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CNBC Excerpts: Billionaire Investor Warren Buffett on CNBC's "Squawk Box"

WHEN: Monday, May 2nd 6am-9am ET

WHERE: CNBC's "Squawk Box"

Following are excerpts from the unofficial transcript of CNBC's Becky Quick interview with billionaire investor Warren Buffett Monday, May 2nd on CNBC's "Squawk Box" (M-F, 6AM-9AM ET) live from Omaha. Video excerpts of the interview are available on www.CNBC.com.

For more coverage go to: www.buffettwatch.cnbc.com.

All references must be sourced to CNBC.

Buffett on the Railroad Business

EVERY RAILROAD IS DOWN ON EMPLOYMENT AND SINCE WE'RE THE LARGEST IN TERMS OF REVENUE, WE WERE PROBABLY WERE UP AT 48,000, AND WE'RE PROBABLY SOMEWHERE AROUND 43,000 NOW. BUT, MOST OF OUR BUSINESSES WOULD BE EXPANDING IN NUMBERS. TO A MODEST DEGREE. BUT A TOWN LIKE OMAHA HAS 3% UNEMPLOYMENT. I MEAN, WE ARE, THIS TOWN IS FEELING AS PROSPEROUS, GENERALLY, AS IT FELT DURING ANY PERIOD IN RECENT YEARS.

Buffett on the Business Being Slow

WE'RE NOT LIVING IN A WORLD, THOUGH, WHERE I THINK YOU EXPECT THE U.S. ECONOMY TO GROW AT .5%... I THINK THE GDP FIGURES ARE INHERENTLY A LITTLE MORE SUSPECT IN TERMS OF BEING PRECISE THAN, THAN YEAR-OVER-YEAR FIGURES. BUT THAT DOESN'T, THAT DOESN'T NEGATE THE FACT THAT THE BUSINESSES, THE BUSINESS IS SLOW.

Buffett on Oil

WE'RE AN OIL IMPORTER. AND IF THE PRICE OF OIL IS LESS, IT'S BENEFICIAL TO US, BUT IT HURTS ALL KINDS OF INDUSTRY, LOTS OF PEOPLE AND LOTS OF SPECIFIC GEOGRAPHIES. BUT IF THE PRICE OF BANANAS DROPS, THE PRICE OF COFFEE DROPS, IT'S NET GOOD FOR THE UNITED STATES, ALTHOUGH IT HAS PLENTY OF POCKETS OF PLACES WHERE IT HURTS PEOPLE WHO ARE IN THOSE BUSINESSESES.

Buffett on AMEX

I DO, BUT THERE'S NO QUESTION THAT THE WHOLE AREA OF PAYMENTS IS SUBJECT TO ATTACK BY ALL KINDS OF PEOPLE. AND THEY'RE VERY SMART PEOPLE. THEY'RE HIGH-TECH PEOPLE. AND THEY'RE, THEY'RE TRYING TO FIGURE OUT FASTER, CHEAPER, BETTER WAYS OF HANDLING PAYMENTS. AND AMERICAN EXPRESS, WITH THAT BEING THEIR BUSINESS, IS NOT ONLY UNDER ATTACK NOW BUT WILL BE UNDER ATTACK AS FAR AS THE EYE CAN SEE, BUT THEY HAVE A VERY STRONG FRANCHISE, TOO.

Buffett on Buybacks

IT IS TRUE THAT HUNDREDS OF COMPANIES, MAYBE THOUSANDS OF COMPANIES ANNOUNCE BUYBACK PLANS EVERY YEAR. AND IF THEY WERE GOING TO BUY THE XYZ COMPANY, THEY'D SAY I'LL BUY IT AT $40 PER SHARE, BUT I WON'T PAY 50. THEY HAVE IN MIND A LIMIT AS TO WHAT THEY'LL PAY FOR ANY BUSINESS EXCEPT THEIR OWN. AND IT'S BECOME FASHIONABLE TO REPURCHASE SHARES. BASE THEY REALLY LIKE THE IDEA THAT THEY THINK WALL STREET WILL LIKE IT.

Buffett on AMEX-Costco

I CONCUR ENTIRELY WITH THEM WALKING AWAY. YOU HAVE TO BE ABLE TO WALK AWAY FROM AN ACQUISITION. YOU HAVE TO BE ABLE TO WALK AWAY FROM A BUSINESS DEAL. IT MAY BE VERY TOUGH SOMETIMES, BUT IF YOU AREN'T WILLING TO WALK AWAY, YOU'RE GOING TO GET PUSHED AROUND PRETTY DRAMATICALLY. AND COSTCO WAS A VERY, VERY, VERY, VERY VALUABLE CO-BRAND TO HAVE FOR AMERICAN EXPRESS, BUT THAT VALUE WASN'T LIMITLESS.

Buffett on the Election

IF YOU ASK ME WHETHER ELECTING THE WRONG PRESIDENT CAN PERMANENTLY DAMAGE THE U.S. ECONOMY, THE ANSWER IS NO. I MEAN, WE'VE HAD 44 PRESIDENTS SO FAR AND THEY HAVEN'T ALL BEEN GEMS. BUT THIS COUNTRY WILL MOVE FORWARD REGARDLESS. AND THERE'S NO NEED TO MAKE AMERICA GREAT AGAIN. AMERICA IS GREATER THAN IT'S EVER BEEN AT THIS POINT. BUT IT'S GOING TO BECOME EVER GREATER.

Buffett on Valeant's Michael Pearson

PEARSON, YOU KNOW – I HAVE NO DIRECT KNOWLEDGE, BUT I'VE NEVER MET HIM – BUT HE CERTAINLY SEEMED LIKE THE SORT OF PERSON WHO FORGED ALL IMPORTANT POLICIES OF THE COMPANY. AND IT WAS AN IMPORTANT POLICY TO JACK UP PRICES DRAMATICALLY – I MEAN, UNBELIEVABLY, ALMOST – FOR CERTAIN DRUGS THAT PEOPLE REALLY HAD NO SUBSTITUTE FOR.

Buffett on Active Investing

ACTIVE INVESTING AS A WHOLE IS CERTAIN TO LEAD TO WORSE THAN AVERAGE RESULTS. BECAUSE IF YOU DIVIDE THE UNIVERSE OF INVESTORS, MAKE IT VERY SIMPLE, AND HAVE HALF OF THEM NEVER MAKE A CHANGE IN THEIR HOLDINGS, THEY OWN HALF OF ALL AMERICA AND THEY JUST SIT THERE FOREVER. WHAT IS THEIR RESULT GOING TO BE? IT'S GOING TO BE AVERAGE, RIGHT? IT CAN'T BE ANYTHING ELSE IF THEY OWN HALF OF EVERYTHING. NOW, IF THAT HALF IS AVERAGE AND DO NOTHING AND THEN YOU HAVE ANOTHER HALF THAT IS VERY ACTIVE, THEIR GROSS RESULTS ALSO HAVE TO BE AVERAGE SINCE THE OTHER HALF IS AVERAGE, AND THEN WHAT THEY GET IS WAY LESS BECAUSE THEY PAY THESE HUGE FEES.

Buffett on Professional Investors

IN EVERY ALMOST EVERY FIELD, THE PROFESSIONAL BRINGS SOMETHING TO THE PARTY. THE PROFESSIONALS, AS A GROUP IN INVESTMENTS, BRING IN NEGATIVE RESULTS TO THEIR CLIENTELE. AND THAT'S A VERY INTERESTING PHENOMENOM TO LIVE WITH, IF YOU SPEND YOUR LIFE DOING SOMETHING WHERE YOUR EXPECTANCY IS TO HURT YOUR CUSTOMER. AND YET THAT IS THE CASE FOR PROFESSIONAL INVESTORS.

Buffett on Jeff Bezos

THERE ARE CERTAIN PEOPLE THAT YOU DON'T WANT TO TRY TO BEAT AT THEIR OWN GAME AND CERTAINLY JEFF BEZOS WOULD BE NUMBER ONE. I MEAN, THAT WOULD BE LIKE ME PLAYING CHESS WITH BOBBY FISCHER, YOU KNOW, FORTY YEARS AGO. IT WOULD BE ALL OVER ON THE FIRST MOVE. JEFF, YOU KNOW, HE'S JUST SHOWN AMAZING TALENT IN FIGURING OUT HOW TO PLEASE CUSTOMERS, AND IN A VERY SHORT TIME.

Buffett on the Halliburton Deal

IT SOUNDED INITIALLY LIKE, YOU KNOW, THAT THEY WERE PUTTING TOGETHER TWO COMPANIES THAT WERE EITHER ACTUAL OR POTENTIAL COMPETITORS IN MANY WAYS. AND THAT'S THE JOB OF THE JUSTICE DEPARTMENT. I MEAN, YOU KNOW, WE HAVE A SHERMAN ACT ON THE BOOKS, AND THE CLAYTON ACT – THEY ARE TO LOOK FOR WHEN THINGS ARE ANTI-COMPETITIVE. AND MY GUESS IS THAT CERTAIN COMPETITORS OF THOSE TWO COMPANIES OBJECTED STRENUOUSLY.

Buffett on Coca-Cola

YOU PAY A 35% TAX AT THE CORPORATE LEVEL, FAR HIGHER THAN AT THE INDIVIDUAL LEVEL. SO IF WE WERE TO SELL OUR COCA-COLA FOR EXAMPLE, IT'S ALMOST ALL PROFIT, SO WE WOULD HAVE ROUGHLY 65-CENT DOLLARS TO BUY ANYTHING ELSE, AND THAT MEANS THE CASE FOR SWITCHING HAS TO BE MORE COMPELLING. WE STILL DO IT. I MEAN, WE SELL STOCKS WITH VERY SUBSTANTIAL CAPITAL GAINS TAXES INVOLVED. BUT IT'S OBVIOUSLY A FACTOR.

Buffett on Not Selling

THERE ARE NOT THINGS THAT I WOULD NEVER SELL, NO. WE WOULD NOT SELL BUSINESSES EXCEPT FOR THE REASONS THAT WE LAY OUT IN OUR ECONOMIC PRINCIPLES. BUT WE WANT ANYBODY THAT BUYS BERKSHIRE TO UNDERSTAND HOW WE THINK, SO WE HAVE A SECTION IN THE BACK WHICH I'VE RUN FOR DECADES CALLED THE ECONOMIC PRINCIPLES OF BERKSHIRE HATHAWAY. AND IT SAYS WE WILL NOT SELL CONTROLLED BUSINESSES UNLESS THEY EITHER HAVE MAJOR LABOR PROBLEMS OR THEY PROMISE TO EAT UP CASH.

Buffett on Currencies

WE HAVE EXPOSURE TO CURRENCY, WE DO BUSINESS SO MUCH ALL OVER THE WORLD THAT I DON'T REALLY KNOW WHETHER IT'S GOOD OR BAD FOR US WHEN A CURRENCY MOVES BECAUSE WE HAVE LOST RESERVES FOR INSURANCE THAT ARE PAYABLE AND EUROS AND POUNDS AND YEN. AND WE HAVE SOME FOREIGN CURRENCY INVESTMENTS AND THEN WE OWN STOCK IN COMPANIES LIKE IBM OR COKE THAT DO A LOT OF BUSINESS ABROAD. SO I'VE SORT OF GIVEN UP IN TRYING TO FIGURE OUT WHEN YOU TELL ME WHAT CURRENCIES HAVE DONE WHETHER I'M RICHER OR POORER.

Buffett on Low Rates

VERY, VERY FEW PEOPLE WOULD HAVE DREAMT IN 2009 THAT WE WOULD HAVE THIS DURATION OF LOW RATES AND HAVE PEOPLE STILL EXPECTING LOW RATES AFTER THE SEVEN YEARS OR SO WERE UP. NO, IT'S A DIFFERENT WORLD. AND IT'S CERTAINLY A DIFFERENT WORLD WHEN YOU HAVE A LOT OF MONEY IN EUROS, AS WE DO, AND YOU'RE BETTER OFF PUTTING IT UNDER YOUR MATTRESS THAN IN A BANK.

Buffett on a Bank Run

BUFFETT: THERE COULD BE A POINT WHERE YOU'D REALLY WANT TO START WITHDRAWING CURRENCY. THAT WOULD BE AN INTERESTING POINT, IF CURRENCY IN A BANK IS WORTH LESS THAN CURRENCY IN YOUR HANDS OR IN A MATTRESS, THAT COULD PRODUCE SOMETHING IN THE WAY OF BEHAVIOR THAT NOBODY'S EVER ANTICIPATED.

QUICK: YOU'RE TALKING ABOUT A POTENTIAL RUN ON THE BANKS, ESSENTIALLY?

BUFFETT: WELL, IF THE DEPOSITS AREN'T DOING ANYTHING THERE, AND, AND THEY CHARGE YOU FOR HAVING THEM THERE. YOU KNOW, I MIGHT CONTEMPLATE TAKING THEM OUT.

Buffett on Financials

WE DON'T BUY THEM BASED ON WHAT WE THINK THEY'RE GOING TO EARN NEXT MONTH OR NEXT YEAR. THEY'RE ACTUALLY EARNING PRETTY GOOD MONEY AS IT IS. AND RESERVE REQUIREMENTS ARE PROBABLY MORE IMPORTANT FACTOR ALMOST THAN LOW RATES, BUT NO, IT'S A FACTOR IN BERKSHIRE'S EARNING POWER. WE HAVE CLOSE TO $60 BILLION THAT'S OUT, INVESTED IN A QUARTER OF A PERCENT OR LESS. YOU KNOW, ONE POINT, ON $60 BILLION, $600 MILLION A YEAR SO IF WE WERE GETTING 3% OR 4% ON THAT MONEY, THAT'S A COUPLE BILLION DOLLARS TO US. YOU NOTICE IT.

Buffett on Recovery

OUR RECOVERY SINCE, SINCE OCTOBER OF 2008, I THINK THAT POLICY IN THE UNITED STATES BY BOTH THE BUSH ADMINISTRATION IN THE FIRST FEW MONTHS AND THE OBAMA ADMINISTRATION SUBSEQUENTLY, I THINK IT'S BEEN VERY GOOD. PEOPLE CAN ALWAYS LOOK BACK AND SAY YOU KNOW, IF YOU'D DONE THIS OR THAT, BUT A LOT OF THOSE THIS'S AND THAT'S COULD HAVE PRODUCED WAY WORSE RESULTS. OUR COUNTRY HAS RECOVERED REALLY QUITE SUBSTANTIALLY FROM WHAT WAS A BODY-BLOW.

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