tv Squawk Box CNBC March 15, 2023 6:00am-9:00am EDT
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bounce after monday's drop is the game of dominos over at least for now? we'll see. it is new chatbot. the new chatbot is out it can outperform 90% of humans on the s.a.t. and bar exam we're going to talk about what that means it's wednesday, march 15th, 2023, and "squawk box" begins right now. ♪ good morning welcome to "squawk box" here on cnbc we're live at the nasdaq market in times square. i'm melissa lee along with andrew ross sorkin joe and becky are off today. we have a lot going on. >> we do. >> after yesterday's big market gain, we've got the nasdaq indicated speed down s&p looking to give up 31 at the open and the dow off by 2750
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they kochblt on treasury yields. we've got the 10-year at 3.6% and the 2-year note at a quarter percent. take a look at bitcoin it's giving up a tiny bit of massive gains it saw yesterday it's down by 0.2%, so basically flat but, of course, we saw a flight of bitcoin over the past couple of days. some people are saying it's because people wanted to get off a centralized system the whole decentralized notion won yet again. 24,690 is today's level. >> what do you think of this >> of bitcoin or what we've gone through? >> the great irony of what we're watching both with bitcoin, some of the stablecoins even over the weekend is that they were, in part, saved by the quote, unquote system that they were meant to disrupt and now all of a sudden, there's been a turn. now that they've been saved if you will, it's like, okay, this
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is great, and they're going to do even bet e which is sort of around tie threat cal to the whole idea. >> the whole stablecoin, u.s. dollar in particular, circles coin, being depeged, i thought that was really interesting because its reserves, audited reserves as of marchetth is mostly short-term treasuries in terms of the funds that back it, i believe there was interest rate risk embedded in the books of banks it certainly didn't exist in the dollar coin. let's move on to today's squawk planner. more consumer data is on the way. we'll get retail prices. new quarterly reports are due out after the "closing bell. adobe, pagerduty, and five below. we're learning about another close call from march 7th when republic airways crossed the
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runway without clearance at reagan national in washington, putting it in the path of a united airlines flight that had just been cleared for takeoff. we've got an interview with acting faa administrator, billy nolen. that's coming up in the 7:00 hour. now some new investigations about the banks. eamon javers joins us this morning with the latest. >> good morning, andrew. what we're learning is the department of justice and the s.e.c. are both investigating the collapse of silicon valley bank nbc news reporting that information. but it's not yet clear how far along these investigations are and what if anything they're going to be focusing on. two sources tell cnbc, one part of the doj investigation will examine the sale of stock by bank executives before the collapse and a senior law enforcement official says the investigation is being led by a team of fbi agents out of the san francisco field office who specialize in white collar
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crime. one issue at hand will be did the executives sell based on non-public knowledge of the true condition of the bank and therefore reap any improper gains. that can also be difficult to prove, but there is a paper trail to start with here our own robert frank reported yesterday that silicon valley bank ceo greg becker sold $32 million in stock over the past six years including $6 million on february 27th, days before the bank diggs closed a large loss that triggered a stock selloff. over executives at the bank, they've also sold millions in shares since 2021. the investigations are said to be at their early stages and there's no indication yet they've discovered anything improper, andrew back over to you. >> eamon do, you think in the end -- i know a lot of people are very upset as they should be with what's happened with this failure. any time we've had failures like in 2008, the question that's
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always asked, who's going to jail, who's going to be held accountable. >> right, right. >> the question obviously in that situation, nobody was, but then there's the question is greed and stupidity illegal or criminal, if you will? >> yeah. >> i mean that's oftentimes not a satisfying issue for the public and american citizens and those who are impacted to accept. >> yeah, look. i mean there's anger when you see something like this and people want heads on pikes, right? the question is sit just management or bad investment decisions here caught up in a mix of bad timing or was there something untoward going on? i think the stocks sale issue should be relatively easy to unpack and figure out what they knew at the time they sold those shares and then figure out whether there's anything untoward there no indication there is so far. but in terms of the overall positioning of the bank, you're
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right. was this dum b decisions made because they had the leeway to make them and put the pedal to the metal. that's bad management. the question i have, andrew, and you know this going back to the too big to fail days, we have a two-tier system, one that's too small to surge seed and one that's too big to fail. >> i'm at the level of just too small to fail. everybody is in the same -- >> there cannot be any failures. >> or everybody's too big to fail. >> nobody's allowed to fail. >> failure is not an option. >> your moral hazard is infinite. >> what i mean is every small bank is going to be regulated like every big bank. that's to me where i think this goes. >> i don't know that there's political will to do that, andrew. >> then we have a bigger problem.
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if we don't have the political -- if there's bias partisan support to bail out these banks when they mess up and then there's not bipartisan -- >> but not to regulate them. >> regulate them properly so they don't mess up, then the whole thing is out of balance and it's been out of balance, we know the only point was going to make separately about the -- either criminality or legality of all of this is i don't think that this was preordained at all. i think this was like a se self-inflicted error by the management not just in terms of the risks they took, but in how they both communicated and tried to raise money at the end. >> you don't make an announcement saying you're going to raise capital >> they tend to say football, but this is not a football this is like a terrible era of
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juncht in how they did it. there was a little bit f smoke in the theater, and i literally think the ceo of this company, whemt on a phone call with the d depositors to say, hey, we're all in this together, and they saw the smoke and started screaming fire that's what happened it didn't have to end this way. >> they were protecting their portfolio companies. there's a difference between screaming fire and i have to look out for my company. >> i have a slightly different view of that when you start sending out notes and emails and not just emails but tweets to the world of what you're doing, you're not just doing it for yourself and you may think you're doing it for everybody else, but in the end some of this was done to themselves by the way, this is not -- >> svb doing it to themselves. i completely agree. >> to some degree the depos p
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posdepositors are getting their money back we've talked about the communication and proper con tech and everything else i think when peter thiel goes out there and says, i'm getting out and he gets out that -- once somebody like that says i'm getting out of the pool, everybody has to get out of the pool. >> that's true. >> i would have a question about that. >> andrew, i would just add you're exactly right add to that the speed at which all this happened. you thought '08 was fast you covered that this is the slacks era and the speed at this these runs can happen is so much faefrt every move you have to make has to be really, really sharp and on point in the moments, in the minutes, in the hours, not in the days and weeks. >> eamon javers, thank you we will continue to follow this story.
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it's not going anywhere. but we've got another story. we were talking about this before the show began. we've been watching shares of credit suisse and they've been tumbling the new one ruling out investing any more the interview of saudi's national bank was asked about further injections of capital if there was a call for further liquidity. he said, quote, absolutely not for many reasons outside the simplest reason which is regulatory and statutory what are those reasons >> he can't go over 10%. that's the reason. >> you think that's the whole issue. >> that's a big part of it. >> i though it the suggestion there was something more to it. >> there was a story they can't go over 10%, so that's a huge part of it the risk that's being seen here can be seen in the cds which hopped, i think, a thousand basis points this is a bank meltdown in and of itself, but it does seem like
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a unique story at this point not endemic to the european banking system. >> this one cracked early. there's been a slow roll. >> a sort of melting of the iceberg here. >> then you go back and start to make these comparisons to 202008 remember bnp np paribas. >> that's true. coming up, regal bank stocks coming up high we'll dig into that. and later michael novogratz talks more you're watching "squawk box" on cnbc >> announcer: squawk planner is brought to you by workday, the finance and planning system for a changing world you're a rock star. you are a rock star.
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u.s. equity futures fall in the session, literally in the last couple of minutes. dow off by 300 points. nasdaq off by about 40 points. what's going on here >> i have no idea. but it is early. and we're setting up for more data. >> what i worry about is not -- i'm not even worried about data anymore. i'm worried about banks. that's literally all i'm worried
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about. >> that's not what the market's telling you. it only cares about it in relation to what the fed may or may not do, the fact that the fed pause has been dominant for the past 48 hours or so, markets were great. >> i think, by the way, that's a mistake. >> for the pause. >> no. i think it's a mistake for the markets tonal be thinking about the banks in the context of what the fed is going to do in the most immediate term. i get the thought. >> if you reduce the terminal rate to 4.6% from 5.6% in a matter of days, that's a big difference. >> yes, but if at the same time -- >> you've got a banking crisis in some way. >> you have a meaningful banking crisis. >> that's only if you're of the belief this is a systemic issue and not an svb sort of subset of banks issue. >> and that's the question and i think we don't know the answer yet unfortunately. >> true. and we don't know what the
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response will be in terms of regulation. >> and the -- there's the piece of -- if there are bank failures, are the depositors really made whole, and there's an implicit -- >> all the dposepositors, are w ining sure all of that we have effectively said we are, the but not really in the strictest terms. there's a question still out there. the secondary factor is if, in fact, that is the case we'ring down that, is there bipartisan support both on the regulatory side from congress but also from the fed and treasury and how do those smaller banks get regulated? if they do get regulated, which you think they should, their costs are going to go up because they're going to have to have capital requirements >> in theory it's passed to the consumer. >> should all pass to the consumer by the way, jp missouri began's
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not in the mortgage business practically anymore. >> no. >> all these things are moving down the chain, down the chain, right? >> wells fargo cutting back. >> right we're going to smaller banks if smaller banks get out of the business, by the way, that business becomes a harders business to be firsthand make money. where do those businesses go we could talk about 25 basis points or not, and the market is so myopic in this sort of short-term way to me this banking thing has -- you know, unfortunately has a runway i hope there is no runway and the story is over. >> yeah, but probably not. in the meantime let's check out the banking sector right now regional banks saw a fall last night as we see future sessions low this morning the central banks are a mixed back jp missouri began is down by more than 1% morgan stanley down by 1.5%.
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let's get into the sectors right now. scott receivers is a research analyst for piper sandler. great to have you with us. how do you think about regional banks, the bounceback we've seen in the past couple of days, and what the environmental is? it's hard to think about what it is if you don't know what the operating environmental will be going forward. >> all good questions. think this is going to be a volatile group for some time i'm hopeful there will be follow-through that will generate confidence in the group. the reality is we've had a shock to the system in the past couple of days. some of the risks were hiding in plain sight and they seemed to come out of nowhere which seem as little counterintuitive, so
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that's the reality the kinds of things we went through in the past couple of days, unfortunately they exposed a blind spot in the market's confidence system, so even if the panic is over, which, again, i hope it will, now we sort of start the heavy lifting of how do we ensure that something like this doesn't happen again. that's going to take a few forums it will take a long time to actually effect. as you properly noted, there's probably going to be pretty enhanced regulation down the chain, but there's going to be the beginning of the aftermath you could say this is the beginning of the en, so to speak. >> when you take a look at the sector, i know you don't cover svb in particular, but prior to this, did you look at available for sale, held to maturity, and what the market-to-market losses could be on this >> of course when i made the comment about these issues hiding in plain sight, that's exactly what i was referring to for the better part of the year
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since the fed started to raise rates, we've all kind of known there were these unrealized losses lushing within the space. so i think there are literally hundreds of billions of dollars of these in the industry as a whole. they hit tangible equity, which is a gap measure, but except for the largest banks in the industry, a la jpmorgan, citibank, wells fargo, the bulk of the industry is about to remove the losses. we also said with the hindsight, we probably looked at this in the wrong way. they're money-good securities. but unfortunately the way they ri ripped higher marks in the last year, the rates go down. unfortunately we've got a really catastrophic situation last week
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with silicon valley insofar as evidently they were forced to be sole to meet depossible tore withdrawal demand. something we knew was there became very serious very quickly. >> $625 billion in unrealized market-to-market losses available for sale as well as maturity assets. have you gone back to re-evaluate your ratings on banks given what we've learned in the past week or so >> excellent question. these issues are all kind of moving at light speed, right it's near impossible to keep up with them in real time we do our best, you know i'd say as i look at the industry, there are a couple of kind of clear places to hide you know, the universal banks, broadly speaking, they're subject already to much more stringent regulation by that, i mean capital
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requirements, liquidity environments living wills the bank's means of dissolving itself i came to a real crisis. i think investors are going to hide there and depositors as well our favorite name in that case is jp morgan which starts as a clear beneficiary to all of this you'll probably see quite a bit of deposits and customer relations moving their way because the market has determined that these sort of colloquial too big to fail names are going to be the safer havens here beyond the kind of money-centered banks if you look in the regional space, we're looking for strong risk profiles and capital profiles i point you to a name like fifth third, citizens financial. those are good solid names in our view but in the regional space, we're beginning to isolate that group in areas where regulators are
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most likely going to pinpoint and enhance supervision. again, that will be a long process, but that's sort of where things seem to be flushing out. >> scott, great to speak with you. thanks for the time. >> melissa, thanks a lot. coming up on the other side of this, open ai we may not be here on the other side of this commercial break. >> because of ai >> open ai -- >> -- might be replacing us? >> pretty much have you seen this thing its new chatbot can beat humans at s.a.t.s and bar exams but not at "squawk box." tak taking a look at futures nasdaq up 109 points, the s&p 500 up 45 points we're back after this.
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. time now for the executive edge and the latest news on artificial intelligence. we still are real, but not for long the latest model gpt 4 assuming human levels on many tests it performed at the 90th percentile on a simulated bar exam and 30% percentile on the s.a.t. reading exam and 80% on the math exam. it still has a problem with hallucinations and making stuff up it still isn't factually reliable and insisting it's correct when it's wrong. some people do that too. the new model which can be
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accessed -- by the way, that's why it's hallucinating people do that too the paid version of chat gpt i remarkable we subscribe. >> what do you use it for? >> for the moment just marveling at the science of the ability of this to happen. >> think about how many servers have to work when you type in your just for fun query and the carbon footprint you're using? >> no. i think about how many people won't have to work when one person can do all of this. that's mostly what i think of. it really is -- it's beyond. >> early stages for sure obviously. >> early stages. the other thing, by the way, you know, i think people are going to be able to do with this is it's going be -- you're going to be able these are the kind of
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things i like and this is the way my brain thinks. it's not just going to be like everybody's chatgpt is going to be the same in the end. >> it's not arbitrary. it's processing data, and it's only as good as the data that's put into it. >> sure, but you're going to be able to customize your chatgpt to you. >> right it. ee going to be a reflection -- >> -- of you. >> right. >> which is not -- >> it doesn't seem any better than -- anyway it's like a whole other ethical -- >> we're going to do a squawk special on this, what do you think? >> i hope so you think? >> you and i, in the next 2 1/2 hours. >> oh. >> here we go. >> except we've got a banking meltdown over in europe that we're keening an eye on. coming up, we'll talk about the collapse of the silicon valley bank as you mentioned, a big move lower with european bank stocks. we told you about the credit
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suisse story, down 21% a lot of banks following suit as we see this impacting futures. we're pretty much as session lows right now we're seeing the s&p down by 51. dow looking to give up 430 points the nasdaq can be down 120 by the we, we'll take you live to london right after this break. stay tuned >> announcer: executive edge is sponsored by at&t business at&t 5g is fast, reliable, and secure oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect. terrier-iffic i labra-dore you round of a-paws at&t 5g is fast, reliable and secure for your business.
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good morning and welcome back to "squawk box. we're live at times square take a look at the screen. it's in the red and keeps going in the wrong direction dow down 400 points, nasdaq down 108 points, s&p down 47 points here's the reason. the european stocks have been itemening this morning europe off by 300. ftse close to 2% off looking at the contact, the german -- sorry, the german dax
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and the frank cac down 2% as well several bank stocks halted i want to get over to julianna tatelbaum to give us an update on what is happening a krois the pond in london good morning. >> good morning, andrew. a lot of the concern that is being seen across the european banking sector seems to have been sparked by credit suisse this morning we've seen a sharp selloff in the stock. as you can see, there's red across the board here. credit suisse has been a troubled name for years now. scandal after scandal, and just this morning the bank revealed that its auditor identified material weaknesses in its financial reporting controls they had previously delayed the publication of their latest annual results, finally delivering them this week and saying it will take significant resource to correct the financial controls that they identified weaknesses in now what really sparked the selloff seems to be comments from the saudi national bank, which bought a 10% stake in the
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lender last year they were speaking to bloomberg, ruling out additional financial assistance that seems to be what created the concern in the market and drove the selloff. let's take a look at credit suisse shares, specifically down 21%. as you've said, we've seen a ripple effect. a number of italian lenders, those stocks were halted, limit down this morning. credit suisse now trading around 1 euro, 76 that's a record low. this is a very much developing story, but clearly this goes beyond what we have been tracking in terms of the follow-up from svb this is very much about credit suisse, a bank that is considered systemically important in europe and depending on how things evolve, it could have significant ripple effects on the broader european banking system. >> julianna, thank you. by the way, we're also seeing a flight to safety continuing with futuring being low on the session
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we the 10-year yield declining and strength on the dollar, going back to the old tried and true safety trades here. let's stick with the fallout from the collapse of silicon va valleybank joining us now former congress member donna edwards i'll start with you. you're back in congress since 2008 in time for t.a.r.p this is going to bring back certain memories for you as we go down the roadabout protecting depositors, et cetera, what comes to mind, mistakes we don't want to make again here this time around? >> well, first of all, i think we have to recognize that it's not 2008 early on within the first three days, the fdic, the treasury, and the fed all stepped in to
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shore up the system to make sure that depositors were covered and to make sure that when the markets opened on monday that we didn't have a spiraling effect among other banks. whereas in 2008 that played out over a several-week period and there was a lot of cob fuchlgs i think the rules that have been put in place since then requiring greater reserves has really helped us in the banking sy system, and the administration made sure this did not become a spiral effect throughout the banking system, even though i do think there's still some vulnerability in the system. >> should all deposits -- i think what the government did, donna, basically is to say there's no room for error in the system, that no bank is too small to fail.
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and is that the right message? is that the system we want to create at this point >> well, i mean, look. svb is a specialized bank karating to the bank industry. what happened in 2008 is the mid-size and regional banks argued they should not be held to the same rules as the big banks. we may need to revisit that because they are quite vulnerable so i think there has to be a lot of investigation as to what happened so we can create rules banks can adhere to without being a burden on customers, and, really, customers who have accounts under $250,000 are insured through the fdic, should not worry, and in this case the
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administration makes sure that, you know, small businesses are able to make payroll come the following week >> apparently any depositor doesn't have to worry. that's the message the government is sending out. there's a fierce debate particularly amongst investors, those on wall street, as to whether or not this sends out the right message, that there is no moral hazard here. >> yeah, and i think it is dangerous. i think what you see if you sort of think through the game theory of dominos, what happens if everybody ee insured and then there's this race to the bottom. there's no real concern about taking care of your investors. the government's going to step in and say, you know what? everybody is too small to fail and do exactly what you heard donna suggest, which is apply the most stringent level of regulation to the smallest banks. they won't be able to afford it. they'll consolidate and you'll end up with 10, 15 super large
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banks and that's it. i think there's a real riff fc you overplay this to the end of regal banks, the end of community banks, maybe the end of credit unions i know that sounds extreme, but if you're going to apply the same regulars to everybody, the little guy simply won't be able to come people i whiens the fed did what they did. i don't understand why the fed and otc and fdic weren't doing their job and allowed this risk on the books at svb for as long as they did, but i whauns they did last week in order to try to prevent a panic. before they take the next step, they need to look at the long-term implications of what they're doing. >> i mean it is staggering to think that just before they collapsed the chairman said there's $6720 billion in unrealized losses in terms of sales and portfolios across banks. unrealized losses. there was a number put on that
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before the svb collapse. at this point, there's plenty of finger pointing, plenty of blame to go around, mick, but where would you focus on what we need to fix right now in. >> it sounds like the regulations in place aren't being enforced even if the most minimal level of regulation, someone's going to look at the duration look at this marty give as speech about it across the system. who at the fdic was responsible for looking at the books at svb. this should be the very most basic sort of investigation. my guess is in the politicized environment, someone's going to ask the question was the bank examiner more interested in esg than they were in the risk those are questions that are going to have to be asked. it sounds like the regulars on the books aren't being enforced properly and that's where we are where we are. >> we've got to leave it here. it's a great debate though thanks. coming up, much more on the tumble in european banks that's
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driving equity markets leer. that's next. more red on the screen credit suisse off 17.5%. 18%. it moves higher. look at. that up 9% bnp paribus up 9% this morning we've got to keep our eyes on this story later we'll talk with galaxy digital's ceo mike never ovograz a reminder to get squawk pod on your favorite podcast app and listen any time. we're coming right back. he came. and i wanted to hide from the world. for years, i thought my t.e.d. was beyond help... but then i asked my doctor about tepezza. (vo) tepezza is the only medicine that treats t.e.d. at the source not just the symptoms. in a clinical study more than 8 out of 10 patients taking tepezza had less eye bulging. tepezza is an infusion.
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welcome back to "squawk box. u.s. equity futures right now sitting at session lows for the morning pretty much. s&p looking to lose about 58 at the open the dow looking to lose 458 points and the nasdaq looking to be down 153 points on a percentage basis that would be a decline of 1.5% at the open for the s&p as well as the dow
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and a decline of 1.3% on the nasdaq what we're seeing here, flight to safety, we've got the yield on the 10-year down to 3.53% the 2-year closer to the 4% level, 4.068%. taking a look at global yields, yields across the board because we are seeing declines in european banks and we're seeing a similar action here, 10-year gilt at 3.72%. take a look at flight to safety. this is a notable change particularly for the euro trade because we had seen the yaur owe held up pretty well throughout the morning in anticipation of a rate hike coming from the ecb tomorrow but we are seeing that down by almost a percent right now coming up, we're going to dig through today's plunge in the futures. let's g back to it credit suisse is off over 20% just right now you're looking at some of those
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european banks also in trouble we're going to talk about that check out the move in u.s. bank stocks right now on the back of that you're looking at jpm down 2%. that's hardly the problem looking at it, close to%. we're going to talk to peter boockvar after this. you can watch or listen to us any meti on the cnbc app we've got a lot going on this morning. we're back after this. inks with their hands. who can shape raw materials into something meaningful. and who wants to serve in their own way. if you're out there. if you're looking for more. we're looking too. we're calling on a new generation of builders for navy's next-gen submarines.
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futures are tumbling this morning. let me show you where things are. dow now off 537 points the nasdaq up 182 points the s&p 500 off 68 points. >> we lost ten bips in the past -- in the khcommercial brek >> this is all happening as a function of what we're seeing in the european markets, which are keying off what we saw in the european banks european markets right now cac off 3% in france
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italy almost off 4%. spain off almost 4% as well. the bank stocks, this is the story. credit suisse off 20% on news that its bigger investor saying he can't put more money in the bank and doesn't intend to that has people spooked. bnp paribas off 10%. banco santander off almost 6.6%. we're watching that. tech stocks are falling. meta, amazon.com, apple, netflix, alphabet, all off at least one and in some cases over 2% joining us now to try to understand what is happening here, peter boockvar, chief investment officer, also a cnbc contributor. make some sense of this for us, peter. what do you think is really happening with the banks in europe that seems to be the problem at least of this morning at the moment >> and the svb news, it's shoot
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first and figure out things later. i don't think that many of these large european banks have dep deposit clean risk there is the potential for a large credit extension contraction that banks are going to embark on, focus more on firming up balance sheets. and rather than focus on lending. and also you have years of low interest rates where a lot of these banks loaded up on duration, and in europe, up until recently, with yields below zero so, there is a lot of toxic stuff in terms of mark to market, not in terms of where they will end up ensuring getting principle back that's what this is, a balance sheet rethink that the markets have, and also you have to wonder with a lot of these banks if they're going to have to start going out and raising
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equity well, that's going to dilute shareholders i want to make an important point that unless concerns about another svb bank run, but i think investors, at least equity holders, need to be worried about what the loan story is looking like, and what potential dilution lies ahead. >> the mark to market issue, peter, we have seen that play out also in the japanese banks over the past couple of sessions or so. and i'm just trying to figure out in terms of the european banks, is this the concern that there is an svb-like sort of blowup hidden in the books, and/or what does this have to do with the credit suisse situation in particular where not only did it delay its annual report, but now it is saying that it may not be reliable, and that, you know, the current financial statements are fair, but, you know, they can't vouch for them, paraphrasing >> yeah, i mean, it seems like
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the credit suisse situation has been ongoing for the last couple of years >> sure. >> and it is not just coming out of nowhere and one has to believe that at the end of the day, how can the swiss government not back stop credit suisse in some way? that doesn't mean the equity is going to be worth anything, but at least the functioning of the bank and the depositors will be protected just as we saw here with a few banks i think broadly speaking, i think the european government, when push comes to shove, will do the same in terms of the depositors and that's why i don't think that that is the risk going forward. i think this is going to be more of a balance sheet fix, a work around with all these sovereign bonds. that's the irony of the whole thing. owning sovereign bonds that you will get your principle back that has caused this sort of havoc in a lot of these bank equities. >> right it wasn't financial risk, it was interest rate risk, and nobody looked at the interest rate
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risk, people just looked at the financial risk in terms of what sorts of assets had to be pledged or put up for capital in determining, you know, the liquidity capital ratios why now, though, peter that's what we're trying to -- what do you think cracked overnight? because u.s. markets took the svb failure, you know, the other failures largely in stride, thanks to the notion that a fed pause was on the horizon >> i think it is the potential for some balance sheet prepare and as i said earlier, the potential for equity rates is that a lot of banks are going to have to do to firm up confidence that was svb's answer to their issue is, okay, we had to take the mark on 20 billion-ish of mbs and treasuries that we have to sell, we'll raise a few billion dollars and everything will be okay obviously because of the timing of that, it was not. but we have to assume that just to firm up confidence that a lot
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of these banks may have to do the same, but now that the equity value is falling, there could be even greater dilution >> what do you think this means for what the fed does, what the ecb does on thursday does this now put pause in the driver's seat in terms of narrative for the markets? i mean the ecb was still expected to stick to 50 basis points >> i think they'll hike 25 and even if they do 50, even if the fed does another 25, that's probably going to be it for a while. so, it is almost irrelevant whether they do raise an incremental amount in a way they want to because they still have an inflation challenge on their hands i think the markets, from what we have seen in the drop in short rates, we assume they're pretty much almost done. which then creates its own issue because if inflation remains sticky, how do they handle this? they're sort of handcuffed with
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dealing with external challenges on the economy and the banking system because of this inflation issue and that's what separates this tightening cycle versus the previous because this time they have less leeway in responding to hits that come our way. >> all right s&p looking to be down by 1.7% this morning peter, thank you peter boockvar, bleakly financial group. coming up, the market moves coming fast and furious this morning. stock futures have fallen more than 400 points in just the last hour european bank stocks as we mentioned telling roacss the board. we have much more on this after the break.
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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 melissa lee. joe and becky are off. a big day and we have some, i'm afraid to say, not great news this morning despite melissa being here that's the best news we got at the moment the dow now off 562 points the nasdaq off 192 points. the s&p off 70 points, that's keying off in large part what is happening in europe and european banks. we'll discuss what is happening in just a moment take a look, though, at u.s. treasuries we have been saying over the past couple of days trying to figure up what the fed may or may not do things got a little bit more difficult this morning you're looking at the ten-year
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note at 3.537, the two-year note at 4.047 and let's show you some european banks right now. credit suisse is off 21% 21.5%. looking at societe generale off. banco santander off over 6% this morning. that after news on the credit suisse front that its biggest shareholder not prepared to put more money into that banks and i think keying off some of the problems we have been having with our banks in the united states, that's raising new questions about credit suisse and that, therefore, creating questions about contagion in europe meantime, we have got some new breaking news this morning this out of blackrock this morning. larry fink putting out a letter, let me get that letter, up on the screen here, if we could, larry fink putting out a letter this morning, a lengthy letter
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this is his annual letter. typically he does a letter to ceos and separate letter to shareholders this is just one letter that runs close to do 20 some odd pages. what you're looking at here is a couple of things that i think i want to highlight and i want to -- let's not use that just yet. i think there is a couple things here that are super important. i think the biggest thing here that he talks about, talking about inflation and what is going on he says that i believe inflation is going to persist and be more difficult for central bankers to tame over the long-term. as a result, this i think is the number that matters, i believe inflation is more likely to stay closer to 3.5% to 4% in the next few years. few years. so to the extent that people were talking about trying to get back to 2%, larry fink is on the other side, if you will, of that trade. he also makes a number of comments, it looks as if they have updated the letter probably within the last, you know, day, based on what has happened with svb.
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he says that it seems inevitable that some banks are now going to be pulling back on lending, to shore up their balance sheets and will see stricter capital requirements on banks and then he says this, and this i think is important, there could be a third domino to fall, he talks about, in addition to what he calls duration mismatch, which is what we saw at svb in terms of how much they were paying for or that the interest rate they were capturing on certain bonds and the mismatch there, we may now see liquidity mismatches this is actually a serious concern. years of lower rates have the effect of driving some asset owners to increase their commitments to illiquid investments, trading lower liquidity for higher returns there is a risk now of a liquidity mismatch for these asset owners, especially those with leveraged portfolios. he then goes on to say, as inflation remains elevated, the federal reserve will likely stay focused on fighting inflation, continue to raise rates. he thinks they're not going to
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stop even though -- which also suggests he thinks they're not going to be successful in terms of lowering the rate if he thinks that 3.5% to 4% is how this is all going to go. >> the fed now has put in a very difficult position of choosing financial stability versus price stability. right now if they're backing off, they're choosing financial stability. so what does that do to price stability? you have higher inflation. >> and, meanwhile, given what we're seeing in europe right now, talk about stability, i think you have to put what is happening with european banks into the jay powell equation for next week. >> i would imagine so. unless -- but the ecb goes before jay powell in this instance. >> right >> so does the ecb put -- what choice does the ecb make does that take the fed off the hook in terms of not factoring in necessarily what is going on in europe? >> i think it is impossible to live in a universe where you don't factor in both and it is interesting because -- we talked to muhammad alarin
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said, he thinks powell should continue to do what he was planning on doing and say the u.s. is controlling the bank we're protecting the banks this other way. and that you try to keep them as separate so you don't allow the market to push you one way or the other. but it is a global world and these european banks are going to end up in -- by the way, look at what is happening in our own markets in the u.s., keying off what is happening in europe. >> to think vietnam central bank cut rates in response to the global banking turmoil, that's how global this world is. >> that's how global it is. >> vietnam is responding let's get to the bank halts that we're seeing in europe right now. julianna tattlebaum joins us with the latest. >> we have seen a massive sell-off across the european banking secretary they are morning, credit suisse shares are bearing the brunt of the selling, now off more than 22% but as you can see, the concern has spread beyond credit suisse.
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several italian lenders have been halted throughout the morning, limit down. and looking at credit suisse shares, as you mentioned, a lot of the concern seems to be coming on the back of fresh comments from the saudi national bank, top shareholder in credit suisse, speaking on bloomberg earlier tv earlier today and ruled out providing further assistance to the troubled lender that's what kicked off the latest wave of selling but clearly the investment community in the banking space is quite nervous a lot of jitters given the turmoil of the last several days so, it has spread beyond credit suisse to the broader banking sector, but a lot of the concern seems to be coming from what happens next for credit suisse and not just the stock that is lower, we also have seen the cost of default insurance on the bank, on short-term debt shoot up approaching distress levels so a lot of concern around the swiss lender this morning. >> julianna, thank you okay let's take a look at the futures
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again, dow down 500 points, better than it was, but who knows. the s&p off close to 60 points let's talk markets, inflation, the fed. cameron dulles of new edge wealth good morning to you. we're trying to make sense of what we're seeing out of europe this morning, what the impact of the european banks are going to mean and as we were discussing what that therefore means to the federal reserve and our own markets and you're seeing it key off of it. what is your take? >> yeah, clearly there is now a shift back to this risk-off tone with rising risk of the banking sector, not just in the u.s., but also in europe we're not certain that would change the fed's course, mostly for next week's meeting because of that hot cpi print and that core, super core services cpi that really accelerated yesterday. and so i think that that keeps the fed engaged in the inflation fight, and it doesn't necessarily mean that the fed is going to pause in may as well because if we think of when the
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may meeting comes, it is at the very beginning of the month, which means they'll only have march data to make their decision so unless we have another banking issue within the u.s., it could mean that we still have further rate hikes ahead >> when you look, though, at what jay powell has to do, and how he has to consider or not this was the discussion, how much does very to consider what is happening now in the european markets? >> yeah, well, the problem is we have seen powell or we have seen the fed pivot for a lot less we have seen the fed pivot in 2018 because of short-term funding markets, 2016, oil and gas banks go back to 1998 with ltcm, arguably the size of svb as well as what is possibly happening are brewing within europe would have normally argued for the fed backing off but, the difference today is that inflation is still very hot. so, to melissa's point, as you're balancing this trade-off
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between financial stability and price stability, the challenge you have is that they haven't had to focus on price stability in the past times they pivoted and so that likely means the fed is caught in this corner of having to choose between the two, which means th there is stl very great uncertainty about the policy path ahead. >> what about the banks in the united states? would you own any of them? >> we don't own any of them right now. we think there is a great amount of volatility likely to be had we think given the uncertainty in the path forward, there is likely more these are trading stocks that you would rent versus names you would invest. there is certainly some action that has been throwing the baby out with the bath water. there is likely strong players, better than others that will emerge from this and we'll start to sharpen our pencils on that. there is likely more volatility to be had. >> is there any name on these lists that you sharpen your pencil on and go, okay, this is now at a discount, i believe in its survivability, i mean, you
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had seen, and i think it is -- i don't know where we are now, if we put it up on the screen, charles schwab off 30%. >> the ceo bought 50,000 shares in stock >> 50,000 shares himself did you look the a company like that and, look, i don't know the details of where -- of the finances of charles schwab at this very moment, but you say that's something that is going to be around for a long time and that's a deal or something like that you're even concerned about? >> you see a similar dynamic happening with schwab where they have the potential for mark to market losses, but that doesn't become a problem unless you see a run or big outflows from that company, meaning that you don't have that risk of a bank run and then they wouldn't have to recognize those losses i think that that probably is an example of a name that has been thrown out, but there is still uncertainty about the balance sheet. you have a lot of names like the largest banks getting thrown out as well, but we're starting to trade at valuations that are getting back towards near one
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times book value, which is typically been a good area of support. >> cameron, thank you for helping us through this as we try to make sense of these moving markets this morning. thank you. when we come back, a lot more, tech stocks getting hit this morning as well not like what is happening in europe, but we're going to keep our eyes on it and talk about it gene munster with us after the break. talk about that sector and former senator and banking committee ranking member pat toomey will share his thoughts on the collapse at silicon valley bank and the moves in the markets and the moves this morning as well. don't go anywhere. at morgan stanley, old school hard work meets bold, new thinking,
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tech stocks also getting hit this morning with the s&p futures looking to be lower by 1.7% at the open we have meta, amazon and apple across the board pretty much 1% or more losses right now gene munster, managing partner of deepwater asset management, joins us now gene, great to have you with us. i'm not going to ask you about european banks or the banking system >> good. >> but to the extent that tech stocks manage to rise on this narrative of a fed pause because of the instability of the banking sector, has any of this changed your view of tech stocks and their ability to make gains this year?
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>> it hasn't as a reminder of my view, melissa, the first half of the year will be difficult for tech, big, mid and small cap tech i think the back half of the year will be a great year and into 2024. and the substance of it is i still believe that even with a rate pause the key factor here is employment, unemployment. that still has been stubborn historically that's the stickiest part of inflation. and all these gyrations within the banks and what we have seen across the liquidity and the money system, i think ultimately it plays into what is the inflation question i think that still is going to be where investors are going to resolve their debate about what is going to happen with stocks and, again, i think that inflation question is largely dependent upon hiring. and so i'm sticking with this view i wish there was more optimism i'm glad to hear about some of the potential pauses in rate hikes, but i think that in terms of invest in tech stocks in the
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near term, it is a little bit of a head fake. again, all you need to do is keep an eye on unemployment number we need unfortunately to see that number inch higher to really take pressure off inflation, and ultimately get to a point where investors can sleep well at night, knowing that rates aren't going to spike higher in the future >> right, and in the meantime, impacted by high inflation i want to deal with the more recent news on some of the stocks that you follow so closely. foxconn for instance warning about consumer electronics demand this year how much do you impeute that on to apple this week >> it is something that should be absolutely considered i also would look at how apple is thinking about their spending with partners like foxconn and some of the other suppliers. a few weeks ago, apple came out in one of their filings and said they're going to increase spending with components of buyers this year by 16%.
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i think about that when i hear the foxconn news and what that means is that they're spending more with their components supplier. some of that may be increased in component costs. unlikely given their margin guidance is for higher for the march quarter, surprisingly higher i think what it means is apple is still doing probably the best job of any of big tech in terms of navigating the storm. again, the street is looking for 1% growth this year. i suspect they're going to comfortably beat that despite what we're hearing from foxconn. no company is immune i think apple is probably the safest place to be when it comes to kind of navigating at least the next six months. >> the other piece of the foxconn warning that came out overnight, gene, is that they are seeing good business, good demand from cloud, from networking, from components. and so how do you then, you know, think about your, you know, the stocks you follow and who will benefit from that
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>> i think, you know, that is like nvidia could potentially benefit from the cloud side. i think you can even see some benefit from a company like intel, which has struggled a lot recently but so i think that's an important distinction is that foxconn is a bellwether. you need to read between the lines and around the lines you need to look at the filings with apple i think there are going to be some points of -- some bright spots. again, big picture doesn't change next six months is going to be difficult for tech, i think back half of the year is sitting up well. >> you know, meta announced more layoffs in the year of efficiency and the stock saw 7% pop yesterday, backed off metaverse. it did mention metaverse in the zuckerberg memo, but they also mentioned things like boomerang in eps opportunity and ai and all sorts of other things that investors want to hear have we seen this all baked into the stock at this point?
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>> i don't think we have i think this is a material letter it was a monster of a letter, 2200 words, this letter from zuckerberg to the employees. he did mention efficiency 12 times in that. and as you said, the substance of the efficiency is going to come from basically cutting out some of the middle management, going from three reports to ten reports. and still focused on engineering as you talked about. and so -- they're still spending on the metaverse today was on "wall street journal" and i saw there was an ad that ran for the metaverse that talked about different opportunities around the metaverse that meta had ran. there they're still on board here with advancing the metaverse. i think one of the ironies in that letter from zuckerberg was that he mentioned that engineers are really important to this and they actually perform better when they're in the office three days a week and what is ironic about that, of course, is the metaverse and with their quest pro is really focused on remote
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work in total and acknowledgement that that may not be the best way to run an engineering team >> right gene, thank you. always good to speak to you. gene munster. >> thank you still to come, more on this morning's market sell-off. up next, a read on the housing market diana olick joins us with the latest and what it means for housing. "squawk box" will be right back. time now for today's aflac trivia question. what media streaming device's name translates to the number six in japanese? the answer when cnbc's "squawk box" continues et used to this retirement thing. ahhh! coach k, there's a goat here. the story of my life. no coach, there is a goat here! whaaa! 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, you can get money to help close that gap. aflac, huh? gaaaap! aflac! gaaaaap! get help with expenses health insurance
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now the answer to today's aflac trivia question. what media streaming device's name translates to the number six in japanese? the answer, roku welcome back we got some breaking news on a number of fronts including the markets and banking stocks, particularly in europe i want to bring everybody's attention to the annual letter just out from larry fink at blackrock. he's saying he thinks inflation is now going to persist and is going to be more difficult for
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central bankers to tame over the long-term. he thinks inflation is more likely to stay closer to 3.5% or 4% in the next few years i say years as opposed to this year that has important implications for the market and what the fed will or won't do i think also addressing the fallout from the collapse of silicon valley bank, he wrote, there could be a third domino t fall, in addition to the duration mismatches, we may now see liquidity mismatches, years of lower rates had the effect of driving some asset owners to increase their commitments to illiquid investments, trading lower liquidity for higher returns is a risk now of a liquidity mismatch for the asset owners, especially those with leveraged portfolios we're going to have to keep our eyes on the whole banking sector at this point in a way that not to say that we weren't before, but i think there is going to be clearly a lot more attention and regulatory scrutiny. meantime, the latest st readin
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housing and mortgage rates is out. to diana olick with the latest on that. good morning >> good morning, andrew. demand for mortgages increased for the second straight week and that was despite some really rough volatility in mortgage rates. the average on the 30-year fixed decreased to 6.71% from 6.79% for loans with 20% down. that was a weekly average. rates were higher for most of the week last week before dropping sharply on friday on news of the silicon valley bank failure. despite that mortgage applications to buy a home rose 7% for the week, still down 38% year over year, but buyers seem to be coming back a little bit now, perhaps because they're concerned that rates will go even higher and we heard that from lennar, the nation's second largest home builder, which posted better than expected earnings after the bell yesterday. the company's chairman stewart miller said in the release, he said home buyers are considering the possibility that today's interest rate environment may be the new normal now, applications to refinance a home loan increased 5% for the
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week, still down 74% from a year ago. mortgage rates dropped again monday, then bounced higher again tuesday after the monthly release of the cpi and renewed expectations that the fed will raise rates again next week. back to you guys. >> okay. diana, we'll see about whether they raise rates again next week and this news out of europe, i think, is going to be added into the mix of thoughts about what to do. thanks still to come, former senator pat toomey joins us with his thoughts on the silicon valley bank collapse, including why he says it is all the fed's fault. let's look at futures right now. we're off the session lows the s&p looking to lose about 62 at the open with the dow looking to be up by 508. this takes us back to just levels we have not seen since friday on the s&p 500. throughout the month of march, we're celebrating women's heritage, hearing from leaders in business and those of our cnbc teammates and contributors. here is jennie johnson, president and ceo.
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welcome back to "squawk box. we're in a sell-off mode this morning. joining us right now, former u.s. senator and banking community ranking member pat toomey great to see you, senator. want to talk about svb we are watching the markets, we should say, in a true sell-off mode, in large part now on the back of concerns about european banks, including credit suisse credit suisse off to close to 20% right now. and that has people nervous.
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but i'm curious on svb and how you think about the regional banks here in the united states and whether you think more dominos fall or given what the treasury and the federal reserve have said about trying to protect depositors that we're in the clear. >> well, no question that they have taken a very, very dramatic step here. so, i think the risk is much reduced, but, andrew, i think the really important lesson that we have to internalize from the whole episode is just how dangerous it is to have extremely and prudent monetary policy i think that's the source of this problem i think about it this way. first we had wildly excessive spending and at the same time long after the financial system was clearly no longer in peril, the fed was still maintaining unbelievably easy money, buying bonds, super low interest rates. that contributed a lot to the surge in deposits that wound up
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on the balance sheets of banks like svb then at the same time, the fed was keeping interest rates at zero, nominal rates, real rates were negative, and so banks were forced out the risk curve. not the credit risk curve, but the maturity risk curve because the curve was still positive in its shape at the time. finally, when the fed realized how badly behind the curve they were and they suddenly raised rates, they created the bond portfolios they had helped to create first place. >> but, let pe tame take the ot side of this for the purpose of this debate. it has become very popular to blame the federal reserve for all of these problems that we're having but, don't you have -- isn't there some level of personal responsibility you talked about personal responsibility. >> sure. >> personal responsibility on behalf of the executives managing these banks to make the right decisions? don't they need to say, oh, it could rain tomorrow, it could rain, we should have some
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umbrellas available if that day were to come and, by the way, unlike the weather oftentimes, jay powell actually told you it was going to rain tomorrow he told you exactly what was going to happen. >> first of all, andrew, i'm not arguing there is no responsibility on the part of management surely there is. evidently it didn't occur to them that one day, $40 billion of assets -- of deposits might walk out the door in 24 hours. that's a pretty unusual occurrence it didn't occur to them, in hindsight it should have but what i'm saying is the fed created the dynamic where all of these things start to come together and that's a huge problem. by the way, there is another element of this, right, and that is the regulatory regime contributed to this problem and i mean in the following sense. there is an inherent instability and fractional reserve banking system that's part of the nature of the system where you transfotr
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transform maturity we have long completely guaranteed small and under $250,000 deposits so those depositors have nothing to be concerned about. and then if you put large deposits with the giant banks, that's implicitly guaranteed by the government that's been pretty clear and so the category in between, mid-sized banks that have a significant volume of uninsured deposits, that's the only place where the risk remains in the system and so when things start to look like they're going sideways, there is a big risk of a flight coming from that category. >> which leads me to this question, as somebody who lived on that banking committee, do you believe that there is bipartisan support to protect depositors and that seems to be what we keep hearing that there is now support in washington to protect depositors across the board, whether you have $250,000 in the bank or $250 million in the bank, all deposits are protected because we don't want flight from the smaller and regional banks if that is the case, do you believe there will be bipartisan
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support to effectively regulate these smaller and mid-sized banks the same way we do some of the bigger banks to prevent problems in the future, given that we now are offering effectively an insurance policy to every bank across the board >> so there is a lot to try to unpack there, andrew first of all, i think that's a really bad idea. it to systematically say all deposits are guaranteed by the government that will lead to bad outcomes like some version of socializing the banking system because folks will insist on that, some folks will and why do we think that will work why do we think that supervisors -- let's be honest, banking supervisors are nearly omnipotent when it comes to the banks they is up weisz th supervise. they can see everything. they can force banks to do whatever they want they didn't see this problem hiding in plain sight. it wasn't like this duration, this mismatch was like hidden under a barrel somewhere in the
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bowels of the bank i would say, here's what i think we ought to -- we ought to consider how large a portion of liquid deposits, short-term deposits can be held in a hold to maturity category by not marking them to market, maybe it is a little bit misleading about the solvency of the institution. and then the other thing we ought to think about is are there sufficient incentives for private vector players to be concerned and to be supervising the prudence of the bank depositors have no reason to be concerned about the prudence of bank management if you have universal guarantees equity holders, they get the outside if things go well. traditionally that role of discipline is an unsecured creditor someone who doesn't have upside, but they got plenty of downside so they have every incentive to ensure the prudent management of the bank i think we should be asking ourselves what is the role of
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that category in the capital stack. >> the role of the unsecured creditor what should it be? >> do we have -- who else is going to play that role of imposing the discipline on the operations of the bank we have seen the supervisor, the regulators don't catch it, maybe they're focused on the previous prices, maybe they're focused on other extraneous issues which we have seen with the fed in the past depositors have no incentive to care so, who is able to play that role and it occurs to me unsecured lenders are in a position to do that. >> let me ask you a question, if you believe that depositors shouldn't effectively be protected, what do you make of what just happened with silicon valley bank? what do you make of the -- so many of these depositors in truth, i think it was a practical reality of protecting them, you know, as unseemly as it very well may be, it is more unseemly these were not just typical depositors most folks were in venture capital community, a lot of them
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had cfos, their job is to manage risk and you would think you -- i know people -- i know family members who put $250,000 in one bank, some money in another bank, for this very purpose. >> right >> yeah. and so there is no mystery, again, wasn't hidden the fact there was a concentration of their customers at this bank and that would, of course, increase the risk there is a correlation of behavior, correlation of circumstances if everybody is in the same sort of sector or the same space now, let me say, i understand the situation that the fdic and the fed found themselves in over the weekend. and the risk of a sudden and maybe dramatic migration of deposits out of midsized banks and into the money center banks is probably what they were worried about. and given that we haven't prepared our system for this, i understand why they did what they did what i'm saying is i don't like the idea of a permanent
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arrangement by which all deposits in the u.s. are guaranteed by the government i'm afraid that's going to lead to really, really bad policy outcomes and it doesn't answer the question of who is monitoring the behavior of these institutions and i wouldn't count on supervisors to get that right. >> senator pat toomey, it is always good it talk to you we appreciate your perspective on all of this i hope we get a chance to do this very soon. >> thank you for having me, andrew >> coming up, inflation data due out at 8:30. we'll get february ppi, the numbers and the market reaction straight ahead as we head to break. look at the laggards and the dow, s&p 500 as well as nasdaq banks topping the list in terms of laggards. we'll be right back with more on the market move this morning stay tuned i am here because they revolutionized immunotherapy. i am here because they saw how cancer adapts to different oxygen levels and starved it. i am here because they switched off egfr gene mutation and stopped the growth of tumor cells.
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go big. or go home. from software that delivers new cures at warp speed, to technology that makes clean energy reliable, emerson innovation helps make the world healthier, safer, smarter and more sustainable. go boldly. emerson. welcome back to "squawk box. we're watching the markets sell off this morning jitters in the european banking sector dragging down european markets and looks to be rippling into the u.s. futures this morning. look at declines across the board in the european banks, the credit suisse booking a 21% lot right now. the dow implied move is open, down 530 points at this hour
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president of queens college muhammad el-erian joins us now good to have you with us >> thank you for having me. >> what is the concern here that we're witnessing the beginning of a full blown banking crisis where there are impacts of what is going on in europe on the u.s. and vice versa? >> i think we recognize three distinct things. one is a set of bank management issues and lapses in supervision. so, the three u.s. banks last week, credit suisse which had problems for a while, that's very specific. then stepping back we recognizing that both the private sector and public sector haven't adjusted enough to what has been a mishandled change in montgomery policy monetary policy regimes. then the third element, the flip-flopping of the fed most recently added interest rate
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volatility to a situation that already had economic and financial fluidity these three things have come together and the equity market is realizing what the bond market has realized the last few days is that it is not just one or two institutions, what we saw in one or two institutions is exposing something much bigger that we have to -- including that banking is changing because of what is happening right now >> you don't know -- we don't know what we don't know, muhammad, is what it feels like now. and that's kind of scary i don't want to cause fear out there, but if you're saying that, you know, the regulators don't know what is going on here as well as in europe and there are all these risks embed in the balance sheet, whether it be liquidity risks or interest rate risks or both, that's a cocktail for terrible losses. >> so, let's say what we shouldn't worry about. deposits are safe. that's really important.
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it wasn't a particularly elegant way of doing it, but the good news is our deposits are safe. second, the banks have a wide open window at the fed, where they can get liquidity in fact, it is incredibly attractive to do so. you can go out right now and the bank and go out and buy a bagel for 78 cents and get a dollar against it so it is very generous to the banks. that's issue number two. but there is the bigger issue that we have driven monetary policy with pedal to the metal we didn't slow it down in time, and then we slammed on the brakes and i always said when you run monetary policy that way, you risk economic accidents and financial accidents. >> so, muhammad, when we spoke on monday, and you wrote about it i believe, as well, you suggested that the fed should continue on the path of 25 basis points, should effectively separate the two issues about raising rates versus stability
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of the banking system and given the implicit guarantee around deposits, everything is fine does today and what is happening in europe change that dynamic at all for you? >> no. we hadde an inflation number tht showed -- if you co-mingle the two things, financial stability, and monetary policy to -- in order to reduce inflation, if you co-mingle these two things too much, you will end up in the muddled middle and that is the problem that we had. we had what i regard as financial sector capture of monetary policy over the last few years. and that's why we are in this mess look, we're going to get further inflation numbers, we're going to see what the situation is, but if it -- if we did not have this mess, they should be hiking 50 basis points, i think that should go 25, but they should stress that they got tools to
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deal with financial stability. >> muhammad, at some point, isn't the winston churchill line, when the facts change, i change my mind, right? >> they're data dependent, that's their version. >> at tsome point, in a perfect world, do you separate these two issues at some point, do you say, they're combined, these issues are starting to overlap? >> they're combined because we have been in the muddled middle, andrew they don't need to be combined and data dependence we got to be careful. that's an excuse to not take a long-term view how can you be data dependent if you measures act with the lag. think about this, melissa, for a second, right. what this fed has failed to do is to step back and take an overall view it is captive to an outdated monetary framework that is for the world of before 2020 and therefore it has
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flip-flopped and that's one of the problems we have a trilema. they have to lower inflation, minimize the damage to growth and have stability you don't do that by being data dependent. you do that by having a view of where you're going and communicating it otherwise we end up in this mess this is the result of being too data dependent i'll argue this is excessive data dependence. >> here is the question, muhammad, the ecb is going first. and i know the fed, you know, the fed isit comes to central banks around the world. does that give the fed more cover in any way to also back off hikes? yeah, i think the -- it may. it may and probably will. i think the dilemma for the fed right now is the market pricing. the market is telling them you're not going to hike and you're going to cut. that's what the market is telling them they have to decide whether they
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want to validate the market pricing that is focused on particularly financial stability or whether they want to also pursue the inflation objective look, we shouldn't be here this is a hole that has been dug over years by the fed, and we really didn't need to dig this hole now that we're here, there is no perfect policy response. >> one last piece of this, we talked to pat toomey about it a moment ago a lot of people are pointing fingers at the federal reserve a lot of people are saying this is their fault is it their fault? and where do you -- where do you sort of put the blame in terms of finger pointing either there or at the banks and how they organized themselves? >> this is the most telegraphed series of rate hikes that has ever existed probably in the history of finance, right? it wasn't a mystery that interest rates are are going to rise and fed was going to go aggressively about its business. >> melissa, they came off
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mischaracterizing inflation in the whole of 2021. they came after they did nothing, too much in 2022, when they were still injecting liquidity when the inflation was 7.5% you got to stop the stor 7.5% you've got to stop the story there. >> mohamed, thank you. always good to speak with you. coming up, the market selloff this morning plus inflation gdata due out "squawk box" will be right back.
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comcast business. powering possibilities. welcome back to "squawk box. i'm dominic chu. time to update you on the global banking system with stresses there and what's happening with european banks and credit suisse as well. these are, by the way, the u.s. listed shares in the premarket they're going to mirror in some way what's happening in european trading. credit suess shares down 27%, ubs, deutsche bank, citicorp,
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and wells fargo, even morgan stanley down 3.5%. i'll send it back over to you. >> for more and the banking sector, chris whalen let's talk about what's happening in this european banks, which clearly are having an impact on u.s. markets. your take looking at credit suisse off now 20% how concerned are you? >> well, i've been a buyer of the stock on the lows on the assumption the they'll get it right. this should have been fixed last year in terms of the spinoff
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u.s. banking business. but they have issues in the u.s. they have a big bidding book and nobody wants it. i think investors are just getting very impatient with credit suisse and they need to have a sense of urgency with what they're doing >> how concerned are you thinking about contagion and banks off 10% because of this news >> hopefully the governments will bail them out that's why the european banking industry is so weak. we don't really make much money. am i concerned medium-long term? no they're going to fix it. this could be a buying opportunity. the incremental approach is not working. i very much agree with what melissa was discussing we need to fully understand what's going on here we need to get congress to allow
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the fdic to cover all deposits, including commercial deposits that were historically uninsured and the banks will pay for it. but we can't pretend we can have half of the banks be uninsured when you have market volatility. the central banks have created the problem by backing loans and the bond market into a very narrow range of coupons so it restricts the ability of central banks to fight inflation the feds can't go any higher if they go any higher we'll see major bank fall yourself in the u.s. >> i'm impressed you're buying credit suisse. the government will back stop certainly depositors and people with assets at the bank. will it back stop shareholders
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you're a shareholder and you're taking that bet. a back stop doesn't necessarily save the equity holders. it may help the bond holders >> it's an option. i think credit swiss with eventually look the ubs. it escaped up you know, there te's a lot woro be done here with credit suisse but ultimately i think they'll survive. >> many cog up, we'll talk with michael novogratz for the latest on crypto. we'll be right back.
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morning. all of this happening on the back of what we're seeing in europe this morning and the big news, credit suisse leading european banks lower off close to 23% right now we now have fears of i dare say the word contagion in europe, about 13% down now and banco santander. and an investor said he will not be able to invest any more in credit suisse because of regulatory issues. just after it seemed like the dominos had stopped falling in the united states, new questions about dominos in europe. the three-year at 4.058.
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we've been talkingabout jay powell will consider this piece of news. we'll have it again right now. >> that is a big question, especially for equity holders. steve liesman joins us with the very latest. what are they doing, steve >> they are plunging concerns about the banking system rekindled after credit suisse plunging more than 20%. it's a furious fight to sa safety in the bond market. if you look at the next thing, the january '24 fed funds futures, that's the one that's down 56 basis points this morning. i have to say i don't think i've ever seen a plunge like this it's quite remarkable.
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we were at 450 yesterday, now we're down to 394 so there's an idea that the fed would hike another quarter and shave another basis point off. with the regional banks playing a key role, the fed will not raise interest rates last week and we've likely seen the peak of short and long-term prices in this cycle the federal reserve does have existing an existing swaup line but if the european central bank does want dollars and just to be clear, the fed is not saying anything, this program had already previously been in place but they do have an existing ability if the ecb -- if there's a need for dollars for the federal reserve. would what the ecp does on
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thursday affect the federal decision next week it had been expected to do a 50-point hike before maybe today's meltdown if it backs down on that, maybe that gives the fed more leeway to say we're going to back off, too. >> i think that's right, melissa. i've been a bit of an outlier here thinking it was less than 50/50 the fed might hike on tuesday or wednesday i think they'll be looking to see how much concern there is in the banking system i've done this a lot, to see with this going over to europe >>'s always probably, credit suisse so this goes on for like they
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always seem to be on the forefront of concern i don't know if it's going to go further than that. i have no knowledge than it being other and i don't know where mohamed is coming from larry linsey think that the med dramatic potential con traction in credit in the economy, which would be a major disinflationary event. i don't think they do that i think they put the concerns about the financial system in the first place before they concern themselves about inflation. i just don't think -- >> steve, let me ask you an economic question. let's say they do in a and there's this expectation if they were to do that that the markets would fly and that would be a good thing for the markets is it a good thing for the markets insofar as the same time there's going to be this other inflationary pressure? >> i think from a central
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banking point of view, none of that mattersin if the central bank's prime rip focus is going to be on the credit to the economy and the possibility of credit con traction, which it would see as an sensely disinflationary event, even a deflationary event, it would not worry about the impact on the stock market it might even welcome a stally some addition an liquidity to the market. >> steve, i want to thank you. i want it get back and also talk about the markets and maybe ask the same question to mike santoli. it's really a question i asked steve. does the and he is now raising
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straight good if you. >> i don't think it's a forgone conclusion the market with fly it might get some relief out of that, just the idea that's one and i don't think so the first rate cut has not necessarily been a bullish sign or the first pause. at a minimum the s&p is in a testing phase. yesterday's rally never got above yesterday's high it was a nice breather and a little recovery but nowhere near this rate. you really see that the market has spent the vast majority of the last year between these areas basically, 3,800 rough speaking and that 3650ish.
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theitience the december lows and that's the line to say, okay, we're still in in range, still trying to understand what's going on in the banking system or is it something where i would point out on monday the lows were made and the we have this pattern sometimes where you do this and then u.s. markets can stabilize after the close in europe we'll see if that's the case one other case of stability recently, look at apple shares all markets are set to go somewhat sync i like them because they're also equivalent market caps you see a little divergence here as small cap have plunged. apple roll in this and i don't
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think that's what people want. but that's the one we've had for a couple of days now take a look at the voluntary index of treasuries. this is just very stuping, testimony actually went below 4% at a time yesterday. it shows you people are very mng evening what does it mean if the fed pauses, race p raises 25 or we have to do go for a week where we don't really know >> who are the big are counteries are do we have ains
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frrngs. >> well, i think the way the market views it is there are all huge counterparts to one another. it's not so much i have complete exposure to credit swiss, that's why my stock is down everyone is interrelated enough for people to be concerned how many times have we flinched about whether it's deutsche bank or credit swiss over the years and felt like it was going to spill and more times than not it has. >> we have another news story coming out that i imagine may be a talker goalman had it had advised on their capital raise happened to always p also been on the other side of that transaction when the bank sold at a $1.8 billion
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loss scb sold that to goldman sachs and has collected $100 million as a fee for such service. this is going to raise all kinds of questions of what happened there and and all banks collect a fee when they do a mass lock transaction look this ostensibly some risk. it was mostly liquid and very highly rated government bonds. but the question is if you're going to have a fee that's 100-plus million, what's going to happen to you bankruptcy judges look at claw backs. >> goldman,er in formed a job
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and they got paid for the job. >> eship the prok. >> why would any of it be clgd goj. >> why is there fan even an dilemma. >> by the way, we you a thing a lot are saying you can claw that money back, it was a service provided but it has to be provided at a fair price and it has to be considered arm's length this is where it gets slightly more complicated >> arms length is the complicated -- >> they were also playing the role of advisor on the capitol race you can argue they are all one of a piece to protect themselves, goldman
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sacks said, look, if you can do that, that. >> all right i think they're clean. sfwlu think. >> i want to believe alful and lots of things that were going on >> sure. >> but given all the conversation around svb, the recriminations, the d.o.j., we talked about the sec the fee i imagine will be part of that discussion >> by the way, that bond portfolio that they bought is worth more today than we've seen this morning >> you know who is going to make out like a bandit in the end the u.s. think about it. they got it for nothing. and think about what that portfolio looks like >> our next guest has been
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watching key technical levels. katie, good morning to you at this point does it change at all with what the markets are doing this morning >> well, it's definitely evident that the bear market cycle has a hold and we have seen a sharp pickup in volatility also day-to-day volatility that is more characteristic of a bear mark cycle move over the past week or so that is very unsettling and it evident that momentum is to the down side. with that 3,900 having been taken out by the s&p, to us the 3700 level isn't that strong as
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a support. we are watching 3505 as the next major support of the s&p 500 that is bas-- it also captured low. >> according to your volatility, have we seen the peaks in rates? >> we have indicators showing signs of up side exhaustion across time frames for two-year yields that goes for the daly, the week and ply and monthly charts we're looking for about nine months or so of sideways to lower with a lot of short-term volatility from yields how that resolves on the back of the nine months, we can't be sure for now they look lower over that time frame.
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>> we're showing a live shot of the indicator of the ten-year yield. it's just piercing it now to the down side. that looks like a line that's opinion able to hold this is just a countertrend move what's the down side here? >> a countertrend moch but we think it's framing this new trading range that's unfolding we are watching support for ten-year yields around 3/14. not looking at the 200 day as a significant support, a line in the sand, we watch the cloud model so we're think ig of 3 1/2 as achievable here in the nerve tom be skating stockton, thank you. >> we've got so much more coming up this morning as we try to break down this market selloff
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michael novogratz will join us and first senator tom cotton will tell us why he thinks president biden has fumbled the silicon llvaey collapse. stay tuned you're watching "squawk box. this is cnbc power e*trade's award-winning trading app makes trading easier. with its customizable options chain, easy-to-use tools, and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. power e*trade's easy-to-use tools make complex trading less complicated. custom scans help you find new trading opportunities. while an earnings tool helps you plan your trades and stay on top of the market.
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box. reports saying the fed weighing tougher restrictions for mid-size banks our next guest has been critical of the biden administration's response to the bank meltdowns tom cotton of arkansas is a member of the judiciary services and intelligence committees. good morning to you. i'd like to understand what your problem is and what your contention is in terms of how you think this administration, how the government has handled these rescue plans >> well, andrew, i think it's been failures all the way down for joe biden and the bank bailout. take a step back a couple years, joe biden's reckless economic policies cratered that if you didn't have that reckless spending, no interest rates and no interest rate hikes, you'd
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have banks exposed six months ago. his evaluators should have taken action to get them it or doing interest rate hedges they should have arranged some kind of shotgun wedding merger with a stronger bank with a stronger balance sheet i don't think they did that because they have ideological opposition to such merger. they're all afraid of elizabeth warren attacking them. and they'd rather have state control of these assets. >> where do you land on personal responsibility the business leaders at signature bank and the other banks as well. so much of what the federal reserve and frankly the administration was doing was relatively del graphed what was in the offing here?
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typically you've talked about personal responsibility before >> i believe that all those managers have personal responsibility the central failure is of the failure of the managers at these banks, chasing too much yield and putting too much risk on their balance sheet. >> it's a chicken and egg. do we belief the fed for easing monday and and flooding the system with money during the pandemic and the like? or do we blame the leaders of these banks for taking advantage of that and in fact missed taking advantage of it >> yes andrew, you can lay the blame on both it's joe biden's policies that didn't do enough to forestall this they're will to empa feis -- the
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only people blameless in the situation are the employees of the banks held at certainly i con valley bank. that's the main action you can take to protect them and their jobs so the company can make payroll today. >> senator, i want to ask you this, though there's a lot of questions about -- push back for a very lon by some have argued that even led to this as well where do you land on that eyity and while i completely agree with you regularing if there as also no question that there are people constantly pushing back on that regulators >> well, andrew, this is not really a failure of regulation, this is a failure of supervision
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and a failure of these bank managers as well these are not esoteric, obscure question of high finance this is taking demand apartments and putting it into longany responsible manager should have seen that was risky and hedged that interest rate risk or taken other ways to protect themselves but supervisors should have seen it thefl sefs and demanded we took this move six months ago. this is a superadvice problem, not a regulation probably will there they thought -- what led to this was a sort of
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misfocus on woke im. what do you think of that? >> i think the core famier again is the failure of the bank managers and supervisors to see they were taking in demand deposits, high rates and investing in low interest rate assets in an inflationary environment. i also suspect ghan this bank has been up to, just look at their web site and some of the events they sponsored that they probably were distracted by things like dei and climate change likewise you got the fed up there doing private stress tests. >> maybe it's unfair for me to bring up the question. do you really think it was those issues that led to this? i can go back to 2008 and you can look at the boards of those companies and for the most part they were white men across the board. >> i don't think that's the primary cause. the primary cause, again, is the negligent and risky practices of the bank managers and the failure of biden administration
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supervisors to take action against it. >> and what about the responsibility for deer the depositors >> i want to go back to those were eight and maybe nine-figure balances on those deposits there are plenty of ways to protect those employees. the fdic was talking about do an advantaged receivership. motte who could have confronted 40, 60 days. there are ways they could have remained, taken a hair cut and still made payroll today that didn't require the biden bank bailout. >> wouldn't the conversation have changed if these weren't tech startups and these were
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retail shops on main street or farmers in the rust belt, would this conversation be different in terms of what you call the biden bank bailout >> i think it would be very different. i think we all know there's no chang joe biden would have build out the small bank in east arrange, a and even more important, would joe biden have bailed out an equally large bank that almost exclusively banked the oil and gas industry i think we all know there's no chance that biden and the congratulations in charge with hilding them >> i'm like to think that the reason that specific sb was to prevent the dom ouns i hope we can continue to have you back we have big numbers coming up with some data in just we have
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you're lowering some of those prices versus changing the rate of change. strip out food energy and trade, up 0.2 and that equals the best numbers since january of '21 november/december of last year january we were up 0.6 year over year projbably the mot important. year over year expecting 5.4, 4.6 on year over year. that is the lowest level going back to march of 'it2021 and the high water mark there, just so people realize how far we have come, the high water mark there was 9.7
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if we strip out food, energy and trade, it's also up 4.4. so these numbers have really come down rather dramatically. that brings us to the lowest level also since march of 2021 you're seeing numbers under 3.5% in a ten-year. look at empire, minus 21.6 now look at retail numbers, exactly as expected. exactly as expected. that's the worst number since when it was minus 1.1. if you strip out autos down one-tenth of 1% and if we look at retail sales, gas stations unchanged we're expecting down 0.2 of 1%.
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and the control group that gets used in other higher up the food chain data points up a half of one% that isn't too bad considering it's only as good as our last liquid and that happened to be the best of all of last year going back to january. interest rates move down, not as much as i would have thought that's most likely because flight to quality, flight to safety has taken a big bite out of all the buying that has occurred and it's a bigger task if we look at the preopening equities, very meager bounces. and all this concentration on europe, i would saw. 19 trillion in negative rates, much of which was in europe. i would be shocked if we didn't see volatility in a banking
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system that was anything but profitable in europe melissa lee, back to you >> rick, thank you steve liesman joins us how does this factor into the mix of factors to weigh? >> it's a good report if you're fighting inflation it shows less inflation up the inflation change here and there's some things in here that are in line with what folks thought was going to happen in the process of bringing down inflation. the one that stands out to me, a couple of them the ppi for trade is a proxy for margins being down 0.8%. transportation of warehousing, melissa, we've been following declines in shipping out there that's down and of course there was the energy decline overall i think this is a positive number for the outlook of inflation ppi can lead, can go along with
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what's happening at cpi. when i look up the chain, process good for intermediate demand up 4 tenths i'm going to take a part of -- january was a real outlier february could just being a kind of bounce back or and i wanted to tell you what's happening with the futures here. we were 50-50 for a minute and now we're still banking on that cut. there's a weird trade out there. i'm going to talk to some fed funds guy and ask them what's going on the quarter point is up more than 50% probability after that if you look at the january 24 contract, it goes straight down and tremendous amounts of cuts are built in for the back end of this curve here. >> thank, you.
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>> we'll also talk about bit coin' rally we're looking at a stock off more than 30% this morning. 28.29% is there contagion in europe ther ing, and a personalized plan ♪ to guide you through a changing world. ♪ woman: at first, it was just a team. now, i can't imagine my life without them. man: that coach changed our son. on the field and off. (cheering) (cheering) (cheering) ( ♪♪ )
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worse here in the united states. the dow off about 602 points, the nasdaq down 167, s&p 500 down about 70 points off the back of what we're seeing out of european markets down across the board on the large part on the back of credit suisse that is now off about 30% this morning as nervousness about those banks persist, 27 1/2, 28% i want to bring in an investor to talk about this morning's selloff. mike, what do you think is going on here? >> listen, you know, this reminds me a lot of 2018 december when the fed had this idea of one last hike and of course it sent in a short period of time, information has changed dramatically the commodity market is telling you and oil market is telling you we are heading into a
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recession. we are going to have a credit crunch in the u.s. and globally. so fixed income, they'll tell you we'll be heading to recession and we'll be cutting rates sooner than you think. that's a huge difference in psychology if there was ever a time to be in bitcoin and crypto, this is why. the fed prints more money whenever things get to this point and woor seeing that >> you saw where crypto had fallen as a sung of all of that. but you it larger question right now is are we in -- i don't want to call it a game. is there ittin owes of contagion in our banking system. do you think it limited to what
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happened in europe do you think what happened with svb is enough? >> listen, there is contage to move towards four or five big depository instougss in they sort of did guarantee the depositsish but they really didn't even the notion of why am i taking any risk? that story is out there. it's hard to put it back in the box. maybe yesterday it felt like maybe it will get back in the box and another guy hits so i think that congress and the fed is going to have to do something more dramatic on deposits or we're going to see a constant pressure of these regional if how to banks rebuild
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capital? they lend less you'll see a credit change in the united states and that's going to affect things in a macro way. >> so what do you look to if in this environment if you are a believer that there as a looming cred you. >> i think you want to be long, gold andville if you go back and look, when that chart turns, it turns for a long peepd and you want to be long fwochl but that's sort of bunker trades >> listen, we're at a shift of fact stocks will be interesting they probably go down first and then bounce because the fed's shifting policy. and powell's got a really tough job. just two weeks ago he was
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talking about i got to raise rates to 6% or higher and now they'll be like, oops. there's an old adage, the fed makes. at a bare minimum they're going to pause. >> do we finally see real cracks in the credit market as displayed in let's say held up pretty decently since october lows >> i think you will. i think you will >> again, if nothing else, the nervousness is investor downtown of is lot of our -- are thinking hedge funds are having a tough run of it. when people lose money, risk comes down so we're in this massive risk
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off. that will like any fire burn itself over time but we're in the second, third inning of it, not the ninth inning >> speak to the bitcoin of it all. you know, i think that there's -- we sort of went into the ftx vortex sr. it's going but crypto at large you think there at that a frpg i mean, you had fpx and fum you are the u.s. fwft with choke point 2.0, really going after crypto in a re targ eed which. that think they have a constitutional right to own an
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asset of their choice, right the 200 million people globally care a lot about this ego system and prices are a lot high person o a volatility adjusted sharp ratio basis, it has been a better investment in three months, six months, five years than jpmorgan, sorry, jamie, then google -- then just meant any investment so this thesis that, oh, it's so risky isn't true i'm volatility adjusting this community is growing in passion. bitcoin came out of the financial crisis because people didn't trust banks i and i got so we are right back to that taken 0le and i think that's really important that it's california van id. >> here you have a situation
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where the banking system looked like you could futurer and there was the government there to backstop it. and frp and i'm just taking the other i'd of this for a kd forecast that somebody who lost hundreds of millions of dollars in bitcoin in there account and they can't get it back it's inaccessible. they lost the password, it will what do you think of that? >> i think that's why the crypto people kind of love cripple nope f own your keys, own your crypto there is a responsibility to it. >> do you laugh at the depositors, the venture capital lists and that i you people are ridiculous then? i don't think you think that
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>> i think the government did the right thing. >> but that's my point if you're living in this personal responsibility category, i would have imagined you'd be saying to tell with them these guys should know that they're putting their money in a ricky play. >> andrew, people behave the rules we set for them. the rules we set in traditional finance in america have broadly been our deposits of guaranteed. so much we have de facto guaranteed deposits. people who have bought into crypto know there's no government backing them up so a lot of it is behavior like what are the rules that have been set about how we play the game and so i do think -- listen, crypto is not without its flaws.
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bitcoin is not a securitiy of theory there are lots of other things can you debate the regulators are still going to come after it, tho. >> nice to see you mike. it's always interesting to hear the different perspectives on all of it. as you were speaking, the dow continuing to slide, down now 6625 points. >> the ten-year sub is down 3.5% a lot of big moves this morning. coming up we'll get jim cramer's take on this morning's premarket selloff. "squawk box" will be right back. ! what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations,
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oh my, oh my, we're going down to the new york stock exchange now jim cramer joins us. we're looking at the markets, got -- i was about to say marginally better, but not much. we're looking at credit suisse off 30% this morning, so many european banks the cpi data from yesterday and the data we got this morning, put it all together. >> well, i do think that around 11:00, the selling will end from europe doesn't mean their selling will end, but the cpi number was benign at 4:00, before we knew about the problems of credit suisse, the market was looking exactly
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flat so, we -- as my colleague, david faber would say, if you didn't know that credit suisse was in trouble, you basically were on the moon am i going to sell advanced micro and meta off credit suisse we have a very different set of problems here. by the way, we have a lot of research that says, own these regional banks i'm waiting for the government to indemnify all the regional bank deposits. we have a lot of flight, and we came pretty close on sunday to being over the precipice, andrew, and i think we're kind of like starting to realize, wow, did we come close that's a lot of what the selling is >> steve liesman was on yesterday, and he had that quote, i think an unnamed treasury official, that effectively said that deposits in this country are indemnified effectively or, you know, across the board. the question is, is that true? >> yeah, let's think about that. you know, i said -- an unnamed treasury official. okay
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well, i mean, if we look back and we say, well, you know why i took all my money and kept it at blah, blah, blah regional bank an unnamed treasury official said it was okay i'm sorry, you're a moron. i mean, unnamed treasury -- like, name yourself, and say, listen, we're indemnifying we're going to guarantee an unnamed treasury official, i don't want -- i think that's what i would call a slim reed. >> jim cramer, there's so much more >> how about an unnamed fed official -- an unnamed person who did the work on my dishwasher >> i was going to tell you that at least anecdotally, the good news, i called around to some of the big banks yesterday, the good news was, i was hearing their phones weren't ringing off the hook >> that's absolutely true. business as usual >> and it was business as usual, meaning people weren't trying to open new accounts, and i thought that was positive news >> the only news i really want
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is, how much money is jpmorgan getting this weekend how much did they get in this weekend? >> good question >> and then the first national bank of ryan reynolds, how much is that worth? >> jim cramer, we'll have to call ryan reynolds we're going to see you -- >> i'll see him in an hour i'll let him know that you asked "ua bm. >>sqwkox" coming back after this i was born on the south side of chicago. it has been a long road, but now i'm working for schwab. i love to help people understand the world through their lens and invest accordingly.
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♪ about a half an hour to the opening bell, and we're still looking down at a sharp down day on wall street the s&p looking to be off by almost 80 points the dow looking to lose 630 at the open the nasdaq looking to be down 191. joining us now, sylvia jablonski. what do you make of today? how worried are you, if at all, about the solidness of the banking industry >> good morning, melissa well, you know, i think you said it well about an hour ago that what we're worried about is we don't know what we don't know. so, i think that we're in this situation where the market is going to be volatile there's going to be a lot of uncertainty until u.s. authorities can essentially give us some confidence or shore up
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some confidence along with european officials that the banking system is stable i think that there are too many outliers there, and we don't know where we're at, and in the near term, that's certainly going to affect stock prices >> we're seeing that in terms of where we're seeing the moves we're seeing the moves higher in the dollar we're seeing a move to treasuries with the ten-year yield, is that going to be the name of the game, at least for now, safety? >> i think safety is going to be the -- safety or sidelines are going to be the name of the game for the next couple days if we get positive news around the banking sector being stable, i think if we get a fed chair that maybe talks about pausing and brings down the hawkish rhetoric and kind of we feel like a fed put might come, and i think that turns things around, but remember, there are still companies out there that are well capitalized there are a lot of types of tech stocks like apple, microsoft, amazon, google, they actually have a lot of cash on their
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balance sheet, and they were the most unfavorable players and the most highly impacted by rates, so if we think about rates easing and those companies having strong balance sheets, there are places for investors to look, but you have to have the stomach for it, understand that risk is likely to the downside in the near term. >> it's interesting, this move in treasuries this morning, with yields coming down, it actually makes the stocks versus bond question maybe a little bit more difficult in some ways because, you know, before, i think you ran into a lot of equity people who said, bonds, because of the yields, but now with yields below 3.5 on the ten-year, maybe it's not so clear anymore. >> yeah, and what's also not so clear is that you haven't really seen equities rally off that news in the last couple days thursday and friday either the systemic risk or potential systematic risk that we have hanging over our heads with banking is just throwing everything off kilter, but to your point, i think equities start to look a little more attractive at these levels >> sylvia, thanks.
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let's take a final check of the markets. half an hour to go and we're down 74 on the s&p 500, down 173 on the nasdaq. moves in the treasury markets, sharp. these are some moves that we're seeing, ten-year below 3.5% right now. >> thank you for being here. >> great to be here on a day like today see you friday >> join us tomorrow. "squawk on the street" begins right now. ♪ good morning, welcome to squaw "squawk on the street," i'm carl quintanilla with david faber and jim cramer the surprise drop in february ppi sends the two-year yield down to 3.88%. market pricing in a full point of cuts. our road map begins with fresh seasonal sector fears. ces's biggest shareholder ruling out further backing. plus, wholesale prices did post an unexpected february, and
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