Transcripts For CNBC Squawk On The Street 20151022

Deposit rates was discussed at the meeting. Mcdonalds up sharply in the premarket. The first increase in two years before all day breakfast. The company now getting a down grade from a key supporter. 3 m and caterpillar, mixed results, disappointing quarters respectively. We will find out how cats ceo explained things to the guys on squawk. Shares from mcdonalds, better than expected Third Quarter results. Comps up for the first time in two years. They see across the board growth in comps in the current quarter. Steve easterbrook says while still in the early changes, we believe we are starting to reposition mcdonalds as a modern, progressive burger company. All of this is not about breakfast quite yet. A lot of it is about chicken. Even as margins are impacted somewhat by paying workers higher wages. It is about bathrooms, about cleanliness, about the idea of a simplified menu and the idea of leadership. I have been a cartoon character about easterbrook. He turned around international when it seemed Like International was finished. He has reenergized a lot of negative stories about how the franchisees dont like him. Go do some work. Not only do they like him, they love him. Wait until he starts doing his automated shortening of the line. Thats the plan. So you dont have to wait in that big line like we do. There are people who understand. This isnt a one man band to a certain extent. He has had to get rid of a lot of people. Loyalty, he hasnt even gun technology. When that p has, you are going to be fishing you paid 110 for it. 110, a record high last week. That was the first time in a long time. Do you think this breakout beyond 105 goes where z he obviously believes more than all the Portfolio Managers the amount of money he is spending buying back stock. These things are big inflexes. This is supposed to be a battleship. When you start seeing the Inflection Point in the u. S. Where it is now positive, the momentum builds, the franchisees build. The idea you are with a winner rather than a loser takes hold. You want to see that. You saw it in wendys. Once these things turn, they turn big. Thats why people are jumping in. It was never an expensive stock. It didnt go down as much as people thought because of the dividend. People dont want to believe in the great man theory. We are too cynical. Easterbrook has figured this out. I think the company had been undermanaged. He isnt scratching the surface about what he intends to do. You are so positive . Im right. You have been absolutely right. I am not a guy who is coming in saying the mets are good. What did i tell you . You said, dont jinx me. You said, i think im going to become a mets fan. You abandoned it after trying it on for a couple of days. Queens. I am not a queens guy. I am a philly guy. I am a queens guy. For the fifth time in my lifetime, we are going to the world series. That just makes me so happy. Im on the bandwagon for the mets and for easter broobrook. Easterbrook is murphy. I like at this. Seven home runs six games in a row. This left the park. It wasnt just going center. You know how it can leave the park. Two singles, a double and i home run. If easterbrook is murphy, you are granderson who said, i get a chance to tell people i played with babe ruth. That was grandersons quote. You aint seen nothing yet. This is going to be tom brady month. The british accent. That short mcd, long chipotle trade has come to an end. That may be. He has tried to make it a little more organic and natural. He is a burger guy. I am what i am. He is not running from it. Who wanted to give him a whimpy buck for a burger today. Thats popeye. He is what he is. He is a burger guy. He is popeye the burger man. We are going to watch obviously mcdonalds is the story of the day. There is caterpillar and 3 m. They beat on the bottom line but missed on revenues in q3. They lowered the top end of their guidance and announced 1500 job cats. There is cat, reducing its fullyear outlook. There is no question we are in a pretty rough patch right now. I was just listening to a couple other earnings. Our day will come, just not right now. Our big markets are mining. Our oil business supplies to that market are very soft right now. We announced a major restructuring a month ago to address this, to get out in front of it for 2016. We are doing all we can to fortify this company to get through this very rough patch we are seeing today. That restructuring is going to cost them more than they said prior. Now, 800 million. If you include the cost, they are looking at 370, which is officially half of the 2012 peak of 871. He has done good things with the Balance Sheet. I am not as worried as i would be. He has the worst end markets. Sometimes that happens. He has been dealt a bad hand and put the hand back and got even worse cards. The Balance Sheet, he has done remarkable things. I dont think this stock gets hammered nearly as much. Part of this theory, we want to be in the industrials. They dont fool around with the numbers. He doesnt have a secret buying organization. He doesnt have some warehouse filled with cat and 3m, by the way, im a huge fan. The guys i like. That number wasnt that good. He is doing the cutbacks. This is part of the renaissance like united technologies. We expected a really horrible number. He gave you less than horrible numbers. So the stock goes higher. Good Balance Sheet there too. Do you know when he gets that . I do not. He is like your goalie with the rangers. Lindquist. He likes ice hockey, by the way. We are not allowed to take anybodys tickets. So i dont go. It is not a wellunderstood company. 80,000 skus. My father worked for 3 m. His biggest seller was sashi, the stuff that made ribbons. They innovate, they innovate, they innovate. They have got some great sponges, man. They do . You want to talk a little valeant . How you feeling about that stock . Do you have any pepto bismol. Yesterday, that incredible wild ride saw the stock go down as much as 40 . The Company Coming out and fighting back against these charges in this report from a firm that recommends short selling and follows it themselves. They picked a great time to spring a bear rate on this company. No doubt about it. There seem to be some others who were involved as well. All of that said, it raised enough questions in terms of the strategy being pursued by valeant in terms of how it distributes its drugs. Branded pharmaceuticals. We sat here many, many times for the last couple of years. Certainly, jim, i have expressed questions in terms of the overall business model, particularly the role of strategy that we have seen so often that needs to be timed so well to be able to make it succeed over the longterm. Buy, buy, buy and then sell. Can you get it all right . There are not necessarily allegations of fraud. One can have a question about the overall pursuit of the larger model. Remember, valeant does a lot of things differently, less r d and raising prices dramatically on some of the acquired drugs it has taken in. It doesnt mean you can question that strategy. That began yesterday. We can, certainly, owning the stock, no doubt. Thats a big issue. Many hedge funds who simply didnt want to ask the questions. That said, allergan fought them for how long with how many people poring over that company . They raise aid lot of questions. Allergan raised a lot of questions about valeant. They have been suffering as a result. Saunders is spending more r d. Allergan was an amazing company. He is getting 40 billion from teva, Balance Sheet. It is a different story lumped in in part because it is well owned by hedge funds, many of whom believe that it is better to get out. The momentum had stalled and the overall strategy of acquiring, acquiring, acquiring, may be mitigated as a result of the stock being down so much. I hesitate to play devils advocate, because i have not been a fan of value. Understood. The cash flow at one point. This is a real company. He used the term enron, citron. Enron is thermonuclear. I remember enron. I remember this does not seem the same. That said, the quality of the earnings certainly has to come in. The cash flow is real. It is real and the p. E. Multiple is extraordinarily low. This morning, jim, you have bmo. They have been bullish on this stock for a long time. You cannot defend the Specialty Pharmacy structure. They downed the stock. Thats why it is down about 7 , 8 . It goes back to the specialty pharmacies where they ship the product and work the unsureers. As much as 10 come from the specialty pharmacies. We cant defend it. It may not be illegal. Proof of a questionable business practice, not proof of wrongdoing. It gets to the qualities of the earnings. The earnings power may not be what it is. In the meantime, we have at least one other analyst suspending coverage completely saying we dont want to touch this right now. Suboptimal situation developing here. It has certainly been suboptimal for some holders. At one point, that thing broke down. A Hedge Fund Manager who is a drug guy, who runs the ceo of a drug company who was shorting aler again and going long. Why bring him up . I didnt mention his name. Hillary clinton jumped into the polls because of this guy. I want to mention hillary. What they say is, i want to buy but Hillary Clinton. They were hoping that joe biden was going to get in the race. I think she will be softer on the phrma now that joe biden is out. Phrma, is also, not everyone thinking that they are the they are not bankers. You have to get through the benghazi hearing today which starts in just about 45 minutes. We touch nothing versus what happens today. Were chipping away at it. When we come back, we will get more news on earnings from the likes of amex, underarmor, southwest airlines, pulte, you name it. There appears to be bad news on the streaming front for yahoo and marissa myers. It does involve pricing for ads. The s p has not had a 1 plus move in 1 in 12 sessions maybe today. A lot more squawk on the street from post 9 in a minute. Awe believe active management can protect capital long term. Active management can tap global insights. Active management can take calculated risks. Active management can seek to outperform. Because active Investment Management isnt reactive. Its active. Thats the power of active management. A lot of earnings to get to. Missing on the top and the bottom line. Company attributed the weak performance to the strong dollar as well as increased marketing spend. Warning ahead of earnings that Third Quarter revenue could come in below expectations. The company says analysts are failing to appropriately factor in the companys acquisition of directv and that the estimates are inflated as it relates to axp, jim. Average transactions down three. Another big buffet name that is not having a good year. A great headline on one of these pieces. American express, jpmorgan, head winds converge. It is interesting. When you try to pin down what is wrong here, i have an easy way to do it. Everything. Every line item. When you get off the desk and talk to visa and master card, they tell you, these guys have completely lost their way . Why . Give me a specific. They havent been spending. She havent been able to handle what happened with costco. They did not give you the particulars of losing costco. I have been saying that costco decision was brutal for them when they lost that partnership in terms of growing. They would say it wasnt economic for us any longer. It turned out to be so much more important. You can just go weigh in higher spending on marketing. They have to do that. They have to spend more on growth initiatives. They talk about the department of justice. No portfolio news on the costco deal. Build Business Growth flat. Last night, i had steven sing on. Do you guys know him . American express owned a big stake in concur and they sold it to s. A. P. Bill mcdermiad doing better. They have made it into the principle part of their cloud business. American express had a chance to be price line, travelosity, yelp. It has been american express, which has not been a bad thing to be. Asking a company that has been one thing for a long time to be all those others is not realistic. You are trying to change an organization in the way it has happened. Visa, 52week high last week. Visa. Im telling you, this is whats bad for the gander. Charlie sharp, very good for master card. You are up against two of the greatest ceos in the world. This master card and visa, they are like masterful companies. I think you can blame the dollar. Im not going there. It is not the fault of the stars. Sometimes i know david loves it when i invoke shakespeare. The fault is in themselves, not in the stars. It comes on the heels of visas hike, 17 cents, goes to 14 cents. They they theyeded boosted that by 17 last year. The amex guys were dealing with these costco employees and chuckled to themselves and never took them seriously. You take jim sindegal seriously and craig seriously. They had growth the week walmart lowered the boom. My Charitable Trust owns costco. Felt horrible going there. You regret selling . Moronic to give up on costco. I pronounce myself idiotic. I got back in when they went down off of walmart. Costco is killing walmart. You were obtuse. I was obtuse. Do brush up on your shakespeare. I am quoting him now. Brush up on your shakespeare. The women. I am brushing up on some of the things that he said. Thats shakespearean. We didnt leave any time for at t. We dont need a lot. They did say, you seem too high on your revenue estimates because of some things. The stock does not appear to be moving in any particular direction. So, there you have it on at t. Well get cramers mad dash. We will get a countdown to the opening bell in a minute. Take another look at the premarket. Got some nice beats from duncan nd asouthwest and Stanley Black decker. We are going to get to all of that when squawk on the street comes right back. All right. It is a thursday for mad dash. Got six minutes to the opening bell. We have six days until the first game of the world series. Thats a nice respite for their arms. The guys will have a lot of time. When you are as hot as the mets are, you really would rather play them a lot. These guys need no days rest. Dow chemical. Dow chemical. Lots of people thought that andrew liberus was going to blow it, because the price ofet eth lean was going down. It is the story of a buyback that will be aggressive. Another boost in dividend. Andrew was right to keep the companies together. Otherwise, he would have been paying top dollar for ethylene. It has left this as a specialty chemical company. The bears got it wrong. He did get a couple of guys on the board. He was terrific. It doesnt matter. He is bringing out value. Watch him do something really interesting to bring up value in agriculture, which is valued at 25 of the Market Capital and produces very little. Ag being the sore point for monsanto and dupont. Not the sore point for dow. This is a story about a company reinventing itself. 14 straight quarters. Reported the bottom of the Third Quarter. Up roughly 14 year to date. He keeps beating the quarter. It is price fix. 12 quarters in a row. Your year of earnings would. Contrast that with dd. Were going to give you the broader picture on the markets when they open. A lot more on squawk on the street. My name is rene guerrero. Im a senior Field Technician for pg e here in san jose. Pg e is using new technology to improve our system, replacing pipelines throughout the city of san jose, to provide safe and reliable services. Raising a family here in the city of san jose has been a wonderful experience. My oldest son now works for pg e. When i do get a chance, an opportunity to work with him, its always a pleasure. I love my job and i care about the work i do. I know how hard our crews work for our customers. I want them to know that they do have a safe and reliable system. Together, were building a better california. Dad hes our broker. He helps looks after all our money. Kid do you pay him . Dad of course. Kid how much . Dad i dont know exactly. Kid what if youre not happy . Does he have to pay you back . Dad nope. Kid why not . Dad it doesnt work that way. Kid why not . Vo are you asking enough questions about the way your wealth is managed . Wealth management at Charles Schwab you are watching cnbc squawk on the street. Well get the opening bell in just about 30 seconds. A lot going on, everything from earnings to draghi this morning as they leave rates unchanged but hints that they can, in fact, adjust the composition and duration of qe. Didnt want that. The dollar is screaming. That is going to hurt the internationals. Be careful. It is Multipackaging Solutions. A manufacturer of paper packaging celebrating its ipo. Over at the nasdaq, you mention the therapeutics. They are celebrating their ipo today. Speaking of ipos, they did price below the range. 215 million. It comes after ferrari had a decent d decent. Farari, 2 million plus per car. Sometimes they capture the imagination. You get the glow. The fact that people think the car is great. I thought that they basically told you, go on fiat and they are going to give you the rest of the stock. Thats what you should do. A lot of things we havent gotten to yet. Underarmor, 45 cents beats by a penny. Their first 1 billion quarter and raising their outlook. We have guidance up at lily, underarmor, ebay and a couple of others. Lilly, expense control. I have been saying, just wait, just wait on this lilly. This is going to be a terrific story. The worst part here, they offload that. Under armour was up a couple of bucks. They anytime pick on it and three weeks later, it is up dramatically. The Union Pacific is a shocker. The tone on the call, it has bottomed. I need the transports to do better. Southwest air saying good things. Transports can lead us. Union pacifics is great. Union pacific separating themselves from the pack. They have better coal. Better coal. Coal that is actually still used . Yes. Me. We sat here a couple of weeks ago on ebay. I dont think it was last week. It was the week before. Watching it go down. Significant percentage declines in the stock as a result of a rert that was out, jim, about saying that there salesmen dont seem to be as strong, month over month. Now, it is up 10 on what the actual earnings were on the guidance as carl just referenced better than expected. The gross market value, the merchandise market was not as strong. The new management seems very focused. That was a big short position. Nothing short like the squeeze of weight watchers. That was just unbelievable. That was almost volkswagenlike. Volkswagen from 2007. I have seen reports international is finally going to come in. This is the oprah effect. I am seeing this incredible confluence of what i record as some of the most volatile stocks. I keep going back to value. I am looking at it. I went to get a bottle of water. When i came back, it had dropped like ten points. The Movement Like yesterday was nothing short of extraordinary. We have to be careful. That is freaking people out and making them return to plain vanilla stocks. This is becoming a plain vanilla market. Is that a technical term . They didnt want rocky road. They want plain vanilla. They dont want fro gurt. Kmi, kinder morgan, down about 5 plus percent. This after the Company Tells us that its earnings and dcf all roughly in line but the dividend, which was supposed to grow 10 in 2016, now got it 6 to 10 . They are doing a raise of capital but they are not telling us how they are doing it. They are calling it an alternative financing. They are giving us no details on how they are going to go about raising what could be as much as 2. 5 billion. I went over that quarter. I think the world of rich kinder. The discounted cash flow. There is a sensitivity here. 10 million per 1 change in barrel. 3 million per dcf. They were saying they could do 10 growth. Now, it is 610. Almost all the analyst questions are, please tell us what kind of findings you will do if you are not going to do equity. They kept saying they cant do it. Why is that . Do you know . No. I was disheartened by it. I was disharteneartened by it. That was a call that was not up to snuff. I took notes and read the texas instrument call. That was clean as a whistle. The Free Cash Flow is still not in question on kmi. I have to tell you, you listen to that call and you really think, all right. Wow. They have to find a way. When you are not giving us the details and telling us how you are going to raise the money. People are guessing. They are guessing. That was disappointing. People want to be in these plain old industrials. Parker hand reported a disappointing number. Particularly in industrial. It was down 4 previous and now, down barely 3. Why . Because these are easy to understand stories. Thats what people want. They want easy to understand stories. They are scared of the stories that are about some sort of thing that we used to like, buying a company and discounting cash flow. They want straight away scores. Ill tell you one thing. The hospital names are being taken apart. Tennant, universal health, hca. A decline of 14 . A big playground for hedge funds. They reported that you cant think that hca is going to be weak and the rest of them arent going to be weak. This looked like a oneyear thing. The Affordable Care act was great for them. Now, they are reverting to their slow growth. Take a look at Community Health. Take a guess. You havent looked. What do you think Community Health is down percentagewise . It is probably down 8, 9. It is down 11. 62. 28. 5 . Are you kidding me . Do you have any more of that pepto bismol . I will look from some. I will get it from the Specialty Pharmacy that valeant is shipping to. They do down gragrade to neu. I always think cheryl is so thoughtful. It is kind of over for the group. Health care used to be the place you went to when you wanted to sleep at night. I cant tell you, you need klonopin, ambien. A complete revenge of what these hospitals are worth. It is a multiple rerating. It was onetimeonly aca. They were obamacare winners. They are now kind of like, all right, tell me Something Else. It is an interesting time. If you want to go to a hospital, your stock goes down. If you want a cheeseburger, your stock goes up. We are going to get existing homes in about 20 minutes. Pulte comes in with a miss of a dime, 33 cents. The internals were no good irlt either. I am still angry i didnt buy a pure house property when we had a chance over in brooklyn. They sky rorocketed. Lenar is the player. Some of these groups have never had bifurcation. The hospitals, it is all the same. The housing companies, some did better than others. They bought a lot of land when things were bad. The variations between certain stocks and certain groups are very hard. Others, wow. Industrial chips. The watch. I got married wearing the brightling, not the iwatch. It reminds me that the eagles are playing carry care at bank of america stadium. You need that. I need that. Specially when you are on the road. It tells me also who has a buy for fantasy. I need that because of the kraft kings segment. You have to stay one step ahead. Mcdonalds is adding a fair amount to the dow this morning. Amx is taking some of that away. Mcdonalds has the second best dow stock of the year. Are you a believer yet in easterbrook. People are coming around. They know their burgers. We underrate the burger. I was just in london. I had some very good burgers. That was up 100 points. I want to show you whats going on in europe. These dovish comments from draghi are having a definite impact. Germany moved up as soon as he started talking. France moved up, spain. We asked our partners about this. There has been six ecb policy meetings this year. All around these easing programs that go on. Every single day and time the markets have moved up. Put up the board for me here. 100 positive for italy, for france and for germany. All six times he has talked before on these kinds of days. Average gains, about 1 . You see that there. Our new graphic look from our partners at kensho. This is a positive trading signal overall. Let me turn to the earnings situation. It is a pretty familiar story. I want to look at the international names, the Big Industrial names, 3m, caterpillar and dow chemical. Mcdonalds numbers were simply fantastic. Stanley black decker, the do it yourself market, not only a beep but a revenue beep. Autos and Home Improvement are all doing much better. America is up 11 . Europe was up 7 for Stanley Black decker. A great report from them. Diy, do it yourself market. Again, another indication, doing very well. I want to turn now to the ipo market. I told you yesterday, farari was an anomaly. A Small Company ready to go, Multipackaging Solutions. Packaging, the price talk was 18 million. 15 to 17. They priced 16. 5 million and lowered the amount and put it at 13 doz. Thats one example. This is trading in a moment. Take a look at another one. They mentioned therapeutics. Another one that priced yesterday, going to trade today. Liver disease treatments, 5. 5 million shares. 14 to 16. They priced it at 13. American farmland, own farm in california and florida. Price talk was 12 million and 8. 50 and 10. 50. They priced 6 million, shares at 8. It opened at 7 right now. This is what im talking about. The trend has been very, very poor. Ferrari is largely an anomaly. Look at how well they did and how far they priced below the talks. Multipackaging 28 below the mid point and dimension therapeutics, 13. 3 and american farmland, 58 . The biggest ipo of the year, the one last week, first data, 160 million shares at 1820, they priced it at 16. It still cant get above 16 initial pricing. Where do we go from here . We are sort of in hiding to a certain extent. There is nothing on the calendar. We have square out there, match. Com. Alex was never withdrawn. Right now, cycle we are seeing for ipos, price cuts, postponementes and on the year, still for the after market return. Back to you guys. Thanks very much, bob pisani. Cat is up. Caterpillar is up. November 13th drawing near. You can look at a calendar and figure out how near it is. Remember perrigo and mylan. November 13th is the day on which the tender will clothes and see whether mylan has succeeded in garners at least 50 of perrigo shares and can take over the Company Given the cash and stock offers. Perrigo releases numbers an a plan for the future that includes what they say will be a 22 increase over the calendar year, 2015. Eps guidance midpoint, in terms of where they are right now for guidance. They also tell us they are going to increase their buyback 2 billion is now going to be the buy back including a 500 million repurchase that would be completed before the end of 2015. Another 1. 5 billion behind. What they didnt tell us and what many people have been wondering about was, would they announce a deal . Would they announce some sort of acquisition . The 23rd of october was the last day they could do that under the irish takeover laws, which they have been operating under with the big israeli thing. They are really run out of michigan. They are based in philadelphia. Their factories are in michigan. Which gets us back to the main point. Is mylan going to succeed . Perrigo will say, we looked at some deals and, in fact, we considered doing an acquisition. We feel buying back our own stock is the better way to go. If you let us go that way, we will trade at a high multiple. We are putting up numbers and guidance that are going to be deserving of such a multiple. We will continue to follow the strategy we have in the past, by using the high multiple stocks to do a deal. We didnt feel it was appropriate to do a deal or find one that was the right price that our Share Holders would benefit from. Better to buy back our own stock. The key will be the holders of the stock itself. As we take a look at Hillary Clinton arriving for the benghazi hearings. There she is. Walking in. Of course, we will be covering those hearings a bit later. As she arrives for her testimony on the hill about exactly what happened on that day. Back to mylan and perrigo, always love to have those little always interesting. Seamless. Im not sure what that is. The question, of course. Say again. Right. Thats Multipackaging Solutions just opened. Maybe people dont want to hear about it anymore. I dont know. Final point here and the key one is the holders themselves. Many of them are hedge funds. Many of them are looking at that. Im done. This is really how it all goes. Perrigo would be much higher if it werent for mylan or million tiepackaging solutions or Hillary Clinton walking into the benghazi solutions. The world will keep spinning. We try to do our thing but the world keeps spinning. Multipackaging, 215 being raised. 16. 5 million shares. Range was 15 to 17. Disappointing at least pricing. We will see what the action looks like today as the ipo market has been tepid. What word would you use . Can you imagine if you were in a unicorn right now. Those things are trojan horses. They are not unicorns. They will crush you. They may well be. It comes pack to me. I get to send it to rick. The final point on perrigo, mylan, is a simple one, as much as a 10 growth spread should she tend to their shares and get the mylan offer. In a market like this, how many of them are going to take that. Also, a big skroefr loverlap in shareholder basis of both companies. That becomes the key question. Perrigo did not do what some thought it would, which would have been a frustrating transaction trying to buy Something Else that would have required a shareholder vote. Ill be back to be interrupted many times. Ill be back with more. Lets head to the bond pits now. Rick santelli, thank you for being such a standup guy after you watched your cubs get swept. Get swept, get slaughtered, however you want to put it. Wait until next year. Im going to look towards hockey season, i think. If we look at a oneyear chart of twoyear notes, not in the u. S. But in europe, pretty much it says it all. More negative. Trading minus 32 basis points. Draghi continuing to push the stimulus notes and to find enough securities to satisfy the q. E. Needs to bolster the market if you believe bolstering has sustainability. Our twoyear note also had some volatilities. You could see the huge yield drop, which swdwarfed the rest the curve. Why . There is not going to be a twoyear auction because of the debt ceiling. I dont know which it is. We will leave that for others to debate. If we look at the tenyear boon, with we see intraday, it dropped rather dramatically. Look at 10s in the u. S. , everything was about the shortend in the u. S. Today. If we look at whats going on in the Foreign Exchange market, this is big. I have said that really the range on a closing basis, the dollar hasnt gone far. Lets see how today pans out. The dollar index up, wow, over a penny right now. The last chart is the dax. I guess thats the point of q. E. Carl, back to you. Thank you very much, Rick Santelli in chicago with less than a week to go before the next feds decision on Interest Rates. We are going to talk with Richard Fisher about that and what we might expect. Treasury has already postponed a twoyear auction because of constraints regarding the debt ceiling. Five of the seven are going to go on as planned. A lot more squawk on the street. Dow is up 148. S p, 2037. Hillary clinton about to testify before the select committee on benghazi. We will take you there live when that happens and stock trading with jim in a moment. Hi watson. Annabelle, your birthday is tomorrow. Im turning seven. What did you ask for . A princess. And a pony. You like things that begin with p. I like pink frosting too. Will you have a cake . Yeah. I was too sick to have one last year. The data your doctor shared shows you are healthy. Are you a doctor . No. I help doctors identify cancer treatments. I want to be a doctor someday. I can help with that too. Watson, i like you. To take their act to the next level. Before earning 1 cash back everywhere, every time. 2 back at the grocery store. And 3 back on gas. Vince of the flying branzinos got a bankamericard cash rewards credit card, because he may earn his living jumping through hoops, but hed rather not earn cash back that way. Thats the spectacle of rewarding connections. Apply online or at a bank of america near you. Time now for cramer and stock trading. It is very rare you see tech going up with all these other groups. There are two that are helping it service. A fantastic company, cloud based. Putting up a great number. Texas instruments. Listen to the call if you want to know how to do a call. Everything they are doing in the industrial, internet of things. What they are doing with am is extraordinary. Tech is going up, because now and texans, including everything from salesforce. Com to lamb research. Tonight, you are going to have alba bet google and amazon. We have cypress semmy and snapon tool. A great stock. Nick akins, American Electric power has been my preferred name. It goes up on the espn layoffs. Caterpillar on the idea that maybe the cash flow is good. This is a market that does everything but love health care. Health care is an epidemic. Open the window and influenza. Jim, we will see you tonight. When we come back, Hillary Clinton on capitol hill. Former dallas fed president , Richard Fisher. Dont go away. Its back, tmobiles most popular family plan now get four lines. Each with up to 10 gigs of 4g lte data. Just 30 bucks a line its 10 gigs for all only from tmobile. Prge a manufacturer. Well thats why i dug this out for you. Its your grandpappys hammer and he would have wanted you to have it. It meant a lot to him. Yes, ge makes powerful machines. But ill be writing the code that will allow those machines to share information with each other. Ill be changing the way the world works. interrupting you cant pick it up, can you . Go ahead. He cant lift the hammer. Its okay though youre going to change the world. Good thursday morning. Welcome back to squawk on the street. Im simon hobbs. David faber. Markets enjoying a pretty good series of earnings with some notable misses like, for instance, weakness in names like caterpillar and 3 m. Some of those names are trading higher. Also, mcdonalds. We are watching draghi and the ecb. At capitol hill, Hillary Clinton will testify before the House Select Committee on benghazi. In a few moments, she will be sworn in. Some Opening Statements and each Congress Person will get about 10 minutes of questioning. Well get to some of that. Rick santelli watching breaking news, existing homes in lei. Hey, rick. Leading Economic Indicators for the month of september posted a minus. 02. It is very unusual to see this metric. It is not a marketmover. It is a big deal. This is only the second negative number of this year. The other was in february, also down minus. 02. You have to go back to january 14th to find a minus. 01 and a bigger negative in the form of minus 0. 3. This is the fourth negative number. We have another september read for existing home sales. But, for that, lets head east and go to diana olick. Diana . Reporter rick, existing home sales up 4. 7 to a seasonally adjusted annual rate of 5. 55 million units. That is a solid beat. The street was looking for 5. 4 million. Up to 5. 5 million. Thats up 8. 8 from a year ago. The only trouble is inventory at 2. 2 million homes for sale. Down over 2 for the month and down 3 from a year ago. This is awe head into the slower season for home sales. I know that i said sales increase month to month seasonal alley adjusted. You take out those seasonally adjusted sales, they fell 6 from august to september. We should be seeing that inventory rising. We are not. Realtors warning, this could be a big problem when we get into the Spring Season of 2013. The median existing home sale price in september, 221. 900. The higher end homes are selling. Sales on the low end actually down. That is because there is so little inventory on the low end. Firsttime home buyers still not in this market. Just 29 . They should be 40 . Back to you guys. With the dow up 166 points, lets take you back to capitol hill with the house hearing on benghazi is about to get underway. There will be Opening Statements from the committee. Hillary clinton will testify. We will take part of that for you. We have a big team watching. Amen javez is watching. This is going to be very interest on whether she can come in unscathed. It was a lot to do with politics and bringing down her poll ratings. As you see Hillary Clinton get settled in there. She should be settled in for what is expected to be a very long day on capitol hill. There could be as much as 810 hours of this hearing. It could go well into the evening by the time all of the questions are exhausted. Here is where we stand politically going into this long day of questioning for Hillary Clinton. She came off of a very Strong Performance at the recent democratic debate. She also saw the removal of one of the big threats to her path to the democratic nomination yesterday as vicepresident joe biden said he was not going to run for president. That solidifies her position as the frontrunner for the democratic nomination. On the republican side, you have trey gowdy who is back on his heels after the comments from Kevin Mccarthy that seemed to suggest that the whole purpose of this Benghazi Special committee was political in nature. There is arn interesting political dynamic at play this morning. Well see if that carries through when we are done this afternoon or evening. Well return to that hearing and to the swearing in, or mrs. Clintons swearing in in just a few moments time. Dow is being led by mcdonalds, up sharply. Better than expected quarterly results. Comps in the u. S. Up for the first time in two years. On the phone to talk about mcdonalds results, is karen short. Good morning to you. Good morning. Thanks for having me. Everybody is trying to figure out to what degree this is brecks fa the or is that really a q4 story. Is this chicken . Why would they manage to beat some estimates in the u. S. And out by such a wide margin . Breakfast isnt even in the numbers. Breakfast wasnt rolled out until october 6th. What you are seeing is basic walking and tackling finally coming to fruition on the new leadership. How much do you expect breakfast to add to comps in q4 then. We will hear more on the call or more on the november 10th analyst day. The numbers that have been thrown out there are in the 2 range to the comp. Thats a higher margin. To the extent that sceptics are pointing to the decline in the operating margin in the u. S. In this quarter as a potential area of concern. It is a higher margin. Operating income was down a touch. They did mention some of these wage hikes at some of the companyoperated restaurants. How much of a head wind is that . Will it be offset and then some by the menu initiatives they are taking . I think mcdonalds has always been very clear with us. They air topline, turnaround store. It is not so much a cost side. To the extent we can get the comps going consistently in the positive range, it will drive more leverage to the bottom line. Obviously, it will be a higher margin. That should help. We will hear more on november 10th about potential further sgna initiatives and costcutting opportunities but, again, this is an operational turnaround. It is just in my opinion, in the early innings. Let me take you back to where you started this conversation. The rally today and the figures that we have. It is not about breakfast. It predates breakfast. It is about, i think the blocking and tackling was the express from new management. What is important for Share Holders to recognize is happening on a broader level . 99 of the attention seems to go to the u. S. , because the u. S. Is more of a structural issue. The rest of the world has very good results this quarter, is a little bit more macro driven. Everyone focuses on the u. S. Obviously, we had december and the 250 special, probably had some benefit. Buttermilk chicken, im sure that had some benefit. More importantly, you need under new leadership structure, you need all the franchisees on board moving in the same direction. Thats whats critical to the success. Allday breakfast is the first tangible manifestation of the franchisees in the u. S. All collaborating on something. I guess Going Forward with the next step is really a National Value program. Thats the next step, i think, in the u. S. Turnaround, to have all the franchisees come to an agreement of the National Platform and what it will look like. It has been a little bit like herding cats. Is this breakout above 105 lasting or do you think we are shortterm overbought here . Are they finally taking share again or are they still losing just a touch . In terms of where the stock is today, obviously, we have a 120 price target and i would argue that we are still very early stages. Again, this is an operational turn around i think there is also some financial levers that management and the company can pull as well. I think the stock keeps working well above this. It is still very underowned by long onlies from what we can tell. So, to the extent that Everybody Needs to have mcdonalds in their benchmark, there is a supply and demand in balance right now. We have seen results from burger king and wendys and who they are losing share to. It is really their direct competitors, other than burger king and wendys. We dont cover either. The thing that burger king has done very well is the value platform. Thats what mcdonalds is working on. They will narrow the gap and start recapturing share. Karen short having a banner day, up 6. 5 . When we come back, former dallas president , Richard Fisher, will join us live and talk about rates and the future of the economy. We will continue to monitor the hearing on capitol hill as a select committee on benghazi meets, as clinton is sworn in. We will bring you that live as well. Squawk on the street comes back in a moment with the dow up 186. My name is mark amann. Im a gas service rep for pg e in san jose. As a gas service rep we are basically the ambassador of the company. We make the most contact with the customers on a daily basis. I work handinhand with crews to make sure our gas pipes are safe. My wife and i are both from san jose. My kids and their friends live in this community. Every time i go to a customers house, their children could be friends with my children so its important to me. One of the most rewarding parts of this job is after you help a customer, seeing a smile on their face. Together, were building a better california. This is the scene of the congressional inquiry into benghazi. Hillary clinton clearly in the hot seat. We will return to that once we get information from either side. We are up 186 points on the dow. Stocks higher. Building on clearly a 5 gain for the s p 500 in less than a month. Catching a big rally from europe as mario draghi signals it may expand qe in december or move closer to negative Interest Rates. Richard fisher is the former dallas fed president. He joins us now. Mr. Fisher, welcome back to the program. A lot of people will be surprised that mario draghi has made such a clear signal that when they get fresh data in december, they will look again at qe in europe and what does that mean to investors here and to those in the feds . This isnt new for mario draghi. He did it at his last press conference and the one before that. He is very market savvy. He is talking up the market, talking down rates. It doesnt necessarily mean they will do more q. E. He has a tremendous effect on the marketplace. If you look at the tenyear german bond, though, it is two basis points higher than the last time he made similar comments. The market is basically roughly the same in terms of the equity markets. I dont think it means a lot as far as the United States is concerned. The real issue is, what does the fed do if it does anything between now and yearend. We have received so many mixed signals on that front. They meet and conclude next wednesday. What is your judgment now. One of the reasons we are rallying, we have rallied in the last month. Some people are putting off Interest Rate rises until the spring of next year. Why are you laughing . I think they have been sending mix signals that become a source of uncertainty in the marketplace. I hear interest in those that i speak to all over wall street. The Large Fund Managers are so used to uncertainty coming out of the rest of washington on the fiscal side. Now, the fed has become a source of uncertainty. I dont think that is healthy. At one point, even after september, you had the chair, the vice chair and then you had several Bank President s come out and say that we still will raise rates by yearend. Recently, two of the governors came out and said, we wont. I worry. The image on the street which i dont agree with is that janet yellen has lost control of her committee. I hope they can resolve this by some kind of statement in october to make clear one way or another what their intentions are. Importantly, beyond whether she can keep everybody on the same page, obviously, it is a deeply divided committee. That is quite clear at this stage. Why do they not come forward and say, i give you no Interest Rate rise. Were not going to raise next month either, because we are not sure about the economy. Why do they have to keep that sword of dam ma clees ever present when nobody believes they are going to do it in the market. No Interest Rate rises. Go rally, go create jobs. Why dont they do that . They deep stressing that they are data dependant. The data is actually quite good. Since the september meeting, we have had a mixed bag of data. The unemployment claims that just came out are in a nice channel downward. Yet, you will get a couple numbers that are disruptive. So perhaps the way that the fnc has expressed themselves. If you try to finetune things a little bit too much, even though the fed has futures in september, for example, apply to low probability to their moving, almost every funds manager, almost every operator on the street that i spend time with and everyone that you would know, simon, actually expected they might take that first step. It will still be hyper accommodating Monetary Policy even if they move 25 basis points. There seems to be a sense, what i am picking up, not what i am arguing my is he, thself, that is in charge haof the fed rathe than the fed controlling the pace for the street. Thats a regrettable occurrence. They are not operating in a vacuum. We just had treasury postpone a twoyear auction. Will you cut them some slack if they dont move in october because of uncertainties in the debt ceiling . This is another variable. The fiscal authorities, lets go down to the basics. I was part of this team. The monetary authorities have done as much as they possibly can. The fiscal authorities have failed us over and over and over again. You have to have one compliment the other. Even mario draghi, when he speaks about his issue, which is dealing not with one sort of happenless physical authority but with so many. They have to do their part. Our fiscal authorities have failed us. Richard, you are a member of the great and the good. You will have connections across politics. What do you do . You are of that generation. You were there. You were in the room. When next economies turn down, a lot of people say the politicians are going to have to step up to the plate. Are you aware behind closed doors of any meaningful conversation in either political side but next time, we are ready to slash taxes or spend hugely, because Monetary Policy will be completely impotent goes the argument. I do believe that Monetary Policy has exhausted itself. I think it is up to the political authorities an the fiscal authorities and do their part. Do i think they can do it . God only knows. Paul ryan is obviously the most capable in terms of understanding the numbers. Im not advocating, republican or dep krmocrat. You might have some leadership depending on how the right Wing Coalition of the Republic Party is willing to play ball. They have to understand they are the problem. It is not the central bank of the United States. Richard fisher. We are still waiting for Hillary Clinton to be sworn in at the benghazi hearing on capitol hill. We will bring you her testimony live as soon as that begins. Dow up 200 points. Back after a quick break. Hillary clintons hearing on benghazi is underway on capitol hill. Lets bring in ben white. Good to see you again. Good morning. Good to see you, carl. How does the committees tone change based on whats happening in the last few weeks . Hillary clinton has more of a leg to stand on when she criticizes the panel is entirely political given that Kevin Mccarthy, the woodbe House Speaker who had to abort his bid because he said this committee has brought down her poll numbers. She is a bit on the defensive. You saw that congressman gowdy was attempting to justify this panel. She has to be very careful. The underlying investigation is very serious. She will look at opportunity to score points against this committee as political but she has to take their questioning quite seriously. Do you believe the timing of bidens announcement plays in the optics here . I dont know that it plays into the optics about you creates the ecosystem for her that things are moving in her direction. Perhaps her biggest threat to the nomination has now been removed and joe biden being out of the race, she has an opportunity to try to put to bed some benghazi questions and make the committee look like it is trying to score political points against her. I think americans are somewhat tired of all the bitter partisanship in washington. If she comes out of this hearing looking like a hero and knocking down republicans, that is another chip in her favor. She could easily also lose her cool in this thing and get really angry at republicans. It is no the a slamdunk for her by any means. We have seen that happen before. Those sound bites live on. As it relates to the email specifically, polls tend to show that americans, as you say, are a little tired of hearing about it. They also show they dont believe she has been completely honest about it. So whats her play . I think her play is to try to be as forthright about the emails as possible, to say, as she has in the past, it was a mistake to set up this server and she should have handled it differently and to stick closely to her argument she did not knowingly handle any classified emails. She needs to be contrite and steely and firm at the same time. Thats a tough needle to thread. You are right that the polls show people kind of stick to the email story and she has an opportunity here to get some sound bites on the evening news where she really pushes back hard on that and that might be helpful to her. She also has to can aknowledack made some mistakes. I am not sure what you read into the face of Hillary Clinton at the moment. It depends on what side of the political spectrum you are on. A poll suggested 54 of democrats feel that this committee is about discrediting her. It is a primary objective at the moment in winning the nomination to play to them. In other words, if she does lose her cool, which you suggested she shouldnt do, ultimately, could that benefit her given how the Political Landscape does seem to have shifted. It would thrill a lot of democrats if she came back very aggressively and pushed back against the partisan questions against republican. She is going to get the democratic nomination almost certainly unless something catastrophic happens. She cant completely lose it when you are talking about the death of american lives in libya. She needs to take that very seriously. Democrats will be excited if she goes on the offensive. She will look for opportunities to do that, take the offensive and answering substantive questions with substance. Just for a quick turn while i have you, the reports seem to indicate that support is beginning to gel around ryan. Is that the general read . The hard right conservative republicans are sort of grudgingly accepting the fact that he will bespeak speaker of the house. The path for him to the speakership is pretty clear right now. He has the votes to get the speakership. It would take a major change in the trend in d. C. For ryan not to be the next speaker. It looks like thats going to happen. Where does that then leave us on the debt ceiling and the various deadlines. Ryan gets the speakership and originally, we will have to deal with corralling republicans. Whether boehner can get something done. The time frame is very short. He wants to get out by november 1. It may fall to ryan. I think maybe the high watermark for him that he got this step of endorsement from the Freedom Caucus and as soon as he tries to get them to vote for something, it might be hard. You talked about markets starting to react to the debt problem. I think they will raise it. The perception is that paul ryan holds a lot of the cards here. Could he persuade john boehner to stay on . I think he could. If he says, i need a clear deck. I need these crises taken off may plate before i take the job, i think boehner will be very open and warnts to do it. He, himself, has come out and said, i cant see a clean debt limit bill passing, which is the traditional thing for them to go. It may be on boehner to get that done. He may have to stick around a little longer to make it happen. I think we are about to get to Hillary Clinton speaking. Stick around. Stay with us. Lets take a listen. At our diplomatic compound and later at the cia post in benghazi libya on september 11th, 2012. Took the lives of four brave americans. Ambassador Chris Stevens, sean smith, Lynn Daugherty and tyrone woods. Im here to honor the service of those four men shall the courage of the Diplomatic Security agency and the cia officers risked their lives that night. The work their colleagues do every single day all over the world. I knew and admired Chris Stevens. He was one of our nations most accomplished diplomates. Chris mother liked to say he had sand in his shoes. He was always moving, always working, specially in the middle east, that he came to know so well. When the revolution broke out in libya, we named chris as our envoy to the opposition. There was no easy pay to get him into benghazi to begin gathering information and meeting those libyans who were rising up against the murderous dictator gadhafi. He found a way to get himself there on a greek cargo ship just like a 19th century american envoy. Hihis work was very much 21st century hardnosed diplomacy. It is a testament to the relationships that he built in libya that on the day following the awareness of his death, tens of thousands of libyans poured into the streets in benghazi. They held signs reading thugs dont represent benghazi or islam. Sorry, people of america. This is not the behavior of our islam or our prophet. Chris stevens, a friend to all libyans. I didnt have the privilege of meeting sean smith personally. He was a valued member of our state department family. He was an Information Officer who served in pra tore ya, baghdad, montreal and the haig. Tyrone woods and Glen Daugherty worked for the cia. They were killed by mortar fire at the cias outpost in benghazi zi, a short distance from the diplomatic compound. They were former navy s. E. A. L. S and trained paramedics with distinguished records of service in iraq and afghanistan. As secretary of state, i had the honor to lead and the responsibility to support nearly 70,000 diplomates and Development Experts across the globe. Losing any one of them as we did during my tenure was deeply painful for our entire state department and usai. D. Family. For me, personally. I was the one who asked chris to go to libya as our envoy. I was the one that recommended him to be our ambassador to the president. After the attacks, i stood next to president obama as marines carried his casket and those of the other three americans off the plane at Andrews Air Force base. I took responsibility. As part of that, before i left office, i launched reforms to better protect our people in the field and help reduce the chance of another tragedy happening in the future. What happened in benghazi has been scrutinized by a nonpartisan, hardhitting accountability review board. Seven prior congressional investigations, multiple news organization, and, of course, our Law Enforcement an intelligence agencies. Today, i would like to share three observations of how we can learn from this tragedy and move forward as a nation. First, america must lead in a dangerous world. Our diplomates must continue representing us in dangerous places. The state department sends people to more than 270 posts in 170 countries around the world. Chris stevens understood that diplomates must operate in many places where our soldiers do not. Where there are no other boots on the ground and safety is far from guaranteed. In fact, he volunteered for just those assignments. He also understood we will never prevent every act of terrorism or achieve perfect security and that we inevitably must accept a level of risk to protect our country and advance our interests and values. And make no mistake, the risks are real. Terrorists have killed more than 65 american diplomatic personnel since the 1970s. More than 100 contractors and locally employed staff. Since 2001, there have been more than 100 attacks on u. S. Diplomatic facilities around the world. But if you ask our most experienced ambassadors, they will tell you, they cant do their jobs for us from bunkers. It would compound the tragedy of benghazi if Chris Stevens death and the death of the other three americans ended up undermining the work to which he and they devoted their lives. We have learned the hard way when america is absent, specially from unstable places, there are consequences. Extremism takes root. Aggresors seek to fill the vacuum and security everywhere is threatened, including here at home. Thats why chris was in benghazi. It is why he had served previously in syria, egypt, saudi arabia, and jerusalem during the second intafada. Nobody knew the dangers of libya better. A weak government, extremist groups, rampant instability. But chris chose to go to benghazi, because he understood america had to be represented there at that pivotal time. He knew that Eastern Libya was where the revolution had gun and that unrest there could derail the countrys fragile transition to democracy. If extremists gained a foothold, they would have the chance to destabilize the entire region, including egypt and tunisia. He also knew how urgent it was to ensure that the weapons gadhafi had left strewn across the country including shoulderfired missiles that could knock and airplane out of the sky did not fall into the wrong hands. The nearest israeli airport is just a days drive from the libyan border. Above all, chris understood that most people in libya or anywhere reject the extremist argument that violence can ever be a path to dignity or justice. Thats what those thousands of libyans were saying after they learned of his death. He understood there was no substitute for going beyond the Embassy Walls and doing the hard work of building relationships. Retreat from the world is not an option. America cannot shrink from our responsibility to lead. That doesnt mean we should ever return to the goitalone Foreign Policy of the past, a Foreign Policy that puts boots on the ground as a first choice rather than a last resort. Quite the opposite, we need creative, confident leadership that harnesses all of americas strengths and values, leadership that integrates and balances the tools of diplomacy, development and defense and at the heart of that effort must be dedicated professionals like Chris Stevens and his colleagues, who put their lives on the line for a country, our country, because they believed as i do that america is the greatest force for peace and progress the world has ever known. My second observation is this. We have a responsibility to provide our diplomates with the resources and support they need to do their jobs as safely and effectively as possible. After previous deadly attacks, leaders from both parties and both branches of government came together to determine what went wrong and how to fix it for the future. Thats what happened during the Reagan Administration when hezbollah attacked our embassy and killed 63 people, including 17 americans. Then, in a later attack, attacked our Marine Barracks and killed so many more. Those two attacks in beirut resulted in the death of 258 americans. It is what happened during the Clinton Administration when al qaeda bombed our embassies in kenya and tanzania killing more than 200 people, wounding more than 2000 people and killing 12 americans. And it is what happened during the Bush Administration after 9 11. Part of americas strength is we learn, we adapt, and we get stronger. After the benghazi attacks, i asked ambassador thomas pickering, one of our most distinguished and longest serving diplomates along with admiral mike mull en, the forme hair chairman of the joint chiefs of staff appointed by president george w. Bush to lead an account ability review board. This is an institution that the congress set up after the terrible attacks in beirut. There have been 18 previous accountability review boards. Only two have ever made any of their findings public. The one following the attacks on our embassies in east africa and the one following the attack on benghazi. The accountability review board did not pull a single punch. They found systemic problems and management deficiencies in two state department bureaus. The review board recommended 29 specific improvements. I pledge that by the time i left office every one would be on the way to implementation and they were. More marines were slated for deployment to highthreat embassies. Additional Diplomatic Security agents were being hired and trained. Secretary kerry has continued this work. But there is more to do. No administration can do it alone. Congress has to be our partner as it has been after previous tragedies. For example, the accountability review board and subsequent investigations have recommended improved training for our officers before they deployed to the field. Efforts to establish a modern joint Training Center are being held up by congress. Men and women who serve our country deserve better. Finally, there is one more observation i would like to share. I traveled to 112 countries as secretary of state. Every time i did, i felt great pride and honor representing the country that i love. We need leadership at home to match our leadership abroad. Leadership that puts National Security ahead of politics and ideology. Our nation has a long history of bipartisan cooperation on Foreign Policy and National Security, not that we always agree, far from it. We do come together when it counts. As secretary of state, i worked with the republican chairman of the Senate Foreign Relations Committee to pass a landmark Nuclear Arms Treaty with russia. I worked with the republican leader, senator Mitch Mcconnell to open up burma, now myanmar to change. I know it is possible to find common ground. We should debate on the basis of fact, not fear. We should resist denigrating the patriotism or loyalty of those with whom we disagree. So im here despite all the previous investigations and all the talk about partisan agendas. Im here to honor those we lost and to do what i can to aid those who serve us still. My challenge to you, members of this committee, is the same challenge i put to myself. Lets be worthy of the trust the American People have bestowed upon us. They expect us to lead, to learn the right lessons, to rise above partisanship and to reach for statesmanship. Thats what i try to do every day as secretary of state. It is what i hope we will all strive for here today and into the future. Thank you. Thank you, madam secretary. I did not cut off your opening at all, nor would i think about doing so, because the subject matter is critically important and you deserve to be heard. I would just simply note that, and i dont plan on cutting off any of your answers. Our members have questions that we believe are worthy of being answered. So i would just simply note that we do plan to ask all of the questions and whatever precision and con significancision you ca the answers without giving short shift to any of the answers would be much appreciated. With that, i would recognize the gentleman from illinois, mr. Roscoe. Good morning, secretary clinton, Jake Sullivan your chief Foreign Policy adviser wrote a ticktock on libya on august 21st, 2011. This was the day before the rebels took trim lee. He titles it secretary klein tons leadership on libya, where he describes you as a critical voice and the public face of the u. S. Effort in libya and instrumental in tightening the noose around gadhafi and his regime. That didnt come easy, because you faced considerable opposition. I can pause while you are reading your notes from your staff. One thing at a time, congressman. Thanks. That didnt come easy, did it, that leadership role and that public face and so forth that i just mentioned . This is an issue that the committee has raised. It really boils down to why were we in libya . Why did the United States join with our nato and european allies, join with our arab partners to protect the people of libya against the murderous planning of gadhafi . Why did we take a role alongside our partners in doing so . There were a number of reasons for doing that. I think it is important to remind the American People where we were at the time when the people of libya, like people across the region, rose up demanding freedom and democracy, a chance to chart their own futures and gadhafi threatened them with genocide, with hunting them down like cockroaches. We were then approached by, with great intensity, our closest allies in europe, people who felt very strongly, the french and the british, but others as well. They could not stand idly by and allow that to happen with the unintended consequences. We did not immediately say yes. We did an enormous amount of Due Diligence in meeting with not only our europe and arab partners but also with those who were heading up what was called the Transitional National council and we had experienced diplomates who were digging deep into what was happening in libya and what the possibilities were. Before we agreed to provide very specific, limited help to the european and arab efforts. We did not put one american soldier on the ground. We did not have one casualty, and, in fact, i think by many measures, the cooperation between nato and arab forces was quite remarkable and something that we want to learn more lessons from. Secretary clinton, you were meeting with opposition within the state department. From very senior career diplomates. This he were saying it was going to produce a negative for u. S. Military intervention. For example, in a march 9th, 2011 email discussing what has been known as the libya options memo, ambassador steven mall, then, the executive secretary of the state department, in one of the top career diplomates said this, in the case of our diplomatic history, when we have provided material or tactical military support to people seeking to drive their leaders from power, no matter how just their cause, it has tended to produce negatives for our interests over the longterm in those countries. Now, well come back to that in a minute. You overruled those career diplomates. They report to you and you are the chief diplomate of the United States. Go ahead and read the note if you need to. I have to im not done with my question. Im just giving you the courtesy of reading your notes. Thats all right. They were pushing back but you overcame those objections but then you had another big obstacle, didnt you . That was the white house, itself. There were senior voices within the white house that were opposed to military action, vicepresident biden, department of defense, secretary gates, the National Security council and so forth but you persuaded president obama to intervene militarily, isnt that right . Well, congressman, i think it is important to point out there were many in the state department that believed it was very much in americas interest and in further ans of our values to protect the libyan people and join with our european allies and arab partners. The ambassador who had to be withdrawn from libya because of direct attacks and direct to his physical safety, ambassador krets, was a strong advocate to assist the europeans and the i wouldnt say otherwise, and there were varying points of view about it. At the end of date in large measure because of the strong appeals from our european allies, the arab league passing a resolution urging that the United States and nato join with them. We did decide in recommending to the president that there was a way to do it. The president i think clearly had a limited instruction about how to proceed. The first planes that flew were french planes, and i think what the United States provided was some of our unique capacity, but the bulk of the work militarily was done by europeans and arabs. I think you are under selling yourself. You got the state on board. You had the president and Vice President biden and the National Security council, and you had another obstacle then, and that was the United Nations. You were able to persuade the russians, of all things, to abstain and had you not been successful and the Security Council resolution 1973, wopt have passed because the russians had a veto. You overcame that as well, right . Congressman, it is right that after doing my Due Diligence and reviewing the various options and the potential consequences of pursuing each of them, i was in favor of the United States joining us with our european allies and our arab partners and i also was in fare of obtaining u. N. Security Council Support because i thought that would provide greater legitimacy. In that, of course, our ambassador to the u. N. Was successful in making the case to her colleagues. This was at the behest of and the direction of the president once he was presented with the various arguments. I have been in a number of situation room discussions. I remember very well the very intense conversation over whether or not to launch the navy seals against the compound we thought that might house osama bin laden. There was a split in the advisors around the president. Eventually the president makes the decision. I supported doing what we could to support our european and arab partners in their oefrt a humanitarian basis, strategic basis to prevent gadhafi from launching and carrying out massachusetts kers. There was another obstacle that you overcame, and that was the arabs themselves. Jake sullivan sent you an email, and he said this. I think you should call. It will be painful ten minutes, but you will be the one who delivered arab support, and thats an email of march 17th to you asking you to call the secretary general of the arab of the arab league. To put this in totally, you were able to overcome opposition within the state department. You were able to persuade the president. You were able to persuade the United Nations and international community. You made the call to the arabs and brought them home. You saw it. You drove it. You articulated it. You persuaded people. Did i get that wrong . I was the secretary of state. My job was to conduct the diplomacy, and it consisted of a long series of meetings and phone calls both here in our country and abroad to take the measure of what people were saying and whether they meant it. We had heard sometimes before from countries saying, well, United States should go do this. When we would say, well, what will you do in support of us . There was not much coming forth. Toiptd make sure they bore the bulk of the load. And they did. What the United States did was use our unique capacities, as i recall, if you wanted it in monetary terms. Slightly over 1 billion or less than what we spent in iraq in one day is what the United States committed. We ask our allies to do a lot for us. They had asked for us to help them. Actually, you summed it up best when you emailed your senior staff and you says said its good to remind ourselves and the rest of the world that this couldnt have happened without us, and you were right, secretary clinton. Our libya policy couldnt have happened without you because you were its chief architect. I said were going to go back to the warning about using military for regime change, and he said longterm things werent going to turn out very well. After your plan, things in libya today are a disaster. I yield back. Well have more time to talk about this because thats not a view that i will ascribe to. Recognize the gentleman from maryland. Thank you very much. Madam secretary, again, i want to thank you for being here. I want to start with the number one question that republicans claim has not been answered in eight previous investigations. Yesterday the chairman wrote in that is Hillary Clinton in front of the select committee on benghazi. An Opening Statement that is essentially a remembrance of chris stevened, a statement on the importance of american diplomatic work, and more importantly, the risks that come along with it. That led right to the first line of questioning, which essentially has been why the politico was about. The state department and clintons own assessment of those very risks. Its a long day ahead, as you have noted, but did they lay a glove on her . They didnt. In her openings statements. Theres a lot to unpack there. You said she humanized it, talking about those that lost their lives. She talked about them knowing the risks going if. She talked about previous embassy attacks under previous administrations. I think she set herself up for a pretty solid day on the hill there with that, and obviously he was going after her for her argument in favor of libyan intervention. She said i was secretary of state. I made the case. The president ultimately made the call. I do not think, at least so far in this very early going, that she has no one has laid a glove on her, and shes joked about the fact that she was able to do two things at once, when he said he would give her a chance to look at her notes. She laughed at him and said i can actually look at my notes and speak to you at the same time. So far clinton is doing fine. She took pains to note, speaking of all the risks in libya that stevens himself was aware of those risks. Despite those risks, no mention yet of the private server or the emails, although over the course of eight hours, i imagine that is going to come up, right . I imagine it will come up. Theres no way theyll let that go. Its a little difficult to tie all these things together, but there will be lines of questioning on that front. The installation of benghazi, and why wasnt there more security . Shes said in the past that those requests for security did not reach her levels, and after the fact she put into place efforts to increase security. There will be a lot of questions about security, and there will be questions about the cause of the attack, the First Response that it was the result of anger over this antimuslim film. Other investigations have found that that was what they thought at first, and then they learned that was wrong. Shell have to respond for that. Shes meticulously prepared. She comes across as very president ial. Republicans are going to have a hard time, i think, rising to her level on this. They may do it. She may get tired. She may lose her patience. Shes clearly prepared today. Appreciate the time today, ben. Thank you so much. As we take one more quick listen to Hillary Clinton in front of the committee. To taking aggressive measures to insure our personnels and facilities were as safe as possible. Certainly when the nonpartisan critical report from the accountability review board came forward, i took it very seriously. Thats why i embraced all of their recommendations and created a new position within the Diplomatic Security bureau specifically to evaluate high risk posts. I think its important also to mention, congressman, that the Diplomatic Security professionals who were reviewing these requests along with those who are serving in war zones and hot spots around the world have great expertise and experience in keeping people safe. If you go on cod els, they are the ones who plan your trip to keep you safe. They did that for me. Most importantly, thats what they do every day for everybody who serves our country. I was not going to second guess them in keeping people safe for theirs. The changes that were recommended by the accountability review board are ones that we thought made sense and began quickly to