Transcripts For CNBC Squawk Box 20160429

In europe. And then finally a quick look at crude before we get to a couple of the big stories of the morning. Wti at 46. 57. That would have been a good move around the 40 handle couple of days ago. Here are the big stories were watching today. Amazon crushing earnings estimate, posting most profitable quarter ever. We asked yesterday are they still sewing . Or starting to reap . Looks like the reaping has been. Cloud computing business. I thought they sold books. No. They have changed apparently. Side things. Other things in the last few years. Helped the Online Retail giant pull off the beat and stock took off. Jeff bezos net worth went up estimated 6 billion dollars based on how much stock he owns. And other stocks on the move this morning as we check into earnings central. Pandora reporting a wider First Quarter loss. Although it wasnt as bad as analysts expect. The streaming Music Service is raising full year outlook thanks to higher ad sales. And baidu fell to lowest level. Chinese internet certainly giant now expects its Revenue Growth to slip even further in the Second Quarter as it tries to continue to diversify a way from its core business. And linkedin First Quarter results beat forecasts and they are raising full year outlook on Strong Demand for hiring service and high eer ad revenue. Verizon meanwhile says its made its best and final Contract Offer to unions. The company is now offering wage increases of 7. 5 . The unions say workers are standing strong on the picket lines. Verizons offer comes ahead of the stuff on saturday. And finally the last trading day of the week. Income and spending stuff. And 9 30. The april chicago pmi. It is the final report of the april consumer sentiment. And dallas fed president rob kaplan is across the pond in london about to speak. And earnings reports, chevron, exxon mobile and phillips 66. And in the meantime becky quick is in omaha ahead of Berkshire Hathawayways annual meetins a. Tomorrow is the meeting. Take a look around. Empty right now but this hall is expected to be completely packed. Buffet did tell us hes expecting attendance to be down about 10 . He did say from further away places, international, the requests for tickets were down a little. But hes still looking for 39 to 40,000 people being here in the stadium tomorrow. We caught one buffett last night and got the chance to talk to him. We asked him to react to comments from carl icahn yesterday. Icahn saying hes extremely cautious on the u. S. Stock market right now and hes calling what could be a day of reckoning with the fed policy creating tremendous bubbles in his words. I pointed out to buffett the stock market closed near the lows of the day after icahn spoke and i asked what he thought about that. Well, there were probably this is the most wild of guesses. There were probably 50 thousand people or more yesterday. So i dont know that i would pick out any one of them and put too much wait in what they did. So i have no idea what the market will do day to day or why it did today or yesterday. Do you share any sentiment when it comes to worrying about bubbles that could be inflated by the low Interest Rate environment . Low Interest Rates. Interest rates act on asset values like gravity acts on physical matter. And if you had zero Interest Rates and you know you were going to have them forever, stocks should sell a hundred times earnings or two hundred times year if your Interest Rate is zero and know it will last forever. On it was enormous asset pull. Investment is something where you lay out money now to get more later on and if you can get 15 it makes the choices way different than if you get zero. And weve had low Interest Rates longer than most expected. And to some extent its changed peoples expectancy about Interest Rates. The 30 year bond reflects peoples view about 30 year money. What about negative Interest Rates in places like japan and europe . What does that do . I hope i dont ever live to find out. I have no idea. You can read adam smith, you can read caines, you can read anybody. And you cant find a word to my knowledge on prolonged below year Interest Rates. Its uncharted territory. That doesnt mean it is the end of the world but i dont think anybody knows what the full implications are of low Interest Rates and i certainly dont. Carl icahn said he would like to see more fiscal spending. He thinks the republicans in congress right now are almost obsessed with the deficit to a point that he called almost pathological. What do you think about the deficit . How big of a problem it is and whether we should be spending more as a nation right now . Well the deficit is not a big problem. The National Debt which is a function of the deficits that you have over a long period of years but the National Debt as a percentage of gdp is a little higher than i would like it. But the main thing is not have it galloping upward. And weve had a National Debt that was 120 of gdp in 1945 and 6 when we came out of word war two and people thought that was the end of the world and of course it was somewhat inflationary for a while. But we had enormous prosperity after that. And there are countries around with much greater debt to gdp ratio than we have. What we have is not dangerous. People talk about it in gross terms. Berkshire had no debt perhaps in 1965 when we took it over. If we borrowed but we have more earning power now. And this company has incredibly more earning power than 30 years ago. And debt can only be evaluated with future income capabilities. And the countries have never been larger and they keep growing. We got the chance to talk with mr. Buffett about a lot of things including what he thought about the gdp numbers. The lousiest growth weve seen in two years. Economists are already writing this off saying dont worry about it. Already in the Current Quarter seeing a much stronger gdp read. Obviously Warren Buffett has his own ideas about that. So many businesses that reach in different directions. And hes got thoughts on that as well and well have more of that coming up just a little later this morning on squawk. We have a packed show from here. The next hour. The ceos of two companies. Well talk to them. And at 7 00 a. M. , berkshire board member sue decker will be sitting down with us. Well talk to her. Becky, looking good to see you. You too. Good morning. Yesterday. Miss you guyed too. Jumble yesterday. I didnt see brutal. Still smarting from your loss two days ago. And ive said this before. Icahn, ive known him a long time. And ive told you hes never ever not said that the stock market is in a bubble. Ever. And i just checked to see how long ago the first time was. So he was not married to gale yet. So i looked to see when he got married to gale. That was 1999. About two or three years before and i had dinner with him. Market oh my god, overvalued. Day of reckening is and then a year ago. Same thing. We talked about it. Its been non stop. Non stop. So i mean, i write that off immediately. The other thing more interesting about icahn, do you remember what he was saying at apple at 110 and . Its worth 200 dollars . And now hes selling at . Hes out, really . You have to be careful. If you want to follow any of these big guys. They tell us after they get in it. And get out after they tell us they are out. And you can follow business for themselves. He was dead wrong on apple and all the cash and annuity they were going to make again and again and again and staying in. He helped a lot of the analysts said well i got to be right. Listen to carl icahn whos i mean that is the only thing. If you listen to his interview yesterday he actually said good things about apple shares. Still thinks positively about them. Still thinks positively about tim cook. But yeah hes out. I cant believe it. I saw that. I was like you, you now ye youre out. There were people that like could you give me the heads up . You pull the rug out. Hes not in that business. Then hes purely talking his we say it over and over again. Because that is the deal. And warren thank go ahead hes always you know it is kind of folksy. But he always has the calm common sense sort of take on things. And with the deficit as well. We have unfunded liabilities out of control but a couple of accounting switches on Social Security and we could fix a lot of those. And if you look at the actual and you can either thank the sequester or i dont know. Im watching the president sort of change a lot of whats happened over the last seven years in terms of that legacy. But whatever did happen, i mean we have the seen the deficit go down. I dont know about that. 5 and whether that is just temporary. I mean this is like seven straight years of. 5. Wait until you hear what he has to say. Hes always optimistic but if you are looking for him to bolster your spirits about how the economy is doing right now . You are not going to get it. Ill show you tape. I was a little surprised hearing what he had to say. You could say till you are blue in the face that things have been great and 1. 5 is good. You can say that till your blue in the face. Tell that to the feel that are feeling the burn. And havent seen a raise in ten years. And putting trump is now going to have more republican votes in the primary than any republican in history. Hes already got more than romney had. Yeah at this point, yeah. Some of the stuff about the economy is what you want to hear more coming up. In the meantime one company that seems to be bucking the trend of whatever Warren Buffett may have to say about the economy, these guys dont care. Shares of amazon soaring after posting earnings. The tech giant logging fourth straight profitable quarter with revenue that soared 28 . Web Service Sales grew 63 year over year. Here to break down those numbers. Good morning to you. Good morning. You may think the economy is going slow. But jeff bezos doesnt know it. Hes doing pretty well. So the head lines are really talking about aws. But i think the standout this quarter is really the Retail Business that. Grew significantly faster than the are you excited about the top line issue or about the fact they are actually showing you profits. Both. So accelerating Revenue Growth and margin expansion. On the profit side do you think it is a head fake . Meaning these guys have done this before. There have been instance where there have been amazing profits. And then for three years you live in this completely unprofitable world as they grow market share. So do you think you look at a quarter like this and they harvest. This is the beginning of some longterm harvesting trend. Or this is a show me quarter which gives them opportunity to start investing in all sorts of other things we dont know about yet. Last quarter if you recall the stock took a hit after earnings. This quarter i think that allayed some of those fears. But i wouldnt get too excited. I think amazon historically has gone through investment cycles. By a zoezos is talking about lo for a fourth. I think it is more of a incremental build. I think you would see profits there will be quarters where they pull back and there will be quarters where they give you more and but this is longterm. What is the fairest way to value this company . We know what the value of it is today in terms of market cap. But if you are an analyst or investor sitting at home and saying okay im going to look at these numbers and these are the kind of multiples i should be putting on these things. What are those multiples and why . Amazon is unique. Because it has two distinct businesses. So you have to look at them separately and assign multiples which you think are appropriate. One to the Retail Business you probably assign about 1. 5 to 2 times sales. So. Sum of the parts business. That is the best way to value amazon today. And lonlsices business i know you dont think it is going to happen tomorrow. What does that look like . They are in the midst of it. I think that is really just to speed up delivery. Get efficiencies. To get product, you know, between the distribution centers. I think over time they will do it incrementally and you will find amazon essentially building out a lojs business where others can piggy back off what they built. Thank you. Coming up more stocks to watch and whats next for the markets. What will turn the selling tide from that big move yesterday . We need to talk about that. Is this the box that weve been worried about for so long . Weve got nothing in the quiver. Nothing in the quiver. Everybody is saying ah it is just the Fourth Quarter. Be thank you Fourth Quarter want great either. That discussion is just ahead. But first this day in history. Welcome back to squawk box. Futures today [ inaudible ] significant for a couple of reasons. Normally if you dont have any possibility of the fed increasing rates that is good for equity markets but i dont know how long that is going to last. Normally if you have oil going up. It is at 46 now. Strength in the equity market. Suddenly those correlations arent really happening anymore. There is no the more we have a weak growth like a. 5 the less likely there is any more rate increases this year. And it seems like, you know it reminds me once again of you need more and more of whatever drug you happen to be dictaetec to to get the same high and sooner or later you just feel crappy. Lets check out europe. Which started us down a little bit yesterday. And it down again this morning probably based upon how weak the United States was. Here is the oil market i was talking about. Saw 46 earlier this morning. 46. 56 based on that correlation of oil rallying means the equities rally. We should be doing gang buster but were not at this point. And then maybe part of the problem is the strong yen versus the dollar. You can see all the way 107 on the yen. Almost 114 on the euro. So you got what you want there. The dollar hasnt strengthened. So why arent equity markets more excited . Im worried now. The dull market trade got us back to just below our old highs and now we failed again. Below the old highs and what that technician was talking about especially with so youre selling everything . Not selling everything. I dont have anything. Stuff that you just keep. But you know now i could start taking disbursements from my ira. Could you . Yes. That is when the whole mortality thing starts setting in. When you are one of those people you thought you would never been. 59 and a half, you can start i mean you havent even thought about it. I cant believe it. I have not. You havent even thought about that. Out there. My just like the end of your days. Its not even feasible. Not that its not feasible. It is that i dont have the opportunity to think about it. Thats what perked me up that you could take money out of your ira. Thats what dragged me out of y my my respite. Like your aarp card. Someday there will be the aarp card. And millennial. Theyre going live forever. Dont need to save. Beggaring. In the meantime, were going to think about stocks to watch. Maybe you have it in your ira. J am gen. And expedia a string of acquisitions helped boost the seas of the Worlds Largest Online Travel booking company. Bought home away. Com. The nasdaq suffering a six day losing streak. And the dow seeing its worst one day declines since february. Investors are looking ahead to more earnings and jobs data that perhaps could turn the tide for stocks. For more lets bring in. Lou, for years the, sort of specter that people would talk about with the fed was that one of these days it is going to be in effective and maybe it already has happened for a couple of years. But wear not going to have the growth we need and were going to be stuck at zero and were going to be looking around staying what can the world do at this point. Yeah i think you are right. During the quantitative easing in particular that is where you can really notice that fed effect. When it was on the market went up and when quantitative easing was not on the market went sideways and was vulnerable to selloffs. So yesterdays close was about 15 points higher than in the Fourth Quarter of 2015 which is the last quarter that the fed has quantitative easing going on. So after that we were able to move a little higher and then in last may we made a high of 2134 but weve not had a weekly close over 21 hundred since last july. The market has had a couple of selloffs since then, come back very strongly but the market has really not been able to sustain any gains above the gains that it had once quantitative easing ended. Now were at a point like you said that growth is very mediocre. 1. 4 in the Fourth Quarter. The fed in march was excited that the First Quarter was starting to look better than that. That the time that the fed met in march, the atlanta fed estimate on gdp was 2 . Now later today the new york fed is making estimates on the gp. So as you were saying earlier it is very unlikely that the fed is going to move any time soon with growth at these levels. They characterize the economy as peers to have shroud and they wouldnt once again make any guess onsz the balance of risk. I would think they need to get as far as the fed, they need to see something more. Additionally we have the brexit, eight days after the june meeting. So i dont think were seeing anything this summer. If just because of that. But the zero rate doesnt seem to be, or the very low fed funds rate doesnt seem to be helping anything. It was that quantitative easing that seemed to move the market along. And the economy notably was the fixed investment by business that was quite weak. Kevin right. Former fed governor. Exactly. That is hot the sort of are investment, fixed investment is not the sort of investment this policy engenders. It is more just buying back stocks or doing financial things rather than economic things. And in the journal again with a great piece. But just the idea that we keep finding excuses to feel better about ourselves here. And, you know, for seven years well its just the hangover from the financial crisis. And then, you know, i also hear that the whole world is aging and, you know, that productivity is going to be down. And nobody is expecting the world to grow like it used to grow. Sooner or later i think we need to look deep inside ourselves here. That with zero Interest Rates and all of the priming of the pump that you could ask for. All around the world. We cant put up better than. 5 . And you know, so i know it is the First Quarter and blah blah. But we try to seasonally adjust it for the holidays and all that stuff. We try to do that to make it apples versus apples and there is just no sugar coating it. We have been first president in history lou to not have one year of 3 gdp growth. First time in history thats happened. Reagan averaged 3. 5 . Averaged 3. 5. And yet now im hearing that we need to dispel the reagan myth. I dont know about that. If you look dont know about what . How you can connect the dots well something to do with it. Well there are obviously something to do with it. But i would like to think that its economic dynamism generated by entrepreneurial spirit. If you throw up also every obstacle you can to entrepreneurialism and you know, every company here wants to move to get a lower tax rate. That is not helping. Part of it is demographics as well. Well that is the excuse. It is not just a recent trend. I will say and i always talk about this. That the recent years, the gdp growth has been, aside from the Great Recession about as slack as you have got it. But it is a longer term trend of lower highs and lower lows on gdp growth. And were all going to die someday too. But i guess im morbid. You know, it would be be nice to think we could get back to 3 . It would be nice. People run on 4 and 5 in the president ial election. Give me 3, 3. 5. It makes a huge difference to all of my problems. Says something. It does say something. Everybody committing suicide. Half the world. The nfl season right around the corner. The first round of the draft is in the books but not without controversy and a social media fire storm cost one player millions. And as we head to a break a look at s p 500 winners and losers. It was wonderful bravo pretty good it wasnt bad i didnt like it it was tarnl terrible should stacy drew. She wants to change the world with you. She can program jet engines to talk and such. Her biggest weakness is she cares too much. Thank you. My friend really wants a job at ge. Mine too. Im a wise elf from a far off shire. And sanjay patel is who you should hire. Thank you. Seriously though, stacy went to a great school and shes really loyal. You should give her a shot. Sanjays a team player and uh. Good. How was your commute . Yours . Good. Xerox real time analytics make transit systems run more smoothly. And morning chitchat. Less interesting. Transportation can work better. With xerox. Thank you for calling. Well be with you shortly. Yeah right. 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Hello . n presents the yardleys. Oh, pizza is here oh yeah, come on in [claps] woah lose the sneakers pal. Kind of a thing. Spring is on. Start your trugreen lawn plan today. Trugreen. Live life outside. First pick of the draft, jared goff. As a senior goff threw more than 4700 yards. About 15 minutes before the draft. Twitter started buzzing. This is a pick of laramie tonsle with a gas mask with a bong. And smoke coming out of it. This is one picture that showed up on tunsils twitter account. Now, he says it was hacked. And that one image dropped him down to 13th in the draft. The Miami Dolphins took him. But that likely cost him about 7 million to drop by that much. Wow. Guess the broncos wouldnt have had a problem with it based in denver now. Couple of places where that now. Would have been fine. Not even fine but improved. Think about the Sponsorship Opportunities in those cities. I do remember andrew that my friends that did try that didnt seem quite as motivated. About the gas masts. Smoked a lot of pot. They werent out like hitting, you know, they werent out on the practice field all day long. They were twinkies and, you know. Twinkies and the m ms. Peanut m ms the best. But we lost the story. We were going tell a story about burritos. Its a great segue. Everyones got a friend. Well some people dont. But burrito lovers arent happy with dunkin donuts. The all Day Breakfast favorite was one of dung dunkins briggs why . I think with need to call our mutual friend and get him on the phone. This may require a phone are if for breaking news about this issue. Ill tell you the breaking news that disturbed me. The munchkins, the holes in the bow nuts. How many calories per munchkin . Hundred. You knew that . Ive been eating them like they were 6 calories. How much is a straight up glazed doughnut . Oh thats got to be massive. 350, 400. About 300. I go on a tread michaela. I almost die and i get a 160 calories burned. You know i have a trainer. Do you know what i found out yesterday. You have a trainer. I do. You never copped to that you little snake. I met a friend of yours who. You dont think i have friends so who would this friend be . You have never copped to that. Do i get a segment out of it . Well talk about it. Coming up. Ceo of benjamin moor. The call just came in. Shes about to arrive. And with her, a flood of potential patients. A deluge of digital records. Xrays, mris. All on account. Of penelope. But with the help of at t, and a network that scales up and down ondemand, this hospital can be ready. Giving them the agility to be flexible reliable. Because no one knows like at t. You wont see these folks they have businesses to run. They have passions to pursue. How do they avoid trips to the post office . Stamps. Com mail letters, ship packages, all the services of the post office right on your computer. Get a 4 week trial, plus 100 in extras including postage and a digital scale. Go to stamps. Com tv and never go to the post office again. Welcome back everybody. Again we are live in omaha nebraska. Were joined by michael searles, Benjamin Moores president and ceo. And sam taylor. Thank you both for being here. I think you have a pretty good idea whats happening with the american consumer. You can see when they are feeling flush, when they are not. And im hoping you can give us insight about that. Sam, oriental trading has catalogs that go out across the country and a website. And people are buying crafts and all kinds of things like that. What are you seeing right now in terms of how flush people are feeling . First of all were coming off our best year in nine years. This year were seeing its gotten a little more challenging to drive the top line. A reflection with gopd overall. Especially in the consumer segment. We sell to organizations, schools and businesses, and to churches. And the more chojing is the consumer piece. Orders are up but average order is down. A very strong easter season. And easter was a week shorer. We push on the marketing. There. Sales were up for easter almost 5 . Birthday is strong. Parties. But some of the more every day type of business. So it feels like the consumer is definitely you know, shes watching her dollars more carefully. Spending where she needs but being careful in other areas. Benjamin moor is definitely a top of the line paint. Interestingly the metric we look at most closely is sales of existing homes. And in march existing home sales were up 5. 5 . If you look a news relative to gdp having slowed down, Consumer Spending in general having slowed down, we havent seen that and hypothesis is that disposable income if you look deeper is up, which means consumers have saved more and paid down their debt. And i think whats translated to is a greater spend on their home. So Benjamin Moore came off a number of records in fourth kah quarter of last year. This is the first First Quarter weve had in eight years. Is were seeing double digit growth. So i think the Housing Market might be just a little more positive than the general consumer. Interesting. Because weve seen things, some of the housing numbers have not been fantastic but the you say the existing home sales are most important to watch. And new Housing Starts is different. But the consumer, the Builder Sentiment is actually strong looking forward. And i think weve seen our con competitors only out and weve the same. The real exciting part for us is the millennial group. There are 92 million millennial out there. Many of them still renting because they saw the 2008 bubble. And those people are going to be coming into the Housing Market over the next ten years. So as we look beyond this year into the future, we think there is going to be a very Strong Demand for the products we carry. And as the premium product. And we tend to not be as effected. Gentlemen, lets talk about competition because you both have to deal with constantly changing competition. And one of the things i noticed was an article in the wall street journal yesterday that just said people are really looking for Free Shipping. And i think they quoted something that said more than half of the last years orders from the top 30 retailers or something were things that came in Free Shipping and that was up from 33 just two years ago. Thats the amazon effect. With prime, with people really thinking. Even if it gets baked into the numbers they dont want to pay for shipping. How do you deal with constant demands for things like that. The space today is much more competitive than it was five years ago, ten years ago. One of the big changes in the industry is the Free Shipping for catalogers. A lot of direct retailers many years ago that used to be a profit center. Those days are long gone. You need to adjust to what the customer. Were finding the customers looking for i was in a listening lab listening to talking to some customers and were hearing shes looking for value, shes looking for ways to save money. Shes looking for deals. And that is where we play in. We have guaranteed lowest prices. Shes looking for an easy way to pull together the solutions. Whatever the event. If its a Birthday Party or graduation or wedding. So we provide that complete solution one stop shop with guaranteed lowest prices and fast delivery and we offer the Free Shipping. Typically a minimum order of 49 and you can get Free Shipping with ornlt trading. You are not going to sell to the big box stories. Buffett promised that and that is one of the things you are standing up to but big box sales are more and more of where the paint sales are coming in. I think i looked at independent dealers they sold about 15 of house paint. And that is down from 25 in 2003. How do you continue to expand . And warren has been very public and actually made two videos that we shared with our independent dealers with great affection from our dealers. The independent base is growing. The big get bigger. Sherwin williams and they are potential acquisition of valspar. So in our group we have two things. One is a premium product. And warren has said we will never be the biggest paint company. We dont want to be the biggest paint company. We have an independent dealer group who knows more about paint than any of the alternatives whether it is big box or the other competitors that you can buy paint from. But the independent dealer is growing, much to the disappointment i think of some of the companies that have predicted the demise of the independent dealer. We actually grew 79 more dealers. About 2. 5 actual growth in new independent dealers stores. We feel weve got a group that is very dedicated to a customer that is very particular. And we feel and charge higher margin higher pricer and get a higher margins as result. Its better product and a better price. You cant go to a big box or one of the more available paint competitors and get the level of knowledge and service an independent dealer can provide. So weve got a formula that we really dont have to worry about the plethora of opportunities for people to buy paint in other places. Weve got a market that is very demanding and now growing. Mike and sam. Thank you both for being with us today. I know you have a big weekend ahead of you. Thank you very much. All right becky. Thank you. Coming up. Oil isnt out of iran. How about rugs . Wouldnt be the first time for a persian rug. Pistachios and saffron. Michelle caruso joins us from inside iran with a look at other sources of income. Love the pistachios. Squawk box coming right back. Oil isnt the only export that iran is known for. Obviously, as part of the recent agreement over Irans Nuclear program the u. S. Embargo against iran was specifically lifted for rugs. That got my attention. And foodstuffs. Meaning saffron and pistachios. Michelle carusocabrera is live in tehran with more. When you say a persian rug, thats from iran, right . Absolutely. Of course. Is that too much to ask as far as a carryon, like a great a 20 by 12 [ laughing ] ill do my best to see what i can get you. Are they cheap . They must be much cheaper over there. Than having to export absolutely. Figure you dont have the transport costs. You carry it on your back yourself. So those three products dont bring in nearly as much Foreign Exchange as oil, of course, but in terms of the iranian brand and share theyre super important. There is a difference between persian carpets and persian rugs. Car petitio carpets are more intricate. Iran had sold half a billion worth in six months. Saffron super important. 90 of the worlds saffron comes from iran. Its the worlds most expensive spice. Thats why they call it red gold. It goes from 2,000 to 10,000 a pound. You dont buy a pound. You buy it by the gram. Pistachios. Last year 233,000 tons. United states is right behind that. They exported from iran 192,000 tons of pistachios compared to the u. S. Of 132,000. The big buyers were china and europe. Now that the u. S. Can buy, well see if indeed they start to ship to the United States as well. You needed to talk longer. I was trying to get your before your time. I am wild about saffron. She is just wild an old donovan song. We dont have time to get it. Well look it up. If you come back again, well play it for you. You dont remember it, do you, michelle . No, i dont. Its it taste like . Do you know saffron, andrew . Of course. You eat it in spanish rice all the time. Spanish rice. Oh, yeah. Im not sure i really like that much, then. Its a weird see you next hour. Are there certain foods sometimes ill have a conversation with my wife at a restaurant and shell say, you dont really like that. She knows the things i dont like. I dont like cilantro. I love cilantro. My mother hates cilantro. Coming up, Warren Buffett on the economy in a little bit. The oracle of omaha, what he thinks about the nations slow growth. Back in a moment. singing alougetting to know you. Getting to know all about you. Getting to like you. Getting to hope you like me. Is someone getting to know your credit . Not without your say so. Credit lock lets you lock and unlock your transunion Credit Report with the swipe of a finger. Getting to know you. Getting to know all about you. Get onetouch credit lock, plus your score and report at transunion. Com. Get in the know. Happening now, amazons cloud keeps making it rain. Shares of the tech giant soaring after it delivered its most profitable quarter ever. Why investors are betting on bezos straight ahead. Inside iran. A rare interview with a former u. S. Hostage crisis spokes woman, now a Vice President of iran in charge of the environment. Her message to american investors, thats next. I am live in omaha ahead of berkshires big weekend. Joining us this hour, berkshire board member sue decker and editor of the board letter. And buffett on the economy. Weve got new exhibits. The second hour of squawk box begins right now. Live from the beating heart of business, new york city, this is squawk box. Welcome back to squawk box here on cnbc, first in business worldwide. Im joe kernen along with Andrew Ross Sorkin. Becky is in omaha this morning covering the Berkshire Hathaway annual meeting. Well hear from her in just a minute. I dont know if she is up to speed on this latest development in fitness. I am just wild about saffron. She is just wild about me call me mellow yellow you know that song, right . This is why i need you. Im old. Go ahead. Becky, i need you here with the golden hair. First, we kick off the hour with does everybody know about that now . I guess. Its mainstream. Beyonce and jayz is that a combined name for them . I dont know. Bayz. Were infatuated with anything that goes on with them, arent we . Especially when two really rich and powerful people are together. Were more interested. The futures this morning. Do you want me to mention those . Fine. Well stop talking about jay z and beyonce. S p up. Do you jones up. 24 points. The nasdaq is up. You know why. Amazon. Its going to be a big one. Jeff bezos. 6 billion richer. Before we go to those. Let me tell you about deal news just crossing the wire. Tivo. One of the early dvr companies, if not the one that invented that business, being sold this morning for 1. 1 billion to rovi. Thats 10. 70 per share in cash and stock. Rovi pays 2. 70 in cash. The remainder, the 7. 95 per share will be paid in common stock combined. They also think that theyre going to save 100 million in synergies. Perfect company to buy it. Only one letter different in the two companies. The r instead of the t. Rovi buying tivo. The combined company will be tivo. Where is our sound . Oh, the tivo sound. Thats true. No sound. We should say, by the way were having audio issues. We would normally do it. I cant make the noise. How much is it going for . 1. 1 billion in total. Not much of a premium. Except for the fact that there were reports i should say actually broken by deal book and the New York Times three or four weeks ago that a deal was getting closer. So thats what actually pushed the stock up. Where i was going with this is tom rogers, the man who actually helped found cnbc. Yep. Talked a lot of people into doing cnbc. Was the ceo. Is the chairman of tivo now, was the ceo for over a decade. An old friend. Good friend. And they have transformed that company. Yeah because, you know, if you thought all they made were the old tivo machines, there would be no tivo left. Does anyone have one . I still do. Its a great product. Now they actually merged there are other things, yeah. No. Now they merged the streaming stuff. Netflix and the like with linear tv. Its all about data and analytics. And rovi. Im fascinated because of doing the jumble that those words are very similar. Only a oneletter difference. We need to get to becky in omaha. She is a jumble player. Berkshire hathaways annual Shareholder Meeting. She caught up with Warren Buffett last night for exclusive comments on the economy. Good morning to you, becky. Good morning, andrew. Good morning, joe. Yes, joe, i saw the letters on the screen and knew you were jumbling them in your head. Yesterdays gdp showing that the u. S. Economy remains in a rut. First quarter numbers pathetic. Weak global demand. Thats the latest setback for whats been a bumpy economic expansion. Data showing the economys weakest growth in two years. I asked Warren Buffett if it feels like he is sitting in an economy growing at just 0. 5 . Its certainly not accelerati accelerating. It isnt declining but its slow growth. And of course, as you would expect when the number is very slow, its irregular in various parts of the economy. The economy is not booming. On the other hand, its not falling apart in any way, shape or form. Economists who say the quarter were in now already feels like its better, 1. 5 to 2 . You think its better . I dont know. They might know. I dont see them accelerating. One thing that struck me from the gdp numbers today was that the consumer hung in there. Consumer spending was very strong. You think about that in the context of lower prices at the gas pump. Sure. As we are watching oil prices pick up, should we worry that that is going to hurt the consumer that maybe weve taken for granted all the extra spending theyve been doing because of low gas prices . But theyre still low. If it goes back to 100 a barrel, thats a difference. Not only are gas prices low but Interest Rates are low. People borrowing money on cars have a lower payment that they would have to make than if rates were quite a bit higher. On homes. Mortgage payments have dropped dramatically. People have more money to spend on other things. And employment is not bad. Joining me right now in omaha, a special guest. Sue decker, the former president of yahoo is on the board of Berkshire Hathaway which is why she is here for the weekend. She sits on the boards of intel. Costco and several others. She was named this week to the board of vox. Sue, thanks for being here trootroo today. Great to see you. Vox is interesting. I sat up and paid attention when i saw that you were going on the board. The ceo has said he wants vox to be the conde nast of the digital age. A lot of properties there between vox, the verge, sb nation and re code and several others. How do you do it . Jim is doing a fantastic job. He is breaking new ground with building multibranded Media Company for the digital age. Its built around brands like sb nation. Re code, verge, brands that are focused on consumers in areas that theyre passionate about. Sports, tech, food. And i think theyre breaking new ground and sort of taking those brands and not building them on the internet but then extending them through podcasts, through television and channels and promoting some of the key spokespeople. Cara swisher. I think they have the whole flywheel figured out and i think that will build an advertising business and today have 170 million passionate users coming to their various brands. Sue, youve been around the Digital Content area for a long time. There is so much promise when c. People will say this is the golden era, there is a real demand for quality content. There is certainly an audience for it. You can look at the massive numbers of users that have piled up to some of these places. A lot of places are still trying to figure out how to monetize that. You go basically all the way up the line. Amazing potential. How do you eventually find the way to get people to pay for all of that content . The core model of advertising driving a lot of the financials is still going to be the predominant one. I do think there are a lot of Companies Experimenting with consumers helping to pay a little bit of the freight. Back into the history of the media business, back to newspapers, 80 of it was from advertising, 20 from subscriptions. Magazines 50 50. Cable the consumers pay a little. Its possible and probable that there will be models that come forth where the consumer pays a small part of it. Overall i and i will think its an advertising based business. Thats why i think it makes sense to build big audiences with a multibranded strategy and extending that through all forms of media such as podcasts and television and online. Is this a situation where a few big players will really dominate and it will be hard for others to pick up . Or will this differ from what weve seen in broadcasting or in magazines or other places like that before . I think it will eventually get to a few big players but i think its early days. Even though vox is well developed and buzzfeed is well developed, these companies that have built brands and are extending them through multipoinmultiple points of distribution, the game has more to go before the true winners are determined. Weve seen the big original content providers sold off to corporate parents. Aol recently selling to verizon. Yahoo up for talks. Is there a future as an independent company for some of these things . Or eventually do many of these content providers need a big corporate parent . What do you think in the situation of vox . Its still early to tell. I think its possible vox could one day be a public company. Its also possible someday some other company will own it. I still think there is a lot of runway between now and those points. Lets talk a little bit about yahoo. Youve obviously seen whats played out very publicly with the situation there. Starwood coming online and taking seeds. Whats shocked people is watching the decline at yahoo in terms of ad revenue falling off, in terms of earnings per share. Two years ago earning 38 cents in the First Quarter. Down to 15 cents, down to 8 cents. They have a massive number of users. How are they getting knocked around and losing out on the ad spending thats obviously there and willing to go to the big players. Its tough. When i left it was 7 billion in revenue. Now its down to i think 4. With stagnation in the user base. I think its the the core issue is one that hasnt been solved in the last few realms of leadership, which is defining what yahoo is to its users. When you think of google you think of search even though google owns youtube and a host of other properties. When you think facebook you think social, even though they bought whatsapp and other properties. They had a chance to do what vox is doing in terms of focusing on new sports, finance, the things that uniquely yahoo was terrific at and really build the whole flywheel. Unfortunately because of the breadth of what yahoo does they sort of became mediocre in so many properties. It was a tough hand that marissa was dealt. I think she has done her best to play it. But at this point it really probably needs a new owner situation. Thats what you think is the best situation . A corporate owner that would be able to focus things like that . I think its the inevitable situation. I hope that the next owner can do something to revitalize the spirit of the core things that made yahoo very, very unique and can create a distinction in consumers minds about why they still love yahoo. It will be helpful if its private or part of a much larger corporation to achieve that. Why . Because it gives them the independence to do the things that need to be done . The intense scrutiny around yahoo makes it tough to make the tough choices that need to be made. If you had to put an valuation on it. What do you think is a fair price for it at this point . I dont know. I think its so right now everyone is there is a lot of interest, as i understand it. The incentive it bid high to get to the next step. Well see the real values in a later stage. All right. Sue, i want to thank you so much for your time here. Obviously here for the Berkshire Hathaway meeting. Were expecting 39,000 to 40,000 people to be here tomorrow. Its awesome to be in this with no people in the stadium. A little spooky. Sue, thank you for getting up early. Its great to see you. Real appreciate your time. Thank you. Andrew, back to you. Thank you, becky. Looking forward to getting on the plane to come visit with you guys in a bit. Coming up, carl icahn bailing out of apple stock on concerns over the future of china. Well discuss the move and find out if his concerns over china are being echoed throughout the rest of the market next. Futures right now as we head to break. Dow opens up 8 points higher. Back in a moment. Welcome back to squawk box. Amazon crushing earning estimates posting its most profitable quarter ever. The stock taking off on the news. Ceo jeff bezos raked in another estimated 6 billion in approximately 20 minutes as a function of that news. Do you call it raking it in . His position appreciated on paper to that extent. Okay. Raking is when you have actually raked it in and paid taxes and its there and you have it and if the stock moves you still have it and right . Thats raking it in. This is the paper profits appreciated by 6 at this point with bezos hes like, oh, really . Whats for dinner. It would mean something to the rest of us. Billionaire investor. Bernie is right. All we do is talk about billionaires. Billionaire investor carl icahn issuing a warning for stocks this week. You cant have a Federal Reserve with negative Interest Rates without creating tremendous bubbles and creating the wealth gap. Its doing a lot of things that, unforeseen has unforeseen possibilities. I do believe in general that that there will be a day of reckoning unless we get fiscal stimulus. Here to react, rebecca patterson. Cio and mike ryan. I dont mind icahn setting up a discussion about this, but i as i said in the last hour, ill say it again, i look to see the first time that i had dinner with him was before he was married to gayle was 99. Didnt like the market in 1996. Overvalued. And as far as i know, i have never ive seen him subsequently over the past 25 have never seen him when he did like the market. The overall market, which is what people do when they think theyre they can find the individual opportunities to, you know thats why he is worth so much, because he has been able to find the to separate the wheat from the chaff . Is that what it is . Thats the phrase, yes. Icahn made a good point. This is a different reason why he doesnt like it. That there is a day of reckoning coming. Yeah. Its called the economic cycle. We tend to have several years of growth and at some point we either slide into a recession or we tipple into a recession because we overheated. The question is are we in it now or do we have some time. I think the day of reckoning while statistically closer, weve got some time. The biggest fear about this latest fed cycle and the unprecedented number of years at zero has been that you are never going to be able to get out, that the Economic Conditions are never going to allow you to get out. And this is another little piece of evidence that maybe were in a real corner, in a real box and theyve got nothing left in the tank to try to stimulate things and so what do we do . First of all, there is no question were in a challenging environment. I think it will be difficult for the fed to go through the process of normalization. You hit it, joe. Its an environment where we have below trend growth and you have the deflationary risks that keep flaring. One thing where i want to be careful and where i disagree of icahns assessment. No one can really ever look at them ahead of time and know where theyre going to be. You have to focus on where the most critical dynamics are. I still think the most critical risk for the globe right now is still deflation. Still going through a Balance Sheet deleveraging process. The worst thing you could do is prematurely raise rates because you think its time to do it or you should or you want to prevent future bubbles. The best way to conduct Monetary Policy is pragmatically. Therefore, i think the fed is doing what they have to do but i think it will be hard for them to go through a process of normalization and it will take years. This will not be something that looks like any monetary cycle weve seen in our lifetime. The entire globe has not deserved anything better than what weve had for the past eight years just because of a deleveraging cycle . Theyll look back at why weve been able to get out of our own way, purely because weve been deleveraging . No. What is it . Activity . We had conversations last year about the future growth rate. There are a couple of things that impact it. When you go through the Balance Sheet adjustment, that dampens growth. Dont forget, weve also had political dynamics that have changed the landscape as well. We have seen a change in the tax environment. Weve seen a Regulatory Environment making it more difficult for businesses to operate. Were increasingly global. Carl icahn mentioned fiscal stimulus. For the last years it was tightening policy, dragging down growth. And china takes its growth rate in half versus precrisis. Its all of these things combined, i think. Its interesting. I dont find myself frequently agreeing with carl icahn but i agree fiscal policy might be part of this. The bank of japan is waiting to see what it does on fiscal policy before it acts. Weve taken Monetary Policy perhaps as far as we can go. Prudent fiscal policy is something thats required globally. We have to be careful. Sometimes fiscal policy is mistaken as just go spend money on everything. This has to be a prudent fiscal policy. Thats like an oxymoron. Not always. Super, i cant blame it on europe has always grown about 30 or 40 slower than we have for the past 40 years. Theyre used to 2 . We never were. China will do what its going to do. 9 , 6 , 7 . That should be good enough for us. Europe i dont expect to help. Or we should be out in front leading at the better than 1. 5 yearly growth. I agree. You do . Mmhmm. All right. Start pounding the pavement. All right. Joe, we can lead but we can no longer carry. Youve heard of donovan and yes. Mellow yellow. Yes. Can you stay . Just because of the music. Af. Aflac isnt Major Medical enough . No whos gonna help cover the holes in their plans . Aflac like rising copays and deductibles. Aflac or help pay the mortgage . Or child care . Aflaaac and everyday expenses . Aflac learn about one day pay at aflac. Com boat blurlbrlblrlbr neighbor yeah, so were just bringing your son home. dad ah greetings, neighbor. Neighbor boy. He really loves our wireless directv receiver. dad he should know better. Were settlers. We settle for cable. But let us repay you for your troubles. Fresh milk for the journey home . neighbor we live right there. dad salted meats . neighbor no thank you. dad hats then vo dont be a settler, get a 100 reward card when you switch to directv. Playing for talways stacy. . At kpmg weve always believed leadership is about vision and integrity, confidence, inspiration, and passion. Pitching wedge. Thanks phil. And always having the courage to take your best shot. See the best of the best at the kpmg womens pga championship amazon posting its most profitable quarter ever. Soaring revenue in the Cloud Business helped the online giant pull off that beat. Stock taking off on that news. Ceo jeff bezos raked in we dont want to use the word raked but paper profits of 6 billion. Much more from becky as we get ready for this weekends berkshire annual Shareholder Meeting. eeeeohmumohweh hush my darling. dont fear my darling. the lion sleeps tonight. hush my darling. man snoring dont fear my darling. the lion sleeps tonight. woman snoring take the roar out of snore. Yet another innovation only at a sleep number store. Welcome back to squawk box. Among the stories front and center. Drug maker leer turned down a request by abbott labs to end their 5. 8 billion takeover deal in exchange for a breakup fee. The request came after abbott announced the acquisition of st. Jude yesterday morning. Caterpillar closing five u. S. Plants and cutting 820 jobs coming in response to falling demand for its heavy equipment. Doug when he was on did not say that that would not be happening. Right. It was going to be continuing to be things like that coming out. Thats not good. Has to be done but thats just thats a prime example another example of what we are talking about here. Quest diagnostics has an emergency fda approval to put its diagnostic test for the zika virus on the market. The commerfirst commercial test zika. It should be widely available for next week. I know a handful of people who will be going to get the test. Breaking news from valeant this morning. Its issued its delayed annual report. That fact is the most important or perhaps more important than the actual numbers. Valeant creditors threatened it with default if it did not get the report out today. I want to go through the report. The other significant piece of it is whether mr. Papa, the new ceo of the company, signed off on that or how that worked. A lot of people looking for that simply from a credibility perspective on where this company may go. The Vice President of iran in charge of the environment looking to attract american investments. Michelle carusocabrera is live in tehran with more. Looking forward to seeing you again, michelle. There was more evidence this week of still ongoing tensions between the two countries. When you see this war of words over the u. S. Supreme courts decision to allow the seizure of 2 billion in iranian assets. The tensions between the countries date back of course to 1979 and the event that ended diplomatic relations between the two. It was when iranian students took over the u. S. Embassy and held 52 american hostages for more than a year. Here in tehran we ran into one of the students, the American Public knew her as tehran mary because she was the student spokesperson. Here she is in 1979 giving an interview to nbc newss george lewis and fred francis. Let us unite together and establish peace and calm in all of the world. We peoples of iran, you peoples of america and all peoples of the world, let us unite hand in hand to establish justice. We ran into her. Her name is she is a Vice President now of the country. Her name is masoumeh ebtekar. And we asked her if she, of all people, would be interested in american investment. Yes. The country is open to american investment. Actually there have been american firms directly or indirectly coming to iran and looking for opportunities, for business opportunities. Its astounding to me to hear from someone who has been embroiled in the revolution for so long to say that you now welcome american businesses. Should it not sound astounding to you . It shouldnt sound astounding. The problem that weve had and that many nations in the world have is the aggressive and militaristic attitudes of the politicians who have sometimes built american politics into military adventures, into intervention in other countries affairs. On the other hand, dealing with the american nation, dealing, scientific level. Exchange of cultural exchanges, business level, i think that there is no there is basically no problem. Vice president ebtekar is considered one of the rhee foefs meaning she is more interested in business with the west than hardliners who dont like the deal that was done at this point. An interesting look at two different periods in u. S. Iranian history. Joe, andrew, back to you. Thank you, michelle, for all the great reporting youve been doing all week. Back here at home its been a big week for deals. Abbott labs buying st. Jude medical for 25 million. Abbvie buying cancer drug startup stem centrics. Thats 5. 8 billion. Cnbc Parent Company comcast buying Dreamworks Animation for 3. 8 billion. Just this morning rovi acquiring dvr maker tivo. The question is is dealmaking back. Joining us is the dealmaker in chief of this country, roger altman. Evercore founder. Whats going on . Remember that in january we had a huge outbreak of Financial Market volatility. Commodity and share prices plunging. That put a chill, as it always would do, on transactions especially among public companies. If your share price is plunging, whatever one might think the textbook should say, you tend to entrench rather than look outward. Its happened since is we have recovered from that, at least as of right this minute. And confidence has returned in terms of transactions and therefore they have they have come back. Right. Are these transactions that we are seeing in the headlines today, do you look at them and say these were in the pipeline, these were deals that were supposed to have gotten done in january and february but were put on hold where people pressed the pause button, or are these new transactions driven by something thats happened more recently . Thats a casebycase thing. Several transactions we have been involved in in the last week. We did advise abbott on st. Jude. Also rovi, for example. Those are not examples of transactions that were deferred. They just took this much time to get to the finish line. Its a casebycase thing. Invariably, when there is all that volatility and when the market is so much lower isnt that frankly when everybody should be buying . Of course. The lower share as Warren Buffett likes to say, the lower share prices the more m a volume should increase. But its the opposite. The reason is that share prices are a proxy for confidence. If your share price is very highyou feel confident. And you feel enthusiastic about external moves. When your share price is low, whatever, again, the textbook says, should say, you dont feel confident and you tend to pull back. Thats just its been the case for a long, long time. Going back to the issue of the American Economy and whether its growing or not, we had this terrible growth number yesterday. Do you look at these transactions and say, this is animal spirit, this is great, this really shows that things are back and revving to go, or is this a function of people saying, actually, things are so lousy the only way we can show profits or potentially topline anything im not sure half of these deals with functioning on the top line, that we need to do things defensively . I think its roughly an equal measure of each. While the Economic Data is weak, most businesses feel all right about their the way things are. They dont feel great but they feel all right. At the same time, when the top line is weak and we saw i think i saw in the wall street journal this morning that revenue for the s p 500 is likely to be down 1. 5 for the First Quarter. When a top line like that is weak the appeal of mergerrelated synergies is higher, and that drives transactions because the alternatives in terms of where you find growth are more limited. To the extent there should or should not be premiums in the market right now for companies that people think will get taken out, whats the merger pipeline continue to look like . Well, i think the as long as the Financial Market environment remains around where it is now i think youll see healthy m a volume for the rest of the year. Its dependent on the Financial Market environment. Premiums have been healthy, as you know. Right. The abbott premium was roughly 40 . The comcast premium was roughly 40 . So attractive. The outlook for m a for the rest of the year is fine as long as the Financial Market environment remaining stable. On the spot on one question. Abbott said forever, all of 2015. Were not looking at buying st. Jude. Were not going to do it. And they did it. What was going on . Were they telling the truth . Miles white was on this network yesterday. He made the point that they just, for the first time they reached out to st. Jude just at the end of last year. Thats just the reality. So there wasnt Something Else . There wasnt. No backchannel . No. They always say things a certain way. Right . You can parse your language very closely. And youre not saying thats not true but youre not saying things that are completely forth coming either a lot of times. Weve decided were not sure what the word is means depending on the context. Its a sad thing because we dont have music ability. You remember donovan. We were unable to play mellow yellow. We arent able to play taylor swift as you exit stage left. Im very disappointed. Can you promise that wont happen again . I cant promise. We should be listening to prince. Probably. Still, it hasnt been that long, but anytime is a good time for taylor swift. In your view. In my opinion it is. Right. Anytime. You know, adele is pretty good too. She is. Have you been . I have never seen adele in person. I am a big fan, though. She is amazing. Thanks, roger. He could easily be a cultural reporter too. He is. We should have him on more. He is a renaissance man. You can tell. Tmz has occasionally made me a job offer. I havent entained it yet. When carol loomis first mentioned, a little known Hedge Fund Manager in a fortune article she didnt dream that Warren Buffett would one day be considered the worlds greatest investor nor that she and buffett would become such close friends. Carol joins becky for a meeting and her personal stories about warren. Futures negative but its been around the front line all morning. Berkshire hathaways annual Shareholder Meeting happening this weekend. Becky quick is there covering the event. Last night she caught up with Warren Buffett who spoke with her exclusively ahead of the meeting. A little taste of what well get on monday. We wont be squaring the circle, but well definitely put a lot of meat on the bones on these comments on monday, right . Filling in the blanks. Something along those lines. Those are all good. They work. Joe, obviously a lot of things that investors are thinking about these days are just what to make of stocks particularly in this crazy, whacky world of insane Interest Rates. The Federal Reserve and bank of japan both leaving Interest Rates unchanged this week. If you look at whats been happening with the bank of japan and the bank of england and whats it meant for the Federal Reserve. It has had investors on edge. We asked warren to comment last night on the country rate environment. Low Interest Rates Interest Rates act on asset values like gravity acts on physical matter. And if you had zero Interest Rates and you knew you were going to have them forever, stocks should sell at a hundred times earnings or two hundred times earnings. If your alternative is absolutely zero and you know it will last forever. So when Interest Rates were 15 , that was an enormous gravitational pull. On the value of all assets, not just stocks. Because an investment is something where you lay out money now to get more money later on. If you can get 15 , it makes the choices way different than if you get zero. And we have had low Interest Rates now for longer than most people expected. To some extent, its changed peoples expectancy about Interest Rates. In the 30year bond reflects peoples view about 30year money. What about negative Interest Rates in places like japan and europe . What does that do . I hope i live to find out. I have no idea. You can read adam smith, gaines, anybody. You cant find a word, to my knowledge, on prolonged zero Interest Rates. That is a phenomenon nobody dreamt would ever happen. And i think its uncharted territory. That doesnt mean i think its the end of the world but i dont think anybody knows exactly what the full implications are of low Interest Rates, and i certainly dont. This year marks the 39th year to carol loomis has editeds Warren Buffetts annual letter to shareholders. Retired editor from fortune. Theyve been friends since 1966. No one has followed Berkshire Hathaway por closely over the last five decades. She is the author of her following warren. Its interesting for him to give his take on negative Interest Rates, what a strange world this is. I was very interested in what he had to say because i hadnt heard him at that length talk about negative Interest Rates. On things like that, his opinion is really prized by everybody who knows him because they dont know what to think either. I certainly dont. Never wrote anything in fortune that came close to talking about negative Interest Rates. Its kind of a strange new world. I guess thats part of the unease in the Investment Community these days. Its probably something that charlie and warren will talk quite a bit about this weekend on this stage. I would imagine. I have been getting questions, you have been getting questions. Andrew has too. Everybody has been getting questions. And i detect some interest, some interest in interest. You know, this is a different sort of year. In years past i feel like there has been one or two key themes that you knew were going to be the big issues regarding berkshire headed into this weekend. I have had a tougher time trying to pick out a theme. I thought about that too. There has always been, previously, some controversy, almost always controversy. Since i had the first question, i always knew what to ask, you know, because i knew, if i didnt ask it, you would come along and ask it. A little competition up there in that. And i think the first question is just not quite that obvious this year. One thing that i have kind of noticed, some themes of people asking about some underperforming assets for berkshire. Think like American Express and ibm. A lot of questions seem to be revolving around those issues. Yes. Youre absolutely right. As you know, warren used to have a rule that he wouldnt even talk about those things, and now i didnt know that. Well, he did originally he would tell the shareholders, at the meeting, that he wouldnt talk about what he was buying or selling or holding, really. And then i think television sort of forced him into having to talk about it some, but he is not expansive on these subjects. You find those questions are pretty are presented and are over pretty quickly. Is that something, you think, that forced his hand because of the filings, having to tell what youre owning and being constantly questioned and quizzed on some of these things . Well, yes. I really do give you credit, at squawk box, and the television from he really, if he gets on television and is asked about ibm, he almost has to say something. But you notice that it doesnt take up a lot of scotch may be on the rocks but the bourbon business is booming, the success of american bourbon sending global scotch sales down 7 . Thats according to the latest data from the distilled spirits council. Joining us with more on the business of bourbon rob samuels. Coo of makers mark. My parents are looking down from the great beyond. This was their brand, makers mark. Did you tell me it was invented the samuels family made really bad whiskey for the better part of a century and thankfully my grandparents had the vision to create a handmade, refined, elevated bourbon which led to the creation of makers mark in the 50s. For people didnt like the bite, aggressiveness, the test of manhood style. A lot of whiskeys can be a little aggressive. One word, a little aggressive. Their goal was to create a full flavored bourbon you could hold on your tongue without blowing your ears off. Theyre credited with essentially creating the modern era of bourbon. Andrew, do you drink bourbon, do you . But this is what i would drink if i were to drink bourbon. Bourbon is back and there is a shortage of it. It has to sit in the barrel. It sits on average six and a half years. Were a Single Source of supply. In kentucky what were making today doesnt roll out of the barrel for six yaand a half yea. So its a challenge. Like boeing trying to figure out when to have an airline ready. Theyre all smooth is the good news. For the better part of 60 years we were the only distillery in the world that created one product. My grandfather was the handmade craftsman who created the bourbon. My grandmother designed the bottle. Her idea to handdip every bottle. Five years ago we created the first new expression. Derby week is coming up. Dont you need this for a mint julep. Its perfect in a mint julep. A nice way to celebrate is with american pharoah. 37 years celebrating american pharo pharoah. Nice to see you. Coming up, Berkshire Hathaway shareholders and legendary investor Mario Gabelli joining us straight from omaha. A squawk box exclusive. Warren buffett on earnings, the economy and his view of stocks. Long term optimism i am a ten. Short term . I dont worry that much about it, i really dont. If i feel like a ten on longterm optimism. Why should i get depressed . Because i have a cold today . Oil prices jumping 20 this month alone now more than 75 above their 2016 lows. Results from exxon and chevron ahead this hour. Amazon shares soaring after the company blows by wall street expectations. The final hour of squawk box begins right now. Live from the most powerful city in the world, new york, this is squawk box. 8 00. What time is your flight . Happy to see you. On my way to omaha to see a bottle of bourbon in your pocket. What time are you leaving . I have an 11 05 flight. Through chicago, no less. Couldnt fly direct . Stupid airlines. Welcome back to squawk box on cnbc. First in business worldwide. Im joe kernen along with Andrew Ross Sorkin and rebecca quick, reporting from omaha. Shell be joined by Mario Gabelli in moments. Personal income and spending news due at 8 30 eastern. The futures have been around the flat line all morning long. Now down 5. The nasdaq up 11. Because of the strong report, really, from amazon. Oil prices were strong for most of the morning, or at least trading above 46. Were still checking them every day, andrew. Thats the sort of gotta do it well stop pretty soon probably. Elsewhere speaking of oil, exxon mobile crossing the tape, earnings at 43 cents. That was above estimates of 31 cents. You had a chance. You had to move quickly. Right when things were most bleak, probably. You had to step up to the plate and buy it. Who thought exxon, even at 30 a barrel, who thought it wasnt eventually going to be an important didnt look like an obvious bet, though, at the time. Maybe it should have. Wti crude. Crude, i think too. But the companies are going to they man it through things like this. Exxon wasnt going out of business. You had a yield that maybe wasnt safe but you could have taken a shot. Some of the other top stories of the morning. Amazon shares soaring. Earnings and revenue smashed expectatio expectations. Recent Cloud Service business doing well. Valeant pharmaceuticals issuing its delayed annual report avoiding a default threatened by creditors. Valeant said Improper Conduct by former financial executives resulted in the misstatement of prior financial results. Big credibility question about that company still. Also in deal news this morning. Tivo bought by Digital Technology provider rovi for 1. 1 billion in cash and stock. 10. 77 per share. The tivo name will be used for the combined company. In the meantime, back to becky, who is in omaha this morning. Becky. Andrew, thank you very much. 40,000 Berkshire Hathaway faithful are expected to descend on omaha this weekend. Were waiting to hear more from the oracle himself. We got the chance to catch up with Warren Buffett last night ahead of all this and we asked some of the questions that are on investors minds. Lets talk about gdp. The first numbers today sunk. 0. 5 . The weakest growth in two years. Its not its certainly not accelerating. It isnt declining but its very slow growth, and of course, as you would expect, when the number is very low its irregular in various parts of the economy. The economy is not booming. Its not falling apart in any way either. Economists say the quarter were in right now feels better, 1. 5 to 2 . You dont think so from where you stand . I dont know but they wouldnt know either. You have a lot of businesses. I dont see them accelerating. The consumer really hung in there. Consumer spending was very strong. You think about that in the context of lower prices at the gas pump. Sure. As we watch oil prices pick up, should we worry thats going to hurt the consumer that maybe weve taken for granted all the extra spending theyve been doing because of low gas prices . Theyre still low. If it goes back to a hundred dollars a barrel, thats significant. Not only are gas prices low but Interest Rates are low. People barrowiorrowing money on have a lower payment to make. And certainly on homes. Mortgage payments have dropped dramatically. People have more money to spend on other things and employment is not bad. What do you see just in terms of the economy through a lot of different sectors . You have so many businesses and so many reads that you get on this. How do you think the consumer is doing right now . I think the consumer is doing pretty well. Railroads are not doing well. Coal is really down. Way more than anticipated. The winter was very mild and coal stockpiles were already very large at utilities going into the winter. And then having a very mild winter, there was no more electricity produced last year than the year before. So the coal stockpiles remained high. So the falloff in Coal Production has been a lot more than any of the railroads anticipated, including ours. If you stripped out coal, would you think railroad shipments would be doing well or was there weakness across the board . No. When i get the figures every week there are about 25 categories or something of the sort. And a very significant percentage of those are disappointing. When you think about the industrial economy, that was what we were so worried about at the beginning of the year. You have a lot of industrial businesses too. How does it look from that perspective . Theyre doing okay but theyre not accelerating. The economy is not but its not getting worse. I dont want to give that impression in the least. As you pointed out, the consumer is in better shape than before. So the world is not falling apart, but were not seeing a lot of buoyancy either. Joining us right now is Mario Gabelli, the chairman and ceo of gamco investors. Great to see you. Great to be here again. You have been coming here for longer than i have. Its called a bakers dozen plus. Its a while. In terms of what weve seen over this last year with berkshire, it changed a big part because of this massive acquisition it made with precision cast parts. You were a large shareholder in precision cast parts before berkshire came in. X number of years ago, 30, we started buying all the fastfood Companies Selling to the Aviation Companies and owned sps, Standard Press steel. They offered us stock. We took it. Weve been fans of mark dunnigan ever since. In terms of when berkshire bought it. Were not unhappy about it. A lot of intellectual effort has been lost. From warrens point of view you have a company that will do 4 billion of ebitda. He added a powerhouse to his lineup. Mark will do more deals. When you say intellectual capital lost, what do you mean . We spent a lot of time doing research on fastner companies. We have probably an accumulated and embedded knowledge of x number of years, becky. So its nice shortterm, but we now have to find new ideas and reestablish the portfolio. Just because he has bought by Berkshire Hathaway doesnt mean hell stop doing bolton acquisitions. No. They did a lot last year. Theyll do tuckins at cast parts. Jp crafted an interesting dynamic. What does he do next . Buy campbell, heinz . Kellogg, General Mills or go overseas. What do you think. Any of the above. He has 300odd million shares, that is berkshire, marked at 80. Thats 24 billion. Hes getting 8 billion back from his preferred. He is ready to reinvestment. Warren wants to do another big elephant. Have you got any ideas about where these might be coming . This is your wheelhouse. No question that there are companies that we like that have niche markets that every day come to work, the management works hard to maintain the preeminent position, the moat around the franchise and are great cash generators. We like the water infrastructure. He wont do military. Companies that do waste water. The drought in china. Flint, michigan. The whole notion of the water echo system in the United States needs to be reexamined. We as a world use 10 of our water for drinking, but a big part of it goes for agriculture. How do we save water in agriculture . Today were having meetings with lindsey. Meetings with valmont. Theyre irrigation. Not drip but irrigation. Companies that can produce seeds that dont require as much water. Those are the elements. There is a company weve liked for a long time thats a spinoff from at t. Xylum. Its 7 billion. Ceo comes to work every day and tries to figure out how do we get another niche and how do we grow that business. That occurs. Then represents that reline the pipes without digging up the streets like lane christensen, mueller water, has certain elements. There is a whole ecosystem in that area. What about other recent moves of berkshire. If you want a big elephant. 100 million shares of autonation. Mike is listening. Youre suggesting that might be i am not suggesting anything. Im observing. Yes, you are. To the degree that you want to take advantage of the finance and insurance part of an auto dealers business and you have zero cost of capital as warren does with his float, thats an intriguing area. Let me ask you this. The auto manufacturers have never wanted to concentrate too much power in one players hands. I just wonder, if they looked at what buffett already owns in auto dealerships, if they looked at autonation, they would sign off . On the other side of the coin, think about tesla. They dont have dealers at the moment and thats going through the whole change of how do we get the distribution to be more effective . When my car breaks down i want that dealer. I want the part today. I dont want to wait. So thats an element. Mario, there has been a huge surge in deal activity in the last couple of weeks. Yesterday in particular. Yesterday in particular. Comcast, our Parent Company, announcing the dreamworks deal. What did you think of that . Catsenberg and givens created this company. We like the fact that catsenberg was able to find a u. S. Buyer for the company. Fits like a glove. Steve burke will run it. Last time i looked, takes two and a half months to pay for it at comcast. You dont think it was over paying . A bidding war, free market process to the degree that you can have synergies that we cant see today, its an element. I think it was said yesterday eloquently. We like content, we like distribution. We love our children. In that regard we like content and distribution globally. We only have 33 million eyeballs in the United States but there are 7 billion around the world. How do we get the millennials to watch what we want them to watch and do it at a low cost and make a profit . Thats always the case in the entertainment business. What about some of the other Media Companies weve been watching . Viacom . Step one bas to make love with urgen. They did that. Step two was to try to figure out how to get into the digital world. How to do more content that has sizzle, the breaking bads of the world, the walking deads. How do you get content on tv series. Theyll do that. They have scale. Paramount is a wonderful asset. I was there when it was bought in 1993 or 94 when he was fighting with diller over it. Within that framework, why would they want to do anything other than look at that value. Are you suggesting they should not spin off paramount . No, its worth 5 billion, to use a round number. Put 3 billion in. 37 over a company that will have 5 billion of economic value plus 3 billion of a cash. Thats great. They can use it as a vehicle for growth. Who can they convince to put in that kind of money for a Minority Stake . Somebody just paid 4 million for dreamworks. That was for a full stake. Not a Minority Stake. If you bring in technology and distribution, where is the Box Office Going . Where is the demand going . China is an important part of that. Mermaids was a local movie made in china. Huge box office. And they have a limited amount of theatricals they bring into the country. That can expand. The world is open. Whats amazon going to do . Whats google going to do . Whats apple going to do within the context of creating and owning content. You cant sell a device without something on it. You think there is a lot more money people are looking at this as the golden age for content. You think thats going to continue . You have to marry both. You cant have control of content and not distribution. I can have a great organic product, a great natural food. But i need shelf space. So how do you create that for the new environment . If i am 22 years old why do i want to pay for, in quotes, a whole bundle. Give the consumer what they want on whatever device they want at a low cost and figure out how to make money. Who are the winners . Work in progress. Notwithstanding that, you have fairly large companies. Viacom has 400 million shares. 12 billion of debt and some wonderful assets. Filipe has to pull it off. You have other companies that are like i like stars. I like lionsgate, amc. There is also one in india that were nibbling at. Mario, i thank you. Youre wonderful for joining us this morning. I know you have a lot of meetings to get to. But we appreciate your time. Doing a lot of research. Lots of Interesting Companies come to this meeting and we look forward to meeting them all. More importantly we enjoy meeting with you. When we come back on squawk box, exxon out with better than expected earnings. That was a little earlier this hour. Reaction from an analyst next. The stock right now up by about 81 cents. Monday morning join us live from omaha. Three hours live with Warren Buffett starting at 6 00 eastern time. At 8 00 eastern time Charlie Munger and bill gates join the conversation. Stay tuned. You are watching squawk box on cnbc. First in business worldwide. D over 100 years ago as a benchmark for average. Yet many people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And invesco believes doing that today requires the art and expertise of highconviction investing. Translation . Its time to bench the benchmarks. Theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. Choose, choose, choose. But at bedtime . Why settle for this . Enter the sleep number bed, designed to let couples sleep together in individualized comfort. Sleepiq technology tells you how well you slept and what adjustments you can make. You like the bed soft. Hes more hardcore. So your sleep goes from good to great to wow only at a sleep number store. Save 1200 on the i10 mattress with purchase of Sleepiq Technology and flexfit3 adjustable base. Hurry ends saturday. Know better sleep, with sleep number. Exxon mobile results crossing the tape. Love this. Beating expectations. Were going to have our discussion about this. Coming in at 43 cents a share, topping estimates of 31 cents a share. Well talk to the managing director of International Upstream research attitudor, pickering, holt and company. We talked about comparing past results to current results or better than expectations. Anish, you remember what exxon used to earn in a quarter because we talked about it all the time. They used to earn 10 billion in a quarter. Now theyre earning 1. 8 billion in a quarter. So they used to earn almost 9 a share, a couple of years ago. Now theyll be likely ucky to e. 88 stock trading at 44 times earnings or 8 times earnings. How do you analyze this as to whether to buy the stock and when you do buy it . Good morning. In terms of the results, i th k think, like you say, you have to remember the magnitude of the numbers. Its only beaten estimates by about 500 million in the context of being billions of dollars more a few years ago. If you look at where the earnings contribution came from, 75 of the earnings have come from chemicals. They actuall made a loss in the key upstream business. So if you look at the cash flow generation, this Company Generates less than 5 billion of cash flow from operations. Its paying out around 8 billion in Capital Expenditure and dividends. There is a big shortfall there. So, you know, obviously youre in a weaker pri oil price envir. To us exxon looks very expensive. In absolute terms it looks expensive relative to peers. There are some Key Developments in i mean, the Company Needs to continue to do what it does, and in terms of upstream operations. And it still needs to replace reserves and all of those things. How does that business look . Are they doing the right things for their future . I think not. I think exxon has the premium multiple. Its always traded on a big premium for a number of reasons. I think some of those are now starting to disappear. Reserve replacement for exxon, first time it didnt replace reserves since 1993. The very strong Balance Sheet. Its now lost its aaa rating. Its spending versus peers, if you look relative to production, its basically spending through the cycle. Then the cash returns to shareholders, which also used to stand out, now no longer stand out given its taken away the buy back. We dont see the reason for it continuing to trade on that premium versus peers. That doesnt sound positive. We appreciate you being with us this morning, anish. Cutting it a little bit short. I wanted to talk to you about it quickly. We in the past maybe it wasnt the greatest comparison at the time, but we were talking about how useless, or i was making the point, that multiples, when you dont when you dont know what youre multiplying. You dont know what your e will be. Its meaningless. We were having the discussion about apple at eight times earnings and people saying its the cheapest tech stock in the worl. I was saying exxon used to make 10 a share and now theyre making 2. You say apple is not exxon. Thats true. But exxon, if it got up to 10 a share, i would think that oil you could count on even more than some tech gadget in terms of doing better and better every year. Right. So with apple, i mean, who knows, if theyre earning x number of dollars per share one year, how can you possibly give it an eight times multiple if china stops buying their phones. Or whatever. Samsung. Android suddenly does same, by the way the way that crude comes down. That seems like you could count on it even more since youre never going to stop youre going to need you know youll need it, but you dont know what the price is going to be. No one thought a hundred back down to using multiples. Thats why analysts hang their hat on its the cheapest multiple around. You have no idea where the e is going to be two or three years from now. Whats the chinese smartphone maker that might leapfrog samsung is a formidable competitor already. Kevin oleary was on talking about the latest samsung with the fast money guys. Never liked it before. Breaking economic news. Personal income and spending in just a moment. Back in a bit. Coming up, Warren Buffett weighing in on the risks of a possible brexit. First, breaking economic news. Personal income and spending. Well bring it to you in just a couple of minutes. Welcome back to squawk box. We have a litany of breaking news, all from march. And of course, lets start with employment cost index. How much does it cost to keep that employee . Up. 6. Definitely a number to Pay Attention to last month. Lost one point and now stands at. 5. Income for the month of march. Up more than expected. Up. 4. Last month last. 1 as well. From. 2 original standing from february up. 1. If youre making more money, are you spending it . We have a consumption. We were looking for up. 2. We ended up up. 1. This is fascinating. Instead of losing. 1 for february we gained. 1. Now up. 2. The pce deflator month over month up. 1 as expected. If we look at year over year, its up. 8. Thats also pretty much as expected following a 1 last month. Of course, we still have purchasing manager survey, chicago. By the way, core pce year over year up 1. 6. As expected. 1 cooler. Cost of employees, different deflators, whats going on with the price outside of income and spending, these are in the right neighborhood. Interest rates looked like they would make a beeline back down. Theyre a little bit lower but still 186, 187 in tens. 191 and change has been the highyield close. Everybody watching the dollar ind ex. Getting hit hard. Another close about the fifth in the last four months under 94. Maybe more important. Lets look at the flipside. Dollaryen. Dollar losing major steam. Making new highs going back to october. 107 handle. Of course, with the japanese stock market closed today, well continue to monitor the relationship post all the central bank meetings. Joe and the gang, back to you. Thanks, rick. Looking at chevron. We just heard the analyst say x exxon helped by the upstream. Chevron posting a loss. Worse than expected. Looking for 20 cents. The company lost 39 cents. I was looking at what theyre expected to earn for the year, 1. 12. They didnt make their number in this quarter. Who knows if they earn 1. 12. 2011 earnings 13. 19. So theyre going to earn a dollar this year. They earned 13 back then. So, you know, future results are past performance in no way indicates the future, but you can see the stock is not trading on the daytoday earnings of this company. Company said its efforts are focused on improving free cash flow. Overall Industry Conditions were apparently weaker. So were margins. Their downstream operations continue to do better than upstream. Upstream operations hit a big loss. Upstream, 1. 46 billion in losses. 735 million in profit in the downstream refining and other operations. But thats a loss of 725 million net for chevron in the Current Quarter. It looks just like exxons chart. Its had a huge rebound and at this point is back over 100. If you were smart, i guess you would have bought it when it was under 70. Its yielding 4 . When it was at 70 what was it yielding . Probably 6. 5 . Remember when everyone said this was it . Yeah. All right. It will be great to talk to warren about the ripple effects, becky, of oil and how it affects rail and paint and, you know, bricks. Thats how i know him best, for bricks, because he sent me a brick with my name on it. Very thoughtful. Acme brick. Looking for the netjet card and i got the single brick. Well yeah. Better than nothing, right . I dont know. Maybe . I guess. I saw someone paid i dont know how many thousands of dollars for a dollar bill signed by Warren Buffett. So i have a break. Maybe its worth something. You have a brick signed by Warren Buffett. There you go. Right. Joe, you were talking earlier about how its kind of hard to ruffle warren when you come up with any of these scary scenarios that are out there. He is sanguine about most issues. We caught up with him yesterday ahead of the Berkshire Hathaway meeting here. I tried one more time. What would worry you, what would be things you would be concerned about in the near term and what the brexit rise to that level. Here is what he said. I dont think its a good thing, but i dont i wouldnt i wouldnt do a thing differently tomorrow in terms of our businesses or our stocks if cameron told me that he was going to come out for it tomorrow strongly. It wouldnt change anything i did. I wouldnt sell the farm i own. I wouldnt sell the real estate i own. I wouldnt sell my house or buy a car and i certainly wouldnt change my investment in businesses, but i hope they dont do it. So again, even when you try to throw some of the scarier things that investors around the globe are a little worried about, he, again, takes things in stride. Now, he mentioned that this is not going to be a good issue if it happens. Thats one of the scarier things out there and he still managed to let it roll off his shoulders. More from buffett coming up. His take on earnings season in a bit. Back to you for now. Thank you. Todays top corporate story. Amazon revenues surging 28 . All about the cloud. Amazon web Service Sales grew 63 year over year. Here to break down the numbers for us is the retail analyst at nomura. We have had successive quarters of profit. Is this going to be a trend, or is this a way of telling the market, you know, we can do this but were going to go back to what we may have to start investing in logistics or other things . I think they have been investing all along for 20 years. So i think the biggest change from our perspective is that theyre getting critical masson o the volume side and a lot of their initiatives are just starting to pay bigger dividends. I think there is a bigger focus on initiatives. Theyre mindful to say the earnings streams will be lumpy over time, dont get used to it, were not going to be on a straight line. If they earned 107 dl 1. 07 this quarter. All of last year was 1 1. 25. Is there any part of it you say it is challenged or you worry it could become challenged . To be honest, when we looked at this story last night, there are three legs to it, really. The biggest story for us and the biggest delta was the international business. International up 24 , you know, just one of the best results, i think, in years. And the Cloud Business continues to perform at amazingly profitable rates and high growth. And the Retail Business, you know, the Retail Business was up 27 with a 32 egm, you know, electronics general merchandise rate. Which is very strong. I think the International Markets are probably what are the biggest concern to people. But it just feels to us as if the adoption of prime is really starting to kick in like it has in the u. S. We talk a lot about streaming and amazons role in that business. I dont know if you think we focus too much on it, frankly, but i do wonder now that theyve changed the price point on prime, allowed you to buy it on a monthly basis and separated it from the shipping component if you want to, how big of a business do you think that could be . Do you try to put a different multiple on that business . Its not truly separated. There are a couple points we would make on that. The first one is that, in the video piece, the expense side of it over the next several quarters is going to it will be astronomical. Gross margins up 300. That wont be the case for the rest of the year. The way theyve priced the video piece of it is probably more to lure people in to say, just spend a little bit a month, get a whole taste of what were doing and then youll feel much more comfortable going the full 99. I think theyre trying to lure people in to lock them in at the prime spending level. So they made a buck and a quarter last year. The stock will be 6. 75 today. I like that multiple. Thats like 600 times earnings, right . Instead of earning 58 cents, they earned, as you say, 1. 07. For the year, the street is at 5. 03. Does that need to go up . We took our number up to 5. 15. 675 divided by 515 is still good value. Still like 120 i will say this. In 2020 the estimate is 30 a share. Based on that, its not but amazon always got by with not being valued on normal metrics because they didnt make any money. Now that they can be valued on a pershare number, does that make it harder to justify . I think the way that we approach it, joe, is we look at it three different components right now. The first one is we put a multiple on the north american segment, and we on an ebtda basis and employ a multiple to get to the target. On the aws piece, think about the financial model. 64 growth. 24 operating margins. We use the Security Industry at like a 20 multiple and say, okay, amazon is somewhere in that, a very Strong Financial model. We use price to sales on the international piece, which were finally starting to see acceleration so we bumped it up on that piece. The hidden point. The video piece, you have almost like anthony covers netflix. But embedded in here is the additional value stream. If you believe vitriol what do we value woody allens tv series at . I dont know. You dont have a multiple on woody allens no. If you give it anything remotely like netflix and it grows even remotely like that the content on amazon in the past quarter or two has gotten so much their stuff there, relative to even netflix right now. Families still tied . There is really good programming. Watched a great show called catastrophe. Hysterical. Its a comedy about a couple with a kid oh, it is a comedy. Robert, thank you. Squawk is a comedy too. Coming up, becky brings us more from geicos top insurance salesman. Monday morning dont miss Warren Buffett. Its hard to ask him questions when hes on tape. But it will be great. Bill gates, Charlie Munger. All live at 6 00 eastern from squawk box. Live from omaha. Okay, so you launched your banks app. Now what . How will you keep up with the new demands of todays Digital Economy . The fact is some believe they wont need a Traditional Bank down the road, so at cognizant, were helping banking and Financial Services Companies Think digital, be untraditional, and reimagine what the bank of the future can be. Our clients can now leverage customer intelligence to predict their financial needs and provide more contextualized products and services. Were creating new platforms across channels so customers can effortlessly invest, borrow, lend, transactwhereverwhenever they choose. And were digitizing the way banks run, driving efficiencies and delivering new value for their customers in return. Digital works for banking and Financial Services. Lets talk about how digital works for your business. Did hav. Welcome back, everybody. We are live this morning from the Berkshire Hathaway annual Shareholder Meeting. Joining us right now is allen alford. Geicos top salesman. Allen says he converts about 12 policies a day simply by answering his phone. 12 policies a day may not sound like a lot, but over the 16 years hes been with the company it adds up to 31,944 policies. If all those customers were to renew their policies thats about 50 million in annualized business, the size of a small Insurance Firm all on his own. He is the author of sell your little heart out. Allen, thank you for being here today. Thank you for having me, becky. Its great to be here in omaha with great folks. I dont imagine you grew up thinking you would be a Geico Insurance salesman. How do you wind up in this job . I sawen an ad in the paper. It was an open house. I thought, let me try it. See if it gets me going, gets me hired. I did it. 17 years later im still with the company. I think about it because youre basically answering random calls that are coming in. Right. Picking up the phone call. And you have to convince these people that they actually want to go through with this and pick up the sale. Right. What do you do . What makes you a great salesman . For me, listening to people. Believe it or not. People think salespeople are just great talkers, which i think i am. But i think the listening is the biggest part. I ask you questions. I ask you what youre looking for, and i generally this empathy about what you want to accomplish when you call. My guess is you must know what youre talking about too. When youre hearing it and hearing what i want. You better know the different policies and options that you can swing my way . Knowing your product, what you have to offer, how you can be a good fit and having confidence always plays a part in it. The book you wrote too. I read on amazon, a bunch of reviews that were out on it. People gave you a lot of props for offering some real tips they thought they could use too. How did you come up with the idea for writing a book. A lot of people throughout my career at geico always asked me, whats your secret . I felt this was an opportunity for someone to read, get insight, talk to me by reading and getting insight on the book, learning what i do from day in and day out. Thats why i wrote the book, to help others. Did you think about what you were doing or are you naturally a salesman for some of this stuff . Naturally some of it is sales ability. But a lot of it i earn through coaching, making mistakes. Ive not always been a great sales person. I make mistakes like anybody else. Joe is listening in. Joe has done time himself with cold calls on things. He has a question too. Joe, go ahead. Alan, i could never close. People finally had to say, just okay i mean and that was always hard for me. Do you know how to do did you do zig zigler or dale carnegie, did you give them choice . Would one year be good or two better for you . Do you try those things. There is a mantra, always be closing. The thing about selling is you have to know what the customer wants. Thats the easiest way to sell someone is to ask questions. Not to hard close i am not a hard closer. I really get what youre looking for, what you want to accomplish. And i use that to my advantage. When it comes to the time where youre hearing the objections and you can tell theyre ready, do you counter the objections and then ask for the yes. Do you do that . I love that. Do you do that . Yes. I counter objections, i go through it, i listen. You have to thats part of selling is handling tough objections, writing down what the customer says is always very, very important. I always want to be in tune to your customer and listen intently. Thats a key. And always stay positive. It doesnt hurt throughout the whole process. The greatest ad campaign in the history repeatedly, too, from cavemen. Always. Now tarzan. Jane asks the chimp is the waterfall over here. The greatest ad support of any product i think on the planet. Dont you think . Oh, it does. Everybody knows geico. Geico does a great job of marketing. I have heard that with 15 minutes you can save 15 on car insurance. I have heard that. How many times . Its a mantra. I mean, thats what im going to use for my meditation. The mantra. 15. Yeah. Exactly. Thats all its about. Marketing and tamerlan tsarnaeving marketing and advertising. Geico does a great job of training the staff and making sure everybody is prepared and when you call in youll get a professional agent. Alan. I understand how you feel. Many of my clients have felt that way in the past. They felt that thats the feel, felt, or found. You can use that. I understand how you feel. Many of my clients have felt that way in the past but theyve found that geico can save them 15 on anyway. Great service. Alan, real quickly, is it easier to sell people in flush times or is it easier to sell them in downturns . You have been doing this for a long time. Yes. Maybe in a downturn they are he looking to save money. Definitely their influence is more financially. That doesnt guarantee that youre going to make a sale but during hard times people are always looking to save money. Thank you for coming in today. As your reward you get to work all weekend too, being the top salesman. We appreciate seeing you today. Thank you. I appreciate it. When we come back going to you what Warren Buffett makes of this earnings season so far. And jim cramer will join us live from the nyse. Stay tuned, youre watching squawk on the street on cnbc first in business worldwide. Theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarter investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can help you find smarter entry and exit points and can help protect your potential profits. Fidelity where smarter investors will always be. Real is touching a ray. Amazing is moving like one. Real is making new friends. Amazing is getting this close. Real is an animal rescue. Amazing is over twentyseven thousand of them. There is only one place where real and amazing live. Seaworld. Real. Amazing seasons been a little disappointing, low eer numbers d lower guidance too. Corporate earnings have never been better. As a return on tangible equity, american businesses never had it so good. As a percent of profits, as percentage of gdp. Profit margins up and down the line business has been very, very good. The steel business has been terrible. You can pick out a few areas. So its not surprising that if the economy is not galloping forward and you already have earnings at this level, i dont see them, you know, jumping a lot from this level. Huh. Have a lot more to talk about with mr. Buffett on monday. Becky, you just saw catching up with the oracle in omaha last night. Lets get down to the New York Stock Exchange where jim cramer is also watching earnings. So we had just like a little primmer on i love price to earnings multiple, jim, they can be 500 or they can be 6. And so can earnings. Earnings can be 10 a share or a dollar a share for the same company. Its all a lot of fun, which i know you deal with that every night on mad money. You got to have you got to have some thoughts about the future dynamics of both the economy and the companys prospects all these metrics mean nothing. Absolutely. If you dont have a world view that tries to figure out where things are going you end up making a lot of mistakes. People at 2 15 decided yesterday the world is finished, chinas bad, its not a good time and they figure how good could amazon disappointed and a. M. Smazon sai this is the quarter we can make youre like selling at 500, buying at 700. Have a world vud view. Thats always the takeaway from buffett. Have a world view. He believes that companies dont change their stripes. That theyre either good or bad and you stay on them and you dont trade. I think some of these companies theyre just so shortterm inconsistent but longterm so consistent that you ought to just take buffetts advice. Sometimes its good to like a Biotech Company that isnt expected to report earnings at all for three or four years, you dont need to worry about normal valuations. Skb you can just look at the prospects. I wonder now that amazon going to be valued based on its bottom line whether it makes it harder. If its going to do 30 a share in a couple years, its not going to be that hard to grow into that multiple. Precisely. I mean, i think thats really the debate. Whether this stock is cheap ten years from now. I could argue it entirely could be given the fact that once they built things out they make fortunes. They have to build it out, but when they build it out, wow, look at what they can do. Its shocking. Jimmy, happy friday. Thank you. Have a great weekend. You too. Coming up, this mornings biggest stock movers. And then monday morning you dont want to miss this, Warren Buffett, bill gates and Charlie Munger all live starts at 6 00 eastern time in the morning. Live from omaha. Back in a moment. They say that in life, we shouldnt sweat the small stuff. But when youre building a mercedesbenz, there really is no small stuff. Every decision. Every component. Is an integral part of what makes the 2016 cclass one of our most sophisticated cars ever. Because when youre setting a new benchmark for refinement, it is the small stuff. That makes the biggest impression. The 2016 cclass. See your authorized dealer for exceptional offers through mercedesbenz Financial Services. Jake reese, day to feel alive jake reese, day to feel alive hi. I got it. Only have a minute to go and then were done, andrew. Stocks to watch two big oil names. Exxon just blowing it out better than expected earnings. Earnings about a fifth of what they earned just a couple years ago. But it was as you can see playing the expectations game it was above expectations not because of upstream more because of chemical operations. Chevron reporting wider than ac suffering for it down about 1. 4 . Going back tobeck becky . We are. It is going to be a busy weekend here in omaha. Andrew will join us later today. But on monday morning you can join us right here on squawk box for the highlights. And three hours live with Warren Buffett starting at 6 00 a. M. Charlie munger will be here, bill gates will be here, theyll join the conversation at 8 00. Well see you then. Have a great weekend everybody. Good friday morning. Welcome to squawk on the street. Im Carl Quintanilla joined with david faber. We have a lot to look at this morning. Europe red although q1 gdp was a shade better than expected. Back home personal spending weak but roughly in line. And oil got within 50 cents of 47. That is a new high for