Transcripts For CNBC Squawk Box 20240714

Probably one of the biggest in terms of Enterprise Companies going public during this ipo vintage. We awere here last year for the uber ipo slack today. Well bring you lots of news about it its a different type of listing, its a direct listing well talk about all of the dynamics around that for now, back to you we talked about that direct listing earlier this week. The pros and cons to it again . There are some pros and cons. You can only do it if you have a lot of cash on the Balance Sheet. This is a company that does. If youre trying to raise money, it doesnt work this way theres no additional money that gets raised the way uber was raising money and wework will be raising money. Well see if it becomes a model. Spotify did it successfully. Slack is doing it. If there works, theres a question on whether airbnb, the next ipo on the docket in the future, theres a question if they go the same route it has a huge implication for wall street, wall street fees and the ipo structure. Andrew, good to see you well check back in with you in a few minutes. Lets check the markets. As joe mentioned you will see the futures indicated sharply higher today dow futures indicated up by 241 points even after the gains we saw yesterday. S p futures up by 27 the nasdaq up by 97. Wall street sort of baking in this idea that rate cuts are coming next month. Look at treasury yields. If you check out whats happening with the tenyear. Wow. The yield is almost 1 2. 009. It was earlier this morning 1. 99 2. 009 . Well watch this closely today today could be the day that we see a one handle gold prices surging to the highest level in more than five years as all of this is playing out. Gold supis up 2. 8 overnight in asia, you can check out the markets there. You will see the nikkei was up by 0. 6 . Stocks were higher in china, too. Shanghai up by 2. 4 . Hang seng up by 1. 25 . Of course all of this happening as president xi is preparing to head to north korea. All of that has questions raised about the trade talks and maybe the idea there will be something that is accomplished at the gk 20, even fizz notif its not a final agreement. The dax sup by 1 . Stocks in italy up the ftse up 0. 4 oil prices jumped after a u. S. Official confirmed that a military drone was shot down by an Iranian Missile earlier iran claimed to down a spy drone in its airspace. A military official told nbc news that the global hawk surveillance drone was in International Airspace over the strait of hormuz when it was destroyed by an iranian surfacetoair missile tensions have been rising in the middle east after last weeks attacks on two tankers near the strait thats a choke point for oil supplies this is annoying and a nuisance, but its equipment ar iran knows its equipment. We know its equipment trump wants to end iraq, afghanistan, but not iran but there are calls for some response there are lots of responses that dont include a full blown conflict youre ratcheting things up you are theyre a nuisance theyre like a buzzing around and they are. This happened before, and there was not a massive response the last time this happened. The problem is when you see heightened tensions theres neertheres theres neither side wants to get into a fullblown escalation i forget how many casualties in somewars could be traced to iran if it was a plane with a pilot that would demand a different response but its a drone just a pain. A nuisance but theyre trying to instigate. Somebody has to accidentally do something to the point yeah. Its scary both sides are doing things, neither one of them wants to get into a fullblown its weird the equity markets, oil goes up, we maybe its demand. Then the stock market its a riskon trade or something its a crappy reason to go up. Its relief relief theres conflict in the middle east . Relief that oil wont continue to go down and have people worried also, dont think its a big factor in why stocks are up. Why do you think it is . Hold that thought. Well have that conversation the market had plenty of time yesterday to react to the fed. Sometimes traders are slow. We didnt get what we wanted today, were not thrilled yields immediately fell yesterda yesterday. Yep if Interest Rates are low, stocks and equities look like a better place to put your money lets get back to that big market story jay powells big decision. Steve liesman joins us with more on the reaction, not only the Immediate Reaction but a day later what we think about this Jerome Powell and the open Market Committee didnt give President Trump the rate cut he was clamoring for but they gave him a solid suggestion that one is on the way. Powell said growing uncertainty over trade and Global Growth prompted the fed to lose its policy of patience and adopt an easing bias. That is if the expected weakness occurs the baseline outlook remains favorable, the question is whether these uncertainties will continue to weigh on the outlook and thus call for additional Monetary Policy accommodation. Many fomc participants now see that the case for somewhat more accommodative policy has strengthened eight policy officials forecast one rate cut, and seven forecast two what happened to the probabilities . Well show you them in a different way right now. 100 baking in a july rate cut an 80 probability of two cuts or a second cut by september 61 chance of a third cut by december lets look at the calendar heres some key dates. That meeting of President Trump and xi in japan on june 28th and june 29th. Possibility of new china tariffs or not jewel 1st the jobs report on july 5th. The q2 gdp report on the 26th of july the fed meeting on july 31st this is important. He responded favorably, without committing, to a question about some Economic Research that shows when youre close to the zero lower bound or the zero rates its best to do more and sooner rather than less. Translation, a lot of talk about a 50 basis point cut possibly in july all right steve, thank you wow what a Wonderful World it would be, steve. Could you sing that, joe . It immediately came to mind what a Wonderful World it would be im going back to when you sang the wait. Dont go back there all our problems would be solved 50 basis points. I guess you could take one or the other. 50 bips now i dont like it im back the other way god how do i know that give me a heads up youre here, youre there. Im a bitcoin bull. He doesnt know what side hes taking until you speak. Have you seen whats happening on twitter im like a god someone sent in what i said to julia, theres no blockchain. Theres no blockchain, and millennials, theyre like holding me up. Theyre going now you love them i love them. Now you love millennials. Theyre so smart. Once again, youve come around to my point of view all these memes im thinking of c3po, when the ewoks think hes a god and hold him up. Theres peoples showing respect, youre right giving me thumbs up. I went back and looked and said wait a minute, was i right about this awesome. Am i right, santoli . If you put in a dollar if you like mumm millennials, thats great if you put in a dollar and your Digital Currency is worth a dollar thats not a cryptocurrency. All the Blockchain Transactions do create some inherent value. Making a Digital Currency thats based on a fee currency makes no sense. Thats what i said. You didnt say it good enough im the god now. I thought i was good with my gift card debit card purchase. That was good look at my twitter feed. Its insane. Oh, my goodness everything is about as long as youre on board with millennials you have to keep going. See, you like them. Pictures of robert red ford we have ian here. Lets talk bitcoin im trying to get some new demos for the show after chasing them away for years. That guy you saw the one what about pushing on a string. Is this good i think it helps with currency at the margin but this is mostly a Domestic Services country. I dont think they need to cut the timeline that steve showed, with the summit with xi, that will be a positive outcome they both need a deal. I dont think the tariffs will go up on july 1st. I think the employment report on july 5th will be fine. I think the Second Quarter gp will be fine if all that happens, do they cut . Theres an element of contingency there. The market says 100 not many thickings in life are 100 maybe they dont cut i dont think they need to i think the economy is fine. Provided trade doesnt blow up if trade blows up, absolutely they ease. Mike, what do you think i think by the july meeting if the yield curve is still upside down, two months of that, what the fed signals today would lead to a high likelihood they do cut but that doesnt mean they should or need to is that happening because traders will throw a temper tantrum or happening because relative over to other yield thats part of it thats been the case for a long time that waxed and waned i think that logic of when you only have 250 basis points to work with to zero, you might use the way the markets are structured, theyre saying its a soft landing it will cut a little bit the economy doesnt need rescuing stocks love a 2 world sure. Steve, whats up . I think all of the things ian said could break to the upside or be stronger than expected with perhaps with continued Inflationary Pressure to the down side the fed could still cut. I would have to think about what tolerance would be if you show remember that powell yesterday, when heinflate the word transittorory. I probably should alter my calendar and put a pci or pce date in there. I think thats important, too. It will be hard to have all that strong data and have the fed cut. Its a close call. Thats why the fed did not specifically cut esterday. I think the stock market is fine with the next that theyre going to try to be preemptive, accommodative and listen to the markets and what theyre saying whether it happens in july or not ian, the last thing powell said yesterday by the way if we do do something accommodative, it may be that we dont mess with the Balance Sheet as much maybe let some of that ride. Thats our way of easing policy. What would you think of that if youre going to do something, do the thing that has the most obvious signal. If you cut rates, its a clear, positive signal about what youre doing, why youre doing it maybe they dont just picking up on what steve said inflation, he didnt say transitory, and he didnt talk about how other measures inflation are going up thats gone up, the pce has gone down where is the focus it seems given they move their pce forecast down quite a bit for this year, maybe this idiosyncratic thing, maybe theyre having a rethink and thinking its permanent. I look at that dallas fed measure, annualized rate is 2. 4. Steve, i think that the market is saying you know, is saying i cant believe the fed is falling for this or the fed is going up like they should have last year. We have to get back to normal. Thats a clever comment they throw a big tantrum in december lets try this but theyll never buy it all of a sudden they go youre right, market, maybe well never raise again. Are you kidding me its a classic we can have our cake and eat it too. Ive been talking about this exact ta and trifecta that the markets are betting on the first thing is we get a trade deal or no worse outcomes on trade the bottom of the exacta is we get no rate cut, or we get the rate cut and no economic weakness thats like the market laughing all the way to the bank. Thats true if we think of the market as the actor here but individual invest and professional invests are extremely pessimistic and defensive. Thats why the market is going up when you have Corporate Bond yields back to where they were in 2018, the math says however we got here, stocks probably are not going to get you in trouble now. Its like youre trying to talk to your parents, were going, but no other parents are going. The concert will go to 3 00 a. M. Your parents say no way, then theres a crack, are you sure youll be home at 3 00 the kid is going you have to be kidding me it sounds like you had this conversation i have. Eventually i cant believe the market i dont think they can believe it. They talked the fed into this. Great to see you. When we come back, were counting down to our big interview of the morning slacks ceo Stewart Butterfield will join andrew ahead of the companys first public trade next, a rare interviewed with the ceo of wynn resorts o new trends in gaming and the new resort in boston before we head to break, a look at winners and losers in the dow. Johnson johnson is a baby company. But were also a cancer fighting, hiv controlling, joint replacing, and depression relieving company. From the day youre born we never stop taking care of you. Or trips to mars. 4. 95. Delivery drones or the latest phones. 4. 95. No matter what you trade, at fidelity its just 4. 95 per online u. S. Equity trade. No matter what you trade, at fidelity mno kidding. Rd. But moving your internet and tv . Thats easy. Easy . easy . Easy. Because now xfinity lets you transfer your Service Online in just about a minute with a few simple steps. Really . Really. That was easy. Yup. Plus, with twohour appointment windows, its all on your schedule. Awesome. Now all you have to do is move. That thing. [ sigh ] introducing an easier way to move with xfinity. Its just another way were working to make your life simple, easy, awesome. Go to xfinity. Com moving to get started. Its a busy morning from the market response to the fed to slacks debut. We have a rare interview with the ceo of wynn resorts. Hes with Contessa Brewer in massachusetts. Hi, joe this weekend the Encore Boston harbor opens its a 2 2. 6 billion investment by wynn resorts. The biggest construction project, private construction project in massachusetts history. Its been a rough road to get here because for one thing a year and a half ago you had steve wynn leave amid a serious metoo scandal. You had a board turnover you have a new executive team. Then that big investigation and the grilling of the Leadership Team including ceo matt mad madx the gaming license remains i tact congratulations on the property. Thank you good morning it looked like a year and a half ago you had one vision of how the future of this company would roll out then things happened along the way that you did not anticipate. Looking back at this past year and a half, would you do anything differently no, i dont think so. The one thing we did was reacted quickly. What we have now is the controversies behind us. The transition is complete we have the best Growth Profile in the gaming industry tell me about Encore Boston harbor i mentioned the numbers of how much you invested. When do you expect to get a return on that investment . How does this fit into your portfolio . Youre not a regional gaming company. This is the very first integrated resort, largescale integrated resort in a major metropolitan area in the United States boston is a tourist destination. Were excited because our International Customers are already talking about they want to come visit. They want to come to boston. The amount of International Credit we already have booked for our play here is xeexceedin expectations harry curtis has anticipated 8 return on invested capital in year one as much as 12 by year three. Do you think those numbers are on the properties always do take time to ramp up, like wynn palace when we opened in 2016. We do expect that. I think the return will be strong you bring up macau. Thats where you get the bulk of your revenues. Vip has been softening there were seeing a change in trends. Tell me about macau and how you plan to shore up revenue there in the Third Quarter of last year i was the first ceo in the business who said there could be softening in the vip segment we have seen that. However its stabilized. Wynn palace and wynn macau are well positioned to capitalize on any market position. When i first became ceo we launched a renovation project for our downtown property that will be completed this year. Thats a new renovation of the hotel. A brandnew casino 10,000 square feet of retail three new restaurants opening. Have you seen a slowdown in business because of those renovations . The vip slowdown began because of the various issues in china, slowdowns in china, but revenues have been stable. What about this u. S. Trade deal hanging in the balance. What is the impact on the economy that might then affect who is coming to macau to gamble and also about the cultural pressure on chinese customers that you might have. Again, theres a lot of speculation. Were watching it carefully. Our results over the last coupl of quarters have been stable the one thing we found is customers will slow down behavior when theres uncertainty in economies but it always comes back people love the business of fun. How important is a trade deal in your mind for the casino industry, for wynn resorts bottom line. I think its important for the Global Economy the two largest economies on the planet, the United States and china are codependent i think in the end a deal will happen we heard a lot of talks from sands and mgm about their plans for japan. Theyve been specific on who theyre working with what city they want. How they will get there. We heard very little from wynn whats your Development Plan weve been working on this for eight years. We like to lay more low profile. What i love about our strategy in japan, were known as the high quality operator. You already have a local partner . We have a consortium were working with in various cities are you targeting a city the way mgm is were looking at multiple cities were not just saying were going after one city its the same thing that happened in massachusetts. No one targeted the boston area because they thought it wouldnt happen we did we won it. Matt, thank you very much congratulations on the new property good luck to you thank you very much guys . Very good thank you. Coming up, a new Labor Department study found women are working longer hours and sleeping less. Weve got the details. Thats next. At the top of the hour our guest host will be billionaire investor i guess it would be worth it if he had a billion i would hate to be known by how much money i have. Youd hate that exactly i dont have to worry about that leon cooperman will talk about the fed decision, the economy, and the tax debate in era. Amic squawk box is coming right back time for the executive edge. A new study found women are busier and its coming at the expense of their social lives, leisure time and sleep the Labor Departments most havent study on how americans spend our time found that employed women work about seven hours and 20 minutes during a typical workday last year. Thats the highest level since the survey began in 2003 men worked around 7 hours and 54 minutes, down from 8 1 2 hours in 2017. Thats the lowest level for men since the great recession. Women face more time constraints outside the workplace, spending about 30 minutes more per day than men on household obligations. You think thats the case in your house oh, yeah. I think its way more than 30 minutes. I do a lot of stuff because im home early we have three dogs and a puppy and my son is home weve got you know. Yeah shes working. She does a lot. She does the household stuff. Is this what im talking about yeah working mothers spent about 30 minutes more per day caring for children than working fathers. Does that mean they spent more caring for the children than they do on the husband, working fathers, or more both. The increased work time for women came at the expense of time spent relaxing, exercising or sleeping. Tough. You dont need that. Mmhmm. All true when youre accomplishing things, working, its a good feeling. A satisfying feeling hang in there. You dont need sleep or relaxation you say this as you good home and watch tv im on the Fourth Season of game of thrones. When we come back red wedding i cant believe what happened. Crude oil prices jumping overnight after the u. S. Confirmed iran shot down a surveillance drone wti up by almost 3 . The ceo of slack will join us at 8 00 a. M. Eastern time ahead of the companys first trade in the Public Markets as we head to break, look at the equity futures which are up this morning. Dow futures up by 230 points s p bupy 26 s p bupy 26 nasdaq up by 97. Through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From using feedback to innovate. To introducing products faster. To managing website inventory. And network bandwidth. Thats the power of edgetoedge intelligence. Ion. Who used expedia to book the vacationental that led to the ride which took them to the place where they discovered that sometimes a little down time can lift you right up. Flights, hotels, cars, activities, vacation rentals. Expedia. Everything you need to go. Welcome back youre watching squawk box live from the Nasdaq Market site in times square. Great, when someone asks you if youre a god you say yes hence the ghost busters music and were referencing something earlier. Good morning time for a bitcoin price check back over 9,000. It was up yesterday. Down a bit today 9,200. Guys like tom lee not looking quite as crazy winklevoss, whatever they were worth three or four months ago, we were feeling bad for them because they were no longer billionaires one was tweeting this week a snarky in your face sort of were back they must still hold a lot of that cryptocurrency. For me, with twitter, i guess its a love hate thing if i say anything about Climate Change man, why do you have to turn it if im the slightest bit skeptical that the world is ending, you cannot believe the stuff that comes in. I ignore it. These people its just twitter its just twitter instead of all, i put it on verified then i Say Something about bitcoin, maybe it has inherent value from the way its mined. Unlike the facebook currency, which is worse than paper money. Why is that cryptocurrency i said that to julia, and it went viral, at least in my world. Now all these young people are saying, wow, old guy, youre awesome. Sending these little what is it called . A mamay . Meme . What are you laughing at over there . You all these memes with people tipping their hats its awesome. You like the millennials theyll start watching squawk box. The ratings in the key demoss, 19 to 33 what is that demo . I dont know. Do they have any money . Yes when we come back, the fed impact on the markets. Futures trading higher, sharply higher dow indicated up by 224 points yields slipping as the fed keeps rate cut hopes alive a full run down straight ahead at the top of the hour, well talk over the market moves with leon opmacoern. Youre watching squawk box on cnbc woman my reputation was trashed online. I felt completely helpless. My entire career and business were in jeopardy. I called reputation defender. They were able to restore my good name. If you are under attack, i recommend calling reputation defender. Vo theres more negativity online than ever. Reputation defender ensures that when people check you out, theyll find more of the truth, not trash. If you have search results that are wrong or unfair, visit reputationdefender. Com or call 18778668555. You mighyour joints. Ng for your heart. Or your digestion. So why wouldnt you take something for the most important part of you. Your brain. With an ingredient originally discovered in jellyfish, prevagen has been shown in Clinical Trials to improve shortterm memory. Prevagen. Healthier brain. Better life. Welcome back the fed concluded its policy meeting this week and decided not to cut rates but instead take a wait and see approach since the beginning of the year we judged our current policy stance was appropriate. We now emphasize that the committee will closely monitor the implications of incoming information for the Economic Outlook and will act as appropriate to sustain the expansion. Joining us now is Julian Emmanuel and steve sheveron. What do you think of the move this morning with the futures and with the yield on the tenyear its very clear that the markets got what they wanted from the fed but actually whats more important is the fed has gotten what it wanted from the markets. And by that i mean a weaker dollar obviously a higher stock market. But very importantly higher Inflation Expectations this is all about inflation. In fact, there was a lot of talk there is an expectation for july it really is one of these instances where words are speaking louder than actions steve, if the fed got what it wanted from the markets, is there going to be a cut in july or plight thmight they think we need to . Theres a high bar not to but they wanted to spref thpreserve optionality. They didnt want to cut before g20. They wanted to see another jobs number what they essentially did yesterday but cut all but the actual cut if all that happens, if the trade deal goes through, if they get everything they wanted, if theres not the trade threat, do they still need to cut next month . No, we dont think they need to cut next month. In fact, if you think about it, you know, obviously theres been issues of political independence recently and there is a perception that the market is driving the fed in that direction from our point of view, the fact that youre pricing in 100 probability of a cut in july, if we learned anything the last two years, is that when you expect something 100 , youre likely to be disappointed. If thats the case, what do you do with stocks you have to be constructive its hard for the market to sell if data is bad, you have the fed to protect you if we wake up in a couple months or a month from now and the fed is not cutting because we have a trade deal, Inflation Expectations picked up and the jobs numbers look great and they didnt have to cut, thats awesome. The market cheers that this is a time where you have to be constructive on the markets here they put a floor under this. Do you agree with that . We do the thing about it look, if we look at last nine months, theres been two weeks in the last nine months where investors have been fully invested that was near the market top in may. As the market turned down in may, the pessimism started building very rapidly. From where we are now, people are not optimistic that alone will carry the markets higher you were even waffling. Last time you were on i got you to waffle. We said our reach market of 3400 squeezed down totally squeezed. I saw some fear in your eyes youre only human. This market has been a lot about positioning. No more 3400 . I wanted 3400. We settle china, the fed is behind us. We wont talk about this for another month, but you have a budget battle, you have brexit all those go right, you can go there. Youre back to that now no whammies, no whammies. No whammies, but again people are not looking for whammies now. Vix at 13, you know, its not a straight shot. Youre right, if you run the table here, you have a meltup scenario thats within sight. Its possible. Gentlemen, thank you. Good to see both of you. Lets get back down to andrew at the federal hall hes standing by outside the New York Stock Exchange. Whats coming up we are getting ready for slacks public debut the big ipo today. Its not really an ipo, direct listing. Our interview with slacks ceo, Stewart Butterfield. Thats at 8 00 a. M after the break, we will talk about slacks Business Model and evaluation everything you need to know ahead of the first trade its all right after the break welcome back to squawk box. Slack to go public right here under the ticker work. The Reference Price, this is not an ipo, its a direct listing, the Company Valued north of 15 billion. The Technology Used in the workplace to help employees communicate and collaborate. Think of it as an alternative to email and like whatsapp or text messaging inside a company i got a chance to use this tool. I use it all the time. This time i did it directly with stewart world Office Adjudication may never be the same. Take a look. [ music playing [ music playing hey. Hey, first of all, how often do you zoom in with people through slack like this. A lot we are sending documents back and forth, asking questions, having it opened all the time, the individual first approach to indication, which are channels or a Team Approach the difference is everyone has their own view over here, everyone sees something very different than everyone else sees here, everyone looks at the same thing. The really important thing is you can see across the organization, you can see what your colleagues are doing. The amount of information thats accessible is profoundly increased. You dont have to read along, you can challenge it show many e on the left side these are the channels, because people can go and look the friction if communications is reduced by orders of magnitude. How much you say microsoft clearly wants to be in this space. They are in this space directly you . Know in its own way, people use whatsapp, for example. I think the advantages for slack, the reason we kept going despite a lot of possibilities for people have been one, the kind of transparency with channels people say more and more money every year on software and in the long run, the measure of our success will be the value we have for customers there is no shortcuts. Their my custom emoji right there. You can see more of that conversation over slack with Stuart Butterfield we will be here live and talk about the ipo, itself, and the financials behind it at 8 00 a. M we want to welcome one of two panelists covering this. Joining us is demetri , he is overweight which means he likes this stock the 37, the reference listing is 26 help us understand just like this company as much as you do, we should say it still loses money and another issue that is at love people are concerned or at least looking at is the issue that revenue has slowed down yes thanks for having me i think in terms of the bigger possibility and why we are bull sish that we see a bigger possibility for messaging to turn viral in the tech sector. A bit of what we saw consumer with, everybody is using Software Like whatsapp if you look at slack, they have already over the last sort of five years grown to 10 million users. We expect that to eventually grow to 50 million users and that will be a fraction of the market we see a big term in reef news out of the user base when if you look at all the messaging applications like in china, they have done very well. We think that, basically, slack has got an Incredible Opportunity to be a sort of central hub. We get access to all those applications right its a question in terms of dimitri, the issue, though, i think they have a loyal audience, individuals inside these Companies Like to use it my question is when do the companies become profitable under your models . Yes, under our modem we expect the company to turn positive in 2021, in just over a year, ipo for uber, for instance, has been burning a lot of cash. If you look at slack, actually in terms of cash burn its relatively limited about 100 million per year which is the current guidance of this year. Its growing to a 10 million user base. Actually thanks, to the premium Business Model, which has been very effective in terms of penetrating the markets. Reporter what do you think of the Competitive Landscape right now . Obviously, microsoft is in this space. We talked about facebook being in this space. We have people like drop box trying to get into this space. Yeah. No, i think its a landscape to market it will change a lot over the coming years and there will be more newcomers you mentioned the drop box if you change from away from the storage Business Model to collaboration, i think the main frame and competition is microsoft. They have the Microsoft Teams, so the messaging is included in Microsoft Office so you are only using Microsoft Office application, you are better off using teams, but it will be like there will be like a switzerland in the center and they can basically get Microsoft Teams its fought integrated with salesforce, for instance thats the difference of slack being integrated with a lot more broader implications take a 30,000 view of the idea of a listing right now. Because one of the things i think folks are looking at is this listing model spotify did it successfully. Slack is the next one on the lest people say if this works, we may see more of them, airbnb perhaps is the next big one, a company that has cash on its Balance Sheets does it make you nervous do you like this strategy of a direct listing relative to a classic ipo . Yes i mean, obviously, when you do that, you dont raise any money. If you are a Business Model that needs to make cash that doesnt work for you businesses like slack to that dont burnaby lot of cash, free cash posting the next set of 12 monthss to 24 months, it does make a lot of months you have a lot of costs you dont have to pay to the wrundz underwriters for the company, it does make sense. Okay. Dimitri, we appreciate your time this morning and 94 perspective. Dont forget the big interview this morning we will talk with the ceo of slack at 8 00 a. M. Eastern time. Coming up, marks climbing towards new highs. We will talk it over with billionaire guest host leon cooperman. He will be here after the egg practic after the break he will be out here, though free access to every platform. Yeah, that too. I dont want any trade minimums. Yeah, i totally agree, they dont have any of those. I want to know what im paying upfront. Yes, absolutely. Do you just say yes to everything . Hm. Well i say no to kale. Mm. Yeah, they say if you blanch it its better, but that seems like a lot of work. No hidden fees. No platform fees. No trade minimums. And yes, its all at one low price. Td ameritrade. Slacking on squawk box. Im going to need you to go ahead and come in tomorrow so if you could be here around 9 00, that would be great. Okay. The workplace platform set to go public after pricing its direct listing last night. Slack ceo Stewart Butterfield joins us ahead of the first trade. Stock futures soaring. Legendary investor and stock macer leon cooperman joins us with his latest calls and names on his investment radar. Plus, we will speak with merck ceo, the second hour of squawk box begins right now. [ music playing it feels so right < musical notes. Announcer live from the beating heart of business, new york this is squawk box. Good morning, welcome back to squawk box on cnbc im joe kernon along with andrew ross sorkin. Becky is getting ready for slack. We have leon cooperman of omega. U. S. Futures are up over 200 points after a series of pretty good sessions in june. You would have to say it as may has become sort of a distant memory we must be back to almost even after what was a pretty crappy month. We were down almost 10 . We have new highs across the board. An extra 200 points, are you probably within spiting distance we were only off by 1 yesterday. I think the stockmarket and traders are playing a big joke on the fed its like i was saying earlier they cant believe theyve talked the feds into easing. We never thought, someone came up with hey, lets try and get the fed to ease, its ridiculous that they should ease, lets sell off, you know, throw a tantrum. Somebody came around and are actually going to do it. I dont think the stockmarket can believe these guys will do it its 100 you have stimulative fiscal policy, recent retail sales are very strong, Interest Rates were already very low riftyear high. Its only inflation thats the only thing that they can maybe it isnt. Maybe that is you think the Interest Rates will incorporate inflation they know something i dont know but if i wanted to take the other side, id say, look, we want to do 3to4 if we could it would be so great maybe we cant why not keep the pedal to the metal if there is inflation . Get on board with what the all the deregulation, the tax reform get on the board with that keep Interest Rates low maybe thats the post theyre taking, the trend growth in the economy is only 2 . Thats what we hear if productivity increase because of innovation and inflation stays low. Two years ago, i was told by an economist i was way too high. Now with the economy doing a little better, theyre saying product iviivity will be highera 1. 5 tdp fooled people maybe its a sugar high. Thats what people say. I would say we all have to understand were in abnormal times today and if you dont understand that, you dont understand whats going on in the world. 12 trillion plus of sovereign debt carries a negative. Think about it ask yourself a question. If you lend money to germany, switzerland, japan for ten years, they give you back less than you leant them. Switzerland raised money 70 basis points negatively turned for fun treasury bills a lot of people retired they have a million dollars, now theyre getting 20 grand a year, they used to get 80 grand. Maybe its a savings club or something. I think its incumbent on guys like me that run money, thankfully, i dont run everybodys money, i run my own. Because you suck . No, i know i swappeding in for lifestyle. I have no revenue. Im the guy in the godfather, at the airport before he was shot, im a retired living on a pension. They thought he retired. I made mine the Old Fashioned way. In the stockmarket and meyer lanski five or ten every morning, no, i got to say, my theme for two years has been the following. We live in abnormal times. Okay the notion, two years ago, somebody moves into a home in denmark, they got a check every month for living in the home there was a negative Interest Rate in the home mortgage. Its note realistic. Im trying to figure out what normal s. This is my take. It leads into the mark whats normal . I this i the productivity growth about 1. 5 trend labor force traend trend, a half a percent. That determines real growth about 2 real. Inflation is 4 nominal. I this it can be 3 not 2 well ultimately get to 4, were around 26789 it may take two or three years with global Interest Rates to get there i think the market should pour 17 times if are you a bull you say 17 times is low growth intrainteret rates, which it is you talk about the artificiality of the earnsings the market is 29. 50. Its a fair evaluation were not over valued. I think the comment i love and i wish i coined it i didnt, sjorn templeton developed the phrase, bull marks are a blood, they grow on skrept michigan and die in euphoria i think its a significant rise in the near term were into euphoria were not into euphoria now. What is significant i say if the market is fairly valued say 2900 typical 10 or 15 overvalued id say 3100 in the near term would be fogging the door of euphoria what do you need to correct that and mover higher again in time. Do you need a bear market or a correction a pare market does not materialize at Immaculate Conception it comes out for a reason. You have a market that smells an oncoming recession it doesnt look like that now. The fed has been too easy. You are talking about the last stages, thats what when you talk about that part, so im wondering would it be a positive or a refresher after that . The economic fundamental also. You are not saying its over . I use the worder h shitsu. The tenyear government now is slightly under 2 or call it 2 and the multiple on the market is 17. The market is not expensive. If there is a bubble out there, the bubble is fixed income i dont understand the focus on easing and gold is starting to till, you know, gold is up 3 this morning i think that i question the appropriateness of easing given the defense of the underlying economy. I think were pulling forward demand the president is very intent in having everything good now and were pulling forward demand so you have stimulative fiscal policy, stimulative Monetary Policy and my guess is you know its free money. If its free money, the marks will do its a long time. And you are pulling demand forward and the deficit is going up now in the face of a decent economy. The deficit should be going down with full employment so its unusual circumstances. And i, after there is a big move from here. I would say its a closeout move its knocking on the door of euphoria you have to conduct your affairs accordingly. The only argument id make with any of that is people have been saying this for a long time, this cant continue for forever. What is the thing that actually says, okay were going to have to come back to some form of formal of do we bring it back to it . You will get there when people least expect it dont forgive, the mark was 29 point 50 in january of 2019. Earnings have gone up in the period and the markets done nothing. There are still a lot of haters of this mark, too, even though you see if we can get to euphoria, a lot is still met with skechtcism. Some of the indicators people use, sentiment indicate rors are bullish . Part of the sentiment is a theory on my part, the money magazine business is threatened by the tremendous growth of passive management, which brings huge downward pressure on fees, so theyre basic business, their livelihood is being threatened i went to a seminar a couple years ago, focused on closing the gap. It all had to do with interest disparity, which interested me there was a futurist from mckenzie that spoke, 45, his thought was the biggest problem the economy is facing in the next decade is 45 of all jobs will be replaced by automation there was no place for displaced workers. I went home and thought about it and said thats passive management for my industry because passive turnover is 5 active turnover, 25 a year. Big reductions in the pool of commissions in the brokerage industry you have to resize the revenue you can measure public sentiment, too, if you talk to the average person, they dont seem to think that the well, theyre still wearing the scars of 2008. Maybe thats good which is good by the end of the day, im a numbers person and i think that the market is in a fair evaluation like i said go back too templeton. Maybe if we have a big move from here, okay, i think its the closeout move in my opinion. What if you get a great i sound like him, what if you get a great china deal and what if some of this stuff pays off, maybe were not fair value, were below. And the fed doesnt cut weretaching now again, joe, you may have a different view of this i think the dialogue on tariffs is not constructive. I understand what were trying to do with china we were doing it with canada, with mexico. Not constructive it scared the business community. There is economic uncertainty. It can come at any time. Economic slowdown is tied to a questionable policy that questionable policy is greeted by questionable policy by the fed. Why is the fed easing when retail sales are strong, employment is at a record high, stockmarket is at a record high and we have a fiscal stimulus, the fiscal policy stimulus it doesnt say Interest Rates are already low. If you are a saver, you are not getting a real return on savings. You have the fear of japan and 20 years of deflation or disinflation its not just the but the japanese market has not been a good place to be. No. So you know do you fear inflation at all . No, i think in a democracy i fear inflation. Were old school when i hear inflation worries i immediately think something thats too high. Inflation worries now means too low, which is bizarre. I would sigh a democracy where everybody wants free stuff, i would think that deflation is not a high probability outcome. Though its very clear from whats going on, i was personally very surprised how abruptly the economy slowed in the Fourth Quarter last year that tells me there is too much debt in the system. And we have to see it go through. The one thing that is very clear to me. And i could be wrong, Interest Rates belong at these levels you are not making 15 in the stockmarket. There is a capital mark line there is a relationship to what you earn in the equity markets so bonds will give you 2 . Fed findz will give you 2 maybe you make 4 or 5 in the stockmarket. Part of the rise this year you make up for what shouldnt have happened in the Fourth Quarter last year. To have a selloff equivalent to what happened in 1929 when there was nothing going on in the economy, its crazy and has a lot to do with market structure. There is no stabilizing forces in the market anymore. I came to the industry 51 years ago. They trade stock for 25 to 50 centers a share. Now in the commissions are driven near zero have you the vocal rule. So the broke raj community doesnt stabilize markets, number two, its off the New York Stock Exchange. So a specialist system is not there to stabilize, for some unexplained reason we eliminate the uptick rule in 2007 and basically this gave rise to all the algorithmic traders out in the market, which buys strength and sells weakness so where is the destabilizing force . Get ready to have your seatbelts fastened and expect the volatility right now we have upside volatility it has to run its course when i look at gold and what i think is inappropriate Monetary Policy i may be missing something maybe they know more than i know, why are they talking up cutting when everything is at a record high . Still own that Mattress Company . Didnt you own temper pedic . You are going back. I do that i bought a casper you need to get out of that, have you seen this casper thing . It comes in a matchbox, you you open it. The average life of a mattress is 20 years. You got out i made money. That was how long ago oh, five centuries. King supermarket you dont go to there, you go to kings. If you see me there, are you there. Thats true oh. We got to go to andrew, i guess. How are we going to do that . I dont know. Reporter we can do it right here joe, i got at if you mattress, a chatham or something, i dont know what its called, purple is the new casper, a bed called purple check it out separately, talking about purple we have purple behind us, coming out, slack getting ready to trade this morning right here at the New York Stock Exchange. We will talk ipos, winners and more right after the break you dont want to miss this at the top of the hour at 8 00 a. M. , slack ceo Stewart Butterfield, he will be our special guest. We wiltal lk to him about his big listing today. You are watching squawk on cnbc you should be mad your neighbor always wants to hang out. And you should be mad your smart fridge is unnecessarily complicated. But youre not mad, because you have e trade which isnt complicated. Their tools make trading quicker and simpler. So you can take on the markets with confidence. Dont get mad. Get e trade and start trading today. Welcome back Steve Liesman joins us with more we watched equity marks look like they will open another 224 points right now the yield is hovering around 2 for the ten year. Reporter it makes you think they got something they didnt expect a bold reaction signals that they were surprised how dovish the new feds policy, were not cutting now, we will probably do it soon. Lets look at when doves fly, eight fed officials after one cut. Several forecasting two. Fed chair Jerome Powell says the runoff could end earlier, maybe justified he hit at a 50 basis cut. That competent came after a reporter asked him about research when the fed is close to zero, its best to act sooner and more forcefully. The research you refer to, essentially, notes that in a world where you are closer to the effective lower bound, its why research kind of shows this, its wise to react, for example, to prevent a weakening if turning into a prolonged weakening. In other words, sort of an ounce of prevention is worth a pound of cure. Is it 50 basis points Morgan Stanley saying the base point is coming. Downside, we dragged the fed away from neutral. The fomc will want to take a future stance. One rate cut in july, 80 chance the next cut comes in september. Joe. All right steve, thank you coming up, squawk news maker leon cooperman names you need to watch, mercks Steve Frazier will talk drug pricing, the state of big pharma, much more well be right back. Slime in my motorcycle. No. Thats motorcycle insurance. Slime everywhere . Ughhh nooo, theres no insurance for that. Do they help when i have bills Health Insurance doesnt cover . Yeah thats it aflac gross guys. Get help with expenses Health Insurance doesnt cover. Get to know us at aflac. Com welcome back to squawk box. We are like just outside the New York Stock Exchange where slack is set to make its public day beautiful. Leslie joins us with what investors can expect when slack starts trading good morning good morning, andrew. The markets have been in the Software Industry, luckily for slack it operates in that world, providing software to companies that can be used as an email replacement for internal communication, like slack, zoom Video Communications and pageer duty sells software to big companies, their stocks are up 188 and 125 since tear respective april initial Public Offering that may bring more investors into slack looking to replicate those steep returns. But zoom and pager do use the conventional initial Public Offering slack is doing a select listing, which removes the underwriters from the process, slack set a Reference Price of 26 per share, it did not sell stock at that price and may open at a completely different price altogether they registered 118 million shares its uncertain how many will sell today in the listing and at what price that could create near term volatility in the debut. When you think about this, so i understand about it, the, there is a lick quiddity event for the investors, more than anything else . Thats all it is. Should that be considered a good sign or a bad sign . I think its nicer. Because in the futures, slack can come out and raise more money and capital that it can then invest back into the business they are saving a lot of money not hiring under writer and payingtheretomy do the whole ipo process, change the modem. That seth said, if you are an investor, you should be prepared for some volatility, at least in the near term, volume gets sucked out i want lo bring in leon cooperman, chairman and ceo of omega advisers hey, lee good morning. When you look at this current prop this vintage if you will of ipos that have been out there, the irishs and lyfts and zoom ended up 70 higher. Have you been buying into any of these ipos we try to get them on a deal, some we hold, mostly we dont. I happen to say demand is what creates supply, there is demand for the type of paper. You feed the ducks when theyre quacking and you know, i would say these Companies Generally dont have earnings, they have at most ebitda, ebitda to me means we have no earnings, its not a place i spend a lot of time trafficking in you know i try to make money on things that have a multiple of their earnings rather than buying you know a pie in the sky. You know i had dinner the other night with the gentleman that runs the vision fund and its a 80 billion fund in the aggregates theyve invested have no reported earnings its not the world i live n. We are going through a cycle so beyond need, i dont know, it is 8 or 9 billion market cap with no earnings and a huge multiple of revenues and its probably not a business that is isolated from competition there is no moat around the business, we seen a number of food businesses getting into the vegetable itself, plant stuff, whatever it is, i would say to me the ipo market is a little bit of a bubble. But you got to do it name by name but i would say, evidence of the late cycle phenomena late cycle . A little bit of a bubble . A lot of a bit of a 1999 kind of bubble, which one . I dont think you can generalize, you dont generalize in 19 nierngs cisco is 100 times earnings, everyone is nervous about google, its a different world. The evaluations are different. They are not unreasonable in the aggregate. You have to look at each company one at a time. I think paying 8 or 9 billion, being they generate with earnings and revenues, no earnings, not a lot of revenues, seems to me to be extreme. We have to be very careful you got to know what you own do you look at this phenomenon of the Companies Staying Private and you look at slack or spotify to do a listing because theyve raised so much capital in the private markets, some from companies and investors that historically were public mark investors and what that does to the appetite and the demand issue i really have not spent enough time to have them educated dependent all i know is there is a lot of money around, zero Interest Rates, low Interest Rates lead to pushing people out in the risk curve this is whats happened over the last decade. Everybody everybody is moving on the risk curve the guy or gal that bought tea bills says i wont get around, i will buy the t bond buyers i will take an industrial credit risk and buy industrial bonds. I cant get, by 4 , so i will buy high yield the high yield buyer basically says i will buy collateralized Loan Obligations and the data player says i will put 25 of my fund in equities, they look more attractive than fixed income everybody looks attractive on the risk curve one of these days they will come in on the risk curve i would say if we have a few more days like yesterday, my guess is you will probably be in that euphoria, you have to be pulling back i think you know the conditions dont seem at the moment suggestive of any big decline and like i said, free money leads to lots of action. You know, the market is not expensive if Interest Rates stay here and the xi doesnt enter recession. I think the fed is acting like theyre worried about some kind of recession if europe, basically theyre relying strictly on Monetary Policy what they should be doing is start to have fiscal policy, germany wont let them okay its crazy, you should not be fighting this slow down strictly through Monetary Policy. The u. S. Is doing better than the rest of the world. We have stimulative Monetary Policy europe has stimulative Monetary Policy not stimulative fiscal policy. If thats your position, you moved up another 5 from here, would you get out of stocks . I would be reducing my exposure. You are not right now right now im enjoying it im about 75 invested 25 i have a oneyear paper i invest at 3 im happy with that kind of picks cure i think its very hard if you are a longterm investor to initiate new positions now ten years into a bull mark evaluation levels that we have because were not traders. We tend to be investors. And its hard to be a new investor in something at the current valuation levels. Lee is our guest host we will have so much more with him. When we come back, merck ceo ken frazier is our special guest right now, though, lets take a look at u. S. Equity futures. Up sharply, the dow indicates its up another 230 points s p opens up 27 points, the nasdaq opposite by 101 points. Squawk box will be right back. So to come on squawk box this morning, a highly anticipated slack is ready to make its debut on wall street. Well hear from the ceo Stewart Butterfield in about 30 minutes. First an exclusive interview with the ceo of merck. We are all over the big markets this morning, legendary investor leon coern,opma and the names he likes right now well hear from him in a few minutes. Squawk box will be right back. Welcome back to squawk box, futures right now are close to the highs of the session up 237 points on the dow. The fax indicated up over 100 and the s p indicated up by 28 merck is holding its investor day in new york today. Meg terrell joins us as a special guest. Hi, mech. Hi, joe the ceo ken frazier is our special guest. Its great to be here people will be looking to you for answers about where your future growth is coming from of course your drug in cancer has been a jug you are kn jug you. Where do you go besides Keytruda Keytruda is a special drug. We have great opportunities to go beyond our vaccines, Animal Health specialty business. We have those opportunities to drive revenue growth, margin expansion. We are also here to remind people we have the Balance Sheet strength to do whatever deals to augment our pipeline most importantly is to show off the great venture talent we have in this company. In the journal yesterday there was a story saying you are looking for small acquisition along the things we seen you do already around a billion dollars or less. What can we expect in terms of future na . We think the thing is to focus on external science and look for value creating deals. For us the sweet spot has been more on the early side, where our inhouse biological and scientific expertise can be brought to bear. What therapeutic areas are you interested in . You have a huge tests in cancer. If you go back six years, merck would not be a Cancer Company at all we think its a mistake to try to decide up front what are the right therapeutic categories we try to lead the science lead us. You have a focus on antibiotics when a lot of companies have left the space s. That a good reason for you to be in, for anyone to be in, considering so few companiesar in it. Its an important thing for Public Health. 700 people will be exposed to a resistant bacteria this year 10 Million People in 2050 will die from antimicrobial resistance, the Society Needs us in that space. I this i we need tore different market incentives so more companies will join this space right now, its not a Good Business proposition but its an important Public Health proposition. Do you think you can find a way to make it profitable . We try to work with policy makers to ensure they understand the need for example to de couple the reimbursement from the volume if you discover these kind of new antibiotics. If some cases they want to be held in reserve for people that failed, the ones that have been overused. Le yon cooperman has a questo for you. What do you think the chances are of medicare for all passing . And can the country afford it . Does it make sense and then, of course, the president s dialogue regarding drug prices, where do you come out on that . Well, first of all, thank you for the question, mr. Cooperman. I have to say that i think with respect to medicare for all, the thing they worry about is that innovation largely comes from the private market medicare has an Important Role to play. But i think to your point it will be hard for to us afford the medicare for all as its now being positive as it relates to drug pricing, we want to work with the president. We want to work with people on both sides of the aisle. Its really important for patients to be able to afford medicines. I think the biggest problem right now for patients is the out of pocket expense, which is largely driven by the fact that while we pay significant rebates to ensurers and pbms, those dont get passed onto the customer at the pharmacy counter. My best friend said the best way to deal with the problem is to pay copays, they have nothing to do. The Senior Citizens and so they want some place to go, some activity and if you raise the copays, it will cut the visits by quite a bit. Well, ironically, copays are actually larger for drug than they are for the rest of the medical treatment. For the average person, theyre 3 for doctors visits. But theyre 13 of the list price for drugs. So it actually discourages people from filling prescriptions, because they dont fill prescriptions, they present later with bicker Health Problems interesting qualifications for doing a great job for the company. Thank you very much, sir. Thinking about medicare for all and the political questions, we got the first democratic debates coming up next week. Drug pricing has been a huge top frisk both sides of the aisle. Your industry is getting hammered what are you expecting from the 2020 election season in that front in. I dont think industry a crystal ball i cant tell you what the outcome will be. I will tell you mercks position we have always taken supportive policies of what patients need we will work with people on both sides of the aisle no matter what our democracy produces in this next election cycle. You have been ceo since 2011, there are some questions about succession planning. What is your plan about who will take over after you . My plan to to continue to focus on mercks ability to bring science to bear, translate it into things that make a difference for patients. My spire team is completely focused on that. Bloomberg reported you are looking at primarily internal candidates is that right . Ki say our board has a process. This is not my decision. Its the boards decision. I think the good thing is we have a deep bench of internal talent that can fill not only my position but all the important positions in merck. One of the questions that came up recently, there was a story in the Washington Post a few days ago about a small drug for bladder cancer, bcg. Old drugs, merck is the only supplier and there is a shortage you told me a couple weeks ago, you wouldnt raise the price because it wouldnt be the responsible thing to do. By raising the price, could you manufacture more of that and supply the whole market . I think this is an exemparticulexemplar when drug get too low, particularly generic drugs, you dont have the market incentive for people to put capital up to build facilities for the additional amounts of the bcg drug for merck, the question is how can we maximize given the other two companies have dropped out of the market. The moral of the story is sometimes they arent available because the prices are too low not because the prices are too high. Interesting conundrum, thank you. Thank you to my friends at the squawk box studio. Becky, back over to you. Thank you very much, mech thank you, ken. When we come back, a chorus of democratic hopefuls calling for higher taxes on the rich we will speak to guest host and megaadviser and ceo leon cooperman. Coming up at the top of the hour,Stewart Butterfield will talk about its direct listing. Quk xilni tayod sawbo wl be right back. In my view, there will never be any real change in this country unless there is a Political Revolution and that means that millions of people have got to stand up and fight and take on the corporate interests, the billionaire class, the 1 and tell them that in this country, our economy and our government belong to all of us, not just wealthy Campaign Contributors the attack on wealth has stirred heated debate on wall street in cnbcs millionaire survey, we found that 49 of respondents support a 70 ing in tax on people earning an annual 50 million or more. Leon cooperman is here to talk about taxes and much more. I know you spent a lot of time thinking about and the public iscourse has really gotten a little ugly when it comes to these things what do you thinks happening . What is your take . You said, yourself, you are happy to pay 50 of what you make in taxes. Well, i think the result is still the result ofing in disparity. Ing in disparity has gotten worse in the last decade, excuse me, a lot due to government policy policy in 2008, mr. Bernaiche saw the xi going down the toilet he said the best way to get the xi up is get wealth up the best way is to get the stockmarket up wealth leads to consumption, the vast stocks are owned by 20 of the people and they then got that wind flow back in the last ten years fuad justed your return on savings from inflation in taxes you got no return on your money. Now they want a second bite at the apple, a wealth tax, a higher marginal tax rate, et cetera in my opinion, what we have to do as a nation is coalesce around the question, what should the tax be on wealthy people, the government should size its activities to that revenue yield. Okay you know, these politicians make it sound like wealthy people dont pay taxes. You know you have a 37 federal tax rate if you live in new jersey, i think the stateing in tax is 10 . In new york, the state is 8. 8. The city is 3. 4. Connect 7 , medicare tax 1. 45 the obama healthcare tax on investment earnings 3. 8 on wages another 0. 9 you quote the estate tax krein you week is over 11. 2 million for single and its a 45 . The facts dont lie 10 pay 90 . 10 pay more than the 90 , the top ten. I think philosophically i dont mind working six months for the government and six months for myself. Its not a selfish comment im not bragging, im not complaining. I took the give me with buffet i gave my kids their inheritance a number of years ago and i believe in my brothers keeper i believe in an aggressiveing in structure. I think its repressive when you start taxing people beyond 50 . You are talking the federal government and the State Government how do you go at the time two of them to get their house in order together its like two different you have to do it in th ballot box you can get rid of salt and then call State Governments. You are going to. Which is what they did. Inappropriate action. When i listen to not going to attack him, i know him together, goldman sachs, phil purchase fi. He says millionaires like me should pay our fair share. Your tax rate in new jersey is 53, 54 . What is a fair share what they said is the top 10 pay more than the bottom 90. The top 10 have about the same amount of theing in that that i understand. How do they get there . Im up at 5 00 every day go to work for 45 years. I went to school when other people were having fun, to get an education do you think the fed had to do, see, in my, this is where i get feedback that people dont like on the left i dont think it was just the financial crisis that caused the fed to have to stay at zero for so long. I think obamas policies were so antigrowth and redistribution and obamacare that its stuck the fed at zero. Here are you on the front end saying you will try to help the have a nots. You end up hurting them. People who had assets, they were marked up as the feds stayed at zero all the talk of helping people was counterproductive. Ing in equality got worse in the obama years. No question, im not knocking the before president obama you did back then you wrote letters to him the letter i wrote to be clear was criticizing him for depreciateing the american dream. Thats what i just said. You can make a lot about me. There are a lot of ways he did that the guy love, hes a frequent guest on your show, i love him i admire him great probably the most admired guy in my 51 years is ken langon. I share a view similar to him, his dad was a plummer in long island my dad was a plummer in the south bronx. He started with nothing, hes made id a lot of money and has done great things, medical centers, unbelievable. Thats capitalism. You know, and so what obama failed to recognize is he was telling the 99 is being screwed by the 1 , whereas he should be telling the 99 , with a lot of luck and hard work, you can become a part of the 1 . The aspiration. And that was my criticism. And i think whats happened now, the economy has been taken off by the president s pro business policies, pro growth policy, thats happening. Now were down to people say growth doesnt work. People are unhappy and results ofing in disparity well see in november. One of the risks for the market is if there is a movement to the left you know, Bernie Sanders in my opinion doesnt have a clue. One of the issues, though, you talked about a 50 tax if you look at the distribution among the wealthiest in america, part of the issue isnt just what the fed did but also that clearly Capital Gains, for example, is taxed at a much lower rate would you be in favor of raising the Capital Gains rate would you be in favor of getting rid of the 1031ic clang for the world of real estateinvestors. There are lots of different incentives in the system the way our estate tax is set up in this country also creates for some perverse incentives. When you talk about the 50 number, thats true fought for the wealthiest americans, its true for a group right under the 1 that are paying out the people getting salaries, everybody else at the truly top actually is paying a little bit less than that im not in favor of raising taxes, generally Capital Gains tacks, Capital Gains if result from inflation over many, many years. It is not necessarily real gains. So you are asking a technical question im stating as a generalization. Its all money you have paid taxes on when you earned it. We have so many Different Levels of taxation that you know i dont think the wealthy, there are loopholes that you can deal with okay thats very technical stuff, which im not prepared to talk about now. But there is a generalization the government has to start sizing your to a revenue yield and not look to the wealthy people to just close the gap and thats the view. I mean, what percentage of ones income i think if you sit down with Bernie Sanders, he is probably at the end of the day talking 90 model tax rate all i know, i said this on this program before, the cuban people are highly disastrous, good people they are prospering in miami go to cuba, the cubans basically get a quart ore after chicken once a month for the protein rationing. It takes two hours from the suburbs to downtown havana they have no organized transportation system. Its 3. 85 per minute for a cell phone. They have no newspaper, no satellite service. That is socialism or communism versus capitalism. We have the best xi in the world. Capitalism works we have to come together at a nation and decide what could u should the maximum rate be for people im giving away all my money i think its counterproductive to look at the wealthy people across the board i cant answer your questions, Capital Gains, exchanges, all in all i am not in favor of raising taxes, i think taxes are high enough i have so much more, please come back. Thank you for having me. Andrewments we got a lot more coming up right here from the Stock Exchange at the top of the hour slack ceo Stewart Butterfield will join us for a first to on cnbc interview to discuss another big ursawho of quk box is coming up call the Insurance Company its them, calling us. Its going to be a week before they can get through on these roads shhh, sorry, i didnt catch that. I said ask how soon they can be here right now . Whats now . He says theyre surveying our property now theyre probably at the wrong house i dont see any hovering his name is hovering . Look up . By automating claims with Machine Learning and analytics, cognizant is helping Insurance Companies advance how they serve even hard to reach customers. Cool the slacker in chief, a messaging service slack set to make its highly anticipated debut today. Markets set to surge futures firmly in the green on hopes of a coming rate cut from the Federal Reserve. Speaking of the feds, wall street begins the guessing game, former ecb president jeanclaude will join us we will talk about mario draghi has the final hour of squawk box begins right now. Announcer live from the most powerful city in the world, new york this is squawk box. Good morning, everybody. Welcome back to squawk box here on cnbc we are live from the Nasdaq Markets in times square im becky quick Andrew Sorkin is downtown his interview with slack ceo Stewart Butterfield is coming up even after the big gains we saw yesterday, the dow futures are up oonts 241 points. The s p is up 29 points. The nasdaq is up 105 points. Treasury yields have been under extreme pressure the ten year is yielding below 2 30 years at 2. 514. Lets get right to the big interview of the hour of the day, andrew is standing by with the ceo of the Software Company slack, which is set as to make its wall street debut today. Andrew, take it away reporter hey, joe, joining me is slacks cofounder Stewart Butterfield. We are happy to have you on a direct listing day, which is a different thing. So just explain what is actually happening so people understand all right ill do the briefly. In a traditional ipo have you under writers that commit to buy the shares they kind of pitch them to a small group of investors him all of that happens in private only those shares are available to trade and the rest are locked up 90 are locked up. 10 are traded in direct listing, potentially 100 of the shares are tradeable. There are many sellers and buyers so you should find a park price earlier. The big thing for us was in the traditional ipo the Company Offering shares, you might rise a billion dollars. When you raise a billion dollars, you dilute existing shareholders, by existing if you shares were not doing that were opening it up for trading. There is no money raised . Yes you have 8 or 9 million in the bank already this is unusual. Not a lot can pull this off as such, you are rewriting the model to some degree wall street does not like it everybody likes it. I think there is a lot of investors who are used to a model where they get a small allocation they wanted a big one. A direct listing maybe you saw that with spotify. Some early investors are taking huge positions on day one, whereas in traditional ipos they might be 25 or 50 million. Reporter toen extent other Companies Like an airbnb say does this work how much will you save if wall street fees . The savings arent that great. Thats certainly not the motivator. The biggest was for not to have to raise capital one of the hopes for Companies Like us is there is not too much volatility we are hoping this modem, many buyers, we reach a mark clearing price a lot earlier. One of the distinctions is there is no lockup there is lockup on early investors or employees you can sell shares to yourself . I ka. As a veteran officer of the company, i am fought free to buy and sell. Reporter so you wont be buying into this i have small sales. Reporter long term, the other piece is sometimes the company will do a dual listing and a secondary, which looks like an ipo . Thats certainly possible for us one of the things of being public is it opens up capital marks. Its not equity. That converts all kind of stuff. Reporter tell us how does it change the company does it change it at all its a big day, a nice moment especially a nice moment for the team to show appreciation and recognition to one another for all the hard work. The last couple weeks we were sending thank you notes so they would hopefully arrive around today. But were you know low single digit percentage penetrated into what we think is an enormous market the 10 million active users, woes lives are on email they would be better off with slack or Something Like it thats the focus. This is a company that still loses money about 138 million your revenue, you have a huge revenue number but its coming down we were in the 80plus percent range now in 2020 you predict it will be closer to 50 . How should investors think about that how should they think about your valuation . Im not going to give them advice on that were in the quiet period 105 million revenue, 18 it was 220, so these are big numbers. These are numbers that wouldnt have been private Company Numbers before were getting to be at scale so the Percentage Rate of growth i think is you got to balance that with the absolute number of dollars coming in. Reporter what did you think of the reaction both to the ipo of uber, which we were sitting here by the way i think darragh was wearing socks that looked like slacks on i have slacks shoes on. These are cohan, a nice customer of ours, along with a couple others made these custom for our listing day. When you saw the reaction to the uber ipo, which did not go up, went down. You thought what i thought bad, it has nothing to do with us. Investors should be given credit for adjudicating between different companies. Reporter in the enterprise space, lets talk about zoom the ipo 72 on the first day do you look at that as a success or a failure they left a lot of money on the table. Reporter yeah. Thats a tough one to calm because i think now theyre notorious. Right. They got a lot of great publicity out of that and got good, warm feelings from people. Investors are excited. Yeah, were very focused on ourselves. We have a big job to do. This is a new category of software there is not a lot of comps for investors to say its just like this, its just like that. We have at love people to convince, a big story to tell. Im not looking so much at what everyone else is doing. Can you talk about the competition . There is a fierce competition going on, lots of different players, whether you think of microsoft in this space and facebook that wants to be in this space or is to some degree, drop box, which structured itself to be more collaborative. All those have integration you are almost a switzerland if you will that brings a lot of these folks in but i also wonder whether you think yourself at google decided to flip a switch on g chat in a different way whether that would become a big competitive threat . They did flip a switch. The fact that you dont know that indicates how competitive it is. Not in the same way its a different product. They have a competitive product as well, no one knows about it heres how we look at it competitor where customer excess if were right there are a couple hundred people that will switch to this model we have 95,000 customers so some are big multinationalists, 100 plus daily active users some are three person, fiveperson startups some are like a 50 person hotel chain, there are tax preparisprs dentists, huge amount of people using the stock. Were trying to find a way to bring it to different geographies is the focus. Reporter for you right now, whats the biggest challenge with the business . The biggest challenge i think is fundamental of all businesses, its convenient, it helps with achieving alignment and clarity around rules and objectives so we can move fast enough we have 1,700 employees, the bicker you get its harder to stay coordinated the transparency is the area. Reporter i understand you have been attracted as a potential target, acquiring target that is from the big guys, the microsofts of the world, the salesforces of the world, the googles of the world. You do have a dual class structure. So you can protect yourself in that way if you dont want to do a deal what itself thought process around being independent right now . We just see an enormous opportunity. There is me, my preference my preference the to do this low. Its such an enormous privilege. I feel so lucky to have a shot to do it very few people get that i am a fiduciary to our shareholders. I have a picture to the shareholders its not the Stewart Butterfield show im not wildly irresponsible we have great partnerships with azure inside of microsoft. With google we have a huge amount of work together, sales force. Salesforce. All conversations are very tentative. We have been super clear year after year that were just not interested let me ask you separately, this may be a broader topic. You said to the Financial Times two years ago, its a strange world, if it was a decade ago wed be public by now so many of the Silicon Valley unicorns like yourself have stayed private for so long. Was that the right decision . Do you feel that was a mistake some people look at the uber and potentially the lyft ipo as had they gone public two years ago, maybe it would have been different, maybe there would have been a greater Growth Opportunity . I think one thing we were clear about is not trying to time the ipo or a listing event. We believe in our hearts that bengals man gram short term theyre a voting machine it can take time to figure it out and whatp their heads around the business i would love to have this job for the next 20 or 25 years. Hopefully the investing community will have me for those that dont use slack, we should say, we showed us having that conversation with slack earlier. This was the goal i think is to end the world of email as we know it. When will we end the world of email as we know it as we know it inside our companies, i think thats happening faster and faster. Over the next few years, certainly over the next fivetoseven years well see a faster change. The broader world of email will stick around inside of a company when you have a choice and you can have an inbox which is very individually orient odd. Everyone has their own partially fragmented view or channels, a lot more transparency, accessible everyone sees the same thing, rather than an an empty inbox, they have a history to scroll through, everyone will choose this. Reporter you think so . One of the other things is privacy. Weve moved in a different world, everything was opened slack is being opened with a whole group, everybody on your team, full on transparency yes. Reporter do you think were moving away from that . No, so i nodded my head yes when are you saying that really slack affords all kind of flexibility around privacy you can have work spaces that have only some of your team members on it. You can make channels private, public it sails i takes time so their maximum accessible i think its a flexible platform some are regulated some are an actual chinese wall. Some Companies Want to be maximum tran parent and we give them the flexibility. You said a chinese wall china. Yes. Reporter where do you think you can do a lot of business, where do you think it will be a lot tougher . Over half our users are international, outside the u. S. , its 35 of nationals that have big operations outside i look at china. I look at japan, i have been five times the last 18 months. Its our second biggest country. Its just like on fire were concentrating a lot more on europe right now. Long term, we do think this is a product that should be accessible to everyone in the world. Any different size, every industry, every geography, so longer term, latin america, southeast asia, all of the developing work, were excited about that. Finally, we should tell the story, you were running a video. This company was not supposed to be this company . No. You were trying to create a video game thats how slack, how did this happen so, i and three otherco founders started the company we had a cup until british colombia, some in new york city and san francisco. As the company grew, we beld e built it for reporter this was to build a video game while we were in the process of building a video game as we added employees, we had business operations, examiner support, back end server engineering, creative stuff, writing, an makes, music, we had collaboration, so the end product didnt hit the market in the way we hoped lets say but the process was fantastic and we were so effective and efficient. At one point we realized we will never work without a system like this again the rest of the world could probably use this. Reporter we should say the reference twice is 26 at the end of the day when you look at the final price, what is success . Success is there is a freely traded market for Equity Securities in slack. It will open up a close at something. Something will happen tomorrow, something will happen monday its such a big focus. Thats where our interest is everyone is very excited across the company. We unfurled the banner yesterday and it was a big moment. Everyone is clapping but i think employees are on board with the idea we cant watch the fluctuations there is no point. There is so many factors it has nothing to do with us. The macroenvironment is a little hectic we got to stay focused on creating value for customers. I promise people inside slack will be slacking each other on the stock price. You should get an extra emoji for that thank you, guys, back to you andrew, thanks, very much folks, lets take a look at the futures this morning bob pisani pointing out the gains, the s p would be opening near a historic high 29. 5413 the interday high may 1st. 29. 49 in april the gains you see it opening at 29. 53. 96 less than a point away to the all day interday high. Well continue to watch the very closely today. But this is coming after tf feds decision yesterday fought to raise rates yesterday, giving clear indications it may do so at the next meeting next month, dow futureing up after the gains yesterday, s p futures indicated up by about 29 the nasdaq up by 105 when we come back, much more on slacks wall street debut, including insight from 21 of the few analysts already covering the stock. Later, former ecb president jeanclaude trichet and jim grant. We will get more on President Trumps twitter snipe at mario draghi what does it mean for the markets . Stay tuned you are watching cnbc. I think their a lot of investors who are used to a model where they get a small allocation they wanted a big one indirect listing, at least they have the Opportunity One of the hopes for a company like us is there is not too much volatility w. Rehoping this model where there is many buyers, supply and demand we reach the market price a lot earlier. That was slack ceo a moment ago. They are preparing for their debut today. We have one of the two firms with coverage of slack so far. He has a 31 dollar price target and New York Times media reporter ed li and cnbc senior commentator mark santoli is back as well. Lets talk about what it means, what the broader interpretation is slack started out as a video game company, it pivoted it used its own service. Its pretty great. The ones that used it. I used it for years at different offices, its almost a cultish product. When they use it they see it as a great alternative to email. I cant slack you necessarily but i can email you from one distance to another. Thats the opportunity thats what theyre talking about intheir s1 filing. Thats the opportunity to replace email and inner work communication. The other flipside of it is slack, itself, because its a cultish product once you are on it might not like that opening why do you have a neutral rating on it minute tral rating is strictly valuation based my Due Diligence when talking to slack customers is positive as i think just mentioned, its a consultish product people who use it really like using it and once they start becoming active slack users. They become dependent on it. I have people that say i wont work for a company that doesnt have slack i look at the valuation that slack is coming public at. Its out there with probably the most expensive names in software and i just think id want either a more attractive entry point or evidence that slack can gain traction in other industries outside tech companies. Meaning would have to get a lot of S P Companies to say this is what we will be using instead of microsoft especially think thats a fair statement, if we can see financial services, healthcare, legal, those sort of more Traditional Industries using slack, i think we can start to see a lot more pickup and the runway for slack to become a true multibillion dollar sass company, it is there, i think the setup is a product is there because its an easy to use product. Its well integrated and work itself and all industries is becoming more unstructured and more collaborative in nature its something i want to see evidence of before i get on board the trend. Mike, how do you look at the given the spate of ipos we have seen this is direct listing, different with all these companies coming to market right now . First of all, i think theyre tapping into the Software Industry bonanza to describe sass, sass companies, service companies, are some of the most expensive and well regarded in the whole stockmarket. So on that level, it makes sense that theyre coming out, yes, aggressive evaluations the direct listing piece of it i think is a subset of potential ipos if you look at spotify, and slack, they need to raise money. They were already brand named. They didnt need the ipo road show as and practiceing and marketing exercise to get investors familiar with them i think its a limited group of these already 10 billion dollar plus valued companies that dont necessarily need that road show. Its not a shot across the bow at wall street it is, those are the kind of deals if you think about it, they would be attractive clients for wall street. They were going to be a good deal theyre going to be successful theyre big fees they have high market value. I think there is a threat, you know, potential in there i just dont think its going to be the usual way that most Companies Come public any time soon. I think thats the point, as a marketing exercise if you know what slack is, maybe you dont need that ipo, you can go directly also clarify most ipos are liquidity events to let the investors out. Thank you for joining us. Thank you. Coming up, a special interview with former European Central Bank President jeanclaude trichet. We will talk about the implications of what was in yesterdays you people are interpreting it. Much more squawk box ahead stay with us stay with us Johnson Johnson is a baby company. But were also a company that controls hiv, fights cancer, repairs shattered bones, relieves depression, restores heart rhythms, helps you back from strokes, and keeps you healthy your whole life. From the day youre rn we never stop taking care of you. Coming up, breaking economic data, we will get the reads on jobless claims and key tnufacturing numbers fromhe Philadelphia Fed stay tuned you are watching squawk box on cnbc twentyfour people came together to sign an agreement that created the Stock Exchange. Just the right elements coming together. It started when scores more people came together, just down the street and traded bonds that helped pay for the revolution, and the nation it created. It started in an office on the corner where the right people witnessed the telegraph and brought information and humanity together forever. It started with the markets, bringing together steel and buildings and silicon and medicine and rockets. We believe the possibilities of life and investing are greater when we come together. Its why for eighty years weve connected ideas with technology, data with inspiration, investors with solutions. So that every day together, it all starts again. Your daily dashboard from fidelity. A visual snapshot of your investments. Key portfolio events. All in one place. Because when its decision time. You need decision tech. Only from fidelity. Welcome back to Cnbc Rick Santelli is standing by with the economic da that rick. Reporter all right, initial jobless claims moved down 6,000 from 222 to 216,000 continuing claims moved from 1. 699 to 1. 7 to 1. 66. Philly fed for the month of june, a disappointment up only. 3. We were expecting a football that had a 10 in front of that 10. 3 so that is disappointing, finally current account balance, expect it to be 223 billion its bigger at 130 billion. At the end of the series of numbers, initial claims are good that will not make a big difference, everybody will be paying attention to philly fed many of the regional surveys, isms have taken a bit of a pause outside of the service sector. Maybe thats trade it could be a variety of issues on certainty it is a pullback we are sitting right at 2 in a ten year yesterday we had massive curves steepening, because the short ends dropped like an anvil we will continue to monitor, fed does nothing, markets priced just as much as some point later in the year. That excites the stockmarket. We end of the day, do we want to join europe in feeling another debt rally by lowering rates, is a quarter point going to macthat much difference to the general xi im not sure at least for the moment, stocks seem quite pleased becky, back to you. Stocks seem pleased with that up 30 plus points, the s p would open at a record high if we continue at these levels for the next hour. I dont know, what do you think of that, rick . Reporter you know, my personal feeling is, i think j. Powell did a magnificent job yesterday. He will watch and see how it continues. Many have made it out to be a negative glide path. It is a bit less optimistic than it has been. A lot of that circumvents around trade. Dont underestimate how much trade has impacted so many indirect avenues of growth throughout the export global xi. I think patience is in order i personally would like to see the fed think about those nine quarter point rate increase, as the greatest ens against a death bubble globe, where an exit just doesnt seem very possible for the likes of japan and the euro zone leaseman said it could be 50 basis points i dont agree with cutting. I dont think we get a 50 any time soon. Just my opinion. Rick, i thoughts of another analogy, im sort of playing devils advocate i was saying, like the stockmarket threw a tantrum when the fed was doing what its got to do, really, normalizing rates. The Stock Traders are groping for a way to get at the stocks, theyre so spoiled, right . They never thought the fed would listen to them all of a sudden yesterday they realized, oh my god, he fell for it he fell for our tantrum or suddenly the case for cutting rates is like a faked emperor. Suddenly powell yesterday thought the emperor had closed all of a sudden. It wasnt just yesterday, but i know you probably feel that way. Right . That this is reporter absolutely. You do . Reporter i think j. Pow emhas done it well he threaded the needle the doves walked away theyre optimistic we get the beginning of a rate cut psyycle rate cut cycle. Shocking maybe the inflation cases is really something that maybe it does make sense, rick, that you dont do it reporter wait a minute, joe, i agree, if they want an exit, there is no doubt. They have enough facts to cut based solely on the artificial target of 2 and how far away we are from it. But i would ask a better question, first of all, do you think that much of the disinflationary issues are derived from exporting other countries and problems associated with the trade issue . I guess what im saying, it would take so much leverage in low rates for our fed in my opinion to make a difference on pricing pressures in this Global Economy . It isnt worth the risk. All right, rick, thank you. We will check in tomorrow for sure just under an hour to the opening day on wall street, domenic chu joins us, the ones pushing the averages up today, hey, dom. Absolutely, becky so we will get things kicked off right away with the shares of apple arguing one of the most important stocks on the mark, just because of its 910 billion market share those shares are higher by 1. 5 alongside the Broader Market as you pointed out. Its roughly 175,000 shares pre mark value so far. After the Services Company was initiated as a hold rating by analysts at stifel nicolaus. Thats not far above where we are currently right now. Theyre a bit more cautious in part because of a possible iphone sales cycle low ahead of 5g phones next year. Nonetheless rising out with the s p 500. There are shares of netflix also up 1. 5 about 50,000 shares pre mark the online movie streaming and Production Company reiterated a neutral rating moffett nathanson. The share stays unchanged. They expect Strong Subscriber growth they cannot justify the stock price under their bullish scenarios. It comes as the murder mystery film with Jennifer Aniston and we will end with shares of tesla that are down despite the rest of the market down by 1 over 250,000 shares pre market. Analysts at goldman sax cut the price to 158 bucks it was 200 before they kept their cell rating. They think its less likely that some of teslas upside volume areas will be acheechld one spec of red in an otherwise sea of green. We have another couple stocks taking hits. Not green arrows everywhere. Cruise line operator carnival beating the top and bottom line. It cut the full year forecast because of new restrictions on travel to cuba and other issues. Shares are down now 8. 5 and Restaurant Owner darden, the revenue and Comp Stores Sales were forecast. That stock is down by 4. 6 . I like saying good things about tesla. It feels so good to have the twitter lean the twitter people when they like me is so much bet were when they dont the whole bitcoin thing i feel so loved that i might, dont you think tesla could do the same thing . Not for long. The mufkte musketeers love tesla. Now im on raising rates. Never mind, i cant do in anymore. How can you cut a 3 point whats unemployment . How are we cutting you are stuck in the past. Are we not i want to see this conversation when you and cramer talk about yeah, thats right. Jims to cut. I want to talk to him about that coming up. We will talk to jeanclaude tichet and the Federal Reserve decides to hold Interest Rates steady, now the Central Banks move. We have jim grant today. Whats the impact of President Trumps pressure on Campaign Chair j. Powell . We will hear from two voices that i just alluded to when we return welcome back to squawk box. Futures indicated up 254 points with this s p up 31, we photoed that would be a new high if the s p were to close with those types of gains this morning. There was some genuine disagreement in the market this week over whether the Federal Reserve would cut Interest Rates at the latest meeting. Now we know the answer is no immediately attention turns to the next fed decision. Steve liesman joins us with how markets are sizing up that rate cut. Reporter yeah, well theyre gorgeing with equities economist versus only one rule, the bill eventually comes. Amid general something straight equities may not be the best dit. Here are some of the downside risks. It likely comes with a weakening xi and could mean slow earnings and sometimes the fed cuts at the top. Sometimes the market is right like in 95 and wrong like in 2007 Peter Boockvar writes, encourageing the build up of even more debt, which is exactly what the fed is doing here, will eventually slow. Lets look at the road to the cut. June 28th 29th, we have the meeting between president s trump and xi in japan. July 1 there might be new tariffs. The erarliest they can be put on if if its weaker, you can pencil, put that cut in with ink. If its stronger, more questions remain gdp coming in the month of judgment, leading up to the july 1st and 31st meeting is fed in question is this an insurance cut where the xi and market have years left of growth or a 2007 cut which you remember, joe, was on the precipice of much greater weakness okay, steve, lets talk more about the fed, the ecb and global Interest Rates, joining us a former president of the ecb, here on satellite, that backdrop, and here with us on set is jim grant, founder and editor of grants Interest Rate observer jim, we just off camera i heard you say you were expecting a cut. I cant imagine you would have been thrilled if it had happened you just probably, just talking about what might happen not what should happen . Playing devilsed a veck, who in their playing devils advocate, who in their right mind would the inflation was problemmatically low and the yield was inverted and an ounce of prevention as the chairman, himself, said, during the press conference, that had been thestory line. I think that was, in fact, how the market read the action because the fed might as well have cut dpimpb what has happened in the markets since. I like when stocks go up, you know what i mean when Mortgage Rates go down, why shouldnt i buy into that . Thats a great narrative, inflation is low, lets do it. Lets put the pedal to the metal. Very low Interest Rates lead to big is distortions. You are sure were seeing that, the bopped market in general . For example, there is 12. 5 trillion worth of securities, fixed Income Securities priced to yield less than nothing on a nominal passive. We will blame our next guest for that its a singular thing in finance. Yeah. The federal debt, itself, is an example of the consequences the pay list to build it up. And it will be painful to pay it off. So president temperature rict trichet driving back to the well with more stimulus. I could blame europes, you know, entitlement state economies for needing all this stimulus because you cant grow over there anymore is there anything do that, this is all your fault . No certainly not. But what i would say is that mario draghi had to counter an analysis which was very, very frequent saying that if we had a global shock or if we have a recession, the ecb will be totally incapable to do anything and, of course, because we have all the low Interest Rates, because we have already lost the securities in the portfolio and so forth and i think that the message coming from europe was even if with the present level of policies, we have to cope with very grave events, we will do it that was the reassuring element in what has been said. He was not preannouncing a decrease of rates. So its a little bit different as in the u. S. Where clearly the possibly of the likely of a decrease of rates is signaled by the fed with several divisions i dont, i say, of course, the inflation, the prices level is a reason but chairman powell also mentioned the confidence level, which has been hampered quite considerably the trade issue and the trade cohost that are so very, very important. To conclude on that i would say for the european, the trade issue is even more important than for the u. S. , because we are more opened than the u. S. , the vendor ability of the u. N. Economy to protectionism is i would say twice as big as in the u. S. In terms of volume of trade compared to gdp and also when you see the lower value chain, which is incorporate in our own exports imports. So we are very vulnerable and that is a point i wanted to mention, because the trade started and entertained by the United States and its a big problem for the global xi, but particularly for europe. The funny thing about this tension between chairman powell and President Trump is that, while mr. Trump probably cannot fire powell, powell could certainly fire trump by simply raising rates say we are going to raise rates and that would be that game on you no at the striking thing about all this discussion is that inflation has taken a seat behind the back seat the new thing in central banking, perhaps president tri ch chet trichet. They talked about a 4 inflation rate mr. Powell says i dont think the world thinks we have the stuff to do it its worrisome what is this they really want that . I had a different thought, jeanclaude, when you said mario draghi letting people know weve got the tools to hand him another downturn each at these low rates. Really why should i believe that . So you go more negative . We can go to minus 10 on interest im not convinced you are not pushing on a string already. Thats what scares me. You say you can do it. You dont really have, you cant back it up with actually being successful doing it. Is that wrong . No, i fully agree that accommodation the world over in the advanced economy is extremely high and it is true in japan, of course to get through in japan, its very true in europe, of course, also true in the u. S. , after all, u. S. Has full employment. U. S. Has a very, very biting economy, obviously, in terms of the cycle and so, i would say we alone are in the same basket the problem we have which is a little bit unusual for a central bank to make, is that the Bargaining Power of labor, the demand advances in salaries, it has considerably weakened. That creates, of course, unities that are fought dynamic, which is 2 . So we are desperately looking for a little more dynamic cost evolution to reach the 2 . It is particularly true i have to say in japan, also very true in europe and in the most i would say competitive economy in europe, which is germany since we still haveprin for instance we still have a level of National Inflation in germany 1. 4 , which is much too low. Teen the extent it is the ceiling for National Inflation in europe, otherwise they would lose competitiveness we have there a big problem. So the main problem we have in the advanced economy is very much out of the realm of the Central Banks, in my opinion it is very much a change of society which implies necessarily the social partners, entrepreneurs, and workers and also the political, i would say, sphere because its part of the overall fabric of society. You know, i think the problem we have in the world is the Central Banks. I think that postcrisis central banking is the engine of instability, distortion, and ultimately of kind of disaster i say this because the worlds Central Banks, particularly the ecb, have destroyed the sensors of the bond market there is no pricing for risk of credit loss. There is no so the bond markets have been virtually wiped out through the central bank action. The National Weather service in this country spends a billion dollars a year it has 76 billion observations of weather a year. It has 10,000 times the Computing Power of the thing on your desk. And it has the confidence to predict the future out to ten days we listen to these Central Banks, we nod sagely with them they say, yes, the fiveyear inflation rate, says mr. Draghi, will be too low. They cant possibly know that. And in not knowing but yet persisting in these policies, they distort and ultimately they will destroy okay. Go ahead very quickly can i say yeah, only to say that it is not because it was an arbitrary set of decisions that such decisions were taken in japan and europe and the u. S. They were accused of being too timid, to shy, not going dynamically in the direction which was suggested by the United States. I think we all have a big problem in our economies i take it that you are not recommending that we embark on deflation because we have also experienced deflation in the past so i agree with you that what has been done has a lot of counterproductive consequences, but its absolutely obvious, and i would say ben bernanke was particular in avoiding big depression, and nobody would be better off if we had a big depression absolutely nobody. Not the people, of course, neither the markets. So all taken into account, i think that the central bank did their job, but of course they are not the only game in town. And it is up now to other partners to realize that the heart of our problem is, in my opinion, the weakening of the Bargaining Power of labor. Its very unusual for a central banker, a former central banker to say that. But i really trust it. Okay. We appreciate it earlier on squawk box, we spoke with Hedge Fund Titan leon cooperman. The markets and the state of the world economy. He said things are not business as usual we all have to understand were in abnormal times today, and if you dont understand that, you dont understand whats going on in the world theres 12 trillion plus of sovereign debt that carries a negative Interest Rate just think about it. Ask yourself the question, if you lend money to germany, switzerland, japan for ten years, they give you back less than you lent them ten years later. Lets get down to the New York Stock Exchange. Jim, i flipped im back to thinking we shouldnt be cutting with you, i understand how things work. You quickly and it has worked in the past. Like when you were talking to the fed about they know nothing. I was like, i dont know you recognize these things very, very quickly with me, im still stuck if i really think about it, im still stuck thinking that with unemployment so low, i cant believe this is the normal rate environment, and it looks to me like the fed is paying attention to stock market tantrums and they sort of got talked into this when they really shouldnt. You would say im wrong because were just too high in this environment, right i think that theres a deceleration in the economy to the point where the railroads, the airlines, the companies, the lenders are all admitting theres a deceleration they know that things have down shifted. Retailers know its down shifted. Theyre hoping the fed sees it the same indicators i use. I speak to ceos. Its not on air. There is just an understanding that things just have gotten weaker i think its great that powell recognizes that. I think when we put on a 10 tariff on 300 billion, which i think is going to happen, its good to have the fed at our back i dont think the trade talks will come to fruition. We cant expect the fed to cure everything. Well, the base believes that the chinese communists pay so why not raise them even more. Okay. All right, jim thanks wish we could talk more. See you in a few minutes dont miss an exclusive interview tonight with jim umpleby, the ceo of caterpillar. Stay tuned squawk xilbeig bk. Bo wl rhtac in these turbulent times, do you focus on todays headwinds . Or plan for tomorrow . At kpmg, we believe success requires both. With our broad range of services and industry expertise, kpmg can help you anticipate tomorrow and deliver today. Kpmg while the second half of june tends to be success is there is a freely traded market for Equity Securities really, its going to open to something, close to something. Same thing will happen tomorrow, same thing will happen monday. Theres such a big opportunity that thats got to be where our focus is that was slack ceo right here on squawk in a first on cnbc interview, the Company Making its debut here today at the New York Stock Exchange, a direct listing. A very different kind of listing than an ipo. A lot of people are going to be watching the success or failure of how this all trades today 26 is whats called the Reference Price. Well see if theres a lot of volatility when it opens later today. When spotify opened, it was about midday, a little after noon well see whether this starts earlier. Folks like airbnb and others who have cash on their Balance Sheet may be looking to see whether this is a model. Also, a lot of wall street bankers and ceos looking to see whether its a model what does success look like what does failure look like on this i think stability 26. If it goes under 26, there will be questions company had a 7 billion valuation a year ago today its 15 plus billion andrew, thank you see everybody tomorrow right now for squawk on the street. Good thursday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer, david faber at the New York Stock Exchange. S p set to open just above a record high as the fed signals rate cuts. Well watch more conflict out of iran this morning. Slacks direct listing and more. Ar