we use the regulated financial system to deal with aml and kyc. to the extent we've held bitcoin and stablecoin outside of it makes it more difficult. >> jay clayton, i want to thank you. mike santoli, leslie, thank you for hanging out. what a big show. lot going on. make sure you join us tomorrow. "squawk on the street" begins right now. ♪ good monday morning, welcome to "squawk on the street," i'm carl quintanilla with david faber, sara eisen, at post nine of the new york stock exchange. cramer has the morning off. futures solid as global markets look for de-escalation in the middle east, but we're close to session highs in the morning as march retail sales crush estimates. strongest control group in over a year. road map begins with these geopolitical risks for stocks, futures rallying on the hopes that conflict will not escalate further. plus, tesla cuts, set to lay

off more than 10% of its staff globally, ceo elon musk saying the company is looking for cost reductions and to increase productivity. financials in focus again. goldman-sachs topping first-quarter estimates fueled by trading and investment banking. we begin by kicking off a new week for the markets, geopolitics on the front bunner. we're watching some of the risk premium in oil, back below $85. brent, off $90 once again, but what an eventful weekend. >> i think some people might be surprised to come in and see oil prices lower after the events of the week. eurasia group says the size and scale of the assault by iran is greater than eurasia group anticipated, but there is hope, as you say, carl, and potentially some signs that we might have a diplomatic sort of response by this. it's certainly what the u.s. is encouraging. unclear what israel is going to do. obviously, the next few hours

and days will be decisive, because wall street's trying to figure out, is there going to be an escalation of this conflict that would jeopardize oil supply when it comes to iran, one of the biggest producers? that is always the question. and it's interesting to see oil prices down when you might think coming out of the weekend that there are at least greater odds of a bigger escalation in the conflict, and yet -- >> if you were watching saturday night, you certainly would not have anticipated, i think, that the futures would be looking the way they are right now. obviously, you might not have at that point expected that 99-plus percent of the cruise missiles, the ballistic missiles, and the drones that were launched against israel would have been intercepted. that said, to your point, sara, the question is, what is the response going to be? we don't know. >> we don't know. >> and the market seems to at least believe or hope, one would expect, that it will be a muted

response of some kind, not lead to a hot war, because if that were the case, you would expect to see a different picture for the market open, not to mention, to your point, oil prices. >> it does come against a very different backdrop. some are making the point then, say, ukraine, on the onset of that, completely different conflict and war, but the backdrop is different because that was right as the fed was raising rates on the precipice of raising rates in one of the fastest hiking cycles in history, and as tom lee of fund strat points, and he's in the buy the dip camp, things like the deleveraging, it was in a very different position in terms of margin debt with much higher levels than we are now, and then, you get into questions, carl, about even if oil prices do go higher, if this gets worse, what's that going to mean for inflation? what's that going to mean for a fed that we assume the next move is going to be a cut? maybe that cut gets pushed further out. that was what last week's sell

off in the market was all about. it will affect headline inflation but not core inflation, which is what the fed is really looking at, and the fed doesn't have control over oil prices. now, you can argue, doesn't have control over insurance, car insurance, either, which is one of the culprits of these higher inflation ratings, but that's one view as well. >> yeah. meantime, the discussion continues about how less intensive, oil-intensive, energy-intensive the u.s. economy is. ap apollo with a nice chart reiterating that u.s. is the biggest oil supplier in the world. this "wall street journal" poll calling the u.s. economy the envy of the world as a lot of forecasts get lifted. retail sales, of course, we mentioned a moment ago, 0.7%. core, 1.1%. we were looking for 0.5%. february revised higher. >> that's key. when we got the february number, we were wondering, why isn't this stronger? the higher february bodes well.

the one caveat with these numbers is they're not inflation-adjusted, so they do incorporate higher prices that people are paying for things, but what was the cpi rate in march, 0.4%? what was retail sales, 0.7%? there's a gap there of spending where americans are taking the price increases, and they continue to spend. online sales were particularly strong in this report. there's still lots of weak spots like furnishing and others, but between the higher gas prices we're paying -- and it's not just gas. you saw it across the board. services are still strong. the restaurant spending was still on fire. it does bode well for the consumer. >> 4.6% on the ten-year, sara. what do we got coming up, auction-wise? anything we should be thinking about? >> we're paying closer attention to these auctions. last week was the big one. there will be more. the treasury has a little under 400 billion auctions in may. >> aren't we getting their plan on maturity -- >> refunding announcements. that's a quarterly situation.

yeah. the question -- the problem is, we worry about these debt levels and these auction sizes when the federal reserve is not going to be imminently cutting rates, and that's been the story. and it makes sense. that drives up a huge cost for the u.s. government when it has to pay these higher interest rates to finance the debt. >> without a doubt. that said, your favorite, the u.s. dollar, has been very strong. >> surged. >> as you might expect, given the rate picture in japan and in europe is different. >> everywhere around the world. what's so interesting is last week, there was a big back-up in yields, and u.s. rates went up on this idea that the fed isn't going to be in a rush, maybe not even able to cut rates this year. but other bond yields went down, in europe, in canada, and we heard from the canadian central bank last week and the european central bank, and they were a little dovish because their inflation rates are not flaring back up. they're not putting as much

fiscal stimulus into their economy like we are. they can cut sooner, which just means strong dollar, strong dollar, strong dollar. this is the imf week. this is the week where all the central bankers and all the finance ministers come from around the world, and when you have a dollar yen pushing 1.54, which is super strong dollar, very weak yen, you start to worry about the fragility in financial markets and destabilization and currency interventions. we've got the perfect guest tomorrow, christine lagarde, will be on this show right after her meeting last week to talk about the global set-up, and of course, what she's going to do next. >> yeah. got ollie rene out. can't wait to hear what lagarde tells you tomorrow. >> she did not change that script in last week's meeting, importantly, given the fed members that have come out, and there's going to be a lot more fed speak this week. they've reiterated the message

that they don't need to be in a hurry to cut. we're in a hurry here. let's move on to goldman-sachs this morning. shares are up in the premarket. this beat was a good one, helped by strength in investment banking, trading. let me go through just a quick take on some of the notes that have been released by analysts in the last few moments. jeffries' first take, very strong. specifically, total revenue above consensus, all banking segments were above expectations. wells fargo, mike mayo, aided by strong m&a number one, underwriting complemented by record fixed income currency and commodity financing, second highest equity financing, far ahead of peers, especially in the investment bank, and for its part, what else do i have? evercore isi. great start to the year, and it's not all cyclical. straight-up strong quarter led by better investment banking and

higher trading. so, that gives you a quick snapshot of at least the analysts who follow goldman-sachs and their opinion of the quarter. return on equity annualized, 14.8%, 15.9%, return on tangible equity, book value up as well, 2.4% year to date, and it does appear they took some share, which is important for goldman. looks like a very strong quarter, as you might expect, the market is responding, at least as of now, positively. >> that was the best r.o.e. since first quarter of 2022, so a pretty good measure there, and i think the relative performance and things like m&a and in trading compared to jpmorgan -- we don't have morgan stanley yet, that would be a more direct comp -- but looked better for goldman-sachs. this is the -- this is where they shine, right, in this environment. they're not in that interest margin bank like jpmorgan is, which is why people were excited about jpmorgan on a more hawkish fed. this is a bank that does better when the capital markets wake

up. >> absolutely. there's some of the commentary that came along with the release. "the earnings power, executing on strategy, core strengths," the usual propaganda. i'm kidding. >> i mean, on both sides. lot of success here, efficiency ratio near 61, opex down 3 and revenue up 16. >> and, in fact, lower than expected equity and debt as well in terms of at least the performance in the iab, so, for example, mike mayo at wells saying that adds to the quality of the beat. it does appear they took share, to sara's point. when you think about goldman, you think about ipos, you think about m&a advisory, you think about trading, it does appear that not just appears -- they had a very strong quarter and to your point, sara, may have taken market share, which is an important measure as well. there had been, you know, there had been some questions, at least, in terms of where goldman is these days. how is it competing and the like. >> they consolidated asset

management, which is a coin that got less attention than the shrinking of the consumer. by the way, consumer, less of a drag on this quarter. >> yes, it gets smaller and smaller and has less of an impact. absolutely true. we're going to have more as we move along, keep an eye on goldman. we're still digesting the wells, citi, and jpmorgan numbers that came out on friday. >> yeah, worst day for jpm on earnings in about 20 years, and of course, the corporate calendar going to heat up. we'll stay on top of the news out of the middle east and the tensions there. we'll get a former ambassador's perspective on that situation. plus, get a report from the ground of that region. take a look at the premarket. news on tesla today with reports of some layoffs. schwab is out. djt down aut 1 pmabo7%rerket. back in a minute. rofessionals know the importance of keeping their clients on track. sometimes they need help cutting through the noise, to ensure fresh investment ideas keep flowing, and to analyze the market from every angle.

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east working on peace initiatives. let's bring in former ambassador to morocco, mark ginsburg, currently president of coalition for a safer web, a nonprofit that fights cyber terrorism and extremist incitement. we understand netanyahu, likely meeting with his war cabinet today. what do you think they should be recommending to him? >> i don't think they should be recommending a retaliation directly against iran. i'm not an armchair general, but i'll play one for the time being. the problem is that the attack doesn't solve the fundamental problem that israel faces from iran's proxies, hamas, hezbollah, and the houthi rebels. the attack by iran doesn't change that equation. israel still faces that problem. i would recommend that israel focus its attention against hezbollah. it is the major threat to israel at this point in time, other than iran, and the united states could likely support an israeli

and more concerted israeli attack against hezbollah because after all, that is what the united states is there to do, support israel and give it that ironclad guarantee, which biden has taken off the table with respect to any retaliation against iran. >> so, you think hezbollah and how does that -- what would the reaction be? describe what the dynamic would look like between proxies and the direct relationship. >> well, given the fact that iran fired its best shot against israel the other night, there is very little that, in my judgment, iran would be able to do to come to hezbollah's rescue. look, there's no doubt that israel is put in a quandary between the domestic extremist side of its government and the israeli public. and yet, at the same time, carl, you and i know that for almost two decades, there's been a shadow war waging against iran by israel, assassinations, attacks on iran's nuclear

installations, and israel has an enormous number of agents inside iran, so we likely will see an acceleration of targeted attacks against senior iranian officials, which the israelis will deny. >> you don't see iran launching from its soil 350 drones, ballistic missiles, and cruise missiles as an act of war they need to respond to? >> sara, i couldn't agree more that this was an unprecedented attack, the first time that iran directly attacked israel. at the same time, while israel has the capacity to hit back, i think the netanyahu government does not probably want to lose the international support that it gained. after all, israel, diplomatically, was in the hole quite a bit over the last few months over its humanitarian failures in gaza. and yet, at the same time, you have a divided cabinet, a war

cabinet where bene gants and the defense minister are pushing the government not to directly retaliate at this point in time and not to cause an expanded war, which the biden administration has said it would not support, and israel needs american support in the event of an expanded war. israel would not have been able to intercept all of these missiles without american and allied support. >> if they do choose to respond, let's say they try to blow up the drone manufacturing capability of iran, what do you think happens then? >> i think, in the end, you probably have a much more concerted attack by iran's proxies against israel. the question is, from hezbollah to syria to iraq, where the proxies are, let alone what we see from the houthi rebels, david, you probably will see a more axis of resistance attack

retaliation against israel, and it would be low-caliber quality weapons, weapons that have already inflicted significant harm against israelis in the north. hezbollah has used anti-tank weapons to kill civilians, and that war, as you know, david, has been going on. there's going to have to be some equation that changes the straitjacket that israel is in right now and let alone the need for a hostage deal that would lead to a potential six-month ceasefire that would provide israel the off-ramp from its current conflict with hamas. >> the other interesting dynamic, of course, is public opinion within iran appears to be somewhat dissatisfied with what some there would argue are expansionist stances regarding the middle east. mr. ambassador, appreciate that very much. i'm sure we'll talk again. ambassador ginsburg. a lot more to get to this

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for more on iran's weekend attack on israel, let's go to nbc news chief foreign correspondent, richard engel, in jerusalem for an update on what we might see next. >> reporter: so, the israeli government officially is being very vague on what its responses might be. there was a security cabinet meeting last night, another one today, but no conclusive statements. israeli officials from the president on down are just saying that israel will act at a time and place of its choosing. it will act in the interests of the israeli people. so, there are no indications at this moment that a military strike seems imminent. in fact, sources that i'm speaking to do not expect that you're going to see an israeli strike coming in the next hours or even days, and that's also been reinforced by the fact that late last night, israel relaxed some of its restrictions that

had been put in place. they were supposed to be in effect through the end of the day today until 11:00 monday local time here, but those have been relaxed, so that means israelis are back in school. there can be large gatherings, gatherings over a thousand people, so they're trying to signal to the israeli public that they can relax a little bit, and we are in this unique stage, which is unique in conflict, and usually a positive sign, where both sides can claim a degree of success and can claim victory. with iran saying that it responded to israel's attack two weeks ago on its embassy compound in damascus that killed seven people, that it wasn't afraid of israel, and israel saying that it succeeded -- it was victorious because it rendered iran's attack with 60 tons of munitions fired at this

country, ineffective. >> richard, thank you. richard engel joining us today from jerusalem. we continue to watch that. markets, highly attuned to any news regarding the news out of the middle east. meantime, the opening bell is coming up in a few minutes. don't go anywhere.

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. tesla's down in the premarket. electric reporting the ev maker plans to lay off more than 10% of its workforce in the wake of falling sales. the tech publication cited a companywide memo from elon musk, in which he's quoted as saying the cuts are necessary to prepare tesla for future growth. reuters matched one of the lines. musk says, there's nothing i hate more, but needs to be done. >> if you look at the stock performance, year to date, and it continues to fall, questions about ev demand, tesla's been in the spotlight.

we've seen price downgrades or target cuts every single day on this stock. we know they're dealing with something, and after the last delivery update, clearly he's making adjustments. >> saw my first cybertruck yesterday. i don't know if you guys have seen one on the roads. >> they're cool. you clearly do not follow kim kardashian on instagram. >> i don't have instagram. barrelling down broadway. i did get instagram because people keep sending me instagrams, so i have to have somewhere to look -- >> so pathetic. >> i am pathetic, but thank you for reminding me. when it comes to tesla, the key question continues to be, of course, overall demand, the competition from chinese evs that we've talked about. you were at that showroom not very long ago, looking at the quality of those automobiles. >> it was good. >> that compete worldwide with the company. shanghai, obviously, continues to be its main factory. i wonder if those layoffs will even improve some of the workers there. >> it must be very difficult to

compete for evs. we saw a lot of teslas on the street in beijing as well, but those showrooms, baidu, for instance, i mean, you asked me about quality. that is a competitive market. and it's a competitive market increasingly in europe where all those chinese evs are going. >> let's get the opening bell. at the big board is fidelity, celebrating is launch of three new etfs. at the nasdaq, it is yahoo finance. breadth filling in fairly nicely. levels, sara, 5,161. we're also watching for arrivals of former president trump outside the courthouse in manhattan. i'm not sure if we're going to take this live. we won't listen in, but the first criminal trial for the former president regarding the

hush money and we'll talk about the implications of whether or not that constituted falsifying business records and election interference. djt was down a lot more premarket. >> it's a good segue into djt, which we've been following for some time. we were earlier in discussing a few prior to the de-spaccing, what it went on the economic front for the former president, who owns some, let's call it, 78 million shares right now, due to get another -- well, tmtg is due to get another 40 million this week or maybe it will be early next week. remember, the 20-day period after the de-spaccing that the stock had to stay above or average $17.50 or more. that's going to happen, despite what has been a significant fall in shares. the latest decline is due to an s1 filing from the company. this is typical of what you get from a company that was acquired by a spac or merged with a spac.

you have a lot of warrant holders, including the sponsors. they own common. they also own warrants. and you are going to register those warrants, and that's what this filing is, registering the warrants, and then, if and when they actually are exercised, that's what you get. a lot more float. a lot more float. we've made that point any number of times, of course, that what was trading right now, which really was only the shares of the spac itself, remember, dwac is going to be seeing a great deal more shares in the not-too-distant future, when a shareholders can actually sell, and that lock-up is still some ways away, but more importantly, many of the warrant holders, both public and private, get them registered and make decisions as to whether they want to exercise said warrants.

you can see where they're trading. but with the stock in the mid-20s, many people may choose to sell. huge profit there. that said, if they believe that the former president is likely to be re-elected, and that would perhaps bring great economic benefits to a company that had roughly $4 million in revenues and 50-odd million dollars in losses, they may choose to hold on. that's what we're dealing with here, guys. nothing unusual in this, other than it is making it very clear to what may be a largely retail-held stock to some extent that, hey, there's going to be a lot more supply out there. typically, the s.e.c. takes three or four weeks to review a registration statement like this. that said, with djt, you never know. >> i do wonder if it's a sort of realtime gauge of what's happening in the courts, you know, how people are feeling about it. we do have this sort of interesting mark to market, pull, nonpull in this stock. >> yeah.

i just come back to the sort of on the fundamentals, you're going to have some -- when all the converts and warrants and everything -- everything is sort of counted, 200 million shares, let's call it. >> more shares. >> and, you know, 200 million, even times the current market value, you can see what that is for a company that, again, has not, at this point, shown or executed on a detailed plan to be able to have significant revenue growth. doesn't mean they won't, but that's what i sort of come back to. and again, former president himself will own some almost 120 million of those shares. >> which is a lot. and helps his -- >> it's a lot. >> and helps with financial issues. >> could you push the lock-up aside to some extent because he controls the board, and you could get a waiver? it's possible. that would, to your point, sara, allow them to sell. would he do so in order to just help finance his campaign?

it's not unimportant in the context of the presidential campaign currently on. >> just looking at this open, it is strong across the board, and the s&p is up almost 0.75%. it's worth noting, carl, that last week, especially friday, we saw a pretty broad-based selloff. 460 stocks in the s&p closed lower, the s&p 500 on friday, and i thought this stat was interesting. for the first time since september, so, the first time all year, every s&p sector was lower on the week. so, higher yields in focus, stronger dollar in focus, pushing fed cuts out in focus and what that's going to do, potentially, to economic growth. we're having a comeback moment today. best-performing group is financials. that was a hard-hit group last week. today, it's goldman-sachs. that's really the strong story. 5.6%, it's one of the best performers in the s&p. i would also note that m&t bank is higher by about 5.5%, reporting earnings. schwab is higher by 3%. they also reported earnings.

we're going to talk to walt bettinger in money movers, but a lot of these problems that were in focus this time last year, like for schwab, the deposit worries, have reversed. they saw deposits go up. they are seeing better numbers and seeing a lot more trading activity as goldman saw, but on the retail side for schwab, and that's helping out. >> as we pointed out, goldman had what seems to be uniformly reviewed as a very strong quarter, both in investment banking and trading. its key franchise is where it may have done better than its peers. that stock is up. to your point, sara, and carl mentioned this, jpmorgan shares just got shellacked on friday, in part of what was the guidance from the company in terms of its net interest margin and the like. but we have not seen that kind of bouncing back today. obviously, not to the extent of the losses that occurred on friday. >> meantime, schwab was in line, i think, on the top and the bottom line. deposits, roughly in line.

bac and morgan stanley tomorrow. later in the week, we'll get some of the regions and huntingtons of the world. but it will be good to talk to walt. >> kre is in focus this week. pre is coming wednesday. we're going to talk to bill about that because it's amazing how different of a place we are in now, just in terms of sentiment, although there are still concerns, right? when last week, we had rates move up, the kre got hit really hard because there's still this narrative that the big banks are much better insulated from more hawkish fed, higher rates. they do better on net interest margins, partly why there was such a disappointment on the jpmorgan forecast on that front, but the regional banks are in weaker shape and they're also exposed to bad loans or credit issues when you do have these higher rates, than just getting the upside on margin. >> yeah. worth taking a look at shares of apple, and again, remember, apple shares actually had a very strong week last week because of

renewed enthusiasm about what the company may be able to accomplish when it comes to generative a.i. and the introduction of any number of potential products that may fuel the next generation of iphones. that said, it is down today on a report from international data corp. in which they measure the overall market for smartphones, as they call them, up 7.8% in the first quarter of '24, but samsung, as you see there, regained its top position in terms of market share, and apple, which had been a 20.7% in the first quarter of '23 overall, felt a 17.3%, so its year over year change was down 9.6%. that seems, sara, to be giving some concern to some shareholders, though again, just to -- the stock has not been a strong performer this year. nonetheless, it did have a very good week last week on, geagain

that sort of exuberance around what it may be able to accomplish when it comes to generative a.i. >> i just want to point out that the dollar went is at 154. we should just stop the show and take it to japan right now, because these are -- these are pretty extreme levels, i think, and everybody's watching, was there going to be some sort of intervention from bank of japan? it will impact u.s. earnings, companies that do business in the u.s. get hurt on the stronger dollar -- i mean, that do business abroad. u.s. multinationals, whether you have a big chunk ofbusiness over there, you feel it. and this was a tailwind recently as the fed was going to cut rates, and rates were going to come down, and the dollar was going to go weak. it's gone completely the other way, and that's been a surprise, and that's going to be another earnings headwind. not so sure the market punishes companies when they miss on foreign exchange, but they'll be able to use this as an excuse. >> looking at how q1 guidance is typically the worst of the year. there's no real upside to promising great things for the

full year. but it will be interesting to see how dollar commentary gets folded into some of the qualitative calls from companies today and what they expect -- p procter & gamble, for example, coming up on friday. >> the guidance is the question. there's been such optimism around earnings with the better gdp and forecasts and prospects for the u.s. economy, but ceos have sounded more cautious. we picked up on that last quarter. i do wonder where that's going to go this quarter, especially with geopolitics front and center. the new sort of en vogue thing to hear from ceos is, the fed's not going to be able to raise rates if they are in a remotely healthy part of the economy and business. i.t. spending, food spending. unless you're in furniture or some parts of retail, department stores or real estate, which has been hit off the back of these high rates, it does increasingly look challenging, and today's retail sales numbers make it even harder, showing we still

have inflation and still a consumer that's willing to spend. we still have an economy that's operating at capacity and also a jobs market that is near -- performing near its potential, and inflation that's higher than forecast. >> i loved yardeni over the weekend looking at the record net worth among baby boomers, which will be the richest senior citizen generation in the history of the country. and that argument is, they're going to spend it all, and that demand for financial services and elderly health care and travel is -- that's what makes this last mile tough. >> i mean, that's one of the things. also, i think back to larry fink of blackrock, who was telling us all these structural factors that's going to make it very hard. that people's roofs, you know, and parts of their homes -- >> he was talking about roofs leaking. >> they've been living in them for so long, and they're locked into these low morgtgages, and that's why you have insurance rates higher. i'm teeing off the demographic

trend about what we might be seeing in the data and why it might be hard to have a change. >> spend it all? what do you think, carl? that's probably a good motto. >> who are you going to leave it to? they'll be fine. >> they'll be just fine. they need to make it on their own. i'm in spend-it-all mode. you guys will be the beneficiaries. >> it's tax day, though, so i thought maybe, i don't know, sometimes we see some selling because people have to pay their taxes, but maybe we got that last week. >> the back half of april, for the s&p, is generally a little better than the front half, because people do get some refunds. what's not playing along today is some tech. crm's among the s&p laggards. "the journal" piece on infomatica. >> number of outlets reporting on advanced talks that could be a sale below the current price. the stock of informatica has moved up. salesforce, we have talked about

over the last year, remember, when they settled with all the different activists, and really did go to work on the margins of the company, and, in part, stayed away, at least for the time being, from large m&a, but large m&a has been a key part of what salesforce has been doing as a company for a very long period of time. the last large deal there was the slack transaction, and it appears they may be near doing another deal of some size here. again, informatica is a controlled company. private equity term, took it private, took it public again, control it at this point. >> is it surprising? i found it surprising to she that salesforce might be doing another big deal. >> i think they were being encouraged by that large group of activists that was involved in the stock in part to focus on execution, focus on getting margins up, sara, and to your point, stay away from potentially large m&a. one would expect that if they do

move forward with this, they would have socialized it with any number of the, at least in some way, and i should point out, mason from value act is on the board. >> meantime, as sara said, all sectors, green. vix below 17. let's get to bob pisani. >> look, we got middle east concerns mixing with sticky inflation, and that's a very complicated stew for investors. what we have today is a bit of a relief rally. all 11 sectors, up. four to one, advancing to declining stocks. i want to show you some of the moving sectors. goldman is the leader on the s&p 500 right now, up about 5%. but you see here the reflation trade, again, doing well here. what's that? well, they tend to be cyclical stocks, material stocks outperforming, doing well. freeport and mark marietta, up strong. industrials like caterpillar, up strong. retail strong on the report. the auto names are strong like

advanced auto parts. tech is lagging with apple down a little bit. interest rate sensitive. a higher-rate environment, that's been messing around with the sectors this year. reits, generally, higher rates, not great for reits overall because reits rely on debt financing. rising rates increase the borrowing costs. not surprisingly, that is lower this year and underperforming. and utilities, generally, rapid rise is not good for them either because they're -- treasury bonds are more attractive for their higher yields, so higher rates mean increased borrowing costs for the utilities. not surprising, utilities also are underperforming this year. higher rates, again, on this idea of the reflation trade here, and a strong economy, you get cyclicals outperforming. and no surprise, that's exactly what's been happening this year. we keep emphasizing every day, i put up some new highs on energy stocks, big industrials like caterpillar, parker hanafin, have all been strong this year. general electric has been

strong. these are classic deep cyclicals, defensive names associated with consumer staple names and health care have been underperforming. so, again, this reflation trade, when you have a strong economy, higher interest rates can benefit certain sectors over others. we're going to have jan von ek on today. he runs a big suite of commodity etfs, and he'll tell us about who the beneficiaries are for this reflation trade here. i guess the bigger question is, what could happen -- what would be a catalyst for a larger pullback? to me, 10% is a larger pullback, not 2% like we've seen recently. you get traditionally 3 or 4 thing that happen that have to happen in order to get a big pullback. you have to have a slowdown in the economy or job slowdown, notable one. that's not happening right now. an exogenous shock, remember the oil embargo in the '70s or covid or war, and unfortunately, that's elevated right now. that's a real concern. and then a rapid rise in interest rates has also been a problem for a correction in the

past here. so, you can go -- and all sorts of different directions on this, but the important thing is that interest rate rise doesn't have to come from the federal reserve, necessarily, raising interest rates. sara's been talking about this for a while. you could have a series of poor treasury auctions. you could have a debt downgrade. various things. in my mind, if you look at the big three things that could cause potentially a notable pullback, two of the three are still very real concerns for the market right now, and i think that's why a lot of people are still on egg shells. >> bob, we'll talk later. as we go to break, watch bonds today. we mentioned ten-year above 4.6%. we'll get business inventories and nahb in about 13 minutes, and then logan and daly on the tape today as well. i can't believe you corporate types

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take a look at oil as we continue to monitor developments in the middle east. interestingly goldman on sunday said hedge fund exposure in their prime book is the lowest

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samsung, the latest company to secure funding from the chips act. let's get to meghan live in texas and has details of this latest large transaction. meghan? >> hey, guys. we're in tailor, texas, 30 miles from austin. past these corn fields is a massive samsung facility about to get a major infusion from the chips act. the commerce department is giving them $6.4 billion and samsung set to invest $45 billion on top of that to build an advanced manufacturing ecosystem. construction got under way in 2022, but it will now include two leading edge logic fabs and advanced packaging facility and r&d fab and should create 21,000 jobs within five years, right here in taylor t they're going to be in construction but also in manufacturing. and they'll produce some of the world's most advanced chips to power ai. now this is the sixth award coming from the commerce

department's chips act and the commerce department does have about $16 billion left to doll out after this. it's hard to really grasp the scale of this project, guys, but take a look at this drone footage to get a sense of it. commerce secretary gina raimondo told reporters yesterday each of the two logic fabs that samsung will be building will be the size of 11 football fields, only one part of the project that will be here. we'll talk with her about this investment later today on "power lunch." guys? >> coming up, the tsm grant and loan from last week about arizona, it's amazing the ways in which the southern united states economy is changing when it comes to tech. >> absolutely. i think officials here told us yesterday they expect this to be a transformative investment fo for tailor. the chips act and the biden administration other stimulus

programs have really been a part of that. you can really see that here with the number of cranes going up, the amount of new housing that's going up. it's been a big part of the development here in texas. >> appreciate that. we'll get tsm earnings on thursday as itepertains to supp chains, tim cook in hanoi today for a couple days committing their supply chain will get diversified in the years to come. >> vietnam, a key part of that, and he was in china a few weeks ago, key demand story, and supply. >> and, obviously, india continues to be an important part of their execution as well outside of the chinese domestic market. speaking of apple, the shares are down 1%. defining the overall tone in the market as we've been seeing the last half hour. the s&p up 8%. nasdaq following right along, but there are apple shares on those market share numbers that we got from idc and tesla shares interestingly, also down about

3.5% oftentimes when we talk about layoffs from companies, they actually generate a positive response in the market, but not so with tesla. the fears of overall demand sliding for their product or outweighing what may be margin improvement as a result of these layoffs. >> bp as well cutting jobs in their ev unit, trying to get back to different drivers of growth as questions continue to be asked about global demand. >> everybody likes hybrids. >> yes. >> toyota. >> hybrids revenge. holding the opening gains. dow up 330 and the s&p 5163. "squawk on the street" continues in a moment. don't go anywhere.

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which is pretty un-boring if you think about it. thank you, boring. ♪ good monday morning. welcome to another hour of "squawk on the street." i'm sara eisen with carl quintanilla and david faber, live as always from post nine of the new york stock exchange. take a look at stocks.

it is a strong start to the week after a selloff last week. the s&p is up 0.8%. you have every sector higher right now. who is leading? financials after a strong quarter from goldman sachs and the regional banks. m&t corporation surging 6%, charles schwab up nicely. health care the second best performer, industrials up in the top three as well. the nasdaq is coming back 0.7%. it actually outperformed last week. today it's nvidia, microsoft, broadcom and amazon. meta is also higher. apple and tesla on the other side weighing on the tech trade. take a look at treasuries. it's been a story of higher yields and continues to be so. the 10-year yield at 4.6%. the highs last october were around 5% on the 10-year. we march towards those levels. the 2-year yield almost at 5%. we have to start with oil, prices are lower despite the geopolitical fears. more on the direction of crude and what to do with that coming up. shares of goldman sachs rallying

the company reporting a big beat on the top and bottom lines fueled by trading and investment banking. tesla as mentioned under pressure. the ev make making big job cuts. more on that story and tesla's future ahead on the show as well. shares of trump media plunging after the company filed to issue millions of additional shares of stock. trump media down more than 40% since its market debut. j getting breaking economic data. business inventories up 0.4% as expected. last month's read was unchanged. meantime we watch for nahb and how the housing market is feeling as rates have stayed high and makes it difficult to get in or refinance. wonder what that will be doing as we head into the spring season. >> places like housing that kicked off the beginning of the year, from last year. it's a big week on data, on earnings. just give you taste of what's ahead and what we're watching.

we're going to get a number of big banks tomorrow, bank of america, morgan stanley, we get existing home sales as carl mentioned and starts. retail sales were out this morning and they added fuel to the higher rates, hawkish fed story that has been playing out in the markets because they were better than expected. 0.7% rise in march. the expectation was 0.3. the revisions on february and march higher, important especially on february. if you break down where the spending occurred, well, the biggest categories were nonstore retailers, buying online, up 2.7% on the month. gas stations, we know we've been paying more for oil prices lately, so spending more at gas stations. general merchandise had a 1% bump that did not include department stores. they were negative. had health and personal care, groceries higher, the places you know you're paying more, but have to buy more. negative numbers at clothing, electronics and appliances,

motor vehicle and parts dealers and furniture. there is this total separation in what we're spending on. services continue to be strong and general merchandise has come back a little bit. those weak spots that are tied to rates and inflation continue to be weak. as i mentioned last hour, one important note on retail sales is it's not adjusted for inflation. it includes the higher prices we're paying which is translating into higher sales. even with the rise of inflation that we saw, david n march, you still saw a spending bump. 0.4% was inflation and we got 0.7% retail sales increases. there was still a boost. >> all of which means, when i -- i ask you this every day, how is this changing people's anticipation in terms of what it's going to mean for rates and for the probability of a cut at some point during the course of 2024, as now we say, since june certainly seems to be off the table? >> it continues to fuel the

notion that it's going to be hard for them to cut sooner rather than later. we came into this year expecting six cuts, the market did. a lot of people thought that was crazy, but that was the market's expectation because the fed itself was sounding very dovish and offered many chances, fed chair powell in many meetings to sound a little more tough on inflation. he did not do that. i wonder if that changes given march's reading of inflation was firm. the data continues to point to an accelerating economy. retail sales is another point. by the way, the control group of retail sales was up more than 1%. that's the one that factors into gdp. >> that was the best since january of last year. >> yeah. so that bodes well for the gdp and overall economy on top of a strong jobs report and inflation amaze still above target. >> we should point out the 10-year is above 4.6 percent first time since november of last year as well. offering an opportunity when it comes to getting a return you

might add for investors. >> yeah. and mike wilson of morgan stanley with a note out over the weekend arguing that pain for equities lies somewhere in the 4.35 to 4.4 range which we're above and you can see the impact it's having on small caps is what mike would argue. >> that's the question now that we're getting into the higher yields and stronger dollar does it increase the chances of a harder landing or recession? because we are talking about levels that constrain economic growth, not to mention oil prices which they're giving some back today, but they are elevated and risen 16% this year and worries about iran and escalation in the region. we'll talk about that theme. by the way, we also are going to hear from ecb president christine lagarde on this show for an exusive because the fascinating thing right now is that rates are moving in different directions. the market likes it when it's

coordinated action, everyone is on the same page and we're all hiking together and cutting together. they're going at different speeds which always can be a little tricky and destabilizing. >> what's the precedent for ecb leading a cutting cycle? >> hasn't happened in a while. i don't know. i can't remember last time -- they lead hiking cycles. >> yes. >> here's gap. the u.s. is all the way on top and it's ticking higher, including as we speak, you know japan is all the way on bottom and these european rates fell last week while u.s. rates rose. >> let me give you that chance i know you want to talk about the dollar very quickly. >> that is why. >> that chart is leading to a very strong dollar and a very weak yen. it is time, as you say, to go shopping in tokyo. >> i think we should just be packing our bags right now. >> you were literally just shopping in tokyo. >> i did have a layover and i got sushi and souvenirs and they were cheap. >> a bargain. >> they were cheap. now it's at 154. i should have waited a week.

it's crazy. when you have a yield gap like that money chases yield and the money flows into the u.s. dollar. for all the talk about how we're losing safe haven forget it. the money is coming here because our yields are higher. >> nowhere better to shop than tokyo. >> it's beautiful. >> i agree. >> as you concur. >> meantime keep our eye on the middle east and get the latest on the fallout from iran's drone attacks on israel. richard engel from jerusalem. good morning again. >> reporter: good morning. so still no indications here that any israeli response is imminent in the works. there was just a briefing from a senior israeli military official. but it was retrospective. he was fielding yes questions a what kinds of munitions were used, countries involved, not a lot of detailings. the takeaway is it was a retrospective kind of look back. the israelis are counting this

as a success. they are talking about 99% of the 300 plus rockets, missiles, drones i should say, that iran fired at this country over the weekend, being intercepted by israeli defense systems, but also with the help of the united states, jordan, the -- france and the united kingdom and other unnamed nations. for now, it seems like this country is abiding by all of the international advice, including coming from the white house, that they should try and deescalate, not respond, and as president biden said, take the win, take the fact that iran launched this attack, that it caused minimal damage, almost no significant damage, no fatalities, as a win and try to deescalate the situation. for now that seems to be holding. >> richard, what is the thinking about how this weekend attack

impacts israel's war on hamas in gaza and is still going on and is a proxy war with iran, rather that they walked away from another cease-fire deal to return hostages over the weekend? does it change the dynamics there? >> yeah. i don't think exactly it is a proxy war with iran. i think that would be an oversimplification. hamas operate wait degree of autonomy. hamas has a population center. they're about 2.3 million people in gaza. gaza is closed off. hamas is supported by iran, but there are no indications that i've heard from intelligence services in the region or in the united states that hamas was directed by iran to carry out the october 7th attack. the proxies are much more the houthis are -- are -- take direct orders from iran, hezbollah, much more closely

aligned with iran, militias in syria and iraq, slabsolute proxies. hamas is an be independent power and rules the gaza strip and the israeli military is trying to dismantle hamas piece by piece. just in the last few days, most israeli troops have pulled out of gaza and they are taking something of a break. passover starts, the jewish holiday of passover starts in one week until the 30th, and the expectation, there's nothing that has been written down and, obviously, israel isn't telegraphing its plans, but the expectation here is that israel will go ahead with the rafah campaign that it is going to go into southern gaza, but that if that campaign does take place, which is something that u.s. is urging a tremendous amount of caution it do that, it would take place some time after passover because israel would

need to put all of those troops back into place, set up a perimeter, set up reinforcements, set up defensive positions before going in and carrying out a major operation against rafah where about 1.5 million palestinians are taking shelter and israel believes hamas is hiding among them. >> viewers are fortunate to get your insight on a morning like this. richard engel of nbc news in jerusalem, thanks. markets trying to shrug off some of the risks in the middle east and readjust to maybe fewer fed cuts. our next guest calls it a moment of frugality but believes the dip will be bought and playing out today, off the morning lows. tom lee joins us. tom, you've been good about taking things like say a job print or cpi and arguing that it's an opportunity, if there is a dip. is it a harder call when it does involve geopolitics?

>> it's definitely a harder call because the scope of, you know, the path, this escalation that takes place, is unknown, but at the same time, we can look at sort of past episodes and past war instances for conflicts and understand how markets react and where positioning is. i think that's giving us confidence today. there's a lot less leverage now, and i think the fed is in a very different position where the fed could be supportive and i think, as undercertain as it feels rig now, i think the dip will be bought? >> does it create downside risk for your year-end target, let's say? >> when you move beyond the one month, three month, six month time frames i don't think these affect the trajectory. the driver are the recovery in corporate profits, the upturn in business metrics by ism.

consumer leverage is low and monetary policy is actually supportive of the business cycle, i think these things are still at play between now and year end and 5200 target is actually too low, but i think it's still too early for us to raise our target as well. >> i mean, i read your note over the weekend and cited it. a lot does rest on this idea that fed is in a different mode as you referenced they're sort of in easing mode but the story has been they are not going to be able to ease so easily or quickly and today's data only adds fuel to the fire. i do wonder how much of your thesis depends on the fed cutting this year? >> sara, i think it's important for the fed to be dovish this year. and in terms of how many cuts they do, i know there's going to be a lot of debate about well, is it three cuts or is it two or one, but it's really going to be the reasons why they make fewer cuts.

if the economy is resilient and inflation is not accelerating, so they end up doing even as little as zero cuts, that's bullish because, one, the fed still has a lot of fire power to make future cuts, and it just shows you the economy is handling higher rates pretty well. i think it would speak really well for equities if the fed made fewer cuts for the right reasons. >> the extent of your thesis depends on earnings coming through. we're at the beginning of earnings season. what are you looking for both now and through the back half of next year in terms of s&p earnings and growth rate? >> well, earnings in the fourth quarter that was reported three months ago, came in close to 8% above expectations. that's already flowed through into what we expect for 2025. first quarter is already looking pretty good. more than 80% are beating. i think our 2025 earnings, which is officially 260, and that was 8% earnings growth, is probably

low looking like it's going to be closer to 270, 275. that's a $15 higher earnings for next year because of the strength of earnings we're seeing now. i think profits are coming in pretty well. inflation is cooling, but companies are finding operating leverage. >> finally, tom, i would love to get your thought on where you think the labor market goes from here. there is a sense that some leading indicators in the job market has softened, but this idea that equity market is discounting earnings, which should be strong, let's say, which then would lead to even more hiring. which direction do you think it goes? >> i think the job market kind of seems to be in a sweet spot because it's managing to grow. the phillips curve doesn't seem to be driving an acceleration of wage inflation. i think it's because companies have actually held on to a lot of folks. they've been allowed to let those people go now because, you know, covid restrictions, et

cetera, and i think what we're seeing is, it's easier for businesses to find replacement workers. that's creating a job market that feels more two-way. i think that's constructive because you can have proper positions filled. i don't think the job market is the reason the fed would be raising rates. i think it's actually in a sweet spot right now. >> tom, appreciate it. obviously, an eventful couple of weeks we're in the midst of and we're talk soon. >> thanks. >> as we head to break the oil market looking past the geopolitical fears with prices higher following the drone attack on israel. the next stop for oil. >> shares of tesla are falling on news of really large job cuts at the company. we'll have those details and what it could be signaling for the company and the ev market. >> defense stocks are on the move following iran's drone attacks over the weekend. what the street is saying about those names from here as "squawk on the street" continues after this break.

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why is oil lower today? >> i think market participants have decided this story, this chapter of this war story is over for now, that essentially iran did the shock and awe and the israelis will be patient in terms of their response. the war cabinet has not made a decision yet on how to respond to the attacks over the weekend. i think it is too soon to fade this story. >> would israel make a move with the u.s. telling it that it will not support retaliation? >> so this is interesting. the united states said it would not support offensive operations. but the expectation, obviously, would be the united states would continue to support israel's defense and they have a coalition of countries that we saw over the weekend that were very supportive of israel and the question is, is the u.s. caution or the white house caution going to hold back the israelis or do they decide it's in their national security interest to proceed with

retaliation. >> why is that, the u.s., that president biden's response, if missiles and drones were sent to this country, do you think that would be the response? >> i think that the biden administration has tried from the beginning of this war to keep it contained. they have been very concerned about getting dragged into a broader middle east conflict, and they've been very concerned about this expanding to iran. they're very concerned about energy prices, very concerned about u.s. troops in the region that are at risk if you have iranian proxies fire on them. the israeli government has not made a decision yet in terms of what the retaliation will be. >> if this does escalate, which it very well may not. >> right. >> what would that mean for oil prices in the near term? >> we'll be watching what happens in the strait of hormuz and saw before the missiles and drones started being fired at the iranian vessel, in the

straits, they have the capacity. they can't those closely the strait of hormuz but they can do damage and infrastructure damage to vessels in the region. we have to wait to see what comes out of these discussions. we still have cross-border rockets fired between israel and hezbollah on a daily basis, and you still have israeli officials saying, hezbollah has to move back from that border because they need to move israeli citizens home. this story is not over, even if the immediate israel-iran chapter is parked for now. i would pay close attention to what happens in the war cabinet discussions. >> the "journal" over the weekend quoted a u.s. official saying so much for the vaunted ballistic missile capability of iran. do you think that came as a surprise? >> i think it's a story of the strength of iron dome and the u.s., israeli and regional partnerships. i think the defense technology did extraordinarily well. what we don't know is what would

have happened if iran close to use hypersonic missiles. it's an interesting question about what would come next in terms of escalation. if hezbollah becomes involved they have 170,000 rockets that could be deployed. it was a good weekend in terms of the technology but would it stand if you had a bigger offensive? we don't know. >> can you give us a refresher on just how critical iran is in global oil production? who depends on it and what might change if this does escalate? >> it's not just the scale of iranian oil production, which has been rising over the past year, with oil sales going into places like china and that has been one of the big stories. you're hearing republican lawmakers say we have to tighten up sanctions. it's crazy you have iran able to produce this much when there's sanctions that could be enforced. watch what happens on capitol hill. the biggest story will be the critical straits of hormuz

waterway. you have 15 million plus barrels going through there on a daily basis, so anything that may passage through the straits more challenging, would send prices higher. don't forget what happened in 2019 when they didn't just hit vessels, they hit pipelines and saudi arabia's facilities. iran has a capacity to cause significant chaos in the oil sector. it's a question of will they choose to do so at this time. >> how much does beijing buy of iranian oil. >> they are the biggest buyer. can you put in place sanctions architecture that could change beijing's incentives on iranian purchases. >> might they urge caution and calm on the iranian side to protect their oil? >> we shall see. i think they're urging deescalation but they've provided rhetorical support for iran as well. >> not enough time today. >> thank you so much. >> stay close. rbc. still to come this morning,

tesla continues to struggle this year now announcing some big layoff plans. we'll get details on that and hit the banks, tesla and goldman in the bottom and top five of s&cop mponents on goldman's big beat. stay with us.

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shares are down again as you see down 33% for the year. this following news the company is going to be making some sizable job cuts. phil lebeau has the news for us. phil. >> these are significant cuts that tesla is announcing. a memo sent out by elon musk outlining the company will be cutting more than 10% of its global staff andended last year with about 140,000 employees worldwide, so approximately 14,000 workers will be let go. in the memo sent out from elon musk he says there is nothing i hate more, but it must be done. this will enable us to be lean, innovative and hungry for the next growth phase cycle. take a look at their annual deliveries and remember the first quarter, that was the first time we saw tesla deliver

a year over year decline in three years. it was down 8.5%. many believe that there is a possibility they will not hit last year's total of 1.81 million vehicles delivered, so as you take a look at shares of tesla over the last six months the next data point people will be focused on happens on april 23rd after the bell when the company reports its q1 results a and the focus is automotive gross margins and operating margins, both have come down over the last year and commentary from elon musk. is this the first of many job cut we're going to see or case where elon is moving as quickly as possible to say we have to downsize, we have to shore up as much as possible as we go through this period here where deliveries will be down, where there is just a tighter market overall for evs and where the pricing war shows no sign of ending, especially over in china. >> just take us down the recent

past, if you can. have they ever done layoffs of this size previously? >> i can't remember them ever doing this size, not that i can remember. you know, they have gone through job cuts over the life of the company and early on, there were a couple of really bumpy periods where they had to go through some job cuts, but they were a smaller company at that point and that was probably pre-china days if i remember correctly. nothing to this size. >> finally, phil, story on the tape today about a union vote in a volkswagen factory and a first step for shawn feain to try to unionize tesla. >> i think there's a good chance, like 70, 71% of the workers saying let's call for a vote. when you get that high and have that many saying we want a vote, there's a strong likelihood you're going to get more than 50% that are required. remember that doesn't mean that if they vote to unionize that

that chapter would be part of the same contracts as the big three, but you know how this works. they're going to pattern off the big three, but it would be significant because in the past, when the uaw has tried to organize south of the mason-dixon line, they have failed. and this time it looks like they're finally going to succeed. >> phil, thank you. number of auto stories right now with one of the worst performing subsectors in the market. after the break we are going to lhit the banks because goldmn sachs is the bgeigst gainer on the dow. don't go anywhere. what is cirkul? cirkul is the fuel you need to take flight. cirkul is the energy that gets you to the next level. cirkul is what you hope for when

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welcome back to "squawk on the street." i'm pippa stevens with your cnbc news update. donald trump calls his hush money trial an assault on america this morning just before jury selection began. the charges stem from a $130,000 payment that trump's former

lawyer allegedly made to adult film star stormy daniels at the end of the 2016 election. swrir selection is expected to take up to two weeks because of the large pool of prospective jurors. sources tell nbc news the fbi opened a criminal investigation into the cargo ship that slammed into baltimore's key bridge causing it to collapse. the sources sayle from agents boarded the ship early today with search warrants. and a somber moment to kick off the iconic boston marathon this morning. the massachusetts governor and mayor led a march to honor the people killed and injured in the 2013 bombing. families of the victims participated. more than 30,000 runners will compete today in the 128th year of the boston marathon. sara? >> okay. pippa, thank you very much. goldman sachs just wrapping up its earnings conference call. our leslie picker has been monitoring it for us and joins

us with the highlights on a pretty nice stock reaction. >> yeah. definitely an up tape today. investment banking fees helping to drive top line gains which are giving goldman shares the boost this morning. on that conference call which ended just moments ago, chairman and ceo david solomon spoke about the resurgence of deal making. >> i've said before that historically depressed levels of activity wouldn't last forever. make strategic decisions for their firms, companies of all sizes need to raise capital and financial sponsors need to transact to generate returns for their investors. where we stand today, it's clear we're in the early stages of a reopening of the capital markets. >> soloman added ipos across geographies is the latest sign that risk appetite is growing. despite this goldman did note investment banking fees backlog decreased quarter over quarter. private equity has remained

largely on the sidelines for deal activity so far, but solo mon saying the pace should pick up in the coming quarters noting the engagement with sponsors was higher in the first quarter than throughout 2023. david? >> thank you, leslie picker. here to break down the numbers, oppenheimer's chris katoeski off the conference call. you called the quarter a near perfect print. why? >> well, just about every line, every key line item of the pnl was better than expected with the exception of the equity gains, so, you know, it's the investment banking was better than expected, trading was better than expected, and expenses were slightly lower than expected. the comp ratio was below expectations and the noncomp expenses were below expectations. from an analyst point of view, it's everything you could ask

for. >> is it goldman simply being goldman in the sense of sort of the dominant as we think about from the past, or simply, you know, a market share that or a market that's overall increasing their share? >> i would agree with david solomon we're poised for a pick-up. last year the alternative asset managers, a group that i cover, most of those big stocks were up 50 to 70% last year. kkrs of the world and you look at the m&a boutiques they were all very strong. it's companies like goldman and jefferies and morgan stanley that kind of lag well behind those, and so, you know, i think the action that you're seeing and the alternative asset managers tells you or it's anticipating a resurgence of deal making and so, you know, i

think -- >> you think we're going to get more -- the alternative asset managers, private credit figures prominently in their continued aum increases for them. we have not seen a lot of deal making. we have not even at this point seen a lot of m&a. you seem to be calling for it. obviously, goldman had a good quarter given what are relatively diminished volumes. >> yeah. i think there's more to come after this. i think, you know -- and you have to be realistic that geopolitical events can always knock things off course. but, you know, if you look at the amount of, for example, private equity deal making, you're roughly at 2019 levels, even though the aum is 50, 60% higher. it's, you know, relative to, you know, what you would expect in kind of on a normalized basis we're still kind of bouncing along at the bottom. i think there's upside from here

from, you know, an industry activity point of view stew just teeing off of the out performance in m&a and trading against jpmorgan and learn more about morgan stanley tomorrow, i wonder how much of it is environment specific or the moves that david solomon has made. he got grief from the consumer business, but as far as what he's done on asset management is there credit here for the strategy which appears to be start to be paying off? >> i think the strategy makes a world of sense. on some level, you know, my main complaint would be what took them so long to get to that point of view in the sense that, you know, immediately after the great financial crisis they had such a great track record investing off their balance sheet that that in some ways it was a kind of obvious strategy they should have pursued earlier.

i would give them credit, better late than never. i think goldman has a good investing franchise, they have a capability there, and they can continue to leverage that and, you know, they can create -- they're not there yet, but they can create, you know, kind of a blackstone or a kkr under their house. >> yeah. they've been talking about that for some time and hoping that they get the multiple improvement if they start to get that recognition from investors. thank you. >> thank you. speaking of financials top three gainers in the s&p, goldman, m&t bank and charles schwab. next on "money movers" with the ceo of schwab on the latest results, taken very positively by the market at the top of the hour. we'll be right back. our time-tested fixed income suite, backed by over 145 years of risk experience,

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u.s. defense stocks as you see right there moving a bit higher this morning given, of course, the rising tensions in the middle east. morgan brennan is at cnbc hq and has more on what this is going to mean for that industry. >> that's right. david, actually we're feeding the gains here a little bit, but defense names like northrop grumman, got an upgrade at jpmorgan have been rallying after that warted attack on israel and the question for investors, does this market -- does it mark a market sent sment shift after the s&p year to date and over the past 12 months. the prime contractors have already been ramping production amid increased spending on weapons systems, missiles, missile defense, munitions, thanks to ukraine and israel surging demand from u.s. allies and all capabilities on strong display successfully over the weekend and yet, margins have struggled to grow even as sales have rebounded notably over the

past year for the defense contractors. ongoing supply chain issues, lingering effects of inflation to blame there, three things to watch here in the near term. one, can the situation in the middle east deescalate? how does israel respond to what was an unprecedented attack launched for the first time from inside iran? the u.s. has reaffirmed its commitment but signaled it doesn't support a direct counter strike. two, do u.s. lawmakers come together on the long delayed defense spending supplemental, $95 billion, including ukraine, $14 billion for israel specifically if that portion is made standalone, top line defense budget up 3% this year, 2025, poised to be 1%, so more funding would be significant for the sector. and three, lastly, earnings for the defense companies kick off next week. some contractors have signaled they expect to see margin growth in 2024, as the year unfolds and as those lingering supply chain

issues begin to normalize. guys, one area to watch, for investors in the sector, this week is really going to be congress to see what happens in terms of that defense spending in the near term. >> morgan, missile defense systems would seem to be in great demand. obviously, in israel, but also in ukraine. >> yeah. >> hopes that they do get more aid. you know, where does that stand in terms of theability to actually supply the iron dome system or the arrow system in israel and on from there and the patriot missiles that are a part of defense and other places? ? >> a huge area of demand and demand continues to outpace the ability to produce. rtx in the spotlight when talking about the patriot missile system, the prime contract, and rtx codeveloped iron dome, david's, sling, arrow systems as well, in terms of

those production lines rts last year or a couple months ago broke ground in camden, arkansas, to continue to ramp those efforts. when talking about the missile systems, pack 3, part of the patriot, lockheed martinand nor throm grum plonds one of the suppliers that makes the rocket motors. a supply chain here and there have been billions of dollars, some of it from the contractors directly, some from the government, that has gone into ramping these production lines on the heels of ukraine but that's why there's skepticism around contractor stocks. the demand is so much stronger than production and can they catch up and what is that going to mean for margins? >> jpmorgan taking lockheed to overweight. take a quick break here. off the opening highs, financials a full percentage point off the intraday high, up 0.5%. the s&p holding 5140.

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stocks are losing some early morning gains. one thing jumping is the ten-year treasury note year. we're at 4.26, the highest level in five months. continuing to march higher after the retail sales report came in stronger this morning. 0.7% growth in retail sales in march versus the 0.4% expected. just the latest hot data point leading to questions about whether the fed can cut rates this year. joining us is jpmorgan chief u.s. economist, what did you think of retail sales? >> it was hot across the board, not only in march but revisions to january and february were favorable. overall looks like the consumer, which earlier there were some signs maybe we were softening at the beginning of the year. now that doesn't look to be the case. i think it's important, particularly on the back of some strong employment numbers we saw

two weeks ago. it will make it challenging for the fed to cut, especially with these inflation numbers. >> what is your thinking on that? are they able to cut this year? >> right now we still have them cutting in july, but i think if it's going to be tough -- they don't get a cutoff by then, it may have to wait until december. i don't think they want to start a cutting cycle before this election. still a lot of data to go between now and then. the latest data would clearly not suggest easing but we'll have to see when we get going forward. >> i started with the ten-year yield, the dollar also strengthening after that retail sales report really took off against the japanese yen. at what levels for dollar for bonds to we get to where you rethink the economic forecast? >> we don't want to get too jumpy on day-to-day moves here, but this was a concern among

some policymakers we hadn't seen much tightening in financial conditions. i think now that we're rethinking the fed, we're starting to see some tightening come back in, which is what we need to have a soft landing -- we don't need to have a soft landing back on track, but i think it would give us a little more confidence after some of those stronger numbers that growth is going to ease going into the second half of the year, consistent with continued disinflation. >> there is this thread that excess savings has been worn down for at least a large part of the income spectrum, signs of some softening in the labor market, after-tax income growth may be coming. is. >> to add to concerns we had seen credit card delinquencies rising, auto loans delinquencies rising. consumers could be stretching.

savings rate is low. i think that's one reason to expect some moderation. moderation hasn't shown up and some may be that there is this post-pandemic enthusiasm for spending as longer legs or longer life than we had considered. that behavioral aspect could be at play here. and it is a risk, perhaps, that at some point we get into a situation like we saw in the beginning of the century where consumers overstretch themselves. i don't think we're close to that magnitude, but that narrative is out there. i'm not buying it wholeheartedly but there is an element that savings rate look low given all the spending. >> thank you for joining us today on that big market mover, retail sales. appreciate it. by the way, the nasdaq has just gone negative. so, we're losing most of its gains. tesla and apple still the weights there. related to all of this on rates, on the economy, tomorrow we have

an exclusive interview with ecb's christine lagarde. she is here for imf meetings, which is getting interesting with central banks moving at different speeds and economies moving at different speeds and that's rattling markets, like currencies. >> market, as you know, ticking lower, as we continue to monitor israel and what, if any, decisions its war cabinet will make in response to the iranian a tacks over the weekend. lot more live market coverage after this.

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good monday morning. on "money movers." i'm carl quintanilla with sara eisen. today's holly newman kroft on whether the recent pullback is a stumbling block or stepping stone. exclusive with charles schwab ceo. wall street and the world awaiting israel's response over the attack this weekend. fred kempe joins us over what he is calling the de-escalation myth. righno