Transcripts For CNBC Squawk Box 20170505

U. S. Equity futures at this hour have been a bit weak in the for the morning. You know what . Just the dow futures. That might have something to do with what becky is going to tell you about. The s p is actually up a point. The nasdaq is up about four. The nasdaq had some rough sledding lately. The dow is the index down today. Down about 21 points. Crude prices coming off a loss of about 5 . Wti posting the lowest close since november. Joe, i ae lewd eluded to it. Its sitting there at one price, then a totally different price. You think it has to do with the world we live in now . Absolutely. At 11 20 p. M. , oil is trading 45. 25 and the next hour 43. 76. How does that happen . Were the world is chasing alpha, when the quantitative models see an opportunity, which they see in oil, thats where all the activity is. It wasnt an overweight trader with fat fingers . No, and not pure fundamentals. Fundamentals are deteriorating for oil. It is seeing the opportunity, lowvol world. You go around, talk to the hedge fund desks, activity in oil. First friday of let me just think about this. First, we will get the jobs report at 8 30 a. M. Eastern. Polled economists predict the economy added 188,000 nonfarm jobs in april. That would be a rebound from the 98,000 jobs added in march. The Unemployment Rate is expected to tick higher by 0. 1 , to 4. 6 . More jobs predictions in a moment. I dont know whether you know where im going with this, becky. Its friday, and its the 5th of may, have i got that right . Man that is setting me up for serious cinco de mayo. Xwyeah, im talking tequila, margaritas. I dont need much of an excuse on a normal day. Thats not true. When you said that at the top of the show, i was laughing with the guys here, how is this different than any other friday. Wow. May 5th and its thats really good. You remember paul mccardny who used to be a total stoner. He got busted how many times on airplanes . Now he likes a nice margarita and some chardonnay. Thats my life, too. And a mint julep for this weekend. I dont like bourbon. I dont like bourbon. Have you had one . Yeah. I dont like bourbon. I dont. Im sorry. You . Are you going jims place . Jim cramers place . Thats a big mexican hangout. Becky im sorry, theyre telling me, you know, this is like you have to get that she has big news. Ive seen it. I knew this happened. Its very interesting. Lets hear it from you about Warren Buffett and one of his big investments. All right. Joe, you have been questioning Warren Buffetts investments in shares of ibm for quite awhile. He started about six years ago. Since that time, ibm has come out quarter after quarter where revenue declined. Thats five years of declining revenue. Buffett had been patient with n this, talked about how he liked the company was buying back shares, how they boosted the dividend, all those things were good. If you look at that investment over the course of time, buffett has made money on it but not as much as he would have had he invested in an s p 500. We caught up with buffett last night and asked him about the earnings. You know the street was disappointed by what they saw with ibms earnings. I asked if he was, too. Heres what he had to say. Well, i wouldnt say the specific earnings disappoint me, but i dont value ibm the same way that i did six years ago when i started buying it. Overall i think the six years that i revalued it downward. When it got up over 180, we sold a reasonable amount of stock. You sold a reasonable amount of ibm . Right. Least that i had seen you owned Something Like 13 billion or 14 billion of worth dont down the price. Im trying to think back the number of shares. We owned about 81 million shares. When it got over 180 180 a share. Yeah. Compared to the valuation then that i thought was appropriate, we started selling stock. Some of that was sold in the First Quarter. Most sold in the First Quarter. Some sold in the second quarter. How much did you sell . We sold about 30 . 30 of the shares . You owned about 9 of the shares outstanding at ibm. If you look at it this way, we had 81 million shares. So we probably sold in the area of 24 million, 25 million shares. But that was at a higher price. You were selling at 180. That stock has come down significantly since the earnings, i think its closer to 160 a share. Yeah. Would you still sell. I dont think we would be selling. We could buy. I continuously look at what they do. I look at the price of the stock. When it was over 180, i looked at what was happening and everything, they have run into tough competition. Why are you telling us this . They have things coming out in a week, and we have the annual meeting. Questions have come up about ibm, i would feel like i shouldnt get cute in terms of having it a week later, people looking back and saying what was he saying at the meeting. So, have you talked to ibm about this at all . Ginny rometty was out a few weeks ago. They had had some stock watch i dont know whether viewers are familiar with it, but there are stock watch firms, i dont even know their names, i dont know how many there are, but they a lot of Big Companies use them. Berkshire does not use them. They report to management who they think is buying and selling. In fact, i dont think ive ever even read a story on them or anything. I think it would be very interesting to know who they are, how much they charge, how they get their information. Because weve had that happen four, five times that a management will say they wonder theyre sort of hearing something, or something of the sort that we may be buying or selling. Like i say, i dont know quite how they get the information. But Ginny Rometty asked you about that . Yeah. She wondered whether it was true. They had gotten reports, or she had gotten reports. I said it was try. I didnt tell her how many shares or the rational or prices or anything like that, she said she whatever firm does that, that they had informed them that they thought we were selling. I said, well, we were. Or i had been maybe. Can you tell us again why you sold the shares . 180 doesnt seem like a ridiculously expensive fries consider i price considering where you bought the stock and where you hold it. Stock doesnt know what you paid for it. There you have it hes sold out of a third of the position. Sounds like he would have sold more shares had the stock not dropped so precipitously. He did say when we talked to him if shares were low enough, he might consider buying again. But hes not actively buying or selling at this time. Very interesting. You Start Talking to him about why he does this, well get into this later today, he said things have changed in how he sees the company. They have not lived up to his expectations in the five or six years since they started buying or their own internal expectations as well. Guys . Was fascinating. I tell you what i was saying, watching him the whole time, i think about a lot of things, its like if he sold a third, i dont think i would want to tell people that that Warren Buffett sold, because he has twothirds left. You ask him that, you know, well, yeah. Because he had to tell you in a week. Might as well tell us now. Then when he says, i might buy more. Im not sure i believe that. I think if he had it at 180 again, i think he would probably try to get out of the other twothirds. In baseball, like if you hit. 350, youre the greatest hitter of all time. If youre a stock picker, if you do 51 right, you can make a lot of money. This probably, warren would probably concede not one of his greatest picks over the course of his career. Hes kind of copping to that a bit. When he says he might buy more he has to say that. He said he says thats based on price. He said he is always looking at the price. But why would he buy by the way, joe, i did ask him if this was a mistake. Well play back what he said to that later this morning. I love hes still so competitive and still it kills him to not, you know, do everything where you think i think its hard, now that you still own twothirds and the public knows how you feel about the company he had to tell us. It becomes much more complicated going forward. I agree. How he deals with the stock or not. It is complicated, but i think he will buy. You think hell buy. I think he will. I think he would defend the position. If the stock falls, i think he would buy. To your point, does this meance . I think the question is, becky, is his frustration with management, is his frustration with the strategy . Ibm acquired 50 Small Companies since Warren Buffett has taken a position in the company. That has not been able to still lace any fo stimulate any form of growth. He did not take any swipes directly at management, which does not surprise me either. Thats kind of the Warren Buffett way. He doesnt tend to do things like that. So he didnt take swipes. I dont know if that indicates hes frustrated or not. He did say the management has not lived up to their own internal expectations and that the competition has come in and been more impressive. When i started asking him about who in the competition, he singled out jeff bezos again. Well get into that tape later. Just talking about the great job jeff bezos has done in amazon web services. Let me ask this joe, you are seeing the stock now off about 1. 8 , 2 . Rightfully so. Was that the buffett premium in this stock . I think there clearly was a buffet premium. Was it a 2 premium, 1 premium, 5 premium . I would say 5 , maybe even more, 7 , 8 . Is there any premiums built in now that we know the shares he does . I dont know the answer to that. The market will tell you over the next month or couple of months what the premium is. Again, you go back to the fundamentals of the company, the incredibly disappointing thing is we live in a world where technolo technology, they check the box because they have the growth and cash. Free cash flow has declined for ibm over the last six years. Cash flow on the Balance Sheet is somewhere around 10 billion, 15 billion. Why is that . Becky, did he speak to any either lessons about this or how it might relate or impact his thoughts about his investment in apple . Over the past year, he has piled into apple. Everybody said, well, hes actually now now he might be shifting stripes a bit between the you can see a trend between the ibm investment and now apple. The idea that its a brand. Youre embedded in peoples lives, which is something he thought was true of ibm. Any conversation about that . Maybe it will come up this weekend. I talked to him about apples earnings, too. Well tell you a bit later, well play some of that sound probably as well. I asked if he had been disappointed like the street was about apples earnings. He said he is not. He said he buys managements explanation that the reason the iphone sales were down is that so many people are waiting for that next iphone. He says he buys into that completely and it buys into what he has been hearing from the nebraska furniture mart, a retailer he does his own research with. I dont even know that he would look at apple as a Technology Company at this point either. Sounds like its a consumer stock to him and a sticky consumer stock. One that people get into and theyre into the ecosystem, they stay there. That sounds like the research hes done around this, not the technology, where are they with the latest, greatest thing. He has gone into this with the typical way he assesses a stock which is what he understands. Technology is something he says he still doesnt fully understand. I thought joes point was interesting, he would have to defend his position. Its almost like a company that starts buying back its at 140 or something, i have twothirds left. I will put some support under it. Right. Thats not a great way to go. You do it so you can stem the decline, sell at a higher price. He has an expression he come ply ka compliments people specifically, and trashes generally. You compliment by name and criticize by category. Which is why he will not criticize ibm management specifically but gently saying that if you have declining revenue, blah, blah, blah. Yeah. Its tough. Its tough. You know i wonder about the the endorsement that Ginny Rometty benefited from. Whether that starts that premium starts evacuating. That was a huge premium. Thats what i mean. A huge premium on her career and the business itself. It gave her license to walk into a lot of different meetings, and also different relationships with potential clients, given the good seal of approval that the butffett name creates. Any stock he invests in, probably carries around that same sort of seal of approval. This company has had to be reinvented six times already. You look at how difficult things are. How many different people tried to run yahoo . It finally sold. Yeah. Becky, thanks. Speaking of yahoo well talk to sue decker later this morning later this morning. Right. What would you do . If i was running ibm, transition to the cloud, i think. Thats just me. They tried that. No kidding. I dont even know what im saying. What else is new. Well be back im kidding. Well be back with ceos of berkshires other businesses. Benjamin moore i think i could run. A bunch of different colors that dont run. You know what i mean . Right . Make sure you dont you know, spill any chemicals anywhere. Brooks running, that would be easier. And cs candies. Monday, Warren Buffett will join us live for three hours, well get a lot more from the oracle in addition to Charlie Munger and bill gates. Coming up, the countdown to the jobs report is on. Well get the april employment numbers at 8 30 a. M. Eastern time. Up next, predictions and how the number could impact the feds next rate hike. Squawk box returns in a moment. Brian, i just need to know if the customer app will be live monday. Can we at least analyze customer traffic . Can we push the offer online . Brian, i just had a quick question. Brian . Brian. Legacy technology can handcuff any company. But yes is here. Youre saying the new app will go live monday . yeah. With help from hpe, we can finally work the way we want to. With the right mix of hybrid it, everything computes. At crowne plaza we know Business Travel isnt just business. Theres this. a bit of this. Why not . Your hotel should make it easy to do all the things you do. Which is what we do. Crowne plaza. Were all business, mostly. Usaa gives me the and the security just like the marines did. The process through usaa is so effortless, that you feel like youre a part of the family. I love that i can pass the membership to my children. Were the williams family, and were usaa members for life. She was nice. Didnt flip us off like that guy i saw our guy going out. He goes out and yeah. That guy the other day, just gratuitous gave us the bird. Hi, were looking at times square. We have a tv show, we like you. How is new york. No reason. Flips the bird. Times square. The society we live in now. The countdown to the april jobs report is on. A little more than two hours from the number of the morning. Joining us now is Jim Osullivan from High Frequency economics, and joe terranova, our guest host. A fast money trader. Whats your number, jim . Is it different than the 0. 7 gdp or is it all related . I think the gdp is a standalone to statistical noise. Im at 180 for payrolls. March was weaker, 1 0,000. I think weather was a factor on the up and down. More neutral in terms of weather this month. Last three months averaged 178. More of the same from that perspective. Which is good. 180 is pretty good. Could they get more accurate numbers and would it kill us to do it quarterly . You can take a threemonth average. Is it worth it to do it monthly and get whipsawed, they revise it, add, subsubtract. It could be off by 100,000 on any given month. A lot of head fakes. Whats the average going to be for three months . 180 . With todays number, because youre dropping out the january and including march, probably below 180. If you look at fourmonth average, year to date, because it has all the pluses and minuses of weather. The net of it is the job market is chugging along well. The gdp number looks like an aberration. All right. Second quarter gdp can go from 0. 70 i have 3. I think the trend is around the 2 mark. Its been good enough to generate good job growth. What about the inside baseball numbers today . What about wage growth . What about hours worked, all those other things. The work week was probably held down by weather a bit. It probably goes up. So strong on the work week part. The wage number, 0. 3 on the month, a pick up from twoish two years ago. Not a dramatic change, but accelerating. To the expetent the unemploymen number is trending down what about retail. Trending 15,000 to 20,000 growth. Trending 10,000 less than that. Izing retalosing retail jobs as go from brick and mortar to ecommerce what is your expectation there . As you describe it is right. Theres probably a structural change there. Even if the trend in overall employment is 180, theres probably slowing on the retail part. The manufacturing numbers look better. Clearly theres been a pick up in manufacturing in the past year. Export numbers look better. Business investment numbers look better. The mining numbers which were plunging a year ago are adding a bit. The net of that is probably not a lot of change overall in the trend. Were getting 180,000 per month, which is strong. Its 1. 5 per year. At a time when Labor Force Growth is probably 1 at best, which is a recipe for the Unemployment Rate continuing to come down. And the government hiring freeze, january 23rd to april 11th. That falls middle of the week . It was never a big deal in the numbers. In terms of net employment growth. Not a lot of turnover for the federal government. Its not as if you ever saw a big negative from the freeze. The fed is watching this, not gdp probably. Absolutely. This doesnt turn them into, like, rav individual ha like, reasabid hawks. The labor market is chugging along chugging, but not overheatingful. We were starting to see unemployment growth, wage pressures, you continue on this path, wage pressures intensify, inflation picks up. No, right now theyre on track. You dont believe theres a bunch of 40yearolds to 50yearolds in the 62 of whatever that number is, where people are not the Participation Rate, you dont believe they can come back . You think its a tight market . Yes. Not to say that the Participation Rate cant hold where it is. Why cant it go up . In the context of a declining secular trend, the aging population is i just said 40 and 50 are some of those people in the 62 . Thats not old. You know that. Its in the middle. Early middle. Even a flat Participation Rate is strong rel liative to t secular trend. All right, jim. Joe, me and you stick around. Im here. Youre here to 9 00. Three leaders of berkshire, the Portfolio Company will join becky in omaha. After the break, the ceo of benjamin moore, brooks running and cs candies. Squawk box will be right back. Would you call your purchase of ibm a mistake . It was a mistake in the sense i could have done better if i just bought the s p. There were a lot of things to make money on that we missed. I missed apple earlier. Monday on squawk box, a special event you cant afford to miss. Three hours with Berkshire Hathaways Warren Buffett live from berkshires annual meeting, plus Charlie Munger and bill gates will sit in for the 8 00 hour. Thats monday at 6 00 a. M. Eastern on squawk box. Predictable is one thing you need in retirement to help protect what youve earned and ensure it lasts. Introducing brighthouse financial. A new company established by metlife to specialize in annuities life insurance. Talk to your advisor about a brighter financial future. I cant wait for her to have that College Experience that i had. The classes, the friends, the independence. And since we planned for it, that student debt is the one experience, im glad shell miss when you have the right Financial Advisor, life can be brilliant. Ameriprise its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . Welcome back. Youre watching squawk box live from the Nasdaq Market site in times square. Good morning. Welcome back to squawk box. A quick look at u. S. Equity futures at this hour. Crude moved in a big way. Dow looks like it would open down. Nasdaq opening about 5 points higher. The s p 500 looking to open higher as well. A little over a point. Some news out of washington. House republicans passing the healthcare bill yesterday. Now its the senates turn and it could be months before we get a decision on obama care replacement. Some members of the senate indicating they may write their own bill from scratch rather than making tweets to the house bill and sending it back to hem. At 8 40 a. M. Eastern time, health and Human Services secretary tom price will join us live. We will head over to see becky now. We are. But just was going to mention that the journal has a good piece on the obamacare replacement. Well talk to tom price, to. Democrats and media, theyre doomed. The republicans doomed, doomed, doomed. The only thing that would have been worse is if they didnt pass it. Oh, my god, then they would be domed, domed, doom edoomed, do. If they couldnt pass t theyre doomed. Before you go to peckky let me see your i want to show. We have something coming up special who will appreciate this. The socks or the shoes . In honor of mr. Buffett and actually the next guest youre like cat in the hat. These are limited edition brooks sneakers that are Warren Buffett sneakers. Oh, my god. Can we show this . Can you see the back of that . Warren buffetts head is right there. And inside the shoe is Warren Buffett. What do you think of that . Nice. I guess thats good. Yeah. I can see i feel like im stepping on warren every time i have my foot in there. Its a quite picture of him. Becky they run small, the brooks. Do yours fit . Back to the Berkshire Hathaway annual meeting. Becky quick is there. We have a pair right here that i have not tried on just yet. But they are sitting here. Andrew got his early and tried them out. I dont know, joe, ill give them a try and let you know if theyre small or not. Nice looking shoes. I like the shoes, its the socks i have issue with. Well talk to these guys who are watching all of this take place. Among the companies that Berkshire Hathaway knows are some Consumer Brands that make batteries, to paints, to shoes and chocolates. Joining us now are jim weber, ceo of brooks sports. These are his shoes. Mike searles, ceo of benjamin moore, and brian kinsler. Welcome to all of you. Thank you. One thing we talk about with Warren Buffett, we ask him about the economy. We asked him if it felt like a 0. 7 , he said no, it feels like a 2 economy. I thought maybe you could sell e. Tell me what youre seeing. Jim what kind of economy does it feel like to you . It feels like a 2 economy to us. Uneven, traffic is skittish, but all in all people are active, running, spending money. So were seeing growth this year, which is exciting for us. It was very uneven. You are in a difficult position with some things happening in your industry. Well talk more about that. Youve been able totch it. Mike, how about you . I feel good. I think its a 2 economy. The metric we look at is existing home sales. Thats a great place holder for consumer confidence. Biggest purchase a consumer will make in their lifetime is a home. March was up 4. 4 . The fastest pace of existing home sales in a decade. That feels better than 2 . Feels good. We will talk more about existing home sales in a moment. Brad what are you seeing when it comes to candy sales . We gauge our business on how we do in major holidays. We came through valentines, easter. Looks like well post a Record Number this year. Things were much better than last year. I would say its much stronger than a very small less than 1 . Why do you think it feels different this year than last year . Whats stronger . How much stronger . Partly the timing of valentines and easter. Valentines last year was during president s day weekend. Thats a difficult time forrous. For us. And this year easter fell early. Qu we could see in our shops traffic was much better in both those seasons. That usually results in very good numbers for us. If traffic was better, thats one great indicator. What are consumers willing to spend when they come into the stores. The average ticket about the same or are they willing to drop more money . Its up. I would say we were up 5 on the average sale. People have a bit more money. Our primary markets are currently the western u. S. , california in particular, and the california economy is doing pretty good. Really. You are expanding to other places on the east coast. I see you now in airports far from the west coast. Yes. We are in the airports. The airports have been very dizzy as well this year. We see that in shipments to airport locations. Theyve been good. Customer traffic through there is strong. So, fwa shg, again, we get a go across the country. Overall its pretty good for us. Mike, lets talk about existing home sales. You say thats the most important metric for you . Yeah. First thing you do when you buy a new home is paint. Unless you are buying a brandnew house, in which case its already done. In the First Quarter of this year, a new household formations for the first time in ten years, more people were buying homes than renting. Thats a great indicator of millennials finally getting out of the nest and getting their own place. Weve been waiting and waiting and waiting for this. Weve been waiting. Theyre finally coming into the marketplace. In terms of what drives millennial sales and what drives the existing home sales, how big of a factor are Interest Rates and that mortgage price . Weve had 61 consecutive months of average home sales increasing. And 21 consecutive months of supply dwindling. So theres pressure on housing prices coming up if youre buying a home you know that. I think i read recently that since 2012, and the downturn of the housing bubble, housing average housing prices have increased 40 . Incomes increasing 12. Thats the only concern on the horizon is Price Inflation on housing. Okay. Jim, lets talk about whats happening in your sector. Its been difficult, we heard from Companies Like underarmer that they had issues because of stores like sports tor s autho closing down. Less places to sell to the consum consumer. How has that impacted you . At 25, 35 is when you invest in your fitness. So theyre running, theyre in the gym, thats the key for us. The athleisure trend comes and goes in cycles. In many ways we become their second show that they begin to invest in because theyre active. So what were seeing is there are winners out there without a doubt. Dicks Sporting Goods is doing well, rei is doing well. Theyre connecting with runners and customers where they want. Are they online . You bet. But we think about 25 of our sales are already going through a website somewhere. Its going to continue to evolve. What kind of headwind has it been to this point . Its hard. Last year we lost 900 stores that we sold through. That was an air pocket in our sales, without a doubt. Its coming back this year. Were seeing good growth off that lower base. What happened . Did that impact your sales as well . Over 400 Sports Authority stores, 2 0 stores from other regional Sporting Goods players. Its happening. Theres consolidation happening at retail. Lets ask about the border adjustment tax. You all deal directly with consumers. Jim, you start with that. What would that mean if the border adjustment tax went through . In Sporting Goods and retail, its a big deal. Most of us are global brands, we sell all over the world. Were worried about retaliation. Were entering china this year, over 30 of our sales are overseas, it should be 50 . It would be about 15 of revenue in taxs at the border. Its a big deal. The argument in favor of it is that the dollar would adjust. Yeah, this audience knows the forces on currency are huge. We dont think you can depend on that. So many forces impact currency. It may not happen right away. Mike, do you have any concerns about the border adjustment tax . Really less in our business. Raw inflation and material coming in is a concern as oeblt h oil has stabled. Brad, you make the candies here, too. We do. I would not think we would feel a major impact on Raw Materials or packaging that comes in. But anything that takes more money out of the consumers product would hpr pocket would sit us at some point. Joe was talking about you all coming up, he thought maybe he could run any of your three businesses, that he might be okay at doing that. How difficult is it . Tell us from joes perspective, is this something that somebody can sit down in the seat and do . Brad . I would say, joe, you know, im not sure if you can develop a new piece of candy, but that would be a critical part of the job. Not having seen that, im not sure i could give him a recommendation at this point. Mike . Joe, i came out of the apparel business, and im still learning the paint business after 3 1 2 years, i think were all replaceable. You could probably do a fine job. Jim . If he can get up in the morning and lead the 5k run, he will do well. And i have a shoe that fits him as well. Do they run small . I think i need an 11. You dont have to send me a pair, but andrew had 11 1 2. That didnt fit. And the 10 1 2 were a little snug. But i love brooks shoes. I do. And the pair that i did get were a little tight. So you know, not for nothing, you have my address, becky. We have widths for you. Whats that, joe . I was saying i may have more not saying i can do that. I said it would be easier for me to do a paint company than ibm. That was my point. Thats true. Thats true. All right. These are things we understand and we use so we feel an affinity to these things. I dont think the world needs me running any the ceo of anything, other than maybe just squawk box. Coceo. Okay. Thanks. Well see you in just a minute. When we come back, much more reaction to buffett selling that third of a stake in ibm. At 7 00 a. M. , amco investor ceo Mario Gabelli will join becky. Managing Portfolio Risk and liquidity and generating income. Thats real etf innovation. Flexshares. Built by investors, for investors. Before investing consider the Funds Investment objectives, risks, charges and expenses. Go to flexshares. Com for a prospectus containing this information. Read it carefully. Welcome back to squawk box. The french going to the polls this sunday to choose their next president. Of course one of the most consequential elections in decades because it has wider implications for europe. One wants to keep the euro as one, the other wants to abandon it. Michelle carusocabrera breaks it down for us. Good morning. Reporter this election is so consequential that even former u. S. President barack obama felt compelled to weigh in. He endorsed a candidate, emanuel macron because he supports more integration with europe. I know that you face many challenges, i want all of my friends in france to know how much im rooting for your success. Because of how important this election is, i also want you to know that im supporting emanuel macron to lead you forward. To the critics of emanuel macron, Barack Obamas endorsement likely will prove what they already think about him. They think hes a globalist, which for them is an insult. He gets booed when he factories because he weakened labor laws when he was minister of the candidate. The other candidate, Marine Le Pen also suffered attacks. People threw eggs at her yesterday when she was campaigning. She would like a much stronger role for the french state in the economy. Markets are acting like this is a done is deal. Theyre complaisant because macron is so ahead in the polls, but more than 20 points. However Claire Fournier caught up with Marine Le Pen this morning and she told claire people are making the same mistake they did in other elections. Translator victory is in our reach. The media seem not to hear the anger in our country that will express itself in the polls on sunday. Reporter so, if the polls are wrong and Marine Le Pen is president on monday, all hell will break out in the markets, considering what we have seen thus far this week. Back to you. Thanks, michelle. Got to go. Wish we could talk. I saw a guy on i24 on with wilf earlier. Speaking with a french accent, sounded like the media here before it. I was like okay, ill take your word for it wetchlit. Well see on monday. Coming up, much more reaction to Warren Buffett cutting his stake in ibm. The stock is lower today. Down 2. 5 . Well talk to buffett biographer carol loomis after the break. Squawk box will be right back. Stay with me, mr. Parker. When a critical patient is far from the hospital, the hospital must come to the patient. Stay with me, mr. Parker. The at t network is helping First Responders connect with medical teams in near real time. Stay with me, mr. Parker. Saving time when it matters most. Stay with me, mrs. Parker. Thats the power of and. Thithis is the new new york. E . Think again. We are building new airports all across the state. New roads and bridges. New mass transit. New business friendly environment. New lower taxes. And new University Partnerships to grow the businesses of tomorrow today. Learn more at esd. Ny. Gov welcome back to squawk box, everybody. We are live at the Berkshire Hathaway annual meeting. We are here in omaha. Standing right by at the Berkshire Hathaway annual meeting and im joined by carol loomis. She has been sitting down, someone whos been with us for quite awhile. She is somebody who has edited Warren Buffetts annual report for how many years . 40 years. This is the 40th year. 40th year. 40th year. And what have you found along that time, carol . What have i found . Well, that he has he has a great instinct for the right things to say. I helped him a little bit with how theyre presented. But hes a great writer and the content of that annual letter is amazing. I think every year. Yeah, you know, one of the things that he surprised us with last night, carol, was the news that he has sold about a third of the stake in ibm. I want you to listen in to why he sold that those shares in ibm. He explained his decision to us a little bit last night. Folks, why dont you listen in to this . A period when im sure that its been tougher than they thought, and its been tougher than i thought. But i was wrong. I dont blame them. I mean, i get paid to make my own decisions, just like an apple or something of sort. And, sometimes theyre right, sometimes theyre wrong. I think i think ibm is a big, Strong Company. But theyve got big, strong, competitors, too. So, carol, what he said was that ibms a big, Strong Company. But they have very big, strong competitors and that look this is something are he still owns about 50 million shares. Are you surprised to hear Something Like this, though . Well, i think everybody has been wondering, as ibm has sort of not stumbled, but sort of moved more slowly, and obviously he was reaching for, i think he has been wondering whether there was the promise there that he had thought was there. Im not surprised to hear it. Ive always thought of his cost basis as around 170. And so hes made a little money. And warren is very good about admitting mistakes. He is not someone to say, well, you know, i really, i got let down by somebody. That is not his style at all. I think its a very good one. In fact in the annual letter he traditionally opens with a few of the biggest mistakes he thinks hes made. Absolutely. And how many times have we heard about dexter . Dexter shoes. Right. I mean he takes every opportunity. If you have him on again, i bet you hear about dexter shoes. Probably right. We had talked a little bit earlier around the table with joe and andrew about how hes not somebody who ever criticizes by name. He criticizes by category, and praises by name. Uhhuh. But we were trying to figure out if he was disappointed and how disappointed he might be in ibms management in this. Well, they had a blueprint. And i know that they thought they could follow that and it just didnt work and hasnt worked as fast and warren has stepped up and didnt diminished his position. Lets talk about another thing that youve been following for almost ten years now. Thats a bet that warren made with the Hedge Fund Manager ted sidas where he got to pick five different hedge funds he thought he would do well over a ten year period. Warren buffett picked the s p 500. As we near the end of that bet as you have laid out and been chronicling, buffett is far ahead at this point. What are the results after ten years . Well, its just a its a devastating loss for the hedge fund. And warren was so strong about it in the annual letter. That was one of the strongest pieces that he has ever written in there. And it just did not work. Sidas proposition that over the ten years the hedge funds could beat could beat, it just didnt work out. It was not and the first year, as you may remember, was 2008. Right. And it looked like it was going to be a walkaway in the other direction. Then after that, as warren said, the tortoise caught up with the hare, just gradually, gradually. And then i had to start writing pieces for fortune that said okay now theyve moved ahead. And it was a real trend in there. And it was amazing how that worked out. Well, carol, thank you very much for your time. Were going to see you here all weekend. Good. Again, folks, carol loomis. When we come back, Mario Gabelli will join us. Im dr. Kelsey mcneely and some day you might be calling me an energy farmer. Energy lives here. Its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . Welcome to this special edition of squawk box. We are live in omaha, nebraska, this morning getting ready for the Berkshire Hathaway annual meeting which will take place right here in this arena. Breaking overnight Warren Buffett telling us exclusively that he sold shares of ibm and revalued the tech icon yawnward. Well have his comments in just a bit. Plus the ceo of Specialty Chemicals company lubrizol will join us. A member of the Berkshire Hathaway portfolio. And susan decker is going to stop by. Second hour of squawk box live from omaha begins right now. Live from the beating heart of business, new york city, this is squawk box. Good morning welcome back to squawk box here on cnbc. Were live at the Nasdaq Marketsite in times square im Andrew Ross Sorkin along with joe kernen. Becky quick live in omaha this morning at the Berkshire Hathaway annual meeting. Shes going to join us in just a minute with Mario Gabelli. Check out the futures at this hour. The dow off about 6. Were now 90 minutes away from the most important item on todays Economic Calendar which is the april jobs report. Economists looking for 188,000 new nonfarm jobs with the employment rate ticking higher to 4. 6 . Those are the numbers to beat this morning. Earnings out this morning as well from Health Insurer cigna. A lot of people watching this one. Cigna earned 2. 77 per share above the estimate of 2. 45. Revenue also exceeded forecasts helped by customer additions in cignas commercial business. And also, weve got a 6. 4 billion takeover deal in Life Sciences industry this morning. Vwr supplier of products and services for scientific labs is being brought by privately held avantor. Its blow yesterdays closing price. The price had jumped earlier this week when reports of talks between the two first had surfaced. Getting better. Yeah. You saw that, cold, had never seen that before, right . Yes. Huh . Syllable down and out. Boom. Boom. We want to get right now back to omaha, the Berkshire Hathaway annual meeting in omaha. Becky quick has breaking news from last night. Becky . Hey, guys, im sorry. Were having a few technical issues. Im going to be listening to you guys on the phone from here on out. If i dont respond, im not ignoring you. In the meantime the beck shire hathaway annual meeting hasnt officially kicked off and already we have some big news. The billionaire investor and chairman and ceo of berkshire Warren Buffett telling us exclusively that he has sold about a third of his stake in ibm. I asked him what changed at the company to make him rethink his ownership. Well, it hasnt done what five or six years ago i expected would happen. Or what the management expected would happen. I mean if you look back to what they were projecting, and how they thought the business would develop. And i would say what theyve run into is some pretty tough competitors and whats really fascinating is that you know, amazon, which ive never seen a guy succeed in two businesses almost musimultaneously that ar really quite divergent in terms of customers and all the operations youre talking about amazons shopping business and amazons Cloud Business. Jeff bezos, i do think, is the most remarkable business person of our age. Ive said that before. And to succeed in two different big businesses, in a huge way, is really i cant think of another example like it. And he talked on charlie rose about three or four months ago, which was really good. He talked about how in the cloud he thought it best maybe hed get a twoyear run or a sevenyear run. So hes a tough competitor. You have some very smart people competing in that field. When you talk about snem not doing exactly what you expected them to when you look at it five or six years ago, is that in terms of the revenue continuing to decline for 20 quarters in a row or is that them not building up the Cloud Business . Based on a lot of different types of businesses. But the earnings have been obviously disappointing. I mean five or six years ago, i think they were earning 20 plus billion pretax. And maybe its 13 billion now and i dont think the quality of earnings has improved. So its, you know, its been a period when it, im sure, that its been tougher than they thought, and its been tougher than i thought. But i was wrong. I dont blame them. I mean, you know, i get paid to make my own decisions. Just like an apple or something of sort. And, sometimes theyre right and sometimes theyre wrong. I think ibm is a big, Strong Company. But theyve got big, strong competitors, too. Joining us right now with reaction to the move and other market thoughts is Mario Gabelli. He is the chairman and ceo of gamco. Mario, of course, is also a major shareholder of Berkshire Hathaway and has been coming here for years and years and years. Mario, thank you for joining us. Well, delighted to be here. Talk about stocks. Lets talk about stocks. We just heard what buffet said. I dont know if you have any thoughts on ibm. But he basically admitted he made a mistake with this. That he would have made more money if he put it in the sfund. Well, he would have made more money if he put it in amazon and bezos and how jeff is changing the world. Theres always almost portfolio adjustments. Well see when it was filed. Hes got 45 days after the end of the quarter to file it. Anything you want to tell us about whats coming out in your 13f . I dont remember. It was filed last night. That was a different day. Its no 9 complicated. Were looking at companies that we have compounded and accumulated knowledge or about 40 or 50 years. So for example in the ecosystem of content and connectivity. What do we follow . How is consolidation taking place . Whats going on with deregulation. The new head of the federal communications commission, how does that work . What is going to happen in broadcasting . Theres a love fest there. A love fest becky. Meaning mergers about to happen . Mergers about to take place. Clearly the auction ended. With regards to the most recent round of spectrum. Theyre now at t and apparently virizen are fighting over Straight Path and tribune is up for play. At least thats what we think. And whether its sinclair or fox trying to put their arms around it, so theres a lot going on. Lets talk about those piece by piece. First of all you bring up Straight Path and the battle that seems to be taking place between at t and were guessing verizon. How does that play out and as an investor how should you play it . At the moment theres only one company that has spectrum in the 5g category that accumulated it during a distressed period of tension, and that was Straight Path. Its a small company. 13 million shares of stock, unfortunately, not that small anymore. Gone from 30 to 155. So, you know, in that, what else can work in the content of 5g and how important is that in the future . And thats going to be important. And would you be a buyer of an at t, a verizon, or any of the comcast, any of the big yeah, we Like Companies that also have going to have a potential exit strategy. Telephone is doing at t is doing the deal with time warner. That makes sense for them. Clearly what is verizon going to do . Theyre going to do something. Then you go back to those four companies. Microsoft, the apple, the alphabet, and so on, that have 2. 5 trillion market cap. Theyre putting a toe in content. Will they buy one of the companies . Will they in close by disney, in close by viacom. You think disney is actually in play . The world is changing. As bill is saying, the times they are changing. Everything is in play in terms of this is a big market cap. Its got 150. But apple has 700 billion market cap. Im not saying its in play. But the point is theres a lot going on within the framework of whos doing what in content and connectivity. And then theres distribution. Cable companies in latin america, that look like theyre being prepared for some kind of a joint venture, merger, or Something Else like that. So thats tifric. Then theres obviously infrastructure. Laguardia, duh, the airport needs help. And so what else do we need . And how do we get the funding. And independent of the funding you read annual reports, like i read one of granite, a Construction Company in california, weve got to fix our roads, bridges, inland waterway, avionics. Forget the money, the answer is its got to be done. How do i play snath where do you play it . I buy Companies Like case new holland but also the truck companies. Navistar is one of my favorite, but theyre also being bought and volkswagen has put a big foot into that one. Why the Trucking Company . As an infrastructure i would think of the companies building the infrastructure they are. But theyve got to move stuff. As a play the whole ecosystem with regards to infrastructure. Case holland makes equipment, Farm Equipment like deere and the stocks around 10. 50, 13 billion shares. So its a fairly nice Little Company that you can i hadnt thought of it playing that far down the ecosystem. Youve got to go the whole way. Then Equipment Rental Companies Like outside right in front of the center here you go out and see the Companies Like sun belt, glg, which Companies Make the aerial work with platforms and so on. Your hotel, you see a little fork lift. I saw that stuff. You have Waste Management oh, yeah, thats another one, public services, and Waste Management, the notion of gathering the data from construction sites, but thats a subset. Then recycling of cans, water, waste, and both of these companies have great cash flow, inflation is picking up in my judgment, and they are going to have a better revenue mix to cover their sg a. So sg a is going to rise a certain level unless the volume goes up, the mix improves and you get higher revenues per whatever youre delivering and the land fills are a great entry. Youre looking at this as an economy thats going to be moving and moving faster because of some of the things that are happening in washington. You just mentioned infrastructure. What do you think about the passage yesterday of the Health Care Bill . Does that send you thinking down any well the, you know, it squeaked by. And to the degree that we as a country need to do a totally different approach to tax structures, i mean we need to go territorial versus global the only ones in the world that do that. We need to look at the rate. And we need to look at what the lobbyists put in like carried interests. Youve got to get rid of some of the background noise. Corporate taxes are 340 billion. Of the 3. 6 trillion that we as a country, estate taxes are only 23 billion. So youve got to get rid of some of these nuisanceite thames that have been in put in there for political not economic reasons. Is that going to work . In a political world probably not but youve got to try. That will help bapsically change the whole attitude toward allocation of capital. But the Bigger Picture is that, you know, the certain stiles of management that resulted in cuba or venezuela have been put on the back burner. What buffett says in his annual, the free market with all its flaws, meritocracy, he calls it Something Different and he talks in intellectual capital and the rule of law, they have worked. And theyre going to continue to work. And thats why we have to continue to be reasonably positive on the outlook. Carol loomis just mentioned something to me as she was walking off the stage. She said to talk to you about deferred taxes. Yes. Because what youre just talking about with some of these issues. 77 trillion billion i looked at it not too long ago because what does that do to the underlying book value right now its a liability of almost 80 billion. Right so 20 reduction youve got 16 billion added to his book and is he going to count that as part of what he looks at when he says ill buy it at 20 above adjusted book. The book was 172,000 last year so project it out to 220 and then that goes to 250 like that if rates drop from 25, 35 to lets say 20 to 25. Right. And apparently she said that thats more than almost any other company that shes looked at but theres got to be companies everywhere that have massive deferred taxes. You start digging through everybodys. I agree. And that is an element with regards to not only that because if you do nonu. S. Taxes and book them at a 35 rate but only pay 10 cash tax that has an impact. Thats not cash. Right. Okay. The difference becky is not cash. Its the book changes, and how buffett the value and how is buffett going to handle Something Like that which he is fully sensitive about. John malone and Warren Buffett are terrific, terrific warren talks about it a great deal just time i met john had a sign on his office saying youre entering a tax free zone. Buffett wouldnt do that. Hes just quiet about it. But theyre looking at these things well you have to. Its a public company. I run a public company. And my largest cost, my largest cost is taxes. Lets talk a little bit about another area that you think is so important. Thats Live Entertainment. Were sitting in an arena right here. How do you play that theme out . Well you think about the millennials. They want an experience. A lot of people want experiences, we dont, you know, we obviously communicate online and talk online. But yet, how do you play Live Entertainment . So coachella as an example the big l. A. Concert. And you look at Live Entertainment. So i was just in l. A. Last week or a weekend ago and saw live nation. They book venues, amphitheaters. They bring talent there. Where are the locations . Madison square garden at 200 dollars a share is kind of intriguing even though they do some strange things in that position. Basically live nation the stock is 31. They own ticketmaster. Thats not as attractive as the notion of booking the talent, finding the venues, matching them up and we Like National is hot. Reno, nevada is hot. Right. But also is the hudson yards in new york. I mean there are spots in the United States that are really very attractive, and how do we participate in Live Entertainment and how do we get content, and so i like rhp, the stock is 60ish they operate the grand ole opry, they have country and western music christian contrary they have a lot of that and then live nation is a very interesting i think they run a great shop. Then i have companies that are involved in other aspects of that entertainment. Correct me if im wrong and the one that you should buy, derek jeter do you like derek jeter . Everybody loves derek. Trying to buy a baseball team. You can buy the Atlanta Braves for half the price that somebodys going to pay for it. Because . The stock is trading is a tracking stock on the malone echo system. Brtka, or and the stock is around 23 and its worth around 35 and they just opened a stadium theyve got cbo toobb c, real estate. Thats a good tip. Thats not a tip. Your grand kids, not yours but mine, future grandchildren, own a baseball team. Correct me if im wrong but do you own churchill bounce, too . Yes. I thought. Youve got the Kentucky Derby coming up this week. To move the stock from 145 to 160 was a south Korean Company wound up buying double downs from someone else and they have somebody called big fish which is an Online Gaming operation. The Kentucky Derby is terrific. Its live events. Its exciting. Theyre doing a good job of allocating cash flow. But egaming, and esports, this arraiena will be filled by individuals playing esports. And how do i participate in that . Madison square garden is the way to do it among others. Great, great. Mario, we want to thank you very much for your time being here. What will you be watching for this weekend . Anything youre looking to take out of this meeting . I like to see whos coming and what their thought process is obviously but you know we talked about the exit strategy of buffett owning a piece. The last big hug he put on was precision cast parts which oh, of course. And mark is in our hall of fame in part of what hes done what is warren looking at. Where is he going hunting . Forget about what he sold. Okay. That was done. Where is he going . Yes. You mention he has 90 billion in cash and cash equivalents. Yes. Yeah but he can create something. You know, you had a little flirtation with unilever with the 3g so dont watch warren. Watch the guys at 3d. Thank you very much thank you very much. Andrew well send it back to you. Thank you, becky. Say hello to mario. Ill be out there in a little bit to see you guys shortly. In the meantime just got back. Having some flight problems becky. Well talk about that later. Separately the house passing a measure to repeal and replace parts of obamacare. The latest out of Washington Well do it next. And later the ceo of Specialty Chemicals company you were doing so good. You know that company. I do but it hurts me is going to join becky in just a little bit followed by susan decker. Stay tuned youre watching squawk box right here on cnbc. I like russo. His on off splits are the best here. Yeah, but his offensive win shares didnt even break 4. Come on, check out that stopandpop what do you think . My tradeoff analytics indicate no one creates more space on offense. This allows him to nail a jumper from a densely populated urban area. What youre trying to say is from way downtown . I am still learning. I can see that. The power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. The shlike a bald penguin. Tion. Readhow do i look . [ laughing ] show me the Billboard Music awards. Show me top artist. Show me the top hot 100 artist. They give awards for being hot and 100 years old . Well take 2 [ laughing ] xfinity x1 gives you exclusive access to the best of the Billboard Music awards just by using your voice. The Billboard Music awards. Sunday, may 21st eight seven central only on abc. Gop taking a victory lap after the successful house vote to repeal obamacare. Eamon javers joins us now from washington. Good morning eamon. Good morning, joe. It was a boisterous scene in the rose garden yesterday as House Republicans fresh off their victory on the house floor came to the white house to celebrate with the president. Now they will be accused by some of the political equivalent of throwing a champagne bash in the locker room at halftime. But nonetheless republicans said they needed this moment. It was a moment of catharsis to heal some of the divisions that had happened within the republican conference on the way to the victory and the president said this victory was particularly important for what comes next. Tax reform. Heres what he said. Were going to get this finished, and then were going, as you know we put our tax plan in, its a massive tax cut. The biggest tax cut in the history of our country. I used to say the biggest since ronald reagan. Now its bigger than that. Also, pure tax reform. So were going to get that done next. And this really helps it. You saw a beaming speaker of 9 house paul ryan just over the president s shoulder there. This would go a long way to healing some of the divisions between paul ryan and donald trump. The question is where this Health Care Bill goes in the senate. The senate signaled yesterday that it is simply going to write their own bill. Theyre not going to pick up the house bill. Theyre going to start from scratch and that means potentially big differences between the Senate Version of this bill and the house version of this bill. Whether or not they can work all of that out is a big political guess at this point. But thats where we are headed into the rest of the weekend. The president , by the way, is in bedminster, new jersey. He doesnt have any Public Events on his schedule today but they say hes working from his golf club there, guys. Beautiful place. You know, theres only so Many Republican ways to do what they want to do. So, it will be a different bill, obviously. Right. But you know, probably 60 , 70 is just a way its going to be very similar. It will be differences obviously. I dont know if i what the white house says on that is you know, look, as long as the Core Principles are the same were going to be happy with it ultimately. The question is whether the Freedom Caucus and some of those cantankerous members of the house who were so divided if theyre happy with it. Remember Social Security used to be the third rail and anyone that touched it gets electrocuted. So health care is the third rail. Eamon the democrats after obamacare they lost obama won, obviously, but in congress they lost four straight badly. They lost 2010, 2012, 2014, and 2016. In large part because of obamacare. In terms of the house. They got just crushed. I dont think theres anyone left that voted for that plan. So it could happen again i guess. Well the democrats are optimistic. You heard them chanting, hey, hey, hey, goodbye hoping that they can beat some of those republicans of course ask the democrats were the republicans more doomed if they didnt pass it or they did . Because theyd give you the same answer. Might have been doomed either way. Democrats say they should have started with infrastructure. All right. Well thats their thing, infrastructure. A lot of opponents dont even want to do that. Coming up, squawk box will be right back from omaha. With berkshire. Time now for todays aflac trivia question. Mr. Diaz. s a very simpl, were just going to make one small incision here, then were gonna go in and remove your 67 corvette. My vette . Its just a gall bladder you dont have. Aflac paying you cash, so you might have to sell that sweet little muscle machine just to cover your rent. More funny juice. But my papa gave me. That. Car. What do you wish you had . Aflac. Ohh, i love doing that. Health can change, but the life you love doesnt have to. Keep your lifestyle healthy with aflac what in real time . Stomer insights from the data wait, our data center and our clouds cant connect . Michael, can we get this data to. . Look at me. Look at me. Look at me. You used to be the yes guy. What happened to that guy . Legacy technology can handcuff any company. But yes is here. So, youre saying we can cut delivery time . Yeah. With help from hpe, we can finally work the way we want to. With the right mix of hybrid it, everything computes. Now the answer to todays aflac trivia question your Insurance Company wont replace the full value of your totaled new car. The guy says you picked the wrong insurance plan. No, i picked the wrong Insurance Company. With Liberty Mutual new car replacement™, you wont have to worry about replacing your car because youll get the full value back including depreciation. Switch and you could save 509 on auto insurance. Call for a free quote today. Liberty stands with you™. Liberty mutual insurance. Good morning, welcome back to squawk box right here on cnbc. Were live at the Nasdaq Marketsite in times square. Among the stories that are front and center, economists looking for 188,000 nonfarm jobs, new nonfarm jobs when the april employment report is released in just about an hour from now. That follows a lower than expected 98,000 new jobs in the march report. Also the Unemployment Rate seen coming in at 4. 6 . That would be compared to marchs 4. 5 . Plenty of fed speak on the agenda today. The hooverers institution Monetary Policy conference in california will be featuring appearances by janet yellen, vice chair stanley fischer. San francisco fed president John Williams and chicago fed president charles evans. Our own Steve Liesman is at that conference and well be hearing from him in the next hour. Also, walmart tries to unup rival amazon according to its reuters report. Now applied for a patent for a system designed to compete with amazons dash buttons. To let customers reorder products. Walmarts system would build the reordering technology into the products themselves rather than requiring a separate button. Maybe you get a bottle of tide and the button will be right on the tide. The second its done and empty and maybe even if its empty, by the way, it would know and could send a little wifi signal and youd get a new bottle of tide sent to your home. You have to give them credit for trying. The writers are messing for you. They put the patent and button in the same story for you. Because you know how i like patent and is it because youre from manhattan. And thats why become deeds. Margarita. Right now lets get why is that . Because its howard stern. Margareader. Lets get back to the Berkshire Hathaway annual meeting in omaha. How is your ifb . Is it working again . Its in or out. Prompter is in or out. We have some gremlins that have made their ways in this morning. Lighting is good. Im with you on cinco de mayo. Any excuse. Any day in may. It is exactly. Exactly. Or, june or july. Yeah. Anyway, joe, the annual the annual Berkshire Hathaway festivities dont start until a little later today but we already have some pretty major news. Warren buffett telling us he has cut his stake in ibm because its not doing what he expected when he started investing in the company. I asked him if the move was based on the companys 20 consecutive quarters of revenue decline or if its the Cloud Business maybe not growing as fast as he had expected. Well its based on a lot of different types of businesses. The earnings have been disappointing. Fitch or six years ago i think they were earning 20plus billion pretax. And maybe its 13 become now and i dont think the quality of ernst has improved. So you know, its been its been a period when im sure that its been tougher than they thought and its been tougher than i thought. But i was wrong. I dont blame them. I mean, you know, i get paid to make my own decisions just like an apple or something of a sort, and sometimes theyre right and sometimes theyre wrong. I think i i think ibm is a big Strong Company but theyve got big, strong competitors, too. Well, as we head into the weekend meeting here in omaha the focus turns to the companies that berkshire owns outright and one of those companies is lubrizol. Thats a Berkshire Hathaway that buffett refers to as one of the powerhouse six because of its enormous earnings power. Last year the Company Brought in 6. 5 billion in revenue. Joining us is eric schnur, the chairman, president and ceo of lubrizol and eric, thanks so much for being here. Nice to be here. Thanks for having me. You just took over the Company Earlier this year but you are not new to the company. Youve been there for 38 years so you know your way around the business. How are things going right now in your industry . Ive been there 28 years. Dont date me too much. Im sorry. But, things are going well. The year started off well. And were seeing demand in the market, but i think generally speaking, its still relatively sluggish, theres a lot of uncertainty. Our markets that we supply are diverse. And so we supply to the medical device markets, Life Sciences. And those markets, the growth rates in some of those segments are pretty strong. And apply to some more industrialized inuse applications. Those are a little bit more stable. Not as high a growth rate. Overall the First Quarter in terms of the volume and top line we saw was pretty strong. Lets talk about the business. Because a lot of people dont understand exactly what you do. I know youre one of four major competitors that are in this business. Youre the biggest of all of them. What is it that you do . The additives that you put in to things like transmission oils or different things. Explain a little bit how that works . Twothirds of our business is in basically lubrication. Which is where the name of the company is derived from. And automotive lubrication, transmission fluids, as you say, engine oils, different types of industrial lubricants. And in that twothirds of our business we are the global leader. There are three other competitors. And what drives demand there is really miles driven, and vehicle builds and things like that. What we do is really three things. We have chemistry, of course, were a specialty chemical company, Global Specialty chemical company. But chemistry by itself doesnt serve much of a function. Its just a molecule. So we understand how to combine different chemicals into a formulation so an engine oil for example. Most people wouldnt be aware that an engine oil might contain 20 different components that have to be mixed together to prevent wear, friction, you know, keeping engine parts clean and making sure that the oil is flowing at cold temperature. Making sure things are not breaking down at high temperatures. Thats very complex. And so we put those chemicals together, formulating is a big expertise and skill set that our company has. And also then we have to be able to test them. So warren was just kind enough to come visit us in our cleveland location and we took him through our Engine Test Lab and we are validating that our performance works in the end use application that we design it for. And then were selling that to the brands that your viewers would know, and our job is to make them successful. Like who are some of your biggest customers . Well, in lubrication it would be the Big Oil Companies that everyone knows, shells, bps, exxonmobil, chevron and so forth. Arent some of your big competitors also joint ventures from some of those companies . They are in the lubricant business the three competitors, one is independent, part of new market. Theres a Company Called infinium that is a joint venture between exxonmobil and shell. And its an interesting business in our competitors are oend by some of our largest customers. And our largest customers are also suppliers to us in terms of some of the base oils that we use for blending our components together to make the package we ultimately sell back to them. So you have a lot of frenemies in the business . Partners we like to say. Okay. What about the other onethird of the business . What is that . Well, the root of that business really goes back to an acquisition that was made in 2004 that was the bf goodrich chemical business. Its a lot of polymer based technology. And weve built that with a number of acquisitions, maybe 15 different acquisitions over the years and so we have leading positions in personal care, so 50 of the vehicles on the planet at any given time are using our technology. But also 50 of the shampoo bottles on the shelves are also using our technology. And we have koegts technology, were building a life science business combining our polymer expertise and that formulation knowledge thats ingrained into our company into some Drug Delivery applications that are pretty unique and exciting for us. Great. We want to thank you very much for your time today, eric. We appreciate seeing you and hope you come back again, soon. Thanks for having me, becky. Joe im going to send you back to you and just warn you, dont talk to me because i cant hear you. Okay all right. Coming up stocks to watch. Were counting down on the jobs number. The have that number. Also Market Reaction. Thats all coming up at 8 30. Check out the futures again this morning. Theyve been mixed because the dow has been down, and the s p and nasdaq both indicated higher. Squawk box will be right back after a quick break. Im dr. Kelsey mcneely and some day you might be calling me an energy farmer. Energy lives here. When a fire destroyed the living room. We were able to replace everything in it. Liberty did what . Liberty mutual paid to replace all of our property that was damaged. And we didnt have to touch our savings. Yeah, our insurance wont do that. Well, there goes my boat. You can leave worry behind when liberty stands with you™. Liberty stands with you™ Liberty Mutual insurance take a look at some stocks to watch this morning. Cigna reported profit of 2. 77 a share beating the consensus estimate, which was at 2. 45. The bottom line got a boost from customer additions in the companys commercial insurance business. And cbs came in nine cents above estimates reporting quarterly profit of 1. 04. The results were helped by increase content licensing and subscription fees. Shake shack earned 10 cents a share for its latest quarter two cents above estimates. However sales at restaurants open at least a year, Comp Store Sales fell 2. 5 . Shake shack gave lower than expected guidance for revenue. When we return were going to talk tech, media and more with Berkshire Hathaway board member and former yahoo exec susie decker. First as we head to a break, Warren Buffett has become a major investor in apple. Last night he joked hes jealous of the companys Balance Sheet, but told becky he loves what apple is doing with its path. I love the fact they repurchase shares, not what theyre doing now is borrowing money in the United States figuring theyll get that money back at some point or another. Theyre really buying in their stock, using borrowed money, but with the knowledge that if they had to they could take it back now and pay every repatriation tax but what they probably hope that that tax comes down and my guess is that some point or other that money will end up back in the United States for most of it. And i like buying if i like buying a stock myself i like the Company Buying in it. Obviously think that you know that its a good buy, and if you can buy your own stock, theres no company you should understand better than your own company. And i think buying and selling is a good price and i think it does not make sense at another price. It should be price sensitive. Most companies dont look at it that way. But thats the way i look at it. The power of a low volatility investing approach. The power of smart beta. Power your clients portfolio with powershares. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. News out of washington, House Republicans passing the Health Care Bill but now its the senates turn and it could be months before we get a decision on obamacares replacement. Some members of the senate indicating they may write their own bill from scratch rather than making tweaks to the house bill. Were going to get a live report from washington in the next hour at 8 40 a. M. Eastern time. Health and Human Services secretary tom price is going to join us live to talk about that bill, and i know joe you were saying that Goldman Sachs was out with a report last night talking about the implications of this bill and whether it actually means were going to get tax reform sooner or later. They make the argument it may be later. I think it paints a little bit of an ominous picture. And i think that seems to be the natural reaction right now. I dont know if youre an investor if you want to align yourself with that thinking. Well, theyre just doing theyre just doing the calendar, thats all. Theyre not not saying i dont even think that theyre, you know, handicapping the likelihood of what happens in the senate. Lets say they get started now and that pushes us into the summer. Then they go back and forth and then youre in august and then by the time september comes around maybe youre getting a final resolution of this and then by the time, you know, you take these guys never work thank god. Its better when theyre not there. Then when they do work you know so youre talking 2018 and then you got the midterms. Right. And then there you go. Thats the obvious component of it. No i understand. I understand. Were going to continue this conversation, tom price as i said is going to join us in the 8 00 hour. We also have the jobs report but we do want to get back to Berkshire Hathaways annual meeting. Where becky is live with a very special guest. Becky . Hey, andrew, thank you very much. As you mentioned we are live from the site of this weekends annual Berkshire Hathaway meeting. Its going to take place right on this stage. Joining us right now is sue decker. She is a member of the Berkshire Hathaway board. Shes also the former president of yahoo and the cofounder of a new company thats called rafter, and sue i want to thank you very much for joining us. Thank you. I love coming. We love having you here. Youre on the Berkshire Hathaway board. We just learned from warren last night that he sold about a third of the position of ibm. Something like 25 million shares over the first and second quarter. Did you know about that beforehand . I learned about that three minutes ago before i got on the stage. So i learned about it after you learned about it. So this is warrens typical way of keeping the board up to date on the moves and things that are happening along the way. Yeah, thats not exactly the way he uses the board. I dont know that we would have added much value. We would have probably slowed things down, increased the chance for a leak. Particularly like something for a sale of stock which is pretty Sensitive Information that he doesnt want to get out there. What can you tell us about being a member on the Berkshire Hathaway board, youre also a member on the costco board. What kind of things have you seen in Corporate Governance . What kind of things have you kind of experienced along the way . What are you measuring right now . Well, you know, every board is so different. It depends on the culture of the company. It depends on the ceo. Almost every board that im a member of is still founder involved, or very Strong Influence from dpoufounders. And i didnt do that by design. But in hindsight looking back i tend to gravitate toward companies that have a Strong Mission and strong sense of culture which typically emanates from founders. The founder often has a very big impact on how the board operates and evolves over time. What does that mean in terms of responsibility as a board member for those for those companies where the founder is still involved . What do you feel like your responsibility is . The responsibilities are the same. Regardless of how the founder how involved the founder is or whether youre on the sixth generation of management basically, the overall governance, risk management, succession of ceo, you know, sort of the very high level responsibilities. Sometimes when its a founder involved company the founder may own a lot of stock. And since the boards responsibility is to the stock holders, it then is a complicated situation when youre both serving the ceo, and also other outside investors. How do you manage that . Pretty much do the right thing and try to make sure that you do what put the hat on what an independent shareholder with no information, and vested interest wants the company to be governored. Sue lets talk a little bit about yahoo. We spoke with you last year about yahoo. Since then we learned yahoos fate in terms of being purchased. What do you think about how the company is doing right now and what do you think about its new owners . You know, i think we were here a year ago. I thought that probably a sale was inevitable, and that it would be better for yahoo to be a part of a much Larger Company or a private company where some of the tough decisions could be made that were a little harder in the public scrutiny position that it was in before. Mmhmm. You know, it is its still a franchise that generates a couple hundred Million People that come every month. It still has a nice brand and i think in combination with the other brands that versus has such as aol, Huffington Post, they can aggregate a number of audiences for advertisers and it probably will be a good economic deal. Theyll have to do some cost cutting and rationalization. Im not sure that the yahoo brand will ever be as preeminent as it was before. But i do think it could be a good economic transaction. So this was the right home for it . I dont know if its the only right home but it is a right home. In terms of what you think needs to happen in terms of cost rationale. What do you think theyre kind of thinking through at this point . What would you be thinking through . I think youd have to look at the overall productivity of the business, what the revenue per employee is compared with some of the other companies that may operate similarly when you have a franchise like aol, where you have similar properties, finance, shopping, other properties youd have to look at the audience overlap, and if theres unduplicated audience youd have to keep the one thats the stronger franchise and rationalize the cost structure. Thats the kind of thing youd like at. I think its hard to invest in innovation when youre in a process of trying to rationalize all the costs. Sure. Now this gives them a little bit of privacy and a little bit of space to do some of those things . Yeah. What did you think about Marissa Mayers pay package that was reported out. It was Something Like 186 million that she got from the companys sale to Verizon Communications . I dont given what happened in the performance of the company, it seems on the egregious side, i guess. But i dont i dont know any of the ins and outs of why that happened or when it was negotiated. It could have been when she first arrived. Im not really sure. Probably been the case. One of the things that caught me as a yahoo customer was the the theft of the cyber hacking that came in. Obviously its a problem that a lot of companies have to deal with. One of the hugest issues that governments are also facing right now. When it comes down to it, what are you thinking about in terms of cyber theft and what happened in yahoo and whats happening around in the rest of the Technology Area as well . Its definitely a big issue on every board rooms agenda, is how do you deal with security and most often theres no way to prevent it, theft entirely, so what kind of controls are in place to make sure that it gets surfaced very early. What kind of mitigation steps companies can take. So it is an important issue. I think the thing that really stood out in the yahoo situation which i know nothing about from the inside, is that it seemed like it happened quite awhile ago. Yeah. And when situations like this happen in any corporate environment, you know, as warren often says, you have to get it out, get it right, and do it fast. And the situation seemed like it, i dont know again a long time, for years it seemed like. Sue lets talk about rafter the project that youre working on right now. I played around with it a little bit yesterday and i think i get it. Its a social media setup where, to me it seemed like twitter without the trolls, and you can get a lot deeper and get more information. Why dont you explain what it is and why youre invested in it. Sure. It came about because i was advising some small startups over the last few years and i met the cofounder of the company, claude vogel, and hes terrific. He started a few companies and together we both had a bit of experience in the content and distribution businesses. So we sort of looked at the landscape and thought theres really an opportunity for content to be delivered with a conversation platform. Its what we do in real life. We come to a meeting like this, and we all have a shared interest in Berkshire Hathaway and theres a conversation that happens. That could happen in a living room, as youre watching a sports game with your family. Or it could happen at the water cooler when you talk about game of thrones last night. When you get online, the existing platforms are not very conversation friendly, and theyre not very curetted. So we thought if we could create something that could allow people to join communities that have like interests to discover people they dont know as opposed to social networks which are primarily around people you do know. Right. And to find interesting, trending content and good conversations without a lot of the noise or scariness that exists today that it might be fun. So its kind of like going to the bookstore and running into people who have similar interests and digging down a little deeper on that . Yeah. And then hopefully having a good conversation and finding discovering things you dont know. Its launched just this year. How big is it at this point . Were in the thousands of users. And we Just Launched two months ago. But weve been pretty successful so far. And your hope, your goal, if youre back here next year where youd like to say you are with raftr . We hope to have a real our biggest going right now is to build some vibrant communities. And we actually launched a Berkshire Hathaway raft. I saw that. It has a little bot on it so you can check in to see what warren and charlie might say on various issues. But the idea is that if we can get people to build a few communities we think it will spread like wild fire. Great. Sue want to thank you for your time. We always appreciate seeing you. Thank you so much, becky. Joe, well send it back to you. Okay, becky. The april jobs report is coming up, just 30 minutes away. The numbers and the Market Reaction. Thats straight ahead. Then health and Human Services secretary tom price will join us to talk about the big events yesterday. Squawk box will be right back. G to be a nightmare does nobody like the future . Cmon, the future. He obviously doesnt know intel is helping power Autonomous Cars and the 5g network they connect to. With this, wont happen in the future. Thanks, jim. Theres some napkins in the glovebox. Okay, but why would i need a napkin . You could have just told me a bump was coming. We know the future. Because were building it. Wont replace the full value of your totaled new car. The guy says you picked the wrong insurance plan. No, i picked the wrong Insurance Company. With Liberty Mutual new car replacement™, you wont have to worry about replacing your car because youll get the full value back including depreciation. Switch and you could save 509 on auto insurance. Call for a free quote today. Liberty stands with you™. Liberty mutual insurance. Rays always been different. Last year, he said he was going to dig a hole to china. At t is working with farmers to improve irrigation techniques. Remote moisture sensors use a Reliable Network to tell them when and where to water. So that farmers like ray can compete in big ways. China. Oh. He got there. Thats the power of and. Breaking news, big blue loses a vote of confidence. I dont value ibm the same way that i did six years ago when i started buying. What Warren Buffett told us about his ibm stake ahead of Berkshire Hathaways annual meeting straight ahead. Jobs in america. The april employment report just minutes away. Were going to bring you the numbers and the instant Market Reaction. Plus the Health Care Reform bill crosses the finish line in the house. This is a repeal and a replace of obamacare, make no mistake about it. Health secretary tom price joins us, first on cnbc as the final hour of squawk box begins right now. Live from the most powerful city in the world, new york, this is squawk box. Good morning. Welcome back to squawk box here on cnbc, live from the Nasdaq Marketsite in times square. Im joe kernen along with Andrew Ross Sorkin. Our guest host is joe terranova, senior managing director at vertis investment partners. Lps fast money trader. Were counting down to jobs friday and to 5 00 p. M. Cinco de mayo. Economists expect 188,000. 188. Nonfarm payrolls for april. Well have a liveup of experts to get you set for the big payrolls release. But first becky quick is in omaha ahead of Berkshire Hathaways annual meeting. She has breaking news on one of Warren Buffetts holdings. Becky . Hey, joe. Weve been talking about it all morning long. Folks if you are just waking up, Warren Buffett tells us that he has sold a major chunk of his ibm shares. This is a position that he bought into five or six years ago. He says over the course of that time hes changed his opinion on the tech icon. Listen in. I dont value ibm the same way that i did six years ago when i started buying. I mean, overall i think the six years ive revalued it somewhat downward. Matter of fact, when it got up over 180 we actually sold a reasonable amount of stock. You sold a reasonable amount of ibm . Right. Last that i had seen you on Something Like 13 or 14 billion dollars worth of ibm. Depends on the price. How much im thinking to think back the number of shares. We owned about 81 million shares. And we when it got over 180 180 a share. Yeah, and compared to the valuation then that i thought was appropriate and other things we started selling some stock. And some of that was sold in the First Quarter. Most of it was sold in the First Quarter. Some was sold in the second quarter. How much did you sell . We sold about 30 . 30 of the shares . You owned about 9 of the shares outstanding of ibm. Well, if you look at it this way we had 81 million shares. So, we probably sold in the area of 24 million, 25 million shares. But you were selling it that was at higher price. You were selling at 180. That stock has come down pretty significantly since the earnings. I think its closer to 160 a share. Yeah, yeah. Would you still sell . I dont think well be selling. In fact, we could buy. I mean, i continuously look at what they do. I look at the price of the stock. When it was over 180, and i looked at what was happening, theyve run into some very tough competition. Very tough competition in part is amazon. Warren buffett did mention jeff bezos by name, talked about what a great competitor he was, how hes built up the Cloud Services and had a much longer runway that bezos himself had anticipated. He said that bezos has talked in the past about how he thought maybe hed have a two year runway before other competitors jumped in and got very serious about the cloud. Turns out he had more like seven years to build up that business. Obviously this news putting some pressure on the stock today. I havent seen in the last half our or so, last i looked ibm shares were down by 2. 5 . Andrew as you were talking about earlier, thats because of the buffett premium. The question is how big it is. As you can see, ibm shares down 3. 25 . Andrew . Okay, thank you for that, becky. Were going to continue this conversation here. Joining us on the squawk news line is James Kissner who course ibm for jeff ris. You just heard the news. What do you make of it and what kind of premium do you think was on the stock as a result of Warren Buffetts investment . Its interesting. So i think warren is starting to see here weve been seeing for the last few years. Ibm is facing some pretty big headwinds in its core markets. Hes talking about folks like amazon and microsoft azure and the fact is these guys buy public Cloud Services, that removes some Market Opportunity for ibm. And in both software and services. Its hard to say with the premium is. I mean its trading at ten times ebb bit today. I think you look at some other companies, were the similar Growth Prospects talking about eight times so thats a decent premium 10 versus 8. So you look at still. Still obviously does have twothirds of his position left. Joe was here earlier. I dont know about bullish but at least defensive. You were talking about how they might have to defend the stock . I think he mentioned possibly buying the stock if he moved lower. I guess james the question would become where do you fear believe fair value is for this stock on a further decline and believe Warren Buffett or others would step in and defend it . Yes, my perspective, we have 135 price target on the stock. Thats based on ten times earnings. And frankly i think thats a bit generous. Considering that theyve had a 20 decline in earnings over the past few years. So you know, ten times is a pretty low multiple. Again the Growth Prospects are quite challenged. So perhaps folks might get more positive on the stock and reach those levels. Yet we think theres a lot of downside from here. The other question is how much do you think that the buffett seal of approval actually helped not just the stock but the business itself . Meaning what kind of license did it give the company in getting new business, retaining business and does that change at all . Im not sure that it makes a huge difference. These are folks and enterprises that are going to evaluate products on their merits. Certainly buffett buying the stock probably speaks to his belief that the business has longevity and so from that perspective maybe enterprises are slightly more positive. Ibms been around a long time. Not sure makes a huge difference in enterprise purchases. What about real quick internal Management Team . Does this have any impact in terms of the confidence that the board or shareholders will ultimately have . At the margin it might. I mean i will say, you know, Institutional Investors dont have particular confidence in the company. I mean, its only 60 institutionally owned. Thats a lot below other Companies Like hewlettpackard. You know, they just passed the shareholders just did a vote on compensation and it barely passed. It was 46 voted against so theres not a whole lot of confidence in the company right now, and ibm is going through a lot of tough times and so you know i guess internally, you know, maybe theres at the margins some thats somewhat morale reducing. But im not sure it makes a huge difference. Okay. James, appreciate your perspective this morning. Thank you. Yep. Heres what else is making headlines this hour. Uber is reportedly the subject of a criminal investigation by the u. S. Justice department. The probe looking into the companys use of software that helped drivers avoid local regulators. Known as gray ball the ride share giant already admitted to using it and said it would stop shortly. After the New York Times published a story exposing the existence of the software back in march. What would it get around . What did the regulators what was it trying to avoid . This is what we talked about. I remember but i forgot he sold ibm. If they went to a town, were trying to open up in a city that had not given them permission they were still operating in the city and what they would do is whats called geofence, offices or police stations or regulatory agencies in which they thought that people might be trying to catch them. Meaning a regulator might be trying to hail an uber to then, you know, not entrap them but to catch them doing it, they would geofence it so that if you were hailing an uber from that location they would create a fake screen. Right. Either show that there were ubers or not ubers, and you would never get a car coming to you. Heres the thing. What i immediately i mean, thats i know but what i immediately thought was clever. A lot of these cities that have, you know, theyve got entrenched entities like cab companies. Taxi companies. And a lot of the regulations seem to be sort of gumming up the works of trying to slow down technology. I almost see this as a, you know, as a flexible sort of a rebellike type company. Yes. As going up against a man going up against the man to give people cheaper fares and a Better Service even though regulators are trying to stop them. I almost can see it as sort of a, romantic type i can see the romantacism in it. Im just suggesting to you that laws are laws. You know, my so you want to build a wall . I love a great criminal con story. So you want to build a wall . I sort of root for the guys, the con artists in the movies. But its illegal. Laws are laws. Like illegal immigration. Except for illegal immigration, those laws we dont enforce. Coming up jobs friday. Next as we head to break heres what Warren Buffett told our very own becky quick about apples cash pile. They also have a cash hoard of over a quarter of a trillion dollars. Are you jealous . Im very jealous. Yeah, i thought i was doing okay until i looked at their Balance Sheet. The power of a proven 15year track record. The power of an etf. The power of qqq. The thinking we put in, clients get out. Power your clients portfolio at powershares. Com qqq. Before investing, consider the Funds Investment objectives, risks, charges and expenses. Call 8009830903 for the prospectus containing this information. Read it carefully. Distributed by invesco distributors inc. Containin this information. Read it carefully. Im dr. Kelsey mcneely and some day you might be calling me an energy farmer. Energy lives here. Hey youve gotta see this. Cno. N. Alright, see you down there. Mmm, fine. Okay, what do we got . Okay, watch this. Do the thing we talked about. What do we say . Its going to be great. Watch. Remember what we were just saying . Go irish see that . Yes im gonna just go back to doing what i was doing. Find your awesome with the xfinity x1 voice remote. We are just minutes away from the april jobs report. Last night becky catching up with Berkshire Hathaway ceo Warren Buffett and asked him if this is a 0. 7 growth economy. Heres what he had to say. Im a broken record on this subject. But since the fall of 2009, literally, its been about 2 a year. You know, and i dont think the figures are nicely that accurate when you get to 10s and all of that. Im sure its sped up a little. Its been 2 now for 7 1 2 years. I dont think weve really seen anything like that. It was a Great Recession but the recovery has been very steady autos are falling off a little now. Housing is good. Most of our businesses are doing a little bit better. I dont see it as being a lot more than that. I dont see it as being a lot less. I wouldnt be surprised if it comes in a little bit higher than that. Its not perfect reporting. Not what i see as perfect either, obviously. But i just dont so anything but kind of a steady rise. Turn to our jobs panel. Geoff rosenberg is blackrocks chief investment strategist. Joe terranova is here. Senior managing director, and ryan streeter is here. Jared bernstein, havent seen you in a long time senior fellow at the center on budget and policy priorities, krpt nbc contributor and cnbc senior economics reporter all the way from the other coast Steve Liesman joins us from stanford, university, at the Hoover Institution Monetary Policy conference where janet yellen is going to be in just a little bit. Folks, what do you think. You know its a steady job market. We had a weather related slowdown last month. Everyone expects that to come off. Its just a matter of degrees in terms of how much. But this job market is very solid and we should have a solid report across the board in terms of head line on the payroll numbers. Theres some issues in terms of the hours average Hourly Earnings based on last years comparison. We should see some steady news there and not much news on labor force Participation Rates. You want to take the other side of that . I think its going to be a good report. Maybe not supergreat. I think that were starting to see full employment raising its ugly head. And so, we could see the upward pressure on wages as a result of that. But at the end of the day it seems like were not thats what we want. Dont we want a little push on the wane front . We do want that. Thats a good thing. What were seeing now though is a growth rate where were just not really able to create a whole lot more new jobs right now. We need to get more people that arent in the labor market back into it. It seems as though consensus overwhelmingly thinks were going to get a rebound here, a strong report. If we get a miss given that q2 gdp is tracking closer to 3 , what does it mean for the market on a big miss . It depends on the pieces. A couple of pieces that might contribute to the miss is retail. You know, weve got a big story in terms of disruption, the last two months you had 61,000 lost jobs so if you have a lower number, and its a big retail number, market will dismiss that. Thats not a Macro Economic indication of where growth is. Thats very specific. You also have some government issues with regards to some of the holiday issue. And you had the government freeze that might show up. Those are oneoff issues. If theres something broader, i think it will be very surprising, i think generally given every other signal you got the nfib, small businesses, basically every other indicator tells you this is a very tight job market. If theres a big decline in head line, it might be more about not being able to find enough people than a signal on a weakening economy. It would be very hard to change that narrative with one number today. Jared bernstein youre going to make it political. Youre in d. C. If the numbers are great, youre going to hear the white house say that theyre responsible for the economy. If the numbers are bad, what do they say . Well, i guess if the numbers are really bad they might say that they dont believe them although that kind of goes back and forth. Look down here everybodys very much focused on the health care vote. So if the report comes in anything like that weve been talking about so far, im not sure its going to get a ton of attention. I will say that i think full employments head is beautiful, not ugly, and im glad that were closing in on full employment. I want to say one word about Warren Buffett. Because i just think hes really smart. And his comments on gdp are exactly right. Year over year gdp was 1. 9 . And thats a much better way as Steve Liesman will tell you, to measure First Quarter gdp because of the liesman bias that the problem in the q1 gdp so i took gdp and i reseasonally adjusted the bea numbers which are already seasonal adjusted so i pulled out the residual part and i got 1. 7 annualized quarterly growth. So that tells you that buffets right. That the underlying trend in gdp is around 2 . Look on the markets let me say one thing. If the job report is unexpectedly bad its possible that the markets will look towards the fed and think, hmm, maybe theyll slow down their Normalization Campaign and that could bounce the other way. That could actually make the markets feel a little better. Okay. Hey, steve, youve got a bias over there, the liesman bias . Oh, boy well i think what hes talking about is the work that we did on oh, okay. All right. I think joe is misunderstanding what what misunderstanding for years. A statistical bias. What were talking about is the First Quarter. It is an interesting split here, which is that whats good enough for the fed may not be good enough for the market. I got kind of a low number. I dont know if were doing predictions now or if thats in the next block. Were going to wait for the predictions. Hold your number. Hold the number. But listen, i try to think in terms of what number is good enough for the fed to still go in june. And i say that knowing theres two jobs reports to go to me a number around 125. Remember we keep coming back to this issue. According to most fed folks the economy should be generating about 75,000 jobs a month. As in equal to the entrants to the workforce. Maybe you pull some in from off the side lines. Big debate about that. Lets say you do 125 id say thats a number the fed is very happy with. On the other hand, jeff and joe would say you know what . 125 is a weak number. The market likes 150, 180, 200 it sees as a strong number. Ive been arguing for a long time you know, to some effect and sometimes it doesnt quite work out, that the market needs to get used to a number that is lower to be one that is enough for the economy here to say the economy is still strong. And that number to me is in the 125 to 150 range. Okay. Thank you, steve. Were going to come back to you in just a little bit. We will talk numbers. When we return the u. S. On the verge of a major nursing shortage. Were going to find out how the aging population is hitting hospitals and educators next. Later dont miss our newsmaker of the morning. Tom price is going to join us at 8 40 a. M. Eastern time. Skwk returns in just a moment. Jobs friday. Time to find out where the jobs are, or in this case where the jobs might not be. Theres a growing labor shortage in the nursing industry and kate rogers joins us from baltimore with more on this story. Good morning, kate. Hey, good morning to you, joe. There is a growing shortage within the industry which means nursing students like tara and lindsay here at the university of Maryland School of nursing will have very solid job prospects. In fact, the bureau of labor statistics projects demand for registered nurses will grow by about 16 through 2024 adding about half a million new jobs. For patients receiving care, nurses are often the first line of defense. But there arent enough nurses to meet demand. Were beginning to see growing shortages in different states and different geographic regions. Reporter each year 150,000 nurses graduate from Training Programs nationwide. According to the American Nurses association. But many medical facilities, particularly in rural areas and larger inner cities, are struggling to attract and retain talent. Rural areas often have lower salaries. Thats also true with smaller facilities. We see a real distribution issue that is only getting worse. Reporter hospitals usually give priority in hiring to nurses with a bachelors degree or higher. Salaries within the industry range from about 45,000 to 150,000 a year depending on location and specialty. The opportunities for nurses, even as new graduates, are almost limitless. Just about any place that people live, play and work, there are many, many opportunities that one can select and gain whatever additional knowledge and stills are needed in that specialty. The aging population has presented the industry with many headwinds, more registered nurses are retiring. More nursing faculty are also aging out of the workforce. In fact the ana says about 68,000 qualified nursing applicants were turned away from programs within the u. S. Last year because they just didnt have room for them in classrooms. But here in the university of maryland theyre doing their best to get ahead of that program by admitting more restaurants in recent years. Joe back over to you. Worried about that one patient back there, kate. Not looking real good right to your right. Im not doing any work on the patient, joe. She hasnt blinked or anything in i dont know. Good luck there. Yikes. Coming up is this is this a school, kate . Did i miss that . Theyre training . Yeah, theyre training. These are nurse anesthesia students in their first year. Theyve got two more years to go. This is frances and their instructor michelle. Theyre teaching her how to administer anesthesia. Coming up the moment youve been waiting for numbers from the april jobs report and the Market Reaction right after the break. Squawk box will be right back. Its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . Welcome back to squawk box right here on cnbc. Were live from the Nasdaq Marketsite in times square where it is raining outside. Well see whether its raining on jobs friday. Lets get some final predictions from our panel. Jared we want to start with you, sir. We have your we have everyones we just gave it away by showing that screen. Jared justify your 170,000. Well, i think thats a little bit below consensus which is around 190. And thats because i think the weather effects are probably going to call for less of a bounceback. I run a bunch of models which are mostly backward looking and you know, thats what popped out. I will say that the confidence interval, the 90 confidence interval around this number, theres 120,000. So im sure ill be within that interval. Jeff, ten seconds. 200 is my number. A little bit better bounceback from last months disappointment. And retail sector. Ryan justify yourself. I think 160. Thats my number. Is also reasonable bounceback from last month and i think it takes into effect what were seeing about this full employment effect. Rickster . 205,000. Probably a positive revision of last months 98 will be in there as well. Steve . Why . 144. I think the bounceback gets in the rescissions. I dont think they roll it into this one and my Service Sector manufacturing indicators are hold on. Were just seconds away. Lets hear it hampton what is it . 211,000. April nonfarm payroll increased by 211,000 jobs. The Unemployment Rate 4. 4 . Average Hourly Earnings, 0. 3 . That 4. 4 Unemployment Rate the lowest since may of 2007. Above consensus, and quite a bounceback from the march numbers. The march numbers were actually revised downward to 79,000. The revisions for both february and march basically a net loss for the two months of 6,000 jobs. Biggest private sector job growth in april, jobs, leisure and hospital plus 55,000. Health care plus 37,000. Professional and Business Services up 39,000. How did we get to that 4. 4 Unemployment Rate . The number of unemployed declined by 146,000. The number of those who found jobs increased by 156,000. The labor force Participation Rate 62. 9 just down a tick from the previous month. The u6, the socalled real Unemployment Rate, 8. 6 . The lowest, again, since november of 2007. Longterm unemployed 22. 6 . 1. 6 million. Year over year the number of longterm unemployed has declined by 433,000. So far for the first four months of this year, average job gains so far this year, averaging 185,000 per month. Back to you guys. All right hampton, thanks. Lets get right to our jobs panel. For reaction. Jeff is still here. Jeff rosenberg, joe terranova, ryan streeter, jared bernstein, Rick Santelli and Steve Liesman. Rick i think you were closest with 210. But, ive seen everybody have wide standard deviations from the main. Steve, you were on a roll, you know, i knew this was coming. I knew it was coming, and not only were you too low but even your reason that the revisions from the previous would go up, and they wouldnt be reflected in this one it was like the opposite sort of. You knew this was going to happen, steve. Well, you know, theres very strong forces in the universe. All right. You know, as einstein said compound interest is the most possible force in the universe followed by the Electromagnetic Force followed by reversion to the mean. I was doing great for seven or eight months now, now ive got a couple of big misses. Go back and check the calculations. Look, who cares . 200,000 people hired is a very good thing. 4. 4 unemployment is a really good thing. Probably average the two months, joe, 80 and the 200 gives you what did hampton say, 180 was the average . That would be 140. You have people, the decline in the unemployed, the decline in the u6, its all good news. And look, you have to say that perhaps, you know, weve been looking for this question. Theres confidence on the part of business. Is it working in terms of them hiring . And it looks like it is at the moment. Despite what looks like very slow or weak topline gdp numbers. Theyre hiring. And my guess is theyre probably seeing the sales and the revenue to justify it. Otherwise they wouldnt be doing it. Okay, rick. You started. Then well get to everybody else. What were you starting to say, rick . Oh, no. I was just going to point out that im really concentrating on the wage component here. And even though the month over month data was pretty good up 0. 3. We lost 0. 2 on the rescission and we lost 0. 1 on the year over year and that was a little light to begin with at 2. 5 . I know were all now satisfied with these numbers, i still say in the greater context that we need to get a lot more horsepower and 250,000 tight numbers. The Unemployment Rate i dont know how much stock id put in steve is correct, though, probably the real Unemployment Rate in this country is the u6 at 8. 6. And it has come down nicely. You know, rates didnt do much, guys. They upticked a little bit and now theyre actually a basis point lower at 235 on the 10s. Its going to be fascinating to see how it closes. French elections dont seem very exciting. But ill tell you what, the china commodity story is big when you look at weak dollar and weak Commodity Prices you have to scratch your head a bit. Lets see, i dont know who was closest at that. Ill just go to jared. Jared, waiting for you to get political. Im sort of just knowing you as i know you, i just you know, im a little bit disappointed. Youre slipping. Im not as political as you think i am. Im probably less political than you are. Anyway, good call by rick. And i think that this 8. 6 on u6 is really a pretty hot number. Ive been waiting for that to start to come down. It sounds like a really shaking out the underemployed. People who are involuntary part timers are finding more hours. Thats a positive sign. Job market is tightening up. So, steady as she goes. I think as far as washington is concerned, yeah, theres going to be some bragging on these numbers. But, again, you know you really have to snooth out the bumps, last month average with this month were into a growth pace of around i dont know probably about 180 per month. Thats a very solid growth. Thats going to keep pushing the Unemployment Rate down. Thats the key here. Is that this is a very strong report, strong across the sector as you had a recovery in retail. You had good leisure and hospitality. That helped to boost it. But the real story here is the tightness in the labor markets. Didnt really show up this month in the year over year figures. The base effects are pretty strong there. But the feds going to Pay Attention here in terms of the job market really starting to go well above potential. You know, ryan you mentioned is it ugly . Is it attractive . Today its attractive in terms of being at full employment. Market will Pay Attention to wages, and whether or not that turns. Its a great report. Great number. And i think stepping back looking at this kind of longerterm, the latest Business Roundtable survey of ceos shows a pentup demand for hiring. And a lot of them have plans to be hiring over the next half hour as well as increasing Capital Investment after a period of relative decline there. So i think thats all a good thing. Whether this report reflects some of that pentup demand, i dont know but i think its a strong signal. U6 is the lowest since november of 07. The rate itself is the lowest since may of 07. Clearly Companies Feel that they have pricing power. Theyre able to lift some vangs. Its a good enough report in the sense of its beats consensus which was the worry overall for the marketplace. Listen the market is well positioned. Were sitting right off alltime highs. Watch financials today and see if we could power our way and break out of 2400. Could i suggest i want to interject one question into this discussion. One head scratcher is that as wages had accelerated, and they have accelerated, as the job markets tightened up, you really havent seen inflation, at least core inflation, accelerate apace. Wage growth does not seem to be bleeding into price growth. And i think thats very important. So i wouldnt necessarily map this tight job market onto inflation acceleration without really seeing the whites of its eyes. I wonder if others have thoughts about that. Ill cham in. Thats very much the case. Wage inflation doesnt move in to core inflation. Its a very long process before you see that. You have a lot of other factors that push against that goods inflation, the value of the dollar is pushed against that. But the tightness in the labor market does tell you about the tightness and being at full employment and what that means in terms of future down the road inflation pressures. And the fed will Pay Attention to that looking forward in terms of space and normalization. All right. Jeff, ryan, jared, rick, steve, joe youll be here. Ask you andrew but i know youre working on your tsa precheck and whether thats going to go through. Are you right after the show . How much time you got . If i tell everybody publicly then we have to actually get more security going to the airport with all the paparazzi so i just try to try to keep my head low. Just knowing i mean all the airports. Thats why i didnt want to let everybody in on the secret. All right. You got enough time to finish the slow . Just enough time. Just enough time. With the precheck. Well, but you know paparazzi oh, there you go. Coming up next House Republicans getting a win in the battle for Health Care Reform. Ill be in the middle seat, everybody. But now the flight fight moving to the senate. 45e89 and Human Services secretary tom price is going to join us next to talk about it. Youre watching squawk box right here on cnbc. Security events every day. Ddos campaigns, ransomware, malware attacks. Actually, we just handled all the priority threats. You did that . We did that. Really. We analyzed millions of articles and reports. We can identify threats 50 faster. You can do that . We can do that. Then do that. Can we do that . We can do that. Better than a manual, and my hygienist says it does. But. Theyre not all the same. Turns out, theyre really. Different. Who knew . I had no idea. So, she said look for. One thats shaped like a dental tool with a round. Brush head. Go pro with oralb. Oralbs rounded brush head surrounds each tooth to. Gently remove more plaque and. Oralb crossaction is clinically proven to. Remove more plaque than sonicare diamondclean. My mouth feels so clean. Ill only use an oralb the 1 brand used by dentists worldwide. Oralb. Brush like a pro. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. Welcome back to squawk box this morning. Want to recap the april jobs report out just moments ago. 211,000 new nonfarm jobs added to the u. S. Economy during the month of april. Employment rate falling to 4. 4 . Thats the lowest since may of 2007 before the financial crisis. People thought that was alice in wonderland. This is good news. We should point out that march payroll was revised downward to 75,000 from the originally reported 98,000. House republicans celebrating the Health Care Reform bill that will now make its way to the senate. Joining us now is tom price, secretary of the department of health and Human Services. Mr. Secretary, its great to see you. Good morning. Good morning. I earlier said you know, used to be Social Security was the third rail and im really starting to think health care could be the third rail its just such a difficult intractable subject for politicians. The democrats thought, you know, in their hearts i think they thought they were doing the right thing when they passed obamacare. Then they lost four straight elections. Not the president ial but four straight elections in terms of congress, decimated the ranks of the democrats and im just worried that you know, given the current milieu of, you know, what youre hearing in the media, that maybe republicans need to try to avoid the same thing from happening by passing this. Do you worry about that . Well its a completely different situation though. Remember what happened with the democrats when they pushed forward their Health Care Bill. They disrupted the market in health care. They made it so it was more difficult for folks to get care and coverage. Got all sorts of folks out there with an insurance card but no care because they cant afford the deductible. What were trying to do now, and wed love to have the democrats assist in this activity, is to fix the challenges that have been created by the current law. Youve got Insurance Companies that are vacating the market. Youve got medica leaving 94 of 99 counties. Youve got maryland saying premiums are going up by 60 next year because of the current law. Thats what were trying to fix. So its a completely different situation. Now that doesnt mean that the media treats it differently. Right. And thats the challenge that we have. You wrote a great oped the other day. Because you remember, obamacare for six or seven years never got above 40 really. I mean there was never even a plurality in terms of approval. But suddenly when people start seeing maybe people lose coverage, all of a sudden its over50 and only 17 want to change it and you get these numbers. But you point out that centralized command and control usually leads to this. Costco up. Exactly. Costs go up, quality goes down, choices dwindle, innovation stalls and really only people with money can get Decent Health care. To cover the 7 that werent covered, 93 of the other people get worse health care because of the coverage. But all youre going to read about is coverage. And loss of coverage, for the next, you know i mean im reading on Huffington Post that youre killing people. Youre celebrating as youre actually killing people. Thats what the head line is on these left wing websites. Yeah. But i couldnt have said it better myself than what you just said. But you know that the hyperbole of the left just simply is not true. And the American People understand that in their gut. They really do. And they will appreciate it more and more as this process moves forward and they understand that what were trying to do is to fix the system that is failing them right now. Now one of the challenges we have is that weve got four Different Health care systems. Youve got medicare, medicaid, the employer sponsored market, and then the individual market, the Exchange Market. And its the individual and Exchange Market that has been decimated by obamacare. Thats where youve got folks that cant afford their care because of the deductibles and the premiums, and the access and the like. So thats the challenge that we have. Because these other systems, there are challenges there, as well. But theyre not as urgent as the ones in the individual and small group market. Mr. Secretary, let me ask you just one question about preexisting conditions considering that the administration had talked about trying to protect those preexisting conditions. One of the big headlines that has come across the tape over the past 24 hours says rape and Domestic Violence could be considered preexisting conditions under this bill. As you know, some Insurance Companies if you have been raped or been the victim of Domestic Violence, you can be categorized as having a preexisting condition and put into a higher paying premium bucket. Is that the case . Well, if its the case, its because its the case right now. Now what the president has made a promise to the American People, and were fulfilling that promise and that is to make sure that anybody with a preexisting illness or injury is not precluded from gaining the kind of coverage that they want for themselves and for their family. Not that washington forces them to buy. And the protections that have been put into this piece of legislation make it so that we believe that folks with preexisting conditions will actually be able to gain better coverage than theyre currently able to gain. Remembering that youve got 20 million folks out there right now who said im not going to participate in that market because it doesnt respond to the needs that i have. Hmm. The other thing, and again it just depends on which side of the aisle youre on. When obamacare passed there were new taxes. The people that invariably pay the taxes are people that can afford to pay the taxes, so theyre going to be people in the upper end of the income stream. So now, just they may or may not. But thats what youre going to hear. Thats going to be the narrative. So now by getting rid of some of the obamacare taxes its going to be branded a tax cut for the rich at the expense of people that can least afford you know, to lose any type of coverage or you can see how its going to be portrayed at this point. Sure. But think about some of the taxes that were talking about doing away with. The medical device tax, which affects every single individual accessing medical care. Thats not just going to the rich. Thats going to everybody. What thats doing as you mentioned early on is depressing innovation in this country. So the quality of health care is decreasing across the board because of the depressing of innovation and the inability to stay on the cutting edge of where Health Care Needs to go. So this is a positive first step in this process. I know the president looks forward to working with the senate and making sure that we get a bill to his desk that hes able to sign. As far as the senate being even more, perhaps, viewed more consisting of more moderates than even in the house, what do you think theyre going to do, you know, if they rewrite the entire bill. I said earlier that republican principles theres probably 70 , 80 , what do you think is going to be different than what they put in their bill and will it be palatable to guys in the house . I think a couple areas the senate will be concentrating on. One is medicaid. We believe its important that those individuals in the medicaid space are able to continue their coverage or have a seamless transition to coverage that again is more responsive to them. Second, there are a number of senators who talked about the open yot crisis. Its one of the priorities that weve made here at the department of health and Human Services and they may want to put more resources in to address the Opioid Crisis which is really a scourge across this land. And this whole issue of preexisting we believe its been addressed appropriately in the house but the senate may want to take a peek at that and make certain they are comfortable with the direction this is going in so we make certain every single individual in this country with a preexisting illness or injury is not precluded from gaining the kind of coverage that they want for themselves and their families. Can you talk us through what you think the time line will be for the senate . We had a report this morning Goldman Sachs said they didnt think this would happen until the fall which they thought could push off the tax reform discussion until 2018 in which case now youre in the midterms. And they became a little critical or negative about then what happens after that. Yeah, no, really is the 64,000 question. As you pointed out you cant get the tax reform until you get through this reconciliation package of the fiscal year 17 budget and thats the health care side. I would like my sense is that it will happen as soon as it can happen. Im hopeful that it happens within a month or two. But again, the senate has a has a whole tempo to its own action. Ive had the opportunity to speak with leader mcconnell and i know he wants to get it done just as soon as possible. I got to ask you one more, mr. Secretary. I kind of felt like jim comey, slightly nauseous when i heard this last night. Krauthammer who is kind of a realist, you know, on special report it wasnt bret, but last night he said, obamacare failed at every level but it did change americans expectations involving health care and in seven years well be at a single payer system. Just philosophically that we end up there. You know . I guess in two years in 2018 maybe the republicans lose the house i dont know what h his how you connect the dots, but thats his prediction. Thats what americans want it now and like every other major country we go to single payer. Well, Charles Krauthammer is a bright guy but ill tell you that the American People dont want the government running their health care. Thats one of the things theyre objecting to strenuously. Thats why we have seen a decrease in access, increase in the cost of health care because the federal governments been involved. Decrease in quality and innovation, all the things that the American People want, that is accessibility and affordnt and choices. So i dont believe that the American People want that. I do know thats what many on the left want. I know. Thats why i believe that the senate will act expeditiously as they can to make sure that we get a bill on the president s desk that hes able to sign that will improve this Health Care System for every single american. Mr. Secretary, before you go, i was curious, did you get a chance to see the monologue that jimmy kimmel gave earlier this week that seemed to go viral . I saw it on replay. Didnt see it live. What did you think of that . Well, i mean, what hes putting a face to are the challenges and the concern and the fear that the American People have. Thats why we need to communicate that we believe every single american needs to have access to the kind of coverage that they want. We dont want anybody to be without coverage. Remembering that there are 20 million folks right now in this nation who said im going to pay a penalty. Im going to suffer the potential penalty from the irs or ask for a waiver because what the federal government is doing for them as it relates to health care doesnt respond to their needs. We need a better system. Thats what the president and we want. Mr. Secretary, thank you. We appreciate your time. I thought about that. If the end result the result of obamacare results in much worse care than he was talking about obamacare. Jim cramer is back in new york. We want to get to him now. Jim, that do you make of the ibm news and Warren Buffett . I think its devastating for ibm. I think ibms spent a lot of time trying to figure out what warren really wanted, felt he wanted return of cash and buy back stock. I think to some degree, it has constrained that company from making the acquisitions the big acquisitions that would change its stripes. It turns out, you please all, you please none. Ibm would say wait a second, they put a lot of money everywhere. Its not like they didnt make some big bets. They bought company after company. But this is a major, major slap. I have to tell you im back to the drawing board on the stock too. Why shouldnt it trade at 135, ten times earning, 4. 4 yield . We have to go and well talk to you and see you in a couple of minutes but joe, the other joe made the argument that Warren Buffett may defend this stock given if the price comes down. So well keep an eye on that. Selling speaks louder than words. Yeah. As we head to a break. Dont miss this, a big show, squawk box monday. Becky is live for three hours at the berkshire annual meeting with Warren Buffett, plus Charlie Munger and bill gates. Kevin Kevin Kevin Kevin Kevin Kevin Kevin Kevin Kevin Kevin trusted advice for life. Kevin, hows your mom . Life well planned. See what a Raymond James Financial Advisor can do for you. We cut the price of trades to give investors even more value. And at 4. 95, you can trade with a clear advantage. Fidelity, where smarter investors will always be. Our thanks to our guest host this morning joe terranova. Is that new earth . Its new earth. And 405 companies have reported. 405. 405. 8. 2 have you mean out of the s p 500 . Out of the s p 500. 8. 2 revenue growth. 15 eps growth. Profit margins up to 0. 95 . Thats what matters to the market right now. Not the not the other stuff . Not the negative Goldman Sachs call on tax reform . Revenue growth. Companies have it. It could get better theoretically. Lets be optimistic. We have ten seconds. Im going to thank this joe. Im headed to omaha, but ill be back on monday. So youre up and down. Youre going to do something at at the thing. Okay. See everybody in omaha. Join us on monday. Squawk on the street begins right now. Good morning. Welcome to squawk on the street. Im david faber along with jim cramer and we are both here at the new york stock exchange. Carl quintanilla has the day off. Lets give you a look at futures as we get started for the final trading day of the week. You can see kind of a mixed picture right there. European markets you ask. How are they faring, especially in the last half hour, especially since we got the