Warren Buffett was on CNBC last week, below is the full transcript and the videos.
Buffett: Interest rates are ‘terribly important’ in evaluating assets
CNBC’s Becky Quick talks with billionaire investor Warren Buffett about where he is finding value in the market and whether stocks are overpriced.
good morning, carl. the fed has plenty of people reassessing their opinion of the stock market. notable investors have told usthey think the fed’s reluctance to taper makes stocks much more attractive at least for the immediate term. warren buffett doesn’t disagree but he also thinks stocks don’t look cheap at these prices. here’s his explanation. the lower interest rates are, the lower assets are worth and to the extent that qe3 iskeeping interest rates lower than it would otherwise, it probably keeps asset prices somewhat higher than they would be otherwise. but there are other variables. if that doesn’t exist it’s maybe because business is a lot better. there are dozens of variable. but interest rates are a terribly important variable in the valuation of assets. when you look around, do you still see good positions or have stocks just moved too far? they moved a long way. they were very cheap five years ago, ridiculously cheap, and that’s been corrected. they’re probably more or less fairly priced now. we don’t find bargains around but we don’t find things that are way overvalued either. we’re having a hard time finding things to buy. when he says things like fairly valued to him — right now he says that the economy continues to chug along, at least as best as he can tell. burlington northern moved 237 cars last week. his furniture stores you 8% to 9%. bryan moynihan has seen similar trends. he said consumer spending on his card was up 5% to 6%. one out of two households bank with bank of america. they do see things in the economy continue to chug along. not a terrible economy. i thought it was interesting the way buffett had enormous praise for bernanke, not wanting to pull him out, calling him a .400 hitter, the best hedge fund in history. couple that with what larrylindsey told you this morning, talking about the unwinding thathas to go on and thinking to bust out of that 2% growth range is wishful thinking in his words. it was pretty telling. we asked buffett who he would put in charge of the fed if he had a choice.he is he bernanke. i asked him who his number two choice was and he said nobody. he knows this is unprecedented territory.it’s been a massive buildup and i think he’d like to see someone he trusts in terms of winding it down.
Buffett: Moynihan was doing the right things in 2011
CNBC’s Becky Quick talks with Warren Buffett, Berkshire Hathaway chairman & CEO, and Brian Moynihan, Bank of America CEO, about what prompted Buffett to invest in the big bank two years ago and if he will eventually exercise his warrants to buy 700 million shares of BAC for $7.14 per share.
Buffett & Moynihan on next Fed head
CNBC’s Becky Quick talks with Warren Buffett, Berkshire Hathaway chairman & CEO, and Brian Moynihan, Bank of America CEO, about the Fed’s no taper decision and what it means for the economy and jobs.
i didn’t have any great expectations one way or the other and it doesn’t make a difference to me in terms of our business or our investments whether it’s zero or ten billion or 20 billion. some day it’ll stop and maybe it’ll go the other direction. although you had been telling us for a while that you didn’t think qe-3 was as effective as the earlier programs. well, i think that’s right which is probably why it’s being continued. it hasn’t done the job yet that they — presumably they hoped it would. but it — i don’t think it’s been harmful. and what you see in the economy is just this gradual increase which has been going on ever since the fall of 2009. and now and then people think it’s accelerating, sometimes they think it’s decelerating, kind of creeps along.you made an announcement recently you’d be laying off about 2,000 people because of the huge decline in demand formortgages. i guess you’re seeing some of what the fed has seen in terms of mortgage business. do you think this move tocontinue with $85 billion a month will make a difference interms of what you’re seeing in demand for mortgages? well, you saw it yesterday. so, you know, i think — i think you had an economy which we see very constructive growing at 1.5%, 2%, we don’t see a lot of downside risk, absent the usual things. i think the fed just thinks — and i think the chairman’s clear about it yesterday until unemployment’s down, he’s got to keep this economy going in right directions for fear it might go in the wrong direction and mortgages — low mortgage rates help housing, housing starts helps warren’s carpet factories, all that go on. if qe-3 hasn’t been working until this point and the fed issaying we have to wait until we see the unemployment level come down, you need to see a pick-up in the economy. that’s not necessarily something that will happen next month. no, who knows when it’s going to happen. no, you could be looking at this rate for quite a while. but i’m no good on that sort of thing. i really don’t try and predict it. brian, i know the next fed chairman is going to be your next regulator. do you know janet yellen well? i can — we know all the candidates. that’s a question that anybody will answer. i think it’s up to other people to make that decision. and, you know, we’ll work constructively with all thecandidates i’ve heard mentioned. i’m sure there are some ihaven’t thought of. but we always will. warren, how about you, who do you think the next fed chairman should be? well, i think bernanke. i think if you’ve got a .400 hitter in the lineup, don’t take him out. he may want to leave but i think — i think he’s done since the panic five years ago, i think he’s done a terrific job.and i think he ought to get a chance to play out a little more of a hand. meaning you think the president should ask him to stayfor another term. i don’t think that’s necessarily going to happen. but that’s what i would do. if bernanke doesn’t want todo that, who do you think should step in and who would be yoursecond choice? yeah, well, i don’t have a second choice. i don’t know janet yellen at all. and i just don’t know enough about the various candidates to come up with a second choice. i know bernanke in my view is very, very good. so i would not trade him away. i would trade some of our — what do you worry about interms of what the fed is facing and how difficult the exit strategy might be? well, whoever has that job at some point will have to do something unprecedented starting with a $3.5 trillion balance sheet still growing. and it’s easier to buy than to sell.now they have don’t have to sell. playing out the last — the lasthalf of this game is very different than the first half. he would know more about that than i would. but i think bernanke ought to be given a chance to play the whole game rather than just the buying end of it. what do you think about the exit strategy?they’ve studied it, they’ve thought about it. they’re playing out the exit strategy as we speak, right? in other words the dialogue and transparency and clarity. if you ask the people who work on the trading desks around wall street yesterday, a lot of them set up the wrong way. that’ll happen, it’ll go through the system, ten-year bonds restabilized. the first 100 basis points was a 60% move as opposed to 10% move. it has to be carefully crafted.not only in the united states but around the world. i think people getting the science of this and i think the clarity that has been through all the central banks will get out as the economy improves. they think they’re getting out without the economy improving to the rate they want. given the strong economy growing at whatever rate