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MCDOWELL: Blake, thank you so much for that report. Blake Burman in Washington, of course, Happy New Year, Blake. Let's bring in former house majority leader and former Texas congressman, Tom DeLay. Congressman, good to see you this morning. What's your reaction to this kind of -- want to call it a game of semantics if you will but -- a clear divide between what even many Republicans are saying in congress, and what you're hearing from President-elect Donald Trump.

TOM DELAY, FORMER TEXAS CONGRESSMAN: My first -- good morning, Dagen. My first question to the Obama administration is what have they done about cyber hacking over the past, past few years? Little or nothing that we know of, all of a sudden they look at this and want to take the politics with their base. And the president -- puts him I think some pretty weak sanctions on the Russians, and yet they're still questioning and doubt whether the Russians did it or not. It doesn't matter, they didn't influence the election. The point is that we have a rogue president out there doing things in the last few days, last few weeks before he leaves office, it's just outrage and undermines the American people.

MCDOWELL: But you do have Republicans in the senate, the vast majority of them believe that Russia and very senior people in the Russian government based on the intelligence that they've seen was behind the hack into the DNC, and you have a Senator John McCain, Blake Burman was talking about that. Senator Lindsey Graham as well think that this sanctions need to go even further. Graham wanted to wait on sanctions until the new congress and the president-elect is in office, but you don't hear that similar talk from Donald Trump, at least not yet. And he's saying that he knows something about this hacking that he's going to reveal in the next couple days.

DELAY: Well, I think he's taking the right approach. He's finding out the truth. Remember that the heads of these intelligence organizations are all political appointees from -- of President Obama. So they're going to go along with the political effort that Obama is doing. I applaud the president-elect for taking his time really looking in and questioning what this is all about. The president took an action, and we still have doubts as to whether the facts are known, and who is the real culprit. And, frankly, whatever the president did, Putin is just making a joke out of it, and embarrassing our president and our country.

MCDOWELL: I want to get Morgan Ortagus in here because the heads of some of these agencies are political appointees. But when you're talking about people actually doing a hard-core intelligence work, those are not -- they weren't there a long time but they're not political appointees, and we -- these are people who are charged with helping protect the homeland and protect the United States. So when you get this divide between the intelligence community and the new president coming in it can become problematic.

MORGAN ORTAGUS, MAVERICK PAC CO-CHAIR: Well, Absolutely. And it doesn't have to be, Dagen, you know, you're either a Russian apologist or, you know, you're tough on Russia. The Trump administration can look at the new relationship coming in with Russia, while still acknowledging that they're not promoters of freedom and democracy by any means. While also we have to remember this is the economy that's about the size of Spain, and Putin is trying to punch about his weight and play internationally the way the Soviet Union used to play. So I think clearly there is no argument that president Trump, elect Trump, would have won the election because he had a message that resonated with the voters clearly. And because.


ORTAGUS: So you can say -- you know, you can say that Russia is a bad actor, we should consider sanctioning them, while still fully believing that Donald Trump was going to win the presidency no matter what. I don't think it has to be a mutually inclusive point.

MCDOWELL: And I look at the congressman in here, but I want to make the point that a lot of the reason that some conservative and Republicans won't talk action against Russia is because you have had an administration for 8 years that completely kowtow to Russia at every turn. You pointed out Crimea, Ukraine, Syria, we've done nothing, and we're flat on our back. And now -- there -- Russia is hacking the United States, even though it's politically motivated, clearly the sanctions given the time we get them, something got to be done.

TOM SAYEGH, FOX NEWS CONTRIBUTOR: It's blatantly political and strategically silly that after 8 years of doing nothing the only thing that gets President Obama's reaction is this perceived hacking of the DNC that then requires punitive action.

STEVE FORBES, FORBES MEDIA CHAIRMAN: What about what China did with OPM, office of personnel and management, millions of sensitive records, and now the Chinese.

SAYEGH: And we knew this, by the way, back in the fall. I don't believe he got anything really new. Here's the bigger problem, and you touched on it a little bit, Morgan, which is the way the Democrats and the media have framed this conversation, has put the Trump administration on the defensive. They're framing this as a hack that changed and altered the outcome of this election, which we mostly agree it did not.

MCDOWELL: Vice president Joe Biden went on television and said that I don't think that it has any -- it's going to have any impact on the election, he said that in October. That is the why the timing of this is so questionable. Because, President Obama looks at Vladimir Putin and says cut it out, they knew it was going on and they dismissed it because they didn't think they would lose. Now they're upset about it. Congressman?

DELAY: Well, I think the only people that believe that -- that the hacking had an impact on the election are the losers. And the losers are trying to justify their losing. And that's not the point here. The point here is, yes, hacking and cyber threats are real, and we have to deal with them. The Obama administration has done a lousy job in dealing with them, and hopefully the Trump administration will understand it, be tough, be strong, he's coming from the position of strength, and we'll deal with them. This other side stuff, other than this political stuff that's going on is just covering up what is really going on, and the real threat to America.

MCDOWELL: And we wait to see what -- if anything, Trump comes out with on this issue in the next expect days. But to that point.

DELAY: And McCain and Graham are just playing along with it. I just can't believe.

MCDOWELL: You mean playing along with the White House?


MCDOWELL: But they didn't want.


MCDOWELL: But Senator Graham did not want these sanctions. He said we need to wait until the new congress is in sessions, and the new president has been inaugurated, but we need to get tough but we should wait, that's what Lindsey Graham said last week.

DELAY: Well, I heard him say other things too. Get tough with Russia, but this issue and dealing with this particular issue is just distracting from the real issue of cyber threats, and that's what the armed services committee, and the senate, and McCain ought to be looking at, and developing a strategy that to deal with those threats.

MCDOWELL: Well, congressman, really quickly on that note, does Rex Tillerson has a tough time getting confirmed or does he sail through for secretary of state.

DELAY: No, I think he sails through. The Democrats are trying to embarrass him as they always will, and they'll look foolish. And he's a strong individual, he's probably the most qualified person to be secretary of state. And he'll catch it from the Democrats, but he'll eventually sail through.

MCDOWELL: Congressman, good to see you this morning, Happy New Year, Congressman Tom DeLay.

DELAY: Thank you, thank you.

MCDOWELL: Coming up, futures pointing to a rally on the first day of trading. Mr. Varney is back, and he will weigh in on the new mood on Wall Street heading into 2017. And President-elect Donald Trump, blasting General Motors for making cars in Mexico, we look at how it's impacting that automaker's stock, next.


MCDOWELL: Welcome back. We are 40 -- almost 44 minutes away from the opening bell, take a look at some of the stocks on the move this morning, shares of General Motors are slipping just a bit in pre-market trading. President-elect Trump on Twitter threatening the automaker with a border tax if it doesn't manufacture its Chevy Cruise in the United States. Trump has previously taken to Twitter to criticize other publicly traded companies including Ford, Lockheed Martin, and Boeing.

Good news for Tesla owners, the electric car maker is extending its offer for free unlimited charging of its Model S and X vehicles, the time is running out, the offer is only valid for vehicles ordered on or before January the 15th, shares of Tesla are down nearly 11 percent over the past year. 2017 bringing in a new president in Donald Trump, and a new mood on Wall Street -- really across America, joining me now to sort it all out is the host of Varney & Co., Mr. Stuart Varney. Happy New Year.

STUART VARNEY, VARNEY & CO. HOST: Hold on a second, Dagen. Let's talk about this new mood in the country.


VARNEY: How is your mood? I understand you got caught up in -- where is it, customs line, is that correct?

MCDOWELL: My plane was delayed coming back last night because of customs, because the plane was coming in from Barbados, and so it was help up. They couldn't process the plane to get it over to the gate to fly us folks up to New York City. So I slept for an hour.

VARNEY: Well done, Dagen.

MCDOWELL: But you know what, we love our jobs, we don't need sleep. We're excited to be here.

VARNEY: I don't know how you do it, but congratulations, that is a terrific.

MCDOWELL: I have this light that's right under my chin, so it wipes away the bags, Stuart, it's the magic of our lighting staff.

VARNEY: Well, you know, normally, you get back to work on the first trading day of the new year, and normally sort of a -- you know, we're back, here we go again. Today, that is completely different. We're looking at I think -- as you said earlier, Dagen, we're looking at a change of mood. It is now up upbeat, lively, it's positive, there's a rally going on, on Wall Street. It's going to carry us higher right from the opening bell. I think, you know, we do politics and money, that's essentially what we do, and I think there's huge political shift happening right now, congress reconvene, first order of business, deregulate, get rid of Obamacare, cut taxes, new mood in politics, and that's now translating to this further Trump rally on Wall Street. It's great to be back. I think things are really, really changed dramatically. That's what I think.

MCDOWELL: And I agree with you one hundred percent.

VARNEY: Good. And I don't know how you do the one hour sleep because I need at least five.

MCDOWELL: You don't sleep. I know what time you get here in the morning, Stuart Varney. We can't wait to see you. We will see you in 10, 11 of -- a little more than 11 minutes, Stuart, thank you so much. Top of the hour, Varney & Co. every day, 9 AM Eastern Time. Really quickly, so General Motors has responded to that Donald Trump tweet from this morning, let's get to this. So Trump tweeted earlier, about an hour ago, General Motors is sending Mexican made model a Chevy Cruise to U.S. car dealer, tax free across border, making USA or pay big border tax. Where's General Motors response. General Motors manufactures the Chevy Cruise sedan in Lordstown, Ohio. All Chervolet Cruise sedans sold in the United States are built in GM assembly plant in Lordstown, Ohio. GM builds the Chevrolet Cruise hatch back for global markets in Mexico with a small number sold in the U.S. So that's the trouble, that you start getting into this back-and-forth with one of the kind of great American companies, although it did get saved by the federal government because it went bankrupt. Coming up, the flip side of the housing market, why house flipping is expected to make a big comeback in 2017.


MCDOWELL: Ten years since the collapse of the housing market and then home flipping is back in a big way. The numbers of investors flipping homes is returning to pre-crisis levels, even big banks are getting back in the game according to the Wall Street Journal. Joining us now Nav Athwal, CEO of Realty Shares which is an online marketplace lender for real estate projects. What's your take on this comeback in flipping homes now?

NAV ATHWAL, REALTY SHARES CEO: I'm not surprised by it at all. I mean, there is -- home flipping is rising for a few reasons, the perfect recipe for home flipping today, we're seeing -- appreciating home prices. You're seeing home values at historically high levels, and you're seeing a very low supply environment. This is the perfect recipe for flippers to turn a quick profit. In fact, compared to 2009, where profits on average were $19,000 per flip, today its $61,000 per flip. And we're going to see continued strong trends towards this activity of flipping homes going into 2017, as prices remains historical highs, especially in the costly coast, and supply remains really low due to home biller sentiment being low in developing new projects.

MCDOWELL: How much money are these flippers, these investors if you will putting down on mortgages, is the credit there for them?

ATHWAL: I know the Wall Street Journal mentioned banks getting back into the market, but banks are not getting back in a direct way. Instead they're providing lines of credit for private lenders that are extending credit for these flippers. Credit for home flippers is historically had been underserved part of the banking market, instead you're seeing this very local regional players, hard money lenders, wo lend money at a very expensive clip to these home flippers. And you're seeing the entrance of the new marketplace lenders like realty shares providing a much more efficient source of capital. So I do think part of the momentum for flippers is being driven by technology platforms like Realty Shares that are making credit much more available, and banks with historically made this demographics of home investors.

MCDOWELL: But what about the danger to the housing market overall that we saw some 10 years ago?

ATHWAL: I mean, I know -- correction, happen a lot to the subprime lending environment, and there is danger of that. I mean, if you start lowering credit standards, you start extending credit to flippers that don't have a track record or very low -- or low document loans, you do have the same risk you have in subprime crisis. The biggest most and important thing for home lenders, and bank -- nonbank lenders is being very savvy with their credit standards. We hired a chief credit officer early on this -- in 2016, who is a former risk and policy control at city mortgage, because credit standards are so important no matter who you're lending to, whether it's a consumer mortgage borrower or a home flipper, credit standards need to remain very high.

MCDOWELL: Yes, I wouldn't call it a correction, I'll call it a utter collapse and, you know, far and wide you saw first payment defaults, people who've got mortgages, liar loans, got mortgages and never made one payment on those mortgages, and it all blew up in everyone's face. Nav, thanks so much, it's good to see you. Nav Athwal, please come back, we'll speak to you soon. We'll be right back everybody.


MCDOWELL: Final thoughts from these all-stars, Tony Sayegh.

SAYEGH: So, as we watch the cabinet nominees begin their micro-hearings ahead of the inauguration, I just hope that Democrats extend the same courtesy to them as Obama appointees were extended in the 2009 transition, quick confirmation process. Let's not get political


MCDOWELL: New word. Morgan?

ORTAGUS: There's something a little interesting, Bitcoin went over a thousand this morning, just a few minutes ago, and that's the highest since 2013. So I just want to make a little prediction in 2017, that we're going to continue to see the rise of fin tech.

MCDOWELL: Nice. Steve, final thoughts.

FORBES: Got to get the tax cuts. He pushes tax cuts, he'll have capital to do a lot of other things. If he doesn't get that done, he's going to have trouble in the.

MCDOWELL: Corporate and individual.

FORBES: Corporate and individual, absolutely.

MCDOWELL: Right. And here's my prediction that Stuart Varney is going to take this market to 20,000. You've got to stay tuned for the opening bell. Thanks to Morgan, Steve Forbes and Tony Sayegh. It's all about Stuart Varney right now.


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(Show: MORNINGS WITH MARIA) (Date: January 3, 2017) (Time: 07:00:00) (Tran: 010302cb.231) (Type: SHOW) (Head: Trump Team Takes Shape; Focus on Trade; Chaos at Customs; Istanbul Nightclub Attack; SpaceX to Launch Sunday; Top Movies of 2016; Tech Death Watch?; Severe Weather Slams South; Prime Minister of Israel Faces Corruption Charges; Upgrade on Autopilots for Tesla Cars Now Available ) (Sect: News; Domestic)

(Byline: Dagen McDowell, Tony Sayegh, Cheryl Casone, Janice Dean, Andrew Napolitano )

(Guest: Morgan Ortagus, Steve Forbes, Rich Lowry, Sean Gallagher, Tony Sayegh, Courtney Scott )

(Spec: Government; Trade; Taxes; Travel; Terrorism; Astronautics and Space; Storms; Technology; Politics; Stock Market; Meetings; Congress; Policies; Supreme Court; Abuse; Trial; Aviation; Automotive Industry; Holidays; Children; Travel; Recreation; Environment; Computers )

DAGEN MCDOWELL, FBN ANCHOR: Deadly storms in the South. At least five people killed after tornadoes and severe thunderstorms slammed the region.

And customs chaos slamming travelers -- a computer outage impacting thousands as the holiday travel season wraps up. Authorities still trying to figure out what caused that computer system to go down.

New developments in the Turkey terror attack -- officials revealing a photo of the suspected shooter and the American who survived that attack speaking out before heading home.


WILLIAM RAAK, AMERICAN VICTIM: All I can say is this massive tragedy is very unfortunate. I don't want to talk about what happened. I want to say, you know, this is a very good country and it's so unfortunate because this is happening to you guys. And I really feel for everybody here. I would love to come back when it's a little safer. It's a good country. All the people are very good. And like I said it's so unfortunate.


MCDOWELL: The latest details coming up.

And it's the first trading day of 2017 and we have a rally on our hands. The Dow up 147 points coming off a double-digit gain last year but gains across the board also very strong in 2016, your small cap stocks and your transports.

Looking at Europe on this trading day, stocks higher across the board; a slight gain on the DAX in Germany but England and France seeing gains of almost half of 1 percent.

In Asia overnight stocks also moving higher; a reading on Chinese manufacturing coming in at its highest level since 2013. The Nikkei in Japan was closed for a holiday.

All of that and so much more coming up.

With me this morning, I'm very lucky to have these fine folks here, outstanding individuals one and all. Maverick PAC national co-chair Morgan Ortagus, Forbes Media chairman Steve Forbes and Republican strategist and Fox News contributor Tony Sayegh. Welcome everybody. Happy New Year.

TONY SAYEGH, FOX NEWS CONTRIBUTOR: Great to be with you my friend.


MCDOWELL: -- over and over and over again. You can't say it enough, I think.


MCDOWELL: Great to see you guys.

Let's move on to this story. President-Elect Trump's team continues to take shape. Donald Trump has nominated former trade official under Ronald Reagan, Robert Lighthizer to head the U.S. Trade Representative Office. This, as Trump criticized China tweeting this, quote, "China has been taking out massive amounts of money and wealth from the U.S. in totally one-sided trade but won't help with North Korea. Nice," exclamation point.

Joining me now is "National Review" editor Rich Lowry. Rich -- great to see you this morning. Happy New Year.

RICH LOWRY, "NATIONAL REVIEW": Hi there. Happy New Year.

MCDOWELL: How will Lighthizer -- based on what we know from his career and service under Ronald Reagan, how will he handle trade and will he be as tough as Trump's words have been?

LOWRY: Well, he's a real experienced hand. He's been doing this for 30 years. And on trade, Trump has built a team that entirely agrees with his view of the matter which is the U.S. has been ripped off and has a lot of experience dealing with it. Some of the other cabinet positions, you look at them, and they have various views. They may be a little at odds with Trump. This one, this team is totally coherent and on the same page as he is.

MCDOWELL: Well, he's thrown out the idea of tariff on Chinese goods in the past. Is that a potential reality? Because certainly investors would be unnerved about that. If there's one question mark in this terrific rally that we've seen, the inauguration, it is how he will handle trade.

LOWRY: Yes. I would imagine as a first blush that that is going to be a leverage point. It's going to be a threat to try to get people to sit down at the table and get what the Trump administration would consider a better deal.

But no one quite knows. And that is part of the leverage and part of the deterrent effect that Trump is hoping to create with these various threats.

ORTAGUS: Rich, because I think it's important to point out that the trade deal that most of the Democrats opposed, that Obama was pursuing in Asia did not include China, right. The point of the trade deal was a counterbalance to Chinese influence and decrease American influence in Asia.

LOWRY: Right.

ORTAGUS: So I think that perhaps the Trump administration could actually still have some sort of trade deal. They just -- I think that what the President-Elect is saying is that he wants to have favorable terms for the U.S.

MCDOWELL: But China quickly tried to move into the breach and negotiate trade deals with those nations we seem to be leaving out in the cold.

LOWRY: Yes. Well, I think the biggest argument in favor of TPP is not necessarily economic. It's geopolitical, sort of create the rules of the road around China and try to leave China out. China is delighted that we're pulling up stakes on that at the moment.

FORBES: What are the big beefs, specific beefs, other than it's a bad deal that they would want to change NAFTA and other agreements?

LOWRY: I am not sure on NAFTA. On China, they believe that China is ripping off our intellectual property, has subsidized its own business in order to --

FORBES: But those are actually violations of WTO rules and stealing property and things like that. They could move on that and have the applause of everyone. It's the worry about putting on a tariff that's got people worried.

LOWRY: Right.

FORBES: Other than blocking our companies, stealing our property, what in the specific trade deals do we know yet that they have objection to or it's the outside of the trade deal?

LOWRY: I haven't seen specifically what they want to do on NAFTA except at least get something they can say that they renegotiate it.

FORBES: What about currency? Do you see them trying to negotiate a --


LOWRY: Well, this is going to be interesting because the dollar is getting stronger which means the trade deficit is going to get higher and the trade deficit has, you know, Trump himself and Wilbur Ross especially has focused a lot on that.

So it's going to be a paradox. You know, Wilbur Ross has to be waking up with a headache every morning about the dollar getting stronger.

SAYEGH: So you have now obviously a trade representative who's going to be negotiating these deals with foreign governments and other entities. Who is going to be the most effect it in your mind in helping Congress get behind the Trump trade agenda which we know there's going to be some divisions.

Clearly Paul Ryan is a free trader. Much of the Congressional leadership supports the more traditional Republican view on trade. How does Donald Trump negotiate with Congress because ironically one of the few areas of agreement between the Obama White House and the Hill are a lot of these larger trade agreements?

LOWRY: Yes. This is -- you know, you look at the start of the Reaganism that you have on the Hill and the populism you have in the White House. There's about 80 percent, 70 percent overlap. But there are areas of major tension in trade that will be one of them.

And Paul Ryan is just an orthodox Steve Forbes-style free trader. And he's not going to like a lot of this.

Not that there's anything wrong with that.

SAYEGH: Could we unify around enforcement. I think Steve brings up a good point.



SAYEGH: Fine, you know, obviously the details of the deal are one thing, but China is violating existing tenets of the WTO.

FORBES: Well, one of the key things they do, especially in major American companies if they think that's a strategic industry for their economy they don't hesitate to block them or humiliate them. I think that would be something you can put on the table -- equal access.

MCDOWELL: I want to move on to this story turning to the GOP. House Republicans voting last night in favor of a proposal that would gut Congress' outside ethics watchdog. This places the independent Office of Congressional Ethics under House Oversight. The full House now votes on this ruling today.

Rich -- should this proposal go through? Of course, "The New York Times" this morning if you look at their front page online it's -- aaahhh -- outrage.

LOWRY: It's probably inside baseball. I would probably prefer the more independent style ethics body they had. But obviously it rubbed a lot of members the wrong way. And I don't this makes a big dent politically unless there's a sort of scandal. You can clearly see Democrats are ginning themselves up to say this is the most unethical administration and Congress in the history of the planet.