together. kwaer very excited to have them join us this morning. tweet us with questions from them, as well. joe, back over to you for some headlines. >> okay, becky. i'll read these headlines with maybe a little bit of an echo. i mean, i'm -- it's like so alone here. but, you know, it's okay, i guess. you're kind of with me, right? >> hey, joe, guess who i have with me. >> besides warren? >> yeah. can you take a shot, jerry? >> oh, i know, i know, i already asked. i've already asked for mac, yeah. you know how that -- >> take a shot of -- >> yep. hi, joe. >> i've told you, he completes me. i've said that to him before. >> yes, that's why i took him. >> is it a leaky roof? i never know what it is. sick dog, what is it this time? it's okay on, but i found out he was with you and at least he's doing something. >> right. >> usually he's just -- you know, let me get on to these stories here. i almost said some -- anyway, the major story dominating the markets are morning is coming out is ukraine. russian forces have seized the southern area of crimea after vladimir putin secured permission from his parliament to use military force in his words to protect russian citizens. western governments are promising to isolate and punish russia's economy. secretary of state john kerry will be going to kiev. this weekend's developments are playing out in the markets. big time this morning. we'll see. 132 points. let's look at europe. all the major averages are under pressure today. russian markets took a hit. the dollar this morning, probably doing a little better. the ruble hit an all-time low against some currencies. the price of gold, get a quick look at where that is trading today. up 22 points or so. becky, we talked about last week. i just think it's a different time. you know, tanks in hungary. i think i was like 19 -- while when i was born, i think, the late 50s or early -- and whether this was going to be similar. i don't know how this works now. is this like a territory grab? similar things happened in georgia. what can we do other than try to punish the economy? no one is talking about confronting russia at this point militarily. then the markets would be down, god knows. >> did you see the headlines wondering about his -- whether or not you could actually negotiate with him at this point. warren buffett is here and i wonder what you've been thinking about this. >> i really -- i mean, this is unfolding and who knows what's going on behind the scenes. >> merkel made some kind of comment that he's living in la-la land or something, right? >> i guess these are comments that she ahead in a conversation with president obama suggesting that he's not living in reality. >> i don't know. for putin, within 2,000 square miles of russia, i wouldn't argue with him while i was over there. standing by in kiev with the late latest, steve sedgwick. >> hey, joe. we've heard the foreign minister from ukraine saying -- they're calling it ultra nationalist, saying we should refrain from supporting this group because they are infringing the human rights of native russians within crimea and the ukraine. the response locally here is is robust. and i want to play a little bit of sound from an mp i just spoke to who is on the secretary of foreign affairs committee. listen very carefully to what she says. >> anyone said that russia is an empire without ukraine. ambitions. and in the world will excuse him such an advance and it would betray ukraine and you will have a new -- heading for europe and heading for world domination. you can stop him. you can stop him here in crimea, in ukraine. we have to unite all these goals. >> the rhetoric on both sides, joe, is absolutely immense, calling mr. putin the new hitler of the 21st century. john kerry has been pretty aggressive. he's due to touch down in kiev this evening. the aurm here is on full military alert. but in is the key. they have told the military personnel throughout the country in the crimea and in the east of the country especially with a lot of major russians not to engage the russians, not ta fall for -- that georgia made in 2008. do not engage the russians. at the same time, of course, the government is trying to shore up both military support internationally, which there seems to away distinct lack of appetite for and economic health. there's an economic crisis here, as well. back to you. >> that's what we focus on now to -- maybe we're lucky just to be focusing on the economic crisis at this point and it doesn't escalate to -- i don't know. people don't use the "h" word very much, steve. so hitler? that's what i thought i understood that it was kind of -- you know, i couldn't understand everything she said, but i thought i picked that up. that's something. >> yeah. the russians have been using hitler analogies, as well. we were the start of the war in the first world war. we were the cause of the start of the second world war. both sides have been using western analogies. the kremlin have accused the pro western government of the exact same kind of treatment. i came into kiev thinking i was going be talking about a huge, huge economic crisis after decades of mismanagement. of course, events have overtaken. this new government here, this is incredible. had government had two days of peace before we had the russian invasion of that crimea region. behind me, let's take a look at this. in is the headquarters of the protesters who were trying to get rid of yanukovych. just to me left here, as well, 97 people lost their lives in that 1250ud studio. >> just hitler, world war three, words that -- they're just staggering. i guess we have to at least admit, steve, thanks, i guess the possibility of a cold war coming back to some extent. it's already here, i guess. we're going to be monitoring the markets throughout the morning. let's get back to becky now with warren. world war three? i mean, you know, becky, really. it would go home on friday -- there was a hockey game last night and now i'm hearing the this. it's staggering to me. i guess the cold war, at least, we have to think at least as a cold skirmish at this point. >> yeah. again, joe, you point d out, the ruble is at an all-time low versus the dollar. it fell drastically today, not only versus the dollar, but against the euro. investors are sitting up and taking notice. the micex index in russia is under quite a bit of pressure, as well. but there are some major moves happening as investors trying to figure this out. >> we are here in omaha because berkshire hathaway went out saturday morning. so a very hefty annual letter that gives people a lot to think about. as you do every year, you laid out a lot about your stocks about investing in general. i would ask you for your mac roy row view in the markets. in your letter, you pointed out you don't give much credence to people offering macro views. >> no. i've been buying stocks and businesses for a lot of years. i've never bite becaused on macro figures. the first business i bought was in the spring of on '92. the macro factors were not looking good. we were -- it was right up at pearl harbor and we were getting clobbered in the south pacific and the war does not look good. i think almost every american thought we were going to win the war. but when i bought my fist stock, i spent all my $120. i was not doing it based on headlines. i did it for what i was get forth my money. >> when you bought into it, you say you haven't looked at macros. i can think of times when you have looked add macros. >> stocks are demonstratablely cheap. i remember an early in 1974 -- or i did an interview with forbes and in 2008 i wrote an article for the times. occasionally when they're ridiculously cheap. but most of the time, they're good value. but there have been a few times when i -- i thought they were so cheap that i -- i should b say something. >> people have pointed out obviously stocks have come a long way since then. people have been annualizing your report and realizing that you didn't say anything like you said in years past, you said one time a few ago that stocks were a much better value than gold. this time, what people have been focusing on were on roadway. one that you bought here in nebras nebraska, another you invested from nyu, new york university. that has people speculating. >> no, that's -- they're speculating wrong. i use those illustrations because i don't know that much about real estate or farms. and yet it was still possible to successfully invest in them. you can have a great lifelong experience in stocks and not know the ins and on outs of capital structures. i was probably more ignorant of the realities of farming, the realities of that building in new york than most people are of stocks. yet it was perfectly reasonable to come to an intelligence decision that you were probably going to make quite a bit of money. >> i wonder because there have been a lot of people recently who have raised questions about the stock market, who have worried that it is a fool's game to try to get involved. i heard people like bill o'reiley say this recently, he doesn't trust the stock market and think it's rigged. what do you tell people? >> it isn't rigged at all. it's pretty hard to rig 20 plus trillion. and the -- maybe we should forget about calling it the stock market. it's american business. for some reason, you think american business over the next 50 years is likely to do well in its production than it has been in the past, then you can come to that solution that it was likely to do more pop so whether you're buying a productive asset, you don't want to categorize it by some name and read in the paper that this or that is going to go up or down. you want to look at the business. if you bought the house next to you to rent somebody, you would look at the rent you were going to get, what you thought the neighborhood would do over a long period om time and measure that against the purchase price. the stock market offers so many opportunities, thousands and thousands of different businesses. you don't ever to be an expert on every one of them. you have to have some conviction that either a given company or a group of companies -- and i would suggest for most people it should be a group of companies -- that those companies are likely to earn 5% to 10% earnings from what they're learning now. >> i read something about the terms of your will. what you set aside for your life. >> i didn't lay out my whole will. but i did explain because i -- i laid out what i thought the average person was not an expert on stocks should do. and my widow would not be an expert on stocks. i want to be sure she gets a decent result. since all my berkshire share res going to philanthropy, the question becomes what does she do with the cash that's left to her? part of it goes outright, part of it goes to a trustee. they're invested 10% in re -- she'll do fine with that. anybody will do fine with that. it's low cost, it's in a bunch of wonderful businesses, and, you know, that takes care of itself. >> you specifically said a vanguard index. >> right. it's a very, very low cost index fund. and there are others. there are others that aren't so low cost. and keeping costs to a minimum is enormously important in investing, whether it's farms or buildings in new york or -- but particularly in stocks. it is -- if you're in effect paying out 1% or 2% annually of your portfolio, that's a big, big tax that you don't have to pay. >> and people who are at home listening to this, they need to look at the suspension ratio. you could probably get one for 20 to 25 points. >> yes, i think that's -- actually, 25 points. now, if they've traded around like crazy, they pay people to tell them what to do with it and everything, their returns become our returns with expenses. so you should look for very, very low expense way of participating and incidentally, at berkshire, our expenses are very, very low in relation to the 100 plus billion of investments that we had. >> we do have the opportunity for viewers to write in and ask you their questions. one viewer did write in the question asking about whether did you lay out that you had said he set this mon aside for your wife instead of being put back into berk share shares. >> berkshire would be fine. but i wouldn't want to be doubting berkshire to people generally. i have no problem touting the s&p 500 at the low cost. >> let's talk a little bit about what you see in the economy rite now. because through your businesses, you have an incredibly good idea about what's happening. you have not only the big five that are doing things, you have massive investments, retail operations, just in general, where do you think the american economy is headed right now? >> it's -- from what i see, and i do see figures on at least 80 some companies or so, and i like to get them and i get them fast. exactly what's been going on ever since the fall of 2009 and '10, we've had this moderate but consistent growth now for 4 1/2 years. every once in a while, we worry about it spiking up and double dipping. it's been remarkably consistent. and the gdp figures bounce around a little been in terms of what we see, i would say that it's been almost a straight line, but not the kind of slope that people would like, but not flat, either. and that's exactly what i see to this point. >> so were we overly optimistic in the fourth quarter and now we're overly pessimistic in the first quarter? >> probably. we'll know for sure, later on. but it's been that waves of -- we haven't been wildly optimistic and gotten wildly pessimistic. over that period, it's the small wave of optimism and pessimism. it's been pret darn steadily improving. >> how much has weather played a role? in fact, the numbers we've gotten over the last few months have been lousy. >> yeah. >> the markets have been writing it off saying don't worry about it, it's been bad around the country. >> our rail road doesn't who whether it's cold. those things compound on themselves. so there's no question, it's just been some factor. >> every time we brick up weather as an excuse, somebody will point out, yes, but if you look at housing numbers and the housing market in california, that's been slower and it hasn't been because of weather there. what do you tell people? >> i can't tell you for sure. we have a couple of large real estate properties, for instance, in california. the largest one in the lower three counties. we're buying another one in san jose. it's okay. and the prices, the prices have really been quite strong. but you always in the winter have less activity and real estate. we bought several real estate brokerage firms last year. we've bought one this year. we'll keep buying them. i like the business. >> we're going to continue this conversation with warren buffett. we have him for the next three hours. joe, i'll send it back to you in the studio. i know we have a break we have to get to, too. >> yes, we do. i have often thought about warren's wealth. how do you spell your name again, joe? >> i mean, saying that -- i think of you as a father figure or calling you dad is probably too much, but, you know, in the past, you've given me -- you gave me a couple of bottles of ketchup. you gave me a brick. you gave me a little card, a net jet card that was absolutely useless. it had no money on it. and i'm just thinking, are you -- you're sort of waiting for the big surprise, aren't you? am i going to find my name in there, got forbid, when -- >> absolutely. no, i've been testing you, joe. what you'll see in my will, it will say to joe who wanted to be mentioned in my will, hi, joe. >> you know, dad, that would be enough for me. i'd just like to say that. that would -- i'm not looking for anything else. that would be -- >> i'm going to make that on the record. >> you're on page 6 today. i think maybe i'll talk about that little bit later since i'll use my will -- >> uh-oh. >> yeah, he's on page 6. he's liable to do anything at any time. so it's on the gossip column. let's save that for later, beck. >> there is a good tease. >> coming up, a special osbourn edition. i've just asked him to include me in his will. and taking a look at the futures, what would it matter, really? 60 billion? really, is it that big of a deal? anyway, "squawk box" with warren buffett will return in a moment. welcome back, everybody. right now, it is time for the executive edge. this is a person edition of the executive edge. this is the ask warren edition. we are joined this morning by legendary investor warren buffett. he is answering some of your questions. we have a lot of questions coming in from people. i'd like to focus on some that take a look at berkshire and some of the on things you pointed out in the letter. one thing is from ron rogers in ridgewood, new jersey. he says in the fall 2013 news came out that you were ever so close to a major multibillion dollar acquisition of what would have never been another elephant. would you tell us what industry group it's in? >> yeah, i better not even say what industry it was in. because there aren't that many companies in the industry. and by the size of it, you would probably narrow it down to two or three companies. it didn't happen. but there's -- we're always seeing the leaves russelling if nothing else. there has to be something behind those leaves. we will -- there's nothing hot at the moment, but we have things we're working on. >> you said in the annual letter to shareholders that when it comes to taking a look at what happened with heinz, that this is a temporary plate for things that berkshire might do in the future. have you spoken with 3g about doing another type of acquisition like heinz? >> we've talked about generally -- we don't have a name, but both georgia power lemon who is my partner in that and i would love to do another one. and they have an appetite for making acquisitions. >> and so do you. >> yeah. we're is a good pair that way. everything that's happened with heinz, everything has been satisfactory and i look forward to working with lemann again. >> we've got to zero based budgeting. as i said in my report, i would expect the earnings of heinz to be significantly better this year than any year in history. >> you pointed out that you're not somebody -- the difference between this and a private equity deal is that speshg shire plans on holding this for a long, long time. >> forever. >> forever. would you be surprised, though, to see a heinz ipo sometime in the next five to seven years. >> that could happen because the 3g people did that with burger king. they have a number of investors. i don't know how many. the primary investors i know. but they -- no, i just don't know the number. but some of those people undoubtsedly will want to get out. they might have a chance to get out under a significant profit. when they do, we have no obligation to -- they have no obligation to sell their shares to us and we -- so it would be totally voluntary on their part. but if they were going to sell their shares, and i pound the price acceptable, i would buy the share for them. >> and we would find equal partners even if the shares were somewhat different. but i would like overtime to increase its share. it's forever. it's -- it will be a profitable business. it will be a worldwide business. and it is a worldwide business. it just fits into berkshire. our problem is putting money to work. we're not looking to take money out of things. we're looking to put more money to work. >> did it create a problem to have the guys still on the board at burger king selling ketchup to places like mcdonald's? >> i'm not sure if the customer of mcdonald's felt that way, but certain of the providesees, as i understand it, sort of objected to the fact that the guy across the street was selling hamburgers against them was also the ceo of berger king. i believe he's still cries chairman. >> traes a big account, though, correct? >> it's a big account. berkshire is going to have a lot of cross lives. there will be times when -- that the actions of one area take the competitors of another subsidiary. that's just going to happen. >> all right. we're going to continue this conversation. let's get back to joe in the studio right now, though. >> all right. becky, a big night in hollywood. one of the big winners last night at the acatmy award. "12 years a slave," best picture and best adapted screenplay but it was "gravity" that took ohm the most statues. seven in all, including best director. and it's in reference to this, warren, that you're on page 6. i'll just let you know that your story is in between a picture of kim kardashian in a low-cut dress where the thing says she's got her own version of the golden globes. this is, you know, the new york post. and then -- ridiculous. and then on the right is a picture of brangelana. and then you're in the middle. and it says that -- yeah, go ahead. >> they probably asked for that placement, joe. >> yeah, they asked for that placement. and it says that harvey wi winestein invited you to his pre-oscars party. and it says that you were snippy to him, that you appreciated it, but you weren't going to go to the oscars because you weren't nominated this year. >> i'm a sore loser. >> you are. and i looked you up on imbd. this movie debate, warren buffett was born as warren edward buffett. he is an actor known for wall street -- it says this right here. you are an actor known for wall street money never sleeps and das something, some german thing. and then it has all your appearances. and it does include "squawk box" as some of your best annances. appearances. you have been offered roles, haven't you? i'm sure constantly and you turn them down. it's just not the right role for you? >> actually, i may have a small one in consideration right now. but i have told my agent to feature the "squawk box" appearances at the top of my resume. that's most likely to get attention in hollywood. >> but i'm trying to think, you could be different things. you could break out of character, you could be a bond villain. i would think about it at this point. it's not your fort, but i mean, i'm sure you get a lot of offers. you would have been on breaking bad. >> joe, i'm thinking more glamour roles. that may be why they haven't stepped up yet. >> leading man type. that's an idea, too. coming up, we'll be back with warren and becky in a minute, but first, a big impact on the markets want more questions for mr. about it. think about more movie roles for him. about business internet? ok, how about thirty seconds? at comcast business our internet is fast. up to 5x faster than slow dsl from the phone company. and our phone's better too. sign up for internet and voice and find out how to get four weeks of internet for free. time to make the call. 800-501-6000 comcast business. built for business. so i get invited to quite a few family gatherings. heck, i saved judith here a fortune with discounts like safe driver, multi-car, paperless. you make a mighty fine missus, m'lady. i'm not saying mark's thrifty. let's just say, i saved him $519, and it certainly didn't go toward that ring. am i right? [ laughs ] [ dance music playing ] so visit progressive.com today. i call this one "the robox." and it feels like your lifeate revolves around your symptoms, ask your gastroenterologist about humira adalimumab. humira has been proven to work for adults who have tried other medications but still experience the symptoms of moderate to severe crohn's disease. in clinical studies, the majority of patients on humira saw significant symptom relief, and many achieved remission. humira can lower your ability to fight infections, including tuberculosis. serious, sometimes fatal events, such as infections, lymphoma, or other types of cancer, have happened. blood, liver and nervous system problems, serious allergic reactions, and new or worsening heart failure have occurred. before starting humira, your doctor should test you for tb. ask your doctor if you live in or have been to a region where certain fungal infections are common. tell your doctor if you have had tb, hepatitis b, are prone to infections, or have symptoms such as fever, fatigue, cough, or sores. you should not start humira if you have any kind of infection. ask your gastroenterologist about humira today. remission is possible. watching the developments coming out of russia and ukraine this morning. western leaders, almost universally condemning the actions and vowing to use economic and diplomatic measures to pressure russia to withdraw. futures are down sharply this morning. european markets are taking a hit. those were down over 150 now and the dow, there are the european markets down across the board. russian markets are already lower at this hour. as you can see, down -- it's a significant number. 12%. and so the dollar with a quick look, you can see against the yen, the euro, especially the russian ruble, which hit a new all-time low. gold has been in a mini bull market on its own. and it's up another $23. you can see that since the december lows, quite a move. let's get back to becky and warren buffett in omaha. you've got warren there. the ukraine is front and center. >> that's right. warren talked earlier, it's difficult to look at these markets. you wouldn't sell anything today base odd that? >> no. stocks are cheaper. we were buying i think one stock on friday. they're selling lower today and that's terrific. >> was it wells fargo? >> good try. >> in fact, a lot of the questions that have come in from viewers and from berk share shareholders have been related to your investments. you did detail quite a bit of your big holdings and what you thought about these. frank alame writes in, coca-cola, american express and wells fargo for 20 plus years. if you didn't sell those stakes down during the great bubble of the late '90s or during the last financial crisis, is it fair to say that you will never sell these stocks? can you envision a skan know that would make you sell any of those portions? >> it's fair to say we wouldn't sell them in any given year, probably any five-year period. we need 340e7b to operate businesses. we could sell only one of those stocks owe or maybe a group of them. would like ownering equities. we'll make money in the equities as an alternative. but in terms of building berkshire for the long-term, we just like adding earning power, big chunks of earning power for businesses which we are going to keep forever. none of the stocks are forever, but they're generally for very long terms. >> there have been a lot of questions that ever come in regarding ibm. from hong kong, a gentleman named rajesh writing ibm has underperformed the s&p 500 since you've adivide a stake in it approximately while you have clearlily mentioned in an earlier interview that you'd prefer the share price does not do well so the company can buy back at a lower price, has the company's financial performance, especially revenue trend, disappointed you? >> well, the revenue trends have been less than anticipated. although not dramatically less than anticipated. there is a transition going on in the business. particularly in terms of the cloud. and so i would say it's fair to say that i know less about the future of ibm than i might know about the future of wells fargo about wells fargo or coca-cola or the businesses i've november. in terms of the price action, that doesn't make any difference to me. ibm bought in a lot of stock last year and if the stock had been even lower, they would have gotten more shares. a few of the shares outstanding, the better i like it. they continue to buy shares. they buy them at a good club. i like that. i would like to see the revenues pick up. >> i think she got into the company at a good time in the business. her record -- i feel fine with her at this point, but her record will be judged five years from now. there's a lot going on in that business and i think they're doing well. but the final score will be five years or ten years from now. >> are you buying more shares? >> we bought a few more shares last year, not very much. and i think we bought a few shares this year. >> okay. let me also ask you a question that came in, this is number 32, folks. it's dan youngberg who writes in, are you still positive on rails? which besides yours is good and what about the rail car companies? >> well, there's four big railroads in the united states. and two in the east, two in the west. and the rail business over time will be a very decent business. it's an enormous asset to the company. there won't be more -- maybe more revenues, some high speed passenger and all that, but in terms of basic freight railroads, you've got the configuration in this country that's going to do this for a long time. and rail does move heavy goods very cheaply moves over long distances. and it's also viermally friendly compared to highway traffic. so the future of railroads is very good. and i will say that that's true of all the roads and -- >> a question came in from someone named curtis carter who says, do you have any plans to use burlington manner and santa fe to move electricity from east to west and are you considering electrifying the railroad? >> well, the answer to both is no. >> okay. it's a question i've heard from others before. >> if anybody can figure out a way we haven't made a lot of money off the right of way that we haven't thought of, let you know. but i haven't thought of in. >> burlington northern has already about theed from the shale boom that we've seen in parts of the country. >> it's benefited and but all of the rails have done well. so it's a bit that -- has real economic advantages. if you look at fuel costs, if you look at drivers wages on the highway, as long as more goods move from place to place in this country, rails are going to get their share and it should be a very profitable business. >> what about the keystone pipeline? that question was raised by shareholders and by others saying wait a second, do you really want the keystone pipeline to come because it would be a direct competitor -- >> it's not that it would be a competitor. it's moving crude down from canada and that -- i think probably the keystone pipeline is a good idea for the country. >> do you expect that the president might actually pass it? >> i have no idea. >> i see seen a study that came out from the state department that suggested if the keystone pipeline was put in, it would end up saving lives versus moving -- >> both sides are going to come up with that sort of thing. >> that was from the state department. it wasn't from -- >> and they may well be right. but there are leaks on pipelines and, you know, the occasional exposure. that is very, very, very, very rare. but if you measure moving millions of barrels for a hundred years, i'm not sure how it would come out. they're going to change rail cars specifically. it's turned out to be more volatile than people anticipated and that's going to require the one thing we've lowered the speeds. >> burlington just said it was buying 5,000 new tank cars. they're not on the shelf, so it's been ordered. we're in the tank car manufacturing business. and there will be changes made and there should be changes made. it's fair to say that we have found in the last year or so that it's more dangerous to move certain types of crude, certainly, than we thought previously. and there is no question about it. burlington was going to be in the market for buying more of these things. >> buying them is a big backlog of not only the subsidiary and others that make cars. our back lot runs into the middle of 2015. those aren't all for krudz oil at that particular cars. most tank cars don't carry crude oil. when you see a tank with a lot of crude oil on it, most of that is not crude oil. you can't just flip and switch and get those cars. there will be retrofitting. it's more important to get it done immediately. but the tank car probe is a problem. and it should be addressed as being addressed. but you can't change the whole tank car fleet overnight. >> we're going to continue this conversation with warren. joe, we'll send it back to you right now. >> becky, is buffett a crayton fan, hoops in omaha. >> i don't know. >> you bet. providence next -- saturday, is our final game. i'm going to be there to watch mcdermott score about 60 points. >> oh, yeah? i guess you missed what happened over the weekend against my xavier -- >> oh, no, no, let's not hear about that, joe. >> nope. >> number nine? not any longer, my friend. it's tough to go into the center. that was fun to watch. anyway, i figured you were a hoops -- yeah, two good judgment schools, right, against each other. i like that. >> you bet. we had a cinderella team back in 1942 when i was a kid and i've been waiting for a return. >> wow. i don't even remember that. come up, apple and microsoft in the news this morning. the futures are right now down last i saw about 150. not quite as bad now to 146. more "squawk box" with warren buffett, next. tdd#: 1-800-345-2550 trading inspires your life. tdd#: 1-800-345-2550 life inspires your trading. tdd#: 1-800-345-2550 where others see fads... tdd#: 1-800-345-2550 ...you see opportunities. tdd#: 1-800-345-2550 at schwab, we're here to help tdd#: 1-800-345-2550 turn inspiration into action. tdd#: 1-800-345-2550 we have intuitive platforms tdd#: 1-800-345-2550 to help you discover what's trending. tdd#: 1-800-345-2550 and seasoned market experts to help sharpen your instincts. tdd#: 1-800-345-2550 so you can take charge tdd#: 1-800-345-2550 of your trading. phone: your account is already paid in full. oh, well in that case, back to vacation mode. ♪boots and pants and boots and pants♪ ♪and boots and pants and boots and pants♪ ♪and boots and pants... voice-enabled bill pay. just a tap away on the geico app. ♪ huh, 15 minutes could save you 15% or more on car insurance. yup, everybody knows that. well, did you know that some owls aren't that wise. don't forget about i'm having brunch with meagan tomorrow. who? seriously, you met her like three times. who? geico. u.s. equity futures are sharply lower. europe is lower. there we are, 144. we did close at a new high on the s&p. at 1859. at least we're up for the year. at least a couple of days. apple is hoping meanwhile to become more prominent in the your car. automakers are rolling out apple's car play technology today. lets iphone users make calls, use maps, lizzen to music or access messages. while you're in your car, ferrari, mercedes and volvo will be the first to include car play in their vehicles. sounds almost like cold play but it's not. it's car play. two microsoft executives are leaving the company. tony bates who ran the motel -- no, not the motel. the business development and tammy reller are departing. microsoft employees were informed of the change friday by new ceo nadella and another executive vice president mark penn becomes chief strategy officer, a familiar name. determining which markets are appropriate for the company. all right. coming up, more of your questions for the oracle of omaha, warren buffett. still submit them by e-mail to askwarren@cnbc.com, on facebook or twitter. twitter me or e-mail me and i'll ask a question of warren. we'll be right back. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. but with less energy, moodiness, and a low sex drive, i had to do something. i saw my doctor. a blood test showed it was low testosterone, not age. we talked about axiron the only underarm low t treatment that can restore t levels to normal in about two weeks in most men. axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. women, especially those who are or who may become pregnant, and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. report these symptoms to your doctor. tell your doctor about all medical conditions and medications. serious side effects could include increased risk of prostate cancer, worsening prostate symptoms, decreased sperm count, ankle, feet or body swelling, enlarged or painful breasts, problems breathing while sleeping and blood clots in the legs. common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. ask your doctor about axiron. and coming up, the big market reaction to russia's push into ukraine. the futures are down sharply. the global market are also lower. we'll have more of your questions for legendary investor warren buffett. "squawk box" will return after another quick break. stay with us. wealth management to one ofp firms in the country. ♪ for a team of financial professionals who provide customized solutions. for all of your wealth management and retirement goals, discover how pnc wealth management can help you achieve. visit pnc.com/wealthsolutions to find out more. anbe a name and not a number?tor scottrade. ron: i'm never alone with scottrade. i can always call or stop by my local office. they're nearby and ready to help. so when i have questions, i can talk to someone who knows exactly how i trade. because i don't trade like everybody. i trade like me. that's why i'm with scottrade. announcer: ranked highest in investor satisfaction with self-directed services by j.d. power and associates. welcome to a special edition of "squawk box," ask warren. legendary investor warren buffett answering your questions during the entire show. >> you have to have a conviction that those companies are likely to earn more money 5, 10, 20 years from now than they are earning now. that is not a difficult decision to come to. >> tweet, e-mail, get to facebook. and get those questions in. "squawk box" begins right now. good morning and welcome to "squawk box" on cnbc. i'm joe kernen along with becky quick. actually, i'm all alone. there's no one here to mind me. i'll do the eddie murphy from shrek in a minute. maybe we can play some of that ♪ all by myself >> they keep saying that we're together, becky. we are obviously not together. >> we are together. i hear everything you say. >> mack is with me, so is warren. >> missing you is one thing but missing mack is a deep, deep hole in -- >> i know how to hurt a guy, don't i. >> becky is in omaha with warren buffett. we'll get more of your questions for the legendary investor. what's happening to our markets with the news coming out of ukraine. russian forces have seized the southern area of crimea after russian president vladimir putin secured permission from his parliament -- gosh, i wonder how he did that -- to use military force to protect russian citizens. western governments are promising to isolate and punish russia's economy, demanding that putin withdraw his forces. it will be interesting to watch how this plays out, how he is able to play the west once again. this weekend's developments are playing out in the markets this morning. you can see the futures are down about 150 points. let's get to michelle caruso-cabrera. with more on the situation in ukraine. don't unpack your bags, girl. >> i'm well aware of that. i want you to think about what i'm about to say and tell me what you think about it. we're talking about whether or not the west can do anything to punish vladimir putin. and i would argue that the capital markets are stepping in in a way that diplomacy has thus far failed. yes, global markets are lower when you talk about stocks. but not nearly as bad as in russia. and by the way, treasuries are rallying as people seek safety. contrast that to what is happening in russia. there is strong capital flight happening there today where investors are saying you want to do this to ukraine, fine, but not on my dime. first of all, the central bank had to raise interest rates 1.5%. 1.5%. we talk about a central bank move of a quarter percent as a big deal. take a look at the russian ruble. these charts show the strength of the dollar. it's been getting hammered. the one-week chart shows the dramatic move that's happened as well. take a look at the rtfs, the russian stock market. down 10%. one week down 16%. remember, this is a market that traded with a multiple of between 4 and 6. because there's so little investor confidence. i wonder, i mean, maybe this is too much to hope, but if there's enough capital flight, if this is the thing that actually forces putin's hands. because us saying that we're not going to attend the g8 is hardly going to convince him and already the eu is saying they don't want sanctions, they wand to do remediation instead. the capital markets are certainly acting in a way, very, very rapidly. it reminds me, remember, when bill clinton said wait a minute, i have to wonder what a bunch of bond guys think about my health care plan? maybe one of those similar moments. we have to wait and see. joe in. >> all right, michelle. it affects his people, not him as much. he'll still be worth $100 billion. that's a very good question to bring up. we'll get back out now to becky. we can continue to talk to warren about ukraine or -- what was last night? i didn't see anything. did you get to watch? how did tina fey and oamy poehlr do? >> it was ellen last night. i didn't watch either but i think it was ellen. >> oh, okay. tina fey and amy poehler were not that -- it was ellen? i love ellen. i didn't know that. i was at a hockey -- >> it was a late night. i was busy getting ready for this. >> ellen degeneres? i feel silly. i feel -- wow. that's embarrassing. >> i'm really glad i read the story this morning so i knew that you were pulling my leg on this, because it may have gone over my head pretty easily. oh, yeah, they were fantastic. i thought they were great. >> they're always funny. that's my way of getting an nbc plug in, even though i don't think it was -- i definitely would not be making fun of it if it had been. go ahead, beck. >> we'll continue our questions for warren buffett this morning. we've been taking questions from viewers, we have been getting more this morning that have been coming in. one of the things that happened over the last several months, warren, there was a story out that suggested that the committee that looks at systemically important financial institutions said it was considering berkshire. this was a story, lightly sourced, that went through. i wonder if you've heard from them and second of all, there's a question that came in from salem, oregon, given berkshire's policy to maintain a large surplus of capital, would berkshire being declared too big to fail concern you? would the increased regulation that could come with that designation be worth it? >> we've heard nothing. i've checked with the lawyers. i would not think we would be under -- our derivatives as a -- "a," they're winding down to begin with. and the a nominal value, they're -- well, let's see, deutsche bank has 60 trillion. so they're less than one-tenth of 1% of a deutsche bank, for example. we have loads liquidity and streams of earning power. it's very unlikely. >> those derivatives will wind down on average around 2020. >> the credit ones all did wind down. and we have very minor collateral requirements. we have no condition. we never have any significant short-term debt. we always have bundles of cash. we always have cash coming in every month. it would seem very unlikely that we get categorized. we're large but exxonmobil is large, apple is large. there's other large companies. it's not based on size. it's based on whether you're likely to get into trouble. >> let's continue the focus on washington. the president is coming out with his budget tomorrow, president obama. the early reed we've gotten on this is that is going to be one that is less inviting to republicans, that he feels like he's made his outreaches in the past and that they haven't been effective. what do you think that does to the environment in washington? >> it's hard to imagine the environment getting much worse. you know, it's more or less a stalemate in washington, because there's a little loosening up, perhaps. you have a significant portion of the republican party that can hold the entire republican party hostage. if the republican party can hold the legislative process hostage. unless there's a real change in attitudes, it's hard to see much happening. >> one of the ones that came in under the ask warren twitter hash tag, i know you are concerned about the wealth gap. are you supportive of raising the minimum wage and tieing it to inflation? >> i thought about the minimum wage for 60 years. i used to work at minimum wage. that got my attention first when i was getting 75 cents an hour. it really cuts both ways. you like to have people being paid more but you also want to have as many people employed as possible. that cuts both ways. i can argue either side of that. the one thing that does make sense is to increase the earned income tax credit. that does increase the income of people who are working. and there's no question that the market system, which is the greatest system ever seen for producing goods and services also leaves more and more people behind as it gets more and more specialized. we've seen that. that's something that a very rich country should address. i think the earned income tax credit is a better way. >> meaning -- when i've asked people like peter orzag that question, he'd like to see both of those thing, a higher earned income tax credit and higher minimum wage. >> i wouldn't fight him on the minimum wage but i think you can accomplish more with the higher earned income tax credit. if you could have a minimum wage of $15 and it didn't hurt anything else, i would love it. but clearly, that isn't the case. so there's tradeoffs on the minimum wage. it's very hard to kwan the phi those tradeoffs. people come out with exact studies. they don't know. >> the cbo recently came out with a study that suggested 500,000 jobs would be lost, if the government were to go to $10.10 an hour by the year 2016. they said it could be zero or a million jobs that were lost. where do you think the likely -- >> i agree with them. they don't know. i don't know. you know directionally that it goes -- it's a situation. otherwise, we'd have a $15 minimum wage if it wasn't going to affect employment, i'd be 100% for it. but it would. i don't know -- it's very hard to quantify the tradeoffs. usually you get proponents of either sides pulling out the figures that substantiate their position. the earned income tax credit is much clearer. that puts more money in the pockets of people working for low wages. that's what i'd like to see. it doesn't distort the market system in any great way. but you know, that's the way i would go. >> berkshire employs 330,000 employees? >> 330,000. >> how many of them make minimum wage? >> very, very few. i can't give you the answer. it would be very, very few. >> let's ask a related question that comes in from ian m. what's the greatest thing the obama administration could do to accelerate job growth? >> well, i think that -- obviously further fiscal stimulus would increase job growth. but you pay a price for that. i think -- i think the market system will grow jobs over time as it has been the last four years. it's just we had such a shock to the system five years ago. we really were in the emergency room. and the recovery has been slow. i think most people expected that but they're still disappointed with it as it happens. >> we had sam zell on "squawk box" on friday. he came up with an interesting analogy. he almost put some of the blame on the federal reserve at this point saying when you have zero interest rates it's like not having a shot clock in a basketball game. there's no severe incentive to get money into investments, people think they have time. >> i disagree with that. if i'm at zero interest rate, i want to get it out. we invested over $11 billion last year. that was a record for us. any project that comes to me that has a reasonable payout, whether it's wind farms in iowa, whatever it may be, i love building more freight cars, whatever it may be. zero interest rate pushes me. if interest rates were 15%, i would be sitting there with a 15% alternative and it would be much tougher for capital projects to catch my eye. i would argue the reverse. >> let me ask you one more on the political front. stan writes in, he says how do you compare of the president of the united states' performance with brian moynihan's performance over the last five years? obviously you own a big stake in the bank of america. >> they both had very, very tough jobs and both settled down to do them. you do things one thing at a time. brian moynihan took something that was a big, big mess, which he inherited, and the size was almost overwhelming. they just methodically worked on one problem after another. but he did not have to get the united states congress to agree with him. >> we'll continue this conversation, again, warren buffett is with us for the remainder of the show. joe, right know, we send it back over to you. markets continue under pressure this morning as you know, we'll have an update on the futures action. and many more questions for the legendary investor warren buffett when we return. [ male announcer ] this is joe woods' first day of work. and his new boss told him two things -- cook what you love, and save your money. joe doesn't know it yet, but he'll work his way up from busser to waiter to chef before opening a restaurant specializing in fish and game from the great northwest. he'll start investing early, he'll find some good people to help guide him, and he'll set money aside from his first day of work to his last, which isn't rocket science. it's just common sense. from td ameritrade. that's pretty cool. the three ts coming up all to comment on that right there. down 160 points, finally got to new highs in the s&p. after treading water, almost for two whole months after closing at a new high december 31st. and we have a busy day for economic news even as investors keep watch on the situation in ukraine. i don't know how this thing is going to play out quickly. ukraine, i mean. january personal income and spending figures will be out at 8:30 eastern. the ism's monthly manufacturing index is set for 10:00 eastern and u.s. automakers will be releasing sales figures for last month throughout the morning. joseph a. bank and men's warehouse entered into a agreement. last week, jos. a. banks said it would be willing to talk about a higher offer after last week's rejection offer. and "12 years a slave" took best picture. "gravity" did not win that contest but it did take home seven other oscars. the most of any film. when i think "gravity," becky, i think what a great country that we're in and i have no issue with sandra bullock and her payday there. her up front was 20 million and she got a percentage of how the film did, which was 50. she made 70 million. i say, you go, girl. >> you go, girl. that's right. >> maybe someday a ceo that's really good, who is in charge of 200,000 employees and hundreds of thousands of shareholders and is a great corporate citizen, maybe someday he'll be worth a tenth of sandra bullock or a guy with a good fastball, a good lefty with a fastball. >> you know who i thought was really cool who i got to talk to recently? may jemison, the first african-american woman to go into space. she saw "gravity" and said it was great having a woman up there. although she said she was put off by this astronaut up there dreaming about george clooney coming back to help her. that was interesting from somebody who's been in space. >> you start talking about the will again. that's all i can think about now. take it away, becky. >> to joe kernen, who wanted to be mentioned in my will, hi, joe. >> he did ask how to spell it, too. speaking of, if you're wondering how big the numbers are that he'd be talking about, the "forbes" 2014 world's billionaire list is out. we happen to have one of the gentlemen on the top of the list. bill gates is number one with 76 billion. carlos liam has 72 billion, or taking go 64 billion, warren buffett, number four, $52.8 billion. how much have you given away over the last few years. >> 160,000 "a" shares. >> which would be. >> 27 billion or so. >> even after that you have $38.2 billion on the list. you're number four. here's the list. >> don't take it too seriously. >> i want to ask some questions that have continued to come in from viewers. part of what you talk about every year in the annual letter is you lay out how each of the insurance companies have done, how each of the businesses have done. another question, how has the latest rise of extreme weather events changed the calculus faced by ajit jain in reinsurance? >> events of the last ten years from an assured standpoint and climate have been unusual. the answer is they haven't. you read about these events but you were reading about events 30 or 40 or 50 years ago. we've been remarkably free of hurricanes in the united states in the last five years. so if you were writing hurricane insurance it's been all profit. there have been some more tornadoes than normal but it's not had any effect in terms, so far, the effects of climate change, if anybody, have not affected our -- they have not affected the insurance market. >> they haven't? >> no. >> that's not something at all that you have changed your calculus? >> i made no difference. i calculate the probabilities in terms of catastrophes. no differently than a few years ago. that may change in ten years. >> i think it's been 3,000 days since something like a category 2 hit landfall. that's the longest in history for a hurricane. you mentioned tornadoes. last year it was well below. i don't know about if you add up all the recent years. i watched you after al gore's big year. it was a horrible year. the one he said it will be repeated year after year, the one where he had -- we went through the whole greek alphabet and started again with hurricanes. i watched you. you knew, you knew, you knew, you knew that that would be an opportunity to raise premiums and not have any events and it played out exactly like you thought. i don't know how you do it. >> i love apocalyptic predictions on it. you're right, it probably does affects rates. the truth is, writing u.s. hurricane insurance has been very profitable in the last five or six years. now the rates have come down significantly. we aren't writing much, if anything, in the u.s. our biggest single cat risk would be earthquakes in new zealand. >> what do you think of the perception right now, i think it's from the mainstream media. we are under the impression that adverse weather events are happening every couple of days and it's never been like this before in history. for some reason, that's what people tell me. it's nice to be able to include them all into one thing. >> yes. >> when you include droughts, floods, too much snow, too little snow. when you can include it all into one big thing, it makes it look like you're pretty smart. >> it hasn't been true so far, joe. >> i know. i know. >> it was cold 50 years ago. >> the great lakes, i think they're almost totally frozen over. i don't know if we've ever seen that. i think we have one more to go. that's a little weird. >> we don't insure against that. >> jim cramer has been watching this morning as well. he writes in a question, too. he says in your shareholder's letter you always speak positively about fabulous ways to transport goods. do you think that keystone should be approved? i think we talked about this earlier but i didn't put you on the line. do you think keystone should be approved? >> i would vote yes. >> he always wonders about creations of jobs, too. energy and jobs, pipeline and renaissance is what jim is pointing out. >> i don't believe in the keystone pipeline because of the jobs. i believe -- i just believe it's a useful pipeline. >> you do? great. we'll continue this conversation, again, joe, we have warren buffett here. he's with us for the rest of the program. okay, becky, sound goods. coming up, how the unrest in ukraine is having an impact. more "squawk box" coming up next. get a leg up on the trading day with the morning "squawk" newsletter. go to our show page. go to squawk.cnbc.com. it's a snapshot of the top stories, next. sign up and get morning "squawk" delivered in your inbox every weekday. "squawk box" on cnbc. profit from it. welcome back to "squawk box" on cnbc. i'm joe kernen. the obama administration is calling russia's advance in ukraine a brazen act of aggression. also threatening sanctions against the country. secretary of state john kerry is on his way to kiev to show support for the new leadership there in the face of russian military intervention. we'll have more on this in the next half hour. and california governor jerry brown signed a $687 million drought relief package to deal with the water shortage that he called the worst in the state's modern history. the largest share of relief package, 549 million comes from accelerated spending of some bond money that voters previously approved in two ballot propositions. and the drama "12 years a slave" won the academy award for best picture. it's the first movie from a black director to win the film industry's highest honor in the 86 years of the oscars. i think we're going to look at the futures. yes, let's take a quick look. we'll keep checking these all morning long. 152 points, sharply lower but stable. that's since i first got in in the morning. that's been approximately what we've been looking at. you can see the s&p which closed at a new high on friday. it closed up at 1859.40, about 10 points above the december 31st, 2013 close. we did get 10 points above that. we'll give back 20 today which would put us 10 points below there, becky. but we were in the promise land, at least for a couple of days. i'm going to try to have fond memories. >> nice while it lasted. >> fond memories of that. back to you. >> well, joe, i can't think of a better day to have warren buffett sitting right next to us. the chairman and ceo of berkshire hathaway, to talk about what's happening. i know you're a long-term investor. when people wake up and look at the futures and see down 150 and see what's happening in ukraine and questions about the economy at this point and whether what happens there spreads here, what do you tell them? >> when i got up this morning i looked at a stock on the computer in the trades in london that were buying. it's down and i felt good. >> what was the stock? >> it was an english stock. >> so you look at this -- would you have done that anyway, or not the futures were down, would you still be buying? >> i had a price limit on it and we were buying it on friday. but it's cheaper this morning. that's good news. >> so you buy more as a result? >> absolutely. >> when people start to think this could be the beginning of something really bad, it could be even a world war iii situation, a return to the cold war. does any of that ever go through your mined? >> well, if you tell me all of that's going to happen, i will still be buying the stock. you're going to invest your money in something over time. the one thing you could be quite sure of is that we went into major war, the value of money would go down. that's happened in virtually ever war that i'm aware of. so the last thing you'd want to do is hold money during a war. you might want to own a farm, own an apartment house. you might want to own securities. but during world war ii, you know, the stock market advanced. the stock market is going to advance over time. american businesses are going to be be worth more money. dollars will be worth less. so that money won't buy you quite as much. but you're going to be a lot better off owning productive assets over the next 50 years than you will be owning pieces of paper or, i might throw in, bitcoins. >> i've been meaning to ask your opinion of bitcoin. what do you think of it? >> it's out of currency. it does not meet the test of a currency. i wouldn't be surprised if it's not around in 10 or 20 years. >> why does it not meet the definition of a currency? >> people say i'll sell you goods and bitcoins but they change the price of those every time the price of the dollar changes in relation to bitcoin. they're pricing off the dollar. i'll sell it to you in barrels of oil. every time the price of oil changes, they change the price of barrel of oil. >> the chinese yuan does that. >> it is not a currency. it is not a durable means of exchange. it's not a store of value. >> you said yourself you wouldn't be surprised if it's not around in ten years. >> i would not be surprised. i don't know that. but it's interesting to me. it's been a speculative, a very speculative kind of buck rogers type thing. people buy and sell them because they hope they go up or down, just like they did with tulip bulbs a long time ago. >> the situation in the ukraine you said you're not that worried about. in the letter to shareholders you did lay out something on the horizon that you are worried about. question came in saying what impact will unfunded government pension and benefits have on economic health in 10 to 20 years? >> well, the government pensions aren't the problem. the private pensions are. the government has the power to tax. and it has the power to print money. we are not in a dangerous u.s. fiscal situation. we have to quit having our debt grow as a percentage of gdp. it made sense to have it happen during -- when things were terrible five years ago. but we can have a deficit which creates more debt but not at a rate that this grows faster than gdp grows. if gdp is going to grow at 2% in real terms, but the fed has a policy that they're shooting for 2% inflation on top of that, that would mean 4% in terms of nominal gdp and you literally could have debt grow at 4% and it would maintain the same relationship to no, ma'amal gdp as it does now. the trend is wrong. there is a danger of that goes wrong. i don't like seeing it go up as a percentage of gdp. this country is in wonderful shape. >> if you say government pensions aren't the problem because the government has the power to tax, what do you say to somebody who has a private pension? should they be worried about it? should they think they are still going to get it when they retire. >> it's protected by the pension benefit guarantee corps. that has come into play in many pension plans. the state municipal pension plans, the one right here in omaha, is in terrible shape. and almost out of resources. it's a healthy commune and all that. we can work our way out of it but people, both who have made the promises and the electorate generally have not understood what they were doing when they were making pension promises. there's a long tail to the problem. we are starting to reap the problems that were sewn in pension problems. in detroit they'll have to scale back the promises. >> what do you think about the decision in detroit, where, at this point, it looks like everyone will take a haircut but the bond holders will take a much bigger haircut. that prompted a question from gary gambino. >> some muni bonds are safe, some aren't. just like some corporate bonds are safe and some aren't. it depends on debt paying capacity of the entity that owes you money. and if you take the omaha public power district which runs the electric operation here, those bonds are safe. they've got enough debt paying capacity that they can take care of things. if you take a city like stockton, california or something, they borrowed too much money. >> but in the situation in detroit, it looks at this point like the municipal bond holders will take a much bigger haircut than those in the pensions. they're not going to be treated equally. >> the pain inflicted, my guess is the pension problems will take -- pension holders are going to take -- >> feel it more? >> absolutely. if somebody is getting $1,500 a month and it's cut to $750 a month, that is huge. the bond holders will take a big cut. the debt just got way, way, way out of proportion to the taxable base. the problem with the city or state, is that if the math gets kind of overwhelmingly bad, you set a sike until motion where people leave and go some place else that doesn't have the trouble. there are plenty of problems ahead in municipal finance. >> we'll continue this conversation but joe, we'll send it back to you right now. all right, becky, as you say, we'll be back with warren buffett in just a couple of minutes. tyco selling tyco fire and security services korea. that division to the carlyle group for approximately $1.9 billion. the transaction is expected to close in tyco's fiscal third quarter. plus, we're keeping an eye on the ukraine situation -- the situation in ukraine this morning. russia threatening military action. it's already begun to some extent. western nations are warning moscow of economic sanctions. markets around the global are reacting negatively to russia's move. we'll have more on the situation in just a bit. "squawk box" is coming right back. so our business can be on at&t's network for $175 a month? yup. all 5 of you for $175. our clients need a lot of attention. there's unlimited talk and text. we're working deals all day. you get 10 gigabytes of data to share. what about expansion potential? add a line, anytime, for $15 a month. low dues, great terms. let's close! new at&t mobile share value plans our best value plans ever for business. ♪ [ male announcer ] help brazil reduce its overall reliance on foreign imports with the launch of the country's largest petrochemical operation. ♪ when emerson takes up the challenge, "it's never been done before" simply becomes consider it solved. emerson. ♪ in just about 15 minutes we'll be introducing our viewers to the three ts at berkshire hathaway. ted weschler, todd combs and tracy britt cool. this is the first time three of them will be sitting down together and talking on camera. we do have a lot coming up we're back with warren buffett in omaha. let's talk about how you chose the three ts, how you came up with these three individuals. >> when i'm not around, my job will be broken into two pieces, running the business, ceo and the investment end will be run by others. it became important to bring on the right kind of investment people. so charlie and i talked about that. the first time we took a trip, i think i had hundreds and hundreds and hundreds of applications that i was reading on the trip to china. and we found two terrific managers. they're not only terrific in terms of their investment ability, which has been proven over time, been proven to me, but they're really the right kind of individuals. they want to be with berkshire, they'll be with berkshire forever. and they're the kind of fellows that you'd want to have marry your daughter, basically. charlie and i care about that. and in tracy, i've tried with assistance once or twice in the past. she came along and she's done a perfect job. there are all kinds of things at berkshire that i should do that i don't want to do. i hand those off to her. the three of them, they've been worth a very, very substantial amount to berkshire. it's demonstrable in terms of the financial performance of the two that manage investments. it's been very clear in terms of tracy's performance with the subsidiaries that have been turned over to her. >> todd and ted are each managing about $7 billion. >> $7 billion. >> $7 billion apiece. >> right. >> they started out on a lower base, $2 billion or $3 billion. you built up more over time. >> less than 3 billion originally, yes. >> what is it that you see in each of them that made you think they think like you do in terms of investments? >> i talked to both of them. it isn't just the investment record impresses me, it's how that investment record was achieved. they are people who are in tune with the kinds of markets and when the market changes they can't adacan adapt. they look at stocks, not as stocks. they look at them as pieces of businesses. they evaluate businesses. they're business analysts when you get right down to it. they translate that into investment decisions. they both have a fundamental soundness to them. there's a combination of soundness and brilliance. you want both. and they think about things that haven't happened yet. in terms of problems. not in terms of dreaming about great projects that are pie in the sky but they're always thinking about the down side. and they've made berkshire billions of dollars already that we wouldn't have otherwise made. they'll make us many billions more. tracy has done into a variety of situations, usually the smaller companies, for one reason or another we needed something done, sometimes a management change. she's done a lot better job than i could do. and she's done such a good job, that when one woman took over a year or two ago, she asked that tracy be made the chairman of the board. the chairman of the board of our subsidiaries is an overseer from berkshire's standpoint. they represent the shareholder in a sense. she's taken on four of those and she'll take on more as time goes along. she also will be a great repository of knowledge about all these companies for my successor. >> let's talk about some of the succession notes that you made in the annual letter. you always do talk about this, not only with the shareholders but with the board. you say the board, something struck me this time around, you said the board knows who your choices would be if there was an immediate need for a successor when it comes to the ceo position. you said those people were either working at berkshire right now or were available to berkshire. that made me question. you're looking outside the company potentially for successors? >> no, no, the successors will be from the company. all the candidates have been over the years. the successor will come from inside berkshire. we have so many businesses we have a shot at evaluating a lot of talent. there is a lot of talent there. and some of them would have the talent to run the place overall. others wouldn't. they're more specialists in their own business. but particularly then when combined with todd and ted who bring an investment perspective, which is useful in acquisitions, analyzing acquisitions. i think we're as well equipped for the next century as anybody. >> you mention both todd and ted. i assume you look at the potential cio part of your job, that someone could take on as a handler. >> those two could. there could be a third person but i'm not looking for one. >> as ceo, would it be a woman. >> not at present. none of the candidates, no. the top candidates now are men. >> and those candidates, has that been a list that's changed over the last year? >> doesn't change very much. it's very slow to change. they shouldn't be on the list if it's quite changeable. >> right. let's talk about some other issues that people have written in about as well. in fact, concerning todd and ted, we have a letter that came in from bora costic. in the mert you mentioned todd and ted created significant values in matters unrelated to portfolio activities can you give some examples? >> in making an acquisition related to media general, where we acquired a bunch of newspapers and also made an investment in the company, ted did all that. in terms of working in the res cap bankruptcy, ted did that. he wasn't getting paid for these at all. this was extraneous work. we recently completed a deal in the last week or so, where we exchanged our phillips 66 stock for a combination of cash plus a specially chemical operation. you know, that was todd. i mean, i may have partially conceive of the idea but i just turned it over to him. and those sort of things might not have gotten done if i had to do them myself. there's some threshold to say the heck with it. and having them has been invaluable on that. we're talking things that are worth hundreds of millions of dollars in addition to the billions of dollars they made us on portfolio. >> you talked a lot about their compensation. both of them were managing their own hedge funds before. the compensation structure is different than the 2 and 20 you would get if you were a hedge fund manager. >> last year they started with $5 billion each. if they put it under the mattress under the standard hedge fund arrangement, they both would have made $100 million by sticking it under the mattress. if they put it in an index fund they gotten the 2 and 20 they each would have made over $300 million. all they had to do was buy the vanguard index fund. imagine -- i mean, you can retire forever on $300 million. it just shows that the huge amounts you get by asset gathering rather than asset managing. even though a great many hedge funds in recent years have not delivered high performance, they've delivered high fees. our arrangement is that they get a salary and then they get -- which most hedge fund guys would look like nothing. and then they get paid on the excess. they get 10% of the excess over the s&p performance but it's done over a three-year staggered period. that's the same arrangement i had with lou simpson for 30 years. it seems to me that's quite logical but it's not something that the hedge fund community is out there pushing harder for. >> they both beat your performance last year, didn't they? >> i'm sorry you brought that up. they not only beat my performance, they smashed my performance. >> all right. up next, we'll talk about the markets reacting to the situation in ukraine. plus, some stocks you need to watch at the open. and at the top of the hour, a behind the scenes look at what makes berkshire hathaway tick. we'll have tracy britt cool, ted weschler and todd combs, all with us on set. "squawk" will be right back. horsehide, bullet. right where it needs to be. coach calls it logistics. he's a great passer. dependable. a winning team has to have one. somebody you can count on. somebody like my dad. this is my dad. somebody like my mom. my grandfather. i'm very pround of him. her. them. so i get invited to quite a few family gatherings. heck, i saved judith here a fortune with discounts like safe driver, multi-car, paperless. you make a mighty fine missus, m'lady. i'm not saying mark's thrifty. let's just say, i saved him $519, and it certainly didn't go toward that ring. am i right? [ laughs ] [ dance music playing ] so visit progressive.com today. i call this one "the robox." tocks to watch, men's warehouse and jos. a. banks have struck a nondisclosure agreement under which they'll exchange confidential information. last week, jos. a. banks rejected a takeover bid by its rival. it did say it would be willing to engage in discussions about a higher bid. men's warehouse's latest offer is 63.50 a share. it did say it would consider a $65 per share bid if certain conditions were to be met. up next, our special show with warren buffett will continue. one more hour with the oracle. plus, a live update from russia on the situation in ukraine. futures are sliding, in large part because of that situation. 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"ask warren." legendary investor warren buffett answering your questions during the entire show, the oracle on the economy, the markets and much, much more. tweet, e-mail, get to facebook and get those questions in. "squawk box" begins right now. welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joe kernen. becky quick is in omaha with warren buffett. we've been speaking to him all morning long. he's been answering your e-mails, tweets and facebook questions. you still have an hour to submit your questions to warren. tweet us usie ining #askwarren. e-mail askwarren@cnbc.com. or paste on our facebook page. the tension between ukraine and russia ramps up. jim maceda is in moscow. a lot of the things we talked about last week, that we thought was a long shot, is sort of happening before our eyes, isn't it? >> reporter: hi, joe. it is playing out before our eyes, though, of course, we don't know whether it will continue playing out or not or whether putin will decide that he's made the west blink and then step back from the brink. russia, however, is how firmly in control of crimea. its forces have either occupied or surrounded all government buildings, ukrainian military bases, posts, ports, telecom towers. they are firmly in russia's hands. putin now has the russian crown jewel. it gives putin, as we talked about before, an essential warm water port, a base for his fleet and it counters what must be in putin's mind the nightmare scenario. that is that what he sees as this ultranationalist government in kiev suddenly cancels russia's lease on the black sea fleet base. then, according to the nightmare, kiev takes over control of crimea and then joins nato down the line, bringing putin's enemy right up to russia's door. so putin has made that calculus, unfortunately, it looks unclear at best what the west can do about it. back to you, joe. >> yes. i'm a simpleton at this, jim. does this become crimea, does it become ukraine as a whole. we've seen this move before in terms of regional influence, being split in georgia and other former soviet states. that's what scares me. crimea is pro-russian anyway. they still have those bases there. is it possible the whole country could be in his crosshairs? >> i think that is highly unlikely. it's not just me speaking. every single analyst i have spoken to over the past week or two now believes that that is a step too far. because that would be shooting putin in his own foot. putin and russia depend on a functioning ukraine. they do a lot of business in ukraine. they've got those pipelines running through ukraine and that's how they get their money, through tax and then, of course, the gas that is purchased by europe. so there has to be a modicum of normalcy. crimea is one thing, crimea was russian for many, many years before it was handed back over to ukraine. the rest of ukraine would be certainly, according to the analyst, one step too far. just to keep the pressure on, he does have the right to take that step, according to the russian parliament. he has the use of force in his back pocket if he needs it. back to you. >> i thought that was kind of like kidding us that he can do it. we need to get congressional approval. i can't imagine it's the same thing. would they ever say no to vladimir putin? i've asked the parliament. >> no, you're right. it's a formality. it's a rubber stamp parliament. it's just his way of sugar coating things. ae and covering up what's really going on. back to you. >> thank you, jim maceda. he knows how expensive, becky, it would be if russia needs to take all of ukraine's problems and maybe money is the one thing we can count on, you know, if these leaders aren't reasonable and absolute power corrupts, absolutely but it would be easier to have the west and europe and the united states sort of pitching in to help this huge region's economy. >> yes, i guess that was michelle's point earlier this morning, maybe the markets can step in and take pressure. i note earlier coverage that noted ukraine, the guys in charge in ukraine now, instead of sending in the military are sending in the oligarchs, the wealthy, influential people, to make the argument of why this should be done from a peaceful perspective. that might make a difference, too. >> i think of buffett as an oligarch. i guess that's probably a stretch to some extent but i don't know, he's just -- actually, you know what, i don't think he's rich enough to be an oligarch in these eastern countries. >> right. some of these guys have built up incredible stores of wealth. but you're right. it is a special morning here on "squawk box." we have warren buffett answering all of your questions. he's been doing that throughout the morning. we have a rare interview with berkshire hathaway investment managers todd combs and ted weschler, plus, tracy britt cool, warren buffett's assistant. this is a rare moment. i don't think you've all sat down together for an interview. >> no. >> we talked in the last "squawk" about why warren chose each of you. he explained about what he finds so interesting in each of you. what i'd love to hear from you three is why you chose berkshire hathaway and maybe how you found your way to berkshire. each of you had a very different path. todd, let's talk about when you first talked to buffett. when did that happen to warren? >> i reached out to charlie. we had a series of conversations over the course of several months before one day i was out visiting in l.a. and he said, just out of the blue after a three or four-hour breakfast, in classic charlie style that warren would really like to meet me. then he went on for five or ten minutes about how much warren would like to meet me and so forth. i came out to omaha and warren and i spent the day together, talking everything from baseball to business and insurance. and it was very interesting. >> you've moved your whole family to omaha. when did you move? >> that's right. after i joined, the kids finished out the year in school back in connecticut and we moved the entire family out, right after i joined. so we've been out here, i guess, coming up on three years now. it's been wonderful. >> it's been wonderful. you love omaha? >> absolutely. my wife and kids all love it. it's been an absolutely wonderful experience. omaha is a great town. and the people really make it there. it's just been an excellent experience. >> todd, i love your story, too, for how you came here. over the course of two years, you paid $5.2 million for two lunches with warren. >> donated. >> i like your version. >> becky, i've been reading warren's letters probably since 1979 when i started college. and i was kind of a bucket list thing for me, that i always wanted to meet the guy. i think as you know, glide f foundation, terrific charity does an auction. i spent a day with glide. this is a terrific charity. they help the otherwise helpless. i bid on the auction and ended up winning. >> did you keep hitting the button at the last minute? >> not quite, not quite. i ended up getting it. and came out to -- my only condition on it that i asked for i wanted to do it anonymously. we were set up at smith and wollens wollensky. we opted to do it in omaha. i came out and visited with warren. and it was just fun. we really hit it off. i was expecting a stiff hour or so meeting and it ended up being this long meeting at the office and terrific dinner where we had a lot of just common interests and thought about things very similarly. and that was that. and i was pretty happy to have it checked off. the following year, i said, you know, i really don't want to see the price of this go down. mentally i said, if it's going to go for the same price or less i want to make the donation again and help out glide. and that happened. came out the second time. again, we really just had a terrific visit. and toward the end of the evening, i had my little yellow legal pad of questions i was asking warren. i wanted to make sure i hit all of them. i said you can ask me anything you want with be too. out of the blue, he said i think you might be a good fit at berkshire. would you have any interest? it was the last thing on my mind. i really completely threw me off. >> did it floor you to hear it? >> totally. really, totally threw me out. i didn't want to be dismissive. this guy is a hero. you can't say no way. i started thinking about it and, you know, it was right at that point i had run my own fund for 12 years. the regulations on hedge funds were changing. i had a staff of two people and me that ran my fund. i would have to bring a compliance person in and life would get complicated. wow, this was actually a way to simplify things and do what i love to do and be an anist. >> tracy, your path to berkshire, when students come out and meet with warren, how did tracy do that? and should i change my name to start with "t"? how did you find your way to berkshire. >> meeting warren was on my bucket list. i didn't have $5.3 million. i had to take another path. i came out with one of the student groups, an organization i was involved with, smart women securities. it was a great opportunity to meet warren. i really enjoyed that experience. like i said it was once in a lifetime. and a couple years later, i decided to write a letter to warren and just say, can i come out and spend a day, a week, a month, i'll do anything if you let me spend some time with you, fully assuming he would say no, i'd say i tried and we'd go about our way. fortunately he said yes. i came out that summer, worked on a small project for him, thought, this is a once in a lifetime experience. >> what was the project. >> i was looking at the lehman bankruptcy. it was a daunting task. one where i don't think i had too much value to add. it was interesting. it allowed warren and i an opportunity to have discussions about business management investing. those were all great for me. my guess, a good opportunity to are him as well to learn more about me. >> you have to get letters all the time from people who want to come to work here. you must meet people all the time. what about these three in particular jumped out at you. >> thing jumped out at you. same thing when we bought escar. it was a one and a quarter-page letter. i've had thousands of letters from people who wanted to manage money for us. they send along their record and everything. it's more than having had a good five years or something of the sort. i've seen a lot of investment managers come and go. so it's a judgment about their intellect but also just as much a judgment about their character. and we've got the right three here. they don't come along every day. >> they don't. in fact, there's been a lot of interest in all three of you. we've gotten a lot of questions that have come in from our viewers and we've been posing some of those questions to warren this morning. if you three don't mind i'd like to ask you three the questions that have been coming in, too. part of what's come up is just todd and ted, i'll ask you this first. how you invest and how you see the world. todd earhart writes in, when you identify a company, for example, that seems worth a deeper look, what does your investment process generally look like? what do you like to read and how much time is typically spent before you're ready to actually make an investment? i'll start with you two on this. >> go ahead, ted. >> okay. well, i'd say that it's investing, turning over a lot of stones. the way that i spend my day is just reading. annual reports, transcripts, delta reports, regulatory filings, channel checks, anything i can get my hands on, really, trade magazines, et cetera. 99% of what you look at you candice miss within five minutes. >> what's the magic thing that tells you there's no way this is something. >> there's kind of a -- charlie talks about mental models and so forth. you think about a gating analysis or flow chart. there's a lot of things that come along, obviously valuation being one, being able to understand the business, technology is an area that, sector, that i traditionally haven't done much in. it's very hard to know what a lot of those businesses will look like five years from now. there's a lot of things that completely eliminate it. if you don't know you can't get comfortable with it, you don't need to spend any more time on it. it's the 1% of ideas, a needle in a haystack. you know when there's something there. that's exciting. if you love investing that's what you can spend the next 500 to 1,000 hours on. >> 500 to 1,000 hours. >> somewhere in that ballpark. >> didn't warren tell you reading is the most important thing you should be doing. >> yes, when i spoke to the business school, late '01 or early '02, the last question posed to him is what his secret was. never forget it. he had a giant stack of paper, it was a hodgepodge. he said he reads 500 pages a week. that's where i started, reading 500, sometimes more pages a week. that's where the reports quarterback regulatory filings come in. >> there's no easy way to it. it's building up knowledge over years and years and years. >> that's right. that's right. as wants has said before, it is compound knowledge. you get better and better at spotting those factors. i can look at a bank or certain companies in certain sectors much faster than i would five, ten years ago. >> warren, that reminds me of something you said when you made that bank of america investment. you built that up over decades. >> i read that probably 55 years ago i read a book called "biography of a bank." i probably read their annual report every year for 50 years. the same thing happens many times. the beauty of it is, knowledge is cumulative. even what you're learning about company "a" will help you thinking about company "b." >> ted, how about you? how does your approach differ or is it the same? >> very similar. i think things are distinguishing, i do them quirky. i typically don't meet management and talk to management. >> why? >> historically, i was in private equity for 15 years, generally if you become a ceo of a company you're a good salesman one way or the other and you'll probably spin people. i made a couple big mistakes where i got involved in situations where i liked people too much. i generally like people. the way to avoid that is put the filter on that rely on reading transcripts, 10ks, 10qs. know the situation, wait for the right price. you're always reading about things but, most of the time the price won't be right. but be ready. >> be ready. tracy, people have a lot of interest into what you've been doing with the companies you've parachuted in on. warren talked earlier when he has a company that's in a little bit of trouble, he's asked you for help. tom from new jersey says what are your plans for benjamin moore going forward? i'm interested in that and i'm interested in what it is you do when you parachute in. >> benjamin moore, we have a tremendous quality of brand as well as a great company with great people. we need to give a little bit more attention to our dealers. over the last ten years or so we've underinvested in our dealer network. what we're trying to do is reinvigorate them with trust and helping them understand that we're here for them for the long haul. we're not going to make commitments in other directions. but really for them. i would say when i go into i accompany, it's helping the management team identify the direction in which we need to move. and in situations that i've involved typically there's been an industry change, business shift, somewhere where we've lost our way a little bit. we can use resources within other companies, berkshire companies are the first place i look to for knowledge and experience. i ask, can you come in and help, how do you manage your warehouse, how you went to market with a specific brand, how you approached an issue that was of specific interest to you. >> another question that has come in, this is directed to ted and todd, both compensations are tied to each other in a 80/20 split. if you could pick any investment manager besides the one you're sitting with to have a similar split, who would you pick? warren is sitting here, too, you can't pick him. >> 99/1 they might go for. >> we can't pick charlie either? >> no. i'm going to take him out of the running. you both have long careers. both worked with a lot of people over the years. is there somebody else who impressed you along the way? i think that's what they're trying to get it. >> i have names that i've recommended people to. i'm not 100% sure they would necessarily want to be recommended. lou simpson at geico, he was there for a very long time and at berkshire. there's a fellow named tom bancroft that runs a fund out in la jolla. he's done wonderful. i've referred people over to him before. >> laurie pigeon, died unfortunately but he managed money very well after he left us. >> merrill whitmore joined our board. i don't think she takes outside money. i've known her for probably 10, 12 years. she has a wonderful long-term track record as does tom. >> what do you think, ted? >> i've never met him but david teppers. he has a good track record. he's proven able to do well in tough markets an rising markets. >> that's a great point. >> i always respected that. >> do you own berkshire hathaway shares personally? if you were still running your hedge funds would you buy it for your funds? if you do own shares, do you think it would be better off if it were broken up? >> i do own some berkshire. owned it when i joined. probably would not have it in the fund. i typically when i manage my own fund, a lot of what i do at berkshire, i like to become the largest share holder in a given company. it's kind of hard to do with berkshire. and the third part of that question? >> the third part would you break up the company? >> no, no. no reason to break it up. >> that's what i thought you might say. >> terrific culture. >> same answer. i own it as well. i owned it when i ran castle point. you know, there's -- i don't think there's that much of a conglomerate discount. certainly doesn't need to be broken up. >> ted, specifically for you, there's been talk aboabout de-v recently. mark blakley said would ted weschler explain what he likes about davita? >> i follow the dialysis industry for 30 years now. right out of college i started studying it. i know the space reasonably well. the broad filters i apply for health care investing in general, number one, does the health care company deliver better quality of care than anybody can get anywhere else? davita falls into that. does it deliver a net savings for the health care system? is it cheaper because of the efficiency the company provides? davita checks that box. all three of those together, you have health care is whatever, 17%, 18% of gdp. you have an incredibly talented team running that company. i'm not sure what the stock will do over the next year or two years. very comfortable at five years from now it will be a more valuable franchise. >> can i ask you both, you're both directv, is that right? >> yes. >> when did it first pop out at you? >> go ahead. >> todd? >> i was in the name of my fund probably eight years ago and bought it when i came on board as well. >> i started following cable and satellite probably about ten years ago. kept an eye on it the whole time. it was one of the first names i bought when i came to berkshire. >> how much back and forth is there? in terms of when you see a stock and identify it, do you talk to warren before you buy it, or do you go ahead, talk to him about it? >> we may give him a heads up. >> you have to make sure there's not a berkshire conflict. >> taking the place over tomorrow. >> we have total autonomy and warren insists on it. it's not a matter of asking to buy it. as ted said, it's literally for compliance reasons. >> anytime there's an s.e.c. filing that says berkshire is buying it. immediately everyone says warren is buying it. how do we know if you're buying it or if ted is buying it? >> if it's really large it's probably mine. if it's really small, it's probably theirs. probably not one i'm starting on, although it could be. >> tracy, one of the things we've been talking about is heinz. what have you been seeing with the company. >> it's going very well. there again is a company where we have a tremendous brand and great team with bernardo and the rest of the individuals there. they're continuing to move forward. i think that company will be much stronger a couple years from now than it is today. >> and warren, just your thoughts about having these three in the office. this is a picture by the way that was in the annual report. you've never had a picture in the annual report before. >> it shows how flexible we are. this is the office staff. when you realize there's 330,000 employees at berkshire, this is the headquarters staff. >> this is the entire office with the exception of two people who missed the lunch. this is my assistant. mark mallard, he's in charge of 40 billion of cash. he moves it around. you know, i give him guidelines. it's a sensational group. we're all on one floor. our tax return is 23,000 pages. that's twice as high as i am. and they put out the 10ks and the 10qs and handle the inquiries about berkshire, public relations, investor relations, all sorts of things and they do a sensational job. couldn't be more proud of them. >> todd, ted, tracy, i want to thank you three for joining us today. we really appreciated your time. it's been great getting to hear from all three of you. >> thanks for having us. >> thank you so much. this conversation with warren buffett will continue. when we come back, personal income and spending data are out. and then we'll get back to our interview with more of your questions for warren buffett. right now as we head to a break, take a look at what's been happening with the u.s. equity futures. the futures are under pressure but they've come back quite a bit from the lows of the morning. we saw the dow down 150 points below fair value, now it's only down 118 points below fair value. honestly? i wanted a smartphone that shoots great video. so i got the new nokia lumia icon. it's got 1080p video, three times zoom, and a twenty-megapixel sensor. it's got the brightest display, so i can see what i'm shooting -- even outdoors, and 4 mics that capture incredible sound. plus, it has apps like vine -- and free cloud storage. my new lumia icon is so great, even our wipeouts look amazing. ♪ honestly, i want to see you be brave ♪ ♪ welcome back to "squawk box." we're a couple minutes away from the release of personal income data. for january. that gives us an opportunity to look at the futures, which were down more than 150 then. they almost got down less than triple digits, now we're down 122 on all of the news coming out of the ukraine and how that should impact the markets, ruble hitting new lows against the dollar. oil going up. also gold headed higher. europe, as you might imagine, has been leading the world lower. we're down most significantly, i guess, in germany. as you can see. we'll take a quick look at asia. we should take a look at the russian stock market if we get a chance, too. there's the nikkei, down 1.25, hang seng also down. rick santelli is standing by at the cme in chicago. you are one of the few people i can talk about hungary with. we were alive, just don't remember it that well. >> '56. >> 1956. you barely made it, under the wire. >> right under the wire. >> yes. >> these are always difficult to handicap, not that i was watching the markets in '56. here we go. january personal income and spending may give us some clues. rearview mirror a bit. and considering the stone washington, a bit late. we can continue the conversation before somebody shovels the data for us. one thing i can tell you for sure is that many down here were a little surprised at how strong the euro currency was. you know, normally we're somewhat used to the dollar being the catch all for some safe harbor buying, especially when the skirmishes, right in the back door area of europe. really isn't the case. euro is down a little bit today. but it's pretty hard to get nervous when you're flirting with the 137, 138. not so far from levels we haven't seen in the back half of 2011. for listeners and viewers, personal income and spending seems to be delayed. washington offices, federal offices are closed. i guess, joe, i'll throw it back in your court. we can go anywhere you want. maybe we can go back to warren buffett to -- wait a minute. we're getting some trickling of data coming in. >> coming in slowly. >> yes. i see personal spending up 0.4 and income up 0.3. so up 0.3 on income, 0.4 on spending. these numbers are both much better than what we were expecting. we were looking for closer to 0.1 on both. of course i'm always very happy to see the income numbers up, the spending numbers, i was disturbed reading that there's people, young people, that are borrowing money from student loans not because they want to go to school but because it's a cheap form of financing. that is rather disturbing. i don't see the other internals, personal consumption. trickling out. the deflator on a month-over-month basis. up 1.2 year-over-year. we have it all. a little late. that's the data at large for now. >> thank you, rick santelli. back out to becky now. it is ask warren day. i've been wanting to talk about the final four at some point. because warren is a huge -- >> all right. >> he's going to the creighton game. i sent you some stuff. >> oh, yes. i'm still trying to look this up. joe has a question on this. joe we should mention the news that is just out in the last half hour about the billion dollar bracket deal that berkshire hathaway is insuring with quicken loans. this is something we've heard about for a heil. if you pick the perfect bracket you win $1 billion. >> or $500 million or $25 million a year for 40 years. >> the news that was out today, is that yahoo! is also getting in on the deal, which warren, that's surprising looking at what had happened. it sounded like yahoo! had its own plans to go ahead with a deal like this. they didn't go ahead with that because quicken loans was out first. now we hear they're joining up. >> they're joining forces. >> warren, you have a better chance at powerball. you're a genius. do you have a quick -- have you figured out the odds on this? i think i could pick the team that wins. i think i might be okay picking the final four if i was lucky but just the very first round picking those, with what happens and then picking 16, then picking 8, then picking 4, it's impossible! and some autistic kid supposedly did it. i can't tell whether this is an urban legend or not that this kid actually did this. >> this defeatism is not like you, joe. if you could put in 15 million entries, which we expect to get, don't you think you'd have a shot at it. >> no. i don't think you'd be putting up a billion if you thought people had a shot at it either. >> well, they have a shot at it. i've seen the calculations where people assume it's a random event. they take 2 to the 63rd. it is not a random event. i made calculations myself before entering into this insurance contract and ajit jain also made calculations. we were in the same ballpark, so we went ahead with it. >> you see what happened. bc beat syracuse. it's unbelievable. i don't know who's good. one team i think is good is florida. that's all i can figure out. florida seems -- they seem really -- after that, everybody seems like they've got, you know, they've been killed by goliath and the giant. >> well, joe, if you look at -- i think the last, what, 27 years, maybe 28 years, whatever it is, they've had 64, there's been like 112, we'll say, number one seeds play number 16 seeds and the number one seed has won every single one of those games. >> what would you pick in the final four, warren? do you have creighton in there. >> i have to have creighton, you bet. >> who else? >> probably, i would say maybe arizona, too. >> florida. virginia looked good. virginia won their game. >> now that you told me about florida, they're definitely going to be in there. >> we're picking the number ones, we're so good, aren't we? picking the number one seed. all right. >> joe, we should point out, though, before we go to break, we should point out, we have time to talk more about the march madness strategy because both warren and dan gilbert from quicken loans will be joining us on "squawk box" on march 14th. we'll get more in depth. >> that's going to be so much fun, isn't it? >> yes. >> we'll have our brackets. >> we'll have more information then. >> we'll have our brackets done by then. our tv newser brackets and that stuff. awesome. much more of omaha and warren buffett in just a couple minutes. you've got his final four. first, a quick news headline. darden restaurants is holding an investor presentation at this hour, laying out its plans for driving growth and increasing shareholder value as it becomes the latest restaurant chain to say that severe winter weather is hurting its sales. darden expects to report profit of 82 cents a share for the quarter that ended on february 23rd. "squawk box" is coming right back. announcer: where can an investor be a name and not a number? scottrade. ron: i'm never alone with scottrade. i can always call or stop by my local office. they're nearby and ready to help. so when i have questions, i can talk to someone who knows exactly how i trade. because i don't trade like everybody. i trade like me. that's why i'm with scottrade. announcer: ranked highest in investor satisfaction with self-directed services by j.d. power and associates. welcome back to "squawk box." this is a special edition in omaha, nebraska with warren buffett who has been with us all morning long answering your questions. we continue to get questions coming in from viewers. jeff writes in, what's your opinion on so-called activist investors? do you really think they are acting in the best interest of their targeted companies and the shareholders or are they more just interested in making a quick profit for themselves? >> i think generally speaking they are interested in making a quick profit. there's no law against making quick profits. but our whole attitude in our own business and what we'd like to see with the businesses we own stock in, we want to run from the people we were going to stay in rather than the ones that will get out. at any given time you can make more money usually selling the company than running it. most stocks, most of the time, not all of the time, sell at a discount from what you could sell the company for that day. the activity might be sell the company. i think that would be a big, big mistake. i've seen cases where really good companies have sold a third or quarter what they were worth. the answer isn't to sell the company. the answer is to keep running the company well. the answer may be to buy their own stock when they're selling at that kind of a discount. the money is flowing into activist fund because they've had good performance lately. that money will get put to work. you'll see a lot of activity in that field. you know, i could do certain things to jiggle up the price of berkshire in the short run that would not be good for the company over five or ten years. >> like what? >> well, you could spin off one stock that might be a hot type -- one of our divisions that might be a particularly hot division. but if it's a really good business i'd just as soon keep it for berkshire. there's a lot of efficiencies from a tax standpoint and capital implication standpoint of being under one umbrella. i'm running the company for the ones that will stick around, not the ones that are leaving. >> nelson peltz is pushing on pepsi to split up the company. he says is makes more sense apart than together. >> i don't think if i was the only holder of pepsi or my family, i don't think i'd split it up. >> because? >> well, i just think that frito lay is an extremely good business. better than the soft drink business. but i think the soft drink business is a good business, too, and i don't see any point to split them up. >> are you concerned about coke could cola's moat declining in the near future? >> right now, 3% of all the liquids people put in their mouths are coca-cola products, throughout the 7 billion people. i think that 3% will go up over time. i think they've got wonderful brands, wonderful acceptance around the world. coca-cola brand itself sold 100 million more cases last year, as i remember, than the year before and it sold more that year than the year before. it's a very, very good business. but it's under more attack. there's a tax situation in mexico. there's certainly a lot of groups that are working to certainly not in the interest of coke. the interesting thing is the diet soft drinks have actually gone down more in this country than the sugared drinks which you wouldn't think. >> water drinks, noncarbonated drinks have gone way up. >> water has moved way up. still, close to a quarter of all the liquids consumed in the united states are carbonated soft drinks. >> wow. >> you know, i drink five a day and i'm feeling good. >> you have two on the set with you this morning. >> i'll finish them, too. >> let's go back to activist investing. apple has been the target of an activist investor, carl icahn, who was pushing for them to do something to bring back shareholder value in terms of buying back stock, he's dropped his proxy request that he had on. the company has spent a lot of money buying back shares. what do you think of that whole situation. >> i think what they've done is probably pretty sound. shareholder value, creating shareholder value doesn't mean doing something to get the stock up tomorrow. shareholder value means building the most value over a five or ten-year period that you can do with the resources at your command. that does not mean trying every day to have the stock go up. and the whole term shareholder value puzzles me a little. the way we build shareholder value at berkshire is building the earning power over 49 years. any given day, you know, maybe splitting the stock, i'm not sure that would mean anything anyway. i had a lot of suggestions. so what if the stock goes up. that's good for the stock. people that are leaving, bad for the people entering, basically. what you want to do is build earning power, sustainable earning power over time. at apple they're working hard at that. >> the question that came in from simon chow, he writes in what lessons or situations from "breaking bad" do you think are most applicable to investing. >> all i know is i should call sol if i'm in trouble. >> joe, back to you. all right, becky. i'll ask about what he's watching now. maybe get to that. we have to take a break. coming up, check on markets this morning. plus, much more from warren buffett, a quick corporate headline. recode is reporting that microsoft is making the biggest management reshuffle since nadella took over as ceo. tony bates, also known as mr. bates, the former ceo of skype and tammy rehler will be leaving. 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to open your fidelity account today. welcome back to "squawk box." futures right now have been down all day. triple digipits, 125 is where we're looking right now. europe started the selling based on what's happening in ukraine. oil has been trading higher all day. gold has also been trading higher. it's amazing, rick pointed out, that the euro has held up so well. here's a dollar board. as you can see, 1.37. the ruble is at a new all-time low and in russia, the markets have not been doing very well. big 12.5% loss. if you do the math, that would be a scary day in most averages. when we would be a scary day in most averages. when we return, more from warren buffett in omaha, fresh off his annual letter to shareholders. keep it locked on "squawk on the street" today. plenty of reaction to warren buffett's comments. a buffett watcher will join the gang at post nine with his thoughts. more with the oracle from omaha. . spoiler alert. it's low. it's guidance on your terms not ours. e*trade. less for us, more for you. to manage your money.r guy around 2 percent that's not much, you think except it's 2 percent every year. go to e*trade and find out how much our advice and guidance costs. spoiler alert. it's low. it's guidance on your terms not ours. e*trade. less for us, more for you. welcome back to a special edition of "squawk box." sitting down with warren buffett of berkshire hathaway this morning wrapping up three hours of him answering your question. we do have other questions that have come in. i know we'll not get through all of them. matt wrote in with a specific question about berkshire company. he wants to know, were warren and charlie aware of the recent change in policy business wire selling access to high-frequency trading firms? >> i didn't know. it's important to realize, though, businesswire sells thousands -- sells to thousands of people and it's simultaneous. no high frequently trader getting information a thousandth of a second of when we found that out, we cut them off anyway. they were getting simultaneous delivery not early delivery. >> if they could get simultaneous delivery as wire service, anybody with wire service would have a slower greatway by a fraction of a second. another question came in from our robert frank, one of the reports at cnbc, and he covers wealthy. >> right. >> brings up the question, you and gates number one and two at top of the forbes u.s. bill airs list for years now. what year do you think will break the duopoly at the top? who will it most likely be? >> i can't tell you who's three, four, five. i'm giving away stock, they'll give away a lot in the past and more in the future. it will be -- possibly somebody who isn't giving away as much. but i don't know who that will be. >> joe has a question. >> just a quick one. one more time to, you know, if anyone would see effect of climate change i would think berkshire would, in terms of because we've built out the population so much bigger and we built in areas where you know, years ago, maybe you wouldn't have see property casualties claims and now it seems like you'd see them. are you surprised you haven't seen an effect, and would you be absolutely shocked if they have to pare back climate sensitivity mods to co2? are you a firm believer that you're going to see events in the future? >> what i think, i am no physicist, joe, so i -- all i'm doing is read what other people say. >> climate scientists aren't physicists either, one thing we know for sure. >> but i think -- i think it's -- is it the kind of question that deserves lots of attention, in terms of insurance business, it has no effect in terms of the prices we're charging this year versus five years ago and i don't think it will have any feick on three years or five years from now. we have one planet and we ought to pay a lot of attention to what happens going on. >> i agree. i agree. better make sure that we're focusing on the right things, though, in terms of keeping the planet livable, i agree whole heartedly. thanks, warren. any one that we don't have on our list of 25, outliers that you think we should have that revolutionize business and just the world that you have probably seen that list you're on. i'm sure you're going to be there as a graham and dodd genius. >> joe's my man. >> thought about me at all? not in your will or on the list, you haven't thought of me? i'm chopped liver, basically. >> i agree i'll put you either on my will orrin the list, one of the two, i'll make the decision. >> all right. >> warren, before we go again, for the people who weren't tuned in at the top of the show at 6:00 a.m. eastern, your thoughts on what's happening with the economy right now, because probably the biggest question that a lot of people are wondering in the economy, have we seen a significant slowdown from fourth quarter, third and fourth quarter of last year? what do you think, based on what you're seeing in the businesses? >> i don't think so except the extent whether it hurts certain types of industries. but, my impression is that the american economy for five years has been moving at a fatherly steady rate upwards not as fast as people would like. but i think that absolutely continues now. i mean, i think we're moving ahead at a couple of percent a year, and a couple percent a year, if you have 1% population growth and 2% gain in output, it means that in a generation you have a 20% gain in output per capita in the country. that is not bad. any other time in the history of the world almost that would have been nirvana. we have 20% more output for your children we have today and they have 20% more in the next generation, that is not bad. we're on a clip that is somewhat better than that. >> finally, look agent stock market today, there have been a lot of people noticing what's happening with the situation in ukraine. you would tell them? >> it doesn't change anything. if you've got a a wonderful business, if you're in peoria, illinois, why would you sell today because of what's happening in ukraine? if you have an apartment house fully occupied why would you sell today because of what's happening with ukraine. the same as about if you have a piece of wonderful business, people react too much to short-term things in the stock market where they behave rationally when they get into other investments. >> thank you for being so generous with your time today. appreciate it. back to joe. >> becky, we will see -- did you say march 14th, becky? will we have our -- >> march 14th. >> yeah. >> i wonder if we'll have done our brackets by then. >> we won't. i believe sunday, that sunday. march 14th is a friday. i believe sunday is the when the brackets open up, who's going to be in the running. you won't have your brackets yet but you'll be about to. >> i think we are -- final four picks, we got at least arizona, warren, and florida. you're going to put creighton in there. i might put cincinnati in there. >> but, joe, i will tell you, right before the 14th, i'm going to sent you a special private list which will lay out the whole 64. >> you'll do that? i'm going to have a better idea whether that 17-year-old -- sounds like an urban legend, whether a kid's already done that, supposed he has -- it wasn't just hit or miss, he used date to try to do it. thank you, warren buffett, very much. becky, safe travels, although who doesn't want to spend at least a couple of days in omaha if they get a chance. >> sure. >> maybe you won't be back. becky, join us tomorrow. right now, jacques a"squawk on street" is next. good monday morning, welcome to "squawk on the street." i'm carl quintanilla with jim cramer david faber at new york stock exchange. if you had a great weekend we kick off the trading month of march with futures in the red. escalation in the ukraine over the weekend will take a toll after the s&p did hit all-time highs friday. ten-year has a lot to react to today. manufacturing, ism in an hour and jobs numbers coming up friday. europe's losses are roughly in the 2% range. germany right now, among t

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