Schwarzman: The Business Community Has A Lot Of Confidence In The Fed

Schwarzman: The Business Community Has A Lot Of Confidence In The Fed
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First On CNBC: CNBC Excerpts: CNBC Interview with Blackstone Chairman and CEO Steve Schwarzman

The following are excerpts from a FIRST ON CNBC interview with Blackstone Chairman and CEO Steve Schwarzman, and CNBC’s Geoff Cutmore and Steve Sedgwick on CNBC’s “Squawk Box Europe” today, Wednesday, June 19.

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GEOFF CUTMORE: Blackstone Chairman and CEO Steve Schwarzman has today announced the record one hundred and fifty-million-pound donation to Oxford University and he’s with us here around the desk. Very good morning, thank you so much for joining us here.

STEVE SCHWARZMAN: Great to see you.

GEOFF CUTMORE: Let me start off just by asking you about the background to your donation. Obviously we’ve heard people like Henry Kissinger and Bill Gates and others express concern about the threat that A.I. potentially poses to the human race. To what extent do you share those opinions and was that a motivation for the investment that you’re making.

STEVE SCHWARZMAN:  Well I think what they’re all talking about is, of course, true. It’s a very disruptive technology and will be extremely powerful. Some people say much more powerful than the Internet itself. And it’ll be a force for good. A lot of amazing things will occur because of A.I. and other computer science related technologies. On the other hand you could have some bad outcomes, dislocations of people in the workforce. So AI will create new jobs, but the amount of jobs it will displace initially will probably exceed that, in some cases, by a lot. So you need a mechanism to try and figure out what can be introduced and when, and just not let things happen and try and pick up the wreckage. And in the Internet introduction the people who did it weren’t aware of a lot of these unexpected negative consequences of the Internet. So we now have a lack of freedom of speech, increasing lack of that, we have cyber bullying, we have social networks where they mobilize thought to make it difficult for governments to function.

GEOFF CUTMORE: So when you think about that and you think about the century that we’ve seen where science has brought progress but also negative consequences obviously, and we’ve only got to think back to the wars and nuclear technology and now the Internet and so forth. When you think about what you want your institute to do, is it to come up with ideas about how you check the scientists or how you regulate governments or whether we should have a global policeman for A.I. rollout. What was in your mind?

STEVE SCHWARZMAN: Well it’s gonna be some version of all of that. This is the start of an adventure and you have a lot of people trying to figure out what to do, to sort of protect humans, in the context of benefiting humans. And one of the reasons I made this large donation to Oxford is because Oxford is rated number one in the world and humanity’s number one in philosophy and we’re gonna have to take into account those core values of Western society, Western civilization as we try and figure out how to bring government, how to bring the media, into the dialogue to control how fast we allow certain types of technologies to impact the world we live in. And this is really big. This is this is not a little situation. It’s like a tsunami where you’re in a satellite and you can see what’s happening and somebody else is sitting on the beach in a beach chair reading a book and, you know, some of us are in the satellite position now. I’m not a technologist but I’ve been educated by them as a result of the gift I gave to M.I.T.. And so it’s pretty clear that that there is a global desire because I get visits from people all over the world now saying, “what do we do here?” So the start of figuring out what we do is first of all knowing there’s an issue, mobilizing people, and governments are really way behind and not set up to handle this issue.

GEOFF CUTMORE: There was a little bit of pushback from some of the students I believe over the M.I.T. endowment. I don’t know how you read that or how you look at some of the views that are being expressed by students when it comes to large benefactions from wealthy people like yourself. Just noise or youthful exuberance, what do you put it down to?

STEVE SCHWARZMAN: Well I think at M.I.T. there were roughly I think 18 students concerned about this and the media tends to have an amplifying element and you know they have about, I think, 12,000 students, so I think that that was extremely well received, in large part because the A.I. ethics of things is needed as well as the pure science, which that was about.

STEVE SEDGWICK: I’m on the Blackstone careers page and I’m looking at the different experiences that Blackstone wants. And I think you want mathematicians, physicists, legal expertise engineering maybe economics not the humanities. Did you see the dichotomy here. I think companies 21st century companies like Blackstone want a different set of skills than what I think that you’re endorsing with this endowment.

STEVE SCHWARZMAN: Well what I’m saying, there is a mix in and, you know, it’s sort of the age of STEM. It’s the age of technology. And I agree with your assessment that those are skills today where everyone’s readily employable. On the other hand people like myself would like more liberal arts, classically trained people. I happened to be at Yale two weekends ago and the person who was the head of the faculty there was talking about how their liberal arts students actually do really well economically. And the reason is that the training that you get for those types of things is sort of multi-matrix thinking. It would be similar to what you guys do.

STEVE SEDGWICK: It’s good to know the medieval languages have still got a place….

GEOFF CUTMORE: ….I wanted to move on if I can, very briefly. Again we learned that Jay Powell‘s job may be under threat. What do you think about the threats made against him, and it’s obviously a Fed day today, and we’re very interested to know as well what you feel the right rate for the U.S. economy is at the moment?

STEVE SCHWARZMAN: Well, I think the Fed’s an independent entity and they need to do what they need to do. I think the President was communicating with them. You know that’s a bit the way he communicates. And so the Fed knows what’s on his mind in the Fed will do what it does.

GEOFF CUTMORE: Does it undermine though, in some sense, the way the business community and the investment community feel about the Fed’s legitimacy if the chairman is constantly being undermined by the President, and this latest threat to somehow demote him?

STEVE SCHWARZMAN: I think the business community has a lot of confidence in the Fed, and Jay is a pretty strong guy. And the Fed will do what they believe is right.

STEVE SEDGWICK: Just you all seen as the businessman, as we as we’ve said really many times, who has Mr. Trump’s ear and who, since his election actually, has become confidant in some ways as well. How do you feel about his very robust approach to international relations as well. Do you think sometimes the President perhaps goes in in a more aggressive way than is necessary?

STEVE SCHWARZMAN:  I think that’s his manner. And you know I can’t explain all the things that happened, that’s not what I do. I try and help from time to time…

STEVE SEDGWICK: Is it good for American businesses or not?

STEVE SCHWARZMAN:  …on individual types of issues. And I watch, like you do, some of the other things.

STEVE SEDGWICK: Is it hurting American businesses though, that approach? Is it hurting U.S. businesses, the ability to grow relations with China?

STEVE SCHWARZMAN: I think the China issue is a very legitimate issue to deal with. And, you know, I’m a friend of China’s, the school there. However, you can see over the years, you know, that that China which had a pretty closed market, it’s been slowly opening it, and there is a desire on the rest of the world, not just the United States, to have China open more, have more intellectual property protections, and less cyber issues and all the types of things that we readily think they should do. And so, if they’re not prepared to do it then there’s bound to be friction. If they are prepared to do it, which I think is in their interest, and I’ve talked to them about that, then that’s really good for the world. And so now we’ve just hit a roadblock. And you can see the tensions going up. I don’t think that works for anyone, particularly in the business community, in the short term. And the question is can there be a rebalance you know with China, jeez, it’s the second largest economy in the world, it grows, you know, even with all of these issues, somewhere around 6 percent. And if you look at where Europe’s growing, what is it 3/4 times Europe and the US will probably be in the 2s. And so it will be two and a half times the US. And so you know all that’s happening with this tension is it’s hurting both countries. And the debate of who you’re hurting more it’s interesting, but fundamentally people would like to go back to a normal relationship, and that’s up to the two countries. And I think that the Chinese know that the balls being thrown their way. And you know if they just dribble it and put it in the basket, you know, you could sort of go on and I hope that that happens. So you know the two Presidents will meet in negotiations who are pretty, you know, sort of, I don’t know what the right word is, stalled out would be one, you know or worse, and now it’s time for a restart if there is meant to be progress.

GEOFF CUTMORE: You’re closer to both of the principles than we are, I guess and you’ve got a much better internal read on this than we have. How optimistic are you that actually something can be signed and put to bed at the G20 meeting?

STEVE SCHWARZMAN: I think that that’s extremely improbable, because there’s been almost nothing happening since May when we the discussions ended. And so this would be a restart, you know, with a senior framework, and then you’d see what happens. But I’ve been watching, you know, sort of the enormous enthusiasm on some of the shows about, you know, can you get something done? What you can get done is you can restart and you could give a bit of a framework, because we were at one place and then things went dramatically downward. Things were taken out of the agreements. And so you have to know what the two countries want to do particularly, China. Because there was a lot of momentum, as you know, to wrap up a few of the open points and get a deal done. That’s, like, not there at all. And so you know if President Xi and President Trump can find a way to figure out how far they’re willing to go conceptually then you can get the people together who are doing the negotiations, Lou Jiwei and Bob Lighthizer and Steve Mnuchin, and see where they can go. So I think the expectation of signing something is not on the table.

GEOFF CUTMORE: It’s been a real pleasure catching up, we’d love to spend more time.

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Jacob Wolinsky is the founder of, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at) - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver
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