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CNBC's Becky Quick Sits Down with Billionaire Investor Warren Buffett on CNBC's "Squawk Box" (Transcript Included)

Warren Buffett
CNBC.com
Warren Buffett

When: Monday, May 5th
Where: CNBC's "Squawk Box"

Following is the unofficial transcript of a CNBC interview with billionaire investor Warren Buffett. During the interview, Buffett discusses the Berkshire Hathaway Annual Shareholders meeting, Yahoo! & Microsoft and Fed rate cuts, among other topics.

All references must be sourced to CNBC.

KERNEN: LET'S GET TO BECKY AND A VERY SPECIAL GUEST. BECKY?

QUICK: JOE, HI. THANK YOU VERY MUCH. WASN'T SURE IF THIS WAS GOING TO WORK OR NOT. WE ARE STANDING LIVE WITH WARREN BUFFETT, THE ORACLE OF OMAHA. CAN WE GRAB YOU FOR A FEW MINUTES? I KNOW YOU ARE ON YOUR WAY OUT THE DOOR. WE JUST WANTED TO CATCH UP WITH YOU TO CHAT A LITTLE ABOUT EVERYTHING THAT HAPPENED THIS WEEKEND. END OF THE MEET, WHAT DO YOU THINK? WHAT WAS THE HIGHLIGHT OF YOUR WEEKEND?

BUFFETT: THE HIGHLIGHT WAS 31,000 PEOPLE COMING. BUT HAVING 31,000 PEOPLE, MAYBE MORE THAN 31,000 PEOPLE COME AND JOIN US HERE, IT'S BEEN A LOT OF FUN.

QUICK: YOUR VOICE DOES SOUND HOARSE. YOU DID A LOT OF TALKING OVER THE WEEKEND.

BUFFETT: I HAD A THREE-HOUR PRESS CONFERENCE YESTERDAY AND THEN WE WENT TO DINNER AND TALKED A LOT THERE AND TALKED AFTERWARDS.

QUICK: ABOUT 5 1/2 HOURS OF SHAREHOLDER QUESTIONS DURING THE MEETING ITSELF.

BUFFETT: RIGHT.

QUICK: HERE I'LL BE A TOTAL PAIN AND I'LL ASK YOU TO USE YOUR VOICE A LITTLE BIT MORE IF THAT WORKS OUT FOR YOU.

BUFFETT: OKAY.

QUICK: MR. BUFFETT, I KNOW A LOT OF TIMES, WE TALKED TO YOU LAST WEEK AFTER THE WRIGLEY AND MARS DEAL AND GOT TO ASK YOU A LOT OF QUESTIONS. BASICALLY AT SQUAWK BOX, WE'VE THROWN EVERYTHING WE COULD AT YOU. WE'VE ALL COME UP WITH OUR BEST QUESTIONS AND TOSSED THEM AT YOU. WE'VE HAD OUR VIEWERS WRITE IN QUESTIONS AND YOU WERE GRACIOUS ENOUGH TO ANSWER THEM. I WONDER IF YOU'D MIND PLAYING A NEW GAME WITH ME.

BUFFETT: WHATEVER YOU WANT.

QUICK: LET'S DO A LITTLE BIT OF ROLE PLAYING HERE. SINCE YOU HAVE ALREADY ANSWERED QUESTIONS FROM EVERYBODY ELSE, I WAS TRYING TO FIGURE OUT HOW TO DO THIS DIFFERENTLY. MY THOUGHT WAS, IF I WAS A WORLD LEADER, I CAN'T THINK OF A BETTER PERSON TO ASK SOME ADVICE FROM THAN THE ORACLE OF OMAHA. SO IF I'M A WORLD LEADER AND I COULD GET ABOUT A MINUTE OF YOUR TIME, I MIGHT HAVE A QUESTION FOR YOU. SO I'LL BE THE WORLD LEADER.YOU BE WARREN BUFFETT. DEAL?

BUFFETT: OKAY. NEXT TIME I GET TO BE THE WORLD LEADER.

QUICK: ALL RIGHT. FIRST UP, MR. BUFFETT, HI, THIS IS BEN BERNANKE. I'M THE CHAIRMAN OF THE FEDERAL RESERVE.

BUFFETT: I'VE HEARD OF YOU.

QUICK: YOU HAVE? THANK YOU, SIR. DO YOU THINK I WENT TOO FAR WITH THAT LAST RATE CUT?

BUFFETT: WELL, I DON'T THINK THERE'S MUCH NEED FOR MORE RATE CUTS. THEY HAVE PLAYED THAT OUT, AND IF YOU GET RATES DOWN TOO LOW YOU HAVE A REAL PROBLEM. SO I THINK I WOULD QUIT NOW.

QUICK: YOU WOULD QUIT NOW?

BUFFETT: SURE.

QUICK: PRETTY IMPRESSED. THANK YOU, SIR.

BUFFETT: OKAY.

QUICK: LET'S TRY ANOTHER ONE. EXCUSE ME. MY NAME IS HANK PAULSON. I'M THE SECRETARY OF THE TREASURY. WE JUST GOT THIS GREAT STIMULUS PACKAGE TOGETHER FOR THE UNITED STATES. DO YOU THINK IT'S ENOUGH OR DO I NEED TO COME UP WITH A SECOND STIMULUS PACKAGE AND FAST?

BUFFETT: I THINK THE DOWN SIDE IS COMING UP WITH...I DON'T THINK THE STIMULUS IS NECESSARILY GOING TO DO AN ENORMOUS AMOUNT OF GOOD. IN FACT, I THINK MOST PEOPLE WHEN THEY GET IT REALLY SHOULD PAY DOWN THEIR CREDIT CARDS IF THEY OWE MONEY THAT. BUT YOU CAN, YOU KNOW, INSTEAD OF WRAPPING $600 IN THE SKY YOU CAN DROP $6,000 INTO THE SKY BUT IT HAS CONSEQUENCES LATER ON IN THE INFLATIONARY AERA. SO I THINK YOU HAVE TO BE A LITTLE CAREFUL ABOUT DROPPING MONEY ON PEOPLE IN THE ECONOMY.

QUICK: SO YOU DON'T THINK THAT WHAT WE'VE ALREADY DONE --

BUFFETT: HAVE YOU CHANGED YOUR HAIR, HANK?

QUICK: A LITTLE BIT. YOU DON'T THINK IT'S A GOOD IDEA, TO SEND OUT THE CHECKS WE'VE JUST STARTED SENDING OUT LAST WEEK?

BUFFETT: IT'S GOT PLUSES AND MINUSES. YOU CAN OBVIOUSLY STIMULATE AN ECONOMY BY MAILING MONEY TO PEOPLE. AND YOU WANT TO MAIL THEM $6,000 YOU'LL GET MORE STIMULUS THAN $600. BUT IT CAN'T BE A FREE LUNCH, IN TERMS OF MONETARY POLICY AND THE EVENTUAL ECONOMIC CONSEQUENCES. AND I DON'T THINK -- I THINK YOU WANT TO BE CAREFUL USING THAT TOOL.

QUICK: YOU PREFER THAT PEOPLE ACTUALLY GO OUT AND PAY DOWN THEIR CREDIT CARD DEBT? WHAT WE'VE BEEN THINKING IS, HEY, THEY'LL GO OUT AND SPEND AGAIN AND THAT WILL HELP THE ECONOMY. JUST PAYING DOWN THEIR DEBT, NOT NECESSARILY DOING WHAT WE WANTED.

BUFFETT: THAT MAY BE. BUT I THINK ANYBODY THAT'S PAYING 15% TO 18% ON CREDIT CARD DEBT IS OUT OF THEIR MIND IF THEY DON'T TAKE THE STIMULUS AND PAY DOWN THE CREDIT CARD BECAUSE THEY'LL NOT BE ABLE TO EARN 15% OR 18% WITH MONEY.TO THE EXTEND THEY ARE IN A HOLE NOW BECAUSE THEY'VE OVERBORROWED IN THE PAST. THEY SHOULD PAY DOWN DEBT. IF I OWED MONEY AT 15% TO 18% AND I GOT $600 OR $600,000, I WOULD USE IT TO PAY DOWN THE DEBT.

QUICK: ALL RIGHT. LET'S TRY ANOTHER ONE. MY NAME IS JOHN McCAIN. AND, MR. BUFFETT, YOU ARE ON THE RECORD SAYING, YOU WOULD SUPPORT EITHER OBAMA OR CLINTON, BOTH OF MY OPPONENTS, AND I JUST HAD A QUESTION FOR YOU, SIR. IS THERE ANYTHING I CAN DO, ANY ECONOMIC ISSUE I CAN GET BEHIND THAT WOULD ACTUALLY MAKE YOU THINK TWICE ABOUT POTENTIALLY SUPPORTING ME?

BUFFETT: I WOULD SAY THAT IF YOU FELT THAT THE TAX BURDEN SHOULD BE SHIFTED IN A SIGNIFICANT WAY TO THE SUPERRICH AND AWAY FROM THE MIDDLE CLASS, I WOULD SAY THAT, THAT WOULD MAKE ME RE-EVALUATE YOU.

QUICK: I COULD POTENTIALLY GAIN YOUR SUPPORT COME NOVEMBER?

BUFFETT: IN THE END, I VOTE ON ISSUES NOW. I THINK IT'S PRETTY CLEAR IN THE MAJOR AREAS WHAT ALL THREE CANDIDATES WOULD DO. AND I THINK IT'S UNLIKELY THAT, YOU KNOW, UNLESS HE HAS A -- I WOULDN'T SAY A SEX CHANGE, BUT A LOBOTOMY OR SOMETHING, I DON'T THINK McCAIN IS GOING TO CHANGE HIS VIEWS TO BE IN ACCORD WITH MINE. I ADMIRE HIM A LOT. I THINK HE'S AN ABSOLUTELY FIRST CLASS HUMAN BEING AND THE REPUBLICANS ARE GOING TO ELECT SOMEBODY I HOPE IT IS JOHN McCAIN. BUT HE HAS TOO MANY IDEAS THAT ARE DIFFERENT THAN I DO, PARTICULARLY IN TERMS OF WHAT I WOULD CALL SOCIAL JUSTICE.

QUICK: LET ME TRY ONE MORE FOR YOU. I AM GOING TO ASK YOU, MY NAME IS STEVE BALLMER AND I COME TO YOU --

BUFFETT: YOU SHRUNK.

QUICK: I SHRUNK A LITTLE. I COME TO YOU THIS MORNING BECAUSE YOU ARE KNOWN AS THE NEGOTIATOR, THE MAN WHO KNOWS THE ART OF THE DEAL BETTER THAN ANYBODY ELSE. I'M NOT ASKING YOU ABOUT TECHNOLOGY, BUT I HAVE DECIDED TO WALK AWAY FROM YAHOO!. WAS THAT THE RIGHT DECISION? WAS THAT THE RIGHT NEGOTIATING TACTIC?

BUFFETT: WELL, I DON'T KNOW THAT IT'S A NEGOTIATING TACTIC. HE MAY HAVE DECIDED HE'S GONE AS FAR AS HE CAN GO. YOU DO HAVE TO HAVE SOME SORT OF LIMIT. YOU CAN WANT SOMETHING BADLY, BUT IT'S NOT WORTH ANY PRICE TO THE BUYER AND I DON'T KNOW THAT MUCH ABOUT YAHOO! SO I DON'T KNOW WHERE HIS CHOKING POINT WOULD BE. BUT HE EVIDENTLY HIT IT. IF YOU HIT YOUR CHOKING POINT YOU QUIT.

QUICK: YOU DON'T COME BACK FOR MORE? DO I WALK AWAY FOR GOOD?

BUFFETT: YOU MAY COME BACK LATER ON. HE MAY HAVE SOME SHAREHOLDERS OF YAHOO! COMING TO HIM SIX MONTHS FROM NOW. WHO KNOWS HOW THAT ALL PLAYS OUT. YOU HAVE TO DECIDE HOW MUCH SOMETHING IS WORTH. I HAVE WALKED AWAY FROM DEALS AND I MEAN IT WHEN I WALK AWAY. AND THE SELLER OCCASIONALLY HAS COME BACK.THAT HAPPENED WITH IN 1972. THEY WANTED 30 MILLION. WE WERE GOING TO PAY 25 MILLION. AND WE WALKED AND THEY WALKED AFTER US, FORTUNATELY.

QUICK: OKAY. SO YOU COULD BE CONVINCED TO COME BACK. ALL RIGHT. LET'S TRY ONCE MORE. I'M JEAN CLAUDE TRICHET THE HEAD OF THE ECB. I'M THE EUROPEAN CENTRAL BANKER. AND I HAVE BEEN STANDING PAT ON INTEREST RATES. AM I DOING THE RIGHT THING OR IS THERE A RISK THAT THIS FLU VIRUS THAT THE AMERICAN ECONOMY SEEMS TO HAVE PICKED UP WILL ACTUALLY COME OVER TO EUROPE?

BUFFETT: WELL, I THINK HE'S -- IT CAUSES PROBLEMS FOR THE UNITED STATES WITH THE CURRENCY PROBLEM THAT WE ALREADY HAVE, IF INTEREST RATES IN EUROPE ARE SIGNIFICANTLY HIGHER THAN THE U.S. I DON'T THINK HE'S EXACTLY PLAYING BALL BUT HE'S GOT A DIFFERENT RESPONSIBILITY IN LIFE AND HE MAY BE MUCH MORE WORRIED ABOUT INFLATION THAN BERNANKE IS OR BERNANKE MAY FEEL LIKE HE'LL BE LIKE SCARLET O'HARA THAT I'LL WORRY ABOUT INFLATION TOMORROW. BUT HE HAS TO DECIDE IN TERMS OF HIS OBLIGATIONS, HIS OBLIGATIONS FOR THE EUROPEAN UNION AND HE OBVIOUSLY FEELS IF HE DROPS RATES A LOT THAT HE'S GOING TO PAY A PRICE IN TERMS OF POSSIBLY IGNITING INFLATION THAT HE'S NOT WILLING TO PAY.

QUICK: BUT IS THERE A CHANCE THAT I, AS JEAN-CLAUDE TRICHET, WILL WAKE UP TOMORROW AND FIND I'M BEHIND THE CURVE. JUST LIKE THE FED FOUND ITSELF LAST YEAR?

BUFFETT: I'M GLAD YOU ARE ASKING THESE QUESTIONS IN ENGLISH. IT'S KIND OF YOU TO DO THAT.

QUICK: ANYTHING FOR YOU, MR. BUFFETT.

BUFFETT: WELL, ANY CENTRAL BANKER IS GOING TO MAKE SOME MISTAKES. SO THERE'S ALWAYS A CHANCE THAT HE'S MAKING A MISTAKE. BUT I'M SURE THAT THE FACTS HE'S GOT, WHEN HE WEIGHS THEM, HE SAYS, I DON'T WANT TO DROP RATES WAY DOWN. AND AMERICANS DO.THEY'VE GOT THEIR OWN PROBLEMS, BUT I'VE SEEN INFLATION BEFORE. I KNOW HOW HARD IT IS ONCE IT GETS IGNITED TO PUT IT OUT. SO – BUT HE CAN BE WRONG SURE.

QUICK: PROBABLY NOT REASSURING BUT THANK YOU VERY MUCH FOR YOUR TIME, MR. BUFFETT.OKAY. NEW CALL. I AM JAMIE DIMON. AND, MR. BUFFETT, YOU SAID THAT TWO DAYS WAS NOT ENOUGH TIME FOR YOU TO EVALUATE THE RISK OF BUYING BEAR STEARNS.THAT'S WHY YOU DIDN'T DO THE DEAL. BUT NOW IT'S BEEN EIGHT WEEKS SINCE THAT DEAL. DO YOU THINK I MADE THE RIGHT MOVE BY STEPPING IN FOR BEAR STEARNS?

BUFFETT: WELL, FROM A SOCIAL STANDPOINT, HE DID MAKE THE RIGHT MOVE. THE FED MADE THE RIGHT MOVE OF GETTING SOMEBODY TO DO THAT. I DON'T THINK YOU'LL KNOW THE ANSWER TO THAT FOR A WHILE. A HIGH PERCENTAGE OF JAMIE DIMON'S MOVES HAVE BEEN THE RIGHT MOVE.

QUICK: WHEN YOU SAY SOCIALLY, WHAT DO YOU MEAN?

BUFFETT: IF THE FED HADN'T MOVED IN ONTHAT SUNDAY, THE FOLLOWING WEEK WOULD HAVE -- COULD WELL HAVE BEEN SOMETHING LIKE WALL STREET HAS NEVER SEEN.

QUICK: ALL RIGHT. THAT'S THE END OF MY ROLE PLAYING. THAT'S ALL I CAME UP WITH. BUT I HAVE A COUPLE OTHER QUICK QUESTIONS. YOU TOLD US A WEEK AGO THAT THIS RECESSION COULD BE LONGER AND DEEPER THAN ANYBODY -- THAN A LOT OF PEOPLE ARE EXPECTING AT THIS POINT. YET WHEN YOU COME TO THE MIDWEST, THERE'S JUST BEEN A REPORT OUT FRIDAY THAT SAYS THIS NINE-STATE AREA IS IN BETTER SHAPE THAN A LOT OF OTHER PLACES BECAUSE OF THE BIOFUEL SITUATION, BECAUSE OF THE HIGH PRICES FOR COMMODITIES, BECAUSE THE HOUSING BUBBLE DIDN'T INFLATE TO THE LEVEL IT DID OTHER AREAS. ARE YOU SEEING THINGS HERE? DO YOU THINK IT'S BETTER OFF HERE IN THE MIDWEST THAN IN OTHER PARTS OF THE ECONOMY?

BUFFETT: YEAH, IT IS. WE GOT HIT FAR LESS BY THE FALL IN HOUSE PRICES THAN A PLACE LIKE CALIFORNIA OR NEVADA OR ARIZONA.THEY NEVER WENT UP AS REMOTELY AS HIGH SO THEY DIDN'T HAVE AS FAR TO COME BACK. AND WE'RE RELATIVELY PROSPEROUS HERE. OUR EMPLOYMENT RATE IS LESS. AND OUR FURNITURE MARKET ON SATURDAY WE DID A RECORD AMOUNT OF BUSINESS. ABOUT 10% HIGHER THAN ANY DAY WE'VE DONE IN THE HISTORY OF THE COMPANY. AND ANY RETAILER WILL TELL YOU $7.25 MILLION IN ONE DAY IS AT A FUNITURE STORE IS A LOT OF BUSINESS. PEOPLE ARE RELATIVELY PROSPEROUS HERE. I WOULD SAY THE RECESSION HAS NOT HIT IN ANY BIG WAY HERE.

QUICK: WHAT ELSE DID YOU FIND THIS WEEKEND IN TERMS OF SALES BECAUSE I KNOW YOU HAVE A LOT OF DIFFERENT COMPANIES SELLING. WHAT CAN YOU TELL US ABOUT WHAT BERKSHIRE SHAREHOLDERS WERE SPENDING?

BUFFETT: THEY ARE BUYING 1.5 PAIRS OF BOOTS A MINUTE, JEWELRY EVERY NINE SECONDS. WE WERE WRITING A TICKET. ALMOST ALL OF THE PLACES BROKE THEIR RECORDS.

QUICK: ALMOST ALL OF THE PLACES BROKE THEIR RECORDS?

BUFFETT: YES.

QUICK: WAS IT UP TO YOUR EXPECTATIONS? DID IT EXCEED YOUR EXPECTATIONS?

BUFFETT: IT EXCEEDED EXPECTATIONS. I DON'T LIKE TO BE IN THE GUIDANCE GAME. I DIDN'T GIVE OUT A LOT OF NUMBERS BEFORE. BUT IT EXCEEDED EXPECTATIONS.

QUICK: OKAY. WHEN YOU TAKE A LOOK AT, WELL, LET'S JUST SAY AGAIN THE GRAINS, THE COMMODITIES, DO YOU WORRY THAT THOSE PRICES HAVE REACHED A BUBBLE AND THAT WILL BE THE NEXT BUBBLE WE START TO HEAR, THE AIR COME HISSING OUT OF?

BUFFETT: I DON'T KNOW WHETHER THERE IS A BUBBLE BUT THEY CERTAINLY MOVED UP A LOT. AND STEEL HAS MOVED UP A HUGE AMOUNT. I THINK YOU HAVE A LOT OF INFLATIONARY PRESSURE, WHICH IS NOT IN THE WAGE PRESSURE YET. WHEN AND IF IT GETS TO THAT, THEN THE FUN BEGINS.

QUICK: OKAY. NOW I KNOW YOU HAVE A MEETING WITH YOUR DIRECTORS LATER THIS MORNING.WHAT'S ON THE AGENDA?

BUFFETT: WELL, WE'LL TALK ABOUT SUCCESSION. NOT IMMEDIATE SUCCESSION, I MIGHT ADD. BUT WE ALWAYS TALK ABOUT THAT. WE GO DOWN THE SAME CANDIDATES AND TALK ABOUT THEM AND THE PLUSES AND MINUSES. WITH THE INVESTMENT OFFICER.THERE'S NOT A WHOLE LOT. WE'LL TALK SOME ABOUT THE MARS/WRIGLEY DEAL. WE DON'T HAVE A LOT TO TALK ABOUT. WE DON'T HAVE A LOT OF TIME KILLING ACTIVITIES. WE DON'T GO THROUGH A LOT OF RITUAL. WE REALLY TALK ABOUT THE GUTS OF THE BUSINESS. THEY'LL ASK ME ABOUT A LOT OF THE SPECIFIC BUSINESSES. BUT THEY ARE VERY WELL INFORMED. I SEND OUT A LOT OF MATERIAL TO THEM ALL THE TIME. SO WE DON'T NEED A LOT OF TIME IN DIRECTORS MEETINGS.

QUICK: JUST AGAIN, THE BIGGEST HIGHLIGHT FOR YOU, ASIDE FROM THE 31,000, WAS THERE ONE MOMENT THAT GOT A JUMP OUT OF YOU THIS WEEKEND WHAT YOU THOUGHT, THIS IS DIFFERENT. THIS HAS NEVER HAPPENED AT AN ANNUAL MEETING BEFORE?

BUFFETT: WHEN SUSAN LUCCI TOOK OVER THE CEO POST.

QUICK: WE SHOULD POINT OUT FOR EVERYBODY. SUSAN LUCCI WHO PLAYS ERICA CAIN ON "ALL MY CHILDREN" CAME IN. THERE'S ALWAYS SOME SURPRISE AT THE SHARE HOLDER MEETINGS. THIS TIME AROUND SHE WAS THE SURPRISE. SHE TOOK THE STAGE AND PRETENDED SHE WAS TAKING YOUR JOB.

BUFFETT: FOR A WHILE THE ACTING WAS A LITTLE TOO GOOD.THE CROWD SEEMED TO LIKE HER BETTER THAN ME SO I GOT OUT THERE FAST.

QUICK: MR. BUFFETT, THANK YOU FOR YOUR TIME.

BUFFETT: THANKS FOR COMING BY.

QUICK: THANK YOU. GUYS, WE'LL TALK IT BACK TO YOU. JUST WRAPPING UP SOME OF THE HIGHLIGHTS OF WHAT HAPPENED THIS WEEKEND AND GETTING A LITTLE TIME TO TALK TO THE ORACLE OF OMAHA.




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