microsoft down about 3.2%. >> take one last look at the futures with dow component microsoft now trading down a little bit. we'll see if that's reflected. yeah, a little bit. we were down about 35 all session on the dow. we're now down 48, down 6 on the s&p, down 20 on the nasdaq. >> make sure you join us tomorrow. "squawk on the street" begins right now. good morning. a blockbuster deal in technology. microsoft buying linkedin in a $26.2 billion purchase. welcome to "squawk on the street." i'm carl quintanilla with jim cramer at the new york stock exchange. david faber's off. futures under some pressure this morning as the markets will weigh the tech news along with these new brexit polls and the mass shooting in orlando this weekend. pound's at a two-month low. the ten-year yield 1.61 and oil's near the low for the month. our top story, microsoft acquiring linkedin for 126 a

share, all crash. the deal is expected to close this calendar year. jim, you just talked to andrew, becky and joe about this. >> yeah. you know when you go back over the arc of linkedin, obviously going into the february quarter there was a belief that things were continuing to accelerate. you had 30% growth. you really felt like there was very, very little economic sensitivity. then you got that incredible shortfall, going from $192 basically down to 9,800, and it was entirely because of the lighter guidance. the guidance, they use the term seasonality. well, we're not used to hearing seasonality with linkedin, 30% going down to 20%. there really wasn't any line item that was good. you saw deceleration in core hiring, you saw challenges in marketing solutions, you saw macro fx headwinds. we don't want to hear that. the last quarter reported at the end of april was quite good. and every one of those items went back up, and that's why the stock was able to recover. but they are getting -- microsoft is getting this

company before, at a price before it collapsed but well below where it was at the high. >> yes. began the year $225 or so, but the $196 is almost exactly where it was q-4 earnings debacle. some comments from wiener -- "just as we had changed the way the world connects with opportunity, this relationship with microsoft and the combination of their cloud and linkedin's network now gives us a chance to also change the way the world works." they're calling it a refounding moment for linkedin. we'll talk to nadella and weiner first on cnbc at 10:00 a.m. >> this is good for everybody. in the last quarter that microsoft reported, there was a conference call -- that was a conference call where i really felt we got some feedback about the negativity about the conference call, but i thought that was a call about there are plans to be bigger in the cloud as you're really taking let's just say a slowing of its growth. so, what happened was you started thinking, well, wait a

second, is microsoft just a pc company with xbox and slowing cloud, given the fact that they did not buy sales force? i didn't think sales force was ever for sale, but i think they would have loved it. remember, this was a goal by sachin to get much bigger in the cloud faster. so, you think how could they do it? this was tightly under wraps on friday -- >> yes. >> which is good news. but linkedin hurt the whole group, if you go back to february. everything social, mobile and cloud, sales force, obviously, that was ten-week. software had a bad number. but you saw everything in the cloud go down because you started thinking cloud had seasonality. no. linkedin was the social-mobile cloud opportunity that professional -- microsoft obviously being professional. you'll see companies like twitter go out. you could see tripadvisor go up, yelp could go up, anybody that's involved in keeping a list. but linkedin, this was just a once in a lifetime opportunity

before linkedin started ramping back. i felt that when i went over the call, the february call again just this morning for linkedin, i was struck by how down they were. i was struck by how they felt the growth had kind of peaked. now, they disputed it themselves. they had kind of a conflict internally, because that last quarter was showing a little bit of a pickup, but it didn't matter. microsoft got its man. this is very positive for microsoft. and i don't care that it's not accretive. obviously, microsoft was not getting a hot multiple. >> minute dilutive. >> but now you're speaking about sales force, adobe, oracle, although oracle is obviously, its platform is software, too, and we'll hear from them this week. and now microsoft. microsoft had missed social, missed cloud, they had missed mobile. by the way, steve ballmer before satya came in admitted as much by saying listen, you know, like we were off track. >> true. >> very positive. very positive. >> weiner and nadella have apparently put together a youtube video which we'll see in a moment. >> let's take a look at that!

>> they point out they've been working on this for a while, which raises the question how much else out there do you think is being seriously evaluated by other companies? >> well, objection, i think that microsoft was unique in n that it had a lot of cash and did not have much social-mobile cloud. if you look at chuck robbins, what he did with mcisco. he started buying mobile securities. obviously, facebook does not need a deal, they're doing so much right. alphabet has so many moonshots, they're not involved in this, an outfit of course is google. they dominate social mobile cloud. they don't need to make a move. but does apple need to make a move? now they've got the developers conference. what is it? i do! i do! and they do have social, but not as much. they certainly dominate mobile and cloud. >> but your point is that the list of buyers is limited? >> oh, linkedin -- no one will come in on linkedin -- >> i mean in general for enterprise, social. >> well, microsoft was uniquely

berift. the converse was satya's doing his best, he's trying to get in cloud. benioff has big admissions, okay, take that off the table. suddenly, linkedin -- nobody would have thought it was for sale, but then they have a bad quarter. you're buying linkedin at a price that he should not be able to get. >> sure. >> that's why i think it's so smart. and linkedin was not tapped out, but they said certain things on the conference call. i wanted to wring their necks on that conference call. >> we all remember that quarter. >> it was like, are you kidding me? now we've got to -- i remember that morning, that afternoon when it happened, and then that morning where i'm calling all these companies, i'm saying is the cloud slowing? no, just for linkedin. is mobile slow? no, just for linkedin. >> yeah. >> is there now suddenly -- do we have a situation where the world slowing is impacting tech? it turned out to be refuted.

it was only linkedin, and then linkedin accelerated. brilliant move by microsoft. we're not going to think of that company with a $12, $13 multiple anymore. next quarter i was dreading for microsoft, saying what are they going to say? windows 10, surface. the nfl uses it. i mean, ah! they gave you something to talk about. >> yeah, they definitely did. >> amy hood is so lucky, because amy hood -- i detected, again, disputed by the company, i detected a moment of velsmirkh. >> what does that mean? >> it's a german word, i'm not feeling that great, maybe things could get better. it's great to have one word like that. >> frank quau tyrone of catalyst -- >> he's back! bigger than ever! >> says it's the largest sale by an internet company ever. >> quatrone's always big, big, big. i always like him. he's back and this is a very big deal for him. that's great. i mean, somebody's going to say,

you like quatrone, what is that about? >> definitely a second act in tech. >> yes! >> we mentioned that youtube video of nadella and weiner. i think we have a piece of it. are we going to take sound full here? nope. this is just to see what it looks like. i'm sure you'll be hearing this later on. but the deal obviously getting the blessing not just of nadella and the boards, but reid hoffman in particular. >> yeah. you want him to stick around. i mean, i looked at that linkedin -- i'm going over the linkedin conference call that was the culprit, the february 4th conference call. and you know, they were like -- i remember their jaws dropped as it was going on, and a lot of people were e-mailing back and forth saying they don't mean it. well, they really mean it. and this is just such a positive to be able to say, hey, listen, you know, it really is -- i mean, there were questions that come in here, like steve sar dello, the linkedin cfo -- "the online business has been decelerating over the last few years, kind of a structural deceleration." huh? it's like, what's he talking about? i remember calling marc benioff,

what's he talking about? he said, hey, business is fine. stop it. stop it. but i was in panic mode. how could you not? >> we'll talk later this morning about what it does to the overall mood regarding the markets, mobile growth -- >> well, people coming in -- i was watching the coverage early morning, and i was like, okay, obviously, we'll have to talk the tragedy. and i'm not -- but it was like, okay, bad day, bring it on. >> right. we do want to talk about the tragedy in orlando that left 49 victims dead over the weekend. we now know it was the deadliest mass shooting in u.s. history. our eamon javers is live with the latest developments. good morning. >> reporter: good morning, karl. fbi special agent in charge here in orlando said this morning that the bureau has investigated up to 100 separate leads as they try to figure out exactly what happened here in orlando, florida, over the weekend. the bureau also examining the possibility that there may have been at least more than one person involved in this attack. here's what the special agent in charge said about that possibility. >> we do not know yet whether

anyone else will be charged in connection with this crime. i do want to let you know that we have no reason to believe that anyone connected to this crime is placing the public in imminent danger at this time, but there is an investigation of other persons. >> reporter: so, other persons unknown at this point. what we are learning this morning this morning, guys, is a little bit more about omar mateen himself. he is 29 years old, was born in new york, moved to florida and has lived here for several years in florida. he worked as a security guard for a firm called g4s. his ex-wife gave a statement yesterday saying he was abusive and mentally unstable. she said despite all that, one of his ambitions in life was to be a police officer. and to give you a sense at just how at a loss officials are in piecing this all together, as they go back and trace the history, they realize that the fbi actually had contact with mateen as early as 2013. there were concerns raised by

some co-workers that he was potentially violent, potentially had contacts with terrorist networks. at the kproepress conference th morning, they continued to put out the call to anyone who knew this man to call the fbi and tell them what they knew, carl. >> eamon javers in orlando, thank you for that. a lot more to come on that story today. still come, as we said, the ceos of microsoft and linkedin on their blockbuster deal, $26.2 billion. take another look at the premarket. it's going to be a big week. a two-day fed meeting. we've got the brexit, of course, polls continue to come in. haven't gotten yet to the china data or wwdc. more "squawk on the street" live from post 9 in just a moment.

futures lower this morning. stocks falling around the globe. overnight in asia, shanghai down more than 3% on weaker chinese investment data that came over the weekend. nikkei down 3.5% due to a stronger yen. european markets under pressure amid some uncertainty surrounding next week's brexit vote. and all of that is ahead of the two-day fed policy meeting set to begin tomorrow. we'll get a statement on wednesday. shanghai, nikkei down three will get your attention. >> yeah. remember, a lot of these things that happened, we are stronger than everybody. and the reason why we're stronger than everybody is because if the yen gets strong, that's just very bad for auto sales. i mean, it's something that ford has been calling to happen. so, when we see this, the takeaway should not be, oh, wow, i've got to sell some of our companies.

it's, oh, that's a good break. and i think that we too often confuse the two. we say, wow, that if japan's down, we should be down. but if japan is down because the yen is more expensive, then when you go to buy a toyota, you get a bargain. so let's keep that in mind. i mean, you go to buy ford, you get a bargain. >> we started the morning talking about microsoft/linkedin. now, citron's andrew left, well known for his call on valeant, is telling cnbc this morning in a phone interview that he is short facebook. >> right. a little bit more evaluation oriented than what we've seen. look, andrew's had a couple of major hits. if he had something that i think would be regarded as that there is something wrong at facebook per se, rather than valuation, then i think there's more to it. now, they had been up like 80 points and this stock has been topee in the last few days, as is much of tech. but look, if you want to sell it, andrew gets short and loud.

i happen to respect his work tremendously. i'm not downgrading it at all. i am saying that unless there's a smoking gun like there was at valeant at $150, you know, he wants to call the top. a lot of people call the top in facebook. >> in his words, "i see facebook losing share to snapchat, overstaying its welcome in other niches. i'm not saying facebook is a bad company, just won't be a $330 billion company in a year." >> well, look, i think that facebook is one of those companies that you're betting against people who don't -- who will make it look like a company that's different from it does now. look, citron -- andrew when he comes out with something is, you know, i'm sure he'll be on multiple shows. he's very outspoken. i find him very compelling when he talks. i generally like him. you know, i think he does some quality work. i've been around the block with him on valeant, on wayfair. so i find that the intellectual jousting is good. but you know, if he's calling just the top saying it's

expensive and it's losing its relevancy, a lot of people have been saying that for a long time. >> yeah. >> i mean, a lot of people -- i mean, look, my kids who don't follow stocks that well, they say listen, facebook is losing relevancy to instagram. but you don't want to correct your kids. well, that's a good point. >> yes, dear, yes, dear. gold, up 12 bucks from $1,300 again. >> right. >> do you believe these brexit polls that show a leave with a ten-point lead? do you care? >> i was listening to someone on with sara and wilf, their show today. and there was a guy who had resigned from a key position in commerce, and he said listen, it has to happen. and it was very good, because sara was ready with 7,248 institutions that are saying, no, this would be bad. and the guy just said, eh, come on, it's all a big exaggeration. but yeah, mine, those of us who follow it very closely -- who follow europe very closely, almost everybody who's involved in decisions are frozen. they're frozen. i mean, real estate and

construction. >> of course. >> like, wow, what's going to happen? and no one really knows. british operation gets crushed because of the translation. so, it is important. it's very important. and it's, unfortunately, very abstract to americans. but one of the reasons, again, just like the yen being strong -- why is our market doing well while a lot of others are doing poorly? well, because we don't have this. now, gold's up because gold trades internationally and the gold stocks -- by the way, american eagle going up. you're seeing barrett going up. watch rang rangold had a weak quarter but has the one with the best prospects. >> a four-week high, something to watch. up almost 3% last week. >> and i think everyone should own gold as an insurance policy. i don't think you should drive around that insurance policy. that's been a very out of sync position, but i don't care. r rand gold, by the way, the last quarter had a couple things that were wrong. that goes to $100 in my face. >> you mentioned apple in the last block.

they are kicking off their annual developers conference today in san francisco. the company's expected to debut some expanded capabilities for siri as well as its latest mobile operating system and some new software for the watch. they're getting big-footed a bit by the other news out of seattle. >> yeah. you know, i mean, geez, satya didn't plan, nor did andrew left, who e-mails me and says the engagement numbers coming out lately show peak facebook. it's like the high peaks of the adirondacks. so, they cannot move the needle of this company. the team's done a wonderful job connecting people. it does not mean it can grow. so, this is not one of those things that you want to just say you've got to short it. but look at this, now here he goes. he goes long linkedin on february 8th with the data to drop. so, this is andrew's day, andrew left citron day. we'll make it satya's day. >> there were, i would say, a school of investors who got in because no one believed linkedin

could have two quarters that bad. >> and that was right! i mean, well -- it wasn't just linkedin that had a bad quarter. go back over the microsoft april 21 quarter, and amy hood says the intelligent cloud segment, as i go, as opposed to the stupid cloud segment -- i didn't like that -- the intelligent cloud segment delivered $6.1 billion in revenues, which grow 3% and 8% just at the low end of our guidance range. and that was one of like -- that was another one of those ah hah moments. >> yes. >> well, that's changed. this is no longer going to be that guidance. association you'll hear their cash really wasn't doing anything. you're going to hear a lot of analysts say listen, i'm no longer concerned. there is a moment in the conference call where they were talking about how windows 10, we're still a windows 10 company. no! they're no longer a windows 10 company. >> some people are trying to say, what does this valuation say about the other reported valuations we're getting on the yahoo! bids? reuters today saying that verizon and at&t qualify for the final round. >> well, i've been saying that verizon and at&t's going to steal that company, but ali

baba's brought that company down a bit. there is an ali baba meeting coming up. i have said this is underrated, yahoo! but it's got to happen sooner. yahoo! is a company that almost feels like a wasting asset. so they've got to make a move soon. look, if at&t -- at&t stock has been the strongest in that group, trading like a high-growth utility. those companies have the cash. if they want higher multiples, they've got to buy this. this is about getting higher multiples, paying more for their earnings. >> yes, reuters hopes to wrap up the auction by july -- >> i hope it's wrapped up. i don't know, it may be wrapped up by 2017. this thing has been the least wrapped up wrapped-up thing i've ever heard. >> yes. when we come back, the big board will hold a moment of silence for the orlando shooting victims. don't go away. most of the show. (woman) and there's no way to restart it. (jon bon jovi) with directv there is. ♪ you see, we've got the power to turn back time ♪ ♪ so let's restart the show that started at nine ♪ ♪ and while we're at it, let's give you back your 'do ♪

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it's been a busy morning so far. if you're not up to speed or just joining us this morning, microsoft announcing it is going to buy linkedin for $196 a share. heard from andrew left of valeant fame saying he's short facebook, so a lot to watch. >> but just go back to jeff weiner. on the april call, which was much better, he talked about the first full quarter of their mobile flagship experience, pleased with it. that was important. but here's some words you never see with microsoft. unique visiting members grew to 106 million members miles per hour microsoft has not had any members of anything. that's why i like this deal so much. >> yeah. linkedin has 433 million of them. >> well, that's a lot more than microsoft had. >> growing at 19% a year. >> and remember, called them in the room, although they've been trying so hard.

suddenly, link yedin, microsoft's call. you lose your kooul cool when you're focused just on microsoft 10. >> the new york stock exchange is about to observe a moment of silence in reference of the orlando shooting victims, the worst shooting on u.s. soil and the worst act of domestic terror since oklahoma city in 1995.

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you're watching cnbc "squawk on the street" live from the financial capital of the world. the opening bell in about 60 seconds. as a big week shapes up, a two-day fed meeting, continued attention to the brexit polls, apple's development conference. we're going to get housing starts and some inflation data. ten-year, meanwhile, that low bond yield story continues. >> yeah. i mean, this is a worldwide issue and you still want -- i mean, if you're in any country in the world where you have money, an institution, i think you're hard pressed to continue to buy those spots. you want to come over and buy our bonds. it's this buy dollars, buy bonds that is keeping the dollar from really i think going down a lot. but yeah, it is a very important story. it's not going to help mortgages because people buying, there's not a lot of homes for sale. >> down here at the big board,

we'll get you a look at the s&p at the bottom of your screen. at the nyse, it's advanced auto parts, retailer of automotive replacement parts and accessories. over at the nasdaq, the future conference, gathering start-ups, financial institutions and investors. we'll take a look at linkedin at 46% increase at the open. >> let's remember, it was -- i remember the day that linkedin broke dow and people said it was the end of tack and there would be no more cloud and seasonality and what were we thinking? i've got the offending conference call in front of me, and i keep thinking it resonated. the analysts were so astonished. people were saying we've got to get a line on this thing. could it really be that bad? and it wasn't that bad, but they presented it so poorly. and it was a transition quarter. this stock would have been -- why do i think they got a steal, so to speak? because if you exoy that quarter and look at how things came

back, you're buying the company at where it was when people still felt it had growth acceleration, which is why i think satya's doing the right thing. a first-name guy. >> yes, yes. >> like madonna. >> satya. >> we are going to talk to both gentlemen at 11:00 a.m. eastern time. before we do anything else, let's get over to sue herera and get the latest on the orlando shootings over the weekend. >> good morning, carl, thank you. here's what's happening this hour. the fbi holding a news conference on the orlando nightclub massacre this morning, the deadliest mass shooting in u.s. history. 49 people were killed, more than 53 wounded. orlando mayor buddy dyer was the first to speak. >> the fbi did an unbelievable job of clearing the scene. by 11:00 all of the victims had been removed and turned over to the medical examiner and to the fdle. and then they also stood tall and did their job. and now, all 48 of the 49 victims have been identified.

>> the shooter, 29-year-old omar mateen, was born in new york and lived in ft. pierce, florida. he worked as a security guard and had been under fbi surveillance twice in the past four years. he died in the gun battle. the islamic state claiming responsibility for the attack. a third weapon was found in his vehicle. the fbi descended on his home on sunday. local law enforcement officers cleared neighbors from the complex, fearful that mateen's unit could be booby trapped. and people gathered for a candlelight vigil in orlando last night at a local park. they prayed and reflected on the horrific mass shootings. most of the 53 people hospitalized are in critical condition, and as a result, the death toll is expected to rise. that is the latest on the shootings in orlando, carl. i'll send it back to you. >> sue, thank you very much. we'll get another update at the top of the hour. are you still poring through this linkedin? >> yeah. i mean, i'm trying to figure out exactly what else satya saw.

and i keep thinking, one of the things i liked with jeff wiener was not defensive about china in that february call. we said -- they are really very big with regard to china. china has been the fastest growing market in terms of new users. growth has been very much a part of the strategy there, priority number one. that would be fabulous for microsoft, jump-start some chinese business. and i just think that this is one of those deals where if you can buy microsoft at $48, $49, i think you'll look back and say i caught it at a level where they have good yield, where they're going to have growth. and i was very concerned about the next quarter, frankly. i really felt they were going to have a quarter where they didn't grow cloud the way i would have liked it, back below growth again. and windows -- we know from western digital, from sea gate and from intel, intel may be getting 30% of the business off of apple. we know that pcs took a real quick play down. so, this may make it so that the overall pastige of business of microsoft is going to be so much cloud that maybe we understand

that windows 10 could be declined and we don't downgrade the company because of it. >> interesting. >> it's a very good deal -- >> do you think the timing of the deal actually is a precursor to a quarter that sounds just like that? who knows? >> you know what, i will tell you this, there wasn't anything that last quarter that made me feel that microsoft was going to be able to reaccelerate cloud. hence the deal -- hence the sales force chatter. because satya's trying to get this goal to $18 billion in cloud. bingo! i mean, he got there! a lot of us are trying to figure out, how is he going to get there? i mean, is he just being way too aggressive? is he overpromising? no. he's being very shrewd about it. and remember that cash, what was it doing for them? a lot of these companies in tech have all this cash, and we're like, well, that's a negative. it doesn't make any money. there's no place that they can put the yield. the german ten-year, wow, what a terrible place to put your overseas cash. >> yes. >> so i like the deal. i like the deal. hey, a lot of people like him.

candidly, i knew ballmer in college. i liked him! i mean, i know that -- well, i liked him. >> yeah, yeah, you did. you usually say this -- >> i liked him. i sat next to him at my 35th. i liked him! >> we mentioned the youtube video that weiner and nadella have put together. listen to this. >> i've been talking with reid and jeff for a while, and the fact that it's came together now is fantastic. but believe me, i've been thinking about this for a long time. >> satya has said time and time again, you have to help write the rules here. we're going to do this differently. you're going to have the independence, we have a shared sense of alignment, so let's dream big. let's think about what's possible. >> interesting communication strategy. put your joint interview together on youtube. >> yeah. the runner of youtube for alphabet must be happy. again, this group of companies -- not that i'm going to start calling -- it's not going to be fand, although netflix operated so badly, you could put the "m" in there,

famd. it doesn't have any literation, but microsoft puts itself in another league. you have a platform. linkedin has unlimited firepower. now, do people buy tripadvisor thinking someone else is going to come in? ye yelp, i saw that bidding up. it's kind of that sympathetic i don't want to be short something if we get a bid. >> we'll talk to them at 11:00 a.m. eastern time. >> it's such a good bidding. are you going to be in on it? >> yes, we'll have a nice cross-country conversation. >> i think that february call made it so they gave away the company at a lower price than they would have like aid. i like these guys. i really disputed the notion that there was a macro and that there was some sort of slowdown, but they had, you know, they had a lot of -- their financials were very hard to understand. they made some acquisitions -- >> yes. >> and i've always felt it was doing better than the stock indicated. well, microsoft felt the same. >> it was actually the acquisitions that made some believe organic growth was over. >> yes. and it looks like, well, maybe

someone's going to contend that this was the top for them. i contend that when you combine microsoft with this company, it's a very powerful combo. it's going to put them back in the conversation. >> taking some attention away from symantec buying bluecode for $4.6 -- >> well, that's because they overpaid -- sorry. i just, that sector is in the dumps. there are many publicly traded companies that have been going down. palo alto had a great quarter. nobody really cared. cyber arc had a great quarter, nobody really cared. symantec's had good quarters and maybe this breathes new life into symantec, but i thought they paid a lot of money for it. but that's because they got new leadership and they have a pulse. wow, symantec's got a pulse. >> 60% of their revenue's going to be enterprise security. >> that's still growth. and we know that from cisco and from palo saalto. >> we have not touched on

walgreens-thernos, resolving that relationship. >> walgreens put them on the map. i remember when that deal was announced. what's so amazing is the market is so -- the market can be really stupid, it can be really smart. take a look at the stocks of quest diagnostic and lab corps since it was ruled that thernos was not what we thought. and they have been straight up. thernos was supposed to be the lab corps killer and the quest diagnostic killer. it killed no one other than the investors at thernos. and one of the great things about the way wealth is calculated is you can't have minus wealth. but listen, talking about $9 billion, you want to say it was down. it was the old management that did that deal. they knew better, the new guys. the new guys are very smart. old guys were very sweet. new guys are very smart. remember, rite aid reports this week. it really matters about whether they can close that deal. >> yeah. chipotle is threatening its

lowest level of the year. >> yeah, deutsche bank really threw some fire on that, huh? better go to moe's. wow. they reduced it again. remember, i am a long-term believer in chipotle. 18 months from the last incident is when you start getting the turn. deutsche bank really just, hey, down there, give them the business. and i know, like i sent a bunch of guys to go to moe's versus chipotle. no one came back and said, hey, listen, i'm now a moe's guy, but moe's has got name brand recognition. >> they've got moe. >> moe's has the moe. there's no mojo at chipotle right now, even though, again, i hit it last week. >> with all that, the dow's down almost 60 points. let's get to bob pisani on the floor. hey, bob. >> good morning, carl. and mixed markets overall, down over in asia and europe, but mixed here today. take a look at the sectors here. some modest declines in some of the tech names. i think microsoft weighing a little bit on the market, down just a little bit right now. also some declines in the bank stocks as well, going on the last three or four days last

week, continuing today. oil failed at $50 and had a tough time on friday as well. utilities, more defensive names like health care are holing up well here. moving the markets, there's three things, and we've been discussing them throughout the morning here at cnbc. we have the china growth concerns out there, we have the brexit vote. we heard about tighter odds of a potential leave over the weekend. and the fed and bank of japan meetings that are this weekend. a lot of people trying to figure out to what extent does the fed keep the july meeting alive at this point? that's going to be a major issue in the middle of the week here. global markets, take a look. shanghai and nikkei both down. china, fixed asset investment growth on the weak side. japan's down 3% here on the stronger yen. remember, they got that two-day bank of japan policy meeting. the yen's strengthening. that was also a big problem for them as well. you can see middle of the trading day over in europe, germany and france. the down side. look at the big japanese stocks. i think it's notable that the names you know, the nissans, honda motor, toyota and sony all down, rather weak there.

nissan not, but honda, toyota and sony all down about 3%. in europe, no letup in the bank debacle. and over there it's really about the flat to down yields overall. we saw a notable decline last week in these names. a lot of them are down. satisfaction ociete generale is down again. in the u.s., some of the tech names weak. i think microsoft's weighing on the markets, down 4.5%. facebook, salesforce, oracle down. adobe's on the flat side. you can see linkedin at $193, up about 47%. twitter's up about 5% as well. that's interesting. our markets are just doing better than the rest of the world. and here's an interesting stat. the s&p hasn't had a down day in 45 trading days. that really got my attention because i wasn't aware of that. it only happened 21 times since 1990. the average gain in these 45 trading days when you don't go

do down, that's 7%. the current gain is 2.6%, so we have a ways to go. the average streak, this tends to last. if you go past 40 days, you can usually extend it. 63 days is the average it's gone on in those other times where we've beaten more than 45 days. so interesting streak that we've got going now. we'll keep an eye on that. finally, we are keeping our eye on the ipo market. we do have an ipo announcement. twilio, which will be at the nyse, big on the coding platform that let's developers add voice and messaging to apps. this is a big, big development. 10 million shares at $12 to $14. we don't know when they're going to actually go public, but the road show will be starting. and if it goes normally, this should happen towards the end of next week or maybe the week after. we don't have a definite date yet, but we'll keep an eye on that. this is important because on friday, lion, the big japanese messaging company, came out with some more details about its ipo coming down the road. it will be a dual listing in

tokyo and the new york stock exchange. don't have an exact date, but the total value of the company, about $5 billion, lower than some people had estimated the value to be. so this is going to be a big tech ipo, this is twilio one. everyone will be watching that for signs of how other tech ipos might be going. right now the dow down 31 points. >> bob, thank you very much. west texas did touch almost its lowest level for the month. let's get to jackie deangelis at the nymex. >> good morning, carl. that's right, crude prices hovering over the $48 mark, despite the events in orlando. sometimes events like that can cause volatility in crude prices, but i think this move is a result of opec's monthly market report, saying in the second half of the year we can expect much of the same. so they're looking at the demand picture as increasing slightly. that was expected. supply contraction to continue but ever so slightly. this rebalancing theme is going to take some time to play out. now remember, the dollar index is a big part of this story, too, and it's remaining range-bound right now, behaving

somewhat as the prospects for a fed rate hike have diminished. so oil prices will continue to stay in the upper range, upper band near $50 as well. remember, worth noting, i just mentioned gold because that's where my head was, approaching $1,300 right now. some safe haven buying, certainly. a couple of different explanations for this. you've got the brexit vote coming up, the fed, as i mentioned, and a safe haven when you have an attack like we saw in orlando certainly becomes attractive as a play. carl, back to you. >> jackie, thank you so much. when we come back, the deal of the day, microsoft buying linkedin for $26.2 billion. we're going to talk to the ceos of both companies at 11:00 a.m. eastern time. dow's down some 39 points to start a very busy week. don't go away. mary buys a little lamb. one of millions of orders on this company's servers. accessible by thousands of suppliers and employees globally.

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- diversity isn't just important for your financial portfolio. it's also important for your life. celebrating, welcoming, and surrounding yourself with people of all kinds is an investment in both you and your community, and we're all the richer for it. our market's a little weak to start the week, but there's a lot to come, not just the fed meeting, but retail sales tomorrow will be key. >> yeah, it's funny. i now think of retail sales and immediately think, okay, so what's amazon up to? and piper comes out, g. munster frequently writes about it,

growth tracking above expectations. remember, it was 20% last time and he keeps the $800 price target. i see amazon down. you know what? amazon is retail sales, so i -- you know, when i was coming here over the weekend, what's doing well in retail? dollar tree, dollar general, big lots. i used to shop at big lots. that's a stretch each for me, i've got to tell you. maybe they fixed it up a little bit, but -- >> you don't have fancy taste. >> whoa, no. big lots had like a bag of cheetos at the checkout and beds all over the place. it was like, what? this is a little different kind of store. so, i mean, big lots may have gotten it better, but everyone's so focused on what did microsoft pay. bob peck, who's so good, just came out, you know, seven times the enterprised value over revenue. you know, a lot of the cloud companies were trading eight, nine times about a year and a half ago. so again, i think microsoft's a buy. i just think microsoft's a buy. they needed to do this. they get -- you're no longer

going to be thinking, geez, the cloud has slowed. and who knows what linkedin can do under microsoft's tutelage. they went through a lot of pipes. this will be a key interview. your interview is going to determine this day. >> stock hit the lowest since february 11th. stock not being treated well, back below $50. >> well, i think that's a mistake. i think that you are not going to get any growth in that company. it's okay to buy growth. one of the things that we've seen is you can buy growth and it's not necessarily a negative. i wanted intel to buy something faster, they bought al tiara, didn't grow enough. but facebook over time, thanks to andrew left, has made some acquisitions that were very, very good, including instagram. >> sure. >> i went back and read the press briefings for instagram and they laughed at zuckerberg. >> not laughing now. >> no, they're not laughing. not a lot of laughter there. >> no. >> no laughing. >> let's bring in florida governor rick scott and get the latest on the tragedy in orlando over the weekend that left 49

victims dead. i guess we don't have the governor quite ready yet. we'll take a quick break. hopefully on the other side of this break. yered security. it's how you stay connected to each other and to your customers. with centurylink you get advanced technology solutions, including an industry leading broadband network, and cloud and hosting services - all with dedicated, responsive support. with centurylink as your trusted technology partner, you're free to focus on growing your business. centurylink. your link to what's next.

back to the tragedy in orlando over the weekend that left 49 victims dead. we now know it was the deadliest mass shooting in u.s. history. joining us this morning on the phone is florida governor rick scott, who declared a state of emergency. governor, it's good to have you with us. good morning. >> good morning. this is just absolute terrorism. isis has to be destroyed. we lost steven sotloff, a journalist from miami a few years ago, and now we have this tragedy here. i've been reaching out to the families, the next of kin of those who lost their life, and you just hear -- i've got daughters, grandkids, even -- your heart goes out to these people. their family members just went to have a good night and ended up murdered. >> the state of emergency, what do you need from the federal government, from the white house going forward? >> sure. i declared a state of emergency for orange county, which is where orlando is, yesterday. and that was to put all of our

state resources, coordinate that with the locals to make sure we had all of the resources. i needed the president to do the same thing with all of the federal resources. we worked very well with fbi, with our sheriff's department, our police department. everybody's worked well together. florida department of law enforcement, everybody's done well. but the president needs to declare a state of emergency to make sure we have all the federal resources we need. >> do you believe that this event will bring about any change in policy? does it need to, at least in your state? >> well, i think that right now the most important thing we can do is, you know, make sure we get to all the next of kin, which is the fbi is working with right now. all of the bodies are out of the nightclub, pulse. but then what we've got to do is we've got to help these families. we have to grieve with these families, get our state back to work and make sure we continue to get, you know, be resilient, which we will. but i think there's going to be

a time to review everything about, you know, why these things happen, what we can do to destroy isis, which we have to do, and other issues that people want to talk about. >> of course, the reports continue to come in about the background of the suspect, his travels to saudi arabia, but the fact that he was born in this country. do you believe in any way that isis is trying to claim credit for something that they tran gently brought about? >> well, here's -- what we know is, you know, what they said about 9/11 and some of the other things. but here's what we know. isis is evil. we've got to destroy isis. we have to take this seriously. we have to mourn with these families. we have to continue what we're doing right now, is reaching out to every next of kin that we haven't gotten a hold of yet. we've got to pray for the families that still have loved ones in the hospital, that i'm

sure are struggling. and then we've got to help these families get their lives back to as normal as possible. but no different than how you would think about your family. your life will never be back to normal when you have a family member that was murdered by somebody that, you know, that would do some heinous act like this. >> finally, i believe it was the mayor who said it's probably the saddest day in the history of orlando. i can't imagine you'd take issue with that statement. >> no. i mean, i remember when i got the phone call. you know, you worry about these things for your state as the governor. you want every citizen to be safe. you want everybody that ever comes to our state to be safe. we're a welcoming state. we're an inclusive state. we love people in our state. we're a melting pot. you look at that list of victims. so many of them are from puerto rico. i was at universal studios the other day. one of them worked there where i was. i wonder if i met him the other day when i was there. a young lady, k.j. morris, she

moved here from had. toiyt take care of her mother and grandmother. these are normal people like you and me who have loved ones and family members, and your heart goes out to them. >> governor, we appreciate your time. please know the whole country is with you and the citizens of florida. thank you so much. >> thank you very much. >> governor rick scott of florida. with all that, we do look forward to "mad money" tonight. what have you got? >> geez, i was a homicide reporter for a couple, you know, three years. this is terrible. >> very tough. it's very tough. >> okay, tonight i've got jon kelly from hive. this is "vanity fair's" new site. it's a mobile -- this is a so the that's a dotcom, so to speak, but they've got great business coverage, fabulous! we want to talk about the state of the web. i think the state of the web is still the premier thing that we can bring other than your -- i always am so jealous of "squawk alley," because you do such fabulous stuff, carl, but i'm trying to intrude in your area a little bit. >> believe me, we're used to it. we'll see you tonight. >> all right, thank you. >> "mad money," 6:00 p.m.

eastern time. as jim said, when we come back, microsoft's satya nadella, linkedin's jeff weiner at 11:00 a.m. on their blockbuster $26.2 billion deal. dow's down 23. e*trade is all about seizing opportunity. and i'd like to... cut. thank you, we'll call you. evening, film noir, smoke, atmosphere... bob... you're a young farmhand and e*trade is your cow. milk it. e*trade is all about seizing opportunity. sign up at etrade.com and get up to six hundred dollars.

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good monday morning. welcome back to "squawk on the street." i'm carl quintanilla with kayla tausche and sara eisen, who we welcome back after four weeks. >> thank you. good to be back. >> david faber's off this week and simon's out for the day. dow is down about 16, 17 points. obviously, big headlines today, microsoft buying linkedin, the brexit polls, china data over the weekend, a fed meeting this week. and of course, we'll get you the latest on the orlando shooting. for the time being, s&p 2095 and oil's back to $48.81. >> our road map for the hour begins with microsoft buying linkedin for $129 a share, an all-cash deal worth $26.2 billion. what's it mean for the ceo, satya nadella, and other companies? >> and terror in orlando. 50 dead in the attack, including the gunman, another 50-plus injured, the worst mass shooting in u.s. history.

we're live in orlando with the latest. and the federal reserve is in focus. fomc kicking off its two-day meeting tomorrow. we've got you covered on what you should be watching for ahead of that. later on "squawk alley," talking about the big deal of the morning. a first on cnbc interview, joined by linkedin ceo jeff weiner and sata ya na deya nade 11:00 a.m. >> and jon fortt has the details. he's had some time to digest this deal and what it means strategically for microsoft. good morning. >> reporter: good morning. yeah, this is an enormous deal. i mean, $26 billion is huge. it's satya nadella's first real megadeal. and it has a lot of potential to really expand microsoft's purview in the cloud. i've been talking for a while, months now, about cloud consolidation, a number of rumblings in the enterprise community about whether that was going to happen. well, we'll see if this really kicks that off in earnest. carl, as you were mentioning earlier, 433 million members on

linkedin. not all of those are active in any given day or even in any given month. and part of what linkedin's been trying to do is get its membership more engaged. this tie-up with microsoft can be expected to accelerate that effort in part because there's so many different ways that these two companies could be complimentary if they can come together in the right way. one of the ways is office 365. of course, microsoft has outlook and wants to be able to allow people to do business together, to contact one another. linkedin opens up another avenue for that to be able to connect people in order to do business. linkedin has a business called sales navigator, in essence trying to open up the possibilities of connecting sales leads. you can imagine how that could fit inside an office productivity suite, if it's approached in the right sort of way. and then another big area of potential expansion for linkedin has been this acquisition of linda.com. they're trying to allow the individuals inside their

linkedin network not just to come in when they need to update their resume or when they're looking for a new job. they want them to come in and learn things, to get better at what they currently do and prepare themselves for that next job. that would increase engagement. you can imagine why that's attractive to microsoft, because with the azure cloud platform, they want as many people, as much data flowing through that platform on a daily basis as possible, people doing business in the cloud. and linkedin has a big base of users who could potentially do that if they activate those users in the right way. now, under the structure of this deal, jeff weiner is going to continue to run linkedin. they're going to give that business some independence. we'll see if they're able to strike the balance between keeping linkedin as independent as it wants to be, but at the same time, integrating it into azure, into office 365 in ways that benefit the core businesses of both companies, guys. >> that's always the big question with those acquisitions. jon, for now, thank you very much. for more on this deal, let's

bring in a panel of experts. mark mahaney is the lead internet analyst from rbc capital markets who just upgraded linkedin last week. good call, mark. and richard davis who covers microsoft for canaccord on the cnbc newsline. mark, i'll start with you. do you agree with jon that this seems to be a complimentary deal, even though linkedin is going to be valued at 91 times earnings before taxes, depreciation and amortization? >> fundamentally, the open field running opportunity for microsoft here is the recruitment business at linkedin, something microsoft hasn't been involved with in the past. and this was the best fundamental asset out there. that's what our survey last week suggested and probably is what the company's fundamentals have told you over the last couple years, even though we've had some corrections. some of the smaller parts of linkedin's business, the advertising segment, the premium subscriptions, the sales navigator product, those have been a little bit rocky. checkered is what the fundamental direction has looked like, but maybe that's the

improvement opportunity. the synergies here should be in the sales and marketing side of the business. so just to step back, yeah, this looks like a good asset from a linkedin shareholders perspective. this is a pretty good deal in terms of valuation. the multiple's pretty much where it was prior to the major correction in the stock earlier this year, so you're kind of back at par and there's probably not going to be other major strategic suitors. take the deal. >> so, is it a good deal for microsoft shareholders as well, richard? >> we think so. and you should realize that to some degree it fills the hole left by the kind of disappearance of the nokia asset. and although they're not exactly the same, it does boost the kind of mobile practice that microsoft has. and then the only other thing that we would tell you to do that we're going to be watching for is just as microsoft gets further into kind of the enterprise market, we'll watch them to see how they bolster their enterprise sales effort, whether that's through hiring people or acquisition. >> mark, enterprise, productivity, those have been two of microsoft's buzz words

under satya nadella, but do you see linkedin being a company that they try to integrate, or do you see it more as a stand-alone add-on to what they're doing in the cloud, with enterprise, with azure, with office 365? >> so, i think jon fortt kind of captured it well earlier. the integration of sales navigator with office 365, that's the most obvious win here. that seems like one of the easiest steps. the recruiting business probably should be run separately, independently, and it sounds like that's the structure. i guess we'll get more news when we hear the call. but it sounds to us like the appropriate structure. that seems, you know, it's not an easy fit-in with what microsoft's done to date. it's much more people-intensive. but you know, that's up side, if they get it right. >> richard, we haven't really seen many data points where satya nadella has had to integrate something of this scale. how do you think he does? >> well, that's a good question. you know, he has a talented group of people, so we're hopefully optimistic.

but yeah, it's certainly something we're going to have to watch for. >> mark, everybody else is wondering who's next, right? so, linkedin was on your list of favorites, but should we -- do others deserve to be on a list of stocks to watch? >> yeah. so, carl, i knew you were going to ask that question. yeah, the first thing that comes to mind is what's next. and i think really linkedin is kind of a one-off in the internet space. in of the internet space i look at is kind of consumer internet. there are a couple interesting small cap plays. we long have thought yelp would be a transition candidate. i see twitter's up materially. i'm not sure this deal makes twitter all that much more likely. in fact, given the size of this deal, you probably just took away, at least for the foreseeable future, one of the potential buyers of twitter. so we wouldn't be chasing that. yes, there is acquisition opportunity in the internet space. i'm not sure we made that dramatically more obvious with this move this morning. >> and final question, richard. cramer was talking about how this sort of changes the

perception around microsoft, something that satya nadella has made a point of doing. does this do that successfully? does it make it a more social company, more getting into businesses with the cloud and with enterprise where he wants it to be? >> yeah, we think it is. and in fact, the piece we put out a month or so ago tied into that. he's done a tremendous job of turning the corporate culture and perception around. and you know, while we don't have a buy on it at this point, more for tactical reasons, he's done a really good job, and i think this moves the ball forward, definitely. >> all right, gentlemen, thank you very much for discussing -- >> thank you, kayla. >> good to see you, mark mahaney and richard as well. getting some news from mcdonald's, that they are moving their corporate headquarters, their global headquarters to downtown chicago from oak brook, illinois. of course, conagra, boeing, a lot of big companies have been moving to the urban center, but specifically to chicago. and mcdonald's announcing after a long period of speculation

that they will do the same. they've been in oak brook for a long time. >> and a large campus there as well with a lot of people. >> which one is closer to o'hare? because oak brook, because -- >> oak brook is west. o'hare is sort of northwest. >> the airport is -- >> i believe prior reports said they would take over the building in which harpo studios was originally located. >> oh, yes. >> we'll see if that's actually still true. but everybody, and it's all about the urban market, right? everybody's moving downtown. >> and being close to where the talent is. >> yep. >> be sure to stick with us. you won't want to miss our first on cnbc interview with linkedin ceo jeff weiner and microsoft ceo satya nadella. that is 11:00 a.m. eastern time on "squawk alley." up next on "squawk on the street," we will head to orlando. the latest on that deadly nightclub shooting that left 50 dead, including the attacker. we'll have the latest up next.

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a shooting in orlando killing 50 people, including the attacker and injuring another 53 in the worst mass shooting in u.s. history. our own eamon javers is in orlando with more details on the shooting and now on the massive terror investigation that's under way. eamon? >> reporter: carl, it is an enormous terror investigation. all the focus now on omar mateen, the man who did this attack here in orlando, florida. why he did it, who he might have been working with. you know, law enforcement officials have said for years that the thing they most fear is a self-radicalized, lone wolf attacker who doesn't have any

communications over the internet with isis or any other terror group, who's completely isolated. it makes it very hard for them to find somebody like that. but it's increasingly becoming clear that's not exactly the picture that's emerging here. there are enough concerns about mateen early on that the fbi actually interviewed him as early as 2013. some of his co-workers said they thought he might be dangerous. at a press conference earlier today, the fbi was asked about those interviews and why mateen was still able to purchase firearms, even after all the concerns that had been raised about him. the fbi clearly not comfortable taking that question just yet today. here's what they had to say. >> we'll continue to move forward from june 12 forward and then do the historical as to who this individual was, learn as much about him as we can. >> reporter: meanwhile, this becomes political almost immediately in this election season. donald trump, the republican candidate for president, was on a bunch of television networks today explaining what he would do differently than the obama

administration, and here's what mr. trump had to say. >> we need far better intelligence-gathering. we have terrible intelligence-gathering right now. people aren't reporting other people when they see there's something wrong. we have mental instability that's through the roof, and the neighbors know it and they understand it, and they don't report it to the police or the fbi. >> reporter: now, carl, as for president obama himself, we are expecting that he will get further briefings throughout the day today, and we may hear from the president as early as this hour. we'll wait and see what happens up in washington as officials there try to get their arms around this and figure out exactly what happened here in orlando, florida. back over to you. >> eamon javers in orlando. eamon, thank you for that. for more on that, former cia officer and republican representative from texas, will hurd, who is also a member of the homeland security committee. congressman, good to have you with us. >> thanks for having me on. >> you heard just now the fbi's not ready to answer how you can be on a watch list and buy an

assault weapon legally. do you want the answer to that question? >> well, absolutely. the reality is, is right now if you are on a watch list, that name does go to the fbi, and the fbi can decide, has influence in that decision. there have been a couple of hundred cases where people have been denied weapons because of that. so the issue is, you know, this individual, mateen, was interviewed i believe on three separate occasions by the fbi. being interviewed by the fbi is not a violation of the law. so i think what you're going to see the fbi doing after the active investigation starts winding down is looking at their tactics, techniques and procedures. were there questions they could have asked? were there things that they learned in the interview that could have tipped them off on this individual's, on this terrorist's ability to do something in the future?

and so, this is an important issue to get answers to. we'll be getting those. but we've got to remember, this is an active investigation. the fbi has over 100 leads that they're trying to run to ground and we need them to focus on that. understand what was the motivation of this guy so that we can see if there were connections across the country. >> aside from any fbi-specific reaction, should there be a broad policy reaction to this? because not the first episode we've had in recent months, and at some point, people will begin to wonder if we are continuing to let these tragedies, in a sense, for lack of a better word, go to waste. >> as we get closer to november, the unfortunate thing you're going to see is a lot of this politicized. you're going to see both sides of the political aisle retreat to their tired talking points on this issue. the reality is what we need to do is we need to take the fight to the terrorists on their doorstep. whether it's isis, al qaeda, boca harum, we need to be there.

we need to be collecting intelligence on the plans and intentions of these groups and taking the fight to them. we also need to be countering the ideology, right? this islamic extremism ideology has to be countered. we're a country of some of the greatest minds and brands and taste-makers. we should all be working together in order to counter this ideology. and the third thing we need to do is we need to make sure that we're getting good national intelligence to our local law enforcement. as we've seen here in orlando and in san bernardino, the local law enforcement are the first responders. they're the ones that are involved in these cases. and they should benefit from national intelligence in order to do their job. >> so on this politicalization point, i agree with you on the talking points. i'm wondering, congressman, do you agree with your party's presumptive nominee for president, donald trump's response, when he tweeted out that he appreciated the congrats for being right on radical islamic terrorism? the quote on politico is "trump's tragic victory lap."

it was a bit of a triumphant kind of response to such a big tragedy. >> well, i don't agree with either of the presumptive nominees on either political party and how they're handling this. i spent 9 1/2 years as an undercover officer in the cia, most of that over in south asia. and i've been chasing terrorists for most of my adult life. and one of the things that terrorists are trying to do is they're trying to kill a lot of people and elicit counterterrorism responses within a government that foments discord. so we need to focus on what the problem is and talk about real solutions. and here's the reality -- it's hard, it's going to take time. but we can win this battle. we must win this battle because the safety of the world depends on it. >> congressman, we appreciate that very much. representative will hurd joining us this morning from texas. thank you so much. >> thank you. we have breaking news from the supreme court this morning. let's get right to hampton pearson, who is outside the court as we speak. hampton? >> reporter: in a 5-2 decision,

the united states supreme court has said puerto rico does not have the legal authority to use the bankruptcy laws of the u.s. to restructure its massive debt. as we said, it was a 5-2 decision. clarence thomas speaking for the court majority. a key phrase from the opinion reads, "the definition provision excludes puerto rico for the single purpose of defining who may be a chapter 9 debtor." now, this decision is very important, obviously, for puerto rico bondholders who were worried about a restructuring that, in fact, might have devalued those bonds going forward. puerto rico had argued, essentially, that without this kind of authority to restructure its debt, even among the municipalities inside puerto rico, essentially, their hands were tied. the u.s. supreme court does not agree, sticking to the language that congress put in the bankruptcy laws when they were rewritten in the mid-'80s that specifically barred puerto rico

and the district of columbia from being able to have this bankruptcy authority. as we said, a 5-2 decision, essentially going against puerto rico. justice alito had recused himself from this case because some of his investments were linked to the key arguments in this case. back to you. >> hampton, thank you very much. coming up, our interview with microsoft ceo satya nadella and linkedin ceo jeff weiner. they will be joining us for a first on cnbc interview at 11:00 a.m. eastern time to talk about the deal of the morning and what the future has in store for both. plus, markets are on the move ahead of the fed kicking off its two-day meeting. the dow is down about 11 points right now. s&p 500 down less than a percent. what should you be watching for ahead of wednesday? we've got you covered. stay with us. "squawk on the street" will be right back.

stocks under a little bit of pressure here for a third day in a row ahead of the federal reserve kicking off its two-day meeting. here with us at post 9 to discuss the markets ahead of a busy week, steven reese, global head of equity strategy at jpmorgan private back and francesco blanch, head of

derivative research at bank of america merrill lynch. great to see you. >> great to see you. >> you're telling your clients to be a little cautious ahead of the brexit vote? ten days to go. >> yeah. >> and the polls are looking sort of mixed. >> it's too close for comfort. we are telling clients to add some protection here in front of the brexit. volatility actually is surprisingly subdued, and you can add some production short term to both the u.s. and europe for relatively low cost. we haven't changed our medium-term outlook. we're still constructive on markets, but we do expect a range-bound, volatile u.s. market through the summer. and in fact, we have a price target that's actually slightly below where we are today in the u.s. >> what are the markets pricing in at this point as far as brexit? and specifically the s&p 500, and what is the risk there? >> i don't think the s&p 500 is pricing it in a whole lot. we're still up on the year. europe has underperformed the u.s. market by about ten percentage points. so you could argue part of it's priced in. but i think if we do get a brexit -- and that's not our base case scenario -- but if we

get it, i think you'll see global risk-off across the board, which is why we're comfortable for protecting both for the u.s. exposure and the european equity exposure. >> i wonder how this impacts your world, francesco. is this driven by global events like brexit and the fed meeting like this week, or is it more supply issues that we saw on friday? >> i think the market over the next few months will become more macro driven. probably the last 18 months it's been really about fundamentals, supply-and-demand changes. but i do think the macro, particularly whatever the fed does in the coming days, brexit, are going to become a lot more important. the one thing i'm most focused on is seasonality, because i do think that once we hit that july 4th peak in demand, prices are going to start easing off throughout july and august. we would be buyers of that dip because we are constructive over the next 18 months. but in general, i think oil's going to be highly dependent on all this macro factors.

so, it's more markets driving oil as opposed to oil driving markets from here on, i think. >> i'm curious, steven, why brexit is not your base case, since some of these polls could easily argue otherwise? >> well, there's been polls on both sides. unfortunately, the last few weeks the polls have become a bit closer. in fact, some are actually favoring the brexit. if you look at the betting odds, there still is a favor -- >> by a less comfortable margin. >> it's a lot less comfortable than we'd like at this point, which is why we're advising clients to take short-term production measures in the portfolios. >> you said francisco, you were going on oil. once we hit $15, people were saying maybe oil could go to $100. is it too early to be talking about that? >> i think it's too early. in the short run, we think we could see a $7 to $10 pullback over the summer months, all based on seasonality. as we go from the summer into l farks there's a big shoulder period where demand drops off

sharply around the world. but what i'm really focused on here is what i call the new sultans of swing. i think the market is obsessed with shale oil and whether we are getting new rigs up in north dakota or whatever else. i think what really matters here is demand. and that's why i think we need to stay very, very much on top of the macro. the key countries to watch in my opinion are countries like india, countries like turkey or the philippines, countries which are extremely sensitive to prices from a demand standpoint. and those are the guys that are supposed to take us higher. so, i think it's premature to talk about $100 oil, but i can see $70 by the middle of next year. i can definitely see prices 40% above the current levels by june-july of 2017, based on a more positive macro and continuing demand growth from those emerging economies, what i call the new sultans of swing. remember, those guys are very poor in general, so their income is low. so the elasticity of that demand is going to be pretty high, and i think that's what's going to

adjust the market ultimately. so, we've got to keep a close eye on demand in emerging economies. >> but here in the u.s., we are seeing drillers add new rigs. six more came online last week, the second week of growth, francisco. and i'm wondering if you think producers in the u.s. feel like we are in the clear and that market share worries are over? >> well, look, producers are taking advantage of higher prices, placing some hedges on at the moment and then adding a few rigs here and there. i don't think producers are in the clear. they don't think they're in the clear. most of them are focusing on repairing their balance sheet rather than talking about growth. so we will see maybe a few rigs here and there, but remember, u.s. production is still a small sliver of global supply. to put it into context, we have about 5 million barrels of shale production here. globally, supply and demand, they're about 95 million. so, u.s. shale is just 5% of the global picture. and it's only going to change very slightly from here on. >> and then to translate this

into energy companies, steven, i believe that you actually are a buyer. energy is the third best performing sector in the s&p this year. >> yeah. we recently upgraded the energy sector to neutral. we see opportunities for certain companies with good balance sheets, low-cost producers. our view is that oil prices will be volatile but trend modestly higher over the next 12 months and translate to opportunities. however, you have to be selective. we like technology, health care and consumer a lot more at current levels. >> not financials, which are now at the bottom of the list. >> depends on the fed, which i think you're not going to hear much about that this week. >> thank you. steven rees from jpmorgan and francisco blanch. sue herera has an update. >> hi, carl. here's the latest on the orlando shootings this hour. democratic presidential candidate hillary clinton speaking on the "today" show says she would support stronger measures to prevent so-called lone wolf attacks, but said she was also committed to protecting the rights of muslim americans. >> all this talk and, you know,

demagoguery, and you know, rhetoric is not going to solve the problem. i'm not going to demonize and demagogue and declare a war on an entire religion. that's just plain dangerous and it plays in to isis's hands. >> meantime, republican presidential candidate donald trump faulting the muslim community for not reporting people like the man who carried out the attack, killing 49 and wounding 53 others in that orlando nightclub. he said omar mateen was known to people in the muslim community as someone with a potential for violence. mateen was a 29-year-old american citizen living in ft. pierce, florida. he was twice under surveillance by the fbi in the past four years. msnbc quoting federal officials who say he took two trips to saudi arabia in 2011 and 2012. and several landmarks around orlando were lit up in the colors that reflect the lgbt community. the orlando eye ferris wheel rotating between rainbow and american flag colors.

and in the park, a fountain spouted water while rotating between various colors as well. we'll have more for you as the day goes on. that's the latest on the orlando shootings. i'll send it back to you, carl. >> all right, sue. thank you so much. sue herera back at hq. stocks have crossed into the green. we'll be right back. the 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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microsoft buying linkedin for $26.2 billion in cash, microsoft paying $129, a 50% premium over linkedin's closing price. julia boorstin, who covers linkedin, explains why this might make sense for the tech giant. good morning, julia. >> reporter: good morning to you. microsoft describes this deal as combining the world's leading professional cloud and the world's leading professional network, giving microsoft more tools to sell as part of its enterprise business. as jeff weiner of linkedin has worked it to be far beyond a

job-finding tool but to an everyday tool. it bought linda.com for $1.5 million, tools such as pulse for people to get the news of the day. the linkedin groups app helps users interact with colleagues or other professionals. and sales navigator is used to find leads while slide share allows users to learn about topics from over 18 million presentations. but it was major questions about linkedin's growth prospects that weighed on linkedin's shares, plummeting more than 40% after its first-quarter earnings report back in february. now, although linkedin's most recent quarterly report, weiner walked back those growth warnings. before this morning's news, shares were still trading off nearly half since their peak of $260 last fall. now, being owned by microsoft could help accelerate linkedin's growth, particularly its talent solutions division, which generates the majority of linkedin's revenue. now, the question is how microsoft could bundle that service as well as its premium

product and ad sale services into the other enterprise services that it sells. now, microsoft says that it will continue to operate linkedin independently, in contrast to how it's handled past acquisitions. the deal is expected to be accretive less than two years after it closes. so, certainly an interesting dynamic to watch. guys, back over to you. >> all right, julia boorstin in l.a. with the news of the morning in the business world. that microsoft/linkedin deal stealing the headlines, but it is still a big day for apple. the company's worldwide developers conference kicking off later today in san francisco. that's where we find josh lipton with what to expect. josh? >> reporter: well, kayla, steve jobs once said that software is the soul of apple's products. and today this worldwide developers conference, apple is expected to unveil new soul for its developers, customers and investors. so, siri, which of course is that voice-activated virtual assistant, is expected to be the focus of today's conference.

apple's ceo, tim cook, needs to make sure that siri is keeping up with its rivals, so specifically amazon's alexa and google assistant. apple's expected to announce that developers will be able to integrate their apps with siri, and that's important, because in this war of virtual assistants, apple's greatest asset could be that community of developers all around the world. for example, users could then possibly use siri to order uber or book a reservation on open table. we also expect to hear about changes to apple music. in april, remember, apple revealed that that service now boasted some 13 million paying subscribers, but we know it's also been criticized for being confusing to use. reports suggest that apple is now going to make apple music's interface simpler to use and better integrate its streaming and download businesses. certainly with its hardware business now under pressure as of late, this conference more important than ever for apple to show that it can deliver on that

promise of innovative, industry-leading software and services. this conference is going to kick off at 1:00 p.m. eastern. we'll be here, so keep you updated. guys, back to you. >> josh, we look forward to it. josh lipton joining us from wwdc. stick with us. our first interview with jeff weiner of linked in and satya nadella of microsoft, first on cnbc at 11:00 a.m., in just about 22 minutes. more "squawk on the street" after this. ♪ using 60,000 points from my chase ink card i bought all the framework... wire... and plants needed to give my shop...

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worries about a brexit front and center. polls show the chances of leaving the eu are rising. a poll by "the independent" newspaper showed the leave campaign up by ten percentage points. the "ft," though, poll of polls showing the leave campaign went into the lead for the first time but just at 46% compared to 44% for remain. still, a majority of the surveys and the betting market give a slight edge to the stay campaign. all this rising uncertainty is

rattling markets. the british pound earlier hit a two-month low against the u.s. dollar. it has since rebounded and is now higher in the session. and it looks like stocks are following with it. speculators are doubling down bets against the british pound. there's now a $6 billion short against the pound. that is the most since back in 2013. a referendum is ten days away. betfair, which is a good way to look at the betting odds, puts the odds of staying now at 68%, which sounds high, but it's actually fallen a lot from the near 80% where we were last week. clearly, uncertainty here about the vote, what would happen if britain does vote to leave is weighing on markets. and kayla, perhaps a reason for the turn in the sterling, according to our market center, that there will be a new poll by "the guardian" newspaper showing that remain is ahead. so, clearly conflicting signals here in the polls, which are never 100% accurate, but there is some momentum with the leave camp. >> of course, the margin of error is what's so important. and former london mayor told our wilfred frost, the only poll

that matters is the poll of the day. we are seeing this fluctuate every single day. >> which is why turnout is going to be very important, but the mystery is building here. i mean, it looked about a week ago like the stay campaign was way ahead. that's changed. and it's caused ripple effects on the markets. >> and sterling perhaps the best indicator of where we stand. investors shedding risk ahead of the big economic events of the week. the fed decision, the bank of japan meeting, inflation data and the ongoing countdown until next week's brexit vote. joining us now, torsten shrock and megan, i want to start with you because you're actually voting in the brexit vote, and you have a british passport. we were just mentioning how important turnout is. and i'm wondering in your circles what the sentiment is. >> so, in my circles, overwhelmingly, people tend to be in favor of staying in. as an economist, it's an absolute no-brainer for the uk

to stay in. but i know a lot of people who use very local arguments for why the uk should leave, such as, you know, our national health services are bankrupt because all these eu migrants have come and are using it, or i can't get my kids in to school with kids who speak english because we have so many immigrants. so i do think a lot will really come down to who actually comes out to vote. and there the youth vote will be incredibly important. they tend to be more in favor of staying in the eu, but there are a few problems. one is glastonbury is on the same day, so that's a lot of youth who won't be voting. and secondly -- >> which is a music festival, for those who are not familiar with it. >> that's right, thanks. and secondly, a lot of youth actually register at university, but they won't be at university on june 23rd and are very unlikely to travel to vote in the referendum. so you know, if it rains, that could affect the compositional effects of who's actually voting, too. so, i think it will really come down to the wire, but i think that the uk will just barely stay in.

>> we saw comments from the former greek finance minister n yanis verafakis, but he said trade and the possible ripple effect where other countries voice their descent, that's a big risk. do you agree those are the biggest risks on the table? >> for the uk, i think trade is a huge risk. also, i think that the economy will slow down massively, inflation will spike, the pound will plummet. i think the bank of england will have a really hard time figuring out what to do with slowing growth and high inflation. but you know, i also think it's an existential threat for the rest of the eu. a recent poll by ipsos showed that over half of italians and french would like to have a referendum as well. and just under half of them would vote to leave. so, i think it's a threat for the uk but also for the rest of europe. >> torsten, if you're the fed, how hard a decision is it to just wait until after this binary decision is over? >> well, this is just another

example of the fed being in this wishful waiting mode where they wish that the economic data in the u.s. were better, and they probably also wish that the rest of the world was much better. there are so many events coming into the fed decision from around the world that are completely unrelated with u.s. economic data that they had to weigh on the scale and say how much weight you put on international developments and how much on domestic developments. >> torsten, i come back and the german 10-year bund yield is 0.01%. you're one of the experts on global yields. how do you forecast something like that? and what does it say about the state of global growth right now? >> it definitely tells you that yields everywhere are going down. there's a big hunt for yield, a parking spot where you can wait for things until you see both after the fed meeting, also until these international developments get better. but it's pretty clear that investors are scared. that's why yields are going down, because u.s. fundamentals, even german fundamentals, the unemployment rate in germany is still at the lowest level in a long time. so it's not that fundamentals in the u.s. and germany are bad, but there are event risks

outside that we have to worry about. >> why don't you see that in the equity market? the dow has turned around, up 18 points. the doom you are getting in global bond markets is not translating. >> absolutely. and when i meet with equity investors, i hear a completely different story compared to the story that i hear from bond investors. bond investors are very worried about the bearish arguments that we had too much debt, the economy's about to slow, the world economy is weak. but others say if the fed is dovish, risky assets should do well. >> but megan, it also comes at a time when the yield on the s&p 500, the dividend yield is actually higher than the yield on the 10-year treasury, despite the fact that we hear that people are chasing yield, as crazy as that may sound, in the u.s. treasury market. what does that say about where investors are looking for yield, despite fund flows coming out of equities? >> well, i think there's a real flight to safety. and there just aren't that many safe havens now, particularly with brexit on the table. so the uk's not considered a safe haven at the moment. and i think a lot of the money

is flowing into the u.s. don't forget, we also have unprecedented amounts of liquidity in the system just sloshing around. and a lot of it is coming to the u.s. as one of the only safe havens out there. it's also going to germany, clearly, as you see with the bund yields. but i would also highlight the european yields have compressed massively off the back of the ecb stepping in and going on a buying spree of corporate bonds in addition to sovereign debt. so, a lot of it is really being goosed by central bank action as well. >> torsten, what is, i would say the opposite of the silver lining? what is the worst-case scenario for how the global negative interest rate story plays out? i was reading over the weekend that sales of safes in japan are up 86% because people are worried, savers are worried they're going to be charged for their savings. >> they're going on a big climb today, it's above $700. >> that's why they have all these unintended consequences that are unfortunely not particularly helpful. that's why we have a different situation where there's a drag on rates, but fundamentals are getting better, but just too

slow, and we've got to have patience with the improvements that we continue to see both in the u.s. and in the euro area. >> we are seeing slight gains in u.s. equities this morning, a reversal, but we do have a busy week ahead. torsten, megan, thank you for joining us. >> thanks for having us. >> thanks. and coming up on "squawk alley," our first on cnbc interview with linkedin ceo jeff weiner and microsoft ceo satya nadella. that is 11:00 a.m. eastern time. more "squawk on the street" with a turnaround in u.s. stocks. the s&p now up 0.5 points. we're back after a quick break.

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market hanging on to some gains just by a tad. dow up six points. let's get to dominic chu for an update on cmg. >> yeah, we're watching shares of chipotle because they hit a 52-week low earlier this session. deutsch bank analysts cut their stock of 12-month price target. it was $360. they also reiterated their sell rating. the analysts say the reduced target reflects what they call a loss in customers, some of which may be lost for good. the stock did dip to about $401 in earlier trading, shares down about 20% over the course of the last three months. we'll see if there's any stability in the shares going forward. back to you. >> thank you very much.

we will keep an eye on that. broadly looking at the markets, carl mentioned the stocks were hanging on to some gains. energy, consumer discretionary, utilities and financials, consumer staples at the bottom of the list. we have a fed meeting on wednesday. nobody's expecting any action on rates but that communication will be key and of course, the sterling, the british pound, has become the center of the storm lately. plunging almost a percent overnight, now rebounding. that seems to have improved sentiment as well. >> we are seeing a stall in the dollar rally as well. we have seen oil prices, brent and wti, just go back a touch negative. they had been positive earlier, which was helping energy to be the best performing sector in the s&p 500. we will see how the turn in oil affects that sector. >> oil hit its lowest level since the beginning of june. what's remarkable is the u.s. markets are able to be relatively stable after a miserable night overnight in asia. japan was down 3.5. shanghai down 3.

the data we got over the weekend, i.p. at six was inline. retail sales, in line. fixed asset investment slows to the slowest since 2000 if you look at january to may. the china slowdown card sort of looms out there for any bear who wants to hang on to it. >> ask any retailer what they would give for 10% increase in retail sales. >> there's always that. >> i was in hong kong last week and i have to say it doesn't look like a chinese consumer slowdown. >> i'm sure you did your part. >> it's a fascinating place where you have designer stores, 12 chanels in one little place. the other stock i would point out is microsoft, the biggest week in terms of percentage movers on the down, down 2.5%, going completely the opposite direction as linkedin which was surging on that buyout, almost 50% premium to friday's close. >> two other companies seeing a little bit of halo effect from that deal, sales force, crm, lot of investors on the buy side

thought perhaps that stock would fall because it was assumed that microsoft would eventually partner with sales force down the line, not necessarily linkedin, but the appetite of tech deal makers being whet has also bid up sales force stock just by about half of 1%. then there's twitter, on track for its best day since february. that stock up about 9%. if you think about microsoft's appetite for enterprise social, if they are interested in social, should they not have just done twitter for half the price. that's what some are saying. of course, it's an entirely different strategy. >> twitter has actually built on its gains since the open. interesting to hear rbc say that rather than chasing twitter, this actually removes a potential buyer for that company in microsoft. >> we will have much more on the market movers and of course, the buyout of the day, microsoft buying linkedin after this break. when it comes to medicare,

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down here on the floor with art cashin of ubs, floor trading here. we saw the dow go positive, s&p 500 is flat. i was saying it's about sterling.

you're saying it's about oil. >> pretty much all about oil. oil erased the losses earlier in the day. that put a bid under equities, brought them back. in fact, at one point, it changed what was going on in the bond market and the yields went back to neutral, although the yields are beginning to dip a little bit here. we'll see how they work out. but i think that for now, as the days go by, you are going to be correct because they have begun paying careful attention to the pound sterling -- >> and all the opinion polls. i want to talk levels for a moment. we are looking at the s&p 500 just below 2100. looks like we have gone above 2100 a few times since the may highs but haven't managed to get back to record high levels. what does that tell you? >> it provided very stiff resistance. if we manage to break out through it it should be a little bit of a rocket ride if they can get it.

so far, the volume is not there, the energy is not there. i think there's too much hesitation. now, tomorrow and wednesday, there's an upward bias. the day before and the day of the fomc meeting have a slightly upward bias. in fact, the day of the fomc meeting provides a good deal of the gain we have seen over the last several years. >> people aren't expecting a move in terms of interest rates but there will be great speculation about how janet yellen and company phrase the statement, how they assess global risks and how they lay the table for further interest rate hikes. what is your expectation? >> key question will be will she announce that they will schedule a press conference for july. it would certainly keep things open. it wouldn't give anything away but it will be very interesting to see if they do that, how will the market react. if the market overreacts on the down side, that will take july

off the table because then they'll say well, i'm glad we found that out before we actually changed rates. >> that delicate dance between markets and the fed. thank you. a busy week. now back to you. >> good monday morning. live at one market, "squawk alley" is live. welcome to "squawk alley." of course, microsoft, linkedin the big story of the day. jon fortt? >> let's get straight to