Transcripts For CNBC Squawk Box 20240622

Much power. Yeah. Black rock was beat. Later this morning we do have more delivering alpha stars stopping by our set this morning including your Capital Management founder. This conference could start at 8 30 eastern time and the preshow starts right now. Dont miss them. They will be on stage together later this morning so a very busy day ahead but first up to speed on the top deadlines. Three big Global Market stories developing at this hour. Parliament is in session. The government must vote on reforms that have creditors insisting on a bailout. Then overnight in asia chinese gdp data coming in stronger than expected. 7 year over year in the Second Quarter. In other reports retail sales also topping forecasts and the main index is down about 3 . The boj leaving Monetary Policy unchanged today. That comes as expected. It continues to expect the economy to continue with a modest recovery. Chair janet yellen will begin two days of semiannual congressional testimony. Shell appear before the House Financial Services committee and her prepared remarks are expected to be made public at 8 30 eastern. The june Producer Price index. Ppi. I wanted you to say. Its july Empire State Survey are also due and later today Industrial Production and the book. Lets check out u. S. Equity futures. So some extent in a wait and see mode the conjecture on greece is is that his own party might not be on board. It doesnt matter though do they . I dont know. Well talk to michelle in a moment. Last time they went outside what they were allowed to do. Everyone wants to be heard and all you did was this and at least now youre more a minimal. Is that all it was . Thats all it was. I wouldnt be surprised im sorry. A few different things. Yall have the Parliament Passing it. Im not sure well see tsipras surviving the next 48 hours. Theres a lot of speculation that he cant survive this. Theyll call for another government. Hes doing his job by getting his parliament to pass it. The big issue is after Greece Parliament passes it youll shine everything on to berlin because you have to have the germans pass this. So well have this tension and the most important issue is the bridge loans. It will take time to approve the new package. Greece needs money next week and if theres no bridge loan we have another crisis next week. Lets get to greece. Michelle is in athens and has the latest this morning. Good morning. Ill run through five things you need to know about greece today. Its going to be quick. The building you see behind me proceedings have already begun. We expect to vote after midnight. It will pass with the help of the opposition no doubt about that. Second thing Alexis Tsipras went on National Television last night ain an interview and he brought back a far worst deal. He said yell we went to the mattresses. This is the best i can could do or else we have to leave the euro. I dont like it but then he played on a particular angle of greek psychologiment he said our creditors would like nothing for than for me to fail and us to fail and leave the euro. Lets prove them wrong. We are expecting some kind of announcement today about how theyre going to do with the bridge financing but this deal will take a month to negotiate. Rumors out of brussels. They figured something out. Maybe we get an announcement midday. The interests have the knives out. Today the pharmacists are going on strike and protesting. Theyre one of the protecting class in in greece. You can only one pharmacy and your size will be sided by the government and your margins will be decided by the government. If all the legislation happens, all of those rules will go away. They hope for liberalization. Thats why youll see a lot of protests and finally the bigger issue, the imf, the documents suggesting they dont want to go along with the deal unless theres a real debt hair cut. They have given up on a hair cut for their debt but the imf has not. Get a deal through. It will not go loong with with the write down on the debt. Thats the latest from here. Back to you. Michelle thank you very much and well get back to her later this morning. Our guest host is larry but before we do lets finish up with with michelle was talking about. Youre stuck between a rock an a place. We knew this debt wouldnt get paid back but we had to say we wontd get a hair cut. This is what is going to happen. Thats going to prove a very difficult political point over the next week. I think what the europeans did was what was necessary. The contract and prior funding was a contract to the state. Not to a Political Party. New Political Party came in and said were going to renegotiate. As a creditor you cant go to your bank and say i want you to just renesh gauche yat. It doesnt work that way. What europe is looking for was for greece to continue with their prior commitments. You see the implementations to make greece more competitive. I do believe europe will find a way to recalibrate the loans but i dont believe you do that before you see a full firm commitment. Do you believe this plan will make them more competitive . Weve had a debail about who is responsible. Whether its the credit or the state. Remember who we had the discussion with . Peter fisher. He says creditors beware. If youre dumb enough to lend someone to someone you shouldnt expect to get paid back. You just said 180 degrees of what peter said. But my mouth was open for the whole interview. If youre asking for another 90 billion youll have to leave with the terms. If you lend money to anybody be aware but if you need more support live with our terms. He wanted to write down a hair cut, there should have been mortgage relief for anyone that couldnt pay their mortgage and i was like okay his argument was that creditors need to take as much responsibility effectively for the loan as the bowerer. I think it was really important. You could not allow that same type of behavior to move to spain and portugal and i think a firm europe was necessary. Once Parliament Passes it and they move ahead i do believe a negotiation is probably in order to try to find a way to resolve it. The hidden secret is post people know theyll never be able to pay it back. What the imf did is they made it public. This little secret and a lot of this is theyre just trying to carrie this on as long as they can. The austerity has been crushing. The greeks have not made reforms michelle was talking about and how corruption is cut down and taxes are corrupted. Since the crisis most of the wealthy have left. The people in greece are the poor and middle class. Theyre left with this arn their neck. This is a social catastrophe because money is so portable. What you saw was interesting. When you had the same crisis in cyprus a lot of money came back so one would expect after this is all stabilize money will come back to greece. My Company Operating in greece needed to take their money out because they couldnt afford to have a deval you wags. All the major companies, food companies. Movie went offshore so once it all stabilizes we saw a lot of that money kept coming back to help the situation. I think thats just a reflection of the guy that you are. Thank you, joe. Earnings just came out, 4. 96 at a beat of 16 cents by what the street was expecting. Revenue came in better than expecting and net inflows of 11 billion. We actually had outflows from the quarter. We had 21 billion 24 billion of active shares inflows. We had about 31 billion of index out flows. 1over or 2 bases. Low fee trucks. But some of the clients went from index to active. So we actually had a very good quarter in active management. What do you think thats about . A our performance and the biggest change are equity performance 78 of our equity performance is above the index. This is a big turn around over the last few years were hoping wont occur. But probably the biggest story is we saw quite a few of what i would call the official institutions who were building rainy day sundays rainy day funds. And theyre using it for cash needs. That sounds like everything from governments to Central Banks and we can see ourself there too. Right. Where the money has been needed. So theyre doing the same thing that everybody else is. Cashing in. Cashing out but some of them are not just putting the money into other products but some are using it for operations and social programs in different companies. When you look at the delaine in oil and the proves you can figure out where some of these have gone. We had a very good quarter. It was the testimony of our Business Model. We have been building our active products and we saw this 5 revenue in greece operating at income increase. Can you deliver alpha . Absolutely joe and we are delivering alpha. Youre hear helping. Im glad you brought that up. That is like music to your ears. Out of 2 to 3 basis points stuff. The higher feed enough. You may be out performing the indexes but more broadly speaking someone like warren buffet has historically said go buy the index. Is that wrong adadvice . Historically theres been great investors, like warren buffet, you can make somebody put money in their savings over a long cycle. Its hard to pick the right manager at the right time over a 30 or 40 period of time. Were one of the largest players were number one in etf and one of the largest players in index funds but the Second Square was our suck suszcess and other products. He will be sticking around for awhile. In the meantime, disney making a huge bet on china. The expectations for a soon to open shanghai theme p next. And jamie dimon is going to join us and first as we head to a break heres a look back at this date in history. A new season brings a new look. A chance to try something different. This summer, challenge your preconceptions and experience a cadillac for yourself. The 2015 cadillac srx. Lease this from around 339 per month, or purchase with 0 apr financing. Kids are expensive. So im always looking to get more for my money. Thats why i switched from uverse to xfinity. They have the most free on demand tv shows and movies on all my devices. Its perfect for me because my kids are costing me a fortune. Im going to cabo [ music plays ] dont settle for uverse. Xfinity is perfect for people who want more entertainment for their money. She caught up with the companys ceo bob aiger and has an exclusive interview. Good morning eunice. This was one of the most important projects we were involved with as a company. China represents great opportunity for the walt disney company. Its a huge priority for us and our primary approach is this park so obviously its extremely important and very exciting. Hey, guys. Well, he is in shanghai and here to lift the curtain on the shanghai theme park. He said that the 5. 5 billion facility is going to be authentically disney while being distinctly chinese. Many many first. One land will be all about pirates and theyll get the largest castle and all the disney princesses will be in the same place and for the first time there will be no main street at this theme park. Ripped out a lot of the americana and are incorporating chinese elements such as the 12 animals of the zodiac. Even though the economy is slowing down hes very optimistic about the chuyinese consumer. Disney land was built 60 years ago and has been through the ups and downs of the u. S. Economy for six decades. So were not concerned with chinese economy and were bullish about the longterm prospects of it. There have been a lot of delays with this park. Its taken many many years before were seeing something come together and there is a date set, spring 2016. The company is going to have its grand opening here. All right eunice. Thank you for that. Looks cool. I like her shot from shanghai. We need him on. We havent talked to him in awhile. Maybe well go to the opening. Or do a show in burbank. There you go. The time is good. Our guest host this hour he called for reform of chinas Capital Market saying its needed to avoid boom and burst cycles. Dont hold your breath. How did you like that we knew that there was a problem when the market didnt go up on the president s birthday . And the other thing that got me was when the manipulation finally worked markets around the world rallied like yes they were able to do it. Lets all buy stocks here as well. Do you think eventually this wont work . I was not happy with the restrictions that the chinese govern lt placed. I was more of a free market investor. Whether you call it manipulated or natural course was up 158 . They were down 30 and everybody got all concerned. Last nights numbers of the chinese economy stabilize the psychology of china. It was one of the lowest quarters since 1990 because of growth. Growth is coming down. The chinese leadership is on the process of doing a ten year plan. Theyre trying to transport the economy to a domestic and Service Oriented economy. When you think about things like disney land disney land in china is part of the service economy. So it creates more jobs that produces less gdp. This is all part of the plan and you have to commend the leadership as he navigates the economy. It look our country and europe 50 years ago from an export driven manufacturing economy to more of a surface oriented economy and this is very critical. Probably the most important number released in china was consumption was up tremendously. So youre actually seeing the consumers beginning to spend. One of the fundamental drags of china has been the consumer saving 40 to 50 of disposable income. Now were going to a 6 and our economy is slow. If we went from a 5 to 10 wed be in a deep recession is. China has been able to avoid this but they need to find a way to unlock this. Did they put the 40 to 50 in the stock market . Some of them did. Well the problem, a lot of it was done with leverage. Thats the fundamental problem. I hope ill be back in china in august. You were tiptoeing around whether they manipulate the market. The pboc prints money to give it to the agency that buys the stock. Can we not bank of japan or bank of england. Hearing stories about Chinese Companies buying stock in the market. My point was china needs to create reforms to allow greater participation in the market more foreign capital. Right now chinas market is a very small market. Thats the fundamental problem. Thats been my message. If theyre going to move it higher black rock wants in. Those are are your words. When you look at chinese stocks theyre valued at 18 to 20 times erpingsarnings. Youre also talking about a market slowing in terms of gdp growth. But chinas number one job is to create jobs. Its not gdp growth. As they transform into a Service Oriented economy theyll create jobs with lower gdp. The biggest thing is why the state owned companies of china are not as competitive as western companies and theyre being heavily supported by the chinese. Thats one of the great needs to allow these companies to freely compete. So i believe as china evolves theyll allow more foreign capital and be judged by foreign capitalistic ways in terms of whether its cheaper or expensive. Unquestionably a year ago china was cheap. I would have said today china is border line expensive but if you do believe that it could grow 6 plus for the next five years ten germanys right. Its probably cheep. But theyre on a path for an economy to continue to evolve and slow down. Unless we have more Global Demand or more Competitive Companies or the consumer starts to consume more well see a slower china which is not frightening to me. Its a path theyll go down and maybe valuations are a little high but well see. Well have much more and you have to do the panels and other stuff. Busy day. Cant they call next week or something . Well i dont know. Do you do your Earnings Call yourself every year. . I do. 8 30. Jay mon dimie dimon said he isnt doing anything. Were glad to have you and much more from our guest host. But new advice from a real thought leader in that arena. Arthur brooks. Writer for the new york times. One of the greats. Might recall paid andrew by the page to read one of his previous books and did no good at all and then tried to charge me but then the addendum in the back and i didnt stipulate in the contract. And then delivering alpha officially kicks off. Dont miss the start to the big conference here on squawk box. Together on stage at 8 40 eastern. Stay tuned. Squawk box will be right back. Tmobile now extends your coverage beyond the borders at no extra charge. Get 4g lte data in mexico and canada just like in the u. S. And call and text as much as you want to and from the United States, mexico and canada. You heard right unlimited calls to any phone even mobile. In mexico and canada. Only tmobile gives you coverage and calling in three countries for the price of one. Switch to the uncarrier today. Can a business have a mind . A subconscious. A knack for predicting the future. Reflexes faster than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . Welcome back. Were at the delivering alpha conference and he is spending the hour with us. We have a couple of other topics to touch on. Joe is going to think this is my favorite topic and it is. Five years after the creation of dodd frank and i want your state of play of how you think things have gone and where theyre going . I dont know where theyre going. But this whole debate about liquidity is a good example of what dodd frank has done. So we have made banks safer and society more protected and banks have more capital now. It would be a success if thats what society wanted. It has a lot of side effects and they should be respected like the liquidity issues and the bond market. I get angry when they traumatic about this liquidity problem and how disasterous this should be. They created it and you should expect it. I dont know if you read it and he took the size of government and regulation. Were not as fearful of it. We wrote a whole piece last friday on liquidity we have reduced the power of the bank to play the role as the buffer. Because of higher capital standards theyre not lending as much so were more reliant on the Capital Markets than ever before. Thats one of the reasons the United States got out of the session much faster than europe so we have seen a giant increase in bond issuance. Dealer inventory because of that. This all happened because of dodd frank. This should not have been unexpected. They should have been thinking about ways of mitigating the alliance. A, rapidly working toward more Exchange Traded bond. We needed to create more processes of bond issuance. We dont believe it will be a crisis. If Hillary Clinton gets elected. Hey wed like you to be the treasurer secretary and tell us what to do you would tell her what . As a black rock ceo . As a citizen of america and the world that you are . Hopefully we address it before theres another president. We need to be aggressive toward relieving the pressure of this reduced liquidity. If there was a crisis right now, this is where antonio was right. 70 of our Bond Holdings are with Insurance Companies and pension funds. Theyre not going to be running away. These are against liabilities that are long dated. What myths are, they have to understand who owns bonds. They can sell them in the volume but if anyone asked me and i said very rapidly whether its secretary clinton or governor bush. Dont forget about donald trump. Hes right there. Youre right. Youre right. Hes tied i saw in the polls. Hes leading. Excuse me. We need to create a much more robust. I love still carrying the progressives water though theyre still trashing him. Thats good though. He has nowhere else to go. It seems worse because theres people that are normally so nice and empathetic. Antonios position was a progressive piece. Its all relative. You dont think youre progressive either. I am relative to you. Here for the hour. A great conversation. Your friends talk to you sometimes dont they . Or do they not talk to you . Theres a couple of other ones. Thats where the term comes from. There has to be enough rich people that are liberal or elsewhere wouldnt be the term . I dont put labels. No labels no labels. Coming up, the conservative heart. Well shift over to that and get arthur out here. They need heart transpants to have a heart in the first place, dont they . A new book offering advice to his fellow conservatives. The punch line build a fair happier and more prosperous america. Hell join us, next. When youre not confident your companys data is secure the possibility of a breach can quickly become the only thing you think about. Thats where at t can help. At at t we monitor our Network Traffic so we can see things others cant. Mitigating risks across your business. Leaving you free to focus on what matters most. I built my business with passion. But i keep it growing by making every dollar count. Thats why i have the spark cash card from capital one. I earn unlimited 2 cash back on everything i buy for my studio. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Thats huge for my bottom line. Whats in your wallet . Xco0 welcome back to squawk box. Among the stories that are front and center today a retail battle online. Its amazon prime day and that means big sales for the ecommerce site celebrating its 20th anniversary. Posting deals about every ten minutes for prime members and we talked about this before. I dont understand the model. We order so much stuff i would think they never make money. I dont get it. Walmart we should tell you though is responding counting its own socalled roll backs on its site today so a series of sales as well. The gop field in the race for the white house now up to 15 and climbing and while the list of candidates continues to grow our next guest says in his new book that its time for a new conservative movement joining us. Say loud and proud. They needed one. They needed one. New york times best selling author and columnist, Arthur Brooks president of the American Enterprise institute is it a best seller . Cruise cruz is not going to make it. The conservative heart. How to build a fair happier and more prosperous america is on sale. The left will say thats an oxy moron. Conservatives dont have a heart. How does this build on the two books . You make the moral case for capitalism and free markets in the first two books as well pointing out how many people have been taken from abject poverty to a pretty good middleclass living based on the benefits of capitalism. I grew up like andrew a left wing home. A liberal. It was in my 20s that i started to study economics and i realized that how 2 billion people around the world had been pulled out of poverty. It wasnt socialism or usaid. But it was capitalism. It was Free Enterprise and the american system that pulled literally 2 billion people out of poverty. That converted me. That needs to convert more people if we want to help more people. Its about using our ideas not just to give tax breaks to billionaires but to eradicate more poverty. I show the proof on how that can be done. I tell conservatives and liberals. I want to convert andrew. We talked about it before that predicted that capitalism creates so much affluence, they forget how they got to where they are in terms of not worrying about shelter or food and getting to the 7th ire hierarchy where you can be a fat rich liberal and you dont have to look at how it was all generated. We can say we need to reject them and do Something Else. Part of the problem is joe, we as free market enthusiasts, we forget why to talk to people remember why it matters. Im a Free Enterprise advocate because i care about poverty and the minute i forget about that and Start Talking like a materialist. The progressives are being virtuous on the front end and not connecting to where their policies lead. They dont want to take that journey to see the end result of their policy. I think they want to. We need to give more people an excuse to embrace our values. Help me with this. The liberal targets help you. Youre the test. But putting that piece aside the argument has been that deregulation and the quote, unquote, free market lead to a winner take all society that has created this enormous inequality. How do you respond to that in this book . The biggest problem is not income inequality. Thats a huge distraction. The biggest problem we have is opportunity and equality. Opportunity and mobility have been falling for three decades and accelerated under the last administration because of really bad policy. Thats not trying to reach all the way down to the bottom so the capitalism can be used to help everybody. So the extent that we extract ourselves with income inequality we wont earn our success. Free enterprise can reach down to the bottom. Everybody can earn their success and have the dignity of work. Lets ask a question. I totally understand what youre suggesting and globally we have lifted more people out of poverty because of the free market over the past 30 years than just about anything but when you looked at developed countries because of globalization and technology in large part it becomes much harder. How do you fix that . I talk about this in the book a lot. I talk about how conservatives can understand this and moderates and liberals too. The whole idea of the developed world is not just about structure and technology. Its about bad social democratic poll i. In washington d. C. It takes a year of full time study and licensing to braid hair in your home which is a typical second job or first job for single core women. We have a tendency to discriminate and become part of the Free Enterprise moment. Theres so many things that can bring people into the system. I have stories in this book about people that pilt theirbuilt their lives on this. Why are you fighting such an uphill battle. When it comes to pr. Income inequality is out there. Thats what people are talk about. Good luck trying to get that out of it. Why is it so difficult to sell what youre selling to people . Well conservatives have been terrible about making their own case. They have talked to Free Enterprises about the money. Heres the central political irony. Leftism is materialistic. Its about government. Big Government Solutions and statism and regulatory state yet it wraps itself up in moral language about fairness and resisre redistribution. We believe each should be able to earn his or her success. Yet we wrap it in materialistic language. Were moralists that look like materialists. We change the outlook and the game. Isnt this book written to the conservatives to change their voice . Who are you trying to attract . If you are trying to get a conservative you can still read it larry. I read a lot of books. Hes with it. I can feel the whole vibe. Im just curious. Figure it out. No but you said youre trying to address this to andrew but arent you trying to empower the conservative movement and changing their voice. Thats a huge objective to it but im trying to help people understand that are in the middle that need permission to join not just conservatives but the movement that they are actually with us and have the same values. Conservatives need to express that better. But all the way to andrew though. Youre reaching out way, way to the left. See i actually think you have a marketing problem because are you trying to be conservative . Look i am a conservative. I am a conservative. What im showing people then i dont know what a conservative mind im trying to point out. But youre labeling yourself not mainstream in my mind by saying youre conservative. Because of the social i would not be labeling myself. To me it sounds youre more of a you know, you may have some you believe in the free market. I dont believe thats a conservative view. Im sorry to tell you that is a conservative view today. I dont agree with that. A lot of other people might label you that look at this. I think its a mainstream view. Free market . Did you see Hillary Clintons speech the other day . Did that look like a mainstream view . I think free markets youre like an ostrich then. I think larrys pointing to liberal for a long time was a dirty word. Liberal in its classic sense is what conservatives are. Thats what im trying to say. Bad labels. I wrote it for you. Okay. Wow. Id love to have it. If you can play wing nut and conservative, then youre right. But not everyone conflates wing nut with you know. Okay. Were going to fix the country. Yeah. I know. Ive heard that before. All right. Thank you, arthur. Thank you joe. Thanks, all of you. Thanks for coming in. When we come back this morning, much more from our guest host larry fink. And this delivering alpha party is just getting started. Still to come today, we have jamie dinan, esther dyson, and christopher ailman. Stick around. Squawk box will be right back. Our guest host this hour has been larry fink from blackrock. We didnt get to the fed yet. When do you think theyll raise rates . I wouldnt be surprised if they dont raise in september. I think this is they said they want to raise it. Theyve talked about it. Theyve already said if the data comes out in the zone that were in theyre going to raise rates. They have to worry, though about the dollar. If we see because of greece weakness in europe and you can see, then youll see a more tentative federal reserve. We cant afford to have the dollar go to party. Although it will help europe. Itll help europe but i believe we saw in the retail sales yesterday, we have to be alarmed this is one of my structural views that the consumer is saving more because theyre getting closer to retirement. We had this time bomb about the lack of retirement money. And i believe theres greater and greater consternation, fear that the consumer is going to be tapped out if they dont start savings. Larry fink thank you this morning. So terrific to start the day with you. Thank you. Good luck today. See you a little bit later. I got a big panel. When we come back weve got quarterly numbers from bank of america. Plus jaime dinan is going to join us on the set. Squawk box returns in just a moment. A new lineup this hour from the delivers alpha conference in new york. Jamie dinan is here to talk the feds rate hikes and market stability in china. Then Angel Investor esther dyson on the worlds hottest new startups. Plus a 7 billion biopharma deal. Celgene ceo joins us to talk about the companys acquisition of receptos. Well bring the top numbers from a banking analyst. The second hour of squawk box begins right now. Welcome back to squawk box right here on cnbc first in business worldwide. Im Andrew Ross Sorkin along with joe kernen and becky quick. Were live at the delivering alpha conference in new york presented by cnbc. Were counting down to 8 40 a. M. Eastern and the first event of the morning. Weve got bill ackman and nelson peltz on stage together. You can watch it right here live on squawk box. In the meantime though we have bank of americas earnings which just crossed the tape. I know joe and becky have been digging in. We have. Bank of america is out with 45 cents. Street was looking for 36 cents. Revenue also better than expected at 21. 12 billion. Street was looking for 21. 31 billion. And the stock is up if you take a look at this. Brian moynihan is the ceo there making comments about solid core loan growth and lowest expenses since 2008. He also says we also benefitted from the improvement in the u. S. Economy where we are particularly well positioned. Thats interesting. Its a little bit different than what we heard from the banks yesterday talking about this. But from his perspective, it looks like a strong economy. All the Bank Earnings have been good news for banks, bad news for lawyers. Did you see this . Noninterest expenses decrease 37 . Actually thats excluding litigation. Its all relative right . The lawyer boom might come into a bit of an end. For this part of the world. Yes. Chargeoffs down 26 to 929 million. Most of the banks have been saying credit quality is pretty good but kind of flat where it was in the year ago period. In the meantime, lets get you caught up on our watch list of whats going on today. More earnings to come. Delta air lines expected to report this hour. Then after the closing bell weve got intel and netflix. Then at 10 00 oom eastern time janet yellen is going to begin her testimony on capitol hill. The text of that speech will be released at 8 30 a. M. Take a look at equity futures at this hour as we see how the market is setting itself up for the day. The dow would open high right now 6. 5 points. And the s p 500 would open about 2 points higher. Also among our other top stories this morning, it is decision day in greece. The parliament there preparing to vote an a bailout deal that could save the country from financial ruin. In the United States it is black wednesday for several major retailers. Amazon is celebrating with a prime day deep Sales Discount event. The company is promoting this event as having more deals than black friday. Walmart, target and other retailers are competing with sales of their own. And a deal in the pharmaceutical industry to tell you about. Celgene a buying receptos for 232 a share. It will boost portfolios and we will be talking to the ceo of celgene coming up bottom of the hour. Got to give credit to cramer who has been a big fan. Only a 12 premium because the stock in january was like 105 or something. Jim had the ceo on talked about it. All his followers have been sending thank you notes because theyd all piled in. We are at the delivering alpha event. This gathering is a whos who of the community. Jamie dinan joins us now from york Capital Management. 26 billion in assets under management. Thanks for being here today. Its great to be here. We were just talking with larry fink over the last hour about whats been happening in the markets. And you have a very good grasp of whats been happening too. Why dont we start with greece . This is something weve been talking about for quite a while. How big a problem is this and maybe an opportunity for investors . As the old saying from adversity and volatility usually creates longterm opportunities. And greece definitely provided a lot of i would say, longterm opportunities. Hopefully what they definitely provided is socalled volatility and adversity. The rest of the eurozone is recovering as we know. Its going to have growth this year. Hopefully around 1. 6 is the estimate. Thats the best growth theyve probably seen since 2008. Companies really starting to feel optimistic. And really wanted to have this whole thing basically get thrown back into the mess we saw like in 2012. The bad part about greece is the last several weeks have been damaging to the Greek Economy. Banks have been closed as we know now for almost three weeks. Voting tonight at midnight to agree to what is really a tough, tough package of reforms. And its i dont know why people go at midnight, but theyre voting at midnight. They dont have a choice but to pass it. Last night the Prime Minister Alexis Tsipras, he basically said he has no choice to do this. He said something i thought was quite telling. Hes true to his leftist roots. You realize that leaving the euro would only benefit wealthy greeks. It would actually really hurt the middle class and the poor. And that is true. And i think thats why hes convinced this is still the best course for greece. He has the votes. And its going to be an interesting cabinet change after the votes. But once he gets the votes, he still needs the ecb tomorrow and friday to start to extend a little bit of a lifeline because the banks need to reopen. If they dont reopen Greek Economy is never going to be able to come back to actually fulfill all these demands particularly germany has imposed on them. Lets assume the best case scenario. They pass in greece and germany, that something worked out with the imf. How much damage do you think has already been done to europe and what does that mean for the rest of the european economy . So i think the Greek Economy we all know thats been really damaged. I think the rest of europe actually has not been damaged at all. I actually think this started to become less an economic issue. 2010 when this really first started and also in 2012 which forced mario draghi the head of the ecb to do the famous pronouncement the end of july. Italy and greece and portugal spreads didnt move that much over the last several weeks. Lower than the United States like a 2. 1 versus a 2. 4 10year bonds. And really became an issue of solidarity with the french and the italians really leaning away to say european we are a community and we should behave like a community. Its just an Economic Partnership and you should behave that way. And as a result it really just became one of what was fair and had a different view. Reached a compromise. But ended up didnt have choices. And had to take ult mally the germans forced them to take. When youre looking at yields that low in the states surrounding greece does that mean opportunity . What are you doing if anything in the area . Right now i think the best way to look at europe is you still have kwaunquantitative easing going on. Since qe and easing in the United States happened which started to taper off in 2013. And it was a great time to be long socalled risk assets. I think european equities are a place that are really attractive right now. I just mentioned a few minutes ago best growth since 2008. Pe right now in europe you look at the euro stock 600. Theyre estimated on 23 times this year. Next year looking at about 16 times. Interest rates being as low as they are, Euro Central Bank being your friend i think the risk is on. What are you doing . Can you talk about any of it . My compliance guys always say you cant talk about names. They get nervous about that. But we do like one name in particular we like called axel nobel. It trades about 15 times earnings or expected earnings. Next week were expecting good numbers. We think theyve gotten debt down now. Were looking for share buybacks coming in the fall. Nothing better to own equities where banks are easing and the companies are buying back stock. Thats a great situation to be in. Japans in that way at the moment. And they have a good management. Companies that are export driven, can benefit from the weaker euro. Find companies that actually benefit from lower input costs. Chemical companies do benefit a lot from lower input costs. Most of all, find companies that have management that are really more an lo sax son. There could be good Value Creation if they consider us separated from the special chemicals business. Youre starting to see some firms in europe, you know becoming slightly less aggressive on their following of companies and suggesting ways to create value. When you talk about the Chemical Companies, things like that, are you buying the equity or debt . In this case were buying the equity. Theres not much debt to buy. Interest rates being as low as they are my own view is its just a duration bet. Hopefully rates go lower and you can make it. Were stock pickers. You know we look for events and catalysts and value. But ultimately were stock pickers. The euro is already the euro might be lower. Everyone thinks its going lower. But 1. 10 might not be a bad place to buy some stock in europe and not worry. Youre absolutely right. But you have to understand what our mandate is and what our mandate isnt. If i was an individual investor looking to buy axel noble, its not overvalued. Right. At york what we do is hedge back. Were not here to i just wouldnt head to it at this point. Like i said i think its in the zone. Exactly. Jamie is going to stay with us. Weve got a lot more to talk about. Up next well get his thoughts on pension funds. Well be talking about that after a quick break. Still to come this hour, heres what weve got. Street reaction to bank of americas results. Well dig through the reports with an analyst. Then another delivering alpha speaker will join us. Esther dyson joins us to talk about the hottest new startups in health care and aerospace. And the ceo of celgene is going to join us talk about the acquisition this morning. Stick around. When you get up to 50 off thousands of hotels with travelocity it means you can also afford to get up to 50 swedisher swedish massages. Making it the place to find a place for summer escapes. Go and smell the roses. Kids are expensive. So im always looking to get more for my money. Thats why i switched from uverse to xfinity. They have the most free on demand tv shows and movies on all my devices. Its perfect for me because my kids are costing me a fortune. Im going to cabo [ music plays ] dont settle for uverse. Xfinity is perfect for people who want more entertainment for their money. Welcome back to squawk box. The futures right now are a little bit mixed. Theyre up a little. Up about 9 points as you can see. Weve had a great snapback in the last eight or nine sessions after we became less concerned about a possible grexit. And it turned into a what do we call it . An agreekment. Lets get back to our guest host jamie dinan of york capital investment. So if we didnt have worries, you would think the prospect for low inflation and the fed might go higher the next couple years but really low historical rates which makes equities more attract i, it seems like a sweet spot for the u. S. Stock market even though its a fiveyear bull already. If it wasnt for greece and china, what would cause someone to worry about the stock market here . Thats a really smart comment and i actually totally really agree where youre going. If it wasnt for these issues that we dealt a lot with last week, youre are l in a sweet spot. Even though janet yellen is talking about raising rates as early as september, shes been so adamant that its going to be a really slow gradual rise. 25 basis points given where earnings yields are relative to 10year bond yields theres a lot of space there that shouldnt derail this. It would be eight raises to get to two. And we will on this set be talking about every quarter point raise. And the comments leading up to it and when is the next meeting and will it be another and its going to be eight of them before we get to two. Right. Its going to be long. Am i right . Eight times a quarter, is that a two . All right. Check me on these things. More importantly, theres an old saying i actually agree with. Bull markets only end long bull markets like this. When you have recession, when you get aggressive tightening. Its hard to see the recession right now. Like old age. Bull markets dont usually die of old age. Exactly. This year were looking at growth of 2. 4 with consensus. If you take out the energy component, Second Quarter earnings are expected to be up 4. 5 . I mean, its a healthy economy right now. And so whats wrong . And i dont see the fed aggressively raising rates. So this market should continue. You should be upbeat on u. S. Equities. Certainly relative to other asset classes. Investors are still living with the ghost of 2008. They still remember how bad it was, you know in their stock market portfolios. And there is still this reluctance to basically kind of embrace being long equities as a really safe asset class. People are still diversifying. Still not seeing that kind of almost bull market main street to go into the stock market. I think, you know people always overexaggerate the tales. The big tale was obviously greece, what that would mean. Most people said its not going to mean anything. Germans felt that way during negotiations over last weekend. We felt that way, but contagions are fun inny things. China is compartmentalized now. Were taking advantage of that volatility. And i think really even the u. S. Market fiveplus years into the bull market and investors think risk is on. Should be looking for opportunities. I should be taking advantage of this extraneous volatility that i dont think is really warranted. So how often do people think youre jamie dinan. Someone says hes got ten times as much money as hell ever have. Didnt that happen at some point . No, it was worse than that. I remember when i thought somebody was going to blow me up. Around 2008 and the banks were really starting to cut back and, you know i was introduced and i came up and gave a little speech. I was there with like the dutch ambassador and we were doing a 200th anniversary of Henry Hudsons voyage up the hudson. And this guy comes up to me. I remember he kept looking at me. He wants to know why he lost his job. Oh, god. At the time they had maybe 170 employees. I dont profess to know everybody, but i dont recognize this guy. So i finally said you know, what department do you work in . He said he worked in tribeca. A light bulb goes off in my head, oh you got the wrong jooi mee dinan. Thats jamie dimon. He works at jpmorgan. And the guy says you know dont think you can fool me. I know who you are. I was thinking im going to die for somebody im not. Right. And luckily the dutch ambassador had a security detail. He was leaving to catch a flight to amsterdam and i just jumped in the middle of his security detail and took off. Where actually they that they were really impressed when they thought you were jamie dimon. Then they find out it was jamie dinan and if they only knew. Im a big fan of jamies. Yeah. Great man. We had a guy yesterday his name was frasier cain instead of crane. You ever think about jim dinan . I hate jim dinan. And when my wife gets annoyed she calls me jimmy. My legal name is james. My late mother called me jamie. I always thought jamie had a softer sound to it than james. I agree. But i do have four siblings. Two call me jamie, two call me james. When i was rebecca, i was in trouble. Your situation is worse than his. Because people are so excited about meeting aaron sorkin theyre saying who the hell are you . In 2004 he was buying an apartment in new york city. And jamie dimon was moving to new york and said. Theyre say nothing were not buying the apartment. He bought the apartment. Anyways, jamie and i actually are on the board of Harvard Business school. We see each other every year. For whatever reason the deans think its funny to sit us next to each other. They call us what do you think jamie. We both start to talk. Hes actually a better talker than me so he gets the microphone. Hes great. But you need a seven second delay a lot of times with jamie. But it was kind of funny the other the most recent in april his wife the wives are invited to these. Both our wives went to Harvard Business school. His wife says thanks for all the credit we get for all your charity. Thats good too. Youre on the stage today at noon. Little before noon. Thank you, jamie. Lot of fun. When we come back this morning, we do have much more to come. Were going to be digging through bank of america results with david hilder. And esther dyson will join us. And then the ceo of celgene is here to talk about the companys acquisition of receptos. Stick around. Ah aflac . Aflac i thought you said this guy was the best . Oh, hes a horrible stylist. Gah . But hes the best at paying claims fast really. Mmhmm. Paid mine in just one day. One day . Yea. Aaaflaaaac in just one day, we approve and pay. One day pay, only from aflac. 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Thats huge for my bottom line. Whats in your wallet . Welcome back to squawk box this morning. The air force taking steps to address a shortage of drone pilots. New line of work for people. The Service Branch expected to announce a new plan today that would give air force pilots thousands of dollars in bonus pay. They sign up to fly drones for five years or more. Current drone pilots complained that theyre overworked. They fly up to 900 hours a year. That compares to 250 hours a year for fighter pilots. Of course you can do it though from a cubicle somewhere. You would think a lot of it was computer controlled anyway i would think. Couldnt it be mostly computer . No. You have to be in there. There was a big story about how theyre working long hours, there arent enough of them. They dont want to be doing these things. Drone pilot sounds like an ox oxy moron. Youre not in it. I know. Like with a pilot certain numbers of hours flown, its likely they fly for the first 12 minutes. There was a big story laying out all the problems they were having getting some of these and recruiting these guys and keeping them. Its funny. You need to know all about flying a normal plane to fly a drone, i guess. Interesting story. We should have somebody on to talk about this. You had to do the roll and things. The weird thing is youre in wartime and you walk out and everybody is shopping at the walmart and picnic and you have joust come from a mission. Kind of bizarre. When we come back weve got bank of america out with their Quarterly Results. And dont forget coming up at 8 40 eastern time weve got bill ackman and nelson peltz. Theyre going to join us on stage together to kick off the delivering alpha coverage. Keep watching squawk box, were back in a moment. Kids are expensive. So im always looking to get more for my money. Thats why i switched from uverse to xfinity. They have the most free on demand tv shows and movies on all my devices. Its perfect for me because my kids are costing me a fortune. Im going to cabo [ music plays ] dont settle for uverse. Xfinity is perfect for people who want more entertainment for their money. Welcome back to squawk box where we are live at the delivering alpha event this morning. The Greek Parliament is in session debating reforms. The creditors have insisted a third bailout. A vote is expected later today. As jamie dinan just mentioned, we are looking for a midnight vote. Also Mortgage Applications dropping by nearly 2 here in the United States in the week. The average 30year fixed rate was unchanged. And paulsen and company has reportedly taken a stake in syngenta fop accept a takeover offer from monsanto. Bank of america posting better than expected revenue and earnings. Joining us is david hilder. We can compare to it the same comments that you made yesterday about i believe it was jpmorgan. Good quarter for mr. Moynihan . Yes. Certainly its a good quarter for bank of america. They reported 45 cents versus a consensus estimate of 36. Theres about 7 cents of nonrecurring gains in there which are very positive obviously for capitolalcapital. Core expenses were down year over year which is good. Expenses came down again. Id say on the Investment Bank to compare it to yesterdays jpmorgan jpmorgan, bank of america wasnt as positive. Bank of americas Investment Banking fees were down about 7 year over year. Their trading revenues were down 2 versus a 1 adjusted at jpmorgan. Fixed income trading was down about 9 year over year. Equities trading was up 13 year over year. Obviously jpmorgan had a similar quarter up 27 . One other thing id point out is bank of america bought back almost 800 million worth of stock during the quarter. I take that as a positive signal because the fed has asked for bank of america to resubmit its capital plan said they can buy back stock in the interim and they went ahead and did that. I think they have a lot of confidence that theyre going to be able to get their new capital plan approved. Just reading between the lines, did Merrill Lynch not perform as well as thats a bright spot in past quarters for bank of america. Is that on a relative basis not as much of an outperformer this quarter . Certainly thats what the numbers say. Having looked at the numbers like this over the years, you shouldnt read too much into one particular quarter, you know whether its up 7 down 4 . A lot of that is just a couple of large deals. Bank of americas results were reasonably comparable to what we saw at jpmorgan. So i wouldnt get worried about that. Of course the bank of america Retail Business continues to run along very nicely for b of a. The other thinking i point out go ahead. Is that credit quality improved. Weve seen that across all of the banks that reported so far. And their chargeoff numbers came down as well. And its been clear for a long time that nonperforming asset inflows are coming down. Thats why the credit numbers are so good. We said earlier tongue in cheek are the lawyers not of america like jpmorgan too . Is the litigation expense not as much as it was . The litigation expense a not as good as its not as big. They didnt call out anything significant in this quarter. And of course you know that those numbers actually end up going to the litigants on the other side of the government. They dont actually go into the lawyers pockets. Exactly. We have were all playing very small violins here for we have been. For a long time. With one finger. Yeah. Son of a lot of things. Sorry, david. For bank of america, this is very positive quarter. Its very good to see their reported earnings above 40 cents a share in an eventual quarter. All right, david. Thank you once again. Appreciate it. Take care. Drexel hamilton is the great firm that does so much great work with veterans. Right. I like using them. Coming up when we return weve got plenty more alpha to deliver this morning. Esther dyson going to join us. Shes off set right noup shes an Angel Investor behind a dozen startups. Also served on nasas advisory council. And Time Magazine named her one of the ten most influential women in technology. She joins us next here at delivering alpha. Well be right back. A fact. Kind of like shopping hungry equals overshopping. At ally bank no branches equals great rates. Its a fact. Kind of like mute buttons equal danger. That sound good . Not being on this phone call sounds good. Its not muted. Was that you jason . It was geoffrey it was jason. It couldve been brenda. All right. Welcome back to squawk box. We are live from cnbcs fifth annual delivering alpha condition fence. Our next guest enrolled to harvard at 16 years old, trained cosmonaut cosmonaut, has been named one of the ten most influential women in technology. Joining us is esther dyson. Unrelated to the vacuum cleaner company which weve been discussing at great length during the break. The question everybody keeps talking about, we talk about Public Markets here and private markets and whether we are in a proverbial bubble. Where are we . Well were in a strange in preipo you have at the very bottom you have way too many little startups. All you know its completely random. Some get amazing valuations. Some cant raise money. And theyre creating a problem because theres too many founders and ceos and not enough actual workers. Then you have the unicorns which are the companies that are worth preipo worth more than a billion in theory. But what often happens is you have somebody invest 100 million at say, a valuation of 2 billion. But if something happens, they actually have some kind of preference so they get 500 million or a billion. So the valuation is not real. The valuations are not real. No. Because the term sheets somebody should do some software that just shows you how a term sheet ends up if you sell at 1 billion, 2 billion or half a billion. If its half a billion, the investor usually gets nothing. If were in a bubble, what is going to pop it . What is the trigger at which we say it actually is a bubble . Yeah its usually its predictable it will be something. Its not predictable what it is. And when you think about the sectors, though think about the economy. You spent a lot of time in health care, for example. Is there one place you think is not in a bubble . What uber is doing i think is sustainable. Theyre taking real resources and theyre allocating them much more efficiently. Theyre allocating them so efficiently that its creating political problems. Because surge pricing, people like discounts. They dont like surge pricing. And so theres a political component here. Also longrun theyre going to be using driverless cars. Is that a 50 billion company . Does that make any sense to you . Yeah, it does. It does . Thats totally thatll be a 100 billion company at some point . At some point. Personally i probably would not invest here because itll go down. Its going to be volatile. All these things are volatile. But i think the fundamental uber Business Model is actually brilliant. Esther a lot of people think its a brilliant model and its changing things. Its obviously bringing jobs to people who werent able to participate in the economy like they were before. But theres also a huge regulatory pushback. Theyve run up against that in a lot of cities and states. Where do you think those two heads kind of come together and how does it work out . You have right now uber is incredibly cheap partly because theyre not paying all the externalities. As they start to pay the externalities their profit margin is going to come down. In terms of like paying people in terms of employees and being responsible for anything that goes wrong along the way. I dont care how they pay people but theres who bears the cost of insurance of the cars themselves. The drivers are they may not unionize, but theyre going to get a little theyre going to get a little less enthusiastic. Its going to be harder to hire people randomly. So you have that coming down at the same time. God hopes that existing Taxi Companies and other entities like that are going to get slightly more efficient. What theyre doing is coming in and making this market dramatically more efficient but they also are not yet bearing all the costs. Someone made a suggestion of the sharing economy is a myth. Its a false idea and that the only when we talk about the sharing economy the only thing were talking about are uber and airbnb and Everything Else is basically worthless. Thats not really true. The word sharing economy is not true. Its the independent contractor economy and it is the allocation of resources. This is rationalization economy. Yes. Its big data in realtime opposed looking for analytics. Suddenly your vacuum cleaner, for example, its time sliced. Just the way you lend money overnight, on wall street they know that in seconds. In the physical world they dont. But thats kind of the most interesting thing thats going to happen with the internet of things. Were going to look at things as having a Fourth Dimension just the way money does. I see you talk about the internet of things. Youre still wearing an old i didnt realize you had so many on. Show everybody whats gong on here. Youre wearing thee bands at the same time. This is the nike one they dont even make anymore. Its great. This is the apple watch. What is this one . This is the misfit shine. Why would you wear all three at the same time . I wish i were being paid to do this but no. I just i wear what i get. Try it out. This one you can swim in. This one lights up in the dark. This is the apple watch and you have to wear it to be cool. So now you have all three on at the same time, have you figured out the accuracy levels . Like how much youre sleeping . Does one know better than the other. The jawbone im actually wearing on my underwear i use for sleep. In your underwear . What . How does that work . Its not a wristband. It just clips on. Sorry. All right. Got it. So you were saying the jawbone. None of them is really Accurate Enough yet. But in the long run, they will be. And thats going to be a huge help for health. Because you can get realtime feedback. Would you be long any of these bands and fitbit is now a publicly traded company. The reason i ask is if you think two, three, four, five years from now everyone is going to wear a watch, but does fitbit or Companies Like jawbone or misfit or whatever these other ones have a future . Whichever one it is theres going to be a lot of consolidation. One or two of them are going to buy the others. Whether apple wins or it ends up the microsoft band is actually a really nice device too. Right. The bands are a small part of the ecosystem behind it. Which is i want to look at that data and that data together. The challenge is getting all the apis to work together. Would that introduce you to wear something when you go to bed . Because you need something to clip it on . Or would you figure Something Else out . Little difficult. I might have to stick it to myself. Or put on some you know not sleep just change your sleeping habits at that point . Thank you very much. Do we get to talk about hiccup at all . Youre going to be talking about hiccup i think a little bit later on your panel. Yes. Just health is an asset class. Not health care. And thats what its about. What do you mean . So we should invest in health. Were working with ibm, working with neticaid. Health is an asset that provides benefits overtime. Right now were renting health instead of investing in it. Which is why it is a question for wall street. Interesting concept and question. We hope to hear more about it at the delivering alpha panel. Good tease. Harvard didnt find you at 12 . How did it take until 16 . I was hiding at princeton. Thank you very much. When we come back celgene announcing a 7 billion deal to buy Pharmaceutical Company receptos. Celgene ceo will join us next. More and more, data is visual. In fact, the number of mris has increased by ten percent a year. And a radiologist might view a thousand images to find one tiny abnormality in shape, contrast or movement. Because its so challenging a Research Project is teaching ibm watson to see. In the future, it could help clinicians spot key patterns quickly and precisely. Ibm watson is working to make healthcare smarter every day. So youre a Small Business expert from at t . Yeah, give me a problem and ive got the solution. Well, we have 30 years of customer records. Our cloud can keep them safe and accessible anywhere. My drivers dont have time to fill out forms. Tablets. Keep them all digital. Were looking to double our deliveries. Our fleet apps will find the fastest route. Oh, and your boysenberyy apple scones smell about done. Ahh, youre good. I like to bake. With at t get up to 400 dollars in total savings on tools to manage your business. Celgene striking a deal to buy receptos for more than 7 billion. The company also releasing its Quarterly Results early, raising its earnings per share outlook for 2015. Joining us now first on cnbc celgene chairman bob hugin and our own meg tirrell. You must love the prospects for this drug. Its really one drug were talking about with receptos that could have a huge market cap down the road. Its already been through a lot of critical trials. Absolutely. Its great to be with you this morning. Exciting time for us. And i think there are a couple of drugs in the pipeline. But clearly its the key driver here. And it has been sort of through a lot of risk trials already. And the mechanism has been proven by other compounds. So its exciting for us. What do we call it meg . I guess part of that class. In a nutshell a lot of autoimmune diseases are when white blood cells, tcells in this case cause the actual disease itself by with crohns or multiple sclerosis, they attack the cells that wouldnt normally do that. And this drug helps prevent that from happening. Exactly. So the potential for the drug itself, the trials have been in so far, multiple sclerosis with the phase three, the first one is fully accrued. And Ulcerative Colitis has just been initiated. And the prospect for other indications may also be very significant. Horrific quality of life diseases that people that had and pretty widespread. And eight weeks remission, right . Its very exciting. I think for us the timing was great for us. Because weve had increasing visibility into our pipeline in the franchise. Tesla now. So we said bringing this together really gives an opportunity for an extremely powerful. Timing did wonders for us. People wondering about your own deal thinking that maybe that showed you werent as optimistic about that one. Thats absolutely wrong. We could not be more positive about the prospects for otesla and for ged301. The additional part of the timing is we think the operating momentum of the company is strong. Thats one of the reasons the timing works on this deal. We preannounced our second order results. 22 year over year revenue growth. 37 year over year earnings growth. So very strong performance. Nows the time to strike built for the future. Over this past couple of months weve been able to identify and execute three significant deals that really enhance our longterm growth prospects. And not just for the next five or six years but the next 10 or 15 years. Whether it was the juneau deal which i know you spoke to bishop about. The astrazeneca deal to get to hematology. So we are building our franchises and really focused about doing that. And were just so excited about the promise of the future. 2020 thats a long way off. Why . This deal we believe will be in 2019 and neutral in 18. So we have a lot of levers to pull to ensure that we have the financial discipline. The operating performance of the company has been very strong. And we really believe in operating excellence is the key primary first pillar of our strategic imperatives. When you execute in the near term you have much better longterm prospects. We feel very good our ability to manage the financial aspects of this. Just one last question. Receptos is big with similar profile. Should we think of you guys as forming your own sales team here . Are you going to continue in multiple sclerosis . Our base is youve got to be excellent at what you do. Weve made the decision to take everything and partner it. Fortunately we have some time as the Clinical Trials mature. If we feel it would be better to partner it this is going to be a great asset for multiple sclerosis. We believe that to be true. On the other hand with additional m. S. Products Specialty Sales force is something celgene has a track record of doing and we can do. Bill and meg not bill. Big move in celgene today. Congrats. Were excited for the future. When we come back calstrs calstrs calstrs cio will join us. Were back in a moment. Ed 2 cash back on everything i buy for my studio. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Thats huge for my bottom line. Whats in your wallet . You are looking at two airplane fuel gauges. Can you spot the difference . No . You cant see that . Alright, lets take a look. The one on the right just used 1 less fuel than the one on the left. Now, to an airline a 1 difference could save enough fuel to power hundreds of flights around the world. Hey, look at that. Pyramids. So you see, two things that are exactly the same have never been more different. Ge software. Get connected. Get insights. Get optimized. Can a business have a mind . A subconscious. A knack for predicting the future. Reflexes faster than the speed of thought. Can a business have a spirit . Can a business have a soul . Can a business be. Alive . It is crunch time for greece. The government ready to take a crucial vote on reforms is that will pave the path. Well have a live update of what investors can expect. Grilling on the hill. Janet yellen set to testify on what could be her last trip to congress on a zero Interest Rate environment. Highlights of the speech to be released. Her comments minutes away. And were delivering alpha this morning. Nelson peltz and big ackerman set to take the stage. Its coverage you can only get right here on cnbc as the final hour of squawk box begins right now. Good morning again, everybody. Welcome back to squawk box here on cnbc first in business worldwide. Im becky quick along with joe kernen and Andrew Ross Sorkin. We are less than 90 minutes away from the opening bell on wall street. We are at the fifth annual delivering alpha conference. Jim cramer and david faber are both here. Well talk to them in a moment. Look at the futures. Youll see now the dow futures up about 8. 5 points. Nasdaq up by about 12 points. Weve also been keeping an eye on the markets in europe at this hour. Today is the day for the vote in greece. Right now you see that ahead of that there is some trepidation in the markets. Advanced but slim when you look at the dax up less than. 2 . In porch ghoultugal a gain of about onethird. The Greek Parliament is in session. Theyre debating reforms creditors have insisted upon for the third bailout. A vote expected around midnight athens time. Also china gdp coming in slightly better than expected. The second largest economy of the world rose 7 . Earlier in the quarter we had asked larry fink if he was concerned about a slowdown there. You could argue chinas on a path for an economy to continue to evolve and slow down. And unless we have more Global Demand from their exports, unless they have more Competitive Companies, unless the consumers start to consumer more then well see a slower china. Which is not frightening to me. Its just a path that theyre going to go down. And maybe valuations are still a little high. But well see. And the other buzz story of the morning, its black wednesday for several major retailers. Amazon celebrating its 20th anniversary with prime day, a deep discount sales event. The company promoting the event as having more deals than black friday. Walmart, target and others are competing with sales of their own today. S an on the move today. Blackrock beating the street on the top and bottom line. Ceo larry fink says the firms diversified Business Model helped to overcome volatility during the quarter. And pnc results topping consensus consensus. A key component of profitability that cramer said he was going to watch for. Is that what nim stands for . Yes. It was good for wells. People didnt think wells was good. People really misjudged bank of america. This is what the Company Looks like without a justice department. I look at all your tweets. You tweet a lot. I find lots of nuggets. But you answer people you do this, you do that. To find the nuggets i g through a lot of your tweets cramer. You know what i mean . How many have you got now . Youre well over 100,000. 900,000, yeah. Its all right. I see them all. Your viewers even think other people do it for you because its the middle of the night. Who else would wake up at 3 00 a. M. And watch the merkel conference . It is him. I know its him. Ive seen it happen in realtime. I got up this early today to go onto this amazon thing. I had a pair of Running Shoes i wanted to get. Theyre 190 bucks. They knocked off 19 bucks. Is that really worth changing your lifestyle . Im telling you, this whole amazon sale thing, i dont know if i want to pay parcel of it. Getting up wasnt the change of your lifestyle. You were already up. Thats true. In the meantime we have been talking about the stakes for greece and Alexis Tsipras. They couldnt be higher today. Greeces parliament is meettoday. Michelle carusocabrera is live in athens. She joins us right now. Michelle . Hey there, becky. They have to pass those reforms or else they cant begin negotiating with their creditors for a new big threeyear agreement. In the last hour or so Yanis Varoufakis the finance munsinister got up and spoke. He called this proposal thats on the table, the agreement, he called it a new treaty of versailles. He did not make it clear how he will vote. When he finished other members of parliament, the mps began screaming and yelling at him. It was a dramatic moment. The vote expected to occur after midnight. Here in athens thats whats going on. In brussels theres another big event. We are talking about how on earth theyre going to figure out a shortterm financing deal. Theres a new proposal that was announced within the last half hour where they say were going to cobble together enough money, 7 billion euros, just for the month of july. Thats to pay back the ecb and the imf. Theyve got to pay back the ecb by monday. Those are all the shortterm immediate things. The biggest cloud, though the big cloud overhang is a new leaked document from the imf in the last 24 hours which implies they wont go along with the bailout unless greece gets some kind of haircut nap is a problem. If the imf doesnt go along with it, its difficult for Angela Merkel to get it through for the reason the imf is really the bureaucratic structure that goes beyond trust but verifies that they comply. Back to you. Okay michelle. I dont know how long you thought youd be there. You didnt have a return ticket. But cant come home yet. All right. Dont get me started she says. Chinas next. Some of the biggest names they have a laundromat. She has no clean clothes. After a banner year for demanding kmang, here with a preview jim cramer and david faber. So excited about all these guys. Has singer done this . Never done it for us. Never done it for us. He speaks occasionally. The man behind elliot management. But it is rare to hear from him. Well do a lunchtime discussion about any number of different things. Are you going to talk about samsung and antisemitism . I mean that is unbelievable watching the way thats played out. And also i saw something from south america too. Kirschner to a certain extent. Theyve been in a fight with argentina for a long time. Theres a lot in the investigation of the death of the prosecutor and other things. But yes, we will touch on that. Its interesting because singer isnt usually thought of the face of elliot in the way ackman or peltz or you name it these activists are. Yet he is being personally attacked in south korea in a nasty battle. He does get in some nasty fights. That are not typical of activism. Theyre their own thing whether its samsung or orargentina. Jim, if you want to start a real row, how will you do it . Have you thought about that . Well candidly peltz and ackman are friends. Theyve got to get something going there, right . Ive been able to do that among family households, friends. If i want to i can throw a grenade and antipersonnel weapons aye used personally at home, abroad everywhere. But this could change the discussion but doesnt nelson separate himself and say he thinks hes a constructivist or Something Like that . I like that. More of a consulting force and when air products when bill ackman walks in this ceo walks out. When nelson peltz walks into pen air it seems they have wow a good meeting of the minds. Lets get together. When he goes into heinz, though initially hostile but then friendly. Goes into dupont, initially friendly and then not so friendly. Thats true. That is. And of course a big loss for them in that proxy fight. Unexpectedly so. Curious to see if some of these activists today think its a turning point. The fact that dupont was able to sweep. But was that the High Water Mark . Icahn too . For icahn we have to speak to other panelists. If icahn cant come are you willing to sit in and do your icahn i am. But i hope hell be here. You and larry fink together . Sure. Ill sit down with larry fink and pretend to be icahn. Sure. Most management are what . Dumb as the next guy. You dont want anybody thats going to challenge anyone. Because theyre morons. How did you know to sell net innics . This is off the record. How did you know to sell netflix . It was a great deal for us. Too early though. It was a quadruple. Sometimes you got to leave a little bit on the table. Actually, thats not icahn. I dont know who that is. Rocky. I thought it was perfect. I got to work on channelling that. But i have a bunch we have on our best ideas panel, were going to be hearing from starboard. Theres an idea there to not miss. Keith meister who is a huge activist. And tom sandell. More in the midcap to smaller cap bob evans one of the ones he took on. All new ideas from activists. Thats a couple hours from now as well. Can i ask you guys when you look at a situation like dupont where dupont won and yet the activist has been in there for a long time. Peltz has been in there for a long time. What do you tell investors when you see an ongoing activist battle . Ive always felt that if you bought what nelson peltz has bought even after he has finished his stake and it becomes public you have and ive done the work on this made money. The problem is that in this particular one, the stock did run up to 80. Under excitement about what he could do. And then when he lost it fell. Ever since he lost its just been an endless decline. And this is one where tactically im imperically he should have sold. Empirically. Maybe the Business Cycle for dupont is over. This is not a great time for dupont. Most of the activists we talked to are somewhat immune to the Business Cycle. Dupont even though it sold it spun off which was very cyclical. Theres a lot of dupont businesses i wouldnt want to be in. Although input prices are down. These Chemical Companies tend to trade down because they feel the customers can put them in. But decided salty snacks and soda go together. Or not . I know that pepsico had the best quarter of any Consumer Product. There nelson has bill johnson on the board. That was by far the best Consumer Product quarter. Its interesting. Coke gets cocacola gets away with it. Pepsi cola does great numbers. I want to know if that was a mistake though in retrospect. Pepsi, yeah. Certainly its the kind of mistake where youve made a fortune. We can expect both of these gentlemen will have new ideas. Not today but well be hearing from them in the not too distant future. At least another one coming in the not too distant future. And frankly mr. Ackman also. I think we can be confident hes going to come up with something big. I am going to attempt without any miranda warning and using a rubber truncheon to get to the ideas they have right noup. But youre saying i wont succeed. I would never put it past you. You may force them to tell you. And how much fun is it to be with these guys . Its great to have you on set. Hes walked down. We see jim every morning, its just remote. This is terrific. Thank you for having us. Thank you. Delivering alpha officially kicks off with activist bill ackman and nelson peltz who will take stage together in the next half hour. Can we go home . Maybe. No. Were going to watch. Are you kidding . I meant that. Watch at home. Yeah. Thats what i meant. Coming up searching for returns outside the United States the second Largest Pension Fund is chasing higher returns. Weve got calstrs chief Investment Officer here to talk about how hes trying to boost to narrow the talk about obligations and retirees. Dow would open up five points higher. Were back in a moment. Tmobile now extends your coverage beyond the borders at no extra charge. Get 4g lte data in mexico and canada just like in the u. S. And call and text as much as you want to and from the United States, mexico and canada. You heard right unlimited calls to any phone even mobile. In mexico and canada. Only tmobile gives you coverage and calling in three countries for the price of one. Switch to the uncarrier today. If you cant stand the heat, get off the test track. Get the mercedesbenz youve been burning for at the summer event, going on now at your authorized mercedesbenz dealer. Hurry, before this opportunity cools off. Share your summer moments in your mercedesbenz with us. Welcome back to squawk box, everybody. Today is a big day. President obama will be holding a news conference. He will be asked every question about how this nuclear deal with iran and whether its a good idea for the United States. It is scheduled today at 1 00 p. M. Eastern time. Benjamin netanyahu says he will keep pressing congress to vote no. And describing the deal as an historic mistake. Congress has 60 days to approve the deal. Oil this morning initially trading lower after the announcement yesterday. It has since bounced back. But its down again by 37 cents. They originally thought this meant more oil coming online. Others say we knew this was out here and its something weve been watching closely since this deal was announced. Were live from the fifth annual delivering alpha conference where were going to be hearing from some market moving commentary all day including from our next guest. Joining us is chris ailman from calstrs. We are thrilled to have you here this morning. Great to be here. Let me start with this. There are so many Hedge Fund Managers and others here. Youve allocated capital to a number of hedge funds. At the same time that calpers, the sort of other half or other fund akroz the river. Has started to pull away. Why are they doing that and why are you moving the opposite direction . Let me ask you a question. Define the term hedge funds. Thats part of my problem. Its all kinds of people. Weve been with activist investors for quite a long time. We are doing a small amount of what we might consider traditional hedge funds. Mostly to hedge risk against the rest of the portfolio. For us its a small allocation. About 750 million. We test drive stuff 750 million that is very tiny on a relative basis. Correct. Compared to across the street who goes big and now is getting out nobodys buying their portfolio. Do you think theyre getting out at the wrong time . Some argue they got in at the wrong time and are now getting out at the wrong time. I dont think theyre trying to time the market that way. Ted really looked at that hedge fund portfolio. It didnt match their investment beliefs longterm. So for them it didnt make sense. And i respect that. For us were using it a different way. Very specific. When you look out, say, three, four, five years from now, do you think you would allocate more to the hedge fund space, more to the private equity space . How do you see the allocation . I wouldnt include private equity in that hedge fund world. But for us private equity were going to stay straight. We want to maintain that going into the future. And the hedge fund area, weve been in it for about three years. So the global macro have not done much which we didnt expect. But now that were starting to see more volatility this calendar year thats when were trying to decide are they really adding value . Again, i want to test drive it. Were not yale and harvard. I cant put that and be early. Does it hedge the equity portfolio . So far the answer is partially yes. On the expense side, one of the big issues calpers has faced is so many things about disclosures and fees. Do they matter to you . For sure. Fees are big. They matter. For us its something we pay a lot of attention to. Are you paying 2 in 20 though . No. Ive been telling people that model is broken and in the hedge fund world, the model doesnt work and isnt true for large scale investors. Even with our small amount, were able to negotiate terms and conditions. When you look at our overall portfolio, hows it moving . We still have a home country bias and thats really paid off. I said to people if you want to bet on the fed and ecb id vote on the fed. The u. S. Market is fairly mature. And the bull market you have said on monday the value in the u. S. Market. So we think theres interesting opportunities in europe japan. Well watch it. We think theres opportunities there. Its all going to come down to quarterly earnings. Is there more opportunity longterm, you think outside of the United States in terms of emerging markets and elsewhere . Great debate. If you think about lets divide it up between developed markets emergeing markets, and the u. S. Market, yes theres more opportunity in emerging market but thats not one broad category. Youve got china and a bunch of different regions. There are opportunities for growth in different regions. I think the u. S. Is still a better place to tilt your portfolio. I wouldnt bet on european right now. You still have a problem with noncorrelated assets. Correct. If stocks and bonds both go down, youre not really ready for that necessarily. Well ive got 15 in real estate. I know thats not a ton. Building up infrastructure portfolio. So its a real problem. Fixed income who wants that . No one wants that right now. Were down to 15 of fixed income. Youve got to be equity right . All right. Weve got to leave the conversation here. But hes on my panel a little bit later with a number of other great people. Well talk to you in a little bit. Thank you. When we come back this morning, the iconic new york store where this scene was shot. Take a look. This is from the movie big with tom hanks but the store where this was shot is closing its doors. Well have details after the break. Then breaking economic news. The ppi for june will be released. Squawk box will be right back. So youre a Small Business expert from at t . Yeah, give me a problem and ive got the solution. Well, we have 30 years of customer records. Our cloud can keep them safe and accessible anywhere. My drivers dont have time to fill out forms. Tablets. Keep them all digital. Were looking to double our deliveries. Our fleet apps will find the fastest route. Oh, and your boysenberyy apple scones smell about done. Ahh, youre good. I like to bake. With at t get up to 400 dollars in total savings on tools to manage your business. Welcome back to squawk box. After 30 years, fao schwartz is closing its doors. At least for now. It has evolved to a new york city tourist destination. They will reopen in another location, but nothing has been announced. Faoschwarz has been featured in many movies such as big with tom hanks. That keyboard has been the stores most popular attraction. Im hoping to pop over there later this afternoon. The bells youre hearing in the background, by the way, the delivering alpha conference just getting underway. Coming up breaking economic news. The june Producer Price index data will be released. You can tell were live from the cnbc Institutional Investor delivering alpha conference at the pierre hotel in new york. You can tell things are getting ready to get started. Thats what the bell is signaling. Well dip into presentations all day long and well kick things off with nelson peltz and bill ackman. As we head to break, take a look at the u. S. Equity futures. I built my business with passion. But i keep it growing by making every dollar count. Thats why i have the spark cash card from capital one. I earn unlimited 2 cash back on everything i buy for my studio. And that unlimited 2 cash back from spark means thousands of dollars each year going back into my business. Thats huge for my bottom line. Whats in your wallet . Welcome back to squawk box. Breaking news. June ppi up. 4 . Is that bigger than expected . Certainly is. Its about double what we were expecting. Dont see any revisions in the number. Strip out the allimportant food and volatile energy up. 3 . If we look at year over year xfood and energy up. 8 . Thats the trade component year over year. So you have core trade year over year up. 7 . What we refer to Straight Year over year that is up. 8 . The numbers on this part of the equation are in line. If we look at empire more recently, 3. 86. We were looking for something slightly over 3. This follows an unrevised minus 1. 98. So that news is as expected with a little bit extra. If i look in the market place i see preopen equities have actually increased hundreds of percent. It went from up one to up three. All right . Dont use percentages for many markets. Sometimes the vix and Interest Rates arent really form fitted for that type of comparison. Of course its janet yellen delivering alpha. Going to be a big couple of days. Back to you. All right, rick. Thank you very much. Janet yellen as we mentioned set to give testimony to congress on the stautte of the economy. Investors are going to be looking for when rates are actually going to start to rise. Hampton pearson joins us with more. From the fed chairs testimony on Monetary Policy shes going to tell lawmakers the timing of an initial rate hike. If the economy evolves as policy makers expect conditions likely would make it appropriate at some point this year to raise the fed funds target rate. But she also emphasizes that the anticipated path of the economy, not statements of intent to raise rates at any particular time will be a big part of the guidance there. She also says that as far as the overall economy, the economy continues to make progress towards maximum employment. However, inflation continues to run below fed targets. The labor Market Conditions quote, not yet consistent with maximum employment. Overall there is an expectation of the u. S. Economy picking up in the second half of the year. And unemployment gradually declining. The economy she even as at one point might snap back more quickly due to a boost in consumer spending. On the concern side theres also the mention of greece and china perhaps at the top of the fed and Monetary Policy makers list of outside concern. Finally the fed chair is concluding her prepared statement with a vigorous of when it comes to lawmakers. The key statement there wrapping up that portion of the speech urging policy makers not to put pressure on the fed or make decisions, if you will that would have the unintended consequences that could undermine the feds ability to make policy, quote, in the long run interest of American Families and businesses. Those are the highlights from the prepared testimony. The hearing gets underway at around 10 00 eastern time. Back to you. Okay hampton pearson. The conditions are right. Steve leisman joins us now. Hes back from germany. Did you participate in you know, sitins or takeovers of government offices to protest the austerity in greece or anything . You didnt get arrested . What city were you in . Frankfurt for a couple days and berlin. You didnt let your feelings known about not doing a haircut. It depends whether you have a tape of any of the protests. If you do then well talk. But if you dont, then i wasnt involved in anything. All right. Arrested not convicted. Thats what i always say. They let him out. Theres an ability for people in germany to you know arrested not convicted. Anybody can be arrested. They could. But i also have that magazine with your name on it. There is a town in germany called kernen. There is. Just quickly, being over in germany gives you a lot of sympathy for their position. I kind of walks away with this notion of you know dont complain dont protest that a check should be written if youre not writing the check. I mean these guys just aint in the mood to write another check to greece. And theyre the ones essentially writing it. Were not writing it here in the states and theyre writing it somewhat less in france and not at all perhaps in other parts of europe. They have to write this check. I think they have the right to demand certain conditions. To be demanding Debt Forgiveness before you give me more money after that. And i walked away very skeptical. I dont know if i said this on air, but this idea of this is a bit like the wizard of oz telling dorothy ill help you if you get me the broom of the wicked witch of the west. Impossible task. Maybe some in germany really want greece to leave the eurozone but theyre giving it one last shot. Maybe its tough love and tough medicine. Michelle went over the details of how they run pharmacies in greece where they have one its totally regulated. What you can sell is regulated. This would all go away. Heres the way to think about it. Sanders would go over there and be a conservative. What they consider to be you know, the left out there is very far left according to the u. S. Politics. Look, a lot of the germans i spoke to talked about the turkish rule where paying taxes was paying the man. Maybe less relevant is greece having been sub jujugatesubjugated. So theyre looking for some kind of cultural change. Long maintained that the euro is the wrong lever to make cultural, you know homogeneity. Very quickly on yellen guys it sounds a lot like friday. Im not sure why she gave the friday speech but she took a lot of her edge off thinking about the economy. I think its significant. She didnt seem to up her concern about u. S. Consumer spending given those lousy retail numbers yesterday. She did add a little bit about greece and china and some of the foreign issues. And shes on track with this notion that you know if everything goes according to plan, this is the year where were going to raise rates. As joe said it could be september or october or november or december. Just come back from your vacation and theres probably going to be a lot of discussion about rate hikes if jobs go the way its going. You saw today in e the ppi that some of the Lower Oil Prices working its way through the system. Yet i think it was a 2. 4 increase in gasoline prices. Youre still 0. 8 on core. Ultimately those impulses for the Lower Oil Prices are working their way through. Well go to break. One last question. Berlin. You were there for how long . Such an awesome city. I was there for three days and had some time. I went to check point charlie. Night life. Did you do something . We did. We tried some of the beers in small quantities so we could drink a lot of them. Try a lot of them. There are some interesting places there with the techno music and did you see cool stuff . I didnt. Well go sometimes. You wouldnt play me the techno music again . Remember that . I think i got yelled at for that. I did. That was autobon. I dont know who that was. Im not a techno head. Do you remember those guys in the big lebowski . Sure theyre wrapping us. When we come back were back at delivering alpha. Nelson peltz and bill ackman will take the stage. Take a look at the futures as we go to break. At rates. Its a fact. Kind of like shopping hungry equals overshopping. A new season brings a new look. A chance to try something different. This summer, challenge your preconceptions and experience a cadillac for yourself. The 2015 cadillac srx. Lease this from around 339 per month, or purchase with 0 apr financing. At ally bank no branches equals great rates. Its a fact. Kind of like mute buttons equal danger. That sound good . Not being on this phone call sounds good. Its not muted. Was that you jason . It was geoffrey it was jason. It couldve been brenda. Welcome back everybody. Take a look at what the futures have been doing. Theyre flat. They have been relatively flat all morning long. Probably trying to figure whats going to happen in greece tonight with the vote expected before parliament. The debate is taking place right now and obviously that has people kind of waiting to see what happens. Steve leismans here. He was just talking about these comments that came from janet yellen. Thats going to be the other thing the markets watching all day long. Does she give any indication about whether the weaker retail Sales Numbers we got are concerning her . Are there other economic things concerning her . Is she going to talk more about the Dollar Strength or anything happening about the globe, make the weakness in china and potential weakness in greece. People looking what else to take away from this. Lets look at whats been happening in other markets. The european markets this morning have also been in the green, but this has been some hesitation to really get too far ahead of themselves. The dax is up by about. 2 and there are similar gains in london and in france. In italy, thats the biggest gainer of the morning. Up by over. 8 . Also if you look at what happened overnight in asia shanghai down by 3 again. That is leading to some concerns a thousand stocks were able to open and opened down 10 which is their daily limit. Again, we are at the delivering alpha conference this morning. Weve been watching to see whats been happening on stage. Right now were going to dip in to give you a glimpse of whats happening with our headline act there. Nelson peltz, bill ackman interviewed by jim cramer. Thank you. Thank you, everyone. Nelson, bill. We can waste no time. Its supposed to be food fighting. Wheres the food fighting . You ended last year with a hug, so we started this year with a hug. Thats only fair. I know you gentlemen are accumulating positions. I know youre doing great things. I want to make it easy for you so you dont necessarily are pigeon holed by me. But give me your single best idea, first nelson then bill that youre building a position in right now that we dont know about. I will say we have two new positions which account for a third of our portfolio. Unannounced. Well, this is such a great opportunity absolutely not. Were not ready yet, jim. Were not ready. But i promise cnbc will be part of that knowledge when were ready. Are they food . Are they industrial . Are they american . One is industrial which we announced. Pent air which were excited about. The other one we have not categorized yet. Leaving it that way. Fair enough. Bill . Weve announced, but no ones really noticed. Which is i think the most interesting investment we own today is probably fannie mae and freddie mac. A lot of people feel the Treasury Department will never let that be worth anything. You obviously are making a statement that its worth considerably more than 2 by saying what you just did. For sure. I think it offers the most upside. Probably has the most downside of anything we own. The downside outcome is very unlikely. Is it an aig situation where you win a court battle except this time it pays off . Whats interesting about the aig situation is were not fighting the original deal with the government. Hank, i give him enormous credit. The government was the only money in town. Terms were harsh. The terms were harsh for fannie and freddie. But four years after the crisis the terms were changed again. The negotiation between the treasury and another agency of the u. S. Government. So i just think that it doesnt get resolved in a legal outcome, possibly. I encourage people to read the amici briefs including one by a former fdic chairman on the Banking System if the socalled amendment is allowed to stand. I think you can create this cannot become a precedent where telegovernment can come in and take 100 of the profits of a corporation forever. Fair enough. I think thats going to work out well. Ultimately what we drive is not litigation but the conclusion of fannie and freddie being the only way to have a Housing Finance system in the u. S. With low cost mortgages. Lets talk about the state of activism and whether david faber and i talked a lot, nelson about whether the defeat that you suffered at dupont is the High Water Mark of actual corporate challenge and the pent air is the new style of listen we want to work with you. Youve always been a constructive activist. But the dupont loss was a significant loss in a lot of peoples minds. Youd done a lot of work. The stock ran up to 80. People felt you could get in and make things change. Its been a significant loss for shareholders. Stocks gone from 80 when i was on your show march 12th it was my wifes birthday that day. And the stock was 59 yesterday. And you can add 2 to that. But its been a loss for all shareholders. We had 46 and the activists, the index funds voted against us. But we havent sold our shares. Thats not our style. And were going to wait and watch and see what management and the board will do from here forward. And Ellen Coleman was in my office last week. I said to her the second least favorite thing that id like to do is have another proxy fight. But the first least thing favorite thing id like to do is see dupont next year at this price. Would you buy more right here . I would consider it absolutely. Are you . We are not discussing that. Would you buy comors here . Thats a good question. Were doing work on it. I mean think about that. That stock when issued a couple weeks ago was 21 bucks. Yesterday i think it was 12. They overleveraged the company. Were accused of smash and grab. Were accused of overleveraging companies. Our white paper said spin off comors make an Investment Grade. They spun off and made it junk. Okay . They promised a 1 dividend. The market clearly 18 . Theres no way thats going to happen. Thats correct. So the stock 21 to 12, 80 to 59. Think what might have happened had we won . Bill lets say you were involved. And they didnt want you on the board. And they voted the shareholders voted against you. Would you take your bat and ball and go home or say, listen theres more here and i want to keep working . Look i think nelsons handled this very well. I think we were not a shareholder at dupont. It seemed much too personal a proxy contest. If i ran the company, i would be delighted to have nelson on the board. I really mean that. I think its very helpful to a ceo to have a major shareholder on the board so you can get input from a shareholder before you can test something internally. Were you surprised that they didnt want what were actually i think pretty qualified candidates that nelson put up . I was spriessurprised by it. But i think the stock price is a shortterm reflection of the owners. With air products where you took a big stake, old ceo goes out. New ceo comes in does a remarkable job. Even in an environment where they didnt think it was that good. Is this the kind of activism that is necessary when you take a position and the company is not as well run as you wellrun as you think . Weve made a lot of one where a great business has been run by a mediocre ceo. I dont want to pick on anyone in particular. We all pick on the former ceo of cp in an extreme example. If you can put a great ceo into a great ceo, you can make a fortune. One of the directors we put on was a guy and the board surged and said hes the best guy, to their credit. They concluded it was the best guy. Hes done a great job and been there a few quarters. Are you happy with juan raymond . Hes done a great job. Does he keep his job . Thats up to the board. You have a position. Are you happy with his work . I just met him. I have to give him enormous credit in a short amount of time. They announced a major restructuring program. Its a great business. I havent worked with him so i dont know. You guys i know youre friends but i also know that you do different styles of work but both of high quality. Have you ever felt i cannot believe that nelson got that one. That was the one that i was working on the whole time and he beat me to it . Have you ever said thats the one i know i could have done . A funny little story. We bought a stake in cad bury a while back. We had never been involved in a uk company and thought this was done nelsons power alley so i went to pitch nelson on cadbury in it. And he was not he brought in candy. He came to the office not to cut him off with all the goodies, and we had already loaded up on the stock. We were loaded up on the stock. So he plays pretty good poker. I left the meeting thinking, huh, and shortly thereafter he announced involvement in the company. We just road his coat tails. Did you like his work at wendys or do you both like quick serve businesss . Nelson is one of the new activists where we crossed over a few times. We had a stake in wendys. Nelson was forming his partnership and six months later bought a stake. It was helpful. Weve known each other ten years and we like high quality businesses and we like high Quality Management teams and i think we like to work constructively with management but occasionally when you get the heisman, i guess youd call it its important to give the owners a chance to make the decision. Wendys was the first stock we bought. We bought that stock in november ten years ago. Okay . And when you talk about activists and they talk about the fact that were shortterm. They talk about that we want to lechlk up they talk about all this stuff and were still in wendys stock. Were still in wendys stock ten years later and what really troubles me is all the mud slinging that goes onto activists. They want to say that were green mailers. They want to say were the raiders of the 80s. Its not true. Werent you . I was never a raider. I did an unso lis itted of national can. That worked out pretty well and we never had a lawsuit about it. Management stayed. It remained the public company. The ceo of national can stayed on after we bought the company. And they put, by the way, interestingly, on the front page of they had a tinder offer going at the same time for a partial tinder offer and they said on the front page of their document that if anybody came in for 100 of stock all cash at a higher price, they would deal with them. You clearly lets talk about a proxy fight where you won. Heinz. You come in and you discover what . There were people that werent doing what they wanted, that you werent happy . You come in and say i thinker sol, these guys are good . At heinz, which was fascinating, i love the company. I love the brands. I didnt know management very well, and like most management the knee jerk reaction was to keep the activist out. But we had a prescription for health that didnt include breaking up the company, that didnt include making anything but Investment Grade just saying lets spend more money on marketing and lets give out less discounts to retailers. It worked. And im very proud of the fact that bill johnson who is the guy we had the proxy fight with is on our Advisory Board today. So far hes got to like the fact that they have the best organic growth and double digit earnings when a lot of the other companies wont. We must feel that maybe that model is not as bad as one thought initially. I didnt have a problem with the model. I had an overarching problem with the fact that i felt their expenses were too high and i think pepsi is doing a wonderful job. Theyve positioned themselves that they will meet or beat earnings every quarter from here on in which will make all shareholders happy. Nothing wrong with that. No. But i think they could probably do more. Fair enough. Youve got a couple things another way to go. You have a vehicle. Howard hughes its been a fabulous opportunity. You have platform specialty. We have them on mad money tonight. A Blank Check Company thats done well. Do you like the vehicle method . Do you like when you have a couple of shares and youre on the board . Which is the activist model that works or do you feel its multidisciplinary . We focus on very Large Companies that are undermanaged and where we think we can be helpful. Weve also built some companies. Howard hughes im proud of because this business didnt exist. We took 34 assets out of the company and spun them off to shareholders and recruited a board of directors and took a bunch of Development Assets the company had made no progress on in ten years and built a real business. Stock is up. And thats been a very good experience for us backing a very talented team with a minimal collection of assets. Weve done the same thing with platform. Its a company at this point. Its a 10 billion plus Specialty Chemical Company and usually we find the great business with weak management. Whats interesting if s if you look at our portfolio, almost everything we own is a platform company. We have a Pharmaceutical Company with a great operator. I commend bill for his plat forms. I think its a great way to do business. We did that in the 80s. You buy vehicles and you do what you have to do and thats how we created American National can, unerol chemical. Its a wonderful way to do things. Wed like to open that pentair will be Something Like that if they can roll up more businesses in their industry. They did a great job with tyco getting a lot of costs out. We think they can do it again. Theyre tax advantaged tax in ireland. I think bill has done a great job doing that and i think its a wonderful model thats time tested. Lets talk about the notion of constructive activism versus people dont feel they need to vote for what might be a good thing for shareholders. Due important, the stock showed that if you went with nelson it was going to get higher and the moment nelson lost, it lower. There are people who believed in you and knew that what your plan might have raised the stock price. How did they vote . You know whats interesting . We got 46 of the vote. And virtually every active manager, virtually pension plan with very rare exception, almost every neutral fund voted for us. They had to mathematically because when the three index funds and retail vote against you, youd better get a lot of votes from the parties and we did. My question to you is that if the election were held today, what do you think the results would be. Thats one of the reasons were sticking around. We want management and the board to do a good job. Wed rather be rich than right. So if the stock goes to 100 where we think it should be in a couple of years under our plan were thrilled whether were on the board or not. But if its not, then weve got to look at all our options again, and i question whether those no votes for us would be no votes again given what the performance have been. Do index funds have to be a brain . Ive had good experience generally with index funds. I dont know why they chose to vote against nelson in that case. They are clearly very interested in being other than a passive investor. I think theyre generally pretty thoughtful. We talked briefly about duponts situation. I think its a bit of an anomaly. I think that if i have to say the biggest bis make nelson made is he waited too long