becky quick is reporting live from ohio where she's spending the morning with warren buffett and jeff immult. we begin with the markets, the dow now almost 4% below its five-year high, reached just before earnings season began. stocks losing $500 billion in just three days and that's just in the u.s. markets alone. u.s. equity futures have this hour -- take a look at the board. we've got green arrows. dow looks like it would open up about 18.5 points higher. the s&p 500 would be up about two points. two big stories could have a very big impact on today's sessions. let's start with the central bank. the policy decision is expected from the fomc around 2:15 eastern time. economists aren't looking for any change in rates and the fed appears intent to stick to its bond buying program.

it would take more than a modest show of economic strength for them to begin taking their foot off that gas pedal. we've got names set before the bell. those include at&t, boeing, bristol myers, and a few other stocks to watch. put this in the bad news bears reporting. revenue falling short, though, and the company announcing plans to cut 5% of its work force and close 20 plants, part of a restructuring program aimed at countering the slowing global economy. andrew liveris will be joining at 6:30. facebook reporting after the bell. shares rising on that news.

up now 22.14. zinga is laying off 5% of its full-time work force.ynga is la full-time work force. zynga reporting after the bell today. we'll keep an eye on those shares. shares at s.a.p. getting a boost in early european trading. the german software company is posting better than expected earnings. and says it plans to grow its market share. one of the company's co-ceos is going to be joining us at 6:00 p.m. eastern. joseph? >> you mean the s.a.p. guy? mcdermott. >> absolutely. that's the guy. the other guy. >> uh-oh. will that hurt mcdermott's feelings? that will be okay? all right. are we going to head to columbus now and becky, where i'm sure --

they have a real football team there, becky. >> oh you're welcome are stealing my thunder! this was my lead. my question was going to be ohio state, notre dame, and rutgers, what do they all have in common, joe? >> nothing. >> they are all undefeated. they are all undefeated in this football season so far. >> are you putting rutgers in the same category as notre dame and ohio state? >> i am. >> are you kidding me? >> they are three of the seven teams that are still undefeated. >> in a fantasy world. >> three of the seven teams that are still undefeated. >> fantasy world. >> this is from "coach." this is not the rutgers song. by the way, i notice that both joe and andrew have new haircuts. very nice, gentlemen. >> you can tell? >> i can. >> not just a new haircut. a new haircutter. >> that's true, too. >> jonathan. >> very fancy. >> let me see. jonathan did a good job. i like both of your hair.

>> andrew went short. he didn't do anything to the eyebrows. he went long on the eyebrows again. >> can i admit something? >> i don't know. i'm nervous. >> he offered, though i said no. >> on eyebrows? >> yeah. he offered to trim the eyebrows. >> she's a smart, perceptive guy. i've offered. we all have offered. >> stop. i like andrew's eyebrows the way they are. >> becky, do they actually have to be touching us before you decide a little trim? >> you stand your ground. they're always trying to pluck mine, too. stand your ground. >> nobody really offered to touch my eyebrows before. >> eyebrow. >> oh! >> sorry. >> gentlemen, let me tell you why i'm in columbus. we're at the ge middle market summit in columbus today. we are at ohio state university. this is a conference, a summit that is funded by money from ge capital. this is the second year that

they've been talking about this program. it focuses on a really important segment that we never spend enough time talking about. those ared my size firms. those are companies that have anywhere from $10 million to a billion dollars in revenue annually. we're always talking about big companies. we talk a lot about the small companies and what it means for the small companies that are the job creators out there. but the mid size business market is much bigger than people realize. they employ 40 million people in the united states. they make up 1/3 of the private sector gdp. if you just look at these companies, they are the equivalent on their own of the entire economies of both russia and india, so this is a huge burgeoning market. if you've been looking at the downturn, 2007 to 2010, it was a really difficult time for small companies. large companies were laying off people and actually shrunk jobs by about 3.7 million jobs over that time period. but during that very same time period, mid size companies were growing. they added 2.2 million jobs. just over the last 12 months, they were adding jobs at a rate

of about 2.2%. but some concerning things in the survey that is just out, from the national middle market summit here. they talk to a lot of these different companies. by the way, this is a huge report, and it takes a look at some of the concerns that are out there. at this point, they say they still have some confidence concerns. confidence remains muted. a real huge issue are challenges that they foresee. they are most worried about health care costs, something highlighted in both the surveys in the first and second quarter, but they're worried about the cost of doing business. these are some very big issues. we're going to be joined by guests about how they can maybe overcome these challenges. warren buffett will be joining us at 7:00 a.m. he can talk to us about what the economy looks like from the big companies' perspectives, too. he's going to give us an update on where he sees things standing right now. we've heard so many concerns over the last few days from the earnings that have been coming

out about how there's a real uncertain global market out there. buffett can talk to us about what he's seeing, everything from the insurance businesses to a lot of reach into the housing market, to the consumer market, and what he's seeing just in some of his investments, too. obviously big investments in companies like american express, wells fargo, ibm. we'll get the chance to talk to him about that for two hours today. we'll also be joined by the chairman and ceo of general electric, which owns a 49% stake in nbc universal. they've been putting together this study, and a lot of their suppliers, general electric suppliers, are actually companies that ared my si ed mm companies. he'll be joining us at 8:00 this morning along with buffett so they can talk about where they're hoping to see jobs head from here. we have a big show lined up, and pretty excited about everything we're going to get to talk to them about today.

>> yeah. well, immelt, he looked really good there. >> yeah. i saw him last night, actually. they did a fire side chat, immelt and buffett in front of about 2,000 people. maybe a thousand people or more from these mid sized companies, but 800 or so students from ohio state. they both were fired up. and this will be the first time we've gotten a chance to speak with mr. buffett since the treatment he was undergoing for prostate cancer. so this is his first time back out on the spotlight, too. we'll get a chance to talk to him about how he's feeling. >> we'll have liveris on, cutting jobs, closing 20 factories. warren, he avoided chemicals, didn't he? i was trying to think whether i could ask him. >> at one point, he did loan some money to dow. i think he gave him three billion dollars. >> that was like a loan, though. >> it was a loan that he made

out to them. >> yeah. >> but i don't think that he's dabbled too much in the chemical business. >> i wouldn't expect him, too. wow. chemicals is a rough business. >> dupont yesterday, the 1,500 jobs they're talking about laying off, too. >> becky, 243 points yesterday, which was -- i mention that labor day indicator. nobody likes when the market goes down, obviously, but jim stack and blake wrote about this. jim stack, 25 out of 28 times over the last 100 years, a 90% -- been right 90% of time. the inconsumer bettkucumbent is. >> really? >> 25 out of 28 times. >> where was the market on labor day? >> i've checked it out this

morning. we're like 15 points away from being down. which is bizarre. on labor day, it closed on the 31st, i think, and then i think labor day was september 3rd, and i think it was at 13,090 something and now it's 13,102. very weird. >> so even that indicator is just as close as all of the polls that are coming back in. >> did you see in trade? "huffington post" wrote a piece during the debate, the monday night debate, that in trade is rallying. it had gone from 62 to 64. you know where it is this morning? >> where? >> 54. 54 points, down ten points. >> are you kidding? >> i wouldn't kid you. i wouldn't kid you about that. >> what swung overnight? i was surprised not to have seen

more action after the first debate. >> drudge had a headline that said it's going to take a miracle. then it showed gallup had a six-pointer. and then suddenly you're seeing both candidates go into states where they weren't going before. buying advertising. >> where they weren't spending money. everything's up for grabs again. romney's in maine. >> ohio is a big, big state. this is ground central for this whole campaign. >> yeah. >> you okay? you're beside yourself. >> i'm fine. >> you sure? >> i'm fine. >> you got a good-looking haircut. and there's more to life than a lot of this other stuff. you got your twins. >> you're right. they just whispered in my ear. i forgot lubrisol. >> he can't throw cornell in.

>> but we should talk a lot about colorado, right? >> colorado. oh, my undergraduate school. they may turn that into a football club now i think instead of an actual -- that's what i would do. just try to compete. intramural maybe. >> okay, becky, we'll come back to you in just a moment. right now it's time for the global markets report. we're going to go across the pond where ross westgate is standing by in london to give us an update on what's going on over there. a little bit of a setup to what might happen here in the markets after a couple of very rough days, ross. >> yeah, andrew. and falls yesterday for the european markets, ftse doing a little bit better. you see here we are weighted on downside at the moment. advances a little bit more than five to four on the dow jones stock 600. we hit the session low here about an hour into trade this morning. that was after we got data out

of it, which wasn't particularly good. the flash pmi numbers for the eurozone coming in at their lowest level for over three years. economics is suggesting a quarterly contraction, could point to a quarterly contraction. we have rebounded slightly since then. ftse 100 is flat. we're fairly flat for the ibex. there are a number of stocks in focus here as well that are fairly mixed. volvo down 4% this morning. they have missed their third quarter expectations. peugeot down 4% as well. they are close to agreeing to a state financing package. s.a.p. -- we spoke to jim earlier, as well up 4% for the software company. their four-year revenue outlook has been hyped. this is a mobile chip designer,

still benefiting up another 3% today following on from the gains yesterday. some mixed performance. yields on spanish and on italian debt are higher. spanish yields up to 5.68%. we started this morning on these yields around about 5.59. they are slightly lower than where we were post that data, and that data just dragging the euro/dollar around 1.29. but the economic fundamentals in europe are certainly not getting any better. the data is the opposite. they are getting worse. that's where we stand. back the you, andrew. >> mr. westgate, we appreciate that. thank you very much. now joining us bob dowel, a black rock senior adviser. hopefully give us a little bit of sense of what to do. i was talking with a well-known hedge fund manager yesterday who says you've got to play through the pain, you've got to buy on the dips. he thought this was a dip. i also talked to somebody who was up big time for the year

yesterday who said look, we're getting out early this year. we're just going to lock stuff down and let's not worry about it. so what do you do? >> i think you have to look back and say we've had quite a year in the markets in the face of a pretty mediocre economy, and be thankful for where we are. the revenue growth pattern for corporate america has gotten pretty sloppy, while corporations are reporting third quarter earnings above much lowered expectations, the topline is not so good. most of the weakness is coming from the non-u.s. portion. i think that weakness is likely to cause earnings to be so-so. on top of that, you have fourth quarter estimates, and next year they're probably a little on the high side. so i think the indigestion is probably going to stick around for a while. not to mention all the political uncertainties. >> how much indigestion are we talking about? jeremy segel, i saw him make some comments. still bullish.

he's a play through the pain kind of guy. >> that's where i'm going to come out. my comments a second ago were all about the short term. most people underweight risk assets. i would look at it as a chance to add positions, believing that we're not going to have a global recession, that equities are not expensive, and therefore this stop start economy leads to markets that generally grind higher, but it's never a straight line. we're just digesting the great gains we've had since early summer. >> so grind higher. give me a number that's say, i don't know, 12 months out. >> i still think the 1450 number is what we should target. every day we're down it's a bigger mountain to climb. you've got to give us a better

economy and better earnings. muddle through economy, grind higher equity market. >> we appreciate your perspective this morning, making us feel a little better and worse at the same time. we're going to send it over to becky. when we come back, we have a parade of corporate leaders. up next, s.a.p.'s boss on why the german software giant is confident enough to raise its guidelines. coming up at 6:30 eastern time, andrew liveris tells us about his cost cutting plans. at 7:00, warren buffett. and then coming up at 8:00, we will add general electric ceo and chairman jeff immelt into the mix. you don't want to miss a minute this morning. "squawk box" will be right back.

s.a.p releasing third quarter results. bill mcdermott joins us now from waldorf, germany, to talk about the quarter. we said it was the other ceo, and we said he's not welcome here. must have rushed you over. you tell this story better than anyone else. the other guy, doesn't he speak

german? that won't work for our audience, bill. >> they knew i would have missed you too much if i didn't do it. so here i am. how are you? >> like wise. good. you're from over here, so you must watch things like dupont and 3m and a lot of these -- i mean, even google. a lot of disappointment over here. and we're all blaming it on europe. you should have a really good insight into the european market in general. what are you seeing? >> portugal, greece, well publicized. it's pretty rough. when you look at some of those geographies, it's pretty strong. so it's kind of a balancing act in euroright now. we were flattish in europe in the quarter, and if you look at north america, we're up 37%.

i think europe is the more difficult operating environment. >> you're actually able to raise your outlook for revenue. why? >> it's real simple. we have an analytics -- almost three years ago, we sent the company to go on a new strategy to go after the cloud, mobile, and data base that was in memory, so it would be truly a realtime data base in something we invented. these emerging businesses are all growing in triple digits, when you combine that with core, you have a real double digit growth story all across the world. today we reiterated our guidance at the upper end, and we look at our pipelines globally, and the company is in really good shape. i must say, though, there is a

structural change in i.t. as well, because a lot of the companies in i.t. that haven't done as well are very hardware centric. that's changing the process, that's driving the outcomes. >> bill, is the organic revenue growth positive? i mean, without ariba, what would it be? it's ten to 12 with the acquisition? >> 98% of our revenue right now is organic. ariba, we just finished the acquisition and we will get .5 percent of 1% of growth out of areba between now and the end of the year. when you think of our growth, it is 98% organic. krr you make any comments over

whether china is becoming more positive? >> there's no doubt everyone is speculating on 7.8% growth in china, but it's still a lot. if they catch a cold, it affects the global economy pretty severely. for our business, selling into china, it's a really good growth story right now. which is why we announced a year ago that we'd invest $2 billion. we see tremendous opportunity. >> would you say you feel better about the prospects for the eu

staying together, greece staying in, everything vag mohaving a m positive outcome. do you feel more positive 1992. >> i've been all across europe in the last six weeks. i think overall there's a strong political will to keep the eu together. certainly germany has played a center role in that, but it's not limited to germany. i do feel better and i do think things overall in terms of the commitment to the e.u. are stronger than they were six months ago. i would say probably the more mixed opinion would be greece. but overall, i'd say it's a little bit better, joe. >> great. bill mcdermott, we appreciate your time today, coming to us from waldorf, germany. watch how do. this seamlessly, we're going to head out to columbus, ohio. this is unbelievable. we've sent signals up there. and then we see becky. becky, what's coming up?

>> well, we have liveris, we will talk to him in just a moment. also at the top of the hour, we have berkshire hathaway ceo warren buffett. he'll be joining us for two hours. we'll talk markets, the economy, politics, and much more. big day today. stick around.

i don't know. is there actually a rutgers? >> it's ohio state. >> ohio state. >> makes sense, becky's in ohio. >> want me to see a rutgers song for you, joe? >> good morning, and welcome back. >> i will see the rutgers song for you. rutgers ever more will stand. on the banks of the old reritan. my father sent me to old

rutgers. >> and when it's not selling fish. >> ho is rutgers playing this week? >> this week -- this is a big game this week, this is homecoming. >> do you play a decent team? >> this is a big week. >> do you play a ranked team all year? >> we beat arkansas. >> okay. >> we beat arkansas, which was a ranked team. >> all right. becky is reporting live from where they have a real football team. >> they lost, too. warren buffett will join becky at the top of the hour. maine is having an off year, really. stocks have been on a rough losing streak. the futures at this hour are indicated to bounce a little bit after a selloff yesterday. among the corporate stories that we're following, facebook earnings and revenues top consensus, even though it was a loss, we're calling it earnings.

the shares are rising on the news. and rising enough to where i'm actually going to jump on the bandwagon at this point. i am joining -- i'm not joining facebook, but i'm going to be sitting in front of something where facebook is, i guess. you've done this. i'm going to be hosting "office hours" tomorrow right after the show, and no question is off-limits. boxers, briefs, anything i've done in the past. >> you'll answer? will you be more forthcoming than woody johnson? >> you mean about tim tebow? >> yeah. >> i'll say right here and now i'm not a virgin. i will say that unequivocally. you have i'm still wondering. >> i'm a born again virgin every single morning. >> yeah did it! you had -- becky and you have both done this.

i want more people participating. you can send nasty comments to me, if you want, on facebook. you can talk about my toupee. whatever you want to do. bring it up again. is it ready again? this is going to be really shameless. facebook is one heck of a company with one heck of a business model and i'm on it tomorrow. will you write something? >> i wrote in to becky. >> you did? >> yes. one of her many comments came from me. i'll do two for you. >> andrew is waiting. a different andrew. dow chemical unveiling restructuring, unveils plant closures, the world's largest chemical maker citing a slowdown. joining me now, andrew liveris. andrew, it's good to see you. and i know that it's never -- i mean, long-term, these are the kind of things that you have to do, but it's tough for the people that are going to lose their jobs and the towns that are going to lose factories, but my question to you is --

obviously this is not just a cyclical downturn in your view. it's something that you need to take action on long-term, and is that a sad thing? i mean, is it really that growth is going to be that much slower for the whole industry in the future? >> well, it's not just our industry, as you well know. clearly europe is at the epicenter of this current world slowdown. dow is a -- a third of dow is in europe in terms of assets and revenues. this restructuring has that as its main thrust. so many of these assets are in europe. we are going through a remake of the european model. we don't know where it's going to go. it's uncertain. southern europe is catastrophic in terms of demand, especially in billing and construction. and it's infecting northern europe. is this a slow growth world for some years? the way we're viewing the world right now is that it is. and if you want to talk about the upsides, when we can remove

some uncertainties, and november is a key one here in the u.s., but china, which is -- you know, from a good news point of view, starting the see some signs of stabilizing. it's been very unusual these last few quarters to see china weaken as dramatically as it did as they remake their economy. so what's the world going to be like? i think we're going to get a lot more of the same in 2013, and i think we just have to equip ourselves from a cost and a cash point of view, conservative balance sheet, take down your costs, and just assume it's a slow growth world, take the upside if it's there. >> andrew, when to you think you realized this this was going to be the case? i imagine this was a decision in terms of restructuring that you don't take lightly, that's taken months to prepare for and to think about. what was the turning point from your perspective? frankly, you might have been there before the markets. >> i think we clearly were. i mean, if i had to kind of be precise with you, i came out of a china trip in march. i've been to china six times

this year. i go there a lot. it's a big market for us. it's a big investment for us. i got to co-host the china development forum for the chinese government in march. i came out of that meeting saying china is going to remake its business model. i couldn't have seen the political stumbling and fumbling that's been going on since. but you got a sense that they were moving to a consumption based model from their export-led model then, and what they're doing, i think, is handling that, but not handling it overly well. we've had a political transition on top of it. it was then that i came back and said look, china's been holding up the rest of the world for some time, and china looms large, not just because of china, but because of the market it is for the rest of the world, southeast asia, korea, japan, all of the countries out there. the knock-on effect from china from europe was very tough on china. so europe affecting china. china affecting the other economies.

we have 2/3 outside of the united states. i said on the earnings call in july, i said the u.s. is the only bright spot. it's advantage usa. i will stick by that today. but i would tell you that streamlining, restructuring, right sizing the footprint to generate cash for our shareholders. we have started to see the cost reductions already. and frankly, i happen to believe that this is the way forward. manage your balance sheet conservatively, manage around the cost curve, and then hope that china comes back and the u.s. keeps being strong. the u.s., of course, depends on what we see in november. >> beck? >> andrew, you talk a little bit about how a third of the business right now for dow is in europe. after this right sizing, is it still going to be a third of the company there? just everything's shrunk, or does that change the geographic breakdown for the company? >> from an asset point of view,

it does shrink it to less than a third. i don't know the precise number, but we definitely, from a revenue point of view, we're seeing a reduction in revenues, but we will make it up with the investments we're continuing with. our large saudi investment is moving ahead positively, and a good percentage of that capacity will be moved into europe, predominantly the growth parts of europe. eastern europe, turkey, the russias, ukraines. western europe, as i said, we're starting to see some signs of life in germany, but i don't think we can count on the rest of europe rebounding, so yeah, i think there's a percent of the company that will go down in the next few years. >> andrew, you alluded to what's happening in november. you were on the jobs -- were you on the jobs council? >> no, i wasn't. i was on the advanced manufacturing council. >> what are you talking about --

so just when you alluded to thov, you said it depends on the outcome in november, in terms of how we handle the fiscal cliff or overall? >> yes. definitely the fiscal cliff. i'm one of those ceos that believes we've just got to get our budget balanced again. we've got to show the world that we could be fiscally responsible. both sides of the aisle have to get to work. and business and capital hates uncertainty and we have an unnecessary new uncertainty, and i think i said on your show once before, this all started back last august. confidence busters like last august, the debt ceiling discussion, the euromeltdown on sovereign debt. the china restructuring that's going on. and now a fiscal cliff. that's why all this money is staying on the balance sheet. most of us are not very sure what policies we're going to see in key areas to balance the budget, whether it's tax reform, what does tax reform look like.

what's the regulatory look going to be. how do we take advantage of this marvelous u.s. natural gas advantage that our company will benefit from. and by the way, we did benefit from in the quarter. one of the reasons we did better than most people thought in the quarter, was despite a slowing economy, for the first time if a long time. so how can we play policy positive and balance our budget, i think that's a lot of what i'm talking about. >> it's amazing. the natural gas part of the equation, in terms of the potential for the united states to have cheap energy and to build out that cheap energy to export to the rest of the world. that may be the story that 25 years from now we talk about ushering in this golden age of what we're able to do, if we don't screw it up, muck it up somehow. >> i'm with you totally. it's a gift. i think i read jamie dimon saying that the other day.

i agree with that. >> a banker. >> i know. >> andrew, thank you. we appreciate it. and thanks for coming on this morning. we hope to see you in studio. the aussie economy is hurt because of china i think to some extent, right? that used to be a bright spot. even down there it's a problem. >> if you go google, i gave a talk there a week or so ago on that very topic. australia is a one-speed economy. china dependent. it needs to diversify. sounds familiar, right, joe? >> it certainly does. good wine, though. thank you. we appreciate it. goes really good with kangaroo. >> oh! >> what t >> what? >> can't eat kangaroo. >> what do you mean you can't eat kangaroo? it's a little gamey. you know what it tastes like?

>> chicken? >> anyway. thanks, beck. >> we will see you all in just a moment. if you have any comments or questions about anything you see here, go ahead and e-mail us, or you can tweet us today, too. we do have two news makers ready to join us in columbus this morningmorn morni morning, first up, warren buffett joins us at 7:00 eastern. an hour later, we have general electric chairman and ceo jeff immelt. arguably, no two men in the world have a better read on the consumer, business spending and the global economy. we have a lot to talk about with these gentlemen. first, we have steve leishman, he's going to join us with big news, some big changes for the adp report. stick around. ♪ [ male announcer ] every car we build must make adrenaline pump and pulses quicken. ♪ to help you not just to stay alive

but feel alive. the new c-class is no exception. it's a mercedes-benz, through and through. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services.

welcome back to "squawk." there are some very big changes coming for the very important adp report. steve leishman joins us now with more details. >> this is something a lot of analysts will want to follow. making a big change to its jobs report since he was launched six years ago. moody's analytics replacing macro economic advisers, and the chief economist says it will feature a bigger sample size and more detail, and what they believe is a more accurate reading on the government payroll report. so let's talk to them. let me start with mark, a frequent squawk boxer. tell me why this will be better. >> it encompasses 23 million workers up from 21 million.

>> i want to stop you right there. you have data. when you tell us what you believe the change is, from 400,000 companies. how does that compare with what the bls has when they report their number? >> i think there are 360,000. >> okay. equal in size then. >> i think we're slightly bigger. and the other big change is we're collecting data every week. priestly, it was biweekly, or every other week. and this is very important, and we're going to do it all the way through the end of the month, so we're going to pick up employment gains by companies that report late. >> i am certain that joe wants you to go through all of the mathematical detail. really what i think andrew wants to know is the results. i think we have a chart in the back that shows you've back tested this, which doesn't mean it's going to perform live. >> i have a big incentive to get this right. i really don't want to be criticized by joe. >> i understand that. that's how i live my life as well. >> are you mark or austin?

>> i can double. >> so you're xandy. biweekly can be either two weeks or twice a week? >> i didn't know that. did you just look that up on wikipedia? >> yeah, it's used both ways. you meant it used to be every other week. now you're going to do it every week. but not twice a week. >> correct. i had to think about that. >> let's go back to the question i was asking before. the results. how is it different? how is it better? let's take a look if you have those charts. the old adp versus the new adp. there we go. that's the one. so there's the difference between -- by the way, it's the revised bls number, not the first print of it. >> it's the third print. we get the number, then it's revised in the following month after. our estimate is close toast that third print after those subsequent provisions. >> is this with the couple

million more -- >> when they put their survey together, they only have 70% of respondents. that's why they have big revisions. actually -- i didn't know this, but interestingly enough, they don't have data from the big guys, because the big companies have to collect from all the establishments and they report late. >> this is a big day for moody's. >> they report to us. >> this is a pretty big deal for us. adp report is almost like a government -- that's the way we treat it here. >> we have been working hard to make it the best report available, publishing a few days early creates a good deal of interest. so we were careful choosing. >> why make the change? i think that's going to be the question. why make the change? >> we started publishing this report about six years ago, and we hadn't really made any enhancement to it through that period of time. and given the rising importance of the report, we felt it was great to enhance it and give it a little bit more umph and more

features to better understand what's beginning on in the job market. >> we're also going to get more detail from the survey by sector, and how is that going to help us, do you think?think? >> well, we used to publish the report with three industry sectors and have expanded that to five sectors. we increased the detail that we can offer on company size. we used to publish three sectors and company size now published five. you get a good deal of detail out of the report. also mark made significant improvement of how we count companies. >> do you just include information on the surveys itself or clients who use adp for payroll processes. >> it is the actual realtime payroll transactions that run the report. >> the survey is part of it? >> it's not part of our estimate. >> straight off the -- >> straight off the payroll. >> mark, i want to get to one issue here, what -- you and i were talking about this change for a little while here. and some of the possibilities

that come from this data that look exciting maybe, you know, down the road, even some more detail. what is the extent of the competition you provide to government data. is there a time you think that the private sector companies like adp can supplant or replace the government data? >> i think so. i think it's more cost efficient, and i think the government is exploring the possibility. why can't we get this from companies like adp? and, for example, mastercard and visa and first data have great data on retail sales and transactions, the credit file data. >> all these private companies out there doing essentially what an army of government employees -- >> and doing it better and getting better at it. >> that raises the question. i know we have to wrap here, but the idea of who and what should i believe on the wednesday number or the friday number. >> excellent question. >> what's your answer? >> believe me and adp. >> really? >> yeah. >> really? >> it's better data.

>> does that mean you won't be on on friday? >> i don't know. >> you can't come on friday. >> will you kick me off? >> can you talk? >> you're on every day. >> people never get tired of me. >> that's right. i'd love to come, but that's up to you guys. >> all right. >> you might know more. >> i can tell you five company size classes and i'll leave you with this. the substance of information. and since the recovery began, it's the big guys generating the jobs, the small guys that are not. >> it's interesting. thank you. steve liesman, you'll still be doing it at 8:15 on wednesday. >> but the next one is going to be thursday. coming up, the clock is ticking. warren buffett joining becky live in ohio at the top of the hour. duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services. when you take a closer look... ...at the best schools in the world...

...you see they all have something very interesting in common. they have teachers... ...with a deeper knowledge of their subjects. as a result, their students achieve at a higher level. let's develop more stars in education. let's invest in our teachers... ...so they can inspire our students. let's solve this.

mike rowe here at a ford tell me fiona, who's having a big tire event? your ford dealer. who has 11 major brands to choose from? your ford dealer. who's offering a rebate? your ford dealer. who has the low price tire guarantee... affording peace of mind to anyone who might be in the market for a new set of tires? your ford dealer. i'm beginning to sense a pattern. buy four select tires, get a $60 rebate. use the ford service credit credit card, get $60 more. that's up to $120. where did you get that sweater vest? your ford dealer. between black and white answers... ...and 1,000 shades of grey duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services.

here we go, everybody. our news maker of the morning is here with us in the house. the man of the hour or the next two hours in this case. chairman and ceo warren buffett is here. he's ready to go. got a lot to say, warren? >> yeah, ready to go. >> he's ready to go when "squawk box" returns from columbus, ohio. we be will right back. [ female announcer ] i found the best cafe in the world.

♪ nespresso. where there's a coffee to match my every mood. ♪ where just one touch creates the perfect cup. where every cappuccino and latte is made with fresh milk. ♪ and where clothing is optional. nespresso. what else?

monarch of marketing analysis. with the ability to improve roi through seo all by cob. and you...rent from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price. i'm going b-i-g. [ male announcer ] good choice business pro. good choice. go national. go like a pro.

"squawk box" is on buffett watch. he joins becky quick to talk about the issues that matter the most to your money. earnings, the economy, and the election. it's a special two-hour event with warren buffett as the second hour of "squawk box" begins right now. good morning and welcome to "squawk box" here on cnbc. we're going to be getting to becky and warren buffett in a moment. but first, let's get a quick check on the markets. green arrows across the board after a couple of rough days. market losing $500 billion with a "b." dow jones up 21 points higher. federal reserve policy makers are concluding a two-day

meeting with their latest policy statement coming around 2:15 eastern time. economists expect the fed to continue to highlight its recent steps to boost a weakened economy. and we'll be watching facebook shares. the company reporting third quarter profit of 12 cents per share, one cent above estimates, also encouraging comments about monetizing the mobile business, which was a big question mark over that company. european union charging microsoft with failing to follow a 2009 pledge. regulators say the alleged violations took place from february of 2011 until july of this year. move could result in a hefty fine for microsoft which says the issue was a result of a technical problem. mr. kernan. >> thanks, andrew. let's get to becky in columbus, ohio, this morning with berkshire hathaway ceo warren buffett. is he there, becky? >> he's ready to go. >> with a new york jets tie on. >> is that what that is? >> you said he had a nice net

jets tie on, and -- >> and what did i tell you? i said you'd have to ask him. >> did you bring one, warren? >> just we'll get to it later. >> he wants to hear you beg for two hours. >> i know, and then he doesn't do anything. i'm going to try. >> i'll come up with something for you. i'm going to try. >> well, you know, joe, we are very fortunate to have warren with us here this morning. and warren, this is the first time we've gotten a chance to sit down and talk with you since the prostate cancer treatment. how are you feeling? >> i feel fine. i feel great. they gave me some hormones too, so occasionally i get some hot flashes which we males call those power surges, actually. no, it was -- it got tiring after a while. the radiation, you know, you don't feel anything. but i felt it was time to quit

when i started getting the urge to pee sitting down. >> but you're feeling good. >> i feel great. >> you look great, and we're happy to have you with us today. thank you for joining us. this is one of the best times we've gotten to talk to you because there have been so many questions lately about what's happening in the economy. we've heard from major companies like 3m, caterpillar, dupont, all these companies, u.p.s. who have come out and said the global economy is very uncertain. it's slowing down a little bit. they're not sure about what they see in the future. and it's raised a lot of questions in the market too. the market's been selling off over the last week or so. real concerns, people sitting up and saying, uh-oh, maybe there's something really happening here. do you think the market's overselling this situation? or do you think it's catching up with reality? what do you see? >> well, i think stock market generally is the best place to have money. but i think that there's no question that worldwide there is some slowing downgoing on.

and in the united states, actually residential housing is picking up and we've been waiting for that for a long time. and it hasn't gotten to any big level yet. but our carpet businesses and brick businesses and all of that will come on with residential construction. and that has turned. and the general economy, i think it's better than the u.s., certainly better in the u.s. than it is in europe. and in terms of the rate of decline in asia, it's reasonably steep. and we're still inching ahead, but it's inching. >> when did you first start to notice this global decline? this global slowdown? >> well, we've had a couple of companies that really are kind of realtime as to what's going on. the number one, they sell these little tiny punching tools or cutting tools and they fit in these huge machine tools, cost millions of dollars. anybody turning out anything big are buying these little razor

blade type items from us. and they don't need a big inventory, we can deliver very quickly. their purchases reflect usage. and our strongest market is in the united states. but europe and asia have fallen off some. ane're gaining market share. so there's a decided decline in activity in all that manufacturing where you're stamping metal and doing this sort of thing. >> we heard from caterpillar the other day and he says that he looks around the globe and he doesn't expect to see a recession anywhere in 2013. but europe is the biggest problem spot. would you agree with that assessment? >> well, it is at present. its rated decline -- it's off a lower base. its rate of decline is not greater in my view than the rate of decline in asia. it's just asia was doing better. the united states, actually, as they got the steadiest trajectory. and i don't see any change in

that, i mean. we've got the freight car -- we've got a big energy pick-up in the united states, we're getting a housing pick-up. those are big industries. >> let's talk about some of those numbers, housing is a huge key. you told us before we're not going to see a turn in the unemployment picture until we see a turn in the housing. he said you're not going to see a turn in the unemployment picture until you see the turn in housing. he kind of set the thing on his head and said it's the other way around, which comes first. >> well, demand comes first. you hire people when you start seeing demand. and you are seeing more demand. you're seeing greater -- i was with a guy last night at the ge dinner that is in the business of selling lots. we have the largest housing manufacturing company in the country at clayton homes, manufactured homes, but those -- that business is up in the area

of 10 to 15%. >> in terms of volume? >> in terms of units. in terms of units. real estate brokerage, we not only see a 15% increase in transactions, but we also see a small increase in the median price. this comes from all over the country. you name it. so that's changed. you know, we're going to make a lot more money on carpet this year than we made last year. and we hire people when that happens. so the united states economy is not tanking. asia from a higher level, wouldn't necessarily call it tanking, but it's heading down and europe has been having its troubles for some time. >> does that catch up with us? does that affect us at some point too? >> well, what we really hope is we affect them over time. and, no, i don't necessarily

think so unless there gets to be chaos some place. we've already adapted to what's going on around the world. >> tell me what you see in terms of the rail cars. you were saying you were watching loadings on those. burlington northern -- >> well, at burlington, coal is down as it is with the other railroads, oil is up, and when you're fracking, you bring in lots of sand. so sand would be, for example. and u.p. just reported and they're seeing small gains in things other than -- they're seeing it in lumber. they're seeing it in cars. we're seeing it intermodal. we're the biggest in intermodal. we carry 15% of all the freight measured by tonnage in the united states. just the burlington northern

carries almost half as much as all the trucks in the united states in terms of ton miles. >> and you're not seeing any downturn, seeing actually numbers go up? >> seeing numbers go up. that was a little deceptive a month or two ago. so the figures were very easy there for july and august. but we are seeing small gains. but they're small. >> and in terms of what you see at mid-american. you talked about energy demand, that had been weak for quite a while because companies weren't using as much energy. how is the picture on that? >> kilowatt hours were down this year. but we -- look at it this way. berkshire-hathaway spent $6 billion on equipment, we spent last year $8 billion on plant equipment, another record, this year we'll spend $9 billion on plant equipment, another record and practically all of that is in the united states. we see lots of things to do. a good bit of that is in the rail business and the energy business, but there's a lot to

do. and incidentally, you hear a lot about infrastructure and terrible shape it's in, the rail industry's infrastructure is the best shape it's been in. >> joe has a question for you, as well. >> along the same lines, warren. if you were going to start a new berkshire hathaway, and you were trying to play whatever happens, trying to take advantage of what happens in this country over the next 20 years, what would -- how would you do that? would it be natural gas? would it be coal? would it be solar? how do you think you would do that? all of the above? are you smart enough to see how this plays itself out with fracking and natural gas? >> i'm interested enough to follow it, but i don't think i'll be able to write the newspaper two years from now at the current time. but we are putting a lot of money in the solar and wind. that's what we do at mid-american.

if you get into producing energy itself, i'm not -- you know, i would be no good at that game. i'd have to join with somebody else i thought was terrific. but i don't know -- i read about it. and i feel very good about what i read, and we transport a lot of oil. but i don't, you know, you stick me next to an oil well and i go back to a clark gable movie as to what i'm supposed to do. >> have you shared your thoughts about, you know, exporting natural gas? >> oh, i know where you're going. >> i wondered whether you've talked to warren about that. >> i haven't. warren, let me tell you before joe makes it sound worse than it is. i have had some concerns about this idea of exporting natural gas. because, look, if you want to be energy independent, he thinks it's a stupid idea, he thinks we should use all of their stuff. but i worry if we want energy independent, why would we ship this natural gas to other

people? build it and keep it here. tell me why that's wrong. >> no, i'm with you. >> you are? >> oh, see. >> no, no -- if you've got a national treasure, and we had that in oil. if you go back 50 years, we were an exporter of oil, producing way more than opec and the texas railroad commission used to announce every month how many days you could produce in texas. it was an opec of its time. we took these huge prolific fields the east texas fields and we sent that stuff abroad and getting $3 a barrel for it. and we built a strategic petroleum reserve later on. now, i believe if you're dealing with a scarce commodity, something you know is finite over time, use the other guy's. >> joe, there, take that. >> i never thought warren was a protectionist. that's amazing. >> i'll protect something that we're going to need to keep this country going 50 or 100 years

from now. i don't want to ship our talent overboard. >> we may have enough, though, for the entire world. and that would be a great export business eventually to be in if we were self-sufficient ourselves. >> it would be for a while. but if you're looking out 100 or 200 years, and thank god people 200 years ago were looking out in many respects. although, we weren't looking out in the 1950s. >> i love that you're worried like 100 years from now and not just for your ancestors, it's for you 100 years from now. >> i like that. >> exactly. i like it that you like it, joe. >> because i do. >> real quick, warren. i'm curious with the market selling off $500 billion in the past three days, knowing you, i think you're probably watching this thinking what am i buying? is there anything -- have you done anything in the past three days? >> maybe in the past week we've done some things. but basically i like to buy. and, you know, so that if the

market is down, you know, i'm happier buying. i like to buy. if i go to the supermarket and they reduce prices, you know, i feel better. if i go to a men's clothing shop, they reduce prices, i feel better. if i go to the stock exchange to reduced prices, i feel better. >> what did you buy in the last week? >> in the last week i bought some wells fargo. >> you did? >> yeah. we only have 430 million shares, i didn't feel we had enough. >> you look at the banking business overall, is it going to be as profitable? >> no, it can't be as profitable. the profitability of banking is a function of two items, return on assets and assets to equity. and return on assets is not going to go up particularly. they're at about 1.7%. wells is between 1.4% and 1.5%. most banks are lower. now, if you have 20 times leverage and you're getting 1.5%

on assets, you're making 30% on equity. and that was not lost on people a few years back. they pushed balance sheets and still pushing them in europe, but they've cut back on that here. they will not be having the leverage in the banking system. it'll be even more restricted among the bigger banks as part of the new rules. and you won't be able to earn more on assets than before. with less leverage and the same return on assets, you'll have a lower return on equity. bank earning 25% on tangible equity not so many years ago. and really, that's kind of a crazy number. you know, for a basic semi-commodity business, you don't want to allow that, but that was allowed because people felt their bank deposits were guaranteed by the government. therefore there was no market force that would look at the shape of -- condition of a bank

and say i won't put my money there because they look kind of dangerous with all this leverage. and therefore people got to push it and push it and push it, and then the government says, listen, we've got a vested interest in this, you're using our credit in effect. and if you want to play, you're only going to have 10 to 1, the return on banks -- >> but you still think it's a good business. >> well run, it's a good business, but it's not like -- it won't get back to what it was. >> okay. >> the european banks still are leveraged to an extraordinary extent just because they don't know how to get out of it. but they are earning 1.5% on deposits either. >> warren, we're going to take a quick break. we're going to continue this conversation warren buffett. by the way, if you've been looking at the futures at this hour, they are pointing to a slight rebound after yesterday's selloff. the dow futures up about 13 points above fair value. as andrew pointed out, stocks have lost $500 billion in the last three trading days. we'll see if today's news can

spark a change in investor sentiment and maybe warren buffett's words will spark things for the markets. more with him after the break. also at the top of the next hour, general electric chairman and ceo jeff immelt will talk to us about the global economy. live from the middle market summit in columbus, ohio. back with warren buffett in two minutes.

welcome back to "squawk box," we are speaking to warren buffett and becky is out there. ying wells fargo this week. been that stock has now turned positive since those comments. becky, they told me to ask a question. is that okay? i'm not going to presume -- >> yeah, go ahead. >> warren, you like to buy. you just said you like to buy. peter sellers liked to watch, but you like to buy. >> buying doesn't preclude watching. >> no, not with you, i'm sure. but that -- i figure anything that moves the market higher, you're not going to -- better than a sharp stick in the eye. so qe-3 is great. market's been going up. but if you were a voting member, and they've got another one of the meetings today, two day -- i don't know, they come so quickly, i don't even remember. if you were there when they voted for qe-3, would you have

voted yes for qe-3 if you were a voting member? >> i hadn't thought about that, but i would say this. i would listen very carefully to bernanke, but my instincts would probably be to go the other direction. but i would listen to his arguments. >> you said with qe-2, you thought maybe it was going too far at that point. so qe-3 is doubling down on that. >> my instincts are to go against it. i think it's much easier if you're a central bank and you can print money. it's much easier to acquire $2.7 trillion of securities than it will to be unwind that operation. and you can expand it indefinitely. if he wanted qe-2 to be $100 billion a month or qe-3, he's the one guy that can do it. he has unlimited buying power. unlimited selling power could be a little different.

you need some cooperation on that. >> warren, you're a supporter of the president, though, governor romney suggested that he wou would -- i wouldn't suggest he would fire bernanke, but he wouldn't pick him up for a third term. not clear, by the way, that bernanke wants a third term even under obama, but how does that affect or impact your thinking in terms of politics? >> i think bernanke has done an absolutely superb job. i mean, what he did in the fall of 2008 was gutty, it was basically right, you know, everybody can talk about tinkering at the edges, but i will say this, if ben bernanke hadn't been there in 2008, i'm not sure where we would be now. i have enormous respect for him. he's a very, very intelligent man. you've got to respect him enormously. and, you know, he sees an economy that he's sort of

fighting by himself to get started when you look over at a congress that's more or less paralyzed. and i would never bet against him. i would say that i get a little worried about continuously expanding the balance sheet of the fed. and, you know, we now are getting 3% of our revenues from the profit that the fed is running on its carry trade if you look -- >> the united states gets 3%? >> yeah. that 2.4 trillion or 2.5 trillion of revenue, the fourth biggest item, the first item is personal income taxes and then payroll taxes, then corporate income taxes, the fourth is dividend from the fed. he makes $70 billion or $80 billion last year. this is unheard of if you go back a few years. when he borrows, he's got $1.25 trillion, then $1 trillion of money in circulation, which he

doesn't pay anything for except for the cost of the paper. >> do you worry about inflation down the road? is this something we'll see coming? will we be able to put the brakes on in time and try to get the liquidity back out of the system? >> nobody understands that problem better than bernanke. >> yeah. >> that doesn't mean i necessarily think the solution is going to be perfect. i'd rather have him thinking about it and trying to modify the impact of -- >> but to andrew's point, if he doesn't have another term or if he chooses not to stand for another term and there's someone else there, that person's going to have a pretty difficult job. >> yeah, depends who it is. but i would vote for bernanke again. you know, i get my kids out and everybody else to vote for. >> but if bernanke says that he's not even interested in staying. >> they worry that he knows what he's leaving behind. >> he says he may have done enough time there. >> well, i think he probably feels that way, particularly after his congressional testimony. but i do think if the president of the united states asks

someone like ben bernanke to stay on, i think he will stay on. i think he's that devoted to the country. >> all right. >> and i would rather have him there than anybody else. >> warren, do you think where the bond market is right now given the extraordinary action by the fed, do you think it's not that far from where it would be if they hadn't been as active? and then i guess it's okay. but if it be a long way from where it is without them, doesn't that cause some dislocations that eventually are going to come back to haunt us? i like when stocks go up too. and i can see it in your eye, you like when the market's going up. i'm wondering, is it worth it? >> no, no -- >> you do. who doesn't like when the market goes up for whatever reason. but if it gets to a point where it's not up based on the underlying fundamentals, seems like sooner or later something has to happen, no? >> interest rates are -- the prices of all assets, you know,

like gravity is to the function of the earth. everything is based off interest rates. it may not seem obvious that the value of some plantation in brazil or something is geared off of it. but everything relates to interest rates. you start with what you can get risk-free interest rate. and so it has a huge, huge gravitational pull. affects what i'm doing. it affects what everybody's doing. >> affects what you're doing at berkshire? >> yeah. if i'm getting 0% on money, i am going to look at other assets somewhat differently, whether it's buying a farm or an apartment house or anything else. and of course, the people who will lend money to me to buy the apartment house are going to lend it to me cheaper. it's one of the reasons i recommended housing six months ago because the low interest rates caused low mortgage rates and low mortgage rates and when you can sign up for 30 years off a policy that may be in effect for another year or two, you're getting a tremendous deal.

but, no, joe, the fed has had an enormous effect on interest rates. >> but it's okay. >> well, i don't know if it's okay or not. but i know that -- >> the price is going up. >> well, i would say that it's marvelously okay if you're buying a house or something like that. but in terms of policy. in terms of policy, the chairman of the fed and the members of the fed made a decision that the economy needed enough of a jolt. and it wasn't going to get it through enlightened fiscal policy and they were going to basically carry the whole load themselves. i don't think they enjoy it, but i think bernanke, i think he's a very responsible guy. now, it doesn't mean he calls them all right, but i think he's responsible and smart guy. >> we're going to slip in a quick break, try to make money for ourselves during the commercial, a lot more to come. plus, we've got earnings from boeing ahead. the numbers and market reaction.

talk to warren about that, as well. and then the top of the hour, ge chairman and ceo jeff immelt is going to join the conversation. between listening to the numbers... ...and listening to your instinct. duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services. hey, it's sandra -- from accounting. peter. i can see that you're busy... but you were gonna help us crunch the numbers for accounts receivable today. i mean i know that this is important. well, both are important. let's be clear. they are but this is important too. [ man ] the receivables. [ male announcer ] michelin knows it's better for xerox to help manage their finance processing. so they can focus on keeping the world moving. with xerox, you're ready for real business. we create easy to use, powerful trading tools for all. look at these streaming charts! they're totally customizable

and they let you visualize what might happen next. that's genius! strategies, chains, positions. we put 'em all on one screen! could we make placing a trade any easier? mmmm...could we? open an account today and get a free 13-month e ibd™ subscription when you call 1-888-280-0149 now. optionsxpress by charles schwab. boring. boring. [ jack ] after lauren broke up with me, i went to the citi private pass page and decided to be...not boring. that's how i met marilyn... giada... really good. yes! [ jack ] ...and alicia. ♪ this girl is on fire [ male announcer ] use any citi® card to get the benefits of private pass. more concerts. more events. more experiences. [ jack ] hey, who's boring now? [ male announcer ] get more access with a citi card. [ crowd cheering, mouse clicks ] bp has paid overthe people of bp twenty-threeitment to the gulf. billion dollars to help those affected and to cover cleanup costs.

today, the beaches and gulf are open, and many areas are reporting their best tourism seasons in years. and bp's also committed to america. we support nearly 250,000 jobs and invest more here than anywhere else. we're working to fuel america for generations to come. our commitment has never been stronger. between listening to the numbers... ...and listening to your instinct duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services.

welcome back to "squawk box" this morning. in the headlines, we've got fresh housing market data coming up later on today. the government issuing new home figures for september at 10:00 eastern time. economists looking for a 3.5% increase to an annual rate of 360,000 units. and the mortgage bankers association says both refinancing and repurchase activity declined sharply during the week. and former goldman sachs board member will be sentenced today for his role in the high-profile insider trading case. gupta could get up to ten years in prison in a case that saw the hedge fund manager, he was sentenced to 11 years. some earnings news crossing the tape. we've got at&t and boeing hitting both at the same time. joe, i know you're looking at some of this right now. >> boeing is reporting $1.35.

if that's that clean number, it's well above $1.13, which was the estimate. the company is also raising guidance for the year. so that makes me think the $1.35 is good versus the $1.13. because wall street is at 4.78 for the year and there's only one more quarter left. and the company's going to 4.80 to 4.95, you wouldn't have to do much better in the fourth quarter given on this big beat you have in the third quarter. and the company says commercial airplanes, the third quarter revenue increased by 28% in the quarter to 12.2 billion. it has a lot to do with deliveries, obviously. unlike some of the other big dow companies that we've seen, boeing was able to match expectations for revenue. the company reported $20.01 billion, and the estimate was for 20.03. and that's basically a rounding error.

i'm looking on this revenue number for the year, wall street is at $80.65 billion for what they're looking for. and there are also going to be deliveries of 585 to 600 units in 2012. our guy phil lebeau would have the number on deliveries and what's expected and whether that would be above the other. backlog at the end of the third quarter was 378 billion, and that adds another billion to the end of the second quarter when it was 374 billion. so boeing at this point is sharply higher, and actually it's helped the dow. we ought to see the dow futures moving higher as boeing is bidding, up almost not quite $2. a nice run on this today. did you look at at&t? do i dare? >> you can go over and look at that. i was actually just looking, nike which had announced it was going to be selling cole haan.

they announced they were going to sell. do you wear those shoes? >> i do, with nike soles. >> well, those are going away. but they did sell a small transaction, $225 million, but as i was making my way to the at&t news. >> are you avoiding at&t? >> i'm not avoiding at&t. >> would you like to take a shot at that? i'm going to look at it -- okay, becky, good, save it. >> at&t earnings came in with an adjusted 63 cents. that was three cents ahead of consensus, consolidated revenue up 2.6%, when you exclude or the divested advance solutions unit, that was the yellow pages one. company had record cash flow, cash from operations of $11.5 billion, $6.5 billion in the third quarter. and it's increasing by more than $2 billion. iphone is a big deal when it

comes to at&t, 4.7 million activations in the third quarter. i'm not sure what the analysts were looking for. but they also are saying they had the best ever third quarter turn. so, again, a beat by three cents. and looks like strong numbers also increasing their free cash flow guidance by more than $2 billion. >> yeah, so the lowest churn is what you mean. not -- >> lowest -- >> best ever meaning lowest churn of 1.08%. >> at this point with at&t, people just look at how they do in terms of wireless. in wireless ads and how much people are spending. >> and iphone. >> yeah. >> and then, of course, you watch what unbelievable yield. 5% yield. i don't know why buffet doesn't put all his money in verizon and at&t. >> do you ever look at those companies? >> i don't know what it would look like five or ten years from now.

>> there he goes again, 100 years from now, so 5% in the meantime, you know, that's true, though, warren. people would say, i've got a 5% yield, doesn't take much for stock to go down 5%, does it? that yield doesn't necessarily hold up if the market's headed south. >> like toll booths -- >> yeah. >> we mostly buy stocks for future earnings. if you used all the money to repurchase shares that could be even more advantageous. >> because you end up owning a bigger and bigger chunk of the company. >> ibm spent 3 billion in each quarter of this year. >> the cheaper they buy it, the more our interest goes up. >> you still like ibm after all the troubles technology companies have seen? >> they're struggling a little. it was kind of interesting. in the -- we owned -- we own a little more than we owned at year end and we got great confidence over the years.

but in the third quarter, they had a sale of a subsidiary rss that produced about 288 million, i think after tax, which was all the gain. and to my knowledge, the "wall street journal" did not have a line on it. it was one line in the report and it counted for all the gain in earnings and it was a sale of part of a business. you know, i think the reporting missed the boat on that one. >> okay. we're going to talk more about ibm and some of your other investments when we come back. and andrew, back over to you guys. >> thanks, becky. still to come, from ge's middle market summit in columbus, ohio, more of warren buffett. and later, jeff immelt on avoiding the fiscal cliff and much, much more. a big show ahead. >> and a new picture. >> and we've got a new picture. >> comments, questions, send them to @squawkcnbc on twitter.

look for updates from andrew, becky, joe and the "squawk" staff. on cnbc and on twitter. smart comes with 8 airbags,13 a crash management system and the world's only tridion safety cell which can withstand over three and a half tons. small in size. big on safety.

with the blackish-blue frame and the white dots and the splattered paint pattern, your lights are on. what? [ male announcer ] the endlessly customizable 2013 smart.

welcome back, everybody.

we are with warren buffett this morning in columbus, ohio, at the summit sponsored by general electric and ohio state university's business school here. we talked an awful lot about businesses. the reason we're here today is because of this focus on mid-sized businesses. an awful lot of questions about jobs and the jobs picture out there. mid-size companies account for a lot of the job growth we've seen over the last several years. can you talk to us a little bit about what berkshire's been doing in terms of jobs. >> berkshire probably has at least 50 of the 75 companies that would fit the middle market 10 million to 1 billion of sales category. it looks to me, there's a few months left. but it looks to me like we'll add at berkshire on a base of 270,000, we'll probably add about maybe 8,000 jobs organically. and then we'll probably add another 10,000 or 15,000 on acquisitions. >> for this year that we're in right now? >> yeah.

certain businesses like geico and burlington northern have added people. then we bought a fair number of what we call build on acquisitions. >> in terms of the jobs growth, what about the companies that are related to housing. you've been talking about how you've seen a turn there. has that translated into jobs growth? >> there's some job growth. our clayton homes is going to produce something like 15% more homes this year and that takes more people. and geico is going to sell more insurance policies and that takes more people. and the -- our furniture businesses are doing very well. we're selling a lot of carpet and furniture. and so we add people, but we've also got to add -- more acquisitions this year than ever before in our history by some margin. and they bring with them thousands and thousands of people. >> how much cash do you have

onhand right now? >> probably have at least 40 billion. >> are you on the hunt for another big acquisition? >> i'm salivating. yeah. a fellow handed me a card last night and said this will cost you $6 billion. and he didn't give me the financials, but i'm going to call him when i get -- i know the company. so when i get home, i'll call him and ask him for the financials. >> have you looked at any other big acquisitions? >> we had two acquisitions this year. possibilities that were plus and minus $20 billion. and where the ceo wanted to do it, but it didn't get done. prices are tough. >> prices are tough right now. >> yeah. >> all right -- >> and cheap money makes that a factor in it. >> we're going to talk more about that in a minute. we're going to slip in a very quick break right now. when we come back, we'll talk about the market for acquisitions and why there's so much money around out there. by the way, tomorrow is a big day for joe. he's going to be hosting office

hours after the show. you can like our facebook page, you can send him comments and questions and he'll be responding at about 9:00 a.m. eastern time. "squawk box" with warren buffett, we'll be back after this quick break. if we want to improve our schools... ... what should we invest in? maybe new buildings? what about updated equipment? they can help, but recent research shows... ... nothing transforms schools like investing in advanced teacher education. let's build a strong foundation. let's invest in our teachers so they can inspire our students. let's solve this.

[ female announcer ] i found the best cafe in the world.

♪ nespresso. where there's a coffee to match my every mood. ♪ where just one touch creates the perfect cup. where every cappuccino and latte is made with fresh milk. ♪ and where clothing is optional. nespresso. what else?

welcome back to this special one-on-one interview with warren buffett, chairman and ceo of berkshire hathaway. here now, becky quick. >> welcome back, everybody. we are coming to you live from ge capital's middle market summit taking place at ohio state university in columbus. i'm joined by berkshire hathaway ceo warren buffett. and you've been talking about how you've been on the prowl looking for big acquisitions around $20 billion or so. a couple have fallen through, but part of it is because pricing's difficult. >> pricing's difficult and money's cheap. we don't leverage our purchases and we're buying on an all-equity basis. but people that do leverage are getting significant portions of the purchase price at very, very low rates, probably as low as they've gotten. so that enables them to bid pretty aggressively and doesn't factor into our thinking. >> you think at this point maybe some of these acquisition prices are getting a little out of

control? >> well, that's the way i feel. but, you know, that's natural when you're getting beaten out. >> but you won't raise your prices to compete? >> no. but now we had a record for bold on acquisitions. we've probably done, i don't know, maybe 15 different acquisitions, but probably add up to $2 billion or something of the sort. and they're good and fit in with companies we have. but what i really like is the elephant. >> so you're always out elephant hunting. >> absolutely. >> with your elephant gun. >> and they're more likely to come along when money conditions are fairly tight or something of the sort. if you can borrow money at these rates, you can pay a lot of money. and other people if they pay the wrong price, they walk away from them. but if we pay the wrong price, we live with them forever. >> if these deals haven't gone through, that means you've been looking more aggressively for stocks to buy in the market. >> well, we're always looking for stocks and i've got two fellows working for me that are

really looking for stocks all the time. but i usually end up buying more of something i already know. any new company, any new stock i look at, i measure it against the best idea i've got among the present ones, and i'm perfectly willing to just keep adding to the present ones. so it has to beat them. and i know those companies pretty well, so it's a pretty high threshold. >> let's go back to ibm. you were talking a moment ago about ibm, have you added any shares to that company in the last couple of months? >> maybe -- we've added shares this year. we haven't had a lot of shares. but we've -- well, we probably added, you know, being many hundreds of millions. wells we probably added maybe $1 billion worth, something like that. >> when you first announced your stake in ibm, it caught a lot of people by surprise because you have always stayed away from technology companies, you've said it's something you didn't really understand and so you didn't want to get involved with it. >> right. >> in looking at ibm, you said

it was a little different situation, it made sense to you at that point. i guess part of that is the services factor of it. but when you look at these big technology companies, looks like some of them may be maturing, have you regretted getting into ibm shares at all? >> no, i'm delighted to be in it. >> uh-huh. >> and i think they'll probably do better abroad than in united states over time. when we buy something like that, i go to our companies and see what they're doing and plan to be doing in future years. and how tied in they are with given suppliers and how much stickiness there is to it. and so we -- i -- even though, you know, if you put me in a computer room and spin me around, i'm lost, you know, i just hoping it helps me get out. but i do know what our managers tell me about their plans. and the degree to which they're involved. and i had one manager tell me something that isn't quite repeatable in terms of -- you

get pretty locked in sometimes with your supplier. >> what's not repeatable? >> well, i asked him how sticky -- i won't name the company, he said, well, it's like -- >> so it sticks. it really does. i should bring up the insurance companies. >> they're big. >> jim cramer had said he's very interested in hearing more about what's happening with insurance because a lot of insurance companies have been doing very well lately. what can you tell us about berkshire's? >> they're doing very well. we have about $70 billion of other people's money, we call it flow. and when we run at an und underwriting profit, i get to earn the money on this. and this year we've had an underwriting profit. not only have they given us $70 million, but they give us more money to hold it. so when insurance's good, it's terrific, and it's been good this year. >> what do you know about the consumer not only from the companies you have at berkshire

that you own outright but from a company like coca-cola and being able to look around the globe to see how consumers are feeling. there's been a lot of pressure on some of these consumer products companies because prices for commodities have gone up and sometimes they can't pass those on to their consumer. >> when you think about it, coca-cola's been around since 1886. that's amazing. and it's the basic product. now it's got a whole bunch of extensions too. but coca-cola's physical volume, not dollar sales, but physical volume was up 4% in the first nine months, and that's in a world that's growing maybe at 1%. so their per capita usage of coca-cola products has gone up almost every year since 1886. he's done a terrific job running that company. it's a huge distribution machine. and mexico, i think the number now is up to over 600 plus 8-ounce servings per capita of

coca-cola products, man, woman, and child, which is at least 50% higher in the united states. and grows every year, growing in the first nine months, it's quite a product. >> we still have a lot of your other investments to talk about, including american express, proctor and gamble, we'll get to that in a little bit. if you'll hold on with us. >> i'm not going anywhere. still to come this morning, we have much more with warren. also talking about everything from fiscal cliff to simpson/bowles. we're going to be adding the man who runs one of the nation's biggest conglomerates. what jeff immelt is finding out from customers about the state of the economy. by the way, check out the futures right now. we have been higher throughout the morning. right now those dow futures up 42 points after a big down day for the markets yesterday. "squawk" will be back after a quick break. at optionsxpress we're all about options trading.

we create easy-to-use, powerful trading tools for all. look at these streaming charts! they're totally customizable and they let you visualize what might happen next. that's genius! we knew you needed a platform that could really help you elevate your trading. so we built it. chances of making this? it's a lot easier to find out if a trade is potentially profitable. just use our trade & probability calculator and there it is. for all the reasons you trade options - from income to risk management to diversification - you'll have the tools to get it done. strategies. chains. positions. we put 'em all on one screen! could we make placing a trade any easier?

mmmm...could we? around here, options are everything. yes mom, i'll place a long call to you tomorrow. i promise. open an account today and get a free 13-month eibd™ subscription when you call 1-888-280-0154 now. optionsxpress by charles schwab.

coming up, ge chairman and ceo jeff immelt here to talk the fiscal cliff and the state of the economy. joining becky and warren buffett in two minutes. you don't want to miss it. check out tomorrow's lineup. we've got robert johnson of the rlj companies. of course the founder and chairman, he'll be our guest host and we'll hear from png, cfo john muller on the results and honeywell's david cote is going to give us details on his campaign. >> much more from warren buffett

right after the break. ...at the best schools in the world... ...you see they all have something very interesting in common. they have teachers... ...with a deeper knowledge of their subjects. as a result, their students achieve at a higher level. let's develop more stars in education. let's invest in our teachers... ...so they can inspire our students. let's solve this. so uh this is my friend frank and his, uh, retirement plan.

one golden crown. come on frank how long have we known each other? go to e-trade. they got killer tools man. they'll help you nail a retirement plan that's fierce. two golden crowns. you realize the odds of winning are the same as being mauled by a polar bear and a regular bear in the same day? frank! oh wow, you didn't win? i wanna show you something... it's my shocked face. [ gasps ] ♪ [ male announcer ] get a retirement plan that works at e-trade. one more hour with one of the world's richest men, warren buffett on the markets. >> if the market is down, you know, i'm happier buying.

i like to buy. >> on europe. >> the european banks still are leveraged to an extraordinary extent just because they don't know how to get out of it. >> and a lot more. rise above the political rhetoric with the oracle of omaha. and ge chairman and ceo jeff immelt, the state of the economy and the impact of the fiscal cliff. the third hour of "squawk box" begins right now. welcome back to "squawk box" here on cnbc, first on business worldwide. i'm joe kernan along with andrew ross-sorkin. becky is with us, but out at the middle market summit at ohio state university in columbus, ohio. she will join us with warren buffett and another special guest, ge chairman and ceo jeff immelt in just a minute. first, though, andrew has your morning headlines. major companies reporting quarterly results this morning,

and they are good news. at&t earning 62 cents. boeing's earnings handling beating the street, eps of $1.35, 22 cents ahead of revenues matching forecast. full-year guidance topping consensus, and then dow chemical shares getting a boost this morning after announcing a restructuring plan. the chemical giant is cutting 5% of the workforce and closing 20 plants. the ceo told us that europe is at the epicenter of the company's current slowdown. u.s. equity futures at this hour look up across the board, dow looks like it would be up almost 38 1/2 points, nasdaq a little over eight points and s&p 500 up, as well. it's worth noting that the dow is now almost 4% below its five-year high reached before earnings season began. stocks have lost $500 billion in three days, and that's just in the u.s. markets. but, you know, we had a lot of pressure on earnings except

today's earnings looking a little bit better from some bell weathers here. overseas in asia, you can look right there. the nikkei off slightly. and the hang seng up slightly. so we'll call it mixed. and in europe, greece's finance minister saying that athens has achieved an extension to meet the terms of the international bailout program. and you've got some green arrows in europe, as well. >> let's now get back to becky at the ge capital middle market summit at ohio state university. in columbus. she's joined by warren buffett and another special guest. hey, becks. >> hey, thank you, joe. as you mentioned, we have another special guest with us joining us right now. jeff immelt, the chairman and ceo of general electric. >> good to see you again. >> warren's been laying out for us what he sees from the economy this morning. and ge probably has one of the best vantage points of any company to see what's happening around the globe. i know you talked about it with

earnings, but the market seems to be caught by surprise just over the last week or so. what does it really look like out there? and do you think the market's overreacting? >> i think the general trend is still positive. there's just volatility as we've climbed out of this recession. i always think about four big factors. the u.s. gets a little bit better every day. we can see that around housing. you know, i think there would be more investment in the u.s. if there was more clarity around the fiscal cliff and things like that. europe is bad, but not shockingly bad. in other words, it's going to be tough, there's still pockets, but europe's tough. china, there's not one china. there's multiple economies in china. construction i think is slow, but if you're in the health care aviation business in china, it's still very robust. and i just got back from a trip to saudi arabia, abu dhabi, there's business in all of those places. so i think if you're out

hustling, you can find business. i think the general trend is positive, but there is volatility in the world. >> so from that perspective, from both of you, you seem to have a more positive outlook than maybe with the market is reacting to over the last several days. >> i think you can't blame investors for what they read and what they see. you'll have a couple of days like we had. but if you step back, you know, i think for a company like ours, our organic growth was up 8% on the quarter. that is high, you know. and 10% year-to-date on a company our size, that is pretty good. backlog of more than $200 billion, that's pretty good. so i just -- and you know, we had dinner last night with 20 mid-market companies, some are doing poorly, but a lot are doing well. i think it's volatile. and so you'll have a day like yesterday or a day like friday and people are going to have concerns. who can blame investors for seeing it that way? but the general trend that i see. and we see 140 countries is

still generally positive with volatility. >> with volatility. >> and good prices for locomotives and turbines and all these things. >> would you like to buy a few more? >> he's never given me a -- >> joe has a question, as well. joe? >> i'm joe kernan, this is cnbc, we used to be one of your favorites, i don't know. >> joe, 49% of nbc is still 100% cnbc. >> all right. jeff, ge capital, the report, it's like raking in money again. and what i'm told is that the company continues to shrink it to some extent, i guess to right-size it if you will. but wow, it's making money, paying a dividend back to ge again. and is there a tendency to want to say let's ramp it back up? and i mean, it was a great unit for years and years and years.

so much profit to the company. is there a tendency to want to do this? do you have to pull yourself back and say we're going to get this where we don't want to get to that point again? >> look, it's a great business, okay. i think the difference in this recovery versus previous recoveries is just one of discipline. there are segments in financial services that we do better than banks. this is one of them. mid-market lending, we just do it well. we're going to continue to grow the places that we do better than our competitors and let those grow. i think what's different, joe, we're just not going to do the incremental or the, you know, some of the distress stuff we used to do because we could. and i think we've got a green light on assets we're great at, we continue to grow those. and ge capital in almost any way is healthier than any time in its history. our margins are better. and some day investors will agree with me that this is a valuable business. we're going to stay in it and there's segments that we're

going to do really well in. >> sorry, warren. warren and i are both large shareholders in ge. and we have a lot of questions. we have a lot of questions ab t about, you know, the portfolio mix as shareholders. i think warren's got -- >> joe, if we vote together, joe, i think we can control the company. >> i'm with you on that. jeff, my other question had to do with we keep talking about the natural gas story and fracking. and number one, i know ge's involved in all parts of energy production and natural gas. is the portfolio right now in energy, does it have enough exposure to natural gas? that's my first question. and number two, have you looking out 20 years, has wind become less -- less attractive long-term because of what's happened with natural gas? >> you know, joe, i think natural gas is one of the big stories of our generation. it's big, it's real, it's a game changer.

we made the decision ten years ago to be long gas, both from an exploration standpoint and from a power generation standpoint. so we see the trend unfolding. we have a great exposure to it. we think this is a long-term really dominant trend and we love it. we've also made the choice to be a broad-based energy supplier. wind is going to have its fit, nuclear will have its fit. we paid $200 million for enron's wind business ten years ago. let me tell you, we've generated billions of cash. the cost of electricity of wind is down to 7 to 8 cents a kilowatt hour. so it's going to have a fit whether it's in the u.s. or not. remains to be seen. i'm glad we've got the breadth, but the big story's gas, let's be clear, the big story's gas and we're super long gas. >> let me ask you both about the fiscal cliff. we have talked to a lot of business leaders about it. it's an issue you were both concerned about. the lead story in the financial times, jeff, was a story we

talked about on "squawk." ge is looking to make moves ahead of that. how big of a problem is it? what do you think needs to be done? and i'd like to hear from both of you on that. >> the research we've released today among mid market companies i think says that they've all slowed down because of the uncertainty. in the case of ge, we're a high-tech long cycle business. boeing depends on us to keep investing in our engines no matter what, we're going to do that, we're going to keep going, but there's no reason why this can't get resolved. we're a group called fix the debt. it basically endorses simpson/bowles. i think everybody believes that we're going to be plus or minus 10% of simpson/bowles, let's get it done. people say business leaders should be more vocal. look, we're vocal. you know, this is a complete distraction at a time -- and an

important distraction at a time when the country doesn't need it. so i just think, you know, everybody is planning. every business is planning for something that's plus or minus 10% of simpson/bowles. i don't get it. and you'll have dave cote on tomorrow. he's a very respected guy in the business community. it is filled with everybody who is -- who runs big companies in the country. we are saying let's get this done. >> you feel like you're talking and washington's not listening. >> well, washington's on hold because of the election. but they'll not only hear people talking, they'll hear people shouting. there'll be a march on washington by business if something akin to it. it's manmade. everybody knows what the general solution should be. and you can argue about whether revenue should be 19%, 18.5% of gdp, or whether expenses should be 20% or 21.5%. everybody knows basically what the solution is.

and bowles/simpson fits in there. simpson/bowles, we're going to stay away from the acronym of bowles/simpson. there are hundreds of people that could that you know that could design a sensible plan. any plan that gets dick durbin and tom coburn to sign on. that reflects a lot of negotiation and effort by two terrific people in simpson and bowles. it's going to get done. and the american people won't stand for it not getting done. and incidentally, i think it'll get done -- i don't mean simpson/bowles precisely, but something materially close to it will get done by either person selected. >> and by that, i mean, a lot of americans probably don't even understand what's in it. you're talking about a plan that will lower tax rates, strip out a lot of the loopholes or things that we've built in as policy and decided we want. >> $4 trillion over ten years,

becky, it's about 1 billion of revenue. lower the tax rate, broaden the base. global system, stuff like that. you know, we're not going to like -- i guarantee, we're not going to like all of it. >> right. >> i guarantee you. >> but, you know, i think the beautiful thing about american business is how flexible and how fast we adjust, you know. it just is today the most resilient economic system on earth. and i've seen them all. and business people small and large are going to figure out, okay, this is a business i can be in, i can do this, i can't do that, let's go. >> but you want a plan, you want to know what it is. >> it's just the stakes are so gosh darn high for the country and all of us. i don't get why we can't do something this important. you know? in other words, i understand there's two opinions on everything, i understand there's republicans and democrats. i just think, you know, what i

say inside ge is nervous laughter is a bad strategy. that's kind of like -- oh, this is really important, i hope something bad doesn't happen. that's a bad strategy. i think it's -- >> -- at berkshire. >> you know, i know andrew has a question too. andrew? >> jeff, i'm curious on the issue of simpson/bowles. have you scored what ge's effective tax rate would be and how it would impact the business? >> my hunch, andrew, is that the tax rate goes up, probably. i think we're kind of ready for that. but, you know, the notion that you can have a territorial system and have flexibility around cash, i think that's a positive that supercedes everything else. i think that's, you know, and again, we're not asking for -- we're asking for the same system that every one of our global competitors has. every one of our global competitors lives in a

territorial system. all we're asking is for a chance to compete on a level playing field against those guys. what i always say, andrew, is look, like us or hate us, we're the last american company standing in all the industries we're in. we compete against global guys in everything we do. just give us the same system they've got. and i don't think that's too much to ask for. >> jeff, real quick, while we have you. we talked to warren in the last hour about bernanke and qe-3. and you were able to sell some bonds at great prices. are you worried? warren seemed to suggest he was a little bit about where we are. >> you know, again, as much as anything else, as i read what chairman bernanke has said, there's a sense of consistency in his actions where he has said he's going to keep the coast of money low until the economy gets better and he's been consistent to his word. so if you love him or hate, you know, qe-1, qe-2, or qe-3, he's the one person that has led to

consistency around where we are. now, did business need -- when interest rates are zero, do you need interest rates lower to borrow money? i don't think so. in other words, this is not necessarily the problem we have to solve today. you know, and so i think there's people smarter than i am that can figure that out. but i think if you take that aside and given the gridlock in washington, and what's going on in europe and other places, it's not bad to have one person in power who's been more or less consistent from 2008 to today. and i think we at least have to give him credit for that. >> absolutely. >> gentlemen, very quickly, when it comes to the fiscal cliff. would you put odds on whether you think we go over this fiscal cliff in january? and go over maybe a day or two or something. what are the odds you think we go over in a bad way versus we find some sort of solution? >> i would say there's pretty fair chance we go over for a short period of time. but, you know, who knows. it depends on which fella's

elected president, on the composition of the house. it's going to get done, becky. how long they want to be in the sand box before they come up with an answer that's obvious, they could come up with today, just depends on the personalities of leaders of the house and leaders of the senate and the president. i don't think it will go on a long time. >> but you -- >> if august of 2011 hadn't happened, i would say the odds are zero. you know, when we defaulted and lost credit rating. so, i think companies have to be prepared it might happen. but let's be clear, it shouldn't. >> it shouldn't. >> let's be really clear. if it does happen, that's a failure of governance. and that's something we shouldn't expect. >> yeah. and shame on them if it does happen. gentlemen, thank you both very much. warren's going to be sticking with us. jeff, you have to -- >> i've got to do some selling

here. >> we appreciate your time very much. >> thank you. >> we will have more from warren buffett throughout the show. also stocks on the move this morning. which companies to watch ahead of the opening bell. a lot of earnings out there this morning. a quick programming note. don't miss a cnbc exclusive interview with goldman sachs chairman and ceo lloyd blankfein. that is today, 11:00 a.m. eastern. "squawk on the street." we'll be back after a quick break. fidelity's etf market tracker shows you the big picture on how different asset classes are performing, and it lets you go in for a closer look at areas within a class or sector that may be bucking a larger trend. i'm stephen hett of fidelity investments. the etf market tracker is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea.

welcome back to "squawk box." futures responding from a nice report from boeing up about 50 points. at&t is up. revenue above expectations -- in line with expectations, but up 13% year-over-year. that has to do with deliveries. and we'll be watching the shares of facebook. stock getting a boost this morning from my pending appearance tomorrow on facebook. which apparently the stock's up $4. oh, wait a minute, there's also quarterly results, apparently, that were better than expected. >> you're going to be holding off. >> yeah -- what do you attribute the move to? i will be holding office hours on facebook.

ask me, seriously, it's not half boxer half brief, it is baggy boxers. t-shirt but not a lululemon like you. it's real, it's not dyed. anything else. nothing is off limit. nothing is off limit. i just want more people to ask me a question than you got. that's all i'm asking to do. as far as facebook why it's real up, advertising grew at a faster than expected pace. >> mobile in particular. >> mobile in particular up $4. we got so sure it was going to be a major problem, it got so negative that the company what it came out with was much better than we had gotten to believe. >> just to put it in perspective, at $22, we're still far away from -- >> i know. it's been sitting there at $19 just dead, though, and now it's going to be up $4, that's a big move for the stock. we've seen three analyst upgrades this morning coming from bank of america. >> something they see, they were

anticipating this, just needed a little confirmation. bank of america, citigroup, all raising ratings to a buy. better at $24. >> i was looking for those reports a couple of days ago. >> you were? >> i was. >> you must be new at this. yeah, this is usually the way it happens. and another stock we're going to be watching this morning, warren buffett telling us earlier he's been buying wells fargo this week. and that stock has turned up since those comments. >> okay. coming up, we have a lot more ground to cover with warren buffett, we'll get back to becky and warren in a moment. maybe new buildings? what about updated equipment? they can help, but recent research shows... ... nothing transforms schools like investing in advanced teacher education. let's build a strong foundation. let's invest in our teachers so they can inspire our students.

let's solve this. ♪ [ male announcer ] this is karen and jeremiah. they don't know it yet, but they're gonna fall in love, get married, have a couple of kids, [ children laughing ] move to the country, and live a long, happy life together where they almost never fight about money. [ dog barks ] because right after they get married, they'll find some retirement people who are paid on salary, not commission. they'll get straightforward guidance and be able to focus on other things, like each other, which isn't rocket science. it's just common sense. from td ameritrade. it's just common sense. mike rowe here at a ford tell me fiona, who's having a big tire event? your ford dealer. who has 11 major brands to choose from? your ford dealer. who's offering a rebate? your ford dealer. who has the low price tire guarantee... affording peace of mind to anyone who might be in the market for a new set of tires? your ford dealer. i'm beginning to sense a pattern. buy four select tires, get a $60 rebate. use the ford service credit credit card, get $60 more. that's up to $120. where did you get that sweater vest? your ford dealer.

♪ nespresso. where there's a coffee to match my every mood. ♪ where just one touch creates the perfect cup. where every cappuccino and latte is made with fresh milk. ♪ and where clothing is optional. nespresso. what else?

welcome back to this special one-on-one interview with warren buffett. here now, becky quick. welcome back, everybody. we've been speaking with warren buffett all morning long. one of the things we haven't talked about yet is another one of your major holdings. i think proctor and gamble is your fifth largest holding? >> could be. >> there was a story yesterday in the "wall street journal" that took a look at bob macdondald the ceo. there had been questions raised by bill ackman about whether he's up to the job. yesterday, the journal added there was a letter sent to the board of directors that came from a former manager who said a lot of managers agreed with him about some of his concerns about

the leadership. where do you stand as an investor in proctor and gamble? >> well, we've -- we owned more shares in the past, we sold some shares, that's related to valuation. and frankly the earnings on proctor & gamble have been disappointing for a few years. he's a terrific human being, what goes on inside the place, what mistakes have been made, what the plans are, i'm really not -- i don't know the answers on that. but you've got to say that proctor & gamble, the jury's out on that now. because they have disappointed in terms of earnings. and we'll see what happens. i know that the board is actively engaged and trying to come up with a strategy that they think makes sense to take the earnings forward. >> in the past, you've said when you sell a stock, it's because you find something else that is a better investment, a better place to put your money, did you sell that stock for any other particular purchase? or was it just -- >> no, we've sold that, we've

sold some companies that are very, very good companies. and we've used that money. we used it to buy what $11 billion or $12 billion worth of ibm in the last 12 months. we bought -- we've bought more wells, another $1 billion worth of that. and then we bought some more walmart a while back, another $700 million or $800 million of that. and we've given money to managers to run too. you'll see a lot of stocks they've selected. the money moves around pretty slowly, but it moves around. >> todd and ted, talking about them in a little bit, those are the two managers you were referring to. >> i'm giving them more money as we go along. >> we'll talk about that in a moment. when we come back, we'll have more from mr. buffett. stick around, "squawk" will be right back.

welcome back to "squawk box" this morning. two dow components reporting quarterly results, at&t earning 62 cents, 2 cents above estimates. boeing earnings beating the street by a noticeable margin this morning. eps of $1.35, that's 22 cents ahead of revenues matching

forecasts, full-year guidance topping consensus. let's get back to becky and warren buffett. do you mind? can i ask -- >> no. no. >> are you sure? >> no, you can wait. you can come in in a moment. i have one question to ask him and i know you're going to want to play on this. stay with me for one moment. warren, i think we've let you go for long enough. you are a big supporter of president obama. >> correct. >> we have an election coming up. >> correct. >> things have changed in the polls over the last month or so, probably since the first debate. what do you think is going to happen at this point? >> i have no insight that anyone else doesn't have. if you go to intrade or something, their odds would be about the same as my odds. you know -- >> joe was just pointing them out a little bit. what are they this morning, joe? 54%? >> 55 now, 55 and change. >> that's movement. that's a fair amount of movement.

>> now 56. >> that's movement. and it may come down to who has the better ground game here in ohio. >> you've been watching elections a long time, though, what do you think happened? >> i think the first debate changed things dramatically. they say in life, you never get a second chance to make a first impression. romney got a second chance to make a first impression. he'd been portrayed a certain way through republican debates, advertising, and in the first debate 69 million people saw a different romney than they had more or less expected from the earlier republican debates as well as the advertising. >> did you see a different romney? >> it was huge. >> warren, did you feel like you -- >> he's asking if -- did you see a different romney in the first debate? >> well, yeah, i saw him behave differently, yeah. he was less robotic. he was -- he was aggressive without being rude.

and obama was down that night. no question about it. that was that huge factor in the campaign. >> you know you've been a huge supporter of the president, do you think it matters who gets elected and what it means just for business next year based on who gets elected. >> well, i do think under either of the two candidates, either one that becomes president, american business is going to get a lot better over the next four years. i think that in terms of social policies, i think if i were a woman concerned about reproductive rights, i think there could be a very distinct difference. if i was concerned about supreme court appointments, there would be a difference. but the economy will get better under either one of them. >> joe, go ahead, i'm sorry. >> i want to stick with politics a little bit, warren. and you always surprise me. i never know how you're going to answer this. i want to talk about a local politician here in new york. and i'm talking about mike bloomberg. every democrat's favorite republican. let's say that this caught on

and that it was a nationwide ban on any coca-cola sold in a container that had sugar. sold over 16 ounces. does that make sense to you to do that for the obesity problem? you're a big coke shareholder. and then i think about, you know, dairy queen and ice cream's not good for you either. i figure there must be a way that's adding to obesity and those crummy hot dogs you sell in your dairy queen. is this something that makes sense to you? >> first -- >> yeah, go ahead. >> first of all, i've got to say, dairy queen sales were up 5.8% in september same store. >> you see where i'm going with this. >> but ice cream, i eat it for breakfast sometimes. and i'm 82, you'll have to judge -- >> well, somebody might not like you doing that at your age, warren, adding to cholesterol. and you might get taxed on it

because we don't really think it's a good idea for you to have ice cream for breakfast. is that okay? >> yeah, well, let's look at the 16 ounces of coke. 16 ounces of coke has 200 calories in it. and i would say there's an awful lot of servings of a lot of things that have 200 calories or more, and the idea to say you can drink 200 calories of something but not 210 or 220 seems to be kind of silly. in the end, i've elected the foods to eat over the years i like to eat and i think it's kept me quite healthy. and if i'd been on broccoli and spinach, i'd been gone a long time ago. but i drink about -- >> why don't you tell me it's preposterous and bloomberg has got a screw loose. why don't you say that? >> well, because you've said it for me. >> all right. but you wouldn't disagree with me? and then i've had people in from mt. sinai, doctors that tell me, hey, oh, well, cigarettes, you want -- it's like cigarettes, you don't want to tax

cigarettes. and i go, well, red meat 20 years ago was the cause of all heart disease, and oh, that may not be the end all be all. >> i eat lots of red meat. >> no, it's not -- >> i eat lots of red meat, joe. and i drink about 60 ounces, about five 12-ounce cans of cherry coke a day. and that's 750 calories but i elect to get -- i'm going to -- >> your prerogative. >> 750 of them are going to be cherry coke. and my doctor told me said drink more liquids and i said, you know, i said how about cherry coke. he says it's fine. >> insanity. it's insanity, and someone needs to tell this guy that. although he's going to be every republican's favorite democrat. andrew, god, if he ran for president, you'd be out there, you'd have 40 signs in your yard, bloomberg for president. >> i've got to say, mayor bloomberg has done a lot of terrific things.

all kinds of things. >> this ruins it. >> i've also had dinner with him in sun valley after this came out and when they brought out the dessert, there was more than 200 calories in this dessert. i'm unable to determine why those 250 or 300 calories of dessert he was eating was different than my coke. >> did you say that? >> i had the biggest bottle of coke brought out that i could find. >> and did he drink from it? >> i drank from it. i wasn't going to let him have any. >> getting back to the national election, you point out it could be the ground game right here in ohio. >> sure. >> that makes all the difference. i know you don't have inside information, you've been watching elections for a long time. your father was a congressman, you used to watch those races very quickly. what do you think it actually comes down to what it means? >> i think in ohio may very welcome down to organization. there's been a lot of early voting in ohio. >> right. >> that's organization. you want to get out your vote and a lot of people say they'll

show up on election day. and particularly when you've got a history as the democrats do of turning out less of their base than the republicans. so early voting is a huge advantage to democrats. they are not going to get the same percentage of their base out on election day as republicans traditionally. so we'll see who has the better ground game. >> no matter who wins the election, we are going to be looking at a different treasury secretary. >> right. >> tim geithner has made it pretty clear that he wants to go. you know a lot of people in finance, you know a lot of people, have you thought about who might make a good pick for treasury secretary? >> yeah, i do. and i won't get a call from -- i won't get a call from governor romney asking me my opinion. but i think i've got a good idea. but i -- i'll say that -- we'll wait and see whether obama's elected and wait and see if he calls. >> is it a name that's been out? erskin bowles has been named recently. >> he would be terrific.

he's smart, patriotic, absolutely would do the best job for the country. erskine bowles is a fine human being. and what he and alan simpson accomplished in getting those 11 to sign on. that's huge, that takes real negotiating ability. it takes humor, it takes a decent human being to get people to come together like that. i admire him a lot. >> okay. guys, i will send it back to you because i know we have to slip in another break. >> and don't miss "squawk box" on friday, getting third quarter gdp numbers coming at 8:30 a.m. eastern. also a huge lineup leading up to that data, larry summers will join us for an hour. we're also going to talk to blackrock's larry fink. they're going to weigh on the markets, economy and the looming fiscal cliff.

welcome back to "squawk box" futures right now, up about 39 points or so. dow chemical announcing plans to cut 5% of the workforce and close 20% of the plants aimed at countering a slowing global economy. i think it said it would save about $500 million in the future. andrew liveris told us stuff earlier on "squawk." >> a third of dow is in europe in terms of revenues and assets, and this restructuring has that as the main thrust. we are going through a remake of

the european model. we don't know where it's going to go. it's uncertain. when we return, we've got much more from the oracle of omaha. we'll get back to warren buffett in a moment. don't miss "squawk" tomorrow. conoco philips, we're going to bring you those numbers and analysis. plus, we've got an interview with procter & gamble ceo. ♪

welcome to the world leader in derivatives. welcome to superderivatives. welcome back to this special one-on-one interview with warren buffett, chairman and ceo of berkshire hathaway. here now, becky quick. >> it's more of a three-on-one interview. but let's get to our news maker of the morning, warren buffett who has been kind enough to be with us for the past hour and 45 minutes or so. warren, we look at europe all the time. and you've talked to us in the past about the eurozone crisis and what you see happening. you talked about the european banks. you think they're in a different position than the american banks. but last week francois hollande suggested the eurozone is moving out the other side of things.

is that the impression you get? >> i wouldn't say so. i don't know how it plays out. i certainly don't feel that it's clear on the road to recovery. they have a real banking problem. you have the sovereigns counting on the banks and the banks counting on the sovereigns. and that creates a problem. and it's going to be a very tough thing to have austerity at the same time grow gdp. it's not an easy solution. europe isn't going to go away. i think it could be pretty rough there for a while. >> is that a good argument for pulling back from the area? or is this a time you think business -- >> they either have to come closer together or they're going to go one direction or the other. but the idea of having a monetary union independent of really discipline on the fiscal side, although they said they

had it originally. they've got to come closer together or it won't be sustainable. >> although the ecb has made some major moves to try to reassure the markets and certainly given up quite a bit more time. >> central banks can print money. it's a wonderful machine to have. in economics just like life, you can never do just one thing. anything you say you're going to do is going to have consequences. and sometimes those consequences are delayed. certainly printing money has consequences. and not printing money would have consequences in the united states too. but we haven't seen -- the movie's not over in europe. >> owjoe, you have a question t? >> do you still think a single-family home is one of the best investments around? and have you figured out a way to invest that? you'd like to buy -- you said, buy as many as you could but

they're impossible to manage and you can't do it. have you tried to figure out a way to do it? >> yeah, and i've had a lot of suggestions from people after i made that statement. it's not really feasible. and certainly compared to other things we can do with money, it's just too big of a problem to deal with small units like that and management problems and human problems. so i think that anybody that knows where they're going to want to live has a reasonably assured income, i think they're making a terrible mistake if they don't buy a single family home now and get mortgages at these rates, and they should get a 30-year mortgage. it's really a golden opportunity. it was a little bit better six months ago, but still wonderful now. you're not going to see a chance like this five years from now. i'll guarantee you that. >> five years from now, it'll be a different picture. >> and rates will be higher and all kinds of things. >> and you think prices -- >> if you know -- you've got to want to live there. and home's a wonderful thing.

but i wouldn't buy one if i was going to move in six months or something of the sort. and i wouldn't buy one if i was terribly nervous about my job. >> warren, a couple you mention ted and todd talking about what they've been doing as an investment cycle. a lot of times we get these notes from the s.e.c. just about what berkshire is doing with investments. how much of it is theirs and home is yours? >> very little of it is mine. i have four stocks over 50 billion that i manage. i got a bunch of other things too. the action is with them. they're building up portfolios. they will buy $500 million at a time of something. and probably more prone to move around in securities than i would be. there's a lot of styles that work. i am enormously pleased. they are paying a higher tax

rate than if they were running a hedge fund doing exactly what they were doing if they were at a hedge fund. it's a really indictment of the tax system when you look at two guys who just moved doing the same thing from morning to night they did before and now they pay double the tax rate for it. >> andrew? >> warren, i want to get an update on my favorite subject, newspapers. you bought the omaha herald earlier this year. you have had time to get under the hood. what do you think? >> well, i'll have a big section in the end report about newspapers. i did write a letter to our newspaper publishers. if you have a newspaper that is indispensable to a significant percentage of its community, you're going to do well over time. we pay very low multiples for them. the trend of the newspaper industry is down but you have to be prime air about things that are of interest to your readers. if you're in grand island, nebraska, where we have a product, we have to be relevant to what people in grand island

are interested in. that's a much tougher problem as you get into bigger metropolitan papers. >> it's working better or worse than you expected? "newsweek" just said they were going to stop printing recently. i know community newspapers are a different situation. a lot of people always have questions. >> our small newspapers and by that i mean towns of 20,000, 25,000, our small newspapers operated throughout the entire year for us, the revenues are down about 1%. our larger newspapers like buffalo and omaha and now richmond, those papers, which are larger communities, revenues would be down 4% or 5%. there's a real difference based on relevance of the paper to a very significant portion of its community. the bigger the community, the hea harder to have a community feeling. >> earlier this week was the release of greg smith's book about goldman sachs. a guy that wrote that op-ed

piece in "the new york times" saying this is why i left goldman sachs. did you see any of the interviews that he has done? did you take a look at any of the book? >> i haven't read the book. i saw an interview. a guy 33 making $500,000 a year and unhappy because he isn't making a million and any other occupation he would be maki making $75,000 a year, i thought the idea that one disgruntled employee leaving a company warrants an op-ed with no specifics in it. i did not think that reflected great editorial judgment. >> i bring this up because lloyd blankfein will be on later in the morning. we appreciate you for spending time for us and when we come back we have the last word that we'll give to mr. buffett and as we mentioned coming up on "squawk on the street," there's a cnbc exclusive interview today with goldman sachs chairman and

ceo lloyd blankfein at 11:00 eastern. >> tomorrow on "squawk box," consumer bellwether proctor & gamble out with quarterly results. we'll talk to the company's cfo shortly after the company reports. and guest host robert johnson plus honeywell chairman and ceo david cote on the campaign to solve america's fiscal crisis. don't miss "squawk box" starting tomorrow at 6:00 a.m. eastern. bob...

oh, hey alex.

just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners.

let's get back to becky and warren buffett for the last word. >> thank you. last word is sort of a free word association game that we've been playing lately. i say a word and you tell me what it makes you think of and the question we get most frequently about you coming on is what should they be buying right now. if i say buy, you say? >> i say hold. the idea the european slowdown or this and that or anything like that would not cause you if you own a good farm run by a good tenant, you wouldn't sell it because someone says this a news item happening in greece.

if you owned an apartment house and you have to raise your rates, you wouldn't dream of selling it. if you had a good businessperson, you wouldn't think of buying or selling every day. when you own stocks, you own pieces of businesses. they're wonderful businesses. you can pick the best businesses in the world. to buy or sell on current news is just crazy. you're in a wonderful business. you have people running it for you. you know you're going to do well over five or ten years. and for think news events should cause you to try to dance in and out of something that's a wonderful game, it's a terrible mistake. get into a bunch of wonderful businesses and stay with them. >> i said buy and you changed it to hold. >> if you haven't got them yet, you buy them consistently over time so you average over time and i've been buying all my life. i bought my first stock when i was 11 years old. it was about three months after pearl harbor.

all of the news was terrible. it was a great time to buy stocks. i should have held that stock forever. i have been buying stocks ever since. >> do you guys have any last quick thoughts? >> warren, have you bet zuckerberg and if you sat down with him and you told him is there any way that he could explain the business well enough to where you would take a huge stake in facebook? >> probably not. that doesn't mean that i'm negative on it. i just don't understand it well enough. i'm actually not even a member. there's a billion of them out there. i like to buy things where i feel like i have a reasonable idea of how the business is going to be doing five or ten years from now just like i would buy an apartment house or a farm with an idea that it would be a good thing to own five or ten years later. >> there's a watershed event tomorrow that may change your view. you're free to send me questions as well if you would like. this is a game changer. >> actually, jo