Right now in the room across the way, governor christie is about to speak and be interviewed by our john harwood later in the day nelson peltz and scott walper is back. We have special guests as well. And so, hello to john, kate, josh. Three big themes from delivering alpha that i want to bring you up to date on. Number one, treasury secretary jack lew there should be a Corporate Tax rate. Maybe 28 as the basic rate for corporate earnings which would bring us back down more in line with some of our economic rivals. An hour ago, retire hedge fund manag manager druckenmiller said the mr. Fed is putting the economy at risk. If you like someone other things, actaviss is up. Citigroup that made news earlier this week with its settlement with Justice Department is down 4. 5 . Kate you led the questioning with one of the guys who has never been on television before, ken griffin of citadel. You hit him with the days breaking news which Andrew Ross Sorkin broke on the bid, the offer for time warner by fox. What did he think . Thats right. He likes the deal. He thinks its going to get done. Lets listen to what he had to say. Its a great deal. Time warner great assets. Hbo, warner studios, content is king. Both those assets have great content. Deal makes a lot of sense for fox. Makes a lot of sense for time warner shareholders. So there you have it. He likes the deal. I think hes the only person on one of our panels who owns shares of both stocks. He thinks well probably see more consolidation in that space. I talked to him about High Frequency trading which has been a big issue. You guys have had a lot of discussion about it. His response to some of the issues was interesting. I hit him some examples from flash point the Michael Lewis book. I asked him about payment for order flow. He said that replaced old recy procam relationships that were on wall street. He said payment for order flow has replaced old reciprocal wall street relationships made brokerages more competitive. 80 of the order we execute are within the bid as spread. Ing interesting points. What do you guys think . Were you buying what he was selling . Ken is one of the biggest operators in the hft space. And when you say im executing in between the spread, theres a large spread there. Especially if youre trading in thousandth of a cent. If 80 of the time i step up by thousandth of a cent rather than buying it on the bid, i buy a thousandth of a cent i head i am in between the spread to kens point but not providing much benefit there. Josh . I think theres no question that the proliferation of electronic trading has been good for investors. I dont think the typical viewer of this show really believes they are competing with it is dale for a fraction of a penny. There are efficiencies that this trading brought. I agree with john also that there are ways to use language and make it sound like youre fairly participating when in reality its not quite that fair and i think that splitting the difference between the two is really one of the hardest things you can do in media. Really hard to explains to subtleties. Rhetorically speaking he set up this scenario where either you have specialists on the floor and soft dollars versus High Frequency trading. Theres no doubt technology and speed have made discussions better in general. The question is, is the current market set up while legal is it fair . Is payment forward fair . Should every single investor whether they are paying extra money or not have access . The bigger question has it ever truly been fair . He talked about internal san diego which was the system 15 years ago. Which was a forerunner to dart pools. Sure. Every broker dealer had its own market making. The small guys did it with smaller guys. The bigger guys did it with bigger stocks. You can say that was completely above board. Then we had the specialists scandal on the american stock alex change. We cant say it has ever been completely fair. Were talking about degrees of fairness. Lets get your reaction to a couple of stock picks that were put out by lee cooperman, Larry Robbins and others today. Lee cooperman had a couple of energy picks, larry robins who used to work with lee, national oil embargo among his choices. How do you react to those . I thought larrys presentation was forceful. A lot of people are talking about the problem with where the fed is and rates and moral hazard and what larry is basically saying look im not here to talk policy. This is what corporations should do given the environment that were in. He said borrow at these low rates. Borrow long. He says lever. I thought this was interesting. We had debate today about the fed, some foes, some allies in terms of what yellen is doing. Robbins took this neutral position and said get in while the getting is good and take advantage of the low legs. This will not continue forever. If you can bioremarks he made the case, monsanto borrowed 50 year bonds at 6 . Buy back in that stock. Dont just look at that this year, look at what that does to earnings in 2025. Thats a pragmatic way of looking at it without having a Strong Political opinion. Apple did that when they set the bar and got the low tick for their borrow which shareholders have to be delighted about. Part of that went directly to them in terms of share buy backs. Another part went out to them in dividends rather than repatriating and paying tax on a kbhink of money that would go out of apple. This was a much smarter way to go. 21st century is doing it too. Share buy backs came in with criticism from drukenmiller. He said companies are borrowing to buy back shares not to invest in their businesses. The other side of that coin, tyler, we want cap x, we want hiring. We had cap x booms too and they didnt work out quite so well. The best example 1990 and 2000 when every company thought they were Great Investors of their own capital and ended up demolishing a lot. There isnt one black or white answer. The answer for a company like ibm is both. Buy back but fund the future. Drukenmillers criticism is also an aspect of this activist corporate defender. The activist wants buy back the thing that Larry Robbins is encourages. At the same time many are saying this is short term. Not going to work. Lee and Larry Robbinsing liked that one. When you get two voerkts two thumbs up the larger portion of that business is relatively boring. Runofthemill sales for testing and diagnose northwestics and some experimentation but then cuttingedge pieces of the business that both investors make the case are not be appreciated by the street right now. They deserve a much higher multiple for some of the more cutting laboratory stuff they have. Well see if the market decides to agree and takes prices higher. Lee cooperman loved energy over and over again and hes been with sandrich for a long time. I like that. To discussion on those two areas youll do well even if you buy related stocks. He put citi on his buy list which is an interesting choice. Bank of america, i was very pleased this morning when i saw the numbers, when the actual numbers were more like 40 cents versus 25 or 30 which was my break even for Cents Per Share on the earnings. When it came in around 40 after you figure back in that fine, i thought it was a great report. It turned out not to be. Single nice thing about the company all he said is when you buy something this out of favor thats thing. They are part of a cyclical downturn. A lot of people think its a good time to get in. Citi, he likes citi stocks. Thank you, guys, josh and kate. Sue, back to you. Great conversation. Much more to come. News alert on General Motors. Phil lebeau joins us with the details. We have data that shows all of these recall headlines over the last three months have not scared away buyers. Q2 data shows worldwide sales climbed a half a percent. They didnt drop. It actually climbed powered by the u. S. 7 . China up 8 . Chevy and buick brands is whats driving sales in china. Adding cadillac 51 in china in the first half of this year. Global sales for cadillac up 14 . This news comes one day before mary barra is set to testify in washington. Her third visit to capitol hill to talk about the ignition switch recall crisis. She turned down a request this time, however, to meet with victims. She did that the first time she went to capitol hill. If you look at shares of General Motors over the last three months and moved higher, think about this, gm right now has sold 4. 92 million vehicles. Theres an outside chance gm could sell 10 million vehicles worldwide this year. An amazing stat despite the headwinds they have going against them. Now to morgan. Check out tesla as were staying with the auto theme. Moving to session loss. It said will name the model 3 as it attempts to hit a Wider Consumer audience. The vehicle will go on sale in 2007 and compete with vw. Price are set to start at 35,000. Stock trading down half a percentage point. Sue, back to you. A developing story, Andrew Ross Sorkin breaking the news, reporting Rupert Murdochs 21st century fox made an 80 billion take over offer for time warner. Time warner rejecting it. Lets look at the parties concerned. Time warner is up 16. 75 . Other media stocks hitting new all time highs. Viacom and comcast the parent of cnbc and nbc. Walt disney down a percent on the day. Julie boorstin live in los angeles with what other Media Companies could be buy out targets giving us that drop and how the companies behind the deals weve been seeing recently are faring. Thats absolutely right. The big question what are the other media assets in play. The time warner fox deal happened cnbc would be sold and draw interest from cbs and disney, neither have a Cable News Network and both have expressed interest in cnn in the past. The promise of more consolidation and the spotlight this shines on the valve cable channels is sending discovery and cnet works, Scripps Network interactive and viacom stocks trading higher. Last week the ceo predicted content consolidation in solution to mega mergers. These few cables that arent owned by media giants promise retransmission fees. Sources at media potential buyers holding back deals looks like high evaluation. And uni vision has melt with viacom and time warner among others. The viacom supertoday because its controlled by redstone unlikely to break up or sell. The unanswered we need to go to governor christie who is speaking right now. We opened that issue again . Ill campaign for Terry Branston who is running for o r governor. Well be sleeping in new jersey tomorrow night. I know you havent decided and if you have i wouldnt expect you to announce it here. Thats good. [ laughter ] knowing what you know right now are you leaning towards it . Are you thinking its likely to happen . This is another way of asking the question, isnt it . [ laughter ] yes. Are you leaning . Yeah. Its another way to ask the question. No im not leaning. Im not leaning in any way. Im not giving it a lot of thought. Im chairman of the republican governors association. My job is to elect as Many Republican governors as i can. I dont have a 527 or a super p. A. C. Or a c 4. Were in the second half of 2014. If youre going to do it im aware. Listen, lets face it the folks who are leaning or actually doing stuff right now are oftentimes who folks dont know that well. I suffer from a lot of things, thats not one of them. [ laughter ] im in no rush to make those decisions. I got a pretty busy day job as governor of new jersey and ive got, you know, a busy job politically as chairman of the rga. 37 governor races across the country. When do you have to decide . End of this year beginning of next. Zion my own. Whether i would tell you or anybody else at that point im not so sure about the timing of that. Thats more of a political judgment than it is a core judgment about whether you really want to do that or not. Ive been clear. I certainly will consider it but whether i do it or not is something i honestly dont know yet. I think people say that all the time. And folks are fairly cynical. Oh, yeah he knows what hes going to do. I dont know what im going to do. If you have four relatively younger children like we have from 20 to 11, theres a lot to consider in doing this on a personal level. Putting aside the politics. So, you know, well decide. Ill decide coming year. Lets talk about your party and what you or any president ial candidate faces if they decide to lead that party nationally. Pew Research Center did a study and on the republican side you have a split between your business republicans who are all the people in this room, and your populace or tea party republicans, these guys have the money, the Populace Group has more votes. When you look attitudes on issues there are stark divisions. Populists Say International trade is bad for the country. Business republicans say its good. Populists say dont even think about cutting social security. Business republicans say of course we have to do that. Immigration, populists say its bad. Homosexuality the populist wing says not okay. People in this room, business republicans say its okay. How to you knit those together . Carefully. [ laughter ] [ applause ] listen, i think the only way to knit them together is to be yourself. Every time you try to go towards one side of the party or another and the democrats have the same problems. Just on different topics but the same problems. Theres always divides inside any vibrant political movement. The way to do is just be yourself. Say heres what i believe in. And, you know, try to convince people if what they are looking for is a candidate that they agree 100 of the time what they need to do is go home and look in the mirror. They are it. You are the only person you agree with 100 of the time on these issues. Dont try to be that. If you try to do that they will perceive you as a phoney and the reason they do that its because you are. So you shouldnt look in their eyes and tell her i want to tell her what she wants to hear and pray to god she forgets when do i the opposite. Own up to what your position are. Say what they are. If thats not good enough to win then you dont want a governor under those circumstances anyway because you have to remember who you pretended to be yesterday and thats not the way to govern. Its complicated enough without trying to figure that out too. [ applause ] we know and were beginning to feel again that we can make an economy produce high stock values, high corporate profits, do very well for the people who are best off in the country, the most educated. But if you were elected president , what do you do to raise the Living Standards of average people in this country, whats the right approach for that . First off, the premise of the question if i were elected president presupposes i would actually run. Its another way to get me into that topic. Forget the president part. I would say say listen there are certain principles that help to create a vibrant economy. And i think things that were not doing at the moment. First off, we have a wretched tax system on the individual and corporate levels. Including my state which disincentivize growth and job creation and which make us less competitive with the rest of the world. The fact is we need to get around the table and redo this tax system which i think is one of the real wet blankets on our economy. Secondly, you need go through regulatory reform. In new jersey, weve eliminated a third of the regulations that existed and put into place by my predecessor, by governor corzine. I hear from businesses across our state what a relief that has been for them and how much easier it is to conduct business and our water and air is cleaner and theres nothing awful happening in new jersey because weve decided to do regulation in a common sense way. We need to look at that federally as well if you want a vibrant growing economy in that direction. Third is improving our educational system. The fact is weve gone from 20th to 30th in math. Weve now gone from 10 toth 20th in reading amongst the industrialized nations. If you think we can continue that trend and still be the smartest, most competitive, most cuttingedge economy in the world, then youre wrong. Thats why you support common core. Listen, what i support is to try to change something thats much more important than common core. The most important factor besides a family to successful education is the teacher in front of the classroom. More than anything else is what is the training and experience and effectiveness of that person standing in front of the classroom. And we have an educational system in this country that puts the comfort of adults ahead of the potential of children. What we care more about we dont want to disturb anybody. We dont want to hurt anybodys feelings. We dont want to say anything bad. Thats crazy. There are ineffective teachers that are protected by a tenure system thats the essence of anticompetition. Were for competition every where else in the world but not for compete shine the k to 12 classrooms in america. And we expect that from duce good results. It doesnt. So from my perspective whats the curriculum in the classroom and those other issues you first need to get to having a competitive educational system that rewards good teachers. We should have merit pay across this country and get paid more if they are good and shouldnt have a system that allows bad teachers to be guaranteed a job for life. And if anybody in this room ran their business this way they wouldnt be in this room. And so the fact is that if we like success around our country thats based upon competitiveness and real vigorous back and forth that happens in that kind of circumstance, then we need to say we can manage our k12 system. Let me ask you about the macro division between two parties. Essentially what you hear from republicans in washington is government needs to do less, needs to spend less, we need to borrow less, get out of the way. From democrats you say we need as Hillary Clinton in a speech recently said the Building Blocks of the 21st century economy. More infrastructure, mo more science, more education and training. The difference between republicans and democrats are democrats believe that the governm