and, you know, they'll be a pure china play. remember in china we own all our assets. as china becomes our line licensee, 90% franchise owned and we become a company that gives asset light and we create two great companies. so this is where we really create two powerful independent companies that can grow as we move into the future. >> good having you here. >> recognize you as a good guest host and for bringing great guests. and you deserve that recognition. thank you. >> thank you very much. i appreciate it, joe. >> you're welcome. join us tomorrow. "squawk on the street" is next. ♪ this is how we do it ♪ this is how we do it good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. this morning disney responsible

for all of the dow's implied decline, macy's is no good either. we'll get to all of that. europe in the red this morning. asia quiet overnight. and watch oil up four of five sessions following the best day in about two weeks. our roadmap begins with four names down big this morning. shares of macy's falling hard after the company's earnings report this morning slashing guidance. terry lundgren saying on the call we are not counting on the consumer to spend more ncht office depot and staples calling off merger after a judge blocked the deal. both stocks taking a hit this morning. and disney shares falling after missing estimates for the first time in five years. a drop in espn ad sales and subscribers taking a toll on that quarter. ncht first up, macy's down in the premarket after the company missed on quarterly revenue and slashes their full year guidance. retailers says top line sales expected to remain below initial expectations. macy's early release terry lundgren saying we are seeing continued weakness in consumer

spending levels, headwinds also coming from a consecutive second year of double digit spending reductions by international visitors in major tourist markets. comps down 6. this is five straight quarters, guys, where sales are down. >> well, you know, the unfortunate location of being in the mall. i can just sit here and say this over and over again, but people just don't go to the mall like they did. and this is happening. what's throwing people off -- and there's a lot of industries where this is happening. cloud adoption in tech destroyed a lot of tech earnings this quarter. this millenial version to the mall which by the way is talked about in a conference call that not solarcity because that was in the fossil conference call. it just went away. this kind of behavior just happened overnight. i feel for these guys. you couldn't game how quickly

this business went away. >> no. >> what happened to the omni channel discussion we used to have? >> we changed the channel. >> we did have an analyst yesterday in the 10 say we used to talk about omni channel but know mobile is just a cannibalizer. >> i used to go -- there was a period you went to the mall and looked at the price on your hand held. you now don't even go to the mall. look, terry lundgren is a great merchant. is he the greatest in the world? arguably mickey drexler is in the mall. it's where they are. it's the showcase. it's the way people shop has changed radically. it's radically. and now i know that apple is completely out of favor. bernstein comes out today with a note, adoption not happening. but people shop in their cell phone. that's what -- >> and we've been talking about it for a while, my friend. david berman introduced the idea a couple years ago and it's only

picked up speed. and in fact when you look at the fourth quarter numbers more than 50% of the sales growth and retail in the united states was amazon. now, there's not a lot of growth to be had, but any that is had more than 50% is going to amazon. that shows you. that said we're talking about macy's has 870 stores in 45 states, gentlemen. >> how many do they need? how many stores does sears need? how many? >> it's not fair to macy's to lump macy's and sears in the same sentence. that's really cold. >> okay. how's gimble's doing? montgomery ward -- don't knock that. they said they cut them perfectly. >> jim, again -- >> first of all first quarter is not particularly good quarter for retail. down 5%, 6% is pretty ugly. >> i just think when you see comp sales down that says we can't get ahead of it.

i bought a pair of rob ports at amazon and immediately macy's said i could have gotten them cheaper on omni channel. and that's true. it's just that i've got that amazon prime. and amazon prime is something i like to use every day because i feel like i'm beating someone. like my parents used to be in another generation like you bought retail? now it's like did you buy prime or not? >> and nobody seems to buy apparel. in fact, i think it's all accessories. apparel is just not purchased. >> you may question that at that conference call. >> key thing number two on the plan for near-term improvement is going to be excite customers with greater newness. >> newness. >> and more exclusive merchandise. that actually is a quote from the press release. greater newness. >> wait until -- comes out 3d mall, you go into stores and you try things on.

it's insane what's coming. i mean, i don't think these guys realize what's coming. retail is not god given. you can -- i can show you boxes of receipts of retailers that my father had as customers in the '80s and '90s, and not one was in business. and that was just because of walmart. now what is walmart? we haven't even heard from walmart. >> i don't know. nobody's even going to walk an aisle again, all going to be on the ship and lose ability to walk and wobble around. >> ship of fools, unbelievable. >> amazon at an all-time high again today. bezos' wealth up $18 billion over the past few weeks. >> what he's worth, we focus on that. it's what he's created. he's created a remarkable thing. do you have the button which says you're out of time? do you have the button? >> i don't have that button. >> my wife says that's the most important innovation since like

tesla. >> meanwhile, disney's down on the premarket after missing with quarterly results last night despite strength that the movie studios cable revenue declined by decrease in ad and subs at espn. bob iger did address that issue on last night's conference call. >> we're also in discussion with a number of entities, current distributors coming forward with new packages and some completely new distributors all have expressed an avid interest in having espn and our other channels included in their initial offerings. and we're very, very encouraged by the discussions last negotiations that we're having. >> now, you shift the timing of some bowl games ad revenue at espn actually up three. no color on succession. >> i'm taking the other side of this negativity. listen to me, get to the end of the conference call, which most people didn't. did you? >> i did. >> bob iger -- >> last words were good-bye. >> no, it's thank you, ladies

and gentlemen, this concludes the conference call. bob iger saying i wanted to have one thing, i'm actually kind of surprised that after 45 minutes of questioning we didn't get one question about our studio. that's insane. they've got five years worth of production coming. i think that this is -- i'm not going to say anything's a buy because if something is down five this market can't handle that volume and usually means stock's down again because that's what happens in terms of the way the market has so little volume. all these big institutions can't sell in one day, they have to in two days. but this quarter we have to judge this from the point of view of when a bowl game came as opposed to "captain america." i had hasbro on last night on "mad money." >> yes. >> i mean, we're now to the crazy point where in order to be able to play disney we buy ea for "star wars" game, and we buy hasbro for disney princess and captain america. this is wrong. >> okay. i will come back at you then.

let's not even consider the overarching fear of the unbundle and the skinny bundle, the things you just heard mr. iger talk about. talk about ad sales up 3%, sports center, is it still getting it done? are young people watching that? because when i've talked to guys buying or selling the stock this morning, that's what they're coming down to is advertising growth, jim. not even the worry about the unbundled world and whether or not espn will be on all the bundles or skinny bundles or not. but this ad growth number is worrying people. and at 575, let's go with a 575 number you're talking over 15 times, why is that not a relatively expensive multiple? for any top line grower. >> okay. there are -- i actually can tell you i feel differently. i think that this is an 11% grower, honestly. >> we're talking about 4% revenue growth, 2% net income growth and 6% dluted eps

quarter. >> 11% i don't know how this is considered bad. five years in a row of meeting or beating street estimates to me is pretty terrific. now you can say, jim, you made the same map on apple. well, apple's not going away. disney's not going away. i am saying disney will be a franchise long after many -- >> of course it will. >> but david's point is not going away. >> short-term i got problem. >> not going away and being leadership are two different things. >> okay. that is fair. >> nobody's arguing this is an incredible company. and the theme parks and the studio. but to the extent that people are buying and paying up a multiple based on expected growth, the question of unbundling and what that's going to mean to espn subs and ad growth are key questions. they are. >> i'm not denying that would be foolish for me to deny that. foolish. i'm just wondering whether that same narrative is going to be with us two years from now. we're still going to be seeing captain america, the intergalactic civil war. we're still going to be seeing

frozen 7, okay, i mean, we will. and we'll still be playing their games. yes, they did do a video game console. that to me was not great. i am thinking over and over again of the fact that my kids went to see "star wars" three times. and i saw "star wars" three times. and i don't know many companies that have that kind of pull. how many times did you go see captain america? >> half of that income comes from media networks, so you get some cord cutting, some cord shaving and that will offset the acceleration of things like theme parks, things like studios. >> i think you got to -- is it right to be thinking a little further along? right now, yes, i can understand. that's why i said selling today, selling tomorrow because of ad revenue. if they'd done time warner's ad revenue -- >> if they'd done cbs's top line growth 10% -- >> don't you think they can change out the personnel.

>> maybe they'd be able to. is sports center getting to be an older franchise? it's not being watched by a young audience anymore. by the way walk around the office and ask anybody you see under 30 years old whether they have cable television. you know what the answer's going to be. >> well, they have comcast. >> they have broadband. >> you have to have wi-fi. >> but they do not have the bundle. >> again, i think that there are issues with espn. i watch a lot of it on my handheld and i don't get watch espn, and perhaps i should. but i get my scores because i'm laser focused. and the fact is that the espn on your cell phone is so -- it's a cannibalization it's so fabulous. it's fabulous. but i just find that when i still put on espn -- yes, i still watch espn. am i too old? i'm not the demographic you want. >> no. you're out of the demo. >> if you don't watch espn sports, for football, if football season were longer, we would be having a different

conversation. >> i don't think it can be any longer. >> i don't think the players want to add. >> they need their bodies to rest. >> that's hard enough as it is. >> the draft. did you see the draft coverage on espn? >> yes. >> it was incredible. short-term i understand but i can't grade this company short-term anymore. it doesn't work. there were quarters i wanted to grade amazon short-term, it was a mistake. >> it makes sense. >> a quarter facebook lost its way because of mobile, there were quarters i felt google including the last one may have lost its way. this is allowed. what i am saying it's allowed. that's what i'm saying. this is not nordstrom, this is not macy's, this is not pen penney's. >> so disney's not going away. that's the point. >> thank you. i got another 15 i can mention. >> when we come back talk about things going away, staples and office depot scrapping this plan to merger. both stocks getting slammed.

we're going to talk to former office depot steve odland. s&p going for four in a row for the first time since mid march as well. we're back after a break. so what else is new? how's your mother? umm..she's doing good. she needs more care though. she wants to stay in her house. i don't know even where to start with that. first, let's take a look at your financial plan and see what we can do. ok, so we've got... we'll listen. we'll talk. we'll plan. baird. at ally bank, no branches equals great rates. it's a fact. kind of like vacations equal getting carried away. more proactive selling. what do you think michal? i agree. let's get out there. let's meet these people.

staples and office depot tumbling in the premarket. the office supply retailers deciding to abandon their planned $6.3 billion merger after a federal judge blocks the deal on antitrust grounds siding with the ftc. staples and office depot hoped to combine after years of syncing revenues. we'll get reaction from former office depot ceo steve odland later in this show. a reasonable possibility the deal would substantially impair competition, especially on big customers. >> look, this kind of ruling, the government's getting involved, this is not like they let the airlines merge and all our rates go up. okay. they block these guys, i mean, i don't know if office depot can, you know, how does it stay in business? >> that's a question here. the key was the b to b business the idea there was not enough in terms of corporations buying

their office supplies. and the judge agreed with the government here. which was something of a surprise given he had been tough on the government in particular because of this coaching that the government had tried to do with an amazon executive in his deposition sort of trying to make it seem like amazon had no interest in entering this market when in fact they do. we spend a lot of time talking about amazon in our first segment of course about macy's. well, if and when they turn the switch on here decide to deliver office supplies to corporate america. don't you think they're going to be fairly quickly in the driver's seat? most likely they will be. >> what i was thinking was friend of the court by dunder miff lin, honestly. >> not to mention -- yes, i'm aware from the office. they committed to keeping prices for three years, i think, froze. a strange outcome in some ways. we haven't gotten a full

decision. >> you need a counter. this is another one where the technology caught up with the arguments. technology is moving too quickly for the judiciary. i mean, do they want a company -- >> antitrust regulators you might say as well. look at some of the deals blocked in particular in the past in technology and then it's what were they thinking. >> i struggle here because i think that everybody where's the real world? i mean, we know where we get our office supplies. they pulled back and pulled back and tried to get -- staples has done its absolute best to try to close and still can't. office depot, this was a merger that had to happen in order to save. this was not two drunken sailors. >> both companies still produce a decent amount of cash flow. there's an idea of given their profile if the stocks come down enough private equity might be interested. >> really? >> we'll see if there's a floor here. >> geez, i don't know. again, i keep coming back to this rapid adoption that no one

was thinking about. and a lot of it is this amazon -- berman, this amazon quarter was a quarter -- was a tipping point quarter where you just realized that this is where a whole generation of people would never go to office depot. >> it's funny we just talked to jamie dimon in the last hour and one of his points was bond market looks open, there's a lot of m&a chatter. he didn't go into the sense of hesitancy like wi-fi at city hall on some of these big ones. >> yeah. and when you're seeing more strategic deals particularly of this type, it becomes more of an issue. and this year listen between baker hughes and this deal falling. >> it's the most they've done since -- >> and then firing regulation, not an antitrust right at the heart of allergan/pfizer, the government -- >> the government's the most active it's been in blocking deals in something like 40 years. the street did a big survey. 40 years. and a lot of these companies are not -- do you think office depot is trading at $3 because it's

about to go to $5? stocks don't trade at $3 because they're about to go to $5. you know where they're about to go. three, two, one, ignition, failure to launch. >> they are going to restructure some operations, cost efficiencies, return some capital. >> okay. >> tough story. when we come back cramer's mad dash, count down to the opening bell, take at look at the premarket. more "squawk on the street" from the nyse straight ahead.

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imagine that, time goes by so fast. live every day to the fullest, jim. >> what do we got? see this, david? says 9.23. >> yes, it does. >> on fossil's conference call last night, which was a horror show, the ceo -- >> watches by the way. >> pardon me? >> they make watches. >> the ceo says we sell 30 million watches today, all they do primarily is tell time. that's now a liability when you wear one of these, david. this doesn't just tell time, it tells me when my wife is bother -- calling me. this is really important. the ceo says largely millennial have not worn watches because they grew up with smartphones. david, milleninial is a whole bg part of the population, and they're taking over the earth. and they don't spend. they get their clock through here. they don't do any of the things we do. >> we have discussed this in every single thing we've done today so far, whether it was

macy's and the rise of amazon because people are buying on this, whether it was disney and the fact millennial don't actually have cable coming into the home. and now on fossil as well. >> david, what can i say? we are disappointed that these headwinds have intensified. by the way, a lot of the talk is nordstrom has drastically reduced the number of -- watches. david, i don't know. >> the big themes sometimes, jim. the big theme of the rise of mobile devices and people's willingness to do all sorts of things on them impact so many things. >> it's happened too fast and yet everyone wants to sell this stock. why do they want to sell apple? they want to sell everything, david, except for amazon and facebook. so we got two stocks. >> all right. >> just two stocks. that's what we have. and everything else we're done. you're a staga and i'm a

triceratops. >> we got it right here. >> trending. trending. >> i'm sure it's worth that according to mr. cramer, but we're going to have an opening bell. and a lot of starts are going to start trading right here on "squawk on the street."

you're watching cnbc "squawk on the street" live from the financial capital of the world. we'll get the opening bell in about a minute's time. coming off of best day for stocks since march 11th, jim, as people in the middle of the session decided they wanted to own some more of these things. >> that was an amazing day yesterday because you had oil cooking, the dollar going the right way. you didn't have really any earnings reports that could destroy the thesis, so in the absence of everything the market went higher. we went back and looked at a lot of stocks that reported great numbers and they were all flying. and i think that was important. >> most of the s&p earnings are now in. profit down about 7.4. at the beginning of april

estimates were for them to fall about 9.5. it has not been a good earnings quarter but it's been less worse than people thought. >> yeah, just some high profile disappointments, particularly technology. really disappointing. big part of the s&p. >> there's the opening bell and the s&p at the bottom of your screen. at the big board this morning it's turning point brands, maker of alternative tobacco products celebrating its ipo today. over at nasdaq the pajamas program, a nonprofit providing pajamas and books to children in need celebrating its 15th anniversary. we'll clearly watch macy's at the open, jim. below 34. >> look at this ea. ea people are saying we buy that, we don't have to worry about espn. we get all the good of disney and don't have to worry about espn. i'm not kidding. that's the same thing with hasbro. we can go buy frozen.

i think it's absurd. >> consumer products were down. i mean, they had incredible growth in the first quarter 23% followed by 8% decline in consumer products, jim. although they say over time, i mean, iger on the call said, listen, "spider man," we have more on "captain america," it's going to create a nice recurring revenue stream. >> they're ready with captain america. by the way nerf and play-doh are still the big guns at hasbro. play-doh double digit gainer. i play with play-doh. my mom gave me play-doh. leave me outside in the play pin with play-doh. it's back. >> never gone anywhere. >> never went anywhere. but disney -- forget disney. that's what i heard today. forget disney. i'm not forgetting disney. >> morgan stanley their note this morning says investors got spoiled. basically called people a bunch

of babies getting used to that kind of earnings consistency. >> there's 499 companies held to a certain standard and then there's disney held to a different standard. >> do you really think that's true? >> no, i say things because i don't believe they're true. i just say them. >> i know everything you say you believe to be true, however i'm questioning whether or not you really think it was held to a different standard. it was held to a high standard because it's performed incredibly well, but it was also rewarded for that. >> well, i think at apple i think tim cook is held to a higher standard. i had tim cook on "mad money" and i thought he laid out a case to own it long-term. and people were saying, yeah, but doesn't he understand there's no innovation. no innovation, being said by people you could not pry their cell phone from their cold dead hands. and we all have to see disney movies when we have younger kids. we can't avoid them. i mean, it's just something, it's a fact of life.

you got to go. it's kind of like a wrrite of passage. >> what? >> rite of passage. >> we're going to keep our eye on sea world entertainment down almost 5%. credit suisse cuts it to under perform. their argument speaking of disney is that disney and comcast investments in theme parks will inhibit attendance growth in the first half. >> i think fossil is being inhibited by the apple watch, but no one wants to hear anything good about apple. the only thing i hear about apple is it fell from the tree in the garden of eden and ended badly. >> shares of macy's now down about 48% over the last 12 months, and down 8% today. >> wow. >> one of the large shareholders has been pushing for them to try to realize some of the real estate value and by the way they did say in the call in the press release that they are continuing

to focus on that, but it is a complex issue in terms of real estate. they said previously announced process for maximizing value the company's real estate continues, these complex transactions are being thoroughly explored. and they will continue to work to monetize unproductive real estate. of course the guy who pushed them towards that was jeffrey smith. >> david, it is -- >> from starboard. >> -- it's literally in half from when he pushed it. >> it is. i had a chance to talk to him a couple weeks ago. i had a chance to talk to him at milken. this is what he had to say about macy's. >> it wasn't necessarily the de-mallification of america, but i do think last year was a difficult year for department stores and for retailers. and so we got caught up in that. and i think part of it was weather, part of it was oil denominated currencies. and hopefully things get better fundamentally as it relates to company, but either way we're

talking about a lot of real estate value. >> secular. >> do they start to move towards realizing some of that lot of real estate value? >> they'll have to pay rent to their own company. you know, i sold macy's bonds in the '80s. remember how that worked? >> yeah, that didn't work out well. >> no. >> was that the campo -- >> they reorganized. it was the japanese -- >> who took them private? no, but who was the buyer? i'm sure somebody will remind me of it. >> these are levered companies. i saw they bought back stock at macy's. that's not what you do. you conserve cash. i mean, look, am i a doomsayer on this? i'm from a retail background. my father worked in retail all his life. it is miserable. when you have a downturn, it's a miserable business. miserable. >> talk about miserable office depot is the worst performer down 35%. i mean, i know there have been some belief that this judge

would rule in the company's favor. by the way the company's decided not to even put on a defense. >> wasn't that something? >> because they said that the government had failed to prove its case that the deal would be anti-competitive. the judge agreed with the ftc. the deal's no longer. i didn't know there was 35% down in this stock based on what had to be an expectation the deal would be stopped. >> what lawyer suggested no defense, the same that said halliburton-baker hughes deal is going to be a lease? i'd be buying puts whoever makes -- what are they out of their minds? what kind of judgment was that? >> i guess not good judgment. >> ill advised, my friend. >> suboptimal. >> suboptimal. >> we do have pvh down almost five. that's a two-month low. at what point do some of these brands say we're not interested in having you carry a lot of our inventory? >> pvh gets beaten up by macy's all the time and they push back. pvh is a pretty good company. they had a good quarter last

time. but you're looking about all the channels, kohl's, jc penney, kohl's is breaking down, there's too many of these places. honestly we just don't need this many stores. we are radically overstored. you don't need them. >> okay. back to the question i've asked you every day, which is when do the mall operators start to get hurt? when you say we're over stored. >> you have new companies coming in because there's always somebody who believes. there's always someone who believes they have a growth concept, not every retailer is a failed retailer. space opens up and supermarkets wants to move in and some of these kroger's good chain upgraded today by morgan stanley. these are not thin reads. >> no, there must be -- a $66 billion market cap company. >> 52-week high, all-time high yesterday, but that's because there's no vacancies. they have like a 2% vacancy.

>> yeah. >> 2% vacancy, because there are so few malls but they tend to be located in the right places where there is traffic. and there's a cohort of people that still go to the mall. it's not like that's over, but it's just the next generation they got to find something more exciting. movies, people go to see movies still, you put movie theaters in and that increases mall traffic, restaurants, some of these restaurants are doing quite well. >> speaking of which wendy's beat. comps up 3.6, but then they say q2 growth to be somewhat below this year's 3% target. >> yeah. i was surprised at wendy's quarter looked good to me for a value meal. but easterbrook, this is just mcdonald's. they did a four for $4 deal wendy's was good. minimum wage could hurt them. fewer people making a bun and putting it on a burger. macy's, what a juggernaut. it's a disrupter.

it's amazon of fast food. >> people can't eat their cell phones. they haven't figured that out yet. food can't come out of it. you got to actually go and consume it. >> that's genuine wisdom. >> thank you. that's what i'm here for. >> tjx, i don't know about that. guys come underneath amazon, tjx, dollar general, dollar tree, i would not sell those stocks. i think they're part of an etf. etf comes down. etf retailers they really can hurt you. >> well, right now disney's the one hurting the dow by the most. we're down 64 points. let's get to bob pisani on the floor. hey, bob. >> and half of the decline for the dow is walt disney, in fact. about 35 points. this is the reason that the dow industrials is underperformed in the overall market because of the drag on disney. meantime mixed market but generally to the downside as we start today. take a look at sectors, merls small gains, consumer staples, financials, energy small to the downside. i put up the s&p retail, that's

the xrt is the symbol because that's the easy way to buy into retail stocks, big broad basket you see down 2.8%. i know you talked extensively about macy's, but worth noting the rather stunning drop in the guidance overall here. here's some of the department stores, macy's down 8.5, jc penney, nordstrom's and kohl's here. it's worth noting we're talking a 15, 16, 17% reduction in macy's guidance. remember, 3.15 to 3.40 is current guidance. you very rarely see a big company drop guidance 15% to 20% for a year in a single swoop there, but they do have a plan. hope you read what their press release is. they talked three specific points. terry lundgren at least has a plan to try to keep things going and turn things around. first he's talking about scaling up what's working here. they've got that blue mercury business, the cosmetics business is doing well, the backstage, that's the off price vehicle that's also doing well. they're trying to get more exclusive merchandise in. they mentioned this love bravery

thing. this is that clothing accessories line supported by elton john as well as lady gaga. and of course there's the usual ongoing efforts of expense reduction, enhance the online customer support increasing the digital and mobile shopping functionality. that's successful, order, go online, order from macy's, pick up at macy's, doing well for them. value investors get in, still ten times forward earnings, a little cheaper than these guys used to be 12 to 14 times forward earnings. but remember the stock was cut in half in 2015. the question is is that enough at this point. remember, barnes & noble was cut much more than that before this year starting to find some kind of bottom. so i think the answer is not quite yet for the value investors overall. meantime, on fossil the important thing is, again, we're talking about even more

breathtaking reduction, a 30% reduction in their full year guidance now at $1.80 to $2.80. 30% reduction and earnings down 50% because they earned $4.50 last year. that's at the midpoint. the important thing about what's not working here with the watch sale business is just wholesa wholesalers are buying less. nordstrom is not buying much of the traditional watches. too much inventory. they've got wearables out there that are taking market share. by the way fossil is trying to develop a wearable. don't have one yet and obviously going to be behind the curve on that. of course these inventories going to be a lot of cheap fossil watches out there going to be a real drag on the margins. there has been some questions about is there anything working at all. there you see fossil and movado the competitor down about 10%. a lot of questions about is anything working. well, if you look at just what the investors have been doing this year the stuff that's cheaper tends to be doing better. five below and big lots and dollar general and target.

they're all outperforming everybody else. that's obviously in the discount category. and then you have the standouts, the guys who are just occasionally knocking the cover off the ball, everybody still loves ulta salon, very dedicated group of people. earnings are fantastic, stock keeps growing up. that's been a darling just in the stock investing business let alone retailer. but those are outliers that keep coming in. once in a while their business is doing fantastic. other than that it's really discounters moving markets flt right now dow down half a percent underperforming the rest of the market thanks to walt disney. >> thanks very much. let's get to the bond pits. rick santelli is in chicago for us. good morning, rick. >> good morning, carl. well, we all have been talking at great lengths about corporate supply, makes some sense. just look where yields are and consider who's lucky enough to be able to tap into these markets? well, corporations are. are they putting the money to good use expanding balance sheets? i don't know.

look at what the profits were for this quarter. i know they weren't as bad as they could have been, but once again when you grade on a curve that's always just an excuse. look at one-week of tens, sideways. look at one-week of bunds, sideways, maybe we're splitting hairs, look at computerized scaling downward drift all about foreign exchange and today would be the seventh up day if the dollar index was up. doesn't look like it's going to make it. look at one week of dollar index nice progressive run up after some very iffy technical pricing about seven trading sessions ago. look at an april 1st start to the dollar index. now we recall that australia lowered rates. it was a bit of a surprise, and i'm not picking on them, but i think watching their markets post that move is very fascinating. let's look at the aussie versus the dollar and look at it since march 1st. you can see it was whacked a bit. and considering it's exporting commodities probably not a bad thing, but let's also look at

their paper. let's look at their sovereigns. let's look at their ten-year hovering just above 2.30. the lowest yield ever. and we can see how influential that rate cut was. now, is it the same if we should move in the opposite direction? kind of counterintuitive based on positions and position unraveling and considering position unraveling you want to be around at 1:00 eastern today when we grade that ten-year note auction especially in lieu of all the competing supply at slightly higher interest rates, carl, back to you. >> rick santelli in chicago. thanks. when we come back we'll discuss the judge blocking office depot staples merger. dow off 80 points. back after a break.

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you wouldn't haul a load without checking your clearance. so why would you invest without checking brokercheck? check your broker with brokercheck. chipotle holds its annual meeting today as the chain looks to recover from food safety issues. the board is expected to come under fire today. one proposal from the new york city pension funds would allow

an investor or group of investors owning 3% or more of chipotle outstanding for three years to nominate directors of the board. the company wants that threshold a little higher at 5%. meantime, headlines about how they're hiring even more food safety experts. >> what have you done for me lately? this is what happens, you have multiple, multiple years of fabulous numbers. and then you have e. coli and nova virus and suddenly -- what do they know about food? get them on the board, what is that going to do? i'm sorry for being so defense of management today but too many companies have done such great jobs in my career and a pension fund wants to get on board, put a guy on, what does he do about the price of burritoburritos? >> right, but it's a corporate governance and new york city in particular pushing for this. >> i understand. i am pro corporate --

>> proxy access. >> they had a bad break. >> yeah. >> and suddenly they are the target. i mean, there are people who have done so poorly in the food business. why isn't jack in the box the target? why chipotle? they are doing everything they can to make this place the safest place imaginable. and this is what they get. no, we need a chance to get on the board. i'm just saying fairness. >> well, it's not that they're proposing people to be nominated. it's simply access to the proxy to get on the board. anyhow. >> well, we'll talk about it. i have a corporate governance conference coming up, but i find this stuff driving me crazy. they always pick on the good guys. yes, i'm going to defend iger. >> who's picking on bob iger? who's picking on him? >> i'm stunned. i'm stunned and silenced. >> you're referring to the drop in the share price today.

>> i'm just saying someone may look back and say this actually might have been a chance to buy it. they might do that. >> might. >> i don't know. but i tell you i've said no to macy's for 30 points. i feel vindicated on that. maybe i'm wrong to say, you know what, i think people are going to watch snow white, they're going to know who those dwarves are, like sneezey. >> macy's -- decline -- >> you probably know some of them. >> i know some of them. dopey. >> what are you saying? >> if we get a dog could we name him dopey, would that be okay? you guys both own dogs. >> try to guess it's hard to do. we should point out disney at 1.02 is nowhere near 1.88 on february 10th. >> thank you. thank you. i'm waiting for someone to say re reed hastings is a joker. honestly, there is a judgment

being made on people, ruth po rat doesn't know what she's doing at alphabet because of that last quarter. who does know what they're doing? zuckerberg? >> so you're not from the church of what's working lately, are you? >> no, i'm not. i've converted to the church of like maybe long-term performance. but ea goes up 9, why? because they have what? "star wars." like they created "star wars." can we just have a moment here where we sit back and say, you know what, maybe not everybody's an idiot and a moron. can we say that? >> yes, we can. amen. >> thank you. >> amen, brother. >> thanks for the reality check, jim. >> i'm just urging for a little bit less myopia. you could be myopic. >> i will not be myopic. >> do you think there's a bit of a myopic spin to you today? i'm going out of quarter. 90 days i know the late andy

grove 90 days was everything, i think it might be a little short. >> now i'm taking the long-term. what is happened to me? >> i don't know. worlds are colliding. things are upsetting. and i'm going short-term? now you're getting low. >> you're benedict arnold -- no, that's a bad one too. i don't know. polk, he was a dynamite president. you're lincoln, i'm buchanan. how about the guy after lincoln? >> how about it? >> that was -- >> andrew johnson. >> we'll get stop trading with jim after a break. dow's down 89 points. and with her, a flood of potential patients. 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.

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time for cramer and stop trading. >> okay. i want to talk gold because gold is moving again. i had dr. mark bristow on, he missed the quarter because there was a power outage, by the way that mine that freeport gave up was a mistake, best copper mine in the world. but i think gold works and i continue to believe that rand gold which has the lowest cost $600 is going to make a lot of money. and i reiterate that i like gold

here because i think we are in a moment where if everybody's rates are down, might as well be in some gold. and i'm going to say right here right now gld, rand gold, gold coins, i standby, something i've stood by for 11 years and i think everyone should have a position in gold. >> yeah. goldman upping newmont today as well. >> second rate producer can do well when gold goes higher. i suggest everyone owns some gold. that's an insurance just like you have insurance on your car, you need gold. >> tonight on mad? >> okay, tonight on mad i've got a company called shutter fly -- shutter stock, i mean. the way people get their pictures. and the best performing stock i've been following of late is iff. iff is perfume, food, international flavors and i've been recommending that stock since 1985. what a quarter. i got to tell you that was the best -- that may have been one of the best quarters of the year. i can't wait to speak to him. >> see you tonight "mad money" 6:00 p.m. eastern time. when we come back we'll talk

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good wednesday morning. welcome back to "squawk on the street." i'm carl quintanilla with sarah eisen, simon hobbs and david faber at the new york stock exchange. disney down after earnings in five years and retail taking it on the chin yet again and crude which was up four of five and just had the best day in more than two weeks down again. >> macy's shares plunging after the company's sales show weakness. the company therefore slashing its earnings outlook. the ceo terry lundgren says he's no longer counting on the consumer to spend more. >> disney not having a good day. espn weakness continues despite "star wars" success. the media giant missing on earnings for the first time in five years. >> and office depot pacing for the worst day ever after the deal with staples is called off, concerns over antitrust issues.

the former chairman and ceo of office depot steve odland will join us shortly to discuss the future now of those two businesses. first up though macy's shares are down over 10% after a disappointing quarter. our courtney reagan is back at hq with latest on that. >> good morning, carl. there's not a lot to celebrate in macy's earnings. the more bearish estimates closed but none of the analysts had full year estimates low enough. bottom line was better than expected at 40 cents adjusted compared to consensus of 36 cents but revenues of 5.77 billion fell short and comparable sales down 5.6%, the worst result since july of 2009 which of course was in the wake of financial crisis. macy's lowered full year earning forecast between $3.15 and $3.40. wall street was modeling for $3.80. now just as many predicted ceo terry lundgren confirmed sales, quote, meaningfully slowed

beginning in mid march on top of suggesting that sluggish consumer spending in the categories that macy's sales continues and took it further and added we're not even counting on the consumer to spend more so we are working harder to give customers more reasons to buy from us. q1 marked the second consecutive year of double digit spending by clients in international tourists for major tourist markets for macy's. sales on international tourist cred cards down 20%. on the call ceo noted weakness in texas too and said that the stronger performance in the quarter came from stores in smaller markets like areas in virginia, north carolina and columbus, ohio. so the big question remains, macy's certainly isn't alone in its struggles, but can it navigate through the retail wreck? it's hired real estate professionals to unlock any alley. expanding jewelry and beauty offerings and more and that's all just happened over the last several quarters, but is it enough? >> isn't it odd that terry

lundgren was on just a few weeks ago with you, courtney, on this show i remember. >> he was. >> he was talking about how the company was struggling but also talking about some of the turnaround efforts and he did sound hopeful. so i was a little bit surprised to see the bleak numbers and that disappointing forecast. >> i would say he did sound hopeful but he did also say he continued to expect that sales would be negative into the fourth quarter. that of course has been taken down a level today. but he didn't really sugar coat it saying that the consumer was still spending in areas in categories that he doesn't sell. so he did admit that, but today, you're right, i think his tone was decidedly more down beat. now, he wasn't on the earnings call. that's not atypical, only sometimes does mr. lundgren get on the earnings call. it's most often led by the cfo. so that was also interesting. i sort of expected him to get on today, but he didn't. >> yeah, he was quoted in that release. courtney, thank you very much. other big story in retail,

office depot and staples deal officially called off. and joining us now is cnbc contributor former office depot ceo steve odland with the center for economic development. steve, good to see you. good morning. >> good morning. >> i believe you're still an office depot shareholder, correct? >> i am. >> shares are getting smoked right now. you've been on the program before saying you thought this deal would have been a good idea. what's your reaction now that it's collapsed? >> well, i think this is just a terrible government decision. you know, the ftc looks after the consumer, they look after small business, they try to make sure that there's competition. in this case the rationale for blocking this merger was to protect the largest company, the contract customers from both sides saying that office depot and staples would have more price power versus people like j.p. morgan or general motors, so it's the largest corporations in the world being protected from this and these are the very businesses that are declining for the office products sector.

and they are not making any money on it. so it's a ludicrous decision, but now they have to pick up the pieces. and staples has announced they are going to restructure, cut costs, close stores, they're probably going to look to sell europe. but the question is is it going to be enough. from an office depot perspective, you know, they have nowhere to go now. they have got to, i think, i don't know, but i think that they're going to have to try to sell the company off in pieces in order to recoup the value. >> the judge was focused on b to b. what do you think happened here? do you think the companies did not make their case strong enough? or do you see this as more politically motivated perhaps being an election season and that's why we're getting more of these kind of rulings? >> i think there are two things. one, they blocked this merger 20 years ago based on the consumer. they don't like reversing themselves even though it was two decades later. number two, the government just is not able to acknowledge that amazon and the internet exist and create great competition for

all retailers. you're seeing that of course in macy's, which i think we'll talk about next. but the entire bricks and mortar retail sector is getting crushed by the internet. yet the government doesn't view that as competition. >> yeah, steve, it's david faber. i think many people would agree with your assessment. it's an odd choice by the judge and also odd choice by the companies not to put on a defense by the way, i'm sure they regret. i'd love to get back to your statement a moment ago where you believe office depot has to basically split itself up and sell itself. i mean, is there -- you know, we're talking about a company with a less than $3 billion market value, actually well below that. do you think there's going to be value there to be created by splitting itself up? how would that actually work? >> well, first of all i want to emphasize i don't know any of this. but i look at office depot, i look at all of these companies now and what is their reason for being if you've got an internet, ubiquitousness of amazon and the power, they have got to do

something. so i think that they have proven it's very difficult to compete in this sector. and i think they're going to have to take these kind of measures. so they've got businesses in europe. they have businesses in asia. they've got multiple sectors in the united states, north america. and i think they're going to have to look at all of that because they simply -- simply doing what they've been doing is not working and the definition of insanity is doing the same thing over and over again and expecting different results. >> steve, can you just explain the business to business component here, which is obviously why there was the antitrust ruling? why do these companies not identify that as something they need to deal with and say, okay, well, we'll sell off one of the business-to-business operations to someone else and then the deal can go through? or is business-to-business the heart of what's going on here? did they think they'd have great e market power and that's what it's all about? >> no, the business-to-business sector which they're talking

about on this deal was blocked, they do contracts with staples, contracts with office depot to provide their office products at very, very low prices. and that's what was blocked. i think that staples and office depot offered to sell part of the business -- in fact majority of the business to other players, there are other players in this. and that was not acknowledged either. but in the end of the day the government said no. we're going to protect the largest businesses. it makes you wonder about crony capitalism that they're protecting the largest businesses in the country -- in the world actually, and saying that office depot and staples have pricing power. which is ludicrous, but that's the basis on which this decision was made. >> steve, let's get to macy's. you talk about whether or not some of these retailers have a reason for being. when do we start having an existential conversation about the modern department store? >> i think we're having it right now. macy's now has had four declining quarters. they're projected to decline for the next four. i suspect probably the next eight.

you know -- by the way macy's is very well run. these are very good people. they are working very hard. and they're doing all the right things. but their margins are down, their inventories are up, every red light is flashing here. but it is an existential situation. they have an enormous capital -- invested capital base when all of these very nimble players in fast fashion and internet-provided goods are just killing them. and they're killing all this bricks and mortar retail stuck in the middle. used to be you could differentiate yourself by offering fashion that wasn't available, but now fast fashion has taken that away. >> macy's is a bellwether, kohl's, jcp, nordstrom all he heading lower ahead of their results this week. are any department stores doing the right thing? you mention macy's is but shares are down over 50% over the last year. does anyone have the right idea of what the department store will look like in the next five to ten years? >> the closest we have is fast fashion, which is a lot smaller stores, very quick to market,

very low prices, very high fashion, trendy kinds of goods. everything else can be sold on the internet, right, because they're more commodity oriented. fashion or otherwise any staples can be sold right over the internet and that's where the millennial are going and they're not using computers. they're using their phones. the bricks and mortar retailers are having to transform themselves and create a whole new business model for themselves. that's very hard to do while hitting quarterly earnings and taking care of your invested customer base. >> challenges across the sector. steve, good to have you. steve odland, former chairman and ceo of office depot. >> thank you. coming up next on the program, check out shares of disney under pressure today after that company missed on earnings for the first time in five years. we'll break down the numbers, what it means for cord cutting and of course now bob iger's succession planning.

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watching shares of disney this morning after it reported mixed results last night helped by "star wars" but hurt by lower ad revenue at espn. the company also announced it's shutting down its infinity video game line. joining us an analyst from citi group. jason, good morning to you. >> good morning to you. >> you've said the debate has long been bears, focus on cable nets, the bulls focus on the

studio. you think the pain is going to be short lived this time, why? >> well, it's interesting. if you look at this quarter the bulls got exactly what it wanted. studio results beat expectations, the bears didn't get what they wanted which was a miss on the cable network side of the business. that's part of the reason, i think, disney's stock was so strong going into this print as most people understood those dynamics were probably going to unfold. the real surprise that happened this quarter was a miss in consumer products. that's where the street had been expecting a pretty significant growth on the heels of all the intellectual property getting monetized. that was the disappointment. >> so you remain with the 1.20 target. you keep your buy. are you relying on the bears to somehow get used to the idea of a slow fade on some of these subs? >> well, it's interesting. if you look at some of disney's disclosures and s.e.c. filings the court did moderate sequentially. what happened on the wire line phone buzz was about 2% a year

for about five years. that's very manageable in the context of disney. the thing where we disagree with the bears is we think disney's actually going to be able to pivot and deliver their content over the internet. that's part of what's happening with hulu and i suspect there may be more announcements on that front. that should be very positive for disney. >> iger also spoke for the first time on the record, jason, about this whole succession issue. says he has no plans to extend his contract beyond june 2018. do you see this as a potential risk overhang for the stock when it comes to the leadership question of a company with the scale and influence of disney? >> well, no, i don't. it's interesting there isn't one other company i cover where the street sort of had an expectation of who the successor would be. in disney's case they've done such a good job planning people thought they knew who it was going to be, the good news is they've identified this issue early, this is two years before mr. iger is to step down. it gives them plenty of time to sort of put in a replacement and

resolve the succession issues you're alluding to. >> can i make a point about a lot of the problem here being about consumer products. i think this was the quarter in which you should have seen the follow through from some of the toy manufacturers, hasbro, i think it is, on the "star wars" merchandise. are we raising a flag as to whether the value of the marvell franchises and the "star wars" franchises moving forward may be materially different because they don't translate to toy sales on the shelves or whatever the merchandise may be? >> that's an excellent point you raise. that's exactly the sort of conversations we're having with institutional investors this morning. i want to make two points, number one is if you look at the consumer products ebitda over the last call it five years it's tripled. so this is on a huge ramp. and the street expected sequentially about 500 million more of ebitda and looks like it's going to come in 100 million less. this is a power f franchise,

they're monitoring it. i think the real reason for the source of the miss had to do with softness at the brick and mortar stores and complexities that we and the rest of the street just mismodeled. but it is not indicative of the end of disney being able to monetize this. >> does it say something today we're talking about what's happening at macy's, yesterday we're talking about what's happening at gap. is the ability of the bricks and mortars to shift this merchandise in question as part of a bigger theme that we're witnessing across the economy? >> i think that's absolutely true. the brick and mortar stores that disney has, which are quite small down 4% year over year, it's absolutely a headwind. on the street i think we imagined the i.p. would overwhelm any sort of brick and mortar headwinds, but this is a recurring theme. i think you were talking about it in the prior segment. it's a real issue. the point i should make for disney is they don't have the brick and mortar stores to drive sales. it's more of a branding and marketing dynamic. so we have to model it better on our part, but it's not strategic

to the disney story. >> it's definitely got a lot of attention today focused on that one name. jason, thank you so much. good to see you. meantime jamie dimon on how the election will affect the economy. more on that after a break. and take a look at some of the big names hitting all time highs today, pepsi, time warner cable, facebook, clorox, "squawk on the street" continues in a moment. [ soft music ]

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when you find something you love, you can never get enough of it. change the way you experience tv with xfinity x1. we're down triple digits on the dow. disney contributing to a 30-point fall in that index, cutting effectively in half yesterday's gain. of course that was the biggest surge in the stock market for almost two months, which took us back up towards the highs of the year. j.p. morgan's ceo jamie dimon predicting the economy could boom in the next presidency if it's a pro-business white house. take a listen. >> we see there's plenty of activity now. bond markets seem to be rather wide open. there's a lot of m&a chatter. it's obviously far better in april and may than it was in january and february. and i'm hoping whoever becomes

president the american economy continues to do well. i do think if the next president does the right things around immigration, corporate and individual tax reform, proper infrastructure spending, america will be booming. and that boom would help the people need it most, the people at the bottom of the ladder. >> joining us now chief investment strategist at state street global advisors, and chief investment strategist at raymond james. michael, jamie dimon has this uncanny ability to almost lift your spirits as you hear him speak. when you hear him lay out what the white house could do and how that could bring a boom to the economy, can we follow through on that in reality, do you think? is that on the agenda? >> i love jamie dimon's optimism, however i'm not sure i share that very same view. i think what we're setting ourselves up for as it relates to the election is more kind of bantering among the two parties in what's likely to be a very kind of aggressive and combative

national election. i'm not sure that post-election we'll be able to heal those wounds as quickly as mr. dimon is anticipating. so i think gridlock is more probably in order. >> jeff, wlast your take on where we now stand? >> i'm in jamie dimon's camp. i spent a lot of years inside the beltway. i've seen more cooperation on capitol hill. the election will be contenti s contentious, i agree with michael on that. but i think the economy improves in the back half of this year. and i do think we're going to get a more pro-business no matter who gets in the white house. >> interesting. why do you come to that conclusion? >> because one of my themes for the past three years has been we're going to elect a smarter and better politicians and we're going to get better policies out of that. and i think you're starting to see that with the cooperation that's going on underneath the surface inside the beltway. >> interesting. michael, i mean, would you give jeff some of that? >> well, i've actually been

describing this environment as a bit of growth purgatory. so we can't seem to get to historical growth rates of 3%, and i think permanent liquidity provided by the fed and other central banks prevents us from getting to recession. as a result i think we're kind of stuck in this very low and slow growth environment where monetary policy remains accommodative, rates remain low, inflation remains low. however, fundamentals in the stock market are fading pretty quickly. as we know earnings continue to be a challenge for the last several quarters and likely into much of this year. >> jeff, i wonder if your view that things look a lot better toward the end of the year, more pro-business, more friendly toward growth is already shared by investors. i mean, whooer what, 2, 3% away from record highs on the u.s. stock market in an environment where earnings are contracting and growth slowed to a halt in the first quarter. so is that optimism already baked in? >> i don't think so. i think you saw the trough in

the gdp numbers a couple weeks ago. i do think earnings are going to improve from here going forward. i don't see any recession on the horizon driving around the country on the back of just about every other semitruck is a sign for help wanted. most of the fast food restaurants you go to it says help wanted. you're getting the tightening of the labor force. you're starting to get a tick up in wages. i think we're going to be just fine no matter who gets elected. >> i guess my question is is the stock market already pricing that in based on where we are valuations not too far off from record highs? >> i don't think so. we don't do the bottom-up operating earnings here at raymond james. we use standard & poors and last time i saw they were around $119 for this year and somewhere around $135 next year. if those numbers are anywhere near the mark, stocks are not all that expensive. >> i want to finally in the time we have talk about where we are

on gold with you both. it's interesting as the hedge funds move in and out of assets, whether it's apple, valeant, whether it's gold, they clearly move the price. gold had a great first quarter, michael, as you'll be aware up some 20%. goldman today is raising estimates though it still thinks it's going to fall over the next three months. where are you on bullion? >> so we think that gold still has an opportunity to rise here. our view is that with almost a third of the world with negative interest rate policy, in negative real rates here in the u.s., right, so ten-year treasuries remain well below the year over year inflation rate that basically the cost of carry for gold, which has held a lot of folks back historically, is as low as it's ever been. maybe for the first time in history gold has a positive carry. it's a hedge against a lot of risks in an uncertain world we think gold continues to have some upside here. >> we're out of time, jeff, but i know you'll want to comment on that. i mean, can you construct an

argument that's sustainable over time on gold? >> yeah. i showed a chart on cnbc at the bottom of '09 on a rolling ten-year percent return. it was as negative as it had been since the 1930s. the crb chart is at the same level right now. i think the bear market in commodities overall is in the rearview mirror. and that would include gold. >> wow. that would be good all around. jeff, michael, thank you both for you time. macy's shares are getting slammed now down more than 12% after sales miss and the company slashed the outlook. all of the other retailers are under pressure as well on the heels of macy's weak quarter. so how do you play this sector as jc penney, nordstrom and others get ready to report? that discussion coming up next.

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good morning everybody. i'm sue herera. and here is your cnbc news update at this hour. an explosive laden car bomb ripped through a commercial area

in a predominantly shiite neighborhood of baghdad killing at least 63 people and wounding 85 more. the islamic state group has claimed responsibility. the son of a former pakistani prime minister freed from kidnappers in a dramatic military rescue in afghanistan has been handed over to pakistan's ambassador in kabul. arriving by helicopter at the afghan defense ministry earlier this morning. queen elizabeth making a rare apparent gaffe being caught on film characterizing chinese officials as very rude during a state visit last year. she made the comments while talking to a senior police officer at a rain-soaked garden party at buckingham palace on tuesday. >> yes, i was the gold commander i'm not sure whether you knew but it was quite a testing time for me. >> i did. >> i think it was at a point they walked out of lancaster and told me that the trip was off. i felt -- >> they were very rude to the ambassador. >> a manchester united soccer

team bus was attacked in london on tuesday as it arrived for a match against west ham. objects were thrown at the bus as it reached the park. west ham released a statement condemning the attack. and that is the news update this hour. back downtown -- actually, to bertha with the inventory report. bertha, over to you. >> thanks, sue. we are seeing oil prices bounce a bit higher here at this hour after a somewhat bullish report from the energy information agency. the government reporting that weekly crude stocks fell by 3.4 million barrels. that was bigger than the estimate and certainly a real reversal, the exact opposite of what we've gotten from the industry report yesterday, which had seen a 3.4 million barrel build. the one area where it did agree with the api numbers we saw yesterday afternoon was the build in cushing stocks by about 1.5 million barrels. that's certainly not good news for wti in the long run. however, the fact that we did

see that draw down may in part be because of the fact that that canadian oil is offline due to the fires. back over to you guys. >> thank you very much, bertha coombs. let's get to speaker ryan addressing the public ahead of his meeting with donald trump tomorrow. >> -- to pretend we're -- after ending a brutal primary that just ended a week ago, to pretend we go at half strength. this election is too important to go into election after half strength. that means we need a real unification of our party, which look after a tough primary that's going to take some effort. we are committed to putting that effort in. i want to be a part of that unifying process so that we're at full strength this fall so that we can win this election. we cannot afford to lose this election to hillary clinton, to pack the supreme court, to keep the liberal obama agenda going. we have to be at full strength so we can win this election. and that is why we have to go through the actual effort and process of unifying.

>> speaker, you've been very vocal in your differences on policy with donald trump. so what is it that you need to hear from him at some point to fully endorse him? >> look, i think these are conversations we're going to have. i don't really know him. i met him once in person in 2012. we had a very good conversation in march on the phone. we just need to get to know each other. and we as a leadership team are enjoying the fact that we have a chance to meet with him. so i'd rather have a conversation with him not through the media, no offense. this is a big tent party. there's plenty of room for different policy disputes in this party. we come from different wings of the party. the goal here is to unify the various wings of the party around common principles sounif >> you spoke with ben carson, a top trump supporter last night. what was mr. carson's message to you ahead of this meeting with

donald trump? >> first of all, ben carson's a great guy. and ben carson is trying to provide a constructive role. he wants to be a force to help all of the various wings to come together and he's trying to play a constructive role. >> mr. speaker, at the meeting tomorrow, can there be -- messages? the possibility of two separate messages, a congressional gop message and nominee's message? >> we've got a process we're just getting started. the last thing i'm going to do is say what the end of this process is going to be when we're just beginning this process. the point i'll make one more time is i really believe if we're going to be successful this fall we have to unify our party, we have to go forward with a positive message that americans see we have solutions to their problems. when seven out of ten americans don't like the path that this country is on, and hillary clinton is basically promising to keep going down the same path, we have an obligation to merge and to unify around our

common principles to offer this country a choice, a better way forward. and that's going to take some party unification to do that. we just finished probably one of the most grueling primaries in modern history. it's going to take some work. and that's the kind of work we're dedicated to doing. >> so there you see the speaker of the house paul ryan in advance of course of meeting donald trump tomorrow talking about the need for real unification under the parties committed to that as far as he's concerned. yesterday of course donald trump did say that paul ryan himself was a very good man and he would be frankly happy if he stayed on as chairman of the convention. so the two sides are moving, it would appear, closer together in advance of a very important meeting tomorrow. meanwhile, shares of macy's down sharply. retail giant slashing full year forecast amid continuing weak demand notably for apparel. oliver chen joins us now, retail analyst at cowen and company. something clearly happened from the middle of march if you

listen to what lundgren said in his statement where suddenly the expectations were not met and the business seemed to be falling away. what's your diagnosis here? >> yeah, that's true. international tourism definitely had a negative impact. that was down about 20%. that's on top of negative 20% last year. so what we're seeing here is less tourists and also they commented on the center core of the store. so what's happening in the center core is handbags have been a little bit soft, some areas of footwear. so they missed comp and a lot of that is due to traffic. so macy's is really needed to rethink the future of department stores. and we think amazon's a factor too as well here at cowen. >> it's one of the basic truths of retail clearly that lundgren identified when he was last on this show about a month ago he didn't do the conference call today, but i want to play a clip of what he said then about top line growth and the need to generate it. take a listen. maybe we'll come back to that a bit later on. i mean the issue seems to be whether or not by promising that

there will be newer newness in the stores, i think is the quote, that that can actually drive foot traffic. i mean, you were probably abreast of what they're attempting to do there. how successful do you think it will be? >> yeah, they are focused in the right areas, whether or not it will be successful is a good question. they're focused on beauty, the off price market as well as health and wellness. we really think hard here at cowen about the future of retail and thinking about generation z and millennials. we think health and wellness is a big theme as well as the instagram generation thinking hard about how to rethink the department store at large just because traffic's a big problem. so we really want to see more excitement in the stores. what macy's will need to do is work with vendors to determine exclusive product that excites the customer and gets them back in the store. >> okay. $32.81 is where we're trading at the moment. what's the risk reward here? does this accelerate that conversation about property spin-offs to a greater extent?

perhaps less joint ventures, i mean, do you think they'll shift on that strategy? >> well, i think they'll continue to very intently pursue opportunities to opportunistically monetize real estate. so they hired a new executive in this department and he will continue to look at ways because they do have marquee properties. and as you do see less sales per square foot sometimes it's attractive to think about divesting or using this real estate in a different way. for example, what if macy's could have a supermarket, seool cycle, it would be exciting and bring more traffic. >> that is an interesting thought. oliver, you're seeing all the names getting hit pretty hard. just from a tactical perspect e perspective, i know we have longer term questions about all of these department stores, but who looks like a good buy going into earnings later in the week given the selloff we're seeing right now? >> yeah, sarah, it's a very dramatic time in retail. we still like off price. we think the off price sector is benefitting from share gains at

the expense of full price. and we like what's on amazonable, specifically planet fitness, you can't amazon a six-pack. we like diamonds, jewelry because the reality of blue nile and online is such that you want to see that diamond. and we like the treasure hunt shopping experiences. off price does that and you need to be in the store. we're looking at that as well as costco. >> okay. price target on macy's $44. oliver, nice to see you. thank you very much. oliver chen joining us there from cowen. year-to-date global m&a activity totalled $974 billion. it's down 20% from the same time last year. we had another deal fall through today, staples and office depot. will we see a pickup in m&a in the sekcond part of the year? citi's manager of m&a will join us in a few minutes.

if you're buying stocks only for their dividend, are you making a big mistake? find out at

tradingnation.cnbc.com. more "squawk on the street" coming up.

welcome back to "squawk on the street." the s&p 500 near its best levels today though still in the red. tech sector standing out as one of the best performers so far today's down market tech's early lead largely due to electronic arts, double digit gain on strong fourth quarter earnings. hp enterprise, act vision blizzard, microsoft also helping. for the year tech down just about over a percent behind health care and financials, the only negative sectors year-to-date, sarah, back to you guys. >> dom, thank you. the dow down about 78 points. let's head over to the cme group with rick santelli at the exchange. >> good morning, sarah. good morning, lacy hunt. great to have you on. thanks for taking the time. >> my pleasure. >> listen, you have a wide follow i following. the first quarter let's look at

the macro. the way you linked and talked about the relationship of debt and growth, maybe you can share with our viewers. if you look at the recent past, the notions of debt outpacing growth and the notion we are now looking at boat loads of corporate supply at historically low rates, put it altogether for us, is the outlook good? >> no, it's not really. last year we added $1.9 trillion of new debt. we only had half a trillion dollars in gdp. so debt was growing 3.5 times faster. the evidence is overwhelming. we not only have too much debt, we have too much of the wrong type of debt from the early 1950s to 1999 it took $1.70 of new debt to generate a dollar of gdp. since then it's taken $3.30 of new debt to generate $1 in gdp. we're on the wrong track here. >> now when you put it that way

it's -- i can't help but seeing red flashing before my eyes. with that type of ratio, the deployment of cash for good investments that will pay off for investors down the road seems to be relegated to buying shares back and dealing with ongoing up days in the equity markets, is that all there is? >> well, in the corporate sector, in the business sector about $800 billion of new debt was added. the gdp nominal dollars was only up $500 billion. and the business sector they took on $800 billion of new debt, and they only plowed about $90 billion back into investment, plant equipment and inventories. most of it went into financial speculation that layed individual companies, perhaps, but does not grow the overall economy. >> now, las cy, is there any ea way in the last minute or so to tie up the idea that we have this dynamic going on, big

corporations can easily access capital, the stock market and the deployment of capital is lacking, as you pointed out. is there -- or are there ways investors in this current climate can at least find ways to invest without getting trapped in owning very low yielding debt even though it may be of decent quality and defaults are low, in the final minute? >> well, we of course we're a fixed income managers, we can be anywhere on the treasury curve. we continue to favor the long duration treasuries because we don't believe the secular low in long-term treasury yields is at hand. and we're concerned that not only will they be going down but they're going to be staying down for a long period of time. and so for investors that are willing to be patient, we continue to advocate a portfolio of long duration treasuries. >> final question, i'm just about out of time. would you be involved in today's

ten-year or tomorrow's 30-year auction from the long side as a buy and hold investor, sir? >> if we get additional funds, they're going to be put to work immediately in the long end. >> excellent. lacy, always a pleasure hearing your thoughts on the fixed income markets. thanks for being our guest. simon hobbs, back to you. thank you, rick. after the break we will check in with citi's global head of m&a, mark schafer next on cnbc. ♪

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so far this year with the global m&a activity which is down 20%, and now another deal has collapsed and as we are talking about office depot and staples merger denied because of an tie trust issue. and now, as joining us every so often, what is happening today, david? >> well, on another deal with the anti trust, the judge is agreeing that staples, and odp no go. and it was halliburton and others saying no, we give up,

and so is this a problem for the companies wanting to get together to mitigate to do a deal? >> well, you can't ignore what is going non in the the real world and we have seen some transactions that are reviewed as aggressive in terms of the attempt to get stuff done, and i don't believe it is an anti-trust phenomenon, and look at the in inverter rule announced by the fed for the imposed regs, and so i don't know if it is a backlash, but it is certainly more scrutiny and some of the deals may have been more aggressive in the approach are getting pushed back. >> it has to impact the way people think about the transactions, because when the deals break, you have a damaged goods problem. >> and with allergan and pfizer as well, so it is going to be

stopping some growth of the m&a this year? >> well, it is hard to say that, but if you arebing laoing at the transaction is that is close to the edge, you have to think twice. in terms of what we are seeing, the volume down 20%, and you are looking at basically, a monthly run rate, that is off more, and that is having been said, we are also seeing, i would say, dialogue is looking good, and we have had the market turbulence period, and the leverage markets are open, and arguably wide open, and i feel like it is picking up, but be clear, it is not wa we saw last year. >> right, last year is a record year, and when people say we are 20% down, and that is off of a record year. so we are still doing okay. >> right. >> and we have not seen the big deals that we became so accustomed to last year. >> thet account for most of the volume drop looking at $5 billion up, and $10 billion the yield is down almost 20%. >> why sh. >> maybe we got tired and who

knows what the rational is, and the macroe environment and the election year, and when you are looking at the $1 billion years it is flat to lower and so it is not unhealthy, but not as good as '15. >> why are the industrials so strong? >> well, the industrial last year was a little bit off and not as big of a beneficiary, and so we are seeing the recovery, but it is 30% of the $1 trillion volume so far, and that is the health of the market not looking good when power up is substantially, and tech is flat to up, but the other industry vert can kls are down in some case -- verticals are down, and in some cases substantially down. >> yes. technology is an area that you have focused on for many years, and you have run that practice

with city as well, and are we going to be seeing more deals? there for a while, the chip companies are going through a rapid pace, and is it cooling off? >> well sh, it is hard to say, because the trends, cloud, mobile or big data, will have ramifications. looking at the internet, and the impact of the driverless car, and the amount of semiconductor intercontinental deals is not new, and the pressure of the nontraditional buyers coming into the space, and if you have to own it or rent it, and technology is just interest ed and the number of transactions, but we could see more of it as the trends continue to unfold, and as a society continues to transform. >> and so, here is a little bit of the prediction time, and down 20 p and you suspect that we will be given the time, and the dialogue that you are hearing and the willingness of the part of the ceos the to do that, and

the acquiescence markets, do we see a second? >> well, i am conservative. i think it will pick up a little bit, but if we trend tout data, it is looking like 2014-type year of the 3.5 trillion plus in volume, which is down, but i believe it is going to pick up, because based on what we will see, and again, anecdotal and dialogue and the type of things that our bankerer s are doing ae talk to the client, and it is picking up, but it is not near '15. >> and so activism is something that we are hitting on and we have 15 seconds, but it seems that is quieter particularly on the large cap side. >> well, look, it has, and look it, that is a bull market business, and tough for the market turbulence that we saw at the end of last year, and beginning of this year, and down substantially, and query has some of the low hanging fruit, and you have to look at the

highly regulated industries and more complex international, and it is not going away, but not as easy as it has been. >> thank you, mark shafir, global ceo for citi. and we will go to rob lloyd of hyperloop one. find out if you're dealing with a registered investment professional at investor.gov. it's a great first step toward protecting your money. before you invest, investor.gov. weinto a new american century. born with a hunger to fly and a passion to build something better.

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