of corporate corner offices and well. it is friday, april 12th, 2024. "squawk box" begins right now. good morning. it's friday. here we go. welcome to "squawk box" here on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with andrew ross sorkin. joe is out today. let's see how things are shaping up on this friday morning. after a wild ride this week, what we have seen with equities and treasuries, you are looking at a flat open this morning for the dow and s&p. dow is up 5 points. s&p is down 10 points. the nasdaq is off a little more. the big gainer yesterday.

down 70 points. the nasdaq was the standout yesterday adding 1.6% to close at the all-time high. apple was up 4% on reports that it could be overhauling the mac line. we have more coming up in a bit. to the treasury market, let's look at what is happening with yields. this is a wild week for yields. the ten-year yield is lower. still well above 4.5%. 4.53% right now. the two-year note at 4.92%. let's also look at crude oil prices. the prices are moving higher on rising tensions in the middle east. in fact, this morning, you see things up by $1 for wti. $86.05 a barrel. we are waiting for the banks to report. over the next hour, jpmorgan chase and wells fargo and the world's largest money manager

blackrock and citi will turn in the first quarter report card. we will get reaction as soon as numbers are released. we need to get to leslie picker because black rock is out. leslie. >> bottom line in at 981. a 24% year over year. top line is 4.728 billion. up 11% year over year. aum at 10.5 trillion. that was up 15% and beating estimates on aum as well thanks to total net inflows of 236 billion over the last few months. 76 billion of long-term net inflows. the top line was driven by the positive impact of average aum. that is based on the higher

performance fees and operating margin coming in at 42%. that is up 180 basis points there. larry fink saying in the release with markets full of complcompl, clients coming for advice and we see growth potential in infrastructure and retirement and whole portfolio slux portfo. the company issuing global debt. you can shares up 1.6%. guys. >> leslie, thank you. those are good numbers. i assume we will see good numbers from the last quarter. the question is what the numbers look like moving forward. >> leslie, the big question for the other banks that are reporting today. the banks, what happens with higher net interest income?

if we are talking about rates higher for longer, that is a significant change in the outlook for what we can expect profit wise. >> it is a change and benefit of the bigger banks that have more asset sensitive balance sheets. shorter term duration loans they lent out. they are re-pricing at a higher rate. higher for longer benefits them. they don't have the competition that we have seen in the previous rate hiking cycle the thes to require them to pay out the depositors more. that has to do with the regionals we saw last year and the issues surrounding community banks and regional banks. people have kept their money in the bigger banks regardless on wha they pay on deposits. if the rates are higher for longer on the asset said. especially how they change their guidance. >> leslie, i appreciate it. we should mention that larry

fink is going to be on cnbc later today on "squawk on the street" after the conference call with investors. morgan stanley is expected to report results next week. that stock dipped on reports that the company is under investigation. the multiple federal regulators are probing morgan how it vets clients at the bank who are at risk of laundering money. s.e.c., office of the comptroller of the treasury and other offices are looking into the bank and if it investigated the identities of prospective clients and the wealth. shares are down .04. shares of globe life recovering after tumbling 50% yesterday. it is looking at a new short seller report from fuzzy panda research. you saw that? i want to make sure everybody got that. alleging multiple instances of

fraud at the company, including policies written for dead or fictitious people. we will watch that. the stock is back up close to 10% this morning. obviously, a tumble after that report. >> a drop of 50% on the week. ford motors is preparing to resume shipments of the all electric f-150 lightning pickup truck. the automaker is working out quality issues. the price cuts come three months after the adjusted prices on the lightning which included increases on some models. ford shares this morning are unchanged. for the year, the stock is up 3%. when we return this morning, apple's mac line may be about to get an a.i. upgrade. that stock is on the move. we have more on that story in

just a little bit. amazon is one of the names that also pushed the nasdaq to an all-time high. amazon back to the all-time high levels. the last of the big five to do that. powerful moves this week. wl talk to the top analyst about that sector next. i am here because they revolutionized immunotherapy. i am here because they saw how cancer adapts to different oxygen levels and starved it. i am here because they switched off egfr gene mutation

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box." apple shares are climbing yesterday. jpmorgan chase analysts saying apple shares are getting attention from hedge fund investors due to the stock slide. p a apple shares are down this month. and bloomberg reports that apple is overhauling the line of the macl line. the company touting the m-3 chips and they could have the new chips later on this year. we will talk to steve kovach in the next hour about this. the magnificent seven doing the heavy lifting for tnasdaq. for more on the tech sector and internet stocks, we are joined by marc mahaney.

marc, the big stocks are picking up. let's start with amazon. that is the best long-term call. >> it is our number one pick in the internet space. >> why? >> we think we had an inflection point. we had aws growth acceleration and record high retail operating margins. i think in the shareholder letter yesterday and interview with andrew, we got a couple of data points to that. for the company, we will have record high free cash flow margins this year. when you have that come together, you have more of a re-rate in the stock. 25 times free cash flow on the numbers next year with the 220 stock price. this could go 20 or 30 times free cash flow at 40%. that is reasonable.

you can get up to 2 250. i think amazon is still one of them which is a high quality asset. >> in terms of what we are seeing right now with a.i. and what that could mean for apple, the stock which has been under more pressure this year, what do you think when you check those things out? >> i don't cover apple. a.i. and generative a.i. is the number one issue out there for tech companies. generally i think it is a tailwind for digital first tech companies. most internet companies have been investing in a.i. for several years. if i just pivot back to amazon, this is a company that improves products and processes on the retail side and helps the ad targeting and ad creation. that was interesting that came out yesterday. on aws side, the gen a.i.

revolution will be on the cloud. somebody needs to store it and compute it. aws is hard to see anybody doing more compute or storage with gen a.i. than aws. >> the other advantage they have is the infrastructure they built up on the retail side. andy jassy laid it out in the letter. they can deliver 7 billion items same day. that is something that is hard for anybody else to surmount. >> two key points, becky. they built the moats around the business. this is the competitive advantage. logistics. they can serve an item. go from click to your door step more cheaply than anybody else's can. that means they can do it faster than anybody else can. what an advantage. you mentioned the $7 billion number. you are in the investment cycle.

they are in harvest mode. that investment cycle that caused the stock to under perform, now you are on the back side and you will have that number that they gave yesterday for the first time since 2018, the cost to deliver decline by 45 cents. you will hear that again next year and the year after that. that is where you are in the cycle. that means margins will rise for the company. a great spot for investors to be in. you are on the other side of the investment cycle t. >> mark, how do you feel about aws as it relates to microsoft and google? there has been a view among some they were behind when it comes to the large language models. andy jassy has taken the approach that all of the large language models, not becoming commodities, but notthe important element that will

change everything and having the exclusive relationship with openai or someone else isn't the thing that will change everything. do you have the same view or no? >> i'm not sure, andy. maybe andy jassy is right or wrong. it is unclear to me. i think this is the one big risk to an amazon bull like myself. if in two or three years we look back and say this was the moment at which aws lost its cloud leadership in terms of product innovation and market share -- that's a plausible scenario. that is the one thing that would take out the long call here. i don't think that's true. i think amazon has the wonderful advantage. first mover advantage and scale advantage. great data security. a lot of advantages they have, but there's no question competitive risk has risen for amazon over the last five years. >> they are building and i made a couple of references in my

questions to him. you can tell he did not want to address it because they have not announced it publicly. there is a large language model project inside amazon called olympus. it will be as good or if not better than the chatgpt. clearly, they are behind in terms of building that. how important is the project like that in your mind? >> i think it is extremely important. you are right. i don't know they missed the gen a.i. trend, but they were not at the cutting edge of it, i would say. i know the company has invested a lot in a.i. over the years. when it came to enterprise solutions and the rollout of gen a.i. tools, they were caught offside. i guess they could catch up with the advantages with the scale and data security. it is possible they don't. i think this is something they absolutely need to nail down.

their lom offering. >> mark, i'm surprised that's the only risk you see this being your number one call. andy jassy was outspoken yesterday and talking about government regulations and how far it has come and how wrong he feels they are on some counts. that doesn't rank as something to change your mind if regulators come after amazon hard? >> there are tons of risk when it comes to amazon. the biggest is the potential loss of cloud market leadership. regulatory risk is up there, too. you know, andy jassy sounded a little bit -- i was surprised by the tone he took on the pushback on the irobot acquisition getting shutdown. there's no question the head of the ftc made her career on anti-amazon anti-trust case. i did not think that held water,

but what do i know? amazon, there's not the dominant market share in the segment. you can easily find with some other companies, perhaps google the and search. i don't know what acquisition you force them to divest? could you force them to divest in aws? that isunlikely. the regulatory risk at the least is amazon cannot do acquisitions the way they did before. that is a risk. >> mark, thank you very much for joining us on this friday morning. good to see you. >> thanks, becky. coming up when we return, we will talk about this one. harvard now the latest ivy league school going back to standardized testing requirements. what are the implications for dei on campus and corporate america? we get a crash course xt wnehen "squawk box" returns with that story and so much more after this.

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welcome back to "squawk box." harvard university is the latest school to reinstitute standardized testing. this is following other schools like brown and yale. we have sean harper who is the founding director of race and equity center. good morning. a big decision. a controversial division in circles. i'm curious what your reaction was given that harvard is atop the pecking order in universities and may now, if this is a trend, it may become

many other universities follow suit. >> good morning. thank you for having me. i will say that i was obviously disappointed that harvard and a handful of other highly selective private institutions have unnecessarily returned to a practice that ultimately makes no difference in the determining who is likely to succeed in college. it has been proven over and over and over again that standardized admissions testing is most useful to admissions offices for conveniently sorting applicants. not determining the student likelihood for success. >> har revard cited a study suggesting as a result of not having access to the scores and the scores are not the entirety of how they will decide to admit or deny people to the school, but it was an extra metric or an

important one that would help them in a very socioeconomic and blind way of trying to understand the full strengths of the student. you don't believe that's true? >> i do not believe that's true. as a matter of fact, it is the exact opposite. the research makes painstakingly clear this is generational wealth and zip code and household income and socioeconomic profiles of applicants' high schools and high cost of private coaching and high cost test prep services that ultimately shape how students perform on these standardized admissions tests. they are not iq tests. in other words, really using the holistic set of metrics without

using standardized testing scores gives us more of an opportunity to ensure the students who are not privileged in the ways i just said are not given unfair advantage. >> what do you make of the results of some of the studies and other commentary from admissions offices saying we get the essays and grades. every school around the country will be different. some schools are going to be getting "as" and some schools don't have the same grade inflation. by having the test, a singular test, that you can see something that is the same across the board and across the entire country. >> that's the problem, right? the test itself is not a test of merit. it is a test of wealth. it is a test of parents' educational attainment and the factors i noted.

they are not iq tests. i will also say it is so disappointing that harvard and others have chosen to pull the plug on an experiment that is too early to make conclusive determinations. what i mean by that is during the covid-19 pandemic, just about every college and university in america that o relied on standardized testing relaxed the standards and made testing optional for students. you know, what we have seen certainly from the university of california is the nation's highest education system. uc and berkeley is tied for the top universities, public universities in america, both get twice as many applications as harvard. they have suspended their

reliance on standardized admissions tests. they found that they have gotten more applications and have been able to be more selective and able to offer admission to more deserving californians and others around the world. that experiment is going very well. we have seen it in other higher insti institutions. >> shaun, i know you brushed it off as being lazy as sorting through students. if you are supposed to go through tens eof thousands of student applications and cannot rely on gpa because you don't know the school district or great inflation at one school over another school, how do you expect them to sort this out? there are so many students who can look similar on one page. you can write an essay, but the average time on an essay is five seconds. you have to catch them in the first line of the essay. how are they supposed to

distinguish between students and that many students in that small amount of time? >> i'm so glad you asked me this question. i worked professionally in college admissions and graduate admissions for five years. over the entire 20-year career, i and my colleagues are reviewing admissions for the program at usc. this is not conceptual. you have to read the materials. you have to do the holistic review of all of the various pieces. you know, we should not make this a convenience exercise for admissions officers. >> tons of applications. >> if harvard is overwhelmed by the thousands of applications, it should take money from its endowment and hire more people to review those applications. >> shaun, we have to go in a moment. i want to connect this to corporate america and the dei efforts going on there and what

you think it means. one of thethings that i wanted to ask is there was a review after universities would not bring the tests back because they were trying to enact a more progressive dei policy at the universities and by putting the tests in place with scores like this, that it actually would make it harder because you can look at the supreme court decision and others where there are and we can decide if they are meritocratic or not. my score is higher than that guy's score. how is it possible you are not letting me in? without the test score, there was more flexibility to make decisions separately? how do you think that relates to corporate america thinks about dei in hiring and promotions in

terms of what we are seeing across the country right now? >> i think it is really important to keep in mind that we only have been without standardized test scores in the modern era for three or four years. again, the experiment is too new to reach sweeping conclusions. the other thing i will say that i think is really important is that most applicants who sue universities for racial discrimination will claim that it is because my s.a.t. or l.s.a.t. score or g.r.e. score was higher than the other applicants. the other applicants had so many more compelling factors in the applications. actually, the standardized admissions tests make universities, private ones especi especially, more susceptible to litigation. in corporate dei, here is the good news.

most colleges and universities in america are fairly open access. ultimately what this means is we will have fewer graduates who are people of color and low income backgrounds and so on from diverse backgrounds from harvard and schools like it in corporate america. the good news is that we will have more or the same number of those applicants or professionals from other schools beyond the highly selective privates. >> shaun, thank you for joining us this morning. it is a hot topic. it is not going away. i'm sure we'll talk about it more with you again in the near future. thank you. >> thank you. when we come back, we are waiting on jpmorgan chase, wells fargo and citi to report results. we will bring you the numbers and instant reaction as soon as the companies report. as we head to break, let's look at the s&p 500 winners and losers.

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good morning. welcome back to "squawk box." it's friday. what a week it has been. the dow futures up 20 points. the s&p futures off 10. the nasdaq, the big performer yesterday, came in with 1.6% gains for the day. it is down this morning. we will see heas we get closer the opening bell where we are going. how this week's data put a speed bump on the rate path and if it could be more like if rather than when for potential cuts. reminder, you can get the best of "squawk box" on your favorite podcast. we'll be right back. an ford ab nium for nuclear energy fuel

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our next guest's piece points to the interest rate ch challenge for the fed. that's the headline for the piece. nick timeros is with us. nick, this put a curve ball into things. people are trying to rethink when or if the fed is going to cut interest rates. what are you hearing? >> becky, the fed doesn't cut for free. that is the story since the pivot in december. you need to see at least one or two things. either weakening in the labor market or meaningful slowdown in the economy would get the fed in the position to cut or you need to see inflation coming back down to 2.5% with evidence it will get to 2% in a reasonable time timeframe. it looked like we might get that in the last couple months. after the cpi report on

wednesday, you have to wonder. this year is beginning to feel a bit like the reverse of 2015. in 2015, the big question was when was the fed going to do the first hike? when would we have liftoff? at the end of 2014, officials were talking about multiple hikes in 2015 and the economy kept hitting pockets of weakness and they pushed back to the end of the year. the fed only hiked once in 2015. this feels like it could be like that. the big question is when will we have the cuts. right now, you have to reset the clock because of what happened on wednesday. >> it feels different than 2015 to me because i think part of the issue is the economy is so strong. we haven't seen that weak economy that would necessarily argue for fed cuts. inflation has been the one issue. if you are looking at the overall economy, there are two takes. if you think this is a situation where the economy is really strong and the jobs market is still kicking along, but

inflation is bumping up and down and the one thing i would say is the ppi number yesterday were in line with expectations yesterday. maybe that is leaning to the camp of the bumpy up and down situation before they get inflation more comfortable. >> yeah. i would say 2015 was the mirror opposite of what we have right now. back then, fed officials were revising down the projections of the long-run interest rate. now they are running it up because the economy has been strong. there were three basic scenarios here. one is we still have the bumpy path down that the fed chair jay powell has been talking about. it is bumpier. it is not happening as quickly as we thought when we were looking at the six-month annualized inflation rates at or below 2% at the end of last year. the second scenario, where you put more mass on after wednesday, is inflation might just stall out closer to 3% if

you look at the pce index, then it is below 3% . it is closer to 3% than 2%. with strong growth, that gets you a higher for longer and we stay at 5.3% fed funds rate for longer. this isn't the worst thing in the world for the fed. it does make it harder for them to get on to the golden path that austan goolsbee is talking about. the worrying scenario, of course, would be a slowdown in growth with high inflation. that's the place the fed just doesn't want to be. it doesn't feel that's where we are right now. >> you have been watching this very closely. you hear the commentary from a lot of fed owe iffficials who st we are in no rush. wedocn't have to push this. some like raphael bostic saying one cut this year, if that. where do you think higher for longer lands us? is this a situation where you think there is one cut or none

this year or are you still feeling generous? >> it is really tough to tell. i want to see what the inflation data looks like. if inflation stays closer to 3% than 2%, i think the bostic scenario is a reasonable base case. the debate, becky, on the committee boils down to what do you need to see to have that confidence and specifically do you need to see a weaker labor market? the big surprise has been we got the disinflation with, you know, even if inflation is sticky, wage growth is coming down. the labor market is loosening. it is not weak at all. you are not seeing the fear that you would have had higher wages or sticky wage growth. how much more weakness do you need to see in the labor nomark? where the fed chair has been, this is fine. we don't need to slow down the

economy. he is not talking about pain to get back to 2%. he stopped talking about that in the second half of last year. there are other people on the committee, becky, who want to see more evidence that you will get the slowdown here and the way you have that is with a weaker labor market. it goes back to how do you have infl inflation. is this a top-down scenario and you need to slow everything down? business will not take pricing power if the economy is weakening? you look at motor vehicle insurance. is that something that monetary policy will get? this is like you threw a boulder into the lake with the car prices going up. the wave is hitting the shore and is this a 20% increase in motor vehicle insurance. you have to wait for the bull whip ripples run into the system. >> we had jason on yesterday.

he is a former official and democratic administration. he looks at this and says you have to be crazy to raise rates right now. this is a situation where monetary policy is looser. you can see that with so many things. is that the type of message that people are really grappling with? if you have somebody who served a democratic administration looking at this and saying jason furman is a numbers guy who looks at the numbers and says this doesn't make sense. >> you are right. susan collins, the boston fed president, gave an interesting talk yesterday. she said the urgency to cut rates has gone down. she wasn't pointing to the inflation numbers. chef she said at the beginning of the year you could paint a picture of the labor market which had some cracks in it. you don't see that right now. the data is better this year. she pointed to the financial conditions which has eased. she said that maybe interest

rast rate policy is only moderately restri restrictive. if the labor market is better than you thought it would be, then the case to cut rates has receded. that is why you see all of the economists pushing back when we start the cuts and how many you are likely to get this year. all conditioned on the economy continuing to run at a solid pace here. >> nick, thank you for talking this through with us. we watch it closely. >> thank you, becky. let's get to leslie picker with breaking news from wells fargo with numbers just coming out. leslie. >> wells fargo also beating on the top and bottom line here. the bottom line coming in at $1.20 per share. comparing to estimates of $1.11

per share. reporting $20.9 billion. 1% compared to $22 billion that analysts were expecting. that was the expectation for a decline. they have a small increase in revenue. here is what the market is for united focused on. guidance is unchanged compared to prior guidance. it was expected to be 7% to 9% lower than the full year 2023 level of $52.4 billion. wells is not updating its guidance. this is going to what we talked about earlier in the hour about how a higher for longer interest rate may benefit firms. wells was on the list that could benefit from the environment. they are not updating guidance at this time. other highlights here with investment banking fees up 92% year over year to $301 million. provision for credit losses is a slight beat there. coming in at $938 million which

is $1.2 billion in charge offs. decrease in the allowance for credit losses. it is also worth noting these results and those from the other banks we are expecting to see an additional fdic special as assessment charge. this is in addition to the one from q4 because the fdic raised the estimate for the hole left behind from the bank failures from last year. for wells fargo in particular, that was 6 cents per share in additional expense which is reflected in the $1.20 per share. back to you. >> leslie, stay where you are. we will watch the numbers. i want to bring in stephanie link at hightower and cnbc contributor. we got the blackrock numbers and wells. we will get jpmorgan chase and citi up next. i'm curious over your reaction to the wells numbers. >> the stock has had a heck of a

run from the october lows. the stock is up 40% to 60% from the october ows. expectations were pretty high going in. little disappointed with wells guidance and not giving guidance. they're conservative. it is the first quarter. there are a lot of giving guidance. but they're conservative, it is the first quarter, there is a lot of moving parts, andrew. i think the biggest question in my mind and we're going to learn about this on the call is on all the calls, by the way, is that 2024 was supposed to be the year of revenue growth accelerating. and with higher interest rates, there is a lot of puts and takes. is that now pushed out to 2025. in the meantime, i think you're going to have very mixed quarters like net interest income, all the companies are going to be down sequentially, but probably up year over year. a net interest margin is still hard headwind for these companies. probably down midsingle digits,

but expenses are where they're going to be able to flex. i think that's why wells beats. >> i need to press pause. i thought i needed to press pause. continue your thought. i apologize. >> i think expenses are where the companies are going to be able to shine. i think that bank of america has done a better job, one of the best jobs in the industry, but all the big ones, the big six, that's where you can have some leeway, some operating leverage if you can get better top line. so we'll have to see. they're all going to be mixed, andrew. this is not going to be another -- this is not a clean quarter, another round of -- >> i don't know if you had an opportunity to look at the block rock numbers earlier. is there a way away from those in terms of looking forward. it all looks back at this point. given where interest rates are, what kind of inflows you think they're going to have in the future? >> i think that's the absolute bright spot.

the inflows. it is kind of a simple story, if you think that -- if the market is going up, if you think it is going to continue to go up, you're going to continue to see inflows, and that's what they saw. so, it will be interesting to hear their commentary, though, about how the etfs, all these -- the crypto etfs are doing. i think that was a nice help and tailwind for the company as well. they just are a consistent, no matter in good times, bad times, able to deliver, they have size and scale, and just a tremendous management team with great execution. >> steph, hold that thought, because we do have some new numbers coming in. jpmorgan out with its quarterly results as well. let's get over to leslie picker, digging through the numbers. what did you find here? >> hey, becky, yeah, a beat on both the top and bottom line, bottom line eps coming in at 4.44 per share. that compares to estimates of 4.11 per share. revenue, $42.5 billion on a managed basis, compared to $41.85 billion on a managed

basis. net interest income, the firm saying that it declined 4% sequentially and diamond noting in the release that he expects normalization going forward for nii and credit costs. nii is the profitability metric for loan making. it is seen as being beneficial for jpmorgan and some other firms as we look for potential higher interest rates for longer. the company also reporting a $725 million extra charge for that fdic special assessment, in addition to what they already reported from the fourth quarter. those estimates from the fdic have increased since then. some commentary from dimon in the release, he says many economic indicators continue to be favorable. looking ahead we remain alert to a number of significant uncertain forces versus the global landscape, terrible wars and violence continues to cause suffering and geopolitical tensions are growing. he also goes on to say there are

a number of persistent inflationary pressures which most likely continue and he says that we have never truly experienced the full effect of quantitative tightening on this scale. he says you don't -- they don't know how these factors will play out, but we must prepare the firm for a wide range of potential environments. so echoes what he wrote in his investor letter from earlier this week. so, still digging through this release, but you can see shares are down about 3.8% right now. guys? >> that's a big drop in the shares, given the big beat on both the top and the bottom line. maybe his commentary, again, you mentioned, it is similar to what we heard in his annual letter. the idea there are these inflationary forces at play, if he sees that, that is certainly something to be a little concerned about. >> yeah. at first glance too, i would also add that it could be the sequential line in net interest income and the expectation that that normalizes, and could be pulling on the shares this morning as well.

i'm going to continue to dig through and let you know if i see anything else. >> we're going to go back to steph. i would love your reaction to the jpm numbers and to the extent you're surprised or not that the stock is off on the back of what otherwise seemed like good numbers. maybe it is the forward guidance that has people more anxious. >> yeah, no. from the october lows of 44%, and the valuation is definitely one of the more expensive ones. rightfully so. they're a great operator, great execution, management team and all that. 1.9 times book. net interest income down 4% sequential in line with expectations, implies they are up double digits, year over year. that's what we're expecting. we're expecting net interest income for all these banks to be down sequentially but up year over year. it sounds like that's pretty much in line. the problem is with the stock running up so much, you can't just report in line. i think this commentary is in line as expected of what i

expect from jamie dimon to be cautiously optimistic and realistic. >> okay. we're going to leave it there for now. we have a lot more coming up. we're going to get citigroup's numbers in a little bit as well. but when we return, a well known investor announcing a new akste in openai. we'll bring you that story and more and the earnings reports. "squawk box" returns after this on a friday morning.

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we are approaching 7:00 a.m. on the east coast. you're watching "squawk" on cnbc. i'm andrew ross sorkin with becky quick on this friday morning. got a number of big stories to tell you about on this friday morning. "wall street journal" saying that federal regulators are

investigating morgan stanley's wealth division over how it vets clients for at risk of laundering money. the stock dropping yesterday and is down now again this morning. china said to be directing its largest telecom carriers to phase out foreign processors that are key to their networks by 2027. that move with hit both intel and amd. you can look right now, both of the stocks down this morning on the back of that news. ford cutting the price of its f 150 lightning pickup truck by $5,500. the discounts come as inventories of electric vehicles soared by 200% industry wide so far this year. last week ford announcing it was switching its focus to make more hybrids. check on the futures this morning. we have seen a big drop just in the last several minutes. you're going to look now at the dow futures off by more than 120 points. we did get reports from big

banks, those banks under some pressure. jpmorgan beat expectations, they're trading lower right now. s&p 500 futures are down too, though, to the tune of 22. nasdaq futures down by almost triple digits at this point. we will take a look at the treasury market in just a moment. first, over to dom chu, he's got a look at this morning's premarket movers and, some reversals, just in very quick order here, dom. >> that's right, becky. it is what you alluded to, what you've been talking about with andrew, with leslie picker en this late breaking earnings news with the biggest banks in america. that's where we're start off. update on where the stocks stand right now, we'll start with america's biggest bank by market value assets and everything else and that's jpmorgan, dow component as well, which is right now down by 3.5% and that's off the worst levels of the session now. it was down more than 4% a few minutes ago. 100,000 shares plus of premarket trading volume and it is understandably picking up right now. again, like you pointed out, a beat for profits, a beat for revenues, also jpmorgan setting

aside less money for future potential credit losses. there are some concerns around the numbers, how much money it makes from lending activities, that so-called net interest income. jamie dimon making comments, there appear to be a large number of persistent inflationary pressures which may likely continue in the future. we'll watch jpmorgan shares down 3.25%. turning to shares of wells fargo, out this morning, which are now down by 1.5%, that's off again premarket lows, down 3% half an hour ago, just around 20,000 shares of volume, 15 minutes ago, just when wells fargo reported. again, here, a beat for profits and revenues. this is america's third biggest bank by market value. net interest income concerns also percolating through some of these results as well. so, wells fargo and jpmorgan both kind of parsing through the numbers for the late breaking earnings news. and we'll cap things off with our third financial of the morning. not a big bank, but the world's biggest asset manager, is shares

of blackrock higher by 2% right now. just over 7,000 shares of volume. this is the parent company of products like those ishares exchange traded funds and life path target date funds and others. they reported properties and revenues that both topped estimates. blackrock was helped into the strong market that led to an increase in assets under management that goes to more fee income for those. that did hit $12 trillion during the quarter,s s that's up $1.4 trillion from last year. tune into at 9:00 a.m. eastern time hour, when blackrock ceo larry fink joins us for a first on cnbc interview. that's the current state of play. back over to you. >> dom, thank you very much. if you want to take a quick look at the dow laggards. jpmorgan is at much to the list now. down by 3.5%. the dow was in positive territory. the dow futures when we started the show at 6:00 a.m.

you see things have taken a turn for the worse with the dow looking like it is down by triple digits. jpmorgan chase down by 3.5%. chips were putting pressure not just on the dow, but on the nasdaq as well. intel is off by 1.7%. followed up by speciaalesforce apple. right now with morge reaction, david george joins us. what did you think looking through the numbers? even though both the banks beat on the bottom and top line, you are looking at both the stock selling off. >> good morning. from our perspective in terms of the stocks, keep in mind that both of these names have had big moves so far in 2024 and i think there was an expectation that both companies were going to guide up, becky, with respect to net interest income. i think there was some hopes, particularly out of jpmorgan, we're going to see more upside as it relates to the net interest income and we didn't get that, but, again, the quarter was fine, credit quality

was good, market businesses were good. they did beat q1 on both top and bottom lines. so i think it is important to have that perspective that the quarter was good. but at 2.4 times tangible, becky, from a valuation standpoint, the market simply wanted more. >> david, is that reidiculously high expectations. producer prices were not hotter than expected. if you're going to raise your net interest income, it is going to be on the idea you are much more convinced the fed is not going to raise rates anytime soon. that may just be a step too far for any of these banks toup to that. by not saying it, maybe they're just being conservative and playing it smart. >> i think that's right. i was going to say that i do think they're being conservative. but, again, the hope springs eternal, particularly with forward expectations with the fed. as you mentioned, expectations

have been incredibly volatile, so, i think in both cases that there is some conservatism at place. this is simply a situation of some profit taking after very strong moves in both of these stocks from our standpoint, both of them are very crowded in the investment community. so, a little bit of softness today is not particularly surprising given, again, those guides for just a little light, i think relative to maybe what market participants were hoping for. >> we haven't heard from citi yet. which is your favorite of the three? >> we're neutral on both jpmorgan and wells fargo. wells fargo we were big bulls on for the last couple of years and downgraded earlier in the first quarter. and jpmorgan neutral on over the near term for the same reason. our preference, becky, has been in that regional bank group, the valuation and risk reward trade-offs and from our standpoint at least is much more attractive stocks like comerica, truist, key, huntington, look

much more attractive on a valuation basis relative to the megacaps which from our standpoint are much more crowded and a lot more expensive. >> you didn't mention citi. >> we don't cover citi, so i can't give you anything there. >> i wasn't sure why it was left out. i wanted to make sure it wasn't, oh, they really stink or they're really great. thank you for claire rifying. >> thanks good morning. shareholders getting ready to vote on the big planned takeover by japan's nippon steel, but the steel workers union has some issues as you know. long time steel industry executive dan dimicco will join us, he's in that camp and he's been speaking out on social media. he joins us after this. you bring a lot back

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welcome back to "squawk box." shareholders of u.s. steel will vote today on the planned takeover of the company by japanese firm nippon steel. this comes amid the steel workers labor union opposing this buyout. our next guest says the deal should not happen regardless of the vote. joining us now is dan dimicco. good morning to you. you've been relatively outspoken on this issue. but we'll give you the floor and the mic to make your case. what is your problem with this deal? >> good morning, andrew. long time, no see. long time, no talk to. >> it has been a while. great to have you here. >> it is great to be on again. i understand becky is with you this morning? >> i am. hi, dan. >> hi, becky. listen, first things first, today's a friday, right? and throughout my career i celebrated red shirt friday, which i have a red shirt on today, to honor our men and women in the military, past, present and future.

and i appreciate you letting me get that in. and as you know, i've been retired now for ten years, still very active through a number of different organizations in bringing manufacturing back, strengthening manufacturing in our country and our supply chains. with regard to this deal, let me just say this, for too long we have allowed ourselves to see our manufacturing sector become decimated in this country. for decades, the steel industry has been under attack from the legally traded steel. we have won numerous, hundreds of trade cases, many of them against nippon. nippon isprobably as guilty as anybody in undermining the strength of the u.s. steel industry over the decades. and i'd like to make one very important point. no u.s. steel company would ever

be allowed to buy nippon steel if we approached nippon to buy them and surprise, they actually agreed, the japanese government would never allow it. never. just can't do it. there is no reciprocity on things like this. and it would be ridiculous for us to allow basically a state-driven nippon steel, japan inc., if you will, to come in here and buy up one of our largest u.s. steelmakers. >> dan, but i think -- >> let me just finish. "the wall street journal" would never write an editorial about the fact that the japanese wouldn't allow us to buy nippon steel, all right? there would be no talk of protectionism, there would be no talk of isolationism.

nothing about any kind of protectionism, okay, or any other ism. you would never see an article in the wall street journal about it. you have "the wall street journal" and others saying we should let this happen. >> let me just play devil's advocate for a moment. i'm not sure personally where i stand on this, but there is an argument to be made that the united states is different than japan, it is hopefully very different than china, it is different than a lot of other countries. and that one of the things that makes the united states such a remarkable country is that we are open, and hopefully open oftentimes to investment from around the world. and in this case, we would be open to investment from an ally. this is not china, for example, or some type of adversary of ours. what do you make of that argument? >> this is not a political issue. okay. this is not that we are attacking a friend.

japan is a friend. as you well know, throughout my career, i've been involved with a joint venture with japanese partners and we continued the relationship and to this day and it has been a great relationship. this is not anything against japan, per se, as a friend or as a trading partner. okay. or as a national global strategic partner in the war against what is building up, with respect to china, in the southeast and in asia. it has nothing do with that. what it does have to do with is us being stupid, okay? open does not mean stupid. as you well know, i've been antifree trade for 30 years. why? there is no such thing as free trade in the world. we're the only dummies that allow anybody to come into our country and do what they want.

the rest of the world keeps us out. and they dump our product in our marketplace, flaunting the trade laws that we all agreed to. this is not a matter of open versus closed. this is a matter of legal versus illegal activities that influenced our steel industry, help destroyed it over the years. also a matter of, you know, reciprocity. and it is a matter of national security. we have to have a strong steel industry. as an example -- >> dan, i don't disagree with wanting a strong industry and what it means for manufacturing jobs. i think oftentimes we talk about reciprocity and say, well, if this country would allow us to invest in this particular kind of company, we should -- it should be one for one. but the flip side to that argument is that the united states has been one of the great beneficiaries of being able to invest and open up countries all over the world and do business in all of these places, which

has benefited us enormously. maybe not in the reciprocal way you're describing from the manufacturing perspective, but there has been -- we have been the -- it has been a boon over the last 50 years. so, there is this question of how do you -- how do you continue to have thatbenefit if you will while also trying to keep as much manufacturing here at the same time? >> first off, we have not benefited. the working class, middle class decimated by the destruction of our manufacturing sector over the last 30 years. and because of that, we no longer can make our own products. we can't make our own pharmaceuticals, we can't make our own -- take of our own supply chains on a number of different issues, number of different products. manufacturing sector has been basically decimated. all right. and that's a failed approach. that has not been good for the united states. we can't even make our own munitions anymore. okay. we're running out of munitions.

so my point here is that, no, not everybody is benefiting. the fact it has been very destructive. it has complete undermined our ability to take care of ourselves in a world that is very dangerous. pure stupidity allowed that to happen. pure greed and ideas about how we can make the world a better place by letting our markets be destroyed by our trading partners. okay? it is not a matter of open. of course we're open, but we have to be open smart. we have to be open in a way that allows us to be a strong leader in the world, and we have allowed our manufacturing sector to be decimated, be destroyed, okay, over the decades, and that's put us in a position where we can't fend for ourselves and the shining light on the hill that we can be for the rest of the world. god nows this country needs to be there for the rest of the world today, despite our imperfections and despite our

mistakes. >> dan, it is a powerful message of -- we unfortunately have to run. but we're very glad to both see you, because you're, right, it has been too long and to hear that message and we will -- >> happy to come back anytime. >> thank you. >> have me back anytime, andrew. >> always. >> god bless. >> nice to see you, dan. when we come back, the threat of a possible iranian attack on israel growing by the hour. the latest on the middle east war and america's response is next. and later, anti-defamation league national director jonathan greenblatt will join us with new data on campus antisemitism. right now as we head to a break, here is today's aflac trivia question. the postal service plans on raising the price of stamps tt tto 73 cents. what was the price of thfie rst stamp issued in the u.s. in 1847? west answer when "squawk box" returns. i have a guess. we'll be right back. good thing i had aflac.

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at pgim, finding opportunity in fixed income today, helps secure tomorrow. our time-tested fixed income suite, backed by over 145 years of risk experience, helps investors meet their goals. pgim investments. shaping tomorrow today. welcome back to "squawk box," everybody. here is the answer for today's aflac trivia question. the postal service plans on raising the price of stamps to 73 cents later this year.

what was the price of the first stamp that was issued in the u.s. all the way back in 1847? believe it or not, the answer is 5 cents. the ben franklin stamp debuted on july 1st, 1847 in new york city. if you compare that with the inflationary prices for everything else, that's actually not bad in terms of an inflationary price. you have a pony that needs to deliver it these days, but there is your answer. new reports that israel is preparing for a direct attack by iran in the next day or two. this follows israel's assassination of several iranian generals last week. joining us right now on how to put this all in context for us is kareem sajapor with the carnegie endowment for middle east peace program. thank you for being with us today. there is a lot to kind of digest and figure out what's happening here. these reports are very concerning that there is an attack and it is imminent in the next day or two. how would you tell us to be

looking at all of this? >> well, becky, i think iran has to very carefully calibrate its response because on one hand, if they -- if the response is seen to be too weak, the retaliation is too weak, they risk losing face. but if their response is too aggressive, they risk losing their heads. always reminded of the quote from hanar arens who said even the most radical revolutionary the day after becomes conservative. the iranian regime controls a vast nation state with a lot of oil wealth and their supreme leader is one of the longest serving dictators in the world. he's been ruling for three, four decades now. and i think that's unlikely he is going to risk a full blown war with israel. >> what is iran's objective

here? >> you know, the ideology of the iranian revolution, you can really distill it down to essentially three things now. number one, they want to try to evict america from the middle east. number two, they want to replace israel with palestine. and number three, they want to try to bring down the u.s. led world order. but they always have done this via proxy. meaning when they either attack u.s. outposts or they go after israel, it is via the original proxies, hamas and palestinian islamic jihad or hezbollah and lebanon, the houthis and yemen, the shared militias in new york. up until now, it has been unprecedented they would launch an attack from iranian soil against israel. >> but we should see things differently this time around? there is a more likelihood this would be a direct attack?

>> certain risk is now greater than before. at the end of the day, as i said, the supreme leader who had long time strategic doctrine of attacking the united states, israel, now wants to risk -- likely to see, for example, attacks on israeli -- jordan, those that israel is -- at those embassies or if they were to attack one of those embassies, the risk of killing the diplomats is solely for the risk of -- and it would be symbolic victory for iran -- in the arab world. those are the types of things i think more likely than iran launches attacks from its territory inside of israel.

>> so, karim, we're losing -- taking some hits with the feed, i hear what you're saying just in terms of thinking that an attack on the israeli embassy in jordan would be more likely because that's closed and it could potentially win some points in the jordanian streets. meantime, when we come back, a lot more on "squawk." the state of the consumer where they're spending money. and andy jassy hitting back at regulators, how big pressure is handling pressure from the ftc and the doj. a look at this morning's leaders on the nasdaq. "squawk box" coming right back after this. help make trading feel effortless. and its customizable scans with social sentiment help you find and unlock opportunities in the market. e*trade from morgan stanley.

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welcome back to "squawk." reuters reporting that apple lost its bid to throw out a mass

lawsuit that was brought in london on behalf of over 1500 app developers over the app store fees. the case with up to roughly a billion dollars alleges that apple charged third party developers unfair commissions of up to 30% on purchases of apps or other content. this has been an ongoing debate, just a different one in this context about what is happening in london. we'll see where any of these cases land. but the u.s. government now going after this as well. and in the meantime, the biden administration announcing more than a quarter of a million student loan borrowers who have been in repayment for at least a decade will have their debts canceled. the 277,000 borrowers who will have $7.4 billion in debt wiped out will receive emails starting today indicating they have been approved for debt cancellation. the latest round of loan cancellations is a result of the department of education's recent changes in improved oversight of income driven repayment plans in their popular public service loan forgiveness program. controversial practice, it is

one that they have been under attack, the biden administration and there have been lawsuits. >> there is going to be more lawsuits. more lawsuits. when we come back, how consumers are feeling about the economy. steve liesman has the results of the latest cnbc national retail federation monitor. and later, what the next round of tax reform could look like. american action foruprm esident douglas holtz-eakin will join us about his latest "wall street journal" op-ed. "squawk box" will be right back.

all right, everybody, we have our early read on last month's consumer spending ahead of the government's own numbers. steve liesman joins us right now with the cnbc nrf retail monitor. looking forward to hearing this. >> here we go. consumers, becky, continued moderately strong spending in march, spending that looks even better when you consider that inflation. the consumer side of inflation is flat and even negative when it comes to goods. the cnbc nrf retail monitor, we get real credit card spending data from affinity solutions, it shows retail sales, auto and

gas, that's our headline number. year over year remains the same at 2.7. and core retail, takes out restaurants and we're 0.2 versus 0.3. but don't get too excited. that rounding is not a big deal. i call it a wash. the year over year did tick down, a strong number, 2.9% versus 3% in february. take a look at the history. considerable volatility over the past several months. spending bounced back in the positive territory for two months in a row now after that january decline, people thought maybe that january decline was the beginning of this long awaited consumer slowdown. well, we're still waiting for that as you might imagine, becky. looking ahead now at the sector, we have a pretty much even split here. 3 up, 3 down, total 6 up, 6 down. food and beverage is strong, up 1.2.

sporting goods and hobbies, good to see that up, that's almost completely discretionary. but there is all your home related stuff. furniture and home furnishings, building and garden supplies down in a big way in the month of march. electronics and appliances down. you had a big decline in prices for both of those. appliances could be related to a weak housing market. electronics could be related to just some deflation on televisions and that kind of stuff. despite higher overall inflation, goods inflation, you see here, has been flat to negative eight of the past 12 months. you may have missed this when you were blinded perhaps by the shining light of higher inflation numbers, but the goods part has been flat or negative. consumers were looking for value. there is a competitive market out there, says the nrf, bristling at the idea of price gouging going on by retailers. this could mean something to think about. possible margin pressure depending on what is happening with the input costs and the labor costs.

we get a piece of the input costs today, import prices at 8:30 this morning. yesterday's wholesale price suggested modest price pressure for the import costs. this is the six-month anniversary of our nrf index. here is how it looks to the census data. it looks a bit more stable. we don't have to revise this data, because we're using real data on the inputs from credit cards. we get the census guides on monday. the retail sales report and this number is in line with where the consensus is on the census retail data. >> i want to take this and add it to what we heard earlier this week from the bank of america institute. >> okay. >> they actually saw spending up for the month of march, i think a gain on households, they're looking at real households too. they have like 69 million households and small businesses that they're watching. card spending per household up 0.3% year over year in march. but that was boosted because

the -- >> year over year, month to month. >> year over year, 0.3%, following a leap year boosted by 2.9%. they saw real big numbers in march -- in february because of the leap year. >> 2.9, is that relative to 3 or -- >> i'm looking at the numbers here. >> okay. >> up 0.3% year over year in march. but when you adjusted it, you know what, though, it says year over year, i bet you're right. >> it has to be month over month. >> they had conniptions with the leap year. it is terrible. hard to do. you can't adjust it. >> it is not just the leap year. easter pulled into march and that pulled from april. >> did you see the algorithm for easter? >> it was numbers that were down. >> it is hard. what we did, i'm glad you asked this, becky, first of all, leap year gave us terrible fits last month. we pulled the data back before we published it to go over it one more time because one extra day, 30 days, is a big number. >> yeah. >> what we did with this

comparison and thanks to matt shay who is a smart economist at the nrf who i work with on this stuff, not matt shay, sorry, i'm drawing a blank, matt is his first name, but i'll get the last name, matt shay is the president. the economist i work with there. i'm having a senior moment here. what we did is for this comparison purposes, we threw out the 29th day to compare march to february. okay. and the february gain. >> you have easter that gets pulled into march which makes march look weirder too. >> it does, except for i do believe that the x 11 seasonal adjustment software program, i think it takes care of that. >> okay. >> i think it does. but these are squirrely moments here for the retail index. right now, i'm seeing 0.4, looks good to me. i saw the split between 6 up and 6 down in the sectors in the categories with a lot of that

weakness associated with housing. that makes sense to me. i see a good amount of discretionary spending going on. what i think matters here is we're -- my overall take on the economy right now is there area lot of risks out there, but not a lot of evident weaknesses. risks become weaknesses, so i'm worried about that we have the risk of the consumer slowing down. i don't see the weakness of this consumer slowdown. >> we have been looking for this. >> for how long? >> very long time. >> a very, very long time. >> all such concerns to this point. >> i have to get you the last name of this individual. >> while you're doing that, we're going to do this, we'll come on back in a moment. coming up, anti-defamation league -- >> mark matthews. >> shout out to mark matthews. >> i'm so sorry, mark. >> when we come back, jonathan greenblatt joining us with a report card, grading universities on how they respond to antisemitism on campus.

find out which schools are passing and failing. check out the futures right now. look at that. dow off 91 points. nasdaq down 91 points. s&p 500 off 18 points. a slew of earnings reports from the big financials this morning. we'll come right back.

all right, welcome back, everybody. let's look at the futures this morning, because the picture has improved from where we were maybe 40 minutes ago or so. you can see right now, dough fu dow futures are down. there was a bigger sell-off earlier with the s&p now down by 15, the nasdaq off by 80. part of that is because of what's been happening with the financials. we got reports from jpmorgan and wells fargo at the top of the hour. both of them came in with numbers that were better than anticipated, both on the top and bottom line, but the stock sold off. jpmorgan was down by 3.5%. potentially on some concerns about what might happen with net interest income from here. jpmorgan chase, jamie dimon

saying they expect more normalization with the net interest income, normalization meaning maybe not quite as lucrative. wells fargo did not increase its net income -- net interest income expectations for the full year, and that was a little disappointing to the street because what you have seen this week is maybe expectations that the fed won't raise rates quite as quickly. however, that initial knee jerk reaction has smoothed out to some extent, wells fargo shares are trading higher now, up by .6%. jpmorgan shares are down, by about 2.1% versus what we had seen down more than 3.5% earlier. >> the anti-defamation league is out with a report card for universities, grading 85 schools on rates of antisemitism and campus responses to discrimination against jewish students. m.i.t., harvard and princeton among those who fail. they got an f. brandeis and elon university receiving as. joining us with more on this, jonathan greenblatt of the adl.

most people go to harvard get straight as to get into harvard and now you're giving them an f. they're not going to be used to that. >> it is long overdue for the universities that issue grates to get graded themselves and how they're handling jewish students. what i mean by that, there has been antisemitism on the campuses for years. after 10/7, it exploded. so that was the point of the report card, to create an objective baseline, like an analytic framework to evaluate how are they doing and to encourage them to do better. >> this is, like, i mean, now that you have this grading system, have you gotten a response from these universities? >> oh, yes. >> and are they -- is it like u.s. news and world reports, which, by the way, has perverted the education system in its own way, but people desperately want to be higher ranked on the system. so i assume people don't want to get an f and they were hoping that next year they will get an a. >> it is a good question. i mean, we thought about, as we

were thinking about doing this, we thought about what is the best way to approach this issue? what is the best way to encourage a race to the top? and because i heard from parents all over the country, is it safe for my child to go to this school? is it okay if i go to harvard or m.i.t.? they want to know will they be adequately protected, supported? so we thought about a ranking like that, but that's the wrong idea. for us, we want everyone to get an a. it is not grade inflation. this will hopefully push them to do better. >> serious question. >> i hope they're all serious. >> but this is -- i want to put it on the table. >> shoot. >> you got kids? >> i got three. >> how old? >> 20, 19 and 14. >> okay. so -- >> one of them is at an ivy league school. >> here's where i go with this. let's say the 19-year-old one was 17, and let's say they got into any one of the schools that you just gave an f to, including harvard, et cetera, which people would say, oh, my god, i got my kid into harvard, i wouldn't the parent lottery, i did everything

right. >> yep. >> would you tell your child not to go to that school? >> so, look, again, my son is at one of the schools that did very, very badly. but the truth is you can't just take the entire dimensions of a university and distill it into one grade. but what in grading system does do is for me, as a parent, it allows me to know is the school doing enough, are they taking action, do they have the right policies, what is the climate like. so, again -- >> but when the parent -- take your own kids out of it. when some parent is calling you saying, my kid is a senior, just got into xyz schools. they got an f on all of your report cards. are you saying to them, okay, go to the school that has an a or are -- what are you saying to them? >> i'm saying go in eyes wide open. you need to know and your student needs to prepare for what's going to happen. let me give you an example. i spent the day yet at harvard law school.

this is arguably the top law school, not just in the united states, in the world, and the stories that i heard from the jewish students were abominable. i heard about a student government, you know, literally throwing the rules out the window in order to pass anti-israel resolutions. i heard about jewish students who have been e-mails, not responding to phone calls, et cetera. >> what did the administrators say when you issue a grade like this? >> look, we worked with claudine gay at harvard. some of these administrators i have e-mails in my inbox from university presidents and from parents saying this is unfair, this doesn't adequately represent life at my school. but you know what? if you don't have the right policies, becky, if you haven't taken the right actions, if you are not supporting your jewish students the grade speaks for itself. >> we were talking about dei earlier in the 6:00 hour because one of the interesting things that happened is harvard yesterday decided to bring back standardized testing.

>> yes, i saw that. >> these are in some ways interconnected issues. >> uh-huh. >> is your sense that -- and you have been outspoken i think about how the dei programs, at least as constructed, don't include anti-semitism in the right ways. >> we know that they don't, yes. >> does that mean ultimately that -- and you can see it now, the pendulum is swinging back it feels like. >> right. >> on dei. i think that's one of the indications, is this -- is the requirement for the s.a.t.. >> yeah. >> is that a good thing or a bad thing or is it thatthe dei programs need to be shifted and adjusted in different ways? >> so i'm someone who believes that diversity education is incredibly important. we are better colleagues or managers or classmates if we better understand the people around us and what they've been through and their background. but, andrew, to your point, if your idea of diversity, equity and inclusion perpetuates the exclusion of jews, that's wrong.

dei as it is currently constructed needs to be rethought, reimagined and repurposed. >> right. >> i believe that's -- >> you are okay with dei short of that? >> well, look, we live in the most multi-cultural, you know, pluralistic society in the world, becky. again, i think diversity education is important, but when we force our kids to play in the oppression olympics everyone loses. so some of the core tenets of what i call the dei ideology definitely don't work, even though diversity and inclusion are incredibly important. >> right. >> that's how i see it. so standardized testing is not something i'm an expert in, but i want these schools to get diversity right rather than the way they are doing. >> jonathan greenblatt, great to see you on this friday morning. >> thank you, guys. when we come back, amazon ceo taking aim at regulators who are increasingly blocking mergers. he spoke to andrew yesterday. we will talk@trus antitrust aft

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i can't believe you corporate types are still at it. just stop calling each other rock stars. and using workday to put finance and h.r. on one platform. tim, you are a rock star. using responsible ai doesn't make you a rock star. it kinda does. you are not rock stars. (clears throat) okay. most of you are not rock stars. oooh. data driven insights, and large language models. oh, that's so rock roll. it is, right. he gets it. yeah. over 60% of the units we sell are sold by third-party sellers. you know, it is not hard to actually create software to put

up an e-commerce website or store front. it is much harder to get distribution and access to customers, which is what amazon gives sellers. you know, our sellers on average sell about $230,000 in our marketplace. we have thousands of sellers that sell over a million dollars a year in our marketplace. sellers are making a lot more money selling on amazon than they could on their own. >> that was amazon's ceo andy jassy on "squawk box" yesterday. joining us to talk about the ftc antitrust seat against amazon and the regulatory environment, a former commissioner. good morning to you. andy made some pointed and fascinating comments about the irobot deal that was blocked and the state of affairs as it relates to regulation right now, what they can buy, what they can't buy. as a result i think you are seeing them do more partnerships, seeing the more big tech universe doing partnerships. do you see this changing any time soon? >> first of all, i want to say good morning. that was a great interview.

i thought it was very insightful because i think that is exactly what industry is thinking, that they're thinking that we have to be on pins and needles trying to figure out where to go from here. i think it is important to recognize that anything these companies do now are really viewed through a prism that the ftc and doj are looking through right now. they're looking through how big tech are using their power in order to maintain their market power, their share. >> right. >> and so they're going to view everything including what mr. jassy saw was the integration of a.i. you mentioned during your interview, for example, about the ftc looking at a.i. with microsoft and with google and with amazon. so i think it is important to recognize that they're going to continue to look at this, and it is not just for now.

don't forget the trial date is not until october of 2026 now. so they're going to keep gathering information to figure out is amazon using new technologies in order to -- in order to maintain their market power. but it is important to recognize that -- and i'm not sure all regulators totally grasp this, that the technology industry is iterative, that they build on innovations that they have and they -- sometimes they add to that by acquisition or by other types of cooperation. now, there is -- i think there's intended to be a chilling effect as to where companies can go with that right now, and i think that until the courts give them some guidance they're going to be treading lightly. >> do you have an expectation that if former president trump becomes the president come november that all of these cases end or continue?

>> well, i'm not sure. i mean because for one reason, don't forget that the case that the ftc brought against meta was brought before this administration came in, just before but before. the ftc has taken up the flag and run with it. so the real question is, what is the balance of consumer benefit versus consumer harm. and i mentioned once before in an interview on cnbc that one of the challenges for the regulators here is that people really like amazon and they really like the services they get and the way they're bundled together. so as you pointed out in your interview that the stores are doing very well and that consumers seem to be benefitting

from it and consumers seem to like it. >> are these good cases though? meaning on the law, are these good cases? the words that we heard from andy jassy suggested that this was overreach, that a lot of these cases may very well be beyond the law, that ultimately a judge is not going to side with the government. >> i think the ftc and doj would tell you that they are pushing the boundaries here, that they are trying to establish new benchmarks in the law. and if you look at their new merger guidelines, for example, they tell you areas that they want to grow into and they're being tested in court. so far not all courts have accepted their new view of what the antitrust laws are. so there's two things here. there's the law itself. >> right. >> as it is written and then how it is interpreted. i think that everybody would tell you and they would tell you that the ftc and the doj are

being very aggressive here. >> mozelle we have to leave it there. it is a long conversation. we have news coming out literally as we were speaking together because citigroup reporting quarterly results. i want to get straight to leslie picker who i know has been watching this. what do you got? >> hey, andrew. shares a little higher on the results which appear to be a beat on the top and bottom line. bottom line coming in 158 per share. that compares to estimates of 123 per share. top line, $21.1 billion compared to $20.4 billion from the street. now, that is exclude -- if you were to exclude last year's india divestiture which took place in the quarter, it led to a $1 billion gain. if you exclude that their revenue came in 3% higher for the year. a bit of a lumpy quarter as it goes through refocusing.

last quarter citi said it would be down 20,000 heads before end of 2026. hopefully we can get an update on that in the call today, but we did see operating expenses increase 7% year over year and net income down year over year. it came at $3.4 billion in first quarter compared to $3.6 billion in the prior year period, driven by higher expenses, higher cost of credit and lower revenue. they faced that higher fdic assessment to the tune of $251 million. if you recall as of last quarter they started reporting in five businesses. i can kind of give you the highlights of the five. services saw revenue up about 8%. markets, revenue was down there thanks largely to fixed income which was down som10 percent although equities was higher by 5%. fixed income is larger for the firm. banking revenue up 49% to $1.7 billion driven by growth in

investment banking and lending. those green shoots we keep talking about. wealth down a little bit and u.s. personal banking up 10 percent. jane fraser addressing the re-org in the press release. she said last month marked the end of the organizational simplification we announced in september. the results is a cleaner, simpler management alignment. it will help us streamline end-to-end processes and strengthen our risk in controlled environment. you can see it summed up in this quarter's press release. you can see the market likes what it sees. shares up about 2.5% right now. >> thank you very much. that is the third of the big banks this morning. we want to check on the futures after getting all of those numbers. you will see there is some improvement we've seen in the futures over the last hour, let's say. dow futures at this point are still in the red, down by about 50 points, but they were down

much more earlier before jpmorgan really had a chance to resettle things. that stock when it initially reported earnings was off by 3.5%, last i looked it was down by just about 2.1%. again, on lesser concerns about net interest income. maybe thinking these banks are being a little more conservative when they've not raising their forecast for net interest income this year. s&p futures right now up -- down by about 11. the nasdaq indicated off by close to 60. among today's top stories, boston fed president susan collins says she sees roughly two interest rate cuts this year. she is telling reuters she expects slowing demand will help bring down inflation later this year. the biden administration announcing it will be forgiving more than $7 billion in student loan debt for more than a quarter of a million people. apple shares are in focus after gaining 4.3% yesterday. that's the best daily performance for apple shares since last may. you can see right now down by

about 23 cents. consumer innovation data this week, talking if the fed should cut rates at all this year as opposed to when. for more on this we want to bring in the co-chief executive officer of blue owl capital, an alternative assets firm, marc lipscultz. marc, thank you for coming in today. >> thank you for having me. always good to be here. >> this idea this week that really kicked into high gear with the markets that maybe the fed won't be cutting rates so soon, maybe rates will be high longer, it is good for what you do. >> it is for what we do. our business is built around stability, predictability, inflation protection at the end of the day our largest business, direct lending, is a floating rate business. the higher for longer is beneficial to our investors. it is what our products are built for, which is to insulate

investors from this type of uncertainty. i had the privilege of being here a year ago and we had this very conversation and at that time people were talking about seven rate cuts and we were sitting where we sat then and sit now, inflation is a sticky animal. how do you protect yourself from that? that's one of the things our products are built to do. >> it is similar to what we heard from jamie dimon this morning with jpmorgan results, the idea inflation is sticky, not convinced we can bring it down as quickly. how do you prepare for that? what sort of areas do you all play in that allows protection for that? >> so where we participate most directly that really sheriffs the investor well -- look, at the end of the day it is how do we deliver a result good for the investor. direct lending, clearly, floating rates, direct pass through of interest rates to investors. so we've seen a benefit over this. we may be the only people that woke up this week and saw this hot print and said, well, that's good news from the point of view

for our investor group. >> you would think the same with financials too because they make more money in net interest income as a result of these things. what happens if inflation breaks and we do start to get rate cuts? how does that change the environment? >> i imagine we will at some point, right. i can't predict the course of interest rates, that i'm sure of. we can look at micro data. we have 350 companies in our portfolio, so we certainly have a lot of information to work from to see what is really happening on the ground. what we have been seeing for this past year and continue to see is inflation is still in place. we are still seeing a lot of pressure on wages. we are still seeing the companies raise prices and prices to their customers. so eventually inflation will ease. certainly it has eased from where it was and inflation will come down and presumably rates will moderate. again, the power of at least our product and our approach is when you invest with our products you are not trying to pick the answer to that. you are not trying to pick the time or the exact place.

we do have a floating product, it is true, returns will moderate when rates moderate. >> what is the environment for the company, all of those operating companies that you are talking about? if inflation is an issue, my guess is consumer demand is still pretty strong and on the business front. >> the economy is in a favorable place. i think it is safe to say from where i sit the economy is a lot stronger than i would have thought. going back a year, the economy is still quite robust. we are seeing it in demand. there are certainly reasons to be a little caution on the consumer. we see some consumer behavior getting a little more tepid, but in total -- >> where in. >> i think in total what we're seeing with consumers is a little more caution on discretionary spending. it is not meaningful in terms of impact, but if there's a place to watch i think we've -- obviously, of course, we all keep an eye on consumer behavior. but in total when we look at the 350 companies we are not seeing

any meaningful indicators of an economic slowdown. >> at what point though -- if you were to look out at a calendar over the next five years and look at the businesses that you are loaning money to and the businesses that others in the -- it is called the shadow banking system, are participating in, is there a moment in which you say, you know what? these companies will not be -- when the interest rate ticks up on them they will not be able to operate at the same level, that we're going to see either close to bankruptcies, we will see a whole slew of mergers or something else is going to happen, that there is an inflection point in the impact of the interest rates? it hasn't happened yet, but when you look at a calendar when you say just can't hold up at these numbers? >> as you just observed very well, it has not happened and it is not happening today, which is to say -- >> right. >> -- that we've absorbed a dramatic rise in rates. >> right. >> and we have not seen any meaningful change in defaults.

we have done about $90 billion in loans and our running loss rates has been six basis points so we've not see it. by definition, of course, there has to be a mathematical point if we were in a hyper inflation environment where we would see companies not able to pay their bills. we're not in that place or near that place. borrowing a dramatic rise in rates, i don't see that, measured in times, companies are proving to have durability in this kind of environment. it is not an atypical environment. everyone is thinking about the rise, but the rise from zero was the strange world. things where treasuries are in the 4 to 5 range is where it is a strange world. >> i want to thank you for being here. >> it was a pleasure to be here. when we come back, what the next round of tax action could look like. douglas holtz-eakin will join us and later tom vilsack will be with us to discuss inflation. more happening on the farm to

your table. we will talk about food prices. "squawk box" coming right back. ♪♪ ♪♪ ♪♪ ♪♪ ♪♪

♪ ♪ welcome back to "squawk box." futures right now are down. we are looking at the dow, off about 76 points. the nasdaq down 71 points. the s&p 500 off 15 points. we've had a number of big financials, wells fargo, citi and black rock all reporting this morning. we will talk more about that in a mom. let's talk taxes because a new "wall street journal" op-ed out and our next guest says there's a good opportunity for reform this year. next, as many revisions in the 2017 tax cuts and jobs act are set to expire. joining us douglas holtz-eakin, former director at the

congressional budget office. he wrote in the op-ed with former texas congressman kevin brady. what do you think the chances are -- let's start with just handicap where things stand. maybe it is almost impossible to because we don't know who is in control of what or where they will be when this all happens, but what do you think the chances are that things just float and nothing gets done? >> well, first let me just say i do want to acknowledge my co-author, chairman brady, who was just a tremendous leader when he was in the house. of course, all errors in the op-ed are mine. let's be clear about that. i think the interesting thing about this situation, one of the reasons we wrote this is that congress has to two something. those provisions are going to sunset. the president is on record as saying no one under $400,000 should see their taxes go up. congress would have to act if he's president for that to happen. mr. trump will make similar claims. i think the odds of complete inaction are very low.

the question is do you want to frame this as extent what we have or let it sunset. i think that's the wrong way to look at it. this is an opportunity to take what was a really good tax reform in 2017, something we hadn't done in 30 years, and not wait another 30 years. continue to improve the tax code and i think the emphasis should be on growth. >> okay. so let's talk about what that looks like in terms of what do you think the corporate tax rate will be. >> sure. >> or should be. but let's also do it in the context of an exploding dent and whether you ultimately think it is going to be a combination of lowering costs some way or another, which we don't seem to be very good at doing, and somehow raising more money meaningfully. >> i think both have to be on the table. there's no question about that. we have a very serious threat in the fiscal outlook, and the growth in the fiscal outlook are interrelated. if you look at the 20th century, gdp per capita, sort of standard of living, grew at 2.4% per

year. in the 21st century it has been 1.4%. that translates into about $19,000 for everyone in the states and the fiscal outlook. so we need to get better growth. when we go into this issue of the tax cuts and job acts sun sets, go into it with an eye toward holding on to things that worked real well. i think there's a strong case to be made for expensing of investment, expensing of r & d. if you do that, no matter how you want to make your company more productive, invest in your workers, invest in your technologies, invest in your equipment, it is on a level tax playing field. we're not destroying those decisions. that's good. eliminating the interest deductibility moved toward greater fairness between debt and equity. that was a good step. we can do more. as we said in the op-ed, in the decade running up to 2017 we lost about ten headquarters every year. you can remember the fights over

those companies inverting. nothing, we have lost no one since this passed. there was one company that was leaving that came back. we had some success. there's some things that could probably be better. let's do that. >> doug, the last time we went around this merry go around, it appears that the business community was prepared or at least willing to take the corporate rate to about 25%. 28% was too much, of course, but 25% seemed to be the number. would you be willing to live with that number or no? >> i don't think it is a good idea to pick one thing out if isolation and say i have got to have that. this is tax reform. you want to broaden the base, keep the rates as low as possible, distort as few decisions as you can and ultimately improve the fairness of the tax code. because when you take out the special provisions, you are treating equals more equally and that's what you want to do if the rate ends up at 25, it ends up at 25. i think we got the u.s. into the game by going to 21% and we solved a lot of our

international competitiveness problems. that's great for american workers and we need to keep an eye on that and not do too much in that direction. >> okay. you satalked about fairness in e code. >> yep. >> where do you land on interest and 31 exchanges, entitlement reform in terms of -- i shouldn't say entitlement reform, death tax reform. >> we need that. >> well, that too. but where do you land on those issues? some of them may raise a lot of money, some may raise less money but may get at this fairness issue that you are talking about. >> i think base broadeners have to be the key and every one you mentioned has to be something that is looked at seriously. as you know, more than half of business income gets taxed on individual returns as pass-through income. so the pass-through income provisions have to be central to thinking about tax reform. we did a good job of narrowing the difference between the effective tax rate on equity investments in the corporate

sector and in the pass-through sector, but the benchmark is you should tax those the same. you shouldn't distort that decision. we're not there yet. i think there's a lot that can be done and it would improve the fairness of the code at the same time. >> doug, i want to thank you for joining us. it is an interesting op-ed and i recommends no matter what side of this debate you are on that you read it so you can be more informed and educated about the various points of this great debate. thank you. >> thanks, andrew. all right. when we come back we are going to get into the inflation debate from the perspective of everyday consumers who are still dealing with sticker shock at the grocery store and other places. u.s. agriculture secretary tom vilsack will join us here onset. but next, tiktok experimenting with new features as it struggles to keep up its growth rate. we will talk about what is at stake even as dc lawmakers aynsider a ban on the app. st tuned. you are watching "squawk box" and this is cnbc.

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all right. welcome back to "squawk box," everybody. we are keeping a close eye on treasury yields after the wild ride they've taken this week. a huge jump in the treasury yields after the cpi number came out on wednesday and was hotter than anticipated. this morning yields are lower and, in fact, they've dropped through the course of the last couple of hours. the ten-year sitting at 4.52. two-year is at 4.89. the push in washington, d.c. to ban tiktok seems to have bipartisan support, but now it is stalling in the senate and the company is facing some pretty big headwinds. julia boorstin joins us with more on all of this. julia, good morning. >> good morning to you, becky. tiktok is certainly far bigger than it was when it last faced a potential ban, but now as this week's senator mitch mcconnell called for action towards banning the app it is facing a new challenge of keeping up its growth. yesterday tiktok did have a big win. taylor swift songs returned to

the platform after a ten-week hiatus. this ahead of the release of her coming studio album next week. but tiktok and universal music group, the world's largest music label, continue to be in a standoff. the label pulled its songs from the platform and accused tiktok of trying to bully it into accepting a deal worse less than its prior contract. this comes as tiktok rolls out a new app called tiktok light in europe. it gives users awards, financial rewards for engaging on the platform or inviting fan friends to sign up. it is in the early stages of experimentation with a new app called nodes that's for sharing photos with captions though the company says there are no plans yet to make it broadly available. this experimentation with formats similar to instagram and youtube comes at a time while time spent on tiktok flatlined in the past year compared to instagram's 10% growth according to sencensor tower. this is a change from the days

when instagram and youtube were copying tiktok as short form format. >> it is you copy me, i will copy you right back. you guys came up with reelz. we will come up with our version of what you do. >> yeah. i think it is so interesting about the notes app. tiktok was very clear, there's a long way before we might see this app in the u.s., but it looks and feels a lot like what instagram is for, for sharing photos with a little text of a caption. now, of course, now instagram is totally different and reelz which is a tiktok-like feature is very much and probably increasingly front and center. you have to look at the fact tiktok may have grown incredibly quickly, but if it is going to keep up the growth in terms of the user base, now 170 million u.s. users, it is about engagement. how do you get people not just to spend time on the platform but to spend more time on the platform? instagram is posing some competition there. >> imitation, the highest form

of flattery. march import prices, we will bring you those next. a reminder as we head to the break though. you can get the best of "squawk box" in our daily podcast. follow in your favorite podcast app and listen any time. if you missed any of the broadcasts this week, you can get the big and best interviews. we're coming right back. ♪♪ hello, mia. are you ready to meet your demise? man, we really need to upgrade your trash talk. ♪♪ nice shot... shot... taker. who programmed you?! i'll see you tomorrow. the future isn't scary, not investing in it is. 100 innovative companies, one etf. before investing, carefully read and consider fund investment objectives, risks, charges expenses and more in prospectus at invesco.com.

welcome back to "squawk box" right here on cnbc. we are about to get march import price data. futures right now are looking down on the back of some news both in terms of the financials we heard from jpmorgan, wells fargo down. we have black rock's news this morning and citi as well on the ticket. take a look at treasuries right now before we get that number. steve has it i think but 4.53, the two-year, sitting at 4.9, steve. >> this has been interesting watching through what has happened with treasury yields this week. kind of going through -- i would love to look back at where we were for a week ago, if you just

take the ten-year over the last week to see what happened on wednesday after the hotter-than-expected cpi number. it was really something, looking through the hotter-than-expected cpi number. here is what happened with yields this week. it was a huge spike. for the two-year it was more pronounced, more than 20 basis points. what you are seeing is a slight pull back this morning but it is after a major jump over the last couple of sessions for what we've seen. again, watching through with futures this morning, dow now down by 100 points. this is something similar to what we saw around 7:00 when jpmorgan and the other big banks came out. watching what happened, just concerns on whether it beat on the bottom and top line. it is just what happens for the rest of the year and maybe a slightly more conservative outlook than some were hoping for. jpmorgan shares have been on a huge tear though. >> steve. >> are you turning to me for the number? >> we are turning to you. >> let's do it.

up 0.4%, a tick above the consensus estimate. that's not the most important number. i will give it to you in a second. export prices falling 1.4%. the number i'm most interested in, which is apropos the discussion we were having about retailers, how well the consumer is doing but also what is happening with import prices and input costs for retailers is nonpetroleum import prices, which actually were flat on the month. unchanged year over year, sorry, down -- unchanged year over year, yeah, and down 0.2%. so the issue is that at least when it comes to the importation of inflation, it is not happening. the inflation we have appears to be here domestically. what could be happening, what is most likely happening is the inflation is in the service sector and being driven i think especially by labor input costs. you have those rises by the way in minimum wages. that could be showing up in some

of the inflation we are seeing being passed along. and then apropos of the discussion you were just having on the ten-year yield, it is interesting. what we're wondering here, guys, is whether or not we have reached a peak here. where is the top of the range? that's the way to think about in this very, very volatile bond environment that we're in right now. we were down -- do you guys remember when it was below 4%? >> yes. >> seems like too long ago to remember. >> it doesn't. even this week it has been crazy, the jump you have seen this week in interest rates. you did have people wondering if you were going to get to 5% before you not to 3.5%. >> yeah, it is looking like maybe this four, five, five, four, six, would be top of the range which would be the good news. the other good news is it is sort of a kind of -- you would call it an automatic braking system on the economy in the sense that the inflation numbers have been higher, the outlook for fed rate cuts has declined.

so financial conditions have tightened up a bit, which should put some breaking on the economy. the bad news i think is for those businesses that were counting on lower rates to refinance some of that debt. remember we were talking about risks versus weaknesses? one of the risks out there is if you remember we hit the low rates in 2020. that's when the fed cut to zero. that's when the corporate refinancing and the terming out began. five years is sort of a sweet spot for where a lot of business lending happens. so what's 2025? the beginning of that five-year period. >> that's interesting. >> so, look, there were some who were three years and -- or two years and experiencing that pain right now. i looked last year. everybody was talking about refinancing risk and i looked at it. i didn't see it. so i actually came on here, i did a story. this is not something to worry about this year. >> the 2025 --

>> 2025, 2026. so there's a race that goes on right now, which is will the fed cut rates faster and deep enough to bail me out as a company of the refinance risk that i have in 2025 and 2026? that's when the big -- now, cre is a different issue right now with office space. that's a whole different world because those values are down. they could still be enjoying some of the low rates they have, but they may have to refinance into what looks to be right now higher for longer. but as i'm going to explain on monday, i don't think you should give up the ghost on rate cuts entirely this year. i think there are reasons to think they could still happen. >> one? >> one is that -- this is what i want to explain. by the fed's own framework, even at these higher rates of inflation they remain

restrictive. the question for powell and company is whether or not they need to or want to or should remain this restrictive and there's room -- i just did the whole story. there's room for them to cut that back and cut down and still remain restrictive, and this gets to that whole debate of -- >> right. >> -- just how restrictive are they. >> i'm not here on monday so thank you. >> i'll call you over the weekend, becky, and tell you the ins and outs of my thoughts on monetary policy because you have nothing else going on this weekend. >> love to hear it. thanks, steve. thanks. >> jpmorgan out with additional color around its earnings. lesley pickers joins us fresh off the media call. they are down 2.7% now. >> yes, and executives were asked how they prepare for higher and longer rates and chairman and ceo jamie dimon spoke up and said rates being higher on their own isn't important. what is important is the why. if it was because of stagflation, obviously it is a negative he says.

if it is because of healthy growth that's actually pretty good. he was asked about this week's inflation reports and how it reinforces his view from earlier this week in his shareholder letter that higher prices would prove to be stickier than expected. he said, one of the things i expressed in the letter was we don't pay as much attention to monthly numbers as you all do. i think he meant the media. i don't think they've that relevant. they're often diss ported by multiple factors. he reminded the media he was talking about a range of outcomes and they weren't forecasting a specific number as it relates to rates. he spoke about the consumer and saying that they still have numbers related to the covid era. he said when youlook at charge-off numbers they were historically low and they're normalizing. in the quarter they came in at nearly $2 billion but nearly double that of a year ago but

lower sequentially. if you go into a recession, they will be higher. he said he is not predicting a recession or no recession. he said the chance of a bad outcome is higher than others think as he looks at a potential range of outcomes. you can see shares down 2.7% on those earnings numbers from today, largely driven by some of the guidance they gave with regard to that interest income and expenses. back to you. >> the cfo, jeremy barnam saying forecasting that interest income has become in his words meaningfully harder than at any other time. >> yeah. >> interesting thing. i guess they're not that much smarter than the rest of us when it comes to trying to figure out what the fed is going to do next. >> i think loan growth is a tricky thing for them now. on one hand you have the prospect of higher interest rates meaning they can charge more for loans in the foreseeable future. on the other hand if commercial entities and consumer entities don't want to take out loans because they think interest

rates are high and they think in the near term, the next year or so, they could go down, that affects the size of their balance sheet as well and their profitability. it is a difficult balance at this juncture and notable both jpmorgan and wells fargo maintained that guidance by and large, though jpmorgan did raise by a billion dollars its niix markets they would point to at $89 billion for the full year. that suggests that just because we're in this higher-for-longer interest rate environment doesn't necessarily mean it is a massive tailwind for some of the asset-sensitive base. >> could be them being conservative, too. les leslie, great job today. we are watching shares of morgan stanley. that stock dropped more than 5% yesterday on a report that the office of the comptroller of the currency are investigating the bank. the probe focuses on how they

vet clients who could launder money through its investment arm. the stock is largely off this morning. >> we are going to talk about one of the points of inflation consumers are dealing with, food inflation. u.s. agriculture secretary tom vilsack will join us. let's look at some of the key commodities. coffee hitting a 30-month high driven in part by a heat wave in vietnam. weather problems in africa continuing to drive cocoa prices higher. stay tuned. you are watching squoeks q"sawb and this is cnbc.

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welcome back, everybody. we learned in this week's cpi report that grocery prices were unchanged in march compared to february. year over year the so-called food-at-home category was up by 1.2%, but prices for dining out jumped by 4.2% year over year. joining us right now to talk food inflation and much more is the agriculture secretary, tom vilsack. secretary, thanks for being here today. >> good to be with you. >> let's talk first about inflation because that's the issue that people are watching so closely. definitely when you are looking at the month-over-month numbers inflation is down for food at grocery stores at least but we are looking at higher commodities prices and it has a lot of people concerned about what is in the pipeline. where do we stand? >> actually commodity prices have come down quite a bit and as a result i think farmers are a little stressed. you have to remember farmers only get 15 to 20 cents of every food dollar so commodity prices have less of an impact than

perhaps supply chain disruptions which i think is president has been so focused on making sure we strengthen the supply chain. also looking at ways people with better cope with whatever the inflation rate might be, that's why he is focused on things like junk fees, tax relief with child care tax credit, things of that nature. making it easier for families. he often talks about the bottom up and the middle out and that's basically what we're trying to do. >> there's a front page on the "wall street journal" when you mentioned what you guys can do to fight inflation, the journal points out you have very few tools to fix inflation. >> i think one of the things we are doing is trying to create more competition, certainly in the processing side that certainly impacts and effects food prices. i think we are trying to improve the transportation system. if you can get goods here to there more efficiently and effectively it will make a big difference. again, i think there are ways in which the administration is trying to figure out ways to help the pocketbooks of american families. these junk fees is a big issue. you know, i was at a meeting the other day where people were

talking about ticketmaster and the cost of the service to get tickets to the ncaa women's basketball tournament. the service charge was almost as much as the ticket. so i think there are ways in which we are making a difference. obviously wages are up as well. we've got an economy that i think is the india of the world at this point in time. obviously we want to continue to do that. >> when you talk about strengthening the smiupply chai how do you do that when it comes to food? >> basically, two things. one, creating a more local and regional food system so we're not as reliant on a handful of processing facilities, for example. we've invested over a billion dollars in nearly 400 projects across the united states to expand access to processing capacity. again, strengthening the transportation system. as we invest in roads, bridges, rail systems, ports and so forth, that's going to allow us to get product to market more quickly and efficiently. it is a combination of a number of things, none of which are

easy and none of which take -- can be done quickly. >> right, they take time. in the meantime the investments from the ira could very well push inflation higher because it is money pouring into the economy to create jobs for some of these things along the way. but it does create some inflationary pressures. >> you know, one of the things i missed about is ira is the fact it is paced. it is not as if all of this money is all of a sudden showing up in the economy. it takes time to get a contract for a road construction. it takes time to fix the rail system. it takes time to improve ports. so this resource is going to be stretched out over a period of time. the money we have at usda from the ira and the infrastructure law are stretched over a period of years. so i think you will see more of a measured impact in investment in the economy. overall what we will see is a much stronger and much more competitive american economy. >> what do you think happens in

november? will it have a meaningful impact on the inflationary picture of where the president is? >> well, i can't talk about elections in this interview, but what i can talk about is i think we've put in place certainly in rural places, we've put in place a new structure, especially for american agriculture. the reality is we've been far too focused on just productivity, and that has driven many, many, many people off the farm. we've lost 544,970 farms since 1981. we lost 151 million acres of farmland. i don't think anybody is satisfied with that. that's why we've put in an entrepreneurial model where we're allowing small and mid size farming operations multiple ways to make a living. additional income streams from climate-smart commodities to agriculture ways to be turned into a wide variety of new products to renewable energy, creating an opportunity for energy to be a commodity for energy, to that local and regional food system where farmers get 50 cents of every

food dollar instead of 15 to 20 cents of every food dollar. a combination of investments, nearly $20 billion to be invested over the next five years to create the system. whether it is november of 2024 or november of 2028 i think we will see a much different rural economy and i think we will see a growth we haven't seen for quite sometime in rural places. >> i mean farmers have gotten hit hard too, especially small farmers by inflationary pressures on things like fuel. prices hit them hard too. they see some increase in perhaps what they're selling but especially if you are a small farmer. >> best three years in farm income in the last 50 years and arguably ever. liquidity is strong. true. prices for inputs have been up, but we have worked on trying to reduce the cost of fertilizer, for example. how do we do that? investing resources in 42 projects across the united states to expand domestically produced fertilizer, no longer responding to what happens in

russia, ukraine and so forth. there are a multitude of ways in which we're helping. this renewable energy opportunity, lowering energy costs for farmers. we had over 6,000 investments under the inflation reduction act to put in bioturbines, brin down and creating the opportunity for those farmers to produce excess energy, which can allow their rec, their rural cooperative, to bring rates down for everybody in the area. i think it's a much brighter future. i'm excited about the fact that for the first time in over ten years, we've seen an increase in the population of rural places. i like the idea that we've seen a reduction in poverty. employment rates in rural places now back to pre-pandemic levels. unemployment at historic lows in rural places, and persistent poverty, areas that have forever had poverty rates above 20%, we've seen a decline in the number of counties in that category. so, i think there are a lot of positive signs.

we just need to be -- i think we need to continue to do what we're doing, bottom up and middle out. >> secretary, thank you for joining us today. coming up, a lot more on "squawk," a wrap-up of today's big bank earnings. we've got a lot of them, and what you need to watch as we make our way toward the final opening bell of the week on wall street. the futures, right now, are down pretty much across the board. off by 223 points, down now on the dow. that's actually taken a bit of a tumble. we'll talk more about it after this. (grunting) at morgan stanley, old school hard work meets bold new thinking. (laughter) at 88 years old, we still see the world with the wonder of new eyes, helping you discover untapped possibilities and relentlessly working with you to make them real. old school grit. new world ideas.

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all right, welcome back. time to check in with dom chu. he's got a look at some of today's top premarket movers. dom, what are you seeing this morning? >> i mean, it's becky, all about those big earnings headlines. we'll start with the big banks. it's being dominated by those big banks. we'll start with shares of jpmorgan chase, citigroup, wells fargo, also asset management giant blackrock, each on the move as you can see here, but it's a bit of a mixed trade. quarterly results right off the bat generally all good for all of these names, better than estimates. the stocks aren't reacting that positively. jpmorgan chase and wells fargo, those better results came with

concerns about the so-called net interest income levels or the money banks make from lending. for citigroup, the shares are higher, due in part to some of the optimism that ceo jane fraser's restructuring plans will lead to better results down the line. blackrock is higher by just about 0.5%. better results helped by record assets under management of $10.5 trillion. we're also tracking shares of chip stocks, namely intel and advanced micro devices. both lower, due in part to a report from the "wall street journal" saying that chinese companies are directing telecom companies to start phasing out the chips from their systems. that follows reports about the chinese government emphasizing domestically made chips over foreign-made ones over the last year or so. nonetheless, those shares down. and we'll end with an analyst call out this morning, moving shares of arista networks. that stock is down by over 4% right now. 50,000 shares of volume, due in

part to a double downgrade at rosenblatt securities. they go to sell. the target price goes down to 210 bucks. it was $330. the computer networking, cloud computing company, they're citing things like maybe not being able to benefit as much from artificial intelligence applications as the current valuation might imply. now, for more on that and other top analyst calls of the day, head over to cnbc.com/pro. subscribers can get more details and analysis. >> thank you for that. have a great weekend. our next guest saying the reflation trade is back, due largely to sticky inflation concerns. i want to bring in the chief investment officer for the americas at morning star wealth. we're looking at the market falling down this morning. we have those earnings reports from the banks. we have some idiosyncratic news around some of the chip makers in terms of what's going on in china, but martha, i want to throw this out there because we haven't discussed it perhaps

even enough right now, which is, i wonder how much do you think the market coming into this weekend is concerned about what's actually happening in the middle east and what may or may not happen with these reports around iran. >> yeah, i mean, the middle east is brewing in the background as we're taking a look, of course, focused on u.s. sticky inflation, core, and we're also focused on what's happening with earnings, but geopolitical risk has been on the rise. that's been the case for the past few years with the war in ukraine and now with concerns around what's happening in the middle east. so, i think that's certainly one of the forces that we see at play within the oil market, and it's certainly a force behind the action that we're seeing for energy stocks. and i think that uncertainty around supply has a bit of a tailwind, just because these issues aren't going away. >> on the inflation trade or lack of trade, what is the trade to be made? what is the investment to be made in this environment, given what we're seeing? >> the trade that we're seeing people make, especially in the wake of wednesday's report, is

everything with a hint of rate sensitivity, utilities, banks, down, energy stocks, ascendant, and of course, duration being punished, i think the question is how enduring that trade is. from our perspective, there is some uncertainty there. what we're focused on is looking for investments that can survive or thrive in a range of different scenarios but are also undergirded by strong valuations, and so that takes us out when we're thinking about valuations. that takes us largely out of the big tech area and moves us into some of these markets that have been a little bit more overlooked. so, say, consumer staples, a very defensive area of the market, trading at roughly fair value from our estimation, a reasonable place to be if you're concerned about any sort of market selloff, consumer staples tend to be more defensive in that environment. we think there's a lot of opportunities there. markets that respond in different ways to the uncertainties that we're facing. >> what do you do about big

tech? what do you do about the magnificent seven, the fancy four, the fabulous five? >> yeah, any particular name that you want to pick. you know, broadly speaking, tech looks overvalued to us, and it's looked that way for a long time. if there's one thing we know about technology and the markets broadly, it's that valuation isn't necessarily a timing indicator, but as we're starting to move to these areas where valuations are so extreme, i think there is room for disappointment, and that's something that we're particularly concerned about when we just take a look at the market concentration. so, 30 cents of every dollar if you're in an s&p 500 tracker is going to those big ten companies, and when we've seen that level of concentration in the past, whether it's the tech bubble or whether it's the early 1970s, we've seen pretty significant drawback. so, in excess of 40%. so, that kind of concentration that those mag 7, big 10, fab 4, however you want to define it, is a risk that we're seeing today in today's market. >> marta, i want to thank you for your perspective on the markets.

we will see where things end the day after what is already a pretty volatile morning and what has been a volatile week. thank you very much. have a great weekend. let's take a quick look. the futures have taken a decidedly turn for the worse here. dow futures now by more than 260 points. s&p futures down by 40, the nasdaq down by 162. that does it for us. make sure you join us next week. right now it's time for "squawk on the street." ♪ happy friday, everybody, welcome to "squawk on the street." i'm david faber with sara eisen and mike santoli. we are live from post nine at the new york stock exchange. carl and jim have the morning off. let's give you a look the a futures. you just heard becky say we have taken a bit of a turn lower, at least, it would appear when we open, we're going to be down rather substantially on some of the broader averages. let's get to our road map. it starts with the banks, jpmorgan, citi, wells fargo, th