decline of american growth by robert gordon. >> charlie, anything on your bed stand these days? >> i read the same book. and i really liked it particularly until i got to the end. they're wonderful at describing the problems, which i really like. when they get into the solutions always swla disappointing. >> warren. >> well, i like to say i read some 2,000 page philosophical, but i just finished reading ben bo sha's -- he died, but it's a recap of his life but mainly what happened at aig. >> gentlemen, i want to thank you all three for your time today. we truly appreciate it. that does it for "squawk box" today. make sure you join us tomorrow. right now it's time for "squawk on the street." good monday morning, welcome to "squawk on the street." i'm carl quintanilla with jim cramer at the new york stock

exchange. david faber is in los angeles. more from david in a moment. meanwhile premarket steady ahead of busy week of earnings. nikkei takes a spill overnight catching up to the yen and oil steady near 46. our road map begins with warren buffett speaking out in omaha. we're going to bring you highlights, no deal for halliburton and hughes calling off their $28 billion merger. and simon hobbs live from cuba on a carnival cruise ship. first up buffett weighing in on the markets, fed and earlier this morning on cnbc. this is what he told becky about the presidential election and the economy. >> if you ask me whether electing the wrong president can permanently damage the u.s. economy, the answer is no. i mean, we've had 44 presidents so far. this country will move forward regardless. and there's no need to make

america great again. america is greater than it's ever been at this point, but it's going to become ever greater. >> talked about koch, talked about ibm, talked about jeff bezos, called him a genius. and pushing back on that warning we got from icahn last week. >> i think one of the things he does is make you realize longer term if you decide to own companies, stocks of good companies that are undervalued are going to do well. and i think it's really important for people at home to recognize this is how they should be thinking about their portfolio. now, i know he also favors index funds, and that's absolutely fine, but there's nothing the matter with being a little self-directed and having an index fund, staying in. what i loved about what he thinks is he just recalls the really bad times. this is not a bad time. he puts bad times into perspective, but now, remember we're average up 25% on this day because of that -- >> that's right. you talked about the buffett bias. of course they're going to have results on friday. and they talked about over the

weekend operating net over at burlington northern, it's going to be hit. >> yeah, i mean, i think one of the things you have to realize is group by rail, burlington is one of their specialties because of the bakken. it's next year the problem will surface, not this year. it may look much better than it is. >> david, it's going to be interesting to see how some of buffett's comments today and over the weekend resonate out where you are. >> yeah, without a doubt it's an interesting group as you guys well know here at the milken conference. amazing people not just in the world of finance but medicine, life sciences or so many different areas, or government, it is a very interesting mix you get here. and fascinating panels. guys, i don't know what you thought. i know buffett had a lot to say about ibm and other things, his comments on amazon were also fairly interesting in part because he's a large shareholder in walmart and yet it did sound, didn't it jim, as though he wasn't sure he should be.

unless i wasn't listening closely enough. >> you know, i was listening, i said, okay, now we're going to -- because i love amazon i got to sell walmart, but he doesn't ever do that. let's understand there's only been a couple instances in all the years we've ever heard him say, you know what, i'm not happy with that situation. yes, i think that if you like amazon as much as you heard, there's really counterintuitive to own anything walmart. now, charlie munger talked about costco where he's on the board. and just point-blank said why didn't they do the deal with american express? i mean, my jaw dropped. that was basically saying, look, american express, what were you thinking? i mean, what were you thinking? and i just said, well, if i'm american express, i'm like, geez. >> munger had a couple zingers. the other favorite says i like the idea of artificial intelligence because we're so short of the real thing. >> yeah, that was bad. i can't wait to hear what scott wapner has with bill ackman because i think that the number

of times that valeant was referred to as being a sewer may be a new record on the network. >> yes. >> i mean, kind of a sewer really does not conote that you really want to buy a lot of their drugs. and, david, i don't know if you heard it but these guys and the rest of wall street that i see are saying that valeant is really in a lot of trouble. and yet we've got bill ackman saying it could be the buy of the century. we got to solve this. >> ackman will be on with scott at noon. >> yeah. i don't know, david, do you think it's a sewer? or more of like, you know, maybe a not great house. >> i think, listen, we've talked for a long time and actually we talk when the stock was far higher about the many challenges faced by a company whose strategy was based on what seemed to be a very low tax rate and an aggress i acquisition policy and with those acquired companies what we've learned, jim, is perhaps we didn't appreciate how much they raised drug prices. all that said mr. ackman will

come on and i'm sure give very strong defense of his very large position there of his significant place on the board of directors for a company that has to be change board of directors up very much across the board and a new ceo taking a seat, i guess, any day now in mr. papa. and the stock is, what, low to mid 30s, right, jim? >> yes. >> drive given that debt load will they sell a significant asset? no shortage of questions. i know guys who want to try to venture into the stock recently. sometimes they've been right in the past. >> right. i think charlie munger talked about the idea of the actual price rise and the impact it had on patients in some of the work he does and i think these will all be things that maybe scott wapner ought to play to bill ackman because it made me feel

like, wow, valeant very cheap on the cash flow basis, but when it comes to the actual nitty-gritty of being in the medical business, these guys don't seem to think it's in the medical business. >> yeah, not to mention executive comp and severance which was a story regarding pearson last week. you guys mentioned ibm, buffett talked about a bunch of aspects of the company. here's what buffett said. >> well, we feel fine or we wouldn't own it. and we've never sold a share of ibm. periodically we buy a little more although we're up fairly close to 10%. >> went onto say they're more likely to be a buyer than seller over the next year. >> yeah, again, to me a soft recommendation. i did not hear making a turn of a lifetime. i did not hear this is the re reinvention, i heard it's okay. david, one of the things you hear from warren buffett. he's not pounding -- he's not pounding the table. he's not saying this is the

moment. it's almost like he's a little lukewarm on some of those bigger positions, don't you think? >> yeah, i guess so. it's funny i come back to his comments on amazon and how much he was praising a company he doesn't own in terms of cloud strategy of course what they meant in retail yet he also owns walmart and ibm, but you said mr. buffett owns things for a very long period of time. we can remember those instances where he has chosen to hit the sell button, but they are far and few between. whether it's amex, iibm, wells fargo of course been a great success, coca-cola, so many of these names been in that portfolio for such a long period of time and ibm now seems to be one of those we can add to that. >> yeah. i think that when i look at ibm i think, yes, they can reinvent, but what was he in it for? for the buyback, the dividend. i remember when he said he didn't want to be in technology. i did not get warm and fuzzy about ibm from listening to him. again, look, you feel great about the world with warren

buffett. you feel not so hot about the stocks he has. now, i don't think he means to be as lack of promotion as he is. i just think that's kind of his way. i would love it if he said, you know what, this is the level where you just got to go buy walmart. but i felt like, david, the real takeaway is this is the level you've got to own amazon but he didn't own any amazon. >> i know. that's what i was hearing too. which was interesting. and i love the fact he referenced bezos' first annual report in his letter there and how he laid it all out. and here we are almost 20 years later and look what he's accomplished. i agree, it's funny. that's what i walked away from it as well thinking, jim. >> well, warren buffett, i've got to tell you charlie munger too, they tell it like it is. which means they're not saying, listen, this is the greatest thing since sliced bread. they say, listen, we own these stocks, they're good. i would have thought like coca-cola the beat the drum coca-cola remains the actual product, which i think many of us feels is the most challenged

part of the company. >> talked about sugar taxes and trying to make the argument if you're going to tax sugar, just tax sugar, don't choose a form in which sugar is delivered. that's another story. we want to get to this historic moment underway in cuba today. for the first time in more than 50 years a u.s. cruise ship is about to dock in havana with more than 700 passengers onboard. our own simon hobbs joins us from onboard the carnival ship adonia in havana. simon, good morning. >> reporter: good morning. it is quite literally history in the making. as you see welcome to carnival's cruise ship the adonia, which as you say is going to be the first u.s. cruise ship ever, well over 50 years, to actually reach cuba. at the same time this is the first opportunity that cuban-born americans are going to get to walk off a vessel, a commercial vessel and onto land after of course we had numerous changes in the laws and negotiations. it was six weeks ago of course that obama was here in havana

attempting to sort out relations. a lot of very happy people here waiting of course first to make land. this is also of course a big commercial opportunity. you know the likes of carnival, caribbean, norwegian have built a $60, $70 billion market value. cuba is bigger than all the other cuban destinations, all the other caribbean destinations put together. it has unaccountable numbers of beaches and coves. and a lot of it is of course to be opened up in the years to come. now, there will be a conversation about capacity. they don't have capacity to take many ships here. and arguably the cruise industry will say, hey, we'll help you a bit. we're not going to build it out for you, but moving down the line, guys, this is going to be huge. a third of the market is in the caribbean. 160 ships out there, probably even today. and all of them would like a little piece of this. we'll come back to you as we actually make land. we went past the old town just now. people actually lined up down the walkway and cheered as this

american cruise ship landed in havana. perhaps a sign of how things are changing here in cuba as of course relations thaw it is still not legal for people to come here as tourists. congress has decided not yet to make that move. and therefore people that do arrive here have to fit into the 12 exemptions to travel. and a lot of the cruise operators are helping them do that, but the rules that they have are softening so essentially as things stand at the moment you self-certify and say, yes, i will take an agricultural tour or i will go and have dance lessons. and that would appear is enough to get around the red tape at the moment. but this is going to be a massive market moving forward. and of course for cuban americans don't forget there was a lot of anger initially when they were booking this voyage and cuban americans weren't allowed to take part. carnival really in a unique position against the cuban authority as a private american business has been able to get those rules changed. we'll talk about that, guys, throughout the day.

back to you. >> simon hobbs in havana, simon, thanks. when we come back a look at this morning's movers as we move into the first trading day of the month. we'll talk halliburton baker-hughes scrapping their merger and a big week of jobs numbers numbers, ism and last big push of earnings. more "squawk on the street" in a minute. ♪jake reese, "day to feel alive"♪

♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪ debt can only be evaluat

halliburton will pay baker hughes a $3.5 billion breakup fee. >> i saw your tweet on that. this is one where i speak to a lot of people in this industry, to a person everyone said this was the dumbest deal ever and got really bad advice from lawyers. there was no chance whatsoever this would happen. this was anticompetitive. the companies were so, so adamant and so out of sync with

pretty much any antitrust department. the people i talk to in the industry said this was dead the moment it was even mentioned. >> which was a while ago. shave 2% off of 2014 m&a, announced m&a. >> look sometimes you get advice it's so stupid it really is rather extraordinary. david, you know that the people you speak to -- >> yeah. >> this is one where you're like are these two texans gone mad here? this is the united states of america, it's not the united states of texas. >> no, that's true. i mean, listen, the $3.5 billion breakup fee was a reflection of what they believe was some inherent risk in the deal. but they did truly believe that the vesture package they outlined, jim, at the very beginning was going to be enough, was going to be sufficient to get antitrust approval. that clearly wasn't the case. remember we got the 38-page complaint from the department of justice, yeah, like 38 pages, going into all the specific

areas in deep water and everywhere elsewhere the two companies would split market share well above what the doj believed make for a competitive market. again, not a big surprise. you can see from the response and the stocks, guys, the market is not surprised in any way, shape or form. for halliburton of course the decline in oil the last 18 months while they've been waiting and hoping to get this deal done thai now saying is a positive in a sense because of course that the deal economics have been damaged to such an extent as a result of that that it really doesn't matter as much any longer. as for baker hughes i wonder what the future holds for that company. they take in $3.5 billion, and they have a lot of assets that conceivably could have been sold and might still be depending on what strategy they pursue here. but it will be interesting to see how they choose to go from here. >> right. oil services just not that many players. they've all consolidated over and over again. i immediately hear ge's name and

i got to tell you i totally discount that. i think that's not where ge wants to be. ge wants to be manufacture which therefore indicate they might want to be in national oil, var co, new digitization technology will tell you ahead of time maintenance which is the most important when it comes to oil service equipment. this baker hughes, we go back to numbers, if we go back to the earnings it's -- i think it's maybe too high. but this is an industry where everyone's scrambling and -- >> they believe this rebalance finally happens in the second half. >> yeah, china's really drilling. drilling cut back this rather with u.s. cut backs people forget we are a big importer of oil. we're going to import even more.

the question is how much can the saudis really -- fired by carl icahn. often i want to stand down, i got to call carl, i wasn't able too that. was saying the saudis don't have the ability to make up for the current demand. the demand has picked up. the idea oil can't go to 50 is a little i think preposterous, but i think at 50 some of these producers will reopen wells and start getting some cash flow because some of these banks, they want their pound of flesh use a little bit of shakespearean stuff there. >> pay me. >> yes. >> when we come back we'll get cramer's mad dash. we'll count down to the opening bell, take another look at the premarket. nasdaq by the way down seven in a row. that's almost tied with an eight-day losing streak back in the depths of january. we'll see what happens. more "squawk on the street" in a minute. here at the td ameritrade trader group, they work all the time.

sup jj, working hard? working 24/7 on mobile trader, rated #1 trading app on the app store. it lets you trade stocks, options, futures... even advanced orders. and it offers more charts than a lot of other competitors do on desktop. you work so late. i guess you don't see your family very much? i see them all the time. did you finish your derivatives pricing model, honey? td ameritrade. [so i use quickbooks and run mye entire business from the cloud. i keep an eye on sales and expenses from anywhere. even down here in the dark i can still see we're having a great month. and celebrate accordingly. i run on quickbooks.that's how i own it. but they demand the best shopping experiences. they may want the latest products and services, they're your customers. and by blending physical with digital, cognizant is helping 8 of the 10 largest u.s. retailers meet their demands with more responsive retail models... ones that transcend channels and locations, anticipate expectations...

creating new ways to engage at every imaginable touch-point. it's a new day in retail, and together, we're building the store of the future. digital works for retail. let's talk about how digital works for your business.

seven memberships to the opening bell on this monday morning. let's get jim's mad dash. couple calls on well known names. >> united technology, goldman cuts but remember honeywell made its move to buy them. greg hays has done a remarkable job, but this is a sec cular trend. but aerospace has been the maybe the best single theme of this earnings season. whether it be honeywell, whether it be united technologies, whether it be boeing, which was a remarkable quarter. i understand it's already taking off. i understand i remembered people listen to jeff and the ge call

about how robust the aerospace cycle is. if it wants to come down you might want to buy this one. >> interesting. short interest on boeing had ticked up. >> some worried about some things with the dreamliner, people worried about the airline companies themselves not doing that well. they should be worrying about a shortage of planes. if you get out of the line, you can't get back in for boeing because the chinese are such veracious buyers. there's an industry where the negativity doesn't dovetail with reality. >> speaking long alliance, call on costco. >> jpmorgan adds costco. anyone on the american express conference call knows it was just a hate fest. they were saying costco's taking its business so visa, which is charlie shar f, the ceo, a lot of bad will all over the place. charlie munger on the board of costco basically say whing what nutty thing. one thing you have to love about

buffett and munger, they don't think of their companies as -- they want them to do well, but they're willing to be down there giving them the business too if they have to. >> yeah. charlie doesn't -- he says it how he sees it. >> maybe there's like a half dozen people in the world who just don't play for dinner. that guy doesn't play for dinner at all. that's why we love him. that's why we love this guy. >> what about the fact costco's not doing the kinds of comps they were doing three years ago? >> yeah, i'm wondering if that isn't because there's such confusion about the credit card. but as jpmorgan says the comps are easier in the second half. now, the numbers do come out. and i don't think the numbers are, again, talk about jack -- the research director we don't expect much for the next numbers about to come out. you might want to wait until you see it because i don't like it pumped up here. but you get it down here it's a good buy. >> and the membership fee starting to creep up again. >> right. there's no resistance in the membership fee for netflix, amazon prime in this one.

the only membership fees i know, everybody else i'm like -- oh, no, also apple. i paid that to back up my pictures. if i lose my pictures, i lose everything. >> that's right. get the opening bell in four minutes, don't go anywhere.

you're watching cnbc "squawk on the street" live from the financial capital of the world. the opening bell in about a minute. busy week we got an indiana primary tomorrow as trump looks to put this thing away. data wise, ism services, we got some pmis over the weekend, and autos tomorrow, jim, citi's got a call on some of these. >> basically we got to start looking at these companies as sum of the parts because they have so much truck business. and the truck business by the way is fabulous. gm using 44 to 55 price target. the worth. and ford 15 to 18. i thought it was amazing that ford after putting that great number was at -- was giving up when bank of america downgraded it. i think it's being short sided. the autos are back. they're doing well. >> we're going to watch for that tomorrow. of course the jobs number on

friday estimate right now is around 200. >> it's also important to point out that buffett was sanguine if donald trump won the first business guy to come out and say, hey, it's fine. he's a happy guy. we should all be so happy. i'm going to try some cherry coke later. >> opening bell and s&p at the bottom of the screen. nq mobile celebrating fifth anniversary at the nasdaq. putnam bank corps on the other side. >> i say be careful this new government -- this government, antitrust doesn't seem to want to make a lot of deals there. again, the oil service, that's a little extreme. i think they not like banking consolidation because there was so much of it. >> speaking of m&a, you see gnc this morning announcing it's considering a sale as part of a

series of strategic alternative. >> good because that quarter was so horrendous. vitamin shop, gnc, i don't know. i mean, this business is just awful. it's funny to see cherry coke we talk positively and a lot of gncs vitamin oriented. that's become a very tough business. i know a lot of people were fooled by how bad that quarter was. >> we got the nasdaq about 1% from sliding into correction. has tech been beat up enough by now? >> you know, two calls we didn't talk about enough last week. one was the seagate conference call. i'm putting in the disaster category. >> i think the drive makers are the worst of the year. >> so i talked to abbott the other day, and the seagate conference call basically saying, guys, we have got to shift down very radically. they have so much capacity. they're talking about they only need capacity for 35 to 40 million of the classic drives. they have 45 to 60 million. >> wow. >> yeah. this was down really badly on

friday too. people were saying that the dividend which yield about 11% is not safe. the ceo says absolutely we are going to defend the dividend, but the street doesn't believe it. bunch of downgrades in the last two days. then the other we didn't talk enough about is gilead. seven times earnings but people are saying gilead is going to be almost terminal they are acting like when it comes to their big franchise for hep c. i don't know, it was down 12% in the u.s. they are talking about price cutting. they are talking about the need to be able to make deals with payers including government. so these were -- gilead killed biotech. and seagate basically said, listen, only the cloud's working. and those companies don't make a lot of money when it comes to the cloud. so these were secular trends that were bad. >> you talked about rolling bear markets. >> yes. >> but your point is it's not done rolling through? >> no, now we're back. i thought that health care -- health care is a gigantic part 15% of the s&p. technology about 20% of the s&p.

and we looked at facebook and now facebook is run so much versus the other guys i'm surprised facebook pulled down by everybody. nxpi involved very much with the internet of things that's a little safer, but anything involving pcs, you know it's over if you listen to the seagate conference call. >> david, you want to raise the curtain on what we're going to hear out of milken this week? >> we have a lot of different guests as you might imagine, carl. in a little bit we're going to be talking with the head -- a lot of things of course second largest pension fund in the country can tell us about in terms of how it's moving its assets around. and milken itself, i mean, sometimes you do get some news out of the various panels. i'll be hosting a panel on activist investing a bit later in the afternoon of course. jim, it continues to be of interest even though we're many years into it and of course given the poor performance last year of activists perhaps there are a lot more questions about the strategy. it will be interesting. jeff smith will be on my panel

along with gene lee of course who runs darden. >> he's so good. >> yeah. they've been very good. >> david, i don't know if you caught any of the discussion about yahoo with warren buffett, he seems not that sanguine about the payout to marissa meyer if things don't go well. i wonder how your panel will think about that. because she does take a substantial chunk of what the company is earning. >> 55 million -- >> it's very bad. >> 55 million, it is a good question. you know, when it comes to some of this compensation decisions, it's interesting to see the background. and i would encourage people to actually go back and read a what was it a decision from the delaware court, it was a ruling based on some lawsuits -- do you remember enrique decastro, the gentleman ms. meyer hired early in her tenure who worked at the company for exactly one year, jim, and walked away with i believe roughly $80 million. fascinating series of events there that are described if people want to bother with

reading the justice -- delaware justice, i believe, sort of gave us a rundown on it of the back and forth between the board and what the board was told and not told about his compensation. but if you read that you'll get a sense as to still howry dick louse some of this stuff is, if i could just sort of leave it at that. >> well, look, i mean carl mentioned the indiana primary there's a great piece in 538 which is one of the tremendous sites that i read owned by espn about how indiana's different. indiana's basically just saying, you know, it's a very old school state. i listened to these numbers. i mean, if you're someone who works really hard in indiana and you work for united technologies and they're closing the carrier plant and you read about these sums, i think you think there's two countries. there's the country you work hard in and then there's the country that you don't have to work hard in and get paid a lot of money. >> well, certainly utx and carrier have been the focus of a lot of attention. >> that's the power of social media because, boy, i got to tell you, if you're a major ceo

and you're looking at three dollars an hour in mexico with no health care costs, zero -- almost zero absenteeism and no epa, it is so hard to stay in this country. it really is. so hard. >> really quickly, gold at 1300. >> wow. >> interesting to you or not? >> yes. i mean, the gold stocks have been one of the weak stealth bull markets. david, notice how no one talks about gold ever and it goes up. it's been the year of gold. >> this is the first time since january of '15 we got this number. >> i know. i'm agast that no one talks about it. it's kind of like as soon as the fed decided not to raise rates gold has been on fire. >> jim, why? why isn't anybody talking about gold? >> i think it got so out of fashion that people said it's never going to come back. and it's just the opposite. rand gold is going to make a fortune. they have very low fining costs. but you're going to start getting the marginal junior gold companies doing well. i guess it has to get to 1500

before people talk about it. it's kind of nutty because there's not a lot of gold left in the ground that's cheap. so i think this is a trend that's very much for real. people should be looking at new mont, but you want to know a company doing great buy rand gold downgraded six times since this year began. and look at that stock. dr. mark bristo brings it. brings it. >> the old adage sell in may and go away. major averages have not fallen in may since 2012. >> yeah, but carl, the e lit ration, i mean, this stuff really works for me. >> all right. so it's in the phonics. >> yes. fun with phonics, david, isn't that what the market's really about? >> it's about what? i didn't hear that, jim, sorry. >> we are talking about selling and go away, now usa today which has become the paper of record by the way for people who want to invest in this market just points out how it's been so

wrong. but i still hear people talk about it. change the month of may to something like i don't know a lot of countries don't pronounce it may. sell in, i don't know, give me -- i don't know. i mean really. not a lot of people at the white house correspondents' dinner were talking about may. >> no, got overshadowed. >> yes, exactly. >> dow did manage three months higher. that was the longest streak since a five-month streak back in 2014. >> now nasdaq's so bad. nasdaq's bad not just because of apple and not just because of microsoft but also these biotechs that started going back down again. i know people say what does sea gate mean it's such a small company, but if you read that you recognize that the cloud is overrun everybody. and the companies that make money in the cloud one-fifth of the companies that make money not in the cloud. so i see oracle once again making another acquisition. this time it's o power. oracle has just decided we are going to own the mission critical cloud services.

and i'm starting to say to myself these guys really get it. oracle gets it, man, move fast, move fast, move fast. cloud, cloud, cloud. >> really? >> yes. >> as fast as a crm? >> well f you listen to larry ellison they're already much faster growing. these are guys i never want to get in a cross-between mark ellison and benioff. i don't want to ever get on larry ellison's bad side. why is that? self-preservation. >> kind of like the kevin knight -- >> don't want to do that either. these are the war between the states, so to speak. and i just think that these guys are all -- they all want to win. they all want to win so badly. you know what, i respect what oracle's doing because this is another acquisition. this one is from the utilities industry. you got to pay attention to these.

i was skeptical at one point how much -- you can't be skeptical and make acquisition every other week. wow. >> with all that, dow's up a little more than 49 points. let's get to dominic chu on the floor. >> good morning, carl. just about flat right now so the market is in the churn. let's talk about the stories you've been hitting on post six here imc this is where baker hughes trades, it's up about a couple of percent right now. so on the heels of that failed merger attempt between halliburton and them. if you look over here this is the first day we have post five rebranded as citadel securities takes over the post here at post five. it used to be kcg. the signage now reads citadel. if you walk around over here this is on the halliburton side of things take place. those shares also trading up at least in the early going here. you can see up by about 2.5% here at post five. so halliburton, baker hughes certainly the big corporate story of the day. about 70% of that $3.5 billion

breakup fee is going back to buying up their own stock and retiring their own debt. huge story on that front. couple things i want to hit on earlier on you focused on, look at early movers in terms of sectors overall. we saw interesting action last week, but right now continue to see telecom services, some of those utility paying stocks doing pretty well in the early going today. as for this past week the reason why some traders are going to be focusing on the big ones here, tech, health care, financials, they were the biggest laggards in last week's trade. we'll see if they can somehow manage a turnaround. that's going to be a focus see if there's another leg higher in these markets and those gold prices, jichl was talking earlier, those are the two big names, newmont, barrick gold, but look at the market vectors gold miners etf. for those etf players and the junior gold etf we are seeing a little bit of a pullback. remember, they surged last week. that junior miners etf, carl,

doubled. back over to you. >> dom, thank you very much. let's get to the bond pits. rick santelli's at the cme in chicago. good morning, rick. >> good morning, carl. rates definitely slipped as all the meetings came and went, i'm talking central banks. but we are holding the lower end of a range in the u.s. and bund yields are a bit firmer off much lower levels in europe. let's look at intraday of tens. it readjusted rather quickly as we moved into our time zone. one-week of tens shows you that these, you know, low to mid 180s, it's been a while since we had a 170 on the closing basis and that is significant. now, if we really want to look at what's going on bund's one-week chart shows a difference, looks as though some rates overseas are having a relative pushback in a different direction than we were used to from about a year and a half ago. it's about dollar but also sort of all about gold. let's look at a mid 2014 gold

chart. look at the pattern. look at how we're about to pop on a closing basis to some of the highest levels going back to that year. now let's look at that same chart relative to the dollar index. notice the similarities. you really want to pay attention to this. it's not the only reason, but many reasons in the foreign exchange market make investors wary of paper for something a little more shiny. now, if we look at a one-week of the dollar/yen, now you see where some of the anxiety comes from. yes, that is a 106 handle. let's open the chart. three months, three months earlier than the record closing level, which is october. so let's go back to june of 2014. you see how much room there can be in this trade. and i underscore some of these big levels in foreign exchange. and how as we start to trade them they could ripple throughout much of the system including interest rates. carl, back to you. >> all right, rick, thank you very much. rick santelli. we have been watching oil pretty steady today.

ja ki da >> oil has come very far very fast holding over 45 despite the fact that the dollar index is now trading 92 and change. i will say this, we're going to start off may with some news about supply. opec people are saying -- the analysts that are surveying are actually saying that opec is producing closer to 33 million barrels a day. that is new record highs for the cartel. remember, if we talk about this freeze potentially coming maybe at the opec meeting in june, they would want to freeze at the highest output levels possible. so still from a supply/demand front not really great news. but the fact that we are holding over 45 probably seasonally related. and even though we're not in green territory today, it is that dollar index keeping all the commodities pretty much supported. i will say this too, a lot of analysts are talking about a new demand push coming out of india saying there's a lot of room for growth there. usually we hear this about china, usually we focus on europe, but now you have the iranians going into india trying

to gain some share there. the saudis soon to follow. and of course this has all been a game about market share when it comes to the international market. meantime my colleagues scooped me on gold but we are trading over 1300. i will point out traders say as long as the dollar/index stays this weak, there is room to run. 1330 is not out of the question. >> thank you, jackie. got to be quick sometimes i guess. >> right. history in the making as a cruise ship heads from the u.s. to cuba. hasn't happened in 50 years. simon hobbs is onboard. simon. >> reporter: yeah. hey, carl, in just a few minutes time here in havana this ship will disembark american passengers from an american ship onto cuban soil for the first time in over 50 years. and cuban-born americans will be amongst them as well for the first time in probably 40 years. first will be the general council of carnival who negotiated the deal to be here today. we're going to talk to his boss about what lies next within cuba

for the cruise industry with a military government. stay with us on cnbc. the call just came in. she's about to arrive. and with her, a flood of potential patients. a deluge of digital records. x-rays, mris. all on account...of penelope. but with the help of at&t, and a network that scales up and down on-demand, this hospital can be ready. giving them the agility to be flexible & reliable. because no one knows & like at&t.

this just got interesting. so why pause to take a pill? and why stop to find a bathroom? cialis for daily use, is the only daily tablet approved to treat erectile dysfunction so you can be ready anytime the moment is right. plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, or adempas for pulmonary hypertension, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours.

if you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. ask your doctor about cialis for daily use. insurance coverage has expanded nationally and you may now be covered. contact your health plan for the latest information. a good car has to maneuver quickly. that's also true of a good car company. people have always bought cars. but we saw an opportunity in sharing cars. so we moved fast and launched car2go in 29 cities, all around the world. doing that required dozens of data centers, designed for speed and performance. we built our business on the ibm cloud. because that's what the ibm cloud is built for. - omg. you are so funny. in the time it took me to type that, if i were driving 55 miles an hour, i'd have driven the length of a football field blindly. not funny at all. don't text and drive. the more you know.

there are certain people you do not want to try to beat at their own game and certainly jeff bezos would be number one. overwhelmingly he's taken things you and i were buying before and he's figured out a way to make us happier buying those products either by fast delivery or prices or whatever it may be. and that's remarkable when you think about it. >> that's warren buffett talking his views on jeff bezos with becky earlier this morning on "squawk box." you said there's a rite aid across the street from you, do you think i go there? you said that last week. >> obviously it's a question of the bulk. if i have to go get some tooth paste, that's okay. but if i know in advance that i need my sensodyne, i can do that on amazon. but who does amazon really attack? it's walmart because they're the biggest retailer and yet warren buffett owns walmart. it is hard for me to figure out

why to own walmart if you really feel strongly about amazon because amazon is listening, we're going to carve this up. that amazon conference call was so good. last week amazon was a standout, great quarter from expedia, i really like the linkedin. i know it didn't react as much. facebook, i know it's gone up so much. do you stand there and still tell people to buy it? i don't know, but those were the standouts. and they're web. they're web. i mean, it's the web that's doing well. it's the cloud that's doing well. >> sure. >> and walmart, look, i think walmart is doing everything they c can. but they're up against a really powerful, powerful opponent. and doug mcmillen doing some big steps. >> by the way amazon at 672 is about $3 from going green for the year. meanwhile walmart year-to-date -- i al popologize

that's a one-year chart. >> walmart, i think, you could say got oversold but to echo warren buffett i would hate to go against them. walmart has a substantial web presence. they do their best, but amazon, that amazon web service business that as bob peck said is worth more than $100 billion, it's really powerful. it's tough to own walmart. but they got that good yield. maybe they get it right, but that's not really -- >> do you think buffett exits? >> no. >> that's the thing, right? >> he doesn't do that. he'd rather denigrate his own -- if he starts drinking pepsico, look out. if that guy has a pepsi, forget -- >> we will get stop trading with jim in a minute. later on the "fast money" and halftime exclusive with bill ackman. scott will talk to him about valeant and a lot more obviously. dow is up less than two points. we're back in a moment. earningk from bank of america to buy a new gym bag. before earning 1% cash back everywhere, every time

and 2% back at the grocery store. even before he got 3% back on gas. kenny used his bankamericard cash rewards credit card to join the wednesday night league. because he loves to play hoops. not jump through them. that's the excitement of rewarding connections. apply online or at a bank of america near you. (man) that show.t to record (woman) now we have to wait forever to see it. (jon bon jovi) with directv, you don't. ♪ you see, we've got the power to turn back time. ♪ ♪ that show you missed, let's just go back and find. ♪

♪ and let's go back and choose spicy instead of mild. ♪ ♪ and maybe reconsider having that second child. ♪ ♪ see, that's the power to turn back time. ♪ (vo) watch shows you forgot to record. call 1-800-directv.

it's time for cramer and stop trading. >> yeah, you know, couple big calls here we didn't talk about.

cisco reposi sysco, a food service delivery company, nelson peltz, this man if you wait until even after you hear his buy recommendation he's buying it, he's not really recommending but he buys the stock and then you buy after it's become public, you have beaten the s&p. only activist i can find. he's not really an activist, that's why. he is just a very shrewd investor who helps management. so i'm trying to get away from the activist. i think it's the wrong title for nelson. i think nelson's just a very opportunistic smart investor. >> probably go along with that. >> yes, and i think sysco is terrific. battleground royal, sarepta has something and it's that very low, you know, in terms of just -- side effect, the fda is going to have to make a final rule. the panel didn't like it, but there are some people who seemed

to like it very important analyst. 43% short of this thing. if they get approval, wow. and if they don't get approval, okay. you know, they don't have a lot else cooking. >> our producer making note of the range of target prices. >> yes. this is it. adam who has done this remarkable job at the street covering it, go read his piece because he talks about there's a compassionate use issue. the fda is really getting in touch with these families now, and that's fabulous the fda is taking the families and taking the patients into account. >> yep. >> well, that is the right thing to do. >> lives are at stake here for sure. >> that's so right. >> what about tonight "mad money"? >> international paper didn't mention they brought us some paper mills from warehouser wy. and then newel brands, michael polk, now called newell brands, what a great quarter they reported last week. kind of undervalued not looking at this gigantic company with 60,000 employees, i'm looking at

because i think it's a buy. newcast newell brands. >> great way to start the week. >> can't wait. >> jim cramer, "mad money" tonight 6:00 p.m. when we come back, breaking news ism and construction spending. and then simon onboard the historic cruise to cuba. there's a live picture right there. we're back in a moment.

you're down with crestor. alright! now there's a way you can get crestor for $3. adding crestor, along with diet, lowers bad cholesterol. crestor is not for people with liver disease, or women who are nursing,pregnant, or may become pregnant. tell your doctor all medicines you take. call your doctor if you have muscle pain or weakness; feel unusually tired; have loss of appetite, upper belly pain, dark urine or yellowing of skin or eyes. these could be signs of serious side effects. ask for the crestor $3 card. ask your doctor about crestor.

good monday morning. welcome back to "squawk on the street." i'm carl quintanilla with sarah isen, mike joins us as well. david faber at the milken institute conference in l.a. with some big interviews coming up. simon is on a cruise ship in havana, more from simon and dafd in a moment. meanwhile dow up some 24 points ahead of a busy week of earnings, politics, macrodata, auto sales, jobs coming through

the course of the week. in the meantime breaking data here. rick, good morning. >> let's go krchronologically, carl. ism up a little on the light side following a big revision. last month down half a percent jumped up to 1%. that's good. now, april read on ism, we're looking for a number in the ballpark of 51.5. we end up with 50.8, 50.8, which means we now can say five out of the last seven have been under 50, but we now have two in a row over 50. so that's very important. and if we look at some of the internals considering it's employment week, the employment aspect, the index there is 49.2, so it's under 50, but it's up almost a little over a point from 48.1. carl, back to you. >> all right. i'll take it, rick, thank you very much. here's our road map for the hour. with warren buffett, charlie munger and bill gates sitting down with becky in omaha, we'll get you all the headlines out of

berkshire's annual meeting including buffett on koch, amazon, walmart and more. plus, baker-hughes and halliburton calling off their merger after regulators objecting to the deal on concerns. a $3.5 billion breakup fee ensues. and stocks come off worst week in february, another busy week for earnings and of course the big jobs report on friday, carl. >> all right. it is history in the making. for the first time since 1959 a u.s. cruise ship has docked in cuba. more than 700 passengers onboard. our own simon hobbs joins us this morning from havana on board the carnival ship adonia. hi, simon. >> reporter: hey, carl. you know it's another important milestone in the thawing of relations with cuba. one of the big questions we're going to ask in the next hour is how able the cubans are to handle the cruise ships that will now come from the u.s. mainland. this of course is the first from carnival. it's a social impact brand. we'll explain what that means and why it's important, of

course, given that the restrictions are still out from congress on tourists traveling here. key question, do they have the infrastructure, do they have the investment? to that end we have a slight hold up. we're actually not in the port yet because they're not ready to receive us. now, we're not quite sure why that is. there was a rumor that maybe they needed water to pump into the dock, which seemed a bit silly, but then there was a discussion maybe they needed water because so many people there ready to receive this american ship and the fanfare will be so great. we will see. and we will talk of course to the head of the carnival organization, which is ahead of all their rivals in negotiating to be here today on both sides of that negotiation. and of course with cuban-born americans importantly ahead on the show. for the moment back to you. >> gorgeous live shot that's for sure, simon. thank you very much, simon hobbs. berkshire hathaway's annual meeting over the weekend in omaha. and buffett along with charlie munger and bill gates joined becky quick this morning on squawk. let's get back out tobeck ki, cover some of the highlights

which really ran the gamut from individual names to macropolitics, good morning. >> hey, carl. great to see you guys. yeah, we did talk about a lot of different issues this morning. as carl mentioned we talked about companies, we talked about some of the micro. but right now it's really the macro environment that's on a lot of investors' minds. so many issues impacting stocks and people's decisions as they try to figure out how to invest. we did spend time talking about the macroeconomy with buffett as well. first up has to be what's happening with the economy. we got really lousy gdp numbers for the first quarter. the growth of 0.5% was stunningly bad. and a lot of economists have really brushed off some of these concerns by saying the quarter we're in right now the second quarter we've already seen growth pick up pretty spectacularly. that's something we've been hearing out there, but mr. buffett who has his eye on all of these things not only through the companies that berkshire-onberkshire-on owns outright but investments from ibm to wells fargo to

american express, he's not so sure. >> we're not living in a world where i think you expect the u.s. economy to grow -- the gdp figures are inherently a little more suspect in terms of being precise than year over year figures, but that doesn't negate the fact that the business is slow. >> yeah, that's really interesting. that's a point steve liesman has been making too, just the idea of measuring gdp whether it's accurate, whether there's a better way to do that. it's a conversation steve's been having for some time and he's done some research to back that up. maybe we could talk about that with him a little later. but in terms of other macro issues affecting the economy, something that might actually help is the weaker dollar relative to some of its biggest peers. you mite want to look at what's been happening with the yen. in just over the last 18 months you can see that very recently

we are talking about a yen that has hit an 18-month high versus the dollar. that's been happening at the same time that the dollar's also relatively weaker against the euro. things like that certainly help american exporters, companys that are looking to sell their goods overseas when you see a weaker dollar that's a much bigger gain for them. it's a tailwind versus the headwind that the stronger dollar had been for most of the last year or longer. now, buffett talked about berkshire's relationship with that too. and when it comes to berkshire, its relationship with currencies it's a little more complicated. >> we have exposure to -- we do business so much all over the world that i don't really know whether it's good or bad for us when a currency moves because we have lost reserves for insurance that are payable in euros, pounds, yen. and we have some foreign currency investments and then we own stock in companies like ibm or coke that do a lot of business abroad. so i've sort of given up in trying to figure out when you

tell me what currencies have done whether i'm richer or poorer. >> that doesn't mean that he hasn't spent a lot of time thinking about some of those trends. berkshire does not have any big bets on currency or any bets on currency and hasn't in about ten years. but he did say that something he spends a lot of time thinking about isot only the currency moves but what the central banks are doing. central banks around the globe. he says it's unprecedented. he's never seen anything like it. in fact, he says no one's ever seen anything like this. the history is being written while we watch. he thinks it's such an interesting movie to see particularly with negative interest rates in japan and europe. that that is something all investors are spending time trying to get their head around. he said he doesn't have any answers but they have tried to work out some scenarios of what could come next. we were joined a little later in the morning by bill gates and charlie munger. they said the same thing. warren said the three of them almost never talk about mac macro issues but they've spent over the last few years when they do get together about negative interest rates and what

that might mean. bill gates pointed out, yeah, it happened to japan and it's been 20 years trying to figure out how to get out of it. we don't know what the answer is or how to get out of the box of that situation. i thought that would be an interesting topic of conversation. sarah, i know you follow these currencies and watching some of the central banks, but those were some of the macroissues we dug into today. >> fascinating munger's point about how some of these emergencies around the world, puerto rico for example, are things that berkshire is expert at avoiding, not necessarily talking about. becky, what a morning and what a weekend of news coming out of omaha. we'll see you in the 11. >> thanks, carl. >> mike senior kmeren commentat us on post nine. for example, if rates were near zero for 50 years and you knew that would be the case, in his view dow goes to 100 k. >> if the government made a credible statement that in fact rates are going to be at zero for 50 years, go to 100 -- now, i think he meant in relatively

short order. if he meant 100 thousand, fifty years, i think that gets at a core issue the markets have been dealing with for a while now which is stocks as a source of refuge and yield in a world that is very short of safe yield of any kind. that's one of the things we know in some unquantifiable way has been supporting the market. stock yields at 2.3 or something like that it makes sense. that's not the way he invests. he's not a yield investor per se, but i think that gets to this issue of kind of the rules haven't really been written or are not clear about this environment that we're in. and if it's just the fact that, you know, central banks are slower to get back to normal, maybe that's okay. if this is normal now, that's a different game. >> i did enjoy the comments on currencies, of course, and on central banks. and i think, mike, for a lot of people, for a lot of long-term investors watching it's refreshing to hear buffett sort of joke off the moves in the

japanese yen or in these currencies because, yes, while they are fluctuating wildly and we have people coming on this network saying how scary that is and how concerning that is, if you're an owner in fundamental companies you believe in for the long-term, can you brush it off as buffett says? >> you know, i don't think if you're actually running a company day by day that's global you can totally brush it off. but i think what he really offers is somebody who has been actively investing for 60 years and who recognizes that time actually takes care of a lot of these issues and basically a lot of it evens out over the decades. that's something that maybe is reassuring to somebody who can take that kind of time horizon, but maybe not everybody can. >> does that explain why he is i would argue marginally constructive on planet earth but on walmart, ibm, coke and axp, right, they haven't done much in the past couple years. >> definitely partially explains that. but i also think the context for when he got involved in those companies matters tremendously. his cost basis is near zero. it's all profit to him.

he got massive revaluation of these companies in the first couple of decades that he owned them, coke, american express, wells fargo in particular, and right now the threshold for selling them and doing something else with that money is very high. and i think it probably should be. i thought it was very telling as well though this morning as he was talking to becky when she asked him, you know, what about your successor who is are going to be running this portfolio? will they have the same kind of affinity for holding these stocks for the long-term as you do? he said probably not. if they don't have a history, they may have better ideas or other ideas of what to do with the money. >> mike, you're going to stick around. good to have you as always. >> got to talk about coke later too. meantime carnival has just become the first u.s. operator to dock in the country of cuba from the u.s. in more than 50 years. our simon hobbs joins us live onboard the ship where he is joined exclusively by carnival's president and ceo arnold donald. ah ahoy, simon.

>> reporter: hey, sarah. welcome back to the carnival adonia where we're beginning to turn. we've not actually moved into harbor yet. there is a delay, as i explained before in the program. obviously if you've been watching all morning, this is the first american cruise ship from the u.s. mainland in over 50 years to come to cuba, and for the first time cuban-americans can travel by commercial vehicle, commercial vessel to cuba. question, how do you think the cubans would greet an american cruise ship after all this time? remember, everybody else is already here, the europeans and the canadians are traveling all the time. look at the people that are beginning to line up as we prepare now to move -- having passed the old town to now move into havana port. i want to bring in the ceo of carnival arnold donald. how do you feel at this stage? your guys have worked very hard to get here and be the first ones in. >> first of all, welcome to cuba. we're delighted to be here. we feel fantastic. we're humbled. it's an honor, it's a privilege to be here. and we can't wait to get in.

you can't see -- you can see the people there, but there are a lot more people inside the terminal, a lot of media. and that's been one of the hold ups. they're getting everything organized, but we'll be coming in soon. >> okay. what happens after this voyage though? because the infrastructure is sparse. there's one key there that has two sides. again, i've confirmed the italians are going to be there most of the winter five nights out of seven. there's no space for you or royal caribbean or anybody else who gets permission, is there? >> well, we've been talking with cuba about that. and of course we have plans to come with additional brands. we have ten as you know. sure royal and norwegian, the other cruise lines are planning oncoming as well, but it will be paced over time. for the time being people should be prepared to sail on fathom from the u.s. and later this year, late this year, early next year perhaps open -- >> but are we talking one or two or three more slots? >> at this time now you keep in mind there's 11 ports in cuba. so if you want to just come to havana, there's only so many slots right now. that will expand over time. but we're also going --

>> sure. there will be people who work in congress who are watching you now who will go hang on a minute we haven't given permission for general tourism to cuba yet. we haven't lifted that embargo. obama clearly has made moves, but you guys with the social impact ship are trying to work within the rules as they exist. now those rules clearly are effectively changing. what do they amount to at the moment? >> right now you still have to travel with the 12 approved forms to cuba for americans. and we are honoring that. all of our tours are set up to accommodate that. for those listening, you can still have a great time within those confines. and you also can have some time on your own as long as you meet the requirements -- >> but has it kind of been neutralized to an architectural tour and a bit of dancing lessons and i can take all the boxes? >> not at all. you'll get walking tours. you'll see all the things tourist see you'll see it in a deeper way with cultural exchange orientation. you'll go to beaches but when you go to the beaches you may

study marine biology. the reality is you'll experience all the beautiful things in cuba. we make it easy. there's no better way than to go on fathom. >> you have reversed potentially what was a public relations nightmare. suddenly cuban born americans said you aren't allowing us. ultimately you got the law changed or so it would appear. but still if you're cuban born you have to have a special type of visa. and i'm not sure how easy that's going to be for people to play on a level playing field. where are you on that? >> you know, the reality is there was some controversy. but we had confidence all along and it proved that we're all here taking everyone with us. in terms of cuban born, yes, if you were emigrated before january 1st, 1971, you have to have a special visa. after that time you have to have a cuban passport with a visa. but there are many cuban born who have flown to cuba, so that process is in place. it takes a little time. but we have nearly 20, i believe, cuban born on this ship

that will be stepping ashore. the first of course is arnie perez who helped lead our working team here. here's our general council and he'll be the first person to step ashore. he in fact cuban born, it's a great moment for him, for our company, for america and for cuba. >> you guys have built an industry of $60, $70 billion in market cap on mainly the caribbean it's a third of the business for all of you and your competitors. people have to understand this is as large as the other caribbean destinations combined in one if you can open it up. >> yes. >> limitless beaches almost. what resources are you prepared to commit as an industry to do that? or are you going to wait for the military government, who may not come through? >> oh, no, look, cuba's been very cooperative. we'll invest alongside whoever they encourage. we're all willing to help build up and it's great for the entire caribbean. it's not just for cuba because cuba can be one stop along the way, it will refresh the caribbean. people love coming to the caribbean, but many have been

many times so it gives them another reason to come and that will help all the ports in the caribbean. >> i'll let you cool off, there are many hands to shake. the ceo of carnival. every now and again, carl, you go, wow, this is a really great job. back to you. >> you definitely did not draw the short straw this time, simon. thank you very much. simon hobbs, rubbing it in. steve liesman here with breaking news at hq. >> carl, thanks very much. the european central bank out with a blockbuster paper now saying that they find evidence of early trading on u.s. data releases, the ecb paper looked at 21 u.s. macroeconomic data releases finds evidence of substantial informed trading on seven of those 21 before the official release time up to 30 minutes before it. they say the profits is in the hundreds of millions of dollars from '08 through 2014 both in the s&p and in the bond market where they look at trading in the ten-year. here are the seven that have come in for special scrutiny

where they find that substantial evidence of pretrading drift, they call it. the consumer confidence indicator from the conference board, existing home sales, the gdp preliminary data, industrial production, the ism manufacturing and non-manufacturing index which just came out along with pending home sales. carl, there have been other studies on this. this one seems to go further. it finds evidence up to 30 minutes before the trade and seems to find it more widespread. some actions have been taken by some agencies over the past several years with some of this microtrading that's come out in the nano seconds, but this paper suggests there's still more work to do because there is what they call potential information leakage here, carl. >> look forward to some responses from stateside agencies on this one, steve. >> exactly. >> thank you. when we come back, some more from warren buffett, becky's interview on "squawk box" this morning and chief investment officer with faber after the break. later today activist bill ackman

on the report at noon for the full hour. dow up 68. they found out who's been hacking into our network.

who? guess. i don't know, some kids in a basement? you watch too many movies. who? a small business in china. a business? they work nine to five. they take lunch hours. like a job? like a job. we tracked them. how did we do that? we have some new guys defending our network. new guys? well, they're not that new. they've been defending things for a long time.

[ digital typewriting ] it's not just security. it's defense. bae systems. david faber at the milken conference. >> thank you, sarah. joined by the second largest pension fund in the country at roughly $180 billion that you

oversee, nice to see you. >> good to see you. >> thanks for stopping here at the milken institute conference. recently you said you are going to undertake a risk mitigation strategy, roughly 9% of that $180 billion i mentioned going to be put into risk mitigating asset classes, why? >> we've got a real growth portfolio. it's done really well in bull markets, but we really need to balance that. and you can't look at bonds anymore. with flat interest rates and negative interest rates in a big part of the country, we needed other strategies to diversify the portfolio. >> but why now? >> again, because i said the low interest rates. >> right, we had low interest rates for really long time, chris. >> we're at 200-year lows in the usa. 300-year lows in the uk. the fact you've got negative interest rates in so many other places. so it really is kind of a factor of coming through '08 doing so poorly in the global financial crisis and really wanted to find ways to diversify out the portfolio. >> so how do you do that? you want to protect your downside and willing perhaps to not get as much upside as you might otherwise. >> you have to give away a little bit obviously to get some

of that insurance. so it's interesting when you look at the bond market, the one safe haven in usa or in the world now is 30-year government bonds. not a great investment, but a great insurance policy. so we're buying some of those. we are going into some hedge fund strategies, which has gotten a lot of attention. but we're really just looking at two, global macro and ctas and then risk premium strategies. >> when you're talking about 30-year bonds and looking at a need for 7.5% annual return over time. >> right. >> to be fully funded. and you return 4.8% last year, i think you'd be going the other way getting more aggressive, not less. >> well, the rest of the portfolio is in global equity, private equity real estate, so it's in growth strategies. and we're in a low patch in gdp growth. so i'm not surprised last year and this year are going to be pretty flat. but we think long-term the growth part of the portfolio, which is, you know, the other 80 to 90% will do very well. and this will protect us in

recessions. >> didn't you get the memo that hedge funds are no good and 2 and 20 are ridiculous and never seem to even meet the s&p? why would you now want to move into that asset class? >> great question. i get that question a lot. we're not actually a big fan of hedge funds. we were very late into them. we didn't rush into them when a lot of the other public funds did in '04 to '07. we actually only started to invest in them really in about '09 to 2010. and it's important to note we're only in two strategies. some of our peers went into everything. there's 22 different strategies hedge fund they went into all of it and overlayed it with multistrategy. so they ended up with a whole basket of stuff in the end you're right had a beta to the market didn't add any value. we're looking at strategies that are countercyclical to growth and should help our portfolio. >> so you talk about global macro potentially being one of them. >> yep. >> sometimes the risk mitigation is not quite what the investors in the fund expected it to be. >> well, that comes down to due

diligence. you really got to do your homework. we're not going to be in hundreds of funds, we're going to be very focused in a handful of funds. really ones their strategy fits with what we're looking for. you bring up the 2 and 20. i want to just drive that point home. 2 and 20 is dead. people have to understand that. that model has been broken. >> well, you can say it, but does that mean you are not paying it? >> we are not paying it. we are going to aggressively -- because 9% of our portfolio -- >> that's a lot of money. >> right. we have a size advantage. we're going to come in. we are already negotiating. our staff is put on their boxing gloves and gone in there and just laid it out what we're looking for. we're a long-term consistent investor, so we think we can use our advantage with any of the funds. >> i'm just curious 2 and 20 is dead for you perhaps, but is it dead more broadly speaking for the industry as a whole in terms of hedge funds? >> if you and i were going to bring out a hedge fund, we'd start at and 20. it's the model and people have been doing that for over 50 years starting in private

equity. it's been around for a long time. so for the new funds, the small investors, they're going to ask for that, but i think overall you're already seeing that that's been broken. the management fee has gone lower, the incentive in some cases goes higher. because funds think they can be successful. but in most cases that split comes down. >> and finally, chris, back to the original point. risk mitigation would imply you're somewhat negative or getting more defensive. i mean, are you worried about the broader market? >> no, we're just trying to balance our portfolio. so it's all back to that point of having a balance in your portfolio. being exposed to gdp growth, but then also having some balance on the other side because we are going to have u.s. recessions and we're going to have global recessions. this is a low patch, but we think overall growth will come through. >> all right. we appreciate you're taking some time. >> you bet. great to be here. >> thanks for coming out. >> you're welcome. >> chris ailman, ceo of calstrs. thanks, david. see you in a bit. we have a news alert.

let's get to eamon javers. >> the department of justice wrapping up a phone call with reporters on this baker-hughes/halliburton deal abandoned. antitrust folks saying they are, quote, very pleased that that deal was abandoned. they said the deal was ultimately unfixable and they offered two points, which are important here, one is on this issue of a remedy. they said a lot of times companies assume if they offer an expensive enough remedy, they offer to sell enough assets out of the merged entity that that will somehow do the trick as far as the doj is concerned. they said, no, in the end didn't solve the anticompetitive problems they faced and also talked about r & d spending. they said r & d spending very important overall want to make sure companies are still innovating in that industry. two factors they cited in shutting down that deal. >> thank you for the update, eamon javers. coming up, he was one of the first -- he was the first ever winner on "the apprentice." we'll talk to bill ransack about small business and working for donald trump next. touching a ra.

amazing is moving like one. real is making new friends. amazing is getting this close. real is an animal rescue. amazing is over twenty-seven thousand of them. there is only one place where real and amazing live. seaworld. real. amazing hey kevin. hey, fancy seeing you here. uh, i live right over there actually. you've been to my place. no, i wasn't...oh look, you dropped something. it's your resume with a 20 dollar bill taped to it. that's weird. you want to work for ge too. hahaha, what? well we're always looking for developers who are up for big world changing challenges like making planes, trains and hospitals run better. why don't you check your new watch and tell me what time i should be there. oh, i don't hire people. i'm a developer. i'm gonna need monday off. again, not my call.

you wouldn't order szechuan without checking the spice level. it really opens the passages. waiter. water. so why would you invest without checking brokercheck? check your broker with brokercheck.

for decades, investors have used a 60/40 stock and bond model, with little in alternatives. yet alternatives can tap opportunities that traditional assets can't. and even though they're called alternatives, they're actually designed to help meet very traditional goals. that's why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. translation? goodbye 60/40, hello 50/30/20. ♪ e.t. phone home. [ soft music ] when you find something you love, you can never get enough of it. change the way you experience tv with xfinity x1. good morning everyone. i'm sue herera.

here's what's happening at this hour. seattle is cleaning up this morning after may day marches turn violent. at least five officers were injured as demonstrators threw rocks, bottles and molotov cocktails. police were forced to use pepper spray to disburse crowds. the marches were in support of worker and immigrant rights. secretary of state john kerry is in geneva in high level talks over the crisis in syria. kerry told reporters progress is being made on a plan to reduce the violence in the city of aleppo. more than 200 people have been killed in aleppo over the past nine days. torrential rains taking their toll on parts of louisiana. in some neighborhoods boats had to be used to rescue people from their homes. the high water also forced the closure of some major roadways. more than six inches of rain was reported in some locations, and more is on the way. and i.c.e. is at the center of a class action lawsuit against starbucks. the company claims the chilled drinks are almost half ice and

customers aren't getting what they paid for. that is the cnbc news update this hour. let's go back downtown. sarah, back to you. all right, sue herera, thank you very much. national small business week is underway, aspiring entrepreneurs from across the country are gearing up to tackle issues like securing your business and the impact of government policies on small business. helping us kick off national small business week is bill rancic, owner and winner of the donald trump show "the apprentice" and a small business owner himself. good to see you, bill. >> good morning. good morning to you, sarah. >> so just in terms of the climate for small business right now we just got a read from the nfib on small business optimism two-year low, all sorts of negative expectations when it comes to the economy or credit conditions. do you share those concerns? >> well, you know, that's why we're here kicking off small business week. we're here to celebrate small business, we're here to encourage customers out there to

visit their small business this week, spend their money because they're such an important part of our economy. as you know they employ more people than any other sector of business outd there. they're the ones rebuilding main street. they're the ones supporting the local soccer teams and community activities. it's something that's very important. i'm actually coming to you right now from a small business here in d.c., rpm, you may hear the construction in the background, but it's a restaurant my wife and i and partners are opening in the next few weeks. >> i was wondering what sort of ventures you were in to after winning "the apprentice" i know you've been doing real estate and restaurant, what else do you have going on? >> the restaurant business is really growing. this is our third opening, we have two in chicago, one in d.c. my wife and i launched a wine called xog wine, it's a stackable bottle of wine now available nationwide. we've really embraced that entrepreneurial spirit. certainly we feel good about it. we think there's a lot of

advancements with technology leveling the playing field for small business. you look at social media, teleconferencing, look at all the different ways we can be more efficient and grow our businesses rather than getting on airplanes and traveling, you know, to and from every other day. >> so we've got to ask you about trump. not only did you win "the apprentice" but you went onto oversee the construction of the trump international tower in chicago. >> i did. >> can you share an anecdote with us about working for him that might help inform viewers about whether they want to vote for him? >> it was one of the best things that ever happened to me. certainly was an opportunity that changed my life. got to learn how business was at that level and got to see how he operates. and, you know, he's a hard working guy. he's an honorable guy. someone i'm forever grateful for. that's for certain. he changed my life. >> how did he change your life? besides just winning "the apprentice". >> well, i mean -- >> give us on the inside. >> well, spending three years working with him on that project in chicago was remarkable.

seeing how deals are negotiated, seeing how, you know, he works with different partners, with employees, the people he hires. i always say this, you can tell a lot about someone by the kids they raised and i know you've had ivanka and don on your show many times. they're not kids, they're adults, but they're hard working and honorable, there's no free lunch. they're the ones putting their time in to growing that business. i have nothing but good things to say. >> bill, thank you. bill rancic joining us in honor of small business week. when we come back a lot more from warren buffett out of berkshire's annual meeting in omaha including some individual names, talking some coke, talking some ibm, that's after a break. ♪ you're not gonna watch it! ♪

♪ no, you're not gonna watch it! ♪ ♪ we can't let you download on the goooooo! ♪ ♪ you'll just have to miss it! ♪ yeah, you'll just have to miss it! ♪ ♪ we can't let you download... uh, no thanks. i have x1 from xfinity so... don't fall for directv. xfinity lets you download your shows from anywhere. i used to like that song. berkshire hathaway's annual meeting taking place in omaha. warren buffett spent the morning with becky quick on our air.

among investments he had a lot to say about coca-cola. >> i drink probably five 12-ounce cokes a day, and that's about 700 calories. and i've been doing it more or less all my life. i can't imagine anybody that feels better than i do. i mean, i'm happy, i enjoy life. i've always wondered if i had a twin and he had to eat broccoli and asparagus and brussels sprouts every day and i had been drinking my coke and potato chips and here's some cookies that also have 100 calories per ounce, which of us -- i think the other guy would be gone. >> for more on what warren said we're joined by mike here at post nine. jeff matthews, author of "secrets in plain sight," jeff, you say his comments on coke are a little unsettling although they made headlines over the weekend. why? >> well, i just thought he

didn't really answer the question. andrew when he asked the question was very pointed and said please try to keep the personal anecdotes out of it and really address the issue of whether coke on the whole is a good thing for society or not. and he didn't really get into that. he just tossed off the usual tap dancing warren buffett stories. so i thought he was kind of off his game there that meeting. >> this is the departure from past omahas, mike? >> i don't know that anything in his view has changed enough about coke's business except the perception of it. and of course the attention to the health impact that he would necessarily change his thoughts about that. so maybe that piece of it didn't surprise me. but it is a little bit dissis dent when you hear him hyperrational about statistics to other businesses and then not be that receptive idea to the issues maybe long-term structurally with coke's business because of its product. >> the other thing it speaks to, jeff, buffett is on the defensive about some of his biggest bets, not just

coca-cola, ibm, american express, we've talked about it a lot but it shows you what position he's in when it comes to defending these companies versus years passed. >> right. i would argue he's been a bit less rational here. i think he's in the past done a much better job of handling both sides of an issue. you know, he didn't want to talk about ibm what the strengths and weaknesses of ibm were. in the past at the very beginning of the meeting the first thing he says is what we won't talk about is what we're buying now. now it seems to be we don't want to talk about what we own and why we own it. charlie munger once said if you can't say what you own and why you own it, you're not an investor. so i thought it was kind of unsettling. >> are you implying, jeff, that it's age-related? i'm trying to read in between the lines of your comments. >> i'm not talking about -- i'm not trying to -- i'm not trying

to diagnose it, i'm saying it was unsettling because it was a different guy than i've heard in the past, i think. >> you sold brk last year after precision kas parts you have said was madness. >> right. >> this time you did not attend the meeting for the first time in a decade although you did watch the webcast. any regrets? >> actually, no. i guess i avoided a lot of rain, which i've hid in the past at those meetings, i know how they can be. the best part of the meeting now is actually talking to berkshire managers and old friends who go. but i thought charlie and warren's q & a session was a little disjointed. charlie was actually much sharper of the two, i thought. >> what was also notable was some of his comments this morning with becky on the banks, some of his positions on wells fargo and goldman sachs that have been suffering lately. let's play a clip of the sound from buffett speaking to "squawk box" this morning on why he likes the banks. >> we don't buy them based on

what we think they're going to earn next month or next year. they're actually earning pretty good money as it is, but -- and reserve requirements are probably more important factor almost than low rates. it's a factor in berkshire. we have close to 60 billion that's out invested a quarter of a percent or less, one point on 60 billion $600 million a year. >> geez. >> if we were getting three or four percent on that money, that's a couple billion dollars to us. >> yeah. >> and, you know, you notice it. >> so in that answer, jeff, i mean he is making a sound point of why he is investing in the banks. and he's giving investors everywhere, as he usually does, a good reminder that it is about the long-term even though the bank troubles have been going on for a few years now. >> absolutely. i thought his bank comments at the meeting were great. and i also thought his analysis

of the reinsurance business was fascinating. i thought that was the most interesting part of the meeting coming out of warren buffett. if you didn't want to short reinsurance when you went to the meeting, you sure did coming out overit. and i thought that was a great part of the meeting. great analysis. >> jeff, you know, i was wondering when you talk about his unwillingness to get into any depth about ibm holding. do you think there's frustration on his part that everybody focuses on the public stock holdings, which in his mind are important, you know, but not really the core piece of the value of berkshire. here you have berkshire hathaway stock trading within 1% or 2% of its all-time high at the same time a lot of public investments haven't done well. are we kind of missing the forest for the trees? >> i don't think so, because the whole point of the meeting six hours of q & a is to be able to ask warren buffett anything. in the past he's answered 50, 55, 60 questions, boom, boom, boom. never hesitates. doesn't get a lawyer to come in and say, you know, this is

subject to the all kinds of regulations and we're not going to talk about forward looking statements and blah, blah, blah. he just answers questions. in the past, you know, for example years ago before he went and bought the whole railroad he would talk at length about the changes in the railroad industry and why they did own burlington northern stock at the time. but all of a sudden he's -- he doesn't really want to talk much about ibm. it was a little unsettling, that's all. >> well, that's what makes a market -- even coming out of omaha a widening spectrum of views. good to see you, jeff. thanks so much. >> thank you. >> and mike here at post nine. when we come back, live from havana, history being made this morning as the first u.s. cruise liner docks in cuba. first time in a half a century. our simon hobbs is there. and don't miss this one, noon eastern, bill ackman, pershing square right here only on cnbc.

i'm extremely cautious about the markets. >> it will be a day of reckoning unless we get fiscal stimulus. >> this economy is not booming. on the other hand, it's not falling apart in any way, shape or form either. >> you absolutely need fiscal stimulus in this economy because i don't think our companies are doing well at all. >> debt can only be evaluated in relation to future income producing capabilities. the country's income producing capabilities have never been

larger and they keep growing. and a slow growth world what's an investor to buy? our traders give you their best picks at tradingnation.cnbc.com. more "squawk on the street" coming up. this is lulu, our newest dog. mom didn't want another dog. she said it's too much work. lulu's hair just floats. uhh help me! (doorbell) mom, check this out. wow. swiffer sweeper, and dusters. this is what i'm talking about. look at that. sticks to this better than it sticks to lulu. that's your hair lulu!

mom, can we have another dog? (laughing) trap and lock up to 4x more dirt, dust and hair than the store brand stop cleaning. start swiffer ing welcome back to "squawk on the street." my first guest of the week, aloha, charles. >> aloha world. >> listen, charles, the reason we love to talk to you is that nobody follows the money more than charles beiderman and trim tabs. by following the money what have you learned historically about the stock market and what may be changing based on that? >> well, since the end of 2011 companies have reduced the number of shares outstanding by $2 trillion. that's all the buybacks minus all the new share sales, insider selling, ipos, secondaries.

buybacks minus all new shares sales add to that cash takeovers of public companies that total $2 trillion number of shares taken out of the market and 2 trillion given to investors so you had more money chasing fewer shares. the overall market cap is up $10 trillion since the end of 2011. at the same time we had companies adding 2 trillion to invest in stocks. there's been no, zero money going into the market from individuals. if you added up all the money going into u.s. equity etfs and u.s. equity mutual funds, the end result is nothing. so this whole market's been run by companies adding money. >> now, charles, what's going on through april now? is it continuing? >> no. the sad news is that company --

buyback announcements, cash takeovers are dramatically down from a year ago. april, well, you know, even with the apple buyback is still down over 50% 50% announced corporate buying. we have seen a dramatic slowdown in corporate buying so far this year. at the same time, we have seen a dramatic slowdown in wage and salary growth as evidenced by income tax collections. forget the stuff the bls reports. there might be a lot of jobs being created but the pay for those jobs is less than the jobs that are being lost, so we are not seeing much income growth and companies are seeing that and probably reducing their buying. we have also seen a -- >> let me stop you there. let me stop you there. so what's some actionable advice for viewers in the macro on the equity market? is there a strategy to implement

based on what you are telling me has changed with regard to buy-backs? >> we have a demand index that tracks short-term market moves. it turned to 1 e100% cash the ft time since late february. middle february when the market was really weak, the central banks decided they are going to lower -- try to reduce the dollar which rallied the global markets. but we are not seeing any follow-through on the base side so that rally seems to be over. for the short term, we are 100% cash and we rarely, since 2011, only a couple of times have we moved to all cash. >> charles, it's always interesting to talk to you. we will wait and see. i'm marking where the market is today so in two weeks when you come back we will handicap how well you have done. coming up, we take you to havana, cuba where history is being made today. [woodworker] i live in the fine details.

that's why i run on quickbooks. i use the payments app to accept credit cards... ...and everything autosyncs. those sales prove my sustainable designs are better for the environment and my bottom line. that's how i own it.

shoshow me more like this.e. show me "previously watched." what's recommended for me. x1 makes it easy to find what you love. call or go online and switch to x1. only with xfinity. we have been watching history unfold in cuba this hour. the carnival cruise ship this morning becoming the first u.s. cruise ship to dock in cuba in more than 50 years. that's where we find simon hobbs

this morning. looking good in the caribbean sun. >> reporter: welcome back. a moment in history, a thawing of the relations. we are still waiting for people to actually depart the ship. obviously we are in havana port. when they do depart it will be the first time in 50 years american passengers from the american mainland on an american ship will actually get off and of course, the cuban americans will be amongst them as well. obviously there's controversy surrounding that. let's make that very clear. not just the cuban americans who initially at least were not allowed on board. obviously the rules have been changed. but also let me take you back to when we left the port of miami yesterday. if you look at the type of unusual police presence, i think i counted 20 launches from the police, from the coast guard, a helicopter flying overhead. it may be six big tugboats. essentially in formation as we left the port, to ensure that some of the very small protests that were there didn't get bigger and they didn't actually prevent the ship from getting out to sea. ultimately, of course, we did, we passed through those seas

that not so long ago, 50 years ago, 54 years ago, the russians were effectively blockaded to prevent them from bringing more nuclear submarines to castro at the time. hence the anger you have at the moment. look at donald trump. yes, 50 years is too long, i support a change in relations but i would have done a better deal. that's how the gop contender put it. for cuba, we have spoken a lot about the constraints on capacity here. being able to have cruise ships here is potentially very important. they only have 3.5 million visitors last year for a population of 11 or 12 million and hotels are not good. there are only 70,000 hotels in cuba, maybe 20% in havana. if they can keep passengers on the ships, fed and watered happily, then obviously they can bring more passengers in and get more american dollars moving forward. more life from cuba later in the show. for the moment, back to you. >> great stuff. simon hobbs reporting from havana, cuba. let's send it over to john with

a look at what's coming up on "squawk alley." warren buffett had something to say about personalities in tech and the trends. also, hulu with an over the top streaming service. could they change the game yet again? and self-driving cars. going to washington and not just on their own. there's lobbying afoot. all that and more coming up on "squawk alley." was created over 100 years ago as a benchmark for average. yet many people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? it's time to bench the benchmarks. mary buys a little lamb. one of millions of orders on this company's servers. accessible by thousands of

suppliers and employees globally. but with cyber threats on the rise, mary's data could be under attack. with the help of the at&t network, a network that senses and mitigates cyber threats, their critical data is safer than ever. giving them the agility to be open & secure. because no one knows & like at&t.

good morning. it is 8:00 a.m. at hulu headquarters in santa monica, california, 11:00 a.m. on wall street. "squawk alley" is live. welcome to "squawk alley" for a monday. joining us, jon fortt,