CNBC Excerpts: CNBC’s “Squawk Box” Broadcasts Live from the World Economic Forum in Davos, Switzerland Today, Thursday, January 24
WHEN: Today, Thursday, January 24, 2019
WHERE: CNBC’s “Squawk Box” — Live from the World Economic Forum in Davos, Switzerland
Q4 hedge fund letters, conference, scoops etc
Following are unofficial excerpts from CNBC interviews which aired on CNBC’s “Squawk Box” (M-F 6AM – 9AM) today, January 24th live from the World Economic Forum in Davos, Switzerland.
Interviews included: Hermitage Capital Management CEO and Founder Bill Browder; BMO Financial Group CEO Darryl White; New York Stock Exchange President Stacey Cunningham; TPG Co-CEO and Founding Partner Jim Coulter; Humana CEO and President Bruce Broussard; Workday CEO and Co-Founder Aneel Bhusri; General Atlantic CEO William Ford; Matarin Capital Management Co-Founder and Equity Portfolio Manager Nili Gilbert; Morgan Stanley CEO James Gorman; EY Global Chair and CEO Mark Weinberger; BlackRock Global Head of Active Equities and BlackRock Alternative Investors Chair Mark Wiseman; Goldman Sachs CEO David Solomon; Canyon Partners Co-CEO and Co-Founder Joshua Friedman; and PIMCO Managing Director and Vice Chair John Studzinski.
Links to video of the interviews are included below.
All references must be sourced to CNBC.
CNBC’s Sara Eisen with Hermitage Capital Management CEO and Founder Bill Browder
Bill Browder on Russia:
Ten years since Vladimir Putin has put a price on my head. But you know I’m not scared. I’m not backing down. And I’m going after them for the murder of Sergei Magnitsky, my lawyer who was killed on November 16, 2009. And one of the main reasons I’m here in Davos is to make sure that I’m talking to all the policymakers here to hold Russia to account.
Bill Browder on President Trump:
Donald Trump in -- at the Helsinki Summit with Putin, wanted to hand me over to the Russians –
SARA EISEN: He seemed open to it.
BROWDER: -- and at the same time, his administration has been, some of the people in his administration, have been highly supportive of sanctioning Russians and sanctioning Russians under the Magnitsky Act. And so, it’s a mixed bag as far as Trump and his administration goes.
Bill Browder on Putin’s Main Goals
Putin’s main goal, he’s got 3 goals. He wants to, hate hates powerful opponents. He doesn’t like NATO. He doesn’t like the EU, who can stand up to him. And he doesn’t like a strong America. And so Putin’s main goal is to try to break up any strength in the West. And that means breaking up the EU, he loves Brexit. It means weakening NATO. And it means creating chaos in the United States. And he loves the fact that everybody’s at each other’s throats in the United States because that means they can’t focus on him and all the criminal activities that he’s trying to do around the world.
Bill Browder on Populism:
If you have a situation where you have a weaker economy that creates populism, populism then creates all these right wing parties that Putin can support, which he does support, he gives them money openly.
Bill Browder on Russia Winning:
Russia is winning because they’ve created all this chaos. I mean, and it’s not just Germany and France -- Macron’s not here either. And so, one of the tweets I put out at the very beginning is that with France, UK and the U.S. not here, you have a disproportionate number of dictatorships vs. democracies here in Davos. And that’s true just sort of generally in terms of the voices of the world right now.
CNBC’s Sara Eisen with BMO Financial Group CEO Darryl White
Darryl White on ‘Two Pictures’:
When I look at the dialogue that says let’s compare everything we talk about today to one year ago today to the minute. And then you could paint one picture. But I’m gonna paint a different picture for you. Because in that first picture you could say: well at that point in time, we had the benefit of fiscal stimulus in the United States, we had some emergence in Europe that looked pretty positive, and we had the global synchronized growth story. Then you can juxtapose that to today and say: well, we’ve got a government shutdown and Brexit looks like it’s off the rails, and we’ve got trade problems all over the world. And those are two drastically different stories and therefore we have a huge problem. Or, you could say imagine two or three years ago we forecasted in 2019, and you asked me what I thought 2019 was gonna look like and I said we’ll probably have U.S. GDP in the 2 or 2.5% range, everybody who wants a job will have a job--
SARA EISEN: That’s not bad.
WHITE: --borrowing costs are still at an all-time low, and we won’t have inflation above 2%. You would probably say, yeah, it’s not bad, you’d probably say it’s a central banker’s dream, right? They wait their whole lives to work up that story. That’s where we are today.
Darryl White on Clients:
Our clients are still in pretty good spirits. They’re spending, the consumer is spending. The capital formation at the corporate level is good, it’s real. There’s absolutely no question we’re slowing down, but I don’t see evidence in our businesses that we’re slowing to a halt.
Darryl White on Recession Risks:
If we have, let’s say 2 to 2.5% GDP growth in the United States this year, that’s exactly the average of the 7 years post-financial crisis when we grew. So recession risks, are we closer than we were? Of course we are. But it does not, in any way shape or form, feel imminent in the businesses that we serve.
Darryl White on USMCA:
I do assume that it’ll pass Congress. I assume that the agreement would be struck a year ago. We’re glad, of course, that it did. I would say the predominant sense in Canada was relief, and an expectation that it would be passed. I think I’ve said before, I think it’s the most successful commercial trading relationship in the history of modern commerce, frankly. So, fundamentals prevail usually and they did in this case. And I think it’ll pass Congress.
Darryl White on the Relationship Between U.S., China, Canada:
For the fullness of time, I think the relationships will survive and I think they’ll survive soundly. There’ll be twists in the road. I think we’re in one of those right now. You’ve got the two biggest economies in the world, and I think the dependency is there, and I think those--
SARA EISEN: You’re talking U.S. and China?
WHITE: Yea and I’m also saying that we’re trading partners with each of them. And so in Canada this situation you’re referring to, we’re monitoring it, it matters, but at the same time the relationships prevail over time.
Darryl White on Currency:
The currency has gotten a lot cheaper, and if you look at the Canadian dollar relative to the U.S. dollar over time it doesn’t get very far away from the price of oil’s movement. So, on the other hand, as you know, it puts more dollars in the pockets of the consumer when the oil prices are lower. So the Canadian economy has been pretty resilient. The biggest impact is in fact on the currency and therefore the knock-on impact of that is on the export environment.
SARA: Which is good.
WHITE: Which is good. So we’ve got a bit of a natural hedge in the oil currency right now.
CNBC’s “Squawk Box” with New York Stock Exchange President Stacey Cunningham
Stacey Cunningham on IPO Shutdown:
Right now there are a number of companies that are lined up and looking to tap the public markets. And we have roughly 160 companies on file with the SEC. So it’s not yet having a major impact, but if it extends a few more weeks it will. Especially for companies that are looking to raise money, because they’ll have to choose a different path if they were counting on the public markets and can’t do that.
Stacey Cunningham on Volume:
When volume picks up in the markets, it’s dramatic. So we were--
JOE KERNEN: Does that help you? Do you like that?
CUNNINGHAM: Yeah, I mean, obviously we have a vested interest in active trading volume, so that does well for us when volumes pick up. And when volatility picks up, typically volumes pick up, too. And, you know, they’re 50% higher –
JOE KERNEN: 50%.
CUNNINGHAMN: --than what they were.
Stacey Cunningham on the SEC:
It’s concerning when you think about some of the things the SEC is considering doing that were conceived in a low volatility environment. And some of the proposals that they’ve put out in place, I actually think would have a really negative impact on the market, especially during periods of volatility.
Stacey Cunningham on Regulation:
It’s really important that we avoid making requirements and regulations that prevent companies from coming to the public markets. The public markets serve a social good. Our mission is to help companies raise money so they can go out and save the world… Look at the size of Uber. The fact that companies are not coming to the public markets means investors are left out of that growth trajectory. And we need to find reasons to welcome them to the public markets. Not more reasons to weigh their alternatives between private and public.
CNBC’s “Squawk Box” with TPG Co-CEO and Founding Partner Jim Coulter
Jim Coulter on Davos, Then and Now:
Three years ago I think we thought tech was the answer. This year it's a lot about, is tech the problem? Two years ago we had a new set of leaders who were going to solve populist problems with populist answers. They're almost not here this year. And this year there's a market which has gone totally crazy in terms of volatility - totally different from a year ago. So confusion seems to reign.
Jim Coulter on Absent Trump Administration:
One of my favorite terms of the week was the politics of chaos. So around the world we traditionally looked for politics to provide structure and as businessmen we're seeing politics actually adding chaos into the equation. So I'm not sure it would have added a lot right now, at a time when Brexit is stalled and the government is closed.
Jim Coulter on Economy:
Last year, the economy was like a fraternity party. It was 2:00am and it had been going well, monetary policy had been driving it and suddenly someone came in with a new keg called fiscal policy. It's now a little closer to 4. Late in the party, people start doing strange things - volatility in the marketplace, chaos in Washington. It doesn't necessarily mean you leave the party but it certainly moderates your behavior.
BECKY QUICK: It means the sun's coming up soon.
COULTER: Yeah. Soon.
Jim Coulter on Confusion:
Well as a short-term investor, confusion is a bad thing. As a long-term investor, I always say that when it feels bad, it's good. So when everyone has exactly the same view, it's hard to differentiate yourself.
Jim Coulter on Social Responsibility:
A lot of the investing we're doing today are in the things that are actually driving societal change. So we believe that things that will drive change actually can also drive returns. And if we're going into a period where change is needed, change will be valued.
Jim Coulter on JUUL:
People are looking for companies to have their values. You can argue what the values might be but they're looking for companies to have their values. This was a company that we respected in terms of some of the disruption they were creating. It's a story, but the actual product and what it was going to do to society just did not fit who we were.
Jim Coulter on Investments:
We're trying to do investments where the industry dynamics will overcome the overall economic picture. So the dynamics of Uber and Airbnb, what's happening and the change in society and the change in their usage will overwhelm what's going to happen in the economy. And those are the type of investments we're looking for today, whether public or private.
CNBC’s “Squawk Box” with Humana CEO and President Bruce Broussard
Bruce Broussard on the Shutdown:
It’s not hitting us as much, but it is hitting some of our customers. And to me that’s probably the worst. You don’t know in the middle income and the lower income how it’s affecting us. And we have a large contract with Tricare, and our military members are starting to be impacted by it. So, it’s less about us, it’s really more about our customers.
Bruce Broussard on Medicare for All:
What we see is Medicare for All is really talking about the financing arm. Is it the employer, is it the exchanges, is it Medicare? And that’s really where a lot of the conversation comes from. They’re still going to need individuals and companies to coordinate care, and they’re gonna still need organizations to provide care. I never see the government getting into the provider and the coordination of care.
Bruce Broussard on Our System:
I think our system is good, I really do. I think our system has a lot of great things to it around innovation, around access, around -- creating the best providers and care. And at the same time, coordinating the care across the system. I think there’s some budget issues that we have to deal with and some areas around who’s covered and who’s not covered.
CNBC’s Squawk Box with Workday CEO and Co-Founder Aneel Bhusri
Aneel Bhusri on Privacy:
I'm a big believer that every company that is using data to make decisions needs an ethics officer to lay down the rules of policies around privacy and to make sure that it's used for good reasons. I also believe that technology is not good or bad, it's neutral.
Aneel Bhusri on AI Technology:
The genie is out of the bottle. AI is out. The technology is in play and companies are going to use it. Those that don't use it will not be competitive. I absolutely believe that. But, it is going to create a skills gap… We need to be on top of retraining a lot of people if we're going to really use this technology.
Aneel Bhusri on Economy:
Last year I thought people were overly optimistic. I think this year, people are cautious. And it's not cautious because of their own businesses, it's cautious because of, largely, the government interactions.
Aneel Bhusri on Trade War:
A trade war. Alright, that is definitely having an impact on a company's perspective of should they invest, should they postpone investments. I haven't yet seen it manifest itself, but it's definitely part of the conversation.
CNBC’s “Squawk Box” with General Atlantic CEO William Ford
William Ford on Investments:
Half of our capital comes from wealthy families from around the world, which gives us a longer-term orientation. Our whole period is 5-8 years versus 3-5 years. And that lines up well with our growth investing mandate. We're focused on innovators, growth companies like Uber and Airbnb are both in our portfolio. And we're doing a lot outside the U.S. quite a bit in China, India, Brazil.
William Ford on Investing Trends:
We're leveraged against two, I think, of the more fundamental trends going on in the world. One of them is the move to a digital economy. That's happening across the world and across sectors. And secondarily too, the emerging markets. I mean if you look at the growth that's happening, the creation of a very large middle class, particularly in Asia, that's going to drive growth. And if we can tap into those secular growth trends, I think we can still generate returns, even with volatility.
William Ford on IPO Renaissance:
We came in here thinking we were going to have an IPO renaissance this year. You know, we had a lot of our larger cap companies that had really delayed their IPO plans, were really gearing up, the boards had really planned, they got their governance in place to go public. The shutdown was a little bit of a monkey wrench here in terms of timing, but I still think you're going to see some very high-profile IPOs out of our portfolio: Airbnb, Uber, Squarespace is coming. These are all terrific companies. And I think they'll be well received by the market and create some excitement actually.
William Ford on Volatility IPO Impact:
If we had volatility like we had in December, I mean, all bets are off. I think at that point, I mean, it's very hard to have a constructive IPO market. I mean, moderate volatility, you know, a 15 VIX is quite good for an IPO, the IPO investor. 20 is not. So I think if we sort of say, not too hot, not too cold, we should have a pretty good market.
William Ford on China:
I think you have to see China in a more complex way… Part of their economy is you know, industrial, export, infrastructure-driven. That part of the economy may well be in recession and it's definitely growing at a dramatically slower rate. The more -- the private sector, consumer services, tech, innovation end of the economy, it's still growing.
William Ford on Regulation Risk:
I think it's the single most significant risk, Becky, around investing in tech right now, is regulation and re-regulation. You know, you've seen it with the European Union, you've seen it – you’ve seen it all over the world basically. And I don't have a great prediction as to how it's going to play out but you can feel it in the hallways here in Davos. You know, that regulators, government leaders are really much more interested in what's going on in the tech sector than I've ever seen them before.
William Ford on Being Bullish:
I am bullish on the U.S. I think people are too pessimistic even here in Davos. I mean, you know, a 2% to 2.5% growth economy is very constructive… I'm still more bullish on the emerging markets. I mean, we didn't even talk about India but I think one of the quiet themes here is how well India's doing and is poised to do in the next 10 years,
CNBC’s “Squawk Box” with Matarin Capital Management Co-Founder and Equity Portfolio Manager Nili Gilbert
Nili Gilbert on 2019 Outlook:
There's likely going to be a lot of volatility along the way. There's uncertainty on so many fronts, whether it's fiscal, trade, and importantly, monetary policy, that in the context of that moderately bullish outlook for the year, it's not going to be a straight line up and it hasn't been so far.
Nili Gilbert on Impact Investing:
When you're a long term investor then questions about who your corporation is in society, who it is for its customers and with its stakeholders become more important. If you're in a short-term game, then questions about climate change, social change, changes in the workforce, community responsibility don't matter. But if you know you're going to be in a stock for years, you really have to start wondering how a company is preparing for those themes.
CNBC’s “Squawk Box” with Morgan Stanley CEO James Gorman
James Gorman on the Mood at Davos:
Obviously the prevailing mood coming in here was uncertainty. We’ve just come off a terrible December in the markets, so everybody’s skittish. You talk to enough people and you express your skittishness, and it echoes and it just keeps compounding. By the third day, everybody’s a little depressed. And, you know, I spoke at a dinner we hosted last night with a bunch of CEOs and clients and I said: I don’t get it, I mean I don’t get it, we’re not living in a depressing economic world at the moment. We’re living in a slowdown in different parts of the world. So, you know, it’s the anxiety starts to feed, and the question Andrew is when does that feeding of anxiety translate into actual economic results?
James Gorman on Global Economy:
Look at the jobs number in December: 300,000 jobs. You need about 80 to 100,000 jobs in the U.S. to hold pace. Yet unemployment went up. What’s that tell you? A lot of people came back into the market. So the economy here -- China’s slowing of course, but it’s still at 6.4%. Global economy is still relatively strong. The political whatever is still relatively weak.
James Gorman on December Markets:
There was a lot of disruption in the market in the last four or five weeks, and that affected our trading businesses. We did less well that obviously we were happy with. I don’t think that’s the state that we’re in right now. January is not like December. You know, it’s interesting. I said to some folks the other day, if the December ‘18 had happened in January ‘18, and January ‘18 happened in December ‘18, the mood here in Davos would be completely different. But you know it’s -- so you can’t get too wrapped around very short-term moves.
James Gorman on Being Cautious:
We’re very focused on growth. We’re, you know, we’re going to be a little cautious here until we see how this plays out.
James Gorman on the Shutdown:
It’s extremely negative if this shutdown goes on much longer. Firstly, at a human level, you’ve got 800,000 families affected by this. This is just not, this is not the way the U.S. should be working. And I truly hope the leadership of both sides come to some way of resolving what seems to be a relatively straight forward problem. You know, so, if it goes, you know, through months of this year it’s going to have an extremely damaging effect. Not just, forget IPOs, I mean that’s just timing, right? Whether it happens first quarter, third quarter, that’s not the big deal. It’s just the momentum in the economy. So this thing needs to get resolved.
James Gorman on Fourth Quarter:
We had three of our best four quarters in our history in the first three quarters of last year. Right now, I’m not expecting that. But the fourth quarter was in a completely different place.
James Gorman on Markets Economy:
CEOs I talk to, they want to get on with business. And at the same time, they’re looking at the stock prices and saying: Well heck if I’m gonna be trading at book value like we are right now, I’m gonna buy back stock. So, there’s -- everybody wants to get back to a market that reflects what’s going on in the economy.
James Gorman on Fed Policy:
The challenge, Becky, is obviously the difference in opinion on what the Fed policy should be. And given the four rate increases last year, the signaling around that, will the Fed truly be data dependent, including market data, in determining what to do in 2019?
BECKY QUICK: Well that’s the key. What data are they watching?
GORMAN: And I hope and believe it’s more than pure economic data. Because market sentiment, market volatility, market liquidity, the temperature of the trading rooms around the street, these things matter. And I think the Fed is digesting that and you know, my expectation is we’ll have a much-- much more modest rate increases in 19.
James Gorman on China:
China’s $11T economy growth is obviously slowing, it could never maintain as it did in the double digit growth. It’s not maintaining 7% growth. The latest reported figures I think were 6.4. China’s slowing. But mathematically it’s gonna slow. In terms of absolute GDP growth, the U.S. and China account for I think it’s 42% of global growth right now. So that’s, we didn’t talk about it, but the whole trade discussion has to take into account: if you have a dislocation in relationships between 42% of global growth and two countries, you will have a global slowdown for sure.
CNBC’s “Squawk Box” with EY Global Chair and CEO Mark Weinberger
Mark Weinberger on the Shutdown:
The government will reopen. I'm not someone who believes it has a huge effect on GDP. It has a very humanitarian effect. I mean, I see it, my neighbors aren't getting paychecks. And we do a lot of filings with the sec and it is slowing down IPOs, it is slowing down tax refunds, there's a real effect but as far as reducing the GDP over the long term, i think there are much bigger issues out there. The real thing I think it does is undermine the confidence people that the people have in the government working together over the next two years.
Mark Weinberger on CEO Optimism:
Most CEOs, as you suggest, are still relatively optimistic. Certainly less than last year. I would say we had an excess of optimism last year, excess of pessimism this year in most of the people I hear from. Businesses are still investing. It's the 5th quarter in a row of double digit profit growth. It was up 11 instead of 17%. Still the highest in –
BECKY QUICK: Is that CAPEX?
WEINBERGER: No. That's profits. Quarterly profits. CAPEX is still up, hiring is obviously way still up. Wages are rising. Net wealth for individuals is at an all-time high. I mean if you're pessimistic now, I think you're probably going to be looking for a problem. Obviously there's more risk to the downside now than we've had in a long time with all the geopolitical issues. But the underlying economic factors, if you're looking as a business in investing, are still very strong.
Mark Weinberger on Trade Uncertainty:
There would be a lot more money going back into CAPEX and a lot more supply chain changes if it wasn't for all the uncertainty around the trade issues and everything else. So decision-making is slower. I think businesses have slowed down in moving forward with things that they otherwise would have. Maybe if some of these log jams get cleared, you'll get more of that. I don't think it will be a flood. But I don't see people stopping investment or stopping hiring because of these geopolitical issues.
CNBC’s “Squawk Box” with BlackRock Global Head of Active Equities and BlackRock Alternative Investors Chair Mark Wiseman
Mark Wiseman on Dimensions of Diversification:
I think today increasingly what we're thinking about is three dimensions of diversification. Two traditional dimensions, which is: diversifying across geographies, diversifying across asset classes, but increasingly we think you have to start diversifying across strategies. So if you're going to be in equities, you have to think about using index, you have to think about using factors, you have to think about using systematic or quantitative strategies, and you have to think about good old fashion fundamental investing. All of those things combined together will create the best outcome.
Mark Wiseman on Low Rate Environment:
We're in, I think, a low interest rate environment for an extended period of time. And so I think this is why it's tough for investors and it's tough for our clients. And what we're doing is trying to IFND ways to help them through diversification, through different strategies to deliver the return that they need, whether it's an individual in a 401k or a multi-hundred billion dollar pension plan... It's kind of the same problem… And we're seeing our clients diversifying more into privates, more into alternatives, more into systematic strategies and I think they have to do all of those things today if they're going to try and protect themselves.
Mark Wiseman on Changing Market Structure:
I think we are seeing a change in the structure of the market. I think the 4th quarter represented the change, and I think active strategies are going to pay off, much more than they have in a period of time. We've had the last 5-7 years where everything's been driven by what the Fed, the BOJ, the ECB does. Today there's an opportunity for active management to really make a difference -- individual security selection and be more prudent in the way that we construct portfolios.
CNBC’s “Squawk Box” with Goldman Sachs CEO David Solomon
David Solomon on Markets:
There’s a lot going on in the world. I think people are watching what’s going on in the world. It’s hard to say how all the big picture things that you guys have been discussing on the show during the course of the last two days are going to play out. Those can have an impact in markets, but I think as we turn the corner on the New Year, people are getting focused on the forward. And if you step up at a high level, broadly speaking while the trajectory of global growth has slowed a little bit. The economy is still doing okay.
David Solomon on Underlying Economy:
I think the underlying economy is okay. Our economists are talking about 3.5% global growth for the year, a little bit more than 2.25% in the U.S. And if you think about that as a base case, it’s not as robust as people were thinking about on the forward curve last year, but it’s not bad. The issue is when you think about government shutdown, you think about the 90 day deadline on trade, you think about the negotiations on Brexit, you look at some of the bigger macro issues that are out there. You know, any one of these individually probably doesn’t slow us down, but a combination of things not going the right way will have an impact on markets and will have an impact on sentiment.
David Solomon on Chances of a 2019 Recession:
I think the chance of a recession in 2019 is relatively low. Our economists put it at 15%. But if you’re running a company, when you’re in the board room with a CEO and you’re running a company, CEOs can’t manage their business saying ‘What if there’s a recession in 2020?’ They’ve got to look at their plan, they’ve got to put forward, they’ve got to expect that there’s gonna be some volatility in the economic activity. But CEOs aren’t very good at kind of looking 18 months, 24 months, 36 months out and saying ‘What if?’
David Solomon on CEOs Planning for Recession:
There will be a recession at some point. Whether it’s in 2020, whether it’s in 2021, or how the cycle runs that’s not a big factor in the context of CEOs thinking about exactly the things you’re talking about. What’s my 3-year plan? Where am I investing? What markets are most open or most accommodating for what I want to accomplish? What are the big picture supply chain issues I have to deal with?
David Solomon on Debt:
When we think about big picture concerns that we’re concerned about, and we think about places where there are financial imbalances and where there are risks, we’re certainly thinking about the growth of debt in the world, particularly the growth of government debt, you know all over the world.
David Solomon on Tightening Cycle:
We recently put out a research report that talks about if you look historically at recessions in the U.S., the five things that can lead to a recession. Some of them, like oil shocks or industrial disruptions that were largely due to inventory rebalances, things like that, less prevalent given the way the economy has evolved. But then you get into things like overheating, and inflation, doesn’t seem like that’s on the radar screen now. Financial imbalances, and a tightening cycle. And so we’re definitely in a tightening cycle.
David Solomon on Longer Cycle:
I wouldn’t be tremendously surprised if this cycle ran longer than everybody expects. And one of the things I’d say also, Joe, that’s interesting: generally we don’t worry ourselves into a recession.
David Solomon on Being Cautious:
We’re more cautious around risk based on where we are in the cycle, but that doesn’t mean that the cycle won’t run for another 2-3 years… I know that we get a lot of attention around the cycle and when there’s gonna be a recession. You know in the short term, thinking about 2019, we’re much more focused on these big governmental issues and whether or not they have the propensity to really disappoint markets.
David Solomon on 1MDB:
This is something that we’re working through, we’re managing through the process. On our earnings call I raised the question that we’re spending a lot of time trying to look at and understand and think about the fact that we had somebody in our organization that we hired and promoted that actually became a criminal, along with leaders in the Malaysian government, Jho Low and other people, in what’s a very, very significant financial fraud. And we’re reflecting on all that. We have to resolve this, and we’re gonna resolve it in an appropriate way, and we’re going to work through it in the process.
CNBC’s “Squawk Box” with Canyon Partners Co-CEO and Co-Founder Joshua Friedman
Joshua Friedman on Bond Markets:
Right now I’d say it’s a very mixed picture from the fundamentals. But when you think from the bond markets, where we primarily participate in things like high yield leveraged loans, distressed, etc., I think there are structural infirmities that remain in those markets that were created by this long period of monetary easing that will make the volatility much higher than we’ve seen in the past.
Joshua Friedman on Bankruptcy:
I don’t think we’re at that point in the market at all right now, myself. That doesn’t mean that we’re not going to have the occasional blowup, you can see what’s happened with PG&E obviously.
Joshua Friedman on Fragility in Market:
When I look at the fundamentals, I say: okay, the U.S. is pretty strong. We’ve seen weakness, you’ve heard from the IMF, you’ve heard from Draghi, you’ve heard from others, and you’ve definitely seen that we’re later cycle. And that creates a lot more fragility in the market.
Joshua Friedman on Debt Burdens:
I think the U.S. is probably better positioned to handle its debt burdens in many respects than others. However, the instruments of fiscal and monetary policy are both pretty limited in their potency right now.
CNBC’s “Squawk Box” with PIMCO Managing Director and Vice Chair John Studzinski
John Studzinski on Geopolitical Recession:
We've looked at risk in a financial mode for the last 10 years since 2008. The world has been very disciplined about evaluating risk, central banks, inflation, interest rates, unemployment, it's been very rigorous… We are, in what I keep referring at this Davos, in probably the worst geopolitical recession that we've had in a long time. And people are having a hard time trying to evaluate geopolitical risk because we haven't had to deal with it before.
John Studzinski on the Relationship Between U.S. and China:
It's very important that during this period of geopolitical risk, people don't overreact, they take a little more time, pace themselves. But I would also say that some of these personalities, people like President Xi for example, and his negotiations with Donald Trump, you know, he's a very wise man, he's a very patient man. And I'm sure he will take a long-term view about China's relationship with the United States.
John Studzinski on China’s Role in Tech:
America's going to have to live with the fact that China is going to be the biggest economy in the world between 2025 and 2030. And China then needs to rethink its own role in the world. And most importantly technology is going to be the -- is the big piece on the chess board here. Because is it going to be two technology worlds or one? And will the Microsoft’s of the world, or the Huawei’s of the world, or these other big players, will they play a dominant role or will we have two separate sets of technologies and two separate sets of companies?
