Transcripts For CNBC Squawk Box 20171003 : comparemela.com

and also a cnbc contributor. >> and a writer for your favorite newspaper, the "new york times." >> there are some things from the federal reseventh. >> reserve >> a lot of openings >> i l >> a lot of openings. >> and in three weeks, the president will make a decision on whether janet yellen stays or -- >> that's right. >> usually the new president gives the old fed chief a -- >> a carry over. >> he's a real estate guy. >> she has done well on starting the exit and she has done well in terms of her relationship with the president other people are eager, they're being promoted from different circles, including up here in new york >> you look like the head of the -- >> he looks like he could be a ceo. >> yeah. >> thank mean, if that's all it took, you would be -- >> shoe-in >> same color hair as janet yellen >> 2529 on the s&p did you see that >> yeah. >> equity futures indicated higher this morning. take a quick look at that. overnight in asia, we did see positive news. there is this country up 2 on the s&p. dow jones indicated 4. big gain yesterday for the dow jones. there's the nikkei and the kospi, both indicated higher i saw european equities were green for the most part. probably a bit of catch up from yesterday. then crude, which has been solidly above 50 for a couple weeks now. today 50.48. >> in corporate news, wells fargo's ceo tim sloan heads to capitol hill to face the senate banking committee. he will be pressed on the bank's handling of that massive account scandal. he will say the company recognize toad late the stull scope and seriousness of the problems in the community bank he will also say wells fargo is a better bank today and that a year ago his testimony comes a year after john stumpf's hearings which played a big part in his resignation. wells fargo shares are about flat, but down a half percent over the past year. and in washington, richard smith will face a tough grilling by lawmakers he will testify before a house committee. investigators will focus on why it took 40 days for the company to notify the public of a massive data breach. there are also questions about three equifax executives selling shares before the hack was announced. and yesterday an investigation found the equifax data breach may affect 2.5 million more consumers than previously thought bringing the total to 145 million. >> uber, the ceo is in london today, meeting with the city's transportation regulators after they decided not to renew uber's operating season uber's board is meeting today to consider several proposals, including to diminish founder travis kalanick's role within the company. really, they're not going to be in london? what's your favorite toothpaste back in the tube, genie back in the bottle >> all very good metaphors >> i think toothpaste back in a tub. you can't possibly do that >> you can put shampoo back into a bottle >> not after you used it >> no impossible >> seriously, in london? are they living in 19th century london >> they have these black car services >> unbelievably expensive. people have been using uber. >> those black cab drivers are well organized it's tough the unions and organizations against free market. >> we've seen this movie before, entrenched industries, they are not going to move until someone moves them >> could be a negotiating tactic on the part of the city of london to extract concessions from uber. >> probably security checks. >> okay. the city of las vegas mourning after a gunman killed 59 people, injured more than 500 others during a country music festival jane wells has more. >> reporter: this is where the country music festival was happening behind this fence. a large area on the east side of las vegas boulevard. you can see mandalay bay in the background little more than halfway up and to the right is where steven paddock set up all of his weapons and his her much to cau perch to cause all of this mayhem we stayed at mandalay bay last night. security was tighter than usual. how did he get all these weapons into his room? golf bags, bags? police have not revealed that to us yet the ceo praised his staff and first responders, but also said this >> i'm also angry, really angry. so many lives were cut short, and so many have been affected but for that one lone, random, despicable, inhumane act, i've seen thousands of humane acts, acts of courage and kindness i've been up since midnight. all our properties rallied together >> this is the city which depends on tourism 43 million visitors just last year at the airport last evening when we were there, people were still flying in. it was a little quiet. but these trips have been planned. this is a dream destination. did they have any second thoughts about coming? yafrnlgts, yafrnlg >> yeah, we did. we decided to come any way >> i thought it would be fun >> not at all. >> why >> number one, he killed himself. >> i feel it's time to have fun, not be concerned about anything else >> people will go where they got to go. got to do what you got to do >> there's not anywhere safe i live in northern virginia, 15 minutes out of d.c., just saying there's not really anywhere you can say is 100% safe >> mccarren airport is saying people who lost their i.d.s here and want to get out of dodge can still get a boarding pass, but they have to fill out more paperwork, potentially also go through additional screening but they are allowing them without a driver's license and i.d. to try to get a boarding pass >> thanks, jane. everything we're doing today -- this is -- you know, we do it, but in the front of all of our mines is the families, the 500 people that are still in just horrific pain and suffering. i'm looking at an instagram of jason aldean great country star says over the last 24 hours i've gone through lots of emotions. scared, anger, heartache, compassion, and i truly don't understand why a person would want to take the life of another. but something we're all dealing with and we're talking about stock markets, and wells fargo who gives a crap, you know because we have to this is in the -- it's not over yet it shouldn't be. thank you. now we'll try to figure out what we do with this. let's bring in the suffolk county police commissioner the comment from the latest from las vegas, we talked off-camera my question to you was sort of an overall privacy versus security question. we live in a free question where you can't harden up every soft target anybody planning something that doesn't live in that city probably is staying in a hotel whether you are planning a bomb attacker, or sniper, whatever it is i don't know, is that where we are, metal detecters when checking in? >> this guy brought 23 guns into a hotel room, maybe it was in ski bags, golf bags, but he was able to keep going up and down that elevator with luggage to do this that theoretically wouldn't have been possible if you were checking in his stuff. do we want to do that? >> the key to preparation and preventing some of these attacks is the public/private partnership between soft targets and law enforcement. in suffolk county and in new york city, we have a program called nypd shield, it's a public private partnership where we push out information about the latest threats and we provide consulting services to private industry to decrease their vulnerability to terrorist episodes, terrorist attacks. god forbid something occurs, we can reduce the number of casualties that collaboration between the private sector and the law enforcement agencies is critical >> i don't know whether it's o profiling or whether it's mental health i don't know what we do about it and whether we could have figured this guy -- because this guy was -- something snapped or he was angered by something. should have been obvious to someone. also the see something say something that we talked about >> that's right. you raise a great point. oftentimes vast majority of active shooters exhibit some sort of behavior whether a comment. someone they say to a co-worker or something they put on social media or some sort of behavior that shows their intent to carry out some act of violence law enforcement's message to the public, be vigilant. if you see something, hear something, trust your gut, report it. law enforcement agencies have been asked to step up their game to guard against terrorism and that sort of thing and we have. we increased patrols and collaboration with the private sector now we're asking residents to remain vigilant. oftentimes it's a civilian who will prevent an active shooter or terrorist attack by noticing behavior early on and reporting it >> are we just relying on individuals to say something and notice something when it comes to soft targets? who is to prevent somebody from going into a hotel at times square and prevent the same thing that he did in las vegas. >> we can pick up on peoples intentions to commit acts of terror we mind social media aggressively we also stay up to date on the latest intelligence bulletins. we're constantly sharing intelligence in suffolk county we have three officers assigned to the counterterroism task force we have members of our department sitting in other agency headquarters. but there's a lot of information. >> it is, to some extent, we need rely on people to do the right thing. the people are our eyes and ears we are constantly asking people, if you hear something, see something, say something >> this case, you have a big concert, someone in the tower of a hotel, what could they do? how would you prevent something like this? there's no evidence of social media comments by this character. it's unclear if this was preventable. i think we talked about one of the issues early on in the show is could the hotel provide some sort of security protocols in terms of baggage search, particularly when someone has so many items of luggage. so certainly there's no question that the hotel will be looking at security protocols to see if they could have done something differently here that's the whole point of the shield program constantly updating the private sector as to what they can do better to prevent active shooters, to prevent terrorist attacks. we'll examine this situation and no question we'll bring corrective action to new york. unfortunately we learn from tragic incidents in law enforcement. we need to keep updating or policies and practices >> if you could snap your fingers, every hotel, you give your baggage to the bellman, he puts it through, and goes to the other side and brings it up to your room that would take a while. expensive. but if you could do it, and they were there i do think that would make things a lot safer >> yes those who are concerned about privacy issues, you know, i would say when you're staying in a public accommodation, when you're using mass transit, public transportation, you lose a lot of your expectation of privacy. and in this day and age, when we have this threat of lone wolf terrorists, active shooters, we need to be extremely vigilant and law enforcement, we're asking folks to recognize that, to understand that, and we need to do our job to keep people safe people need to understand that >> richard -- >> i just want to thank him for what he does. >> all those guys. >> thank you very much >> once again, everyone else running away, those guys running towards. >> the police officers are trained to run towards gunfire if you think about that for a moment, it highlights the heroism of our first responders. >> exactly all right. thank you. it's tough i don't know what answers are. we do this too much, talk about this seems like it's too much thank you. earnings just in from home builder lennar the company beating estimates by 5 cents. home deliveries up 12% new orders increasing by 8%. in the report, lennar said about 120 home deliveries were delayed because of hurricane harvey. they say damage to the community because of the hurricanes was small. tom petty died he was rushed to a hospital from his malibu home after being found unconscious and in cardiac arrest he was placed on life support and the decision was made later to remove the support. he rose to fame in the '70s with his band, tom petty and the heart breakers they put together a string of hits the group was inducted into the rock 'n roll hall of fame in 2002 here, i won't back down was another song that he was known for. also a member of the all-star group known as the traveling willburies over his career, petty sold more than 80 million records worldwide. he was 66 years old, too young >> very young. >> i remember a great super bowl performance from tom petty and the heart breakers i mentioned earlier, there's a couple of iconic moments in film that featured tom petty. jerry mcgwire, silence of the lambs. having kids, in barnyard, an animated film. >> i missed that one >> you were watching that. >> you've seen it ten times. >> i have. >> the cow -- he is a cow. he's a he, but a cow >> gender neutral. but he was not backing down to the coyotes. any way. >> coming up, president trump will visit hurricane ravaged puerto rico today. contessa brewer will tell us what kind of reception the president can expect 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. whentertaining us,es getting us back on track,hing? and finding us dates. phones really have changed. so why hasn't the way we pay for them? introducing xfinity mobile. you only pay for data and can easily switch between pay per gig and unlimited. no one else lets you do that. see how much you can save. choose by the gig or unlimited. xfinity mobile. a new kind of network designed to save you money. call, visit or go to xfinitymobile.com. president trump will fly to puerto rico today to view the devastation from hurricane maria. residents there are still struggling with basic necess necessities. contessa brewer joins us now >> good morning. president trump and the first lady will land just after noon at the national guard base in san juan he's going to meet not only with the governor of puerto rico but also with the governor of the u.s. virgin islands, also hard hit by the hurricanes. they're going to meet on a u.s. navy ship responding to the disaster in puerto rico. the president is unlikely to see the kind of damage that we saw firsthand when we were driving the island in a jeep barren mountains, hundreds of miles of downed lines and cell phone towers infrastructure just wiped out. and the people there's so much desperation for food, running water, medical services much less electricity. while in san juan there is no indication that the president will meet with the san juan mayor here carmen cruz and trump were engaged in a twitter battle. the president criticizing her response to the disaster she pressed back that people were dying and now she is pressing for a moratorium of ten years on any repayment of public debt and whatever hurricane relief aid that comes from the federal government to be distributed in the municipalities here. she wants some control over the way the money is spent in her city >> contessa, thank you terrible story here continuing to unfold. our guest host is richard fisher what can we do here stateside to help with puerto rico. this is a country already buckling under tremendous debt levels prior to this hurricane >> tremendous organization maladministration. i'm on the board of at&t we were the first nonmilitary aircraft on the ground, flying inasmuch as we could. flying in generators the needs are so extreme if you can't communicate, first responders can't get anything done i think this ought to be taken as an opportunity to update that infrastructure, make it more modern insist that it be administered more properly. it has been, as you know, under financial enormous duress and maladministration. i think they have to correct this fighting between the mayor and the president doesn't serve a purpose. it's the need to address the changes that have to take place. by the way, today is an interesting day in history 1975, on this day, moody's downgraded new york city and we were on the verge of bankruptcy. that's how bad things were here. this is on the mainland, in new york, a unique place but it was a horrible tragedy at that point no trash was being collected, rats on the street take advantage of this bad situation. it's horrible, horrific, clean up your act, and help them clean up their act that's my simple remedy. not going to be easy if should be down. these are american citizens. >> we forget about houston and irma >> i haven't forgotten about houston. we're talking about puerto rico and you're from texas. >> in houston, the real key to success is not only the great people from fema, the private sector went to work. they banded together i have a friend who is the ceo of a major company he has a totally unknown family living in his house. just took people in. well, this is the kind of community relations that the corporate sector, the private sector has to do on their own. there's not a big one in puerto rico your unemployment rate was 20% plus i think we need to take advantage of this, use it constructively, and help them prepare themselves not just for future storms but to have an economy that's vibrant and prosperous not easy what do you think? >> i think that it got political to some extent >> it's a shame. >> i don't like it i think it's disgusting. i want everything that can possibly be done for puerto rico to be done just watching -- things that happen sometimes, i wraatch in congress lately -- >> you know how i feel about congress, guilty of at least -- it's not president the congress should be getting things done. >> all right >> we solved that problem. coming up, we will talk strategy with daniel schwartz. he will join us love from the sohn tel aviv conference as we head to break, here's a look at yesterday's s&p 500 winners and losers not rebalancing your portfolio. focused on what you love, not how your money will last through retirement. we make it easier to plan for retirement with day one target date funds from prudential. look forward to your 401k plan. theextreme risk of burstd a pipes and water damage...y... soon, insurance companies won't pay for damages. that is, not if they can help prevent damages from happening in the first place. at cognizant, we're turning the industry known for processing claims into one focused on prevention with predictive analytics, helping them proactively protect the things that matter most. get ready, because we're helping leading companies see it- and see it through-with digital. pthey don't invest inn stalternativesds. or municipal strategies. what people really invest in is what they hope to get out of life. but helping them get there means you can't approach investing from just one point of view. because it's only when you collaborate and cross-pollinate many points of view that something wonderful can happen. those people might just get what they want out of life. or they could get even more. ...from godaddy! in fact, 68% of people who have built their... ...website using gocentral, did it in under an hour, and you can too. build a better website - in under an hour. with gocentral from godaddy. welcome back you're watching "squawk box" live from the nasdaq market site in times square. good morning u.s. equity futures at this hour are indicated higher again after they had the quietest month ever in terms of volatility it just seems to be, you know, very similar to almost every morning that we have seen for a while now. >> amazing >> yeah. bit of buying pressure, goes up. over in europe -- that's why germany was not participating, it was unch, it was closed for a public holiday so there's the other bourses of note not a whole lot happening any way. >> stocks to watch, facebook says about 10 million people in the u.s. saw political ads on its site that were bought in russia before and after last year's presidential election facebook says it plans to hire 1,000 more people to review ads and make sure they comply with terms. walmart bought the start up parcel for an undisclosed amount the retail giant says it plans to use parcel for delivery in new york city, including same-day delivery. tesla delivered a record number of vehicles in the third quarter but the company made fewer of the new model 3 sedans than expected. tesla blaming production bottlenecks for the slow rollout of the vehicle 260 vehicles produced it aimed to make 1500 per week. >> right >> but an elon musk target is always ambitious >> nothing matters any way >> right >> when you do finally get it, you'll be psyched. people love those cars >> now china is mandating electric cars. >> so is california. >> they sell more cars than we do >> california, that's different. >> 2040, if they don't secede. we talked about that they have -- that governor may run for president. >> certainly entertaining. >> we have that going for us >> he dated linda ronstadt >> he did. he did >> i guess that's a plus >> he didn't like any of her albums, supposedly >> maybe that's why she found him attractive >> yeah. meantime we've seen dozens of new stock market highs so far this year including yesterday's new highs on the s&p 500 they are giving the hedge fund industry a boost joining us from the sohn tel aviv investment conference raising money for the fight against pediatric cancer is daniel schwartz. great to have you with us. sohn does a terrific job at raising money for worthy causes. the cause there is the israel ret syndrome foundation silent angels how much are you planning to raise? >> i think so far they've raised a few hundred thousand dollars, the target is a little over $600,000 just from this conference alone. >> there's still a lot of time there to raise that amount let's pivot to the markets and m&a. wondering in terms of looking out in the fourth quarter, are you factoring in tax reform as some sort of catalyst? are you investing around that thesis at all? >> yeah. the merger market has been strong, it remains strong. i think tax reform is open ended. even though there's been frameworks announced, i don't think anyone believes there's any definitive framework as to how things will look i think more people are investing or factoring in m&a based on the fact they've given a bit of time to see what's going on with the new administration, they're more comfortable now that the economy is continuing along on its pace. not that much changed, and that people are getting more comfortable now, getting back into the game of mergers and acquisitions the trend we've seen of m&a over the past few years is likely to continue you're seeing that in headlines almost every day where there's a new deal being discussed or announced. that's something that's likely to continue. >> which sectors to be expect to be the hottest biotech is catching a bid on the premise of not only is m&a expected now, but if you overlay repatriation that could help fuel that as well. >> absolutely. pharmaceutical companies have been active. they continue to be active there's always the story of large companies looking for things to fill the pipeline and to maximize use of that sales force. we know pharmaceutical, their pipeline will be cyclical. there's a down trend for some of these companies, and they will continue to do m&a especially were so many new treatments on the rise that's one sector likely to remain strong in terms of m&a activity as we've seen, there's other sectors just prone to this type of activity. cable and telecom. at&t/directv time warner closing now. you have in the press almost every day discussions about whether it's t-mobile and sprint or now you have charter that's been in the subject of speculation. the interesting thing here is how multinational this has become sprint backed by softbank, merging with it mobile, backed by toi by deutsche telekom. altice backed by europeans so it's a global international merger market. that's really a trend that's expanded, but will only get stronger and stronger. >> sounds like your position in this particular space, the space of telecom what do you expect to unfold here? >> we expect there so be something to happen with sprint and t-mobile there is -- we believe that there's been a lot of talk in the past, but nobody has been quite comfortable that anything can get past antitrust or fcc scrutiny clearly that's not something that is necessarily going to happen now either. but i think people are much more prone to take a chance with the current administration and the current anti trust environment to do deals, especially not knowing how things will turn out in the next election cycle if you have an idea that you want to get something done, now is probably the time to give it your best shot so that you can get the deal potentially completed under the current administration when there's likely to be a more business combination environment. so i think to the extent these deals have been discussed, they've been on lock for years now, there's a higher likelihood they'll happen >> last quick question, you're yet to give your presentation at sohn any hints? >> no it will be something related to the telecommunications industry. a company involved in mergers. it's along that theme. not only telecom that is active. there's many sectors now that are busy on the m&a front. >> great to speak with you good luck raising those funds. >> thank you very much >> coming up, equifax and wells fargo on the hot seat on capitol hill they'll answer questions about the data breach and the fake account scandal. this morning we have richard fisher for an hour between 6:00 and 7:00 how do we keep viewers after he leaves at 7:00 what guest could we get that would top richard fisher how about buffett? our newsmaker of the morning after richard fisher is warren buffett. he will join us at: 8:00 a.m. eastern. ♪ ♪ i'm living that yacht life, life, life ♪ ♪ top speed fifty knots life on the caribbean seas ♪ ♪ it's a champagne and models potpourri ♪ ♪ on my yacht made of cuban mahogany, ♪ ♪ gany, gany, gany, gany ♪ watch this don't get mad (bell mnemonic) get e*trade and get invested [he has a new business teaching lessons. rodney wanted to know how his business was doing... ...so he got quickbooks. it organizes all his accounts, so he can see his bottom line. ahhh...that's a profit. know where you stand instantly. visit quickbooks-dot-com. on today's agenda in washington, hearings with two executives in the news we will talk about the equifax hearing in a moment, first tim sloan will talk about the fake account scandal. wilfred frost is in washington i wondered where you were. there you are, in washington for that hearing >> good morning, joe wells fargo ceo simthrown witiml appear almost a year after john stumpf's hearings, which played a large part in his resignation in october of 2016 sloan will say the company recognized too late the full scope and seriousness of the problems in the bank and congress was right to criticize us after stumpf's appearance a year ago, but wells fargo is a better bank today than it was a year ago he will talk about how they paid money back to customers as examples of the bank's improvement. he will likely be asked on whether he has to take on more responsibility when the accoun scandal was identified sloan is likely to get a tough reception. here is senator warren on "mad money" two weeks ago >> as long as they can keep checking their paychecks, and they can keep sleep and cozy at night, we'll have the same kind of thing going on in these big corporations where the customer is at the end of the day let's face it, stock holders are at the end of the day, too it's all about the executives. if we want change, we have to hold the executives accountable. period >> wells fargo shares are nearly 30% behind the banks index since the scandal became public just over a year ago. guys >> so how are shareholders at the end of the line when you screw up like that and you lose billions of dollars of market cap, how is that not reflected on the share holders as well how is that not self-correcting without the heavy hand of government it is just such a naive viewpoint we hear expressed constantly if you do things that are antit hshg et tshgantithetical, it al off. >> a year ago there were nos fo >> you think wells fargo needs elizabeth warren to slap their hand, or what happens with the public relations, what happened with the stock price -- >> let me finish a year ago it was different. since then, what tim sloan will make clear, and we saw in his remarks, there have been changes made notably 69 million clawed back from john stumpf, 67 from carrie tollstead, money paid back to customers and the share price. it's a different setting coming in this year for tim sloan than it was for john stumpf, but i'm sure senator warren will still go after him. >> she didn't even say banks, she said big corporations. they are all chasing profits as long as we have that system, there's going to be problems as long as they're trying to make money, they'll be doing these things thank god we have her and her ilk. thank you, wilfred frost also in the hot seat, the former ceo of equifax, richard smith is scheduled to begin his first of three days of testimony today. >> the testimony comes one dayne breach affected 2.5 million more consumers than initially reported, bringing the total to 145 million people one thing we can expect from smith is a mea culpa we have a copy of his repaired remarks. it starts with an apology to each and every person affected by this breach, i'm deeply sorry this occurred in his testimony smith acknowledges that despite government warnings in march about the vulnerabilities that led to the breach, the company did not implement the patch immediately for it he also gives details about who knew what and when smith said he found out about the breach on august 15th two days later smith breached his senior leadership team on august 22 nd smith said he lt the board know, the full board knew about the breach a full month after it was detected. another thing he will likely be grilled on, the share sales of three executives three days before the breecach was announc. well have questions for richard fisher when we come back we'll talk about the future of the fed. maybe talk about you dealt with senator warren >> i have. >> okay. we'll talk about that. figure out what does she want? don't forget, our newsmaker of the morning -- warren buffett will join us with becky quick live from oklahoma at 8:00 a.m. eastern. here's a quick check of what's happening in european rkmaets right now. stay with me, mr. parker. when a critical patient is far from the hospital, the hospital must come to the patient. stay with me, mr. parker. the at&t network is helping first responders connect with medical teams in near real time... stay with me, mr. parker. ...saving time when it matters most. stay with me, mrs. parker. that's the power of and. >> richard fisher is here. we talked a little bit about chair yellen and prospects for who might eventually get that -- i want to kick this out. i wish we had more time, but let's talk about overall i'm going to merge these two things together you for years have said that the fed could only do too much prime the pump, get the money out there. fiscal authority i am wondering whether this latest proposal from the group of six in terms of tax reform, i'm wondering whether that fits the bill for what you said, and then back to senator warren, who you have dealt with a lot. i would say just philosophically, she would say corporations shouldn't get really any help with lower taxes and that that's not a positive for society. there's almost a viewpoint that, you know, we need to sort of shackle corporations and that a lot of good things come from the public sector. you said -- you were saying how smart she is >> she is. i had the pleasure of dealing with her and lunching with her when i was at the fed talking about dodd frank she's the only senator that i know of that read every sentence of dodd frank. she's a contracts lawyer she's very smart now, you and i don't agree with her philosophical approach small wisconsins create jobs in america. >> private sector creates jobs >> we have a philosophical difference here. >> what is the end where does her philosophical -- where does it lead >> i can't go inside her brilliant brain, even though we don't agree with the way it's oriented most people go to the senate and want to go further either be a vice president or a president. have a cabinet job i would manual had hillary clinton been elected, she would have pulled her in, unless she didn't want to lose massachusetts, but at the risk of losing massachusetts, it isn't great. >> how about this? >> you have to respect her because she's smart. if you disagree with her, you have to be prepared for her brilliance, and she's really a smart contracts lawyer that's what makes her so formidable >> the plan as it's been put forward at this point -- >> well, obviously, the markets have been pricing this in. >> positively. >> i have felt this way before the election, and you know i talked about trump because he is the change agent now, the question is he the right answer or the wrong answer to the right questions we needed to have the change that we have we'll see. this is what it's all about. the supreme court -- his cabinet appointments have been superb. this is what people voted for, which is to bring about change monetary policy has been carrying ut ball everywhere for too long we floated the markets they're richly priced. that price can only be justified if you change the gear >> richard, it's a 12% of the public probably. not seeing numbers and things that should get a tax break because of the way it's put forward by the democrats and their friends in the media, right? we know -- >> we all know that we're not competing internationally with our tax regime >> is that going to fly, though? >> i hope so >> are the senate republicans -- do they have the backbone when it's raining down on them from chuck schumer and elizabeth warren and the media -- >> chuck schumer, my classmate from harvard -- >> really? >> -- is the senator from new york this is the epicenter of capitalism you would think -- i this i what chuck is arguing for is to make sure they maintain the state and local tax deductions it's apparently obvious. >> you can't, though >> i don't think you can it makes the numbers work. it rounds it out rather than the border adjustment tax, which was a $1 billion plug figure >> i hope these guys can get their act together we all know this is good for our country. it's way overdue it will justify the kind of pricing we've seen if they don't get it through, i don't care how much monetary accommodation. the central banks are changing signs now. they're reversing their boundaries it was gentle at the beginning the brits are signaling that they're likely to change signs the canadians have already done it of course, they have a great -- >> great canadian -- >> the europeans are likely to slow down their bond moves >> chance is yellen is reappointed in one word. >> i would say 40% >> 40% >> richard, thank you. if it wasn't -- you could stay >> i wish we could talk about golf >> i bet you do. you're glad we didn't get to that >> you have a new putter, right? >> i'm the putter. that's the problem >> you need a new putter not a new putter >> thank you, richard. a busy morning today we'll talk to leonard lance just one day after an independent veigiofod the breach could be bigger than initially thought. "squawk box" will be right back. your brain is an amazing thing. but as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall. thankfully, the breakthrough in prevagen helps your brain and actually improves memory. the secret is an ingredient originally discovered... in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory. prevagen. the name to remember. the death toll did continue to rise in las vegas following the deadliest mass shooting in u.s. history we are live on the scene with the latest back on wall street. records continue to fall with the dow, nasdaq, and s&p 500 all hitting new highs. we have your trading day set up ahead. equifax faces congress the breach that affected millions of consumers. congressman leonard lance will join us with a preview as the second hour of "squawk box" begins right now good morning welcome back to "squawk box. i'm melissa lee along with joe kernan becky quick is in omaha, nebraska, this morning she'll be speaking with the one and only warren buffett. we'll hear about his recent comments on dow one million and talk wells fargo ahead of today's hearing on the hill. that begins at 8:00 a.m. eastern time this morning. in the meantime, let's get a check on the futures this morning. it was a recordsetting day yesterday. the first day of the fourth quarter. we could extend those gains. s&p looking at about one and a half at the open dow looking to be higher at 38 nasdaq looking to add about two right here here's what's making headlines at this hour the nation's automakers afford the september sales figures this morning. analysts are expecting the month to be the best of 2017 boosted in part by post-hurricane buying after many vehicles were destroyed in the recent storms homebuilder lennar is another hurricane-related story. they're beating estimated at five quarters at $1.06 a share some deliveries were impacted by the end of the hurricane harvey. that should be impacted when the current quarter results are tallied. general electrics chairman jeff immelt, his departure from the job comes three months earlier than planned the death toll continues to rise in las vegas following the deadliest mass shooting in u.s. history. multiple vigils were held across that city last night to honor the victims. let's get to jane wells live in las vegas with the very latest jane >> 59 dead, over 500 injured this is where it all happened behind this fence. this is the concert venue you see behind me. mandalay bay was up on the 32nd floor where you could see fbi agents last night searching the room of stevphen paddock this is where much of the chaos happened people were hopping fences, breaking down, coming this way, going that way in mandalay bay a lot of employees did not even come to work yesterday because the perimeter is still closed in this area. as you might know ea bringing this to a swift conclusion, then would likely have been the case i love my town i know my town >> machine guns are legal. why did stephen paddock snap he was reportedly successful, liked to gamble. the son of a bank robber once on the fbi's most wanted list, but his brother just seemed stunned. >> like i said, find out who sold him the machine gun i don't know what else to say. i just -- i mean, it's his fault that he did this, but i would like to know where he got it because it's not something that -- >> as i said, machine guns are legal in nevada as long as they're federally registered in a and a few other rules, and they advertise all over the place here where you can go and shoot machine guns it's a fun popular thing to do with tourists. it's not clear if any of the 40 weapons, 23 here and 18 at one of his houses, plus who knows how many more, if any of those were illegal, guys as far as we know, gun store owners say that those who sold to paddock said he passed all the background checks. there was nothing out of the ordinary back to you. >> isn't there a federal law or something that supersedes the nevada law that anything after 1986 you need -- so prior to 1986,ing and then you need -- then you need a license from the -- i don't know. there's a lot of regulations and licenses, right? how does it -- i mean, it's crazy, but how does it work where this guy could -- >> it depends which state. there are certain states where you just can't have them at all. nevada is one where you can have them if you register them with the federal government yes, i believe it is they have to be older than 1986. you know, this is a state that's very proud generally of gun ownership. you know, you are in the west here this is kind of -- we can -- you have open carry here in nevada even housekeeping staff that were in the room at times reportedly have said they didn't notice anything out of the ordinary this took a lot of planning, joe. this was not something that a guy came up with on the spur of the moment because he was angry. there was a lot of planning involved with this >> right definitely yeah, there is -- there's open carry, and, you know, that's -- this is not going to -- there's going to be a lot of rhetoric on both sides now, jane, about this obviously. about someone pointed that out yesterday that there's a lot of -- i guess during a convention a lot of open carry around, but you think back then there was no incidents there are all the law-abiding people where there weren't >> well, and he may have been law-abiding too until he snapped and killed everybody >> i know. we know that certainly it makes it easier when you have an automatic weapon it's horrific. jane wells, thank you. former national counterterrorism rowley flynn we've got the gun issue, but we know that ariana graund ynde wa bomb nice was a truck it's hard to protect soft targets, and i'm not sure what the answer is. we'll talk about hotel security in a moment too, but in india you get wanded yoo your car gets wanded, and your bag goes through some type of detector is that coming here, you think >> that's a good question. in a lot of parts of the world where security is perceived to be more intense, hotels, restaurants have much akin to what we have in our airports here where you have to go through security screening before you get in, but, you know, it's a matter of where do you put the perimeter? there's a problem wherever you are outside of the perimeter, and besides those kinds of security precautions aren't 100% either it depends on who is manning those and how carefully they're trained and taught and how carefully they man those security precautions in fact, in las vegas, these hotels have really good security they're gambling casinos in many cases, and they have closed circuit cameras. they have a lot of hotel security there to watch what's going on >> is the security as good on the casino floor as it is in the other parts of the hotel >> that's a good question to ask. that's something i think the police and the investigators will want to look at i have not been in the mandalay bay, but it would not surprise me if they don't have security not in the rooms, of course, but in the hallways and on the elevators and in the elevators, and around >>ates i guy walking with a golf bag. >> not suspicious. >> guy walking with a golf bag >> a suitcase. >> if he brought them in in several stages, it would raise more attention >> this just occurred to me, rowley, that when people are going to do something or planning to dosomething, they usually unless they're from that city, they don't have a base of operations well, they need a hotel. it wouldn't be just for -- you know, it would be for anything that they were doing and planning if you had a better idea in the hotel if they were bringing -- whatever if they're making a bomb, or whatever it is that they're doing, they need a place to sort of operate out of. hotel seems like -- >> hotels are very easy. >> it seems like a natural place to -- >> absolutely. it gives you concealment while you'replotting and planning an setting up for an attack >> we either decide this is a free society, and these are going to happen, or we got to give up some right to privacy. >> well -- >> and it's going to be expense i too. >> there's always this balance between liberty and security the american public tends to swing back and forth between the two depending on how they perceive their own personal security to be if you are going to protect soft targets, it's almost impossible. >> to rowley's point, though, every single time you move the perimeter out, that area right outside the perimeter becomes a danger, and if it's not a hotel, go to air bnb where there won't be at same regulations they'll find another way it's like whack-a-mole at this point. >> absolutely. you can look at attacks like in brussels where it took place in the waiting area >> exactly >> outside the security. >> one of the things people need to do is be cognizant. when they're in buildings or venues, know where there are a couple of exits. have yourself a plan know what department of homeland security and law enforcement say, which is active shooter it's run, hide, fight. be prepared to do that >> somebody knew this guy. >> i would think >> there's always -- you know, somebody knows something most of the time we desperately need that >> most of the time at least little over 60% of the time studies have shown a lone shooter like this will tell somebody else what they're going to do. maybe it's having a beer with a buddy. maybe it's a close friend. maybe it's a brother they will tell someone usually what they're going to do, but usually afterwards that person is asked, and they'll say, oh, i thought i was kidding. i didn't think he would really do that. >> coming up, congress holding a hearing today on the huge equifax data breach, and that compromised millions of information of americans congressman leonard lance will discuss the breach and what he is hoeng to find out stocks closing at record highs futures once again pointing to the higher open. we'll run you through what you need to watch ahead of today's jobs report. at 8:00 a.m. eastern time becky quick will be joined by warren buffett. that ierew intvis coming up. you're watching "squawk box" on cnbc >> the futures right now for most of the morning have been up on the dow somewhere around 35, 40 points 37 37 right now the s&p, 500 indicated up 1.43 nasdaq would open two points higher if we were to to be what's indicated right now >> congress on a fact finding mission today as former equifax ceo richard smith prepares to testify. leonard lance, congressman, who sits on the digital commerce and digital subcommittee he will be asking mr. smith some questions today. thank you for joining us what's your number one question for mr. smith? >> why the public was not informed when this occurred. the company knew that it occurred in july and had suspicions about this as far back as march, and the public was not informed until september. >> i mean, i would like the answer to that question as well. as being somebody whose data was breached, i mean, i would have liked to have put a credit freeze on my reports much, much sooner getting at the root of the problem, the company was notified of the breach in march, right? it was alerted to the breach on march 9th. on march 15th their information security department ran scams that would have identified vulnerable systems they didn't. what can we do at this point to really protect consumers information when it comes to the root of the issue, and that is the companies just -- i don't want to say incompetent, but failure to even react to a breach >> i think it goes beyond incompetent. i think this might be culpability, and as you know, some stock was sold by those in the company before the public was made aware of this, so we're certainly going to get to the bottom of that as well, and moving forward, we want to determine how we can best protect the public so that this does not happen again. >> we talk about protecting the public and the public's information being breached, but the fact of the matter is, congress marn, that this business model isn't set up to serve the public at all. it's set up to serve the lenders and to serve the banks, and i understand that the public benefits from that greatly through expedited credit checks, et cetera. at the same time there is no incentive in this sort of business model to serve the consumer in any way. should a business model like this exist where a company is profiting off of consumer data that it doesn't have an sneptive necessarily to protect because it doesn't serve the consumer? >> i think that's an excellent question, and perhaps in the future the model, the business model, should be as you suggest, and we're going to be asking questions in that regard as well i just think it's unconscionable to what occurred here particularly as you point out that this began in march >> at the same time the stock has certainly born the brunt of the fall-out it's lost millions of dollars in market cap the ceo richard smith is out, and there's an interim ceo that seems to be making a lot of effort to make amends within the public to promise free credit protection services for life is it possible that the company has done enough, or no >> i don't think the company has done enough yet, and we will ask questions of the company today as to what more the company should do. yes, the stock has gone down, but, of course, it's gone down after this was made public, and there was in my judgment insider trading. >> there was in your judgment insider trading, so you are going into the hearing with that sort of mindset that something was done illegally >> potentially i'm a lawyer, and i never want to prejudge the situation, but certainly we're going to be asking questions in that regard. the subcommittee under the leadership of bob latta of ohio wants to protect the consumers of this country. that is, in our name protection of consumers. that is the principle goal we bring before the committee, mr. smith because he knows as much about this as anybody, but our ultimate goal is obviously to protect the consuming public in this country. >> sure. obviously the target of the hearing today and over the next couple of days is equifax, but there are two other credit agencies out there should they be on watch? should they -- should investors believe that the likes of a trans union and an experian wil have to face a change because of equif equifax's bad acts >> let's hope that the other companies, if this were to occur, would inform the public as soon as possible. i'm not suggesting that it has occurred, but as you suggest, maybe the model should change. certainly the other companies, i'm sure, will be monitoring the hearing today. >> all right congressman lance,ing we appreciate your time >> thank you very much coming up, we're going to speak to another security expert, fred burton, about protecting soft targets. later, wells fargo ceo tim sloan heads to capitol hill this morning. what investors can expect when he is grilled by lawmakers all is leading up to our big interview with the biggest shareholder of wells fargo stock. the biggest shareholder of like every stock. not really, but he could be if he wanted. warren buffer et "squawk box" will be right back. whether it's connecting one of the world's most innovative campuses. or bringing wifi to 65,000 fans. businesses count on communication, and communication counts on centurylink. there was no magic up hisgends. sleeve. he didn't have wings, or a cape. he was but just a man... with the will to go beyond. flexshares etfs are built around the way investors think. with objectives like building capital for the future, managing portfolio risk and liquidity and generating income. that's real etf innovation. flexshares. built by investors, for investors. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. welcome back to "squawk box. a few stocks to watch. jeff immelt stepping down as ge chairman yesterday earlier than expected. immelt had been set to retire by the end of the year. the company's named ceo john flanery as his replacement immelt resigned as ge's ceo in june sony says ahead the head of its video game unit adam haas will step down at the beginning of the year. he oversaw the launch of the playstation 4. it is now the world's top selling console. the justice department has cleared century link's takeover of level three communications. as part of the approval level three must sell overarching fiberoptic assets. the deal still needs approval from the fcc and california regulators the music world is in shock after the sudden passing of singer guitarist tom petty petty's manager confirming he died last night after suffering cardiac arrest earlier in the day at his malibu home petty was just 66 years old. he rose to fame in the late 1970s with his band, tom petty and the heart breakers the group put out hits like "don't do me like that." he also had a success as a solo artist with songs like "free falling. over his career petty sold more than 80 million records. coming up, your top corporate stories and later markets hitting new highs yet again. what investors can expect as a fourth quarter kicks into high gear as we take a break, look at equity futures we have been indicating a higher opening all morning long, and we're still looking at one stay tuned you're watching "squawk box. ♪ 9 out of 10 couples prefer a different mattress firmness, so we created the only bed that adjusts on both sides to your ideal comfort, your sleep number setting. you can even see how well you're sleeping and make adjustments. does your bed do that? the most amazing part is they start at $699. that's $200 off our queen c2 mattress during our fall sale. ends soon. visit sleepnumber.com for a store near you. good morning welcome back to "squawk box" here we're live at the nasdaq market site in times square among the stories front and center, wal-mart has bought delivery startup parcel for an undisclosed amount it specializes in same-day and overnight delivery i the latest in a series of acquisitions from wal-mart, having bought men's apparel seller bonobos in june and jet.com last year. i thought you were going to chime in >> yeah, i'm kind of -- >> yeah. maureen powell jobs has bought a significant stakes in monumental sports and entertainment. the company that owns the nba's washington wiz aards and the washington capitals. that's according to the washington post. the stake is about 20% says the paper, although the deal still needs the approval of the nba and nhl. jobs is married to apple founder steve jobs from 1991 until his death in 2011. american express has won dismissal of a shareholder lawsuit. they accused the company of down playing the significance of its financial relationship with costco mx shares fell back in 2016 after announced that its longstanding relationship had ended. a lone gunman in las vegas killed 59 people, wounded more than 500 at the worst mass shooting in u.s. history joengs now strategyfor chief security officer and counter terror deputy chief fred burton. we've been -- it's good to have you, chief, this morning the one thing we keep coming back to all of a sudden now is hotels, and the implication for what hotels may need to do from here on out, and it's been pointed out that there are places in the world where hotels, your luggage, needs to go be screened, your cars, the mirror needs to be passed under your car it's not unheard of around the world. is that coming here and should it >> well, you raise an interesting question i wrote analysis for strategyfour a few years back talking about hotels being embassies of the future, and that's because when terrorists were targeting them with large vehicle-borne improvised explosive devices. as a result of that, holtels had to adjust to your enhanced security i think what wear going to see after the horrific events in las vegas is some new protocols put into place perhaps specific dogs that are capable of sniffing for weapons in the lobby maybe walk through metal detectors. perhaps some form of rapid name checks on persons as they check in there's no doubt that this is a game changer for the hotel sector and the entertainment business as you look at how do you protect these mega stars when they're on stages? >> the other point that maybe i keep bringing it up because it just occurred to me, and it's just that if you are planning something, you are probably not from the town where -- you might be, but a lot of times these are people that come to a place to perpetrate some horrific evil crime, and, you know, they're not staying under an overpass or in -- i guess they could do air bnb, but they're probably in a hotel somewhere. if you had an idea of the comings and goings of these people, you might stop a lot of this stuff theoretically, right? >> well, on paper, yes let's not lose sight of the fact we've seen these kinds of attacks before actually orchestrated from inside of hotels, which we saw unfold in mumbai, and i know from working a lot of protective details, specifically like in places like vegas and new york city, once you rent that room, you have free reign of that hotel. you have the ability to do reconnaissance you can watch. you can stare. you can linger nobody is harassing you. it's a safe haven for people and guests conducting legitimate business, as we all know, but it also is a perfect kind of observation post for an individual that might have terrorist intentions or criminal intent >> then there's the -- you know, all the other things we always talk about gun control, mental health issues see something, say something they are the same things we talk about over and over again, but then we always come back to a free society there's an offset between privacy and a free society and security in a free society some people actually say that this is the -- actuarily there's no way to go to zero on events like this with all the soft targets. >> well, i think that's correct. there's not absolute security anywhere, and regardless of the location or the person or the v.i.p., it's impossible to predict any possible kind of attack that could take place you can only mitigate those that you have intelligence on, that's going to manifest itself, and have adequate security resources in place to deal with it the challenge with this kind of attack is the same phenomenon that the secret service suffered when lee harvey oswald shot j.f.k. there was not a counter sniper capacity at that time, and after that asass natisassination one into place if you think about large hotels, whether that's new york city or las vegas, overlooking locations, it's a daunting task, and this problem just might not be fixable >> i mean, do you think that americans are willing to give up something like, you know, doctor-patient confidentiality or profiling or -- i don't know. are we willing to allow our personal lives to be more, you know, looked at more closely by the government is that something that we'll say, okay, i'm willing to do that if we can make some inroads on stopping these things >> i think that there's a fine line there i think many people would -- are already at their wit's end and trying to deal with just getting on the average plane think about this from a conceptual perspective look at the transportation sector it's impossible to screen the volume of passengers getting on to trains or subways around the nation on any given day. cities like new york do a pretty good job of enhanced patrol and bomb dogs and so forth and surveillance technology, so i think what you are going to see is a combination of a technology solution here for hotels combined with enhanced surveillance of the actual hotel, and enhanced coverage of guests as they check in. maybe very quietly >> what if someone like this has no criminal record how could we have seen that this guy was going to do this is there any way >> well, i think the verdict is still out on that. i've done a lot of terrorism investigations and other kinds of cases in my career. there's not been a motive publicly released, although i suspect the police know exactly why he did this at this time or at least have a very strong working theory i think once we get the motive behind this attack, that will help fill in these intelligence gaps, and then you can apply some security solutions to deal with that problem, but until we have that, all of us are missing a big piece of the jig saw puzzle >> i'm hoping that there's a motive, but i'm almost -- what if there isn't >> well, it's been my experience from looking at these cases, you can go back to any of the horrific cases that have happened from a historical perspective. there was a specific reason why he chose that site to carry out this act, and it's not going to be rationale to you and i or to your viewers >> right >> at the moment he pulled that trigger, he knew exactly why he was doing it, and that's the piece of the puzzle that needs to be figured out. >> right >> i'm hoping that -- if you can't -- if there's no rhyme or reason to it, if it's -- then it's just pure evil. you know, you say, well, he is insane, but, you know, the classic insanity is hearing voices and hallucinations and delusions and, you know, chemical imbalances. that's not necessarily what we're talking about here we're talking about, you know, absolutely i guess, you know, more anti-social or sociopath. not caring that you are causing all this misery. if there's no motive in terms if he didn't direct it at these people in particular, then we're just -- then you're left with the -- it's like an -- it's just bad, right >> well, i think, again, we're missing pieces of the puzzle we don't know his blood alcohol content. we don't have pharmakocology >> we don't have his computer hard drives. >> that's exactly right. exactly right. we had a similar case, you know, many, many years ago in austin, texas, with the u.t. sniper case >> right >> very diabolical plot. the shooter turned out to have a brain tumor. >> i didn't know that. i remember that. yeah, in the tower >> right right. it was a very similar kind of well thought out plot with the gunman dressed as a maintenance man carrying in loads of weapons and water and flashlights and batteries. he was hell bent on staying there forever. very similar kind of m. o. fs i was an agent, i would want to see what other past attacks this shooter had studied, if any. >> we've got, i don't know, 300 million, 400 million guns in this country we've got laws that cover machine guns, and, yet, there seems to be some loopholes for automatic weapons too, obviously. this guy had something there have been other countries that, you know, people point to australia where they've actually taken guns what will happen in this country eventually the advocates for gun control are obviously going to be very outspoken now about action from congress what makes sense what incremental steps make sense or just as a full-out, you know, there's a lot that would like to never see another public citizen -- or another citizen own a firearm. what makes sense >> well, i think some problems are not fixable. i think this is one of the issues that a year from now we're going to be talking about the same kind of matter. just with politics surrounding the entire gun issue in essence, i think that the real bad guy here is the shooter. let's figure out the motive. let's try to figure out what we missed, if anything, and go from there. >> right i mean, you know, trucks are being used and bombs it's a fair point that for just pure mayhem and the body count, i mean, a machine gun should not be probably around for any private citizen, it would seem is that a stretch to say that maybe just there shouldn't be any of those it doesn't seem like much of a stretch that they shouldn't be in the hands of someone like this >>. >> well, i know there's a lot of people that would disagree with that position. >> there are i know >> i'm a former police officer and a former special agent i don't really like guns i don't own a machine gun. i can't imagine why anybody would want one >> right >> that's just me. >> right >> there's a lot of people that feel a heck of a lot different from that. especially when you are looking at the south and the southwest and out west you know, again, it's one of these issues spa there's no good answer too >> just raising the questions because i know it's being -- obviously it's being talked about everywhere today anyway, thank you. appreciate it. >> thank you up next, the markets counting down to the knob of the month. the september jobs report will be released on friday. we'll talk expectations and markets right after this break a check of the futures this morning. we have been pointing to a higher open all morning long, and there we have it dow looking at about 39 at the open "squawk box" will rhtacbeig bk. lindsey pickard jones you now with some new information. it says le-- >> i actually just got off the phone with a ledge egendary pro gamble ceo he says he is "taking the gloves off. he uses statistics,case studie and harsh words for both peltz and clayton daley who was the cfo for a time and was hired by trian to run the fight he says mr. peltz and mr. daley are clearly out for number one they certainly don't represent me, a long-term shareholder. he takes on each of their assertions he calls their plan to reorganize a "big step backwards," and when it comes to improving p & g's digital strategy, he said i can safely say that peltz and daley would be the last two people in the world that anyone would call to get any insight on digital and e-commerce perhaps the most cutting part, he takes on daley's tenure as cfo. he says daley guided the street wrong on sales and earnings, erasing $60 billion in market value. peltz received the support of all three major proxy advisory firms as well as yachtman asset management, which owns more than $is billion worth of stocks. we'll see highway it all goes down when it comes to a vote next week. >> we'll be watching for that. what day >> october 10th where, exactly a week from today. that's where you are starting to really see the gloves come off >> okay. thank you. >> thanks, guys. let's get you caught up on the broader markets. global market strategy jest at jp morgan asset strategist russell price, senior economist at amare prize financial good to have you with us i'll start off with you. records for the s&p, the narks, and the russell 2000 where are we on value wags >> well, valuations are looking a little stretched, which is why we are focussing on earnings growth going into the fourth quarter and into 2018 as the real driver going forward. the weaker dollar improving globally, international markets as well as the fact that we could see some tax cut or should be supportive for earnings going into next year, which is why we're still constructive despite the valuations being about 12% above their long run average >> you haven't mentioned anything about taxes, tax cuts, tax reform, but we have seen over the past month or so a real reflags trade, the financials, the industrials, the materials, energy have we seen that price into the market to some extent? >> it's starting to come in. the fiscal policy is snapping back into focus. investors are starting to realize that politicians might make some headway here however, we still need some concrete details in order for the markets to really make some progress on the back of a reflation trade. >> russell, where do you stand on valuations in the market and whether or not there is the growth to back that up and continue to back it up, especially as the fed starts its rolling off the balance sheet? or this month. i forgot we'rein october already. >> i do think that the economy supports the level of the market today because really it's all about earnings, and earnings are the lynch pin between market levels and the economy i do think that the economy is going to do well enough and certainly with global growth now in better sync, i think that's a strong positive for u.s. multi-nationals. a little weaker dollar since the beginning of the year should give earnings a boost. i think it's a good outlook for corporate america, and we should continue to see pretty solid earnings growth based on your economic outlook >> could we see any sort of impact on the economy from tax policy, let's say, if the tax cuts were not funded, for instance will we see that impact what the fed does and how fast it does it >> i am a little bit concerned about that if we do get fiscal policy changes, significant enough beth on the corporate and the individual side, you will see a little bit more pressure in the bond market in my view we could see additional demand on top of the $600 billion deficit that has to be fund the over the next year >> you know, investors, alex, take for granted that a tax cut of any kind will be good for the markets. there's a little bit of a push-pull. how do you dissect that in terms of the positive and the negative >> i think it impacts different sectors differently, and really what we see particularly in september was a very strong rally in small caps. 6% up on the month, which was one of their best months since november of last year. they're the ones that really stand to benefit they're paying the highest tax rates. the bigger large cap companies. >> i think that will be staepd >> is there any risk in your mind, with all the vacancies on the fed, with the fed starting to roll off its balance sheet, that unwinding that trade so to speak could present a risk to the markets or to the economy? >> i do worry a little bit about that there are so many vacancies on the fed to fulfill if we get a little more hawkish membership on the fomc committee, that could be a risk for markets. if we see rates rise a little bit more than what is currently expected i do think that that is a risk that we have to be atune to. >> is that a risk to you >> for us the fed has certainly turned to be being more hawkish in the fourth quarter. we're actually focussing on a lot of what the other central banks outside the u.s. are doing. they seem to be taking a slightly more dovish tone in particular to the ecb. that's something that should be driving some market differentials in the fourth quarter. we might see the return of a stronger dollar as the fed tries to push through one more rate hike this year >> does that mean you want to be invested internationally >> we might still like that in the long-term. in the fourth quarter we might see a pullback of a trend that has been playing out in the first three quarters, because the fed are changing its rhetoric >> alex russell, thank you so much >> thank you very much >> coming up, lawmakers getting ready to grill wells fargo ceo tim sloan today on the hill. preview after the break. then at the top of the hour, banc's largest shareholder joins us to discuss the company. yeah, that's who i'm talking about right there. warren buffett he will be our special guest as we head to break, therehere'a look at other notable e. haves ronoh really?g's going on at schwab. thank you clients? well jd power did just rank them highest in investor satisfaction with full service brokerage firms... again. and online equity trades are only $4.95... i mean you can't have low cost and be full service. it's impossible. it's like having your cake and eating it too. ask your broker if they offer award-winning full service and low costs. how am i going to explain this? if you don't like their answer, ask again at schwab. schwab, a modern approach to wealth management. 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stumpf just over a year ago the good news first is that an initial decline in cost sales metrics has abated the company says extensive changes in risk management and employee incentiveization make them confident no new issues are being created today. sloan will also highlight today that they have paid money back to customers however, the bad news is that there were more past issues than highlighted last year. that includes 67% more potential fake accounts than originally thought, and auto insurance problems and it took tim sloan some ten months at the helm to discover and announce this it raises questions whether more could still be uncovered in the future in terms of executives and board members, there were huge clawbacks for former executives like carrie and john stumpf, but not for tim sloan despite occupying roles like cfo and coo while the problems were developing and the board has only made small changes and only recently removing just 3 of 15 members after a terrible set of votes at the april agm when nine members got less than 70% approval hence, even though the last coo came here to d.c. to answer to public anger towards wells fargo, a full year ago there are still plenty left for tim sloan to address in front of lawmakers today at 10:00 a.m >> thank you we do have some breaking news here. warren buffett, brookshire hataway has an equity stake in pilot flying j it's the largest operator of travel centers in north america. brookshire's investment will grow to 80% in 2023 which will make it the majority shareholder. becky, of course, will join us live from omaha in the next hour with war enbuffett and pilot flying jcoo jimmy -- >> love flying j for your heart... your joints... or your digestion... so why wouldn't you take something for the most important part of you... your brain. with an ingredient originally found in jellyfish, prevagen is now the number one selling brain health supplement in drug stores nationwide. prevagen. the name to remember. massacre in las vegas. the death toll rises at least 59 dead and more than 500 injured. a live report from the scene is straight ahead ceos head to the hill. wells fargo chief and ex-equifax boss get questioned. warren buffett speaks out on his top holdings, the trump agenda, and dow one million. that news making interview is just minutes away. the final hour of "squawk box" begins right now live from the most powerful city in the world, new york. this is "squawk box." good morning wack back to squawk backs here on cnbc. i'm joe kernan along with melissa lee. andrew is off today. becky is live in omaha with warren buffett that interview just minutes away let's get a check on the markets ahead of that interview. the futures right now indicated and the dow up over 43 the nasdaq indicated up just under four the s&p indicated up about two >> well, the death toll in las vegas rising to 59 just more than 24 hours after the mass shooting at a country music festival more than 500 others are injured. jane wells is there. she joins us now with the latest jane >> hi, melissa this is the area behind me where the concert took place you can see mandalay bay in the distance it was about a little more than halfway up that building where stephen paddock had his perch. they have not yet opened this area you can see here we have police cars this perimeter is still closed off. that's the las vegas strip down there. the short area at some point, of course, people who still have their belongings here would like to get back and retrieve them as well as families of the dead who would like to get their loved ones belongings we are starting to learn more about the 59 who died. we have some pictures here they come from all over the country. there was a male nurse who died protecting his wife. a veteran who survived the war in afghanistan an off duty police officer, a commercial fisherman a worker at disney's california adventure. while investigators are still trying to figure out why stephen paddock did this, what was his motive at the last briefing, they had yet to find a note or a manifesto, but people are still coming to vegas. convery longs are still going on a big global gaming expo is happening today. 26,000 attendes expected there as i checked into mandalay bay last night, i took a picture there was still a long line at the check-in you could see noticeably more security around the room elevators as the night progressed you can not get off on the 32nd floor where stephen paddock was. i tried. there was more security around there, and while people were on the casino floor, joe, the mood was much more subdued. back to you. >> yeah. i didn't know what to think. jane, the slot machines were being used within hours. i guess if you are in las vegas, that's what you are doing there, but it just all seems incongruous. it's all very sad and heart breaking in so many ways >> yes >> now that the stories are going to come out and you see faces attached and lives attached to what happened, it's not going to get any better. thanks for your reporting. appreciate it. right now get to omaha becky is there with a very special guest. >> the scale and the scope of it and the stories that are coming out right now. you have any reaction to what you have heard >> you never should get -- and the one thing i would say is that i heard that the shooter got off 200 rounds in 90 seconds or something like that, and i think the las vegas metro police did an incredible job in getting there. when somebody is shooting at that rate, the police force may have saved maybe even hundreds of lives by reacting as fast as they did you've got 325 million people in this country, and a certain percentage of them, their brains don't work leak brains should. >> and you see a situation like this develop obviously, our hearts and our thoughts are with the people of las vegas and the people who have traveled around to be there today, but we are talking about business too, and as much as we should not be come inured to this, the markets have ignored just about any potential bad news lagts witely with the dow n another record yesterday and eight quarters in a row of gains in the markets is that a market that makes sense to you do valuations here make sense? >> well, valuations make sense with interest rates where they are. i mean, says in the end you measure laying out money for an asset in relation to what you are going to go et back, and the number one yard stick is u.s. governments. when you get 230 on the ten-year, i think stocks will do considerably better than that. if i have a choice of the two, i'm going to take stocks at that point. on the other hand, if interest rates were on the ten-year were five or six, you know, a whole different valuation standard for stocks we've talked about that for some time now >> it's been years that you have been talking about how this is in relation to gravity and pulling the markets down and how it's not happening here. >> interest rates are gravity. we knew interest rates were going to be zero from now until judgment day you know, you could pay a lot of money for any other asset. you would not want to put your money out at zero. i would have thought back in 19 -- i mean, 2009 that rates would not be this low eight years later. it's been a powerful factor, and the longer it persists, the more people start thinking in terms of something close to the race they've seen for a long time the one thing i'm sure of is that over time stocks from this level will be bonds from this level. if it i can be short the 30-year bond, then 3% and long the s&p 500 and just have it put away for 30 years, stocks are going to far outperform. the question is which variable is going to change everybody expects interest rates to change. they've been expecting for quite a while. >> so does that mean -- i mean, if the one factor is interest rates, we know that the fed is looking at raising rates it's going to do so slowly and gradually over time. at least that's what they've been telegraphing to this point. >> yeah. >> would you bet on that continuing for the next couple of years i mean, 2.3% to 5% is a long way when you are moving a quarter point increment. >> that would be a long way, and i would -- i would guess -- i don't try to guess the stock market i find businesses i like if i were to guess, interest rates -- if the ten-year moved up to 5%, stocks would be somewhat cheaper >> if -- but you are not betting that that's going to happen in the next couple of years >> it's been so wide i've written about it in annual reports. stocks have been so much more attractive than bonds for a long time now that's partly intentional on the part of the fed. i mean, they want assets to increase in value and the way to do it was to reduce that gravity force of higher interest rates >> the fed has been sounding a little more hawkish. even janet yellen has been sounding a little more hawkish does that concern you? are people getting complacent thinking rates are going to be low for an extended period of time >> i think they expect it to increase, but the question is how much three years from now interest rates are 100 basis points higher than this, stocks will still be cheap at these prices 300 or 400 basis points, they won't look cheap janet yellen doesn't know what she would do three years from now. she's got more of a job than -- that's a simple factor of the stock market it's interesting because the fed has said that they would like to see 2% inflation >> sure. >> that's fairly reasonable. paul volcker would not have -- you never heard that in the 1980s if the u.s. government is borrowing at ten years from you at 2.3%, and their own instrument, the fed is saying we would really like money to become more 2% a year or less, they're not promising you very much in terms of real terms for saving >> so janet yellen, you said she's got a big job. the question is does she keep that job, or does president trump appoint someone else that seems like two of the leading figures right now are either kevin warsh or jerome po powell as an investor do you have to think about who is running the fed to think about what stock prices are going to do if interest rates are the most important factor >> i don't spend time thinking about. it wouldn't do any good to think about it i wouldn't know the answer most of the time the fed is not that important occasionally it's the only game in town. it can be the only game in town. there is only one person that in september of 2008 could walk out like the sheriff into the street and say, you know, that this isn't going any further. we're going to do whatever is necessary and have the power to do it. the fed is of enormous importance people tend to hang on their every word in between. we don't pay any attention to it >> but you have said that interest rates are the most important factor, so anybody who is trying to play the market and figure things out, maybe not as long of a term of investor as you are going to be, but they should be thinking about this. >> if they really think they could figure it out, they might as well play the bond market they don't really have to get over to the stock market i can't remember a decision we've ever made based on the fed except for the fact that i felt that bernanke and paulson and geithner, but i felt the fed would do the right thing in the fall of 2008 we had an incredible machine that was in the hospital, and the fed could bring it out >> i realize that interest rates are not something that you often think about other than on a very broad scale, and you have said that taxes aren't something you think about other than on a very broad scale. is that the case this time around >> well, i think about them plenty right now because we may or may not have a change in the tax code, and we have lots of stocks with lots of gains, and we have a few stocks with losses, and here we are in october. if something happens that changes the tax rate significantly on january 1st, it would pay me something that they would reduce rates on capital gains or corporate rates it would pay me to sell the losses now and defer the gains until next year. i think there's a lot of that going on because i think there's an expectation that if they reduce -- that if they have a tax act, it will be -- they will cut the rates -- corporate rates certainly. it would be kind of foolish to have a gain now of a 30% tax on it by waiting a few months you were likely to pay 25% it actually very seldom enters into our thinking. on balance we would rather -- right now we're sitting and watching because within three months -- actually, less than that -- we'll know the answer on this whether this is was the year to take losses and not gains. we've got actions on both sides that we would take i think -- >> you are actually stopping what you are doing at brookshire you are actually holding off potential losses >> potential sales and realizing losses >> and realizing losses. that's an actual change in your behavior that i have never heard you say. >> it doesn't happen intestine during the month of october, with a being a major tax act, whether it's a 20% chance or 50% chance i'll know the answer within a month or two there's not that many days left to legislate, and i would feel kind of silly if i realized $1 billion worth of gains and paid $350 million in tax on it if i just waited a few months and would have paid $250 million if enough people were doing that that may mean that the market is being affected >> what is the broader play in the markets as a result? if are you doing it, you have to imagine lots of people are doing it >> i think that's true i think that's true. >> you are talking about billions of dollars of potential sales. >> maybe hundreds of billions or something. >> and you may be talking about people -- it would tend to depress stocks that have behaved badly because people would be taking the losses now, and it would tend to defer gains and reduce sellers currently that would be in stocks with very large appreciation >> so -- >> i can tell you, it's an actual fact at brookshire, and it's very, very, very seldom in my 87 years that it's ever been a factor >> what might we see first of all, what do you think the odds of a tax plan getting passed are >> i personally think they're higher probably than most people think because i think that -- i think -- just generally and no infrastructure, if you take maybe the three big items, this is the only one left to do this year, and i would think the republicans controlling both houses and have the presidency, they would not want to have a shut-out in their first year, and of top priority -- i think they can get it done i think that any politician that can't pass a tax cut probably is in the wrong line of business. if you can't pass that -- a different thing with the health care act, but i think there could be a lot of compromise i think it could be bipartisan to a degree. >> okay. i know joe has a question, but before we get to it, warren, i know we've had some -- let's get that back in before joe asks his question, but, joe, make sure that this is working before. is that okay >> i think so. >> joe, go ahead try that out >> it depends what joe asks whether it's okay. >> yeah. if you don't like the question, you can say, well -- warren, you know i'm jealous of you. >> i'm already practicing. >> you know i'm jealous, envious, but sometimes i see you do things where -- i mean, i would -- if i could buy flying j, i wouldn't care if i ever made any money i would just like to own flying j. i like to own -- do you ever do things just because you can? i mean, are you going to make money on this, or i like -- like dairy queen. i don't think you're trying to make money you like dairy queen what about c's candies you like -- i want to own -- flying j i love those places. there are showers. there's restaurants. you're out on the road you're like a cowboy with the truckers and everything. you do things just because you c can, i think, right? >> well, joe, if you feel that way, i mean, bring money i'll as i understand a map of all the locations. you are our kind of guy. >> you stop there, right becky, have you been in a flying j? a lot of times -- >> i have. i have been inoasis. >> there's one on the 95 of new jersey and 97. there was one right there. i was just talking to the flying j ceo, the -- he will be here next block >> he buys cool things my question is does it have to be a good investment, warren you just buy whatever the hell you want because you like it >> well, you know, they're not mutually exclusive i do like -- i do like the products of virtually all our companies. i suppose if we ever bought a funeral parlor, i wouldn't be as -- generally speaking, i like our products i like good economics to go along with them too. >> you do. obviously, you have been -- how smart are you in terms of, like -- i mean, how profitable is, like, geico? you got an eye for things that are really, really profitable, but there are times where i just wish i had a lot of money. i would just say, you know, i really like that place i like -- remember that guy, victor kiam? he bought the razor because he liked the way they shaved. maybe when you get to a certain point, you just do that, you know >> well, if you do it, you do it with your own money and not brookshire's i wouldn't argue against that. i mean, if you had a lot of money and there's something you like, it it isn't profitable, you buy it, but you don't buy it with brookshire's money. >> most of brookshire you own anyway, buffett. how much of brookshire is yours? >> well, every single share will be given away, and -- >> no, i know. it's fun you are -- you get to do cool things >> it's fun. it's fun >> it is that was my point. >> absolutely. the high point are bricks. i sent you a brick >> i know you did. >> i have never wanted to say this publicly, but you really are not showing the proper appreciation >> thank you you know, net jets i've asked for one of those -- like, would it really break the bank if you sent me a few hours on a net jet plane if y you sent me a brick instead. >> i think any response -- maybe i'll try net jets. >> all right >> there you go. >> i can't see your face, but -- >> i just had -- it just had my name, and it was not good for anything it was like one of those, you know, like a taco bell card that's been all used up. anyway, sorry. thanks >> i do have dairy queen cards >> we are going to be back in just a moment. we're going to take a quick break here when we come back, we will be joined by the ceo of pilot flying j to hear more about the deal that's just been announced from brookshire hathaway jimmy haslam is the ceo. jimmy likeam is the ceo. e-commerce warehouses. and private debt to finance transportation and infrastructure. building blocks of strategies to pursue consistent returns over time from over $120 billion dollars in real assets. partner with pgim. the global investment management businesses of prudential. [and her new business: i do, to jeanetgo. jeanette was excellent at marrying people. but had trouble getting paid. not a good time, jeanette. even worse. now i'm uncomfortable. but here's the good news, jeanette got quickbooks. send that invoice, jeanette. looks like they viewed it. and, ta-da! paid twice as fast. oh, she's an efficient officiant. way to grow, jeanette. new. get paid twice as fast for free. visit quickbooks-dot-com. good morning welcome to "squawk box." we are live in omaha, nebraska, this morning with two special guests we already introduced to you warren buffett, the chairman and ceo of brookshire hathaway joining us is jimmy haslam, he is the ceo of pilot flying j there was a deal that was announced that brookshire hathaway is buying a 35.6% stake in in pilot flying j >> thank you for having us on. >> what happened explain. how did you two meet >> you do it, jimmy. >> we have a mutual friend, byron trod, who warren has known longer than we have, and byron's company, b.d.t. owns 5ers% of our company, and he introduced the two of us back in may. for the last several months we were able to put together a deal that we think makes a lot of sense for both companies >> let's talk through that deal. a 39.6% stake that will then go to an 80% stake in the year 2023 why that structure >> i think it's 38.6 >> yes, 38.6 >> i would be glad to make it -- >> we negotiated hard for 39.6 >> why set up that structure i mean, warren, this is not a situation where you are short of cash whe cash >> well, we set up a lot of different structures than what the managing party would like to have, and, you know, with the -- in 1983 it's the same structure. their situation in terms of their family and their partnership and everything made this logical, and we have this two-step arrangement we've got other two-step arrangements we had a three-step arrangement with the marman family we try to fit what the seller would like, and with families and everything, you can have different arrangements >> jimmy, this is a situation where this is a family-run company for almost 60 years. we're talking about the number 15 on forbes list of private companies in terms of size 750 retail locations in 44 states some of the metrics are pretty amazing. fourth largest tanker fleet in the nation just by what you're sending around to make sure you have enough fuel with all those stocks talk about the company and how you built it, and why make this transition >> it's like a lot of companies. warren has bought it, and it's a family-owned, family-run company started by my dad in 1958 with one gas station. we've changed over the years gas stations, c stores, and now truck stops. we're a huge distributor of gasoline and diesel fuel it's a big logistics company every 22 seconds we drop a load of petroleum somewhere in the united states or canada at one of our stops also, a big food company we'll sell over $1 billion in food and over $2 billion retail this year. that's in 44 states and u.s. and canada >> you must have a pretty good idea in what's happening in the u.s. economy at any given point given some of the metrics? >> warren and i were talking earlier. it's pretty good it's pretty good particularly strong in in florida. particularly strong in california and, of course, exit text with return of the oil boom and fracking is really strong. it's certainly better than it was a few years ago. >> two of the states that are states that have been hit really hard by the hurricanes that came through. do you see a blip on the screen for that is it something that's picking up >> hurricanes are obviously very unfortunate for people involved from a business standpoint it does create more business there are homes that need to be rebuilt. there's new cars being sold, et cetera our business is up substantially in both florida and in texas >> why does brookshire seem like a good fit for you >> long-term investor. i think i'm right. of the companies you bought, not equities, i don't think you've ever sold one. is that right? >> that's right. >> long-term investor. hands off. he truly wants us to run the company. wants us to maintain the culture and, of course, if there is an opportunity for us to grow the company substantially, he has plenty of capital. just a marriage that we thought made a lot of sense. >> jimmy is based in knoxville, and we bought another company 14 years ago. clayton homes. their employment has gone from 5,000 to 16,000, and they've seen me exactly once they might have done better if they had -- jimmy knows the families know each other, and so they've got a chance to check to see exactly how much we do interfere with operations. the truth si wouldn't know how to -- or gravel center or we depend on management >> jimmy, you have seen some pretty phenomenal growth i think you increase the number of stores you've had in the last two years by 10% is that correct? >> we've been a growth company, like i said, from the get go, and we have a pretty large market position now, but we're always looking for opportunities to grow either organically, to grow to buy single stock or last year we partnered away marathon petroleum on 41 stops in the southeast. over the last couple of years we've added 71 stops, and still think there's an opportunity to continue to grow the company >> where are you not right now that you would like to be? >> we're really -- we're in 44 states we're not in alaska and hawaii i think the growth will continue really in all segments of the country. texas, obviously, with the natural growth texas has coupled with the oil industry which has great opportunities. >> jimmy, we want to thank you so much for joining us today, and hope to see more of you in the future >> great thanks, becky. appreciate you having us on. >> appreciate it >> joe and melissa, i'll send it bah to you in the studio >> i think so that, becky. we have to go, but send me -- how many has jimmy been to i just wonder out of the 750 i would like to visit. just cool. anyway, we will have much more with becky -- >> you have an answer. >> all but one >> all but one >> when i just named one, i said there's one in new jersey that described kind of where it was he said, yeah, i'm bored in town >> just opened one in lathrop, california >> that's unreal >> that's worth it >> i have a terrific location. >> that's worth it right there just -- >> alaska would be cool, but people aren't really driving across, you know you have -- it's not really like going somewhere. think about it anyway, we'll have much more from becky quick and warren buffett throughout the hour. stay tuned "squawk box" will be right back. n is what they hope to get out of life. but helping them get there means you can't approach investing from just one point of view. because it's only when you collaborate and cross-pollinate many points of view that something wonderful can happen. those people might just get what they want out of life. or they could get even more. welcome back to "squawk box. we are live in omaha, nebraska, today, and our special guest is warren buffett, the chairman and ceo of brookshire hat awhaway. thank you for your time again. while you're here today, it happens to be the same day that wells fargo ceo tim sloan is headed to capitol hill this has been a long, messy process of trying to find out what happened at wells fargo tim sloan is just the latest person who is being called before congress with this, but already there's been a lot of -- i want you to listen to a soundbyte coming from senator warren who was speaking with jim cramer recently on "mad money. goed and let's listen to what she had to say >> you know, we had a hearing a year ago when john stumpf, who had gone on your program first one out of the barrel. he said, hey, listen, i take personal responsibility for what's gone wrong at wells fargo. then it turns out what personal accountability meant was firing thousands of people who made $15 an hour. you know, we got john stumpf in front of us and asked a few questions. stu stumpf is no longer the ceo of wells fargo. let's face it, there's still a lot of folks running wells fargo who were there at the time of the crisis >> again, that was senator warren speaking to jim cramer of "mad money" very recently talking about what he can expect coming in today. what do you think about what senator warren has to say on this fronts? >> well, i didn't hear all of what she had to say. she's absolutely right that you should -- 8,000 people four or five of them had caused the problem. the job is to remain -- remove the stain from almost all of the 8,000 and get it where it properly belongs with the people that either performed the act or condoned them. that's what we did at solomon. i think that's what they've been working at at wells. you can't do that necessarily in a day or a week. >> sure. >> you can't do it in a day or a week, but it's been quite a bit longer than that would you say that the actions that have taken place to this point with john stumpf getting clawbacks, with the other woman who was in charge of the banks getting clawbacks with some of those issues, john stumpf leaving and new position -- new people being put in these positions. is that sufficient in your view of what happened >> well, i pro he pose, actually, in the annual report of brookshire that would be four or five years ago, sometime after 2008, that the problem is that the bank gets fined and the shareholders are the ones that pay for it, and they didn't have anything to do with it, basically, and i suggested that probably more extreme actions than senator warren in terms of clawing back all the directors' fees for five years, and, hey, i think that you really want -- you want as much as possible you want the people that were responsible to pay, and ideally you would have the people that were innocent not pay. it doesn't work that way in the american judicial system i think that if you have a very large company -- brookshire is large -- you have a hotline. i think the ceo has to be very attentive to what comes in on the hotline. now, most of it's silly stuff, but there's real stuff too you get anonymous letters. you've got to follow through on the ones that actually sound like they have real meaning, and clearly you couldn't have activity as broad as it was at wells without the hotline here somebody messed up on the job as to find out who messed up and ideally to make the penalties these type that discourages other people in the future from doing similar things >> you know, part of the concern has probably been how the news has dribbled out over time when it comes to wells fargo that it wasn't just the fake accounts that we heard about at the beginning. it turned out that was more widespread than we realized. it turned out that there were auto insurance -- there was auto insurance that was being sold to people who didn't need it. there was life insurance being sold to people who didn't need it that continual drip drab just eats away at the reputation of the bank >> yeah, sure. i say when you got a problem -- you are going to have problems i mean, if you had a very big -- you can't have 280,000 people working without something, and most things are minor, but to get something systemic, you have a big problem. once you find out about it, you have to get -- get it right, get it fast, get it out, get it over getting it right is hard i mean, because you trn over rocks, and sometimes you find some things, and it's very seldom there's just one big thing going wrong in a big institution if something like that is going on you've got get it right, and the one thing you don't want to do is be wrong about it >> a lot of the things that you just said are not exactly how things have gone at wells fargo. you're the largest shareholder in wells fargo do they still have your faith? are you still behind the bank? >> yeah, like i said, it happened to be at solomon. solomon had my faith it doesn't mean every person at solomon had my faith after i got there. i had some surprises i mean, i was worried about surprises every day. the truth was that 99% of the people, they were just like the people working at goldman or some other place, and somebody had gone off -- totally gone off the -- gone haywire and other people didn't report it. when you find a problem, you have to jump on it i mean, that is -- that's just basic. >> every now and then they ask me to -- so they can see who owns a lot of shares i have talked about -- i must have talked for at least anhou this last week >> did you talk to him at all about this his testimony before congress? >> i -- i mean, he knows that i testified many years ago in connection with solomon. beth to the house and the senate, and i told him something of my experience, but it's all on tape, and in ermz it of being able to see it anyway. i gave him -- i told him what i would do >> if he has your confidence, though, are we right to assume that you have not sold any shares of wells fargo? >> only to stay under 10%, which was something that the fed requires, and since wells repurchases their shares and we were right up against 10 %, that way we went over because they repurchased shares not because they bought. we keep -- we will sell enough to stay at around 9.8. that's to avoid becoming a bank holding company. >> we see the s.e.c. filings we shut not assume that -- >> you will find with just keeping a little below 10% we have not sold the share except for that purpose. >> okay. you are a major shareholder in bank of america too. >> what's your favorite bank >> what's my favorite bank i'm not so -- what's your favorite child bank of america has done a sensational job. brian had all kinds of problems when he came in. they were not of his own doing, but he had a ton of problems he had a lot of rocks to turnover, and it cost a lot of money. he has really done a job, and we will be holders of b of a stock for a lopg, long, long time. >> warren, we're going to take a quick break right now. i will send it back to joe and melissa. we have much more to come with warren after that. >> all right thanks we're going to go to bak, reand then we'll be right back with more from warren directv has been rated #1 in customer satisfaction over cable for 17 years running. but some people still like cable. just like some people like banging their head on a low ceiling. drinking spoiled milk. camping in poison ivy. getting a papercut. and having their arm trapped in a vending machine. but for everyone else, there's directv. for #1 rated customer satisfaction over cable switch to directv. call 1-800-directv. there was no magic up hisgends. sleeve. he didn't have wings, or a cape. he was but just a man... with the will to go beyond. >> good morning, everyone. welcome back to "squawk box" here on cnbc we have a special program where we're live in omaha, nebraska, this morning with warren buffett, who is the chairmanthay weave been talking to markets and what's happening on capitol hill we tuchtd briefly on taxes earlier. what do you think about it >> i don't think i need a tax cut. the current proposal eliminates the estate tax, and it's not a death tax. there will be 2. million people die this year. if you start going to a funeral every month, it's going to be 40 years on average before you go to one where there's any estate tax to do it with, and it's a pajorative term. if they passed the bill that they're talking about, i could leave $75 billion to a bunch of children and grandchildren and great grandchildren and if i left it to 35 of them, they would each have a couple of billion dollars. they could put it out at 5% and have $100 million. is that a great way to allocate resources in the united states that's what you are doing through the tax code is you are affecting the allocation of resources. if they were lucky enough to come out of the room room and have the right name, buffett, they could build tombs for themselves like egyptians, pharoahs never dreamt of they could do anything capitalism was all about intelligent allocation of resources. now, some people say, well, you don't have to worry about that because they'll blow it all. but this they blow it all, that means that they've done some dumb things with some important resources. that's not good for capitalism i don't think it's good for the children i sure don't think it's good for a society where there's a ton of inequality to start where. >> i though think setting it up so children and grandchildren -- let's say i died when they were 20 i don't think they would be the same individuals that they are i didn't encourage that foundation program until they were in their 40s and i had seen what they had done with their lives, and they had a chance to live for a long time going to public school, living just like other people in omaha live i just think that -- i don't think we should have our olympics in 20 years from now be the he woulde eshe wouldest son olympic games currently. i don't think dynastic systems with huge sums of wealth -- bare in mind, the wealthy are so much wealthier now than 25 years ago. we're talking about the 400 now having $2.4 trillion against $ 90 billion you have sprinkled around he's these children and grand which irn that just with those 400 could have $2.4 trillion passed down to them that's a lot of resources in this country with a $20 billion gm and not even quite a $20 trillion gdp i think -- i think it goes totally against what's built this country, what this country stands for, and if those 5,000 people can't stand to spend the $20 billion or $25 billion they have lots left over, believe me. incidentally, it wouldn't be bad for philanthropy people would -- a certain number of people would elect to set their kids up with the billions and billions of dollars rather than -- i don't think that's the primary reason, but i do think that would be a byproduct. >> the estate tax is just one part of this let's talk about the corporate tax, first of all. corporate taxes from 35% to 20%. >> yeah. >> if i haven't lost all my friends by now, i'll finish it off. we have a lot of businesses. 60 or 70 i don't think any of them are noncompetitive in the world because of the corporate tax rate i mean, american business earns a return on tangible equity under the present tax system that is extraordinary compared to history the last 100 years in america. i'm talking about tangible equity that's the money actually you invest you could add the five largest companies in the united states by market value. that's almost 10% of the value to market. they don't need capital. it's like the old days where oil refineries where huge amounts of capital were needed. we do not -- we are among the high earners of the world in terms of return on tangible assets >> but just looking at the tax code, 35% what we're supposed to be paying and what corporations are supposed to be paying, most of them don't where. >> a lot of them don't >> a lot of them don't the ones that do are penalized because they're not taking advantage or they're not able to take advantage of the massive number of loopholes that have been built into the system isn't there an argument for saying let's simplify this, let's level the playing field and make sure everybody is paying the same amount, that you can't snake your way around into a lower rate, and let's set up a tax code that, by the way, doesn't incentivize companies to keep cash overseas bring it back here, and potentially put it to work right here in america. >> yeah. but if you make it very easy to take back money from jurisdictions in which you pay very low rates, it's going to encourage even more investment over there because you still have a higher rate in the united states. listen on a personal basis and from brookshire hathaway shareholders, would like it in the sense that it would be good for a million shareholders of brookshire in temz of their returns. i do think that some of the arguments i think people they find their nose growing a little bit after they make them >> melissa has a question too. melissa. >> warren, i clearly get your argument that a lot of companies don't actually pay the going tax rates, but wells fargo pays a tax that would be higher than the proposed corporate tax rate. their effective tax rate as of the second quarter was 27% or so it would benefit broadly speaking, what do you think that tabs rate at 20% would mean for the broader markets? would that mean a 5% increase in stocks what's your estimate >> well, a decrease in taxes would mean an increase in profits. it might not be totally the amount of the decrease in taxes, but it would increase earnings there's no question about it the question is whether that's already built into the expectations i doubt if it fully is built into expectations. the lower the taxes -- actually, if you had a negative tangs rate for corporations, it would really be great, but you great. you're right about banks, incidentally banks tend to pay a pretty full rate unless they -- they own some tax exempt bonds, but that's not a big item some of them do low income housing tax credits and that sort of thing, but the tax rate on banks is right up there among the top of various industries. berkshire, most of our income is taxed at 35%, but we do have a lot of unrealized appreciation in securities, close to 100 billion, that hasn't been realized yet, but if we were to sell all of the stocks we own today, we would pay 35% on about 80 or $90 billion. so but i can say this, the banks are doing okay they're not doing as well as they were eight or ten years ago, that's primarily because of the capital requirements capital requirements can kill the return on equity, and banks, and they reduced it significantly from what was available 10 or 12 years ago. >> so -- >> i'm just trying to just get exactly what you are saying, warren if the money came back, it would be a good thing. but you don't want to -- you don't want to induce them to send it over there in the future so if you really did go to 20, and you really did bring it back, and because you're at 20, and there is no longer an inducement to go over there, why can't you just say outright that's a good thing? why do you have to say people are hyping it and noses will grow why can't you say if we did it, 20% would be better here and it wouldn't go over there anymore, so the money might stay here and the jobs might stay here why isn't that a good thing? give us an endorsement of that if they could do it. >> let's just say, let's just say the rate in some country was 2% and you charged people 10% -- 10% for bringing it back and you had a domestic rate that was 25 or something like that. >> not 2%, not 2%, the lowest is 12 probably in ireland you think there will be a race to the bottom if we do this? >> oh, there is rates lower than 12 you're right about ireland, but there is rates lower than 12 >> okay, then your argument -- then it is a race to the bottom. you think it would be a race to the bottom then at this point? >> there is some of that one think, interestingly enough, joe, the money is coming back to some extent. when berkshire hathaway sells a bond issue, guess what the foreign subsidiaries of certain very cash rich american companies buy those bonds so the money comes back to berkshire hathaway, we pay interest to the foreign subsidiary of the cash rich country over there, but that money ends up in the united states think of it this way -- >> there is trillions over there, though, right i would rather have -- isn't there 2 or 3 trillion? i would rather have that back here there is infrastructure. >> let's say you have two companies, company a and company b and both have a trillion dollars over there and company a borrows a trillion from company b and company b borrows a trillion from company a, now all $2 trillion back here and it is available for investment >> you got -- you're so smart, you know how to do all these things before they get done. that's why you like that -- you don't care about estate taxes, you got more things going on to get around it than -- you're just too smart, too smart. if everybody had you running their money, we wouldn't need any tax reform >> i can tell you exactly the secret about not having any estate tax, give it all away it will eliminate all estate tax. >> exactly, that's true. >> warren, one follow-up, just to underscore a point, you said a lower corporate tax rate will increase profits does that mean that you also believe a lower corporate tax rate will cause markets to go higher >> well, anything that increases profits tends to push high there can be ten other variables happening for other -- but as a single variable, in the equation, for profits and profits determine stock prices over time, no, it is a plus for american business, and like i said, i got a million shareholders at berkshire hathaway and they would all love to see a corporate tax -- >> you said if my kids had grown up quicker and become mature quicker, then i would want them to keep it and not give it to the government there is always these qualifiers in some of your arguments, if you can keep it in the -- keep it in the private sector but didn't have crazy 20-year-olds blowing it on god knows what, you would -- so see what i'm saying like, and you, maybe there should be -- maybe we should have a wealth tax on you, maybe we should have taken 20% of what you have right now, because you got too much right now, you can't possibly use it. maybe we should take -- start reallocating it now. you don't need that much. >> i'm with you, joe >> no, no, i'll be safe. >> i got to tell you, if you can tell me how to have your kids mature at age 20, send me the secret. >> how about maturing at age 60? >> neither am i. >> no guarantees >> there is nothing like an immature billionaire, i mean, an old one. >> get to do -- get to do whatever you want, like buy flying j because you like their truck stops. >> we'll put one right next to your house we'll really make it convenient. new meaning to the word convenience store. >> let's talk about the markets again, because you have a long running bet that is almost up in the final stages, the last year of the bet about what does better, the s&p 500 index over ten years or someone who you made a bet with for a million dollars who got to go pick five hedge funds. he created a fund of funds based on five hedge funds, and between the two of you, the s&p 500 index has been the massive outperformer over the nine and a half years of the bet. >> yeah, yeah. it will absolutely kill every one of the fund to funds and bear in mind, each one of the fund to funds at a strong financial incentive to pick the best funds they could find, ten years ago, meant real money to them so it was overwhelming and passive investment, i've written about it, passive investment and aggregate will be active investment because of fees >>y wanted to show people they didn't need to be trying to beat the market all the time. >> and they didn't have to pay 2% or 3% a year to somebody to get those, average results were going to be very good. and they were good, they have been good all my life and these ten years they have been good. you've done perfectly okay with passive investment. >> actually great with passive investment, the last seven or eight years. there are people out there who are saying, he got lucky, he picked the right ten years, did it before quantitive easing came along. >> i get letters all the time from people who say i would like to do it, i'll put up $100 or something, become famous they love the idea of me giving them a lot of -- if anybody wants to put up a significant percentage of their net worth -- >> a million dollars >> net worth, if they want to put up a significant percentage of their net worth, family's net worth and want to make a bet on ten years, on active versus passive, maybe my estate has to be the one to settle with them, at 87, anything involving ten years is kind of a triumph of hope over statistics, but nevertheless, the ones that have written me, they really want to get their name in the paper. >> you'll take anybody who puts up a substantial portion of their net worth, you'll take that bet >> they can pick a group, got to pick a group, you know, i'm picking a group of 500 in the s&p 500, and they can pick the date of the start. the date of the start has nothing to do with it. the truth is, the market behaved fairly typically in terms of aggregate return for the decade. this is not some extraordinary period in the least. nothing unusual about this the thing that was unusual is the size of the fees that ate them alive, basically the managers of the funds did very well during this period and the managers of the underlying funds did very well and investors got killed compared to something they could have done. >> one quick story, picked up around this week, oprah may be considering a run for the presidency you know oprah have you talked to her about this >> i haven't i haven't talked to oprah for quite a while. >> have you had any democrats who have come to you looking to fund-raise to run in 2020? >> not -- nobody has come to me to fund-raise. i'm not a great prospect on that either no solicitors aloud, you know, or something it is going to be a very interesting run up to 2020 there are going to be a lot of people that think about getting into this race, you have somebody come from totally outside politics to get elected president, it starts the wheels churning with a lot of people. >> it does thank you very much for your time today it has been a pleasure. >> thanks for having me. >> joe and melissa, back to you. >> becky, you -- he was like, it has gone up since then, he was not long -- he was very cautious prior to that, i'm -- can i get in on this bet against you? >> on warren's side? >> yeah, i want on his side. >> thanks, becky thanks, warren join us tomorrow melissa, thank you hope you feel better "squawk on the street" is next ♪ oh yeah all right ♪ ♪ take it easy baby make it last all night ♪ ♪ she was an american girl ♪ good tuesday morning, welcome to "squawk on the street". busy morning, two big hearings getting under way in an hour the former ceo of equifax and the ceo of wells fargo testify on the hill. the president heads to pue

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