CNBC Excerpts: CNBC’s “Squawk Box” Broadcasts Live from the World Economic Forum in Davos, Switzerland Today, Tuesday, January 22
WHEN: Today, Tuesday, January 22, 2019
WHERE: CNBC’s “Squawk Box” — Live from the World Economic Forum in Davos, Switzerland
Jim Chanos At Invest For Kids: Short This Tech Company As Profits Slump
At this year's Invest For Kids conference, hedge fund manager Jim Chanos pitched a tech giant as his favorite short idea. Jim Chanos is a Wall Street legend. The president and founder of Kynikos Associates made his name shorting Enron in the 1990s. He has since identified some of the most profitable shorts in the Read More
Following are unofficial excerpts from CNBC interviews which aired on CNBC’s “Squawk Box” (M-F 6AM – 9AM) today, January 22nd live from the World Economic Forum in Davos, Switzerland.
Interviews included: ValueAct CEO Jeffrey Ubben; IMF Chair Christine Lagarde; Salesforce CEO Marc Benioff; Bank of America CEO Brian Moynihan; Marriott CEO Arne Sorenson; Blackstone CEO Steve Schwarzman; Canada's Minister of International Trade Diversification James Carr; Atlantic Council CEO Fred Kempe and Financial Times U.S. Managing Editor Gillian Tett; IHS Markit Vice Chair Dan Yergin; UPS CEO David Abney; Guggenheim Global Chief Investment Officer Scott Minerd; Carlyle Group Co-Founder and Co-Executive Chair David Rubenstein; Bridgewater Co-CIO Ray Dalio; IBM CEO Ginni Rometty; Silver Lake Partners & North Island Co-Founder Glenn Hutchins; and BP CEO Bob Dudley.
Links to video of the interviews are included below.
All references must be sourced to CNBC.
CNBC’s Sara Eisen with ValueAct CEO Jeffrey Ubben
Jeffrey Ubben on Financials:
It seems like, at the end of the year, because the yield curve would invert one basis point, the computers were talking to computers and the active investors kind of ran out of money. And they just -- there was some sort of sell financials at any price. So now you have a situation where you’ve got companies that are almost utilitarian in nature because there’s so much regulation, and they’re so de-risked that actually they’re low-risk entities, and they’re pretty fortified against a lot of macro risk.
Jeffrey Ubben on Corporate Governance:
The idea that the extreme is this accepted principle, that corporate governance serves only one purpose, which is to maximize shareholder value, I think that -- and specifically that means that the role of corporate governance is not in the interest of the overall firm or in the interest of assisting and achieving a corporate purpose. So you get this weird dynamic where profit follows purpose. Or the idea that purpose – you know, profit leads.
EISEN: Right. Purpose is secondary.
UBBEN: And to me that’s just ass backwards, right? So in this way I think capital markets and public companies are showing their limitations in terms of how they can play a role in societal good.
Jeffrey Ubben on Gov Policy:
Government is so important and so part of the solution. And the trust in government, and the trust in companies is gone, which is why you see millennials looking for companies to reassert corporate trust…
But idea that companies have to be more involved in policy, only because the good actors are gonna be dragged down by the bad actors if they don’t get involved in government policy, you know. So, I think it’s in a company’s interest to be very proactive on policy.
CNBC’s Sara Eisen with IMF Chair Christine Lagarde
Christine Lagarde on Tariff Risks:
We look now at tariff increases that have taken place and that are beginning to have an impact, however small. We're looking at threats, we're looking at an attempt to resolve it but we're not seeing really the end of those negotiations. We are also seeing now a market, which has I think taken account of that. And we've seen market values change dramatically over the last few months and now, you know, stabilized again. But you have a compounding effect that is resulting in obviously some instability, some volatility. And we believe particularly from the advanced economies, it will have an impact.
Christine Lagarde on China:
We have not revisited the growth forecast for China. It's still at 6.2. And we believe that the Chinese authorities for the moment are taking the right policy measures, in terms of credit tightening on the one hand and in terms of appropriate stimulus on the other one. But clearly any worsening in terms of trade threats would reduce confidence, would have an impact on that growth -- which is clearly one of the two key economies in the world at the moment.
Christine Lagarde on Brexit:
It's a big uncertainty within Europe and certainly for the U.K. economy itself. But it's also an uncertainty because of the role played by London as a financial center. And how will that sort of be either rebalanced or kept as is, what will be the equivalences granted, what will stay in London, what will eventually go?
Christine Lagarde on No Deal Brexit:
It's obviously the worst case scenario. And anything short of that would be better but would also hurt the U.K. economy. Even the mildest scenario will, you know, add frictions, will add difficulties, will make transactions less smooth and transportation less convenient.
CNBC’s Sara Eisen with Salesforce CEO Marc Benioff
Marc Benioff on Economy:
On one level the economy is rocking, you know that. We continue to have good growth. We’re gonna have more good growth this year. And, but of course you’ve got, you know, the mitigation for that growth against Brexit, the trade war—
EISEN: Lots of uncertainty.
BENIOFF: -- foreign exchange issues, rates. That’s on peoples’ minds. But it doesn’t – it’s not dominant. The main thing is people are growing, they’re investing and they’re ready to go forward. And it’s an exciting Davos.
Marc Benioff on the Crisis of Trust:
We’re navigating through a crisis of trust. CEOs don’t help themselves if we have a crisis of trust and they’re not helping the homeless or they’re not helping people who need them. And, certainly if they’re abusing their product or abusing the data that they’re collecting, I mean those CEOs need to, they need to also wake up and they need to realize that they can’t do that anymore.
Marc Benioff on AI:
You cannot continue to do these terrible things to the world with your technology. And you’re gonna see more of that as AI gets further unleashed. You’re getting this next wave of artificial intelligence, so the tech lash could get amplified if CEOs don’t make change now. They need to wake up.
Marc Benioff San Francisco Trainwreck:
San Francisco is kind of a train wreck, we have a real inequality problem. We have –
EISEN: Is that because of the tech sector?
BENIOFF: It’s because of the tech sector.
CNBC’s “Squawk Box” with Bank of America CEO Brian Moynihan
Brian Moynihan on Consumer Strength:
We think the consumer is very strong right now. Spending a lot on experiences. There's, you know, a lot of talk about car sales slowing down or house sales and things like that, but there's lots going into experiences, dinners and travel and stuff. Very strong. Very strong. Ending the year, 4th Quarter strong. Christmas was strong. And January so far has been strong relatively.
Brian Moynihan on Bank Earnings:
We were happy that we were on the top of the heap, no question, that's obvious. But I think -- the trading business was really, the month of December was really kind of strange. And it's kind of – it’s moved back to where it's more normal and things. But it was really a strange time. The shutdown and everything -- the confluence of things that didn't go right were high. So a lot of people had that kind of surprise at the end of the quarter. Going into November, the businesses were performing basically at par.
Brian Moynihan on Shifting Workforce:
Our view is that we have to let attrition be our friend. So what happens is you're seeing a cycling, year-over-year we're down maybe 4,000-5,000 people. But you have 2 or 3 thousand more people facing customers and less people as we digitize and improve paper process and get rid of it. And that's going to go on forever.
Brian Moynihan on the Fed:
The minutes are clear. That as they reach the neutral rate they have said we have to be careful now and watch -- we're data dependent. And that is meeting-to-meeting. An analogy a great economist once made to me: think of them as climbing one of these mountains, hand-hold to hand-hold. There's no path left, they've reached the path, and now the question is what they're going to do and that's going to be depending on the data.
CNBC’s “Squawk Box” with Marriott CEO Arne Sorenson
Arne Sorenson on China:
The China story, of course, is a little bit complicated because we’ve got the trade and we’ve got a number of very high profile event that have happened. But the China story is still a very constructive one in the travel space. We’re not in a business which is super sensitive from a national security perspective.
Arne Sorenson on China Trade:
In China, too, you’ve got risks on their economy because of trade. You’ve got also a shift towards consumerism, which is helpful for us. Both of those things are sort of working their way through
Arne Sorenson on Recession:
I’ve heard some people -- some folks say ‘Maybe we should just get a small recession now and get it over with’, because then we could stop worrying about the length of the cycle… It could well be very mild and not very long.
Arne Sorenson on Hacking:
We’ve got to get it encrypted, and we have to make sure that people have the confidence that the data that we keep is going to be kept only because we need to use it. And we need to use it in a way that delivers ease and value to you. And that’s where we’ve got to get, and we’re working as quickly as we can.
Arne Sorenson on Experience:
People love to travel today more than ever. And young people particularly would put travel very high on their list of things that they’ve got to do. When I was growing up, it used to be a discretionary luxury now, forget it, I’m going to take my vacation. I’m going to do that before I buy a car, maybe before I get an apartment, whatever. And that’s happening all around the world. Of course, we talk about it in the sense of people want experiences more than they want stuff.
Arne Sorenson on Instagram:
It partly is Instagram, and other social media, where the consumption we now share and brag about in a way, is the stuff we take pictures of.
CNBC’s “Squawk Box” with Blackstone CEO Steve Schwarzman
Steve Schwarzman on China:
I think that both sides would like to see something happen, each for their own reasons. And the Chinese laid it out, a group of things they were prepared to do in Argentina and I think they’re following up on that. I think on the U.S. side one of the really important things, among others, is compliance. And there’s some skepticism or need for clarification that if they agree on something, the U.S. side wants to know if it’s going to happen. And one way to do that is to have a mechanism where if something isn’t happening it can be appealed to the Vice Premier’s office for resolution within 30 or 60 days. Some mechanism so it’s not just people having agreements, without the ability to make them happen.
Steve Schwarzman on Global Force:
Each of the countries is a very, very important global force. Number one and two in the world, economically. China’s got the largest population. And they each have some type of destiny, some of which will be cooperative of course, as it is, and some of which will be competitive.
Steve Schwarzman on Trade Normalization:
Normalization of trade, and that’s gonna take some time. Because the Chinese system is so different with state-owned companies as well as private companies, as well as you know, more restrictive access to their country typically than we have of ours. And these things work out but they don’t happen in a day or two, they don’t happen in a week or a month or a year.
Steve Schwarzman on Economy Slowing:
The U.S. economy is slowing from where it was. Remember, you know, two quarters ago it was at 4.2% growth, which is unsustainable for a large country like the United States. We’ll probably grow this year somewhere around 2.5%, maybe two and three quarters. I don’t see you know, any recession. I don’t know where that came from the last two months of the year.
Steve Schwarzman on Consumer Confidence:
The consumer confidence is down a little bit, which I think comes from you know, some of the dysfunction. But they’re still spending a lot of money and we’re a 70% consumer economy. And so I see the U.S. sort of rolling along, but at a lower rate for growth, but also lower, Joe -- lower earnings growth.
Steve Schwarzman on Internet:
The cohesion of societies in the developed world has definitely gone down. One of the contributors, I believe, is the internet itself and the ability to mobilize small groups of people to basically undercut what societies would typically want to do. And we’re becoming fractionated and there’s no head of state who would tell you things are the same today as they were 10 years ago, in terms of the ability to run a democracy.
CNBC’s “Squawk Box” with Canada's Minister of International Trade Diversification James Carr
James Carr on Huawei Arrest:
Canada's a country that abides by the rule of law and when you have an extradition treaty with a partner, you honor it. And that's exactly what happened. And there will be due process. There was no political interference in that decision. Our judiciary is independent. That's the signal that we're sending to the world. And much of the world agrees.
James Carr on USMCA:
I know that the political environment has changed. But we also know that it’s a good deal for Canada, the United States, and Mexico. And we can make that argument persuasively as we did throughout the negotiation. So I am confident that it will be ratified.
James Carr on H1B Visas:
We're reaching out to the talent pool internationally. And we're making it easier for companies to attract talent to Canada. Expedited visas are one way of doing that. But the policy difference is that our country believes that there is an international competition for talent. And Canada invites the world.
CNBC’s “Squawk Box” with Atlantic Council CEO at the Fred Kempe and Financial Times U.S. Managing Editor Gillian Tett
Gillian Tett on the Trump Slump:
This time last year it was all about the Trump bump, everyone was pretty optimistic about the economic outlook. Now, it’s more about the Trump slump or more widely the problems of populism. And you’re looking at Theresa May. In fact, what people are talking about this week is much as not just who’s here, but who’s not here.
Fred Kempe on a Long Lens:
If you look at it -- with a long lens the last 50 years we’ve cut global poverty in half.
JOE KERNEN: Exactly.
KEMPE: If you look at it with a long lens we’ve got technological advance that’s going to help us decarbonize the planet. If you look at a long lens, you know -- there’s a lot good that’s happened a lot, because of the system that got set up after World War II. What people are worried about is that’s all in danger now.
Gillian Tett on the Market Volatility:
Even if you are optimistic long term like Fred or Joe who are clearly the sunny people today, in the short term there’s a lot of uncertainty and that spells volatility for the markets in 2019. And that’s something that almost everyone I’ve spoken to says, is brace yourself for more volatility.
Gillian Tett on China:
China, and the Chinese data that came out at the start of the week, which has left a lot of people saying actually there really is a slowdown happening now, well a slowdown in growth.
BECKY QUICK: You believe the 6.6% number?
TETT: Personally no. But you know. And of course the other thing is U.S. China trade relations where people were hoping that maybe if you had Donald Trump here, there could have been some talks.
Fred Kempe on China Competition:
The biggest change is we’ve gone in 2018 from a certain strategic engagement with China to competition and deeper competition and conflict. And what people are really talking about behind the scenes here is how that’s gonna unfold on the tech front, in the war with Huawei right now, in the war for the commanding heights of artificial intelligence. And then -- and do China and the U.S. divide up the world, and you pick your sides? Or do they collaborate?
Gillian Tett on the Splinternet:
I do not think that most investors have woken up to the implications of a possible future, not definite, but possible future where you have the splinternet, not the internet. Where essentially you have China taken out of the supply chains for many U.S. tech companies. And I was talking just this morning to a couple of CEOs of big U.S. tech companies who are saying: Well yes we’re having to think about it, but if that ever came to pass it would take years, and it would be a huge shock.
Fred Kempe on Markets:
I think we’ll have some sort of trade deal with China, and the markets have priced that in. What the market hasn’t priced in is a generational struggle with China for dominance, and particularly tech dominance.
JOE KERNEN: Why not? That’s not new. What do you mean it has a price –
KEMPE: Look you can’t ignore it, but how do you price something like that in? I just don’t know how you do it.
CNBC’s “Squawk Box” with IHS Markit Vice Chair Dan Yergin
Dan Yergin on Permian:
BECKY QUICK: You’re looking for Brent Oil to somewhere be in the $60 to $80 range.
YERGIN: Right –
QUICK: Do you have a prognosis for WTI, too?
YERGIN: -- well about $8 or $9 less, although that’s going to close as you see the bottlenecks in the Permian are resolved with the new pipelines that will come on, the new ports that are going to come on, and that will tighten over the course of the year.
Dan Yergin on Pipelines:
I think we’re going to see a surge of production, particularly in the third quarter. And I think overall we expect U.S. production to be up to 1.5 million barrels a day, which is interesting because we also see global demand being up 1.5 barrels a day. So that’s going to put some pressure on the exporters.
Dan Yergin on OPEC:
Well I think the charm offensive – on one hand, it’s the charm offensive. On the other hand, they’re cutting back. They, and the Russians, the new partners, are cutting back to try and balance the market and get it stronger. So last year the average price for Brent was 71. I think at this point, it looks like it will be sort of in the high 60s.
Dan Yergin on China:
But all the factors you’ve been talking about -- particularly about China, trade, all of those things are going to really weigh on the oil price because the oil price is going to play off all of these macro factors.
Dan Yergin on Trade and Oil:
You see the oil price very much responding to outlooks for the Chinese economy, outlooks for global trade, the trade war. If we see a resolution by March of the trade battle between the U.S. and China, I think that’s going to be positive for oil. And in fact, part of the way that gap is going to be filled in that trade balance is with exports of U.S. oil and gas to China.
Dan Yergin on Saudi Oil:
Well I think what you’ve seen is the Saudis have done the major part of this recent cut, but I think that both sides are going to continue to -- that relationship is important to them, not only for oil but for geopolitical reasons for both sides.
Dan Yergin on Iran Sanctions:
The question mark that’s out there is phase two of sanctions on Iran. And I think that’s a question that is going to hang over the market. And this time -- last time the U.S. said we want zero exports. It turned out, ‘Well, we want 40% exports.’ So the question is, how hard -- and that comes up, I think, in May.
CNBC’s “Squawk Box” with UPS CEO David Abney
David Abney on China Uncertainty:
Businesses of course like certainty. And right now there's not as much certainty as we would like. So there are a lot of discussions about that. We have a lot of customers talking to us about whether they should optimize their supply chains separately. There's also some hope that the recent discussions could lead to some kind of conclusion by the March 1st date so we'll just have to see.
David Abney on Shutdown:
Operationally we are fine. There are no delays. We do get concerned, of course, about the people going without paychecks. And, so we'd love to see that resolved. But we haven't seen it affect spending yet. But that could happen the longer this goes on.
David Abney on the Postal Service:
We believe that the postal service -- we need a healthy postal service for the U.S. We also believe that the prices that they charge for the package delivery should cover their costs.
David Abney on Amazon:
A lot of what Amazon is doing is moving supplemental inventory. And they do have planes. And they are – they probably have a second day network that they're utilizing. But in order to have a next day network, it would take a lot more planes. And so we believe we add great value to Amazon.
David Abney on Global Supply Chain:
A lot of our customers that are doing business in China are looking at other areas in Asia. And so I would believe that probably is a little bit bigger option. But there are companies that are of course looking to move back into the U.S. or probably would do so with automated facilities and a little bit different than maybe when they left.
CNBC’s “Squawk Box” with Guggenheim Global Chief Investment Officer Scott Minerd
Scott Minerd on Collision Course:
The Federal Reserve is still on a restrictive path. We’re gonna slowdown, but we’re tightening. And at the same time we’re going to have stimulus come from the U.S. government in 2020. So this collision course between increasing rates and a more restrictive fiscal policy is going to spill over into the general economy.
Scott Minerd on Slowing Growth:
When you look at where potential output is for the United States, and then you layer on, you know, the inflation rate, we’re – we’re just not growing at the same pace we historically have. And you know, when you have population not growing in the United States anymore, you just don’t have the same latitude.
Scott Minerd on Productivity:
The productivity gains in the economy, though they’ve picked up recently, have been pretty sluggish. And I don’t think that we’re making the big gains in productivity that are gonna spill over into growth.
Scott Minerd on Corporate Debt:
QE was great because all of a sudden it lowered rates, you were enticed to take on a lot of debt. Now that we’re trying to reverse things and we’re having quantitative tightening, you know, incrementally it’s harder for companies to manage when they have large debt loads than when they had less debt.
Scott Minerd on Bailout:
I think Americans need to have more confidence in their willingness - the willingness and ability of the government to print money. And we’ve learned that lesson. The great bailout of the financial crisis was just to open the monetary taps and flood the system. I think the policymakers learned their lesson. I think Bernanke waited too long before he cut rates, which made things worse. And they’re going to be quick to go back and engage in QE again if they have to.
Scott Minerd on 2020 Recession:
The peak happens typically about 4 to 6 months before the recession starts. So I would say that sometime in the latter half of 2020. And from here we probably have some more upside for the time being.
JOE KERNEN: 3,000 on the S&P or --?
MINERD: You could get that high. I’m thinking maybe about 15% from where we are today.
CNBC’s “Squawk Box” with Carlyle Group Co-Founder and Co-Executive Chair David Rubenstein
David Rubenstein on a Longer Shutdown:
The members of Congress and the people in the administration know that this is hurting the economy, the shutdown. And they really want to resolve this. And I think there's a real resolve to get it resolved very quickly. So it could be more than a few days, it could be very soon, but it's not going to go on for a month or so, in my view. Both sides recognize this is not in the country's interest. Both sides recognize that something has to be done and there's going to be much political backlash against both sides if something isn't done soon. That's the general sense that people in Congress have, people in the White House have as well.
David Rubenstein on China Negotiations:
The Chinese weren't sure that President Trump really meant what he said about being tough on trade because he was very polite to Xi Jinping. They now realize, in my view, that he's very serious about this. And they also realize this: that if he were to depart tomorrow, there is somebody behind him who supports the same views. In other words, his views are probably the views of 40% or 45% of the American people. So they realize that if Trump goes away tomorrow, they're still going to have to deal with somebody in his place who will have the same views.
David Rubenstein on Powell:
He tried to make it clear as he could that probably the expectation of 2 increases this year should be off the table for the time being. There was a general expectation last year that you'd have two Fed increases, two 25 basis point increases, probably earlier in the year. I think his view was probably you shouldn't assume that's going to happen now. That's what his main message was, in my view.
David Rubenstein on Investing in Emerging Markets:
The theory of emerging market investments is that prices are lower, the growth rates will be higher, and the profits will be higher. Now it turns out, over the last 20 years, that emerging market IRRs are roughly the same as developed market IRRs. So there's no premium you're really getting in the emerging markets. Now that could change and individual deals could be better, but generally you're going to get the same rate of return historically.
David Rubenstein on U.S. Political Risks:
I often think the greatest political risk is in a country that you and I are very familiar with. This country…
Sometimes the United States has political risks that you can't anticipate. Now there are greater corruption issues, lack of good management issues, disclosure issues in the emerging markets and the exit opportunities are fewer. But surely, we recognize that from time to time, the U.S. government does things that are hard to predict.
CNBC’s “Squawk Box” with Bridgewater Co-CIO Ray Dalio
Ray Dalio on Recession:
There’s a significant risk of a recession a recession, you know, is it minus one? Plus one. Okay let’s not get technical about that too much. There’s a high likelihood of a significant slowing in 2020.
Ray Dalio on Big Impact:
The three big factors are the combination of the wealth gap and the politics as we come to it. The where we are in the later cycle, and the inability of Central Banks to ease as much. That’s the caldron that will define 2019 and 2020, in my opinion.
Ray Dalio on Capitalism:
We have to re-engineer capitalism in a way that produces productivity. And there are ways of doing this. There are things like microfinance or there’s paying education. You know, in other words I think you have to do an all-in accounting of the costs. Like, if you educate somebody -- if you can’t educate people well and you balance a budget, you’re not dealing with the total cost.
Ray Dalio on Economy:
We’re going to have a slowing of the economy. Not just in the U.S. but in Europe and you’re going to have a slower economy in other places and that’s going to have an effect that will bring growth down to a certain level. In that notion of how monetary policy will be part of that. And at the same time politics and the disparity issue are going to merge.
Ray Dalio on the Fed:
I think we are now in a situation in which, now you take the term structure of rates, which is basically that rates will not rise. That’s what’s built into the curve. If it rises faster than that, I think we’re going to have another problem. And then --- so it shouldn’t rise. And then I think as we’re going forward, when we take a look at what will the -- how much will the economy slow and how much will some of the lending that supported the stock buybacks and supported the – you know, the big growth was corporate lending, which was financed because the cost of funds was cheap in relationship to the return on equity. And then we’ll see how that passes through.
CNBC’s “Squawk Box” with IBM CEO Ginni Rometty
Ginni Rometty on Red Hat:
When we did Red Hat it will be 200 basis points to our revenue growth, as we talked about, that’s right, accretive in the second year. Free cash flow though, a billion dollars. And so it’s really a good move for all of IBM. Because it’s 200 basis points to all of IBM when we talk revenue growth. And when you look about where IBM is right now in this reinvention, what I would say is now it’s up to us to consistently perform.
Ginni Rometty on Precision Regulation:
Every government right now, the issue is privacy of consumer data. And so every government is itching to regulate. And I think the risk we all have is that there’s a great overreaction and the casualty is the whole digital economy. Where really what we have to protect is consumer privacy. And that’s consent, opt out, ability to delete. And that is what I would call almost like precision medicine, precision regulation.
Ginni Rometty on Trust:
We’re 108 years old, and we have always lived by that view. That we exist because clients trust us with data. So I think every company now has to do that, when everyone’s looking to benefit from it. If you’re gonna benefit from it, you have to live by those rules.
Ginni Rometty on Oil Metaphor:
I think it was probably 7 years ago I started using that oil metaphor, but it was for a different reason. It wasn’t about limited, not limited. I think the real point to that metaphor is: value goes to those that actually refine it, not to those who just hold it. And just like with countries, poor countries have oil. And so, that’s what that meant. I think the future, and again I just left a discussion on this, people say ‘Well gee, if as an example China has no privacy rules and has all this data, do they win in AI?’ Having a lot of data, for the current state of AI, is useful. But there’s more and more AI innovation being done that learns with less data. So I don’t call this a war, one way or the other, that’s over. This idea that our technologies are going to learn with less data, that’s what we’re working on and others are, it’s gonna make a big difference here.
Ginni Rometty on Skills Crisis:
I think there’s another side to tax reform of why haven’t we see as much prolonged sustained. Again another discussion we just had. Yes, there’s been tax reform, but we have not paid as much attention to, to me, the societal issues. There’s A) this trust headwind you just mentioned with data. But this skills crisis is a real issue. So you may take and have capital, but if we don’t help bridge these gaps on skills, I think this is what you’re missing. And, you know, fourth industrial revolution is the topic here, every past industrial revolution had a great technology, but then it was accompanied by both physical infrastructure and societal infrastructure to spread the benefits evenly. That’s what we haven’t paid attention to.
CNBC's "Squawk Box" with Silver Lake Partners & North Island Co-Founder Glenn Hutchins
Glenn Hutchins on Market Data Disparity:
People are all looking at economic data and concluding -- reaching one conclusion from it. They're looking at the markets and reaching a different conclusion, or wondering why the two seem to be different. We have to understand the markets are backward – the economic data, pardon me, is backward looking. What happened in the 4th quarter, right? The markets are forecasting the future, and so the markets right now are saying something very different for what they expect for the future than what the economic data is showing happened in the most recent past.
Glenn Hutchins on Global Slowdown:
The main thing the markets are forecasting I think right now is a global slowdown. China's slowing down, Germany’s slowing down, emerging markets, and then interest rate-sensitive sectors of the United States not contributing as much to the economic growth as a consequence - housing and others - as a consequence of interest rates going up.
Glenn Hutchins on the Fed:
The Fed is not going to tighten and create a recession. They just don't want to do that. The fed doesn't really care about market levels. What they care about is the market as a transmission of policy to the real economy. So when the real economy does falter with respect to unemployment or growth, and that can come as a result - the market transmissions that do that primarily are interest rates affecting borrowing levels or a wealth effect affecting consumption. But as long as it's just the markets moving around, that's not within their mandate.
CNBC’s “Squawk Box” with BP CEO Bob Dudley
Bob Dudley on Oil Prices:
It is tightening up. I think a big variable, in of course, the Iran’s sanctions, whether it be applied or not, big overcorrection up, went down, and I think we’re heading back into reasonable balance. And by the way, we don’t see the demand actually falling.
Bob Dudley on China:
We just looked at the figures and project another 1.4 million barrels a day growth in crude… But we’re not seeing this worrying thought it’s all going to start falling.
Bob Dudley on Saudi:
Our relationships with Saudi Aramco, we work with them on the gas climate initiatives. We know Saudi Arabia well. We don’t have a lot of investments in there. We have found a way over the years but it has not changed our relationship at all.
Bob Dudley on Advertising:
We’ve come out of a really difficult decade of the company. I don’t think we had the credibility to talk about things in an exciting way. We’re doing a lot in the -- getting ready for the energy transitions that are going to happen, a lot of natural gas. We are working on renewables. Of course we have a lot of oil. And I think it’s time for us to just tell our story a little bit differently. Let people know we’re engaged in this transition that happened. And we have a great big core business.
Bob Dudley on Emissions:
We do believe that the world needs to reduce emissions. We think it’s not a race to renewable. It’s got to be a combination of many things. Renewables and natural gas is going to be a natural grouping. And as long as you’re in advantaged oil, the world’s going to need lots and lots of oil for decades and decades to come.