totally online. people want to see it, feel it, touch it to some degree. and then maybe buy it online. >> i would agree with that. alan, thank you very much for joining us. >> great to see you. >> brian, thank you. we'll see you tomorrow. >> join us tomorrow. right now it's time for "squawk on the street". good suze motuesday morning welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber. day one of a fed meeting. political primaries, retail sales. valeant, apple and more. futures are weak at the moment. europe and asia overnight in the red. the bank of japan leaves rates unchanged. retail sales okay, but the revisions are the worst in two years stateside. the selloff in crude continues. the road map begins with

fed-ticipation. looking ahead to tomorrow and what people can expect. >> valeant shares are down big this morning after disappointing results. >> and it's mega tuesday with five major primaries taking place across the country. we'll go live to one of the most important states hitting the polls today. first up, retail sales down 0.1 last month, in line with expectations, january sales revised downward from 0.2 to 0.4 down. producer price is down 0.2 in february. unchanged if you strip out food and energy. the data coming as fed policymakers are set to begin their two-day meeting today with the latest policy statement due tomorrow afternoon. that will be followed by janet yellen's news conference. a big question is whether or not their statement reflects some firming of inflation. ppi today relatively stable. >> i think things are tame. obviously james bullard was talking about oil going to 20,

how he might have to revise his view. it went to 40 and has come back. the thing that's devastating is the retail sales revision. if you go back to that terrible moment, the fed '10/'11 period what helped turn around people to think we were not going into a credit crunch and not going into recession, strong retail sales. then literally just took that away. so, i'm not saying we'll go back to a credit crunch. the faux credit crunch, as i was calling it. that retail sales number made us feel so much more confident. i look at this number, the only thing i see is home depot seemed to be doing well. i'm a little just flummoxed. geez, a number comes out that makes us feel great, then that number is taken away. >> yeah. there was also an employment number for february that made us feel good, too. >> it's just -- yes. that's true. i think we're trying to gauge the consumer at all times. the consumer is -- there's a

disconnect between employment and the consumer. i know a lot of people say the consumer, they're focused on spending on their house. you're missing that that's all they're spending on. i took great heart when we got that retail sales number last time. now i feel like, wait a second what was i taking great heart in? it was wrong. >> they are taking their savings from gasoline and saving it. is that a bad thing? >> there's a little outfit -- i know some things you don't want to get do antidotal, travel centers of america was fuel and convenience store. there's no pick up in driving. gasoline is coming down. summer driving season is supposed to happen. no pickup. more importantly, the money is being spent slightly at convenient stores. save a little money, buy a hershey bar. >> won't move the needle.

>> you can go to general. >> walmart closed their express stores. the stock moved to 67. >> i agree. i know you took comfort from those numbers as they originally came out. >> i did. >> it's not as though we haven't been sitting here and talking about retail being a conundrum for a year now at least. it's not as though there's not been strength across the board. there's been pockets. generally speaking it's not a great picture for retail in this country as a result of a lot of different things, including seminal changes in the way people go about buying things. >> we did get a great number from hd supply. that does matter. if it's home and construction, i'm still heartened. if it's accessories, handbags, vera bradley, coach. kors doing much better. this morning dsw doing better.

home spend, home depot, big bump this morning from opco. it does make sense. if you're spending -- it's spring planting season. don't laugh, it does matter. bri brigs & stratton, good numbers on tools. mike jackson, he's become too much of a downer. >> what was the downgrade on a.m. the other day? you remember that. >> mike jackson is like, look, i remember speaking with mark fields. he said suvs are still selling well. made me feel like suvs are svus. >> yeah. you see morgan stanley this morning? 30% risk of global recession. >> those guys have go on zoloft,

xanax. >> the morgan stanley are so down. maybe there's new things for depression at j & j. they're off the reservation in terms of how negative they are. >> the apple analyst came out with something positive. >> he didn't get the memo, to be down beat. >> she, i think. >> katie. >> yeah. >> okay. i just look at the firm. march iphone demand tracking ahead. iphone -- did you see the number of home -- the home theater sales at best buy? >> no, i didn't. home theater sales are something you do when you really believe in your home going up in value. people are spending on their home. the home goods number was so strong within tjx. i do believe there is spend. the spend is coming out of everything else. jcpenney had a good number. that was off of macy's. there a lot of it was sephora, perfume doing well. the spend pattern is off the

wall. i don't really get it. if mike jackson is right and autos slow, i was coming on like maybe we were not going to see a peek. i see auto car loans are good. that would be bad. >> yeah. >> you wouldn't want to tighten in a situation where auto sales have peak. >> right. >> not a great time to tighten. >> we'll get to some other calls like whirl popool and tiffany. it is a big day in the race for the white house. five states holding primaries including, as you know, florida and ohio, where it's winner take all when it comes to delegates on the gop side. we go to the buckeye state with the latest. man, will ohio get some attention tonight. hey, scott. >> it always does, carl in a presidential year. none more so than this year. turnout has been brisk at this precinct outside of columbus. polls opened about 2 1/2 hours ago. they've been lined up since then and still waiting quite awhile

to vote in this day and age a lot of people cast their vote. these are the early voting totals in ohio. as of the cutoff yesterday afternoon, 187,000 democratic votes cast. about 223,000 republican votes cast. that's down from the 2008 total, but the early voting period is shorter than it was eight years ago. so we'll see. but regardless, the stakes are huge here, particularly on the republican side for those in the republican party trying to cut off the momentum of donald trump. kasich, the governor of ohio, toured the state yesterday with the 2012 nominee, mitt romney. trump is not conceding this state. yesterday he shot back at kasich. >> go home, go to sleep. get a good rest go out tomorrow, you have to beat kasich. he's not going to be a great president. he's not going to be strong.

>> also an important day on the democratic side. hillary clinton has been up in the polls going into primary day. but she was up in the polls last week going into michigan. bernie sanders hoping for another upset in the industrial midwest. carl? >> scott cohn in ohio, we'll watch that closely. see what kasich does and what florida turns out. >> i've been looking at commonalties among all the candidates. it's defense spend. defense spend. going to be up big. i don't know where they'll get the money. but -- >> up big from the 580 billion we're already spending? >> every single one of these candidates. democrat and republican, except for sanders. >> that's not even including the segregated money for the wars. >> yes. just something to watch, ratheon downgrade. i think defense stocks -- when you try to look at the 1980 race to go back to reagan, the big

victory there. the 600-fleet ship. i was looking at commonalties because i don't want to say, okay, trump -- trump has been taking on the drug companies. where is this $300 billion medicare savings? they don't even spend that much on it. defense is something to watch. you will hear more and more about that, i think. looking for something that is not binary. defense is going to be a big thing in the fall. >> 54% of all federal discrec discretionary spending in 2015. >> it's not me spending it, it's him. >> when we had talk about everything else, the spending on defense is more than half of discretionary spending. >> we see syria, russia pulls out, we think there may be a deal in europe. merkel is in trouble, not in

trouble. so much in flux. >> rio, brazil. >> everything is in flux. >> turkey. a lot to watch. >> you know there's like a hydro shortage in brazil? that's where the lng is going from cheniere? i thought they were supposed to go to europe and korea? there's a shortage of electricity in brazil. >> not as bad as venezuela. >> venezuela is a failed state. >> that's a scary thing to say. >> failed state. we don't even know what they're pumping down there. we lost figures. a lot of people feel the firm up in oil was because venezuela is going off the grid. this is a big country. you ever see the numbers for these companies? >> makes a lot of sense. >> clorox is up big because they got rid of venezuela. the companies don't even expect to -- they're selling things for

a fraction of what they're worth. >> it's very sad what's happened to the country of venezuela. >> i've been begging these countries when they come on "mad money," please get out of venezuela. only donald knause had the guts to pull out of venezuela. everybody else said it will come back? come back? it's like a narco state. rough morning for valeant as you probably know. the stock down more than 40% this year alone. we'll get the latest. also virgin group founder sir richard brandson and david kush. another look at the premarket. beware the ides of march. more "squawk on the street" from post nine in a minute.

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shares of valeant are down sharply in the premarket. the drugmaker is cutting current and full-year guidance amid weaker demand for gastrointestinal products. valeant also missed fourth

quarter operating earnings. the company has yet to file its 10k, which has some people concerned in the bond market because there are various provisions in terms of avoiding an acceleration or default. that seems highly unlikely if they, in fact, are unable to file their 10k by april 30th. they still would probably get some -- or give something to the banks and monday holders i stead of facing any kind of default. that said the bonds are trading 82 on the 25 maturity bonds. overall, not a pretty picture. mike pearson, the ceo who returned after a significant medical leave has been on the call this morning. the stock, as you see, looking like it may trade below 56 bucks a share on this guidance or on this lack of meeting anywhere what had been expectations for guidance. fiscal 16, now seeing ebita between 5.6 and 5.8 billion.

investors were expecting more than that. eps 9.50 to 10.50 per share for the full year. that gives you a sense of the multiple we're talking about here. well off what people were looking for. at least well over $11 a share. first quarter has clear disruptions of business. people talk about de-stocking in dermatological products. here's what pearson had to say if they don't get things together and what will happen in terms of the stock price. >> if the stock police does not recover, i think that will be as much of not delivering the cash flows we're promising and/or exceeding the cash flows. and then the company should think about other moves it can make. we are here to serve shareholders. i know the board is committed to that. i know management is committed to it.

but we do think we have a plan that will generate strong cash flows, allow to us reduce debt, and we can demonstrate real growth. >> okay. what do you think, mr. cramer? >> strong cash flows. i can't even figure out what the cash flows are. i remember when andrew left from citron, when the stock was 150. came out and said is this the ne next enron. used a $50 price target, and people said what's that? bingo. >> the relationship with wa walgreens, not well explained. even their tax rate is going up. one of the great business models of valeant was having an

extraordinarily tax rate, rolling up many companies, constant endless acquisition stream. benefitting from that tax rate, raising prices of drugs it acquired and keeping r & d spending low. the tax rate from 10% to 15% from 5%. >> targeting divestiture? who will buy the stuff. it's not just gastro. they're getting bausch and laumb. >> people look at the numbers from ophthalmology and don't see it. >> i know. >> there may be more questions on the call. >> i hear accuvue coming on. i have to believe -- i kind of put more faith in j & j than i do in valeant. >> jim, the stock is 55. >> but what's the cash flow? >> there's going to be lots of hedge funds who lost lots of money here. i will be hearing from them.

maybe now is the time. maybe they finally kitchen sinked everything. it will be okay from here. they added three board members, ackman screaming and yelling. jeff upman saying he has faith. >> i have not seen anything like valeant. the smartest people in the world were in valeant. >> they will tell you they were the smartest people in the world. i don't know they are. >> give me something that compares to this in terms of what people loved? how about ackman? what is he thinking? >> i don't know. fraden was his guy. what is he thinking? >> there's no reason for fraden to lend his name to it. he's a distinguished guy. i'm a thinking this is a rolldo? what would you call it. >> on the tax rate, i want to

take that back. a lot of it is reporting, the actual rate is not going up. >> how can we give a number on the earnings per share guidance? use a wide range. 5 to 10? 0 to 12? >> i know. >> i don't know. this is very hard -- i'm putting this in the hard to analyze company. if they make an aggressive move in oil and gas right now, it would be easier for my to figure out what they're going to earn. i'm not kidding. i don't know it's incom incomprehensib incomprehensible. >> hillary clinton, here, take this. when we come back, we'll get cramer's mad dash a look at the opening dell. futures erode a touch more. more "squawk on the street" in a minute.

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. still the largest market cap company on the planet. apple is our mad dash. >> at 93 they gave up. the universe gave up. this apple note, but katie ubberty, a woman -- >> yes. >> there. march quarter iphone demand tracking ahead of models? every single day i hear it's tracking behind. they're talking about far ahead of 49 million. 56.5 million. the china -- china could be better than we think! maybe correlates more with the stock market. this is a bold call. don't forget, march 21st, strut the stuff. apple services revenue could be

a major focus. this one, numbers have to be revised higher. >> service revenue keeps increasing at double digit rates. >> yes. when people say, listen, we don't have anything that's continual. we are all just one product. do you look at our apple bill or you just say that's fine? >> i look at my amex and see the kids have done this or that. another photo album. >> cable bills circa 1991. okay. that's fine. i write a bigger check -- i need an apple family plan. you know? like a sprint plan, you know what i mean? >> all-you-can-eat. >> yeah. like a smorgasbord. i'm paying apple a huge amount of money without realizing it. dad, should i pay on american express or -- >> they're a whole other story. they're getting into their 20s.

>> they cut the cord, but we pay apple. we pay netflix and apple. this is the new world, david. watch qorvo, skyworks, broadcom, formerly avago. that's why futures may be down, but watch tech. this is the call! okay! >> okay. >> this and children's place and hd supply, but i'm focused more on this. >> got. >> children's place, we'll get to that. >> opening bell less than four minutes away. >> really? >> collect yourself. >> skyworks. >> skyworks. >> got it.

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you're watching "squawk on the street." busy day. whether it's the central banks, political primaries, a handful of important states. then the retail sales number, which included the worst revisions in about two years.

as jim pointed out building materials, virtually the only thing that kept it from being any worse. >> do not sell home depot off this number. all good. >> there's the opening bell. a look at the s&p at the bottom part of the board. at the big board, adviser shares. at the nasdaq, staples celebrating the launch of its strategic business initiative. >> man. >> you want to get to some of these calls on tiffany and whirlpool? >> tiffany, they're so worried about it. >> city cuts it to neutral. >> they report on friday, management has been cutting and cutting and cutting. i thought they got to the point where they would beat it. strong dollar not an issue. i want to contrast that with something positive. this children's place number. a big dividend increase. i counter tiffany with chirp's place. i'm trying to be more positive.

we have good news in housing and accessories and this apple call could change things. watch skyworks. >> you said that. i heard you. i'm watching skyworks. i think tech can turn us around. >> there it is. skyworks up. >> one thing not turning around is valeant. >> did they take numbers down again? >> it is down almost 24%. now trading below 53. that's a new 52-week low. new recent low. what happened apparently that freaked people out a bit more that's possible, in a release they said they would do between 6.2 and 6.6 billion in earnings before interest, taxes, appreciation and amortization. but on the slide presentation it said six. they were asked on the call and they said six. so the release said they would do 6.2 to 6.6.

on the call, they said 6 billion in ebita. that's almost a 10% decline from the top end of the range that they were anticipating for the year. it may have been mistakes. i don't know exactly. that's what we have to share with you. that's why the stock took another leg down from the 55-56 level. >> now we're talking about headwinds in op to optometry. >> medasys, a lot of the products they sold through philidor, that specialty pharmacy were medasys products.

they had that channel prior to it being bought by allergaaller. >> joouvaderm comes in with bot. allergan has a thing for double chin. the whole face is covered. how do i know this? my wife was a medisys salesperson in new york. >> you're saying significant competition? >> everyone is carving them up. whether it's in the eye care, whether it be in the dermatological. david, this company has got -- it's doing many things more wrong than were possible than i

thought. hou how's pearson doing? >> hasn't been doing well since he got back. >> did they get new numbers in the conference call? >> he said moments ago he has to earn management credibility back. he said it starts with me. we have to deliver on our commitments. the world has changed to some degree since december. we had underperforming businesses, that's on us. we have to meet or exceed guidance. it's a bit of starting over point for me and the company. if we don't deliver, that's on me. >> valeant 2.0. >> i'm making sure we do deliver. >> were you assured by that. >> what's the bigger fire? that or lind today and their ongoing concern. >> they have been trying to make the most of it, like many oil and gas companies. trying to figure out what assets to sell. they bought that buried petroleum. that was a bad buy.

so much. with oil going down, you have to be careful. you will start seeing rio come down. bhp, all these companies. they're up so much. you look at pioneer, they did a guy againic secondary at 116. up to 135. you will see profit taking. profit taking there, money rolling over to tech. >> dover citing weakness in their oil and gas markets. >> we shouldn't be surprised by that. stocks went up in anticipation of oil going to 40, and people feeling more positive. dover says while they're heartened by the run to higher prices, it's not helping their business. today is an odd day. the apple call a couple of retailers, versus valeant and what can go on with pharma? wow. you mentioned tech, pinning a hope on that. we have oracle tonight. >> oracle is a very inexpensive

stock. i know -- my memo to oracle, focus less on sales force, less on workday. more on oracle. they're scrappy. ellison is a scrappy guy. i never want to get in a fight with ellison. there should be a netflix series about him. >> there probably will be soon. >> action oriented. can you imagine? a guy you don't want to tussle with. mark hurd. >> benioff is not afraid with tussling with him. >> benioff is afraid of nothing. afraid of nothing. >> i hear there's more -- >> tension? >> less tension between them. there is. he loves ellison. he started with apple, benioff, worked at oracle. the problem with oracle is they are switching to cloud aggressively. but cloud is just the margins are not so good. that's why i like workday, which

was up 10 points after that quarter. oracle, neither here nor there. but inexpensive. >> what are you looking at? >> i'm mesmerized by watching valeant. trading so quickly. >> are you the valeant candidate like the manchurian candidate. >> remember the candidate with robert redford? >> what are you now? >> exactly. a guy -- forget it. 50 -- it hit 50. 50.90. >> citron. >> we should get them on. >> maybe they have a new price targe target. >> i want to hit marriott shares. yesterday they were up after news th news that anbang made a bid in cash to take shares away from marriott. the shares were up in part because the people who were trading long. starwood shorted marriott. recovering.

today it's down. interesting to see what marriott chooses to do. in terms of timeline for people following this closely, let's talk the end of the week. revisit towards the end of the week and see whether or not starwood is able to strike a deal, a new deal with anbang and its partners. and sign a definitive agreement or be close to doing so. >> right. >> at which point, of course, they will turn to marriott and say here's what we got. we're about to sign it up. what you can do for us? marriott has to be thinking carefully about their strategy which seems to be based in part on scale. if they get this taken away from them, it's not clear they can pursue that strategy. >> a lot of people are saying does anbang have the money? this is a state-controlled entity. this is not some -- this is the communist party. >> they got the money. money won't be an issue. >> by the way, they already got it over here, my understanding it. >> how much do you think the

hotel groups are undervalued because of air b & b? >> i don't know. >> i think air b & b scared the living daylights out of these people. the numbers are like this the biggest problem air b & b what is inventory. not enough of it. >> really? not security concerns or anything like that? >> it's overblown. the company is a juggernaut. it's the only one of the unicorns that i think is a genuine unicorn. jen yin. i don't think uber is genuine. >> really? >> yes. i think air b & b is for real. i don't know. i think anbang is for real. i think the communists are playing a game to hedge deflation. anbang is very real. >> they'rereal, so is primavera. >> i threw an event there. >> wood panelling, very nice.

>> unfortunately it closed. >> dow is down 100. apple and home depot the components -- >> that's what people are spending on. you should see the shoes, handbags. and children's place. look at that number. >> let's get to bob pisani on the floor. >> good morning. apple helping things out. the market has two big problems. the first is central banks. specifically the bank of japan. to a secondary extent the federal reserve. of course bank of japan decided to keep monetary policy unchanged, even though they warned on the economic outlook, that was a bit of a disappointment. nikkei down 0.7%. dropping today not just reaction to the bank of japan, but to the idea that the fed may be in transition towards tightening sometime later in the year. remember, this highlights how addicted the world has become to central bank stimulus. mario draghi last week, at the

end he said we don't see the need to further reduce rates. market dropped on that. this is a clear indication we're addicted to the stimulustimulus. the other thing is the retail sales number, minus 0.1 from plus 0.2% in january. futures dropped a bit. bond yields dropped a bit. not normally a market mover. this means q1 gdp estimates will be revised lower. that january number was quite strong. look at sectors right now, you see the materials in energy quite a bit. freeport is down quite a bit. alcoa, owens illinois, the big metals company over in europe, down about 10%. they had a poor report, didn't pay the dividend.

materials are weak. morgan stanley having positive comments. one reason industrials are weaker is what happened with dover. i like following dover, a global multinational industrial here. their results will be below expectations. they cited a significant weakening in the oil and gas markets. they make drilling equipment. here's what's important. no surprise on that one. they're diversifdiversified. they make engineering equipment, you go into a gas station, you see their equipment there fixing cars. they make refrigeration and food equipment. the ceo described all their other business besides the oil and gas market as very solid. they works for all over the world. they could have chosen to say things are lousy all over everywhere with what we're doing, they didn't. they said everything else was solid. i know they're down. it's not great news, but i view

their comments about the other markets around the world as positive. things are holding up pretty well for them. elsewhere, jeffrieses, the big investment banking firm owned by lucadia, reported a big loss. revenues from stocks and bonds trading tumbled about 82%. this is a clear indication of how lousy bond and stock trading was in december, january and february. the quarter ends in february. the markets have significantly turned around the last few weeks. while this is a troubling read for other brokerage firms, i think you need to look at fact that the quarter ended in february for them. they also have a huge position in knight capital. they helped knight capital out during that big trading glitch in 2012. knight capital had a tough time in the trading markets. right now, dow off the lows, down 84 points. >> bob, thank you very much. let's get to the bond pits.

rick santelli made his way back to the cme after visiting us on the floor. >> yeah, that was fun. thanks to everybody on the new york stock exchange. they treated me well. two-day chart of tens, rates are dipping a bit. if you open the chart up towards october, i always find it important to look at what's above us. i've been hitting this hard. the 190s, 2%, that whole area has a lot of what technicians say is lots of resistance at the yield level. year to date of ten-year minus bunds. touched 170. there's a little differentiation going on between mario draghi and the fed. to see that our yields are coming back down, that spread narrowing is something to pay attention to. the 150 seems to be home base. a year to date, speaking of japan, the ten-year jdbs. early february. they danced in negatives. not that negative, today trying to crawl back, hovering right

below the zero line. i'm sure their decision today reflects an anxiety, like the marketplace about the foray into negative rates. the dollar suffered based on what is occurring with the bank of japan. if you look at the october of 2014 start to dollar/yen, that's the neighborhood of dollar weakness we're hovering in. when it comes to the pound, everybody thinking of all the various votes coming up. there is a lot of dynamics going on between europe and the uk. above and beyond that vote a two-day of the pound dollar shows the pound is definitely on the weak side. it lost 143 and 142 handle. you want to pay attention because it's hovering in the neighborhood of weakness against the green baback heavily since 2009. carl, back to you. rick santelli, thank you. still to come, texas governor greg abbott live from south by southwest on everything

primaries to tech in the state. dow down about 72 points. ashley bryant, you are a teacher of small children. that's right. i have read it is the hardest job in the world. that's why i'm here. can you... i can offer advice from the accumulated knowledge of other educators... that's wonderful but... i can tailor a curriculum for each student by cross-referencing aptitude, development, geography... sorry to interrupt. but i just have one question: how do i keep them quiet? (pause) watson? there is no known solution.

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there's a look at shares of valeant trading below 49 on the company's conference call. it seemingly lowered guidance from what had been in print in its press release of a range of 6.2 billion to 6.6 billion. saying 6 billion was actually the guidance. that got a lot of people saying we're done. that stock trading as actively as any we've seen. >> one of my favorite reporters at money.com saying got ahold of andrew love. he's not shorting. saying it's uninvestable, it's a block box. yesterday ackman said problems are behind it. today pearson says the problems are in front of it. it's an unknown. this is one of those -- they put

themselves in this situation, you can't feel bad for them. $50 price target. >> now at 48. carl, people will do math as they always do. you have pershing at number two, 9%, 37 million shares according to latest filing. you can do the math. down over $600 million on that position right now. just today. just in the last 20 minutes. >> debt, debt, debt. >> 30 billion in debt. >> 30 billion in debt and the delay of the 10k was supposed to be filed by today. they have some time still, but it's worrying some people. >> slower sales, can't raise prices. >> in covenant with the banks and bondholders. they have to get it up by april 30th. seems highly likely they will. >> this is the story if you're a hedge fund manager. this is the story. not oil and gas, not tech.

valeant. and we should have listened to hillary clinton. she is so much better -- no janet yellen got biotech ready eventually. >> she was talking small. >> small cap. >> in the end she nailed it. >> it was an early call. hillary clinton nailed valeant. the most interesting thing she was saying, not that inspiring, was this valeant. >> now it's 46. >> what can ackman do? just go out there and buy it. >> yeah. >> you're restricted. insider, right? maybe? >> no, he's not necessarily -- i don't know what his lock-up provisions are. >> you managed money. is something like this, does he say to himself, this is survivable? this is part of the game? i'll make up for it on my winners? what do you say if you're pershing? >> i always -- this is one of

those -- i had cendant. >> yeah. on the day of the fraud. >> i was at the beach. you're trying to figure out how not go in over your head in water. i remember calling all my partners saying, listen, i will get through this. i traded cendant. i bought a million at nine, flipped it at 18. what was the ultimate thing i did? testified on behalf of the government against the cfo. governor christie wanted me to call for a lifetime sentence. i went for the 20 years. they got the 10 years no parole. revenge is not a dish best served cold. this does have that cendant feel to it. >> whoa. that's -- i don't know. >> just a feel. >> you went there. >> i'm not saying it's cendant. no, no, no. i will pull that back. >> pull that back. >> i'm saying it's a feel. >> it's got a feel. >> it's down 33%. this is not a cendant.

not a cendant. i'm saying you asked me for what it was like when i had a position. and that's -- that's the only reason i mentioned cendant. valeant is -- >> these guys have to move fast to instill some form of confidence into the market. >> they should put you in charge. >> wow. >> we'll get stop trading with jim in a minute. we spend days booking gigs, then we've gotta put in the miles to get there. but it's not without its perks. like seeing our album sales go through the roof enough to finally start paying meg's little brother- i mean,our new tour manager-with real,actual money. we run on quickbooks.that's how we own it.

time for cramer and stop trading. >> we had a big speculation call yesterday with 3d systems reporting a bigger than expected number. jpmorgan is bringing is back from hold to sell saying the run was too enthusiastic. 3d is not as big as people think. maybe the bloom is off the rose. it's nice they bounced. but that may be the -- all she wrote. >> what's on "mad" tonight. we have cedar fair. i'm in search of companies that will do better with gasoline cheaper. and mod pizza. and cendant not valeant. but when i look at companies that are benefitting from gasoline, i come up with theme parks, they say no.

i come up with try to get convenience stores, they say no. only darden has directly said that lower gasoline has helped them. >> disney is raising prices at parks. >> i think so. disney on a conference call did not talk about that, all they wanted to talk about was espn. i want to talk about "zootopia." >> right. that's right. nice numbers in north america. >> beautiful. thank bob iger there. i mentioned z"zootopia." >> we'll see you tonight. when we come back, breaking news on home builder sentiment and the latest on the primaries. lots to get to with sir richard branson and david cush in a moment. earning 1% cash back everywhere, every time... 2% back at the grocery store... and 3% back on gas... vince of the flying branzinos got a bankamericard cash rewards credit card, because he may earn his living jumping through hoops, but he'd rather not earn cash back that way.

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good tuesday morning, welcome back to "squawk on the street," i'm carl quintanilla, with sara eisen, david faber, simon hobbs. big stories today, whether it's political primaries, day one of the fed meeting, valeant news, positive call on apple. the dow is down about 84 points. the selloff in oil is closer to 36 than 37. let's get to rick santelli. breaking news on inventories and

home builder sentiment. >> let's start with older, on the january business inventory side, up 0.1. we are looking for unchanged. no great shakes there. 58 on the more recent contemporary data point of march. national association home builders housing index, 58 mirrors the last look unrevised. just to give you an idea for 2015, the high water mark was october at 65. low water mark was 352 last march. 58 fits in the middle. >> back to you. >> thank you very much, rick santelli. primary elections are underway in five states today. 358 delegates total are at stake. the most watched elections are in florida and ohio as donald trump and hillary clinton look to further pave the way to

become their party's nominee. john harwood is live in washington watching the action today. good morning. >> i want to step back a bit. we have clear front-runners in both party nominations, donald trump on the republican side and hillary clinton on the democratic side. i want to see what it would take to stop either candidate. let's talk about the republicans. can trump be stopped? one of the necessary ingredients of that is for john kasich to win the winner take all primary in the state of ohio today. polls show he's leading. marco rubio does not seem to be doing the same thing in florida. and ted cruz has to pick up delegates in states like missouri, north carolina, both of which trump has shown to be leading in polls, but cruz is running close. overall, all of the non-trump candidates have got to amass a pile of delegates in the hopes of denying donald trump the 1237 majority he needs for a first

ballot victory in cleveland. now, let's take a look at what's happening on the democratic side. can hillary clinton be stopped? first, bernie sanders is going to need to repeat the victories that he did last week in michigan. he has good opportunities in ohio, in illinois, in missouri. second, he has to prevent her from sweeping up all the delegates in the proportional states. democrats do the entire thing proportional proportionally. hillary clinton has a big lead in florida and north carolina. bernie sanders cannot get wiped out. he has to overall engender a collapse of confidence in her candidacy in order to begin making up that delegate lead with big victories. let's look at the delegate count. on the republican side, trump has a lead, ted cruiz is about 100 delegates behind him. hillary clinton has a 200 vote lead in pledge delegates and has

the 400 super delegates on her side. bernie sanders is hoping to make people think hillary clinton is a weak candidate and flip some of those. but he has to make up that deficit among the pledged delegates. to do that it doesn't take victories in states, it takes big victories in the state coming up. states like new york, new jersey, california, not easy for bernie sanders to do. it's an uphill fight, guys. >> it is a big day, john. thank you very much. john harwood as we kick off super tuesday, take three. virgin america launching a new route from san francisco to denver. three times daily connecting silicon valley with silicon mountain. denver's mayor and linkedin about to host the inaugural flight where they will live stream a discussion on entrepreneurship as will richard branson, virgin founder, and david crush,urb, ceo of virgin

america. gentlemen, welcome to the program. congratulations on another inaugural fight. sir richard, you must be the fastest growing airline in this country now, i would think, on a proportional basis. no? >> we must -- i missed the question. we must be what. >> the fastest growing airline in the country. >> the fastest growing. possibly. we're definitely the fastest growing best airline in this country. denver was a route that's been in massive demand from the public for a while. it's great that we're finally there. and we're looking forward to having a good party on board, a good party when we get there. >> so those that want to enter the live streaming discussion, watch it who will be on board? what will you do? >> we've got ten entrepreneurs on board. we have linkedin on board. we got myself on board. we'll have a discussion.

and see what comes out of this mouths and the young entrepreneurs mouths. hopefully people will pick up a few -- hopefully a few gems of ideas from it. >> i would say, simon, also, these are entrepreneurs from all over the world. they are not just bay area entrepreneurs, they're from europe, several different continents. it should be interesting. >> let's talk about the airline indust industry, david, in particular what's happening in dallas. it seems in this country the destination is everything. you took up a substantial amount of the conference call on earnings to discuss what you described as toxic pricing in dallas. can you explain what is happening there? what it says about the market in general in this country if anything? >> i'll say two things. you have little versions of dallas all over the country. dallas is ground zero when it comes to the pricing wars now. one is you have low prices.

so, essentially people selling fare forcs for $40 and $50 to t east coast and west coast from dallas. probably more important is the advance purchase rules are broken down. now you can buy these cheap fares within three days of flying, sometimes day of flying. that goes in and dilutes all the business yield. that's the breakdown of pricing. part of it is the low price points. a bigger part is the fact we're allowing the close-end business travel tore taer to take advant that low pricing. >> a good time to fly. >> it is. that's the point. for airlines trying to make money it's difficult. we have this battle royal for united. one of the allegations from the active shareholders is -- it's not appropriate to have a ceo who comes from the rail industry. when you listen to how david describes the situation in dallas, it's indicative of the complexity of the industry.

what do you think of the united fight? >> as far as i'm concerned, we -- most routes we don't have this sort of issue. we have this issue in dallas and virgin america is doing extremely well in america. you are going get situations like dallas. ful airlines feel they are being unfair behavior going on, we always have recourse to go to the department of transport and report it. by in large, virgin america is now big enough to compete on a -- on what is generally speaking a reasonably fair level playing field. much more than our fair share of customer customers. >> i would also add that not

specifically with the united deal, but it's a complex business and it's difficult to come from the outside and understand the complexities of the business. >> david, you were one of the first on the network to identify a few years ago that we were entering a different phase in the airline industry, where capacity would be restrained. what would you say now to the current concern that despite the fact you got falling oil prices, and your oil costs are down 40%, shareholders may not have seen the lion's share of that cash. what would you say? i would say they are seeing most of the cash. most airlines are carrying 50% to 75% of the fuel drop straight to the bottom line. yes, there has been capacity added. some routes make a lot of money at $1 feel. i think the industry is behaviig

rationally. there's an irrational focus on unit revenue versus net income. >> i have to let you go and board your flight. thanks for sparing the time. enjoy your trip there. david cush and sir richard branson. cnbc is launching a new platform today called "make it." a story on branson leading the website right now at cnbc makeit.com. it's a new way to learn from the world's most inspiring entrepreneurs. cnbc has unparalleled access to ceos. cnbcmakeit.com. it's day one of a two-day fed meeting what will janet yellen have to say about the economy? look at valeant here at the new york stock exchange. that stock is down double digits. take a look. the company cutting its guidance. revenue by the year by about

12%. the call is still happening. two hours and counting. we'll keep you posted. the stock down more than 35%. more "squawk on the street" when we return. what's going on here? i'm val, the orange money retirement squirrel from voya. we're putting away acorns.

you know, to show the importance of saving for the future. so you're sort of like a spokes person? more of a spokes metaphor. get organized at voya.com. man 1: i came as fast as i man 2: this isn't public yet. man 1: what isn't? man 2: we've been attacked. man 1: the network? man 2: shhhh. man 1: when did this happen? man 2: over the last six months. man 1: how did we miss it? man 2: we caught it, just not in time. man 1: who? how? man 2: not sure, probably off-shore, foreign, pros. man 1: what did they get? man 2: what didn't they get. man 1: i need to call mike...

man 2: don't use your phone. it's not just security, it's defense. bae systems. these are the hands, the hands that drive commerce, that build business across borders. these are the hands of pitney bowes, the craftsmen of commerce. these are the hands that sew the seeds of business growth, that weave the data, and find the perfect spot to thrive. these are the hands of pitney bowes, the craftsmen of commerce. it is day one of a two-day fed meeting. wall street is bullish on stocks once again despite today's news. steve liesman has more. what did you find? >> some interesting forecasts

from our panel of 42 forecasters here. there's an anomaly here i want to show you. let's look at where the s&p forecast is. back in december for 2016 and '17, looking for robust numbers. 2223 and 2140 for '16. then we are the big swoon in the forecast in january. the numbers came down for both years and then came back up. almost in line where they were, not for this year but for next year. 3% and 9% are the expectations for the s&p this year and next we're. watch what happened to the bond forecast. the outlook for the ten-year. had been at 3%, came down, there was concern about recession. but it's come down again. it's flat for 2.34, trading just below the 2% level. over here where the outlook for

stocks came back up, the outlook for bond yields did not. one more anomaly. i like to think bond yields trade most on the inflation forecast. watch what happens. inflation forecast went up sh, t came up a bit, outlook for bonds did not. unclear who will win this. our forecast for the fed is for them not to do anything in the march meeting, but about 80% now see a rate hike in june or even earlier. some are carving out april and may for the possibility. stephen stanley says the fomc has been excessively sensitive to financial market swings and is falling increasingly behind the curve. carl, if you go online, cnbc.com, we have much more detail about this particular cnbc fed survey.

>> lots of good stuff this week, steve. very nice. what should investors be expecting from yellen tomorrow? let's bring in the global head of market economics at pnb paribas. good to see you. >> good morning. >> you say act soft, talk tough what does that sound like when we get that statement tomorrow? >> yeah. i think that that's what fed has done for years. act soft, talk tough. so they won't move rates. but they'll say they have a hike. they'll show through the so-called dots that they'll hike three times this year. the message is we're not going in march because of uncertainty. but we're highly inclined to go in june. i don't think the data will allow them go in june. >> how much of the language refers explicitly to firming of inflation or strength in unemployment? that kind of thing.

>> the employment data is the one sector of the economy that you can say is good. up until today, retail sales, they would have said the consumer is good as well. the retail sales data that feeds in gdp, it's been flat for the last three months. it's only the employment data telling us the economy is okay. that will be the first thing they mention in the statement. employment is good. for many on the fomc, that's the key bellwether. so i think their line is probably the market has had a bit of a tizzy in january, we have had a bit of a pause, but basically we're on track for continued normalization. >> do you have any theories as to why retail sales are coming in the way it is and what is happening to whatever incremental savings people are getting from gasoline? >> when you get gasoline prices

so low, below 30 bucks, everybody believes it can't last. so it's a temporary gift. you don't alter your spending due to temporary factors. that's one of the things. >> there's some worrying signs. the national federation of independent businesses, what we saw for ours and earnings in the payroll report and now retail sales. so i think this is raising the question did the market turmoil have more impact on sentiment and activity than we first thought? in light of that the fed is wise to say let's take more time and assess what's going on. >> thank you very much for that. we'll see what happens tomorrow. breaking news from interior on oil drilling. let's get to john harwood in washington. john? >> sally jewel, president

obama's interior tesecretary announced a reversal of position by the administration. the administration last year said it would permit oil drilling off the atlantic coast, 50 miles off the coast, off of states like virginia, georgia, the carolinas. now the administration in response to local opposition from communities in those states, has said it will not permit that drilling 50 miles off the coast and will protect the coastlines for future generations. one thing we have to point out, this is the interior department's five-year plan for drilling. this administration has a few months to go. the new president could revisit the issue as well. carl? >> john, thank you very much. some news just out from alcoa that we wanted to share with you. alcoa has unveiled the name for its planned spinoff company. it will be called arconic. that piece will service the

aerospace and auto industries. shares down about 4%. they say the split is still on track to happen in the second part of the year. the arc, they say, is the arc of progress and the conic speaks to the company's history of creating iconic products. alcoa and arconic coming later this year. coming up, volkswagen facing a $3.5 billion lawsuit from hundreds of institutional investors including calpers and other players in the united states on the emissions scandal. ♪jake reese, "day to feel alive"♪

♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪ ashley bryant, you are a teacher of small children. that's right. i have read it is the hardest job in the world. that's why i'm here. can you... i can offer advice from the accumulated knowledge of other educators... that's wonderful but... i can tailor a curriculum for each student by cross-referencing aptitude, development, geography... sorry to interrupt. but i just have one question: how do i keep them quiet? (pause) watson? there is no known solution.

u.s. investors including calpers filing a multibillion dollar lawsuit against volkswagen in the german courts claiming the auto giant breached its duty to shareholders as part of the vw's emissions scandal. joining us from southern germany is the lawyer representing those international investors, andreas tilp.

what is the central accusations you're making in the suit? >> good morning, mr. hobbs. we filed that lawsuit on behalf of breaches of duty of volkswagen since june 6, 2008. the lawsuit is based on law and on breach in duties under the german securities trading act. >> why would international investors file in the german courts? wouldn't they get more money in the united states? >> no, the point is -- you're familiar with the supreme court decision in morrison versus national bank of australia from june 2010. that means investors cannot sue in the u.s. if he has bought the shares outside u.s. so there is a need for all the american and other worldwide

investors to sue in germany. you can only sue in the u.s. for example on behalf of adr shares, but that's very small position. the bigger position, the biggest position has been traded outside u.s. >> we saw last week there was the abrupt departure of the head of volkswagen usa. he's going back to germany. he had been the face of vw through the crisis. how much does it matter, do you think, that still volkswagen has not settled with the department of justice or the state of california. they seem unable to close the negotiations. how does that impact what you're doing? >> i think there's no impact on this, because we have totally legal system in germany. we have no class action. we have a model case, a

procedure. it we are experts in that. we have one against deutsche telekom. it's totally different from that. >> though presumably if they accept criminal liability in the settlement with the doj here, you will cite that in your case, will you not? if they settle in the u.s. and they get $2 per share, so we have to deduct the amount we're suing for, but that's it. >> all right. andreas tilp joining us. it's mega tuesday in the u.s., some are calling it separation tuesday, survival tuesday. the critical winner take all states of ohio and florida holding primaries along with three other states. and valeant remains a story today. shares down over 40%. a stunning move, more on that

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i'm morgan brennan, here's your cnbc news update. video from today shows the first group of russian planes leaving syr syria. vladimir putin ordered the withdrawal of troops yesterday. the move comes as peace talks to end syria's five-year civil war

continue in geneva. the u.s. is loosening travel restrictions to cuba. the changes mean americans no longer have to go as part of a group to the islands. now travelers can legally go as individuals, as long as the trip is for educational purposes. and sony is writing a $750 million check to michael jackson's estate in exchange for its 50% share in a music venture it shared. the severe flooding is turning one texas town into an island. mandatory evacuati cases are continuing in deweyville where water levels are the highest in 130 years. back over to "squawk on the street." >> morgan brennan, thank you very much. it is being dubbed separation tuesday. voters in florida, illinois, missouri, north carolina and ohio could decide whether or not front-runners donald trump and hillary clinton manage to

separate from the field and significantly increase the chances for their party's nomination. for more let's bring in gop strategist and chair of inge, phil musser, and our own larry kudlow. you came on saying it's not just about floor a and ohio. >> a >> and i'm sticking to that. trump will win florida that's what all the numbers say. ohio is too close to call. in fairness, ohio is too close to call. don't forget you have north carolina, which has a lot of delegates. you have illinois, which actually has more delegates than ohio. you have also got missouri. what i want to say is kasich can easily win ohio. it's his homestate. i don't think that gets him anywhere. it doesn't get him anywhere. god bless he carries his homestate. he has no infrastructure. he doesn't have the money. he's a wonderful man. i adore him. you cannot write out ted cruz.

people are ignoring him in the media with all the controversies about the chicago rally or non-rally. cruz is hanging in there. he's got money. he's a very bright man. whether you like him or not, i won't get into that. i'm just saying that if trump loses ohio and cruz has good nights in illinois and in missouri and in north carolina, missouri and north carolina, by the way, could be cruz states. they have a lot of evangelicals. just keep your eye on that point. it's too simple to say it's all about ohio. >> isn't the idea that if they do -- if kasich does take ohio, in the event of a contested convention it would be donald trump with the most delegates versus whoever the establishment

and party coalesces around? >> kasich has too few delegates to be a player here. trump could walk into that convention with a plurality. he may get his majority. i don't want to rule that out. >> he can't get enough to win outright today. that's not today. that's not numerically possible. >> unless he takes ohio and florida. if trump does that, he might roll through this. that's speculation, not a given. you are going to go into that convention, i think, either donald trump has an outright majority, okay? maybe he does. if not, if not, you go to a second ballot. when you get to the second ballot, you have to look at the two front-runners. if the so-called republican establishment -- dummies that they are, the whole election is about overthrowing them, count me in. the dummies. especially the dummy named romney who attacked trump -- >> all right. >> i didn't mean to

editorialize. you can't walk out on the two people who have the most votes by far. >> we have to bring phil into the conversation, a former romney senior adviser. >> i know. i know. he's a great american. >> you are also watching races outside of ohio and florida. >> i am. definitely. larry is a good friend. he summed it up well. in the second ballot what will happen is the kudlow for vice president movement will emrnlg on the floor of cleveland. that's what you guys need to be watching for. look, his analysis and setup is right. while the discussion is all about florida and ohio and who goes forth, do you have to keep an eye on missouri. remember, it's winner take all by congressional district. and remember that ted cruz did well in neighboring kansas a few weeks ago. think about the dynamics, if ohio is won by kasich, missouri is won by cruz and donald trump wins florida. from all the things i can see looking at the early vote in florida, half of the state voted already. it's likely the margin is closer

than the polls say. but i suspect trump wins there as well. north carolina, i don't agree with you there. that's going trump. >> you're being very objective. phil muster and i tried to engineer tim pawlenty about eight years ago. >> great tax plan. it was a great tax plan. >> putting that aside, you got your finger on the pulse. we have to deal with this. the two guys will go into that convention in one order or another. trump and cruz. all i'm saying is -- i'm not pushing cruz here. i'm not pushing anybody. the media has sort of forgotten about the cruz story. and they shouldn't, he's a powerful guy. he's a smart guy, he's got strength in the states that phil mentioned. >> can we mention the democrats for a moment? do you think that sanders will prove that michigan was not a fluke in any of the races today? >> that's a good question. it's possible. i have my doubts. it's possible.

it's just -- i give it to hillary. i don't know whether i should, carl. i don't know. really. >> i just give it to her. >> you don't think michigan sets a tone to roll through some of these states? >> phil what do you think? is there a chance sanders beats hillary? >> my sense is the output of tonight is the republican race goats more confusing. and it's definitely going tod n june. the democratic race clarifies. if you look at the voter compensation of the big states she has to compete in, some of the flavorible blocs she's been able to get exists in those big stakes. the clinton story gets clearer. the republican story probably gets a bit murkier, but we go from 17 to probably 2 or 3 in tonight's contest. that's really important. the high floor/low ceiling argument that larry laid out about trump v cruz could result in a very interesting couple of months here going forward.

>> you know, look -- bernie sanders was a guest on our show a couple times. a man of great integrity. he actually believes what he says. it's fascinating. the trouble is he wants to take all your money. he wants to take all your money. and therefore he ain't going to win. now, maybe the democrats are crazy enough to try that. but, all right, fine. they'll lose every state practically. >> he wants universal healthcare like most other nations have. you have to pay for that. >> never. it's all free. >> it's all free to the point of delivery. >> education is free. free college. free everything. >> automobiles are free. student loans are free. everything is free. >> which of the two would the republicans most like against hillary? donald trump or cruz? >> oh, i don't know. i wouldn't believe a word they said on that stuff. >> presumably cruz would keep the party together, at least there won't be the type of activity we saw at chicago at

gop -- >> let me come back to my friends in the republican establishment, excluding phil muster. these are the nightmares of the republican establishment. you couldn't have crafted a worse leaders for the establishment -- >> for winning? >> just for personal likability in 18 holes of golf in terms of winning? my view? trump wins. mr. cruz does not. >> the nomination? and then in november? >> yes. >> you think he will win in november? >> yes, i believe he can win in november. >> i think you're right because he will flip-flop. >> you are the best british analyst of american politics i have ever met. you are number one. >> we are a tossed salad. everybody gets to have a go. >> phil, final word from you. your prediction? do you agree donald trump could win the general election. >> i think the composition of voters and the turnout he's bringing to the party make it

much harder to diagnose the ultimate electoral composition in the fall. my suspicion is that, you know, there's a lot offense mending to do in either scenario. >> there is a revolution. there's a revolution. >> there is. >> part of it is populism, part of it is nationalism, part of it is anger that america doesn't win anything anymore and the rest is they want to overthrow the existing order. it's like france of the 18th century. trump is the guy to do that. you may not like it, but he's the guy. >> better similarities to leave the uk and the vote to leave the european union, or in germany, or in france. it is happening around the world. this is a major event for our time. >> brexit, you're exactly right.

merkel just got her butt kicked. >> that's my point. >> sale issume issue. >> but it's a different group of people. let me close with this metaphor. i spend a lot of time looking at social demographics and search data, donald trump was the most searched candidate in florida the last couple of days. what was surprising is the top search trends which speak to the masterful marketing ability of the trump campaign and the state of the mind of the american electoral, the number one trending search is where can i buy trump steak steaks. what does that tell you. >> there's a revolution brewing. not everybody likes it. me, i look at establishment and i kind of like it let's overturn the existing one. >> wow, you rebel. >> thanks for joining us. phil muster and larry kudlow. >> thanks, phil. >> speaking of turning things over, the shareholder base of valeant has been turning over a lot. the stock has been down as much

as 40% today after the company slashed its outlook and had a conference call less than inspiring. meg terrell was on that call and she joins us now. meg, this is quite something to watch. >> it is. it was a two-hour conference call. valeant hoping to reassure investors now that ceo mike pearson is back that things will be on a smoother trajectory, but the stock price down 40%. hearing concerns on the call about the company's $30 billion in debt. also the timing of its 10k. mike pearson saying they hope to file in april, but that depends on a lot of factors including an internal investigation and the outside auditor coming together. the company did cut guidance much more than was expected. and they're giving different numbers in the press release from the slide presentation. that's for their ebita going forward.

they had given 6.2 to 6.4 billion in ebita on the press release, clarifying on the call that it's $6 billion. valeant saying it is increasing investments in reporting, government affairs, managed care and compliance, giving lots of questions to management about why they should be trusted given what's happening. here's how mike pearson addressed that. >> it's a bit of a starting over point at this point for me and the company. and clearly if we don't deliver, then, again, that's on me. >> so, he was also questioned on the call about his potential exit package. the "wall street journal" said he had a $200 million payout coming his way if he was fired. he was asked about a golden parachute. he said he had no knowledge of a golden parachute, and he thinks if he was fired his payout would be modest. >> i saw that as well. it was a few weeks ago that i

reported that mr. pearson was ready to come back to the company. there was some division on the board of directors about whether they wanted him to return. some of those same directors may now really be wondering whether that was a good idea. it appears while many believed mr. pearson's return would be seen as a positive, it is not. can't determine if that's a screw up between the press release what was said on the call and in the slides. these are the communication errors that they made time and again, meg, that has completely dispaced any confidence that investors have in this company. you're talking about a company where the fundamental business model has been in question for quite some time. people are saying does it deserve the kind of multiple we're talking about given the lower ebita? when you add in 30 billion of debt you still get an enterprise value of $45 billion. it's not even that cheap. that seems to be what's going on

today. your take? >> it's mind boggling. i agree with you. we have been saying for months what other shoes are there to drop. and investors telling people in calls, which were criticized last week, because they were private calls with analysts not public calls, saying there were no more issues to come. we hope it's a smooth road. all of these analysts on the call saying why should we trust you? that's how everybody is feeling. folks are worried about that debt load now. >> that's a key here. 30 billion in debt. that's the net debt number. meg, thank you. we'll be following this. i know you will all day as you have been for months. simon? still ahead on the program, kay kay kayla tausche sides down with the governor of texas, greg abbott. that's coming up on "squawk alley." we'll be back after this short break. there's no one road out there. no one surface...

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welcome back to "squawk on the street." energy and healthcare sectors, both trading more than 1% lower. 1.5% in the case of both. biggest s&p 500 decliner in sek sectors. commodity prices continue to sell off for a second straight day, crude oil weighing on the sector. chesapeake, transocean, ensco weighing it down. energy up just about 1% overall year to date, simon. back to you guys. >> clearly not as bad with the dow down about 19 now. let's send it over to rick

santelli with the exchange. >> thanks, simon. i would like to welcome former fed governor robert heller. bob, thanks for taking the time. day one, fed meeting. >> good morning, rick. >> all right. let's start at the beginning. there's good pairings and bad pairings. a bad pairing would be oreos dunked in cola. if we were at 21 on the overnight rate, i think the conversation and the way the fed is handling issues would be perfect. the pace of normalization doesn't quite square. your thoughts? >> i fully agree. the federal reserve always says they will increase rates in the future and then it never happens. i think they get scared of their own shadow if they have to take actio action. >> when it comes to what may go wrong, what are the issues if we stay too long? if we fall into the japanese

trap, the same conditions, level of employment, unemployment, lack of pricing, lack of growth it could last for years. what are the issues you see in the windshield should that >> well unintended consequences can be dire. offering very, very low returns. so corporations, insurance companies, pension funds, that rely on and i won't be surprised at all and insurance companies and pension funds not being able to fulfill obligations. >> you open a very interesting door because we can't necessarily pin all of this on fed policy if rates would still be low even if they normalize but since we don't know it does

put them in the box so you think potentially when people go to retire if the money isn't there, due to some of those capital building institutions that are supposed to take that for us they could be a bailout debutant like housing and student loans. finish it out with that line of thinking, sir. >> insurance companies in the country will go broke and all the state owned pension funds, if they can't fulfill the obligations i would certainly expect that the government would step in but that is all brought about by these low and artificially low interest rates that we have at the present time that do not reward savers and do not reward thrift and investors. >> you know, real quickly, this sounds a lot like the conversation on this floor regarding bank of japan. what would you tell him that we have 30 seconds left based on

his comments with negative rates. they're flirting right now right at the zero rate mark. >> it doesn't help anybody. you can't continue on those strings. >> thank you for your comments as always. of course we look forward to the fed's day two to see the direction they are going to take. sarah, back to you. >> thank you very much. coming up the chief technology officer of the united states. megan smith talks apple and the fbi. we're back here after a quick break with the dow down 20 points.

stocks are modestly lower right now but we're certainly off the lows. the dow is down as much as 108 now down 32 points. apple is the biggest gainer on the dow. in terms of the groups leading utilities and consumer staples. the defensive stocks are in the lead. energy and health care are the biggest lagers. the price in oil is falling.

the dip in retail sales didn't help and neither did the bank of japan. >> it's worth noting that energy is losing on oil and health care is the worst performing sector today. valeant i don't think is listed within the s&p sector but in general a lot of the drug companies are down. we have this report out with express scripts and it's doubled in this country which leads into a lot of conversations about what you do moving forward as a policy implication of that particularly with the november election of course. >> if the s&p does close lower it would be the first back to back losing streak in march. >> very good four weeks. let's send it over to john forte. squawk alley is on deck. >> let's talk about the good news. apple up better than 2% at this moment. that means it's up better than 11% for the month. how about that? we'll be talking about that and

news on the iphone that has investors cheering. also megan smith joined kayla at south by southwest. we'll check in with her and hillary clinton fund-raiser in silicon valley is being hosted by that controversial founder. what's going on there? is it wise? all that and more coming up on squawk alley. with extraordinary offers on the exhilarating is... the thrilling gs... and the powerful rc coupe. ♪ this is the pursuit of perfection. every auto insurance policy has a number. but not every insurance company understands the life behind it. ♪ those who have served our nation have earned the very best service in return. ♪ usaa. we know what it means to serve. get an auto insurance quote and

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11:00 a.m. on wall street and squawk alley is live. ♪ welcome to squawk alley. join john forte and myself this morning. kayla at south by southwest in austin texas. we'll see her in a few momen