week it is friday, march 10th, 2023 "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick with andrew ross sorkin joe is off today i want to look at the u.s. equity futures a lot of things happening this morning. you see the dow futures are off by 150 points. this comes after the down day of almost 550 points yesterday. you are now looking at the dow down for three days in a row week to date, down 3.4%. the s&p is indicated off by 13 points after dropping 74 points

yesterday. it is down 3.15% for the week to date as you see here nasdaq composite is off by some numbers this morning as well you will see it is down week to date yesterday's session, the dow down 544 the nasdaq was the biggest loser down 2%. for the week, each average is down 3%. you have treasury yields taking a look at the 10-year which is sitting at 3.866%. the 2-year treasury at 4.885%. andrew mentioned we have the jobs report coming up. that is what we are all waiting to see in the meantime, you should check out the move in crypto it has been plunging in the last 24 hours after the crypto lender silvergate announced it would wind down operations and liqu liquidate. these are long-term problems for the bank bitcoin is off 12% ethereum is off by just over 11%. ag again, this is moving on big

news in the bank area. >> let's talk about that this is the top story this morning. silicon valley bank shares t tumbling after losing half its value yesterday. concerns growing over the stability over the tech lender in the valley. it lost $2 billion selling assets following the greater than expected decline in deposits here is the problem. venture capitalists advising portfolio companies to pull money from the bank. those concerns, of course, rippling through the sector. regional banks comerica and key sd keycorp hit hard we will discuss this right now the potential for contagion risk with hugh son.

good morning it is not clear if silicon valley bank would be a problem insofar as peter thiel telling founders to get money out. that can create a run. >> yes, andrew i spent yesterday afternoon into the evening talking to founders and vcs. the consensus is people are saying we don't know if silicon valley bank is under duress or going to have issues, but we don't want to wait around to find out if you are going to panic, it is best to panic early. you don't want to be last in line to get your money out portfolio company emails sent from the likes of founders funds and other prominent vcs saying if you got more than 250 k, it is best to move it around. i spoke to one founder who did so and said, you know, it took five clicks. it wasn't hard to do with the

online banking platform. they were able to get their money out. there are other anecdotes with people who had issues with wire transfers not going in quickly and smoothly there could be breaks in the system also anecdotes of people having trouble logging on in the afternoon. that could indicate a lot of traffic on the silicon valley web site >> how concerned should people be not just about silicon valley bank itself, but whether there is a contagion and if this will spread >> so, this take away from the people i talked to is this is like 2008, but only for crypto and startups so, the hope is it stays there i think the concern in terms of knock-on effect is i talked to a founder last night who said i don't have money in svb. i was told to pull it out if i did. i don't have exposure there. how far, i'm trying to extend a debt refinancing and silicon

valley bank and others are specialists in this and they are not doing it anyway. it's risk-off. i'll not make payroll if i can't refinance. term sheets will be pulled in this person's estimate you could have and we speculated for a while there needs to be an event with the unprofitable st startups that exist with the zero interest money era need to be a reckoning it is possible this is a thing that incites that i would look there for with the knock-on effect. >> hugh, this is a bigger issue. you start looking through and jim cramer talked about this yesterday when we spoke with him. he said there are cracks everywhere this is what happens with the fed raising rates and you have

liquidity getting drawn in and it is probably not surprising that one of the places this would be an issue would be a crypto bank or bank that specializes in tech startups having problems getting money elsewhere so they need their money back this is a bigger problem high highl highlighting if you look at the banks down 7.88%. bank of america is down by 7%. jpmorgan chase was down significantly. it is because a lot of the banks hold something it is an accounting rule that says the banks can hold bonds and not mark them mark-to-market, but mark-to-maturity it is fine if you hold the bonds to maturity, you can do that those are the best plans to hold to maturity. if you have customers who want their money back, you can't hold to maturity and you have to sell at a big loss because the prices

have collapsed with the fed raising interest rates the concern is people are just digging through and this may be a case of sell now and ask questions later. people are digging through looking for the hold-to-maturity situation and valuing bonds at a higher level than they were worth if you were forced to sell today. >> becky, you are absolutely right. the issue with the unrealized losses on bond portfolios and bonds are worth less as the fed hikes rates. i want to say it is possible that the market is sniffing out if you look at shares of first republic and other players it is trying to sniff out the people who may be stressed in the situation. if you want to be conservative about this, you could say only the banks with the greatest exposure and in this case, obviously the crypto and

silvergate and now with silicon valley bank and startups their funding base is vcs and startups this is not a diverse group. these are momentum followers they talk to each other. they are moving en masse is what it seems like. that is the critical issue it is not the case with bank of america or jpmorgan chase. >> hugh, what do you hear about one of the big banks coming in to buy silicon valley bank speculation out there now that we will see some form of rescue of the company hopefully not from the federal government not yet. general atlantic put money into the bank hours ago this was a fund that was trying to make up the shortfall that was supposed to give c confidence to customers. >> andrew, it shows how quickly

this has escalated that people are talking about the potential for bailout. you know, as a potential end game, that is where people's minds go this is a mini 2008, but for crypto and startups. the idea, potentially, would be some regulator brokered deal you know, the people i talk to have said that the regulators have to be aware of the situation. clearly they have seen the headlines. if it gets to that, andrew, there is no indication it has, but apart from bill ackman tweeting this is something that needs to be done, you know, this is an end game for this. this is speculative to say so on live television. this is being discussed, yes >> the other thing i would ask you is whether you think those folks -- a lot of these venture

folks who are pulling their money out, they have investment in other banks rival banks. there is a conversation going on overnight about whether this is actually just a competitive situation. meaning there are venture capitalists trying to hurt this bank in particular to help themselves >> it would be like taking a shotgun to your own face silicon valley bank is so central in the startup ecosystem. they have been extending debt to all of the companies as a result, they own equity stakes in a spectrum of the startup world. the knock-on impacts of that would be hard to conceive. there is a central role in the ecosystem that i don't think a founder would do that. this is hard to conceive, andrew >> hugh, it is good to see you

i'm sure we will talk throughout the day and next couple days as we see how this story plays out. thanks >> andrew, this is a bigger issue with the jobs report today. if this is a function of some unintended consequences of what happens when the fed raises rates quickly and continuously, you see cracks this is something that the fed had to realize the fed is looking at this and thinking we don't want this unintended consequence if you see a hot number -- >> who thinks this is okay >> when you think -- you don't want markets to freeze up. that is not happening yet. when you have a big crack like this, there are questions raised, especially with the big banks reacting regional banks. >> i'm surprised the big banks reacted this way my thought is, if it is a hot number, you are right.

i think and i know this is an unpopular view i think jay powell doesn't look at this yet and say this is a bad thing. i know it is so perverse to say it i think he does not think it is a bad thing. >> you don't want excess you don't want the financial system to freeze up. you don't want people to not get money when they need it. when it is a crisis situation. look, this is not yet. i don't want to stretch this farther than it is when you look at the double digit declines in the major banks, people are asking questions and want to know this is not the same thing this is not a run on all banks by any stretch >> if it is a bunch of banks that are -- by the way, bunch of regionals banks that get blown out in the process of what has happened with the economy, i actually think he would say good i know that sounds crazy to

people, but that's excess. by the way, this is a bank that looked like excess from the beginning to anybody who was half centient. $50 billion in assets. quadrupled in the past two years. >> assets were locked up they were locked up too long if you were a bank focused on real estate investment trust, you would have trouble right now, too i think we will continue to watch this this does make the 8:30 number important. it determines how much pressure is on the fed to raise rates the jobs report is coming up at 8:30. the jobs report for february is 8:30 eastern time we dig into the market trends right after the break. the futures this morning are

still indicated down dow off 145 points after the decline of 545 points yesterday. big loss early in the week, too. down for the week across the board. more than 3% the dow off 3.4% this week s&p futures down 14. the nasdaq off by 11 we'll be right back. you are watching "squawk box" on cnbc >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com.

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we are counting down to the february jobs report the labor market is resilient, but we see signs of cooling demand in january, u.s. job opening fell and layoffs rose. g gm is offering workers across the board meta is continuing to play

middle managers. we have jason greer. we keep talk about the strong job market and we hear about the layoffs and buyouts and things that are happening how would you describe it all? >> layoffs work. when you look at what is going on in meta and gm, they are cash rich they are saying to middle managers and white collar workers, thank you for the work, but we don't need you. we will exit you out the door. you are looking at companies that are cash rich, but trying to figure out where they will be in three-to-five years. >> how much is the companies looking at this as excess and how much is wall street is looking at it and saying this is excess and demanding cuts? >> in meta, mark zuckerberg has gone so far in, he has to make this happen. i tell people when i think about

mark zuckerberg as the ceo, he is the guy from high school who told his friends i'll ask this girl out on a date and every day goes by and it never happens so he goes all in you have a bunch of companies facing shareholder pressure and inflation and the fed is losing its mind over cooling the k economy. it is a combination of all of the factors at once. >> with the broader economy and emphasis as you point out on middle tmanagement and white collar workers are the brunt of this, a lot of times this is blue collar workers. what is the difference >> they are hoarding the blue collar workers because they don't know what the future looks like you see companies putting people in warehouse and saying we will create a job

we will create some duties for you so you don't go back on the job market because it is hard to find quality workers from the white collar workers, they went to college and did the things people tell you to do now they are in dangerous because companies when they look at the bottom line, they factor in paying $150,000 to paying somebody else $50,000. this is too much bloat on the bottom line. >> jason, thank you for the time. >> thank you for having me coming up on the other side of the break, the cnbc investigation into the shadowy world of medicare and medicaid fraud which criminals are stealing staggering amounts of taxpayer money. take a look at futures we are off this morning. dow off 154. nasdaq off 12 points s&p is off 15 points we get the jobs number and all this could change.

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sam. sophie's not here tonight. so you have a home with no worries. brought to you by adt. welcome back to "squawk box. while washington argues over medicare and medicaid, fraudsters are stealing money and it is costing factaxpayers billions here is con ttessa brewer with more >> reporter: this is the face of fraud care in america. the man smiling as he counts the stolen money in the recording by the government informant the business of stealing medicare and medicaid has never been more brazen this is the florida special agent in charge. >> we head to the medical equipment company.

>> reporter: durable medical commitment dme. braces and wheelchairs fraudsters buy with lists of patients to steal from the government >> with those two key pieces of information, they can sit in a place with open wifi and submit claims to medicare >> reporter: in south florida, he says about 90% of the dme companies are fraudulent he shows us a storefront in the strip mall used in the steam to bilk the government out of $48 million in a single year. the mastermind the man counting the money we head to the home where he stashed his stolen money this is where agents made a startling discovery. he hid some $2.5 million in cash in pvc pipes under his home.

>> stuffed cash? >> saran wrapped them. they looked like bricks of coc cocaine. it was an indication of how deep the fraud was. >> reporter: he plead guilty to wire fraud and sentenced to 12 years in prison. that hasn't stopped the fraud. we are at the miami merchandise mart where agents say is a hotbed for fake companies set up to bill medicare for products and services they never deliver. in the maze of shops, we find exactly what investigators describe >> a desk, perhaps a curio with one or two types of braces they have the manuals that medicare requires. and some type of partition with orthotics. the patient is to come in and get fitted most times we show up, nobody is there. if someone is there, they have no clue which business they are

representing >> reporter: we find a young woman sitting alone at a desk here at this company >> i'm contessa brewer what is this business? the woman says it is a medical supply store she has nothing to do with the business the only thing she can show us is a brace she gives us a business card for the owner. i call the number. it rings at the desk inside. this is contessa brewer from cnbc we just talked a minute ago. this is the number you gave me to call to talk to antonio i leave a message for the owner. we reach him weeks later he said all of the equipment is ordered through another company after the patient sees a doctor. he refuses to give more information. government records show the company has billed more than $2 million to medicare, mostly for

wound care >> how big is this problem >> south florida, without question, is the ground zero of healthcare fraud it is only one state there are 49 others and territories where these types of scream schemes are occurring. >> reporter: the business we visited has been cut off after the visit by the office of the inspector general. dozens of schemes totaling more than $61 million which is called abuse of the healthcare system next month, a south florida man will be sentenced for billing medicare numbers that is what facilitates the fraud. his maximum sentence five years >> that's unbelievable why can't we shut this down more quickly? why can't we raise the penalties to deter >> the number of investigators they have is not equal to the

task of how inventive and creative the schemes are for every $100 that medicare and medicaid shell out, 2 cents is used for enforcement and oversight. yet, for every dollar they spend, the agency gets a 12 times return on that investment. it is definitely worthwhile to put more energy and resources into the enforcement >> why -- why is the preferred choice here in terms of crime, durable medical equipment? >> we found lots of schemes. this is the one we focused on because it is easy the shops don't cost much to rent office space. if the inspectors come by, there is a legitimate address. you put up the manuals and partition that looks like you are fitting somebody for a brace. in fact, nobody ever shows up.

they can keep that scheme going for months and months until the paper work gets co- llated we have been here five times. >> they shut it down and open up somewhere else that is why you need stiffer penalties and fines. >> you are right. >> thank you, contescontessa i would imagine we will see more >> absolutely. >> thank you when we come back, politicians and companies have been sparring over esg investing. after the break, we talk about what that means for asset managers as they walk a tight-rope between fiduciary duty and client comments and political pressures. we want to look at the s&p winners and losers from yesterday.

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good morning welcome back to "squawk box" this morning we are live from the nasdaq market site in times square. futures are under pressure this morning after down sharply the market down sharply yesterday. nasdaq is bouncing back a bit.

in positive territory, but barely the dow futures are off 135 points s&p futures down by 11 shares of silicon valley bank are falling again today after a 60% plunge yesterday down another 45% to 58.50. they lost selling assets after the decline in deposits. people wanted money back and they had to sell at discounted prices to pay people back. venture capitalists are advising portfolio companies to pull money from the bank. peter thiel was involved with telling his clients that this is a bank that focuses on venture capitals and startups in the tech area. you see what unfolded. that selling has spread to other bank stocks as well. s&p bank index

the bank index and the stoxx 600 all tumbling yesterday, one of the major bank index was down by the most in three years. the kbw nasdaq index biggest decline in three years if you check out the losses for banking names, look at this. wells fargo for the week is down 13%. pnc is down 10%. bank of america down 11% just over that lots of other places we have seen larry mcdonald is the founder of the bear trap report larry, i don't want to spark additional concern, more than is necessary. this may be the case where people are selling now and asking questions later i think what is probably happening here is people are looking to hold to maturity situations you have assets particularly in bonds and say you will not mark them down. you don't have to with

accounting rules bond prices are under such pressure this year and if you hold to maturity, it is not a problem. if borrowers force you to cash in on those things earlier because they want their money back, it is a problem. it is a problem for svb. is it an issue for bigger banks, too? >> you are doing a great job of giving important color on the situation. i have been listening this morning. the larger banking systems, xls, those have above 15.5 trillion of assets. kre is above $5.5 trillion the regional banks are the smaller, but picture the credit risk management team at jpmorgan chase and one of the big banks in new york. this is like the team that is flying the f-16. if you think about the interest rate risk teams at the regional banks across the country, you might think of overweight man or

woman coming out of dunkin' donuts you are talking about a team of people across the regional bank system across the united states which hadn't had to deal with interest rate risk for literally their entire careers you are talking interest rate risk and credit risk that hasn't existed. so, they really don't have the risk management hedging practices the big banks do as yyou nailed it, if there is demand -- remember, the u.s. treasury is pouring money out of these banks. you can get 5% t-bill and the deposit rates in the banks are much lower and that is pouring money out of the banks as well. >> that is an excellent point, larry. i hadn't thought about that. you can get a better deal. why go to cd or savings account with a better deal from the u.s. treasury >> yes in essence, the fed is causing

the bank run what i heard is we run an institutional platform we run a conversation across the bloomberg p network. here is what the professionals are saying globally. this is a risk issue with the fed tightening monetary policy conditions are not tightening. the new york fed is going around to the regional banks and saying your market-to-market reegion i a problem. that is creating this tightening of financial conditions that the fed wants. that is ultimately what gets inflation down. >> that gets to the contagion. i guess i hear to the regional banks, but don't worry about the big banks so much. >> yes exactly. this is like the s&l crisis in

the '80s they are playing with frankenstein they need to get inflation down and tighten financial conditions so they are doing that and now we are having a run on banks it is going up the curve charles schwab is off 10% yesterday. you might see that once or twice in a career. this is contagion process. i think the fed will end up cutting rates by 100 basis points by december. >> whoa. back it up there is a headline for you. you are convinced because of the problems that look like they could be systemic if they roll to other things, the fed will say forget inflation and we are worried about the financial system holding up? and focus oded on the regional banks? that is enough for them to change their mind about what jay powell said we are going after inflation and that is going to

be what we do? >> well w, you just nailed it there is an inflation fire they are pulling out the fire hose with financial conditions trying to put that out that is the fire they are dealing with now the problem is when you do that, our 21 systemic risk indicators are at the highest since lehman and covid. they are exploding within the next couple months as the contagion brews up high yield and leverage loans and ecosystem, the fed has to come out with the fire hose and cut rates. >> to your point, we have been looking at the 2-year treasury that was above 5% until the last couple days. you are now talking about 4.818% that is a drop of 25 points in the 2-year treasury as people are maybe placing bets with what

you said does that explain the decline? >> exactly watch two-year notes a month ago, it was 4% last week, it was 505 basis points that is the regional banks and what they are dealing with they are pouring money out of the regional banks i have family members who own businesses in new england. i'm seeing business owners in new england taking the money out of the banks and moving it into t-bills. that's interest rate risk causing problems now as you said, we literally come down 25 basis points the last 48 hours on the 2-year note as the market is pricing in a softer path forward. >> we have a big number coming up in two hours. that is the february jobs report if that number is far hotter than expected, what does that

do it puts the fed in a tighter box. >> yes the fed -- the fed talked things down to 25 they talked to 50 through the leaking system now if it is a hot number, they will be in a tough spot because the 50 is in play and we have the credit contagion they will walk back to 25. remember, you guys have been doing a good job on jobs this situation in january historically with the seasonal adjustment typically with the seasonal dislocations and february and march is leaner. the probability of a weaker number on jobs is soaring high >> larry, thank you very much. really insightful. we appreciate your time this morning. larry mcdonald >> thank you. coming up, oracle shares falling. this despite the earnings beat we will tell you what is weighing on the stock next throughout the month of

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welcome back to ""squawk box. oracle's cloud business an failing and the company's chairman larry ellison is weighing in on a.i. and chatgpt comparing it to oracle's own a.i. tech. >> we actually shown or md andersen has shown if you use the system, you reduce hospital

admissions and readmissions by 30%. that's a stunning number people talk about chatgpt being really cool because it can write my high school essay for me. how about reducing hospital readmissions at md anderson by 30%. you decide which is more important. >> oracle raising dividend by 25%. larry ellison, effectively, gloves off saying there is cool and really cool. he may not be wrong. >> when you hear promises of that, that changes my opinion of the concerns that are out there today. i think you have to keep an eye on both issues the promise is something we don't want to lose sight of. shares of gap falling. are you wearing gap. >> not lately. you know me, i don't get out of the house to shop a lot.

>> i have not been to gap in years. >> i have one a block over >> fourth quarter earnings and revenue missed estimates i bought socks there warning of the full year revenue drop analysts were expecting gains they own banana republic and old navy and athleta they are looking for a permanent ceo. when we come back, crypto prices plunging in the last 24 hours after the collapse of the crypto lender silvergate we talk to the chair of the newly formed sub committee on digital assets of regulating cr cryptocurrency representative french hill will join us after this

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the newly formed financial services crypto subcommittee held its first meeting on digital asset failures like ftx and gaps in regulation joining us now with more on the future of crypto oversight is congressman french hill. he's the chairman of the subcommittee on digital assets, financial technology and inclusion and, congressman hill, first of all, thank you for being here today there are so many issues swirling around in this realm, i think the biggest may be when can we actually expect some clear -- some clear rules on who should be the regulator on so many of these different assets >> well, becky, it is good to be with you and andrew this morning. it is a critical time in the fintech and distributed ledger blockchain industry and what is the future of it last year was such a terrible year in the industry, and that's continued this year in terms of what are the rules of the road

if you want to innovate on blockchain with a new product or service, how do you go and be regulated? how do you disclose what you need to disclose and people went to our regulators over the last two to three years, got commitments that they could do a particular service, and now in recent months that's been taken away from them with this new biden administration policy of lack of innovation and lack of a common direction. so what we hope is that the biden administration will work with us on capitol hill to look at regulation on stable coins, which we made a good start on last fall, look at market regulation, how you trade a cryptocurrency or digital token, where you do that, who oversees it, what the requirements are, and then what's the difference between something that should be regulated like a security and something that is not a security these are critical issues if we have innovation in this space. >> congressman, i think the

biggest issue may be that it is taking so long that the fed's top banking regulator, michael barr, just yesterday was calling for congress to step up and get some legislation in place we see the s.e.c. kind of going after and trying to do some things, but they're not really authorized to do a whole lot so i think gary gentzler is in the unfortunate position of trying to run around and put out a fire without being the authorized fire department for any of this. you have the cftc wanting to step in. but it is taking years, while we're watching crypto skyrocket, collapse in some cases, bounce back and a lot of investors who are at risk in the meantime. >> right but we got -- as i said, small progress last year in getting the biden administration's attention to work with us on that legislation but then they started this new enforcement effort and it seems to be aimed at companies who tried to come into the s.e.c., for example, and ask permission on how to do something there were no cases against ftx last year. they didn't stop ftx's collapse.

but they definitely have been attackingkun companies who are registering and attempting to register right now you have my commitment that i'm going to work real hard this year to get consensus on a bicameral basis on capitol hill, a bipartisan basis and i certainly encourage the biden administration to work with us so that we can promptly bring definition, legal statutory definitions to this market to give chairman gentzler and the cftc and the banking regulators the direction they need. >> congressman, one of the reasons that gary gentzler has been reticent, i think, to do something more broadly is that there is concern about the underlying assets. there is one, you know, one piece of this that is trying to regulate an exchange, but if you are concerned about being able to control and regulate the underlying things that are trading on such an exchange, you sort of throw your hands up in

the air and go, you know what do you do i would ask you what do you do, give than i think so many of these assets and different coins and the like are something that are somewhat uncontrollable, especially when you start to think about how they work globally >> well, first, i think we have to protect investors in the united states. and that's why i question the s.e.c.'s position last year on ftx. there were many, many americans who were duped by that scam and i didn't see the cops on the beat do all that i think they could have during the course of the last year. but it is those definitions, andrew that are important. what is the security, what is not a security, what are the listing standards, how do you be a dealer in that market, how does it work if they're decentralized? these are not easily, as you note, wedged under the existing securities laws or existing laws governing the cftc that's why we think we need new statutes to approach and the cooperation of the biden

administration to do that quickly and effectively. >> okay, congressman hill, thank you so very, very much appreciate it. >> you bet, andrew good to be with you. thanks >> you bet. on the other side, dow futures are well off the session lows the nasdaq now in positive territory. next, we're going to talk about the slide in bank stocks and whether there is going to be some contagion from what is happening with silicon valley bank later, the commissioner of the p&g tour is going to join us live from players championship you're watching "squawk box" and this is cnbc a ballet studio, an architecture firm... and homemade barbeque sauce. they're called 'small businesses.' but to the people who build them there's nothing 'small' about them. that's why at t-mobile for business... you'll save more than $1,000 versus verizon. and with price lock guarantee, we'll never raise your rate plan.

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good morning the future's mixed following a steep sell-off led by the banks yesterday. in particular, silicon valley bank, now down 70% in just 24 hours. the february jobs report, a big focus for investors, we have a preview of the numbers and what it means for the fed, where rates could be headed. the next policy meeting is just two weeks away. we are watching and waiting. the second hour of "squawk box" begins right now good morning welcome back to "squawk box" here on cnbc we're live at the nasdaq market site in times square i'm andrew ross sorkin with becky quick. joe is off today u.s. equity futures, a lot going on now questions about banks, we got

questions about the jobs number. we're going to get that in about an hour and a half all the numbers you see on the screen may very well move. the s&p 500 off about six points, dow off about 92 points, nasdaq moved up, we're at 16 points higher right now. treasuries, though, the ten-year and the two-year ten-year at 3.847% the two-year at 8.422% that's coming down oil, wti, show you that right now, looking at that at 7502 crypto this morning as well, some of this move has to do with president biden's new budget proposal, and rules to close a loophole and eliminate investors ability to take advantage of losses to lower their tax bills. it would subject crypto to the same wash tail rules that apply to stocks and bonds. bitcoin under 20,000 at $19,771. either at 1385 along with today's jobs number,

we got a big focus on silicon valley bank and the banking sector shares tumbling this morning again after losing more than half their value yesterday concerns are now growing over this stability of what was a tech focused lender in the valley many called it the backbone of the valley lost nearly $2 billion of assets following a greater than expected decline in deposits the fallout being felt across the financial sector regional banks down sharply as i think folks are getting a little nervous. also the major money center banks under pressure this week as well. steve liesman is on the set this morning. we're going to talk about the jobs number. i'm curious how you think the fed is thinking about this, and whether you think really there is contagion here or not >> i'm curious now or are you curious now? >> now >> i thought you were still reading the -- >> no, you're -- my curiosity is -- >> i think the fed is going to watch this very closely. i was just going back and reading the monetary policy. >> reporter: to coreport to cons

they did not see issues at the bank we have a quote from the monetary policy report to congress in which they say, you know, funding risk at domestic banks and broker dealers remain low. >> when was this >> this was reported to congress a week ago friday. >> okay. >> so pretty recent. from everything i'm hearing, this is a bespoke situation in the sense that they are a silicon valley bank, right and what we understand is that they have a lot of depositors there who have been taking out their deposits and that creates a liquidity problem. they should have, by the way, which is curious to me, beyond my level of knowledge right now, there should be ample fed facilities for them if they have a liquidity problem. i don't think this is a solvency problem, right i think they have the assets, and it is just a matter of the value of those assets now and whether or not it makes sense for them to go out and sell those assets to meet their

liquidity needs. >> they already have sold some of them. at a big hit $2 billion loss. >> and raising more cash. >> when they did that, i think it is important to note, they weren't doing that because there was a run on the bank and they needed to sell those things. they were doing that because the interest rate they were capturing was too low, relative to what was happening. so they were trying to rip the band-aid, same look, we're stuck with this interest rate down here, we actually want to float it we prefer to float it. we'll take a loss now. otherwise we're stuck with this for a very long time that's almost a strategic decision that is now taken by the market in some kind of other way. >> in the wrong way. >> see what i'm saying >> right in terms of the contagion issue, i want to show you a chart by a banking association, but that's what's happened to their tier one or high level quality capital. and it is up 197% since the financial crisis so, it is a little hard to argue and all of the stuff in the

policy report, monetary policy report says the banks are well capi capitalized. there are going to be losses even after dodd frank and all this regulatory stuff, we have not eliminated the possibility that banks can be challenged and we're not talking about a failure of this bank, but that banks could, you know, fail. that's not out of the question. >> the losses we see, i wouldn't talk about the big banks being in a position of failing but you see some of the big bank stocks down double digits in the last few days. maybe that is more realization that they could lose money on some of these things because they all have been holding these assets that are, you know, much lower than they have been marking them at this point and maybe that's just a reflection of, okay, it is not going to look as rosy as we thought. morgan stanley is out with a note today saying they think silicon valley bank, they always have believed they have more than enough liquidity to fund outflows withcapital clients

and they think there is no contagion to the rest of the regional banks or anybody beyond that but we had larry mcdonald on who said one of the issues you have is that regional banks are getting a lot of liquidity sucked out of them because the fed raised rates so much, it makes, you know, a two-year note look so much better than a cd or a saving or checking account they can't compete with those things they're losing a lot of money right now. >> they can. they would have to raise their deposit rates and banks have had a tremendous run, by the way, before you shed any tears, becky, i don't think you would anyway, they had a great run of net interest rate being positive because they haven't been paying those deposits and deposits are sticky, you know what would it take for you to say i'm moving my automatic deposit or paycheck to another bank >> a really great rate on your mortgage. >> huge gap. i think we have gotten near that place where people are like, between 1% and 2%, meh but

between 1% and 4%, maybe i should fill out the forms again. >> consumers are getting money for keeping things in a saving account again. >> they will or go to a two-year look it is a different regime we're out there. it is the new normal, but there was chatter at the powell's hearings about a possibility of a longer term, higher interest rates that are part of the environment and the landscape now and getting used to that and money is not free. and which part of the country, which sector of the economy benefited the most from free money? it was the tech sector. >> can i ask one question. we have the two-year note up right now. >> i put that up. >> if you look at the drop, 25, 30 basis points, overnight in the two-year this plays into something else larry mcdonald said. he thinks the fed is going to have to cut interest rates by 100 basis points by december and that this is the two-year kind of reflecting that. if that's not the case, what is that >> i think larry's point is premature to look at that and

see 100 basis points of cuts what you can look at that and -- >> he said the 100 basis points, i pointed to the two-year. >> you can look at that chart and see, becky, the idea that that bump on the left side of your screen, that was 9:59 a.m. on tuesday that was before powell said a more rapid pace. so when you look at na that cha what you see is the whole bump in the two-year that happened from powell is gone. >> so maybe back to 25 basis points >> i'll tell you exactly where we are people want to know why they keep seeing the top of my head i keep looking down at data. that's why they do such a nice job in the back with the makeup on the top of my head. let me give you the tale of the tape 23% was the probability of a 50-basis point hike before powell spoke as of yesterday, until this savings bank silicon bank valley

story broke, it was up as high as 72% it was odds on it has now come back halfway and so we're now trading with 50% probability of a 50. so we are betwixt and between, what does the fed do with the possibility of some tumult in the bank >> this is what we think right now, what do we think at 8:30 when we get the jobs report? >> let me show you something i'm sorry joe is not here because we have this running joke of everybody being above average. okay, so every report i read about the jobs report today, every single person was above average. above the consensus. i don't know if that was a random thing, but i read like ten reports, they were all above average. i want to show you why, which is this is a great graph i got from goldman sachs' report. it is their analysis, a series of regressions, with all of the high frequency data that is out there, okay. so adp, that was the number, okay home base, that's a regression

they do. an hr software company if you use their data, it comes up with a number of 300. the census bureau business pulse, 325 and 475 all of the data out there is pointing towards a stronger than expected report this morning >> okay. >> steve, stay with us we're going to bring in the voice to talk more about this, about what we're seeing both in the markets and in washington. peter orzag is here, the ceo of financial advisory at lazard and the former director of the office of management and budget under president obama. peter, an interesting morning. a lot of things we're trying to dig through. can you offer any help or any insight to point us in the right direction? what do you take out of this spv situation? >> i think it is potentially dangerous. a couple of points, first, let's look at the direct impact. the most likely direct impact is on the tech community itself battered by valuation, but a lot

of these companies have relied on this particular bank for liqu liquidity, they'll have to go elsewhere and expect some dislocation from that. but the big question as you were just discussing is what more than that? and i point to just two things the core issue here, becky, as you pointed out, there are a bunch of assets that have not really been marked market. that is a broader phenomenon where when interest rates go up, these bonds that are held and available for sale are held to maturity, the value of them go down, they're not -- they're not immediately recorded as such, depending which category in particular but that is a broader phenomenon, because that is not specific to silicon valley bank and so that's one question and the other question just involved confidence. a whole variety of different, you know, underpinnings of the financial system fundamentally depends on confidence, waking up

to seeing problems of a well known bank in a particular community doesn't help from that perspective. >> all right, let me ask you this the idea of not marking things to market properly, and not being forced to do that by accounting standards, i was wondering this morning and i'm reluctant to take this on air, hold to mature, htm, is that the new cdo? the big banks at this point, what you're saying kind of keys me back to that question, how big of a deal is this? >> how big of a deal it is depends a little bit on how long interest rates remain high, because that's what's driving this juncture between, you know, the change in the valuation of those bonds. and that brings us back to the inflation dynamic. this is one reason, by the way, why i've been taking for a while i wish the fed would tilt towards pausing and seeing how things play out. i think it is better to do that

than to keep raising and then be forced into a reversing your position quickly as you try to clean up a mess that results from it. >> peter, help explain to the audience, we were trying maybe not as artfully as i would like personally to the audience what actually happened at silicon valley bank, because it appears to me they made a strategic decision, if you will, because of some of these bonds that they were holding, what the was a lower interest rate and said to themselves, i'm going to rip this band-aid off, i'm not going to do this right now, we'll sell this, we'll take the loss and we'll go to a floating rate to try to capture a higher number that unto itself has been taken by the market as something existential and i'm not sure whether you think it should be or shouldn't be. >> well, andrew, i think we don't know all the facts yet i want to be a little bit cautious here. but the fact of the matter is right now what is happening is they have a combination of problems, one is a lot of their

depositors are now pulling funds, that's pretty clear and they also have this problem with regard to two categories of bonds that they have previously held as capital in terms of their value. what the -- what the instigating shock was, what you're sort of getting at, i think still remains a little unclooer uncle. the situation they face right now is a situation that a bank just doesn't want to find itself in because of this concern, it comes back to that confidence. once people start -- this is the classic run on the bank. once people start pulling funds, no one wants to be the last person standing. >> peter, we have a vast structure in this country designed to create a series of buffers before there is ever a run. if i'm not mistaken, the bonds you're talking about are essentially treasuries or other liquid instruments they're not sitting there holding high yield, high tech bonds as part of their capital

so, aren't there a number of facilities available to them at the federal reserve where they can take these bonds, put them to the fed, get back the cash and then use that to pay their depositors what am i missing there? >> well, there was -- there were a variety of different bonds held, not just treasuries, so that's the first point i think the second point, this is a broader question, by the way, we are going to have -- we are -- i think over the next few days going to see a process in which svb will try to raise capital or potentially be sold or there is likely to be some -- there will be some discussion of whether the federal government needs to step in, even beyond the facilities that currently exist. so, this is coming back to my first point, this is definitely a topic to watch very carefully because of its potential, not its direct impact, but more

because of its potential to raise concerns about what is happening in the portfolio of other banks, and, you know, how are they valuing their assets and, you know, is there a broader confidence problem. >> i think that's maybe some of the scramble that you see with some ofthese stocks down art cashin is talking about pen square bank in 1982 which kicked off the savings and loan crisis, talking about the thai baht, things that people never heard of that became bigger problems, this may be very different, but, peter, i think you're raising some of the questions and those are things people are talking about off camera, in all areas of wall street right now >> and don't forget, this is not the only -- just to come back to the other topic of the day, apart from the jobs number, we also had the president's budget come out yesterday this is the -- almost none of that is going to be enacted into

law, so it is probably not worth reading the whole thing, but it is the opening salvo in this dance of another big risk out there, which is there really is no plan on the debt limit as we move into the summer i think the broader point is we still have a very strong labor market, we still have a pretty strong consumer, on the other hand you're starting to see some of the fishers that come from -- come really from the rate environment and perhaps from a self-inflicted wound around the debt limit as we go into the summer >> peter, i just want to understand here, if the quality of their tier one capital was not sufficient, or there were other issues that they were not prepared for when it came to the possibility of companies withdrawing their deposits or depositors withdrawing their accounts, is this a regulatory failure? was the fed not on top of where they were and should have been

>> again, i don't want to start casting aspersions too quickly i think there is a lot that let's foresee how the next few days go, i think there is a lot of unanswered questions and i think you're raising a legitimate question, which is as they experience the significant inflow of deposits over the past few years, and park those disproportionately in bonds, you know, what was the regulatory interaction and sort of who was watching >> peter is bringing up an important point. this bank has grown substantially over the past -- >> four or five times, huge. >> huge inflow from the whole -- >> yes. >> easy money policy. >> yes. >> and they took that money and put it into bonds and apparently some other stuff. >> that's why i think that -- >> i want to know what the other stuff is. >> i think jay powell doesn't look at this and says this is a terrible situation, you know what i mean? >> peter, before you go, hold on, peter, ray mcgwire.

>> we're thrilled to have ray join lazard as our incoming president starting in april. could not be more excited about his addition to our firm >> we'll have to get ray at the table. thank you. >> very good to have you here this morning we'll have you back soon there is a lot more to dig into here. when we come back, the commissioner of the p&g ga tour will join us live from the players championship as we head to the break, look at the laggards and the dow the nasdaq and the s&p 500 we'll be right back. i think i'm ready for this. heck ya! with e*trade you're ready for anything. marriage. kids. college. kids moving back in after college. ♪ finally we can eat. ♪ you know you make me wanna...♪ and then we looked around and said, wait a minute, this isn't even our stroller!

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welcome back to "squawk box. the 2023 players championship under way at tpc sawgrass in florida where the top golfers in the world are battling it out. joining us now, pga tour commissioner jay monahan good morning to you. nice to see you, sir. >> good morning, andrew. good morning, becky. great to see you guys. thanks for having me. >> hey, jay. >> let's talk about the state of golf joe is not here. we can't talk about his putting or our putting or -- we're not putters, jay, but, you know, there has been lots of questions -- >> joe took the day off.

>> what did you say? >> joe took the day off to watch the second round of the players championship >> mm-hmm. >> let's talk about ratings. let's talk about where golf is let's talk about liv golf, which i know has been sort of the big issue that so many players and so many people have been talking about. >> yeah, listen, we're -- as we turned into 2023, we just had tremendous momentum behind the pga tour you look at what happened inside the field of play with john rahm winning three times. look at scottie scheffler winning the phoenix open, rory mcroilroy is number one in the world. now jon has it and just go back to, you know, this past sunday night at the -- at bay hill, arnold palmer invitational, and it was dizzying to see the number of big names moving up and down that leaderboard within one or

two shots. the competitive fabric, the competitive integrity of the pga tour is extremely strong that's reflected in the numbers. the viewership, the consumption has been really strong this year as we transitioned to this model of designated events bringing our top performers together more often and as we turn into the players championship here, andrew, we can't be more excited about, you know, where we're positioned within the fedexcup season >> how big a deal do you think full swing on netflix is in terms of the popularity of your sport at this point? >> i think it is a big deal. you look at the 230 million subscribers it is reaching and the game of golf over the last couple of years and coming out of the pandemic, you've seen participation rise, you've seen more diversity, you've seen more advancement in the game and this is reaching a much broader demographic. and what is important is that thanks to the great media

partners we have and nbc, golf channel, espn plus in the united states, you're now starting to see, you know, the behind the scenes you start to see the personalities, you are starting to see the dimension to the pga tour that fans haven't been able to see and i think it's been really well received. >> are there players who didn't want to participate in "full swing" that now do >> no question there is a line at the door to sign up for season two, which netflix has committed to already. and i think you'll see a number of new players and personalities in season two. but it is -- listen, i was here first tee yesterday, first tee shot was 6:50 a.m. i watched joel dahmen, one episode features him and his family there is a big crowd following him yesterday morning and throughout the course of the day. it is having its desired effect. >> jay, i get to see you every year at pebble beach, which is

always great of course, jack nicklaus made some comments about this recently, a lot of news reports followed that pebble beach is going to be elevated to become one of the major events for the pga tour and as a result the amateur and celebrity status is going to get knocked to the way side any comment on that? >> well, i think, you know if you look to what we announced earlier this week, becky, for the 2024 season, we're building on the success of these designated events. we'll have 16 in total when you exclude the players, the major championships, the three fedexcup playoff events, that leaves you with eight additional we haven't announced our 2024 schedule to your point, the at&t pebble beach pro am has long been a staple the format has been a great element to the pga tour. i expect that to continue. but as it relates to, you know, whether or not it will be a designated event, there is a lot of work that needs to go into finalizing our 2024 schedule

but no matter where we end up, that event will always be a central part of the p&g ga tourn the element of the celebrities, the likes of joe participating will be core to it >> answering his questions for him, even though he's not here >> jay, we want to thank you you have a bet on thisweekend? you can actually now actually bet on this weekend, like it is not just do you have a bet, you can bet. >> you can i can't. and i think when you look at, you know you look at this field, the beauty of this tournament, andrew, is based on the nature of this golf course. it is as democratic a golf course as you'll find and tests all facets of the game look at the leaderboard as we complete round one here, and it is really difficult at this point to predict who is going to be there at the end. but that's what makes it so great and that's why people will be tuning in late in the day on sunday on nbc. >> thank you for joining us this morning. have a great weekend. >> i think betting on golf, the

purest form of the sport. >> people who can corrupt it. >> exactly right? >> sure. >> right don't miss the best of the pga tour including jon rahm taking on the 17th island green as action continues with round two today, 12:00 p.m. eastern time on the golf channel and, yes, on peacock. "squawk box" coming right back time now for today's aflac trivia question. what was the first u.s. coin to have "in god we trust" engraved on it? t the answer when cnbc "squawk the answer when cnbc "squawk box" continues what's this? a thousand dollar hospital bill? but i have good health insurance! gaaaaaap! did you say 'gap'? he's talking about the expenses health insurance doesn't cover. but with aflac, u can get money to help close that gap. aflac, huh? gaaaap! aflac! gaaaaap!

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now, the answer to today's aflac trivia question. what was the first u.s. coin to have "in god we trust" engraved on it? the answer, the 2-cent coin of 1864 all right, welcome back to "squawk box. i'm dominic chu. premarket movers, banks the story of the morning so far following yesterday's massive plunge in shares of tech-focused bank svb financial the company announced to raise more than $2 billion in capital to offset losses on asset holdings trading in the stock was halted for volatility multiple times during the session and that drop has brought the market cap to below $7 billion again, a nearly $600 stock over the last year, now $59.56.

other banks are feeling the effects. a sell-off in the sector yesterday, wholesale yesterday, after that news as investors grew increasingly concerned that higher interest rates would result in more banks facing losses on some of their assets due to borrower defaults, credit risk, everything else. a possible contagion effect. now in the premarket trade, still seeing some stability in some of the banks. in the market dow component caterpillar trading lower in the premarket after downgrade from analysts at ubs. they say there is not enough moment in many growth and see a slowing in construction machinery and oil and gas production as well so they see at least some downside, down 1.6%. they're pointing to lower estimates for iphone sales and more moderate growth expectations and some of their services revenue so those apple shares down fractionally in the premarket trade. now the countdown to the jobs report continues keep it right here

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president biden's budget message is clear, taxing income won't raise enough for his program. so he will have to target investors. the big increase in capital gains is one of the things we have been talking about. and robert frank joins us with more on this. >> there are a lot of big increases here, becky. total budget includes more than a dozen new tax hikes on companies and high earners

the total increase, $4.5 trillion over ten years. the plan includes that billionaire minimum tax imposing 25% tax on those worth $100 million or more. that is on unrealized capital gains. so, that's the increase in value of stocks or a company even if they're not sold the big change for investors would be that long-term capital gains. it would raise the rate from 20 to 39.6, it would apply to anyone making more than a million dollars a year, including someone who sells a company for more than a million dollars. wants to increase the net investment income tax to 5%. add all of that together, the cap gains rate would go to 44.6%. you live in california, sold your tech stock, you would pay tax on that sale lived in new york city and sold your seven-figure apartment, you would face a combined city, state and federal tax of, get ready for it, 59.4%.

>> okay. robert, stay with us we want to bring in gene ross, senior fellow for the center for american progress and douglas holtz eakin, president for the american action forum and former congressional budget office director let's just start out with this, jean, is this a serious budget or is this just politics at this point, asking for whatever you want because the house isn't going to give it to them >> it is a serious budget. it is a budget that fits together as mr. frank was saying, there is a suite of tax proposals that are integrated that work together that you need all of the pieces there i think it is absolutely a serious budget that builds off the tremendous legislation we have seen enacted over the past two years, but also sets forth a value statement for the next two years. >> doug, what do you think >> it is a messaging document. it is not a governance document.

there is no seriousness about it because despite all of these increases, $4.7 trillion in taxes, it takes the debt from 24 to 43 trillion over the ten years. it adds 19 trillion in debt. which tells you just how much new spending there is, record levels, higher than we have seen in this nation's history, without fixing any of the existing problems. we know the existing problem is that mandatory spending, entitlements, social security, medicare, medicaid, grow much faster than revenue as far as the eye can see. it is messaging. >> jean, i think when you look through it, some of the ideas are ones that the democrats have wanted for a long time they weren't able to pass it, even when they had control of the house as well. so i guess i just wonder what happens next particularly in an interest rate hiking environment that the fed has been on, when all of that additional interest is going to add up, we have to pay much more than we ever had to pay to

borrow before. does it change the equation, does it make it more difficult where do we go in terms of these negotiations between the administration and the house >> i think it is a plan that could be enacted it is now up to congress to take into account the budget. i point to the two proposals on the medicare tax rate. that's very much designed to address one of the challenges before the budget, extending the solvency lifetime for the medicare trust fund. so in that respect, it is a serious fed check. >> jean, one of the premiseses of the whole budget as the president laid out yesterday, he said billionaires only pay a tax rate of 3% and they pay less than a firefighter or police fighter. the white house says it is 8% and even that 8% for billionaires is bayed on their unrealized capital gains over the course of 2021, which was a huge year in the stock market.

what do you think -- other than the revenue issue, do you think this really does anything for inequality, and what do you think a more rational tax or rational rate would look like, given that the top 1% now pay a record 42% of all taxes? >> i think most americans agree that tax rate on wealth should not be preferred over the taxes that we pay on our earnings from salaries or earnings from work if you look at the budget and other proposal, which you didn't mention in your introduction, is the president's proposal to reinstate a full refundable child tax credit, which we saw last year, the s for 2021 came out, a historic reduction in child poverty i think it does certainly look at how do we address the tremendous inequality of particularly wealth, wealth and

earnings in our society. >> doug, i would also say, though, some of that federal expenditures have certainly fueled the fires of inflation, which is part of the big problem that we're dealing with right now. the bills have to be paid for at some point >> yeah. there is no question the inflation affects federal finances but that's on both sides of the equation it raises revenue and raising spending so, you know, hopefully the fed will be successful and we'll get back to the 2% target in an expeditious fashion. but, you know, this budget, you know, you and i both know the test proposals wouldn't goically controlled congress. it won't go through this one you're going to have to have some discussions between the administration and congress on the annual discretionary spending and that's all this is about. the rest is just show. >> okay.

so, let me ask both of you very seriously, setting this aside, one of the huge issues we have been talking about this morning is trying to make sure that the government doesn't default, that we are able to raise the budget. raise the deficit. and that that goes through there is going to be a negotiation between congress and the white house on that. can you each lay out how you realistically think that might kind of be scripted out, a realistic plan that keeps us from defaulting and creating more unnecessary pressure in a situation where there is already so much concern swirling in the financial situation? jean, politics aside, just honestly, where do you think we wind up, let's say by june of this year? >> i think we can, we should all agree that the debt ceiling must be increased it shouldn't be taken hostage that the nation -- >> let's not use talking points here let's get to what he with think actually happens because both sides are going to negotiate we can all say what we think about these things, but where do

we realistically wind up >> i think we have to increase the debt ceiling, full stop, no questions asked, to not do so would be a calamity for the economy. >> doug, how do you think we get there? >> it looks a lot like 2011 to me, becky. there is not going to be an early resolution, both sides are dug in, the politics are unattractive so what we saw in 2011 was we came close, we saw a lot of fallout in financial markets, a lot of volatility, spreads increasing, we got a downgrade out of that episode and i don't see anything in the tea leaves right now that looks different than that. it gets done, but it has some harm in it >> all right doug, jean, thank you. robert, thank you for continuing to bring this to our attention. >> thank you >> we'll see you soon. meantime, a check on the futures ahead of the big jobs report take a look right now. see where we stand

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we got some breaking news right now. saudi arabia and iran now saying they have reached an agreement to resume diplomatic ties and reopen embassies they have agreed to respect each other's sovereignty, they say, and not interfere in internal matters. saudi arabia cut off ties with iran in 2016 after the embassy was stormed over a dispute over riyadh's execution of a cleric they have now backed opposite sides of proxy wars in yemen, syria and elsewhere. but that re-establishment probably raises some new questions about the relationship, frankly, between saudi and the united states and china is involved in all of this so lots to chew on this morning. coming up, new developments in the effort to label gun purchases through credit card transactions we're going to talk to the ceo who spearheaded that application, priscilla sims brown will join us next at the table. as we head to the break, check out the futures this morning, dow off about 70ois. pnt

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typically, that could create confusionand they're saying legal uncertainty with what are now global standards joining us is priscilla brown with the international standards organization a real setback yesterday what happened here and what do you think happens next >> look, it's an interesting time it feels like the march to financial services firms being able to actually eradicate or help to eradicate illegal behavior occurring on our systems has taken a bit of a pause. but it's a long journey. we've been at this for three years. we've actually been at the larger issue for 100 years and there will be from time to time setbacks what i'm hoping is that these firms are looking for better ways to get the same job done, better ways to be effective in identifying -- >> what do you mean by that? >> well, what they've said to us, at least in the public reports you and i have read, is

that they would like to -- that they're concerned about the effectiveness of the process so my hope is that by pausing, they're looking for ways to make suspicious activity recording more effective in their systems. >> but do you think they're trying to do that or do you think that the political backlash to tracking anything related to guns at all and in this case trying to identify suspicious activity that could very well be illegal, that's generally all this would do. but the fact that's not even on the table and is now so confused by certain states trying to choose certain approaches over other states that they're saying it's not even worth us trying to do this at all what gives you any view they're trying to do it in a more effective way? i think they're not trying to do it at all. >> what gives me hope is the legal obligation we have to report suspicious activity

also, the code has been assigned there is a code for a merchant category code for gun stores my hope is that people will look to the legislation that was bipartisan legislation that was just passed not long ago, which makes illegal activity related to straw purchases and gun trafficking something that we should address and so we have an obligation as financial services firms to do that i understand that there's misinformation out there, i understand that there be political issues out there, but i'm not a political pundit what i would say is if a bipartisan group in congress has set legislation against these things, it's incumbent upon us to follow along. >> let me ask you a question what do you think the liability should be for a bank that underwrites a credit card that's used in a mass shooting or straw purchase >> look, no bank on either side

of this issue wants to see straw purchases and gun trafficking and illegal activity happening i'm convinced of that. i don't talk to any of my peers who say, look, we don't care about this what i hear people saying is it's complicated, there's misinformation out there, it's difficult, it's infeceffective n the current process. because of that i need to take a pause and get it done right. >> i hear something very different. >> what do you hear? >> i hear private live we don't want straw purchases, mass shootings to happen. however, if we implement any of these things, we become a political football in certain states who are going to prevent us from underwriting municipal bonds in their state, from other types of business that we could capture or not or that there's going to be a backlash and that they will be cancelled

talk about cancel culture. the companies will be cancelled by, frankly, republicans oftentimes who have now said that they don't like cancel culture. that's what i hear >> i would say to that that that's -- the source of all of that is misinformation, that the best way to address that is to make sure that everyone understands what this code does and what it doesn't do it doesn't give us visibility into exact transactions. we don't know what you purchased. what we know because of this is where you purchased it and we understand that there are patterns related to where you purchase it and your behavior in purchasing it that help us to detect or to flag suspicious activity >> right >> that is what it is. it is not a violation of your second amendment rights, it's not going to alert people of legal purchases, it's not going to hurt legal gun owners and as

people understand that, then they can influence the powers that be. >> but you've heard what the nra has to say about this, right they think this is a system to track all gun purchases. >> yes, but there's no tracking. there's no underlying data the data is where you bought the item and if you bought the item at a gun store, we are legally obliged assign the code that most closely identifies the area that you're in we use these codes today to alert authorities of suspicious activity occurring across our rails, whether it be money laundering, human trafficking. our hands are tied behind our back in doing so as relates to

gun-related crimes, straw purchases, gun trafficking, goes from one state to another. these are patterns of behavior, you pointed them out in the case of the las vegas shooting, $95,000 put on credit cards in multiple gun stores prior to the time. these are the kind of things they're trying to identify ahead of time. that's common sense. i don't think anyone should disagree with that, whether you're a legal gun owner or not. g >> i want to thank you more children die from gun deaths than cancer or accidents or anything and for reasons that seem inexplicable. >> when we come back, the february jobs report is just over a half hour away. we're going to bring you those numbers as soon as they cross. the futures ahead of that dwayia

the nasdaq is up by about 14 mbints but a lot riding on this nuer it will determine how tight of a box the fed is in. "squawk box" will be right back. for businesses of all sizes, there are a lot of choices when it comes to your internet and technology needs. when you choose comcast business internet, you choose the largest, fastest reliable network. you choose advanced security for total peace of mind. and you choose a next generation 10g network that's always improving, getting faster; more reliable; and more intelligent to keep you ready for today and tomorrow. the choice is clear: make your business future ready with the network from the most innovative company. comcast business. powering possibilities™.

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. good morning 30 minutes and counting now to the february jobs report the number is always important but today's could be even more crucial because of what it might mean for the fed's next move futures are mixed ahead of the number we're coming off a big late-day selloff yesterday. what helped drive that negativity fears over the stability of a california bank critical to the nation's economy the final hour of "squawk box" begins right now. . good morning, everybody. welcome back to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with andrew ross sorkin joe is off today watching the u.s. equity futures

pretty closely at this point allthree major averages are down by 3% or more, the down off 3.4% for the week and you're looking at additional red arrows this morning. dow futures down by 78, s&p futures down 7, nasdaq just turned positive by just over a tenth of a percent and you have a jobs report coming up. that could mean big impacts for that the treasury note is yielding 3.822%, the 2 year is down to 4.765% steve leiesman is here it could be a flight to safety as well as people are looking for places to put their money. we are closely following shares of svb financial behind silicon valley bank. shares in the premarket this morning are off by another 62% after the stock dropped 60%

after svb announced a plan to raise more than $2 billion to help offset losses on bond sales driven by rising interest rates. reports say some venture capitalist forms including the founders fund are suggesting their portfolio companies actually move money out of the bank that's what's causing the problem here, a lot of deposits coming out svb's ceo held a call with clients yesterday aimed at calming fears. some of the biggest u.s. banks dragging them down for the week. if you check out some. shares in the premarket, you will see at this point there are some concerns. bank of america down 11% for the week, bank of america this morning down just about half a percent. so not additional losses necessarily coming this morning but for the week you were talking about some of thiev these big banks down double digits and how securities are marked on the banks' balanced sheets,

premature to save much overall but a lot of questions are being asked at this point. >> let's go over to mike s santoli. i want to get his remarks on the moves. what do you have think >> it did trigger a bit of a breakdown in the broad market, that general what if trade that's out there in terms of within banking books, whether there's unrecognized losses as deposits flow out. it did create a little excuse for the s&p 500 to more or less revisit last week's lows, break through those a little bit you see the s&p 500 broke below its 200 day average. this is a lot of localized worry about the financial services industry but it came at a time when the overall index was buckling 3900 is where people want to see the up turn preserved.

the market is getting a little bit short term, oversold, but it's more like the december lows in the first part of the new year, if the lows are breached, which already happened in the dow but not the s&p, it's sometimes a warning signal regional banks, etf and community banks etf, that's even smaller. they're mostly in sync public live traded private equity firms a proxy for the private capital market evening conditions tightening, yields moving, capital market activities being a little less liquid the overall market has been able to hold together better because you have areas like in capex, industrials working well, semi-conductors have been a standout and big tech has emerged as a little bit of defensive play again on a short-term basis, wewe

can't know if that's going to continue and take a look at the two-year note yesterday we saw a return of the yields down, stocks down d dynamic. we came in worrying about yields going higher here is the six-month chart on the two-yoear yield. interesting dynamic with the jobs report coming today and no more fed speak after today the stakes are rising. but as i mentioned, the banking panic seemed a little bit like a sell first, ask questions later in the broad spectrum of institutions as opposed to necessarily feeling that we know there is danger there. the shock value of much higher rates in a hurry is emerging in that area at least mike, what is the banking situation when you look at silicon valley bank, whether

this is an idiosyncratic, single situation, the way morgan stanley suggests this morning and others in the banking business say you got to keep your eye on it because there could be other banks that have similar issues what do you think? >> it's not unique but it's extreme. so it's an extreme version of what can happen and the situation a lot of smaller banks are in, regional banks i say it's unique because of their client base, not because it's always private tech firms and venture backed companies listen, unrealized losses on bond portfolios throughout the economy, and some of those if deposits flow out in search of higher yields, that's what's happening at a lot of these places and if they have to sell assets assets at a loss, it eats into

capital. there's a lot of work being done sifting among the regional banks. it reminds me of things that happened in 1994, not just orange county going bankrupt but all the short-term bond funds blew up. people tried to synthetically create higher yields >> mike santelli, thank you, sir. >> it's hard to imagine mike is old enough to remember things that happened 29 years ago >> yup >> he was there, he saw it let's get back to steve liesman with more and the fed and financial sector you've been doing some reporting and come up with great new guests to join us. >> here's what we do on "squawk," we just bring on the people we'd be talking to on the phone. this is one of the guys who i

talk to. bill nelson is a former top starve at the fed, did fed window discount policy for many years and now he's chief economist. thanks for joining us. the provision is bill cannot talk specifically about silicon valley bank, which is the cause du jour, so to speak thanks for joining us. i wonder if we can talk about the general issue here, which seems to be the concern to bank investors and investors broadly. a bank has a bunch of assets, a whole bunch of deposits, bought bonds that declined in value and the bank has a run on those deposits and the assets against those liabilities have declined in value how pervasive is this in the banking system right now, do you think? >> well, with the significant rise in interest rates that's

occurred banks have like everyone else made losses on their longer term securities, treasuries but at the same time banks are currently incredibly well capitalized. they have passed rigorous stress tests. so as a general matter, i would say it's not an issue to be worried about for banks generally, but it is true certainly that lots of banking institutions have longer term securities on which they've had substantial losses >> we were talking about the ability of a bank to go to the fed's emergency lending discount window and then say, you know what, i got all this paper, i don't want to sell it or i can't sell it, i want you to give me immediate overnight funding for it can a bank do that these days? >> yeah, of course

that's the purrpose of the window a lot of funding is mundane. any bank can bring collateral to the discount window and borrow against it if they're financially sound and adequately capitalized they get credit under one program if they're under more distress, then the situation is a bit more managed by the fed the fed values those securities at market and applies a conservative hair cut to them to apply a lendable value >> especially as andrew was saying earlier, this particular bank that has a lot of mortgages, a mortgage-backed security, you would get 90 minus some other haircut that would protect the fed and you wouldn't get the 100 at par value and plus there's a stigma attached to it. they went out and tried to raise equity bill, how do you think what's

happening now or concerns about the financial system will affect the fed when it comes to interest rate hikes? >> i think that the fed has -- well, that's an interesting question i don't think that this is going to be a significant financial system problem, so i don't really think it's going to have much of an impact on the fed's decisions about interest rate hikes. they're micaking the decisions based on their objective of bringing it down to 2% and maximum employment, you know, down the road as well. so i don't think this is going to rise to the level of interrupting that. >> just for the record, the market disagrees with you a little bit, bill just in the last couple minutes, the probability of a 50 has come down to 44%. it has been as high as 72% you don't think in the face of uncertainty the fed says let's

do a little business less rather than a little bit more >> the message i heard from the fed out of the last meeting they were saying we're not data dependent, it's not about the pace, woe're going to go 25 and it not about duration. they seemed to have changed their mind about that. you kind of get the impression maybe the first question that powell was asked in his house testimony was perhaps a question requested by the fed, which leads me to say voices were saying you put 50 too firmly back on the table. he he went back and said it's going to depend upon the employment report and cpi. you'd have to get at this point sort of below expectation prints >> we got to run

thank you so much for joining us in a hurry this morning. >> you bet have a good day. >> coming up, the february jobs report from the labor department in about 15 minutes. but next, going inside the budget and compromise on spending nasdaq off just rgalmainly it was up. s&p 500 off by ten points. you're watching "squawk. this is cnbc the first time you made a sale online was also the first time you heard of a town named... dinosaur? we just got an order from a dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. godaddy. tools and support for every small business first.

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i want to make it clear i'm ready to meet with the speaker any time tomorrow if he has his budget. lay it down, see in we can agree. >> that was president biden yesterday in philadelphia where he laid out his new budget proposals, comes in at $6.8 trillion, the president pledging to cut $3 trillion over the budget joining us is the deputy director of the national economic council there's a lot of folks that say this proposal is dead on arrival. what do you think and what do you think is possible in terms of anchoring a negotiation >>. [ no audio ] from our perspective, what the president has put forward is an

entirely reasonable measured planned to protect social security and strengthen the medicare program and do all that by reducing the deficit by almost $3 trillion over the next ten years. the question for my republican counterparts would be what is it about this plan that you oppose? and i think there is quite a bit of it drawn from bipartisan proposals. so, for example, there's a key proposal to increase the supply of affordable housing. that's drawn on bipartisan support by comments. so my question is what elements do republicans posoppose and why >> and which do you think there is bipartisan agreement on >> there's two questions where is there bipartisan agreement amongst the public the answer is every one of these issues, cutting drug costs,

strengthening medicare, protecting social security whether that's going to translate to bipartisan support on the hill, that's a good question for the republican party. we've put forward our plan, a plan that reduces costs, puts us in a much better fiscal trajectory, cuts the deficit by $3 trillion, something that republicans say they want to do. if the republicans have a different approach, we welcome a detailed approach from them at that says what the alternative approach is and then once that happens, we can have an informed conversation >> walk the audience through the tax piece of all this, though. >> look, there's again bipartisan support for each and every one of the tax proposals in this plan you mention a minimum tax on billionaires something like 70% agree a billionaire shouldn't pay a lower rate than a firefighter or

nurse. we are putting together a package that is well calibrated, addresses economic growth and we would welcome a conversation with the republicans about which elements they want to support. >> can i ask on the tax front, how you feel about taxing unrealized gains and if there's a different way or perhaps a better way so you're taxing either realized gains or folks using loans to effectively obfuscate -- >> i would venture that the majority of people watching right now pay a tax on unrealized gains it's called a property tax each year when the value of their house goes up, they pay a higher amount of taxes on that unrealized value, even if they don't sell their homes so the idea of asking

billionaires to pay a similar tax i think is entirely reasonable. >> two big questions in the news, how much is the white house focused and paying any attention to what's happening in silicon valley banks >> this is a highly fluid situation. we're monitoring it very carefully. the treasury department is monitoring it very carefully i don't want to say more but want to assure the viewers this is something we're on top of >> when you say that you're on top of it, i think all of us are trying to gauge whether this is an idiosyncratic one-off issue at this particular bank or we're watching the stocks of so many of the other banks fall throughout the week, how much we should think about the process of contagion >> that's exactly the right question it something we were looking

into yesterday and this morning. i don't want to get ahead of the treasury department's views on this topic, something they may opine on in the future your question is the right one is this going to spread into a more systemic issue. >> we hope to talk to you again very, very soon. >> thanks. >> in the meantime, a big downgrade this morning of ap t apple to a sell. i want to bring the analyst that made that call that's a big call to say apple is worth less than it is at this point. >> apple w's multiple has expanded somebody could argue on the bullish side it could go further. given some of the fundamental risk that it takes being able to deliver growth, not to mention the kind of economic uncertainty

that exists in the market, it's just a tougher time to own apple right now. and specifically people aren't upgrading their phones as quickly. that's been a trend last year. i think a lot of people tried to explain it away in saying it was a supply issue, but most of the operators we talked to said they had plenty of supply in december i think it's more of actually a demand issue as we head further into the year, the question is is that trend going to change? are people going to start upgrading their phones faster than expected? >> is it an earnings story, a multiples story? >> it's both you can't make a call that's obviously difficult. i think they're going to miss top line and they're going to miss earnings. and when you do that, there might be some reassessment in terms of what multiple you're willing to pay for this. >> if tim cook were watching,

what would you tell him you want to see him do? >> they're executing fine. this is not a shot at management the consumer, the u.s. is still a big chunk of their business, there are still some technological changes that make it easier to use your existing phone. maybe argue come up with better innovations, come up with a 5g application that spurs someone to upgrade to a 5g phone we heard a recent bullish call that apple will get rerated because of the services mix. look at the services multiples out there. netflix has imploded and is actually trading a the a lower pe multiple i think to apple today. bring up these old arguments of saying, hey, this is a services company that's beneficial apple, i think it's a little harder, swl in the services business that you have this type of --

the breadth of content that's consistent enough to hold on to those customers and grow that element in their business. >> i want to thank you for joining us after this downgrade this morning we'll keep our eyes on apple throughout the day >> thanks, andrew. coming up, the number of the morning, the february jobs report and our panelist is standing by for it we'll bring that to you next "squawk box" will be right back. then customize a netapp cloud services solution to integrate data management for all your clouds, helping you reduce spend, improve security, control data 24/7 and automatically detect anomalies. in the cloud, at least. netapp makes efficient cloud management possible. cdw makes it powerful.

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welcome back to "squawk box" right here on cnbc we are just a couple of minutes away from the government's february employment report ahead of that report, we want to bring in our jobs panel. the president of the economic advisers under president obama is now an economics professor at harvard's kennedy school of government tyler goodspeed who served as the acting chair under president trump and is now an adjunct scholar at the kato institute,stephanie link of course and we have our very own steve liesman and rick santelli as well. the dow futures are down about 90 points after a week of losses for the dow that was already down week to date before we saw the numbers and the s&p down by

about 10 points. we're watching the ten-year treasury this morning, sitting at 3.82% and yields have come up under pressure because of issues in the banking industry, specifically with the silicon valley bank that's been under a huge amount of pressure. we're going to watch all of these numbers. right now i can tell you the jobs expectation is for a gain of 225,000 jobs, that's what the street's been looking for. unemployment rate expected to go to 3.4%. these numbers will be watched very close by because a bit of a pickle that the fed may be in, they're going to want to raise rates to head off inflation, a strong jobs report, which show you could be looking at additional inflation coming through. we're looking very carefully at the wages. what's the average hourly wages?

do you know, steve >> i think 0.4 >> all of these things will be watched really, really closely we're going to be getting those numbers. >> 0.3 >> rick says 0.3%? >> that's correct. >> sorry about that. >> and we are going to get this report in just a few seconds let's go over to rick santelli rick >> very exciting as we await the february jobs report here we go nonfarm payrolls, 311,000. if you look at manufacturing payrolls, they were down 4,000 two-month net revision is minus 34,000, minus 34,000 and if you consider the unemployment rate, it moved up to 3.6 3.6 from 3.4, which happened to have been a 53-year low.

if you look at average hour ly earnings month to month, 0.2 that is the smallest month-over-month change since february when it was unchanged if you look at year over year, it is 4.6. now that indeed is better than a still unrevised 4.4 and 4.4 was the lowest year over year since july of '21. average work week, 34.5 and we are expecting 34.6 so that is a bit smaller than expected and last year's 34.7 moved to 34.6 labor force participation, 62.5, .01 better than expected and 62.5 is the best rate since

62.6 in march of 2020. and if we look at the underemployment rate, or u-6, it is 6.8 i do want to point out at the end of last year this series was at 6.5, which was the lowest since 1994 record keeping. we look at what's going on, interest rates on tens are going down, interest rates on twos are below 470 and the stock market is gyrating on the futures. you know, we had the biggest punch bowl in world history for many years then we had covid hit and we threw a bunch of money into the global economy and specifically the u.s. economy banks were flush they purchased a lot of securities, much more in the

securities camp than what they tried to loan out when they were flush with all these deposits. well, with rates moving up and money markets so competitive, they're losing deposits. all those securities they have, if they'd hold them to maturity they'd only have show losses from an accounting perspective the point is should they need to start liquidating because deposits are moving away, they'll liquidate securities held to sale or held to maturity if they liquidate those, they have to show the losses and that's something to pay very close attention to back to the panel. >> rick, excellent summary on all parts. let's kick this around a little bit. as you mentioned, futures dropped initially and then started to come back, the dow futures. but the yields definitely came under more pressure. the last i saw on the two year,

it's just about 4.7% now put all this in and, steve, we were going through some of these numbers. what's the things that are jumping out at you >> first thing i want to clear up is rick and i have a lot of differences on the average hourly earnings consensus. reuters was 0 the 3, dow jones was 0.4 that's the difference. in any event, the key thing -- >> rick, thumbs up, my man >> the wages cooling goes along anecdotally and goes along with what we saw from home base and also from adp in their wage trackers broadly this 311, hats off to some of the high frequency data, which i reported this morning suggesting that there could be a stronger number the other thing i thought was most interesting was as soon as rick reported there was only a modest downgrade or

reinvestigation to the prior month. was it going to be blown up? it still could be a weather thing going on you had a construction game of 24,000 retail of 50,000 other indicators of just retail not doing quite so well. transportation down 21,000 some extra people added to bring the goods to your home when you were all locked down needs to come off. health care up 74,000 and leisure hospitality with big number food services up 69,000 the other thing we saw is education services, some of those folks are coming back in i really like seeing the nurses thing. i did not get a chance to look at why the household survey showed the unemployment rate increase and remember the fed -- are we

going to get people to come back to the workforce and put a cap to the higher wages? >> and that would be a microcosm played out in this very report jason, let's talk a little bit about that how does the fed look at this? you have a jobs number stronger than expected, 311 versus 325 but average hourlies up but not what the feds had expected maybe it a sign that it's cooling from expectation there is >> i think the big picture is absent a favorable surprise next week, the fed should go 50 basis points and probably will go 50 basis points the biggest picture, the highest quality data you get from the jobs report is the jobs number last year it slowed to about 275,000 a month. that pace has risen to 350,000

you can tell all sorts of special stories but some of those stories would have said you should have lower job growth this month the unemployment -- >> i got to interrupt you just for one second it looks like silicon valley bank, the stock is suspended awaiting news. we've been talking about this bank all morning, the possibility of what's happened there. general atlantic making that investment in the last 48 hours and the stock has fallen about 70% in the last 48 hours the white house said they're keeping their eyes on the company as well and whether it will impact other regional banks, we're going to be monday terping this >> jason, let's go back to what you were just saying because it plays into what andrew just talked about with this news.

it will put additional pressure on any banks holding maturity, any of these treasuries. not just treasuries but other bonds, too that's the question, are there cracks in the financial system that are coming from the fed raising rates so quickly and so far? >> look, i thought when they went to 75 a meeting for several meetings in a row, i liked that from a macro perspective but i was very nervous about what might break in the financial system it turns out that worked just fine from a macro perspective, it was not enough to get inflation under control so you need to do more as we push up and i think rate are going to go to 6 this year and could go higher this year or next year if inflation doesn't come under control are we going to see more cracks in the financial system? probably but the answer is not to change your interest rates, it to deal with it through financial

supervision. if a bank fails, you merge it into another bank. we know how to do that their primary job is getting this inflation rate down >> maybe rick wants to talk about what the heck is going on right now. we have now 4.68 on the two-year this is seen as perhaps less inflational and news about the silicon valley bank could be an issue. >> earnings were slower than they were last month >> keep in mind, one thing that's real easy here, the unrealized losses they don't need to account for, at the end of 2019 those represented about 8 billion. right now there 620 billion in the giant-sized banks that alone could supersede any activity from this report these are very large numbers

the fed can ignore cracks in the bank if it wants, but does anybody here really believe that >> tyler, let get your take again on the broad picture that jason was just talking about, too. will the fed look at this and say, okay, we have to get back to 50 basis points, especially after they dropped to 25 basis points but you did have fed chair powell laying that out this week. it seems like it's a bit of a pickle for the fed you have to make sure you do it carefully and you don't break things you want to push liquidity out and make sure people aren't taking risks the same way they were before but what's your take what's the fed do here >> i think on the totality of the macro data, it increasingly points to the necessity and appropriateness of the 50 basis point hike whether or not they actually go through with that, i don't know, but i think if they were not to go 50 and they were instead to go 25, that would be a big, dovish surprise given the remax

of jay powell given this job market data. i would just add we probably shouldn't read too much into that average hour lly earnings number because the labor force increased by 419,000 last month. that was what was driving up the participation rate and unemployment rate. there could be compositional issues going on, particularly as a lot of the jobs were added in sectors like leisure and hospitality. i wouldn't take too much comfort yet on those average hour lly earnings number. >> stephanie, i'm sorry for the delay in getting to you. i wanted to ask you as an investors what you do at this point. this is a lot to download. >> it's a challenging time for sure silicon valley bank is definitely stealing the thunder today and creating tighter financial conditions

i think the bond market, i think this is a flight to safety people don't know what the outcome is going to be a lot of silicon valley is specific to them given the mix and capital exposure that they have and they're repositioning their bond portfolio you got to fault management not for knowing the rates would stay higher for longer. i do not think this is contagion to the big banks i think they have enormous capital positions and much more diversified business mix are they going no get hit from the bond market? certainly, of course but there are other offsets they can do in terms of net interest income concerns, well, numbers have been coming down across the board for the banks in this particular segment, offset by capital markets getting better and trading and that sort of thing. that's like the big picture but i think the silicon valley bank

is stealing the thunder. i thought the jobs number were solid. there was a whisper at 365 but 311, we'll take it unemployment is still low and average hourly earnings month over month were better in cooling, but the year-over-year numbers are still high we have a lot to get through next week in terms of cpi and retail sales we'll have to reassess at that point. >> how have you dealt with the silicon valley bank news what do you do ahead of next week's inflation numbers >> well, to be honest with you, i have been taking some profits in some positions as of late occidental, d.r. horton, only because they're up so much when you can make 30 to 40% in

three, four months' time, you want to take some off the table, take a little bit of cash. i do want to be looking for opportunities. i do think some of these big quality banks are getting effective. it historically a great time to buy banks, especially if you feel comfortable with the book value. that's the big problem but i do with the big banks. i still like some of the industrial companies i like the onshoring theme, i'm overweight that sector i do like material stocks because they have pricing power and within technology, i continue to like the semi-conductors. you got to pick your spots you and i talked about consumer distress as well and kind of the china reopening play and that's what i've been focused on as well again, picking my spots very carefully and having a lot of cash to put to work. >> steve >> i want to see if i can shake jason on his hawkish view.

i i'm going to play devil's advocate here. 1.7 million additions to the workforce. some of that was the rebenching of the population or whatever. you've had three months in a row of increasing participation rate and average hour lly earnings a down i'm not saying we're underweight on the job push inflation, i'm saying there's maybe a chance forthe fed to make take stock in moving in the right direction. >> average earnings, i think that's incredibly important. there were three different times

last year when i got excited about a slowdown in average hourly earnings and all three times it was revised away. i just think that's an important number i just don't know that i believe the data in any given month. i place most of my weight on the payroll thing. it's big picture inflation is running at 4.5% jobs are running above potential, not below potential it's better to get to where we need to be sooner rather than dragging it out. >> but we're bringing people back into the workforce, tyler, right? and to your point about being careful about the composition, it was the composition that drove up wage, right, in the sense we removed or eliminated people from the workforce and now they're coming back and it's all averaging out in a beautiful way. >> it's all averaging out but i think if you look at other measures of wage inflation, they point to a figure with a five

hand only. you look at those continuing in a job, that's still very hot i think it's kind of a free hike because markets have really priced in -- have increasingly priced in a 50 basis point hike this next month. so the fed can kind of take that without praeking things presumably and i would just add also that the longer we permit this to persist, the more deeply embedded it becomes in expectation formations once inflation gets above a certain level, could be as low as 3.5%, consumers go from not paying attention to inflation and being biased and having error terms and underreacting to inflation news they are reacting rationally to

new recent inflation news and this no longer expect recently observed changes in inflation to be fully offset by future changes. i think getting down to a level to where consumers are no longer playing attention to inflation, i think that's important to getting to that embeddedness >> rick, the last quick word >> if we look at wages in a non-emotional way, up 0.2% is the weakest since february of last year. if you look at year over year, for all of 2022, it had a five handle except for two months and those months were december in 4.8 and october at 4.9, both higher than the current 4.6. 4.6 would be the lowest since august of 2021, just to put some texture to those numbers >> excellent i want to thank our entire jobs panel this morning, rick, steve,

stephanie, tyler, jason. who did i forget did i get everybody? there we are thanks, guys >> meantime, we want to get to the new york stock exchange. i want to start with svb, sill i c silicon valley bank. he says if they can't raise private funds to cover the hole, the government will almost certainly bail it out. ironically the risk to depositors is actually small what do you think? >> henry's got a lot on it this bank is the bank to start-ups. it's the bank to people who have liquid securities that were loaned against why don't we wait and see. i've learned enough in my lifetime that if i have to wait 11 minutes for an answer, i'd

rather wait 11 minutes >> how concerned are you about this bank versus what we're seeing across the board? you look at some of the other regional banks those stocks have fallen quite precipitously. do investors know something that maybe depositors don't >> a lot of these real estate exposure. a lot of them may have the wrong duration on the portfolios, meaning they're really much more sensitive to these rate hikes and the fed moves so quickly silicon valley bank is unique because they were always willing to lend against securities that haven't come public yet, so you could even call them pre-ipo no one had that exposure, so they are unique. just like silvergate was unique with crypto. but i do think that they're big enough to be more like what he said, it feels like penn square, maybe hoping to continue before it gets caught >> the bigger story today, jim, we don't know yet. it could be svb.

it could be the jobs report. normally, it would be the jobs report what do you think? >> well, look, the jobs report is important because we have bigger labor participation rate. we could quibble over how much wages went up. i don't know i like to be more granular the big gains were in travel and leisure, which is still below 2019, but that's the industry -- the last industry that's really growing. i like the fact that datacenter looks like it was down because that's warehousing, transportation there's enough in here for the fed to say, you know what? we can do 25 we don't need to do 50, particularly because of the duration of the portfolio of some of the regionals, which is what i care about most, other than the fact that silicon valley likes to lend against companies that might come public >> just to merge these two topics together, if you like 25 basis points better than 50, there's people that say that the svb of it all might push toward 25 because the fed doesn't want to push too hard

>> now that we know the duration risk, we've got to be concerned that the fed is forcing banks to go from help for sale. we don't want a three-year treasury holding to destroy the banking system it's crazy just because he raised it so quickly -- it wasn't reckless to put money in a three-year. it's duration that we're talking about, which has to do with sensitivity to what the fed does so, the fed ought to cool it to make it less sensitive >> jim, want to thank you. we will be watching you all morning long, and we'll see you in just a couple of minutes. "squawk" coming right back in just a moment. just a moment. we got nuveen's saira malik. now your systems monitor themselves. what used to take hours takes minutes. and you have an ecommerce platform designed to handle sudden spikes in ove.. as in actual overalls. ♪♪

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welcome back to "squawk box. i want to recap the february jobs report. nonfarm payrolls increased by 311,000 last month, above expectations you're looking at the futures. they have moved higher, perhaps on the expectation that the fed may come down and may not go with 50 points we'll see. dow up about 50 points, nasdaq up about 80 points, the s&p up about 17 points. joining us right now to talk about the market impact is the chief investment officer from nuveen good morning to you. let's talk jobs report and layer

in, to the extent you can, this nervousness around we don't know what's going to happen with the silicon valley bank, which of course the news has been -- news is pending that stock has been halted, but worries about contagion there, and how jay powell may react to that >> good morning. the employment report is the short-term shot in the arm that the markets needed we were watching for three things that was labor force participation, january revisions, and wage inflation, and we got two of three of those in the right direction however, the market's still going to grapple with a higher potential terminal rate and a faster pace of rate hikes. if you look at history pre the gfc, the average federal funds rate was running at almost 6% and post the gfc, it was under 1%, so i think this is about the market adjusting to more of a return to the old normal environment that we had seen for most of our careers and beyond looking at silicon valley bank, i think that's a binary event. tough to call on that.

contagion likely limited in that they have a unique business model. we don't love the financial sector in general because of higher rates, but if i was looking, i would be looking at companies like morgan stanley, other regionals like fifth third, which are much better positioned or turn arounds like wells fargo. >> what do you think about this hold to maturity idea, that some of these banks may be holding too much >> i think that's a risk, and depending on your customer profile of your bank and how you're positioning your business, it can be, and you're looking at some of these companies like silicon valley bank, which then can go into an unwind if there is a run on the bank that's another reason we're not a fan of financials in general net interest margins are likely to get crushed for many of these banks so the ones with the more diversified, resilient businesses are going to be favored. >> what's your broader outlook on the market if we were to have this conversation at the end of the year >> in the nearer term, we're still worried about the impact

of monetary tightening we're just one year into when the fed first raised rates by 25 basis points revenue growth is a risk, especially going into 2024 companies took a lot of pricing power. the question for us is, can they hold on it what's going on with the consumer and the employment markets? those are going to be the keys i think we do get a recession, but it may be delayed because of the strength in the employment market >> you said, "when," not "if." >> i think it's going to be challenging looking at yield curves given the tightening the fed has done th they will be battling inflation, which remains reasonably high. continued rate hikes, i think, eventually does unwind the economy into a recession as employment eventually cracks >> we talked to walter earlier who just downgraded apple stock from $150 to $120.

his argument is he thinks the demand is going to come down, that folks are not going to be out purchasing new phones throughout the rest of this year at the pace they had before and that the multiple is too high. what do you think about that and what it says about tech writ large? >> i think apple specifically has been at risk of a post-covid demand unwind for a while now. it won't be surprised to eventually see the demand for iphones, ipads during the covid-19 pandemic was multiples higher than what we've seen in the past for apple that normalization is going to be tough for the stock generally, though, i like quality technology companies, not unprofitable technology, but software companies can be more resilient in a market like this where companies are focused on, how can i retain my customers. they tend to have strong backlogs but not just about growth, so i think quality value companies, the quality, strong balance sh sheets, we're learning that today, even customers of silicon valley bank, those are going to be the winners going forward >> saira, we appreciate you

joining us this morning, and we'll keep an eye on silicon valley bank until we get that news lots of worries and questions about that bank. >> you've got that weighing on equities, weighing on yields this morning across the board. right now, you'll see, down by about five points. s&p, up by nine, the nasdaq up by 61. this is what they're going to be talking about on "squawk on the street" and the rest of the day today. have a great weekend, everybody. we will see you back here on monday ♪ good morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer at post nine of the new york stock exchange we're going to hear from david fab ner just a moment. futures fairly steady. really only two big stories today, svb and of course february jobs, 311,000 with some relief in hourly earnings, workweek and labor force, some of the benchmark yields near a six-week low today we're going to begin with svb

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