Transcripts For CNBC Squawk Alley 20170315

Manufacturing jobs back to the United States, as General Motors makes a major announcement this morning. For all of that, well turn to phil lebeau, who is in michigan. Good morning, phil. Reporter good morning, carl. Well talk about that gm announcement in just a little bit, but youre right, President Trump you can see the banner behind me its buy american, hire american. Thats the theme hell be hitting today. But hell also be talking about his administration moving to change the fuel economy standards law for the rules going into effect for the future. Let me show you this wall, which shows where fuel economy is h d headed between 2022 and 2025. Now, these standards were locked in by the Obama Administration back in 2011. You see the dramatic increase between 2022 and 2025, when the industry is expected to hit an average of 54 1 2 miles per gallon. Well, now President Trump has eventually said, look, were going to revisit these rules with a review in 2018. At the end of the Obama Administration, they pushed through locking in those standards as opposed to having to review in 2018. Now were going to go back to a review with the industry and the administration in 2018. The automakers say, look, 54 1 2 miles per gallon, it drives up cost and is not reflective of the market. To give you some perspective of where the market is right now, look at auto sales in february. Almost twothirds of what people were buying last month were trucks, suvs and crossovers. Clearly, the bigger vehicles are what people want. They are not as fuelefficient. Cars making up just 37 of sales. And at the end of the day, automakers say that reflects the market of people saying we dont care if we get up to 54 1 2 per gallon. Wed like more fuel efficiency, but thats a little unrealistic. With regards to the gm announcement, the Company Announcing today it is going to either add or retain 900 jobs here in michigan. It comes down to 400 jobs being added at a number of facilities, 500 jobs that were going to be eliminated at one of the plants here in the detroit area. Those now will be retained. We expect President Trump later on today. He will talk about fuel economy, and of course, his theme, buy american, hire american. Guys, back to you. All right, phil. Busy afternoon for you. Well check with you later. Phil lebeau in michigan. Weighing in on this relationship between the white house and auto ceos, former chrysler auto ceo robert nardelli. Good to see you again. Thanks for joining us. Good to be with you. We spoke before about repatriating supply chains, but lets focus on the deregulation part of this today. Take economy standards. What could that do for the industry over the next couple years . Well, i think this is fantastic news, carl. As ive mentioned before on your show, this regulation was put in place, as phil mentioned, several years ago and was really imposing a tremendous hardship on the Auto Industry. I think its so encouraging to see the president meet with the Auto Industry in washington and now follow up by his trip to michigan. I think this is Proof Positive of his commitment to a variety of industries, certainly the Auto Industry, which has been really one of the brightest stars in this slow, slow recovery. If you think about back to 2009 when the industry fell to about a 9. 6 million sar and is now back to around 17 million, the change in the mix, as phil mentioned, to trucks and suvs and crossovers has had a tremendous impact on the profitability for the auto industries, which has allowed them to reinvest. And for mary and gm to talk about retaining and adding jobs, ford doing the same. So, i think this is really encouraging and adding to the overall confidence with which we see in the business community, carl. I think this is great news. Bob, its jon fortt. It sounds like youre making this out to be kind of the Auto Industrys version of no child left behind, no car left behind. The government setting standards that are so high as to be out of sync with reality. But is there the chance that these types of standards are what was going to push the Auto Industry to a point of competitiveness in the future when it comes to things like efficiency and fuel standards, and that without it, the Auto Industry will end up disadvantaged longer term . No, jon, i think this was unrealistic, and the Auto Industry is going to have to make improvements, continue to make improvements, whether its in safety, reliability, increasing the warranty on the drive train, the engine part, and obviously, continue to work on fuel efficiency. This was an Unrealistic Target that was really going to force the consumer to buy small cars. It really was going to the new policy was going to force an average of the entire fleet, which was unrealistic to say [ inaudible ] than an suv. And now youre telling the Auto Industry to hold on Consumer Preference as to what would be available to buy. Before, this would only be achieved if the government came in and said, ford, youre only going to produce x number of f150s, because thats what it takes to meet the average in the out years. So, totally unrealistic. I think the bigger issue that well have to look at within the Auto Industry now recent surveys show that the incentives are about two times the cost of the labor going into the vehicle. So, at some point, you know, theyre going to have to address that issue of incentives, 7,000 on the hood, 72 months, 0 financing Interest Rate. Thats something that, you know, well have to look back and remember what got the Auto Industry in trouble and be careful not to overextend what were doing to keep the volume up. I think gms decision to sell opal and dont worry about the highest volume, but being the most profitable auto provider is clearly an important change thats taking place in the industry, jon. So, bob, just on this relationship between the automakers and President Trump, obviously in focus today, hasnt always been all happy talk. The president s been critical of Companies Like ford and gm for having plants over in mexico and hiring workers over there. Are we finally today starting to see what the deals, the art of the deal is going to look like between these two . Hes going to roll back or relax fuel economy standards, and in exchange, these companies are going to announce that theyre hiring more workers and building more plants in the United States . Do the economics behind that work . Sara, i think youre exactly spot on. I think a combination of Corporate Tax reduction, repatriation, government regulations that were strangling some of the Auto Industry are, again, proofpositive evidence that this president is committed to creating jobs, and goodpaying jobs certainly within the Auto Industry. I think as far as some of the plants you mentioned offshore, those that are specifically designed to serve the local market make a lot of sense for the Auto Industry and those local markets. Where jobs were just moved offshore because of regulations, higher tax rates, i think we will see a repatriation of those jobs. None of us wanted to have a strategy to outsource jobs just to outsource them. It was really about being globally competitive. And now that were leveling the playing field, i think youre going to see people do right voluntarily by bringing some of those jobs back or retaining some of the jobs that we heard phil talk about this morning, sara. Speaking of all of that, bob, i wonder, if you were still at depot, how hard you would be pushing up against border adjustment, if at all, and would you be willing to let that be an obstacle to broader tax reform . Well, its a great question. Again, you mentioned earlier on the program, im encouraged with housing showing recovery. It was a little stagnant for a while. And during my period, that, again, was one of the strongest industries in the economic growth. I think we have to be careful. Over the last two decades or more, weve created a Global Supply chain. So, we have to be thoughtful about those things that are being produced offshore that we cannot compete globally based upon Natural Resources and some of the local technologies that exist offshore for some of the products that we, in fact, did import through home depot. So, not everything that we are importing are produceable here in the states, so we have to differentiate those, i think, carl, and weve got to think about whats fair and equitable. And if it does make sense to put some of those on, then we ought to do it in an appropriate fashion. Here is the president now, bob, as were talking to you at joint base andrews, making his way to detroit and then nashville later on today. Your point about things were good at making, though, bob, there are some who believe, hey, lets bring that sourcing back. Well make the businesses to make those products here once again. It might take a few years, but well get there. Well, again, if theres confidence in longevity in some of the policy changes, if, in fact, the Corporate Taxes, the repatriation are in place, carl, i think you will see that. Again, i dont i cant imagine taeg talking to any ceo the Business Council that isnt, you know, made in america, buy america and support america. Bob a lot of these corporations are housed here, and i think theyre going to do right voluntarily. Bob, forgive me, but this sounds like a moving target to me. Now were talking about, well, you know, these Auto Companies will bring jobs back as soon as we fix these onerous regulations and taxes. But it seems to me like the original argument was, boy, the labor unions, our labor costs are out of whack, were not as productive as we need to be. Are we going to end up with a switcheroo . We get deregulation, we get Corporate Tax relief, and then the companies turn around and say, oh, but these unions, they need to give us more concessions, our labor costs are still too high . Well, we have to keep everything in balance. We have to remember what got us into trouble back in the 07, 08 and 09 time frame. I think as we went through that trough, there were many changes in our dealing with the union. I know working with ron gettelfinger, who was the president of the uaw at the time i was there, really stood tall and made some tough decisions for the rank and file that allowed us to be more competitive. And weve got to make sure that we dont let that get out of control and have a runaway situation. As i said earlier, labor costs are a fraction of what incentives are. And if you think the other big cost in the Auto Industry is energy. Labor costs were less than the cost of energy. But as weve been talking now about oil prices, we talk about natural gas that runs the furnaces, that does all the finish work in the paint system. So, i think were getting a combination of a competitive advantage, but weve got to keep in check and not let these things get out of control again, because we will find ourselves back in a ditch. The perfect day to check in with you, bob. We really appreciate it, as always. Thank you so much. Thank you. Thanks for having me on. Robert nardelli joining us from atlanta. When we come back today, a lot more on the president s leaked tax returns. What we know and what questions are being raised. Later on, twitter hacked again. Celebrities highprofile accounts in the crosshairs. And later, the department of justice about to release charges related to that massive hack. Thats when squawk alley comes back. I love to see businesses that just started from ground up grow into further success. It just feels good to know that im helping someone else. My first goal is to learn about their business, what theyre currently doing in their advertising. Pull some research, create a great story. Trying to figure out some way of building some kind of trust in a very quick moment. You have to love to work with people. Our goal, without a doubt, is that all customers are satisfied before they leave. Two pages of President Trumps 2005 tax returns are now public. The president paying 38 million in taxes that year, weve learned. Thats an effective tax rate of 25 . Our robert frank is back at hq with more. So, whats the big story . Whats the takeaway here, robert . Well, ultimately, as you mentioned, pages of that return were leaked through the website dcreport. Org, released in conjunction with the Rachel Maddow show. As a candidate and as president , trump is the first in 40 years not to release his returns and we confirmed the authenticity of the tax returns, says it proved trump was a successful businessman and called the leak totally illegal. All right, so, what was in them . It showed a reported income of 153 million, paying 38 million in taxes, which would be a tax rate around 25 . Now, there are critical details missing, like exactly where that income came from, but the form suggests that his income included 42 million from business income, 32 million from Capital Gains and 67 million from partnerships. Now, his adjusted gross income after deductions was 49 million, but 2005 was a banner year for trump. Remember, the apprentice debuted the year before. He and his hong kong partners sold a 1. 8 billion building in new york, and he launched his big hotel in vegas that year as well. Now, he paid most of his taxes, because of the socalled alternative minimum tax or amt, thats a parallel tax to the regular income tax created to prevent wealthy taxpayers from avoiding paying any taxes. Now, trump and House Republicans have proposed repealing the amt under their tax plan, but trump did claim a 103 million loss in 2005 on his regular return. That was possibly a carryover from the 1990s. So, if the amt didnt exist, he would have only paid around 5 million in taxes. So, is that 38 million a lot or a little . Well, his 25 rate is much higher than that paid by most americans. Middle earners are paying about 14 effective rate. But its lower than the average rich person. The 1 pay an effective rate of 33 . So, the bottom line is, he paid more and earned more than many people assumed, but we still dont know a lot from just one years return, guys. Back to you. One year ten years ago. Thank you, robert frank. And when we come back, twitter hacked again. And one early investor says hes out of the stock. Jason calacanis will weigh in on that. And then, we are awaiting charges from the department of justice related to the massive yahoo data breach. Squawk alleys back in a moment. Hey nicole. Hey i just wanted to thank your support team for walking me through my First Options trade. We only do it for everyone gary. Well, i feel pretty smart. Well, were all about educating people on options strategies. Well, dont worry, i wont let this accomplishment go to my head. Im still the same old gary. Wait, you forgot your french dictionary. Oh, mucho gracias. Get help on options trading with thinkorswim, only at td ameritrade. Welcome back. Were watching twitter this morning. Some highprofile accounts, including Justin Biebers and forbes hacked through a thirdparty hack, hackers tweeting racial symbols and turkish politics on various accounts, this as early twitter investor chris sacca tweets out he has personally sold all of his shares as of last fall. Lets bring in inside. Coms jason calacanis. Jason, good morning. Good morning. Nice to see you. So, what to make of this. I mean, all the talk, it seems, is about snap versus facebook now. Weve had less of that twittervertwitter versus facebook conversation. Is twitter still relevant . People still use it, but is the ecosystem broken . Is this yahoo all over again . Yeah, i think yahoo might be a pretty good analogy here. If you look at the growth of instagram, its been up about 50 since jack joined twitter. Facebook during that times been up 20 on a very big number. The internet has grown 7 since jack took over twitter, and twitter has grown 3 since jack took over twitter. Hes a halftime ceo. He hasnt been able to release a lot of product. Theres no products coming out of twitter. Theyve lost a lot of the key members of the management team. You would be crazy to own the stock. Its the worst stock you could own in technology, i think. There really is a really systemic problem at twitter. And if you want exposure to social media and the social space, i would say put 70 cents on the dollar into facebook and their collection of assets and 30 cents on the dollar into snapchat and let that be your risk take in high flier. Its completely mismanaged and time for jack to go. So, in honor of reid hoffman joining the microsoft board, how does twitter pull a microsoft, since that seems to be the tech turnaround du jour . New leadership . Something else . There really are only three choices. One is to bring Evan Williams back, bring medium over. Evan constantly novartis and releases new product, and hes a true innovator, and i think hes grown a lot since the early days of twitter. And i think he would release a lot of product and take some bold action, which is whats missing right now. The second possibility is to hire somebody whos a bit of a wild card, somebody who is a product manager, who builds great product, but whos unknown, and then put really great management around them. The third possibility is to just sell this thing and be done with it. I dont know what the board of twitter is thinking, putting a halftime ceo in, but if your company cannot grow in a time of political upheaval when you have a reality tv president using it and has gone completely rogue on the platform, then you will never grow. I dont think twitters ever going to grow again until they make massive changes in management. And you know, without potus, i actually think, without trump, twitters growth would not be flat. I think it would be done. By how much . So, its a very scary stock to own. How much do you think hes worth in user growth . Id give it a 5 premium, you know, 5 . Maybe it goes down 10 million users, 15 million users. But the point is, the user count may be propped up by trump right now and just everybody wanting to check in on his insanity at 5 00 a. M. You know, it sort of reminds me of something that sacca said, which i think resonates with a lot of People Like Us we use it, its a good news source, twitter, a great product, terrible stock. How do you use that sort of thinking . Can you apply that to any other company . And what does it mean for a company like snap, which is also a tricky one to find the right valuation . Every analyst that comes out, it feels like, it underweight on this one. Yeah. Snapchat is worth 10 billion, maybe 15 billion, so its way overpriced. That said, you have a founder there who has released four Amazing Products in five years, which is four more products than jack has released in the past two. And i think i would much rather take a chance on a slightly overpriced snap than on a completely overvalued and incompetent twitter. Tell us how you really feel. Speaking of the yahoo comparison thats why you have me here. Exactly. In less than ten minutes, the department of justice is going to announce charges against parties in connection to those massive hack attacks against yahoo, compromising the accounts of more than a million users. The doj believes the hacks were done with the backing of a nation state. Jason, nobodys immune from the potential of getting hacked. How have these sort of headlines changed the tone and tenor in silicon valley, maybe the questions investors are asking startups about security measures, maybe the market for chief Security Officers . Yeah, i mean, security is a major issue. Im seeing very small startups that ive invested in get hacked recently and have to, you know come to me and say, what should we do . Should we give 5,000 to these Russian Hackers or unknown hackers . This literally happened two weeks ago. Or should we go public with it and own it . Of course you want to own it and go public with it, which is something yahoo didnt do. Big mistake. You have to own these hacks. Of course, everybody listening has to put on twofactor authentication. This means that you go to the site, you type in twofactor authentication, you get a little code that comes to your smf for you to login. It takes extra time, but it will keep you from getting hacked. And most importantly, write every smf message you do on a platform like a tweet and write every email like a blog post. Assume youve been compromised, assume everything will come out, because its already been compromised. And im really glad to see that our government is investigating yahoos hack absolutely ten times more veraciously than they are our election. I mean, this is absolutely pathetic. If theyre going to put all this effort into the investigation into yahoo, can we please get a prosecutor, an independent one, to look into the fact that our election was most likely hacked . I mean, this is serious stuff. And russias not our friend and russias hacking everything, and theyve got the goods on us. Who knows whos compromised right now. There are probably dozens of politicians who have been compromised who might have right now, you know, might now have all kinds of dirt on them. We have to get this hacking under control. We have to take it seriously. And americans should be infuriated that we dont have an independent prosecutor looking into the election. The election is the most sacred thing we have, and its probably been compromised. Well this is scary stuff. You couldnt make this into a tv show and believe it. We will see. It feels like it is a tv show. Were talking about it all the time. Well see what comes of these developments in yahoo and other companies. Jason calacanis, thanks for joining us. My pleasure. As we await that announcement, well, of course, share it with you when it comes. And as we head to break, look at shares of snap, which we just mentioned, have turned around now and are higher. This morning, Cantor Fitzgerald came out with initiation coverage on the stock with an underweight rating and 18 price target. Plus, moments away from the department of justices News Conference on those yahoo attacks. Were back after this. Whats going on here . You know how Ge Technology allows us to fix problems before they. They slow production, yeah. Well, no more catchy business acronyms. Wait, we dont need to smooch . Im sure we can smooch a solution we just need to hover over the candice, problem until. Just let it go. Hey, sorry im late for team building. Smoooooooch that felt right. Whats wrong with you . Hes so trusting. I love the smell of napalm in the morning. No, this is double espresso. Hodor hodor ehhh, hodor. You guys watch game of thrones, right . Inconceivable surely, you cant be serious. I am serious. And dont call me shirley . Stream all your entertainment. Introducing at ts new unlimited data plans. Plus, get the amazing new iphone 7 on us. My name is jamir dixon and im a locafor pg e. Rk fieldman most people in the community recognize the blue trucks as pg e. My truck is something new. Its an 811 truck. When you call 811, i come out to your house and i mark out our gas lines and our electric lines to make sure that you dont hit them when youre digging. 811 is a free service. Im passionate about it because every time i go on the street i think about my own kids. Theyre the reason that i want to protect our community and our environment, and if me driving a that truck means that somebody gets to go home safer, then ill drive it every day of the week. Together, were building a better california. Welcome back. Im sue herera with some breaking news. The Republican House Intelligence Committee chairman, devon nunez, says that fbi director comey is going to be among the witnesses confirmed for a hearing on march 20th. He also says that there is no evidence that trump tower was wiretapped and does not believe that it happened. Nunez says the National Security agency director, mr. Rogers, is also confirmed to testify at the march 20th hearing, and the house Intelligence Leaders also say that they still want the fbi to provide evidence on any possible wiretapping, but they say there is no evidence at this point that trump tower was wiretapped, and they do not believe it happened. Carl, ill send it back to you. All right, sue. Thank you very much for that. Well be in touch with you, im sure. Meanwhile, youre looking at a live shot of washington, d. C. , the department of justice announcing charges related to that massive hack against yahoo a statement is expected in a few moments. Were going to bring that to you live. But guys, obviously, the questions here will intersect with questions about larger potential hacking on the part of foreign agents, maybe particularly russia, at a time where the white house is trying to iron out exactly what relations are going to be between that country and ours. We have the issues around china as well during the election. There have been multiple stories about statesponsored action targeting u. S. Accounts. You know, whether its russia or china, they seem to be finding a path of least resistance, in this case, consumer emails, a story thats not going away. I think the yahoo one was particularly headlineworthy, because it involves so many different users. And if we could, we have deirdre bosa at yahoo hq with more answers. Do we know whether this is related to oh, never mind. Lets start and listen into this presser. Okay, this is your two or threeminute warning. Thank you for coming today. I appreciate all of you taking time to do this. Were going to flip these posters around in a minute. All right that was the twominute warning. Well bring it to you as soon as we get it. Deirdre bosa is outside of yahoo hq. Do we know whether these charges are related to the first yahoo hack that was revealed and then that larger one that it was revealed that a billion users were affected . Reporter sara, we dont know that yet, but we are outside of yahoos headquarters in sunnyvale, so let me just tell you how we got there. You mentioned those two hacks. The first one was disclosed in september. September of last year, yahoo said it identified a hack in 2014 that affected 500 million of its customers. It said at the time it believed it was a statesponsored actor. In december of 2016, yahoo said it identified another hack, this one in 2013 that affected a billion users. Now, of course, we know the ramifications for yahoo throughout all of this. Theres been millions of dollars spent in legal fees and investigations. Of course, it also threatened that verizon deal. Verizon seeks to discount 1 billion, ultimately taking 300 million off the price tag, also loss of management changes. So, as more comes out, it will be interesting, but in terms of the management changes, longtime general counsel for yahoo, ronald balank, he resigned, didt get any payment with the resignation. But Marissa Mayer said she would forego hers. As more comes out, it raises questions about Marissa Mayers legacy and perhaps maybe a little vindication. I dont know. Well have to ask some people around us, but as you were talking about with jason before the break, its not just if this was, in fact, a statesponsored actor, it could be the same statesponsored actor that hacked the democratic party. That would certainly be interesting. So, well get more from this presser coming up. Indeed. Were going to be having a very busy afternoon here, deirdre, butt not only are we watching this, weve got the president en route to detroit and later today nashville. Were going to be watching returns and exit polls perhaps out of the netherlands. And by the way, a fed meeting at 2 00. Yes, a big fed meeting where theyre expected to raise Interest Rates. And well wait for tones on that. With this one, i think deirdre brings up an interesting point about the reputation and legacy of Marissa Mayer. Why yahoo . Were they more vulnerable than the other tech giants . A billion users information compromised because of one hack and half of that from another hack . Jon, do you have insight on that . I think its important to know, even though we dont have details about what specifically was the issue here, yahoo is a legacy email provider. It used to be just tops. There was yahoo, hotmail, maybe a couple others, and that has become kind of this cash cow that yahoo was milking, not necessarily investing in. Eamon javers, i think were getting close. Let us know what youre seeing. The embargo is now lifted on the information they are about to present, and this is a fascinating case here of russian fsb. That is the Successor Organization to the kgb, allegedly working alongside russian computer hackers in a criminal sense. So, youve got an intelligence component to this, allegedly, and a criminal component to this, allegedly. Ill let you listen to the press briefing, which is beginning right now. General for the National Security division at the department of justice. And with me here today is fbi executive assistant director La California and office of National Affairs director vaughan airy. Were here to announce a major Law Enforcement action related to one of the largest data breaches in u. S. History. Today we are announcing the indictment of four individuals responsible for the 2014 hack into the network of email provider yahoo, the theft of information about at least 500 million yahoo accounts, and the use of that information to obtain the contents of accounts at yahoo and other email providers. The defendants include two officers of the Russian Federal Security Service and intelligence and Law Enforcement agency of the Russian Federation and two criminal hackers with whom they conspired to accomplish these intrusions. Dimitri dokachiev and egor sunk nk sjen, both fsb officers, protected, directed, facilitated and paid criminal hackers to collect information through computer intrusions in the United States and elsewhere. They worked with coconspirators alexsey ballon and kareem baratov, to hack into the computers of American Companies providing email and internetrelated services, to maintain unauthorized access to those computers, and to steal information, including information about individual users and the private contents of their accounts. The defendants targeted yahoo accounts of russian and u. S. Government officials, including cybersecurity, diplomatic, and military personnel. They also targeted russian journalists, numerous employees of other providers whose networks the conspirators sought to exploit, and employees of Financial Services and other commercial entities. Bellan has been indicted twice before in the United States for three intrusions into Ecommerce Companies that victimized millions of customers, and he has been one of the fbis mostwanted cyber criminals for more than three years. Belans notorious criminal conduct and a pending interpol red notice did not stop the fsb officers who, instead of detaining him, used him to break into yahoos networks. Meanwhile, belan used his relationship with the two fsb officers and his access to yahoo to commit additional crimes to line his own pockets with money. Specifically, belan used his access to yahoo to search for and steal financial information, such as gift card and credit card numbers from users email accounts. He also gained access to more than 30 million yahoo accounts whose contacts he then stole to facilitate an email scam. With these charges, the department of justice is continuing to send the powerful message that we will not allow individuals, groups, nation states, or a combination of them, to compromise the privacy of our citizens, the economic interests of our companies, or the security of our country. For those of you who may not be familiar with the fsb, it is an intelligence and Law Enforcement agency and a successor to the soviet unions kgb. The fsb unit that the defendants worked for, the center for Information Security, also known as center 18, is also the fbis point of contact in moscow for cybercrime matters. The involvement and direction of fsb officers with Law Enforcement responsibilities makes this conduct that much more egregious. There are no free passes for foreign, statesponsored, criminal behavior. Through the work of the National Security division, the fbi, the United States attorneys offices around the country, we continue to pursue National Security Cyber Threats using all available tools to investigate malicious activity and attribute it to the country, agency, and even the individuals involved. When possible and supported by the evidence, we intend to charge those individuals and bring them to justice. As i wrap up, i am also pleased to announce that a fourth coconspirator charged in the indictment, kareem baratov, was arrested just yesterday in canada on a u. S. Government provisional arrest warrant. Id like to thank all of those who worked diligently to bring the investigation in to this point, including the men and women of the National Security division, the fbi, and the u. S. Attorney offices for the Northern District of california and the criminal Divisions Office of interNational Affairs, for their tireless work. Id also like to extend a special thanks to yahoo and google, whose customers were targeted and who cooperated with Law Enforcement it is very important for corporations around the country to know that when you are going against the resources and backing of a nation state, it is not a fair fight, and it is not a fight you are likely to win alone, but you do not have to go it alone. We can put the full capabilities of the United States behind you to make cases like this, but we cannot do it without your help. At this time, ill introduce fbi assistant director paul lebate, who will provide Additional Details on todays announcement. Thank you, mary. Good morning, everyone, and welcome. Todays announcement is a testament to the tremendous work and extraordinary efforts that have been done to identify and hold accountable those accounts believed to be responsible for this significant breach of yahoos networks and Information Technology systems. This indictment details how Russian Federal Security Service officers working together with criminal hackers conspired to plan and carry out one of the largest cyber intrusions in u. S. History. These perpetrators compromised the companys networks, along with the accounts and personal information of approximately 500 million yahoo users, and further, stole millions of user contacts in order to carry out fraud schemes for their own personal financial gain and enrichment, among other things. I want to note, this is a highly complex, longterm investigation, that has only reached this stage as a result of the relentless and persistent and dedicated efforts of the team. It also further underscores the essential value of early proactive engagement and cooperation between the private sector paul abbate, executive assistant director of the fbi, along with the acting assistant with the doj cyber division. Eamon javers, trying to read between the lines, look at motivations. Clearly, this one indictment regarding someone who was after personal monetary gain, but weve got to look to the National Security element, too. Yeah, thats right, carl. You clearly have a case here, at least according to the u. S. Government, where russian intelligence was working hand in hand with russian criminal elements to get into americans and global email accounts, presumably, the intelligence component here is to search for valuable intel related to prominent figures journalists, politicians, dissidents and the like. The criminal element is to get all of that data that can be used on the black market in cyberspace, to sell that and reap in huge financial rewards. Those two things going hand in hand here. The u. S. Government is suggesting. Now, this presents an interesting dilemma for the trump administration, which is, of course, confronted here in washington with allegations that, somehow, the russians involved, intervened in the u. S. Election last year in order to benefit the trump campaign. What will the trump campaign, the president , what will the Trump White House do now about these allegations from the u. S. Government that russian intelligence was involved in this hack . All of these investigations now sort of dovetailing at the same time here in washington, d. C. Weve got the chair and Ranking Member of the House Intelligence Committee up on capitol hill giving a press conference just a few moments ago. Weve also got senator Lindsey Graham holding a hearing later this afternoon on russian hacking into the u. S. Elections. So, this is a very hot topic right now here in d. C. , carl. Jon fortt, weve been talking about the russian element with regards to the election for, obviously, months since the election. Im not sure we expected yahoo to become such a large part of that conversation. Well, yahoo, its kind of a honey pot, as they say in security lingo. Its a place where theres a lot of information, and there hasnt necessarily been a lot of innovation in email. Theres the sense, and there have been stories reporting this, that yahoo perhaps underinvested in security on the mail product. They just werent seeing a lot of growth there. So, all of these stories potentially connected. Of course, well have to see where these investigations lead. Theres a trove of information there. We know hackers with phishing attacks and other sorts of attacks are trying to piece that information together with others. Alexsey belan was said to be after obamacare information, hacking into companies trying to get at that, forming these big databases. A lot of different strings. We also learned one of the big ironies here is that the center for Information Security you heard there, known as center 18, is part of the fsb, which is a successor to the kgb. And you just Heard Department of justice officials saying that thats the point of contact for the fbi in terms of defending against Cyber Attacks. Now the fbi and the department of justice are saying they were conducting Cyber Attacks around the world. Well see what the reaction is to this and whether we learn more about the motives. Eamon, for now, thank you. Were going to leave this story here. And squawk alley will be right back. The dows up 50 points, S P Still Holding in there, up 0. 3 ahead of the big fed decision at 2 00 p. M. Eastern. Well be right back. Im scott wapner. Coming up today on the Halftime Report, market mover Jeffrey Gundlach is here for an exclusive interview as we count down to the feds big decision this afternoon. Plus, are stocks ready for a rate hike and what could happen next . Our traders take their positions as well. And the sectors to buy and avoid in the minutes before the fed announcement. The Halftime Report top of the hour. Carl, well see you over at post 9 in just a few. All right, see you soon, scott. Meanwhile, lets get to Morgan Brennan for a quick market flash. Index provider msci responding to reports its received or rerejected a buyout. It sent it to a record high earlier today and resulted in it being halted. Msci saying we are not in discussions with a third party and have not received any offer or indication of interest. Youll recall, our jim cramer mentioned the stock earlier today, noting its indices represent one of the best ways to access emerging markets but reports of a takeover were unconfirmed. Shares are up 1. 5 right now, but certainly pairing the gains we saw before it was you. Morgan, thanks fort update. Another important event, widely anticipated federal rate hike coming this afternoon. Hours away. Joining us, Michael Feroli and nate fute, head of global asset allocation. Thank you very much. We are going to make this quick and dirty, because we got a little chopped by the yahoo press report. We have been wondering what could surprise investors, they are walking into this fed hike in a pretty calm way. What could be the mystery here . Obviously, expectations are for hikes. What could surprise investors . What they say on the dots. Most investors are looking for the dots to continue to signal three hike this is year and three hikes next year. I think if we got something more than that, four hikes this year, is a good possibility, or four hikes this year and four next year, that would be really hawkish and surprise us. We are going to cut you off. The u. S. Department of just sis announcing charges. Listen. You said this morning in the Financial Times seminar that the government has a number of tools at its disposal, including prosecution. Will the u. S. Seek other means, other than these indictments, to go after the russians, sanctions, trade limitation sns. Those are things yet to be determined. We are committed to using all tools and we certainly in this case were able to develop the evidence to the point where we were able to bring criminal charges consistent with the standard required for that. That doesnt mean we wont look to see if there are other tools that are available. Will you look to see if there are other tools . We will engage in those discussions and considerations. Is the expulsions of a diplomat one of those . For this type of matter, that is nothing we are prepared to to address today. Also, two of the indicted members the fbis point of contact in moscow on cybercrime matters. You described in the press as beyond the pale . Wouldnt it be natural that people would use that to exploit this . I think what is. A degree of naivety on the u. S. Government . These are people we are to work with coorder pperatively i enforcement channels. I can certainly pass to paul if he has any additional comments . I would just add, we have had limited cooperation with that element of the russian government in the past. In this case, with respect to the lon, we have asked. He has been charged previously in one case out of the Northern District of california and also in nevada back in 2012. We have asked for his rush in 2014 to official channels to the russian government. We have had no response. I think that is reflective of the relationship and the approach we needed to take in this case in terms of the lack of cooperation we have gotten. To change or end . We need and have to have cooperation in all int nation many partners to resolve cases like this among many other threats that we face. When we look at this case, im speaking to this case now, we expect and hope for their cooperation here and, in fact, post this announcement. Were going to go out with another official request, not just for mr. Blonde but for the other two individuals that are charged here and are reside ing in russia now. This model that you are alleging, officers working with criminal hackers, is this the new normal that we are seeing in russia or is this a deviation from your standard expectation of how these crimes are carried out . How were you able to make the link that all four of them were intended together sm. To take your first question, im not going to be specific as to russia on that. We are certainly seeing more and more use by nation states of criminal hackers to carry out some of their intentions. I dont think thats necessarily unique to russia in this particular case of fsb. The indictment, i think alleges in pretty great detail the conspiracy among these four men. The sharing of infrastructure and hacking techniques and tools and procedures the shares of the cookies that were meant to be able to gain access into accounts and contracting wito d other if such as google sfwchlt cl do you think there is a connection between this case and interference in the election and hacking there . Can you speak to the president s claim as part of that in surveillance . If you are just joining us, federal authorities have now charged four men including some officers from russias spy agency with hacking Computer Systems at yahoo . We are learning a lot more about this story quickly. As we get more, we will bring it to you. You can also watch it on cnbc. Com. The dow is in a tight range ahead of the fed. We are back after a break. Uh, yeah. Its over, larry. What is . The whole wheelie thing. What do you mean . I just got this baby to get around the plant floor. Right, but now Ge Technology monitors every machine. Yeah, it brings massive amounts of information right to you. So you dont need that. Well, it makes me look young and uh. With it. Time to move on. Oh ill move on. Right into the future. Backwards. Youre going backwards. The futures all around us not just on your little tablet, my friend. We continue to watch the press conference on d. O. J. Yahoo expressing thanks to federal authorities for those responsibility to the front. Thats one angle, which yahoo is in the process of selling itself to verizon. What is this going to mean for the u. S. Government in the first significant case charging russianconnected spies . All sorts of complications with that, with the meddling in the u. S. Allegations and more . They are saying this isnt unique in the sense it is foreign intelligence working with known criminal hackers. Thats a trend, something we will continue to watch. Meanwhile, markets obviously are going to hold their cards close to the vest as we awit the fed statement and then the presser we have talked a lot about the questions she is sure to ask. The projections that the fed members actually make on how many Interest Rate hikes they are expecting. If they are more aggressive than expected, does that rattle the markets so far . They are holding their gains for 1 off of the record highs for u. S. Stocks. Thats certainly one we will be watching. This market is hard to rattle. We never mentioned going to the microsoft board sxwchlt their microsoft used to be a company in latin, nongrata in silicon valley. Re Reid Hoffmann is one of the leaders. Tomorrow we will be talking about the dutch. For those 1,000 parkas that you see all over. Lets get over to post nine and the half. Welcome to the Halftime Report. Im scott wapner. Our top trade this hour, decision day. Stocks waiting on the fed. Is a rake hike a foregone conclusion and is the market really ready . With us josh brown, steve weiss, john and Pete Najarian around in a moment. Two hours until the fed delivers that big decision. There are the markets, in the green across the board. Dow jones industrial up