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WHEN: Today, Thursday, December 7
Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Avenue Capital Chairman and CEO Marc Lasry and CNBC's Scott Wapner today at the Wells Fargo Investment Thought Leadership Forum. The interview aired Thursday, December 7 on CNBC's "Squawk on the Street" (M-F 9:00AM – 11:00AM.) Following is a link to video from the interview on CNBC.com: https://www.cnbc.com/video/2017/12/07/marc-lasry-stock-market-rally-could-continue-for-another-6-months-1-year.html.
All references must be sourced to CNBC.
MELISSA LEE: WELCOME BACK TO "SQUAWK ON THE STREET." LET'S SEND IT OVER TO SCOTT WAPNER AT THE WELLS FARGO INVESTMENT THOUGHT LEADERSHIP FORUM IN NEW YORK CITY SITTING DOWN WITH A SPECIAL GUEST. HI, SCOTT.
SCOTT WAPNER: HEY THERE MELISSA. THANK YOU SO MUCH. THAT'S RIGHT. WE ARE JOINED BY RIGHT NOW MARC LASRY, CHAIRMAN AND CEO OF AVENUE CAPITAL. IT'S GOOD TO SEE YOU AGAIN.
MARC LASRY: ALWAYS A PLEASURE.
WAPNER: ESPECIALLY WITH THE MARKETS WHERE THEY ARE. AND IT'S FUNNY, YOU WERE ON CNBC ALMOST A YEAR AGO TO THE DAY, OK, DECEMBER 9th, 2016, YOU SAID OF THE RALLY AND DOW 20,000, "IT'S ALMOST LIKE YOU'RE ON A SUGAR HIGH. THE QUESTION IS, HOW LONG DOES THAT CONTINUE?" OKAY, DOW 24,000. WHAT ARE WE ON NOW – ARE WE POUNDING RED BULLLS?
LASRY: NO, WE'RE ACTUALLY – I THINK PART OF IT IS ALL THE NEWS HAS BEEN POSITIVE. RIGHT? WHEN YOU TAKE A LOOK AT THE ECONOMY, THE ECONOMY'S DOING WELL. SO EVERYBODY'S TALKING ALL THAT POSITIVE NEWS AND JUST IS CONTINUING TO BUY EQUITIES. SO LOOK, I THINK IT COULD CONTINUE FOR ANOTHER SIX MONTHS OR A YEAR BECAUSE EVERYTHING'S GOOD.
WAPNER: HOWARD BARKS HAS BEEN SPEAKING THE LAST COUPLE DAYS. HE WAS AT THIS CONFERENCE EARLIER TODAY. HE WAS AT ANOTHER YESTERDAY. HE SAID THE EASY MONEY HAS BEEN MADE. DO YOU AGREE WITH THAT?
LASRY: THE EASY MONEY HAS ALWAYS BEEN MADE. RIGHT? IT'S – I THINK WHEN YOU'RE IN THE MARKET EVERY DAY, YOU NEVER THINK IT'S EASY. YOU'RE TRYING TO MAKE MONEY EVERY SINGLE DAY. I THINK MY VIEW IS IT'S JUST ALWAYS HARD. SO WHAT WE TRY TO FIND IS SITUATIONS WHERE YOU GET OVERPAID FOR THAT RISK.
WAPNER: WHAT DO YOU THINK THE IMPACT OF THE TAX PACKAGE IS GOING TO BE, ASSUMING IT PASSES?
LASRY: WELL, I THINK IT'LL PASS. I ACTUALLY THINK IT'S GREAT FOR CORPORATIONS. IT'S ACTUALLY REALLY BAD FOR INDIVIDUALS. I DON'T UNDERSTAND WHY YOU'VE GOT THIS HUGE TRANSFER OF WEALTH FROM INDIVIDUALS TO CORPORATIONS. IT DOESN'T MAKE SENSE. AND I THINK IT'S GOING TO END UP HURTING THE ECONOMY LATER ON.
WAPNER: ARE YOU AS CONCERNED ABOUT THE STATE AND LOCAL TAX DEDUCTIONS, THE SO-CALLED SALT AS SO MANY OF YOUR COLLEAGUES SEEM TO BE? LARRY FINK ON THE STAGE JUST A SHORT TIME AGO WAS LAMENTING THE EFFECTS OF THAT, THAT IT'S GOING TO HAVE A REAL IMPACT ON DYNAMIC CITIES, NEW YORK, AND STATES LIKE NEW JERSEY AND CALIFORNIA AND ELSEWHERE.
LASRY: OBVIOUSLY IT'S GOING TO HAVE AN IMPACT. EVERYBODY'S AN ECONOMIC ANIMAL. SO IF ALL OF A SUDDEN NOW, YOU KNOW, EVERYBODY PAYS 39%, SO LET'S JUST MAKE IT 40. NOW IF YOU'RE IN NEW YORK CITY AND NEW YORK STATE YOU'RE PAYING 54, AN EXTRA 20% MORE FOR THE LUXURY OF LIVING IN NEW YORK, YOU KNOW, THAT'S GOING TO HAVE AN IMPACT. THE SAME THING IN CALIFORNIA. SO OBVIOUSLY IT'S GOING TO HAVE AN IMPACT THE QUESTION IS, WILL PEOPLE WANT TO LEAVE NEW YORK TO GO TO FLORIDA AND OTHER STATES?
WAPNER: DO YOU THINK THEY WILL?
LASRY: I THINK YOU'RE GONNA HAVE A NUMBER OF PEOPLE WHO WILL. BECAUSE IT JUST ECONOMICALLY – IT JUST COSTS YOU TOO MUCH MONEY.
WAPNER: SO IN THE CURRENT ENVIRONMENT THAT WERE IN, I SAID DOW 24,000. NEW HIGHS ALL THE TIME. WHERE IS THE OPPORTUNITY THEN FOR A GUY LIKE YOU?
LASRY: WELL, I THINK FOR US, IT'S NOT IN THE EQUITY MARKETS. RIGHT? IT'S GOING TO BE IN SITUATIONS WHERE YOU'RE GETTING OVERPAID. SO FOR US IT'S GOING TO BE IN ASIA RIGHT NOW WHERE WE CAN DO DIRECT LENDING, WE'RE MAKING 15, 20% ON THOSE LOANS. IT CAN BE IN AVIATION, WHERE WE'RE BUYING END OF LIFE PLANES AND YOU'RE GOING TO MAKE 20% PLUS ON THAT. IT'S GOING TO BE IN THE ENERGY SECTOR. IT'S TRYING TO FIND AREAS WHERE OTHER PEOPLE ARE NOT COMPETING AND WHERE THE LIQUIDITY OR THE DEMAND FOR LIQUIDITY IS NOT AS HIGH BUT THE DEMAND FOR CAPITAL IS VERY HIGH.
WAPNER: ON THE OTHER SIDE OF EQUITY THOUGH, THE ENVIRONMENT IS SUCH THAT DISTRESSED OPPORTUNITIES ARE LIMITED. AREN'T THEY? THERE ISN'T THAT MUCH DISTRESS OUT THERE.
LASRY: THERE ISN'T THAT MUCH DISTRESS HERE IN THE U.S. IT'S MORE FOR SPECIAL SITUATIONS. BUT WHAT THERE IS IS THERE'S A REAL NEED FOR CAPITAL. SO THAT'S WHERE WE'RE INVESTING IS MORE IN SPECIAL SITUATIONS AS OPPOSED TO DISTRESS.
WAPNER: OK, SO THE AREA THAT I'D THINK THAT YOU ARE TAKING A LOOK AT IS THE ONE THAT WE TALK ABOUT ALL THE TIME, RELATIVE TO AMAZON, AND THAT IS RETAIL. ARE YOU CURRENTLY ACTIVE IN RETAIL EITHER ON THE DEBT OR THE EQUITY SIDE?
LASRY: SO, WE'RE ACTIVE ON THE DEBT SIDE. SO NEIMAN MARCUS WOULD BE ONE WHERE WE ACTUALLY OWN THE BONDS. YOU KNOW, WE'VE BEEN INVOLVED IN J. C. PENNEY. AND A COUPLE OTHERS. SO IT'S AN AREA WHERE WE'RE LOOKING AT IT PRETTY HARD, ESPECIALLY ON THE DEBT SIDE. AND I THINK YOU'RE GOING TO FIND AFTER THE HOLIDAYS, DEPENDING ON WHAT HAPPENS WITH BRICK AND MORTAR, I THINK THERE WILL BE MORE OPPORTUNITIES ON THE DEBT SIDE FOR FIRMS LIKE OURS.
WAPNER: OK – SO WE'VE SEEN A JUMP IN RETAIL STOCKS. YOU THINK THE SAME THING THAT COULD UNWIND RETAIL STOCKS IS THE SEASONAL BOOST MAYBE THEY'VE GOTTEN—
LASRY: IT IS.
WAPNER: -- IS GOING TO CREATE GREATER OPPORTUNITY ON THE DEBT SIDE, AS WELL, DEBT'S GONNA TO BECOME CHEAPER.
LASRY: I THINK SO. OR AT LEAST THAT'S WHAT WE'RE HOPING. AND IF THAT IS, THEN WE'LL TAKE ADVANTAGE OF THAT. IF NOT, THEN IT'S FINE. YOU KNOW, REALLY, WE'RE TRYING TO FIND THINGS AT A PRICE WHERE WE THINK WE CAN'T GET HURT, WHERE IF THERE'S GONNA BE A LIQUIDATION, WE'RE GONNA GET OUR MONEY OUT.
WAPNER: YOU MENTIONED J.C. PENNEY. ARE YOU CURRENTLY TAKING A LOOK ONCE AGAIN AT JC PENNY, WHICH YOU'VE OWNED ON THE DEBT SIDE BEFORE?
LASRY: YES WE HAVE. AND SO WE'RE LOOKING AT IT PRETTY HARD AGAIN. THE BONDS ARE DOWN TO ABOUT 70 CENTS ON THE DOLLAR. SO YOU'RE GENERATING SORT OF A DOUBLE DIGIT YIELD, WHICH IN THIS ENVIRONMENT IS GOOD. BUT WE'D LIKE TO GET INVOLVED IN THOSE BONDS, YOU KNOW, HOPEFULLY, IF THEY GET DOWN TO THE 50, 60, 70 LEVEL.
WAPNER: LET ME SWITCH GEARS AND ASK YOU ABOUT HARVEY WEINSTEIN.
WAPNER: YOU WERE ON THE BOARD OF THE WEINSTEIN COMPANY FOR A YEAR OR SO.
WAPNER: YOU WERE NAMED YESTERDAY IN A CLASS ACTION SUIT AGAINST HARVEY WEINSTEIN, THE BOARD AND OTHER OF HIS COMPANIES. WHAT DID YOU KNOW WHEN YOU WERE ON THE BOARD?
LASRY: DIDN'T KNOW ANYTHING. I JOINED THE BOARD. AS SOON AS I FOUND OUT, WHICH WAS A COUPLE DAYS BEFORE EVERYBODY ELSE, WE HAD A BOARD CALL, I THEN RESIGNED THE FOLLOWING DAY. SO LOOK, I UNDERSTAND AND I THINK WHAT ENDED UP HAPPENING JUST WASN'T – WHAT HE DID WAS WRONG. BUT AS FAR AS FOR ME, I HAD NO KNOWLEDGE OF IT.
WAPNER: YEAH. HOW COULDN'T YOU HAVE KNOWN AS A BOARD? I THINK PEOPLE WOULD HEAR THAT ANSWER AND SAY, IF SEEMINGLY THERE WAS THIS REPUTATION OF THIS GUY FOR 30 YEARS IN HOLLYWOOD. YOU KNOW, BEN AFFLECK TELLS THE "TODAY" SHOW EVERYBODY KNEW THAT HE WAS A SLEEZE AND KIND OF A BULLY. HOW DIDN'T THE BOARD KNOW?
LASRY: WELL, FIRST OF ALL, IF EVERYBODY KNEW, WHY DIDN'T ANYONE TELL ME? NOBODY CALLED, NOBODY SENT ME EMAILS, NOBODY SAID "HEY, BY THE WAY, YOU SHOULD KNOW THAT." SO IT'S REALLY NICE THAT EVERYBODY SAYS THAT, BUT AT THE END OF THE DAY, A LOT OF BOARD MEMBERS JUST DIDN'T KNOW. AND EVERYBODY CAN SAY TODAY IT WAS AN OPEN SECRET. IF IT WAS SO OPEN, IT WOULD HAVE BEEN NICE IF SOMEBODY HAD CALLED OR SOMEBODY HAD SAID ANYTHING.
WAPNER: HAVE YOU TALKED TO HIM AT ALL RECENTLY?
LASRY: NO, NOT AT ALL.
WAPNER: YEAH. LET ME ASK YOU ABOUT BITCOIN. WE'LL SWITCH GEARS BACK TO THE MARKET. 15,000. THAT MAKE SENSE TO YOU?
LASRY: YOU KNOW, THE ONLY THING I'M UPSET ABOUT IS WHY DIDN'T I BUY IT WHEN IT WAS AT 300 OR 500? YOU KNOW, IN THE BACK OF MY MIND, I'M LIKE WHY DIDN'T I BUY THAT THING. I WANTED TO BUY IT WHEN IT HIT 9,000, 10,000. I WAS LIKE YOU KNOW, I'LL JUST WAIT FOR IT TO TAKE A LITTLE DIP. AND IT HASN'T TAKEN A DIP. AND LOOK, I DON'T UNDERSTAND IT. I JUST SORT OF LOOKED AT IT AND SAID IT SEEMS LIKE A NEW CURRENCY IS BEING CREATED, AND THEREFORE IT MIGHT MAKE SENSE TO TRY TO PARTICIPATE IN IT. BUT I CAN'T GIVE YOU ANY ANALYSIS WHY IT MAKES SENSE OR NOT.
WAPNER: RIGHT. I MEAN – AMID THE COMMENTARY ON BOTH SIDES, WHETHER IT'S REAL OR IT'S A FRAUD AS JAMIE DIMON HAS NOW FAMOUSLY SAID, YOU DON'T HAVE AN OPINION ONE WAY -- DO YOU THINK IT'S REAL?
LASRY: I THINK IT'S REAL. I THINK THE REASON YOU'RE SEEING THIS HUGE RUN-UP IN IT OVER THE COURSE OF THE LAST COUPLE WEEKS IS JUST THAT MORE AND MORE PEOPLE NOW ARE STARTING TO BUY IT. AND WHAT I MEAN BY THAT, WHEREAS BEFORE IT MAY HAVE BEEN MORE TECHIES, NOW WHAT YOU'RE SEEING IT'S COMING TO THE MAINSTREAM, AND AS IT COMES INTO THE MAINSTREAM, MORE AND MORE PEOPLE ARE STARTING TO GET INVOLVED IN IT. I DO THINK IT'S REAL. AND I THINK WHEN NOVOGRATZ SAYS IT'S GOT A POSSIBILITY OF BEING WORTH 20,000 OR 40,000, I CAN SEE THAT AS IT BECOME MORE MAINSTREAM.
WAPNER: LET ME ASK YOU – WRAP IT UP BY ASKING YOU TO REACT TO SOMETHING LARRY FINK SAID ON THE STAGE, THAT I THOUGHT WAS INTERESTING. AS YOU SORT OF LOOK AHEAD TO WHAT THE MARKETS ARE GOING TO LOOK LIKE NEXT YEAR, HE SAID WE'VE NEVER HAD A TIME WHERE THE FED HAS BEEN ON THIS AGGRESSIVE TIGHTENING PATH, WHILE AT THE SAME TIME UNLOADING THE BALANCE SHEET, WHILE AT THE SAME TIME DOING SUCH A SIZABLE FISCAL STIMULUS. AND HE DOESN'T KNOW WHAT THE IMPACT OF ALL THAT IS GOING TO BE. DO YOU?
LASRY: I DON'T. I DO THINK WHAT'S HAPPENING IS CONSUMER CONFIDENCE IS HIGH. PEOPLE ARE SPENDING MONEY. SO, I THINK THE ECONOMY IS DOING WELL AND BECAUSE OF THAT, YOU'LL FIND THAT THE MARKETS WILL CONTINUE TO DO WELL. AND THAT'S WHY RATES ARE GOING TO MOVE UP, RIGHT? SO IF CONSUMER CONFIDENCE IS HIGH, THE ENVIRONMENT IS GOOD, THE MARKET WILL GO UP.
WAPNER: APPRECIATE YOUR TIME.
LASRY: THANK YOU.
WAPNER: IT'S GOOD TO SEE YOU AS ALWAYS. MARC LASRY IS THE CHAIRMAN AND CEO, AS WE SAID, OF AVENUE CAPITAL. DAVID, BACK TO YOU.
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