believe it. >> it's the fact that the dow is going for three days down first time since february after a nice five week. the justice department charging this morning for allegedly coordinating a campaign of cyberattacks on a new york dam from 2011 to 2013. mr. ambassador, good morning to you. >> good morning. >> we were discussing the implications of these charges from the attorney general and the fbi director. and letting the oil and letting some of these. >> this is the underground warfare going on on a cyber level between iran, the united states and israel during the height of what could have been largely a war against iran's nuclear program. well, the iran nuclear agreement

obviously was supposed to stem the shenanigans and the fact that the justice department felt compelled at this point and time while everybody is hoping this iran agreement is going to hopefully lift the relationship between iran and the united states forward. and for the united states to improve anymore in their new future. >> looking at the bigger picture here, i seem to remember the atta attack and it seems to be happening on a global basis back and forth. does this fit into the overall narrative? is this the attack and counter attack flow of things or is there something different here? >> this is the beginning of what essential sly the new generatio. just launched a major attack against south korea's banks.

the russians have been engaged in cyber warfare in the last few months against ukraine as well as literally took down the entire internet, structure, last year. the israelis are trying to do what they can to attack the internet sites that iran's nuclear program had. so this is now -- this is where we are heading over the next few years. dealing with cyberattacks on infrastructure. a real problem that we're just beginning to get our handles on. >> ambassador, it's one thing to plug the website of a bank, 46 financial institutions in this space. it's another thing of tangible infrastructure. what is your response on how we should safe guard ourselves on that going forward? >> it's a great question. under the obama administration, the justice and the defense

departments have tried to establish a new cyber warfare institute. that is to coordinate the response of the cyberattacks. what did the united states do? look at the constant attacks despite the visit to the united states last year when president obama appealed to him to stop the cyberattacks against american private companies that are continuing to this day. the problem is is that unless we fight fire with fire, these countries are going to continue to target american private companies no matter what the diplomatic agreements may be. an agreement with china has not resulted in the cyberattacks against the united states. >> speaking of fighting fire with fire, let's turn to brussels. as the policy suggestions continue to get tossed out, whether it's carpet bombing or

profiling, are you sensing the tolerance for things like that in america is changing in the wake of the attack? >> americans have more reason to be concerned about their security. whether you're republican, or not, it's the battle against isis, it's been largely an eye dropper approach to dealing with the situation and it's popping up in libya and up in yemen and afghanistan as well and as the former u.s. ambassador to morocco, let me point out almost all the attackers in paris as well as belgian were morocan origin. it raises the question of how you stem the tide of those that see the attacks as further inspiration to join isis. >> as we await, this joint response from the eu ministers we are hearing from belgian leaders that are saying this

attack was on the liberty upon which the european project was built. what does the eu wide response need to look like? >> i think every counter terrorism official will say the same thing to you. there's an inadequate sharing of data, biometrics and sharing. think of the situation where we were 9/11. the cia and fbi were not sharing information when they were discovered by the agent in minnesota. this is the problem in brussels and belgian. the captain of the european experiment. five bouroughs and that's brussels. there's even adequate intelligence sharing and talk all they want about this being an attack on liberty and the

status of the european union but until they get control of sharing biometric data and intelligence these attacks are going to continue. >> ambassador, turkey deported one of the suicide bombers last june. warned the neglecttherlands and belgian that he was a foreign fighter. another one of these attacks was actually renting a house that the paris attackers used under an assumed name. it seems like there's information that's being shared but there's also a real lack of information and intelligence gaggering that's happening here. they didn't know where this guy was. they failed to detain him even after turkey shared information. what do they do about that? >> he was deported to the netherlands. made his way back into belgium because he was able to do this. when you look at all the records of each of these attackers they

all have criminal records behind them. they may have been in effect warned by turkey but the problem is is that when they arrive in the european union, the laws are so much laxer in the united states than in britain where as when they have been engaged in an act of terrorism their criminal record is all that stands between them and jail. and that's the real problem. when you look at the laws of the netherlands. when you look at the laws of belgium and france they don't have the capacity within the judicial system to arrest these people merely because of suspicions of wanting to be involved or maybe being involved in a future act of terrorism. >> finally on the optics, a lot has been said about not coming back from cuba and tango dancing and feeling that it's envolkswagenienvoking a

response. >> the american people want to hear the president talk more authoratative. and it's around the edges here about what is necessary to do against isis. and syrian and less territory means less authority for isis but unless you have a much more comprehensive program to deal with the outbreak of isis in libya as well as in yemen it's like a whack-a-mole game as senator mccain would say. >> a lot of people can relate to that notion. thank you so much for your time. >> good to be with you. >> meanwhile, the major averages are in negative territory today. and a five week streak. the dow is about 30 points above

it and financial energy and weighing down in terms of sectors and oil down about 3% and that's having an effect on the markets. we did have capital spending and goods orders coming in week on february on jobless claims. >> when we come back, yahoo!'s board, and a deep dive on who is being nominated by starboard and whether yahoo! has a governance problem. plus iphone preorders again today. what it means for products and margins and why buying a home is getting further and further out of reach for many americans when squawk alley comes back in a moment.

starboard is launching a full proxy fight over board members. jeffrey smith wrote, quote, we believe the board clearly lacks the leadership, on apologetic activity and perspective needed to make decisions in the best interests of shareholders. for a deep dive on nominees. and thanks for being with us this morning. so, i want to start with you. this struck me as an unusually deep board of directors for an

activist to put up. this can be yahoo!'s board currently as far as the depth of experience they have. what do you think that reflects about investors? >> well, the investors are clearly frustrated this thing has gone nowhere. it's a wasting asset and the longer the board doddels with getting a strategic act together the less it's going to be worse. and i believe it's to place them and trying to replace the whole board to get some action and change the strategy. but i can't tell from the letter we only got 1.7% ownership. it's not much. how serious he is. and to see them spin off and dismantle the whole company and the business to verizon if i

read between the lines and then failure to act for a long period of time way back to the days. i feel sorry for marissa meyer but you can't just have an asset going downhill. >> jeff, do you think, she has a lot of critics out there that say she has wasted money on acquisition, she's wasted time not cutting back the employee head count sooner, what grade do you give her and the overall board at this point? >> i give this board a b plus. i disagree with bill moore. i usually agree with him 100% on these activist campaigns. i feel sorry for marissa mayer but i feel sorry for you. bill a little more homework needs to be done here if you'll forgive me. you have total shareholder return up almost 150% since she

has been there. she has strong revenue streams coming in from her business and her mobile business video stuff that wasn't there before. she has monthly active users. >> crowd over alibaba and if you look over alibab itself there's issues that makes alibaba have uncertainties. and there's tremendous unlock underlying value here and this board has done a great job with the long-term plans and short-term plans. here you have the improving performances and they have cut head count further on the payroll. it's 42%. a half a billion dollars and that's pretty noteworthy. certainly most noteworthy than any other company we talk about but it takes awhile to fix this but this is a big company to

move around and also it's complex space that's moving as fluid and who do they have on the board? you say it's a deep board? i don't see any digital expertise. digital media expertise coming in on this board. there's a noteworthy player in the digital space and richard hill had his ups and downs. >> well, bill, i mean -- bill, go ahead. we'll let you respond first. >> jeff, was going to say, the next day going to sell the whole company and put it up for sale and they declare that so to me the board, i have a lot of respect for lee scott that came on the board but when are they going to make up their mind what they're going to do? is marissa trying to rebuild another google or what is she doing? it's a long-term deal here and they can't wait on these strategic issues. >> they have a board that has very strong financial confidence

and just brought them on and the m&a titans they have brought on. the starboard supports. and this is the deal with some of the ownership. this is like nelson. it's the dupont board. these guys don't even have 2%. let them put their money where their mouth is. >> it's an $8 billion company. yahoo! is a $32 billion company so the size and the scale of what they're trying to do is different here but to my point -- >> not really, look at the starwood fiasco. they had 42%. they forced a fire sale auction of starwood to marriott and now they realize they weren't so smart. they saw tremendous value there and there the other activist got up to 42%. a company much bigger than both of those put together. >> what are the rules of engagement with the shareholder that does have less than 2% stake and seemed to be throwing

every idea but the kitchen sink out there. they wanted the company to spin off the alibaba stake and wanted them to reverse that and sell the core business which yahoo! appointed a committee to do. at what point do you ignore what the activists are saying. >> i think it's the board that really forced them to act. and i think they just need to sell those shares. it's an independent company and they're not going to then decide could they get more value from a verizon or a buyer of the core business and then they can materialize internally and how long will it take. >> it's like -- >> and i'm afraid their asset is going to continue to decline. >> bill, you could say the same thing about their investment right now before.

one day they're going to emerge rather with office depot and staples. one day they're going to and the next day they're not. it's because the antitrust indicators were negative on the deal. we get a ruling in a month on that but you have the regulatory interference. they wanted to sell it. the irs came out with a negative assessment to they're trying to unralph that. and as you would know with the major telethon companies. as aol was delivered beautifully to verizon. and they're looking at it very seriously. and there's the auction prices. >> well, gentlemen, more spirited couple of debaters, and

would not find yale versus harvard. always good to see. thank you, have a good weekend. >> thanks a lot. >> coming up, speaking of activism, another company, united continental facing an activist investor and a proxy fight. that activist is coming up today at 12:30 eastern time on halftime. plus stocks came into the week with five straight weeks of gains but that streak is about to be broken. is it a pause, a change in sentiment? we'll have more on the markets after this break. ♪ there's a lot of places you never want to see "$7.95." [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be. if only the signs were as obvious when you trade. fidelity's active trader pro can help you find smarter entry and exit points

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with the guidance of a pnc investments financial advisor, know you can get help staying on track for the future you've always wanted. >> for more on the markets, asset allocations strategist at jp morgan asset management. normally we would say after five

weeks this is a natural pause but given where we have come from, down 10% in february to flat now for the year should we make anything more. >> it's quarters like which remind us why central bankers as well as investors are so confused. it's on march 24th and a weaker dollar and roughly flat s&p and they took 50%. because of what february 11th. >> so do you think more is left of the stock rally that it comes from data that are getting better from the fed continuing to move and instill confidence that the economy isn't getting worse? >> so this is what it's about. data dependent are the two words

that i use with clients all the time. if the data supports a tightening, they will tighten. what you saw in the beginning of this year with all the activity around emerging markets which were unloved and up 20% from january 20th, if you continue to see the credit spreads, the vix, the global equity prices as well as the dollar cooperating that's going to make it into another uncertain season. and spent some near term since this bull market began in march of 2009. it's the lowest amount of equities. and it's it's exactly what they wanted it to do. >> it's cash. nothing wrong with that.

>> that's not where we want to be. and it's the yield without throwing the line on the sand. >> had some people been in the tech cycle because they come out early. both of those outperformed expectations. and talking about the fang trade this year. the fang trade has been an unloved trade. that was one of the most crowded trades coming into this year. they're underweight emerging markets, emerging markets outperforming. the dollar has weaken and the fang trade. we look a lot at those technicals for near term performance. >> is there any sort of event you think would have the capability to rock equities. the markets had a remarkable resilience and now there's talk

about a political response to that whether it's in britain or the eu. >> europe is a, you know, a percentage point or so away from recession. there's still very low growth so policy error in squen rahal has always been the black swan event. whether it be the fed moving too late or too early and in europe's response what the sentiment comes out of brexit is you have a fed meeting in june. a week later you the referendum. that may cause them to shift to july and out of this press conference cycle. >> we will see where it leaves usment come back soon. >> thanks guys. >> and up next, more on yahoo!'s board and the new slate nominated this morning. henry blodget is going to join us on the next steps for yahoo! coming up. margaret and tom lee. the championship game ball?

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good morning, everyone. here is your cnbc news update at this hour. the justice department charging several hackers in a series of cyberattacks against banks and a small dam north of new york city. loretta lynch is among the federal officials making that

announcement. the former bosnian leader is guilty of crimes against humanity for leading a crime against terror beginning back in 1992. he was sentenced to 40 years in prison. his legal team just said that they will appeal. the illinois supreme court struck down a state law designed to narrow multibillion deficits in chicago's employee pension funds. the funds are short and the city has warned it will be insolvent in 15 years without change. very scary moments for a baltimore woman, a driver after her car fell four stories from a park garage earlier this month. she was parking it when the vehicle lunged forward and crashed through the barrier and fell on to the sidewalk. miraculously though, i don't know how, but she was not seriously injured. that's the good news in that

scenario. carl down to you. >> sue, thanks. yahoo! activist investor starboard value wants to replace the entire board and has put forward nine names it would nominate. henry is the business insider, founder and joins us here. >> great to be here. >> we heard everything from good track record to they don't have a big enough stake so it isn't going to matter who runs this company. what's your take. >> so many different things going on here. one the board acted slowly and changed it's mind many times and there's arguments to be made that you want to unlock that. then there's the core business and i think the idea that someone is going to wave a magic wand and turn it around quick sli crazy and there's good things going on there and it is extremely valuable here. still, this amazing platform, great media distribution

platform in the right hands but what is sad is its going to be chopped up into pieces and thousands are going to get fired as a yahoo! shareholder. >> what's the model for what yahoo! ought to do in three to five years. when you look across the land skap skap so what are they going to be? >> there's a lot of opportunity in media distribution platform. look at what yahoo! has done with news they have one of the best customized news feeds everywhere. you go to yahoo! now. i see tennis stories up at the top. they're very good at customizing that and pulling in sources, thousands of differ sources on the platform and this works very well with publishers. we work with yahoo! on that. it's a wonderful distribution arrangement.

and with one experiment in the nfl e-mail is still valuable. there's still core assets that are valuable. the company needs to be focused and keep taking risk but the problem is if it gets into a financial engineers hands everything is going to be blown up. >> what critics would say what they're trying to do is a quick and dirty sale that the board would say it's already engaged in doing maybe just on a slower time frame but then there's the question of if there is still value in the core business how much of that is draining out when some of their top employees read these news stories and see us talking about it and think i don't want to work there anymore. >> there's been a lot of turnover and mistakes made even in this current administration they have done a lot of things that haven't worked so there's a lot of things to address but the core business drain agoway, yahoo! has been hit by two things. one the huge move away from the february to mobile and apps and that was a big change and a big change in advertising from

premium direct digital sales. both of those things are going to hit any company. yahoo! is adapting well to that. it's going to take awhile to get through that and the idea that somebody is going to wave a wand and come up with the iphone, first of all, steve jobs didn't announce when he came back to am in a few years we're going to invent this thing and change the world. you can't see that. what you have to see is good ideas and changes. >> doesn't the cost discipline stick in your craw? the comp we've seen. >> on the other hand how else are you going to maintain good people when 25% of revenue is given away. >> but are they -- >> for talent, absolutely. on the engineering side. one of the big strategic questions is do you move in the media distribution direction or stick with the idea that we're a

technology company. you're a distribution company powered by great technology. >> that sounds like grandpa's news feed. steve jobs sure didn't announce the iphone or the ipad right in the door but he did have a clear and focused vision for what am was going to do and was not going to do and i don't feel like despite the bluster out of marissa mayer we have seen that from her. a clearly articulated vision where we say that's yahoo! >> it will be helpful to have a clear picture of the destination that we're headed toward and lots of milestones along the way. there's no question. >> and a distinct philosophy for how we do things. >> whoever does end one that asset there's still a lot there. >> i hear you talking about people will lose jobs. i don't mean to sound incentive but that's not what shareholders are most interested in, right? you owned shares for how long? >> 15 years.

>> 15 years. >> when does your patience run out? >> my return over the last several years has been great and has a lot to do with the alibaba stake but it's been good. and give them time. if there's a way to unlock value with moving stuff around like alibaba, that's great. unlock it. >> so you're going to buy more yahoo! then. >> no, i'm not a trader. legacy, 1990s invision. >> you're going to buy more. >> good seeing you. great for coming in and weighing in. when we return, can you afford to buy a home? the answer is increasingly no in a lot of the country. we'll get that story next. plus iphone preorders began on an important week for apple. why one analyst is predicting big demand. but first, rick santelli, what

are you watching today? >> i'm watching the markets especially in response to two issues. the long weekend and this morning's durable goods. it was really weak. but really how weak was it? i might surprise you with my answer after the break.

mohammed el-erian predicts a big pull back for stocks.

plussed plus todd wagner is here. he gives us his take on yahoo! netflix and much more. we'll also have an exclusive interview today with brad gerstner for the latest in his company's proxy battle against united. kayla, we'll see you in 20 minutes or so. >> sounds good. see you there. meanwhile, fewer and fewer americans can afford to buy a home. diana has that story in washington. >> well, kayla, it makes you wish you bought last year if you're out house hunting now. homes are becoming increasingly unaffordable. 9% of the 456 u.s. counts measured by realty track are now considered not affordable by historical standards and that's up from 2% last year. there's so little supply on the market and home builders are focused on the high end.

no entry level homes. so where is it the worst in counts in denver, dallas, austin, new york city, brooklyn, san francisco, omaha an st. louis. now affordability is best in baltimore, birmingham, providence and chicago. they also mention boston as affordable but that may be very limited to a couple of not so great areas. anyway a new record shows the weakening affordability in cities, many of which are undergoing a great rebirth is pushing people out. it claims the typical home sold in 2015 was about 4% farther from a city center than in 2011 and here's a weird end note on palo alto. the city council is considering subsidizing housing for workers that make between 150 and $250,000 a year. apparently that's the new poor in palo alto. the median home price there

$2.5 million which is unaffordable to the middle class there. back to you guys. >> does this mean that there's pent up demand for millennials? if we do get a downturn and home building boom we're going to get a lot more of the buyers in because they can't afford it now? >> they're absolutely pent up demand. we're seeing it from d.r. horton, a lot of people made fun of them when they started in 2014. it's seeing great growth. so there's incredible demand out there. >> you have to see the home builders step up to the plate on it and lower priced sellers get back into the market. >> yeah, having too much success at the high end. a great story. thank you very much. let's get to the cme group this morning. and get the santelli exchange. >> i love data and i really enjoy the way cnbc was part of the whole process in letting us know how some of these numbers could be so off and i'm

referencing gdp and it's under the microscope because productive is off. in the end, many times it all comes out in the wash and that's the one thing we can all hang our hat on. now this morning's durable goods and as i'm talking i want you to look at ten year note yields, we have climbed back to unchanged after yields dropped after the data releases this morning it's always hard to pull out exactly what moved it but i'm going to give you one theory. if you look back on a seasonally adjusted basis it's a volatile series. last month was up 4.2. before that minus 4.6. you get the idea. well, a lot of trading shops now do a whole lot more inputs into numbers. the one is the nonseasonal adjustments. let's go to the board here. when it comes to durable goods i went back and looked at the

nonseasonally adjusted data. feds data, headlines is 222 billion so it's 221.691 million. now you have that. i figured out the percentages. on durable goods headline it was up about 6.5%. if you stripped out transportation it was up 6.5%. defense up 7.25%. nondefense capital goods up close to 2%. ex-aircraft up 7.5%. it's easier to find the data. this is month over month. year over year on a nonseasonably adjusted basis. headline up close to 5%. ex-transportation under 3%. the reason i'm doing this is its a volatile series but everybody wants to get a leg up on everything and what i notice is there's a fed equity fixed income cycle. the equities seem to get

scrambled a bit. add in the holiday, you know the rest. yields drop a bit. but in the end, the real story here is that our economy isn't so much different than it's been in the rear-view mirror, many believe, including myself, it's not going to be much different looking through the windshield. it's moderate, less than historic growth so it not bad. and so many are thinking the fed needs to normalize. they're really digging in. to stay up with competition you have to do more math or have a good program or carl, back to you. >> good, that's a nice deep dive, rick. thank you very much. it's a big week for apple o course. preorders for the new smaller iphone began today, a look at how that may move the needle for the company when squawk alley continues.

apple's newest iphone and ipad are on sell today for preorder anyway as the company pushes it's smaller size products so just how popular are apple's smaller products going to be? let's bring in steve, hardware analyst at ubs. steve, good morning.

now i believe greg, vp of ios smaller iphones in 2015 given that the 6s wasn't out yet for much of that period of time, are we really talking about a huge amount of demand? they did about 75 million units in the holiday quarter alone. so more than twice the number of four inch iphones that they sold, steve. >> we think the new se is going to be successful. we did take our numbers up on the announcement. we're expecting about 12 million units to be shipping here and you have to remember that a third to even 40% of the installed base is still on a 4 inch format. over 200 million iphone users have not moved to a big screen and this is also a very important product so it's the first time they new technology at this price point.

>> now what convinces you this isn't going to cannibalize sales of higher average selling price phones of the 6, of the 6s. if people are buying a 400 or $500 phone instead of a 650 or $750 phone that's not great for the top line or bottom line. >> there could be a little bit of cannibalization. we're very happy with cannibalizing ourselves. so maybe there's some of that and we think we've got that in our numbers but it's still a 4 inch phone versus a much larger screen. there's some technologies in the newer products that aren't in the 4 inch so i think it will be more people moving up than people choosing not to the 6. so at least we think it's positive incrementally. >> given the preorder start today but there's a week left in the calendar quarter do you think if there is a lift that we should look at that in this quarter or pushed to next quarter. >> it's not going to be in this quarter because apple's quarter

closes on this saturday. so the 26th. so much like in the christmas time frame they lost that last week because it was actually in the next quarter so i would not look for it in this quarter. we would expect it over the june and september quarters. >> how much does this suggest about apple's commitment to growing the business that happens after the initial hardware sale? we saw them put out numbers talking about how many active users they have on ios and how much money they can make through additional services by putting out a lower end phone, does that allow them to tap into that base? and does it at all counter the thing we heard from tim cook so often? we're not looking to sell the most, we're look to sell the best. does this mean they're looking to sell a few more as well? >> i think so. they're still selling the best phone at that price point so they're not taking 2-year-old technology. they're taking new technology and that's why it still fits within the idea of the best product but growth is an issue. apple might be trading off a

little bit of margin for growth. the company is huge and also the disappointment this year is that the installed base isn't upgrading as quickly to the s as we expected. we're trying to manage the upgrades and install base. we have user groups on two sides that monetize them by being in the middle. ios is a platform so the services side is more where apple subsidizes to make money and justify the high margins on the hardware side. it's largely a hardware company in our view. they have a billion devices out there that's a very strong annuity stream. >> i saw some me tricks of people mentions the products on monday on social, the ipad got nowhere near the attention that the phone did. i wonder what the future is for the ipad. it's so easy to hang on to one and never replace it until they

make it compelling. >> the ipad is in the middle of the market. you never want to be in the middle of markets. it's getting cannibalized by the large screen tablets moving up. tim cook is thinking there's still growth left and i have to believe that he thinks there's an upgrade cycle at some point which this 8 inch product might fit into and with the ibm relationship they'll get bigger penetration and enterprises and with the new applications, new uses for the ipad but we're continuing to forecast declines for now. >> he has not yet given up on this idea, at least not publicly that the ipad will be more popular than the pc. should everybody else give up on that? we have two years straight of declining sales of the ipad now

but they are clearly positioning it as a replacement for the pc to some degree. pc markets declining. it's not bouncing back yet the way people hoped it would but i'm still expecting the market to decline and have to see some proof points otherwise. >> all right. i was hoping they would keep around a 4 inch phone. >> i just bought a keyboard for the ipad. it looks a lot like a laptop. stocks breaking a win streak ahead of the jobs number next week. we'll forecast what's coming up on the days ahead after the long holiday in a moment.

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take a look at the markets this morning. a lot still to come next week in the way of economic data, jobs numbers, the banks though definitely lagging today. goldman, jp more fwan and others. we talked to him on this splashing, trying to make a splash. this initiation with a sell on wells fargo today. >> what's so interesting about it is the stock is down 12% in the last year.

that's less than other financials but the valuation is up there and there aren't any near term catalysts because the outlook for rates isn't what he we thought it would be. >> even criticizing the portfolio and auto lending and so forth and the conversations about other banks in the past month or so. we didn't, rumor out there that they're looking to buy them. has the stock up nearly 20% at least in this early trade. it's interesting. the two top movers on the stocks that i follow this morning in tech, tivo up 20%. pandora up 10% and these are the first movers in dvrs and streaming. you can argue that tivo wasn't exactly the first in dvrs so cautionary tale to the innovators out there. >> we have zoom line, we have that continual back and forth for that company. but certainly interesting. i think that story that they would be potentially taking on

tivo, the new york times report. >> we began with starwood, marriott, ihs market, some bhi news so m&a has been percolating in the last few days. good easter weekend to all of you. let's get back to headquaters and the half. >> thanks. the fed and the u.s. economy. is the run over? that debate begins now. i hear people starting to say, about to rollover. >> it's trading range and i think we have all been saying that to some degree that you're seeing in the upper end of the trading range and guess what, the market gets overvaluedre