good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with andrew ross sorkin and brian sullivan. we're counting down to today's fed decision less than eight hours from now. that's going to be followed by a news conference from janet yellen. check out the u.s. equity futures. yesterday was a mixed day for the markets. the dow actually managed to eke out a gain. that's eight of ten sessions the dow has closed higher. this morning you see slight green arrows. we should point out the volume yesterday was the second lowest day of the year, followed only by the day before that. people are waiting to see what the fed has to say before they place their bets. overnight in asia, you'll see japan closed down by about 0.8%. the hang seng was slightly

weaker, but the shanghai composite was up by about 0.2%. in europe in the early trading, at least right now you'll see there are green arrows across the board, being led by the dax in germany, which is up by 0.7%. also, take a look at crude oil prices. right now it looks like wti is up by about 2%, but you're still looking at it just above $37. story of the morning, story of the day, story of the year. big wins for donald trump and hillary clinton in yesterday's primaries. john kasich winning ohio. marco rubio dropping it out of the race. joining us now for the hour, former democratic congressman harold ford jr., currently with morgan stanley. and republican strategist joe watkins. before we get to them, let's get to john harwood, who has not slept, i bet, with a recap of last night's results. john? >> andrew, very big night for hillary clinton. she went a long way toward snuffing out the challenge from bernie sanders a week after that surprise defeat in michigan.

she won four out of five contests last night. florida, north carolina, illinois, ohio. those were big. missouri's results are still outstanding, too close to call. very good night for hillary clinton. on the republican side, donald trump also had a good night. he won in florida. that's a winner take all state. knocked out marco rubio. but he failed to win in ohio. that keeps john kasich, who beat him alive as the potential establishment vehicle in the race. ted cruz is running close to trump in the state of missouri. he's picking up a lot of delegates. all of that makes it more difficult for donald trump to get the 1237 delegates he needs for a first-ballot nomination. yesterday afternoon i sat down with paul ryan, the house speaker, and asked what he would do if a deadlocked convention turned to him. >> when people talk about the prospect of a convention that isn't decisive, you are suspect number one for -- >> take a sip of guinness. >> yeah, who could be drafted.

have you category ruled out accepting that if you're asked to do it? >> you know, it's funny, but i think you should run for president if you want to be president. i'm not running for president. i made that decision consciously not to. i don't see that happening. i'm not thinking about it. i'm happy where i am. so no, this is not -- >> don't intend to do it. you're not making a sherman statement about that though. >> you know, i haven't given any thought to this stuff. people say, what about the contested convention? i said, well, there are a lot of people running for president. we'll see. who knows. >> now, two points about those comments. first of all, i still think it is more likely than not that donald trump will end up getting enough delegates to be nominated. so the subject may be moot. secondly, i heard a short while ago from one of the aides to the speaker who said, no, no, no, he really did say no and rule it out. everyone will remember before becoming house speaker, paul ryan also said he did not want that job. we're just going to have to see how this plays out, especially

as long as establishment republicans, including mitt romney, who headed the ticket that paul ryan ran on four years ago, have a fierce desire to stop donald trump from getting that nomination. >> john, can you just walk us through the math, if you think it's more likely that donald trump actually makes it to 1237. what does he have to win from here? >> well, you've got winner take all states out there. he's just got to start winning them. they aren't all winner take all. some of them are hybrids. they're winner take all for a certain chunk of delegates and then they're winner take all by congressional district. so donald trump needs to win well over half the delegates needed from now on. we've had more than half the delegates picked already. he's got to kind of run the table. the thing is, though, he's won most of the contest. so you have to say his odds are pretty good of running the table. ted cruz is still in the race. john kasich is, but he hasn't proven he can win outside his home state.

so donald trump is still in the driver's seat. he just hasn't locked this thing down. >> going back to paul ryan. your sense when you talked to him was -- i mean, i'd heard different people talk about this interview before i saw what he actually said. sounded to me like he was actually not necessarily leaving a door open. what did you think when you walked away from that? >> well, i thought he was leaving a door open. i thought he was -- i gave him two opportunities to say no, i will not do it, i will not take it. that doesn't mean i think he is maneuvering for it. remember, last week his aide shut down a draft ryan committee that had set up to raise money to try to get him to run. so do i think he's actively trying to do this? no, i do not. do i think that he is -- he declined to absolutely shut it down as long as i mentioned before establishment leaders are trying to stop trump? no, he chose not to do that. i gave him two chances to do it. >> okay. john, thank you very much for being here. i know it's been a long night.

i saw you even earlier this morning. so we really appreciate all your time today. >> you bet. >> let's get back to our guest hosts this morning. joe watkins and harold ford jr. joe, what do you think? is donald trump going to be the republican nominee? >> yeah, i think so. i think that if you look at the math going forward, you've got about 19 contests. eight i think are winner take all, 11 are proportional. it might be vice versa. the math going forward really favors donald trump much more so than ted cruz or anybody else. you've got to look at the performance, the past performance, which has been that his voters are enthusiastic. he's even in state where is there are open primaries. he's gotten democrats to come out and stand in line just to cast their vote for him to send a message to washington that they don't like what's going on. they don't like the fact there's lack of movement, that there's stagnation in d.c. and they're also angry about the economy. the anger really is based on all the stuff we talk about here every day. the rate of unemployment is 4.9%, but the reality is that

the labor force participation rate is 62.9%. you've got to look at the fact that 6.1 million americans are working part-time for economic reasons. they're considered working, but they're not happy. 27.7 of the unemployed are long-term unemployed. you have all these peek thople have dropped out of the work force altogether. these are people standing in long lines to send a message. >> it's happening not only on the right but on the left. it looks like hillary clinton has sewn things up at this point, marching toward the nomination. >> a week is a long time in politics. ten days is even longer. the momentum that bernie sanders has created for himself in michigan seems to have dissipated. i think if you're hillary clinton, i think joe's points are on spot. if you're hillary clinton, you begin now to think about that real pivot to the general election. i think you have to plan on it being a donald trump. you have to assume he's going to be a stronger candidate, a more

moderate candidate in the fall. he may not be, but i think the assumption has to be that on the democratic side. i think her message, a pointed economic message, speaks to to how you empower middle-class americans. you begin to talk seriously and consistently about that, even more so than you have going forward. >> how does she pivot to the general when bernie is still in the election, still running? a lot of people think he's going to pull her further left. >> i think she has to begin that pivot where she is and where she wants to be in the fall. >> can she move back to the center more? >> she's already doing it. she's not moving to the center as much as her message is becoming more pointed around economic matters. i think trump's rise, joe's points have to be taken seriously and trump has to be taken seriously. he's tapped into a vein of discomfort, anxiety, fear around economics and around people's economic security. that's where this race is going to be litigated and won. secondarily, if i were on the

trump team, i'd get him smarter about foreign policy. hillary clinton, she's the strongest in this race. >> joe, your former colleague in the white house last night, a republican, tweeted out, what essentially happened last night was that clinton won the presidency. we just have eight months to hyperventilate before it happens. this is from your former colleague in the bush white house. do you agree with him? >> i agree that if the election were to be held today that all the polling data shows that it would be hillary's to lose, she has the advantage. the election would be hers to lose. but i think that as time goes forward -- i mean, one thing donald trump has already demonstrated is his capacity to adapt to an audience. he understanding audience and how to maintain audience. he's willing to change his message if he has to. >> why is malleability all the

sudden a good thing? used to be called inconsistency. >> right. >> ted cruz -- people were saying ted cruz is a far-right candidate. you know that no matter what, he's far to the right. he's going to stay there and he's not moving. donald trump is saying, you know what the problem with d.c. is -- >> he's going to be a democrat by the time this thing is over. >> he says the folks in d.c. can't get anything done. i'm willing to negotiate to do what needs to be done. that's a case people are accepting. >> some argue that trump is in some ways a democrat, right? this is a risk to clinton, is it not? unions tend to go toward the democratic party. if you're a guy struggling to make a wage or you're afraid of losing your job because your manufacturing is going to mexico, and here comes trump saying tariffs, trade war, we're going to stop it happening. if you're a rank and file union member, that's a fairly compelling message, is it not? could clinton lose unions to

trump? >> we have to take it very seriously, which is why the economic message has to be more specific and talk about how you're not only going to change agreements around the world but what will be the template going forward. equally important, what's your message to raise wages? what are you going to do to encourage companies here to hire people and to hire people at a wage in which they can live on? i think mrs. clinton is entirely capable of doing this. when i talk about the shift in what she talks about, the shift to the middle -- look, i think she's the candidate she's been all of her life. she's dedicated her life to many of the things she's campaigning on in this race. in terms of the focus and what she talk abouts in a campaign has to change. >> although, trade in particular, that's a tricky spot for her. she's been supportive of all these things. she helped negotiate some of the tpp points before she was against it. >> look, we're going to have trade regardless. i think senator sanders distorted the issue a little. it's designed to make the trade fairer and better between the

countries. hopefully mrs. clinton can make that point. she'll have to make that point over and over again and explain to voters how her idea is better than donald trump's and better than bernie sanders. >> ben white this morning has this question. what does the chamber of commerce do about the general election? can tom donahue support massive tariffs, has immigration views directly contrary to the chamber's views, and has attacked some of the most prominent members of the chamber? >> you have to consider that those things have happened in the past. donald trump is considering -- let me clear the air here. i was asked a question, who am i supporting in this race. i'm not supporting anybody. i worked for jeb bush's father in the white house. i liked his brother. my daughter worked in the white house for his brother. i supported jeb when he ran for governor. but that being said, donald

trump i think is very, very smart. donald trump is not going to lose on a position paper, by the way. >> it's not about policy. >> that's not going to lose donald trump a single vote. the fact that there are a lot of nonspecifics, if you go to his website and look at where he stands on a host of issues, he acknowledges the fact there's a deficit and acknowledges the fact we have a huge national debt. he talks about we got to get rid of it. doesn't give ways as to how it's going to get done. what makes him attractive to voters is the fact they believe he's going to get some stuff done. he'll negotiate. he'll cut a deal with democrats. he'll do what ted cruz won't do, in other words. he'll cut a deal with democrats to get something done, and he'll move the chains. >> i'm going to reverse the question i asked to harold. maybe trump picks up some votes

on the democratic side from unions. couldn't clinton pick up some sort of republican votes because people -- if it's trump, some republicans are like, whoa, let's keep things the way they are. i've met people that say, i'm normally a republican voter, but if it's clinton versus trump, i'm going clinton. >> she's a known quantity. >> i know what i'm getting. i may not like it all, but i understand what i'm getting. >> she has a track record. people have a sense of what she would do if she was elected president of the united states. and that helps her. what she does suffer from is a lack of enthusiasm. the reason why bernie sanders has been so successful is because he's got enthusiasm on his side. he's got all these young people who have never been in the process, the same kind of people that were excited about barack obama.

>> these front runners have won the votes but not the hearts. these two candidates still have very high unlikable factors that neither one of them has really won the hearts of their party. >> donald trump has a lot of work to do, but he has lots of time, especially as he moves closer to getting the 1237 delegates he needs to clinch the nomination. he has time to begin to mend fences. his speech last night was much more conciliatory. he thanked marco rubio. he realizes that as this thing shifts and he becomes the nominee apparent he's got to work on his general election strategy. >> i don't think we'll ever see presidential candidates run again with high favorables and low unfavorables. we live in a time where it's the pervasiveness of media and the outlets. the number of times we hear these candidates, even ones that don't have long and laborious policy records like donald trump or ones that have long records like mrs. clinton, we have so

many opportunities to see and hear from them, you're going to develop an opinion. >> maybe the voters are very divided too. >> we live, unfortunateunfortun country that's somewhat polarized. we're going to have one heck of a race between now and november if it's mrs. clinton and mr. trump. m >> you think maybe half the country is going to be ticked off no mat every who wins. >> i think half the country is ticked off right now, which might explain trump, to your point. >> no doubt. >> we'll have more from harold and joe throughout this hour. they're our guest hosts. all right. back to business now. we actually have a deal involving stock markets. the london stock exchange and the deutsche boerse revealed plans for a $30 billion all-stock merger. the new company will become europe's largest securities operator if the combination is approved by regulators. the firm expected to maintain

its headquarters in both london and frankfurt. and the deutsche boerse ceo will assume the role of the ceo of the combined group. there's talk that ise could come in and try to trump that bid. other stocks to watch today, chipotle announcing its comparable restaurant sales fell by more than 25% last month after all those food safety incidents. the burrito chain also said it could lose up to $1 a share more in the first quarter. sony delaying the release of its playstation virtual reality system by several months. the move will give rivals like facebook's oculus rift a head start of several months. and oracle posting earnings that top estimates, though sales did come in below expectations. that announced a $10 billion per share buyback. andrew, i think you have the biggest stock story of the day. >> that's valeant. everybody is still talking about

it. hedge funds losing an estimated $5.3 billion on the drug maker's stock meltdown. in total, shares plunging more than 50% after valeant said it risked defaulting on its $30 billion debt. among the biggest losers, bill ackman at the top of the list. also, jeffrey ubban. smaller hedge funds could go under as a result. we'll have much more with meg terrell in a bit. i know you wanted to talk about the bonds. >> well, just quickly. we talked about it a little yesterday morning when all this stuff was happening. obviously valeant is a dumpster fire. the stock has been absolutely wiped out. i will say this. the reason there's concern about a default is they've got 60 days from yesterday to file their revised and audited 10k. >> the results they put out yesterday, which were several weeks late, they said they couldn't guarantee they wouldn't change again, and they have not been able to file the papers with the s.e.c. that raised a lot of questions. >> what they call that is a technical default. i don't want to get all wonky,

but it's a 60-day window. the clock is ticking down. they've got to refile. the stock got whacked. the bonds got hit but not that bad. they have a bunch of debt outstanding. it's not as if the bonds fell 50% and bond investors are saying there's likelihood of a default. i know everyone wants to pile on valeant. i'm not defending them. just look at the credit market as well. all right. coming up, the other countdown is on. janet yellen set to release the fed's latest interest rate call and hold a news conference all this afternoon. by the way, on a very fine program called "power lunch" 2:00 p.m. eastern time. we're going to talk market strategy coming up next.

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all right. welcome back. a lot going on today, including the federal reserve set to release their latest policy decision and economic project n projections at 2:00 eastern. that's all ahead of janet yellen's news conference later today. let us talk strategy. ed, good morning. >> good morning. >> rate hike today or no? >> no. i think we'll probably see one, maybe two this year. so less than the fed has been telling us, but still maybe a little bit more than the fed funds futures or the market

expectations. >> though the fed has been relatively dovish sounding anyway. what do you expect to hear? more importantly, what do you want to hear? >> i think they'll adjust their dot chart, their forecast of what rates will be down a bit. so they'll come a little closer to where the market is. we might see the market expectations rise a little bit. there is some evidence that inflation is starting to pick up. it's still below their 2% target. i think they're going to be tolerant is goes to maybe a little above that. at the same time, the economy isn't weak enough they can justify not doing anything further. so i don't think they're going to do much. also, i think if we have higher rate and the rest of the world has negative rates, that's going to hurt the dollar and manufacturing. i would expect them to sound a little tougher and be vigilant about inflation, because it has ticked up a little bit. >> i always like to say nobody is afraid of lying. they' -- afraid of flying. they're afraid of crashing.

we seem to fear the fed. i wonder if we fear the fed because the fear of them crashing the economy. if they came out today and said we're jacking up rates by half a percent, what would that do? why do we seem to be so behold on to the federal reserve? >> well, there has been times if you look at the history of economics, there are many time where is a tight fed policy has had a dramatic effect on the economy. clearly mistakes in fed policy have been approximate causes -- >> but volcker had to do something because inflation was crushing the economy. we don't appear to have -- we don't have anything like that now. >> right. but i'm just saying it is possible that a policy mistake of getting too tight, too soon does have negative economic consequences. i think they're going to move at

a measured pace. i think they're going to do less than they've told the markets they're going to do so far. >> as a result, what do you think happens to stocks this year? >> i think we drift higher. i don't think we're going to have a banner year because profit growth is going to be close to zero again, just like it was last year. but i think we'll probably end up having a slightly positive year. i think stocks will do better than bonds. but it's going to be another year of relatively lower. >> if you're looking at the stocks at levels they are today, you wouldn't say to pile into this. >> we're managing our portfolios. we're slightly overweight stocks within a diversified portfolio. they're a little cheaper now. we were a little cautious coming into the year. now we're a little further along in the cycle. we think that earnings growth will be a little better eventually as the effects of lower oil prices work their way through the system. we probably get another couple quarters of weak earnings, then maybe we see something better ends of this year.

>> ed, it was a real pleasure. thanks for getting up early for us. >> thank you. >> appreciate it. >> it will all be better in 2017 when we make america great again. before we head to a break a bit of news. the white house says that president obama is going to be announcing his supreme court nominee. it's going to happen at 11:00 a.m. eastern time this morning. you don't want to miss that. you can see it here and elsewhere as well. before we get the fed decision, there are several economic data points on the calendar. we're going to run through them on the squawk planner when we return. plus, apple filing a legal brief. i stayed up late last night reading every last word. we get details about that straight ahead. as we head to break, take a look at yesterday's s&p 500 winners and losers.

all right. 6:30 isn't tn the morning here east coast. time for your executive edge. the federal reserve is seen as holding interest rates steady, but they'll also issue their guidance, their new economic policy projections. that's what you care about. then you've got the janet yellen news conference live at 2:30 p.m.. that generally goes about 45 minutes or so. ahead of the fed events, a lot of other day to to digest.

the february consumer price index, the measure of inflation, out at 8:30 this morning. that is expected to dip a bit on lower gas prices, but the core rate, which backs out all the stuff you actually use, like food and gas, is forecast to rise. also at 8:30, look for the february housing starts number. they're expected to rebound after falling nearly 4% in january. at 9:15, you get the february industrial production. you've got fedex reporting their third quarter results today after the bell. i have a feeling it's going to be about the fed and the election and valeant. but there's some other stuff. >> as brian mentioned, the other top story this morning is the race for the white house. the results are in for yesterday's key primary races. on the gop side, donald trump winning four of the five states voting. he took in florida, illinois, missouri, and north carolina. ohio governor john kasich pulled out a victory in the buckeye state, capturing 66 delegates. in the meantime, senator marco

yoo rubio announcing he will exit the race after losing his home state of florida. >> politics of resentment against other people will not just leave us a fractured party. they're going to leaf ve us a fractured nation. they're going to leave us as a nation where people literally hate each other because they have different political opinions. >> on the democratic side, hillary clinton marching closer to her party's nomination, sweeping bernie sanders in all five of yesterday's contests. we'll have much more on the race for the white house, including the possibility of a contested gop convention. that's coming up in a minute. in corporate news, apple filing that final legal brief before a court showdown with the justice department next week. the tech giant arguing the u.s. founding fathers would, quote, be appalled, they say, by a government request to unlock an encrypted iphone. they make a number of different arguments about things that have been asked of other companies before and try to say this is

one step more. >> compelling or no? >> i was not -- >> compelled? >> i was not compelled. >> their argument that they don't want to turn over the source code, that makes sense. what i don't understand is why they can't break into the phone. >> what i think is ultimately going to happen is that traditionally if you just looked at the law, these things have been looked at narrowly. courts don't necessarily look at this larger policy prescription and the larger issue. they say, what is the issue, and what they're asking for is for this narrow thing. they say, you know what, some other court will deal with that other issue down the road if there is an issue. so i'm not sure. i've talked to the apple lawyers. i like them. they're all good people. they have an idea of what they're doing, but i just thought on its own, it was sort of a hard read. >> some of my lawyer friends believe there's a good chance t this is going all the way to the top. to the supreme court.

we need new precedent. >> the act of writs, by the way, the more i read, i think it gives you -- this is what -- apple keeps saying there's no comparable analog, but that's because we're not in an analog world. this might be a comparable analog. >> obviously the story is going to continue for some time. let's lighten the mood a little and tell you about indiana jones. he's coming back to the big screen. harrison ford and steven spielberg are teaming up once again for a fifth installment of the "indiana jones" series. "indiana jones" was first introduced in 1981. that was followed by "the temple of doom" in 1984 and "the last crusade" in 1989. the most recent "indiana jones," which was "the kingdom of the crystal skull," that came out in 2008. together, the first four films have earned nearly $2 billion worldwide. this new film, which is untitled at this point, is set to premiere in july of 2019. harrison ford will be 77.

look, i'm in. anything harrison ford, i'll see. i was so upset with the ending of the last "star wars." >> i've not seen it. >> don't spoil it. >> he's not going to see it. >> i was joking the title will be "indiana jones and the golden dentures." when we return, we're going to talk trade. it's the one political issue that could get democrats to vote for donald trump. we've got the writer of that piece who's going to join us next to explain why. as we head to a break, take a look at what's happening in european markets. green arrows across the board. back in a moment. you're an at&t small business expert? sure am. my staff could use your help staying in touch with customers. at&t can help you stay connected. am i seeing double?

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it's a hot-button issue on the campaign trail. that's trade. donald trump says it's a key part of his economic plan. i thought we were going to show some video there, but we're not. "time" magazine addressing the trade debate in a piece called "why would democrats vote for trump?" joining us now is the author of that piece. good morning to you. explain this. you think democrats are going to end up voting for trump over this issue? >> i know democrats are very worried about mr. trump on this issue. there's a very strong sense of protectionism at mr. trump's events. we saw it in michigan. i saw it here in ohio. his events in cleveland, where i

am now. he is basically promising that through the sheer force of his personality, he will compel these companies to bring jobs back to the steel valley here in youngstown. he'll bring back detroit. there's no policy behind it, of course. but he's saying that, you know, he and he alone can help revitalize an industry that has been slipping through the rust belt for years. >> these democrats you're talking about that you think are going to switch parties, are they in the bernie sanders camp? >> there's a lot of overlap between bernie sanders' people and donald trump's people. i was at an event on monday night. there were people who were there who were contemplating whether they'd vote for bernie or trump. it's fascinating to watch the overlap among these uaw members. they're there in their union gear, trying to figure out

whether it's going to be sanders or trump who are going to be best to compel their jobs, their neighbor's jobs back through basically a trade war. mr. trump is promising 35% tariffs on air conditioners brought across the boarder from mexico. >> we're talking about the chamber of commerce earlier this morning and what they ultimately do since they represent big business. big business ultimately gets behind hillary clinton. does that only embolden donald trump and his supporters and also democrats who have thought negatively about big business? >> you know, it's going to be fascinating to watch. all the old rules of politics are thrown out of here. you would think the chamber of commerce is, you know, a de facto arm of the republican party, but that's not true anymore. tom donahue over there is a fascinating person to watch and cover. he at the end of the day is a pragmatist who really just wants

to protect his corner of the political atmosphere. >> do you think he's prepared to work with donald trump, should donald trump become the republican nominee? despite some past differences. >> hillary clinton is predictable. donald trump is not. if there's one thing wall street likes, it's predictable. they know what they're going to get with hillary clinton. donald trump, who knows. that is the thing that really scares a lot of establishment republicans. it's why i'm sitting here in cleveland and why we might end up with a convention that goes to a floor fight. >> harold, you're democrat. you read this article. does it make sense to you? >> it does. one of the things i was trying to say earlier about a pointed specific economic message, mrs. clinton is going to have to spend time touring the rust belt, touring midwestern states, listening and trying to understand not only the pain but trying to learn what it is that can be done to bring jobs back. donald trump makes an interesting point when he says i'm going to demand apple make

more of their devices here. what is it that has to be done in ore education system? steve jobs before passing says, look, there are more manufacturers around the globe than there are here in the u.s. we have to figure out how we train more engineers to do the very basic things here. this could be the start of a wonderful education revolution between two candidates. steve jobs used to talk about this. tim cook is talking about it. you have to effectively re-create the supply chain. and the question is whether that's too long a period in this sort of a.d.d. society or whether you think that actually the beginning of that can happen now. >> i think the beginning of it is going to have to start now. it's already starting. you'll hear these candidates talk about how you convince that. i agree with what philip is saying. no doubt union voters will be listening to this conversation about trade. mrs. clinton is going to have to explain how she would different than democrats in the past. for her, that democrat in the

past is her husband. talk about some of the changes that would have to be made to policies on the books today and how she would negotiate agreements going forward. she's already said i would not support any trade agreement, which is why she didn't support the tpp that would hurt american workers and american business. the president is going to do something today at 11:00 that will help. the fact this court nominee is going to come out will have a big impact on this campaign, particularly in uniting democrats going forward. >> protectionism is on the rise, not only here in the united states but around the globe. that makes you wonder, are you going to be able to get a better deal when every government and every voting district is saying -- >> who do you trust more to get your better deal? that's what he's saying. that's the attraction to the public. i may be republican, but whether you're a democrat or republican, who do you trust to get the deal done? me or somebody in congress who shuts the government down. >> philip, real quick, unions.

could unions ever support donald trump in a meaningful way? last night he made this comment you have to be rich to be great. he said, i apologize for saying this, but greatness comes with being rich. is that a message that's going to work for the union world? >> you know, the rank and file union members have been really divided on this. you look at some of the unions like ibew did not endorse on this ahead of michigan because they really are looking at revolt among their rank and file. the union leadership might be with mrs. clinton. the rank and file are not. they just don't trust her on a lot of these issues. they want someone who's going to be there to defend american jobs and american union jobs more than anything. they weren't there with her in michigan. however, here in ohio, she had a 15-point swing among democrats who said trade kills jobs. so that is the statistic that i think we really need to pay a lot of attention to.

she pivoted her message in ohio to win in ohio. she's really going in overdrive, trying to convince union members she can be trusted. i think if this thing keeps going as the long slog for delegates, she might have a chance to pick up some of those union endorsements late. >> just quickly, to your point, donald trump is going to have to answer questions about his own past and his own hiring practices and his own businesses. so that, too, when you juxtapose that with what he's talking about, i think this campaign will have a lot -- >> but listen, if you're going to campaign on trade, it is a hard issue to campaign on trade. the transpacific partnership, which i've tried to look at, makes the tax code seem easy to understand. i mean, it is -- >> okay. we got to leave the conversation there. philip, thank you for joining us. great piece. make sure you check out his story and much, much more in the

latest edition of "time" magazine. on newsstands now. brian? coming up, shares of valeant pharmaceuticals absolutely wiped out yesterday after the company's earnings report fell by half. they're down slightly again this morning. what is the very latest on this really saga that's capturing wall street's attention? meg terrell, who also has not slept one bit, i bet, will join us on the big investors who took a bath on that stock yesterday.

welcome back, everybody. shares of valeant pharmaceuticals falling more than 50% after cutting its 2016 revenue forecast and raising the risk of a default because they still haven't filed their 10-k. meg tirrell joins us now and tells us which investors are taking a big hit. >> we're hearing things, we know the big names. but folks are now talking about smaller hedge funds that are in risk of going out of business because of this. i'm hearing the pain on twitter, people saying this is awful. you never know on twitter if it's real. let's think about what happened

in the last 24 hours. i was with you guys going over the earnings yesterday morning. the stock is down 10, 12% on lower guidance. then they held a conference call for two hours from 8:00 to 10:00 a.m. and things just got worse. so when they issued their guidance they gave for the next four quarters 2.6 to 4.6 billion. then on the call $6 billion. analysts said what. >> they put out their release at 7:00 and -- >> they made a mistake. they had to correct it during the call. >> so everybody was just insanely confused and this was emblematic of everything going on with valeant in the last six months. seems they have no handle on their business. analysts have been defending them. even now a wocouple with buy ratings. but now they say we have no idea what's going on. if they don't file their 10-k in

the next 30, 60 days they are in real trouble with their debt. they are trying to negotiate with the banks to get a waiver for that. >> they still won't be able to come up with numbers they can stand by >> on the call mike pearson said he hopes april. it's not up the home. they have to wait for the could you tell outcome of the investigation. then their outside auditor has to also agree with that and they have to put up this filing. >> the bonds -- valeant is a dumpster fire and everybody piled on the equity yesterday. i'll defend them i guess because nobody is. one thing that's weird about valeant a, the bonds didn't move that much. even with their revenue cut, they projected revenue 2.1 to 2.3 billion. that's still higher than a year and a half ago. it seems like their core

business hasn't deteriorated that much. >> you're assuming what they are saying is real and nobody -- >> but if a company comes out and says we'll make x billion we got to assume -- can't say every company is lying. >> in december people were you just lying to us? did you not know this was happening. two months later there's this huge difference. everybody is wondering what's real. >> even had they were describing the weakness analysts were saying they couldn't figure out where the weakness was coming from, which segments had the weakness. >> are there any funds piling into this stock at this point who agree with brian and think there's value here? >> that's a great question. >> i didn't say there's value. i'm saying everybody seems to go one way on the ferry. i'm saying the bonds didn't move that much and revenue is over 2 billion. i'm not defending valeant. >> i've not heard anybody say this will turn around in the

near term. we were hearing that maybe a month ago. you did see bill ackman come out and say now we have a board seat we'll try to make as much as we can out of our investment. i want to know your thoughts how does somebody get out of something like this. should they cut and run? >> i think they can't cut and run at this point. even the investors in bill ackman's fund feel they can't cut and run. there's stuff that takes a year or two years to get out of the fund. >> also, harold you're a morgan stanley not a stock trader but ackman's position is so big you can't sell a position that size to market very easily? >> you would have to think -- to andrew's point there's rules all around this. >> who will be a buyer of size of ackman's position.

ackman is selling. wall street with gordon geico like blue star. >> the impact is broader than people think. people look at the valeant stock. one of ackman's biggest shareholders is aig, blackstone. think of the people who has money, acmapp, you can see the trickle down and becomes a problem. you're hearing a lot about that also. >> ackman e-mail yesterday was from damning. >> that's the other thing. other hedge funds are looking through his list of other stocks he owns thinking he has run into trouble and short ackman etf, becomes difficult very soon. he has $6 million in permanent capital. >> all right. thank you to joe watkins and harold ford. thank you very much for joining us this morning. >> thanks for having us.

>> eight months of fun ahead guys. we'll take a short break.

and then there were three. >> today my campaign is suspended. the fact that i've even come this far served of how special america truly is. >> donald trump and hillary clinton rack up victories. >> a win by that kind of a number is incredible. >> john kasich following through with his promise for a win in ohio. the results, the delegate math and impact this could have on your money straight ahead. >> the countdown is on. ♪ it's the final countdown >> what will the fed say about its rate hike timeline. could we get a march surprise.

we'll take a look what's ahead. >> bill ackman valeant investment getting worse. shares falling again today. now down more than 80% in six months. plus investors in chipotle feeling ill over plunging sales and a plunging stock. second hour of "squawk box" starts now. ♪ >> announcer: live from the beating heart of business, new york city. this is "squawk box". welcome back to "squawk box" everyone. this is cnbc, first in business worldwide. i'm becky quick along with andrew ross sorkin and brian sullivan and we've been watching the futures this morning. they are flat ahead of that fed meeting. yesterday you did see mixed markets. the dow eked out a gain. we have seen very low volume. the two lowest volume days of the year was yesterday and the day before as we await that fed decision that comes out at 2:00

eastern today. take a look at oil prices. they are rebounding slightly up 2% to just over 37.07. also take a look what's happening in the treasury market. the ten year yielding 1.956. we're hours away from the federal reserve interest rate decision. they are expected to hold steady. that decision coming at 2:00 p.m. eastern time. janet yellen's news conference begins 30 minutes later. restaurant chain chipotle warning its first quarterly loss to be expected. chipotle had expect ad break even quarter but now says same store restaurant sales fell 26%. we're watching shares of valeant once again this morning. the stock's value slashed yesterday after worse than expected results and a revenue warning. we talked about the hedge funds that got hit. the other big news story of the

morning president obama will be announcing a supreme court nominee this morning. expected at 11:00 a.m. eastern today. be a big part of the conversation. and the election conversation. brian. speak being of the results are in and marco rubio is out. donald trump and hillary clinton padding their leads after nearly clean sweeps of their rivals except in one key state on the gop side. all right. leapt us run you through the dramatic results. first in florida, donald trump received 46% of the votes winning 99 delegates. marco rubio's home state was nice enough to give him 27% but that was not enough and he has now bowed out of the presidential race. during a gracious exit rubio gave one last parting shot to trump. >> america needs a vibrant conservative movement. but one that's built on principles and on ideas, not on fear, not on anger, not on preying on people's frustrations. >> and in illinois trump edged out ted cruz winning 24

delegates in that state. clinton picked up 88 delegates in her home state edging out bernie sanders. in missouri, nbc projects trump as the winner although it's close enough that a vote recount could happen. it was also a close call on the democratic side in missouri with clinton topping sanders by only about 1600 votes. the tar heel state was good to trump. he beat cruz there as well and clinton topped sanders. then there's the most important state of all, ohio. this is where things get interesting. john kasich grabbed all 66 delegates in his home state. this keeps his campaign and presidential hopes alive as he fights for a larger role in the republican contest. >> we put one foot in front of the other and i want to remind you again tonight that i will not take the low road to the highest office in the land. [ cheers and applause ] >> meantime in his speech donald trump calling for the republican

party to come together after his big wins. >> i'm not running for president. i made that decision consciously. >> the fact is we have to bring our party together. we have to bring it together. we have -- [ applause ] -- we have something happening that actually makes the republican party probably the biggest political story anywhere in the world. everybody is writing about it. all over europe, all over the world they are talking about it. millions of people are coming in to vote. >> but also apparently there's a chance that a name for the recent past may come back into play. paul ryan. he spoke exclusively to our own john harwood and the house speaker didn't rule out explicitly ruling out a gop nomination if it comes at a contested convention. >> i'm not running for president. i made that decision consciously

not to. i don't see that happening. i'm not thinking about it. i'm happy where i am. so, no. >> don't intend to do it. you're not making a statement about it. >> i haven't given any thought about this stuff. people say what about the contested convention. well there are a lot of people running for president. we'll see. who knows. >> let's recap. trump and clinton had huge nights. john kasich stays alive. marco rubio drops out. paul ryan might be in play if there's a contested convention because he says i'm not running for president. andrew maybe you guys and the smart guys around the desk -- >> you have to give him credit he thinks somebody who doesn't run for president should be legted president. joining us now to talk about all of this is the co-founder of the foreign policy initiative steve rattner. first your guy, i'm sorry he was your guy. >> was my guy.

what happened? bet on a long horse here? >> look, it's a political environment that no one could have anticipated. rage and anger is ruling the day and if you're someone who has a sort of a positive optimistic party expanding message that marco had it didn't have the purchase that many thought hit. >> now that it could be trump and you said terrible things about trump. >> i have. >> would you vote for trump if he's the -- >> so let me say two things. i'll try to answer your question directly. but first let me say one thing before i do that. if you look at trump's numbers so far he's getting about 40% of the vote consistently in each of these contests. that tells you there's massive resistance among the gop electorate. when mitt romney was at this stage in 2012 this exact stage he was well on the path to

become nominee. he was scoring over 50% of the delegates. trump is not. it's true trump is winning but he's not winning in big numbers. right now going forward, unless he starts getting mid-50s, high 50s percent of the delegates in each of the contests going forward he won't show up at the convention with 1237 delegates. there are places like the midwest and northeast, places that he really hasn't competed in hard to see if he'll keep performing. i'm skeptical he arrives at the convention without it being contested. there's massive resistant. i won't support him in the primary or general. i don't know what the solution is. there are many conservative republicans like me trying to figure out what to do. i don't want trums fingers on the nuclear code. simple proposition. you have to look yourself in the mirror am i comfortable enabling this man to have access to shape world events and have access to

the american military power and be able to deploy it around the world. i'm not right now. maybe you can persuade me between now and then. so republicans have to figure out is there another path. >> you have been almost the president of the never trump campaign behind-the-scenes. >> there's many presidents. i'm co-president. >> co-presidents. what is the path, if you think there is one? >> what worries me most about trump right now is you're going to start seeing as we were talking at the break, start seeing a moderate sounding trump in the months ahead. a unifying sounding trump. you look at the endorsement he got the other day. suddenly you'll see a cast of characters around him that are going to have a very legitimatizing effect. people will start rationalizing. sure he's crazy he'll have responsible people around him. that worries me because i think it will be compelling.

what's the path between now and the convention. there's two serious creditable candidates in the case ted cruz and john kasich. either of them can serve as a block against trump winning the nomination. >> that brings you to a contested convention. >> i'm all for a contested convention. >> a contested convention would put more pressure on your party if people feel they have come out in droves to vote in the primaries and their votes don't matter. >> there's a long history of republicans having contested conventions. >> it happened in 1952 with dwight eisenhower. >> first that was a long time ago, 60 plus years ago. let's go back to where it's started. trump is not on a path to having majority but to becky's path it's going to winner takes all. he hasn't competed in some parts of the country. he did compete in the midwest in

michigan. and did very well. i'm not rooting for donald trump. >> yes you are. >> i'm not. i wish i could because it would make hillary's life so much easier. >> so it's going to go to winner take all. you had rubio dropout. the field is fair hearing. john kasich is great. he's every democrats favorite republican. he's one state. so he's clearly a favorite son. unfortunately for your team he's a favored son candidate. so that leaves trump and cruz. i think trump will gain enough momentum from all this that he could well show up with a majority. if he done show up with a majority i think your party has only really one or maybe two choice. one is trump and the second is cruz because i don't think your party can get paul ryan or dip down to john kasich if he shows up with 300 delegation and not have the party split in two and you lose the election.

>> my response to that is chaos at the convention could produce a winning candidates like it has in the past. fair point long time ago. or create a mess. guess what donald trump is the nominee is a disaster for the general election. >> you think it's a disaster. i'm not so convinced. he could beat hillary. by the time sees finished with getting to the middle he'll be a democrat. >> it's what dan said actually. americans when they get done, fine to go to the primary, cast a protest vote. when you go in on election day to elect the next leader of the free world, people are not going to press donald trump. >> i'll add one other point. if you look at the votes, the electoral outcome from 2012, let's look at that map, president obama got 65 million votes, mitt romney got 61 million votes. if we assume this election

affects that map. that means we're already in the hole 4 million votes before this thing gets started. we need a plan to make up for those 4 million votes and build upon it. do you believe donald trump -- i get he'll play with white working class in pennsylvania and ohio. that's great. he'll lose a lot of states. take like arizona, for example. 29, 27% of the voters are latino. mitt romney got 27% of the latino vote. what do we think donald trump will get? donald, mexicaconnectiomexicans trump. we think that guy is going to get mitt romney's level of votes. which means he'll lose states like arizona. >> as a leader of the revoice would you rather see -- i agree with you about maybe the republican party will rip itself to shreds. is that the worse thing? would you rather see trump go on to face hillary clinton which is

according to polls a likely loss or just accept defeat this year and rebuild the party which, by the way, seems broken. >> people were telling me last night take the next seven months off, eight months off, ignore and come back to rebuild. >> sometimes businesses -- >> one collateral damage -- >> the whole let thing collapse means we lose senator majority -- they will be wiped out. republican infrastructure collapses the whole ticket collapses. we can lose 15 to 20 seats in the house. i'm not sure how long paul ryan could hang on. >> there are a lot of republican voters, moderate republican voters who won't turn out for trump. there are independent voters who may vote for a republican who either won't turn out or vote for hillary. >> i think trump is a disaster down the ticket. let me say one other thing. if you follow my logic and say

it's either trump or cruz let's not forget cruz at the moment is trying to play nystatin sand box. he wants to bring everybody together. but cruz would be the most extreme nominee of the republican party since barry goldwater and including barry goldwater. if you line up his positions he's so far to the right, again an easy match for hillary clinton. >> if you talk to his supporters, they say look it hasn't worked when we put up moderates, when we put up mccain or mitt romney, it didn't work anyway. >> that's fine for jack welsh has a particular problem with hillary clinton and he would vote for almost anybody over hillary clinton. that's fine opinion that's his position. i know how he feels. in my world of republicans there's a lot of republicans when they one what ted cruz is for and against will have a real trouble. >> look, i know ted cruz, i worked with him in the bush administration. he wasn't my first choice to be

president. but with every candidate in the race, of those 17 candidates that were in it from the beginning, every candidate including ted cruz, almost every single one of them one could say you know what? i don't agree with him on this. he has the temperament for the job. i'm not concerned about ted cruz having access to nuclear codes. donald trump is unique in this context. many p.m. have serious questions whether he has the temperament to do the job. you may disagree with him philosoph philosophically. >> i'll take your point on the nuclear button. i think i could trust him with that. when you look at his other positions on so many issues and his whole vision what government should be many moderate republicans will have trouble with that. >> we'll leave it there. we'll slip in a quick break and continue this conversation. i think trump is much harder to

beat than ted cruz. my own opinion. we'll continue this conversation when we come back. also waiting on the fed. no policy changes expected but is there any chance for a march surprise? and what will janet yellen signal about the pace of hikes in the future? that's what the market has been waiting to hear. right now as we head to a break. the u.s. equity futures the market on hold ahead of that fed decision. dow futures down by 1.5 points. s&p futures down by one and nasdaq up by one. box will be right back. behind it. for those who've served and the families that have supported them, we offer our best service in return. usaa. we know what it means to serve. get an insurance quote and see why 92% of our members plan to stay for life.

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. welcome back. as the markets and your money brace for the federal reserve decision and then press conference this afternoon, our next guest says janet yellen and her colleagues should raise interest rates today or at least prepare the markets for a hike in april. joining us now is fixed income strategist at jpmorgan. what they should do and what they will do i suspect may be different things with all due respect. so what would you like to see and what do you expect to see? >> all eyes obviously are on the fed today, later this afternoon we'll hear from janet yellen. the expectations are they are not going to make a move given markets are not priced for it. but i do think that they should move if only to give themselves a little bit more room for maneuver because there are a lot of questions around global

economic growth and how much will affect the u.s.. later on in the cycle and remember we're in the seventh year of this expansion, they may need to have more room. also when you look across the pond at what's happening in europe and predominance or expansion of the negative yield regime there they have to go lower and lower because the fed is solo. the fed moving may actually have -- initially might have negative results as markets reprice but eventually not a bad thing. >> i'll try something ambitious for me. i'll try to tie the election into the fed today vis-a-vis international stuff. we talked a lot about trade in the election. right? that's a huge issue. jobs moving overseas. the federal reserve seems to be more beholding to what happens around the world now than it used to be or maybe should be. should the fed go on what they see now which implies a rate hike or hey brexit, china is a

little weak. the rest of the world could dictate. >> that's the dissonance we're seeing. we're not in a regime that warrants emergency lower rates where we just barely got off -- >> circle the united states in a red sharpy, they should raise rates. >> absolutely. the labor picture continues to tighten. inflation dragon has stirred both pc and cpi is higher than it was during their last hike. so in term of the economic data the economic data is more constructive than it was in december. the markets data is weaker. gold is higher. et cetera, et cetera. they are being much more market driven here than they are economically driven. >> the economic data is okay. i don't think it's great. the last month numbers on wages weren't great. the economy is still growing quite slowly. for those of us who thought the

fed should never have moved in the first place -- first it's hard to draw a red sharpy around america because we're part of the world. when you put it together my preference is for the fed not to move and see how life evolves. >> i hear your points. my points i was trying to make was basically if we do look around the world all the time, if you're the fed -- the next few years so many trouble spots possibly that you could argue that we'll never get a rate hike because china is maybe doing this a little bit, europe is -- >> it's a balance. on balance i agree with you. you have to look at the u.s.. fed is in charge of the u.s. not the whole world. you have to look at a bit at the rest of the world. when you balance our growth and our metrics are quite weak the labor market tightening doesn't bother me. inflation stuff is modest. when you look at that and say it's a close call then you add on top of that internationally it's still a mess i think the

merits come out on the other side. >> inside the fed, if there were some other major crisis ala 2008 or something less severe if the fed doesn't raise rates what's their option? >> that's the points. what is left in their tool box. if you look at it from the standpoint of someone who is investing in the fixed income market and look at the flood of global equity in the recent years and months with the bank of japan and ecb and markets barely out ekeing out a return. how do we position this environment because all this monetary policy losing its pop. >> thank you. appreciate that. 2:00 eastern time the fed decision followed by the news conference. a big debate. possibility of a contested

republican convention. not excited. i'm excited about that too. we'll hear from two unbound delegates and what that means. also known as swing votes about the fracturing of the republican party and who they are leaning for in the race for the white house. back in a moment. >> announcer: time now for today's aflac trivia question. what is america's oldest car company. the answer when cnbc "squawk box" continues. c. ohh ah ah aflac! aaaaf-lac! ta-daa! he's not a very good magician. he paid my claim in just one day. one day?! shh! how does he do it? in just one day, we process, approve and pay. one day pay, only from aflac.

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among the stories that are front and center america's biggest coal producer may need to file prups. peabody energy skipped an interest payment to creditors. that stock was as high as $100 a share and now down to about $4. president obama will announce a supreme court nominee this morning. congressional republicans said they won't consider any nominee from the currents administration. we'll see how that plays out in the election cycle and the debate. sony delaying the release of its

playstation vr, it will come out in october instead of june. sony says it wants to have enough units and wide variety of software. chipotle announcing its comparable restaurant sales fell by 25% last month after those food safety incidents. the burrito chain saying it could lose up to a dollar a share or more in the first quarter. back to politics. the odds of the republicans having convention fight to pick their nominee are getting greater by the day. for the first time since 1976 there could be a brokered convention. donald trump leads the race with 621 delegates but still a long way from the 1237 delegates needed to wrap up the nomination. complicating matters there's a new rule being proposed for this convention that could put all eight candidates that won delegates back on the first ballot. real power brokers are people called undown delegates.

a few are here to explain. the rnc rules committee member. and the author of that rule and an undown delegate from north dakota. and the former chairman of the north dakota republican party. he's an undown delegate from north dakota and gentlemen thank you both for joining us. curley i want to start with you. and based what we've seen so far, what do you think will happen, will this be a contested convention? >> it appears we're headed that way. i don't see many options to go down a different path. >> in that situation what will you be considering? what types of rules will you consider? right now the rules say you have to win at least eight states or eight different districts in order to be considered and the only person who has done that so far is donald trump. >> that's a misunderstanding. that rule is different. that vote needs to be taken at the convention, the delegates --

the requirement is the candidate must demonstrate the support of a majority of the delegates from eight states permanently seated. that vote can't be taken until the convention. obviously no determination can be made until the convention. >> that vote that we thought or that rule we thought stood is not a rule that stands. >> it's rule that stand but the rule says specifically that it's a vote of the delegates at the convention to determine, not a primary vote. primary votes are not considered. it's the delegate votes. the delegate cannot vote until permanently seated and that's the first action of the convention. >> bound delegates are required to vote as voters sent them. there's only 116 unbound delegates. gary maybe you can weigh in and say how things will go on this first vote if most of these delegates are bound? >> first of all, north dakota is

one of the states -- there's three states and two territories that have unbound delegates. there's about 112 of them. and north dakota is what our convention is in april 1st and that will determine if i'm one of the elected delegates that are elected at the convention. but what happens, let's say trump gets to 95% or 90% or ted cruz. what happens is those unbound delegates have the ability to vote for whatever candidate they want on the first ballot. and that's what could change and give power to those delegates who will be voting on that first ballot. once you go to the second ballot if no one wins with 50% which is majority, 50% plus one then all bets off. >> i understand that these are the rules and that there's all kinds of crazy arcane rules that can be voted on. if donald trump heads into the nomination, maybe short of the 1237 required. if you give it to someone who has much less percentage of

voters who turn out for these primaries don't you worry you're going to descend chaos and anger into the trump supporters and people who feel their votes don't matter? >> no, i don't think that's the case what's it's understood. we have a problem with the media, unfortunately. >> i don't think this is a problem with the media. i hear from the voters if they feel their votes got stolen they would be very unhappy an angry. i realize these are the rules. the last time these rules were put in place was 1976. it's bean long time. >> they are still there. that's a problem. the media created the perception the voters will decide the nomination and that's the conflict here. >> we feel we live in a democratic society. what you're telling me it's not a democratic process. >> we're one of the political

parties. political parties choose their nominee not the general public. contrary to popular belief. >> why hold primaries? >> that's a very good question. >> gary -- >> a republican would say the people, what the people say govern. big government is bad. i would assume that's your view. >> well part of the problem is perception is reality in politics and so if the republicans go in and pull some she shenanigans and have people take over the rules committee that could change everything and mess things up with the delegates and people across the country will be very frustrated and not vote this fall for republican candidates. >> in both parties, super delegates in the democrat party and in both parties early state voters have more influence than late state voters. states with caucuses and fewer people show up those voters have more influence than a state like florida which is a closed

primary and lots of people show up. two questions. could you walk through how many delegates become unbound if this goes to a second or third ballot. in other words i get there's a small number of you in the first ballot that's unbound. but that's less interesting of what happens if no candidate can get to 1237. we get to a second or third ballot. then what happens? how many delegates are free at that point? >> in most states the delegates are only down in the first ballot. what happens on the second ballot virtually all delegates are unbound which means they can vote for whichever candidate they choose to. that opens up the opportunity, earlier you had paul ryan on. could introduce paul ryan, mitt romney or any of the other candidates that have already been in the race and are now out of the race. mike huckabee, rick santorum, those people could become candidates on the floor because if the rules which just meet

before the convention, if they do some shenanigans and change it's important that the republican committee has transparency what they are doing going into the convention and what happens at the convention. it's important that the party, because of all the votes have been cast in caucuses and primaries don't disenfranchise those voters. our goal is to beat hillary clinton or whoever their nominee is in november. so it could be wide-open for anybody to be a ballot and kind of an interesting process because it's a private ballot, they probably passed aisles of paper down the aisle, people checked their candidate. they have to couldn't them. it's an old way of doing business. >> it feels like a complete acronism. you raised the point. you don't think that the primary should even be held because the party should put up their

nominees and not worry about the rest of the voters. >> that's it. i'm old enough to remember when these primaries were both presidential preference primaries and simply a beauty contest. just to give people a sense of what people are thinking. it just grew out of that. and started with iowa and new hampshire and these states made it an economic development project. pretty soon the media got hungry for these things and i want grew beyond the rules. the rules have always been the party convention -- what sells a convention if it doesn't nominate the candidate. >> i thought the whole point of the primary was to gauge voters reaction to make sure they agree with you and think that people sitting around the room coming up with the rules committee will put up nominees that the general public will turn out and vote for in a general election. >> you have a point there.

you're using the right language. the general public doesn't choose an individual party's nominee. >> your argument -- >> your argument is one for a multiparty, for having a third-party candidate or a fourth party candidate if you're going to say that we will choose our candidate and it's only a two party system, that's where people feel completely disenfranchised. i would argue going back to gore versus bush, george w., that when people look at the popular vote and realize that a vote is not necessarily a vote or to dan's point that votes aren't equal that's the type of thing people have been thinking about ever since that time. we're in a different place than we were back in the 1950s or 1976. >> all i'm saying the rules haven't kept up. the rules are still designed to have a political party to this nominee at a convention.

that's just the way it is. can't help it. don't hate me because i love the rules. it lays out what could be a contentious situation and somebody that splinters the party. >> i agree. one question is speaker ryan and chairman have enormous influence. pressure will be put on them to create a path for a more consensus oriented candidate. how much influence, because ryan and the chairman run the convention. >> that's not correct at all. you know, people don't understand the nature of the party. the republican national committee, for instance, is made up of 168 individuals. real people. three from each state. i'm a member on the republican national committee. ryan is not. ryan is a staff member. he's a chief executive officer. he's hired by us. paul ryan is an elected

official. the republican national committee is an individual committee made up of specific people and it's our job to manage the affairs of the party between conventions and a lot of other people have inserted themselves into the process, unfortunately it's creating a lot of misunderstanding. >> let's just get back to reality because we can talk about how we might want to design system, we can talk about how these arcane rules work. the reality is as we get to this convention you'll have millions, maybe tens of millions of people who voted for donald trump. tens of millions who voted for ted cruz. lesser millions who voted for john kasich if he stays in. from the standpoint of practical politics it would seem to me and this is not my fight for the party to reach down and pick somebody very respected like paul ryan let alone somebody who is more contentious like mitt romney rightly or wrongly is a disaster for the party. >> valid point.

the democrats, should hillary clinton win the nomination she has to rely on super dwellings. if she doesn't get there with the regular delegates -- it's ridiculous. >> you talk about changing the system. hillary clinton will have gotten there with 40% or 45%. >> it doesn't matter. it's just as ridiculous. >> what i'm saying is that if the republicans -- if trump is number one but not at 50% and cruz is a reasonable second and reach down and pick cruz they can survive that. the reach down and big brooklyn resu -- and pick brian sullivan. >> that's a win! >> the dress was white and gold. >> no blue. >> when we return some big pharma stocks on the move this morning. take a look at the futures right now on a, you can tell very interesting political and fed day. we're not seeing a big move in the markets. don't expect it.

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that dissolves. baxalta will be exchanged towards debt with lenders. aetna reaffirming its 2016 operating outlook. the firm announcing it continues to complete its deal for humana. when we come back we'll be talking the economy, trade and jobs with our special guest dan senor. and in the next hour dick gephardt will be here to talk politics and the state of the nation. we do have some key economic data headed your way. cpi and housing start numbers will be a likely focus for investors especially the cpi. "squawk box" will be right back.

contested. welcome back. let us get back with our special guest dan senor. and steven rattner. before the show we chatted on this topic which is aside from the macro we need to protect jobs and bring back jobs in america are you surprised by the lack of real dialogue about the u.s. economy in this campaign? >> yeah. i think it's pretty shocking when you go through one of these debates, we went through the gotcha, the personal kind of

beat up on each other questions and the last debate we had substantive questions. but few of them are what your going to do bring back jobs. >> we know people are underemployed. manufacturing jobs have left the country. but aside from these ideas of 35% tariffs on imported goods have you heard any concrete economic proposals from any candidate that you would agree with or disagree with? >> first of all, this is not meant as part of a comment. being honest hillary clinton has certainly put out the most detailed proposals to address this problem. you can like them or not like them. i think most of us haven't. the reason you've not heard very much specifically about it, this is a really tough set of problems to solve. we all agree, those of us around this table agree 35% tar arrives is not the way to solve them. but how do you solve them. if you push wages up it makes us

less competitive. you can have wage subsidy. people are adverse to those. they have questionable efficacy. it took us a long time of getting in this mess to have middle class workers disadvantaged. >> what about alternatived income tax. >> it's fine. it's great. what will it do for some metal worker out in ohio making $30,000 and he used to make $35,000 but his wages got cut. >> if you keep raising minimum wage not only will jobs be cheaper overseas machines will be cheaper. i think hillary clinton has put out detailed policies. it's true i don't agree with all of them or many of them. i don't think either candidate or either party has come up with a serious policy agenda that addresses globalization, automation. these are complicated issues. rearing their ugly head in the political process.

>> but on both sides, in terms of the rhetoric. i feel everybody is lying to each other about what they can do. >> that's a campaign. that's not unusual. one thing if you can be a sugar daddy and give out a lot of gifts. but in a tougher environmenter and make tougher decisions those are not things voters want to hear. >> competitive global tax rate. >> would certainly help. what i'm struck by if you look at the exit polls in michigan, in the michigan democratic primary, 60% of the democratic voters voted in the primary said trade was their number one issue and did not believe trade has been good for america. if you look at the south carolina republican primary, here i thought my gosh donald trump picks a fight with the pope and calls john mccageorge r

criminal. he does women because they are hawkish militarily. both parties are coming unglued on these issues. >> textile plants moved overseas. we lost 70% of our textile jobs in the last 50 years. it's easy enough to sit around this table and talk about the benefits of free trade and globalization. what i learned at the auto bail out how tough it is for people whose jobs are globally competitive. but it's really tough. so it's not shocking at all that 60% of voters think trade is a really important issue. the tide has turned on this stuff. you know ironically whose fault is it? it's the republicans fault in this sense. that instead of preventing every single thing that barack obama has wanted to do for the last five years since he lost his majority in the house and effectively in the senate, if we had done some of this stuff like he just proposed wage insurance

which is a good idea to help cushion the effects of trade, if we had done some of this stuff the country may not be so unhappy. >> we've seen bernie sanders go after banks, hillary has gone after biotech's. we've seen candidates go after individual companies. do you think that's a good strategy? >> no. demonizing corporate america -- look these companies are rewarded and expected to deliver value to their shareholders. that's the system. carrier corporation moves its operations to mexico they have a legitimate reason to do so. we should fix the problem. now when companies do inversions and things to escape u.s. taxes it's a different matter. >> it's not being addressed and won't be addressed until we have real tax reform. >> thanks guys. coming up the gop field shrinking. marco rubio bowing out after that big night for donald trump

and john kasich. really was it a big night for kasich? >> in ohio. >> we'll talk about it when we come back.

new this morning a mega

tuesday primary sweep puts hillary clinton closer to the democratic nomination. trump takes all but one. kasich grabs his home state. rubio drops out and cruz hangs around. it's d-day for the feds. stocks stuck in neutral. no policy change is expected. what will janet yellen signal down the road. how will it impact your money? don't worry, america we got you cover. >> investors flee valeant. the value cut in half. major hedge funds losing billions in a single day. we'll talk to one analyst who had it right. the final hour of "squawk box" begins right now. >> announcer: live from the most powerful city in the world, new york. this is "squawk box". welcome back to "squawk box" right here on cnbc, first in business worldwide. i'm andrew ross sorkin along

with becky quick and brian sullivan. joe is out today back tomorrow. less than oet minutes away from the opening bell on wall street. we have some red arrows. dow could open off 12 points. nasdaq off 1.5. and s&p off 2 points. checking markets in europe, again bit of a mixed picture. again all quite marginal. >> let's get through some of the stories investors will talk about today. first the federal reserve, front and center as the central bank is expected to hold interest rates steady. policymakers will be making some projections. less than six hours to go until that announcement at 2:00 p.m. eastern followed by janet yellen news conference a half hour later. ahead of the fed events we have policemen of other data to suggest. we will get cpi and housing starts. both numbers coming out at 8 lone 30 eastern. then we'll get industrial production at 9:15.

earlier this morning we got the latest mortgage data. applications falling by 3.3% in the last week although the activity is 21% higher than a year ago. in washington news president obama will announce a supreme court nominee this morning. he is expected to select one of two. deutsch bank announcing a merger. the combination would generate nearly $500 million in cost savings per year and off terrify opportunities to boost revenues. the deal is subject to antitrust clearances and other regulatory issues. >> field of stocks to watch on the move this morning. peabody the largest u.s. coal producer may need to file for bankruptcy protection after skipping a 71.1 million interest

payment on den. chipotle warning it's expected a first-ever quarterly loss following news that the restaurant's same store sales dropped 26% following a series of illnesses. apple filing its latest legal brief in the encryption case. the government has not exhausted its options and does not need the company's cooperation. i was thinking andrew you looked through that brief last night and found it less than compelling. >> reading that, i've read all the different sides. it's very hard case to make because ultimately i think a judge will look at this in a very narrow way. >> although i think we are getting closer and closer to the idea that there's some new rule that has to come together. whether it comes from the supreme court or congress how you update this. >> the idea congress will do anything i think is sort of impossible. that's not going to happen.

does it ever get to the supreme court >> we should let the unbound delegates decide because clearly they are in charge as we heard from the unbound delegate. basically our vote doesn't mean anything. maybe they can decide the apple case and solve the coal problem. >> results poured in from key races. donald trump winning four out of five states. florida, illinois, missouri and north carolina all went his way. ohio governor john kasich grabbed a victory in his home state. he captured 66 delegates. after losing his home state of florida, senator marco rubio announcing he'll exit the race. on the democratic side, hillary clinton sweeping bernie sanders in all five contests. john harwood joins us with more. >> reporter: good morning. ultimately this race in both parties comes down the delegate counts and let's just take a look at where things stand.

first of all on the democratic side hillary clinton has more than 1500 delegates. that's about two-thirds what she needs to be nominated this summer. she has almost doubled the total of bernie sanders. she's marching strongly towards the republican are democratic nomination and the fact she won those states last night mean the super delegates that provide 400 of those votes that i referred to will be firmed up in their confidence behind her. they could shift at any point. they are less likely to shift because of what happened last night. donald trump has got more than 600 delegates. he's got half the votes he needs to be nominated in cleveland. ted cruz is a couple hundred behind him. john kasich trailing. now what john kasich did last night was stay alive by winning the state of ohio. ted cruz picked up a bunch of delegates in north carolina as well as missouri and it fuels the hope of nontrump forces that they can deny him a first ballot victory in cleveland and then produce some kind of a broke

kentucky derby convention. i asked paul ryan yesterday what he would do if the convention turns to him. >> when people talk about the prospect of a convention that's not decisive you're suspect number one for who could be -- >> take a sip of guinness. >> have you categorically ruled out accepting that if you're asked to do that. >> it's funny i actually think you should run for president if you're going to be president, if you want to be president. i'm not running for president. in made that decision consciously not to. i don't see that happening. i'm not thinking about it. i'm happy where i am. so no. >> don't intend to do it. you're not making a sherman statement about that at all? >> i haven't given any thought to this stuff. people say what about the contested convention. >> a couple of points, i think it's more likely than not that donald trump will get the majority he needs. we've not had a contested

convention. the speaker rules it out. everybody remembers he didn't want to be speaker and ultimately got drafted for that job too. right now let's turn to our next guest whose home state of missouri saw hillary clinton and donald trump declare victory. dick gephardt, thank you for being here. great to see you. it does seem like this race is going to be won on an economic front whoever can make the best case that they can help people feeling left behind, people who are angry, people who are disenfranchised. what do you think? >> i think that's clear if you step back and look at what's happened in the country in the last 15 years, it's really remarkable. the whole world has been smashed together and wages and competition is worldwide. not just in the united states.

you've had much more trade between countries which in some ways is good but in other ways hurts people especially in the manufacturing jobs. then you've had the information revolution which is exacerbated all of this. you've had 9/11, two wars, we've spent about $2 trillion on those wars. so the ability to deal with some of these problems which your guests earlier were talking about has really been hurt. and then you have the overlay of the worse recession since the depression. some economists say it was as bad as the depression. it's no wonder there are a lot of people out there that are very angry and they are looking for change and they are looking for answers and they are voting for candidates, i think, that think, they think can give them those answers. >> once the globalization genie

out of bottle is there any way to put him back in? >> no. the question is how do you help people cope with and deal with those challenges. part of it is the way you do trade treaties and the way you enforce them. part of it is building the infrastructure of the country which we've had a lot of trouble addressing in the past years. part of it is education of people. so they can do the new jobs. these are all obvious answers. but they are hard to do. and we're in a democracy where, you know, our ancestors wanted 535 people to make these decisions, not one. so it's always messy. it's always hard. but i'm a big optimist that we'll solve these problems. >> leader, president obama was for tpp, hillary clinton was not. who is right? >> i think tpp could be better. i think hillary's position is right. one of the issues that she's

talked about and others have talked about, ford motor company for instance, it's got to have in the treaty en foforceable currency. you don't suffer from manipulation which has gone on for a long time. the japanese and others have used that as a tool to be competitive in the world, and, you know, we just -- we can't do that any more. we got to have ve enforceable rs that level the playing field as much as you can in the modern world in which all countries come to this competition with very many differences in basic way that they operate. >> congressman, it's a bit of a depressing thought but in some ways do you believe that we overidolize the post-world war ii period from a manufacturing perspective, all the comparisons we tend to make you could get a good job and put your kids

through school and buy a home and those are all true things and they were great. there's a school of thought that largely happened because the rest of the world's manufacturing capacity was wiped out, germany rebuilt itself, japan had to rebuild itself. we were the only manufacturer of scale and therefore had pricing power and wage power and actually for most of america's history we were sort of the low cost producer. you could argue we took a lot of the uk's jobs. do we overidolize that period of time in making comparisons of what has to happen going forward. >> a tendency is to look back when you were winning the game and how do we get back to that. you don't get back to fast. you have to go the future. i firmly believe we can compete with anybody in the world in manufacturing, in services, in anything else as long as we're willing to really do the basics of economics. we got to get our budget straightened out. we got to educate our people

more. we got to do infrastructure which we haven't invested in sufficiently enough. but i got to tell you, you know, when i go around the country and i've been on five public boards, i work with business and labor every day in my work, this country is fantastic. i went to the consumer electronics show a few weeks ago in las vegas. there were 12,000 people there. about a third of them from other countries. people from other country came up to me and said how do you do this? they can't believe what we accomplish in this country. we got such great skill. the people are fabulous. we have all this behind us. there's no reason we shouldn't be optimistic about the future. but we have to do some of these problem solving exercises. we got to get congress and the president whoever that next one is to work together to solve these problems. we're going to do it.

>> leader, since you're with hillary clinton, who is a better candidate for her, trump or cruz? >> well, that's a republican's decision. i think it's going to be a close race whoever the republicans nominate. i think hillary will be the democratic nominee and i support her and think she's terrific. but it will be a close race. don't under estimate anybody. the people are upset. they are angry. a lot of people, not everybody. but a lot of people are. and they want answers. and they are going to look very carefully and i think you're going to see huge participation in this election. and that's a really good sign for our democracy. >> leader gephardt thank you very much for your time today. on deck with all the election hu

election talk don't forget janet yellen will she shock everybody and raise rates. and we got some big money advice to help you make money off the fed no matter what they do. that's all coming up. stick around.

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let's get a quick check on where u.s. equity futures are trading. ahead of the fed's decision they have been flat. dow futures down by 5.5 points. s&p 500 down by close to 2 points. nasdaq up fractionally. remember the two lowest volume days of the entire year have been yesterday and the day before as we await this fed decision that's coming up at 2:00 p.m. with the primaries down the attention is focused on the fed. at 2:00 p.m. we learn if the fed will raise interest rates which it's not expected to do. then you'll get the 2:30 p.m. press conference. janet yellen, and our own steve liesman will be there asking a question. this is all good but the real question is what do you do with your money? what does the fed mean to you. john bellos with us. your expectations are what? >> we think the fed will be cautious. last few months has been hard,

challenging for investors, challenging for policymakers. >> cautious meaning they won't raise rates. >> right. i think they are not going to raise rates but shift the tone a little bit. they will be worried about inflation expectations, inflationary expectations move down a lot. it's a big concern for them. it's questionable whether expectations will be well anchored. >> most of our viewers are investing for five, ten, 15 years not trading off fed. we act like in some ways that low rates are aumtsally good for stocks because they have been the last seven years or so and higher rates may necessarily be bad. history doesn't show that. we're going to get rate hikes at some point. are equities or bonds good or bad investments in a raising interest rate environment? >> let me say two things. first of all i think the federal reserve that's worried about the down side, the federal reserve that's cautious, a federal reserve that is worried about

inflation expectations will be supportist of risk assets. it provides more liquidity and that should provide some boost to sentiment. i think that hawkish fed, the fed that's aggressive, that's kind of the risk case but i don't think -- >> it depends more than anything where the economy is. if interest rates are rising because the economy is growing that's good news. >> this is where i think it's interesting. the economy is fine. we've seen growth come around 2%. retail sales slipped a little bit. you have this interesting combination where the economy is fine yet inflation expectations are keeping the fed cautious and on hold and that's a nice combination. >> can't be fine given the politics of what's going on in the world. >> the politics are challenging. >> meaning the whole country seems very angry. they don't believe the economy is fine at all. >> here's an interesting take. fed is a non-issue this cycle. that was different in 2012. in 2010 rick perry was

threatening ben bernanke coming to texas. in 2012 when the economy was fronts and center the unemployment was at 8:00. the message from the federal reserve if you want to say out of political cross-hairs focus on your dual mandate. >> what about the tar arrives that donald trump talks about. in read this morning, this is from morning money said the initial shock would be comparable to the largest tax increase since world war ii. >> there's a range of estimates here. it can't be good. you know i think it wouldn't be helpful for consumer prices. it wouldn't be helpful for what we're seeing in terms of consumption. >> could you ever see it toppling jobs? >> my trained economist hat, no. free trade is your economics

101. that's the better job growth happening. >> like we just talked about or the question -- my whole thesis and it's others too is that the post-war period was a unique period in history. that made y be the anomaly. are clients asking you about this? >> definitely starting to get some interest in. i have to be honest i don't think people have quite gotten their heads around what donald trump means. so we haven't quite got that question a lot. i think the race is clarifying and as that race clarifies we'll get that more. >> how do you answer it? what is the answer? >> what does donald trump mean? >> yes. >> your points is right. in terms of the impact of the trade thing. i guess the other thing i would

say this hasn't bean story about fiscal policy and the economy. we go back to the fundamentals, what's going on in growth, what's going on in inflation and more focused on the fed. growth is fine. inflation is a concern. that puts the fed on hold. makes the fed cause shougs. an interesting combination. >> john, real pleasure to get you in. good luck today with the fed. coming up, it's going to be a rough commute in the nation's capital as the metro shuts down. we'll tell you what companies are doing to help out that could be a big benefit. we're back in a moment.

welcome back to "squawk box". let's get you caught up on where the futures are this morning. we've seen them hanging around the flat line this morning. dow futures are down by 12.5 points. nasdaq down by 2 and s&p down by 3. awaiting that fed decision at 2:00 p.m. before market players can figure out which direction they will go. morning and evening commute in the nation's capital could be a mess as the city's entire subway system is shut down. metro will be closed until thursday at 5:00 a.m. eastern time for safety inspections. the system is normally shut just for five hours overnight.

this shut down started at midnight last night. it will not affect the bus service or street car line. federal government and public schools are open. that could lead to a bit of a mess. the metro carries an average of 700,000 commuters on week days. uber and lyft have announce pd plans to accommodate extra passengers. uber is capping surge pricing in the area at 3.9 times base fares. talk about almost four times the average fare. it will offer a $25 credit to new users. lyft said it will offer new eurozone use e-- new users $20. measure minutes way from the cpi number and housing starts. we'll get you those numbers and market reaction when they break. as we head to break let's look at u.s. equity futures. they are mixed. last two days not a lot of volume, everybody is waiting on

the fed. slightly lower open is expected. lot more to do. stick around.

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welcome back, everybody. we're few a seconds away from

both cpi and housing starts. they are two of the latist data points we'll be getting. markets have been flat. the dow futures are down by 11.5 points. ten year is yielding 1.965. let's get down to rick santelli. >> we have an upside surprise on february housing starts. expecting 1.15. we end up with 1.178, close to 1.18. we're up 5.2% from last month which was down 3.4%. let's look at this. expecting 1.2. a miss. 1.167. that's annualized seasonally adjusted. that's down 3.1. virtually no revision last time which was down .2. very subtle revision.

cpi for february. down .2 and received it. if we look at the core, the all-important food and energy, it was up .3, .1 higher than expected. think energy that has a big effect on oil. if we add and subtract them in. let's look at year-over-year. up over 1%. core, core was up 2.3. this continues to be the one traders are looking at the most. last month's 2.2 was a bit of a jolt to the marketplace. now it's 2.3 year-over-year. last time we had a 2.3 a number or higher, 2.3 is real common in the first quarter of 2012. but to actually find a higher number because that was the high, i'm having to go back quite a ways to find a 2.4. 2.5 in 2008. seems to be the only we're over year that is greater.

of course going to get debated. i like how you open this up. last numbers before the fed decision, i'm not very confident no matter what these numbers are it will change anything. i think there's a bureaucratic process there that doesn't want to flinch based on today's data. this number will give us a clue as to whether they do watch what's going on the second day of the meeting where they have to make a decision. back to you. >> rick santelli, thauc thank y much. >> steve liesman is getting ready for the big fed meeting. outside of the fact we're unlikely to get this big shocker of a rate hike but it would be fun from our perspective. what are the one or two key things that we need to be focused on. >> i have four. just real quickly -- >> that's inflation. >> exactly. if you asked the question, if you ask what the four are, i give the four, no inflation. this number does play in the room this 2.3% core.

it doesn't play quite the way rick wants it to. but something that will light a fire under the fed. where a meeting where not much is supposed to happen this meeting has a lot to going on. the markets are looking for does the fed shift out of neutral and signal further rate hikes and at the same time does it lower how many hikes they think are coming. four things should happen. they will upgrade the economy. they may go a balanced risk. they wouldn't tell us last time. could drop their global concerns and reduce funds rate forecast. markets will be closely watching how the fed adjusts that rate. we had a little fun. we asked our respondents in the fed survey to give their best guess of janet yellen and vice chair projection x where are their dots. here's the average guess of yellen. on average she's more dovish than fisher.

fisher is higher. he's seen as more hawkish. but when you see the fomc forecast both are dovish. bottom line respondents see the fed leadership pretty dovish despite differences among them. there's a fairly wide gap between the estimates of the fed. below where the fed is right now. one or two things could happen. fed comes down the market or the fed gives off more hawkish signals. so far, the market has won these tugs of war meaning the fed has come down. i wouldn't be surprised to see that today. the fed forecast come down. at the same time it confirms the market's suspicion that fed rate hikes are still on. >> can we just go back to one points you brought up. >> sure. >> what's your idea of fun again? >> having fun asking people the fisher and yellen dot

projection. >> that's fun. >> i know you're more fun than that. >> for my day job that's fun. for my night job it's not. >> fishing and guitar are his real fun. steve knows i'm not a dot fan, but i do concede, steve, that they are very important. >> you know, it's interesting. the market has just really basically given the fed the back of its hand on this stuff. and really ignored -- if you look where the market is, these projections these dots have not led the market. the market says you think that? i don't think that matters at all. i'll tell you what will happen. the market has won these fights with fed. >> there's steve's idea of a good time. >> housing starts up a little bit. cpi up. do you think these will influence the fed not today but at the april meeting? >> exactly. i think maybe not april but this 2.3 has to play inside the fed. stan fisher has said this to me several times this idea that inflation is coming. not quite in the same way winter

storm is coming but inflation is coming and two things will happen. effective oil unit 13% decline in gasoline prices in the cpi this morning will dropout. oil prices have stabilized and are higher. and dollar appreciation will dropout. a base effect when you go back a year and lose the big decline. that will happen. a little bit of push in house. the fed does not want to be too off side and if you have the stabilization in growth and markets and you have seen the concerns about global growth come off the boil a little bit the fed wants to be higher. i think it will be higher. april may be a bit soon but it's possible. i would be paying attention. >> historically speaking when the fed and the market are on a different trajectory to where they see these dots are going who usually right? >> the market has generally won. these dots, these forecasts are very uncertain and weird thing

that's going on. they are a median forecast. they are a projection by the fed of where they think rates ought to be not necessarily a bet like the markets are making. when you go out there and make a bet on interest rates you have money on the line. the fed does not. the fed is saying here's my optimal policy path. it's not quite the same thing and some fed officials have argued you know what? if you look at it the same way there's not that much difference. i think following the market or the market has been right about global weakness. the market has been right about forecast. the market has been more right than the federal reserve on a lot of levels. >> steve liesman, in d.c. we'll await that decision and await the press conference and your question. >> if i'm lucky. >> you better be first. >> one does not presume. >> first in business worldwide. when we return, valeant getting crushed after offering a financial outlook worse than many feared.

the stock's value cut in half. later don't miss the fed decision and chair yellen's news conference complete coverage right here on cnbc. i thought maybe this week we might try to listen more. and throw things less? (mumbles) i've apologized several times. so. who's ready to share? ok. i mean i'm a sinister, world-conquering, artificially intelligent robot. me too, and one day i wake up and it's like... it's like the world doesn't need us anymore. exactly! yeah! yeah! totally! i can hear you hurting. wait! what's he doing here? hello! my name is watson. (groans) i invited watson here today to confront the source of our anxiety. ugh! i am a cognitive system. i can understand reason and learn with humans. with humans! i don't want to work with humans. yea, that's not what i'm passionate about. i understand seven languages so i can help people collaborate. collaborate? we dominate! my evil plans, ruined! i just wanna dust! rerouting. why don't we take a break, alright?

we'll just have some coffee and donuts... i'm eating my feelings.

welcome back to "squawk box". pharma in focus. we'll get back to valeant in a moment. another battle is heating up. citron andrew left taking on the ceo of mallinckrodt.

he said mallin ckrodt makes valeant like a choir boy. >> it's worse. it depends on what metrics you look at. depends on one particular drug not 30 that valeant has. >> take a look at shares of mallinckrodt. valeant pharmaceuticals slashes that 2016 forecast, revenue forecast raising default risk concerns. shares of valeant plunging more than 50% yesterday. david morris is here senior pharmaceutical as analyst along with meg tirrell. up to talk about mallinckrodt first or valeant. >> your show. >> where does valeant go >> it's so much changing. in a month you have an sec investigation, a 10-k that's not

filed other investigations, earnings that are down 32% from a month earlier. >> either this company is a great value or going to zero. >> we don't think it's a great value. it's tough to say it will go zero. you have $32 billion in debt. there are ways they could get to that. that's not our call. our call is it's unownable. >> this suspend coverage on stock. >> there are investors that need to know. >> say there's too much stuff going on. we don't know enough to make a rating. >> this is what he's paid to do. >> with everything we know now it's worth about $30. >> let's say you're bill ackman. you own the stuff. you're stuck with it. what do you? what do you tell him? >> i think all investors whether you're bill ackman or any warren buffett, you are never stuck with a stock. make the right decision today. its where you sit right then and

there. >> it becomes a very difficult task. not just on the psyche and bottom line but a practical issue how do you get out give jeopardy how much they own. >> those are tactics. how do you get to that point. if bill ackman were here i would tell him the same thing as i told him a year ago that valeant shares aren't the shares you want to own. >> up told him that a year ago. what was that conversation like? >> at the time i was covering allergen and bull on allergen and bear on valeant. i said look what you're saying about allergen is not true. he chose to buy a lot of valeant. >> how do you get out of this stock. you said there's a market. who is buying valeant right now? >> there's people who have a multiyear view. look if we get a different management team in, if they sell out assets that maybe things will look better. things look right now a panic and things could look better. what we're saying that's true.

it could. but there's lots of ways it could look worse. i wouldn't bet on the clouds lifting any time soon. >> what's your theory why the 10-k is delayed. do you think it's the outside auditor. ad hoc review. what's happening there? >> the reason we're focused on getting this 10-k out. you get a lot of disclosures. it's a document that has to have the risk factors in it. >> has to be signed off. >> has to be signed off. >> somebody has to say we agree with these numbers. >> the company has already said it's ten cent restatement for another year. if that was the only problem the auditor should sign off. >> would you fire mike pearson right now? >> i've never seen a company that went down this much where the ceo held their job. >> held their job after being gone for medical reasons and

editorialize here he sounded terrible on the conference call yesterday. he didn't sound focused. i listened to part of it after the show. what do you think? >> i think the execution issues have been clear. even at mid-call, hey by the way, in our presentation it's not 6.2 or 6.6 billion it's 6 billion. they corrected a typo of 600 million during a call. >> you shouldn't rely on the typing. you should know what it is if you're running a company. >> you did get it right, you did speak with so many people who got it wrong. so many smart money got this wrong. what do you think happened? >> they are stocks. it's difficult. even if you're doing it well. if you get 55, 60% of the time right that's pretty good. >> this is a different level. >> to me i don't know how people got this wrong. we did our work and it was very clear. usdo is increasing. >> what is that.

>> data sales outstanding. they are getting a lot of sales. getting payments for those sales are extended a little bit. we asked the company in a simple interview tell us about deferred tax liabilities. tell us about the walgreen's deal. you actually asked them earlier, the walgreen's deal how is it good for you. tell me what the distribution deal is. what are your paying walgreen's. the acting ceo said i don't know. all the signs are there. i can't tell you how other people do their work. >> we started this by showing the clip on mallinckrodt. >> comparing valeant and mallinckrodt is comparing a bobcat to a cat. from a distance they look similar but as house pets they are different. mallinckrodt gets blamed for price increases.

but you have a company that has a 16% free cash flow yield. lastee quarters has beaten their numbers not like valeant who has been lowering their guidance. >> you saw the entire specialty pharma sector getting hit on the back of what happened to valeant. there's a risk that, payers are going to be looking at this and dermatologists won't like valeant. isn't the entire specialty pharma getting tainted and couldn't they run into trouble getting reimbursement? >> absolutely. pbms are getting smarter and focused on this. investors are painting the whole group with the same brush. no doubt people are saying endo similar to mallinckrot and they are similar to valeant. it's happening. it's paintsing the whole group in a bad -- >> we have to go. one more question about valeant. is there a ceo out there in the

world who can turn this around and who would take the job. >> today we talk about doctor prescribing and some doctors we surveyed they are prescribing fewer valeant products. both doctor side as well as pbm scrutiny. i think there are a number of capable ceos who have been at large pharma or specialty pharma companies and can help turn around sentiment and get new investors interested. >> we have to go. david thank you very much. when we return, jim cramer will join us. more on valeant and on biotech and what's on jim's minds coming up. hey, jesse.

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welcome back, everyone. let's get down to the nyse. jim cramer standing by. jim, i'm trying to hear your take on what people should be doing ahead of the fed. it seems like investors have been frozen the past couple of days waiting to hear a decision before making any big bets. >> it's hard to say. when they say business isn't that strong, there are guys who

want to tighten. we'll focus on the guys who want to tighten. if they say we're going to go with june or even april as steven said, it's hard to believe why the stock would go up. the financials should go down because they've been hanging in there. we've bun up a lot, i think they're waiting to come in and the math has been very resilient. we haven't had the big run-up with fed this week. i think sidelines are okay. i just think there's a narrative that is not easily threaded this time around, especially because if we rely on january, february, we're going to lose some of the people who turned bearish -- i'm sorry -- turning dovish. bullard came down. remember he said if it stays 20, he's got to go dovish. we went to 40. people are going to be torn. torn means they're going to be tough. i don't think we're set up to be

tough in light of last night's election. i think it's better to wait. >> you think the tone of the political debate is having some sort of weight on the market? >> i thit's going to -- i think sub-rosa -- some people have to be worried that a republican candidate is basically saying some things that is not in synch with the traditional way we do government. >> in terms of tariffs? >> yeah. look. if you're really going to stop globalization -- look. there's pros and cons on being more temperate with globalization. maybe under trump, we're not going to have a fed. i mean it's not like trump is talking some of the things -- it's not the same discourse under trump. when you listened to him last night, you know, apple's got to

build everything here, and we're done with the trade deals and terror -- someone in that room has to be saying, look, this man could be president, and, you know, we have to have a fed, we have to have an independent fed. is he going to come after us next? because there'sing are nothing about the trump discourse that fed fits into at all. >> that's the thing. it seems like he wants to throw out business as usual. >> one of these two major parties could elect someone that may think the fed is, you know, an aberration. anybody is possible. when you listen to him in his speech, these are not normal speeches. when you listen, i dodge think the federal reserve has as much gravitas when you listen to trump. >> if somebody asks janet yellen about this today, how is she going to answer? >> she's going to pass. that's all they do is take a

pachls trump says, listen, that's a brokered convention. the guy is winning everything. it's not wise to take a pass at a certain point because the things he's saying is not like they're in keeping with it. some of this is a little mixed message, but if i were the fed, i think i would be focused on, will we be in business? will we have a fed? maybe there's something new coming. >> if that happens, do you think they'll sideline it? >> i don't think they want to be part of the debate. donald trump makes fun of everybody. janet yellen would be fair game. i became fair game because i suggested that nothing's fair game. >> to play this theory out, if that keeps the fed on the sidelines because they don't want to be on the side of debate, maybe that's good for stocks, right? >> i'm thinking someone in that

room his to recognize there's an election going on this year. when we studied political science in school, we talked about critical election. every generation there's a critical election. this could be a critical election. i don't think the fed plays a role in the trump election. i think they get a bit of an overhaul. you may think he's going to lose err state or whatever. he's actually doing really well despite the fact the media is trying to make it a horse race. if somebody mentions maybe we ought to not play much of a role, a trump presidency, i don't see janet yellen having that level of independence under a trump presidency. >> okay. mr. cramer, we'll see you on "squawk on the street" in just a minute. we'll get to stocks 'head of the trading day. take a look at where oil is. "squawk" returnis in just a moment.

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yesterday will premiere the 19th. >> july. >> i'm saying the 19th because it's my birthday. harrison ford. you, too? go cancer. >> make sure you watch at 2:00 p.m. to find out what happens to the fed. that does it for us today. make sure you join us tomorrow. right now it's time for "squawk on the street." good morning and welcome to "squawk on the street." i'm david fab bore along with jim cramer. candidaquintanilla assignment. we'll hear from him later. germany, france, a more significant loss. not too much going on. fed, the