NEIL CAVUTO, FBN HOST: LinkedIn, time to get the net out because we've got a new boom going on here, folks. And it appears to be over the top. We'll see whether it is justified.
Welcome, everyone. I'm Neil Cavuto and here's the deal. You know, this IPO is still going. As we speak in after-hours trading LinkedIn not remotely falling back after closing at around 94 bucks a share, staying at around 94 bucks a share. Now leaving aside this stock was at one point north of $120, it was originally priced to go at $32. Then $35. Then ratcheted up to $42 and then $45. And then this.
Now can you imagine the folks at Facebook watching this or Groupon watching this or Twitter watching this. Or Zynga watching this? You know, not too long ago I had no idea what those companies were. Anyway, can you imagine anyone having anything to do with social networking watching this? Well, then get ready for this. A boom the likes of which we really haven't seen since that great '90s show. We know how that one ended. I'm just wondering how many of us remember how that one ended? Two words, not well.
The boom turned out to be a bubble and the bubble burst. That was then I'm told no such problems for Facebook valued at north of 70 billion or Groupon approaching 25 billion now. And maybe after LinkedIn today tens of billions of dollars more for each now, trust me. I'm not here to rain on the parade just to remind folks about that last parade when they said earnings didn't matter but they did and they're saying the same stuff again now but it seems they forgot.
To be fair some of these companies do indeed make money. But ask yourselves this. When the best of them makes a few million bucks just that really justify valuations in the tens of billions of bucks? I don't know. What I do know is you don't need to be an accountant to wonder whether, maybe, maybe, someone is spreading the sheet. I practiced that just to get that just right. Anyway, we'll see. We'll see. And later my Fox financial all-stars will debate.
But ahead of all things web rule and all things brick-and-mortar drool, a special delivery for you with a special reminder, not all brick-and-mortar things. UPS finding plenty green in brown. The world's biggest package delivery not too concerned about the bumpy economy. For now, the numbers proving it. It's earnings are rocketing and lately stock has been soaring in and out of a 52-week high. Closing just above $74 a share today.
United Parcel Service CEO Scott Davis joining me now exclusively. Scott, good to have you.
SCOTT DAVIS, CEO, UPS: Neil, it's great to be here.
CAVUTO: You know, we do focus on this -- I was kidding with you before the show maybe you should just ad an "in" to your name. But you look at this Internet thing, this sound familiar?
DAVIS: It does sound familiar but we absolutely enjoy the Internet. We move an awful lot of goods from businesses to consumers. So we like the Internet.
CAVUTO: And you're big on the Internet. I mean, people can do all that on the Internet. So you're convinced that there is some staying power to this? That these are, I don't want to come out on individual issue, I understand but that there is some legitimacy to this versus, you know, a couple decade ago when maybe not?
DAVIS: Yes, I won't forecast valuations but clearly I think that you're going to see more business to consumer growth in the years ahead. So I think we're seeing our business going on about a percent of our pie every year going to B to C. So we're about a third of our business today is B to C.
CAVUTO: What does that mean?
DAVIS: That means that you're seeing a lot of people buying over the Internet and less brick-and-mortar shopping.
CAVUTO: OK. For a company like yours where is that more promising? Here in the U.S., abroad, what?
DAVIS: Everywhere. I think in the U.S. we've seen growth for probably the last 20 years pretty significant growth in B to C shopping but in the emerging markets, the developing world, it's going to grow at a faster pace.
CAVUTO: OK. What about Europe? You know, they're all in a tizzy right now. Disarray at the IMF. I don't want to get into that, who is going to be calling the shots. Whether Europe itself might be shot in the interim, what?
DAVIS: Europe, you know, from our intuition says Europe ought to be a challenge for our business but it's been good. You know, we've been growing our cross-border volume double digits for the last several years in Europe. So for whatever reason the UPS business, THE package shipping business has been strong in Europe. Now there are differences between northern Europe and southern Europe. Obviously southern Europe --
CAVUTO: What about all the troubled countries? You hear a lot from the Portugals and the Greeces, and the Irelands, they are similarly trouble spots?
DAVIS: Well, I think they're truly not growing in those countries at this point in time.
CAVUTO: So are you worried about a contagion? Obviously, you have a map out the world. You're all over it?
DAVIS: I thought going into 2010 and particularly 2011 that we would see less growth in Europe but so far most the growth has been good and most of the CEOs I talked to the business of growth is pretty good in Europe.
CAVUTO: You know, this Internet notwithstanding of late, the market seems to have found its footing, volatile though it is. Your (INAUDIBLE) your stock coming back with a vengeance. Is it real this time? Everyone worries about a dip? Everyone worries about, you know, Ben Bernanke taking the punchbowl away and Katy (ph) -bar-the-door?
DAVIS: I think there are arguments on both sides of the ledger, a lot of risks. You know, energy prices where they are certainly a challenge.
(CROSSTALK)
CAVUTO: They're coming down.
DAVIS: They're coming down now. You know, they may have got ahead of themselves. That impacts consumers. It impacts our business. To date we have not seen the impact we saw in 2008. When energy got to $145 a barrel that impacted people's shipping. They changed modes of transportation from express to slower modes. Today, we haven't seen that switch. People are still --
CAVUTO: But you're still part of that mix, right? I mean --
DAVIS: We're still a part of the mix.
CAVUTO: You're still getting the business, right?
DAVIS: We're still getting business and it really has not changed behavior at this point in time. If it stays at a higher price for an extended period of time that could have impact on all (INAUDIBLE).
CAVUTO: Very good seeing you. Scott Davis, thank you very much for dropping by.
DAVIS: Thanks, Neil. Appreciate it.
CAVUTO: Well, today a stock called LinkedIn was over the top. Did we just throw a country called Israel under the bus? The prince on whether we just made Israel, the pauper.
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CAVUTO: All right. This just in -- oh to be a fly on the White House wall tomorrow. Benjamin Netanyahu is coming to chat, and let's just say he is not happy. The Israeli prime minister today flatly rejecting President Obama's push for a Palestinian state and his call for Israel to return to its 1967 borders to create that state. Those that existed before the famous six-day war which saw Israel occupying east Jerusalem, the West Bank and Gaza. Just two of the eye-popping headlines from President Obama's big Middle East policy speech in Washington today. A speech that also included forgiving at least a billion dollars in Egypt debt owed us and potentially billions more in Middle East aid from us.
Israel not happy but as of yet, much of the Arab world not responding until now. With me first on Fox Business and only on Fox Business, until he goes to his b choice, his second choice, and visits CNBC tomorrow, Saudi Prince Alwaleed Bin Talal. And although the prince holds no position with the Saudi government, he is very close to his uncle, obviously, King Abdullah and his diversified global financial investment firm Kingdom Holding Company is among the most richest and the most successful on earth. So is the prince himself, ranked 26th in the latest "Forbes" magazine list of billionaires, worth an estimated $20 billion. Full disclosure, some of that money is invested in the parent company of this very network you are watching.
Prince Alwaleed holds nearly seven percent equity stake in News Corp. He says because I work here. Your Highness, welcome.
PRINCE ALWALEED BIN TALAL: It's a pleasure to be with you.
CAVUTO: I added that last. So much to get into your highness. First off, the president today, his Middle East remarks today, Israel not happy with his call, not only for a Palestinian state but redrawing Israel's boundaries to what they were to 1967. What do you think?
BIN TALAL: Well, it is a bit unfortunate that Israel has been unhappy for the last 50 years or 60 years or so and I believe President Obama's speech today was straight to the point. And if it's executed well we may have peace and tranquility in our region at the end of the day. And I think the Netanyahu position today proves conclusively to the world but more importantly to our friends in the United States that the main obstacle to peace is really Israel, not the Arab world.
CAVUTO: So do you think if they surrendered land we have a better chance of peace?
BIN TALAL: We're not talking about surrendering land. We're saying go back to the land that was there before the 1967 war.
CAVUTO: But that was a war that Israel didn't instigate.
BIN TALAL: Yes. But that is the U.N. resolution. If the United States has to accept the U.N. resolutions, we have to generalize it across the board. We can't just pick and choose where we impose and accept the U.N. resolution and don't accept them. U.N. Resolution 242 is very clear and states very clearly that Israel has to go back to the borders of the pre- war of 1967.
CAVUTO: All right. But you can understand where they're coming from, right, your highness? They're saying, look, we didn't start that war. We responded and ended it in six days and now we're told something we did not instigate we have to give up.
BIN TALAL: If Israel wants to be cooperative in the international community and the part of the U.N. it has to accept the charter in its entirety. It can't pick and choose. To have peace in the Arab world, to have peace in Palestine, you have to abide by the road map that President Obama has established today which is fair and square to the Arabs, represented by the Palestinians and the Israelis.
CAVUTO: This happens, as you know your highness, in the middle of the Middle East that is still very volatile and I'm just wondering whether Israel recognizes the Palestinian state or not, would that have affected or could it affect any of the stuff we've seen going on in the likes of Egypt and Syria, in Yemen, in Libya?
BIN TALAL: No. I think they are two separate subjects. The issue of Palestine been there since more than 60 years. But more important since 1967 when the war was, ended in the defeat of some Arab countries. What's happening right now in the region is very much separate and independent. The revolution took place in Egypt and Tunis was going on right now in Syria, Yemen and Libya are very much independent than what's happening with the Palestinian-Israeli --
CAVUTO: But it seems like a great social unrest. It's like the masses have revolted.
BIN TALAL: Well, for sure. This is a grass rooted revolt that took care of two presidents in the Arab world and it was very much grass rooted. It was not through America. It was not anti-America. It was not pro-Israel or anti-Israel. It was not (INAUDIBLE). It was very much grass rooted with one voice only. That the people wanted to have their own voice and get involved in the decision-making process of their country.
CAVUTO: Well, how do you think our country, the president, handled Hosni Mubarak?
BIN TALAL: Well, I think that the wait and see approach that President Obama took, not only in relation to Egypt and Tunis but also towards Syria and Yemen right now is prudent. At the end of the day, if the people are given the chance to decide, we have to listen to them and listen to their final choice. Once their final choice has been decided, President Obama has to act. And that's what he did. I think this cautious approach was very prudent and at the end of the day, Egypt decided, it decided that they don't want their own president, Tunis decided the same thing.
CAVUTO: So you don't share the view some in the Arab world had, your highness, we have an expression in this country, threw Hosni Mubarak under the bus?
BIN TALAL: Not really. I mean, who threw Hosni Mubarak under the bus are the Egyptian people. It is not any outside interference.
CAVUTO: Nevertheless, people always go back, if something like this happened in your kingdom, in Saudi Arabia, that would be a big deal?
BIN TALAL: I think (INAUDIBLE) in all countries in the Middle East, no two countries are the same.
CAVUTO: You don't think it could happen in your country?
BIN TALAL: Although Egypt and Tunis are very close to each other, both are in North Africa. The reasons and the causes of what took place are different. For example, in Egypt, it was very much suburban and it was very much career oriented revolution. In Tunis, for example, it was the masses -- came from outside, from the towns and the villages.
CAVUTO: But you don't see it happening in Saudi Arabia?
BIN TALAL: I'm telling you, you can't compare Saudi Arabia to other countries. Saudi Arabia has stability. The social contract and the political contract between the king and the rulers and the royal family and the ruled people in Saudi Arabia is very strong and the bondage is so solid. And the proof of that is the failure of the latest call to have massive demonstrations in Saudi Arabia and the people got around their king in a very strong manner.
CAVUTO: The criticism had been, your highness, that the reason why they didn't revolt is that your government got very generous and started paying people, handing money out?
BIN TALAL: I read a lot about what was written about that, new social contract.
CAVUTO: Right.
BIN TALAL: Between the government represented by the king and the people. If you look at the ingredients of those, of this contract, what was it, it was first of all establishing minimum wage which was needed in Saudi Arabia.
CAVUTO: Right.
BIN TALAL: Established (INAUDIBLE) benefits. Established the construction of more than half a million housing units to the middle class.
CAVUTO: So this had nothing to do with what you saw happening in these other countries? Not you, particularly.
BIN TALAL: To use the word bribe is wrong, frankly speaking. Because I think this shows ignorance of some media outlets, excluding Fox, obviously, towards what is happening in Saudi Arabia.
CAVUTO: Nevertheless. I know you're very close to your uncle, the king, King Abdullah. And you did write a piece, not too long ago, in the middle of all these uprising, shortly thereafter, I think in April, your highness, in which you speaking as a progressive and as someone who wanted to hear people and their rights heard, did that rankle anyone in the royal family or were you sending a message to the royal family?
BIN TALAL: Look, contrary to what people believe in the United States about Saudi Arabia, we have a lot of freedom of expression, a lot of freedom in expressing your own views. Actually many, I was commended by many Saudis about the op-ed I had in "The New York Times" which openly talked about the fact that Saudi Arabia has to open more, liberalize more and this was not only directed towards Saudi Arabia but was directed towards all the 22 Arab countries in our region.
CAVUTO: You were not a big fan of things that Tom Friedman of "The New York Times" had said.
BIN TALAL: No. Actually Tom Friedman is my friend.
CAVUTO: Really?
BIN TALAL: We always communicate. But I was not against the article that he wrote in the "New York Times."
CAVUTO: In which he criticized the royal family.
BIN TALAL: No, no. He specifically to say that (INAUDIBLE) Saudi Arabia, the leader of the Islamic Arab world and the United States, the leader of the western world in these days to say it's based only on oil although very important component of it, to say it's only based on oil this is heresy and innuendo and wrong.
CAVUTO: I read these, I don't know text messages or tweets back and forth you sounded angry.
BIN TALAL: No, no. You know, I just -- because you know, he usually writes well. He a good friend of mine.
CAVUTO: Is he really?
BIN TALAL: Oh yes. Tom Friedman is a good friend, yes, yes. Just because I'm a friend of Fox and you don't mean, I am friend of left, right and center.
CAVUTO: Touche. If you don't mind my switching gears a little bit to market developments, you're a pretty canny investor. And you've been in a big investor in my parent company, I think, as I said you have about a seven percent stake. Still a big investor in Citigroup. You still believe in both?
BIN TALAL: Oh, definitely. These are strategic and core investors. I invested in Citigroup 20 years ago, and in News Corp almost 19 years or so ago. These are core investors. My relationship with Citigroup is forever. My relationship with Mr. Murdoch and News Corp is also forever. No doubt about that. These are core investments.
CAVUTO: That would stay whether he comes or goes?
BIN TALAL: No. This is with News Corp and News Corp happens to be controlled by Mr. Rupert Murdoch who has my full confidence, completely.
CAVUTO: What do you think of James Murdoch?
BIN TALAL: Oh I mean, James Murdoch is as good as his father. But for sure right now, we have one boss, Rupert Murdoch.
CAVUTO: What do you that of Chase Carey?
BIN TALAL: Oh, Chase is an excellent guy. No doubt about that. You have a good team here.
CAVUTO: OK. So you stick with that. What do you think of all these new debuts today? LinkedIn today setting the stage for many argue for Facebook and Groupon, all off the chart performances? Are the bubble days back? Do you think there are a bubble?
BIN TALAL: Well, you know, there is a faith and belief in the Internet and social networking. The latest company today went up 100 percent.
CAVUTO: Right.
BIN TALAL: So --
CAVUTO: What do you think of LinkedIn, the whole phenomena -- LinkedIn.
BIN TALAL: I believe it's exaggerated for company to go 100 percent in one day. I hope there is no new bubble in the Internet arena. Because we had a big lesson in 2000, at the beginning of the millennium.
CAVUTO: Sure.
BIN TALAL: So we have to be careful --
CAVUTO: Do you think we're repeating it?
BIN TALAL: Well, there are indications that these companies are overpriced, for sure. I mean --
CAVUTO: Because you astutely avoided a lot of these, you know, hot run-ups a couple decades ago.
BIN TALAL: We're very conservative in our portfolio.
CAVUTO: So you're not interested in any of these today?
BIN TALAL: We are (INAUDIBLE) situation (INAUDIBLE) Saudi Arabia.
CAVUTO: Right.
BIN TALAL: We can't afford to have the company in a bubble situation.
CAVUTO: OK. So you know, come to think of it, I can't see someone like you investing in a Groupon. First of all you don't need the coupons, right? You know me, it is pointless task. Stepping back, what do you think of the markets in general? Our markets are coming back. The markets of the Middle East from the worst of the Egyptian and Tunisia crises have come back. Not all the way back but enough. Certainly in Europe, coming back, will it last?
BIN TALAL: Well, (INAUDIBLE) don't forget that we went through a major trauma beginning of summer of 2007. So it took us two or three years to stabilize. We're getting out of that. The concern is not the stock market. The main concern right now is the deficits in the United States, the budget deficits. Most importantly is the increase in the debt limit which is going to come to --
CAVUTO: What do you think of that? They're dillydallying about that.
BIN TALAL: I think the Congress and the president have to get this thing done and approved. Not the last minute. Not 1st of August or 2nd of August. It has to be done before.
CAVUTO: They're not, I'm telling you.
BIN TALAL: I'm following that very closely.
CAVUTO: Are you frustrated?
BIN TALAL: You have to put that aside. This will not only affect the United States but it will affect the international arena.
CAVUTO: Do you have any U.S. bonds, any treasuries at all?
BIN TALAL: No.
CAVUTO: Really?
BIN TALAL: We only invest in stocks.
CAVUTO: In stocks. You're not saying you're not invested because, you have very little faith in the country?
BIN TALAL: No. My faith is, is in the United States through investing in the stock market but this, if there's a problem and the problem is not resolved before the 2nd of August, this may affect the stock market not only in the United States but globally also.
CAVUTO: You're one of the world's richest men and, I know you don't, last time I had you here you say you don't look at these lists. Do you have a computer or do you look as very rich people did during the financial meltdown, going down, down, down, did you sense that experience? Safeguard some of your assets? Put it in something different, something conservative?
BIN TALAL: Well, I mean, our policy from the beginning was conservative. You know, in any company we invested in, we followed a conservative approach with a, with a very well-studied approach. So we just don't go to into any investment that is in a bubble situation like what is happening right now in the Internet arena in these days.
CAVUTO: President Obama, how do you think he is doing?
BIN TALAL: Well, so far is doing good and especially after the finding and the of Osama Bin Laden and getting rid of him which made the world a lot safer. I think he's --
CAVUTO: It wasn't universally greeted with glee in the Arab world.
BIN TALAL: Well the United States, the Arab world has commended the move by the U.S. troops in Afghanistan by eliminating Mr. Bin Laden.
CAVUTO: Well, not Syria, not Yemen. There were some protests certainly in Pakistan.
BIN TALAL: No. I mean, when you take 500 people demonstrate in Karachi, you can't generalize.
CAVUTO: So you don't share the view that the United Nations has the way we got him, your highness, was wrong?
BIN TALAL: I think the way was good, correct, and any person that disputes that fact is not really a human being. Getting Bin Laden is a plus for the not only for the United States, but for the whole world.
CAVUTO: When you look at the economy in this country, you mentioned the debt and deficit problems we have, do you think we're a joke? Do you think that America just can't deal with its problems?
BIN TALAL: Oh, no, no. The United States is not a joke at all. I say to the United States, to the politicians, to the business community and to the market, you are down, yes, but you're not out. I think we can sort out your internal matters if you get together and at least resolve this issue of the debt limit temporarily.
CAVUTO: We're not making much progress, sir, as we said but philosophically, your highness, are you more a Republican or a Democrat?
BIN TALAL: No, I'm a royalist.
CAVUTO: Do you like Republicans of this country or Democrats more?
BIN TALAL: I like what is good for the United States. Republicans, Democrats. I don't interfere in internal politics in the United States. I have Republican friends and Democrat friends. For example, George Bush, the father --
CAVUTO: Sure.
BIN TALAL: The son, I'm friends. Also on the other side, Clinton and Obama. And Carter, all my friends.
CAVUTO: Carter too?
BIN TALAL: Oh, sure.
CAVUTO: OK. George Bush, Barack Obama, in a boat, one of them (INAUDIBLE) I'm kidding. Do you think right now that the U.S. is losing its world dominance? We're just going to have to share it? There was much discussion in your country and elsewhere about a global basket of currencies to challenge our dollar.
BIN TALAL: Look, I hear this a lot. The United States is way ahead of China and India and all the world. If you look at the GDP of China right now, it is around $5 billion. The United States is around 14, $15 billion.
CAVUTO: China is growing so fast.
BIN TALAL: China eventually will --
CAVUTO: Do you have Chinese investments?
BIN TALAL: Sure. China will reach the United States. But you look at the GDP per capita. You have $46,000. They are around $6,000 so they're way behind you. China is big force to be reckoned with in the future.
CAVUTO: Today, do they worry you?
BIN TALAL: No.
CAVUTO: Militarily, can they worry you?
BIN TALAL: Well, I mean, in the end, we are moving from the unilateral, from the, to a multi-polar situation whereby you have China coming, you have India coming and you have others nations coming. But it's going to take some time for those countries to come and they're able to compete head on with the United States, economically, financially, and then politically.
CAVUTO: Your highness, I heard a great deal about you. (INAUDIBLE) You're a pretty savvy investor. What do you watch, when you're back home or when you travel, what do you read, what do you watch?
BIN TALAL: Well, you know, I watch all the news. I watch Fox for sure. I watch your program. I watch CNBC, that you hammered in the beginning of this program.
CAVUTO: By the way, I'm glad you mentioned that, your highness. They were promoting this today. I guess you're going to be with them tomorrow. I want your reaction. This is from CNBC today.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Don't miss "Squawk Box" tomorrow. They will have Prince Alwaleed, an exclusive interview for an hour starting at 8:00 a.m..
CAVUTO: They lied. You're with me.
BIN TALAL: I'm with you today but I'm with them tomorrow.
CAVUTO: Yes, they said exclusive. They said exclusive.
BIN TALAL: Maybe exclusive for an hour because my time --
CAVUTO: Now you're parsing. What they did is they lied.
BIN TALAL: No, no, they never lie.
CAVUTO: I think you should cancel.
BIN TALAL: No.
CAVUTO: I think you should say you guys lied. I much preferred being with Neil on Fox Business first.
BIN TALAL: You should be happy I came with you before CNBC.
CAVUTO: I'm very happy. But see they have been promoting this as exclusive.
BIN TALAL: CNBC being my number two favorite.
CAVUTO: Number two?
BIN TALAL: After today.
CAVUTO: Can you do an ad for us?
BIN TALAL: I'm with you today.
CAVUTO: So CNBC is my second place for business news. We'll work that into our promos. Is it your fear down the road when it comes to investing, we were talking about the whole Internet phenomenon, your highness, and investing again, that people don't have it in them to get excited anymore? Yes, they might get with a LinkedIn, who knows. They might get excited about a Groupon or Facebook or Zynga but it is just not in their belly anymore? They have been so burnt by it, now this whole thing with the, you know, the IMF guy just left. They're tired of it. They think the system is rigged. What do you say?
BIN TALAL: Well I think the market today when it jumped 100 percent with this new company that went public with the Internet is contrary to what you say. I think the appetite is there, I think.
CAVUTO: But I always talk to folks, your highness, who say "Yes, but it is for the princes. It is for the big guys. It's for these guys that rig the system. It's for the Raj Rajaratnam who we discovered," not putting you in that group, that "They're the in crowd, we're the out crowd, so why should we even be part of the crowd"?
BIN TALAL: Well, I mean, it is good that some people have memories of the Internet bubble that impacted many people, that caused the NASDAQ to go down by 50, 60 percent or 70 percent. So it is good to have these memories because once burned, shouldn't be burnt a second time.
CAVUTO: So you can't blame them they want out?
BIN TALAL: I don't blame them at all because they were burnt very badly when the Internet bubble burst, or when companies crashed 70, 80, 90 percent. Some of the companies were wiped out.
CAVUTO: Any guesses on who you think are Republican nominee for president is going to be?
BIN TALAL: Very right now. Too early for it. I mean, one year and a half is a long time in politics of the United States. Very long.
CAVUTO: I know that, but any early bets?
BIN TALAL: Too early.
CAVUTO: You're not going to answer me, are you?
BIN TALAL: No, because you are still seeing people coming and people going out. Huck was in, was out now. So it's too early for that.
CAVUTO: Gotcha. What do you watch of us at Fox?
BIN TALAL: I watch your program and all programs. I even watch O'Reilly. I watch --.
CAVUTO: Do you think he argues a lot?
BIN TALAL: He -- a bit too much, yes.
CAVUTO: Yeah. I think so too. Glenn Beck?
BIN TALAL: I watch him also. I watch all Fox. I'm here all day. I have to follow my investments.
CAVUTO: On Fox Business, Judge Napolitano, what do you think of him?
BIN TALAL: He is good.
CAVUTO: Just good?
BIN TALAL: Yes, he is good.
CAVUTO: Anyone you don't like here on Fox Business?
BIN TALAL: If I say -- if I don't like, I'll tell that to Rupert Murdoch, not to you.
CAVUTO: You will? That's power. I like that.
BIN TALAL: I'm meeting Murdoch, by the way, in Paris.
CAVUTO: Really? I was going to meet him right afterwards.
BIN TALAL: After the conference with Sarkozy.
CAVUTO: Listen to you.
BIN TALAL: We're having breakfast actually.
CAVUTO: Wow. You could try the Olive Garden while you're here.
Finally, people are looking at this world right now, your highness, and they're -- they think for their children things are going to be worse than for them. And a I've heard this explained, this is the first time generationally, at least in this country, that people have felt that way. They think the next generation is going to have it tougher and worse.
What do you think of that?
BIN TALAL: That assumption is correct if the United States doesn't get its house in order. If the budget deficit keeps on ballooning year after year like that and there is no resolution for the debt limit, you bet this could happen. Your sons and your daughters and you grand sons and your grand daughters could have worse life than you. You bet.
If the United States doesn't its order quickly, this could happen. That is a danger. By the way, I like Olive Garden. I used to go there.
CAVUTO: Really?
BIN TALAL: You bet.
CAVUTO: I know you were educated very well, with honors, in this fine country. Olive garden? Imagine being the waitress.
BIN TALAL: We'll go there next time.
CAVUTO: That's a tip. That's a type. Your highness, a real honor having you. Thank you very, very much.
Again, when you go to cNBC tomorrow -- I like a lot of those guys, but just tell them you're liars. I'm going to stay five minutes tops and then leave. Just leave.
BIN TALAL: I will not say that. I will say you're good people. You're as good as Fox Business and Fox News.
CAVUTO: You just said they were second.
BIN TALAL: Second in the program but --.
CAVUTO: I want you to say that on the air with them, that you're second best. I'm here with the silver team. I was just with the gold team.
BIN TALAL: No. They're both good. Both gold.
CAVUTO: Always diplomatic. We'll have more right after this.
(COMMERCIAL BREAK)
CAVUTO: So the prince and I were talking about getting together at the Olive Garden. I'm not a name dropper, but I do want you to remember that interview and I do want you to recall and -- actually not to recall because it is still running -- this ad on cNBC. Still running.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Don't miss "Squawk Box" tomorrow. They're going to have Prince Alwaleed in an exclusive for an hour, starting 8:00 a.m.
(END VIDEO CLIP)
CAVUTO: Exclusive? I think not CNBC. Your highness, the bet is on. You're going to call them on this. I'm looking at you, your highness. I'm looking at you, CNBC. You either do this, or the kingdom is mine.
OK, not mine, but just please do it. Just point out that they lied.
OK, to some other developments today. Before the White House complains about the rich again, maybe -- maybe, it should thank them the same folks that want to make -- tax more so they could spend more. There is a report out today that the wealthy are shopping at pre-recession levels. Everyone else, well, not so much.
Weighed down by higher gas and food prices, we're looking at a pretty shaky labor market. Economist Benjamin Powell says if they still don't see the insanity of taxing the spenders, they will not see the light on taxes. But they never do, do they?
BENJAMIN POWELL, ECONOMIST: It is good to be exclusively with you.
CAVUTO: There you go. Because -- I'll tell you something, Ben, people can only see you here right now with us. But continue.
POWELL: That's it. This is a bad -- it's a bad idea to tax anybody right now, whether they're rich, poor, anybody else. Taxing are going to delay economic recovery for a couple reasons.
But I don't think the main path to reducing consumer spending or something like that. For the rich, for the most part, they are going to continue to spend their consumer dollars anyway. But it's because it decreases your incentives to work and invest. That's bad for economic recovery or growth generally. And that's true whether you're rich or poor.
CAVUTO: I'm sorry, Ben. What is going on with the wealthier? We are seeing they're opening up the wallets more. They tend to be cautious whether they have money or not. They're a little less so now. Obviously that reflects some sort of confidence now, right?
POWELL: Yes. I think a lot of it is coming from our political gridlock and stalemate that you have. When you look at like the worst of the downturn that we had, what you had was a whole lot of what we call regime uncertainty going on, where the government is bailing out one person one day, somebody else the next. And it is unclear what anybody is worth, what are good investments, and what your environment's going to be like.
Luckily what we got with the last election was kind of a pause in all that. When you have a pause, innovative entrepreneurs start coming up with ways to make money. They gain confidence and they stay ahead of bumbling bureaucrats. And this kind of stalemate that we have is good in that regard.
Also looms larger the bigger problem of government spending and the deficit that's getting racked up here for our accumulated debt. Gridlock eventually has to break and resolve that. But the regime worsening something slowing down.
CAVUTO: I understand. In another year and a half or so, as things stand now -- they could change -- their taxes are going back up begin. We only got a two-year reprieve for the wealthy with this tax deal, budget deal. So why aren't they being more cautious?
POWELL: I mean I think it's -- the baseline here is relative. It's compared to when they were very cautious before. They have got a little bit more optimistic now. I think that's a good thing.
It reflects the underlying kind of improving economic reality, fiscal crisis aside. That could be the big thing that blows up next for us.
CAVUTO: Benjamin Powell, thank you very much. Benjamin joining me exclusively from Boston, Massachusetts. I'm very honored for that. Thank you, sir.
From the same people who brought you the 2,500 page health care law, completely incomprehensible tax code, a plan English law? I wish I were kidding, but I'm not
(COMMERCIAL BREAK)
CAVUTO: We want to keep you alert of Prince Alwaleed and his whereabouts. The folks across the river here at that other financial channel are still promoting their exclusive chat with a certain Prince Alwaleed bin Talal, who was just -- you see that exclusive?
Now, technically the definition of exclusive is only us. They're going to have to add something like, and Fox Business, just much, much later, because we had him first.
But we're going to keep you abreast of this. So let's say if they missed anything, and they want you to forward this a little bit, they could just have gotten it here, because exclusively first on Fox here. It is enough to make -- it's enough to get me sicker, ticker, whatever.
All right, on to other developments that go way beyond the prince; 117 pages to say keep it simple. Sound like a government guideline to me. The Plain Writing Act is now starting to go into effect to help you understand what Washington is writing, banning confusing language like "in accordance with" and "heretofore."
My next guest says the government is finally making some cuts, just in all the wrong places. Matt Spaulding of the Heritage Foundation.
Matt, what does this mean? I don't understand what they're trying to do here.
MATT SPAULDING, THE HERITAGE FOUNDATION: This is an exclusive story, Neil.
CAVUTO: There we go.
SPAULDING: A hundred seventeen pages of regulation, you probably didn't know we needed that to tell us how to use the English language .
CAVUTO: Why didn't they do it with healthcare law? Why didn't they do it with the break down of the stimulus measure?
SPAULDING: There is something deeply Orwellian about this coming out of the problem. The problem is that government does way too much in the minutia of our lives. And now it has to figure out how to communicate that that with the American people.
So Obama has now issued regulations to the various agencies and regulations that run the place telling them to use simple languages, short sentences, pronouns. You'll love this one, start using the word we when you talk about the government and you.
Speak as if we're in a community together. This is kind of a nonsensical language that makes sense if you're in grade school. But this is trying to get the government to be regulation with a smiley face.
CAVUTO: But why can't they --
SPAULDING: This is an absurd level here.
CAVUTO: What about brevity? If you have a 2,500-page bill, maybe make it, I don't know, 25 pages or err for brevity or Cliffnotes or whatever?
SPAULDING: Hear is the key distinction. This law -- this law was passed by the last Congress -- applies to administrative agencies. This is the government, the administration, the regulators, the experts communicating to -- publicly with the American people.
This doesn't say how laws will be written. Laws passed by Congress, thousands of pages, gobbledygook. It is gibberish. That is a communication with regulators themselves. The government will still communicate within government based on the old regulatory language.
This is truly Orwellian. This is how government communicates with the people on the outside. So it's even worse than you might think. This will not change things radically. You are going to have to have an agent, a czar, if you will, in every agency to talk about English language, to change their websites.
There is going to will be reeducation of government regulators about the language. It is all a communication piece on their part. It has nothing to do with actually what is going to happen when it comes to the regulations and the procedures and things that cost so much money for the American public.
CAVUTO: Amazing, amazing, amazing. Matt, great having you. Thank you very much.
SPAULDING: Thank you.
CAVUTO: LinkedIn starting with a bang, enough to make fee fear a boom? Hate to burst your bubble, but didn't we once burst a bubble?
(COMMERCIAL BREAK)
CAVUTO: All right, we have our exclusive discussion with our panel. You will find these folks here and only here. They will not be anywhere else. LinkedIn IPO rolled out. Investors jumping in. Get ready for others to pile on, after an over the top debut from LinkedIn, Internet companies like Facebook, GroupOn looking more likely to cash in with their own public offerings later on.
Lizzie MacDonald has some worries about this. Also Jonathan Hoenig, following this and Matt McCall. Lizzie, what do you think?
ELIZABETH MACDONALD, FOX BUSINESS ANALYST: We're in a bubble with these social networking sites. Look, LinkedIn now valued more than Southwest, Clorox and the (INAUDIBLE).
CAVUTO: I was thinking the same thing.
MACDONALD: I've been thinking about it, too. When you take the fact they're, what, valued according to this stock price 641 times earnings, it's --.
CAVUTO: Actually 640, but --
MACDONALD: But if you use that same valuation with Exxonmobil, their valuation would be 90 trillion dollars, bigger than the U.S. economy. They only have a rolodex, Jonathan. Only a Rolodex of 15 million and income last year.
JONATHAN HOENIG, FOX BUSINESS ANALYST: Great. It is so easy to be a naysayer, Neil.
CAVUTO: Tell me about it.
MACDONALD: I'm usually bullish.
HOENIG: I remember in 1995, Netscape went public and all the old- timers same thing: it's overvalued, too expensive. You know what? The Nasdaq went up 20 percent for five years in a row.
MACDONALD: Where is Netscape now? Where is Netscape now?
HOENIG: People made money. Where is Google? Where is Amazon. Where is Priceline? That is not the point.
MACDONALD: By the way, the point is there was no float on this. It was only seven million, eight million shares. That is a tiny float. Google, when it IPO'd, was 20 million shares.
CAVUTO: We can debate the particulars of this. We broke a little bit of news earlier, as you know, Matt, that his royal highness is not into GroupOn, not into coupons. I think that one will not involve any royal holdings.
But you do have to wonder, all kidding aside, whether there is momentum here for all these other social networking business, networking sites. The LinkedIn thing still amazes me. Isn't that essentially here's my business card?
MATT MCCALL, FOX BUSINESS ANALYST: LinkedIn, I don't get that. Facebook I understand.
CAVUTO: you don't need it. You're a celebrity. Here I am on LinkedIn. That is like Barack Obama, you can find me on LinkedIn. I can also find you at the white house. But go ahead.
MCCALL: But GroupOn I actually use it. They actually have a business model behind it. Facebook has a business model behind it.
CAVUTO: You use GroupOn?
MACDONALD: Absolutely. I'm cheapest guy on the set right now. It's amazing, I probably buy two or three a day. Honestly, yes, I do. I told you before. I get my massages on GroupOn. I always get them on there. They're half off.
CAVUTO: Don't go there, baby. I do share your concern, Jonathan's bullishness notwithstanding, because I agree -- Jonathan's right, there were clearly big survivors out of that boom, and while it was booming it was great, and Amazon's here today, eBay is here today, some survivors from that. Who would the survivors be now?
MACDONALD: Who would the survivors be now out of the social networking?
CAVUTO: Yes. Don't repeat my question.
MACDONALD: I want to understand it. It would be Facebook and I think GroupOn. Listen, I'm not bashing LinkedIn because I think it is a bad company. I think it has a model. I'm bashing Wall Street because the insiders are making out like bandits.
CAVUTO: Are you bashing the valuation of a company that's just making a few million bucks and now is worth tens of billions?
MACDONALD: Correct.
(CROSS TALK)
MCCALL: -- investment in the future, correct? People are investing in future.
(CROSS TALK)
MACDONALD: Listen, they got pre-IPO 45 dollars, and then it got jacked up to what, 100 percent. These guys are making out like bandits and high-fiving each other today. Then they will pull out and dump. And the main street investor gets creamed.
MCCALL: That is main street investor's problem. Do some homework.
HOENIG: Unfortunately, the mainstream investor -- this is their first chance, Neil, to actually buy in to a social networking IPO. There is a government created scarcity premium here because of accreditation of investors, rules from the SEC. Joe Six-Pack can't buy in like all the private equity firms. So this is their chance -- first chance to get in. That is government --
MACDONALD: Not now though.
HOENIG: It's one of the reasons it has gone up so high.
MACDONALD: I wouldn't get in now, at the top.
MCCALL: No, no, no.
CAVUTO: It's not as if -- how many offerings have we had over the last year, 92, something like that?
MACDONALD: Something like that.
CAVUTO: At our height during the '90s, we were getting what, 200. It's not like that.
MCCALL: Look at performance of the IPOs over last 12 months, they have done very, very well. LinkedIn had the biggest day since OpenTable, which is just an Internet company where you go on and you reserve reservation.
CAVUTO: Can you reserve the Olive Garden?
MCCALL: You can do the Olive Garden, as a matter of fact.
MACDONALD: It's amazing that China's answer to Facebook, RenRen, has done a U-turn now from its IPO.
(CROSS TALK)
CAVUTO: Don't even get me going on RenRen. Guys, I want to thank you all very much. Again, any of you in the mood to watch cNBC tomorrow, the prince will be on there. Be watching whether he acknowledges the fact that they lied, and he was exclusively with us first.
And then ask yourself this, if a network will lie about that, what else will they lie about? Good night.
(COMMERCIAL BREAK)
END
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