Exclusive: Boeings Chairman


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The aftermath of two seven three seven Max crashes has put on the company this airplane will will fly it will be safe as well as the CEO. He is going to experience experience in his first period. One of the most difficult situations any CEO. That I've ever known has lived through and exclusive to this podcast. CNBC'S CNBC's auto and aviation reporter Phil above the narrative completely got away from them anchors on today's squawk box are Joe Kernan becky quick and CNBC contributor Surat Sethi joins as has guest host your host on this podcast that's me CNBC producer. Katie Kramer it's Tuesday November fifth. Two Thousand Nineteen Squad begins right now. So what's your process to hold people accountable to make sure this doesn't can happen again. Senator First of all my company and I are are accountable. I believe that accountability starts with with me My board took some recent actions regarding my position which I fully support and will allow me to focus even more on on safety so every action takes tried to focus on safety that was bowing CEO. Dennis Muilenburg and Florida Senator Rick. Scott during last week's blistering questioning joining of the airplane manufacturers leader on Capitol Hill one month ago Boeing's board stripped Lindbergh at his chairman title in the wake of months of criticism. Boeing grounded the entire fleet of jets. Let's call seven three seven Max. Following two deadly crashes one late last year and one in March of Twenty nineteen today for the first time we hear. From the new chairman of Boeing Blackstone. Executive Dave Calhoun. I caught up with my colleague film about Polo. Thank you Why don't you introduce yourself? I am Filipo. I cover aviation listen and the airlines for CNBC. And I've been doing it for twenty years. How long have you been covering the Boeing Company? Twenty Years Twenty years of watching this company company grow Go through some challenging times and this is clearly the most challenging time. They've gone through so. Tell me about that. The last eight months the headlines for Boeing have been really grim. Well anytime you have a plane crash. It's bad news and I know that's maybe we'll be listening to the same well Duh. Of course it's bad news but it's not just that there was a plane crash It was two of them very short period of time between them that led to the grounding of the seven thirty seven Max and had to put this into some perspective for people the seven thirty seven is the bread and butter for this company It is the cash flow generator. And so when you are effectively effectively saying we're not delivering any of these. You're cutting off. The cash pipeline for Boeing Commercial Airplanes It is a massively important story. Sorry one that everybody has a feeling about it. emotionally Whether they're in the industry or if it's somebody who who flies only occasionally people have A real concern about whether or not these planes which are so popular Are they safe. Will they be safe in the future so today on the show we had David Calhoun. Who is the new non-executive Chairman of Boeing directors? But I but very active. It's pretty clear from his interviewees active. Tell me about the scope of Calhoun job now. And what makes him qualified to lead Boeing during chapter. He's been on the board since two thousand nine and he also has a history going back to his time with GE when he was CEO of Ge Infrastructure Working Ge jet engines He's familiar with the aviation the airline business and he's also familiar with the challenges that go along with running a a large industrial. Austria company like Boeing and essentially. Now that he is non executive chairman that title used to belong to Dennis Muilenburg. And the Board has said. We're going to split your titled. Dennis is going to be. CEO Run day to day activities. The broader questions for the company vision where they're going so forth. That will go to Dave Calhoun L.. Who and when we talked to Dave Calhoun he made it very clear? We want Dennis Muilenburg to focus on getting the Max back in service that is that is the main job really the only job that matters right now for him. I'm sure he's doing some other things as well. I mean it's not like he's in a vacuum But the Max is all encompassing right now. Why why is he speaking out now a month? After kind of taking the reins of Boeing. Will I think the narrative got away from them last week. When Dennis Momberg was on Capitol Hill It was a brutal brutal couple of days. I mean you had senators and representatives outright saying you have no business being CEO. You have no business getting the compensation in that you get. If you had any decency you would step down. You would do more than simply say we're working on this. Is Anybody at Boeing taking a cut or working for free to try to rectify this problem. Like the Japanese do congressman. My board conduct a comprehensive review. That so you're saying you're not giving giving up any compensation at all your continue to work and make thirty million dollars a year after this horrific two accidents that caused all these people's relatives took go to disappear to die. You're not taking a cut in pay. It all began. Our board will make those terminate. You're not accountable. Then you're saying the boards accountable. I went in Quebec. And kind of underlying Steve Cohen of Tennessee. In the second day of my Lindbergh's yeah in front of the House. We talked with them afterwards in the hallway. I mean he's disgusted rested instead. I'm disgusted at at this entire situation here and that he is getting paid what he's getting paid. Which is roughly twenty three million dollars last year so it was wild because Representative Cohen was asking question? Are you taking a pay cut. Is Somebody going to take some financial responsibility for this and mullet Bergara sort of during the headlights. Absolutely and You could fault Boeing for not being better prepared for that question. Look I've covered enough of these over the years on Capitol Hill when a CEO goes in front of a committee especially Leanna safety related matter. I mean that is almost a guaranteed question. Look if you would fault Boeing for anything last week. It's the fact that they didn't anticipate that. This question streams coming because they could've nipped in the bud much quicker by having Dennis Muilenburg even in his opening remarks say I understand what's going on. I understand that I shouldn't be getting the compensation or at least all of the compensation That I received last year That would've short-circuited a lot of this discussion. Instead he said Ed That's not for me. That's for the board decide really came off looking very poor for the company and for him to stand by Joe Three to one his mic. It's it's time for our newsmaker. The morning Boeing Chairman Dave Calhoun the Dow component is you know separated at CEO and chairman roles amid the seven thirty seven Max crisis naming. Calhoun Muniz chairman on October eleventh. Relatively quiet since then in terms of on camera interviews this morning. He's speaking out in a squawk box exclusive. Dave joins us now with their own Philibeaux. Oh global headquarters Phil Good Morning. Good Morning Mr Galvin. Who Good Morning Joe? Joe And I know you guys have a number of questions for Dave and Dave. Let's let's begin first off if you and I were talking before you came out here. Big Question right off. The Bat is about the compensation for Dennis Muilenburg. This came up on Capitol Hill. You have some news regarding and how that's going to be changing correct. Yeah I do of course it was sort of obvious to everyone that was uncomfortable question for Dennis. Dennis doesn't like to speak in behalf behalf of board activities anyway. Dennis called me Saturday morning at ten o'clock with the purpose of suggesting that he Not Take any compensation for two thousand nineteen as in the form of bonuses which is of course most of your compensation it came came in two fronts. One No short. No long-term bonus and three no consideration for equity grants until the Max in its entirety. Entirety is back in the air and fly safely as you know Max in its entirety takes us through all of the next calendar year and probably probably into the beginning of two thousand twenty one so it was a significant move on his part. Nothing surprising about that for me. Nothing that is his character always does the right thing. Dennis was very uncomfortable in that situation. Dennis more than anything walked walked out of the evening in between the two hearings where he listened for several hours to every story every story. Roy that the victims families presented to him changed him for life. He was doing all the right things but now he's gotten his core he's got his bones in its. It had an enormous impact enormous impact. But you know that people are watching you right now. Saying why is Dennis Muilenburg still. CEO Joe Boeing. Yeah because the from the vantage point of our board Dennis has done everything right from the beginning from the beginning remember member. Dentists didn't didn't create this problem but from the beginning he knew that should could be done better. And he has led a program to rewrite M CASS to alleviate all of those conditions that ultimately beset to unfortunate crews and the families families and victims. And he's done that incredibly well. He manages it every single day. He keeps the board abreast of everything. That happens every day And he's done that well and he set us up for a return to service because I I will remind everybody return to service starts the they it certified. It's not over when it cert. There's no victory in that right. We have to get the airplanes that our customers have put on the ground. We have to get them van back in the air. We have to assist them every step of the way and we have to get the airplanes that we built and are ready for delivery to customers back in the air as well. That's a long the program it's at least a year and it's a tough important task and we believe he's up to it Joe. I know you have a question for Dave. Yeah going back to the compensation issue Dave so that takes care of this last incident but is there anything being change but by the board about clawback provisions for something other than fraud fraud or or whatever you normally put in that in the bylaws there which which would cover reputational damage so or which would would then cover safety issues because safety issues issues are notoriously hard to have a clawback provisions for because it's unintentional and we know things happen. This is a high risk business and everything else but it was reputational. I think that would be a way of making that permanent for the next situation if God forbid if there is one at bone so joe the provisions Asians around clawback first of all let me just say. We're not looking for a clawback on Dennis and there is nothing at any stage anywhere that suggests there's culpability involved in any the of that With respect to those provisions. There's no doubt we'll take a look at that. There's no question everything related to safety. And its impact on compensation and many other facets of the operations of our company will be turned over. Looked at hard in many revisions will be made so. I don't want to predict the outcome. But you can be sure we'll look. It's been reported that I don't know how many engineers are on the board of Airbus. But I know that there's fewer at Boeing right. Now your your career. You're all over the place Lissa. Ge whether you need engineering degree but you've got a lot of manufacturing expertise. Obviously Malmberg is an aerospace engineer. So that's one which makes me think maybe this is a guy that you want here right now in spite of everything that happened last week in spite of what happened in the last in the last eight ten months whatever it is this is a guy you want but you need more engineers on the board. At a company like Boeing. I don't I don't believe we do. I think we are. We have an incredibly diverse board. It's very strong. Everybody has view an opinion. We tap into it. I personally tap into it on a very frequent frequent basis. Not just in board meetings but individually the safety committee chair Admiral. GM Boston who I believe is just one of the really one of terrific leaders. He has led an effort to study. Look at bring outside experts in to look at all of our safety. Practices across the Boeing Commercial and broadly across the whole company. And we have embarked on a program that will make significant changes to all of that and I think he's doing it the right way in. Just just one last comment Joe you may recall you may recall in my life leadership in the aviation business at Ge in the where we built the engines on the airplane. I joined that business ten years after a horrific accident and Sioux city in one thousand nine hundred and nine that accident all of the major changes that occurred inside of Ge and the way we stood up safety practices ultimately created independence with our engineering or organization and visibility. Right down to the nooks and crannies crannies of the company. All of that was present when I joined ten years later and everybody referred to it. That's what's going to happen in this company. That's exactly the path we're going to have to take AAC. But but Molin Berg that is an asset an asset. So you think he'll be here in a year Dave or I've seen people say wants. Is it back in the air. Six months later. Maybe there's a change and why speculate on that you know how difficult and how big the program is and remains through the course of the next next year right if we successfully get from where he started to where we need to end up I would do that as a very significant milestone and something that speaks to his leadership and courage and his ability to execute and get us through this and yes the board deliberates every single meeting on the subject of our leaders. And how well they're doing and do they have confidence and to date and his recently as Sunday or Monday evening Sunday evening. He has confidence Dave. There had been a lot of news reports in the last month. That said that you were brought in to kind of manage strained relationships between Dennis Malmberg and the board. How how would you react to that characterization? That's that's a false characterization. Dennis has a relationship with all of or board members. The he talks to them. They each bring a sort of a special skill to him. My point of chairman was very much about division of duty and the that experience I brought from my aviation days and what I think is the significance overhauls that have to go on inside our inside our company to increase visibility on the subject of safety straight up to the board and right down to the bottom of the organization and create more independence in the functions sections that represent safety. Do you see eye to eye on what has to happen to get the match program back in the air and approved by regulators around the globe. Yes we do and I think honestly. I think think Dennis appreciates this help. Dave curious a lot of people will hear this and they'll hear that the board is deliberating or meeting on a regular basis discussing this but there are a lot of people look the board over the last year and say what have you been doing. Why haven't you done more sooner? Were you too slow to act as a board while no one's ever gonNA claim that they were fast enough So and I'm the last person to say that but I will say this has been one very active board so between Indonesia and in each roughly four months very tough time just trying to get everything we can out out of the NTSB investigation or the Indonesian equivalent of that. Learn the facts understand what has to get done fairly early on that assumption that deadly assumption around what a pilot would do in that circumstance when that boundary condition was tested that begin starting to come to light. No question about that Ethiopia happens everything changes And our board is in full full gear and me me included. We went down to the engineering organizations with a new safety committee. That at that time was we didn't know if it was permanent temporary. But we're on with it. What we learned in that committee is is the process? They undertook to make the decisions and ultimately surfacing that flawed assumption and anyway it was sort of clearinghouse clearly. Noah's hiding anything. It was a set of engineering decisions that ended up being wrong and our job now is to make sure that whatever processes we have whatever prices are regulator has that those processes never allow for this to happen again that that assumption just because history suggested it was a great assumption just because history and the record suggested that turned out. It wasn't right and we have to test that every day. But you know representative defies. You'll last week. You were watching the hearings. He said look. There was an email that was sent from a Boeing chief technical pilot that Dennis Muilenburg and some of the executives were aware of that essentially brought to to light this question of whether or not executives were aware of concerns. With 'em CASS. I've talked to a lot of pissed off pilots. They said we were the backup system. Can we be backup. We don't know something's going to take over our plane they are There's quite a bit of discontent out the aviation community about that. Was the board aware of that. Before Ethiopia crash separate the first of all the I am was discover covered and turned over to the authorities that we were meant to turn it over to the question you're asking is when it was written was it surfaced then as a concern was at fleshed out. Is there a broad culture question. The answer is it wasn't do we wish I should had. Yes what did have resulted in something different around that assumption. That went wrong. I'm not so sure that I would hope hoped that it would. But none of that happened so our job is to make sure that it will happen. I do not believe that. Instance that isolated instance is indicative indicative of a cultural problem. I have not seen that in the many touches that I have had because you know they yesterday. Representatives Representative Larson. They sent a letter to the rest committee and they essentially said there's a culture of concealment of not being one hundred percent up front when it comes to safety and I just don't I just don't see that I don't I believe it. I have many touch points inside Boeing. I always have that question of culture and anybody's willingness to trade safety against anything else. Never seen it never touched it. Don't believe now. Don't confuse that our culture on this subject can get better. We can do more with visibility. Everybody knows that we can strengthen all the independent arms that are meant to put judgment against every decision in favor of safety we can strengthen those we can increase sort of authority across the company and those are the steps that we are going to take Joe in your view. What's the right right balanced between the company and its employees and the cooperation with regulators in the the FAA? Obviously the I can't imagine and the FAA trying to certify something without a close working relationship with the company and yet if it's too close then figure bigger than maybe the FAA is doing Boeing's bidding Ford. So how do you get that balance right from here on out because that's going to be something that people look at closely honestly I. That's a great question that definitely came up in the hearings. I just don't want anybody to be confused. Reform will happen. Form has to happen the system. Let everybody down. I totally understand that delegation of authority over a fairly lengthy period of time has delivered incredibly strong results that safety record demonstrates that and the involvement of the most technical of the team at Boeing and their involvement in that process good one if a rebalancing has to happen by way of reform so be it so be it. I get that I think both both the FAA and ourselves will look hard at these La Carte at all of these a practices we will attempt to improve on our own and we will encourage reform four at every at every. Turn all in the name of safety squawk pod. We'll be right back. What kind kind of Tech Company does the world need today? One that applies smart technologies at scale with purpose and expertise. Not just for some but for all with with a AI. Blockchain and quantum technology IBM IS PARTNERING WITH CLIENTS TO DEVELOP SMART scalable technologies that help businesses work better better together. Let's expect more from technology. Let's put smart to work visit. IBM DOT COM slash smart to learn more. You're listening to squawk pot with more from our exclusive interview with David Calvin Boeing's chairman of the board. Here's becky quick Dave we we've had people analysts and others who have come on the show and defended Boeing saying look if they think a big part of the problem with this was a lack of pilot training and some of these incidents. Do you think that this was a situation. Where pilot training wasn't up to snuff or was this an actual problem with the system and the design? Becky there were a a lot of contributing causes. My our job is to fix. Fix 'em gas and make sure whatever inputs ultimately come about in that cockpit at that moment do not create a pin known him. There is no question. The fundamental assumption we designed around was flawed with respect to how a pilot would react. And that's our job is to fix that assumption and work with that man machine interface with all of our customers and all of the regulatory authorities around on the world. If you ask me that is the that is the center of the issue that has to be addressed as we go forward and develop every next new airplane. The the sensors were you had to put trust in at the end caps was reading. There have been people that said that pilot tournament flying planes anymore. More is too much automation at this. Point is if a pilot and was actually more involved with the takeoff than just relying on software elsewhere in an automated systems. Would the same thing have happened to these guys. Fly planes anymore. Cancer the second part. Because it's speculative live in nature pilots to fly airplanes less and less in terms of controlling them up in flight. But I do think we're past a sort. SORTA that that moment we are going to have to deploy automation. We are GONNA have to ultimately almost almost make these airplanes planes fly their own. Make no mistake. I wouldn't want to get on an airplane without fat pilot their judgment their behavior at moments of critical local importance is. That's why get on an airplane. So forget my life at Boeing. A and so we're going to do everything in our power to make their job easier and it will likely increase the level automation in the cockpit. What spellings relationship with the new head of the FAA he? He seemed like he was irritated with with the company at least in recent weeks a- based on some of the release of information that had gone to the criminal investigation but not necessarily to the FAA. Can you tell us what the latest development is in that and your latest conversations. Well Dennis appropriately apologized for that situation in. None of us are. Nobody's happy about that. He's exercising his independent. Says the regulator. So I don't even want to suggest gest. There is a relationship our respect for the role. He is in and our respect for the judgments he has to make over the next Next month or two I don't again I don't Wanna I don't WanNa suggest we have one. He's doing his work. He's doing it the right way. And he's going to listen to everybody inside his regulate Regulatory Authority and make sure that everyone is comfortable. This airplane is in fact as safe as we believe it has dave let me ask you about the airlines. Your customers customers Gary Kelly. CEO of southwest was on our air not long ago. And he's very upset. I mean he came out and said I'm not happy with Boeing it all and they are going to consider looking at Airbus as a possibility to find a future. I've been very clear. We're not happy where we go from here is a question. I've also made clear that will address next year as to whether or not the strategy that we've deployed for forty eight years is the one that we want for the next like forty eight years but you guys have been to in a pod. Since they started in nineteen sixty seven he said that. What did you think? I said sort of good for that Gary Gary. Rei I've known for a very long time he is. He's a fantastic. CEO He He's objective about everything. We have let him down. There is no question we've let him down. He was entirely dependent on the Boeing Company in the seven. Thirty seven fleet. He has confidence in that fleet. He does he knows at his served him well and he knows it has served him safely but this gap where he needs capacity. And it's not. There is a real problem for him. Anybody at that moment in time has to make the decision that we're going to consider other alternatives. I get that so we're going to have to step up to the plate. If and when that day day happens and put our best foot forward and we're going to have to have a Max back in the air that's flying safely maybe safer than any airplane. That's ever flown. Does that mean even greater compensation sation in other words cutting the price on the plane. COMPENSATION IS A. That's that's a decision way long from now right now we are. We are focused focused on getting this airplane back in the air. We price our planes against our competition. We always intend to win and we always sell value. How you in the process? I don't think anything will change about that. becky Dave do you still anticipate that the seven thirty seven Max Program will be approved. The new program approved by at least one regulator and it will be back in the air by the end of the year at least somewhere in the world. So I'll reiterate a very important point and ground rule that everyone set early on inside Boeing. The regulator will make that decision. So I want to state that right up front and we are going to support everything they do and cross every t and dot every I in the process right now that schedule suggests that it will be that. What you just said will happen that in fact our airplane airplane we'll get certified as we turn the year? We can begin to move forward on getting these back in the air but again subject always always to the FAA's schedule did you WANNA cut production any further. There's been reports that you have been an advocate for saying either shut down production altogether in the Max or bring it down even lower than forty two per month. Have you been an advocate for that. I've been advocate for stability and so so the planned increases. Now if you'll recall back when these accidents happened and immediately following Ethiopia I had an objective active to take the pressure off the company in every way I could think of and one of them was to create some stability on the seven. Three seven Max line. At that time we were running at are fairly low rate forty two relative to the what we were predicting but my advice and by the way this wasn't a debate accepted accepted readily by the team was yes we're going to stay at forty two and why stay of forty two. Why not drop to thirty well? Because there's stability involved in our workforce and and skills and knowledge that we wanna stay stay the course. We won't WanNA hurt those folks. We don't WanNa bump through the union lines. None of that works for us or worse for the airplane or works for the name of safety so we have worked very hard to keep that stable and steady for as long as we can and and we have looked at our balance sheet and all the credit issues that you face in doing so every step of the way every month there's regular around evaluating that and our our hope our desire is that we get the certification. We get returned to service and we never have to move off that number Joe. Seven thirty I. Seven Max is so important to Boeing. I can't imagine that there'd be a successor airline in the works any time really really soon that this needs to be salvaged and saved obviously can will people a year or two from now. Say I'm flying on a seven thirty seven Max and it will be called a seven thirty seven Max. There's no plans to change the name of it. It and it will be a proud brand for for Boeing eventually reputation. Is that possible. I think it's possible. The the entire companies dedicated to that. Your question started with a phrase I would never use which is salvage. That's not what the that's not what. This is This airplane has been updated several times over the course of its its tenure out there always with the latest technology and safety regular You'll requirements in mind so it is a modern airplane and this control system will be fixed and it will be safe and it will have been tested like no other control system in at least in my history in the aviation industry and this airplane will fly and it will be safe and I'll fly it and my family will fly it and there's the only way to win. A brand back is not advertised or to talk about it but to win with every next flight and every touch it will be called the Max Max it will be called the Max no plans to change the name know. Jim Cramer is tweeting. Dave and he points out something that Doug Parker from American Airlines has told him. Recently and and Boeing he thinks owes his company. Hundreds of millions of dollars also says that those costs would be borne by Boeing shareholders. Not by Americans. What's your response? It's too that there's no question. There will be settlements in Doug is Doug's writing Doug's been very clear with me on that front as well as every other. CEO Oh that's been affected so there's no question there will be a fair number of settlements in and yes our company and our balance sheet has provided for what we think that resolution will be so. There's a lot of work between here and there to to resolve that but yeah we understand that Doug's right and we intend to satisfy him. Do you think your company is. It's getting drawn into the trade talks and now potentially used as a pawn in what's happening between China and the United States right now. Well I certainly hope not. And I'm going to operate under the premise that that it will not trade as completely separate discussion. It's big and it's important. The Boeing Company long-term but no way shape or informed. Should anything get in the way of the subject of safety and the recertification effort day. We we don't have much time left but one last question we have for you is I think there is a perception that the board. You talked every once in a while nine every month but every couple of days. How often does the board talk about? How often are you guys saying? Here's where we stand on the Max. Here's what needs to be done. I don't think a week goes by where I haven't talked to. At least two or three board members at least to gain perspectives to inform them to make sure that we are up to date on everything reminder every he day we get an update on a plea update on the status of the Max. And what's happening. With the software development release approval certification et CETERA. So this is a very involved board admiral GM boss. Jani was led our safety efforts and drive deep into the company. He's done on an amazing job. You'd think he was working fulltime on this. I think most of our our team believe he is and we thank him for that service. This is a very involved board. It's doing. It's very best to cope with a very difficult situation. We are not trying to rewrite history. We are simply trying to take every next half step forward the right way. Go Dave Boeing for years one of the most respected names in the world respected companies. And you work with Jim mcnerney for a long time and those those. I don't know whether I'd call them. The glory years at Boeing but obviously at a very successful tenure is capable of. Do you think returning bowing to those days. Did it did Boeing lose a step one loss mcnerney or a tough thing to ask but go ahead. Let's talk to very different errors and you may remember. When Jim came in and CEO he came in under dire circumstance based on a serious compliance issue in defense side of our business so and he brought our company back from that and he did really really well? This situation's very very different. Dennis came to US highly qualified. He is an engineer. That is helpful But he also ran. Big businesses inside Boeing. He knows how to design airplanes. He delivers aeroplanes and he has provided them safely to his customers and he responds to them when when he's asked questions so he came in qualified and now he is going to experience in his first period. One of the most difficult situations any CEO. That I've ever known has lived through. So if he can get us from here to the endpoint and the endpoint being a Max. That's flying in service and accepted by the flying public and begins to restore our brand. I might argue. He's just about the most qualified executive in the world to be running. A company like Boeing. So all of us have been through. co-chaired know how tough and gritty these experiences are. We're GONNA support dentist through this process and open we get to the end of this and we're not going to project when we get or how we get but if we get there the way I think we will. Dennis can be one highly qualified. Peo- WE'RE GONNA leave it. We're GONNA leave it there. Dave Kowloon Chairman of Boeing. Thank you very much for the extended interview. Philo thank you very much. Bring it to us from CBC headquarters. I appreciate that very much. Thank you still more. Swath POD Cup. The other stories that had US talking today and Private Equity Pioneer David Rubenstein. We'll be right back. This is walk pot you buy in three to one good morning. Welcome to Squawk box here on. CNBC we are live from the Nasdaq market site in Times Square. I'm becky quick. Along with Joe Kernan Andrew is out today our our guest. This morning is Surat sappy. He is managing partner at Douglas Lane. He's also CNBC contributor. And it's good to see you today so yesterday One of the websites I think it was zero zero hedge. It said China planning to surprise trump negotiators with a last-minute demand for phase one to remove previous tariffs on. This is never been talked about delaying future. Terrorists was the most we were going to agree on. Trump has been getting king traction because of the bite of those previous tariffs and China's go. This has never been on the table now. China's going to demand that that's done before they may. Hey because I figured it was done today. These tariffs are now part of the negotiate but the way that it was cast yesterday was that it was almost like An appeasement or almost like throwing in hand where we're now excuse as a nation's or is it a backing down negotiations but but I think it also means that a deal is is more likely to get done in the future so much saving face each side wants to say we got what we wanted out of right now if that happens the markets are going to like that because they've been so much of this negativity while we're not going to give you anything or does the market care if this is the deal that comes without a lot of teeth it doesn't heaviest property and some of the others or do they want a truce and no more ramped up sort of phase. One do we want to give up. What was working? I force them to the table. I I think they will be part of that if we give up a little bit of that but I think the the what. The market's really looking for is going forward. Are you going to continue conversations. And I think that's that's what companies are looking for because right now so many companies are frozen and cap axe and see. I think I wouldn't want the company's negotiating right now China. I think they'd say just hold it. Depending on which companies I think the market in general thinks that they've got to make the three months quarterly number. And we're doing things so I think think they'd want to. These are the tariff working these are the tariffs that have China wondering companies that are impacted by it would probably say go. Hard earned packed the retailers. That are complaining complaining about it because they're being affected by but some of the others. That aren't so I think it's both sides have to kind of say. How are we going to figure this? Bring up retailers because the the tariffs that they're talking about largely impact clothing a large screen. TV's a lot of things that consumers go to consumer spending part going into the holidays and that's the part that's really been in keeping our economy stable at this point and probably the thing that you could see. The White House came on I. Because they don't want to impact America's but you won't hear the word caving in it'll be part of the negotiation because we're going to get something else better get you know we'd take those off but we gotta get something back posibly the IP issues. We're getting close on things that people said would never ever happen. I've been sneezing allergic. Thank you allergic to big losses. Uber's third quarter loss widened into one point. One billion dollars believe them that they get profitable by the market does based on the reaction companies. It out spent rivals offering discounts counts invested heavily on new ventures like self driving cars and drones revenue though rotated rise nearly thirty percent which was above forecasts also gross bookings which include rides food delivery and freight increased twenty nine percent however costs rose even more jumped by a third. Nearly five billion. Never the less lupercio tells. CNBC the company does see a path to profitability was a very significant beat on the top line in terms of revenue growth accelerating and the bottom line. We increased our two thousand nineteen the midpoint of our guidance in as far as EBA dog goes by two hundred and fifty million. Well we haven't finalized our planning and it's GonNa take a lot of hard work from from a lot of folks. We are actually targeting in twenty twenty one for adjusted Eva dot profitability. Full Year. Uber's down more than five percent today about thirty five percent since the IPO. Go back in May. The stock could be squeezed. Further tomorrow in the lockup period ends you know what that means employees can then cash in their shares in a programming. Note Uber C. O.. We'll join Andrew Live tomorrow at the New York Times Deal Book Conference Malmberg is going to be on. And then perhaps even more importantly Kim Kardashian Kim Kardashian West. Yes Chris. I'm like friends I feel like I feel like we're friends tastings that's GONNA be interesting. What goes through that person? Oh Yeah Alex Gorski from John J just back to Uber. Let's go through some of this. First of all he said profitability on an adjusted EBA Dhabi's earnings before interest taxes earnings before everything an adjusted right in and lifts at the same thing. And I think if you're looking at the equity markets today companies that are increasing price to sales but not price to earnings are getting killed by the market. And this is like this is one have Mawson's big investments and getting burned on we work. You're now talking about people saying you're GONNA show us up half the problem and this happened to grow up. This is happening to companies that. When they came came out the UNICORNS did very well but the street is now looking for real earnings real growth? So you're getting positive earnings reactions from companies like facebook and Google rule. But when you look at some of these companies even though they're big size they're not getting closely you don't think we should use the headlines that we've been using since last night which is expected to be profitable by the end of two thousand eight hundred chested even the crap not profitability. It's it's not. I mean it's adjusted before we take anything out of the cost that actually have to be paid. Certain in costs are included. They're just talking about that. You can get away with it. It's also two years out and I think that's the thing I think that's the thing assists was six hundred receiving a very different way so I think you can basically make that any yes. It's just like adjusting. What are you writing off in over there and I think that when the clarity comes to that then I think the street will actually give them some confidence? The next and final guest on today's podcast cast private equity legend. David Rubenstein Rubenstein founded the Carlisle Group A nineteen eighty-seven today the firm manages more than two hundred billion dollars around the globe but Rubinstein's signs enthusiasm for us. History is almost as impressive as his investing he owns and original copy of the Declaration of Independence and his philanthropy transformed restoration projects projects of the Washington Monument and the Dome of the US capital. He joined squawk box today with. CNBC's Leslie Picker. At the Greenwich Economic for David Rubenstein last joined the show in August when he said that the economy is due for a recession. It's too hard to say what's going to happen before November after pepper but at some point in our lifetime there will another recession in today's interview. She admits it might not be as imminent as he thought A. That's where we'll pick up his conversation with Lesley. You still think that we're due for curve recession. There will be a recession at some point. But I don't know why we always have them on when it's going to happen. I don't think today there looks like there's going to be a recession in twenty twenty. I think there's enough strength in the economy. Go Pass Twenty twenty. I can't predict further than that. But right now. I don't think there's a recession likely in twenty twenty unless some exogenous event. We can't predict all of a sudden on happens in a geopolitical world. One of the big topics on the campaign trail has been this idea of wealth redistribution and yesterday on CNBC. Leon Cooperman told Scott Wapner CNOR he he calls you a philanthropist with a capital P as an example of a wealthy individual who should not have to pay more taxes because of all the money that you give back to society Heidi Small P. Birdies Bernie. Marcus Ken Langone Michael Bloomberg David David Rubenstein there. Philanthropist recap appease. Do you agree with his dog in the fight is a very smart man but I would say generally I am giving away we all of my money. I signed the giving pledge one of the first forty to do so. And I'm going to give away more than half basically all my money and I think that taxes are different issue than philanthropy anthropic. I think the taxes now in the United States are not completely fair for everybody. I think there could be improvements. I'm not sure everything that lasts. Tax Act was perfect but no tax. ACAS DOC is ever perfect and I think tax inequality is a big issue. But I don't know that there's going to be one solution. It's gonNA solve everything I don't think all of a sudden they wealth tax for example would solve all our society's problems if one could ever actually implemented. Do you think there are improvements that needs to be made in terms of how the taxation of the super wealthy in our our country always make improvements rubinsohn taxes. But I'm not sure that there's any one thing that's going to solve our problems if you taxed upper income people. There aren't enough of those people to really make a wealth distribution affect. It's going to be significant. There just aren't enough people so you have to do something at the middle class. The problem is that the middle classes. Roughly sixty five thousand dollars per family of four and people don't like to get tax to that level so there just aren't enough people at one hundred thousand three hundred thousand eight hundred thousand dollars and above to really make a gigantic wealth. Redistribution I think taxes will be a big issue in the general election campaign paint. But I don't expect to see any major tax bill or anytime soon because we haven't had one for many years we had one in two thousand seventeen. It takes about four five six years before you get another tax bill because it has to be a lot of Supportive of sport where there's not one right now for a major overhaul the tax code again. I think there's a change in party and while you have to change which both houses as well Because taxes are presents talk about taxes when they get an office they realized that the House Ways and Means Committee really writes a tax laws and then the Senate Finance Committee adjusted a bit. And there's a conference committee. Presidents have some impact on taxes. But not as much as they might think when they're campaigning well speaking of changes under a potential. Oh new leadership senator Elizabeth. Warren has proposed a set of sweeping changes for your industry the private equity industry looking at Among other things making GP's responsible for the debt and pension obligations people. I've spoken with in the industry has said this would be you know a nail in the coffin for private equity. Is that something that you think is realistic. I don't think it won't likely happen happen. I don't think there's any political support for her proposal and Congress that I've seen from members on either side I think when you run for president you say many things you think are going to get you votes and you realize when you become come president. Some of those things aren't going to happen so I think it would be a disaster for the industry but I think it would be disastrous economy. Private equity creates a lot of jobs and preserves a lot of jobs and pays a lot of taxes taxes and we are the center of the world in private equity the United States. And if we're to hurt this industry I think it's GonNa hurt the US economy. And unfortunately I have to wrap here but I do WanNa know you had a new book. If that came out just last week well thank you for this. Dorian it's about my effort to educate members of Congress a little bit about American history. I interviewed great. Historians of quantum members of Congress. I once a month and this is a summary of David really appreciate it. That's the show for today on our rundown tomorrow A.. Rod Former Baseball player Alex Rodriguez CEO CEO of the a-rod corporate real estate development and investment firm. He'll pinch hit on squawk box tomorrow. And we'll bring it to you on. The squawk box is hosted by Joe. Kernan becky quick Andrew Andrew Ross sorkin tune in weekday mornings. CNBC at six am eastern to get the smartest takes analysis from our TV. Show right into your

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