Davos 2024: Josh Friedman, David Rubenstein, Steve Schwarzman, And More

Following are excerpts from the unofficial transcripts of CNBC interviews which aired on CNBC’s “Squawk Box” (M-F, 6AM-9AM ET) today, Wednesday, January 17 for Davos 2024 in Davos, Switzerland.

Interviews included: Canyon Partners CEO Josh Friedman, NYSE CEO Lynn Martin, Inflection AI CEO & DeepMind Co-Founder Mustafa Suleyman, Cisco CEO Chuck Robbins, Carlyle Group Founder David Rubenstein, EY CEO Carmine Di Sibio, Pagsgroup Founder & CEO and Celtics Co-Owner Steve Pagliuca, Uber CEO Dara Khosrowshahi, ServiceNow CEO Bill McDermott, Blackstone CEO Steve Schwarzman, Goldman Sachs CEO David Solomon and Coca-Cola CEO James Quincey.

Interview with Canyon Partners CEO Josh Friedman

Friedman On Fed Cuts

JOSH FRIEDMAN: It’s a tough business trying to outguess personal choices on these things. But in my view, as long as the unemployment rate continues low, which it’s likely to, it’s been under 4% for 23 months in a row now, as long as the stock market remains pretty strong and valuations remain elevated, as long as there’s a ton of federal spending that’s going to take place where the money’s been allocated and it will be spent. It seems like there’s enough tailwind that the Fed doesn’t really have to engage in great rate cuts. And they maintain a lot more flexibility to contain the last bit of inflation, which is always the most stubborn part by being slower than the market anticipates. There’s a pretty big disparity. I think between the market’s expectations and what economists expect right now. I’d be more on the side of the economist personally.

Friedman On California Being A Challenging Real Estate Market

FRIEDMAN: California is a challenged market. There’s a lot of out migration, there’s changing use of properties, etc. So and we do have some equity investments in real estate and I think right now the market is struggling to figure out what cap rates even are in commercial real estate.

Friedman On The Three-Day Work Week

FRIEDMAN: I don’t think so. I think people are coming back to work. I think people like being in the office. I think people who run businesses like people in the office.

ANDREW ROSS SORKIN: That’s true.

FRIEDMAN: And I think that businesses run better when people are in office. so I think that I don’t really think that’s the essence of it.

Interview with NYSE CEO Lynn Martin

Martin On IPO Market

LYNN MARTIN: It hasn’t been great. You haven’t seen the amount of deal flow that you saw in 2021 for example, but you know, I look at those two different years as two different tails on the bell curve if you if you will. The public markets have always been open. You referenced Kenvue, you referenced Birkenstock those are two huge deals that actually got done last year and got done a good prices, and their stocks are trading quite well in the secondary markets. It’s always been a question of valuation and what value founders would expect to achieve in the public markets and importantly, what does the volatility look like? So it’s not just about day one, what different systemic issues are in the market that can influence the volatility of secondary trading.

Martin On 2024 IPO Market

MARTIN: I’m incredibly optimistic about 2024 and the pipeline of companies that we’re working with. We actually had an IPO last week to open the markets Smith Douglas Homes, who had an incredibly successful IPO, particularly given the industry that they operate in. Priced at the high end of the range, stock opened up 15% on IPO day and has continued to trade at that level. Gives us a lot of reason for optimism, and we’re working with quite a few companies who are on the road at the moment to debut them in the next couple of weeks. So I think you’re gonna start to see some companies come out in the next couple of weeks, not just in the next couple of months.

Interview with Carlyle Group Founder David Rubenstein

Rubenstein On Fed Rates

DAVID RUBENSTEIN: Nobody really knows of course and trying to predict what this Fed’s going to do is difficult but the Fed does generally telegraph what it’s going to do pretty much in advance—

JOE KERNEN: Know what the economy is going to do and that’s what we need to deal with.

RUBENSTEIN: Well, look, Jay Powell says I’m very data driven. The Fed is data driven. So have a look at what the data says right now. It’s too early to say.

KERNEN: You need to tell me what the data is going to be.

RUBENSTEIN: Well, they’re not going to make their next decision till March. So there have a meeting in January but they’ll just look at the data and they’ll wait until March before they do anything almost certainly. The concern that I’ve had is that when you get into a presidential election year, it’s very difficult to cut rates when you’re right in the middle of a presidential election season because the party that’s out of power will say well, you’re trying to help the party in power. Now Jay Powell is Republican presumably is not trying to help Biden but he’s trying to do what’s right for the country. So if he starts cutting rates significantly in September, October, November, or before the election, November, people will say, well, you’re helping, you’re helping the Democrats. And I don’t think he wants that.

Rubenstein On Inflation

RUBENSTEIN: Well, the law was changed when I was in government so that the Fed has to worry about not only inflation, but also by unemployment. However, fed shares are known in history for what they did on inflation, either getting it up or getting it down. And I think Paul Volcker is famous for not worrying about unemployment but worrying about inflation. Right. And he got it down. I think Jay Powell will go down in history for having done a good job if he gets the inflation rate down to close to 2%

Interview with EY CEO Carmine Di Sibio

Di Sibio On Slowdown

CARMINE DI SIBIO: You know what we have been seeing is there is definitely been a slowdown around the world, slowdown in our business so good way to gauge is to look at our business and look at our consulting business in particular. So that has gone through a slowdown. Companies have been spending less, they have been doing less on transformations and so forth. In particular in the U.S., actually in Europe, that has continued which, you know, to some people that’s surprising. But I do think Europe was catching up a little bit on this.

Di Sibio On Workforce And Layoffs

DI SIBIO: We were in a situation where our attrition rate, post Covid, our attrition rate was 25, 27%. You know there was the great resignation and so forth. That went down to the single digits very quickly and so in our business, when that goes down a lot, we end up with more people than we need in the short-term. We have been very careful at certainly adjusting our workforce. We also have to adjust our workforce with technology coming forward. But we want to make sure we’re investing in the downturn for when things do come back.

Interview with Pagsgroup Founder & CEO and Celtics Co-Owner Steve Pagliuca

Pagliuca On Pro Sports Partnering With ESPN

PAGLIUCA: Adam will determine that you know he’s been brilliant in terms of our media relations. And so the NBA has been great at looking at new models, you know, looking at streaming, looking at partnerships, and and if it works out if he if he if he thinks it’ll work out I think we’ll back him.

Interview with Uber CEO Dara Khosrowshahi

Khosrowshahi On EV Transition

DARA KHOSROWSHAHI: We continue to lean forward, but we see the pullback. I think that the key is that for us, we view electrification as a good business. If you look at our riders about 40% of our riders now, for example, in the U.S., have been in an EV and they love the product. Their average tips are higher for the drivers, so the drivers who got to an EV, our take rate is lower, so they’re making more money from us. Making more money because the tips are higher, so both drivers and riders love what we’re seeing. But then per Tesla, we have to go to OEMs and get them to lower prices and make it more affordable for drivers to make that switch.

Khosrowshahi On Drizly Shutdown

KHOSROWSHAHI: It committed us to move faster to build this one app for every delivery need that you need so it’s worked out for us in the end and alcohol delivery is one of the fastest growing parts of our business but it wasn’t working as a stand-alone. That’s one of the challenges a lot the smaller tech companies that are private who can’t get funded anymore is because these small stand-alone use cases don’t justify the returns on capital, but putting these products inside an Uber and Uber Eats makes a lot of sense.

Khosrowshahi On AI

KHOSROWSHAHI: The new version of AI, which is Generative AI, we’re very focused on, for example, productivity measures, helping our developers be more productive in writing code, our customer service agents provide better service once they, summary of what they’re doing, what the rules are, etc. It is very early, but I do think that properly used Generative AI will be a huge productivity saver for companies around the world, not just tech companies.

Interview with ServiceNow CEO Bill McDermott

McDermott On Generative AI Productivity

MCDERMOTT: It’s an amazing once in a generation moment, where generative AI meets the ServiceNow platform. So we now have engineers texting to actually code. So instead of all the setup, where you can text a blueprint to actually build a net new application to drive innovation in a company, and the cycle time to do that has been reduced dramatically because you’re getting right to the coding process.

Interview with Blackstone CEO Steve Schwarzman

Schwarzman On European Real Estate

STEVE SCHWARZMAN: Right now, European real estate is very interesting, which probably is a surprise to people but what’s happening is that interest rates were really, in Europe, were negative, so people could borrow money very cheaply. Now their cost of money 500 or 600 basis points higher so people who use debt to town their portfolios really are struggling and they have to pay down debt, so they have to sell assets. We’re one of the few people in the world who have a lot of money and like to buy things.

Schwarzman On Buying

SCHWARZMAN: People approach us with portfolios to buy, and we say thank you for the opportunity, but we’re only interested in buying a few types of real estate we want to buy more warehouses, more student loans, one or two other classes. So, if you could take this pile of stuff back and just give us what we like, we’ll buy it all so what tends to happen is they go back and they find all of this stuff of the type. We’ll buy, and they sell it, and they often bring their best stuff so we’re able to buy wonderful pieces of real estate at prices that work for us, and they get liquidity, and this is the start of what we call a distressed cycle for those owners.

Schwarzman On China

SCHWARZMAN: The Chinese, I think, have decided that they really need to reengage with the world for their own reasons. Right now, they have a negative foreign direct investment. This is a terrible situation for them and they want to reverse it.

Schwarzman On 2024 Election

SCHWARZMAN: I think we have an interested presidential election now. They are very high negatives, as you know, for both candidates. That’s assuming we know who gets nominated right now. It looks certain on the democratic side straight line, because nobody else is running. There’s still some other people in the Republican one, though they’ll all be experts, you know, say it’s going to be, you know, former President Trump so I’m in the let’s wait and see and see how this works. I’m, not into the hypothetical world yet as much as you’d like me to be and we’ll see what happens. There are always surprises in these elections.

Interview with Coca-Cola CEO James Quincey

Quincey On Inflation

QUINCEY: The main story is moderating inflation, coming into the landing zone, back to the classic story of earning the right for pricing.

Quincey On AI

QUINCEY: We’ve used artificial intelligence to design a coke drink, a coke variant. We had a program called coke creations, still have a program called coke creations, which is about making flavors that people can engage with, whether it was from space or Marshmallow the DJ, you thought it was a food and no, it was a DJ, and then artificial intelligence designed a version, which was cool and very engaging for people. I think the challenge is now, as we take those sort of applications of drinks, and we had a program at Christmas where you could make a coke Christmas card with AI. You could tell it what you wanted to be in the picture and it would make a Christmas card for you, and we put them up on Times Square, thousands of them. Next year, this year, 2024, it’s about, can we turn cool ideas into ideas at scale? Can this Generative A.I operate at massive scale for us.

Quincey On Interest Rates And Marketplace

QUINCEY: We make over 75% of the profits outside the U.S., and as the world economy has grown, the importance of emerging markets has gone up a lot for us, and so not all these currencies are hedge-abl. We certainly do hedge and start to spread out. I think we’re likely at the moment to see a bit more stability in the marketplace that’s certainly what’s happened so far this year long-term period of dollar strengthening. I think it’s all going to be who goes down when on interest rates is going to make a bit of difference, but we’ll have a hedge program. We’re committed to our investors that we’ll find a way to grow the earnings of the company while we manage the—

Interview with Inflection AI CEO & DeepMind Co-Founder Mustafa Suleyman

Interview with Cisco CEO Chuck Robbins

Interview with Goldman Sachs CEO David Solomon