Of the current Interest Rate environment, but we dont try to time our decisions based on capitalizing on Interest Rates at the moment. I think for the long term, maintaining the deep and liquid u. S. Treasury markets is something thats very important to u. S. Economic security. You dont need to time it. Look at the deals apple and verizon did for multiple billions and know its better paper, i believe, than apple. I think we have the best paper in the world. And i think that the markets around the world refleblcted th. Theres a reason the dollar is the worlds reserve currency, why the appetite for u. S. Treasury debt is to high. I think, you know, as you look at the way weve created new products, its really reflected the evolution of market appetite for different kinds of products, and well continue to try to be innovative in terms of introducing products that help to keep the deep liquid markets that we have, but i think any attempt to try and design our products to capitalize on an Interest Rate at the moment would be short sided. At the same time, this trajectory is not a false one, right . 70 billion is a month you take in a lot, but you have to be heartened we are far more ahead back to 2008 levels, and were going lower, and yet i dont hear a lot of talk as i did last year at this time that the deficit may be closing. You know, jim, we have made enormous progress reducing our deficit and getting our fiscal house in order. Look at where we were when the administration took office, we were in the middle of the economic crisis, two wars on the credit card, seeing the debt rising, and we had to intervene to get the economy moving again to prevent a depression. We then took Decisive Action working with congress. We had several pieces of legislation, the Affordable Care act helped control health care spending. We had the budget control act which brought Discretionary Spending under control and a tax bill at the end of 2013 that rose revenues needed to close the gap. Were on the path to bring deficit 3 below gdp in ten years in a sustainable place. We know that we have a longer term challenge as we deal, and i think the attention in washington needs to shift a bit. Right now, the challenge is not immediately deficit reduction. Would be great to deal with all issues so devicive, but right now, we need to get beyond devisive poll sicks and do what we need to do today. We need to rebuild infrastructure. We cannot have a competitive u. S. Economy in 50 years if our ports, bridge, and roads are crumb crumbling. We have to deal with immigration reform, difficult as it is because we know its important to the economy. Theres a whole bunch of issues. Worker training. Thats an area where i believe that theres bipartisan bill that is going to come to the president for a signature. There are things that even in this difficult, political environment that we can do to make progress. If we get points on the board doing those things, theres time to deal with the longer term fiscal challenges. I think it would be a mistake to put the long term fiscal challenges ahead of what i described. Thats a foundation making it easier to deal with the long term fiscal challenges. Understood. Mr. Secretary, earlier this week, the house cut 13 of the budget from the irs. Supposed it was to be 20,000 if theres a 13 decline in the irs, no way you can enforce the Affordable Care act. Weve made clear that if the house funding levels pass, theres no way we can do all the thingsment irs has to do to end force tax laws effectively and be at the level we should. It is a mistake to short fun the irs. It costs money to short fund the irs. Ultimately, you are taking Enforcement Actions down, and it means youre lowering the bar for people to get away with cheating on their taxes. Thats bad not just for the money involved. Obviously, its not good to lose revenue or fair to people who pay taxes. We depend on a system of voluntary compliance, and its terrible if congress says, you know, you can get away with it. Okay. Mr. Secretary, in the room, theres literally several trillion dollars of hedge fund assets. When i was a manager, i had the right to be able to pay far less tax than the average american who is now burdened. Why not just where are you on carried interest tax yourself . Look, my view is that carried interest provision is used inappropriately. Not to be a way of converting what is normal income into an enterprise income. It has been. We have a proposal out there t cutting back on it. Okay. You were in china, and part of your job is to take a look at trade agreements. Is there a trade agreement done in the last 20 years where the United States has a surplus . Jim, look overall at trade agreements, the evolution of trade agreements, they are better and better in termings of raising standards to a high level. Look at the conversation were having with china bilaterally and more broadly with our pacific countries in the transpacific partnership, were trying to drive world standards to a higher level helping u. S. Businesses and the Global Economy and the u. S. Economy. My discussions with china are about how important it is to the u. S. Economy and also to the chinese economy. If they that wants to sit as a Major Economic power, they have to play by the same rules that Major Economic powers play by, open market to u. S. Goods and services and International Goods and services and to investment by foreign firms. I think were making progress, slower than id like in the conversations we had this week. You know, we agreed that we will, at the beginning of next year have china present the next phase many our bilart ral treaty negotiations to make progress there. Its a good thing for the u. S. And china for us to include a bilateral investment treaty. I understand theres carrot for both of us, for china, for the United States, but whats the stick . Would you consider a moratorium on anything china until they go with a comply with world trade organization, comply with currency, no many manipulation. What do we have to be able to compel them, and do you think that maybe theyre a paper tiger . Maybe they are not powerful as we think. You know, jim, theres no denying china is an enormous economy. Depending how you measure it, its up there as one of the two largest economies in the world, and i think we ought to build a relationship with china where our economic relationship is part of what strengthens the ties making it easier to deal, frankly, with the strategic issues, important for economic and our security positions. We are very tough in enforcing unfair trade laws, and thats not always an easy thing talking to the chie naez counterparts. We bring action against them when there is an actionable event for us to respond to. While we do that, we say the right thing to do is to enter into agreements and enforce the agreements so that does not ham in the future. I think for the Global Economy, bringing china up to the standard that would reflect would be an important thing. You know, the world is getting to be a smaller and smaller place. It is impossible to imagine doing business just within the boundaries of one country. I think the ghoebl economy depends on a good u. S. China relationship, and thats why i work so hard to try to build that while being tough on issues like currency. I could not be more clear with the chinese counterparts on need for them to step back from intervention and move towards a market determined Exchange Rate and be much more transparent about their actions, and we, frankly, got them to concede important points 07 that just last week. I would never take stocks with you. You talked about target, the third party venn tors, and Palo Alto Network is trying to get involved. They are a speculative stock. Some people say its maybe one of these substantially stretched valuation stocks. Is it ever right for a federal official to comment on substantially stretched valuations of stocks, whether they be small cap or whether they be security or whether they be social media . Jim, i think it is appropriate for us to comment on policies and trends. It is not appropriate for us to comment on individual market movements. So you dont think necessarily that the smaller bioteches and social media stocks are over valued, or none of your business . I think theres a lot of people in this room who ought to be making sense bble judgments about proper valuations. Maybe Better Qualified than some in the government. You talked hedge funds in cyber security. Who monitors whether they are doing it right . Thats a very good yes. I think, in general, we have growing parts of the financial landscape relatively more lig s lightly regulated and more and more activity stream through those keep of business, and it is important to have voluntary standards for those institutions to kind of step up on things like cyber security. You know, i think the reputational issue that i mentioned, im sure that thats legitimate concern. No one companimeny menwants to exposed more than others. Its shoulder to shoulder, something we all have to do, the more you do it collectively, the more it reduces the Reputational Risk and raises overall level of defense. Excellent. Well, mr. Secretary, cnbc, institutional investor, thank you, thank you and best of luck to you, sir. Good to be with you, jim, thank you. Jim cramer with the treasury secretary, jack lew. Good morning, im carl quintanilla, faber and cramer at the alpha conference in new york. Getting to them shortly. In the meantime, time warner rejecting the takeover bid from 21st century fox, earnings from intel, apple, ibm partner up, futures looking good as well. Cramer wrapped up with jack lew. He said everything from economic patriotism, steve, to inversions, corporate tax, cyber security. Ran the gamet. Yeah, carl, work with me on this, did lew throw the fed under the bus here . Sounded like it. Glad i was not the only one who heard it. Cramer asked, is it appropriate for the government to comment on valuations and applause from the audience, i point out, and lew said its appropriate for the government to comment on trends and policies, and by implications not valuations. I dont know if he thought he was responding directly to what happened with the fed and what it was yesterday with the fed calling biostocks and social media to be overstretched. That created controversy. What does the fed know about valuations . This is an important question. Well see if janet yellen talks about it later today. Theres an interesting question whether or not theres divergence between fed and treasury. By the way, importantly here, lew is the chairman of the oversight Stability Committee involved with monitoring the economy and markets for financial stability. All right, steve, well get to what he said regarding economic tax inversions. Steve, thank you for that. Interesting, will continue to divest whether or not the secretary knew what jim referred to. Its unknown. Big news on the m a front as well. Big as it gets in terms of potentially reshaping the media landscape, carl. Our own colleague this morning breaking the news of an offer that was made by fox to acquire time warner. We have since had a lot of developments as you would imagine, and we have been reporting vigorously on the story since brought to us at 7 00 a. M. Eastern. Shares of time warner are, as you expect, trading up sharply. Lets bring you up to date. In fact, latest news we have is 5 rejx jex from time warner or at least a statement from them reiterating rejection they gave to the company when et cetera board voted, im told, back 3 r of july, to reject an offer made in writing made on the 24th of june coming from a proposal that was tweej a conversation of the ceo of 21st century fox and the ceo of time warner. That was on the 8th of june, 24th, proposal made in writing, 4, and 3rd, time warner rejects. Today its public, pressure on time warner in a public way. Fox go hostile in will it require that . Those, of course, question, i dont have the answer to at this point. I will say murdoch has a history of trying to give things a shot, sometimes winning, oftentimes winning, and sometimes not winning. Were going to have more time warner in a minute. I want to get to Rick Santelli with Industrial Production for us, carl. June Industrial Production, what we see is a bit of a miss. Up 2 10 on the top line, looking for more than that, and last month downgraded and saw a miss on the utilization rate, 79. 1 is unchanged, lower than expected, and, of course, people are talking about the ppi jump, fourtenths, and last but not least, top of the air, we had trash Ri International capital flows and tick data is sfaz nating, although pos sieve on all metrics significantly laesz than we look at last month on total, and look at revisions, foreign investors, worked aggressive on financial dollar assets as they have been. Carl, david, back to you. Pick up where we left off in terms of time warn before we get to jim and everybody else and other news. The offer was 1. 53. This could be an important component of the defense for time warner along with 32. 42 in cash. 40 cash. If youre time warner, you may want to say, hey, listen, youre going to take nonvoting shares to give voting control to our Company Whose gentlemans family inherits control of the those are some of the things they can do. They dont have actual defenses. 15 to call a special meeting, although, not until next year. They do not have a stacked board. What they are coming back to is the plans saying they believe the plan theyve been following for some time is going to deliver far more value than 835 a share. In a sampling this morning, they certainly seem to be congregating around a number of a hundred dollars a share. We shag see. Savings, of course, that come from the combination is significant. There would not be potential challenges on antifront trust to combine the studios. They start every year with market share. They would be willing to divest cnn, seemingly an antitrust impediment. Where it goes is uncertain. Theres a lot of things to come to the floor here. My argument would be theres a 7 70 overlap of Shareholder Base of fox and time warner. Thats a weapon in foxs hands, however, time warner has the ability to fight here effectively, certainly, if they can elaborate on, articulate, and show their plan is a viable one to deliver more in value than delivering shares of theirs for nonvoting shares in a company that will then be controlled. Carl, back to you. David, dont go anywhere. Jim is geeting seated talking to the secretary. And kayla is here making her way from sun valley where it was topic of conversation. It was. Its a potential breeding ground for deals, and we went into the conference thinking univision, the Hispanic Television network, thats been prime, and scripts network, and by the end of the conference, every single executive said were talking about time warner. Who is buying time warner . Who is interested in it . Who rivals the other for it . Its unclear whether theres real talk about this bid when all executives were congregated there. Murdoch there, the ceo of fox there, and the man of few words especially with reporters, quick as always is, but, of course, rejecting that bid before the conference, you have to think he made clear to the executives that he was not willing to entertain that while there. Jim, youre take on all this, congratulations on a great session with the treasury secretary, you know, people this morning are, obviously, surprised by the news, impressed by the news, but cant separate themselves with the baggage with m a and time warner. Does this signal any kind . Its an outright steal if you get the company for 85 if youre fox. Why . Because its a situation where i would pay a huge, hugely higher multiple for fox if they get time warner. I love the consistent revenue that they put together. David, look at time warner, we know this is the annuity stream, even more than cbs. The annuity stream media property. If you were to fit this into the glove of fox, the hand into the glove, you would have, by far, the most valuable lucrative media franchise ever. Yeah, as i reported a number of times and hearing and believing time warner is not interested, clearly, they are not, not clear on how interest there was, but its a cash cow, a presence globally, as you say, that annuity, if you will. That is where hes focused. You get a studio, you cut costs if you combine them, and get Cable Networks, cnn not amongst them to add to the stable of significant networks fox already has. No doubt about the logic of the potential deal. However, there is certainly going to be a great deal of debate about whether, in fact, time warner should sell at all, whether it delivers on merits of its on combination at this point of those businesses. It is the best of time warner and time inc and got out of aol some time ago. Moves made urn the watch, ori n originally put into place, but he wants runway and see what he can do with this company, time, of course, only recently p recently spun off. Time warner had the three most aggressive buybacks of the Major Companies in the country. Whats amazing is every time time warner goes up, hes there underneath buying the stock back, clearly he thinks this stock is dramatically lower than should be or wouldnt be. Why not go to disney and say give me a hundred bucks. Disneys not going food it. I dont see it in the cards at this point, but its an interesting point, time warner go out and do an acquisition after some point. Right. I investigated the idea are they looking at something got wind of and moved when they did . Dont forget the backdrop of this is the consolidation amongst distributors, our Parent Company comcast, of course; and its deal to acquire Time Warner Cable, a unit of time warner, and the at t deal. The question is valid in the sense of what does cbs choose to do, if anything at this point. They are a valid combination. You have to have redstone make a big decision, unclear whether theres anything conceivably transpire there,