being -- >> sure. but listen, they're not going to pick a guy like me from texas because republicans are going to carry texas. that's going to happen. can you go pick someone who maybe can deliver a state and help down ballot, help in a particular -- >> mexico governor, maybe, a woman, hispanic. >> marco rubio. i mean, there's some real talent out there. >> all right. governor, pleasure. >> we'll see you back here tomorrow. right now it's time for "squawk on the street." good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the market exchange. earnings from apple, twitter, boeing, chipotle. a fed statement this afternoon, the nasdaq going for a fifth down day, the longest streak since january. europe's in the green, oil hits 45 this morning. that's the highest since november. as inventories show a draw.

and we're going to get more numbers today. our roadmap begins with apple shares falling in the premarket after the company reported a drop in quarterly sales for the first time in 13 years. so what happens now? >> we got reports that comcast in talks to buy dreamworks animation. that has the stock soaring this morning. we'll give you the latest. >> and twitter shares down about 15% after reporting revenue that misses estimates. we'll hear what jack dorsey had to say about the quarter. first up, the miss for apple taking a toll on the stock, quarterly revenue down as iphone sales slide for the first time. for the current quarter here's what tim cook said on last night's earnings call. >> as we continue through the june quarter, i'd like to remind you that we measure the health of customer demand based on sell through. despite ending q-2 within our channel inventory targets in light of the macroeconomic environment, we plan to lower our channelin e venn toirs in the june quarter. this will impact reported revenue in q-3.

>> the street's response this morning at least 12 target cuts, only one downgrade. >> yeah, that's the problem. remember we said yesterday there were a lot of soft buys, what i was hoping is this quarter would shake them out and we'd get a lot of downgrades. but these price targets, they're so off of where the stock is. let me just give you some thoughts about the conference call. first, i think that not to be too pa jortive, but imagine if you're a baseball player and you're doing real well and suddenly you're hitting more home runs than you ever thought you could. >> okay. >> you're sammy sosa. >> got it. >> but you don't know you're taking steroids. literally. you don't know. someone is feeding them to you. and you don't know. you really think, well, wait a second, i'm suddenly really able to hit. that's what happened with this iphone 6. i don't think they realized how much their sales were on steroids. so what happened is they have to pull back. they obviously have too much inventory. they literally are -- i know there's a lot of now what i

regard is the kind of talk they're not being forthcoming. they're not being forthcoming on china. the china couldn't be down that much. i didn't like the hong kong -- pull back for a second. it's all about not enough downgrades and where they're going to stand with the buyback. because let's say they stand at 9 3. extend by $100 billion of apple stock. stock's not going to go down. now, if you want to value it, you're starting to think where are we going to value? on dividend? then an $80 stock. if you're going to value on iphone 7, never came up in the call, then you're going to get a $90 stock. if you're going to have the company stand there and say we've now reset and we're going to stand at 93, it isn't going to go 93 because they have too much fire power. >> we want to get back to apple in just a second. want to share this news on yahoo you've been seeing at the bottom of your screen which is they have resolved that proxy fight that was ongoing with starboard. not a surprise, certainly not a surprise if you listened to jeff

smith who runs starboard in an interview with me last week when he discussed the possibility of a settlement. in fact, they will add four directors to the board immediately. those will be -- >> bingo. >> jeff smith himself will go on the board of yahoo. the key now is they will be able to be a part of the process by which yahoo is starting to not just entertain but consider the bids that it has received for the sale of its core business. the question for mr. smith was, yes, you're coming after nine directors to try to take over the board, but you're not actually going to see any of those directors elected until after the process that you are focused on has concluded. and he admitted that in an interview we did last week. so it does make sense in recent days i've been trying to get people to confirm that in fact the settlement was near. and here it is this morning. they will take -- immediately take their places and then of course starboard withdraws its

other nominees. this eliminates a distraction for yahoo. the board has been leading this process for the sale of its core business while marissa meyer, the ceo, has been running and future and that board will now include four nominees from starboard including of course mr. smith. we'll have more on this later. we're not anywhere near done with apple. >> no, but i want to point out that rick hill, who is the man that has been the transformational guy, the man i wanted so much to be in yahoo, is coming on the board. >> transformational guy from where, i'm sorry? >> a guy who makes things happen. >> you made this point a few weeks ago. >> yeah, he's a change agent. if they get him to be chairman. >> right. that is not the case. >> okay. >> you're talking about a truncated time. it's may. you're talking may to middle of june. and they're going to have a deal or no deal. so this board is going to have its work cut out for it for six

weeks. >> you want to buy it. you want to buy it on this change. >> okay. >> because this is no longer going to be a say in disarray. these people are very good. hill is good. >> what's a turnaround, darden or yahoo? >> darden is down to 9200, they've lost 40% of their head count. remember the boomerangs? >> yeah. >> i like this. i like this because this is adults coming in and saying, listen, if the auction fails we'll turn it around. >> that's the key. >> we'll turn it around. >> if in fact the auction is not a success, you know at least they will have not taken the bids because they didn't feel they were sufficient. you will have board members at least at this point mr. smith would say then focused on a real turnaround. back to apple, speaking of real turnaround. >> sure. >> jim and carl, a lot of people at this point saying it's all about the seven and how compelling the next offering from apple is going to be.

are people going to be willing to buy it. quick point for me that happened in the last year or two a change the way your wireless company has you pay. remember, they've separated service revenues from equipment. you pay separately for your equipment. and, jim, it's interesting. that's a two-year process that adds like $30 a month to your bill. >> right. >> then it ends. and one day you get a bill that suddenly has it's $30 less. >> right. >> and you say why would i buy a new phone now? now i'm not paying for the old one at all and that may also be a reason why you're not seeing people switch to the newer phones, or unless they really feel it's compelling make a decision to buy a new one. >> that's what you have to do. you have to say the ceo of verizon know you're going to want to upgrade an outside source, the guide down was terrible. the conference call was a little unreal in the sense the company is presenting itself as a growth company, revenue stream. at one point tim cook says there

is no revenue growth. i think it's one of those situations you say you're right back in the soup of a stock that's very hard to value. it's a deep cyclical stock. they did say there's a lot of macro concerns. people are dismissing that entirely. they talk about the revenue stream but it's not big enough yet. but if you get a billion and a half ecosystem users it is going to be something to put a multiple on. >> they talk about india becoming a real growth market in the future, china was. >> are they rich enough to be able to handle the phones without the average selling price coming down? i like this. we can flip. we can flip. i'm not going to flip. i'm not going to flip. >> in a vacuum, cirrus today warns on revenue. >> very important. so skyworks and cuervo not lessened dependence from apple. nxpi with the recent acquisition has. and broadcom has. i really like nxpi, internet of thing play. broadcom, that was a brilliant

acquisition in retrospect. an amazing ceo, he's not promotional. so there's going to be a split here between skyworks -- they're all going to go down, but then bids will come back for broadcom and nxpi ahead of the analyst meeting. and i like david very much, but they're going to trade lock step just like cirrus does, which is the sound system for apple. remember, they have a lot of cash, a lot of fire power. are they able to determine their stock price? >> to some degree, yes. >> back to apple, what is an appropriate multiple then? we always used to say x out the cash, but the fact is they are now returning 90% of free cash every quarter in the form of a dividend and in the form of buyback. so you can't do that. >> no, you're not going to x out the cash. >> so where are we? the iphone is obviously still the key product for them. what do we come down to? >> well, i think you're talking about that -- you're kind of like microsoft and intel a year ago where you're dealing with

perhaps there's going to be -- it's a decent analysis at the moment. i think people are asking when are the layoffs going to start at apple. i don't think that's necessary, but i think that's what people want. they want the reset with recognition that you're dealing with pc. that we're at the moment where microsoft was able to go cloud and intel wasn't able to do anything and became hostage. people want this story -- there's a lot of desperation in this story. there's a lot of people who feel it's over. 13 years, boom, done. i say if you believe there's nothing in this in the new one that's ever going to make you really want to upgrade, which i don't think is possible. i think there will be. >> you think there will be. >> because the form factors, what a lam is telling you, what a novellus, where rick hill --

you want to see battery life. you want to see a lot of substantive change, you have to believe no auto, you have to believe in service revenue not that big, believe the watch is a bomb, the ipad pro is actually not really coming back. you have to believe the mac doesn't matter, you have to believe china is finished. you have to believe tim cook is nowhere near as good as you thought he was 18 months ago. now of course they don't like him at all. there's a series of things that you really have to turn on this company. and they're all happening. they're all happening. in the analyst call reminds me of an intel call two years ago. like you're getting me, right? this is all there is? and it turns out that, well, microsoft dividend, people thought microsoft in the last quarter wasn't good but 12 multiple went to 20 multiple. >> took a long time for that pivot to happen. >> now it's pulling back. i think everyone is struggling with what it's worth. what i said was if we had a lot of downgrades, we'd have the washout. we didn't get that. and if we didn't have the company standing there, then we could just say objectively -- >> speaking of difficulty

valuing and resets, twitter down 15 cents beats by a nickel but obviously they warn on revenue north american monthly average users flat. the business side this time, jim, was not able to help. >> oh, geez, i mean that's one of those calls where, listen, don't listen to anything we're saying. just remember there's this one line. and the one line is, hey, listen, people don't want it. the big branded advertisers. so you go through it, it's kind of preposterous call, i thought, because they talk about how there's a great return on investment. they say they're really starting to build again. people are excited about that. the nfl's great. and then they put in revenue came in at the low end of our guidance because brand markers did not increase as quickly as expected in the first quarter. why don't you just say that everything else you said doesn't matter? >> that is an important point, brand advertising seems to become more important as a component of overall internet advertising. advertising is okay right now, but there is seasonal ity to

brand advertising. google saw it to a certain extent, twitter saw it. the question is twitter only or is it a broader sign and then ask questions about the facebook quarter. but nobody seems particularly concerned over the long period of time in terms of brand advertising and spending, but it may be a quarter where the seasonality of that spending came down. >> now you run the risk of saying did it go to facebook and tell people to buy facebook and facebook goes down ten points because a lot of emotionality. free cash flow for twitter 99 million, up 3.6 billion in cash, then you figure let's add the 3.7 billion, don't mean to talk too fast but we have a lot of stuff to cover, we have a company that really should be, you got a company valued at 6 billion. you put a cbs multiple in the cash flow, ultimately you come up with a stock that's worth $9 billion. but the stock's going to be at what $11 billion.

so it's still overvalued by two or three points. >> that's not a free cash flow multiple. >> i had nothing else to go to. >> you remember you said the other day about earnings per share? >> yeah. >> this is the most -- >> it's very difficult to figure that out. even with the we have at&t reporting today. >> that was a tough one. >> ebitdas for these companies too -- >> trying to figure out -- i'm like sitting there 10:30 at the kitchen table not watching nothing trying to figure out the actual what are the earnings here. >> yeah. >> and finally i just said i'm going to resort to free cash flow, i'm going to put a cbs multiple on it and come off my valuation because we are all struggling for valuations. and unlike apple, i felt that that was a convoluted quarter. i want to work there. >> you want to work who? >> i want to work at twitter. >> you want to work there? >> i can take that job. the other guy's got two jobs.

i got that dot com thing and these two, i can be in there. dorsey has two jobs. square's moving up. >> i think as you get older you should do even more. >> the wife wants me to work at twitter. >> do more, sleep less. you're sleeping three hours a night. >> if i'd gotten that last night i'd be coming to play. >> real quick, microsoft, google, apple -- >> are you going to do the tape or go with the sell maniacs. >> i'm going to say facebook and amazon are going to be a key to this market. >> key to this market is tractor supply and -- >> facebook tonight. >> facebook is now part of this it's like we hate growth. only two companies with growth this quarter that really have any significance are so small that i hesitate to mention service now and proofpoint, because you'll laugh at me the tractor supply and ulta of tech. >> i'm laughing. >> came back from three runs yesterday so you're really happy. >> we are, 4-3. >> oh, now it's we. play for the mets.

>> it's always been me. >> there's a quintanilla on the team. there's no favor playing. >> yes. yes. if other bets had been able to do anything for google and they had any cost control, then you would have found that google's actually selling at a marketable and that's silly. shouldn't be market multiple. but ultimately we are struggling with valuation. and when we put it together we come back and say, hey, that looks cheap. >> ge looks cheap at 19 times? >> yep. consistency, my friend. consistency. >> oh, i think you're struggling to find values. >> honeywell, you want me to go -- alcoa. split it up. hey, listen, alcoa going up from 67 cents to 77 cents since they split last quarter. i'm trying. >> you're trying. but i don't know that you should be. >> are you saying i'm not succeeding? >> time to throw in the towel. >> holy cow. you know what bill parcels said about that, he said, yeah, i'm trying. he goes, yeah, i want guys who succeed. you're giving me a bill

parcells. every bit as good as belichick. just putting it out there. loves the show. >> when we come back, a lot more of the morning's movers. we'll get to chipotle, at&t, boeing, comcast, baker-hughes. also exclusive with irene rosenfeld, take another look at the premarket. by the way a fed statement is also coming at 2:00 p.m. eastern time. more "squawk on the street" from post nine in a minute. bank of a to buy a new gym bag. before earning 1% cash back everywhere, every time and 2% back at the grocery store. even before he got 3% back on gas. kenny used his bankamericard cash rewards credit card to join the wednesday night league. because he loves to play hoops. not jump through them. that's the excitement of rewarding connections. apply online or at a bank of america near you. here at the td ameritrade they work all the time.

sup jj, working hard? working 24/7 on mobile trader, rated #1 trading app on the app store. it lets you trade stocks, options, futures... even advanced orders. and it offers more charts than a lot of other competitors do on desktop. you work so late. i guess you don't see your family very much? i see them all the time. did you finish your derivatives pricing model, honey? td ameritrade.

chipotle reporting its first ever quarterly loss. the company missed on revenue as it held those food giveaways aimed at getting back customers following last year's food safetyi issueissues. jack hartung will be on tonight. margins from almost 28 a year ago to 7. >> they had to redo everything. redo everything and then redo everything again. for instance, they had decided to centralize lettuce, decided to centralize the bell peppers. here's why i like it. this buyback is extraordinary. if they keep up at this pace they'll have bought back a quarter of the company by

november. the second incident, the most recent one in boston which was not really an incident but there were safety concerns set back their plan. can we just remember the jack in the box -- many deaths from e. coli, permanent damage, kfc in china, okay, came back, taco bell, it's a timeline. a year from now the stock will be up and you'll forget this is as bad. west coast and east coast problematic in terms of comeback. but do you know the number of people who redeem their coupo coupons -- >> for a free burrito? >> 76%. people are loyal. they still have another 70 million in buyback power and going to stand at 400. they had a 463 average and they were happy about that. jack will talk about that

tonight. it's just on par with all of the great massive problems in restaurants and it's going to make a comeback. now people are downgrading it. >> oh, really? there's a problem. >> sound like first quarter from a lot of hedge funds. >> well, the difference is you can't eat at a hedge fund. >> i'm having chipotle today just to spite all of you. >> well, enjoy your free burrito. we'll get cramer's mad dash, count down to the opening bell and take a look at the premarket on this wednesday. more "squawk on the street" from the nyse straight ahead. ♪jake reese, "day to feel alive"♪

♪jake reese, "day to feel alive"♪ real is touching a ray. amazing is moving like one. real is making new friends. amazing is getting this close. real is an animal rescue. amazing is over twenty-seven thousand of them. there is only one place where real and amazing live. seaworld. real. amazing that's why i run on quickbooks. details. i use the payments app to accept credit cards...

...and everything autosyncs. those sales prove my sustainable designs are better for the environment and my bottom line. that's how i own it.

all right. we got a quick mad dash to do. about five minutes before the opening bell and so many things we haven't gotten to but you want to hit wild wings. >> buffalo wild wings, sellers are coming out of the woodwork. why? same store sales declined. declined. like this was one of those like do you want a hawaiian punch? i couldn't believe it. just used to consistent growth, by the way wing prices going the wrong way -- >> they're going up. >> you know what it's like -- >> what happened here? you loved sally smith. she's one of your favorites. >> david, takeout happened. i think we have to explore takeout. as someone who is a restaurateur now you don't want to serve takeout, you make money on the corona. there are other things that happened which are inexplicable so we have to ask the ceo.

the conference call i think they were so stunned that they like forget how to ask hard questions. because we don't really know what went wrong. have people got tired of watching games and eating wings and having beer? has that happened? now, they even talk about the idea that people aren't going out as much. go tell that to steve easterbrook of mcdonald's. mcdonald's may have hurt everybody, but this was a stunner. and i honestly think this is a company that has to be valued at $100 per share if you're going to just become another restaurant chain. i have got to find out. i don't think that it could have -- it fell off a cliff. >> all right. well -- >> it was k-2, david. you talked to me the other day, it was k-2. into thin wings. >> you are going to get answers sally smith on that tonight. we've got the opening bell coming up. earnings from at&t and comcast, if i get some calls back maybe we'll have more on dreamworks. back after this.

i am benedict arnold, the infamous traitor. and i know a thing or two about trading. so i trade with e*trade, where true traders trade on a trademarked trade platform that has all the... get off the computer traitor! i won't. (cannon sound)

i won't. ♪ i could get used to this. now you can, with the luxuriously transformed 2016 lexus es and es hybrid. ♪ watching cnbc "squawk on the street" live from the financial capital of the world. the opening bell in just a few

seconds. what a morning. earnings, yahoo, starboard, the fed, oil at 45, the northeast primaries which donald trump sweeps. hillary clinton with four of five. here's the opening bell and a look at the s&p at the bottom of your screen. the security traders association at the big board today. women in finance. and at the nasdaq yintech investment holdings, online provider of spot commodity trading services in china celebrating its ipo today. we talked about tim cook's comments on china down 7 on constant currency. does that give you second thoughts about your bullishness on china? >> no. the hong kong number was more disturbing frankly. i think that china, they bought a lot and looks like a lot of people bought them and didn't need more. by the way, in doing some work behind the scenes, i mean, it's not an antiapple thing you hear about china. it's just i think china's cool

because that's the steroid market, okay, referring to steroids. that was where they didn't know they were on steroids. you know what's the most important thing, i know it sounds nutty but when i listen to your litany, it's oil. >> oil. >> oil. oil says that china's good. now, i had charif on last night who said carl icahn is why he got fired at the company. i said why did you lose your job, carl icahn. he said saudi arabia does not have spare capacity. if that's the case, given that china's going down in supply and we're going down in supply, then oil goes to 50. if oil goes to 50 this market goes higher. technology is alternative with oil. >> production responds once it hits 50. >> yeah, i got to spend some time with them. at 15 this is where the decent oil companies of our country can start selling a lot of futures and paying back the banks. 50 is the magic level. 50 is maybe where we should have

been. i think we're going to 50 because demand is very strong. eia is going to have to revise how strong the demand is. and a lot of it's china. and a lot of it's driving. >> if miels driven way up. >> that's very important. >> china has decent demand for oil but not as much for iphones. >> when you have an iphone -- >> sated. >> sated is right. >> i want to mention something mr. cook said on the call and get your take. it was about m&a, mergers and acquisitions. >> door wide open. >> and he said -- his language i think interesting. we would definitely sbie something larger than what we bought thus far. it's more about the strategic fit and whether it's a great technology and great people. and so we continue to look at and we stay very active in the m&a market. >> they bought a lot of companies but none of them were needle movers. kind of like ibm if they were to go do something. there were guys on our network screaming last night they got to

go buy something. >> that's not necessarily the answer, but it's interesting that he seems to be indicating a willingness to go bigger. >> they need to get that service revenue bigger. now, service revenue they kind of backed into it. the service revenue when you see that you're paying your little bill. you can remember that can go up and that can go up, then we would be able to put a multiple not unlike a comcast where we look at the service revenue and then the multiple goes higher. it's not there yet. i'm going to throw one out they're not going to do because they've already told me a zillion times shut up about it. notice if they go buy netflix, i want them to go lower. look at that, you have to pay them every month. netflix prime. you know, that kind of thing. >> yeah. i get it. comcast by the way our parent company which you just mentioned is up about 1.2%. sub growth looked pretty good, overall a decent quarter given how much we've got to get to this morning not really that much -- >> no, spend more time. >> jim, overall the call just, i

think, concluded -- >> can i ask you, david, how can theme parks be up this much? do they need like "shrek" or something, like a new ride? >> as you know harry potter has been extraordinarily beneficial when it comes to theme parks. when they did the deal to nbc universal it's become an afterthought. they are investing more. >> to control of universal japan. >> exactly. >> how can cable communication increase -- people want high speed internet more than they want anything else. would you kill for high speed internet? >> broadband is the key product. period. end of sentence. >> what happened here? >> that's broadband is the key product. and that's all it will be. and that eventually the bundle falls apart over time other than those who presents a good economic value broadband will still be the key and that's what these companies are. to john legere's point yesterday where he believes they'll be competing and may need to be consolidation amongst wireless and cable. >> yes, they are competitors.

geez, aerospace is strong. you mentioned -- excuse me, defense. >> northrop up -- >> lockheed martin up very big yesterday. boeing it was a miss so-called but orders were good. united technologies was dave cote going to steal that company? yes, united technologies had 1.3% organic growth and i like they are literally in control of their destiny. it's amazing. >> interesting honeywell and utx virtually identical. >> what do you make of that? >> they're moving in tan tdemta >> that's circular reasoning, my friend. >> no problem. i'm very good at that. >> it's now above where dave cote was trying to steal it. >> may be the case, we'll see if he ever chooses to come back --

>> david, can we run the ain't going to happen again? i run it like every five days on "mad money." >> do you run it a lot? >> i've run it a couple times. >> have you? >> yeah. >> guys, i want to look at perrigo which has been a story this week. it traded below $100 yesterday. prgo. >> wow. >> there had been some thoughts out there, mylan, they considered buying it once, not going to happen. they are not interested at this point. they're focused at mylan completing the metta deal they're involved with. so if anybody's thinking there's a bid for perrigo because it's now $100 and it's from mylan, don't think hard about that. >> anymore on the impairment charge? >> no, we haven't gotten the full story there by a long shot. >> no. notice chipotle's not down that much and they haven't come in to start buying. people, the panic thing, such a bummer. let's panic. let's sell united technologies because nxpi's down. each top on its own bottom.

the food business is good today, the oil business is good today, this market is not trading together. and twitter's in a whole other universe. >> where is twitter? >> i don't know. >> his face -- >> twitter is below $15 a share. >> full sound and fury signifying nothing. >> when are they just going to sell that thing? is there anybody who would buy it? >> i'm too busy trying to get the ceo job. i get in there and i'll fix it. >> what would you do? >> run it. >> day one, what's jim cramer's ceo twitter doing? >> oerperations. >> they have added gifts, moments, they've added an nfl deal, they've added new board members. >> hugh johnson from pepsico. why don't they add new users. that would be something. >> they did have a couple. >> oh, come on. i'm going to get into twitter, saturday nights have become -- i'm hosting, i'm going to switch out of that, run to twitter, get the stock to 18 and flip it --

>> you'll spend saturday nights on it? jack dorsey spends -- >> i didn't like the conference call. i didn't like the conference cause because they have so many things going except for earnings. >> yahoo is for sale. twitter is not interested in buying that. but i mentioned it because of course this morning we did get a settlement between yahoo and jeff smith from starboard owner, one of its larger owners, not the largest by a long shot. he'd been seeking nine board seats but now will seat four of his nominees including himself on the board immediately. and they will then be able to become involved in the process for the sale of the core business. last week when i spoke to smith he indicated such a settlement certainly might make sense. >> it would be great to get it done. so we are having conversations, as we always do with companies. we speak with every company we invest with. and we want to settle.

and in fact since the darden situation where we replaced the whole board we haven't been able to run a proxy contest all the way to a vote. we've been able to settle with companies. we're having conversations with yahoo as well. if we can reach a mutually agreeable solution, we would want to do that. in order to do that we have to have enough representation on the board where we feel comfortable we'll be able to work with the board members in good faith to provide that same capability and credibility in the boardroom for the benefit, again, of shareholders and for buyers. >> so what's that number? >> the number was four. that was the number. and the other number is zero, which is exactly how much the stock is up today. >> give it some time. give it some time. it's 9:39. let's start doing some work. go ahead, do the work i keep urging people. no one wants to do the homework on them. >> apple's not wasting time going down. it's shaving about 60 points off the dow. >> doing that quickly. >> nasdaq becomes the only index negative for the month. let's get to dominic chu on the

floor. hey, dot com. >> what we got here, guys, we were just kind of talking to some floor traders here try to get an idea of what the themes are on the floor. and there are big picture and microsmaller picture items at play here that's a reason why you're seeing a lot of these markets down at least just marginally here. the reason why it's important is because as you take a look at the tech sector overall, you guys have been hitting this apple story quite a bit here. and we know it's going to be a huge driver, the biggest waiting on the dow to the downside today. twitter, facebook shares also moving lower here. remember, facebook is a big important report. it comes out after the bell. if you look at technology as a sector overall, it's down over a percent. it's the worst performing sector in the s&p 500. now, you take the other side of the equation, the tug of war that we're talking about here, if you look at oil prices today, some of the highest levels of the year, the highest levels of the year, we haven't seen these levels since late last year. crude oil up by 2% on wti for that basis. if you take a look at those

prices and whether or not that's driving the trade in energy stocks, it could be one of those tailwinds for energy stocks overall. that sector the best performing sector in the s&p 500 today. so, again, that tug of war, transocean, apache, anadarko, marathon oil, all these guys catching a bid in the early trade helped along by those oil price moves to the upside. that's the company specific stuff. of course the holding pattern type theme we're seeing today also has to do with the fact we have a big fed rate decision coming up. no action expected. we're not really expecting anything of that sort. however, we are seeing a ten-year yield moving back up to that 1.9% mark. it's interesting only because a lot of traders do not want to get in the way of what could be kmem te commentary or statements from the fed that could signal something about future interest rate moves. again, a lot of people aren't pricing anything really substantial until later on this year. but those ten-year note yields indicating that, again, we're in a holding pattern right now. one more thing to watch of

course tomorrow's bank of japan policy meeting on the big central bank side of things as well. keep an eye on the dollar value and on the yen as well. so a tug of war. and then the wait and see for these central banks guys, two of the big themes developing on the floor of the exchange this morning. back to you. >> thank you very much, dom chu. let's get to the bond pits as well. rick santelli at the cme in chicago. good morning, rick. >> good morning, carl. you know, old song that some of us older people like stairway to heaven that's kind of what we've seen in slow motion with oil rates. and i think it merits some introspection especially considering what dom just said. central banks are holding the baton, and all the investors are kind of in the orchestra pit trying to figure out what music to play, who's the arranger and ultimately how loud it's going to be. look at a one week of bunds just creeping up. how fascinating in five trading days -- actually a little less, we haven't completed this one, up about 14 base points,

virtually double from 15, 16. today's high yield was around 31. and if you look at the year-to-date chart, you see that spike there on the 15th of march? that's a 32. and every pattern of all the sovereigns has that same pattern with that mid march area. you want to watch if we take that out on a closing basis, especially the next several days with the bank of japan and the fomc. and if you look at what's going on specifically with our tens, let's look at a series of charts, a two-day, a one-week and a four-year. why is this important? first of all they were up 14 on the week, we were up 10. who's leading who? on the way down it was easy. rent-to-value trade was all about this room, all bt u.s. rates. i'm not so sure going the other way as everybody kind of runs from the damage at the bank of japan seems to be causing and maybe they're right now stopping for more kitchen sinks. if we look at foreign exchange, that has been the one area that has been at a very critical junction but really hasn't given us any clues as to how it's

going to deal with that territory. look at a one-week chart of the dollar index. it's kind of sideways of late. it's the same with the yen then the euro because they're all basically the same trade. and if you're looking at a four-year of the dollar index, this is what i'm talking about. wow, this thing is either going to wedge up to the upside or fall back, but in either case it's worth paying attention for how that will back into the interest rate trade. carl, back to you. >> rick, we'll talk to you soon. when we return, the business of iran. michelle caruso-cabrera is live in tehran with a look inside one of the world's most isolated economies. wipes out almost $40 billion in market cap. be right back.

everybody knows that business today is built on data. the thing is, most businesses aren't getting the most out of it. the ibm cloud is uniquely designed for all kinds of data. like data from the weather company for 2.2 billion locations. or billions of health-related data points. even social sentiment in real time from hundreds of millions of people. it's all in the ibm cloud. if you combine that with the data your business already has- then things get interesting. so right now we're working with a retailer to blend social and inventory data to help predict demand. we can help a hotel chain match weather and local event data so they can adjust room prices from minute to minute. and another company we work with can apply analytics to sensor data to save millions in energy cost. today, every business runs on data. that's exactly why we built the ibm cloud.

our chief international

correspondent michelle caruso-cabrera is in tehran with a look behind the scenes at the oil industry. michelle, good morning. >> reporter: hey there, carl. yes, the iranian government is desperate to ramp up production because they need the money. and if they're going to do that, they also need investment. we're here in iran to do stories about the oil industry. take a look at its state right now and how successful they're going to be in terms of ramping up production. they gave us access to what we call a most export island 25 miles off the coast of iran. and this is where the vast majority of iran's exports leave from, 90%. they are now exporting 1 million barrels more per day than they are when the sanctions were at their toughest. but they want to do even more. if they're going to do that they're going to need more foreign investment. here's the thing even br sanctions went into place a lot of oil companies weren't investing in iran because the terms that the iranian government offered were too onerous, it wasn't investable. but now as a result of the

sanctions being lifted, it appears that the iranian government may be changing their tune and offering much more attractive terms. in the old days the contracts they offered were five to seven years. now they say they're willing to do 20 to 25 years. and there's a lot more risk sharing. they used to say to oil companies we're going to give you a fixed amount of money for costs and any overruns you have to bear. cost overruns o common, that's a killer on your return in investment. also, they're going to tie how much money an oil company can make to how many barrels they produce and the price. and there could even be booking of reserves, which is really important for oil companies and their stock price. now, that's what they say they're going to do. it remains to be seen if they will actually do it. there's a lot of controversy in the country about this still. and we're going to see some of these contracts become available in june of this year. they say they're going to put up 49 different projects hoping to get $153 billion worth of investment that's evenly divided between gas and oil. and if you look at the

production in the country and what's happened to it, you can see back in 2010, 2012 when different rounds of sanctions were put in place their production fell dramatically. and then once the sanctions were lifted it started to pick up again. but keep in mind even as they try to reapproach nearly 4 million barrels per day, there was a time, carl, where they were at 7 million barrels per day. that was in the '70s before the islamic revolution, before a lot of mismanagement, corruption, et cetera really killed the infrastructure and the investment in the industry. and as a result that's why they need so much more investment now. back to you. >> such a fascinating and important set of information there, michelle. >> she's good. >> as we see brent almost to 47. michelle caruso-cabrera in tehran. we'll get stop trading with jim. dow is down about 15 points. don't go away.

man, i'm glad aflac pays cash. aflac! isn't major medical enough? no! who's gonna' help cover the holes in their plans? aflac! like rising co-pays and deductibles... aflac! or help pay the mortgage? or child care? aflaaac! and everyday expenses? aflac! learn about one day pay

at aflac.com/boat blurlbrlblrlbr!!!

getting some news out on ford. the automaker recalling nearly 202,000 pickups, suvs and cars in north america because of an automatic transmission issue. among the models involved ford's extremely popular f-150 from model years 2011 to 12.

we'll keep our eye on that. >> that's not mine. >> not yours? did want to mention dreamworks which we haven't gotten to. of course stock up almost 16% on talks with dreamworks and our parent company comcast which owns nbc universal we can confirm there are talks. but important to keep in mind here typically when you see leaks of this nature they put pressure on the talks to reach a conclusion one way or the other. no one involved expects at least at this point they'll see a deal announced today. but that does not mean that in the next few days you won't see these things move towards and/or an announcement or perhaps fall apart. important to keep that in mind. investors obviously trying to kind of figure out given the $3 billion number that is out there what that will approximate to in terms of stock price for the company. and right now that's 31.50, up 16%. we'll see, again, but when you do see leaks like this, you can then have everybody say, well, we got to either make it happen or walk away.

>> all right, jim, what's on mad tonight? >> we have jack hartung from chipotle. and don't forget be in there buying stock in another seven minutes. sally smith got to find out what went wrong with buffalo wild wings. and i am going to drill down dig time on how nxpi can be up, broadcom be up. can i just say in all my years of being in this that you can have the biggest capitalization stock blow up, okay, on top of google blow up and maybe facebook blow up, who knows. and the market just goes on. >> barely moving at all. >> this is a bull market in industrials. now, of course the fed can take everything away. but i've never seen the banks go up, industrials, parker raises forecast, that's important because right in the wheelhouse of the industrials. but then you look at a boston scientific and edwards life science and they're doing amazing. these stocks are all decoupling. i cannot believe how important the rest of the market is versus tech. >> tech, which is by the way now officially the worst sector of

the year. >> as biotech was one month ago, as oils were two months ago, banks were three months ago. >> you're going where the market thesis lives. >> oil was in bear market and it's out, banks in bear market and then it's out, biotech in bear market and then it's out. >> for good reason. the earnings this season thus far have not been good. >> this too shall pass. everyone gave up at banks at the bottom, biotech at the bottom. we have to get a bottom. we didn't get the downgrades i wanted. i think they fear tim cook. >> i'm sure there's an element of that, yes. >> listen, i'm cutting my price target to 78, but i reiterate my strong buy. >> one of those. i'm sure we'll get that. >> i love this show, guys. can i just say i love the show? that will cut my paycheck in a second. i like it okay. >> you'll live with it. >> as ceo of twitter -- >> i got to go to twitter now and fix that thing. oh, man, i got a lot on my mind.

>> can you run twitter can you make sure david and i remain verified? >> i can take care of all that. i'm going to add 50 million users instantly. i got a lot of ideas, better than the ones they have. i'll let them stay because they're all part-timers anyway. jack's got that square deal, bane, you can stay with me. guys, i'm just kidding, i love you because you're really nice. >> jim, we'll see you tonight. >> i'm choking up. >> when we come back, an apple shareholder reacts to the company's miss and the slide in the stock currently down about 7%. and then panera's ron shaich, dow is down 17. don't go away.

good wednesday morning. welcome back to "squawk on the street." i'm carl quintanilla with sarah, simon, david faber at post nine of the new york stock exchange. apple is a big loser this morning, but it's being made up for in some other areas, as a result the dow is only down about nine points, s&p down about one. we are watching oil which did get above 45 earlier today. that is the highest since november. pending homes coming out as

well. the numbers are at the bottom of your screen. so a lot to take stock of in advance of the fed decision this afternoon. first to the big mover, the day apple first revenue decline in 13 years after weakness in iphone sales was confirmed in the report yesterday. that news sent the shares tumbling. let's bring in josh lipton who spoke with tim cook and has all the highlights. good morning, josh. >> good morning, carl. when i spoke to him, tim cook sounded upbeat and looked confident. we are in the early innings of the iphone, cook said, and added that there is great reason for optimism, demand for the new iphone se in particular he said, in his words, off the charts. investors aren't as convinced however. in q2 apple's revenue dropped for the first time in 13 years. iphone units fell year over year for the first time ever. and we know that q3 guide came in lower than expected for both revenue and gross margins. piper's gene munster chalks up

the iphone to two reason, one the iphone was a big success so apple is struggling against very tough comparisons, more broadly apple is taking share of the smartphone market. but that's a market that's slowing. idc says it will grow less than 6% this year. that's an issue cook did address on the call with analysts. >> i think that the market, as you know, is currently not grow i ing. however, my view is that's an overhang of sort of the macroeconomic environment in many places in the world. and we're very optimistic that this too shall pass. >> so why is cook confident that the iphone franchise is going to return to growth? he tells me to look at the strength in emerging markets like india, the new users that the iphone se is attracting and the record number of android

switchers. but investors aren't so sure at least right now heading into these results that stock was already down more than 20% from a recent high. it's down even harder this morning. guys, back to you. >> okay, josh, thank you very much. for more on apple's earnings and what investors can expect going forward, let's bring in technology analysts. good morning to you both. tim, let's kickoff with you. tim saganaki suggesting there's no question that apple's best days are behind it. why are you aggressive buyers here? >> look, you know, i think that right now they're really suffering from just a tough compare coming off the iphone 6s. and i think as you go into the iphone 7 you now have a very low base headed into what i think is going to be a little bit better than people think iphone 7 cycle, and that really is a bridge to get to the real upgrade cycle which i think is next year when they put displays on the iphone. >> okay.

channing, specifically on that point, you're suggesting that the idea that you hold the stock until the iphone 7 launch through those difficult first two quarters is a strategy that probably should be thrown out of the window. why do you believe that? >> well f you look at the quarter, and it was a really bad quarter, two things that stuck out were growth margin guidance well below the 39.2 analysts are expecting. they did 40% in the june quarter last year, so that's a challenge for them. the revenues are coming way down. and secondly, the big growth driver for the apple stock over the last couple quarters has been china. and the decline was 7%. so what i fear and we'll have to see more evidence is that we have the same situation we saw a couple years ago where gross margins decline, you saw market share declines and a lack of innovation. we don't have the market share declines, but we do have emerging market growth in question. so i think it's a tough slug for apple next two quarters. >> specifically on the question of mainland china as you say in

a constant currency basis they're down 7% on sales. i mean, tim cook pointed out in the conference call that's off a compare last year of up 81, and specifically on china echoing the macroeconomic arguments we heard early on from josh, we may not have the wind at our backs that we once did, but it's a more stable country than i think is the common view. so we remain really optimistic on china. doesn't that to a certain extent take the wind out of the sails of the argument you just put forward? >> well, i don't think so. i mean, look at the numbers. apple has a growth investing base. and there's no growth. look at the -- if you look at the segments there, 90% of the categories are either flat or declining. services is the one bright spot. but there's no way that services can make up for all the other areas. so, look, we're positive on the iphone 7. we think it will be a big success. we were hoping to limp along until we got to july/august when we start anticipating that the anticipation trade in apple, but that's not happening.

all of a sudden we potentially have some issues that might be of deeper concern here. >> tim, i wonder what it's going to take to actually turn this stock around. cook says he's optimistic that a lot of it is macroeconomic challenges overall and that there's still reason for optimism in the smartphone market. but i wonder if it's going to take a new product or just talking about something that's going to drive the growth other than the iphone. >> well, look, i guess i make two points. number one is i think now you set a pretty artificially low base in june. if you look at what they guided to and adjust for channel, they're guiding to like 44 million units, which is not that far off of where people thought they'd guide to, that's the first point. if you sort of look into the third calendar quarter, i think there's a chance that they launch the iphone a little bit earlier, maybe a week or two earlier which could add several million units to september. so i think in the near-term that the table sort of set for this to be the last estimate cut and for, you know, possibly that we have to start to raise numbers. and as it relates to the, you

know, iphone itself, look, i think iphone 7 is going to benefit simply from moving the iphone 6 users into the upgrade base, you know, beginning late this year and really early next year. so compares will get bet sgler and that will be the normal two-year cycle that he was talking about and everybody's talking about. just in conclusion, tim, i guess if you're going to nail your colors to the master of iphone 7, you have to have a clear idea of why it's so innovative. what is your price target here? 120 -- 20% upside? >> yeah. i have $125 price target. the stock trading at $96 after here in the market maybe there's $5 a downside and $25, or $30 of upside. >> what will the iphone 7 look like? what do we think they're going to bring to the table that is going to reinvigorate the stock specifically? in layman's terms. >> look, i think the iphone 7 will have a much better camera.

i think that's going to be one of the big things for the iphone 7. i think it will have better battery life. look, the iphone 7 to me is simply a bridge to get to the real upgrade cycle which is next year. and i think that it's a good bridge because you're going to move all these iphone 6s into the upgrade base. >> right. and next year they have new displays. in laymans terms what do those new displays look like? what do they do in your view? >> these are -- olad brings lots of advantage, one being battery life. significantly better battery life, much better quality of the display, and really opens up this whole new cycle of innovation because apple can come out with curve screens and a much more elegant implementation of what samsung is doing. and then ultimately maybe have a foldable screen as well. >> good to get both of your advice, thank you very much. tim acuri and channing smith. the other big story of the day, the two-day fed meeting wrapping up today. we've got new exclusive data from the cnbc fed survey showing that views from the top two

leaders at the fed, that would be janet yellen and stanley fisher, could be drifting apart. our steve liesman is back at hq with all the details. steve, explain this one. >> yeah, this is an interesting story. the cnbc fed survey 48 respondents, economists, market strategists and fund managers, they perceive a growing difference between janet yellen, the fed chair, and stan fisher, the fed vice chair. take a look at the numbers we came up with. first i want to show you this graphically here. here's where yellen and fisher were before on our dove/hawk index zero being most dovish, ten being most hawkish. fisher in the middle about a 3, call it on the dovish side. what's happened in this survey they've moved apart. yellen below 3 on the scale, fisher not much movement. this gap has widened between the two in the mind of the market and mostly because yellen, especially coming from that speech she gave at the economic club of new york perceived as

being more dovish. that's where the increase of the gap came. so it's growing in market sees that significant. take a look at where the rest of the fomc comes in here. you can see first of all fisher's in the middle. bull ard made a step towards being more dovish but still on the hawkish side of the line. and yellen now in terms of voters this year the most dovish taking that title away from fed governor brainard. george out and mester out a little bit. show you in a second here 4.7. go to the next chart, fomc 4.7 just on the dovish side of neutral about where it was when we asked this question in december but slightly more hawkish than voters in 2015. the governors three more dovish than the presidents. and then you can see the most dovish is kansas city fed president george most dovish yellen 2.9. one comment we got lynn reaser,

their speeches and remarks since december indicate a possible widening on views monetary policy. they do vote together in every meeting, simon. >> yes, in a word do you think they'll make a statement after the conference? >> i think not. i think the markets should be prepared for possible somewhat guidance on saying, look, rate hikes are still alive but they're not nigh. >> at least you get to stay in jersey today, steve. >> yeah. >> nice to see you. steve liesman there as we anticipate the fed. meantime shares of twitter plunging as revenue misses estimate and guidance again a big worry within tech. cnbc spoke exclusively with ceo jack dorsey, all the highlights on that coming up. and donald trump coming close tore nailing down the gop nomination after last night's big wins declaring himself

presumptive nominee. he will make a major foreign policy speech at 1:00 this afternoon. more on that ahead.

quick check on where we are with oil, currently trading as you can see at, i think -- well, let's come back to that in a minute. in the meantime, twitter shares are falling today. thank you. $44.97, we're up 2% on the session overall. obviously riding high on the

wake of the kuwaiti decisions and where we were with the oil producers last week. twitter shares falling after company reported lower than expected revenue for the first quarter clearly ad revenue showing weakness. julia boorstin spoke exclusively to jack dorsey and she has the highlights. >> good morning, simon. with twitter shares plummeting, jack dorsey insisted he has the right plan in place to turn the company around. when i asked him about criticism he hasn't changed twitter more dramatically since taking the helm he says the changes he's made aren't small and he says they're working. >> we've made some pretty big changes over the past six months. everything that we're doing around periscope has been a big shift. the refine timeline is something that, you know, we've been meaning to do for quite some time and we're seeing some pretty significant positive signals out of that. more tweets, more replies, more retweets, more likes obviously. >> twitter's investment in

thursday night nfl games is also designed to grow users and engagement. now, dorsey wouldn't say what kind of impact he expects from the deal, but he said it's a key one to watch for a sign of twitter's full potential. >> the nfl deal is one such example where we have people tweeting about games all the time. and the simple question is what if the game was actually on the same screen as the tweets? and it's not just about football. it's not just about sports. we can do this around live news. we can do this around elections, we can do this around debates and entertainment as well. >> dorsey says he wants twitter to invest more in customer service taking a dig at facebook's messenger's move into this customer territory, facebook using artificial intelligence powered bots, he says twitter has really human focused customer service with a human touch. more on what dorsey thinks about growing competition from facebook coming up in squawk alley. and you can find more from my interview on cnbc.com.

>> great stuff. thank you, julia boorstin live in san francisco. panera shares are in rally mode today after a better than expected quarter. the ceo ron shaich is coming up next. and before we get to break, let's check on oil one more time. earlier going above $45 a barrel. highest level since back in november. that is helping the energy stocks lead the s&p, which is pretty much flattish to modestly lower. we'll be right back on "squawk on the street." we were born 100 years ago into a new american century. born with a hunger to fly and a passion to build something better. and what an amazing time it's been, decade after decade of innovation, inspiration and wonder. so, we say thank you america for a century of trust, for the privilege of flying higher and higher, together. ♪

how's it going watson? welcome to the bank. hello tom mccabe. executive from dbs bank.

i am keeping busy assisting your relationship managers. how so? i can read over a thousand research reports every day, to help you keep abreast of market movements and to help your relationship managers give better advice. that's great. today's fast moving markets make it hard to keep up. but together we can stay one step ahead. we make a great team, watson. bue.t. phone home.n sta[ soft music ]ad.

when you find something you love, you can never get enough of it. change the way you experience tv with xfinity x1. gop front-runner donald trump one step closer to securing his party's nomination as results are in from connecticut, delaware, maryland, pennsylvania and rhode island. our john harwood is live in d.c. this morning. john, your takeaways from tuesday's primaries. >> well, the primary last night in those five states you mentioned was a big night for both front-runners. look at the democratic side hillary clinton wins four out of five of those states. bernie sanders only wins rhode island with 55% of the vote. his problem is he needs wins bigger than that, not only in rhode island but everywhere else to overtake her delegate lead. on the republican side critics

of donald trump have been saying he has a ceiling of 35%, 40%. well, look at these numbers, he's over 50% everywhere last night, over 60 in delaware and rhode island. and donald trump last night said he had in the way a boxer does, knocked out his opponent. >> i used the analogy of the boxer, you know. when the boxer knocks out the other boxer, you don't have to wait around for a decision. that's what it is. and that's what happened tonight. that's what happened last week in new york. and that's really what's been happening throughout. >> now, we still have this cruz-kasich alliance which looked pretty feeble last night. ted cruz is going to make a stand in indiana. he's expected to make an announcement this afternoon. who knows what that's going to be. maybe he'll announce a running mate. but donald trump's going to be campaigning with the legendary basketball coach bobby knight this evening. and you can bet he's going to have fun with ted cruz yesterday when he was talking about a hoosier style comeback referring to the basketball hoop as a

basketball ring. donald trump and bobby knight will have some fun with that, guys. >> yes, we can't wait for that, john. thanks so much, john harwood in washington. for more on this joined by former adviser to vice president jieden and cnbc contributor, former rubio and romney campaign advisor lanny chen now a research fellow at stanford university's hoover institutions. good morning, guys. good to see you both. lanny, are you ready to write the o bit on the never trump movement? >> you know, i'm not quite ready to do that yet. it feels like we're close after last night donald trump had a great night, no question about it. but he still got to perform very well if he wants to get to 1237 which are the number of delegates required to clench on that first ballot in cleveland. and i'm not sure he's going to get there. i think the momentum is clearly on his side, but i think we've got some contests left here. >> why is there not a fairness argument to be made by trump going into cleveland? i mean, 1237 technically you're right, but come on.

>> yeah, i mean, look, i think if donald trump is close to 1237, he is going to be able to convince some of these unpledged delegates to get with him and be with him on a first ballot. but, you know, the rules of this process have been clear for a long time. donald trump has talked about the process being rigged. now he's going to have to pivot back to talking about how he can win this legitimately. so i think that the rules have been known. donald trump's got to compete by those rules. we'll see what happens if he's able to convince some of these unpledged delegates, great, he'll have the number he needs. but he does need a majority of delegates to win this thing. >> a lot of people, jared, are looking ahead to november now that the front-runners have really solidified their places here into the primaries. clearly if the u.s. goes into a recession that would be bad for the incumbent party, the democrats. but what about this sort of mediocre stall speed slugging along that we're in in the u.s. economy? which party does that help? >> well, i think you have to ask

yourself whose economy are we talking about. you're absolutely right if you talk about productivity, gdp growth, there's definitely a slog there. but if you talk about the job market, it really has tightened up. by the way i'm sure we'll hear more about that from the fed later today. in fact, i'm about to publish something showing that even middle and low wage workers are seeing real wage gains right now. and that's something that's been missing for years. so i think you have to kind of divide up economy from 30,000 or 40,000 feet, the kind of macroeconomy, and the kind of microeconomy on the ground working a little better for working people formerly left behind. i don't think if it's steady as she goes that will hurt the incumbent or the democratic front-runner. >> jared, at some point the market is going to connect to what both camps are saying. let's assume it's trump-clinton. paul donovan at ubs said earlier today that actually we know very, very little about either side's fiscal policies. would you agree with that? >> no.

>> where would you take us? >> i would strongly disagree with that particularly on trump's side. i've written about this as well. he actually has a tax plan. and it's pretty coherent. it's also pretty fiscally irresponsible. he cuts $9.5 trillion in revenue over ten years, and he claims he's going to hold a bunch of other stuff entitlements, defense spending constant. that means he'd have to unrealistically cut something like 100% of the rest of government, which isn't going to happen. so his fiscal plan is a wreck. hillary clinton is much more fiscally kind of moderate and has said as much. and i think she's probably believable in that sense. >> lanhee, cruz giving an announcement at 4:00 for those who are not going to be watching facebook earnings. would you pick a vice president this early on, try to shake it up? >> well, look, he clearly has to do something to change the dynamic. this partnership he formed with john kasich was probably too little too late. and ultimately it speaks, i think, to the problem that the never trump movement has, which is that they didn't have a

single person to coalesce behind. it makes it very difficult to do so. for cruz it could be something that he's announcing the support of the indiana governor, announcing some support in indiana that could be helpful. but he does need to change the dynamic. that is absolutely clear because donald trump did have a good night last night. >> yeah, you make the point of not having a single candidate, but i mean polling 60s with three people is impressive, would you agree? >> it clearly is impressive. i think that the issue of course is these were states where we expected trump to be strong. it was states in the so-called asella corridor. the big question is going to be can trump win in indiana and can he win as the terrain gets less favorable. ultimately this is all going to come down to california and how well donald trump can do in california. can ted cruz take enough from him in california to send this to an open convention? >> all right. lan lanhee, jared, we'll see what happens this afternoon and tonight. good to see you both. thanks again. >> thank you. >> thank you. ahead on the show, chipotle

reporting its first ever quarterly loss as a public company. shares of competitor panera are rallying after its earnings beat. the ceo of panera will join us live. and coming up later, the former dallas fed president richard fisher, a man who likes to call it as it is.

good morning everyone. i'm sue herera. here's your cnbc news update at this hour. presidential hopeful bernie sanders acknowledges he'll have to win some big victories to get the democratic nomination over challenger hillary clinton. clinton has 90% of the delegates after winning four out of five states during yesterday's primaries. former house speaker dennis hastert arriving at a federal courthouse this morning in chicago. hastert is being sentenced in a hush-money case centered on sex abuse allegations. the 74-year-old republican could spend as much as six months behind bars as part of a plea deal. residents in northern texas

assessing widespread damage from tornadoes. as many as three tornadoes touched down last night damaging homes and uprooting trees. five people were injured, one seriously. and the ceo of chobani surprising 2,000 employees by giving them an ownership stake in the company. if the greek yo gurt company does an ipo or sells itself, those shares could be converted to stock or to cash. and that is the cnbc news update this hour. carl, i'll send it back down to you. >> thanks so much, sue. let's get to the cme group and check in with rick santelli and get the exchange. >> thanks, carl. happy fed day. and of course if it's fed day we always try to get an individual who has some in-depth awareness of the fed. and today, wow, we got the biggest character of all that fits that, and it's richard fisher, former dallas fed president. richard, thanks for joining me this morning. >> emphasis on the word character. i appreciate that, rick. >> hey, listen, you tell it like

it is. it's so refreshing. so i'm going to hit you right with my best shot in the beginning. i don't think that central banks have adjusted very well to the hiccup of globalization. you know, we have a world that has excess capacity and the central banks keep throwing them lifelines, whether it's in the form of manipulates fx, rates that are probably too low, purchases of paper to keep sovereigns looking healthy, and of course all their holdings whether it's our central bank or others. so in the end how are we going to de-lever, how are we going to clear the excess capacity, how are we going to see goods prices move up, which the fed and central banks want, when the very nature of what they're doing prevents that healing? >> that's a great question because monetary policy worldwide including here in the united states is leading a distortion in the way moneys are distributed and asset allocation inflating the price of securities or anything that trades including commercial real estate.

and then you are very hesitant to try to take that away for fear of volatility or for fear of a downside slip which could effect the economy. i've said this over and over again, rick, the fed has the markets on rit lin, trying to keep volatility down as much as possible, as soon as they hint they might remove that, then they create the problems that they're afraid of. so they've boxed themselves into a corner. and the real art will be to see how they manipulate or maneuver to get out of that. it's not clear how it's going to be done, but i think it should be done. and the sooner they begin to act, the better. >> you know -- >> how's that? >> but the problem is and your first word was probably correct, manipulate. the problem with manipulating is, richard, at one point in my youth i had a mustache. okay. and i tried to trim it. and i didn't quite like it and i'd trim it a little more and a little more and pretty soon i had no mustache anymore. how is the fed and central banks going to know when to stop, when

to let things happen? they seem to want to overcommunicate, but their communications are in the form of, you know, here's what the market's going to look like, here's where we think our dots on the economy and growth are going to be. they're never correct. how are we going to see the rains slow things down when there's no indication to address the real fear which is the markets and financial assets. >> to me that is the concern. we have levatating markets and we have analysts who puts up a bar chart of who's dovish and who's hawkish, this is theater of the observe, not steve by the way who's my dear friend, but so much time is spent and even yesterday on this program or the last couple days what's more important, top line growth, bottom line growth or the central bank, the federal reserve? and the agreement seem to be all the analysts you had on it's the central bank. that's not what central banks should be doing. central banks should not be driving the markets. they should be assisting the

real economy. and the real economy both domestically and globally compared to the last meeting that was held is doing much, much better in terms of employment, in terms of stability overseas, the argentina come back to the market. the brits by the way just issued a 50-year bond four times oversubscribed and it's only 50 basis points above where the ten-year treasury is trading. these are very robust markets. so, you know, i would take advantage of that right now. and i would be prepared when they move, and i hope they move some time in june if indicate some wording today they'll be a settling in of the marketplace, there will be a correction. suck it up, deal with it. that's reality. how's that? >> richard, thank you. that was great. and once again you always call it the way you see it. and we all appreciate that. thank you, richard fisher. sarah, back to you. thank you, rick santelli. especially for the mustache

image. oreo and cadbury maker higher, reporting better sales and improving margins. so which brands and which markets are driving that momentum and what does the company see ahead? we have an exclusive with the ceo irene rosenfeld coming up in squawk alley. after the break an exclusive interview with panera's ceo ron shaich also coming off of a better quarter. what does he expect going forward and is he benefitting from chipotle's losses? we'll be right back. and i know a thing or two about trading. so i trade with e*trade, where true traders trade on a trademarked trade platform that has all the... get off the computer traitor! i won't. (cannon sound) mobility is very important to me. that's why i use e*trade mobile. it's on all my mobile devices, so it suits my mobile lifestyle. and it keeps my investments fully mobile... even when i'm on the move... ahhh.

intensely-flavored. andbeautifully-misshapen. s fully mobile... when you cook with incredible ingredients...you make incredible meals. get your first two meals free at blueapron.com/cook.

perhaps some good news for the bulls, historically stocks have tended to do very well in the third quarter of presidential election years. so find out what's behind the trend and if history will repeat itself on tradingnation.cnbc.com. more "squawk on the street" coming right up. they say that in life,

we shouldn't sweat the small stuff. but when you're building a mercedes-benz, there really is no small stuff. every decision... every component... is an integral part of what makes the 2016 c-class one of our most sophisticated cars ever. because when you're setting a new benchmark for refinement, it is the small stuff... that makes the biggest impression. the 2016 c-class. see your authorized dealer for exceptional offers through mercedes-benz financial services. welcome back to "squawk on the street."

i'm seema mody. stocks are mostly lower and it's no surprise the tech sector is lagging the most as apple weighs on the overall index. technology now joining health care and financials as the only s&p 500 sectors in negative territory for the year so far. among the names dragging the sector lower are large caps like facebook, google's alphabet, microsoft and amazon all down around 1%. and alpha alphabet, microsoft and amazon reaching correction territory. keep an eye on facebook as it reports earnings tonight. >> nasdaq now in the red for april. s seema, thank you. we're also watching another loser that would be chipotle after reporting its first ever quarterly loss as a restaurant company. the chain looking at new menu items to regain customers. they've been koing all sorts of promotions, but the numbers, the comps down 29.7%, worst than forecast. and things don't look much better. they gave guidance on the early part of april the first three weeks down 26%. analysts writing this morning it's just hard to gain any

visibility into whether chipotle can find a bottom and what sales look like after that. they're talking about maybe 2018. >> as cramer said this morning, you look back at the history of massive problems in restaurants, jack in the box, kfc in china, it takes about a year for customers to really come back. and that remains jim's point is that a year from now stock's going to be higher, you're not going to be looking at comps down 20. >> but i think that's the point that wed bush says it's actually the best case scenario you get a recovery in 2018 it's because you're not yet seeing it. the comps are actually deteriorating hence the argument you don't have a bottom so you can't see the upward trajectory. >> meanwhile the stock has been hammered down about more than 30%. >> it's 43% since the last -- since the august highs 43%. >> so it's been hammered. chipotle's loss could in fact be competitor panera's gain. shares of panera bread are higher today after it came out last night beating wall street

estimates raising its projections for the year on top of a solid gain already for 2016. with us now is ron shaich, the ceo of panera bread. ron, good to see you again. thanks for joining us. >> good morning, sarah. how are you? >> good morning. let's talk about this quarter. nice beat and raise. and a nice boost for the stock, which is already up 13% or so in the last three months. what's driving your momentum? and could it be a loss of customers from chipotle moving over to panera? >> yeah, well, it has nothing to do with chipotle, but we'll explain that in a second. it's really rooted in our own strategy for transformation. we've been working on it four years. it's essentially about being a better competitor alternative and about expanded runways for growth. better competitive alternative, panera has been rolling out a guest experience called 2.0, it's access, it's technology, it's operational integrity. panera's also been driving innovation food and marketing operations in terms of expanding growth panera's made a real

commitment to catering. it's made a real commitment to our cpg business, panera at home. and we are having success with delivery. and i think that the world sees it. it's manifested itself in comps that have been building. you saw this quarter our comps were up 6.2%. that's the best comps we have recorded in four years. more importantly we've been taking market share that those comps are about 600 basis points better than the all industry composite. so we're feeling just great. our long-term strategy is working. >> on that point about taking market share, 6% comps versus negative 30 for chipotle in the same period, why are you so sure this has nothing to do with chipotle? >> well, it's real simple. we have been tracking against chipotle for many years. we don't correlate with their sales. and whether they go up, we don't go down, when they go down, we don't go up. more importantly, the way to think about what's happening in chipotle is consumers are

staying away from chipotle. that business is probably moving to the entire universe of the food industry. so everybody's getting a tiny little bit. people are not waking up and saying i want to go to a fast casual restaurant. i was going to go to chipotle, but now i'm going to panera. no, they're going to go to whatever's going to offer an experience like chipotle whether it be mexican food or something else that given day. the reality is in the last month when chipotle has essentially been giving away their food, tremendous couponing and discounting, our comps were as high as they have ever been. and so i think that says literally what's going on. >> with the diverging fortunes and restaurant business in mind, mcdonald's seen momentum thanks to all day breakfast, the story when mcdonald's was suffering mcdonald's is losing share because people are going to panera and shake shack and other fast casual options. now that customers are coming back to mcdonald's, is that a

headwind or risk for your growth? >> i have to tell you, sarah, i think you know because you've watched us for 20 years, i know it. the reality is right now -- i know, i know all the way back to high school, right? >> it was. it's true. >> no, no, i remember being on cnbc when she -- what is it? panera sarah. >> right. >> i remember that. at any rate, the reality is that the market loves to focus on what happened in a given quarter who's up, who's down. what we're focused on here at panera is really doing the things that make us a better competitive alternative for the long-term. when we do that, we've always won. look at panera's success over 20 years. it's not about an individual quarter. >> and it's a good story that you tell. but you have been under pressure from some of the investors, have you not? i mean, just talk us through the attempts to please them, not just the idea that more of the estate is going to be franchise than owned and the borrowing of debt to return cash to shareholders.

>> you know, i'll tell you something, right, i've been doing this -- i've been a public company ceo for nearly 30 years. i've done a hundred quarterly earnings calls. it's never about the pressure. what it's about the pressure on ourselves internally is far more than anybody could put on us externally. what we want to do is deliver for the people that actually have faith in us. who is that? that's our team members, that's our customers and that's our investors. and so we continue to try to do the things that matter and that will make a long-term difference. i actually stepped down, i retired. i came back to be part of this transformation and help prepare panera to be in a place where it can have a long standing run, you know, many, many years of sustained expanded earnings growth. you don't do that in a quarter. you do that by putting in place the ingredients that drive a better competitive alternative. and you position an organization for larger ways for growth. >> yep. you've come a long way, ron,

since st. louis bread company. quickly here on the outlook, i want to combine two factors that i know you feel passionately about and that's some of the risk factors and analyst reports. it's always going to be u.s. consumer spending, so i wanted to get your read of the consumer going forward and also higher wages. what's going on with wages? are you feeling the pressure to raise them given new laws and more demand for labor? >> absolutely. panera has always paid better than others. we believe that's part of the guest experience. we're going to continue to do that. there is structural legislated inflation in wage rates, that's going to effect the restaurant industry to a much greater degree than food inflation, which is essentially benign. expect it to continue certainly for the next couple of years. it's not going to go away. and the guys are going to be able to meet that ante are the guys are going to win because customers are expecting a better guest experience. >> and quickly on the state of the consumer. >> you know, i actually focus very little on the consumer.

the consumer goes up, the consumer goes down. panera is about taking market share. and we're taking market share. >> ron, thank you. good to see you. >> thank you, sarah. >> stock up almost 1%, ceo of panera bread. >> always a good interview. when we come backse, starbod adding four new members at yahoo. that's not the only activist flexing muscle this year. new report talks about which stocks could benefit next. we're going to get to that. and then a check on crude. we saw a build of 2 million, that was bigger than expected on inventories. and oil has come off of its highs was above 45 now just above 44. back in a minute.

who do you work for? your boss? yourself? your family? our financial advisors are free to realize a plan to fit your family's unique needs. we'll listen. we'll talk. we'll plan. baird. t-mobile does data differently. so it can do more for your business. when work takes you across the globe, your unlimited data travels with you to 140 plus countries and destinations at no extra charge. and that's not all. because with t-mobile there's no overages. ever.

switch your business to t-mobile at work. and get four lines. with 10gb of 4g lte data each for just $35 per line. nobody does business data like t-mobile.

the amounts of cash given to activist investors is rising from up $56 billion to $173 billion in just five years. our next guest says that the next increasing importance of the activist investors is to really identify the underperforming managements. and now sh, to join us here at t 9 is jim giannakis and you have

a new sweet here, and what are you seeing? >> well, we figured with captain ahab, you can have great stocs s and so what we have ascertained with the research is that activist investors are a good force for the market, and they are replacing the boards in 50% of the cases that we have examined and they are reviving the underperforming managements with good underlying businesses. >> that is it, and for many people watching, that is a very glass half full view, but run with that. so, what therefore are you attempting to do with the product sweet? >> well, the product suite is trying to identify the product suites and the gooding managers and a good array of stocks to present to the clients. when they ask for this research,

we retrying to identify the stocks through management teams and not through the traditional si silo. >> is it easy to quantify it, because it is qualitative in terms of a team, and how it performs? >> well, it can be quantitative and we do try to quantify it. in the captain ahab piece, they had to beaten the s&p 500, and beaten the peer index and done the job twice. it can be qualitative but we try to take a qualitative approach. >> and so this is counter to two narratives that the hedge funds are slammed. big ackman is having a tough ye -- we foe that bill ackman is having a tough year, and we know that they come in for invest investor-friendly moves and then leave the stock. >> well, it is not a great year for the hedge fund, but we are long-term focused and the clients of the hedge funds are long-term focused, and you don't

try to replace the boards and trade in and out of stocks, because they are taking measures that are positive for the long term fundamental changes. and we like temper sealy who is otrying to effect the long term range, and ta have been there for a long time, and trying to do the right thing by the company and the shareholders. >> so the point is to throw out companies that investors might be interested in and one is temper sealy. what else are you planning to see? >> we plan to do more works with advanced autoparts, and that is a really good underlying business with underperforming margi margin, and if the management team which has been shaken up can bring up the margins close to the peers, it could be a tremendous stock. another one is rolls royce which trades in london and really good b business and long-term cycle business and with the help of value act and recent changes, then it could be very good.

>> they is have had profit warn warnin warnings. >> yes, and it is a good time to get involved. >> interesting. >> and you say that there are good targets as far as the management team, so do you have any targets of making charts for this? >> well, we have to identify the activists. >> so you like when they nominate their people for the boards and effect the change on the board, and what about the break up and deal strategy of activist, and which one works best? skwlel, there are many ways to skin the cat. and sometimes, taking the company and splitting it into many parts can be good for the shareholders and companies, and one of the ceos that we have identified and long term manager is john malone, and his goal is focused. so he is taking the company and splitting it into pieces, and putting them back together. >> and what is your perception

over time with the activist, because the argument is that companies who don't have activist investors have moved the way they operate and allocate the cash in just in case one appears. so do you think that the opportunity for activism has diminished substantially over time as the market has shifted towards and arguably shift ed towards the short-term shareholder goals which is arguably what the activists oftentimes would head for? >> well, in many, most cases they are long-term focused, and in the case of a couple of the companies, you look at what is happening over to the long term with temper sealy, and we feel that there is a really good opportunity to improve margins, there and so they are long-term focused for the most part, and you can't count every case as that. >> and as many opportunities as there ever were or diminishing? >> well, interesting statistic, if you look at the assets of $74 billion, you don't need a 5% stake to effect change. it can be $3 to $5 trillion impact, and that is 3% of the

s&p 500, and so clearly the opportunities are going to diminish, but it is a massive force in the market with activi activism. >> thank you, george. appreciate it. >> thank you. and let's send it over to jon fortt on "squawk alley ". >> well, we have guy kawasaki and others weighing in on the earnings from yesterday. and also, the ceo of uber is going to be weighing in on the pressure to go public. and finally, the rumors of comcast and dreamworks might tie up. there are talks, but will there be a deal? all of that is coming up on "squawk alley." a deluge of digital records. x-rays, mris. all on account...of penelope. but with the help of at&t, and a network that scales up and down on-demand, this hospital can be ready. giving them the agility to be flexible & reliable. because no one knows & like at&t.

an hour and a half into trade, and it is apple that is d disappointing the market, but what is interesting is that despite that apple is down so heavily, the market is able to the basically trade on. as we saw with other big tech, and other big tech d disappointments in the course of last week relatively unaffected with a slight contraction on the s&p. >> and i want to point out another earnings mover for you and that is mondelez, the giant stack maker which emerges markets and all over the world came in with a better quarter

and sales, and kept the stock up, and in the next hour we will bring you an exclusive interview with irene rosenfeld, and now over to you for "squawk alley" carl. >> yes, thank you. it is 8:00 in cupertino and it is 11:00 a.m. on "squawk alley." ♪ ♪ they are running the streets ♪ ♪ and running my streets up to my knees ♪ ♪ and she is running the street s down to chicago ♪ >> welcome to "squawk alley" for wednesday, and joining us is kayla tausche and jon fortt and also joining us from out west is guy cow sake. and oil is rolling over, and apple, with the shares