good morning it is 8:00 a.m. at nike headquaters and 11:00 a.m. on wall street and squawk alley is live. ♪ good thursday morning we're back at full strength at post 9.

kayla made her way back after south by southwest. henry is here, editor, founder and ceo of business insider on a day when the dow is 24 points away from break even for the year. first up tim cook talking about the company's brawl with the fbi in an exclusive interview. he talks about how the government should be pushing for more and not less encryption and calls the notion of going tark raised by law enforcement as he says crock. his senior writer, it's great to have you, welcome. >> thank you. >> no signs of backing down as far as you can see. any cracks in this? >> cook is passionate about this. he's going to take it. it's going to end up in supreme court or congress, he's going to take it all the way. >> he is a southern guy at heart. he feels like as long as apple has been working with the government if they were going to sue apple they should have told

him first. he shouldn't have read about it in the press. has this taken on the passion that apple versus samsung had where it seemed like they were going to pursue that to the ends of the earth. >> they field strongly about privacy and their product. they don't like other people messing with them and if they did what the fbi wants them to do it would damage the entire apple security ecosystem and that's somewhere they're never going to go. >> it seems that he is still trying to grapple with what the purpose of the government is in all of this. he mentioned that he believes it is to set a precedent. where do you think he's coming from there? >> it's all part of a larger issue having to deal with the right to privacy. can technology companies go around giving private citizens strong encryption which will allow them to hide their data from hackers but also from law enforcement and on that debate, cook is proencryption. >> and having talked to him and

apple do you feel like this conviction is coming from the traditional silicon valley view that governments are terrible. all islands unto ourselves. privacy above all. do you feel like apple understands what the responsibility of the president of the united states is to protect the country and law enforcement to figure out whether people have committed crimes and then put them in jail and they're going to hobble that if they do it? >> cook's point is that if you take away encryption from the iphone t bad guys are going to get it elsewhere. they're going to fine encryption and get it from russia or where ever they have to. they're going to stay encrypted. meanwhile you'll be punishing the good guys. they feel like it's going to make it worse for everybody else. >> i'll ask you a question. they have a product announcement coming up early next week. whether it's true or not, people believe why not unveil an

unhackable os now and make the product cycle part of this political discussion. >> effectively they had done that and part of what tim cook is not saying in this when he's saying they're make megabreak my product is its only relatively recently that apple introduced this unhackable system. they brought it up so it's good that we're having this dialogue and when we first talked about this, when the news came out, that's the thing is that the country said where do we fall out on this and let's think about it from a high level. not on this one particular phone but a high level to your point which is apple's view. let's all get encryption. law enforcement can still do its job. you can defend that argument. >> how practiced was tim cook? had he rehe heararsed his lines was he off the cuff? it seemed that apple was a bit slow out of the gate on this argument. a bit blind sided as he suggested by this lawsuit. how deep is tim cook in the all

ritz act and the issues in this case frlts make no mistake. this didn't come out of nowhere. this has been brewing for awhile. they have been talking, the government, about banning or weakening encryption for a long time. there was a case in brooklyn this fall where drug dealers said i forgot my pass code. government invoked the act and apple said no and the judge upheld it so they have been down this road before. >> but tim cook, i still want to know was he rehearsed in his responses to you. >> you always look for that and somebody reciting press releases. when he said the whole going dark idea was a crock. i don't think his pr team wrote that for him. that was straight cook. >> this was a fight they have been fighting on different fronts for some tile. is he exasperated?

>> i think they will take this as far as it has to go. what they want is for this to take a long time and while it's coming up with a long time they will come up with a technical fix for this where it will take them out of the equation and the government will have to leave them alone. >> my question is whether that happens on monday or that's harder to do and it happens down the line. >> don't know. >> great. going to be widely read. thank you for coming in and talking about the experience of putting that together. >> thank you. >> you can grab a copy of the interview with tim cook. it hits newsstands tomorrow. in the meantime, apple has started storing some of its iphone data on google's cloud platform. much is on amazon and some reports say apple is cutting back on its wrus of amazon. amazon is an investor and business insider but netflix higher.

some people think maybe the cost of storing data, of serving through the web servers. got a little less expensive. >> you now three big competitors that are really good at this. the reason amazon was able to build such an amazing business so quickly, it was the first. now you have google and microsoft, very credible alternatives an they're in a pricing war and if you're am it's hedging. it's saying we're going to play you off against one another and use the infrastructure while apple builds it's own and the key point is its actually tough to do this. that's why ibm and some of the older big computer firms have not been able to whip up the solution to compete with amazon. it's difficult to do. >> how much of this is apple trying to gain a competitive advantage by sampling it's competitors and seeing exactly how they do things. >> that's a good question. it's probably more just pragmatic. they need a solution for peak demand. perhaps when a new iphone comes

out. they have a huge surge of traffic. they can off load their nonhe essential traffic into the cloud during that time. give that to google. give that to amazon. apple being the size business it is, it can negotiate it's pricing in this. probably not making a ton of money off of apple as a customer. i don't know about the strategic importance of this. i'm not sure that apple wants to be an infrastructure as a service provider. >> they want to build all the data centers where they're the primary service providers to themselves. now a lot of us are storing all of our stuff on apple servers which right now is amazon. >> when you're building it for yourself it's completely different than if you were building it as infrastructure, the kind of thing they're buying

as a google or amazon. so seeing how those work i'm not sure how much that's going to benefit apple. >> interesting side note, not to digress, the way amazon developed this whole thing in the begin as good they realized they had to build it for themselves and they realized how hard it is and they said wait a minute hundreds of other companies need this. let's sell it. >> sounds familiar on a day where fed ex has earnings as well. >> exactly and it's amazon's secret plan to build a fed ex. >> you don't know logistics. aws just had it's ten year anniversary this week. good to see you. >> great to be here. >> meanwhile we're taking a look at the market which is are rallying after the best close for the markets for 2016. the dow is up 74 points. we're close to break even there. the s&p is up by a quarter of 1%. the nasdaq has been in negative territory for much of the morning it remains down 8 points. shares of williams sonoma

falling after missed estimates. the company did raise it's quarterly dividend by 6%. they said the weakness came largely from pottery barn and it's down 5.5% and valeant also falling out with predators demanding tougher terms after the drug maker delayed filing annual financial statements. it's down 8% today but carl it's down 53% this week alone. >> when we come back as am continues to fight against the fbi, the debate over encryption. why it's more complicated than most people think. he'll tell us why. plus it's been a tough time for pandora. shares down close to 50% in six months. we'll talk to the company's cfo on an exclusive and heavy hitters in entertainment. we'll talk to the director of the jinx on hbo and top producer of the walking dead in a moment.

i really love this column. i of course agree. this tends to get blown out of proportion. people say open is good but don't think about the fact that google locks down the parts of its business that are really important to it where it makes

profit. apple does the same. lots of businesses do it. what part of the open versus closed understanding do you think is particularly important for consumers to know about now? in this era of cloud or mobile? >> you know, john i think consumers actually should pretty much ignore it for the most part except for one part, one aspect of it which is are you buying a device or a software platform which allows you to gain use of third party hardware apps and editions but for an average consumer that doesn't care about what's going on under the covers.

they're going to make sure if i'm going to buy a smartphone or laptop and cloud service i want to make sure that it runs across all the different platforms and i think both qualify there. in. >> digital media these days people aren't talking about this much anymore. when itunes downloads first came out people were talking about i want to be able to play this file on any music player. i don't hear people saying i want to be able to stream my spotify account into itunes or i want to be able to play pandora in spotify or netflix through hbo go why has that aspect of the debate gone away? >> first of all it's a certain level of exhaustion but secondly in terms of the music and you

may prefer the way play lists are done. they license the same stuff and that was partly what gave rise to that. on things like netflix, you know, i think people just want what they want when they want it but there's a real raging competition now and hulu has particular advantages. netflix has advantages and i don't think that you'll see any of the cross breeding there.

>> there's been reports for years that the android system is responsible for call it 90% of all cyber security breaches and i'm just wondering if you do see any proof that being an open platform actually does have some security risks. >> so, part of it is being an open platform and part of it is the way google is operating if you are purely open source that means bad guys can also get the entire code and it makes it a hill bit easier for them to figure out how to do malware on it because it's open. the countier to that is tweeting right now and i agree with it. up to a point is because the open course kmun is large and

they can snuff out the flaws in it that let them do bad things so it's self-correcting and some of them would argue that it's better than relying on the wisdom of the people at microsoft or at apple and the thing that's important to remember is that google doesn't review the apps before they go into the store. apple curates and reviews the apps before they go into the store and at one time that meant that apple was turning down a bunch of apps. now it's pretty much. it's so rare that if they turn one down it actually becomes a story. but the difference is google will look and they'll get complains and pull it off but

not until it's already caused some damage. >> well, thank you. perhaps it comes down to convenience and available. that's the real open. always nice to have you. >> thanks. love to be here. >> up next, a lot of talk about amazon taking on fed ex but the shipping giant says it's not worried. it called any threat fan tsa cal. the stock is up about 11% this morning. check this out, the dow is very close to break even for the year. it's about 10 points away. the number to watch, 17,425. squawk alley will be back in a moment. wow, that was random. random? no. it's all about understanding patterns. like the mail guy at 3:12pm every day or jerry getting dumped every third tuesday. jerry: every third tuesday. we have pattern recognition technology on any chart plus over 300 customizable studies to help you anticipate potential price movement.

there's no way to predict that. td ameritrade.

get you a look at the dow. 17407 is fewer than 20 points away from break even for the year. of course it brings to mind january 20. got to 15450.

it was down about 11% and then that famous february 11th low, the jamie dimon low we have been calling it late hi but amounting to a do over for the dow. we'll see if we get there today and what that means for the rest of the year. >> meantime hillary clinton's pledge to take on wall street is putting her in confrontation with a key part of the industry. mike, how different is what she is proposing from what bernie sanders already proposed? >> it's narrower. it's only meant to target a certain kind of high frequency trading. so part of the problem to restrain risky wall street behavior is a plan to tax high frequency trading. he is trying to raise a lot of money supposedly. clinton would only tax certain types of high speed electronic trading. here's how her campaign sets it out. the growth of high frequency trading has unnecessarily

burdened our market and enabled unfair and abusive trading strategies. that's why clinton would impose a tax targeting specifically what she calls harmful hft. she would do this by taxing activity that uses excessive order cancellation. automated trading systems constantly post rapid fire orders and cancel a lot of them. that's men to get harmful hft. countering this, this is an advocacy group for the electronic trading industry. such attacks would punish legitimate market making functions and hurt trading liquidity. they call it authentic market making efforts and say it would limit an inexpensive way for investors to determine a fair price and the ability to negotiate prices freely helped risks and made costs very low. so the big question is how they work and whether it would be a top priority of a possible

business agenda. it's out there. it's one of these things that i think clinton is wearing as part of her badge as being tough on wall street. >> of course we'll see once we get into the fall how likely something like this would actually be to put into law to implemented on the ground. it's unclear at this point. >> very thorny and messy and i don't know that it would be a top priority but it's out there. >> mike, thank you. >> and fed ex rising sharply on upbeat earnings and guidance. the company taking aim at amazon when it comes to shipping says it would cost tens of billions of dollars to compete with fedex. here's what fred smith said last night on the conference call. >> the concerns about industry disruption continue to be fuelled by fan tsa cal and let me emphasize i chose this word carefully, articles and reports which are devoid of knowledge of hoe gistic systems and the markets which fed ex serves.

>> now the thing that concern me hearing fred smith say this is that it doesn't mean amazon has to create an entire fed ex to really disrupt the industry just like it didn't have to build out an entire barnes & noble to change retailing. amazon already spends, i'm looking at the 10k here and the 2015 number, $11.5 billion on shipping cost and that grew 32% year over year and also has shipping revenue because it gets revenue from the sellers that operate on its platform but it's quickly approaching $15 billion a year on spending for shipping. for a company as efficient as amazon do you think they're not looking to optimize that? >> that play is getting the most play. what's interesting is that fed ex cfo said he thinks she should be paying more for delivery. so yes they're spending and cutting capex into their network but he thinks some of the cost

should be shouldered by the price of shipping going up to reflect what they are spending. that's going to be a tough thing to get some of your clients to do. >> certainly we spent quarters talking about people trading down in shipping costs and that was a big reason for the stock's long time pattern until the past couple of months. >> and amazon snows where the levers are for growth. they have been building out in the new york area and other areas. using the postal service and also building out same day delivery using an uber-like flex network where they have their own drivers delivering packages. i turned into an amazon junkie. i'm here in manhattan. i don't have time to buy things in person often. i see these cars coming by and dropping this stuff off. it's loyalty driving. >> well, there is a fulfillment center in new jersey and people that live in that town say that the traffic has become unbearable. they have had to hired traffic cops and security guards to direct the flow there.

that's probably a bullish indicator. >> yes. when we come back, shares of pandora having a tough time lately. down about 50% in six months. the cfo will join us live in a cnbc exclusive. plus much of the world in ruins on the walking dead but hope remains for that network. >> well, you never know. there's some hold outs as we saw. we saw the center for disease control. there were a few hold outs. you never know it might be that cnbc is the only network standing. >> more of our conversation with legendary producer gale an gale anne hurd. dow remains four points away now for break even for the year.

>> fireworks are flying on callal hill where rick snyder is facing harsh criticism over the flint water crisis. >> now i'm not buying that you din know about any of this until october 2015. you were not in a medically intused coma for a year and i've had about enough of your false contrition and phony apologies. >> big changes for seaworld. the company announcing it will end it's orka breeding program making the current generation of whales it's last. they will also phase out it's iconic shows.

>> bubble bee is recalling over 3 one thousand cans of tuna over spoilage concerns no illnesses linked to the product so far and it's back to normal for washington dc.'s metro. reopening after a 29 hour shutdown to check for security and safety issues. that's the news update at this hour. let's get back to kayla. >> thank you very much. it's been a tough time for tech stocks of late and pandora is no exception. take a look at the stock in the last six months. it's down about 49% but it is up about 1.5% today. our next guest, pandora recently acquired assets former competitor and they also acquired a data company but the market continues to consolidate. recently acquiring it so what is the future of streaming music look like? michael is the cfo of pandora and he joins us now from south

by southwest. michael it's great to see you. >> so you guys won a licensing fight last year but the stock is down 25% this year and i'm wondering how you see pandora getting it's groove back. >> well, i'm really excited about the way we're entering 2016. the acquisitions at the end of next year combined with large licensing deals with the publishing industry and the end of the licensing negotiations through the process allowed us to enter 2016 with a clean slate and we're excited to execute and do here. >> 2016 will be another year of reinvestment in the business. the new forecasts are for a $70 million loss this year. the street had been expecting a proflt. how do you manage expectations in a industry that is continually challenged as you're

trying to execute? . this industry is just getting started. we're only a few years in the streaming world. there's how people are consuming music and so although it's an investment year we're excited about that investment. we're bringing new products to market. we're bringing new connections for artists to their fans. we're bringing live events and experiences into the virtual world so that people can find ways to connect directly with their artists through our platform and all of these things are brand new. it's exciting. it's opening up a whole new next generation of how people interact with artist and interact with music generally. >> i love the service. i use it pretty much every day of the week but i have to wonder, is it a great business? you say it's early innings but if you make it to the end of this game here is this becoming a scale game where competitors

whose streaming is just good enough and beating you into the ground? when does your technology end up yielding you an advantage that you turn into profit? is it two years from now? is it three? >> that's a great question. it's already a great business. it takes investment to grow and scale it but over the last few years we really built a revenue stream that stands on its own. over a billion dollars in revenue last year an continue to grow well into the double digits year over year and we laid out our five year plan so that some healthy targets, 4 billion in revenue, 20% operating margins on our core business over the next five years and we have a clear pathway to execute there and that's exciting. as we do that i think you're going to see music streaming really become not only a good business but a great business. >> as you talk about executing and the way forward it sounds

like you're preparing to be an independent company for the long run. i'm wondering about the discussions to sale pandora and the hiring of morgan stanley as a strategic advisor. what can you say about that? >> i can't comment on that report but the plan that we layed out is dependent on us being an independent company and operating across all platforms and devices. one of the great things about pandora is the access. our users love the service so we can stream it no matter what kind of cell phone it is. whether it's a desktop computer or over 100 different automobile models all have pandora in them. so that makes us unique. >> as you think about remaining independent what other strategic options might morgan stanley be presenting to you as you think

about that. >> we look at a lot of different options. in order to ener new markets like live events and ticketing so there's a lot of things we're looking at. the key is we have this large massive audience in the united states. 80 million people and a huge amount of data around that audience so what can we use that data? and do for that audience to improve their experience and build a healthy long-term business. that's the strategic options we're focused on. >> enjoy your time in austin. >> thank you very much. >> meanwhile, elsewhere, the future of con ten and streaming taking senor stage this week. we caught up with a legend in the business the executive producer of the walking dead. she talked about why streaming helps her tell stories better

than ever. >> now through streaming, now many networks including amc, scifi, usa, are able to air the same episodes so you have many tuns. not to mention your own dvr to catch up so that also creates the golden age of television because you don't just have to watch procedurals. they're great. you can watch them in any order but if you really want to do a deep dive into character it's through serialized tv. paul ryan is answering questions about the presidential race. let's take a listen. >> right, so six days notice taking this job. i learned after becoming speaker that i'm the chair of the convention. so i will have to obviously bone up on all the ruls and all of those things. my goal is to be passionate and

switzerland and neutral and make sure that the rule of law prevails and to make sure that the delegates make their decision however the rule is require them to do that. right now i'm busy trying to get congress moving in the right direction. >> well there's a lot i have to bone up on as well. nothing has changed other than the perception that this is more likely to become an open convention than we thought before so we're getting our minds around the idea that this could become a reality and those of us involved in the convention need to respect that.

>> can you give us an idea of what is is next in terms of timing? >> very pleased. got a good vote out of the budget committee yesterday. when i ran the budget, we would get it out at 11:30 at night. chairman price needs to be complimented for how fast they got that thing moving. he beat all my records. number two, look at the budge they passed. this is a budge that balances the budge. pays off the debt. honors our military with the equipment they need. calls for tax reform. repeals obamacare. it does everything we need to do on the entitlement side to move people from welfare to work and to pay off this debt so we think this is a very good budge. we're going to continue to have that team discussion with all of the members of our conference to decide how to proceed from there on. >> they are prepared to put out their own budget. >> as they do every year. >> and there's conflict --

>> speaker ryan talking about the presidential race. of course spoke to john harwood in the last 24 hour or so and msnbc as to the reports he would be a nominee at the convention, in his words i told boehner to knock it off. it's not going to be me. any further headlines we'll get them to you. >> people always trying to give him another job. >> yes. >> up next, another look at the dow. close to break even for the year. but first, rick santelli, what are you watching today? >> i may not agree with the fed's decision and maybe normalization is going to be too difficult for a long time. so in that world, how do we trade rates? how do we trade long rates? are long rates relegated to go down? i don't think so. come back after the break.

coming up on the halftime report, exclusive new details on the state of pershing square after this week's valeant debacle. plus offense versus defense. which strategy is best in the markets and break up the banks. that's what one person is saying should happen. we'll speak to him live in about 15 minutes. we'll zee you then. top of the hour. >> in the meantime we go back to speaker ryan. >> a moral obligation and duty to offer a bold an specific

alternative course so if we win this election we have an obligation and a man date given to us from the citizens of this country to go on that course to put those reforms in place to get this country back on the right track. that's something i can control. that's something i can be involved in. that's something i can help deliver. that's what i'm focused on. thank you very much. >> ecoing comments he made to john harwood from a few memos ago. rick santelli has the santelli exchange today. >> good morning. a lot has happened in the last 24 hours. i thought yesterday's press conference i walked away with a couple of key thoughts. one is is, we're all right on data dependent, at least we meaning the crowd i hang out with on the trading floor. it was a red herring so let's just get to the heart of the matter. normalization is going to be tough. the markets have already

adapted. the relationship of central banks. going back the other way is going to be extremely difficult from a point of big strength and global and domestic economies that i don't see on the horizon any time soon. so six or seven years of this, probably most likely my opinion is going to turn into ten years plus. in that world for the time being, how you trade spres rates. we all know that the yield curve has been flattening rather dramatically and when we talk about flattening it is he key. let's look at a chart and this chart goes back to may of 2007. it gives you a very good idea of how flat the curve has gotten. well, when positions get built up, especially on a flat curve position what you're looking at is many are expecting rates on the short end to be more aggressive to the upside than the long end but after yesterday, that trade just isn't going to be as hot. we have seen steepening and

mostly of the steepening has been proactively caused by the drop in short rates. just look at net change of twos versus net change of tens on the weekend. you'll see what i'm talking about. now let's consider that one of the long standing staples of the long end is that slow growth globally and domestic sli going to keep a lid on it. when you add until tin the trad europe that seems to have run it's course so market logistics alone suggest that steepening is going to put pressure on the long end. now let's look at a chart of ten year and on this particular chart all we have to do is go back about a year to mid april of last year and what you'll notice is is that 2% gets sliced both ways meaning it was important to get through it and now it's tough to get back above it. with a risk on environment it's going to make some less credit worthy instruments like junk,

like corporate securities much more in vogue for the extra yield. especially with the fed out of the way for awhile so just logistics suggest should you see any breaches of 2% there could be legs to this trade in the short-term and as counter intuitive as it may seem don't underestimate how people packed into trades can alter outcomes with the logic of economics. if you question that, just look at where the japanese yen is relative to the euro and the dollar. at a point where they're the most stim eula tif easing economy on the planet but close to euro and ecb as well. let's go back to kayla. >> you're a man that's hard to please but we'll try. thank you. up next, where we're going we don't need laces. more on nike's new shoes that look straight out of back to the future. the head designer will join us

in a moment. stay tuned. ♪

these are the hands that plow the data, dig up clues, create opportunity, and weave messages that lead to sales. these are the hands of pitney bowes, the craftsmen of commerce. these are the hands, the hands that drive commerce, that build business across borders. these are the hands of pitney bowes, the craftsmen of commerce. >> it looks like something out of back to the future two. nike unveiling self-lacing shoes at an event in new york city. sarah talked to ceo mark parker and joins us with more. >> he said this has been 30 years in the making. plenty of petitions online for sneaker heads ever since back to the future.

they actually had the patent for the self-lacing shoe for about ten years now but they all came executives to new york city to unveil the first for mass consumption self-tying shoe and it will hit stores and the market in -- later this year during the holiday season. we don't know the price of it yet. i actually had a chance to talk to the legendary lead designer barely gives interviews. he thinks about it like a self-driving car. here's what he said. >> this is our first effort and it's not perfect but it's a big step forward in technology for my foot ware maker and it's going to change the way all shoes were made in the future. just like cars are becoming more adaptable, like when someone is too close to you or they might park itself, a car might park itself these shoes are going to start to have, just sense your

body and then react accordingly. >> so that's a sense of how big the market is for self-tying shoes. changing the way we wear sneakers. they're protecting their patents pretty well so the competition didn't follow even though puma is expected to unveil their prototype of the self-tying shoe. i had to ask about trade because if you remember last fall we were there at headquaters when president obama was selling his transpacific trade partnership on nike campus. about all of this campaign bashing of free trade. parker remains defensive about it. have a listen. >> we continue to feel that free trade and 21st century trade policies incredibly important to the u.s. economy and globally as well and it's important to be at the table and that policy is

being developed. >> so clearly continuing to back free trade and the transpacific partnership which bernie sanders and hillary clinton has come out against. also donald trump we know also has come out against free trade and it's a controversy that nike is watching closely. >> reacting to the dollar weakness today. great stuff all morning long. when we come back, dow near break even for the year. about five points away. we're back in just a moment.

>> paul ryan just wrapped up his weekly news conference. let's get to a recap of what he told you already. >> paul ryan said he made some news he didn't intend to from his interview with me about the possibility of getting nominated by a broker's convention and from his predecessor saying he was for that happening. here's the speaker. >> speaker ryan, you made a little news with my colleague john harwood. >> i wasn't trying to. >> but just to clarify i want to make sure that in the event that

no person running for the republican nominee right now gets enough on the first ballot that you will unequivocally not. >> it is not me. look i didn't think i made news. i thought i was pretty leer, cob candid with you. i saw boehner last night and i told him to knock it off. >> that reflects a politician that does not want to be in the center of that political storm right now. he and the house are defining their agenda. he says he's going to stay out of it for now. >> how much of this is walk backable come cleveland time? >> well, look, i think the issue is are we going to get to a brokered convention? and i think if we do, we haven't seen one in our lifesometimes then all bets are off no matter what is being said today. i don't think it's likely to come to that. i they donald trump's prospect for first ballot majority in cleveland is better than many people have assumed and so we're just going to have to wait and see but all the rules go out the window if we get to cleveland

and nobody has a majority. >> if i understand the rules correctly even if donald trump doesn't make it to the magic number on the ballot, whoever is going to challenge him, unless the rules change, is going to have to have won four or six states. how hard would it be for them to change those rules and then enter into a brokered convention situation? >> not that hard. look, if nobody has a first ballot nomination, then delegates start being freed from their commitments and you have a very fluid situation and i think the rule that you have to win a certain number of states to have your name put in nomination would either be ignored or changed. >> a lot of people argued not becoming vice president was a pretty good move for speaker ryan. >> he also thinks staying out of the presidential race so far has been a good move for him too. >> i think you have a big basketball game to get to. so we'll let you go now. >> are you rooting for us.

>> well, the odds are in duke's favor so i have to be. >> good. >> don't change the channel entirely, john. keep one tuned to cnbc. that does it for squawk alley. let's get back to headquaters and the half. >> carl, thanks. we begin the halftime report with breaking news. bill ackman talking to me exclusively today about the state of his firm pershing square. news that he told down his mondelez position by some 20 million shares just a day after losing a billion dollars on paper in valeant raising a flurry of new questions about that fund. it is down 9% this week alone. 26% year to date as key investments declined in value lead by the pharmaceutical company. down 47% from the high reached in july of last year.