that all of you are leading us in. so i encourage everybody to show up, which is the key to life, right? >> right. >> and it will be a great week. thank you. >> tom, thank you. >> thanks for being here. we appreciate it. >> see you next friday. >> thanks. >> seriously, i felt a little there. make sure you join us tomorrow. thank you, melissa. i think becky's back. >> becky's back. there's a tease. >> are you cheering for becky? >> for becky. >> "squawk on the street" coming up next. a pivotal morning, the trump presidency nine days away, the president-elect set to hold his first news conference since july. rex tillerson's confirmation hearing to become secretary of state about to get underway on capitol hill. good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. stocks will have a lot to digest over the next few hours. premarkets steady, downgrades of exxon and at&t. yields are not moving that much.

it's a confirmation hearing for one of the president-elect's most scrutinized cabinet picks. secretary of state designate rex tillerson appearing before the senate foreign relations committee. some lawmakers have expressed concerns about tillerson's dealings with russia, jim. we got a lot to get through in the next few hours. >> yeah, look -- cross talk with joe in the market yesterday though everything is up for grabs. i think the tillerson's hearing is very much encapsulate the whole rally. but tillerson is at the heart of what i regard business agenda who is secretary of state. and part of the business agenda by the way is to do business with everyone including russia, which by the way before you went to sochi was one of our brightest possibility of partners of energy. so let's say too much is on the line to not cut away. >> not the only one going on as

well. elaine chao in front of commerce this morning. tillerson now apparently in the room shaking hands with members of the committee. expect to see more protests today as they've been lined up in the hall. busy day for the capitol police. and as it regards the trump press conference, obviously everybody's read up on what happened last night, allegations of -- questions of even whether he was briefed on friday about some of these unsubstantiated allegations that russia had been collecting compromising data. >> i find that when i read -- i mean, look, like many people i'm watching the news flow at all times. i'm watching the twitter flow at all times. and i see this and by my word lights up and i say to myself, okay, how is this going to play into today's press conference. and then we hear about fake news once again from trump. it is so fluid, carl. this is a fluid situation that it's very hard to be able to say, you know what, i'm pounding the table on caterpillar here. too granular.

>> do you think that it damages him at all and therefore investors just pull away from the prospects of success from the trump agenda? or is it really a one-day story? i mean, i don't know. we all know that his -- has been an outlier for president-elect and therefore raised questions. >> the world's better. i come in every day thought futures would be down very big. that's what i thought. i thought pa ja ma traders would take it down on that story. >> right. >> london's good, europe's good, asia -- no impact. there's just no impact. >> there is some discussion this morning about whether or not we're going to get anywhere on learning more about obamacare timing, about border taxes, whether it's all going to be hacking and russia and conflicts of interest and briefings. nothing that the market's interested in learning. >> tom barrack, he's very close

to trump and talking about stages that need to happen. if the economy can actually generate some strength, then we can have a bridge for the bull. you need to see the economy in the earnings to have strength to be able to say, you know what, the agenda, the tripod, lower taxes, repatriation, deregulation, were fine because the numbers themselves aren't that bad. so i'm actually keying on earnings season just as a buffer to make it so that you don't have to focus every second on washington. maybe that again is too glib, but it's what i do for a living. >> i continue and as you've heard at many times believe tax reform will be the largest single focus for the market because it has the most impact on so many different industries. it's going to be quite some time until we really get a sense there. but i certainly as along with everybody will be listening closely to today's press conference to see if we at least get -- does the trump administration fully agree, for

example, with the house plan in terms of the tax on imports? >> right. >> will that give that more credence? does the trump administration also sign onto that portion of what is currently only blueprint we have from house ways and means. those things the market care about but a long full-time until we get answers. >> that's right. why i'm not recommending any retailers, period, end of story. unless that's something definitely domestic or special situation like a lulu yesterday. what i am doing is taking a look metaphorically at a lot of companies. paycheck is upgraded today, what's the upgrade based on? full taxpayer. >> right. >> earnings per share go higher. >> oh, yeah, you're a full domestic taxpayer, you're looking at a significant increase in your operating margins, i guess. your overall margins. >> most of the ceos i have on ask me, please ask me a question, would you mind asking me a question about my tax rate?

it's incredible. how about your core business? please ask me about my tax rate. interesting. >> there's a lot of research about effective high payers and low payers now. >> yep. >> people trying to extrapolate who benefits from loopholes already. >> you could also be in a very unfortunate position to be somebody that imports under a fixed dollar contract, meaning not subject to currency fluctuations, you are in deep trouble. >> yes, you are. don't forget -- >> and there are some of them. there are some companies but not many that are going to fit all these parameters going to really be not good in terms of a lot of their business overseas or in terms of how they have it structu structured. >> i know. don't forget to feel for rob sands, got to make mexican beer in the united states, one of the great conundrums of our time. >> yes, it is. >> i think one of the things that's so in play is like a macy's. you bottom fish on a macy's. wait a second, border tax, i

don't know how that works. so ulta salon today upgraded. why? they're going to take the cosmetic business from macy's, but then ulta they import. >> yeah. retailers are the ones who stand to suffer the most. >> stay away. >> those particularly apparel which is largely made outside the country. >> right. pvh announced better than expected stock couldn't get out of its way. >> yeah. >> as we watch tillerson, we've already seen some of his opening statements. he is going to say among other things our nato allies are right to be alarmed at a resur gent russia. he'll go onto argue that is due in part to weakness in american leadership and we left the door open for russia to make gains. we'll see how specific he gets on that matter. earlier in the week the journal fascinating story about his tenure of exxon. joined in '75. made the call to join with state-owned oil companies even though others found them

difficult to deal with. and it was that partnership with rosnif and the arctic fields allowed them not only to benefit but for putin to consolidate power around oil revenues. >> one of the reasons why i had been less than aggressive in recommending the stock of exxon was that they made such a big bet with russia. first suggesting eog, like the biggest problem they have is whether it should be permian or eagleford. but he did negotiate this correctly. it doesn't have the growth. but when you're exxon, remember exxon has a 50-year plan, exxon is thinking past putin. i know that seems incredible, but they're the only company i know with a 50-year plan. >> they do. interestingly the stock has been downgraded today by wells fargo as you guys know. >> yes. what is that about? >> they expected exxon to be able to pursue an acquisition during the oil price downturn as a way to grow returns, however with that window likely closed

for now plus premium valuation, they're stepping back. >> i agree with that call. i've been hounding them to make that acquisition. many of the acquisitions in the united states -- nothing moves the needle for exxon. >> yeah. >> as far as blue chip downgrades go for the week, coke, p&g, exxon, goldman, mt, that's five. >> these are nonbelievers. these are people who think this sugar high. i like that term the sugar high of the market. >> yeah. >> i've got to tell you sugar high of bank of america got you from 15 to 23. i say bring sugar on. make it domino -- i'll take stevia. >> peps kico's been weak here. i think it's a buy at 102. >> moving on to the trump presser which of course happens at 11:00 a.m. this morning. this morning trump tweeted that russia has never tried to use leverage over me. i have nothing to do with

russia, no deals, no loans, no nothing. intelligence agencies should never have allowed this fake news to leak into the public. one last shot at me. are we living in nazi germany? so we don't know whether that is going to displace questions of policy later this morning. >> always invoking nazi germany always finds to me as kind of an extreme position. >> kind of going right to code red. >> yeah, i remember when i first got in this business someone said don't ever compare whatever's going on because of the -- there is a let's say an extreme position involved. but what i come back to saying trying to place this in the context about whether to buy individual stocks or buy the market has proven to be a fool's game. because you'd be shorting this market on a billy bush bus trip, right? shorting the market on the idea that you put pruitt in for epa because he's suing epa. i use that as just again an

instance of the craziness. >> do you think that market immunity lasts forever? is there some line at which -- >> i think if you get tax reform, if you get deregulation -- i hate to just default to these really prosaic issues, but this market is based on profits. and if profits are better then stocks go higher regardless of who's president. i remember 2009 obama came in and we're talking about the notion of every bank going under and whether we have to do a sweden plan and talking about gm going under. what are we talking about here? about whether gm's numbers should be higher than we thought. there's mary barra talking about a cash flow number that's extraordinary. the circumstances are so different. >> they are. >> we're wondering whether that ford special dividend was enough. i was worried about ford going under. we are in a position where united airlines, united continental go under, united continental's december numbers are extraordinary, i come back

to contrasting 2009, which was a period of tremendous losses versus now where when i wake up the pajamas traders never seem to react to anything anymore, europe is very strong, britain. i mean, didn't they brexit? brexit times two because that market's up for like a dozen days. >> well, a lot of their exporting related industries are faring well as a result of the drop in the pound. >> of course strong dollar used to matter. remember sell, sell, sell? now we buy, buy, buy. >> it really will be fascinating to see whether we get any specifics from the president-elect in terms of policy. >> but it's great, david. >> whether it is replace, repeal aca or what his expectations are there, dereg, the wall -- >> infrastructure spending. >> -- infrastructure spending and financing and then again tax reform which because we have a republican congress has incredible likelihood of

passing. >> right. >> but the question is what we end up with. and i think when you speak to people in the business community as we do and for as long as i have and follow this and all the inversions, there's no doubt we need it. we need corporate tax reform. it's just a matter of when are we going to get it. >> will you please mention that talk of more deals right now than we've seen in a long time? >> there is. we may have a window where you want to do it, but i'll tell you once you're sort of looking at the prospect of tax reform and still not sure of the details, you may get a bit of -- >> holy cow. i see your hard s.a. toocht. wo i go french. >> i love when you do that. my name is pepe le pugh, say no no. >> when we come back as you see live coverage of rex tillerson's hearing. we'll take you there when the secretary of state designate begins his remarks. take another look at the premarket. s&p ended unchanged for the

first time since '08 and nasdaq going for seven straight. first time since may. back in a minute. go pl ilegs at instg avag vivi d inth nves. go pl ilegslio beks n regolf instg avag vivi e is putio. go qoks intr ilegslio icse ty'egolf instg avag vivi

senate foreign relations committee we are awaiting remarks from rex tillerson, of course the nominee for secretary of state, as we wait for him to begin his remarks. we're watching that of course. and multiple confirmation hearings today. let's bring in eamon javers, a busy day it will be, eamon, on capitol hill. >> yeah, good morning, carl. you can take a look at a live look-in at that hearing for rex

tillerson. he's expected to face questions about the story of the day, and that is russia. already rex tillerson the former ceo of exxonmobil now the nominee for secretary of state, was facing some skepticism from republican lawmakers about his role at exxonmobil, his relations with vladimir putin and the nation of russia in the wake of last night's reporting on intel allegations surrounding russia and donald trump. you can expect all of that to be front and center today. we are told that tillerson in his prepared statement will mention russia, specifically he will say that russia must be held to account for its actions. that could go a long way to appease some of the members of the senate committee here who are going to be listening in on them. we know that rex tillerson has been making the rounds up here on capitol hill meeting with a lot of the senators who will be grilling him today trying to assuage some of their concerns.

we'll see if those missions to capitol hill last week were a success or not, carl. >> with that we'll be checking in with you repeatedly throughout the morning, eamon javers on capitol hill. meantime, discussion continues about various levels. if it's not dow 20k today, it's jeff gundlach on 3% again. >> yeah, i got his letter. he obviously has missed this rally. >> yes. >> allowed to say that. >> i've always found listening to mr. gundlach's views on the fixed income markets tends to be more apres yent than his views -- >> true. that's not casting aspersions -- >> no, i mean, that's a fact. >> it's imperical. i think bond guys should say, listen, i know bonds. bonds are my thing. i don't opine about the dollar. dollar is not my thing. but that's okay. i mean, everyone has -- the first amendment is gives broad

coverage to people to talk about. >> it does. and the ability to raise money for other disciplines other than just fixed income investing. allows there's people willing to give you money for equity investing, you'll probably take it. >> right. >> some time. >> there you go. i do think that one of the things that happened yesterday was new leadership. biotech. biotech. and that was the spin-off of some stories j.p. morgan that made people feel at the conference meg actually led the whole coverage there which was terrific, one after another after another you heard great things and people were not worried about tweets. maybe they're not worried about tweets because there's bigger issues going on right now -- no, i can't say that because trump has been focused on "the apprentice" numbers. obviously he could focus on say higher costs, but valeant changed a lot of people's minds yesterday because valeant had been a big hole in the fixed income market and a lot of people felt valeant was better,

they felt joe papa revig rated himself. and merck with this news is extraordinarily positive, which is something i thought people knew which is the extension for lung cancer is going to be terrific, but stock's up in the premarket. so drugs and biotech led us yesterday. the rotation of the leadership for the nasdaq, which again hit an all-time high. >> yep. >> is extraordinary. and would be what we would talk about if it weren't for the tillerson hearings. >> what kinds of things will you be listening for? either tape bombs or reassurances in the trump presser that could alter one's view of the market? >> i think he says if we're going to spend a lot of time talking about the repeal of obamacare before we get to anything else, i think you'll see a downturn. i think if he does not say, listen, this is about economic expansion that we have to have right now because the economy's

not been that good. >> so in other words if he suggests there are priorities higher than tax reform? >> oh, my, remember when obama talking about shovel ready projects? i wouldn't be surprised if trump didn't talk about, hey, listen, i've been a builder all my life. we are going to do shovel ready, you see caterpillar explode to the high side. we are going to do repatriation. and i wouldn't be surprised if he just says i'll do it. if they won't do it, i'll do it, because he does have a level of confidence that tends to make the executive in our checks and balances system to be a little more important. >> without a doubt. but to reiterate you do need the participation of both houses of congress to actually get legislation done to change the tax code. >> was that your civics class speaking? >> just going back trying to remember how things work. >> it is true. what did you say in the previous segment? you said because the republicans it might happen. >> oh, no, i think there's desire for it. the house and the senate. and the incoming administration. we're going to get tax reform.

the question is what will be a part of the final bill, when will it actually happen, will it be linked with individual or separated, or is it possible they're only able to get a little bit namely repatriation? >> but deregulation ahead for earnings for banks coming up, how important is that? small business survey and job hiring, how important is that? if he talks about the momentum of the economy, then i think that the stock market's going to divorce itself from the memo that came out last night that frankly some of the granularity of it was -- >> it was a good read. >> it was a good read. >> if you like that sort of stuff. i'm not sure i want my ninth grader leading it let alone my fifth grader. >> i didn't want to read it. i have nothing to say. >> with that -- >> rendered speechless. >> luckily for you it's time for a break. when we come back rex tillerson's remarks and his confirmation hear. we'll bring them to you live. futures have been hanging in there, just above fair value. more "squawk on the street"

after a break. n, o o wn shr in's a thde b b yd mym,p tr tsw

a nent d uy f ines anou s sis enusancetet mecalp gha yavre ossi,,ctak

awaiting remarks from exxon ceo rex tillerson nominee to be secretary of state. some introductions this morning among them by former senator from georgia sam nunn who said of tillerson he would take off his corporate hat devote 100% of his experience to being secretary of state. as we await that and the president-elect's news conference at 11:00 a.m. eastern time in new york city, let's bring in john harwood who's live at trump tower this morning. busy day, john. >> carl, it's crazy. and on any other day rex tillerson would be the dominant story, major corporate ceo from

exxonmobil about to become secretary of state in part because he's getting bipartisan praise from people like sam nunn and other foreign policy professionals are praising him. but this is the first press conference by the president-elect since july. and it comes on the wake of this report that follows the intelligence report last week in which u.s. agencies assess that russia took steps to interfere with the election, to harm hillary clinton, to help donald trump, and then we have now learned that intelligence officials presented in briefing materials to the president-elect that they had gathered raw intelligence that russia might have obtained compromising material on the president-elect and that representatives of the trump campaign or the trump organization may have had

continuing contacts with russian officials or representatives during the course of the campaign. donald trump denies that. but there's going to be some serious drama when he faces the press for the first time in months and responds to those in person, guys, rather than on his twitter feed. >> john, you know, john mccain, senator mccain out with a statement a few moments ago saying late last year he received sensitive information that has since been made public. upon examination of the contents and unable to make a judgment about their accuracy he delivered the information to the director of the fbi and that's been the extent of his contact with the fbi or any other government agency regarding this issue. so mccain weighing in with a statement not too long ago. >> and, david, the real issue going forward beyond what the president-elect says today is what exactly congress does. john mccain wants a bipartisan select committee to investigate all of this.

if that happens, there's a serious potential that it will consume a massive amount of political oxygen in washington and therefore slow down all of the other issues that republicans want to move forward on like the tax issue that you were just mentioning. so there are very high stakes in how this plays out. when you get a major probe that commands tremendous media attention in washington, it is hard for other things to get done. and that is a key variable in the pace of action in 2017. >> john, thank you for that. we think we're still a few minutes away from tillerson's introduction. we'll try to take that live when it happens. >> it does seem a little packed. i mean, if you wanted to rail the agenda, you cause big hearings. if you don't want to derail the agenda, you don't cause big hearings. and i think this is the dichotomy that faces anyone owning stocks, which is that,

okay, if the next five months are consumed by equivalent of the army mccarthy hearings, then nothing is going to happen. and if the next five months is about tax reform and lowering taxes and getting repatriation in here then you're going to say why did i sell. the context of the hearings do matter to individual investors. >> even though they're arcane, difficult to read, measured, evaluate -- >> i agree. i will say by the way, tillerson, what can i add on tillerson? tillerson was a diplomat ambassador ceo. he's actually the only one i can recall during this whole period that you really felt when you listen to tillerson -- i mean, i've always wanted tillerson on "mad money." why? because i wanted to ask him about production. i wanted to ask him about what his plans were to buy more natural gas. but that was beneath this man. this man's a big thinker. so it's not like he's like some secretary of state guy who's worried about the quarter.

this guy was never about the quarter. never. >> absolutely true. as we're watching that opening bell's about to happen down here at the nyse. at the big board -- [ bell ringing ] there's the bell at the big board, board at the nasdaq as well. you mentioned upgrade at citi of con agra. >> right. >> and kraft heinz to buy neutral respectively, i thought that was interesting. >> my travel trust owns kraft heinz, why? the idea is they're going to be gearing up for a large acquisition. and i do believe that there are acquisitions that are brewing. but, david, when i have presented this before, you have often said who, where, why and i have no answers. they're talking about kellogg's, very hard to do, general mills,

cereals, very hard to do. but the chatter doesn't die. >> it doesn't die. the 3g guys as we reported and others concluded raising a significant fund whether it was 8 billion or 10 billion i can't tell you but that sparked a round of rumors but that doesn't mean they would be linked with kraft heinz of course which they have significant investment in by deploying funds for a kraft heinz deal so that they could offset delusion. it may be 3g is pursuing a new vertical. >> really? why? >> we don't know. >> beverage? >> they have beverage. >> what new vertical? >> i don't know. >> you can't throw that out. >> well, i've mentioned this before, maybe you weren't here. >> i'm just trying to create some faux tension. >> but 3g may produce something doesn't mean they're going to be doing it with kraft heinz. meanwhile kraft heinz many believe having digested the combination of kraft with hiebz is now ready for its next deal.

>> right. >> and you know the name that comes upmost often, what is it? ed biggest name that comes upmost often? >> well, i think mondelez comes up. >> yes, exactly. mondelez is the name. >> i didn't answer it in the form of a question. >> what is mondelez, yes. >> the reason i point it out is the stock acts better than the rest of the group which has been just from hades. the group is awful. >> the president-elect did back off a bit on the oreo thing. now, when i talked to nelson peltz a few weeks back in washington, he'd indicated that he discussed with president-elect trump who he speaks to regularly that there's a lot of plants making oreos in this country. yeah. >> and na nabisco. >> there's an amazon credit card, news, amazon prime 5% off, j.p. morgan, that would have been what we would have talked about because this is once again -- i mean, amazon -- >> i saw that i was like 5% off what i spend all my retail --

>> didn't you immediately apply for it? >> i was thinking tonight at home going to apply for that card. >> yeah, i was interrupted by the show. i felt like should be applied for instantly. i spend way too much money on that thing not to get 5% back. >> why wouldn't i want 5% off a big number? >> once again every day you come in and the nail is put in the coffin of another retailer. i mean, i remember the first credit card i ever got was a macy's credit card and i was so proud. then i was denied the kohl's card, which was a bummer. >> and you have not gotten over that. >> you have mentioned that many times. >> david, when there's 13 people behind you in line and some of them say booya and you're like, hey, i'm sorry, you've been turned down for the credit card, calls into credibility your question. how good is that guy he got turned down for the kohl's card. >> we have seen since the new year this return to growth. you were talking about it earlier in terms of the biotechs, but even more significa significantly. i mean, facebook up again this morning in three minutes of trading. but it's up 8.5% this year.

>> extraordinary. >> and google up 4.5, amazon up 6%. tesla. i mean, there has been a return to some of these names. >> tesla did that big equity offering and had a quarter people thought would send the stock down and it didn't go down. i think it's right. i also see the -- i see a lot of cloud stocks going up. for instance, david, one we don't talk about that much but i see salesforce starting to get a little pep again. that stock is coming back to where it was when it rallied after the quarter. now isn't that interesting? almost a reversion to those kinds of stocks. >> by the way on this date in '04 mark zuckerberg registers the facebook.com as a domain name. >> that's interesting. >> 13 years later it's worth $360 billion. >> i tell you, i got that facebook when i got to howard i devoured that thing, i dog eared it -- wait, i was younger then. i had a ton of hair, man.

>> did you? it was all over the place. >> it was mutual that facebook people tearing it up saying, oh, wow -- just saying it was not as substantive as it is now. >> on some of these tech names should mention j.p. morgan takes netflix to a top pick. >> how do you like that? >> on the prospect of their words increased profitability. ma mallone had more things to say say. >> he felt the cable companies themselves should be making an offer that is netflix made several years ago. had other things to say about t-mobile and cable companies. this could be an interesting year when it comes to let's call it a group of companies that includes verizon and charter and t-mo and our parent company comcast and dish and sprint, kind of throw them all in a box, shake it up and see where we end up. >> something's going to happen.

i watch t mobil all the time. the other day i said sprint is doing well and john legere he doesn't really want to hear -- he's not a big fan of anyone else in the business. but there is -- there's momentum at sprint. i have a company tonight, pegasus, does a lot of their back systems that are very good, there's momentum at t-mobile, there was a downgrade today of at&t. deutsche bank saying weaker margins, slower earnings growth. well, i thought that was interesting because one of the things that's been part and parcel to this rally is the return of at&t has been a bit of a growth stock. that's worth watching because i think if sprint were to team up with t-mobile, someone would be left behind. >> yes. if sprint and t-mo were to get together, you've got to keep thinking about the dominos, the advent of 5g could potentially motivate some cable companies to consider wireless. it's a ways away, the expense is

going to be e norous to actually get 5g. it's not about your home, it's about getting to your home in a wireless solution. >> said to me 11 months ago that 5g -- it's a 2017 year -- >> no, no, 5g is five years away -- >> broadcom is getting equipment orders now, i believe. >> you can do it in certain things, but to really bring it -- allow it to be able -- >> not broad. >> no. and it's not propagated over long -- it's very wide and small. in other words, small -- short areas. >> do you watch programs on cell phones? do you watch programs on cell phone? >> sometimes. >> well, i mean, that's broadcom. >> right. but 5g is about your home replacing or a new customer being able to not ever have to have a wire in there. but you still got to get it nearby because you can't be taking a signal from a long way away. >> i think broadcom is the way

to play 5g. in the same way we see a lot of these companies like nvidia be able to play machine learning and gaming and artificial intelligence be able to play autonomous auto. there are a lot of companies in the chip business that are doing so well. >> really quickly, we should mention the airlines today on this ual revenue guidance basically saying november and december were extremely strong. >> isn't that something? i mean, a lot of people felt this group has moved so much and oscar munos, you got everything he could give you. that was obviously not the case. please don't get excited. delta reports tomorrow, delta often is a killjoy i find. in terms of quality and companies never had a loss you can still go with southwest. i think that gary kelly is putting up good numbers but this united continental number was rather extraordinary. >> we will take tillerson once senator corker stops talking. in the meantime lelts get to bob pisani. bob. >> good morning, guys. while we're waiting for mr. tillerson to come on, modest

upside to the stock market as we begin today. health care the big leader all year up 4%. another leader again today. biotechs been doing well. energy's on the upside. that's had a rough time. exxon's been down almost every day of the year even though oil has been bouncing around. energy doing well. and industrial materials up fractionally. that's up about 1%. what's going nowhere are the banks even though earnings season for the banks starts on friday. nothing has been happening with them for over a month, essentially. a lot of jitterness going into earnings season on friday and the reason is because expectations are very high. evercore isi i think had the best comment, said the bar on earnings has risen as expectations for growth have increased. slight misses in the third quarter resulted in rather big declines in a number of stocks. so there's a little bit of jitter riness here about that expectations. and i think jimmy had a great line this morning, we need a bridge, jimmy said. and i agree with him. we need a bridge between the current market mentality with the price runups around the high

expectations and the likely guidance for 2017 we're going to get likely which will be fairly conservative because they don't know what the end result of all these programs are going to be. so remember right now high expectations. they're going to try to tamp them down likely. the state of the market's tightly wound here. new highs. we've got very high consumer confidence, very high investor sentiment and very low volatility. that's a bit of a volatile mix going into earnings season. i want to mention something about the nyse floor. the nyse announced just a few moments ago they're going to expand their floor base trading operations. they're going to offer trading in all u.s. securities including nasdaq listed symbols and exchange traitded funds. most of you know there are three nyse exchanges. there's the trading floor which is what we're at here, nyse arco which is electronic trading platform and nyse myt the old american stock exchange.

what they're going to be able to do now is for example trade apple on the floor. you can't trade apple right now on the floor of the new york stock exchange on this particular exchange. they're essentially expanding the exchanges to be able to trade all the products. i would call this a modest commitment, additional commitment to the floor of the new york stock exchange and i think the traders on the floor feel exactly that way about the product announcement. right now, carl, dow is up 24 points. still about 120 points away from dow 20,000. back to you. >> all right, bob. thank you very much. being helped we should mention by merck. good for over 19 points. best day for merck since before thanksgiving. >> it's really incredible. a lot of people had great hopes for kitruda, their lung cancer drug, and it's apparently playing out. >> and bristol-myers the other side of it -- >> not for opdivo and i think that's something that's been percolating. we know that's how bristol-myers got down to 50.

what's incredible to me is merck is a -- this is a juggernaut drug, but i feel like i have to promote merck. now, why is that? because merck knows better than to come out and give false hopes. that's one of the reasons why i like merck as a company, as the ethos of a company. they just don't go out there and say, hey, people, we're taking full page ads, merck, we're solving cancer. because that's not their style. and i want to thank ken frazier because anyone who's suffered from cancer or a family member ken frazier is doing this thing right because, boy, the false hopes i saw with my mom, oh, man, you run hospital to hospital to hospital. thank you, ken. >> let's sneak in a break here before rex tillerson's opening statement. dow's up 26 points. don't go away.

ncht still have our eye on the senate foreign relations committee as rex tillerson is about to begin his opening statement as the confirmation hearing begins for him. as long as as we said earlier at commerce elaine chao, judiciary conference day two. we're getting excerpts of what

rex tillerson is expected to say among other things, quote, we are the only global superpower with the means and moral compass capable of shaping the world for good. >> well, look, i think that tillerson understands the stakes. he's not going to come here and say, listen, one of the things i did was got a great award from putin. look, if you're in oil and you don't deal with russia, you're a small time company. just a fact of life. you had to deal with russia. you often had to deal with iran. you had to deal with countries you didn't want to deal with. i'm not saying i feel for tillerson. that's a ridiculous notion. just understand that if you're a big time oil company and you were not somehow negotiating with the russians, well what were you doing? were you really fulfilling the mandate? >> right. >> remember that. i think that's important. if we had the ceo of royal dutch on, or if we had the ceo of b.p. on, do you think the discussion would be any different? they had no choice. you had to deal with the oil that they have. nothing you can do about it if

you're a major company. >> some important supporters there who have a lot of history behind them, sam nunn of course, and robert gates, a man i know a bit. >> you do? >> yeah. >> book is very good. >> integrity oozes out of every pore of that man's body. certainly can't hurt when you're up in front of the committee to have those guys show up on your behalf. >> right. i don't think this is as controversial as some seem but that's because of the backers, not because of the man's hes history. i'm giving you business insight. oil companies unless you're an independent oil company based in the united states, you have to be in these places you don't want to be because you need to have a 50-year plan about where oil is. and i just don't get -- people have to understand these are national. there's national oil companies that you have to deal with and

then there are private oil companies. and a guy like tillerson absolutely must know, must be involved, he absolutely must be involved. >> among other things in his opening statement he will say russia must be held to account for its actions. where differences remain we should be steadfast in defending the interests of america and our allies. we will be accountable to our commitments and those of our allies and that russia must be held to account. some wonder why we haven't heard that kind of language from the president-elect. >> look, again, i don't have any particular insight that would be valuable to people at home of the rhetoric -- when you check with ceos who are involved with russia, there's a notion of there's a real politque and that's what they talk about, again, what do i add? i feel more comfortable saying that the mercks -- that merck was a surprise.

there's more to it. i defer to others who would talk about what the -- david, i mean, why has he -- >> one thing i'd talked about when it comes to mr. tillerson is his pay package, the fact he was able to accelerate the vesting on what was the stock that he received having originally planned to retire come later this year. but i do want to clarify something buzz there had been initially people may have interpreted as he was getting all of it at once. but it's actually going into a trust with the same schedule of deferment that was on the stock over ten years. >> really? >> but he's trying to pursue what the journal calls an unusual tax argument to not have to pay an up front tax on that deferred stock, which again is being made into cash. so it's a taxable event, you could argue. >> well, would you argue -- >> but it's interestingly being -- the cash portions of which are being deferred over the same period of time as would have been the stock that vested.

>> are lower capital gains coming? >> right. isn't that what you think from that? >> you say, well, let's not sell stocks. we may have lower capital gains. >> but exxonmobil to its credit had a very well defined compensation agreement with its outgoing ceos and lee raymond also under the same thing that allowed them to at least be in a position to pull back things long after the ceo had departed. >> exxon is different from every other company that i've followed. always has been. always been a bank, when i say bank meaning not a bank that got in trouble with the government. it has been a company that looks at cash in, cash out and has a long history of doing things very honorably and right. you may not like them, but i'm saying from the point of view of the old seven sisters we used to talk about of the great oil companies, this was standard oil. okay. this was standard oil. >> it's an interesting

experiment here. for example, this week people trying to raise the question of whether exxon was working against the interests of the state department in kazakhstan, right? i mean, we don't know -- we don't have good case studies on whether ceos make great diplomats. >> no. we don't. we know during world war ii we had ceos come in and run certain parts of the government that were very important. defense. but, no, we don't really have a history of -- most ceos are not like rex tillerson. most ceos, i think, would be naive about international politics. most. >> but not one who runs a multinational like exxon. >> right. >> muhtar of coca-cola would not be -- >> he would be a natural, i'll say. >> yeah. and identify the cleanest water

wherever that would be also. >> right. not to mention you get build in gaza, build in iraq, muhtar kent is someone very comfortable overseas. i'm not saying executives tend to be naive in general. i'm saying most are domestic ceos. their businesses are largely based in the united states. not this man. not tillerson. >> interestingly reuters has a story this morning talking about the incoming administration looking at companies that are reconsidering mergers, price hikes, layoffs all because they worry about being labeled anti-american. as somehow the national interest has become the interest that your fiduciary interest to some degree. that's an interesting shift. >> that's the bully pulpit right now of the president-elect, which is largely through twitter. >> right. >> having an impact. i would argue that tax reform, coming back to our earlier

conversation, will have a much broader impact on m&a in terms of the decisions companies make that may not any longer be motivated by tax considerations but by the actual best use of capital which would be good. and so we'll see once it's settled it could conceivably unleash a lot of m&a. >> so in other words that it may not be as much as intimidation as, look, let's stay patten, there are some good things happening if we play ball. >> it is interesting you've got companies -- listen, if we go ahead with the import tax as part of the tax reform bill, just think about manufacturers of clothing and are they going to have to move plants back to the united states? >> boy, that'd be something. talk about a lost art. >> because that would be better off for the retailers who sell those clothes and therefore it's going to be a lot of demand for their services. >> it's almost inconceivable to me that we're going to start making enough shirts and ties and pants in this country. it's just not what we do. it's not what we do.

>> no, but it could be until the machines start doing it anyway and then has nothing to do with jobs. by the way it all will come back because there won't be any workers involved. >> that would be a major change. >> there's a great internet meme picture of the flag, made in the u.s., by robots, right? that's what it's going to be largely about. we talked to secretary perez about that last week. >> yeah. >> let's take you to washington and the senate foreign relations committee. >> -- the world knows more about you than they ever thought today. without using any more time we thank you for being here today. i know you may have some family members to introduce, which is always helpful. and if you wish to do so, begin with that. and then with your comments. >> thank you, mr. chairman. yes, i do have members of my family with me today. my wife, more than 30 years has kept a welcoming home when i would come back from my many travels and also our four sons

and five grandchildren. my sister jo peters, high school mathematics teacher, math teacher, coach teaching many, many years in the texas public school systems. my sister dr. rae ann hamilton, family practice position abil e abilene, texas, more than 30 years. my brother-in-law judge lee hamilton who's now finishing -- or has just begun to serve his fifth term on the bench at the 104th district of the state district courts of texas in abilene, texas. i appreciate so muched love and support they've given me in my past endeavors but most particular they would come all the way up from texas to be with me today. good morning, chairman corken and others. i'm honored to have the backing of senator corn and senator cruz from my home state, i want to thank senator nunn, something he

remains as steadfast today as ever -- his own leadership as president of the boy scouts of america. chairman, members of the committee it's an honor to appear before you today as president-elect trump's nominee for secretary of state and seek the approval of this committee and the full senate for my confirmation. i come before you at a pivotal time in both the history of our nation and our world. nearly everywhere we look people in nations are deeply unsettled. old ideas -- may no longer be effective in our time. we face considerable threats in this evolving new environment. china has emerged as an economic power in global trade, and our interactions have been both friendly and adversarial. while russia seeks respect and

relevance on the global stage, it's recent activities have disregarded america's interests. radical islam is not a new ideology, but it is hateful, deadly and an illegitimate expression of the islamic faith. adversaries like iran and north korea pose grave threats to the world because of their refusal to conform to international norms. as we confront these realities, how should america respond? my answer is simple, to achieve the stability that is foundational to peace and security in the 21st century, american leadership must not only be renewed, it must be asserted. we have many advantages on which to build. our alliances are durable and our allies are looking for return of our leadership. our men and women in uniform are the world's finest fighting force and we possess --

>> my home was destroyed. senators, be brave! protect my community! protect america! rex tillerson, i reject you! i reject you! my home was destroyed by hurricane sandy! >> -- our men and women in uniform are the world's finest fighting force, and we possess the world's largest economy. america's still the destination of choice for people the world over because of our track record of benevolence and hope for our fellow man. america has indispensable in providing the stability to prevent another world war, increase global prosperity and encourage the expansion of liberty. our role in the world has also historically entailed a place of moral leadership. and scope of international affairs america's level of good will toward the world is unique. and we must continue to display a commitment to personal liberty, human dignity and

principled action in our foreign policy. quite simply, we are the only global superpower with the means and moral compass capable of shaping the world for good. if we do not lead, we risk plunging the world deeper into confusion and danger. but we have stumbled. in recent decades we have cast american leadership into doubt. in some instances we have withdrawn from the world. in others we have intervened with good intentions but did not achieve the stability and global security we sought. instead our actions and our nonactions have triggered a host of unintended consequences and created a void of uncertainty. today our friends still want to help us, but they don't know how. meanwhile, our adversaries have been emboldened to take advantage of this absence of american leadership. in this campaign, president-elect trump proposed a bold new commitment to advancing

american interest in our foreign policy. i hope to explain what this approach means and how i would implement it if confirmed as secretary of state. americans welcome this rededication to american security, liberty and prosperity. but new leadership is incomplete without accountability. if accountability does not start with ourselves, we cannot credibly extend it to our friends and our adversaries. we must hold ourselves accountable to upholding the promises we make to others. an america that can be trusted in good faith is essential to supporting our partners, achieving our goals and ensuring our security. we must hold our allies accountable to commitments they make. we cannot look the other way at allies who do not meet their obligations. this is an injustice not only to us but to longstanding friends who honor their promises and bolster our own national security such as israel. and we must hold those who are

not our friends accountable to the agreements they make. our failure to do this over the recent decades has diminished our standing and encouraged bad actors around the world to break their word. we cannot afford to ignore violations of international accords as we have done with iran. we cannot continue to accept empty promises like the ones china has made to pressure north korea to reform only to shy away from enforcement. looking the other way when trust is broken only encourages more bad behavior. and it must end. we cannot be accountable though if we are not truthful and honest in our dealings. as you are aware, my longstanding involvement with the boy scouts of america, one of our bedrock ideals is honesty. indeed, the phrase on my honor begins the boy scout oath. and it must undergerd our foreign policy. in particular we need to be

honest about radical islam. it is with reason our citizens have a growing concern about radical islam against us and our friends. poses a grave risk to stability of nations and the well being of their citizens. powerful digital media platforms now allow isis, al qaeda and other terror groups to spread a poisonous ideology that runs completely counter to the values of the american people and all people around the world who value human life. these groups are often enabled and emboldened by nations, organizations and individuals sympathetic to their cause. these actors must face consequences for aiding and abetting what can only be called evil. the most urgent step in thwarting radical islam is defeating isis. the middle east and its surrounding regions pose many challenges which require our attention, including syria, iraq and afghanistan.

there are competing priorities in this region which must be and will be addressed. but they must not distract from our utmost mission of defeating isis. because when everything is a priority, nothing is a priority. defeating isis must be our foremost priority in the middle east. eliminating isis would be the first step in disrupting the capabilities of other groups and individuals committed to striking our homeland and our allies. the demise of isis will also allow us to increase our attention on other agents of radical islam, like al qaeda, the muslim brotherhood and certain elements within iran. but defeat will not occur on the battlefield alone. we must win the war of ideas. if confirmed, i will ensure the state department does its part in supporting muslims around the world who reject radical islam in all its forms. we should also acknowledge the realities about china.

china's island building in the south china sea is an illegal taking of disputed areas without regard for international norms. china's economic and trade practices have not always followed its commitments to global agreements. it steals our intellectual property and is aggressive and expansionist in the digital realm. it has not been a reliable partner in using its full influence to curb north korea. china has proven a willingness to act with abandon in the pursuit of its own goals which at times has put it in conflict with american interest. we have to deal with what we see, not what we hope. but we need to see the positive dimensions in our relationship with china as well. the economic well-being of our two nations is deeply intertwined. china has been a valuable ally in curtailing certain elements of radical islam. we should not let disagreements over other issues exclude areas for productive partnership.

we must also be clear-eyed about our relationship with russia. russia today poses a danger, but it is not unpredictable in advancing its own interests. it is invaded the ukraine including the taking of crimea and supported syrian forces that brutally violates the laws of war. our nato allies are right to be alarmed at a resurgent russia. but it was in the absence of american leadership that this door was left open and unintended signals were sent. we backtracked on commitments we made to allies, we sent weak or mixed signals with red lines that turned into green lights. we did not recognize that russia does not think like we do. words alone do not sweep away an uneven and at times contentious history between our two nations, but we need an open and frank dialogue with russia regarding its ambitions so we know how to

chart our own course. where cooperation with russia based on common interest is possible such as reducing the global threat of terrorism, we ought to explore these options. where important differences remain, we should be steadfast in defending the interest of america and her allies. russia must know that we will be accountable to our commitments and those of our allies and that russia must be held to account for its actions. our approach to human rights begins by acknowledging that american leadership requires moral clarity. we do not face an either/or choice on defending global human rights. our values are our interests when it comes to human rights and humanitarian assistance. it is unreasonable to expect that every foreign policy endeavor will be driven by human rights considerations alone, especially when the security of the american people is at stake. but our leadership demands

actions specifically focused on improving the conditions of people the world over utilizing both aid and where appropriate economic sanctions is instruments of foreign policy. and we must adhere to standards of accountability. our recent engagements with the government of cuba was not accompanied by any significant concessions on human rights. we have not held them accountable for their conduct. their leaders received much while their people received little. that serves neither the interest of cubans or americans. abraham lincoln declared that america is the last best hope of earth. our moral light must not go out if we are to remain an agent of freedom for mankind. supporting human rights in our foreign policy is a key component of clarifying to a watching world what america stands for. in closing, let us also be proud about the ideals that define us and the liberties we have

secured at great cost. the ingenuity, ideas and culture of americans who came before us made the united states the greatest nation in history. so have their sacrifices. we should never forget that we stand on the shoulders of those who have sacrificed much and in some cases everything. they include our fallen heroes in uniform, our foreign service officers and other americans in the field who likewise gave all for their country. if confirmed in my work for the president the american people i will seek to engender trust with foreign leaders and governments and interests of american foreign policy. the secretary of state works for the president and seeks to implement his foreign policy objectives. to do that i must work closely with my cabinet colleagues and all relevant departments and agencies of the administration to build consensus. but let me also stress that

keeping the president's trust means keeping the public trust. and keeping the public trust means keeping faith with their elected representatives. i want all the members of this committee to know that should i be confirmed, i will listen to your concerns and those of your staff and partner together to achieve great things for the country we all love. i'm an engineer by training. i seek to understand the facts, follow where they lead and apply logic to all international affairs. we must see the world for what it is, have clear priorities and understand that our power is considerable but it is not infinite. we must where possible build pathways to new partnerships and strengthen old bonds which have frayed. if confirmed, i intend to conduct a foreign policy consistent with these ideals. we will never apologize for who we are or what we hold dear. we will see the world for what

it is, be honest with ourselves and the american people, follow facts where they lead us and hold ourselves and others accountable. i thank you for your time and look forward to your questions. >> thank you very much for your testimony. do you commit to appear and testify upon requests from this committee? >> yes, sir. >> with that, i'm going to -- i know the committee members know i rarely give opening statements, certainly not expansive ones like i gave in order to move this along. i'm going to reserve my time for interjections and move to the ranking member senator carden and then we'll move to senator rubio. >> once again, mr. tillerson, thank you very much. do you agree with me that creating a stable, democratic free societies around the world that support the aspirations of their people including basic human rights is in our long-term national security interest? >> without question, senator. >> and do you also agree that russia under mr. putin's leadership fails in that

category? >> yes, sir. >> so what we try to do in order to provide national -- international leadership is to put a face on an issue. thousands of people in russia have been harmed or killed as a result of mr. putin's leadership. and millions have been impacted by that. there's one person who lost his life in a courageous way, sergei -- a young attorney representing a client with u.s. interests. found corruption, did what any lawyer's supposed to do, report it to the authorities. as a result he was arrested, tortured and killed. and those who benefitted from the corruption were held with no accountability whatsoever. through u.s. leadership, we brought that case to the international forum. the congress has passed a law, the miniske law, other countries

have now passed similar laws to deny our banking system and right to visit our country to those who perpetrated those gross violations not held accountable by russia. do you support that law? >> yes, sir, i do. >> i thank you for that, because under the obama administration there have been 39 individuals who have been individually sanctioned under the law and five more were just recently added on monday. reviewed by the administration included for sanctions. do you commit that you will follow that provision on names that we submit to you for potential sanctions for human rights violations under the magnitsky law? >> senator, i will ensure that if confirmed myself and the state department does comply with that law. >> and this year under the

national defense authorization act that was extended globally, it now applies to human rights violations throughout the world. do you also commit to support the global magnitsky law using the tools of our visa restrictions to prevent human rights violators from coming to america? >> senator, again, consistent with all applicable laws that might impact immigration will endeavor to comply with that, yes. >> well, the laws allow secretary of state -- visas are privileges to come to america. there is no -- there's no due process issue on issuing of visas. this is a privilege to be able to come to a country. so we have -- there's no -- i'm not aware of any restrictions on your ability to withdraw the right of someone to come to america. there may be other than through treaties that we have diplomats that have to come in, which is exempted from that provision.

>> i understand, senator. that was what i intended is i think i would ensure that a full examination was made of any and all applicable laws or other policies, but then we would follow those and implement. >> you mention in your statement about the invasion by russia of crimea. does russia have in your view a legal claim to crimea? >> no, sir. that was a taking of territory that was not theirs. >> and do you agree that russia has not complied with the magnitsky agreement? >> the process for implementing the agreement as i understand it continues. a full completion of all the accords has not yet been achieved. >> so i want to get your view on the sanctions that the united states applied. and maybe i'll drill down if i might by asking you this first question. you stated in your statement

that part of the reasons why russia or we were ineffective in preventing russia is we didn't exercise strong enough international leadership. what would you have done or recommended to have been done to prevent russia from doing what it did? >> well, senator, in terms of the taking of crimea, i think my understanding is that caught a lot of people by surprise. it certainly caught me by surprise, just as a private citizen. so i think the real question was the response to the taking of crimea that then led to subsequent actions by russia, which i mentioned the next action being coming across the border of eastern ukraine with both military assets and men, that was the next illegal action. i think the absence of a very firm and forcible response to the taking of crimea was judged by the leadership in russia as a

weak response and therefore -- >> so what would you have done? after we were surprised by what they did in taking over crimea, what should the u.s. leadership have done in response to that? that we didn't do. >> i would have recommended that the ukraine take all its military assets it had available, put them on that eastern border, provide those assets with defensive weapons that are necessary just to defend themselves, announce that the u.s. is going to provide them intelligence and that there will either nato or u.s. will provide air surveillance over that border to monitor any movements. >> so your recommendation would have been to do a more robust supply of military? >> yes, sir. i think what russian leadership would have understood is a powerful response that indicated, yes, you took the crimea, but this stops right

here. >> so understand our nato partners, particularly in the baltics and poland, are very concerned about russian aggression. nato has deployed troops in this region in order to show russia that article v means something. i take it you support that type of action? >> yes, i do. that is the type of response that russia expects. if russia acts with force, taking of crimea was an act of force. they didn't volunteer themselves. so it required a proportional act -- proportional show of force to indicate to rush y that they'll be no more taking of -- >> i appreciate saying that it's not exactly consistent in what mr. trump has been saying under article v by nato -- i appreciate your commitment -- or your views on that issue. so let me get to the response that was done. we imposed u.s.-led sanctions

against russia as a result of its conduct in ukraine. we went to europe and were able to get europe to act. the united states in my view wanted to go even further but we couldn't get europe to go beyond what they were willing to do. do you agree or disagree with that strategy for the united states to lead by showing sanctions as we did? >> senator, sanctions are a powerful tool. and they're an important tool in terms of deterring additional action once actors have acted up, then we want to deter any further action on their part. so, yes, american leadership is oftentimes if not almost always required to demonstrate that first step. >> and as you understand unless we move and we have to move in a strong position, we're going to be the best. we're going to get the strongest reaction on sanctions from the united states. we saw that in iran.

and i know that some of us have mentioned to you the legislation was followed yesterday -- i don't know if you've had a chance yet to respond to it or not. i might do that questions for the record, but we have legislation i would urge you to take a look at that seems consistent with what you're saying here that would provide the administration, the administration, with the tools to show russia that if you attack us by cyber or you continue to do what you're doing in ukraine or what you're doing in georgia that there's going to be an economic price you're going to pay. i take it you believe that's a powerful tool and one that you would consider applying? >> senator, i have not had the opportunity to review the legislation. i'm aware that it has been introduced. and, yes, i think in the state department carrying out diplomacy or carrying out important role in trying to negotiate to a different course of action, to a different

pathway, we need a strong deterrent in our hand. it's the old tenant of teddy roosevelt walk soft, carry big stick. even in diplomacy it is useful to have a stick that is in your hand so that whether you use it or not becomes part of that conversation. >> let me ask one final question, i was meeting with mr. pruitt yesterday and i asked him about his view of global leadership on climate issues and he said you should ask that question to the secretary of state nominee. so i'm going to ask it to you. and that is, we were part of cop 21. do you agree that the united states should continue in international leadership on climate change issues with the international community? >> i think it's important that the united states maintain its seat at the table on the conversations around how to address threats of climate change. which do require a global response. no one country is going to solve this alone. >> thank you.

>> thank you. senator rubio. >> welcome, mr. tillerson. do you believe during the 2016 presidential campaign russian intelligence services directed a campaign of active measures involving the hacking of e-mails, the strategic leak of these e-mails, use of internet trolls and dissemination of fake news with a role of denigrating a presidential candidate and also undermining faith in our election process? >> senator, i have had no unclassified briefings because i've not received my clearance yet, however i did read the interagency report released on january 6th, that report clearly is troubling and indicates that all of the actions you described were undertaken. >> based on your knowledge of russian leaders and russian politics, do you believe these activities could have happened without the knowledge and consent of vladimir putin? >> i'm not in a position to be able to make that determination. again, that's indicated in the report, but i know there's additional classified information that might --

>> you've engaged in significant business activities in russia so i'm sure you're aware of very few things of major proportion happen in that country without vladimir putin's knowledge. i ask in your experience is it possible for something like this involving the united states elections to have happened without vladimir putin knowing about it and authorizing it? >> i think that's a fair assumption. >> that he would have? >> yes. >> if congress passed a bill on posing mandatory visa bans and asset freeze sanctions on person who -- undermining the public or prooiflt i private infrastructure of democratic institutions in the united states, would you advise the president to sign it? >> i would certainly want to examine all four corners of that. >> those are the four corners. we would sanction people who are involve ed in cyber attacks in e united states -- >> the threat of cyber attacks

is a broad issue coming from many corners of the world. certainly this most recent manifestation and i think the new threat posed in terms of how russia has used this as a tool that introduces even another element of threat, but cyber attacks are occurring from many nations -- >> so no matter where they come from, if they come from belgium, if they come from france, if someone is conducting cyber attacks against the united states and we pass a law that authorizes the president to sanction them or actually imposes these sanctions as mandatory, would you advise the president sign it? >> i think it is that second element, senator, that you just described that leaves the executive branch no latitudes or flexibility in dealing with the broad array of cyber threats. i think it is important that those be dealt with on a country by country basis, taking all other elements into consideration in the relationship. so giving the executive the tool is one thing, requiring the executive to use it without any other considerations i would have concerns about. >> so, mr. tillerson, i

understand your testimony. you're saying it was mandatory you would not be able to advise the president to sign it because you want the president to have the flexibility to decide which countries to sanction and which ones to not sanction? >> under which circumstances to sanction. >> in essence because you want to be able for example to take other things into account like for example the desire to perhaps improve relations with that country and therefore the president maybe doesn't want to sanction them even though they're attacking us. >> there could be a whole array of important issues that require consideration including trading issues, trade relation issues, mutual agreements around our national security. so i don't think it's appropriate and certainly for me at this time to indicate that i would just say that it's a blanket application. i think that is the role of the executive branch. it is the role of the secretary of state and state department to assist and inform the president in judgments around how to use

what is a clearly powerful tool. >> well, again, i mean, what's troubling about your answer is the implication that somehow if there is some country that we're trying to improve relations with our have significant economic ties with the president you may advise the president not to impose sanctions on that country or individuals in that country out of concern it could damage our -- the rest of our relationship with them on a cyber attack, which is a direct attack on our national security and our electoral process. so let me ask you, would you advise the president-elect to repeal the obama administration's recent executive orders regarding cyber security and russian interference in the 2016 elections? >> i think the president-elect has indicated and if confirmed i would support what's really required is a comprehensive assessment of our cyber threat and cyber security policies. in my view based on what i've been able to read and have been briefed, we do not have a cyber security policy. we do not have a comprehensive

strategy around how to deal with what has been a rapidly emerging threat. as i said we're seeing it manifest itself in ways we never envisioned. >> but mr. tillerson, i understand the cyber security plan. we have to have one to protect ourselves and handle cyber attacks against our country. that is separate from the question of whether people that have already conducted attacks should be sanctioned and singled out. there's an executive order that is now active that has sanctioned those individuals. and my question is, do you believe that executive order should be repealed by the incoming president? >> if confirmed, senator, i would want to examine it, all aspects of it in consultation not only with the president but with other interagencies that are going to have input on this as to their views. >> well, again, mr. tillerson, if all the executive order says is that certain individuals responsible for cyber actions against the united states will be sanctioned and you still need to examine whether that's a good idea or not, is that correct? >> yes, sir. >> okay. let me ask you this question. is vladimir putin a war

criminal? >> i would not use that term. >> well, let me describe the situation in aleppo and perhaps that will help you reach that conclusion. in aleppo, mr. putin has directed his military to conduct a devastating campaign. he's targeted schools, markets, not just assisting syrians in doing it, his military has targeted schools and markets and other civilian infrastructure, it's resulted in the death of thousands of civilians. this is not the first time mr. putin is involved in campaigns of this kind. back when he was just appointed prime minister before he was elected, and i'm sure you're aware of that period of time, there was a series of bombings. and they blamed it on the chechens and mr. putin personally said he would punish them so ordered the air force to bomb the capital. they used scud missiles, main outside market 137 people died instantly, used explosive bombs that ignite and burn the air breathed in by people who are hiding in basements, they use

cluster munitions. he used battlefield weapons against civilians. when it was all said and done, an estimated 300,000 civilians were killed. and the city was completely destroyed. by the way there's credible body of reporting open source and other that this was all -- all those bombings were part of a black flag operation on the part of the fsb, and if you want to know the motivation, here's what it is. putin's approval ratings before the attacks against the chechens was 31%. by mid-august of that year it was at 78% in just three months. so based on all this information and what's publicly in the record about what's happened in aleppo and the russian military, you are still not prepared to say that vladimir putin and his military have violated the rules of war and have conducted war crimes in aleppo? >> those are very, very serious charges to make. and i would want to have much more information before reaching a conclusion. i understand there is a body of record in the public domain. i'm sure there's a body of record in the classified domain.

and i think in order to deal with a serious question like this -- >> mr. tillerson, the attack in aleppo is in public domain, video and pictures are there. >> -- i would want to be fully informed before advising the president. >> well, i encourage there's so much information about what happened in ape e aleppo leaving the chechen issue aside. what's happened there is clearly documented as well. there's so much information out there, it should not be hard to say vladimir putin's military has conducted war crimes in aleppo because it is never acceptable you would agree for a military to specifically target civilians, which is what happened there through the russian military. and i find it discouraging your inability to cite that, which i think is global accepted. i want to in my last minute and a half here move really quickly to an additional question. in fact, i want to enter two things into record, mr. chairman, without objection. >> without objection. >> the first is a partial list of political dis-u dissidents, journalists of vladimir putin suspiciously murdered or died under highly suspicious

circumstances. second thing i want to enter is a letter addressed to this committee by man himself mysteriously poisoned and a member of the putin regime. >> without objection. >> mr. tillerson, do you believe that vladimir putin and his cronies are responsible for ordering the murder of countless dissidents, journalists and political opponents? >> i do not have sufficient information to make that claim. >> are you aware that people who oppose vladimir putin wind up dead all over the world, poisoned, shot in the back of the head, do you think that was coincidental? or quite possible or likely as i believe they were part of an effort to murder his political opponents? >> well, people who speak up for freedom in regimes that are repressive are ultimate threat and these things happen to them. in terms of assigning specific responsibilities, i would have to have more information.

as i indicated, i feel it's important that in advising the president if confirmed that i deal with facts that i deal with sufficient information which means having access to all information, and i'm sure there's a large body of information that i've never seen that's in the classified realm. i look forward if confirmed to becoming fully informed. but i'm not willing to make conclusions on what is only publicly available or been publicly reported. >> none of this is classified, mr. tillerson. these people are dead. political opponents -- >> your question was people who were directly responsible for that. i'm not disputing these people are dead. >> senator, menendez. >> thank you. mr. tillerson, congratulations on your nomination. thank you for coming by to meet with me. and i'd like to take this opportunity to expand upon the conversation we had last week. since you've worked in one sector for one company throughout your entire career, getting a sense of your world view is incredibly important

since you will be the chief advocate and advisor to the president-elect on those issues. so i'd like to go through a series of questions. i think many of them can be answered by a simple yes or no. others will probably take a greater more extensive answer. and you've alluded to some of this in your opening statement, so let me go through several of them. do you believe it is in the national interest of the united states to continue to support international laws and norms that were established after world war ii? >> yes, sir. >> do you believe that the international order includes respecting the territorial integrity of sovereign countries and the inviability of their borders? >> yes. >> did russia violate this international order when it forcefully annexed crimea and invaded ukraine? >> yes, it did. >> did russia's continuing ougs of foreign countries violate laws and norms? >> i'm not sure which specific countries you're referring to? >> well, the annexation of

crimea, eastern ukraine, georgia, just to mention a few. >> yes, sir. >> does russia and syria's targeted bombing campaign in aleppo on hospitals, for example, violate this international order? >> yes, that is not acceptable behavior. >> do you believe these actions constitute war crimes? >> again, senator, i'm not -- i don't have sufficient information to make that type of a serious conclusion. coming to that conclusion is going to require me to have additional -- >> do you understand what the standard is for a war crime? >> i do. >> and knowing that standard and knowing what is all within the realm of public information you cannot say whether those actions constitute a war crime or not? >> i would not want to rely solely upon what has been reported in the public realm. i would want confirmation from agencies who would be able to present me with indisputable facts. >> senator menendez, if i could, let me ask -- >> if you won't take my time,

mr. chairman. >> i'm not taking your time. it will be added back. if you had sufficient evidence though in looking at classified information that that had taken place, would that not be a war crime? >> yes, sir. >> thank you. >> for all of these answers that you've given me, does the president-elect agree with you? >> the president-elect and i have not had the opportunity to discuss this specific issue or the specific area. >> in your statement on page three you say, in his campaign president-elect trump opposed a bold new commitment to advancing american interests in our foreign policy, i hope to explain what this approach means and how i would implement that policy if i'm confirmed as secretary of state. so i assume to some degree you've had some discussion about what the world view -- >> in a broad construct and in

terms of the principles that are going to guide that, yes, sir. >> i would have thought russia would be at the very top of that considering all the actions that are taking place. is that -- did that not happen? >> that has not occurred yet, senator. >> that's pretty amazing. you built a career on exxonmobil you said -- in 2013 he awarded you with the honor of friendship award. in our conversations you told me you had direct and personal access to the russian president over the course of your tenure there. then in 2014 exxonmobil lobbied aggressively against sanctions on russia after their invasion of ukraine. exxon lobbied against the stability and democracy for ukraine act which i introduced in the senate last year. you employed well-known washington based lobbyists who support these efforts, you personally visited the white house and reported you were engaged, quote, at the highest levels of government. in essence, exxon became the in-house lobbyist for russia

against these sanctions. sanctions are one of the most effective diplomatic tools in our arsenal, one we rely onto avoid putting american lives at risk by engaging in traditional kinetic war fair. today in response to a previous question by senator cardin, you said sanctions are a powerful tool. but you have made sanctions and given speeches where you do not believe sanctions are a useful tool. so if sanctions are not a useful tool, have you changed your view? what are the tools of peaceful diplomacy you will use to get countries to return and act within the international order? what are you going to say to vladimir putin when he says to you, but, rex, you said sanctions were bad? >> senator, i think it's important to acknowledge that when sanctions are imposed they by design are going to harm american business. that's the idea is to disrupt america's business engagement in

whatever country's being targeted for sanctions. and so broadly -- >> i don't think it's to disrupt american business. i think it's to disrupt the economies of those countries. now, american business may or may not be affected to some degree. >> american business -- if america is going to have an influence on disrupting those economies, then the intent behind the sanctions is to disrupt that country's access to american business investment, money flows, technology -- >> financial sectors. >> correct. so by its very -- i'm only stating a fact. i'm not debating it, but the fact is sanctions in order to be implemented do impact american business interest. in protecting america's interest, and i think this is where the president-elect would see the argument as well is sanctions are a powerful tool. let's design them well, let's target them well and then let's

enforce them fully. and to the extent we can, if we can have other countries join us or if we are designing sanctions in concert, let's ensure those sanctions apply equally everywhere. >> well, when you made your remarks, and i have a long list here which i'll introduce for the record, you did not differentiate that way. you basically made the broad case that sanctions are not an effective tool. now, i heard your response now, but in your opening statement you said that, quote, america must continue to display a commitment to personal liberty, human dignity, principled action in our foreign policy and that we are the only global superpower with the means and moral compass capable of shaping the world for good. i totally agree with you in that respect. but mr. tillerson, our efforts in leading the international community for example in sanctions against our adversaries like iran and north korea represent exactly that, leadership and a moral compass. it's not about disadvantaging

american businesses. it's about putting patriotism over profit. diplomacy is not the same as deal making. diplomacy requires other countries often to do things they may not always want to do. and there isn't necessarily something to trade for it for. this is how we were able to build an extensive and effective sanctions network against iran, through legislation from congress and diplomatic pressure from secretaries of state across different administrations, we were able to build the framework of primary and secondary actions that ultimately crippled iran's economy. now, you lobbied against the comprehensive iran sanctions accountability and divestment act, which i was the author of, you reportedly and i say you, exxonmobil, but you were the head of exxonmobil, wanted to eliminate secondary sanctions that would prevent joint ventures. this makes sense in 2003 and 2004 and 2005 you were engaged to a subsidiary company in

businesses with countries who the united states listed as state sponsors of terrorism including iran, syria and the sudan. countries that except for the maneuver of your subsidiary exxonmobil could not have been dealing with. exxonmobil is listed as a coalition member of usa engage, an advocacy group that lobbies against sanctions. this group also lobbied against sanctions including against iran. and applauded passage of the joint comprehensive plan of action. so my question is, with that as a history, with the work that you did in the spring of 2011, where you oversaw an exxonmobil deal with the kurdish regional government in iraq after the united states government expressly did not want to see that happen fearing that a deal would undermine the u.s. policy of one iraq and lead the country closer to civil war, what message are you now going to be able to send to american

businesses who are intent on pursuing their own interests at the expense of u.s. policies and potential political stability in foreign countries? how are you going to recalibrate your priorities as secretary of state? your shareholders are the american people and their security and their interests. >> well, there was a lot in that question, senator. >> i'll give you the rest of my time. >> around which i could respond. first, i have never lobbied against sanctions personally. i continue -- >> the company you directed did. >> to my knowledge, exxon never directly lobbied against sanctions, not to my knowledge. in terms of all the other actions that were mentioned there, they've been done -- they were all undertaken with great deal of transparency and openness and engagement and input to the process. that's the beauty of american process is others are invited to express their view and inform

the process. but that -- my pivot now if confirmed to be secretary of state will have one mission only, and that is to represent the interests of the american people. and as i've stated multiple times, sanctions are an important and powerful tool, but designing poor sanctions and having poor and ineffective sanctions can have a worse effect than having no sanctions at all. if they convey a weak response. so it's important in designing sanctions that as i've said that they're carefully crafted, carefully targeted with an intended effect and then enforced to the extent american leadership can broaden participation in those sanctions. and you're exactly right, the iran sanctions were extraordinarily effective because others joined in. >> thank you. senator menendez has played an incredible role for our nation making sure that sanctions are in place and has done -- let us all if you will relative to iran

as my first longer interjection let the record set your time ran over to accommodate the interjection i made earlier. it's my understanding, i think you called me during this time, that your concern with the sanctions that were in place relative to iran were not that they were put in place. but that the europeans had put them in a way that was different -- it caused adverse -- an adverse situation for u.s. business relative to european businesses. is that correct? >> that was with respect to the sanctions for russia, that's correct. >> okay. with that let me just -- on senator rubio's questions. i understand how a nominee would wish to be careful how they answer, especially one that plans to do what they say, in the event with many of those where he was asking about war

crimes, if you were able through your own independent knowledge in working with classified agencies here within the government to determine that the types of activities that he so well ar titiculated took place,u would agree that those in fact would be war crimes? >> yes, sir. >> senator johnson. >> thank you, mr. chairman. welcome, mr. tillerson. i imagine you're having a pretty good time already. i want to pick up a little bit on sanctions because i've had my own legitimate concerns about the effectiveness of sanctions and the double edged sword nature of them. for example, again, you are pretty well aware events and public opinion inside russia. i mean, i'm concerned that some not well designed sanctions can actually solidify, for example, vladimir putin's standing within russia. is that a legitimate concern on sanctions? >> yes, sir, i think it is.

>> in your testimony a couple statements, you said russia is not unpredictable. no other way of saying russia is pretty predictable. russia does not think like we do. can you further expand on both those comments? >> well, in terms of their -- >> because i don't want to drill and burn the arctic! that will ruin the climate and destroy the future for our children and grandchildren! please don't put exxon in charge of the state department! protect our children and grandchildren! please don't put exxon in charge of the state department! >> if you would, i can easily add time myself, but if we stop the clock when these kind of interferences take place, it'd be appreciated. with that, senator johnson. >> if you forgot the question, it was explain your comments that russia is predictable,

basically. and that russia does not think like we do. expand on that. >> well, in my experience of both dealing with russia and representatives of russian government and russian entities skpr , and then as my -- the length of time i've spent in russia as an observer, my experience with the russians are that they're very calculating, they're very strategic in their thinking and they develop a plan. >> you have treated the worlds's most vulnerable communities as expendab expendable. in our home state of texas people are resisting dated pipelines. whether or not you become secretary of state, oil is dead. and people will not stop! senators, be brave! stop this man! protect the vulnerable! senators, be brave!

reject this man! protect the vulnerabilities! >> apologies for that, mr. tillerson. maybe answer the question unimpeded. >> i've found the russians to be very strategic in their thinking, very tactical, and they generally have a very clear plan that they've laid before them. so in terms of when i make the statement they're not unpredictable, if one is able to step back and understand what their long term motivation is and you see that they're going to chart a course, then it's an understanding of how are they likely to carry that plan out, and where are all of the elements of that plan that are on the table. and in my view the leadership of russia has a plan. it is a geographic plan that is in front of them. and they are taking actions to implement that plan. they're judging responses and then they're making the next step in the plan based upon the response. and in that regard they are not

unpredictable. if russia does not receive an adequate response to an action, they will execute the next step of the plan. >> so be a little more specific. summarize that plan you see that they have. >> well, russia more than anything wants to re-establish its role in the global world order. they have a view that following the breakup of the soviet union they were mistreated in some respects in the transition period. they believe they deserve a rightful role in the global world order because they are a nuclear power. and they're searching as to how to establish that. and for most of the past 20-plus years since the demise of the soviet union they were not in a position to assert that. they have spent all of these years developing the capability to do that. and i think that's now what we are witnessing is an assertion

on their part in order to force a conversation about what is russia's role in the global world order. and so the steps being taken are simply to make that point that russia is here, russia matters and we're a force to be dealt with. and that is a fairly predictable course of action they're taking. i think the important conversation that we have to have with them is does russia want to now and forever be an adversary of the united states? do you want this to get worse, or does russia desire a different relationship? we're not likely to ever be friends. i think as others have noted our value systems are starkly different. we do not hold the same values. but i also know the russian people because of having spent so many years in russia. there is scope to define a different relationship that can bring down the temperature

around the conflicts we have today. and i think secretary gates alluded to and secretary nunn alluded to it both in their opening remarks, dialogue is critical so these things do not spin out of control. we need to need to move russia being an adversary always to a partner at times, and on other issues, we're going to be adversaries. it's not unlike my comments i made on china. at times china is friendly, and at times china is an adversary. but with russia, engagement is necessary in order to define what is that relationship going to be, and then we will know how to chart our own plan of action to respond to that. >> in my mind, if i take a look at the spectrum of america reelsi relationship with different nations, you have friends and allies, you have friendly rivals, you have unfriendly adversaries and you have enemies. and right now, you're basically putting russia in the unfriendly

adversary category? >> well, unfriendly to enemies. i think at this point, they clearly are in the unfriendly adversary category. i hope they do not move to enemy, because that would imply even more direct conflict with one another. >> but you don't have much hope that we can move them into the friendly rival category, maybe partners where we have mutual interest? >> senator, i tend to think of it in three categories -- there are our friends, there are our partners, and there are our adversaries. and at times, certainly our friends are partners from time to time on specific actions. our adversaries from time to time can be partners. but on other issues, we're just not going to agree, and so we remain adversaries. an adversary at the ideological level is one thing. an adversary at the conflict level, direct conflict level, that's a very different. >> i want to switch subjects a little bit. i agree with former senator nunn

when he said that your business experience, your private sector background, your relationship with putin is actually an asset coming to this position. i come from the private sector. i think that kind of perspective is sorely needed. i don't think we have enough people from private sector. i think economic strength is inextricably linked to national strength. your background traveling the world -- i asked you when i met -- i don't know if you ever did the calculation -- how many different countries have you traveled to? >> i've never actually counted them up. i would say over 40, somewhere between 40 and 50. i've never actually counted them. >> how many countries have you actually done deals with, you know, where you've dealt with top leadership? >> i've never counted those, but it's certainly, you know, probably between 10 and 20 where i was directly engaged in a significant way. >> let me ask you, as somebody from the private sector being

asked to serve your nation, understanding you're going to be through a process like this, understanding all the disclosure, leaving a life behind that i'm sure you valued, what was your greatest reservation saying yes? >> senator, when i went through all of the analysis, all the reasons i had for saying no, which is your question were all selfish reasons, so i had no reason to say no. >> you obviously had responsibility as the ceo of exxonmobil, fiduciary responsibility. your role's going to change. do you have any reservation? and can you just kind of describe exactly what your mind-set is from making that transition? >> senator, i have no reservations about my clean break with my private-sector life. it was a wonderful 41 1/2-year career. i'm extraordinarily proud of it.

i learned an awful lot. but now i'm moving to a completely different responsibility. my love of country and my patriotism is going to dictate that i serve no one's interests but that of the american people in advancing our own national security. >> as you've traveled the world with the business mind-set working at developing projects around the world, you know, obviously, you're hearing from people around the world. former president carter in june of 2015 was commenting on president obama's foreign policy, and here's some excerpts of his quotes. he said he can't think of many nations in the world where we have a better relationship now than we did when he took over, president obama. the united states influence and prestige and respect in the world is probably lower now than it was six or seven years ago. is that your general sense as you travel around the world during the last eight years of this administration, that our power and influence, prestige, respect is lower, that we have

not developed better relationships around the world? >> senator, i think -- i don't remember if i shared it with you in the meeting we had, but i know i shared it with others in meetings. in many respects, i've spent the last ten years on an unintended listening tour as i traveled about the world conducting affairs, engaging with the top leadership, heads of state in many of these countries, and i have had the opportunity to listen to them express their frustrations, their fears, their concerns as to the withdrawal and the stepping back of america's leadership, the lack of that engagement. and they are yearning and they want american leadership reasserted. when i met with the president-elect and we were meeting about his ultimately asking me to do this, i indicated to him, i said, mr. president, we've got a tough hand of cards that you've been dealt, but i said you know, there's no use in whining about it, no use in complaining or pointing fingers at anyone.

we're just going to play that hand out, because what i know is america still holds all the aces. we just need to draw them out of that deck, and that leaders around the world want our engagement. i said you're going to be pushing on an open door because people want america to come back. >> one of the reasons i really value the private sector experience is just in your opening statement the number of times you used reality, clarity, moral leadership, moral clarity, moral lights, facts, use logic, clear priorities. those are the words of a businessperson. that's why i think your perspective will be very welcome in the state department. thank you, mr. tillerson. thank you, mr. chairman. >> thank you, sir. senator shaheen. >> thank you, mr. chairman, and thank you, mr. tillerson, for being willing to consider the nomination which has been put forward to be secretary of state. i agree with your opening statement that the united states has an important role to play in the world, not just standing up

for our interests and values but also for democracy, for press freedom, for human rights, for rule of law. you were unwilling to agree with senator rubio's characterization of vladimir putin as a war criminal. and you point out in your statement that russia has disregarded american interests. i would suggest, as i think has been brought out in later testimony, that not only has it disregarded american interests, but international norms and humanitarian interests. the state department has described russia as having an authoritarian political system dominated by president vladimir putin. meanwhile, freedom house currently puts russia in a category of countries like iran, with very restricted political rights ruled by one part or military dictatorships, religious hierarchies or autocrats. do you agree with that characterization of russia and vladimir putin? >> i would have no reason to

take exception. >> senator rubio and senator cardin both talked about some of those people who have been victims of the putin authoritarian regime in russia. and behind me is a poster with a recent "the new york times" story. i quote -- "more of kremlin's opponents are ending up dead." i'd like to ask unanimous consent, mr. chairman, to enter the article into the record? >> without exception -- objection. >> i think a picture is always worth 1,000 words. and when you put a face to sergey magnitsky, as this poster does, and see two other victims of the authoritarian regime in russia, i think it speaks to what's happening there and how we should think about the country and dealing with president putin.

so, i understand what senator nunn said and -- i mean, former senator nunn -- and secretary gates said when they talked about the need to have dialogue with russia and to continue a mill-to-mill relationship, but i also think it's important for us to understand who we're dealing with. in 2008, you notably said that there's no respect for the rule of law in russia today. do you think that continues to be true? >> that is still the case, yes. >> so, i think you can probably understand, mr. tillerson, why some of us are very concerned about the president-elect's statements praising vladimir putin's leadership, his intelligence, including after being reminded of his ruthless -- >> fascinating discussion about the u.s./russia relationship. a senate foreign relations committee as rex tillerson has the first of his two-day confirmation hearing before that committee. wide-ranging talk of some hawkish talk about russia. tillerson saying the taking of

crimea was, in fact, illegal, that any hacking would have been done with putin's knowledge, some indictment of the current form of american sanctions regarding iran, arguing that russia wants to re-establish its role in the global order. markets have been taking all this interest n stride, in fact, building on their gains. dow's up 82. we have a nasdaq record high. but in the next few moments, we are going to get the president-elect, donald trump, holding his first news conference since july, scheduled to begin any moment. we're getting some indications the president-elect will be on time. we'll be on alert to see if there's any market-moving information there. john harwood is live inside trump tower standing by on the phone. robert frank is outside. john, let's begin with you. what can we expect? >> reporter: well, i think we can expect in this extremely crowded press conference with reporters from all over the world packed in here that there's going to be intense focus on russia, on the russian