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tv   The Exchange  CNBC  June 11, 2019 1:00pm-2:01pm EDT

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calling that last week so, we made a pretty substantial jump and then it's kind of like, okay, now we move on to the next thing. >> take a couple chips off the table. >> discipline, baby. >> not such a bad idea >> guys, thanks. thanks for watching. "the exchange" with sully begins right now. >> thank you very much, scott. welcome, everybody trade wars, tariffs, fed, jobs and everything in between. we'll talk about it all and first cnbc interview with the point man larry kudlow an exclusive interview with david solomon we'll ask him about stocks, the future of banking and whether the economy can weather any economic storm when free is really expensive. how google and facebook could have avoided the scrutiny of regulation with one simple change all that is ahead this hour. but the markets, they're turning negative putting the dow seven-day winning streak in jeopardy let's get more of what is going on and maybe what happened with
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dom. >> we have some movement down in the overall market also shares of united technologies we'll talk about that in a bit the dow industrials off 60 points we were making a run of up 200 at one point and 186 at the high a similar percentage to climb for the s&p 500 off by one quarter of 1%. so, fairly moving to the evenly kind here in the markets the technology sector and the communication sector over the course of the past week. two to watch look at that gap between the two of them technology and the white line the best performing sector in the s&p 500 gives you an idea of some of the shopping list names that have gone on during the course of the recent dip and we've seen in the markets overall. those two sectors a key focus and then the two stocks to watch here today raytheon and united technologies moving towards the lows of the session.
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a dow component is shacving abot 36, 37 points off the dow just by itself. a little skepticism about this deal does happen in its current form remember, even president trump just yesterday telling cnbc he has maybe some reservations about a possible combination of these two defense giants back to you. >> should be a regulatory battle for the ages we'll see you later. so, investor optimism is fading a bit into the afternoon trade. let's get more on why and head down to bob pisani we weren't soaring bob and not collapsing now hey, after a seven-day run, when we're in the red, we will have some questions >> that's exactly right. traders are fading the initial oep r rally at the open. stocks are not cheap and a lot of assumptions are priced into stocks, including a china deal
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which we haven't had yet and rate cuts from the fed right after that, traders began lightning up on the power forward in the last week very specifically, by the way, technology stocks and material stocks we have seen notable advances in the last week and a very broad away of cap tech stocks paypal, mastercard and microsoft was up 10 per in a week all of that reversed course today. similarly stocks rallied on word that china would expedite. they all had big rallies and still up, but, they, too, are off of their highs brian, the two things that animated the markets this year which is a dubbish fed and trade are still things that are animating the markets, but kind of pushed it as far as we can. trading 17 times forward earnings on the s&p. that's a pretty high pumultiple right now. back to you. >> thank you we'll see you in just a minute
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all right. bipartisan effort -- let's go to capitol hill with what to expect when house democrats meet today to talk about regulation on possible anti-competitive behavior among the big technology companies there we talk about sort of the fight over the fed and trade i would imagine in the halls of congress where you are, things might get a little bit hot, as well >> well, brian as you were saying, the hearing will happen in a room behind me in an hour or so and there is political debate over what this anti-trust investigation will entail. i just got a statement from the committee's point person on antitrust and he said that this investigation is long overdo that congress, not the courts, agencies or private companies enacted the anti-trust laws and it is up to congress to make sure those laws are still relevant however, republicans tell me that they have not agreed to
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single out any specific companies or call the tech ceos to testify they say subpoena power is a tool that they are prepared to use. >> all right, ylan, thank you very much. president trump, meantime, making comments on trade negotiations with china and mexico outside the white house just moments ago let's get more on this breaking news with kayla with the headlines at the white house >> the president earlier today just a few moments ago reiterating his belief that china will make a deal soon because it needs to make a deal. the president saying he has a close friendship with china's president, but he has a great respect for chez xi but that the tariffs are hurting china badly and that is what will ultimately bring them to the negotiating table. reiterating what he said yesterday on "squawk box." he said it is the tariffs that brought mexico to the table and without those tariffs the u.s. and mexico would have had no deal when asked for that deal brought
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a deal and said right here is the agreement and he said while it is up to his sole discretion to put the deal in place, that mexico will need to legally approve the deal in some way although he was asked what if mexico brings down border crossings. what if the numbers improve over the next month will you still go forward with this deal that has no effective day. if mexico brings border cross g crossings way down, then the deal will not have to go into effect we'll need more clarity on that. the president is heading to iowa a state where the farmers have been reeling from all these trade disputes he will bring that message to farmers and we will hear that a little bit later today >> kayla, thank you very much. let's talk about this, as well as the technology hearings with matt gaetz who sits on the committee and will be at today's hearing. congressman gaetz, welcome this committee hearing is about
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anti-competitive behavior. you have a different beef. you believe that while they may be anti-competitive, they certainly may be anticonservative speech. why? >> well, i was given no explanation for why and also no real insight into what other activities, social media companies may be doing to silence conservatives. four members of congress that received this treatment. four of the most outspoken supporters of the president. but i don't want to focus on what divides republicans and democrats on this issue. what is far more important is that you see a real meeting of the minds with left wing and right wing populists david cicilline is right this is a long overdo investigation and we should use the anti-trust tools of the government and regulatory powers of transparency to see what is going on behind the curtain with big tech
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>> what can you do about it, congressman? >> well, one thing we could do is repeal section 230 of the communication decency act. right now technology companies enjoy special immunities that even local newspapers and even your television network doesn't enjoy in terms of their responsibility for content they enjoy those protections because they hold themselves out as unbiassed and neutral platforms. but if they aren't willing to demonstrate that they, in fact, are unbiassed and neutral, i think we should repeal that section of law >> you think there is any chance of that happening? >> well, right now you see something that is very rare on capitol hill republicans and democrats arm in arm working together to see how we can change the way consumers interface with big tech. while right now i believe there's bias against conservatives, i think even my democratic colleagues recognize the real harm that could come upon consumers if we have, you know, 90% of search that is done through google and more and more
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of the way we communicate governed by entities that aren't subject to the same laws >> over the theoretical anticompetitive aspect, not the speech aspect that you're talking about. >> but they're inner related because if somebody has such a monopoly if a company or a small group of companies can create the four corners of debate in this country, that should be concerning to liberals and everyone in the middle alike because it is too much power in the hands of people who are accountable other than their shareholders >> twitter or facebook have to do that. yes, most twitter users -- most twitter users identify as younger and more liberal that's well known. so, if you don't want to have that sort of bevent, don't go o twitter. the leading channel in the country leans conservative it's a balance >> okay. so, defend why then twitter
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would exclude my name from their search bar they would allow my political opponents and people who don't hold my views to have access to the search bar but when you typed in my name it didn't auto complete it's not a question of where the discourse happens whether people are critical of conservative view points but whether the features of the technology apply equally to people regardless of view point that is where there was a lack of transparency and i do believe that anti-trust tools can be used to force that transparency because if you break up big tech as elizabeth warren and david cicilline recommended, then a blossoming of additional forums where people have greater choice and engage in that discourse that choice doesn't exist today so technology companies shouldn't be able to put their thumb on the scale and reshape speech in our country. >> good debate there congressman matt gaetz of florida. a lot of work ahead of him thank you very much. president trump speaking on the south lawn moments ago about trade.
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let's listen in. >> that's the agreement that everybody says i don't have. so, no, because i'm going to let mexico do the announcement at the right time from mexico, they want to go through it but here's the agreement a very simple agreement. this is one page this is one page of a very long and very good agreement for both mexico and the united states without the tariffs, we would have had nothing we had nothing two weeks ago mexico told us, absolutely i don't know where "the times" got the story. i think they got it from somebody who worked here and said how well they were doing. for a long time, for many years, people tried to get what we got in a period of a couple of days. and they couldn't get it that's the difference. they couldn't get it so, mexico, we're getting along with them great. the president and all of it, we're getting along great. they started a very strong action
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they're moving right now 6,000 soldiers to their southern border who ever heard of that you think we had that two weeks ago. two weeks ago, i tell you what we had we had nothing the reason we had nothing is because mexico felt they didn't have to give us anything i don't blame them this is ultimately going to be good for mexico, too and good for the relationship of mexico with us so, here's your thing. you know, they all say, oh, he does it. i just give you my word. inside here and i would love to do it, but you will freeze action it. you will stop it you will analyze it. every single letter you'll see but in here is the agreement >> every time -- >> look, nancy is a mess the democratic party is a mess they're doing everything they can to win the election in 2020. they are guilty of many crimes many, many crimes. what they've done.
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they're guilty of many, many crimes and hopefully in a short period of time, that will be seen they should never have done what they've done and all they do is waste time on these investigations where there's no obstruction, no collusion, no nothing and in the meantime, they can't get a border deal done they can't do anything we need, in addition to the great deal with mexico, we need them to work on illegal immigration, on lower drug prices, on infrastructure. and they're not doing anything they have come to a halt >> they say you can't be trusted, sir how do you react to the fact that the democrats say you cannot be trusted. >> did mexico agree to the -- >> i don't want to say but you can just figure it out yourself right here and the reason is, mexico wants to handle. that would have to go through their legislative body
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>> i heard they agree. >> a lot of people heard they agreed to it good luck. okay i'm not going to say one w or the other. but i will tell you, right here is the story you know, i don't like it when newspapers write fake news or when reporters like you do fake news. i don't like that. so, right here is the agreement. it's very simple it's right here. and in here is everything you want to talk about done it's done. it's done. >> joe biden -- >> joe biden thought that china was not a competitor of ours joe biden is a, china made $500 billion over a short period of
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time against obama, biden and for many, many years in all fairness to them china is a major competitor and right now china wants to make a deal very badly. it's me right now that is holding up the deal. and we're going to either do a great deal with china or we're not doing a deal at all. right now china is paying us billions and billions of dollars. they never gave us ten cents and china ate our country alive during obama and biden they ate us alive and then biden has some kind of relationship financially or his son with china. tell me about that because china ate the united states alive economically and it's a shame >> so, mr. president, how do you respond to the democrats -- >> no, pelosi attacked me. she was here she made a horrible statement that i'm sure she wishes she didn't make. she made a horrible statement
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while i was with the queen of england. while i was with the president of france and you're not supposed to do that. okay but the ones that committed the crimes are the democrats and others >> immigrants from venezuela deserve asylum in the u.s. -- >> we're looking at that and very much involved in the venezuela crisis it's a horrible thing and a horrible situation it's been brewing for many years. it really started in the worst form during the biden/obama administration but it's been brewing for a long time so, we're looking at that very strongly >> mr. president, mr. president -- >> where are you with that >> my relationship with president xi of china is a very good one one of the people i really like. i get along with him he's representing china. i'm representing the united states of america.
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we're doing very well. we're taking in billions and billions of dollars. companies are leaving china right now and they're coming here because they don't want to pay the tariffs and they are going to other countries but i think that china, i can tell you, china would like to make a deal very badly they're getting hurt very badly by the tariffs because companies can't pay the tariffs so they're leaving china. and the other thing you have to remember about china, is that china will subsidize companies so our taxpayer is not paying for very much of it. a report came out. they're paying for very little of it. what it's doing is creating a fair playing field which we've never had with china since the wto, the world trade organization >> democrats say you are lying -- >> we expect to meet with president xi very shortly. we think we'll meet him at the g-20 we're talking. we have a very good relationship look, we had a deal with china and then they went back on the
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deal they said we don't want to have four major points, five major points so, we changed it. but we had a deal with china and unless they go back to that deal, i have no interest right now we're taking in billions and billions of dollars. i've created something, what we've done in the last two and a half years we've picked up $14 trillion in net worth of the united states and china's gone down probably by $20 trillion. there's a tremendous gap when i came in that gap was getting very close. >> i love iowa i have gotten along great. i won iowa by a lot. the last time usually republican would not win it by that much. >> that was president trump speaking moments ago on the lawn he said a lot in a short amount of time. accused democrats of unspecified crimes and that china was eating
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us up emnconomically. that was the deal that mexico said really did not exist. remember the mexican foreign secretary claimed there was no secret agreement the president holding up a piece of paper a number of times and saying what is on that document is the deal that they made and that in time that would be released wide ranging and free flowing news conference there by the president on the white house lawn here's what else is coming up on "the exchange. . coming up, a first on cnbc interview with national economic counsel director larry kudlow. does he agree with the president on rate cuts does he still believe tariffs are a tax on consumers and where are we in the economic cycle plus, a one-on-one interview with goldman sachs ceo david
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solomon. the state of the markets, the economy and the future of the firm and don't look now but the rally keeps on rolling where can you put your money to work some answers ahead this is "the exchange"n bch, looks you know, maybe you'd worry less if you got geico to help with your homeowners insurance. i didn't know geico could helps with homeowners insurance. yep, they've been doing it for years. what are you doing? big steve? thanks, man. there he is. get to know geico and see how much you could save on homeowners and renters insurance.
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all right. welcome back to "the exchange. stocks turning negative. the dow down maybe on pace to break, maybe on pace to break its six-day winning streak the china trade war fears aren't exactly over earlier today morgan stanley ceo james gorman saying the u.s. could tip into recession if the trade war continues. he goes on to say that a full-blown trade war would be, quote, a disaster. for more, let's now bring in matt, equity strategist, as well as dominic chu we can't say the six, seven-day run is over yet. there is still 2 1/2 hours of trading left but it does appear that maybe momentum has appeared to pull back >> no reason it shouldn't pull back a little bit and even if it did by a tenth of a percent or a third of a percent, not that it is going to be any kind of derailing element. the stocks are up huge 2.5% run for the s&p 500 just over the past week and the
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technatec technatec technology stocks like we pointed out. rallied off of those lows and given back today, still a story that folks want to buy the market in certain areas like technology the question becomes whether communication services, which has been the real battleground for a lot of this controversy over the past couple weeks becomes one of the places that people want to buy, as well. >> we're starting to see a little momentum in things that you like but then we have press conferences, news conferences or whatever you want to call them from the president like we heard just moments ago could the market continue higher when there is so much political uncertainty out there, matt? >> i think it's going to be very tough for it to move a lot higher from here with the uncertainty that you mentioned. because you have leaders, business leaders both big and small and makes it very tough for them to make decisions on hiring and capital spending and things like that i think it's going to be very hard for us to get the bounce back in economic growth and
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earnings that the, mat h market been pricing in. i disagree with what president trump was saying about china has to make a deal you listen to anybody who spent serious time in china whether it be on the business side or political side they're not going to give in any time soon in any substantial way. i think this issue will be with us for a while and therefore the uncertainty will be, too >> that's the great battle the market is facing right now because bob pisani said earlier today 17 time s earnings seemed rich for the markets on one hand you have a market threat that could bring down our gdp but on the other hand, all these deals. they look richly valued. you have the amount of valued stocks shrinking massively through record buybacks quarter after quarter. do multiples even matter right now? >> well, i mean, when you start questioning on whether multiples matter then what people were
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calling at the end of april and we rolled over and saw 7% correction and 10% in the nasdaq i think multiples do matter. one of the things that people tend to push for is say that don't worry the fed will come in and save the day they already told us they will cut rates. if you look at the history of the last ten years ever since the fed acts, rather than their verbiage, has moved the market in a big way but, it never acted in a major way until we had seen a lot more stress in the marketplace. in other words, a lot more market dependent than people realized and the market hasn't fallen as much as it has in the last ten years it does exist and just further out than most people realize and the uncertainties that we face right now will cause us to have some rough sledding. >> matt, as we talk about the way the markets are focused. we talk about stocks all the time, but this idea here that
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there is a disconnect between the credit markets and the stock market could be in play. we haven't seen real signs of stress in the credit or investment or yield and the markets have pulled back and bounced back there there is something to be said for this idea that maybe stocks are revaluing themselves because there isn't anything overarching to fear. >> well, that could be true. i mean, you never know what the market is going to do. however, it's funny because i had been cautious through the month of may being a former trader as i know you are, dom. i saw it as a situation with the markets simply gotten way oversold and more of a technical bounce so far. even though a strong bounce, nothing more than a technical bounce we need to see more follow through. if we don't get that, i think we're going to have some problems so, i'm not sure that we fought off the way, the uncertainty surrounding the, in other words,
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the recent bounce. it has to do with the technical condition. >> wonder the shrinkage in stock has to play some kind of role here dom and matt, thank you. good luck tomorrow night game seven nhl it's almost been six months since boston won a sports championship >> st. louis, the blues have never, right >> listen, my mother's hometown. but good luck, matt maley. and best wishes to big papi. a former white house trade official had this to say about the upcoming g-20 meeting between the president and president xi at our capital exchange event >> there won't be a deal at the g-20 i think what the g-20 could do is catalyze a productive period of negotiations where the deal closes so, if we do not get a deal or if we don't get a deal at the g-20, what might it mean for the markets and your money a big interview coming up. david solomon in an exclusive interview with cnbc live from
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it is that time. time to turn it up a notch we call it rapid fire and today we are bringing out the best we got. the best we have leslie, contessa brewer. the 30-day window since uber's ipo closed now the earliest investors are free to sell their shares and make millions, right >> that's fake news. they have another five months to go before they can sell. they did have some hope, though, because there is something called an overallotment agreement or a green shoe which if uber stock price had been trading substantially above its ipo price the underwriters would have been able to buy stock from the inside investors and sell that into the market allowing venture backers to raise $1.2 billion. >> it's not the contract, it's the fact that uber stock has not performed.
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>> it's that exactly. instead of allowing venture backers to crash out, it has been used to support the stock price because as we know, can't believe it was only a month, but after-market trading was not anticipated. >> does that provide an overhang for the stock? >> it certainly could. depending on where the -- i mean, five months is a long time from now 30 days is a long time from now, it seems like. can't believe it has only been 30 days since that ipo certainly could be an overhang and something that a lot of investors in the market watch for as a potential catalyst because these people have been locked up for a really long time 22 rounds of fund-raising at uber >> they have been waiting. like we all would, by the way, to get rich. >> exactly exactly. >> i'm still waiting, morgan >> i mean, i don't even have a good response for that but, yeah, i think this is the thing to watch for all the ipos especially if you're a retail
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investor right now not how the ipo performs in the first days or weeks but how the lock ups expire. we have seen it with other high tech names in the past uber trading below or for the most part trading below the ipo rally. it makes november look more volatile >> probably one of the most five widely watched stocks in the united states right now. topic number two one of china's advantages, of course, the trade dispute with the united states. the enormous amount of smartphones and other technology products made in their factories. but now foxconn says they can produce enough phones outside of china to meet u.s. demand. so, if, morgan, we need our smartphones. could you imagine if there was suddenly you go in and i want that new smartphone and you can't get it, we don't have it it's not made enough there could be a public outcry on the trade fight like we have not seen don't take away our phones >> and i think that is part of
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this whole situation right. if you see tariffs increase on smartphones that are imported to the u.s. what happens to that increase cost does it push it out to consumers, et cetera foxconn is expanding has capacity in india and expanding manufacturing in india specifically for the iphone there. if they can get aroundthe potential future tariffs, then maybe you don't have to -- >> or former milwaukee resident, how about that big factory they were supposed to build in kenosha, wisconsin >> foxconn says we'll hire 13,000 people in racine, wisconsin, and doesn't do it do you believe they'll do what they say when they manufacturer outside of china >> that factory was never meant for apple and iphone >> but if they build it, you could ship production. if you build l.e.d. screens or whatever they were going to build. go to the mar's cheese castle across the highway which is a
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real thing the point is, don't whine about not being able to produce enough phones outside of china, leslie picker, if you don't have any production or a lot of production outside of your own nation >> well, here's the purpose -- >> we moved our production outside of our country >> exactly >> that's part of the problem. >> the whole purpose of a trade war if you were to ask someone in support of it is that, you know, on one hand you have these tariffs that can help bring people to the terrible on the other hand, the hope is, i don't know if it's working and i think foxconn is a perfect example of this. does it bring manufacturing back to the united states i think that is a key question here foxconn has czech republic, u.s., australia. but no matter what, it is going to be a lot more expensive to manufacturer these things in the u.s. than it will be in vietnam. >> then maybe we will have to pay more for some of the things we want. >> pay more. >> i paid $1,600 for my iphone. >> gas prices are going down
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>> iphone costs $1,600 >> had $500 bills stuffed in the case apparently. according to new rankings of global companies, amazon has overtaken google and apple to become the world's most valuable brand. the report compiled by research agency cantar value amazon brand at $13.5 billion and combine the top of the list. >> that's because of all these other things that they're offering now the web services, they're branching into insurance and going into health care and, in fact, here you have wang of canter saying amazon's phenomenal brand value demonstrates how brands are less anchored it's about to branch out >> everybody knows it. everybody nearly -- 112 or whatever prime customers >> two things. the first is, whenever i see some sort of ranking like this what is the methodology? more than 3 million consumer
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interviews and the companies have to be public and then they do an analysis of the businesses and the financials using data. okay, fine the second question, what happens to all these most valuable brands? amazon, google, facebook some of the other names on there with an anti-trust probe oh, good point >> maybe their brand name gets bigger because people who already know them maybe decide they like them and don't want them, leslie, messed with. because guess what congress is upset but outside, most people seem to like amazon. >> it seems that way at least according to the brand value. the key lesson and take away here is the idea that the more present you are as a empcain pe lives. >> one thing they bombed at, smartphones. remember the fire phone. >> no. i don't remember >> exactly that's the point >> they should reboot it up as a rapid fire phone >> a rapid fire -- i like that so far you're winning.
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not even a game. but you're winning topic four all indications are that team collaboration software maker will ipo on june 20th. but when the company provided guidance last night, reported expectation of slack revenue growth in 2020, leslie picker, can't bode well for the ipo or maybe nobody cares >> just to put it into context this slower revenue growth is 52%. so, still looks really great slowing down from 67% annualized growth but you see this a lot of times with ipos where they get to a mature point in their business and they need to be able to top the capital markets for liquidity purposes and ined isse insiders need to sell but as a by-product you see a business more mature and, therefore, tends to slow down >> morgan, i want to ask you i have to keep quiet because a lot of good people over there that work on our digital side and i see them all day long like
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this >> on slack. >> i mean -- >> speaking of brand value >> i hate e-mail, is that better or worse maybe people are getting over slack. >> i think the users of slack are very, very big fans of slack. definitely brand value here. yes, 50% growth. however, fiscal 2019 was more than 80% growth and the year before that was 110% growth and this is a company that is still not profitable that top line growth is slowing. >> current deceleration rates. >> you know what one of the most popular features on slack around here an emoji called dumpster fire is an omen, i don't know >> is there a dumpster on fire >> i haven't seen this emoji >> don't send that around because then when a dumpster does catch on fire, nobody is going to believe it and all the trash will burn. topic five and this one should not be a surprise. new research out indicating that apps this is the dumbest story of the
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day. it is the best, but the worst. apps designed to help you sleep may be keeping you up. did anybody else think there was anything more to this. you only got five hours of sleep and you get scared who things that helps you sleep. >> i am a person at times that suffers from anxiety and i start looking at the clock and think i'm cutting into my sleep time and then -- >> try hosting "worldwide exchange." it hurts because it is true. >> but i think the whole idea is that we're very, very connected to our devices even tim cook in a broadcast interview said he is too connected to his devices and ironic that we go to our devices to check our sleep and meditation and everything that we're supposed to be unplugged around >> i get the alerts that say, hey, it's time for you to meditate this is very stressful also, i tell my machines, no, you go to sleep. you don't tell me to go to
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sleep. >> i have one app that helps me sleep. >> that is good, too >> the white noise that's it. everything else is stressful you're right we have to go. we have to go. we have a giant interview coming up leslie picker, contessa brewer, thank you very much. the annual code conference is under way bringing together some of the biggest names in technology, but carl it's bringing together the biggest name in banking. >> banking and tech, brian that's what it is all about. david solomon is with us in an exclusive interview here at the code conference in scottsdale. thanks for your time >> always good to see you. >> you just got done presenting on stage before we get into any of that and why you're here and marcus and the way you're evolving goldman. any temperature on the quarter on trading revenue, fee revenue
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or even the last couple weeks and sort of the roller coaster we have been on? >> it's been an up and down quarter just from an activity perspective as we've seen sentiment back and forth i can't comment on the quarter at the ispoiis point, but no qu this has been a quarter that at times asset allocaturs have been risk on and at times more cautious we'll work through the next few weeks and see how things play out. >> has the discussion on tariffs and for mexico and the way it is used for nontrade related purposes done anything to confuse investors in your mind >> i think you saw this, if you look at the last couple weeks in particular over the last couple days as we have kind of moved forward from the discussion with mexico and you've seen a little bit of a relaxation and sentiment i think the issue that is just interesting here that inesthaveinesthavvestors are wrestling with, using tariffs for a broader agenda
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than trade it gives investors some concern. there is no question, watching the way the president chooses to use tariffs on a broader political agenda will have a market, will have an effect on market sentiment, risk on, risk off. we're watching that closely. >> what kind of impact >> people don't like that. uncertainty. uncertainty and dislocation is bad for risk assets. there's no question if the president continues to use tariffs for a broader, political agenda, i think it can have an impact on market activity. >> if he used it to nudge nato countries to pay more. >> one of the things that is interesting here is we have a complicated situation with china that i know a lot of consensus that we want to try to advance and move forward and make some progress with. but we also have, you know, some battles or squirmishes going on on a number of other fronts. i think the breath of that and watching very closely. >> you would rather see them be
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used on a bilateral basis with china and a multi-front engagement using tariffs maybe something the market would rather see not done. >> i am not a big fan of the economic cost of tariffs and i think there is a real economic cost to the u.s. economy and to u.s. consumers. i do think that one of the things that is new and uncertain is the broad number of ways with which the president's agenda is potentially using tariffs. and i'd rather see less of that and a more focused approach than getting us focused on china and how we'll resolve the bigger issues >> you talked about china on stage a few moments ago. you know it well you have been trying to get control of that. when the president says china has to make a deal, is he right? >> i think it's more complicated than that. i think that is a sound bite i think that there are some fundamental issues of disagreement that are very significant between us and china. we've had a certain policy approach to china for a long
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period of time and we're now in a position where the world is evolved and it's important for us and it's important, i agree with the president in pushing this, that we have to rebalance that. the question is, how will it happen and over what period of time and personally while i think we can make progress on narrow issues around trade, this is longer towards rebalancing some of these issues i think we're in a different place. when we had disagreements with up and coming economic powers or up and coming, you know, world powers, it's been different. the last time we really had a conflict or disagreement with a very, very significant up and coming power was with russia and we weren't a big trading partner. here we're a very, very significant trading partner with china and the more we have disagreements, it is hard to walk away from that economic relationship and how the world's economy is entwined in that. >> valuation you talked about the markets a bit inside you said, i'm going to put words
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in your mouth -- >> if i don't like them, i'll take them out. >> not a bubble, but people are willing to pay more for growth than they have in past eras. do you see discipline slipping when it comes to valuation >> look, i talked about some of those words i think were in line with what i said when you're asked whether it is a bubble that's a hard thing to respond to i don't think we're looking at equity market valuations for tech that look like what we saw in 1999, 2000 and 2001 i do think because of the massive amount of monetary policy around the world and the fact that basically interest rates are zero or the risk-free rate is zero, less than zero in some places people have been looking aggressive and looking for risk assets. and people have been willing to pay a lot for growth in that context, i think there are a number of technology companies. we're talking about that in the context in the code conference where people are really paying a lot for the future prospects of
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some of these businesses that doesn't mean it is a bubble, but it just might mean the end result might not execute as flawlessly or in such a straight line with respect to meeting those growth expectations if so, the market will adjust accordingly. >> the abundance of private capital and why these companies will stay private for so long. in part, no 6% yield on the ten year and one day we'll wake up and there will be a 6% yield on the ten year you believe that >> i think some day in history, not any time soon. the picture will look vastly different. the question i was responding to is one about the availability of private capital and, again, gets to this point. people are looking to move out the risk curve to find returns and i was just highlighting that if monetary policy in the world looked different, there might be a different quantity of this private growth capital available because people could find reasonable returns through other avenues, potentially with less
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risk now, i don't think that is something that is happening any time soon, but i was making the point if we woke up one day in the future and there was a 6% treasury, that the availability of private capital for new, young, growing businesses might not be as abundant as it is today. >> the day might come when you're in your current job >> i have no idea when that day may come those who say it will never happen again aren't probably looking at history through the same lens i would look at it >> you're here at a tech conference why? >> tech is just so important to almost any business. any operation at this point in time i think about our clients around the world. no matter what business or industry they're in, they're using technology in their business to connect with their clip clients or customers and deliver their product and services and improve what it is they do tech is such an important part of the ecosystem that our investors are involved with. lots of interesting businesses out here and it seemed like a
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good place to get caught up and kind of get a sense of how that is all evolving. >> you think you participating here moves markets forward in any way? >> i don't think it specifically moves market forwards you beinge moves the markets forward? >> we're excite and certainly, there's a number of consumer oriented fintech companies out here but i don't think my being here is really more of the context of the overall client platform but we're excited about what we've accomplished. 4 million customers on the platform brought in about 45 billion in digital deposits announced our partnership with apple and the credit card that will launch at the end of the summer that's in beta and i feel good about the steps that group inside the firm is making to really build an interesting digital consumer platform for the long-term. >> how would you update investors on specifically especially those who are suspicious building a credit card is more difficult than it might seem
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>> it's not an easy thing to do but we're excited about the platform we have built and the partnership with apple it's in beta right now and there's some employees at goldman sachs and employees at apple using the card i'm using the card i like the way it works. i like the simplicity and the lack of friction when it comes to paying bills, looks at what you've spent,'s ease of use, i think it will be well received the early feedback indicates there will be a lot of interest in it when we finally do launch it later this summer not a lot more i can say about it at this point but we feel good about it and make sure it's a good product for apple's customer and our customers. >> finally, i hate to ask you about all the calls that your strategists and research analysts make, but your chief economist said no rate cuts this year do you share that view >> well, the market is certainly set up where the market has a high expectation for rate cuts at this point in time. certainly one in july at this point. you know, i'm watching you know, i'm not an economist i'm not at the center of this and it's interesting to me we're
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at a moment in time when we do have full employment while the trajectory of growth might have slowed a little bit, there's no question, the economy is still growing probably growing around trend and the fact that we're sitting here and the markets built an expectation for a couple of rate cuts this year, you know, i'm not sure, you know, how that will play out certainly, if it's not going to happen at this point, the fed will have to figure out how to walk the market back from that and that probably won't be good for risk assets if that's where we are. but it's just interesting at this point in the cycle that is kind of where we sit >> great to see you. >> good to see you thank you for taking the time. >> david solomon, brian, back to you. >> a great interview as always i understand, nick dunn tweeted out you were on the hot seat literally how hot is it there, actually >> how hot would you say it is, right here >> pretty warm 105. really glad we took our jackets off because if we had our
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jackets on, i'm not sure i would have gotten through it >> dj soul show. thank you guys appreciate it. lots more on "the exchange" including one of the greatest retail turnarounds in history. best buy but who is the new ceo you're going to meet her coming up moving is hard.
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the big change at the top today from best buy. jolie becomes executive steps down from ceo. this crazy turnaround story and the new ceo. >> so let's talk first about the new ceo. cory berry, she's 44 and one of just 33 women to lead a fortune 500 company. as you well know, the transformation for best buy was incredible sales growth growing turnover is down their stock has quadrupled. >> when everybody said they were toast because they were going to get amazoned out >> they've been doing well corie berry, will stay on in a different role going to continue that i spoke with an analyst who said well respected and surprised to see that jolie was stepping
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down wasn't, however, surprised to see that corie berry would be promoted because she's very well respected. >> has been best buy for investors. thank you very much. that does it for "the exchange." i'll join tyler and melissa in a minute on "power lunch" which begins right now >> juwe'll see you in just a moment tech on a tear best stocks in seven years but one major overhang hearings on capitol hill this hour into big tech's dominance elon musk, the stock soaring this month but hovering at four year lows. the tesla trade coming up and kevin durant's brutal injury, one of the most significant in nba history. the big money at risk. "power lunch" starts right now


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