Shownotes Transcript
Your best bottling plant employs 3,300 people. How do you get 3,300 people working at peak efficiency? Your best store has reduced waste, water, and energy usage. How do you make every store like your best store? Your best property has every guest raving. How do you make every property like your best property? The answer is Ecolab. Better performance, better outcomes, better impact. Ecolab. Now every location is your best location.
As America's leading business lender, Bank of America is on your corner and in your corner. With $215 billion in business loans and over 3,700 business specialists across the nation, we help businesses thrive so communities prosper. What would you like the power to do? Learn more at bankofamerica.com slash localbusiness. Bank of America, official bank of FIFA Club World Cup 2025. Copyright 2025 Bank of America Corporation. All rights reserved.
Bring in show music, please. Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. Delivery wars heating up. Uber's lawsuit against DoorDash. A lawsuit against Uber. An expansion into Turkey. Dara Khosrowshahi on the Uber rides and orders that just keep coming. We don't see any consumer slowdown at this point. We don't see consumers trading down to more affordable restaurants or pulling back from any of our services.
And the U.S. and China meet this weekend in Switzerland. Lazard CEO Peter Orszag says this is the beginning of a high-stakes road. But we need to get to framework agreements with the most important trading partners in this 90-day window. We're not going to get that with China. Plus, an escalation between India and Pakistan, a change of the FDA that's prompted a change in drug stocks, and a name change right here at home. We're conversant. Yes. Very conversant.
All of that today and much more. It's Wednesday, May 7th, 2025. Squawk Pod begins right now. Stand back, goodbye in three, two, one. Cue, please.
Good morning, everybody. Welcome to Squawk Box right here on CNBC. We're live from the Nasdaq market site in Times Square. I'm Becky Quick, along with Joe Kernan and Andrew Ross Sorkin. China's central bank and financial regulators announcing sweeping measures to ease policy. That includes cutting key interest rates to 10 basis points and reducing the amount of cash that banks must hold by its reserves by 50 basis points. Now, the central bank saying that the cutting of the reserve requirement ratio
effectively injects an additional liquidity of about 138 billion dollars into the market also announced some broad measures to try to support financing for key sectors that includes technology real estate lending for autos and a couple of other items and so i think it's that plus what you're about to talk about trade wars aren't good that's why they're called wars because there's casualties on on both sides but we're definitely seeing some strain maybe here as well i mean we had a
negative print on GDP, but I guarantee you China is feeling it. They may have, considering how much they export versus how much we send to them, they've got a lot more to lose.
Treasury Secretary Scott Besant and U.S. Trade Representative Jameson Greer are going to meet with China's lead economic representatives in Switzerland this weekend. Megan Casella joins us now with more. Good morning. Hey, Joe. Good morning. So the possibility here for a real step forward between the U.S. and China with this meeting, it's set for Saturday and Sunday in Switzerland. And this is really the first confirmed
meeting between high-level officials on both sides since the tariffs were announced, and it's the first real sign in months of momentum in U.S.-China trade negotiations. The news of it yesterday came just after Besant told lawmakers earlier in the day that trade talks with China had yet to begin. And Besant last night appeared to sort of downplay expectations for this meeting, but he did say everything is on the table.
What we're going to do in Switzerland is we've agreed to talk. Then on Saturday and Sunday, we will agree what we're going to talk about. My sense is that this will be about de-escalation, not about the big trade deal. But we've got to de-escalate before we can move forward.
Now, one tangible outcome to watch for here will be whether the two sides agree to bring tariffs down from where they are now at 145% and 125%. Besant told me about two weeks ago he believes that's the necessary step before broader talks can begin.
The president has been resistant to this, but China has also called for that, for lowering tariffs as a way for the U.S. to show sincerity. Now, overnight, China's Commerce Ministry also laid out a longer set of stipulations. They say if the U.S. wants to negotiate, it must face up to the serious negative impact of unilateral tariffs on itself and the world, correct its wrong practices, and meet China halfway. Guys? Fingers crossed. I guess we could conjecture and...
you know, and, you know, give our own opinions on the likelihood. But I think, Megan, it might be best just to wait and see what happens at this point. The only thing I'd add to that... We'll wait and see. We'll know soon. Some of those comments coming from the Chinese government. Also adding to that, that they said that the rest of the world shouldn't appease the United States when it comes to these things, too. Maybe signaling that they're worried about the rest of the world kind of going along with some measures and teaming up with the United States against them. Yeah.
But this is going to be kind of fascinating. Absolutely. I think China is seeing how many countries are going to the U.S., are responding to these tariffs by saying, we do want to make a deal and offering different things. And China doesn't want to be the one left alone as much as they want to hold out. We've seen that over the last couple of months. You guys have talked already.
earlier about some of the easing that they're doing. It does become a question of what the pain threshold is in China versus in the U.S. if we started to see some economic impact show up in the data here. So China wants to hold out, but as they're seeing every other country in the world, as the administration puts it, come to Washington to try to negotiate, they have at least agreed to this meeting, even as they keep putting out these strong words about what they will or won't do once they get there. Yeah. And Scott Besson chooses his words very carefully.
We've seen that. And I think he's earned some credibility and respect on both sides. No matter how you feel about Trump or the administration, most people, I think he's got really high, you know, he's not underwater in terms of polls and things like that. And it's, I think, for a reason. And you can see, you know, I don't know him that well, but his mind seems to be working on exactly how he chooses words very carefully. And I think when he says things, it's not going to be. And as a Treasury secretary,
You don't want to misspeak as a Treasury Secretary because so much is at stake. That's right. I think all the time. Major implications for everything he says. And I'll say, too, that everyone I talk to behind the scenes says they don't want to come out with it, but that Besson's the one that they don't want to say it publicly, but Besson's the one that they're going to try to get into the president's thinking or ask for an exemption or try to have cooler heads prevail on a lot of this. Besson is really the one leading the way. The other thing
that's interesting on China, and I want to mention, as you said, Joe, how much more they have to lose than we do. One thing we've heard from the president in the last couple of days when he speaks about Beijing is when he thinks about the trade deficit, he says that if we cut off all trade with China, that's only a good thing for the U.S. because it means that we no longer have a trade deficit. We're no longer losing money. It's not what most economists think. It's not what I think the market believes either. But something interesting to watch as we get closer to this meeting. Although even China
individuals that, you know, in past discussions about trade deficits, no one really loves trade deficits either. I mean, we acknowledge that we're big consumers and we're a wealthy country and the world is, you know, we've all gotten wealthy together, but it just keeps hitting new highs, the trade deficit. And, you know...
I don't think you should judge everything you do with trade on whether you, there's certainly circumstances that warrant a deficit with another country, but it's not something you, you wouldn't like to say, wow, we tripled our trade deficit. Yeah, really. You know, that's not right. That makes no sense. Megan, thank you.
Drug stocks in focus today after the FDA named oncologist Dr. Vinay Prasad as the director of its Center for Biologics Evaluation and Research. That's the government entity that oversees regulations of biological drugs, including vaccines, also in charge of gene therapies and the safety of the U.S. blood surprise.
This is normally a position that has been held not by somebody who's seen as being political, but a longtime career scientist within the FDA. Prasad has, though, been a very vocal critic of pharmaceutical industry and FDA leadership, and he blasted the agency's decision to approve COVID vaccine shots for children.
The news of his appointment did send stocks lower yesterday across the pharmaceutical spread. Particularly hard hit name. One of those particularly hard hit names was Sarepta Therapeutics. That makes a gene therapy treatment for Duchenne muscular dystrophy that could get much more scrutiny. You can see Sarepta shares down by more than 26 percent.
If you were looking at a larger basket of biotech stairs, they were down by 6% yesterday. FDA Commissioner Dr. Marty McCary said that Prasad would bring scientific rigor, independence, and transparency to its role. If you look at some of the things he's said recently,
He said he likened Marx, the guy whose job he's taken, Dr. Peter Marx, to a bobblehead doll that just stamps approval, probably raising some of the concerns you see among drug companies that were hoping for faster approval on some of these things. He's got a long history of very publicly criticizing the FDA in its current form, too. See where Moderna was? Dead, yeah. 24? Yeah, 24.90. Guesses on the high?
uh more than 400 464. some other news not worldly markets yet but maybe should be i don't know india attacking sites in pakistan that it said were part of a terrorist infrastructure following an attack by islamist militants on hindu tourists last month that killed 26 people in indian kashmir for its part
Pakistan saying it had shot down five Indian fighter jets and amounts to the worst fighting between the nuclear-armed countries in more than two decades. Pakistan saying at least 26 people were killed, 46 injured in the India strikes. Pakistan now denying it has any connection to last month's attack on Taurus. The iShares of MSCI India's ETF falling earlier, though it has recovered, and I will say when I was out at Milken on Sunday night,
the sort of prospect of war between Pakistan and India was a big topic of conversation, like a big one. And we don't really talk about that that often. It's been going on for decades. Yeah, we just said 20 years. I've heard other people say that this is the most in almost six decades, more than half a century in terms of how tense things are between the two nations. But that was sort of a, not a black swan risk, but more like a risk that everyone was saying is right in front of us that
Nobody's talking about it and the market's not engaged in. Some details on dissension at Uber stemming from changes the company recently made to a popular benefit and its in-office work requirements. Last week, CNBC reported that Uber had told employees, including some previously approved for remote work, that they'd have to start coming into the office three days a week.
Also, that they would be eligible for a month-long paid sabbatical after eight years instead of just five. That led to a heated all-hands-on-deck meeting during which CEO Dara Khashoggi defended the policy changes to employees and told them it is what it is.
And this is all according to audio and other correspondence obtained by CNBC. We'll get more on this when we speak with Dara Kashmashahi following the release of Uber's first quarter results.
And NBCUniversal's parent company, Comcast, revealing the name of its spinoff of the majority of its cable network portfolio. The new company is going to be known as Versant. CEO Mark Lazarus told CNBC in an interview that the name was chosen to emphasize versatility and the company's familiarity with multiple subjects.
He said the name will be used for the business to business purposes rather than being something that is consumer facing. He had a big point about how these brands are incredibly important that already exist. Lazarus says that he wants Versant to be seen as a house of brands with each one interacting with its users. Our network, for example, CNBC, is one of those cable properties that Comcast is spinning off into Versant and obviously CNBC is a well-known brand. That's what we would like to see out there too.
In addition, Versant will own MSNBC, USA, Oxygen, E!, Syfy, and Golf Channel. It's also going to be housing digital assets Fandango, Rotten Tomatoes, Golf Now, Golf Pass, and Sports Engine. Lazarus confirming that Versant is on track to be spun out from Comcast before the end of 2025. And if you look it up...
It's nice to know that versant means experienced, which is what we are. And we're conversant. Yes. Very conversant. Slope of a mountain. What I like is the animation of that. See the little V thing there? It starts as a line. The shadow lines. Starts as a line like this, and then they move across like that, and one goes to the A and one goes to the V. I like that.
But the individual brands are what matters. So the Squawk Box brand is what I'm hanging my hat on. Yeah, I know you are. How did you know that? But for a while, I think we've known that a corporate umbrella name is just for
- What is that even for? - I bet we get a CNBC.com email address. - But it's not for branding of the individual. - It's for the investor class. - Right, right. But it's not for branding of the individual. We're gonna continue to brand CNBC. - Exactly. - And there is a question about what our email address will be. I'm hoping it's CNBC.com, right? - Well, why don't you tell everybody your email address and then-- - I am. - Can I keep my driver? - You gotta work out. You gotta work that out. - Can I have you work it out for me? - Call a lawyer. - I've seen your skill. I've seen your negotiating skills.
Teas will be next. Coming up next on Squawk Pod, what's driving Uber's business with the company's CEO, Dara Khosrowshahi? We'll have our good days and bad days, but hopefully the good days will outnumber the bad days. And what makes a bad rating? 4.5 is not acceptable. No, I'm not 4.5. It depends. It depends.
How will you shape the future of banking with confidence? Industry consolidation, crypto, the rise of fintechs all create a complex landscape for banks to innovate and grow. EY provides domain-led insights to navigate today's fragmented banking sector. So whether you're tackling regulatory complexities, integrating digital assets, or seizing M&A opportunities, EY sees your business from every angle, working together to deliver outcomes that create strategic value.
EY, shape the future with confidence.
This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information-packed daily market preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash market update podcast or find Schwab Market Update wherever you get your podcasts.
You may get a little excited when you shop at Burlington. Oh, what a low price! Ha ha! Did you see that? They have my favorite! And it's like a whole new world! I can buy two! Woo! I'm saving so much! Burlington saves you up to 60% off other retailers' prices every day. Will it be the low prices or the great brands? Burlington. Deals. Brands. Wow! I told you so. Styles and selections vary by store.
This is Squawk Pod. Up in Andrew, Q.
You're watching Squawk Box on CNBC. I'm Andrew Ross Sorkin, along with Joe Kernan and Becky Quick. Uber reporting better than expected earnings, but revenue fell short. Shares right now, take a look. You're looking at $82.50 on the stock, down about 3%, 4%. Joining us right now, first on CNBC, is Dara Khashoggi. He's Uber's CEO. Dara, it's great to see you this morning. Look, it looked like a beat across the board, actually a big beat.
Stock not reacting maybe the way you'd want it to, but maybe expectations were marginally too high. I don't know how you think about that. Yeah, it's tough to track daily stock price changes, Andrew. But I think the results were spectacular. Our transaction growth over three billion trips served both on rides and eats was consistent with last quarter at 18 percent.
Gross bookings growth came in very, very healthy as well, similar number. And then adjusted EBITDA was up 35% on a year-on-year basis, over $2 billion in cash flow. So the company continues to execute well. And, you know, the stock price has performed really well this year in a tough market. And, you know, we'll have our good days and bad days, but hopefully the good days will outnumber the bad days. We're very happy with the results and the momentum of the company.
I was going to say the margins on the mobility business, meaning those folks who are getting in the cars, is a standout. How much pricing pressure, if you will, or opportunity power do you really have? You know, we've actually – pricing has been an area – you know, we want to keep –
rides business as affordable as possible. And if you look at the growth rate between kind of last quarter and this quarter, our gross bookings growth rate on mobility slowed down because we didn't take price. So last quarter, for example, price increased by 4%.
This year, pricing was essentially flat. And that's really for two reasons. One is we saw the insurance costs. Insurance has been a huge factor in terms of inflation, not just in transportation, but also home insurance, as you know. We saw some relief in terms of insurance increases. We passed that on to the consumer as it relates to our mobility business.
And we did see a slight mix shift in terms of trips to more international trips, especially as we saw outbound travel to the U.S. slow down a bit compared to the overall travel sector internationally as well. So pricing is something we're very well aware of. And actually, we're happy to pass on some of the pricing relief we saw to our consumers. What do you see in terms of the mix between the mobility businesses, the ride business effectively,
and the eats business at this point. So if we were to look today at a pie chart in terms of what the business looks like, mobility versus eats today, and you sort of look a couple years out, what do you think that looks like? Well, listen, it's like a Ferrari racing a Lamborghini. They're both going incredibly quickly. Mobility, mobility,
grew 19% on a year-on-year basis. Delivery delivered a second growth rate of 18%. The two are pretty close to the same size. Mobility is a little bit bigger in terms of gross bookings. But our mobility and delivery businesses are hitting on all cylinders. I think it's going to be a great race, and I can't predict the outcome.
There does seem to be, though, a bit of a war going on in both the delivery and mobility wars. Lyft announcing it's going to go international. So this has become an international war, if you will. DoorDash yesterday saying they're buying Deliveroo. So there's a whole sort of host of things going on. You're buying a business in Turkey. How do you see that all playing out?
Well, we see these spaces, both the mobility and delivery spaces, they're trillion-dollar-plus markets. Competition is natural. For us, we've been in an enviable position in that we built most of our global footprint organically. We built these businesses over the past 15 years, brick by brick, trip by trip, so to speak.
And we've always said that the platform advantage that we have, both being in mobility and delivery and our global scope, really having exposure to all of these different economies has been advantage. Now that you see our competitors have to buy their way into the international markets, it shows you that our strategy is working. I'd much rather go organically. Turkey for us was one of the largest unaddressed markets in terms of delivery.
Trendy Algo is a terrific business. They've got a great team, great tech team, and we just couldn't resist going into Turkey. We've had a lot of success there in terms of mobility, and we hope to duplicate that with its acquisition and delivery. You know, mentioning DoorDash, you are suing that company, claiming that they are involved in coercive tactics, quote, to reduce restaurant consumer and consumer choice. Where does that stand, and why did you feel like you had to go to court?
Well, we wanted to go to court to essentially give merchants more choice. There's a direct business where ourselves and some of our competitors essentially empower merchants to be able to deliver for themselves, for their own website, et cetera. It's delivery as a service. We think that should be an open market solution.
And right now, we don't see that as an open market. We see some of our competitors trying to make some anti-competitive moves. We just want to give our merchants more choice. Talking about anti-competitive moves, the FTC, you faced a lawsuit from them which says that you're charging consumers or have been charging consumers without their consent for a service called Uber One. I think for I don't know if I still am signed up for Uber One. I might. I'm not sure.
And maybe that's the problem. I don't know. But where does that stand? And do you think there's an opportunity to settle that case? Well, it's a bit of a head scratcher for us, Andrew. You know, Uber One has been incredibly popular. We've got over 30 million subscribers now to Uber One, 60 percent of our gross bookings.
come in our Uber Eats business, come from Uber One members, and that continues to grow. The suit alleges that some people don't realize if they're signing up or cancellations are difficult, but I'd encourage you to go experience it yourself. It's very, very simple. You take a couple of steps to be able to cancel if you want. And the good news for us is,
Uber One growth indicates that consumers are seeing the reward in this program and the savings, and our Uber One business continues to grow at very, very high rates.
What are you seeing in terms of the consumer, the strength of the consumer? Obviously, there's been lots of concern and worries given all the tariff conversations and everything else going around the country. We haven't really seen it in the economic numbers. Has it shown up in yours or are you seeing anything sort of moving forward? You know, we watch the same news you do, Andrew. And the fact is, as evidenced by our results, we don't see any consumer slowdown at this point.
Our audience growth up 14% is very consistent with what it was last quarter. Frequency is now at six trips per month, continues to be at highs, and our frequency continues to increase year on year. We don't see consumers trading down to more affordable markets.
restaurants, or pulling back from any of our services. So we haven't yet seen any signs of consumer weakness. I'd say the only kind of shift that we've seen in spend is a bit more travel spent internationally than in the US. But otherwise, the consumer remains strong. And we tend to, we're in a couple of categories, food and transportation, that
tend to be quite recession resistant anyway. So, so far so good, but we're watching the consumer very, very closely. Talking about the consumer, what about rides in and out of Newark, given all of the commotion?
That's happening in the air or maybe lack of commotion because it's not enough planes coming in and out of there. Yeah, it's it's really unfortunate what's happening and it is showing in the volume. So if you look at New York airport volumes, they're trailing that of what we see nationally. And that's reflective of what's happening in Newark. It's unfortunate. Hopefully they can get that resolved as quickly as possible.
That's over the last week, week and a half since that started? Wow. It's really in the last couple of days. New York airports generally are weaker than airports around the nation. And, you know, this is what Uber is all about. We are an everyday use case, so we have a pretty incredible pulse on what's happening in every single local city. Hey, Dara, Andrew was trying to figure out what I should use for Uber if I lose my...
You know, lose my driver. Is there I'm told there's a is there a seniors? Is there a seniors new program or something? You know, there's there's a there's a ability for for you to simplify your app.
And also, you know, Andrew, if you want Andrew to call an Uber for you, he can call an Uber for you and he can track you, you know, and really take care of you. Don't take me into like some before. So you could he could track me then. Will you? I think I think you should be calling Joe's Ubers.
I'm going to be calling. I'm going to put him within. It's going to be like we're going to set up a trust. We were trying to figure out which one to use. I'll be operating. I think I can get a discount. Can I get a discount or something? If I ever. It's an additional service, Joe. It's making sure that you're safe and sound wherever you go. There's no senior discount. Over 55 is where I'll be there soon. OK, but most importantly, what I'm going to get you, Joe, eventually. Yeah.
is an autonomous vehicle that's going to drive you. We're getting one for myself. We are. I'm doing that, Dara. So, Dara, my question to you is, I know you're launching with Waymo in Austin. You got Elon Musk supposedly launching, I don't want to say supposedly, he says he's launching in two, I think two months, two or three months from now, his service. How do you see that competition playing out? Yeah, we're already launching in Austin, Andrew. You can experience Waymo on Uber yourself.
We've got almost 100 cars in Austin, and the launch has been absolutely incredible. Consumers are opting in. They love the product. Waymo's safety record is second to none. And the Waymos are really busy.
average Waymo in Austin is busier than 99% of our drivers in Austin as well. So the service is working live. This is a huge market, trillion-dollar-plus market. More autonomous vehicles means safer streets.
We'll be watching kind of the pilot from Tesla as well. It looks like it's going to be a limited launch, but this is not going to be a winner-take-all market. And I think more autonomous investments coming into the industry is only good for everybody. And hopefully it'll make for safer streets and consumer delight, as we're seeing today in Austin. That's pretty awesome. So who else, besides Waymo? Is Tesla, to you, the next big competitor at this point?
Well, I think we work with Waymo, obviously, and there are many other players out there, but Tesla is certainly going to be a competitor. You know, we're, for example, working with Volkswagen to bring their ID.Buzz
wagons to Los Angeles. We're working with May Mobility in Texas. We ride in many, many international markets along with Pony and Memento. There's a lot of investment in many competitors in this marketplace because it's going to be an enormous marketplace. And the vast majority of those competitors are partnering up with Uber to commercialize the service safely.
Okay. And then separately, let's just talk about what's going on inside of Uber in terms of the culture and employees. You've, you've changed the sort of benefit mix, trying to get people back in the office. What's happening here? Yeah, listen, we want more people in the office. We, we provide a really flexible, um, uh, kind of work experience where we want you in, in the office Tuesday, Wednesday, Thursday, those are anchor days. So when you're in the office, everybody else is in the office. You can work together. You can, uh,
get to see your compatriots in arms, so to speak. Monday, Friday, you can come to the office or work from home. We think it's a great policy and it's the right mix of giving our employees flexibility, but also getting them to the office for those all important teamwork tasks. I didn't know that prior, at least in prior years, you had offered a sabbatical program as a benefit. You had to be at the company for five years. You've moved that to eight now.
Yes. And we think that's that's incredibly generous as it is. Listen, we want people, again, in the office. We want them working hard. The company, our company is executing really well, but we need to be at the top of our game. And that means people working together in the office. But what about the folks who basically took the job under with the understanding that they were going to be remote?
And that was sort of cool with the program and now it's shifting on them. - Yeah, I think that that's tough. And we're talking with those people one-to-one,
making sure that we make accommodations as can be. But that is different for people. That's a different adjustment that they have to make, and they've got to make their own choice. Do they want to come to the office or is working remotely really important for them? The good news is, you know, the economy is still really strong. The job market is strong. And people who work at Uber, like, they have lots of opportunities everywhere. We want them, obviously, to take the opportunity with us, to take the opportunity to learn from
But this is a company where you have to work hard. We're not gonna make excuses for that. And you have to work hard together. And that's the kind of environment we're trying to build. - Okay, final news you can use. I've been talking to a lot of drivers and I always look at my score. We've talked about the passenger score. And it seems to me that in New York in particular, that the drivers in New York
are less inclined to automatically just give over the five stars and that just about everywhere else in the country, the drivers are giving the five stars. And so the New Yorkers have a lower rating than the rest of the country. Is is such a thing true? Andrew, do you want me to make excuses for you? Maybe, maybe. But I think but I've actually now been asking around about this.
I will tell you that New Yorkers are tough judges. They're tough judges when it comes to their sports teams and they're tough judges as it relates to their passengers as well. I think it's something that's wonderful about New Yorkers. So you're going to have to up your game, Andrew. You're just going to have to be super nice. Do the drivers in New York also have tougher ratings? Do they have lower ratings than elsewhere? Right.
I think that passengers in New York are kinder, but we've got drivers who are demanding and they should be. - So Dara, here's what happened. I happened to be in California, took an Uber, and the driver said to me, "You must be from New York."
And I said, well, you know, and I said, why did you say that? And he and he said, because New Yorkers always have have lower ratings. How low is your rating? That's by the way, drivers, you know, these drivers are pros. They they know the marketplace. They understand these things. So, yes, they do know that New Yorkers have have lower ratings. You got to create us on a curve, though. I can't. I copped in the senior thing. I can't believe you're copping to this. You got like a one or something.
So wait a minute. I'm still high fours. But the vast majority of the country does think that there is a degree of rudeness among New Yorkers that people in the rest of the country do not think. No, no, they're getting high scores. A New Yorker in California will get a five stars. Well, maybe you're on your best behavior. You're losing the rating here in the city. It's a pleasure to share. So you're in the high fours. What would you like to be?
Five. You want to be like 495 or something. Are you willing to disclose your actual? No, I'm not. Are you below four and a half? No, I'm not below four and a half. What's a bad score? What's a score that will make a driver not pick you up? Four and a half is bad. Four and a half is bad? Yes. You're a four, five, one. I'm better than that. Four, five, one is bad. I'm not four, five. I'm much better than that. But you're not disclosing what you are.
because well daryl what do you think the lowest number is it's like acceptable is not acceptable no i'm not 45 it depends it depends it depends it's it we do uh grade it on a curve so city by city uh you do city numbers now yeah of course
Oh, really? So hold on. We're very local business. So hold on. So New Yorkers' score is actually, so my number's actually higher than it should be? Is that what you're suggesting? No, no, no. New Yorkers, on average, have lower scores because New Yorkers tend to be tough judges on each other. It's a good thing. Hmm.
Do you know your car service rating? Think if you had one of those. We got to run. We got to run before this conversation really becomes a problem. Dara, it's great to see you, sir. Congratulations on the earnings. Thank you. We look forward to seeing you again soon. Thanks. Take care. Higher than that. It's still higher than that.
Up next on SquawkPod, Lazard's CEO and Obama White House Budget Director Peter Orszag on the season of trade deals, what we're spending our money on. I think we need to be paying much more attention to our fiscal trajectory today. We're at 7% of GDP as far as I can see. And maybe his Uber rating too. Stay tuned.
This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information-packed daily market preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash market update podcast or find Schwab Market Update wherever you get your podcasts.
High Five Casino is the top sweepstakes casino that's free to play. Sign up today to receive a free welcome bonus and exclusive first purchase offers. Choose the premium jackpot package for $29.99 and claim up to 700 game coins, 55 sweeps coins, one sweeps coin daily bonus for five days, and 400 diamonds. Your high five moment awaits at highfivecasino.com. No purchase necessary. Boardware prohibited by law. Must be 21 years or older. Terms and conditions apply.
You're listening to Squawk Pod from CNBC. Here's Becky Quick. All right, welcome back, everybody. I want to get to our next guest. Joining us right now to talk markets, tariffs, the Fed, dealmaking, and much more is Peter Orszag. He's the CEO of Lazard. He's also former director of the Office of Management and Budget under President Obama. And we've been discussing all these important issues just as you sat down, Peter, including your incredible rating that you've got of 4.89. Yeah, always working on it. Yeah, almost 4.9.
Getting there, you know, step by step. And it has nothing. Now I'm finding all this out. It's not about tip. It's after you tip. I didn't know that. But you've been really good. Well, now you know. Yeah, exactly. The tipping part is not a money shit. We have to call up Uber. Peter, let's talk about the I guess maybe the most pressing situation today. And that would be where things stand with the trade tariffs. This meeting that is set up with China in Switzerland over the weekend. How are you reading it?
Look, we have the I think the pause was beneficial for a variety of reasons. 90 day pause. The 90 day pause. But the administration, we really need to get to yes with, you know, someone. I think the meeting with the Chinese is encouraging because that situation is not sustainable. But it's not just with China. We need to get to yes with China.
The EU, this really comes down to, I mean, we talk about 70, 80, 90, 100 countries. It really comes down to maybe a dozen. It's the EU, it's the UK, it's Canada, Mexico, Japan, India, China, and a few others. The Falkland Islands we could kind of survive if we don't have a trade agreement with. But we need to get to framework agreements with the most important trading partners in this 90-day window. We're not going to get that with China, right?
I wouldn't anticipate it. Let's talk about China. I mean, my expectation is we're going to get to an average tariff rate of somewhere between 30 and 50 percent, either because there is a Xi-Trump summit, ultimately, and there's a deal. I think that's less likely. Or because we just wind up exempting more classes of goods from the tariff rates.
so that you wind up with somewhere between 30 and 50 on a weighted average basis. We've obviously already done that with electronics and we may need to do that with other categories also. - I mean, that's pretty interesting because that creates these clear winners and losers and maybe disincentivizes the idea of trying to bring manufacturing back here. - Yeah, well, and also very strong incentives for transshipment, which we were already seeing. So when you have wildly varying tariff rates,
There is an incentive to ship through Malaysia or through other countries that may have a lower tariff rate with the United States. And administering that or monitoring that is very difficult. What do you hear from business leaders you're talking to at this point? Desperate for clarity, desperate for some stability, because we've got strong underlying drivers, both of the economy and of deal activity. And then this headwind of uncertainty.
uncertainty as this plays out. But it varies by sector. I mean, obviously, industrials, transportation, consumer products, much more affected. You know, the oil majors and the hyperscalers have a different set of dynamics. Are you more worried about a slowdown or inflation or equally worried? I think the Fed's in a tough spot. What I would say is I don't think the Fed's going to be cutting rates. It obviously can cut rates for one of two reasons, either confidence that inflation is coming down or concern about the economy. Or both.
Yeah, but I don't think the Fed is going to be cutting rates in 2025 because of confidence that inflation is coming down. You don't? No. So any rate cuts will be bad news.
That's a very interesting perspective. So if markets are up right now because they think the Fed is coming to the rescue, that's a miscalculation. Well, no, but the rescue might be that it's bad news. It's a miscalculation on their part. I would not read into that anything positive. That would suggest the Fed is concerned about the state of the economy. I mean, in a perfect world, wouldn't you want rates as low as you could get them if there was no inflation just to spur activity and just, you know, mortgages? Sure, yes. And it even helps inflation when rates are down.
I don't agree with that part. You know what I mean, though. If you're paying less on your mortgage. Turkey tried that, by the way. I mean, I understand that it spurs economic activity, which in the long run could bring more inflation. But if you're paying less on a floating rate mortgage and if you're. Yeah, look, I think everyone would be in favor of lower rates to the extent that they are. Zero would be nice. Consistent with, you know, stable inflation. And there are signs that inflationary expectations are taking up a little bit.
What about oil? Oil helps. I mean, lower price of oil helps on headline inflation, obviously. Can I just ask you about the regulatory environment? Sure. Because part of the whole argument about our economy taking off was going to be that the regulatory environment sort of just opened up in this big way. You work with companies that consider all sorts of transactions that would otherwise be regulated or at least need regulatory approval. Has your complete
You know, has there been a shift in terms of how you think about that or no? Well, we were always a little bit more measured in terms of there would be a move away from the big is bad kind of perspective. I think that is happening, but it was never going to be, you know, anything goes. The biggest change, in my opinion, will still be with regard to vertical deals as opposed to horizontal deals. There was always antitrust enforcement against horizontal deals.
The biggest shift under the Biden administration was the way that they handled vertical deals. And I think in general, those will be you'll go back to a more traditional perspective there, with the exception of in the tech world where the dynamic. OK, now I got a more complicated question. If you are a client that's going to go up against the government, potentially, do you use one of the law firms that did a deal with the administration or do you not?
And when the client calls you
and says, you have a choice. You can use Paul Weiss, or you can use Skadden, or you can go use, they made deals with Trump, or you can go use WilmerHale, which is effectively fighting the administration and so far winning. You choose, you tell them what? You know, the choice of advisor, the choice of a law firm often is a little bit less about the institution. It's more about the specific person. So there's not one answer to that question because it depends on who the person is at the various law firms that you're considering and whether you're
your trust in that person outweighs the kind of macro background on this firm or that firm. I don't think there's one answer. Peter, did you see the OMB director on yesterday? Did you get to see that interview? I did not. It's a skinny budget. Do you know what's in it? What did you think of the priorities? I think defense goes up 13%.
I think air traffic controllers, believe it or not, they're gonna spend some more money on that. It seems like a good idea at this point. But a lot of other things
Are there's gonna be some cutting look my biggest concern is The focus on non-defense discretionary, which is really where all those cuts are There's a lot in there that actually does help spur economic activity. So slashing the budget for the National Institutes of Health for example when we want to be a world leader in research and spur
activity in the biotech sector doesn't strike me as that's not what I would do. - Is there movement of, but I've been a little surprised that we haven't heard from more CEOs, business leaders, others about those very concerns. If you talk to universities, they will tell you that. If you talk to research institutions, they will tell you that.
Is that because there's not as much concern in the industry or because people in the industry are keeping their heads down because they don't want to be the next target? Well, there's also a president's budget doesn't always get fully enacted. And so there's, you know, it's still early days. I would say in general, there's obviously a lot moving on the fiscal front.
a big reconciliation bill, the president's budget. There are a lot of different moving pieces and it remains to be seen. I would also highlight, and I'm saying this as someone who even as a former budget director got a little sick and tired of the chicken little and the boy who cried wolf. I think we need to be paying much more attention to our fiscal trajectory today than the concerns over the past decade. We're at 7% of GDP as far as I can see.
Going up from there. The debt to GDP ratio is high. We've got... Spending's high, 27%, 26%. Well, spending is higher than revenue, which is what generates the... Yeah, but it's usually 17 and 20, not 17 and 27. But my point is, this is not a good situation, and it is encouraging that the administration is saying the right things about...
about the fiscal trajectory, but I think this is different in terms of the risk factor is much higher. - I know you have to run, but that's like taking two, you don't wanna see cuts in places like the NIH, the cuts are being done too roughly, but you're very worried about the gap in our spending versus the revenue we're taking in. Those are hard to match those things up. - Well, I have put forward in the past a whole bunch of different things on entitlement, Social Security, and Medicare. - So you're talking about the stuff they're not talking about. - Yeah, well, that's where the money is.
That's a tough question. They keep saying it's not us that is cutting this short. Where do you have to go so quickly? They're saying he's got to go. He's got to go. I have to go get my Uber rating. But they're saying that they'd let you stay till nine o'clock. But it's no. Peter has to leave. I don't know where I have a client meeting. You start work at seven forty three. I started before that. I'm up early.
We appreciate having you here. Please come back. Conscience bothering you from those Obama years, probably. I sleep okay. I sleep okay. Come back because I want to dig in to what you're talking about with the entitlements and what we see happening. Sure. Happy to. Thanks a lot, Peter.
And that is the pod for today. Thanks for listening. Squawk Box is hosted by Joe Kernan, Becky Quick, and Andrew Ross Sorkin. Tune in weekday mornings on CNBC at 6 Eastern. Get the best of our TV show right into your ears when you follow Squawk Pod wherever you like to get your podcasts. And check out our feed. If you missed any of our coverage from the weekend's Berkshire Hathaway annual shareholder meeting, we released two mega-long pods featuring our live guests,
and Warren Buffett's full Q&A with shareholders. All the content you could wish for from Omaha right in your ears. That's it. Have a great day, and we'll meet you right back here tomorrow. All right, clear. Thanks, guys.
High Five Casino is the top choice for social casino gaming that's free to play. With chances to win and redeem for real cash prizes, free spin rewards, and tons of exclusive games, you can experience more High Five moments than ever before. You're going to want to High Five everyone. The neighbors, the mailman, all your co-workers, of course your friends. Well, you get the point. Your High Five moment awaits at HighFiveCasino.com. No purchase necessary. Voidware prohibited by law. Must be 21 years or older. Terms and conditions apply.