check out the futures once again. nasdaq has been up eight of the last nine sessions. s&p 500 closing at its highest level this year. you can still see futures up with the dow up 40 this morning, s&p up 3, nasdaq up 7. have a great day, everybody. we'll see you tomorrow. right now it's time for "squawk on the street." ♪ good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. futures off their highs but market steady after janet yellen hinted about the fed's thinking on monday. rough opening for valeant and ralph lauren. new polls on brexit to look at today. productivity revised down for q-1. brent a new 7-month high above 51. road map begins with ralph lauren shares taking a big hit. company announcing a major

restructuring and lowering guidance. >> shares of valeant are down sharply this after an earnings miss and sharply lower guidance. we'll give you the latest on the stress they're feeling over at valeant. >> and the viacom saga continues. a hearing is taking place right now in massachusetts. we've got the details. but first up, futures rising a day after comments from janet yellen propelled the s&p to its highest level of the year. the fed chair expressing optimism about the economy and said she sees rate hikes ahead but gave no timetable for a tightening. >> if incoming data are consistent with labor market conditions strengthening and inflation making progress toward our 2% objective, as i expect, further gradual increases in the federal funds rate are likely to be appropriate and most conducive to meeting and maintaining those objectives. >> she did call the jobs number concerning, disappointing, raising questions.

fed's going to wrestle with it and drop that phrase in the months ahead. >> right. well, it's good to see she's the chairperson. because there's a lot of people who are not the chair people who when you look back make me feel like, you know what, cleveland's going to crush the golden state warriors. i mean, these are people if we were listening say they were on espn and they were correspondents, there were people on, they wouldn't be there the next time would be incredibly incredibly disappearing sports analysts. so we have a chairperson who is data dependent. she's waiting. she looks at the numbers. a number comes out that is the weakest in six years. and she's the only one that i don't feel has scrambled egg on her face, or, you know, eggs dun easy, hash browns, the denny's grand slam is not on her face, but a lot of these federal reserve guys i feel like it's pass the mayo and a little ketchup because the eggs on their faces could be eating cold, hot, doesn't matter.

>> kicking coaches and special teams coaches -- >> those guys are the first guys you fire. no one gets fired at the federal reserve for being wrong. it's lifetime. >> they talk too much though. at least the special teams coach knows to just shut up and stay on the sidelines. nobody wants to hear from them. >> went to training camp and guy asked a question of the offensive coordinator of the eagles said what do you think of the idea of having a dual running back. ask the head coach. finally one of the sports writers turned to me and said i think i'm going to ask the head coach. let's just ask the head coach from now on. the other people who want the mike, i mean, if you went into the federal reserve to be on a mike, i suggest you go into acting. you could go to summer stock. you know, the berkshires have summer stock. >> great summer stock. >> supposed to be terrific summer stock. >> it is lovely. >> put it on a plate. cable access. >> rehearsal for murder starring eric rosengren. >> williams town theater

festival. >> that's a good one. . they have a shakespeare festival not one would be able to compete in that. all's well doesn't end well with those guys. much ado about nothing. >> i love when he trots out the shakespeare like that. >> share spear holds up. >> is that why we're at highs for the year? >> yes, the dollar was key. if you raise rates, the dollar goes up. if you're ford or gm struggling stock, i don't know, but you want the yen to make it so that at least you have a shot against toyota. you want the europeans to be able to say, you know, you want them to be able to say, you know what, maybe this whole keeping rates down, let's just get things going. i think it is such a positive because we don't have to cut numbers if we work at, you know, let's say you work at colgate where the dollar really does matter, or honeywell you can sit back and say we're okay. that's how you get to a new

all-time high. >> we want to get to some movers this morning including one of our old favorites valeant. >> how's it doing? >> not that well. valeant's down sharply in the premarket. we're talking about 13% or 14% decline right now. i'm looking below $24 a share. this because after it reported its delayed first quarter results, operating profits, most important the company cut full year guidance significantly. new ceo joe papa says valeant's q-1 results reflect the impact of significant disruption over the last nine months but then adds progress has been made towards stabilizing the organization. and, guys, the key focus i think for so many investors right now is on their ebitda guidance, of course their kov nans of all that debt according to how much ebitda generate is key. right now based on current capital structure -- or updated adjusted ebitda is between $4.8

and $4.95 million this year. as per interest coverage ratio, 0.8, they're going to be okay, it would seem. but getting awfully close. >> okay. >> okay in terms of meeting their interest coverage ratios, meeting the covenants that come along with their lending agreements. that they won't with violating them. but they're coming very close. jim, the weakness seems to be in dermatology and in g.i. remember they bought salics. one has to wonder also whether they suffer in dermatology because of philador. >> it's all about the face, david. >> okay. >> remember, you're a salesperson, say you're a determine to logical salesperson, if you work for valeant, remember you're selling the lower part of the face, those lines, david, focus on those lines, you don't have

them, i have them. >> not yet. >> they had a drug that got rid of those lines and then allergan developed juvederm and remember they had the double chin thing. >> yes. >> this was brent saunders i happened to speak to him yesterday, you go in and you are eviscerating valeant. by the way the guy who came up with medesis he works with allergan now. how about baush & lomb, i'm hearing $5 billion? >> that's what you're hearing? five? >> yes. jnj, cooper, alcon, allergan, they all want it. do you think valeant -- let's say you're a salesperson at valeant -- sorry, you aren't because you don't work there anymore. this is an amazing -- this is a dissection by american pharmaceutical companies against valeant. and i don't know about sallics, i don't know who comes in against them. >> the conference call, jim,

began at 8:00. let me give you a couple headlines. thanks for not updating us on headlines here, but time will be our friend at valeant says joe papa. >> time is our friend. >> time is our friend. they will be in compliance with debt covenants throughout 2016, as we've just told you. the g.i. units perform below expectations as did dermatology of course. under performance in dermatology. and the key drug for when they acquired salix. they also say their liquidity position remains solid and on and on from there. >> that womens libido product did not work. >> that did not work at all. >> you remember this in the end is a drug company. it is not a company that makes things where it's like -- you

know, jnj has great aaa balance sheet. and when they were pulled -- remember the unbelievable thing, tylenol was pulled. and not just by themselves, but i am talking about all drugs pulled. and they were able to survive because they had a aaa balance sheet. >> you have to wonder again use whether or not they are really being hit by the inability to raise prices significantly as they have been. >> or rollbacks as papa told me. >> or even some rollbacks, right. so papa went from one bad situation to maybe an even worse situation. >> frying pan to inferno. >> yeah. >> frying pan to volcano. >> on squawk this morning talking about how it was a cult people were blindly following mike, as they called him. any time a ceo goes by the first name you know there's a problem. >> she's great. great reporter. >> i covered jonestown as a kid reporter. >> yes, i do.

>> that was a cult. >> yes, it was. >> valeant's guidance makes ralph lauren's looks good. but still lauren announcing a restructuring plan including cost cuts. company expecting to achieve up to $220 million in annualized net savings. revenue for the current fiscal year down at a low double digit rate hurt in part by store closings, a pull back in inventory receipts, weak traffic. stefan larson from old navy is swinging the axe. >> i know the stock is down, i'm not going to push it here, but isn't larsson doing what you have to do in the modern day taking a lot of gutsy action. i know everyone's selling the stock today. i'm not going to say today is the day to buy it because when you see a stock down that much what typically happens the sellers last for several days. but i thought larsson is biting the bullet. look at pvh when stock was at

130 and had to say, listen, we bought this company and we're going to have to take some charges. >> big analyst meeting today. of course the journal has the large takeout on the company as they sort of reintroduce themselves to the world and he sets out strategy. he's been the ceo now for seven, eight months, right? nine months. come in in september. >> i come in and talk about there was a great piece by matthew boss yesterday, i don't know if you read that piece by j.p. morgan, research, about what brands can absolutely like, you know -- didn't mention ralph lauren, but ralph lauren is a brand. and that brand is not going to be as amazon as people think. look, again, i know you could argue, well, look this thing is down so much that there must be no comeback. i look at it's an excellent brand. larsson is doing what's right, old navy talk about a difficult situation. you can give up on ralph lauren all you want. i think the time to give up was at 130e. >> interesting.

we're going to see more about the severity of the job cuts, womens wear daily says 10%, obviously trimming their exposure to department stores. >> look at that employment number on friday. that's ralph lauren written large. we were saying yesterday in the meeting it was rather extraordinary. we literally saw companies that arms are taking positions in, 8% position in retailers that many of the people in the panel said won't exist. take an 8% position you saber rattle and no one wants you. >> that can happen if you pick the wrong stock in the wrong sector, no amount of activism is going to help you. >> none. i'm not going to mention the retailers because that's not fair. but there's a lot of retailers -- look at pac sun, that's done. look at some of these teen retailers and quick silver, quick silver came on "mad money" and basically talked about a restructuring. and it's like, well, okay, let

me know who's buying -- give me a customer. this is not like watson where you give me a customer. it's like give me someone who walked into your store and bought something. >> right. they make those? >> let me think. you know, in the camp prussia mall there was a guy who came in and bought a rash guard. rash guard. >> got it. >> when we come back we'll get the latest on viacom and sumner redstone and one of the power players in commercial real estate blackstone's jonathan gray on the state of the economy and more. take a look at the premarket. we're going to get to some of these brexit polls, a primary in california tonight, a lot more to look at when squawk comes back. call just came in. she's about to arrive. 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

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the viacom board versus sumner redstone saga has moved to a massachusetts courtroom this morning. a county and family court judge is going to hear arguments on whether to expedite a case involving the mental capacity of the 93-year-old redstone, philippe dauman, viacom ceo and george abrams, also a long-time trustee, both removed from the irrevocable trust that oversees the control position and on the board of national amusements and

oversees control position in viacom were both removed saying by undo influence. and they want a court to rule on that. there's so much more going on here, guys, that it truly is one of the more fascinating stories we've run across in a long time. simply put you have a board of directors of a controlled company actively at war with its controlling shareholder. and yesterday as we reported first at 4:30 yesterday, you had national amusements as that control shareholder come out and say we've just changed the bylaws, viacom, and we have now made it necessary for unanimous vote should you do anything involving paramount other than normal course business. of course this has had the effect of actually having people at paramount say what can we and can't we do without a unanimous vote at the board of directors. the board still includes shari

redstone and sumner redstone, hence seems nothing at all will happen with paramount, the company has been talking to potential bidders for a minority stake in paramount, maybe those talks will still continue. maybe this is a one-time only kind of thing that you could still get people to come to the negotiating table. but given what at least has been attributed to sumner redstone about his feelings about paramount, it's hard to imagine they would approve virtually any deal. this may have had the effect of stopping in its tracks any hopes philippe dauman and the board had in retrieving any stake in paramount, but the key here is just this continued really territory i've never seen trot on where you have a board and open revolt against controlling shareholder, of course saying that that shareholder in the form of mr. redstone, a 93-year-old gentleman who just turned 93 last week, is not competent and is therefore not making the decisions but is

actually in the hold of his daughter shari. >> wow. we may debate his confidence, his legal team's confidence isn't getting a whole lot of debate. i mean, they are doing the job that he is asking them to do. >> they are. and they've added to that, in fact. you're now talking about law firms in the national amusement sites, carl, are ones we know well. so, yes, they are -- they're at war. and it goes back and forth. and i know it can be hard to follow, but you need to step back and consider a couple of key things, which is one what if you are at viacom right now? what are you doing? you're kind of paralyzed. yes, in case of paramount you very well may be but just in terms of going to your job every day and making sure you're doing what you need to do not knowing really where the leadership is as i've reported many times there's still an expectation and this is based on my reporting that at some point there will be a move to replace that board of directors and ceo mr. dauman. it has not yet happened. it has not yet happened.

and they have a little more time it would seem given they now can potentially make sure no paramount deal happens at least unless it's one they want to happen. and finally, i'd come back to the court hearing today and to that trust, which of course in the event mr. redstone is deemed yes competent, it is interesting to note he would then step off the trust and as is also the case his former wife would also step off the trust if he's deemed incompetent and two new members would come on. those two members are the two members put on in place of mr. abrams and mr. dauman. so you get back to a situation says even if you were deemed incompetent, four of the trustees that would be on the trust in that case would still seemingly be those in favor of what mr. redstone and his daughter shari are in favor of, namely making changes at viacom. so i'm not sure any of this matters. >> i don't even think there's a

corporate analog. i mean, i'm thinking about unita and lpa during the great angolan civil war. >> i don't know what you're thinking of. >> the government which you were supposed to salute to. i mean, honestly, i think you have to go to geopolitical to find something this insane. i mean, honestly, who did you serve for in angola? i don't think there's a government. >> yeah, people are searching for historical parallels. >> in south carolina in 1861. >> and as salacious as it is and as much as they go back and forth, we're talking about two very large important media companies whose future certainly in play here. >> you don't know what you're working for. you don't know who's in control. >> you don't. >> alexander hague, i'm in control here. maybe it's one of those situations. alexander hague. >> saturday night massacre. >> yes. >> something like that. >> yes. out. >> out. >> we'll get cramer's mad dash and count down to the opening bell after a short break.

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about five and a half minutes before the opening bell, where have you gone, spencer ras coff? >> wow. i was going to say name me two co-hosts of "squawk on the street." >> yeah, spencer and rich. there they are. >> spencer came on "mad money" recently and talked about his lawsuit with move, which is news corp.

and people were talking about they were suing for $2 billion for patent -- people talking about zillow perhaps owing $500 million -- how about a settlement for $130 million. spencer said it would be small. david zillow, which is actually doing okay as a business too, this is obviously real estate listings, they got off very easy. and i think a lot of shorts were thinking it was going to be much bigger. >> do you like the stock here? >> i don't know. my thought is that's kind of the pop and not as strong on real estate right now. >> why? >> i think real estate's peaked in a lot of the hotter markets. >> you do? >> yeah, i really do. i think you've just got up to prices and let me look at that employment number. now, he'll tell you, look, it doesn't matter what it really is is market share. and that's true. it is market share. but in the end i find that you want zillow for market share. whenever i hear market shares posted greenfield, i like greenfield. but they're doing well.

i can understand, i don't want to pay up for it. the one i would be willing to pay up for, david, is a place i want so badly to shop with you. you know i tweeted you this weekend about going to -- >> pier one, right? >> yes. i didn't do olive garden, unlimited salad for vegetarian like my daughter. david, i want you to get to know a name. >> okay. >> ollie's bargain store, you and i are going to shop there. they did a secondary today. it's mag nif sennificenmagnific. >> our next outing. >> we can eat off the floor just like we can of my dollar tree. where are you getting your july 4th stuff? >> ollie's bargain store. >> no -- dollar tree. >> i'm working on it. opening bell coming up right after this.

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you're watching cnbc "squawk on the street" live from the financial capital of the world. opening bell in just about 25 seconds on a busy day po

post-yellen, watching some eurozone q-1 gdp revised higher. german industrial production comes in ahead. >> i was thinking that -- numbers out of europe and it's going to surprise people. >> meanwhile our own numbers on productivity not great. labor costs up. there's the opening bell. at the big board today belmont stakes racing festival takes place in new york june 9th to 11th at the nasdaq e-plus, provider of i.t. products and financing services. >> if you've never been to the belmont stakes, let me recommend it. it's a very fun thing to do. i wonder what the read through is here. my writing colleague suggest what's the read through for macy's. perhaps ralph lauren is in too many places, it's too available. i do find it. anyway, that's also the macy's

anal analog, those are the same cost of clothes, that's that area. i just feel like the mall, you go to buy ralph lauren, you go to macy's, these are places other than children's place and some limited, i keep coming back to the mall as being a very hard place to do business. really hard. i mean, i love my ralph lauren because i never -- i always feel safe. always feel safe when i buy something ralph lauren. club monaco, but it does matter. we're going to start questioning whether larsson is the guy. i think he is. >> you do think he is the guy? i have no sense for him at all. never met the man, 41 years old, came over from old navy, been on the job for some time. not that ralph lauren has pulled back. he hasn't. still very actively involved in the business. >> look, i came in -- when larsson came in i said they're going to have to make some big changes. larsson makes the big changes and then everybody doesn't like it, i don't know. i mean, i just think this company, you know, you got to come in and make some tough

decisions. look, we keep waiting for tiffany to make tough decisions. we keep waiting for a macy's, for kohl's. i'm looking at kohl's and thinking they better may some tough decisions. ralph lauren made some tough decisio decisio decisions. limited brands, we forget how much -- the people running victoria's secret, he bit the bullet. >> right. >> it's what you have to do in order to figure out what to do in the mall. holy cow the mall is hurting. >> yeah. it's true. oil's going to be a story all day it appears. west texas now the highest since october 9th of 2015. with above 50. we'll see if it holds, as we said brent above 51. >> this newfound story about demand and the fact saudi arabia's -- we're now realizing opec is a joke. but i keep talking to oil people, i know that the rate count was up last week at $50.

again, some comes on, but i think the chinese demand, the chinese automaker, remember they used the worse oil, the worse gasoline, they don't even do gasoline, they don't do any filter. the air is bad. one-third of the air of which 1.5 million people died of respiratory illness, one-third of the air that's bad is from autos, but they're buying autos like crazy. the gm auto numbers, wow, do you see those? gm is doing quite well in china. >> i did want to come back to valeant. >> you do? >> this is a new low for valeant, a stock now down over 90%. it has been such a saga we have gone over so many times for so long at this point of course. you have new management in in the form of joe papa. you have bill ackman on the board heavily invested in this company's future. you have value ax pulling back very much so from what had been a company that they really helped to form the strategy for

many years ago. and there it is. why? it's the guidance. on the conference call that's going on we told you earlier the ebitda guidance in particular is the focus of many investors who are looking at the debt on the balance sheet making sure this company is still going to be able to meet all of tests under the covenants that come along with the lending agreements in terms of ratios, in terms of meeting ebitda, interest coverage for example. on the call asked are you likely to exceed or fall short of guidance you just issued, company says in total we try to be realistic with what we know. where there's uncertainty we try to be conservative. there are five weeks into the new quarter given the delay in issuing this quarter, first quarter numbers, and all they would say is this quarter is looking favorable to q-1. and also asks, you know, will you be able to be more clear on where you're seeing growth, we're seeing disruptions in our sales was the answer. that disruption was significant. that's the primary issue. we saw disruption because of

turnover and changes. and that call, i believe, has now completed. they did emphasize they want people to understand we have a strong liquidity position at the company. they're also going back and forth between adjusted and nonadjusted and gap and nongap. guys, which of course has become more of an issue as i think it should in terms of what companies are telling us or asking us to how we're being asked to judge them. >> maybe suggest joe papa coming in. >> kitchen sinking things. yeah. they are. >> you do that? you think that? >> certainly possible. >> maybe it's garbage disposal. >> could be. >> maybe we have the wrong kitchen implement there. >> yeah, maybe they hit the wrong button. >> right. maybe it's garbage disposal. >> and the thing started up and you suddenly found your wedding ring down there and it's too late. >> no, with a bottle cap you can wreck a good disposal with a bottle cap. our bausch & lomb.

>> ron barn on squawk this morning. >> sports authority did not have the discounts that i thought they would have for under arm r armour, so it was just not worth it when you did the mall shopping trying to save a few bucks. >> he talked about tesla potentially being one of the biggest companies in the world in ten or fifteen years. >> i know. >> and then an interesting tale about giving up on netflix back in the day where price hikes were not working, everybody was panicking on the name. here's what he said. >> i invested in the company at $50 or $60 or $70, down two-thirds and i'm very nervous about investing in companies when the full two-thirds like your valeant and you never know and everyone's having all these negative stories and it goes up a bit and i say i don't understand it well enough and i sell it and then it goes up ten

times or icahn buys at $80 and i was selling at $80. it's the stupidest thing. i totally blew that one. you know, so you make mistakes. and you learn from them. and you learn probably as much -- at least as much from your mistakes as you do from gains you've had. >> you could see the pain on his face on that one. >> i've known ron for i don't know 30 years. and it's so great that a manager comes on and just admits he made a mistake. most managers don't. it's great to see someone who is as good as he is just say, listen, i got it wrong. i think people at home would try this often say listen every time i try to do something, you know, i'm maybe make a mistake but the managers on tv are so incredible. that was a bad call to sell netflix. >> it was. he was once a big owner of ralph lauren, i believe. they used to own a lot of that. i don't know, i have no idea -- >> i'm not giving up on ralph lauren. today's the day when -- they're talking about kitchen sink. >> we should mention biogen.

there had been a thought there was this option this study they were doing phase two study for antibody being developed as potential neuropairtive therapy in people with lapsing forms of m.s., but missed the primary end point and that stock getting hit almost 10%. >> been selling it because belief of this and alzheimer's that they just didn't have it and still kept a small position in it. frankly there's no reason to own it. >> on the same front alexion also down this morning on a miss of data on solaris. >> that was a very good drug. and it's interesting a lot of people thought it was going to get taken over. i think you talk with bob yugan

yesterday, he's executive chairman. i think we kind of had a high water mark in some of these biotech buys, and i think a lot of people now when alex gorski goes out from jnj and says what didn't i do right, i think it's daunting when someone points out says you've been following the medivation saga, now they're someone not willing to pay up. >> sanofi, not yet. i think acting by written consent and that will begin momentarily, i believe. so the 60-day clock will start very soon. >> although we had a very good story today. i don't know if you guys saw the zimmer, the deal they made for a company that i think is a very good company, this is lrdh bid. novel spine treatment. i had invasive on which is another company, this is a very -- you get -- for them it's cervical disk, but these are baby boomer problems. the fact that zimmer willing to

pay up so much a lot of people feel this was a defense by zimmer. no, i think you need to have -- this is a money losing company they're buying, but you need to have a back, something involving the back in your portfolio if you're a device company because it's too big a market. and, again, newvasive had them on. i think they're a takeover target. it's a phenomenal company. sold life technologies to thermomade so much money. devices work. i know people, hospitals surgeons like their products. >> eight points away from 18k. haven't been there intraday since april 28th. courtney's on the floor. >> that's right, we are getting ever closer here, carl, as the dow jones industrial average is creeping up little by little this morning. the first couple moments of trade the s&p 500 above that key 2100 level. perhaps markets taking cues from what yellen had to say yesterday slightly more dovish when it

comes to the timing of a fed rate hike, but also we're seeing some strength overseas. we have brent crude hitting eight-month highs. we've got wti also higher above $50. and if you take a look at what happened overseas, european markets are higher this morning. and this is ahead of tonight's debate on the referendum debate on whether or not the uk should stay in the eu or not. of course david cameron is on one side and then the independent party leader is going to be on the other. but the latest polls actually show a slight preference for staying in the eu. we'll see of course what happens in several weeks there. but if you take a look at asian markets those were higher overnight. some commentary out of the people's bank of china about the yuan's stability. perhaps that's part of the reason we're seeing higher moves overnight there in asia. we've got of course the game continuing for yahoo. the bids are coming in. and a report from "the wall street journal" that verizon is perhaps bidding $3 billion for the internet business. and then if you take a look at shares of hertz, we know carl

icahn is upping his stake to 15.2%. shares higher by more than 3%, almost 3.5%. zillow is selling a lawsuit with move and actually for much less than what move had been looking for. move is owned by news corp. only settling for $130 million as opposed to the $2 billion as a result barclays actually upgrading zillow. you can see shares there higher by almost 7.5%. and i'm going to have more on ralph lauren coming up in the next hour. the investor day is continuing. no media allowed but we're listening in. bring you the latest coming up soon. >> thank you very much, courtney. get to pandora, a stock that's been in the news a bit lately. of course it was a few weeks ago that keith meister of corvex filed 13-d. analysts come out to see the company brought by various brokerages, i think it was isi that brought people to see john

malone and the ceo of liberty. i mention that because liberty controls sirius. and there's been a lot of talk over time would sirius be interested in buying pandora, did it even make a bid. in these meetings mr. maffei spoke to investors. those who left the meeting tell me that he spoke positively at least about the possibility of that, or i should say positively about the benefits that would potentially be brought to bear should there be a link between sirius and pandora. i called greg maffei yesterday, he said, yeah, we did talk about potential synergies and the fact in his belief pandora should potentially consider selling itself at this point. but he also went onto end our conversation by simply saying they're not for sale. and that of course may be the key reason why the stock actually was down yesterday after all these people came back

from denver with this, you know, thinking about that of a potential sirius-pandora tie up. nothing new, we've been hearing that kind of chatter for a long time. and it's what keith at corvex seized on in his 13-d as one reason why in fact he thinks the company should move ahead with looking at all of its alternatives. that said, tim westergren, the company's current ceo and its founder, a couple of days ago over this weekend he was in france at a big conference asked about the possibility of a sale said the following, we're on a path to do something big. and something for the long term. and that's why i got back in the saddle. so no plans for that. meaning a sale. corvex by the way just to refresh when they did come with a 9.9% stake having elected to actually not go after board seats when the window -- before the window closed said we urge the company to immediately

engage in independent investment bank with fresh perspective without any prior history of advising in terms of value, they want to maximize including execution of a sales process and to evaluate the results against other options including the risk adjusted value of continuing to operate on a stand alone basis. and they did point out that mr. westergren's public statements suggest he has no intention of comparing alternative option such a sale with the company's current state of affairs. but interesting. sirius, pandora, jim, there are others who believe now is not the right time to sale. maybe google would enter the fray at some point, and perhaps others. >> well, look, always adamant apple should do a big thing, big service roll up. you do sirius, you do pandora, you get a lot of people on the rolls and revenue, but that's not been apple's way. but i remember going back to that last conference call and you heard tim cook talk about

maybe it's time to do a bigger deal. now, that's obviously not what's going to happen here, but that's what i wish would happen because this service revenue would break out this once again we have a note today ubs range bound, range bound. goldman sachs downgrades j bill to a sell. people often communicate that as being a handset play. it's a treadmill, kind of like you're a hamster, you got to get out of that. one of the ways to do is this way. i pay for sirius and don't even think about it. my kids pay for spotify, they don't think about it. >> probably think the same way at amazon prime where goes to a 930 target today. >> all right, let's get to rick. let's get to him. he's at the cme group in chicago. rick santelli, take it away. >> thanks, david. you know, a lot of people on this trading floor considering there are nasdaq futures along with the other equity indices watching the nasdaq, it hasn't

been in the black all year and it's pretty easy to tell when it is because we closed a smidge over 5,000. traders are looking at that and not seeing a lot of logic, but if you have somewhat illogical monetary policy, regulatory policy, tax policy, and we're just the tip of the iceberg when you look all around the globe, it doesn't surprise many traders though that the markets are a acting a bit incongruent. look at the one-week chart of two-year note yields then one-week chart of dollar index. obviously they rhyme pretty well because of the impact of the dollar -- of the fed on both those markets. now, year-to-date ten-year reveals we're only a handful literally five basis points away from a new low yield close for the year, current is february 11th at 166. bund yields, you see the intraday chart there. they're hovering right at six basis points. this could be the third lowest yield close ever for bunds, the second lowest. this could be the lowest and a third pass of under ten basis

points. mub, okay, this is muni index, etf, closest to the highest level of 2012. lots of articles written about the sponsorship in munis. look how different and more aggressive compared to the hyg and yld. continues to underscore despite many cities and municipalities having issues investors seem e namerred with munis. >> thank you very much, rick santelli. when we come back, a big surprise from a legendary hollywood producer courtesy of our new digital series "binge." we'll tell you what we're talking about. dow backed off of that 18k mark. never got there.

our new digital "binge" -- apollo 13 and the show 24, take

a listen to a clip from our binge fast forward lightning round. some of the people you've interviewed. >> okay. >> the first thing that comes to your mind when you hear their name. >> jeff bezos, brilliant. >> tim cook. >> funny. brilliant and funny. >> tim cook. >> sincere and honorable. >> jack dorsey. >> smart and much funnier than people think he is. >> oprah. >> oprah is the greatest -- one of the greatest human beings on the planet. >> jim cramer. >> smart but just out of his mind. [ laughter ] >> so, brian did a book about curiosity. >> right. >> interviews people from all walks of life. you were one of them. >> yeah, i did. we had a lot of fun. he did a lightning round with me. and i got them all right ahead and i didn't know -- when is this? >> so it's live now on apple tv. >> oh, you've got to -- i think brian -- he said to me i got to know if you have a beautiful

mind. and at the end of it he said kind of you're crazy. and i said is that good or bad? it wasn't clear. >> he pushed you on your knowledge of tickers, right? >> oh, my god, he played a lightning round with me that was just one -- it was like, holy cow, this guy is really going at it. i was about 100%. and at the end he said, well, yeah, you're nuts. well, i guess he kind of reiterated that. thank you. thank you for asking. >> of course. we love that answer. we will get stop trading with jim in a moment. you're watching "squawk on the street" on cnbc. lexus is f spo. because the ultimate expression of power, is control. this is the pursuit of perfection.

it's time for cramer and stop trading. >> whenever i think of retail i think of stores i'd like to take david to. and one i was at recently was michael's. there's a new one in brooklyn. this is a craft store. and it shows you no one is immune to the mall. they had 3.1% comps before, people are looking for maybe 2.2. they came in at 0.9. now, this is a company a lot of people feel defies amazon because crafts are kind of like etsy, you can make them yourself. it doesn't matter. it's in the wrong place on earth, which is the mall. and even though they have some stand alones, this was

remarkable to me because michael's has been a great comeback story, p/e. >> the kids, they need all their art supplies. >> yeah. >> waiting on long lines. you've been too, right? >> absolutely. really quick, jim, what's on mad tonight? >> we've got wix, which is important. and talking about stealing guests, david, this is an outright steal of meg whitman. >> i know. >> it's grand theft. >> the sun doesn't set on the "mad money" empire. >> you're going to talk cloud, i think, right? >> we're going to talk whatever you were going to talk. >> you talk to meg whatever you need to. just remember on earnings she's mine. >> when we come back, david kostin who only comes on this show, in a minute.

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good tuesday morning. welcome back to "squawk on the street." i'm carl quintanilla with simon hobbs and david faber at the new york stock exchange. dow almost gone to 18k this morning for the first time since april, but stopping just below that level. s&p up a touch to 2114, pharma

and retail getting hurt, crude still above 50. our road map for the next 60 minutes on cnbc, janet yellen clearly soothing the markets, global stocks rallying to their highest level in five weeks. we'll speak in a moment to goldman sachs david kostin, his thoughts on yellen's comments and where stocks go from here. plus, a restructuring at ralph lauren. the struggling retailer announcing plans to cut costs and shed real estate assets. that stock is tumbling on the news. and hillary clinton hits that magic number ahead of today's big primaries, what's next for the presumptive democratic nominee? we'll break down the race. federal reserve chair janet yellen striking a generally positive tone on the u.s. economy warning investors should not overreact to last week's disappointing jobs number. our very own steve liesman has more on that this morning. hey, steve. >> carl, good morning. fed chair janet yellen suggesting to markets what it thought it knew but needed to hear that a june rate hike was off the table.

yellen did that by saying the weak may jobs report was d disappointing though said shouldn't focus on one report. hikes are appropriate if the data improve but pointedly did not put a time period around the next hike the way she did in late may. another implication of yellen's comments is the idea that likely only one rate hike coming this year, not two. that's at least the way the market is currently priced. and the market has been more right than the fed. the fed funds futures market now isn't fully pricing in a single hike until december. that's where it crosses the 50% line. that could change with a strong jobs report or better economic data, which yellen said she expects. but the likely earliest date for hike is july or september, cautious fed might wait until 2017 before coming back with an encore. take a look here where different forecasters are on when the fed will do the next hike. j.p. morgan and goldman sachs along with oxford in the july camp. the bulk of the forecasters are in the september camp, which is kind of the new median including bank of america, ubs, and then december deutsche bank and rbc

for just that first hike of 2016. the futures market you can see here currently pricing in just a 50 basis point funds rate through november. just 60 all the way out to february 2017. and when you look further out the curve it isn't until late 2017 that the market begins to price in a second hike. fed officials went into the march meeting projecting three hikes, and they've lowered it to two coming closer to the market. markets will look carefully at next week's forecast from fed officials which come out with the policy statement on wednesday to see if fed officials back down again going from the two hikes expected to one and meaning the market once again has it more right than the fed, carl, on its own funds rate. >> not the first time. maybe not the last, steve. thank you so much. >> right. >> steve liesman. let's bring in david kostin, chief u.s. equity strategist at goldman sachs joining us exclusively at post nine. david, welcome to you. >> nice to see you. >> last time you were here i argued you were a little more

net bearish because you were looking for some chop in the summertime. has that view evolved in the last couple weeks? >> no, the view is the market strategically is likely to continue to rise slowly over the next couple of years basically in line with the economy growing at a modest pace leading to slightly higher revenue growth and earnings growth and ultimately as interest rates go higher multiples go lower and maybe takes the market up 5% rate for the next five years. tactically i think there are more risks to the downside than the upside at this starting point in valuation. very high level of valuation, couple of variables to think about, goldman sachs perspective as you just heard from steve liesman, my colleague hatzius expecting about a 40% probability in july. number two is politics, the uncertainty around the collection and the political or economic or equity market uncertainty has been very low

recently. and we think that is likely to increase over time. as you get closer to the election. and number three is tactically we are in a lull that will begin in about a week when the buyback, the wave of discretionary buybacks will end ahead of the earnings season, second quarter earnings, so about a month before companies are precluded from repurchasing shares. from a money flow point of view, from a rates point of view, economic point of view, there's more risk and that would be more tactically to the downside. >> so does june become this liquidity vacuum ahead of brexit and entering that buyback window? >> well, the end would be middle -- in my view the end will be middle of june and basically in second part of june and all of july you'll have less discretionary purchases and that will pick up in august. i think the risk near-term is more to the downside. >> to the tune of what? 5%? >> 5%, 5% pullback would be 2000, level s&p 500. the market is trading out 17 times forward p/e multiple. and in the last four years when

you've had various drawdowns at a 5% level, the market has tended to have a p/e multiple base around 15 times forward earnings. that would put you all the way down at 1900 as an example. a modest pull back would be to around 2,000. the market has been in this trading range and the mantra we've had all year has been as you know flat is the new up and that's essentially the kind of environment for this year. >> to be in the trading range, to have the key goldman say flat is the new up, where's the market positions? if that's as good as it gets, what are people expecting? yesterday on the show we were hearing people are positioned for downside, which could potentially be important of course surprise is there to the upside. >> i would disagree with that. my conversations with portfolio managers people are concerned about the market moving higher. and they're not positioned that way, so they're buying upside calls to protect themselves in that context. my view is that is less likely to happen. and so tactically where are the opportunities? they tend to be in certain

pockets. you have a margin expansion. there's not that many companies that are in a position to raise their margins. you saw this morning some of the economic data showing that labor inflation is rising and that began as a concern about margin. so that's one area. secondly -- >> do you have names, david? are you putting names out? >> sure. you can look at starbucks, amazon -- >> you did a list of companies. >> that goldman sachs, my colleagues in equity research are anticipating more than 50 basis points margin improvement each of the next several years. those would be examples. so margin expansion number one. number two would be dividends. dividend yield, dividend growth. you can look at various companies, honeywell, cisco, companies with high yield and dividend growth. companies have wage inflation, low labor cost inflation, low exposure to higher wages would be another because again one of the issues on higher wages which

is a good thing economically speaking is a bad thing from a margin perspective. that's why margins dividends would be areas of focus. there are opportunities again tactically in an environment where the market is high from valuation perspective. >> what's the risk of surprise rally in crude and how would the overall market respond to that? >> so -- >> i mean, something that's i don't know 70. >> that would be a big increase given the current levels we are and our view from goldman sachs is the market oil price is likely to be closer in the sort of trading range 30 to 50 dollars as opposed to moving that much higher. if you had that much higher be pressure on margins for a lot of companies. more specifically it's positive for energy company profits. headwind for some of the consumer discretionary companies. >> you mentioned hatzius on the side aggressive in many rates

did the world change on friday when we got that poor employment report and then maybe you ratchet down in general your interest rate expectations. that's got to be positive to the market to the comments you were making earlier. >> well, certainly a question of whether that was an indicator the canary in the coal mine of things slowing down or an aberration, but the view is economy is generally getting better. a number of economic readings suggesting the economy is getting better. you saw some of the inflation numbers this morning. >> sure. but if you ratchet down those expectations, although we're not expecting huge interest rate rises and talking the next year, 18 months if you're able to suppress those, do you get a big bounce in the stock market? or have those days gone, do you think? >> it is generally a more positive i think stabilizes and gives benefit for why the market stays at these levels. again, we are at the 90th percentile of historical valuation. >> you've said that every time for -- >> and the market has been sitting here at this level. it's fine, but we're at a pretty

high level about 2,100, which is consistent with a market that is highly valued. so the risk would be tactically slightly more to the downside, but strategically still have positive expansion in the economy and earnings market. >> going to be a fascinating month. d.k., thank you for coming in. >> my pleasure. turn our attention to shares of valeant this morning which hit a new low, but off of that low 22.52, but still down almost 20%, this after the company reported its delayed first quarter earnings. it was not the earnings which were not particularly good that is consuming investors in terms of their fears, it is the guidance from the company for the rest of the year that really has hit hard. that guidance being you see there full year now 6.80 to $7 a share down from what had been $8.50 to $9.50. there's the revenue guidance. most importantly it is the ebitda guidance that is now between $4.8 and $4.95 billion for this year.

and you can see where it was previously that really has investors concerned. immediately going to the covenants and loan agreements and taking a look and making sure they're still going to be within what is the allowed framework in terms of that ebitda as it relates ratio to what their interest payments are and the like. that is pressuring the shares. the weakness does seem to be sort of in dermatology and as well in some of their g.i. products including the key drug that they acquired when they bought salix for a big price some time back. new management at the company some saying under the leadership of new chairman and ceo joe papa this is an opportunity to do what we call kitchen sink things, take everything down to the lowest possible level you can and then begin the slow steady climb back. he did indicate on the conference call which ended about a half hour or so ago, perhaps a bit more than that, that they're trying to be realistic with what they know. where there's uncertainty they're trying to be skoempbtive. and they also say that since we're five weeks into this

quarter the question how is the june quarter going, the answer all i'm going to say is favorable to the first quarter. they are focused and having people focus on their strong liquidity position they say, guys, but again, stock of course including its very large shareholder purchasing square getting hammered yet again in what has been an extraordinarily awful year for investors in valeant. >> as you're talking, david, house speaker ryan with comments on trump's comments about judge -- >> talk about this agenda and policies contained in this agenda. that's why i believe we're far better off advancing these policies and getting them in law with his policy than hillary clinton policy. [ inaudible question ] >> i fundamentally disagree with that. i think it's wrong. the way i look at this is if you say something that's wrong, i think the mature and responsible

thing is to acknowledge it was wrong. [ inaudible question ] >> i'm not going to comment on that. we've got enough work to do here in the house to comment about people running their campaigns. [ inaudible question [ inaudible question ] >> i don't know what's in his heart but i think the comment itself is defined that way. i'm not going to defend these kinds of comments because they're indefensible. i'm going to defend our ideas and our majority. i think our likelihood of getting these ideas into law are far more likely if we are unified as a party. i see it as my job as speaker of the house to keep my party unified. i think if we go into the fall as a divided party, we are doomed to lose. i'm going to focus on these and not try and attempt to defend the indefensible. >> that is speaker ryan responding to questions about donald trump and those comments that trump made about the judge

in the trump university case. ryan saying he disavows the comments, that they're absolutely unacceptable calling them a, quote, textbook definition of a racist comment. if he makes any additional headlines, we'll get them to you. coming up on the program, shares of ralph lauren are struggling this morning. restructuring measures and cutting costs to reduce real estate assets. we will have the latest. and exclusive interview with blackstone's global head of real estate jonathan gray, says prices will continue to rise even if the fed hikes rates. much more ahead on "squawk on the street." ♪ using 60,000 points from my chase ink card i bought all the fruit... veggies... and herbs needed to create a pop-up pick-your-own juice bar in the middle of the city,

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ralph lauren out with its restructuring announcement following earlier reports of job cuts. our very own courtney reagan joins us this morning with more as the stock is under pressure. court. >> that's right, hi, carl. so ralph lauren is holding first investor day in the brand's 50-year history. wall street is finally hearing ceo stefan larsson's plan as ceo. larsson's way forward plan centers around reigning in costs, brands and stores. the brand will focus on three name brands, ralph lauren, polo and lauren. the brand will close 10% of mainly high end stores, strip out three layers of management, which means 1,000 job cuts or 8% of full-time staff. it's also going to reduce the inventory that it ships to department stores, which is 45%

of revenue in hopes of reigning in promotional levels and selling more items at full price. leaning on his strengths from old navy and h & m will shorten merchandise production times from 15 months to 9 months with an eight-week test pipeline. now sees revenues dropping at a low double digit rate due to the decline in inventory receipts which is proactive as part of the closures, but also weak retail traffic environment. but the savings from the restructuring costs they're undertaking are expected to result in 180 million to $220 million in annualized expense savings. ceo stefan larsson also says he'll focus even more on the shopping experience. part of that he says his number one priority winning at the wholesale channel. but he's also going to build strength in e-commerce. he's included an executive from e-bay for that role. he also wants to evolve the retail shopping experience.

we have about an hour left in the meeting. as you mentioned, carl, shares have fallen by a third over the past year as sales and profit have also fallen and costs have risen. so certainly something needs to be done. it remains to be seen if these are the right changes, simon. >> clearly some disappointment today, courtney, thank you very much. the latest on ralph lauren. the largest private equity investor in real estate says prices will continue to rise even if the fed hikes rates. jonathan gray says blackstone is still buying and selling real estate in equal proportion despite having $100 billion under management and over $30 billion to spend in cash. john gray also chairman of hilton with a 46% stake spoke to us at the nyu hospitality conference. >> if you step back and look at real estate landscape today in

the u.s., the thing that makes you feel good is the supply/demand fundamentals. new supply, new construction of real estate's running about 1%. the economy is growing around 2%. and that's why the fundamentals are strong. the biggest challenge on real estate is to your point rates are low, and that's led to very low cap rates, or unleveraged yields in real estate. as the fed tightens that puts some pressure, if you thought about it like a stock, you'd say i like the earnings growth in real estate, but i'm worried about the multiple. and net-net what we believe is rather than seeing a big sharp upward growth in value we've seen, we'll see growth in value but at a more modest pace going forward. >> you're also a huge investor or holder of assets in housing. you've got 50,000 rental houses, single family homes and then multifamilies, another 50,000 there. what do you think is going to happen with housing? >> i think housing in the u.s. is in a very good spot today. we just look again at supply and demand. if you looked at population,

household formation, you'd say you need about 1.6 million in terms of homes, this year we'll deliver about 1 million. that is leading to rising rents in apartments and home values as well and rising rents for single family homes that are rented out. so i think housing is one of the great stories today in the u.s. economy. there are obviously some headwinds coming from outside the u.s. but if you wanted to put your hat on one thing that would make you feel good about where the economy will go over the next couple years, i would say u.s. housing. >> what do you make of the public markets of the stock market in general? >> if you look at the lodging space, what you'd see is the companies are not trading well. stocks are off 35%, 40%, because market participants are very worried about a recession, a slowdown and sort of the end of the lodging cycle. we think the market's being overly punitive and that could create investment opportunities for us as well. >> you've done two notable deals with the chinese. you sold the waldorf to the

chinese as part of hilton, and of course you're selling strategic to them for $6 billion. where are we on the chinese? are those deals going through? >> well, i would step back and say on the chinese what people i don't think fully appreciate is many of these companies didn't have an opportunity to invest overseas up until a year or two ago, which are the insurance companies in particular. and they're now looking at overseas assets particularly high quality real estate or real estate companies. and that's what you're seeing. i think this is the beginning of a longer term trend where they deploy capital globally not much differently than u.s. insurance companies who look to invest or u.s. investment companies around the world. some of these deals may not make as we've seen they lost out in starwood situation, but i think they will continue to invest more over time. and part of this is they're getting their sea legs in this business. they're understanding how the process works, how the regulatory framework works. so that takes time. i think these are companies that

have long-term investment horizons who want to own great quality assets so i think you'll still see more investment dollars from china. >> and in general are they good for the cash? >> yes, i mean, the chinese economy is grown to be quite large. it's the second largest economy in the world. their insurers are enormous companies with very substantial financial means. i think the skepticism around china i think will go down over time as they become larger players and people see them. but, you know, they have made some mistakes as they've been learning. >> although obviously real estate outside china is thought to be relatively safe bet. jonathan gray joining us there the head of real estate at blackstone. >> when we come back, cnbc's disrupter 50 list, who made it to the top? we'll tell you after the break. the heirloom tomato.

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methodology placing increased importance on scaleability, uber landed in the number one spot on this year's list. since starting six years ago the ride hailing app expanded to nearly 60 countries with estimated revenues close to $2.5 billion. and $66 billion valuation. similar story for number two, airbnb taking on the hotel industry. now active in 34,000 cities and valued at more than $25 billion. coming in third, india based mobile payment start-up easy tap poised to tap into the explosion of payments in the developing world and take advantage of the indian government's efforts to get more people to participate in the financial system. fourth, secretive palantir technologies which analyzes and visualizes big data for clients ranging from the u.s. government to wall street firms. and fifth, genetic testing company 23 and me which reinvented its offerings after the fda effectively shut it down. apart from the top five we want

to highlight a few other notable members of this year's disruptor 50 class. first time we've included education disruptors courseera landing number ten offering access to courses from the world's top schools. lyft on the list for the first time after partnering with general motors to develop a fleet of self-service cars. and jaunt landed on the list at number 47. its tools are designed to help artists, brands and consumers create virtual reality content. and here we are at houzz. check out this office there's a slide from the fifth to the fourth floor, each of the different conference rooms is designed to look like a different room of the house. we'll be sitting down with houzz's ceo coming up in squawk alley. back to you. >> julia, thank you very much. disruptor 50 on cnbc. coming up, the final push of the primary season as clinton hits of course the magic number making former secretary of state now the presumptive nominee of

the democratic party although she's yet to claim victory on that. the latest on the campaign next. ♪ i could get used to this. now you can. when you lease the 2016 es 350 for $329 a month for 36 months. see your lexus dealer.

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reliably fast internet starts at $59.95 a month. comcast business. built for business. good morning everyone. i'm sue herera, and here is your cnbc news update at this hour. a rush hour car bomb attack targeting a bus carrying riot police killed 11 people and injured 36 more in istanbul. the police bus was overturned from the sheer force of that blast, which also damaged nearby buildings. treasury secretary jack lew and secretary of state john kerry wrapping up two days of strategic and economic talks with their chinese counterparts in beijing. the two telling beijing it needs to provide a level playing field for u.s. companies to do business in china. widespread outrage over the sentencing of a convicted rapist who is a former stanford university swimmer. 20-year-old brock turner given a six-month jail term for sexually

assaulting an unconscious woman. his father wrote a letter to the judge saying his son should not be put in jail for, quote, 20 minutes of action, end quote. and tropical storm colin expected to continue to drop heavy rain over the southeastern parts of florida after moving across the northern part of the state knocking out power and flooding roads. security cameras on this house really capturing the sheer force of those winds. that is the cnbc news update this hour, simon, back down to you. >> thank you very much, sue. house speaker paul ryan moments ago coming out forcefully to condemn recent controversial comments from the presumptive gop nominee donald trump concerning the federal judge that he's overseeing the trump -- case. here's what ryan had to say. >> i disavow these comments. i regret those comments that he made. i don't think -- claiming a person can't do their job because of their race is sort of the textbook definition of a

racist comment. i think that should be absolutely disavowed. it's absolutely unacceptable. >> for more now joined by cnbc contributor former economic advisor to vice president biden, and sarah fagan, former political director for the george w. bush white house. sarah, how serious is this split for the gop, do you think? >> well, the challenge that donald trump faces is at a moment when he had wrapped up the republican nomination and he was starting to bring key republicans like paul ryan to defend him, he's now put them on the defensive. so in a week where hillary clinton is claiming her party's nomination, we're talking for five days as republicans about a judge's race. and republicans are disavowing donald trump. that is a very bad development for the trump campaign. >> what's interesting, sarah, is he's doubling down, it would appear, from what he said previously. >> i know. >> why do you think that? what does that point to? who's advising him here? >> well, i think the only person

advising him is donald trump, and that's part of the problem. this is quintessential trump. when you make a mistake, own it and double down. he doesn't apologize. he doesn't ever say that he's wrong. and at some point as a candidate that is going to catch up for him. it may not be this moment, but i do believe that the collective weight of all of these missteps that he has rhetorically and verbally will ultimately probably cost him this election. the challenge for him is he's got to quickly pivot. he's got to pivot on two fronts. he's got to pivot from a policy perspective. he's got to start to give very thoughtful, deep policy speeches where people understand what he is for. and secondly, he has to pivot politically. he has to start making very good decisions, good speeches, doing them in places that matter to the electoral college. he spent five days in california, a state he has no chance of winning in the general election.

that's just bad politics. >> jared. >> well, i just think it's the idea of donald trump giving a deep and thoughtful policy speech is kind of hard to wrap your head around. i think sara's analysis is essentially correct, and i give paul ryan a lot of credit having just essentially endorsed donald trump to turn around a few days later and call it like he sees it. look, this candidate is a huge problem and precisely for republicans and precisely the way sara just said. he is not following a playbook that neither sara nor i nor a lot of other people including paul ryan would recognize. and importantly the fact, the very fact that he's not followed that playbook has gotten him to where he is today. that worked i think demonstratablely well with republican voters, it probably won't work in the general election. he's got a real problem. at the same time we have this extremely historic event occurring as we speak, which is this country is about to have a presumptive nominee for

president who is a woman, the first time in our history. after electing an african-american two times, our chief economist is a woman, janet yellen. i mean, this kind of diversity is not only, i think, great for america, flies in the face of the kind of xenophobic racism you get out of donald trump. >> sara, before we leave the topic and perhaps talk about what's happening in california with hillary clinton, there was a suggestion from senator lindsey graham this was now the off ramp opportunity for those within the gop who were nervous about supporting trump anyway. paul ryan hasn't withdrawn his endorsement as i understand it at this stage. >> right. >> so if trump can make it through this, i guess, in many senses he'll know who's likely to stand with him through the rest of the campaign. >> well, donald trump does have some things going for him politically. >> of course. >> republicans are far more energized in this election than democrats. and hillary clinton except for this week, this one week in the campaign, has proven to be a pretty bad candidate. and what donald trump needs to

do is not only give people a reason to vote for him, he has to make a more articulate case against her, which he did not do. she attacked him very aggressively. and i think very effectively last week. rather than respond to that and talk about all of the failed foreign policy missteps by the obama/clinton white house which there are many from syria to missile defense to iran to iraq, he, you know, spent time talking about this trump university lawsuit. >> sure. >> so he's got to pivot. and if he doesn't do that, these republicans are going to, as you mention, are probably going to start bailing on him. they're going to be forced to bail on him. >> jared, what is your reading now of the degree to which hillary clinton can united pa y party? at what point does obama come out and endorse in your view? and what does sanders do? >> start with the last point because i think it connects to the others. a lot of people are saying bernie sanders should get out of the race perhaps after california. it was about this time in 2008

when hillary clinton did just that and began to unify around barack obama. what i think is key now and what i don't hear people talking about is really the posture of the clinton campaign to embrace sanders supporters. i heard someone from the clinton campaign this morning talking about bernie sanders as a hypocrite if he doesn't get out he's undermining the party, hear a lot of that kind of talk. i think that's really misguided and not smart, not forward looking at all. i think that hillary clinton's best move at this point would be to think about ways to try to pull those sanders supporters, at least the ones open to buying into the fold and not to bernie sanders out of the way. >> sara. >> all we've seen is staffers talking about the need to bring the sanders team together with the clinton team. i think they are striking the right tone, at least as a campaign organization. and so they're very cognizant of the fact that bernie sanders has

a wide swath of the democratic party very loyal to him and very energized by him. and the clinton campaign while they're going to win regardless of the results tonight, she's clearly going to be the nominee, they do need to bring the party together. and i thought her speech last week criticizing donald trump was effective not only because of what she did to trump but it was very effective in that she gave the reasoning for the sanders team and the sanders supporters to come to her defense and to coalesce into one democratic party. and she laid that out effectively. and i think she did herself a lot of good in her own primary last week as well. >> can i make just one -- >> briefly. >> a quick economic point. you know, i never like to attach a particular event to a market bounce, but i actually think the markets today and in general that the economic fallout from a hillary unification -- hillary winning this candidacy is going to be positive because i think there's a great deal of economic

insecurity about the destruction that a donald trump would do to both domestic and international. so i think we may be sitting a bit of a hillary clinton bounce. i think that's continuing. >> we'll leave it there. clearly we've got six primaries to get through today not least of course california and jersey. but for the moment, thank you both. >> thank you. when we come back, oil prices moving higher, brent above 51 today. plus, jim grant with rick santelli when "squawk on the street" comes back. at&t introdus a buy one get one offer that sounds really good. and looks good. thanks nice job on the typesetting, guys. this bogo offer is making me feel all tingly inside. is that normal? yes. anyway, come in and take advantage of this offer. huh? (yelling) it's a great offer! what? buy one get one free! yeah, this bus goes downtown. let's just go back to the graphics. right now at at&t, buy a samsung galaxy s7 and get one free.

with a weak jobs report and a lot of questions about the federal reserve, what should you be buying, if anything? find out at tradingnation.cnbc.com. more "squawk on the street" coming up.

i'm susan lee. stocks are trading higher, but health care is sticking to the downside. standing out as worst performing

s&p 500 sector today. among the stocks dragging are biotech names like biogen, alexion and vertex. biotech etf is trading lower by more than 2%. yesterday the health care sector turned positive for the year and we'll watch to see if it can actually hold onto those gains with today's losses. back to you. thank you very much. in the meantime, serepta therapeutics rocking taking a second look at one of the biotech companies has more on that in chicago. this is a big move, meg. >> simon, it is. it's been a roller coaster ride. it has a drug developingdystrop. we learned last night that the fda has requested more information from some ongoing studies of this drug from sarepta. plan to submit those in the coming weeks to help facilitate

what it hopes will be a prompt decision on application for approval. up until this point most analysts had been bearish on this drug getting approved tested in just 12 patients initially. they are doing more studies and some data has been requested. most analysts thought the drug would get rejected, but today we're seeing notes while some analysts are still skeptical it will get approved, others are saying if these data are good and consistent with what we've already seen, this drug could get accelerated approval. so that is why you're seeing the stock trading up so much today, simon. >> okay. thank you very much. up now 25%. thank you. meantime the dow just hit 18,000 for the first time since april 28th. of course a delayed reaction across world markets to what appears to be a more dovish janet yellen as we heard from her yesterday afternoon. let's send it over to rick santelli for the morning's exchange. good morning, rick. >> good morning, simon. and thank you. i'd like to welcome my very special legendary, if you will, guest, jim grant. thanks for taking the time this tuesday morning, jim.

>> you're welcome, rick. >> you just heard simon hobbs, we crossed 18,000. if my math's right we're about 35 points away from going into positive territory for the first time of the year in nasdaq, both the equity indices, the s&p and dollar up over 3%. we all know the fed doesn't have enough confidence in the market to normalize, so why are equity markets where they are, jim? >> well, i will be able to tell you why they are where they are in about six years with more perspective, rick. for now it seems to me the stock market's presented an image of a kitten up a tree. imagine the fire department coming and the presence of janet yellen with a truck and wondering how it might help get going again. the stock market, you know, is wiser than even so-called legend watching it. let me say that.

frankly and sincerely. but one can't help but wonder if the stock market is where it is on account of the dynamism of american enterprise or because of the words, deeds and errant judgment of our federal reserve. >> well, you know, everybody seems to think that down on this trading floor that we have a fed that very few have confidence in is making the right call, they're out of phase with the market in terms of their cycles of strength in the economy and when they chose not to versus when they choose to normalize. considering that we've had many, including myself a few years ago, who think flat may be the ugly side of the stock market. you know, jim, the age old question, we know that the fed may not be up to the challenge of normalization, maybe no central bank is. but investors still have to invest somewhere. they know normalization or recession is coming, one or the other. >> yeah, we do live in the fed's

world. you wonder about the world. let's conceive we are not infor investors but rather basketball players and the game's about to be televistelevised, playoff ga there's a final and all they can talk about is the referee. what the referee is thinking. what the referee he or she where they've gone to school, what has been writing about in scholarly journals. so the federal reserve has come to occupy the anomalous place of the referee who dominates, overshadows and is in utter control of the game that he or she is intended to be merely supervising. >> quite extraordinary. >> now, jim, you've talked at great length in some of your newsletters regarding the yield curve and how flat it is. one of the reasons you bring up is obviously a valid reason that there's a fragileness to not

only the u.s. economy but the global economy. and we all know normalization coming sooner later keeping long the short end higher than the long end with regard to recent moves on rate. having said that i look overseas, i see bund yields at six basis points, i see over 10 trillion of negative rates. isn't a good chunk of this also the dynamic that you express regarding the referees it extends to the yield curve as well, especially the long end. it's looking at other securities a lot more than it may be other issues. your final thought. >> yeah. i mean, you mentioned several times normalization, it seems to me the fed has missed its market and the next move is likely to be down as it is up. it's very good economist named steve blitz to whom i'm now shouting out. and he has called attention to a relatively new indicator the fed has a 19-comment thing called the labor market conditions index and it's turned negative. and if this indicator were back

tested, it would show that the fed is more incline to cut rates when it is in this territory than it is to raise them. and i think this comports with the yield curve, comports to any number of citings on the economy. so the world economies are weak. the american economy is weaker than the federal reserve is willing to acknowledge. >> jim, we rare out of time, an we have to leave it there, and simon hobbs, back to you. >> thank you very much, rick. coming up, we will have a look at the oil market. oil was moving higher today, and partly because of what is happening with the dollar, and a view that if we see more than $50 a barrel, you will see more short, and we are trading at $49.88 and how netflix is hollywood's frenemy.

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mark, and traders wondering if we will get that close today before we can move higher. and you remember that the break with the dollar index is supportive of the crude prices, and remember that dollar rally when it is likely that the fed may hike in june, and now that seems to be off of the table, the dollar index is correcting a little bit, and the second reason is that we are in the uptrend of the driving season, and that is when the demand boosts, and pretty much the whole complex isle rallying to derek and last year this time, crude was trading around $60 a barrel to give you a frame of reference, and traders are saying that 55 is the upside this time around and not as high, but remember what happened when the summer driving was down, the crude prois prices went down to $30 in august and expect to see saw pattern to continue. and also, some support from the supply disruptions, and we discussed venezuela and some concerns about can a da easing.

on deck, we have the epi setting us up for the department of energy tomorrow. we have seen the department of energy report total production for the u.s. down 15 straight weeks. at around 15 a barrel, and $50 a barrel, that means that the crude producers may be pemping back online, and remember a that we did see the inkrecrease for first time in a long time last week as well, and that may be a sign that we will see the fluctuations here, and you to keep an eye on the production numbers. back to you. >> thank you, jackie. and basketball shaquille o'neil, and phil jackson were back together last night. the two of them have 17 titles between them, and talked some hoops. cnbc caught up with shaq and asked him about the future of payment. >> i always wanted to be at the forefront of all new technology. no secret i'm one of the world's

biggest geeks and any time you can pay without using cash, it is a good thing, and you have to be real responsible and know what is going on. i gave one of my kids applepay, and it did not turn out real well. >> one of the world's biggest anything i think applies to shaq given the size of that gentleman. >> and maybe not free-throw shooter. >> well, that is true. >> the one thing. >> okay. over the kayla tausche with a look of what is coming up on the squawk alley. good morning, kayla. >> yes, and we will start out by talking about the deadline forbids for yahoo! that verizon is preparing another one of its own in the $3 billion range. and we will talk about how the election is shaping up here in the bay area, and we will talk to michael from reputation.com now that clinton is the presumptive nominee and how the tide might be turning for trump, and today, this is when we will be unveiling the disruptive

50-50, and we will talk to so-fi who is disrupting the world of banking. a all of that is coming up on "squawk alley." ♪ okay, so you launched your bank's app. now what? how will you keep up with the new demands of today's digital economy?

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it is 11 a.m. on wall street, and 8:00 in sunnyvale, california, and we are on "squawk street" live. ♪ good tuesday morning, and welcome to "squawk alley." jon fortt is out, but kayla tausche is in san francisco, and here for the hour we have mike santole, and dennis berman, the financial editor at the "wall street journal," and also, joining us is lead writer at "fortune" as well. and now, verizon is looking to bid