the futures are indicated lower this morning. a lot of red arrows. "squawk on the street" will take you through the rest of the day. join us tomorrow. michelle, thanks for being here. see you tomorrow, too. back here tomorrow. right now, time for "squawk on the street." ♪ good monday morning. welcome to "squawk on the street." i'm carl quintanilla with melissa lee, jim cramer, david faber live at the new york stock exchange. markets settling in. it's going to be a big week on both the domestic and international fronts. right now tacking on a little more losses after a down week last week, the first down week for the dow in about three. as for europe, worries continue regarding the eu summit which we'll talk a little bit about in a moment. >> the supreme court, a decision on the affordable care act, also known as obamacare, could hit in an hour's time. the stakes are high for the obama administration, the elections, health care companies as well as corporate america.

>> market seems skeptical this week's eu summit will amount to much. german officials knocking down the idea of eurozone debt as long as individual states decide on government spending. >> and what was behind the botched facebook ipo? well, overconfidence and arrogance on the part of nasdaq staffers. that's what the nasdaq ceo says. shares of facebook, just about five bucks away from the ipo price. a decision could come as early as today on the health care law. the big consideration is whether congress has the power to require americans to purchase health insurance. the court could strike down to full law, uphold it in its entirety or repeal only portions of law. that comes at a little after 10:00 today. do you have a battle plan? >> i was telling david, let's say home depot, they said on the

conference call, if the law is upheld, it's going to cost us a lot of money. you have a stock at $52, you could buy a call that struck not that deep. it would be -- it's part of the s&p, it's going to open down. it is a domestic play. won't be influenced by eu. just throw it out there. >> so you think that corporate america -- companies in general will pop because the cost won't go up if the law is struck down? >> this is what home depot said in its conference call. they said it's an incredibly important law for them. carl, you were at costco. >> 90% of their workers enjoy some sort of benefits like that. intrade today, the contract saying 74% chance that the individual mandate is deemed unconstitutional. and we've seen what health care stocks have done in the past week, best-performing sector. >> chief justice roberts, he's a identity.

people are scared of him as a legal mind that, he's that powerful. and you have to question whether he would have taken this case on unless he did feel that he had the votes to begin with. as the papers indicated, at the time no one really imagined it would be challenged. roberts is the kind of guy who is very persuasive and he only needs to persuade kennedy. don't want to get too much into the nitty-gritty of the court. but i agree with you, sounds like intrade could be very right here. >> we'll see. balanced on other things, david. domestic concerns, not the only thing going on right now. >> not at all. but it's going to be fascinating to see what the decision is. we come back to the supreme court a lot on these moments. >> does it matter if you buy hmo stacks or medicare or what? >> hmos have moved their model to embrace this law. it's one of the reasons why they started percolating.

i think there's a belief that they are really ready if this law is upheld. they're clever and crafty companies. when this law was passed, they were supposed to be the enemy. they are chameleons, they figure out how to make money wno matte what. >> a lot changed during the course of the negotiations between the obama administration and congress. but we did get the individual mandate and we'll see whether the commerce clause or how it's interpreted by the supreme court -- >> what about the argument that the mandate -- it's not dead. >> not at all. >> but if it's ruled unconstitutional, would have provided a bigger customer base for companies like hmos? >> it depends on what kind of hmos. certain hmos are more dependent on larger group plans, not the small business plans. the larger hmos, major insurers, probably would not see an increase. the insured who go onto their

books, the ones that are smaller could see the benefit because they cater to individuals who might not currently have insurance. but those who cater towards a corporate customer, may not. >> look, you come in today, the market is just hideous. it's hideous. >> is it really hideous? >> it's garden variety hideous. with this rain, we're going to destroy the gardens. what i think is kind of -- it's just coming from nowhere if you get a decision. let me just call it a positive decision for business. a positive decision is to strike this down. i think then the momentum will be, this was the most important thing that obama did and now that is gone and why didn't he turn to the economics and the jobs when he first started? there will be a momentum to romney that i think will actually, if you believe that he's good for the stock market, may be able to transcend for at least 45 minutes europe. >> that may be true. >> a romney rally? >> a romney rally, yes. i'm thinking of a romney rally.

>> of course, health care costs and that debate is not going to go away anytime soon regardless of what the supreme court does. as we head towards the end of this year and deal with the so-called fiscal cliff and budget issues and medicare and medicaid, to a certain extent, and whether this law will actually have helped or hurt in terms of trying to bring down those incredible growth of health care costs in this country, that remains a huge concern for both parties. >> right. >> hospital stocks will also feel an impact depending -- because right now they treat the uninsured without getting reimbursed, they face deep losses. if there is insurance, the theory is that will be covered for a lot of those expenses. an medical devices, there would be a tax on medical device revenue, they would be hurt if this law is largely upheld. >> people go for hca when they go for the large cap hospital -- >> how much is in these stocks,

an expectation that's going ton overturned? >> it's battleground. there's not as much in these stocks as you think. i don't think they're factored in either way. people keep thinking, wait a second, there really can't be a possibility that everything is struck down. this interstate congress -- the congress act, it's kind of like the second amendment. no one really uses it to do anything. it's been a long time since we thought about the commerce act. it's kind of like an -- but these guys are constitutional lawyers and can make a case. >> let's talk about the markets. garden marriott. u.s. futures are moving lower over concerns that euro leaders will make little progress later this week. spain has requested aid for its banks but the government didn't specify an amount. the economy minister said he believes it would be enough for

the banks plus an amount of buffer. so it would be sufficient. >> i'll tell you, this is a crucial week. i think there's a lot of people -- there's a bunch of bond auctions. >> and next week will be a crucial week and then the next after that. and one in august and one in september that may be crucial -- >> it's garden variety, david, come on. >> you're not going to be sitting here in three months saying the same thing -- >> by the time you take over "jeopardy! " we'll still be talking about this, right? >> yes. i'm figuring a four-year time line. i'm going to step up when he turns 70. that's a good time for him. >> wait till he gets his 30th season. then we'll say good-bye to david. >> can i just say the pictures, "the new york times," merkel with her hand just saying, yes, we've crushed greece. the metaphor was a little bit too hard for me. i think -- >> you're talking soccer.

>> football, soccer. it really does -- there is a hatred for germany building. >> the fact that they even made it that far is pretty amazing in terms of their soccer team. >> i think the metaphor is not lost on people that merkel is clearly in charge and spain -- >> and continues to say nine. she says nine to a lot of things, including deposit insurance and joint liability. when everything comes back to it in terms of joint and several liability, germany saying, we'll guarantee the euro bonds that everybody wants us to issue or we'll guarantee deposit insurance, they say, no, no, no, that's where we keep coming back to. and we haven't really advanced on a solution in a real way. and they can talk all they want. but how much time is the market going to give them? when spain's borrowing costs exceed 4%, how much time -- >> the short end of the swiss market now with a negative yield, people basically paying

to store their money on the twos and the fives. and george soros saying europe basically has three days. w40 knows how he's positioned relative to his comments? >> i hope he's short. he scared you with the fiasco comment. a lot of people are positioned to make a lot of money here. and a lot of people need spain to go down. there's a lot of people who want the yields to go to seven in italy because it's a great negative trade. david, listen, if you're a hedge fund, you have to make your quarter. does it really matter if there's rioting in the streets? maybe you want rioting in the streets. >> depends on what your positions are. >> which is more important, impoverishing europe or making your quarter? >> making your quarter, of course. >> just wanted to put in it context. >> on that note, there are guys who are buying certain things in spain -- a lot of them -- >> you're buying all of them

like ellison. >> i've gotten together and made a bid for catalonia. dan loeb is writing nasty letters to kick kick out the board -- no. there are bonds that some of these regents have issued. people believe they will not default. >> meantime, yet another call by citi on china gdp, cutting their forecast for the year, largely centered around a european collapse. could result in a hard landing, according to citi. >> 20% of china's product is sold in europe. i love the whole new theme. all the chinese numbers are phony. that's the new theme. >> as if nobody ever thought of that before. >> right, i know. >> when they were going up, they were great. ironcl ironclad! >> there is a great migration of people and industrial revolution in china. people go from being impoverished.

but now we've decide that had china is horrible. they are only going to grow at 7%, 8%, which is abysmal. >> but that's been a longtime case. that's where everybody measures electricity production and looks for other metrics they feel can't be massaged or changed by the local party leaders. >> so what's the hope here besides quest software getting a higher bid? is there anything? can anyone think oaf a single piece of news that is any good this morning, ahead of the supreme court? >> we're going to get a little taste of some ipos this week for the first time since facebook. that's going to happen. there's that. >> borrowing costs are really low. >> netflix was upgraded. >> you can borrow money very cheaply. very, very cheaply. >> gas prices are down 11 straight weeks. >> i need to hear something positive. this is what i want. i come to play on a rainy day and i'm surrounded by optimists. >> disney, braves, $60 million.

>> and goldman upgrades sandisk. >> oh, wow, i've got to make calls on that. >> piper said the zynga news is in line. you felt that zynga news might be below line. >> all you do is play words with friends -- >> scrabble with friends! >> be very afraid. meantime, "the journal" says that robert greifeld said that arrogance and overconfidence contributed to problems with facebook's ipo last month. he claimed nasdaq executives rely too heavily on assurances from the exchange's technology group guy, said they were not prepared for the number of cancellations is what appears to have done them in.

>> i'll tell you something, the yankees are arrogant and they can continue to win. i don't think arrogance is -- >> 6-5. >> well. >> a win's a win. >> i don't think this was a case where -- i think this is more asleep at the switch. you do have a ceo who's now laying off on his tech group. >> throwing them under the bus -- he didn't say we, he said they. he said, we relied too much on their -- >> i was acting like i was one of the founders of facebook out there -- please. >> i think he threw him under the m 104, that bus that goes across time. >> yes, taken it many times. >> or did he throw them under the 7, the 7 train? >> no you're reminding me of the mets again? >> yes. i know you guys talked a lot about facebook last week. up sharply from the low of $25.52. >> it's bigger than ever, man.

>> it's huge. >> now we feel that maybe facebook was down because of the arrogant way that the deal was done and perhaps there were real buyers working. but they couldn't get in there and buy. now they're coming in, end of the quarter, people want to show that they own facebook. they don't want to own anything else. boy, they don't want to own the oils. have you seen the selling in that group? >> take them to the woodshed, all of them. >> and a lot of other commodities providers as well. >> and corn is spiking because of the weather. >> crazy weather around the country this week. crude, $78.91. down 22% for the quarter. just crazy. >> just a straight line. crude, straight line. >> but that's got to be a good thing in many ways. >> oh, look at you, mr. optimistic. that's the second thing you've said that's positive this very morning. you earlier agreed that that sandisk upgrade was -- >> that was huge. >> he's making calls on that.

>> he's already thinking about getting fitted for his "jeopardy!" job. >> david corona, make my light. >> anheuser-busch buying modelo would be a big deal. a winningness on the part of a.b. -- inbev controls -- it's the brazilians. >> we'll discuss maybe a little bit of r.i.m. later on. speculation about activity in that area, too. >> anheuser-busch has been the best. we had a quiz on cnbc on friday. the worst has been molson, tap and pbr. >> abovelove a good pbr. >> petrobras has been a lot of the brazilian stock market. >> we know jim likes all things

brazilian. >> did you get any brazilian note from group snn no, thank heavens. cosmetic injections. i wonder if they can do restaline i'm tired of botox. apparently it hurts like all get-out. but i have to choose between two options. when we come back, i'll have everything to know about the luminec med spa in soho. >> quickly, before we -- not to interrupt your discussion over brazilian, let's talk quickly about merkel. she actually has had comments while we've been on the air saying economic growth must be sustainable, living beyond means led to the euro debt crisis, shared euro debt

counterproductive. rejects euro bonds, joint euro bills, rejects joint deposit -- >> that's everything we were looking for if you were a bull. >> your hopes are dashed. >> it could be a fiasco. >> continuing to say what's been said by germany all along. >> we need an aubry mcclendon over there to fix things up. when we come back this morning, a wall street analyst known for being a netflix bear explains why he's upgrading the stock now. scrapping his sell rating. we'll have an exclusive interview with jim skinner on thursday. live from chicago's wrigley field as he exits the top job at the fast-food giant. one more look at futures. a little bit of weakness looking to give up the gains from friday. a lot more "squawk on the street" live from the post at the nyse when we return. and kept turning the page, this is the next chapter for the rx and lexus.

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the streak continues for disney's pixar division. "brave" was the biggest box office winner over the weekend taking in $66.7 million. "brave" becomes pixar's 13th consecutive movie to debut at number one. that brings us to this morning's "squawk on the tweet" -- what would it take for a pixar movie to actually bomb at the box office? you can tweet us at cn.

a big smash, "brave" was over the weekend. >> the kids who were 3, we talked about, might actually get into the zone. but the winning streak, where does it end? >> geez, they're amazing. that's one of the reasons why i think the stock does so well, plus espn. these are anunty streams. i think bob iger will unveil a ride in a few years, another reason to go back to disney world, disneyland. >> i remember the time disney bought it, they paid a hefty multiple, over $7 million. it was a deal they had to do. and it's been a great deal. brought steve jobs to disney for that time. and bob ig ser on apple's board, we shouldn't forget smchlt ] >> and disney does a lot of things right. it's done a lot of things right ever since the change in management. >> right.

52-week high, $48 just off of that. coming up, find out which stock cramer's about to highlight and what he thinks of it. and we'll take another look at futures as we start off this monday trading week. looking down about 91 points on the dow, 13 on the s&p 500. much more "squawk on the street" straight ahead. how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers

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watching r.i.m. and this downgrade from morgan stanley or something else? >> both. morgan stanley downgrades, sets a negative tone. goldman comes out this morning, they don't like the stock either but they are saying that estimates have now gotten too low, which tells me goldman's really saying when they report this week, r.i.m. could go higher. this is something i was looking for. the numbers are down enough that maybe r.i.m. can put a floor. >> also continued speculation about them separating their handset business from their messenger network. >> yes. one of the things that anton wollman pointed out, no one's been able to duplicate their keyboard. the keyboard is loved. they have millions of subscribers. i understand why someone might want to call a bottom. i don't like stocks when the earnings keep going down. but if they are cut enough, maybe r.i.m. bottoms this week. >> we'll talk teva after the opening bell. a potential decision on the fate of the affordable health care act is straight ahead.

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a potential crucial decision on the health care act. meanwhile here on "squawk on the street," live from the financial capital of the world, the opening bell at the big board, gol, a low cost airline based in brazil, celebrating its eighth listing. the countdown will continue. we'll see if any of these decisions involve health care at 10:00. jim, you were going to mention teva pharmaceuticals. >> for almost close to five years, teva's been facing this challenge of a generic of their big proprietary drug. teva's the first to knock off a company. so a lot of guys gang-tackled

teva and said, we have something better. and they won a very important decision. now tee have will have the drug for a little bit more. and teva is frankly a story that's been one way to get down. >> natural gas, story in "the journal" about ferries switching over. a nat-gas-powered boiler. >> really? there are 7,000 buildings in the new york city metropolitan area that are heat bid oil. every single one of these would save a lot of oil if they switched immediately. the story seems to have some resonance. there was a big order for ford trucks -- well, relative to their size. i continue to think that natural gas is the way out of this jam in our country. no one cares. >> you alluded to chesapeake shares, down by 5.5%. there was an article reported by reuters saying that aubrey

mcclendon, the ceo of chesapeake, may have been in violation of state and federal laws. that hangs over the company as mcclendon still is in his post. the stock still remains under pressure. >> this reuters story, i think that -- i hope reuters has everything straight because -- >> they're citing e-mails -- >> yes. >> they didn't tell us how they got ahold of the e-mails. and they're quoting them building a case saying there was collusion. we have yet to hear from chesapea chesapeake. but it is the reason the stock is down this morning. >> when i comes to banks, we have the moody's downgrades out of the way for now. f.t., pay among ceos, dimon, pandit, double digits -- >> got to be the most hated

cohort out there. oil and gas people are more liked than them. really is just a remarkable series of figures. i urge everyone to read that article because the amount of money these guys make with their stocks going down is miserable. >> at the top of the list, you had barclays dimon was one of the stop earners. stumpf, $19 million -- >> if you look at the charts for the domestic banks, they're really extraordinarily positive. just something to keep in mind. if you get a -- they have a lot of employees. i don't know the status of their employees versus the health care law. but these companies are very heavily staffed and they're doing quite well and we get a cessation of the number of homes that are for sale to keep it down, it's a place -- oh, my, look at that red. walmart up because if the law is struck down, walmart is a big winner.

but obviously people are betting that way. >> i assume you think, though, that if the supreme court rules any part of the law unconstitutional, that red turns to green, to a large degree. >> i don't want to take the other side of that downward trade today -- >> right. this is largely europe right now, i think. hate to say. i haven't looked at spanish or italian yields. but the merkel comments we got not that long ago -- and the banks are the worst performer yet again today, 3.5% for citi, same for morgan stanley. >> i think it's retail. i don't think you want to go buy caterpillar off this. >> but you referenced in some of your notes, an rbc call on deutsche bank, right? >> sheesh, i think you need to see an attack on the german banks by shorts in order to motivate merkel who just seems to be -- >> what do you mean? like hit her where she lives? >> i think if you saw the same

push by the shorts against germany, i think that is what needs to happen. the german stock market was still up at 4:00 a.m. >> definitely a line of thinking out there that believes if things get worse or germany and we continue to see deterioration in data, that may be positive -- it happened with the fed decision and it's also there for germany. we see things get significantly worse, maybe that will force merkel into embracing things that are necessary -- deemed necessary for the eurozone. >> it's like it's a good business. >> yeah, but it's still a difficult thing to imagine. you talk about the worries of inflation and the wheelbarrows full of cash. >> but remind people exactly how these kinds of things can spiral out of control by central bankers. krugman is an intelligent guy. he basically said, germany and

the united states looking the other way -- consequences that no one is thinking about. i thought the allusion underneath that is if you're fighting vimar is you're fighting hitler. >> still 80% debt to gdp. in comparison to the rest of europe, looks pretty good. >> but they have growth. that's the difference. >> yeah. >> name me a place with rectitude right now. >> um -- norway. >> you stumped the "jeopardy!" champion. >> there's a central banker in israel who is worshipped in southeast asia because of what he did in '87 a097 and '98. he was reviled now he's revered. that's one thing where inflation seems to be under control. >> but they also have hundreds of thousands of people protesting in the streets about

social conditions. >> the s&p is down by 1.3%. so is the nasdaq. segz lows. let's check in with courtney reagan. >> reporter: a lot of traders they zaire looking forward to this eu summit at the end of the week. expectations are low in terms of market-moving factors. that's not expected to come out of that session. european stocks and asian stocks are lower. spain requesting aid to recapitalize its banks. we don't know the details as far as the size and the rates. not expected to know that until the second week of july. moody's expected to downgrade spanish banks sometime soon. spanish and italian yields are near session highs here. we know spain is going to have another auction tomorrow, three and six-month bills, expected up to 6 billion euros. unicredit shares in milan are

suspended, at least for right now. we'll update the situation as we continue. italy selling bonds at the zero coupon. that's happening tomorrow. we've heard that merkel and hollande are going to meet ahead of the eu summit to see if they can come any closer on the differences. the market not expecting much there. if we bring it back to the corporate sector, a lot of pharma news this morning. you all spoke about teva a moment ago. but the u.s. district court is validating the patents for that ems drug. also bristol-myers-squibb and pfizer, their blood clot-preventing drug fails to win approval from regulators. those shares under pressure. and watson pharmaceuticals are up. watson is going to own the activist is now being helped by that decision. jim, back over to you. >> thank you, courtney.

david says norway is probably the country with the greatest rectitude and solvency. stat oil is a big beneficiary of that. >> $600 billion sovereign fund. >> you're moving to norway? >> i have been to norway. >> you did an unbelievable special out there. how bear stearns brought down a school district. >> island of fiscal rectitude. tweet us. let us know what you think. >> is that the tweet question of the day? >> it's not. i went rogue on that. >> look at david living on the edge. >> let's head to the bond pits. rick santelli is at the cme. >> good morning, jim. you've heard all the reasons why you're supposed to pay attention today and this week. but let me tell you, there's so much bubbling under the surface, we're going to talk about it all day, whether it's bank of international settlements having one view of how central banks have run it as far up the flagpole as they can. or you see george soros, who

knows what his position is, thinking that thursday and friday are going to have to come up with something significant. it doesn't look like that is the case, given all the issues that germany isn't going to stand up for. and bund rates have moved. but let's get to all the charts. you look at our ten, we're down. if you look at the bund, all the hedge funds seem to be ganging up. you saw how the rates popped up a bit. not today, they're leading the pack, down ten basis points. for the big stories, italy. italy's down about 13, 14 basis points, getting closer and closer to 6%. spain is up about 17 basis points and it's around 6.5%. these are very significant levels. the other thing we have this week after i just said all that, $99 billion in u.s. supplies, twos, fives, sevens. back to you. >> thank you very much, rick.

oil prices moving lower. let's go to sharon epperson at the nymex. >> what's new is with the lows of the seg right now. and of course, it is much of what you've talked about this morning in terms of the negative sentiment on global global growth weighing on oil prices. add to that the fact that some big banks are lowering their forecast for oil prices for this year and for next. and jpmorgan among them lowering their forecast by about 13 bucks to $106 for the brent contract. also the supply/demand picture is changing a bit. chinese demand actually weakening, at the weakness level that we've seen basically since the first quarter of 2009. opec continues its production growth above that 31 million barrel per day mark. that's been a consistent production level for the past seven months or so. we have plenty of oil coming out of the opec region. keep in mind, we're also watching what is happening in the gulf of mexico with tropical storm debby. and the oil markets seem to have

shrugged this off. but the fact that 23% of oil production in the gulf and nearly 23% of natural gas production in the gulf has already been shut in due to tropical storm debby. so we are seeing the heavily short natural gas market covering those shorts today. we are looking at natural gas prices up about 3%. meanwhile, the metals market, a mixed picture there. anytime you talk about economic stress and concerns about what's going on in europe, you're going to see a little bit of lift to the gold market as a haven. >> thanks very much, sharon epperson. shares of bud, one of the few bright spots. the stock up about 1.5%. it is nearing a deal to buy 50% of modelo. having spoken to people close to the situation, negotiations are going on, it is possible you will see a deal perhaps as soon as this week, though no guarantee of that. it appears there is still negotiation going on regarding price. if you were to simply take the

market value of modelo at this point and assume they were going to buy what they don't own for the current price, that would get you close to $12 billion. currently trades at 10.7 adjusted to 2012 ebitda. the market cap right around $23 billion. but that assumption may be faulty. in fact, we could expect to see a higher price than that one might anticipate as you take a look at some of the brands we're talking about. corona is the best known of modelo. you might anticipate, though, that you will get a higher price, given there are significant synergies, a number of analysts already choosing to weigh in, talking about very significant after-tax revenue synergies in the united states for anheuser-busch. this is a deal that's been out there for quite sometime. it was the poison pill, if you will, that anheuser-busch could have chosen to go with to avoid -- to have avoided inbev a

number of years back when inbev bought the company or took control of the company at that point. they did not, in fact. augie busch iii went back and you got that deal. but it would be seen as a positive at this point. but we'll see what the price is. we simply don't know. i assume it will be far more than the $12 million number. >> the per capita consumption of beer in mexico is off the charts. you really have this amazing growth market. latin america, always drawn to beer sales. i have to tell you, it is a remarkable growth market. having seen the beverage markets around the world be kind of so-so, beer is still a growth vehicle. and i think that that's certainly one of the reasons why you want to own modelo. >> and we'll see what that multiple is in terms of how high they sell it. if it's 13 or 14 times, you'll get a better price.

>> consolation brands is up 7.5%, feasibly off of this. interesting to see the various market movers. nokia shares sitting at 16-year lows, the lowest levels since august of '96. microsoft said back on june 20th that windows 8 will go on sale in the second half of the year but phones operating on an older version can't be upgraded. so you have to buy a new phone. so the idea is that people will by lumias and -- >> it's a hideous stock. >> not much to be said about the chart. >> cost people a fortune speculating in this one. could we get a decision on affordable health care in less than an hour from now? we are on supreme court watch. plus, a lucky 13 straight number one debut for disney pixar at the box office as "brave" hits the top spot.

what would it take for a pixar movie to bomb at the box office? tweet us and let us know what you think. here's a look at the bright spots on wall street this morning. "squawk on the street" is heading to the windy city. carl quintanilla will be live from wrigley field with a show too big for one city. we'll catch up with jim skinner during his final week as mcdonald's ceo. all that and much more when we are in chicago. this thursday on "squawk on the street." [ male announcer ] this... is the at&t network. a living, breathing intelligence teaching data how to do more for business. [ beeping ] in here, data knows what to do. because the network finds it and tailors it across all the right points,

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we're we're at session lows as we await a possible supreme court decision on the affordable care act. walmart, the only dow component in the green. the s&p 500, we should note, is down about 18 points, 1.3% here. as we continue to count down to that possible supreme court decision, on the health care markets, there's a lot more

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here's a here's a look at the dow, down 146 on this monday. looming concerns about the eu summit and just how much may come out of that meeting later on in the week. nasdaq down almost 40. s&p down almost 19, to 1,316. people watching. >> yes, they are. reiterate that home depot, if you want to do a little speculation, there's going to be an overturn, home depot calls may be a way to go. let's check in with simon hobbs and see what's coming up. >> things get really intense and tense from here as we get the most important decision from the supreme court of the united states arguably for decades. it will define a presidency. could define the next election in november. and there are six possible decisions. the stocks could move in various combinations through that. we'll keep people abreast of what's happening minute by

minute and the way in which the investment view is changing. back to you. time for "six in 60," six stocks in 60 seconds. southwestern energy. >> everyone's been downgrading these stocks. i figure it's important to put out citigroup upgrades. >> red hat? >> we had jim on last week. i think this thing was overdone to the downside. >> another buy at jeffers for abercrombie? >> this one's impossible. >> barclays downgrades paychex? >> this is not a good way to go. all the oil service stocks keep getting downgraded. >> mgm reports, a buy at deutsche? >> shocking this one is a ten. but this is a gasoline play. people can drive from l.a. to invitation. >> for more on those names, sots.cnbc.com.

you mention that had 4% dividend yield, a big theme for you on friday night about hitting this floor. it's hard to break through it. >> it is difficult because, again, the return is so great. and if you have a gridlock congress, perhaps they're not going to get rid of the favorable treatment for dividends. no one wants to get rid of the capital gains favor. i prefer dividends because it's a great way to be able to accumulate wealth for our people at home. >> revised gdp this week. new home sales, confidence, income and spending, is that going to -- are we going to drive the bus, do you think, more or less. >> i hope not. our manufacturing has clearly slowed down. i call your attention to kirby, chicago pmi, negative. >> philly. >> yes, philly. the manufacturing has stalled in this country because oil and gas had been the leader in hiring and that is obviously going down with the price of oil. >> talk about what's on "mad money" tonight? >> i have a death match between the burger wars. trying to figure out the

cheapest burger. i think the jim skinner interview will be amazing. he is a great american ceo. >> yeah, you think about mcdonald's, p&g, pepsi, a lot of challenges beginning to creep into these big names. i wonder how you're separating the wheat from the chaff. >> i think some good inroads are being made. they are russia, they are turkey. i like pep. i really do not like proctor p. >> you have a law degree, you understand what this decision means probably more than a lot of us here at this table. guesses on what they'll say and implications? >> i think roberts has -- i would -- stick my neck out here. but i think roberts has a chance to strike this one down or at least the individual mandate. i know he's a free market guy and this is obviously viewed as a non-free market law. >> right. see you tonight. >> thank you, carl.

>> "mad money," 6:00 and 11:00 p.m. eastern time. could today be the day? might be minutes away from a monumental decision. the supreme court's ruling on the health care reform act, you want to see how markets react to that decision if it comes down in the next few minutes. keep it here on "squawk on the street." back in a moment.

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welcome back to "squawk on the street." rick santelli here. we're moments away from may new home sales and the survey says, better-than-expected. 369,000. seasonally annualized adjusted rate. so 369,000 best expectations. and 369,000 is the best. wow, this is going to be the best going back quite a ways. that is going to be the best going back to april of 2010. best number going back to april of 2010. carl quintanilla, back to you. >> thank you very much, rick santelli. talk to you in a little while. the supreme court could announce its decision on health care reform at any moment now as we gear up for that announcement. we take a look at how the ruling will change america's health systems across the board. and one netflix analyst is

brushing aside his bearish stand, upgrading the share. sit now time to get in? we'll talk to the analyst behind that call. plus, disney has done it again. "brave" topping the box office this weekend, pulling in over $66 million. how much longer can the media giant right the wave of box office domination? >> and, of course, they're tracking the selloff here in the united states and on the street throughout the rest of the hour here. so a very tense time for all as we await this judgment from the supreme court. there will be a number of judgments they have to read. because it's such a big judgment, it would likely be the last they read, maybe the third or the fourth. as soon as they start reading, the wires will notify us that there's a judgment coming through. if they affirm stuff, it means they are agreeing with the lower court in florida that knocked down obamacare. it might be quigt confusing initially. an affirmation is negative for obamacare.

we can discuss what parts of the health care complex might move. i guess it's those hmos that are most aligned to medicaid that will move the greatest, marley if we get the individual mandate knocked down. that seems to be the most controversial area. >> the individual mandate coming back to the commerce clause and the interpretation of that and whether you can force people to get insurance, is it regulated as commerce is across interstate lines? i'm not a constitutional law expert. but those are some of the key questions, i think, as we go into this decision, that at least the justices will have entertained. >> and some people will argue that the commerce clause allows the government to regulate commerce as opposed to regulate inactivity. that's sort of the crux of the matter. >> had they called it a tax, we wouldn't be in this situation. but obviously they didn't for political reasons. it is interesting to notice how this seems to have kaug certainly the democrats by surprise that it would be such a big issue. and many republicans as well.

this central clause was what the conservatives were originally talking about to avoid the public option. >> some people under the rule actually do have an out f. you get an exemption for religious reasons, if you're in prison f you pay more than 8% of your household income to get coverage, members of indian tribe dos not have to get insurance from private coverage under the mandate. obviously the lion's share of all americans would have to if this stands. >> and citi had a note out a couple of weeks ago that said the penalty actually -- they're talking about for 2014, for not taking out this insurance is only $95. >> it's cheaper than buying insurance. it's hardly a penalty at all. >> right. it is interesting to note the genesis of the individual mandate, which as you alluded to was actually a conservative idea, was something that was embraced by the republican party years ago. and, of course, is no longer the case. >> the danger, of course, is if

they knock down -- will they knock down parts of it or all of it? if they just knock down that individual clause, that's potentially quite bad for a lot of the health insurers because you might have people on the way to the hospital have not bought health insurance are able to buy it -- of course, you still have those more popular areas like pre-existing conditions or allowing your kids to stay on your health insurance -- you know, it's a very -- there are up to six or more possible solutions that we might have in the next few minutes. >> always interesting the way the supreme court reveals their decisions. we don't get all the rulings at one. they are read one by one, starting with the opinions of the least senior justice and work their way up the bench. takes some time. we didn't get the fcc decision until about 10:20 or so east coast time. and every justice with an opinion can give the opinion and then they can also summarize, if it's a dissent, if they choose to. it could be the better half of this half hour before we actually know if in fact this is going to happen. and then, of course, chief

justice roberts could say, we will have an additional decision day either wednesday. thursday appears to be the last possible day this could come down. >> huge implications if it's another 5-4 vote for a lot of americans. that's fair to say. >> the expectation is it would be a 5-4 vote if it was against or if it was striking down the individual mandate. with justice kennedy having sort of being the swing vote now on a court -- used to be sandra day o'connor and now with her retirement, it's been kennedy who is more conservative typically than she was. >> intrade saying that 75% chance that it will be struck down. >> 74%, brian sullivan tweet this had morning, intrade counting on an unconstitutional ruling on the mandate. one reason, that health care stocks were the best performing sector last week. as you look at some of the stocks today, you mention add couple of hmos this morning trying to guess what this decision is going to be. >> well, it's interesting to note that wellpoint has turned

higher. but in large part, this group is trading down, along with the broader markets. while health care was the best performer in the last week leading up to the decision since the law was signed into law, march 23rd, 2010, the s&p health care index is up by 14.7%. and that is basically in line with a broader s&p 500, outperforming by one percentage point. a roughly inline trade since the law was signed. >> a.p. is reporting we are getting some decisions. the supreme court striking down montana limits on corporate campaign spending. the supreme court, according to the a.p., ruling out life in prison without possibility of parole for juveniles under 18. these were all cases that were on the docket before the court this year. >> interesting, they struck down montana, did you say? that was a citizens united-related decision as well. >> of course, even the president of the united states seemed quite sanguine about the idea that the individual mandate might be knocked down.

reportedly when he was at a fund-raiser in manhattan recently he was asked to rattle off what his second-term agenda would be. and he said, along with tax reform and immigration, he mentioned coming back to health care and the possibility of having to work around a negative ruling apparently in a rather matter-of-fact way. there are not just those that are against obamacare that suspect he might have an issue with that. but it is the white house itself. want to get a deeper analysis on what this means with jud gregg. and congressman tim ryan joins us. gentlemen, good to have you with us. >> good morning. >> good morning. >> senator, not too many parlor games where nobody knows the answer, even the president at this late hour. but the collective wisdom about the mandate potentially being ruled unconstitutional, do you think they have it right? >> well, i do. i think it's going to be hard to

justify the individual mandate under the commerce clause because the commerce clause deals with commerce and what you're telling -- you're telling individuals to take action. that's more of a police power right. and the police power lies with the states, not with the federal government. i suspect that will be the essence of the decision. the question is how far do they go beyond just striking down the individual mandate if they do strike it down. how much more of the bill will they strike down? i suspect there will be a place they will sever it. i don't think the court is going to want to deal with having to take the whole bill down. >> congressman, the argument originally for the act was that the mandate is needed to make the whole thing work. can democrats come around? can the president come around at this hour now and argue that, in fact, there is some severability in there? >> i don't know if it matters, really, at this point. the court's going to make the decision that they think is right or that they think is politically expedient for them.

the problem is for p those people pushing for appeal from the republican side are going to have to explain to the 30 million-plus seniors who got preventative health care last year without having to give a co-pay, explain to them why they're repealing it, the 100 million people who no longer have ceiling -- lifetime limits on their insurance policy, the young kids that are staying on their parents' insurance, the 360,000 business folks that took a tax credit to provide health care for 2 million people. the republicans are going to have to go back to these constituencies and explain to them why they were pushing for this repeal. ultimately, that's going to be the discussion as we move forward into the fall. >> senator, i have a hard time believing any republican will mind going back to their constituencies with this decision, if it turns out that way. >> i don't think they will either. it's a very practical matter, this bill is a dast erp. it's a disaster for the economy. it's a disaster for american health care. it basically puts us on a track

towards a single payer system, which means a rationing in the end. there are a few positive things in this bill. but overall, this bill is an overreach by an overreaching government. it's a lurch to the left and moves us down the road towards more of a social welfare state policy, along the lines of europe and we've seen that that doesn't work. and we can't afford it as a country and our children can't afford it if they're going to have to pay all the taxes to support it. >> what would work, senator? as republicans come back around, they're going to have to offer alternatives that come in a different form. are those beginning to gel? do we have an idea what those might look like? >> yeah, you heard a lot of discussion prior to this bill being put into harry reid's office and written ininform camera and brought on the floor of the senate on a saturday afternoon and we had to vote on it on christmas eve. prior to that, there had been significant bipartisan movement towards getting some very

substantive and important reforms in health care and how we deliver it. and it goes back to the issue of what do you reward people for in the health care system? rather than rewarding them for utilization and repetition, we should be rewarding them for outcomes and for value. giving people more choices, allowing people to participate in their choices and understand their choices more effectively, allowing the insurance market to go across state lines. there are a lot of different things that could be done, obviously major tort reform. a lot of different things could be done m and they have to be done in a bipartisan way because health care is such a big issue that the american people aren't comfortable with decisions that they think aren't fair and they think they're not fair if they're done in a partisan way. to have fairness, you have to get bipartisanship. >> tim, the president decided to make this the centerpiece early on of his administration. it's a decades-old democratic dream of universal health care. if it is now struck down, will

the perception be that he's lost hold of the presidency? >> no, the perception will be that the political world is being controlled by major monetary influences. you guys said before we got on here that the health care stocks are already going up based on the fact that this thing may get overturned. once again, the health insurance companies are going to benefit from the supreme court and the republican legislature. with all due respect to the senator, he talked about rationing. we act like the insurance companies aren't rationing health care right now. anything can be better than the system where in my congressional district, quite frankly, half of the bankruptcies filed in my congressional district are due to health care. >> tim -- >> that's an inhumane health care system. >> tim, you're surely not suggested the justices are influenced by the insurance companies, are you? that's a very strong thing to say. that seemed to be what you suggested just now. >> what i'm saying is there's a clear political agenda coming from the supreme court, it's a conservative court embodied with

the principles of the tea party. look at some of the justices and their family members who are involved in certain economic activities. let's not act like we're living in a world where we have blinders on. so the insurance companies are already rationing. and some of the points that the senator made about making efficiencies and rewarding people and doctors and hospitals for making people healthy and not coming back and being repeat customers, all of those are already in the health care bill and they're already starting to work at hospital systems like in akron, ohio. this reform is already moving in that direction. we're talking about deficits and long-term spending in the country, the congressional budget office has said, neutral, third party has said in the first decade, this health care reform will save us over $100 billion. and in the second decade, it will save us over $1 trillion, because the system needs managed properly. that's what the reform does. it's not perfect. we need to go back and tweak it

and do it as the senator said in a bipartisan way. but the things he mentioned, rationing, already happening by the insurance companies. you want to fix the deficit, we better get health care costs under control. and a neutral third-party validator said we'll save $1 trillion in the second decade of this -- >> i hate to disallusion the congressman, but a third-party arbitrator is the supreme court. and i think the congressman's comments about supreme court members' families is irresponsible and destructive to our system. the court has an opinion based off -- i don't know what the opinion is going to be. maybe he does. but that opinion has to be respected because if you don't respect the institution of the supreme court and you start to run it down the way that he was, you're really undermining our constitutional system of government.

i've never heard a statement that's so irresponsible about the court as was just made by the congressman. >> frankly, i think it's irresponsible that half of the families in my district that file bankruptcy file it because of health care costs. i'm not trying to demean anybody. >> you did. you did it in a very aggressive way. it was totally inappropriate. >> we have an inhumane system that is hurting millions of people in our country and you guys sit by and act like it's some parlor game. it's not. there are real lives at stake here. and i see it every day. and you probably saw it when you were a senator. i'm not comfortable with that system and i'm not comfortable with the court playing politics like they are. >> well, i'm not comfortable with the system either that doesn't supply good health care at a fair cost and is affordable for the country. there are better ways to do it than the proposal that was passed in a very partisan way under this administration when it had a working majority in the senate of 60 votes. but that doesn't mean you have to run down the supreme court.

that's not constructive to having a healthy debate on this issue. >> senator, before we go, i'm sure you've seen polls that show, right or wrong, americans do believe the court is more political than it has been in decades past. >> well, i think that at any time that the court has to step into an issue, which is extremely controversial, it's always polarized by the media and by certain people within various parties as being political. but that's just the nature of our system to represent something like that. i don't think members of congress have to do that. they don't have to participate in that sort of activity. i do genuinely believe the court is an extraordinarily valuable part of our constitutional structure. and when you demean it in a gratuitous way as was just done, i don't think it's healthy. that's one of the reasons we have problems with our

government today is we have these gratuitous shots at institutions which really don't deserve them who are trying to do their job, whether it's the presidency, the congress or the court. >> senator jud gregg, congressman tim ryan, thank you so much for your time. >> thank you. we want to get back to the markets here because we are pretty much at session lows right now. the s&p 500 is down by more than 20 points. that's a loss of 1.5%. we're being driven lower right now by energy stocks. if you take a look at the xle, they're down by 2.75%. crude oil, wti trading below $80 for the third straight session. it's worth noting that energy stocks have trailed the s&p 500 by 43 percentage points since the bottom of march '09. a continuation of an underperformance in the sector on the back of those lower prices. financials, a big loser. morgan stanley, despite the lifting of the cloud of the moody's downgrade s down by more than 4% at this hour.

jpmorgan is down by about 3%. those are the two groups driving us lower at this point. >> and be aware that europe stocks -- we have heavy falls in europe. the losses are extending. the french banks are down 5%. this standoff front and center between angela merkel and francois hollande is a difficult situation and will haunt us for the rest of the week as we head towards the summit on friday. big losses, very broad-based selling in europe. >> we see the court has upheld the immigration law in arizona, big defeat for the president. but it appears that that is the major decision we'll get today. getting to that hour where it appears we may not get a health care decision today. would have to be later on this week. we'll take a short break, try to catch up on what's happening at the supreme court after this short commercial. don't go away. a lot more "squawk on the street" in just a moment.

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we have learned there will be no supreme court decision on health care released today. we want to go straight to hampton pearson in washington. the question is, when's the -- excuse me, john harwood in washington, d.c. the question is, when could the next window be? >> reporter: we could have decisions any day this week. our colleague, pete williams, has told us he expects the last day of the court will be thursday. but it could any day since then. everybody was an high alert for

the decision today. we've gotten the decision in the arizona immigration case. if i understand what carl said correctly, that most of the law had been upheld. i think that is actual a political win for the president. policy defeat because it keeps the issue front and center and will help him energize hispanics in the election. but health care is the larger issue for president obama's legacy and it also could have the same effect, the reverse of the ruling is what helps somebody politically, if the law is struck down by a 5-4 decision, democrats will try to rally around that. if it's upheld, you're going to see new energy from republicans on the trail, guys. >> john, a number of other things came out today. kwon if you've had a chance to go through them, including a montana decision. i know they were trying to apply some limits in terms of corporate spending within the state related to citizens united. but the court does seem to have gone against montana and in favor, again, of reaffirming in

a sense citizens united, correct? >> reporter: yes, and mitch mcconnell, the senate republican leader who's been one of the leading supporters of limiting campaign spending, he praised what he calls the first amendment implications of citizens united and said that the explosion in corporate spending simply hasn't occurred. and i will note, i wrote a piece about this in "the new york times" over the weekend, certainly publicly traded corporations have not jumped into this fray and a lot of the things that have gone on in the presidential race this time that have people lamenting the influence of money and politics don't flow from citizens united. >> interesting this idea, john, of policy defeat being fuel for your campaign. how long does that last if, in fact, say for instance it does, like the arizona law, it is -- some parts are upheld, some parts are knocked down? is that also potentially a boon for the politics of the reelection campaign? >> reporter: yes.

look, if this arizona law is kept standing in the provisions that hispanics like the least, that is to say, the provisions allowing law enforcement officials to check immigration status for even routine interactions with the public, this is something -- considering that mitt romney in one of the debates praised the arizona law as a model, he said -- now he said that that description was limited only to a certain portion of that law. but it gives the president something to talk about to hispanics, like the decision that he made unilaterally to stop deporting some 800,000 young people, it helps the president try to press that advantage, 2-to-1 advantage that he scored in 2008 with hispanic voters. it is often the case that when you win something politically, you don't get -- when you win something in policy terms, you don't really get rewarded. but when you lose, you get energy for your political campaign. that's the way it works.

>> john harwood in washington, a busy day as we try to digest a series of decisions, not all of them uncomplicated. thanks so much, john. the market selloff steepens a little bit here. the s&p 500 is down by 21 points. simon mentioned, we're really keying off of europe. if you take a look at the chart of the euro/dollar, energy stocks getting pummeled today on this wti price and brent is trading lower as well in the session. technology taking a beating, too. microsoft is down by 2.6%. we do have apple down by 1.3%. outperforming its peers but still sharply lower, putting some pressure here on the nasdaq. >> the dollar is up across the board when you've got these emerging markets in such difficulty -- certainly the australian dollar is taking a pounding today. concerns about chinese growth, we're finding it difficult to pull away from that.

we had a downgrade from one of the major houses overnight. >> citi revising its gdp forecast for china to 7.8%. they had been at 8.1%. they're moving more towards consensus, but still coming around to this notion that there is slowing in china here. and that's certainly hurting the material stocks today. >> and they'll cut rates a couple of more times. with the dow down 158, "squawk on the street" is back in a minute. [ male announcer ] research suggests the health of our cells plays a key role

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well, if you were hoping for a reversal on some kind of supreme court decision ruling, the individual mandate unconstitutional, not going to happen today. we're not going to get that decision today. some say it will likely be thursday. but for the time being, the market is on its own to worry about things like europe and other international issues. dow down about 150 prior to 10:00 a.m. has added to its losses since then. >> interestingly, we saw a slight reaction before in terms

of maybe stocks anticipating some sort of decision. but in general, the sector, when you take a look at pharma stocks and hospital stocks, hmo stocks, all largely trading lower just with this market downdraft that we are seeing. banks being hard hit. bank of america down by -- down below the $8 a share mark. it is down by about 3.4%. >> it's been a double barrel of concern obviously about europe, which we see almost every day. comments from angela merkel reiterating again her opposition to any joint and several liability, if you will, in which germany would take on the liability of other countries, whether deposit insurance, euro bonds or whatever it might be, and concerns about global growth. >> and this is in the wake of no q.e. 3 from the fed. no sign from the intral fed that you're going to get any sort of relief. >> that's a great point, with crude down more than a dollar now. hampton pearson's been our

guy on the ground in washington watching for a health care decision. not going to happen today. give us some color outside the court. >> reporter: number one, we don't have an obamacare ruling today. we're still waiting to find out whether that's going to happen or wednesday or thursday. but another big headline case that people were waiting on was the arizona challenge to federal immigration laws. specifically each side gets something to cheer about out of the 5-4 decision here. the state of arizona, basically that portion that allows law enforcement to make checks, trying to check a person's immigration status on the ground or on everyday stop, if you will, that part for the moment has been upheld. on the flip side, more onerous checks of a person's employment status, as far as being legal or illegal, that part was struck down. what the court also says is, it is affirming part of the arizona law in part. it is striking down part of it in a lower part, sending it all back to the lower courts and

specifically saying, as far as, for instance, the police searches, that issue really can't be resolved unless and until the state courts in arizona have a chance to take a whack at that. but, carl, as far as the atmosphere here, we've had demonstrators, we've had protesters, a media army, if you like. it's also hot, that time of the year. but a few more days of waiting. the only market saernlt as far as the health care ruling is, we will have it this week. >> hampton pearson surviving the heat in capital. >> the judge is like, you're all waiting but we're all supreme court judges. it's a transparent, muscular kind of legal system, you would expect it to be a bit more regimented. >> but no wigs.

we've got that going for us. >> yeah, you want to talk about the wigs? >> interesting grouping in the arizona issue. so many 5-4 rulings with the conservatives on one side -- >> and with the 5-3 i wonder who recused. >> kagan did, i would assume, because she was a part of the administration -- i don't know. but that's what i would assume. let's talk big pharma. let's bring in two top analysts. katherine arnold and barbara ryan, great to have you both. both of you basically agreed that there would be a modest impact from any sort of health care decision. but, barbara, maybe you can walk us through. i think a lot of people out there would assume if you're going to require more people to have health insurance and be covered and therefore be treated, that there would be an

increase in use of pharmaceuticals. >> well, i think what has happened as a result of the act is that the industry has negotiated discounts for medicare and medicaid with the government and also pays a fee into the health care reform of about 2%. so i don't think the discounts would change with the government. i don't think there's much opportunity to do that. the fee might go away. and certainly they would hope to make it up in volume, so to speak, with induced demand as new members come into the system. but the market really has been skeptical about that and not priced that opportunity in. so that's, i think, the biggest reason why there's not that big an impact on the pharmaceutical sector specifically. >> let's talk about what has been a key driver because many of these stocks in this group are at or close to 52-week highs. that's because there's been a flight to safety in the stock market, a flight to yield, a lot of these stocks have great

yields here. katherine, at this point, it seems like one of the biggest risks to this group would be a sort of risk-on attitude toward the stock market where people would be willing to rotate out of these steady eddies and go into higher stocks. >> i can't disagree with that. health care reform is something we're waiting to come and go. the impact on the products specter has always been less than the other aspects of health care. while an overhang, not nearly as much of a driver and the defense has been there, we think the fundamentals are improving and pipelines are getting better. but obviously, a less risk-on trade. but yet there is something noteworthy that's happening on the fundamental side. >> what is happening on the fundamentals side? >> you're seeing a lot of the companies have products that are coming out with phase 3 data going for fda approval launching right now that are new ways to treat diseases.

whether we're talking about blod clotting drugs, or talking about arthritis drugs or about the hope for alzheimer's drugs, we're seeing new mechanisms. five years ago, there were others coming out. there's an uptick in the industry that's helping beyond the yield trade. >> and i want to get to your pick, barbara. abbott labs, bristol-myers and merck. is there a potential to increase the dividend? >> i would absolutely agree with catherine. i think we are seeing a fundamental improvement in the level of innovation from the industry. and that's really the singlemost important aspect of driving out multiples for the sector. the group has been attractive because the dividend yields are very strong, high relative to interest rates, they're well-capitalized by very visible cash flows. most of these companies have

active share purchase programs ongoing. but we also see the opportunity in all three of those companies for the multiples to expand as a result of an improving new product portfolio. >> catherine, your top picks in the space? >> on the value side, our top pick is merck. we also like allergen and for t forest. i think there's low expectations. we are moving towards thinking about the osteoporosis drug data coming out. they have a cholesterol program that's coming out that's novel. they have cancer and alzheimer's products coming out. those are drivers that are less obvious but will become more so over the next 12 months. >> thank you both for your time. we appreciate it. >> thank you.

thursday will be the last day for decision from the supreme court. that's now the official word. it looks like thursday could likely be the day. >> they could still slot more days in between that to reach judgments -- tuesday they were doing some tuesdays. stay with us. down 156 on the dow. more on the markets in a moment. ng. ♪ there'll be the usual presentations on research. and development. some new members of the team will be introduced. the chairman emeritus will distribute his usual wisdom. and you? well, you're the chief life officer. you just need the right professional to help you take charge. ♪ this is new york state. we built the first railway, the first trade route to the west, the greatest empires. then, some said, we lost our edge. well today, there's a new new york state.

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no decision on health care. no decision on health care. we have shifting back to the markets and the selloff we have

on our hands right now. waseef joins us. s&p down by 1.6% right now. what's your take on the markets at this point and putting money to work on these selloffs. >> well, the market is down largely on europe, a continuation of what we saw over the weekend. and the spanish thing continues to get worse and worse. in terms of the financing. and today they asked for the bailout lt so it really depends on what happened in the next plan that they have for the meeting with the finance ministers in the eurozone. and that's number 18 meeting that they're having. so the markets aren't taking any confidence on what they're planning on doing. that's why the markets are down today. >> at this point, do you see that there's been a disconnect between what's going on in corporate america in terms of the balance sheets and evaluations and what's going on

in europe? do you have any sort of confidence in your fundamental analysis where you say, it's time to step in because they're being taken down by european concerns which don't drive the fundamentals that we're seeing? >> you're absolutely correct. that's exactly what we're doing. we are focused on the fundamentals of companies and economies. and we look at everything that we invest in from that standpoint. and right now, quality companies are really looking attractive because they're being beaten down because of the macroeconomic situation that's going on. but these are the type of companies that continue to outpace some of the other competitors. and quality typically commands a premium in terms of valuations. but because of these selloffs, you get good, attractive pricing for these types of companies. so companies that have good, strong balance sheets that can grow their earnings on an organic basis and not necessarily rely on a whole lot of funding and have good, strong cash flows and really durable franchises -- that's not just in the u.s.

they are global. quality companies can be everywhere where you can find them. so because of that, investors who are longer term in nature and can see through this type of a crisis are finding some attractive pricing for those kind of companies. >> and yet at the end of last week, s&p had some research out where they looked at the coming earnings season. if you strip out the banks and if you strip out apple, the expectation is that the earnings will rise overall for the s&p by just 1%. that's not really a very encouraging environment, sis it if you have big economic blocs like europe also potentially slipping into recession, or parts of them? >> short term, there could be volatility to europe. but you're talking about an overall average. and i think if you strip away some of the lower quality companies that are pulling that average down, there are still some higher quality company that is may tend to do okay in terms of their earnings growth. and, yes, earnings may be under

pressure for the rest of the year. but when you factor in the longer-term growth and the attractive valuations, even know, that makes for really interesting investment opportunities for investors. >> wasif, we're going to wrap it there. thanks so much for your time. >> thank you. dow down 169 points. financials leading the way lower. we're going to track all the moves amid the selloff when we come back. "squawk on the street" is heading to the "squawk on the street" is heading to the windy city. carl quintanilla will be live from wrigley field with a show too big for one city. we'll catch up with jim skinner during his final week as mcdonald's ceo. all that and much more when we are in chicago. this thursday on "squawk on the street."

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george soros said george soros said overnight

the eurozone has three days to sort it out and if it does, the summit thursday and friday will be a fiasco and could prove fatal for the eurozone. the stock market down 169 points on the dow. what's the trade here? >> good morning, simon. what we're seeing is a risk-off trade. specifically in the equities we're seeing a selloff. gold is holding in strong despite the fact that we have a stronger dollar. the euro eu has to come up with a trick play if they're going to get the legs back under some of these peripheral banks in europe. >> let's say they don't. that's the indication because the french and the germans are so split. how do i position in the market here for that outcome and how bad could it be? or do we shrug it off and say, we knew about it on monday? >> you're seeing the flight-to-quality bid in the treasury market and that's where it's going.

a lot of money from banks in europe, a lot of it's coming over here for that one reason, what if. and right now, it's not a good scenario. i think you're going to continue to see riskless assets benefit especially here in the treasury market. >> what about corporate debt? >> corporate debt is great, you get a little bit better yield. but a lot of these mandates and some of these pension funds has to be u.s. debt related. i think right now, corporate debt is a good spot to be in. but for the big fish out there, the treasury market is where they're holding shop. >> thank you for your time. >> thanks, simon. >> thank you, sir. we've got a lot of interesting 52-week lows. tiffany, avon, juniper networks, a lot of the oil stocks, a lot of the coal stocks, on a day we're seeing the markets trade down by more than 1.5%, we are seeing notable lows on the session here. this is the lowest level for tiffany since october of 2010. a lot of multi-year lows out there as well. >> the question is where do you

buy growth in the market like this? a lot of the names that had done well -- a lot of the luxury good players, that was where we luxu players, that's where you should be, demographics in china telling us would drive us forward. come what may, we'd be fine. it's blowing up all over the place. apple, do you come back to a conversation about apple. >> a lot of stocks have been doing very well and still sit de los 52-week highs are high yielding stocks verizon, at&t, pharmaceutical stocks. those have been the growth play in this sort of very, very choppy market. >> early cycle stocks, transports trading worse overall market near recent lows, worries about growth. it's europe and then it's growth. it's not just china but india, europe, u.s. >> you sound slightly depressed today, david. >> i'm upbeat. it's the weather, really. that's what does it to me. >> jim o'neill from goldman

earlier on "squawk" talking about how europe is a very convenient excuse for any business that wants to be more cautious going into the third quarter. >> we've seen that throughout the year, in fact, the unwillingness of so many executives to make the big decisions whether it be hiring or opening plants. not to say they haven't to a certain extent. m and a, exacerbates worries about growth. as we move closer to election, end of the year and budget woes, you're just not going to see those key decisions made. >> can i just make one point about that. when they blame what's happening in europe, actually the way in which that impacts a lot of their products, you see that with p and gs through emerging markets. those bricks where you had growth before, because their currencies have been so badly affected with surging dollar, you're kind of erasing growth, you fundamental growth is not going to come into the earnings the way it would have done because of currency moves, which is jim o'neill's starting point. >> all right.

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welcome back welcome back to "squawk on

the street." cnbc market flash. qsft, a mysterious unnamed second bidder. will that unnamed second bidder reports on street and other places say is likely to be dell has been raised. in fact, a $27.50 a share offer now coming in, which is higher than the original offer by said mysterious bidder and higher than the offer made by the venture capital firm stock, though, above the raised offer. always interesting. back to you. >> thanks very much. a good process at quest software. the ceo part of that private equity bid for the company. and we believe it's dell. strange they haven't told us who it is. you don't see that often. tweet time, street continues for pixar division. animation studios latest offering "brave" was the biggest box office winner over the weekend taking in $66.7 million. "brave" becomes pixar's 13th consecutive movie to debut at number one, which brings us to this morning's squawk on the tweet. what would it take for pixar

movie to bomb at the box office. tweet us at cnbcsquawkst and we will air responses throughout the morning.

this is new york state. we built the first railway, the first trade route to the west, the greatest empires. then, some said, we lost our edge. well today, there's a new new york state. one that's working to attract businesses and create jobs. a place where innovation meets determination... and businesses lead the world. the new new york works for business. find out how it can work for yours at thenewny.com. [ laughter ] ♪ [ female announcer ] each one of us is our own boss. ♪ and no matter where you are in life, ask your financial professional how lincoln financial can help you take charge of your future. ♪

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health care. talking about "brave" the 13th consecutive pixar movie to debut at number one in theaters. we're asking you what would it take for a pixar movie to bomb at the box office? andy writes, make an animated version of "john carter." they will never live it down. james writes, anything with the word "mars" in the title. "mars needs moms" reference. finally, if it was distributed by the nasdaq. >> harsh. >> harsh. >> what's coming up tonight? >> lack of a health care decision gives us the opportunity which trades to put on ahead of thursday. also, our second half series starts with bill procida, real estate and where the best buys are in the second half in real estate. >> are you ready to do this again on thursday? >> yeah. >> standing by. >> look forward to that. in the meantime if you're just joining us this morning, here is what you missed early on.

>> welcome to hour three of "squawk on the street." here is what's happening so far. >> everyone in the country wants people to be individually response in. if you go around without insurance you're essentially saying i think it's fine to shove my bill onto someone else. that's unacceptable in america. >> in today's political atmosphere, i have quit trading all together. >> you think that should be a policy for everyone in washington. >> probably or a blind trust. >> hmos have moved to this model to embrace the law, percolating, if they are really ready if this law is up held. there's a lot of people positioned here to make a lot of money. there's a lot of people who need spain to go down, david. there's a lot of people who want yields to go to seven in italy because it's great trade. it's a great negative trade. it's the end of the quarter. >> financial capital of the world, opening bell.

>> we have an inhumane system here that is hurting millions of people in our country. you guys sit by and act like it's some parlor game and it's not. there are real lives at stake here. i see it every day. you probably saw it when you were a senator. >> we have learned that there will be no supreme court decision on health care released today. >> a few more days of waiting with the only market certainty we have as far as the health care ruling is it will happen this week. and santa claus may be enjoying some time at the beach. here at "squawk on the street," countdown to christmas has begun. >> good monday morning, welcome, third hour of "squawk on the street." dow down 147. we've seen worse today, down 160 and change, sapp down 20, nasdaq down 49. nasdaq having the best performance of the year but

awfully tough quarter. chesapeake big loser, concludeded with encana in areas rich in oil and gas. down. co constellation up, close to a group takeover. road map for this morning, a lot going on. markets in the midst of a sharp selloff. word from the floor of the nyse. carly fiorina joins us to talk about facebook, ipo and more. worries on spain, see how it shakes out when the european markets close in less than half an hour. we're six months away from christmas, you saw from santa skiing at the top of the show. retailers gearing up for that pivotal season. we're going to preview the tech gadgets you may be shopping for when the holidays arrive. all that and more coming up in the next hour.

first we'll start with the markets as wi sit down sharply. let's bring in joe from equity partners. always good to see you. good morning. >> good morning. >> is this europe talking or what? >> i would say maybe yes. we see italian and spanish bonds at the highs of the day. but really it's probably a little more concern that the only way we're going to get any, you know, action out of the fed is to have the market pull back. we had positive numbers up in housing at 10:00 a.m. the market said, forget this, we don't want it. seems like the bid size is going to withdraw and keep that market depressed hoping we can spur activity with the fed in august. >> last week obviously was a sign that's going to be tougher to come by. >> exactly. >> how much pivots around merkel saying anything that exhibits a blink. >> later this week, hopefully comes together and prompts some sort of action. i don't anticipate we'll get what everyone will suspect, capitulation at that appoint. really what you've got to do is

prepare that's not going to happen, prepare for the downside and be ready in case what comes out of europe is more of the same. we'll look at it, leaving the door open. much the same as we're hearing language in washington. >> levels to watch. as we sit at 1314. >> you're going to see that in 1312, 1314 is where we're looking at this morning. we're there now, hovering. break a psychological 1300, going to see 1280, 1250 is the bomb there that you really don't want to see. i would be surprised if we don't see buying in droves at that point because that's where people start to get back involved and say here is a good level even if we do a pullback, i'd like to be one-third in. >> i keep thinking back to short-term trading calls from last week. goldman one comes to mind for me. that was short-term, short the s&p to 1285 and memory may be lingering with some guys around the floor today. >> a little bit. for the first time goldman came out with something, looked like everything went with it. >> exactly. >> opposed to them being on the

other side. bad press rings true for them. i tend to think a lot of people in that, lack of clarity, back to where we are two years ago, last year. it's kind of reminiscent of last summer but i tend to think we'll get some resolution at some point, thursday that unclear issue of what's going on with the supreme court. are they going to go in favor of obama or against him and how is that going to play out and lead us into november. so there are a few macrocatalysts that really could push the market one way or the other. but i tend to think overall we need to see action for the markets moving north. >> we were bracing for a decision this morning. we didn't get it. the thinking was if, in fact, as positive the mandate rule unconstitutional that somehow is a spark for small business, maybe a harbinger of less onerous regulations, spark a reversal of today we're not going to get because of that. do you think that would happen if, in fact, it happens that

way. >> i'd like to say that but i don't think it's true. speaking to business owners and people more intelligent myself, they don't see the trend reversing quickly where all of a sudden struck down, great, cheap to go hire people. let me hire 10,000 employees. they still believe an business owners small and large recognize they are getting buy on lean operations. there's nothing on the shelves. they aren't carrying inventory. they are producing revenues without that many bodies. if they continue to do that and see leadership from the government pushing that direction, you start to see hiring increase. without that, you know, even new home sales, it's not coming in the droves yet that is indicative of a true recovery of the economy. we're faltering a little bit, we need that bid to fill in. >> as the journal pointed out today, gas prices are coming down but consumers in large part are pocketing whatever savings they are getting. >> sure. now they are borrowing from that in the budget to pay off something else. i don't think we're going to see the type of talk about stay

indicati staycations into august. not coming into the treasury. what we do need to see, that continues to stay low, bodes well for the election either way because both candidates can kindergartkind of push for it. obama will take a nice amount of credit, rightfully so, helped in that way. depending where you sit in the tri-state area it's not exactly cheap to fill up the car. >> try filling it up in california. joe, meridian equity. market flash back at hq. >> all right, guys. thanks very much. this is the developing story. i would say it's fluid. that is a good beverage pun. "the wall street journal" basically that anhaeuser push was going to buy a stake in grupo modelo. that moved constellation stock

up. it's up by 14%. however, both grupo modelo and anheuser busch coming out, not completely throwing water on the "wall street journal" story. what they are saying is they are exploring any options for a possible deal. it may or may not include a buyout of grupo modelo stake from constellation brands. any speculation is premature. could lose steam on this if a deal does not get done. >> brian, thank you so much. brian sullivan. let's go to chicago and check in with rick santelli, get the santelli exchange. good morning, rick. >> good morning and welcome back, carl quintanilla. status quo and rate of change. this is an important topic today. why important today? today it's really about china. how many people and it's only 11:05, 11:08 eastern, even though citi downgraded what they

believe gdp in china from 8.1 to 7.8. wow, 7.8, i would fight for 7.8. france will give up champagne copyright for 7.8. or how many times have you heard, our tax rate, the current tax rate, which we call bush tax cut rate, how many times you heard back to another administration this is wonderful. this really misses it. you know what we price in in our lives? status quo. status quo. 7.8 is priced in or 8.1 is priced in or whatever current tax you have is priced in. all that really makes is the rate of change. where was it, where is it going? in this case if it goes from 8.1, 7.8, spend it any way you want, who would love that, but in the end the global economy is dealing with less growth out of china. period, end of story. tax rate, doesn't matter whether it's here, here, here. whenever it is, lower or raise it status quo changes and

effects get repriced in. now talk about boom deals. this is important. big talk today. as a matter of fact i've never had more inbox articles, great articles, whether about bis, bank for international standards, george soros, greece, other than today yields moving up a bit. is it because they were too low? because balance sheets under duress in germany? what is it? what i can tell you, it isn't happening today. if you look at parties pushing the position, large hedge funds, large bond funds. i don't want to you read too much into this. to me it looks like a position, a strategic safety change. last but not least, sliding in greece. i'll tell you what, anybody who thinks we're going to see something big come out thursday and friday on this get together while greece is still yet to implement spending cuts, layoffs, wage and salary

decreases, tax collections, tax increases. see, the problem is they want another extension. this is a model. it's not a model fixture, a model why countries that are always asking for more and never going to deliver anything but less especially if you keep giving them checks. carl, back to you. >> the market agrees with you on that, rick. not a lot of hope that this week is going to result in a whole lot. we'll talk to you in a few moments. rick santelli in chicago. when we come back, carly fiorina talking google, rim, more. a selloff, 151 to the downside. back in a moment.

all right. batch bristol-myers. i'm brian sullivan, market flash, "squawk on the street." both pfeifer and bristol-myers down, a drug that could push back u.s. sales, not selling in the u.s. but in europe. the fda saying we want more information. ifieser and bmy both down on that news. back to you. >> thanks, brian. no supreme court ruling on health care as anticipated but the high court did uphold a key portion of arizona's controversial immigration law. want to bring in former ceo for hewlett-packard carly fiorina. >> good morning, good to be with

you. >> want to talk arizona. some parts upheld, other parts knocked down. people trying to sort out to what degree this is a defeat or win for the president. >> yes, exactly. first it points out why we need a long-term solution on immigration. secondly the headlines uphold a key provision, the other half of the headlines were supreme court knocks down key provision. both sides are using it to try and continue to forward the political conversation. my fear is that's what we're going to get on health care. in other words, the supreme court may strike down a key provision, the individual mandate, but that there will be a lack of clarity about where we go next, so the political rhetoric will heat up and there will be no certainty other than we need to go back and relook at health care reform all over again, as we do immigration. >> in the case of arizona, parts of it can go forward but the state is obviously going to have to really watch its step, tighten its language.

i assume you think that model also will translate to health care. >> yes. in essence what i think the supreme court did in immigration was uphold the state's police powers and say, yes, the federal government is the responsible body on immigration policy but the state has a right to enforce that policy and use their police power to do so by asking for papers. so i think that is an interesting analogy moving forward to the health care decision that's to come out i guess now on thursday. if i had to bet, it's a bad thing to bet on, but if i had to bet, i would say they will strike down the individual mandate. they will uphold state's rights on some of these issues. police power will be overwhelming the argument on the commercial clause. then everyone is going to throw that ball back up in the air and say, okay, elections have consequences, now we need to wait for november. >> to whatti degree would a rulg

like that unlock any kind of willingness to invest among small business. would it have an impact on hiring? would it have an impact on capital spending? >> i don't think so. i don't think there's anything the supreme court can say on thursday, even if they struck down the entire law or upheld the entire law. i don't think it's going to have any impact, because the supreme court's decision doesn't change the political process. what will happen is i think regardless of what the supreme court decides is both political parties will use that decision to focus people on the november election. the republicans will say if it struck down or if it's upheld, we need to repeal it. elections have consequences. the democrats will say hurray for our side or we have more work to do. if you're a small business owner, that gives you no certainty. all it says is elections have consequences, an election is

coming up, let's wait and see what happens. >> some tech stories around, arrogance and overconfidence cost a tough ipo for facebook, didn't count on so many canceled orders. seems like the mea culpa has come in dribs and drabs. >> the tidbit about canceled orders was interesting and not explained. secondly it kind of felt like he was throwing the technology staff under the bus a little bit, which is unfortunate. third, i think probably bob himself exhibited some overconfidence being in california instead of at his headquarters and getting on an airplane and being out of touch for several hours. those were clearly big mistakes in retrospect. >> on rim, bunch of analysts called today, split decision, among them in large part concern about the blackberry 10. people love blackberries because of the keyboard. this one might be a rick in the eyes of some.

i saw a price target of seven out of morgan stanley. would you be concerned if you held this stock? >> i would be. what worries me, and i am a loyal blackberry user, i love the blackberry. what this feels like to me or starting to feel like is a company so far behind the innovation curve there's no time to catch up. that's what happened to kodak. this feels like a company where they are so far behind that almost no matter what they do now they are not going to be able to grow their business at the rate they need to. so yes, i would be concerned. >> carly, always good to get your insight. see you next time. >> see, you carl. thanks for having me. >> carly fiorina. the man, the myth, the legend, gary kaminsky standing by in london unshaven, waiting for the news of the day. we'll be with him in a few minutes to talk about what he's

been through. the close in europe, ten minutes and change to go. back after the break. schools flourish and students blossom. that's why programs like... ...the mickelson exxonmobil teachers academy... ...and astronaut sally ride's science academy are helping our educators improve student success in math and science. let's shoot for the stars. let's invest in our teachers and inspire our students. let's solve this.

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gary gary kaminsky, capital markets editor, world traveler is back on the air this time from london. gary, if gillette were still a stock i'd be shorting it looking at you. how have you been? where have you been? >> carl, i really feel like i traveled halfway around the world and i have since you saw you at the new york stock exchange. as you know we went to tanzania, kilimanjaro, two of my sons, my father, father-in-law. we had a very amazing three generational time but unfortunately not able to make the summit this time. as i had known from my previous experience in 2008 going to kilimanjaro, sometimes you just,

as they say in swahili, sometimes the mountain doesn't accept you. one of the kids had a serious altitude issue. we did have an amazing time. just missed the summit this time but we'll be back. >> no doubt about that, gary. in the meantime you spent quite a bit of time in london and you're getting a view about the european economy and mood there that is hard to put into words. what are you seeing? >> absolutely, carl. when i manage money, i used to always say, you know, when you rely on the research of others you rely on what you know. what you don't know is what hurt you. i have to say spending time over the netherlands, last in the uk, having the ability to once again reconnect with former colleagues and such, this is a very, very serious slowdown. i heard talking about china, numbers out of china, many people in the manufacturing business don't believe those numbers were real in the first place. you've got a dramatic slowdown across the continent. what i will tell you, a couple of themes i've come away with

the last couple of days. the first the fact the euro will not survive. there will not be a euro five years from today as it exists what we see now. how it's going to ultimately unfold, i wish i could tell you. the euro currency is a stand alone currency is not going to survive. in line with that, i can tell you this idea about a euro bond, germany supporting a euro bond, another myth that's not going to happen. you will not see euro bond. as i said speaking to a number of professionals in financial institutions world in the netherlands, you're not going to get the type of support you need for euro bonds. can you throw that out as well, which leads me to a third conclusion, something i predicted earlier in the year and i'll stand by that. u.s. ten-year at 1% by the end of the year and possibly below it. excess cash reserves the european financials institutions continue to generate are going into one thing and one thing only, u.s. ten-year treasury. they don't care what the yield is. they want to put the money there

and they want it to be safe and liquid when they want it. >> you are repeating your car for sub1% ten-year by year end. >> i said 1% at the beginning of the year as much as i said 2% the year before. unless you see some dramatic change, which i don't think will happen, you will continue to see excess reserves go into the u.s. ten-year and go in there no matter what the yield is. >> before we let you go, gary. some might say, looks you're on the ground. how do you make a 40,000 foot decision like the euro is not going to last five years just being where you are. that's a lot of variables involved in that call. >> again, carl, when i manage money, i try to speak to people smarter than me, people that have a sense in terms of politics and financial implications. again, going from sources. i do want to say one thing. i know we've got to go. on a positive note, out and show you a picture i took for the crew back there. take a look at this picture i snapped at the apple store on

regions street near picadilly circus. these is an amazing thing. these are people standing in line on a cold, rainy morning, waiting in line to get in an apple store. in amsterdam. that's something that's unbelievable. >> gary, we'll talk to you in the second half hour, get the european close after the break. don't go away. the first railway, the first trade route to the west, the greatest empires. then, some said, we lost our edge. well today, there's a new new york state. one that's working to attract businesses and create jobs. a place where innovation meets determination... and businesses lead the world. the new new york works for business. find out how it can work for yours at thenewny.com.

a few a few seconds to the

european close as we begin a week of waiting for eu summit thursday and friday. simon is here. >> many a figure of speech, a rough close for europe for the second consecutive day. >> european markets closing now. >> across the screen, europe down heiferly, heavily, italy heavily. not a good start for the week. importantly today angela merkel has come out and warned the summit thursday and friday should not fixate, she says, on the question of shared liability both politically and economically. you see her saying these words, politically and economically it is wrong to focus on, for example, she says europe bonds or bank deposit guarantees. that is important because it puts her squarely at odds with what the french president said to her on friday when he said, look, if you want us to give up sovereignty so you can control

our national budgets, we need solidarity now. that solidarity in the french view is precisely about shared liability. let me show you as we count you down what the timetable is to that summit thursday and friday. bear in mind george, who knows what position has he in the market, he basically said you have three days to sort the eurozone out or you could have a fiasco of a summit that could be failing down the line. countdown to 27 heads of state today, frempl president meeting with ecb president because they are working on a plan on euro wide bank guarantees which presumably merkel will say no to thursday and friday. he is going to meet her wednesday. extra summit has been put in for those two before you get all 27 heads of state meeting on thursday and then on the friday as you can see. now, today because of that apparent deadlock on the horizon, you've had very broad selling in europe today for a third straight session. let me show you the major indexes and can you see how they

have trekked lower into negative territory. added spain, down 3%. you officially have the spanish today requesting that money for their bank. we don't know precisely, $100 billion euros or whatever. some banks had heavy losses and other spanish stocks, big spanish stocks also in negative territory. let me show you the yields, let me show you where they are. thank you. i have everything out of order here. the french banks. i want to show you the french banks. unusual where we traded for french banks, communication for the things they have. let's come back to the yield on the spanish ten-year. what i want to demonstrate there is how we've been falling recently as i told you many days and we've begun to rise there. look at those big spanish stocks in negative territory, big spanish banks, down 6.5, 5.5 down as well. the italian yield now moving in

the direction we do not want it to do. if the summit is not seen in italy as a political success, further lose electoral support to do what we need him to do locally. bond yields rising out of the end of last week into this week. italian bank's negative territory, one of the oldest is asking for state support to raise a billion euros, bmps, sienna. you see 7.5, 8% losses there on italian banks. and let's not forget the greeks. let's have a look at greek moves today. look at these losses here, 13, 14%. neither the greek finance minister nor greek prime minister due to ill health will be able to attend that summit on thursday and friday. they need, in their view, to renegotiate their deal. that is not good if you're looking for stability in greece, politicians turn up even the troik, a, supposed to decide

these matters, ecb, imf delayed arriving due to ill health. now is not a good time to be ill and out of circulation if you're the prime minister of greece or finance minister having just won that election. >> between prime ministers, heads of google, it's a bad week for people who are sick new york city question about it. thanks. courtney reagan watching what else is moving with dow down 159. >> carl, looks like we're in a bit an anticipate ory market. market looking ahead with traders and what happens the end of the meeting out of that session and also what's going to happen with obama care, when that ruling comes. we know it's not coming today. vicks up 6.2%, up 1% in the session, fourth largest intraday jump this year. we saw some health care stocks move higher ahead of the 10:00 higher when we thought potentially we could get a decision. then when we knew we wouldn't get a decision on obama care we saw stocks pull back.

we approach the end of the quarter, we're seeing interesting trends here. last quarter's winners alp appear to be this quarter's losers. financials up 21% last quarter. this quarter down 11, tech down 21%, down 9.5. consumer discretionary following that same trend. today all major sectors lower, financials leading lower. crude oil lower today but not quite at the levels we saw last week. quarter to date energy stocks down 13%. if you take a look at the oil services sector, we're just barely off a 52-week low here, down 21% quarter to date. we're seeing a number of energy names hit new lows, multi-year lows today, including alpha natural resources, lowest levels on record going back to 2005. lowest since 2008, a number of others. but financials, too. i know the world is watching spanish banks, watching what happens with financials in europe. here, too, financials under significant pressure, citi group, morgan stanley, bank of

america, $8 a share. that's the key level we often watch. last but not least, take a look at home builders, a little bit of an uptick on new home sales. we saw promise there. then again we began to pull off just a little bit. carl, back to you. >> thanks so much. courtney reagan, rick santelli in chicago with a favorite combination, that is, of course, ira harris. >> smart guy back from japan all rested. before i get into the meat of what we're going to talk about, i want to hit one area. simon and many newscasters continually say looking at rates, moving the wrong way in italy, moving the wrong way in greece, moving the wrong way everywhere because they are moving up. i'm saying thank god the markets have enough of a pulse after everyone tries to change the outcome we can still when rates move up in italy and spain, market saying programs,

solutions aren't viable. mark your watches, three days. what do you think about what's going on in europe? >> europe is what europe is. every day we week up. every day they are chasing. rather than doing anything significant they are chasing the market, which i find interesting. if you go to the europeans, they don't really have respect for the markets. we'll go back to the german comments from years ago, going back to oscar la fontaine talking about locust, financial locust. they really don't respect markets yet they are reacting to markets. because they are reacting, majorly flawed. combine that with u.s. policy, bis called out every central bank in the world. >> every central bank. >> your policies are flawed because your models are flawed. >> this is a bank for international standards. we're not talking about a third party standard here. >> talking about bis, staffed, a great staff, doing great

research, staffed out of that m.i.t. cadre, a lot of these same people. they are basically calling everybody out and saying, hey, step back. take a look here. you really are not getting traction for what you're doing. that should be cause for concern for financial markets. >> they don't see the value in doing something not to appear idle? that's a major program solution. look busy, it works every time. okay. now let's hit another thing. let's go to the quick. let's really go to the dark side here. the real issue we're all talking about here, germany is going to stand behind everything during times when the market is giving them time. the real question, when they have their fall of '08 moment like ben bernanke had with mr. paulson, are they, when the markets reach some turmoil down the road are he going to cave on logic, principle, during a time of turmoil. that's the big question. >> if you read everybody, there was a great piece in the financial times last week, if you read everybody they expect

grpz to collapse. i'm an old trained social scientist. we used to have a joke we talked about. let's assume there's a can opener. you know, if you have to open a can, the economists go, let's assume. well, everybody is assuming that germany is going to make the right decision. but is the right decision going to sell politically within germany. that's going to be what -- >> didn't sell here but did it nonetheless. didn't sell here. how many people you run into on the street that say, gee, i love bailouts. >> you know what, is still german citizens that will elect angela merkel. >> less than three days now before george's time runs out. will he be right? no. back to you. >> guys, thanks so much. we're going to kick off where you left off talk about risk off trade on obviously as treasuries rise and investors seek safe havens.

as they are saying, warning risk. john joins us this morning. good to see you. what is he missing? >> we have a crisis going on right now in europe. things that would happen a year, two, three years down the road aren't relevant immediately. more importantly the whole idea of a more centralized european union doesn't seem to be working. politics is a local concept. the local people in greece, the local people in spain and even the local people in germany are not enthusiastic about expanding the powers of the european union. >> you say the framework held together by rubber bands, bailing wire, paper clips and millions of intergovernment liability could at some point unravel. what potentially makes it unravel? >> an old saying john maynard

keynes made it famous. if you owe the bank $100 you have a problem. if you owe the bank a million dollars, the bank has a problem. now we're talking in terms of billions and trillions. to some extent germany is the bank and they do have a problem. as these periphery countries exit, germany will be left holding the bag. these liabilities will not be worth what they should be. germany has to deal with that scenario. they are making sure they have the collateral and dry gunpowder so when that happens germany doesn't get as devastated as the periphery does. >> there is a school of thought shorts turn attention to germany. once they feel the fire in their own living room, their rhetoric would ostensibly change. do you think that's a possibility? >> the question is more money after bad. greece asking for $15 billion,

another year before they implement austerity programs. the reality, as i understand it, greece government employment has been increasing over the past year. they have not been implementing austerity plan at all. so we don't really know what would happen to greece. in any case, i don't think germany as the lender could be that happy about that kind of implementation. >> how much runway do you think is left on the u.s. ten-year in terms of yields? we had a discussion in the last half hour. one of our friends gary kaminsky says there's so much excess cash among u.s. corporations, going to go into the ten-year yields potentially below 1% sometime in 2012. where do you see it headed. >> the u.s. is not in great financial shape, great fiscal shape. cyclically the fiscal cliff will cause a charlotte slowdown in the u.s. making debt metrics worse. at the end of the day, u.s. dollar and u.s. ten-year, so to speak, is the fight to quality

assets. very likely, i would think 135, 10 or 20 daze points lower than previous lows in the cards. >> interesting. the targets keep getting lower and lower. i remember when the discussion was about 18, look where we are now. >> want to send it back to hq, get another market flash from brian sullivan. >> quick bioflash. moment, a and teva in different directions. here is why. a drug, saying pharmaceutical patents may infringed on teva's. do down. >> straight ahead, the market selloff. dow has not budged as down 165. we'll talk to art cashin how we might be positioning our portfolios after a short break. ok! who gets occasional constipation,

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the etf market tracker is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea. introducing gold choice. the freedom you can only get from hertz to keep the car you reserved or simply choose another. and it's free. ya know, for whoever you are that day. it's just another way you'll be traveling at the speed of hertz. welcome back. coming up in a few on the halftime report we're kicking off special series on winning second half strategies. john rut linlg joins us with his position on china. a fund manager reveals what stocks he's buying before thursday's supreme court decision. one analyst says tomorrow is make it or break it for zynga.

>> art cashin joins us. good morning, art. >> good morning. >> something about mondays, our produce says dow down eight of the last nine, four of those triple digit. is that because there's always some summit coming up people have very little hope for? >> this week it is. robert has a sharp eye. by the way, historically monday is the worst day of the week. friday is usually the best with a little short covering going in. we had disappointment coming out of the fed last week. we had disappointment out of the mini summit in europe. how are we going to get 27 countries to agree to something when we couldn't get four countries to agree to anything? this looks like an uphill fight. you can see this morning we have reasonably upbeat data on housing at 10:00. the market tried to smile but couldn't get away from europe. we're stuck in that rut. >> how much of a spring-loaded in a supreme court decision that does turn away some elements of the law. anything?

>> yeah, i think there's actually a group of people who think that the entire law was struck down it might give the market and economy a boost. remember, everybody has been talking about the great doubts, the uncertainties people have. that's one of them. i don't buy that. i think there's so much partisan ship around this whatever the supreme court says the other side is coming back one more time. it is going to be tough. >> some have taken some solace in the fact although the vicx i up, not continue to go up today, some stability at higher levels. >> no, i'm a little away from the vix. in fact, i was taken over the weekend by a line in the financial times. somebody said with talk of bazookas, the best the fed is able to do is use an item with ben bernanke's initials, bb, stuck with a bb gun instead of

bazooka. >> where do you think we are in the saga of fall in commodity prices. >> some think it may be over. i'm not sure i'm ready to go there. it's pretty clear with all of these things going down, it's about a global slowdown. greater evidence there is -- if it was just oil, you might think it was the threat of margins that began it. you can say it was government pressure, but it's not just oil. it's copper. it's some of the grains even, although they are hanging better. >> citigroup today downgrading or cutting their forecast for china, gdp to 7.8% for the year. people talking about the ten-year having more life. i wonder if you think there's more. is that dog going to hunt some more? >> it's a possibility. there are two things here. number one, the flight to safety does continue. that's a good and bad sign. it's nice to think about ten-year going lower. if there is that much of a rush,

it can be a rush into the dollar. in today's dollar averse markets with the dollar rallies, almost everything else goes down. >> see where we go this afternoon, art, thanks so much. art cashin. when we come back, more on the potential deal between anheuser busch and grupo modelo. there's a look at the stocks today. back after a quick break. strea, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor, right at your fingertips. [ rodger ] at scottrade, seven dollar trades are just the start. try our easy-to-use scottrader streaming quotes. it's another reason more investors are saying... [ all ] i'm with scottrade.

as grupo modelo expands talks, this wouldn't be the

first time. more on this story about beer kaley. >> familiar territory for modelo, anheuser busch and newly combined company. let's not forget in the summer of 2008, anheuser busch and modelo had a completely negotiated deal for that 50% stake to be bought out by anheuser busch for $10 million. that not different than the price at present of $12 billion or slightly higher. after the inbound deal anhaeuser chose instead to sell that deal a poison pill, thwarted the takeover from happening. they made a couple of forays at modelo. number one, too much leverage from anheuser busch deal itself. number two, they couldn't find a place for modelo chairman and ceo fernandez gonzalez. that could be a big sticking point in this deal. when anhaeuser had that deal in place, it would have have made him coo of anheuser busch with

potential to have him promoted to ceo. the rest is history now they own anheuser busch. if at the can find a role for executive member they could get this done. >> interesting to see activity around one of the growth markets in beverage. don't forget to tweet us today. disney pixar "brave" was the biggest box office winner of the weekend. took in $66.6 million. believe it or not pixar's 13th consecutive movie to debut at number one. we're asking you, what would it take for a pixar movie to bomb at the box office, our twitter handle at cnbcsquawkst and sweet get your responses after the break. and kept turning the page, this is the next chapter for the rx and lexus. this is the pursuit of perfection.

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and businesses lead the world. the new new york works for business. find out how it can work for yours at thenewny.com. squawk squawk on the tweet for this monday morning, disney's "brave," the 13th consecutive pixar movie to debut number one over the weekend. we're asking what it would take for a pixar movie to bomb at the box office. a cartoon animal running the federal reserve. for a disney pixar to fail they would have to do advertising on a rimm platform. it would bomb if greece provided

financing advice. let's get a takeaway from rick santelli. rick, i know s&p now flirting with negative territory for june. you're looking at some benchmark so far this year. >> absolutely. not only our benchmark, if you look at the dow up a little over two. if you look at the s&p a little over four. if you look at the nasdaq about 9%. i like to look at the nikkei but more specifically dax, they tell us the same thing. both are slipping into negative territory year-to-date. i think this is very important. we already know france, spain, the other stock markets quote, unquote, better economies in europe already in negative territory. i guess my final thought is we've had a lot of guests very smart. i don't disagree. hard to short u.s. equities. there has to be somewhere the liquidity goes. but should any of these dividends be cut with pressuring down of rates or general slowing of the global economy, that will definitely show up in net change

figures of safe harbors meaning u.s. >> as you're speaking, rick, some headlines crossing the greek finance minister, according to reuters said to be resigning. that's according to the greek prime minister's office. cypress applying for a bailout according to a government statement. of course we have spanish news. >> cypress just downgraded into junk, so that's right. i'll tell you, carl, it's tough to find anything good in any of the headlines. friday we expect things will get better. friday's markets are up as art cashin were talking about. monday is the dose of reality today, unfortunately. >> yeah, i think another broad point is these decisions, whatever decisions are made at the summit are not happening in a realm of stability. they are happening as the pain continues to bleed off the wall. >> see, that's the problem. the problem is, and ira and i were talking about this. if you wait until we get to crisis mode, those decisions are not