Downgrade. Fwu given all of that, take a look at the futures right now. You may not surprised to know we have some green arrows across the board. S p 500 up about 6. 5 points and the nasdaq up about 8 points on an expectation that a deal does get done today. But, boy, things could turn around. We will see what happens. Over, over to you. I know youre waiting. I know. Were watching and waiting. I know were news people. Come this afternoon, if we dont have anything andrew, when they said two weeks ago that these things will converge, the debt ceiling and the government shut down will converge, wa did everyone say . Theyll probably wait until the 17th to do it. Today is the 16th. But tonight, its midnight tonight is the no, i know. You know that theres the slightest bit of breathing room. You know that. I think theres a decent chance we get to tomorrow and maybe the house votes tomorrow. Look, and yesterday, once again, was humiliating for boehner. Remind he me of do you remember plan b . Plan b collapsed because he didnt have the votes for plan b. Do you really think at this point if the Senate Passes something, its going the be mroftly clean, hell brng it up. There will be enough republicans to get it done and well the put this off and well do it again in six months. Joe, i love your outlook. Its just realism. The thing is, the republicans look the worst roit probably right now, but the president , you know, he doesnt want to be the first one that provided over a default, okay . So he doesnt hes not going to look great, either. And neither side wants to hurt the wants to burn down the house to save the house. Thats wa i think. Some people do want to burn down the house, but well talk about that. But not where you cant rebuild it. They think longterm entitle manies are important enough that the house is going to burn eventually. So they think that eventually its going to be destroyed and were going to default based on how much weve promised. Theyre crazy, thats admittedly true. In other countries, six different parties, four of them come together on one side and two on the other. Now weve got that here, but in different parties. But the house is supposed so be the you know, i dont want to call them the we talked about it yesterday. Theyre the omegas. They are the delts or whatever it was in animal house. Theyre those guys, theyre going to be there causing prubl trying to keep power divided among the different houses of government. I think this is all fine. Youll see. I hope youre right, joe. I hope youre right. Stokes, wouldnt you think that would be the most sensitive place to an actual imminent default . Yes, but the application still is we do get a deal. Thats what i mean. Youve been you know, you wrote the column two weeks ago sort of hoping that when there would be a default, remember . Im hoping that im very wrong. But, you said dont be so sure there wont be a default. Not a default, that we could go past the 17th and no, it was a default. Ill get the column for you. I didnt read it that day, but we have to talk to mr. Buffett. Lets do. Lets get to becky. Gentlemen, thank you. Now lets get to the man of the morning, war b buffett, chairman and ceo of berkshire hathway. Warren, youve heard the news. You know where things stand in washington. At least at this point at the look at the reaction in the markets, not much. Wall street seems to be betting that there is going to be a deal. Do you think thats a safe bet . I dont necessarily think its a safe bet, but i think its a perfectly okay debt to buy securities. We bought a 1 billion business about five hours ago. I think over at the uk. And we did not buy it with a condition in it that we could call off the deal if there was a no vote on the deficit change. Limit change. So if you can own a Good Business, a good farm, a good apartment house, you know the United States is going to be around five or ten years from now and you know it will be more prosperous. Its not necessarily a mistake to buy stocks because you dont know the outcome of something thats happening in congress. Thats a great longterm view. And your view has always been no matter what happens, we will get through it. We got through the great depression. We got through world war ii. But what about the immediate . People are really concerned about whats happening in washington right now. Its a mess. And if you think about it, i used to tell my children when they were young, it takes 20 years to build a reputation and 20 minutes to ruin it. Weve been building a reputation for 237 years. The United States has become the reserve currency in the world in the process and people all over the world hold our paper. So to do anything to damage the 237 years of Good Behavior is idiotsy. I dont think it will happen. But if it does happen, its a pure act of idiotsy. You might say that the threat to not raise the debt ceiling after you youve already spent the money is its a political weapon of mass destruction. We used the atopic bomb back in 1945 and said we werent going to use Something Like that again. The russians and the soviets the same way. There are certain weapons that are just improper to use against humanity. And so to use this as a weapon against the american public, it is idiocy. Its too powerful. Some republicans made the claim that, look, we are doing this because we are trying to save the longterm health of the country and we are very concerned about the path we are headed down. Is that an unfair statement . Well, we could have said in vietnam that were trying to save the and were going to use a nuclear bomb in the north. Theres all kinds of times when you get frustrated in government about your lack of ability to carry out something. It does not mean that youre selfdestructive. Its not a weapon that should be used. Theres plenty of weapons to use. You can do various things. But you should not take an asset that weve spent 237 years building and tear it up. Over any kind of a fight. You can do it over abortion, do it over gun control, all kinds of things. Its an improper weapon to use. Joe has made the argument this week that you dont burn down the house to save the House Partnership guess youre making a similar argument. Yeah. It is a it is something where youre going to destroid stroi an asset of the american people, 315 million americans to get your way on a specific bill. And its such a powerful weapon that it my even work unless both sides say, this is off balance. So weve been treating tomorrow, october 17th, as if its a hard deadline. Do you think it is . Well, i think its crazy to find out exactly what the inflow and outflow of the treshly will be in any given month. You know it isnt sustainable when were spending more than were taking in to have it. The treasurys flow of funds, ive snefr seen the exact dates on tax receipts coming in primarily when Social Security goes up. But it should be over. I dont care if its two days later or that you actually would run out of money. Who knows. The treasury doesnt know precisely. But forget it. This is like this is like poison gas. You dont use poison gas to say, well, people wont die until next saturday. Is that a prediction that the market will react rapidly and strong tomorrow . If we dont have a deal by midnight tonight or when the markets open tomorrow morning, is that like we saw back in 2008 in the financial crisis . We were looking at issues every weekend that you want to resolve before the markets open. It could be. Ive never felt i can predict what markets are doing to the next day, but it certainly has the potential for that. And its idiocy. Fitch put us on negative watch based on not the u. S. s ability to pay its bills, but the idea that you have all this wrangling in politics and the ideal of getting them p there. With them making this move, do you think the damage has been done . Theres a tiny bit of damage thats been done. We have spent 237 years without people working whether were going to pay our debt. Even in the great recession, people do not worry about government bonds being used. We financed ours in world war ii. People did not worry about the fact that when the government said we promised to pay. Isnt that something. Anything like this arose just slightly, but the actual fact would be, you know, many fold. It is huge compared to this at that particular time weve seen so far. If we prove were total idiots, i think that has an effect. Were on the here at fortunes most powerful womens conference. Christine legarde, the former french finance minister was here last night as the key note speaker. She raised the suggestion that the use has done enough damage, that it brings the idea of the dollar as the reserve currency into question. Do you think thats the case . I dont think its the case quite yet. It could be done very, very quickly. By next week, do you think . I dont think theres another reserve currency that would jump in next week. But it would produce chaos over time. I cant tell you exactly wa day it would be. Like i said, the treasury opens their mail like we all do and hopes theres more checks in it than bills. Some days there are and some days there arent. But we know were spending more than were taking in. Incidentally, the congress did it. It just its so silly to sort of deny reality when youve spent the money and say, no, were not going to borrow it. Lets talk about that acquisition that you referenced earlier. This is a 1. 1 billion argument that bish yoch is placed. Its liquid disexpensing machines, like the machine i have at our office where i can get a coke and cooling equipment. All designed for beverage cooling and dispensing. So 1. 1 billion, people look at that and say wow, thats an ee normal amount of change. Not for berkshire. No. Weve committed to spend 5. 6 billion on mv energy. Well spend about twice our depreciation on plant deployment. So we are sfending at a rate this year thats as high as ever. Have you been looking for a big, big acquisition . You had in the past. Youve always talked about how you have your elephant gun out and ready to go. Right. Its met foficcal, but its definitely here. But have you seen anything . Yeah, yeah. We always have a a little sighting. I wush to the clearing and cant quite locate the science. Wuven that got away, you mean . Well, i dont like to say it that way. Recently . Yes. How big . An elephant. Heinz is something of an elephant. 12 billion is an elephant to us. But this was a bigger one. How much cash does berkshire have on hand right now . Right now on a consolidated basis, but sclusing our railroad and utility, we would have about 40 billion. So thats more than the United States will have tomorrow, ard cooing to jack lew. Right. But they should not regard us as a source. Have you sold anything . So no. First of all, do you own any shortterm treasury bills . Probably those that are due in less than a week. We always have a big rolling chunk of treasury bills. And i issued no special instructions in terms of getting rid of the shortest ones. I am fought worried in the sense of those treasury bills being paid. Im worried about damage to an asset that we carefully cultivated for years. Those shortterm treasury bills, though, the rates have spiked on them, especially in the last couple of days. Bill gross said hes a buyer over at pimco. Are you . Theyve spiked, but youre talking about going from zero yield to 35 basis points. But 35 basis points for three or four days does not amount to a bunch of in other words, youre not scraping for cash . Ive got Better Things to have had although that date looked pretty good. Have you changed anything youve done at berkshire as a result of whats been happening in washington . No. We have been at a derth when it comes to getting any signs of the economy, any reading on what is happening because you dont have any economic numbers coming out. You have a lot of numbers coming out every day. In your opinion, has the u. S. Economy been hurt by whats been happening in washington and does it show up in your receipts . It has not shown up. But what will show up is in the world, United States citizens lose some faith in the full faith and credit promise of the United States. That would be a momentous event. Even if we said, well, were slowing it for a week or were putting out script or whatever, that would be huge. We have been spent 237 years building up our reputation for billing our bills on time. It would be crazy for me to say, well, ive been handlinging things and ive got these internal rules and things that were just not going to pay for a few weeks. There would be a lot of damage to berkshire. That would be a thousand more damaged to the its if they do it. But the economy, you have not seen any Consumer Confidence dropoff, you have not seen any spending decline even as the retailers no, if you look at our Furniture Stores and Jewelry Stores and orders coming in on carpet and all of that, no. You know, this is not the last three or four days ive been traveling and but if this goes past tomorrow, we will see. We will definitely see something. It wont cause me to change what i do in life, but we will definitely see something. War b, if you will stay with us, we will slip into break and, joe, ill send it back to you. Thank you, becky. I bet you warren well, who has thought about this guy. Guess what the symbol of germanys post war economic miracle. The symbol . Yes. War b, do you have any thoughts of that . Gummy bears. Oh. Yeah, theyre from the black forest, right . It it was on the tip of my tongue, joe. Im sorry. Hans reigel, he was the last great he died. He was 90. And gummy bears marched around. He just died. Theres a big piece in the journal. The good gummy bears say they come from the black forest. Reigel. He was worth 2. 9 billion and its a little bit sad to me that there is their most famous entrepreneur after tworld war two. Anyway, he was 90 and well miss him. How is that, andrew . Thats safe to say, right . My wife is a gummy bear can you imagine . Life without gummy bears. He will be missed. Yeah . Good. He will be missed. U. S. Equity futures trading above fair value. If we were up 50 we would be at 1 1,520. Anyway, coming up, more on war bs surprise dinner. Did you know about this . I heard about it. I am a fan of this person. Huge. Maria . I am a fan of hers, as well, but this is different. The st. Louis cardinals beat the Los Angeles Dodgers 42 last night to take a 31 least in the mls. Boston is now up 2 of 1 is. Now homer trying to gefg the tigers the win in detroit. Welcome back to squawk box. It is now time for the executive edge. Its our daily segment focused on giving Business Leaders a leg up. We also want to welcome a special member of the squawk team to join this conversation, Warren Buffett. A new survey finds the population of a banking career has fallen. Industries such as software and Computer Services has become much more popular. Lloyds, which conducted the survey said banks must change their recruiting techniques. Guys, is banking dead . I mean, it goes to be how much of the s p were financials a couple of years ago . This is probably it was around the world, too. Did you see that . It was all over america, asia, the middle east, africa. And actually, the byline is in london. I guess its good if you till want to get into banking, its good that theres not as many people trying to get in there. But becky, war b, good thing or bad thing . In 2008, people said before that there was such a brain drain from all sorts of industries that had done goo wall street. Maybe it goes back the other way . Maybe its a good pendulum swing, as well. I cant say its surprising at all. Im getting excited about gumny bears, actually. Think about it were warren. You own candy and you own darely queen. I mean, are you a gumny bear person at all . Joe, im on it and i will tell you, since you tipped me off to it, i will definitely give you a gumny bear as a reminder. If you have any special colors youd like to we make the deal. Honestly, the guy owned half of the company now and a lot of times when a key employee like dont be surprised when we hear about this a couple of months from now. Berkshire hathway finds dont be surprised if you get a gift box with a gummy bear in it, too. I just want to happen im looking forward to this. You dont have to pay a royalty rate to his estate now, do you . Does he own the right to all gummy bears . I think there are knockoffs, too. But warren, if an investment banker comes to you with an idea like this, what is the normal fee . More than one gummy bear. But thats my sharding position, however. All right. Well, i wouldnt be surprised. This is kind of like your kind of company. Plus, its international. It is my kind of company, definitely. And if you say its 2. 9 billion and he only owned half, its a pretty good deal. And 2 billion in sales, too, per year. I had no idea. But one thing a lot of people are pointing to, warren, honestly about was going on in washington, if you madeed a 1 billion acquisition without anything in you know, any way to get out of it based on and if you havent positioned anything else at berkshire for that, i mean, that speaks volumes about whether something is likely to happen at this point if the worlds smartest investor hasnt done anything to repair for it. Well, i think its such idiocy for us to get beyond it. I cant believe that 315 million americans are going to let perhaps even a minority of the party in one house i think there may come out of some something that i hope both parties say, forget about that. This is off the table. We can all about all kinds of things, but were not going to use a weapon of mass destruction im hoping Something Real good comes out of it, just like you. Warren, did you ever think about making the acquisition, instead of making it in the past 24 hours saying, you know wa . Im going to wait a week just to see if case things go down . No. My partner, charlie and i have never had that discussion in any event. And theres been a lot of events over that time. It is election day in new jersey and cory booker and republican steve logan are fighting for steve who . Longan are fighting for the senate seat vacated in june. What do you guys think . Becky and joe live in new jersey. Booker is up by double digits. But this is interesting because its a microcosm of whats happening in washington. Booker has said he would like to see washington settle this dispute. Lonigan said he thinks they should stand firm. He would like to see a year extension on obama care. It was 16 points. I think its ten now or something. Some of the tweeting, i dont know, that was such a tempest in a teapot. I dont care who tweets me, i aint tweeting back. I actually i used to follow cory booker, but he tweets so much i unfollowed him because i couldnt 1257bd the amount of stuff coming out every day. I didnt realize that. Then there was something in the paper that he hadnt lived in newark. That was false, i think. The video might have been false. I think he does live in new jersey. But anyway, we have a final story here this morning, one of my favorites. A surprise at the end of the laugh nights dinner, opening the summit, Warren Buffett, the man who is with us, making an appearance with glenn close. And let you break a little thats the story of thats the glory of love so, warren, how did that happen . We love glenn close. Cry a little guys, this was the thing that brought the house down last night. There was a surprise appearance. Glenn close was we knew she was going to be coming out and speaking. We did not know that Warren Buffett would be joining her and that is something that definitely brought down the house when it happened. Warren, just know, in the past, shes gotten a little i dont know. I mean, check your bathtub. I called Michael Douglas ahead of time. He said just one piece of advice, warren, dont get her upset. Thats what i mean. Dont get her too attached to you or anything. No. She got to pick the songs and everything. I did not isnt that horrible that one movie can, 20 years later, people are still talking about it . I guess the its good if you were that great in that role. That was a powerful performance. Wives love that movie, joe. But i cant believe shes not really like that in real life because i saw it in the movie. Im scared of him. Im sorry. You should not be. Is she one of your favorites, andrew . You have a lot of favorites. Thats nice, though. Shes absolutely terrific. Were going to have much more from Warren Buffett, the economy, the fed and the markets when we return on squawk. [ man ] on december 17, 1903, the Wright Brothers became the first in flight. 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Men with Breast Cancer or who have or might have prostate cancer, and women who are or may become pregnant or are breastfeeding, should not use androgel. Serious side effects include worsening of an enlarged prostate, possible increased risk of prostate cancer, lower sperm count, swelling of ankles, feet, or body, enlarged or painful breasts, problems breathing during sleep, and blood clots in the legs. Tell your doctor about your medical conditions and medications, especially insulin, corticosteroids, or medicines to decrease blood clotting. In a clinical study, over 80 of treated men had their t levels restored to normal. Talk to your doctor about all your symptoms. Get the blood tests. Change your number. Turn it up. Androgel 1. 62 . Blackrock, reported Third Quarter net of 3. 88. Guess what the estimate was . 3. 88. The analysts did their job. Is that what happened . They got it right today. Doesnt normally happen. The company and the analysts is there body language. And they talk to the company. You know, i got 3. 89. No, no. If thats the case, the analysts would be more accurate. 3. 88. The company, in talking about the current environment, says uncertainty is keeping many investors on the sidelines. In terms of assets under management, 4. 096 trillion. So, you know, jack lew, theoretically, could call larry fink and say i have a couple of interest payments, a couple of Social Security can you hang tight . Margin of 4. 067 trillion. Thats a lot. I always knew it was above 3 there will, but theyre now and they just passed 4. 096 trillion assets in management as of september 30th. Oh, this is interesting. Larry fink, Global Growth at this point is dictated more by central bankers and elected officials than by Business Leaders. And i think hes been sort of in that camp for a while in terms of fed action, as well. And it doesnt help anyone that but look at what fitch said. Its still aaa. But fitch the putting us on watch was not they had whether we were a good economy or not. But they havent even done the original downgrades that already happened. S p. S p downgraded. And the real question will be well, what happens to moodys . Operating margin, 39. 1 for blackrock. Let me just do we see . What is it . I cant tell whether we got any premarket trades at this point in blackrock. I cant tell where its going to trade. But right in line with expectations and you can see that, wow, the pretty close on revenues, too. Back to you, beck. Joe, thank you. Again, our special guest this morning is Warren Buffett. Hes the chairman and ceo of berkshire hathway. Warren, you heard those xlents that joe and andrew were just talking about. The comments coming from larry fink, too, one that uncertainty is keeping investors on the sidelines. Larry fink going on to say its the central bankers and elected officials who are driving things these days, not Business Leaders. Would you agree with particularly that second statement . I think business drives a lot. I think the juices of capitalism over time are more important. If you look at what built this country over the years, its been its been tens of thousands of people that want to live better tomorrow than theyre living today and go to work on it. Were here with 400 of the most powerful women and every one of them is thinking about how to have their business be bigger and better next year. So people forget that theres a lot of natural juice to capitalism and the government is a big factor. But if you ask me what accounts for where the United States is today, i would say that the actions of american citizens that are the dominant factor. Although, you know, gdp has been below what the fed is expected, below what a lot of economists expected, particularly coming out of such a deep recession. Is that because of whats happening in washington or in spite of . I think its because of what happened five years ago. I mean, we had a shock to our Economic System like we hadnt experienced since the 30s. I took a long time to come out of the 30s. Although weve come out of it. And sometimes people forget. 2 growth with less than 1 population gains means 1 real growth per capita. In 20 years, thats 20 . If every generation lives 20 better than the general population before them, thats not terrible. But 1 real gdp growth per capita over a long period of time, it does wonders. Are you telling us that we need to get used to this or is this a temporary rare thing and were going to get back to what we used to expect . I dont know. I think its very possible we get back to higher rates of growth, but i will tell you that this is not a disaster. I mean, if you just think about each generation living 20 better than the generation before them. That is not terrible. Its not terrible and its not a disaster. But if youre looking for 3 versus 3. 5 growth versus what whooefb getting, youre fought going to have the problems weve been dealing with today in washington. That takes care of itself. It takes care of itself unless we start making new promises. We tend to make big promises. Were like a very, very, very rich family and then we dont stop getting rich at quite the same rate. But our promises, we just went overboard. And anybody can do that. Thats an argument for entitlement reform, which is what some of the republicans have now i realize this argument started out with obama care and their objections to that. The center of the party has pivoted to entitlement reform and is now looking at that as a way out. What you just said sounds like its an argument for that. I think there will be entitlement reform. And i think there should be. We should have a sustainable path and people should understand that its a sus staunble path. It can be a very attractive sustainable path. We start out as the richest country in the world and we keep getting richer. But a rich family can overpromise. But i dont believe that we should destroy the full Banking Credit of the United States or reserve currency or upset the whole worlds economic situation. To get that or any other piece of legislative activity. I think you should take that weapon off and then you can find it out on entitlement reform. And they will. It will happen, i just dont know when it will happen. We had the former to president clinton. He said we feed another maybe 400 to 500 billion in new revenues. Does that sounds like a right blueprint to you . It probably does. The whatever it is, you want to come up with something sustainable over a lodge period of time with decent assumptions, but not ridiculous sumgs. So if you want to plug in 2 of your growth and figure out where that takes you, and if it doesnt work, you have to adjust one side or the other and more likely both. I mean, you should probably do both. But you have to they dont like to call them taxes. They call them revenues. You have to look at taxes and you have to look at expenditures. They call them entitlements. But you should start with realistic subjects. Its very important at berkshire that i be realistic. If i kid myself and think 10 billion more is coming in next year and i make plans based on it, were going to have problems. And its not a great problem to work out, actually. We are so rich that we can do a lot. We cant do everything. But tax revenues have been rising. Revenues have been rising, taxes have been coming in higher, the deficit has been coming down. These why things have been improving on their own. Weve seen that. Summer fall of 2009 been but they havent been accelerating. Theyve been moving at a couple percent per year. And we see that in almost all of our own businesses. But they arent accelerating. And people have gotten very impatient on that. The stock market hasnt gotten impatient. Its gone up five years now. But in terms of employment, in terms of the way the average person feels, they feel the cover has been very slow and i can understand why. Have we promised too much in terms of entitlement . Do you think it bites us 10, 15, 20 years down the road . I know you dont look and analyze every one of these numbers every day, but you think about this stuff and youre an actuarial in your head. We didnt know when the housing bubble he said we have to keep dancing and we didnt know when midnight would come and everything would turn to pumpkins and mice. And it was a lot of fun at 11 55. You cant fine tune this thing and you shouldnt try to fine tune it. Proper behavior as a government is not the plan things for the best case, but to plan for what a sensible case and make adjustments if you find out that your estimates have been wrong. But weve got to make some changes. But weve got enormous resources, too. So it isnt like im prescribing sack clothes and ashes for the american people. We have the best situation in the world. But its not quite as good as we promised. Were going to continue this conversation with Warren Buffett this morning. Joe, i know you have some other things were going to be watching, as well. Always. I think its earnings season again, becky, isnt it . Here we go again. It is. It dawned on me because we did citigroup and jpmorgan and wells fargo and blackrock. Weve got bank of america coming up and warren owns a big stake in that. Yes, he does. Well talk about that. He said something that hes most of the stuff he says is mostly true, but even he can spend beyond his means. Mostly true . Even he can spend beyond his means. Are you calling him a liar . No, not with the way you he didnt say he would. He said even a rich family can overpromise, right . Anybody he said. Theres no way, buffett. Theres no you could send i guess its true, if you promise all your money to a lot of charities. My family would not say ive overpromised in terms of them. No. And i wouldnt even as part of your extended family. Because ive gotten a ketchup bottle, a brick, a croppy looking tie and i got a and a gummy bear. A jet car ta doesnt work, which i can use to open a lock. And you got a personalized brick. How many of your friends have personalized bricks . Right. Thanks. Okay. True. Coming up thanks. He overpromises, yeah. Coming up, a few stocks to watch this morning, earnings season is in full swing. Fist as we head to break, check out the dollar. Warren has like 60 billion of these. Anyway, well be right back. vo you are a business pro. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. Welcome back to squawk. A few stocks to watching this morning, yahoo s earnings beating the street by a penny. Revenues were in line, but Current Quarter guidance disappointing investors. Current quarter Outlook Revenue fell short and warned production of its upcoming broad well processor was delayed. Also, earnings and revenue at Railroad Operator csx beat analyst consensus. Its noncoal business did well and the railroad increased prices rose on that news and i imagine Warren Buffett who owns train might have an opinion on that, as well. Jp portionan to pay 100 million to settle with cftc. It could come as soon as this week. Also, apple reportedly told two suppliers of its low cost iphone 5c that its reducing orders in the fourth quarter. That news raising concerns about weaker than expected demand for the new product. 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Therell be the usual presentations on research. And development. Some new members of the team will be introduced. The chairman emeritus will distribute his usual wisdom. And you . Well, youre the chief life officer. You just need the right professional to help you take charge. Good morning everybody. Welcome back to squawk box we are at fortunes most powerful womens conference. Were here with Warren Buffett today. Weve talked about a lot of issues. Whats going on at Benjamin Moore now . We heard an employee was you fired. Benjamin moore has been around over a hundred years. I made a promise to the dealers that we were going to stick with that and would not go with the big boxes. Meaning the home depots and so on. That was enormously important. I did a video so there wouldnt be any question. I found we were about to sign with one of the big boxes. I had to make a change. We have a commitment toll to the dealers. We take care of them; they take care of us. I encouraged who was put in. Recently we had to make a change for a reason i cant get into. You have seen the press coverage and stories out there circulating about this . Yeah. Weve got a new manager in there working fine. Benjamin moore is making a lot of money. We paid a billion for it. We probably made a billion and a half pretax or so in ten years. Its earning close to record levels. Dealers are feeling better now. They were worried we were going in another direction. We have a commitment to them. I think youll see a lot of stability over time. With hurricane san i ddy we dide a plant. Articles also pointed to tracey brit who works in your office and responsible for a lot of companies. Has the coverage been unfair singling her out in this situation . No. I participated in the selection of the ceo a year and a half ago. I made the decision to make a change. We couldnt go in the direction of leaving the dealers behind. I participated and made this decision. I participated in the selection. We interviewed three good candidates. One from one of our other companies. We decided on the present ceo who i understand is doing well. The company is doing well. Thank you very much. Were going to continue this conversation with Warren Buffett. We have more to come and more of this mornings top stories. Weve been watching whats been happening here in washington. Any sign of a debt deal or not, were going to continue trying to figure out what to make of all that. Well watch the futures as well. Stick around. Squawk box will be back. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. So she could take her dream to the next level. So we talked about her options. Her valuable assets were staying. And selling her car wouldnt fly. We helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today. And tomorrow. So lets see what we can do about that. Remodel. Motorcycle. [ female announcer ] some questions take more than a bank. They take a banker. Make a my financial priorities appointment today. Because when people talk, great things happen. From the Government Shutdown and the debt ceiling to how to make money now, its a squawk box special. Live from washington d. C. With Warren Buffett. Good morning. Welcome back to squawk box im andrew along with joe kernen and becky quick in washington with ceo Warren Buffett. Well hear from him in a moment. Lets look at the markets. We have green arrows ahead of the news in washington maybe we get a deal or we dont. You have news joe. Bank of america and the major shareholder he is. Listening closely. 20 cents a share, ahead of expectations. Just below that theres a lot of different metrics. Global market revenues 3. 8 billion. Tooer one common equity 10. 3. Consumer and Business Banking revenue 7. 52 billion. I dont see outlook yet. Im going into the actual release and see. Net charge offs 1. 69 billion. Prevision for credit losses 296 million. By the way the Third Quarter number and i dont know what analyst took into account, theres a 2 cent benefit and 10 cents of charges. Could be 28 cents. Would that be it . Youd actually add eight to the 20. 18 cents was the estimate. I havent seen comments from them. Warren owns a lot of that. If is brian morning ham the right man for the job . S he doing a good job . Compared to diamond, they equal to, greater than or less than . Im not going to rank them. Brian has done a terrific job. You mentioned 1. 6 billionle in charge offs for the quarter. Thats before the reserve release it sounds like. Thats an annual xized rate of charge offs. Now youre getting down to 70 basis points a year. Wells was under 50 basis points. This economy has come back in that respect. I dont think anybody expected chargeoffs to be as low as they are now. Brian has done a great job. Youre better than the analyst we have on. You did that in your head. He got to basis points on charge offs. The stock is up 14. 38 to 14. 41. You are a savant. Thats why they call him the oricale. If you had the worth for 700 million shares you probably would know how much they had in the cash drawer. Exactly. You have the reason to know. Youre more than a casual observer. If youre free we have sun trust coming. Its up to you. Maybe not. Warren, you still own shares of j. P. Morgan right . Right. You saw what happened with the earnings release. Earnings were okay but it was the legal fees that ate up the earnings for the quarter and then some. Yeah. Basically im buying businesses and bank stocks for that matter in terms of whats going to happen in the future not for whats happened in the past. I can go back with bank of america. I read a book 55 years ago. I can go back to the San Francisco earthquake. They thought it was a down day and turned out to be a good day for bank of america. What really counts is the future. In the future, banks will have to carry, particularly larger banks are heavier capital. Banks are in the best shape i can remember. Theyve built up capital enormously. Portfolios are in good shape. Big problem they have now is getting out more money. They have more money around than they would like. They are not reluctant to loan. I want to grab warren real quick on j. P. Morgan. We didnt get to talk about it enough in chicago. I know youre a fan of jamie dimon generally. What do you make of legal cases against the company . People want his head. Ive argued they shouldnt, but nonetheless there is big cases. Some say its unfair for the government to go after them. Whats your position . Andrew, ill get to that in a second. If a cop follows you 500 miles youre going to get a ticket. Believe me youve had a lot of cops following a long time. Theyre going to write some tickets. If you run a Major Financial Institution and i did for a short while. The government is pressing potential, pressing charges and have the potential of going criminal. A large Financial Institution cant take that. They have license in 50 states. So you are in a terrible negotiating position. Ive been in that position. You know, if they want to take a pound of flesh, they can. If they want to take a ton of flesh, they can take that too. Further on this, and well do pepsi. When numbers come out, we try to figure out j. P. Morgans ongoing business because thats how we decide about the economy, decide what the banks futures will look like. At the time you have certain left wing organizations or even main stream media saying we should have been focussing on a loss that was reported in that period and whether it should mean he should lose his job. Isnt it thats in the rearview mirror. Isnt it upon us to try to figure out the results of the company when you factor out the litigation to see how you the underlying business is performing . Its the way i i look at it. Frustrating. I put 2 billion in something called Energy Future holdings. They go bankrupt within a few weeks. I go all by myself. I didnt have a guy in london to trade me. It was warren sitting at his desk saying this is a greet great buy. I bought a Company Called dexter in the 90s. The stock i gave them is worth 5 billion today. The shoe company is worth 0. You cannot be active in a big business without making some misstayinmi mistak mistakes. Babe ruth had 60 home runs that year. I dont know how many times he struck out and dont care. 500 miles of a cop following you. You get a ticket. That boggles the mind. When you do get caught, there have been how many times when you werent the guy does not want to give you a warning. The cop does not want to if hes following you 500 miles. On the particular issue of the bear sterns, some people said they should have known better. Others say they were heroes trying to save the country in the midst of the a crisis. They probably had a week to look at it. Bear sterns had hundreds of thousands of contracts. The government loved it when lewis bought company wide and lynch. They loved it when jamie took over wabo and bear sterns. You can say they should have written different contracts that protected them against the things that happened in the past. The government wanted to get a deal done and needed to promptly or other dominos were going to fall. I think its a little stuff to be in this situation. Jamie will survive fine. He knows how to run a bank. Okay. Stay where you are. Were going to come back to you in a minute. Well tell you about pepsi flashings from the bottom of the screen. Company reporting 1. 24 x items against the estimate of 1. 17. Their Constant Currency bid went up 12 12 to date. Organic revenue up 4 year to date. Also reaffirming guidance in line with long term targets, theres a single digit organic growth and 7 core Constant Currency eps growth. Warren probably saw coke the other day too. Were going to go back. We can still talk about that. Coke, the u. S. Numbers were better. Do you have a feeling on whos in better position with the challenges facing sugar drinks ands aper tame and everything else. Is it good to still have a snack business. I know you like cherry coke. You dont even avoid the sugar, right . Hes drinking it right now. Boy, thats good. Coke obviously has the better beverage business. Pep i ssi has a wonderful snack business. In the 50s, lay offer had the business to cocacola. If they made the deal, herman would have ended up with more stock than mr. Wood rough. Herman left atlanta and made a deal with pepsi. Frito lay has a wonderful business, no question about it. We saw cocacola had the unit case volume a little below expectations. 2 . I think the big problems came in africa and developing markets. Cocacola since 186 has done a good job increasing you capital consumption over time. Theyll continue to do that in my view. The rate of gains currently are not like they were 15 years ago. My guess is theyll have trouble getting back to those levels. Because we didnt have all the now here you are again. You need to be available for a lot of these earnings that come out. Becky, talk to him. I want to go back to the pepsi question. Nelson argues the company should be broken up. I i know youre not a sharehold shareholder, but do you agree . No. If i owned control of the company, id keep both. One is a terrific business. The other is perfectly good. Why break them up . I believe in running a company for the shareholders that are going to stay rather than the ones going to leave. If youre going to stay, i think you like the idea of them having two businesses. Speaking of investors, lets see a what carl has been saying to apple. What do you think about his requests or demands to buy back the incredibly large church of stock . The Apple Management did a nice job running the company. I wish i bought the stock years ago. I did advise the stock years ago. Theyve got a lot of money thats not trapped over seas. Theyd have to pay a big tax to bring it back. They hope for free trade at some point so they wont have to pay the tax. Carl is suggesting they borrow money to buy back the big chunk of stocks. Companies have done that including cocacola. Theyre buying in stock. Ive got i think the Apple Management and directors have done a good job running the company. I vote with them. Versus what carl is saying . I do not think that companies should be run primarily to please wall street and largely shareholders going to sale. I prefer shareholders going to stay not those going to leave. Mexico is pursuing this tax on beverages. Youre talking Michael Bloombergs focus leaving new york city at this point going to mexico. Mexico drinks more soda than any other nation per capita. They drink more cocacola products than any other nation, 100 sure. They drink more soda than any other nation in the world. When you see a tax like that, is that a concern for a company . Its a minus. Get 2700 or maybe weight level and tax them. Whether i eat ice cream, cookie, candy, all of which i eat or coke which i drink a lot of, i dont think it should be important for the government to determine which ones they like that i eat. Im not sure whether my candy bars are better for me, which i eat plenty, or the coke. Were going to eat a lot of calories and going to gain weight. Calories are the problem. Lets talk ibm. Thats a more recent holding. Its come under pressure. I think shares are above where you bought in or a big chunk of where you bought in. I paid more than some shares. Earnings are out. What have you thought about the investment since you made it . I feel fine. The fact its trading 185 or a number like that instead of 205. When they buy billions of in shares, i go up more. I love it. If you guarantee me id have 170 for five years i would really buy it. As long as they were buying in a lot of stochl. I own a higher percentage of it. Are you buyi ining shares of . Not right now. Have you you been . We bought some shares this year, not a lot. What do you hope or expect to hear in the earnings tonight . I talked to jenny. I saw her last night. I cant do anything. Thats not to suggest you dont have inside information. I can have information and cant tell anybody. You know but cant tell us . Youre warm. Lets talk about other holdings. American express has been a holding of yours for a long time. Were interested for a lot of reasons. Its a good read on the company. Good read on the worlds economy. What do you know about that based on what you see from American Express . I cant give specifics. Theyre doing okay. Incidentally we have 70 plus businesses. One of those has 100 businesses. The world is doing okay. Its not galloping. The rate of gain has not accelerated or decelerated. Every since the fall of 2009 weve had a slope thats like this. It doesnt flatten out or go like that. Thats true until last week as far as i know. Were going to continue this conversation with Warren Buffett. I know you have other headlines andrew particularly whats happening in this town. No deal in washington not yet. Ball back in the senates court after House Republicans failed to come up with their own version of the bill. Minority leader mcconal and harry reid are hopeful of a vote today and holding a vote shortly thereafter after the u. S. Inches closer. The triplea rating is on watch. The shutdown having an effect on the housing market. Applications for government mortgage products dropped a six year low last week. Applications for mortgages to purchase a home dropped 5 . Overall applications did rise slightly but that was by refinancing activity. Did you have any estimate for the speaker yesterday . They cant get their act together. I feel bad for people who are trying. It was like plan b when he couldnt get it. He proposes and cant do it. Its embarrassing. Hes got a fatal flaw. His flaw are the 20 guys. Its sad. Im sad. Youre sad for him . I think its going to work out. We have much more. A check on washington and earnings recap from pepsi. Well have all that when we come back. Our special guest at 7 30 a. M. Eastern. Its only on squawk box. Take a look at stocks to watch this morning. Bank of america earnings beating the street 2 cents. Revenue falling short. There were things in there. 2 cents here, 10 cents there. 2 cent benefit and i dont know which analyst knew. Whatever reason, the stock is trading up 19 cents. I loved buffett. The most important thing, charge offs and what they were back when things were bad and where they thought total charge offs would be in terms of basis points. He annual xized what they said. Wells fargo down to 50 basis points. Thats good. Thats why i wish we could have him to call on some of this. Pepsi earnings 1. 24 were 7 cents aled of estimates, revenue in line. Company is pleased with the performance despite the Macro Economic volatility. I love lays. Love fritos. I love cheetos. Keeping one eye on the hill and another eye on you cant close one eye . Warren buffett is my special guest. Is becky supposed to be reading this. Well have much more from him throughout the show. Fedex ceo fred smith on affordable energy, the economy and how hes handling the situation in washington. Squawk box is back with more in a minute. Since 1960, how many times has congress acted to raise e, extend or revise the definition of the debt ceiling . The answer when squawk box continues. Yo, yo, yo. 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Whered you get that sweater vest . Your ford dealer. Now the answer to todays aflac trivia question. The answer 78 times. Welcome back to squawk box everyone. We are live in washington d. C. At the fortune most powerful womens conference. Our guest is Warren Buffett. Since last time we talked to you, janet yellen has been named the choice for the next fed head. What do you think about that decision . I dont know her. Ill wait and see. Everybody says good things about her. I have no reason to doubt her. Well see what the actions are. You wanted ben bernanke. He was your top choice. You figured you knew what he god and he was a known commodity. Ive never pulled a hitter out of the line up. I wouldnt then. Yesterday, we talked about based on whats happening in washington he doesnt see a chance. Before the mess blew up in washington, he doesnt think the fed will be tapering soon. Do you agree with that opinion. I have no idea. The economy has been getting better. How they make a decision on whether to pull back it doesnt enter into my thinking. Ill put it that way. Ben bernanke did make comments after the last fed meeting and said the trouble in washington was the reason they were standing pass for now. Obviously he was right. Look at what happened since then. At this point you try to figure out what pd in washington will have a serious impact on the economy. You havent seen it in ub ins, but whats your guest in terms of if we were to get a resolution by the end of the week, how big the impact would be on the economy . If they get a resolution today, i think opinion of Congress Still will have diminished significantly. I dont think that will change the world or certainly wont change the peoples feeling about the reserved currency. What would do the job, both parties say this is a weapon of mass destruction. Were not going to use it. Well fight in trenches but not going to blow up the world to get our way. That doesnt sound like conventionalism in washington. Doesnt sound like what theyre most likely to do. Im really no good on congress. If you can predict what 535 are going to do, youre better than i am. I cant. I wont even try. Again the market this is morning seem to be relatively complacent and calm ahead of the idea we are now looking at less than 24 hours eding into this deadline. We made this deal for 1. 1 million acquisition. Its been this the process weeks. We signed it this morning. I wouldnt change the price a penny based on whats happening. I wouldnt want to get out of the deal. We didnt put in as a condition things had to get solved. If i were buying a farm today, i i would not change my mind. If i were going to take on a dairy queen stand today, i wouldnt go a different way. Youre a long term investor. Most people are. If you take the people that own farms, that own apartment houses, most people are long term investors. Thank heavens. If things sold off in a good way, you think that would be a big buying opportunity . Absolutely. I made the first purchase of stock april 1942 and pearl harbor was four months past. We were losing the war. The dow was 100 and its 15000 now. If i were guess aing along the time, i i may still be today. You thank you for that. We have headline this is morning. Mostly about where you are now in washington d. C. Lawmakers are back in session today trying of course to forge a bill to end the Government Shutdown and debt limit debate. Senate leaders reid and mcconnel hope to finalize the agreement after House Republicans failed to come up with a deal yesterday. Weve told you about bank of america and pepsi beating consensus. Stanley black and decker, you wouldnt know it from the stocks plunge and pretrade this morning. The tool maker earned 1. 39 per share a penny above estimates. The company cut the outlook for the year because of a slow recovery for Profit Margins as well as impact from the Government Shutdown. Also, auto parts maker advanced auto part, 2 billion in cash. The deal creates the largest after market auto parts in america. The stock jumped following the announcement. We have more from Warren Buffett live in washington d. C. When we return. Also fred smith on energy independence, state of the economy, much more when squawk box returns after this. Were sending the squawk box team. Dont miss a special edition of squawk box tomorrow live from the Nations Capital starting at 6 00 a. M. Eastern. Americans take care of business. They always have. They always will. Thats why you take charge of your future. Your retirement. Ameriprise advisors can help you like theyve helped millions of others. Listening, planning, working one on one. To help you retire your way. With confidence. Thats what Ameriprise Financial does. Thats what they can do with you. Ameriprise financial. More within reach. Securing americas Energy Future hosting a National Summit on Energy Security called o peck argo. Joining me cochairs of the Energy Security leadership council. It is national security. Thats why when we see china try to buy an oil company it doesnt work. Energy is something we can talk about in the same breath as defense and energy. I figure we are in a better place than the last three or four years. Arent we . Isnt it astounding about our own possible efficiency . No question about it. When we set up the Energy Leadership council, this group of retired four star admirals, generals and ceo of oil using companies we were importing about 60 of our oil everyday. What happened to the light . Today its less than 40 . Much progress. I know its your job and a lot of guys that protect our nation, thats your job to worry. We are in a better position now to some day take that weapon away from opec and people that dont like us . It must be gratifying. Joe, thats well said. It is before. Trend lines are encouraging. As fred mentioned were still importing 40 of the requirement today. We believe that as a nation, weve got to work on it. Eventually well achieve the Energy Security. I want to point out joe, when opec instituted the oil embargo 40 years ago to punish the United States in particular for support of israel during the war, we were only importing 35 of our oil. Withholding oil supplies through the United States economy and complete chaos. Yeah. You know, the advances weve made, we all know about natural gas and fracking. The 90 plus is oil that we use. Its not going to change for at least 20 years or so. We still need natural gas cant solve everything. Were going to need oil, right . Oil will remain the primary motor power for planes, truck, ships. For the first time, theres a chance to diversify a significant amount of transportation, electrification of light duty vehicles including the hybrids which are popular today, natural gas for heavier over the road central fuel vehicles. Theres promise in bio fuels as well. Diversification of transportation away from its sole reliance on petroleum is the best thing we can do to prevent ou prevent ourselves have from having another shock on the market. We have to get to the point were producing enough oil for our own consumption. Were still tied into the oil market. Id like to point out the world market is not a free market. Seven of the top ten Oil Companies in the world are state owned. Price is driven as opposed to a result of supply and demand. Fred, Warren Buffett wants to talk to you. I dont know what its about. He usually has a checkbook. 38 billion is the current mark of fedex. I wouldnt entertain anything less than 50. Joe is going to take a commission. Im thinking fedex. Warren, you love fedex right . Hes paying you in gummy bears. I wanted to make one comment. Sometimes im accused of. The reason is really because of people like fred smith. If you think about it. Fred 40 years ago, took two common ideas, mail and delivery and airplanes. Somewhere in his head he dreamt up the idea of a business thats changed the lives of all of us. Its the fred smiths of the world that made america what it is and will continue to make america greater. Its far more important than washington. There are more fred smiths out there. I hope i find the next one. You just have to youve got to feel good about america when you see Something Like a fedex develop. An idea in one mans head and now employeei inin ining how ma thousands of people. I tip my hat to you, fred. Thank you. Im complimented you would say weather. Joe, can i add something a lot dont know about joe fred smith. He was the Company Commander in the vietnam war. Thats not surprising. I concur. We all concur. Weve said it so many times. The post office, you thought how could anyone take on the post office and deliver a package overnight anywhere in the world. It was impossible but some how you did it and made money. I dont know what that says about the post office. Amazing. It could be a segway to the u. S. Government. Want to get your thoughts on the shutdown itself whether that impacted business, if youve seen it and to the extent youve made preparations or what you think about washington related to the debt ceiling . Its definitely had a minor effect on business. As one example, we have tens of thousands of shipments held now that we cant deliver to the United States government and a lot of vendors shipping to the government are now ceased. On the margin, theres been an effect. I agree with warren though. I have confidence theyll come to a conclusion. Our system tends to be pretty fracturous. At the end of the day it ends up in the right place. Reid and mcconnel are good men. I think theyll provide leadership here. Fred, well end with what we were talking about earlier. That is our energy needs here. The other thing i think is most staggering. Three or four years ago the argument was made we dont need to open up a lot of stuff here because we can never hope to generate that much more domestically. I think that has been the nail put in that notion of the coffin. We could do it. I think if we can we should. Well, of course. The oil markets are the largest Single Market in the world. Oil is at the center of everything that we do. The biggest single thing that happens if we produce more in the United States and use less and develop alternatives which are our recommendations is you allow the United States to have within our economy a half trillion more in gdp. We are looking for growth in the United States and greater employment. Theres no better way to get that than to produce energy in the United States and north america. There are high paying jobs. It allows us the flexibility to conduct International Affairs and Foreign Policy without regard to being hostage to national Oil Companies that general con way mentioned. He and the other generals and admirals on this committee spent their career protecting those trades. I add with regard to energy, our nation is about to experience something no other nation can claim. That is well have more reserves in petroleum, natural gas and coal than any nation in the world. I think it harbors well for our nations future. Thanks general and thanks for everything your entire life general con way. Thanks for appearing today and fred smith, great to have you on. When ever youre able, wed love to hear from you. We all concur with what Warren Buffett had to say. Before we go, lets take a check on the futures now. We have green arrows. Investors are keeping a close eye on the senate. Squawk box returns after this. Make a deal with me, kid, and you can have the car and everything that goes along with it. So, what do you say . Thanks. But i think i got this. [ male announcer ] the allnew cla. Set your soul free. So she could take her dream to the next level. So we talked about her options. Her valuable assets were staying. And selling her car wouldnt fly. We helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today. And tomorrow. So lets see what we can do about that. Remodel. Motorcycle. [ female announcer ] some questions take more than a bank. They take a banker. Make a my financial priorities appointment today. Because when people talk, great things happen. I love having a free checked bag with my united mileageplus explorer card. Ive saved 75 in checked bag fees. [ delavane ] priority boarding is really important to us. You can just get on the plane and relax. [ julian ] having a card that doesnt charge you foreign transaction fees saves me a ton of money. [ delavane ] we can go to any country and spend money the way we would in the u. S. When i spend money on this card, i can see brazil in my future. [ anthony ] i use the explorer card to earn miles in order to go visit my family, which means a lot to me. Lets get back to our guest host, Warren Buffett chairman and ceo. You own stakes in a bunch of companies. Berkshire has connections people may not think about. One im thinking about is jcpenn jcpenney. The stock was at a low yesterday. The entire market cap in the s p 500. Youre a supplier in that sflieth. Supplier in many respects. Fruit of a loom. And also supply jewelry to them. Theres a lot of questions about the health of the company. You as a former retailer yourself in the Department Store and now somebody that has a lot of retail business, youve been watching this. What do you think about whats been happening . Its very tough. The trouble with retailing is the competitor is always moving. Getting your act together which theyre doing is important. At the same time all others keep moving. Its just very tough. I have this huge rooting interest. I worked there when i was 16 selling shirts 1. 98. I sold mens clothing, childrens and i loved it. I have always loved the company. Its tough to run it. Of course when you have to do Something Like selling out whether 38 or a large number of shares it makes it very tough. Coming from behind in retail is very tough. We saw drops of 25 to 35 on a quarter basis and sometimes year over year. You wonder how and when they stem the losses. My question comes as a supplier, is there a point youve grown concerned enough . Thats a good question. We do ship to them under normal terms. Were not worried about shipping to them. I dont know how much we have in the way of a receivable from jcpenney. Its significant. We have not changed the terms cash order or anything like that. Im not worried about them surviving. Its tough when you have to sell this quantity of shares at this price. That really hurts. Lets talk about the health of the consumer. Youve given us some inside to the economy. I know you have a good sense on things like the Burlington Northern santa fe. What do you expect . We expect to basically match by a tiny bit exceed the carloads. Its a few weeks away. Goods coming in for christmas. We set the record in 2006 again in november. Our projections are that well hit maybe slightly above that record in a few weeks. Its come back. Our Furniture Stores we have them in houston, boston, utah, california, nevada, idaho, nebraska. They have been very strong lately. Sort of across the board. Businesses continue to get better. I cant atell you about the last couple of days. I think it will continue to get better unless we totally mess it up in washington. What happened about the housing business . Weve heard from Home Builders to this point, many of them and heard from bank of america, the dropoff of mortgages. Many saw a slump when Interest Rates spiked. Theres been some ive seen our figures for september on home sales. Theyre very good around the country. The median price is up and everything. Its true that refinancing that doesnt mean anything. We got in trouble refinancing five or six years ago. Its great for people to refinance their mortgage and bring down cost. That increases consumer purchasing power. Homsome Home Builders had to give away Granite Counter tops and things to get those homes sold. I dont know about specific markets, but i say the median prices we see in all kinds of markets. Ive looked at price for september on our sales. Theyre up. Volume pending sales are up. It may have slowed down a little. Who knows in any given market. Were a lot better off in residential housing. The demand keeps growing. Fundamentally things are going in our favor over the next three to four years. Thank you. Well continue this conversation with Warren Buffett. In the meantime well have the latest in washington as the debt ceiling clock continues to tick. Either way, whats it going to mean for investors . Well be right back on squawk box. Still to come from a one garment wonder, the founder of spanx talks business success. And another half hour with ceo Warren Buffett. Squawk box is where Business Leaders turn first. Its only on cnbc. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. You might say the threat to not raise the debt ceiling after youve already spent the money is really a political weapon of mass destruction. Lots more still to come from the oracle of omaha. And the developer of spanx sara blakely. The third hour of squawk box starts right now. Is that nickelback . What happened to them. Welcome back to squawk box here. First in business worldwide. Im joe kernen along with andrew. We got it. We hear it. Becky is dancing. Warren is going to start dancing. Becky joins us live from washington. I sent you an email. Show that to warren and figure out our next step. Well get back to them in a minute. Did you see it . Im just looking. Heres the morning headlines. Ask if theres anything we can do. Heres a couple of morning headlines. Bank of america earnings beating street by 2 cents. Provisions for credit losses and ex pensions fell. Revenues short. Pepsi 1. 24 a share, ahead of estimates the company says its on track to meet financial goals for the year despite a sluggish economy. The u. S. Equity futures now. We have green arrows despite the back and forth in washington. Expectation that a deal gets reached today. Dow looks like would open 58le points higher, s p 500 up 6 point, nasdaq up 11 to 12 points. Nobody is worried. Nobel prizes this week, it was confirming the market hypothesis. One confirmed efficiency. Shiller says no. This is what i love about economics by the way. They both get nobel prizes. Anything else, physics, literature even is good or stinks. You think the efficient market hypothesis is saying something will happen. Are they saying something gets done today or in the next two or three days and its fine either way . Or they just listen to buffett. That could be it. Lets talk about the debt ceiling and Government Shutdown. Becky is in washington with our special guest Warren Buffett. I guess were not buying gummy bears. Did he have ideas how to budget out of a private foundation . What would his next step be. For viewers that werent watching earlier, the guy that created gummy bears came up with this. Its perfect for warren. Joe got to me first. Well execute a letter of engagement, joe. Can you do that . Its going to have your name on it. You tipped me off. Candy, dairy queen and he pays. 15 facilities around the world turning out a hundred million gummies everyday. Its him. Any way. Lets talk becky about washington. Well do this later. Keep him after the show. Well figure out a strategy. Good idea, joe. The top story of the day is one we talked about today. It does not look good in terms of what weve heard. Smoke signals coming from the hill and the market is complacent that will will be a deal that gets done. Is that how youre reading things too . The market feels nobody could this idiotic to take something from the country that could be destroyed over this matter. It should never be used as a weapon, the debt ceiling. Its a political weapon of mass destruction. The threat of it is huge like a Nuclear Weapon would be. We dont go around threating countries. They could argue about abortion, gun control, about the budget. Fine. But dont use something to destroy a 237yearold asset of the United States to get your way on something. You pointed out this is a technique thats been used in the past in terms of people trying to negotiate around this. It is a Nuclear Weapon. The administration and others in washington have pointed out they think this time is different. They think theres a real intent to go over the debt ceiling. We heard that from House Republicans weve had on. I questioned whether the leadership in the house would go ahead with the move like that. I dont think they would. Thats what the market is counting on. Its the threat of Something Like this that youre not going to do. There are some that would take it over the limit. Theyre not a majority in congress. Its a mistake to kind of suspend activity in the u. S. Over something thats unthinkable to do. We say poison gases. We dont use it. If youre losing a war, you dont use poison gas. If youre not getting your way in a diplomatic engagement, you dont threaten Nuclear Weapons. This should be taken off the table. I say have statute of limitat n limitatio limitations. We realize its stupid to use it and neither side use it anymore. Youre talking about an amendment passed by congress. Hank paulson is thinks that too. If you vote to spend more than youre taking in, youre going to increase the debt ceiling. Why use this weapon of mass destruction when a small government can do all kinds of things . Weve had 237 years to perfect our democracy. On this particular point weve gone backwards. Lets get it off the table forever. Youve talked in the past about how you think that the entitlement programs need to be addressed. I think we need a situation where our National Debt is not increased as a percentage of our gdp. We have not talked ability the Affordable Care act, obama care. The roll out came. It got overlooked because of chaos thats taking place in washington. Health care is no matter which way you look at it is huge. On its way up to 25 of the gdp. What do you think about the roll out of obama care and how do you think we can tackle that . Im glad i wasnt in charge. Health care is the tapeworm of the american economy. When you get to 17 or 18 and other countries have 10 . 7 or 8 cents from the dollar is disadvantage. We think we are disadvantage and we are. We talked about the 500 billion spent on foreign oil. Were talking about a huge, huge cost disadvantage against the rest of the world. We need to address it. Were so rich we can get away with a lot of things, doing things wrong for a while. We cant get away with doing them indefinitely. We had the ceo of edna on. He believes about 30 of the money spent is wasted. One out of three almost is spent in poor ways. He thinks its kept that way because of lobbyist in washington and established economic and political lobbies. When spending 2. 6 trillion on something, thats a big constituency that doesnt want change. Theres a lot of fraud. Many think its poorly spent too, wasted. I dont doubt it. Its not subject to the usual market forces. When i walk in covered by blue cross blue shield. I make no decisions related to cost. If you have people who are not paying directly themselves, market systems dont work so well. Affordable care act doesnt necessarily address that aspect. Weve got a long way to go. You think that i guess when i talk to somebody like mark, he has simple solutions. Like wow, if someone was listening, there are ways to quickly turn this around. I dont know about medicine. I asked people i respect and they Say Something could be done. Theyre not sure whether its really possible considering the politics and huge vested interest. 2. 6 trillion. If you you think sugar produce other e ers in florida, imagine the industry with 2. 6 trillion coming in. Thats 600 billion out of someones pocket. Thats tough to change and important too. Well slip in a quick break now. When we come back, well have more from the womens most powerful conference in washington. Sara blakely the inventor and founder of spanx is up next. Shes an amazing person. Cant wait to tell you more. Stick around. Squawk box will be right back. Change in aftermarket trading. All the tech stocks with a market cap. Of at least 50 billion. Are up on the day. 12 lowvolume stocks. Breaking into 52week highs. Six upcoming earnings plays. That recently gapped up. [ male announcer ] now the world is your trading floor. Get realtime market scanning wherever you are with the mobile trader app. From td ameritrade. Welcome back. In our headlines this morning, saw it yesterday marco up. Senate moving along, reid, mcconnel getting along well. We hear one more try. Republicans before they were going to take the senates bill decided to try to put together their own bill and stick to medical device tax in there and other things. The senate, those guys said well postpone what were doing. Reid said this is a no go. We wont do it. Boehner couldnt get the votes to do it. Last night the senate said were going to do it. You figure thats whats happening today. Ball is in the senates court. They have to put something together. We have to make sure no one disallows it to go. We have to make sure ted cruz i cant imagine the filibuster could have enough to overcome that. One guy could still say no. Theyre hopeful coming up with an agreement. I couldnt imagine boehner wouldnt put it to the house. Maybe thats the scenario. I dont know why the market is up 60. Even yesterday it manage to have had close above. Fitch still put the u. S. On negative watch to see what happens. Maybe a downgrade in the offing according to fitch. It would put it everyone with s p. Moody never raised the caution flag. Weve had the individual on. He said no, were not putting it on watch. We think theyll figure it out. Were going to get back to washington with becky and warren. They have a special guest with them. Becky ask about an undershirt. Im wearing one. I already heard. You talked to everybody about it. You talked her ear off. You definitely want to hear about this. Were at 15th annual most powerful womens summit. We have a special guest. This is an entrepreneur that turned her invention into a must have in every womans closet. Joining us now you sara blakely the founder and inventor of spanx. Also ceo of Berkshire HathawayWarren Buffett. For people that dont know you, youve got an amazing story. Spanx is something every woman has. How did you come up with this idea . Actually my own butt was the inspiration. As a woman i couldnt figure out what to wear under my white pants. I dont know if warren had the same problem. A lot of women do. I was a frustrated con super that had no business background or retail experience. I knew there was a void between the traditional underwear and the heavy duty girdle. The moment happened to wear the pants in my closet. You made your own . I cut the feet out of controlled top pantihose one day and realized that worked better than anything on the market as far as smoothing. They rolled up my leg all night under my pants. I went home that night and said ive got to figure out a way to keep this below the knee. It sounds so simple and obvious. It was something that had never been done before. For anybody that thinks you were somebody sitting around with a lot of spare time on your hands or born with a silver spoon in your mouth, tell me. You are the apitmy of the American Dream. Were you selling fax machines door to door . Yes. How many years . I sold fax machines seven years. It was basically my only job out of college. You know it was a cold calling for a living. I got kicked out of businesses all the time for years. I did that until i cut the feet out of pantihose. I had 5,000 set aside in my savings. When i came up with the idea, i went on the internet and started researching hose ri and shape wear, where and how does it get made. That started my journey of spanx. I found out that most of it was made in north carolina. Lucky for me it was close enough i could drive there on weekends and take Vacation Days and go during the week. This wasnt an easy thing. I think your background as someone selling fax machines door to door helped. You heard no a lot. Someone that grew up wanting to be a lawyer but basically bombed the l sat twice. I ended up at disney world trying out to be goofy. They wanted me to be 58. They wanted me to be a chipmunk. They hired me to sell fax machines. They would hire anyone. I feel very much like i em body the American Dream. I feel lucky to be a woman in this country and to be given this opportunity. I have these pinch me moments. Not long ago i was selling fax machines. Now im setting next to you and Warren Buffett. How did this happen to me . They another fred smith. Shes the reason you have to be. They both saw a need. They took common ingredients to solve that need. Theyve been sitting in front of everybody else. She was thinking about what can you do to make the womens lives better. Now shes got them for men. What are you holding in your hand . Im holding a gift which promises to transform my whole public persona. I may go change while were doing this. Youll see a new warren. This is your obsession. Hes holding one of those undershirts. Im wearing one of yours sara. I could take my shirt off. Im wearing one of her undershirts now. She makes you dont have the pants on . She makes two kinds of mens undershirts. One is a regular undershirt. Another one has a little bit that pulls you in. Any way, im wearing the regular one at the moment. That was good. Youre hired. Theres a serious point here. Really. Sara has just begun. Other people will be inspired by sara to come up with things. America really works. This is where the growth you talk act is going to come in the economy. Washington has its place, but its much more important we have fred smith and sara blakely. You came up with the great idea, had the research and 5,000. Getting from there to here was an pimpossible task. You did this by yourself. Initially i did it myself. I had no money to do it any other way. The first two years i was involved in every aspect of selling it, marketing it, trying to wear all the hats. I couldnt afford to hire anyone. When i could afford to hire my weaknesses or the things i didnt enjoy as much i did. I hired a fabulous ceo. Shes been with me 11 years. That was a critical moment for spanx to recognize this is my gifts for the company. I need to find someone to really manage the daytoday and operations. Weve been a good team. That takes self awareness and confidence to say im the creator, founder, inventor, builder, but there are things i cant do. For sure i recognized that. I was eager to hire my weaknesses. I find that a lot of entrepreneurs we tend to get in the way sometimes of our own growth. Its rare that the person who invents it, births the idea is the one thats supposed to grow it and operate it year over year in a very business type background way. I recognized it. It paid off. I want to talk about a couple of other things you did. I think one of the unique ways you approached the business was not doing things by the rule book. By going directly to some of these factories in north carolina. How did you first of all did you know you were a book you were supposed to be following . No. That was my greatest gift. What you dont know can become your greatest asset if youll let it and if you have you the confidence to say im going to do it any way. Even though i havent been taught or somebody hasnt shown me the way. I actually talk about that a loot now within spanx. I always bring it up with the team and said if nobody showed you how to do your job, how would you do it . Go to that mental space. Nine times out of ten youll come out with a better way. A lot of times were on auto pilot. The fact i had never taken a business class, had no training, didnt know how retail worked. I wasnt as intimidated as i should have been. I went into an industry on a 15 year decline. A few weeks after i made the invention i called Neiman Marcus on the phone. I ran into people that had their own products. They said how did you get into Neiman Marcus . I would say i called them. They would literally look at me like what are you talking about . I said why, what do you do . They said weve been going to trade shows six years setting up a booth hoping the buyer comes by and we get our shot. I didnt know there were trade shows. That example throughout the process of spanx worked in favor in a lot of cases. Lets fast forward to the giving pledge. Youre now in a position to be able to youve got to be a billionaire, have at least a billion and agree to give back at least half of that. She looks like a billionaire. Thank you. What are you focused on with charities . It wasnt a hard decision for me. Since i was a little girl ive known i wanted to help women. Ive had gratitude since i was young being born in the right country. I was given this great opportunity to fulfill potential because of where i was born. When i invented spanx it felt like okay this is the platform of where i get to where i ultimately want to be. When i got the call from bill gates and he explain what had the giving pledge was and asked if i would meet with him and other potential jointers, as soon as i heard about it, i thought this is exactly the right thing to do. Women need help. I am so excited. I have the opportunity to do it. I was making 40,000 a year not long ago. Giving away half of what i have now i can live off of and be comfortable. Im fortunate of bill thinking of this. If to bring thought leaders in one room that have made money in different ways to sit and brainstorm and discuss this topic is amazing for the world. I know we have to go. I want to point out one thing. Ive shown your videos to our girls. I think youre an incredible example of never giving up and letting failure overcome you. You told me something your dad used to say to you everyday that challenged you. My dad growing up encouraged me and my brother to fail. Wide come home at the dinner table. My father would say sara, what have you failed at this week . If i didnt have an answer, he would say you failed. The gift he was giving me for me failure is not trying versus the outcome. Its really allowed me to be much freer in trying things and spreading my wings in life. With amazing results. I want to thank you so much for joining us. Joe you have something . I was thinking, if you were still trying to sell fax machines im so happy youre not trying to do that anymore. Has one been sold this year, do you know . We still have fax machines. I know. You dont really need them. You said first was your butt. Spanx to me sounds did you know that word was going to be austin powers. You got it from a comedy club right . From a comedian or something . No. I actually got it i dreamed it up sitting in traffic in atlanta. But that with butts, that all fits in. Youre a quick you the i did putting it all together. Youre exactly right. I did stand up comedy as another spreading my wings and being willing to fail. I experimented with that. I met a lot of people in the industry. I think a lot of my writing i did for r several years helped in all my marketing. I knew i invented something in a really boring category. Who cared, shape wear, nobody talks or thinks about it. By naming it something people wanted to laugh and talk about, it became news worthy. People are still laughing about it. Are you going to kill me if i ask one more question. Can i get away with it dave . Theyre going to kill me. When you went to london, for joes benefit, and you were first again doing it yourself. You were giving your own promotion in the market. What happened . Is this okay for morning tv . When i did my International Expansion, i jumped on a plane, went to england with my backpack. I got the opportunity to be on the bbc which was a huge opportunity for me to explain my product to england. The gentleman interviewing me says sara, tell me what spanx can do for women in the uk. I said well its all about the fanny. It smooths your fanny, lifts and separates your fanny. This man lost all the color in his face. I had no idea but a fanny apparently means vagina in england. That i did not know. There you go. You can imagine. My International Expansion is off to a great start. Very nice. Theyre quiet arent they. Thank you. I somehow feel responsible for this. You are responsible for this. That story is too precious. I took it to butts. It didnt know we were going to take it there. Sara, thank you very much. Becky, thank you. Warren is going to be sticking around. Joe were going to get you a shirt. Youre buffed now but will be more buffed when it sucks you right in. Before we go to a break real quick, take a look at shares. Stanley black and decker is trading lower in the market after earnings a penny higher than estimates. Cutting it down for the year. Slow recovery of Profit Margins. And the Government Shutdown, more stocks to watch when we return. So we talked about her options. Her valuable assets were staying. And selling her car wouldnt fly. We helped sydney manage her debt and prioritize her goals, so she could really turn up the volume on her dreams today. And tomorrow. So lets see what we can do about that. Remodel. Motorcycle. [ female announcer ] some questions take more than a bank. They take a banker. Make a my financial priorities appointment today. Because when people talk, great things happen. I know what youre thinking. Transit fares as in the 37 billion transit fares we help collect each year. No . Oh, right. Youre thinking of the 1. 6 million daily Customer Care interactions xerox handles. Or the 900 Million Health insurance claims we process. So, its no surprise to you that companies depend on todays xerox for services that simplify how work gets done. Which is. Pretty much what weve always stood for. With xerox, youre ready for real business. [ laughter ] [ female announcer ] each one of us is our own boss. And no matter where you are in life, ask your financial professional how lincoln financial can help you take charge of your future. Can help you take charge of your future. At a ford dealer with a little q and a for fiona. Tell me fiona, whos having a big tire event . Your ford dealer. Who has 11 major brands to choose from . Your ford dealer. Whos offering a rebate . Your ford dealer. Who has the low price tire guarantee, affording peace of mind to anyone who might be in the market for a new set of tires . Your ford dealer. Im beginning to sense a pattern. Get up to 140 in mailin rebates when you buy four select tires with the Ford Service Credit card. Whered you get that sweater vest . Your ford dealer. Welcome back to squawk box right now lets get back to your special guest Warren Buffett and becky. I heard you had a question you wanted to ask warren. I had a quick question. We were talking to david yesterday. You were talking about the giving pledge. I raised this question about peter your son that wrote over the summer about if i ran tloep i. There was suggestion it was about image enhancement and making you feel better about yourself. How did you feel about it after you read the piece . I felt fine. Peter was explaining the various motives that go into philanthropy. Hes a great component of it. Theres a fair amount. They sell buildings with names on them. Im fine with that. If that causes a bidding that a wonderful teacher will be in the next 100 years, i do not have a problem with peoples motives. Its how the money gets spent that counts. He was saying there could be improvements. Philanthropy is tougher than business. I encourage my kids to fail because if theyre not failing, theyre not trying things that are tough enough. Youve got to fail to succeed a lot of times. Some famous philanthropist said this and i agree. It doesnt mean after he died the Russell Sage Foundation didnt do great things. Looking around at whats been happening in washington. Markets again dont seem to be concerned about whats happening. There have been people who have said, look the dollar and its safe haven status as a currency. The dollar is the reserved currency would be at risk. Last night, christine la guard said perhaps that damage has been done according to where she said things are in the world. She even talked about countries that moved. Do you see that becoming to be a deal if we dont get a deal this week . Its a problem at some point. Near term, i dont know exactly when that is. It would be a colassal readjustment of the world. Its basically unthinkable. I dont think it will happen. Even to play around with the idea is totally irresponsible. I think it should be banned from the arsenal of both parties. Both parties have been guilty in the past. Its not just either one. It does not belong on the table. I hope this example teaches us that. I hope we dont need a more extreme example. A credit worthiness can be preserved but not restored easily. It is crazy to play around with it. We go from sara blakely to you on these things. She opened it up. Its not my fault. If we take a look at where things stand. You told us recently on the program you think stocks are fairly valued at this point, harder to find deals. We still have our money. If we are looking at an environment where the fed does not taper for some time to come, the economy continues to chug along. We get through the most recent crisis in washington. Does that make the stock market more attractive. The stock market compared to most Asset Classes in my view is the most attractive place to have your money over the next 20 years. Over 20 days or 20 weeks i dont know. We have our money in businesses. We all all of some businesses, parts of some. We call those stock. We think thats where value lies. We had mark as a guest on the show yesterday. He laid out the argument about just by looking at formulas, playing the averages, that we are due for another correction at some point. You never know when or how thats going to happen. It was an argument for not getting caught up in the euphoria of the market and making sure you were diversified. Do you think weve reached the stage in this market people have to worry about bubble levels . No. We could at some point. No. Stocks are not selling at bubble levels. I think its a terrible investment compared to equities. So youre going to have your assets in something. Good businesses held for a long period of time are certain to deliver good results from this level. For an average investor in the past, you advocated investing in a stock index. If youre not somebody to sit down and evaluate every single company. If you dont know enough play against pros. You have a very Good Alternative available. You want to own a bunch of Good Businesses at very low costs. An index fund makes the most sense. Over the recent decade, more and more money went to index funds. Could we switch gears and take a look at the American Dream in this country. We had fred smith on the show, sara blakely on the show, you another self made billionaire. You are all examples of the American Dream. Is the dream still attainable today . Its more attainable than others. Your zip code is a predictor of your destiny. It isnt the total predictor. There are more stories that come out of different zip codes than others. Theres opportunity in this country. There are a lot of people that arent going to share. Its terrible. We are a very rich country. The bottom 20 do not have a great chance in this country. Do you think thats different than it was 20 to 50 years ago . Somewhat different. I think a market system produces a huge abundance of goods and services. Its the greatest service weve seen turning out lots of tough. As it gets specialized, more get left behind. Its still the best for turning out lots of stuff. Well continue this in the meantime, joe well send it back to you. Okay. Weve got suggestions. I dont think we should do this. Do you think we should change rise above the lift and separate . Thats not were getting a lot of comments about that, becky. My whole world few has changed. Weve got to think long and hard when we talk to people from other countries. Thats why you were so quiet the last conversation. I was. We were both listening. Whats this story going to be about. You knew exactly. I blame myself. I did spanx austin powers, took us right there. Normally its at 6 00 a. M. On squawk box youlistening. Never know whats going to be heard. Tomorrow were talk politicia politicians. Well rise above pop politics. The rise above capitol hill. There could be a deal fast. It all starts probably tomorrow at 6 00 a. M. Eastern. The most Free Research reports, customizable charts, powerful screening tools, and guaranteed 1second trades. And at the center of it all is a surprisingly low price just 7. 95. In fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. Im monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. This morning. Lets look at stocks on the move in the trading this morning. Yahoo rising despite the Current Quarter outlook falling below estimates. Yahoo reported 34 cents per share, one cent above estimates. Also announced it would hold the larger than expected state in china commerce company. Looking forward to ipo soon. Free market trading up. Rail operating earned for the Third Quarter, 3 contributes above estimates. Twitter isnt trading but when it does it will be on the new york stock exchange. It announced yesterday it is going on the big board. It is expected to price november 14 and begin trading the next day. Coming up, were going to hear more from Warren Buffett. First well check with cramer for stocks ahead the move. Well be back in a moment. Joe is going to washington. Were sending the whole squawk team to talk to lawmakers and politicians about the ongoing negotiations and the repercussions of hitting americas debt limit. Dont miss the special edition of squawk box tomorrow. Live from the Nations Capital starting at 6 00 a. M. Eastern. I am today by luck. I put in the hours and built a strong reputation in the industry. I set goals and worked hard to meet them. Ive made my success happen. So when it comes to my investments, im supposed to just hand it over to a broker and back away . Thats not gonna happen. Avo when you work with a schwab financial consultant, youll get the guidance you need with the control you want. Talk to us today. A billionaire based on and i thought about it and i think i understand. So you dont want the panty lines, right . So pantyhose make sense. It seems so simple. Im trying to figure out something we could do together for men. Remember when spanx was on Donnie Deutsche . I it was a Million Dollar company. You have a Good Business idea, can you go pretty far. Did you hear bank of america, did you hear buffett said annualized its only 70 basis points and wells fargo is only 50. Did you see how fast he did that . Dont forget, they solved a lot of litigation problems. They did a that an right. I like the Wealth Management business. Its very, very strong. The commercial loans are starting to get stronger. Stanley black decker, did you ever get negative on that . I got negative but for the wrong reasons. I thought it was going to be europe. I did not think it was going to be security, which is really, really terrible. This is a shocker to people. The margins were bad, this division they bought obviously not working, they have a lot of work to do but its not tools. Dont sell hope depot off of Stanley Black decker because that was not the weakness. Good info, jim. Thank you. Coming you, well get back to becky in washington for the last word from our special guest, Warren Buffett. Hes got advice from the republicans when we return. At a ford dealer with a little q and a for fiona. Tell me fiona, whos having a big tire event . Your ford dealer. Who has 11 major brands to choose from . Your ford dealer. Whos offering a rebate . Your ford dealer. Who has the low price tire guarantee, affording peace of mind to anyone who might be in the market for a new set of tires . Your ford dealer. Im beginning to sense a pattern. Get up to 140 in mailin rebates when you buy four select tires with the Ford Service Credit card. Whered you get that sweater vest . Your ford dealer. Welcome back to squawk box. Its time for the last word with Warren Buffett. Were in washington, d. C. It is 15 hours till the dead line. Youre the master negotiator. What advice would you give to the republicans this morning . I would give this advice to republican because theyve dug the hole. Im not saying the democrats havent done it in the past but this particular hole belongs to the republicans. I think if they were wise, they do not want to be remembered as the party that destroyed a reputation that americans built up more than two centuries. I think i would tell them to follow herman hickmans advice. When he was a coach at yale, i believe it was herman who said if youre getting run out of town, turn around and make it look like youre leading a parade. I would suggest the republicans do that. How do you do that . I know were almost out of time. Its the hardest line in the world but they made a mistake. They can fight out the budget, they can fight out obama care, everything they want, on other grounds but they cant do it by holding a Nuclear Weapon, which in the end they cant use. Ultimately you think we do get a deal this week . I think so. I want to thank you for all of your time and for joining us this morning. Guys, well send it back to you. What a great three hours. It really was. A little bit of everything. We should take a quick look at futures. A little over 11 points as well. I will see you tomorrow in washington, d. C. Well see, well see. Squawk on the street begins right now. Zvlgs i im carl quintanilla, david faber and jim cramer with me