tv Squawk Box CNBC July 18, 2018 6:00am-9:00am EDT
good morning, everybody. welcome to "squawk box" here on cnbc we are live from the eighth annual delivering alpha conference which is presented by cnbc and institutional investor. in becky qui i'm becky quick along with joe kernen and andrew ross sorkin. we have a big lineup of speakers at the conference including national economic council director larry kudlow. also mary erdoes, we will also hear from former white house strategist steve bannon. he will wrap things up for us this afternoon and this morning marc lasry will be joining us at 7:00 a.m. eastern time >> markets are still happening, even on -- i thought they would take a pause, they're not. let's check the markets on delivering alpha day now up 28 points on the dow. up two on the s&p. nasdaq indicated up 3.
let's look overnight in asia i saw some mixed results over there. yes pan is up a half point hang seng and shanghai down. in europe, saw some positive action earlier see whether that is still the case with all the general news backdrop it's just the normal news cycle. >> the new normal. >> the new normal. >> that was smart when he coined that phrase. >> works in a lot of different situations it's not fancy or profound >> he was the first one to figure that out. we're still trying to figure out the new normalization for interest rates >> yeah. speaking of which, we took a left turn at albuquerque on the way to 3.25%, we're still well below 2.85 today
that controls a lot of stuff the two-year has been interesting. but now we're all worried about a flat yield curve flat is not bad. >> would inverted be different this time? >> that's the question that will be asked throughout the day. >> ten-year being held back by so many international factors. >> andrew has a bounce in his step the jacket is on you got that square perfectly in there. what if i reach over and mess that up. >> you want to steal it? >> i will play referee >> you know what maybe i can -- how do you fold it >> tape a napkin, we'll coordinate the pocket square >> you go ahead. >> it can be done. >> a bit of news to bring you. european regulators will fine google $5 billion over its android operating system regulators argue that google's mobile device strategy unfairly
strengthened its dominance the competition chief will hold a news conference this morning at 7:00 a.m. eastern time. president trump trying to calm a storm over his failure to hold vladimir putin accountable for the 2016 election meddling the president tweeting this morning. so many people at the higher end of intelligence loved by press conference performance in helsinki many haters wanted to see a boxing match big results will come. the president speaking about the trip >> i reviewed a clip of an answer i gave, and i realized that there is a need for some clarification.
in a key sentence in my remarks i said the word would instead of wouldn't the sentence should have been i don't see any reason why i wouldn't or why it wouldn't be russia you can put that in. i think that clarifies things pretty good. >> reading mostly from a prepared statement, president trump said he had complete faith in u.s. intelligence agencies and accepted their conclusions, but then veered from the script hedging on who was responsible for election interference saying it could be other people also. there's a lot of people out there. a walk back. >> other than the 12 people named in the indictment or other than russia? >> i can't speak for the president in this instance in addition, president trump's former top aide, steve bannon, praising the president for his meeting with vladimir putin. we'll hear a lot more from bannon at today's delivering
alpha conference right here at the pierre hotel you can get more details at delivering alpha.com warren buffett's berkshire hathaway has eliminated a restrict shion on an ability toy back its own shares. it allows buffett and charlie munger to authorize buybacks when they both believe the repurchase price is below berkshire's intrinsic value. it is subtle but this is important. for a long time they had thi policy where they tell people up front they will never repurchase shares more than 1.2 times book value. this is a recognition that all of the market is kind of pushing up evaluations in the stock market he's been looking for a long time for places to put his
money. this is probably a call on valuations in the stock market overall and saying that stocks may be worth more here, particularly when you compare it to what you see in treasuries. >> lasry will be on for an hour and a half he's a distressed asset person >> where do you put your money you have to buy your own stock >> other companies buy back their stock, like apple. >> he's announced plans to buy back stock and then ultimately not bought back stock. this is just the option. >> i think this clears the way, if they want to buy it back, they won't be faced with the same formula they used in the past that says to me the form ula ma be broken. it's relative to other asset classes they're watching >> this next story -- did you write the letter to elon musk? have you write an letter to elon
musk on this we talked about other things >> flame thrower was the start you say he spreads money around. >> he donates to all sides >> even that is not favorable. i don't think you would look upon that favorably. >> no. no well, you know, i prefer there would to be no money in politics >> that will happen. >> money makes the world go around, sorkin money never sleeps either. >> the amount of money in our pockets -- people in other countries look at our country and we always think every other country is corrupt, that's where it is corrupt. >> now you're talking about tub union money. >> that, too >> oh. >> let's bring everybody else up to speed >> i'm trying to take money out -- >> testimony la's ceo elon musks
apologized to a british caver who rescued the dozen boys and their coach. in a heated twitter exchange musk called the man a pedo in a new tweet musk says his actions against me do not justify my actions against him to that i apologize to mr. unsworth and the companies i am the leader of. gene munster posted an open letter to musk urging him to apologize to the caver we will talk to gene munster at 7:58 a.m. eastern time he also suggested that musk take a is a bsabbatical from twitter. >> does he know something? >> no he withdrew the tweets >> where did that come from? is that a gratuitous attack? >> i think there was nothing offensible about what elon musk said just to explain how it got to
that situation, i think, this is an arm chair psychological assessment, he went over there tried to build this thing. i think thought that he was being encouraged to do so by the right people put all this effort into the thing, then was effectively criticized for doing that. i think given -- that's why i said it's indefensible, but given the -- >> yesterday you brought up the fact there was a pedometer >> no, no. people online were saying he's not calling him a pedophile, he's referring to a pedometer, because he's a diver they use them. >> they do >> i don't know. >> musk has withdrawn those tweets the cave driver who helped had talked about potentially litigating against him for
defamation of character. >> it's like nitroglycerine. when i look at other people and what they say, i worry about what can happen. >> my concern is if you accidentally like something. what if you leave your thing on and it goes in -- there are words, sentences, you could have an angry mob outside your house that will kill you basically for certain things almost having the ability to publish something that everyone sees -- >> risks to the business model >> if you can butt doyle that has something that people kill you over, it's dangerous >> good reason to be a voyeur on twitter. >> you guys on twitter >> no. >> smart men >> instagram >> no. >> all right managing money for clients is easier the ceo of texas instruments is out now after less than two months on the job.
brian crutcher stepped down late yesterday over what texas instruments said were violations of the code of conduct got any insight on this, sorkin? >> i don't >> nothing >> i know why you think i would, because you love -- >> no, you like water cooler -- >> gossip. stories. >> but is it a -- do you have any -- no idea >> i don't know. >> personal issue? >> i don't know the answer i won't speculate because i like to be of pure mind >> he resigned from the board, crutcher did he had taken the helm in june after 22 years at the company, most recently he was chief operating officer. texas instruments said the violations were related to personal behavior and not strategy or financial reporting. now a days, it's like yeah, i cooked the books a little, but i have not hit on anyone crutcher is being replaced by rich templeton
he has been ceo for 14 years before announcing his retirement in january templeton will return indefinitely and the board is not seeking a replacement. he's a young guy >> he is >> shares of texas instruments are down 1.25% on that let's get back to the broader markets. joining us is jewulian emanuel n chris retzler. trying to remember which of you guys -- i think it was chris you were talking about trade fears, i think you're pointing out that you expect trump to be aware of the november election. was that you, julian that was you so something in terms of a pullback in the rhetoric and everything else will happen before that is instituted.
if not then, definitely before november because he knows that the average downturn in the market is -- what did you say 22% in a trade war >> yes >> that meansregime change in november >> yes >> which could bring in all kinds of bad things for the president. >> let's be clear here after the last 24 hours of confusing language on the part of ceos and politicians alike, clarity. if the trade war escalates, it is not going to be good for stocks full stop. you as an investor, if you are looking towards the markets going higher over the next 12, 18 months, which we are, are definitely believing that the outcome is going to be favorable. we think whether it's the potential for political change or to look at the effects that we're starting to see in the chinese economy and it is early
in the u.s., we do think there will be a favorable outcome. >> chris, the hook for you is you think it's simple the environment right now. it's good. corporate earnings strong. economy is strong. if you keep it simple, seems like a time to stay long >> we're at an exciting time of the year it's a confluence of a lot of information we'll get get in the next few weeks we have the benefit of deregulation, tax reforms coming through, but we also will listen to management and see what sort of hit to confidence they've been taking as they're beginning to plan or reconsider from what they heard in the tariffs. when you speak to management they say we're reading the same headlines. we have some insight into what customers are thinking so far we have not lerd a lot of negativity this season we may see some of that going into the second half. the numbers on a macro basis continue to look good.
so we're positive on that front. you're in the summer months when volumes are lower. volatility can be higher because of those volumes we're looking for opportunities to deploy capital. we're not stupid in the fact that we're later in the economic cycle and there's probably risk out there. we're looking at the twos and tens, that's flattened that's concerning. it has not inverted yet. we don't think that will happen this year. >> we like to stay on business we'll stay on business all day today at delivering alpha. there is a backdrop if you were to watch other cable news channels to see what has been happening recently will the market ever price in the possibility of some type of constitutional crisis? if you listen to the breathless conjecture on some of the other networks, you would think if trump and his staying in office is important to the markets, you
would think at some point there would be a bit of shakiness if this rhetoric had a chance of becoming -- i'm talking about treason. i saw the odds of the bookmakers in ireland the odds of impeachment went fro from 8/1 to 2/1. >> you said the market needs trump in office. does it? >> lasry is coming on today. life-long democrat he will be saying the big risk for the market is the democrats retake congress in 2018. >> which is what he's hoping for, he likes to play in chaos >> that's fair >> trump already accomplished a lot since the election how much more does he need do?
>> he's expendable now >> he's been very successful so far with regards to tax reform with deregulation. >> constitutional crises, you remember the whole nixon thing you weren't alive. >> we have gray hiair for that purpose. it may happen eventually, but the message of the market is we announce the potential for 2$200 billion in tariffs down for one day rallied, made new highs. one of the f.a.n.g. stocks got hit yesterday. the economy is good. earnings are fabulous. eventually, potentially, politics may intercede, for us it is one of those bricks in the wall of worry that's being climbed. one of the unintended benefits of the trade war is that inflation, which was the issue in the february selloff is much less of an issue right now >> while the nato meeting in
brussels was an acknowledged triumph, the meeting with russia may prove in the long run to be a greater success. many positive things will come out of that meeting. russia has agreed to help with north korea where relationships with us are very good and the process is moving along. there's no rush. sanctions remain big benefits and an exciting future for north korea that's the tweet from the president. there's people that want haerpihaerp i hearings on what the translators heard. i would like to hear from president trump about what was discussed. i would. whether, you know, it looked like all carrot at the press conference i want to know if there was any stick in the private meeting with putin about syria, ukraine, commercial airlines. s any of that stuff. why are you smiling? >> you want to hear it from him,
but don't you want to hear it from a third party >> who is the third party? translator >> yeah. the only other person in the room >> two others probably maybe not. that would be funny. >> were trathere were translato either side. >> i would hope so otherwise you would have some sociopath saying you cannot believe what he said about you and your mother, president putin. she didn't wear army boots, did she? folks, when we come back, it was a rough start for amazon prime's day, but that didn't seem to slow down the retailer's sales event. we'll get an early read from dana telsey next and don't miss a sitdown from president trump's economic adviser, larry kudlow. that's live from the delivering alpha conference are you ready to take your wifi to the next level?
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around 3:00 a.m. on the east coast. that's about 3 1/2 hours ago it got off to a rocky start. most indications are pointing to a record breaking day for amazon once again so the last comprehensive snippet of an update amazon gave was less than a third of a way in at that point they said the first ten hours of prime day grew faster than the first ten hours of last year unclear if that's sales, orders or traffic, but something was faster at that point they just fixed issues that caused widespread outages lasting for about the first seven hours. at least for some shoppers and in some parts of the country amazon made jokes about a rough start that was no walk in the dog park, as you see the dogs that popped up along with the error messages explaining what happened so far best sellers include the fire tv stick, the echo dot, fire 7 tablet, the
instapot six quart, an life straw personal water filters for hikers there are some deals left, including on amazon's devices, but you have to ask alexa for those. 26 hours into the 36-hour event, amazon said small and medium sized businesses worldwide exceeded more than $1 billion in sales. but without knowing how that compares to last year it's hard to know what that means. other retailers came to play retail me not said there were 30% more retailers offering competing deals this year compared to last year. it will be interesting to see if they admit they saw this spike in mid to late july and are able to tell us that without saying the word amazon in some of those earnings calls later on. back to you. >> thank you for that. joining us now with more on amazon's biggest shopping day, dana telsey is here from telsey adviser group. good morning >> good morning. you're watching google trends, google searches, seeing whether this is working.
>> exactly watching the traffic trends on google search. comparing prices to other company websites >> how much lower were they really >> anywhere from 10% to 25% on average. that's compared to some department stores, target or walmart. that's the price differential. >> what do you think happened yesterday? >> the first 24 hours, the search traffic trends were up. overall sales volume for amazon was around 3$3.5 billion compare to the average retail sales. >> what kind of merchandise? >> all of the alexas, items like that, toothbrushes >> what kind of margin did they get on those products? how much money did they make or lose >> i think they gave away a lot of it. i don't think they made a lot of money but they drew the traffic in with 100 million prime members this year, it had to add
up to more volume. >> where do you think they can get in terms of prime membership, if that's the goal to build prime membership, what is the ceiling >> i don't think there is one. we had people in our office yesterday who were not prime members and they were signing up there's a long way to go >> they has to be a ceiling at some point that's like saying housing can go up forever. do you look and say this is the absolute maximum number that you will get just in the united states even >> if you look at the number of adults out there, can you get 8 80% of those adults? and what portion of their spending will you get. >> you look at yesterday as a prime membership style day >> yes in order to attract new prime minister members deals were meant to gain sales from existing customers and bolster new ones >> when i think about the amazon electronic products, the kindles, the alexas, those then
require -- do they all -- i should ask, do they require prime membership >> i don't think they require prime membership >> they don't. >> so the other question is is there a price -- we talked about this before -- in which the ecosystem breaks apart you're a competitive shopper i imagine you could, as we talked about, you could go to walmart, you could go here, there, and try to cobble together the equivalent of >> but one thing people want, they want seamlessness they want speed and convenience and ease also what this offered, it was an event it's almost like hurry -- >> like a flash sale >> exactly gre >> great to see you. coming up, japanned a the eu inking a new trade deal eliminating nearly all tariffs on products they trade among themselves we will talk trade with robert
holleyman. as we head to break a look at yesterday's s&p 500 winners and losers what do advisors look for in an etf? i tell clients, etfs can follow an index, but which ones target your goals? it's not about quantity. it's about quality. no trendy stuff. i want etfs backed by research. is it built for the long-term? my reputation depends on it. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully.
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conference that's klee nix. >> yes used >> it's one of these not used you spend all this money >> too fat didn't do it right >> you have to go a bit down now the corners are gone >> what happened to those sportscaster mikes >> the madonna mikes >> yes >> we realized -- it will get loud when people get here in a bit. >> will the next generation understand the madonna mike reference? the current generation doesn't understand >> the taylor swift mike >> we're dating ourselves. >> yes sorry. >> european regulators apparently are set to fine google $5 billion over its android operating system the eu's competition chief will hold a news conference this morning at 7:00 eastern. also happening around 77:00 a.m., the 12 boys and their soccer coach that were rescued
from the cave in thailand are set to make their first public appearance they'll appear on a nationally broadcast news conference in thailand we'll bring you those pictures when we see them united airlines reported second quarter results that topped forecasts. despite a surge in jet fuel costs. the airline is raising its guidance for the year. that's different than what we heard from delta they pulled in hair horns a little in terms of flights and other things oscar munoz will join us at 8:00 a.m. eastern today on a first on cnbc interview u.s. equity futures at this hour, nothing to write home about so far today anything in this environment where it continues to be flat or up a little is -- don't know whether it's surprising, but we had someone yesterday saying that holding on to 2017 gains this year would be a win for the
market also with earnings going up, make it not quite as overvalued as some people thought we have a very big day here. we have a big lineup at delivering alpha conference presented by cnbc. leslie picker has a look at the schedule and the highlights. good morning good morning it's a jam packed day. kicking things off with the representative from the administration today it will be larry kudlow, the director of the national economic council he will be joined by jim cramer for the opening keynote. after that the conversation, which is sure to encompass the latest on the trade tensions will turn over to a panel of investors for their take on the global economic environment including mary erdoes and marc lasry. then looking forward to your con investigation, andrew, with ken griffin who manages the $30
billion hedge fund citadel that should be very interesting. that is followed by a sitdown with ed wakenheim. the rest of the day encompasses three notable titans john gray of blackstone, david rubin stone of carlyle, and howard marks of oaktree. four investors will provide their best stock market picking ideas and the event will end with steve bannon who served as white house chief strategist for president trump. >> i will say it again, is a big bitcoin believer >> and ken griffin historically has not been >> maybe we'll ask about both of those things >> it's been interesting watching the bitcoin debate between traditional investors and maybe more tech savvy and newer investors. >> it has also become political.
>> that's how it was founded, under the idea that there is no central government controlling it and there is a bitcoin panel today to discuss those things. the debate between bitcoin and blockchain institutionalized investors have a mosh open-mindedness towards blockchain than bitcoin. >> leslie picker, thank you. japan and the eu signing a trade pact that would cover one-third of the global economy, elieliminating nearly all tarifs between the two. let's bring in robert holleyman, former u.s. deputy trade representative and now cmm international president and ceo. thank you for being with us. >> good morning. >> what does this mean we have been talking about breaking down some of our trade pacts. we've been talking about maybe doing moreone-on-one, but what
does this new trade pact mean for us >> three things. one is that this new agreement shows that our economic competitors like the european union are moving faster than ever to strike new deals this is a third of the global market it is the largest pact that's been negotiated since the original transpacific partnership when the u.s. was part of it we see the eu is rapidly negotiating agreements with canada, mexico, australia, chile, indonesia there's a huge expansion in trade agreements second the u.s. has largely retracted from negotiating trade agreements third, we're also involved in heavy litigation for the u.s. within the wto so it's really a dramatic contrast between the expansion of new trade agreements by our economic competitors and our allies, and a real retraction
from the united states >> we have talked an awful lot about the tariffs. that's certainly something that we heard not only from investors with some concerns, though the markets are still doing quite well yesterday senator heidi heitkamp brought up her concerns about what it meant for farmers in her state. short-term pain, that was in conversation with jay powell who said tariffs are not the right direction over the long term what's the best case and worst case scenario here >> the best case scenario is the tariff taxes that the u.s. is imposing can create change, particularly in china, which is at the heart of the major problems that the u.s. and the global economy faces the worst that can happen is that these taxes that the u.s. imposes becomes the norm they stay in place they may be short-term adjustments to the market because the economy is strong, but long-term what it means is
that there's a real defensiveness and a withdrawal that would make american goods in foreign markets more expensive. that's the real risk in this we really see this huge dichotomy that's happening the rest of the world is trying to reduce tariff taxes, expand market opportunities, the u.s. contracts. that long-term cannot be a good position for the u.s. to be in whether it's the tariff taxes we're putting in place or simply walking away from the expansionist trade deals that all of our major allies and competitors are engaged in. >> let's focus on the best case scenario you bring up this idea that china has not played fairly. it was accepted into the world trade organization was that a mistake to allow them in when they still hadconstrain? >> i think the premise of that question is revisionist history. a lot has changed.
there were expectations on china at the time they entered the wto that they have not lived up to on the other hand china is the second largest economy in the world. it would not make any sense for china not to be in the wto so we have to look at whether the wto can work two, are there gaps that need to be filled in, which do not have to be filled in bri the wto. they can be filled in by new trade agreements certainly these agreements that japan is entering into with the eu, and with the rest of the tpp countries, it is in part a counterpart to what's happening in china by putting new rulesed a modern rules in place. the u.s. is largely walking off the stage. that's neither good in the short term and it will be terrible for the u.s. in the long term. >> ambassador holleyman, thank you for your time. >> thank you very much. when we come back, crude prices are sliding after some
surprising inventory data. we'll find out what's happening and where things may be headed. then our guest host at the top of the hour, marc lasry, co-owner of the milwaukee bucks and a featured speaker at the delivering alpha conference. and at 8:00 a.m., oscar munoz will join us in an u'clusive interview. yore watching "squawk box" on cnbc
time for the executive edge. this morning we'll start with a couple of stocks to watch. csx second quarter profit beat estimates. csx was helped by cost cuts and higher shipping rates and by higher coal shipping rates. and boeing received a $3.9 billion deal to build two jet there's a will be used as the new air force ones in the future president trump heavily criticized the price tag last year the jets will be delivered by the end of 2024 and they will be painted red, white and blue. that will replace the light blue color scheme that's been used
since jfk was in the white house. so the iconic plane is going to change quite fundamentally >> i don't mind red, white and blue as long as it's not gauche >> i don't understand, 99% of the time you are mr. progressive. progress don't worry about the way things used to be done. we're moving forward >> right >> we need universal basic income all these things that you want you want to stick with that -- every time someone moves in the white house, they change the china, the rug >> i thought when you think about air force one, it should be an iconic plane, plane going around the world >> why robin's egg blue, why powder blue? >> presidents have walked down those steps in historic moments. when whether it's reagan walking down the steps >> don't steal reagan. >> clinton walked down those
steps. name your president, but the point is over the last 50 years -- >> lincoln, maybe not. >> there's been remarkable images >> that's not -- >> consistent and iconic about the plane and what it represents >> it feels like there are a lot bigger issues. >> i don't like the light blue >> looks very pan-amy. >> depends on what the design is >> yes >> there's been some examples online that have been not nearly as attractive. >> you don't want a black and gold -- >> as long as it's not gold. >> remember the -- >> there's one shot online of a mock up that has a big eagle's face taking over the whole plane. >> i think that's what scared you. it's not going to be like that but the light blue, it doesn't have to stay powder blue
>> as long as it's iconic and classy >> when we come up, crude oil prices are under pressure after we got some surprising inventory data yesterday we will talk oil with john kilduff after this wti 67.62. as we head to break, a quick check of what's happening in the european markets up across the board. ftse up by a half percent. "sawbo wl quk x"ilbe right back. at&t provides edge-to-edge intelligence, covering virtually every part of your retail business. so that if your customer needs shoes, & he's got wide feet. & with edge-to-edge intelligence you've got near real time inventory updates. & he'll find the same shoes in your store that he found online he'll be one happy, very forgetful wide footed customer. at&t provides edge to edge intelligence. it can do so much for your business, the list goes on and on. that's the power of &.
♪ welcome back to "squawk box" live at the delivering alpha conferen conference wti falling again this morning after u.s. crude inventories rose last week defying expectations for a significant reduction. take a look where things stand $67.57 joining us right now, john kylduff is with us again to explain what is going on how much of this are you going to credit -- depends what side you're on too. >> i knew you'd say that.
>> so trump tries -- but now you're going to say but it hurts the oil sector it hurts the oil sector when prices go down this is trump's fault. you don't give him credit. >> for those who don't know, what is happening? explain what's happening here. >> first explain first does it really have anything to do with trump? >> for whatever reason, the saudis and russia have gotten together and have decided to relieve the pressure that had built up in the oil market >> you say whatever reason >> if we want to remove the trump factor from it for whatever reason they've decided to put more oil on the market in a lot more fashion and secondly for whatever reason, the parties that were at each other's throats in libya suddenly came together and have ramped back up their oil exports. so we had a one-two bunpunch ine market and that coupled with the bad
situation in venezuela and the libyan situation got the market into a fervor where rent got over 80 bucks. wti got to $75 because it looked like there was no relief in sight. it didn't seem they were going to do anything about it. they were going to stick to the status quo it was game over for the opec -- >> you had a good conspiracy theory on why the saudis didn't want to play ball. do you want to share that or not? >> about the saudis? >> yes why are they so inclined to do this >> because they're trying to curry favcu curry favor with him they believe the president can ease the listing standards with the stock exchanges. >> is it that or is it iran? there's a lot of reasons >> i think there's a mutual squeeze on iran. the saudis are grateful to
president trump for pulling out. >> can we go to the listing idea does anybodybelieve it's plausible that the president of the united states would have influence over the new york stock exchange >> yes or -- >> blocking sinclair or anything like that. i don't know >> maybe the answer is yes >> anything is possible. >> the law would seem to suggest otherwise that he does not but the saudis were certainly under an impression he could make life easier >> what are the chances we are going to see this infamous ipo >> they said they're not going to do it and they can't do it. again, here's the problem they have the sketchy part of their business are twofold what are their reserves, what are their productive capacity, and what's the government and other folks' cut of the revenue? that's the stuff they don't want to share i've been trying to suggest
maybe they just ipo the refining business or maybe lever up a trading unit like we had seen with glencore and some of the other big oil commodity merchant players that'd be a way for them to realize the money they were going to get from the ipo. keep in mind we talk about the valuation. they were only going to take in $150 million to $200 million >> so just tell us as you look out a month or two from now, where do you see the price headed >> it has been extraordinary when the summer ends, we'll be heading into the third and fourth quarter went to the peak demand period we're still tight. we have no spare capacity. prices should still be up to the swing. >> john, thank you again. >> yes good luck with your conference here today >> appreciate it meantime, we want to goat
wi -- get to wilfred frost. >> it's a decent beat. revenue $10.6 billion. net income nicely ahead 2.4% versus expectation of 2.0% shares jumping to 1.5% up in the market if i dive into some of the areas, institutional insecurities look like the beat. also trading have to come back at the top of the hour with more of a deep dive but decent numbers up 1.5% >> great thank you, wilf. coming up, our guest host is a featured speaker at the delivering alpha conference. marc lasry of avenue capital and co-owner of the milwaukee bucks of the nba al likes basketball, but he so likes to double his money in, like, two years. marc lasry will join us next comy helping cars emit less.
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welcome to a special edition of "squawk box." live from the eighth annual delivering alpha conference in new york city. it's a who's who of the investor community. with leading asset managers, institutional investors, and political power players gathering to talk about the biggest issues affecting the markets. it's wednesday, july 18th, 2018. and "squawk box" begins right now. ♪
good morning welcome to "squawk box" here on cnbc we are live in new york city i'm andrew ross sorkin along with joe kernen and becky quick. our guest host this morning, marc lasry he's among our headline guests at today's delivering alpha confidence other big names include larry kudlow, mary erdo, and ken griffin. we're going to be bringing you those interviews throughout the day. steve bannon ending the day with us as well take a look at u.s. equity futures at this hour dow would open up about 12 points high per. we'll call the s&p slightly in the green. joseph it's official. the eu fining google $5 billion over its android operating system they argue that their mobile device strategy unfairly
strengthened its dominance the company's too good at what it does. the chief is about to hold a news conference. we'll bring you -- monitor that and bring you the headlines. not to say this is going to help any eu companies, because has any tech start-ups happened? that's not what this is about, obviously. but what is this they love doing this shaking down successful american companies. >> it's fairly common place. it's happened over the years >> all of our best companies seem to do something wrong over there. like they're scratching their heads in europe, why are they so good at these things we should try it no, let's go have lunch. a three-hour one >> which is why you enjoy your vacation there >> i do. i love it. you don't have to do anything. >> not fair and not true >> i withdraw. sustained. sustained. >> objection argumentative. >> i was kidding
lasry owns a jacket. what happened? >> it's the summer >> you got the sweater thing at the delivering alpha >> i know. but it's warm for a sweater. >> that looks good >> you've had some light sweaters before. >> yeah. >> but he wears a acket. >> a linen sweater >> i thought i should be a little serious today >> you should be >> we'll talk to marc in a moment, but first other headlines we're watching berkshire hathaway has eliminated a restriction on its ability to buy back its own stock. it could help him deploy the company's cash it would allow buffett and charlie munger to authorize buybacks when both of them believe it's below the intrinsic value. marc, we talked about this a little earlier it's interesting not only what
it means for berkshire in terms of their judgment where they see berkshire shares in the stock market relative to other class markets. this has been a formula they put in place for awhile. it kept a ceiling on things. but at this point, they're probably looking around saying you've got to find places to put your money it's been harder as the market has gone up. >> i think they're saying should we invest with ourselves because we think we're probably the best company out there and i think you're finding that in the market. i mean, the market keeps moving higher people don't understand why it keeps moving higher. and sort of where are you going to put that money? i think for someone like buffett, it's let's just try to re-invest in our company which actually to me seems like a signal that you seem to be at the top. >> okay. >> we are going to continue that conversation just a couple of other headlines to bring you this morning. texas instruments ceo brian
crutch crutcher, he has resigned. chip maker says that crutcher violated the company's code of conduct although it was not specific on what those violations were. it did say, however, they were not related to operations of the company. rich templeton who stepped down as ceo on june 1st will return to that job. i want to make one comment about this which is, you know, when you have these announcements especially in this age of me too, by default your brain goes there. >> more information would be useful if that's not the case. >> in some cases, i think these companies do a disservice both to themselves and to the individuals by not being a little more explicit about what the issues -- >> and to you. because you just want to be nose nosey. >> interest. >> i think as a shareholder you should know what's going on at the company.
i think you have some right to understand at least the basics of the situation >> you ever get to the bottom of sir martin >> you know, i never did because they signed an nda. >> you were poking around though >> i did poke around well, look brian at intel and then the other question -- >> they did give some details on him. >> they did. then what you realize is the code of conduct was so strict that he was having a consensual relationship with somebody that was below him and he hadn't talked to hr about it. by the way, had he talked to hr about it, he wouldn't have violated the policy. but because he didn't -- so, it's very complicated. >> complicated to go to hr hat in hand and say -- >> i'm having the relationship i know but i'm just -- but you then see this headline, he breached the code of conduct. you want to know what that means. i don't know you're a shareholder in lots of companies. do you want to know when the ceo
gets ousted why? >> i think you automatically assume what happened what's ridiculous is you need both parties not to make the statement. if you're the ceo, he -- i mean, if he didn't do anything, he'd come out and say just so everybody understands this has nothing to do with so-and-so the fact he doesn't want to make a statement and the fact the company doesn't want to make a statement would lead you to believe there's something more there. right? so i just assume something's happened a little more news for you this morning as well morgan stanley out with quarterly earnings wilf brought them to us. $1.30 per share. that was above estimates also strong on investment banking sales and trading results. we'll also be getting a fresh read on the housing market that'll happen in about 90
minutes. economists looking for a 2.2% decline for june that's following a 5% jump in may. all right. we've had couple conversations with our guest hosts already this morning marc lasry is co-founder and chairman and ceo of avenue capital. and if i were to just paraphrase some of your pre-interview notes, it looks like you're almost hoping for chaos. i think that's not necessarily fair but is it fair to say that the opportunities are more scarce now given that so many things have been moving higher and there are so many good things happening that you're not -- the word distress doesn't come to mind a lot in any asset class right now. >> especially in the u.s i think that's correct i think in the u.s. it's a lot harder i think the opportunities in the u.s. today because of how well the economy is doing, you still have opportunities they're just less. >> didn't you totally hit a home
run with your energy deals >> that's actually worked ou extremely well >> was that last year at this conference >> last year or the year before, we started investing pretty early. >> you raised a billion dollars for that >> we raised a couple billion. that's worked out well >> annualized to what? buying another basketball team give me an idea. >> maybe i could hopefully get to l.a., yeah. >> all right we alluded to some of your comments after years and years i've been talking to you, i'd see you down south sometimes. i've been trying to bring you to the fold have you finally come to your senses in terms of which party should be running things >> no, i think it's -- i think dr democrats would probably do a good job but i think the risks you have
out there today is when we look at congress today, they seem to be supporting pretty much anything president trump does. >> is that good? >> you can argue it back and forth. for business, it's good. everything is remaining the same, the economy is fine, there's no real issue. >> so you don't want -- becky was kind of kidding. you don't want to watch the world burn if some bad stuff -- let's say congress takes the house. is that something you'd want for distressed situations to re-emerge? >> no. as an american, what i would like is stability and you want the economy to keep doing well right? >> yeah. go elsewhere look in brazil or something. >> right from a business standpoint, i'd like a little bit more chaos and issues but, you know, you sort of wait and see what happens i just think if congress shifts, you'll have more investigations. you'll have more issues. and from a business standpoint,
i think then people start stepping back. that's what's going to happen. >> although what i will say that i've heard from business leaders particularly with all of the issues the department of justice has weighed in on, uncertainty in terms of what is the rule of law in terms of mergers and acquisitions >> i agree with that they're trying to figure it all out. it seems where they are today is different from where they were yesterday and where they're going to be tomorrow >> and it's a bit capricious depending on who is doing what >> yes so those are issues. >> i want to get to all these things andrew, he's a bitcoin guy >> i know he is. should we go there right now >> i think the facebook stuff is interesting. you're mad about what happened there, right you are looking for some way of reining that company in? it wouldn't stay where it is if it was a utility >> i just thought there were issues at the time
you get into this whole privacy issue. i think the whole question for facebook ends up being, how should we hold them accountable or should we not that's really it >> and so what's the answer? when you say accountable, how do you hold them accountable if that's what you want to do >> that's not what i want to do. end of the day, that's the question you've got to determine. you can't sort of say if you're facebook, look, we're going to allow anything to be on -- to be printed, to be said. and it's not aour fault. that's fine. if that's the model people want, that's fine. >> doesn't it appear that's what the public wants >> i think it does therefore i think the public has spoken right? so i think you've got these privacy issues but it seems like everybody has got a privacy issue unless it involves them. and what i mean by that is it's okay, we're going to allow a lot of different things to happen. so to me that's where the model
is going that's why the stock price has actually moved up since then i think people have come to the conclusion, look, that's how it's going to be we agree with that >> let's talk a little bit more about your energy play this was a play on the power companies. >> yeah. >> that had gotten into trouble at the time. again, we talked a little bit about that if you're looking for the next thing like that, what would it be >> i think for us there, you still have that opportunity. >> really? >> you do. the reason is because you still have too much debt so you've got to restructure that debt. although oil prices have gone up a lot, and we've done well on that side, natural gas prices haven't moved up as much so you've got a number of those companies that are doing restructurings we're buying that debt and we think that's the next opportunity over the course of the next year. >> when you talk about oil services, heidi heitkamp brought up yesterday in the conversations with jay powell
that energy companies in her state have been suffering because of the higher tariffs on steel and aluminum already do you see that? does that play out in other areas where you see issues like this or do you think this is too soon to jump in >> i think it's a bit early. at least for us. the one big thing on the tariffs is how longs are they going to last >> it seems like right now you've got a bit of a trade war going. but i don't know if that could stop tomorrow or next week it seems like the market believes it's really not going to last. because the market keeps moving higher all of a sudden when they're really worried about a war with china, you see the market going down i just don't know how long president trump wants to continue this. >> how have you been playing the trade issue? >> for us we're not really playing it i mean, we're investing in europe we're investing here in the u.s. remember, we're buying companies that already have issues
so the trade war is really affecting companies. how well are they going to do? >> okay. do it this way were there any companies you were looking at before the trade war where once you sort of began to appreciate that we were really going in this direction, you said, actually, i don't want to go there. >> not yet not yet. i think for us it's been much more in the power sector it's been the savuation sector we haven't seen that yet. >> you were in a good place. i'm kind of surprised. if anyone was a bigger friend of bull and hillary, it's you and you seem to have moved on. you don't seem like -- are you resisting right now? you're not resisting >> no. >> you call him president trump. >> there was an election it was fine. you know, you move on. >> really? have you seen anyone else move -- andrew has moved -- a lot of people have not moved on
do you read the newspapers do you think hillary moved on? >> he's on his best behavior because you're here. >> i'm sorry >> he says you're on your best behavior because i'm here. >> no, no. >> why do we get along i don't know we always got along. we also have to talk -- you know what i was thinking of a bigger conversation about media and what's happening there and that made me immediately think how valuable sports is which also makes me think how next year with dante, i'm going to be a bucks fan. >> thank you we need more bucks fans. >> but you have -- but then i worry that you got, you know -- now, you got lebron. i don't know how good they're going to be. and golden state even boston. and the 76ers. there's a lot of fun things happening in the nba right now >> it is i think for us it's been pretty phenomenal i think right now we probably have the best player in the east and so with giannis there,
that's great for us. we have a lot of young players he's healthy and doing well. >> why is it so hard then >> did you see how much money all-time record for how much money they made in revenue gains. which means the teams are more valuable which means the tv rights are more valuable. look what's happening in media with big sort of event programming. that's where i was getting to with things are valuable what did you pay for the bucks and what are they worth now? or you don't want to say >> we paid about $500 million for the team >> are they worth two yet? >> i hope so. >> so four times money in a few years. >> four years that was a good investment. >> don't gloat >> i've got to be happy about something, right >> you are about the election, you're
happy. >> there are two types of owners of sports teams. ones that do it as an investment and then in two years say i made four times my money i'm out. and then others that do it because it's fun which is it for you? >> i think you start out as an investment then you quickly find out how fun it is and enjoyable it is. and it stops being about the money. and about enjoying the process and the time normally any investment, you would have sold. >> is that a way of saying it doesn't matter you're not necessarily seeing additional gains in the future >> no. i think you're going to have a lot more gains i think you'll have the gains because the media rights keep moving up. the one sport doing really well is basketball. >> it's amazing. >> that's just going up and up so i think that investment will do better. but it's also one of the most fun things we've ever done
>> i've heard through the grapevine that one of the other owners had to convince you you were talking $10 million or something and they had to slap you around saying we're paying this, just get in line is that true >> it's very true, yes >> okay. we're coming back with more in a bit. coming up when we return, morgan stanley out with revenue this morning wall street's reaction when we return sergeant baker, how are you? they took care of everything a to z. having insurance is something everyone needs, but having usaa- now that's a privilege.
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♪ welcome back, everybody. we are watching shares of morgan stanley this morning after the bank's quarterly results wilfred frost joins us right now from cnbc's headquarters he's been watching the stock which is up by 3.5%. >> yes it's up because they had a decent beat. revenues up. $10.6 billion versus $10.1 billion. if we think of the core investment banking businesses of pure investment banking, fixed income trading, equity trading, some of them beat on two of those areas. morgan stanley's beaten on all three. 1.7 revenue versus $1.5 billion.
all the sub sectors did well but ipos, that was a strong performance. fixed income trading, $1.4 billion versus forecasts of $1.3 billion. slightly ahead decent equity trading was $2.5 billion. the forecast was $2.3 billion. up high single digits. almost 10% now, wealth management which has really differentiated themselves from goldman sachs that's still up year on year and the margin was very good at 27%. so pretty decent across the board here i think people also will be focusing on the efficiency ratio keeping costs under control. it means the shares are up over 3% in the pre-market guys >> okay, wilf. got the quarterly dividend up 20%. thank you.
it's good to have you, wilf. because you seem to -- you seem to not mind doing this >> you're finding a nice way to say this. >> yeah. >> i'm a geek at heart i love it. >> we appreciate that. >> geek at heart you're a geek. we know and we love you. coming up, new data on the housing market this morning. details on who's buying and what mortgage rates are getting when "squawk box" comes right back time now for today's aflac trivia question. what major u.s. city declared bankruptcy on this day in 2013 the answer when cnbc "squawk box" continues thanks, dad! break a leg! aflac?! not that kind of break. oooh! that had to hurt. aflac?! not that kind of hurt. yeah, aflac paid us cash in just one day
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now the answer to today's aflac trivia question. which major u.s. city declared bankruptcy on this day in 2013 the answer detroit. coming up when we return, europe slapping google with a big $5 billion fine. the tech giant vowing to appeal. we will get an analyst reaction next helping keep shoppers safe. this is a financial transaction
conference we're live at the pierre hotel in new york city we have a busy day ahead before we do that, we have top corporate stories to tell you about. google just fined a record $5 billion by european regulators they say google abused its dominance of its android mobile operating system with illegal restrictions on smart phone makers and mobile network operators. google says it will appeal that fine the stock down just marginally in the pre-market this morning joining us on the squawk newsline, brian weiser what do you make of the fine >> it's not surprising there's a fine here. it remains to be seen is the attempt at a remedy assuming that google is ordered to pay the fine let's keep in mind the shocking case is not yet done even there the eu as i understand it they're looking at
whether the remedies put in place are good this is before we get to gpr >> brian, walk us through the possible permutations of a remedy and what that could mean for the urine paeuropean part oe business >> i wish i knew certainly when it came to the case, the eu was not particularly clear in saying google must do this door that. only that google must follow the law. if i recall correctly. how they choose to remedy the matter is -- it's up in the air. >> and just -- >> yeah. here's the thing changes will have an effect over time the business is so dominant, google and facebook together are also so dominant in europe you have to play this out over
several steps. there probably will be an obliged breakup. the combined entity might still be as dominant if not more dominant after that happens. >> and then last final question for you, brian, is does this suggest anything that could happen with regulators in the united states? >> probably not. but i think if let's just say google did oblige some kind, that would have an impact on the united states. >> okay. brian, we appreciate you jumping on the line so quickly just after this news broke. and we thank you for it. meantime, a programming note the eu's commissioner is going to join "squawk on the street" today at 10:15 eastern time. it's an interview you do not want to miss she will walk through the case
and where it's all headed. all right. new details on the mortgage market this morning. diana olick joins us with the data >> well, there's plenty of demand for housing right now but very short supply. that's hurting home sales. you saw it in mortgage applications last week falling 2.5% for the week seasonally adjusted and that drop was driven entirely by a lack of buyers total volume is down 12% compared to a week ago mortgage applications fell 5% for the week and were just 1% higher compared to one year ago. new buyers are struggling to afford what's out there. and you see that in the type of loans they're applying for specifically fha loans in particular that could make a difference in the weekly moves in interest rates which were basically flat last week. the average rate on the 30 year fixed with 20% down increased to
4.77% from 4.76% refinance applications did manage to move about 2% higher they were still 28% lower compared to the same week one year allego that's when rates were so much lower. much more online back to you guys >> thank you very much diana olick. as we've been talking about, it is an exciting day here at cnbc the delivering alpha conference taking place right here. joining us now is one of the panelists for the strategy session happening this afternoon. david villa. thanks for being here today. >> thanks very much. >> one of the huge issues facing pension funds everywhere we should point out you have 620,000 participants from the state of wisconsin that are relying on you one of the huge issues is trying to find return, trying to find alpha when looking at bonds
trading at such low levels 2.85% right now for the 10-year. how do you do that how do you reach out and try to find additional returns to make sure these people will have enough money for when they retire >> well, i have pixie dust no, i did -- so there are two things compounding over long periods of time time we use to get to our target we make a promise easy to keep our discount rate is 5%. which is about 2% less than the average fund so the low bond yields are troubling. but they don't create as much pressure on us as they might on other funds. >> what do you need in terms of compounding and returns over time to make sure that there is enough money in the pot when all of these employees retire? do you need 6% 7% 8% >> we're shooting for 6.2% right now. >> that's more reasonable than a
lot of pension funds >> yeah. so we can get to 5% with a simple, index, low cost solution then we get from 5% to 6% by having leverage, portable alpha, private markets, and active management so that gets us close to 6.8%. >> you need to talk to lasry >> pardon me >> you need to talk to lasry he said five that's like a savings account almost to him. marc, talk to him. he's open for business >> we've talked to them. >> they invested with us >> you rely on hedge funds for a lot of your strategy >> jeyeah we're very keen on that. >> a lot of people in this arena are now looking at index funds why do you feel this is the place to be? >> we think it's getting close to the opportunity of a lifetime so everybody's running away.
there's a lot of money, a lot of capital flowing into etfs. that's forcing active managers to sell small cap and value. it's lining up to be very attractive the -- and the hedge funds, we use very low volatility hedge funds. we benchmark them against libor. so our expectation above libor is only 2.5% so we feel that taking a 5%, 6% market return and putting a hedge fund return of 2.5% to 3.5% on top of that gets us to our target >> do you throw your weight around and ask for better fee structures >> no. we don't think that's a better strategy. >> because >> being the big gorilla in the room means you're the big gorilla in the room and people don't like you so i think it's better to be wisconsin nice and, you know,
try to find terms that are commercially attractive to both sides. and not negotiate fees the fees are not what we want, then we just walk away everybody's money is green in terms of getting access to the best managers, the people with the most skill -- >> you'll pay the fee. you don't think investors or this industry is overpriced right now? >> if my beneficiaries do well, if they -- if the promise is not broken and we're able to make our target, i don't care if he gets rich. >> that's on the incentive fee i don't disagree with you there. but what about on the management fee? what about expenses? >> so we think about -- >> he's talking about 2% and 20%. >> it's what are the fees high what we think about is what is the gross value added above
libor and what is the split between most of it if we don't get most of it, we walk away. it's not a conversation where we say lower the fee and we'll invest we just say, what are your terms? we're trying to keep the majority of the juice. if it doesn't stack out that way, then there's no commercial relationship >> we want to thank you for joining us today pleasure to see you and we look forward to your panel later on >> thank you coming up with , a lot more our guest host marc lasry. then in the next hour, the ceo of united airlines oscar munoz. seeing shares of his airline jumping this morning you're watching "squawk box" on cnbc in new york city. back in a minute who would have thought,
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happening right now, the boys on that rescued thai soccer team are speaking at a news conference in thailand you can see they've been passing the microphone along the coach of the team who's also very young, he's only 25, he said that most of the boys on the team knew how to swim. some better than others. but again, this is the first time we're getting to hear from all of these boys since that rescue it's been nearly a month since they first went missing. we are watching this closely we will monitor and bring you updates as we get them in washington, ivanka trump has a new op-ed in "the wall street journal." it's about the white house's push to train american workers for the jobs of tomorrow the president is going to issue an executive order, the national council for the american worker. president trump will also form an advisory board of leaders from the private sector, from educational institutions, charitable organizations and
state governments. and i'll be in washington tomorrow to talk to administration officials about the new jobs push including ivanka trump that starts at 6:00 a.m. eastern. obviously there's a skills gap obviously there's jobs that are going unfilled obviously the trump administration doesn't want a big federal program to try to solve things they want a partnership with private industries it's a pretty good idea. they have all these different components you bring the ceos in to partner up with trying to match -- i mean, the jobs of today are different from the jobs of ten years ago much less four years ago. >> yeah. they've changed much more rapidly. and people now say you constantly have to be updating the skills and knowledge base. >> then you should also see who's going to pay for it. you could argue that with all the corporate tax cuts, you
focus on reskilling. >> then you try to do this i'm going to be standing on the white house lawn >> you're going to mow it? >> no. but ooum going to be going -- and i'm going to be waving and trying to get trump to come -- >> come down. >> to come down. >> okay. >> do you want me to do that >> i would like you to i have a lot of questions for him. >> oh, you're not going to be -- he's not -- you write them down for me >> i will write a full list down of all -- >> is it going to be like, how do you do it how do you win so frequently >> i'll work on that during the next commercial break. >> does it involve putin >> it might. our guest host this morning marc lasry, co-founder and chairman and ceo of avenue capital group. we haven't had a chance to talk about it yet crypto >> yes >> you are a bitcoin fan >> yes >> are you an ethereum fan
>> just bitcoin. >> so you're bitcoin only. because? explain your rationale >> it's a new market for me there's just something i want to invest in. >> did you think of it as a speculative lottery ticket >> i wouldn't say completely speculative. but it is speculative. >> is this your personal money or portfolio >> it's absolutely my personal money. you can't say crypto's distressed that would be kind of hard. >> can i ask what percentage of the lasry family fortune has been invested in bitcoin >> yeah. i mean, you can absolutely ask. >> and >> knock yourself out. >> no, it's around 1%. >> oh, yeah? 1% >> that's significant. >> it's 1% because you bought in at high levels or because it rose after --
>> it's gone up. >> when did you get in >> few years ago >> a few years ago hold the phone, people a few years ago. >> but not i bought a lot more i would say in the last -- you know, in the last year when probably the average price would be somewhere around $7500. >> what do you believe the intrinsic value would be today >> i have no idea. you're hoping that as it gets more into the mainstream, and as many markets end up allowing it to trade where it's really tradeable, to me that's more the market bet i think then you'll start seeing the price of it as it's easier for people to buy. i think then you'll have something that'll end up being somewhere around sort of, you know, 20,000 to 40,000.
>> if steven mnuchin announced tomorrow that the dollar was going to become a digital currency, do you believe that would crowd out bitcoin as the sort of digital currency of the world? or do you think it would validate bitcoin >> i don't know. i really don't i mean, i think it's -- you can make an argument both sides. the reason i like bitcoin is it's the one where everybody's going to come to whether when you look at everybody else, everybody else is trying to make bets on different cryptos which i think makes sense. i just think the one that's going to have the biggest market benefit is going to be bitcoin so to me a lot of this is, hey, if the average american can buy it, i think then the price moves up >> and last question on this what chance or risk do you factor into your equation that
others say that's a problem there? >> i think that's an issue. >> too many of this currency because of the way it's built, either we're not going to allow it or make it much more restrictive. >> if that happens, it'll continue roughly where it is if things work out, you'll make five, ten times your money if things don't work out, it'll lose a little bit. there aren't that many opportunities where you have that >> okay. >> that's the reason i bought it >> marc lasry, a bitcoin believer thank you. >> i like the way he says, five, ten times your money >> most people pay attention to something like that. >> how long? >> i think it will be the next two or three years. >> five to ten times your money in three years >> what was your price when you got in >> i started getting in -- i bought very, very little i started buying a lot when it
was around $5,000. the real reason i did it was because i thought it was going to get approved by the regulators it does, it takes off. when we come back this morning, elon musk is apologizing for his comments about a british caver that helped rescue the boys in thailand more after this. you always pay your insurance on time.
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♪ that's the ballroom. things are ramping up for the delivering alpha conference. elon musk has apologized for his comments about a british caver who helped the boys in thailand. in a heated twitter exchange, he called the man a pedo. people assumed that's short for a pedophile. musk now says his actions against me do not show his actions against me for that i apologize to the companies i represent as leader. the fault is mine and mine alone. joining us now is gene munster he posted an open letter to musk
urging him to apologize to the caver. thanks for being with us today >> good morning. >> gene, you are somebody who's a believer in elon musk. you're an investor in elon musk. but you've been concerned about what you've seen, a pattern the last several months. describe what you told him in that letter. >> so the context of this letter, this was inspired by comments by byside investors this concerning behavior of the last six months. there's been four kind of notable events one, the march 18 earnings call. second is broadly this outburst against short sellers and the media. there was this saboteur exchange last month then the unsworth event this week crossed the line. essentially the issue for tesla believers, the investors was that this was illustrating a leader that was thin skinned and
short tempered and that really isn't the reality of who elon musk was an so the purpose of this open letter was to encourage him first to apologize and second take a more measured approach to twitter. ignore the short sellers and focus on what is most important which is improving model 3 production >> he has apologized do you have faith that he's going to step back a bit from twitter? you said you hope he takes a twitter sabbatical >> yeah, we do have faith. i think the apology was something that was somewhat surprising just given who he is and kind of his strong will. i think that is a sign the apology is a big deal. i think that's a sign you'll see a more measured approach it's okay for him to use twitter, but it needs to be to focus investors on this wonderful mission that tesla has which is accelerate the globe's
adoption of sustainable energy it's a much bigger vision. and i would also point out that tesla is a unique company in they don't do advertising. they really rely on things like elon's tweets to build community referrals for their cars i think they need to refocus him on the grander plan of tesla when he does get off his twitter sabbatical. >> thank you very much we'll check in with you again soon all right. coming up, the ceo of united airlines on his company's latest quarterly results. stayun ted you're watching "squawk box" on cnbc 'm carl and i'm a broker. do you offer $4.95 online equity trades? great question. see, for a full service brokerage like ours, that's tough to do. schwab does it. next question. do you offer a satisfaction guarantee? a what now? a satisfaction guarantee. like schwab does. man: (scoffing) what are you teaching these kids? ask your broker if they offer award-winning full service
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welcome back to a special edition of "squawk box" live from the eighth annual delivering alpha conference. a front row seat to market movers and shakers in less than 30 minutes, president trump's top economic adviser larry kudlow will take the stage for a news making interview. it's july 18th, 2018, and the special hour of "squawk box" begins right now ♪
good morning and welcome back to "squawk box" here on cnbc live from tnew york city. the place where in 30 minutes delivering alpha will kick off with a special conversation with a great american larry kudlow director of the national economic council you can hear the buzz when i mention larry. >> more than buzz behind us right now. >> yeah. >> i can hear the buzz i can't hear you >> which is how good for you our guest host this morning, marc lasry -- >> you said it >> marc lasry, the chairman and ceo of avenue capital. let's get a check on the market. the futures right now indicated kind of flattish consolidation day so far
we'll see what happens the rest of the session but down one on the s&p. the dow jones up two nasdaq down six. and the nasdaq's kind of had some adverse things. >> netflix was amazing jim cramer talked about it last night, about how it was almost like lazarus rising from the dead. >> not lasry. >> lazarus rising from the dead yesterday. >> and $5 billion to google is like $5 billion to lasry you should point out 1% of your cash, not 1% of your net worth. >> regarding bit worcoinbitcoin. >> that's a much different in you remember >> i know. >> 1% of your net worth, bitcoin would be double where it is right now. >> yes no it's just the cash i have. in the meantime, we have
breaking news to bring to you this morning the eu slapping goog le with a 5 billion fine they argue the device strategy was unfair speaking on a news conference tin the last hour. >> today the commission has decided to fine google 4.3 billion euros for breaching antitrust rules. google has engaged in illegal practices to cement its market position in internet search. it must put an effective end to this within 90 days or face penalty payments >> google said it will appeal that fine. quote, android has created more choice for everyone, not less. rapid innovation and lower
prices are classic hallmarks of robust competition the commissioner will be live on "squawk on the street" at 10:15 a.m. eastern time. the big question now is not just about the appeal but if there's ever a remedy what that looks like and does to the profits of google and its parent company alphabet >> you wonder why britain wants to leave the eu. dp you just hear that? we've decided just to levy this fine that's a lot of power for a regulator on a u.s. company from the european union >> but any regulator anywhere can do that. the u.s. regulators can do that too. >> we don't. >> we don't? you know a guy -- >> we don't pick a successful european company -- actually, that's why we have trouble finding one. >> i agree with you but the other side of things is that they look at privacy very seriously. much more seriously than other
regulators do. so this is kind of in keeping with that. >> got a lot more to hide. >> okay. >> i don't know about that other news of the morning, morgan stanley out with its earnings $1.30 per share for the quarter. it was 19 cents above estimates. revenue also beating on strong investment banking sales as well want to get to wilfred frost >> thanks very much. there are some successful european companies let's get back to morgan stanley. overall the ceo's tone was bullish following that strong beat across the line two particular areas that are of interest, firstly his point on trade fears. he said it's not impacting decision making of clients yet, but that moment is getting closer he said a lot thought it was a negotiation tactic last quarter but clients now thinking it is more than that and it's affecting psyche that said when it comes to
investment banking, he was optimistic about the pipeline. still despite the trade fears. i also asked him about the yield curve. we also talked about that in relation to his wealth management business. which is about 40% of the business that days he said cash levels are about as low as we've ever seen but the most notable recent change from clients has been shifting into shorter dated bonds and money market funds opposed to longer dated bonds. so it's not a shift necessarily from equities into bonds, but there is a shift into shorter dated things because of that shift in the yield curve guys >> okay, wilf. thank you for that report. we should also tell you earnings in just now from abbott labs as well they reported second quarter profit of 73 cents per share
beat estimate biss by 2 cents they also raised their full year outlook. meantime, we have a big interview now. united airline raising its full year profit forecast and phil lebeau right now is in chicago with the ceo of united phil >> thank you, andrew let's bring in oscar munoz ceo of united. big second quarter you've raised your guidance. validation that your strategy in terms of adding capacity in certain markets will pay off >> off always said proof not promise. you and i were together that day the market wasn't reacting positively to the news and so it is -- it's just proof again we're doing it and it's to the credit of all the people in the network operating center in chicago.
it starts here, right. been going on for two years. across the board, customer surveys are coming back more positively >> you know the industry overall, people are worried the industry is going to have to come back a little bit you said we're staying the course with our plan you have paired back your expansion plans by a half a percentage point but are you still confident the strategy laid out, that you're really implementing is the right one? >> even with what we're facing, probably a couple billion dollars from what we expected, i think it's the nimbleness of our organization and our people. how they've been able to not only continue to provide great customer service, but it's really getting at some of those
costs. we recovered about 75% of the fuel through revenue then the cost structure allows us to do what we just announced. >> worried about jet fuel slowing down your momentum >> it's always an issue. we prefer it to be lower, but it's something that's constant in this industry forever and ever how we operate around it, how we sort of adjust whether it's capacity or other costs, i think it's in the way to manage. a nature of our life in this industry we need to learn to manage it rather than lament it. >> whether here in the u.s. or internationally, are you seeing any signs that demand is slowing down saying pull back a little bit whether it'scorporate or leisure travel or do you see it continuing to grow >> it's continuing to grow our third quarter guide is significantly high may be the highest in the area of the industry. the atlantic has been strong
and i think latin america and some of the mexico and puerto rico situations, we'll fix them. our team has proven they can adjust for a giant company like us to be able to say nimble, it's a great attribute to the team. >> just returned from here they're worried that the trade tensions with europe, asia, wherever it might be may slow down overall demand. especially overall travel. are you seeing any indication of that >> we're not no indication of that. our demand is strong >> oscar munoz, ceo of united airlines got better than expected numbers on both the top and bottom line. >> thank you very much when we come back, our guest host's look at the markets be sure to tune in for full
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welcome back to "squawk box," everybody. we are live from the eighth annual delivering alpha conference presented by cnbc things are about to kick off it's very loud here because everybody's about to go in the ballroom meantime, let's look at what's been happening with the futuring this morning. the dow indicated down about 11 points in negative territory after starting the day for most of these indexes in positive territory. still got a lot of things that can happen before the opening bell let's get back to our guest host today marc lasry is the cofounder and chairman of avenue capital group. he has been our guest host for the last hour and 15 minutes or so we started off asking you about your view on the markets right now. yesterday we heard from jay
powell me says he sees several good years ahead of us. does that jive with what you see? >> yeah. i would actually agree with that i think the u.s. economy is going well there's nothing negative out there today. so for us, you know, we're just trying to find different places we could invest. >> different places meaning different than the united states >> different than the united states when we look, we're putting money today out in asia. we're still investing in europe. one of the new things we're doing is here in the u.s., we're doing impact investing so it's one of the -- we're finding that there's huge opportunities there especially on the credit side where most people are doing impact on the equity side. >> what would you be looking for? >> so it's mainly where we're lending money. it's more of a direct lending approach and you're generating about 10%, 15% returns. because there seems to be this
real niche out there for that. there aren't that many people doing it >> when you say impact investing, you're talking about companies that you feel good investing in why? >> you can measure it. you're trying to do the u.n. sustainable goals. it's sort of a different level than esg esg is more i would say a risk factor you're trying to make sure you're doing things right. impact investing, it's more of a measurement. we're trying to do that. it's going to be limited really in the united states right now >> big demand for that >> i think there's huge demand for that >> in the united states from u.s. investors >> the investments will be in the united states right now. >> and do you look at that and say i'm okay with lower returns? >> i actually would tell you i don't think the returns are going to be lower. i think that seems to be the perception i think the better question is how big is that space. i think right now it's still
pretty new so you can generate the returns. it may end up being in two years or five years or ten years when there's more capital there >> interesting >> marc, part of the reason we have seen such a difficult place for investors like yourself looking for distressed opportunities to invest is because we've had so much free money floating around. money, money everywhere. lots of liquidity. that's because the fed has been low for so long. as they start to normalize, what do you think about the rate of normalization. and second of all, what's the point for normalization? what are normal rates in this environment? >> i wish i knew the answer to that i think it's the rates are going to move up what you're finding, though, there's massive liquidity as long as everything is fine the minute there's an issue, you find liquidity is gone right? so i think in what we're trying to do is become a liquidity
provider when there's a problem. that's what really changed out there today. because you don't need an avenue you don't need anybody to end up lending money when there's no issues when there's no issues, it's easy to get capital. if you want to borrow money, that's easy to borrow that money with collateral. but if you lost your job for six months, you will find all of a sudden you can't borrow money at 2%, 3%, 4%, that you're paying 15 pr 15%. >> is that an indication when things get ugly for the overall market, they will go south very quickly? >> yes i think that's very true if you take a look at it, we're lending money in europe right now at 10% to 15%. >> wow >> and the only reason we're able to do that is because there's issues you brought up the minute all of a sudden there's issues in the
system, people are going to run away very, very fast. >> that makes me a little worried. i think of an airplane hitting an air pocket. >> yes you're going to drop pretty quickly, yes you will, sorry. >> so you don't see anything bad on the horizon, but you can't predict everything that could happen any any point. >> i think the economy is doing well it really is the question is how fast are we going to continue to grow. so i think from what we're doing, the opportunities are more in areas where they need capital and that's going to be in europe right now. it's going to be in asia u.s., you've got sort of different opportunities here and there. but it's not as large as it used to be. when you have a default rate less than 1%, there isn't that much to do >> let's talk a little bit about active versus passive management that's constantly in the background
i saw some new information recently that said sovereign wealth funds which are usually considered a savvy investor that they have just under half of their money in active management right now that they've leaned more towards index, passive aggressive investing. is that something -- would you still call them the smart money at this point? >> you know, to me the smart money is whoever gives us money. look at the end of the day, the reason more people are going into active is simply because you've been in an environment where everything is doing well right? in that environment, you're going to find the index funds are going to be fine >> more people going into passive because it's been -- >> it's been easier. what do we do? we're trying to minimize risks when the system theoretically doesn't have a lot of risk, it's better to be a passive investor. so we're costing people money by
hedging out those risks. yet there hasn't been any events where you're nervous about so people are going, the world is fine. there's no issues whatsoever and that's great but ultimately you will see that active managers will do a better job when there's issues. you don't think there's any issues, i'd be a passive investor because we're going to cost you money by hedging out that rirskg people are always chasing what's happened in the last year or two. >> and that's always going to happen people come to us saying when is the stress going to economy, when is the economy going to slow down. i wish i knew. i mean, i do know it will. i don't tell you it ultimately always does. you've got to be ready for that
>> you'll be on a panel here in a bit. tell us one thing we haven't heard from you in the past where you suddenly see opportunities and maybe i shouldn't say suddenly i know for you a lot of times you spend a year or two weighing things >> i would say the areas where we're seeing opportunities is going to be on the impact space. the other area we're seeing opportunities really out in asia where you can do direct lending. aviation where you're able to end up buying end of life assets and you can still lease them out. we saw what happened with malik. there's this -- you want it to work and that -- so you're finding that there's these opportunities out there. but they end up being sort of
smaller opportunities. i would say it's sort of half a billion or a billion dollar opportunity. it's not scaleable opportunities where you could put $5 billion or $10 billion no work >> we want to thank you very much for your time today and being so generous with your time >> thank you >> thank you coming up, we're just minutes away from the first delivering alpha taking the stage. larry kudlow we'll bring you that interview live don't miss other heavy hitters taking the stage this afternoon. full coverage right here on cnbc we'll be right back. the governor has declared a winter weather emergency... extreme risk of burst pipes and water damage... soon, insurance companies won't pay for damages. that is, not if they can help prevent damages from happening in the first place. at cognizant, we're turning the industry known for processing claims
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here we go here we go >> which song do we pick >> big day >> big day for bq, becky quick. >> happy birthday. >> thank you very much. >> 21 years old. >> thank you even more. >> what sign are you >> cancer. >> cancer the crab you're not crabby. >> sometimes >> you're a delight. >> happy birthday. are we going to sing >> no. it's okay. other things happening delivering alpha we can move on
>> some birthdays are. >> okay. we got to go happy birthday, becky. coming up when we return, we're counting down to the kickoff of the delivering alpha event as soon as the director of the national economic council larry kudlow takes the stage we will bring you his comments live plus it's jackie deangelis' birthday too >> happy birthday. >>e' bng y wllriou numbers when we return. going on at schwab. oh really? thank you clients? well jd power did just rank them highest in investor satisfaction with full service brokerage firms...again. and online equity trades are only $4.95... i mean you can't have low cost and be full service. it's impossible. it's like having your cake and eating it too. ask your broker if they offer award-winning full service and low costs. how am i going to explain this? if you don't like their answer, ask again at schwab.
welcome back to "squawk box. breaking news. our june read on housing starts and permits and the data is out. 1.73 million annualized units. that is a big miss big miss matter of fact, it was a subtle revision to last year. 1.337 million, that's over a drop of 12%-plus and if we look at permits, it's also a disappointment but just not on the same scale. we're expecting a number around
1.33 million that's down a little bit more than 2%. non-revised 1.3 million. and that 1.3 million if you recall last month was a soft number as well last month we had strong starts, weak permits this month it's the opposite there may be some leveraging there. to go up five on starts to now down isn't a good thing. can't really blame interest rates. we haven't had a significant raise in interest rates over the past read period we are still hovering in the mid-2.80s. this is going to be session 20 closing in that zone and also second day for jay powell. we'll also listen anxiously. brian, good to see you back to you. >> thank you very much i am brian sullivan. let's look at how the markets are looking this morning as we wait to return to delivering alpha. this has been an incredible tech stock run. i know we've been talking about it on "squawk box. but really you've got to
highlight how far and how fast we have come the futures indicate that will continue today likely not but we are down five points on the dow. amazon, facebook, even alphabet, these have been the stalwarts and the power horses behind this market run futures not indicating necessarily if that's going to continue today either way, we will wait to find out. europe, a little more green on the screen some of the stuffs we talked about with their pullback on squau quantitative easing. you've got germany up 0.5% it was a mixed trade in the asian markets. nikkei higher. much more on the markets, much more from delivering alpha after this short break we're back right after this. so you don't miss out on the perfect hotel... but did you know you can also use tripadvisor
welcome back morgan stanley out with their numbers this morning wilfred frost is here. not an overstatement to say they looked pretty dog gone good. >> right the eps $1.30. the estimate was $1.11 equity trading, fixed income trading, some of them are beating. they beat on all three expectation was $1.5 million fixed income $1.4 billion.
so pretty strong beat across the board. wealth management you could say a little bit behind in terms of the revenue. but pretty strong still and the profitability was good because the margin was ahead of expectation. >> i know the earnings kaulzs beginning right nouz ppz you dp have a chance earlier today. the moment it's going to effect is getting closer. the moment it's affecting psyche rather than decision making. james gorman, the ceo coming on right now. >> you've got to hop on that i know also a solid quarter from morgan stanley let's get back to the crew at delivering alpha save a seat for us >> we will, brian. we'll see you in awhile. thanks for that. i think you get a little overtime or something after
"worldwide exchange. as we wait for the president's top economic adviser larry kudlow to take the stage here at delivering alpha, let's bring in former council of america adviser jason furman and steve leisman is here. going to give both of you guys some raw meat. for you, jason, i'm going to do your job for you i'm going to find some real problems here. and that is you cut taxes, you raise spending you don't do anything about entitlements and you have a deficit that is not going to be helpful whatsoever over the next year. i guess you saw those numbers. >> yeah. oh, yeah larry kudlow's a wonderful guy i'm sort of ashamed he made that statement about the deficit falling rapidly. all else being equal >> you heard larry say it's the
rate of increase they were hoping to arrest down the road >> it was like the third derivative -- >> oh, you took calculus do you remember anything i remember that weird looking "a" that y "s." but that's about all how would you do it differently? would it be entitlement reform democrats don't like entitlement reform >> i think there's a framework to deal with fiscal problems it's additional revenue -- >> so you want to raise taxes. >> i think that's part of pit. >> who should we raise them on >> high income households. we could take the corporate tax code we have and make it more efficient and raise more money there's still a lot of loopholes on the overseas. there's a lot of loopholes for pass throughs. i think we could give sugar of making expensing permanent. >> you don't want to complain how much things are going right now. it seems like you've got a horse
in the race. and you can't ignore that for the most part, we just had lasr on he had trouble coming up with anything as a money manager to be overly concerned about. >> if i was a money manager, i wouldn't be concerned. if i was a wage earner, my wages would be lower today than a year ago because of inflation we had rising real wages from 2012 -- >> but income inequality and disparity got worse. now with labor getting tighter, aren't you expecting any month now to hear about some better wage improvements? >> i'm not, like -- i don't think this is donald trump's fault. the economy is a big thing but that's the one big fly in the ointment it's an important one. that's what matters. most people have jobs. what happens is the wage increases they're getting. you saw chairman powell citing that as a factor for one reason why he's not quite as concerned. that was one of me more dovish
lines in his testimony >> so would you expect the current administration to ever -- for entitlements -- to appear on the plate of priorities it has to. every minute that goes by, we have to -- >> oh, president obama had a much more robust set of proposals on medicare reform than are in president trump's budget so -- >> does that happen though you see that coming on the radar? >> again, i think the only way to do it is to go out and agree on two things. you're going to put everything on the table and you're going to protect low income households. i think this administration -- >> you can't -- >> -- does nothing >> you can't do that until the deficit matters. you look at what's happened. and it's hard to find any reaction in the markets to supply >> yeah, why is that >> well, you know, i've gotten some e-mail from people who did work on this very difficult to find a supply effect
deficits don't matter until the bond market says they do >> in other words, they don't matter until -- >> and the whole reason to do deficit reduction is preemptive. you would do it because you're afraid at some point the bond market will decide it matters. you do it to create fiscal space for the next recession when was the last time you got congress together let alone in front of their face as preemptive as that >> although there was a point where i thought we were moving close to that. >> there was a time. but the -- it may be because america issues the world's currency that we have plenty of people and have had plenty of people to buy our bonds. >> bitcoin >> the dollar. >> oh, yeah. >> and it may be the rules are different for the issuer of the world's currency than other people >> how do we go up how do the -- the vigilantes can't be vigilantes.
>> there's no competition. that whole differential, maybe when europe starts to move, and bay the way, europe moving is not clear nm ever. we know they're going to end qe. but when they raise interest rates is another entirely. there's no competition it's hard to get too far out over your skis in terms of expecting higher interest rates when the rest of the world is zero or lower. >> sit up to the bankers in europe or the demand and supply dynamics to go up? is it still in draghi's court? >> i think if they had consistent inflation, that's a single mandate they would start to move but they don't >> how would you fix europe, jason? >> you've got ideas to fix everything else. >> one, they're doing exactly the right thing. they are not doing the tieps of fiscal contractions they were
doing before they have an expansion monetary policy and it's working the first half of this year, they're behind us. we have this bigger fiscal expansion. they're not expanding the way we do it's opposite. they need the demand in the short run more than we do. we're sort of supercharging everything at a time when we're already having an unemployment rate of 4% >> what do we do with trade? because you're an obama guy. he wanted tpp. but hillary ran on the opposite. what if they had asked you into that administration, would you have -- >> i would have explained the benefits of tpp. look at the auto tariff. president trump rightly complains about the tariff on the autos. they're about to get rid of that for what they buy from japan and keep for what they buy from us these will be diverted away from the rest of the united states.
that's going to have a long-term negative repercussion. >> it's hard to find the market caring about it. we keep going. nothing ever happened. >> down 200 points isn't even a percentage point >> i don't think this is a disaster for the u.s. economy. i think if we want it to be an autarwe tautarky we could survi. i don't think that's a great economic strategy, but i can overstate the trade. >> can i ask you guys about powell yesterday he said there are several good years left going to have a strong economy you're going to see inflation. but is he pushing for inflation above 2% >> i don't think so. i think he's being very careful in his wording on that by the way, he's getting a lot of credit and praise for his
simple language. and there are far fewer words. these things are ending like half an hour to 40 minutes earlier. they're running out of questions for him. it's kind of crazy we were not ready yesterday for when they finished we're cruising until 12:30 >> part of my prediction we're extricating ourselves from the central bank running the world. >> i think that's good and it should be a corner. >> really? >> i have never thought it should be as central to the markets as it has become >> once a month, we should hear from powell. instead of 12 different guys on the fed speaking every week. >> i don't agree with that, joe. i think it's good to hear them i think the market handles that fine if you're tired of it, you should go watch reruns >> it wouldn't be so consequential. >> i used to do your show in 2015 and '16 you asked about monetary policy. i'd say i'm in the
administration, i don't comment on it. i got out. i was excited to start commenting on monetary policy. then all i got were fiscal questions. so, you know, i think some of that has shifted >> but i do think that powell does see a couple good years we can argue and i think that's where the argument is going to be what is causing higher growth right now? some people are convinced that it's the tax cuts. and some people are convinced it's the fiscal thrust my sense is it's a little bit of both with the important question for powell being what's to come? is there going to be this outside -- outsized corporate effect, supply side effect to the economy? that's what he was waiting and watching he said it's too early for tax cuts to be effected. ifhassett, he will tell you what he sees happening is a multi-year process. you cut taxes, companies buy
machinery, they increase productivity >> so let's go -- all right. we're going to go a little bit further. obviously larry is going to come on in a couple minutes and shoot down everything jason just said. >> that was steve. >> no, not that thing. some of the previous things. i mean, should we look at your little dot curves then do we care anymore about how they -- >> i'll let jason in but you should factor it in, right? what i never understood is if you -- you know, want to know is the fed going to do an extra quarter point this year and you're basing any meaningful investment decisions on that, i think you're running it too tight to the vest on that. >> everyone was looking at jay powell yesterday to find out what the fed is going to do. jay powell doesn't know what the
fed is going to do that's a really good thing he's waiting on data he made that clear it would take some major data to get them to move in august to get some major data to get them not to move in september. beyond that, what happens to inflation? what happens to expectations what do we see in the labor markets? >> the reason i keep coming back to that is whether or not market valuations are going to be so closely tied to that if inflation runs hot, it's going to be other assets to make your money just worth as much as it is. gentlemen, thank you very much let's take a look. jim cramer is taking the stage ready to sit down with larry kudlow. >> kudlow and cramer >> by the way, we haven't changed a bit. not a bit. we all look the same >> i was 30 pounds heavier you look younger congratulations. >> it's nice to be here. i appreciate it very much. appreciate cnbc for having me. >> well, we are thrilled i miss you, partner.
>> i miss you too. that was a great show, by the way. >> yes great stuff. look, five years ago, you were here you were interviewing tim geithner. >> that's right. >> how's it feel to be interviewed now rather than doing the interviewing >> oh, it feels fine it feels great i've done quite a lot of this. i have to -- i guess the little secret -- maybe it's not a secret i'm honored to have this job what everyone thinks of potus, for me it's a great honor. i've known him for a very long time interviewed him many times on cnbc, on radio but i kind of look at it, you know, it's not so much a job, it's an honor. i mean, i served in the white house omb long time ago, 35 years-plus this is a more senior position >> sure. >> probably, jimmy, it's the most fun i've ever had, if you
want to know the truth. >> even by your own admission there are various factions within. >> oh, yes >> you have to get the president's attention and keep his attention. whap happens if he doesn't agree with you >> you win a few and lose a few in anything else. sometimes you agree with me. sometimes we didn't agree. you know, look, i will say this, president trump has been very open, very assessable to me. i see him quite a bit during the day. lots of meetings sometimes you get an afternoon call sometimes you travel on the airplane he's just been great he's open and in meetings with five or six or eight, who knows, people, he'll go to me, "larry, what do you think? i tell him it's my job. i tell him. >> larry, what do you think? we're having a big fight with
china. >> i don't like the fight with china. i don't necessarily agree with all the trade tactics. we'll talk about that some but my point is, he enjoys the back and forth, to his credit. i think he's greatly underrated, in that respect. he thinks and processes. he loves facts, figures, charts. he's very attentive. when he disagrees he'll let you know look, on the whole, i mean, obviously i helped draft the tax and economic stuff during the campaign we agree on almost everything. where we don't agree, we talk it through and he's been wide open and assessable to me and i just love that and i will say this, great thing about the national economic council, we have our fingers in our everything that's what makes this a fun job. every darn thing under the sun,
including stuff i know about virtually nothing and i have a cracker jack staff to help teach me except for "kudlow and cramer" jimmy, this is the most fun i've had. >> we're serious optimists. >> i think so. >> i know, larry, you must be thinking the way brian moynihan did. you're the economist, how do you have a flat yield curve 4% gdp and have so many people gloomy. >> it's interesting about that it looks like it's fourish i know nothing more than you know at this point, informationally. it could be higher i would be thrilled if it was three plus that was our baseline. everybody yelled at me during the campaign, after the campaign, when i came into this office oh, you'll never get three
including many dear friends of mine in the democratic party, who i respect enormously we are getting three, and it may be four for a quarter or two it may be plus i don't know that's all to the good you know, literally millions of more people are working. i mean, if you can't -- if you go into these jobs, what's the key point? the key point, in my judgment, best way i can help the country is get the economy strong and prosperous you know you've got millennial's out there -- i'm going to depart for one second then i'll come back to your gdp. you've got kids, millennial's, et. cetera, some of whom are working in the white house, in junior positions, who have never seen a full-fledged long lasting prosperity they don't know what i'm talking
about. >> they must think it's about to roll over at every minute. >> they're not cynics but they haven't seen it. we haven't had one in 20 years you and i professionally grew up, i was through the stagnation but the '70s and '80s were fabulous prosperities. to me, that's the gain that's what you want to do do whatever you think is best to generate a long prosperity there's 155 million americans. i believe we can get it up to 160 million or better. i believe we can do that through taxes and regulation that's why you do these things you want to leave it better than you got it. >> but at the same time you've never been a fan of the huge budget deficit that's what we're faced with can the issue is can we grow out of it? we're pro growth even if you're pro growth, the numbers are staggering
the deficit is so daunting >>well, i don't know, you know, yeah, huge deficits are not good we're going to run, as a shared gdp. we're going to run 4 or 5% i've seen worse. in the reagan years, in the beginning, you know, you cut taxes and the first order is you lose some revenues no question. but it's like investing in a business you may have to borrow to make a good investment. i don't mean cash flow daily a good, long-term investment i see the same thing happening now. the trump tax cuts, yes, we will lose some revenues in the short run. i believe we'll get it back and more and we have the mid year review coming out soon. mic mu-- >> the taxes should be cut again?
>> well, -- >> i know there's a budding tax cut 2.0. >> right we had a good meeting yesterday on the very subject. we're mulling over a number of options. it will be pro growth options. >> capital gains >> and move it -- >> what's left >> i don't want to go too far on this. >> is it -- acceleration >> i will say this, a lot of people, and, again, the policy is not yet developed okay so i'm not letting anything out. but there are a number of people on the hill, for example, who would like to make a lot of tax cuts, the individual tax cuts permanent. >> okay. >> permanent so not only did we have a successful tax cut but we want to keep it that way.
you may see a 2.0, a 3.0, 4.0. i'm a tax reformer lower the rates, broaden the base a lot of that was done in the last bill. much needs to be done going forward. some of those ideas are circulating. i think will come to fruition. let me go back, though, the gdp thing. look, i'm not an academic guy, but i just pose this thought to people we are, in some respects, we are the ninth year of a recovery all right. >> for the younger people around you in the white house. >> right they've never seen prosperity. here is a thought, and i may be wrong about this, but think about it when i was a young economist at the fed and wall street, it was usually labelled by economists of all stripes 2% growth was a
growth recession it was not a recovery. it was not an expansion. it was called a growth recession. i don't know who coined the term just consider this possibility, we have been in a growth recession since the middle of 2009 and you can go back further, if you would like okay if we get the kind of numbers you're suggesting and i'm suggesting, we've already seen some of that i mean, on the quarterly basis we're going to go through 3% this career. look, that may be the beginning of the recovery. >> you're saying everything could be a prelude to what is about to occur now >> well, you know, i notice jason furman was on squawk and he's a friend. a terribly smart guy he may disagree and i get that, but consider the possibility
that a capital spending boom that we never really had, okay wide spread capital returning back to the united states. you know, this is the hottest country right now in the world trillions of dollars are coming here it's leaving europe. it's leaving china it's leaving a lot of places we've never seen these inflows probably since the 1990s it's possible that a, quote, "real business growth cycle," is there in front of us for the next four or five or six years that's a possibility and i want you to be open to that growth recession is one thing. full fledged recovery where people not working can work and cap spending that never took place, long-term projects will be put into place and the attitude toward businesses is improving enormously think about that you could have a run in five or
six years that the rest of it, as you said, is prelude. >> the stock market is agreeing with you at the same time, if that's the case, larry, is this not the time to take on the chinese? do you think we're in a trade war with them, if you think we are, is it winnable? >> i think it's a significant trade dispolluute. >> >> this is pure kudlow. >> we love you for it. >> look, i'm not a big fan of tariffs, you know that i don't like blanket tariffs i wrote an op-ed piece before i lost my job at cnbc, where we didn't like the steel national security 232 okay, but, i have been a long-term critic