Skip to main content

tv   Squawk Box  CNBC  June 19, 2019 6:00am-9:00am EDT

6:00 am
begins right now ♪ live from new york where business never sleeps, it's "squawk box. good morning we're live at the nasdaq market site in times square i'm andrew ross sorkin along with joe kernen. >> guys, a lot coming up this morning including the sun right now which is coming up behind us i'm at the kpg women's summit. we have a huge lineup of guests that will be joining us here from the women's pga championship, which is kicking off later today. we're on the 18th hole right now. the guests who will be joining us this morning have lots to talk about the ceo of kpmg will be here target's chairman and ceo, brian
6:01 am
cornell. this is the first time we'll talk to him since last weekend's events where so many cash registers were shut down and stores across the country. also we'll talk about what the consumer is doing now because last august when we talked to brian he said he had never seen a better retail environment. also as you can see, former secretary of state, condoleezza rigs will be joining us and g e given the incidents last week in the straits of hormuz with the tanker attacks, we'll talk to her about what this means. joe, i know you've been watching the markets closely. >> i am watching that sun come up beautiful. you're on the 18th that's the green behind you. condi will tee it up, i have no doubt. she is pretty good
6:02 am
>> she's a fantastic golfer. but, yes a lot happening here it's nice to be on a golf course where the sun is coming up as we start the show >> you're a midwest type you know -- >> i am. >> you travel the midwest. you see the country. you see what other people -- >> not only that, my best friend from when i was a little kid is with me. >> what are you looking at me for? >> they put us in a three box as if i'm in -- are you talking about the -- i heard you refer to these flyover states. this is real america, josephson. >> channeling me now >> i fought for becky to be there. >> andrew, you look exhausted. were you up watching that keep america great thing last night >> you feel -- rn >> you see me? >> he's a little lethargic >> i'm trying to hold down the excitement of this country we're doing so well, becky
6:03 am
it's nice to see you i love -- >> you know who else is here >> tell me >> my friend amy is here jim paulson is here. i'm hanging out with all these minnesota types. it does feel good to be in the middle of the country. >> is mac there? >> no. mac's not here >> he's not here either. he told people here he would be out there with you >> no, no, no. >> where the hell is mac >> he must be taking the day off. >> most of our crew here is from the golf channel because of the great relationship we have with the golf channel we're using their set. their crew >> work that work it. work it. >> nbc universal symphony. >> work that golf channel connection please i'm begging you. work it. all right. we do need to talk markets it is quiet. >> quiet ahead of the storm.
6:04 am
>> we're up 21 on the dow. good day yesterday the markets are almost back to where they were at the beginning of may we had that sell in may selloff. then the world was going to end because of the tariffs now almost back to new highs just off new highs we'll see whether we get there this time. the dow is indicated up 22 points s&p indicated up three nasdaq up 10 overnight in asia, there might be some positive sentiment after the tweet that trump tweet yesterday. a little bit shanghai up a percent. the hang seng doing well in europe, a quick look. it was green earlier today now it is actually turning it's slightly red. then treasury yields moved up a little bit
6:05 am
2.08 this morning. earlier this week the ceo of huawei forecasted a $30 billion revenue hit as the u.s. blacklisted that company we want to get to deirdre bosa in china she has a cnbc exclusive interview. it's a huge one with the huawei founder and ceo himself. good morning rn >> good morning. ren down played the effect of that $30 billion hit projected for revenue. he said it wasn't a big deal and he said their 180,000 employees would understand, that they would make it back and be stronger than ever in two years from now i asked him how they would get there and would they be relying on american suppliers, the chipmakers that have seen their share prices s tank on the attk the u.s. has made on huawei. >> translator: maybe even more
6:06 am
they can't for all these years american suppliers have contributed to huawei. if we do not buy from them when we can, then that will be a blame on our conscious but however we are not to blame. there is a restriction on us now to buy from them actually until today we're still placing orders to american suppliers. those suppliers have to ask approval from washington if they get approval, we can still buy from them. if they don't get approval, we have to find other ways. >> i also asked mr. ren if he had spoken to chinese officials on the impact of sanctions on his company, huawei. terp >> translator: i don't know why an american company reports to the u.s. company all the time. we don't need to do that we just pay the taxes. >> the export ban against huawei is having an effect on american companies that sell to you
6:07 am
we're seeing it in their forecasts for revenue profits in the year ahead are they talking to u.s. officials on huawei's behalf are they trying to lift the export ban or win some exemptions >> i think are they able to lift this kind of ban i don't know attacking huawei is painful for both sides its revenue, jobs here, it's also jobs on the american companies side they are a list of companies it's a bigger impact we do not need to show them the same kind of responsibility. it's also a benefit of not being listed >> in terms of revenue, the bigger impact is on huawei i pressed mr. ren on this several times. he refused to see it this way. even the slowdown in smartphone shipments that he spoke about earlier this week, he said they
6:08 am
will emerge from this stronger he did strike a defiant tone >> deirdre, before you go, president trump in the past week talked about using huawei or said huawei could be part of a trade package. though, of course, he also talked about it as a national security threat. did ren speak at all about how that -- how his company could be part of that trade package what that would look like? >> we certainly did ask him about that multiple times. he kept saying he doesn't care about the trade war. he said he has more important things to care about like his company. i said his company like it or not has been placed in the middle of the trade war. he said he doesn't care. he's not even watching or listening to what leaders are saying i'll bring that you sound in the next hour. he did say that if president trumpcalled him, he would pick up the phone and have a conversation with him. perhaps that is progress about a month ago mr. ren said
6:09 am
he would not pick up the phone if he called he said he didn't want to be a part of the trade war, but he was still engaged. >> deirdre bosa, we'll see you with more of that in the next hour. back to becky quick who is minnesota. what's coming up >> the sun continues to come up, but we have lots of guests joining us this morning. after the break we'll get you ready for the big federal reserve showdown president trump ram ing ping up pressure on jay powell. up next, jim paulson is here he will tell us how today's fed decision could affect your money. as we go to break a look at premarket winners and losers in the dow.
6:10 am
is where people first gathered to form the stock exchangeee, which brought people together to invest in all the things that move us forward. every day, invesco combines ideas with technology, data with inspiration, investors with solutions. because the possibilities of life and investing are greater when we come together. ♪ ...or trips to mars. $4.95. delivery drones or the latest phones. $4.95. no matter what you trade, at fidelity it's just $4.95 per online u.s. equity trade.
6:11 am
6:12 am
♪ welcome back the story line to watch today is jay powell and the federal reserve out with their latest policy decision just hours from now. in case you missed it yesterday, the president responded to
6:13 am
reports that he explored back in february whether it was legal to demote the fed chairman. here's what president trump said yesterday outside the white house. >> let's see what he does. i can tell you that draghi and the eu, if you look at what's going on with the euro, they have a much different stance than our folks do. as you know, we did something today that was very dramatic frankly it helped that part of the world. we'll see what happens they'll be making an announcement pretty soon we'll see what happens i want to be given a level playing field. >> great piece in the "journal" talking about the valuation doesn't work doesn't work in europe wouldn't work here forecasters expect the fed to leave interest rates on hold but perhaps signal a rate cut later this year. when trump was tweeting about
6:14 am
draghi, it was another message sent to jerome powell. >> i think we all should agree you want to have an independent fed, despite the fact that presidents historically -- not this this is different but this is different in terms of how public he has been about it. >> nobody had twitter before >> know one talked openly about firing the fed chair trying to use different legal mechanisms to do so. >> there's two ways of thinking about what happened. that the economy that powell was facing in december warranted a rate increase, and that the tariffs then derailed things but if you listen to cramer he was yelling and screaming and jumping up and down about the channel checks he was doing that showed the economy was already -- cramer called it at that point in hindsight you have other people that have relationships with the fed, sort of accommodate the fed.
6:15 am
more thaaccommodation than the d offers maybe they did make a mistake, but for whatever reason, december was tough on the markets. i have more news for you on hazeltine. what a storied place i had forgotten, that is where rich bshgeem beat tiger woods i that classic match i don't know if you remember towards the end. he was doing this weird dance. i remember it. beat him by one stroke at pga championship back then and tony jacqueline won back in 1970 were you watching? >> i was not born in 1970. no i don't remember >> and y.e. yang won a couple of
6:16 am
years ago. tiger was second you are walking -- there's ghosts everywhere. they're not dead, but a lot of history behind you awesome. >> a lot of people on the set, getting the greens ready, putting greens, lots of activity here >> payne stewart won his u.s. open -- i think he won more than one. he did he beat mickelson in one he won in '92. >> have you ever played here >> i have not. i have flown through minnesota, never spent time there they have solid people there, like jim paulson >> you have to stop over some time >> jim and i were talking earlier this morning he used to do all of these 6:00 a.m. shots for us, that were 5:00 a.m. shots out here in the
6:17 am
wintertime constantly doing that in january when it's minus 30 degrees i was explaining to him we have never thanked him enough for the hard work and efforts he puts in to come to the show. appreciate it. great to see you here today. let's talk about what the guys were talking about, the fed. that's the huge issue for the markets. you may not see a lot of movement in the futures markets, that's because everybody is waiting to see what happens. i would say there's a better chance than 24 hours ago that the fed could cut rates today. what do you think the odds are >> i think the president dictating it or the markets dictating t i think the fed could make its own case for cutting rates. >> today >> yeah. i don't know if they would do it today. i would kind of do it today. the fed funds rate is way out of balance. the inflation is d.o.a
6:18 am
growth is certainly slowing. we have an inversion, which is concerning in its own right. it's affecting people like me and my sentiment and it could freeze up the markets. if the federal reserves sits there, what's my greatest risk is it inflation or recession i don't think it's close the debate on that i think the fed could -- i think sth they should to a shock an awe. take the i venversion out do one today and then explain why they're doing it >> if they don't do that today -- yesterday when we looked at the fed funds futures, it was 20% of something actually happening today. again, since that time, we've seen what mario draghi has had to say, we've seen what president trump has had to say about those issues if they don't do anything today, if they take out the patience word and maybe signal that a rate cut could come in july, what do you think the market reaction is? >> i think it will be somewhat
6:19 am
more negative than you expect. because i think at the end of the day, i think a lot of markets are saying if you're going to do it in four, to six weeks, why wait? what will change what will change is they might get further behind the curve i we get more bad reports. talking about the empire number that came out. say we get a few more of those, suddenly the treasury is below 2% on the ten-year, the fed is trying to catch up i think they'd be best served by coming out and doing something today. i think the market would react positively to that if they don't, we could see the ten-year go below 2% >> any chance if they did do something today market participants look at that and say what do they know that we don't? or what you already laid out with the economy is enough to justify it >> it's possible but less likely it's this moment because it's pretty much telegraphed that they have already moved and the reasons for that it's not panic at the moment it's he more people
6:20 am
understanding why they'll cut rates. i think what you're talking about is the risk they have if they wait six weeks. they have to do something, and then it becomes a debate about whether that will be good for the markets or not then it's no longer necessarily an insurance cut that you're talking about. >> no. >> then it's an actual reaction to something >> it could add to the fear at that point they could look panicky. >> before the show we were talking about bond vigilantes. you know, what they have brugt t brugt t brought to bear. how much of it is bond vigilantes or why wouldn't you go to france, germany where interest rates are negative. how much of it is people saying don't like what we're seaing and how much of it is a rush to a higher yield >> i think there's some of that. we're sucking in demand for higher yield instruments in a
6:21 am
lower yield world. more than anything, it's inflation, which is just really rolling over, all over the world. it's not so much growth has gotten that weak it's more about inflation. even this inversion we've had. normal inversions are the result of overheat and rates going up this is inversion with rates coming down. that tells me it's more about low inflation than weak growth, which makes it an odd inversion in its own right i think with inflation, inflation expectations, that's another risk for the fed if they don't arrest the decline in the inflation expectations, it becomes more embedded. i do think there's a great case to be made to take at least one lift that they did last year off the table and take some of that inversion concern out of the minds of private sector players. >> you say inversion scares you? >> it does >> you've been positive to this point. >> i sitill am.
6:22 am
i still am i'm not worried about this inverpgs at ti inversion at the moment, but if it lasts three months, i'll get more nervous about that. i'm thinking -- the biggest risk to me is not the economy cratering now. it's not inflation i think the biggest risk is a panic freeze in the markets because of concern about what inverg meani inversion means. >> we're only 1% off the highs we're acting as if we're on the edge of a precipice or something. we're 1% off highs what would you tell people to do would you buy or wait? >> i would be tilting bullishly. i wouldn't be max bullish but tilted bullishly here's one thing that attracts me about this. the idea out there now is don't fight the fed. today it's not just that i would say it's don't fight the fed. real money growth has gone up in the last six months. it's also don't fight the treasury we have seen the federal deficit as a percent of gdp was 4.7% in
6:23 am
may. that's 1% greater than last may. we've had greater additional fiscal stimulus in the last year than we had last year when they cut taxes. then it's don't fight the bond vigilantes we've only had all three of those, the fed, treasury and bond vigilantes stimulating over a previous six-month period less than 15% of the time since 1970, in the last 50 years when that's happened, it hasn't happened often, the next six months of the stock market is annual itzed abo edized about 1, versus 8% the lest of the time i think it's not just betting against the fed, it's betting against the three-gun gooser i think it's a bad bet i think you want to be aligned with that. i think it will work >> jim, great to see you on your home turf. >> great to see you here in minnesota. we'll see you in new york soon >> yep
6:24 am
>> jim paulson guys, back to you in the studio >> thank you for that becky. when we come back, we'll talk about facebook's digital currency announcement. it drew neimmediate backlash fr congress. and executives are gathering in new york for the energy conference lots going on on squk sq"sq box" this morning. we'll be back. direct messages have evolved.
6:25 am
6:26 am
6:27 am
so should the way you bank. virtual wallet from pnc bank. just one way pnc is modernizing banking to help make things easier. pnc bank. make today the day.
6:28 am
welcome back to "squawk box. facebook's old motto was move fast and break things. congresswoman maxine waters wants to make sure that's a thing of the past. just hours after announcing libra, unveiling so much of it here on "squawk box," representative waters request that facebook put the project on pause. waters in a statement wrote given the company's troubled past i'm requesting that facebook agree to a moratorium on any movement forward to developing a cryptocurrency until congress and regulators have an opportunity to examine these issues patrick mchenry also supporting further inquiry saying it's necessary to study the impact on the financial system
6:29 am
and sherrod brown went a step further saying that facebook is already too big and too powerful we cannot allow facebook to run a risky new cryptocurrency out of a swiss bank account. it will be interesting to see what happens here. but the larger part of the story here is whatever facebook does next, this is probably true of google and amazon, whether they want to make ak question zi quen acquisitions or launch new products, forget about getting broken up, the next steps forward they'll be creeping and crawling everything will be one step
6:30 am
forward, one step back that's where we are. >> i'm feeling an enemy of my enemy welling up inside of me. a love and respect for facebook suddenly when i hear sherrod brown and maxine waters talking about it how many jobs has facebook created? shared wealth? maybe you don't think it's good for people to be stuck on the screens, but just enriching lives of so many people. what has maxine or sherrod done in those contexts in terms of job creation, growth, shareholder value, satisfying customers? whenever you get these bureaucrats and bean counters involved, there may be some guardrails needed, i got you with that. you used to love these tech
6:31 am
companies. >> look, i'm -- >> you still think facebook -- you think that 100,000 russia spent on facebook ruined it for hillary. is that where you are? >> no. no no that's not where i am. where i am is effectively there probably should be guardrails on all of this stuff. >> you love cryptocurrency you loved it yesterday >> there has been lots of people who have gotten burned along the way. i love silicon valley. asking if a congress person has created jobs or what they've done, it's a different responsibility >> maxine may have created some at her husband's bank. she may have saved some at her husband's bank >> everybody has a role to play. >> stay out of the private sector. much more to come on the fed meeting and the potential reaction the enemy of my enemy.
6:32 am
mark, i love you love you, man. sheryl, you're doing a great job. first, the latest chapter in the cbs -- is there a latest chapter in this or is this old >> the story is old but we'll talk about it. put some context on it >> that's what we do. before we go to break, a look at yesterday's s&p 500 winners and losers through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business. from managing inventory...
6:33 am
to detecting and preventing threats... to scaling up your production. giving you a nice big edge over your competition. that's the power of edge-to-edge intelligence.
6:34 am
6:35 am
welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning u.s. equity futures at this hour are positive again, 42 points on the dow. the nasdaq indicated up 15 the s&p indicated up about 5 points on a good streak in june got back 90% of what we lost in the pullback in may. cbs reportedly preparing to
6:36 am
make a bid for viacom in the coming weeks the board discussed a potential deal last week and both companies had preliminary talks. this will be the third attempt to reunite cbs and viacom since they split in 2005. shari redstone has been working to merge these companies the "wall street journal" leading with this story. i should say david faber has been reporting this we've been reporting this for quite some time over the past couple of weeks if not months that this was happening. the board meeting happened on friday i think the expectation is that we will see a deal sometime in the next couple of weeks if not months you know who wins, joe the family always wins that's who wins. the family always wins >> i thought you meant the investment bankers that decided now you have to put it back together >> they do, too. >> those two companies had to be
6:37 am
split up >> they were split up in 2005. >> it was such a no-brainer to split up >> the other piece of this, a quick wrinkle, cbs is looking at whether they want to buy starz if they buy starz and then do this, how does that work there's lot of complicated issues who will run it. b we'll bring you more as we get it >> any moonves sightings >> moonves is not in new york these days he's hanging out in l.a. he set up a separate office for himsel himself. >> you have your ear to the ground on what he's doing. i know you >> i want to think some of this was reported in the papers i can't claim credit. when we return, more on
6:38 am
"squawk. the president weighing in yesterday on today's big decision for jay powell. he had some words for jay powell we'll bring you those comments, how the fed will react, maybe some legal opinions on it. stay tuned you're watching quk x""sawbo on cnbc as the fed/trump soap opera rolls on as someone in witness protection,
6:39 am
i can't tell you anything about myself. but believe me, i'm not your average consumer. that's why i switched to liberty mutual. they customized my car insurance,
6:40 am
so i only pay for what i need. and as a man, uh, or a woman with very specific needs that i can't tell you about- say cheese. mr. landry? oh no. hi mr. landry! [ grunting ] liberty mutual customizes your car insurance so you only pay for what you need. liberty. liberty. liberty. liberty. ♪ it's a revolution in sleep. the sleep number 360 smart bed now from $899... senses your movement and automatically adjusts on each side to keep you both comfortable.
6:41 am
and snoring? how smart is that? smarter sleep. so you can come out swinging, maintain your inner focus, and wake up rested and ready for anything. only at a sleep number store, don't miss the queen sleep number 360 c2 smart bed, now only $899. plus, 0% interest for 48 months on most beds. ends wednesday. countdown to the fed decision today will jerome powell and the fomc decide to cut rates this time around let's get over to steve liesman who has the big expectations from today's meeting and maybe a little color around the soap opera that is taking place there between the white house and the fed. >> i don't know if i would call it a soap opera. it is one of the most fraught meetings in recent memories. the fed is expected to make a dovish turn amid pressure from
6:42 am
the president to cut rates the consensus that the fed holds rate, mroef removes patient froe statement. how many if any fed members forecast rate cuts this year and next in the dots none did so at the last meeting in march that has not stopped the market from taking a definitive position in june, a 23% probability of a cut added today. it's not the consensus view but pretty high for a meeting where they're not expected to cut. 82 for july. 94% for september. a chance of three cuts by december the meeting takes place after these comments yesterday from president trump. >> let's see what he does. i can tell you that draghi and the eu, if you look at what's
6:43 am
going on with the euro, they have a much different stance than our folks do. as you know, we did something today that was very dramatic frankly it helped that part of the world. we'll see what happens they'll be making an announcement pretty soon we'll see what happens i want to be given a level playing field. >> so can the president do this? here's fed scholar and wharton professor peter conti brown from a 2015 paper the federal reserve act is clear in her capacity as governor she is only removable for cause. the statute is silent however with respect to her removability as chair given that removability has become the legal hallmark of administrative independence, this silence is remarkable conti brown's conclusion only politics and the fear of a negative market reaction really keeps the president from being
6:44 am
able to fire the chair, not legal statute. >> i want to ask you, steve, larry kudlow was asked this question several times earlier this year. he said what i think we all thought at least, you can only be fired for cause >> that's the dpgovernor's side. peter conti brown says the statute is silent about removing the chair. he wonders if this was a mistake by congress, or whatever by the way, at 8:45ky come back with three kways that president trump can fire powell. >> under the cause scenario or under what scenario? >> i won't give it away. but there's been three ways that chairs have been removed >> blows off a lot of steam. we've seen this movie before fire him i don't mean fire him. i don't know it's interesting you figure this guy is a scholar who looked at the letter and the spirit of the law, the
6:45 am
congressional stuff. we care what he thinks >> it's fascinating reading, joe. there's a lodng history of precedent from the supreme court to the lower courts about the ability to remove a superior or an inferior or -- it gets at the heart of the constitution. the powers of congress the separation of powers it's interesting it's -- my best guest -- not my best guess, you can read the statute itself, it is silence on mro removing the chair. >> i have and dru. andrew has me. what if one of us was removed and we don't have that person anymore? does trump really not want powell --. as a foil. >> yes >> you're the best at getting inside the head of the president. i'm telling you what the statute
6:46 am
says >> what if he puts his guy in and it doesn't work out. >> this is already his guy >> i know. if you do this, take the step -- >> then he really owns it. he has four of the five governors. he has the fed chair the fact he acts as if he doesn't own it now is remarkable would own it in the future i don't know >> joining us now, let's talk more joe lavorgna, a cnbc contractor, and mark grant for b. riley joe, do you think that trump could do this based on what steve just said based on that 2015 paper do you think he would do it? >> it's entertaining the whole thing. i wouldn't call it a soap opera. it's more of a comedy.
6:47 am
to me, it's more politics. my guess is he won't do it he's using powell as a foylil the fed opened pandora's box and opened itself to political pressure and i don't know how they get out of this. i don't expect jay powell to be mroefe removed. my guess is the president is using this as a clever ploy to blame the fed if something goes wrong with the economy >> you have superman vision with those glasses. what are you seeing? >> i think it's also he's trying to add political pressure. i'm hoping the fed does do something today. the reason is mr. draghi at the ecb released another very significant speech recently. and he basically said that the ecb is going to start buying
6:48 am
more bonds, going to lower interest rates again i think the fed has got to respond. the interest rates in the united states are significantly higher. about 240 basis points higher than germany i think president trump is correct in saying that the playing field is not level i'm hoping that the fed realizes that and cuts interest rates today rather than waiting for future dates >> joe, mark makes a great point -- >> you have to say president trump was then -- all of his efforts were counterproductive, because he painted powell into a corner where -- in this day and age, where you get twitter pile-ones and all this stuff happens, i can't imagine powell -- if he did it today, everyone will say wow, you're weak you were wrong in december and everything else. i can't imagine as a human being
6:49 am
key do tha he could do that >> the clip you played when steve was on, people asked him the question he didn't say by the way i want to get rid of jerome powell again. it's almost cat nip for the press. >> how could powell cut today after all that pressure? >> two reasons why they could cut. i think it's possible. i don't think it's the likely scenario i agree the fed has got to weaken the dollar. people like evans and williams from chicago and new york talked about an undershoot of inflation, letting inflation expectations get higher. they've been talking about this for a while. it's an inflation story going on for a while. that's why i thought the fed would cut rates in january with the pmis, weaker global growth, they want to help the economy. because if the economy is worse, they will get more flack >> mark, will we get a one
6:50 am
handle on the ten-year >> absolutely. it will come before the end of the year >> thank you, gentlemen. >> thank you >> becky, we have to talk about minnesota politics eventually. i just minnesota politics too, eventually because i was just remembering some of the wacky guys they have elected out there. >> hulk hogan? >> hulk hogan, jesse ventura, actually i always call him hulk -- adam sandler, no, al franken. one of the "saturday night live." eugene mccarthy. the most liberal guy to ever -- and then poor humphrey lost to nixon. that takes some doing, right >> tom friedman is from out here too. he talks about growing up out here in the '50s and '60s. >> mondale he won only one state. i think that was the only state he won anyway, crazy. jesse ventura, really? nobody else was around to -- for
6:51 am
governor he had a boa. >> i know. we had politicians come from stranger places. up next, the ceo of devin energies is joining us live from the jpmorgan energy conference and don't miss the lineup. we have lynn dowdy, and we have target ceo and chairman brian cornell. and condoleezza rice the former secretary of state will be talking to all of them this morning. "squawk box" will be right back. carvana is six years old this year
6:52 am
and is the fastest growing place to buy a car in the nation. it's because we have thousands of people working hard to make our customers' experiences the best. it's because we have tens of thousands of cars ready to be delivered to your doorstep. and it's why hundreds of thousands of happy customers have ditched the dealership and bought their car online, earning us an average 4.7 stars in the process. so if you didn't know about us before, you do now. we're carvana, and we want to give you the car buying experience you deserve.
6:53 am
6:54 am
energy executives have gathered in new york today for the jpmorgan energy conference and brian sullivan is there. he joins us with a special guest this morning brian? >> andrew, good morning. dave hager, ceo of devon energy. >> great to see you, brian. >> i need you to help me make sense of something because we talk about the u.s. oil boom and the permian in
6:55 am
particular 13.5 million barrels the oil industry has never been bigger but energy stocks as a percentage of the market are now just 5%. they used to be 20%. why is the industry doing this but the stock market doing that? >> well, you have to understand there's been a total revolution in our industry in the last ten years. where we are drawing the horizontal wells, they're hydraulically fractured and the reservoirs and no one thought were economic. what we have been doing in the last ten years is to really appraise these different zones to see what are the most economic zones some of these plays have worked extremely well economically, and some have been more challenged but the phase we have moved into now is the full development in the most economic zones. this is just happening in the last couple of years so now we'll be moving into the much more predictable results and the best zones and we're going to see much better economic returns and that's going to really lead to better stock price
6:56 am
performance. >> you think -- i mean, to be blunt, dave, the industry has boomed production has boomed. we talk about the shale revolution, but the stocks have been dog for investors for ten years. everybody's stock for ten years has been flat or down. >> and the other factor you have to remember that the prices were $90 to $100 a barrel and now we're down the $50 to $60 a barrel so that has caused the companies to totally retool their cost structure to really focus on the most economic zones and that's what we have done as an industry. so it's been a tremendous retooling that's been necessary to be successful and to survive as a company. >> yeah. >> that transition is now behind us so the good news is we found a lot. >> do we need less production? do we need slightly higher prices, dave >> i think it depends on the company, frankly our company has really retooled
6:57 am
our cost structure we have some of the best plays in on shore u.s. that we are involved in. if you have high quality rocks, you can drill for economical oils low cost structure you can make money. not everybody is going to be able to there. there are going to be winners and losers out of this. >> just quickly, we're running out of time here you guys looking to sell anadarko got taken out have you been approached to be bought >> i don't get into things like that, but that's not our goal. our business is to maximize the value for the shareholders if that would happen that would happen but we're very optimistic about where we are we have great plays. our cost structures are in line. we think we have a bright future as we are. something like that comes along we'll deal with it when it does. >> you have been cleaning up that balance sheet for a long time thank you for being here isn't that amazing, guys
6:58 am
we have seen production go up but the stocks have not been able to get out of their own way. >> i don't know what that means, brian. whether it means it's discounting something in the future or based on the commodity -- the stock, what oil, what do you think give me a quick answer you're a genius at this stuff. >> well, too much production i guess. >> too much production working nglo hours coming up, former yums brand david novak will talk about leadership the china trade war. let's not just develop apps, let's develop apps that help save lives. let's make open source software the standard. let's create new plastics that are highly recyclable. it's going to take input from everyone. so let's do it all, together. ♪ ♪ let's expect more from technology. let's put smart to work. ♪ ♪
6:59 am
7:00 am
7:01 am
huawei forecasting a $40 billion revenue hit after the united states black listed the company and now the ceo is speaking out. the fed in focus, what investors need to know ahead of the rate decision. plus, women, leadership and success. the ceo of kpmg will join us from the leadership summit in minnesota. the second hour of "squawk box" begins right now ♪ >> live from the beating heart of business, new york, this is "squawk box. >> good morning. welcome back to "squawk box" right here on cnbc i'm andrew ross sorkin with joe kernen we'll get to becky in a moment she has a huge lineup of guests. u.s. equities 2 1/2 hours away from the opening bell, dow looks like it will open up about 37 points higher. nasdaq up about 14 points and
7:02 am
the s&p 500 looking to open about four points higher as well in studio with us this morning we are thrilled to see david novak, former yum brands ceo and the founder and the ceo -- and becky is in minnesota at the women's leadership summit. we said you have a huge lineup so we'll let you spill the beans on what you have coming up. >> all right, andrew, thank you very much. i'm in shasta, minnesota, at hazeltine national golf club this is the site of what's going to be the kpmg women's pga championship that kicks off today and the site of the leadership summit. we'll talk to lynn dowdy, the ceo of kpmg u.s. in a little bit and what she's seeing in terms of the women's executives, what they see happening in the workplace, what they think is going on what they need to be doing she has a big survey we'll talk about the results of she has done a separate survey
7:03 am
with 400 ceos in the u.s. to see what they think of the outlook and what they're planning with the businesses later this morning we'll sit down with brian cornell, the ceo of target corporation. target corporation over the weekend had the issue where for a couple of hours on saturday, their cash registers in their stores nationwide didn't work and then credit cards couldn't be accepted on sunday. this is first time we'll get to talk to him about that and what he sees with the outlook for the consumer as well all these concerns about whether we're heading towards a recession, whether the fed should cut he's on the front lines and he can tell us what he's seeing with the consumer. then later on this morning, condoleezza rice she'll join us to talk about all of the global situations that we have been facing including that tanker attack that took place just last week we'll get her take on what she thinks happened in the middle east much more on the outlook for the oil markets. what that could mean and the
7:04 am
china trade talks. what she would be advising right now and perhaps what she sees happening with the trade talks coming up -- that are set to take place at the g20 later this month. guys, all of that kicking off from right back here the sun is coming up the birds are ut so are the lawn mowers we're ready to go. >> okay. looking forward to all of that, becky, in just a little bit. we'll be coming back to you in a moment i want to tell everybody about the headlines making news this hour federal reserve policymakers will be concluding the two-day meeting today and interest rate decision and policy statement is issued at 2:00 p.m. time the investors are looking for indicators about what it will do later on this year jay powell will then hold his usual post meeting news conference at 2:30 eastern time and expect lots of questions about his role as the chairman of the fed of course, some of the comments that perhaps president trump has made about him
7:05 am
in that role and whether he'll keep that role in the coming weeks and months. southwest airlines is extending the flight cancellations, through september 22nd the fuel efficiency is down this year due to the grounding of the jet and it's raising the full year forecast for revenue per available seat mile. that's a key metric, due to what it calls solid demand. then google parent alphabet holding the annual meeting today. it will be urged to break up before regulators require it to do some. a chairman called some of us will be bringing that up none of which are expected to pass, but of course expected to be part of the conversation. in the meantime, we want to get our guest host this morning, talk leadership and the economy. david novak is here, yum brands cofounder and a former chairman and ceo. he's the chairman and ceo of
7:06 am
digital leadership platform ogle lead. >> great to be here. >> because we'll be hearing later on today and steve liesman is down in d.c. on the interest rate issue, what do you think will happen, what do you think should happen? >> i think things will stay the same and i think that's what should happen and, you know, i don't think that the rates should just continue to prop up the economy. you know, you saw the market move just on the thought of the rates being lowered. i think the rates are solid right now. that's where i would keep them i don't think there's any need to overreact -- >> you don't feel that the economy is turning towards either sideways or down? >> i think the economy is good i talked to a lot of business leaders recently everybody feels good about the economy. i think there's a lot of noise about trade. but i think trade is more of a business issue than it is a consumer issue you have got job -- unemployment all time low you have got -- you have got more jobs out there that can't be filled.
7:07 am
you know, i think all of the factors -- >> you don't think trade is a drag >> i think trade can become a drag because when i talk to business leaders i talked to somebody who has 30 different companies. people are very worried about 2020 you know, i think that's going to be the big volatile year. the election year. >> right. >> and i think -- so people are really shoring up their balance sheet. they're just kind of nervous and, you know, i think there could be good news on trade. there could be bad news on trade. we don't know. yesterday, you had trump talk about his meeting and, you know, right now people are being whipped around on trade. you know, the market is so volatile. >> companies are making moves. we have news that apple is moving out of china towards the capacity, irrespective of what happens on trade we have the interview of ceo with huawei. also, a national security issue at the same time. >> right huawei is a national security
7:08 am
problem. they don't deserve a level playing field here in the united states i think what google is doing makes sense. i think what trump wanted to do was bring as much business back to the united states as he could. he's basically everything he said he would do whether you like him or not, he has taken on china for first time -- first guy to ever do that and i think it needs to be done because, you know, obviously this issue with intellectual property is huge it's much more important than the balance of trade and i actually think that the big issue that we're going to have in the future is all about technology and one of the things that does bother listening to the google news, more and more people are putting pressure on our technology companies meanwhile, you don't see that happening in china. they're unleashing the power of their companies. i think we have got to be very careful because the one war we don't want to lose is we go -- as we go forward is the war on technology. >> you have done a lot of business in china. >> yeah. >> what have you seen on the ground people talk about intellectual property and theft and when they talk about the culture that is
7:09 am
creating some of these issues. >> see, for us, when i was the ceo of yum we didn't have any problems the only intellectual property we had was the colonel sanders 11 herbs and spices. he had the secret recipe what we really represented on the ground in china, it was jobs you know when she goes to bed every night he wants to keep the economy moving, he wants to keep the any moving >> did you feel the hand in china in any way >> yes, but not to the point that it limited our business we were able to open up the restaurants within three months. you know in the united states, it takes a year you know, things move quicker. we moved all the way into tier 8 cities you know, we expanded rapidly. i say we, i'm no longer running the company, but you know i'm obviously -- >> you're an interested observer. >> very interested observer. >> i was just saying if it's $30 billion and none of us
7:10 am
thought that at huawei we didn't know it was that serious. i wonder what the total number is at this point and how much heat xi is under you're right they're trying to transition into the modern society but instead of having 300 million people they're trying to do it -- it's not easy. you don't need external roadblocks you might be able to deal with if you play it right i think he wants to play it right. >> i really do it's interesting, joe, when i used to go to china, all of our people, i think everybody thought that china would move towards much more democratic model over time. you know i don't really see that happening today. i don't think the people on the ground in the company necessarily see that happening today. so i think there's much more pressure, much more control from the central government i think that's a really a fact of life. >> as long as people's lives are getting better they'll be fine with not being as free as we
7:11 am
are, i think but once they see any type of slowdown, then they have tiananmen square problems or hong kong problems. >> i think social media exasperates this but i think china wants a deal i think we want a deal, china wants a deal i don't know how big of a deal it's going to be, you know but i think for both sides, both the u.s. and china. >> i mean it's something that the president has talked a lot about and yet at the same time we had secretary of state pompeo who said it is an absolute national security threat to our country and it's hard for me to understand how it can be both a national security threat and a pawn in the larger negotiation which is to say it's a national security threat it's a national security threat, if it's pawn, it's a pawn, but can't be both. >> but china in general is a national security threat and a trading partner. so any trade we do, hopefully gives us some concessions in the national security threat that makes them less. so same thing with huawei. you get some concessions to make
7:12 am
it less of a national threat and you throw it into the overall trade. there's a way of doing it. don't you think? >> i think it's really, really complicated. not a great insight but that's the case and, you know, that's a big bargaining chip right there. that is -- >> is there a way that you'd feel more comfortable with huawei and everything 5g in this country? >> you know, i think that based on what i know, i don't know enough to really make that statement. make a statement one way or the other. right now, i would be uncomfortable making concessions. >> right you made an important point about what's happening in terms of the way that the u.s. government is treating the big tech companies relative to the way that china treats its big tech companies therefore, what? meaning you look at the scale and the scope of a facebook and some of the problems that they have had in the past and google and amazon which are under fire even just today or yesterday rather, facebook announcing this libra -- new cryptocurrency. and the first thing out of the
7:13 am
mouth of washington is press pause, stop this before it gets started. we need to understand everything about it the question really is, what should the role of government be with these companies of this size and scale >> well, i don't think they should be broken up at all you know i think if they have any kind of monopolistic practices they should be address and can be addressed in a different way my point is that we have to create an environment in the united states where we win on technology we can't take a back seat to anybody there. and, you know, i think that you have got a lot of resources. you know, even if you look at huawei, they have 21 r&d centers around the world okay so now we're sitting in this vacuum where we own everything any more. >> unfortunately, huawei has been stealing our own i.t. along the way. >> i know. >> so you acknowledge that now >> oh, ip, my view -- yes.
7:14 am
they have been stealing ip - >> said more positive things about huawei. >> my issue is that -- >> you love that company. >> no no my issue has been it could be -- it could become a national security threat in the chinese government were to use it as such but no evidence it's being used as such having said that, there's a lot of ip theft in past orprior years. >> i didn't use my free taco day yesterday. can i -- >> yum - >> can i get two next year >> listen, joe as much money as you make, you don't need it. >> that's what i said yesterday. the rate limiting problem is not the cost of the tacos. >> i love the fact that you love taco bell. >> it's not a strong -- the little things you brought me last time, you got any of those? >> no. i forgot the coupons >> david novak is here.
7:15 am
>> you know they expire. >> we have to head back to becks. >> all right, coming up, we'll head back to minnesota, hazeltine. a lot of history there that's where bkyec is this morning speaking to the most powerful women in business lynn dowdy will join becky
7:16 am
7:17 am
coming up it's a new season of deal or no deal we'll hear from host howie mandel after the break and
7:18 am
preview the new season plus, if you plan on going to the jersey shore this weekend, look at this dude you may need a bigger boat a viral video of a great white making waves this morning. the video is straight ahead. "squawk box" will be right back. but not when to use it. do i use aflac when the kids get slime in the plumbing? no. that's home owner's insurance. slime in my motorcycle. no. that's motorcycle insurance. slime everywhere? ughhh nooo, there's no insurance for that. do they help when i have bills health insurance doesn't cover? yeah! that's it! aflac! gross guys. get help with expenses health insurance doesn't cover. get to know us at aflac.com
7:19 am
7:20 am
you should be mad at airports. excuse me, where is gate 87? you should be mad at non-seasoned travelers. and they took my toothpaste away. and you should be mad at people who take unnecessary risks. how dare you, he's my emotional support snake. but you're not mad, because you have e*trade, whose tech helps you understand the risk and reward potential on an options trade it's a paste. it's not liquid or a gel. and even explore what-if scenarios. where's gate 87? don't get mad. get e*trade and start trading today.
7:21 am
you are going to have to match move for move her champion. >> and you this. >> ready for the challenge >> yep. >> not a man alive who scares me. >> all right send out your champion [ cheers and applause >> oh! >> "deal or no deal" season 2 premiers tonight on cnbc two back-to-back all new episodes begin at 9:00 p.m. eastern. we have a special guest on set with us now. howie mandel, host of "deal or no deal. who, i mean, before this you were -- at least for us a lot of iconic in terms of your stand-up. >> i think iconic is kind of a political correct way of saying old. i have been here for a long
7:22 am
time. >> legendary. >> that's even older. >> you don't want to be legendary. >> i don't want to be legendary. >> not yet. >> i'd want to mention that, you know, it is a premier tonight of the new -- from the new season and we're doing something different this season where the home viewer, not only can you watch somebody possibly win $1 million but we have something called the lucky case game so if you're sitting at home alone watching in your underpants with a remote, you have an opportunity to win $10,000 at home. >> i as a home -- i have multiple home viewer at home and we watch your show together. do you know what did -- which briefcase it is personally >> no. no. >> do you know what's in it yourself >> no, i don't know. >> but i assume that the producers -- >> no. >> no one says it to you do you have a little thing this your ear, how does it work >> i sometimes - >> we are watching, he must know. >> no, let me tell you, he being
7:23 am
me does not know, the girls don't know what's in their case. the executive producer has no idea what's in the case. ever since that movie "game show" quiz show, where that was debacle on a game show where somebody cheated it is like ft. knox. >> so like a banker now? >> the banker does not know? >> no, we know that 26 amounts that existed -- it's all based on an algorithm. the whole game is based on a mathematical equation. it's not unlike the stock market, you know like the odds and, you know? >> so interesting. we were convinced that you must know >> no. >> sometimes we thought is he acting does he really know? >> no, i'm not acting, i'm a very good actor, but i'm not acting on the show but the truth be told, like even if the ladies are making their way to the set, if somebody should fall or slip, and they drop a case and the latch opens but nobody sees what's inside, we're shut down for an hour where they give it to the third
7:24 am
party. they hire another company that comes in and randomizes -- rerandomises all the cases so nobody knows. that's why i find it very funny when a contestant comes in and goes, i've got a strategy. i know all the odd numbers are over -- you know, it's got to be the big -- there's no strategy it really is risk versus reward. it's luck. and the same thing goes for the home game, the lucky case game it's lucky you have to pick the case with $10,000 just by sitting at home and you can get paid off but it is exciting and it is real and cnbc is a perfect -- >> did you audition for the job? >> that's a great question so here's the thing. they called me originally and they said, we want you to host a game show in 2005, no comedian hosted a game show when your currency is irony, they said no no no after three times they said, let us show you. my wife said you're an idiot, take the deal. i took the deal.
7:25 am
this is on a friday. i said, okay, i'm going to do it when does it start they said monday and i said, monday don't you have to build a set? they said we have a set. don't you have to hire the models, we have the models so how far down the rung, the list, how many people said no before i was asked >> the reason i ask, okay, so the new season is how many shows total? >> i think this new season right here on cnbc is ten new episodes >> but you have done them -- you do how many in a day and you're always on and it looks like you like those people you're with and everything i mean, you said you're a great actor. >> i love the -- the truth of if matter is -- >> it kind of looks like -- you're welcome you're not always that up, are you? you're up right now. >> i'm up -- barely up because it's too early in the morning. i'm amazed at what you're able to do. for me it's 3:30 in the morning. but the point is that you know when i finally did it, when i -- no comedians were doing it
7:26 am
i think every comedian now doing a game show should thank me because i kind of paved a little way for them but when i said okay, i hired comedy writers and i was going to this witty, funny, a great show case for me i walked out that first day and i saw the first contestant, her name is karen banner i have done 600 episodes and she said she's a single mother that has never owned a home, has no health insurance and then it became about oh, my god, this is real. >> do you ever get angry or upset with the people when they don't take the money before they should >> oh t hardest -- my skill is not throttling somebody to say are you kidding? when i say the banker is offering - >> sometimes they take a crazy risk, like take the money. >> it makes no sense. >> makes no sense. >> ill logic is prevailing >> we put the control in their hands for a moment in the new on cnbc, what we have been able to do is give them one opportunity to counter it seems like some people don't understand like if you're going
7:27 am
to counter, counter when you have leverage on the board why are you hanging on >> as the leader of the show, how much do you get involved in how the show evolves and changes and the new twists that you put into the programming every day >> the truth is we have probably the best team in television. i just want to show up it's a great team that builds this great bus and they take me for a ride every hour. i thought it was brilliant to come up with the idea of being able to have a counteroffer. i had nothing to do with that. i have had nothing to do with what the show is i kind of show up and hopefully help the people through -- >> they're playing music i have more questions for you. >> well, during the commercial break -- >> no, i want to talk about -- have you seen crashing or passing out -- please come in and he gets to go on if he gets -- did you ever have to do that when you were starting out? was it hard starting out let's talk off camera. thanks, howie.
7:28 am
can we do that >> i'm going to talk off camera. please go to commercial, everybody. then we'll be talking -- >> "deal or no deal. tonight. what time tonight? >> 9:00, right. >> 10:00. >> we have a doubleheader. >> coming up when we return, a shark encounter of a lifetime and then becky quick joined by a very special guest who's coming up? >> andrew, first of all, tell howie thank you for putting that image of you watching at home in your underwear appreciate that. when we come back, we are at the kpmg women's pga championship which is home to the women's leadership summit taking place here lynn doughtie the ceo of kpmg will talk about what she's hearing from the female utokorives about the olo f the economy. stick around "squawk box" will be right back.
7:29 am
twenty-four people came together to sign an agreement that created the stock exchange. just the right elements coming together. it started when scores more people came together, just down the street and traded bonds that helped pay for the revolution, and the nation it created. it started in an office on the corner where the right people witnessed the telegraph and brought information and humanity together forever. it started with the markets, bringing together steel and buildings and silicon and medicine and rockets. we believe the possibilities of life and investing are greater when we come together. it's why for eighty years we've connected ideas with technology, data with inspiration, investors with solutions. so that every day together, it all starts again. ♪ i can't tell you anything about myself. as someone in witness protection, but believe me, i'm not your average consumer. that's why i switched to liberty mutual.
7:30 am
they customized my car insurance, so i only pay for what i need. and as a man, uh, or a woman with very specific needs that i can't tell you about- say cheese. mr. landry? oh no. hi mr. landry! [ grunting ] liberty mutual customizes your car insurance so you only pay for what you need. liberty. liberty. liberty. liberty. ♪
7:31 am
hey! i live on my own now! i've got xfinity, because i like to live life in the fast lane. unlike my parents. you rambling about xfinity again? you're so cute when you get excited... anyways... i've got their app right here, i can troubleshoot. i can schedule a time for them to call me back, it's great! you have our number programmed in? ya i don't even know your phone anymore... excuse me?! what? i don't know your phone number. aw well. he doesn't know our phone number! you have our fax number, obviously... today's xfinity service. simple. easy. awesome. i'll pass. ♪ welcome back to "squawk box. check out this viral video of a
7:32 am
group of fishermen got a big surprise this is great. vacation season. when they encountered a great white shark about 30 miles off the coast of new jersey. point pleasant they were fishing for much smaller mako sharks when this 16 to 18 footer was captured on camera it took the bait but avoided the hook and swam off after a few minutes. let me tell you about the one that got away. wow. all right, we have more coming up on "squawk box." trade talks in focus after the president announcing he'll be meeting with chinese leader xi jinping in china today, robert lighthizer will speak about the tariffs. we'll speak about trade talks and much more. then day two of the fed meeting. will there be a rate cut or not? deal or no deal, if you will then secretary of state condoleezza rice will be our special guest. she'lloin ck jbey in minnesota
7:33 am
that interview and much more coming up on "squawk" right after this this is not a bed...
7:34 am
it's a revolution in sleep. the sleep number 360 smart bed now from $899... senses your movement and automatically adjusts on each side to keep you both comfortable. and snoring? how smart is that? smarter sleep. so you can come out swinging, maintain your inner focus, and wake up rested and ready for anything. only at a sleep number store, don't miss the queen sleep number 360 c2 smart bed, now only $899. plus, 0% interest for 48 months on most beds. ends wednesday.
7:35 am
good morning, everybody. welcome back to "squawk box. all morning long we have been coming to you from the kpmg
7:36 am
women's leadership summit which takes place in minneapolis this summit is focused on how executive women lead in the workplace. to talk about this and much more is lynn doughtie, the u.s. chairman and ceo of kpmg. >> great to see you and thank you for being here. >> thank you for inviting us it's a fantastic place to be you have the women's pga tournament coming up and the women's summit that's here we'll talking about that in a moment but you're somebody who is talking to ceos around the globe, and the united states on a constant basis you're a road warrior and you're constantly hearing from people we have been trying to figure out what's happening in the economy right now. you do your own surveys and talk to over 400 ceos to ask them what they see. what are they saying about how optimistic they are? >> the ceo's in the u.s. are the most optimistic and more optimistic than they were a year ago. >> wow. >> although they're concerned about geopolitical risk, they're also very concerned about cyber risk, you know, they're telling
7:37 am
us they're plowing forward they're focussed on innovation and m&a as well and the war for talent especially in areas that they're trying to take advantage of new technologies and in some cases to really transform their business models. >> we have seen in some of the numbers that we track that capital expenditures haven't been keeping par with expectations what do you hear from the ceos are they waiting to put more money back in? >> we see the statistics but yet when we're talking to them and what they told us in the survey, they're leaning in to capex pences and our outlook is looking out over the next three years and not the short term i think they're looking at the growth prospects and seeing that there is definitely an opportunity to invest for the future particularly in areas that it relates to new technologies >> one of the most interesting questions you asked them was if you could spend on either new technology or spend to invest in your workforce, most of them
7:38 am
chose spending on new technology. >> they did. but i think, you know -- but there's questions in there about their talent and recognizing that technology alone is not going to be able to move them forward and having the right talent, the right diverse talent is important as well. >> what do you hear in terms of the m&a outlook, in terms of mergers and ceos i guess being optimistic at this point >> when we asked them about the growth prospects we said where is that going to come from and m&a was at the top of the list for ceos so we're seeing that in our own business where the clients are doing deals and that hasn't slowed down for us. >> you know, yesterday we saw the market pick up pretty rapidly when it looked -- when president trump said he'd be meeting with president xi and president xi confirmed that later this month the china trade talks loom pretty large on the minds of a lot of ceos. what do you hear when you talk to them about that >> i think a lot of ceo's are not focused on the -- you know, on the fluctuations in the
7:39 am
market they're sticking to what's the strategy, how they'll invest for the future and how to grow the business and they're staying out of the day to day coverage on what's going on in the geopolitical market. >> what are they saying in terms of their investment strategy though and how that could be affected by the trade talks? are they saying we want a new supply chain along the lines or we need to get away from china >> i think they're sticking with their strategy they're cautiously watching where trade is going, but the ceos that i have talked to they said, you know, they're sticking with their strategy. they're moving forward. >> lynn, the s.e.c. had a settlement of kpmg a $50 million fine coming from the s.e.c. for ethics problems at kpmg. i realize this goes back a few years but this is the final settlement with. this what have you done to address this within the firm >> well, our business is based on trust and we did have a failure. the opportunity for us to -- we
7:40 am
acted swiftly. we took decisive action and this settlement with the s.e.c. really allows us to have closure. but also we have learned some really valuable lessons. we focused on culture. we have focused on compliant as well as governance. and this allows us to move forward a stronger kpmg. >> let's talk about the women's leadership summit which is why we're here today you're bringing together hundreds of women who are maybe a step or two step away from the c suite. they have been nominated by their ceos to come here. what do you hear from them >> at kpmg we care so deeply about developing and advancing women. and this summit is all about getting more women into the c-suite. so today this is our fifth annual summit. and this is an opportunity for these women to hear and be inspired by amazing speakers
7:41 am
like condoleezza rice, brian cornell the ceo of target. as well as we have mia hamm here as well. but it's really much more than just a day it allows them to have a year long program of, you know, working with their peers talking about the challenges that they're facing. and really inspiring them to move forward and go for those next roles >> what do you think has held women back from the ceo roles to this point >> well, you know, with ejust did this -- we just did this survey with the past participants from our past five summits. and we focused on leadership styles in that survey and what they shared with us is that, you know, they feel like they really have to focus on changing their style in some ways as they progress within their organizations. and we're going to be talking about that today in the summit. >> changing their style because people don't react to them well or because they feel they need
7:42 am
to act more like men what do you mean changing their styles >> here's what they told us, in some cases they get told -- these are all the spectrum, you need to be more aggressive or you know what, you're not aggressive enough and that's one of the topics to talk about today. we are talking about the various leadership styles that are necessary to move forward in their careers. and so there's a lot of learning that we'll be sharing today around those topics. >> well, thank you very much for your time and for hosting us here today. >> thank you, becky. thank you for being here. >> lynn doughtie, the ceo of kpmg make sure you tune into the kpmg's pga championship on the golf championship and nbc starting tomorrow. >> thanks, i like the last major that the women played. it was amazing our guest host david novak is with us i want to quickly ask you
7:43 am
something before -- i don't know, we can do your op-ed looking at how productive silicon valley has been to the u.s. economy, and how we lead the world, i mean, it's exciting microsoft, apple, google so they bring it up anyway because they don't listen. as productive as these companies have been, they now are in the crosshairs and like it or not, they either got to self-regulate or they're going to be regulated. if you were on the board, would you know how to solve this as a leader >> gosh, you know, i think it's going to be one of the biggest challenges that you could ever imagine. because, you know, you have such a growth mindset and almost a hubris that you can do anything. >> that's good a lot of times, isn't it >> it's great. but then to be able to throttle back in the right way to slow the right empathy, to show a sense of care and concern about the issues that are real, that are out there. i think that's going to take a
7:44 am
tremendous, tremendous - >> so you would say no if they asked you to be on the board >> listen, i think it would be an unbelievable challenge and i'm on one board and one board is enough for me. >> you're on the most important board. in the great country, i think. what is it >> comcast. >> parent company of the network. >> i didn't put that together. two and two together but i think you're right about that. >> okay. i was listening to mary -- or to lynne on - >> yeah. >> i think that, you know, i think in business the biggest things that disappoint you is it's not necessarily the results as people. here you have a person who's a great ceo. she knows her business cold. she's passionate about the firm and then she had some people high up in the organization, people loyal in the organization that didn't comply by the rules. and i give her high marks for really using this as an opportunity to reset and not waste the crisis, basically. i also -- i understand she has a
7:45 am
chief culture officer which i'm wondering if that's going to become a trend in business. >> yeah. >> where it becomes -- you know, a c-suite job. because culture is so important. i mean, i studied all the great companies and, you know, every one of them they always talk about their culture as being the biggest drive of their success the work environment they create. >> it was for you. >> it was for me too and all the great companies and the ceos that are focused on the great things are focused on the culture. >> you weren't a founder maybe there's a time and a place for founders where they -- where they're not maybe the perfect people for taking the company into the next step you believe that >> i think that, you know -- i think that every company has to evolve some has skills they can keep growing and growing. like if you look at herb keller, he was a founder this guy was unbelievable and continues to -- continued to add
7:46 am
value. if you talk to gary kelly of southwest airlines he would say that keller was one of the greatest assets throughout his life so you know to me, you know, i think it depends on the situation. i think if you look at home depot as the situation where, you know, you had founders who were fantastic and really laid the track, they needed to take the -- >> of course the jobs came back. steve jobs came back and -- i mean they were lost without him. >> there's no generalities on this. >> elon musk at tesla. >> i think this guy is going to either take that place to the moon, take that company to the moon or going to blow up, okay there's no in between. >> do you have a tesla >> do i, no, but it's a hell of a car. >> what do you drive we'll talk later. >> a chevrolet >> how many engines? anyway, coming up, senator james langford joins us to talk trade
7:47 am
ahead of the testimony from trade chief robert lighthizer. check out the futures at this hour they're about where they were, a big fed thing coming up later. up about 40 on the dow we'll be right back. with all that usaa offers
7:48 am
why go with anybody else? we know their rates are good, we know that they're always going to take care of us. it was an instant savings and i should have changed a long time ago. we're the tenney's and we're usaa members for life. call usaa to start saving on insurance today.
7:49 am
hey! i live on my own now! and we're usaa members for life. i've got xfinity, because i like to live life in the fast lane. unlike my parents. you rambling about xfinity again? you're so cute when you get excited... anyways... i've got their app right here, i can troubleshoot. i can schedule a time for them to call me back, it's great! you have our number programmed in? ya i don't even know your phone anymore... excuse me?! what? i don't know your phone number. aw well. he doesn't know our phone number! you have our fax number, obviously... today's xfinity service. simple. easy. awesome. i'll pass. welcome back to "squawk box. the trade war with china front and center and huawei has become obvious a controversial piece between the two countries. in a cnbc exclusive interview, deidre bosa asked the founder
7:50 am
and ceo of huawei if he would pick up the phone if president trump called him. >> translator: of course i would like to pick it up we can communicate and achieve cooperation, to achieve win-win because information market is very big we don't know how big can it be. let's work together to build an informed society we can all contribute because u.s. is still very leading in advanced and huawei will be only able to be leading in a very focused area however, on the wider scope the united states is still the leading one. so we should work together to build and contribute the information in society. >> and the big trade showdown happening next week when president trump is set to meet with chinese leader xi at the g20 summit in japan that sparked yesterday's rally and kayla tausche is here to talk about the trade and the trade front. >> good morning. >> great to be here. you know, we heard the president
7:51 am
for the last week talking about his expectations for this meeting but not only has he said it is going to happen, but china is also confirming it. so that means that the possibility of this meeting falling through is slim to none at this point. president trump not only said that the two sides are going to be meeting at next week's g20, but the trade negotiators are going to start talking again today. listen. >> we'll see what happens. i think the meeting might very well go well frankly, our people are starting to deal as of tomorrow the teams are starting to deal so we'll see china would like to make the deal we'd like to make the deal but it has to be a good deal for everybody. >> ceos have described the recent weeks as a sort of detente where the u.s. was letting china to sort it out and figure out exact my what it could offer at the g20 when the two presidents met in an exclusive interview with "time" magazine yesterday, president trump suggested that
7:52 am
maybe the protests in hong kong have destabilized china's government and brought them back to the negotiating table the protesters have been very effective and when asked if he supported the cause he said i'll let them speak for themselves and i have my own argument with china. i'll let them work out their own problem. it looks like it's going to be worked out before that meeting between trump and xi happens at the g20, we have vice president pence making a speech on china on monday i'm told by a white house official that's still on, even though two sources the content is being tweaked >> wow was that a tactful kind of a politic response from president trump? i think it actually was, wasn't it >> which one >> the one where -- on hong kong it was considered and low key and sort of not disruptive to what china is trying to accomplish was it that was, right? he's not usually very political.
7:53 am
>> he also said that he believes that hong kong is going to put off this piece of legislation indefinitely so he's suggesting that it's going to be on -- off the table forever by saying they'll work on it. >> -- if it was put on the table for real isn't this where goes? >> you have to believe. >> i guess we have three minutes for our next guest let's talk trade joining us right now is senator james langford he serves on the senate finance committee. we don't know what you big-time senators hear that we don't hear and if you have anything that you can tell us body language, about the prospects for what's happening with china you heard the conjecture that maybe what happened in hong kong might have pushed china towards maybe doing a deal i think, you know, the democratic debate next week has
7:54 am
2020 in the president's sights, that might push him toward doing a deal, i would think. is this playing into this? >> i think so. the presidents want to get the resolution with china done by the end of 2019. this has gone on for several years and the push to be able to resolve things in china is pushing on the administration. the 301 exclusion process if you're in a company in the middle of that you know the complications of that. but each time the president announces a group of tariffs on china, there has to be a 301 resolution process to give exclusions to companies that only get their product there is. that's a big paperwork nightmare for the u.s. gr's office so it's important that they get this done. if they don't get the deal done by the end of the year they have a lot of additional work as well so there's not only the stress level and the work level, the economic issues, the companies that are saying enough is enough let's try to get this resolved everybody is pushing the same way at the same time that's a good sign for me to be able to say, let's actually get the resolution. >> so are you privy or were you in the loop for what really happened last time the -- in hind sight it now
7:55 am
looks like the deal was mostly done but then the individuals that agreed to it couldn't really deliver on what was necessary. now, president xi can deliver on anything he wants, i would think. are we back to getting most of that, where he's going to push it through now because he's been motivated to do that by either the economy in china or for whatever reason? do you think we're back almost close to that agreement where it's actually similar to that one and we get most of what we want or are we settling for less? >> i wish i could tell you, i know they started with a list of 100 and then 75 got resolved and then on the 25, no, china said we wanted to renegotiate on the things we settled and closed and that caused a big stir in the process. ultimately, president xi is the decisionmaker and he can choose through whatever he chooses to push through both with the chinese officials wand the u.s. officials,
7:56 am
president trump and president xi have a very good relationship. they're able to talk very openly and freely see if trade negotiations get the stuff done and then they can seal this when they get a chance to meet next week. >> the -- it is too early to talk about next year, senator? >> it's never too early to talk about next year. that's always the ongoing conversation and unfortunately in washington, d.c., we seldom talk about right now it ends up being next year all the time. >> because we have some things that could matter today and i'm talking about jay powell, talking about what the fed decides to do. market's almost back to new highs. the economy had a pretty good print on the gdp we saw but there's a lot of speculations swirling that things have slowed significantly. the economy is important to your candidate -- you know, the republican candidates' re-election. how do you think the economy is right now? >> so let's start with the basics the economy is important to just americans period it's not about politics, but
7:57 am
about individuals and what they can do and change and grow jobs. two big things that are out there. obviously, tax policy. the regulatory issues. those have been baked in at this point. the unbaked portion no one knows is the trade issue the president can land this deal with china and get an executive agreement with them, that has a more stable trading relationship and we can actually pass the u.s. mca which at this point it looks like a much better deal than what nafta was. it settles the digital issue and some of the ag issues. if that can pass through the house and the senate this year and get that resolved, that should do another lift to the economy again, quite frankly bring more stability. >> hearing them playing the music but i wonder if there's a disconnect i don't know if you believe the polls, but given the record employment levels and, you know, stock market prices and a lot of the positives we see, it's weird for an incumbent not to be polling better i guess there are other reasons for that. >> we'll let everyone decide in 2020 rather than right now
7:58 am
right now, there's 23 people beating up on the president every single day on tv and we'll allow the american people to be able to determine the next year. >> you know, i'm not shirr that the policies at least being talked about by the 23 are necessarily a good way to maintain the prosperity we're in right now. i don't know why americans aren't considering that. am i wrong maybe that's my -- >> we will see as people make their decisions on that one. i would say that the policies that have been put in place for the last three years have led to this rally - >> i'm thinking about the ones that we're talking about putting in place that boggle that mind in some respects senator, thank you i appreciate it. u vecoming up -- i mean yoha some of them that you even think are crazy, right, andrew
7:59 am
8:00 am
8:01 am
this hour on "squawk box," three news making interviews first the ceo of target is joining us to talk about the nationwide outage that hit the retailer last weekend. plus how tariffs can impact the bottom line. then we'll hear about the oil prices and how tensions with iran are rippling through the global energy markets. finally, a special interview with former secretary of state condoleezza rice the final hour of "squawk box" begins right now ♪
8:02 am
good morning welcome back to "squawk box" here on cnbc i'm becky quick coming to you from the kpmg women's leadership summit in chaska, minnesota. also, john kernen and andrew ross sorkin and david novak. all back at the nasdaq site in times square today seeing what's happening, right now the dow is indicated up by about 38 points. we have the big fed meeting coming up later this morning that's what the markets are on key waiting to hear what the fed does all right, let's get to our first "squawk" news maker of the morning. with us right now to talk retail, the state of the consumer and those nationwide technical difficulties from over the weekend is brian cornell the chairman and ceo of target great to see you you on your home turf. >> thank you. >> when we heard the news of what happened over the weekend, i guess that puts more of a focus on what's happening internally at target right now
8:03 am
what happened over the weekend >> it was a tough weekend and really disappointing for our guests so i need to start off by apologizing to the thousands of guests shopping at up stores on saturday and sunday. unfortunately we had issues on both days. saturday, we had an issue and on sunday we had an issue with our partner ncr, one of the upstream data centers a disappointing weekend for us we have let down the guests, our consumer but the good news was you know we were quickly able to determine no data breach which was important to communicate and within a couple of hours, our teams were able to identify the root cause and push the fix to our stores and get us back up and running. >> so weird -- >> but disappointing performance. >> it's so weird it happened, one was an internal issue, one was an external issue. there was nothing related? >> there was not but it was a difficult weekend
8:04 am
but the good news, our teams rallied around it. the number of people who posted stories about our store team members, trying to make this situation as -- you know, as positive as it could be for our guests and they really stood tall our guests appreciated it. but you know, we're committed to doing a better job and creating stability going forward. >> i heard one estimate it could have cost you $100 million is it material >> no, we were down for a couple of hours i think the real question -- i might as well answer it up front. is it going to change our guidance for the second quarter and the answer is no we're committed to our guidance. from a comp standpoint, an op income and we'll build on the momentum that we started with in q1. >> let's talk about what you're seeing from the consumer right now. last august when you joined us back at "squawk box" you told us that you were seeing a fantastic retail environment i thought it was the best ever but you said it was one of the best ever in your careers.
8:05 am
what are you seeing right now? >> you know, we continue to see a really healthy consumer environment. and gdp has clicked down a bit, but we're still seeing strong gdp growth unemployment obviously very low. wages are rising interest rates obviously have stayed in check. and overall, there's strong consumer confidence. so i think what we're starting to see in the retail environment and i talked about this during earnings is really a bifurcation between winners and losers we're in the winner's camp right now. we had our best year in a decade q1 got off to a strong start our comps are up by 4% and eps grew 15% so we see a really healthy environment. but i think you're seeing the separation between winners and losers in retail >> has growth slowed at all in your stores just from what you see in the consumers spend
8:06 am
>> the stores grew by over 2%. digital was up over 42%. we took market share in all of the categories and our growth was tied to traffic growth which is really important. so we're seeing a really healthy environment and others are reporting a very healthy start to the year. on the other hand, clearly there's retailers that are donating share right now and i think what you're seeing is retailers that have been investing in their stores, in their brands, in their digital assets in their teams are winning. those that are trying to save their way from quarter to quarter and can't invest in the omni channel requirements, well, they're giving up shares so i think we're seeing the separation in the marketplace. but overall, it continues to be a really healthy consumer environment. >> you just announced last week that you're increasing benefits for your store associates. you're going to be offering more time off to either take career of a new child or a sick family
8:07 am
member is that something you're doing because bernie sanders is beating up the likes of walmart, or it's such a tight job market? >> it's something we talked about back in february of 2017 you and i spent time on camera about investing in stores and building in brands and all the fulfillment options but you have heard me talking about the most important investment was our team going back to february of 2017 i talked about our commitment to building a path to a starting minimum wage of $15 by 2020. well, we are on that path. but we also recognized we need to think about what else we could do for our team. and we want to have honestly the best team in retail. so we started thinking about what are the family benefits we need to offer? so we're starting i think very differently about paid family leave. we doubled the number of weeks available for our team members so they can now take four weeks and if they have a sick child, a spouse, a parent that they need
8:08 am
to take care of, we get the insurance that we'll do that we're doing it across our headquarter team and our store team and our distribution centers both for salaried and hourly workers so really making sure that we provide them the benefits that they need. we want to make sure they also have backup care hopefully today while you're in town you'll see one of our stores you know, in our case, half of our store directors are women. you know, one of the reasons i'm here today at the conference and backup child care for a store director that might be running a $50 million business with hundreds of team members that has a couple of kids and then all of a sudden they have a problem in the morning that backup care is really, really important. so we want to make sure we're providing our team great starting wages but also the benefits they need to ensure they have the support from the company like target. >> have you spoken with any of the democratic candidates because, you know, doing all of these things, boosting wages,
8:09 am
adding additional benefits has been so front and center for so many of them, but you have been doing it since before the campaigns. >> we got a head start so this is not driven by the environmental issues we are talking about today. we thought it was the right thing for our company and the right thing for our business and again, i have always said while we have got a great strategic plan that's working, the most important part of our plan is the work that our team does it comes down to our team members. >> just in terms of things that could affect the bottom line i know you have been pretty vocal to the administration. you talked about what it would mean if the additional tariffs from china were put on and i know target were one of the 600 companies that wrote in to the administration last week too. what would additional tariffs mean they haven't affected your bottom line to this point but if the additional $300 billion went on the chinese products what would it mean to your bottom line >> we're watching it every day
8:10 am
and almost every hour and the fourth list is concerning to us. 25% tariffs on $300 billion it's big number to us as a consumer focused, family focused company anything that's going to increase the cost on essential goods is concerning to us so i actually look at it with almost two hats on i think you may know i currently chair the retail industry leadership association and if you think about the impact on retail, and on consumers, if these tariffs go into effect and prices go up it could have significant impact on the consumer for the balance of the year and it's the car seats you need, you know, items for going back to school and college in the fall. particularly if you're a single category retailer and you don't have flexibility in your portfolio, these are tough issues from a target stand point, we have a little bit more flexibility. >> more flexibility, but would you have the flexibility if it was on everything coming out of
8:11 am
china? >> well, 20% of our business is apparel, but 20% is beauty and household essentials 20% is in home, but another 20% is in food and beverage. we have been in this business for a long time. you know, with one of the hidden -- one of the hidden jewels in our company is the target sourcing team they have offices around the world, they're very experienced and talented and because of our scale, you know, we have got sophisticated vendor partnerships. they have been working on diversifying - >> away from china >> for a long time this didn't just start yesterday. >> when did it start last year? >> for a long time we started to think about diversifying the portfolio back then so we have a few more levers to pull, but if these tariffs go into effect prices are going to go up that's going to affect the consumers and hopefully not impact the current rate of growth in the economy.
8:12 am
>> you said one of the reasons you're here today is you're looking for more women to put through the ranks at target. what are you hoping to tell the women executives that are here >> a couple of things to talk about, it's somewhat ironic based on where we started today, but we have over 3,000 engineers and data scientists at target. >> that does surprise me. >> 25% of which you'll be happy to know are women and that number is way up versus a few years ago. we made a concerted effort to bring more women in to engineering. a third of our tech leaders are women. and on campus, our college recruits over 50% of the recruits we bring in are also women so we're building that pipeline you know, we made a big commitment to diversity and inclusion. it's why when we sit here and talk about our success, it's a combination of those initiatives and the team and the caliber of people we bring. in but i think our commitment to d & i is so important to the
8:13 am
fabric of this company over 40% of my direct reports are also women all those stores we run, over 50% are run by women so we're ensuring that our leadership team reflects the consumer we serve. >> how many of your shoppers are women? >> correct we want to make sure our leadership reflects the audience we serve so our commitment to diversity and inclusion, the steps we are taking, that's why i'm here today. and we want to talk about our commitment to making sure, you know, we are a great company to work for but people realize we're a purpose driven company we wake up every day thinking of how we bring joy to all the families we serve. but we have this amazing commitment to diversity and inclusion and we'll talk about that later on today. >> brian, thank you for your time today brian cornell is the chairman and ceo of target. back to you in the studio. >> thank you send our best to brian
8:14 am
appreciate it very much. i want to get reaction to what we just heard from our guest, brian novak, a former ceo of yum brands. good morning, we have seen you all -- we see you all morning. but your reaction to what brian had to say you have spent time with ceos that had crises, i would imagine this last weekend was a minicrisis it wasn't a dennis muilenburg boeing crisis. >> no, they solved it in two hours, internal issue, they took care of it i listen to this brian this is like a case point in terms of how to resurrect a power brand, you know i think back to five years ago when he took over, you know, remember they had the data breach which was a huge crisis. >> that was a real crisis. >> they also were in canada which was a failed investment which he had to get out of so he had two major things he had to deal with right off the bat. and they have been losing share and had sales declines but what he's done and what you
8:15 am
have heard right there is he's really invested in the long term they have reinvested in their existing stores. they have done small box formats. they have really gone after fulfillments so they can compete against amazon you can get one day fulfillment. he's done all the things that required a tremendous amount of investment and is paying off for him in the business environment right now. plus he invested in his team members. in the culture so i think this guy has done a phenomenal job building a great brand. admittedly target is a power brand. the other thing i thought was interesting was his point about sourcing you know, these guys -- i guarantee you if that's a china tariff target will be impacted less than most companies because they have been working on this for a long time. they have a great sourcing department and it's a competitive advantage for them. >> right. >> i know some smaller businesses, leaders who literally because of the tariff situations they have found other places to source so i think the really smart people are already getting ahead of this.
8:16 am
>> right. >> so it's going to not impact them that much but i think it's interesting when you look at the overall consumer landscape i think, you know, margins are going to be under attack in the future, no question. because wages are going to be increasing and i think the whole corporate social responsibility approach that every good company is taking is going to cost a lot more money so i think, you know, you're going to have to be looking for ways to grow that top line, make your customer happy. he talked about giving customers joy. you know, he's got the right passion for what it takes to really drive the business. >> okay. david is sticking around i loved his phrase donating marketplace. did you hear that? >> yeah. the winners and losers. >> companies that are donating like giving at away. >> right those are the losers the winners build the brands the right way and that's what i think target is doing. so i give him high marks >> stick around. i want to hear your view on muilenburg at some point. following the best day for oil since january we'll hear from the ceo of chevron on
8:17 am
whether we're in for a sustained rise in oil prices and how tensions between the u.s. and iran are rippling through worldwide energy markets and a little bit later a special interview with a former secretary of state condoleezza rice stick around you're watching "squawk box" on cnbc this cnbc program is sponsored by land rover. above and beyond johnson & johnson is a baby company. but we're also a cancer fighting, hiv controlling, joint replacing, and depression relieving company.
8:18 am
from the day you're born we never stop taking care of you. ♪♪ from the day you're born ♪♪ ♪♪
8:19 am
8:20 am
welcome back to "squawk box" this morning some airline news that's just breaking as we speak i want to get to phil lebeau on the "squawk" news line. >> we have learned that american airlines will become the first u.s. airline to order the new airbus a-321 plane that's a stretch version of the aisle plane think ofit as a replacement for the boeing airbus announced that they'll be launching this plane two days ago in paris the first order went to air lease corps, which is a leasing company thatleases airplanes t dozens of airlines around the world but this is the first order with american saying, yes, we will buy and fly the airbus
8:21 am
a-321 xlr. a conversion for a previous order but this is significant and important not only for american airlines but for also airbus as it looks to further make inroads was u.s. carriers and the a-321 xlr going to american, that is significant. guys, back to you. >> real quick, phil, in terms of just thinking more about boeing, i mean, is the -- is this a story about airbus or really a story about boeing >> it's a combination of both. if you think back to the real origin of this order, you have to go all the way back to when american back in 2012-2013 said we'll put a huge order in with airbus that decision which was part of this original order, andrew, that decision prompted boeing executives to move much quicker with a redesign of the boeing
8:22 am
737 into the boeing 737 max. so that is significant and it is both a boeing and an airbus story. >> phil lebeau, thank you for breaking that on the air right now. a top energy players are gathering in new york for the jpmorgan energy conference and brian sullivan joins us us with a very special guest and friend of the show. >> guys, thank you very much michael wirtz, the ceo of chevron, the last big oil company standing in california. >> we have been in california for 140 years. >> you're still there somehow. i want to ask you about something else in the news you tried to buy a company called anadarko. you were not in a bidding war, because you never rebid, occidental bid against themselves a couple of times why didn't you come in with a higher bid >> look, we really liked the deal that we did there great fit between our assets and multiple basins around the world.
8:23 am
really a lot of opportunity to create value for the shareholders of both companies and we did a deal that we believed was fair for the anadarko shareholder and for the chevron shareholder and we're well on our way to integrating when we had another bid come in which is unusual in our industry it was pretty clear that the other bidder was highly motivated and, look, we would have -- we would have eroded shareholder value. we're in a commodity business and we have to remember that that capital discipline matters. we looked hard at it and we chose to stand behind the deal we did and when anadarko chose the other bidder, we decided not to go there and we would have eroded for our shareholders.
8:24 am
>> so did ox dental overbid? >> i won't go there. >> you obviously identified yourself as a potential acquirer. >> yeah, we have got a great portfolio right now. this would have made it stronger it would have allowed us to strengthen positions where we have core competency and geographies where we have existing assets where we could have found real synergies. it wasn't just all about the permian. the permian gets a lot of attention. we like the position in mozambique and it was something that was a moment in time and a great value opportunity for us and unfortunately, you know, we have not captured it we have a great story. >> you helped to set the bar, right? you kind of identified where the value is and where valuations may be if things still look relatively well valued in the permian the stocks have not responded. they're the worst performing
8:25 am
sector this year down 20 or so percent as a group. >> certainly there continues to be a belief that there's some downside risk in the oil markets right now. i think that's weighing on the entire complex and, you know, we continue to look at all opportunities to invest in our business but we have great organic opportunities that will keep our business growing for years and years and years. we don't have to do anything and so, you know, we always watch -- >> well, you got $1 billion for walking away i'd love to get $1 billion for walking away you have $2 billion for the sale in the north sea you're on your way to 5 or $10 billion in divestitures. what are you going to do with the cash >> i talked about the shareholders, the shareholder distributions are very important in our industry. we know why people hold our stock, they expect to see distributions back we have increased our annual dividend payout for 32 consecutive years, a track record we're very mindful of we're buying back shares at rate
8:26 am
of $5 billion right now. we can still invest in our business organically to grow cash flows, to continue to grow that dividend into the future and we have surplus cash that we're redeploying through our share buy backs. we have a very balanced approach to capital allocation and we intend to continue to use the cash that way. >> why is oil at 53 bucks? >> well, you know -- >> it's amazing. we see venezuela -- by the way, you're in venezuela. you have been working there to preserve those assets and it's been a dangerous situation four your employees i don't want to go into that too much libya, oil can't get out of its own way, mike. >> it's as complex of an oil market on the supply-side you have the tragedy in venezuela, you know, it looks like potentially a war under way now in libya sanctions on iran, the ships on fire in the strait of hormuz, things that would create concerns on the supply-side, but
8:27 am
here in north america we see strong supply growth out of the permian basin. really as of the last few weeks it seems to be weighing on the market are concerns about economic growth in the globe the trade issues that continue to be on people's minds, they have created an ongoing anxiety and so that's manifesting itself in some concerns about demand which you see in the price of the commodity. >> michael wirth, thank you for taking the time. send it back to you, joe and andrew the last oil company based in california see if that will last. >> okay, brian, thank you for that say hi to mike for us. when we come back a lot more on "squawk." wide ranging interview with the former secretary of state, condoleezza rice, who will be joining becky quick. we'll be hearing from her on the oil tanker attacks in the middle east the latest on iran's nuclear program and the u.s. trade war with china a mecoming up in just mont don't miss it. "squawk" returns in just a
8:28 am
moment
8:29 am
8:30 am
that's what happens in golf nothiand in life.ily. i'm very fortunate i can lean on people, and that for me is what teamwork is all about. you can't do everything yourself. you need someone to guide you and help you make those tough decisions, that's morgan stanley. they're industry leaders, but the most important thing is they want to do it the right way. i'm really excited to be part of the morgan stanley team. i'm justin rose. we are morgan stanley. good morning again, everybody. when we come back, another big interview from the kpmg women's leadership summit. this time around it's former secretary of state condoleezza rice she'll be joining us live. in fact, she's here right now. we'll talk to her about the global hot spots and what she sees happening around the globe. condoleezza rice in a few minutes here on "squawk box.
8:31 am
when-- when you hear those words that you get diagnosed with cancer. (osamah) successfully treating it still remains one of the most enormous challenges facing us today. we realized that, if we developed the technology that could take 2-dimensional patient imaging and convert it into 3-dimensional holographic renderings, we could enable surgeons to dissect around the cancer so we can precisely remove it. when we first started, we felt like this might just not be possible because computing power just wasn't there, but verizon 5g ultra wideband will give us the ability to do this. we won't rest until we see this technology being able to change lives. what do advisors look for don't just track an index, help me meet a client's need.
8:32 am
is the fund built to sell or built to last? etfs are only part of a portfolio. so make it easy to explain. give me a quality fund that helps me get clients closer to their goals. 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.
8:33 am
good morning again, everybody. welcome back to "squawk box" right here on cnbc i'm becky quick coming to you live from the kpmg women's leadership summit in chaska, minnesota. our next "squawk" news maker of the hour is joining us right now, condoleezza rice, the
8:34 am
former secretary of state under george bush and she's now a professor in global business and economy at the stanford school of business and madam secretary, thank you very much for joining us this morning. >> a pleasure to be here. >> i can't think of a more timely issue -- or a more timely time to be coming to you than with everything we have seen in recent weeks i thought we'd start off this morning and talk about what's happening in the middle east right now. >> right. >> and the tanker attacks that took place last week there's been so much speculation about what's gone on and but from what your vantage point how do you read this >> it's a complicated and a dangerous situation. i do think that we are seeing that iran is the big troublemaker in the middle east. i think we have known that for a long time. but the iranians condition reckless they can engage in activities that you would think of why would you do that because it's going to provoke a response. obviously, they are being squeezed pretty hard under the sanctions that the administration has put on. and i will say that the decision to leave the iran nuclear deal
8:35 am
clearly the iranians are trying to fight back, but it says something about the deal that the iranians are so quickly able to start saying that that i can break out -- that they can break out and start enriching at a high level i watched secretary pompeo i think that he is somebody of significant substance and a cool head i know the people like john bolton, i think they will manage this we need the europeans with us, this is a time for the united states and europe to say to the iranians, it's fine to come back to the table, but not when you're threatening to cause havoc in the middle east or in the -- along the sea lanes >> do you think that the 2015 agreement was the wrong choice for the united states? >> i didn't support the agreement. i certainly understand wanting to get there with iran i actually started the negotiations with iran when i was secretary of state so i think negotiation is the right way to go. al but this particular agreement
8:36 am
had certain weaknesses in verification also, we know now because iranians themselves leaked the budget that a lot of the money that was unfrozen actually went to help hezbollah and hamas cause chaos in syria so i didn't support the agreement but you can get a better agreement if the united states and europe will hold together and say to the iranians if you really want to join the international community, then sit down, let's get an agreement that really does put your nuclear policy and your nuclear arrangements into an international framework that is safe for all of us. if you want to do that iran, we're there. >> the argument at the time was that the europeans wouldn't stand with us if we didn't go that direction do you think there's room for us and the europeans to get on the same page? >> i do. first of all, the administration didn't leave the agreement on day one. as was said in campaigns
8:37 am
a lot of things are said in campaigns. the president gave it a year and during that period of time, it would have been good to negotiate other elements of the agreement, but even now i think the europeans -- the iranians are trying to get the ear of the europeans. i think the europeans and others should say to the iranians stop threatening. let's go back to the table and we're willing to negotiate but it's going to have to be on terms that really do put a halt to that -- to the nuclear program. >> you're a professor of economics and business now, too. so taking your secretary of state hat, combining that with your professor role right now, what do you think when you look at the oil markets there is this global slowdown in demand. >> yes. >> watching what's happening with that, but then at the same time, all of these issues happening in the strait of hormuz what happens next? >> if we had been sitting here ten or 15 years with that kind of tension in the strait of
8:38 am
hormuz we would have seen the oil prices spike thousand the roof but there's a change largely because of the north american platform because of the united states and canada and even mexico able to take a role in so much of the demand i think you're seeing a calmer set of oil markets it really is a bit of a lesson, by the way, to the bad boys of the oil markets. that they can't play these games in quite the same way. i was secretary of state when oil spiked at $146 a barrel. nothing warps diplomacy than oil at $146. you had hugo chavez buying elections and you had the iranians refusing to come to the table and negotiate and you had the russians talking about cutting off supply of the gas to the ukrainians and to eastern europe, even to western europe those games are going to be hard to play if the north american platform fully develops as the
8:39 am
premier oil and gas market in the world. that's one of the reasons that that's what we should be doing. >> i forgot one more field of expertise for you. you were on chevron's board. >> that's right. yes. >> how much of is this different because the united states has the permian basin and the bakken shale? >> a lot of it is different. it will be even more different if we fully develop these resources. but, you know, there's still work to do, obviously. we have to work on the pipeline structure. we need to work on the terminal structure to be able to supply abroad and one of the things that we're going to have to do is continue to build the relationship between canada and the united states and mexico it's one reason that the follow on agreement to nafta, the u.s., mexico and canada trade agreement is so important. i know that there are a lot of questions about it that congress has. but i really would urge people to take a hard look at it and to
8:40 am
pass it. >> what did you think about president trump raising the issue of tariffs on mexico if they didn't help us with immigrati immigration? >> i'm not a big fan of using trade policy in what we used to call linkage to other issues let's solve it on the basis of the immigration issue, but apparently it got mexico's attention. but i don't think we should make a practice of threatening tariffs to get policy responses in other areas. >> china is a different situation. the president is trying to address what he sees as an uneven playing field what do you anticipate coming out of the g20 later this month now that president xi and president trump have agreed to meet >> well, i think you have bipartisan agreement i would even say more than outside of the government you have agreement among many ceos that the playing field isn't level with china, because of china's industrial policy whether it's ip theft or using joint ventures to cover ip theft
8:41 am
so that you give your ip and suddenly the joint venture opens it and then you're -- owns it and then you're out. the markets that are closed in china, the banking sector, is still basically completely closed the cyber security problems that we have had with china so i think there's a general sense that something needed to be done. now, we are at the edge i hope of the tariff retaliation on both sides because the truth of the matter is that the u.s. economy will not grow very much longer unless the international economy can grow and the international economy is going to have trouble growing if china doesn't grow so we need to get resolution to this i'm glad that they're meeting. i hope that the chinese come back this time to what apparently had been agreed during the last negotiations one hears that a lot was agreed
8:42 am
in terms of changes in chinese regulation, laws, industrial policy that was then walked back. >> right. >> i'm quite certain it's hard in beijing to get these things through because there are a lot of vested interests. you know, we tend to think of china as well, it's just authoritarian and xi jinping can do whatever he wants, but there's vested interests he has to think about and i hope that the chinese were admitted to the wto prematurely, because people wanted to encase the chinese economy in the larger international economy with that comes certain responsibilities to really have reciprocal policies and so we should be looking to that. i believe that's what the administration is trying to do but sooner or later, i hope we get an agreement. >> can we still get a good agreement even if we don't get 100% of what we thought we had started in the negotiations last month? >> well, they can only answer that question from inside.
8:43 am
because i don't know how completely the chinese were walking back i do think you have to get something on the intellectual property get something on changing the nature of access to certain markets. it can't be whole markets of the segment that are shut off. we are seeing the bigger issues between the china and technology in the united states and there i think the chinese made a bit of a mistake when they went out and said, oh, we're going to surpass the united states in quantum computing and ai by 2030 i told my chinese friends that was a big mistake -- >> in doing it or a big mistake in telling us they're going to do quit? >> a big mistake in saying it first of all and secondly it's not the way to think about the broadening of knowledge in the across the globe now, it's very clear that china is going to use these tools in ways that i think would make all
8:44 am
of us uncomfortable. whether it's promoting social credits for certain patriotic activities or statements what they're doing to -- right, so obviously, we would be very uncomfortable with this. but i hope that we recognize that free people are always going to innovate better than captive ones. >> you have mentioned intellectual property theft a few times. speaking of that, huawei is this a case of intellectual property theft is this a case of pay back i'm trying to use them as a lever in the trade talks, or do you think they're actually a security risk? >> i think any chinese company is going to do what the chinese government tells them to do. >> right. >> that's just the nature of the beast. and so the questions about the imbedding of technology from a chinese company into networks i think it's a serious problem and i do think that there is a kind
8:45 am
of an aggressiveness on the part of this chinese leadership that is a little bit more than we have seen with leaderships before if china is going to want to play on the global stage with its big, private companies, it's going to have to find a way to give people confidence that these aren't just arms of the chinese government and right now, i don't think people are confident of that. >> while we're talking about technology, let's talk about stanford's commencement speech. >> yes. >> just last weekend tim cook was the commencement speaker. and he really stepped out. he has taken on a front position about privacy concerns and about concerns and responsibilities of big technology he focused on that in his speech this time around you're in the heart of silicon valley and what do you think of these issues you're a former member of the
8:46 am
boorndz a former dropbox member. >> yeah, let me say that tim cook gave a tremendous address and he talked about having your own voice and, you know, and the -- but also with responsibility we talk a lot these days about rights, my rights to do this my right to do that. my right to my opinion we don't talk enough about the responsibility that comes with that i think for somebody who speaks out, you have to recognize that certain responsibility to be truthful in the way that you speak, to listen to others who may disagree, to do it in a civil way, these are the points that i think are really important if you want to have a voice. in terms of privacy issues, the first thing i would say is we're in a new world we're in a world in which the data that is gathered is gathered in many ways without transparency so one of the things that i have been saying to companies is just be transparent with your customers. let them know what you're doing and i think a lot of us actually kind of like the convenience
8:47 am
of -- well, if i go on and i say i want to buy golf balls they'll say you may want golf clubs too and i kind of like the convenience of that. i like being able to sign in and not havingto put in my credit card data every time. >> me too. >> so we're in a little bit -- we're a little bit conflicted as consumers too. if we can be transparent about it, i think some of this can be done with. >> but i don't want them sharing my medical history or marketing information. >> exactly that's why the transparency is important. and perhaps there's been some overreach in some of the areas. >> does it require a regulation from washington? >> well, there's going to be regulation from washington i hope that the regulators -- sometimes, becky, regulators will regulate even if they don't understand what they're regulating i was a little spooked by some of the hearings when mark zuckerberg and others were up that maybe the level of knowledge on the hill seemed to me not quite there for what
8:48 am
we're actually looking at in the technology revolution. well, people -- people need to study. but we are going to get regulation one of the things that we can do with the europeans, you asked earlier about can we get on the same page with the europeans i know that we and the europeans don't have exactly the same views of privacy but whatever our differences about privacy, they are nothing like our differences with the chinese about privacy. so this is an area where the united states and europe i think can work together with the companies and with the governments to have sensible regulation that doesn't kill the goose that laid the golden egg. >> let's talk about the reason you're here. the women's leadership summit that's taking place today. why is this important to you, what do you here >> well, i have been a part of this since kpmg started some five years ago and i just believe that we are getting to a point at which we have enough women poised for really remarkable leadership roles and we just need to make sure that we make that next step and get over the hump.
8:49 am
and we have had women secretary of state and major ceos of corporations, not enough of them kpmg is led by a woman but obviously and we had a survey done of the women who have been here over the last five years at the leadership summits. and they're still -- there's still a sense that maybe you don't quite belong, how do i belong and i think we need more ways to give women confidence that if they are prepared, and many of them are, that they're going to be able to make that next leap when i started, becky, there weren't that many role models. you know, i have been waiting for a black female soviet specialist role model, but now there are women moving in to the positions of authority who can help bring other women along with them. and so the summits have brought women who are poised to go into the c-suite. not quite there yet.
8:50 am
giving them tools, giving them a network so they know they're not alone in some of the trepidation that they might feel about making the next step and i just applaud kpmg for its commitment to this and we get to do it at beautiful golf courses like this. >> it's fantastic. >> while the lpga is showing that is showing that women play this game of golf pretty well too >> the survey you mentioned, a lot of the women executives said they felt like they needed to change their style of leadership to match up with expectations. did you ever feel like that in your rise? >> i actually think what is going on here is you do change your style of leadership as you go up the ladder the fact is you now are leading larger teams of people you're having to make decisions that are much tougher than decisions that you had when you were lower on the wrungs you can't just pass it off to somebody else. you have to learn that sometimes you're building consensus. sometimes you're just informing. >> maybe that's a universal. >> i think it is a little bit more universal, but i can understand why people feel that they have to change their
8:51 am
leadership style i've certainly had to change my leadership style i think in some cases i've changed it for the better when i was younger. i wasn't very good at delegating i always wanted to go do somebody else's job for them so i would say to women, yes, it is going to change you don't have to change who you are. you will have to acquire new tools, you'll have to acquire new ways of dealing with people, and you'll have to ask yourself hard questions about what you may be doing that may be holding you back but these are the kinds of issues that can be addressed in summits like this, where women can network with other women >> secretary rice, thank you so much for your time, it is a pleasure to see you. >> pleasure being with you, becky. >> andrea, back to you, in new york. >> thank you, that was a terrific interview, becky. we should mention right now that we are just a few hours away from one of the most consequential fed decisions in recent memory. back to steve liesman who teased us before, he's now got a preview, will tease us again,
8:52 am
you did tease us in the 6:00 hour and i want to get to that part i know you don't think it is a soap opera, but of the back and forth that we may be hearing >> yeah. add my praise for the interview becky just did pivot from patience to possible rate cuts today as the fed meets among unprecedented public pressure from the president for the fed to ease policy signals that willingness to cut rates in the future, removes patient from the statement, marks down possibly the economic outlook. major question, how many if any fed members forecast rate cuts this year. the so-called dots in these economic projections none did so in march when they last did this. let's look at the fed rate cut probabilities real quick 23 for june. 82 for july. 894 for september. 45% chance of three cuts by december the meeting takes place after these comments from president trump, who was asked by our own eamon javers if he would remove or demote jerome powell.
8:53 am
>> let's see what he does. i wican tell you draghi and the eu, if you look at what's going on with the euro, they have a much different stance than our folks do as you know, we did something today that was very dramatic and frankly helped that part of the world. so we'll see what happened they're going to be making an announcement pretty soon we'll see what happens but i want to be given a level playing field. >> no fed chair has ever been fired or demoted here is three ways that chairs have been removed. promotion, failure to reappoint, that was volcker under president reagan and agreement for mccabe, then fed chair in 1951 to resign with president truman who did not like what the fed was doing at all neither law nor convention fully profect the fed chair that comes from politics. another part of the chair and
8:54 am
political protection, the belief among politicians that markets will react negatively to his or her removal. the question i have is, whether fed chair powell has that kind of support from the markets. >> other people, steve, said that it can't be done. and you say, you know, so it just depends who you -- i saw a whole piece on that, that trump cannot do that it is definitely gray area >> i don't find it in the federal reserve how to do it the idea is -- you can imagine outside of the federal reserve act there is some case law and that kind of stuff you can put that on. act itself is silent on the removal of the fed chair. >> the chairman has to have independence that's just treading too far >> we'll get an answer about that if we have time at the end of the show. to jim cramer who joins us now you usually don't like basing all your plans on the fed. on any given day do you >> no. we have too many great
8:55 am
companies. union pacific last night, that are a little more concerned about china. but they're in the talking about the fed. that are talking about how long the war is going to last that's the new continual theme i get from industrials many of whom, by the way, the ceos supports the president in principle, but don't want to come up short in the quarter i have not got a lot of other people than bankers saying they're worried about the fed. every company in the west, they don't know what the fed, they think it is a stock, fed >> you didn't like the -- you didn't like the december hike, but you're not really -- you're not pounding the table for them to take it back. >> i understand the trump -- as soon as you say you understand something that trump does, people hate you, but he wanted a national policy where the economy is strong, this is the time to go after the chinese, and the powell destroyed that. he didn't get the national policy and i think that the president is trying to get a national industrial policy like he feels they have in europe, look they have in russia, leak they have in china
8:56 am
but we're a democracy. it is new. >> jim, thanks nu will see you in a couple of mites. and we'll be right back with more from david novak in a minute you can be sure of. they're changing by the nanosecond. that's why cognizant created a unique engineering approach to design and build new digital products. learn how cognizant softvision designs experiences and engineers outcomes. ♪ cool. ♪
8:57 am
your daily dashboard from fidelity. a visual snapshot of your investments. key portfolio events. all in one place. because when it's decision time... you need decision tech. only from fidelity.
8:58 am
david novak, you heard cramer's take on that, we need a national policy. you want an independent fed you think powell has been on the right track? you think he should be able to do what he -- >> i think he's a very smart
8:59 am
guy. put in position to do the job and let minimum him do the job. >> can you job own as -- you got a guy who all he wants to do is be able to say my record on the economy is great he wants everybody on board. just you knew it was going to come >> i think he -- trump can say what he wants to say but i think had the system loses the independent chairman, we got a problem. >> you know who else could job own? congress could get involved with rules-based system for the fed too. and you can imagine -- >> you don't want either of those things >> you don't. >> that's the point. it is a disservice to the whole system to undermine the institutions of government >> let me tell you something i think is more important in this right now. i want to get this little plug in. >> good. >> worker engagement is all time low. 70% of people not engaged. the number within reason why the manager is not trained properly. recognition is the -- 79% of people leave jobs because they don't feel recognized. and so -- but nobody is training people on recognition. that's what my company doing
9:00 am
right now. and we just launched a program called purposeful recognition. and it is teaching managers in a very important skill that they have not learned, how do you recognize people the right way with earned recognition? i hope people go to -- >> we have great management in comcast across the board we could always use -- >> i'm not saying comcast has the problem. a lot of other people do. >> join us tomorrow. "squawk on the street" is next ♪ good wednesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. plenty to watch while we wait. including huawei ceo eon our air more draghi fallout, two year yield to a one week high today

76 Views

info Stream Only

Uploaded by TV Archive on