beleeber, he's beating the beatles record having two top billboard songs for the most consecutive weeks. his songs "desposito" and "i'm the one" spanning 13 weeks at the top of the charts. the beatles had 12-week runs, two tracks in the top three back in '64 and '69 we're done the biebs might move to montclair, new jersey, the garden state >> he was here with styx, daughter's rehearsal >> make sure you join us tomorrow "squawk on the street" is next ♪ congratulations to the golden state warriors winning their second nba title in three years. welcome to st"squawk on the stree street". i'm carl quintanilla with jim

cramer, faber is off president is in wisconsin, surp positive, yields tick up on decent core ppi. tech stocks taking a tumble. treasury is out with its plan to loosen bank regulations and is the worst over for under armour? the stock having a nice bounce after the warriors take the title. first up, tech stocks looking to rebound from their worst two-day streak of the year jim looking at some of the percentage declines for fang, somewhere in the 4% to 5% range. >> what happened is you didn't get follow-through other than the negative apple you got a downgrade of adobe that lasted for about 30 seconds. there were no substantive calls and by the way no preannouncements that these great tech sell-offs that we've had there usually is a linkedin tableau data, upgraded today by goldman. there's something to hangon to which says tech has slowed down

but we didn't get that, which made it so it was more of an air pocket than it was the beginning of some gigantic rollover. just didn't get it i was looking for something. i came in this morning and said okay, who is not doing well. cheesecake factory, hard to, i don't know, the technology there. >> lowering guidance today >> a lot of tech there scotts miracle gro, not a lot of tech i tried to use it but people say that's too much chemical i thought that would be up because of the people saying they have hydroponic, but that's what we're faced with. we don't come in and discover that netflix has preannounced, we didn't get something from sales force saying it looks like you can't make the quarter or workday is discouraged, without something fundamental we can't follow up. >> and analyst calls are not enough to do it. >> no. >> goldman on shopified today is not going to do it >> i totally get that, the stock, the guy has been right.

what a huge run he's had he's taking it down because he doesn't want to be caught into a friday situation i look over the things that people downgraded, i didn't get anything i was surprised just to be clear that we didn't get more defense. i would have thought people would be out in full force saying they did not kill the stocks yesterday i thought they get out of the fox hole, the pill box and re-recommend facebook. that did not happen. maybe that happens tomorrow. these analysts don't realize the old way the game is played you get hit on friday, you stay under the table monday, maybe even take a day off, go to the beach and come in tuesday with guns blazing these must be too young. that was the routine from 1983 until a few years ago. so we did not get enough disappointment to take things down instead we get good news about micron, quiet defensive apple, that kind of thing >> b of a has their fund survey managers out and the second month in a row, most crowded

tried is long nas 38%, it was 26% in may >> you know, mike, the problem with the most crowded trade if you go away and go to the banks, controlled destiny, no, in the hands of the fed retail, controlled destiny, no, in the hands of the consumer an amazon health care, controled destiny, no, really the disarray of the government so when you get these big sectors, do you not get them, you can't have them say you know what we're going to have a great quarter because in the end there's too much negativity. i like merck what comes out merck has a drug that did not do as well as we thought for myeloma. without knowing for certain the fed will raise twice you don't have certainty but when it comes to adoption of the cloud and internet of things what can i say? it's just a very powerful force.

>> so you're not an advocate of rotating here. >> i was hoping -- >> into laggards >> i was hoping more than just under armour and the golden state win. under armour bottomed not because of golden state. it's selling well at kohl's and that's a wake-up call. kohl's is doing very well with nike and under armour. ron barron put up an impassioned speech about under armour. i don't have enough negatives in tech i thought cheesecake had a good quarter. it's not all fat they have a menu just so people know they have a menu if you don't decide that you need -- you don't have to fast after going to cheesecake. but there is a kind of it said the east is not doing that well. the scott's miracle gro is disappointing. why? i've been trying to figure out

why home depot goes down almost every day since the great quarter. people will read through maybe the guaardening season is not ta strong we've had a very negative reaction to home depot's quarter. >> we'll watch for that. ron barron on "strauquawk" this morning. here's what he said. >> to 2030 i happen to think the stock market and the economy are both going to double as they have every 12 or 13 years for my whole life that means the dow jones will be somewhere around 38,000 or 40,000, up from 21,000 presently and it means that gdp, which is now about 19.5 trillion will be about 38 trillion then >> all right, so there's boaron >> we're not that close so i can't say his forecast is outrageous, because we're a little far from there. i will say this. he is kind of a warren buffett

attitude toward life, i think the underlying them is we have progress, and when we have progress things get better i don't know if anyone's been able to dispute that it isn't like we're back to downsizing so i think people feel if you listen to the poll, it's technology. elop musk is a visionary and visionary per share is kind of something we give to reed hastings, and we give to jeff bezos and elon musk. >> baron, we don't talk about them often but they take their target from 193 to 464 >> i saw that leap frog target tes tesla, they. you the it in reverse and recharged and they put -- i don't know, those bears are

looking, whoa. they got tire treads all of them and difficult to stay short that stock and hard to borrow there are die-hard guys who say that he can't, musk can't pull it off and all i can say is you know what? they certainly have demand they have demand >> yep >> and you see them everywhere now. that's a big difference. >> that's true for a long time it was a west coast phenomenon >> i went shopping this weekend because i like to shop and get a real sense, faber is not here is i had to shop twice. i go through, there's tesla, tesla in the parking lot i'm like, wow! i guess i got to get a tesla maybe my 2005 lexus wagon is time to retire that. and i love that car. eric saltz i'll be back, don't worry. >> he's not going to let you forget >> i will not forget the treasury department plans to soften bank rules put in place after the financial

crisis the 150-page report features proposals including restrictions on bank's trading operation, lightning the annual stress tests and reducing powers of the consumer financial protection bureau, basically protecting voelker in principal but not for banks less than 10 billion >> you have to have the federal reserve and congress and of course treasury. behind the scenes you have bank regulators and this is a part of the denuding of the bank regulators who put their feet o jai jamie dimon's desk that's going away. mnuchin does not want heavy-handed regulations if you can principle, able to buy stock for a client and not worry about some sort of regulator saying hey, come on man, that's really what you're doing is buying for yourself that's going to make goldman do better and if you wanted to know

who does better in these rules in this environment it is goldman sachs but i also would tell people it takes many to tango. the federal reserve could be in there. you still have federal reserve holdovers who i think are still more aggressive. it isn't they can say we want a gigantic dividend boost for all the banks. that capital has to be redeployed the only way to get the bank stocks moving unless we get two rate hikes which steve liesman has been adam ant we will. i prefer liesman to "the financial times" guy >> who argued yesterday june and done as far as other policies go mor creeping conversation -- there's the mueller trial balloon that the president was considering. >> i remember writing this story about archibald cox and nixon and the special prosecutor >> would that be negative for stocks we'd freak out >> we have an all republican congress it would be a gold buying opportunity is the way i want to put it

there are too many of us old enough to remember the saturday nice massacre when archibald cox was fired. he was a great american like mueller and when he was fired, you kind of said, well, nixon was guilty and i think there will be too many people saying trump must be guilty or wouldn't fire mueller because mueller is regarded as a great american >> there's whispers that congress may curtail their six-week recess to work on tax reform >> that would be fabulous. could we please throw in that debt ceiling would it kill us when the secretary mentions it i always think this is something that the republicans and democrats would fight about, but the republicans? come on, let's move on and tax reform, yesterday the downgrade of apple, we didn't talk about it enough one of the points was hey listen, tax reform, repatriation not going to happen. maybe only $10 or $15 because the rates may be higher. if you got the repatriation we'd justify a lot of tech and industrial buys. we need to see that.

we have to have that >> dealbook has a piece today about why ceo confidence measures are so high, but m&a is down 40% from q 1 '15 and we said with faber the other day a lot of it is tax uncertainty >> if you don't know what's going to happen, you're not going to take a radical action like an m&a. i did a corporate governance conference and we got that same report that the jpmorgan fellow said we got a lot of dead deals. look, without some clarity, it's just not worth it because maybe you've done something wrong. i go back to the allergen deal killed by treasury i guess that he' the end of these deals. we don't know what will and won't be killed. i think if you're in the government you should just try to give us a little clarity please but they don't seem, there doesn't seem to be urgency. because the mrkt's so good maybe they don't think they need to do anything >> they've got some cushion.

>> yes >> you're sitting on double-digit gains >> 2018 an election and not until then it isn't like every day i come in and the nasdaq is down. we better do something >> right we will find out, when we come back we'll talk some under warm your bouncing back from its lows of year, curry and the warriors are champs the nasdaq is still double the dow's year-to-date gain. >> isn't that something? >> unbelievable, and the dow and the s&p are on track for their seventh quarter of gains we're back in a minute online u.s. equity trades...5 ♪ ...you realize the smartest investing idea, isn't just what you invest in, but who you invest with. ♪

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despicable me 3. rated pg. is the worst over for under armour stock rose almost 6% yesterday, that was before curry and the warriors won the nba title last night. shares though still down 19% year-to-date 37% over 12 months it's one of the big s&p laggards all year >> nike tried to buck a downgrade, vf corps starting to move pbh had a good number. i think under armour is playing catchup. i don't want to get too far ahead of anyone because again it's retail. there are so many stores closing

that most likely have some under armour that you're going to end up seeing a lot of the stuff at the bargain stores don't get too ahead of yourself. under armour was not as bad when it was trading at 17 and 18. i no he that kevin plank is a competitor and will not allow it china is strong. >> it's better than the alternative. >> it absolutely is. i remember talking about whether it would mean anything if the panthers won they had lined one the panthers and the answer is cam newton, if he had won they would have marginally sold more steph curry yes, let's give them some kudos kevin plank is a competitor who is not going to give up and he plays a long game. long game. delightful guy jeff immelt is a delightful guy but you're only as good as your numbers say you are >> as it relates to urry,

remember we had this discussion whether a shoe sells when the player endorsing it is maybe not as physical, shooting from long distance, but maybe at this point, youth may see look, the guy is cool, i'll buy the shoe >> that's what happens, and we all know that happens, and it may seem a little glib, but it has happened before. it will happen again this is something, by the way, in shoedog, an unbelievable book by become knight, you read how important, it all started with pres the prefontaine we wanted to stop pre. we it our shirts saying "stop pre. we want to wear what the great people wear. >> as it relates to retail we briefly mentioned sears holdings some layoffs, restructuring and sears canada raising doubts about growing concern today.

>> sears canada, the previous ceo was saying that this was just a dying chain there's nothing the whole chain is dying but eddie lampert, restructuring. they're always making progress but progress is not their most important product there. losses are i can tell you they can continue to do this gymboree on the other hand did a bankruptcy even though they had money to get ahead of it and close stores that was smart >> j. crew today as well >> those j. crew numbers soweres bad and a payment in kind. if i were a hedge fund manager maybe that's attractive but it is in the mall and the winners here right now, the winners is children's place, with the remarkable number last time and the stock should go higher but what can i say

one of the problems about the rotation, it isn't like the mall overnight became someplace that the cloud lifted it's the cloud we want to be in the cloud we want to be in work day. tableau data not in the cloud but does measurement, goldman sachs comes out and says you want to own it adam silipsky, a former amazon web service guy, he will see data, congratulations, steve weiche recommended that on the halftime show. i'm not going to be there. >> you game of lambert a run for his money yesterday. >> i did but we went back and forth in email, a delightful guy, but there was a prosecution aspect of it, but you know >> he was -- >> yeah. ooh, the prosecution never rested >> he knows the deal when he comes on, i have no doubt. >> yes, and you know what? wapner instead of being judge he was a witness for the prosecution, a great one >> that is true. we'll get kramer's mad dash and

count down to the opening bell in a couple of moments take another look at the futures on this tuesday, more "squawk on the street" from the nyse straight ahead ray's always been different. last year, he said he was going to dig a hole to china. at&t is working with farmers to improve irrigation techniques. remote moisture sensors use a reliable network to tell them when and where to water. so that farmers like ray can compete in big ways. china. oh ... he got there. that's the power of and. looking from a fresh perspective can make all the difference.

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♪ let's get kramer's mad dash ahead of the open. >> one of the stocks that came down for us, we did an announcement stocks had been up. mcdonald's had been hit for about 36 hours here we go, bank of america, merrill lynch says no, have no fear, price target goes 165 to

175, and they're talking about the franchises doing better. what i thought was interesting the hiring 250 people, they are allowing to you submit it, submit applications via snapchat, and people are buying snapchat on that may i remind people there's 900 million shares that are unlocked in the month of august so steel yourself if you're buying snapchat off that mcdonald's news, be aware that there's some others who may not be as sanguin who can tell during the month of august difference between mcdonald's and cheesecake the only casual dining company that is really doing well right now is darden, but red robin had a good quarter red robin has drinks >> mcdonald's coming off a 22 win week streak. talking about ml yesterday and the00component performance since he began, ge was last number one mcdonald's >> if you took apple out, absolutely

by the way, just so we know, there was only one positive comment about ge, and that was steifel saying we like what flannery will do i thought some had sells and holds on it, might say victory, no victories were declared which i thought was very interesting because a lot of people did want immelt to go, and i thought there would have been at least one guy who went from sell to hold. flannery is so far they're in abeyance >> opening bell in four and a n'gonyerlfines dot awhe.

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almost to where they were, and if you get the right commentary, which is that we see the economy being strong then they can break out to the upside. if they don't you're going to wish you did some selling. i hate that being so binary, but it really is all on them all on them. >> our friend josh brown -- >> what's he saying? >> today in 2012 dimon testified before senate banking about the won done whale loss. since then the stocks returned 200% including dividends i'm reminded of that phrase tempest in a teapot. easier to say that four years later. >> visiting the american, you know that great museum on the west side, naturalist museum just to get a sense of the whale. got some size to it. jamie dimon has done a great job but there's no successor i took myself out.

we all have to take ourselves out. >> let's get to the opening bell [ applause ] the s&p at the bottom of your screen [ bell ringing ] the bill brother it is toll brothers 50 years celebrating their 50th anniversary over at the nasdaq it's amarin, cardiovascular health. congratulations to toll brothers today. >> yes, you know, the tolls have been old friends because philadelphians and doug yearley runs it now, they all come on "mad money" and they are a fabulous success story i remember when they were a little builder just started and now a national builder, beautiful luxury homes congratulations to home. congratulations. >> really quick, may ppi did come in, the core 2.1, we haven't had a two print in three years. >> i think again, that gives the fed the cover. we need the fed to have the cover, because i no he a lot of wise guys are saying oh, just

when autos roll over, when we had weak employment. as my friend steve liesman would say they have to get back to where we just kind of a normalized level not like they're looking at the economy we have to roll over it's healthy yourself that we have to get balk out of the emergency phase. he's getting it from the horse's mouth. he's not just saying i think they ought to tighten. may >> may trying to get the alliance in reasonable fashion >> i know, they've got inflation. they really do the pound, when you go over there, you're just surprised at the cost of things, and i don't want to be it shall -- the british economy right now had a

move the only other thing i lirke diagio, johnny walker is priced in every dollar. the blue is too expensive. buy the black. the blue is overpriced i just want to point that out. >> alibaba got some love today from ray j., a street high of 190. 20 bucks above the rest. >> there were four big price target bumps yesterday alibaba was the only stock that was defended by analysts, and i think part of that was they didn't feel like it was fact the "a" has never been alibaba in fang. it's really been american and you've got a lot to love in alibaba in terms of the middle classification, in terms of how great the numbers were, but the upside surprise was so dynamic that the stock does deserve to be significantly higher. >> they did maintain a strong buy. >> yes >> ray j. seized 2018 revenue growth 45 plus

>> this is a juggernaut. it's very -- i've never seen a large company at that level of revenue growth i watched the presentation, and when in, i think it was the cfo kind of just said next year we're going to grow, and she made the -- and there was a gasp, because you just are not used to seeing big companies grow like that, just extraordinary. the stock goes higher. >> speaking of which, apple we should mention best performing dow component today. tim cook does give an interview to bloomberg, a few days ago, which they're just -- >> that was odd. i missed that. >> -- public now in which he talks about self-driving, not as a car manufacturing initiative but working on the underlying technology, calls it the mother of all a.i. projects >> the analysts are not including much about the ecosystem and how the home pod they've already written that one off. i don't want to write that off the analysts are saying that china, not that strong but tony

said he's been a tepid bull saying they could be coming back there's a lot of discussion whether india is the next greatest market. the key thing there is how much do the people love the phone because if that's the case then the phone companies will make it available. i like apple here but that is absolutely nothing new whatsoev whatsoever >> tangentially chips are having a good morning western dig reportedly upping their bid for the toshiba unit >> western had been a quiet bid. western dig is able to block, toshiba is a gigantic company, needs the money. micron and western digital have flash. if western digital gets it, it goes to 100. it would be a. steel, broadcom wants to pay more apparently although on the conference call, hock tan said he only wanted connectivity western digital could block it western digital gets it.

it's just monster. monster. but they will have to buy, take a lot of debt and they need partners because they do not -- and the question is whether they need equities. don't get too excited. the stock gets hit on the equity and it flies because their balance sheet is not capable of buying an $18 billion purchase not after they bought san disk they come on "mad money" a like them very much but the balance sheet is not a thing of video. >> nvidia is up, amd and micron and others really the combination of tech and financials is making for a fairly nice morning. >> yes, and we had that combination on thursday and then we had obviously the break on friday but the financials continued. i want to be sure that people realize that now the tech stocks are up so much if you bought them friday or you bought them yesterday at the opening, those people have to start scalping. some of those people are going to scalp, so don't be so enthused as to come in up big. pick a microsoft up at 70, up a

little bit before an nvidia come four because you're a little johnny come lately on nvidia >> retail once again taking it, autonation and simon property, footlocker, even darden. >> that piece was negative about new york real estate and a lot of us feel there is too much new york real estate, simon property obviously is mall based. there's just a lot, double trouble for nyc rents. this morgan stanley piece which was so long, look, it was the best of times, the worst of times. oh, no, i thought it was -- well, actually -- >> i read this in high school. >> it's about the battle of the board, it's requesting war and peace. tolstoy had game >> very nice book. >> i loved anna, and i loved ronsky, i thought it was an underrated character >> oil we're going to get some inventory tonight. we are looking for a draw. we were up for a third straight day. >> that's about all we're going

to get i have a thing i'm doing with the new york stock exchange with my friend rusty brazil from rbn energy, and i've got to tell you we don't have the strong demand we need and not getting the shut-ins this rig count doesn't stop. the personalean, companies that are 33 to 38 now on the permian pumping like mad it's going up. natural gas is going up, up, up too. >> people talking about a death cross in brent >> death cross >> haven't seen since 2014 you think the cap the ceil got a little lower then? is that what you're saying >> it's possible they really did have when you is ayou that rig count in the last few they're getting a lot out of keach well death cross i don't know, i find those things to be -- they're too glib i do think that there will be a little bit of a pullback and the saudis might do something.

it's too glib. i'm trying to avoid the word manipulation because i don't think that oil -- but i don't think the oil market is as fluid as people think. it's supply and demand but there are many people that can influence the demand >> well the whisperings of reuters. >> that's what i'm saying. >> fever pitch >> right, and i think you have to be careful if you're short oil. oil is stabilized at a level that was realistic you need to see real decline in inventories. that's to get inventories down so when we get the wednesday number the algorithms don't crater oil when i hear the death cross the algorithms played a huge decline in last thursday if they sense the wrong number you'll get another >> it was because api was a head fake, when they're off by so much >> oh, my, the numbers and plus oil is all over the system and

the numbers are not as helpful as they use to be. they're just not i want to emphasize if you're buying into tech now, it doesn't work like that it can't be that easy. you're going to reach some sellers. just be careful. you can probably get them a little bit lower price >> vix not quite back below ten, but ten and change are we ready to say friday and monday are sort of a self-contained unit here >> i think that unless you -- you didn't get preannouncement no one broke ranks there was no company that came out and said you know what we see a decline in demand, like you did get for cheesecake, like you did get for scotts miracle gro or saic. you needed that in order to continue the rollover. the prices ran a lot you didn't get anything -- we're in a weird week. this say fed week. when you look at otherwise there's not a lot of news and you didn't get any preannouncements that said you know what?

we do have to sell tech. we didn't get them the downgrades aren't enough they're just not enough. >> heading into the last few weeks of the quarter we'll be watching for them. >> if you really want to sell these tech stocks with what you said about the nasdaq, do you want to look like that all you really owned were gap stores and you made a big bet and macy's? no >> good point. >> ibm was one of the few tech stocks up. wangs say ibm isn't tech but i believe it is putting a bottom, kind of gutsy. >> goldman is leading the charge on the dow up 55 been good morning bob pisani >> happy tuesday everybody good day in europe and in china shenzhen up 1% the day before the fed meeting we get the fed drift, the pendcy of the markets to move up in the

day, day and a half before the fed meeting and yesterday around 3:30 we sort of moved up no real news up there, move up about four points overall, moving up again today and this say well studied phenomena, the tendency of the markets to rise before the fed meetings the market moves up nine, ten points since the close on yesterday here sector check here, you can see the first one there, that's the semiconductor etf and the banks up, consumer discretionary and consumer staples to the downside couple developments last might, a report from the treasury on easing dodd-frank regulations helping some of the regional banks. you see some of the regionals, regions, key korpds, huntington up citygroup a new high also up today. oil is flat, disappointing to those hopeful oil can get toward

$50. saudi arabia are continuing to try to cut production, cutting exposure to the u.s. but not having a big move on oil here. fractional moves to the upside in some of the oil names what is moving and has been moving throughout even the preopen is the semiconductor names we talked of course about nvidia the last couple days, amd, micron. it bounces back here today, so that indicates that this sell-off in the last few days might be on the limited side internet stocks, bank of america had a timely report out, monthly on fund managers around the world, internet stocks overvalued 57% said yes pretty high number but only the 18% in a double, that's important they may think it's expensive but don't think it's a bubble and this is a good sentiment indicator overall the market doesn't think we're in imminent danger of a crash here are equities overvalued? how about that what do they think june had 44% overvalued. the highest it's ever been recorded here up from 37% with you half of the group thinks

that profits are going to improve so the bottom line is, profits are improving, that's why they think the prices are high, but the market is a little bit vulnerable to profit weakness, that i'd say is the biggest issue right now overall. what's the most crowded trades what are they in the most and what do they think their colleagues are in the most, long nasdaq the most crowded trade. the second long eu equities and the third is long u.s. and european union corporate bonds this is not a surprise the first two we've been talking about for a long time. the fund managers mimic where a lot of the money has been going because there's part of that money. the biggest risk to the global markets almost a third believe is if china starts tightening. number two is a crash in the global bond market, only 18% think that's the biggest risk and 14%, those of you who think the trump agenda is the biggest

concern out there, only 14% say a delay in the u.s. tax reform would be the biggest overall risk to the market very interesting here. everybody is afraid of higher bond yields, when will the markets really start being affected 64% ten-year treasury yields would have to move north of 3.5% for equity bear market to actually begin of course, obviously we're about 140 basis points or so away from that happening so the majority don't believe that this modest moves we've seen in the last few months since the election is any threat at all to the equity rally that fred drift going in perfectly, up 100 points in the dow since about 3:30 yesterday right now up 44 points since the open guys back to you >> bob pisani thank you very much rick santelli at the bond pits at the cme in chicago, good morning. >> good morning, carl. fed meetings, whether the fed or any central bank really has a good grasp on the manipulation that they've cornered themselves

into or not almost doesn't matter, because markets get changed in the leadup toward the meeting and affected and changed after the meeting's over last meeting was may 2nd and 3rd. let's start all of our charts today rite at the end of february, so the first thing you see on the left side of the chart is kind of the reaction going in, and the reaction going out of that fed meeting. look at two-year note yields, that is easy it jumps out at you. up to 1.37 basically we're getting close. it was what the fed was going to do, may do, will do. the ten-year a different picture. yes rates were up but look at how they dropped as we diminished the effect coming out of the fed meeting what i find interesting is how the boom looks in the same period the relative value trade right at that point around the second week of may, was just pulling our yields down.

look at this since the last fed meeting basically we've gone minus 40 basis points. 125 to 85, that is just a huge move, but the neat thing about it is, virtually it's mostly all the long end so yes, it's important to understand what these spreads are doing but it's also very important to know which side of the trade is guns hot and guns cold in the old days it used to be both would share in the move not true anymore look at the ectf the vix of the fixed income market. the higher it goes the less anxiety there is finally the dollar index nothing good teams to happen with this price. it was a big drip from 102 to 97 that's a lot of move in a short period of time carl and jim back to you >> rick thank you very much to are that rick santelli. watching oil as well as you know pretty flat for the moment jackie is at the commodity desk. >> good morning to you carl.

i heard your conversation with jim before, correct. despite the news that saudi arabia plans for deeper cuts, you can see that prices lower around $46 a warl. more headlines the opec monthlies that have the market concerned. opec production up in may, they're confirming that. little less than half a million barrels a day but we're supposed to be in a cutting period so perhaps the cheating has begun and probably the numbers underreported, too the biggest offenders not a surprise, libya, iraq and my year ja at this point. opec also projecting that there will be an increase in u.s. production year on year, a little less than 1 million barrels a day and the problem is demand, expected to rise year on year but only a little more than a million barrels a day not enough supply is outstripping demand. this is a rebalance they're saying but it is very slow, perhaps painfully slow and the headline also continue to move the market so we have competing factors today. back over to you >> thank you very much, jackie

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the tech sell-off goes global after apple's rotten day. what it means for valuations and will it continue ♪ when i'm not with you, i'm no me ♪ ♪ nothing ever feels good ♪ when i'm not with you after a tough couple of days for fang stocks all of those components up about 1.5%, some back dove the 50-day like netflix. >> we don't understand a lot of these that there is something going on there is an acceleration the acceleration into the cloud does really matter ones that have seen it are workday sales force they've seen a major reacceleration of revenues at apple you can make a strong case don't leave it. there's much more to the service

revenue stream also knocked by that i don't think it was right alphabet is a self-driving car you got to put that in the mix i have yet to find a single hair on the facebook story. you get off the desk they talk about how zuckerberg designed snap the competitive nature and the 2018 earnings aren't so bad. you got the tableau update of goldman out of nowhere when people see this upgrade of d.a.t.a. i can do that to a work day, i can do that to an adobe and auto desk. someone did it to marvel the analysts love to see when one of theirs can make a move they'll come out tomorrow. tomorrow is an important day >> that's a good insight into the mind >> how they work >>ows 3 d iup5.

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time for kram and "stop trading. >> i debated talking about dennis rodman he was in season 8 and 13 of "apprentice. since he was fired so early i thought he would not be the president's representative let's talk about procter & gamble one of the things sure happy with ge which means they finally have the ability to issue the white paper, and take a shot at proctor. i can't believe you can get a chance to buy procter with a 3% yield. it doesn't fit in with the micron and bank of america crowd but if you want a stock where there's a nice yield and where i think you'll start seeing some action and fireworks, not like with ge went from 25 to 30 because of trion, train your guns on procter. >> equivalent 5% bounce? >> i think there's, nobody know

this is package good business better than nelson peltz i did the study if you got long when he makes noise you beat the s&p. few activists you can say that about. i think procter two ways to win the quleeld and the company's well managed, but it's not managed as well as nelson peltz twants to wants it to be by procter. >> what's on tonight >> the best industrial another group they don't want procter or the industrials i try to anticipate the next wave of buying and i like this idea, i've got an industrial people have forgotten about, left for dead and it's going to get resurrected this evening >> you and your deep teases, jim. >> yep great show, thank you. >> see you tonight 6:00 p.m. eastern time when we come back bill richardson former new mexico governor we will eight guess his take on the trump agenda, w u44ns testimony doisp

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good tuesday morning welcome back to "squawk on the street." i'm carl quintanilla with sara

eisen and mike santoli at the new york stock exchange. this afternoon the president goes to wisconsin and a two-day fed meeting begins with a statement tomorrow >> road map for the hour begins with the treasury department, unveiling its financial reform framework. we've got the details. >> the central bank kicking off its two-day meeting. is it time for a rate hike >> another buzzy day on the hill attorney general jeff sessions getting ready to testify live report from washington. >> let's talk some fed to start things off kicking off day one of its two-day meeting our steve liesman joins us this morning with some exclusive results from our cnbc fed survey. they only see 2442 for the end of the year, up half a point not much juice left in markets

only 5% by the end of 2018 here is a little bit of good news they think if there's more economics and fundamentals behind what's happening in the market in december 82% thought it was policy expectations of the trump administration driving the market, 18% thought it was fundamentals that's come way down now it's 2:1 in favor of those who think this market is backed up by economic fundamentals, and earnings and not policy expectations also along with that if we push that to the side what we see here is that now they think the market's a little more realistic. back in may 62% thought the market was too optimistic. now it's just 31%, a little more sense of realism in the market one more thing i want to show you is the ten-year yield. that has come down quite a bit back in january, 3.43 for 2018 now just 3.05. that's what happened at the

market, not much is in there but much less in looking for higher rates and what we continue to see is that our forecasters are factorring out policy for this year, and more and more the story for 2018, carl >> that's fascinating steve, thank you very much. steve liesman back at hq for more on the fed and impact, dan saw zukie of merrill lynch, and jeff klein chief global investment strategist at charles schwab good morning guys. >> good morning. >> jeff we get the core ppi number above 2 and steve lays it on us how the long-term year-end projections are coming down. what's right >> well i think probably both right. we know we've been in a little bit of a rebound in some of the inflation numbers which have been depressed but the truth is, the long-term outlook for inflation is still not getting out of hand. we don't have the xasi itcapaciy issues to push up inflation. we're in a global environment of

slack capacity that means the fed can continue to go slow and even more interesting, carl, maybe china doesn't have to match the fed this time. remember, china hiked rates twice in the first quarter matching the fed's 25 basis point rate hikes they may not go this time. good news for emerging markets >> good point, jeff, on the china and goldman. dan, what sort of tone would the fed have to strike or what could they say that would upset the markets here >> we're kind of right in line with what steve was mentioning in terms of his survey in terms of expectations but there are a lot of moving parts in this reporter with' going to get. potential for the dot plots to move, any discussion of the balance sheet unwind and sort of general tone overall so i think right now the market's going to be super sensitive to any changes in the language, because in contrast to what we saw earlier this year,

the market's just a lot more vulnerable to surprises right now. you can swallow a lot more of aggressive fed and everything's looking really rosy and you're expecting a lot of trump policy. right now growth looks to be peaking and it looks like as steve was mentioning you're not going to get a lot of policy push so right now, i think the market's a lot more vulnerable surprises. that's not our base case right now. >> jeff, you know we've actually had basically a year's worth of average gains in the s&p 500 in less than half a year. bonds have also done well. where do you think we are to dan's point in terms of the market field position and its ability i guess to absorb anything that's not necessarily so rowsy >> mike it comes back to earnings stocks went up this year, not so much because pe has expanded it was really about a turnaround in earnings growth, much better earnings numbers the second half of the year i still think we'll see solid earnings growth but maybe not quite the same improvement in

analyst estimates we saw in the first half as they kind of recognized better global growth and booming trade, in the second half of the year look for more stable growth, a continued upward trend to earnings revisions but maybe not as much momentum as the first half that means maybe some corrections in volatility but still probably a path higher for stocks >> today bill gross says all markets are at risk, capital arteries are blocked by secular trends is that part of the normal conversation does it characterize the moment we're in >> i think it does characterize the moment i think earlier on the show you were talking about how we had the global fund manager survey out today, you can look, there's basically a record number of market participants that think the market's overvalued, yet everybody seems to be wanting to put more money into stocks i think that's the environment

we're in and that's typical for sort of late stage bull markets where there's a sense of building optimism, a sense that the markets may be overdone but no one wants to miss out on the markets. so i think this is very typical late bull markets. the minimum returns you typically see in the last two years of bull market going back to the 1930s is 30% and on average more like 60% so it's really not the funneled mentals that drive markets in the late stages it's really senseiment and technicals there's room for that to run if you're a fundamental investor you want to get a little bit worried because the fundamentals aren't going to be there to support markets if things start to slow. >> jeff we should zero in on technology, best performing sector in the s&p after two rough days it seemed universally popular. how crowded of a trade was it, and did the last two sessions do anything to wash out all of those positions? >> i don't know. two days, we'll have to see.

it's interesting that it's coming back today. what's maybe more interesting to me we saw rotation out of tech on friday and on monday. some of those investors moved their money out of tech into financials, an unloved area of the market today financials are up again even though money is coming back to tech. it might be a sign as yields i don't know if we've seen the bottom in yields but maybe we're close to it that could be good news for a broadening of the market and participation in other sectors and not have all of this focus and attention on tech by the retail investor. >> good discussion guys, thank you very much. we'll see what happens with the fed tomorrow dan and jeff, see you later. >> thank you >> thanks. verizon has closed its acquisition of hoo, integrating aol and yahoo! under the verizon subsidiary called oath yahoo! ceo marissa myler not remain with the new combined company. press release yahoo! wishes her well, end of an era we say a lot

but this is one. >> it was a brief ecamera, five years, a last shot to try and revitalize things there. there's so much talk given what the nasdaq is doing and the global fund manager survey harkening back to 1999 this book ends that period a little bit because when yahoo! first reported a profit and was admitted into the s&p 500 november of '99 it really launched the final burst of that tech bubble and obviously it's kind of been unwound in many different ways and yahoo! as an entity gets swallowed up into a big old baby bell. >> headquartered in new york city >> yes >> the treasury department unveiling its plan to reform the country's financial regulatory framework, our kayla tausche outside the white house. did you go through all 150 pages of this, kayla >> it was close to 150 149 to be exact, sara. i did go through most of it. the treasury department got input from 300 parties mostly

industry groups and more than 100 proposals for how to regulate banks and credit unions in the country here is what the treasury ended up reporting they said they want streamlined rules bradley for community banks. they want to exempt banks from the volcker rule and stress testing. benefits for larger institutions, how banks cap clat their capital, those that hold a lot of capital more than required would get exempted from stress tests and capital requests for others that just meet the threshold, those events would happen less frequently it calls for significant struck turlt changes to the cfpb and expansion of fsoc secretary mnuchin chairs industry groups called it an important first step, and subsequent reports from treasury will cover asset managers and

capital markets. about a third of the recommendations require congressional action, just two democratic senators ranking committee member brown and warren last night were critical of the report. senator warren saying it calls for radical changes that would make it easier for big banks to cheat their customers and spark a financial meltdown the overall response from capitol hill was quiet as l lawmakers remain row fussed conthe russia investigation and health care reform today the president will host republican senators for lunch to discuss where things stand and where there might be sources for compromise handful of senators raised doubts about the ability to to it this year, others more optimistic we'll see what comes out of that lunch if anything today. >> was there anything that came as a surprise to member of the industry or congress that will

prove controversial? >> nothing completely controversial i don't think. much of it telefwrafed ahead of time whether it was treasury sharing parts of it with industry groups or industry groups knowing that they were all aligned on certain matters khantal requirements for some of the largest financial institutions could you expect a lot of democratic lawmakers to point to that and say why are we trying to protect the biggest wall street banks that almost sank the global financial system back during the financial crisis at this time. the treasury department could come back and say well our mandate was to improve lending in this country, and to improve growth and that is one way that we see fit to do that. >> so kayla, you said only a portion of it actually requires congressional approval the other story of course we're following from congress is health care, which i know you've been tracking carefully. is it actually moving through the senate and why is it seemingly so secretive

>> there's a little bit of an uproar about the fact it doesn't appear that the key senators that are working on this plan to release the legislative text until it is finished it would take the congressional budget office about two weeks to score a full bill on the matter, which is why senators have been back channeling and sharing certain portions of it with the cbo in advance of that to try to understand exactly what the treatment of those portions will be but it's unclear where certain items are going to shake out, for instance, whether they'll have the votes to defund planned parenthood, which a few female republican senators have said that would risk their votes. that could come up at the meeting with the president today at the white house, but ultimately it's a call that senate majority leader mitch mcconnell and john cornyn the majority whip will have to make. >> kayla tausche, thai for the update on all things washington, and congress we're also waiting house speaker paul ryan as he takes his q&a from his weekly conference

speaking of banks, they're doing well again today guys, goldman sachs adding 18 points to the dow helping the market go higher banks and technology working simultaneously >> not purely kind of an unwind of this rotation we've seen for a couple of days you have technology bouncing on a tuesday, which is not that unusual. you get a little bit of a rebound on the tuesday, and fed meeting so no surprise you might have a little bit of a bounce but yes financials participating there is also showing it's not just purely concentrated in tech and it's interesting the dow clicking to a new high, s&p 500 still a couple points below but it's starting to look like it was like mid-may shutter in the market and almost forgotten it b it the vix and the credit markets didn't give you a reason to think it would be a start of something nasty. >> nas deck fell 3% in two sessions but as we said this morning, still leading the dow year-to-date by a factor two of. amazingly enough 00and the s&p are on track for a

seventh quarter of fwanz the qua gains. the quarter wrapping up and jim is looking out if or preannouncements out of tech which hasn't come which he says didn't ratify the sell-off let's get to speaker ryan and the leadership press conference. >> former speaker gingrich said it's time to rethink mueller's role do you think it's wise for the republican party to be having this debate and decision right now? >> all i heard so much are rumors but i think in the best case for the president is to be vindicated by allowing this investigation to go on thoroughly and independently so i think the best advice would be to let robert mueller do his job. >> and mr. speaker, if it came to that, though, do you think you could continue to stand by this president and what sort of -- >> i'm not going to get into -- look, i just said i think the best thing to do is let robert

mueller do his job the best vindication for the president is to let the investigation go on independently and that's the best and smartest thing to do and what hopefully will happen >> speaking on the budget, you guys are running into issues like last year, the top-end spending and some members are talking about [ inaudible ] do you think you can get a real budget passed and what are the consequences of failure to do so >> the question is about the budget remember, with a new president in the first year you always have an abbreviated budget season that's just the way budgeting with new administration works. we're having a debate right now about how much we can assist the pentagon in the military so it's not a question of more resources for the military it's a question of the degree of how much more resources we can dedicate to the military that's really what this big debate is about and we'll have the debate about what kind of, what we call reconciliation

instructions are necessary not just for tax reform but other things we need to make sure that we're getting the budget trajectory in the right direction. what is the purpose of the budget, get us on the path to balance and work on the debt long-term problem, rebuild the military and put the tools in place so we can maximize economic growth. the crowned jewel of growing this economy, regulatory relief, tax reform we think tax reform is absolutely critical to get 3% economic growth, to get higher wages, to get people going to work, and that is really important, that's what this budget is about. we have lots of priorities that we have debate about how best we advance this priority. we have the family conversation you have every year when we have a resolution on that, you'll know deidra >> mr. ryan, [ inaudible ] the team around him and do you have complete confidence in mueller and his team >> i don't know his team i know bob mueller and i have confidence in bob mueller. >> last question >> way in the back

yes. >> thank you two parts. one did you convey your opinions to the president on mr. mueller that you should let [ inaudible ] >> there's no debate that's going on here. this is like a rumor you heard last night so there's not some big debate that's occurring on this >> would congress be interested in [ inaudible ] >> you're creating like i said kevin just said it, creating a debate that's not occurring. this is something that was a lumor that came out last night >> you're creating a rumor that's not happening >> kevin made a good point here. look at what we're doing this week we found out three years ago veterans were dying on these waiting lists that were occurring at the va in arizona, and then all around america. so we uncovered a scandal, and then we realized when we were uncovering this veteran scandal we couldn't bring accountability to va.

they couldn't fire people grocery neglect in their jobs. we're fixing these problems. we passed the choice act, repealed and replaced dodd-frank, and brought needed regulatory relief for community banks to help small businesses get credit and grow. next week the skills gap so people can get the skills you need to get good jobs. the point i'm trying to make is put this all in perspective. we are focused on solving people's problems. what i think the american people want to know if the government is working um and not saying this isn't important. these investigations are important. they need to be independent. they need to be thorough and need to go where the facts go but we also have a duty to serve the people that elected us to fix the problems they're confronting in their daily lives and that's what we're doing. thank you. >> thank you >> house speaker paul ryan reiterating his point that we have heard from him guys many times, which is we continue to be focused on solving people's

problems, citing a number of efforts recently to uncover scandal at the va, last week passing the choice act which he says ends too big to fail but certainly does get at financial regulation and revising dodd-frank he says next week we're going to work on the skills gap and we're going to continue to fix people's problems, despite the investigations, which he did say are important. just quickly on mueller, a lot of buzz about this as well, he says that president trump should continue with robert mueller and we're creating a story out of nothing talking to reporters there when he was asked about it that it was just based on what he said was a rumor. so putting that to rest a little bit. when we come back, the governor of new mexico bill richardson will be here live to discuss that and much more plus betting big on americanic from structure. the ceo of american electric e rer wh o"sawon thstet."

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we, the tv loving people, roooooaaar!!! want our whole house to be filled with entertainment. easy boy! but we don't want annual contracts and hardware. you scoundrel! we just want to stream live tv. and we want it for 10 dollars a month. (batman:raspy) wow. i'd like that in my house. it's a very big house. yeah, mine too. look at us. just two bros with sick houses. high five. directv now. a big streaming deal for $10 a month. it's entertainment your way. u.s. attorney general jeff sessions headed to capitol hill this afternoon to testify before

congress john harwood joins us with on what we can expect to hear, which questions we examine thcat him to answer. >> this is not the first time jeff sessions has been before his former colleagues in the senate to testify. he had a contentious confirmation hearing earlier this year. the stakes are higher because the white house is in deep trouble with the russia investigation you were talking about in the previous segment. among the issues jeff sessions will face are his failure earlier to disclose meetings that he had with the russian ambassador including meetings, conversations with senator al franken in his confirmation hearing where he said he had not had contact with the russians. we can expect him to talk about conversations with fired fbi director james comey he said he asked jeff sessions not to leave him alone with the

president after the president asked him to drop the flynn investigation. he said sessions did not respond. sessions through the justice department has said he did respond and then finally he'll be asked about his role in the firing of james comey and whether or not he honored his recusal from the russia investigation which so angered president trump that he has been talk about the potential for replacement jeff sessions. he offered his resignation expect jeff sessions ask be asked about rumors paul ryan was discussing at the news conference that the president is considering firing the special counsel robert mueller, which would be certain to trigger a backlash on capitol hill >> thank you for that setup. joining success former governor bill richardson of new mexico. welcome. >> thank you >> nice to see you >> we want to talk about some recently breaking news you have some involvement in.

cincinnati hometown boy will finally be released from north korea. the state department confirming it, same with ohio senator rob portman. what was your involvement in this case? >> my foundation which i head which deals with political prisoners made a trip to north korea late last year to get otto out. i've been trying to work with the north koreans to get him out. the state department deserves credit for getting him out but there's some concern, we heard from otto's parents this morning and the worry is that he may be in a coma, that he's been in a coma for a year. the north koreans have a lot of explaining to do did he get proper consular access in north korea, medical treatment, sweden represents us there. why wasn't he released sooner? he's being flown to japan where he'll get medical treatment. three other detainees, two

americans, one canadian that need to be released right away it's a complex situation we celebrate his release but what is his health he's a healthy 21-year-old but in a coma. why didn't the north koreans tell us about this >> just to review he was charged in north korea after being captured there on a trip a few years ago with hostile acts against the state, sentenced to 15 years labor >> he stole a political banner, he took it down and he was sentenced to 15 years. he's served one year obviously his health has been good and the north koreans not to stop detaining americans. this could backfire if otto is not well his parents are wonderful people we were in touch with them this morning.

we hope otto's health is good. >> we have rodman making another visit, the president continued to apply pressure on china to apply pressure to north korea, ongoing missile tests. how do you characterize the level of threat right now? >> well the korean peninsula is a tinder box, the highest level of tension i've seen i've made eight trips there. we know very bill will kim jong-un what he wants to do. we have to continue to push china to pressure to do more with north korea we need to continue the military exercises with south korea but in the end we need diplomacy, we need direct talks and we need a deal like the old days in exchange for food, fuel, sanctions, relief. they stopped their missile test, they stopped their nuclear test but the humanitarian path is

most important, otto's health. i'm worried he's in a coma and the north koreans never told us that >> do you think the trump administration has been -- >> i was concerned with the trump administration talking about preemptive military strikes. that's know at an option, a good one right now. because there are 30,000 american troops, 25 south koreans in seoul it's better to use diplomacy, pressure, sanctions, the military exercises, the joint missile system with south korea to top north korea from shooting these missiles this is going to be the president's first major foreign policy crisis. we have oget to the bottom of the otto situation >> a crowded agen da on the foreign policy front,

legislative agenda in the u.s. and today watching testimony from attorney general jeff sessions what are you looking to hear >> the attorney gen hall has a lot of explaining to do. did he have a secret meeting with the russian ambassador at the mayflower hotel? what was discussed athird potential meeting. all of this issues relating to russia is what's going to happen to the infrastructure tax bill to health care my hope is we don't do anything on health care, medicaid expansion is important to states like mine, preexisting condition, the senate health bill has been drafted in complete secrecy on the one hand you want bipartisan movement on legislation but you don't want bipartisan movement on bad legislation. >> has there been a reduction in participants in new mexico's

marketplace? >> the congressional budget office says the health marketplace exchanges are stable but we benefited, we've got a lot of poor people medicaid is important to us. throughout the country if medicaid is slashed or not expanded a lot of people will lose their health care, the sick, the elderly, the young we don't want that to happen this is a fair mark and this senate health bill and house bill with the preexisting condition, not elimination but so many triggers is a real problem for health care for americans. >> clearly you're on the other side of a lot of these issues, but what's your sense, you are still plugged new york the level of republican loyalty to president trump as the investigations heat up, how tenuous is that? >> i'm a politician. i ran for office once votes get cast if the

republicans lose this georgia seat, if there's more turmoil among republicans, 70% of the republican base still supports president trump but if he starts continuing this turmoil and downward spiral he'll have a lot of defections. so far i think they're standing behind him >> you said cooperation on bad legislation is not something you look for does that mean all this preoccupation with the russia investigation is a net poggive from your point of view? >> no, not a net positive but we have to get to the bottom of it. the russians should not be involved in our electoral process, and they were and this is one thing comey said it was a massive intervention that should not happen get to the bottom of that, put it aside if it merits that and move on to pass legislation to the american people. >> nice to see you governor, thank you for coming by on many

topic, governor bill rich soured ann, former governor much new mexico >> dow is up 61. sue herrera a news update. >> good morning everyone you were just talking about north korea. secretary of state tillerson announcing that north korea has indeed released jailed u.s. university student otto warmbier, serving a 15-year prison term for hard labor for alleged anti-state acts. he's on his way back to the u.s. to be reunited with his family former nba player dennis rodman arriving in north korea for the fifth time in four years he said he's just trying to open a door on a mission that he thinks president trump might support. he's been given red carpet treatment in his previous trips to pyongyang including meeting with kim jong-un jurors deliberating for a second day in the sexual assault trial of bill cosby. the 79 yield comedian arriving in court outside philadelphia this morning the defense rested its case yesterday because cosby did not testify in his own defense

for the second time in three years the warriors beat the cavaliers for the nba championship taking the series 4-1 games. kevin durant has named series mvp. the cavaliers beat the warriors for the title last year. that's the news update you are up to date carl back down up to to you. >> thank you very much when we come back the ceo of american electric power is with us, we'll get his take on the president's infrastructure plans and a lot more 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?

[ gasp ] if you fire him, you're agent gonna have to fire me. do you really wanna do that? uh, do ya? [ screaming ] well, i guess she did. we're going to be fine. i want to help since you don't have a job. i got two whole dollars. awww. minions! we're going back to villainy. [ cheering ] [ evil chuckles ] so, you're villains now? [ shrieking and chuckling ] i mean hello sweetie. despicable me 3. rated pg. next week we're opening a big coal mine, one in pennsylvania, that hasn't happened in a long time but we're putting the miners back to work >> president trump praising and taking credit for the opening of a new u.s. coal mine last week and on twitter this morning. our next guest the chairman and ceo of one of the country's

largest electric utility companies does not expect a resurgence in coal nick akins good morning. good to have you back on the show >> good, god be with you >> watching the president's comments, bp's annual review of global energy trends shows world coal production had its biggest drop ever. do you think the u.s. gets back into the business? >> yes, i think it will be difficult for thermal coal which we use for power plants to continue to improve because there's so many other technologies available to us today that weren't available a few years ago. m metallurgical coal we continue to see in primary metals may see some coal benefits but as far as thermal coal for power plants we don't see that continuing in a big way. >> is that a secular change? we had gary cohn on a couple weeks ago made some arguments

it's not the most feed stock and clarified it's not the most efficient feed stock at this price. could a price change make it more competitive to a point where it is compelling >> well gary is right certainly in terms of the costas spects of it but now natural gas prices so low and certainly renewable prices coming in lower as well you see a shift occurring and a transprofessi tra transformational change in the resources we look at if coal prices drop you deal with the risk parameters around a large central station coal fired versus the other resources available to us today. >> nick as a power utility company how many years have you been moving away from coal power into natural gas and other renewables like solar. you saw this coming a while ago, didn't you >> yes, sara, we made tremendous progress, the industry continues

to make progress but certainly from an adp perspective we continue to drop our goal musage, since shale gas came into play with renewables and efficiencies around transmission and other areas certainly are driving coal production down that will probably continue because the other types of resources are much more beneficial from an environmental standpoint and we continue to reduce carbon emissions in this industry not only by 30% from an industry perspective but 48% from an adp perspective and we'll continue making that progress >> we hear talk of potential infrastructure investment program what are the needs and opportunities for the electrical distribution system. the industry likes to talk about how they invested a lot and got it up to snuff

on the other hand potentially a lot more to be done. >> there's much more to be done. the industry spends $ 10 billion of capital every year. we need to refurbish the existing grid and reformulate it based on the new drivers in terms of resources and in terms of customer usage. so that kind of process will continue i'm standing in the middle of a smart city's top application that trifz drives technology and firnss which is a partnership that can exist in this industry. >> speaking of which, the president announced withdrawal of paris, we saw a bunch of cities, a bunch of private companies saying their initiatives would go on uninterrupted. you don't think with drawing from paris will be that consequential? >> i don't, because certainly

this industry has been aep has been focused on improving the customer experience. our customers are asking for the clean energy economy of the future and we're driving that direction. eight being driven not only by our customers and expectations but shareholder expectations as well >> how much of an infrastructure plan need to address the risk to the grid of hacking, cyber security that kind of thing. is that an event that you can envision in our lifetime where a big part of the grid is disabled as a result of a bad actor >> certainly the industry is working closely with different agencies of the government we've been doing that for years and we have a great relationship you're never ahead from a cyber security perspective you've always catching up to the bad actors and certainly will continue to do so. the industry continues to spend a tremendous amount of money and not only in terms of cyber security and the tools

associated with that but also physical security swle to make sure our grid remains resilient and reliable for our customers >> you never appreciate something until it's gone and that would be a big loss nick thank you so much nick akins ceo of american electric power >> thank you when we come back the federal reserve kibing off its two-day policy heating former fed governor robert heller joins rick santelli next. "squawk on the street" will be right back i can't wait for her to have that college experience that i had. the classes, the friends, the independence. and since we planned for it, that student debt is the one experience, i'm glad she'll miss when you have the right financial advisor, life can be brilliant.

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what can you expect after the tech stock drop? r more, check it out on cnbc.com more "squawk on the street" coming up.

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good morning, rick >> good morning, sara. welcome robert heller. thanks for taking the time the first day of the two-day fed meeting. >> good morning, rick. >> all right, on the rate side, a, do you believe the fed will extend the range tom snow. >> yes, sir. they will do that. finally it's time. >> all right now in some of your writing you've alluded they're way behind the curve where do you think overnight rates or range should be at this point in time? >> well, the fed funds rate really should be at 3, 3.5%. we have 2% inflation and a little bit for, you know, real interest rate and you had 3, 3.5, so the fed is way behind the curve. they should be raising the rates. they should have raised the rates beforehand i'm glad they're doing it now. >> all right, now you bring up a great point. it goes to the notion of

normalcy i agree that is probably the range we should be at, and the fed is trying to return markets and the overnight rate to normal places the problem is that the rest of the trading market that isn't necessarily directly under the fed's thumb has orphed, changed, not the same market normalization at 3.5%, i just don't see the rest of the curve going along with that. i would see an inverted curve if that occurred. your thoughts? >> well, the curve may invert a bit but eventually if our economy grows the way i would expect it at about % from now on, then the long end will be above 3% as well so the curve will flatten out i would expect and hopefully there will be a little bit steepness in it, too, because we have a good economy and that's going to be the reason, that will make it worthwhile for people to invest.

>> i see your missing piece. in your hypothesis you look for 3% growth, that would make the ten-year rise for goo sure and good reasons let's switch gears to balance sheet. the big talk on the street these days is what grownups, the fixed income boys have turned into talking about balanced sheet reduction, rolling over, buying new securities that are mature and the markets acted so calmly. what are your thoughts on that, is the market acting calmer or waiting for actions versus descriptions >> well, clearly we got to start reducing the balance sheet and the way to begin is like you say, by reducing the rollover. i would expect the fed will start doing that later this year gingerly, $5 billion, $10 billion less than the first month or two and a little bit more and more of the reduction

in the balance sheet so they'll go gingerly into it but i think el they'll do it >> we have 35 seconds left, bob. is it nearly impossible for the fed to achieve the goals regarding normalization if other central banks sprinkle liquidity and stimulus in effect negating any of the less accommodations stance of our fed? your final thought >> i agree with you. that's a big problem it results in inflows of capital into the united states, and thereby is holding down the long end of the curve but the fed has to take care of the united states first of all. >> gotcha. bob heller, it's always a pleasure to talk to you, and you have all the wisdom of past administrations being a former fed governor thank you, mike, pack to you >> rick, thanks very much. over to font fortwe a look on

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on the hill. kayla tausche has that >> it is a testimony centered on the budget for the justice department next year, but the senator from new hampshire took the opportunity to ask the deputy attorney general about whether he has the resources that he needs for bob mueller the special counsel to pursue the russia investigation and whether based on comments last night from the personal friend of president trump that he is considering firing the special counsel. here's what the deputy ag said >> as i understand mr. rosenstein in this matter, you are actually the one exercising hiring and firing authority because attorney general sessions is recused. is that correct? >> yes, that's correct >> and at this point have you seen any evidence of good cause for firing of special counsel mueller. >> no, i not

>> he was then asked whether he had received an order or whether he would follow an order to fire the special counsel. he said he would only follow an order if he deemed to be, quote, lawful and appropriate and that he would only be fired for good cause and that the deputy attorney general would be tasked with putting that cause in writing so he went to great lengths to establish his support for the ongoing investigation and the resources that bob mueller currently has. but the circumstances that he just described are ererily familiar to those surrounding the firing of james comey. but we will see whether he comments further as the hearing continues. carl >> kayla tausche, we will watch that interestingly, there are parameters by which the president can fire or be fired by the deputy attorney general so we'll watch that. ryan took pains to say this is

not and on going debate, more of a rumor that got leaked out. we'll see where it goes. >> we'll see if republicans can tolerate that one, if that really is a question of whether -- >> and whether it was a floated idea just to get dit out there and why investors trust companies more than countries, always thought provoking >> the idea that the markets are telling you this you look at the rates that companies can can borrow at right now, apple has $200 billion in cash, the government maybe can spend $200 billion over ten years on infrastructure investors say you have dismun dysfunctional democracies all over and they have kind of hidden in these huge corporate nation states called apple and facebook and the rest are so we'll see if there are risks, but it seems to be what invest are tors are hugging toward. >> and you sort tag out with the idea thatnvestare tors are huggg toward >> and you sort tag out with the idea that in a populist wave, they do become a target.

>> potentially if you have wealth and equaledity, and you have this search for kind of who is profiting from this situation, still popular unhe's. ease world market caps are about equal to gdp right now when we come back, uber is in the spotlight again "new york times" columnist mike isaac breaks down the future of the ceo. [vo] when it comes to investing,

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welcome back i'm dominic chu. markets are moderately higher with consumer discretionary one the. among the leaders, you have travel stocks like priceline.com, also trip adviser and expedia. royal caribbean, as well up by a percent or more at this point. sector also down for the month but this is the year's third best performer so far. but take a look at some of the retail etfs out there, all of these stocks doing their part to at least try to rebound. but remember, some of the struggling retailers have a very long way to go before we see any

kind of improvement from their performances many them still hovering near 52 week lows that's it for this hour "squawk on the street. back downtown for the start "squawk alley. back to you. thank you, dom it is 8:00 a.m. in oakland, 11:00 a.m. on wall street. and "squawk alley" is live ♪ good tuesday morning welcome to "squawk alley." big tech is on the rebound on after taking a tumble in the