father's day gifts on behalf of the children yet? >> i have not. >> you have not. >> well is it, not this sunday. >> no, you got an extra would ek ahead but ordering stuff online you're getting close to the deadline. the average for mother's day. it was a record for mother's day, too. >> get more or less? we have to go. >> 186.39, we win. >> mothers get more. >> time for "squawk on the street." >> as it should be, yes. ♪ good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer who is back, david faber. futures are lower after the secondest tightest raping. the president meets with gop leadership on health care and taxes today. comey's testimony two days away. europe is weak. bond yields now testing election day levels ten-year gets to

2.14. our road map begins with apple and new product announcements. did we see anything that would move the needle? plus a big change at j. crew. mickey drexel is helping down. new chief executive coming from quest elm. the president taking to twitter ahead of congressional meetings today. lots of buzz surrounding apple's answer to the amazon echo and google home, the new home pod unveiled at apple's worldwide developers conference. here's tim cook making the case for that product. >> we have such a great portable music experience, but what about our homes? we think we can do a lot to make this experience much better. just like we did with portable music, we want to reinvent home music. >> jim, we got the ar kit, we got amazon on apple tv, but home pod really stole all the

headlines. >> i have the logitech music system. i have the harmon carden music system and i have the echo. i would tell you that the echo is really great. you can talk to the echo, but i talk to my wife. i don't need to talk to him or her. i want sound quality. if you care about sound quality, this seems like something i want to get. when it comes to price, yes, it is more expensive but the devices that i have that produce sound are not cheap. so i think that audiophiles will like it. do they move the needle? if it's part of the big apple family people will say i'll give that to people because the apple family is so big that i think you tend to want to buy people something that is part of it. so my take is that the reviews are good about the sound. the typical articles about apple's best days are behind it. they're written, i remember when i was a sports writer and they said listen, you have 15 minutes deadline, you'd have to write a

piece which says this fsu loss badly to florida and fsu crushed florida and you had to get that out, i think people just do the fsu is crushed by florida except for fsu is apple. i read the piece, won't move the needle. they could have put anything in. my take is if you're an autophile and apple member so to speak, i'm taking it. >> i do marvel at their ability to continue to not even compete on price. i mean, they just set their own price. it's always a premium. for example, as we all know, they take virtually all the margin in the wireless phone business, virtually all of it goes to. ale, and here again, they're twice the price of the echo. they're saying it's about audio quality, i guess, not necessarily just about being a digital assistant in the household, but it is amazing, guys, that they just continue to set their own price. sume maybe they're going to raise prices, i don't know, the next -- >> thousand dollars? the echo sound quality is, i don't think anyone is raving. i like the echo very much.

but the sound quality is -- >> i'm not sure i'll play it when friends are over for din per. >> my father-in-law did and it was a marvel, we liked it and i wanted cole porter, i wanted some show tunes, then i wanted jazz. coltrane comes on and blasting but no one wanted to say anything because i didn't want to hurt her feelings. >> maybe it's more competitive with the sonos offering. >> that's what people say. andrew ross srk join was saying sonos is switzerland, it can work with everything. >> sonos is a good product. >> i like sonos. >> apple hasn't made a new high since the 15th of may. since that time, nas is up 3%, bringing up mean reversion? >> i think apple had the big run. we had the downgrade from pacific crest which you know, crushed the chart if you're a chartist, but i think that apple is such a huge cap stuck, it

galloped up there like a small cap. alphabet is doing well, fang is extraordinary. i was surprised there was no netflix note yesterday. of course there's one today talking about foreign international sign-ups but i think apple is stalled until the next thing and i think there are also people who say if it isn't a super cycle, what's going to happen, and was there something supposed to come out of this that was legendary. nothing was supposed to come out of this, nothing, other than just developers. everything that apple does is second guessed, and you second guess it after you buy it. i bought it, you know, i guess this is a bomb, i love it, but i guess it's no one's getting it. then you get 20 million people buying. their best days were so behind them. i'm sorry. >> what are you wearing on your wrist these days? >> an apple watch but the old one. >> feels like i know -- i know, they bought a lot of them.

>> we got a new os. >> not as many as they ever thought. this did not become a blockbuster product. >> carl icahn has some 60 million projection? >> the best selling smartwatch, it's out of nothing. >> right, only 56 degrees. come on. >> it saves lives but what does that matter? that's another thing that's an afterthought. apple's best days are behind it, i want two more of these. honestly. if apple's best days are behind them why does anyone use theirs? can someone tell me why i'm not using a samsung, other than the fact i'm not an arsonist? >> who says apple's best days are behind this? are a lot of the people saying that, who sent the market cap to $803 billion. who are these people? >> i find a level of cynicism in the apple coverage astonishing. i find it astonishing. i do. i'm trying to figure out if i can get the device in time. i can't get it for father's day

but i'll get it for the holidays. you think my wife is not going to get me that thing? she doesn't watch the show so it's not really a hint. honestly i want that device. >> i kind of do, too. i need one. >> i like the stylus, i like it because the quality is so good. >> the new mac is incredibly gorgeous. it was called a monster. >> i'm on the house of cards, i don't know where you are in terms of bingeing. >> haven't started yet. >> holy cow! and orange is the new black and you know what's back is on amazon, philip dix. >> can cast f catastrophe? >> no. it's a crime thing, what is it? >> edelweiss. >> man of the castle. >> like the rome guys won. >> yes. >> and that's back and i watch them on my hp. i love my hp to the point where it's putting tape on it, but you know --

>> geez, jim. >> it's got mold, too. >> have you seen this, taped and cracked. >> that's his own though. cnbc, that's not a cnbc -- >> it holds up, i put this through the washing machine, it's like a timex. i've run with over with an abrams tank and it's still taking. >> are they not playing defense after the imac and laptop? >> i try watch things my wife is like let's watch it similar to a tv as opposed to this thing you tell me it's been able to withstand a bazooka. i'm wasting -- hp, they had a good quarter and if they were to peak that quarter could have been to 20 but i do think -- i watch -- what? >> nothing. i do not. >> wilf told me it was good, wilf. he's from over there.

>> i caught up on "silicon valley" the best comedy. love that show. >> amazing. that's because your met are so bad. >> it was a good night for us, they did not play. >> that was fabulous. not that we have 20 wins. >> i don't think you should be throwing stones. >> why not? i'm a stone thrower. >> we talked about the ge phillies analog last week. >> a lot of people weren't happy, which is worse than ge for the phillies but the phillies have superior cash flow. >> futures are moving lower, one day after the stocks snapped the two-day win streak. the nasdaq hit an all-time high during monday's session. the trump agenda in focus. the president tweets "big meeting today with republican leadership concerning tax cuts and health care. we are all pushing hard, must get it right." some have called out the fact he called it tax cuts not tax reform. jim, how much does that matter? >> not that much.

i ran a corporate governors conference and executives are dodging anything involving trump because they've been committed to climate change, afraid of being tweeted at. he's out talking about what, the fall for tax cuts? thank you for calling it tax cuts, mr. president, because that's the only way you're going to get it through. tax reform is too opaque. tax cuts is something historically some of the republicans like and maybe we do it on a limited -- we? they do it on a limited basis. >> i think a lot of people expect that's what you end up with. reform is extremely difficult with so many different moving tarts, not that we don't need it. we do need reform, but we're probably not going to get reform. we may get some sort of repatriation deal and again i'm just parroting what i'm hearing from many people who have a lot more insight than i do into this process and who i speak to but the expectation is perhaps do you get a repatriation deal of some kind. >> right. >> and a tax cut of some kind, but perhaps fairly modest. i'll tell you, they don't have a

plan yet at all. >> they had a plan! i saw it! sorry, you got to cut -- there's only one. >> it had that many words on it. there is no plan. the senate is still dealing with health care. burr yesterday added his name saying 50 votes will be tough. mcconnell said the same. and we got the budget issue this summer. the debt ceiling, don't ignore that. given how much trouble, when he starts tweet being that and starts antagonizing people, who knows we'll see. >> they were saying antagonized the supreme court in the failed new york times, the fake news "new york times." the supreme court i don't think they follow twitter as much as people think. >> the council on the other side won't introduce some of that into evidence. >> the supreme court, i don't know if you have ever been there, a heavyweight

institution. >> it's june. >> what does that mean? >> giving you the calendar, still this session, tax reform, tax cut maybe '18, mid terms come up. you know, less than a year from now everybody's going to be thinking about the mid terms and you're done. it's getting tighter already in terms of getting anything done legislatively. >> anyone remember reagan putting through the tax cuts? he had more democrats on his side. that was like the democrats saying yeah we had a bad recession. >> that was to be fair a process that went on for years involving as you say bob packwood and bill bradley in the senate and tip o o'neill and a broad away of democrats and republicans. which doesn't happen anymore. >> no, and also commonality. i was going out with a woman, what do you think of the kemp-roth bill? she says you ought to pay it. >> is that the end there? >> no, it was not -- >> did you end the relationship

there? >> it was like the climpble erc terms of a great dinner. >> you knew she was dumb, you were ready. >> you know it's our producer's birthday, we'll go away from this girl is not smart. >> when we come back, mickey drexel known as one of the innovators in apparel retailer giving up the raenz eins at j. . also by the way, 73rd anniversary of d-day and the landing at normandy. more "squawk on the street" in a moment. ready or not, here i come.ek.) ♪

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when... i... kill you. [ explosions ] [ intense music ] the mummy. rated pg-13. i left gap not feeling that great about myself. i was let go. >> you were fired. >> i was fired. let go/fired, whatever. >> one bad season? >> it was a tough year or two, and it's okay. >> are you pissed off still that you got fired? >> not anymore. >> that was mickie drexel, five years ago, when we did a documentary on j. crew called j. crew and the man who dressed america. drexel is stepping down as ceo of j. crew. he will remain the chairman. new ceo james fwret, recently president of williams-sonoma west elm unit. he'll start in july, the changes taking place amidst a significant slump in sales. it's a private company with a

good deal of debt out there, it's been paying interest payments and paying in-kind, in other words with more debt. and along with tpg and leonard green, mr. drexel owns a decent amount of the equity. it's been a rough go. not without their own mistakes, jim, that had been made in terms of fashion taste, in terms of high price point they were at for some time. but they're also fighting this tide that we talk about so often. drexel himself has said it's a sport. it used to be the main sport in this country, shopping. and it still may be for you, but it's no longer the case for so many other people. can you really turn things around when really what are you but a retailer that is leases and an artist at the top, somebody who had a great sense for the pulse of what was working in fashion, that's what it is. it's not a brick and moror retailer. bunch of leases and somebody who has the feel until they don't.

>> i wish mr. brett the best of luck as new ceo but i think the days of the billion-dollar brands are behind this country. debris with you. i think that the concept of having the right merchandise at the right time has kind of abandoned us. lululemon are a public company, they had great, great, great, great, the stock was not rewarded and one day they missed two months, and the stock has one of the biggest declines ever, and they have the hottest trend and someone was saying, in one of the articles, he was late to atleisure. nothing is killing it. tirico from pvh, what did he do? he successfully cut back america. and realized tommy hilfiger and he realized that calvin klein for europe. he knew that the mall was dead. he knew that the mall was dead. >> merchants changed distribution all the time based

on trends. that sort of cycles. this is not that. you're not saying he thinks it's a cycle. >> no, it's not. it's a secular downtown. xara has been able to move very, very quickly. something mickey himself said technologically didn't see it coming. i think this is a horrible business, and it was not a horrible business, and i don't know who can solve this conundrum. this is where the weakness is at the mall is apparel. >> right, and that is a key question for this company again, whether or not the new leadership and williams-sonoma is down on his ex-pit. can he come in with new nideas and put this retailer on a new base? they are dealing with a large debtload which makes things more kif. >> when you deal with people,

good quarter at pvh but manny's got, he's a merchandiser but as is mickey. pvh is a fabulous company when it comes to inventory but look at north face. what an innovatoinnovator. the stock has done nothing. look at macy's. they're hurting in apparel. kohl's apparel, nordstrom. apparel is not where anyone is making -- urban outfitters had great fashion. >> have we seen the end of private equity trying to turn these around? j. crew has a couple billion in debt. >> that's a great question. i think it's so risky. >> it's tough. know man marcus is a private company, had its share of woes. hudson bay has done a lot of deals buying sak's. real estate wise looked like it would pay off but the question of the underlying business for any number of the buyers in the

private market. >> mr. brett we'll see in the end when you buy crew in the stores and next store and the next store and you get to the store that's what am i wearing, brione, the store that is -- they have, because you can't try that stuff on amazon. costs too much. you got to say hey that looks good. one day we'll be virtual reality and brione looks dynamite on you and you'll cut. brione. >> don't joke. after that ar demonstration at apple yesterday, that was crazy. >> oh my. walmart, but that could be a plus. >> they'll use it for training apparently for their employees. vr for training. >> wet eight get cramer's mad dash and one looking athe pre-market. we are back in a minute. ♪

say carl, we have a question about your brokerage fees. fees? what did you have in mind? i don't know. $4.95 per trade? uhhh. and i was wondering if your brokerage offers some sort of guarantee? guarantee? where we can get our fees and commissions back if we're not happy. so can you offer me what schwab is offering? what's with all the questions? ask your broker if they're offering $4.95 online equity trades and a satisfaction guarantee. if you don't like their answer, ask again at schwab. it's been over 100 years since the first stock index was created, as a benchmark for average. yet a lot of people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? why invest in average?

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♪ less than six minutes before the opening bell here for tuesday. let a's go tote a mad dash. >> there was a company that had consistently unbelievable numbers, it's the recreational vehicle business called thor and they bought j.co and a bunch of things. last quarter they missed badly and that was tough. david, last night sales up 56%, income plus 41%, operating cash flow plus 26.2%, motorized rvs

up huge versus last year and the stock is up very big. this is an experiential thing. you rent one or own one of the things it say fabulous business that slipped up and i think they're back. they're in the penalty box since the last quarter and you can see people are saying maybe thor is back. they're the biggest, people say winneba winnebago. they are not even a tenth their size. this is the big gun, they're airstream if you want to go for old but they are the ones that a lot of millenials love to rent these. they go, it's a very fun and exciting thing, so watch thor. it's back and it's bigger than ever. >> we'll watch a lot of other things as well when we get the opening bell a few minutes from now. stay with us. we're back on "squawk on the street" after this.

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seconds. interesting action in asset classes, gold near a seven-week high. the ten-year getting back to the day after the election. there's a big difference between november 9th, when it was abo about.05 and november 8th, 1.85. we forget how much it shot up in the hours after the election. we're testing those areas. >> i think we all felt that demand would be very strong and we all felt that there would be an expansion of the budget. that has not happened in part because of the gridlock and i think people are saying you know what? the spend is not going to be that big from government, and also, we've not had -- >> not gridlock, though. gridlock is when one party is not ayou loing the other party to do something. >> i think -- a new form of gridlock. we're in swamplock. i don't think the consumer is weak. i think there's a lot of corporate spend but it hasn't

translated into more growth. it's leveled off and that's a big issue. >> when barron's puts the incredible shrinking consumer on the cover, you don't quite buy that? >> no, i don't. i'm using visa and mastercard as numbers. [ bell ringing ] and paypal. i trust them more. >> lets's get to the opening bell. s&p at the bottom of your screen here this morning, at the big board, the iq west low volatility bond etf celebrating its recent listing. how much this last couple of days, since friday when things got tight in terms of range is about uk thursday, ecb, comey, all happening on thursday. >> look, i think that everyone, i think there's a level of uncertainty but i also think remember there's little to trade on. we don't really have anything. we already had the big thin, apple, right? that was about the ligest things

that will happen, that didn't budge things. we have ford and what, you had, boy, michaels, hd supply. so we're looking at macro events. i feel that people are concerned britain maybe the election is more of a tossup. people talk about may, i listen to wilf having missteps but not a lot of economic data so we're defaulting. oil continues to go low eer. people expected something to happen with oil with qatar but no. it's a supply problem, we're producing so much so i don't know. you can trade off of the fact that harrison is healthier than we thought, csx. >> he does have that oxygen thing but he's fine. hunter harrison got his pay package approved almost

unanimously as you might have expected. that was a unique case, mantle ridge, activist fund, not that large but run by this guy paul halall, bringing in the ceo and benefiting everybody. you see the changes he made in the root schedule at csx and what it's done? >> i want to defend michael ward. there are some things he did, harrison couldn't have up-ended everything. >> he's a cevante. can he control practically every crossing from his home and does. gets on the thing to the engineer, gets on whatever you want to call it, to the engineer, can talk to them and tell them speed up, slow down. he's running that railroad from his living room. >> i got to hand it to him. in terms of going back to fashion for a second. >> from railroad to fashion, yes. >> and your trip to milan. >> we had a nice trip to milan. >> my wife says milan is pretty,

i haven't been there yet. manny tirico, pvh, calvin klein, they've got a direct, a designer here, ralph simon, who just won the award for top men's and women's designer that will help them with sak's, barneys and neiman's. i'm surprised that stock is down, it should not be down. this is good news from ralph simons winning top honors. i think fashion can matter. i'm just saying that fashion is -- >> annual meetings the season is in full force. gm's is today. csx yesterday. >> what do you think? >> i think gm will win handily this contest against david einhorn seeking three seats on the board of directors as a significant kudgell to get them to create two separate classes of stock.

it's going to be a fail for mr. einhorn is what i hear from people close to the situation but see how the shareholders decide. we should know the count on that pretty soon, i would think. usually they already know going in. >> okay, yes, i think the ratings agency put the kibosh on that. >> he said it was misleading in terms of context but it never seemed to pick up a great deal of momentum. >> no. >> this campaign, that he waged. somewhat surprisingly going after board seats as well, not just job owning. >> that one didn't work. you know -- no. that was a non-starter. and kind of people that came and went. >> it seems to. again we'll see what the final tally is for gm as its shareholders make their voice heard in the annual meeting of the company. einhorn himself his performance this year like the last few years has not been particularly good. >> no. >> i believe down 3.4% as of the end of last month. >> you know, we are, it is a little narrow as to your flatness. we have apple up today, but you

know, netflix is up but you really, when it comes to fang, nvidia, when i speak to people now about nvidia, nvidia is the chip behind all artificial intelligence so when youer that a.i. and i know that's going to change intel when they do mobile i., but you open up a lot of things that can talk to you, and nvidia is about voice and control and figuring it out, and nvidia goes up again. we better get other tech stocks that move. nvidia has done a lot of heavy lifting here. right? >> that is a record high on nvidia. remember when we couldn't believe it crossed 100? it wasn't that long ago. >> jensen that conference call was like, is he so far ahead of everybody else in terms of his thinking. >> he's thinking far out and expects enormous change will occur over the next five years when it comes to their chips and what they're going to be able to power and what's going to be able to be done by the internet

of things, and what that's going to mean. we're just at the very, very beginning. >> and nvidia is in every device. >> of the significant change and it's not just nvidia. the internet is going to have so much impact on so many companies. it's going to create a new network of devices essentially. >> that are not code written. that's one of the things jensen is talking about, the internals are very different from what we now expect, and it's like, it is a total next generation chip, as if when remember we had d-rams and intel came one the 286, he's talking about a leap frog next generation and no one else is there yet so you probably wonder why does that stock keep going up? it's because the earnings are going to continue to go up. it's a really marvelous company. >> speaking of all these names on the nasdaq anyway, the spoke had a nice chart of what happens in a year where the nas 100 is up in the first 106 trading days, as it now is.

some years it's up another 50%, for the remainder of the year. other years not so much. down 15%, 20%. >> we need it to be a little broad. the ones i'm looking at, that are unstoppable, the third one will shock you, tesla, people are short that thing. obviously major mistake, nvidia. >> you say it's a mistake, to short tesla? >> you can't get in front of that monster. holy, that thing is a monster. i'm not recommending it. that's a monster. and then square. sq. payment processing. it's almost as if someone's going to make a bid for that company. jack dorsey, i mean you know what? we really should be talking a lot about jack dorsey and square. we should not be talking about jack dorsey and twitter. >> another record high for sq. yesterday cook does his, they did the presentation in which you can now make apple pay a transaction within an i-message.

>> yes. >> people said venmo and square would be on the defensive. >> everybody seems to be winning. dan shulman said everyone says we'll be destroyed at paypal because of wells fargo. we're going to be destroyed because sharf doesn't like visa. spree is a good partnership. we use square and apple pay, you have to use everything. square is a real winner. we use their delivery system. sarah friar, fabulous ceo. jeff dorsey should declare victory and move on. >> i think that's a good idea. >> thank you. >> speaking of personnel moves mr. hendrickson is stepping down after only a year or so in the role. remember joe papa was the ceo of

perrigo, got shareholders to turn down the deal for my lelin which i'm sure every one wishes they had taken. they didn't and it's a tough go. analysts point out this thing trades at 13 times 2017 ebitda, still not chief. >> no. >> they're going to search for a successor to mr. hendrickson. >> now david, myelin, these were all trying at one point to create question. >> mylan had the stick thing, they prevented that, tried to buy perrigo, perrigo got shareholders to say our future would be better without your 275 bucks and two shares, something, i mean it was an enormous premium. then papa goes to valiant. >> the destruction value is rather incredible and they would have paid -- everyone would have

paid way pooch. p perrigo, the one that looks like pepto bismol is what makes that. j&j, one of the nifty 50 again, they are winning back shelf space. for a while i thought i bought pepto bismol. i like to chug pepto, i know you're not supposed to, but you don't need that little cap. just -- >> dow is down 5. retail and some banks not doing well but amd is the best gainer. >> it's back. and you know, i think that the company had that analyst meeting and didn't acquit themselves well. the chips are doing well. they are doing so much in gaming, gaming remains something incredibly strong. amd i've been saying it's an out and out buy. nvidia, i'm not backing down. i think that amd has got really powerful chip sets, they have a lot of new products and i think

they're going to sell. >> home depot supply gets crushed. >> well i mean, when you miss, you miss. and they missed big. i was looking for 66, they come in at 63. i like the sale of the waterworks supply but they announced a buyback. you can't miss 500,000 customers. what does that say? says that well maybe this small, medium sized business jives with the bonds. you want to do a little read through there. >> okay. i like it. thank you. >> read through. >> let's get to bob pisani on the floor. >> good morning, carl, everybody, happy tuesday. weak open but generally weak open around the world as well. want to revisit the middle east for a moment. remember that fallout from the diplomatic isolation of qatar continuing down another 1.6%, another 52-week low but remember only 44 stocks that lift on the qatar exchange and those are mostly energy related. abu dhabi, bahrain, weak, saudi arabia also to the downside. some of the european banks here

i suspect that the ecb position on thursday is influencing some of these bank stocks here. i think nobody's expecting the ecb to change its monetary policy and there may be some disappointment again, having the same problems with relatively low yields here. our yields are higher. european banks down here and our banks, look at sectors here in the united states, we're looking for a bottom on bank stocks, to be perfectly blunt still haven't seen it yet. that's the bank etf, that you stlee. n see there. retailers are weak. michael's came out with disappointing earnings and of course defensive tone here with utilities, gold sitting at that's probably seven-week high, maybe an eight-week high for gold. here is where we are in the markets. lot of commentary from mike o'rourke, jones trading, at a calm despite the flash points. practically monthly terror atorgts on soft targets in western europe.

how many times the vix close below 10? maybe 12, 14, 15 times, happened yesterday and narrow leadership, probably the number one concern that's out there, the in a are row leadership that exists. there is some evidence it's there and the nasdaq 100 if you look at the top five companies, we all know facebook, apple, amazon, smicrosoft and alphabet. 43% of nasdaq 100, five companies, 4 % 3% of the nasdaq0 and 70% of the trading days have been positive this year. the highest it's ever been in history. i think the record is 63% as i recall, not many days you'll see it above that and of course that means that we are on a very long, high moment up stretch here. we don't have all tech new highs in the top five. there's a few others. there's a lot riding on chips as jim mentioned. cadence set a new high, lam research and expedia, and paypal as well here. the big question is the stock versus bonds.

we talked about this yesterday, historic highs on the s&p, and the lowest yield since november hitting it, a lot of people feel something's got to give. i'm not sure it's a contradiction but bank of america this morning in a note declines they weighed in and said we think equities are right. we think yields will move higher and we continue to think the global upswing is intact. they cite the primary reason earnings revisions are at cycle highs. we talked about the improved earnings for a long time. the risks out there, two risk, china tightening and the nasdaq stretch that's been around for a while. right now the dow is down 31 points. carl, back to you. >> thank you for that, bob pisani. rick santelli? >> hi, carl. bob said the operative word, much research says rates will go up, eventually. guess what? today is not eventually. look at a one-week of tens, clearly a drift there, and we've been drifting for a while. we've been out to sea. look at october 1st start to

tens last time we were down here and you can see as carl pointed out earlier we're getting into that kind of post election trade preelection, could you argue we were 170s to 180s. we had a wild november as many markets did. let's hold everything as a year-to-date, shall we, look at year-to-date. bunds, settled at 244, we settled at 22 in bunds. we're above it. gilts hovering at the lowest since october like the u.s. ten-year, under 100. the year-to-date chart looks much like the u.s. chart and gives you a framework for how they continue to go down. they're making low yields in nt from of the election it's hard to say the election jumps out at you because it looks like so many others. there's a lot of issues with banks in europe, the story in "the journal yst regarding pimco

and portuguese or italian banks. portuguese ten-year is at 3.07 and come down to get there. switch that around and look at italy only in the 2.20s but moving up to get there. and finally year-to-date of the dollar/yuan, the dollar is at the weakest level since november, looks like somebody's trying to get on our good side. stories out today they're thinking of buying more treasuries. they haven't done that in a while. the dollar index by the way also at the lowest level since october. carl, jim, david, back to you. >> you got it, rick, thank you, man. rick santelli in chicago. when we come back, views on streaming and the changing tv landscape from the legendary alan alda. dow is down 42.

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alan alda best known for his floelz "m.a.s.h." and "the west

wing." also a writer. he wrote multiple episodes of "m.a.s.h." and won six themmies. "if i understood you, would i have this look on my face?" this is his recent acting rolery aired only online. would you be up for a second season? >> yes, i'd do anything with louie. he's brilliant. >> was there any hesitation going to a show, a project noofs web only, was going to have the support of a network, marketing dollars or was it weird, did you think this is weird? >> no, not at all. when i was a young actor i didn't have any hope of being rich and famous. i didn't have that in my sights. i wanted three things, i wanted

to do material that i cared about with other actors who i respected in front of an audience that got it. if i did that in front of 200 people, aid he be happy. that's exactly what happened with "m.a.s.h." except millions were watching. it's the same principle, the material, the acting and the audience. >> did you ever see "horace and pete" as someone who looks a lot like louie? >> i watched last night's special, talking about suicide, i don't mean so say it was hilarious but -- >> all topics are open season. >> he's a genius. >> a pioneer comes to using the web and getting paid. years ago people paying him voluntarily or not but alda is interesting the way he's taken

his career. >> from day one you knew he was like, i remember talking to my mom. my mom is like he's brilliant. and he is. he is brilliant. louis c.k., someone saw me and said louis c.k. hangs out and next time a huge crowd. >> a lot more of this interview on cnbc.com/binge and hulu, apple tv and youtube. we did get a vote at gm, shareholders elect nominees for the board. rejecting the greenlight slate. >> not in any way shape or form a surprise there. gm didn't really struggle to fight back against that pun. it was not embraced by the population there the idea of splitting into two different classes of stock, one the growth engine which you buy and another for capital and the other a

return of capital. that's over and done with. that doesn't leave the challenges the company has which are not about its capital structure as much as about its business. >> right. >> ford's more challenging than gm. just a point. >> we'll get to trading with jim in a moment. dow is down 32. wab billboard. oh, not so fast, carl. ♪ oh no. schwab, again? index investing for that low? that's three times less than fidelity... ...and four times less than vanguard. what's next, no minimums? ...no minimums. schwab has lowered the cost of investing again. introducing the lowest cost index funds in the industry with no minimums. i bet they're calling about the schwab news. schwab. a modern approach to wealth management.

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[ grunts ] the mummy. rated pg-13. time for kramer. >> corporate governor's conference, a fabulous ceo of citri examine x, was talking about why bitcoin has been strong. when you have ransomware, in other words when a bank, whenever someone is just faced with the ransom from a cyber attack, in europe, they pay them off in bitcoin, and he's saying in europe the big buyers of bitcoin have been people who are afraid of being hit by cyber security, and you cannot use cash to pay off a bad guy. you have to use bitcoin. they've been the buyers of bitcoin. so you wonder why bitcoin is going up, to pay ransom. citrix are not a bunch of jokers they are serious. natural buyer of bitcoin are people who feel like they have to pay ransomware in order to get their system opened.

wow. >> that's crazy. >> what's tonight? >> i can't wait to talk to palo alto, remarkable quarter and e.l.f.'s quarter was okay. we have to find out. we're in a selfie generation and people are going to walk out with makeup and elf is a big seller at target and walmart. >> good to have you back. >> oh, my, missed it yesterday. don't like not being here. >> we missed you. "mad money" tonight at 6:00 p.m. when we come back, goldman's chief equity strategist david kostin. the dow is down off its low at 25. i'm only in my 60's. i've got a nice long life ahead. big plans. so when i found out medicare doesn't pay all my medical expenses, i looked at my options. then i got a medicare supplement insurance plan.

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♪ good tuesday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen, david faber at the new york stock exchange, watching these low ten-year yields, somewhere in the 2.14 range but equity weakness moderated somewhat. dow is down 27 points. >> our road map for the hour begins with that retail shakeup. j. crew's ceo mickey drexel stepping aside after 14 years at the helm of the company. we've got the details. >> apple's new product push

unveiling a homepod to take on amazon's echo. is the street impressed? and oil falling again on fears of qatari rift could harm opec cuts. live report straight ahead. 9 of the 11 s&p sectors are positive for the year. tech is leading the way up over 20% as the nasdaq posts another all-time intraday high during monday's session. for more we're joined by goldman sachs chief equity strategist david kostin. good to have you. welcome back. >> nice to see you, thank you. >> why are ranges getting tight the last couple of days. are we nervousness ahead of some of the binary outcomes? >> the way i think about it is we have a goldilocks style economy, not too hot, not too cold and as a result relatively modest slow pace of fed tightening. one next week, one expected in december so as a result we have an environment that's very

conducive to tailwind for stocks, on the positive side. but a modest growth environment means that growth is still relatively scarce. and so the growth stocks which you highlighted tech is a prominent area, are likely to continue to do well, and outperform, provided that the valuation of not excessive. that's a key ratio. if you're looking for where is there excesses in the broad market economy, it's pretty difficult to find, we could argue, valuation, broadly speaking at a high end, maybe unemployment, at a very level, that leaves potential risk for higher inflation but basically you want to be in tech and particularly where there's secular growth and a group of stocks where you have revenue growth that's double digit and that's still relatively rare and that's really going to be focusing on tech. >> does that mean sectors that are ex-tech will tread water? >> broadly speaking, the market could move a little bit higher, but from a tactical perspective, the market trades a little bit above where i would expect fair

value is, closer to 2,400 and fading a little bit later this year. the expectation earlier in 2017 was that you would have some political and tax reform and infrastructure spending. that's been pushed back and arguably a 2018 event. 2% inflation. top line revenue growth growing around 4%, with 1% accretion. that's persistent, consistent with basically a modest ly increasing market 2018-2019. revenue growth that's broadly speaking for nominal gdp and group of stocks that grow 10%, 15%, 20% in terms of revenue, google, apple, amazon prominent where they trade enterprise

value to sales is the sweet spot. >> we had this debate upstairs in makeup. >> you look beautiful. >> i had the curling ironing out. the excessively low volatility the increasing geopolitical risks in the united states and globally? >> we look at vo will, in foreign exchange, rates, credit, vol, volatility across the term structure incredibly low. what is the destabilizing event? very difficult to identify that. in hindsight it will become clear it's apparent in x, y, zen it's difficult and not clear that there will be something that will resolving it self in or cause an increase in volatility. political, geopolitical risks you mentioned, clearly something

to worry about but going back to fundamentals a group of stocks whose sales and revenue growth is not predicated on either political activity or new legislation and it's not predicated on economic growth. there's a structural shift as advertising is shifting more towards the internet for example or people use more technology. >> the dollar is reversed in treasury, maybe not fully but back to november levels on the yields as well. why are stocks 15% to 20% higher since the election. do you think there's confidence in the trump agenda in the stock market you're not seeing elsewhere? >> there's an expectation the economy will continue to grow at a modest pace that's a positive and rates at 215, and a tailwind

to a higher valuation but the market trades something in the order of 18, 19 times forward earnings which is a very, very extended level of valuation. the market has shifted and started to reward companies that are not buying back stock and so reward some of the companies that are investing in capital spending, some focused on returning cash to difficult lends, some of the areas where there's been a shift in perception. broadly speaking the market has moved generally higher with the trajectory of profits, and profits are moving slowly higher this year. >> would you expect fang to retrace at all? this year? or does the first half blockbuster mean the second half blockbuster? >> those stocks will continue to move higher. goldman sachs have buy ratings on all three of the companies i just mentioned but the idea of revenue growth of 10, 15, 20% is what would support those stocks moving higher. if there's a reversal, the big issue would be if you have

economic growth accelerate. in an economic acceleration environment you want more value, more cyclicals as opposed to secular growth. this is a regime where we have modest economic growth of % real gdp, that's consistent with tech moving higher. >> you and i were talking tech, fang, large cap global tech or something more narrow? >> one of the surprises this year has been the strength globally in economic activity, relative to the u.s. u.s. is growing but not as dramatically seeing stabilization in europe, so that would be more consistent with a larger cap stock which have more revenues internationally as opposed to smaller domestic companies. >> questions specifically around the comey testimony on thursday, is that a market risk event? >> well, any geopolitical issue would be at risk but it's not clear that is unique. people would be interested in. mark wi

market will focus on it but it seems the investigation would take a longer period of time. this is his one testimony. >> where are you on tax reform probability likelihood and impact on the markets? >> the expectation at goldman is that there will be some tax reform, probably more likely a tax cut but probably won't take effect until 2018. now, portfolio managers which had been expecting and focused on this earlier in the year, have pushed this back, and the expectation is you look at paying for that sometime in late third probably fourth quarter when there's much, perhaps more clarity on what tax form might look like. >> good stuff, david, thank you. >> while you guys speaking we have economic data. jolts numbers on jobs. rick santelli with the numbers. rick? >> you know, this is always abinteresting number. it's not intuitive. this doesn't include the most

recent read. 6.044 million, we'll just round it out to 6 million, we've never had a 6 million handle on openings which is the o in job openings and labor turnover, so that speaks volumes in and of itself. by looking at things like the quit rate separations, we could get an idea of how emboldened some of the thremployees are an the quit rate holding steadily 2.1 against this, it gives a picture that employees feel the extra mobility and power? the issue is, it doesn't add up. it doesn't add up with the rest of the jobs numbers, the growth numbers, the productivity numbers. but nonetheless, if you are just pegging your trading portfolio on a strong jolt, you're a happy camper today. sara, back to you. >> certainly paints a sign of a healthy labor market. rick, thank you. >> when we come back, it is the end of an era at j. crew as its ceo, mickey drexel announces

he's stepping aside. we've got the details oen what it may mean for the retailer. plus apple's latest innovations. we'll break down what they actually mean for the stock with a pair of analysts. "squawk on the street" will be right back after this quick break. think again. this is the new new york. we are building new airports all across the state. new roads and bridges. new mass transit. new business friendly environment. new lower taxes. and new university partnerships to grow the businesses of tomorrow today. learn more at esd.ny.gov

is unlike anything what we have ever faced.. [ sinister laugh ] what's happening? you have been selected. [ dramatic music ] give in to me. i'm scared. [ screams ] [ dramatic music continues ] [ grunts ] the mummy. rated pg-13. quality and value. >> your price points seem to have been moving up. quality may be, too, i understand that but these are not the easiest of times in this

country for the very top it's fine. and that's part of your customer base but you want to be available for everybody. >> right, absolutely. but our opening price points on knits, socks, accessories are at a price that, frankly, is affordable, and we are very competitive. >> that was mickey drexel five years ago on the cnbc documentary "j. crew and the man who dressed america." drexel stepping down as the ceo but will remain chairman. james brett will take over for drexel in july. the changes come amid ten quarters of declining sales under drexel's leadership and that decision to go upscale a bit five years ago, which he was articulating, and take their price points to a level that was above some of their typical shoppers, proved to not be the best idea at least at that time and one of the reasons they've been challenged, though there are so many others. >> so many things come to mind. first the fall from grace

because at one point mickey drexel was the bench mark for the industry, gap, j. crew, a merchandiser who understood fashion. >> yes. >> and jim brought this up, if he can't do it, who can is the question. >> it is. they hope mr. brett will be able to in some way change the direction of the retailer, which is suffering under a very large debt load as a result of the go private transaction that occurred a number of years back but you're right. it is well beyond perhaps any one person's ability to deal with so many of these trends we talked so often about, of the decline of the mall, and the rise of online, and frankly, what drexel admits at least one i talked to him as well simply shopping is no longer the sport so to speak that it once was, the most favored sport of americans, that has changed. >> it is for me. one retailer that has managed to buck the trend and do very well in on online world is west elm. look at the stock today of

williams-sonoma getting hit. i went back to the last call and west elm is the shining star of this company. the cfo says the brand has reached more than $1 billion. it's grown comp. store sales double digits for seven years straight and williams-sonoma expects it to be their largest brand over time, very bullish on the prospects for west elm. this could be a real loss because this is the guy who has been at the helm, they've seen it in e-commerce and managed to bring it to the store with not a huge footprint across america. >> no. nor does j. crew have that user footprint given they have closed a number of stores. they some successes, the made well brand, but it's small but it has had success and drexel's legacy is cemented. he did transform the gap after a couple of, for years though he did leave there, got fired as he said during our documentary, but old navy reestablishing banana

republic, changing it completely and the gap itself and j. crew had incredible success as well. there's no doubt he had the pulse of sort of the shopper for a long time, but it's been a rough couple of years. >> and it speaks to the leadership. today is also the annual shareholder meeting of macy's i believe. you think about best in class in terms of retail ceos, terry lond gren no longer the, kr eo but the chairman and these two companies had that at one point both of them had enormous struggles, missing fashion, traffic. >> turnover at macy's, ralph lost thai ceo and mickey, too. at least three in specialty. >> yes. >> department stores. fascinating. we'll keep our eye on more developments. oil prices down for the third day in a row over concerns about that rift between qatar and several arab states, whether that would undermine a deal at opec. we'll get a live report from riyad. started out with a relatively weak open but dow is making its

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getting survey results from the business roundtable. kayla tausche? >> ceos in the u.s. are still confident in the economy but that flattened after a sharp jump last quarter. the composite is a mosaic of sorts for the expectations of six months. it saw a slight uptick but reached its highest level in three years. the 148 ceos surveyed remained bullish on sales and expect slight increases in capital spending, but interestingly, plans for u.s. hiring in the next six months actually dropped as did the outlook for this year's gdp growth. those ceos now expect 2.0% gdp for the rest of the year, a decrease of 0.2 of 1% from the previous survey three months ago. this survey took place between may 3rd and may 24th, a three-week period where the house passed the health care bill, director james comey was fired and an overcease trip with

mixed results from allies. ceos want tax reform. the organization's chair jpmorgan's jamey dimon and ceo josh bolton say the report shows the confidence in the prospects for tax reform going forward. the white house legislative director told reporters last night tax reform remains a fall agenda item, though acknowledging there is a lot to do between now and then. carl? >> kayla, thank you. sounds like ceos are still hopeful on the legislative agenda. meantime, qatar's foreign minister announcing doha is ready for mediation efforts, after a group of arab states cut ties with qatar this week. hadley gamble is in riyad with the latest. >> reporter: sara, they may be open to mediation but it has not stopped saudi arabia from escalating tensions just in the last 24 hours. they've shut down the offices of al jazeera tv group and also asked qatar airways employees to

leave the country. in the last 24 hours, 175 regional flights have been shut down. they've closed the land border with qatar between saudi arabia and qatar that has major implications for the import of food into qatar, basic staples of life, and questions of course over whether or not the united states is going to really back the gulf countries saudi arabia the uae and bahrain as well as egypt in their argument with qatar. earlier today we heard from u.s. president donald trump on twitter and essentially he seemed to be showing his support for the gulf states in their argument that qatar's questionable foreign policy and what they've been basically using all of that lng to do has been something that's detrimental to what the fight against terrorism really is. one of the things of course is their support for the muslim brotherhood in egypt for hamas, hezbollah and obviously for having this televan diplomatic outpost in qatar. as part of the back story here, all of these royal families in the gulf countries are interrelt related, all intermarried so it's rather like basically like

a game of thrones without all the gratuitous sex and violence. >> thank you, hasley. for more on the political implications on the oil industry we're joined by francisco blanch, nice to see you again. >> hi, thanks for having me. >> specifically on this question about the oil market, does the rift with qatar among the arab states change the supply picture for oil? >> well, it doesn't immediately, but i think it's very concerning, the escalation of tensions between the neighboring gulf countries, because here you have the world's largest crude oil exporter basically breaking out diplomatic ties and commercial ties, too, with the world's largest liquid gas exporter. so a consequential to the energy

markets and wie may not see the impacts on a day-to-day basis but it could end up being bullish or quite bearish if the opec deal unravels on the back of all these tensions. >> so is the idea on the bearish argument qatar is an owe o peck member and may not be a major oil producer it has less incentive to stick to the production cuts and therefore might start to abandon that deal and win back market share and everybody else will follow suit? >> i'm not sure which way it will go. the last 48 hours are hectic but if you think about what happened a year and a half ago, the dispute between iran and saudi over the decision in saudi to put to death a shia cleric led to a big breakdown in markets,

and we saw very shift downdraft in oil prices in the early weeks of january. true, we've had a warm winter as well, but part of the reason we went from 40 to $25 a barrel is because saudi went over the head and in qatar canceled to neighboring gcc countries, not being allowed to fly through iran to maintain some of the routes that, is now being allowed to fly, one of the fastest growing airlines in the world, qatar airways is committed to do. so again the shifting geopolitical dynamics in the middle east are certainly something to watch very carefully. >> are you saying this exacerbates tensions between iran and saudi arabia which are both major producers? >> absolutely. i think the whole point of the measures taken by saudi and

emirates on qatar really targeted at qatar are pulling away from any kind of relationship with iran which is again the comments you were making about president trump's policies on the middle east and the big shift we've seen frankly from where we were six months ago, in the obama administration. there's been really a 180-degree turn in american policy in the region, and that's i think partly what is triggering all these changes. >> let's cut to the chase. i saw a headline that earlier this year you predicted we could see $70 by this summer. >> right. >> brent just dropped below $50. doesn't appear we're head in that direction. >> no, it doesn't and there's a number of reasons why that's happening. inventories haven't come down fast enough and demand softer than expected. the first quarter we have a very warm winter and i think that basically left us with a very high level of inventories to

draw from, and then of course shale has come back faster than many of us expected. so we've actually lowered our numbers in the last month or so. we are now expecting an average of $52 a barrel for wti this year to be clear, and think we'll be around $53 a barrel next year. the real change is not so much what happens this year. we still we'll get tight 2017. we'll sigh a deficit of half a million barrels plus in the second half of the year but importantly, for 2018 we're looking at a balanced market. and that's the real issue the market is trying to understand, if we have balanced the demand in 2018 and the opec deal unravels sometime in 2018 after the russian presidential election in march of next year, what happens to the market then? that's why i think people are getting anxious that the comeback in shale is too fast, too deep and inventories haven't come down fast enough. having said all that, inventories are coming down.

sorry g ahead. >> one last thing, francisco. do you believe that there needs to be more adjustment on opec's front, and does thrift with qatar throw that into question? >> it does a little bit. i mean, i don't think opec needs to cut more. i think they need to be patient. we need command to pick up. we need growth to improve. cutting supply more aggressively could possibly lead to a further market share loss across opec and russia relative to the u.s. shale player. i don't think they want that. these losses could become permanent and that's a big risk for the cartel so very risky path to pursue. it puts a little bit of risk so the risks are initially to the downside, and as tensions continue to build, remember the middle east is a pressure cooker, and the heat is being turned on. so it does create more of a bullish outcome, six, 18 months down the line as those tensions continue to creep up higher. >> for now, energy stocks

remaining higher, prices lower. francis francisco, thank you, from barge of america merrill lynch. dominic chu a quick market flash. >> watching signet jeweler shares down 2%. the company said in a regulatory filing its c.o.o. brian morgan resigned from the company because of somery violations at signet unrelated to financial matters, came out in a filing after yesterday's closing bell. we'll watch the shares closely. the shares down 45% already year-to-date, one of the worst performers in the s&p. back to you. >> dom, thank you very much. when we come back the big apple unveil, what the street has to say about the latest innovations at wwdc and the impact on the stock. amazon meantime announcing individuals on government assistance can now get prime at a special price. got details oen that, when "squawk on the street" continues. the doughnut in a doughnut in a doughnut.

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good morning, everyone. i'm sue herrera. here is your cnbc news update. london police releasing the photo and name of the suspected third attacker in the london bridge attack which left seven dead and 48 wound . 22-year-old youssef zaghba is believed to be abitalian national of moroccan dissent. afghanistan's president said last night's suicide truck bombing killed 158 people, makes it the deadliest single tack in the country since the 2001 u.s. invasion that. topple the taliban. a georgia woman is behind bars accused of leaking a top secret document about russian meddling in the 2016 election. 25-year-old reality winner is charged with sending a qualified report to an online media outlet. prosecutors said winner admitted she was the leaker. bill cosby arriving for day two of his sexual assault trial.

judge is expected to decide if the mother of one of his accusers can testify. kelly johnson told jurors on monday she told her mother after cosby abused her in 1996, when she worked for his agent. that is the news update this hour. carl, i will send it back downtown to you. >> sue, thank you very much. sue herrera. apple diving into one of the hotter tech trends during the world's most valuable company announced an augmented reality developer kit and answer to echo and google's home the $349 priced home pod. for more, brian white the global head of technology hardware and software, robert managing director at guggenheim securities. good to have you. >> good morning. >> tim cook said we have six big announcements, how many of these move the needle? you've already upped your price target a month ago. >> i think what we saw yesterday is that ecosystem at apple is alive and well. we saw a plethora of announcement. it was a very long wwdc keynote,

and it wasn't just software this time. there was a lot of hardware innovations that i think homepod was actually the star of the show. >> star of the show. it's definitely stolen a lot of the media attention and you're not moved to adjust your targets today as a result. >> there's availability. i think this is a go-to around the holiday season if people can get their hands on it. let's see how it rolls out. iphone 8 is going to be a huge needle mover over the next year, and we're going to wait for that. >> can t costs nearly double the echo speaker. >> iphone is the needle mover.

i think the big focus on a.i. is important because it actually sort of increases like lit price what people are willing to pay for a phone, the more the phone can do the more you're willing to pay for it. the homepod is probably pretty small revenue standpoint. i was a little disappointed no the with the product, looks great but the fact it's six months afor a product seems like they should already have one out there by now and secondly, the 350 price point that doesn't get them into the low end. amazon's echo dot at 50 bucks is really what moves a lot of volume and little disappointing apple didn't do a low-end version. >> what is the size, brian, of this market? how many consumers is amazon, google and apple chasing after? >> it can be a big market over time, because you're going to want to control your home with this and as iot comes into vogue

this say great product to have. i look at it, apple has a billion ios users, ultimately that's the opportunity for apple so that's an enormous market. 349 might be higher than peers out there but it's a reasonable price for someone to get a lot of value add out of a speaker and a.i. assistant. >> robert, as it relates to ar kit and the vr demo they did with industrial light and magic, how does it compare to what zuckerberg showed off at f8? are we in a race here to see who can put the coolest tools together to have industry adopt some of these vr tricks? >> well yeah. i think there are two separate things there, for vr i think apple's focus is developing vr content on max, and sort of using the power of max to do that. i think on ar, where there's a huge opportunity for apple because if you look at the iphone, it is a powerful platform to run the kind of, you know, local processing you need for ar, so by you know,

explicitly going after augmented reality developers with the ar kit, and sort of showing that hey, we have the most powerful mobile platform out there, i mean, i think the ar side is really where apple has a big opportunity. >> what did you make of that? is that a two to five-year story still? >> we go to a lot of vr-related conferences and i can tell you vr is still two to three years out. ar will ultimately be a market probably that's three times as big as vr. >> really? >> ar is going to be a bigger market opportunity and so -- >> why is that, brian? why? >> i think because of the advertising opportunity. you look at pokemon go, we cover snap and you see what's happening there. vr is really, it could be a business use but also like a gaming consumer use, primarily gaming today but ar can really be enormous. so what i really loved about this conference, these areas that apple was not in, with home pod, with ar, with vr, they made

the announcement and now they're there, i think that's huge. >> what about the stock price, still the dow's best performer this year up 33%, rob. it's only trading, some would say, 17 times next year's earnings which is still less than the overall market and certainly less than some of its big cap tech peers. >> i think apple has more upside. you back the cash out trading at 12 times next year's numbers, so apple's always relatively cheap. i think there's more upside though. >> what about you? do you agree? >> yes, i mean 11 times ex-cash we call it the most underappreciated stock out there, and talk about the sugar water companies, now that warren buffett is in apple, coca-cola traded over 20 times, apple is growing over 30% a year and maybe that's not the growth going forward, maybe it's 10 to 15 but it's significantly undervalued. >> you don't think apple needs to ratify what the nasdaq has

done in the last three weeks and a few weeks since apple set its own record. now it's all nvidia and alphabet and amazon and netflix? >> you have valuation. you have this capital return. you have these innovations that we saw that were kind of question marks, will they be there. then you have iphone 8 cycle. i really feel like people want to own this, and i think there is underneath all of this, i think the valuation is improving. everyone was wrong about apple being marginalized in the smartphone market. >> interesting. we'll see if we get more headlines out of the conference today. brian, rob, thanks, guys. >> thank you. speaking of amazon, amazon making a big announcement for people who receive government assistance. deidra bossa joins us with the story. what are they doing? >> good morning, sarah. amazon is offering a nearly 50% discount for people on the supplemental nutrition

assistance program, better known as s.n.a.p. or sara mentioned food stamps. the segment makes up nearly 20% of the u.s. population. it was announced the discount would mean people on the government assistance program would pay $5.99 a month for its prime membership versus the $10.99 price tag for others. that comes you the to 70 bucks a year versus the regular $99 a year for access to unlimited two-day shipping, video and music content, as well as the other perks that come with a prime membership. now this also makes amazon ecosystem more accessible for those on government benefits, a place that walmart currently dominates. last year walmart generated about $13 billion from shoppers using food stamps and it's been working hard to keep these customers as more go online to shop. now amazon is going after this stronghold with this discount. this uhm isser it will start accepting food stamps for its grocery items. today's announcement comes on the heels of likely changes coming to the food stamp

program, a few weeks ago president trumpl's budget proposed massive cuts to s.n.a.p., a move that could hit his supporter hardist. the move by jeff bezos and amazon could be seen as a message, saying we support you and it's no secret bezos and the president have had their differences. >> thank you very much. as we go to break look at shares of paccar, one of the biggest u.s. truck makers. upgraded to buy on what ubs calls improving trucking market conditions. new product taking center stage in the fast food breakfast wars. we'll tell you what it is, with the dow down 29. listen up, heart disease. you too, unnecessary er visits. and hey, unmanaged depression, don't get too comfortable. we're talking to you, cost inefficiencies and data without insights. and fragmented care- stop getting in the way of patient recovery and pay attention. every single one of you is on our list.

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a familiar pattern, tech outperforming right now. treasury yields are lower. out to the cme group, rick santelli with "the santelli exchange." >> good morning, sara. sean rushton, thanks for taking the time. >> hi, rick. >> you know, whether it's jack kemp foundation, whether it's devotees of nobel economist robert mundell on your own writings which of course are in lock step with both of those, you believe that fx volatility is the enemy and we need to do something to calm it down. how bad is it and why is it not a good thing? >>right. the world today is divided into three big blocks. you've got the dollar and the bloc countries around the dollar area. you got the euro, which is 19 economies bound together plus a lot of africa, and then you've also got asia, which is another matter, but the two big blocs, the euro and the dollar, have

been wildly unstable for the last decade, swinging by about 20% margins, eight times, and most people don't really realize that, when you say that, even to financial professionals, they're surprised, but it's true. the two biggest currencies in the world that define global capital flows and trade flows and set a lot of prices around the world asset prices, have been swinging by huge margins, and to our way of thinking, that helps explain why this has been such a lousy period of slow growth, where people are unwilling to make long-term capital expenditures, and long-term investments, and why the system looks the way it looks, which is leading to instability in political upheaval and other things. >> and, let me stop you there. it makes sense. nothing lower on the food chain than the currency with

economies. big economies and two different currencies and something in air quotes as relatively new as the euro those make the life of exporters, manufacturers in general, government officials very much more difficult, but the problem i see is, you know, back in the '80s, we tackled taxes. we also tackled this problem. i believe it was 1985 we had the plaza accord, another reagan administration issue that is being looked at. the problem central banks didn't own a third of the tradable bonds in the entire world, isn't that an even bigger problem and don't things like that have to be addressed long before we sit down and try to have a currency discussion? your final thoughts. >> i think if you get the inflation rates roughly harmonized, you have to have an agreement that does address the issues you're talking about, but rolling those off the balance sheets with stable exchange rates, having that as the backstop, i think that would do

things like improve the velocity of money, the spending in the economies. that would help immeasurably to loosen up the system and make it work better on a global basis. >> excellent, sean, great suggestions. i don't know if they're grown up enough in d.c. or in brussels or in tokyo to do it, but it sounds good and i think that discussions need to be ongoing. thanks again, sir. david, back to you. >> thanks, rick. >> thank you, mr. santelli. send it over to john fort what is coming up on "squawk alley"? >> apple dropped hints about the next iphone and where investors can expect to make money in the next year. we'll dig into that. walter isaacson will talk about president trump and the gop's agenda when it comes to the economy. we'll talk to avia's ceo and ul that coming up and more "on squawk alley."

it is the latest move in the fast food breakfast wars which are still going strong. taco bell introducing a new item

to its menu. jane wells of course joins us now to tell us what that is. >> reporter: it is salsanity. is breakfast salsa somehow different? i have in front of me taco bell's new breakfast salsa along with its traditional mild salsa. what's the difference? also here, mcdonald's salsa, jack in the box, del taco. we are going to do a taste and tell. first some data. taco bell has been killing it thanks in large part to breakfast. same story sales last quarter jumped 8%. 54% of the customers surveyed east breakfast at non-traditional times. 43% want breakfast served all day. breakfast is the only meal time at restaurants which is showing growth, thanks in large part to taco bell, mcdonald's and going out to lunch is quote, a dying tradition. okay. taco bell came out with this breakfast salsa and it confused the internet saying it's a special salsa for the most important meal of the day.

what's the difference? i'm looking at the grnts betwin between the breakfast and mild salsa. breakfast has less vinegar. looking at i, it has more texture to it. here we go. here's the breakfast salsa. it's like catchup with jalapenos. here's the mild. that tastes more like regular salsa. that has chili pepper in it. this would be great on eggs. compared to mcdonald's. excuse me. that's way too salty. jack in the box. jack in the box i actually like. their tacos are really kind of gross but still good. all right. that's like piccante. finally, taco bell.

that's my favorite. but before we go i want to tell you one more thing. if you look at the chart, taco bell and mcdonald's have outperformed the broader markets so far this year. del taco and jack in the box have not. the greatest threat may not be each other but mom and pop stores. there is new research suggesting that mom and pop, independent restaurants are going to grow faster in sales over the next three years than fast food chains thanks to things like yelp. people are going back to independent restaurants. not me. i tend to continue to eat fast food. back to you. >> jane, listen, i live for a jane wells taste test. i still remember the bacon milkshake. >> oh, my god. that was from jack in the box. that was another kookie thing. that was a love/hate thing. that was gross. that was gross. i can eat anything but that was gross. >> i just love that you brought up the tacos from jack in the

box. there's a cult following of those. i'm not convinced there's any meat inside. >> no. there's a lot of grease. it's all fried but there's something so comfortable about that. especially late at night, not necessarily for breakfast. they really do have pretty good salsa but i have to tell you, excuse me as i use my finger. yeah, i am. del taco's the best. it has the most depth to it. >> you spent a lot of time figuring that out. >> i can get on board with breakfast salsa. >> jane, thank you. >> what will you have with a breakfast burrito which is all we eat out here? >> eggs and salsa. jane, thank you. taste test, stock charts, she does it all. speaking of food and sugar, seattle's the latest city to impose a sugar tax on consumers. distributors of all canned sodas, juice, energy drinks sold in the city now will have to pay a tax of 1.75 cents per ounce.

philadelphia, san francisco among other big cities that have enacted similar measures over the past few years. part of a growing national movement seeking to curb consumption of high calorie beverages. the tax will go into effect in seattle in january. i did just get a statement from coca-cola reading in part we are disappointed that seattle city council members approved a beverage tax today. as we have seen in philadelphia and other places, according to coke, beverage taxes simply don't work, they don't make people healthier and they are unsustainable way to fund important programs. they hurt the local economy, small businesses and people's jobs. the american beverage association which represents some of these companies went even further and said that it exacerbates inequality and is a job killer. we have seen pepsi announcing layoffs in philadelphia as a result of this. >> right here in new york some time ago under mayor bloomberg, it did not succeed but it continues. diabetes is one of the key things. government funding for it and

how much health care costs. >> it's not just soda. sunny delight, gatorade and more. take a look at stocks at this hour. nasdaq remains positive. just barely. dow is down 27. s&p down three. tech outperforms. energy is also higher. we've done well in life, with help from our advisor, we made it through many market swings. sure we could travel, take it easy... but we've never been the type to just sit back... not when we've got so much more to give when you have the right financial advisor, life can be brilliant. ameriprise

welcome back. today's sector sort tech stocks lean, s&p so far biggest tech gainers, microdevices up over 6%. that does it for "squawk on the street." we go to the start of "squawk alley." good morning. it is 8:00 a.m. at apple headquarters, 11:00 a.m. on wall street. "squawk alley" is live.