact that the exercise of prosecutorial discretion is a judgment call in every single case and among the things you consider is what was this person's background, what was the circumstances of the defense. were they drunk? were they inflamed by passion? was it somebody that had a sufficient level of education and training and experience that we can infer things from that to consider the entire circumstances of the person's offense conduct and background. i did not mean to consider political context. >> the entire circumstances,

remember what she did. she sets up this unique server arrangement. she along controls it. on that e-mail system are her personal e-mails, clinton foundation information and now we know classified information. this gets discovered. we find out this arrangement exists. then what happens? her lawyers, her legal team decides which ones we get and which ones they get to keep. they made the sort on the front end and then we find out the ones that they kept and didn't give us to, didn't give to the american people or congress, the ones they kept, they destroyed them and you don't have to take my word. i'll take what you said on tuesday. they deleted all e-mails that they did not return to the state department and deleted their devices in such away as to include complete forensic recovery. that sounds like a fancy way of saying they hid the evidence and you just said thousands of

e-mails fell into those categories. that seems to me to provide some context to what took place here. did secretary clinton's legal team -- excuse me. let me ask it this way, did secretary clinton know her legal team deleted those e-mails that they kept from us? >> i don't believe so. >> did secretary clinton approve those e-mails being deleted? >> i don't think there was any specific instruction or conversation between the secretary and her lawyers about that. >> did you ask that question. >> yes. >> did secretary clinton know that her lawyers cleaned devices in such a way to procollude complete forensic recovery. >> why believe she did. >> did you ask that question? >> yes. >> do you see how someone could view the context of what she did, set up a private system, she controlled it, she kept

everything on it, we now know that they did for that very reason so no one could see what was there, based on the deposition and then when they got caught they delete what they had and they scrubbed their devices. is that part of the context of evaluating this decision? >> sure and. >> i yield back. >> thank you. we'll now recognize the gentle woman from the district of columbia. >> thank you mr. chairman. i appreciate your conduct of this investigation in a nonpartisan way. and lead presidents of both parties to appoint highly placed law enforcement positions in our federal government. i want to say for the record

that this hearing where you call the prosecutor mr. comey stand in the place of the prosecutor because the attorney general has accepted entirely the fbi's recommendations, when you call the prosecutor to give account for the decision to prosecute or not a particular individual raises serious questions of separation of powers and particularly when you're questioning the prosecutor's decision with respect to the decision to prosecute or not, a particular individual raises serious constitutional questions. these hearings are are so often

accusatory that they yield no guidance as to how to conduct business in the future. it looks as though that's how this hearing is going. now of course everyone understands in the abstract, why it was important for security reasons to use official government mail or e-mail rather than private account or private e-mail if security matters are involved. that's a very broad, wide, proposition. now there are no rules so far as i know requiring members of congress to use their -- as to how they use their official e-mail accounts whether involving security or not. the chairman of this committee

lists his personal account, for example, on his business card. no one says that's wrong. whereon if it's wrong or right because there's no guidance. federal agency employees, members of congress often have secure information or at least sensitive information that shouldn't be made public. some of our members on the intelligence committee or even this committee have such matters. some of these matters macon certain national security issues. and i don't know if something as sensitive as the itinerary, as to the route you have taken. all of that could be on people's personal e-mails.

of course this legislative branch and i'm not indicating that there should be a government wide sense that is ordained but there ought to be rules that everybody understands about, especially after the clinton episode, about the use of personal e-mail. so i'd like your insight, your guidance as to how employees are concerned and members of congress and we can learn from this. so strictly from a security standpoint, do you believe that federal employees, staff,

members of congress, should attempt guidance on the issue of the use of personal e-mails versus some official form of communication? what should we learn from the process the secretary is going through? i'm sure there will be questions about how there was even confusion, for example, in the state department. but what should we learn? when it comes to our own -- our own use of e-mail or the use of federal employees on this. >> answer mr. chairman? the most porn thing you'll learn is an unclassified he e-mail system is no case for an e-mail conversation about classified matters and by that i mean

either sending a document as an attachment over unclassified e-mail that is classified or having conversation about something that's unclassified on an e-mail system. that's the focus of the concern. that's the focus of this investigation. it was also a personal e-mail adds to the concern about the case because of security vulnerabilities associated with a personal system. but the problem is peel using unclassified systems to conduct business that is classified. so all of us should have access to classified communication systems. the fbi has three hefls. unclassified system, a secret system and top secret system. you can e-mail on all three but you need to make sure that you don't e-mail on an unclassed system about matters that are classified. that's the important lesson where everybody ought to be aware of it and everybody ought to be trained on it. we spent a lot of time training

to make sure that folks are sensitive to the need to move a classified discussion. even if it doesn't involve sending a document to the appropriate form. >> american lives are at stake in some instances, correct. >> in your statement you did point out that administrative security consequences would be appropriate if someone demonstrated extreme carelessness or classified information. so those consequences would include potentially termination of federal employment. it could include security clearance. >> yes. >> and it could include an eligibility for future employment and national security positions, correct? >> it could. >> now would you allow someone in the employee of your agency to work