Transcripts For CNBC Squawk Box 20140602 : comparemela.com

Transcripts For CNBC Squawk Box 20140602

Ground in massachusetts. Andrew, over to you. Thank you, beck. Its a horrible story. Earlier he spent 88 million buying out the other half of the philadelphia inquirer. His son will now join the board, but other Corporate News this morning. Apple kicking off the Worldwide Developers conference happening today in San Francisco. Ceo tim cook promised the company will enter new product categories this year. Thats what hes been telling everybody. Among the announcements expected from apple are this. Details on the new operating systems because theres ios for the iphone and ipads along with the mac and what that is going to look like. We will also hear applications with a lot of news reports that the applications may let the iphone or ipad control parts of your house like thermostats, appliances and security systems. So well see what happens. A lot of people are looking forward to that. And General Motors could have a recall issued this week after details are released gm will disclose new steps designed to make sure future safety issues are brought more quickly to the attention of top management. Finally, google reportedly plans to spend more than a billion dollars on a fleet of satellites to extend Internet Access to unwired parts of the world coming from the wall street journal this morning. It says the project will start with 180 small highcapacity satellites orbiting the earth at lower altitudes than traditional satellites. Joe . But not drones. But not drops. Because drones fly 40,000 feet or whatever. Does the apple thermostat, can you control your beats remotely . Did you get over that yet . Im not over that yet. You read all the conjecture about it and didnt pay that much for the stream but they paid more than it was worth, like five times what it could be valued at for spotify. But its all about those two guys making it cool. Thats what it is about, right . Thats supposedly what it is about. Call me in a year. Im sure. They are going to have the beat streaming and the itunes separately. Are we sure we should do this, tim . 3 billion is such a small percent with the market is over 500 million. Well see. 500 billion. How can it be a mistake . Just in the margins they make on the beats, the overpriced beats. They may make the money back on the beats, but they have to believe the beats will be fashionable for the next five, ten, 15 years. They make a billion a year. In profit . Maybe thats revenue. But thats 60 markup. Well check on the markets continuing to confound people. The more i read about it the more i get nervous about, you know, all this money, all this fed money, the market is up, the bonds are up, the volatility is down. People arent able to trade. Its just i dont know what is going on behind the scenes. We are up another 22 points at 45 million a month. Thats still real money. Still qe. Basically buying everything out there. We think they are tapering but in fact they are still hugely in it. Lets look at whats happening in oil. You would expect at some point oil to move, but that hasnt the up nati inflationary problems, that would be the low. 2. 48 now. Longterm it goes back down below 2. 40. Well take a quick look at the dollar. Which 1. 36 on the euro is what im interested in. I dont know about the trip abroad. We got tariffs coming here, we dont need to go to paris. A meeting at 8 00 a. M. This morning with thomas pickety. One of the first things im going to ask, have you been to new jersey before . He was at m. I. T. Before. I dont know if hes been to new jersey. You know the expression, its hard to go back to paris if youve been to new jersey. Its very difficult to go back. Its hard to keep them down in paris. You want to stop by princeton during his time. He may have stopped by princeton. Youre right. On his way to teterboro. Youre im not happy about the comments of new jersey and driving along the new jersey turnpike. Terrible. You have a lot of nerve. Have you noticed the new look this weekend . Check this out. Take a shot of joe and show them. It is only on our screen. Whoa, thin man. You need weight. You dont need to be any thinger. Thanks. It is only on the little screams. On the big screens we are stretched out still. We are still fat . Okay. Did we look at gold . No, lets take a look at gold. I feel bad for gold. 1245. Dont you feel bad . For the gold bugs, you mean . It is losing its luster a little. It shot up very high, very quickly. Well get to if theres any type of untoured activity. This is an important story that caught all of our attention over the weekend. You just assume the worst in everyone. Everyone is guilty until proven innocent for you. What do championship golf, an activist investor and a las vegas gambler have in common . Apparently a federal trading inquiry. Phil mickelson confirming over the weekend hes been answering questions from the fbi about stocks and options trading he made with Billy Walters. At least one involving an investment by carl icahn, but the investigation may have hit a snag. Our Senior Correspondent scott co cohn is here with the latest. He may have hit a snug and this is all for nothing. The snag is that the word is out, potential snag, and that complicates any undercover work in if the feds can get past that. And it would bring together two areas where pete barrara and his company have done a lot of work. 26 people pleading guilty in a single case last year. All indications are that this case is in the factfinding stage. An attorney for mickelson says the golfer is not a target but mickelson acknowledged this weekend hes answering questions. I have done absolutely nothing wrong. And thats why ive been fully cooperating with the fbi agents. And im happy to do so in the future, too. Until this gets resolved. But for right now, and hopefully it will be soon, but for right now i really cant talk much about it. Mickelsons trading partner Billy Walters has declined comment. Heres where carl icahn comes in. Take a look at a chart for clorox 2011. They launch a bid at 7. 50 a share. But did somebody like Billy Walters and fbi mickelson know icahns bid was coming and did they learn it from icahn himself . Even if they did, its not clear its illegal. And Billy Walters says he has not heard from the fbi. One criminal defense attorney told me over the weekend it would be difficult to prove anything without a recorded conversation, a wiretap. And if that was part of the governments plan, and the wall street journal says it was, it would be hard to pull it off now that we know about it. The idea that icahn hasnt been contacted yet, does that suggest they were going after him or collecting information to go after a higher target . That doesnt necessarily suggest anything, but if hes the target they may not come to him until late after having all their ducks in a row, but thats conjecture at this point. The investigation has been going on for three years and still they hadnt done what they needed to do yet . Three years to is that when the clorox deal was . The trades were three years ago. They are always looking at up usual trading patterns ahead of a big announcement like that. We dont know when they figured it out or decided there was something to look into. They are looking at him in realtime. They saw the activity three years ago. That must have looked really weird. Then they put it together to figure out who is who. Do you think they get all excited when they see its Phil Mickelson . I think they get excited to see Phil Mickelson, carl icahn, the gambler. Wouldnt you in that situation . If they are looking for headlines thats their business. One of the richest athletes in the country. Yeah, but like Martha Stewart, the idea of getting her was so attractive at that point, i think. And then a noname the Martha Stewart thing took on a life of its own when she lied to the investigators. But they probably did because it was an obstruction case at that point. Plus mickelson made the comment about taxes being too high. Right, throw him in jail. Lets go after this guy. I would worry myself. Scott, stay with us. Well get more on the Ongoing Investigation with berto with us onset. And harvey pitts is onset, former chairman of the securities and exchange commission. And i guess harvey, ill start with you because we were talking beforehand about what really constitutes whether this would be Insider Trading or not. If youre a third or fourth person in line of where the up f info says and clorox is doing some, and you say lets buy some based on that, is that Insider Information . It can be depending on what you know and the source of your information. If you can tell the person who is passing on the information had access to confidential information, it doesnt matter if youre third, fourth or 16th. But what happens if you dont know . Meaning, i mean, this is complete conjecture, walters goes to you, youre hanging out and he says, by the way, i think something is happening with clorox. Im friends with icahn, he may have been in it before, i dont know, but it is all like that. What is that to you . It depends. These cases are hard to put together. There will be a fair amount of difficulty in trying to show that he knew, but the government, at least the sec part of the government, can do this by circumstantial evidence. If they show telephone calls immediately before meetings or then trading took place. But they didnt have that. But this happened in steve cohens case. In steve cohens case they had emails and other things to make it quite clear. What if they wanted to put more wiretaps in now and they werent able to, so what did they want to hear . New stocks that he might be in . Or what if they said, geez, i am really worried, is that what they are looking for . Roberto, would that cause them saying, wow, we better cover our tracks, they just talked to me today. What should i do or say . They may do it, too, huh . Thats exactly what they are looking for. And just to go back to the cohen case, what the government also had was cooperating witnesses. And clearly the government would have been looking for that in this case with mr. Mickelson and icahn and Billy Walters. And theres no suggestion that there are any cooperating witnesses in this case so far. Can i just ask, even if icahn did tell them what he was doing, i know that thats all supposition at this point. But if he did, how is that different than what bill ackman is doing with valiant . It isnt. The question is whether this information was stolen. And whether the people that were involved knew that it was stolen, whether walters and mickelson knew it was stolen. Thats really the crux of it. And icahn just saying im going to make a trade is not necessarily stolen information, except maybe from icahns investors. Icahn had a deal. They were in business together. Its a different kind of violation. When someone is accumulating a position, if i tell my friends and they buy stock, then my position looks smaller. And that would be a violation of the securities laws. It wouldnt be Insider Trading. He had a publicly traded fund at the time. Icahn, does he still have that publicly traded vehicle . So he would potentially be defrauding the investors in that fund . If this involved stock he was buying with that vehicle. And we know some of the stock he accumulated was with the publicly traded vehicle. Roberto, when they went rushing to columbus, thats a great tournament, too, the jacks tournament and fbi agents are swarming the fairway. When they went rushing to see mickelson on thursday because they knew it was coming out, what did they expect to get from him there . What was the point of that . You know, i dont like that. And 15 years ago when i was in the justice department, i would tell you that type of fbi work is routine. But youre telling me they couldnt wait until monday . What was the urgency . Especially since there are reports that mickelson was already aware of the investigation. So youre not exactly going to the memorial tournament to surprise him as he comes off the 18th green. So i really think that the government is doing this in a way to bring publicity to this, trying to embarrass mickelson, rattle him, force him to talk when really he shouldnt be saying anything. There was a i dont think it was on the 18th green, i think it was during a round. And its like, theres a joke about that. Well, something horrible happened to phil over the weekend. What . He went doubledoubletriple on the last three. I think he did. I think he was like 6under or something. That will throw you for that might hurt your short game. That might get a little yippee on a couple shots, wouldnt you, scott . Well, yeah. He made the cut, though. He did make the cut. He was only 2under, but that just shows you how great he is. And he can call up can i go back to one Insider Information issue that im still unclear about, though . If youre a company, and an insider does something, i get that. That makes sense to me. But if youre an investor, and carl icahn has no inside information about what hes about to do except that hes about to do it, but thats not like hes got Something Else going on. And you say to your friend, hey, im thinking of investing in this company. Is that considered Insider Trading . No. Unless you have some other duty of confidentiality you breach, it wouldnt be. The government will have to prove that icahn got some benefit for sharing that information. No one is talking about that aspect of it. What benefit would icahn have received for sharing this alleged inside information. Could walters or mickelson get in trouble without icahn in trouble . Absolutely. Theres no question that even if icahn did not violate the law but his information was used by others to trade in the market, thats a clear Insider Trading violation. What is that, that they stole the information from him . They misappropriated it for their own personal use. Whatever icahns rights are, he cant transfer those to other people who get wind of his ideas and then trade on the basis of it. Thats Market Information as opposed to corporate information, but its also subject to Insider Trading laws. Does it benefit, the benefit has to have been received by both sides. So mickelson, im sorry, so walters would have had to get a benefit from mickelson for giving information, is that right . Well, right. You have to show that the personal who originally had the duty of confidentiality which would be icahn received some benefit as well. It wouldnt just be walters. So its a little more complicated. Im saying, im saying icahn says it by accident at dipper, walters now has it and misappropriates it and mentioned it to mickelson. Show me the benefit piece. Reputational friendship. Information about how mickelsons feeling in future Golf Tournaments. And that would open able his bets. There are all sorts of ways in which you can come up with benefits. Isnt the benefit issue a little bit of a gray area right now with the cohen cases, the michael stineberg case, thats the subject of the appeal, how much benefit does he have to get from it . Its whether the tip has mom of the benefit. You still have to show there was some benefit, but whether the tippee has knowledge of the benefit they received. Thats up in the air right now. A fascinating case study, talking about phil, if you know how he plays, he has never not gambled with any shot. He gambles on every shot. Over the years, theres been stories swirling about huge bets he makes. Or that people make with him. So here he is making 60 million a year. 60 million a year and is buying dean food options and clorox options. And he knows this guy in vegas. Hes like good friends with this guy who is a professional gambler. Its all like gambling. You have seen it with Michael Jordan and others. Right. Thats why the ten years at 240. We dont understand that because we dont have 60 million. Thats why we dont understand that. Speak for yourself speak for yourself. Speak for yourself. I dont have 60 million. Thats because you have been here 25 years. And where is my 60 million . Thats true. Maybe thats why he has 60 million. Thank you for bringing up this case. I can tell he likes this case. What i dont like about this case, which roberto eluded to earlier, is why is this public . Why do we know about this . This is not the way government investigations are supposed to be conducted. That is very, very troublesome. When you read the wall street journal piece, there was a New York Times piece, but where do you think the leaks come from . I thought they were really two potential sources. The one thing you can pretty much say is it wouldnt be icahn, walters or mickelson because it is not in their interest to be tarred with an investigation. So its either the government or somebody who was approached for information by a subpoena or otherwise. I figured it was someone at the golf course. Because of the timing, they get approached at the golf course. Carl icahn, i have never given outside information. What about the inside information . I have never given outside information. I deal with the inside information. Never ive never given outside. Only inside. Harvey, thank you. Roberto, thank you. Scott, well talk to you later this morning. When we come back, well look at the group that runs commodity trading. And the Los Angeles Kings were able to close out the chicago blackhawks. Game seven of the western conference finals. They will now be facing the new york rangers in the stanley cup finals. Game one is wednesday. Squawk box is back in just a moment. Peace of mind is important when youre running a business. Century link provides reliable it Services Like multilayered Security Solution to keep your Information Safe secure. Century link. Your link with whats next. Welcome back. Its time for the executive edge. And today a peek inside commodity traders. The secret club that runs the world. Good title. I cant take total credit for it, but it is eye catching. Its a global, powerful but surprisingly

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