Transcripts For CNBC Squawk Alley 20170105

Good thursday morning. Welcome to squawk alley. Carl quintanilla with Kayla Tausche at post 9. Our jon fortt live at the Consumer Electronics show in las vegas. A lot to come from jon later on this hour. Joining us at post 9 this morning, elevation partner cofounder Roger Mcnamee and jonathan, barclays head of u. S. Equity strategy research. Good morning to you both. Big story is the Senate Hearing under way this hour on capitol hill, top intelligence officials facing questions primarily centered on russias purported hacking of the u. S. President ial election. Senators john mccain, elizabeth warren, tim kaine among the committee members. Eamon javers has been watching this all morning long. Fascinating headlines. Good morning, eamon. Reporter good morning, carl. There is an enormous elephant in the room here, and that is this classified Intelligence Community report on alleged russian hacking of the u. S. Election. We know that that report has been delivered to president barack obama and hes had an opportunity to review it today. Were also told that the members of the committee, members of congress will get a briefing on that at some point in the coming days, and donald trump himself will be briefed on it tomorrow. The problem here for the Intelligence Community members who are testifying today is that they have not released the report yet, so they are very circumspect about what they can say about whats in it. What we do know is that they say they will ascribe a motive to Vladimir Putin for alleged russian hacking of the United States in this. And theres also been this really interesting moment here between the director of national intelligence, james clapper, and john mccain, who is chairing the committee. John mccain suggested that no one here is saying that russian hacking switched the results of the election. Director clapper appeared to push back a little bit on that by suggesting that thats simply an unknowable thing, despite mccains suggestion that, in fact, it was knowable that it didnt swing the results of the election. Heres clapper part of that exchange. Did not change any vote tallies or anything of that sort yeah, im just talking about we have no way of gauging the impact that certainly, the Intelligence Community cant gauge the impact it had on choices that the electorate made. Theres no way for us to gauge that. Whether or not that constitutes an act of war i think is a very heavy policy call that i dont believe the Intelligence Community should make, but it certainly would carry, in my view, great gravity. Reporter john mccain making it clear what his own feelings on all of this are. Heres what he said to open up the hearing. Every american should be alarmed by russias attacks on our nation. There is no National Security interest more vital to the United States of america than the ability to hold free and Fair Elections without foreign interference. Reporter guys, one of the things that we learned about this classified report is that there will be an unclassified version of it that will be released next week, so all of the citizens of the United States will have an opportunity to gauge whats in this report and decide what to make of it. Back over to you guys. Eamon, thank you for that. Eamon javers on capitol hill. Roger, this is a tough one, because theres so much politics int intertwined with real implications for business huge. That are going to last for decades. Actually, carl, i think its been going on for a decade already. I mean, i think having it focused in the political arena has got everybodys attention on a problem that has been plaguing us in business, and frankly, i think its a huge National Security threat. If you sit there and look at cybercrime, it is now a gigantic busine business, and the internet is not architected to prevent that kind of stuff, and we have not had any National Policy for addressing what has been an increasingly large, increasingly dangerous problem thats now tipped over into our political system. So, hopefully now we will get a national consensus, but one of our problems is that most of the elected officials in our government are not even remote experts, right . I mean, our president elect is talking about effectively using flight couriers to send things around because in theory, thats more secure than email. And im sitting here going, seriously, we need to get some adults in the room and really take this seriously, because you know, we have real challenges to the economy if these vulnerabilities cannot to be exploited at the rate theyve been exploited in the past. Well, it seems somewhat ironic, too, because on the one hand earlier this year you had the government saying apps like telegram and endtoend encryption were like carrying a Swiss Bank Account in your pocket. But now once their information is out there, of course, their supporters and proponents of encryption, of some of these newer technologies to help keep some of that information out of the public eye. And i think the scary part of this is a lot of this crime happens without the victims being aware of it. You know, much as what happened with wells fargo and creating fake bank accounts, that its relatively easy to cover your tracks in this world, and they can drip money out of accounts so people barely notice it. And i just i look at this and go, i think it is such a good thing that were having this conversation now. I dont know how its going to turn out relative to the political side, but its really clear to me that we need to make this a national priority. There is no point in building, you know, new aircraft carriers and new submarines if for 10,000 somebody can bring our electrical grid to its knees. And thats the problem. Its the asymmetry, the fact that it costs very little to do huge harm. All right. I mean, theoretically, you could make a case that there is a hidden liability, a black swan liability, for markets, right . Not just u. S. Equities, global equities, if something were to go terribly wrong, jonathan. I think thats absolutely the case, and its something that everybody should have on their radar. But i would argue its certainly not a priority right now in terms of where the markets are going. I think there are some very important themes and trends driving the equity market right now, cyber policy not being one of them, but earnings absolutely being critically important. We are on the precipice of a real earnings recovery for the s p 500. Were calling for Earnings Growth of at least 7 in 2017, and perhaps as high as 12 , if tax cuts come through, which is going to be some of the best Earnings Growth youve seen in years. And we think that is whats really going to propel stocks higher Going Forward. Contingent on what getting done . And do hearings like this detract from the focus on those things . I dont think so. The 7 eps growth is supported just by the momentum we have currently in the economy. Absent new policy . Absent any policy changes. And thats what weve kept as our base case right now, because we dont know for sure that these policy changes are coming through. So, the way i think you should think about it is you have 7 growth in earnings if nothing happens. If you do get tax policy change, your upside is as high as 12 , and that could drive the market to a significantly higher level over the course of this year. Thats an interesting point, roger, because especially in tech theres been this growth versus value debate going on for some time, and it really depends on how much you believe any Given Company in that space, regardless of whether its a growth stock or a value stock, will benefit from the things that jonathans talking about. Well, and i think the other challenge that everyone faces in this environment is that we have come to see, partly because of the election process, that large corporations are now competing with countries, you know, so that youve got these issues where, you know, exxon is conducting its own foreign policy, sometimes in conflict with the state departments policy. And so, you see in europe antitrust measures being brought to bear against some companies in this. And it seems to me that the fly in the ointment globally is that there are going to be countries that want to assert themselves against large businesses. Chinas been doing it aggressively. We see apple today pulling the New York Times app due to pressure from the chinese government. And i think this conflict between states and Large Enterprises is something were going to see a lot more of in 17, and it may not get in the way of the earnings story, but ill bet you anything it gets in the way of peoples outlook beyond 2017. You mentioned we mentioned apple. The company is confirming a new 1 billion investment with softbanks vision fund, working to develop new strategically important technologies for the future. And then of course, as roger said, that request from chinese authorities apples removing the New York Times app from its app store in china. Authorities there say the app was in violation of local regulations. The times website has been blocked in china since 2012. Are you surprised by that at all . No, but i do think we have to look at the pattern of whats going on here, that countries are less tolerant of Business Practices than they have been for the last ten years, and its not just europe. You know, chinas obviously very active there. The russians are very active there. And apparently, trump is going to be very active there. And i look at that and i go, you know, no matter what the next 12 months will going to be, people are going to be discounting a future beyond that. And to the extent that something that feels like a substitute for antitrust enforcement against Large Enterprises, or at least restrictions on the flexibility of Large Enterprises to do their business, that seems to be a risk that we werent looking at a year ago that looks to me at least, a lot more serious than it did. But companies do seem to be willing to do that in order to operate in china because of the population, because of the economy there. Absolutely. But i think that the problem is, youve got to please china, youve got to please the United States, youve got to please europe, youve got to please russia. And my guess is, if youre a global company, one of those things isnt going to work out for you, and some market may not be as available to you as youd like it to be. Again, i view that as a risk, not as you know, its a hypothesis as opposed to a conclusion. Jonathan, softbank announcing it would create this fund a few weeks ago. It was reported that apple would be contributing to it. I would like to know where that fund is domicile, because apple has some 200 billion in overseas cash and some have said this morning that maybe this is a creative way for apple to invest or put some of that cash to use ahead of any potential tax holiday or repatriation policy. I mean, do you think were going to see companies pursue overseas mergers, pursue more creative investment vehicles, rather than just counting on all that money coming back to this country . I think youre bringing up an important point with all this offshore cash. The way weve thought about it is what does it mean for the potential for buyback activity in the market this year . So, weve had this call that the big growth youve gotten in corporate buybacks has run its course, and thats largely because companies have taken on too much leverage and they need to stop levering up. But the wild card in it is what if you do get a repatriation holiday . And like you mentioned the 200 billion that apple has and the 2 trillion that exists across the s p 500, comes back onshore. Do Companies Take that money and use it to repurchase shares, driving buybacks higher and potentially driving the market higher . I think thats a big wild card this year. Like you mentioned, companies can get creative with that money, but do they get the opportunity to bring it back onshore . And if so, what do they spend it on . I think buybacks are near the top of the list. But you know, i look at that whole issue and i do not understand why if youre a Global Enterprise bringing money back into the United States is that attractive. And you know, if im apple, if im any large american enterprise, at the margin, my bigbusiness opportunities are outside of the United States. So i agree that for political purposes people will cooperate with that to some degree, and theres practically nothing else to do but buy your stock back. But i look at that and i suspect that that is one of those things that were going to talk a lot about, but when the dust settles, its going to turn out to be a smaller deal because the people with the huge pools of capital are mostly Tech Companies who dont have a good reinvestment opportunity in the United States. And so, well see what happens, but ill tell you, in my own sector, their opportunities are not to pile the money into the u. S. Yeah, apple builds a plant here, whoopdedoo. The money theyre putting into the softbank deal is like the change they found in between the cushions of tim cooks couch in his office, right . It just doesnt move the needle. So, it will be fascinating to see, but there surely are a lot of banana republicans who are counting on capital being repatriated to the United States to trigger some kind of positive thing, and im sitting there going, if youre the company, okay, so you bring enough back to please the politicians, but i dont get it. Yeah. Thats a big discussion, not just in tech. I mean, questions were asked about fords longterm innovations, too. And all of this stuff, its nuts whats going on right now, because everybodys doing this kabuki trying to figure out what trump really believes, right . And i think hes shown you, right . Which is, if youre in business with him, he loves you. And if youre not in business with him, well, your choice is either do business with him or get out of the way, right . And i look at that and i go, wow, thats banana republicanism and thats apparently where we are now. Were going to find out beginning in about 15 days. Roger, its always good to see you, thanks. Roger mcnamee, jonathan giliana. We had jackie give us crude inventory numbers. Turned negative briefly after the numbers came out. Well watch that and how it drives the rest of the market day. Kayla . Were continuing to monitor developments on capitol hill, but another story thats above the fold this morning, shares of macys and kohls getting hit hard, both reporting dismal holiday results as ecommerce giants like amazon continue to grow market share. Our Courtney Reagan is on site outside one macys in elmhurst, new york, with more. Courtney, they told us a month ago they were perfectly positioned for the holidays. Reporter i know. That is true. And we only got more gloomy news out of the Department Store sector from macys and kohls, but that doesnt mean the consumers are spending less in general. They just spent less at macys and kohls stores over the holiday season. So, for november and december, both macys and kohls said that their comparable sales fell more than 2 , leading both retailers to lower their fullyear earnings forecast for this year. And macys expects that that samestore sales trend will continue through 2017. The consumer, though, is strong by most economic and financial measures. Shoppers are spending less in stores and more online. Barnes nobles holiday comps fell 9 but online grew 2 . Adobe, in fact, just out with new data saying online sales in total for the holidays grew more than 11 , almost 92 billion. Thats stronger than adobes initial estimate. Macys online sales also up double digits and the ceo reiterated to me that macys has the third highest sales in the categories that it competes in online. Still, macys online sales arent enough to offset the weakness in the stores as a total. And remember, online sales also come at a higher margin. Then if you look at amazon, slice intelligence, which scans email receipts of more than 4 million, says that amazon took 38 of all online sales over the holiday season. That is very impressive and its going to be very, very hard for retailers to compete with Going Forward. Theyre only getting bigger. Back over to you. All right, courtney. Thank you very much, Courtney Reagan. When we come back, well continue to monitor developments of the cyber threat hearing on capitol hill. A lot more from the Armed Services committee. Plus, House Speaker paul ryan delivers his Weekly Press Briefing in about 15 minutes. Well bring that to you live. Later on, a lot more from ces with our own jon fortt. Dow session lows down 76 shortly after those Oil Inventory numbers. Were back in a minute. Ford scrapping plans for a 1. 6 billion plant in mexico just one day after the president elect criticized gm for importing mexicanmade vehicles into the u. S. Joining us now for his take is former gm vice chairman and cnbc contributor bob lutz. Bob, its great to see you. Good to be here. Thanks. So, we have ford appeasing the president elect. Meanwhile, gm pushing back and saying most of its chevy cruze models are actually made in the u. S. Why the difference in approaches . Well, i dont know what prompted this, you know, sort of somewhat inexplicable attack on gm, because the percentage of cruzes that come back out of mexico is like 2 of total cruze production. But i think this whole focus on where the economic Automobile Industry is sourcing parts and cars misses the main point. And the main point is, yes, imports are a problem yes, imports have more than 50 or close to 60 of the u. S. Market and continually increasing. But why this focus on the three remaining u. S. , or in chryslers case, semiu. S. Producer, when nobody is talking about toyota, nissan, honda and all of the european brands . I mean, that is where ownership is outside the United States, a lot of the engineering and design is outside the United States, the profitability flows out of the United States. And you know, to my chagrin, the president elect isnt talking about that at all. But interestingly, and you know, for those of us who remember the financial crisis and the bailouts, i mean, the taxpayers still remember that. They know that they paid toward those bailouts. The feeling and the wound is still open. But bob, you mentioned parts. And what i think is interesting is that the market to import parts is so much bigger than the imports of whole vehicles that we do, and im wondering why you dont think that thats the industry thats getting targeted, instead of whole automobiles . Well, look, automotive trade today is a very global proposition. I mean, the japanese source a lot of parts to china, to mexico, and all over the place in an effort to get the best possible parts at the lowest cost. U. S. Producers do the same thing. And if you want to kind of totally renationalize the Automobile Industry, it would take a considerable effort, and it would be a logistical nightmare, which would take at least three years to complete. But i want to say one thing, and that is that a Chevrolet Cruze that is assembled in mexico with a High Percentage of u. S. Parts, like engines and transmissions by the time youve shipped all of that stuff down there, assembled it with mexican labor, which arguably is a little bit less expensive than u. S. Labor, but not that much. Besides, the labor component today in an Assembly Plant is only about 11 of the total cost. So by the time youve got it assembled in mexico, put it back on the rail cars and ship it back to the United States, you really havent saved anything. Now, about ford canceling that plant, that was kind of interesting, but that was sleeves under their vest. I mean, ford was probably, with the state of the demand for small cars in the north American Market right now, which is, you know, the demand for small cars has basically evaporated, im sure ford was telling themselves, you know what, this might be a really Good Opportunity to back out of that commitment, because we dont need another plant producing small cars. Its funny you say that, because some suggested that when you think about longterm mobility, shared riding, all of those things, if they really needed that capacity, bob, they probably would have kept it. Yeah. I dont think they needed that capacity at all. So, it was politically expedient to say, you know, we bow to the wishes of the president elect and were going to cancel that plant in mexico. I wonder, Bob Phil Lebeau was talking about this this week. He was thinking back to an auto show maybe ten years ago. I think it was under your leadership, in which trump was selling a limo. Was it not a limo, a trumpbranded limlimo . Yeah. He worked with cadillac marketing at some point to create what was called i think the trump executive limousine, and it was trump badged and it had an extended wheel base and a large video screen and everything. I think three were produced and sold, and i would not be surprised if they didnt all wind up somewhere in the trump organization. This is i dont know if you have a monitor, bob, but this is a picture of you and trump, 2006. I just wonder, does it say anything smart about trumps allegiance to brands or how to stay or get on his good side and remain there . Well, i will tell you, i think trump is a lifelong cadillac fan. He grew up with cadillacs. His father always drove cadillacs. And he is a loyal cadillac driver, owner and supporter. And for instance, cadillac advertised on the apprentice and so forth. It was sort of an informal contract or informal relationship. I dont think any money passed hands either way. But it wasnt a very deep relationship. It was between donald trump and the cadillac marketing people, which is sort of, you know, midlevel in the gm organization. I would imagine that to avoid the appearances of favoritism, president elect trump felt the need to make a comment about General Motors or about the imported cruze hatchbacks. And you know, its conceivable, conceivable, and im not accusing anybody, but its conceivable that one of our competitors said, why are you picking on us all the time . Why dont you ever say anything about General Motors . And maybe he decided hed better do a General Motors tweet. Well, bob, im wondering just quickly before we go what advice you would have for folks in the Public Affairs roles at automakers, at industrial companies, at Government Contractors who are getting a new education these days . Who are what . Who are getting a new education under the way that the president elect is dealing with industry. Well, i think hes saying a lot, putting a lot of pressure on this trade issue, which is fulfilling what he sees as an election promise, but i think once somebody has and thats why i think this Business Forum on which mary barra, the ceo of gm, will also be a member once that starts meeting with the president and his staff, i think hell become much more knowledgeable and much more understanding on the benefits of nafta. Now, portions of nafta have to be fixed, without question. Right. But the point is, nafta and the connection with mexico does help the u. S. Automobile business preserve jobs in the face of the japanese and korean innovation. Thats an important point and its one that well leave on today. Bob lutz, former vice chairman of gm, we appreciate it. We want to take you back to the Senate Armed Service committee and listen in to senator graham. In our election and what theyre doing throughout the world and be more aggressive than president obama if i chose to. Thats your choice, senator. Do you think he was justified in imposing new sanctions based on what russia did . I do. Okay. So, to those of you who want to throw rocks, youre going to get a chance here soon. And if we dont throw rocks, were going to make a huge mistake. Admiral rogers, is this going to stop until we make the cost higher . We have got to change the dynamic here because were on the wrong end of the cost equation. Yeah, you got that right. Could it be republicans next election . This is not about parties per se. Its not like were so much better at cybersecurity than democrats. Right. Now, i dont know what putin was up to, but i dont remember anything about trump in the election. Now, if trump goes after the iranians, which i hope he will, are they capable of doing this . They clearly have a range of cyber capability, and they have been willing to go offensively both weve seen that in the United States and the one so, if trump takes home china, which i hope he will, are they capable of doing this . Yes. Okay. So, weve got a chance as a nation to lay down a marker for all wouldbe adversaries. Do you agree with that . Yes, and id be the first to acknowledge we need to think about this broadly. And we should take that opportunity before its too late. Yes, sir. Do you agree with me that the foundation of democracy is Political Parties . And when one political partys compromised, all of us are compromised . Yes, sir. All right. Now, as to what to do. You say you think this was approved at the highest level of government in russia, generally speaking. Is that right . Thats what we said. Okay. Whos the highest level of government . Well, the highest is president putin. Do you think a lot happens in russia big that he doesnt know about . Not very many. Yeah, i dont think so either. Certainly none that are politically sensitive in another country. Okay. Now, as we go forward and try to deter this behavior, were going to need your support now and in the future. So i want to let the president elect know that its okay to challenge the intel. Youre absolutely right to want to do so. But what i dont want you to do is undermine those who are serving our nation in this arena until youre absolutely sure they need to be undermined. And i think they need to be upli uplifted, not undermined. North korea. Let me give an example of realworld stuff that hes going to have to deal with trump. Do you believe that north korea is trying to develop an icbm to hit the United States . Could be used to hit the United States . That could be, yes. Do you agree with that, admiral rogers . Yes. So, when the north Korean Leader says that theyre close to getting icbm, hes probably in the realm of truth . Hes certainly working aggressively to do that. And if the president of the United States says it wont happen, hes going to have to come to yall to figure out how far along they are, because you would be his source for how far along they are. Is that right . I hope wed be. I hope wed be the source. Yeah, i hope hed talk to you, too. And heres what i hope he realiz realizes, that if he has to take action against north korea, which he may have to do, i intend to support him, but he needs to explain to the American People why. And one of the explanations hell give is based on what i was told by the people who are in the fight. And let me tell you this, you dont wear uniforms, but youre in the fight. And were in a fight for our lives. I just got back from the baltics, ukraine and georgia. If you think its bad here, you ought to go there. So, ladies and gentlemen, it is time now not to throw pebbles but to throw rocks. I wish we were not here. If it were up to me, we would all live in peace, but putins up to no good and hed better be stopped. And mr. President elect, when you listen to these people, you can be skeptical, but understand, theyre the best among us and theyre trying to protect us. Thank you all. Would you have any response to that diatribe . Microphone. Senator graham and i have had our innings before, but i find myself in complete agreement with what he just said and i appreciate it. Thank you. Senator chairman mccain, if i might just pick up on a comment of yours, and that has to do with the information fight, if you will. And this is strictly personal opinion, not company policy, but i do think that we could do with having a usia on steroids United States Information Agency to fight this information war a lot more aggressively than i think were doing right now. You know, i agree, general. And i think one of the areas where were lacking and lagging more than any other area is social media. We know these young people in the baltics are the same as young people here. They get their information off the internet. And we have really lagged behind there. Senator gillibrand. Thank you, mr. Chairman and mr. Ranking member for hosting this very important hearing. I want to follow on some of the questioning that senator ernst started concerning the National Guard and cyber. I have been pushing dod to use the guard foree years going to take you across the hill here to speaker ryan, addressing, we hope, perhaps some cyber issues or aca. Lets listen in. Do you view this as kind of like, okay, this is the first, you know, potential break on this . How are you going to combat those inevitable types of breaks when they come from senator paul or people in your own conference here . Im really not concerned about this. This is a repeal resolution. Our members fully understand that. Weve been planning for this for quite some time, and our members realize that. The full budget resolution, the traditional budget resolution, will occur this fall, like it always does. And our members understand this process. Youre going to have folks say i cant go for this, i cant go for that. How do you again i know you dont want to dictate. No, again, i believe our members know exactly why were doing what were doing. And this is a repeal resolution, meant to give us the reconciliation instructions we need to do our job to keep our promise. Our members get that. And they realize that a more comprehensive, complete budget will be coming in the fall, like it always does per the way our budget process works. Casey . Do you have full faith in the United States Intelligence Community . Well, they dont always get everything right. Weve seen that, clearly. But i do have faith that our men and women in our Intelligence Community are doing an incredible job sacrificing for our country, but theres always room for improvement. Look, we overhauled this about a decade ago, after 9 11, when we realized the Intelligence Community wasnt getting things right. So clearly there is room for improvement. Do you have any doubts about their assessment in russia meddling in the United States . No, russia clearly tried to meddle in our political system. No two ways about it. Let me say a couple of things. First of all and i think this is what the president elect is legitimately upset about there are attempts to try to delegitimize this election. Thats just bogus. He won fair and square. He won clearly and convincingly. Russia didnt tell Hillary Clinton not to go to wisconsin or michigan. They didnt put the server in her basement or put this stuff on Anthony Weiners laptop. He won the election fair and square, clearly and convincingly, okay . Now, having said that, do we ever condone any foreign actor, any outside interference from trying to mess with our elections . Of course not weve been saying this all along. But lets just put this in the proper perspective. And that is, lets deny those who are trying to delegitimize the presidency before it starts while doing what we need to do to make sure Going Forward that outside actors dont interfere with our political system. But doesnt it im not going to call on you. Josh. In penalty box, man. 2009 process that did aca, democrats used reconciliation. You railed against it. Republicans had the talking point that it was jamming things down americans throat. A, you guys are using it this time, so how do you square that . And b, the fact that you have two budget resolutions, including one whose numbers are worse than obamas budget last year, and two reconciliation bites. Does that signal a deterioration in the institutional legitimacy . Not at all. Of the budget . I actually think we should do reconciliation each and every year. Im excited the fact that were getting a shot at doing two were going to be doing two reconciliations this year. Thats a revival of the budget process, if anything. What ive been concerned about in the past is when we go a year or two without doing any reconciliation. So, doing reconciliation frequently is exactly what we should be doing and is exactly one of the better aspects of the 74 budget act. With respect to what they did when they passed obamacare we ran on what were going to replace obamacare with. We made it really clear to the people of this country what we want to replace obamacare with. But lets take a step back. This law is hurting people right now. I mean, look at these premium increases. This year, arizona, 116 increase in premiums. Tennessee, 63 increase in premiums. Oklahoma, 69 increase in premiums. Illinois, 43 increase in premiums. North carolina, 40 increase in premiums. Nebraska, 51 . Pennsylvania, 53 . These arent statistics, these are real lives these are real families facing huge premium increases. And on top of this, youve got a massive deductible, so it doesnt even feel like you have insurance in the first place. So, i think whats happening now are democrats, for ideological reasons, are trying to save their failing law, which was an ideological pursuit. The law isnt working. It is failing. Its nothing but a string of broken promises. Remember, if you like your plan, you can keep it . If you like your doctor, you can keep it . Its going to lower costs . It did none of those things but whats worse than the fact that obamacare is a series of broken promises that have been thoroughly debunked is this law is what the actuaries call a death spiral. Plans are pulling out. About a third of the counties in this country have only one choice. Thats not choice, thats a monopoly. So, the law is failing. Families who live paycheck to paycheck are getting hit with doubledigit premium increase after doubledigit premium increase with massive deductible increases. We have to provide relief. We have to step in front of this chaos and provide relief for people. That is why were moving to fix this problem. Our goal here is to improve peoples lives, is to have a Health Care System that actually works. Its to have a Health Care System where families actually have more choices, where they have freedom, where they can have more competition and lower prices. And so, this is why were doing this. Stop the damage from getting worse, because it is getting worse. All the insurers tell us its going to be even worse in 2017. And what is important to know and i think the scare tactics started with the democrats yesterday i think theyre trying to make americans think, like, some day this february or some day this march youre going wake up and you wont have a Health Insurance plan. That aint happening. Thats not true. What were doing is were going to be methodical, were going to be deliberative, and were going to do this the right way. Were going to get this law epeeled. Were going to get this law replaced. And were going to have a transition period so that people do not have the rug pulled out from underneath them while we get to a better place. Obamacare has failed, is getting worse, and we have to provide relief, and we will have a transition period so that people dont get hurt. But if youre going to argue its a failure, dont you also have to deal with the recordlow numbers of uninsured as well as the lower we can do a much better job look cdo has said its coming down. I said if your deductible is 12,000, doesnt feel like you have insurance. If you dont have a choice other than the one plan youre stuck with, it doesnt feel like a choice. This law is failing and we have to fix it. Yeah. Mr. Speaker, switching gears here, there is a controversial painting that was chosen by congressman clay that has to do with portraying Police Officers as pigs. And you were called upon by several police associations, your letter i dont know if you got it yet, to i havent seen it yet. Well, essentially, they want to know whether or not where is this painting . Its over in the tunnel outside. Ill have to take a look. Oh, you mean the one of the kid exactly. I havent seen it. Ill have to take a look at it. Theyre calling on you to have some response to it. I havent seen the letter. Allow me to look at the letter and see it. Jake. Do you believe that youll be able to insure as many people as currently insured under look, im not going to get ahead of our committee process. Were just beginning to put this together. We havent even gotten scores from cdo yet on these things. But let me say this, can we in this country have a Health Care System that gives us access to Affordable Health care in this country without a costly government takeover and death spiral, which obamacares giving us . And the answers yes. And that is exactly what we intend to deliver on. So, you do believe speaker ryan, can you tell me how and when youre going to pass legislation to defund planned parenthood . Well, planned parenthood legislation would be in our reconciliation bill. Yeah . Over in the senate, grassley has reintroduced a criminal Justice Reform bill to reduce mandatory minimums for wellbehaved prisoners a discretion on mandatory minimums, you mean. Yes. And obviously, let wellbehaved prisoners potentially out early. You had talked before the election about doing Something Like this in the lame duck. Yes. Are you planning to bring Something Like this up . Yeah, i do support criminal Justice Reform. I think its a long time in coming. Ive asked our committee to pick off where they left off on this. Bob goode let passed six or eight bills out of committee, im not sure exactly what number, and ive asked them to pick wlup they left off. This is something we wanted to get done last year and we ran out of time. We plan to pick up where we left off and get going in criminal Justice Reform. I think its good policy, the right thing to do for lots of reasons and a priority of ours. Last question in the back. Thanks, speaker ryan. I appreciate it. Can you commit that the congress will have completed a repeal and replace of obamacare by this session . Yeah, our legislating will occur this year. Our legislating on obamacare, our repealing and replacing and transitioning the legislating will occur this year. What date all of this gets phased in on is something we do not now know because were waiting for the Trump Administration to be stood up, were waiting for tom price to be confirmed as secretary of health and human services. The question there is how long will it take for markets to put in place, for markets to adjust. That question we dont know the answer to, but the legislating on obamacare will happen this year. Thank you. Speaker ryan addressing a couple of different topics on the issue of cybersecurity and the senate Armed Services committee hearing, reiterating that donald trump, in his words, won the election fair and square, also talking about the resolution getting fasttracked, resolution to begin the repeal of the aca. Interestingly, all of this, kayla, feeds the notion of more friction on the hill. Dows down 123. A lot of the trump trades unwinding today. The dollar down. Goldman sachs, the worst dow stock right now. Financials lagging. Well, it does seem that any prioritization of dodd frank will be pushed later in the year. He just said that obamacare legislation will take place this year, although it depends on how long the markets that were set in place several years ago take to adjust. Making comments on cybersecurity as well, denouncing any foreign actor who tries to meddle in cyberspace here in the u. S. But also said russia had nothing to do with the outcome of the election. Certainly none of the Strategic Campaign choices that Hillary Clinton made, in his view. 10year, by the way, is now at the lowest level since december 8. Were watching that, along with oil, which did go negative after the inventory numbers. When we come back, well go live to ces in las vegas, where our jon fortt will catch up with the founder of mobileeye, talking selfdriving cars, new partnership with bmw. And coming up on the half, omegas lee cooperman, interview at 12 00 eastern time. Dont go away. Take a look at where we are in the markets now. We began the session mixed, but after the crude Inventory Data at the top of the hour and crude retreated, we did see that take the market down a leg with it. Dow currently down 115 points, s p down 9, nasdaq down 9 as well. From ubers Driverless Cars to googles, the road is being paved for a future with more autonomous technology. Bmw group, intel, and mobileeye are testing Autonomous Vehicles on the road in 2017. Jon fortt joins us now from the Consumer Electronics show in las vegas with a cnbc exclusive. Jon, out to you. Reporter thanks, kayla. Im here with amnon shashua, the cto of mobileeye. And this announcement about 40 Driverless Cars, you made this along with bmw and intel. What exactly are you going to learn in 2017 from having this fleet on the road around the world . Well, jon, this is the beginning of a fiveyear plan, where in 2021 we are going to launch thousands of vehicles that are autonomously driven. Now, tens of thousands of vehicles that will be autonomously driven on highways and thousands of vehicles that will be autonomously driven inside cities. And within this fiveyear plan, we are starting 2017 with 40 vehicles that are fully equipped with all the sensing cameras, scanners, highperformance, the computing that are necessary to ingest the sensing information, builtin environmental modal, understa understanding the understanding. All the code to program the car, to path plan dense traffic. All of that will start in 2017 with 40 test cars, and well peak with several hundred of test cars as we move forward. Tell me where we are with the technology. Seeing the road is one thing. A toddler in the car can see the road, but it takes an adult, usually, to actually know how to drive. So where are we between being aware of the environment and the Car Technology actually knowing what to do . Because we see uber cars in San Francisco blowing stoplights, and sometimes, you know, the problems that tesla has had with Driverless Cars, which you guys have commented on are wellknown. Well, its a great question, jon. I think there are three basic elements to building an autonomous car. One is seeing, sensing. The second and the sensing part is relatively mature today. Its relatively mature because of the many years of driving assist. Driving assist is all about sensing, all about interpreting sensing to prevent collisions. So over the years, there is a certain maturity and were not that far away from getting to the place where we need to be. But there are two other elements that are much more complicated. One is logistical, about mapping. You need to map your surrounding at very, very high detail. Highdefinition maps. Its a matter of how you do it efficiently, lower the cost in order to build an economy. Without it, youll not have Driverless Cars. But then the third element is to the point that you have raised. It is about the reason we take driving lessons. And as you said, we dont take driving lessons in order to train our sensing. We know how to see. We take driving lessons in order to understand how to merge in traffic. There are rules, and there are norms, there are codes, kind of rules on how to break the rules. And they change from territory to territory. In boston, people drive completely different than when we drive in california. We dont negotiate by signaling, talking to the other road users. We negotiate by motion. Our motions signal to the other road users our intention. Whom do we want to give way, whom do we want to take away, and some of them are very, very complicated. And this is what the robotic Computer Software is about. Well, were counting on Companies Like yours to teach cars, figure out how to drive in new york traffic, as well as other places. Cto of mobile eye, thanks for joining us. Carl, back to you. Jon, thanks for that. We take you back to the senate Armed Services committee. This is senator ted cruz of texas. A component of the strategy. We have got to ask ourselves, how do we change this broader dynamic. To go to the point you have heard repeatedly today, how do we convince nations and other actors out there, there is a price to pay for this behavior. That, in fact, it is not in your best interest. And what should that price be . Its a wide its a wide range of things. Theres no one silver bullet, which is another point i would make. If were looking for the perfect solution, there isnt one. This will be a variety of Incremental Solutions and efforts that are going to play out over time. There is no one single approach here. And your point about manipulating data, about a month ago i chaired in a Different Committee a hearing on Artificial Intelligence and our growing economies growing reliance on Artificial Intelligence and one of the things the witnesses testified there was concern on the Cyber Security side of a hack that would modify the big data thats being relied on for Artificial Intelligence to change the decisionmaking in a way nobody is even aware its been changed. And i think thats a threat, i hope, that you all are examining closely. And its the sort of threat that could have significant repercussions without anyone even being aware its happening. Let me shift to a different topic. Director clapper, you have testified before this committee that cuba is an intelligence threat on par with iran and listed below only russia and china. And there are reports that all rightis, the russian operated signal intelligence base in cuba will be reopened. And russia and nicaragua struck a deal to increase military and intelligence cooperation. And resulting in an influx of russian tanks and an agreement to build an electronic intelligence base, which may be disguised as satellite navigation tracking station. To the best of your knowledge, what is russias strategy in the western hemisphere, and how concerned are you about the russians expanding their influence in cuba and nicaragua . Well, the russians are bent on establishing both the presence in the western hemisphere. And theyre looking for opportunities to expand military cooperation, sell equipment, air bases, as well as intelligencegathering facilities. And so its just another extension of their aggressiveness in pursuing these interests. And with respect to cuba, cuba has always had longstanding, very capable intelligence capabilities and i dont see a reduction of that of those capabilities. Thank you. Thank you, mr. Chair. And thanks to the witnesses for today and for your service. And mr. Chair, i appreciate you calling this hearing. I think this hearing is a test of this body, the article 1 branch, congress. This hearing and others to follow. I was chairman of the Democratic National committee for a couple of years. And we had a file cabinet in the basement that had a plaque over it. It was a file cabinet that was rifled by burglars in an invasion of the Democratic National committee in 1972. It was a bungled effort to take some files and plant some listening devices. That small event led to one of the most searching and momentous congressional inquires in the history of this country. It was not partisan. One of the leaders of the congressional investigation was a great virginian, caldwell butler, my fatherinlaws partner before he went to congress, played a major role. It was not an investigation driven because something affected the election, the 1972 president ial election was the most onesided in the modern era. But it was a high moment for congress, because congress in a bipartisan way stood for the principle that you couldnt undertake efforts to influence an american president ial election and have there be no consequence. The item that well discuss and well discuss more when the hearing comes out is different. That was a burglary of a Party Headquarters that was directed to some degree from the office of the president. But this is very serious. The combined intelligence of this country has concluded that efforts were undertaken to influence an election by an adversary. An adversary that general joe dunford said in testimony before this hearing was in his view the principle add verify area is of the United States. In addition, it was not just on the Party Headquarters. The october letter you have referred to talked about a tax on officials, current and Public Officials with significant positions and also attacks on state boards of elections. The letter of october 7 traced those attacks to russian entities, russian companies, and didnt ascribe at least in that letter directed to the russian government. But im curious about what the full report will show. It is my hope that this congress is willing to stand in a bipartisan way for the integrity of the american electoral process and will show the same backbone and determination to get all of the facts and get them on the table as the congress did in 1974. There was another congressional inquiry that was directed after the attacks on 9 11, and there was a powerful phrase in that report that i just want to read. The commission concluded, quote, the most important failure was one of imagination. We do not believe leaders understood the gravity of the threat. And thats something i think well all have to grapple with. Did we have sufficient warning signs . I think we did. And having had sufficient warning signs, why did we not take it more seriously . That question is every bit as important as a question about what a Foreign Government and adversary did, and how we can stop it from happening. Three quick points. One, is the report next week thats going to be issued not solely going to be confined to issues of hacking, but also get into the dimension of this dissemination of fake news . Will that be one of the subject matters covered . Without preempting the report, we will describe the full range of activities that the russians undertook. I think that is incredibly important. I had a little role in this election. I was along for the ride for 105 days. Just an indication how busy next week is going to be. Donald Trumps Press Conference on wednesday. The president s farewell address on friday and now this report made available to the public by the Intelligence Community. Not to mention whats happened today. Dow down 106. Those inventories, kayla, as art cashin said, did spook the equity bulls. In the earlier session, most activity in the treasury market and in the dollar and in gold. So well see whether equities can recapture attention. Lee cooperman on with the half. Lets get over to hq. All right, carl. Thanks so much. Welcome to the Halftime Report im scott wapner. We will keep our eye on that hearing in the nations capital, watching what the markets are doing, today, as well. We do want to begin with a halftime exclusive interview today. Oneonone with the hedge fund legend, leon cooperman of omega advisers. Mr. Cooperman giving us his view on the markets for the year ahead today, while continuing to defend himself against Insider Trading charges. Mr. Cooperman joins us live today from florida. Lee, happy new year. Welcome back. Nice to see you. Thank you. Happy new year to you, scott. Thank you. You know i want to talk about the markets. But, you know, theres no doubt the elephant in the room remains this s. E. C. Issue. So i would lik