Ken Langone, Sen. Peter Welch & Anthony Scaramucci 9/22/26

25:46There you go. Thank you. Next on Squawk Pod, the legendary Ken Langone. He co-founded Home Depot, celebrating 45 years as a publicly traded company. He gets into it. All the lessons from inside the big box retailer. If you put$1 ,000 into Home Depot in its IPO, it's worth$16 million. Yeah, you did okay. And Senator Peter Welch joins the conversation on the midterm elections, entitlements and term limits in Washington. Can it be? I've never been a CEO. I'm just a pain in the ass. That's all I do, sir. But for how long have you been doing that? All my life. Stay tuned. So much more Squawk Pod still ahead.

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27:48Download the latest episode and subscribe at schwab.com slash marketupdatepodcast or find Schwab Market Update wherever you get your podcasts. We're back. This is Squawk Pod. Up on Becky, Q. And you're watching Squawk Box right here on CNBC. I'm Becky Quick, along with Joe Kernan and Andrew Ross Sorkin. Joining us right now to discuss everything from his take on the markets, the economy, health care and politics is Ken Langone. He is the chairman and CEO of Envamed Associates, also the co-founder of Home Depot. And Ken, it is really good to see you this morning. Thank you for having me. Thanks for coming in.

28:29We have so many things that we want to talk about with you. But I think we need to start with the idea that Home Depot had its IPO 45 years ago this week. Pretty phenomenal timing. We did OK. And somebody just went back and did the research on this and found that it is the highest returning stock over the last 45 years. The 500. Of the S &P 500. Yeah. Pretty good. That's pretty amazing. Hammers and sores. And against AI and against you name it. Everything that's come its way. it's because you were somebody who looked at this and saw a huge potential and huge possibility, and you had to use your connections to actually make this IPO happen.

29:09I didn't realize it started out at$4 million, market cap of under$40 million. But if you put$1 ,000 into Home Depot in its IPO, it's worth$16 million. It was everybody out of the water. You did okay. The best part of the story, to me, it is what it is. We have kids that started at 18 years old, out of high school, not wanting to go to college, not knowing what they're going to do, ended up at Home Depot. We have 3 ,000 of them that are today multimillionaires. The whole key to our success, in my opinion, are the kids on the floor. Now, when I say a kid, if you're under 91, you're a kid. but we have these kids that do everything they can to give the customer the very best experience they can have and we're blessed with so many we have over 450 ,000 associates today, pretty good it's two US Marine Corps anyway it's been a great story and a lot of good has come out of it Bernie's philanthropy, authors mine I couldn't do what I did at home at NYU financially if it hadn't been for Home Depot.

30:27Now, I must be honest with you. Lilly's come along pretty good. And it's given Home Depot a real run for who's first place in my portfolio. When did you first invest in Eli Lilly? I took over a little medical device company in San Diego in a proxy fight. The market cap of that company, you think I'm nuts, the market cap of that company was a million and a half dollars. And we took it over in May of 72. In November of 78, 77, Lilly gave us$50 million worth of Lilly stock for that company. Lilly was selling, had a market cap of$2 billion then, and they had revenues of$2 billion, of which 30 % of the$2 billion was in an agricultural product called Treflan.

31:26They owned Elizabeth Arden, and this was their first device company they bought. I met the management of Lilly, and all of a sudden it dawned on me, these are good people. Now, we've had some lulls, but look at it today. $2 billion over a trillion today. Did you held the whole time? Never two times. You know, I really believe this. God watches stupid people and old people. I qualify on both counts. Lily had two significant adverse episodes. They had a drug in Europe called Oroflex. Nine patients died. The drug was a great drug. It was misused by the physicians. the stock got down to an eight multiple and a seven percent yield and i really loaded up on top of that then the next time was when they bought the pharmacy benefit management from mckesson and the market didn't like it it was down 20 percent one day i was playing golf with Stan Druckenmiller out at Oakmont.

32:40And I just called in. And my trader, Lance Seidman, said to me, something's going on at Lilly. It's down 20%. I said, I'm going to go play golf. Stop buying the stock for me. Well, I didn't tell him how much, and he kept buying. At 4.05, I had a crisis because I had more stock than I had money. So on those two occasions. But it's a wonderful company. And the people are really first class. I'm sure there's a lot of other companies can say this, but the thing I marvel about with Lilly is the quality of the people. The guy running it now, David Ricks, home run. And his partner, I call him his partner, Dan Skowrinski, who runs R &D.

33:23And what they're doing, they're doing it this year. They've made eight or nine significant acquisitions, billion dollars or more. You'd appreciate this. They're not relying completely on these weight loss drugs. They're building a fortress for activities in so many other different areas. The last guy was great, too, Ken, because he went to Lilley, the predecessor. Oh, John Leckleiter. He went to St. Xavier in Louisville, Jesuit, and I went to Xavier in Cincinnati. I hope John's listening because John deserves a lot of credit. That's what I mean. When John took over, Lilley's pipeline was empty.

34:02There was nothing there. Did he do the GOP-1 stuff? He said, John had two goals. John said to me, Ken, I'm going to do everything I can to make sure we don't cut research. So we're spending$4 billion a year,$17 or$18 billion in R &D this year, one company. And he said the second thing, I'm going to do everything I can to protect the dividend. So for four years, three or four years, the stock stayed, the dividend stayed at 49 cents. But John had the courage and the guts to stay the course. And I think Dan, I should say David and Dan will both tell you, it was that commitment to research where they didn't throttle back that put them where they are today.

34:45And it's scary what they have coming. I still think of David as the new CEO. Well, he's like a kid. First of all, he's young, but a wonderful human being. And just the whole company, they always had good people. Gus Watanabe, Sidney Terrell, Gene Stepp. These are all guys that I got to know. Vaughn Bryson. Terrell, yeah. All the way back. And the best is yet to come. I think, I shouldn't tout it, I think Lilly's going to be a$2 ,000 stock in the next three or four years. Wow. And Home Depot better get off its ass because Lilly may become number one in the old days portfolio. You've never sold either of those stocks.

35:27You've given away to philanthropy. I've given Home Depot shares to charities, obviously. And again, quality of the people. It's all about them. I'm looking at that American flag. Very prophetic. Great companies in the greatest country on earth. You got a winning combination. I got to tell you, I'm heartbroken at the behavior of Americans today towards America. We live in the greatest country on earth. There'll never be another America. We have a problem. We have lots of problems. Democracy dictates you have differences. However, when the public has spoken, we should show some respect to whether it's a congressman or a senator or the president or whoever it is.

36:15Something's wrong, but we'll get it right. I want to come back to politics in just a moment. But before we do, you mentioned Home Depot. What were your words? It better get office. What? You said Home Depot better get off its... Yes. So what's happened with Home Depot is probably directly tied to higher interest rates. Absolutely. Look, people are fixing leaks. People are still painting, but adding wings or building... Look at the home builders. Yeah. Now, Home Depot, thank God they're doing this. They made a great deal when they bought SRS. The guy that came with it, Dan... That's the... SRS is the one that goes to contractors and really brings in a lot of those businesses.

36:55And this is where they're going to the whole market. They came with a great management team led by a fellow by the name of Dan Tinker. Hell of a guy. They're doing very, very well. They continue to make acquisitions in that field, mostly bolt-ons, little companies. The SRS deal was a big deal. It was$18 billion. And they made another couple of big acquisitions in the building supply business. So Depot is positioning itself. Meanwhile, it continues to make$14,$15 a share, pays a nice$9.22 dividend. No,$9.32 dividend, I think. So depots position beautifully. And the home is still the principal asset of every American.

37:46Not stocks, not bonds, they're homes. And they fix them up. So that's why I'm optimistic about Depot. And Ted Decker has done an incredible job of leading the company. And they've got a great bench. Things are going great at Depot. How long was Nardelli there? How many mistakes have you made? A lot. I make a mistake every day. How many has the company made, the board made? Then you brought Frank Blake, and he was great, right? Frank Blake saved Home Depot. Right. And I say to people today, if you're going to mention founders of the company, I would put Frank in there, although he showed up 20 years after we started.

38:24Did he follow Nardelli? What? Did he follow Nardelli? Who was after him? Here's what happened. By the way, in the spirit of fairness, the first four years Nardelli was there, everything he touched, he made better. Our earnings compounded at 20 % a year in the four years. Really? Yeah. Yeah. And he went off the track as far as I'm concerned. The whole the whole essence of Home Depot is his culture. You know, you grab a kid on the floor. There's a passion. There's an enthusiasm. There's I can do it. I can help you do it. When it was clear that we had to go separate ways with Bob. We had a board meeting in Dallas and I was lead director.

39:11And I said, look, we've got to make this change. It's gone too far. There's too much animosity. There's too much stress. You mean he got those earnings gains at the expense of driving employees too hard? It was Bob's pay. And this was around Enron. And the headlines were. But in any event, we made a decision. Bob did a great job for four years. Last two years, kind of rough. But the numbers were OK. When we made the decision to say goodbye to Bob, I said to the board, we only got one guy, Frank Blake. Now, Frank didn't know a hammer from a saw. Frank, here's a CV. Harvard undergraduate, Columbia Law School, clerk to Justice Stevens of the Supreme Court, and number two guy in the Department of Energy.

40:05I forgot which the hell department. and Bob brought him in. He worked with Bob at GE and Bob brought him in and Frank did strategy for Home Depot acquisitions. The board was of a mind. They wanted to make him acting CEO. I said, I got a better idea. Let's cut his legs off and see how much of a chance he has. By making him acting? We're going to make him CEO and we just showed him if we have to get rid of a guy, we can do it. Here's a ball, Frank. Run with it. If you don't run with it, you're toast. And boy, he took off. But better than Frank's talent is Frank's character and integrity. One year, he refused to take a bonus.

40:48He said to the board, first took the job, we all have to work to do one thing, to get me off the front page of the newspapers and what I'm paid. And he was very sensitive. And one year, he wouldn't take a bonus because he felt like it was the right thing to do. and his wife. I can't say enough things about Frank. Great. We're going to take a quick break. We've got to talk about Elaine. I mean, she's what a saint. She's the best. 70 years with you. Yeah, she did okay, too. And you looked the same and had no money. I know. I look uglier now than I did that. No, but you were no prize then either.

41:26She married you with no money and no looks. No money, no looks. Rough around the edges. You? Oh, you are a delight. And why does it take so long to get you? Why does it take so long to get you? I'm like sandpaper. Yeah, you are. But very useful. That's right.

41:48It is only seven weeks until Election Day. Affordability is a top issue. Joining us right now to talk more about it is Senator Peter Welch of Vermont. And Senator, thank you for coming in today. It's great to be here. We've been watching oil prices, more importantly, prices at the pump, diesel above$6.50 a gallon. And that has really caught people's attention. How do you plan to use that to make hay in the election season? Well, it's not about making hay. It's just understanding reality. This$6.50 is really brutal, especially on farmers, including those Midwest farmers who broke last time very strongly for Trump.

42:22The tariffs are hurting a lot, too. You know, in Vermont, we've got a cheese company that has a million dollar piece of equipment on the Canadian side of the border. They're going to have to pay five hundred thousand dollars more for it. We've got a manufacturer who does snow moving equipment with sales to Canada. They're five hundred thousand dollar units. He's losing sales because there's going to be a two hundred fifty thousand dollar tariff. So these things are coming home, whether you vote a Republican or Democrat. Those are pretty steep bills and you want some relief. What would Democrats do as a result?

42:54I guess if you had the power of the wherewithal, you'd stop the tariffs, first off? No, absolutely. I'm 100 % against these tariffs with Canada. It's going to be$193 million. There's a place for tariffs. Actually, frankly, China. That's a legitimate discussion. But tariffs on Canada, when we have what the president bragged rightly was the best USMCA deal ever, they make no sense and are inflicting enormous pain. And when you add to that 650 for diesel, that's brutal for folks. The 650 diesel is a much more intractable problem. That's not something you can change on a dime. What would your solution be?

43:32How would you handle that? Well, that's really related to the war in Iran. My view, that's been a disaster. You know, it's going to be over in two days. We're well into six months. How do you resolve it at this point? You can't undo what's been done. How do you resolve it now? The reality here is that the president believed that with massive military airstrike, he'd take care of the problem. He'd decapitate the regime. There'd be an uprising in Iran. That didn't work. And in fact, Iran responded with asymmetric use of drones, and it's closed the strait. So there's real, he's in a box. But the bottom line is there's got to be a negotiated deal involving any of the other.

44:11This is what I don't understand. And the idea of negotiating a deal is pretty complicated. If you're going to come in and say, never mind, we're sorry, we're wrong about this. What do you expect to walk away with from Iran? I mean, there were goals and initiatives in terms of taking out nuclear, trying to prevent that from happening. Do you go hat in hand and say, we're sorry, we surrender, we give up? How do you negotiate a deal with Iran? The reality is he's in a box. And we're not going to get the outcome that he thought was going to be easily available to him. So it really does raise questions as to what will happen with the strait, whether there have to be some tolling as an alternative to having to be closed.

44:52So I don't know what the outcome is going to be, but the status quo is really detrimental to the well-being of our country. Do you think the economic pain and pressure campaign that the Treasury Secretary Scott Bessent has kind of put on, do you agree with trying to give that time to work? Do you think that could be effective? Well, if I thought it would work, I'd give it time to work. But you've got an Iranian regime, and they really don't care that much about the suffering of the people that they rule. They slaughtered thousands of people when they rose up and had a protest. So the economic pain, the ayatollahs don't feel it.

45:31The citizens do. And the ayatollahs don't care. So I don't think that's a tactic that ultimately will work. Senator, you have a colleague that actually is a socialist in Vermont. So I just want to talk about democratic socialism, the effect on the Democratic Party in the midterms based on that. I hear it's a big tent. We love everyone. And then I hear some rarely, maybe John Fetterman. I don't know how you feel about it. You're from the land of Ben and Jerry's, obviously. So, yeah. Is it bad for the party? Good for the party? Is it just ideas? Some of the stuff, there's no way you can defend, you know, closing down prisons and releasing it.

46:11Yeah, no, no, you're right. There's some extreme views out there. And that's true on both sides. The Democratic Party, there's two things. One, the Democratic Party has to be anchored in affordability, on working class issues, everyday people. And it has to have a plan that's beneficial to folks who work hard, whether they voted for Trump or they voted for Harris. That's number one. Number two, the candidates bear the burden in each of the races, and every state is different. So the candidates have to build the confidence that they need in order to win. So we've got an opportunity. I like our odds better in the Senate than the Republicans.

46:47Republicans. You don't think that some of you and some of your colleagues should speak out more about the anti-Semitism from some of these characters? Amen. Well, I speak out about anti-Semitism. That is outrageous. Well, it's pervasive. There isn't enough being said about it by our leaders, of which you're one. You're a leader. Well, I condemn anti-Semitism. I understand that. But there's a lot of issues here that need to be addressed in America. Right. I have no doubt that if we had to gone after Iran and they developed a nuclear bomb, they would have used it. I give the president credit for doing something that seven previous presidents kicked down the can down the street.

47:32Now, we may agree or disagree on a lot of things. Let's agree on this. I were talking about all these stocks I own and my wealth. What the hell am I doing getting a check every month from the government? Why don't you take it away from me? What are you saying? Social Security means this. I shouldn't get it. You mean test Social Security? Make some tough decisions. Well, I'm with you on making some tough decisions. Social Security is imperiled. And I like what you're saying. Well, hold on. I'm not done. Raise my taxes. I've got an ally here. I like this guy. Why don't you airmark those taxes, those increases, to reduction of the debt?

48:12We can't live as a society with a trillion dollars in interest. I so agree with you. And also, the last thing, write your own obituary. You guys should have two terms and go home. The American people want term limits badly. Eighty percent of the American people want them. This is the polls. Why don't you guys have the courage in a democracy to give the American people what they want? Well, let me talk about two things. Go ahead. One, the debt. I'm in agreement with you. You know, I am considered a liberal, progressive Democrat. I think we've got to pay our bills. So when I'm in favor of a program, we've either got to cut or we've got to raise the revenue in order to pay it.

48:55This debt is really, really dangerous. And there's too little discussion about addressing it. He just said if you raise taxes, you said, you're going to layer on another program and raise taxes to pay for that. That's what you just said. And he just said you've got to cut what you've got to use it to help defray what we're already spending. You guys are crazy about layering on new fees. Raise my taxes a lot. I can afford to pay them. I'm liking what I'm hearing. I don't like the fact that you won't come out and say, you're right, we should have term limits. That's what the American people want.

49:30You know, people want responsive government. No, we're talking about term limits. Let's not put candy on the pill. OK. The American people, by a wide margin, want term limits. I think if you have term limits, a lot of what's going on in America, because you know what? But your second term, you're not going to worry about getting reelected for the third term. You're more apt to make the right decision because you're going home, whether you like it or not. You know, there's a premise there, and I'm not quite sure you're right. You know, I actually think. But tell us why. I mean, how long was Ken CEO, right?

50:07I mean, I've never been a CEO. Well, you know, I'm just a pain in the ass. That's all I do, sir. OK, for how long have you been doing that? All my life. All right. Here you go. So no term limit on that. I think the real question here is government is not answering it. It's not solving the problems. And if there's an argument, if you can actually have confidence, the term limit somehow means that new people. I would argue to you that Senator Tillis, for example, has effectively broken with large parts of the Republican Party. Yeah. In part because he's not being reelected yet. And so he can make choices that, frankly, are based on his moral center rather than trying to be religious.

50:47The choice of him not sorry again wasn't his. I understand that. But the broader point is you have people. Once you get to a position where you don't have to raise more money from other people, you don't have to be at the behest of whoever is leading the party. You can actually make the decisions, hopefully, on behalf of your constituents and what you think is morally right, as opposed to all of these other things. Well, actually, Tillis is somebody who did that even before he didn't know he was going to be running for real election. Yeah, but that's self-fulfilling after that. Well, look, the government is not working in solving things.

51:20Like we just talked about the debt. And Republicans are Democrats. It hasn't mattered. The debt just keeps going up. So that is a frustration for the American people. And the question about a term limit, a fair one, I acknowledge. But a lot of it has to do with whether the voters in a particular state are satisfied with their member of Congress or their senator. You know, Senator Sanders has been reelected overwhelmingly by Vermonters. They want it. 700 ,000 population in the state of Vermont. We're mighty. You're 700 ,000 total population. You're a little jealous. You've got a guy who I guess is nothing more than an avowed communist.

52:00Call him whatever you want. but everything you listen to what he says sounds to me like he's took lenin's book and read it and swallowed well so you if we're if you were vermont you probably wouldn't vote for him i don't think so i think that's a pretty good fact that i would he's pretty he's pretty popular and by the way you know i think the question of term limits is is really the voter decision in congress and there's an immense amount of turnover uh in the house where i served for 16 years this is my first term in the Senate. So I trust the voters. You get elected, and since you're going to run again in two years from the day you're elected, you're starting your re-election campaign.

52:39You know what? You're getting to something that's a real problem, and that's money in politics. I mean, the amount of money that is in politics is just awful. And it went from raising it from individuals and corporate PACs of$5 ,000 to now the super PACs dominate everything. And it means that when you're in a campaign, outside forces actually target your race if they think they can win it, Republican and Democratic. It's just like the teachers unions and other unions. It's not just corporations. No, no, I'm saying money in general. The corporation issue. There's two things. You either have to get money out of politics, which, by the way, seems to be harder and harder given where the Supreme Court has landed, or you need to get at potentially what I think Ken is talking about, which is the term limits.

53:28Look, in a perfect world, maybe you do both. But one maybe offsets the other in a bit in some kind of way. The other thing I was going to mention on Ken's Social Security point, because we've been talking about this one for, I think, 15 or 16 years together about means testing Social Security. Most Democrats that we've talked to at this table about means testing Social Security push back and say no. You never do it. I've had that conversation with Elizabeth Warren many times. You know why, Senator? Because then it turns it into a true welfare program if it's means tested. No, that's right. Then it looks like it's for...

53:58Well, there's two things, OK? One, Social Security is extraordinarily, extraordinarily important for the well-being of Americans who've worked, and they need some dignity in retirement. And it does get more support because it's universal. But it's universal because this guy, he paid in the Social Security. Yeah, but the money that he paid in, it's being paid by... That I put in, it's crazy. I get that. It's a transfer payment. It's not self-funded. That's a total illusion. You probably funded 10 % of what you ended up getting. Let me just say, number one, we have to have a strong Social Security.

54:35Number two, it's in jeopardy. Number three, we have to have some fixes, and that means some revenue. You're talking about you getting less. Getting nothing. Or getting nothing. No, and I actually really appreciate that, because you're taking that position because as a practical matter, you don't need it. And as a practical matter, we have to get our social security system to be solid. I want you to do. The thing I worry about in America, none of these things, the biggest to me, and nobody's doing a thing about it, and where the Chinese are going to kick our butts, mark my words, is public education.

55:10They're taking their brightest kids and they're grooming those kids to be ready for big things because of their intellect. Public education in America today is a disgrace. It's incredible what the challenges are. Nobody, oh, the teachers union, look what they did. You got this guy, what the hell does he call himself, the mayor? The teachers union got in back of him in the primary. And here we got this guy. I hope he's one term, but who the hell knows? But the fact is, public education today is a national disgrace. It's a local issue that has to be really there has to be enormous involvement by parents local leaders of the local issue.

55:50Let's do away with the Department of Education. It's a local issue because that's a waste of money. Well, I don't know if it is or isn't. I don't know. That'll help. Do you agree with me that we can do a lot better in public education? I do. I agree that we have to do. And what's the whole purpose of the Department of Education? Getting those devices out of the schools, not having kids online in the middle of school, and that's happening. And more and more states are acting to take those away. I'm actually worried about AI getting in the way of people learning how to think for themselves. I think there's a number of things that we have to do that would have the objective of improving our public education.

56:29Senator, thank you for joining us this morning. We appreciate it. And thank you for your service. Thank you very much. By the way, thank you for your service. I appreciate it. I appreciate it. But go home after two terms.

56:42That's it. That is Squawk Pod for today. Super sized. Sometimes when we have a great show, we change our plans. Like today, we wanted to bring you the full conversations that you can only get on Squawk Box. Thanks for listening. Our show is hosted by Joe Kernan, Becky Quick, and Andrew Ross Sorkin. Tune in weekday mornings on CNBC at 6 Eastern. Get the best of Squawk Box right into your ears when you follow this podcast wherever you like to listen. All right. Have a great Tuesday. We'll meet you right back here tomorrow. We are clear. Thanks, guys.

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