Warren Buffett, chairman and CEO of Berkshire Hathaway, spoke with Bloomberg Television’s David Westin about the 2016 presidential race, Donald Trump and Hillary Clinton’s E-mail situation. He also spoke on income inequality, China’s economy and the potential for a global slowdown.
On how Hillary Clinton handled the private E-mail situation, Buffett said: "It hasn't been handled well, but I've handled some things badly in my life too. You don't want to have too many of them, but I do not consider that determinative at all of the kind of the person she would be as president."
On Donald Trump, Buffett said: “He's going to spell out his economic program sometime in the next few weeks. I wouldn't be surprised if I agree with quite a bit of his economic program…From what he's said, in terms of he thinks the rich should pay more. He thinks that carried interest should be treated instead as regular income, it's just like they would be if they were investment advisors or anything of the sort. I have -- in terms of tax policy, I haven't heard him say anything yet that I disagree with."
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The first two months of the third quarter were the best months for D1 Capital Partners' public portfolio since inception, that's according to a copy of the firm's August update, which ValueWalk has been able to review. Q2 2020 hedge fund letters, conferences and more According to the update, D1's public portfolio returned 20.1% gross Read More
Buffett On Trump’s Tax Policy: http://bloom.bg/1hUSgwe
Buffett: Clinton E-mails Haven't Been Handled Well: http://bloom.bg/1hUFnSU
Buffett: I'm Bullish on China, It Has Long-Term Potential: http://bloom.bg/1K5JIcC
Buffett: Government Should Do More on Income Inequality: http://bloom.bg/1hUEF8h
Buffett: I'm Less Enthusiastic About Crude Oil Prices: http://bloom.bg/1hUEJVt
Buffett: I Don't See Local TV as a Growth Business: http://bloom.bg/1hUEKJ5
DAVID WESTIN: We are here with Warren Buffett. Thanks for your time, Warren.
Warren Buffett: Clinton E-mail Situation Hasn't Been Handled Well
Warren Buffett: I'm a Huge Fan of 'Breaking Bad'
Billionaire Warren Buffett, chairman and CEO of Berkshire Hathaway, comments on "Breaking Bad" during an interview with Bloomberg's David Westin on "Bloomberg Markets." (Source: Bloomberg)
Buffett: I Don't See Local TV as a Growth Business
Billionaire Warren Buffett, chairman and CEO of Berkshire Hathaway, comments on his media holdings during an interview with Bloomberg's David Westin on "Bloomberg Markets." (Source: Bloomberg)
Buffett: Government Should Do More on Income Inequality
Billionaire Warren Buffett, chairman and CEO of Berkshire Hathaway, comments on income inequality during an interview with Bloomberg's David Westin on "Bloomberg Markets." (Source: Bloomberg)
Buffett: I'm Less Enthusiastic About Crude Oil Prices
Billionaire Warren Buffett, chairman and CEO of Berkshire Hathaway, comments on crude oil prices during an interview with Bloomberg's David Westin on "Bloomberg Markets." (Source: Bloomberg)
Buffett: I'm Bullish on China, It Has Long-Term Potential
Billionaire Warren Buffett, chairman and CEO of Berkshire Hathaway, comments on China's economy and the potential for a global slowdown during an interview with Bloomberg's David Westin on "Bloomberg Markets." (Source: Bloomberg)
WARREN BUFFETT: I'm delighted.
WESTIN: As they just said, but I'll repeat, we're here because you have you have your annual lunch that you auction off for charity. And it's Glide Foundation in San Francisco. Tell us about that and why you're involved.
BUFFETT: Well I was -- there was a church in San Francisco that was dying, had about 100 white parishioners and a young black minister was sent there. And then the 100 quit, but that fellow's name was Cecil Williams. And he turned that really defunct church into one of the most remarkable social institutions you can imagine. He has helped tens of thousands, probably hundreds of thousands of people that have given up on themselves, their family has given up on them, society has given up on them, but Cecil never gives up.
So they give a couple thousand meals a day. They had 10,000 volunteers out there. They give vocational training. They give beds. They take in battered women, you name it. And Cecil works with every one of them like they were the most important person in the world.
WESTIN: And your wife, Susie, was actually involved in it, right?
BUFFETT: Yes. She was very involved. And she actually sort of beat up on me to go there one time. And I thought this was probably a phony of some sort. I'm a skeptical guy. So I probably should have been in the news business. So I went on a Sunday, and I was blown away. I mean this guy was for real. And these people were having their lives changed. And so I really -- I mean that was a big thing that she convinced me to go there. And I can't do enough to help.
WESTIN: And through these lunches you have raised over $20 million for Glide.
BUFFETT: That's true.
WESTIN: And today it was $2.35 million, I think.
BUFFETT: Well what happened, somebody bid 23456789. That's a $2.345 million. I guess they thought it was lucky, but it won the lunch this year.
WESTIN: And he's chairman of a Chinese videogame company.
BUFFETT: Yes, exactly. And he had six friends, along with him, and his wife. And we had a terrific lunch.
WESTIN: So let's let him lead us to China. Let's talk about China and what's going on over there. There has been a lot of turmoil, a lot of ups and downs, back and forth. You have traditionally been pretty bullish on China.
BUFFETT: I'm bullish on China.
WESTIN: And has it any tempered your enthusiasm, the extent of the Chinese government intervention in the markets, both equity markets and FX markets?
BUFFETT: Not over time. I mean and it's -- I mean this country has gone through a couple of world wars in the 20th century, the Great Depression, went through a Civil War. I mean we've had lots of ups and downs in this country, but overall we've kept moving forward, and China will be the same way.
WESTIN: So long-term you're big on China.
BUFFETT: Long-term China has go -- it has got a long way to go.
WESTIN: And do you see opportunities right now? You have done some investing there.
BUFFETT: And a little bit of investing there. And we're open to ideas anyplace, and we've got a number of factories there, but capital travels.
WESTIN: And expanded beyond China, to what extent, if any, are you concerned that there may be indications of a more global slowdown? I mean you have got China slowing down. We're not sure really quite how much because we're not sure about the numbers. Brazil is an outright --
BUFFETT: Brazil has got a lot of problems.
WESTIN: And it looks like it's going to be there for a while. U.S. numbers are fair to middling. I mean they sort of range around -- Europe is growing some, but pretty slowly. Do you think we should we be concerned at all about a global turnout, and if so, what from a policy point of view could be done?
BUFFETT: Well I think it's unlikely that the world has some great slowdown, but it always can. I mean you look at history, and it's not been a straight line in this country or any other place. But what I look at is five, or 10 or 20 years out. And there is no way that America is not going to make progress, China is not going to make progress, Europe is not going to make progress over that period of time. I can't predict the ups and downs in between, but I don't know how to do it.
But I do know that the tide is really with humans. I mean we learn more and more all the time about how to unleash human potential. We're the same people we were 200 years ago, but look at how we're living compared to then. It was all inside, but the rule of law, market system, equality of opportunity, none of which are perfect, but as we push out on those the world moves forward.
WESTIN: But talk about opportunity, because you have written actually on income inequality in the "Wall Street Journal," a piece that didn't get the attention some of us thought maybe it deserved. You think this is a very big issue for us.
BUFFETT: I think it's a huge issue, but I think that -- I think we're moving in the right direction on that over time. And we have an enormously rich economy, David, I mean well over 50,000 of GDP per capita. It's six times, in real terms, what it was when I was born. Imagine that, one person's lifetime, six for one. And I mean it blows your mind. And if you told my parents in 1930 when I was born that there would be this amount of poverty and everything in a country that had grown like that, they would've laughed.
WESTIN: Growing disparity, it's not like it's coming together.
WESTIN: It's going the other way.
BUFFETT: It needs to be addressed, because the natural forces of a market economy and capitalism will drive that disparity, unless government does things to help. And government has done things to help over the years, but it needs to do more.
WESTIN: And you think earned income credits is the way to go.
BUFFETT: The earned income tax.
WESTIN: Instead of increasing the minimum wage.
BUFFETT: Yes. No, increasing the minimum wage, it's nice if you get it, but it also leaves and causes more people unemployed. The clearing system for labor is going to leave a lot more people out of $15 an hour than where it is now. But the real thing people need, if you're poor, is not a higher minimum wage. They need money.
WESTIN: Right, right.
BUFFETT: And if they're willing to work, the earned income tax credit is the way to go.
WESTIN: Well tell me about organized labor and whether it could play a role in this. The president is going to have a summit in October on income inequality.
WESTIN: And he certainly is including, not exclusively, but including organized labor. And I come from Flint Michigan.
WESTIN: My father was there for the labor riots in the '30s.
WESTIN: And the fact is UAW perhaps went to some excesses, but it really helped (INAUDIBLE).
WESTIN: And so for the '50s and '60s, now maybe that doesn't work now, but what do you think about organized labor?
BUFFETT: Well organized labor, I mean there's no question that in certain industries that the workers are doing better than they would have done otherwise. And it had some success in some places too, but the real problem isn't the people who fit in well, which generally the the people in organized labor do with our present system.
It's the people whose skills just don't command much of a market price. And you can have them all organize and it wouldn't do any good in terms of making their skills worth a whole lot more in this economy. But they are entitled. If the best they could do is be a cleaning lady, god bless them. They should have a reasonable life in a country this prosperous. And if you say the minimum wage is $15 an hour, my cleaning lady is probably not going to have a job. But if you say we're going to change the earned income tax credit so that if you work 40 hours you are going to have the income of a person that made $15 an hour that can be accomplished.
WESTIN: That skills disparity takes us back to education.
BUFFETT: Part of it, part of it.
WESTIN: But if you look at OECD numbers, or at least it's not so much that U.S. education has gotten worse. It's just the rest of the world has gotten a lot better --
BUFFETT: A lot better.
WESTIN: -- as the demands have gone up in the marketplace.
WESTIN: And so what can we do about education? That has to be part of it.
BUFFETT: You want everybody educated to their potential. You want people to reach their potential. That still won't work for some people in a highly developed market system. I mean if this were a sports-based system, you could give me a PhD in football, and I could practice eight hours a day, and I might be able to carry the water from, not onto the field, but from the locker room to the bench. There's just some people don't fit well into a highly skilled market-based economy.
They're perfectly decent citizens. We'll send them off to Afghanistan, but they are not going to command a big price. You still want them to get the most out of their abilities, but if their abilities leave them unable to earn much more than the poverty level, we ought to do something additional for them. We've got the resources.
WESTIN: So come back to the here and now to in the media. We have Media General merging with Meredith, right?
BUFFETT: I saw that.
WESTIN: Now you have a slight interest in that. I think you're the largest shareholder.
BUFFETT: Well it's really very small like an arm --
WESTIN: 17 percent.
BUFFETT: -- so and we own a little less than five percent now.
WESTIN: Oh, is that right?
BUFFETT: Yes. It got diluted down when they made an earlier merger. We have less than $75 million of the stock.
WESTIN: Yes. But you originally purchased the newspapers --
WESTIN: -- from Media General. And it looked like Media General is making a decision. They're going to go the broadcast route --
WESTIN: -- and get out of the print route. Now they've gone back with Meredith, which has 17 affiliated stations, but they have more magazines.
WESTIN: Is that a change in their strategic direction, or is this really a television broadcast business (INAUDIBLE) really well?
BUFFETT: Yes. My guess is that it's the TV the primary motivation, but I don't know. I have never talked to anybody in Media General. And we made that deal with them. And I have never had a conversation with anybody at Media General.
WESTIN: But you have been invested in television before.
WESTIN: And you own a station now. Didn't you take (INAUDIBLE)?
BUFFETT: We own a station in Miami, and we own WPLG, and doing very well.
WESTIN: A pretty good station.
BUFFETT: Well, and Tom Murphy helping us.
WESTIN: Who was my old boss (INAUDIBLE).
BUFFETT: Exactly, exactly, and my hero.
WESTIN: Well he's helping a broadcast you're safe, in my experience. But so you know that, because do you see that as a growth business at this point, broadcasting TV?
BUFFETT: It's amazing to me how well it's sort of hung on, but I -- no, I don't see it as a growth business, particularly. And no, I -- the world has really changed in the media and communications world. I love newspapers, but that doesn't mean I think they're going to do better -- well financially.
WESTIN: And as Tom always said, the big advantage of broadcast it's a cash business.
WESTIN: And so you don't need cash flow. It's very attractive.
BUFFETT: Very attractive.
WESTIN: So you are probably the preeminent value investor, right?
BUFFETT: Well I am certainly a value investor, yes.
WESTIN: And you're a value investor. And but I've watched -- I mean I was at Cap Cities as a young general counsel when you were on the board, major shareholder. You invested in Tom Murphy as much as you did, frankly, in the company, I think. That was my sense.
BUFFETT: There's no question about, and Dan Burton too.
WESTIN: And Dan Burton, absolutely right.
BUFFETT: Those two may have been the best management duo in the history of the world.
WESTIN: Yes. Well I felt blessed to even know them and to work under them.
BUFFETT: Yes. And they were among the best human beings in the world.
WESTIN: Yes, so absolutely right, agreed on both points. But you pick CEOs pretty well. You've got a track record, and you pay a lot of attention. You want Hillary Clinton to be the CEO of the country, essentially.
WESTIN: As a CEO that you'd like to put in place, how concerned are you about how she has handled this private e-mail situation?
BUFFETT: Well it hasn't been handled well, but I've handled some things badly in my life too. You don't want to have too many of them, but I do not consider that determinative at all of the kind of the person she would be as president. I believe that she has a vision for America that's very similar to mine in terms of everybody included in the prosperity we enjoy. And I think that she would work very, very hard at getting policies implemented that would lead to that. So that's what really counts. I have made so many mistakes. Unless we're going to put on a four-hour special, we're not going to get to them all.
WESTIN: So she would still be your CEO. You might (INAUDIBLE) talking with her, but she'd still be your CEO.
BUFFETT: Yes, sure.
WESTIN: Exactly. So the favorite subject, Donald Trump. And the only question I want to ask you is carried interest, actually. You agree, I think, and you're only one of the Republicans, right?
BUFFETT: The interesting thing is, I mean he hasn't spelled it all out yet. He's going to spell out his economic program sometime in the next few weeks. I wouldn't be surprised if I agree with quite a bit of his economic program.
WESTIN: Oh, is that right?
BUFFETT: Well just from what he's said, in terms of he thinks the rich should pay more. He thinks that carried interest should be treated instead as regular income, it's just like they would be if they were investment advisors or anything of the sort. I have -- in terms of tax policy, I haven't heard him say anything yet that I disagree with, yes.
WESTIN: That's interesting, energy. (INAUDIBLE) energy, because you have been involved in the energy business for quite a while. And you have got some significant investments now. And you had ExxonMobil that you had only for, I think, for a couple of years.
BUFFETT: Yes, fairly short.
WESTIN: Pretty short for Berkshire Hathaway, right.
WESTIN: And but you have just gone back into Phillips 66, --
WESTIN: -- which is a different kind of company.
BUFFETT: Yes. That's a refiner, plus it has a chemical interest in midstream interests.
WESTIN: And how much of those decisions is governed by your view on long-term oil prices, as opposed to something else?
BUFFETT: I don't have strong views on that, but I did get less enthusiastic about crude oil prices at the time we owned the ExxonMobil. And I felt that the future wasn't going to be as good as people were thinking it was going to be. So I didn't -- we own no companies that are crude oil producers.
WESTIN: Oh, but your anticipation what might happen with crude was part of your decision to get out of Exxon Mobil decision so early.
BUFFETT: Part of that decision, yes, part of the decision.
WESTIN: Yes. And Phillips 66, how much of that is driven by possible connections with Burlington Northern Santa Fe?
WESTIN: None? That's not a factor.
BUFFETT: No, no.
WESTIN: And you run these individual businesses.
BUFFETT: Yes, totally individual, yes.
WESTIN: And exactly. Okay, so last question.
WETSIN: "Breaking Bad."
BUFFETT: "Breaking Bad," I love it.
WESTIN: You're a big fan of "Breaking Bad."
BUFFETT: I'm a huge fan.
WESTIN: Okay. Is anything to replace it for you? Have you found anything? Are you looking for (INAUDIBLE)?
BUFFETT: Well "Better Call Saul" is a good program, but "Breaking Bad" I think will go down -- I mean in terms of both the writing, I mean I wonder how in the world can you end this thing right. They ended it right, the talent that was on there. I mean there were half a dozen really outstanding actors and actresses. I mean it was -- I don't think the world is going to see anything better than that. Vince Gilligan has -- he gets four stars in my book.
WESTIN: Quite a phenomenon.
WESTIN: Certainly not on broadcast. It was on cable, okay, great. Thank you very much, Warren.
WESTIN: I really appreciate your time.