>> some kind of garden burger. >> thank you for joining us today. it's been a pleasure talking to you and we really appreciate your time. andr andrew, you could look pretty good over there. >> thank you. thank you very much. i'm supposed to tell everybody, can i get a camera to look at me, i'm going to look right here. make sure you join us tomorrow "squawk on the street" begins right now. >> nice. that's nice. ♪ good morning and welcome to "squawk on the street." i'm david faber with jim cramer. we are live from the new york stock exchange. carl quintanilla has the week off. take a look at futures. we are leaded for a decidedly down open, perhaps for a number of reasons. many of which we'll at least try to hit. of course, you can actually go down. >> it does happen. >> it has happened on occasion. though not lately. let's take a look at the ten-year right now, i always

like to look not just at the ten kwlooer. 2.629. japan, france 1.76, italy 2.9 and spain 2.63 to put that in perspective as we look at our ten-year note. for europe, of course, many of which i've mentioned, it is decidedly negative there as well this morning. it was a relatively quiet night. stocks in asia finished the day more or less mixed. europe is in the red across the board. news pretty quiet, slow on the macro front. although there were a number of headlines perhaps impacting things over there. let's get back over here and start with our road map and it starts with amazon. some bare knuckle negotiating tactics, it's more than books. why you can't preorder the lego movie on amazon.com this morning. and what's at stake for time warner. fresh highs, of course, have been set for the dow, but as you saw futures are sharply lower this morning eric cantor defeat

perhaps weighing on the market? we will discuss that. overseas profits getting attention. overseas europe investigating tax practices of apple and starbucks. their response, well nothing to see here is what they're saying. let's start with amazon this morning. goldman sachs adding the on-line retailer to its conviction buy list citing a favorable risk/reward profile. meanwhile published reports say amazon is refusing to take preorders for home videos produced by time warner in what appears to be a dispute there. now amazon has not xhentsds. a spokesman for time warner says the company does not comment on contract points or proprietary issues involving its partners. this comes amidst a heated battle between amazon and the large book publisher which we know is the publisher for j.k. rowling amongst others. james patterson. where they have really been saying hey, we want you to bring

your prices down as we try to negotiate a new deal, particularly on digital rights, that is the key part of this. amazon throwing its weight around. the word that many are using now is monopsonme. you bring prices down, not to bring prices up but down. force your suppliers to bring prices down which is the amazon way. also the walmart way i might add. >> good point you mention that. all they're doing, they're doing bare knuckles. now this piece by goldman, i have to tell you, it's business [ inaudible ]. you could have written this piece after the company reported. you might disagree with me on this. if you remember the company reported and it reported during the moment where if you were spending too much and weren't getting share actual eps your stock went down. people started to think over again and you can come right back to the ones that -- >> here we are, jim, we crossed below 300. the stock down over 22%. >> classic correction.

>> and now seems to be gaining momentum. it's got -- you know, the goldman downgrade today, it's cash returns on invested capital, 39%, have consistently been amongst the highest in internet and well above that of other sectors. >> valuations -- >> return on capital is something jeff bezos told you in shareholder letter number one in 1997 was his focus and that's where they've composen to focus. >> amazon is one of the best cash returns. i'm reading the research. versus the broader market. the problem with that is if you look at the internet group it does look better than the others in the internet group. i had athena health. it isn't growing like amazon but sells 100 times earnings. i come back to this one number, since the last week of february when the market changed. earnings per share, what are they looking for in 1215? a loss? >> a loss. >> this stock can creep back. it had -- my head writer cliff mason said listen, this stock

crashed. these stocks crashed and now they're bouncing back. >> amazon bouncing back is very, very important for amazon to attract talent, keep talent. a good amount of compensation includes stock. if you have a long and protracted period where its stock is doing poorly while others in its competitive realm are not, that can really hurt. >> that's "the new york times" sales force salesforce.com story. unless marc benioff can get the stock up he can't get the people he wants. i think netflix started this and a company that came public, anet, a good ipo in the cisco area, netflix bouncing back, the analysts are creeping out of their foxholes and saying let's go back to that kind of valuation that we have a two track market where we don't care about amazon's earnings, we care about the growth, and can it return? can we have that dual market? i don't know. >> now there are a couple other things here. potentially introduce a new product on june 18th. >> remember i told --

>> everybody thinks is a phone. >> i said to you before, is this really about the known really about the phone? because i don't see anything new here. but that is new. >> and then there is the larger question, which walmart faced many years ago, when i did a documentary on that the first time around which is, is public perception of the company changing as it throws its weight around, uses its market power against hashet or time warner and will that in any way change the buying habits of people? >> look, we know -- going into the quarter, except in -- that they're raising price for prime, the analysts like that. going into the quarter, spending a lot in china we like that. maybe an alibaba killer. >> yep. >> after the quarter because the world changed so to speak, oh, my, they're spending so much in china no hope for profitability. oh, my, alibaba has earnings and growth, we have to talk about alibaba it's being forgotten about and shouldn't be. return potential 20%. isn't that interesting? where would it be if the stock went up to 20%.

>> notice they lowered their price target at goldman from 430 to 400. yeah. >> what you have is a lot of people are cutting -- micron. >> we had multiple compressions. our target comes down. >> multiple to what? now it is interesting that they did use a 2016 earnings per share number with 1.16. wouldn't that be something. bezos says i don't want that money made. the opportunity is too great. i don't want that money made. >> amazon right now is rising and there is jeff bezos, the title of a documentary we will be bringing on cnbc, never too early to start promoting an effort that has been many months in the making. >> we have the olympicss. >> yes. >> in -- when? >> 2016? >> it's time. it's time to start talking olympics. >> exactly. let's start talking markets as well. futures moving lower. the world bank cut its 2014 global economic growth estimate to 2.8%. it had been at 3.2% citing a

rough u.s. winter and conflict in ukraine. the forecast comes one day after the dow and nasdaq rose for a fifth consecutive session. the s&p did fall for just the third time in three weeks. you can forgive people if they thought perhaps we had revoked the law of allowing the stock market to go down. >> a lot feel it's down because of cantor losing. and i have a lot of views that are different. >> eric cantor losing a primary unexpectedly in virginia. >> this world bank cutting growth means tremendous things in europe. this what is they fear again. it's mostly -- to us it's like wait a second, world bank. what's the relevance there. but these world bank numbers came out europe got hammered on this. europe is not sitting there saying, wait, cantor lost in the key primary. europe doesn't know about a key prima primary. they know about the world bank and world cup. >> right. >> i think they're worried about both. >> right. >> as they should. >> should there be worry on the

geopolitical front on what's going on in iraq? i mention it because it is on the front page of newspapers. it's like -- you know. scary. >> it fell. a lot of people who felt you could get behind a thesis where oil goes down to 80, 90 because iraq returns to some incredible level of production. the southern areas of iraq are producing. i think that the next thing you're going to hear about is the oil companies and people pulling out of iraq. they're denying that. >> civil war will have that effect. >> because the -- the oil minister said listen, it's safe in the south. oh, okay. well thanks. let me get my trip tick out. >> let's move on quickly to taxes. apple says it's received no favorable tax treatment in ireland. irish officials say the same. european commission is looking into taxes that are paid by apple in ireland and by starbucks by the way in the netherlands and whether any tax deals violated eu rules. starbucks issued a statement saying it complies with all relevant tax laws in the netherlands. this is not about inversions,

mind you, not about u.s. corporations that are reincorporating in many of the same a forementioned countries to gain a lower tax rate and as importantly be able to repatriate cash from overseas back to the u.s. without paying big taxes. this is about countries, companies that move their intellectual property over there and then run a lot of things through there. apple says we got 4,000 employees in ireland. so come on. and our tax bill keeps going up. but it is something to keep in mind because overall it has the effect of reducing the tax bills for these companies. >> what's funny, to distinguish apple from starbucks is important. starbucks a great international, global operation. they're not trying to do anything other than comply. i mean howard schultz ceo will tell you that. many companies in technology move to ireland. i went to an intel open plant there. i went to visit an emc plant there. they move there because the work force is the most overeducated and least employed. so i mean it's interesting to hear suddenly it sounds like there were two -- what i'm saying two irish here.

one is okay, let's take advantage of the irish taxes. and the other is let's take advantage of the irish work force. i hate for anyone to think the reason why these great companies move to ireland was anything other than the fact they had the highest percentage of people with doctorates and masters degrees of any country in europe and the most unemployed at one point. that's why intel moved there, apple went there, dell went there, emc went there. great educated work force. important to point that out. >> right. we should point out as well the conversation about inversions continues although we have not seen a new one announced since pfizer failed in its attempts to buy astrazeneca. it became an issue perhaps we thought we might see action in the u.s. congress. >> your mentioning reid. >> yesterday reid and rand paul getting together to try to actually think about a way to fund the highway bill. >> right. >> by repatriation holiday. that is something people need to keep an eye on because harry

reid happens to be the majority leader of the senate. >> you're talking nonsense. you're talking about progress. >> well no, it wouldn't necessarily be progress because it wouldn't be tied to tax reform. do the repatriation thing and wouldn't do a tax reform at all which many people would agree is needed on a wholesale basis. >> right. but my background contacts with people in the government, democrats side admittedly, because that's who -- treasury is democratic, is that without comprehensive, which addresses everything, it's dead. and the two are loggerheads and after cantor even more loggerheads. i don't want to say this is dead on arrival because it makes too much sense and too much broken infrastructure. i wouldn't bank on it. i think that's the way to look at things. >> and, of course, with cantor being gone, i mean, impact on overall? >> because he was the congressman from "squawk box." he should have been the congressman from his district. he might have gotten reelected. >> all right. >> oh.

>> why don't we listen to lloyd? >> lloyd blankfein, the ceo of goldman sachs, spoke this morning on "squawk box" regarding mr. cantor's defeat in the republican primary in virginia. >> i hope it doesn't mean that it will be impossible from this point forward to compromise on issues like the budget, on immigration policy, or any of the issues in the country. at the end of the day i don't look forward to a time when every legislature goes to washington absolutely committed to an extreme point of view and we can never resolve anything and never move forward and i think this is a -- this is not necessarily a good signal but have to see how this plays out. >> there were all these reports that cantor would flirt with the tea party and then bankers in new york would then come in and say maybe you're going too far and he would then straddle things. look, the reason why -- yesterday i said the reason why this market keeps going up is we forget about washington.

and washington bodes confidence, things like debt ceiling that make our bonds less attractive and s&p wants to downground. >> that very evening we get a reminder of how washington can play an important role here. >> and so i -- >> not necessarily a positive role. important role. >> i still think this is -- i think there's just many reasons to want to take profits. the most important thing you said so far today we've been up so much. look, we got world bank the reasons to take profit, air bus order that got lost, reason to take profits, we have, you know, these kinds of things. cantor. let's take profits. i don't want to get too serious about it because the market has been up a lot. >> coming up the man who stunned the world by defeating eric cantor in last night's gop race in virginia. david brat. the solar panel installer talks business. the ceo of solar city. another look at futures as we've said. we are preparing for a lower, a rare lower open at least in

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looking at a shot of london, england, traffic, of course, coming to a standstill. a protest by taxi drivers there. cab drivers in london. of course against uber, for example. we're going to get a live report

on the ground. that's a real profession in london. a bit different than what can be a rung up sort of moving up here in new york city, for example, driving a taxi. there you've got to past incredible tests, know every last street, everything, and it's obviously expensive to get a taxi there. >> you're right. >> it's a good job. >> i remember going to the tower of london taking a cab and hearing what the tower of london was and who was there and what to look for from a cab driver because that's the way it is. >> uber, of course, is disrupting to use a word that is used a great deal, a lot of things, including traffic right now. >> should we raise the valuation of uber based on this? >> yes. >> i'll take you -- sold to you. >> all right. >> said he was going to be the most powerful man in the world. i had a meeting with him. i wanted to tell him about massa son. >> the founder of uber. >> massa son, these people who want to be the most powerful people in the world. >> massa son. ma. or travis.

>> i don't know. big three. >> it's like stalin -- churchill and roosevelt there. >> a little cage match. cage match there. >> we'll have the mad dash coming up. do you know what you're doing yet? don't tell me. >> of course i know. >> as surprise. >> i have the ultimate idea. it's the ultimate suggestion. >> i bet i know what that is. cramer's mad dash is the countdown to the opening bell. a look at futures again. looking for a lower open. more "squawk on the street" coming right at you. come with me, his wife said.

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we got eight minutes before what looks to be a lower open this morning. >> holy cow. for a very long time i was bullish on ul ta and then they had a couple quarter stumble, little negative, i got too negative. last night they reported a quarter that had everything you ever wanted. it had great -- it had terrific same-store sales, a guide up same-store sales. it had a sense of renewed mission. it was the strategic plan is paying off and i'm a believer. and one of the reasons i'm a believer is because, as a guy i like very much, aaron rubenson at wolf, writes ul ta salon, bear case rip and he's right. i'm back on board. you have to be. >> you're back on? >> i'm back on. >> of course -- >> jim screwed up. i was negative. i literally should have gone positive and i didn't. >> all right. you were positive here. >> positive and then i got

negative here. sometimes you get it right. >> what's wrong with that? >> because i didn't -- >> please. you're supposed to -- >> telling you on twitter they want to hang me. >> it's interesting, dan hurwitz of a large reit which has ul ta as one of its -- owns a lot of malls said very good things about them. >> adding stores like crazy. contrast this with the other retailers, i'm not just radio shack, the radio shack conference call, i mean hello, admit that it was bad. that was like -- there's total denial there. and i saw that there was -- i usually don't quote their stuff maybe i should using a price target to zero. >> zero good for you? >> because you can't go minus five. that's the amazing thing about stocks. >> you can do five below. >> still undervalued at 35. >> move on to my kron this morning. >> the big bear, simon, bank of america, he goes sell to buy. saying that all of thof theory

there will be new fabs and no price discipline, dead wrong. he was negative negative negative negative negative. oh, positive. okay. i get that. credit suisse has been positive the whole time. >> big hedge fund name, but a lot of hedge funds in this game and they've actually gotten one right. >> but philbin and company had this one right the whole time. i don't know if you read the research. >> regis philbin? >> yes. saying this was an undervalued stock, told me, right about here when i went on to talk with regis, he's actually -- follows the stock market and goes on melissa's show. really terrific. other thing, credit suisse says it's not just a supply problem meaning not a lot of new fabs, the demand is good for the enterprise. i think the real takeaway here is when the japanese folded, with al peed da and sold it to micron for $2.5 billion, that was it. it's hinex, samsung and micron. when you only had three competitors, geez, they tend to

get along a little better than you thought. >> that's the concern of the fcc and the doj if sprint and t-mo were to get together. i would argue three is fine when it comes to wireless. >> they don't get into a hotel room and fix prices. >> we hope not. >> by the way, you go to jail. >> right. >> you go to jail if you do that. >> but this stock is going higher. >> we got so much more to talk about. we didn't get to bank of america. >> we didn't. >> and it's continued conversations with the justice department. >> conversations like you and me during the break. >> no. >> i don't think so. >> think they're a little more heated than that. opening bell just 4 1/2 minutes away. replace your laptop?

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♪ all the tech stocks with a market cap... of at least 50 billion... are up on the day. 12 low-volume stocks... breaking into 52-week highs. six upcoming earnings plays... that recently gapped up. [ male announcer ] now the world is your trading floor. get real-time market scanning wherever you are with the mobile trader app. from td ameritrade. you're watching cnbc's "squawk on the street." we're live from the financial capital of the world where the opening bell is going to be ringing about a minute and a half from now. what's the keys to this market? and with all seriousness, i like to ask that. not just ul ta salons but what should we be watching? >> that's. i think the key to this market is that it's been led by the financials and the financials, lloyd blank fine asked by joe

kernen where's the volatility. jpmorgan came out with a very kind of hey, listen, things are pretty good. but bank of america's news has frankly put a pull over the group again. >> the news, of course, this morning is reported by the times and the journal that the negotiations have sort of hit a deadlock if you will, 12 billion was a number, the government wants more. ebay wants to pay more not to the government, but in the form of aid and things of that nature. >> if you remember -- >> not pay more above $12 billion. >> this $12 billion figure came out i said you know what, that's a steal for bank of america. >> the government agreed. >> apparently they heard you. >> they heard me. holder has often said to me, i love your show. >> so you get a civil action here. >> i blast limb in a lot of the shows. >> >> the file everywhere and that's the government's style. bank of america has already paid

a lot. the government has a strong case from the point of view that the bankers are such terrible defendant ps if you go after -- go in a jury trial. but this is a new stumble and i didn't expect it. >> all right. you hear it there. the opening bell for this wednesday. taking a look, of course, at what is going to be a down open for the market as you look at our real taiime exchange here i new jersey. institutional broker dealer sponsoring free student admission to the museum of american finance. >> right down the block. >> right down the block on wall street that would be over the summer. take your kids. take everybody to the museum of american finance. i like the little dollar sign in there. over at the nasdaq, the u.s. army commemorating the 189th anniversary of fort hamilton in brooklyn and the army's 239th anniversary. >> father served in the army.

served in the occupation force in japan too. >> wow. >> said that they were afraid of americans but were actually quite humble. >> those who served, thank you. >> absolutely. let's get back to movement in the stock market this morning. i want to start off with hilton. $23 stock of which we're going to have a big seller. that seller is blackstone which, of course, owns most of the company. but is going to be selling what is it 90 million shares at least they've told the market. >> but if you bought it on the deal you did fine, you're up. not they're being greedy. pretty good. good trade for them. >> last week we spoke with john. i don't know if we have that ready or not. we did speak with john gray who runs real estate at blackstone. >> i like him. he is so impressive. >> so many potential exits for blackstone, whether hilton or extended stay or la quinta, all these companies they brought to the public markets over what is it the last six months or so. and obviously the game plan is, to sell.

here's what he had to say about how they're going to execute those sales. >> the nature of our business we have to sell. we have closed end funds, we say our model is buy it, fix it, sell it. think about exiting how are we going to do that? we are going to do it in a methodical way over time. there's no rush to do this. these are good businesses we own or have controlling stakes in. the management teams are excellent. and we're in a good part of the cycle. so for all those reasons there's no particular rush but we do have to return the capital to investors. >> there you go. >> i mean and you know what, terrific. because basically everything worked out. they -- the hilton common is cheap versus the group. the company is much better run. la quinta what look like a busted deal when they became public, stocks sneaking up here. marriott got a downgrade from boutique but i think marriott is good. starwood, offering a special dividend gives it about a 5%

yield. steve holmes, windham, this is an industry that has attracted tremendous ceos that have made you a lot of money and this was a good example. jonathan gray who i met through you, very thoughtful man, you know, people should recognize that not everyone's created equally on this in private equities investment, really thoughtful. >> real estate, of course, as we pointed out many times is the largest single base for back stone trumping in terms of assets its private equity business. they've had great success. >> that stock a long, long time. >> what are you doing buying this stuff at the top. ended up not being the top in certain cases or buying things at the bottom. let's move on to cvs, it is launching the splitoff of cbs outdoor. we had leslie moon have and jeremy mail right here for an interview and this was always the plan. it is going to affect an enormous buyback of cbs shares.

if you are a cbs class b common stockholder you will get an opportunity to give -- sell your shares to cbs in return for cbs outdoor common stock at a 7% discount. this is typical and this will be the way that they fully divest their 81% ownership in cbs outdoor. what will also be interesting here the aerio decision, it is conceivable if it was a bad decision for cbs, positive for aerio, the stock will go back, hence buyback more stock, they will be in a position to do that. this was anticipated. cbs shares are up 1.5%. people like the timing. >> you know something i didn't like, the incredibly ridiculous and massive amount of call buying done in cbs yesterday. some were in the money some were out of the money. it was insane. and i wrote a piece for the street which basically says someone knows something. i hate to see this.

i hate that kind of -- that call buying. i said there will be news tomorrow. i don't know what it is but this guy did or the buyers did. congratulations to you very smart call buyers. you did quite well. preet barra. i think it would be interested to see. >> a lot of call buying in anadarko. >> i've been mentioning that. >> stephanie link mentioned that as well. >> way too much. the 105 calls. my charitable trust owns anadarko, inexpensive after the deal. but again, if anadarko were to get a bid i would analyze every call buy if i were the u.s. attorney. every single call buy. >> they will if that happens. while this very well may be an eventual consolidation play, you and i talked about it, it's not going to be this soon. >> it better be. these guys are buying june and july 105, buying 115 calls. >> i don't know -- they may be disappointed in terms of timing. >> looking at call buying that

drove clorox the other day, cbs the call buying was right. >> used to be a good way for me to get a potential lead on a story. >> it's back. >> that's the sign of not an overheated market -- >> may may be pure speculation, not insider information. >> one of the guys that was buying clorox said what do you want me to do, you have a company that sells charcoal and -- do you not think this is a logical target after hill hire shire and pinnacle. people will spec la it that before we get to mary thompson on the floor, yahoo! and alibaba. this morning alibaba doing a very large deal, obviously that company is going to be coming public. we can start counting it down. i mean that road show from what i hear is going to be begin towards the end of july you'll have two weeks, maybe you do end up with this initial offering of alibaba taking place on the 8th of august, 8/8 being lucky numbers, 8 being a lucky number in china. we'll see. timing wise, though, we know it's not far off and so a key

question, of course, is yahoo!. right now, it has not changed how much stock it's going to sell. there is speculation whether it will shrink that and perhaps the primary shares sold by alibaba will increase. for alibaba's part originally if you recall, they weren't going to sell any primary shares. they are now doing so. so that is increasing the size of this initial public offering. it could be $25 billion worth of stock sold on that day. they'll use some of the cash they take in to pursue more m&a which they are doing at quite a pace right now. and then there's also the tax treatment for yahoo!. >> right. >> some of its shareholders not on the back end but what they're going to sell. a way to protect or do something more tax advantaged keeping the cash overseas. >> could be. >> is one way. then you're not bringing back, not paying taxes. >> the question is, will alibaba be valued at north of $200 billion. now something has substantively happened in the last ten days. jd.com came public. it looked as if it was an okay

deal. it's up ten points. in other words, each day the stock had kind of creeped up. vip shop, was -- had been hammered recently. these are the analogs to amazon, of course. vip and jd are the an na logs to alibaba. so you should be willing to pay a little more for alibaba which has superior almost in every single metric to the two i just mentioned. be aware that i think that yahoo! is a buy off of alibaba. >> anybody would kill for the margins alibaba has. >> it's amazing. it is a juggernaut. a real juggernaut. >> much more akin to google than -- >> very good comparison. >> thank you. >> mary thompson is on the floor and has more on what's moving this morning. good morning, mary. >> good morning to you, david. it's expected a lower open here on wall street as the market's record run appears to be at risk today. the dow up for four straight record days. today off 64 points. just off the session lows. couple of reasons that traders are citing a number of reasons for the markets weakness today,

the concerns about cantor's loss, the representative, of course, in virginia the house whip, his loss expected to increase gridlock in washington, concerns about the world bank cutting the global growth forecast, and also just a market that's looking a little bit tired today. let's take a look at the transports. yesterday, like the s&p and dow it lit a record. today it could come under pressure because of concerns about the airlines. coming from germany where luf tan sa is cutting its forecast, currency, labor and slowing global and cargo. passenger i should say passenger and cargo growth. let's see how it's affecting some of the airlines in the u.s. in the premarket. we were seeing a little weakness in delta as you can see, they are down across the board. sticking with the airline theme, we also are looking at boeing. it was lowered to sector perform from out perform at rbc although some believe it could benefit from cancellations of an order by the emirates airline for its rival air bus a-350 which does compete with the dreamliner.

boeing one of the leading losers among the dow 30 components off 2%. we want to highlight ge as well. reports say that mitsubishi and seamens are mulling a joint bid for some of the assets of [ inaudible ] france. ge has bid for it ps power assets. the two companies expected to decide on a competing bid next week a week before alstom's board is supposed to vote on ge's bid. we are seeing strength in semiconductors, the only group moving higher. we did have micron upgraded over at b of a to buy on expectations of stronger growth in europe and the u.s. back to you. >> thank you very much, mary thompson. wanted to get to the allergan/valeant deal not to talk about the various tactics being used both sides as they wage that war with each other, if you will, but perhaps to crystallize what may come out of this regardless of whether valeant wins or loses as the single issue for investors to consider. and jim, i want to get your take on this. what i'm talking about is the

perspective on research and development spending by big pharma. that is one of the key issues here, of course, when we talk about valeant and allergan. valeant's playbook being led by its ceo mike gerston saying r&d most of the money spent by big pharma is wasted. he saw this up close and when he got the opportunity to run a company like this his key focus is not necessarily stifling innovation but making sure innovation occurs well above the cost of capital to bring that innovation to bear. this morning valeant releases a report called its perspectives on r&d. why? of course as you know, allergan in its rejection of valeant's bid, cites its playbook, its complete cutting of r&d costs as a real negative and what it feels will ultimately be something that will cause a loss of value if it were actually to

be acquired by valeant. as you might imagine, valeant disagrees. the points are larger points for the industry, which top ten companies spend about $68.5 billion in r&d right now. valeant will point out that is leveling out. that we're starting to see a leveling out as people start to question this as investors do, but that many of these companies are run by scientists that they are large and that they just throw an enormous amount of money against the wall without looking at the economic returns from r&d, which have run well below the cost of capital. novartis actually in this presentation at 8.4% economic return seeing the highest. they will point out that only four of the top 50 products developed internally by big pharma were developed internally by big pharma, the 50 biggest products out there, 46 of them actually were acquired. we talked a great deal about this yesterday, jim, when we talked about gilead and pharma and merck and its decision to

buy i dennics. they are of the belief at valeant that r&d is best done on a -- by smaller companies who are much more focused on being entrepreneurial, creating real value, as opposed to one of many scientists at an enormous company who might not get credit let alone economic incentive. there is a great deal of debate about this and when it comes to, for example, botox which was acquired by allergan but built so many different uses for you can make the argument okay, they acquired it, but it was one small product, and they have come up through their own r&d with a lot of different uses for it. this will be a key conversation i believe even when we have a victor or loser or whatever the outcome is of valeant and allergan. >> i find it a fatuous debate. always one company i've been recommending on "mad money" for the better part of eight years and it was allergan. why? because they were the only one that got bang for their buck from the r&d. 17% of r&d. they had the best growth --

>> 17% of revenues. >> they had the best growth of any major pharma company. yes, they may have acquired botox, but when they've done things off label botox -- there's a lot of -- i shouldn't say off label, they've been approved, but david piatt has figure out ways to make botox work for everything from incontinence and migraines to sweaty palms and under arms. don't dismiss that. these are very big categories. it's an op though logical company, eye care company and has the best eye care company. even you get a terrific guy like who did regeneron, he would recognize the allergan r&d pipeline. this is a trav jesty. david piatt has gotten the most out of his r&d than any major company in pharma and this is what happens. it's a disgrace. >> all right. well, we are going to continue to follow the ins and outs of that battle that will rage most likely for some time to come. coming up, virginia congressional candidate david

brat, who pulled off what many thought was impossible, a gop primary defeat of house majority leader eric cantor. first, though, cabs are hitting the streets of europe to protest uber. it is disrupting. in this case traffic. we're going to head across the atlantic for a live report. "squawk on the street" coming right back. i make a lot of purchases for my business.

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♪ taxi drivers across europe snarling traffic. those pictures are live from london. blocking roads, holding protests against american on demand car service company uber. cnbc stefan pedrosys live from paris where there are companion strikes. stefan. >> this morning taxi drivers

blocked the access to the main airports of the french capital and later converged to the city centers when blocking a couple streets. to be honest we are far from the total chaos that they had predicted for today. since the beginning of the year it's the second time that taxi drivers are protesting in france against companies like uber. they see it as an unfair competition not facing the same rules taxi drivers, for instance, have to pay a license in paris around $300,000 to work as a taxi driver. nothing to view with companies like ubber who -- which pay only 150 euros per year for each vehicle. the french government promised to regulate the sector but in paris the lack of taxis. not unusual here to wait for up to one hour during the weekends to get a taxi. still french people believe the strike today is right thing to do. according it it a survey that

was conducted during the last strike in february this year, 56% of french people believe taxi drivers are right to take it to the streets. it's not really surprising in a country where competition is not really a key word and where strike, it's probably some sort of national sport. back to you, david. >> competition not a key word and strike is a national sport. thank you, stephane. and the company has a $17 billion market -- i shouldn't say market. >> 18. >> going to take it to 19. >> private market valuation, that being uber. >> uber. >> i love that. >> i do too. >> better way to say it. i'm going to say it like that from now on. coming up stop trading with jim. david brat, fresh off his primary victory over eric cantor. "squawk on the street" will be back right after this. [ female announcer ] there's a gap out there.

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aerospace that seemed interesting. the stocks were down. no negative news. rbc comes out and downgrades basically the industry but by saying that boeing the valuation is too high and it's over. i want to point out that first of all you never go short or downgrade boeing ahead of the july aerospace show. >> the big aerospace show. >> mcnerney has done a remarkable job. seven-year backlog. on a new plane tends to last seven years this is when you should be buying boeing. the stock is weak no one wants to get in front of that. what happens in this market all come out and say i ought to sell boeing if everyone else is selling. i don't advise doing that but i think boeing is terrific. emirates canceled a gigantic order for air bus. they have to go somewhere for the planes. the idea that today was the idea to downgrade boeing in light of the fact that the emirates took their order away from air bus -- >> assume that's perhaps going to end up with boeing. >> only two guys that can make

that size order. i want to be a buying boeing when it settles down. the stock is up big and when it has the sell-offs the selloffs are not one day affairs. i like the stock very much. the second one i want to talk about is, you know, there's a new ceo, new ceo at aig. >> yes. >> and i have to tell you that i -- bob shay is a very popular favorite. so when this new ceo has come in, there's a lot of people very skeptical that mr. hancock, peter hancock, can possibly follow up as well as bob. my contacts indicate that hancock is exactly the man for the job. a great banker, earlier at jpmorgan, had a property casualty business. ben shay told me he would never leave thought it was in great hands. i want to redouble my efforts and look at the hancock regime. there is a big buyback going on. stock still below book. >> back off, it does introduce

some risk. you know ben has done extraordinary work rebuilding this company beyond what many of us anticipated was possible. and you don't know this guy. and you're it telling us good things here. >> what i'm saying people want to sell and i never want to -- look, a new ceo first year always difficult. but i'm saying this company was left in historic -- this company which was a -- tragedy of american finance was brought back by ben lachey and those who are trying to -- say listen i'm out of here, i respect that. again like boeing has huge profits. my sources indicate that hancock is not a naive choice, but a perhaps very wise one. >> and they've been thinking about this choice for some time. we heard from miller the non-executive chairman. what do we have on "mad money" tonight? >> the best -- one of the best performers today is h&r block. i am absolutely thrilled. nice move. to have the ceo. one of the reasons i am is because cobb told me, he came on, they did this ad campaign about the $500 in each seat in

the stadium, apparently worked. not only that, but the affordable care act made it so you really can't do your own taxes. it's too darn hard. you go to h&r block. strategy is working. man is working. company is inexpensive. >> i remember bill cobb from ebay. >> yeah. >> ran the marketplace. simon hobbs what's coming up in the next hour? >> david faber, we are rapidly redigging the next hour of the show. the man of the moment, david brat, who, of course, beat house majority leader eric cantor in last night's gop primary, will be joining nous five minutes. is that the reason that the market is sdmoun also ahead, the ceo of solar city. (mother vo) when i was pregnant ...i got lots of advice, but i needed information i could trust. unitedhealthcare's innovative, simple program helps moms stay on track with their doctors to get the right care and guidance. unitedhealthcare.

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and our road map starts with that shocker for washington. house majority leader eric cantor defeated by the tea party backed by dave bratp. we will talk live with mr. brat. that victor in just a few minutes time. >> the ceo of solar city joins us live in an exclusive interview to talk about the state of energy in this country. elon musk and a lot more. >> google buying the satellite start-up sky box. we'll talk to one of sky box's board members about the

acquisition. >> we're going to start with the markets. it is interesting to see the sell-off. you can blame the eric cantor loss, you can blame the world bank forecast as we were hearing from jim cramer, perhaps just an excuse as markets have been running higher. the dow jones industrial average down 73 points, s&p down 0.3 and the nasdaq down as well. not severe losses but interesting to see given the fact that we see this pattern higher and higher we go. >> yeah. >> i would just point out, i know the volume has been very light but if we can get up to where we've traded recently,s last month has been phenomenal for the market. the s&p gained 4% taking the gain for the year -- i mean we were flat for the year, now up 5.5%. perhaps it's inevitable you retrench slightly from there. >> interesting to watch the bond market moves as well. glued to the lower yields. in the past few sessions the yields have been climbing higher. you wonder, are they going to match up with the economic

picture, solts lid jobs report on friday, coming off of that going into retail sales on thursday. >> a lot of talk about the sfeds, people are beginning to talk about inflation, the point of which there is an inflection point from the conversation from the fed and we have janet yellen with that news conference next wednesday. >> yes. >> i think the 16th. that's in a lot of the notes this morning. >> there's deals and that must say something about confidence in the economy and the markets. wouldn't you think? we're seeing the return of deals. >> no doubt we've talked about it, of course, and we will continue to. as i've said so many times for so many years, despite what has been a generally positive environment for deals they have been hard to come by and your key word there is confidence. that is what you need and seems to be spreading amongst those who make the decisions to actually deploy capital and/or their stock in search of growth and buy a company as opposed to simply using capital to buy back their own stock. >> or pay a dividend. >> let me ask you a question.

you were talking to rand yesterday. if -- >> rand paul. >> works to actually repatriate, give a cash, repatriation holiday, will that stem the m&a activity? at the moment what you have is a lot of american companies using the cash that they have launched abroad to buy companies particularly in europe. that's been a major trend. if there's a process they can repatriate that at a reduced rate do you think some of those deals will fall by the wayside. >> it's a reasonable question. i don't necessarily know. i don't think the main reason you do a deal is for strategic reasons because you have cash overseas and want to deploy. that's certainly important. i don't think the money is going to be coming back any time soon. we'll see. harry reid is an important member of the senate. it's the single most important member and it's an interesting alliance. you're also seeing a good deal of domestic m&a. >> you could see more -- >> hillshire, for example, or whatever, valeant and allergan, should it happen. so i believe we are -- and based on the conversations i have so often with those behind many of these deals, i think we are in

what is going to be a very steady, robust environment for m&a. >> and the other thing everyone is talking about today is politics. dave brat unseating the house majority leader in his very own state. i got a note saying this could be having an impact on the futures in that there's concern now on the street ahead of the midterm elections that republicans will make the same inroads they were going in now that the tea party is back in control and the center of gravity has been shifted farther to the right. >> the idea being if you are a republican now, you have to move yourself further to the right to make sure that you don't get any sort of a challenge and, therefore, you're going to have more intransigence on things like the debt ceiling again. >> budget deficit. >> immigration is probably -- >> see any of it -- >> what have we done as an issue one would anticipate. they have a general election still to come in a heavily republican district in virginia that mr. cantor had represented the last seven terms. >> we're still waiting to get

that victor on the show. some pictures we've got coming in from across europe. just tuning in, there have been synchronized protests in many european capitals today by taxi drivers against uber which they feel is eating their lunch. in case you're not aware, there's not a lot of cars but if you look you will see the taxis have blocked the way through. that is on the mall there. you see it in italy and on the streets of paris today. it's an important moment for what many would regard as an entrenched industry which is being severely disrupted by uber, hence the large valuation people have put on it recently, david. >> it's a high margin business given they don't own the cars. you have to assume the significant rates of growth around the world not just here domestically to get to the $18 billion number, that stunning number we got by the last capital raise they just did. >> we'll continue to keep an eye on london and paris, the uber protest, but we want to bring you the political shocker of the

morning, house majority leader eric cantor losing the primary to tea party backed candidate dave brat. joining us on the cnbc news line, is mr. dave brat. probably the happiest man in america. good of you to join us, mr. brat. >> hey, thanks for having me on. >> so, we have to ask what your reaction was last night? he outspent you 25 to 1 no house majority leader has ever not been re-elected in his primary. what were you thinking when you learned the results? >> yeah. i mean i was just utterly grateful. i told the crowd, it was basically a miracle from god straight through the people that worked so hard for me. we thought the vote was there because people do want their representative to be with them in the district and so i pounded the doors, everyone says the nation is off track, we're not following free market principles anymore, way too many special deals up in d.c., and amnesty issue resonated and i made

commitments to meet with everybody in the district once a month and that kind of thing resonates with the people. so we pulled it off and we couldn't be more thankful to the people that supported me. >> we do want to get to your views on policy, but first an issue we were talking about, we're down here at the new york stock exchange on wall street. there is some concern about the midterm elections coming up later this year and that republicans will not score as big of a victory because of your win, because of the separation that exists now in the republican party, moving further to the right and potentially escalating what people are calling a civil war in the party. how do you respond to that? >> yeah, in the first place, it's not due to me. i mean that tension has been there and the republicans in our area have been slating conservatives out of their own political processing unit, technical thing called slating, that needs to be reported on, but secondly, there's nothing about right and left here. the press loves that story and the left is already putting that out.

wasserman, schultz and schumer, they don't even know who i am, and not a lot of love shown by those guys last night toward me in the initial thing. they always say we don't work together across the aisle and the first thing they do is attack me. that's not a lot of love and so this false characterization between right and left does not fit. free market are not right or left. >> it's between right and right. it's between right and further right. tea party right. >> no. and i -- i reject that as well. free markets is not a debate between the right and the further right. free markets are in the republican crede. it's the first plank of the republican creed. a commitment to free markets and the second plank in the republican crede is equal treatment for everybody under the law. if you look at obama care or amnesty, et set it terra, the middle class right now does not think they're getting a fair deal. they think there's special laws where big business gets exempted from obama care, business business wants amnesty for cheap

labor. and the middle class thinks their wage is being hit as a result. adam smith said 200 years ago, he was not right or further right. right. it's the wrong thing. he said when two or three businessmen get together look out because you're going to have collusion. and so he -- he along with james madison, the architect of the constitution, said what we want is a lot of competition. we want a lot of factions, a lot of small businesses competing against each other, not these monoliths, too big to fail, where t.a.r.p. comes into play and the american people end up being the backdrop for failure. if you fail in business the firm is supposed to fail. >> mr. brat, hearing all this, what does it mean in i've been quoted as saying the issue with the republican party it's been paying way too much attention to wall street, playing off of what you were talking about, not enough attention to main street. what does that actually mean and what are you going to do if you're elected to change that?

>> mr. brat, are you still with us is a good question? >> must have lost him. >> i want to know his thoughts on fiscal policy. >> and immigration. >> interesting he rejects the notion, he recognizes there was a split in the republican party, before he came on the scene, and rejects free markets and some of the principles he's standing for don't have to do with the split in the party. >> we knew there was split. we saw that at the last major set of elections. the narratives have changed. the narrative before the establishment within the gop and the business interest had pushed the tea party back and he's clearly scored a victory that changes that narrative 180 degrees. >> mr. brat, do we have you back? >> yeah. sorry about that. don't know what happened. >> did you hear the question? >> no, sorry, missed it. fire away. >> the question was, you've been quoted any number of times saying basically, i'm paraphrasing, that the republican party has been paying way too much attention to wall street. and not enough attention to main

street. a, what does that actually mean? and what are you going to do to change that if you are elected? >> yeah. well, what it means is, just look at the tax code we have in this country and who gets, you know, deductions, tax credits, special treatment, it's people and corporations with access to lawyers who can afford to go to d.c. and get tax credits and deducti deductions. they're endless. and each one of those distorts the economy. so everyone's for free markets except when it affects your own business. and then there's always an exception. and so that's what i mean.myste. nobel prize, james buchanan won a nobel prize for his work on public finance and public choice theory out of virginia and there's an entire literature devoted to the distortions in the tax code. we need to clean it up so that it's fair, lower rates, for the business as well as individuals,

and get this country growing again. we have $2 trillion worth of regulation now that's just clogging the arteries. >> am i right in saying you actually lecture in this? you were -- i think you failed to meet some of the senior big wigs in the party because you were working on your exams or was that marking of the peoples? >> say it again. i didn't quite understand that one. >> i have an english accent. you lecture in this, do you not? this is -- >> yeah. right on. right. >> okay. listen, let me ask you about immigration reform. you mentioned that you felt that was one of the reasons why you had won. if you look at the people that are lining up for presidential bids, notably former governor jeb bush and senator marco rubio, they have been quite clear in their support of immigration reform. in order to bring the hispanic vote to the gop to win that greater victory in 2016. do you think that they are wrong to do that?

do you accept that? there is a bigger game on the national stage that has to play out for the party to win the important milestones? >> the way you characterized it, yeah, i don't agree. if they're doing it for political reasons to bring in voters, i don't agree with it. i ran for the last six months on the republican [ inaudible ] and i believe in staying true to your principles and one of our principles is the rule of law. i have great empathy, i teach third world economic development for people across the world. i love all of them they're god's children. the thing is not import 7 million people into our country. the thing to do there is clear. you have to get [ inaudible ] and encourage strong rule of law and property rights in those home countries. they get rich like us. the reason everyone wants to come here because we're the richest nation on the earth. >> david, i'm curious, you're an econ professor. ph.d. in economics. what do you think about janet yellen and the current federal

reserve policy? >>. >> i think they didn't follow the taylor rule back in '03 and '04. . i've spoken with john taylor at stanford, similar to the friedman monetary rule and so too much liquidity back then, they had a good track record for a while but then they started fine tuning and i think hayek had the logic right in the road and call it the fatal conceit, right. the monetary rule to keep sound money is pretty sim. if you have the discipline to stick to it. but that -- >> sounds like you don't agree. >> basic logic -- the basic principle of what we should be doing, i'm not sure if we're staying true to that course at all. >> well, very quickly, david, while we've got you, eric cantor was viewed as next in line to be the speaker of the house of representatives. who do you think that should be? >> again, i don't -- i'm not about the personalities. i'm for anyone who follows the

principles in the republican crede that start off with free markets, a commitment to free markets and proven track record pushing for free track record. fiscal responsibility. a lot of them up there seem to be getting an "f." $17 trillion in debt, $127 trillion in unfunded liabilities. and no leadership on how you dig us out of that. that's all going on to the next generation. right. it's not free lunch. someone's going to pay that bill and we're ignoring the next generation who's going to end up paying that bill. >> david, thank you for joining us this morning and sharing some of your thoughts and views on policy that is david brat, the congressional candidate, in virginia, unseating house majority leader eric cantor. >> down 71 points on the dow. u.s. stocks in negative territory. all three major averages in the red. joining us now to weigh in, bob doll, chief equity strategist and senior portfolio manager with nuveen asset management. welcome back to the program.

>> thank you. what do you think we've witnessed and talked about with eric cantor losing that primary vote means for the markets? >> i think it creates some uncertainty. the market had been gathering steam for a bunch of reasons on that list i think was the established republican candidates largely were winning, therefore, better chance in november and now this puts some question mark in cold water on that. i think that's among the reasons the market is a little sloppy. >> i guess the bigger issue as we mentioned before, about ten minutes ago, this strong run up we had over the past month, of 4% gain in the s&p. and even you said we got to the targets, 1950, much sooner than you anticipated? 135. >> absolutely right. a lot of people say when is the market going to get started this year and the truth is, as you point out, we're up about 1% per

month. up 5% since the april lows. up 10% since the february lows. look, the economy is getting better, but i don't think we were we have another run away equity market like we did last year. some side wise consolidation as we've had this year is probably in order. >> people talk about the word correction, 10% from the highs, where's the correction. we haven't seen it since back in 2011 during the european debt crisis for u.s. stock market. is that a bullish sign or a sign that things might not be right and healthy? >> i think the absence of a correction is a strong bull market that corrects by going side wise and internally corrects. as you well know we had a couple of side wise, slightly lower times, six, eight weeks ago, late january, a lot of stocks during that time frame were down a double digit percentage, but the averages didn't get hit because there were other stocks going up. it points out this is a stock selector's market, different

from where we've been where it's been so monolithic during the crisis and immediately thereafter. >> how do people -- if what you say is true how do people position now? >> well, my view is if you have money earmarked for equities, do a dollar cost averaging program in. as we just pointed out, we could have a little sloppiness so i wouldn't be a hero and put it all in tomorrow morning. i would lean to the cyclical side, industrials, technology, that is, therefore, underweight some of the more defensive stocks, some of the utilities. if you are in agreement the economy is getting better, interest rates likely to continue to drift higher and we will get better earnings. >> i went through quite a lengthy presentation early this morning that somebody sent me from you and one of the two things that stood out, was your call on gold. i'm not sure when you made it, but you suggested that you could go down to a thousand dollars an ounce which would be a 20% further correction on bullien from where we are now. do you still hold true to that

and why are you calling gold so much substantially lower? >> so the -- we made a prediction, we make ten at the beginning of every year. one gold has a second down year in a row. a thousand is a stretch but i can see it going there. here ares the reasons. one the world is healing, not falling apart. two, we have more deflation than inflation problems in the world. three, i think the dollar is at the beginning of some more improvement and four, real interest rates rise. if those things continue it's not good for the price of gold. >> good to see you, bob. thank you for your time. bob doll joining us from nuveen asset. >> thank you. >> thank you, sir. >> coming up solar in america. is it elon musk's solar city. that's what we'll talk about with the ceo of the battery technology company next. governor rick perry on tesla. you heard from the man who beat eric cantor himself. we will ask govern perry about that huge upset in virginia. all coming up on "squawk on the street." spokesperson: the volkswagen passat is heads above the competition,

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yao ceos and business leaders are gathering in new york for the first north american energy summit at goldman sachs headquarters. kate kelly is live with a special guest. good morning, kate. >> thanks so much, simon. i'm here at the goldman sachs north american energy summit as you mentioned and i'm pleased to be with lyndon rive the ceo and co-founder of solar city. welcome to the show. thanks for being with us. >> thank you for having me. >> i wanted to kick off talking to you about policy in terms of energy and obviously solar being

your priority. there's a lot of discussion today about where the policy falls short, what needs to be done, what would be your sort of overview of the matter? >> you know, one of the big areas in policy that can help is in the permian area. so in california, it's actually quite amazing. you don't need a permit for four things. you don't need a permit for a small tool shed at the back of your head, you don't need a permit for a small fence, you don't need a permit for small retaining wall and you don't need a permit for an oil deric. you don't need a permit for an oil deric so if we were able to remove a lot of challenges of deploying solar, the cost would come down dramatically and you would see a reduction in the cost and then accelerate the adoption of solar as well. >> so you've talked today and previously about the issues with red tape in having solar, a

greater penetration in the u.s. markets and you deal in both residential and commercial markets. you also talked about subsidies or a lack thereof in the solar area. tell us more about the subsyty shortfall as you see it? >> yeah. if you look at the whole energy sector, the energy sector has been highly subsidized, specifically the fossil fuel sector, has been highly subsidized for the last 80 years. solar is a technology really working well. the cost has come down dramatically, come down over the last few years, significantly. and the adoption has never been higher. our company has grown 100% year over year and to remove incentives at a time when you have a technology really working to address the world's biggest problems, is a crazy notion. >> right. >> it is -- almost suicidal to think about trying to slow down the adoption of clean energy

today. >> so let's say that i am a residential adopter of solar power, at least i want to be, and i live in new york state. how easy is getting to be for me to put solar panelling on my home, call you guys, get that installed and on-line. what's my average wait time going to be? >> there's a lot of complexity that goes into it. we simplify it for the homeowner. the business proposition is simplistic. we install the solar system for free, install the equipment for free, and we maintain it, we do everything. the only cost to the customer is the cost of the energy. and then we sell that electricity at a lower rate than they could buy for the utility. now in terms of the complexity we take care of all that. >> right. >> hef hey permitting and everything else. from a homeowner perspective most of our systems get installed in one day. >> quick question from simon hobbs. >> i wanted to ask you, you made a lot of headlines earlier in the month when you did a deal with groupon where you were basically offering $100 off installation and it seemed a

popular move. i wonder why you made the decision to do that and how it's going barely a week in. >> yeah. absolutely. so the homeowners that use groupon, really care about saving money. and, you know, the average household that goes solar saves roughly 10 to 15% of their energy costs. any homeowner that is looking at saving money, should absolute consider solar. this is why we partner with groupon. >> quick question about being in business with family you co-founded solar city in 2006 with one of your brothers. >> correct. >> and cousins with elon musk which helped you generate the idea for the company. what have you learned with working with family members? what are the ups and downs? >> i wouldn't want anything different. working with my brother has been great. he's an incredible business partner. he's a technologyist in the

company. working with elon is amazing. i always refer to him as neo in the matrix. he sees zeros and ones. as a describer, he always says dodge the invisible wall. you can't see the invisible wall. >> but he does. >> he sees the invisible wall. you got to take that with blind faith and turn right to dodge the invisible wall. >> okay. mr. rive, thank you for joining us. back to you guys. >> thank you very much. kate kelly there. up next, it was once a favorite safe haven for investors, but gold is losing its luster for many. so what is america's favorite investment now? more on that after this break. so what i'm saying is, people like options.

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welcome back to "squawk on the street." i'm jackie deangelis reporting from the nymex this morning. the department of energy out with its weekly inventory numbers for crude oil stocks. we got a draw down of 2.6 million barrels. that was a lot more significant than what they were expecting, the 1.2 million barrels they were looking for. prices are up ahead of this, up slightly before we went into this report as well.

i want to make a couple finer points about what we're seeing in oil prices. analyst says june is a time where the refine ris try to build up the coffers a little bit anticipating further demand but actually what we're seeing here is a reduction in imports and we're using more of our domestic supplies. keep that in mind. then the geopolitical factor. while that's raising prices it does have an impact on wti as well. concerns in the pits over what we're seeing the conflict in iraq. people watching those issues closely and that is being supported to the w it ti price right now. at this point, wti trading at 104.42. back to you. >> okay. thank you very much. let's mention gold. it used to be america's favorite investment but lost its luster for many over the last couple years, down 20% as you saw now. where are investors putting their money now? cnbc's senior economics reporter steve liesman has the details about all american economic survey.

good morning. >> good morning. this is big news in our survey. for two years running now, americans told us gold was their favorite invest-pointment. but gold has fallen. this is the data we'll show you from 2012. you can see here it wasn't even close. gold going away, by the 800 americans we survey every quarter. gold falling down to just 20%. almost half of what it was. the number one investor right now real estate interestingly enough. almost tied with stocks. so that's maybe part of what we're seeing in this survey, is a little bit of our return to normal, how things may be used to be before the reception. some of our confidence data shows us that. this really interesting breakdown we have here, the investing generation gap, we looked at 18 to 34 and 50 to 64 years old and the differences between the two. you can see here, the younger folks prefer real estate, the older folks not old, 50 to 64 is not that old, anyway, the older folks, they like stocks better,

about even on the gold story. you can see here, the younger folks they like savings and cash more than they do 50 to 64. you would think it could be the opposite. another way we want to look at the data, who likes stocks. big differences here. demographic differences. we think of the market more as are people -- have a lot of greed or fear and different investor classes but also demographic classes. here's all adults picking stocks. or think it's a good time to invest in stocks big differences between men and women and big differences between the wealthy and those less wealthy. under $30,000 in income. that's one of the things that makes the market. we're coming back at 1:00, folks with all the information on minimum wage and the outlook for people on unequal pay and unequal wosh after tkwauequal w this on cnbc.com. >> thanks very much. very interesting to see real estate on top. steve liesman next time you have to put in bitcoin.

i've been looking at the trend. >> come on. >> hijack. >> sara, we've asked about bitcoin in the past. it's a very small sliver of the public who actually knows about it. >> yes. >> that's fine. >> i will e-mail you that data from our march survey. >> that's fair. but just to bring up that chart, it's up about 500% over the last year, while gold interestingly is completely negative. >> how can you compare the two? >> down 9%. they're both seen as anti-currencies, seen as sort of anti-establishment and anti-central bank dollars. i'm not saying it's the same buyers and sellers, a replacement or anything. >> legitimate investment in any sense in a scam or pyramid scheme. >> you could argue gold is a pyramid scheme. >> i'll back you up. >> don't start mentioning fear currencies. >> fiat currencies, mentioned them. >> my piece hitting cnbc.com later. >> advertising. >> up with day we may look back and she may be more amongst us,

just so you know. >> i doubt it. >> thanks, simen. >> steve liesman thanks for the results of the all-american survey. just ahead, governor rick perry joins us live about his fight to bring the tesla factory to the lone star state and ask him about eric cantor's stunning defeat as well. coming up on squawk alley. we're back after a quick break. mine was earned in korea in 1953. afghanistan, in 2009. orbiting the moon in 1971. [ male announcer ] once it's earned, usaa auto insurance is often handed down from generation to generation. because it offers a superior level of protection. and because usaa's commitment to serve current and former military members and their families is without equal. begin your legacy. get an auto insurance quote. usaa. we know what it means to serve.

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welcome back to "squawk on the street." check out what's happening with orexigen therapeutics. the stock taken a hit after the fda deliverayed by three months regulatory for it owes beesty drug to consider post monitoring safety. that stock down about 15% on the day. simon, another ones of these anti-obesity drug companies very much in focus. back over to you. >> a lot happening in the space. thank you. up next on the program, eric cantor's defeat sending shock waves through to washington. so does this set a precedent for other challenges? one of the challengers tea party backed senate candidate joe carr, he's challenging senator lamar alexander, he will join us live after this break. life with crohn's disease or ulcerative colitis is a daily game of "what if's". what if my abdominal pain and cramps end our night before it even starts?

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i know there's a lot of long faces here tonight and it's disappointing, sure. but i believe in this country, i believe there's opportunity around the next corner for all of us. so i'll look forward to continuing to fight with all of you for the things that we believe in, for the conservative cause, because those solutions of ours are the answer to the problems that so many people are facing today. >> it is the biggest political upset in recent memory sending shock wave ace cross washington this morning. that being yesterday's primary defeat of the second ranking republican in the house of representatives, majority leader

eric cantor by a little known, low funded tea party backed candidate. cantor because the first majority house leader in history to lost his premieimarprimary. does his loss put other high-profile republicans like senator lamar alexander in tennessee on notice? joining us joe carr who's challenging veteran tennessee republican senator lamar alexander. good of you to join us. does senator alexander go the way of eric cantor? >> well, we certainly believe he will, sara. thank you for having me on "squawk" this morning. i think senator alexander has a similar problem that leader cantor had in that he's out of touch with his republican base in tennessee. >> for those of us who haven't been following the senate race in tennessee, immigration shaped up to be a huge issue in virginia. it has been one of your talking points as well. tell us where you stand on immigration reform, and amnesty and how it differs senator alexander's position? >> i've been serving the

tennessee general assembly for the last six years and i have been fortunate to be the architect and arthur of some of the strongest illegal immigration bills in tennessee, whether e-varify or the save bill or no sanctuary cities or resolution recognizing governor jan brewer's right in arizona to defend her state from illegal immigrants. the problem lamar alexander has and so many of the establishment republicans have, they are taking themselves away or are detracting from what the republican national committee platform in 2012 specifically says, and when it says no amnesty at all for illegal immigrants. it's lamar alexander who's running away from the republican platform and its conservative in the tea party trying to embrace that republican national committee platform saying we need to be a country of laws where lawful citizens are welcome, but those who gained unlawful entry cannot come. they need to stand in line and -- like everybody else. >> if i look at the press

releases, mr. carr, that you've put out recently. you would advocate far more friction in capitol hill than even at the moment. i think you didn't want the secretary of health and human services to have been accepted for that vote to have gone through simply because obama care exists. you would really pursue gridlock to the nth degree it appears. >> i would disagree with your terminology. what i would pursue is an idea that republicans need to stand on the republican national committee platform and when it comes to obama care, that lamar alexander voted for funding of obama care by voting with the democrats on cloture. what lamar alexander did, is he sided with the democrats and against the republican national committee platform when the platform specifically stated that obama care was an attack on the constitution. so if obama care is an attack on the constitution, it stands to reason that lamar's vote is also an attack on the constitution and what republicans want and what conservatives want is they

want people who will stand and defend the republican national committee platform instead of running to the democrats in capitulation. >> there are many people, though, sir, who would advocate compromise at the highest level as a way to govern and even lloyd blankfein, the ceo of goldman sachs this morning, paid tribute to cantor, he said he was a man who had done good things at the highest level with public service and then said this, which i think is really quite important. if you just listen to what the ceo of goldman sachs had to say. >> i hope it doesn't mean that it will be impossible from this point forward to compromise on issues like the budget, on immigration policy, or any of the other issues that are racking the country. at the end of the day, i don't look forward to a time when every legislature goes to washington, absolutely committed to an extreme point of view and we can never resolve anything and never move forward and i think this is a -- this is not

necessarily a good signal but we'll have to see how this plays out. >> mr. carr, how would you respond to that? >> i think the idea that compromise is the solution when it really is disguised as nothing more than capitulation on the part of some in our party who want to seek compromise only to curry favor with the democrats who are controlled in the senate. the problem is, too many of our elected officials in washington, d.c., don't understand why they're there and the reason for which they got elected and they got elected because of a platform that we established in 2012 that we authorized them to carry forward. and when they reject that platform the day after they get elected, then the voters the next time around are going to reject them and that's what you see in virginia, that's what you're seeing in mississippi and most certainly what you'll see in tennessee. >> you're running on jobs and the economy and that is numbers one issue for americans, so if you are elected to u.s. senate on behalf of tennessee, what's the first thing that you're going to do and realistically get passed to help put americans

back to work? >> well the way we get americans back to work is to embolden small businesses and individuals to have confidence in their economy. there's a serious lack of confidence in this economy and this president and quite honestly this congress and senate, to get the regulatory burden off businesses so that they can pursue their american dream. and most people don't believe that dream is available to them anymore because the federal government is so far reaching into their personal and professional lives that they don't believe it's worth the risk. we've got to sell the idea that it is worth the risk, and that there are things we can do in government to remove the burden so they can take that risk. >> we'll see. thanks for joining us on the race. that is joe carr from nashville and he is trying to defeat senator alexander. u.s. senate seat in tennessee. >> thank you very much. >> all right. google buying satellite imaging company sky box. up next one of sky box's earliest investors and board members about the acquisition.

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$500 million acquisition of skybox imaging. the deal expected to serve as a launch pad for google to take aerial pictures, provide online access to row meemote areas of world and improve imagery used on its service. board member david cowan a partner at bessemer venture partners. mr. cowan, good morning to you. >> good morning. >> i think this business is five years old. it has about 130 people working there. launched its first satellite in november, with, i think, plans for another 23 over the next 5 years. what do those satellites do? >> so those satellites are geospatial imaging sensors. they take pictures of the earth and also take hd movies. >> so what will google do with them, do you think? >> well, certainly this company's ability to take

pictures and take movies and to do so with a constellation hawaii great coverage of the planet will have great benefits for google's mapping services, but this acquisition by google is about more than just images. it's really about access to space, as a platform for deploying information systems. >> yeah. i'm sorry. i didn't mean interrupt you, now that we're there, one of the sells points they substantially cut the cost of launching a satellite down to about $9 million, albeit ones with shorter life spans. what was the original aim of the business? i imagine it wasn't to get primarily bought out by google? >> that's right. really the aim of this team, their mission, was to change the way that people think about space development. typically, up until skybox, satellites would be deployed by spending hundreds of millions, or billions of usually

government dollars, in projects that would take a decade or two decades to complete. and this team of stanford engineers really wanted to use the concept of cube sats or microsatellites, to change the way that satellites can be deployed in space. and not just for imaging but for communications and other applications as well. >> one of those applications, david, is trying to get internet everywhere, to remote places of the earth, to places that don't have internet. i know it's something facebook has been heavily invested and working on in a that race for space between facebook and google. did google just pull ahead with this acquisition? >> i think google with this acquisition will have absolutely the only team on earth that's been able to demonstrate that it can deploy software systems in space cheaper, better, faster. this is really a unique asset, and i think that's why google s

is making this move. >> before we let you go. completely out of time. what is the one thing you think is now the most exciting development in technology people should be looking at? >> boy. there is so much going on in innovation today. it's hard to pinpoint it, but i can tell you that this -- this success of skybox really opens up the door to space for other entrepreneurs and what seemed like an absurd idea two or three years ago, venture capitalist funding space-based start-ups now is all the rage and we're seeing a lot of business plans from young aerospace engineers making its way around silicon valley, around venture firms and i think we'll see an important new wave of innovation in space. >> partly due to nasa changing its funding, of course, david. we have to leave it there. great to see pup thank you for joining us. david cowan joining us there from the west coast. now send it over to jon fortt with a look what's coming up on "squawk alley."

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take a look at markets. seeing the dow sell off almost triple digits down 96 points at this hour starting the day with losses. those losses sort of extending a lot of talk about perhaps investors spooked by the results of virginia's election. eric cantor unseated. jim bianco writing in, complete nonsense, for whatever reason, an excuse to sell off. a down grade in the world economy. >> 15 seconds, you've gone through it, like 30 seconds. >> not always easy. with that over to "squawk alley." it is time. kelly evans, over to you. >> 11:00 a.m. on wall street and "squawk alley" is live.

♪ and we have a special guest this morning joining us. mitch lowe, ceo could you phoneder of necessary flix and former ceo and president of netbox. nice to have you here. >> thank you. >> so much to discuss, as always with kayla tausche. and if you want to preview it on amazon, out of luck. refusing preorders of that movie are and other warner brothers films after a dispute with the studio. instead sign up to be notified when copies of the movie go on sale. speaking of amazon, the stock in the green this morning. this after being added to the conviction buy list over at goldman sachs. we know it's been a tough year so far for amazon, but seeing a pop of almost 2% today. >> well, interesting to see how this plays out. we know that amazon is dominant in books. about 40% share. dvds, not quite as much, and plus, dvds a