coming in better than expected. we get jobs next week. the question is, is 2014 going to look a lot different from 2010. michele bachmann is leaving, tea party is in decline. might not take back the house if we get a lot of good economic data, it makes our case better. >> ben just took your last two words. >> we'll have you both back soon. right now it is time for "squawk on the street." good morning and welcome to "squawk on the street." i'm scott wapner with jim cramer live from the new york stock exchange. carl quintanilla is on assignment. we'll hear from david faber shortly. markets looking to bounce back today from yesterday's 106-point drop in the dow. futures holding on to gains despite a slight downward revision to first quarter gdp. european markets also repounding after having tuesday's gains erased in yesterday's session.

overnight in asia a stronger yen helped spark another big sell-off in the nikkei. down more than 5% and into correction territory after hitting a 5 1/2-year high just last week. our road map today starts with the markets. as we mentioned -- dish network boosting its bid in the battle for clearwire. david faber is be along with much more in a few moments. warren buffett's berkshire hathaway buy iing an energy company. we begin with the markets as we said, futures on the rise, jim. everybody's trying to get a handle on what happened in japan overnight. what it may mean to what happened -- to what happens here today. in the environment of rising rates and everybody paying attention to what the 10-year's doing. >> i think japan, classic correction.

obviously people feel that -- before people freak out about the banks, remember that this economy has been dead for -- it's not a lost decade. it is literally a lost 15 years. i don't want to write that before. but a new phenomenon -- the job claims came out. i was looking for weak. we got weak. gdp comes out. i was looking for weak. why i say "looking for it," we are on watch now where all good news is bad. everything good. we got to focus on paper. everything bad and we focus on non-paper. kimberly clark down yesterday because people feared this news would be strong. it was weak. it bounces. >> you think the markets in general have overreacted to this rate story? >> no. >> no. >> no. because if it continues you really have -- there are a lot of people caught leaning the wrong way here. i know you are a baseball fan. it is entirely possible that

there's just pick-off after pick-off after pick-off. i'm very worried about mortgage bonds. who knows what's in -- we've got trillions of dollars in mortgage bonds we're calling the wrong way. you you don't want mortgage rates to go up because you need housing which is really the only area of the economy that's still strong. i do want to see a leveling off in rates otherwise, no, we're not done with the reit hammering or with the hammering that need rates -- >> the dow utility average yesterday in correction mode. you do have this shift, the make-up of the rally certainly seems to be changing over the last several days to a week or so as we've paid more attention to rates. now people are shun being the you a tilts, staples, big dividend payers trying to look at more offensive areas of the market. >> i was looking at the brilliance of warren buffett scooping up this nv energy which is, by the way, fully funded. they can export power to

california. the market in nevada has clearlily bottomed. it is a b-rated piece of paper. i come back and i say the only guy who's buying utilities is buffett. i look at pinnacle west and see it doesn't yield enough for me to want to get in. i look at duke. still doesn't yield enough. i believe you'll see these high-quality utilities at 5% and wish you hell off buying. >> this is for buffett about renewables, about getting a bigger footprint out in the west. >> yes. this is a company really only has 10% that is solar, mostly based on nat gas, very little coal. trying to do clean coal. the main thing is nevada has bottomed. this is one of the continuing themes. arizona bottomed. california bottoming. florida bottoming. we had david henry on this morning on a fabulous interview on squawk. big shop center guy. these areas that had been

generators of the economy are coming back. buffett coming into nevada almost at the low is brilliant. by the way, nevada power has not -- there is a great grab if you go to the website. it says gaming revenues do not correlate with with electricity. these guys are a very smart company and they have every chart and graph you need. >> back to the market. i talked to a the lot of people an they raise the issue of there's still a tremendous amount of cash that wants to come in to the market that are going to use any day like we saw yesterday with the dow at a four-week low or the worst day in four weeks or whatever as an opportunity to come in and buy the market. do you think that that prevents the market from having any sort of meaningful correction, the kind that people keep saying has to come sometimes? >> here's my problem. i think the market is bipolar. people are saying, cramer's giving a green light to buying procter & gamble -- not! i think the market as we see it was yesterday -- take a look at the banks. the banks never faltered. why? because they're selling at back value. >> because they're clapping with

rates going up. >> yes! they need some inflection. this reminds me of 1989 to 1991 when greenspan said we have to rebuild these banks balance sheets so they can lend again. those banks were like stone walls. i just think that that's what i'm looking at. is the market is being bifurcated here. people want to buy technology. emc up on a buyback. they were sick of their stock being down 8%. people want to get out of the market bond. unless we get a series of weaker numbers they're not going to go there. they'll go for something with a little juice. caterpillar up premarket. why? i don't know. >> emc, priceline with new buybacks. over the past three months you've had a record $214 billion in buybacks. have you that dynamic which is also helping the market move higher. >> goldman had a really interesting call this morning about the defense companies upgrading. think about it. questions ter.

matt lauer asked me yesterday on "today," jim, how is the sequester hurting you? i said, geez, lockheed martin was up. but i do think that northrup grummond's buying back 25% of their shares, stated goal by 2015. wait a second! cracker barrel reports next week. i happen to be a big fan of that putting that big cheese on top of the granola -- >> you think they'll downgrade that? >> no. it used to be a great pfizer play. before when you went to cracker barrel you had to take a lipitor. these stock buybacks, there's like no stock around and that's what happens is you can get a -- i think where the stock's been bought back that really does matter is another floor. there's some floors but at the same time, is there a floor on a company like floor rocks which isn't growing very fast. but is well run. clorox is depending upon

kingsford. you get five good days of weather and kingsford explodes. >> fire the barbecues. >> natural gas should begin to trade up. you only took a couple of hot days. union pacific -- what a great company. they were on "mad money" last thursday. we get a couple of hot days, air conditioners go on, we bring down all the inventories of these fuels. look out -- it is 90 degrees. my collar will be completely brown from the makeup had they put on me. you can't even tell i wear makeup. i look pale as whatever. pale rider. but i do think there can be a bit underneath. >> you know where they go to buy all the charcoal and some air conditioners and all that other stuff? costco. >> well, my travel trust owns it. that was a remarkable number, 7%. if you back out the fuel. what kind of numbers did walmart do? right? this is that model. this is that card model, the infinity card model. all the good companies had -- there's something in the seattle water because starbucks has a

great affinity here. are you an executive member or are you just a regular member? >> a regular. >> i have been thinking up upgrading to an executive. i mean you get a little more. >> the amount of paper towels and toilet paper and all the other stuff i walk out with? >> paper towels are their largest seller. good that you mention that. that is their absolute largest seller. how can you not? i got two kids running around. paper towels rule my world. >> you have to own a house to understand the greatest of costco. they don't just have those little tiny light bulbs. dish network raising its bid for clearwire to $4.44 pr share. the takeover battle as dish tries to buy sprint. david faber joins us with more on the clearwire story.

there was only one person who could bring this one. what do you make of this latest news? >> scott, this is a significant change, if you will, for mr. ergen. a lot of it hasn't been noise but hard to decipher but this is a real bid. in speaking to people, it is clear it is a real bid. it does not have anywhere the conditions of the last bid that dish had made for clearwire which was $3.30 a share. it is $4.40 in cash. it is a tender without being conditions. and so it is going to be well received, one would expect, by the public shareholders. but that's the key here. let's not forget, sprint owns roughly 50%, but it also has the right to buy another let's call it 18% from the likes of comcast, our parent, and intel and it won't give that up either and in fact will likely do that. the best mr. ergen had hope for here is that he will own roughly

30%, maybe 32% of all the public shares out there of this company's stock, but it will be enough for him to be an absolute significant thorn in the side of the team buying sprint. not clear what his strategy is from there. this is a real bid. they're expected to adjourn the meeting tomorrow, my sources tell me. not a big surprise there. and we shall see what happens from there. >> david, clearwire obviously was worth like 30 cents at one point. now everyone is buying it. charlie ergen, he's not a bank. he's not the jgb bank of japan. where is he getting all this money? >> well, he's lining. the sprint bid. that continues to be something we believe he's focused on. in fact i can tell you yesterday, i was told mr. ergen was on the campus of sprint. they began their due diligence recently so he's on the campus

of sprint while he's preparing to make this $4.40 a share increase offer for clearwire. but that said, it is only $2.2 billion he would need here, let's call it, to buy in the public shares. he's not taking sprint shares, he won't get the comcast or intel shares. that's actually the equivalent of what he made an offer in his last clearwire bid to buy the spectrum of clearwire for. no longer conditioned on that. who knows? you can expect late with ergen what he's really after. he can own this stake and swap for spectrum at some point for clearwire. he's been expected to line up the financing but that's been the key question all along how serious he is. >> david, is there a possibility he's walking on campus, and does he come in peace? is it possible that what's really cooking here is a split, something where softbank wins and dish wins? because it just seems like there's just too much activity for me to think that he's just

done, can go away. why not make it so that there is some sort of split where dish gets some, softbank gets some? what's going on? >> that's a great question, jim. you're asking me to decipher what it is mr. ergen really wants. we use the word poker player a lot, but he is the consummate poker player. so i can tell you having spoken to so many of the advisors around that, directors and everything else, nobody's quite sure what charlie ergen really wants. but it does appear he is in a position to actually get 30% of clearwire. after that, maybe it is a commercial agreement. 's got all this spectrum but he doesn't have a network on which to use it. and he can't build that himself. and so there's always been a thought that what he really wants here is some sort of very significant commercial agreement with sprint that would allow him to deploy in spectrum and do so anonymously. but trying to decipher what his true end game is here, you know, the guy is very, very hard to

read. >> it's calculated, certainly, the timing of it, david, a couple days ahead of the sprint vote. right? that's how this guy plays ball, right? >> yeah. the clearwire vote -- which is still scheduled for tomorrow, but won't actually take place according to my sources. that's going to be adjourned. in fact, interestingly, scott, june 12th is the sprint vote. we've got to wait to see what happens there. that softbank continues to push its huge timing advantage over dish and many other things. they got the agreement that they needed yesterday and what they needed on the securities front, softbank did. that's june 12th, this meeting will be push out. there is a possibility softbank reversus itself -- or i should say sprint with softbank reverses itself and pays more, comes up and says we'll meet the price you were willing to pay for clearwire to try and get this whole ting done. what we've realized here is clearwire was a lot more valuable than we recognized perhaps in the early days.

because that spectrum is so central to the business plans of either dish or softbank. >> all right, david. thanks very much for the latest. >> the whole time when clearwire was at $2 he was telling me, listen, there could be something here. it's important to try to make money, too, not just talk about tapering. >> david, we'll talk to you soon. david faber for us. coming up, a pair of wall street upgrades lifting facebook from its lows of the year have shares of the social network bottomed out. also ahead, another david, david stockman, who served as white house duth direirector du reagan information. find out the message he's sending to fed chairman ben bernanke. stocks looking to rebound. dow's coming off its worst day in four weeks. looks like it will be a positive open but a little bit of a luster. no doubt taking off by not only jobless claims but that next read of gdp which was a big disappointing as well.

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shares of facebook jumping after premarket trading after social network received upgrades from jeffries raising it from buy to hold saying it represents a buying opportunity ahead of the expected july launch of video ads. also bmo upgrading the stock to outperform from market perform saying market sentiment regarding facebook has grown overly negative. jim, when the stock hit its lows for the year yesterday, the bmo highlights -- positive advertising expectations, they say sentiment is overly negative. >> the worst. >> and a near-term catalyst being the upgraded video ads as we just said. >> my travel trust has been buying this stock. why? there have been so many lies about this company since they've reported. the usual engagement is up, not down. every single ceo on "mad money" i ask what is the preferred way they want to advertise. it is facebook. this is not twitter. now espn likes twitter. pepsico likes twitter, but it is facebook. there's this kind of unreal world of wall street that hates this company so much.

cheryl sandberg gave an interview yesterday. she said twitter's real. i love her honesty but i would like to hear from facebook whether they speak, we're the best. not wait a minute, these guys are nipping at our heels. a lot of people short the stock. here's "usa today" piece. how to ride facebook's giant wave. it is all about facebook. this is the preferred way to advertise. it's not the preferred way on wall street because people hated that deal and they will never stop hating -- >> it certainly seems as though wall street is grasping to any negative string that comes out regarding facebook. you mentioned, the twitter news of a week or two ago, everybody got -- oh, wait a minute, they're not using facebook? they're using twitter now? >> i was on the conference call -- which was a great conference call. said user engagement is up. the notes the next day say user engagement is down. you know what? this would be like costco saying

business is great and then people saying we were on the costco call, business is terrible. i mean like who you going to believe? you're -- my lying eyes or facebook conference call? facebook has to recognize this is a game that's played by wall street and sheryl sandberg has to say everything that's been reported about our company is wrong. by the way, every single advertiser is willing to still pay a premium for video. this is not one of those thing hayes happening. but it is a hated stock and people will short it left and right. >> are you saying the biggest issue right now facing that company is zuckerberg's lack of visibility in telling what their story is right now and where we're going to be? >> all he's got to do is say stop lying about my record. that's a little bit of a reference to a political campaign, but this company doesn't understand the

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i got about five minutes before the bell rings. time now for cramer's mad dash ahead of the market open an we're focusing on solar and a bunch of upgrades at goldman. >> look at this. wafer. wfr. they are going to a conviction buy! i mean holy cow. fslr upgraded to buy from neutral. better late than never? sun power upgrade to neutral from sell. these have been just -- these stocks have been on fire. goldman says it is not too late. near-term visibility trumps long-term risk. undercurrents here. one, the chinese. no one's tolerating their dumping anymore. the chinese have lost a portion of this. second, i am going to play solar city. elon musk, people realize financing is coming to solar city which means you'll put a solar panel on top of your house, i'll put one on top of my house and this has become a low-cost reasonable way to provide power. this is an amazing phenomenon.

>> how about the stock on solar city? because herb greenberg's been all over that one, too, our pal. >> herbal life greenberg? i'm test driving a tesla tonight in preparation for interviewing elon musk tomorrow. i don't want to short them or long them, but solar city caused this rally when goldman sachs did the financing. there's financing for solar. that's always been the big, big stumbling block. now there's -- solar city has started this. elon musk is a visionary. now will i drive the tesla on the new jersey turnpike? i will tend to drive it more around my hometown. unless i go to giant game. or jets -- jets. i want to point out that, this all started when first solar said they could do $5. at an analyst meeting that stunned people, wfr, wafer, we call it, was the most shocking

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you are watching the opening bells at the s&p 500 and cnbc realtime exchange. this is an interesting one given the man at top. >> now he's the chairman and ceo. those who don't know him, that's sidhu, he is the man who built sovereign bank, one of the biggest banks in my hometown, philadelphia, then flipped it in one of the greatest trades in history. then retires. the fact that he's coming back to a community bank with with just a few branches, signals to me that the smartest people in banking want to be bankers

again. that group is the most undervalued group in the market. >> oh, okay. i like that word. as we begin trading today, financials were the only group that were positive yesterday. sort of everybody's trying to figure out what the best plays are in the market, whether they have -- the dash for a yield is coming to an end and there will be rotation to other areas. >> i usually hate to talk about yield curve. i don't like to talk about tapers. i'm willing to talk about li lemurs. a taper is positive for the market because then the banks start making money on your deposi deposits. the cd rates, they're not making any money. you give them just a few basis points, they'll make fortunes. that's why the banks are the place to be. >> you think the market is eventually and participants are going to start understanding

that more don't fear the tapir, the tapir could be beneficial to certain areas of the market that are undervalued, like the banks. >> i think that people will not understand it but the move will occur. the moves tend to be exj rated. who would have thought people would buy bond market ekwifb lentz whether they are yielding 2.75%. i think it takes a while for people to catch on that a stock like -- you take a look at citi. i mean look at citi. here's a stock that's been in one of the most quiet rallies. it's incredible. u.s. bancorp just had been consigned to the dust bin, kind of creeping up. needless to say, jpmorgan, jamie dimon is back, bigger than ever but maintaining that lower profile. >> i still go on this thought that if there is a significant amount of money that wants to come into this market, if there's a belief that you're going to have some kind of summer rally, this recent rise

in rates is going to subside a bit, that we're going to get back to talking about what's working in the market rather than the fear of the fed, fear of the rates and everything else. >> realty track comes out this morning and talks about a dramatic decline. the number of homes that are foreclosed is dropping, dropping, dropping but it's still been 36%. that's absolutely superb. foreclosure related sales accounted for 20% of the u.s. residential sales. scott, the idea that this country is only going to build a million homes this year, we need every home we can get. a lot of that price appreciation you saw, case schiller, is because we don't have enough homes. it is not because money is too cheap. it is very, very hard to get a loan and you have a 750 fico score. we don't have enough homes. go back to toll brothers. these things were killed. >> who was it this morning saying basically buy all the home builders. >> stern ag. >> yes, it was. >> what just a line in the sand.

toll brothers had a great call. yearly's good. look, i happen to love the toll brothers. stewart miller at lennar. these guys knew when things were bad. bob toll didn't tell you to get in front -- he didn't see light at the end of the tunnel. he said it was an oncoming train. now he's bullish. go back over the home depot conference call. they're telling you there is just going to be a surge in home buying and all the inventories being worked off from the banks, no, i'm not backing away from this group. no! >> because as rates go up and people get spooked, if the stocks get hit harder, it provides an entry point for the people who believe that the housing story is going to continue. >> right. kelly evans had an amazing point yesterday saying, there's been no run toward mortgages, yet. he recognized things are starting to go up. but when i look at what warren

buffett buys, when he see that he goes into nevada and i see that he buys the largest power company in one of the hardest hit areas of residential and of course, you know what? this move is not over. everybody loves to sell the home builders. toll didn't go to 30 this time. >> is an incremental move in mortgage rates going to have a dramatic impact all of a sudden on the desire it buy houses? >> no, not the people i talk to. >> fundamentals of housing, no. stocks, yes. >> kimberley clark told you everything you need to know -- more diapers. people are having kids again. people are finally saying my mother-in-law, god love her, but you know what? it's time. 330,000 homes are destroyed every year from fire and flood. a little bit higher because of sandy this time. we have a housing shortage. we build -- in 2009, '10, '11, if you combine them, we built half as many homes as we built

in 1960 in this country. so yes, it is really easy to sell down the stocks. they don't have any yield support. hedge funds love to slam them down. hedge funds love to do that. it's fun. but maybe they ought to take the other side of the trade. >> the dow has turned negative -- >> it's not going to end! people are still going to say the back-up continues. they only notice selling. that's why i say the stocks will get hit more than the businesses. but i do think that if you're going to short toll here at 34, i don't know. i mean maybe you hope it goes to $33. >> josh lipton's watching everything on the floor this morning. josh, what do you see that's moving the most? >> let's start with a quick trip around the world here. we'll begin in asia. markets closed lower. notably a drop again in japanese stocks. nikkei now down about 15% from that may 23rd intraday high. though still up about 30% this year. in europe it was a different story. you saw markets mostly higher.

you did see better consumer business and economic confidence in may. here state side, of course an hour ago we got a slew of economic day, mostly weaker than expected. jobless claims slightly higher than expected. you you got the second look at q1 growth. some folks say if you were worried about what doctors bernanke and yellin might do next and you don't mind seeing slightly softer economic data. we'll end on a couple individual movers. express. they are the news. raises 2014 eps. sees q2 eps above consensus. the ceo talking about customers responding enthusiastically to their spring merchandise. also joy global lowers 2013 eps and narrows 2013 revenue. there the ceo talking about what he calls a sluggish recovery in the u.s. the contraction in the eurozone, the weaker than expected trooin china, all that he says slowing the growth of global commodity demand.

>> my travel trust right here buying joy. sghi because there's people trying to force that one down. the conference call i think things will be okay. you have to buy something that's connected to world growth. this is that whole issue i'm talking about. >> the commodities conversation plays right into that and global growth. >> iron ore down 4% last night. obviously this is against the grain trade but sometimes you have to do that. >> isn't that when the money is made? >> that's what i -- i learned this weird thing it is called buy low, sell high. it is so out of facial, it's scary. >> i think i've heard that before. >> josh lipton brought up what most traders on this floor are paying the most attention to. hayes what's going on in the asia markets. the nikkei particularly. the jgb as well. nikkei continues to get hit very hard. two-day chart of our 10-year notes, granted, rates are elevated, but as you see on the

two-day, spikes to the up side have moderated. gdp revision was small. we see we are off our highest levels. but when you open the charts and you look at a chart over several months on interest rates, it really jumps out. same is true with the bund and the jgb. its volatility the last several sessions has ramped up and to think not that long ago it had an intraday low around april of 30 basis points. let's switch gears and look at the foreign exchange side. if the nikkei keeps moving down and the yen starts to strengthen, that could have a big impact on carry and leverage. and yes, the yen is strengthening, but not huge. look at the following charts of the major currencies against the yen. the dollar-yen. see the dollar giving up some ground but not a lot. euro-yen actually giving up less.

maybe it is a battle of the weaklings. but the interesting chart is, with all the talk about commodities, look at the aussie dollar versus the yen. but no matter how you slice it, should the yen start to strengthen more significantly with a weak stock market and rising jgb rates, it will be noticed in the credit markets. now let's go to judge wapner. >> all right, rick esantelli, thank you so much. kelly evans is here at post nine. i know you've been keeping a close eye on what rick was talking about and other things as well. >> two things. we had another 700-point sell-off in japan overnight. stronger yen, exporters getting a little bit of a mitt. but we are talking about a market that's more or less in correction mode from its highs. the question then becomes is there room to run and interesting to see what's been happening over in japan since markets closed. futures have really come all the way back. why? the public pension fund, major fund, may be increasing its

exposure to domestic equities. keep in mind this is about 11% and that's typical for a lot of these japanese funds. 11% of their portfolios to equities. that's more about the volatility action we've seen since the crash than anything else. you might say are he they not a little late? we moved 70%, 80%. but the question is becoming now are government bonds too volatile with, are they moving to equities -- >> they are acting quite volatile certainly lately. the 10-year yield is twice as high now as it was before the massive stimulus thing was announced. >> oh, exactly. it is almost twice as high as it was a couple of weeks ago. the question becomes if they're able to increase this, bullish signs for the nikkei of course but what does it mean for jgbs because it takes out another natural buyer of these bonds. there is a really significant rebalancing going on in japan and there is going to be implications both for how risk trades because we saw this overnight, but also people considering our own future.

>> one of the things that just always surprises me about japan, kelly -- enlighten me -- there's always some gigantic thought that has money to burn there. has the postal fund gotten involved yet? >> this is what you watch now. you watch for one after the other. if the big public pension fund makes a move, everything else will start, inevitably, you would imagine, to follow. >> incredible. >> they also want to be quite careful not to overreact as well to the volatility we are seeing. i'm sure they're sweating watching what's happened with rates, watching what happens with the nikkei an the yen. but they also don't want to overreact. >> they've held their fire in the past. i think back during the crisis there was some consideration about whether to maybe move the other way. these funds move extremely slowly which is why, if they do change here, it will be so significant. >> is there going to be bifurcation? we know that the banks own the jgbs. will they go and -- if they get

the yen to stabilize, will the banks still go down because of the jgb may be caught, and the exporters do well if we just hit some stability. toyota's pretty cheap here. >> great question. let me -- we are running a little short on time. you were talking about mv energy. this is a quote from brian reynolds over at rosenblatt securities. if you want to understand, mid american making a bid off a buffett-owned company raises money in -- raised level of money but issuing debt earlier this month. now it is taking a look at this utility that's sold off in the market as we've generally seen utilities get hammer. now it is up 22% today. brian's point is what you're seeing here is a bid in the market coming from managers who are saying this stock's down, i can turn around, unlock the value here. a lot of people -- buffett might like this play. it is a play on las vegas. there are some fundamental reasons to like it as well. but he is saying this is a

perfect illustration of financial engineering at work. buffett taking the example of the super low borrowing rates. we believe this process will be repeated again and again. >> the refinance the whole thing. >> buffett, it is basically a way to short treasuries. fine, i'll lock in these low rates. we'll see how the rest of the utility space reacts. >> see you back here in a few. what happens when google takes over a house in new york city's soho district? also ahead, is the party for dividend stocks over? two money managers will debate that question. let's take a look at this morning's early movers.

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welcome back to "squawk on the street." i'm sharon epperson at the nymex. gold prices on a tear, up nearly $20, around $1,410 an ounce, as high as $1,415 an ounce earlier in the session. the bearish economic data we've seen from jobless claims data to the numbers we got on revision of first quarter gdp, that's all helping gold prices. add to that the weakness in the dollar. some traders say it is not necessarily new longs coming in but perhaps short covering in the market after the weakness over the last several sessions. we are continuing to watch what's happening to gold prices here as well as what's happening in the energy sector. we do have inventory data coming out later today. we're watching as we saw last night the american petroleum institute reported an increase in crude supplies. it was a surprise to the market. we got natural gas coming out at 10:30 and oil inventories at 1:00. we'll bring you the numbers live. >> sharon, we look forward to

that. tesla is announcing it is tripling the size of its super charger electric vehicle stations. ceo elon musk outlined the major expansion of the company's recharging network last night at the d-11 conference. tesla currently has nine operational stations. musk says by the end of the year tesla owners will be able to drive from l.a. to new york. and, oh, by the way, this man right next to me is going to be taking the tesla's model-s for a test drive this evening. it is going to be caught on camera and we'll bring you that tomorrow on "squawk on the street." plus, if that's not enough, we'll also have an exclusive live interview with elon musk himself. >> the most exciting man in business. a lot of people like jim cramer on twitter say don't buy tesla. but elon musk has said something

here. if you're out in california, every other car seems like a tesla. we had to put a charging session in our inn in summit. elon musk is for real, whether solar city or tesla. the stocks, they're out of their mind crazy. but people like this driving experience. >> to be able to drive from l.a. to new york is big. the bearish case beyond just what the stock has done is that you can't go that far. i hear that a lot. some of the guys on our show say that as they try and lay out the bear thesis. >> these people who just go back and forth, back and forth, they love the darn thing. it is only a matter of time before bmw comes in and does their own super tess. whatever they can do. this is a phenomenon in the smasht. stock market. i happen to speak to a lot of kids about what stocks they play in the stock games.

parents wish they were playing with the kids. the kids are playing tesla, parents are buying clorox. >> do you have a heavy foot? >> lock your doors. you don't want to be within a 90-mile radius of summit, new jersey. just be careful. does the aaa not have one of these? i'm a aaa member. >> they may be on full alert this evening, extra staff called in. >> you bet. i get an extension cord, i may take it all the way to here. here's what's coming up next on "squawk on the street." coming up, are you still in bed? well, you better hurry up and get moving. six stocks in 60 seconds is up next. you won't want to miss jim cramer when "squawk on the street" returns. you've known? is the n we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s.

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time for "6 in 60," six stocks in 60 seconds, give or take a few.

>> jpmorgan upgrades so it is a split. someone better than expected numbers. citi group says weakness is a buy but goldman takes it off conviction buy to buy. >> letter f. ford. >> is there a guy who doesn't? universal health, it was a terrific upgrade today. surprised that they went for it. ford's going higher. >> how about alcoa? >> i know the company is not happy with the downgrade to junk status. i question the rating agency. alcoa's doing better than we think. >> staples. >> bernstein said that conference call was a little more downbeat than it should have been. i think it goes higher. i hear judge is holding court downtown today. >> court will be in session right here post nine at noon. >> will that be like when they had a court and a jail at texas stadium in philadelphia? >> if you don't behave on the show today you're going

downstairs. >> who do you have? >> mohammed el-erian. what do you have? >> charles batchhelder from popeye's. i love the crawfish special. chart has been very hot as people talk about exporting the natural gas. >> give me a kwib comment before you go. market up 71. >> there are two camps. okay? the camp which says as soon as you get any weak data we can go back to the job equivalent. you look at jobless claims, say that's a little bit weak. then people say i want to roar into the cyclicals and the banks because rates could go up. i am in the latter camp. i went to sell the soft good stocks on strength, which you have today, and cycle in to the

cyclicals and particularly the banks. banks are charm here. that's exactly what the banks order. this is the bank environment we've all been waiting for. >> i had fun. >> this was fun today. >> see you tonight at 6:00. and 11:00. jim cramer. simon hobbs with a look at what's coming up next hour. >> you may have had fun so far, scott, but the second hour is going to be even more fun. we'll have our third major data point on the housing market. we'll look at where this market is going to trade now, what will happen to the difficult den stocks and the cyclicals. and also the power of the $50 membership at costco. we'll be looking at that company in particular. that's the next hour of "squawk on the street." i'll have more awkward conversations than i'm equipped for, because i'm raising two girls on my own. i'll worry about the economy more than a few times before they're grown. but it's for them, so i've found a way. who matters most to you says the most about you. at massmutual we're owned by our policyowners,

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can help you do what you do... even better. ♪ welcome back to "squawk on the street." i'm diana olick with breaking news from the national association of realtors. pending home sales flat missing expectations, up to 0.3% month to month in april. the expectation was for a gain of 1.5%. this is pending home sales which represents signed contracts, not closings, so an indicator of what's to come about one to two months from now. index is higher by 10.3% to the highest level since 2010 just

before the expiration of the home buyer tax credit. saying sales are essentially squeaking by because of a low inventory of listings and higher prices. out west is where we saw all the distressed supply, investors coming this, buying up these properties in bulk and now there's very short supply for sale listings out west. you are seeing that in the drop in the numbers. again this is a miss on pending home sales. we were expecting to see some kind of spring surge but that's likely not to be as we head into the slower months of summer. >> diana, thanks so much. let's get more reaction to the numbers. another dose of data out this morning, second estimate for first quarter gdp. jobless claims as well. we bring in cnbc's senior economics reporter steve leisman who has more on all the numbers.

steve, so the dow is up 82 so it's moved up a tiny bit on these numbers. gdp was a bit disappointing. jobless claims a business disappointing. housing a bit disappointing. bad news is good now for the market. >> it seems that way, scott. seems like it goes either day to day, maybe even hour to hour with how the market balances better economic growth with less fed help or worse economic growth with more fed help. claims coming in below expectations rising. i want to show you the four-week moving average here. what you can see is the concern is that the improvement we saw in the past couple weeks and months has kind of stalled out and what i'm hearing today, one of the very low weeks is going to drop out for the four-week moving average so it is expected to tick up. the level is consistent with decent payroll growth, say in the 150,000 to 175,000 range using very simple models.

but you'd like to see that number improving. we were down to the 3.30 area. it was whetting appetites for maybe an acceleration in the labor market. that's not showing up in the data any longer. gdp, a dow jones forecast of 2.4%. coming in at 2.4%. details confirming what he going on in the economy -- consumer, not too bad. business investment, okay. 2.2%. those are the good things. they were revised up just a tick. gdp up 2.4%. business investment, 2.2%. the other part is housing. that was revised down. but government spending down a half a point from the original estimate. inventories also down $38 billion from $12 billion. kelly and scott, the story is that we're still in a 2% growth economy and hopes kind of being dashed for any immediate is

being -- acceleration in the labor market. >> simon is here, too, steve. >> i'm very sorry. no offense. you know i think the world of simon and his fabulous questions that he asks me all the time, wm of which i cannot answer. >> i can just bring up -- simon, do you want to respond? >> no, no. carry on. please carry on. >> that was a complement, by the way. >> i know. you were saying? >> i was actually going to save this question for whether bad news is good news. if the housing report is a supply story, if the story is that we don't have enough supply and that's pushing up prices and keeping people out of the market, that's not necessarily bad news. that's kind of a good news -- that's kind of good news. that's stelg us thetelling us t demand there. >> kelly, i think housing has been something that's really kept the consumer in the spending game. if you think about things that have gone well for the consumer over the course of this year, they were hit with the payroll

tax increase and incomes have not really done too well. one positive side of the consumer balance sheet has been rising prices. so yes, i think that's a positive for the market but i am beginning to get a little concerned when i look at what's happened to mortgage rates, now back over 4%. what is the level that the housing market needs to keep going and continue to be a positive for the consumer balance sheet? >> steve, if the only way that the housing market can move ahead is to have mortgage rates at absolute record lows or therebs, then we all have problems. right? can a little jump in mortgage rates -- i don't -- for the people that i talk to, they don't see that having a tremendous impact on home buying. >> real quick, scott. the story is that rising interest rates could bring people back into the market real quick. the fence sitters who have been waiting to see if the rates would go lower. but the real story is we do not know how healthy the housing market is and what the right

level of mortgage rates it requires to keep going. >> you are obviously a man who's refinanced, scott. >> many, many months ago. >> yes. safely at lower levels. >> not recently. >> that's maybe why we're not seeing more activity here. steve, thanks very much. let's pick up on this theme. markets positive across the board after the dow had its worse day in four weeks jed. what are some catalysts that could push the market higher from here and is the makeup of the rally changing for good? barry knapp, head of strategy at barclays. >> morning, kelly. >> we've been talking about this rotation we're seeing below the surface here but we haven't necessarily seen the kind of sell-off that perhaps would be argued by a real transition towards the fedex iting the market here. what do you think -- what's in investors' heads right now? >> well, first of all, typically what's happened when you've had these fed policy normalization

related corrections, 2004, 1994, 1983, is it begins with a fixed income market. within the equity market it begins with parts of the equity market, namely dividend payers. then as it becomes clear that the fed is going to normal eye policy, it broadens out to the cyclical sectors as well. interestingly, when you look back at these past episodes you had some very sharp bond market sell-offs in periods where the fed raised their policy rate aggressively, namely 1983 and 1994. you didn't have near as big a move in treasuries in 2004 but the market sell-off was all the same on all three occasions, roughly 8% to 9%. so it does take a little while for the equity market to catch on to the idea that the fed may be moving. truthfully, this could be a false dawn. if we walk in a week from tomorrow and have a 125,000

payroll report, it is a false dawn. if it is 250,000-plus, it could be game-on. >> some will look at the jobless claims report today and ask have we overextended the good news on jobs here. to your point, barry, why are we seeing this 8% to 10% sell-off this time around? is it still your view that we end the year lower? >> we had three scenarios in mind. bull scenario was that the economy proves really resilient to the fiscal drag and that business confidence improves because public policy uncertainly falls. that was a 1,600 outcome at the end of the year. but part and parcel of that was the idea that you would rally pretty sharply through mid year but then the fed would taper purchases in the second half. not only did we get that correction typically over the course of call it three months or so but then the mark goes into a range after that for a period of roughly a year or so. the bull market could resume after that -- or should resume after that but that -- it is

looking increasingly like that bullish outcome that we had visioned. >> taper talk. that's when we had a picture of the tapir this morning. yesterday talking about the fed perhaps stepping back. do you think that that's -- there's the tapir again. geez. talk a little bit about how you see things evolving here. >> if you look over the last year, almost 90% of the market appreciation came from multiple expansion. reason valuation multiples went up despite the fact that earnings expectations have come down over the same period is investors view risks, tail risks, as being lower and they view fed as being -- continuing to be accommodative. from this point forward i actually think the key to the story is going to be earnings growth. i think the market can withstand a modest tapering of the qe policy and even a modest increase in interest rates,

perhaps 50 to 100 basis points on the 10-year i don't think we'll actually affect valuation multiples. key to the market is going to be ability to grow earnings and companies that are going to achieve superior earnings growth are the ones that will outperform sglp outperform. >> so where do you want to be within the market? say rates stay over 2% for a little bit. do you want to reold kate where you put your money away from the defensives, utilities and the like? >> yeah. we certainly are significantly underweight utilities -- telecom, staples. i still believe the trade tied to the consumer housing is going to continue at least through year end. there is still a tremendous pent-up demand in terms of household formation so i think that trend is still with us. parts of technology, particularly communication commitment continue to run. then i would actually also look at areas of the market which are going to benefit significantly from the rising rates such as

life insurance where valuations are attractive and you could have a fairly dramatic move up on rerating. >> banks. right? the banks are a natural place to look. is there banks, as well as life insurance, as well as some of the companies involved in money management. >> i want to mention as well, we've gotten that news this morning on the kinds -- on the increase in buybacks that potentially are going to keep driving this market forward. barry, is it really about earnings here or is it just about the fact that actually one way to increase earnings, by the way, earnings per share, is to decrease the share count and low rates have allowed for that? >> well, yes, that's absolutely true. 40% of the earnings gain we've seen over the last 12 months is attributable to buying back stocks. you are going to need to see earnings growth accelerate on a real basis, not just from buying back stock. because truthfully the median companies amount of stock they are buying back relative to cash flow has stabilized and cash

flow has flattened out. to get earnings growth to accelerate, you need cash flow to pick up, which means underlying activity picks up. again, those are all the sorts of things you'd expect to have happen when the fed is normalizing policy. i think part of the issue here when we think about all these dividend payers and the nature of the market is, if we have a 1994 or '83 scenario where the fed tightens aggressively after the first step, that would be the end of stocks with bond-like characteristics. but if we have a 2004 scenario where the bond market sells off, maybe even goes up to 2.75, but then rallied right back -- that's what happened in 2004. that's entirely plausible given the complexity of the exit strategy. i think if you sell your utilities today you might be jumping the gun a little bit. >> well, not to mention the

buyers out there, still pretty amazing around the markets. we'll see you both next time. still ahead, we're going to show you exactly what happens when google takes over a house right here in new york city. we're filming that. we will bring it to you in the latter half of the show. also we're going to kick the tires on what barry knapp just said, that it is too early to be selling utilities. we're going to look at that sector, now in correction territory, and at what precisely the charts are telling us. see how you should play them ahead. in today's markets, a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason

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one of wall street's most famous oil traders is warning that the shale revolution in this country will only temporarily boost oil production and that oil prices will remain high. the financial times has obtained a copy of a letter from andy hall who used to earn $100 million a year at citigroup to investors in his current hedge fund. wall writes, while output from shale owl wells is initially prolific, production declines rapidly because each well only taps a single pool of rock tracked oil rather than entire reservoir so it makes it

impossible to maintain production without constantly drilling new wells, the cost of which will require high oil prices. david greenberg is the president and founder of greenberg capital. he joins us here at post nine. >> good morning. >> is he right? >> no. anybody that has -- if you read the article, it says guru and god in the same sentence. i have to discount 100%. united states is going to get this right. they have -- it is imperative that they get this right. they have no choice. so what's going to happen is that they will find cheaper methods and more efficient methods and i am definitely a seller on his side of the argument. >> in fairness to the man, he says that the boom is an incredible phenomenon. it is ridiculous to argue that it will not have a transformational impact on the economy. he's just warning that some of the wider claims regarding its future prospects need to be tempered. >> but that's like in any boom. everybody comes out, it becomes this big -- the next best greatest thing. it might not be the next best greatest thing, but it is going

to be really good. if it takes off the edge in the market, what we've seen in this market, a little extra supply can go a long way. >> what happens now to the oil market more immediately? as we go through the summer -- opec is meeting at the moment and the newspapers are full of discussion about how they're trying to play the situation. >> opec's been in a little bit of a turmoil the last few years on getting oil prices stabilized. i've been a firm believer oil is still too high for what's really going on. we don't have a lot of turmoil worldwide. i'm still looking from $87 to $89 crude oil would be a very, very fair price for public oil. >> a three-decade high in oil supplies, are we going to get more data out today? >> that's the key. when i traded on my next, you want to talk about bull markets, we've had a bull market since '05. if you translate that to when electronic trading started and everybody could tap in to this market, people who liked oil, didn't need oil, you've seen a steady rise in prices.

i am a true believer that oil is much higher than it ever needed to be. back in 2002 i did an interview and we had 2 million barrels a day offline with saudi and we were going to go to war with iraq. we were at $40 oil. why are we at $96 oil? >> you could argue the world today has fundamentally more demand for oil than we did ten years ago. look at the development that we've seen. >> i agree with you 100%, i just don't think it is three times the amount. >> if we don't get a second half not only pick-up in our own economy, but the economies of the world, europe, china, could you see oil come down to $50, $60? i've soon some of those predictions out there. zplif's seen some of those predictions. i think that as oil comes off you'll have bottom pickers come in so you'll have these natural little bump rallies. i think a real fair value of oil right now is about $75. think if everything what you just said happens, you'll see a steady decline -- >> for nymex. >> yes. not for brent.

>> the irony is over the last two years since the peak of the commodity boom, oil is only down about 9%. if you look at copper or coal, they've lost 20%, 21% of their value. >> yes. >> what happened to those great grand arguments of a rising middle class in china, of a demographic boom that would mean that commodities would be a great bet longer term, absolutely dead certain, because that's proved horribly wrong. what was wrong in that analysis? >> almost everything. it was one of those where it was best case scenario all around. what i teach in my lectures, never look at best case. always look at mid toll almost worst case to see where the price structure will be. think about in china, they built cities that nobody showed up to move in. i think they completely had an explosion on their economic scale on an emotional level, but couldn't come through with the people. >> speaking of emotions, where are you on gold? >> i'm still a seller in gold. i think gold's had an 11-year bull run. no market goes up forever.

any of the new longs in the past six months are hurting and hurting badly. and i think you're going to see a down move in gold. >> what if rates continue to go up? >> i still don't think it affects gold. i have to be honest with you. i think what's going to end up happening, countries will start selling gold because if rates go up, of course. gold's not producing any money for them. there is a cost to carry and it is the quickest asset to get rid of to put their money into more efficient products. >> good to see you, david. thank you for coming. david greenberg from greenberg capital. still ahead db turning the tables on the hunt for yields. could the biggest risk to stocks be the speed of the rising yield curve? plus, triple-digit gains one day and a sharp sell-off the next. we'll check the charts on what the technicals could be telling us about markets and where we are a heading next. stick around. [ male announcer ] i've seen incredible things.

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analyst at r.w. baird, he lass an outperform on costco, just raised his price target to $15 fr -- $125 from $117 that happened just this morning. peter, you made the most of recent action on the stock so you were pleased with what you saw despite a sales miss. >> yeah. thanks, scott. good morning. the sales were really in line with our estimate. i think the street has a hard time kind of triangulating costco's quarterly sales numbers. they do report monthly, so the sales really weren't far off of where we were estimating. i mean we did like what we saw. we saw nice core comps. we saw margins expand. upside to our numbers was driven by gross margin which is nice to see. really there is a lot to like here with costco. >> so what's the problem, brian? now that you're dumping all over the stock but you have a market perform. the price target is $105. are you being left behind in your view on where this thing's

going? >> look. i'll make it simple. my only concern with costco is valuation. i agree with what peter was saying. i think this is a very well run company. i wouldn't make too much of any type of sales miss. i think that's more of a nuance in how the street estimates sales because i think the sales are very much in line. like i wrote a note to our clients, i really view costco as one of the best run, most efficient retailers in the world. as i talk to clients and i talk to those that have these longer term rise, they look out three to five years, i don't disagree with that whatsoever. i'm saying nearer term clients, those looking out six months, there are better values in retail right now. >> it is a fascinating business model with 75% of the operating income actually coming from the $50, $58 annual fee that people pay. why are margins looking so good in your view? is that a reflection of the membership fee or something else? >> simon, that's part of it. costco's been riding a wave of

membership fee increase that they took a while back. so that's part of it. really they've also stabilized their core merchandise margins. they had been investing in those about a year ago. those have been more stable recently. we'll find out on the conference call what exactly drove gross margins higher. we speculate there's probably some favorability on the gas front. costco's proving they can hold an steadily even slightly improve their margins while generating very, very strong top line growth. to brian's comment, yeah, i agree, the stock's obviously had a huge run. it is up 30% in the last year, up 40% if you include the dividend they gave you last year. but if you compare it to the s&p staples index, really the valuation looks very much in line with historical trends so we think there is more up side. >> brian, what about the international performance here? it was strong but only once you exclude the currency effect. so is the stronger dollar going to continue to be a headwind for

them? >> the way i look at this. i made some comments on your show a couple weeks ago about tiffany's. i look at local market demand. costco continues to perform very well on these international markets. i think that's really the driver of the stock. the positive sentiment on shares. >> hey, peter, how would you characterize the way that investors should be thinking about this particular stock in this particular environment? it seems to me that you get a little bit of a defensive play but you get a defensive play with growth in figuring that people are going to continue to go there to get the kind of prices that they offer, not only for gasoline but for the products that are inside the big box itself. >> scott, i think you can think about it a few ways. first, consistency of the traffic. that's extremely rare in retail these days. you know what's going on with the internet. you see a company consistently up 4% traffic. that's one thing you want to be exposed to. secondly, you said there is a growth angle here.

they've accelerated their unit growth. they're opening their stores now at a 4% to 5% clip year of over year. that used to be 2% to 3%. you have an being a sell rayed unit growth story and more than half of that unit growth is coming outside of the united states. unlike most retailers, that's good thing when it comes to costco. costco makes more money and dozen better internationally than they do in the u.s. >> all right, thanks. brian, peter, thanks. we got breaking news on natural gas inventories. let's go over to the new york mercantile exchange where sharon epperson is standing by. still a little while to go, sharon. just recap where we've traded so far today. >> right now we are looking at prices around $4.13. we've seen prices edging lower over the last three days or so as the june contracts went off the board. we're now in the new contract here for natural gas. we are continuing to watch what is happening here as we wait for the number to come out. we are expecting to see an

addition to storage levels between 87 to 91 billion cubic feet. that's the expectation from plat analysts. we've seen in the last five years or so the five-year average of an injection right around 92 bcf. so there is a big range of traders and animal lis who think we could see an addition anywhere between 84 and 100 billion cubic feet. we are also watching these warmer temperatures and what they will do to demand as well. the number just came out. natural gas storage level now up 88 billion cubic feet for the past week. that is right in line with analyst expectations. but we are seeing prices come off just a little bit here. we're down about 7 cents for natural gas at $4.11. traders say what to watch here is for perhaps further weakness based on what we are seeing in the broader energy complex, as well as what we're seeing with the economic data that we got out today. we could potentially see a test of the $4 level. that's what traders are watching right now. scott, back to you. >> sharon, thanks so much.

still ahead -- fed worries are weighing on u.s. equities. earlier this week, the nikkei falling about 5% overnight before finally bouncing back. we'll tell you how to play that volatility and take a look at some of the technical levels to watch. back in two. (announcer) scottrade knows our clients trade and invest their own way. with scottrade's smart text, i can quickly understand my charts, and spend more time trading. their quick trade bar lets my account follow me online so i can react in real-time. plus, my local scottrade office is there to help. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade. voted "best investment services company." [ male announcer ] a car that can actually see like a human using stereoscopic cameras ♪ and even stop itself if it has to. ♪ the technology may be hard to imagine...

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well, needless to say, it's

been a volatile week so far for the markets, seemingly ping-ponging within a wide range. to help us with some technical analysis, katy stockton, chief market technician with mkm partners joins us now. katie, welcome back. nice to see you. >> you, too. >> can you read that the technicals to give us an idea of where you think the market could be heading from here? it's been hard to read this week especially. >> this week has largely been a consolidation phase. that does tend to confuse investors. but the reality is that the market has very positive interimmediate yad and long-term momentum. this loss of short-term moment yum i think will prove to be temporary. consolidation phases are characterized by volatility. overseas it's been much more dramatic than we've seen here but to me it is a pause to refresh the up trend. i say that, in part, because the s&p 500 has broken out above its 2000 and 2007 highs quite decisively, and that really clears of chart of any resistance overhead and suggests

that momentum can continue. >> i know people say you have to respect the technicals. i fully respect that view. but what technicals can't read is rates going up. they can't predict market moves based on unforeseen events within the market so how do we put all of that into context if you look at what the 10-year's done, if you look at even what's going on in japan, the ripple effects that could be seen worldwi worldwide. >> we can certainly analyze rates as well from a technical perspective. i do think rates are moving higher. looking at the 10-year treasury yield, we've broken out above the march high and that really targets about 2.4. so i do think rates are going higher. i also notice what's going on in japan. i think japan is a correction, not the start of something much worse. i say that based on what my indicators tell me, my momentum indicators remain pretty strongly positive. believe it or not, with such a dramatic decline in japan, we have not seen a breakdown below

any important support levels for the nikkei 225. for me it is a global correction or in some cases a consolidation phase and a good opportunity to add exposure to equities. >> what about gold? >> so gold has been in an intermediate term down trend. it still exhibits negative interimmediate ymeediate and in long-term momentum. but the april low was undoubtedly a very significant low. we've already tested that low successfully once. meaning we did not break below it and that could be the start of a bottoming process but it is way too early to suggest that gold has turned the corner. for that we would need a move above resistance which would occur above $1,485 per ounce. i think that's a bit far away at this point. for now, people might want to use gold as a short-term hedge. >> katie, thank you as always. katie stockton, mkm partners. let's turn it over to the weather, especially for folks in

the midwest the tornado threat looks to be intensifying. weather channel's nick walker joins us now with with more. nick, we hope it is not bad news for that hard-hit region. >> you know, i think it is going to be another day of tornadoes, unfortunately, in some of the same areas. we were hard hit in nebraska, up towards wisconsin, western kansas, western oklahoma, the texas panhandle yesterday. similar areas and little farther toward the east today from des moines, kansas city, st. louis, southward all the way into oklahoma city and dallas. the greatest tornado threat probably in oklahoma today. we're seeing showers and thunderstorms coming across portions of kansas, into missouri right now. wichita, kansas city. this might actually and good thing to inhibit some of the tornado threat today because it has a tendency to cool the atmosphere a bit. however, lots of rain on saturated ground is not a good thing and we could see three to five inches of rain in this area between now and the weekend. and we could see some major flooding on some of the rivers, including the missouri around the mississippi river over the next few days. flood watches are out for this region. we're going to keep a close eye,

too, into tomorrow. another tornado threat, probably here in southeastern oklahoma, into portions of missouri and a severe threat, including damaging winds and hail all the way northward into minneapolis and over towards chicago. be on your guard, have your plan in place. >> we certainly will. thank you very much, sir. we are up now 62 points on the dow. let's see it over to seema mody for a market shares. >> according to a filing, dan lobe is an investor in sony. cnbc has reached out to both banks and also dan loeb for comment. sony shares up about 5% on the day. >> that's going to be a big interview. still ahead on this program -- google is taking over a home right here in new york city. in fact, just further up manhattan in soho. what will a google home look

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well, the latest read on gdp coming in slightly lower than expected this morning. jobless claims also a little bit higher so how will all of this affect the fed's stimulus measures or the prospect of a taper? we're joined by chief u.s. economist at rbc capital markets and the chief economist for north america. good morning to you both. julia, you say coming in to today we're already in the mid -- is it midst aftermath of super storm ben bernanke regarding his testimony. is that still the market's focus here or is it, as he suggested, data dependent? >> well, it is the market's focus because we don't have clarity. fed's dropped hints that there is a tapering possibly in the next several meetings or months

but we don't know what the guidelines are, what are the goal posts they need to reach to taper, how much would they taper by, what asset classes would be affected, would it be treasuries, would it be mortgages. that's a recipe for a lot of market volatility. so it is data dependent but it is also until we get that clarity very hard for markets to settle down. >> what about the comments from eric rosengran, a lot of people seizing on those. significant in your view? >> i think's trying to provide some of the clarity. he gave us the goal post of he needs to say payrolls in the same neighborhood of 200,000 or above for the next three or four months, and if that comes to pass, then he will be comfortable taking a modest step down. so we've gotten at least a payroll guidance and a modest step. we still don't know what modest means but to me, that says that the bar is still fairly high. everything needs to go very

well. both rosengren and williams said their forecasts are above market expectations. so we have to see data outperforming market expectations consistently for three or four months, and then they would take a modest step down. so it is not quite as hawkish as the market initially reacted to. >> tom, how likely is it that we get job reports especially let's talk about next friday's, that are strong enough to keep this conversation going, i.e., 200,000 or above? >> to julia's point, i think that this is something that the market is sort of searching for. bernanke has outlined about eight different employment indicatiin indicators he's looking to. one is a six-month annualized percent change in the actual change in payrolls. what's interesting is every time that dips, the fed responds. i think what the chairman is looking for today is basically that trend to continue even if it is just in a glacial way. that's what we've seen.

we think the coming payroll report next friday will actually be consistent with this idea of this metric that we think the fed is really looking at. we think that will be enough for that to consistently move glacially higher but that, to us, is the real metric that i think we should probably be paying attention to. it is really uncanny that they respond every time it slully slips. >> tom, are you sure they're going to move at a glacial pace? there was a suggestion a couple of weeks ago in "the journal" you might effectively get white noise from them, that they would vary the amount of qe month by month so you actually don't know really where they are on the full withdrawal or full application. in the case is it confusing the market? >> no. i think this is a great point, simon. again, speaking of rosengren or williams, i think these guys provide more noise than they do actual useful information. i think at the end of the day there are only a couple of voices we want to pay attention to. one is obviously bernanke. i would put dudley and yellin in there as well but i think at the

end of the day, it is really about the unevenness of the backdrop. that's what's preventing them today from actually engaging any sort of policy reduction. i think they want to see more even backdrop. i don't think we're there yet. when we do get there which we hope would be toward the end of the year, i think they'll take the baby step of reducing asset purchases by $10 billion or $15 billion, see how the market responds, then move on from there. we do think it will be a very stepped function approach. >> there's something in the report today for everyone. we got 2.4% with maybe some stronger details below that, even though it was a step down. at the same time, tom, corporate profits which we got the first read on declined. so -- but then at the same time, gdi was strong. what's your take on what's the message here from even this report? >> yeah. so i think there are a number of things to take away from this report. first of all, let's make sure we are aware, this is a very rear-view mirror report. it is the second cut of q1.

we're already into the middle of the second quarter. i think the important take-away from this report in particular is the fact that you have to remember the only reason why consumption actually looks so good, it grew at a 3.4% clip, you actually had a massive drawdown in savings. savings was 5% in the fourth quarter. fell to 2.5% in the first quarter. we literally cut savings in half. that's to us not a sustainable outcome. in q2 we think it is a much more relevant conversation than this sort of stale q1 report. we're looking for a modest outcome, about 2%. you'll get around 2% from a q2 gdp perspective but that to us remains a very uneven backdrop for the fed. >> julia, in a word, what's your q2 expectation for gdp? >> well, we're around 1.5%. as tom mentioned, we are looking for a slowdown in consumer spending as consumers seek to restore the saving rate. i agree, that will probably not

really meet the fed's bar for tapering so it will be a little too uneven and too subdued for them to be comfortable taking a step back. >> perhaps explaining why markets still here expect maybe no major moves from the fed. we'll leave it there for time being. tom, julia, thank you both very much. we're up about 65 points now on the dow this morning. still ahead, one early investors in salesforce.com who went on to start his own investing firm is now filing for personal bankruptcy. we'll tell you who it is later on. but first, rick santelli is taking on japan's trillion dollar pension fund and its potentially radical shift in strategy coming up just after the break. hey, so uh... what's going on here? do you want the long or short answer? long i guess. chevy is having a big -- huge, in fact -- event. the-great-deals-on-our-most- fuel-efficient-line-up-ever- for-just-a-very-short-time-so- you-better-hurry-extravaganza! so what's the short answer? awesome. [ male announcer ] the chevy memorial day sale. now, get $500 memorial day cash

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welcome back to "squawk on the street" and today's edition of the santelli exchange. listen, i try to be the eyes and the ears on the trading floors, and of course, i have plenty of sources around the globe that are now sitting behind the keyboards. nonetheless, what have they been focusing on the most? the japanese markets. if you look at what the markets are doing, you'll see why it's an important variable.

the nikkei is down. it's a mass i turn after a rally that started with economics. we can clearly see just like treasury yields. just like oat yields. we've seen a reversal where they have moved higher. why is this important? we understand you can have a carry trade in many forms. you can have finance trades based on carry trades. let's keep it simple. it's about having a little and holding a loot. so now think about the variables with the japanese trade in particular. what's important is the spread between their rates and the rate this is the u.s. or the rates in europe. that's been narrowing. just look at that chart of jgbs. the other issue is more simple. that's the currency. so you're trying to spread the interest rate differential, pocket the difference in a

leverage format. what are your risks? your risks are the currency goes up and interest rates go up. now to that end, a bit of information popped out today. this is the japanese fund pension shift after rally according to shortage. the long and short is every five years they reassess the allocation. we're talking about government pension investment fund. represents 1.1 trillion under management for government employees. and here is the allocation. about 67% in bonds. and you can see domestic foreign stocks. 11%, 9% respectively. remember a while ago in the royal bank of scotland put out wonderful research paper about how many of the central banks and various huge entities with pools of money around the globe, they want to get more involved in things that aren't traditional. like maybe foreign stocks.

so i'm not saying this is a bad thing, i'm just saying there's a lot of change going on at the same time in japan. so the long and short is they don't want to be forced to buying the fixed income market when prices are going down and they don't want to be forced to sell stocks when the price is going up. but the danger is we're tramping a lot of people with jgb paper and it's a huge market. >> rick santelli with the santelli exchange. meantime, the race is onto get back to emerging markets, but not the ones you may be the most familiar with. we're taking you down the foreign roads less traveled.

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>> well, tesla is announcing it's tripling the size of the super charger electric vehicle stations. they outlined the expansion of the company's network last night at the d 11 conference. they say they will be able to drive from los angeles to new

york because people do that all the time. we will be going for a test drive tonight. and we'll catch it all on camera and bring it to you tomorrow on "squawk on the street." along with an exclusive line interview with elon musk himself. >> that will be fascinating to have the interview and to watch jim cramer drive. do you think he's a good driver? >> if you live in 700 miles of new jersey be careful. >> everybody will be on full alert tonight, no doubt. let's touch quickly on price line. a ball dollars. and here's what you may have missed if you're just tuning in to "squawk on the street." >> welcome to "squawk on the street." here's what's happened so far. >> i can see the s&p 500 is running to the upside or falling

100 points starting today. very unpredictable. eventually they will have to taper. >> the jobless claim numbers come out a little worse than expected. the visual is also a little worse than expected. people want to get out of the bond mark. unless we get a series of weaker numbers, we're not going to go there. why? >> i don't know people want to rotate to different stocks. people are slaging from the moment. they standby the comments and the stock would go up. but the lies are manifesting. >> you are watching the opening bell. >> i actually still believe that the trade tied to the consumer housing is going to continue through the year end.

in terms of demand for household information. so i think the trend is still with us. >> i am a firm believer. 87 to 89 crude oil would be a very fair price for the crude oil. >> good morning. because it is a holiday week we have oil inventories live now. >> we are showing buildup across the board. crude supplies in the last week rose up by 3 million barrels. gasoline supplies were down. gas down by 1.5 million barrels. and fuel supplies rose by 1.8 million barrels. now the expectation is we would see dpe cleans across the board and in crude oil gasoline.

we saw much bigger than expected build. we weren't expected to see a build in supplies according to the industries supplies that came out. that showed a rise of 4.4 million barrels. so this rise by the energy department of 3 million barrels is a little bit o shy of that. they may be why the prices are off the lows of the session. we fell for the crude oil. that was the lowest price we had seen in about a month's time. sharon, thank you. now we are up 77 points on the dow. within technology, the semiskukt tors are also doing reasonably well. shares of sony spiking on reports it will be working with morgan stanley and citi on

investment proposals to split up the company, float bli entertainment division. no word as of yet. we will have more on the story very shortly. don't forget that the new guy at the helm will be live on cnbc at 3:30 this afternoon. big lots, one of today's biggest decliners falling sharply after the first quarter earnings fell 21%. let's get to today's road map. this hour we're hunting for yields. is the party over for the big dividend stocks? plus, fears are tapering on everything from markets to housing. find out when the tapering is likely to happen and how the fed may go about doing it. and you have heard of google glass and google tv.

what about the full on google house? it exits here in new york. least for now. >> but we start with the markets and two opposing views of a core theme in the market. dividend stocks on whether the rally is over. david katts is the chief investment officer. scott is a senior equity strategist at wells fargo advisers. are you bullish or bearish on defenses? >> simon, i think we have seen the pattern start six weeks ago. the it's been all cyclicals. that was after a good run by the defenses. >> and yet i don't necessarily see them to rally. i just need to collect the dividend. are they safe at these levels? >> well, i think the evaluations are stretched here. i do think the market is likely to end a little bit lower this

year. so you could see capital losses there. i think what we have been telling our clients is if you're overweight in the defensives, health care, staples, utilities, you need to rebalance here and get the money to the cyclical. over the next 12 months you'll see the defensives higher, but they're going to lag in a big time way from the cyclicals. >> david, is he right? >> we think they are going to be a better place to be in the upcoming year. we like financials. we like energy. we like industrials. having said that, we think there's a definite place for dividend stocks in the portfolio. in light of the selloff and pullback in the last six weeks, we're comfortable putting some money into there. you can buy some consumer staples. so you can put money into them as well, like a dupont. >> scott, what if we have it wrong? what if the data is weak and

there's no sign of heading out to the end of the year. the does the switch unwind? does the rotation unwind? >> well, i think -- i don't think the fed is going to taper. i am looking for that to start happening in 2014. you have to look at what the market has done. it's run a long way. we have a great year. we're going to end the year having a great year. but i don't think the rotation is going to stop. when the s&p 500 was down the defensives were really getting hit. so i think this rotation is going to continue now of course, if the economy would stumble, the market sells off, the defenses are going to do better if it sells off in a big time way. i don't think that's going to happen. i am certainly trying to look out over the next few months, i think the market will be higher.

we could see something north of 1800. so i think that will be a cyclicly led market. >> someone is making the point the dividend ratio is at historic lows. so there there still room for dividend payouts to increase? and if so, what does that mean for investors? >> there is actually plenty of room for dividends to increase, and companies are seeing the market is paying increasing attention and rewarding that. so you're seeing more and more companies increase their payouts. we expect microsoft to raise their numbers. we think it will happen in many industries that do not pay as much. and like the drug companies u they will continue to grow their def dend. it's important to remember why you invest in a portfolio. if you're getting half a percent, you can buy some stocks paying 3% or 4%.

and you will get a nice growth over the next two to three years. >> great conversation. thanks so much for your tim. >> and solar stocks are on the move today. bertha coombs is at the nasdaq. >> stocks have been on fire for much of the year. but goldman sachs says there's room to grow. they are upgrading the sector. particular names today. they are up 5%. sun power up 3.5%. you would wonder where you get the evaluations, though. first solar is already up 80% year to date. but goldman says they think there's real stability and real outlook in terms of earnings growth. they think that will drive the price target up.

that's actually their favorite name in the space that they add now to the conviction buy list and they move that price target from $8 to 10. they say they like a friendlier, more shareholder friendly board. they're holding the board meeting today. one of the friendlier things is a share tolder vote to change the name of the company to sun edison. finally sun power goes from a sell to a neutral. they think leasing is one thing that puts them in a good state. dpoeld man does have banking relationships with all three names. >> now the rebound this year. that's something to look at. bertha, thank you very much for that. taper talk appears to be the talk of wall street. will this happen and will we get insight on that? but mr. santelli, we understand you will be joining us with a special guest.

>> absolutely. we have david stockman on the trading floor in chicago. you know, when you think of comments like the fed is a central bank gone crazy, maybe some of you think of me, but no, david stockman said it. he's going to defend it. he's going to talk about the issues in his new book. do deficits matter? is the central bank going to be able to find us an exit that we can all fit through? he has some significant thoughts. bottom of the hour, yes. david stockman. clients are always learning more to make their money do more. (ann) to help me plan my next move, i take scottrade's free, in-branch seminars... plus, their live webinars. i use daily market commentary to improve my strategy. and my local scottrade office guides my learning every step of the way. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade... ranked "highest in customer loyalty for brokerage and investment companies."

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let's take a look at the energy sector this morning. that sector is underperforming today. soeema mody is back. >> >> the s&p 500 underperforming. two companies weighing in on the index. both of which got downgraded at morgan stanley from equal weight to underweight, kritding concerns around slowing spending growth and a competitive international pricing market. both stocks trading around 2% on the day. simon, back to you. >> thank you very much. home prices in demand coming in strokly today. so then why are sales so sideways? diana olick has more on what we know now aut housing. good morning, diana. >> good morning, simon. demand is up. prices are up. and the realtors say they are

squeaking by. so important of supplies. short sales and foreclosures were making up 45% of home sales in 2009. now they're down to just 21% according to a new report from realty track. so we have far fewer distressed properties out there. banks may be holding onto some of their properties to gain pricing power. we've been hearing that. then in overall supplies they did move up a little bit in april. we're still at a five-month supply, which is down 14% from a year ago. so we need more listings on the market. the realtors are begging for them. then you have mortgage rates, which have moved closer to 4% mark, which could be emotional. but realtors are already seeing slowing sales due to higher mortgage rates which prices out the much-needed first time home buyers at lows not seen in years. we have rising home prices. some say they are outpacing

prices in income and employment. if you see prices going up that fast, is there a price bubble in certain markets? and zillow reports 22 million homeowners with a mortgage are in a negative equity position or near equity, which means they are stuck in place. they're being called zombified and mark hansen of the mortgage industry says that has taken out the maximum demand because these folks are stuck in place. >> thanks very much for that. now we turn to the questions on the bhinds of economists and strategists everywhere. steve is giving thought. he's back at hq with more. what do you make of the chatter we use? >> we want to put people in perspective on the issue of the timing fed taper and what these

guys are saying. i want to look at a select group of fed members who have spoke nn the last several days. see if we can come up what we think is the consensus on when the taper may begin. let's put this into context here. kind of alone. what i want to do is concentrate on these guys here. let's look at what charlie says. he speaks for a lot of the hawks out there. i believe that they are scaling back as soon as the next meeting. maybe jeff from the fed. now it's john williams who was very -- ubbish. now i put him on the hawkish side in the sense that his forecast says i expect we'll meet the tests for substantial improvement in the outlook by this summer. that makes him a little more hawkish. he is sort of ready to get

going. he said just yesterday. it may make sense to consider a modest reduction you can see where we're going. we are going to september. dudley not ready to say it. the qe depends on how the economy handles the dragging of the next months. jim bullard not normally in this place here. i'm putting him on a more dubbish side. he says our inflation right is quite low. it's a major consideration in whether we should taper or not. and then there's ben bernanke who at least publicly is in the middle. that's how he tries to position himself. so he's saying in the markets that we see continued improvement and we have confidence that it's going to be

sustained. and take a step back and look at all of this stuff. so right now we're headed to a fall consideration of a taper. >> steve, doesn't he have to be in the middle? it's inconceivable that he's going to turn hawkish before he leaves the feds. maybe a little bit of tapering, but not too much. >> you bring up two excellent points. he doesn't have to be in the middle. to publicly position himself in the middle. and the second point i want to make about this is the question is, what is the difference, if there is one, between bernanke's public pronouncement and how he

feels privately? ian shepherd says he may publicly position himself in the middle but privately he's probably on the more dovish side. >> steve liesman with a breakdown on the fed and what everybody is really talking about at the moment. still ahead on the program, google is taking over a house in trendy soho new york city. we'll give you a look inside within the hour. it is fascinating. but first, one of the earliest dot-com billionaires filed for bankruptcy. we'll tell you who it is after the break. i want to make things more secure.

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bust. robert frank is here with all the details as we now learned last week that he filed. >> that's right. the news just came out last night, and they are gory details. he made a fortune from the new economy, but he lost it the old fashioned way. overborrowing, overspending and overconfidence. he was a cofounder of cnet which sold for $1.8 billion. he went onto be on the cover of forbes as one of the new masters of the universe in 1998 with a net worth of $400 million. in 2006 he divorced and went a giant spending spree of $100 million. he bought art, thoroughbred horses and one of the most historic estates in virginia for $15 million. he also bought a mansion in san francisco for $20 million and hired president obama's designer to decorate. when the crisis hit, however, minor was overextended and the

lawsuits just started piling up, along with his debts. last week he filed for chapter 7 bankruptcy, that's liquidation in california. he listed liabilities as 50 million to $100 million and assets of $10 million to $15 million. in a statement he said a case could be made i never should have strayed from technology, however i like doing things outside of my comfort zone. and these stories of wealth destruction to me are more interesting than sudden wealth creation. so many fortunes today are made so quickly. and these entrepreneurs have such a risk mentality that they go all in, whether it's on the spending side or the investment side, and they are just not thinking about preservation. >> and if you get it right once, that seems to justify your behavior, right? so it's almost like firms getting involved in leverage.

they make one winning bet and we can repeat this. instead of, wow, thank god that worked out for us this time around. >> he had not just one success. but salesforce.com. the company that became google vision. he has a track record here. he also said he was investing in real estate. no. he was spending money on real estate. and wealth changes people. he had a grandiose vision of becoming this big bachelor in los angeles and i think he overextended. >> my guess is the divorce cost him more than the business failures. >> she took half as he came out of that very successful period. that was an awful lot of money. >> in addition to this that, i've studied people who have lost a lot of wealth. and those who have gotten a divorce or are sort of unhinged from their first wife that kind

of keeps them grounded, that's when it starts. i don't want to get psychological, but those two are connected. >> did you say $100 million in liabilities? >> yes. >> he's liquidating. he's zero. he went from $400 million to zero in under five years. >> it's not as if google vision was an unsuccessful company. there was a way in which this could have played out well and did not. >> he'll make it back. >> he will. they always do. >> thank you. great to see you, robert. >> thanks. >> just a few more minutes left in europe's trading day. that usually puts pressure on stocks but the dow is up 45 today. we'll have the close in details with the impact across the u.s. with simon hobbs when we come back. >> wow. ♪ [ male announcer ] how do you engineer a true automotive breakthrough? ♪ you give it bold styling, unsurpassed luxury

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some news on cit. let's send it over to kayla for a quick market flash. kayla? >> hey, we're just getting a headline with about $35 million in assets that a written agreement with the federal reserve from 2009 has been terminated. that sent shares spiking now about about 5% for a few reasons. this was one of the only firms that accepted a bailout that declared a bankruptcy. under this agreement the fed asked cit to beef up the risk management and had to meet several benchmarks that were extremely strenuous and they also precluded cit from buying back shares or issuing a

dividend. so investors believe that now cit will be able to return some capital to shareholders. second, cit is long rumored as a sale target. it's long rumored he would like to put the company up for sale. many industry observers saw the agreement as a prohibit tor of a sale that no firm would want to buy cit while it was under the fed, and now that agreement is terminated, a lot of people believe cit some time in the near future could be put up for sale. a good day for cit shareholders. up 5.25% midday. >> further signs of progress there. thank you very much. now let's get o over to simon counting us down through the close. 20 seconds to go across continental europe. >> i'm talking the sign of progress. we got some confidence tickers that came through today.

a few thing for the month of may. whether that marks a turning point, we'll wait and see. the inflation data was quite strong in spain which reduces concerns about deflation there as the economy continues to sink. here's the close. >> the european markets are closing now. >> yeah, it's relatively mixed, and we have fallen from where we were a few hours ago. we were doing much more let's cheg on the automotives. they were doing well. it was a mixture of stocks that were rising today. it was upgraded by goldmans. there's a report that it's raising $10 billion to buy the bits. the airlines were also a

standout partly because oil was trading. air france also in positive territory. now there's a big summit under way between the french and german leaders in paris as we speak. we are awaiting word on that. a lot of people here are focused on banking. i thought i would mention one note that came out from jpmor n jpmorgan. the suggest was that they had three little pigs that europe's banks will get a house of twigs. only the promise of the most robust frame further down the line. it will remain very much at the responsibility for dealing with any stress.

you will want to subsy died t diz the spanish banking system. number two remains years away. we'll work our way for what it is worth. >> you know the trouble, there's no big, bad wolf. who is out there threatening to close the house down if they don't get their act together? >> they are not prepared for the german and italian banks. >> when there was market pressure it was forcing europe to further consolidation. now the pressure is gone. >> they abandoned the serious move to proper banking union about a year ago. >> right. >> it was never gonna happen. there's lots of smoke and mirrors but when it comes to burden sharing as we had in the bond market, it's not going to happen. >> and it needs to happen for this to work out.

you know how many people are telling me they're buying european stocks at these levels? they're piling in. and same with the government debt. fascinating stuff. simon, thanks. want to look at what is happening at the big board. hey there, josh. >> hey, you're looking at the dow ju just off session highs. you saw a lot of economic data this morning. none of it was that encouraging. you saw jobless claims higher than expected. 2.4%. also pending home sales and mised expectations. we march higher. traders seeing a couple of things. if you were worried, you don't mind slightly softer economic data. they are talking to customers. they do not hear a sense of panic or urgency. but net base tells me they're still on.

financials leading the charge for a second day in a row. new 52-week highs. since september of 2008 at this point. utilities are another sector to check out. warren buffett stepping in. mid american energy buying md energy for $5.6 billion. defense is another sector. lockheed martin take to conviction buy. and we mentioned the pending home sales missed. mortgage rates at the highest in about a year. kelly, back to you. >> u.s. markets outpacing market this is year.

and while the big bets were traditionally made is it time to shift focus to the new corners of the globe? # welcome. first off, people should know if they don't already how weak the emergencying market has been this year. some are self made. for example, in the brazilian policies that have affected prospects for growth. something similar can be said about china are people are sket call of change. so those things with the initial enthusiasm on the economies can explain that spread. >> and the major question now becomes if you look at developed market equitieequities, say the expensive, is time the get exposure to emerging markets?

that's a good question. this is the perfect time for the portfolio. it remains. it is something for the next months and years. if people believe in the story, it's a good time to explore alternative ways. >> it's a secular growth story. and i assume you mean population explosion and rising weflt. if that story is still intact, why is the momentum not in the market? you were talking commodities from two years ago. the argument for the emerging markets were similar. we have it down 20% and so on. why are they not higher, as you may expect? when you look underneath,

there's a lot. some doing very well. not so well. >> as a short guy, that's to your advantage. >> that is absolutely to your advantage. last thursday we were down 2%. yesterday was down 1%. >> and i think people get that. does the country that is losing or gaining, does it switch? can i pick a country and go for my long-term investments i believe in this country and stick with it for my retirement? or do you that it changes through time. >> i think it's both. it's up to the professionals to take advantage of the tactical advantage. some countries will do better than others. on the other hand, it should be

seen as an investment, and not a trade. >> the majors economies in japan and america. >> a lot of people are making comparisons now between the u.s. markets now and in the '90s. you had the crisis across asia ya. a lot of liquidity that came out of the markets. why not expect a similar accident this time around? you got the move in the u.s. curve happening. that leaves them vulnerable. >> you raise the question of the mexican tequila crisis. not a lot of people are worried about blowing up in the latest rounds. part of that is a sensible and responsible management of fiscal policies. mexico is sitting on $160 billion. >> what about the hugely -- i

don't want to say irresponsible, but the military policy being adopted by japan. if you have a major currency that moves by 20%, that is destabilizing a large part of the economy. isn't it? >> it's got to be. that's where they are focusing on long-term investment can take advantage of those rises from the external factors. >> and one country that did all right was kmi na. thank you for stopping by by today. >> thank you for having us. >> obsessed with the emerging markets. >> absolutely. >> up next on the program, why one former white house official is calling the federal reserve central bank gone crazy. david stockman is live with rick santelli right after the break. you don't want to miss that.

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another plunge for the nikkei. and banks rallying back to precrash levels. our traders are picking their favorites. guys, ooel see you in a bit. >> thank you very much, scott. >> i have confirmed with a source that sony is indeed working with morgan stanley and citi on this low proposal to spin off a piece of the entertainment business. but i don't want to overstate what is happening here. they are still exploring what they want to do. they haven't made any decisions so that far. i talked to him last night. he said the board is still considering it. they are going to take their time. they're not going to rush. that's the stage this is in right now. they should not be interpreted as the process is moving any further beyond the stage assignment. >> it will be seen be many as progress for those that wish to

unlock value. what has been a huge move in the stock previously. >> well, i am going to have closing bell in the 3:00 hour, and we're sure to ask him about that, about the process. he was talking with me a little bit about it last night. this is going to be seen that way. he said, look. any time a big shareholder comes to us, has a proposal that's reasonable, of course, we're going to consider it. people seem to think because we're a japanese company somehow we're close to this sort of this thing. we are going to look at this. we are going to take our time. we are not looking to spin off the business. and we're going to look at it. that's where he was last night. we look forward to that interview, thank you, let's get to rick santelli in chicago. >> thank you very much, simon.

the great deformation. the corruption of capitalism in america. what a title, what a book. what a dude. welcome, david stockman. i remember when i was in the 30-year bond pit and your headlines it about deficits. we saw a treasury crisis fall and yields move up. nour not a big fan of deficits. you're not a big fan under reagan, were you? >> no, and not a big fan of money printing either. back then we had an honest effect. it wasn't flooding the market with untold liquidity. and therefore the market could judge what congress was doing, the white house was doing and decide where the risk/reward equation was and how to price the bond, the note, the bills. today the market is entirely rig

ed it's not honest. how can that possibly lead to rational behavior? this has made it possible for the deficits which have been growing chronically to be financed because they're shoving them in the vaults of all the central banks in the world. it's created an unsustainable dangerous financial system. >> the concerns in the house are all about the deficits. the rest of the country is not concerned. come up to prove that deficits matter, it's hard to find that. why do you think that is? >> because of the error of central banking that has become universal. >> how do we get the tears? >> we get the tears by telling the people you're going to have

to pay taxes in order to fund all the spending that you seem to want. and once the people feel the pain of taxes, we should have let the bush tax cuts expire. >> let me stop you there. you are advocating something many conservatives don't advocate. you think we ought to raise taxes. >> traditionally it's cut spending first. they didn't believe in starve the beast. they believed in pay the bills. we got off track in the the 1980s when the illusion was created that deficits don't matter when when greenspan turned it into a bubble machine and began to monetize the debt. our political system is paralyzed and frozen. we're looking at 10 trillion to $15 trillion more debt.

you're at 130% of gdp. and it all depends on how soon the central bank loses control of this. >> the last election in very specific ways did raise taxes on a very small group. so the group of the middle class outside of payroll taxes, their taxes remained at the same rate. >> right you're saying for the democratic party stays in power and that doesn't happen, will there be a price to pay? if we don't get it doing the way you advocate, you can see what the deficits are doing. how is this going to end if the administrations refuse to do so? >> you keep building on the national debt. you're taxing future generations. you're taxes the unborn. they're going to thank you for the massive disaster that was

handed to them. as long as we have one party saying no taxes. it needs to be drastically reformed. you have both parties in the military complex and we're still spending $650 billion for defense. >> so the honesty will be in the raising of taxes. >> the honesty will come when you tell the middle class you're not going to get a tax cut. you're going to pay more. then they will wake up. then they will march on washington and demand that we do something about the giant programs that are difting today because everybody thinks the fed will take care of the debt. >> if you were in charge, how much would you cut the defense spending? >> 28%. no problem. >> we can end it there. many think they understand david stockman. they don't. he advocates many issues that

both parties like but can't get together on. back to you. >> that's a great point, rick. thanks for that interview. what happens when google takes over a townhouse in new york city? find out when we go inside the that's right when we come back. don't go anywhere. going on here? do you want the long or the short answer? long i guess. chevy is having a great-deal- on-the-2013-silverado- but-you-better-hurry- because-we-don't-want-to-see- a-grown-man-cry-spectacular! what's the short answer? nice. [ male announcer ] the chevy memorial day sale. during the chevy memorial day sale, current chevy owners trade up to this 2013 chevy silverado all-star edition with a total value of $9,250. plus get america's best pickup coverage including 2 years of scheduled maintenance. chalky... not chalky. temporary... 24 hour. lots of tablets... one pill. you decide. prevent acid with prevacid 24hr.

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welcome back to "squawk on the street." ibm shares moving higher today. this, despite the latest report

that shows a decline in the server market. ibm's factory revenue decreased 13.4% versus the first quarter of 2012. an analyst says the idc report was generally in line with what the street was anticipated. but that the street has been getting more positive on i.t. spending which of course corporations, including ibm, depend heavily on. kelly, back to you. >> all right, thanks for that. now, google has been taking over a townhouse in new york soho neighborhood to demonstrate how its slate of technologies can work together. it all centers around voice activated conversational speech. to simulate asking a friend a question in other words. from the swimming pool where you can plan travel to the patio where you can lose google glass to capture images of life's little moments. the living room where you can virtually hang out with friends while watching the same tv show together. even the kitchen on your

favorite foods. google technologist daniel sighburg sums up how the so-called connected life can work for you. >> all these devices and services work well together no matter what it is that you're doing. if you're planning a vacation. if you're on the go and need to move maps. all of these work together through voice search but also in a sense it's happening very, very quickly and you're getting that information without having to look too hard for it. >> sounds simple. i'm horrifylmorhorrified. >> it's voice activated conversational search. i will say who is kelly evans and it will respond to me and then i'll say where is kelly evans or where is she and it will understand that the "she" refers to you and it will show me a map of where you are? it's complex but it's great. >> all the more reason to be a little worried about this. no, i just think even when it companies to the nutritional aspect of this -- to what extent

are we making life quote/unquote easier and to what extent -- what is the purpose really? what is this ultimately doing for us? >> it's fun and people will buy it because it's fun. i saw somebody walking down eighth avenue in google glasses the other day and they looked ridiculous. it wasn't carl. >> i can understand why there will be demand for these products but i just wonder if we'll look back and say what were we thinking? why did we give up so much of our personal and private lives to these services? >> you're too young to remember when texting came along. everybody said, why will we text? and then it took off. >> shouldn't we consider the reverberations of all this? have nutritional counts done us good at all in the last 30 years period? >> i'm glad you're worrying for the rest of us. >> i am, i'm very concerned. it's telescreens we're inviting

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welcome back. tesla ceo outlined the ex-spanning of the company's recharging network. tesla currently has about nine operational stations and he says by the end of the year tesla owners will now be able to drive from los angeles to new york. our own jim cramer not making that drive but he will take the less sa for a spin tonight. don't worry, we'll catch it on camera and bring that to you tomorrow on the program. we'll also have an exclusive live interview with ceo elon musk himself. >> you get to see jim cramer driving around new jersey which i think will be quite fascinating. >> if only we could have the interview with elon in the car as well. >> all things are possible on

cnbc. i just can't get over it. now you see how tall she is. you know, i'm actually not that short -- >> they you'd to stagger us at world wide exchange. we'll do that next time. >> thank you very much for watching. carl will be back with us tomorrow. it's time for the "fast money halftime report." >> have a good one. all right, guys, thanks. welcome. today live from post nine. four hours to go till the close. let's look at where we stand. a bit a snapback for stocks. the dow is now up 75 points. we are in the green across the board. here's what we're following on "the half." banking on the financials. why some say they're the most undervalued area of the market and what your best plays are now. japan falling. is the nikkei's second plunge in a week a warning sign for one of the most pop