newsom has gotten himself into politically. he tried to pander to the far left by creating this commission stacked with incompetent morons. now that they're asking for billions of dollars, he's pat them on the head and said, thank you, but that's not going to happen. now he has the left mad at him, moderates who are terrified of california going bankrupt and conservatives already didn't like him, so he's essentially ended his presidential bid before it's even started. [laughter] gerry: characteristically forthright judgment. thank you very much, indeed, to kristin tate and ben domenech. i'll be back here next week on "the wall street journal at large." to all the mothers out there, have a wonderful and a restful mother's day weekend. thanks for joining us, bye-bye. >> "barron's roundtable" sponsored by global x atfs.

♪ jack otter: welcome to "barron's roundtable" where we get behind the headlines and prepare you for the week ahead. the auto industry is shifting toward electric. i will ask ford ceo jim farley what it means for the next generation of cars and how evs can become a profitable business. space is expected to be a one trillion dollar opportunity. we will tell you how investors can play it. nintendo stock is level and up after the latest legend of zelda video game and the super mario brothers movie. we begin with three things investors ought to be thinking about, stocks ended mixed as investors try to make sense of the economy in limbo. disney shares drop 9% in a day. what does cricket have to do with it? we will explain. buyers are struggling to find the perfect home as inventory remains low, the housing market showing no signs of crashing.

that's a problem for the fed's inflation hike. on "barron's roundtable," ben levisohn, carleton english and al route. it's a funny contradictory market out there, pessimists say inflation was recently the highest in years and optimists say the unemployment rate is lower than it has been 50 years. ben: the market is confused too. the market fell 0.3% this weekend is moving less than 1% in either direction the last 6 weeks. it hasn't done that since 2019. if you look over 6 weeks the market has gone up to 0. 4%, the smallest 6 week move since 2,020 one. it is a reflection of all the forces pulling on the market. i was looking at jobless claims data. if you look at the big jump we had this year, it was suggested there's recession. if you dig into those numbers the state of massachusetts is

responsible for half of that jump. no one is sure why. they think the markets might be funky. if you take those out or adjust for them, things look okay. that is what is going on if you have a push/pool going on between the bulls and bears and it's a stalemate. . a lot of the concerns over regional banks have continued down one% so far this week even if we have a bailout two weeks ago but questions about other names in the space. jack otter: what the argument things are okay? al: i believe in looking at the markets and what it is trying to tell us. something we've seen is when the fed pauses the s&p 500 has gained 16. 9% over the following 12 months. the other thing is inflation is dropping. when inflation drops by 5

percentage points, 14. 9% in the past 12 months. these figures suggest there's upside ahead. jack otter: no upside for disney, stock is down 9%. what happened? carleton: they saw a decline in subscribers. wall street was expecting a 2 million gain in subscribers. may be we are over streamed. that has to do with the fact that disney lost its rights to cricket which was an expensive endeavor but a lot of users in india abandoned the service but basically looking at disney, people were hoping streaming would be a big business, night let netflix, finding out it's a challenge. people are going out more, during the pandemic people subscribe to 5 or 6 places. now we are being more choosy.

jack otter: at some point, no more streaming services. disney versus desantis. do investors need to worry about that? carleton: long-term it is tough to bet against disney. they will figure out the screaming -- the streaming game, parks are outside for them. maybe a little choppiness in the back half of the year but long-term. don't bet against disney. jack otter: travel and leisure up, goods down. tell me about mortgages twice as high as they were two years ago and the housing market seems resilient. al: you expect it to be doing worse. one of the reasons, inventories are terrible. before the pandemic, 2 million houses listed in the us, we are below 600,000 and dropping. you can't find a house and if

you are 2% mortgage you feel stuck. keeping the housing market more resilient it will turn into a problem for the fed. jack otter: why would you trade that for 6%. wise it so difficult for the federal reserve? >> inflation data from shelter and housing tends to lag. these things like doubling mortgage rates will eventually feed into the numbers and make it tougher to pause. jack otter: even if they were to go down it would not be up for many months. warren buffett says he won't invest in automaker stocks. reaction to that from ford ceo jim farley next.

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sofi get your money right. jack otter: the auto industry feeling the pressure to deliver the next generation of cars. this technology continues to advance, automakers shifting to electric vehicles but how will the transition affect the bottom line. joining the is jim farley. ford's ceo, is ford building electric vehicles because it wants to or is being forced to? do you think evs are better than their internal combustion predecessors? >> for some customers they are but not for everyone. if you are pulling 1/5 wheel in wyoming, but three cars in your household and one is short distances or 200 mile range it is a better car.

it is dependent on the customer. jack otter: what are the benefits for the person for whom it's the second or third car? >> the components are faced complicated, driveshafts, differentials that break. it's a lot more reliable and less cost after you purchased the vehicle. you don't go to the gas station, the biggest thing is interior is bigger. the engine up front takes a lot of room but it is for specific customers -- it's not a monolith. people like to think about changes like it's going to happen everywhere. that's not happening. jack otter: you reorganized things to take out evs as a separate unit and wall street cheered that transparency but revealed a daunting task that you are looking at $3 billion

in losses in that unit for 2,023 and you expect profitability by 2026 which in automaker land is tomorrow and you sell one million evs. how do you get here today or? >> we are investment mode, you invest a lot of things and we finish launching our first generation products. number 2 in the us in volume of evs. 150 pickup truck, and the e.u. transit america's number one van that is electric and we learned we have to design the second generation of vehicles for that timeframe, totally different than the first generation. we put too much cost and labor content in it. the second thing is we have to make the customer experience a lot better. we are shifting bluetooths to the car, hands-free software system that is a big help for profit.

the second cycle product will help a lot but we are not stopping the first generation product. we will get ev positive on the nameplate level. we reduced costs by $5000 a vehicle so far. we are not going to wait until 26. jack otter: sounds like the internal combustion engine at last day might be out of sight in the future but do you have a target date at which point ford becomes primarily an electric vehicle maker? >> 50% in 2030. we make a lot of big suvs and pickup trucks, those customers go electrical. ford is a different company than a lot of other companies. we have specific vehicles we make and those vehicles, we think the internal combustion engine will grow in the next couple years. all three areas of business will grow. that's different from a lot of companies that are student body

lift, let's go to evs. we have a more balanced approach because customers we sell to are different from other companies. al: jack otter: analyst cost and ev cost 7,000 more than the equivalent internal combustion engine car. with costs coming down, $2,500 shaved off of that. when do you see parity? >> we are getting close. in the 26 timeframe with the wayward design, advanced electric architecture, there's so much more mass, we simplified. aerodynamics take costs out of the battery. beyond 25 under dollars of battery, getting cheaper. the 26 timeframe, and cross over. internal combustion engines require more emissions, you need to go to aluminum body panels, a lot more emission control devices on the vehicle and those cost money.

ice vehicles are getting expensive and evs coming down in price. jack otter: at the meeting in omaha, warren buffett said he would not invest in the auto industry, too difficult with global competition, the big transition to evs, what would you tell warren? >> they have a lot of dealerships. our job as leaders of a company like ford is to be one of the early winners. this is like investing in apple or samsung in 2006, before the transition to smart phones happens, there's a lot of investors saying who's going to be the winners and losers? so far we are seeing a huge shakeup where the winners and losers are different as the industry goes to a digital product. there will be a lot of investors who want to see how it plays out before they place

that bet. as leader of ford i'm excited. i never had a chance to do this. 60%, 70% of lightning customers are new to ford and never owned a pickup truck before. my job is warren and charlie and his team invest in ford when they decide to go into the auto space. this is the next big device that will be digitized. jack otter: warren will have wished he bought the stock sooner. thanks for coming on the show. whoa. okay. easy does it. we switched to liberty mutual and saved $652. they customize your car insurance, so you only pay for what you need. with the money we saved, we thought we'd try electric unicycles. whoa! careful, babe! saving was definitely easier. hey babe, i think i got it!

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jack otter: the final frontier

could be a one. one trillion dollar investment opportunity. bank of america expects the global space industry to rake in the revenue by 2030. it's the barron cover story written by our own al route. in the middle of all this is elon musk. how did elon reinvest space? al: he stopped throwing away the plane. he pioneered and perfected reusable rockets, cut the cost of reaching space from 10 to 40 times depending on what vehicle you look at, and he did it, almost as are markable as reusable rockets, over the entire coursegloggle's history, they spent $10 billion, sent people to the international space station, have contracts with the government, send rockets every week and returning them to the earth standing up. nasa for comparison have been spending, they spent more than $20 billion on sls, the rocket that is part of the artemis program that has launched once. jack otter: one musk rocket recently is bloated but this

happens. >> these the best the paradox of space, if you go fast and be aggressive and are not afraid to blow things up, you end up getting to your end point faster and cheaper than the traditional way which focuses on absolute precision and perfection. when the rocket blue up, if you were watching the webcast, wild applause from the space x employees. jack otter: know what was in it and they have to perfect it before putting humans and. combined with the announcement that musk was made ceo of twitter could office be good news for tesla shareholders? >> there have been rumblings of a space x ipo. not so much space x but the internet business, star link, elon musk said he might ipo when it is close to profitability and executive this year said star link might be profitable in 2023. that could be good news because it would give musk a way to

fund his buying of social media platforms, don't have to sell tesla stocks that tesla shareholders just tested. could it happen? there are rumblings, it would be an interesting event, the biggest space company by a factor of 10 or 20. all of space x together is one hundred $40 billion, star link is a subset of that, $70 billion, $80 billion, something to behold. jack otter: when are we going to get to mars? al: glad you asked me that, musk tweeted in 22 that maybe we could get there by 2029. like the 1969 moon landing. but mars will be too far away so you're probably looking at 2035. i'm going to say 2035 we will be standing on mars. jack otter: who will get there first, musk or nassau? al: the space businesses change, the commercial

operators, this mode of letting private industry do it, i'm betting on musk. carleton: space is tricky for investors, you look at virgin orbit, why is that? al: in the 20 one boom, a lot of space companies came public, virgin orbit came later, richard branson's space x competitor that is bankrupt now. there's been a lot of carnage in the space investing, space x is private so investors only no pain. most stocks are trading below dollar. it has not been a good space. carleton: where are the opportunities? al: we focused on companies that have real businesses, revenue, profits visible. rocket lab is like a mini space x with launch capabilities as hundreds of millions in revenue.

rocket lab is a good stock. planet labs like a service provider that is benefiting from lower costs. they image the earth and sell it to a host of organizations. jack otter: we've not mentioned jeff baeza's, the third guy trying to prove himself by going into space. al: blue origin goes at a lower pace and is a much different scale than space x. it launches in 22, will do more than that this year. over the entire history of blue origin, including tests, they launched 30 times, focusing first on the tourism business. didn't have a spacecraft circle the earth, it's a different organization entirely. jack otter: you have a pair of stock picks and nintendo stock is leveling up, we also you why when we return - double check that. eh, pretty good! (whistles) yeek. not cryin', are ya?

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etfs. visit foxbusiness.com/"barron's roundtable". jack otter: aishah huge lines down 40 eighth street by the nintendo store. what was going on? carleton: reliving every 80s child's dream, the zelda game out friday, huge gains with the super mario brothers, global sales at one. $2 billion. one of my personal favorites, minions, nintendo is having a moment right now, when with the release of its newest game and finding the right footing in the movie space as well. jack otter: how does it look as a stock? carleton: the nasdaq so far this year, nintendo is expected

to release its new console switch, to give you some perspective, what i grew up within the 80s, 60 million units, the switch was released in 2017, one hundred 20 million units. lots of things with how the world has changed, huge catalyst for stocks and nintendo really realizing we can make movies off of these games and characters, we all love mario and luigi, imagine a donkey kong movie. jack otter: let's get a stock pick starting with you. al: and industrial software company that makes software for managing big pistons to designed companies. anything for school administration. the cash flow that earned them a nice multiple. it is not a cheap stunt but keeps beating earnings, the guidance has gone up. it will get an ai kicker, it

will use ai to boost its business. jack otter: will your pick go to the moon? al: top golf. i will go to the dragon range. it is a contrarian pick idance. i love it when something, the business and the stock action don't seem to ma jack otter: value and price are two things. check out this we kept addition of barron.com and follow us on twitter, barron online and that is a us, have a happy mother's day weekend and see you next week on "barron's roundtable". ♪ thank you both for joining us. jackie: thank you, guys. >> from the fox studios in new york city, this is maria bartiromo's "wall street." maria: and happy weekend to all.

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