i'm doing after work. "squawk box" begins right now. ♪ live from new york where business never sleeps, this is "squawk box." >> good morning. welcome to "squawk box" right here on cnbc. good morning, everybody. we're here at the nasdaq market site live in times square. i'm andrew ross sorkin along with joe kernen. our guest host is joe terranova, senior managing director and a "fast money" trader. becky quick, we'll get to her in a moment. >> good morning. >> joe will take a quick check on the markets. we're coming to you in two seconds. this is confusing? me? >> you. >> yes. >> got two joes.

u.s. equity futures at this hour have been a bit weak in the -- for the morning. you know what? just the dow futures. that might have something to do with what becky is going to tell you about. the s&p is actually up a point. the nasdaq is up about four. the nasdaq had some rough sledding lately. the dow is the index down today. down about 21 points. crude prices coming off a loss of about 5%. wti posting the lowest close since november. joe, i ae lewd eluded to it. it's sitting there at one price, then a totally different price. you think it has to do with the world we live in now? >> absolutely. at 11:20 p.m., oil is trading 45.25 and the next hour 43.76. >> how does that happen? >> we're the world is chasing

alpha, when the quantitative models see an opportunity, which they see in oil, that's where all the activity is. >> it wasn't an overweight trader with fat fingers? >> no, and not pure fundamentals. fundamentals are deteriorating for oil. it is seeing the opportunity, low-vol world. you go around, talk to the hedge fund desks, activity in oil. >> first friday of -- let me just think about this. first, we will get the jobs report at 8:30 a.m. eastern. polled economists predict the economy added 188,000 non-farm jobs in april. that would be a rebound from the 98,000 jobs added in march. the unemployment rate is expected to tick higher by 0.1%, to 4.6%. more jobs predictions in a moment. i don't know whether you know where i'm going with this, becky. it's friday, and it's the 5th of may, have i got that right? man that is setting me up for

serious -- >> cinco de mayo. >> xwyeah, i'm talking tequila, margaritas. i don't need much of an excuse on a normal day. >> that's not true. >> when you said that at the top of the show, i was laughing with the guys here, how is this different than any other friday. >> wow. may 5th and it's -- that's really good. you remember paul mccardny who used to be a total stoner. he got busted how many times on airplanes? now he likes a nice margarita and some chardonnay. that's my life, too. >> and a mint julep for this weekend. >> i don't like bourbon. i don't like bourbon. have you had one? >> yeah. >> i don't like bourbon. i don't. i'm sorry. you? >> are you going jim's place? jim cramer's place? that's a big mexican hangout. >> becky -- i'm sorry, they're telling me, you know, this is like -- you have to get that -- >> she has big news. >> i've seen it. i knew this happened. it's very interesting.

let's hear it from you about warren buffett and one of his big investments. >> all right. joe, you have been questioning warren buffett's investments in shares of ibm for quite awhile. he started about six years ago. since that time, ibm has come out quarter after quarter where revenue declined. that's five years of declining revenue. buffett had been patient with n this, talked about how he liked the company was buying back shares, how they boosted the dividend, all those things were good. if you look at that investment over the course of time, buffett has made money on it but not as much as he would have had he invested in an s&p 500. we caught up with buffett last night and asked him about the earnings. you know the street was disappointed by what they saw with ibm's earnings. i asked if he was, too. here's what he had to say. >> well, i wouldn't say the

specific earnings disappoint me, but i don't value ibm the same way that i did six years ago when i started buying it. overall i think the six years that i revalued it downward. when it got up over 180, we sold a reasonable amount of stock. >> you sold a reasonable amount of ibm? >> right. >> least that i had seen you owned something like 13 billion or $14 billion of worth -- >> don't down the price. >> i'm trying to think back the number of shares. >> we owned about 81 million shares. when it got over 180 -- >> $180 a share. >> yeah. compared to the valuation then that i thought was appropriate, we started selling stock. some of that was sold in the first quarter. most sold in the first quarter. some sold in the second quarter. >> how much did you sell? >> we sold about 30%. >> 30% of the shares?

you owned about 9% of the shares outstanding at ibm. >> if you look at it this way, we had 81 million shares. so we probably sold in the area of 24 million, 25 million shares. but that was at a higher price. >> you were selling at $180. that stock has come down significantly since the earnings, i think it's closer to $160 a share. >> yeah. >> would you still sell. >> i don't think we would be selling. we could buy. i continuously look at what they do. i look at the price of the stock. when it was over 180, i looked at what was happening and everything, they have run into tough competition. >> why are you telling us this? >> they have things coming out in a week, and we have the annual meeting. questions have come up about ibm, i would feel like i shouldn't get cute in terms of having it a week later, people looking back and saying what was

he saying at the meeting. >> so, have you talked to ibm about this at all? >> ginny rometty was out a few weeks ago. they had had some stock watch -- i don't know whether viewers are familiar with it, but there are stock watch firms, i don't even know their names, i don't know how many there are, but they -- a lot of big companies use them. berkshire does not use them. they report to management who they think is buying and selling. in fact, i don't think i've ever even read a story on them or anything. i think it would be very interesting to know who they are, how much they charge, how they get their information. because we've had that happen four, five times that a management will say they wonder -- they're sort of hearing something, or something of the sort that we may be buying or selling. like i say, i don't know quite

how they get the information. >> but ginny rometty asked you about that? >> yeah. she wondered whether it was true. they had gotten reports, or she had gotten reports. i said it was try. i didn't tell her how many shares or the rational or prices or anything like that, she said she -- whatever firm does that, that they had informed them that they thought we were selling. i said, well, we were. or i had been maybe. >> can you tell us again why you sold the shares? $180 doesn't seem like a ridiculously expensive fries consider i price considering where you bought the stock and where you hold it. >> stock doesn't know what you paid for it. >> there you have it he's sold out of a third of the position. sounds like he would have sold more shares had the stock not dropped so precipitously. he did say when we talked to him if shares were low enough, he

might consider buying again. but he's not actively buying or selling at this time. very interesting. you start talking to him about why he does this, we'll get into this later today, he said things have changed in how he sees the company. they have not lived up to his expectations in the five or six years since they started buying or their own internal expectations as well. guys? >> was fascinating. i tell you what i was saying, watching him the whole time, i think about a lot of things, it's like if he sold a third, i don't think i would want to tell people that -- that warren buffett sold, because he has two-thirds left. you ask him that, you know, well, yeah. because he had to tell you in a week. might as well tell us now. then when he says, i might buy more. i'm not sure i believe that. i think if he had it at 180 again, i think he would probably try to get out of the other two-thirds. in baseball, like if you

hit .350, you're the greatest hitter of all time. if you're a stock picker, if you do 51% right, you can make a lot of money. this probably, warren would probably concede not one of his greatest picks over the course of his career. he's kind of copping to that a bit. when he says he might buy more -- he has to say that. >> he said -- he says that's based on price. he said he is always looking at the price. >> but why would he buy -- >> by the way, joe, i did ask him if this was a mistake. we'll play back what he said to that later this morning. >> i love he's still so competitive and still -- it kills him to not, you know, do everything where you think -- >> i think it's hard, now that you still own two-thirds and the public knows how you feel about the company -- >> he had to tell us. >> it becomes much more complicated going forward. >> i agree.

>> how he deals with the stock or not. >> it is complicated, but i think he will buy. >> you think he'll buy. >> i think he will. i think he would defend the position. if the stock falls, i think he would buy. to your point, does this meance? i think the question is, becky, is his frustration with management, is his frustration with the strategy? ibm acquired 50 small companies since warren buffett has taken a position in the company. that has not been able to still lace any fo stimulate any form of growth. >> he did not take any swipes directly at management, which does not surprise me either. that's kind of the warren buffett way. he doesn't tend to do things like that. so he didn't take swipes. i don't know if that indicates he's frustrated or not. he did say the management has not lived up to their own

internal expectations and that the competition has come in and been more impressive. when i started asking him about who in the competition, he singled out jeff bezos again. we'll get into that tape later. just talking about the great job jeff bezos has done in amazon web services. >> let me ask this joe, you are seeing the stock now off about 1.8%, 2%. >> rightfully so. >> was that the buffett premium in this stock? >> i think there clearly was a buffet premium. >> was it a 2% premium, 1% premium, 5% premium? >> i would say 5%, maybe even more, 7%, 8%. >> is there any premiums built in now that we know the shares he does? >> i don't know the answer to that. the market will tell you over the next month or couple of months what the premium is. again, you go back to the

fundamentals of the company, the incredibly disappointing thing is we live in a world where technolo technology, they check the box because they have the growth and cash. free cash flow has declined for ibm over the last six years. cash flow on the balance sheet is somewhere around 10 billion, 15 billion. why is that? >> becky, did he speak to any -- either lessons about this or how it might relate or impact his thoughts about his investment in apple? over the past year, he has piled into apple. everybody said, well, he's actually now -- now he might be shifting stripes a bit between the -- you can see a trend between the ibm investment and now apple. the idea that it's a brand. you're embedded in peoples lives, which is something he thought was true of ibm. any conversation about that? maybe it will come up this weekend. >> i talked to him about apple's earnings, too. we'll tell you a bit later, we'll play some of that sound probably as well.

i asked if he had been disappointed like the street was about apple's earnings. he said he is not. he said he buys management's explanation that the reason the iphone sales were down is that so many people are waiting for that next iphone. he says he buys into that completely and it buys into what he has been hearing from the nebraska furniture mart, a retailer he does his own research with. i don't even know that he would look at apple as a technology company at this point either. sounds like it's a consumer stock to him and a sticky consumer stock. one that people get into and they're into the ecosystem, they stay there. that sounds like the research he's done around this, not the technology, where are they with the latest, greatest thing. he has gone into this with the typical way he assesses a stock which is what he understands. technology is something he says he still doesn't fully understand. >> i thought joe's point was interesting, he would have to

defend his position. it's almost like a company that starts buying back -- it's at 140 or something, i have two-thirds left. i will put some support under it. >> right. >> that's not a great way to go. you do it so you can stem the decline, sell at a higher price. he has an expression -- he come ply ka compliments people specifically, and trashes generally. >> you compliment by name and criticize by category. >> which is why he will not criticize ibm management specifically but gently saying that if you have declining revenue, blah, blah, blah. yeah. it's tough. it's tough. >> you know -- >> i wonder about the -- the endorsement that ginny rometty benefited from. whether that starts -- that premium starts evacuating. >> that was a huge premium. >> that's what i mean. >> a huge premium on her career and the business itself. it gave her license to walk into

a lot of -- different meetings, and also different relationships with potential clients, given the good seal of approval that the butffett name creates. >> any stock he invests in, probably carries around that same sort of seal of approval. >> this company has had to be reinvented six times already. you look at how difficult things are. how many different people tried to run yahoo!? it finally sold. >> yeah. >> becky, thanks. >> speaking of yahoo! we'll talk to sue decker later this morning later this morning. >> right. what would you do? if i was running ibm, transition to the cloud, i think. that's just me. >> they tried that. >> no kidding. i don't even know what i'm saying. what else is new. we'll be back -- i'm kidding. we'll be back with ceos of berkshire's other businesses. benjamin moore i think i could

run. a bunch of different colors that don't run. you know what i mean? right? make sure you don't -- you know, spill any chemicals anywhere. brooks running, that would be easier. and cs candies. monday, warren buffett will join us live for three hours, we'll get a lot more from the oracle in addition to charlie munger and bill gates. coming up, the countdown to the jobs report is on. we'll get the april employment numbers at 8:30 a.m. eastern time. up next, predictions and how the number could impact the fed's next rate hike. "squawk box" returns in a moment. brian, i just need to know if the customer app will be live monday. can we at least analyze customer traffic? can we push the offer online? brian, i just had a quick question. brian? brian... legacy technology can handcuff any company.

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♪ >> she was nice. didn't flip us off like that guy -- i saw our guy going out. he goes out and -- >> yeah. >> that guy the other day, just gratuitous -- >> gave us the bird. >> hi, we're looking at times square. we have a tv show, we like you. how is new york. >> no reason. >> flips the bird. >> times square. >> the society we live in now. >> the countdown to the april jobs report is on. a little more than two hours from the number of the morning. joining us now is jim o'sullivan from high frequency economics,

and joe terranova, our guest host. a "fast money" trader. what's your number, jim? is it different than the 0.7% gdp or is it all related? >> i think the gdp is a stand-alone to statistical noise. i'm at 180 for payrolls. march was weaker, 1 0,000. i think weather was a factor on the up and down. more neutral in terms of weather this month. last three months averaged 178. more of the same from that perspective. which is good. 180 is pretty good. >> could they get more accurate numbers and would it kill us to do it quarterly? >> you can take a three-month average. >> is it worth it to do it monthly and get whipsawed, they revise it, add, subsubtract.

it could be off by 100,000 on any given month. a lot of head fakes. what's the average going to be for three months? 180? >> with today's number, because you're dropping out the january and including march, probably below 180. if you look at four-month average, year to date, because it has all the pluses and minuses of weather. the net of it is the job market is chugging along well. the gdp number looks like an aberration. >> all right. second quarter gdp can go from 0.70 -- >> i have 3. i think the trend is around the 2 mark. it's been good enough to generate good job growth. >> what about the inside baseball numbers today? what about wage growth? what about hours worked, all those other things. >> the work week was probably held down by weather a bit. it probably goes up. so strong on the work week part. the wage number, 0.3 on the

month, a pick up from twoish two years ago. not a dramatic change, but accelerating. to the expetent the unemploymen number is trending down -- what about retail. trending 15,000 to 20,000 growth. trending 10,000 less than that. izing retalosing retail jobs as go from brick and mortar to e-commerce what is your expectation there? >> as you describe it is right. there's probably a structural change there. even if the trend in overall employment is 180, there's probably slowing on the retail part. the manufacturing numbers look better. clearly there's been a pick up in manufacturing in the past year. export numbers look better. business investment numbers look better. the mining numbers which were plunging a year ago are adding a bit. the net of that is probably not a lot of change overall in the trend. we're getting 180,000 per month, which is strong.

it's 1.5% per year. at a time when labor force growth is probably 1% at best, which is a recipe for the unemployment rate continuing to come down. >> and the government hiring freeze, january 23rd to april 11th. that falls middle of the week? >> it was never a big deal in the numbers. in terms of net employment growth. not a lot of turnover for the federal government. it's not as if you ever saw a big negative from the freeze. the fed is watching this, not gdp probably. >> absolutely. >> this doesn't turn them into, like, rav individual ha like, reasabid hawks. >> the labor market is chugging along -- >> chugging, but not overheatingful. we' >> we're starting to see unemployment growth, wage pressures, you continue on this path, wage pressures intensify, inflation picks up. no, right now they're on track. >> you don't believe there's a

bunch of 40-year-olds to 50-year-olds in the 62% of whatever that number is, where people are not -- the participation rate, you don't believe they can come back? you think it's a tight market? >> yes. not to say that the participation rate can't hold where it is. >> why can't it go up? >> in the context of a declining secular trend, the aging population is -- >> i just said 40 and 50 are some of those people in the 62%. that's not old. you know that. >> it's in the middle. >> early middle. >> even a flat participation rate is strong rel liative to t secular trend. >> all right, jim. joe, me and you stick around. i'm here. you're here to 9:00. three leaders of berkshire, the portfolio company will join becky in omaha. after the break, the ceo of benjamin moore, brooks running and cs candies. "squawk box" will be right back.

>> would you call your purchase of ibm a mistake? >> it was a mistake in the sense i could have done better if i just bought the s&p. there were a lot of things to make money on that we missed. i missed apple earlier. >> monday on "squawk box," a special event you can't afford to miss. three hours with berkshire hathaways warren buffett live from berkshire's annual meeting, plus charlie munger and bill gates will sit in for the 8:00 hour. that's monday at 6:00 a.m. eastern on "squawk box." predictable is one thing you need in retirement to help protect what you've earned and ensure it lasts. introducing brighthouse financial. a new company established by metlife to specialize in annuities & life insurance.

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>> welcome back. you're watching "squawk box" live from the nasdaq market site in times square. good morning. welcome back to "squawk box." a quick look at u.s. equity futures at this hour. crude moved in a big way. dow looks like it would open down. nasdaq opening about 5 points higher. the s&p 500 looking to open higher as well. a little over a point. some news out of washington. house republicans passing the healthcare bill yesterday. now it's the senate's turn and it could be months before we get a decision on obama care replacement. some members of the senate indicating they may write their own bill from scratch rather than making tweets to the house bill and sending it back to hem. at 8:40 a.m. eastern time, health and human services secretary tom price will join us live. we will head over to see becky

now. >> we are. but just was going to mention that the "journal" has a good piece on the obamacare replacement. we'll talk to tom price, to. democrats and media, they're doomed. the republicans doomed, doomed, doomed. the only thing that would have been worse is if they didn't pass it. oh, my god, then they would be domed, domed, doom edoomed, do. if they couldn't pass t they're doomed. >> before you go to peckky -- >> let me see your -- >> i want to show. we have something coming up special who will appreciate this. >> the socks or the shoes? >> in honor of mr. buffett and actually the next guest -- >> you're like cat in the hat. >> these are limited edition brooks sneakers that are warren buffett sneakers. >> oh, my god. >> can we show this? can you see the back of that? warren buffett's head is right there. and inside the shoe is warren

buffett. what do you think of that? >> nice. >> i guess that's good. yeah. i can see -- >> i feel like i'm stepping on warren every time i have my foot in there. >> it's a quite picture of him. becky -- >> they run small, the brooks. do yours fit? back to the berkshire hathaway annual meeting. becky quick is there. >> we have a pair right here that i have not tried on just yet. but they are sitting here. andrew got his early and tried them out. i don't know, joe, i'll give them a try and let you know if they're small or not. nice looking shoes. i like the shoes, it's the socks i have issue with. we'll talk to these guys who are watching all of this take place. among the companies that berkshire hathaway knows are some consumer brands that make batteries, to paints, to shoes and chocolates. joining us now are jim weber, ceo of brooks sports. these are his shoes.

mike searles, ceo of benjamin moore, and brian kinsler. welcome to all of you. >> thank you. >> one thing we talk about with warren buffett, we ask him about the economy. we asked him if it felt like a 0.7%, he said no, it feels like a 2% economy. i thought maybe you could sell e. tell me what you're seeing. jim what kind of economy does it feel like to you? >> it feels like a 2% economy to us. uneven, traffic is skittish, but all in all people are active, running, spending money. so we're seeing growth this year, which is exciting for us. it was very uneven. >> you are in a difficult position with some things happening in your industry. we'll talk more about that. you've been able totch it. mike, how about you? >> i feel good. i think it's a 2% economy. the metric we look at is

existing home sales. that's a great place holder for consumer confidence. biggest purchase a consumer will make in their lifetime is a home. march was up 4.4%. the fastest pace of existing home sales in a decade. >> that feels better than 2%. >> feels good. >> we will talk more about existing home sales in a moment. brad what are you seeing when it comes to candy sales? >> we gauge our business on how we do in major holidays. we came through valentine's, easter. looks like we'll post a record number this year. things were much better than last year. i would say it's much stronger than a very small less than 1%. >> why do you think it feels different this year than last year? what's stronger? how much stronger? >> partly the timing of valentine's and easter. valentine's last year was during president's day weekend. that's a difficult time forrous.

for us. and this year easter fell early. qu we could see in our shops traffic was much better in both those seasons. that usually results in very good numbers for us. >> if traffic was better, that's one great indicator. what are consumers willing to spend when they come into the stores. the average ticket about the same or are they willing to drop more money? >> it's up. i would say we were up 5% on the average sale. people have a bit more money. our primary markets are currently the western u.s., california in particular, and the california economy is doing pretty good. >> really. you are expanding to other places on the east coast. i see you now in airports far from the west coast. >> yes. we are in the airports. the airports have been very dizzy as well this year. we see that in shipments to airport locations. they've been good. customer traffic through there

is strong. so, fwa shg, again, we get a go across the country. overall it's pretty good for us. mike, let's talk about existing home sales. you say that's the most important metric for you? >> yeah. first thing you do when you buy a new home is paint. >> unless you are buying a brand-new house, in which case it's already done. >> in the first quarter of this year, a new household formations for the first time in ten years, more people were buying homes than renting. that's a great indicator of millennials finally getting out of the nest and getting their own place. >> we've been waiting and waiting and waiting for this. >> we've been waiting. they're finally coming into the marketplace. >> in terms of what drives millennial sales and what drives the existing home sales, how big of a factor are interest rates

and that mortgage price? >> we've had 61 consecutive months of average home sales increasing. and 21 consecutive months of supply dwindling. so there's pressure on housing prices coming up if you're buying a home you know that. i think i read recently that since 2012, and the downturn of the housing bubble, housing -- average housing prices have increased 40%. incomes increasing 12. that's the only concern on the horizon is price inflation on housing. >> okay. jim, let's talk about what's happening in your sector. it's been difficult, we heard from companies like underarmer that they had issues because of stores like sports tor s autho closing down. less places to sell to the consum consumer. how has that impacted you? >> at 25, 35 is when you invest

in your fitness. so they're running, they're in the gym, that's the key for us. the athleisure trend comes and goes in cycles. in many ways we become their second show that they begin to invest in because they're active. so what we're seeing is there are winners out there without a doubt. dick's sporting goods is doing well, rei is doing well. they're connecting with runners and customers where they want. are they online? you bet. but we think about 25% of our sales are already going through a website somewhere. it's going to continue to evolve. >> what kind of headwind has it been to this point? >> it's hard. last year we lost 900 stores that we sold through. that was an air pocket in our sales, without a doubt. it's coming back this year. we're seeing good growth off that lower base. >> what happened? did that impact your sales as well? >> over 400 sports authority stores, 2 0 stores from other

regional sporting goods players. it's happening. there's consolidation happening at retail. >> let's ask about the border adjustment tax. you all deal directly with consumers. jim, you start with that. what would that mean if the border adjustment tax went through? >> in sporting goods and retail, it's a big deal. most of us are global brands, we sell all over the world. we're worried about retaliation. we're entering china this year, over 30% of our sales are overseas, it should be 50%. it would be about 15% of revenue in taxs at the border. it's a big deal. >> the argument in favor of it is that the dollar would adjust. >> yeah, this audience knows the forces on currency are huge. we don't think you can depend on that. so many forces impact currency. it may not happen right away. >> mike, do you have any

concerns about the border adjustment tax? >> really less in our business. raw inflation and material coming in is a concern as oeblt h oil has stabled. >> brad, you make the candies here, too. >> we do. i would not think we would feel a major impact on raw materials or packaging that comes in. but anything that takes more money out of the consumer's product would hpr pocket would sit us at some point. >> joe was talking about you all coming up, he thought maybe he could run any of your three businesses, that he might be okay at doing that. how difficult is it? tell us from joe's perspective, is this something that somebody can sit down in the seat and do? brad? >> i would say, joe, you know, i'm not sure if you can develop a new piece of candy, but that would be a critical part of the job. not having seen that, i'm not sure i could give him a recommendation at this point.

>> mike? >> joe, i came out of the apparel business, and i'm still learning the paint business after 3 1/2 years, i think we're all replaceable. you could probably do a fine job. >> jim? >> if he can get up in the morning and lead the 5k run, he will do well. and i have a shoe that fits him as well. >> do they run small? i think i need an 11. you don't have to send me a pair, but andrew had 11 1/2. that didn't fit. and the 10 1/2 were a little snug. but i love brooks shoes. i do. and the pair that i did get were a little tight. so -- you know, not for nothing, you have my address, becky. >> we have widths for you. >> what's that, joe? >> i was saying i may have more -- not saying i can do that. i said it would be easier for me to do a paint company than ibm. that was my point. >> that's true. that's true. >> all right. >> these are things we

understand and we use so we feel an affinity to these things. >> i don't think the world needs me running any -- the ceo of anything, other than maybe -- >> just "squawk box.." >> co-ceo. >> okay. thanks. we'll see you in just a minute. when we come back, much more reaction to buffett selling that third of a stake in ibm. at 7:00 a.m., amco investor ceo mario gabelli will join becky. managing portfolio risk and liquidity and generating income. that's real etf innovation. flexshares. built by investors, for investors. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully.

welcome back to "squawk box." the french going to the polls this sunday to choose their next president. of course one of the most consequential elections in decades because it has wider implications for europe. one wants to keep the euro as one, the other wants to abandon it. michelle caruso-cabrera breaks it down for us. good morning. >> reporter: this election is so consequential that even former u.s. president barack obama felt compelled to weigh in. he endorsed a candidate, emanuel macron because he supports more integration with europe.

>> i know that you face many challenges, i want all of my friends in france to know how much i'm rooting for your success. because of how important this election is, i also want you to know that i'm supporting emanuel macron to lead you forward. >> to the critics of emanuel macron, barack obama's endorsement likely will prove what they already think about him. they think he's a globalist, which for them is an insult. he gets booed when he factories because he weakened labor laws when he was minister of the candidate. the other candidate, marine le pen also suffered attacks. people threw eggs at her yesterday when she was campaigning. she would like a much stronger role for the french state in the economy. markets are acting like this is a done is deal. they're complaisant because macron is so ahead in the polls,

but more than 20 points. however claire fournier caught up with marine le pen this morning and she told claire people are making the same mistake they did in other elections. >> translator: victory is in our reach. the media seem not to hear the anger in our country that will express itself in the polls on sunday. >> reporter: so, if the polls are wrong and marine le pen is president on monday, all hell will break out in the markets, considering what we have seen thus far this week. back to you. >> thanks, michelle. got to go. wish we could talk. i saw a guy on i24 on with wilf earlier. speaking with a french accent, sounded like the media here before it. i was like okay, i'll take your word for it we'tchlit. we'll see on monday. coming up, much more reaction to warren buffett cutting his stake in ibm. the stock is lower today.

down 2.5%. we'll talk to buffett biographer carol loomis after the break. "squawk box" will be right back. stay with me, mr. parker. when a critical patient is far from the hospital, the hospital must come to the patient. stay with me, mr. parker. the at&t network is helping first responders connect with medical teams in near real time... stay with me, mr. parker. ...saving time when it matters most. stay with me, mrs. parker. that's the power of and. thithis is the new new york.e? think again. we are building new airports all across the state. new roads and bridges.

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♪ welcome back to "squawk box," everybody. we are live at the berkshire hathaway annual meeting. we are here in omaha. standing right by at the berkshire hathaway annual meeting and i'm joined by carol loomis. she has been sitting down, someone who's been with us for quite awhile. she is somebody who has edited warren buffett's annual report for how many years? >> 40 years. this is the 40th year. >> 40th year. >> 40th year. >> and what have you found along that time, carol? >> what have i found? well, that he has -- he has a great instinct for the right things to say. i helped him a little bit with how they're presented. but he's a great writer and the content of that annual letter is amazing. i think every year. >> yeah, you know, one of the things that he surprised us with last night, carol, was the news that he has sold about a third

of the stake in ibm. i want you to listen in to why he sold that -- those shares in ibm. he explained his decision to us a little bit last night. folks, why don't you listen in to this? >> a period when i'm sure that it's been tougher than they thought, and it's been tougher than i thought. but i was wrong. i don't blame them. i mean, i get paid to make my own decisions, just like an apple or something of sort. and, sometimes they're right, sometimes they're wrong. i think -- i think ibm is a big, strong company. but they've got big, strong, competitors, too. >> so, carol, what he said was that ibm's a big, strong company. but they have very big, strong competitors and that look this is something are he still owns about 50 million shares. are you surprised to hear something like this, though? >> well, i think everybody has been wondering, as ibm has sort of not stumbled, but sort of moved more slowly, and obviously

he was reaching for, i think he has been wondering whether there was the promise there that he had thought was there. i'm not surprised to hear it. i've always thought of his cost basis as around 170. and so he's made a little money. and warren is very good about admitting mistakes. he is not someone to say, well, you know, i really, i got let down by somebody. that is not his style at all. i think it's a very good one. >> in fact in the annual letter he traditionally opens with a few of the biggest mistakes he thinks he's made. >> absolutely. and how many times have we heard about dexter? dexter shoes. >> right. >> i mean he takes every opportunity. if you have him on again, i bet you hear about dexter shoes. >> probably right. we had talked a little bit earlier around the table with joe and andrew about how he's not somebody who ever criticizes

by name. he criticizes by category, and praises by name. >> uh-huh. >> but we were trying to figure out if he was disappointed and how disappointed he might be in ibm's management in this. >> well, they had a blueprint. and i know that they thought they could follow that and it just didn't work and hasn't worked as fast and warren has stepped up and didn't -- diminished his position. >> let's talk about another thing that you've been following for almost ten years now. that's a bet that warren made with the hedge fund manager ted sidas where he got to pick five different hedge funds he thought he would do well over a ten year period. warren buffett picked the s&p 500. as we near the end of that bet as you have laid out and been chronicling, buffett is far ahead at this point. what are the results after ten years? >> well, it's just a -- it's a

devastating loss for the hedge fund. and warren was so strong about it in the annual letter. that was one of the strongest pieces that he has ever written in there. and it just did not work. sidas' proposition that over the ten years the hedge funds could beat -- could beat, it just didn't work out. it was not -- and the first year, as you may remember, was 2008. >> right. >> and it looked like it was going to be a walkaway in the other direction. then after that, as warren said, the tortoise caught up with the hare, just gradually, gradually. and then i had to start writing pieces for "fortune" that said okay now they've moved ahead. and it was a real trend in there. and it was amazing how that worked out. >> well, carol, thank you very much for your time. we're going to see you here all weekend. >> good. >> again, folks, carol loomis. when we come back, mario gabelli will join us. ♪

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welcome to this special edition of "squawk box." we are live in omaha, nebraska, this morning getting ready for the berkshire hathaway annual meeting which will take place right here in this arena. breaking overnight warren buffett telling us exclusively that he sold shares of ibm and revalued the tech icon yawnward. . we'll have his comments in just a bit. plus the ceo of specialty chemicals company lubrizol will join us. a member of the berkshire hathaway portfolio. and susan decker is going to stop by. second hour of "squawk box" live from omaha begins right now. ♪

>> live from the beating heart of business, new york city, this is "squawk box." good morning welcome back to "squawk box" here on cnbc. we're live at the nasdaq marketsite in times square i'm andrew ross sorkin along with joe kernen. becky quick live in omaha this morning at the berkshire hathaway annual meeting. she's going to join us in just a minute with mario gabelli. check out the futures at this hour. the dow off about 6. we're now 90 minutes away from the most important item on today's economic calendar which is the april jobs report. economists looking for 188,000 new nonfarm jobs with the employment rate ticking higher to 4.6%. those are the numbers to beat this morning. earnings out this morning as well from health insurer cigna. a lot of people watching this one. cigna earned $2.77 per share

above the estimate of $2.45. revenue also exceeded forecasts helped by customer additions in cigna's commercial business. and also, we've got a $6.4 billion takeover deal in life sciences industry this morning. vwr supplier of products and services for scientific labs is being brought by privately held avantor. it's blow yesterday's closing price. the price had jumped earlier this week when reports of talks between the two first had surfaced. getting better. >> yeah. >> you saw that, cold, had never seen that before, right? >> yes. >> huh? >> syllable down and out. >> boom. >> boom. >> we want to get right now back to omaha, the berkshire hathaway annual meeting in omaha. becky quick has breaking news from last night. becky? >> hey, guys, i'm sorry. we're having a few technical issues.

i'm going to be listening to you guys on the phone from here on out. if i don't respond, i'm not ignoring you. in the meantime the beck shire hathaway annual meeting hasn't officially kicked off and already we have some big news. the billionaire investor and chairman and ceo of berkshire warren buffett telling us exclusively that he has sold about a third of his stake in ibm. i asked him what changed at the company to make him rethink his ownership. >> well, it hasn't done what five or six years ago i expected would happen. or what the management expected would happen. i mean if you look back to what they were projecting, and how they thought the business would develop. and i would say what they've run into is some pretty tough competitors and what's really fascinating is that you know, amazon, which i've never seen a guy succeed in two businesses almost musimultaneously that ar really quite divergent in terms of customers and all the operations -- >> you're talking about amazon's

shopping business and amazon's -- >> cloud business. jeff bezos, i do think, is the most remarkable business person of our age. i've said that before. and to succeed in two different -- big businesses, in a huge way, is really i can't think of another example like it. and he talked on charlie rose about three or four months ago, which was really good. he talked about how in the cloud he thought it best maybe he'd get a two-year run or a seven-year run. so he's a tough competitor. you have some very smart people competing in that field. >> when you talk about snem not doing exactly what you expected them to when you look at it five or six years ago, is that in terms of the revenue continuing to decline for 20 quarters in a row or is that them not building up the cloud business? >> based on a lot of different types of businesses. but the earnings have been obviously disappointing. i mean five or six years ago, i

think they were earning 20 plus billion pretax. and maybe it's 13 billion now and i don't think the quality of earnings has improved. so it's, you know, it's been a period when it, i'm sure, that it's been tougher than they thought, and it's been tougher than i thought. but i was wrong. i don't blame them. i mean, you know, i get paid to make my own decisions. just like an apple or something of sort. and, sometimes they're right and sometimes they're wrong. i think ibm is a big, strong company. but they've got big, strong competitors, too. >> joining us right now with reaction to the move and other market thoughts is mario gabelli. he is the chairman and ceo of gamco. mario, of course, is also a major shareholder of berkshire hathaway and has been coming here for years and years and years. mario, thank you for joining us. >> well, delighted to be here. talk about stocks. >> let's talk about stocks. we just heard what buffet said. i don't know if you have any thoughts on ibm. but he basically admitted he made a mistake with this. that he would have made more

money if he put it in the sfund. >> well, he would have made more money if he put it in amazon and bezos and how jeff is changing the world. there's always almost portfolio adjustments. we'll see when it was filed. he's got 45 days after the end of the quarter to file it. >> anything you want to tell us about what's coming out in your 13-f? >> i don't remember. it was filed last night. >> that was a different day. >> it's no 9 complicated. we're looking at companies that we have compounded and accumulated knowledge or about 40 or 50 years. so for example in the ecosystem of content and connectivity. what do we follow? how is consolidation taking place? what's going on with deregulation. the new head of the federal communications commission, how does that work? what is going to happen in broadcasting? there's a love fest there. a love fest becky. >> meaning mergers about to happen? >> mergers about to take place. clearly the auction ended. with regards to the most recent round of spectrum. they're now at&t and apparently virizen are fighting over

straight path and tribune is up for play. at least that's what we think. and whether it's sinclair or fox trying to put their arms around it, so there's a lot going on. >> let's talk about those piece by piece. first of all you bring up straight path and the battle that seems to be taking place between at&t and we're guessing verizon. how does that play out and as an investor how should you play it? >> at the moment there's only one company that has spectrum in the 5-g category that accumulated it during a distressed period of tension, and that was straight path. it's a small company. 13 million shares of stock, unfortunately, not that small anymore. gone from $30 to $155. so, you know, in that, what else can work in the content of 5g and how important is that in the future? and that's going to be important. >> and would you be a buyer of an at&t, a verizon, or any of the -- comcast, any of the big -- >> yeah, we like companies that also have going to have a potential exit strategy.

telephone is doing -- at&t is doing the deal with time warner. that makes sense for them. clearly what is verizon going to do? they're going to do something. then you go back to those four companies. microsoft, the apple, the alphabet, and so on, that have $2.5 trillion market cap. they're putting a toe in content. will they buy one of the companies? will they in close by disney, in close by viacom. >> you think disney is actually in play? >> the world is changing. as bill is saying, the times they are changing. everything is in play in terms of -- >> this is a big market cap. >> it's got $150. but apple has $700 billion market cap. i'm not saying it's in play. but the point is there's a lot going on within the framework of who's doing what in content and connectivity. and then there's distribution. cable companies in latin america, that look like they're being prepared for some kind of

a joint venture, merger, or something else like that. so that's tifric. then there's obviously infrastructure. laguardia, duh, the airport needs help. and so what else do we need? and how do we get the funding. and independent of the funding you read annual reports, like i read one of granite, a construction company in california, we've got to fix our roads, bridges, inland waterway, avionics. forget the money, the answer is it's got to be done. how do i play snath >> where do you play it? >> i buy companies like case new holland but also the truck companies. navistar is one of my favorite, but they're also being bought and volkswagen has put a big foot into that one. >> why the trucking company? as an infrastructure -- >> i would think of the companies building the infrastructure -- >> they are. but they've got to move stuff. >> as a play -- >> the whole ecosystem with regards to infrastructure. case holland makes equipment,

farm equipment like deere and the stock's around $10.50, 13 billion shares. so it's a fairly nice little company that you can -- >> i hadn't thought of it playing that far down the ecosystem. >> you've got to go the whole way. then equipment rental companies like outside right in front of the center here you go out and see the companies like sun belt, glg, which companies make the aerial work with platforms and so on. your hotel, you see a little fork lift. >> i saw that stuff. you have waste management -- >> oh, yeah, that's another one, public services, and waste management, the notion of gathering the data from construction sites, but that's a subset. then recycling of cans, water, waste, and both of these companies have great cash flow, inflation is picking up in my judgment, and they are going to have a better revenue mix to cover their sg&a. so sg & a is going to rise a certain level unless the volume goes up, the mix improves and you get higher revenues per whatever you're delivering and

the land fills are a great entry. >> you're looking at this as an economy that's going to be moving and moving faster because of some of the things that are happening in washington. you just mentioned infrastructure. what do you think about the passage yesterday of the health care bill? does that send you thinking down any -- >> well the, you know, it squeaked by. and to the degree that we as a country need to do a totally different approach to tax structures, i mean we need to go territorial versus global the only ones in the world that do that. we need to look at the rate. and we need to look at what the lobbyists put in like carried interests. you've got to get rid of some of the background noise. corporate taxes are $340 billion. of the $3.6 trillion that we as a country, estate taxes are only $23 billion. so you've got to get rid of some of these nuisanceite thames that have been in put in there for political not economic reasons. is that going to work? in a political world probably not but you've got to try. that will help bapsically change the whole attitude toward allocation of capital. but the bigger picture is that,

you know, the certain stiles of management that resulted in cuba or venezuela have been put on the back burner. what buffett says in his annual, the free market with all its flaws, meritocracy, he calls it something different and he talks in intellectual capital and the rule of law, they have worked. and they're going to continue to work. and that's why we have to continue to be reasonably positive on the outlook. >> carol loomis just mentioned something to me as she was walking off the stage. she said to talk to you about deferred taxes. >> yes. >> because what you're just talking about with some of these issues. $77 trillion -- billion i looked at it not too long ago because what does that do to the underlying book value -- >> right now it's a liability of almost $80 billion. -- >> right so 20% reduction you've got $16 billion added to his book and is he going to count that as part of what he looks at when he says i'll buy it at 20% above adjusted book. the book was 172,000 last year so project it out to 220 and then that goes to 250 like that if rates drop from 25, 35 to

let's say 20 to 25. >> right. and apparently she said that that's more than almost any other company that she's looked at but there's got to be companies everywhere that have massive deferred taxes. you start digging through everybody's. >> i agree. and that is an element with regards to not only that because if you do non-u.s. taxes and book them at a 35% rate but only pay 10% cash tax that has an impact. that's not cash. >> right. >> okay. the difference becky is not cash. it's the book changes, and how buffett -- >> the value -- >> and how is buffett going to handle something like that which he is fully sensitive about. john malone and warren buffett are terrific, terrific warren talks about it a great deal just time i met john had a sign on his office saying you're entering a tax free zone. buffett wouldn't do that. he's just quiet about it. >> but they're looking at these things -- >> well you have to. it's a public company. i run a public company. and my largest cost, my largest cost is taxes. >> let's talk a little bit about

another area that you think is so important. that's live entertainment. we're sitting in an arena right here. how do you play that theme out? >> well you think about the millennials. they want an experience. a lot of people want experiences, we don't, you know, we obviously communicate online and talk online. but yet, how do you play live entertainment? so coachella as an example -- >> the big l.a. -- >> concert. and you look at live entertainment. so i was just in l.a. last week or a weekend ago and saw live nation. they book venues, amphitheaters. they bring talent there. where are the locations? madison square garden at 200 dollars a share is kind of intriguing even though they do some strange things in that position. basically live nation the stock is $31. they own ticketmaster. that's not as attractive as the notion of booking the talent, finding the venues, matching them up and we like national is hot. reno, nevada is hot.

>> right. >> but also is the hudson yards in new york. i mean there are spots in the united states that are really very attractive, and how do we participate in live entertainment and how do we get content, and so i like rhp, the stock is 60-ish they operate the grand ole opry, they have country and western music christian contrary they have a lot of that and then live nation is a very interesting i think they run a great shop. then i have companies that are involved in other aspects of that entertainment. >> correct me if i'm wrong -- >> and the one that you should buy, derek jeter do you like derek jeter? everybody loves derek. trying to buy a baseball team. you can buy the atlanta braves for half the price that somebody's going to pay for it. >> because? >> the stock is trading is a tracking stock on the malone echo system. brtka, or and the stock is around $23 and it's worth around

$35 and they just opened a stadium they've got cbo toobb c, real estate. >> that's a good tip. >> that's not a tip. your grand kids, not yours but mine, future grandchildren, own a baseball team. >> correct me if i'm wrong but do you own churchill bounce, too? >> yes. >> i thought. you've got the kentucky derby coming up this week. >> to move the stock from 145 to 160 was a south korean company wound up buying double downs from someone else and they have somebody called big fish which is an online gaming operation. the kentucky derby is terrific. it's live events. it's exciting. they're doing a good job of allocating cash flow. but e-gaming, and e-sports, this arraiena will be filled by individuals playing e-sports. and how do i participate in that? madison square garden is the way to do it among others. >> great, great. mario, we want to thank you very much for your time being here. what will you be watching for this weekend?

anything you're looking to take out of this meeting? >> i like to see who's coming and what their thought process is obviously but you know we talked about the exit strategy of buffett owning a piece. the last big hug he put on was precision cast parts which -- >> oh, of course. >> and mark is in our hall of fame in part of what he's done what is warren looking at. where is he going hunting? forget about what he sold. okay. that was done. where is he going? >> yes. you mention he has $90 billion in cash and cash equivalents. >> yes. yeah but he can create something. you know, you had a little flirtation with unilever with the 3g so don't watch warren. watch the guys at 3-d. thank you very much >> thank you very much. andrew we'll send it back to you. >> thank you, becky. say hello to mario. i'll be out there in a little bit to see you guys shortly. in the meantime -- >> just got back. >> having some flight problems becky. we'll talk about that later. separately the house passing a measure to repeal and replace parts of obamacare. the latest out of washington

we'll do it next. and later the ceo of specialty chemicals company -- >> you were doing so good. >> you know that company. >> i do but it hurts me is going to join becky in just a little bit followed by susan decker. stay tuned you're watching "squawk box" right here on cnbc. i like russo. his on/off splits are the best here. yeah, but his offensive win shares didn't even break 4. come on, check out that stop-and-pop! what do you think? my trade-off analytics indicate no one creates more space on offense. this allows him to nail a jumper from a densely populated urban area. what you're trying to say is from way downtown? i am still learning. i can see that.

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gop taking a victory lap after the successful house vote to repeal obamacare. eamon javers joins us now from washington. good morning eamon. >> good morning, joe. it was a boisterous scene in the rose garden yesterday as house republicans fresh off their victory on the house floor came to the white house to celebrate with the president. now they will be accused by some of the political equivalent of throwing a champagne bash in the locker room at halftime. but nonetheless republicans said they needed this moment. it was a moment of catharsis to heal some of the divisions that had happened within the republican conference on the way to the victory and the president said this victory was particularly important for what comes next. tax reform. here's what he said. >> we're going to get this finished, and then we're going, as you know we put our tax plan in, it's a massive tax cut. the biggest tax cut in the

history of our country. i used to say the biggest since ronald reagan. now it's bigger than that. also, pure tax reform. so we're going to get that done next. and this really helps it. >> you saw a beaming speaker of 9 house paul ryan just over the president's shoulder there. this would go a long way to healing some of the divisions between paul ryan and donald trump. the question is where this health care bill goes in the senate. the senate signaled yesterday that it is simply going to write their own bill. they're not going to pick up the house bill. they're going to start from scratch and that means potentially big differences between the senate version of this bill and the house version of this bill. whether or not they can work all of that out is a big political guess at this point. but that's where we are headed into the rest of the weekend. the president, by the way, is in bedminster, new jersey. he doesn't have any public events on his schedule today but they say he's working from his golf club there, guys. >> beautiful place. you know, there's only so many republican ways to do what they want to do. so, it will be a different bill,

obviously. >> right. >> but you know, probably 60%, 70% is just a way -- it's going to be very similar. it will be differences obviously. i don't know if i -- >> what the white house says on that is you know, look, as long as the core principles are the same we're going to be happy with it ultimately. the question is whether the freedom caucus and some of those cantankerous members of the house who were so divided if they're happy with it. >> remember social security used to be the third rail and anyone that touched it gets electrocuted. so health care is the third rail. eamon the democrats after obamacare they lost -- obama won, obviously, but in congress they lost four straight badly. they lost 2010, 2012, 2014, and 2016. >> in large part -- >> because of obamacare. in terms of the house. they got just crushed. i don't think there's anyone left that voted for that plan. so it could happen again i guess. >> well the democrats are optimistic. you heard them chanting, hey, hey, hey, good-bye hoping that they can beat some of those

republicans -- >> of course ask the democrats were the republicans more doomed if they didn't pass it or they did? because they'd give you the same answer. >> might have been doomed either way. democrats say they should have started with infrastructure. >> all right. well that's their thing, infrastructure. a lot of opponents don't even want to do that. coming up, "squawk box" will be right back from omaha. with berkshire. time now for today's aflac trivia question. mr. diaz. 's a very simpl, we're just going to make one small incision here, then we're gonna go in and remove your '67 corvette. my vette!? it's just a gall bladder! you don't have.. aflac! paying you cash, so you might have to sell that sweet little muscle machine just to cover your rent. more funny juice. but my papa gave me...that...car. what do you wish you had? aflac. ohh, i love doing that. health can change, but the life you love doesn't have to. keep your lifestyle healthy with- aflac!

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good morning, welcome back to "squawk box" right here on cnbc. we're live at the nasdaq marketsite in times square. among the stories that are front and center, economists looking for 188,000 nonfarm jobs, new nonfarm jobs when the april employment report is released in just about an hour from now. that follows a lower than

expected 98,000 new jobs in the march report. also the unemployment rate seen coming in at 4.6%. that would be compared to march's 4.5%. plenty of fed speak on the agenda today. the hooverers institution monetary policy conference in california will be featuring appearances by janet yellen, vice chair stanley fischer. san francisco fed president john williams and chicago fed president charles evans. our own steve liesman is at that conference and we'll be hearing from him in the next hour. also, walmart tries to un-up rival amazon according to its reuters report. now applied for a patent for a system designed to compete with amazon's dash buttons. to let customers reorder products. walmart's system would build the reordering technology into the products themselves rather than requiring a separate button. maybe you get a bottle of tide and the button will be right on the tide. the second it's done and empty and maybe even if it's empty, by the way, it would know and could send a little wi-fi signal and you'd get a new bottle of tide

sent to your home. >> you have to give them credit for trying. >> the writers are messing for you. they put the patent and button in the same story for you. >> because you know how i like -- >> patent and -- is it because you're from manhattan. and that's why -- >> become deeds. >> margarita. right now let's get -- why is that? >> because it's howard stern. >> margareader. let's get back to the berkshire hathaway annual meeting in omaha. how is your ifb? is it working again? >> it's in or out. prompter is in or out. we have some gremlins that have made their ways in this morning. >> lighting is good. >> i'm with you on cinco de mayo. >> any excuse. any day in may. >> it is exactly. exactly. or, june or july. >> yeah. >> anyway, joe, the annual -- the annual berkshire hathaway festivities don't start until a little later today but we already have some pretty major news. warren buffett telling us he has cut his stake in ibm because

it's not doing what he expected when he started investing in the company. i asked him if the move was based on the company's 20 consecutive quarters of revenue decline or if it's the cloud business maybe not growing as fast as he had expected. well it's based on a lot of different types of businesses. the earnings have been disappointing. fitch or six years ago i think they were earning 20-plus billion pretax. and maybe it's 13 become now and i don't think the quality of ernst has improved. so you know, it's been -- it's been a period when i'm sure that it's been tougher than they thought and it's been tougher than i thought. but i was wrong. i don't blame them. i mean, you know, i get paid to make my own decisions just like an apple or something of a sort, and sometimes they're right and sometimes they're wrong. i think i -- i think ibm is a big strong company but they've got big, strong competitors, too. well, as we head into the weekend meeting here in omaha the focus turns to the companies

that berkshire owns outright and one of those companies is lubrizol. that's a berkshire hathaway that buffett refers to as one of the powerhouse six because of its enormous earnings power. last year the company brought in $6.5 billion in revenue. joining us is eric schnur, the chairman, president and ceo of lubrizol and eric, thanks so much for being here. >> nice to be here. thanks for having me. >> you just took over the company earlier this year but you are not new to the company. you've been there for 38 years so you know your way around the business. how are things going right now in your industry? >> i've been there 28 years. don't date me too much. >> i'm sorry. >> but, things are going well. the year started off well. and we're seeing demand in the market, but i think generally speaking, it's still relatively sluggish, there's a lot of uncertainty. our markets that we supply are diverse. and so we supply to the medical device markets, life sciences. and those markets, the growth rates in some of those segments are pretty strong. and apply to some more

industrialized in-use applications. those are a little bit more stable. not as high a growth rate. overall the first quarter in terms of the volume and top line we saw was pretty strong. >> let's talk about the business. because a lot of people don't understand exactly what you do. i know you're one of four major competitors that are in this business. you're the biggest of all of them. what is it that you do? the additives that you put in to things like transmission oils or different things. explain a little bit how that works? >> two-thirds of our business is in basically lubrication. which is where the name of the company is derived from. and automotive lubrication, transmission fluids, as you say, engine oils, different types of industrial lubricants. and in that two-thirds of our business we are the global leader. there are three other competitors. and what drives demand there is really miles driven, and vehicle builds and things like that. what we do is really three things. we have chemistry, of course, we're a specialty chemical company, global specialty chemical company. but chemistry by itself doesn't serve much of a function. it's just a molecule.

so we understand how to combine different chemicals into a formulation so an engine oil for example. most people wouldn't be aware that an engine oil might contain 20 different components that have to be mixed together to prevent wear, friction, you know, keeping engine parts clean and making sure that the oil is flowing at cold temperature. making sure things are not breaking down at high temperatures. that's very complex. and so we put those chemicals together, formulating is a big expertise and skill set that our company has. and also then we have to be able to test them. so warren was just kind enough to come visit us in our cleveland location and we took him through our engine test lab and we are validating that our performance works in the end use application that we design it for. and then we're selling that to the brands that your viewers would know, and our job is to make them successful. >> like who are some of your biggest customers? >> well, in lubrication it would be the big oil companies that everyone knows, shells, bps,

exxonmobil, chevron and so forth. >> aren't some of your big competitors also joint ventures from some of those companies? >> they are in the lubricant business the three competitors, one is independent, part of new market. there's a company called infinium that is a joint venture between exxonmobil and shell. and it's an interesting business in our competitors are oend by some of our largest customers. and our largest customers are also suppliers to us in terms of some of the base oils that we use for blending our components together to make the package we ultimately sell back to them. >> so you have a lot of frenemies in the business? >> partners we like to say. >> okay. what about the other one-third of the business? what is that? >> well, the root of that business really goes back to an acquisition that was made in 2004 that was the bf goodrich chemical business. it's a lot of polymer based technology. and we've built that with a number of acquisitions, maybe 15 different acquisitions over the years and so we have leading

positions in personal care, so 50% of the vehicles on the planet at any given time are using our technology. but also 50% of the shampoo bottles on the shelves are also using our technology. and we have koegts technology, we're building a life science business combining our polymer expertise and that formulation knowledge that's ingrained into our company into some drug delivery applications that are pretty unique and exciting for us. >> great. we want to thank you very much for your time today, eric. we appreciate seeing you and hope you come back again, soon. >> thanks for having me, becky. >> joe i'm going to send you back to you and just warn you, don't talk to me because i can't hear you. >> okay all right. coming up stocks to watch. we're counting down on the jobs number. the -- have that number. also market reaction. that's all coming up at 8:30. check out the futures again this morning. they've been mixed because the dow has been down, and the s&p and nasdaq both indicated higher. "squawk box" will be right back after a quick break. ♪

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the bottom line got a boost from customer additions in the company's commercial insurance business. and cbs came in nine cents above estimates reporting quarterly profit of $1.04. the results were helped by increase content licensing and subscription fees. shake shack earned 10 cents a share for its latest quarter two cents above estimates. however sales at restaurants open at least a year, comp store sales fell 2.5%. shake shack gave lower than expected guidance for revenue. when we return we're going to talk tech, media and more with berkshire hathaway board member and former yahoo! exec susie decker. first as we head to a break, warren buffett has become a major investor in apple. last night he joked he's jealous of the company's balance sheet, but told becky he loves what apple is doing with its path. >> i love the fact they repurchase shares, not what they're doing now is borrowing money in the united states figuring they'll get that money back at some point or another. they're really buying in their stock, using borrowed money, but

with the knowledge that if they had to they could take it back now and pay every repatriation tax but what they probably hope that that tax comes down and my guess is that some point or other that money will end up back in the united states for most of it. and i like buying -- if i like buying a stock myself i like the company buying in it. obviously think that you know that it's a good buy, and if you can buy your own stock, there's no company you should understand better than your own company. and i think buying and selling is a good price and i think it does not make sense at another price. it should be price sensitive. most companies don't look at it that way. but that's the way i look at it.

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news out of washington, house republicans passing the health care bill but now it's the senate's turn and it could be months before we get a decision on obamacare's replacement. some members of the senate indicating they may write their own bill from scratch rather than making tweaks to the house bill. we're going to get a live report from washington in the next hour at 8:40 a.m. eastern time. health and human services secretary tom price is going to join us live to talk about that bill, and i know joe you were saying that goldman sachs was out with a report last night talking about the implications of this bill and whether it actually means we're going to get tax reform sooner or later. they make the argument it may be later. >> i think it paints a little bit of an ominous picture. and i think that seems to be the natural reaction right now. i don't know if you're an investor if you want to align yourself with that thinking.

>> well, they're just doing -- they're just doing the calendar, that's all. they're not -- not saying -- i don't even think that they're, you know, handicapping the likelihood of what happens in the senate. let's say they get started now and that pushes us into the summer. then they go back and forth and then you're in august and then by the time september comes around maybe you're getting a final resolution of this and then by the time, you know, you take -- these guys never work thank god. it's better when they're not there. then when they do work you know so you're talking 2018 and then you got the midterms. >> right. >> and then there you go. that's the obvious component of it. >> no i understand. i understand. >> we're going to continue this conversation, tom price as i said is going to join us in the 8:00 hour. we also have the jobs report but we do want to get back to berkshire hathaway's annual meeting. where becky is live with a very special guest. becky? >> hey, andrew, thank you very much. as you mentioned we are live from the site of this weekend's annual berkshire hathaway meeting. it's going to take place right on this stage.

joining us right now is sue decker. she is a member of the berkshire hathaway board. she's also the former president of yahoo! and the cofounder of a new company that's called rafter, and sue i want to thank you very much for joining us. >> thank you. i love coming. >> we love having you here. you're on the berkshire hathaway board. we just learned from warren last night that he sold about a third of the position of ibm. something like 25 million shares over the first and second quarter. did you know about that beforehand? >> i learned about that three minutes ago before i got on the stage. so i learned about it after you learned about it. >> so this is warren's typical way of keeping the board up to date on the moves and things that are happening along the way. >> yeah, that's not exactly the way he uses the board. i don't know that we would have added much value. we would have probably slowed things down, increased the chance for a leak. >> particularly like something for a sale of stock which is pretty sensitive information that he doesn't want to get out there. what can you tell us about being a member on the berkshire hathaway board, you're also a member on the costco board.

what kind of things have you seen in corporate governance? what kind of things have you kind of experienced along the way? what are you measuring right now? >> well, you know, every board is so different. it depends on the culture of the company. it depends on the ceo. almost every board that i'm a member of is still founder involved, or very strong influence from dpoufounders. and i didn't do that by design. but in hindsight looking back i tend to gravitate toward companies that have a strong mission and strong sense of culture which typically emanates from founders. the founder often has a very big impact on how the board operates and evolves over time. >> what does that mean in terms of responsibility as a board member for those -- for those companies where the founder is still involved? what do you feel like your responsibility is? >> the responsibilities are the same. regardless of how the founder -- how involved the founder is or whether you're on the sixth generation of management basically, the overall governance, risk management, succession of ceo, you know, sort of the very high level

responsibilities. sometimes when it's a founder involved company the founder may own a lot of stock. and since the board's responsibility is to the stock holders, it then is a complicated situation when you're both serving the ceo, and also other outside investors. >> how do you manage that? >> pretty much do the right thing and try to make sure that you do what -- put the hat on what an independent shareholder with no information, and vested interest wants the company to be governored. >> sue let's talk a little bit about yahoo. we spoke with you last year about yahoo. since then we learned yahoo's fate in terms of being purchased. what do you think about how the company is doing right now and what do you think about its new owners? >> you know, i think we were here a year ago. i thought that probably a sale was inevitable, and that it would be better for yahoo to be a part of a much larger company or a private company where some of the tough decisions could be made that were a little harder in the public scrutiny position

that it was in before. >> mm-hmm. >> you know, it is -- it's still a franchise that generates a couple hundred million people that come every month. it still has a nice brand and i think in combination with the other brands that versus has such as aol, huffington post, they can aggregate a number of audiences for advertisers and it probably will be a good economic deal. they'll have to do some cost cutting and rationalization. i'm not sure that the yahoo brand will ever be as preeminent as it was before. but i do think it could be a good economic transaction. >> so this was the right home for it? >> i don't know if it's the only right home but it is a right home. >> in terms of what you think needs to happen in terms of cost rationale. what do you think they're kind of thinking through at this point? what would you be thinking through? >> i think you'd have to look at the overall productivity of the business, what the revenue per employee is compared with some of the other companies that may

operate similarly when you have a franchise like aol, where you have similar properties, finance, shopping, other properties you'd have to look at the audience overlap, and if there's unduplicated audience you'd have to keep the one that's the stronger franchise and rationalize the cost structure. that's the kind of thing you'd like at. i think it's hard to invest in innovation when you're in a process of trying to rationalize all the costs. >> sure. now this gives them a little bit of privacy and a little bit of space to do some of those things? >> yeah. >> what did you think about marissa mayer's pay package that was reported out. it was something like $186 million that she got from the company's sale to verizon communications? >> i don't -- given what happened in the performance of the company, it seems on the egregious side, i guess. but i don't -- i don't know any of the ins and outs of why that happened or when it was negotiated. it could have been when she first arrived. i'm not really sure. >> probably been the case. one of the things that caught me as a yahoo customer was the --

the theft of the cyber hacking that came in. obviously it's a problem that a lot of companies have to deal with. one of the hugest issues that governments are also facing right now. when it comes down to it, what are you thinking about in terms of cyber theft and what happened in yahoo and what's happening around in the rest of the technology area as well? >> it's definitely a big issue on every board room's agenda, is how do you deal with security and most often there's no way to prevent it, theft entirely, so what kind of controls are in place to make sure that it gets surfaced very early. what kind of mitigation steps companies can take. so it is an important issue. i think the thing that really stood out in the yahoo situation which i know nothing about from the inside, is that it seemed like it happened quite awhile ago. >> yeah. >> and when situations like this happen in any corporate environment, you know, as warren often says, you have to get it out, get it right, and do it fast. and the situation seemed like

it, i don't know again -- >> a long time, for years it seemed like. sue let's talk about rafter the project that you're working on right now. i played around with it a little bit yesterday and i think i get it. it's a social media setup where, to me it seemed like twitter without the trolls, and you can get a lot deeper and get more information. why don't you explain what it is and why you're invested in it. >> sure. it came about because i was advising some small start-ups over the last few years and i met the co-founder of the company, claude vogel, and he's terrific. he started a few companies and together we both had a bit of experience in the content and distribution businesses. so we sort of looked at the landscape and thought there's really an opportunity for content to be delivered with a conversation platform. it's what we do in real life. we come to a meeting like this, and we all have a shared interest in berkshire hathaway and there's a conversation that happens. that could happen in a living room, as you're watching a sports game with your family.

or it could happen at the water cooler when you talk about game of thrones last night. when you get online, the existing platforms are not very conversation friendly, and they're not very curetted. so we thought if we could create something that could allow people to join communities that have like interests to discover people they don't know as opposed to social networks which are primarily around people you do know. >> right. >> and to find interesting, trending content and good conversations without a lot of the noise or scariness that exists today that it might be fun. >> so it's kind of like going to the bookstore and running into people who have similar interests and digging down a little deeper on that? >> yeah. and then hopefully having a good conversation and finding -- discovering things you don't know. >> it's launched just this year. how big is it at this point? >> we're in the thousands of users. and we just launched two months ago. but we've been pretty successful so far. >> and your hope, your goal, if you're back here next year where you'd like to say you are with raftr? >> we hope to have a real -- our biggest going right now is to

build some vibrant communities. and we actually launched a berkshire hathaway raft. >> i saw that. >> it has a little bot on it so you can check in to see what warren and charlie might say on various issues. but the idea is that if we can get people to build a few communities we think it will spread like wild fire. >> great. sue want to thank you for your time. we always appreciate seeing you. >> thank you so much, becky. >> joe, we'll send it back to you. >> okay, becky. the april jobs report is coming up, just 30 minutes away. the numbers and the market reaction. that's straight ahead. then health and human services secretary tom price will join us to talk about the big events yesterday. "squawk box" will be right back. g to be a nightmare! does nobody like the future? c'mon, the future. he obviously doesn't know intel is helping power autonomous cars and the 5g network they connect to. with this, won't happen in the future. thanks, jim. there's some napkins in the glovebox. okay, but why would i need a napkin?

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china. oh ... he got there. that's the power of and. >> breaking news, big blue loses a vote of confidence. >> i don't value ibm the same way that i did six years ago when i started buying. >> what warren buffett told us about his ibm stake ahead of berkshire hathaway's annual meeting straight ahead. jobs in america. the april employment report just minutes away. we're going to bring you the numbers and the instant market reaction. >> plus the health care reform bill crosses the finish line in

the house. >> this is a repeal and a replace of obamacare, make no mistake about it. >> health secretary tom price joins us, first on cnbc as the final hour of "squawk box" begins right now. >> live from the most powerful city in the world, new york, this is "squawk box." ♪ good morning. welcome back to "squawk box" here on cnbc, live from the nasdaq marketsite in times square. i'm joe kernen along with andrew ross sorkin. our guest host is joe terranova, senior managing director at vertis investment partners. lps fast money trader. we're counting down to jobs friday and to 5:00 p.m. cinco de mayo. economists expect 188,000. 188. nonfarm payrolls for april. we'll have a liveup of experts to get you set for the big payrolls release. but first becky quick is in omaha ahead of berkshire

hathaway's annual meeting. she has breaking news on one of warren buffett's holdings. becky? >> hey, joe. we've been talking about it all morning long. folks if you are just waking up, warren buffett tells us that he has sold a major chunk of his ibm shares. this is a position that he bought into five or six years ago. he says over the course of that time he's changed his opinion on the tech icon. listen in. i don't value ibm the same way that i did six years ago when i started buying. i mean, overall i think the six years i've revalued it somewhat downward. matter of fact, when it got up over 180 we actually sold a reasonable amount of stock. >> you sold a reasonable amount of ibm? >> right. >> last that i had seen you on something like 13 or 14 billion dollars worth of ibm. >> depends on the price.

>> how much -- i'm thinking to think back the number of shares. >> we owned about 81 million shares. and we -- when it got over 180 >> $180 a share. >> yeah, and compared to the valuation then that i thought was appropriate and other things we started selling some stock. and some of that was sold in the first quarter. most of it was sold in the first quarter. some was sold in the second quarter. >> how much did you sell? >> we sold about 30%. >> 30% of the shares? you owned about 9% of the shares outstanding of ibm. >> well, if you look at it this way we had 81 million shares. so, we probably sold in the area of 24 million, 25 million shares. but -- >> you were selling it -- >> that was at higher price. >> you were selling at $180. that stock has come down pretty significantly since the earnings. i think it's closer to $160 a share. >> yeah, yeah. >> would you still sell? >> i don't think we'll be selling. in fact, we could buy. i mean, i continuously look at

what they do. i look at the price of the stock. when it was over $180, and i looked at what was happening, they've run into some very tough competition. >> very tough competition in part is amazon. warren buffett did mention jeff bezos by name, talked about what a great competitor he was, how he's built up the cloud services and had a much longer runway that bezos himself had anticipated. he said that bezos has talked in the past about how he thought maybe he'd have a two year runway before other competitors jumped in and got very serious about the cloud. turns out he had more like seven years to build up that business. obviously this news putting some pressure on the stock today. i haven't seen in the last half our or so, last i looked ibm shares were down by 2.5%. andrew as you were talking about earlier, that's because of the buffett premium. the question is how big it is. as you can see, ibm shares down 3.25%. andrew? >> okay, thank you for that, becky. we're going to continue this conversation here. joining us on the "squawk" news line is james kissner who course

ibm for jeff ris. you just heard the news. what do you make of it and what kind of premium do you think was on the stock as a result of warren buffett's investment? >> it's interesting. so i think warren is starting to see here we've been seeing for the last few years. ibm is facing some pretty big headwinds in its core markets. he's talking about folks like amazon and microsoft azure and the fact is these guys buy public cloud services, that removes some market opportunity for ibm. and in both software and services. it's hard to say with the premium is. i mean it's trading at ten times ebb bit today. i think you look at some other companies, were the similar growth prospects talking about eight times so that's a decent premium 10 versus 8. >> so you look at still. still obviously does have two-thirds of his position left. joe was here earlier. i don't know about bullish but at least defensive.

you were talking about how they might have to defend the stock? >> i think he mentioned possibly buying the stock if he moved lower. i guess james the question would become where do you fear -- believe fair value is for this stock on a further decline and believe warren buffett or others would step in and defend it? >> yes, my perspective, we have $135 price target on the stock. that's based on ten times earnings. and frankly i think that's a bit generous. considering that they've had a 20% decline in earnings over the past few years. so you know, ten times is a pretty low multiple. again the growth prospects are quite challenged. so perhaps folks might get more positive on the stock and reach those levels. yet we think there's a lot of downside from here. >> the other question is how much do you think that the buffett seal of approval actually helped not just the stock but the business itself? meaning what kind of license did it give the company in getting

new business, retaining business and does that change at all? >> i'm not sure that it makes a huge difference. these are folks and enterprises that are going to evaluate products on their merits. certainly buffett buying the stock probably speaks to his belief that the business has longevity and so from that perspective maybe enterprises are slightly more positive. ibm's been around a long time. not sure makes a huge difference in enterprise purchases. >> what about real quick internal management team? does this have any impact in terms of the confidence that the board or shareholders will ultimately have? >> at the margin it might. i mean i will say, you know, institutional investors don't have particular confidence in the company. i mean, it's only 60% institutionally owned. that's a lot below other companies like hewlett-packard. you know, they just passed -- the shareholders just did a vote on compensation and it barely passed. it was 46% voted against so there's not a whole lot of

confidence in the company right now, and ibm is going through a lot of tough times and so you know i guess internally, you know, maybe there's at the margins some -- that's somewhat morale reducing. but i'm not sure it makes a huge difference. >> okay. james, appreciate your perspective this morning. thank you. >> yep. >> here's what else is making headlines this hour. uber is reportedly the subject of a criminal investigation by the u.s. justice department. the probe looking into the company's use of software that helped drivers avoid local regulators. known as gray ball the ride share giant already admitted to using it and said it would stop shortly. after "the new york times" published a story exposing the existence of the software back in march. what would it get around? what did the regulators -- what was it trying to avoid? >> this is what we talked about. >> i remember but -- i forgot he sold ibm. >> if they went to a town, were trying to open up in a city that had not given them permission

they were still operating in the city and what they would do is what's called geofence, offices or police stations or regulatory agencies in which they thought that people might be trying to catch them. meaning a regulator might be trying to hail an uber to then, you know, not entrap them but to catch them doing it, they would geofence it so that if you were hailing an uber from that location they would create a fake screen. >> right. >> either show that there were ubers or not ubers, and you would never get a car coming to you. >> here's the thing. what i immediately -- >> i mean, that's -- >> i know but what i immediately thought was -- >> -- clever. >> a lot of these cities that have, you know, they've got entrenched entities like cab companies. >> taxi companies. >> and a lot of the regulations seem to be sort of gumming up the works of trying to slow down technology. i almost see this as a, you know, as a flexible sort of a rebel-like type company. >> yes. >> as going up against a man -- going up against the man to give people cheaper fares and a better service even though

regulators are trying to stop them. i almost can see it as sort of a, romantic type -- >> i can see the romantacism in it. i'm just suggesting to you that laws are laws. you know, my -- >> so you want to build a wall? >> i love a great criminal con story. >> so you want to build a wall? >> i sort of root for the guys, the con artists in the movies. but it's illegal. >> laws are laws. >> like illegal immigration. >> except for illegal immigration, those laws we don't enforce. >> coming up jobs friday. next as we head to break here's what warren buffett told our very own becky quick about apple's cash pile. >> they also have a cash hoard of over a quarter of a trillion dollars. are you jealous? >> i'm very jealous. yeah, i thought i was doing okay until i looked at their balance sheet. . the power of a proven 15-year track record. the power of an etf.

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♪ i'm dr. kelsey mcneely and some day you might be calling me an energy farmer. ♪ energy lives here.

hey you've gotta see this. cno.n. alright, see you down there. mmm, fine. okay, what do we got? okay, watch this. do the thing we talked about. what do we say? it's going to be great. watch. remember what we were just saying? go irish! see that? yes! i'm gonna just go back to doing what i was doing. find your awesome with the xfinity x1 voice remote. we are just minutes away from the april jobs report. last night becky catching up with berkshire hathaway ceo warren buffett and asked him if this is a 0.7% growth economy.

here's what he had to say. >> i'm a broken record on this subject. but since the fall of 2009, literally, it's been about 2% a year. you know, and i don't think the figures are nicely that accurate when you get to 10s and all of that. i'm sure it's sped up a little. it's been 2% now for 7 1/2 years. i don't think we've really seen anything like that. it was a great recession but the recovery has been very steady autos are falling off a little now. housing is good. most of our businesses are doing a little bit better. i don't see it as being a lot more than that. i don't see it as being a lot less. i wouldn't be surprised if it comes in a little bit higher than that. it's not perfect reporting. not what i see as perfect either, obviously. but i just don't so anything but kind of a steady rise. >> turn to our jobs panel.

geoff rosenberg is blackrock's chief investment strategist. joe terranova is here. senior managing director, and ryan streeter is here. jared bernstein, haven't seen you in a long time senior fellow at the center on budget and policy priorities, krpt nbc contributor and cnbc senior economics reporter all the way from the other coast steve liesman joins us from stanford, university, at the hoover institution monetary policy conference where janet yellen is going to be in just a little bit. >> folks, what do you think. >> you know it's a steady job market. we had a weather related slowdown last month. everyone expects that to come off. it's just a matter of degrees in terms of how much. but this job market is very solid and we should have a solid report across the board in terms of head line on the payroll numbers.

there's some issues in terms of the hours average hourly earnings based on last year's comparison. we should see some steady news there and not much news on labor force participation rates. >> you want to take the other side of that? >> i think it's going to be a good report. maybe not supergreat. i think that we're starting to see full employment raising its ugly head. and so, we could see the upward pressure on wages as a result of that. but at the end of the day it seems like we're not -- >> that's what we want. don't we want a little push on the wane front? >> we do want that. that's a good thing. what we're seeing now though is a growth rate where we're just not really able to create a whole lot more new jobs right now. we need to get more people that aren't in the labor market back into it. >> it seems as though consensus overwhelmingly thinks we're going to get a rebound here, a strong report. if we get a miss given that q2 gdp is tracking closer to 3%, what does it mean for the market on a big miss?

>> it depends on the pieces. a couple of pieces that might contribute to the miss is retail. you know, we've got a big story in terms of disruption, the last two months you had 61,000 lost jobs so if you have a lower number, and it's a big retail number, market will dismiss that. that's not a macro economic indication of where growth is. that's very specific. you also have some government issues with regards to some of the holiday issue. and you had the government freeze that might show up. those are one-off issues. if there's something broader, i think it will be very surprising, i think generally given every other signal you got the nfib, small businesses, basically every other indicator tells you this is a very tight job market. if there's a big decline in head line, it might be more about not being able to find enough people than a signal on a weakening economy. it would be very hard to change that narrative with one number today. >> jared bernstein you're going to make it political. you're in d.c. if the numbers are great, you're

going to hear the white house say that they're responsible for the economy. if the numbers are bad, what do they say? >> well, i guess if the numbers are really bad they might say that they don't believe them although that kind of goes back and forth. look down here everybody's very much focused on the health care vote. so if the report comes in anything like that we've been talking about so far, i'm not sure it's going to get a ton of attention. i will say that i think full employment's head is beautiful, not ugly, and i'm glad that we're closing in on full employment. i want to say one word about warren buffett. because i just think he's really smart. and his comments on gdp are exactly right. year over year gdp was 1.9%. and that's a much better way as steve liesman will tell you, to measure first quarter gdp because of the liesman bias that the problem in the q1 gdp so i took gdp and i reseasonally adjusted the bea numbers which are already seasonal adjusted so i pulled out the residual part

and i got 1.7% annualized quarterly growth. so that tells you that buffet's right. that the underlying trend in gdp is around 2%. look on the markets let me say one thing. if the job report is unexpectedly bad it's possible that the markets will look towards the fed and think, hmm, maybe they'll slow down their normalization campaign and that could bounce the other way. that could actually make the markets feel a little better. >> okay. hey, steve, you've got a bias over there, the liesman bias? >> oh, boy well i think what he's talking about is the work that we did on -- >> oh, okay. all right. >> i think joe is misunderstanding what -- >> what -- >> misunderstanding for years. >> a statistical bias. >> what we're talking about is the first quarter. it is an interesting split here, which is that what's good enough for the fed may not be good enough for the market. i got kind of a low number. i don't know if we're doing predictions now or if that's in the next block.

>> we're going to wait for the predictions. hold your number. >> hold the number. but listen, i try to think in terms of what number is good enough for the fed to still go in june. and i say that knowing there's two jobs reports to go to me a number around 125. remember we keep coming back to this issue. according to most fed folks the economy should be generating about 75,000 jobs a month. as in equal to the entrants to the workforce. maybe you pull some in from off the side lines. big debate about that. let's say you do 125 i'd say that's a number the fed is very happy with. on the other hand, jeff and joe would say you know what? 125 is a weak number. the market likes 150, 180, 200 it sees as a strong number. i've been arguing for a long time you know, to some effect and sometimes it doesn't quite work out, that the market needs to get used to a number that is lower to be one that is enough for the economy here to say the economy is still strong. and that number to me is in the 125 to 150 range. >> okay. thank you, steve.

we're going to come back to you in just a little bit. we will talk numbers. when we return the u.s. on the verge of a major nursing shortage. we're going to find out how the aging population is hitting hospitals and educators next. later don't miss our newsmaker of the morning. tom price is going to join us at 8:40 a.m. eastern time. skwk returns in just a moment.

jobs friday. time to find out where the jobs

are, or in this case where the jobs might not be. there's a growing labor shortage in the nursing industry and kate rogers joins us from baltimore with more on this story. good morning, kate. >> hey, good morning to you, joe. there is a growing shortage within the industry which means nursing students like tara and lindsay here at the university of maryland school of nursing will have very solid job prospects. in fact, the bureau of labor statistics projects demand for registered nurses will grow by about 16% through 2024 adding about half a million new jobs. for patients receiving care, nurses are often the first line of defense. but there aren't enough nurses to meet demand. >> we're beginning to see growing shortages in different states and different geographic regions. >> reporter: each year 150,000 nurses graduate from training programs nationwide. according to the american nurses association. but many medical facilities, particularly in rural areas and larger inner cities, are struggling to attract and retain

talent. >> rural areas often have lower salaries. that's also true with smaller facilities. we see a real distribution issue that is only getting worse. >> reporter: hospitals usually give priority in hiring to nurses with a bachelor's degree or higher. salaries within the industry range from about $45,000 to $150,000 a year depending on location and specialty. >> the opportunities for nurses, even as new graduates, are almost limitless. just about any place that people live, play and work, there are many, many opportunities that one can select and gain whatever additional knowledge and stills are needed in that specialty. >> the aging population has presented the industry with many headwinds, more registered nurses are retiring. more nursing faculty are also aging out of the workforce. in fact the ana says about 68,000 qualified nursing applicants were turned away from programs within the u.s. last year because they just didn't have room for them in classrooms. but here in the university of

maryland they're doing their best to get ahead of that program by admitting more restaurants in recent years. joe back over to you. >> worried about that one patient back there, kate. not looking real good right to your right. >> i'm not doing any work on the patient, joe. >> she hasn't blinked or anything in -- i don't know. good luck there. yikes. coming up -- is this -- is this a school, kate? did i miss that? they're training? >> yeah, they're training. these are nurse anesthesia students in their first year. they've got two more years to go. this is frances and their instructor michelle. they're teaching her how to administer anesthesia. >> coming up the moment you've been waiting for numbers from the april jobs report and the market reaction right after the break. "squawk box" will be right back.

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♪ welcome back to "squawk box" right here on cnbc. we're live from the nasdaq marketsite in times square where it is raining outside.

we'll see whether it's raining on jobs friday. let's get some final predictions from our panel. jared we want to start with you, sir. we have your -- we have everyone's -- we just gave it away by showing that screen. jared justify your 170,000. >> well, i think that's a little bit below consensus which is around 190. and that's because i think the weather effects are probably going to call for less of a bounceback. i run a bunch of models which are mostly backward looking and you know, that's what popped out. i will say that the confidence interval, the 90% confidence interval around this number, there's 120,000. so i'm sure i'll be within that interval. >> jeff, ten seconds. >> 200 is my number. a little bit better bounceback from last month's disappointment. and retail sector. >> ryan justify yourself. >> i think 160. that's my number. is also reasonable bounceback from last month and i think it takes into effect what we're seeing about this full employment effect. >> rickster? >> 205,000.

probably a positive revision of last month's 98 will be in there as well. >> steve? why? >> 144. i think the bounceback gets in the rescissions. i don't think they roll it into this one and my service sector manufacturing indicators are -- >> hold on. we're just seconds away. let's hear it hampton what is it? >> 211,000. april nonfarm payroll increased by 211,000 jobs. the unemployment rate 4.4%. average hourly earnings, 0.3%. that 4.4% unemployment rate the lowest since may of 2007. above consensus, and quite a bounceback from the march numbers. the march numbers were actually revised downward to 79,000. the revisions for both february and march basically a net loss for the two months of 6,000 jobs. biggest private sector job growth in april, jobs, leisure

and hospital plus 55,000. health care plus 37,000. professional and business services up 39,000. how did we get to that 4.4% unemployment rate? the number of unemployed declined by 146,000. the number of those who found jobs increased by 156,000. the labor force participation rate 62.9% just down a tick from the previous month. the u-6, the so-called real unemployment rate, 8.6%. the lowest, again, since november of 2007. long-term unemployed 22.6%. 1.6 million. year over year the number of long-term unemployed has declined by 433,000. so far for the first four months of this year, average job gains so far this year, averaging 185,000 per month. back to you guys. >> all right hampton, thanks. let's get right to our jobs panel. for reaction. jeff is still here.

jeff rosenberg, joe terranova, ryan streeter, jared bernstein, rick santelli and steve liesman. rick i think you were closest with 210. but, i've seen everybody have wide standard deviations from the main. steve, you were on a roll, you know, i knew this was coming. i knew it was coming, and not only were you too low but even your reason that the revisions from the previous would go up, and they wouldn't be reflected in this one it was like the opposite sort of. you knew this was going to happen, steve. >> well, you know, there's -- >> very strong forces in the universe. >> all right. >> you know, as einstein said compound interest is the most possible force in the universe followed by the electromagnetic force followed by reversion to the mean. i was doing great for seven or eight months now, now i've got a couple of big misses. go back and check the calculations. look, who cares? 200,000 people hired is a very good thing.

4.4% unemployment is a really good thing. probably average the two months, joe, 80 and the 200 gives you what did hampton say, 180 was the average? >> that would be 140. >> you have people, the decline in the unemployed, the decline in the u-6, it's all good news. and look, you have to say that perhaps, you know, we've been looking for this question. there's confidence on the part of business. is it working in terms of them hiring? and it looks like it is at the moment. despite what looks like very slow or weak topline gdp numbers. they're hiring. and my guess is they're probably seeing the sales and the revenue to justify it. otherwise they wouldn't be doing it. >> okay, rick. you started. then we'll get to everybody else. what were you starting to say, rick? >> oh, no. i was just going to point out that i'm really concentrating on the wage component here. and even though the month over month data was pretty good up 0.3. we lost 0.2 on the rescission and we lost 0.1 on the year over year and that was a little light

to begin with at 2.5%. i know we're all now satisfied with these numbers, i still say in the greater context that we need to get a lot more horsepower and 250,000 tight numbers. the unemployment rate i don't know how much stock i'd put in steve is correct, though, probably the real unemployment rate in this country is the u-6 at 8.6. and it has come down nicely. you know, rates didn't do much, guys. they upticked a little bit and now they're actually a basis point lower at 235 on the 10s. it's going to be fascinating to see how it closes. french elections don't seem very exciting. but i'll tell you what, the china commodity story is big when you look at weak dollar and weak commodity prices you have to scratch your head a bit. >> let's see, i don't know who was closest at that. i'll just go to jared. jared, waiting for you to get political. i'm sort of just knowing you as i know you, i just -- you know, i'm a little bit disappointed. you're slipping.

>> i'm not as political as you think i am. i'm probably less political than you are. anyway, good call by rick. and i think that this 8.6% on u-6 is really a pretty hot number. i've been waiting for that to start to come down. it sounds like a really shaking out the underemployed. people who are involuntary part timers are finding more hours. that's a positive sign. job market is tightening up. so, steady as she goes. i think as far as washington is concerned, yeah, there's going to be some bragging on these numbers. but, again, you know you really have to snooth out the bumps, last month average with this month we're into a growth pace of around i don't know probably about 180 per month. that's a very solid growth. that's going to keep pushing the unemployment rate down. >> that's the key here. is that this is a very strong report, strong across the sector as you had a recovery in retail. you had good leisure and hospitality. that helped to boost it. but the real story here is the tightness in the labor markets. didn't really show up this month in the year over year figures. the base effects are pretty strong there.

but the fed's going to pay attention here in terms of the job market really starting to go well above potential. you know, ryan you mentioned is it ugly? is it attractive? today it's attractive in terms of being at full employment. market will pay attention to wages, and whether or not that turns. >> it's a great report. great number. and i think stepping back looking at this kind of longer-term, the latest business roundtable survey of ceos shows a pent-up demand for hiring. and a lot of them have plans to be hiring over the next half hour as well as increasing capital investment after a period of relative decline there. so i think that's all a good thing. whether this report reflects some of that pent-up demand, i don't know but i think it's a strong signal. >> u-6 is the lowest since november of '07. the rate itself is the lowest since may of '07. clearly companies feel that they have pricing power. they're able to lift some vangs. it's a good enough report in the sense of its beats consensus which was the worry overall for the marketplace.

listen the market is well positioned. we're sitting right off all-time highs. watch financials today and see if we could power our way and break out of 2400. >> could i suggest -- i want to interject one question into this discussion. one head scratcher is that as wages had accelerated, and they have accelerated, as the job market's tightened up, you really haven't seen inflation, at least core inflation, accelerate apace. wage growth does not seem to be bleeding into price growth. and i think that's very important. so i wouldn't necessarily map this tight job market onto inflation acceleration without really seeing the whites of its eyes. i wonder if others have thoughts about that. >> i'll cham in. that's very much the case. wage inflation doesn't move in to core inflation. it's a very long process before you see that. you have a lot of other factors that push against that goods inflation, the value of the dollar is pushed against that. but the tightness in the labor market does tell you about the tightness and being at full

employment and what that means in terms of future down the road inflation pressures. and the fed will pay attention to that looking forward in terms of space and normalization. >> all right. jeff, ryan, jared, rick, steve, joe you'll be here. ask you andrew but i know you're working on your tsa precheck and whether that's going to go through. are you right after the show? how much time you got? >> if i tell everybody publicly then we have to actually get more security going to the airport with all the paparazzi so i just try to -- try to keep my head low. >> just knowing -- >> i mean all the airports. that's why i didn't want to let everybody in on the secret. >> all right. you got enough time to finish the slow? >> just enough time. just enough time. >> with the precheck. >> well, but you know -- paparazzi -- >> oh, there you go. >> coming up next house republicans getting a win in the battle for health care reform. i'll be in the middle seat, everybody. but now the flight -- fight

moving to the senate. 45e89 and human services secretary tom price is going to join us next to talk about it. you're watching "squawk box" right here on cnbc. security events every day. ddos campaigns, ransomware, malware attacks... actually, we just handled all the priority threats. you did that? we did that. really. we analyzed millions of articles and reports. we can identify threats 50% faster. you can do that? we can do that. then do that. can we do that? we can do that.

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fidelity, where smarter investors will always be. welcome back to "squawk box" this morning. want to recap the april jobs report out just moments ago. 211,000 new nonfarm jobs added to the u.s. economy during the month of april. employment rate falling to 4.4%. that's the lowest since may of 2007 before the financial crisis. people thought that was alice in wonderland. this is good news. we should point out that march

payroll was revised downward to 75,000 from the originally reported 98,000. >> house republicans celebrating the health care reform bill that will now make its way to the senate. joining us now is tom price, secretary of the department of health and human services. mr. secretary, it's great to see you. >> good morning. good morning. >> i earlier said you know, used to be social security was the third rail and i'm really starting to think health care could be the third rail it's just such a difficult intractable subject for politicians. the democrats thought, you know, in their hearts i think they thought they were doing the right thing when they passed obamacare. then they lost four straight elections. not the presidential but four straight elections in terms of congress, decimated the ranks of the democrats and i'm just worried that you know, given the current milieu of, you know, what you're hearing in the media, that maybe republicans need to try to avoid the same thing from happening by passing this. do you worry about that? >> well it's a completely

different situation though. remember what happened with the democrats when they pushed forward their health care bill. they disrupted the market in health care. they made it so it was more difficult for folks to get care and coverage. got all sorts of folks out there with an insurance card but no care because they can't afford the deductible. what we're trying to do now, and we'd love to have the democrats assist in this activity, is to fix the challenges that have been created by the current law. you've got insurance companies that are vacating the market. you've got medica leaving 94 of 99 counties. you've got maryland saying premiums are going up by 60% next year because of the current law. that's what we're trying to fix. so it's a completely different situation. now that doesn't mean that the media treats it differently. >> right. >> and that's the challenge that we have. >> you wrote a great op-ed the other day. because you remember, obamacare for six or seven years never got above 40% really. i mean there was never even a plurality in terms of approval. but suddenly when people start seeing maybe people lose

coverage, all of a sudden it's over50% and only 17% want to change it and you get these numbers. but you point out that centralized command and control usually leads to this. costco up. >> exactly. >> costs go up, quality goes down, choices dwindle, innovation stalls and really only people with money can get decent health care. to cover the 7% that weren't covered, 93% of the other people get worse health care because of the coverage. but all you're going to read about is coverage. and loss of coverage, for the next, you know -- i mean i'm reading on huffington post that you're killing people. you're celebrating as you're actually killing people. that's what the head line is on these left wing websites. >> yeah. but i couldn't have said it better myself than what you just said. but you know that the hyperbole of the left just simply is not true. and the american people understand that in their gut. they really do. and they will appreciate it more and more as this process moves forward and they understand that what we're trying to do is to fix the system that is failing

them right now. now one of the challenges we have is that we've got four different health care systems. you've got medicare, medicaid, the employer sponsored market, and then the individual market, the exchange market. and it's the individual and exchange market that has been decimated by obamacare. that's where you've got folks that can't afford their care because of the deductibles and the premiums, and the access and the like. so that's the challenge that we have. because these other systems, there are challenges there, as well. but they're not as urgent as the ones in the individual and small group market. >> mr. secretary, let me ask you just one question about pre-existing conditions considering that the administration had talked about trying to protect those pre-existing conditions. one of the big headlines that has come across the tape over the past 24 hours says rape and domestic violence could be considered pre-existing conditions under this bill. as you know, some insurance companies if you have been raped or been the victim of domestic violence, you can be categorized as having a pre-existing condition and put into a higher

paying premium bucket. is that the case? >> well, if it's the case, it's because it's the case right now. now what the president has made a promise to the american people, and we're fulfilling that promise and that is to make sure that anybody with a pre-existing illness or injury is not precluded from gaining the kind of coverage that they want for themselves and for their family. not that washington forces them to buy. and the protections that have been put into this piece of legislation make it so that we believe that folks with pre-existing conditions will actually be able to gain better coverage than they're currently able to gain. remembering that you've got 20 million folks out there right now who said i'm not going to participate in that market because it doesn't respond to the needs that i have. >> hmm. >> the other thing, and again it just depends on which side of the aisle you're on. when obamacare passed there were new taxes. the people that invariably pay the taxes are people that can afford to pay the taxes, so they're going to be people in the upper end of the income stream. so now, just --

>> they may or may not. >> but that's what you're going to hear. that's going to be the narrative. so now by getting rid of some of the obamacare taxes it's going to be branded a tax cut for the rich at the expense of people that can least afford you know, to lose any type of coverage or you can see how it's going to be portrayed at this point. >> sure. but think about some of the taxes that we're talking about doing away with. the medical device tax, which affects every single individual accessing medical care. that's not just going to the rich. that's going to everybody. what that's doing as you mentioned early on is depressing innovation in this country. so the quality of health care is decreasing across the board because of the depressing of innovation and the inability to stay on the cutting edge of where health care needs to go. so this is a positive first step in this process. i know the president looks forward to working with the senate and making sure that we get a bill to his desk that he's

able to sign. >> as far as the senate being even more, perhaps, viewed more consisting of more moderates than even in the house, what do you think they're going to do, you know, if they rewrite the entire bill. i said earlier that republican principles there's probably 70%, 80%, what do you think is going to be different than what they put in their bill and will it be palatable to guys in the house? >> i think a couple areas the senate will be concentrating on. one is medicaid. we believe it's important that those individuals in the medicaid space are able to continue their coverage or have a seamless transition to coverage that again is more responsive to them. second, there are a number of senators who talked about the open yot crisis. it's one of the priorities that we've made here at the department of health and human services and they may want to put more resources in to address the opioid crisis which is really a scourge across this

land. and this whole issue of pre-existing we believe it's been addressed appropriately in the house but the senate may want to take a peek at that and make certain they are comfortable with the direction this is going in so we make certain every single individual in this country with a pre-existing illness or injury is not precluded from gaining the kind of coverage that they want for themselves and their families. >> can you talk us through what you think the time line will be for the senate? we had a report this morning goldman sachs said they didn't think this would happen until the fall which they thought could push off the tax reform discussion until 2018 in which case now you're in the midterms. and they became a little critical or negative about then what happens after that. >> yeah, no, really is the $64,000 question. as you pointed out you can't get the tax reform until you get through this reconciliation package of the fiscal year '17 budget and that's the health care side. i would like -- my sense is that it will happen as soon as it can happen. i'm hopeful that it happens within a month or two. but again, the senate has a --

has a whole tempo to its own action. i've had the opportunity to speak with leader mcconnell and i know he wants to get it done just as soon as possible. >> i got to ask you one more, mr. secretary. i kind of felt like jim comey, slightly nauseous when i heard this last night. krauthammer who is kind of a realist, you know, on "special report" it wasn't bret, but last night he said, obamacare failed at every level but it did change american's expectations involving health care and in seven years we'll be at a single payer system. just philosophically that we end up there. you know? i guess in two years -- in 2018 maybe the republicans lose the house -- i don't know what h his -- how you connect the dots, but that's his prediction. that's what americans want it now and like every other major country we go to single payer. >> well, charles krauthammer is

a bright guy but i'll tell you that the american people don't want the government running their health care. that's one of the things they're objecting to strenuously. that's why we have seen a decrease in access, increase in the cost of health care because the federal government's been involved. decrease in quality and innovation, all the things that the american people want, that is accessibility and affordn't and choices. so i don't believe that the american people want that. i do know that's what many on the left want. >> i know. >> that's why i believe that the senate will act expeditiously as they can to make sure that we get a bill on the president's desk that he's able to sign that will improve this health care system for every single american. >> mr. secretary, before you go, i was curious, did you get a chance to see the monologue that jimmy kimmel gave earlier this week that seemed to go viral? >> i saw it on replay. didn't see it live. >> what did you think of that? >> well, i mean, what he's putting a face to are the

challenges and the concern and the fear that the american people have. that's why we need to communicate that we believe every single american needs to have access to the kind of coverage that they want. we don't want anybody to be without coverage. remembering that there are 20 million folks right now in this nation who said i'm going to pay a penalty. i'm going to suffer the potential penalty from the irs or ask for a waiver because what the federal government is doing for them as it relates to health care doesn't respond to their needs. we need a better system. that's what the president and we want. >> mr. secretary, thank you. we appreciate your time. i thought about that. if the end result -- the result of obamacare results in much worse care than he was talking about obamacare.

jim cramer is back in new york. we want to get to him now. jim, that do you make of the ibm news and warren buffett? >> i think it's devastating for ibm. i think ibm's spent a lot of time trying to figure out what warren really wanted, felt he wanted return of cash and buy back stock. i think to some degree, it has constrained that company from making the acquisitions -- the big acquisitions that would change its stripes. it turns out, you please all, you please none. ibm would say wait a second,

they put a lot of money everywhere. it's not like they didn't make some big bets. they bought company after company. but this is a major, major slap. i have to tell you i'm back to the drawing board on the stock too. why shouldn't it trade at 135, ten times earning, 4.4% yield? >> we have to go and we'll talk to you and see you in a couple of minutes but joe, the other joe made the argument that warren buffett may defend this stock given if the price comes down. so we'll keep an eye on that. >> selling speaks louder than words. >> yeah. as we head to a break. don't miss this, a big show, "squawk box" monday. becky is live for three hours at the berkshire annual meeting with warren buffett, plus charlie munger and bill gates. kevin kevin kevin kevin kevin kevin kevin kevin kevin

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our thanks to our guest host this morning joe terranova. is that new earth? >> it's new earth. and 405 companies have reported. >> 405. >> 405. 8.2 -- have you mean out of the s&p 500? >> out of the s&p 500. >> 8.2% revenue growth. 15% eps growth. profit margins up to 0.95%. that's what matters to the market right now. not the -- >> not the other stuff? >> not the negative goldman sachs call on tax reform?

>> revenue growth. companies have it. >> it could get better theoretically. >> let's be optimistic. >> we have ten seconds. >> i'm going to thank this joe. i'm headed to omaha, but i'll be back on monday. >> so you're -- >> up and down. >> you're going to do something at -- >> at the thing. >> okay. see everybody in omaha. join us on monday. "squawk on the street" begins right now. ♪ good morning. welcome to "squawk on the street." i'm david faber along with jim cramer and we are both here at the new york stock exchange. carl quintanilla has the day off. let's give you a look at futures as we get started for the final trading day of the week. you can see kind of a mixed picture right there. european markets you ask. how are they faring, especially in the last half hour, especially since we got the