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tv   The Exchange  CNBC  July 10, 2019 1:00pm-2:01pm EDT

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and shafta but now that trump is just flailing at the trade deficit, i hear an occasional democrat say we should just ignore the trade deficit. i don't think that ignoring or flailing is the right approach i know there's been a significant discussion here about crypto currencies. this constitutes crypto currencies in attempt i hope unsuccessful, to transfer power from the united states government to sanctions tax evaders, terrorists and drug dealers, while reducing the importance as the chairman indicated of the united states dollar as the reserve and trade currency madam chair, i know that we have an executive from facebook coming to join us, but ultimately, it is time to bring mark zuckerberg here he is the one that has made billions of dollars out of us, relies on the u.s. government to
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protect his billions, and now wants to undermine the system. but i see his problem, and that is he wants to invade the privacy of the average american and sell our data. and in order to compensate for that, he wants to provide privacy to drug dealers and terrorists, thereby establishing how dedicated to privacy he is so i look forward to bringing him here because the libra is an attempt to create a crypto currency that you could actually use to buy things. right now we can kind of monitor the bitcoin because to actually buy something, you need to convert it to the dollar mr. chairman, i want to shift to another issue. we've talked last time you were here about wire fraud. mr. gustuf and i got 40 of our members to write you and we just got the response
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today about the need for a name-matching system so that when you wire money, you wire money not just to an account number but to a name because especially in real estate transactions we've had a lot of people tricked into wiring money into an account because hacking and spoofing has caused them to do that the united kingdom is moving to a safeguard system where when you wire the money, you wire it not just to an account number but to a name. you indicated there'd be some difficulty in doing that here. i know that we have state laws here that establish some rules, but you certainly have the capacity to regulate the financial institutions you have regulations in this area you could adopt regulations that say if you're going to accept
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the wire transfer, it has to be wired to an account name, not just to an account number. how do you plan on addressing this issue where people are coned into wiring money into an account number thinking that's the owner of the property they're trying to buy? >> we understand it's a serious issue and that it's something that they do very, very organized crime kind of a way, hacking into -- they get a list of the real estate transactions. they try to hack into the players and they try to divert these payments it's organized crime you accurately obviously summarized the contents of that letter and i would say, you know, we have concerns about the matching name idea because it conflicts with some state laws we think that really the way to get after it is to get banks to have appropriate id from customers. but what i will propose, though, is let me get the people who are the experts in this to talk to
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you and your staff and try to -- >> and i would point out this is clearly interstate commerce. this is clearly federal jurisdiction legal and we've granted you the power. please use it. >> thank you >> thank you very much the gentleman from washington, mr. heck is now recognized for five minutes >> mr. chair, thank you so much for staying back i have a straightforward question five days ago the president of the united states said we have a fed that don't know what they're doing. so for the record, sir, do you [ laughter ] >> um, i would say let's take a look at the economy and let that be, you know, the report card. so, again, the economy is into its 11th year of expansion >> the longest in modern history. >> since we kept records which began i think in the mid-19th century. unemployment is at a 50-year low and has been for 15 months and we expect that to continue
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i think inflation is below where we'd like it we, as you know, we are concerned about uncertainties and other factors that are paying on the outlook and looking at changing our policy but overall i'd say that our economy is on a solid footing. >> so, despite addition agreements you and i may have had in the past about the actions, i think the fed should have taken with respect to interest rate raises i want to state for the record i do think that you know what you're doing i thank you for being here i thank you for your willingness and courage to stay independent. i thank you for your accessibility. you're only the third fed chair that i've had the privilege to work with, but you're amazingly accessible i thank you especially for your remarks earlier in conversations with various members, notably mr. stivers and mr. permutter regarding wage growth. in particular, not being tempted
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to characterize recent wage growth as adequate because it isn't adequate and as you know, i've been asking since i came to this committee when does america get a raise? and it's long overdue. but it sets up a bit of a, as it were, dilemma for me you have characterized here for me today that the crosscurrents confronting the american economy are trade and global growth. i want to know why it is, given that the if ed and you have accurately pointed to the fact that our economy is 70% consumer driven, why hasn't the fed called out more than a generation of lack of wage growth a threat to this economy? if we want to have a healthy economy that is 70% consumer driven, we've got to have some decent wage growth, and we haven't. we have to have a prosperous growing middle class and we haven't. so why doesn't the fed explicitly call out this lack of wage growth as a threat to the
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growth of this economy and the health of this economy >> well, i think we do i think we've been trying to promote -- >> you were asked and you said the crosscurrents are trade and global growth. the other crosscurrent, the other downward factor is the absence of wage growth is it not? >> i think it's really -- if you look at the -- go back to your point, go back to the turn of the century, what you saw was a decline in labor share and that has not been reversed so we're focusing on the change in wages but really the level they're missing -- wages are missing ten years of growth. so i think that's really the underlying problem we are getting reasonable wage growth, but we missed all of those years beginning again at the beginning of this century. so i think it's a very serious problem. we should do a better job of calling it out >> i look forward to you doing just that. phillips curve there was a recent article in
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"the wall street journal" that said in japan the phillips curve is dead. obviously the connection was alluded to here earlier, has become more tenuous even in this country. i would pause it and ask for your reaction that the fact is that if you measure the phillips curve in terms of u3, the connection's been more tenuous but if you do as you just now indicated in terms of percentage, especially 25 to 64, 25 to 54-year-olds participating in the workforce, then the phillips curve isn't dead, and that's in part why we're beginning to see some traction why would we continue to use u3 when it clearly isn't reflective of what has gone on, especially in the aftermath of the great recession where people keep coming out of the woodwork to join this workforce, and as a consequence that unemployment rate keeps going lower and lower, but we keep adding hundreds of thousands of people
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to the workforce is it not -- have we repealed the law of supply and demand, or can we, if we continue to add people to the workforce, expect continued wage growth? >> so u3 is just a number to us. it isn't the number. we refer to it quite a bit but obviously we look at a broad range of employment indicators i'm not sure i took your question though on this. >> well, i think my point is that we haven't reached full employment as long as people keep coming out of the woodwork. >> okay. that's where i thought you -- yeah that's what we're learning we're learning this. a lot of the margin where we've seen the improvement has been in labor force participation rather than unemployment, and that's great. people come in you know, you could actually see and you have seen in some months you've seen labor force participation going up, enough labor force participation increase that the unemployment
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rate actually ticks up that's a good thing. >> so i'm way over in the chair, indulge me to even allow me to ask questions for which i'm grateful two things, we need more wage growth secondly, i believe you know what you're doing, sir, and i thank you for it >> thank you >> thank you very much mr. powell, we have one more member, the gentleman from georgia, and then we will wrap it up. >> thank you for indulgence madam chair. i will try to be quick and concise. i do have just a few questions so i won't make any statements the first one realtime payments you and i have had this discussion before. do you have any idea when you may announce the decision of whether to get into a realtime payments or not? >> we are in the middle of -- we haven't actually gotten too a place where we're getting ready to make a decision, but i think
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there's been a ton of work, and so we're moving forward to try to make a decision, you know when, it's ready to do >> okay. what are the factors you're weighing >> so this was something that came out of the faster payments task force that was a group of involved -- small banks, large banks, you know, community activists, technologists, card companies, all of that. and there was broad support, particularly among the smaller banks as i mentioned earlier, for us to play a role in final settlement that was a recommendation that came out of that so we put out a proposal last year, and we asked for comment we got i think 400 comment letters, and we're piling through those and working our way through assessing the issues we have to look at two things. one is just the requirements under the monetary control act and there's also a big policy question, which is is there a role here. there are people who feel
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strongly that there is a role here for us, and there are others who feel not. so we're having to make a decision on that, and we'll be doing that >> okay. i appreciate it. if you keep us in the loop on that we have several parties, especially in georgia very interested in the direction you're going and so another issue regarding the tailoring of proposals, or the tailoring of regulation for domestic and foreign banks now that the comment period's closed, when do you expect final rules on that to be issued >> the tailor regulations for domestic and foreign banks >> okay. so the comment period for domestic and -- i don't have a date for you >> i think the comment period has recently closed. i'm just wondering -- from my understanding the comment period recently closed on that. >> foreign closed in june for domestic closed in january i'll have to come back to your office -- i mean, i think vice-chair coral said that we
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see most things being wrapped up by the end of the third quarter, and darn near everything wrapped up by the end of the year. >> do you anticipate that domestic and foreign will be done together? >> i don't know. >> with the remaining time, one other issue that's important, especially back in georgia small dollar lending when the fdic chair mcwilliams testified back in may, i asked her if they plan to address a small-dollar lending issue for banks. and she said that she was going to work with the other regulators to get this done. is the fed committed to working with the fdic and occ to come up with a plan for the small-dollar lending? >> i think we're doing that. actually, i think there's an interagency group that's carrying that forward right now. >> okay. would that -- i think we're all ready to end a very long morning. so i appreciate that and madam chair, thank you for
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your indulgence and i yield back >> thank you very much i'd like to thank chairman powell for his testimony today without objection, all members will have five legislative days within which to submit additional written questions for the witnesses to the chair which will be forwarded to the chairman for his response. i ask you to please respond as properly as you are able without objection all members will have five legislative days within which to submit extraneous materials to the conclusion in the record this hearing is adjourned and i thank you very much for your patience, mr. powell >> and that is fed chair jay powell wrapping up his day one of two days of testimony on capitol hill today. welcome to "the exchange" today. i'm kelly evans. and the fed chair not taking a rate cut this month. off of the table markets have been moving big time and then throughout the question and answer portion of his testimony today that just wrapped up we'll get to all of those market moves. first let's bring in steve liesman. the fact that, look, he even had
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a chance after he saw those remarks cross at 8:30 to water things down, and he didn't appear >> think\like, the serving of the turkey he brought a very large turkey of a rate cut. i'm not saying the rate cut is the turkey to the table and said here eat this. he was asked, kelly, directly by a congressman to trade uncertainty and low inflation. those two factors, does that mean you should lower rates? here's what he said. >> yes as i mentioned, we think that uncertainty around trade policy and also global growth, it's not all down to trade policy >> right >> there is something going on with growth around the world, particularly around manufacturing and investment and trade. and so that uncertainty is we think weighing on the domestic economy. >> as kelly said, not only from the report but also in the testimony, he accentuated the negative on a bunch of things.
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let's go through them. the jobs report, it did not change the outlook data since june has continued to disappoint concerns about global economic weakness and trade uncertainty remain look, if he had no intention at all of walking the market further back from its belief that a rate cut is coming. in fact, it's like he pushed them a little further. >> which is fascinating because think of what's happened since we last heard from him last friday we got the jobs report for june, and it was extremely strong 224,000 jobs added, way above expectations there had been softness in the adp survey there was no softness really in that report. and the big question, and you saw people then price out the chance of a rate cut and then, steve, within moments of his testimony crossing the wires this morning, and as you've seen every hour since, there is something else out there saying >> the euro strengthen the markets reacted
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instantaneously. two-year yield fell. >> it was quite extraordinary. i got a 23% -- but, you're right, was like 3 percentage points i'm curious as to his thinking here if i were a policy aer, i would want to call back a little flexibility, unless, and he knows this better than anybody, he's got the entire committee on board, and they are just like sort of salivating the cut rates right now. if that's where he is, and that's where the committee is, then he's okay in this kind of transparency but he does not have any flexibility, unless the data super outperforms or super beats expectations >> let's kick this around a little bit more. also joining us is michelle meyers craig callahan is president of icon advisers and briyan reynolds, guys, it's great to have you all here. you guys in the wake of this, correct me if i'm wrong, now have moved up that rate cut, forecasts say, yeah, it's going
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to happen at month end, right? >> that's right. we were kind of on the fence looking at the data assuming that strong jobs report. ism above 50 would allow the fed to have a little more time to assess conditions before making a move but powell very much adjusted the otherwise today. he made it very clear as steve said that this is a fed that is looking to act they're very worried about uncertainties. and they're looking at a broad range of data, mostly global data, in terms of informing this view so to me i think a 25 biscuit. they want to be aggressive they want to be early, and they want to ensure that this is a recovery that can continue, and they're not waiting to see evidence of slowing in the data. >> craig callahan, i know that you think that they've tightened too much last year, but i want to talk about the why they're doing this do you agree that the outlook is so gloomy that it justifies a half point rate cut at this
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juncture or should they be focusing on the inflation story and saying the growth numbers aren't that bad, the job trend isn't that bad. productivity is picking up that's actually good does the mixed messaging, how is that going to play out in markets, do you think? >> the inflation outlook is just so moderate. there is no inflation in sight so they have plenty of freedom to reduce federal funds, stimulate a little bit without any fear of inflation. >> without -- absolutely but my question to you, and i know that your long equities is should people be long equities should they be long, especially bonds, craig, when the fundamentals for growth, for example, aren't that bad i mean, the yields, mentioned this earlier, but some of these european corporate junk yields are negativeow i mean, if the justification for yields being as low as they are is that, oh, well, the german economy's weakened the ecb is the growth outlook in the u.s. really that bad are people all piling in way too
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far on this bond trade >> we're valued investors and we find stocks in the u.s. to be around 15% below our value stocks is cheap and bonds is very expensive >> so, mr. reynolds, you've been saying the markets for a long time have been pushing the fed to be as dovish as they are right now. does this then unlock a path to higher stock market valuations, and what do you think about bond valuations right now >> well, i've called this the all-weather stock market because when the fed was raising rates in october, stocks were at an all-time high. now market rates have been coming down since december, and the stock market hit all-time mays in may, june, and july. what's driving this is financial engineering and we're going to be getting more of this. because while the fed is on track for a rate cut this month, the bigger issue is that money market and financing market investors are telling the fed to cut even more. they're telling to cut five times in the next 12 months. >> wow >> that's the big issue.
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and the fed is not ready to do that yet >> steve, where does this leave -- >> i'm just wondering. -- go ahead. >> michelle, i know this is a weird metaphor, but is this like a bad b horror movie, there's a monster there, but nobody thinks the monster is going to get our hero >> who's the monster, who's the hero >> the monster is the trade unserenity the market's trading like the fed is going to cut rates to ward off, but there's no way we are having a recession it's hard to see us. my friend putting on the 3,000 s&p hat. >> i think there's a lot of concern on the concession. >> if we're going to have a recession, i don't think the fed is in front that far curve right now. that's my belief >> yes you know, you raised a really important point, which is how do we think about the fed's reaction function?
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why is it that they're cutting right now, why is it that the market's so convinced. and i don't think it's because they think a recession is around the corner initial jobless claims are low, we are still creating a pretty solid jobs clearly the yield curve is inverted and that's one signal that's flashing but the rest of the indicators are still pretty muted. the reason that the fed is cutting at this point is because they don't want to even tolerate below-trend growth they don't want a scenario where the economy is falling below trend. the unemployment rate starts to edge higher and you have even more subdued - >> i clipped steve's question, but to put it the other way is are they too concerned about a recession? they're about to cut rates by a quarter, maybe half a point. what happens if that slowdown that is completely hypothetical right now doesn't materialize? >> well, then i think they say, look, you know, we cut it was for insurance reasons
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the economy is running and they can reverse it >> that may be the key because it's a low-risk cut. if your problem is that you cut and you have inflation on the back end, well, we have very low inflation right now. i think that may be the reason why -- >> and it's a good problem >> very low-risk management basis. >> i think it's one of the strangest environments that we are in >> it's bizarre. >> it really guys, thank you. >> it's a bad horror movie, but nobody's going to get hurt we're going to be okay [ laughter ] >> i appreciate it, apologies for the quick response michelle, craig, brian, and our own steve liesman. coming up the representative and house financial services committee chair maxine waters will join me live just after this break also ahead coming up, iac chairman barry diller on the streaming wars regulating big tech
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what media merges could be coming plus, with all the streaming services being launched, a look at who's best positioned to survive. and the trump administration plans to overhaul kidney care. who is bound to benefit the you most most this is "the exchange" on cnbc to improve short-term memory. prevagen. healthier brain. better life.
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welcome back, everyone here's your cnbc news update at this hour. britain's ambassador to the u.s. kim darroch has resigned just days after diplomatic cables criticizing president trump were leaked british prime minister may praised his many years of service. >> this morning i have spoken to sir kim darroch. i have told him that it is a matter of great regret that he has felt it necessary to leave his position as ambassador of washington the whole cabinet rightly gave its full support to sir kim. >> german chancellor merkel was seen shaking as she met finland's prime minister, her third shaking bout within the last month but a spokesman for the german
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government says the chancellor is fine. thousands of fans lining new york city's canyon of heros to cheer on the u.s. women's soccer team the crowds were chanting "usa, usa. they have long hosted ticker-tape parades for veterans, leaders and hometown sports stars and they indeed are stars. that is the news update this hour kelly, back to you >> sue herera, let's catch you up on a couple stories it's time for "rapid fire. hear with their takes, we're going to talk more about that women's soccer parade in just a second but first we are going to talk some brit coin trading above 13,000 earlier today before pairing gains seema, you sat down to talk about crypto and all that. and they had -- well, everybody take a quick listen. some bold new predictions about facebook's new libra venture
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>> demistifies the word. it makes people feel a lot more comfortable. and our prediction is that every company will have some sort of crypto project within the next ten years. >> maxine waters who we're going to talk to in a minute, her first question to powell was about facebook's libra and now the twins are saying every company is going to have one company. >> they're saying it's not just facebook but silicon valley and tech companies are looking at building their own version of a crypto project over the next two years. so it certainly sheds light on how this ecosystem could be growing over the next couple of years. >> you're a coin expert. >> not an expert >> is libra a crypto or is it just emoney? >> what they call is it a staple coin which can be used to facilitate crossborder payments. >> they're marketing it as if,
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oh, yeah, now facebook's getting in, everybody's going to get in. it's a different thing >> i do understand that they're saying that it just allows a larger audience to even talk about crypto currencies in general. >> that's like a lot of people are buying cars. we think bike sales are going to do great it's not the same thing! >> from the very beginning of this country, every bank had their own currency there were these notebooks that you would have comparing robert frank's bank's dollar is worth x amount of seema's bank's dollar. so just the fact that we have a u.s. dollar by the government, that's not always been the case. so in a way we're going back to what was old >> and i think that's why the federal reserve has an interesting position on all of this and powell said we did meet with facebook about this coin next up, lady gaga is launching a new beauty line exclusively for amazon she gives retailers some serious star power as they are making a bigger move into cosmetics she said they're the right
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partner because it embraced self-acceptance. it will be available in september in nearly a dozen countries. >> so, it's a delicate thing all these luxury companies and even retail brands are going into partnering up with stars and saying this will sell. rihanna is partnering lmh, all going after these stars. and it's a new audience. these influencers are big with generation z if the price points are right and the product is right, fine but rihanna is now selling $200 t-shirts, $1,500 jackets that's not her audience. makeup - >> it's aspirational, though to be so rich to own that. but your parents have credit cards or kids' parents have credit cards >> i think this is good because her audience, makeup, amazon, that's a good thing. >> you know who else has credit for this is oddly kylie jenner she came out first on the scene
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with these kits. we talked about it making her potentially the first self-made female billionaire, whatever you want to call it. are we now just going to see -- >> are we at peak lipstick though >> they're going to exclusively sell just online with lady gaga. so the makeup counter is basically disappearing because you'd think as a woman i'd want to try out my lip stick and blush before buying it >> but it's easy to return it. send me five, i send back four that's an easy online business >> eric likes to try it out first before he -- >> i stay out of this. [ laughter ] >> but you have to admit we are wearing makeup full disclosure, we are wearing makeup >> it's not lip stick. >> a robert frank makeup kit, that should be next. >> i don't think the laida gaga colors would fit for cnbc's brand. some bright purple >> speaking of bright pufrple, the u.s. women's national soccer team has taken home their fourth
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world cup title from france. i've had difficulty following the contours of the argument here about are they or aren't they being paid fairly based on what >> they're paid differently. so they have agreements with their team so there is a national women's soccer league. it's like the nba but for women's soccer they get paid salaries from there. then they supplement them to the players that are on the world cup team the men do not get a base sal reed that's guaranteed they only get bonuses and it's based on if they win or lose so it's a totally different collective that's guaranteed they only get bonuses and it's based on if they win or lose so it's a totally different collectivethat's guaranteed. they only get bonuses and it's based on if they win or lose so it's a totally different collective wfrmgts endorsements you are maybe looking at a million dollars. without endorsements, call it 100 grand, maybe 200 grand >> but the payment discrepancy, is $400 million. for the women it's 30 million. so in tennis, for example, they
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have equalized the prize money, correct? >> yeah, like in wimbledon or the majors >> does soccer fall into the camp of, hey, that revenue disparity is too wide or not >> u.s. soccer is a domestic organization that gets its money from sponsorships, local tv deals, different things there. but they also get money globally from what fifa gives out to the teams that win or do whatever the world cup. so you've got different revenue streams. we know, look, a billion people will watch the men's finale. the entire women's world cup, all the matches added up would be a billion >> they're going to do great with endorsement deals and products but this is going to be a commercial massive wave. >> they just launched a product line of their own. the awareness is way up. we'll leave it there there's our short, condensed "rapid fire" today but we congratulate the women on their win regardless don't know if that's leading them towards equal pay but thank you all. let's take you back out to capitol hill this afternoon and
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speak with the representative in charge of the committee meeting with fed chair powell that you saw just a few moments ago joining me now is committee chair maxine waters. and chairwoman, it's great to have you welcome. >> thank you, delighted to be with you >> we were all struck by your questioning of fed chair powell as to whether he would stick around in the job if the president ordered him to go. how big of a concern do you think his position, you know, his staying on the job for you right now really is? >> well, there's been a lot of discussion about the fact that the president of the united states is interfering with the fed. the president would like to direct the fed and have them do what he would want them to do. and so i think it rattles the markets when that happens and creates a lot of uncertainty so i think it is good for the fed chair, mr. powell, to reiterate and to say over and over again that he knows that he is there for a period of time
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and that the president doesn't have the authority to fire him and should he get that call that i ask him about, he would not go, he would stay. and i had him say two times so that everyone would hear it. >> yes, you did. are you comfortable with the present level of interest rates? do you think they're too high or too low? >> well, no. i think that we should make sure that we rely on the independence of the fed to make these decisions. i don't think the president should dictate whether the interest rates should go down or they should go up. i think that we should rely on them to make these decisions they have a wealth of data that they are analyzing that they are looking at that they're dealing with all the time. and so i rely on them. of course, i have my own personal opinions about it, but i basically keep them to myself. >> sure. understood and, again, congress is the main way for their oversight, which is in more focus now than ever you asked about libra.
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obviously, this new facebook coin is a big concern for you, and we were just discussing it here what is the main question that you have about the introduction of this coin, and what role should the fed be playing in it? >> i have a lot of questions about libra. and as you know, i've asked for a moratorium because we all have to get up to speed on what is happening with this new cryptocurrency that is being introduced i'm concerned about the fact that it's based in switzerland what does that mean? we have a lot of information about switzerland and the fact that there has been a lot of money laundering and other concerns and so i want to know, first of all, why it's based there. i want to know all of the members now that are in the association, how they were recruited and what their interests are and how they plan on dealing with this challenge to the dollar. and so i think that as our committee with the responsibility for oversight and
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investigation, we must be concerned about our consumers and what this all means. and so we are going to have a hearing. i think it's coming up on the 17th and we are going to begin asking these kinds of questions and delve into what this new cryptocurrency effort is all about. >> cnbc just had an interview with the winklevoss twins today where they said they expect all the major tech companies will have this kind of coin in the future would you have equal concerns about all of these companies getting involved, or do you think facebook is uniquely problematic? >> no. i'm concerned about all of the companies getting involved with crypto currency. i think that it is a huge effort it will help to, you know, redirect the way our whole economy works. and so we are concerned about all of them. we are just starting out with what is happening with facebook because they unleashed and -- their efforts recently in the press with the media
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so we are going to start asking questions. but we are concerned about all of the companies that will be getting involved with crypto currency >> understood. we also learned this morning that the usmca could be headed to the floor in september for a vote we know it's something the administration is looking for. they say it'll do a lot to boost growth democrats have supported this bill as well would there be support to pass this bill if it were brought to the floor today? and is that something that you think should be done sooner than later? >> i don't know. i just have no idea about when it's coming to the floor and what the level of support is for it i just don't know anything about what we can predict about that >> do you personally support it? >> uh, i am not going to give you an answer on that at this point. >> understood. congresswoman, is everything okay within the party these days there's a lot of little squabbles it seems like.
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>> well, i think the committee is making more of the squabbles than it should there are different philosophies within the democratic caucus and then the republican caucus people disagree. sometimes they agree on things but it all works out, and i don't think that there is any reason to be overly concerned about any differences at this point. it shall all work out. >> all right we appreciate your time today. thank you for joining us fresh off that hearing on capitol hill congresswoman maxine waters of california we're going to take a quick break. when we come back, up next iac chair barry diller will join us from sun valley, idaho, to weigh in on time warners' new streaming service baktore down big tech barry diller right after this break.
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welcome back. at&t revealed yet another streaming service
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yesterday. hbo max is the field of competition among these services for your attention and your money getting a little too crowded. let's get to julia boorstin. joulea >> reporter: thanks so much, kelly. barry diller, thank you so much for joining us here in sun valley you just wrapped up the panels this morning and what they were hearing is the streaming wars with hbo max just announced. with that new announcement, that enterant in the market, who do you think is poised to win the streaming wars >> i mean, i don't know that you can do who's going to, quote, win this this is a weird transformation i mean, this is ten years ago you certain essentially had these six movie companies that had hedge money over the entire production distribution business along comes two complete outsiders, netflix and amazon. and they have totally up-ended
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what was a kind of a stable business, business in terms of how it functioned all throughout the world. if you owned a movie company, you kind of had a worldwide franchise. so now you have an arms race, never existed before you have a complete blurring of television and movies, which is only happened in the last couple of years you have these two new entrants which have forced consolidation on the old players but forced them to now make investments in their wildest dreams they've never had to make before so you have disney, which is mobilized itself like a true, you know, god knows superforce, wanting to compete in streaming because of these two big players of amazon and netflix. you have at&t who is
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reorganizing itself behind time warner, and they are going to compete. so, you know, how many people are going to be at this table five, ten years from now i think it's impossible to say >> but you said earlier this year that you thought that hollywood was irrelevant >> it is ielevant. >> but since you've said that we've seen disney unveil -- >> it's irrelevant to the extent that before anything those majors did was kind of an absolute you couldn't dislodge and you couldn't do anything, right? so along comes two outside players and they're completely everybody is dislodged and discombobulated because they can't get access directly to the audience so, you know, the fact that they're competing, the fact that you've got two now two big funded so to speak, they do have a lot of debt, players, disney and at&t who are going to enter
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this in a very vigorous way. but that has nothing to do with what we used to call of, quote, hollywood which was a cottage industry >> so now you've had the mega mergers and these new streaming services >> which one is going to win >> itself which ones are best positioned to compete with the likes of netflix >> nobody, i believe -- i've said this whatever, to my peril, nobody is going to complete with netflix in gross subscribers i think that they have won the game, and there's nothing that i can see that's going to dislodge them amazon's in a completely different business in that it's selling prime, which gives you all sorts of services, just among them is video and television disney has the best chance just because of its very, very popular content. and the money and distribution and the disney name that's put in behind it disney has the best chance to
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get a number of new subscribers, millions of new -- will they ever get to netflix? i don't think so i don't think it matters much. but do you think netflix losing so much license content to nbc universal and warner brother s, does that make a difference to netflix's trajectory >> i don't think so. >> here we are now, you have these new mega media mergers that have gone through what needs to happen now what happens to the smaller players? >> well, who is a smaller player >> well, cbs and viacom. you have lions gate. >> i've never thought, don't believe, that it takes size really because you have -- if you're making content, there are so many buyers, so you don't need to have size, you just need to have talent and some energy, and you can do well. can you build a big empire unlikely but, so i don't think that the smaller players are necessarily
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endangered all of broadcasting is endangered because what's happened with streaming and with other services is the only people who are along to watch commercials are people who can't afford to buy the goods that are being sold so, that's an existential long-term issue. but it's a fascinating time because it truly is, it is a giant arms race. so, when you have a giant arms race, it really is kind of last dollar in. >> and i want to ask you about these other platforms you mentioned. google and facebook facing growing regulatory scrutiny. both of them are here. they're competitors with both of your companies, icm expedia. do you think they need to be regulated and under what terms >> i've always believed in sensible regulation when you get
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to be of a certain size when you influence markets, there should be regulation that's tailored to some of the things that are outgrowths of your having certain kind of market size where you can dictate things that may not be in, let's call it fairplaying fields. best interest of all players so i think regulation is mandatory. i think that it will happen. i don't think these companies should, quote, be broken up unless it is proven that regulation doesn't work. i've lived in environment where's i grew up in broadcasting broadcasting was a very, very regulated world. you actually got your license from the government. they could take it away from you. that sword over your head made you act if you didn't want to act decently, it sure spurred you along the way. so i'm a believer in good regulation, and i think it has been lax that it hasn't come it will come i'm hopeful. >> barry diller, thank you so
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much for joining you us. i'm so sorry we are over time. i appreciate it. >> julia boorstin speaking with barry diller there and let's actually talk more about what we just heard for more on the streamin sara, anything, first of all, about his comments in particular strike you when he talks about this is a giant arms race, you know, when we're comparing the amount of, you know, new series in terms of what they cost to $150 million blockbuster movie, we're in a whole new era, aren't we >> we definitely are, kelly. and one of the things that he said that did catch my attention was that he said, disney is probably best positioned to obtain new subscribers that word new is very important. because you take a look at the lot of the services getting into the streaming arms race, if it's hbo, nbc, some have legacy services, where it's not about necessarily obtaining new subscribers so much as it is
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from preventing old ones from leaving. so if you're in a position to not only keep your old subscribers, but also bring in new ones, to mr. diller's point, that is a very strong position to be in. >> yeah. that's a great observation and one of the points you've made which i think is important to emphasize here is that it's not just for these companies about, hey, we would like to win streaming. they have to they have a lot of debt, especially at&t. and it's offering some hbo -- as a consumer, i now find it confusing. there is hbo max and hbo now and hbo go how important is it for them to get this right and get those new subscribers, to your point >> the marketing is going to be crucial here and to your point about it being confusing, there technically is an hbo max that even already exists in latin america. it's the combination of hbo and cinemax. so they're going to have to do a good job of explaining to consumers what this new service really is. and so for those watching, let me break it down hbo go is the service that you get that's digital through your cable subscription so if i already buy cable
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subscription through comcast or at&t, but i want to get hbo on my computer, i go through hbo go if i don't get it, that's when i'm going to subscribe and pay a separate fee for hbo now there are 8 million subscribers to hbo now that get the full digital subscription and lastly, we have hbo max, which is different from hbo now. that's, analysts say, will be $1 or two more than what you are getting. it has more time -- excuse me, warner media content in there. it's going to have the new "friends" library. so what hbo and at&t is banking on is, how can we get those hbo now subscribers, maybe the hbo go subscribers, to pay that dollar or two extra to be hbo max subscribers. the costs they have to weigh w why? eventually you lift to where your margins cancel out debt from the $85 billion acquisition of time warner last year.
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>> that's how "friends" became so important hbo now. i've got to try to watch "hard knox" this fall. where does this lead a bit hit with "stranger things." how important it is for that company. >> and for all companies what we're finding with consumer habits is that new content brings new consumers in, or it brings returning consumers in. old content keeps them from leaving, prevents churn. so if you're any streaming company, you want to make sure that you have a solid library of old content, what we call catalog content, to make sure that your casual streamer has something they can continually watch, whether that's an "office" or "friends." but you invest in the original programming so when they're done watching their catalog or are sick of it, you can get them to
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subscribe or tune back in. one phenomena i would keep my eye on, kelly, hbo and netflix, all of these companies are developing new catalogs. i mean, if you take a look at "stranger things" but also "house of cards" and "orange is the new black," these are series that will have hundreds of episodes and one day if netflix wanted to turn down some of its debt, i don't think it would do this, maybe one day could sell its catalog of original shows. expect everyone to be investing in new catalogs. >> not the same as having "the office" on in the background it's very soothing for some people sara, thanks sara fisher of axios. president trump signing an executive order today to move dialysis patients away from for-profit centers to less ce.nsive homear what this means for the kidney care companies that have been moving, next
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market but if you look at how they performed over the course of the week when this started to leak out from politico over the week, they took a big fall yesterday and are starting to climb back prezias is the other big company, controlling 70% this order aims to reduce the number of people with end stage kidney disease and shift the way they're treated out of the clinics that they have, and that the way people are primarily treated through dialysis to in-home care with die al aas i say and to get more transplants. and the third part of the plan is to increase the availability of the organs for transplantation. because kidneys are the things people are waiting for most on the transplant list, i. >> i'm sure that's another question i was going to ask, how are the two companies going to respond in this threatens their business model. >> so what people say about why davita is coming back today, not clear how this will get implemented or how quickly and they point out both companies are already working in the space
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of at-home dialysis. but if you look at other stocks today, we have alist of those potentially set to benefit from the executive order. baxter is one that a lot of analysts are saying they're already working at, and cvs, as well as united health are working in this space. and people talking about changing the system. so cvs to me presumably sounds like that's a walk-in kind of role but they're going to be able to provide some at-home services. >> yeah, this was on -- they were trying to innovate. >> a big change, even if it doesn't happen overnight. >> yeah. >> meg tirrell, thanks. that does it for the exchange thanks for joining me. it's time for "power lunch." that begins right now. kelly, thank you very much and welcome, everybody, to "power lunch." i'm tyler mathisen yes we do have breaking news we are moments away, seconds away now from more breaking news on the fed we spent the morning listening to fed powell in front of the house financial services committee. he made remarks that has sent
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the dow, nasdaq and s&p splint sprinting higher, the s&p up 16 points and sitting just four points shy of the 3000 now let's go to elon moy with the fed minutes. >> the members agree the risk to the outlook had intensified as of the june meeting and that many members believed additional accommodation could be warranted if uncertainty to the outlook continued. that view was shared by the broader group of fed participants many felt the balance of risk was now weighted to the down side there also appears to have been a very robust discussion of the arguments for a rate cut in the near-term. some felt that a cut could be justified to cushion the economy against future adverse shocks. some felt that a cut could be w warranted in ord t

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