>> live in new york where business never sleeps this is "squawk box. >> good morning, everybody welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick. our guest host for the hour is steve grasso, a director of institutional sales at stewart frankel and steve thank you for being here. >> good morning. thank you for having me. >> we'll talk about short termism and what investors really want to see you'll join in on the conversation in a moment. >> can't wait. >> let's talk about the u.s. equity futures and yesterday was a big up day for the futures you'll see this morning the green arrows are continuing once again. dow futures indicated up by about 43 points and the s&p futures up by over 2 and the nasdaq up by 7 points. the london stock exchange returned to normal after a glitch delayed the opening for an hour.

you can see the ftse is down about 0.1% that goes against the rest of the major averages in the green. looks like the cac is up by a third of a percentage point. some modest advances in germany and spain. our top corporate story morning -- two business titans out with an op-ed in "the wall street journal" this morning berkshire hathaway ceo warren buffett and jpmorgan's ceo jamie dimon calling on companies to move away from short termism the business roundtable which dimon chairs is throwing the full weight behind the idea. we spoke with both about taking the long view. >> america -- the largest companies in america are owned by literally 100 million people including veterans, retirees and teachers and we feel a tremendous obligation to deliver in the long run to build the great companies and therefore

corporate governance is important. i really learned this by listening to warren, some of the ills particularly the earnings forecast, not transparency, not openness, not having quarterly reporting and it can often put a company in the position where management, you know, from the ceo on down feels like they need to deliver if the board says you have a great investment opportunity you say it will cost me another couple hundred millions this quarter, someone like warren would say absolutely do it that's future earnings don't hurt your company because you're trying to meet a short term thing so we have been pushing on it. you know, warren has been part of -- one of the persons making it a real thing so we think it's a good thing to give people an umbrella and moving away from the bunch of companies. >> this is something you have been preaching for a long time too, warren. what's an example of where you have seen it gone wrong? >> well, i have seen -- when companies get where they're sort

of living by so-called making the numbers, they do a lot of things that really are counter to the long term interests of the business and i have never seen a company lose performance -- whose performance has been improved by having some forecast out there by the ceo that we're going to earn "x. because it's sending -- not only sending the wrong message and delivering the wrong results to the company and to the country, but it's also teaching the people that work under him or her that quarterly performance is the end -- the end game i tell our managers just pretend you're going to own -- this is the only business you and your family are going to own for 50 years, you can't sell it and you'll make the right decisions. >> have you seen this play out in the wrong way in the boards that you have sat in or the companies that you have owned or other friends you know >> becky, i have been on 20 boards, not counting berkshire's, and i have seen --

i have seen managements that i really think well of personally. i'd be glad if they married my daughter or were named executors of my will, but they get tempted and their ego gets involved. when they find they can't make the numbers they make up the numbers. it's -- it's a bad -- it's a very, very bad practice and once it gets going it feeds on itself because if your investor relations department said we put out you'll earn $1.08 and if you get the reputation for making the numbers or beating the numbers you'll do some very stupid things at some point because business doesn't work that way and for 53 years at berkshire,

you know, i considered berkshire an unfinished painting all the time and the rise in -- and the horizon is infinity as far as i'm concerned. >> what does this mean from a real perspective are the companies in the business roundtable, i think there are 200 companies, are they not going to be issuing quarterly guidance at this point? >> let me comment on what warren said so first of all, remember this goes down in the company so this -- they can be pressured at the sales level, the divisional level, they should do something different than they might otherwise do it's very easy for the ceo to change a short term profit number by not doing -- by not opening the branches they should open or selling more product at a cheaper price. they can hit a revenue number or something like that. so it creates the disensintives and then it feeds on itself. if you have to meet it, years later you find it's corrupted. i think it's a good thing if you're really careful about how and when to use earnings guidance in particular the brt -- of the brt 60% of the

members do annual earnings guidance i would personally eliminate that one day 20% plus or minus do quarterly this is the first step to try to get people to focus on the long run. i should say, most of the companies they're pretty good at focusing on the long run, in terms of r&d and capital expenditures this is one case that we think we should go another step to improve the governance of corporate america. >> jamie, let me ask you, you mentioned it's up to the ceo's discretion to do this. if you wanted to how could you change the numbers at jpmorgan if you were more focused on short term >> well, you can change interest rate exposure by making a phone call and doing some swaps and adding hundreds of millions of revenues a lot of people cut marketing because that's the easiest to cut. you can pay people less. like airplane maintenance, you can reduce that but that's a bad idea so people shouldn't --

>> tell me if you're doing that any place. >> well, that's what it is you don't have to build a new data center. you should build the new systems you need around do -- and do the r&d that you need. it's the sell side that we put pressure, but i'm trying to say to people, be free to drop it. you'll be okay companies have done it, the good, smart shareholders don't mind, you have the best shareholder in the world sitting on this tv telling you it's better he prefers it. he does want to hear how you're doing. how you're thinking about the future, what you're investing in but he knows that quarterly earnings, they're a function of the weather. commodity prices you know, volumes. competitor prices. you don't control that as the ceo. sometimes you're like the cork in the ocean but do the right thing anyway and you'll be fine in the long run. >> warren, what do you want to hear from companies in terms of guidance so it doesn't put the artificial constraints on them >> well, i want to talk -- hear from them what i would hear if i were their sole partner in the business and they were the

operating partner and i was a person that did not spend day to day at the business but had a significant part of the net worth in it. they would tell me periodically that the things that were important to me and then they would tell me the upside possibilities, the downside possibilities. where they were investing ahead of time and things that might pay off in a few years i would want them to -- i would want them to run it like we were going to be partners for 50 years and neither one of us can sell then keep me informed and don't worry about what we earn today or in the next week. i mean, what's magic about a quarter? we're in businesses for a very long period of time. >> again, that's warren buffett and jamie dimon. we have much more from them throughout the morning we talk about all kinds of

things, everything from the economy, what they think of the stock markets and the whole situation with quidly, whether they think the euro will be around in ten years and the health care initiative they're working on with jeff bezos right now let's focus on the news from the brt. this idea that the focuses should be focused on the long term instead of the short term joining us is cnbc seniors market commentator mike santoli and our guest host, steve grasso, a cnbc market analyst and director of institutional sales at stewart frankel joe, first i want to talk to you. because we were joking around about this off air you made the point of course, ceos don't want to be held to quarterly guidance. >> they would like to be running the private companies and not dealing with the shareholders, but the shareholders want to know as soon as possible and we always talk -- we want as much information as we can get as much transparency as we can get. i'm not sure whether -- i mean, why do quarterly numbers at all?

why not report results twice a year instead of just saying don't do forecasts to hit them, why ev even -- if you take this to the logical conclusion maybe report earnings once a year so you can do everything you need to do but i can see why ceos with the hat they're wearing with the public company, like i can definitely understand where they're coming from. it does make sense but you also - >> to be skimping on the long term investments >> you don't want to pressure people to make the numbers in a way that isn't operating the business but you do want them to make the numbers by working harder and doing what you -- going the extra mile seeing clients you do want to put pressure on them to make certain numbers. >> push it out though. if we're saying they're doing things to make numbers on a quarterly basis then we push it out to a semi-annual basis or a yearly basis doesn't it just push out that dilemma anyway to joe's point - >> but any pushing out is better, right? >> why >> well, because we worry that

the -- that the changing cycles get shorter and shorter. >> if i push it out to five years -- look, the decisions may not be executed properly you don't know if it will work here's the -- the real problem i don't know if they said it specifically is, the way they should be thinking and the way the investor class thinks is just -- they're not -- >> do you know what the investor class is going to do, not buy it for five years they want clarity to think about, they might buy it or sell it. >> we have to know why we got here why do companies give explicit or quarterly advice? they told the analysts your numbers are too high and the information kind of got massaged out there in a slow way. ceos aspire to have the kind of business you can think about long term and they aspire to have the kind of shareholder basis that will give them the slack to operate the business

that way the real world is these -- you know, to your point. the information exists inside companies. the budgets exist. the targets exist. the incentives exist about long term performance that are also made up of lots of short terms every sales guy is held to account. i think what you're saying is we want less information in realtime into the public markets. we'd rather it get kind of - >> or is it broader than that? i'm thinking it's broader than that this is a first step and my guess is -- they have their bonuses based on quarterly numbers they're hitting or not hitting. >> most ceos, their compensation packages are based on a combination of annual and longer term objectives. they're usually written pretty well the other thing is - >> that may be the ceo, but you think about it in most companies that i know, down the line from that they are based on annual numbers. whether they hit those numbers or not. >> yeah. >> the other part of it is

whether the company itself has put out an explicit guidance for a quarter. the analysts have a number so they're still pressured to meet the number. i think the ceo, the psychology of it is i don't want to deal with that volatility around the earnings print i'd rather kind of have the information managed by us getting out there and have us take the expectations up or down rather than have the -- because, you know, look this is a debate since reg fd a big debate in the ir -- investors relations community. >> isn't it a function of the distinction between how long the investor class now owns shares relative to how long a ceo is in his role that's where the real deep divide is in all of this. >> yeah. you have short ceo tenures they have to kind of -- you know, they have a limited amount of time to get the valuation of their stock up and they see a clear path to do that by -- >> i think you're just smoothing out that line.

it will get to where it's -- the gyrations quarterly, but you're going to get to where that information flow leads you. >> jamie made some good points you don't think the company can massage revenue numbers -- >> a bank can create revenue any moment of any day. >> quick question, what would you think of changing the incentive structure so that you have to make longer term decisions as an investor meaning we have a cap gains structure on a tax, but if i told you, if you own it five years, there's no tax and if it was one year it would be at a higher level or if it was at a day -- >> i think the investors they put that all into the end calculus, but investors try not to make decisions based on one sort of input to it. if you're going to make 20% on a stock -- >> i'm trying to figure out how you align both sides if i can force you to think longer term and -- because right

now what they're trying to do is operate with the investor class which makes sense. i'm not saying it doesn't. >> i think we're trying to massage the ceos and the public companies into doing what they would like to do maybe they shouldn't be running the company if providing quarterly guidance or having quarterly benchmarks is too rigorous for them. >> it's not universal. >> but companies don't give guidan guidance. >> jamie said 60%. >> i want to know what's going on quarterly but that means that you might not close that big sales deal on the last deal of that quarter. and suddenly everyone sees that you miss your numbers by 20% then you close it the next day which goes into the next quarter. so there's all that volatility that comes from that but i want to know it's just the travails of trying to run - >> yeah, you want to know and by the way -- >> we want to know -- they don't want to tell us. >> but i think they want to tell us. >> i know. but they want -- they don't like the volatile they comes around.

>> also, it's one thing for the walt disney company to say we don't give guidance. we think it doesn't really matter because we have the franchise, we have people who believe it in long term. if you're a mid cap restaurant company, how are going to get analysts to cover you? >> this is 200 companies who are saying this is the right thing to do. you're getting additional help from warren buffett, they're trying to provide an umbrella coverage to say, oh, you're not doing it because your numbers are bad this quarter. >> yeah. >> grasso wants daily updates on - >> why don't we have the new show that goes on for five minutes. once a month, what's the difference you can make this analogous to anything you do. you want as much information. >> perhaps we have swung too far in this direction. >> when i look at the stock, they close out the noise around the earnings and say, this is what happened in the last five

quarters traded down or up "x" percent. let's see where it trades a week from now. >> if that's a lot of volatility around you say this is a time to jump in if they're down. >> the other question, as a journalist, we always talk about you want transparency, investors want transparency. if you believe in mark to market you want transparency. yet, you look at the financial crisis, i have been convinced that the financial crisis was in large part because we actually saw too much. >> in terms of mark to market, yes, no doubt about it. >> meaning it was the short term trade, not the long term trade that got us to that place. >> no doubt that was a catalyst. there were triggers all along the way. but you had people trading credit default swaps in realtime that we took as a verdict on the solvency - >> not reserving anything -- >> 30 to 1 leverage had a lot to do with it. >> but i think if you look at the solvency versus liquidity

perspective, the mark to market transparency piece of it which we think we want created its own dilemma. >> right i don't know if i want the reverse though greenberg wasn't there because we had the guy spitzer that ran him out of there and hank greenberg wouldn't have allowed that probably. i blame it all on spitzer. >> all right back to that mike, thank you for coming in. appreciate the historical context too. steve is going to be with us for the rest of the hour. >> really it was bush. his policies i read that again. someone tweeted that again you're pining for days of, you know, prior to the obama administration that's what -- really it was a societal housing sort of a mania. wasn't it? flipping, and there's so many factors. you wrote the book. >> we'll get a chance to relitigate the entire -- >> no, please don't. >> ten years later, i promise you we will have this conversation more than once. the meantime, some stocks to watch this morning a lot going on this morning. sources say carl icahn bought a

small stake in allergan. the ceo pushed the company to overhaul the management. unclear what icahn's intentions are in this, but he has been a long time supporter of the alher general ceo saunders they're surging today after the discount retailer reported better than expected results and the company is raising the sales forecast for the year. much more than five below this morning. okta reported a narrower first quarter loss they make cloud based identity management software is issuing upbeat guidance for the year and the expanding operations in the u.s. and europe. coming up we have more of the exclusive interview with warren buffett and jamie dimon including their take on the jobs forecast in the country and then the potential candidates then at the top of the hour, former florida governor and former presidential candidate jeb bush will be here.

we'll talk to him about the trump economy, immigration and one of his real passions, education reform and his plan for that "squawk box" will be right back. ♪ with expedia you could book a flight, hotel, car and activity all in one place. ♪

stocks to watch, twitter being added -- this is the day to the s&p 500 this morning. yesterday, they announced plans to sell at least $1 billion in convertible debt joining the host of the tech companies rushing to take advantage of soaring stock prices so some converts, interesting. mongo-db, the maker of the databased software posted strong revenue growth, and that was offset by the higher expenses. united natural foods beat forecasts. the company supplies food to amazon and whole foods gross margins fell today one more stock to watch this morning, the shares of thor industries are sharply lower the rv maker reported third

quarter earnings are missing the street expectations. it was in line with estimates and the labor costs have moderated but it's seeing price increases in certain raw materials and commodity based parts. thor also saying it's due in part to head winds from the donald trump administration's announcement of steel and aluminum tariffs it should off set over time. but half of the materials come from canada these days so you can see how they're getting hit by the cross currents of what could turn out to be a trade war. shares of other rv makers falling in concert today with thor rev group, winnebago and lci also down. look at rev group down 18, 19% this morning. some new satellite photos show the dramatic changes that the kilauea volcano is causing on hawaii's big island in addition to the destruction of homes and roads, the lava has filled in the iconic bay

the photos show a before and after, displaying the volcano's power to change the size and the shape of the island itself. >> wow i don't know if i'd build there quite yet. check out this viral video of a padres fan at petco park who made an amazing catch. with her beverage. she was seated in the upper deck behind home plate. and the lady caught a foul ball in her nearly full beer and then to the delight of fans she finished off the drink working around the baseball which was still in the cup then later in the day budweiser tweeted if you catch a ball in your beer you have to finish it. she knows the rules. if anyone sees this girl, tell her she has tickets to padres game on us, beer included. steve, we talked about this twitter debt offering, $1 billion, kind of sliding in really quickly here. the terms of it we talked about it yesterday twitter can decide if they'll pay you in stock or cash at the

end of it. would you buy an issue like that >> i don't know -- i own twitter itself but usually what happens with those convertibles it creates a sense for the hedge funds that do buy that issue to actually sell the stock, it creates pressure on the actual equity. so it's inverse what you would -- counterintuitive to what you would think, but i'm long on the equity itself. >> is it different in that respect? i don't know. >> at the company's discretion they get to decide whether to pay you in stock - >> if it goes way above you can do a fourth conversion because you debt at a thousand usually they don't want to pay it off in cash i'm shocked it's $40. >> up 67% year to date. >> in terms of sentiment that was the bottom when we thought twitter -- thought twitter would -- >> when "squawk box" returns a lot of market action plus jamie dimon and warren buffett ahead. jamie dimon is the head of

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berkshire hathaway ceo warren buffett and jpmorgan's ceo jamie dimon sitting down here. here they are talk attack tight labor market. >> this number is the lowest in 50 years and some time later this year it will be the lowest ever you take global unemployment it will -- it will be at the lowest ever this year that's a good thing. we want wages to go up, so at the brt you are having a lot of conversations that they have seen the wages going up. they have seen pressure to get people but i look at that as a good thing that sharing the wealth that's being created we want the wages to go up we'll be sitting here in a year worried about inflation and the wages going up too high. but it's bringing people back to work, work is dignity. once people start on that ladder of work they tend to move up and they have household formations both warren and i support the

earned income tax credit it's a negative income tax which helps to pay people at minimum wages more money i think it's better for society to have people working and having house hold formation. it's better for social outcomes. this is a wonderful thing. we should be celebrating it. of course we'll start worrying about the downside of it soon. but so far, so soon. >> we always worry even with the positive headlines. >> becky, when you raise the question of whether we have trouble finding people, we have six or so home building operations in various places, kansas city and denver, austin, texas. and there's a shortage of the labor required in home building throughout the country and we have home furnishing stores and carpet installers, certainly truck drivers. there's plenty of places that are a lot of jobs that are

unfilled right now. >> can you solve the problem by paying more? >> well, the people that are thinking about going into those jobs want to get -- they want the higher wages but the market system works towards solving problems like that but it's absolutely true now that there are -- there are shortages of people in some fairly important type jobs >> we still have much more to come from warren buffett and jamie dimon including the latest on their thoughts about the health care venture with jeff bezos. on today's agenda in washington, a couple of big things happening president trump is hosting shinzo abe at the white house today. abe expected to urge trump to stick to a hard-line on north korea ahead of next week's big summit both leaders will attend the g7 summit in canada on friday and on saturday. and then on the data front we're getting weakly jobless claims at 8:30 april consumer credit numbers are due later this afternoon

in the meantime i want to show you the u.s. equity futures, right now it looks like the dow will open up higher and the nasdaq up about 2 1/2 points and the s&p 500 about 1 1/2 points. we'll remain on the market we have jason dre coe from global wealth management ubs. kind of still got -- you know, just be careful what you say now. used to be -- explain this before, it was ketter with ge so somehow i ended up with you -- >> it was paine webber. >> paine webber. are you prepared to talk today >> i am. >> make me feel better about things >> i'll make you feel confident. >> in terms of asset allocation, are you going to tell me about asset classes where i should go or intraequity sectors that you like >> we can do both.

what would you like? >> i don't know. should i be in bonds with rates going up >> the conversation right now in the job market the u.s. economy is strong. we are seeing good momentum, we are not seeing the inflationary pressures. so it's really good job growth and the other half, wage growth is moderate where we are that's good for the economy because we're close to that goldilocks number. >> a lot of people are using the "g" word, goldilocks >> i know. last year was true goldilocks and this year is bumpier. >> but even more goldilocks because the gdp -- >> we see the inflation going up and rates going up higher. >> it doesn't seem like it's surging. >> which is why it's still goldilocks. >> but you only have a hundred more points on the s&p for your target. >> that's right. so we have seen obviously you

know huge growth in earnings expectations 19% year over year pretty significant economic compression. >> all earnings -- >> earnings have been very strong so a lot of it is priced in going forward we give more earnings growth but the multiples don't like to move a whole lot. we're looking at 4% upside for the year, given what the s&p is thus far, that's 10% for the year that's a pretty good outcome. >> chris, you're worried about the seasonal slowdown in volume. i looked at may 1st. we're up 7%. since the s&p was below 2600 in early may and now here we are -- i mean, that was the wrong move to sell in may and that's the opposite. why should we think that this seasonal trend is going to be -- is going to play out like past years now? >> well, i think what happened in may is you had a lot more global volatility. you went back to the tariffs, you had zte. a lot more confusion

>> why would that make the market do up >> well, i think money is flowing to more domestic players that are less exposed to the global pressure. less currency exposure so small caps, you know, where we look we like technological moats. there's some themes outside of faang that are doing really well you have automotive modernization, you have moving the stuff around, you have security all of the things used to be nice to have you have to have them now. you know, if you're going to be working in the cloud, you're going to be managing, you know, artificial intelligence, investing, we continue to see technology companies like intel that are producing the chips they're being installed and a lot of supply, you know, suppliers in that space that are doing well that's where we tend to invest so it's been good. >> you mentioned moats, that's a buffett thing, right, becky? >> an elon thing. >> right is he going to make candy?

>> i don't know. he's got images of his candy. >> why wouldn't he make candy if he's making flame throwers i would do with the candy before the flame throwers - >> cheaper price point. >> do we know anything about it? a chocolate based candy? >> no, peanut butter brittle he's trying to do a knockoff of see's candies. it's identical but with his face on it. it's on twitter. >> i think so. so you're loading up on it >> i'm not -- i'm not loading -- as you know, i'm also very -- we talked about this. i don't love his -- the flame thrower idea i have a problem. >> yeah. >> i o. >> exactly i'm not -- >> you're a flame thrower control guy. basically. >> i'm a flame thrower control guy 100% and two efforts going on in california right now - >> for flame throwers?

>> to control the flame thrower. absolutely. >> don't you want to control candy and sugar? you want to control a lot of this stuff, i think. >> less so. >> but not - >> definitely not in doughnuts >> okay. so should i -- >> doughnuts >> yeah, do what i say, not what i do we have seen that. we have seen that. >> loopholes. >> right. >> i don't want any bonds. do you know my guy over there? >> i don't know your guy i can talk to him if you'd like though. >> can you find him and say, i don't want any bonds. >> don't want any bonds. >> is it a blind trust i'm not allowed -- >> are you worried about rates rising >> i don't want to be in bonds listen, don't buy me the german bonds i get half a pound for ten years you know what i mean >> with a negative - >> with a negative return. ixnay -- >> we are not urging clients to buy german bonds for that reason. >> after this do you have any

openings at needham if i want to switch my account to small caps or something >> yeah. >> see his head turn >> yes. >> i love ubs. i love my guy. i really do. very client oriented you know what i mean? >> we are there to help the clients understand what's going on in the world and feel good about it. >> i better get something at a discount after all this. jason and chris, thank you both. >> fully disclosed. >> i didn't know what to say. >> do you have ubs don't they hold some of -- >> ge. >> i spread it out. >> too much money. >> not one spot. >> right. >> you're in a lot of high net worth -- a lot of -- >> right. >> wells fargo created a few accounts for you i don't think you know about. >> i have to talk to my family office we'll find out what they have to say. coming up, when we return, we'll be hearing from warren buffett and jamie dimon on some

hot topics including the take on bitcoin. warren buffett is commenting on the uber news and potential presidential candidates. then our guest host at the top of the hour is former honeywell ceo larry bossidy. and then we'll talk to former governor of florida jeb bush then later just gets better. we have commerce secretary wilbur ross. he'll talk about trade loti a.m. eastern me a t of actionable conversation right here on "squawk box. back in a minute

it's time now for the executive edge fidelity could be taking a big step towards legitimizing cryptocurrency an internal job posting seeking candidates to help engineer, create and deploy a digital asset exchange would be a big vote of confidence by large wall street firm towards cryptocurrency abby johnson has been a big proponent of crypto. she has been quite public about her support for bitcoin and other thing. the number of homes meanwhile in america without a

land line continues to rise. i'm going to keep my land line because otherwise the bots - >> you won't get any crank calls. >> and it causes them to call -- >> these are like illegal cheats that are working around -- >> yesterday honestly i was going to say put me in touch to talk to and then i want to find out an address and a place and give it to someone and say, here's where you can find these people because they're doing nothing about this. >> i wanted to rip my land line out. the only reason i haven't i don't always get great cell service in my house. >> there was an emergency back then and it was not a problem anymore. i don't think. >> my cell phone doesn't always work - >> i get bots on the mobile. >> where do you live, becky, from the adirondacks >> ten miles from the englewood cliffs >> it's a hilly area

more than half of the households had at least one wireless phone and no land line in the second half of last year. that's up 3% from the previous year more than 3% of homes have no phone service at all but i'm just so satisfied with my triple play package from comcast. which gives me -- [ laughter ] which gives me a land line and wi-fi and cable and everything else and i couldn't be more pleased i always have -- i don't understand i can't be honest, frank about -- >> no, apparently not. coming up at the top of the hour, joe on his cable service and former honeywell ceo larry bossidy and jeb bush they're in the house we'll ask them if they still have a land line or a cell phone and a lot more also on the news from warren buffett and jamie dimon, we'll talk education, politics, the

economy and so much more a number of big conversations all coming up at 7:00 a.m. eastern time coming up -- legendary investor warren buffett and banking industry titan jamie dimon are together for first ever tv teie >>hich one of you hates bitcoin more >> their response after the break. executive edge is brought to you by at&t business with edge to edge covering every part of your business. & he's got wide feet. & with edge-to-edge intelligence you've got near real time inventory updates. & he'll find the same shoes in your store that he found online he'll be one happy, very forgetful wide footed customer. at&t provides edge to edge intelligence. it can do so much for your business, the list goes on and on. that's the power of &. & if your customer also forgets socks! & you could send him a coupon for that item.

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the conditions normally associated with a big decline are not present yet. >> nasdaq is up again today after posting another record close yesterday. mike chron 23% twitter 29, paypal 14. the place to be. >> s&p 500 by the way touching

its highest level since mid-march. >> if you were going to level the playing field, wouldn't you pick a time when the playing field is growing >> jamie dimon and berkshire hathaway warren buffet out with on op ed in the "wall street journal," they are shorting away if short termism, longer companies getting away from quarterly earnings guidance. the two have one thing in common, too. >> you both said nasty things about bitcoin recently, which one hates bitcoin more >> well, i set a high standards. i don't know if jamie can top me or not >> i don't want to be a bitcoin spokesman. just beware. >> we also asked warren buffet about iriuber and whether or no deal in the future is responsible.

>> i think it's very unlikely. i don't say zero to anything it's true, we did have a conversation a few months back and certainly as i said earlier, i'm impressed with darragh and the -- we just didn't quite come to terms but that's not a unique experience at berkshire. >> we will have much more of the exclusive interview throughout the show we will be headed to cnbc if you want to see full coverage. we want to talk about the economy and where the stockmarket is a little later. >> uber is amazing but isn't it expensive for the average person that's the only thing. on short hauls, it's no big deal, but -- >> they're losing money at this point. it's not profitable. >> it used to be expensive, meaning -- so i'm thinking i don't use it but for my kids and it's such a god send when you

have kids you don't want them to drive around late at night or something. but if they're a fair distance away it's a serious amount of money. it's almost like hiring a car service which most -- we know that - >> and search pricing. >> when you hear that half the country doesn't have $400 if they need it you can't drop $80 on a ride, but it's so god. >> it's the only thing that uber will succeed or fail at. ultimately same thing with lyft, by the way, it's what's called their pool service so if you go to uber experts, uber x is the lowest level. >> then you share it >> you do the share. you are sharing with other people >> it brings a host of other problems >> it brings all sorts of issues >> it becomes much more affordable. >> you don't like people >> no, i don't like a lot of people also, if you are worried about spending money and having kids in a car, there is nobody that

wants to, then you worry more than the driver. >> exactly >> you hope has some references or something >> you are looking altd it from at it from a smaller viewpoint >> if you can pool to work, it gets cars off the road, it makes it cheaper >> you think a lot of people want to pool to work i think i'm the exception here would you want to pool to work >> i would prefer not to. >> you have the ability to say you don't want to. >> let me go back to the bus then >> there are a lot of people that take public transport there's a lot of places that don't have public transport. >> there is a lot of areas in this country that have been completely under served by public transport, especially places that have actually benefitted from services like uber, it's given certain access. you have heard these fabulous stories about people who now can actually go to work, to other

things that they couldn't before >> a lot of people make some money. you know, it helps both sides, the consumer and the employee at uber it's really transformative it's amazing >> the question is silicon valley subsidizing all of our rides? >> you got to turn a profit on this, how do you do that even though you say it's expensive, it's not enough to. >> having a private ride wherever you want to go at every time, you have to pay for it the people dock it have their $5 cup of starbucks, too. >> elon musk is working on jet packs, anyway. so, we're okay >> the whole flying thing. i love convenience, but if you are dead, it doesn't matter how long it takes to to get anywhere i worry. we got to do something with graphics though >> very quickly before you leave. we looked at a big run up in the

markets the last several days, what do you think? >> so everyone i thought felt the mark was going to turn around and come back we sort of shrugged off so many different things i think we will make a run at the highs. i think we will make new highs s&p is 78, we're a hundred else to less than that i will make sure i tune into this. >> nice to see you >> thanks do you like grasso or grasso >> it is grosso. >> coming up, our guest host for the next two hours you get reaction with warren buffet he was a company ceo former presidential candidate jeb bush wants to make changes to higher education about

pre-freshman year. he'll join us on set demand a cfa charterholder. cfa institute. let's measure up.

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welcome to the special edition of "squawk box." becky quick catches up with berke hire hathaway chairman and ceo warren buffet and jpmorgan chase chairman and ceo jamie dimon for an exclusive interview. two of the most powerful business leaders discuss the issues that matter most to your money. from market expectations to washington's agenda. we cover it all and get reaction throughout the hour. buffet, dimon, only on "squawk box" [ music playing >> announcer: live from the beating heart of business -- new

york this is "squawk box. [ music playing >> good morning, everybody welcome back to "squawk box" here on cnbc we are live from the nasdaq markets set in time's square i'm becky quick along with andrew ross sorkin with us a the former honeywell chairman and ceo and a cnbc contributor. we will hear from him in a moment larry, great to have you here today. >> nice to be here >> after automatic gains look they can i like they are indicated up again a special morning here on "squawk box," warren buffet and jamie dimon making the case to take the longer view and move

away from guidance on quarterly earnings we spoke to them in a "squawk box" exclusive interview >> america, the largest companies in america are owned by literally 100 million people, veterans, retiree, teachers. we feel a tremendous feeling to deliver and corporate governance is important one important step i learned this by listening to warren is some of the ills and problems and people making quarterly earnings forecast, not transparency, not openness and it can often put a company in a position where management, you know from the ceo down feels obligated to deliver earnings and, therefore, may do things that they wouldn't otherwise have done. so if you have a good board. the board will say, if you have a great investment opportunity, you say it will cost me another couple hundred this quarter, someone like warren would say

absolutely do it that's future earnings, don't hurt your company because you need to meet short-term thing. we have been pushing on it warren has been the person making a real thing. so we think it's a good thing to give people an umbrella and hope a bunch of companies drop it right away >> warren, this is something you have been preaching for a long time, too. what is an example of where you have seen it go wrong? >> well, when companies get where they're sort of living by so-called making the numbers, they do a lot of things that really are counter to the long-term interests of the business and i've never seen a company whose performance has been improved by having some forecast out there by the ceo that we're going to earn x, because it's sending -- it's not only sending the wrong message and delivering the wrong results to the company and to the country. it's also teaching the people that work under him or her that

quarterly performances is the end game i tell our managers, just pretend you are going to earn. it's the only business you and your family will own 50 years and you can't sell it. >> we will bring you more of this news-making interview, throughout the morning >> larry is here we want to get your thoughts on this you have been on the board with jamie, by the way, jp, of course, was there ever a time when you were running honeywell, you thought, okay, i got to nail the quarter and move some stuff around >> sure. everybody is trying to make the quarter. i have always been of the belief that there is room to be attentive to both short and long-term earnings short term gives you focus long terms give you inkreinivces there will be forecasts whether they make them or not.

then do things improve or do they get worse what do you do if are you a ceo, some yahoo out there has a number off the wall? do you sit and wait for that to ca play out or call that person and say this is whacky >> do you think this is unrealistic? >> not totally unrealistic i do think you got to think about after this goes into effect as i say, there will be forecasts. and whether that will make things better or worse, i think remains to be seen >> larry, i think you are also somebody in a position who was a ceo, who had some power and authority to do it i think a part of what the business roundtable is doing with this is trying to provide cover to smaller companies and ceos who don't have the same sort of ability. if they pull in, it's not giving quarterly earnings guidance, it's going to look like they have something to hide. >> i suppose, that will always

be the case whether you do this or don't do this >> right >> so i think it's directionally chec correct. i think the after math is unzblern maybe a little idealistic >> i'm surprised both these guys are fought idealistic i have reservations about this >> ceos want more. >> they like to be - >> the prior company >> i heard so many things, gosh i wish we were a private company. so i understand this if it is the shareholder's money, they want to know how much they k. i understand the tension between the two competing interests. they do make a lot of sense, jamie -- >> i would also make the argument even within private companies, some kind of pana ceo. you go look at when companies in management have not making their earnings in a private company >> yes >> their people are all over them, too. >> all private companies and believe me, there is plenty of pressure to deliver on earnings,

whether it's quarterly or whatever the time period is. there is no less pressure. you don't get an exemption to do anything you want. you still have to deliver. >> okay. great. thanks our next guest proposes a unique way for governors to tackle skyrocketing college cost, giving students a freshman year for free, let's bring in jeb bush, former florida governor, obviously, 2016 presidential candidate. he is now president and chairman of the board of directors of the foundation for excellence in education. we talk the current political environment. >> question do that. >> would you rather start with that >> no, no, no. >> okay. the freshman year free how would it work? i know now that like you - >> there is political short termism as well if you think about it yesterday, for the first time, there was for the first time ever since they started recording this, there are more

people that unfilled jobs than people looking for work. that's incredible and the skills gap is only growing. the way to solve this is a mull tude of ways one of the ways is to make it easier for people to get through college quicker and do so in a way that they cannot have debt, recourse debt on their backs so their student debt now is 1.4 trillion the idea is simple. you may remember you took the club test one of them didn't you? when you graduated the clip test is a - >> do you? >> i started as a sophomore in texas. >> really in >> yes >> i got out of all my english, math, history, taking this college board test that gave me college credit >> that still exists and what sleeve chinski is proposing. what he is doing is he is paying for the test for anybody up to 10,000 people and there is a surge of people wanting to do this look, young people are still aspirational but the simple fact s. few are and in-state student in public

universities it's $38,000 to get a four-year degree 60% of students don't get a four-year degree in six years. so the idea is to accelerate this and make freshmen college for free as one step among many steps i think that governors can do this is a cheap day, if you think about it this is a really low cost way to save millions of dollars for families that are struggling right now. >> there is a real discussion now about whether college makes sense, whether trade schools make sense, online versus, which would be so much cheaper and who knows whether you need to be in a discreet location where you will be brain washed by liberal professors >> in this case, these are professionally done online courses that are done by ed ex, which is one of the most prestigious universities i believe affiliated with mit and harvard so there's 30 courses can you take, it's online before

you become a freshman, you can actually start as a sophomore. there are a lot of other things that can be done as well the idea of career pathways is becoming more relevant a lot of high school credits are put in for nationally recognized second quarters. certifications that say i can get a job from day one so you are totally right a four-year dwree a psych major loaded up with debt may not be the proper course for everybody. but college still has value for a whole lot of people. it ought to be much more affordable than it is today. florida has the lowest tuition in the country we have bright futures so a lot of our monies goes to subsidized based on merit students and there is performance pay, but if you add all this stuff towing, are you in a position where the kid cannot be pushed out of the chance of getting a four-year degree >> okay. here's how i'm going to get into this so we are the political environment crude borish,

poisonous. a lot of people can be blamed all over the place we know each side wants to blame people on the other side obviously, the president gets a lot of the blame directed at him. here's how i'll ask the question the current narrative is that republican versus ro republicans have rolled over and sold their souls because of the success of the first 100 days. he's got the highest rating among republicans now since your brother after 9/11 right now and the highest of a lot of his predecessors, too. so the republicans, whether it's good or not, are looking the other way at a lot of the things that some people think have taken us into a really dark place. is that fair to say that and should they be doing -- you just talked about how many jobs there are, i mean there are great things happening economically in this country is that okay >> i don't blame president trump for the cultural malaise we are

in she a byproduct of it the kind of campaign he ran would have never been successful a decade ago or in the age of reagan an bush, for example. it would have been rejected out of hand. >> i don't want to interrupt you. i know i did but the ends justifying the means. romney ran a clean campaign. he was a great candidate you were a great candidate >> so we're saying the same thing. in a cultural environment has changed. president trump was a -- >> is it worth it? >> it's not worth disparaging people this is a byproduct of that. it's dangerous so to my republican friends, most and many of them are if washington, you know, i know them well. they're good people. i think you have to praise the president when he does good things and you are totally right, in my mind the regulatory environment. the tax environment. some of the foreign policy stuff, the judiciary praise him and work with him but when he goes beyond the line

or anybody else does, for that matter, you have to stand on principles look, last week we had roseanne barr and samantha b. how can you explain this to your children and grandchildren there has to be something more than just policy you have to, we have to be civil with one another we have to embody some degree of character or this all falls apart. politics is a mirror of our culture. public leaders have a responsibility to fortify the culture. >> here inside the party, it is few were to, inside the party. if you were to step out and say, i don't like the way he's approaching this in some way. >> i probably got 50 already contacts oh my god, i'm so worried about. that they're worried about that. they shouldn't be. >> if you do that, a you get it on your twitter feed, b, if you are in the senate or the house you think you will get attacked by the president, himself, or it

will upends the policy piece right? this goes back to the ends justifying the means issue >> right look, it's not an easy owe o'i totally agree they're in a dilemma. it's not an easy thing it's easy for me so they i say these things, i don't have to worry about my bill that will be held up or attacked at a rally somewhere. but this is something that goes beyond the here and now. this reals to how we begin to solve problems in the long run >> what happens now, both parties are continually unwilling to tackle the big issues of the day, be they immigration or health care for political purposes, so we had this impasse who is it going to take to break this impasse >> look, there is not a lot of history where we have been in this position. you can't look back and say 50 years ago, this is what happened i think we need a change in our culture, which would change our politics for sure and hopefully we'll have people that will, you know, stands up for what's right and also support the die when

he's doing good things look, i'm not a never trumper. i think a lot of people get obsessed to the point they can't give him credit for the good things he's done having a balanced view would be helpful. the rule aapply is simly the this, you are if d.c. as a republican, for whatever, whatever happened and the dpak same thing happens in this administration and are you silent, that should tell you something. it's okay to be critical when people go over the line. and you can do it in a respectful way i think we need to get back to that a bit there is no political reward for doing the work that you expect them to do there is a lot of down side politically. we really fractured ourselves up into tribal units. >> would you consider rung for office again or taking some sort of role in politics? >> i don't know. you know, i love policy.

i love my country. but this political environment right now, i'm not suited for, to be honest with you. i'm a fish out of water. i can't imagine having to attack someone to make yourself look strong >> that's the question can someone like yourself who i think prides themselves on being civil and approaching it in that way fight against a fighter who is not and if someone like yourself is not. how do you ever get back to that place in terms of where the culture is >> how do you ever get back to that place when social media every day lays bear human nature in both the good things that happens that you see, twitter makes me cry when i think how great people are at times when i see what they do or animals. but then i see the basis laid there. nothing doesn't come out on 26th or social media. that's where we are. >> the key to that i see that in facebook to a same

degree people have to put their name behind it. discount the bad stuff celebrate the good stuff remember we're a bottom-up country as well. the obsession about washington, d.c. has to be one of the great things is there are so many great things happening this idea of free college freshman year, that saves literally tens of millions of dollars for families there are scores of examples of this, this is a guy a private equity guy from new york that said, enough of this i want to be productive. i want to do something so he put his own money behind this hopefully, that will spark governors to put it in their budgets. the legislatures will do it. you can literally imagine within three or four years thousands and thousands of young people will be able to go to college. >> i don't think you voted for triumph, did you disclose? >> i didn't vote for him, didn't vote for hillary clinton >> will you vote for trump in 2020 >> we'll see >> is it possible to get your vote >> it's possible >> do you think it's possible

for independent candidates to emerge especially in this environment where it feels like all bets are off? >> i think it's possible it's you know, look, we have a protectionist election system. it's hard to get on 50 ballots you probably have to be a self funder then you have to, you know, just have to have a plan and withstand the withering attack because it would be, few gain any traction, you'd have both parties going after you. but it's possible. it's not probable, though. >> yesterday, howard schultz announced his retirement from starbucks and there is speculation he might be a presidential candidate on the democratic side. do you think the trump administration in terms of the controversy that it's created is going to make it easier or harder for a ceo to just into politics >> well, an outsider i think whatever doubts people may have had, i don't think there were many from people from the outside running, president trump blew that barrier away for sure.

so i think there is probably a lot of people that have the leadership skills that think that it's important for them to think about running at least >> is it realistic >> it's hard it's going to be harder than they imagine it's harder than it looks. leave it at that >> is someone more inclined to think given trump's election that they want to see another business person in that office or do you think that there will be a backlash against that >> i don't know. that's just pure speculation what i can tell you, though, whatever barrier there might have been, i think it eroded already. but having political experience was deeply discounted. it was not considered a value people embraced in the primaries or the general election for sure so i think there could be, whether it's an entertainment celebrity kind of person, the rock, my man dwayne johnson from miami. i saw him on tv, he's thinking about running. a box office star. a lot of positives are higher than anybody >> if anybody voted for trump,

would you vote for the rock? >> i'd have to know what his views are on college affordability. >> i don't know how this plays out over the next couple years, but electing a ceo or businessman at least at this point seems improved compared to the last guy for eight years that was not a businessman we'll see. i don't think it's necessary people say wow we elected a ceo we got trump let's never do that again. given the record so far, i'd elect a ceo. >> you used only his republican approval rating. if you looked at his approval rating across the country, it's completely - >> even leishman is at 3.7 this quarter on gdp >> real income broke labor shortages. >> if you call me stupid, you want to elect another guy in the private sector say hi to your dad he's out again, back if kennebunkport enjoying the summer >> monday celebrating his 94th

birthday, yesterday would have been my mom's 93rd we are blessed he is up there. >> we are blessed with the next generation he's in the right state, a political career and abbott. >> the jamie george p. bush works pretty well inning the >> can he ever run again or not? >> he can. he's done a good job >> he is 41. all right. it doesn't have to be immediate good texas governor. >> he won't be doing in new jersey where he lives. so >> it doesn't matter my vote is i've never had a vote in new jersey that mattered. anyway, governor, thank you. >> nice to see you. when we come back, jamie dimon and warren buffet in a cnbc exclusive we will talk trade specifically about bilateral talks between the united states and mexico and u.s. and canada said of nafta. also the topic of trade, a big one today, commerce secretary

wilbur ross will join us in the 8:00 hour this morning stay tuned you are watching "squawk box" right here on cnbc because, when you really, really want to be there, but you can't. at cognizant, we're helping today's leading media companies create more immersive ways to experience entertainment with new digital systems and technologies. get ready,

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welcome back to "squawk box," everybody, all morning we have been bringing you our "squawk box" exclusive

interview, warren buffet and j.p. morgan ceo jamie dimon, dimon serves as the chair of the rounds table >> that sentiment is near historic levels. it did see a slight dip in the most repeat readings in two years. dimon attributed that dip about uncertainty about u.s. trade policy >> we did another special survey, like 80-to-90% are worried if trade goes south, prices go up, they'll invest less things like that we're trying to be very clear about this we think the president raised critical issues with trade, around china, fair enterprises, fair competition mark access, value to own 100% of a company these things should be negotiated out and the business roundtable supports the facts of those issues the business roundtable has been quite clear we don't think tariffs is the way to do it.

you make more. people tends to retaliate. you can incite nationalism in countries because it's not the same thing if you don't negotiate and be tough on each other. if you put a country in a tough position how they might react it could create potential negative outcomes. we are cautious about doing it that way we want to support trade, we want to get nafta done we think you can make great progress with china and they will be responsive with those issues >> reporter: very quickly the latest coming from the white house is they are looking for bilateral talks instead of nafta, canada, mexico, the united states, bilateral talks with us. what do you think about that jamie? >> i disagree, we're stuck here on two issues. okay, for nafta the sunset proichlths the president can rip it up whenever he wants? he can rip it up, i don't know it creates more uncertainty for everybody else there is uncertainty there

anyway you want consistency the arbitration you can go to effectively arbitrators posted courts in mexico, canada, the united states, everyone wants that you know, you can make an argue in the united states why it's better to not have it? it's better for companies an certainty. i think personally we should give it up there are a lot of things to negotiate modernizing nafta. i'm quite in kwaf of doing that. it's important we get these things done. personally i would have done tpp. in trade it gets complicated when you start to do bilateral things it very much can be used against you. what we do in some of these places has aped the door for trade negotiations with our allies, you know, i think we should be working with allies we have a common interest. not against coin, to set global standards that may not be exactly what we want those global standards, eventually china will have to adhere too, too, including

reciprocity, investment, treaties, et cetera. the president is doing his way, we will try to support as much as we can. i personally support doing thing differently. >> let's talk trade with our guest host today, honeywell ceo, larry, your thoughts on trade. >> i agree on what jamie said. i think nafta is in peril now. as jamie mentioned, i don't think the orbtration panels is the right issue to fight for or the sun set prediction even the north american contents under siege in the sense that they want 45% for trucks all made by $16 an hour mexican wages. i think our position on these things is somewhat unrealistic there is a thing called skin -- skinny nafta, if we adopt skinny

nafta, it doesn't take congress am approval. everybody decares victory and goes home. >> this idea of using tariffs, jamie says the business roundtable is not in favor of. look there is something that says theis is a way of getting them to the negotiating table. do you agree with that as a stick in these disagreements or not? >> my view would be you impose tariffs as the last alternative. in other words, is there a better way to bring these people to heel? we aring the discriminated again. what can you do to unright this uneven trachld are there other sticks if there are, i would fave them. on the other hand, if they have been intend and there aren't any, while it's not ideal, maybe that's what you have to do >> senator bob corker plans to introduce thislegislation alon with five other republicans and four democrats in the senate, i believe, that will prevent the president from being allowed to use tariffs without asking

congressional approval for this even in situations for emergency. i guess they think the emergency clause is being abused here. >> i agree with that i looked at the legislation, frankly, these are the people that allowed us to get ripped off the last 20 years. so i'm not in favor of that i do think i would go about these things a little bit differently than the president does i wouldn't be trying to resolve nafta at the same time imposing tariffs on these same countries. it seems to me there ought to be a separation of steps here in terms of how you go about getting it done. i'm not in favor of in terms of what's happening i don't want to take power away from the president >> meantime, we want to look at stocks to watch this morning a couple things going on, recreational vehicle make thor reported profits of $2.53 cents, below estimates. talk about guidance, short-term

guidance, long-term guidance, due to the new u.s. tariffs on import steel that stock down 8.5% this morning the rv makers across the board are getting hit. down about 18% earlier discount retailer five below beating estimates by 3 cents with a quarterly profit of 35 vents per share. they issued upbeat guidance for the current quarter and vail resorts five cents above estimate, beating forecasts. they saw a 19% surge in sales of season passes. i believe sorkin family may have helped with that meantime, more of becky's exclusive interview, including how they are feeling about the markets. >> consumers are in very good shape, balance wages are going up debt levels are low. all the credit riddence since the great recession.

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>> good morning, welcome black to "squawk box" here on cnbc live from the nasdaq mark site in time's square j.p. morgan's jamie dimon and warren buffet out with an op ed in the "wall street journal" making the case to take the long view and move away on guidance on quarterly earnings. becky spoke about it in a "squawk box"ic exclusive interview.

>> so we have been pushing on it warren has been a part of the one of the persons making eight real thing we think it's a good thing to give people an umbrella from helping a bunch of companies drop it right away >> this has been something you have been preaching a long time, too, what is an example of where you have seen it go wrong? >> when companies get where they're sort of living by squad u so-called making the numbers they do things counter to the long-term end of the business. i've never seen a company whose performance has been improved by having some forecast out there by the ceo that we're going to earn x because it's sending, it's not only sending the wrong message and liveing the wrong results to the company and to the country, it's also teaching the people that work under him or her that quarterly performances is the end game

>> we'll have much more of the news-making interview in just a couple of minutes. stay tuned for that in other news, shares of food producer smucker is lower in pre-mark train trading. they reported $1.93 a share, 25 cents shy of consensus, below forecast, weakness in the peanut butter and baking category in the labor department is out with its weekly report on jobless claims at 8:30 eastern time economists are looking for 222,000 claims for the last week >> that will be slightly lower than the previous week with the total still near five-decade lows. acquisition of monsanto freeing up a spot in the s&p 100. today twitter and netflix respectively will they can i take those spots its been a banner year for both companies. twitter stock up 66% remember it was left for dead about five or six months ago

netflix up 91% joining us internet analyst at evercore isi. >> good morning. >> the question may be a technical question before we get into the companies, themself, typically, when you know a stock is going to join one of these index there is a bit of a bump and a run. is that already built into in? how does this work >> so basically with them being yielded to major indices, mutual funds and e tfs. they will match demand >> built in or more? >> i don't know if it's built into this. i think the inclusion in these indices begins with today's trading. but it's probably to a large degree priced in maybe a little more buy and deman. >> let's go twitter first and netflix. on twitter we're at $40 a share basically. what is a fair price >> i mean, these stock versus run like crazy

the momentum line to investor versus driven mid-cap internet to all time highs in terms of the multiples. where the stock should be valuation is hard. with that said, company is doing great. they are executing in terms of user growth, return to revenue growth, even on the profitability side i think that investors are throwing valuation out the window, when i talk to internet tech investors, they joke, valuation doesn't matter on either side the spread on multiples on names >> you are not giving me confidence are you suggesting the price should be a lot lower? >> i think it's hard on valuation, i got to tell you i think liquidity is down. the spread on the multiples for mid-cap internet versus value the disruptors, as you call them, a higher percentage of their valuation is put in what we talk about as determinal value. >> straight up and down, your client calls you, should i buy

twitter as these prices? you tell memories them what? >> ret now i say in the short term there could be continued, you know, stock could continue going higher because the kpis are going, the key metrics are going in the right direction >> that said, if the market were to turn or theal the algos were to go in a risk off scenario, i would like to earn something with a valuation backstop. to me facebook and google have more of that >> we have been on the table very long with netflix >> these are great companies, we're getting awhat friday what's driving the companies twitter and netflix are both executing, putting up great revenue growth i have been positive on both stocks in the past you are right, in that it's getting harder on justifying a target price on fundamental evaluation >> i think larry has a question for you. >> first of all, few answered andrew's question the way you did i wouldn't know what you

seth said. maybe that was the intention second it would be nice to see netflix generate some cash i mean, i know nobody talks about it anymore, but no nonetheless at some point it's going to be effect is it close at hand? >> i think the peak of the pre-cash flow losses is getting closer i think it will be a few years before they generate positive cash >> they will run negative cash because they want to keep investing? >> the strategy is keep invest income content they are going to be able to invest more incontent than the traditional companies seeing revenue flattish versus revenue at 40 percent. >> c'mon back. we have to have a longer conversation. >> sounds good >> appreciate it >> i just figured it out, larry. the susan rice thing, she's really good with video right? i just realize that, why she's on the board, coming up, buffet and dimon on the markets

>> you have been buying stocks actively in the first quarter, is it fair to say you are still buying stocks? >> we'll get the answer to that question and much more from two market mavins after the break. with tripadvisor, finding your perfect hotel at the lowest price... is as easy as dates, deals, done! simply enter your destination and dates... and see all the hotels for your stay! tripadvisor searches over 200 booking sites... to show you the lowest prices...

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. all right. welcome back, everybody. it is a big morning here on "squawk box. investor warren buffet and j.p. morgan ceo jamie dimon speaking out in their first ever television interview toke. they weigh in on a lot of things, including the marks and the state of the economy >> consumers are in good shape, balance sheet, wages are going up their debt levels are low. all the credit ridden since the great reception other than student lending was done by the government large corporate credit, business sentiment is almost the highest level it has been. consumer sentiment at the highest levels, housing is in short supply my guess is mortgage credit will expand a bit it looks pretty good there is nothing that's a real pothole there. we don't have the leverage we had in 2007. so maybe it's been a nine-year recovery, it's been owned 20%. average recovery would have been like 40% growth over more like a

seven or ache-year period. the slack is being pulled up it may be it's a long delayed cycle, sentiment grows, recovery from the great recession, that you may very well be user growth i hate to forecast the future. because i don't know it seems to me it's a logical possibility and, in fact, i think we are growing stronger today, not weaker. >> if we are nine years into this recovery, just doing the math on that, you are talking another three years of recovery, is that something that you say, yeah, that's not out of the realm of the possible? it's definitely in the realm of the possible we'll climb the wall of worry. one day we'll have a resechlgs leak i say, i don't like to predict that the fact is things look pretty good also more stimulus coming from tax reform and other bucket issues so i think, yes, you could have growth people don't want to see it. it's a long time, it'salmost like we are too afraid to say it

out loud. >> what about you? warren, how does the economy look from where you sit? >> right now, no question, it's feeling strong if we're in the 6th inning, we have our sluggers coming to bat right now, numbers 3, 4 and 23459 lineup business is good i am no good predicting out three, four, five years from now, there is no question america will be far ahead from where we are ten, 20 and 30 years from now, right now business is good no question about it >> as a result you think the stockmarket looks afford annual, warren. >> >> not as a result the decision of the stockmarket is being made independent of the current business outlook when you should buy stocks is when you think are you getting a lot for your money, not when you think business, not necessarily when you think business will be good next year the time to buy stocks in america generally has been always with a few exceptions because the long-term outlook is exceptionally good

i don't think you should buy stocks based on what you think the next six months or year is going to bring >> you had been buying stocks pretty actively in the first quarter quarter. is it fair to say you like buying stocks? >> i like buying stocks. i'm a net buyer. i have been that all my -- i bought my first stock march 11th of 1942. we've had seven republican presidents and seven democratic presidents and i bought stock under every one of them. >> jamie let me ask you, the market wobbled last week because of issues with italian politics, we have concerns about italy or quit-aly, how big a problem or could we face conteenagegiconta. >> it obviously has problems, it's amazing the ability this country to continue to grow and even the word ten or 20-year

period they've used them well. bill gates talks about a book factfulness and man kind is doing better and better and stronger and stronger and healthier, healthier, living longer that is reflected in markets, valuation and things like that obviously, there is always something to go wrong. the biggest threat to man kind is nuclear nothing like nuclear proliferation. things like that you have things like italy, that is one of those things that reminds you there is rick out there. you could open up the newspaper any day and be remained of another risk it might be argentina, do i think that president is doing great things there this is a reminder, it's not resolved you saw this wobble because people question again all of a sudden italy's day in the euro zone, obviously i hope they do the monetary union is the most important thing. i hope they do i do expect they will. it will be very hard for them to leave. >> i was going to say, do you expect the euro will be here in five years and in ten years?

>> i will say again, i hate to predict the future i say yes, exiting the euro, the monetary union will be catastrophic for anyone who exits. and there is no way out of that. so i this i that when people see that and they don't want to do it, i think the eu is making progress with merkel and macron, who are the lynchpins. remember britain was never a part of the monetary union continue to make proper reforms? it can be a union that strengthens over time. it takes fiscal reform, the ability for the banks to pan european banking him some regulatory reform and certainty. some common, they have to deal with certain issues the bug issue in the country everyone is interested, the european union continues on that path the other path is really not a good one >> warren, few had to pick a side if you were forced to pick a side, would you bet the you're row is here in ten years >> i would bet it.

i don't consider myself an expert on it by any means, sure, i'd bet on it. i would point out one thing in -- i was doing a mental calculation what were you were talking. i have been investing over a period probably over 25,000 days and i would say if you took the headlines from the paper of those 25,000 days, i'll bet a majority of those headlines they certainly wouldn't be good news or optimistic. i mean you start with 1942 when we were losing the war when i made the first investment. so the news is usually, well, it's more often i think the headlines are bad than good. but the dow was 101 at that time and the dow is whatever it is now, 25,000. so america works, but the headlines are frequently going to be kind of warmest. >> we got larry bossidy former

honeywell ceo. we have all been listening there is a lot of talk about the economy, larry let me frame it this way the atlanta fed have overstated gdp numbers. steve leishman who does not overstate numbers, he's now at 3.7 for the current quarter. so you read the papers every day, you watch cnbc. you know that what the people were saying about the possibility of us getting back to 3%. now you had some people that were in the obama administration like larry summers or jason ferman, so they didn't want to get back to 3% the democrats don't want to get it back to 3% necessarily under this guy here we are. now the narrative it was a stimulus with the tax cut. it's going back to the base level. i heard in 2020 they are talking about it it will be 1.5%. they're acknowledging we may do 3% this year it was a sort of a sugar high a

one-shot deal. is it possible we are in a permanent higher growth rate now from this? do you think >> nothing is permanent. but i do think that it is a kind of a goldilocks economy now as these two gentleman just said. if you look at all the indices, they look very favorable i think 3.7 and beyond is above where we are going to be i think we will be close to 3% in the second quarter maybe 2.8 to 31 to 3% for the year i don't see us growing in 4% in the years out. but i do think we can sustain close to 3% by virtue of what we're doing. i'll tell you one thing on the horizon as you look beyond, we have 23 billion of debt. when we service it with a higher interest rate, it will put a big crimp on the economy second we have to solve the medicare medicaid issue. >> both things would be more solvable if we stay above the

3% >> i think it takes the will to solve them we don't have that will right now. >> >> do you think some of the things that we've seen have stimulated it or has it been sin chronnous global growth finally happened deregulation, is that why? do lower corporate tacks really factor into this is it just an overall but just more confident consumer, more confident ceos what is attributing or sit front end loaded canegian stimulus >> the atmosphere is better than it has been. i give credit to the trump administration for that. in other words the deregulation makes a difference, the tax production makes a difference. beyond all that there is a perception that we're strong again in this country. our businesses are doing better than they are than in other

places in the world. i think we're in a real optimistic tone. it's accelerated by the policy action that's taken. we're in a really good place >> we're admitting it's happening in spite of the absolute chaos of what we're watching how do you expect the chaos to be manifest in november of this year >> you know, it's so hard to predict how the, you know, you had an indication tuesday in the primaries. it was kind of a divide outcome. nobody can claim dominance in terms of the preliminaries and the primaries. so it's very hard -- my mind is that this economy continues to be grow the way we have talked about it growing, the republicans are going to be in good shape because at the end of the day, the economy has a lot to do with election outcomes. >> are you a republican. i'd expect you to say that >> i did >> but the average of 31 seats in the house that you lose, the incumbent president's party

loses 31 seats anything above that is a win they need to keep -- they can't lose more than 42? >> if you will see, you will see a lot of presidential actions that don't take congressional approval in the latter part of his tenure >> do you see manchin said it was a mistake for me to back hillary clinton and i might vote for trump in 2020. he's in west virginia, obviously. >> it's a smart thing to say in west virginia right now. >> but do you think that people, that democrats will run on repealing the tax reform bill? >> no, i think you will hear as little about tax reform in both parties than you can imagine that's not a popular subject, either way you go on it. >> republicans are not - >> republicans either? so they run on the economy but they don't tie it to the tax reform >> running on the economy and everybody doing better and feeling better, but not because of the tax -- even though that

is has influenced it >> all right, larry, will you be with us to the ends of the show, which is about another hour which we have, which is great. >> when we come back the case against reporting quarterly results, more importantly not reporting quarterly results, making guesses to what you mind wind up doing. warren buffet and jamie dimon getting an op ed on that issue we have been bringing you their comments and we will hear more on this topic after the break. a cnbc interview with commerce secretary wilbur ross. we'll be right back. >> for more on this episode, check out cnbc.com you will find the latest video, om t o and news-making comments frwof the most powerful people in business "squawk box" returns after a quick break. hat? grandpa come. at cognizant, we're uniting doctors, insurers and patients on a collaborative care platform, making it easier to do what's best for everyone's health,

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did you say yes? good, then it's time for power e*trade. the platform, price and service that gives you the edge you need. looks like we have a couple seconds left. let's do some card twirling twirling cards e*trade. the original place to invest online. warren buffet and jamie dimon joining forces i believe this is the first time the two of you have done a television interview the two business titans calling for a change on wall street. the end of quarterly guidance. >> an exclusive interview you can't afford to miss. if that's not enough,

another "squawk" news maker commerce secretary wilbur ross will join us live to talk trade and tariffs as the final hour of "squawk box" continues right now. [ music playing >> announcer: 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 market site in time's square. i'm joe kernon -- kernen with becky quick. larry bossidy a cnbc contributor and ceo of honeywell it can bring in scraps >> it's changed many i life. >> the big hour is still ahead, including much more of the "squawk box" exclusive interview with j.p. morgan ceo jamie dimon

and berkshire hathaway executive warren buffet. we have a lot of background and nuance on that piece with becky's interview, they talk short termism, the markets, politics and that he can heck venture with amazon jeff besos coming up throughout the hour. i hope you can be have been watching since 6:00. it's been a lot of stuff. >> we will show you the markets. the do you is up about 51, 52 points right now nasdaq up marginally treasury yields out right about now as well. here you go. >> thanks. if you check out b1. "wall street journal" score today. chinese telecommunications from zte nearing a deal reportedly with the u.s. government how to save its business. joining us now for a cnbc

exclusive interview. commerce secretary wilbur ross it's great to see you. where does this stand now? the journal says we are close to a deal >> well, we are more than close. at about 6:00 a.m. this morning, we executed definitive agreement with zte and that brings, that brings to a conclusion this phase of the developing with them >> you are telling us that right now? this is no longer nearing a deal this is a deal has been done and the letter, the ts are crossed the is are dotted. everything is finished >> all 23 pages of them. >> 23 pages. okay so were the provisions and the parameters that have been out there, is it basically, can you summarize exactly what's in the deal and how it works?

>> sure. as you know, this is a trade enforcement proceeding zte originally had been violating the u.s. sanctions both against north korea and against iran so in march of 2017, we reached a settlement with them and had it approved by the court subsequently, we learned not that they had done more violations of sanctions, but, instead, had lied to us during the settlement negotiations and after them so we then triggered one of the provisions that we had in the agreement, which was, we could either take $300 million that had been put aside or we could, in effect, shut them down by denying them access to the u.s. technologies that they needed. we opted initially to do that.

what this new deal does is something i think even more effective. it imposes the most strict compliance that we've ever had on any company, american or foreign. we are literally embedding a compliance department of our choosing into the company to monitor it going forward they will pay for those people but the people will report to the new chairman because we are also having them replace the entire management and the entire board the reports of the chairman and to the commerce department dis division jointly and here's what this accomplishes enforcement is about two things. punishing people for bad acts in the past and giving them and other parties a disincentive to

go forward with bad acts in the future we think this settlement, which brought the company a $17 billion company to its knees more or less put them out of business, now, they're accepting having this compliance team in, whole new management whole new board, should serve as a very strong deter represent not only for them, but for other potential bad actors so that's why i'm very, very happy with this arrangement. now, if they do violate it again, in addition to the billion dollars they're paying us right up front, we have them put $400 million in escrow so the total deal is a billion 400 million. >> that money will be forfeited if they violate anything, whether it's sanctions or

anything else and we'd still retain the power to shutdome th them down again. this is a strict penalty and largest fine that has ever been brought by the examiners department against any violator of export controls so it's been a long road getting here, but i'm quite pleased with the end result >> larry bossidy. >> wilbur ross, larry bossidy. how are you? >> good. >> should we look upon this as a separate deal or as a piece of an overall set himment coming down the road with china >> no, this is an enforcement action it happens that i have been involved with the other negotiations with china. but that's quite separate and apart from enforcement every day, every week, practically, we are bringing some sort of an enforcement action against china or some other country and that has nothing to do with big

negotiations such as the ones we have been embarked upon. >> mr. secretary, just to clarify on that particular point, though, the president instructed your department to revising your view of what you had done with zte originally and most of us from the outside at least have looked at this as a chest piece in this larger negotiation. how can it not be? >> well, i don't know what the president had in mind. all i know is what we have in mind from an enforcement point of view is can we provide a really good solution and one that also doesn't have adverse side effects this company did sell 15 million cell phones, very low end ones to americans last year and so that's one consideration that we had. it also buys a lot of companies

from qualcomm and from other american manufacturers so that was another consideration that we had in mind but the main thing i said in the beginning. purpose of enforcement punish bad actors and by getting rid of the whole management and board and finding them another become 4 on top of the billion that we got from them a year ago and yet keeping the ability to put them out of business, i think will serve as a very, very powerful deter represent to other bad actors >> how do you think this is going to change the dynamic, positively or negatively with your tariff discussion with the chinese? >> i don't think it will have any necessary impact on. that they recognize that these were bad people. it wouldn't be that surprising if the chinese took some sort of a further action on their own. this is a world class embarrassment for that government

zte is a $17 billion company out of $30 billion mark cap and they blew it over some violations of u.s. laws. i think this is a very, very well publicized message to other parties, don't fool around with our controls or you are really going to get hurt. >> it just seems, wilbur, that i mean the notion that the u.s. government is going to pick the people on dte's compliance team, it teams seems like there are so many concessions from china, it just seems almost uncharacteristic and how many other violations are we talking about that happen on a daily basis of intellectual property or you know take your pick on why we're even in this brew ha ha with china, but it just

almost seems unclarkistic that the chinese, which are, you need to part their with them. it's so difficult to do business there, it's just seems too good to be true almost, that they're allowing people that we pick that the u.s. picks to come in to run things. >> well, i think there is a real reason for it. had prior administrations have been real patsys for the chinese than for other countries have never pushed back. trump administration for the first time is pushing back on all fronts on intellectual property rights, on technology transfers, on subsidization, over capacity, dumping, all kind of rules that have been not obeyed so i think the chinese are well aware will is a new marshall in town it's called donald j. trump. he has a very good shot. >> secretary ross, let me ask

you about sanctions and sanctions violations in general. that's a broader issue this is a touchstone for this week, some eu officials wrote to trump administration officials and asked for exemptions for european companies from the sanctions reimposed on iran. do you think that is likely to pass given this message you are sending out today? >> i really don't think. so secretary mnuchin who had gone to great lengths to try to make sure these sanctions work and that they're effective and that they're really biting we're already seeing it modify the behavior of the iranians i believe it's one of the main reasons why north korea seems potentially to be coming to the table. sanctions are important. economic warfare is important. i would be very, very surprised if our government would give any meaningful exception other than maybe for humanitarian purposes

or some very specific, very small purpose. but to just give people a free pass to do business with these fellows in the face of our sanctions, no, i don't see that forthcoming. >> mr. ing is,south carolinings. i don't know if you saw about facebook and a data partner with four companies, including wawai, which the u.s. has had a number of security concerns about that company. national security concerns >> right >> is your department looking into that? >> well, facebook is not really a part of our domain the reason we got involved with the zte is the department of commerce, bureau of industry security administers and enforces the export controls so unless export controls of

high-tech militarily significant materials were involved in the facebook thing, i don't think that we would really have a jurisdiction for going in there. there may be some other entity that would so we will look at it and we will see if there is any violation of export control. and if there is, i promise you, we'll be on them >> do you have concerns about wawai? at&t announced they will not be distributing their phones in the occupation the newest phones. >> yes, i've seen. that i've heard a lot of the rumors about wawai as of the moment, i don't believe that our department has found any violations of wawai. >> it's hard to go against the crowds at times in terms of

invoking concerns for close allies, canada, mexico, whatever there is like you, the president and then there is everybody else that this might not be a great idea can you understand it. we don't think of canada as a security risk or mexico necessarily as a kuehrt risk so it almost looks like you are sort of using a loophole to effect this. it's going to come back to haunt us if we're going to do this in this sort of, i don't know, kind of a you know not a totally above board way, they will come back and say, look you did it to us we will do it to you it sets a bad precedence is there anything do thto that? >> no, i'd like to answer the parts of that question first of all, they haven't bothered to use any excuse why they have asymmetric altarives against us -- asymmetrical tariffs.

now the notion of invoking national security by us will somehow free them up of the shack him is rubish. >> that they have been very, very aggressive in their behavior before. second, national defense is a defined term in section 232 of the 1962 trade expansioning a. that -- expansion act. that's the basis upon which we brought the steel and alluminum tariff that defines it correctly and broadly. namely, it recognizes you cannot have military security if you don't have economic strength and economic security. so it's specifically invokes things like unemployment, health of an industry unfair foreign competition, as a part of the definition i didn't write the legislation

so it isn't my job to tell you was that a proper use of the definition i think it was because the truth is, you must be strong economically to be strong militarily. now, as to the personalization that tu degrrudeau and others pn it they are hiding behind that. they know full well we don't regard them individually as national security risks. that's not what the act is about. this was a collective action taken to deal with a global problem, global over supply and of production of steel, global over supply and global over production of alluminum. we had to do it on a universal basis in order to make it work and what's interesting to me is, the same people who are complaining the loudest about it

are finally starting to do what we have been wanting them to do for quite a while, namely, protect their own borders from these very same problems suddenly europe in the month of june is putting in all sorts of safe guard actions well, where were they a year ago, two years ago we have been fight tag fight ever since the trump administration came in we have now one-fourth of the all the trade acts that the u.s. has total from ever have been brought under this administration and that's because there is so many violations the 232 was simply a means of getting to a solution to a global problem on a global basis and, guess what? it's working u.s. steel two nights ago opened another facility hasn't been going for years and

years and years. a million 200,000 tons a few weeks before they did another million-and-a-half tons. there are pipe mills, 20 different pipe mills being expanded as we sit here. this is changing the road map. it's a very, very important thing. you cannot have a country if you done have steel industry and you don't have an alluminum industry and if you don't draw the line somewhere, it will be the next industry and the next. so the same naysayers who are complaining about steel and alluminum, they also said, oh, if you put tariffs on solar panels, it will be the end of solar electricity. what really happened more factories have opened here making solar panels. but when we put the tariffs in washing machines they said, oh my god, you will kill the world guess what's happened?

lg and samsung, two of the main foreign competitors are rapidly expanding facilities here in the u.s. and are now for the first time really seeking out parts suppliers and component manufacturers here in the u.s. >> just back up to the zte deal again, we're getting some questions. who picks the chairman of the company? does the u.s. pick the chairman? will it be an american how will that work for zte >> no, this was a publicly quoted company that had had a $30 billion market cap before we took our action. the shareholders will take care of the new board and the new management the part that we will take care of is the key part it's not our job to make cell phones it is our job to make sure they

don't violate sanctions, that's why we will be putting our own compliance regime in and our own compliance people. >> will they be americans? will that be an outside company or consulting firm that you would hire to oversee this >> no, it will be individuals. it will be individuals who are community in chinese, because this is going to affect the total company, not just the american part of the company that's the other unique feature. this is the first time that i am aware that a major foreign company has been brought into strict compliance with u.s.ic port control rules >> yes, definitely good they will be fluent in mandarin -- we talked about that earlier actually in storms, you definitely want to make sure they're in the room and they know what's going on, otherwise, yeah hey, wilbur, you have been a republican your whole life, haven't you? >> no, i don't know that that's

true >> all right but you see that there is a lot of well-meaning conservative republicans that think that there will be more job losses that result from this few that we save given this, some of the tariffs, that we're cutting off our nose despite our face? we see more and more of that every day, i know you read it, do you see yourself and the president, if it gets to that point where it's actually counterproductive? is there a bargaining level here where we would be willing to back off and go back and pull some of it back in >> well, first of all, you are assuming that they're right in their premise. you look at the recent unemployment figures i don't see that there has been a negativesque it looks to me like unemployment figures, employment is at all time highs we now have 6.6 million job

option >> wilbur, it hasn't - >> that's not true they went in, in march, into effect in march. >> some of them. >> right and meanwhile, what you have seen are factories opening once in a while there is some isolated case of some small company claiming to be hurt by this event but remember, i came on this very show and demonstrated with the campbell soup can how trivial an impact the steel tariffs and alluminum tariffs actually have. remember, it's a fraction of a penny on a can of campbell's soup it's a fraction of a penny on a can of coca-cola a fraction of a penny on a can of budweiser, under 1% of the cost of a car. do really think those trivial impacts are going to cause layoffs? i think it's silly >> looking at rv shares down in

some cases, seven, eight >> i think that's gas prices >> in dcanada, too. >> if you have so little impact, why do we do it? >> no, it didn't have much impact on the down stream industries the argument the naysayers had, they said, oh, there are far more people in the industries that buy steel than there are in the industry that makes steel. and that's true. but it's not relevant when you are talking about a fraction of 1% of their costs. very few companies, larry, as you know, can get the cost of an individual product right to within a fraction of the penny >> wilbur, do you think there is anything to it that this is the time to do it if you can play -- if you are above 3% on gdp and that is the time to try to take some enforcement action when things are going well, do you you see it as any head wind at all? if so, how much could you see it

taking off gdp i'm sure if it was a half a point of gdp, you wouldn't do it so, obviously, you don't think it is, have you calculated that, in total, all these different things >> sure. well, if you take the total amount of the tariff and if you assume that that full cost got passed on into the economy, it's about $9 billion a year. we're in an $18 trillion economy. compare $9 billion to $18 trillion, you know it's a tiny fraction of 1% it's just math >> okay. all right. wilbur you have a forecast for total 2018 gdp, we're running a little pool here. what's your number >> i'm not allowed to be a betting person any more. but i think that something well into the 3s should be very, very

achievable you probably saw the federal reserve bank of atlanta. >> i did >> kam come out with a '034.8 or some sort of a forecast. i think that's a bit of an out higher remember what we faced before the trump administration, larry summers and other big democrats were saying economy can never grow more than 1.5 or 2% a year. they're probably right under their style of operating it probably wouldn't have, look where we are, a lot of the measures haven't taken full effect yet the tax bill, the regulatory reform and a lot of these trade reforms really haven't taken full effect. i think those are extremely important and maybe even more important and i think the biggest thing that the economists miss is psychology.

some optimism is all time high this is optimism small business optimism. >> thank you we appreciate the extended time you gave us today and the news that you broke with us about zte. we appreciate that also see you again soon. >> thank you >> always great to see you when we come back, we will get to our op ed termed short-termism is harming the economy. by jamie dimon anwar ren buffet. we heard from them the companies are they not going to be issuing quarterly guidance at this point? >> we will tell you what they said about that after the break. stay tuned you are watching cnbc. whoooo. when it comes to travel, i sweat the details. late checkout... ...down-alternative pillows... ...and of course, price.

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we welcome back to "squawk box." we were talking about guidance on quarterly earnings dimon

chairs the business table. we spoke with jamie dimon and warren buffet about taking the long view. >> becky, i have been on 20 boards publicly owned companies not counting berkshire and i have seen, i have seen managements that i really think well of personally i won't say they married my daughter or were named executors of my will or moved next store, but they get tempted by this the predictions that are made. their ego gets involved. when they find they can't make the number, sometimes they make up the numbers it's a bad, a very, very bad practice and once it gets going, it feeds on itself because if your investor relations department goes, we put out you will earn $1.08, you get this reputation for making

your numbers or beating your numbers, you will do some very stupid things at some point, because business just doesn't work that way and for 53 years at berkshire, you know, i consider berkshire an unfinishe thing and the rise is infinity as i'm concerned >> are the companies in the business roundtable, are they going to not be issuing quarterly guidance >> let me comment. first of all, this goes down in the company. it can be pressure at the gigsal level the sales level and very often it's easy for a ceo to change a short-term marking number by you know selling more product at a cheaper price, they can hit revenue numbers, it's disincentives. like warren says, if you have to

meet it, years later, you find it corrupted so i think it's a good thing to talk about how and when they use earnings guidance in particular the brt, i think the brt, something like 60th% of the members do annual earnings guidance i would personally eliminate that we're not going plus or minus quarterly. this is a first step to try to get people focused in the long run. most of these companies, they're good at focusing in the long run, r afternoonch a d, capital expenditures this is one case we need to go to improve the governance of corporate america. >> okay. fascinating conversation i want to bring in chairman advisory services into this very conversation the gentleman to my right. i'm not sure totally thinks this is a realistic way to approach the world. what do you think? >> i agree i don't know let's just talk about some of the pitfalls, less information means less liquidity, less, you

know, basically, will you have bicker gaps if price to somebody like us who invest we rely on information, this, you know, i understand what they're saying is there a behavioral issue here how do you value the companies >> you are saying you want to be spoon fed the information. you want the company to tell you exactly what's there so the game can be managed and guided how do you value the companies unless they spoon feed you the information? >> actually, i'd like to see less time spent work, below the margin >> i think that's the point for in you don't want the earnings or t the. >> that's a choice that companies make we get it. long term, companies may be a solution would be to say look we're investing in new businesses you have to value this business differently than this part of the business >> i think you are trying to get

to the -- >> how do you value the company? remember, we're always look at forward expectation of earnings. right now the s & ps trade 16.7. what this starts getting to, few go back to this. think about how a private equity company, who doesn't have all these reporting requirements talks about their value. they talk about it on a cash flow basis if that seems to be where the mark wants to go, that's fine. i do think you have to take the good with the bad there. then you lose the opportunities you have been taking advantage of with regards to, for example, looking at how i can make my earnings, my profits look better through incentives to the taxes. wait until next year. >> mike, let me ask you this this has been around a long time, this short-term focus. i think there is merit in the sense that there are people who have breached the rules. they get caught up with it remember, we have the best

companies in the world, why isn't it reflected in the quality of american based companies? i don't get it >> i agree what we spend time looking at, we look at operating margin, sometimes it's so nonsensical some of this stuff that goes on with the county, wait until the new capex, where you can write down your capex. the theory is earnings growth will slow until next year. have you the one-time hit from the cash right? now they have a boat load of cash what are they going to do? i think they will protect their earnings by virtue of making investments the point is the earnings growth will be protected. because now they have another accounting tool in their basket that will allow them to basically get the benefit by writing that down all at once. so focus on the operating profit >> sure. that's a good way. i will say, jamie has criticized the media in the past saying we shouldn't be reporting on cnbc

and other outlets. he said here's what they earned this year versus last year >> i agree with that >> how do you align the investor class with the company, management class, if you will, in terms of the time rise? and the other piece, we were talking about this off air warren and jamie are talking about, absolutely works if you are a big investor right. in large part because you will be in it for a long time for the most part. >> it's harder for the retail investor and everybody else and the worry is, that if are you a retail investor, you are not getting the same information as the big investor who can either come up with their own estimates or still gets whispers in this environment. >> good question here's what i know the disparity of information will be dramatic. the dispersion of analysts will be all over the place. nobody will know where it will be less information begets less

liquidity, begets bigger gaps, more volatility. >> we are not talking quarterly reports the guidance >> the guidance is what people are trading on people are trading not on what happened really yesterday, they're trading on what they say. this is when a company reports greater earnings, saying, i will be a little more cautious about that they knock ltd. it out but they didn't go anywhere. you see this scenario all the time the market is always forward looking. i'm saying, sometimes it's good, short term does the management some are too short term, some too long term. maybe what it does, you need to articulate your story. i worry about having that met less information to work with. i can hardly make sense. the smaller companies will be

punished they won't have the same access. i think it's merritt torious to discuss. i don't know how realistic it is >> i would love to figure out a way to make what they're talking about work, but work for everybody. that to me is the next piece of the challenge. >> i tell you, we invest internationally. when i try to put a non-u.s. company, right, versus the u.s. company, it's really hard to make proper comparables. they're the same type of company. that's a challenge for your money management. is that good enough for you? >> that works. >> all right anything short is okay anyway, when we come back. what jamie dimon and warren buffet said about that mysterious health care venture with jeff besos of amazon. it told us something we haven't heard before a lot of stuff on this show today. by the way, you wawe want to hem

you what you think about jamie dimon and warren buffet's call on short-termism do you think companies should do away with the quarterly guidance tweet us squawk@cnbc. the governor has declared a winter weather emergency... extreme risk of burst pipes and water damage... soon, insurance companies won't pay for damages. that is, not if they can help prevent damages from happening in the first place. at cognizant, we're turning the industry known for processing claims into one focused on prevention with predictive analytics, helping them proactively protect the things that matter most. get ready, because we're helping leading companies see it- and see it through-with digital.

>> my guess is inflation and interest rates will catch the marks next year. >> snacks up after closing another day yesterday. twitter 29, pay pal 14, netflix 14 tech is the place to be. >> s&p 500 touching the highest level since mid-march. >> if you are going to level the playing field on trade, wouldn't you pick a time when global trade is grow something if you are going to do it now is the time. welcome back, everybody, j.p. morgan, berkshire hathaway

and amazon announcing this year an initiative to fix health care in america we don't have details, in an interview with jamie dimon anwar ren buffet, we asked them for an update on that venture. >> the three of us and the new ceo we basically reached agreement. so we're just tidying up a couple of thing. we should have an announcement on that matter within maybe two weeks at the outside but the work has been done and we have the right ceo and i'm very enthuset about it i know jamie and jeff are too. >> jamie you've met this new ceo, too >> yes, i have, the left histing was done by todd combs i want to give him total credit. he went through the total process we have an outstanding individual, capably, character, heart, mind, this is a long-term

thing. we're not looking for immediate success, but there are lot of ideas out there. a lot of things can be done better we know the fraud, the administrative cost and overuse and under use of various drugs and specialized procedures we know the end of life is often costs far more and is far more painful than it should be. with big data there are so many thing the goal is better satisfaction for employees and you know eventually we can learn a lot of things to help inform america and improve these things. >> jamie, have you heard back from your employees about this warren, have you i will start with jamie. >> a little bit. what does it mean for us it means the same thing. effectively do this every year for employers. every year we usually have a lot of very good companies to help us do things in terms of claims, structure, payments and choice and wellness and we just want to do that better so i told them we will try to do it better. you should expect we will do it the right way, but to improve

your lives, improve your wellness, improve your outcomes, give you more choice i believe it will effectively be cheaper. you will much more healthy employees. >> i addressed a group of 130 or so of the varies cfos from all of our subs, just a couple of days ago and they're very interested in this subject and the interesting thing is, as we went around interviewing a large will be of prospective ceos, we didn't run into one that didn't think the improvement was both significant improvement was both possible and important. so it isn't like there is anybody out there that's connected with the system that thinks we have already arrived at nirvana and they know how difficult the job will be to make major changes they're all cheering for us to succeed. they might have wanted to be the

one to help us succeed nobody disagreed with the mission, the importance of it or the feezibility. but it's also a very, very tough nut to crack it's going to take significant time we've got the right person. >> so you guys are working on everything from problems facing american businesses, long termism to short-termism to this huge problem for itself. that's health care it has people wondering, jamie, if you are running for are the >> i have no intention of running for president. >> warren? >> i'm not running for vice president either. >> that's leaving opened the opportunity to run for president, though. >> exactly switch the ticket. jamie vp trying to trick us joining us, partners managing director and senior research analyst. has it gotten to the point, anna, you are great at covering this whole industry, is this now in the future some type of

disruptive entity you think is going to make a big splash from what are you hearing right now will it? >> i don't think so. it's encouraging, good for them. they finally found the ceo but whatever we are hearing from companies like cigna, i've spoken to two of the ceos of the grid, what we're seeing with amazon not getting into the hospital drug supply chain, which really surprised me, if you ask me, each from a lodgist lodgistical perspective, listing challenges, i don't think they have a blue print yet. simultaneously and parallel of anything, you know, it's catalyzed a lot of change in event driven investing opportunities in the public space and what private equity is doing. so these two big deals on the table. aetna, cbs, sick na express, they're trying to attract specialty costs. united has come in and has been passing through now some of the drug rebates to consumers.

aetna followed the azar blueprint seems to be supporting, integrated bpms and managed care so we'll see what they come up with >> so you are talking about finally passing on some of these discounts to the actual consumers paying them, instead of passing them onto the pbms or the payers you are talking slinking administrative costs, if you combine them with others, you are all amy squeezing them >> standard pbms have been a problem. there have been no stand alone pbms you will have ma jelan and that impact. that's a small percentage of the market >> anna, one thing that will be helpful in this. we don't get much in the way of metrics, the progress being made or not being made. i can see these people going in and buying from drug makers directly that's a small part of the overall health care, 3.3 trillion as you know how do you get at the other stuff the defensive medicine, to

cover people's backside? and the administrative burden, which is, how are they going to be able to get at ha >> you know, it's a great point. so there is an arms race going on, i think, largely with the payers, but now some of the hospitals as with el to come into the ambulatory space, buying primary care physicians, buying hospice, surgery care centres, building out urgi-care. they have shrunk and build down the inpatient and out patient admissions that's been putting a lot of pressure on the hospitals. it's probably why you see private equity and activism right now in names like envision and ten net and medinax. investors are trying to unlock value and pull out some of those higher-built ambulatory assets, thin them out, or merge them with other companies and hospital admissions are just under a lot of pressure.

>> yeah, they are. so you've seen the trump administration's pharmaceutical plan drug stocks the drug stocks rad when scott gottlieb was on, just looking at the overall approach to trying to manage or disrupt status quo how do you view it now is it heavy handed not heavy handed enough? the regulation being proposed, is it more, right or less than what you're seeing right now >> i thought it was comprehensive. i thought the market is discounting how thoughtful it really was he's making the medicare part d plans become the change agent and the foot soldiers, really. there are some actions that can be done directly by the administration around taking part d or part b business which is the specialty and the biggest problem, really and introducing competitive acquisition programs

over time, maybe, after the elections, congress may even pass legislation to make all of part b or part d which is a negotiated and formulary-driven approach i think it will hurt the biopharma industry it will take time. he is a thoughtful change agent and he's not coming in with a heavy handed approach and he's giving the industries a chance to respond to his proposal and come up with his ideas and he says pretty clearly that if they don't he's going to do it anyway and he's not afraid of -- and i feel like what happened with the previous administration was shotgun and they did pilots here and there and they had this outcry from the docs and the biopharma industry and they would just stop them, you know, in the middle. >> people have tried to find -- people say that looking for a silver lining for trump and some people say that wave

if all you got out of trump was scott gottlieb, and he's honest. >> he's a doctor and worked inside the fda before. he understands how it goes >> next time late at night and you're up and thinking the world is horrible. scott gottlieb, okay >> totally different name, while she's here >> jonathan bush >> that's not the guy that is a different guy. we don't know who they picked. he's available what do you think of this whole situation? >> i mean, the personal aspects aside and why they coincided in time with the elliott offer. i would aren't want to speculate on the exposure, but we've done a survey and we're looking at the growth in ambulatory medical records which have slowed down considerably the replacement opportunity doesn't seem that strong the offer from elliott is pretty good with 160 and if they do due

diligence they will up it and maybe another ep consortium comes in with a competing bid and lex turner who is more hospital focused and we think the general will push this agenda a long and they haven't appointed a new ceo yet. >> do you think the tech company will have it >> like cerner >> like an apple or a google or microsoft. >> interesting. >> because they just did a deal with apple. >> yeah. yeah to provide this data to the consumer and ultimately that's what the company will do in the short term if not the long term and i wonder if you start to say to yourself the buyes are no longer the classic buyers. >> interesting it's very out of the box it's very thoughtful and i hadn't thought about it in the really big picture mode, but yes, it's possible creativity which is another player they cover it was reported and we have wondered in

that case even whether newer entrants look accenture for the data -- for the data, yeah >> what do you think in terms of bush's departure, forgetting the personal stuff you can take the company as far as he could and therefore is it reasonably the right thing to do >> it hasn't squeezed the operating cost and the margins there could be opportunity you would have to right side for a company that's seeing slower growth than you have in the history and valuations are reflecting still a high growth company in the 20%. >> you would hire her at honeywell. >> you could ask her that. we'd start negotiating salary right now. >> you can ask for anything. >> do you think he will do it at the belmont on saturday? >> oh, yeah. that's funny maybe! i'm now the expert on the derby. belmont. >> coming out of the fourth hole tomorrow trained by billy mott and ridden by ines ortiz, 9-2,

who do you think will do it? hoffberg will win the belmont stakes >> i think you have another career just you in the voice >> it's going to be on nbc so i don't care who wins, but for wheels up. >> anyway, an a thank you. >> thanks for the tip. >> george soros is behind justify. >> no, i didn't see that >> did you see this? >> no, i didn't see that >> this is a story -- >> what does that have to do with winstar. >> justify, he's -- he is the third group, the secretive entity that owns the remaining 15% of justify is the soros group controlled by top employees of george soros. >> that's what he says. >> ana, by the way, thank you for coming in. good to see you. all morning we have been rolling out our exclusive interview with j.p. morgan's jamie dimon and

berkshire hathaway's warren buffett. we spoke to them about the idea of business leaders embracing politics ♪ ♪ >> let me ask you. this week we spoke with howard schultz. he announced he's stepping down as chairman of starbucks he spoke to us on squawk box and said yeah, he may be considering public office and he doesn't know exactly what that would be at this point, but we spoke to kim langdon and he said the idea that donald trump won the presidency and this means a business leader can come in and run the country and that expands it, as far as he's concerned he thinks it's a good thing. jamie, what do you think about that >> the business people need to learn what the issues are in government you can't just walk up to government officials and say here's what i need for my companies and profits, et cetera governments have huge issues with poverty and incarceration

and education. we should help them do that and that's why members should be deeply involved in that. getting involved in politics is a great thing to do for anybody. i think it's hard. i don't think being a ceo translates do that i think the world of howard and he'd be a great chief executive, governor, senator, mayor, or whatever he wants to do, but it's hard, but you've got to want it. you're not going to be ordained to be the president of the united states. you have to get out there and fight for it, and ceos aren't used to doing that and i don't think all ceos translate to that so we'll see, but i think it's absolutely right getting involved in government is a good thing. even having warren help focus health care is a good thing for america and government can't do all of these things itself particularly in the rapidly changing and highly technological role i wish howard the best.

>> warren, your thoughts >> i totally agree most business people would have trouble starting a year early and going from motel to motel and repeating themselves six or seven times a day and listening with great interest to every possible voter as to what their suggestions might be so i'm not recommending it to any of my friend, but i do think it is very important that business be a hand maiden of government business has done wonderful things for america and america has done wonderful things for business. >> tune in to cnbc.com for that interview. >> we've been having a debate all morning about so many of the comments that jamie and warren made my question, is there a perfect solution to this is there a way to make it work

because ideally, conceptually it makes a lot of sense and the question is is it realistic given the concerns you have. >> it's great to have them weigh in the influence and resources can make a difference. i don't think it's going to be easy and that's why they're getting in at this stage, but i'm excited about their pa participation. >> this trade talk every day is wonderful. you can question the tactics, et cetera, but the fact that we're getting at some of these issues where we've been prejudiced for many, many years is exciting and i think it will be a nice outcome. >> it will be a nice outicome >> what are you doing with the bossidy family >> it is on hold. >> because >> i think the market is fairly valued. >> fairly or over valued >> fairly. >> it doesn't mean the economy is overvalued. >> no, the economy is great and it will be great through the first half of '19. >> and we need to appreciate it,

i think. >> we do >> before you know it it's, like, god almighty, when is it going to get good. >> that's how we think. >> larry, thank you so much for joining us today it's always a pleasure to see you. >> thank you >> that does it for us today make sure you join us tomorrow it's time for "squawk on the street." ♪ ♪ good thursday morning. welcome to "squawk on the street," i'm carl quintanilla, david faber and cramer will be in new york city and the u.s. assistant ag dell rahim, and futures are at record highs and the dow and s&p, and plenty on the tape including dimon and buffett talking to becky quick our road map wil