Proft: Good morning, Dan and Amy. Well, we have a discussion yesterday, Shaun, about the so-called "Fang Stocks", and the curious case of Amazon never making a profit, but Jeff Bezos being the richest man in the world. And now, there is a little more controversy with Amazon because President Trump took out after Amazon yesterday, tweeting "I have stated my concerns with Amazon long before the election. Unlike others, they pay little or no taxes to state and local governments, use our Postal system as their delivery boy, causing tremendous loss to the US, and are putting many thousands of retailers out of business."
Thompson: Yeah. Wharton huh, you went to Wharton, huh? Let's see what a PITT guy thinks!
Proft: He did go to Wharton...that doesn't mean that everything he says is TRUE on matters of economic policy, as we've seen. And the only thing that is true in that tweet is that Amazon is putting thousands of retailers out of business, *under breath* because they've got a better competitive model, *louder* BUT...
Thompson: Yeah. What this problem needs is GOVERNMENT!
Proft: ...but he...they've also benefited from government, has Amazon, and it's worth pointing this out, as The Wall Street Journal did in their op-ed today...a Federal intervention from the OBAMA Justice Department...you know, the big government Democrats who like big government democratic benefits conferred to big corporations...Obama Justice Department brought an antitrust case against Apple, for trying to compete with Amazon's eBooks dominance. That helped...led to Amazon now being the dominant player, accounting for 75% of all eBook sales. So, perhaps not the most judicious use of antitrust policy ever pursued.
Thompson: It's been...it's benefited from incompetent and corrupt government...'cuz there are a few states who said "We offer you this...NOTHING, but a well-run state." So, you know, it's only the states like Illinois that have to fluff Amazon, the rest of 'em don't!
Proft: All right, for more on tech stocks, and where you should put your money, we're pleased to be joined by our friend Jim Iuorio, CNBC contributor. Jim, thanks for joining us. ...do we have Jim? Oh, okay we lost...Jim dropped. All right, well, we're gonna try and...
Thompson: So I always like when we talk to Jim, for the same reason we talk to Scott Shelady. And that's because they're guys that actually traded THEIR money! They didn't raise money, aren't running a "lipstick on a pig" commercial like these Goldman-Sachs bankers, but these guys actually had to learn fundamentals! What they bring to the table is a brutal honesty about fundamental capitalism.
Proft: All right, let's get some of that brutal honesty, we've got Jim back. Jim Iuorio, CNBC contributor, Jim thanks for being with us, appreciate it.
Iuorio: *laughs* My pleasure.
Proft: So, what about the President's pronouncements on Amazon, how did you react?
Iuorio: Well, the one thing you just said a second ago was that they have barely turned a profit. So when you think about them using the Postal service as a delivery boy, squeezing out retailers, what they're really doing is creating cheaper prices for everyone who buys their goods, so it's not as simple as he makes it sound, like they're takers. They're takers and they're givers at the same time. With the President, the one thing is I think...the things he's done is very very interesting when he comes out with something like this, I do wonder what he's trying...what his angle is, trying to...is what his angle is here, because I don't think he cares that much about Amazon, and I haven't been able to identify it yet. But ultimately with Amazon...you know, I have no problem with people paying the right amount of taxes, but the beneficiary of all this is US, everybody has become addicted to Amazon because their prices are cheaper, we use that money for other things, like buying hamburgers at Brandt's of Palatine.
Thompson: Ohhh, see what he did there?
Proft: Oh...I see what you did...first answer, he works the plug right in there, I like it!
Iuorio: Well, now we're done with it, we don't have to do it again.
Proft: No, look, I've said...not just the best burger in Chicago, because I mistakenly said it was just the best burger in Chicago, the best burger in the country, at Brandt's.
Iuorio: Well, that's what we're shooting for! Come and find out for yourself.
Thompson: So Jim, I know what he's doing. It's that false positive quick pop that national populism and strongman economics shows you. It's why the Bernie Sanders of the world, ten years ago, were touting "Look how great Venezuela is!" Because that's what they did. Now granted, it does take some time for these moronic, ridiculous, corporatist policies that rear their head, the effect of them to happen. But what Trump's looking to do, is what last time I was here and you and I were talking, is...is cook the books of national protectionism. Showing that when you have this massive government spending in the Omnibus, and now right away the Infrastructure, how it can appear to a GDP as actual profit. So Trump's doing what he did with the stocks...he's fluffing the price to get the big loan, and then stiff the debt. That's what I think he's doing, but I...
Iuorio: I like it! I like that theory, and you're probably right, and we have to realize though that running the country is massively different than running a privately traded company where you're trying to create a vision for your stock purchasers. We...nobody...you know, I guess you could call the lenders here, but remember the lenders to the Federal government up until a couple of months ago was the Federal Reserve, so at the same time we're losing our biggest sponsor, our biggest lender, all of a sudden we're issuing a bunch more debt. That could really kind of muck up the profit! So, at the same time, the biggest buyer is going away, and the selling is going to increase, you know, by another 400 billion over 2 years from what it was before in this bill alone.
Proft: And what an Amazon, just sticking with them for a second, in HQ2, a legitimate complaint from a free market perspective would be with respect to all these states and localities putting together all of these inducements, if you will, to locate HQ2 in their community. I mean, in the state of Illinois, for example, we're talking about rebating all the state income tax that employees here at an HQ2 would pay, which would be projected to be north of $1B, and so you know, this is where it's easy to beat up on Amazon, because they're the beneficiaries of the rent-seeking behavior that both companies like Amazon like, as well as the politicians, like to confer so they can have press release successes.
Iuorio: All that being said, I STILL want Amazon here. And if we have to give them concessions to get it...as grow...getting...growing....getting growth here and growing our local economy is a huge deal, because it's...that's not what...
Thompson: It's fake, though, Jim.
Iuorio: What's that?
Thompson: It's FAKE. Yeah, I don't want to fake it, Jim! This is fake and...
Iuorio: Hey, I don't want to fake it either, but I'd rather fake it than have everybody bug out and go somewhere else! I mean, people who are making 100 grand are GENUINELY spending money on rent, and on dinners, and on entertainment.
Thompson: But it's fake, it's fake money! It's tax money, you're frauding it as real money. So when you said before about "I don't see the lender as faking it to...", the lender in this case and my other scenario of why he's faking it...is it's the voter! You could point to these fake GDP numbers...he just wants to get re-elected! The outcome of us being underwritten by our future...that's always there! That's the Federal Reserve System. So, I see the nut. I found the scam, and I think it's all a fraud.
Iuorio: I'm with...I'm with you on that, we're not even arguing about this! On the Federal level I absolutely believe...one thing that we've learned here is that every different level of government continually tells us that they need more money. And we watch their behavior, and know that is FLATLY not true. Even when you break it down to the state of Illinois and the county of Cook, they keep telling us "Oh, shoot! We got these huge bills, we need more money!" No, you have TREMENDOUS amounts of money. The poor stewardship you've provided for that money, that's more your concern than it is ours. Take care of things! And I agree, that's the same on the Federal level too. We...yeah, is it cooking the books to make us, you know, "We're gonna do all these pet projects of everybody, and pass that burden onto our grandchildren's grandchildren."? I think it's absolutely absurd and ridiculous, I agree with you.
Proft: But with respect to Amazon, you know, it pays to be preemptively free-trade, so even if other countries want to be protectionist, it's still a benefit to you to be free-trade. So why at the state and local level, if everybody else wants to play the rent-seeking game, wouldn't it behoove a state to not?
Iuorio: Well, it's...certain situations dictate other behaviors. Right now, in the state of Illinois, where you and I are BOTH concerned about people leaving to find better regulatory and tax environments, to score a big win is going...is a good thing. To do it in the right way would be infinitely better, INFINITELY better, than to do it in the wrong way, by creating these special deals and creating this fake possible scenario is the worst possible way to do it. BUT, it's still slightly better than every headline I see being another company leaves Illinois. Do you not agree with that?
Iuorio: ...fair enough.
Proft: Ahh, I...we talked to your friend and colleague, and ours, Scott Shellady yesterday, we're talking about these tech stocks that have driven the run-up of the market, and now may be driving the pullback, if that's what comes to pass. Where are you, with Facebook taking on some water, politically and from a public relations perspective, less popular, less trusted, which...we've talked about Amazon, Google, Netflix...I mean now that they've got Susan Rice I guess it's gonna be (Iuorio: It's gonna be fine.), blue skies, yeah, blue skies, right. But I mean, where are you with those tech stocks that drove the run-up, and may drive the retreat?
Iuorio: Well, it's funny...we pass leadership from one sector to another often in the stock market often, and to do that, many times it's not the most elegant process we're going with that. The fact that we're going to zero in on Facebook and say "Can you believe that they were mining and selling data?" Well, OF COURSE we can believe it, that's why they were a half a trillion dollar market cap company. That's what they do, and I guess spoiler alert...that's what GOOGLE does, it's probably what Amazon and Netflix do as well, everybody's gathering data on you. We've been talking about that for three years, that being the next...data scientists in college, coming out, there's jobs waiting for them. So for us to be rolling our eyes and scratching our heads, "Can you believe this happened?", of course I can. So to me, it's more indicative of...you know, the NASDAQ itself had rallied more than 60% in 20 months. The "Fang stocks" had more than doubled and were the obvious clear leaders. When everybody is all built up on them, and everybody has so much of those "Fang stocks", the slightest story, and this is you know, real where if the media can draw attention and public opinion can change, because maybe people don't WANT all their information being collected and sold, or if I'm going to have my information sold, I want to benefit from that financially. And also the public opinion changes on these companies, that's a real thing, despite the fact the story is so old and ridiculous and trite, and we're pretending that it's fresh, but to me it's just indicative of market position and that has to work its way out. It's way off and that's probably what's happening in the entire market is this transition from a low-rate period to a medium-rate period, and in like a subset of that transition is the "Fang stocks" gonna give up leadership to something else, that leader hasn't stepped forward yet, I believe it will. As I said the last time I was on the show, I don't believe that any sort of Bear market is going to happen when all the economic data I see is good getting better, not bad getting worse, there's no big recession on the horizon at all.
Thompson: I get my inputs from you, I want those 'puts, Jim!
Iuorio: And I'll sell em to you!
Proft: Shaun is also, you know, long on Bitcoin, so you know...
Thompson: It was a big time! I was ahead of the curve.
Iuorio: You gotta go low!
Proft: I'm happy to end on a note of optimism from Jim. Also, this unsolicited tweet, Jim. "Brandt's, best deal in the northwest suburbs, hands down good value and family friendly!"
Iuorio: Cmon now, did you tweet that?
Proft: I did not tweet that, Patty O tweeted it.
Iuorio: Oh. I don't know who Patty O is, but I love her!
Proft: There you go. Jim Iuorio, CNBC contributor, thanks for joining us, appreciate it.
Iuorio: Thanks for having me.