NEIL:
ALL RIGHT, TIME TO GET AN UPDATN
THAT WARREN BUFFETT PLACING A $4
BILLION BET ON JPMORGAN CHASE
AND ADDING TO IT.
THAT CERTAINLY HELPING THE
STOCK.
A PERVASIVE EFFECT ON A LOT OF
OTHER FINANCIAL ISSUES ON A DAY
WHEN MOST OF THEM WOULD LIKELY
BE TAKING A HIT ON THE FACT THAT
THERE COULD BE EXPOSURE TO THAT
REGION OF THE YEAR.
IT GETS OVERWROUGHT AND
OVERDONE, BUT CHARLIE GASPARINO
ON WHETHER THIS IS A SIGN THAT
WARREN BUFFETT9 IS NOT REALLY
FOCUSED ON THAT, NOT REALLY
FOCUSED ON DEMOCRATS WHO WANT TO
CRACK DOWN ON BANKS IN THIS
COUNTRY TAKING POWER IN THE
HOUSE.
>> WELL, FIRST OFF, I DON'T
THINK WE CAN --
NEIL: THE DEMOCRATS.
>> YEAH.
AND ONCE YOU HAVE THE SENATE IN
REPUBLICAN HANDS, ANYTHING THEY
DO WILL BE SORT OF COUNTERACTED.
LET'S JUST SAY THEY TRY TO --
THEY SAID THEY HAVE INDICTABLE
EVIDENCE ON DEUTSCHE BANK WHICH
IS A BANK THAT DID BUSINESS WITH
DONALD TRUMP AND CLEARLY IS
GOING TO BE IN THE CROSSHAIRS OF
MAXINE WATERS.
SO THEY COULD SEND A REFERRAL TO
THE JUSTICE DEPARTMENT, AND THE
ATTORNEY GENERAL WHO WORKS FOR
TRUMP COULD SAY, OKAY, I'M GOING
TO STICK IT IN THIS DRAWER.
HER POWER IS GOING TO BE TO
INTIMIDATE AND HARASS, AND THAT
WILL MAINLY COME FOR THE
PRESIDENT RATHER THAN THE BIG
BANKS.
I THINK WHAT BUFFETT IS
SAYING -- FIRST OFF, HE LIKES
JAMIE DIMON A LOT, LIKES HIM AS
A LEADER, LIKES A LOT OF WHAT HE
SAYS AS A SORT OF THOUGHT LEADER
IN THE BANKING BUSINESS, BUT
HE'S ALSO, I THINK, MAKING A BET
THAT INTEREST RATES ARE GOING
HIGHER.
AND IF THAT MAY NOT BE --
NEIL: WARREN BUFFETT.
>> YEAH.
MAY NOT BE GOOD FOR OTHER
STOCKS, BUT BANKS GENERALLY DO
BETTER PARTICULARLY IN A HIGHER
INTEREST RATE ENVIRONMENT,
BECAUSE THEY CAN CHARGE PEOPLE
MORE.
NEIL: THAT'S RIGHT.
>> AND THE LAG BETWEEN WHAT THEY
CHARGE PEOPLE AND HOW THEY HAVE
TO INCREASE RETURNS ON SAVINGS
AND CHECKING ACCOUNTS IS WIDE
ENOUGH THAT YOU HAVE THIS
SPREAD --
NEIL: SO THEIR CD RATE INCREASES
ARE SLOW, BUT THE ONES ON THEIR
LOANS --
>> ABSOLUTELY.
NEIL: -- GIVE YOU THIS CHASM.
THAT'S EASY MONEY.
>> RIGHT.
AND THAT'S, I THINK, WHAT
BUFFETT IS BANKING ON AT LEAST
IN THE SHORT TERM.
AND IF HE THINK-- AND HE THINKS
JPMORGAN, IF THERE IS A BANKING
CRISIS, GUESS WHO BENEFITS FROM
THAT?
IF THEY LET EVERY BANK GO UNDER,
THE ONLY ONE THAT MIGHT HAVE
SURVIVED BECAUSE THEY HAD SOME
STUFF ON THEIR BALANCE SHEET WAS
JPMORGAN.
NO BAILOUTS, YOU KNOW, NO AIG
BAILOUT WHICH WAS A BACK DOOR
BAILOUT FOR ALL THE OTHER FIRMS
AND NO DIRECT MONEY.
JPMORGAN HAD THE BEST CHANCE OF
SURVIVING, AND I THINK THAT'S
WHAT HE'S ALSO BETTING.
IF THERE'S ONE BANK, THIS IS MY
IF BANK.
SO HIGHER INTEREST RATES THOUGH,
SO YOU KNOW, I MEAN, LISTEN, IF
YOU WANT TO KNOW WHY THE MARKETS
ARE TRADING OFF -- ALTHOUGH
THEY'RE ALL OVER THE PLACE
TODAY -- TRADE IS A BIG
DETERMINANT, AND INTEREST RATES.
ANYTHING THAT PUSHES INTEREST
RATES UP GENERALLY IS BAD FOR
STOCKS BECAUSE YOU'LL GO FOR
OTHER INVESTMENTS.
AND THERE ARE TWO THINGS THAT
MIGHT PUSH INTEREST RATES UP,
THE FED UNWINDING ITS BALANCE
SHEET AND RAISING THE FED FUNDS
RATE, BUT ALSO IF THE TAX CUTS
DON'T WORK, YOU'RE GOING TO GET
HIGHER DEFICITS AND, IN
RESPONSE, HIGHER INTEREST RATES
BECAUSE PRICES OF BONDS GO DOWN
AND INTEREST RATES GO UP.
YOU HAVE TO TRACK PEOPLE WHEN
YOUR INTEREST RATES GO UP.
THAT WILL AFFECT EVERYTHING.
THOSE ARE THE SORT OF THINGS
THAT PEOPLE ARE WEIGHING RIGHT
NOW.
WHEN I TALK TO INVESTORS, THAT'S
WHAT THEY'RE TELLING ME.
NEIL: MENTION GE AND ALL THE
CREDIT WORRIES THERE.
>> EVERYBODY MENTIONS GE.
YOU KNOW, LISTEN --
NEIL: TALK ABOUT EXPOSURE, A LOT
OF PEOPLE EXPOSED.
>> BUFFETT IS ONE OF THE BEST
GUYS WHEN YOU ASK HIM, LIKE,
WHEN DOES HE MAKE HIS
INVESTMENTS, WHEN EVERYBODY ELSE
IS OUT AND HE PICKS THE BOTTOM.
HE DIDN'T TO THAT WITH JPMORGAN,
BUT HE'S BEEN KNOWN TO DO THAT.
WHAT'S INTERESTING IS THAT HE'S
NOT IN GE RIGHT NOW.
I MEAN, YOU WOULD THINK AT $8 A
SHARE --
NEIL: REMEMBER WHEN HE AND JACK
WELCH WERE TIGHT --
>> RIGHT.
NEIL: BOB WRIGHT, OF COURSE, THE
FORMER VICE PRESIDENT OF NBC
UNIVERSAL, HE WAS WEIGHING IN
YESTERDAY.
I WANT YOU TO REACT TO THIS.
YOU AND JACK WELCH AND AND A
TEAM THAT WAS CONSIDERED LIKE A
WHARTON DREAM TEAM, WHAT
HAPPENED?
>> SOMEHOW OR OTHER WE LOST
OUR -- I SAY "OUR," BECAUSE I
NEVER CAN QUITE GET PAST IT.
JUST LOST OUR BEARING IN DEALING
WITH THE BALANCE SHEET.
AND THOSE INSURANCE
RELIABILITIES SHOULD HAVE BEEN
DEALT WITH.
NEIL: YOU KNOW, AND THEN HE WENT
AFTER JEFF IMMELT WHICH WAS THE
MORE SEXY QUOTE.
I DON'T MEAN TO SECOND GUESS YOU
GUYS, BUT IT WAS INTERESTING --
>> WHAT'D HE SAY?
NEIL: WELL, WOULD HAVE, SHOULD
HAVE, COULD HAVE.
NOW I'M WONDERING THE THAT'S THE
CASE.
IT DOESN'T DO ANY GOOD POINTING
FINGERS, BUT I DO WONDER ABOUT
WHAT HAPPENED TO GE.
>> WELL, I FIND IT INTERESTING
THAT BUFFETT'S NOT BUYING AT THE
LOW, JUST FROM MY STANDPOINT.
BECAUSE HE'S USUALLY THE GUY
WHEN EVERYBODY ELSE IS SCARED --
NEIL: THAT'S RIGHT.
>> -- HE'S IN.
HE MUST NOT LIKE WHAT'S STILL ON
THE BALANCE SHEET AND WHAT THESE
GUYS HAVE TO DO.
YOU KNOW, I WAS TALKING WITH BOB
BEFORE, BEFORE HE WENT ON, AND I
SAID, BOB, WHY DON'T THEY -- I
SAID, THIS IS ON THE TABLE --
BREAK IT UP INTO THREE
SEPARATELY-TRADED COMPANIES.
SELL OFF THE EXTRANEOUS STUFF,
HEALTH CARE, AVIATION AND
POWERING RIGHT?
HE SAID IT'S NOT THAT EASY.
THEY'VE GOT $30 BILLION IN
PENSION FUND LIABILITIES.
THEY NEED SOME OF THAT CASH FLOW
TO PAY THAT OFF.
I MEAN, IF YOU -- IT'S NOT LIKE
THE OLD DAYS, YOU CAN JUST WALK
AWAY.
NEIL: RIGHT.
>> SOMEONE CAN GO AFTER THEM.
THEY CAN BE SUED, THEY CAN BE
PROSECUTED.
SO THIS IS HARDER THAN YOU
THINK.
NEIL: IS THAT RIGHT?
>> THAT'S WHAT BOB SAID --
NEIL: I HAD NO IDEA.
>> AND HERE'S THE INTERESTING
THING, I DON'T KNOW WHY BUFFETT
ISN'T IN THERE AT EIGHT.
IT'S GOT TO BE -- THE SUM OF ITS
PARTS ARE WORTH MORE THAN EIGHT.
NEIL: REMEMBER WHEN IT GOT TO
20, GOT BELOW 20 --
>> RIGHT.
17.
I REMEMBER EVERYBODY WAS LIKE,
IT'S GOT TO BE WORTH MORE THAN
17.
THE FACT THAT BUFFETT'S NOT IN
THERE --
NEIL: THAT'S WHERE HE IS
CONCENTRATING THE HIS FINANCIAL,
BIG PURCHASES.
>> LOOK WHAT HAPPENED DURING THE
FINANCIAL CRISIS WHEN HE KNEW --
AND HE ACTUALLY KNEW THAT AIG
WAS GOING TO BACK DOOR BAILOUT
EVERYBODY, YOU KNOW?
WHEN AIG WAS BAILED OUT, YOU
ESSENTIALLY HAD ALL THE TOXIC
DEBT ON THE BALANCE SHEETS OF
THE BANKS ESSENTIALLY BAILED
OUT.
THAT'S WHAT HAPPENED.
BECAUSE THEY INSURED THAT DEBT.
NEIL: THAT'S RIGHT.
>> HE WENT IN AND BOUGHT GOLDMAN
SACHS.
REMEMBER THAT.
HE KNEW THAT PEOPLE WERE SO
SCARED, HE WAS GOING TO BUY THE
PREMIER INVESTMENT BANK THAT WAS
GUARANTEED TO SURVIVE.