Speaker 1:
From the library of the New York Stock Exchange, at the corner of Wall and Broad Streets in New York City, you're inside the ICE House, our podcast from Intercontinental Exchange on markets, leadership and vision in global business, the dream drivers that have made the NYSE an indispensable institution of global growth for over 225 years. Each week we feature stories of those who hatch plans, create jobs, and harness the engine of capitalism right here, right now at the NYSE and at ICE's 12 exchanges and six clearing houses around the world. And now welcome inside the ICE House. Here's your host, Josh King of Intercontinental Exchange.
Josh King:
Tinkers to Evers to Chance, Bird, Michael, and Parish, Rubin, Summers, and Greenspan, Moe, Larry, and Curly, all fearsome threesomes that have seeped into American culture in one form or another over decades, a formidable double play team, an awesome front court, an economic team that presided over nearly a decade of peacetime economic expansion, and a vaudeville comic troupe with a loyal following active from 1922 to 1970. So where among this pantheon of teams does Cramer, Faber, and Quintanilla, the co-hosts of CNBC's Squawk on the Street fit in? And what other set of triplets make for an apt comparison? There's no doubt that as millions of people around the world settle in for work every day, especially in the Eastern and Central time zones, Jim Cramer, David Faber, and Carl Quintanilla are their guides to the day ahead in the global economy. There they sit on Post 9 at the New York Stock Exchange with the perfect pitch to see how the day will unfold, the CEOs in the building to ring the opening bell on their IPOs, the market makers balancing buy and sell orders, the government officials in town to explain federal economic policy.
Josh King:
But a lot of the reporting that really happens from these three connected correspondence unfolds in the early morning hours and during the commercial breaks, when their smartphones are working overtime, texting and calling sources for the latest scoop that can move markets. Our guest today, one of the fixtures of Post 9 over many years, the aforementioned Mr. Faber, one of the most reliable reporters in financial news over two decades on the air. When Faber has a scoop, the chyrons, those lower third graphics that blast breaking news, light up the screen. We're 11 years into a bull market. The yield curve is inverted over the summer with many saying there are signs of an oncoming recession. The trade war with China shows flare-ups and then hope, seesawing it seems with every news cycle. And with Labor Day, 2019 now in the rear-view mirror, we approach the autumn with trepidation, the sort of uncertainty that accompanies any election year with perhaps massive change ahead.
Josh King:
From the canyons of Wall Street, to the corridors of power in Washington, DC, where have we come from and what does the future hold? We'll ask CNBC's David Faber right after this.
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Josh King:
We are over 125 episodes into the lifespan of Inside the ICE House. Episode number five featured CNBC's Carl Quintanilla and we figured a hundred more episodes was enough of a gap to wait until we had Carl's broadcast partner in the library to take another pulse of Post 9 from the floor of the New York Stock Exchange by inviting David Faber upstairs to reflect on really a 25 year journey for the journalist and the beat he covers, and also some speculation of what the future might hold. Welcome David, inside the ICE House.
David Faber:
Pleasure to be here. I'm glad to hear it's been a hundred at least since Carl joined you. Congrats on that by the way, that's quite a run already.
Josh King:
125, not bad. And Carl was just back from, I think, the Olympics in Korea and had so many stories to tell. Do you do a lot of travel for coverage or do some sort of the busman's holiday that Carl does by covering sports?
David Faber:
I don't travel very much anymore. Carl does such a good job on those kinds of assignments whether it's the Olympics or he went to Vietnam. Really, he was there for a day, but he did great coverage. He's just particularly good at that. Not that I would be bad at it. I traveled a lot for CNBC during a course of the time when I was doing a lot of our documentaries.
Josh King:
Yes, I want to get to that.
David Faber:
And that would require a lot of travel. I do kind of miss it, but yeah, I haven't traveled too often. Here and there, you got to go somewhere for an interview and there's sort of the yearly things like the Milken Institute in LA, but I don't travel the way Carl does.
Josh King:
Yeah. You guys pack up for Milken, you pack up for Davos. I don't know what other aspects around the calendar require the full compliment of the three of you to go remotely. But do you look forward to getting your bags packed and showing up either in LA or Switzerland for a week?
David Faber:
Yes, typically. For me, especially now, because it is kind of nice to break up the daily routine. I think sometimes when you're doing a lot of travel, as of course a lot of journalists have to, it can become pretty difficult, but yeah, I do look forward to it. I enjoy Milken. I haven't been to Davos in a while, which is good and bad. Davos, it's exhausting. I mean, it looks like a great trip, but you're really working very hard and it's freezing and you're walking home in the snow at three in the morning to some tiny little room. So it's got its downside. Not that anybody complains about it because they shouldn't. But I do look forward to the handful of trips that I do take every year.
Josh King:
Let's start our conversation, David, with going back seven years to one of the bigger stories that broke that had its origin right in this building. We'll pick it up on December 12th, 2012. The first voice you're going to hear is CNBC's Scott Wapner.
Scott Wapner:
First to David Faber who broke this story this morning. David, I guess this deal had to happen based on where the competitive landscape now sits. And as Maria was just mentioning, it's likely not going to be the last deal that we're talking about.
David Faber :
No, we've been thinking about and hearing about and talking about consolidation amongst the exchanges for quite some time. But as you pointed out, Maria pointed out much of that, did not happen as a result of regulators. Certainly the NYSE has been looking for quite some time to figure out something for the future. It's CEO, Duncan Niederauer having engaged with and had a deal with Deutsche Boerse sometime back. About two years ago or so is when they were in heated discussions, announced it in early 2011, but a year later it was dead. Why? Well, because of the derivatives business in Europe. The European regulators simply did not want to see get together from both of those companies. They couldn't get around it. NASDAQ as well. Along with ICE at the time had made a hostile bid you may recall for the New York Stock Exchange, but that was stopped as well because it wasn't going to happen as a result of antitrust here in the US in terms of the merging of the two equity platforms of NASDAQ and NYSE.
David Faber :
So NYSE kept at it. My reporting is that, let's call it September or so, right at the end of the summer, early fall, Jeff Brecker who runs ICE made an overture to Duncan Niederauer and the NYSE about a potential deal. Discussions began at that point and continued for a number of months, ending with this morning's announcement from the two of them that they did in fact have a deal, fairly significant premium to NYX's share price, although, not as much as they might have been able to get at a different time before those volumes started to fall off a cliff.
Josh King:
David Faber, it could have been any one of the hundreds of other M&A stories you've broken. But if you recall back to ICE and NYSE, how did you get wind of that one?
David Faber:
I don't really recall because it is some time back in terms of the source base there. Typically what I'll tell you is it's at one of any number of different places. It's either the bankers or lawyers who work on a transaction, the corporate communications people who are typically outside who work on any variety of these things, or in many cases, it also happens to be amongst senior management at various companies. And when I think about that transaction, the fact is that I probably had relationships across the board with everybody involved. So I don't specifically recall at this point, who was the initial source for that story. Although, I do recall, once it sort of especially is out there, whether it was me breaking the initial, which I think I did, then you tend to get a lot more coming in terms of people wanting to communicate.
Josh King:
I remember going back to some piece of video, let's call it five years before that, a failed acquisition by Intercontinental Exchange hatched down at FIA Boca. I think you were breaking that news too, Jeff Becker trying to buy the Chicago Board of Trade.
David Faber:
Yeah. I kind of remember that as well. Yeah, I've known Jeff for a long time and there is a tendency to have the same advisory teams. And so when you're a reporter and you have particular relationships with people on some of those teams, it can be beneficial to you when you're looking to break a story.
Josh King:
It's been six years with the NYSE now under the ownership of Intercontinental Exchange on a variety of levels. What's changed since then at the place you ply your trade at every day, starting with the exchange itself? It's a very different vista that you look out on from Post 9.
David Faber:
Yeah. I mean, you know this very well, obviously being here every day, there are fewer people. It's changed in terms of the way business is done there.
Josh King:
You haven't always reported from Post 9 in your 25 years at CNBC. What did you think as you sort of first talked to your colleagues and management at CNBC, the folks who are designing the sets and saying, "Look, we have an opportunity to create a broadcast position right in the middle of the floor?"
David Faber:
It's exciting. It still is, particularly when there's either news or as you well know an IPO of significant stature. That's a lot of energy, which is fun once the trading day ends, but it's been an interesting opportunity to sort of be a part of it. I think for many people in the country, it still remains sort of the face of what they believe the markets are.
Josh King:
Now onto the world for which this building is a microcosm, the global economy back at the time that you were reporting on ICE acquiring NYSE Euronext, President Obama had just won his second term, the economic crisis pretty much in the rear view mirror, and a dramatic expansion underway. Do you think it's reached a tipping point? I mean, you were talking about that on the show this morning.
David Faber:
It's something we talk about all the time endlessly. And of course it's a key question. I don't have the answer. I think everybody's trying to understand the current environment right now. It's an interesting time, because of course we are in the midst of this trade war with China and the impact that that's having, the coming tariffs, the existing tariffs, the impact that's having on decision-making at the boardroom level, in terms of the willingness of CEOs to continue to invest when the landscape is somewhat uncertain. It's funny because we were having somewhat similar discussion back then. Under the Obama administration, the concern from CEOs was, "Well, I don't know what the regulations are going to be," because that administration was more focused on increasing regulation. And so you would hear somewhat similar refrain. "Well, I'm pulling back to a certain extent because until I know the rules of the road and can sort of predict it firmly, I'm less likely to allocate capital towards certain things."
David Faber:
A lot of that seems to be at least the refrain that we're hearing from corporate America. Now we are seeing it reflected to a certain extent in business investment. So that's a result of the trade war, got this inverted yield curve that we've talked endlessly about in the last couple of weeks. Although, we seem to be backing off from sounding the alarm bells anymore. It was often seen as, still is, as a recession indicator, but there's a lot of weird things going on in the world's bond markets these days, starting with negative rates on what, $16.7 trillion worth of sovereign debt. And so that may, and probably, is having an impact on our yields here and that inversion which we're focused on. At the same time, the consumer remains very strong. And so you still could see an economy that grows at 2%. Will we grow more than that, the way the administration seemed to promise after the tax cuts of '17 and then that we did in '18? Unclear and probably unlikely.
Josh King:
Talking about your connections with corporate America and you're in touch with so many CEOs, let's talk about the 2300 companies or so that are listed here. Every year, fewer of them, the result of mergers and acquisitions activity, also LBOs. And also these startup companies that are staying private longer. We had Uber having its IPO earlier this year and some would say that it spent so much of its life cycle as a private company that people didn't get to realize the upside of that. And yet that one was a whopper and there are other whoppers that have happened this year. What does the future hold do you think, David? More IPOs or a continuation of the trend of venture capital and private equity, money keeping businesses on the sidelines from the public markets?
David Faber:
I mean, I think it's both because they don't necessarily have to be in opposition. You're right. And I think it's been a key question in terms of some of these big names we've seen and obviously Uber being one of the biggest here this year and it was an exciting day, but did they go public in a sense much later than they might otherwise in a different era? Yeah. And is there a growth opportunity that was available to the venture investors that perhaps is not necessarily available to the public investors? I think there's an argument to be made about that as well, but they did come public. And so while a lot of these businesses are staying private longer, there are very few of them, though some, in particular, those that might sell to other companies, that are not going to eventually make it to the public markets. The question is has the gestation period been so long that it becomes a more difficult argument to be made in terms of why you should buy the stock?
Josh King:
Well, you start our conversation talking about that moment that you broke the news that ICE had bought NYSE Euronext. And I mentioned, I don't know if you have a score book or scrapbooks of the big stories and scoops that you've broken, but reflecting back I think you celebrated your 25th anniversary on air last year at CNBC, but if you could tick back some of the ones that you were in possession of that news on a Sunday afternoon, ready to break it on Monday morning, what are some of the ones that really would go up on the trophy case or above the Faber mantelpiece, if there was one, of the biggest scoops that you've had?
David Faber:
Scoop-wise, given my long-term memory is not as good as it used to be, I'll go shorter term here. I mean, most recently in the last couple of years it was Disney Fox without a doubt, which I would argue still and still rises to one of my better scoops because it was so incredibly unexpected in part. And I was able to break it without anybody having a clue, coming out and basically saying two things. Obviously Disney and Fox when I reported had been in talks. At that moment, they weren't, but I certainly indicated they could easily get back into talks, which of course they did, but even more so, the idea that Rupert Murdoch had decided to become a seller. I mean, that really shook the entire media industry.
David Faber:
I broke when Rupert decided to step down as CEO and sort of hand over... He became chairman, but handover the reins to Lachlan and James. I broke when News Corp made the bid for Dow Jones. That's again another one that I remember very fondly. It's really fun, these moments, when you know it and you know nobody else knows it and you know you're about to tell the world and all hell's going to break loose as a result of it. That is a really fun moment as a journalist. Another one that I always come back to is a fraud at WorldCom.
Josh King:
Yeah, we're going to get into that.
David Faber:
Which I also broke late in the day. I think it was like six o'clock, but I still will have people occasionally stop me, fewer now, but stop me and say, "I remember where I was at that moment," because it was such a mind-blowing story.
Josh King:
There's the M&A, there's the big moments like Rupert stepping down, and then there are these days of these huge IPOs when the floor is packed, the CEO and the management team are full of hope in the hours before the new symbol is traded. We see so many of them, beyond the Uber that we mentioned this year, Levi's, Pinterest, Slack. What's your job in helping to tell the story about when a new name comes to market? I mean, sometimes, Andrew will have an interview in the prior show of the day, but really when they've come down from the podium and they're sitting on your set and who knows where the stock will open, how much thinking do you put into it in those hours before and saying, "The CEO has had years of planning toward this moment and this is their time to tell the story?"
David Faber:
Yeah. A lot. And we love Andrew. He's great, but we don't want him to get any more of these interviews. We want them to be here from the NYSE as they should be. And that's our hope and expectation. And I mean, I can use an example. WeWork, for example, which will be coming up in the not too distant future and which is an enormous company, a great deal of controversy surrounding it's S-1, at least it's filing and it's business model. You spend a lot of time on that. It's not just that day or the day before that you suddenly are preparing for it.
David Faber:
It's months and months, hopefully spending a lot of time with the management team. And in these cases, you obviously can talk to a lot of people who already are investors, because to your point earlier, there are so many investors in these private companies who are in many ways, some of the same hedge fund guys who may buy it on the public offering as well but some of them whom are my sources. So there's a lot of preparation that goes into it. Pursuing the interview, even if it means going head-to-head against some of your colleagues, which is a key and the day itself is always very exciting. I mean, the one I remember most here, now it's fading a bit, is Alibaba.
Josh King:
Biggest one ever.
David Faber:
Yeah. And you forgot until you walked in that morning, the interest around the world and from the Chinese press. I mean, you remember, there were rows and rows of people outside the exchange, just waiting there that day. That was incredible. That's what you're trying to do. You're trying to tell a story. And particularly when you're going to be losing money for quite some time to come, you need to have a lot of people who are going to be willing to follow you for a long period of time who believe, and I guess, yeah, it's an interesting point you raise. So in order to do that, you really have to have them bought in. And I think storytelling is still one of the key ways to get people engaged.
Josh King:
So generally speaking, how do you do your day-to-day reporting? Your show goes off the air at 11 o'clock. Is that when you take your anchor hat off and sharpen your journalist pencil, or does it go for 20 hours after that?
David Faber:
It goes all the time. I get in at around 7:30 and obviously prepare, more focused on that morning in particular, but there are always stories that you're... I mean, right now I'm chasing a couple of deals that I think may or may not be out there, be able to break them, because dead end is usually the case. You don't get there. It's not true or you get beat or they announce it before you're able to actually break it. But I'm always chasing things. Those don't end with a day, they sort of extend over a long period of time until you get to sort of a point sometimes of where you've got to how to push it. Either you go all in, call anybody and everybody you could imagine because you think it's absolutely real, knowing that in making those calls, other reporters are going to hear from those same people, because that happens and you conceivably could lose the story, but you got to be ready sort of.
David Faber:
So I kind of tiptoe around for quite some time. So the larger answer, yeah. I mean you're always working and it's changed a lot. I kind of explained this to some of my younger colleagues and I don't need to be in the office anymore. When I started at CNBC, almost 26 years ago and I was working on a story, I needed to actually be by the phone at work. There were no cellphones. And if somebody was going to call me back, it was going to be on that phone. And so you'd have these days where you stayed in the office waiting for a phone call till 7:30, 8:00, whatever it might be at night because you didn't want to miss it and you couldn't actually even leave your desk. That obviously changed. You can be anywhere at any time and you can be reporting, which is nice. At the same time, it often can also be when you're on vacation.
Josh King:
And people somehow feel more comfortable thinking in some way that texting back and forth is maybe a more secure way of communicating than actually picking up the phone or having a meeting.
David Faber:
You know you fall into that trap of texting and you mentioned it in your introduction. I'll do it during the show because I can't really get on the phone. And there are times when CEOs in particular with me or with Jim will start texting us, but it is not, it is not for all you young journalists out there the way to report. Do not report via text or via email. You miss so much, context, tone of voice, so many other things. And so I really try not to do that, try to discipline myself. Okay, let's take this off text and onto voice because that's the only way to really report.
Josh King:
You said you show up here at around 7:30 in the morning and you got to be on top of the news every morning by 9:00 AM when the Squawk on the Street goes on air. When we were talking a few weeks ago at bar San Miguel, you said that you're generally not awake at three in the morning, pouring over news from Europe. How do you get your first dose of what's going on in the world?
David Faber:
Phone calls. Yeah, I have the same kind of group of people that I call virtually every morning or they call me. Most of them are money managers, hedge fund managers. And unless there's something specific, unless I walk into a potential deal, typically I might even know about it the night before, but then it's a bunch of the people involved in that particular transaction. If it's being announced, it may be the CEO wants to talk on background or some of the bankers who want to try to shape the narrative that morning because they care about how the stocks are going to trade. But on a typical morning, it's always going to be the same group of people who I just check in with and call. Now, I'm lucky in that I had this guy named Cramer who does wake up at three in the morning and for whatever reason, feels it's his mission to know everything about everything. Now, he can't do that. But between him and Carl, I know I'm pretty well-covered so that I can kind of go deep on things without necessarily knowing exactly what GDP numbers were in Japan that day.
Josh King:
I mean, the team that has gelled so amazingly at Post 9, you, Carl, and Jim, what is the special sauce of that? What do each of the three of you bring to that anchor desk?
David Faber:
I mean, I think Carl is the consummate anchor man. He's also broadly informed about a lot of different things, does all his preparation and comes to the desk every morning, knowing all those different numbers and all the different macroeconomic statistics and a lot of different news that's occurred. Jim is similar. Although, he's going deeper on particular companies. And again, for Jim, it's also the same thing. It's somewhat similar to me, long-term relationships with different CEOs and different companies where there might be some news that morning, but it isn't as though you're just engaging it for the first time. I know that Jim is going to know things that I'm not necessarily focused on that morning, because again, he sort of takes it as his mission to try and know as much about everything as he can. Whereas I'm going to be able to go deeper on some things, particularly if there's a transaction of some kind, you can assume if it's of significance, I will have talked to the people involved and hopefully have some insight to share beyond just the headline and/or couple of my areas of expertise.
David Faber:
So media, telecom, where I've been reporting for so long and sort of very much aware and constantly working on understanding new developments, whether it be the streaming wars or the introduction of 5G. If we head into that area, you can typically come to me and then I can just start to talk and probably wait too much. So we all kind of know our roles, with Jim sort of covering more than anybody and Carl keeping us on track and kind of having everything there and me occasionally taking us deep on certain things and/or frankly, sometimes even calling BS on Jim.
Josh King:
I mean, Carl tweets constantly. You can follow him 24 hours a day. Off airtime, you learn a lot about the entertainment industry, about his personal passions of film and art and television. Jim is all over the place, sharing thoughts as wide as his prognostications for the Philadelphia Eagles for the season or the war between president Trump and Fed Chairman Jay Powell. You are more circumspect online. Why?
David Faber:
I don't feel like getting into it with people. I try to use Twitter as just another distribution mechanism for news. And that's how I use it. I'm not interested in sharing frankly, my personal experiences for the most part or anything about my kids or my family or my views of the world. Because I think when you do that, inevitably somebody's going to not like it. And then you can't help but want to engage and it just gets your blood pressure up. I don't feel like it's worthwhile. I will retweet some things that I think are interesting.
Josh King:
I mean, at the top of your Twitter feed right now is a retweet about the fires in the Amazon rainforest.
David Faber:
Right.
Josh King:
So it must have affected you in some way.
David Faber:
Yeah. I mean, I'm interested in sort of the environment and climate change and what's going on right now, which is not necessarily good. And so yeah, I will occasionally. I mean there's some things I think people could figure out. Yeah, the latest horrible shooting tragedy, I might just feel like I need to send some things out that I'll see, but I tend to try and stay away from it for the most part. Things are so divisive right now in terms of the views of the president and that's not necessarily where I should be going at this point. I mean, I'm happy to weigh in on something that is economic related and/or of course when I'm lucky enough to break a story or have a big interview. I will use Twitter for that. And occasionally, to talk about my New York Mets, but I made a big mistake a few weeks ago when they won that game against the Nationals and it was feeling really good. They came down from, I think they were down three runs and they won-
Josh King:
You said it's going to be a great September.
David Faber:
I did. And I was wrong. I was wrong. Well, didn't expect we were going to drop five in a row right here at the end of August. So it was fun and I shouldn't have done my LGM tweet. See what I mean? Even when I tweet that, I probably am better off not.
Josh King:
I mean, four games out of the wild card as you head into Labor Day weekend. September, you can make four games back up if you need to.
David Faber:
You can, you can. That performance from Syndergaard last night was not a particularly good sign of things to come. It's looking not too likely right now. What are we? Two games over 500. Listen, it was fun. At least, we were in late August, sort of feeling like, "All right, we have a shot here," which is what you want from the baseball season. The last two seasons it's been June and we've been already out of it. So I'll take it. But yeah, a few weeks ago it felt a little better.
Josh King:
Let's talk about one of those major moments that you mentioned earlier. You know it can be such a long slog to get newsmakers to open up. We know the story of ICE. It rose to prominence from the ashes of the Enron bankruptcy. At the beginning of the century, two companies, Enron and WorldCom became the twin poster children of accounting scandals that brought down those major names. The day before yesterday was the 78th birthday of Bernie Ebbers, the CEO of WorldCom, whose now in the middle of his 25 year prison sentence at the Federal Correction Institution in Fort Worth, for the role that he played in the downfall of his business, a story that you followed right to the door of Ebbers's pickup truck in Brookhaven, Mississippi. Let's have a listen.
David Faber :
Those words from Bernie Ebbers were to have marked the of our story, followed by some concluding comments of my own. We traveled to Brookhaven, Mississippi, Ebber's hometown to record those comments. Suddenly, in the midst of our taping, a surprise visitor showed up, the very person who for months had rejected our request to meet.
Bernie Ebbers:
Hey David.
David Faber :
How you doing, Bernie?
Bernie Ebbers:
Good. Is Tyler here?
David Faber :
No, it's just me. Oh, it's just me. How you doing?
Bernie Ebbers:
Welcome to Brookhaven.
David Faber :
Thank you. Thank you. It's actually not the first time I've been here.
Bernie Ebbers:
Oh really?
David Faber :
Yeah. I was here about two months ago.
Bernie Ebbers:
Good. You want to meet the man?
David Faber :
Hi.
Bernie Ebbers:
That's Mr. Henderson. He's chief of police.
David Faber :
Oh, sure, sure. Thanks chief for letting us... So you want to do an interview?
Bernie Ebbers:
No, I can't. You know that.
Josh King:
I can't, you know that. David, I mean, Ebbers refused to talk to you for nine months. I watched this thing unfold. You chit-chatted, you walked down the street, you sort of got him to open up and he talked a lot.
David Faber:
That was the moment when I get asked, of all the things that you've done, what were the greatest moments? That was probably right up there, maybe the single most interesting because it was unexpected. The way it was shot too, people tell me, "That had to have been staged." I'm like, "It wasn't." But we had this boom camera because we were doing the conclusion of the documentary and I was on the railroad track. So we had that camera way up high over this little town, which you could kind of almost capture a lot of the main street from just that camera. And then we had obviously a cameraman on the ground too. And so then we started this walk-
Josh King:
And a guy looking through the trees too. You had a third angle as well.
David Faber:
Yes. I think we had three cameras and we started this walk and my front cameraman, he followed us. Now, we never mic'd up Bernie, but we had a-
Josh King:
I was wondering how the sound from Bernie sounded so good.
David Faber:
We had a boom mic on the camera and he saw it. I mean the cameraman was only three or four feet in front of us. He was walking backwards. We were walking through this town and then we obviously also had that overhead camera. We were able to capture it. It was just an incredible moment. And of course, then I spent the next, I don't know how long it was, three minutes, whatever it was, walking through town with Bernie and asking him all the questions that we were unable to ask him. They were so mad at us because we had to kill all the ad breaks for the hour and squeeze it in. And it was a nightmare trying to sort of figure all that out. Because as I said, it came at the very end and typically you'll do it in the end, but you've already done a lot.
David Faber:
The documentary's almost done. You're going to come in, put the end on it, and then it's going to go out in the not too distant future from there. So we added that seven minutes, but we walked all through town. I asked them, I tried to... Obviously, it was unexpected. But I was trying to just, "Okay, what do I need answers to?" This, this, this, this, this. It's funny though. After this extraordinary interview and I say goodbye to Bernie, who clearly knew he was on camera and could see the mic, I call one of my main producers on this. I did have another with me, but the lady who was sort of working on a day-to-day and I said, "You're not going to believe it. Bernie, after all these nine months, he did an interview. I met. He's like, oh my God."
David Faber:
She said to me, "Well, did you ask him if he caused the fraud?" And I said, "You know? I didn't ask that question." Of all the questions, I was so focused on the weeds and so focused on sort of what about this, what about that, and this and that, that I didn't ask the home run question. Now we all know what the answer would've been, but you've got to ask the question. And of course, this happens after so many interviews. I was like, "Oh my God, why didn't I ask that question?" Plus for TV and dramatic purposes, you need to ask that specific question. All that being said, unfortunately for Bernie, to your point, even though he knew better, it was used at his trial. I think it was a Southern district, not the Eastern here in New York when they won their conviction. I mean, 25 years. It's funny, you just mentioned 78th birthday. I'm not sure 25 years was appropriate there. It was sort of the height of corporate malfeasance, but yeah, it was used in his trial.
Josh King:
I mean, I don't know if you flew out of Brookhaven that night or looked in your Brookhaven, Mississippi hotel room and reflected, "I just got a piece of video that I've been after for almost a year." But if you think about the psychology of a person and what he told you on that day, you ever have any thoughts or conclusions to yourself about a person who knew better, why he said the things that he did and why he talked when every bit of legal and public relations advice he had to have had at the time would be, "Keep your mouth shut?"
David Faber:
Yeah, I have thought about it. I do think he may never fully have understood what it was that was fraudulent. And so therefore, perhaps actually thought that he was innocent and wanted, as many people who believe they're innocent want to, to prove that. There's another lesson that I've taken away and occasionally I try and share this on TV, although it's not really analogous necessarily. It is somewhat, but I don't want to say that this company's fraudulent, but the lesson is that, and I watched this for years, I mean this mythology that grew up around Bernie Ebbers, right?
David Faber:
He worked in a garment factory. He was a gym teacher. This mythology that grew up around him as the greatest cost-cutting telecom executive, who could do it differently, who somehow had the special sauce and the way that that was supported by the Wall Street banks around him, particularly at the time Salomon Brothers Citi, and obviously the enormous fees that came to them as a result of all the deals that they did. You need to be aware of that because that's all they are, is myths. Obviously, he wasn't the greatest telecom executive of all time in any way, shape, or form. Obviously, the company was not what it said it was in any way or what Wall Street said it was. And we do see that repeated even to this day. And I try to make that point occasionally on air.
Josh King:
David, you wrote your first book, the Faber Report, How Wall Street Really Works And How You Can Make It Work for You. In the book you said, and I quote, "In January, 1987, I accepted a position to cover corporate banking for a newsletter owned by Institutional Investor magazine. I graduated from college 18 months earlier with a BA in English. I'd worked in politics since graduating. I'd never taken an economics course during college or high school. I never read the Wall Street Journal, never owned a stock, never owned a bond, never met an investment banker, a risk arbitrager, a CEO, or an analyst." Was business journalism never in the cards growing up in the Faber household?
David Faber:
Never, not once. I did not grow up in a household where people were talking about stocks. I mean, I grew up in Queens and an apartment above us were cousins. And the only time I remember was going up there to visit my cousins and my cousin, Jerry, who has long passed away, would be screaming or yelling about Coca-Cola that day. That was when you get the New York Post in the afternoon to see the stock quotes, obviously the 70s, early 70s, late 60s. And that was about it. That was my only understanding in any way, even through college. I remember some of my friends who would read the Wall Street Journal and that was not where I was going. When I took that job, I figured I'd last three months. I was interested in journalism. I had worked in Washington, DC prior to that.
Josh King:
What had you done there?
David Faber:
I had worked for the Democratic National Committee at a college and I didn't like it. I didn't like politics at all. And I thought, "Well, maybe I'll get a job at the Washington Post. I'm sure they'll hire me," with absolutely no experience other than having been on the school paper and whatnot in college as well. And they didn't, surprisingly. Amazingly, huh? They didn't want me to cover politics for them. So I had to come back to Queens and answered the ad in the New York Times for a job at Institutional Investor covering corporate banking.
David Faber:
Thankfully, they took me. But yeah, I didn't think I'd last long, but I was very lucky. I started in a place that was a meritocracy. They had actually stressed breaking stories. When I started, it was on a typewriter. There was obviously no internet. There really weren't even that many computers at that point. The key was, "Here's an American express card. Take people to lunch." Slowly, and I mean, slowly you start to sort of get past the defenses that are put up by the industry in terms of the language and things that are supposed to dissuade you from trying to understand what the hell's going on and you sort of get a vague idea of what's happening. And then at some point I remembered thinking, "This is actually pretty interesting."
Josh King:
The young man by way of DC out of Tufts, is trying to make it in business journalism. Let's go back to your book and one other thing you said, "My first three months as a reporter were terrifying. I would've trouble breathing," some warnings, "as though the stress of it were all crushing my lungs." Stage fright, writer's block, what was it?
David Faber:
No, it was just thinking I was going to get fired because I said this place is a meritocracy. It really was, the newsletter division. A lot of great journalists came out of there, but a lot of people also lost their jobs very quickly. If you didn't produce stories and scoops, and these were weekly newsletters, you were gone within six months. So I didn't want to get fired. I was very stressful. It was very stressful.
Josh King:
Well, eventually you got hired by that place in then at Secaucus, New Jersey-
David Faber:
Fort Lee, Fort Lee.
Josh King:
Fort Lee. Yeah. And now in Inglewood Cliffs and you started this 26 year run. And we'll talk about that a little bit after the break. David Faber, the man with a well-earned nickname, the Brain that we've been getting a dose of inside the ICE House, talk more about his career at CNBC after this.
Speaker 3:
And now a word from Charles Harrington, chairman and CEO of Parsons, NYSE ticker PSN.
Charles Harrington:
We offer technology, digitally-enabled solutions to the defense, intelligence, and critical security markets. We see a lot of growth and opportunity in cyber and intelligence and geospatial intelligence, as well as solving network problems for critical infrastructure. It feels great for Parsons to be a newly traded public company once again. When I joined the company in 1982, we were publicly traded on a New York Stock Exchange and here we are, 35 years later, publicly traded once again.
Josh King:
Back now with David Faber, host of CNBC's Squawk on the Street, the author of the Faber Report. And then also And Then The Roof Caved In. That's his 2009 book and House of Cards, the Origins of Collapse. So David, Jim Cramer walks in here every day, satchel overflowing with earnings reports and analysts call transcripts. We no longer have big printed broadsheets in the Wall Street Journal and the New York Times in printed form, the way it used to be. You entered the business during the golden age of print journalism. What's the state of business journalism today? You were talking about the meritocracy of Institutional Investor and you've been giving little sort of hints and bits of instructions to journalists coming up. Can a kid from Tufts with no experience still a break in?
David Faber:
Absolutely. I think so, without a doubt. I think the state of journalism is not nearly as bad as people would say in terms of at least the overall product that's available to people who want to consume things about business news in this case, let's call it, but you can even broaden it out just generally. It's not all coming from the Wall Street Journal, which continues, by the way, to put out a great product. I read it digitally now. You probably do as well. I read it on the subway every morning, but there are stories still there that you will not read anywhere else and there's still great reporting there. And in the Times, and at Bloomberg and at Reuters. It's a different level of competition now amongst everybody. When I first started breaking stories, I think my first one was 1996, British Telecom buying MCI for 22 billion.
David Faber:
And I broke it on TV that day. It was the first time that it had ever been done, right? And back then you were competing with the next morning's newspaper. And that's when it all started to change in terms of suddenly Dow Jones said, "Well, we got to put stuff out on the wires now, because we can't hold it necessarily because there are other people." It's before the internet, obviously the advent of the internet. But when you look at the totality of what's available in terms of people making calls and talking to people and trying to understand what's going on in the world and putting their product out there, most of it digitally at this point, but also in print, I think there's a lot of opportunity. I don't know how well you get paid for it, unfortunately. That's got to be a key.
Josh King:
So you and I are having this conversation in some of the last dog days of summer, not a huge amount of activity on the floor, perhaps time to take stock of what the fall will offer. David, you've been through cycles before, but many now in the market haven't seen these cycles and one of your guests today, Jonathan Golub said he's been, "bullish for a long time on stocks, but is more cautious recently." A lot of 401ks have recovered since 10 years ago, 2009. Retail investors want the good times to keep rolling, but are institutions like Golub moving to safety?
David Faber:
Yeah, possibly. I mean they are. I think it's a difficult time to generally allocate more capital to the equity markets if you're an institutional manager, to some extent, given you can wake up any day with a tweet that could completely change the tenor of the market, but I'm the last person in the world who should be giving any advice on what stock market's going to do. I mean, there's a reason I love focusing on companies and I leave the prognostications to either the guests that we bring on or to my friend, Mr. Cramer. And that's because I have absolutely no idea what the heck the stock market's going to do. I can talk to you about all the reasons why it might go up and I can talk to you about all the reasons why it might go down, but what it's actually going to do, I don't know, which is why I've always been drawn much more at the stories about companies, about industries, because there you can actually get answers. You can't really ever get an answer to what stock market's going to do.
Josh King:
I mean talk about a tweet that could move the market, another guest you had on the air today, legendary Art Cashin and comes on with a specific message, a message for the White House. He says, "No tweet on trade over the past 24 hours." Stocks go higher. Your old colleague, Larry Kudlow is whispering in the president's ear as he heads toward reelection campaign. Will Larry's whisper get through?
David Faber:
No, I don't think so. Do you?
Josh King:
No.
David Faber:
I mean, it doesn't feel like Donald Trump is... He's going to do whatever he wants to do. And if that means tweeting about trade when he feels he needs to, he will. This month has really been more about his, and I think this word at this point I guess is aptly used, hatred for Jerome Powell, the chairman of the Federal Reserve. So virtually every day, there's been a Fed related tweet from the president, basically talking about how he wants the rates to go lower, but nobody's going to stop him. I know Larry well. I like Larry a lot. I don't see Larry actually having the ability to say, "Don't do that, Mr. President," and the president listening.
Josh King:
I mean you were talking about the first story that you broke in 1996. You had as your guest on the show today, Larry Summers, former deputy secretary of the treasury, secretary of the treasury during the Clinton years. You've covered the way Washington influences Wall Street from Clinton through Bush, through Obama, and now Trump. What do you make of where we are now versus when you were a kid breaking in and you saw Bob Rubin, Alan Greenspan, Larry Summers working together to keep the economy on a steady track?
David Faber:
We tend to put people on pedestals to a certain extent who don't always necessarily deserve it. And sometimes I think we also degrade people who actually in hindsight did much better work. I mean, I hate to sound cynical, but everybody's just taking their best guess. They really are. As long as they're doing the work... I guess that's what I worry about, people faking it. There is a lot of brain power amongst the group you just mentioned, for example. Larry Summers is nothing if not incredibly smart, doesn't mean he is going to get it right all the time. But you know he is going to do the work and think long and hard about things. Rubin, same. Alan Greenspan. I mean, listen, Greenspan made his share of mistakes too though along the way, particularly you could argue sort of towards the end of his tenure and he would argue differently.
David Faber:
The one thing that seems a bit different now is you would hope that there was... I mean, there's always an ideology that comes with economic policy, of course, but at the same time, there was a willingness, I think, on the part of many people, whether they were Republicans or Democrats, to take the data as it was, and not to argue with it and to believe in data and science and things like that. I do worry sometimes about that in particular at the present time, that everything is doubted. And so if you can't believe anything, then what are you going to believe in, what actions are you going to take as a result of what should be things that are facts.
Josh King:
We talked at some length about the work that you did on the documentary about WorldCom. You also did the new age of Walmart, the eBay effect inside a worldwide obsession, the big heist, how AOL took Time Warner. And to be able to tell a story over an hour or however long those things were and do the travel and the work and the storytelling that went into that, CNBC is sort of the go-to channel in the King household, but we know what prime time usually has on it now. Do you miss the ability to do long form work like that or has that gone on to places like Alex Gibney and where he can sell his shows on HBO or other places for documentary work?
David Faber:
I miss it. I really do, doing the documentaries and you mentioned many of them and the AOL one was our first one. And I mean, one of the great things about what I've been able to do at CNBC over the last quarter century and more is learn. And that first one, when I look back at it, it was horrible in terms of telling a story really, in terms of having access to the actual players, but we got better. We got a lot better and I learned the form and there are great opportunity documentaries to sort of take a look at things in a much deeper level than we do every day, because the mission's different. And also it's a collaboration amongst a lot of people, which I really enjoy, your producers, your editors, you write it. Obviously, you write it as well with your producers. Cameramen, it's so many people contribute, people who create the graphics, that it's really a great feeling when it all comes together.
David Faber:
And so I think when I look at my career, to the extent I do these days, and you mentioned a lot of scoops and they're great and I am proud of those scoops, but the things I'm most proud of are those documentaries, whether it was the first Walmart one where nobody really had a sense for this company and we got in, or whether it was House of Cards, which I think arguably still stands up, 10 or so years later, as one of the definitive explainers of the roots of the crisis and of which I still remain very proud.
Josh King:
And yet, news continues to go on. I mean, some of the stories that are breaking today could become documentaries of tomorrow. You've certainly been in the middle of them. You talked about your special focus on media earlier and in particular, CBS and Viacom. Sherry Redstone, finally combining these two companies again. I watched an old interview of a much younger David Faber pushing hard against a very combative Sumner Redstone. Let's just hear a quick little clip.
Sumner Redstone:
ViacomCBS.
David Faber :
That's so short-term, do you think-
Sumner Redstone:
Why? No.
David Faber :
What do you mean, why? Just ask 35, 36-
Sumner Redstone:
Wait.
David Faber :
37. What is-
Sumner Redstone:
Wait, wait.
David Faber :
Why 3000?
Josh King:
Sumner wait, wait, wait. I mean times have changed so much. Your parent company, Comcast owns NBCUniversal. You've reported deeply, as we talked about earlier, about Disney acquiring the assets of News Corp. As we watch this unfold fictionally now on the second season of HBO's Succession, will the consolidation continue? Where is the media industry headed?
David Faber:
Man, I know I miss Sumner. I mean, he's still with us, but he's not what he was, obviously. He was... Wow. What a piece of work. Yeah, we're still in the midst of it. Listen, the direct-to-consumer, which we talk about a lot because we should, is the thing. And the fact that people are not watching or consuming media the same way they did for the last 20-25 years is known. Cord-cutting is here to stay. Video streaming to your home is not going to be what it was. It's not going to come via your cable. It's going to come to your broadband. And so this is a transformation that is still in the early days and the media companies are trying to adjust. Bob Iger has made his move, prepared that company well for it, we'll see how it goes. We all know that Netflix even... With a difficult year in the stock market, I think it's only up to 10 percent this year, still has $130 billion market value. This is a company that didn't have any market value, what was it, 10 years ago. I mean, this just shows you-
Josh King:
Show CDs around the place.
David Faber:
Exactly. Just shows you how the world has changed. It's only going to continue to. I think you're going to hear the old things about scale, ViacomCBS is still subscale. It's still most likely, even though with all the properties they have, may be still too small to really compete in this world where you're going to have to have some sort of offering direct-to-consumers that can actually generate real meaningful revenue as you watch the other side of your business slowly, slowly erode. And it's not like it's all going to go away. There's still going to be plenty people who subscribe to cable, but not nearly as many as there are right now.
Josh King:
I mean, on the other side of the coin in the sort of media and telecom is T-Mobile and Sprint. Some of that story is played out right here on your set on the floor of NYSE. A lot of this started with the acquisition spree of Bernie Ebbers who tried to buy Sprint for $115 billion in 2000. Here's T-Mobile CEO, John Legere on Squawk on the Street from the floor of the NYSE last year.
John Legere:
This is the game that we put our helmets on to come play today. After we come here, meet with you guys, couple of other stops that are not as relevant as CNBC, and all roads lead to Washington. Everybody's got an idea as to the preconceived notion of this deal. Here's what I say. I'll start yours first. Take that competition and supercharge it. Put it on faster speeds, bigger scale, bring lower prices. Take that. My commitment, Marcella's commitment is if you liked that competition before, you're going to love what's coming with this one. Secondly, 5G is coming and by the way, with all the hype that the United States has had around AT&T and Verizon, millimeter wave, we are behind.
Josh King:
So David, can those in the telecom space like Verizon and T-Mobile and Sprint still make a buck or do they have to veer closer to Comcast and Charter and do broadband and see more of this consolidation happen?
David Faber:
No, they can still make a buck. I mean, listen, it's a really interesting time when it comes to telecom, which I appreciate you're asking some of these questions, because Verizon is going in one direction, AT&T has gone in a very different direction with the acquisition of Time Warner. And really now only what, 40 some odd percent of their revenues come from wireless. And you've got the prospect of T-Mobile and Sprint, which now have received at least preliminary approval from the DOJ and the FCC, despite what all the states that are going to try and litigate against them on an antitrust perspective, but more likely than not they are going to get together, it would seem. It's going to make for a really interesting competition.
Josh King:
You and I started our conversation a bit ago now, David, talking about this fearsome threesome of Faber, Quintanilla, and Cramer, but it all started with you along with Joe Kernen and Mark Haines. Mark passed away in 2011, but here's a clip of you, Joe, and Mark observing CNBC's 20th anniversary in 2009.
Mark Haines:
Okay.
Speaker 19:
He's a pretty girl.
Mark Haines:
Oh boy. It should have been a long, strange trip. And, David 20 years.
David Faber :
That's just not right.
Mark Haines:
No?
David Faber :
Really. After all that time, especially as I'm holding your big arm there. What the heck?
Mark Haines:
I have never seen that before.
David Faber :
Is that an old thing, or is that just new?
Josh King:
The thing that you guys are reacting to, David, you know it, you remember. It shows Haines in the Han Solo character, Kernen as Luke Skywalker, and Faber as sort of the third person in that troop.
David Faber:
Right, I was princess Leia, yeah.
Josh King:
Holding onto Mark's arm. I mean, in all seriousness, there's a plaque here at the Exchange that honors Mark's contribution, not only to the network, but to how millions of people now understand what happens on the floor. Your thoughts on his contribution to how we see the business world today?
David Faber:
Yeah. Listen, I'm miss Mark. Think about him a lot. See that plaque every time you go up and down the stairs, of course, to our area here at the New York Stock Exchange, where we work. He told it like it was, he was a great interviewer. When he came prepared, man, you better watch out. You look back at your career and you remember moments, and those were great years. Things have changed. Obviously, Mark is no longer with us, but those were great years. We had a good partnership, all three of us, not without some back and forth, as you might imagine, although I usually stayed out of it. Joe and Mark maybe got into it more, but it was the dawn of the internet. That was kind of when our show really hit its stride, '97, '98, '99, and all the craziness.
David Faber:
And we would just come in every morning, it would be fun. And we were able to be unscripted, which was sort of a new thing back then, 20 some odd years ago. Completely unscripted and they had confidence that with Mark sort of shepherding us along, that we could make it work and we did. And we did. I mean, the show I'm on is called Squawk on the Street, right? It came from the Squawkbox franchise. And it's certainly, along with documentaries, one of the things I'm most proud of, having been one of the founders of Squawkbox.
Josh King:
So the last thought is, as we mentioned at the beginning of the conversation, was that a year ago, you marked 25 years on the air at CNBC. Now 26, I think at your anniversary, you got a little surprise on the Squawk on the Street set as your family showed up at Post 9, your son and daughter skipping school for the morning. Let's take a quick listen.
David Faber :
I'm not going to cry.
Speaker 16:
No.
David Faber :
This is what happens see, when you.
Speaker 20:
Any Fabers, a lot's happened in 25.
David Faber :
It's a lot larger than I am. Hi.
Speaker 21:
Hi.
David Faber :
Hi.
Speaker 22:
Hi.
David Faber :
You have an IFB in and everything.
Speaker 22:
Yeah.
David Faber :
They're not going to school?
Speaker 22:
No, I am.
Speaker 21:
We are.
Speaker 22:
Yeah.
David Faber :
Soon?
Speaker 22:
Yeah.
David Faber :
Okay. Oh my God. This is so sweet. I'm really touched.
Josh King:
We talked a lot about your colleagues over the years, David, but in 26 years on the air, you get a lot of support back home and thoughts about the way they've supported your career and you've watched them grow. Now, your son looks like he is foot and a half taller than you.
David Faber:
It's not hard, but yeah, he's a big boy, which is kind of funny to the point where people do look at me and go, "Really, you're his father?" But I am. Yeah, he's going into senior year. So one more year at home, definitely makes you reflect. And then my daughter thankfully, will be around for a bit longer than that. I'm very lucky. And just when I reflect, sort of as you tend to do when you hit 55, not that I'm going anywhere, not that I'm not still young, but you think about your career and your family and I feel extraordinarily lucky in both.
David Faber:
I still have a great gig, as I like to tell people, in terms of what I do every day, the people I get to interact with at work, my colleagues through the years, the way people treat each other at CNBC, and the subject matter, which I still fascinating. And I've been extremely lucky as well in sort of one of the more important decisions you make in terms of who you're going to spend your life with. So yeah, most days I feel like I got a lot of it right. I've just got to keep going, right? That's the key thing. Figure out what's next, too.
Josh King:
Figure out what's next. And on that lucky note, David Faber, have a great weekend. We'll see you next week for the opening bell.
David Faber:
All right. Look forward to it. Thank you.
Josh King:
Thanks so much for joining us in the ICE House. That's our conversation for this week. Our guest was David Faber, co-anchor of CNBC's Squawk on the Street. If you liked what you heard, please rate us on iTunes so other folks know where to find us. And if you've got a comment or a question you'd like one of our experts to tackle on a future show, email us at [email protected] or tweet on us @ICEHousePodcast. Our show is produced by Theresa DeLuca and Pete Ash with production assistance from Ken Abel and Steve Romanchik. I'm Josh King, your host signing off in the library of the New York Stock Exchange. Thanks for listening. Talk to you next week.
Speaker 1:
Information contained in this podcast was obtained in part from publicly available sources and not independently verified. Neither ICE, nor its affiliates make any representations or warranties, express or implied, as to the accuracy or completeness of the information and do not sponsor, approve, or endorse any of the content herein, all of which is presented solely for informational and educational purposes. Nothing herein constitutes an offer to sell, a solicitation of an offer to buy any security, or a recommendation of any security or trading practice. Some portions of the proceeding conversation may have been edited for the purpose of mental clarity.
