Warren Buffett’s New Job & A Nonalcoholic Cheers to 2026 1/2/26

0:00Bring in show music, please. Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod. The wealth tax that won't quit. How anti-billionaire sentiment and policy is impacting our politics. Former Senators Heidi Heitkamp. This is not a new idea. This is called a personal property tax. And Pat Toomey. The exodus will be profound. And these are the folks that pay the lion's share of the revenue to California. This is a disaster in the making if they proceed with this. Dry January is here. We check in with the CEO of non-alcoholic beer company Athletic Brewing. Over 53 % of Americans perceive drinking one to two drinks a day as unhealthy, which is up, I think, 14 points in two years.

0:47I think it's a status thing to actually show this is non-alcoholic. Rather than pour it in a glass, you're maybe showing off, I'm drinking, but I'm not. Plus, new year, new boss. The first day for a new CEO at Berkshire Hathaway. and New York swears in Mayor Zohran Mamdani. This will be one of the most fascinating political stories to watch this year. It's Friday, January 2nd, 2026. A new year of Squawk Pod begins right now. Stand Becky by in three, two, one. Cue, please. Good morning, everybody. Welcome to Squawk Box right here on CNBC. We are live from the NASDAQ market site in Times Square.

1:26I'm Becky Quick, along with Mike Santoli and Robert Frank. Joe and Andrew are off today. Markets are not, though. If you check out what's happening with U.S. equity futures, we are looking at some pretty decent signs of gains already on January 2nd. It looks like the Dow futures right now are indicated up by just over 200 points. S &P futures indicated up by about 44. The Nasdaq indicated up by close to 290 points. Of course, this comes after four down sessions in a row to end 2025. but that doesn't mean that the markets didn't end with a bit of a bang anyway. We were looking at pretty decent sized returns.

1:59The Nasdaq composite or the Nasdaq 100 was up by about 20%. You saw very sharp gains for both the Dow and the S &P 500. The S &P 500 was up by about 16.4 % and then the Dow closed up by just under 13 % for the year. The three major averages and the Russell 2000s all had their six positive session or six positive year out of the last seven. Dow was up by 13 percent, the S &P about 16.4 percent, the Nasdaq more than 20 percent, and then the small cap Russell 2000 up by about 11.3 percent. Though with Wednesday's market decline in December, the S &P 500 broke a seven-month winning streak. So the best sector for the year last year, it was communication services.

2:40That sector up by more than 32 percent. It was the only sector to end the year lower, though, was real estate. That was just barely negative. And then the commodities markets, gold and silver, they've been one of the big market stories this week. Gold actually ended the year up more than 64 percent. Silver was up by 141 percent, both of them logging their best years since 1979. Same story for platinum with that. And by the way, both gold and silver are up once again this morning. In the meantime, the dollar was down by 9.4 percent last year. It was its worst year since 2017. WTI crude oil was down by 20 % for 2020, so the worst year it's seen in several years, too.

3:22And then Bitcoin and Ether down by 6.7 % and 11.3%, respectively. It was the first negative year for each of those cryptocurrencies since 2022. How would you guys wrap this up? How would you look back at the year and say, here's what we think? Third straight year of double digits. I mean, the S &P 500 had been up 20 % each of the prior two calendar years. So this is a pretty expansive three-year bull market. Most of it's supported by earnings growth. So it wasn't really all about, like, you know, specific AI exuberance dominating. I mean, obviously, that was a big part of the story. I think what's interesting about the way the stock market finished is that we've kind of gone sideways for two months.

4:00So most of those gains came in that huge six-month sprint off the April lows, the tariff panic low. S &P closed the year basically where it had been in late October. But within that period, you also started to see outperformance by financial stocks, by transportation stocks, cyclicals, economically sensitive stuff. So the market seems to be positioning for a better economic pace in the early part of this year, even as tech had some profit taking that was an undertow. Yeah, I was looking at when was the last time that we had three years of double digit gains and then what happened after that. Mike, I know you know this is the late 90s dot com.

4:35But then it wasn't that long ago, 2009 to 2021. And then we had, of course, the decline in 2022 because of the interest rate increase. But it didn't really tell us much about the likelihood or unlikelihood that this year is going to be down just because we've had three years of double-digit games. No, it doesn't. But it is unusual. Trends are persistent. We did have Sam Stovall on Wednesday, and he was talking a little bit about how rare it is to have four years in a row of big games. That is true. Exactly. Usually things moderate. I mean, look, you start off every year with kind of the odds in the bull's favor.

5:1070 % of all calendar years are up. So therefore, if everyone's talking about, well, if the first week is up, the whole year is going to be up, all that kind of stuff. Well, the more you stack the high probability outcomes together, the more it seems like a lock. But it's never a lock. And usually, even if it's strong, you're going to have scares along the way. Do you see over time a real seasonal effect of January optimism? It's, there is a, there's January flows, there's January optimism. You know, a lot of professionals start with a blank slate and, you know, all of a sudden they can kind of add to their risk budget.

5:42Right. But I don't think it's been very precise in terms of handicapping what happens based on, I mean, I know there are all these ways to slice and dice. Look, the Santa Claus rally period, right, we're down 1 % over that. We have two more trading days for it. I don't pay attention to it because it's basically become just noise. It's become this irrelevancy. It was down the last two years. And guess what? We were up the subsequent 12 months. Do you pay attention to the January? I mean, I pay attention to the general tenor of the market to start the year. What you often have seen in January historically is what didn't do well last year gets some relief.

6:19And what did do well last year gets some profit taking. It's obvious to try to sell into a new tax year if you just have appreciated stock. However, the market tries to front run that because that's what we were seeing last week. So it's very tough to tease out. The one indicator that I think is really worth watching, and it's one that doesn't trigger very often, is if in the first quarter you break December's low, that often is a sign of potential difficulty to come. And that didn't count for last year because it was April. It was the second quarter before we had the... Well, look, I think, I mean, I guess you could say, But also, like, what happened in April is the kind of trouble you're trying to see if it's on the way.

6:59It's not to say that the whole year is going to be a washout, just that the market is on less firm footing. I'll throw one more thing that I kind of watch in there, and that's the Davos indicator. Often how the beginning of the year starts is not what happens in Davos, and then Davos is often a counterindicator to what happens to the rest of the year. Well, and there's also the big swing factor this year, which is policy, right? And so last year, everyone was optimistic about deregulation, tax cuts, right? What we didn't really see, certainly until well after the inauguration, was the tariff piece of it.

7:29And that came in April. So there could be a lot of surprises. What I also think is interesting is last year it said that communications was the top sector. Yeah. The AI trade is really the determinant factor for 2026. Well, by the way, that was basically the alphabet in terms of the communication services sector. I wonder. So essentially it was like up 60 percent, added trillions in value. So there's a great note from J.P. Morgan on the weekend. And 42 AI-related companies generated 65 % to 75 % of all S &P 500 earnings and profits. So that really, all the outlooks for this year from the Wall Street banks, it's just where you land on AI.

8:07That's the determinant factor. We have some other news to tell you about, too. Big changes in Omaha, Nebraska this week, and the business community at large is taking note. Warren Buffett has officially stepped down as the CEO of Berkshire Hathaway. a company that he built over the last 60 years, and he's handing over the reins to Greg Abel. Buffett remains chairman, of course. That announcement from Buffett about this transition coming back in May at the company's annual meeting, it was a surprise not only to the shareholders, but to most of the board and to Abel himself. So what changes for Buffett today?

8:41Listen to what he told us just a few days after that surprise announcement. Everything will be the same. I will come in. I won't be up there speaking at the annual meeting, but I'll be in the director's section. Maybe you'll interview me at halftime or something of the sort. Who knows? But Greg will be the decider. He can't imagine how much more he can get accomplished in a week than I can or a month. And at the same time, he's not a distorted individual. I mean, he likes to play ice hockey with his kids, and he lives what would look like a normal life. And my guess is that if the neighbors didn't know who he was, they wouldn't have any idea that on January 1st, he is going to be the decider on a company that employs close to 400 ,000 people.

9:44and has got plans around to be around 50 or 100 years from now. And who knows what will happen, but it has a better chance, I think, of being here 100 years from now than any company I can think of. Able is inheriting a Berkshire company with a huge stockpile of cash. It was over$381 billion as of the end of September. And after a year when the company gained just over 11 percent versus the S &P, which was up by almost 17 percent. Abel, of course, will run all of Berkshire, having the final say on both investments and holding companies. Buffett offering some high praise of his successor. Listen in to that as well.

10:23And Greg's operated more than I have when you get right down to it. I mean, he's gone over to England to run something. He came to Omaha one time to run a business for a few years. And, you know, there's no secret formula that only CEOs have or anything of the sort. So I'd rather have Greg handling my money than any of the top investment advisors or any of the top CEOs of the United States. That is a huge endorsement. It is a huge endorsement, but it's an endorsement we've made. And I am going to have him handling the money of it. And, you know, in effect, I he knows business. So does Warren Buffett.

11:12And in fact, he is going out, guys, after 60 years with probably the most impressive compound in interest record of anybody in history. Berkshire shares, I think I saw a statistic the other day that said they could drop more than 99 percent and they still would have outperformed the S &P 500 over his 60 years running Berkshire. Absolutely. I mean, so it's going to be unrivaled forever. I think what's really fascinating is how the character or the sort of profile of the company might evolve under Greg Abel. I've always assumed it was going to be a lot less about, you know, the invest in public shares of other companies, you know, that portfolio manager type approach, even though it's going to be there.

11:56You have all these great investments. I just wonder on the operating side what that means and if it's going to be more centralized or how that really does break from here and how the market view. I mean, the underperformance this year, first of all, beat the average stock. It was up huge into May on the exact announcement. And it's very defensive. It was up huge until he announced he was stepping down. But I don't think it has collapsed as some people thought it would at some point without Buffett being there. That's right. That's important, too, that continuity. Without it. It's almost like anybody who would have sold because of that did it or is in the process of doing it.

12:33And I do think there are questions we were asking last week. Like, for example, there's always been this advantage of the status element of selling to Warren Buffett and becoming a partner of Warren Buffett's if you do sell your company to Berkshire. Is that going to go away? Is it going to be maintained? Yeah, and I think, Mike, you've said before, there aren't a lot, perhaps any other successful conglomerates that continue. And I think ABLE is clearly one of the, if not the best, operators if you're going to try to do that. But whether that can be sustained, because the history of conglomerates in this country is not great.

13:09But you're right, that's essentially what it is, along with this huge cash pile of$380 billion. It's not great in general, but the way Berkshire runs a conglomerate, they're not pretending that there are magical synergies among all these companies that offset. It's just saying, you tell me what you need to run the business and reinvest in the business. Send the cash back to us. We'll figure out what to do with the surplus. And a company like NetJets benefits from the low-cost capital, which is, across the portfolio, one of the huge advantages that they have in all their businesses, that low-cost capital.

13:38I mean, it's always been about the float. The insurance companies generating the float and then taking and reinvesting back. And Warren Buffett has been very clear about the idea that Greg Abel is going to have the ability to manage all that cash. You're right. I don't know if it'll be stuck into stocks the same way. But what they talked about at the last annual meeting in May was this idea that you might take a lot of that money and invest in infrastructure projects or something to do with Mid-American Energy or Berkshire Hathaway Energy, as it's now called, or any of these other things. There's a lot of big deals.

14:08But I'll tell you, Buffett even said at the time, I wish somebody offered me a$100 billion deal today. They don't want this cash sitting around. They would like to deploy it, would like to put it to work. Buffett's still going to be there as chairman, which gives Greg Abel a lot of protection and a lot of runway to run the company the way he sees fit. I think of it a little bit the way you had Doug McMillan come in at Walmart, where he had the backing of the Walton family. He did some things at the beginning that caught Wall Street off guard, reinvesting in things. The stock sold off, but the Walton family supported him.

14:42And look at what happened with the next 11 years, how Doug ran that company, too. That's a good analogy. Folks, by the way, a programming note for you. While Buffett has said that he is going quiet, the sound that you just heard from him is part of a new primetime special that we're putting together. We're bringing it to you here on CNBC on Tuesday, January 13th at 7 p.m. Eastern time. In a series of never-before-seen interviews, we spoke to Warren about his philosophies on business, philanthropy, on life, and how his perspectives have changed over the decades. Buffett's three children, Susie, Howie, and Peter, also join us to discuss the monumental task that their dad has given them, which is to eventually give away his entire fortune.

15:24But it's an interview I don't think you want to miss. I can't wait to watch that because they are going to become instantly the, if not among the most important philanthropists in the country. Yeah, agree. And they've been trained for it. They have. They've spent decades at this point running their own philanthropy or their own philanthropies and figuring out what works and what doesn't. And they're going to be working together, which is really interesting, too. And it will be New Yorkers who reform a long, broken property tax system. New Yorkers who will create a new Department of Community Safety that will tackle the mental health crisis and let the police focus on the job they signed up to do.

16:03New Yorkers who will take on the bad landlords who mistreat their tenants and free small business owners from the shackles of bloated bureaucracy. Zoran Mamdani vowing an agenda aimed at making New York more affordable for working people. In a speech following his swearing in as New York City's next mayor, Mamdani, promoted some of the central themes of his campaign, including universal child care, free buses, more affordable rent. We will answer to all New Yorkers, not to any billionaire or oligarch who thinks they can buy our democracy. We will govern without shame and insecurity, making no apology for what we believe.

16:46I was elected as a democratic socialist and I will govern as a democratic socialist.

16:55A lot of excitement there. Mamdani's inauguration of 40 ,000 people braving the cold. Also featuring speeches by fellow democratic socialists, Senator Bernie Sanders of Vermont, New York Representative Alexandria Ocasio-Cortez. And, you know, it'll be interesting to see. We've got the New York governor race this year. interesting to see where and whether he can get the money for these programs, what he can actually do. Mayor, of course, does not have the ability to raise taxes in New York City. That has to be approved in Albany. But we saw Governor Hochul there right next to Mamdani showing her position, at least with regard to some of his policies.

17:33This will be one of the most fascinating political stories to watch this year. He is just a mayor, but it is New York City and he has galvanized a lot of energy in this party. I mean, that's the really interesting thing. I feel like Hochul is, Governor Hochul will be in a little bit of a pickle. She's the one who will have to do all the things that voters hate, which is raise taxes, in order to allow him to continue the agenda that he has run on. If she doesn't do it, she's the one stopping his agenda and irritating everybody who supported it. If she does do it, she's the one who's going to be the one who raised taxes.

18:10And look, we all know here at CBC. And so far, she's been saying she's not going to raise taxes. Absolutely. She has given a little bit on the corporate side. She may raise the corporate taxes. But that's going to cost New York. And we can sit around here and we know what it means when the wealthy leave, when companies leave. But look, we are in a very populous time when most Americans are really under pressure from inflation and they see the asset prices for the asset wealthy continue to rise. So it goes without saying that taxing the wealthy is more popular than ever right now. We see what's happening in California.

18:42So there is a lot of pressure both within her party, but also I think among voters. Hey, we just got higher salt ceiling passed. $40 ,000! But for the majority of voters, that's still material. I also feel like you're starting from a point where New York's never been a low tax venue, right? So it's not as if, oh my gosh, the identity of New York as a tax haven is going to go away. So I think all those things fit into the debate a little bit here. Meanwhile, the affordability said he's talking about permitting rules and all the other stuff that is within the mayor's control. Who knows if it's really going to matter to get more housing built?

19:17But at least rhetorically, you can sort of say, look what I'm doing over here that seems a little bit more private sector solution compatible. I guess, but free buses, free daycare, like a lot of these things, you need money to pay for those things. The daycare for sure is a very, very expensive and tough proposition. You need money to be able to do that. You need higher taxes for that. But then do the higher taxes work if you lose the highest, the wealthiest out there? So there are questions that come with it. I did like Bernie Sanders. You saw him clapping and sitting there so different from the meme.

19:49Remember Joe Biden's inauguration? He's excited. Sanders was the meme sitting out there in the same coat. It looked like that he was wearing from that with his mittens. I would bet a lot that it's the same coat. I would bet. It looks just like it. It looks just like it. But by the way, I can't criticize. I think I'm wearing the same coat from years ago, too. Cheese will be next. Coming up on Squawk Pod, are billionaires really about to leave California in droves because of a new tax on the wealthiest? Former Republican Senator Pat Toomey joins us. It's not going to be just billionaires. People are going to realize there's no limiting principle here.

20:25If you can confiscate the assets of a billionaire, why not someone who's worth$500 million or$100 million? And former Democrat Senator Heidi Heitkamp. I think there's a whole lot of ways to address income inequality, a whole lot of ways to address the perception, if not reality, that rich people are not being taxed than to simply embrace a wealth tax. We'll be right back.

20:53Welcome back. This is Squawk Pod from CNBC. Today with Becky Quick, Mike Santoli and Robert Frank. Zoran Mamdani vowing an agenda aimed at making New York more affordable for working people. In a speech following his swearing in as New York City's mayor, Mamdani promoted some of the central themes of his campaign, including universal child care, free buses and more affordable rent. We will answer to all New Yorkers, not to any billionaire or oligarch who thinks they can buy our democracy. We will govern without shame and insecurity, making no apology for what we believe. I was elected as a democratic socialist and I will govern as a democratic socialist.

21:43Mabdani's inauguration also featured speeches by fellow democratic socialist Senator Bernie Sanders of Vermont and New York Representative Alexandria Ocasio-Cortez. And the big chant at that rally was tax the rich. That was the big chant. And speaking of that, we're going to go to a wealth proposal in California that has angered some of the state's richest and some in the startup community. One of the big questions around the proposed billionaire tax is valuation. So most of the 200 billionaires in California made their wealth in tech, usually a stake in a private or a public company. Tech companies, as we all know and have seen, are highly volatile.

22:21So let's say your stake in a tech company was worth a billion dollars as of January 1st next year. You would owe$50 million tax. If that valuation falls, let's say, by half in a few months, you would still owe that$50 million tax. In other words, tough. The bill makes no mention of refunds or credits. Now, the issue is especially important given the volatility of tech stocks and valuation. Last year, the AI boom created 50 new billionaires, many of them in California. If AI valuations could decline, some of those AI billionaires will no longer be billionaires, but they'd still owe a tax on wealth that they no longer have.

23:03Now, the bill does make provisions for private companies or illiquid assets that allows them to pay over five years. But the amount that is owed actually doesn't change. And there are penalties of up to 20 to 40 percent of the amount owed for those who failed to pay. So a lot of people, I've talked to a lot of tax attorneys that are helping a lot of Californians either make plans or move out of California. The question will be, because this is retroactive to yesterday, you have to approve you're no longer a tax resident as of January 1st, 2026. Did they get enough time? will it sort of withstand the legal challenges that it will inevitably be faced?

23:46But there are a lot of billionaires in California and soon-to-be billionaires that are trying to leave, planning to leave, at least finding out what it takes to leave California. Well, there were a flurry of announcements that went out. Peter Thiel making a point of saying that his new office in Miami is set up. David Sachs said that he's got a new office that just opened in Austin, Texas. And I think Peter Thiel's signed that December signed the lease for their extension on that. And what was Larry Page's? Larry Page, same thing. He's got a family office in Miami. His family office head is now spending a lot of time in Miami.

24:21Now, the question of residency isn't just did you leave or were you out of the state for more than 180 days? It has to do with your bank accounts, where your kids are in school, where your pet goes to the vet, where your dentist is. So unless you've shown a pattern of all those things being in Texas or Florida for the past year, and the California auditors are very tough, even tougher than New York, when it comes to forcing you to prove that you have actually left. So that's going to be a question along with, can you actually make, will the tax itself survive legal claims, but can you make a tax retroactive?