level. barry white jr. teaches fifth grade in charlotte, he greets every student with a personalized handshake. it got his class excited about school. we thank all of our inspiring teachers out there. here's shep. >> shepard: it's noon on the west coast. 3:00 p.m. on the east coast. president trump acknowledging he had a tough phone call with the australian prime minister and the president of mexico. those leaders are telling detailed stories. what really happened? the president doubling down on the warning to iran after that nation's military fired a ballistic missile. ahead, the possiblebehind the r. and were the iranians testing a missile or testing us? also, did the white house just cut vladimir putin a break? the trump administration easing

penalties against russia. the white house says this is normal. context ahead. let's get to it. and first from the fox news desk this thursday afternoon, president trump is testing the limits of u.s. relations with world leaders from foes like iran to one of america's strongest allies on the planet, australia. the president is telling americans not to sweat it. he says the u.s. needs to be tough. according to "the washington post" newspaper, president trump lashed out at the australian prime minister in a phone call that happened on saturday. we've learned about it now. he called it the worst phone call of the day after a chat with vlad putin and others. more on that in a moment. president trump is issuing another warning to iran. he tweeted earlier, iran has been formally put on notice for firing a ballistic missile.

should have been thankful for the terrible deal the u.s. made with them. national security advisor michael flynn said yesterday that iran is on notice, but since "on notice" is not a proclamation from policy and leaders have not explained it at all, we can't report what that means. the president is also shaking up things with other countries. the "washington post" reports in the phone call with australia's prime minister, president trump slammed a refugee deal between the united states and australia and bragged about his election win and abruptly ended the conversation 25 minutes into a planned one-hour call. upon learning of the details of the call, senator john mccain called the australian ambassador in an attempt to smooth things over. he asked the ambassador to convey to all australian that there's unwaivering support for the alliance. president trump said he spoke to four other world leaders that day including a russian prime minister, vladimir putin and

told the australian leader this is the worst call by far. the post reports that up trump was angry over a deal the obama administration made with the aussies to take in 1,250 refugees. the president said it was the worst deal and he would be killed politically. the president said "i don't want those people." the paper reports president trump said he does intend to honor that deal. that is widely reported gives him wiggle room to change his mind. in a tweet last night, the president wrote "do you believe it? the obama administration agreed to take thousands of illegal australians. why? i will study this dumb deal."

america and australian troops have fought alongside each other for decades including in iraq and afghanistan. "the washington post" further reports that president trump also got angry and bragged about his political victories to mexico's prime minister. president trump said he was ready to send troops to mexico to help fight the drug cartels. the a.p. reports our told president nieto, you have a bunch of bad hombres down there, you're not doing enough to stop them. i think your military is scared. ours isn't. i might send them down to take care of it." the mexican government denies that he threatened to send troops into mexico. here's what president trump said about his conversations with world leaders.

>> the world is in trouble, but we're going to straighten it out. okay? that's what i do. i fix things. we're going to straighten it out. believe me, when you hear about the tough phone calls i'm having, don't worry about it. just don't worry about it. they're tough. we have to be tough. it's time we're going to be a little tough, folks. we're taken advantage of by every nation in the world virtually. >> president trump hours ago said he has to respect the refugee deal with australia because the obama administration agreed to it. but he said a lot of people are taking advantage of it. the white house described the president's phone call with the australian prime minister as cordial. the prime minister in a radio interview said the call ended courteously. >> the president committed to honoring a deal done by his predecessor.

no doubt he would have said he wouldn't have done it himself. he committed to stick to the deal that president obama done. >> australia's treatment of refugees is controversial. the country has been keeping them in offshore detention facilities. the united nations has called it illegal and unhumane. there's no doubt that president trump's election is leading to changes on the world stage. david petraeus warned lawmakers that the world order that the united states created in the 20th century is under unprecedented threat. he said the threat comes from sources including russia, china, islamic extremism and cyber attacks. >> americans should not take the current international order for granted. it did not will itself into existence. we created it. like-wise, it's not naturally self-sustaining. we have sustained it. if we stop doing so, it will frey and eventually collapse. >> shepard: the president spoke at a prayer breakfast this morning. now on how the latest moves

coming out of the trump administration are affecting the world. john roberts is live there now. what is the white house saying about the president's comments on iran? >> yeah, he said a short time ago when he was meeting with leaders from harley-davidson, nothing is off the table when it comes to iran. we don't know what is on the table when it comes to iran. yesterday late afternoon, we had a background briefing with the national security council that said they're looking at a large number of options. the options could include further financial or economic sanctions, potentially support for opponents of iran. there's no question that the white house is very upset about what it's seeing happening over there in iran. they think that this is about more than just ballistic missiles. this isn't a testing the united states, about testing the new regime of donald trump. but the white house does insist when taken altogether, it will

respond appropriately to what iran did over the weekend. here's sean spicer from the briefing a short time ago. >> we will have further updates for you on the additional actions. clearly wanted to make sure that iran understood that they're unnoticed. this is not going unresponded to. >> because nothing is off the table, that could include military action. the white house doesn't want to do anything that is either "premature or rash" and provoke a negative response. the first response from iran is terse. the ayatollah said they don't need to pay attention to useless threats coming from an inexperienced person. when it comes to donald trump, i'm sure them is fighting words, shep. >> shepard: when will we learn more about this shortened phone call with the australian prime minister? >> the white house described it as cordial. i was told behind the scenes

that was a very frank discussion. it was supposed to be scheduled for an hour and wrapped up after only 25 minutes. at issue this idea that the obama administration cut a deal for the united states to take 1,250 refugees that are being kept on two islands in the south pacific, what are being described as horrible conditions but some people. but the president according to sean spicer deeply disappointed that this deal was cut. here's what the president said when he was meeting with the harley-davidson officials a short time ago. >> president obama said they would take probably well over 1,000 illegal immigrants that were in prisons. they were going to bring them and take them into this country. i said why? we'll see what happens. you know, our previous administration does something, you have to respect that. you can also say why are we doing this?

>> as you pointed out a short time ago, shep, the president says that he will honor the obama administration ideal and take the refugees with the caveat though that they will be subject to the same degree of extreme vetting that people from the seven countries that were named in the executive order on extreme vetting were. you also have to take into account a lot of people in the camps are from some of those countries like iran and iraq. >> shepard: neil gorsuch is on the hill. what's going on there? >> he's meeting with senators and the trick is to get the 60 votes necessary to head off any filibuster. joe manchin is the only democratic senator to met with judge gorsuch. he says he believes they can get to 60 votes. the white house says it shouldn't come to that. they're holding to him to a 60-vote threshold would be unfair if you look at historical precedent. here's sean spicer.

>> i'll repeat, neither of the two supreme court justices that president obama put forward were subject to the 60-vote threshold. although i agree with senator manchin that judge gorsuch will get enough democrats, it's not been a requirement. >> there's a number of democratic senators that are up for re-election in states that donald trump won on november 8. they might want to vote for judge gorsuch or they might get voted out in 2018. >> shepard: the president attends the national prayer breakfast. today president trump suggested that we pray for the ratings of arnold schwarzenegger and renominate the chaplain that gave the speech and said why not? the hell with it. >> the reason that president trump went down that road is because he was introduced by mark burnett, a man of strong faith that created "apprentice",

"survivor" and shows like that. he said we pray for the ratings of the new "apprentice" being hosted by arnold schwarzenegger. he said the ratings for the new show not what the ratings were when he was doing it, which provoked this response today from arnold schwarzenegger. watch. >> hey, donald, i have a great idea. let's switch jobs. you take over tv because you're an expert in ratings and i take over your job and people can finally sleep comfortably again. >> shep, all through the election campaign, if donald trump wins the presidency, this will be the most interesting place on the planet to be. guess what? it is. >> shepard: sleeping comfortably, john roberts. analysis next. when you're close to the people you love, does psoriasis ever get in the way of a touching moment? if you have moderate to severe psoriasis, you can embrace

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>> shepard: analysis of the day at the white house. john bussey is here. the call with the australian prime minister happened saturday. we heard about it today. it's friday morning in australia. the herald is out. the top four stories about this. the first headline is up. "wake up, australia, it's trump time" and then talks about john mccain calling to straighten things up. >> the language the president at the prayer breakfast this morning -- >> shepard: "the hell with it".

>> he says we have to be tough. we're taken advantage of by every nation in the world virtually. it's not going to happen anymore. america as victim. when donald trump said he would be tough, they imagined he would be tough with our enemies. >> shepard: like vladimir putin. >> yeah, not australia, mexico, germany over the euro, our nato allies. this has -- this has caught people off guard. it's caused some efforts at walk-back by john mccain stepping in, calling the ambassador from australia to the united states saying i consider you, the american people consider you one of our foremoves allies in the world and most trustworthy. the question for donald trump is, you know, these battles with our allies, saying to the mexican president, your military seems scared. >> shepard: bad hombres down

there. >> forgetting there's a lot of anti-american resentment under the surface in latin america and other south american countries. the question is whether or not you hurt the credibility of the united states. deals have been made with countries like australia, whether or not you begin to force countries into other camps. china is looking to create greater strength and alliances in the region. maybe they make some head way. >> shepard: have other leaders suggested as much? they're still doing a diplomatic dance. >> that's right. our nato allies are. germany is. the mexican president is concerned about what might happen to that nafta trade accord. what might happen to the border relationship. the military in mexico cooperates with that, with intelligence agencies and dea, drug enforcement agency, people in the united states. is that going to unravel because of frictions being created like

your military looks scared. >> shepard: insiders say they are board room tactics that donald trump over time has thrown the proverbial bomb in the room with his team and allow them to fix it and he's employing those same tactics with world leaders. but world leaders accustomed to a more diplomatic, sort of measured tone in these matters. it appears that they're not really sure how to process this. like iran, you're on notice. what does this mean? i've never seen this. >> let's stick with australia for a second. it's not because the diplomats are prissy. >> shepard: prissy? >> yeah. the issues are complicated. they're not diplomatic and careful about what they say because there's a diplomatic protocol. the issues are complicated. you can create all sorts of unintended consequences by your statement.

this is a disagreement with austra ally of ours. over 1,200 people. they're not all illegal immigrants. they're refugees. they're seeking to get out only some hellacious play. >> shepard: and they have no where to go. >> nowhere to go. >> shepard: and we vet them for years. >> and we would vet them for years. the question is, the battles being picked at the moment with countries like australia, where we have marines getting trained in the north of australia, where we have deployments of ships that refuel and just look back at the many conflicts over the 20th century. australia has always been there side by side with the united states just like britain. >> shepard: in the outback, the roos are self-arming. >> i'm not sure what that means. >> shepard: i'm not sure either. including "i ran, you're on notice." what does that mean? that's next.

>> shepard: officials in iran say they will not bow to the useless threats from the united states. that's after the white house put iran on notice over its recent ballistic missile test. they mocked president trump's inexperience and adding that the missile tests will continue. jennifer griffin live at the pentagon. the iranians insist they didn't violate any resolutions. >> that's right. iran's test minister said they're tests are not nuclear capable and not in violation of the u.n. resolution. the pentagon disagrees. the u.s. security council has referred it for further investigation. paul ryan came to the defense of the white house today. >> i would be in favor of additional sanctions on iran.

i'd like to put as much back as possible. the last administration appeased iran too much. i think they went too far with iran and as a result, iran is far more active than they otherwise would be. >> that's what the israeli prime minister is calling for. netanyahu said he would raise the issues of iran when he meets the president on february 15th. >> shepard: how is this flying at the pentagon? >> senior officials said they were not consulted about mike flynn's statement yesterday. they said they agree the ballistic missile tests are a against the u.n. agreement. some people i have spoken with said they would not have included the saudi attack on the warship in the statement. according to one official, this

watered down the message of iran's ballistic missile breaches. right now the u.s. does not have an aircraft carrier in the gulf. u.s., brush and french warships are participating in pre-planned exercises in the gulf amidst the heightened tensions. >> shepard: the white put the country on notice for the recent ballistic missile. let's bring in jeff mason from reuters and president of the white house correspondent's association. good to see you. >> nice to see you. >> shepard: you have new reporting. sanctions are in line. we can't won firm that. >> yes, reuters is looking at that. president trump said with a meeting from executives from harley-davidson that nothing was off the table. sanctions are part of that. saying that nothing is off the table leaves a big question mark

about what else they're considering. >> widespread praise for harley-davidson and the noise their motorcycles make. what are we to make of "on notice?" have the iranians be informed according to your reporting what "on notice" means? >> i think "on notice" is left sort of deliberately vague, shep. i think they're suggesting with that statement yesterday and with the comments from the president today that there is a shift in tone from this white house and how it's going to deal with iran. the obama white house, of course, one of their signature achievements with the nuclear deal that they had with iran and several other countries. president trump was very critical of that deal. it's clear from the white house that that type of tone is not the one that his administration will follow. >> shepard: the iranians seem to blow this off. >> well, they certainly didn't like what they heard and made that clear with their very

response. some people are concerned there's a ratcheting up of tension because of that. because of the statement from michael flynn and the statement yesterday and today and i ran's response to that, that that will actually escalate tension and escalate a war of words between the two countries. >> shepard: reuter was first to report it but i'm told we have just confirmed, the u.s. plans to impose sanctions in a manner that wouldn't violate the nuclear deal. expect to impose additional sanctions as early as this friday. we've confirmed it. u.s. sanctions have been under consideration for some time. they're expected to be imposed because of this recent ballistic missile test. the sanctions will include eight iranian entities under an executive order and 17 under weapons of mass destruction order. this is not expected to anyway derail or affect in any manner the iran nuclear deal that iran

made with five or six powers around the world. >> right. that deal does allow or does not prohibit other sanctions to be put in place on iran that is something that the administration is dealing with. however, you can't ignore the fact that president trump doesn't like that deal with iran. so by starting some sanctions now, it's putting in conversation the fact that he may be looking at that deal down the road as well. >> shepard: certainly a possibility. thanks very much. i appreciate the i believe sight today. jeff mason, the white house correspondent for reuters. the united states easing up on sanctions for russia. we have new information from the treasury department. that's coming up. when reporters asked president trump about it, he said he's not easing up on anything. the distinction coming up on the fox news desk. motion.

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>> i'm lea gabriel with the forks report. an update on the hostage situation at a prison in delaware. we're learning the guards that died in the standoff warned the other officers to get out of the prison as the inmates were taking hostages. that's the word from the head of a labor group which represents corrections officers in the state. he said that officer stephen floyd saved lives. investigators say three officers survived. inmates used some sort of sharpened weapons and they used footlockers to barricade the doors. >> what they had done during negotiations, we turned on the water as a demand and they filled the footlockers with water which created very heavy building blocks. >> he also said constructions officers knocked down the walls to get inside. the news with shepard smith continues after this.

>> shepard: the treasury department reports it's easing up on economic punishments against russia. president trump told reporters he's not easing anything. president obama said that he slapped those punishments on moscow for interfering in the u.s. presidential election. the treasury department's new move will allow certain transactions. in december, the united states kicked out russian diplomats. trace gallagher has more. trace? >> shep, some experts say when the obama administration ramped up the sanctions in december, one of the unintended consequences that u.s. companies and citizens were no longer allowed to ship technology goods to russia. so experting any device with an encryption feature was not allowed. they say this corrects that mistake. democrats are not buying it.

one of the ranking members of the how c.i.a. said russia was awarded for tampering with our election. he said "we just made it easier for the same group to import into russia for the tools to hack us or our allies again." it was last week when mitch mcconnell and paul ryan advised president trump not to lift any sanctions against russia. shep? >> shepard: trace, thanks. the white house pushing back on this. we heard sean spicer mention it. >> sure, yeah, the white house says point blank this does not represent a shift in policy. instead, they're calling it a routine adjustment saying the fix was already in the works during the obama administration soon after the sanctions were put into place. here's the press secretary. >> it's a fairly common practice for the treasury department after sanctions are put in place to go back and look at whether or not there needs to be

specific carve outs for different either industries or products and services that need to be going back and forth. >> the former director of the russian federal security service or fsb, the new kgb, says he believes this will lead to more cooperation between the u.s. and russia when it comes to the war on terror as well. shep? >> shepard: thanks, trace. the senate may have something to do that its never done before. confirm president trump's education secretary nominee betsy devos. a senate committee is set to move ahead with her nomination. two republicans say they will vote against devos. that would leave a split of 50/50. historians say it would be the first time the vice president would have to cast a tie-breaking vote to confirm a nominee. the white house has called devos a tireless advocate for students. she's faced accusations of plagi

plagiari plagiarism. the critics lampooned her for suggesting a school in wyoming would need a gun on school property to defend against grizzly bears. let's bring in anna palmer from this is the closest vote i believe that he has had and apparently will have, devos and senator sessions after that. >> yeah, absolutely. this came as a surprise. usually the education secretary isn't the most controversial picks. certainly she's had the most scrutiny in terms of two republicans breaking with the majority to say they won't vote for her. right now, this is a play for what senate majority leader mitch mcconnell will do. you'll see him work very hard to keep the represent of the republicans in line. >> shepard: this would leave the vice president in a position that is perfectly right but unusual, rare.

>> certainly very rare. usually when it comes down to it, if the president thinks his nominee won't make it through, they pull it. think of tom daschle from south dakota, a senator and he has problems with financial disclosures during the obama administration so he was pulled. this is something where they're not going to pull her. they have stood behind her despite some of these discrepancies on plagiarism. mike pence will probably have to come to washington d.c. to cast the vote. >> shepard: when should we expect that? >> it was supposed to be this week the right now news has been breaking that the vote will probably be next week. senate republicans have a fund raiser out of town over the weekend. so i think there's been issues with making sure that they had their numbers in line and everybody would be there to cast the vote. >> shepard: there's 52 republicans. if they stick together, this is a no-brainer.

you need a simple majority. representative susan collins and lisa murkowski said whence that they will vote against this. has there been any other waivering from republicans? >> what we've seen in the capitol, there's been a lot of making sure that the republicans have the numbers. senator deb fisher from nebraska is somebody that we were looking at, could she break with republicans on this. she came out saying that she had concerns but she's going to vote for devos to become the next secretary. there doesn't appear to be any shaking. this is something that mitch mcconnell is working hard to make sure that this goes through. it would be a huge embarrassment if it doesn't. >> anna palmer from politico, thanks very much. >> shepard: hi, i'm the new guy. that's how rex tillerson

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>> shepard: 18 minutes before the hour. mad dog mattis blasting north korea in his first overseas trip. he met in seoul today. secretary mattis said if it wasn't for north korea's provocative behavior, there would be no need for the system. secretary mattis said he's scheduled to meet with leaders, another country north korea has threatened. the new secretary of state rex tiller said giving his first speeches today at the state house. he said diplomats needs to work together as a team. he said that it's obvious everybody in the room didn't want president trump to win the election. >> i know this was a hotly

contested election. each of us is entitled to the expression of our political beliefs. we cannot let our personal convictions overwhelm our ability to work as one team. >> this comes after hundreds of diplomats signed a dissent cable challenging the president's executive order on immigration and refugees. on monday, the white house said state departments can get with program or get out. rich edson live at the state department. rich? >> well, shep, today secretary of state rex tillerson in his first fill day came to the department of state to a round of applause from hundreds of employees who as they typically do the first day of a new secretary of state will listen to an address. rex tillerson was the ceo of exxon mobil. he was with the company about four decades. there were a number of business-like words of advice he had for employees. he said they should embrace accountability and cited the new

england's motto of "do your job", this is not his first job in the public sector and he's promising a more efficient bureaucracy. >> change for the sake of change can be counter productive. i will gather information on what processes should be reformed and make sure we're functioning in the most productive and efficient way possible. >> he didn't directly address that dissent channel cable that you discussed early, the one where a number of state department employees have officially lodged their complaint about the trump administration's actions to halt immigration from several predominantly muslim countries. shep? >> shepard: and the secretary meeting with foreign officials. >> that's right. the next 15 minutes from now, the secretary of state in his new offices will be meeting with the german foreign minister. there's plenty for those two to discuss, especially since germany is second to the united

states in funding nato. that's a security alliance the trump administration and the president himself has been supportive of lately. however, given some of the discussion that the candidate then donald trump had said about nato, a number of allies wonder what the trump administration's commitment has been. so they've been re-assuring allies while the administration has criticized nato. germany helped negotiate and a signatory to the iran nuclear deal. this all ties in together, in particular what you just reported to earlier on this show, shep, in perhaps in response to a ballistic missile launch, will be getting increased sanctions on iran. >> shepard: breaking news now. an iranian man that was blocked under the travel ban has just arrived at los angeles international airport after a judge ordered his safe return. he's the first person to come back to america as a result of a court action against the president's travel ban targeting iran and six other muslim

nations. here, listen. >> said are you looking for the passenger assist? i said yes. i went to the immigration office, asked about it. the lady told me to stay here, maybe we can do something. i stayed there. suddenly god sent somebody. i saw five or six people around me. they said we're lawyers. calu or something. i don't know. [laughter] they said we're from this organization. i said, are you allowing me something? i said, yes. but how much is it going to cost? i said i only have $5,000 cash in my pocket if something needs -- he said, don't need it. don't charge you. i said okay. you charge me if i do something wrong. just do whatever you can.

after that, we tried to stop flying back. okay. i think my brothered stop it. thank you, everybody. mucho gracias. >> shepard: now the man will reunite with his family. can you go back to that? waiting for his family there. and they're now reunited again. he's the first that has been returned. he's reuniting with his brother and his niece. the american civil liberties union and an immigration attorney fought for his safe return to the united states after u.s. officials detained him and sent him to dubai. they let him back with flowers and cameras. super bowl li three days away.

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>> shepard: a super bowl ticket will easily cost you at least $2,000. not a good seat. that's a bargain compared the cash some people are shelling out to stay near the big game. realtors at one company in houston said they're charging people up to $35,000 to stay in other people's mansions. that's the price for a night. there's a four-night minimum. lots of homeowners say they're more than happy to move out for the weekend to rent their place

for a nice chunk of change. who wouldn't be? rick leventhal in town, i understand. >> yeah, turns out everything cost more super bowl week. take our hotel. it's several miles from downtown alongside a busy highway. it's renting out for $600 to $800 a night when it's normally $129 for a king. just imagine how much a 6,000 square feet home with a pool and tennis court to rent. why not $35,000 a night if you can afford it, right? >> we do have a lot of a, listering looking at these properties, celebrities, entrepreneurs, those that just want privacy and don't want to deal with the crowds and the hotels and don't really want to be seen out in the crowds. >> of course, there's a down side. you hinted at it. the homeowner has to move their personal items out with 48 hours

notice. the upside, you get a big check. >> that's not terrible. you've looked for predictions, huh? >> yeah. we were at a sanctioned event where valet parking was $40. i saw michael irvin. i asked him who he was picking. he said he is focused on the field and who is focused on foolishness. >> i'll know sat when i ask guys what do you think of houston. if they say, i don't know, dog, i was focused on the field. i put a check by his name. if they say oh, houston is off the hook, i put an x by his name. >> so he says he will figure it out saturday; shep. >> shepard: how will security be? >> very, very tight as you might imagine. you'll find out here at discovery green. there's checkpoints, airport

checkpoints. there's thousands of officers and agents on the ground, in the air keeping an eye on things. very tight reins not just at the stadium but also at all the super bowl sanctioned events and venues across the city. we spoke with the special agent in charge of the houston office of the fbi about this and including protests and demonstrations. >> we expect to have protesters. our goal is to work with them to allow them their opportu protest their cause. at the end of the day, it's about keeping the american public safe and making sure we have an enjoyable event. >> the houston police dent is the lead agency here. there's been flash mop -- mobs at the local malls. >> shepard: thanks, ricky. our team is off to houston. four minutes from now, we leave

for the airport. we'll have live programming tomorrow 3:00 eastern and again on saturday. we'll give you prep for all the festivities. you can catch the big game in one place. big fox. sunday night.

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>> shepard: so the man returning from iran after being barred from entering the united states, we just heard from him. it wasn't him. that was his brother. his brother says he's still waiting for his brother and they will reunite this evening. on this day in 1790, the u.s. supreme court met for the first time. president george washington named john jay the original chief justice. justices didn't have their own space to hold sessions until 1935. for years, congress made room for them in the capitol building. the court has had a defining role in settling some of the great issues facing our country ever since the first session 227

years ago today. the dow closing. not a horrible day. off but not much. off to you live from houston, the site of super bowl li right here on fox news channel. >> neil: punxsutawney phil predicting six more weeks of winter. that is nothing compared to the chill in washington that could be here forever! democrats boycotting today's hearing for the president's pick to head the epa. vowing to block his supreme court nominee, before it was announced. and then the riot breaking out at u.c. berkeley over a speech by a conservative editor. protesters had plenty of opportunity to smash windows and set fires. now some democrats are threatening to protest the democrat's speech to congress later this month. reportin