>> it's been great. >> thank you so much. and you know, you brought some great people and so far, so good. best buy is a great buy is a better buy, maybe. >> thank you, brad. >> of course, have a great weekend, everybody. ic ma sure you join us monday. "squawk on the street" begins right now. good friday morning. welcome to "squawk on the street" as we close out the month of may. i'm carl quintanilla with jim kramer and david faber at the new york stock exchange. futures are fighting a bit of an uphill battle thanks to a miss on personal income and spending. the data out of europe not so hot either, and germany retail sales are amiss and a record 12.2% and the nikkei did manage to close higher after thursday's 5% sell-off. our road map begins with the market. whos to sell in may and go away. dow is down 3% and we'll brake

down all of the news affecting the portfolio going into june. >> the dell special committee has spoken a yet, and the ceo michael dell is the computer maker's best bet, but the battle is still far from over. >> plus, we have an interview with tesla's ceo elon musk. jim cramer may not drive much, but he got behind the while of a model s last night and we'll tell you what he thought of the ride coming up. i think the review is generally pretty good. >> wow! what a car. >> first up, final trading day in may. the dow posting its sixth consecutive monthly gain and heading into today's session, the dow is up 3.3% for may. s&p is up 3.6 and the nasdaq up 4.9 and what a difference a year makes. last may the dow and s&p fell by more than 6%, even worse for the nasdaq down 7.2. we remember. that's why we called it the spring swoon. >> oh, i mean, last june you

started thinking, is this going to completely unravel. there's a lot of talk that this is going to unravel and my take is that part of the market will be unraveling and other parts of the market, the financials and the industrials raising my price target. >> right. back in that world. now we're into this fear of higher rates, right? we talked about it, but now it's coming through in the form of a ten-year which has leveled out. >> it's important that you should point that out. 2.1 looks scary when you're looking at 1.730 days ago. here's the quote from one of their reports. it's hard to believe that the greatest bull market will end in a bloodshed and the risk was a bond crash are high. people love to talk about crashes because we've had a lot of crashes. to me this is the most telegraphed move that could ever occur. david's talked endlessly, and they don't realize they can lose

money and those people are the ones in stocks and they'll say into a .5 cd. is it pointing out to high inflation or is it simply more worried that the fed will stop buying and it's starting to back up, but it doesn't mean that there's higher growth in the horizon? >> i am not going to surrender to the crowd that says all good news is now horrible because all good news is horrible for proctor, okay? it's not good for -- it's not good for on utilities. i don't know. other than warren buffett who goes and buys a whole utility. i'm watching the partnerships and one of my favorite groups and this group acts as if the government has decided not only to block keystone, but to block every pipeline and there are

segments in this market that are horrendous with the real estate investment trust. at the same time look at sti, 52-week high. here's a stock that's gone from 29 to 52, 53. has anybody said anything? that's a quiet bull market that's happening because they're going higher. >> you would walk away from the verizons from the pepsis and the proctors. great presentation the other day. this is a push me, pull you. do i want to short pepsico? >> no. i think that would be dead wrong. do i want to short productor? i don't know. that was a bad quarter and lafley's back and i'm not as enamored of him. my charitable trust sold johnson & johnson. >> really? >> sold j & j. >> whoa! >> i'm worried about the taper. i am. i'm worried with about the taper and not only this. here's an example of being too cautious. charitable trust sold -- it is

so hard. bristol myers is out of the portfolio. sold bristol myers. >> what? >> this is what's happening because these are the stocks that could be wrong and instead, you know what? jamie dimon, you didn't lose that fight, but more importantly, the earnings say that stock is so undervalued. so you position for higher rates. that's what you're doing. >> love higher rates and environment that does seem to indicate perhaps we'll get higher growth. >> yes. i am not going ever say that if our country is leading the world in growth that therefore i have to worry about italian car registrations. we can fret about -- you know how many people -- >> there are more teslas being sold than there are cars in the road. >> personal spending down .2. i think the market's gotten ahead of the fed. i think the fed doesn't want to lose billions of dollars in the portfolio, but there are bond vigilantes again. the bond vigilante is, i don't know, death, death wish 3 or

something. >> right. >> it's just really not as dangerous because i don't see the whole market selling off, but i think position in the wrong place. i've been watching aep. con ed, these are great companies and they're not growing to any spin. the companies growing 2% that are up 30% year over year, i don't want to own those because i don't buy the bond market equivalent if i can own the 3% yield and the stock can decline 8%. >> how's my total return on that. so that's what i'm worried about. >> yeah. >> do you wonder whether we're replaying something earlier this year when we saw rates back up and we had the same conversation at the very same desk and we went back to 1.6. >> it seems so violent now. i don't know why. the whipsaw was -- the destruction on these junk bonds. >> i think we have that. >> it's been ugly. it is ugly for junk. the spread has been widening

between junk and treasurys. you might see the opposite because of the economies getting better and you would argue default rates should be going down hence the risk is better for junk and that's been widening. so much money had moved in and some started to move out. not enough buyers anymore. it doesn't go right from bonds and stocks. i've run investment funds and helped manage investment funds and it isn't like wow, bonds are getting killed? you know what we ought to do? we ought to go buy some ibm? it doesn't work like that? this is -- ibm is now above where it reported that bad quarter because hope spring, eternal and the second half will be strong. whether or not it should with the ibms or the intels of the world with, i don't know. the s&p is down i think about a point as the nikkei has fallen 10 over the last couple of -- >> we have good numbers and good production numbers in japan. i think japan could turn. you mentioned intel.

david, intel is really the classic. i liked intel at 23 because of the yield. i liked intel at 26, and you see it's not there yet. the new ceo in the second half starting to win some serious tablet business and making inroads so intel is the kind of quint e serm what i'm not fearing. i'm not fearing analog devices. >> you talked about it a lot. >> what? are you going go radioactive with that? it's apple. apple is -- the point is over the last tw years microsoft and intel's hold in the pc market and what's happened there has been unprecedented. unprecedented. the fall. the erosion is horrendous. correct. let me give you where i feel is more worrisome than intel. hershey. hershey has growth there, right? hershey is the kind of stock that you cannot own in this environment. even though it's a great company and it's doing fabulous. i don't want to own hershey at 90. it doesn't come in.

kimberly-clark, which i love. i love mr. falk and the buyback. that was down five bucks in one day and there's your yield. you try to pick up a little yield and you lose five bucks and suddenly it's, like, wow! then there's general motors. general motors is a win in this environment. hershey, no. gm, yes. kimberly clark. down five, i'm not going to sell it. proctor i'll sell. i don't like the growth in campbell's soup. >> neither did i. >> we had a long talk about it. but the gatsby index that we set up and it's right the rich are different. i know that's fitzgerald and not gatsby, and that index was up double the s&p. someone upgraded tiffany today. look at michael kors. the rich people are even richer. this must drive obama crazy. i thought i nailed those people. no. >> it's never done. >> we're waiting for the trickledown. >> they've never done better.

that is an irony. >> isn't it weird that they're happier than ever, buying tesla. >> going to costco. >> they had merchandise problem, but i still like costco. >> the dell special committee is recommending shareholders approve the buyout bid led by michael dell. the takeover bid of 1365 is the best alternative available and the special meeting to vote on the deal that's kind of news here set for july 18th, the record date, by the way, the date by which you have to hold the shares in order to vote them is june 3rd in what is a t plus 2 and if to settle to actually have it, but listen, the question here is do they get the bid in the face of this idea of a large recapping proposed by carl icahn and southeastern. we're still waiting for mr. icahn to line up all of this financing. you're still waiting for mr. icahn to give us a name, perhaps of a ceo because he would need to do that, and of course, i

need to remind people this vote is a tough vote because michael dell is not voting his shares and so we'll be very close at this point and there'smore to go between now and july 18th. just the second vote that would have to take place if they vote this deal down wouldn't allow michael to vote his shares and there's no guarantee there will be -- >> isn't there a chicago election? the first vote wins. >> the first vote wins? why is the first vote going to win? >> it's the minority, so to speak. >> the michael dell vote wins -- i'm sorry. the 15% michael dell. >> yeah. >> he has no blocking ability with 15%. >> no, no, no. he can't vote his shares in this vote. the july 18th vote on the deal. >> the second one. >> correct. the second one is the annual meeting. >> might they not even have an annual meeting? it's over. >> okay, now, here's what i want to know, how much stock has hewlett-packard bought and are they voting for the recap

because the big winner here is meg whitman, because they will not have enough money on innovate dell, and at the same time hewlett-packard is engineering their way out of the bottom. hewlett-packard, 25, 26. >> good balance sheet, too. we looked at dell chasing down margins in pcs and unwilling to cede share at all. you have vendors and people at channel who are nervous. you say don't be nervous. if i cut the price at $150, let me ask you a question. given what's happened to hp and the halo effect that we might have imagined that would have occurred as a result of what happened in hp. given what happened in the market with with multiples overall. no deal, no nothing, just good old dell computer right now. >> it would be because of how much hewlett-packard is starting to take share, i think. >> or maybe even a little higher. >> maybe 13 1/2, 14, with

microsoft at 35 and intel at 25. i still don't want to say stealing it because if you leave her off that balance sheet then meg whitman can come up here and it's about engineering and i think macked is a revitalized company and that interview with meg whitman changed my mind about everything. i recommended the stock on "mad money." did you really? >> i think it has a shot. it has the ability to generate free cash flow has taken away the worries of some. >> i remember when people were selling the debt and now they're building cash. remember, this is a company that did have a gigantic installed base given against a hobbled company with a management team that always had innovation, but it was put on hold. >> southeastern and icahn says it's not about the pc with dell. >> it's still a huge percentage is the pc versus hewlett-packard which i think is lower -- >> it is. which much quickly is getting

out of the commodity game. >> i think she's much more impressive. you know something? sometimes i've been talking about this with "mad money," management matters and what matters is taper. we think only macro matters. how about meg whitman turning the company around. does she say, you know what? this turn means nothing because of the lemur problem. >> when we come back this morning a tesla test drive unlike any other. >> activate. who with's ready to roll? >> jim cramer gets behind the wheel of the model s. >> "star trek" 10. >> did you really say activate? >> captain pick art. we'll find out if he is super charged about the electric car. you're really smoking there, jim, in the parking lot. also ahead, an exclusive with the man who makes that car, elon mufshg at 10:30 a.m. eastern time and a lot to talk to him

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welcome back to "squawk on the street." i'm sharon epperson. oil prices on the decline as the opec meeting in indiana has ended and the group has left production level it is unchanged. that was expected and we are looking at prices that are just above 101 for brent crude and $92 a barrel for wti. of course, was there discussion for -- on opec, as well and we are continuing to watch what opec will do leading up to its next meeting on december 4th. keep an eye on gold prices above the 1400 level, the key psychological level and it may impact demand coming from asia. we'll see whether gold can hold above that market for the second day. back to you. >> meantime, kelly evans is here at most 9 taking a look at what she's watching. a lot of data to get through today? >> can we talk about pce? >> yes. >> critical, critical report.

it always seems to come out a friday when people aren't ready to digest it. several important things happening here and there are headlines about how consumer spending are weaker, but we're taking a look here at what's happening on inflation because the pce stands for personal consumption expenditures and consumer spending recently and this is an inflation gauge measuring the prices of how those measures are changing. we're looking at the measure up 1.1% year on year for the month. so near a record low. i'm sorry, that was the core. the headline up 0.7%. bottom line is this. at a time when we've had a lot of people from goldman today reiterating that the u.s. treasury sell-off is for real from bill gross reporting the lows. you get a report like this and you have to wonder if it wasn't complicated enough already for the fed to think about what to do about the volatility that we've seen in the market and how they should respond, at the same time, this is their mandate. this is their inflation mandate. their target is supposed to keep

this thing between 1.5% and 2%. we're significantly undershooting and it's all the more important to watch the rhetoric coming out of the fed. how much do they talk about job growth? how much do they talk about inflation and we'll get the payroll report next friday. >> i know you don't necessarily look the part of a geek, but i know you are. >> trust me, she is. >> i know you watch the st. louis fed because they do quality work. households and americans recovered this from the journal. only 45% of the weight that they lost in recession. so again, if you're the fed you just say, listen, they don't have as much money and they're not as rich as they used to be. >> by the way, the income part of this report was really weak. you say what is it boosting consumer sentiment, even though this is a dilemma for the fed, weaker investment is increasing disposable income or spending in that sense. it's not as bad as the headlines might suggest, but the savings rate 2.5%. we were at 3.5 a year ago. is this a sustainable situation?

the data is getting soggy. does this mark the start of a summer sell-off? >> i still don't see it on the corporate level. just not seeing it. >> even with retail relative -- >> it's the walmarts, yes. the high end, no, and i know that the high end has carried us this year. i know it sounds absurd, but it happens. >> if this keeps fed in the marks and precisely because of this inflation measure is this not reported outcome for stocks and not seeing it in futures this morning and we're caught in this goldilocks economy. >> we'll see you in a few minutes and come back for musk. >> when we come back, cramer's mad dash as we get you one more opening bell from this week. also ahead, a blast from the past. >> here we are, you know, 12 years later after the grand settlement. many a question to ask is has anything changed? i would argue, not really. >> former star telecom jack grubman after being banned from

the securities industry. we'll get headlines coming up. >> something changed, carl. we all got old. >> speak for yourself couple ke sanny. >> a lot more "squawk on the street" and the opening bell. back in a minute. s makes them m. which makes you wonder -- isn't that a conflict? search "proprietary mutual funds." yikes! then go to e-trade. we've got over 8,000 mutual funds, and not one of them has our name on it. we're in the business of finding the right investments for you. e-trade. less for us. more for you. the fund's prospectus contains its investment objectives, risks, charges, expenses, and other important information and should be read and considered carefully before investing. for a current prospectus, visit etrade.com/mutualfunds.

[ wind howling ] [ engine revving ] ♪ [ electricity crackling ]

[ engine revving ] [ electricity crackling ] ♪ we are minutes away from the opening bell. deutsche bank upgrades it. the stock's up 30%. >> yeah. what people are saying to me is,

look, wealth management's doing better and a bit of m & a. fixed income, people are saying bond, people are getting killed with bonds. >> it could be -- it can issue a great return business if you're managing it properly and let's not forget a lot of it is trading and not necessarily based on how your portfolio is doing. it's trading and it's selling. they've got a long way to go and they don't have a return on equity that has broken above double digits. smith barney? better digits than we thought. the talent walks out of the elevator at the end of the day. morgan stanley is the kind of company that can continue to move up because the book value suddenly becomes real. >> the japanese own a lot of this. it's 20-plus percent. >> do they need to sell it. >> no, sometimes we forget what a significant owner they are of the stock. >> this is an example when people are saying the taper will

kill stocks. this stock has been remarkable during this period. >> it has. >> be careful. stocks are not trading as a euniuni unit. >> other stocks are going to flourish. this one is flourishing after a long period, david, in the wilderness. they may be in the land of milk and hon sneet land of milk and honey. i'm behind that. talk about flourishing or not. we'll talk about the stocks when we get to the opening bell. by the way, the final trading day of the month is about to open. stay with us. ♪

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luckily, he found someone who gave him a fresh perspective on his portfolio. and with some planning and effort, hopefully bob can retire at a more appropriate age. it's not rocket science. it's just common sense. from td ameritrade. >> all right. you're watching cnbc's "squawk on the street" on a friday. the opening bell set to ring in about a minute. if you're wondering how we're doing for mayotte dow, up 3.3. 3.3%. s&p, a far cry from last may where we were down 6%, 7% on the nasdaq and this would be the first positive may, jim, since 2009. >> we draw the conclusion that even though the bonds are backed up that the market is really strong or should we say, you know what? this is it. this first-half run is still a

market and that's what i think people are trying to decide. how about taking money off the table and it's been such a great month. >> it's below 16.49 today is the first consecutive weekly close since november and keep an eye on that, too. there's the bell and the s&p 500 at the top of your screen. it's celebrating the vectors etfs. and novadaq, celebrating its first listing anniversary. a lot to talk about. boeing, for instance, if you're looking at dow componentses, big order for their 767. $6 billion. >> they make so much money on a 737, just like any assembly line. once you have made it, they still cost a lot to make, 737, i'm not saying they're cheap, but the margins and mcnerney,

isn't it an a maezing time? this guy, i went to the world war ii museum in new orleans where they built this boeing wing. mcnrny is everywhere. he's an american freshir and know you hate me when i say stuff like that, but he's the real deal. >> he can get places quickly. he's got a nice little air force. >> don't forget what the b-29 did and the b-17 did. they kind of won the war. >> they have the scuttlebutt, notion that saks and neiman-marcus and combined and private equity would have. the rumors continue. >> right. on sewn, not much to say there. yesterday it was up rather sharply when we heard the news that morgan stanley had been hired and first of all, that is the case although neither will confirm and they were hired by

being contacted by dan loeb, and morgan stanley, and they're receiving a new board, remember? chairman howard strengther at the june 20th meeting and the 13-member board. these are the advisers to the board. they will step in and give them advice on this idea of doing a subsidiary ipo of entertainment. what from i hear at this point, not much of a hoorah yesterday on our air gave voice to it saying exactly what you would expect. we would give it serious consideration, but we will see. they are not at this point from what i am looking at the ipo, a smart, strategic move, and we'll see what mr. loeb can do between now and then, that's not the battle that's taking place. >> you're just wrong, and -- i don't know that youio want to do that with one of your single largest shareholders. it's better to keep the lines of communication open and for his part, i think mr. loeb kept it quite cordial.

it's not as though it went right to i'm punching you in the face kind of stuff. >> so we'll see. it can be constructive dialogue, but again, don't expect anything, any time soon and certainly not until the new board is seated and even then it will be quite a review process from these two banks and from that board as we take a look at it it and the idea. >> morgan stanley, one of the big movers fighting the tape on this deutsch upgrade. >> here's something else that i want to point out. >> apple goes higher now. what's that about? >> you notice that, david? >> yeah. >> is it possible that their buyback is for real that they're actually in there or that value guys are in there. i'm not being facetious. it's been a quietly positive stock. >> three month, 2.5% gain over 3 three months. it's one of the top ten losers in the first quarter of the s&p. >> a lot of people talking about how they tied that bond deal

maybe better than anyone else. >> that bond deal -- you are not particularly happy right now. >> the long bond is just -- i do point out that i think one of the seminal moments was that my friend adam from the old days said it was very critical of tim cook saying you've never heard anybody give you less leg, so to speak and see what apple is doing and also people are just -- the fact that the stock didn't get hit on that shouldn't be the expectations are very low. >> but you do need new products. you've said it many times and i'm not clear that they don't have anything. >> i'm not either, which is yet stock can trade to 4.80 and then we'll look at it again. >> we're two weeks away from the worldwide developer's conference on the 10th in which he may -- all things clear, he gives developers a little more of a test of what launch there may be in september or in the fourth quarter. >> i have to tell you, was there a time when you looked at the

big investment houses for advice on tech. >> absolutely. what a franchise. >> it was fantastic. >> can i take a look at fannie mae and freddie mac? i don't know if we have one week on fmna and fmcc, and they're making boat loads of money right now and are in a position potentially to cash in, cash out and be even with the u.s. government by the end of the year, but, man, those stocks, jim have been crazy. >> i don't want to think -- >> i'm look at fannie mae down another 18%. >> the common was overvalued -- >> it's a spec play. in talking to bruce burk wits earlier this week, he says there may be a lot of option -- there may be option value there and it may be significant and you may go down a number of roads to get there and the first that the u.s. government will do something here to reconcile the

fact that these are private companies and conservatorship and perhaps no longer should be once they've gone back and you expect a finite return and not an infinite return. there are no security organizations. if you take a look at the banks, they throw everything at fannie. >> oh, yeah. >> david raised a point which was interesting because the comment is overvalued. the community banks are loved in washington. a community banker goes down and it's a community like monopoly. they love these guys and the community banks got crushed. >> a number of them went out of business as a result of the holdings of the preferred. burkowitz is very large and combined between fannie and freddie. the question is if, in fact, we do get some -- some deal here, do you just turn it back on, pay the dividend, right? so it goes back to par or do you make it whole?

who know, but watching this stock move has been unbelievable this week. you saw it. >> this is one of those things where i worry about froth. the frothiest thing in the market was the fannie mae comment because it was valued higher than the preferred. that's inconceivable. that something was wrong there and then the fannie mae collapsed as though it was one of these dotcoms. you could make an argument that they have after tax combined in income last year. and they're writing up the deferred tax assets and you throw a multiple on that, eight, nine times you get their 180 billion and a number that turns a lot in the government. you know what? maybe we can keep the liberal programs we have. >> deficit reduction. that would not be right, though. come on, man. you can't just run them like that. >> it's the judges at the 12:00 show. >> as you look ahead to june,

jim. s&p says only once, since 2005 has the s&p gained over 1% in june. so do you feel good about putting money to work over the next four weeks? >> i think the market is high because there are a lot of stocks in the dow. we mentioned verizon, at&t. i don't like the stocks there. you have to have this changeover and people saying there will be this big switch in bonds and those, give lens will come down, but i do think that the components of the dow that are interest rate sensitive or bond market equivalent, i don't like them. i can't make a case for verizon, 4% yield? verizon, david, you have said over and over to me when with i was in my bond market equivalent. jim, the growth of verizon really knocked that bid. >> the growth is not that great for at&t although verizon runs its business and the multiple has come down a bit with the stock moving down lately and then the larger question of whether massa san will bring it

if they do gain control of sprint and what it means to the competitive landscape. >> are you segwaying in to our old friend jack grub mn? >> maybe we'll get to that later. i think he was saying -- he was mispronouncing it, and he was as michigas. >> a lot of discussion about grubman on our air, comments both positive and negative. >> there were some positives? >> let's go to courtney reagan. let's get to courtney and see what's moving. >> good morning to you, carl. at the open we are under a little bit of pressure. the dow down about 46. the s&p off by about five. we are seeing materials and the commodities being pressured by what's going on in the there are. some of the financial names performing a bit better than the broader markets and some of the bigger bank, but if we consider today the last day of may has been a strong month. so much for that sell in may and go away and you touched on it at the top of the show. the s&p 500 up almost 4% for the

month. the strongest start to a year since 1995. we finished higher today assuming everything goes as we've seen, and we've had the seven straight months of gains and the lipper showing its stock mutual funds seeing their 21st week of inflows so some strong data there and even though we talked about this rally and not being the most loved that we've ever seen. the s&p far outperforming some of the emerging markets that we focused on a lot, and it's up 16% and we're getting some of those numbers out of the eurozone that are not promising and the high unemployment 12.2% in the record high, and german retail sales also getting hit. if you look at what's going on here. take a look at the sectors in may and we're seeing the risk on rally with the cyclical names performing strongly and financials and industrials having the best month since january 2012. tech, the best performance since february 2012 and we're lagging

there in the utility and telecoms. we were going to watch with the volume today and we're having rebalancing there. we could see some heavy volume towards the end of trade today. some 30.4% of stocks will be impacted here. jim, over to you. >> thank you, courtney. at this point there are changes made. let's shift to the bonds and the dollar. rick santelli at the cme group in chicago. >> good morning. thanks, jim. just to put into context, you can see we're kind of hunkering down into a range and many believe the 205 yield will be something to pay attention to and if you look at a chart, month to day you can clearly see how we flew through and april of 2012, you get the whole picture. now let's look at other sovereigns. let's look at a year to date of the bund or the ten-year-to-date

of the jgb and the similar moves in most of the other major, sovereign market, but what's really interesting is exactly who is leading. that's the key and the dollar versus south korean yuan, look at the volatility there. emerging markets will have a hard time and the bank governor for south korea last night was certainly talking about the volatility we're exporting. back to you, carl. >> thanks so much, rick. when we come back, a spotlight on the tesla model is that cramer took for a test drive last night. does he think the electric car is as hot as the company's stock. be sure to stick around for a live and exclusive interview with tesla's ceo elon musk how one of the most prominent innovators continue to answer his critics. ♪

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made a retirement plan, they considered all her assets, even those held elsewhere, giving her the confidence to pursue all her goals. when you want a financial advisor who sees the whole picture, turn to us. wells fargo advisors. welcome back to "squawk on the street," blast off, 58 on the chicago purchasing manager's survey and that's the biggest number since march 2012 and if you look at the markets and how they move whether you look at yields or the dow, s&p or the

nasdaq, certainly people are trading on it before i started the countdown to blastoff and the market seems to be off to the races in many ways. we're seeing a retest of the low teen, mid-teens and ten-year note yields and briefly wiped out pretty much all of the losses on the day. a very powerful number, many are going to be quite surprised that joins the ranks of the conference board's consumer confidence. so many of the feel good in the season surveys are moving along quite aggressively. carl, it's all yours. >> thanks so much, rick santelli. we're watching the dollar and the ten-year and watching the market and ironically comes just minutes after ubs puts out this call telling people to buy treasurys. >> i don't like that, carl. >> there's so much stuff in the dow that gets hurt on this good news. although the banks are not one of them. it's a mixed picture, but i'm looking at bankamerica and almost a percent and morgan

stanley, too. >> citi holdings goes away and 800 million in drag each year for citi holdings. these guys don't have a lot of bad stuff. it goes away and that's so important. >> and the net interest margin, of course, and it starts to show real traction and there are companies that are doing really well because management is great. so this idea that the market gets killed. no, proctor gets killed and not the market. >> goldman sachs up half a percent today and gary cohn, and lloyd blankfein wins. 17,000 people apply for the job and it's an ivy league school. few are chosen. >> tesla shares up slightly after the automaker announced an expansion in the super charger network yesterday, shares are up 200% right you in. we'll talk to ceo elon musk in the next hour, but in preparation for that jim wanted to do a little research and take the tesla model s out for a spin himself. take a look.

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♪ >> take your stuff out of the front. i have the fried chicken for you from the popeye's. >> probably still good. it's about three hours. it's still good? >>. ♪ ♪ ♪ >> yes, you are, don. >> let's explain where, exactly, you droefr. >> i drove around southern, new jersey, and that's the didberry inn and it was a cool car. and i drove it from cnbc, and what can i say? as soon as you hear something good about the car. you hear people say he's endorsing the stock. the car was magnificent. i felt it had a huge amount of power. electric cars i feel have more power than gasoline engines. >> no lag time. >> the torque is amazing. >> at the end, someone was in my

tesla spot. we added a charging station because there was a guy who said, listen, i want to stay at your inn, but i have a tesla, and the other inns don't have charging stations. >> you are making a decision between the car and the stock. >> the stock is a cold stock and it's really difficult to figure out where it can go because when you get behind the wheel, remember when twrou first ordered something from amazon and it came to your house? this is like an amazon. wow! you get behind the wheel. you want to get behind the stock and i'm trying to distinguish that. i'm saying that's not the right thing to do, but i totally understand why someone who test drives a tesla wants to buy the stock because it is about as cool a thing as -- i felt different behind the wheel. >> wow! >> we'll talk to musk in just about 40 minutes and you'll be back for that. in the meantime we have university of michigan. don't go away. what if i took it down that hill? what if it weighed less or turned sharper?

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dow is positive on the back of that chicago pmi number, best number since march of last year. in the meantime let 's get "six in 60." palo alto, just too hard. >> ubs is also saying, buy it on weakness and it wasn't weird to

have a midday down. haven't seen that in ages. >> this is one of those that was horrendous to me, so the stock goes higher. up the price target at panera. >> this is a tug-of-war because also lazard downgrades it. i think the dow can go higher. a lot of things people aric thatting about the ceos, they like our brand and we should split the stock. pacific crest on sandisk. this is the first time we're hearing capacity increases and that's what i've been waiting to be careful on those stocks. >> ray jay, hold the sales. >> this is a company that does the mass testing. mice. and there's not enough new researching done. >> let's talk about what's on mad tonight? >> tonight i've got two spec biotechs. bioteches have been working and working and working, and i've been trying to just dig them up and find the ones that got the big approvals and were all over them and i have an oil company

that's been breaking up. teasing. >> that's not bad. got about 15 seconds until we get to rick santelli, the data has been mixed today. consumer spending income not so hot, but the pmi was a shift. >> there are a lot of places in the federal reserve, where baltimore, maryland came out not that strong. texas, very strong and i still believe the oil and gas renaissance is driving a lot of the industrial numbers. >> rick's got michigan. >> 84.5 is the final read for may. 84.5. i'll tell you what, that's another biggie because tit doesn't dismiss the notion that it's the lot ftiest level since july. a big level is held and enhanced going from the preliminary to final read from michigan. back to you. >> thanks so much, rick. >> we continue to struggle with

a broad consumer base that says they're feeling good, but doesn't appear to have the money or inclination to save to move the economy at large. >> this is one of those situations where there's just a lot of people who are not feeling this greatness, and i keep thinking that until you see actual big employment growth, these numbers do not deter me from liking, say, the banks. i still believe this is a verizon, this is a number that is so bad for owning verizon stock. you say, wow? i got big industrial growth coming. why should i own a slowdown in utility? the industrials do better here, okay? that's amazing that this stock -- >> okay, look. >> they moved here because things are better than expected, but in the end they sell-off, it's a bifurcated market and one of the reasons it is a bifurcated market is they're not feeling this goodness. you like the banks here. what else, though?

tech, cyclicals and low valuation. the toughest one for me are the home would abouters. mortgage rates are going up, but they are historically, if you build them this year in 1,500,000. they'll be at the tug-of-war right there. master limited partnerships and i've been saying this on jim cramer on twitter. they are the wrong place. even though i like them so much, 8% yield goes into 9% yield. be careful because they will be sold when the euphoria dies down. any big number. >> we'll see you in a few moments when we get elon mufshg at 10:30. do not go away. a lot more squawk on the street is back in a minute. [ engine revving ]

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>> welcome back to "squawk onna i street" for a friday. our road map begins with the markets after a volatile week. may looks to go out on a high note, but are we headed for a choppy summer and what about the ten nf year. we'll talk to market veteran bob call. >> jack grubman has returned.

what's the one-time telecom analyst saying now about the looming deal for clear wire and the industry as a whole. >> the interview you've all been waiting for impeach elon musk will join us to talk about the stock, and the future of his company, space travel and what exactly is a hyperloop. so much more. >> in fact, before we go any further, do send us your questions for elon musk. tweet us at squawk street with the #ask elon musk and we'll be asking him some of your questions when he joins us in 30 minutes' time. >> let's get back to the markets. the treasury is selling off on good manufacturing data this morning. gold is down further and equities up to close the month of may since '09. what about the sell in may and go away thesis. robert call and joins us this morning from princeton. bob, happy friday, good to see you again. >> and to you, thanks. >> got a lot of push and pull here between the data and between what consumers say

they're feeling and what they apparently have to spend. what do you make of it and what's the impact on stocks? >> well, there's no question that consumers spent most of the first part of this year spending more money than most of us thought in the wake of the tax increase and the gasoline and you know that they dipped into their credit card balances and reduced their savings rate. that can't continue. my view is that the consumer will be there, but can't lead the way. we need other parts of the economy. notably capital spending to do a bit better if we'll sustain acceptable growth. >> we keep waiting for those figures to balance a little bit, every time we get durables we look for core capex. it hasn't moved sustainably the way people would like and clearly, you're looking for that to feed down to job growth, something that's also been frustrating. >> no question about that, as well. as we all know job growth has done a little bit better if i can put my optimistic hat on.

it's not what i would like to see or need and back to conversations that we've had in the past. the numbers are good enough for the stock market, but they're not great if you're looking for a booming economy. >> so with all of this that we've gotten in the last ten day, bob. japan, here, we're looking at the first consecutive weekly close on the s&p. are you looking to walk away from risk as e larian put it yesterday? >> you'll recall from early march to mid-april, five, six weeks the stock market was kind of stuck at 1550 on the s&p. >> maybe we'll spend a few weeks around 1650, consolidate all of the things you just said and kind of sort things out, try to figure out what do second-quarter earnings look like. i don't see a lot of down side, famous last words, but on the other hand, i think the market's a little tired and needs a bit of a rest and often those

corrections are sidewise movement which is causes people to put some more money in. i don't think the cyclical bull's over, but maybe we take a summer rest. >> i have two questions for you, good morning. >> the first is on the data that came out last night from lipper. why do you think the flows into equity mutual funds are now at their lowest for the year and they're not just from etfs and emerging markets and net redemptions, for example, for the s&p 500 etf. >> it's pretty amazing. i saw those numbers and i'm still trying to sort them out. part of me wants to say, we need more weeks to call this a trend, but i think investors are still very skittish about what to do with their money and still have the memory of the '08, '09 decline and in the 2008-2009 decline and that is still grudging. i think they need to -- >> you see, other people think

that we're on a much more important inflexion point than you seem to be suggesting. >> there is a very strong view out there that if we get a non-farm payrolls nab is 200,000 next week that the bond market will sell off quite rapidly and that could push the yield up 2.5% in the ten-year and the bond market goes down and at the same time, as soon as aging investors see 2.5% on the treasury, they'll go down and not taking the volatility in the stock market and they'll sell the defensives and go interest treasurys and the stock market will fall therefore in response, too, the move in fixed income. do you believe it? so my view is the rate is nowhere near what is threatening for the equity market and the economy. the problem is the pace of increa increase. equity markets do not like it when bond rates move this fast. if we creep higher in interest rate which is is my view, i

think stocks will be find. it's this gallup higher that has equity investors concerned and i don't think we can make positive progress if ten-year treasurys keep moving up. >> i don't think interest rates can have a whole lot of upside because we don't have an ebullient economy. if rates get ahead of themselves, the interest sensitive parts of our economy come to their knees, slowdown and rates turn around and come back down, so this is temporary for a bunch of reasons that you alluded to earlier. >> great point, forget which direction it's headed that it could be a headwind for stocks. we understand that there's now a way to track the vix for the ten-year. this is now an instrument that we can watch. is that now something that's correlated to stock market moves in your view. >> yes, i do think that's the case. markets don't like volatility in anything and bonds are pretty important thing, so i would agree with you. the higher the volatility in the ten-year and the more troublesome it is for equities.

i think a slow, stead increase in rates would mean that the world continues to heal and the economy continues to improve. we can't take 50 basis points up in a couple of weeks and say everything is fine. >> bob, have a great weekend. >> the same. bye. >> bob joining us from princeton. >> let's bring in andrew ross sorkin because jack grubman was on "squawk box" this morning. what did you dub from that interview? >> we talked about telecom and before we got to that and this goes to some of the issues around research and what's going on on wall street. we talked about the fact that he was barred from the industry and we asked him if what he did at the time was wrong. he offered this view. >> let's be crass about it. if we wanted to maximize our personal income the way you did it was to be highly ranked by institutional investors because

if you weren't highly ranked by institutional investors and you know this, every pitch book on wall street for every ipo that went down then, the analyst section and the first thing that led with was the i pulse and at the end of the day if you were not held in high esteem by institutional investors who thought you were nothing more than a sham, guess what? you dropped precipitously. >> when he said that he warned that the system now is no better than it was before, take a listen to this. >> here we are, 12 years later after the grand settlement and maybe a question to ask is has anything changed? >> i would argue, not really. i'd say there's maybe change in form, but not substance in terms of today's wall street research. >> the other part of the conversation is we talked about his view on telecom today and in

particular, dish's attempt to buy sprint and what he thinks is going on behind the scenes which is very different than the narrative we heard about. >> i would argue that in his heart of hearts he doesn't really want to own clearwire. he wants to agitate which i guess he's good at to get a network access deal from sprint because, let's face it, he's a smart guy. >> any and in this case, jack grubman was talking about charlie yergin who runs dish and formerly echostar suggesting that this was really more of a ploy if terms of what dish really wants rather than actually a true takeover bid. >> guys? >> we've talked a lot about that, though, not knowing exactly what it is mr. yergin wantses, but knowing he wants to pull on as many levers as he possibly can to use that spectrum and get a commercial agreement is something that's been talked about. i always made the argument and you listen to him on clearwire and yergin. he had great insight and had

great contacts within the industry and i made the argument he was completely conflicted and totally bought and paid for, you could argue in some way, but he was knowledgeable whereas today you have analysts out there that i would question some of their knowledge because jack grubman made $10 million more at the height. >> he was bringing back investment business. >> i always think about world com because he was the key engine for driving that company in so many ways for so long with mr. ebbers at his side. >> the distinction, i think, was the idea that unfortunately, both he had a role as a research analyst and as an investment banker and as you said was conflicted, but becky and joe was talking about this when he left the set. one of the most thoughtful people when he came from some of the issues and you're right. we do have other people in the research business and it doesn't attract necessarily the same talent, though clearly some of the conflicts that were created

don't exist. >> you have to remember, if you're an institutional investor talking to jack on the telephone and getting his insights and thoughts he was invaluable to you. the stuff he was putting paper, you just throw it away. throw it away, but when he talked to you as a client, he was valuable. >> yeah. no, i agree with you. it's interesting a decade later to talk to him and see where he's at, but now, by the way, and now he works for the telecom companies and we want to hear his view on the other side. there it is. thanks, guys. >> thanks, andrew. >> let's take you to jersey and show you a live shot of the tesla model s right outside cnbc's global headquarters. the electric carmaker announcing it's expanding its super charging network. it's a big buildup to a big interview. we have a live and exclusive interview with tesla's ceo elon musk coming up on the show in about 20 minutes.

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let's drill down now in oil prices. this is opec hosting its $163rd ordinary meeting with ministers agreeing there sea no need for the change in the output cap. it's always about the $30 million level, isn't it, steve? steve sedgwick joining us live from vienna with more. steve, it's great to see you. >> kelly, we're missing you and no doubt about it, but in the meantime in vienna, lots and lots of things happening and yes, they decided as expected to keep production levels as the same as it's been sin the start of 2012.

there are a lot of concerns internally or externally and the opec is worried on the horizon and of those concerns is the u.s. oil boom and what it means for their experts to the united states and elsewhere, as well if the u.s. does take the energy independence and thereafter starts exporting in a more meaningful way. i spoke to various ministers and plus the secretary-general. let's get a word from the nigerian oil minister who put it quite bluntly about what her long-term concerns are for the veil oil means for the picture. >> i don't think that in the very immediate futures on the out short term the shale oil or shale gas will overtly affect opec countries or opec's production and their experts at all, but it is of grave concern for us even though we do respect the integrity of the u.s., of course, to be sustainable in

terms of oil and gas, however. we are concerned in the medium term. >> so concerns there about the longer term picture because the nigerians, amongst others are seeing less exports to the united states on the back of this energy revolution we've been seeing in tile and shale gas as well. a lot of broader concerns, as well about the chinese economy and indeed about the european economy. i just finished speaking to the secretary-general of opec and he summarized some of his concerns and made further comments about shale. >> as i can see it now because of the world economy. the world economy is not really stable and others concern is it's not concerning, but it's something that they don't know anything about it which is the united states. this is something they need more information about, and they need the costs and the protection better from now until 2055 or at

left in the medium term. >> and i think that's a very measured response. we think shale is a big factor in world oil, but we just don't know how much and we'll monitor the situation as well, and carl internally, there are all kinds of wrangles going. the secretary-general took on an extra year of that job because they couldn't agree on who was his replacement and there is a sectarian battle for the leadership of the middle east between the iranians and the saudis and that is manifesting itself in the role of secretary-general, and they both put candidates forward and the iraqis also have a production and there are concerns with too much oil in the market and there are other issues about quota levels and how much adherence there is to the 30 million barrels a day level coming out of opec as well. so lots of subtext here as well, but on the surface, a rollover of current production levels. back to you, carl. >> a lot of americans think we've got them on the run, steve

sedgwick joining us from vienna. the hurricane season begins tomorrow. the new season could bring up half a dozen hurricaneses upping the ante in the gulf of mexico where preparations are under way. we have an exclusive look behind the scenes. hey, scott. >> hi, carl. consider how complicated this is when it comes to hurricane season. chevron alone on any given day has 2500 people offshore. roughly about 600 structures, we're talking about oil rig, platforms, drill ships. if the storm comes they've got to move all of those people in, they've got to secure all of those assets and there are lives, facilities and billions of dollars at stake. they handle it all from a very special, very sophisticated command center. >> with so much equipment and so many people offshore, just keeping track of it all is hard on a good day, let alone with a storm approaching. these monitors show everything and everyone.

>> the folks offshore have the latitude to start moving people. >> chevron vice president warner williams says this facility is the result of a lesson from previous storms, communication is key. having all of that done here from one location, we've been able to save time and money with that. >> another key location, the command center open in 2008 is in covington, louisiana. a good hundred miles inland north of lake pontchartrain and that's because the old facility in downtown new orleans flooded during hurricane katrina. >> being here in this look and being in the building that's highly technical has been a big benefit to us. >> it's quiet now, but in the storm this place is jumping and cranking out constant information for teams of managers who with are making decisionses by the minute affecting workers offshore, onshore and in the air. >> the whole process is carefully choreographed. chevron is unique in that it

owns its own fleet of aircraft. they feel that gives them more flexibility and control, but it's one more aspect of the whole operation that they have to be concerned about. >> once again, it's all about communication. in another part of the command center they can operate some of the offshore facilities from remote control. from this room they can monitor and control every chevron asset in the gulf of mexico. so during the storm, the operators evacuated from offshore will be brought here to make sure their facilities weather the storm. mike casy is in charge of operations. we can talk to every platform we've got, everies asset we've got whether it be a helicopter or a boat. >> important because after the storm they have to get everything and everyone back offshore as quickly and, efficiently as they brought them in. >> reporter: to give you a little bit of a sense of how far they've come in terms of the technology before that command center opened in 2008, the way they used to keep track of things offshore. post-it notes on maps and now everything is computerized, monitors just about in real

time. coming up later on "power lunch," we'll go back offshore and imagine what it's like to be the last guy standing when a storm is approaching out on an oil rig. we'll talk to someone that's done that many, many times. that's coming up on "power lunch yet ". okay. thank you very much that's really working for a living. >> thank you very much, as they wait for the hurricane season. meanwhile on this show, tesla is looking to take over the electric car with the tripling of its super charger network from l.a. to new york. still ahead, wooey have that exclusive interview with tesla's ceo elon musk. do tweet in your questions for the co founder and ceo of tesla. >> also ahead what the hunger games, twilight and madmen have in common. lionsgate, of course, vice chairman michael burns will join us live after they have the next "hunger games." hey, what's going on here?

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down about 24 points now, and let's go over to jackie deangeles. and the education products and the stock is sliding this morning and the worst performer on the s&p after earning sl slid.4%. and i spoke to baird with the beon the stocks and said it was a decent quarter and the declines were anticipated, today's response looks like short-term profit taking,and the

13-year-old queens boy, and the national spelling bee. k-n-a-i-d-e-l-. knaidel. >> the yiddish term for dumpling, apparently. he is an eighth grader at nathaniel hawthorne middle school and this is his fourth trip to the spelling bee. speaking of queens we have our own pretty smart guy from queen, yes, david faber. some people call him the brain, but that's for different reasons. i don't know if you're happier about the bee or the mess. >> the it will probably be the highlight of the year because weir not a good team. and we never have been, but that's part of being from queens knowing that your team or teams used to be the jets are really, really bad, but hey, we have a spelling champion and a treasury secretary so we're doing okay.

we're doing okay. >> you're a big part of that, too. >> yiddish, come on! that's really going far field. >> i disagree! >> my grandmother used to make kneidel. >> as i said, rhymes with gra dreidel. >> it's ai? >> yes! >> you win, the brain win, takes this one and still, ai, that's not that difficult. all right, it is difficult. it's impressive, fine. major kudos to those kids and it's incredible to get to that point in the spelling bee been back to the pressure at that microphone. >> and he lost the last couple of years. >> still ahead, the electric car company that's super charging the stations from the west to the east coast and elon musk joins us for a live and exclusive interview when we come back. there's one thing dave's always wanted to do when he retires -- keep working, but for himself. so as his financial advisor, i took a look at everything he has.

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♪ ♪ ♪ about an hour into trading. some of the stories that we're talking about at 7:30 on the west coast, 10:30 on wall street. a hat trick in the financial sector. b of a and goldman all hitting 52-week highs. consumer sentiment for may coming in better than expected and 84.5. that is the highest level in more than six years and chicago pmi surging almost ten points to 58.7. the number 50 marking a return to growth in midwest manufacturing. >> tesla now will dramatically increase the charging stations around the country. they will triple by the end of june, and i have to tell you, you'll need them, believe me. you can drive from los angeles to new york using the stations. elon musk is co-founder and ceo of tesla, founder and ceo of

space x and chairman of solar city and elon, how are you? >> good, how are you doing? good. i managed to be able to test drive it, and thank you very much for letting me do it, and i'd like to let them know, what percentage of people who do test drive it go buy it? >> it is up to, i think it's about a quarter of the people who test drive the car buy the car. it's a really high growth wrashio. i love the car and i would be curious, how are the orders because when you have a big charging network nationwide and start getting a lot of good buzz, i figure the orders would go up. >> we haven't seen, but before we made the announcement, the order run rate was around 20,000 units, and back, which is it's up three times more than we originally thought for north america because we agreed that that extrapolates the rest of the world, and it would mean potentially up to three times that number for the rest of the

world and the order of 50,000 units once we get shipping worldwide. >> and i'd say that's not in the number, but i would point out, i think that a lot of people who have asked me we want to know one, can you lower the price of the car and two, how much in government subsidies, state and federal are involved in each vehicle, and would you, if you didn't have the subsidies would you still make money? >> and, and it's around the 25%, without the credit and the quarter. and we do expect to make money, it should be noted that we will be shipping most of our volume overseas where there are no u.s. government subsidies. >> elon, you spent a lot of the appearance doing what some would

argue is a well-deserved victory lap. people said the car would never work. you proved them wrong. they said you couldn't make money, you are. they said the stock was a short and it has been, but a painful one for some. how much of all of that could you have done without government support? >> actually, although this has been a -- i think we could have done a little bit without government support, but that's not to say that the government support was unhealthful. i think they look at it as a black and white and the income report and we're in a catalytic way and it helps accelerate things, but i don't think it was -- i don't think it was necessary, but it's definitely helpful -- it was very helpful and it accelerated things and that was the intention of it. >> elon, can you clarify just how much financing here has helped, as well. would you have hit that 20,000

run rate without working with wells and usb on this? >> i think the financing was pretty helpful. actually, i don't think we would have hit the 20,000 year to year run rate if north america was out, and i think that was actually an important part of it, but i do want to emphasize, that they extrapolate a run rate and i'm telling you what the run rate is, and it could go down, and it could go up, but that's where things are right now. >> the reason why i'm asking as well is a lot of people are under the impression that there's huge demand for these vehicles from people who can easily spend the likes of $20,000 on the car. so what you're saying is, in fact, no, that's not the case. >> i have to think that the car particularly with financing is -- a much broader segment, but when it was a purchase product and it was in a million

households in north america, and it was in the household, and we do have a lower-class vehicle and it would be a little bit smaller and in about three to four years we expect the vehicle that's about half of the price of the model m. and that will be one more, that's affordable. >> elon, i wanted to ask you, who is really buying the car? when i test drove it last night i was conscious of the fact that if i had a routine, we had a doctor staying in our inn who had a tesla because we go back and forth and back and forth making his rounds and who is your core buyer, someone who is healthy and wants to save money on gasoline? this is the best one in the world and, you know, we're fortunate that the report was 99 out of 100 and we were only given that rating once before

ever any car which was to a lexus which was about six years ago. this is the first time an american car has ever gotten that rating in the report. so i think if you want a really great car, whether or not you care about the environment and care about the electric, and i think the model s is found get. >> one of the questions someone had for me who bought the car, was honest marketing and terrific, but when you list the financing on the web page you give them a percentage of how much it is per month, but this is including a match of gasoline that you save. do you think that's a smart way to advertising the high class of vehicle and that's the fine print that i'm used to from other car companies. >> well, i think the monthly payment and the gasoline safe suggests really important because that's a fundamental difference relative to gasoline cars. so if our monthly payment is,

say, 900 and somebody is saving $250 a month in gasoline, and then the true payment of gas savings is $250 and so with somebody saving another bmw or audi and whatever the case may be and they're looking at that lease payment and they're looking at our finance payment and in order to prepare what it is out of pocket, you have to take gasoline savings into account. >> elon, let's talk some hyperloop. a lot of people are scratching their heads. what is the combination of a concord, a rail gun and an air hockey table? is there any other clarity or clue you can give us? >> well, i was trying to make the description fun. >> you did. >> you know, obviously, i need to make sure that some of the news is out of the way, and we have one more meaningful test announcement on june 20th and after that -- after that news

sort of subsides and that's maybe when i'll talk about a hyperloop idea, and a hyperloop is something that i personally have the time to do, but i want to put it out there and describe it and maybe somebody else wants to do it because i think it will be a really -- a really great way to travel between cities, and it will be a good mode of transport and it's not a mode of transport that currently exists and i think it would be a really great way, and better than a high-speed rail or a plane between the right city parts like san francisco or l.a. or new york-boston, and that kind of thing. >> how many years until something like this can break ground? can it be privately funded? i know california has a less of a deficit problem than they used to, but it sounds expensive. >> i think it would be a lot cheaper than something like the

high-speed rail system in california. in fact, the thing that prompted me about this was when i read about the high-speed rail in california is which is now effort mated to be $70 to $100 billion and it will be really slow, then the high-spade rail system will be there in china or japan. >> wow. that's really good. why would we want a rail system that's better in the wrl. that can be condition. so i thought about it, and i think it could be done for probably a tenth of the cost than of the high-speed rail in california. so it would be a lot less intrusive into people's lives for the travel. i think we're better on all

count, but it's brought better receipts. >> elon, just changing the subject. you are very adept to dealing with washington and you work in regulated areas and a lot of attention was drawn up to the fact that you resigned from mark zishgberg's fwd lobbying group on immigration and a lot of people would like to know exactly why you did that and what the implications are for getting what you want in washington. what can you tell us about that decision? >> you know, i didn't really want to make a big deal out of it, and the reason i joined in the first place was i think it is important that we have immigration reform in the united states and i think they're silly immigration laws that will often send home people that are contributing to this country and it's like having -- if you have

you want to go play for the other side. i think we really need that report, so that's why i joined it, but then i wasn't comfortable with some of the tactics that we used and i -- i -- >> so what's -- what it the fact that they put out things out that supported conservative elements of the group that they're trying to put together. was that your issue that they were supporting the type of activity that you didn't think you should be involved in? >> well, i thought the approach that was taken was a bit too cynical. it was, you know, if you want to -- if you want to win in washington you have to win in the court and not just legislation. i think that's -- if we do that

we'll get what we deserve and it's pushed to win something on it is merit. and it's sort of naive with respect to what came out of it, and i have to think the bandwidth, of course, and it takes longer and it's harder and that's the right way to do it. >> elon, it's david faber. you helped revolutionize the payments industry by founding paypal, electric cars. of course, we can argue with tesla, space travel with space x. you are also an investor in solar city. i'm curious, you did a lot of that or most of that in this country in the united states, do you still think the culture of innovation in the u.s. puts it ahead of other countries or is that no longer the case? >> i think the united states definitely had the proper innovation, and i think there's no place in the world where if somebody wants to accomplish great things, there's no place better in the united states than europe, but by that i certainly

don't mean to suggest complacency or that we could not do better and we need to be constantly vigilant and make sure that that environment stays that way and it remains that the united states remains that. i think it is that -- >> elon, we have twitter questions for you here before we let you go. keep your answers brief and we can blow through a few of these. when with will tesla introduce lower price compact model ts making it available to all? . in three to four years that's when we aspire to bring into production a car that is half the price of the model s and then shortly thereafter a smaller suv, as well. these should be quite affordable and the price will be around the order of $35,000, however,

because you save a lot in gasoline, and the fact that the gas -- i think gas prices will be more expensive in four years' time and that's like having a car and it's like the 25 to $30,000 price point. >> timothy asks, given the down time at recharging stations, any plan to create a customer experience during that time while people wait? >> well, we're aiming to keep improving the charge speed, and then we've got other ideas for minimizing people's time at charge station, but yeah, i think we'll try to come up with some entertaining things over time. i mean, right now we're really focused on expanding around the country and making sure that you have it anywhere you want, any time you want.

>> just to go back to something you said. i regard your company as a technology company and the average price of technology does come down and you mention that. how do you preserve the resale value which you are pretty much guaranteed if you are going introduce a much, much cheaper car that probably is going to undercut the value of a used car? >> yeah. i'm behind the retail value of the model s as being the highest of any -- the reason i feel confident about that is that the -- i think -- i think demand is going to exceed the production for several years to come, so there will all be some level there and the car i'm talking about in three to four years is it fits all of their model s, and we wouldn't have quite as many features as model

s and it would be pretty cool. and if the model s is like the audi a-6 or a-8 or a-7 and the third generation that i'm talking about is in roughly four years would be similar to an audi a-4 and the bmw b series. >> tag asks any chance to partner with google on a self-driving car technology. you expressed your admiration for larry yesterday. >> yeah, i'm a big fan of google and larry, but we have had some discussions pip think there's a good chance we'll partner with google on self-driving with cars. we have a difference of a opinion on the architecture of that. i'm a proponent of using the system, but we may or may not partner with google and we'll

certainly make self-driving cars or auto-pilot cars. >> finally, on the question from all of us, will you say hello to cameron diaz for us? >> um, i -- um, yeah. i am not dating cameron diaz. i don't know where people got that from. -- yeah. >> elon, you're the best. >> pretty forthcoming. >> thank you for your candor. >> i thought -- >> thank you for lending me the car. >> and for your time. you know you're welcome back any time. >> thanks for having me. >> the co-founder and ceo and product architect of tesla motors. we didn't even have to time to talk about space x or other things and what a blast having a chance to talk with him. thanks for sticking around. >> sure, buddy. have a great week snooernd another person who happens to be close friends about elon himself. former chairman of gm bob lutz.

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welcome back to "squawk on the street." i'm sharon epperson at with a quick look at metals. gold prices are falling fast. we told you about 1400 an ounce. gold prices definitely below the mark now. down $18 below the session. $13.91 an ounce. right now gold prices are basically flat on the week. but the dollar, a big culprit in what we're seeing in gold prices

and other commodities as well. as we have seen relative strength in the dollar we have seen gold prices go up fast as well as the industrial commodities. the silver is down the most sharply of the metals. we'll continue to watch the impact that the dollar is having on commodities. we're still watching what is happening with the other fundamental factors in the emergency market as well. simon, back to you. >> thank you so much. it may have been a short week due to the holiday, but it was a volatile one for many people. they can have a very violent reaction. this really feels like a buildup to potentially a massive move led by the bond market now.

>> it certainly has that sense to it, yes. sense bernanke spoke last week, we've had a lot more volatility in the marketplace. yields have been climbing. that put pressure up and down on individual names and sectors. for example, names in financial groups seemed to react fairly well to that, but it's created a lot more volatility in the market. >> pretty much summed up the diverging views between goldman and ubs. they are saying this is the end of the extent. ubs says we're 50 basis points below fair value. >> exactly. that contradictory view is pushing the volatility. you see it in the equity market and bond market as well. >> what do you think? you think the bond market can take the heart out of the rally? >> i don't think so yet.

what i i believe though is everything coming out of the fed has been testing the marketplace here to see what the reaction is going to be if we talk about tightening. they got reaction when those comments came out. in my mind, the fed has to be extremely conservative going forward. >> because of the equity market? >> mostly because of the equity market. i believe that's going to be bullish for the equity markets. at least it has been and will continue to be. >> some believe, those who report closely on the fed, that they know it's going o be some heartburn associated with tapering, and they're oerk with that. >> there's a difference between tapering and tightening. that's been a lot of the talk we have seen lately, too. the market can handle tapering. i don't think it can handle tightening. >> what do you mean by tightening? >> raising the interest rates. >> it's 2014 they're talking about. way down the line. that's the end of next year.

>> you go back a month ago, a lot of people thought tightening would be starting in the first half of the year. there was a lot of discussion that may happen sooner. that continues to get pushed back. as long as it's pushed back further and further. >> is the jobs number the one to watch? >> absolutely. that's key on the fed's watch list. i think it will be another signal that they will push in. >> we have to leave it warren. thank you very much. >> when we come back, a lot more of our sound. we'll talk to bob lutz, his good friend, when we come back. we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket. i'm greg stevens, and i helped create fidelity's options platform. it's one more innovative reason serious investors are choosing fidelity.

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welcome back. we'll start with breaking news

in washington. treasury secretary jack lew set to speak on social security. >> hi, carl. social security has funds to operate until 2033 according to a new report by the treasury department. that's the same year that treasury depicted it would run out of funds last year. in that sense, social security is treading water, if anything. after 203 # they'll be able to use tax revenue to finance social security benefits at three quarters of the current level, and that will exist until 2087. moving to medicare, social security is saying medicare has sufficient funds to cover obligations through 2026. that's two years later than projected last year. in a sense that's a strengthening of medicare's financial position. and jack lew, the treasury secretary is scheduled to give remark starting in about 20 minutes. they are meeting their commitments today but more needs to be done and the programs face

long-term challenges. carl? >> eamon, thank you for that. hard to say we can all breathe easier now, kelly. >> and a couple of things to watch in that report. inning the disability roles to help their own funding challenges. and the average age of people when they're retiring and also about the extent to which labor force participation can keep changing. >> absolutely. with that the markets are reacting not so much to lew's comments but more on the data we have gotten today. pretty nice beat on michigan sentiment. but personal income and spending were both slight misses. but a miss nonetheless. shares of netflix jumping on news the stock will join the nasdaq 100 on june 6th. next week netflix will replace parrago and gold falling below 1,400 today.

chick data beats expectations and the dollar does rise. >> it's type for time for the road map this hour. sell in may and go away? not so much. what does it mean for the rest of the summer? art cashen is here to weigh in. plus, shares of lionsgate are rallying today. after reaping the benefits of hunger games and twilight. and elon musk is speaking out on the the future of electric cars, tesla and spacex. but how is he doing as an executive leader? a long time friend of murvg and a car man himself will help us evaluate musk as a ceo. >> as we end the week and the month of may, all three major indices are up. let's bring our cash and director floor operations. some are joking there is still time to sell in may, but not much. >> it would be an awful surprise

to all of us, including may. you ha to take sell in may and translate it to japanese this year. and it got a start. and it's not just the month of may. it is between now and hal wean. we could have a summer selloff that would still live up to the thesis. but it's been quite pleasant. and now we're beginning to get some second thoughts. we're thinking about where the fed is going to be, where they are with tapering. i think we're getting a hall pass here because the refunding needs have gone down. so the government is not pushing out that many bonds. and we're seeing the same thing in the mortgage. so what they had been buying up is seeing less and less of it issued so they can, if you would, lean back and pretty much have the same effect. >> should the u.s. audience, the u.s. investor care about the selloff this month?

>> i would say ordinarily yes, but this week especially. but this week especially we've had a rather strange performance. we discussed it off camera. i have to find a way to get the chart up for the viewers next week perhaps. but big swings all hours in tokyo. this morning after tokyo closed it was up a little bit. that took european markets down. it took the futures down. before it opened people were discussing down 95. since then the after market in tokyo has come back unchanged and here we are. >> does it suggest because it's happening after hours that's it's u.s.-based move from north america instead of maybe the domestic japanese audience? >> it's been so recent and dramatic, i must admit i haven't

fully figured it out. i'm perplexed why someone is doing something significant enough to move that average pretty sharply and doing it off hours. if you're a professional trader, you say i want to go when it's most liquid. people wait often for expiration dates to get the heavier volume. so you know the market is going to be particularly thin. and whatever you do is going to have an extra large impact. if i were a conspiracy theorist. >> and capital management r the traders walking away from risk? are they selling high yielders and buying cyclicals? what do you think? >> not quite yet. we're watching what is going on. it was very interesting yesterday to see the market outthink itself. the utilities and other dividend payers have suffered as they've gone up. yesterday they had a good rally in the morning thanks to what?

our old friend warren buffett. warren went in and bought up a yuletity. everybody said if the smartest investor around still likes utilities, i guess we can buy them. by late in the day they rethought that and went out flat. >> and volume. confirming that people are nervous? confirming nothing at haul? >> well, i'm not sure. i think we're losing volume to things like epfs in which people can buy baskets and you don't get trades in all 500 stocks. i'm very old phobic. for me volume is validity. i'm a little frustrated. we're talking about stam peeds but the cattle aren't moving very fast. >> that summer selloff get translated back into english in the months ahead? what do you think? >> well, there is that risk. we'll try to figure out what is happening off hours and maybe with we anxious the question directly. >> perfect. now this stock is up 80% this year and the the best may be yet

to come. lion's gate releasing the now you see me today. that is. the hunger games sequel in november is coming not to megs the continuing success of madmen. that's an important driver as well. what does it all mean for the stock, and who better to fill us in than the vice chairman himself. he's here next for an exclusive interview. but first rick santelli. and you're talking housing and lumber, sir, we understand. >> we are. lumber has had a little bit of a correction. it's still down 27% from the the february highs. we're going to have matt mabely talk about all of this with us and are the correlations with housing something to throw out the window? and we'll also weigh in on the japanese issues which are hot, hot, hot in the marketplace all in about ten minutes. ortunity, ortunity, with ideas, with ambition. i'm thinking about china, brazil, india. the world's a big place. i want to be a part of it. ishares international etfs.

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it was very painful situation. the rash was on my right hip, going all the way down my leg. i'm very athletic and i swim in the ocean. shingles forced me out of the water. the doctor asked me

"did you have chickenpox when you were a child?" the pain level was so high, it became unbearable. dow is up 55 now. take ha look at s&p financials tradesing on the the flat lines. some of the big banks are seeing rallies. jack jackie is back with more. >> we are just over the flat line now in positive territory. morgan stanley, bank of america, goldman sachs are the standouts. all three trading at levels not seen at various points since 2011. the thought is that as the banks rise we will see continued strength. i do want to point out it is

morgan stanley with 1.6% gain today. kelly? >> we're also keeping an eye on shares of lionsgate rallying today. the stock is up more than 7% today. julia boorstin joins us with an exclusive interview with lionsgate vice chairman michael burns. kelly? >> thank you so much for joining us today, michael. >> thank you. >> well, i think we're in the right place at the right time with a lot of hard work. it's all about content now. we have an enormous library. we make a lot of content. if you take our acquisitions and you take the content that we've made, both television and future film, we've invested $6 billion over the last dozen years. probably close to a billion dollars this year. >> your stock is up 110% over the past 12 months. how can you keep up this kind of growth? >> you know, it's what have you done for us lately? i'll tell you that again it's blocking and tackling. if you look at our library of

over 15,000 titles it pays our overhead. you're going to see us do some fairly dramatic things in regards to lowerring the interest costs, which again will save a lot of money. we have a big deal to save us a lot of money. we have better settlement rates with the theaters. 25 million here. 25 million there. it adds up the to real money. >> the next original series is called orange is the new black. you have a original series for hulu and amazon. how important are these? >> well, the more buyers the better. the more well capitalized buyers. you take a look at netflix. over $10 billion run. i had dinner a few weeks ago with reid. he's very excited. he said it on your show. we're very optimistic. >> does that mean you'll have a

second season of orange is the new black? >> i think we're highly confident. >> lion's gate is known for the cables show. you also make madmen. but you also have nashville. why does it make sense for lion's gate to make a broadcast show. >> it's not a core part of our television business run by kevin and sandra stern. but once or twice a year when we think there's upside we can make a lot of money. but when the show picks up in the future years, in latter years, you get a higher license fee and syndication potential. >> later this year you have a sequel coming out for the hunger games. what do you expect it to do? >> a lot. we have over $250 million in sales. patrick and the international team did a phenomenal job. that's a record for us. but more than -- close to

double. catching fire, i've seen the movie. it's terrific. it comes out in november. jennifer lawrence is obviously a much bigger star today than she was when the original hunger games came out. we think it will do comparable numbers internationally because the books have sold internationally well as they've taken off. the first hunger games did $408 million of domestic box office. we think the numbers will be closer together. >> now you're really betting big. you have two more in the works. what is the challenge to make sure they turn into a twilight and not a john carter? >> well, eric fine, who is a great part of the acquisition runs production for us with a great team. what happens is they come in. eric is a big fan of having a built-in audience.

so he actually brought twilight into the summit fold. our big hook, hunger games, the same thing happened. it was a property that we thought -- i think oo,000 copies that sold. and we ended up buying the book series. we like the idea of a built-in audience. particularly in the young adult space. we now have over a quarter of a billion fans on facebook alone, which is a fantastic way for us to reach those people in a very efficient manner. >> so how much of the future is hinging on the ability to adapt books? is that really what you want the studio no be? >> we like books. we like other intellectual property. we have a big movie coming out this weekend. which is now you see me. it opened last night. the late night shows were very encouraging. it doesn't have to be a book. but we like the idea of built-in

audiences. >> based on last night's performance, what are your ideas for now you see me? >> i'm seeing it tonight. so i'm curious how it is. in the past quarter cbs bought out half of the tv guide network. this is an incredibly crowded space and there's a ton of content online. why does it make sense? >> well, we're now partnered with wes mundez and cbs. we feel there's already a couple of things happening. we announced we're going to put big brother after dark. the original shows will be moving from showtime to tv guide. we announced the young and the restless moving from soap net to tv guide this summer. and then midnight, that's fantastic for us. so the idea that we have a great programming partner. it's two strategic partners as

opposed to lion's gate and a private equity fund. it's night and day. >> now another television question about madmen. there's only one more season made after the current one. isn't it a mistake to end a show when it's so successful? >> never say never. we just wrapped up this year. then we have next year. madmen has been an enormous success for us. we like to continue our relationships with talent. you'll see a continuation of the relationships with both talent. >> never say never. we may see an eighth season of madmen. >> that's really a discussion with matt and amc. and it's basically going to be a joint decision if it were going to happen. >> michael burns, thank you so much for joining us. kelly, over to you. >> julia, thanks for bringing that up.

>> the markets mean session highs here. we opened with futured looking at 70-point gap down. we reversed a lot of that on the back of michigan sentiment. still ahead, the former vice chairman bob lutz will give us his take on elon musk, what he has said this week and including this morning on our air. what does he think of the performance as a ceo? we'll ask bob when we come right back. i have low testosterone. there, i said it.

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♪ we can dance if we want to >> yes, we can. we'll go to rick santelli and talk about lumer. >> yeah, you found the lumber

theme song. i would like to welcome my guest matt maley. you alerted me to the lumber movement and early stages. if we have heard it once, we've heard it 1,000 times. things are different this time. when it comes to correlations, and let look at the charts that you sent, whether it's against the philly housing index in lumber or the s&p in lumber, it certainly seems as though there's been a fork in the road. what are your thoughts? is it different this time? >> i don't think it is. it's funny. several years ago a very smart colleague of mine, charlie, turned me onto the importance of lumber. i've been following it closely ever since. if you look at the charts, they are tit for tat for years. and at some point, i think that has -- sorry the correlation has to reassert itself. >> i've asked a lot of people

about this. the only answer i get is they're single family homes. existing home sales don't require as mum lumber and eventually you see it. but don't multifamily dwellings use lumber, too? >> exactly. people always come up with an excuse why things change forever. people still build their houses with lumber. housing is so so important to our economy. that's why it's important to the s&p 500 as well. >> now, interest rates have moved up. the yield curve has steepened. and obviously mortgage rates are going up. subsidies for the fed aside. the move in lumber certainly predated the move in interest rates, did it not, matt? >> exactly. it's been happening since the beginning of the year. we're seeing it in iron and steel, things like that.

it goes back to what david talked about whn he was on with you yesterday. the markets are getting divorced from the underlying fundamentals. at some point that will bite us. >> do you think when we come back we'll see that it was a leading indicator. maybe it will be an leading indicator on the durkt of current aggressive numbers in housing. your thoughts? >> i definitely agree with that. when you have something so strongly for so many decades and what that has really changed in lumber? people still have to build their houses using lumber. >> now let's switch gears aggressively. you've also been keeping a close eye on the cross trade. i always monitor the euro yen. the pound yen. but this has captured your attention. tell us why and how viewerscan

make a few schilings on the trade, potentially. >> well, any of the yen crosses are good to watch i happen to watch the one correlated with commodities. and when there's a net positive liquidity, that's positive for risk assets. and we have seen over the last year or so, or actually many years that this cross has been a good one. the problem is lately it started to break down. and i think that's part of the reason we see weakness in japan. it broke a key support level today. if it doesn't bounce back soon, it's going to be a problem for the u.s. markets as well. again, on a short-term basis. net liquidity is the most important thing to watch right now in the markets. and this looks like it's breaking down a little bit. so the fed or other central banks may not have the pedal to the metal 24/7.

>> thank you very much for being our guest. viewers, make sure to monitor liquidity because it turns to leverage which turns to various aspects of carry-trade. >> thanks so much. >> now just a couple of minutes left to go in europe's trading day. we'll have the close with simon hobbs when we come back. ♪ ♪ ♪ ♪ ♪ a talking car. but i'll tell you what impresses me.

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last day of the month let's see how the markets closed. >> i think there's a discussion about where european markets are going perhaps in the united states. but let's just take in the close first of all. >> the european markets are closing now. >> after working in television you see things that miss the anger. we miss the things around 7.5%. today you have record unemployment. now standing at 12.2%. one quarter of young people in the euro zone are without a job. 40% of young italians are without a job. and the bittersweet irony in spain, the imports are crashing at a such a level that it's reported the largest trading surplus ever. we will come back to that again

and again. we promise to do something about unemployment for many years. it's all about gdp growth. of course, the other difference that you have is over the last two weeks european equities are not doing as well as here in europe. you see the dow. and there's a slightly more acute discussion about where next we would like to trade. other people are saying that technical breakdown doesn't look so good. common though is the fact that you have the defensive areas selling off and you see the telecom index that has outperformed. a lot of them are in negative territory. they are trying to spin off the

fixed corporation, but those guys have performed well. to the point i was making about anger and frustration, we should point out there was an attempt by europe's answer to the occupy wall street movement that we had two years ago in frankfurt to shut down the european central bank. 2.5 thousand demonstrators were met by police with riot gears. this may be repeated tomorrow. there are protests for june 1st planned. clearly the guys are unhappy about what they see. it's the same market that we have here. they believe the european central bank propped up the bankers at the cost of the broader public. >> yeah. some had some scuffles here and there. nothing too serious. >> unlike the united kingdom, they won't get far in germany. >> simon, thanks. simon hobbs, we'll see you -- >> you reminded me.

don't go too far. >> let's get to cower knee ray gone who is watching what is moving here. >> as we look up here, it looks like the dow is in positive territory. we started the day lower. then we moved higher as well as the consumer sentiment. really a broad market lift over the last couple of minutes going into the european close here. if you can take a look at the dollar index, you see a strong move to the upside after we got the better than expected data. on the flip side, if you look at the bond etfs pushing them to near 52-week lows, you can see a number of them. we're going to watch them carefully as we move them as well. cyclicals are strong again today and also for the month. this is the last month -- the last day of the day so we're looking at comparisons there. some are the consumer names.

this is because of the yields and the ten-year is moving higher today. the financial is seeing financials in the big banks. the goldman sachs and bank of america is moving higher. let's talk about the month and year to date. the strongest start to the year since 1995. as we look at the dow as we end here, 43 points. this is the eighth trading day in a row that we see for the day. let's check in on energy and commodities now with sharon epperson live at the imex. >> hey, we have definitely seen commodities falter here. whether oil prices, crude and

wti. gold and silver, also lower on the session. gold have been able to hang onto some gains. traders say not being able to close above 1400 an ounce as we did yesterday, that could proceed more bearish momentum in the gold market to come. we are also watching the good news in the slide. that is for the gasoline futures at the pump. prices continue to come down with a national average below 3.50 a gallon by the end of the june. back to you. >> find out what tesla motors elon musk had to say about the future of travel and a long time friend himself let's him weigh in on the management style of the tech renaissance man. we're back in a minute. i want to make things more secure.

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coming up next on the half, is more volatility ahead after a stellar may for stocks? mike santoli on which housing trades are overdone and self

profesed vacant fan on smithfield and china and a whole lot more. carl, we'll see you in a bit. we're going to get serious about the rally and have fun as well. >> you're clearly serious about the suit today, man, it's summer. >> it is. it's blazing. it's blazing. >> we'll see you soon. scott walker is back in headquarters. last hour we talked to elon musk. we asked about cars and the topic on everyone's mind. >> i, yeah, i'm not dating cameron diaz. i don't know where people got that from. we also the car technology. here's what he had to say. >> the self drive driving cars, we have some difference of opinion.

but we may or may not partner with google. we'll certainly make auto pilot cars. >> when it comes to the car industry there's no other man that knows better than bob lutz. good morning, bob. >> good morning. how are you? >> great. thank you for your time. i don't know how much of the interyou you caught but what's your take on elon musk talking about driving from coast to coast and introdrusing a lower cost option here. >> well up until now elon has always delivered on his promises. so far his track record on delivering on what he said he's going to do has been excellent.

he's a brilliant guy. >> absolutely. and you have to be impressed with his accomplishments but do you get the sense it's more of a struggle to introduce the mass car to america at this point? to come out with a model and do what he has done so far, impressive stuff. but to take it to the next step. look, this is something they were hoping to put in production by the end of the year. now it sounds like the time frame is moving back and the price point higher as well. >> for the generalization of electric vehicles you really need three things. you need cars that can go at least 300 miles on a charge. you need rapid recharging capability. and so far elon musk and tesla has achieved two of the three. they're a long way from mass market pricing. the electric car future is definitely coming. batteries will accept more and more charge. the cost of botryes will come down.

fast charging will happen. but the alcohol thing is five to ten years away. but when the day comes where you can plug in your car and you have 400 miles in the battery and you find a fast charging station and you can recharge in 15 or 20 minutes, at that point who needs a gasoline engine? >> the expansion of the super chargers. a lot of people say he's really not going to move the needle on the sfrukt itself. he's going to alleviate the range anxiety that is keeping people from buying the car as it is right now. is that true? >> well, yes. range anxiety with battery empowered cars is tauls the big inhibitor. that's why general moertds that did the volt with a gasoline engine. i think that's the solution a lot of people will adopt. that gets rid of range anxiety.

but once you get to a reliable 400 miles in the tank, there should be no more range anxiety and battery powered vehicles than gasoline-powered vehicles. the other thick about battery range, with a lot of people don't understand is the stated range is always with a new battery and on a standard 65-degreeday. hen the battery is two years old and the temperature is very cold or very, very hot. you're apt to get 30% less range than your nominal range. go ahead. >> that's a good point, and you're right to remind us about the limitations of battery. that's been the hick hiccup for so long. why aren't the big three, if this is the future, why are they not chasing him with guns blazing, bob, or are they and

we're not noticing it? >> well, look. by 2010 or by 2025, if 10% of the market is electric vehicles i would be greatly surprised. that would equate to 7 to 8 million electric cars a year. the total production of tesla so far doesn't make one day's production of general motors. and general motors, ford, toid all have access to similar battery technology, and this is the long term worry about tesla. there is really no proprietary intellectual property. there's no battery chemistry in their cars. they have simply crammed far more kilowatt hours boo the car. they just have a huge battery, which is what drives the price

up so high. and this is always the single most important factor. they have a beautiful looking car. the model s is gorgeous. and a lot of people say i don't care what drives it. tell me it will go where i want it to go. i have to have that car. >> go ahead. finish the thought. >> let me just ask. i want to broaden it out and say if we consider the demands for fuel and resource availability, what's best for america? ask is it electric car? gasoline powered cars? natural power cars? i think it's a blend. we have to recognize that petroleum will get more expensive even though we have what looks like an unlimited supply on the united states. all of these energy sources have

legitimacy. right now the only place it makes economic sense like via motors is doing disclosure. i'm a member of the board. but the operator of that vehicle saves a lot of money. with most electric rikly powered passenger cars, if most do the math, they're going to decide, wait a minute wchlt the fuel savings, i'm paying 100,0$100,0r the car, it's going to take me 20 years to get my money back. tesla reminds me of the old dot-com superstar days. they're riding a wave of favorable publicity. they're getting a lot of praise.

they are the darlings of wall street. people buy the car because it's the cool thing to do. >> but bob -- >> yeah. >> i know you know elon pretty well. we have pictures of the two of you twogt. you have been acquaintances for years. i don't know if you can address this directly or not. >> okay, let's hear the question. >> why is he doing as well as you aptly described and others are having problems or li liquidating. i know people who did due diligence and just chose wrong. >> i could give you a 15-minute lexture on why that never made sense. the business of storing hundreds and hundreds of batteries and swapping them out, that was the dumbest thing i ever heard of.

i can't believe sane people invested in that. the car is just as beautiful as the model "s." it will eliminate the range anxiety because after you use up the 50 miles electric, the gasoline powers the generator to keep the car going for another 250, 300 miles. and the price point was a little bit higher than tesla. because of the dual power train. but what happened with fisker is they simply launched too soon and had too many reliability problems with early cars. too many people just bought the car and then, you know, the second week it wouldn't -- it wouldn't move. the battery was dead. then they had a battery recall because all the batteries had a defect. and so it was wave after wave

after wave of negative publicity. also their volume projections, how many they could sell per year were overly optimistic. so it's sad because i like fisker. he's a brilliant entrepreneur. he's a fabulous designer. i think the car deserved to succeed but it was half baked when it came out. that was the problem. >> bob, always appreciate your time, of course, and your straight talk. anybody who wants more has to buy your book. "icons and idiots." bob lutz. >> thank you very much. straight ahead. jack grubman is back. we'll hear what he had to say about his fall from grace and by the way, there's an asteroid headed our way. so we're asking what everyone does in the situation, does my

homeowner's insurance cover android impacts? we have an answer to that after a short break.

jack grubman stepping out weighing in on the dish deal for sprint but also the state of the street. kayla is here with more on what he said this morning on "squawk on the street." >> in the late '90s he was considered the most important analyst on wall street.

he participated in ipos and mergers. he was accused of using his influential reports. grubman reflected on his $15 million settlement with the s.e.c. and how wall street has changed. here we are, you know, 12 years later after the grand settlement. maybe a question to ask is has anything changed. i would argue not really. i would say there's maybe change in form but not substance in terms of today's wall street research. >> what grubman means by the form that's changed is the erecting of chinese walls between banks research and investment banking arms. grubman says those are more for optics than effectiveness. >> i could tell you for a fact that back then if you were pitching for an ipo, yes, the analysts and the bankers would

come into the same meeting and the bankers would talk about the firm and the distribution and all of this, and we would talk about our investments. guess what happens now? there are two meetings instead of one meeting. >> but no such policies existed at all during grubman's era. in his 2002 testimony, he acknowledged he had attended three of the company's board meeting and had nonpublic inches. the linchpin of his demise, an e-mail he sent detailing his decision of upgrading at&t. unfortunately, those are human errors in nature not necessarily operational ones. >> kayla, that's right. fascinating stuff to watch. thanks very much for that. now, in just a couple hours, yes, an asteroid nearly two miles wide will pass right by our planet. if it veers off course and bruce willis isn't here to save the day, of course, does your insurance cover asteroids? we're going to ask about that and have the answer for you right after the break. ♪

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it's nearly two miles wide, has its own moon, and flies by earth in just about five hours' time. the huge asteroid is headed this way. so what if it just happened to collide with your house? would your insurance cover it ? we've put jane wells on it and she's got the answer. >> it's all over in five hours so smoke them if you've got them. yes, here is a preview. actually, i am exaggerating. this is not supposed to happen. instead, this is supposed to happen. an asteroid called 1998 qe2, sort of a galactic easing of fed policy will pass by the earth with 3.6 million miles to spare, that's three times the distance between here and the moon. there's a little while dot. that's its own mon coming along

with the asteroid. if this did hit your house, are you covered? >> we totally -- >> oh! >> obscure space junk falling from the sky? we cover that. >> and that is generally the case. not just with farmer's insurance but all insurers. >> if an asteroid hits your house, you're going to be covered for the damage that that asteroid does to your -- the house itself and any possessions that you have in it. so you are covered. if for some reason it doesn't destroy your house but sort of just lands on your house, you're also covered for the cost of removing that asteroid up to the limits of your policy. >> however, if it hits your car, you better have comprehensive coverage. basic liability or collision alone will not cover mayhem like this. the good news, guys, ge2 won't be back for 200 years, but there are an awful lot of other rocks flying around out there. >> jane, i don't know how you do

it. prancercize and now this. you have had a good week. >> we better prancercize a lot today because it's all over people. >> five hours. >> jane, thank you. jane wells joining us from los angeles. >> how would you spend the last five hours? >> i don't know. she said smoke them if you got them. maybe i'll have a cigarette. i have no idea. i don't smoke but i guess i can start. have a graek great weekend. back to headquarters, wapner and the halftime. >> welcome into the halftime show. four hours to go on the close. right on the wall is where we sit on wall street and it is green across the board. the dow sup 26, s&p and nasdaq following suit. long in the tooth. mike santoli on why some housing trades look extended and what to do now. nothing but netflix. it's shares have outperformed all the rest