Once again, good morning and welcome to squawk alley. Joining me at post nine, sara eisen, mike santoli, carl keent nia has tkne quintanilla has the morning off. A big interview for us from omaha, bullish comments on apple from Warren Buffett. Becky quick is live there, berkshires temporary headquarters for the weekend in omaha, nebraska, with details, especially on ibm. Thank you very much. We talked to Warren Buffett about ibm, apple, a lot of different issues but lets start with ibm. Warren buffett says the case for ibm doesnt make quite as much sense to him as it used to. He told us last night that he went ahead and sold about onethird of the position he held in big blue over the first and second quarters. Thats pretty shocking because Berkshire Hathaway was the largest shareholder and shares of ibm that controlled about 9 of the shares outstanding. Buffett told us they went from 81 million shares down by 25 million. They still hold more than 50 million shares, which means there is still a major shareholder. The news is coming out next week, his hand would have been forced with an s. E. C. Filing of 13f filing that was going to be coming out. He told us about it now because he didnt think he could go through the Shareholder Meeting and not be forth right with telling people what was going on. You see where the stock got above 180, thats when he started selling shares. He says at this point he has stopped selling shares, the stock is back below 160, got there after the earnings came out and disappointed investors last week. So he stopped selling at that point. Says he wouldnt be selling additional shares at these levels and says that in fact shares continue to go down, he might actually buy more shares. But take a listen to what he said about why he sold those shares. It has been a period when it im sure that it has been tougher than they thought and tougher than i thought. I was wrong, i dont blame i get paid to make my own decisions, just like an apple or something of that sort. And sometimes theyre right and sometimes theyre wrong. I think ibm is a big strong company. But they got big strong competitors too. They did talk a lot about the big strong competitors, he did talk about some of those competitors, the one he mentioned more than any was amazon, pointing out that jeff bezos has really been able to do with the amazon web services, the cloud division, what none of its competitors saw coming. Bezos has been phenomenal in two different industries, with Online Shopping and secondly with the cloud services. Hes been incredibly impressed by that. And talked about how none of the competition really saw that coming. He said bezos himself says that said he had expected to get about two years lead time, by moving into cloud services. He got seven years head lead time and that has made all the difference for amazon. Now, another stock that buffett is a huge shareholder in is apple, the other Technology Stock we talk about being a berkshire holding, one he moved very aggressively into and Berkshire Hathaway owns more than 19 billion worth of apple shares. And he talked about those earnings as well because obviously those earnings came out earlier this week, a bit of a disappointment to the street, Warren Buffett said he was not sf disappointed by it. He talked about how the iphone sales were weaker than an tis paced because there are so many people waiting to upgrade to the iphone 8. Holding off on purchases until that iphone 8 comes later this year. That explanation made sense to him. Listen in. If you knew a new car was coming out, tomorrow, a new model of something or other, and you had to pay the same roughly the same, i dont know, but close to the same for last year model, youre probably going to wait. So i think i think it is an incredible consumer product. An incredible consumer product, but one that Warren Buffett himself still does not own. So, jon, maybe blame him for why the sales were weak. He says hes very happy with his flip phone and will keep it that way. Wow. Even the best have blind spots, we learn that, and he is a ledge end. Thank you, becky, as always. Great stuff from Warren Buffett. Lets bring in nick and josh. Guys, buffetts comments on apple come as citi is putting out a note listing the top potential targets. Netflix topping the list. I want to talk about buffett first. Is tech his kryptonite . It was contrary to his bet on ibm years ago anyway. Apple and aprmazon have done amazing. If he bought into those five, ten years ago, he would have done a lot better. Nick . Yeah, i mean, i think it probably is. I have a tremendous amount of respect for Warren Buffett, i think hes an incredibly smart guy, but he has a flip phone. How can you understand how consumers are going to interact with technology when you dont use them. Maybe his bets are wrong sometimes with technology and, you know, for me, i do agree amazon is a big and Scary Company that is going to be a competitor to a lot of the people that hes invested in. And, josh, one of the things that strikes me about this area in technology is how much parity there is between big giants. I dont remember the last time we have seen a time like this, is it easier or harder to pick winners as an investor during a time when you got so many big potential acquirers and competitors . I think the real thing with technology you have to be investing in is expecting the rate of change and investing in the companies that can be able to catch the new trend and the new trend, you know, amazon was able to catch this trend of software moving into the cloud and become the foundation for that that nobody thought they would do as a bookseller. Now seeing the trend of ai come up and every company is building the best Machine Learning and being able to predict the company that can hit the next trend like apple did with mobile. Thats a different business type of bet than one that is runs a great infrastructure business or engrained in the fabric of america, a lot of other berkshire holdings. Buffett reminding us that the wars right now are in the cloud, and while amazon was one of the first movers and probably the leader, nick there are other competitors. Who else is a prospect to be watching in the cloud here . Is google a contender . Well, i think anyone it is google, could be facebook, could be any big company. You know what josh is saying is correct. If you think about it, snapchat is a 4 1 2yearold company, started in a dorm room at stanford and now a 20 plus billion Dollar Company with hundreds of millions of users. That happened at an incredibly rapid pace and will happen with cloud computing, with artificial intelligence. So you dont know. It is interesting, amazon right now, they sell books, in the cloud, theyll get into the driverless car market and compete with uber and google and apple and the other dhapz dont companies that dont do these things today but will do them tomorrow. Building on the idea of defining what is tech has become harder. We heard in the sound bite, Warren Buffett referring to the iphone. You have amazon, and netflix. Are they categorized as tech stocks in the s p 500, so you have all the different kind of dynamics wrapped into what we call technology, how does that change things from an investors perspective, at whatever stage the company is at . I think that you have to be expecting this pace of technological advances to keep going as nick pointed out. Things like selfdriving cars are coming and whether thats three years or ten years, and so everything is now built around software, this is the ability you can write the programs that actually we see things on our screens, do things around us, faster than ever before. Not just thee atoms you move around, but bits. It makes investing in any business or any space, figuring out what are the technological advances, users accessing new products over their phone, whether they dont want to go to a store because they want to just make a couple of purchases through their voice and say bring me a new shirt and one shows up, these are the advances were expecting and you have to invest in the companies on the head of the trend, not the ones that get stuck behind when consumers move on faster than those companies can keep up. I want to poll you guys on that netflix question, real quick, josh. Should apple buy netflix, yes, no . I think apple is a Great Company that sells these consumer products, it doesnt it has the itunes and app store, but doesnt quite have a Consumer Service we use in the same way. It would be incredible for them to own something that is more of a subscription like that. Nick, what do you think . I think that facebook should buy netflix. I think that, you know, facebook is looking for longer views on videos on their platform, they have almost 2 billion users, an astounding amount of people, quarter of the planet. What better way to get longer views than to actually start posting live content and videos that are two plus hours long. I think that facebook is going to get in that space, why not buy a company to do it. It is a fun game that we go back to. It is very relevant. The cash pile overseas that apple has, that buffett said, will probably come back to the u. S. If they get a repatriation kind of deal from congress. Some of the other names that are floated out there, tesla, we know it has ambitions in cars. And, even disney, hearing more about this, the analysts like to swoon over that potential deal. I think the real question is, you know, when all this cash comes back to the united states, what are the Technology Trends that apple will want to be part of in the next ten or 20 years. Seems like car and transport and energy is really interesting and would fit with the consumer products. Moving on, uber reportedly facing a criminal probe over its use of what it calls gray ball software. Helped drivers to avoid local regulators by giving those regulators a false view of where cars actually were, according to the wall street journal. Uber said back in march it would stop using that software after a New York Times report exposed the practice. Guys, does this matter as far as the amount of heat that is already on uber . Nick, you have covered a lot of these companies that have been under the microscope, incrementally does this probe make a difference . Well, does the probe make a difference . Maybe, maybe not, depends how it nets out. But i think all of the things that have happened over the last x number of months with uber will make a difference. It has been one problem after another after another after another. If this was a Public Company, travis kalynic would not be running the company and if he was, the stock would be on a downward trajectory. There are bigger problems with uber too. We talked about driverless cars. If they cant figure out the driverless car model, uber will not exist. If i was thinking about investing in that company, i would be worried today. Josh i was going to say, you know, if nick is correct that if it were a Public Company that he would no longer be the ceo, would that be a good thing or bad thing in this instance . Is there an advantage being private to basically say, maybe we can ride this out with the current leader . You know, i think when a company is growing and uber has grown to 20 billion in gross bookings over the past six or seven years, just a phenomenal business and proof there is a need for transportation that just wasnt being fulfilled at all. And it took a lot of scrappy work to upset the apple cart or the taxi cartels and to get into the cities where it wasnt sure it was a trusted thing, even though customers needed it. I think the company has to change and mature. Travis is a ceo is somebody who can make that transition and being private allows you to make that transition. But i do think the verdict is out on whether they can mature and be a company that now harnesses the impact it is having versus a scrappy one that has to prove it is even useful at all. The other market impact, hard to quantify what this means for a private company, but we can look at the Competitive Landscape and there are hungry competitors out there like lyft and dd in china. How much are they benefitting from this . They have been out trying to raise capital. Theyre benefiting theyre doing everything they can to benefit from this. There was a interesting, you talk about the New York Times mike isaac had written a story about greyball and a followup story yesterday and i was reading it on my phone and in the middle of it was an ad for lyft. Their taking full advantage of this. It is working to their benefit. There has been several delete uber campaigns from people on twitter and from what i can tell, from what i heard, lyft is growing as a result of that. Yeah, would not be surprised of that. Nick, before i let you go, want to talk about your new book, american kingpin the epic hunt for the criminal mastermind behind the silk road, fascinating subject, a guy who essentially set up a digital Drug Distribution network, i want you to riff on this idea for a moment, is american kingpin really about Silicon Valley and this libertarian idea in technology that tech is always good, Government Intervention is bad, and kind of tech inventors arent responsible for what the people do with their product . Yeah, it is absolutely it is interesting when i started reporting the book, i knew the story was this kid who started this website where you buy and sell drugs on the internet and led to Different Things going wrong including attempted murders and so on. What i found as i started to get access to the diaries of the guy who ran it and the chat logs, he ran his company in the same way a lot of tech founders run their companies in Silicon Valley. He cited the same ann rand quotes and, you know, the same inspirational steve jobs quotes and that was it. It was, you know, travis has decided he wanted to disrupt the tax industry, and ross founded silk road decided to do drugs. You could switch the founders around and they would still say the same exact things about the things that the companies that they were running. Little bit scary. But you guys and others out there keeping a watch on all of it. Nick and josh, thank you for joining us. Thank you. Thank you. And when we come back, 211,000 jobs created in april. More than double the amount added in the prior month. Hear what former cea chair ed lazear has to say. Silicon valley and more when squawk alley is back after this. At fidelity, trades are now just 4. 95. 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. And at 4. 95, you can trade with a clear advantage. 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Just heard from new labor September Alexander acosta, releasing a statement moments ago saying, quote, all indicators of labor market slack showed improvement in april, adding that we still have challenges ahead. For more on the april report, were joined by rbc Capital Marks chief economist jim porcelli and david kelly. Welcome to you both. Strong january. Strong february. Weak march. And now strong april. Can President Trump claim credit . No, i dont think that were quite there. A lot of what youre seeing today has been put in place sort of months previous. But, look, i think at the end of the day, we like this report. And i think one of the things that most folks have to come to grips with is if youre trying to build a case for sort of, you know, resource outilization, ths report checks off all the right boxes. The u 6, now 8. 6 . Decade low. Yeah. I mean youre within an arms length the previous cycle low. The fed will like this report in terms of us moving in the right direction, but i would hasten to add i heard this from a number of people already today. Not consistent with an economy that is accelerating. From our perspective, you know, were not calling for an acceleration, were looking for more of the same, pretty nice backdrop, 2. 5 backdrop and this report is consistent with that. Investors like this report too. The s p is up about a tenth of a percent. Im surprised were not seeing a bigger reaction. This was a better number, a better Unemployment Rate, and a lot of the internals also pointed to stronger economy and stronger labor market. What is with the reaction . Well, the problem is it is a tighter labor market. The good news it is a good report f you wa report. This economy is perfectly healthy, and there is no need for further fiscal or monetary stimulus. This report makes a june rate hike more likely, but also undercuts the idea we need big personal tax cuts to try to sort of pump up demand here. Because this is the Second LowestUnemployment Rate in the last 17 years. We have really dont need more demand stimulus here, so, you know, from a market perspective, dont get big tax cuts, that might be something of a negative for the equity market and fed is more dete