good morning stock futures pointing to a lower open after friday's rally pushed the dow to a new high the nasdaq, in fact, posted the fifth losing week out of the last six margin call shock waves. some names getting crushed after a family office was forced to liquidate a position of $30 billion. and the cargo ship partially freed from the suez canal. operations are under way to clear the backlog of ships

apparently the toilet paper supply was in jeopardy it is monday, march 29th "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc i'm becky quick along with andrew ross sorkin and joe kernen on friday, you saw strength across the board you saw the dow and s&p and dow transports close at record highs. dow up 453 points and up for the week which is the third of fourth times it was higher nasdaq up on friday, but down for the week that puts it down five out of six weeks. this morning, you are seeing pressure that we will talk about quickly about why this is coming

the huge margin calls out there. dow futures down this morning by 137 points s&p futures off 16 the nasdaq indicated down by 32. last week on friday, we did see treasury yields move higher. the ten-year is sitting at 1.657% staying in the range 30-year is 2.36% it is good to see you, andrew. welcome back >> good to see you to spend the weekend on the phone with these folks wall street has been on edge trying to understandwhat is happening. let's talk about it. this developing story is causing ripple effects ar archegos forced to sell $20 billion in stocks friday

the firm hit with margin calls forced to liquidate $20 billion in stock the center of this is bill wang. he set up the firm as a family office after his own was closed. he was part of the tiger asia. he is a protege of julia robe robertson. he pled guilty to wire fraud on behalf of tiger asia late in the week, goldman sachs, for years, refused to do business with bill wang, by the way, because of the insider trading allegations and the guilty plea. it pushed him to sell some of the stocks that he had been long and leveraged long in a big way. especially with stocks like viacom and baidu viacom, last week, was hit hard in part, we should say because

it issued that stock mid week and frankly, i hate to say it, i think there wasn't enough appetite for that stock. people talk about when the stocks are high flying, should they sell stock and raise cash that is what they tried to do. there wasn't enough buyers that, in turn, put the short on it you guys talked about it last week you see impacting the company and bill wang's returns in a big way. that creating a huge pressure down on the company. >> you know why it was up, andrew i won't blame people for not buying the stock knowing it was up it was almost a gamestop in those things did the guy really make $15 billion on $200 million? did you hear that? >> we believe he was using total

return swaps it is all leverage something on the order of three to four to five times. we have a couple of guests coming up to talk about this fascinating to see goldman having to make this decision and what you see in terms of getting smacked around credit suisse and nomura, the lenders, they are getting hit in such a massive way this morning. saying they will both be experiencing significant losses resulting directly from transactions with what they are calling a u.s. client that is bill wang. >> this guy is everywhere. it is like a perfect storm he was in all those chinese internet stocks, too they are down for another reason all of these things started happening. it is like the guy must have been like what did i do? it was all dependent on various things they all went against it at the same time.

>> it was also working for so long not so long. >> and muddy waters. the one stock people don't think -- there are questions about gsx from the start he had run that up as well the whole thing is crazy there's a reason you have to say you own more than 10% of something. you can get in trouble if you use these things and nobody knows, here we are again with -- i know what you're doing. too big to fail. make it too big to fail. t-o-o? >> too big to fail squared i know this is sort of a long-term capital style moment i don't know if we're there yet. i don't want to delve into it. >> a melvin style. >> we can hope >> it is why the margin calls were forced to begin with to prevent something like this from

getting bigger the answer was no mas. you can't do this. take a look at the two month if you look at the two-month chart of viacom and discovery. declines of 50%. viacom in the last two months, down 2%. this was a huge run up that came back quickly you are right to point back to gamestop these are huge moves that catch people on the top and on the b bottom of these things two months is not much movement. these are rapid gains and losses >> you know, i spoke to david a couple of weeks ago. i mean, he was doing pretty well for a while in terms of viacom i asked if he can use the "b" word he declined. he was modest and humble you had to be close.

probably all of a sudden, here today and gone tomorrow. >> right. >> it is weird this is not the reddit traders you can't blame retail you cannot say it is any type of chatroom or wall street mob. this is again one of the guys that you might think what are you doing? >> how much do you think the reddit trader played into -- originally into the run-up >> this is leverage and stupidity. >> viacom and discovery and other stocks you can argue and what i understand bill wang was the guy riding the reddit wave we talked about the idea >> on margin, dummy. >> on the reddit trade there are people taking

advantage of the reddit trade and investing alongside and as becky said with remarkable margin and you see what happens when it comes undone and they always do. the question is, what really broke the camel's back i would argue it was actually viacom going out to the market looking for cash probably looking for too much cash and thankt really was -- >> that dropped 27% that day >> the market said we can't do this that was because they went for too much you know, when you really start to talk to both the investor community that was getting the outreach from the morgan stanley and jpmorgan chase, there was pressure to buy this stuff because there were not enough investors. that was the tell, the tip, if you will, to so many others to sell and short the stock and created the daisy chain effect >> i agree with you 100%

that is probably what kick started this whole thing if you look at the big run-up. we say they were asking for too much that's why the stock sold off. that is justifying the run-up that it saw. it is too generous to what we have seen with these things. you probably do have retail investors that get in there. it is hard to make the jus justification on the run-up and why they are coming back so much it is the valuation that is justified at the levels. i will say this is the same story again and again in terms of money and greed and liquidity. it takes you back to ben franklin i looked up quotes this morning. he was right hundreds of years ago on all of these things remember that credit is money. rather go to bed without dinner and rise in debt all the same lessons learned again and again. >> it is great on the way up, leverage. >> yup

>> think about that. $200 million to $15 billion in a family account >> that's what i thought to have that much in a family account. >> it's gone did hegone did he have it ever? we'll get back to this we have to figure out the stack. viacom cbs and discovery that was last week now we go on to some of the banks holding the bag. >> credit suisse and nomura in there. i would put viacom i want to watch viacom and disc discovery. does it go sno does it come back? >> joe and i were talking about this, andrew some of these make sense in a chart than a stack you want stay the moves over a couple days in a time. it is hard to capture in the "squawk stack. >> we have to tell people if theywant to know where the

tt ten-year is, look at the bug alan greenspan, you have to look elsewhere. it is weird. now we always need to have the dow and nasdaq they move a lot of times not in the same direction that was weird all of this was happening. up 453 on friday that had something to do with all this that was indirectly because of this which scares me this is not systemic, do you think? this is not a thremor. what are we doing with fundamental investing? is there anything left to it when no one is doing it anymore? i don't think we need to read too much into it it is still about vaccines and reopening and getting cargo ships out of the mud breaking news. the cargo ship

they are looking for tide. lift it. i was hoping it didn't crack in half brian sullivan talked about that for a while. bigger than the eiffel tower and stuck in the muck. it is unstuck. not completely out of the way in the suez canal partly refloated after the towing maneuvers officials say the course is corrected by 80% further maneuvers will resume when the water level rises later in the day and when the vessel is fully floated, it will be moved to the lakes area for inspection and traffic will open to other ships not quite yet. one shipping director told cnbc asia, the backlog is 300 ships waiting to pass through the canal which handles about 50 ships per day. we learned it is a long way around the tip of africa >> cape of good hope

>> to get to where you need to go we take it for granted, i think. then, you got this, becky. you talk about the hundreds of ships that are still waiting on either side of the canal. that brings us to the suez traffic report >> suez canal traffic report south of the fresh food market nothing doing north or south gaper delays heavy closer to the lake where everyone is stuck up to the north, nothing doing here same to the south. suez gulf is heavy no one going anywhere. this extends to the red sea. >> that was john hanson. co cohost of the jam tv program he tweeted that out over the weekend. the former traffic reporter in him could not resist it is funny. good play on all of these things, but no joke. this created a huge backlog in

shipping and, joe, this is stuff we take for granted. 12% of the world's cargo moves through. 12% is stuck and the ripple effect will last for weeks as they start moving again and back ups at the ports and everything from there >> we did not see the oil effect it was not so bad. $3 have you filled your tank? that has not come home to roost. we do more home production if you heard the suez canal was blocked years ago, you think crude would be up 100 d$100 a b. >> most of the crude there was on the way to asia coming up, what time is it 6:15 a huge story crazy. one guy. nu nutty. futures are under pressure we will get you ready for the

trading week that's ahead next. after andrew does the tax read >> announcer: today's big number 79%. that's the share of companies that plan to institute a hybrid work arrangement even after the pandemic passes. according to a survey from challenger gray anchsts.d rima >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com. we see breakthrough medicines getting to patients in record time. at emerson, our automation software is empowering pharmaceutical companies to accelerate their production of critical vaccinations for the world. emerson. consider it solved.

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welcome back futures right now down 130 points on the dow. we have three days remaining in the first quarter. joining us now is markets reporter barry knapp, managing partner at ironside macroeconomics. i don't think initially you were coming on to talk about this there's nothing else to talk about this morning, is there does it go beyond this isolated case and should we throw it in the same boat with, i don't know, gamestop and spacs is it the fed and all of the cheap money? should we start wondering if the

bell is going to ring with the fed? >> you are right there's nothing else to talk about this morning you know, this is really the talk of wall street the past few days who was the mystery trader behind the block sales in viacom and discovery? i think you can put it in the gamestop camp. the latest chapter of what is shaping up to be a very dramatic year on wall street already that's caught professional traders flat footed as with gamestop >> you think leverage or the use of it and the availability of it increases with the easy money globally >> that's certainly the case here as the wall street journal reporter over the weekend, mr. wang was using concentrated positions and leverage and the handful of chinese companies and

tv companies via the swap market >> barry, why shouldn't we think everything is over heated and overcooked this is at margin, but does it make you question the level of the averages and other stocks? >> it doesn't. i think that this is early cycle behavior i don't think it's ring the bell at the end of the cycle. look, there is unintended consequences of the fed using the blunt industries to add a ton of liquidity to the system you know, pushing real rates to negative levels. i view this as amateur hour on the street i don't know how you allow someone to apply that much leverage to that high of all type of positions. if you think about it, volatility adjusted, this is a fantastic amount of leverage through swaps. getting around the 50% margin

requirement. it is crazy. it is amateur hour on the street it is poor risk management in the hedge fund community when i look at the broader averages, joe, i reach the conclusion quickly that this is not systemic it doesn't mark the end of the cycle. listen, there are members of the fed, rob kaplan is one in particular, knows there are unintended consequences and costs associated with this intervention this may be one of them. >> it has been pointed out viacom and discovery back to where they were before the crazy wild ride. if you were asleep or went on the appalachian trail, you may not know it seems like if you are someone that does graham & dodd

investing, you could get caught up in this and get hurt. this is not good for fundamental investing. >> i suppose although, the concept and themes i have been promoting to my clients, the re-flation trade. i downgraded tech this summer thing they were not beneficiaries through the cycle. i'm not in any of these positions period i would think if you are approaching this from a business cycle perspective, this is not what you would be in if you are looking at the broader cycle like deglobalization, the struggles of the mercantile-less because we have to deglobal size and no

have production globally you would not be in the chinese positions. for me, if you are doing core fundamental analysis, you would not have been in these positions. obviously some people are. >> that's probably something i agree with you eventually we will get back to watching the ten-year and covid cases and variants we'll be back to that to decide what happens not this stuff >> totally that's a really good point the past few weeks have been dominated by tracking the ten-year and seeing the yields stoke mayhem in other parts of the market like stocks we will go back with growth stocks and value and tracking the record diffivedivergent. i do think that will take center stage again. this really is the latest wild

card for markets right now >> it doesn't feel like a long-term capital or bank or systemic problem for banks at this point at least. barry, thanks. great to have you on this morning. they seem to talk about crazy stuff every day. i don't know >> we haven't talked about nfts yet. we will. we will. coming up on the other side of the break, live to beijing for the look at how u.s. banks are handlingtensions with china. as we head to the break, the update on the u.s. vaccinations. 6.5 million doses were given out on saturday and sunday now almost half, half of all american adults over the age of 65 are fully vaccinated. that means they got the second shot dr. scott gottlieb will join us

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welcome back to "squawk box" eunice yoon has more on the geopolitical tensions between the u.s. and china good morning, eunice >> reporter: good morning, andrew the issue is the abuse issues in x p xinjiang we decided to go to beijing.

h&m is quiet they are the focus on the chinese outrage since last week when the past statement from the company surfaced online which said that they were not going to use xinjiang cotton because of forced labor in the production of it. those are allegations and the chinese government has been denying. the nike store was busier. business was down. we spoke to a number of customers. because of the political sensitivity. nobody would come on camera. off camera, the response was mixed. most people said they were feeling pressure not to buy the targeted brands. they said instead they would buy chinese or alternative foreign brands we also learned that nike has a very strong following. if you are a brand with a strong loyal fan base, then what they were telling us is they were

going to delay purchases for a month or so when all of the controversy blows down or they would just buy online so they would not be seen at the shop. this is where things get tricky for the chinese government nike for example is a huge employer of chinese people here. that was another theme we heard. one staffer at the store said she is worried about her job because nike doesemploy so man people, the chinese government has to be careful. there could be a negative impact on the economy this is a way foreign companies can push back despite the rhetoric >> fascinating nike is not saying anything, obviously? >> reporter: no. most of the companies have not been saying anything in fact, they have been shying away from commenting at all because some of the staff have

been verbally abused online. that is because nike has a way to reach out to customers. they actually livestream staff members have been told they are traitors. it is a hot-button issue what is interesting is the chinese government pushed back on the u.s. allegations that the whole effort to boycott foreign brands is state led. the government here said that why would we need to do that when so many people don't like this effort by foreign companies. with one more point that was really natu fascinating with myn vargs conversations with people. they don't understand the controversy. there is no open discussion about beijing policies to

xinjiang they didn't want to use chinese products that also shows that challenge for companies because of the very closed information environment. >> fascinating eunice yoon in beijing this morning. your evening for us. thanks talk to you soon becky. thanks, andrew when with we come back. the global chip shortage that could hit the carmakers more than the pandemic. the formd ceo will join us and what it means for consumers and how long it may head to break united airlines operating yesterday in jfk's airport for the first time in more than five years. the carrier is taking advantage of the lull of air travel to snag space at the airport.

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welcome back the chip shortage will take more than a year to resolve and is equaling losses that the co companies dealt with during the pandemic joining us is mark fields. former ceo of ford and cnbc contributor. mark, the ford f-150 line is shutdown this weekend. that was the most profitable line for the company that tells you how big of a problem this is. what are you seeing? >> we are seeing a shortage of semiconductors when this problem surfaced a couple of months ago, the automakers were playing triage protect the high market products

like suvs and trucks as you have seen over the last week, gm shutdown their compact pickup truck line. you have seen other big suv lines go down. you mentioned ford with the f-150 coming down for a couple of serious issue when you look at the impact compared to covid. the industry lost 2.5 million units of production. it will lose about 1 million units of production. if you assume the shutdowns could be april and may, that could be another 1million units. you are rapidly approaching the impact of covid last year. automakers are assuming to make some of that production up in the second half. that is going to be touch and go given the supply chain >> i had been thinking about

buying a new car at some point i missed my opportunity, right if there is less supply, there is a lot more demand for people who did not buy cars last year what does that add up to with prices consumers can expect to pay? >> you can always buy a car. depends what you want to pay for it the inventory situation was tight before the semiconductor shortage it is tighter now. what you are seeing is last month in february, for example, you saw average transaction prices the highest they have ever been. approaching $38,000. you will see when the numbers come in for march in the next couple days, another record set. consumers will see not a lot of inconvventory on the lots. they will pay more for what they thought they could get the good news is when they go to trade in their vehicle, they will get a good price because it is hard to find good used cars right now. that is somewhat of the offset for consumers.

>> so it is the first-time buyers get hosed on this mark, let's talk a little bit about what caused this and why it's so bad. we heard from debbie stabenow and others in senate who said we're held hostage by of overseas companies they want to build more chips in the united state send incentives, but the a automakers are to blame? >> when covid happened a year ago, all of the automakers cut production schedules which cut their orders from the suppliers. w who actually deal with the semiconductors the automakers don't have the relationship with the chip makers tha that is done through suppliers the economy shutdown we saw a "v" shaped recovery in

the auto industry as the lockdowns lifted in the auto industry, it is just in time delivery relies on precise and undisrupted supply scheduling. that hit the market. what you are seeing now going forward is not only the chip shortage, becky, but you are seeing the perfect storm of a few other things a fire at a company called r renesys. it serves the auto industry. it will take 30 days to do repairs and another 30 days to ramp up. you had the texas winter storm that shutdown the electrical system there you know, that stopped the flow of petrol chemical base materials with coatings and resins that is important for seat foams and seats in cars. you have the suez canal which will impact particularly european automakers and

suppliers. then finally, you know, once this starts flowing again, you have huge port congestion around the world as well as the shortage of shipping containers. so, you will continue to see this impact the industry to one degree or another for the remainder of the year. >> wow let's hope that is the last leg of the perfect storm mark, thank you for your time this morning >> thank you, becky. all right. coming up, "saturday night live" tackling nfts over the week. and much more on the margin call that sent shock waves through the markets. a full breakdown of that story coming up. we'll be right back. we see smarter software delivering cleaner power.

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well come back to "squawk box. nfts getting the "saturday night live" feaiffeature over the weed ♪ everyone making so much ♪ ♪ money ♪ what's an nft ♪ ♪ it's like real life ♪ ♪ monopoly ♪ >> son, i didn't understand a word you just said >> hey, thanks

>> kate mckinnon playing janet yellen in the skit pete davidson playing batman >> eminem. >> eminem. but -- yes i don't know if you saw the other one. boomers. did you see the boomer >> loved that one. i sent it to scott gottlieb. he made a cameo in that. that was really funny with the vaccines >> we'll play boomers later. when we come back, the developing story you will hear about all day. the fallout from the massive margin call on archegos that hit nouri a nomura and credit suisse wl talk about all of that

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♪ since stocks last week linked to margin calls and liquidation of positions held by archegos capital, media fell sharply. chinese stock tencent, check out the moves in credit suisse and nomura overnight. they're taking hits. and editor of the bear trap is here, cnbc contributor

good morning to you. we've been talking all morning about the remarkable margin call, perhaps a historical one, the question is, are there ripple effects, larry? >> well, andrew, we wrote a bloomberg chat with investors, we have a live chat with about 1,000 institutions in there, individual investors and on friday, the confusion of what the banks were exposed to was just exploding in our chat and behind the scenes, it's a hypothetical going on a lot more leverage on the banks i'm sure which one is on the hook for liberty, but, yeah, there will be ripping effects for sure. >> how significant are we thinking about this? is this a one-off situation? is this melvin capital or long term capital >> as you laid out beautifully

in too big to fail, all of the leverage, andrew, was on the bank side. now, all of that leverage is a m metamo metamorphosis, it's transferred from the sell-side banks to the buy-side hedge funds you think about the last year, a year ago, nobody talks about this, but that relatively hedge fund blowup in march was all leverage you talk about 20 times leverage trades and that one is interest-rate driven then you have melvin, greenseal and archegos four in one year the serpent in the market is coming out unfortunately, it's the bad news bears versus the new york yankees. the regulators are two or three steps behind >> larry, when you look at the rise of a stock price next in a

viac viacomcbs, that we've been crediting to the crowd or the hwang? >> it was nod david versus gol l iath, it was goliath versus goliath. you've got companies with obscene leverage to run the stocks up and take out short sellers, as larry mcaarthi once said, i talked about my book, if you take out the short-sellers the problem is you take out the speed bumps on the way down and it's very unhealthy for the market because you don't have that bid on the way down

it's very, very disturbing >> you mentioned the regulators, you also mentioned this idea of obscene leverage let's talk about the folks who are providing the obscene leverage in this case, it looks like credit suisse, nomura. are we hearing from the banks, goldman sachs pushed the credit call do we believe we have exposure or any other bankses s have exposure >> credit the false swans relative to goldman sachs and jpmorgan it was disturbing late last week once again, you have something going on there, it's not 2008-ish, no way but it's the beginning of something but you want to watch the credit risk as credit leads equities but i suspect it's a lot bigger behind the scenes in terms of trying to figure out where this -- essentially, you'll remember, this is just

one or two small players are able to manipulate the banks i think the biggest question for our viewers looking forward is this is going to bring a possible deleveraging into the system where if two small players can manipulate big bank balance sheets this much there has to be a whole review >> we're going to have to run in a minute but here's the question to me, it's not clear to me that all of the banks that were lending money to bill hwang understood they were running money around the same stocks. do you think there's a relook now by the banks at all of the clients in terms of how these total return swaps are working? >> yeah. this whole return swap thing is another invention, another innovation it's been around but the way it was used in this case is spectacular abuses it reminds me, as a young kid, i

learned about leverage there was a person in my neighborhood, his father gave him a nice car he took it around to six or seven banks, he borrowed $20,000 from the different banks to get the same car this has been going on for years. hedge funds are using these techniques the problem is you country quantify the damage until weeks later. >> and why the banks are not doing the diligence is a real question that i'm sure regulators are asking and looking for. larry, great to see you this morning. >> pleasure, thanks. >> thank you for helping us understand what seems like an hard to understand situation see you soon >> andrew, these are excellent questions. the disclosure, what do you do with all of these things, this is what the regulators are going to start talking about when we come back, breaking news from southwest airlines, adding 00 new boeing orders. phil lebeau has the details,

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stock futures lower after the s&p closes at a record high on friday. we'll tell you what you need to watch ahead of the opening bell that's coming up straight ahead.

canal chaos. a massive container ship stranded in the suez, finally breaking free a few hours ago. the problems remain, we've got the details. for and media mayhem a once in a decade margin call that rocked the markets. the a lot of the on what investors should know about the archegos fire sale as the second our of "squawk box" begins right now. ♪ good morning, welcome back to "squawk box" right here on cnbc i'm andrew ross sorkin wit kernen take a what has been a wild week, after wall street is trying to process some of this margin trade, margin call which we'll talk about in a

second the dow looking to open down 132 points s&p looking to open down, about 13 point the nasdaq up 12 points. we have breaking news from southwest right now straight to phil lebeau. phil >> good morning, an droo, this is a massive order that southwest airlines will be placing with boeing. it is for 100737 max airplanes, the first 30 of which will be delivered next year. there's also an option to take delivery of 155 more over the next decade, bringing the total list price investment for southwest airlines in new 737 maxes to more than $10 billion so, let's be clear here, southwest is not waiting the list price for these aircraft. they're often sold -- they're always sold at a substantial discount that no doubt can be part of the ultimate price tag here still, a multibillion dollar

order for southwest airlines when it is completed, it will have 349737 maxes in its fleet by 2031. they are taking delivery of 28 more this year they will have 69737 maxes in the fleet flying around the country by the end of this year. again, the total number of new 737 maxes southwest is ordering will be 100 by 2031. at a total of 349 737 maxes in the fleet over the next decade a huge deal, not a surprise, guys, given the fact that southwest was looking to update its fleet. a bit of a defeat for airbus because there were indications in the market that southwest was considering the airbus a-220 as it goeswith the smallest version of the 737 maxes which seats about 1150 passengers, it

will be going with the 737 max 7, obviously a big deal for boeing that it keeps southwest a 737-only airline it has always only flown 737s, that will continue guys, back to you. >> hoping that dow added a little bit to that moving this morning. thanks, phil the big story we're focusing on, viacomcbs, discovery, among the media and technology names facing a big selloff last week the reason, tens of millions of dollars of block sale trades due to the realigning of a company called archegos management capital. maybe that's too much. but a controversial figure, leslie picker, not you, but mr. hwang.

>> yeah, i would hope i'm not the controversial figure but i think it's fair to say he's certainly the center of this archegos capital, the center of the morning. which one source described the size and scale of friday's four sales as a once in a decade event. it all started first thing friday morning when goldman sachs sent a note to clients offering block trades in steep discounts this inbuded b i du, tencent and victimshop, there were other names throughout the day, discovery, ghs, viacomcbs, and traders struggled to find out what was going on and it came to that capital management firm of archegos managed by bill hwang. and several leveraged positions, archegos did not respond to our

request seeking comment. but still, "the wall street journal" says that archegos holds a highly controversial book and runs positions due to swap and now trying to find out where else hwang was exposed many are bracing for potential volatility today as a result of that uncertainty now, the situation has been raising broader questions and you guys have been chatting about this, about risks in the system, nomura and credit suisse both warned they could face transactions with the u.s. client and for that, it's unclear how other banks might be impacted and whether the pain will spread to other hedge fund, potential contagion in the system, now, guys. >> a lot of people saying it's another example of overleverage. it cuts both ways from 200 million to 2 billion, that can

go down just as quickly. >> right, exactly. >> exactly >> leslie, as i was calling on over the weekend, you obviously heard that credit wice was hit by this, nomura is hit by this do we think this extends out and there's additional pain for the u.s. credit suisse and nomura have been, frankly, offering leverage to the bill hwangs of the world but there may be others. >> so, it's interesting, bloomberg record this morning that goldman does not believe it will have material risks as a result of this but it appears that there may -- at least as we know right now, we don't know exactly how they were exposed, it was as a result of facilitating these block trades that type of role tends to be a little less risky unless the stock price plummets before you can hold on to them before you off-load them. it's unclear what credit wice and nomura were doing.

and therefore, on the hook when some of these were happening that what appears just reading through the tea leaves, reading through the press releases so the type of role that each of these banks provided is a little bit different, therefore the risk exposure is different but i think that's a question question to look for, exactly what the contagion looks like across u.s. banks on wall street now, the market seems to be believing that there could be significant pain obviously we saw the shares of nomura and credit wice, goldman is down, despite the story saying that the bank doesn't believe it will face material losses as a result of this >> leslie, the other big question is what happens to stock buybacks because bank of america downgrading credit suisse on this because they say all of these things add up to things that there directly impact the buy-back of shares there i think that's a big question, too, how much does this eat into the capital cushion that the banks have and that will then be

able to turn around and buy back shares >> absolutely. at least according to the credit suisse statement, it doesn't appear that they have -- or at least willing to disclose a sense of what those losses look like nomura put a number on it, they said it was $2 billion you're right, you have to put aside some sort of cash in order to cover the loss which is could remove the cash from other uses, such as potential buybacks around things of that nature so both firms were in relatively good standing. at least they're u.s. subsidiaries with regard to the federal reserve previously but if you have to put aside additional cash to cover potential losses from a u.s. client that can totally change the picture and require them to take money from other sources in order to cover those losses. >> leslie, thanks a lot. this is a story we're talking about all morning. later in the hour, rich

greenfield is going to be joining to us talk about the change in media stocks andrew a cargo ship we've been talking about for a time now, blocking the suez canal adding anxiety to the global supply chain. but this morning, a little good news, reports say that the ship started its engines and has now been refloated dan murphy joins us. dan. >> hey there, andrew, i'm on the banks of the suez canal here in egypt. just in the past hour, we have seen movement here that's really good news almost a week after this massive ship got stuck in one the world's critical airways rescue teams have been able to partially refloat the ship, the back of the stern, more than 100 meters towards the shore it seems to be pointing more in the right direction now. progress is also being made to

get this 200,000 ton ship unstuck and get the suez canal moving again two things, the price reaction, oil prices initially fell on this news. of course, the suez accounts for 5% or 10% of the trade, this announcement was initially bearish crude, but we're seeing that reversed. but now they're declaring victory here saying that the crisis is over look, that might be a little premature at this stage but it has been a maritime effort to get this far across the weeshg saw dredges ug really sophisticated equipment to pump sand and clay behind the ship we've seen diggers excavating the bow, that's the front. and they're here to push the ship with almost 20,000 feet of

containers on top. a couple questions to answer here we don't know how soon the suez is open again to traffic we don't know how long it's going to take to get the "ever given" out a report suggests there are 400 ships fully loaded with cargo. but they haven't been able to do so because the "ever given" is blocking their path. and the other thing we're looking at exactly what happens next and where the finger of blame is pointed. the investigation how the ship came to be stuck is under way. authorities looking at a number of factors, high winds, speed, pilot error. maybe a systems failure. all areas in inquiry right now and you see how vital the suez is to trade delivering billions of dollars of goods to the

world. back to you. >> dan murphy, thank you with your eyes actually on the ship itself, we appreciate it. becky. >> thanks, andrew. when we come back, a shift in the way executives are battling cyberthreats and what it means for u.s. companies. let's get a check of the markets, the dow, s&p, all set new highs on friday. this morning, dow indicated by 107 points s&p futures down by 10 nasdaq at the flat line right now. "squawk box" will be right back. certified sensi™ smart thermostat uses geofencing to simplify how homeowners manage comfort and costs. emerson. consider it solved. want to make a name for yourself in gaming? how homeowners manag then make ad costs. name for yourself. even if your office, and bank balance are... far from glamorous. that means expensing nothing but pizza. your expenses look good, and your books are set for the month! ...going up against this guy... and pitching your idea 100 times.

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welcome back to "squawk box. tech executives have a new worry keeping them up at night that's state-sponsored cyber warfare. eamon javerses joining us with fascinating insights eamon. >> yeah, we're seeing the way executives perceive the threat in cyberspace. according to the first quarter of cnbc technology executive council survey, concerns about state-sponsored cyberthreats remain high. 48% said that's the most dangerous threat to their organization that number was at 50% in the

third quarter 10% said individual hackers were the most dangerous cyberthreat. and 35% said employee mistakes were the most dangerous. and these concerns are going all the way to the top 74% said their board has had a formal discussion about the solarwinds hack, an additional 10% said they haven't done that yet, but it son the agenda for their next meeting and we asked them how they think the government is doing in responding to the solarwinds hack average got the response 23% said moore, and zero, zero percent said excellent that's not a number you see often in polling this is a group nats not been inspired from what it's seen from uncle sam so far, guys. this is just a snapshot of what the industry is thinking about 30 responds they're high-ranking tech officers in their companies. back to you, andrew.

>> eamon, stay right there we'll continue this discussion, for more, let's welcome sue gordon the senior deputy director of national intelligence in the obama administration and a cnbc contributor sue, just looking at this, it's kind of overwhelming if you are the head of a company that's being tacked by a nation state, what are you supposed to do that's pretty overwhelming >> good morning, becky in a way, i'm heartened to see the tech executives, they have it right cyberthreats are both the alligator closest to the boat tactically and the most significant strategic threat these two last attacks show that nation state actors are willing to attack nongovernmental entities as a pathway to their objectives and even though these two have been largely about intelligence-gathering or espionage, it doesn't stop there. it doesn't have to stop there.

so they're right to be concerned. we'll talk about the government in a minute. you know, i'm perfectly willing to be critical of the entity that i've been a part of for most of my career. but i don't think this is something where we want to wait for the government to be good. companies, reputations, operations and then their contribution to national security, all at risk. so there's some pretty clear things they need to do eamon mentioned one that they recognize. they need to have sea sweet discussions about the value and rick of their organization i'd even suggest they exercise at the board level, at the senior level, a cyber attack they also need to add more talent, not just to boards tote get more tech-savvy, cyber-savvy people sitting in that boardrooms, but they also have to add to their technology teams.

this is not just about running a network. this is about the ability to do some forensics and finally, they really need to make sure they're making it harder by reducing the networks and layering and data controls and know their systems >> obviously, employers are concerned and they know that mistakes that employees might make are one of the things they're most worried about point made, they need to be watching things at home and ramping things up for some sort of self-reliance but what is the government doing? is it safe to assume they are doing more things than they are going to tell us you know, if we've got nation states that are attacking us, how do we go back at them. >>. >> yeah, so one -- this is hard. and it's hard because our adversaries well know that there are protections in place that actually limit the ability of the federal government to go trouping in to the private sector so that's something that we're going have to overcome

i really have seen in the last two years, the last yearly of the trump administration and the first -- the beginnings of the biden administration, a real focus on this starting with the cybersolarium report and the position in the white house. but there are things that the government needs to do now they kneed to get on their horse and form a focal point someone who is responsible for this issue of cyber security for the nation they need to set some security standards. we just don't have them. it's time to put them in place probably need to go harder on the deterrents and response, establish some international norms. and we need to get our best players on the field we'll talk about the limitations of private sector and information sharing. but we need to really look at how we get our best cyber-defenders playing on this private sector field so, i see a lot of activity.

i would say the private sector, my companies, really need to put pressure on it and need to be leaders in terms of demanding that we have collective defense, be willing to share information about attacks, yep, congress get in there and provide some incentives and protections but if we don't share all of the information that we have, the government has too small a soda straw to do all of the protection >> you've been following this for a very long time cyber security what do you think about the risk to companies right now, and any potential cooperation with government >> well, it's higher than we've ever seen in terms of the risk, right? and the cooperation piece is still not there. a lot of companies are just not disclosing that they've been hit. we know that thousands of companies have been impacted by these recent attacks but we've only seen, maybe dozen of disclosures of those attacks. a lot are hiding it from the

public and the federal government because of fears of reputation and damage, all of those things that companies deal with i've got a question for sue. sue, we saw a bunch of officials on capitol hill last week testifying about one of the big problems that they deal with, the nsa, as you talk about our best cybertroupes, those are our best players they're prohibited by law from looking at u.s. servers because they're designed to look overseas only and there are good and right privacy reasons why that is. but the bad guys know that and they've been able to rent servers in the united states from well-known american server farms and launch their attacks from inside the united states. we do we need to either allow the nsa to operate within the united states which raises a whole bunch of questions? or have regulations on those server farms, a know your server type regulation, the same with banks, that say if you're

leasing it out, we need to know and you're not selling this space to hackers? >> eamon, i think you have it about right. number one, on the question of the nsa having different authorities that allow them to look in the united states. i think that's a really serious question we need to look at it in general. i'm opposed to escalating government authorities, but we ought to look at it because it is an unfair fight that we have nation state actors attacking u.s. companies i also think that you're right that we need to get congress to establish some protections or incentives for the data sharing. and i think one of the considerations is exactly what you said, this know your customer this really has to be collective defense. there isn't a way for the u.s. government alone protect this, but shared -- we're not doing enough shared work i think that's where the government, the congress and companies have got to come

together >> sue, thanks for time this morning. and eamon, good to see you >> you bet >> thanks, becky a look at what's moving in the premarket. check out bitcoin this morning last week, remember, it's all over the place it's almost 60,000 only down to 50,000. 300 a day. it's up $2500. 4.5% back to 57,000 and change. "squawk box" will be right back. this is how you become the best!

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still to come right here on "squawk box," dr. scott gottlieb on the vacate cinations. and upticks in the cases and we're taking a look at the dow, 109 points don, s&p 500, looking up to open 11 points nasdaq looking to open up 5 points as we head to the break, here are the big gest losers in the s&p 500. when we return, "squawk" returns after this we want both - we want a hybrid. so do banks. that's why they're going hybrid with ibm. a hybrid cloud approach helps them personalize experiences

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welcome back to "squawk box. i'm dominic chu with your "market minute" on this eventful morning thus far we want to focus what's happening with some of the action in chinese and big tech related issues, coming off the liquidation indications reportedly from archegos

capital. some of the chinese markets, ishares, fxi and the crane shares csi china internet, kweb. it's taken a huge move lower compared to the rest of the chinese market overall a lot of it has to do with government crackdowns and what we're seeing this week with liquidations this morning. checking out some of the names specifically and how far they've fallen, baidu and vipshop and tencent, we're talking 40% moves from recent highs to one-day lows here. keep an eye on this. of course, this all creates opportunity. taking a look at the pre-market action, some stepping in for

some of the dip in this, baidu and tencent either traded through or close to their long-term 300-day price. you can see the gains there, baidu, 1.29% and tencent, taking advantage of the weakness we've seen there. and some names tied. viacomcbs, discovery, and credit suisse and nomura, two of the banks reportedly, may be involved in the downtrade here becky, keep an eye on those names. i'll send things back to you >>dom. thank you. when we come back, dr. scott gottlieb amid states that are lifting restrictions plus last week's selloffs in media names, like viacomcbs and discovery, due in part to that

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boards of lumina, pfizerer and a former cnbc contributor. doctor, we're going to talk about troubling numbers in new jersey and new york, and even after quite a bit of progress in the vaccines, it's a little troubling to see those rises but you have an op-ed piece today. i'm just wondering how that happened because your fees, it's very similar to the lead-in op-ed piece in the journal it's not exactly the same. but both pieces are talking about intellectual property. and the inclination to actually, i guess, get around patent protection for big drug companies that develop these things and in your view is that we should actual sho ly take a leso george w. bush, i guess 43 -- was it 43? yeah, 43 in terms of hiv and efforts there where they

didn'tpatents, they kind of worked with pharmaceutical companies there's parallels what we're hearing now from the left, global left, and the w.h.o. about the covid vaccines >> that's right. the pieces are coincidence what the world health organization or nations want to do or some people in the wto, is get the people to believe it's not going to enforce patents on vaccines it's really a hollow promise the reality is even if manufacturers like pfizer which i'm on the board of didn't press their patents in other nations there's no ways that other companies are able to manufacture these vaccines, it's going to end up being the lower end of the generic market. isn't going to figure out how to make the vaccines. it's a highly specialized process. and the rate-limiting factor is

not the production itself. it's the shortage of materials that go into that process and the very specialized machines for doing the mixing you need to get more inputs to get more output. simply allowing companies that are highly inefficient at manufacturing this, it's going to take many months, and they'll still have to run clinical trials with that vaccine, simply allowing them for that vaccine if they do want to increase the supply of this vaccine, i think there are things that the biden administration will like to do like petfar, and trying to get vaccines distributed because distribution is a challenge in those countries especially with the specialized vaccines that need cold chain storage. there's a way to go ago it with but to simply allow our intellectual property from being ripped off won't do that

>> and it's a lesson is that we need to learn again and again. i think. and i'm hesitant to get -- i don't want to get on a soapbox, but bernie -- here i go -- bernie sanders, mut multimillion-dollar companies, and moderna invested hundreds of millions of dollars over years, and pfizer, billions of dollars invested over time to get to this if we don't allow some type of profit to be earned on all of that time and money spent to develop these things, they're not going to do it anymore it's such a simplistic view that people like bernie sanders -- but there is pressure from the wto and the left to break the patents for these companies.

>> well -- >> go ahead. >> we had the same battles at fda in 2004, we fashioned the p petfar program, there are many who said we shouldn't press our intellectual property, or allow it to be appropriated for the production of cheap fix those combination hiv pills that could be distributed in africa >> right >> we didn't feel comfortable with that. we didn't want u.s. funds to buy what could camouflage medicines, so we started to allow american companies to come together to allow them to fix those combinations and put them through an expedited review process. that became that program we assured the safety and efficacy of those drugs. and u.s. manufacturers agreed not to press the intellectual property in those instances. if we go the other way and allow

companies to manufacture those drugs what we subsequently found many of those drugs were sub-potent or adultated this is reminiscent of the arguments in 2004. >> these are in demand, vesselsi can't imagine anyone having the skill or technology to do it in the first place pap so there's practical reasons and theory redial reasons as well texas opened up quickly. is texas doing as badly as new jersey and new york? and why are we seeing is the disparity between states that seem to be doing well that opened more quickly? and others that basically stayed closed or weren't as open and had a lot of vaccines? was it a variant story >> it's probably an all of the above story. the south does look better than

the north. they have been grappling with the variants we haven't seen a takeoff of cases. parts of florida look up right now, miami texas looks pretty good. where we see problems, michigan, m massachusetts, the tristate region the biggest serve in massachusetts are between 10 and 19 year olds, that's in part by reopening of schools i hate to say it, i hate to say we should close the schools. but where the infections are, 10 to 19 year olds, the fact that it hasn't warmed up and moved activities outdoor as in the south. it's not just tral vel and aduls moving around the infection spikes we're seeing are younger cohorts. >> are we getting closer for your glut versus shortage for

supply, early may? >> i think by early april, it's going to be wildly available in most states. most people can go online and get an appointment right now, we've vaccinated at least 95 million americans have at least one dose of vaccine be 50 million americans have two doses. when israel had two-thirds of the population vaccinated that's where they saw the declines. we're at that tipping point. if we can buy ourselves a couple of weeks and not see a takeoff anywhere in the country, i think at that point, we'll have enough in the country where we vaccine 3 million people a day that's a pretty significant back stop combined with the warm weather. it's touch and go in the last two weeks because we are seeing rises in the parts of the country but regalized. probably just certain states that see the cases go up >> then what do we do? hold our breath in the fall, whether this is an annual thing with the vaccines? we just don't know at this

point. when will we know? >> i think we'll know probably in the fall that's going to determine what the fall and winter look like whether or not we get a new variant in the u.s. that can penetrate prior infection, prior immunity like t-1, or the brazilian variant or south african variant, those have become prevalent here right now, in new york, it seems like there might be a variant, but with the people we've sequenced with 1526, the new york variant, it's actually quite low. there's been about 50 reinfections where people who have been vaccinated at least one dose and got infected which is relatively small. we're not seeing wholesale reinfection with 1526 right now. we're not sequencing enough to determine that so, you know, unless we get a variant that can cure prior

immun immuni immunity, in the fall. >> doctor, we keep hearing reports on what are breakthrough infections people who have gotten the vaccine and getting infected afterwards it's a very, very small number that's good news do we have any idea whether that's variants breaking through? obviously if the drug is only 95% or j&j 72% effective, there are going to be break-through infe infections >> yes, the cdc site, it's actually from february, you have to look at what's going on in citizen states new york recently put update da looking at people who got one dose of vaccine or two doses of vaccine and got infected and were sequenced so when you looked across their data, you didn't see any discernible patterns they had maybe 5,000 people that

were sequenced and the rate of people who had one dose of vaccine and got infected in that pool was about 3% it wasn't -- it wasn't high. it is what you would expect. and the rate of people who had two doses that got infected was extremely small. it's probably happening but it doesn't seem to be happening on a widespread basis they'll be probably picking it up at this point >> doctor, thanks. early april. almost early april that's good to hear. what's today, monday see you about six more times this week. hopefully. always good to have you on thank you. >> thanks a lot. >> okay. when we come back, forced selling by hedge fund archegos capital management crushing a lot of media stock in late-day trading on friday. we're going to speak with rich greenfield about names like discovery and vie cbs news

>> and later, mohamed el-erian, what the forced hedge fund and the broader markets for you. we'll be right back.

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we're talking this morning about a melout in the legacy media sector, discovery and viacomcbs down the drop reportedly due in part

to the forced liquidation of bill hwang's positions in all of this we talked about goldman sachs making that margin call on them. here to talk more about the media mayhem, rich greenfield, co-founder and partner at lynch partners good morning to you. we saw the rise in the stocks. some people thought they were reddit stocks over the past month. now we're learning perhaps it wasn't david and goliath, it was goliath and goliath. what do you make of this is? >> andrew, i think you just nailed for the last two months the number one conversation i've been having with fund managers, all over the world, where is this happening they didn't see it on the next reddit or meme stock they kept seeing the stocks go up 6%, 7% every day on no news

analysts they were fine, but certainly wasn't oh, my god, these are amazing. yet stocks kept getting higher and higher and higher. now, it becomes clear that there was somebody buying price agnostic all the way up and creating a short squeeze for all of the investors skeptical of these moves to ever higher levels until obviously, it came down crashing down last week to me, it's less about the fall and more about the craziness that drove this irrational buying over the last two months. >> let's talk now about fundamentals if we can i know nobody talks about fundamentals anymore when you look at a viacomcbs or discovery, it's obviously been pushed down, do you look at this and say there's a buying opportunity because there's so much pressure on wait down what valuation would you put on these two companies? >> challenge that everybody in the media base is having, this

is not unique to viacom or discovery. we put out a piece basically looking at all of the major guidance as well as companies like amazon and netfnetflix. roughly the streaming to subscribers are set to double by 2024 that's is if everybody hits on their numbers. you and i know, andrew, it's going to be hard for every single group to win. the question is which of these countries have differentiated strategy i think they're all trying to grow their streaming business. and the one things that that everyone has got to focus on is that the traditional business is collapsing you can't tell consumers to get this service >> would you be buying a viacom today or say discovery based on

weakness, or do you think there's a fundamental issue here last week seeing viacom goes to the market, selling those shares, the market is not there clearly -- >> hold on, hold on, hold on stop, they got $85 a share i mean the stock is sub-50, they got $85 a share. their stock was at 12 not too long so, i would say the stock sale was a brilliant move by shari redstone and bob and i commend them tour doing that the question, andrew, where do you step in. the challenge right now, cord cutting is getting worse advertising is slowing everywhere you look, the traditional media business is under pressure the whole sector is under pressure the only way you can buyers and believe in these companies long-term is if you think they can scale their businesses and be global powerhouses that

overwhelms the pressure on their core business. that is not an easy challenge. and i think that's what's so confusing, everybody was looking at this and going, these companies are under real challenges >> rich, i'm coming back to this, you really think it was the right move -- i understand the move for viacom to raise cash, i get that but the question is whether by doing that, they to some degree maybe created the problem we saw last week. and where the stock now trades and creates all sorts of trust questions in terms of how investors are looking at these businesses no >> this is a far you know, the far for consumer time and attention you need amazing content netflix is spending $17.5 billion a year on content. viacom, came out analyst day, it was fine, they showed up with a lot of content but they didn't really didn't have a must-have huge critical show i think raising it doubled their

cost to the nfl and to build war contend that was a smart move for five to ten years. if you're looking at obviously a few weeks it was a negative move for the stock but if you're looking at what they need to do to compete and quote/unquote win long term, i hope they would raise more capital >> rich, this is totally out of left field i want to quickly comment on it. those two big lawsuits with fox. could those be material -- they don't want to do discovery, i'm talking about the dominion and the smart, even if that was a 10% settlement would that ever be material to fox it's a much smaller company. >> obviously, it's a much smaller company. i don't know thousand comment on those lawsuits fox news obviously gets itself into a lot of hot quarter many times. obviously, the company has come out pretty strongly about this i is have no idea. but to your point, joe, it is a smaller company and every dollar

matters. in some ways that's why the stock has had a recent good run, i think investors are getting more excited about the ability to buy the fanduel and if you look at draftkings everything matters incrementally more to fox sand obviously selling off disney a few months ago. >> if you could buy one stock which one in the media space >> i would step in and into a snapchat right here. >> snapchat -- >> snapchat benefits >> appreciate it joe. >> thanks, andrew. coming up, futures in red this morning got a little morning, we'll talk to allianz's mohammed el-erian. and lar,te senator steve

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good morning dow futures pointing to a lower open, but the market story that everybody is talking about, fallout from a multibillion dollar investment funds

defaulting on margin calls ripples felt across wall street. we're covering the story from all angles meantime, word of progress in freeing that massive container ship blocking the suez canal for nearly a week. we've got details straight ahead. and it's a critical day for amazon labor fight votes from workers and whether or not unionized how high are the stakes for amazon we'll dig into all of this agency the final hour of "squawk box" begins right now. ♪ good morning, welcome back to "squawk box" here on cnbc i'm joe kernen along with becky quick and andrew ross sorkin u.s. equity futures down 160 points boeing got that big order from

southwest. as a dow component, it was up quite a bit. but moved back down. nasdaq looks better than it was, down about 17 points and the s&p down 16 or so. the ten-year is at this point around 1.65. pretty well behaved, 1.46. let's show you the "squawk" stack. see what we've decided to add into this morning. earlier, we have viacom and discovery. it's still there, along with the dow and dnasdaq and we've still got the ten-year there are so many potentials that we could have on there, in terms of the riprle effects tha news and that margin call there are a lot of different banks on there that seem to be moving with that news. just leave that as it is those are the two that we saw on friday that got everyone's attention when two big media

companies that really shouldn't be moving 30% in a day but they did bec. >> they did. and watching that move over the last couple months has been pretty phenomenal, too let's walk you through some of the stories, one of them joe justmentioned but these are bi stories for investors today and certainly things to pay attention to southwest irlines, as joe mentioned announcing 100 firm orders for boeing 737 max jet and also taking an option on 155 more jets. those first 30 planes will be delivered next year. southwest had been considering alternatives to the 737 max during the time that the jet was grounded after those two fatal crashes. this morning, boeing shares up by 2.5% on the news. southwest up as well, guess is they're thought paying stock price. visa saying it will allow the use of u.s. coin, a cryptocurrency pegged to the

u.s. dollar. this is something they will allow subtle transactions on its payment platform crypto platform.com. visa said it will expand its offering later this year visa shares down by 51 cents and president biden will be separating his plan to upgrade the nation infrastructures into two pieces that's according to jen psaki, telling fox news yesterday that the administration will focus on the plan rebuilding roads on wednesday. she said the second part which will probably include child care and health care reforms will be re-released in a few weeks andrew >> thanks. we're learning what went on over the weekend in the drops in shares of viacom and discovery, the trail appears to lead back to a multibillion dollar family office known as archegos capital. leslie picker joins us

>> andrew, that's right, the trail leads back to afterchegos, but the bread crumbs are spread all over wall street archegos, a family office managed by bill hwang faced a faced in steep shrines with viacom, discovery gxs, baidu and victimshop among other names on friday archegos did not respond to our request to speak but according to the journal, archegos holds a highly leveraged books and handles it through swaps. and this morning we're getting a sense of collateral damage and nomura is facing potentially $2 billion in losses credit suisse said default in margin calls could be, quote, highly significant and material to their earnings. shares of morgan stanley and

goldman sachs facing that although unclear at this stage how exposed third from a systemic standpoint. we already know one other hedge fun has been hit, a firm called tenu it's managed by a former tiger management analyst and was exposed to chinese tech and media names that suffered significantly last week. guys >> and as we all try to figure out the fallout from this, the question is whether you think the ripples beyond the credit suisse and nomuras doesn't appear that morgan or goldman sachs is necessarily going to take the loss on this but you look at the spreads on banks like a morgan stanley, but they seem to be asking those questions? >> you're right. as robin legalsworth tweeted, he

said look at what the prim brokerage firms do do they pare back or increase their standards in order to lend out. that also could have a kind of second derivative effect on some firms that may not be facing a direct hit as a nomura or credit suisse, but, of course, changing their standards for one day would have an impact on their business, andrew >> hey, leslie, i think it's worth pointing out this is a pretty little known hedge fund before now in fact, we've pronounced it about 17 different ways. we started saying archegos, then saying archegos. now tell sounds like you're saying arc-a-ghost do we have any idea? >> yeah, archegos, i went down a deep rabbit hole on what this name actually means yesterday. it's a biblical term it seems to imply someone who is taking a leadership position in

something. maybe one could say they're leading the liquidations of the markets these days but during that rabbit hole, it's appears it's pronounced arch-kay-goes. i probably said archegos i don't know if that makes any sense. that's the way to pronounce it >> emphasis on goes -- >> yes >> this is a small hedge fund that went from zero to 60 and probably taking that turnaround back down. even to the point we're trying to figure out how to say the game of the company. >> it's also worth noting this is a family office managed by bill hwang he was implicated in an insider trading program back in 2012, when he was in charge of tiger asia that's a spin-off of tiger management he was implicated in wire fraud and insider trading. so it's unclear if and how much

outside capital he managed but his recent s.e.c. disclosure shows he managed this, it's unclear what that means unlevered, perhaps less than that, but signature under the radar name, nonetheless, up until today. >> yeah. leslie, thanks very much joining us right now to try to help us make some sense of what happened with archegos capital management and what it says about the state of the broader market is al lianz's mohamed el-erian what do you think, this is a one-off in terms of the banks with leverage against? or is this a sign, with liquidity out, so many things happening, could this be one of many >> well, first, it seems to be a

one-off, becky it's a one-off, highly concentrated positions and massive leverage and had it delivered orderly on top of that when you look at the fast-moving contagion, meaning how quickly it's going to happen, this doesn't look bad it looks contained and that's good news for the broader market the question now, are the slower moving contagion forces, spoke to one of them, are we going to see a tightening in positions, are banks going to become more cautious i'm not too worried on the fast-moving elements keep an eye on the slow-moving elements why does that matter it relates to your question, what we get fender benders like this one, what we don't want is a pileup that's why it's really goimportn to look at the slow movers by now it looked contains.

>> mohammed, maybe that's not a bad thing if we've seen successes and bubbles build up maybe it would be more concerning if regulators were to clamp down on a way that's even more excessive than what the banks might do on their own. saying, hey, we got to be a little more cautious and take a risk perceptive on this. >> yeah. that's what you want you want better discipline in the marketplace because we've lost a lot of discipline with the liquidity sloshing around. so you do that want. the question is can it be done in orderly fashion i can tell you in a lot of investment houses and banks, people are being asked to look at how we are positioned who are we exposed to, do we have enough margin, is the collateral moving or not all of that causes a slowdown in the system but it is small. this is a rather small fender bender but keep an eye on it because everybody on this highway has

been driving really fast >> yeah. iguess the question comes back to what caused goldman sachs to say, forget about it, no more, we're going to force this liquidation. did they suddenly sit up and realize there's a little bit of fast and loose getting played here >> i suspect they looked at the transaction. they looked at what was going on they got a sense from who else was lending. how much, how big was the margin overall. and they moved first and clearly, they caught other banks off guards that's the story if one bank moves and they reduce their own exposure but it catches other banks off-side you're seeing that play out today. >> yeah, morgan stanley down by 4.25%. but it's nomura who says they're on the hook for $2 billion and credit suisse, credit suisse, 12%, nomura, and that's

the thing, that's an issue we got to wonder why goldman and morgan stanley have come out yet and say this is the extent of the damage i suspect they're assessing it but the fact that they haven't come out and said this is the extent of the damage the calmer the market will be. the way you deal with that, if you're having an issue, is you pull back on other lines and that's what we don't want. that's a contagion element that's a slow and moving contagion element that you got to keep an eye on here >> mohamed, i want to get to this other idea what i think people are describing as a bit of a head fake we've talked about those so-called quote/unquote reddit stocks over the last couple months where we've watched a company's rise, including discovery and viacom and the

like without news. and when you peel back the onion, you're seeing more and more, stanley offices, leveraging themselves up is that the lesson here, that maybe we're looking in the wrong direction? >> look, when you're an investor, andrew, you ask the question, who's going to buy after me if you can figure out who is going to buy after you, you buy the quarter. if you're a hedge fund which you can lever, you leverage your position ahead of them because it's very reassuring that someone is buying behind you they validate your own purchase and they verify your liquidity this is also very, very connected. this is not the hedge funds of this world, phase one, they were on different sides and the hedg funds got hurt until robinhood

clamped down phase two, that is where the systemic risk comes. >> always good to see you this morning. but especially when well can talk through important issues to the market like this thank you for your time. >> thanks for having me. coming up, the very latest on efforts to fully free that great big container ship, 1300 feet, blocking the suez canal. workers make something progress, in fact in just the last few hours. we've got a live report from egypt, right after the break stay tuned you're watching "squawk box" on cnbc

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workers trying to free the massive container ship stuck in the suez canal have gotten it partially refloated. dan murphy on the "squawk" news line with the latest details dan, hello again >> reporter: joe, a significant breakthrough at the suez canal regulators have been able to partially release it which has been stuck since last tuesday. it's pretty well to what they call the push and pull movers in

high inside. they've been able to pull the stern of the ship, that's the back about 100 meters from the edge of the canal progress is being made here to free this ship to get it unstuck from one of the world's busiest trade waterways. we've already seen a reaction in oil prices, for example. we're watching the asset market reaction closely. the suez accounts for 5% or 10% of oil and trade this was initially bearish crude. when you look at the impact, i think you need to point to the impact of what we're seeing with trade and supply chains and the broader impact, too. time is money, right less than a week, the blockage has held up $9 billion a day in global trade according to some estimates. and it's caused big disruptions to global supply chains. what we're also going through now, even if the ship is cleared, analysts say it's probably going to take ten days

to bleeclear the backlog of 400 ships to pass through. the suez controls 7% of the world's oil. it's a really, really busy passageway 10,000 ships pass through. they need to get moving. egypt's president has spoken for the first time saying egypt has succeeded in the crisis. egypt losing about $95 million in revenue according to data a lot to unpack there. maybe with one other thought, though, an investigation also under way exactly how the ship came to be stuck in the waterway authorities are looking at a number of factor like high winds, was the ship going too fast was speed an issue pilot error, perhaps or a systems error on board these are all areas of inquiry but for now, the focus is getting the ship unstuck

and getting ships moving back through this canal back to you, joe >> dan, it must be rare, obviously, we haven't seen this happen before. but we don't want it to happen again. and i'm just wondering i remember the "valdez" that guy was drunk. there's no reason to think there was pilot error at this point or high winds but this shouldn't happen again. are there ships bigger than the "ever green" or is this as big as they get? >> reporter: well, joe, this is definitely one of the other biggest in the world the "ever given" is 200 tons and certainly one of the biggest in the world. look, the suez canal had to be so important for global trade. it was important in the 1800s when it opened it was important when it was expanded in 2015 and i think this incident ultimately just shows that it's still important today. how the egyptian government responds to this is also going

to be very closely watched we know that not only is this a big revenue driver for them, but it's also a project of national importance it is a legacy project for the president. and certainly something he would like to see resolved very, very quickly with the eyes of the world on egypt and in looking how this country responds in the future, though, are we going to see the canal perhaps being expanded well, that's certainly the conversation i think it's something we should be looking at. >> ship that big, 200,000 tons you think of the inertia that has, first going into the bank i can't believe they ever got it out. >> reporter: you got it. you got it >> dan, thanks for your reporting on that. bec. >> joe, that's the question, unless and until they expand the canal will they allow ships this big to go through it these ships have gotten bigger and bigger these are new ships that have gotten bigger. way bigger than when the canal

opened or expanded that's the question, until they do that do you keep letting them through. >> that's right. when we come back, we're talking taxes -- oh, what's up -- we'll talk taxing and potential tax hikes when the president lays out an infrastructure proposal. when rates go up, who actually pays we've got that story next. "squawk box" will be right back. , and fly we help make them healthier. we are the people of abm. for more than 100 years, we've been a leader in making spaces cleaner, from the things you touch to the air you breathe. today, more than 100,000 of us are innovating to ensure spaces are more efficient, healthier and safer. abm. making spaces healthier for you. i'm searching for info on options trading, and look, it feels like i'm just wasting time. that's why td ameritrade designed a first-of-its-kind, personalized education center.

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welcome back to "squawk box" this morning the biden administration looking seriously at corporate tax cuts to pay for the massive infrastructure package but it's probably not just corporations who will end up paying for that story, robert frank joins us right now robert, good to see you. >> good morning, andrew, and welcome back opponents of the corporate tax hike say workers will end up paying more than two-thirds of the cost supporters say companies and shareholders will foot the bill and needs to pay their fair share. the true impact is probably somewhere in between economic studies cited by the heritage foundation and others find that workers pay more than 70% of corporate taxes through lower wages. the tax policy center and congressional budget office finds workers less than 20% of any corporate tax burden with share hoerlders and capital staying that other 80% why the big difference

well, it depends on how you think investors of these companies respond. if they shift their money overseas, do the tax hikes, workers and consumers pay more the cost if you think consumers won't go away, workers pay less of the share. pricing matters. and as companies can pass more of those tax hikes on the consumers, the workers will pay less more recent studies suggest workers and shareholders each paying half of any corporate tax hike andrew >> the real question is do we know what share workers got of the 2017 tax cuts then >> the problem is one, andrew, of attribution we did have all of the strong wage hikes in 2019 leading up to the pandemic a lot of people saying those are due in large part to the tax cuts others say despite the highly

visible payments paid early on most of those by the share buybacks and dividends so it depends on the political partisanship of the economists and who is looking at that picture. clearly, we had strong wage gains leading into the pandemic. and clearly, those tax cuts were part of that >> robert, thank you for that. we'll continue this conversation now, right >> joining to us talk about the potential changes to the corporate tax hikes, senator steve daines we've seen a lot of articles written, axios, jonathan swan, not just the senate either, nancy pelosi can't lose a lot of people in the house either and we had gottheimer last week and tom swazy saying they're not

going for this is this doable, senator? >> that remains to be seen raising taxes generally is not a real popular issue for the american people. you look back to 2017, worked hard to reduce and then the massive spending and proposed tax hikes. the bottom line tax policy is a means to an end. cutting taxes helps us become more globally competitive. it creates incentives to reinvest capital, grow businesses create jobs, increase wages. bottom line, republicans want to drive more tax cuts. workers win with that. you saw the data, you can look at various studies, but we've seen wages go up as a result of the tax cuts 2019, we saw 6.8% growth in median household income. that was the largest one-year

growth in the history of o country. notice inversions stopped when we cut corporate rates >> senator, what about at 25%? that's what we're hearing that senator manchin or -- there could be some -- i don't know -- well, he's a democrat obviously, but would any republican go for anything above 21% if there is a compromise that would put on with some, i don't know, something that republicans want involved in there as well? would you ever go back to 25%? could you support that >> yeah -- well, no, i don't support that and here's why it's on the table now, we're hearing the 28%. >> right >> let's put this in perspective, an increase of 28% in corporate tax rate that would raise the u.s. federal combined rate 32% that would be the highest in the oegc and it's about global competitiveness. if we want to create jobs here

in our country, we got to have competitive tax rates going from 21 to 28, remember, we were at 35 that puts us as the highest, that's not the right thing to do >> i asked about 25. but 28, they're saying there may be some place for people to come together at 25%. i don't know whether that's -- >> it's not just the corporate tax rates. they're looking at raising state taxes as well. and the llcs and the s-corpse. so they're looking at tax increases across the board not just on. c-core rate. >> if we just spent $1.9 trillion and you're looking at the potential of another 3, or i've seen parts of the democratic party saying that's not nearly enough. they want upwards of 5, 6, i've seen 8 trillion.

would you not raise taxes anywhere if you were not to spend it or not spend it >> no, it's a spending problem there. we've pushed nearly $6 trillion of covid-related spending in the last 12 months add another what, $3 trillion or more they're talking about massive spending increases high tax increases this is a recipe that's going to take us to a bad place in our economy. so this is the fight right now it's very, very narrow it's 50/50 senate right now. narrow margins in the house. this will be an interesting battle but i can't support these massive spending increases and looks to be perhaps massive tax increases as well. >> all right senator, thanks for your analysis, obviously, you're on the other side of the aisle from the current administration but i'm just wondering what is actually possible. and if it's not possible, i don't know what we're going to do with a lot of the spending that we're seeing. but appreciate your time in

this >> thank you >> okay. when we come back, we're going to dive into two important stories at the intersection of markets and technology the first is the conclusion of a closely watched union vote by amazon employees in alabama. and the second, big time drops in a number of media and listed stocks last week and the still developing drama behind that selling. insider inc.'s hryen blodget will join us you're watching cnbc

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amazon workers at a warehouse in alabama have been voting by mail on whether to unionize the ballots are due today. counting starts tomorrow and there say lot at stake degr diedra bosa joining us now >> warehouse workers are watching as well that's why the stakes are high here the results will determine whether the workers will become the first group to unionize among amazon's 800,000 u.s.

workers. but, guys, don't expect this process to be quick or smooth. the mail-in voting period that ends today, counting starts tomorrow, it's likely to last days in part because both sides can dispute votes. there are about 6,000 workers there. even if it does pass it could take years of bargaining to reach a first contract and either side could and is likely to contest the results. tensions over the union battle have escalated last week, we talked about a twitter spat between one of amazon's most senior executives and lawmakers that received. friday, senator bernie sanders visited workers telling them, quote, they know if you succeed here, it will spread all over this country and, guys, that idea of a domino effect is why those stakes are so high here labor challenges could push amazon to alter its policies and ultimately threaten that

efficiency, guys that has turned it into a $1.5 trillion market cap powerhouse, becky. >> over the weekend, there were reports that suggested that jeff bezos was the one that responded to the critics that maybe he got people fired up about that what do you know about that and where is andy jasky with all of this >> yes, andy is supposed to be taking own the reins later this year but no one expects jeff bezos to go anywhere. he's going to be executive chair. it may be unusual for bezos to direct this but it's certainly not unprecedented. there was that "the new york times" a couple years ago about working conditions for white workers. we saw jay carney, obama's former imprpress secretary hitt hard against it.

and the reporter says that jeff bezos has been watching this and thought they weren't pushing back enough. this is a mandate from him to do so it's got a lot of people talking, of course we talked last week about that back and forth. and people are shaking their heads thinking what is the strategy here. perhaps to the other side, republicans who may be against this unionization effort or against changing the corporate tax initiatives. but it's certainly one to watch this week as we get closer to the outcome as votes begin to be counted tomorrow we'll see what the amazon twitter handle, dave clark, svp of worldwide operations is thinking about tweeting over the next few days. it will be one to watch for sure >> yeah, i don't know what happened here. but we've all seen it in the workplace where the boss says something and people jump over themselves to try and respond. sometimes, react a little too much maybe too aggressively in some of these situations. we've all watched play out in

the workplace, though. dee, thank you, good to see you. >> yeah. >> we're going to continue this conversation talking what about unionization vote could 15 for amazon, henry blodget here for co-founder of insider inc., and will weigh in on the margin call from last week let's talk about amazon, henry, in terms what's at stake now and what's at stake longer term for amazon >> well, i think it's interesting that amazon is the company that's been targeted they have been more proactive about raising at least salaries for employees. incredibly high profile. obviously, a lot of people work there now it's not surprising. i think stepping back from it, the really important larger story is just the increasing bifurcation in the economy between shareholders and

everybody who works for a living in a way that there has to be a way for companies to share more of the value for the people who helped create it, the employees. i think for amazon, i think they will work through this i don't think it's devastating if the union was created, as deirdre has said this is a story about the u.s. economy. i think we'll continue to see more of this. >> but, henry, i think going to this issue of how amazon is dealing with it on social media with the likes of bernie sanders and elizabeth warren, do you think the strategy of them, on them pushing back on unions is the right one? amazon is considered one of the most popular companies in the country, if not the most popular. maybe they have an authentic claim on being able to push back, or do you think that's a losing strategy longer term?

>> well, i don't think the execution over the weekend at the end of last week help them particularly i think they do have a strong case to make, which is they led their industry in raising wages to $15 an hour they have health care. this is something that other companies like walmart and target, all of the fast food companies have not yet done. they've been fighting it they will move toward it over time i think amazon does have good arguments there. i do think that people actually do generally like amazon so there is -- >> henry, why do you think -- >> i don't think the twitter wars will be there >> if you think that the amazon is on the right side of things relative to the walmarts and targets the world. why do you think, and i don't know if it's disproportionate or not, they get a lot of attention from the left, from elizabeth warren, from bernie sanders? appropriate, not appropriate >> well, they get what walmart

in his heyday got, you're funneling businesses and to the richest person in the world it's just an easy company to attack they're huge they employ almost 1 million people so there's a lot to gain from that. it's stock has done so well. very easy target but i do think, again, they are headed in the right direction. i think everybody else needs to follow them. >> right >> and i think as a society and economy, we need to think more about, you know, big rich companies can afford to make sure that their full-time employees aren't poor. and that's the case with a lot of our big rich companies. >> henry, let's pivot right now to this blowup of archegos, the margin call that took place last week you're seeing the fallout on nomura, for example, and the fallout from credit suisse, those are the folks that lengthened the money that was used in terms of leveraging the media companies like viacom cbs.

curious how you see that unwinding? what the larger implications are for wall street but also for the stocks onto themselves >> well, i think it's good for the market and companies that use a lot of leverage, leverage makes you look like a genius when you're right and an absolute reckless moron when you're wrong. hopefully, this is one isolated dice-roller who got blown up, along with his or her enablers and it won't cascade from there. i think it's a good reminder t everybody that what seems so rock solid is leverage that. >> i guess the question is, is this the tip of the iceberg? is this the tim of the iceberg jutted up under water, we can see it now or is this more or one-off >> let's hope it's a one-off i don't know more than anyone

else mohamed el-erian was saying that earlier. it's huge to see this in a cascading market like this, usually in the bond markets or currency, but possible >> and when you look at the media companies, viacomcbs, they raised it and they were buying it at $85 a share. was it a right move long term to take that cash and hopefully invest and we'll see whether they do? or was it a mistake in terms of long-term trust issue that has now been developed in this case? >> the right time to raise cash is when people are eager to give it to you and buy stock and when markets are good, you never want to wait until you actually need it because then it's a much harder thing. everybody who bought on a big institutional offering like that is an adult. they're very good at analysis. they can make their own

decisions so i don't think management should be beating themselves up about that at the same time, you know, it's a good reminder, the stock has gone from $12 to almost $100 over the course of a year. maybe you're buying it at the top. what you have. again, it's a good reminder to everybody that stocks do occasionally go down >> henry blodget with the insights good to see you, my friend >> thanks a lot. coming up, jim cramer and his big take on the weekend. we've got the jobs report and the markets are not up, but we are. in a programming note, the global pandemic has disrupted how we work. find out at the cnbc at work summit register now at c

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let's check in at cnbc headquarters jim cramer joins right now jim, been waiting to get this chance to talk to you this morning. because you know how wall street works. you know how these things play out. explain what you think happened with archegos and what the potential implications are for the broader market >> obviously, there was a foot race on friday

goldman won it it looks like nomura and credit suisse were too late and ended upholding the bag. i think you got excellent coverage of the companies. the is he question is whether viacom and whether they basically hurt people. well, yeah, i think people are big boys and as henry said they got smoked discovery got the chinese stocks come back first. because when you see tencent music already making a comeback, but it's emblematic of what i think will happen which is that younger people, becky, will say i told you it was rigged, i told you the whole time that trulio is going down, it was rigged and look at the stocks and say zoom, i knew that was rigged, and andrew made a great point this morning, who moves stocks up and if it is is the robinhood crowd, they will say i've had it and with the ipo, the market is going to have it.

and they always call the boomers and the suits the enemy and it means that the suits and the enemy won. >> and the timing of all of this with the robinhood ipo that is coming up, who else was holding on, or got in at the highs, because if you watch that over two months, that's the crazy thing, look back two months and the stocks are basically unchanged. discovery and viacom at least from where they were two months ago. so everybody who got sucked in on the upswing, and then who got left, on the down. >> we were talking, endlessly, david and i, what is viacom doing up like this and obviously people were i think shorting it and getting crushed, and it's very interesting because a lot of the nonboomers should be asking themselves, what did you think happened what did you think happened? it's the same thing that happened to this one so geez, they got completely wiped out. and obviously, we don't hear from melvin capital. we don't hear from these guys. it's just, it is regarded as

sinister by this younger cohort, and they'll go home, and what a shame. but they'll go home. they don't stick around. they're short-timers it's really a shame. because they got smoked. >> the bad news is, is the lesson that that teaches them for decades, you need to be invested longer term to make money out of this and i hope they don't get burned and get turned away from markets for good. >> in 2000, we lost about a quarter of the people who were in and you got to keep teaching, they don't want to hear from the suits, they don't want to hear from the boomers but the only thing we really have for them is history and they need to hear it stay in the game don't get blown out. >> jim, can't wait to hear your thoughts, david and carl coming up in a few minutes. see you in a few thanks ♪♪ (car horn)

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cbs, and discovery, exacerbated by pressure on achegos capital management,er, that's what's known and we said it a few times, as a family office, and robert frank is back with us to explain how these firms have grown in recent years, there's more than a couple, robert >> a lot more than a couple, there are somewhere between 5 and 10,000 family offices around the world, they manage more than six trillion in assets those numbers tripling over the past two decades despite their huge size and impact on the market, they are actually exempt from most of the s.e.c. disclosure requirements imposed on hedge funds and other private funds. and that's because back in 2010, as part of the dodd frank legislation, family offices fought hard and won a special carve-out from congress allowing them to avoid s.e.c. registration as long as they serve as single family and don't provide any outside investment

advice now, archegos did not make a single filing with the s.e.c. in its entire history, despite of course making billions of bets now, technically a family office with over 125 million in invested has to foil some 13-s or stock holdings with the s.e.c., but those are rarely filed and by the way only visible to the s.e.c., not the public, joe, after all this news, i suspect someone in congress is going to push for them to get rolled back into that disclosure legislation so we start to learn more about this $6 trillion and thou it's invested >> you are required to file a 13-f and no one does, i don't understand that, robert. once again with great power comes great responsibility and hopefully they're not all going to act like the manson family, these family offices but apparently this escaped all scrutiny, and look what happened, it happened too many times, and it could be a

problem. what do you think? go ahead >> i just think that, you know, these family offices used to be very sleepy institutions that bought some family bonds, muni bonds and paid the family accounts and paid the family bills. these are massive very sophisticated institutions now, much like hedge funds and don't have the same requirements so i think the regulations need to catch up with the reality of where family offices are today all of these hedge fund, whether it's carl icahn, george soros, they're all family offices now and part of the attraction was they don't have to disclose. >> let's file a 13-f, must file a 13-f but they don't. never filed. even the existing law isn't being followed, maybe we don't need more. thank you, robert. we got to run. >> a final quick check on today's top pre-market movers

from dom chu who has those stocks for us. >> we're keeping a close eye on that fallout from the liquidation family archegos, credit suisse taking a hit, down 14%, roughly three quarters of a million of shares of volume. and nomura also warned of significant losses tied to an unnamed u.s. hedge fund margin calls last week and reports are that archegos could be the hedge fund in question watch those shares another massive amount of movement, selling pressure, was tencent, and they lost nearly 40% of their value but now up 8% pre-market and seizing on the opportunity by buying back a billion of their own stock and those shares are under end on discovery communications moving higher up, and lost 46% of its volume also caught up in the liquidation trade, so keep an eye on that one credit suisse, tencent and

discovery communications back to you. >> thanks for that make sure you join us tomorrow, "squawk on the street" begins rit now. . good monday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer david faber will join us in a moment we are expecting some chop to start the week futures are bit soft as we monitor the fallout following friday's block trades. busy week ahead. jobs on friday and our road map begins with the massive margin call. some banks warning of significant losses and the latest on the container ship still stuck in the suez canal. and boeing rallies as southwest orders at least 100, 737 max planes >> jim, great to see you in general, how are yo