from the senate. monday, march 1, 2021. "squawk box" begins right now. ♪ ♪ good morning, everybody. welcome to "squawk box" here on cnbc i'm becky quick along with joe kernen and andrew ross sorkin. we're watching the u.s. equity futures. we're looking at the markets down about 3% from the highs if you're looking at the dow or s&p 500. down about 6% if you've been watching the nasdaq. you see this earning month that we are looking at some pretty significant gains. dow jones industrial average indicated up by 335 points the nasdaq indicated by up 195 points the s&p indicated by up by 43. i don't know if there's a real reason happening here other than the j&j news, that we'll talk more about, which means we'll

have three vaccines approved in the united states. it's great news for when we might be able to see things open up a little more you can also look at -- go ahead. >> right we're not at 1.7 on the ten-year >> right 1.34%. we've watched the yields pick up and had people show concern about it that still gets me back to the crazy point where the market is arguing, hey, we don't want this ten-year picking up because it signals the economy opening up again. it's a short-time trade where we don't want to see no alternative, money coming out of stocks into the treasury market. the ten-year is higher because it looks like we're getting to a real opening for the economy, which is great news. bitcoin remains under pressure go ahead, joe. >> one basis point a day would be, i think, the market would be and then it just -- we know --

>> slowly, slowly. >> and 1.51, 1.52. 30, 40, 50 basis points -- it's weird the way traders are. it's no different. you end up in the same place it's the sentiment. >> the speed of how you get there. >> yep >> it is this is weird, too you know, they've got me starting off saying bitcoin remains under pressure following the $43,000 yesterday, back at $47,718 today. crypto rebounding a little bit, but well off its highs of $58,000 late last month. still, it's hard for me to think that, you know, bitcoin is under pressure when you're still talking about it at close to $48,000. think how far we've come and how quekly that move has happened. >> totally let's run you down some big stories, including some becky was just mentioning. first, johnson & johnson getting the green light for its one-shot vaccine. both the fda and the cdc, the

federal government can now begin shipping doses to sites around the country. and meg joins us in a couple of minutes with all of the details. we have an exclusive with j&j ceo alex gorsky at 8 enclose k a.m. eastern time. early saturday morning the house passed its version of the $1.9 trillion covid relief bill, including direct payments of $1,400 to most payments, $400 a week in supplemental unemployment assistance and $20 billion for vaccine distribution that bill goes to the senate we'll talk to former senators heidi heitkamp and judd gregg at 6:30. in his annual letter to shareholders, warren buffett delivered much of what we come to expect. he admitted mistakes, commented on the markets and talked up america. he dished out criticism of some long-held practices in corporate america. first up, let's start with the numbers. berkshire earned $42.5 billion

in 2020. that was down 48%. $21.9 billion of that was from operating earnings that's the metric that buffett says is the most important those were down 9% profits for berkshire for the fourth quarter were up 23%, thanks in large part to the gains we saw in the stock market berkshire has a lot of big holdings those holdings were up every year in his letter, buffett gives an assessment of the company, highlighting what he thinks are the most important performers this year for the first time, the investment in apple made that list. berkshire owns 5.4% of apple, which is worth almost $110 billion. buffett called it one of berkshire's family jewels along with their property casualty group, bnsf railroad and berkshire energy they accumulated the purchases starting late in 2016 and went through the middle of 2018 since then it's sold a small

part of the stake for $11 billion. it's also received more than $2.3 billion in dividends from apple. all in that means it's closer to $23 billion that is worth almost $110 billion that stake, the percentage they own in the company, has grown thanks to buybacks at apple. buffett pointed out berkshire shareholders have seen their portion of profits grow because of buybacks at apple, and berkshire which bought part of its own stock in 2020, a record. stock buybacks are under fire in washington right now with politicians like elizabeth warren labeling this practice market manipulation and threatening to pass legislation to keep companies from doing it. buffett defends this practice in the letter he wrote, the math of repurchases grinds away slowly but can be powerful over time. the process offers a simple way for investors to own an ever-expanding portion of exceptional businesses and as a sultry mae west assured us, too much of a good thing can be wonderful as for the markets, the mistakes

that he admitted, berkshire took on an $11 billion write-down last year. most for precision cast parts, app a manufacturer for the aerospace industry they bought in 2016 for32.1 billion. i paid too much more the company, buffett wrote pcc is far from my first error of that sort but it's a big one. for the criticism of corporate america, buffett took wall street to task the big problem with most conglomerates, he said, is they only buy other businesses in their entirety and that limits the pool of available businesses because most great companies don't want to sell out it's asserxacerbate. ed when the conglomerates buy. wall street loves the fees that deal-making generates. at a point, also, the soaring price of a promoted stock can itself become proof that an illusion is a reality. eventually, of course, the party

ends and many business emperors are found to have no clothes conglomerates earned their terrible reputation. as always, buffett cheers the american spirit. he lays out some of the stories he witnessed across can america, success stories, companies like clayton homes and pilot travel centers, national furniture matter and national indemnity built out of nothing he writes, in its brief 232 years of existence there's been no incubator for human our progress has been breathtaking never bet against america. for the comments on the market, they were sparse this time around but he said bonds are not the place to be. that echoes jamie dimon when he said he wouldn't touch treasuries with a ten-foot pole. a lot of commentary on this. i should point out, this is the first time in 14 years buffett hasn't joined us live on the show for three hours to talk about this

>> that's true >> i've got a question, because i -- like you and so many other saturday morning, our weekend reading. the apple stake, which you pointed out, now almost considered one of the berkshire companies. in a way, he talked about it as one of them and what i'm curious about is long term, does that mean he thinks to himself that he can sell out of that position at any point that would be the benefit of what then he later talked about, the conglomerates and everything else that you can get in and out rather than get stuck with something or overpay for something but i couldn't tell if he, therefore, loves apple the same way he loves burlington northern or, frankly, has to love burlington northern because he owns it, or whether he's going to try to build large stakes in other companies in a similar way. he did at one point sell some apple but i think it was todd

combs or ted who did that because i think that was in one of the other funds >> i don't know if it was there or in one of the pensions for another company. i'm not entirely sure on that. i would be surprised if he was looking at selling and getting out of the stake quickly this stake has grown incredibly valuable, incredibly quickly i think that's probably why he puts it in there at the end of the year it was worth $120 billion i think it's kind of hard to ignore when you get up to some of those numbers if you look at some of his long-time holdings like coca-cola or american express, they have been in the top five holdings of berkshire's holdings for more than 20 years they're still there. apple is now their number one holding in this. it's number one by a longshot. number two is bank of america, $31 billion. then coke, which is close to $22 billion. american express is about $18 or $19 billion. then verizon, the new one they built up, that's their fifth biggest position at this point and that was a big surprise because we just found out about.

they now have $8.6 billion these were the valuations at the end of the year because that's what the company lists them in apple was -- i did the math on that i think that's why he mentions it at this point it's a big, important part of the company. when he talks about the crown jewels, he's talking about the most valuable assets the company has. i'd be surprised to see him jumping in and out you mentioned the conglomerates but berkshire tends to hold for a very long time, if not forever. >> i was checking out what kind of professor elizabeth warren was. it was commercial law, i guess, because that -- buybacks, it's so clear it's just the way a company's balance sheet reflects whether they've issued stock or

whether it's time to reduce the float. it's an agnostic thing to call it just, blanket statement that it's bad and market manipulation. does that make a company virtuous if they're issuing stocks it's a preposterous thing to say for someone that had a position in a major university. i understand the stig that and everything but she should know better than just to give that blanket statement. what's the right amount of stock to issue, andrew gamestop - >> the interesting part, though -- but to me what's so interesting about the buyback debate is buybacks technically used to be legal there was actually a law on the books. it was illegal so, it's not a completely crazy idea that, you know, 30 -- i think 30 years ago or 40 years ago -- >> what if you issued too much stock? >> for a publicly traded company

to buy back -- the idea that somebody is even raising this -- >> why >> i'm not saying i agree with it but to suggest it's so loony when there used to be a law to prevent it - >> what was the reason for the law? what was the reason for the law? and why do you have an opinion on what the right amount of outstanding shares of a company is it's based on the company's own situation, the market situation. if you're using it because executives have pay tied to earnings per share, and that's a way -- then i can see. >> there's two pieces to it. >> how you arrange your balance sheet, how you arrange your balance sheet is totally arbi arbitrary. it's not good, bad, ugly it's not anything pep it's what makes sense for your company it scares me she's in a position to make a decision. >> the question is whether you can manipulate the price to effectively help the compensation of the executives. >> don't preach. i understand that.

i understand why >> not just it is compensation of executives. oftentimes executives obviously are large owners in the company themselves you could say that should align them with the public shareholders, but if the business unto itself is somehow failing and they're trying to prop up the business to keep -- to keep the stock higher so they can sell it later, i mean, there are complications with buyouts i'm not saying buyouts are a bad thing necessarily. i think sometimes -- >> buybacks. >> i think warren talked about that in his letter very well apple is a very good example of that i would also suggest - >> the other warren. >> you look at an ibm -- right, warren buffett you look at a company like an ibm that spent decades buying back its shares rather than investing in its own business -- >> it's an individuals situation. but -- okay. what's wrong with berkshire hathaway buying it back because they think there's not a whole

lot else out there they would want to use the cash on. it's a company's decision. >> right >> to argue the point it's not an agnostic -- you should have an agnostic view of it based on the situation. now, if you are manipulating it, that's one thing but having one share horrible as having a trillion shares good? it makes no sense to just make a blanket statement about whether -- >> i think whether you take on debt to buy the shares, for example, that's different. warren buffett has a huge cash -- has a huge -- has a lot of cash in his back pocket he can afford to do this there are a lot of companies that have taken on debt to do this they have put themselves in harm's way at the same time -- >> you're making the point it depends on a company's situation. >> depends on the company's situation. >> that's what i said. >> guys, we can talk more about this we do have much more to come. by the way, we should point out this year's berkshire hathaway annual meeting will be held on may 1st, this time in

los angeles, not in omaha. warren buffett and charlie munger will be together answering shareholder questions virtually and i'll take questions from shareholders as well if you're a berkshire shareholder, you can submit questions by sending an email. coming up, we'll tell you how long it will take for people in the u.s. to begin receiving the j&j vaccine just approved over the weekend it usually takes about three seconds -- oh, no. they're talking about getting it out and actually doing it. the actual vaccine itself, pretty quick the impact of a third vaccine on the market. stock futures are solid. up 300 points. we'll be right back.

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the fda and cdc gave johnson & johnson's vaccine the green light over the weekend the company expects to provide 20 million doses by the end of this month and it's march 1st meg terrill joins us with the latest on the j&j rollout. hi, meg. >> hey, joe. 3.9 million doses of the j&j vaccine expected to roll out this week, arriving for the first administration potentially tomorrow morning this comes after the fda gave the green light on saturday. cdc's advisory committee met yesterday. and in the cdc signed off on recommending this vaccine as well it is the third coronavirus vaccine to enter the market here in the u.s. and the first that only requires one dose now, of course, in clinical trials, it showed to be 72%

effective here in the u.s. and preventing disease 85% effective worldwide at preventing severe disease. and in addition to being one shot, this vaccine is fridge stable at three months you can store it at more normal temperatures, not the ultracold freezers you need for pfizer or even the more normal freezers you need for the moderna vaccine. we've been reaching on you the to states and counties, trying to get a sense of how they might use this vaccine differently from the other two the cdc's advisory committee did not make any specific recommendations for this vaccine versus pfizer and moderna but the states will get those decisions. they get allocated vaccine based on their population numbers. some told us because of easier storage, it could go to places where storage is more complicated for rural areas. arizona, for example, telling us it plans to allocate the j&j vaccine similar to how it allocated the moderna one, areas that don't have the ultracold storage options. also settings where it's difficult to get a second dose,

for example. washington state telling us maybe the fishing industry where a lot of folks live in congregate settings on ships, for example, that would be a place they deploy this vaccine the homeless population, where it's difficult, perhaps, to find folks to come back for a second shot or for people who may be hesitant about the vaccine and only want to get one shot. we also heard yesterday from the cdc, one of the committee members saying this could be an option for doctor's offices where they don't have the ultracold storage. the message from government health officials is take whatever shot you can get, even if you're comparing efficacy numbers. here's dr. fauci yesterday on "meet the press." >> particularly the recent results from j&j, if you look at the efficacy against severe disease greater than 85% there have been no hospitalizations or deaths in multiple countries, even in countries that have the variants so, be careful when you try to parse these -- this percent versus that.

>> dr. fauci saying if this had been theitalization and death. joe? >> yes, yes. they've got three, take your choice whatever they have it will be interesting to see exactly how it -- will there be a day when people are actually sho shopping, when we get to that point. where would this initially go where they say, hey, here's your j&j vaccine versus moderna or pfizer you could could see some people saying i'd rather have a pfizer or moderna and have the 95% double dose, right >> yeah. there's a lot of conversations going on like that right now the argument from the federal government is, a, we are supply constrained so we all need to get whatever we can get. b, these trials are not directly comparable as dr. fauci said, they were run

at different times, more variants circulating, more disease when j&j was running its trial. you can't directly compare apples to apples the most important measure is it keeps you out of the hospital. it prevented deaths in the trial. that's what they'll be emphasizing. you're right, joe, look at the flu shot market. right now if you wanted to, you could call your pharmacy and say, do you have the gsk vaccine? nobody does that, but you could. >> right if it prevents you from going in the hospital, going in the icu, on a ventilator and dying. or you can get covid it's your choice it's pretty clear. it has been clear for a while, meg. thank you. for a check on the market impact, let's bring in stephanie link steph, we're going to switch gears entirely and try to figure out exactly what's happening with yields. you've been thinking about it, writing about it a lot i think that moving higher gradually, not too hot, doing it

in a nice stepwise fashion would be fine, even if we ended up at the same place because it indicates, you know, that the fed has been successful, as you point out, in stimulating the economy. >> yeah. good morning, joe. it's good to see you i kind of look at this the last couple of weeks as looking at rates and rotation and rates going up for the right reason is very good, very positive it's something we should embrace, not something we're afraid of. i look at all the economic data over the last couple of weeks, so incredibly impressive i mean, industrial production is going to rise 9% retail sales, the control group, is up almost 12% that goes right into gdp housing permits are at a 15-year high last with durable goods, i think i mentioned that i fell off my chair when i saw the aircraft orders up 63% year over year and also technology and computers were up 20%. it wasn't just kind of this

lumpiness, if you will, in aircraft orders. of course, personal income up 10% month over month and the savings rate at 20.5%. all of these things and many more data points in terms of the economy are the reason rates are rising i just -- i look at the speed. we just want to make sure it doesn't go too crazy on us i'm glad we've seen the settling down, quite frankly, but i think 1.6% last week intraday on the ten-year that's still lower than the 2% prepandemic level we were at so i think we can handle higher rates. just watch the speed look at the economic data. all the stimulus is working, joe. it's just working. >> what if we had -- what if we did have a $15 minimum wage. what if you started to see some indications that that recent inflation, hot numbers weren't

just outlier what if it looked like rates were moving, when do we cross that line where it becomes a negative >> i look at technology and i look at capex that will lead to better rates i'm looking at all the commodity prices and them escalating aluminum, steel, iron ore, copper, they're all up huge. i think the productivity might keep it a little bit one-sided, if you will, in terms of where inflation is labor costs, joe, are zero that's the leading indicator of inflation. let's just watch it. let's just watch it. i don't think we're going to get out of control but we have to see. for now, i think it's goldilocks >> we're approaching -- we seem to be approaching that, we seem to be approaching there's a lot of pressure to do things that way. i don't know whether everything

aligns you have new additions to things that you're buying that, individual names, stephanie? >> yes you know i've been more on the cyclical camp. that's about 70% of my forty f portfolio is improving two things that haven't done anything is ibm and prudential ibm to me with a new ceo, who's focusing on everything, ai, data analytics and blockchain, you have the red hat acquisition, a 5% dividend yield and a ten times earning pe multiple, rather so, i like that one. prudential also hasn't done much that's absolutely a function of the yield curve. they should benefit as a result. the stoblg trades at eight times earning and they have done a good job in terms of focusing how their going to grow going forward. they'll spend $3 to $5 billion, focusing on emerging markets and

asset managements in particular. i like that. they're also buying back stock and they're going to plan on increasing the dividend. they have $10 billion allocated for that over the next three years. i like both names. they're out of favor they're boring they're value, for sure. but i think that's the opportunity. >> when i intro'd you i figured everybody knew who you were. chief investment strategist and portfolio manager at hightower and cnbc contributor in case people were wondering and needed to know stephanie, thanks. >> thank you, joe. >> won't be long we'll be doing this again i feel it. coming up, when we return, your watch list for the week ahead. it is straight up right after the break. then, we're going to tell you what comes fwhection for president biden's $1.9 trillion relief bill. we'll have that debate in a little bit "squawk box" returns right after this

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welcome back to "squawk box. it is time for our executive edge and a look ahead. it's jobs week and we'll get adp private payrolls on wednesday. jobless claims and productivity data on thursday then the february employment report on friday on the earnings calendar, we get zoom video reporting after today's close. tomorrow we'll be hearing from target and kohl's before the bell on wednesday we'll hear reports from american eagle outfitters, yend's and snowflake on thursday we'll hear from kroger, costco and the gap about he canny becky >> thanks, andrew. when we come back, a new report on robinhood and potential plans for that company to go public. also, later, j&j ceo alex gorsky will bring us an update to the vaccine rollout a lot to talk about with him "squawk box"ilbeig bk. wl rhtac

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♪ good morning, everybody. welcome back to "squawk box. check out the futures this morning if you're just waking up things are sharply higher. dow futures indicated up 300

points s&p futures up by 40 the nasdaq up by 178 right now the dow and s&p are about 3% below their all-time highs. the nasdaq closed friday 6% below its all-time high. andrew meantime, robinhood reportedly planning to confidentially file for an ipo as soon as this month. according to bloomberg, that that trading platform has held talks with underwriters this past week with moving forward with the offering. the report says no final decision has been made and the timing can change. of course, this explains, a, why this was so much pressure on the company a couple weeks ago to raise money and also why investors are willing to hop on and jump in and vlad was able to raise $3.4 billion. meantime, watching shares of citigroup because jane fraser is taking over. making her the first woman to

lead a major bank. the stock is up more than 9% so far this year. when we come back, we'll have a debate. former senators heidi heitkamp and judd gregg will battle off for covid relief funds in the senate and the concern over excess spending. a reminder, you can watch or listen to us live any time, including right now, on the cnbc app. we're back in two.

welcome back to "squawk. the senate will debate the president's covid relief this week while the country is still suffering from the impact of covid-19, there are concerns over the long-term impact of the trillions of dollars spent on the recovery joining us is former u.s. senator heidi heitkamp, founding member of the one country project and cnbc contributor and joining us is former senator judd gregg, also former governor of new hampshire heidi, let me start with you and what you think will play out in the senate, where you think the democrats' fault lines are meaning, is there a break or compromise in here do you have any worry we're spending too much? you can talk to people like mitt romney, who is a relatively sensible guy who will say, look, you can say at least $350

billion isn't going to get spent in some cases to 2022, 2023, 2024, you know, $422 billion is going to be handed out in the $1,400 checks. you could do that in a more precise way. what do you think? >> you know what i think is you're going to see fewer fault lines in the democratic party than what people anticipate. i think this is a package that is heavily not albeit for the those that have suffered during this pandemic. when you look at where i think there will be tension, it's going to be on a package which may include the $15 minimum wage, which may not be a $15 minimum wage, but may be a reduction in -- tax deductions, reduction in tax benefits to companies that don't pay a $15 minimum wage that should overcome what we call the bird rule hurdle and

people who follow this know there are rules on how we can do this in the senate. >> i want to get to senator gregg in a second, but i want to -- maybe i'm doing his work for him in this case what do you make of some of the money that doesn't get spent, literally, until years out from now? >> one thing we found out after the 2008 collapse and we had a very sluggish recovery i think that all the economists and the politicians learned from that experience and said, it may not be enough stimulus just at the moment we need to encourage growth in the economy. the argument i would make on debt and deficit is when we grow the economy, that helps in debt and deficit. if we have a sluggish recovery like we did after 2009, we may not have done everything we needed to do so, let's not say that's not important to recovery. i think it can be very important given our past experience.

>> senator gregg, is there a compromise to be had here? is there an influence republicans can have in this conversation or do you think it just gets jammed through >> oh, it gets jammed through with 51 votes because that's the way reconciliation works and that's been used in the past by both parties fairly effectively. to get to your point, andrew, when you put this $1.9 tril yoen on top of cbo's projected $2.3 trillion deficit this year and throw in an infrastructure bill, you're talking $5 to $6 trillion of deficit spending this year on top of $4 trillion of deficit spending last year, which makes our debt to gdp ratio over 130%, which makes italy and france and greece look solvent. the simple fact is, you have to pay the piper some day apples do fall from trees. if you're going to print this much debt and this much money,

down the road, heidi's concerned about having an economy grow is going to be suffocated by massive amounts of excess debt and printed money. and at some point you have to stop you can't keep this up and if you look at the $1.9 trillion, heidi says this is going to benefit the lower quartile no, it's not ist just a helicopter. they're thrown out of the helicopter they're not focused at all you have $350 billion, which is going to state and local governments, which have been profiting over the years like illinois, new york, california states like new hampshire and north dakota, which have been fiscally responsible, the people are going, you have to pay for their states, now we have to pay for illinois and a bunch of other states and then you have a big chunk of money going to teachers unions let's face it, the teachers union is not even allowing their kids to go back to school. so, this bill is walking around

money for a democratic constituencies it will be purely a democratic bill because they control the government i guess you can expect that. if you have a liberal government, you'll get a liberal bill at some day our kids will have to pay for this massive, massive expansion of debt and deficit spending and for the money that's being printed to support it >> heidi, let me ask you -- i want you to respond to that, but let me add one wrinkle to this is there any -- given the expected plan to come in with an infrastructure plan on the back of this, is there any benefit politically to some form of compromise bringing this down to, i don't know, $1.5 trillion, for example, cut off the $350 billion i mentioned that doesn't get spent until '22, '23, '24, '25 because there's going to be a lot more money on the other side, and what does it say about president biden's plan to try to be a negotiator and create some semblance of bipartisanship, or was the lesson from the obama

administration and this last administration that you just don't do that anymore? >> look, 10 or 12 senators showed up in the white house, said, look, this is what we've got to do. i want to remind people that biden promised during the election and then won the election, he promised $2,000 check, $600 of that already went out. there's $1,400 here. i love when people who are millionaires and in the senate decide, these people really don't need this money, even though they can't pay the rent they're in food lines. they're worried about their future so, how about we make some investment on the bottom half. i didn't see this kind of crocodile tears when we had almost $1 trillion deficit during what allegedly was the best economy in the history of the country, and we were spending billions of dollars to farmers. i mean, you know, it's kind of

like, you know, we're all complaining now because the wrong people are getting this money, but no one talked about what was happening during the greatest economy, and we were running in record deficits back then. >> heidi, that's absolutely incorrect. please, don't make those types of incorrect statements. the fact s i was aggressively opposed to the amount of debt which was run up during the trump administration. >> but, judd, other people sitting in your seat in the united states senate, so-called deficit hawks, whether you want to call ted cruz, they didn't say a peep so, i'm not talking about you. i am talking about leadership in the senate at the time who now are complaining and going to vote against this package while they close their eyes running up record deficits during a very high-quality period of time for the economy. so, let's realize we're in a crisis we need to come together we need to negotiate and get this done.

that's - >> well, that's -- >> judd, 20 seconds to you they're going to play the music. >> that's exactly what should happen but you're not seeing any negotiation on the issues where you could negotiate. for example, let's send the $1,400 to people who need it instead of arbitrarily send it to everybody or send it to states who are covering up for their pension failures. >> you don't know that's where the money is going and it does not cover everybody. oh, by the way, oh, by the way, if you're really concerned about equality between the states, let's adjust the map and see how -- >> i told you they were going to play the music and the music has begun. i want to thank you both we have to continue this conversation i know we will looking forward to seeing you both again very, very soon joe? >> all right coming up, one of 2020's least loved sectors has been outperforming the s&p 500in a big way so far this year we'll talk about the 2021 rally

in energy stocks we're up, a little off the best levels we've seen in the premarket. almost 300 poionnts the dow we're coming right back. ♪ ♪ (kids talking) pnc bank believes that if an app can help you track your pizza... come on cody, where are you buddy? ...then your bank should have the technology to help you track your spending. virtual wallet® for digital banking. one way we're helping to make a difference at pnc bank. use a single hr software? nope. we use 11.

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welcome back, everybody. the energy sector has gone from worst to first up 25% this year oil majors outperforming the broader market with exxon and conocophillips up by 30% each. joining us is dan jur gen. this brings together the biggest energy names it's hosted by ihs dan, it's good to see you this morning. everybody is coming to houston this time it's going to be virtual. >> it's virtual. it means we'll have a lot more people we have quite a program ranging

from the biden administration coming to the conference to bill gates to the next ceo of amazon to prime minister modi of india. a lot of focus on this gathering this year. >> we've watched what happened last year right after that meeting. you can go back a year, just before things really started to shut down around the globe with that, we saw oil prices plummet and go into negative numbers. are we past that are we getting back to a more normal reality >> i think we -- absolutely. i think we're out of what we call the virus alley oil prices. up 70% in the last four months and our numbers for economic growth are that this year the u.s. will be 5.5%. the world will be 5% strong demand

the big question is how the oil exporters manage that and how quickly they bring back all of that oil that they have sitting on the sidelines that's going to be a big question. >> what do you think happens looking at oil prices back at $62, that is a long move, very quick move as you pointed out. are we back to just life is normal, take the pandemic fear out of things or are we looking at all kinds of different scenarios than we would have been a couple of years ago you have climate change for people coming to speak there you have a lot of big energy companies that have focused, the big oil companies that have changed their focus to work with them with the limits that they can do how is the world different just from that perspective? >> even over academic times, more and more companies say that they're targeting net zero

carbon, that's a very big change we're talking about how strategies are changing, energy transition then there's a question, becky, about how different is life going to be. are you going to the studio five days a week or two days a week one part of oil demand is not coming back, it's jet fuel what the future of business travel although we think business travel will resume but people are finding other ways to get around >> what about the catastrophic power failure in texas that we've just witnessed, what are we going to talk about what will we hear coming out on that >> we're going to have a lot of discussions about that because it's something that resonates around the world we've been talking about people in other countries, they can't believe texas and the united states energy, houston, energy capitol of the world can be knocked out by that.

i think it was a systemic fai failure. people are saying this person, that ennew jersey gi source. the problem was ice and the system was not prepared for cold temperatures although they've had cold temperatures a number of times, freezing temperatures. they cut off electricity to the natural gas wells so you couldn't feed the gas to the generating plant the whole system was caught in this vicious circle. there's going to be a lot of effort to learn the lessons. what it's going to drive home is you can do a lot of changes, it has to be reliable, it has to be resilient to depend on electricity ever more. >> dan, thank you for joining us this morning we'll be looking forehead lines coming out of the big meeting this week. thank you for your time. >> thank you folks, we also want to tell you about an upcoming event. on thursday brian sullivan leads two critical conversations for our cnbc evolve live stream. speaking to vicky holub how

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futures surging after friday's triple digit selloff. a run through of what's moving is straight ahead. the fda giving j&j the green light for a single dose vaccine. shipments begin today. what investors need to know is coming up. warren buffet bets big on berkshire hathaway once again. we've got the highlights from the annual letter and what investors should take away from it that's just minutes away the second hour of "squawk box" begins right now. good morning welcome back to "squawk box" right here on cnbc i'm andrew ross sorkin along with joe kernen. take a look at u.s. equity futures this monday morning.

about 2 1/2 hours before the market is set to open. the dow would open up 288 points higher what did i miss? >> nothing. >> becky's here. becky's here. >> did i not say becky >> i don't know. what did you say >> did i >> no. >> hi. i'm sorry. >> that's okay keep going >> i was -- >> let's go. >> go, go, go. >> let's show everybody the dow real quick up 287 s&p up 36 points the big news besides my own mistake is johnson & johnson one shot covid vaccine is cleared for distribution the federal government preparing to ship out millions of doses this week. want to get straight over to meg tirrell who joins us with more meg. >> reporter: hey, andrew

we understand the vaccine now is starting to ship out 3.9 million doses going out this week of the j&j vaccine after getting the blessing over the weekend of both the fda and the cdc. this of course is the third coronavirus vaccine to be available in the united states the first that only requires just one dose. now j&j had been ramping up the vaccine bringing on multiple partners to make it as available as possible. over time it will dramatically increase the availability of vaccines here in the u.s., but we understand that the availability will be a little bit spotty over the next couple of weeks j&j will be providing 4 million this week, none will ship next week we should be getting up to 20 million by the end of march and 100 million doses by the end of june because this is just one shot, that's enough for 100 million people in the first half of the year we're seeing shots live now preparing to ship that vaccine out to states where the states will be making allocations of

this vaccine there are a lot of questions about how it will be used compared with the pfizer and moderna vaccines the message is, whichever one you can get, take. here's dr. fauci on "meet the press. >> people should take the one that's most available to them. if you go to a place and you have j&j and that's the one that's available now, i would take it. i personally would do the same thing. i think people need to get vaccinated as quickly and as expeditiously as possible. if i would go to a place where they had j&j, i would have no hesitancy whatsoever to take it. >> reporter: and, guys, those live pictures you were seeing and are seeing now, this is the process of this vaccine going out. we could see the first shots in arms potentially as soon as tomorrow guys. >> hey, meg, you know, everyone is going to try to run out and get whatever vaccine they can. hopefully people aren't going to go shopping over the next month. it sounds like -- when do you think we're going to get to the point where people are going to

potentially think about which vaccine they're taking >> reporter: well, we know in terms of supply that there should be enough for 400 million americans by the end of july of course, that's more than there are americans so we will have an excess amount at that point, but at that point a lot of people will already have been vaccinated so maybe it's the folks like us, andrew, i don't know anything about your health but assuming a lot of people in their 30s and 40s are going to be the last people getting vaccinated. whether we'll be able to choose, that's a question. we could have vaccines from astrazeneca and novavax at that point. perhaps there could be choices a lot of people will not have been vaccinated. we'll have to see if the u.s. has excess supplies. the message is going to be get whatever you can for the foreseeable future. >> the other question is obviously there's been lots of different news about the efficacy of the different vaccines

do you imagine with the j&j vaccine, you have a big interview coming up at 8:00 which we want to talk about in a second, that the studies that j&j is doing on a second dose of that vaccine or potentially people have talked about whether they're going to ultimately mix, meaning take one from one of the vaccine makers and another from another vaccine maker, i know there hasn't been enough testing on that yet. >> reporter: yeah. so people are really anticipating seeing these data from j&j on two doses of this vaccine that should come over the next few months. that could inform how best to use this vaccine i have also heard from folks talking about using j&j as the primary shot and then perhaps pfizer or moderna as the booster. could that create better protection since we haven't run those studies in the u.s., we don't know we are seeing other countries mix and match vaccines in trials to see if you can get better results. it may be down the line we find

using one technology first and another second is better everybody here in the u.s. is going to stick to what we've seen in trials. >> meg tirrell, thank you. as we mentioned, coming up in a little less than an hour, alex gorsky going to join us here to discuss the approval of these covid vaccine. joe. >> andrew, thanks. markets are focused on something that has not been on their radar for a long while that's inflation senior economics reporter steve liesman joins us with a look at whether the inflation threat could be real this time. it's always on the radar it just depends on whether you really think it's a threat, i think. we always think about it but for too long we've thought about it and it just hasn't happened. maybe it's different now >> it's been a far off blip, i think is the best way to continue the metaphor there, joe. we called them the inflationistas they've been calling for an

inflation outbreak and they've been wrong this time you have to say they look more substantial. there's still a long way to go for actual inflation trying to explain that despite concerns over easing fed policy. it never really recovered the 2% inflation target on a sustained basis. now around 1.5%. it is rising this time not only is the fed wide open. it's forecasting to stay that way. $1.9 trillion stimulus bill set to follow a $900 billion bill we just passed. commodities on a tear. all rising homes aren't being built because lumber is scarce and prices are high but price increasings, not yet they have to work into wage demands. if that happens, former imf chief economist thinks the fed would have to react strongly with rate hikes. he wrote in a recent commentary, the increase in interest rates

might have to be very large. i would rather not go there. he supported wide open policy after the financial crisis he believes it would be temporary. global trade technology and rebound will keep inflation in check. jpmorgan writing over the week, we agree we think the underlying trends will remain modest and the labor market tightens. serious global forces, they've kept inflation in check over the past several years this time serious inflationary forces will push against them. that makes the inflation threat real but not a foregone conclusion the fed relying on the inflationistas being wrong again. joe? >> steve, why should we assume -- stephanie link was on earlier saying productivity is going to be our wild card there which helps us maybe keep inflation down why should we assume that at this point we've had years and years that

that can continue to keep inflation in the genie's bottle. >> reporter: so that's like a half an hour question, joe, for which, you know, i've spent a lot of time listening to different experts on the issue, but you don't know that. i mean, you -- basically what you do is you assume that productivity is going to kind of remain in the trend that it was, that we become more efficient in the way we have been becoming more efficient robert gordon idea says, hey, we've invented the best stuff already. you look at what's happening with the ipos in the market, the funding, technological developments and you say, you know what, people are putting serious money behind that stuff. there must be profit, gain, productivity behind it the real question is not really will we continue productivity. i think that continues the question will it be above or below rend i don't know a reason to think it's going to be much different

than how it's been >> well, if it was just commodities, we'd probably be worried. is that causing people on wall street to raise their expectations do you need that wage component? it's hard with 10 million jobs lost, it's hard to think wages are going to start surging any time soon unless it's done at the federal level. i don't even know if that would do it. it doesn't affect enough people. might ripple through. >> right so the idea of people who are real concerned about inflation for that, the job market, it comes back roaring back when we open up and all of a sudden you don't have the labor stock that you had in the '09, '08 period i see them upping their forecast for cpi in 2021 by .3 to 2.2% and then same number for next year they're not really -- i'm not seeing a whole lot of forecasting very strong inflation in the years ahead, not yet. we'll see what happens if this

$1.9 trillion bill passes and see if wall street starts to tag on even more inflation >> okay, steve thanks are you here, becky? becky. >> i'm here. i'm here when we come back, taking advantage of the reddit rally. can gamestop capitalize on the stock surge? we're going to talk about the company's financial situations and the options that are available as investors continue to drive the shares higher that stock is up another 5.1% this morning check out the futures. sharply higher with the dow indicated up by 300 points right now. s&p up by 40 nasdaq indicated up by 165 check out the airlines this morning. all of them higher as more vaccines get ready to be distributed. johnson & johnson getting that approval we know those are starting to roll out united airlines the big leader, up by 4% cruise lines higher as well. take a look there.

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the second round of gamestop mania says here has some wondering how they can, actually how it can or should capitalize on the renewed investor

interests that sent the stock up 120% joining us is george cordonas. partner at latham and watkins specializing in assisting financially troubled companies have you been scratching your head about why they haven't sold stock yet? >> good morning. thanks for having me on. in my world the restructuring people, we look at companies like gamestop, amc, blackberry, even blockbuster, these are a lot of names that got traded and were traded pretty significantly the past few months. and we sit here scratching our heads wondering what's happening and how is it these companies are trading so high especially from an equity perspective one example which is a good comparison is amc. amc has taken advantage of a lot

of the tools in its tool kit out there. it did go out and raise capital. it went out and did what it had to do from an operational perspective and pushed through during the pandemic. it seems like at least they're going to make it on the other side >> you make some points and, in fact, you reminded me of something that i think may have been a foreshadowing to what we've seen i forgot about hertz and that crazy situation where they were going to in bankruptcy issue stock. it looked like it was going to be worthless and yet that was bid up that's the same type of irrational move that doesn't seem to be grounded in anything. my question to you which you didn't really answer, gamestop, why not if you're that company, why question it? why don't you take advantage of

it why haven't they >> yeah, look, it's interesting because if you look at what they've done the past few months, maybe this is what the reddit people are looking at, they have made a number of changes, right they definitely went out and issued new stock i believe their cfo is being replaced in the near term. they are going on a digital first kind of thesis right now and trying to change their operations look, they do have a bunch -- they have 5500 stores and i do think that there is a chance that they're looking at the capital markets and trying to figure out a way to push through this and take advantage. >> welling, if they came to you, i'm not going to send you a check for you to tell us what you would want to do, and i know you -- you guys never say anything if you're not billing by the hour, but if they did come to you, what do you think latham and watkins would tell

them to do right now, to start doing? >> kind of what you said it's go out there and take advantage of the capital markets. take advantage of the energy that you have right now and see if there are -- if there is more financing that you can raise for 2021 there are maturities out there there are tools in the tool kit we can look at in their credit agreements that they can do but, yeah, i mean, it's basically -- it's the amc playbook which seems like they're -- they're not sitting back doing nothing they are thinking about what to do next. >> george, would they need another firm, a strategy firm to actually help them with their business plan in the future or would you get involved there if you would get involved there, you mentioned just sort of generally that, you know,

becoming more digital with their store but what else would you have the company do? our own jim cramer has some ideas he suggested that involved a lot of different scenarios what do you think latham would tell them? >> yeah. i think in order to have a holistic approach to how to take advantage of what's happening and deal with whatever -- there are a couple of things a, from the legal perspective, again, credit agreement docs and get access to the capital markets and get creative solutions. i think bankers are great, obviously investment bankers are another way of going out and accessing capital markets to figure out what the best sort of piece of paper out there exists to help them either refinance their debtor take down some of their debt and from an operational perspective, which you touched on, there are a lot of financial advisers out there to right size portfolio companies.

there are 5500 stores, i believe, which is kind of a big number considering what's going on in our climate with malls, so those are the three that i would say are tools in their tool kit in terms of advisers that they can pull together and help out >> so overall do you think that watching this happen and seeing that gamestop has an opportunity to do something, amc has an opportunity to do something, maybe these reddit traders are breathing life into certain sections of the economy and are a positive thing in terms of just fertilizing rebounds or restructurings oren any -- or renaissances in these companies. should we look at it or is it just gamefication of the stock market >> i think there's a number of different angles, right? securities angle and the angle on what reddit and what robinhood are doing and those

are things that have to get looked at. from my perspective as a restructuring person, go out and try to pull equity or financing at times when they need it and they're not able to. unfortunately, many of those liquidate, some of those hopefully restructure and come out on the other side. this is something interesting because amc did take advantage i do think it's another tool in the company's tool kit if they are part of the reddit list they should take advantage and figure out a way to maybe capitalize. >> one last question which is kind of a change in what we're talking about. you have seen some companies put bitcoin on their balance -- in their treasury as a hedge against the valuation of the dollar, whatever it is is that -- would that ever come in to a stayed conservative company like latham and watkins? would that ever be something you

would check? >> we've talked about it a little bit and from us, we don't really see it as a play for latham it's going to be interesting to see where it is. it's interesting to see where tesla and other big cap companies take advantage i think if that's the case, other companies like mine probably might take a look and see where it goes. for now that's not where our heads are at. >> no billable hours being paid in bitcoin instead of your 2,000 an hour, you can be making 60,000 an hour or is that what you already charge >> it would have been great if that was the case two years ago, yeah >> right exactly. okay

you know, some guys -- some football -- nfl guys have done it others have done it. >> yeah. >> thanks, george. just playing it. latham and watkins thank you. >> thanks for having me. thank you so much. coming up on the other side of this break, legendary investor warren buffet releasing his annual letter. we'll look at some of his holdings and the mkearts mohamed el erian ahead right after this a visual snapshot of your investments, key portfolio events, all in one place. because when it's decision time, you need decision tech. only from fidelity.

welcome back to "squawk box. watching shares of citigroup jane frazer takes over today that makes her the first woman to lead a major american bank. mike mayo with a new note this morning raising his price target on citi to $82 from 74, 10% increase he cites a wall street journal report on frazer's plans to restructure. that stock is up 9% so far this year. logitech says the profits will drop after a 2021 boom in demand for components like computer mics and cameras.

futures this hour, you'll see things are sharply higher. dow futures indicated up by almost 300 points. s&p by almost 40 the nasdaq looks like it's up by 160 points this morning. "squawk box" will be right back. sales are down from last quarter but we are hoping things will pick up by q3. yeah...uh... doug? sorry about that. umm... what...its...um... you alright? [sigh] [ding]

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support for the overall market one other place to watch is some of the abnormally high down moves that we've seen have come from the internet names, especially the big cap ones. the first trust dow jones is flat on the target.

selling stock to sure up its balance sheet. back to you. >> unbelievable. meantime, when we come back from the other side of this, berkshire hathaway's warren buffet has bought back a record number of stock. that brings berkshire's normal to $24.7 billion we'll discuss the oracle of omaha's letter to shareholders and much more after the break.

johnson & johnson's ceo alex gorsky joins us. the one shot vaccine getting approval millions of doses shipped this week n u t conversatioyodon' want to miss we're back after this.

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welcome back, everybody. this weekend saw the release of the berkshire hathaway annual letter to shareholders in it warren buffet delivered much of what we've come to expect he admitted mistakes he commented on the markets. he offered up folkesy wisdom and talked up america. first let's get to the numbers berkshire earned $42.5 billion in 2020. that was down 48%. $21.9 billion of that was from operating earnings that's the number that buffet says you need to pay the most attention to that was down by 9% but the profits for berkshire hathaway were up by 23% for the fourth quarter thanks in large part to big gains we saw in the stock market every year in his letter buffet gives an assessment of the company highlighting the most important performers this year the investment in apple made that list they own 5.4% of apple right now that's worth just

about $110 billion buffet called it one of berkshire's family jules along with berkshire's property and casualty group, burlington northern and santa fe railroad and berkshire energy they paid $36 billion to buy the stake in apple and it purchased through the middle of 2018 since then it's sold a small part of that stake for $11 billion. then it received about 2.3 billion, maybe more than that, in dividends from apple. its stake worth $110 billion that stake has grown as the percentage of the shares outstanding because of stock buy backs at apple as for the mistakes he admitted, berkshire took an $11 billion writedown. most of that was for precision cast parts a manufacturer for the aerospace industry that berkshire bought for $32.1 billion in 2016. i paid too much for the company, buffet wrote pcc is far from my first error of that sort, but it's a big one. now for the criticism of

corporate america buffet took conglomerates to task. the big problem with most conglomerates is they only buy other businesses in their entirety and that limits the pool of available businesses because most great companies don't want to sell out it's exacerbated when they agree to overpay often with an inflated stock price he writes, wall street loves the fees that deal-making generates and the press loves the stories that the colorful promoters provide. at a point, also, the soaring price of a promoted stock can itself become the proof that an illusion is a reality. eventually, of course, the party ends, and many business emperors are found to have no clothes conglomerates have earned their terrible reputation. he laid out some of the success stories he's personally witnessed, companies like clayton holmes, pilot travel centers, nebraska furniture mart, national identity.

he writes, in its brief 2 32 years of existence, there has been nothing like this it has been breathtaking never bet against america. for the comments on the markets, they were pretty sparse this year he did say bonds are not the place to be and that echos what we heard from jamie dimon back in december when he said he wouldn't touch treasuries with a 10-foot pole joining us to help dissect the message is allianz advisor, mohamed el erian it's great to see you. thanks for being here. >> good morning, becky thank you for having me. >> maybe we should start with the comments on bonds. bonds not being the place to be. he was specifically talking about government bonds but then went on to say the junk bonds are not really the place to be either because you're not getting paid for the risk. what do you think? >> so he was talking about when

bond yields in the 10 year were below 1% you're right, he said government bonds are not the place to be. then he took a swipe at high yield bonds as well. i think what he is saying has been consistent with the view, which is be careful of bonds at those levels it will be interesting to see what he would write when the 10 year is at 140 plus as it is today. >> that's a really good point. this letter is one that buffet works on through the course of an entire year i saw some people speculating last week that maybe he would be commenting on what charlie munger had to say last week. this is written on over time, gone to print long before some of these changes that we've seen what i would say though is what he points out that you have seen people move out the risk spectrum that's been pretty interesting to watch and to see. the idea that you shouldn't be jumping into these junk bonds either, that you're not going to get paid for the risk there. >> the image i have in my mind, he picks it up in four different ways in fact

the image i have in my mind is all of this apple liquidity has provided the foundation to build the building and that building has been risk taking on the basis of liquidity, not fundamentals we've added a flaw after flaw. he talks about various financial engineering transactions look at celebrity spacs, et cetera everybody wants to be in the penthouse so there's always a question mark are the foundations strong enough for the building we've built but his messages are very clear, which is it's hard to find cheap stocks if you're value investors. he didn't like bonds at that point. and he believes in america as we all do and he doesn't want to fake the u.s it leaves him to buy back his own stock. it speaks to a very important signal to investors. whatever you do at this point, make sure you know really well what you're buying >> you know, one thing he said

though is they would not even be spending that money to buy back their own stock if he and charlie mon ger didn't think their stock was undervalued. they look at it closely. they'll sit on the cash for forever as they've proven in the past rather than spend it on things that are over valued. they don't think berkshire shares are over valued, at least they haven't it was almost $25 billion that they purchased last year in their own shares >> that's right. and remember, berkshire hathaway hasn't been one of the fads they haven't fallen to one of them in relative term, they've looked cheap. he's absolutely right to do what he's done. >> you know, mohamed, we're looking at the top five holdings for berkshire hathaway verizon was the new entrant. that was a surprise. we found out about that very recently, that they've been buying verizon shares. chevron made its way to the top 10

he's pretty consistent saying we buy things and hold on to them for a very long time you see american express and coca-cola which has been there in the top 5 for the last 20 years or so. that's pretty impressive but you do see him switching out of things it's worth noting that 3 of the top 5 weren't there 10 years ago. >> the big one is the airlines, of course. he wrote a lot about that last time and he sold his airline and i suspect he looks back now and thinks maybe i should have waited i also like the fact what he said in the beginning about apple. here's someone who in the beginning was very suspicious of tech stocks but he revisited to use adam graham's phrase he was willing to rethink. he thinks of apple as part of the crown jewels >> yeah. that's a good point. mohamed, we talked a little bit earlier about share buybacks because that was a big section in the report as well. we've seen politicians like

elizabeth warren, some other senators who have said they're not in favor of share buybacks elizabeth warren called it market manipulation when they buy back the shares. he's a big proponent of it he uses apple as an example of that why their stake in apple has gotten so much more valuable because apple was buying in shares he says berkshire shareholders have a bigger piece of the company's future profits because we've been buying back berkshire shares this is a situation where the berkshire investors have doubly benefitted from that what do you think. stock buy backs and the political sentiment in washington, too? >> i think stock buybacks are part of a well-functioning marketplace and ceos and boards have to decide where to put their liquidity in the interest of shareholders. the problem, there is a problem, becky, we've had highly distorted interest rates when you have highly distorted interest rates it leads to all

sorts of other behaviors that are less consistent with the well-functioning market system so the problem is not buyback, the problem is the great distortion in the interest rate side because of the over reliance on central banks. so the politicians are right in the sense of saying, look, there's something happening on buybacks that shouldn't be going on, that's too much financial engineering. the problem isn't the buybacks themselves, the problem is what leads to that distortion >> explain that. the politicians are going after the wrong bogey on this? what do you mean >> yeah. if you repress interest rates and take them to non-commercial levels, then you will find a lot of companies do what they have done, borrow funds and buy back shares that is actually good financial engineering given that interest rates are so distorted, but that in itself raises all sorts of questions that the politicians

jump on. is that the best use of liquidity? should the federal reserve be subsidizing shareholders doesn't that worsen wealth inequality suddenly you have a whole host of things to come. they are not to do with buybacks, they are to do with the unintended consequences of low interest rates we have a whole host of fed speakers they have to deal with what happened last week and tell us where do they want to take the fixed income market or whether they want to guide the fixed income market going forward. >> mohamed, the -- i mean, when you issue stock -- when you issue stock, a lot of times it dilutes the shares and they go down so is that market manipulation because you're issuing shares these are all things that corporate decision makers, these are decisions they have to make and they have to live by them. we saw with carp at eastman

kodak or ibm over the years, we saw what happened when you do it wrong. it's not regulator's jobs to try to dissuade people from doing stupid things. maybe it is, but, you know, these -- just because these guys bought stocks -- bought back stock at much higher levels doesn't mean that suddenly, you know, you have to get the government involved in prohibiting that type of activity people do stupid things and you can't help that. but i don't see how issuing stock or buying back stock or doing anything with your balance sheet, i don't see how any of that should be something that elizabeth warren should be raising an eyebrow to. what a company does for the type of corporate structure that it wants, that it thinks is advantageous might be wrong, but it thinks this is the way to run its business get out of the way >> yes, joe. i agree with two things you said now and before now is that we know of no better

system that raises funds and allocates funds efficiently than a well-functioning stock market. it performs a very important function in society. but at the same time as you pointed out with hertz, remember what you said a few minutes ago, that we had the strange situation where hertz declaring bankruptcy is looking to issue stock at a time when it tells its potentially held shareholders they may be worth nothing and they almost got away with it. there are episodes of distortions that happen. so we've got to manage through the distortions without -- without risking a system that is incredibly powerful in ensuring we continue to grow and innovate. >> mohamed, real quick though. we were talking about this earlier, joe, becky and i were, about the law close to 40 years ago, which is to say that the sec had issued what was then

safe harbor guidelines for share repurchases and it was a very limited safe harbor at the time. clearly that advice changed and ushered in this last 30 years of buybacks was that a mistake was that safe harbor language a mistake then and would it be a mistake to implement some version of it today? >> so, andrew, we've got to modernize the whole structure. we've had a massive change in the way the markets function in addition, we've had a massive migration of risk taking from banks to non-banks and the process hasn't kept up the regulatory process doesn't understand what's going on and that's part of the process i would tell you yes, but yes in the context of a broader review. we don't do this quickly, what is a very important strength

will become less so going forward. mohamed, want to thank you for your time. it's great to see you this morning. we'll talk soon. >> thank you, becky. >> thank you by the way, folks. this is the first time in 14 years we haven't had warren buffet live for three hours on this show after the annual letter came out. if you want to hear from him, you're going to have to wait until the berkshire hathaway annual meeting on may 1st. it's going to be for the first time ever in los angeles, not in omaha. there won't be any shareholders there, it's a virtual meeting. warren buffet and charlie monger will be there. i'll be participating as well. i'll be taking questions from shareholders if you have questions, if you are a shareholder submit the questions by sending an email to berkshirequestions @cnbc.com "squawk box" will be right back. investments, r key portfolio events, all in one place. because when it's decision time,

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welcome back to "squawk box. tesla was the worst performing last week. joining us for what's next, gene munster and warren johnson, founder and ceo of glj research. there was a huge rise.

there's the selloff. it's still done remarkably well. gene, how are you looking at this >> if there's a one-year plus perspective, yes, this is the time to buy. the addressable market is so massive. this is $4 plus trillion addressable market think about the smartphone market the hardware piece is $5 billion. i would caution trading tesla is a long-term endeavor this is evidence of how fast this can move. i would caution investors if you're thinking to trade this on a quick one, two, three-month, that may not turn out well >> before i get to gordon, you think a year out from now this stock is higher based on fundamentals >> i do, and i want to anchor

that, and the piece that is going to move shares higher year plus is in the back half of this year i think we're going to hear a lot more about fsd specifically it's in balt at that beta right now. right now it's a little bit of a fairy tale for investors when they hear about fsd and some hopes and promises if they can make good on that and actually show -- >> this is full self-driving what you're talking about. >> thank you, andrew, that's correct. if they can make good on even advancing the beta to a public beta, i think if they show substance around fsd, i want to just quick connect the links here between how a stock like tesla can keep going higher with fsd, that lays the groundwork to this large addressable market.

one thing i've learned, if there is a massive market, this is the year, the back half of the year for fsd. >> gordon, i imagine you're taking the other side of this trade? >> let's just look atthe facts right? i think it's clear that tesla has a demand problem we see tesla more as blackberry versus apple think of this, despite the growth falling 152% in 2018, 40% last year, they've already cut the price of their cars 14 times this year already through the first two months versus 18 last month. after that they shut down the production of model 3. if we move to the largest ev market, the markets fell from 30% to 10% their sales declined total in europe by 10%. the total european market in ev

was up over 100% and they saw significant decline in growth in january. their sales fell from over 20,000 in december to 15,000 in january. with the idea that tesla somehow has a knee over everybody else j.d. power ranked tesla 30 out of 32. "consumer reports" and what car? they ranked tesla second to the last you look at the edmunds report, they said every single tesla car they looked at had range below the stated epa estimate. if you're talking about a battery technology that doesn't meet up to what they're stating it is. then, again, taking a step back. every single year tesla has lost money excluding one-time credit sales that they're saying are going to go away then on full-self drive, every

analysis ranks them dead last. we think the reality versus the perception is off. they're at level 2 to get to level 5 is years off so to suggest they're going to be there by the end of this year is like gene said, fantasy >> guys, i would love to do the full battle royal and continue this debate. i know we will try that. we have a hard break and alex gorsky on the other side appreciate you both being with us very much thank you. >> absolutely. thank you. >> joe coming up, first doses of j&j's vaccine ship out today after the jab was approved for emergency use over the weekend ceo alex gorsky will join us at the top t nt ofheexhour to discuss the rollout. we're coming right back. target . strengthening client confidence in you. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information.

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u.s. equity futures at this hour are -- and andrew ross sorkin. >> you had to be watching an hour ago to get that >> exactly exactly. anyway, we don't -- >> i'm not going to live that down i know that. >> you knew that was coming. up 330 points on the dow this morning. the s&p up 40 or so and the nasdaq strong, up about 150 points the 10-year has gotten kind of quiet. maybe that's partially responsible, lower bond yields setting this up perhaps after what was a pretty tough week last week for the averages johnson & johnson and gone shipping doses of the coronavirus vaccine after the cdc director greenlit the shot, we do mean shot because it's just one meg tirrell joins us with a special guest. hey, meg >> reporter: hey, that was the

ceo alex gorsky. i was looking at our interview a year ago you designed this as a pandemic vaccine, one shot, fridge stable what do you hope and expect this vaccine will do in terms of having an impact on the pandemic >> meg, becky, joe, andrew, it's great to be with you today look, this is an incredibly proud day for johnson & johnson to think that, yeah, only 12 months ago these were literally numbers that came across in an email discussing the genomic sequencing of covid-19 and here we are a year later on the cusp of literally having 100 million doses delivered in the united states by the end of june, close to 1 billion around the world by the end of this year is a -- is just a remarkable achievement. while our doctors, our scientists, our engineers are incredibly proud and humble, i think it also gives a lot of

hope to our country and to our world to know that, look, that means 100 million more people as joe just outlined are actually vaccinated it requires minimal refrig refrigeration. we're doing it on a not for profit basis to make sure we can get as much availability as we can. the faster we can get everybody vaccinated, we lower the chance for the mutations and variations and hopefully brianne end to this pandemic. >> reporter: speaking of getting this out fast, the manufacturing here, we understand almost 4 million doses going out this week it will look a little lumpy over the next couple of weeks none going out next week but 20 million by the end of march. ramping up a manufacturing supply chain in a year is no simple fete either have there been bumps in the road are you confident now despite this kind of lumpiness in the beginning the bumps are ironed out. >> meg, as you mentioned, the science, the biology, chemistry is certainly challenging in

bringing a vaccine out, discovering it, developing it, the engineering fete of actually producing it is just as challenging. and we've been working very closely with partners around the world. we're in the process of delivering 4 million doses here in the united states as we speak. that will go to 20 million doses by the end of march and 100 million by the end of june we'll see it progressively increase whenever you do something like this, it's never a linear shot you're always going in i think that should reinforce our commitment to quality, following the right processes. we're very committed to hit the objectives i just mentioned. again, this is -- when we're talking -- the nice part about our vaccine is when we're talking doses, that's actually the numbers of patients that are ultimately going to get a shot in their arms. so we're absolutely committed

and we won't stop until we make it happen. >> how does j&j look at the situation of comparing these vaccines we're toldly dr. fauci and others, the important thing is this prevents hospitalizations and deaths you hear the conversations from folks saying 95% versus 72%, i want the 95% how does j&j look at that dynamic? >> look, all of these vaccines are incredibly effective if you would have asked i believe any of the companies would we achieve these kind of efficacy end points, i think it would have been on the top end of our expectations 12 months ago. what i really think is important to know about our vaccine is, number one, is that our clinical trial, as you know, started in september of 2020. if you look at the incidence rate of covid-19 in the united states and around the world, that's unfortunately when we started seeing the second wave the incidence rate went up at a

very high rate secondly, we conducted our gl clinical trial on a global basis. 40% were in latin america, 15% were in south africa what's important to know, of those patients in south africa, over 90% have the south african variant which of course, you know, prior to this point in time, in the summer of 2020 the incidence rate was much lower. the same with the p2 variant as dr. scott gottleib has talked about on this program, it's occurring in latin america, was also at a very high rate so our data actually includes these most challenging pernicious virulent strains. what we saw was 85% effectiveness rate in the severe disease and really importantly when you think what do you want from a vac sneen you don't want to go to the hospital. you certainly don't want to die. we've seen 100% efficacy in

those parameters again with a single shot. as you well know, all of you talk to analysts on this program each and every day there's a lot of different ways to try and do comparisons. when you really look at what's the objective here, keeping people out of the hospital, keeping people from dieing, we believe this is an incredibly important tool to be added to health care systems let alone for patients around the world. >> hey, alex, a couple of things the variants that are bound to happen that we see now and into the future, we're so agile at all of this molecular biology. is there an advantage to the messenger rna? >> well, joe, i think both of these platforms, as you well know from your background, the great news is the agility, the flexibility that we have to actually literally be developing

software to address these new and emerging variants. the other companies are already working on options for the variants again, we're quite confident based on the clinical data that we already have with our vaccine, we're going to see a very robust response we're simultaneously doing the same thing not knowing what exact path this virus will take longer term. >> all along people have wondered whether the messenger rna delivery system would get the same t cell response that we know adeno mediated vaccines get. i've had it pointed out to me there are people that are still alive, few from the spanish flu, they still have t cell immunity. so it's more longer lasting. is it better, the adeno? is there any data that shows the adeno vector is better at t cell immunity than messenger rna or

are they the same? >> we're encouraged by early data we have there doesn't always seem to be this exact correlation between antibodies and t cell and b cell particularly with some of the variants, so, look, this is an area that's going to need additional study before we understand it completely as we know, these are very complex systems. we think this combined approach with the adeno virus combined with the spike protein is clearly related to the very robust results we're seeing in the most challenging strains. >> hey, alex, we mentioned that this is different than pfizer and moderna's in that you only need one shot and not two. it's different because it doesn't need to be held at some of the same deep freeze revels and some of the things that make it more complicated than the other shots. we know this is good news for

places like rural communities where you don't have that, maybe for a doctor's office where you can give vaccinations versus some other places that they're held maybe for other countries that don't have the same resources rehave i know you're rolling this out in the same way as moderna and pfizer's vaccines are being rolled out is there any movement afoot about eventually targeting johnson & johnson for places where all of those different things maybe would be a benefit? >> becky, from the very beginning our scientists were focused on how could we best address the pandemic the parameters, we needed a safe vaccine, effective vaccine, convenient vaccine ideally with one dose, clearly one that would logistically require minimal refrigeration over what's normally expected with a vaccine. when we were selecting our first candidates, you know, we used the -- you might say the carpenter's approach

you're trying to measure ten times and cut once or twice. we did our very best to really maximize all of those different aspects. i think that's what's resulted in the kind of profile we see right now. absolutely, we're working with the u.s. government, partnering, collaborating with them. and certainly in the united states if you're talking rural areas, think of it outside the united states. think of it particularly in some of the developing parts of the world. we're working with the bill and melinda gates foundation, sepi, gavi, others, that kind of logistical challenge is almost insurm insurmountable the administrative challenge o having to monitor and track multiple doses we think today's news is certainly great for america but we think it's equally great news for countries around the world we also know really until we vaccinate as many people as we can around the world, we're not going to be going back to the kind of travel, to the kind of life that we knew before this pandemic >> right hey, alex.

curious what you think of this i recognize that the efficacy studies that you've done relative to moderna and pfizer may be apples to oranges in certain respects and getting this vaccine just into arms broadly is the ultimate goal to the extent though that there's anybody watching that's having any reluctance, ret at this sanction thinking maybe i want to get the pfizer or moderna, i hear the efficacy is better i've heard from doctors that say, get the johnson & johnson shot now they're working on a booster or potentially even that you might boost it with a moderna or pfizer vaccine later depending on the results of these tests. what do you say to that? >> what i would say, andrew, get the first shot you can get consistent with what dr. fauci said, peter marks of the fda, other experts in this field. all of these vaccines are incredibly safe and very, very

effective. what's most important right now at this particular point in the virus, to stop these other mutations, every time this virus replicates itself, it's going to likely change to a certain degree and so the faster that we can get people vaccinated, and by the way, the effectiveness results on all of these is very, very high. and we know that that can reduce these additional variations. i think it's great news. look, i couldn't be more proud of the biopharmaceutical industry what a golden moment where they've invested billions to be here where we're now in a position to joe's earlier comment where we can simultaneously be working on additional formulations that we know could actually increase potentially what we're currently seeing again, i would say get your first shot these are all very effective know that the industry, certainly us at johnson &

johnson, we're committed to being prepared for the future as well longer term, andrew, i'm also excited about the potential application for these in areas such as cancer, areas such as alzheimer's disease. we're learning so much about the platforms. as somebody that's been in the industry for more than 30 years, if i see the partnering, clinical development, potential of some of these new approaches, i couldn't be more excited >> alex, we're just about out of time with you. i'm goings to bundle two questions. you showed some tantalizing data showing it may reduce asymptomatic infection, maybe cut down on transmission when do you expect to have more definitive data on that and also, when are you going to get your shot? >> of course, that's the holy grail. if we can show that our vaccine actually stop transmission, you know, for asymptomatic patients, that will really demonstrate

that, you know, we can put a major dent in this pandemic going forward. our early data is quite encouraging but we've got to gather more. we would expect to gather that literally in the coming months as we continue to follow the patients in the trial. i'm going to get my vaccine as soon as i possibly can i'm going to wait for the j&j vaccine. as soon as i'm authorized based upon the parameters established by the cdc and government, i'll be first in line i hope everybody in our country follows and, again, the more people that we can get vaccinated around the world, the better we're all going to be. >> alex, we really appreciate you being with us this morning thanks so much >> thank you very much have a great day >> you, too. becky, back over to you. >> that is great news. thanks, meg. great news great news where you see johnson & johnson shares up. it's a dow component helping the dow and it's great news we'll get more vaccines out there quicker. right now let's get over to

david faber. he has breaking news. >> good morning, becky a company we follow fairly closely, exxon mobil adding two important directors this morning. they will be adding jeff ubben and mike angelakis mr. ubben a long-time so-called activist investor. he has moved on to an esg fund he will become a significant investor, over time, i'm told in exxon mobil as part of his taking a directorship here and michael angelakis. long-time cfo of comcast the company he managed through a certain type of transition as well transition is one of the key things at exxon mobil is going through.

it will continue to develop oil and oil fields around the world, but it is also embracing and will be more so, one would expect with the addition of them to the board of directors, in transition to a carbon free or carbon neutral future and helping in the technology to try to do that the company having made announcements even recently about carbon capture and things of that nature one is imagining with ubben on the board and pushing in that direction and understanding the underlying fundamentals and delivering profits coupled with angelakis and a keen eye for capital allocation, it will be viewed positively. and it has been responding positively for some time this after activists started to get involved, not in the form of mr. ubben but d.e. shaw took a

sizeable position in the company. has been in conversations with it for quite some time and as you might imagine is supportive of both of these gentlemen being added to its board of directors. you also have engine one with calsters out there they have four directors they've nominated to the board my understanding is d.e. shaw having added or been part of at least the conversation that has added these two gentlemen to the board will be supportive of the slate of directors that management is supportive of at the annual meeting worth mentioning over the last six years, exxon mobil's board, 2/3, has changed over a significant remake over time of the company by darren woods somebody you know a bit well having followed the company in the past something we're going to follow very closely, i think, here. it is no longer the largest company in the country but it certainly remains one of its most important >> wow big news, david. watching this angelakis.

there's a name we all know very well you're right, i think looking at what this company is doing and where it's gone, i was glad to point it out its stock up better than 4%. that comes after it was already up more than 30% watching the gains we've seen recently. the company continues to lay out its plans for how it's going to be changing. they do have their meeting with shareholders coming up their meeting with the street coming up with investors this morning. we'll hear more about what their plans are for how they're going to roll things out i think we've heard a lot over the last couple of months. this is big news the stock up 4% today on what you're reporting, david. >> yeah. there had been some discussion of mr. ubben joining the board some had expected that would not be the case. angelakis, something of a surprise. >> that's a surprise. >> his focus on financial discipline we'll have more on "squawk on the street." thank you for giving me time to break it on your show as well, becky. >> we certainly appreciate you breaking it here, too.

the stock up by 3.5% we'll be watching later, david thanks a lot good to see you. okay coming up on the other side of this break, former fda commissioner dr. scott gottleib will give us his take on the johnson & johnson getting the green light. mario gabelli will weigh in. stay tuned, you're watching "squawk" on cnbc ♪ ♪ ♪ ♪ ♪

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breaking news from david faber talking about jeffrey ubben and michael an kb elakis i confirmed with the company i've just checked with them and also want to let you know darren woods will be joining us the ceo of exxon mobil will be joining us on thursday morning on wednesday is when he meets with investors the annual meeting with investors that they always do. thursday morning he will be live right here on "squawk box. andrew >> great thanks, becky. that's a great conversation. looking forward to that. meantime, coming up, instant reaction to johnson & johnson. scott gottleib will join us. what do the three approved

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this is an incredibly proud day for johnson & johnson. to think that, yeah, only 12 months ago these were literally numbers that came across in the

email discussing the gee no, ma'am mick sequencing and we are on the cusp of having 100 million doses delivered by the end of june, close to 1 billion around the world by the end of the year is just a remarkable achievement. >> that was johnson & johnson chairman and ceo alex gorsky with us talking about the just approved covid-19 vaccine. joining us former fda commissioner dr. scott gottleib. he sits on the boards of pfizer and illumina good to see you. summarizing it this is sort of my view of the way things are you can disagree maybe, but this is great 70%. 75%. keeps you out of the hospital. keeps you from dying so i don't think you worry necessarily about the difference in the efficacy numbers also, it's one dose. it's stable because it's dna

this is great news i want to ask you whether there might be advantages -- do we know with the adeno towards better immunity in terms of t cells? do we know that the messenger rnas now match up dollar for dollar, if you will, with the adeno-based vaccines >> yeah, this is great news. and alex and his team should be very proud i remember the phone call that we got when pfizer was announced the results and how proud people felt in that phone call. it was an emotional call, learning how effective that vaccine was. i think that there is emerging evidence that the mrna vaccines illicit t cell response. it seems to be eliciting strong t cell response.

they did a good job trying to ascertain the t cell response and in patients. we believe now the mrna vaccines are eliciting a t cell response that could be quite strong you're getting a full complement from the mrna vaccines as well, based on the evidence we have. none are answered definitively we'll need more data you're dealing with an environment where we have three effective vaccines and patients should take the vaccine that's offered to them. >> definitely. the state of the art as far as science goes, they could modify their vaccine quickly as well even though it's a different technique. does messenger rna have an advantage in how quickly you can change the software? just to call it that >> yeah, they're both synthetically derived vaccines i think the process for modifying the mrna vaccines is a

little bit more straightforward, a little bit faster. they're using double stranded vaccine in the viral vector that gets translated into mrna once it's injected. they have the ability to modify that fairly efficiently as new variants come out. >> i know we don't have the data what do you think the probability is that once you're vaccinated and you've had the immunity, that you're no longer even if you're asymptomatic, that you are no longer able to trangs mitt the virus? don't you think seeing previous demonstrations of this over the years with vaccines, don't you think we can be fairly confident that you will not be a person that transmits the virus once you get one of these vaccines and have immunity? what is the probability? 80%?

we're still afraid to say it >> personally, i think it's 100% i think there's a reduction of transmission the question is what's the magnitude. we don't have the definitive study to prove that. the accumulating is there's a reduction in transmission. the data j&j developed suggest a strong reduction in transmission i think most people agree there is a reduction in transmission the question is the magnitude. the growing consensus is the magnitude can be quite strong. we're going to answer this more definitively within the next month or two they did serial screening and they tested them whether they had symptoms or didn't they showed a 7 4% reduction in symptoms which shows there is a reduction in transmission.

i think we can reasonably say, yes, there is a reduction in transmission the question is, what's the magnitude. >> is it easier to manufacture the adeno? obviously there's advantages in transport, logistically and storage and everything else. can you make it quicker, the j&j? >> they can make it at high yields so, you know, with a reasonably sized bioreactor they can churn out a tremendous amount of vaccine. the rate is the fill finishing, getting it into viles. there is a global shortage of fill finishing certainly in the country but around the world very efficient to manufacture. >> damn, this is all good. this is all good i haven't heard anything -- right? this is all good >> we're going to have

tremendous supply coming into the market there's a possibility we'll have 15 million doses in the market this week. they're going to ship 4 million doses. it could be upwards of 20 million doses. pfizer will go from 5 to 10 million doses in a week. i'm not sure if it's this week or next week they'll convert and dramatically increase the spry. once we're at 20 million doses in the market, that's the ability to vaccinate 12 million new people a week. we're easily going to hit the benchmark we talked about, which is being able to vaccinate 100 million people by the end of march. once you're up at those numbers, you've addressed a lot of the easing of demand the vaccine becomes generally available. by april everyone will be able to go o online and get an appointment regardless of their age or pre-existing condition or any other factor >> yes i hope that's the case, dr. gottleib you've been telling us that and i'm a big believer i did see overnight that mexico's president plans to ask

president biden to share in some of the united states vaccines and that seems like it would be a politically pretty tough thing to do right now at this point. biden said he'd do that. his first priority is making sure americans get vaccinated too. that's a political football for now. if the scenario you're talking about for april is a different scene, what do you think happens until we get to that point >> yeah. it's hard to know what's going to happen in the next four weeks. we've talked about this on this show i thought we should give some of our excess supply to mexico. we're going to have a lot of excess supply if everything goes well by the summer, maybe by july i think as that supply starts to build, there's an opportunity to start giving some of it away in tranches certainly by the end of the summer i think we'll have expexcess supply we'll want to hold on to some of that to give people boosters i think the first country that we ought to try to support is

mexico, for a whole host of reasons. the partnership that we have, its proximity to our border and the fact that if mexico has continued spread, that will create continued risk for the united states as well. there's a lot of migration across that bierder to mexico, from mexico. we need to take care they take care of their public health problems >> all right, doctor i know we have to run. do you foresee the day where you get mixing and matching of these? i wouldn't mind an adeno and a messenger just to cover all my bases. >> virologists are talking about that, you know, getting a viral vector vaccine and following that up with mrna. i'm not going to advocate that it's off label there are people talking about that on twitter. >> unbelievable. yeah, i think i'm going to do that when we have a lot of supply, it's amazing dr. gottleib, thanks thank you for coming on.

>> thanks a lot. >> for following alex gorsky all right. beck >> when we come back, legendary investor mario gabelli will join us live. we'll get the latest information on his thoughts on warren buffet's letter over the weekend. stay tuned, "squawk box" will be right back ♪ ♪ ♪ ♪ ♪ ♪ ♪ ooh la la by cherie ♪

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warren buffet out with his berkshire shareholder letter he admitted that he paid too much for presis cast parts and said bonds are not the place to be these days. joining us right now is long-time berkshire shareholder, mario gabelli. mario, you are a long-time berkshire watcher, too somebody who's been out to the annual meeting time after time what did you think of the annual letter this year >> it was very carefully worded even though he made some significant points so that if you read through it but, becky, let me give you some numbers 1 point 500 billion shares if you take the balance sheet, you've got $280 million of marketable securities of which american express -- let's start with apple, american express, bank of america and coke equals

almost 200 billion of that when i have a $500 billion company, i strike out the cash, take out the marketable securities and then i look at the operating earnings now the nuggets that he said, becky, one, what you've described before about debt. this is not a place to be. he goes back 40 yearsago when the 10-year govey was 15% plus or minus they had a question mark after that number on his annual as to whether it was that day in '81 so the bond market coming down like that has given a huge tailwind to multiples. he looks at quality of the company and most with businesses and by and large does quite well but he says also price that's part a. part b is the amount of money they're putting in to harden the grid the amount of money they're putting in over the next 10 years in terms of territory at the west and how he knocks those that want it today

he says it's going to take 10 years to if i can out just what he's doing in terms of bhe that's the energy company that they own about 91% of. so that's a very interesting back doorway then he talks about robinhood indirectly talking about, you know, how people are buying stocks and he points out to them it's your taste. you're a speculator. you're an investor, that's up to you. over the long term you'll do okay under the system of america in terms of capitalism but he points out that what the investor has losses are someone's gains. for example, he's probably saying if you pay for order flow, somebody's paying you $2.5 billion, how much are they making nobody's asking, in quotes, those entities paying for order flow the third part, you know, you go back to corporate governance, becky. why is the corporation in existence? who should they work for is it the greater society?

he puts a couple of comments on it those are some of the dots >> okay. that's great, mario. i want to run through some of those things first of all, what you said about the valuation of the company is very interesting because i wondered why more people haven't talked about that $500 billion market cap. $281 billion in marketable securities, things like apple, american express, coca-cola, all of those that they own, bank of america. you take that. take out the cash they have on hand do you think it's under valued >> assuming they didn't take any dumb pills, i'm going to assume they didn't and buying back stock and i'll give you the number, like $335,000 in the q4, what do they think the values are? so you multiply the value of clayton holmes, you put that in the public markets what would that be worth the book value, that's one thing, and i gave you the book value of the company is 287,000 at the end of 2020

287. >> right >> so he's buying it higher. why? and the value of the funds, the 280 billion is market under new accounting except for khc which is basically equity accounting so he's got to figure out what does he think precision cast part will earn in two years when boeing comes back? what does he think the railroad will earn? what does he think the others will earn? what's the value of the insurance business that's how he comes up with that intrinsic value. he probably puts a number in his pocket and says, i'd love to buy something but the prices are too high >> okay. but you just did a back-end way of bringing up a question that people from time to time will ask, and that is, you know, he talks about conglomerates and why they're not very good in this letter. berkshire hathaway is a conglomerate they operate differently they'll buy companies in pieces and that allows them to be much

more flexible and have a bigger pool if they're not getting the same valuation for clayton as they would on the open markets, is it worth having all of the companies in the conglomerate? >> well, basically the nature of what he looks at is cash flow, quality of the cash flow and evaluation on that multiple karn flow so in terms of my reading of it, not his, he doesn't talk about the congrlomerates except for pointing out investment bankers love pushing the illusions, they last for a long time he goes back to the '60s the conglomerates were looking at things to try to put together a cycle position for wall street but he uses that analogy, becky, to talk about today as to how companies are put together, how companies are put together for wall street, not necessarily for operating cash flow. there's a lot of detail. for example, in klayton he talks

about howell they did in the annual, but if you go into details, they only sold 2.5% more manufactured housing. when you blend them together under his leader, how does he look at that i would think in quotes the conglomerate discount has value. a lot of companies that i follow sell at a discount from what i think the takeover price would be so if you want to take over berk berkshire, you're going to pay a much higher price. not going to do it because it's unlikely then what is the benefit of splitting it up. when you split it up you have $280 million of which 130 million relates to the float that he's got in the insurance company. so there's a lot of moving parts. i just don't see him coming to that conclusion and i think the -- >> no, i don't either. i don't either the class a shares prevent it with the voting structure anyway i'm asking if you see it. >> no, i don't see it at all i think stay the course.

it works when i started buying the stocks, i only bought it for my asset class. i do it as a methodology we have a $6,000 cost. why do i want to split it up if i'm going to monetize it and it doesn't pay a dividend however, observers of our mutual fund would say because we hold things that long, they say we're not an active manager because we don't have high turnover you know, you can't -- you can't please everyone all the time >> yeah. that was his point in the letter, too. you want the investors you want. >> he talks about his investors in those buckets he puts them in five categories. that's the first time he's done that, and he doesn't talk about cash dividends not going to do it the other thing he doesn't talk about is taxes normally he would talk about how

taxes would work and the environment that we're going into on a corporate basis, what happens at the book tax, unrealized gains goes up, how much is that going to impact it. for example, he marked the -- he increased the book value of his company when they lowered corporate tax rates. those are a lot of details you don't want to over analyze one company. step back. $120 billion in one stock. 1/4 of a company is in apple so when they say he'skind of looking at things like that, he's got a bar bell. operating companies are going to do quite well in the next two years, extraordinarily well except for question mark over insurance. there's an accounting rule, i don't want to get into that. cam new rules auditors have to identify companies, what's important. they look down and drill into the question of the liabilities in the insurance companies you know, how does england dealing with the covid-19 and the insurance companies? how are we doing it in the u.s.?

what's going to change it's a fun annual report to read >> yeah. and it's fun having you on to talk about it. mario, great to see you. thanks for your time >> thank you for having me i talk too much. i'll do it in sound bites. >> no, no, no, we'll get you back sign. thanks, mario. >> investor dan laurel making news coming from his twitter account. leslie picker confirms it is his account. he coals this a deep dive. this is a deep dive into someone who's really been i guess conflicted about bitcoin listen to this he says that i've been doing a deep dive into crypto lately it's a real test of being intellectually open to new and controversial ideas. culturally i compare bridging the crypto world with the old as akin to finding a portal between two distinct worlds in the

multi-verse. okay then also maintaining healthy skepticism while also deepening one's understanding requires one to engage in what steve jobs, and of course fitzgerald before him, described as requisite for superior intellect to maintain two opposed ideas in one's mind and retain the ability to function goes on to say, then another conflict to overcome is the idea that being late to the crypto party will inevitably lead to one taking the sucker seat at a high stakes poker table versus still being early days and what is now being adopted in the mainstream so it just sounds like i feel kind of bad because it just sounds like some -- maybe better late than never but, you know, after you watch it go from $8 to $48,000 and maybe resist the entire way to finally at 48,000 say i need to look closer at this, better late than never, but he seems very conflicted that got very -- i don't know,

keep it simple and that got -- i don't know whether it really is like a portal between the multi-versus or not, andrew he's thinking about it he's conflicted. >> i'm with dan. you do have to hold two ideas in your head or maybe not. i'm wit hold two ideas in your head, and maybe not, and true bulls don't hold two ideas in their head and two bears don't hold two ideas in their head either so we'll see. meantime, we'll come back after this and in fact, i think we will have jim cramer's first take on what's about to happen. >> that's right. also, a programming note for you, don't miss a special interview on thursday, that's coming up with exxonmobil ceo darren woods, we told you earlier this hour, david faber reported, that the company has board members joining, and "squawk box" will be right back.

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let's get to cnbc headquarters and jim cramer joins us now and the market is up today and how much do you think is j&j out their new vaccine and how much is other things going on. >> europe is up too. i think that is encouraging. and the last five minutes of friday was major rebalancing, and i think that people are going to start predicting which month the pandemic ends, and when you get that, then you start understanding why you can

see the cruise ships going up today, and the airlines going up, because if we can actually not make it a parler game and figure out the raw numbers of what can be put out and j&j is putting out some very aggressive numbers each month, then i really think we will be saying, all right, what works best, when things are wide open and the american people have so much money, who have jobs, the ones who don't have jobs obviously, jay powell is trying to do his best, congress doing its best but wow, i really think that the enthusiasm that alex had, alex is a very understanding guy, and he was very, very positive which i thought was great. >> i thought so, too i know last night, at one point you were tweeting that you kind of hoped we opened down rather than up, to settle things out. what was the thesis behind that? >> i think when you open up this big, we have people coming in early, they come in early and europe closes, and europe's goods, and we bring out some sellers, and i just don't want

people to get picked off so to speak, because you got really good prices friday and these prices aren't as good and i always like to warn people that look, when you come in, and it's this high, after people bought on friday, those people on friday, a lot of them are traders and they're going to scout, so let them scout, let them come in a little, and if you want to buy, go ahead and there was something that i was talking about with todd our executive producer, the idea that we have buy news, remember we used to buy rumor and sell news and now we buy news, and everybody knew that j&j was going to get it and now we're excited. david, great scoop about exxon and we were like, did anybody not know that j&j was going to get approval well, no, they knew but they like it anyway >> i know. you're right it is new, maybe new retail investor out there but jim, thank you >> we will hear more about it. >> great show. >> see you in a few minutes. thanks >> andrew? >> thanks, becky meantime, today is jane

frazier's with citigroup and a new analyst moment, with raising the price target and now joining us, joining the price target from $74 to $82 this morning, on the back of some reports about a potential restructuring at citi. mike, what's the thesis? >> well, it looks like the new ceo, the seventh ceo of citigroup jane fraser is hitting the ground running according to the new "the wall street journal" article, there is a big restructuring on the way, so it looks like she has been working hard behind the scenes and with the big restructures, that would be a major reversal, the last four years, citi repeatedly said our restructuring is done, which i personally thought was ludicrous, no company with worst in class return, efficiency, and stock price performance should say the restructuring is done. so now, it looks like we're actually going to get one. and i go to the annual meetings and stand up and say why don't

you sell some international consumer, why don't you sell mexico, why don't you sell some other things, why don't you take charge and now it looks like we are finally going to get that so it looks like restructuring 7.0, as the seventh ceo of citigroup takes over starting today. >> so what do you anticipate will be in that restructuring? what do you want to see? >> well, i would say first of all, you know, theory meets reality. we estimate the sum of the parts at citigroup are worth 80% more than the current market value so just selling off some assets can unleash track capital and hidden value so that by itself could be good but i personally would like to see them sell off all international consumer, i would like to see them focus more on their payments businesses, which are 37% of revenues, and typically, higher valuation, and the third thing would be take a big charge to retire all the old clunky computer systems. now, i won't get everything that i want, but "the wall street

journal" reports that they should be selling off a lot of asia consumer which is one-tenth of the company, and should get a higher valuation than where citigroup trades today but the point is, after denial, denial, denial, about the need to restructure, day one, jane fraser, boom, here you are, you're going to get, it and i would expect you to get that over the next, you know, several months it looks like she's not wasting to much time >> i read that report, too do you think there is going to be a one-day announcement where you're going to hear a plethora of things happen or do you think it will this be quote-unquote restructuring that happens in dribs and drabs? >> you know, enough dribs and drabs out of citigroup, andrew, you know, citigroup, you know i know citigroup, i mean i've been covering it for a quarter of a century, it's the biggest fall of major banks, in modern u.s. history. there's no more dribs and drabs, no more time for that, we're looking for a big bang so we expect and hope that jane

fraser as the new ceo will lean into this and push hard, and if in doubt, we structure, restructure, restructure, restructure because that's what citigroup needs and get the job done and execute and hold everybody accountable which they've not done over any extended time period >> mike, we appreciate it. great to see you as always thanks so very, very much. >> thank you. >> we'll look for that restructuring and see what happens over the next couple of months meantime, let's take a quick final check of the markets right now and show you where the dow stand, we're about a half hour before the open and it looks like we're up about 372 points, on maybe on the back of j&j numbers and s&p 500 up about 40, 45 points. and i want to thank both becky, becky, and joe, for being here, and what a show it was so there we have it. good to see everybody. >> it was fun. >> see everybody tomorrow. >> i will see becky and joe tomorrow make sure you join us tomorrow. >> big half time report.

big half time report today big. big half time report. >> are you on? >> big big. >> okay. >> joe, on the half time report. >> we got to go. >> tens of dozens of fans. >> all right good monday morning, welcome to "squawk on the street." i'm carl quintanilla, with jim cramer and david faber march coming in like a lion, the dow futures up nearly 400678 the vaccine optimism as j&j gets fda approval, begins shipping, bonds stabilize, the house passes stimulus, and a lot more retail earnings are heading our way our road map though begins with these easing rate fears, as stocks are poised for gains at the open plus, exxon continues to shake up the board of directors, activist investor jeff, and comcast ceo mike angelakis added he