Ahead taking into account that uncertainty about the economy will dictate future policy decisions. Janet yellen we are not behind the curve, my judgment is that we are in a good path to reaching our objectives but the outlook is uncertain. We recognize that there are many sources of uncertainty affecting the outlook and we will have to adjust our thinking as things youve all. As things evolve. Charlie welcome. What is the significance of this . The fed is a knowledge and the fed the the economy is doing better, unemployment down, a nineyear low, inflation is starting to rise, Something Else the fed wants to see which will encourage businesses to invest, maybe people have to give more raises and the fed is taking a step in the direction of normalization, what caught them offguard as every three months the fit looks at its forecast for growth and inflation and how many rate hike whitehead. Everyone expected a quarterpoint hike on this very special meeting but they did not expect the fed to move from two hikes for 2017 to three. That is what boosted bonds yield and boosted the dollar. Charlie why now . They have been talking about this for a while, we thought they would do it but held back perhaps looking at economic factors perhaps now more positively. In september they did not move, they held off, in november it was too close to the election and they wanted to get cap the election uncertainty. They got past yesterday but created a new uncertainty, donald trump is now heading for the white house and there is some kind of physical moves and janet yellen was asked about that. The fed was taking a step they have known that they needed to take. She said they do not know what donald trump will do and they cannot make policy based on that but some members look at the possibility of more stimulus, more spending and tax cuts and that may have made them say we need to give more rate hikes next year. Charlie on wall street and within the financial community, will this be looked upon with enthusiasm or will there be some people who say no, this is not the right time. Banks, interest margins, helps them make money and the bond market was are ready turning around with yields rising, the more to market will hit some consumers but broadly a lot of businesses and investors would like to see normalization. A want to see rates move higher, a healthy sign for the economy. 2017 . Might they move and the key rate could go from , only a. 4 , now at. 5 small difference because it would have ended the year on the previous forecast at 1. 1 . The bigger question is where dupont years ago bond yields go . We will see a move up and Mortgage Rates and are already majority of economist that they because this is boosting the dollar that will hurt exporters, it will put a brake on some parts of the economy and that is why the fed said they will go slowly and go meeting to meeting to decide what to do. Next, the former secretary of defense and National Security advisor to a number of president s talks about Rex Tillerson and other appointments or nominees by president elect trump. Charlie we continue with donald is selectinge he for important positions at his office. We talk about Rex Tillerson, he could potentially base a tough confirmation battle for secretary of state, senators include republicans have raised concerns over his ties with russia and the countrys leadership. The nomination comes as lawmakers prepared to investigate a russian Cyber Campaign aimed at disrupting the u. S. President ial election. The cia reportedly concluded that russia intended to tip the election in Donald Trumps favor. Joining me now is a man who recommended tillerson, bob gates has served eight president s over a five decade. Period including secretary of defense. And we areriend pleased to have him, welcome and happy holidays. Mr. Gates thank you and to you too. Charlie let me begin with tillerson, after all that you had said, because of your reputation for sound judgment, i assume it was that you are invited to come meet you president elect, is that what happened . Mr. Gates i had met the previous day with his National Security advisor, general flynn to talk about the process for decisionmaking and how the National Security council works. After that meeting, i received a call that they would like for me to see the president elect the next day. Charlie he stayed overnight in new york and went to see him, tell us about the conversation as much as you can. Mr. Gates as you can imagine, given some of the things i have said, it was a little awkward at first. Will say he was very gracious we moved beyond that and had a wide ranging about both policies and about people. Charlie you are not the only person who has had harsh range during the campaign. The president elect has talked to, just call mitt romney. Mr. Gates that is for sure, i said he will be the president , and his success in National Security matters especially is vitally important to all of us. My view has been anybody who can help him in this process should be willing to do so. Charlie how did tillerson come up . Mr. Gates he asked me for my personal thoughts on several of the people that had been mentioned as candidates for secretary of state. Several ofe them had reached out to me and i had urged each of them to serve if asked. If you have a blank slate, who would you suggest . Tillersons name. I got to know him years ago through our mutual involvement in and leadership of the boy scouts. We spent a lot of hours after scouting events sitting around with a drink after dinner talking about International Affairs and u. S. Politics and what is going on around the globe. I came away with a feeling that wrecks have a lot to rex had a lot to offer. Because he was not a traditional candidate he might have been overlooked. Charlie i want to stay with that, i want to make note of the fact that your firm that you are has aner in, also consulting relationship occasionally with exxon mobil . Mr. Gates they are one of our many clients but as i have said, my relationship with rex goes back to well before that. It is tied to boy scouts did charlie why do you believe that he would make a good secretary of state . Other than the fact he has led a great, huge multinational with business interests around the globe and knows a lot of world leaders. Mr. Gates for one thing his the knowledge about a variety of parts of the world, from indonesia to latin america to the middle east, russia, and other places. That she has negotiated with leaders of the countries in all of these places. He has gotten to know how these countries operate, how their leaders operate and has insight into how they think. Because he has negotiated with them. The truth is i think at his been rare for a prospective secretary of state to have such a lengthy record of negotiating with Foreign Governments and foreign leaders. I think that is an important asset but it is his knowledge of these countries, he will not need a briefing book to tell them who is in charge and what country or where that country is, he knows all of this to start with. There is another piece of this that i think is important and that is the representational role of the secretary of state. I think that people do not think of this when it comes to rex but and andeen him stand up prop do in front of 1000 or 1500 volunteers in the scouting movement and talk with great passion about america and our values, about patriotism and what we stand for as a country. Will be a next one representative of the United States and a superb negotiator for the United States. Charlie when you became secretary of defense, you brought to that job broad experience in government. National security advisor, cia director, you had developed a theory of how the world works. Does Rex Tillerson have a theory of how the world works in a geopolitical sense . Mr. Gates i think he absolutely does. I do not think you survive much less succeed with a Huge InternationalCompany Unless you have some understanding of how the world works. I think he brings a realism to it frankly that people who may have come out of academic environment or a law firm or Something Else would not have. He has been out there in the real world. I think that is an experience that will serve the country well. Charlie when president bush suggested that he had met Vladimir Putin and you know where im going when he suggested he had met vladimir he and he saw a man looked into his eyes and saw a man that had a soul or something to that effect, you were quick to say that you had looked into Vladimir Putins eyes and saw a cold stone killer. Mr. Gates that is an accurate reflection. Charlie how does Rex Tillerson when he looks at Vladimir Putin, what does he see . Mr. Gates i have not asked him that question. Let me be very clear every ceo of an international of a company in the United States that does business internationally wants to have a friendly relationship with the governments and leaders of countries in which they are doing business and that does not matter whether it is a Big Oil Company or boeing or hundreds of other companies. I would make the case that being friendly is different than being friends. Interesthat rex had an i think he dealt in a businesslike fashion with Vladimir Putin. I think what let me put it in a different context, charlie one of the challenges facing the next president is how do you thread the needle of stopping the downward spiral in u. S. Russia relations that is potentially quite dangerous . At the same time, push back against putins aggressiveness and bullying and general thuggery. Having somebody who understands where putin is coming from and who knows him and how he negotiates, how he deals with problems is a big asset. As you begin to develop strategies for accomplishing what i just described. I think it is mistake to think because Rex Tillerson successfully did business in russia that he is best friends with Vladimir Putin. That is a completely false narrative. Charlie and if he was against sanctions against russia, you was suggest that that is because simply he thought sanctions were a bad idea or he thought it wasnt a song desk in a sans interest to oppose sanctions exxons interest to oppose sections . Mr. Gates i suspect it was both, he was looking out for exxons interest and his view of what works and what does not work. Tillersonat once rex lists his hand to take the oath , his only objective is going to be to do what is in the best interest of the United States. , the former baker secretary of state and chief of staff and secretary of the treasury, said to me this morning that the essential thing the most essential thing is what is the relationship of a secretary of state to the president. Does he have the president s confidence . Does zero play the president s ll . Vision weel can we determine whether Rex Tillerson has that . Wisdom so because he appointed him. Is gates i do not think it violating confidence, as i told the president elect, when it comes to choosing the secretary of state, the rest of the world, in addition to the congress and others, had to know that the secretary of state had the complete trust and confidence of the president. That when the secretary of state speaks he is speaking for the president and others can take that to the back. Take that to the bank. I believe the president elect had that in mind when he began to think about Rex Tillerson for this job. The irony is the example i used was the relationship between jim baker and the first president bush because everybody around the world knew that when jim baker spoke as secretary of state, he was speaking for george h. W. Bush. Charlie what questions would you ask if you were in the senate and asked to confirm Rex Tillerson . Mr. Gates i think clearly they will need to explore their concerns about the relationship with russia. I think mr. Tillersons answers will is somewhere along the lines of what i have described. And a reassurance that as secretary of state he will be acting only in the interest of the United States. Have itt they ifld be useful for everyone that hearing included discussions about what kind of a strategy do you think we should follow toward russia . How should we deal with this country that we have to have a Good Relationship with in some respects because we both have these gigantic Nuclear Arsenals and at the same time we have a lot of behavior on the part of the russians that is a serious problem for us . How do you square that circle . I think the senators will want to have some confidence that there is a solution. And ie in the end, you both know that Foreign Policy is run out of the white house, isnt it . Mr. Gates it depends on the president. In some cases it is and in some was run outnot, it of the white house under president nixon. On the other hand, jim baker and George Shultz play significant roles in shaping Foreign Policy for president first president bush and president reagan. I think it depends on the relationship between the president and the secretary of state. And the role of the National Security advisor and frankly it seems to me that based on what i read that the president elect is somebody who, once he has confidence in somebody, delegates a good bit to them. I would hope that would be the case with the secretary of state. One of the things, factory, charlie, that encourages me is is, the both jim matt nominee for secretary of defense, and Rex Tillerson, the president elect has reached out to two very strong, independent minded individuals who i have confidence will tell the president exactly what they think and what they think he needs to hear. I think his willingness to have this those kinds of people around him and strong voices who will n be intimidated or not be rolled is a very important thing. Charlie what do you think about the Lieutenant General plan, the National Security advisor nominee . Mr. Gates i will state my personal experience, i do general plan when he was an Intelligence Officer, when he was the Intelligence Officer for the chairman of the joint chiefs and when he was general mcchrystals primary Intelligence Officer. Goods a very, very Intelligence Officer, he wrote an article at the end of 2009 on the deficiencies of our intelligence collection in afghanistan that i thought was right on the money. I have had no contact with him 2011 i left in june of until i met with him in new york and our conversation in new york was very thoughtful and very serious. He was taking a lot of notes in terms of how the nsc should operate and i can only speak to those experiences that i have had with him personally. Charlie you read a lot and know there is controversy about conspiracy theories and his belief that the cia is the has become politicized. Mr. Gates one of the bank that has been my experience over the years is that peoples attitudes and views towards things change quite a bit when they actually have responsibility sitting on their shoulders. There are a lot of people who say things during campaigns and when they are not in government that they have a different approach once they have a real responsibilities. Charlie do you think that is true for the president elect . Mr. Gates based on the sites i have seen so far that is my hope. For example, i was very encouraged when he came out of his meeting with general mattis and he talked about torture and waterboarding and so forth. He comes out and says that after talking to general mattis and hearing his view on that, he changed his mind. I took heart from that. Charlie what about the cia designate, do you know congressman pompeo . Talked on no, we have the telephone, he reached out to me which i thought was a nice gesture on his part, he comes from my hometown of wichita, kansas. Has awould say that he challenge in front of him at cia can out how best support the president in a way that is useful to the president. Reports tofor the president , not vice versa. Cia has to adjust the way it interacts with every president to meet the needs of that president. For example, president eisenhower was not much of a reader, he prefers the information in briefings. Pompeo and the rest of the agency will have to figure out how do we make this enormous asset it is american intelligence and cia available and useful to the president and how do we get to him the information he needs to know in a way that is easy for him to take it in . I think they have to be very flexible in the way they approach that. Charlie what do you think the cia and other intelligence agencies are saying about russians trying to meddle by hacking our Computer Systems and metal in american elections . The second question is do you believe that the russians hacked in order to promote the candidacy of one person over the other . Mr. Gates first of all, i do not have access to classified information, all i know is what i have read in a variety of newspapers and heard outside of government. Here is what i believe, i believe the evidence seems to be overwhelming that the russians that hackers, under the auspices of the russian into sites did hack in the United State