tv Squawk Box CNBC January 21, 2020 5:00am-6:00am EST
and this special four-our edition of "squawk box" in davos begins right now good morning welcome to "squawk box" here on cnbc we are live from the world economic forum in davos, switzerland. we are coming to you live an hour earlier because president trump is expected to address the crowd of world leaders here in the next half hour we'll bring you his address live as it happens. we have a huge lineup to talk about the president's speech here to talk about business. bank of america leader uber chairman, goldman sach and many, many more. >> after the markets pull back a
little we had the holiday equity futures are showing the dow with pressure of 123 points, nasdaq indicated off about 60 and s&p indicated down about 18. we've been in quite a bowl as we extend record setting moves from last year are into the new year. pulling back a little. >> there are growing fears about the outbreak of the coronavirus. confirming now that the disease can spread from person to person and this comes at the time of the chinese new year travel-related stocks are down today. the hang seng falling after moody's cuts its rating. a little corporate news, boeing
in talks to borrow $10 billion or more to deal with the rising cost of the 737 max crisis they've secured about $6 billion so for from banks and are talking to others for more >> it is not a new virus it's usually live stock to humans but people who are contracted it have not been anywhere near live stock. >> it is when it goes huchl an to human when you worry.
you worry about the mutation >> and we've got people here from all over the globe. >> we know more about some of those boeing loans this january marks 10 years for the ceo of bank of america now hovering near the 52-week high joining us now, bank of america ceo. >> it is great to be here. >> i can't believe it has been 10 years you've been in charge of bank of america i guess i'd ask you 10 years later. when you took over, we were in the mts of the finance crisis. what is your outlook now
>> well time flies when we are all having fun >> we are delivering the right way in terms of themes of davos and broader society. as we look ahead, our team thiz the u.s. will grow at 1 b.75% our customer base increased. that bodes well for the rest of the u.s. economy because of the sheer volume we see about $3 trillion a year go through our customer accounts >> i talked to you in august, you said a recession did not
look to be anywhere on the horizon. >> at that point, everybody went to the conclusion and then it didn't happen. as we think about the market, you go up and down every day, you still sit at the high. there are the tax reform, the ability of people to adjust usmca as well. last year, businesses were conservative because they were trying to read the uncertainty coming after labor day, they'll stabilized we'll have to see how they react. >> too early to tell if they are willing to spend more aggressively
>> i think they flattened out. you have to think about the different types of businesses. they are aggressive and go out in hiring people and doing good things and spending. you had to deal with supply chain and issues you are doing all that work, you are not doing one new product, service or capability. really, it was related to the size of the company. with the settling down of the open conflict about tariffs, you'll see that mitigate >> you can make a case that the earnings improvement across the board justifies were stock prices have gone i've seen in recent weeks more and more people drawing recent weeks as fw it is totally related to the recent moves by the fed. it is a way of saying this isn't
real you think there are underlying fundamentals of justifying that. >> how did you feel in 2018? it will come down to the earnings growth. our team is constructed. it is going to be an earnings growth driven outcome. valuations are moved up dramatically our stocks are still cheap relatively in the industry >> and you are buying back >> a lot the debate will be had people extrapolate and you have to be careful. the last core relation was in august saying we are going to recession. >> was it a mistake for the fed to do it then? >> i think it was a mistake to provide a safety net or insurance or whatever. you can look back to the
precedent. as long as employment stays strong, that is the good news for the u.s. >> would you race interest rates? >> i think they are going to hold >> i think they are going to hold do you think that is a mistake >> i don't guess what they'll do >> there is not a single banker in the world that wants the preemptive position. no one is going to do it so we are going to mess up by letting it swing too far >> that is the question. >> that's the debate we'll find out in five years whether it happened or not >> you are in davos now. i'm surprised you admitted to doing buy backs. have you got your story about how buy backs are not horrible >> let's think about that. left year, we bought back a lot of stock we went from $20 starting
minimum wage a year ago i told you it would take two years we did it in one year. we did $1,000 extra bonuses in cash to everybody under $100,000 we had a large bonus pool we paid out we generate record amounts of small business loans >> what is the justificationer fought buy -- for the buy backs? is. >> we have more capital. using the excess capital we built up in the early decade and giving it back to share holders. we can both do buy backs and deliver what society needs from $250 million to charity, $5 million to low to moderate income housing if that's not a great track record and doing buy backs
you can do both. >> we are going to hear from the president in about 20 minutes. is there something you want him to say >> i think predicting -- >> is there something you'd like him to say >> i think keeping work on the trade deal so the global economy can continue to function is always a great thing resolution with china, usmca starting to happen with europe and other countries, these are other important pieces >> eanot just a truce with chin and arrive but actually transforming and changing the way we did business with china in a positive way. do you agree with that >> predicting what steve will say. they might be on the same page >> you are also the head of
international business council i know you've been looking at a lot of things you have been circulating through, i think you have news. >> we had committed to environmental sustainability for a while. when i became ceo, we had $25 billion, we doubled it to $50. four years ago, we with enter to $125 billion we've announced a $300 billion commitment to make sure we can do that on a business basis the business opportunity to deploy that money is huge whether green bonds, different financing for solar, wind installation every business has to give to the office in order to get $300
billion done whether small business, large or getting to carbon neutral positions, we need the whole country to drive at it >> do you think it will change the way business operates. do you think companies will fundamentally change because they want a better score from larry and a letter from you? >> it is deeper than that. defined the vision of stake holder capital that started 50 years ago, the brt statement, 2017 signature by all of us. what you are trying to say is you can deliver profit, success, employees and share hoerllders. that ought to allow owners and managers and operators to say
success is along to mention. in our letter everybody saying what data are carbon neutral and commit to it we are carbon neutral now. we made it last year. >> that will drive the demand for power companies to get them carbon neutral that simple 22 metrics is what we are shooting for. >> does that message resonate with investors >> it does our $3 trillion from merle lynch. others saying we want you to invest >> for you to be carbon neutral, you are buying from other people everybody can't buy carbon credits. it is not enough of it
they had a great editorial on this down the road if their wrong about how serious it will be in the next 20 to 30, 40 years it will hurt developing companies and share holders. being woke is going to have consequences if it doesn't work out right. >> companies and industries drive it. >> i did see that. >> it sounds great everybody is talking the talk. >> this is not some small
thought process. we'll see what happens we'll see what happensing. >> he has a very different view. >> he does he does. >> the economic sustain ability. >> report profits. >> good job. kudos, brian >> you never live up to your brother's expectation. >> i'll never live up to yours either >> aspire. >> thank you coming up, we already talked about it, blackstone's steve schwarzman here to talk about china. one of the big guests and many plower players don't miss the ce o's of verizon, inbev, marriott
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good morning welcome back to "squawk box" live from the world economic forum in davos we are waiting to hear from president trump. he's scheduled to deliver some opening remarks. first, we'll hear from steve schwarzman, chairman and ceo of blackrock. you were there at the signing of the phase one deal with china. if you look for the media or people that don't want trump to succeed, it is a nothing burger. i've seen that word again and again. you have that number of deal.
>> it is an important deal since 1949 when the people's republic was established in china, the u.s. hasn't done a bilateral deal i think it is really important that that has occurred there is a lot of interesting things in the greement, whethe on intellectual profit or financial institutions and also compliance and resolution of problems, i think that china looks at this as a very important thing because we were basically escalating to a very bad place between the two countries. these two together comprise 35%
to 40% of the world's economy. there are over 200 countries when these two don't have it right, it is a big deal. >> that's what we heard. we got a few things done in phase one. we got some ag buys. just getting back to where china was a few years ago on what china used to buy. when we look deeply into it, there is ip things in there. there are ways, things of noncompliance, tariffs go back up when you look at the fine print, it seemed like the notion that only in a phase two did we accomplish anything. that's not the case. >> it is in china's interest to do a phase two deal. they think it is a good idea most of the tariffs were not rolled back in this phase one so there is a lot of incentive, if
you will to get to phase two they are quite serious about that in china. >> we'll talk to ray dalia on this a bit he still thinks they've moved from the competition to much worse, confrontation is this a pause button on that or do you think this is a deescalation that has rewritten the rules and where we are rolling back towards escalation again. i don't think this is a fundamental rewriting of the rules. this is a start that is much more fraught, if you will, basically in technology. that is an area that crosses over into national security and other things so that's an area
of real friction i think over time in the trade area, it is in the interest of both countries to be in a more normalized position. i think that escalation made it clear to everyone this could be pretty unattractive. not just for the two countries it is slowing down and contributing to slow down to the global growth of the world that is not good either. >> what you focused in on are some of the big key issues it is a huge sticking point that continue to have problems. we spoke to steven mnuchin, from the fcc, he said he is going forward looking at them as a security risk. ifs that the face, what kind of
backfire could that mean for our american companies and for other players in the region who don't want to be told you have to pick between united states and china. >> the whole area between 2025 and at least the translation of the document talking about china wanting to dominate the world with all of the modern computer science based technology really triggered a wake-up call for the united states and other countries. it is normal to want to develop by it self-. it is normal for the u.s. that has had the lead position in technology over my lifetime. to look at that with some trep dags and these two countries are each moving forward.
>> to the point that you've invested money at mit to make sure united states stays on top. >> well i'm american i think we should maintain an edge but make no mistake, the chinese are very capable now and are developing their own echo sphere to move forward ultimately in a more self-sufficient basis. >> you have a close relationship with china and blackstone. that has become more strained in the last couple of years given the focus on the uighurs and human rights and hong kong even a speaker you had at one of the events for schwarzman scholars we have all benefitted from our
relationship with china. are you looking at it given recent events wondering how close you want to be with the ccp? >> actually not the purpose of the program. it is to facilitate the dialogue >> as to our program, joe, we haven't been affected. we have a special status in china. china wants that connection with the outside world. >> i love your program but there is a huge debate in the academic world about whether we should have chinese students, whether they are stealing ip or whether american students will be allowed to be in some of these chinese institutions how would that work? >> i don't know that anybody has answers to that. china to the u.s., research and
knowledge transfer there are about 370,000 chinese students that come to the united states each year >> do you think they should shut that down. some of them are talking about it >> they want to keep that open >> they make a lot of money. they have terrific students that come from china. they look at knowledge differently than we do they view the production of knowledge as a global commodity, building blocks for further developments of knowledge. so their attitudes are much different than a company and than a country actually.
>> it almost reminds me of dealing with mds here, the way he talks about the ccp, the chinese communist party that has come into focus is that going to continue given there is so much pressure for reform in a lot of areas there hasn't been a lot of progress. these are giant forces at worg and a rebalancing of what is going on 40 years ago, china's gdp was $40. now it is $10,000. their gdp is somewhere around $14 billion, $15 billion ours is $22.
there is almost no one in third place. when you have these types of geopolitical changes, they go with it. there is going to be some type of sphere of influence and coexistence that have to be done there are a lot of positive things that these two countries if they choose to act together can do for the world >> can we pivot to your take on investing. i'm doing a panel in a little about unicorn valuations the market you live in actually inflated compared to the relative market. what do you think? >> all markets have gone up
pretty dramatically. i guess the s&p is somewhere around 19 times. if you pay a premium to that, it is high. that is partly justified to the prospect of growth by the fact that interest rates are so low >> do you think when in fact people exit, they'll exit on par with what the marks look like. >> i don't think the funds are marked up too high you have a cash flow model those marks don't change d dramatically everything is up the more interesting issue is
the issue of purr which issing things now they are pretty expensive. you have to see something reasonably remarkable in terms of your ability to improve the operations of a company. >> does that mean you are stepping back and not making purchases like a year ago? >> i wouldn't say stepping back. this is like a hockey game where you used to have 35 shots on goal of things you could buy. now, it's like five. you have much fewer things that are worth your time to analyze that doesn't mean those things won't happen but your opportunity set is significantly reduced. >> is there more competition for
those. >> i don't know that there is more we are in the large end of the market there have always been seven to 10 competitors the names have changed they haven't dramatically changed. >> would you like to comment on any of the senator warren or bernie sanders type of prospects? >> this election is really pretty remarkable in terms of the differences on the democratic side. >> between president trump and michael bloomberg. both are friends >> who would you vote for? >> well, i'm a republican. >> bloomberg used to be one.
>> he's flexible. >> so is the president >> that's true too >> i think the press has done a really good job with the economy. >> i think mike is a really capable person and long-time friend i think it is fascinating what is going on now with him showing up with huge amounts of money to play the game out on super tuesday in march to see where he can get. there is all kinds of fews >> would you like to see how he would be to see two capitalists running? >> i don't think there is a lot of love lost on the democratic side with other candidates who have been out there for the year with mike, who has clearly got
more operational experience running in new york, creating a great company. he's a very capable person showing up with all of these ads it creates some dissidents with other candidates and also the media. on the other hand, we'll see what happens i anticipate if he does really well on super tuesday, game goes on if he does not do well, i would be surprised if he continues >> so andrew, what was the answer, bloomberg or trump >> as i define, trump still. >> the president will be speaking in a moment, do you have any early intel on what he is saying? >> no.
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>> what is your message to the senator, sir >> okay. you can see president trump has just arrived here at the congress center. they are shutting the doors as he goes back stage he'll be speaking to the crowds here in a few moments. again, this is president trump who has just arrived in davos. this is the crowd awaiting the speech this is the keynote speech to kick things off here it has been met with much anticipation you can see someone coming out to introduce the president who he's going to speak about is anybody's guess. my speculation is probably not along with what you are hearing out of the meeting in forms of sustainability and climate change >> it is the world economic forum. hopefully he'll talk about
sustainability i would like to talk about the prospects for global growth. it looks like we'll rebound in china and europe interest rates will stay low i'd like to talk about all that stuff. i know what you want to talk about, we got to get to carbon neutral. but it is the world economic forum. let's talk about economies >> is he going to talk capitalism socialism? is klaus going to speak with him after. the questions, given sustainability and climate, is he going to ask him about that these are interesting questions and any drama you may or may not see. >> first of all, remember president obama never came here. the fact that he's come here
twice makes people happy they like stars and important people the other star today is greta thunberg you have a 17-year-old competing for the stage with a 73-year-old trump. don't forget, they had a twitter fight where he said she should handle her anger management problems i don't think he'll talk about her. he will talk about growth and the trade deals and how the united states is better off this year >> i didn't introduce you. fred here. a little color commentary. where are you on what steve schwarzman said about the relationship between u.s. and china and what the phase one deal means he suggested a decrease.
who was it that said china was a great company mass ka raiding as a country. phase two, steven mnuchin was talking about phase 2 a and 2 b. the motion you you are going to have a big breakthrough, what you are really going to have a is a generational struggle between state capital and generational you will see a decoupling of the two economies. >> are we the democratic or state capital? >> i'd like to think we are the free market. >> you would okay for now. >> it is a real test the soviet union didn't have
these capabilities china is a pure competitor of what the united states has never had before with all the focus on the environment. a lot of people are watching the contest not only between the two forms but a lot of anti-capitalism fever. >> i was at a dinner last night, nobody mentioned eeg or climate change for the first two hours because most of the talk was china or the united states that battle will be playing out in a lot of different ways >> for people's bottom lines, that is huge either you are german or french manufacturer who sees an opportunity in china or you are an investor in the united states. >> let me ask you about that i describe it as hypocrisy the theme here, everybody is
talking about sustainability, you have satya manadella and everyone has a plan. there seems to be a warming, almost an embrace of president trump based on the economic success of the country and maybe the sustainability thing is really a side show -- >> i can't believe what i'm hearing. andrew, i love you thank you. >> in his column, you called president trump the new davos man. >> i said -- by the way, everybody has been wrong everybody here a year, two years ago thought the economy would falter and go down and yet, what happened >> you know i've been a reasonable voice on this
>> i might have been unreasonable voice on this >> you are right it is really hard to know where growth comes from in the next year the majority of people think you've got a growth slow down. the real issue on trump is is he an internationalist in the sense that most people here are? does he believe in the international institutions >> my suggest is that whole con instruct is gone upside down >> macron is such a french nationalist and president xi is a nationalist. >> it is all changed, my friend. >> we have 100th anniversary of the end of world war i what did we have then? nationalism, pop uism and reurge
ens of a authoritarianism. by not paying attention to these real shifts that could tear apart the system that has served us well. we needed president to not only push growth but not buck the system that brought us here. >> i think trump wants to open up trade with china but on a fair playing field >> he should bring europeans with them. he shouldn't be doing trade fights with those who should be his allies and he shouldn't have backed out of the transpacific partnership. >> that is done. we'll do some bilateral. >> we'll do something with boris johnson. >> the president is here now being introduced by the head of the world economic forum donald trump taking the stage here in davos.
>> congratulations on your world economic forum it is an honor to address the members of this organization for the second time as president when i spoke at this forum two years ago, i told you we had launched the great american comeback today, i'm proud to declare the united states is in the midst of an economic boom the likes of which the world has never seen before we've regained our stride, rediscovered our spirit and reawakened the powerful machinery of american enterprise america is thriving, flourishing and yes, america is winning again like never before. just last week alone, the united states concluded two extraordinary trade deals. the agreement with china and the
united states/mexico/canada agreement, the two biggest trade deals ever made, they just happened to get done in the same week these represent a new model of trade for the 21st century agreements that are fair, reciprocal and priorities the needs of families. the american turn around has been nothing short of spectacular. when i took office three years ago, the american economy was under a rather dismall state under the previous administration, over 200,000 manufacturing jobs had vanished. wages were flat or falling, over 500 million americans had left the labor force. 10 million people had been added to the food stamp roles. predicting a decade of very, very slow growth or even negative growth, high
unemployment and dwindling work force and very much a shrinking middle class millions of hard-working, ordinary citizens felt neglected, betrayed, forgotten, they were rapidly losing faith in the system. before my presidency took place, the outlook was bleak. top economists warned of worldwide recession. the world bank lowered projections for growth to a number nobody even wanted to think about. pessimism had taken root deep in the minds of leading thinkers, business leaders and policymakers yet, despite all of the sinnics, i had never been more confident in america's future. i knew we were on the verge of a profound economic resurge yens
if we did things right one that generate a historic wave of investment, wage growth and job creation if we cut taxes, slashed regulations and at a level never seen before in the history of our country. fixed broken trade deals and fully tapped industry, that american would come thundering back at a record speed that is exactly what we did and exactly what happened. since my election, america has gained over 7 million jobs a number unthinkable i wouldn't say it. i wouldn't talk about it but that was a number i had in mind. the projection was 2 million we did seven more than three times the government's own projections the unemployment rate is now
less than 3 per%, 4%. at 3.5%, that is the lowest in 50 years the unemployment rate is the lowest for any u.s. president in recorded history we started off with reasonably high rate. for the first time in decades, we are no longer simply concentrating wealth in the hands of a few we are concentrating and creating the most inclusive economy to every sift. kwer lifting up americans of every race, region and creed unemployment between african-american, hispanic-american are at record lows african-american youth unemployment is the lowest ever recorded the unemployment rate for women
reached the lowest level since 1953 and women now comprise the majority of the american work force. that's for the first time. the unemployment rate for veterans has dropped to a record low. unemployment rate for disabled americans has reached an all-time record low. workers without the high school d disploema have received the greatest increase rate in history. those at the bottom of the income ladder are enjoying the by far, largest gains. workers' wages are growing faster than management wages outpacing the top 10%. paychecks for high school graduates are rising faster than
for college graduates. young americans entering the workforce are sharing in america's extraordinary pros sperity. since i took office, more than 2 million millennials have gotten jobs and wages have growth by 5% annually a number that was unthinkable. nobody would have thought it was possible three years ago a record number of americans between the ages of 25 and 34 are now working. in the eight years before i took office, over 300,000 working age people left the workforce. in just three years in my administration, 3.5 million people have joined the workforce. 10 million people have been lifted off welfare in less than three years. celebrating the dignity of work is a fundamental pillar of our
agenda this is a blue collar boom since my election, the network of the bottom half of wage earners has increased by plus 47%. three times faster than the increase of the top 1% real median household income is the highest level ever recorded. the american dream is back bigger, better, stronger than every before no one is benefitting more than america's middle class we have created 1.2 million manufacturing and construction jobs a number also unthinkable. after losing 60,000 factories under the previous two administrations, hard to believe, when you think 60,000 factories, america has gained in a very short period of time. 12,000 new factories under my
administration and the number is going up rapidly and beating the new 60,000 number we lost. these will be bigger, newer and the latest years of economic stagnation have given way to a roaring guyser of opportunity. u.s. stock markets have soared by 55% adding march than $19 trillion to household wedge, boosting 401 k and college accounts these great numbers are many things it is despite the fact that fed has raised rates too fast and lowered them too slowly. even 2340u as the united states is by far the strongest economic power in the world, it is not even close it was going to be close
but a lot of things happened to us and not so good things happened in other places forced to compete and we compete with nations that are getting negative rates something very new they get paid to barrow money. i could get used to that quickly. nevertheless, we still have the best numbers that we've had in so many different areas. it is a conservative approach. we have a tremendous upside potential when all of the trade deals and massive deregulation starts kicking in, especially this year and towards the end of the year when the trade deals kick in already, the regulations are kicking in right now i see such tremendous potential for the future we have not even started the numbers we are talking about
are massive. the time for skepticism is over. people are flowing back into our country. companies are coming back into our country. many of you i know are coming back with your plants and factories. thank you very much. america's prosperity is undeniable and unmatched america chiefed this turn around not making minor changes but adopting a whole new approach centered entirely on the well being of the american worker every decision we make on taxes, trade, embrace, education, immigration and more is focused on improving the lives of every day americans. we are determined to create the highest standard of living anyone can imagine right now, that's what we are doing for our workers, the highest in the world we are continuin