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

retail sales fall. futures, of course, as you may have already seen, are pointing towards sharply lower open we'll also spend a little time talk about blackrock larry fink's letter in which he warns a third domino could fall. let's begin with tresh worries about the banking sector, credit suisse tumbling to a new low saudi investors say they cannot boost their shares european bank shares have taken a hit, dragging their u.s. counterparts and the global markets lower. that's in addition to larry fink's letter. >> the market was flat at around quarter to 4:00 before we got news that the saudi entity is not going to put more in i want to comment very clearly on this. there is a man to my left who has said, ever since arkegos, that you should be quite aware that this bank has a lot of

problems more than just mistake-prone so, david, when everyone else felt these guys were the pristine bank that we knew in the '80s and '90s, you were saying, perhaps it no longer is. >> they have had a series of missteps and different management teams at credit suisse for quite some time, and that has made it very difficult for them to progress that said, the current management team, which has been in there not for that long, has embarked on a restructuring time, a cost savings plan, that we have talked about, but we've also been talking about credit suisse over the last, let's call it, four or five months, because there has been a flow of assets, in this case, you know, we have been talking about banking crisis, it can get confusing but here, we're talking about wealth management accounts this is what their main business is in switzerland. wealth management. those accounts have been moving out. that has been a concern. it's been a concern for shareholders it's been seen in some ways as a barometer of confidence in the

overall institution itself, and it goes to the earnings power of the company. it's one reason why the company did raise $4 billion only a couple of months ago the saudis being the largest single investor in that new equity raise and, of course, the market cap now is already lower than it was when they raised that additional $4 billion by the way, that was $4 billion on what was around a $10 billion market value at the time you can take a look there. that was in november, that 9.9% stake. as carl said, we've got the saudi national bank in an interview earlier on another network saying, we can't go beyond 9.9% for regulatory reasons. they did affirm their belief in the transformation plan that is under way. but these things take on a reality of their own, whether it is warranted or not. it is often the case, the cds, the stock price, the questions that continue about outflows

from the company in terms of people saying, i don't need my wealth management account there, that's a question mark here. i will tell you guys, though, and obviously, as you might imagine, i've been speaking to a number of people involved with this, close to the bank as well, 14.1% capital ratio is strong. liquidity ratio of 144% to as high as 150% is quite strong this is not -- this is not the banking crisis we saw here with silicon valley bank or signature, where you're talking about a bond portfolio that's deeply under water or something else this goes back to the overall concern, which is, people just keep saying, "why do i need to bank with you? i can across the street. they do have, by the way, a very significant plan with the swiss national bank in terms of contingency plans that would provide them even more liquidity, should they even need it, but the question, jim,

becomes, does the marketplace need credit suisse and that's sort of where they are in a position where, you know, you got to tell everybody. we're good "we have a strong capital ratio, we have strong liquidity," but it may be ignored. >> i do want to ask you, david i mean, you said, does the market need it not clear. do the swiss need it remember when citi was in trouble, well, one of the many times, but there was one time where it was not in the interest of our nation to have citi go under. is it in the interest of the swiss government to have this go under? do they not care >> i don't know. my understanding is that they have plenty of contingency plans that would not include that, but simply providing liquidity if it was necessary, which, at this point, it doesn't seem to be this is not a liquidity issue, because you're talking more about a wealth manager by the way, we also know here in the states, they're splitting

off what will be once again called first boston. they're essential running the company independently, but the assets have not been put into the new entity yet that is probably a few quarters away from being completed. they did complete the sale and take off their balance sheet of all the securitization to apollo, the securitization business, essentially. they have been moving forward with cost-cutting, but the market, you know, may be ahead of them. and it can be very difficult to continue to reassure a marketplace that just doesn't want to hear it. >> look, our interest rates are just plummeting. it's just incredible that causes tremendous fear, like, what's going on with the bonds? larry fink will talk about that, illiquid situations, but one of the more illiquid situations is shockingly the u.s. bond market. the u.s. bond market is like a rus russell 2000 here. but i would say that the idea that we are, like, 2011, where we're going to sit here and say, i'm worried about x bank in this country because of credit suisse that's just not true

as a matter of fact, if you're a european bank or a european wealthy person, you might want to be selling our stuff to raise capital, because it's better than that. we're going to talk a lot about what larry -- >> that's an interesting point obvious, not just duration mismatches that's what we saw with silicon valley bank, for example they went long and had deposits that were short-term in nature as they quickly found out, but he's also talking about liquidity problems in terms of driving asset owners so, what do you do when you got to sell? >> right >> you have to take big markdowns is what you do >> right now, i mean, remember, i think that was written -- i know he updated it, but before you could go to the discount window and before you could borrow against these under water bonds, governments, as if they're par, but carl, one of the things that happened, i came in this morning, first republic bank was up a couple, and i said, oh, someone wants first republic bank up, because you don't move that common stock at 5:40 a.m.

you watch these things and say, oh, please but the banks that were -- whose stocks were in trouble, not the banks are, i think, clearly coming home to roost again at a time when they -- a lot of these banks could sell paper and not be nearly as under water because of this remarkable move in treasuries so, i think that this is a really good time to suggest, whoa, if you were selling off credit suisse, that's mistaken i do think that we're going to hear that eventually, and i wrote this in a very long tweet this morning, that it's time you can't have an unnamed treasury official say everything's fine. >> right >> you need a named treasury official saying, we have total confidence and explicit guarantee for now, for more than just $250,000. so, go try it. >> so, the upgrades today of schwab and cs, of discover at b of a, of truist at citi, those make sense >> the discover, no, because

they talked about a dramatic increase in credit losses. the swab, what we had there was a very good interview with our own sara eisen where the ceo bought 50,000, had money inflows, and then, the evidence lab, david, i know you always follow the evidence lab. >> oh, yes, i do >> because of "csi." >> i love their show on cbs too. >> well, it's unbelievable >> it is incredible. >> they come out -- >> their flu thing is just unparalleled >> they initiate buy on western alliance >> this is the time -- david, western alliance, too early. >> you think it's too early? too early for credit suisse also, then >> credit suisse is getting -- remember, one of the things i learned when i was at goldman-sachs, being taught by the great david tepper of the panthers, is that stocks stop at zero they never go below. >> no, they don't.

>> no negatives. so, let's get away from that whole concept. >> well, they got $1.80 to go there. we got to watch it closely again, the market cap with credit suisse is some $7 billion in other words, all the $4 billion they raised from the saudis has been wiped out. by the way, the saudis,though, continue to be confident in the transformation plan is what the head of the saudi national bank said gets confusing between the two snbs, swiss and saudi. >> the two-year is under 4%. >> that rapid move from less than a week ago, where were we on the two-year? >> 5.12%, somewhere around there? >> we've never seen a move like that >> that's good again to brang br bring up larry fink. you bought a common stock at 5%,

wow, you made a big move >> a very big move >> look, i have -- i'm only allowed to own treasuries, and i want to sell the treasuries that i have bought last week because i was worried about the bank i was in, because it's just a big hit. you're not supposed to make money on the two-year. that's not supposed to happen. and these moves are hurting someone. someone is, like, on the other side of these trades >> yeah. we talked earlier in the week about hedge funds or whomever was short or levered short >> leveraged short so, we don't know yet. we do know that this incredible attempt to be able to say that you should buy these regionals, we have great cfo counsel, fantastic dinner last night, where a lot of the cfos were telling me -- i'm not going to mention specific ones -- but they're saying, look, we're kind of in trouble. we want to keep investing in our community banks, but we can't rely on an unnamed treasury official we can't go to our ceos, and say, i kept it with that bank

because an unnamed treasury official told me i was fine. i think that person would say, you know, you're an unnamed cfo. >> yeah. >> we're going to talk to elizabeth warren later this morning about what options congress has or may not have goldman, last night, did say that the actions by the government likely do stem deposit outflows, and they don't expect congress to make any changes to deposit insurance caps >> well, i think that there's ways to get around having to go to congress in the short term. we've seen this. jay powell, the treasury, they've all been much more aware that if we wait for congress, it's too late. by the way, the one thing that republicans and democrats all agree is that their biggest givers are the people at these banks. they can't have these banks fail we have a doctrine in the country that we favor these banks. there's nothing -- >> but what goldman is saying here, what about the explicit guarantee? should we just have that mitt romney has, i believe, been

saying that's where we should go >> i think that's what we have to do to end this. >> that continues to be the question in terms of the banking crisis, if you want to call it that, here in our country. moving away from europe for a moment will it -- we talked about that. yesterday was a positive day today, it may be a little more damaging because our friends in europe are having a rough go of it >> david's absolutely right. i do think that -- think about if the unnamed treasury official came forward and said, look, you don't have to worry, because we will backstop you. and then everything that you sold today, then, david, i've got to tell you, pac west -- >> but, you know, there's still a question as to whether the stocks aren't correct in recalibrating the potential earnings of these banks. >> they are -- >> their y're going to have to more for deposits. it has focused people on their held-to-maturity portfolios, the hit they may take, although

things are looking better with the change in rates. >> yes mr. ray of sunshine. >> and then, you know, we can -- economy, you can go through it, but there is a question, particularly for those who relied on people they had commercial relationships with being willing to have deposit balances that really weren't earning any interest that may change. so, if you're first republic, what's that going to look like for you? >> yesterday was the day where everyone said, that's the time to buy these halftime, everyone was buying first republic, and i said, i think you should buy apple >> well, it's not just -- i mean, it's a lot of bank ceos, pac west among them. you mentioned schwab >> but they're just banks themselves they don't want -- no one wants the taxpayers to pay for this, so they're going to levy a tax on fdic, and maybe they're going to make it so your earnings

power is lower this is not an equity issue, not like 2008 where the banks didn't have enough equity remember when tim said, you got to buy more? it's deposit outflow >> it's not the capital outflows base on the asset quality. it's not because they made bad loans. >> no, it's not that they bought bad paper. look, if the federal reserve takes rates to a generational low, and you happen to have the bad luck or bad timing or ill-advised nature of going in and buying bonds, treasuries, governments at a generational low, should your bank be closed? should you depositors be hurt? i think that, yes, you have to wipe out the common stock. those banks are dead but i don't see why the depositors should be hurt because you bought treasuries at a generational low that's not the fault of the -- but all the cfos said the same thing to me, carl. do i really have to start

checking to hold the maturity of a bank >> you're not going to expect people to do that. you may want to check the tangible book value. >> you don't want to be in citi, because the tangible book value is very different from the stock price. >> thanks for that, jim. >> i was going to tell you >> please do >> citi has the greatest cash management business in the world. that's the one that the cfos all want to be with, because they know how to manage cash, and that counts toward the cash they have that was a message that was actually some positive news. >> i didn't mean to interrupt you there. >> big part of the debate this morning is, when it comes to the fed, are they -- do they care about ppi negative month on month? do they care about retail sales? is it all about financial stability? >> i think -- yeah, it's very funny that people feel the most conservative thing they can do and most prudent is to do 0.25%

so nobody thinks they're panicked jay powell, i think, is going to do, based on the evidence, he's not going to say, "oh, i have to put on a charade of 0.25% when i said i got to wait to see if there's something that happens." larry fink writes a letter, and he does revise it after what's happened i mean, i think jay powell is not sitting there saying, "you know what? i don't care that the banking system seems -- a lot of regional banks are teetering." i think he's saying, "well, you know what, that's going to cut loan growth. >> apollo today says the small banks are a third of loans in the country, and they're going to spend several quarters rebalancing their balance sheet. here's the jpm desk. cpi really doesn't matter. what has happened over the last three days has done powell's job for him. credit conditions will collapse, economy will slow even in a good scenario we'll get inflation rolling off as a result. >> i think that's true before this, we were worried about commercial real estate and tier two buildings

well, i'm not worried about them i'm worried about people getting loans right now, because these banks are trying to figure out what their deposit base is >> it's only wednesday, guys yesterday, we had a positive tone overall, but i said there were people who were down in d.c. that i was speaking to. >> same. >> talking about the concern about another big wobble, so to speak. i don't know if that's today and whateer t they're seeing in the european banks, but every day has its own tenor at this point. >> we're waiting for janet yellen to say, i think people would be ill advised to take their money out of these banks >> they would be >> what would happen >> there's an implicit guarantee. >> let's make it explicit. that's all what's the problem with that then you wouldn't have to -- if you're a corporate treasurer, you would say, "you know what? i'm going to keep my money in xyz bank because we just got an explicit guarantee from janet yellen." you can take that to the bank.

>> literally >> yeah, literally you know, david, they could -- remember -- never mind i was going to mention a storm >> think about it during the break. >> no, i was going to mention a movie, another reference, and you always get mad at me >> i do, because nobody knows what you're talking about. don't do it. don't do it. don't do it. >> it was a steven seagal movie. it was not a ryan reynolds movie. >> ryan's having a good day. we'll get to other news this morning. >> i could use some gin right about now. >> we'll stay on top of banks and the fwlglobal selloff in the next hour, senator warren, who has been calling for a probe in the svb collapse. the futures on this wednesday, don't go anywhere. 1234r0e678 did you ever stress about us having three kids? no, that was always part of the plan.

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we're back keeping a close on eye on shares of credit suisse this morning. it's a story we have been following for many months now, of course. management changes at the biank going back to so many different missteps over years and the new plan that has been put in place by the current management team to cut costs, to hive off the investment bank here in the united states, to sell the securitization portfolio as they have to apollo none of it, though, enough to

instill enough confidence in the marketplace, perhaps, to keep people from taking their assets elsewhere and that's where we're focused this morning now, listen, this is a company that has a strong capital ratio, 14.1%, strong liquidity ratio, 144 to 150% of their liquidity needs. none of that seems to matter right now. earlier this morning, our hadley gamble over in europe did speak to credit suisse's chairman. this was before the action we're seeing right now, but take a listen to what he had to say >> for you, specifically, at credit suisse, would you rule out some kind of government sh assistance in future >> that's not the topic. look, we are regulated we have a strong capital ratios, very strong balance sheet, all hands on deck, so that's not a topic whatsoever >> i think one of the key questions, though, continues to

be, what are they seeing in terms of outflows or not that's what the market had been focused on they had stemmed -- largely stemmed the account departures after a very bad october and november, but you have to believe in this current environment that may have changed, even if it's not warranted, as we can say over and over again, and i'm sure that as mr. lehman or the company's ceo would happily say as well, in their belief, it's not warranted. >> well, let's think about all the bank prices. let's go back to '80, '82, no savings and loan said they were in trouble and needed assistance '90, '93, no bank said it needed assistance 2006, no bank -- 2007, no bank said they needed -- there is no bank that would say they need assistance, because it wipes out the common stock i think you have to do that denial if you hope to have some sort of financing, but it would

be behoove me to say, who would buy it at $1.80 if they said, we need government assistance an assurance can't be made at a certain point, it's not up to the person who's running the bank it's up to the person who's running the country. >> right >> and this is a storied institution that would not make the swiss look good, and the swiss have other banks >> we'll watch it, obviously, falling below $2 this morning. a record low we'll talk about oil as well $68.50 this morning. >> just collapse >> that's fresh lows for the year going back to mid-december. dow futures are off their lows but not by much. back in a minute (funky electronic music)

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. let's talk some markets here obviously, it's going to be an eventful open. we mentioned oil before the break, jim got to $69.76. >> yeah, i mean, that's a combination of, europe is obviously slowing as we think

about it, maybe america, but we're in a deflationary environment, and all commodities deflate. it just doesn't matter it's just what happens i think that people are -- the take your breath away trade right now is treasuries, and i think the people's view of treasuries is that there's going to be a stopping and commerce, if there's going to be a stopping in commerce, then sell anything that is boosted by commerce, and that's oil plus, we also know from the iea that the russians are pumping much more than we thought they could. the oil stocks were among the strongest performers yesterday >> i mean, on the drone crash, there might have been some geopolitical jitters, yeah >> i think -- what i'm going to caution people is that whatever you see on your screen now may not be as bad after europe closes, but it is a little daunting to see so much deflation in front of a fed meeting where we talked about inflation. and larry fink talked about steady and consistent -- >> that's true larry sees 3.5 to 4% for the

next several years, going to be stubborn not a new view from larry, but reiterated today in his letter >> i love his letters. they're incredibly thoughtful. i know everybody wants to focus on what he says about liquidity issues but he spent a lot of time talking about time exchange, and look, that was a big issue. i'm trying to make money for you, which is why i'm worried about climate risk this was the definitive piece with just says, it's not about how he feels it's about earnings per share, and that's quite effective i don't want to overlook that. >> 3,865 here at the open and the dow down about 480 meanwhile, jim, jpmorgan adding to their underweight on equities they were already underweight given some of the concerns they have had for a while b of a yesterday prefers cash this year to stocks, because they're looking for total return

of 2 to 3% on the s&p. >> i think cash is earning less than it was a week ago look, i understand why everybody's very bearish we did come -- we had a horrible thing happen this weekend. we dodged a bullet i do know that when cotton illinois failed, now going back to the '90s, one of the largest banks in the country, you had a run in the stock market that was up that was so dramatic that it was the ultimate clearing event. we were worried, worried, worried. i do think if someone comes forward from the treasury and says, look, it's way overdone. we're monitoring we understand the interest rates have come down dramatically. if banks want to go right now and refinance, we'll stand by them but david, it takes someone to come out loud from the administration and say that we will make it so that deposits that are in banks that are smaller than the big ones, specifically, are fine >> right, well, that would calm any other fears, although that

said, what was done on sunday should be enough to actually make people feel comfortable it should be and it could be. >> but if you're a cfo, how can you justify staying with a bank when you don't know what their -- you have to look at their held-to-maturity some of the cfos last night were all unified that those who yelled "fire" using twitter may have bordered on the irresponsible. >> that's been going around. >> yeah. >> jim, s&p yesterday, they said, we did put frc on credit watch, but we don't see ourselves adding to that list because we're not seeing the deposit outflow, at least as of this moment. >> as one major banker told me, it's bau, jim. business as usual. >> that said, we don't know the numbers. we haven't gotten numbers. first republic, you're not going to give us numbers you don't want to. >> is jpmorgan going down? well, there's -- this is not

really a quiz, but if we think there's less lending because things are a little more frozen, if we think there's commercial real estate problems, david, if we think that every bank is going to be levied -- what are you looking at >> i'm trying to read my texts, because it's realtime here >> go ahead. i'll talk to carl. >> you can still talk to me. i can do both. >> you can multitask >> yeah. >> i'm just saying that we don't know what the levy will be >> we don't, and we come back to it again, the earnings power of these banks may certainly be impacted, even a swchwab, some would say, were they sweeping everything they were taking advantage of very low rates not questioning their ability to survive, but simply saying, their earnings power >> their earnings power is reduced. >> that's certainly going on other names, it's a different story. i think there's still concern about first republic, warranted or not, but -- >> well, they did lend against

securities that were not public. >> right and then you've got the concern of the european banks. we started the show with it. we should go back to it now. credit suisse in particular, because there's an important point to be made here, you know, which is, i mean, to jim's point, in a sense, if you are a counterparty, you're always looking, well, how much do i have there do i need to increase my margin requirements when dealing with credit suisse? >> thank you that's a really big issue. >> if you increase your margin requirements, where does that come from? that depletes their capital ratios to some extent, so that becomes an issue, and it keeps building on itself >> right but these are things that, if you're a money manager, you just don't want to worry about. i mean, you just say, "you know what i don't need this trouble. i want to get away from the banks. they're too risky. that's just kind of the way money managers work.

it's not like netflix is down $5 >> actually, we got a new call on netflix of oppenheimer reiterating a buy. their basic point is, less competition because others are focused on profitability >> i thought that was a thoughtful note. i think that the thoughtful notes are coming from -- away from finance because what happens is there's money that gets sold, and then it's going to be put somewhere. if you see rates where they are, which is a dramatic decline, then suddenly, you say, wait a second, that yield that i was getting that didn't look competitive from a major company is a lot more competitive today, so i know about the quality cash but that was a better call last week >> housing is working. i don't know if that's lennar. >> stuart miller, anyone who was on that -- they do the conference call this morning, but the -- their release was rather incredible. they're doing very well. now, the overall market is down.

the stock was up last night, but in this environment, where the fed is doing everything it can to cool housing, good luck it's not happening housing remains very strong. once rates drop, they actually were very -- rates dropped in february, so the orders spiked >> we asked spence about that yesterday because we wanted to know if the reaction function would be the same as we saw in the first part of the year would it be? do you think the consumer mindset, the home-buying mindset is different where relief and mortgage rates would result in the same bounce in traffic >> stewart miller said, absolutely yes he's the dean of that group. i've known him, knew his father at lennar, the great home builder in this country, and i was shocked at how sensitive -- you also had diane talking this morning, people buying >> yep >> people buying with cash david, if we could just go to

11:40 this morning -- >> you want europe to close. >> i want to see when europe's closed, because we're such a great source of -- and you know, right about that time, maybe even earlier, ryan reynolds will be here. >> i'm very excited. i know you are >> yeah. >> yeah. >> well, because he's a great man, and i don't think that -- i know it's not time for levity, ted lasso, but there is a life outside of this where there are companies like mint, which is being bought for more than a billion dollars, which is ryan reynolds' company, by mike sievert. that's happening today that's happening whether the swiss make better cuckoo clocks than anybody else in the world >> you can ask ryan, where is he going to put that money, in a regional bank? >> remember, he's canadian a lot of people thought rbc was going to buy who floated that rumor don't you hate that? >> in a market like this, you do need to deal with rumors as

well, that can be, obviously, incorrect but still have an impact >> right >> because there is a lot of fear >> but again, i go back to, we're worried about credit suisse but when the -- when the saudis pulled out is when this market dropped. otherwise -- >> well, they didn't pull out. >> well, buy more. >> the saudi national bank owns 9.9% they were the big buyer when the company sold $4 billion worth of new stock in november. obviously, the market cap now is -- that's all gone. that money is gone away. but that was to help with the plan here, the transformation plan that is under way at credit suisse but what the saudis did say is, we're not going above the 9.9% they did also say they believe in the transformation plan, but again, with credit suisse, despite what are strong capital ratios and strong liquidity ratios, they don't have to worry about counterparties increasing the margin requirements, which

puts pressure on them. liquidity. it ends up being hour-by-hour in a situation like this. >> i want to get away from that for people at home they don't want to trade hour-by-hour >> i'm saying, for credit suisse, it's hour-by-hour. >> you keep mentioning about the ratio, which tells you that someone should come in, and i think if the government were to go -- look, the saudi saved citi at five. the saudis are not saving. but if you had to ask me, what stock you could buy right now that would be up at the end of the day? >> meta? >> bristol myers 3.45%. that's like what you were getting with treasuries. remember when treasuries were at 5 5% >> whose letter did you like more, larry fink's or mark zuckerberg's from yesterday? i >> i thought mark zuckerberg's was an epistle, not unlike what martin luther slammed to the door >> meta backing off nfts

the glowing sell-side calls yesterday, i think evercore called it a slingshot opportunity. >> moft nathanson raised the money they're going to save. even if the revenues stay flat, there's an explosion >> some believe with tiktok on the ropes, maybe revenues don't stay flat. maybe they sell. >> i understand that instagram is doing very well by the way, i was speaking with someone in commercial real estate who said the possibility that they'll just pull out of europe is not -- is possible but they'd have to pay a lot >> well, they have the space, and they're leasing it for years, so you can take -- >> you have to pay out you have to pay. >> really? you sure >> they're saying, you got to come in or else. >> you got to come into the office why would you think that >> i think you can consolidate you don't need all those offices. i think you buy meta >> i don't know the specifics of their real estate contracts. i do know that they've leased a lot of office space, and it's

not always easy to get out of that >> well, you can pay to get out of those deals, but i think that he's -- he's focused totally on profitability, and next year is going to be -- remember, it's efficiency 20 times efficiency. i would buy that stock simply because i now know at 14 times earnings, it belongs at $270 >> some might think $305 >> yeah. look, it's a cash machine. it was -- they had too many people he's been overly conservative, i think, but he's the first -- he's running his company as if it's a great american industrial company. >> i want to ask you about apple while we're on mega cap tech because the foxconn warning about consumer electronics demand, sort of rejiggering their bonus schedule internally. >> right, but i think the old days, when foxconn was apple, are over and i think that apple has always been terrific at disguising who they're using, but it was hard to disguise

foxconn. i no longer regard what foxconn says to be, you know, when they sneeze, apple doesn't have a cold when foxconn has a cold, i think apple has a mask on or something. that must be ryan reynolds >> maybe, yeah i hope everybody's okay. m&a front, guys. we've got -- you expected it i was hearing a lot of concern, whether the surface transportation board would finally approve canadian pacific's acquisition of kansas city >> what'd i tell you >> they did. they have. what was at stake here, if you recall, because of the structure of the deal, which was announced years ago, we had that battle that went on, canadian pacific won it, and then they agreed, because there was so much concern about the regulatory pushback, they agreed to basically buy kansas city, all the stock. they took that all off your hands. they would be in such a disastrous place if they had to sell all of that

>> what a deal >> but they don't. kc southern, you're not going to see. they bought that already now they can consolidate it, and you can see the impact on canadian pacific stock prices. >> they have a trunk line from canada all the way down to central mexico where they will be able to import everything that's too heavy that's made in the truck and car business they had it. i would buy that >> if i wanted to, i could look at appendix a on page 187 of the maps -- at the maps. this is a 200-page filing from -- decision from the transportation board you want to go to the maps page? i'll go to it. >> this is an amazing transformational deal, because ksu is one of the greatest railroads -- >> look, the nekus river bridge. see how far it goes? beaumont, texas. >> it goes to mexico >> wait. routes through houston terminal via trackage rights.

there's all sorts of great things in this file. you're going to enjoy it >> this created a rail colossus, not unlike what vanderbilt put together when he built the new york central >> they've got a map of iowa >> would it kill you to go to mexico, for heaven's sake? page 193 is mexico >> meanwhile, downgrade of norfolk southern today out of argus. they go to hold on the cost of remediation in ohio. >> east palestine, i had clean harbors on that's a tough one that's going to be a tough clean-up and i think that what's going to happen is if you are running your railroads at 40 miles per hour, maybe you got to slow it to 25. maybe -- they'll come up with rules that make it so if you're carrying hazardous waste, maybe those have to be much slower it's going to hurt the profitability. >> speaking of transports, jim, interesting tables yesterday

circulating about the fraying of the reopening trade, and that's airlines, but also cruise lines and hotels >> i'm not buying it there's just still too much in the long money, short light. we still see -- if you could get, by the way, the cpi, the worst part was tickets >> right, but don't you think if jobless claims spike, are we going to keep planning vacations? >> we're now starting to use, according to katy huberty putting out that chart for morgan stanley, we're now tapping into savings, trying to get that from visa and mastercard and not just from the excess capital that you got from covid. but you know, today is the first day that you can go to china >> and get a visa. >> and get a visa. and so, we've all been waiting for china to reopen. china has not reopened china reopens today for business, which is rather remarkable >> also the first day that you

can use chatgpt 4. yesterday, when we were doing the "mad dash," you were talking about nvidia i was talking about my concerns, broad concerns about a.i >> they got a 34 on the a.c.t. >> they did well on the s.a.t. >> i know that >> crushed the bar >> i studied for, like, six months they crushed the bar >> and a.p. english lit, like 18th percentile. >> not great they'll get there. >> they're derivative. >> we're that much closer to the end of the human species, i think that's fair to say don't you? >> what does that chatgpt 4 run on >> excuse me >> what does it run on >> it runs on nvidia chips >> thank you for saying that i thought you were going to say, "dunkin." >> like a defense attorney leading the witness. >> right now, jensen huang is in deep, almost not -- deep dive for the march 21st >> it's going to be great. >> it is >> that nvidia stock is going to go really far when all those

robots are running the planet and we're their slaves i'm sure they're going to take that as currency that'll be really helpful for you. >> you continue to go with the sky net thing. >> i do. i still don't like the fact that 10% of the people working on this think it's going to be the end of the world and they're still doing it >> jim talking about things in the banking industry we got two things in streaming we talked to jon favreau, creator of the "mandalorian" on disney plus. here's what he said. >> he was there when i first started collaborating with disney back around iron man 2 it's so interesting watching someone like iger both

anticipate what's coming next but not push too far and too fast into the company. there are fans, certainly, but there's also stakeholders and what you anticipate is coming and how to prepare for the future, but still, let the people who you're working with feel that you're supporting them, creatively what i like about bob iger, he knows it's about story >> we had eisner on yesterday, who seems to think disney can work through some of these issues in florida on culture and so forth >> the stock's plummeting. my travel trust owns it. we look to buy it. favreau is, i think, one of the most brilliant people of our time, and he just said, basically, this is the guy i want to work with. that's great it's interesting, iger just said they'll probably be less reliant on marvel. look, he has to do what he has to do. he knows people. he knows movies better than i to, but i think america wants as much marvel as possible. hey, david, name me someone in

"iron man" who was in for a minute in the greatest box -- who only got a hack? >> that would be, who is jim cramer >> i got a stark industries baseball cap everyone else made millions. >> that shows your acumen. >> you know why i did it because of favreau >> it's been a good spot, though i've seen it so many times >> i know. meantime, david, the financials are falling apart, and you're talking about "iron man" >> actually, i wasn't. >> i want to urge something you usually don't hear how about calm you think the treasury isn't watching this and thinking, look, let's just -- we value community banks. there's an imperative in this country. it's a doctrine, or else we would let jpmorgan -- we would be like britain. it's not our goal to be like britain. we want banks in neighborhoods it is not so hard to say, listen, temporarily, until we

figure this out, there's no need to take any money out, because we'll guarantee. they should be doing it, and they should be doing it in an hour >> brookings did a piece yesterday, basically saying, when you have long periods where no bank fails, that's a problem. where risk mindset becomes prob >> we know that silicone valley bank was generous because they had this very small deposit base that was e rotedroded by a coup people that went to twitter. and remember, first republic did loan against and signature was -- now they're talking about criminal investigation. so we're not like talking about banks that are pristine that something went wrong. >> no. we don't know what any investigation will find. but on the face of it, making a decision to go long in your bond portfolio is no way criminal it's just a bad choice reaching for that yield at that point in time that the silicone

valley bank appeared to do was a bad choice. >> we have lots of -- we have lots of stocks that do not have the level of risk that banks have that are suddenly much more valuable because of the yields for the travel trust, i was telling people, club members we do the home stretch, morning meeting, look, we built a portfolio with the idea interest rates were going lower in in the short term and one day during the ten years that you own the stocks interest rates are going lower. >> do they stay there? this hopefully resolves in a fairly short amount of time are we talking about a terminal rate being 6% as was the case a week ago? >> right now it's 4.67. >> because the damage is the reactionary action that

occurred. >> go in the cpi that was up it's still travel and leisure. a lot of the other cpi -- even, by the way, food stuffs were down so cpi could roll over here and commercial real estate could rollover and startups could decline -- >> and oil and commodities and m is negative. >> when does jay powell say i'm winning, my strategy is working, i'm going to stay the course, have it keep working isn't that -- two weeks ago if we had the numbers without the crisis we'd say it's going the fed's way. he's got a soft landing here. >> yeah. definitely the backside -- >> plus by the way, your stock portfolio is not inspiring a lot of confidence. not running to buy that $2,000 sofa.

>> real income is for the wealthy in this consultant because of what you're saying. >> yes. >> i just bought a sofa at restoration hardware, i think. >> what did you pay? >> yes, of course i have to be. >> you don't want to tell me >> i'm not going to discuss that on air. >> we're watching europe closely. on that note let's get to julianna tatelbaum in london morning. >> reporter: good morning. we certainly are watching credit suisse investors across the globe are watching, they've fallen about 7% today shares plunged as much as 30% at one point. cds widening in what some are calling a crisis of confidence it came after saudi national bank ruled out providing more financial assistance to the lender triggering a selloff across the european banks.

trade halted earlier due to the sharp falls. credit suisse has been trying to reassure the market throughout the day saying we are a strong bank and overshoot all regulatory requirements, our liquidity base is strong and the chairman said the bank has strong capital ratios, strong balance sheet, and all hands on deck. but this is a troubled lender and the market has yet to be convinced. it's faced problem after problem and facing head winds on a number of fronts the bank is engaged in a multiyear complex transformation trying to stem outflows and as of yesterday outflows had stable la stabilized but not reversed. and they had concerns from the svb collapse so now they're wondering what comes next,

whether credit swiss will have to be rescued. when asked about a potential takeover at a conference today, the uvs ceo responded our strategy is organic, we are focused on ourselves so for now that doesn't seem like an option for credit suisse it all comes at the same time that the european central bank is meeting tomorrow and potentially going to take the foot off the gas when it comes to rate hikes. so a lot of focus on credit suisse and the banks >> we got a pause in canda, talking pause here >> i think it's reckless -- i still favor the quarter point because this is the vampire and can't come back in the last five minutes -- right >> the argument yesterday was why would you raise if you're just going to cut, if you believe in cuts? >> because of a guy like larry fink, who's thoughtful, unless

he decided this morning, looking at the world and inflation is less persistent. i think you have some persistent -- you're paying $1.89 for a honey crisp apple at target you still have inflation. >> we still have significant inflation in a number of different sectors. >> i think jay powell in order to win has to say look, voeker, voeker, at 16 could have stopped. taking it up more. don't you dare raise prices. we have to have him say don't you dare raise prices or we will come after you that's what he has to stay. >> the other argument is the fed, the whole committee, they're not paying attention to z zillow, zip recruiter because they got burned on transitory so bad. >> they can come out and say we're going to keep raising. if we see the chaos of this

month and still have inflation you can bet we're going to raise it in conjunction we're also going to back the treasury in saying we're not going to allow the community banks to fail because they're too important in their regions. and we're not going to get to the situation where the only banks existing in this country are wells fargo, j.p. morgan and bank of america. that's not an imperative, dating from the founding fathers. we have not favored that kind of concentration. we can't let first republican or zions go down. that's not in the interest of america. we're going to not let you feel under confident if you want your money back they have to do it >> and those saying that allows these banks to -- i'm saying the other -- >> what -- >> that allows these banks to pursue risky lending, all sorts of risk-taking behavior they otherwise would not.

by the way, that may very well not have been the case here although there are a couple banks that were konsconcentrated whether in deposits or asset side. >> it's not in interest to have a regional bank. there's a doctrine that those banks should exist. >> the first thing is make sure they maintain financial stability. if they feel things are not looking stable are they going to raise? >> if an unnamed treasury official said we're fine, this is a good time for the unnamed treasury official to name themselves it's not hard. it's irresponsible to say i'm unnamed and fine it's irresponsible in the federal government, the treasury, to sit here and say to the press, you're fine but i'm not going to reveal who i am that is just not -- the government right now, that treasury official is being -- >> that really sticks with you doesn't it

you won't let go >> sara eisen, how many ceos did we meet last night she's over here. everyone said an unnamed -- i'm going to the ceo, i'm okay, the unnamed treasury official said i don't have to do a thing really go spend five days a week out of the office do you know who's on mad tonight? >> i don't who is on "mad money". >> the coolest guy on earth. >> daredevil -- >> my god i really do have him yesterday sara eisen had schwab and i thought that was a great get until i saw i had ryan reynolds. >> then you felt better? >> yes >> he did sell his company -- >> yes >> there are things happening at all times that are good. a guy starts a company, you saw aviation gin his father is canadian, counting on the canadians to bail us out, bailing out our railroads.

i say o' canada, partner been to toronto lately >> i have not. >> it's cool you ought to take a trip. >> i'm all about canada. >> i went up because there was the sale of hudson bay in the horrible hedge fund. >> you went up there >> yes the dollar differential. up to hudson bay to get suits. >> what are you wearing today? >> see you at 6:00 p.m. eastern time getting data of inventories and nahb let's get to rick santelli >> yes, carl, thank you. more data. january, business inventories, expected unchanged our last look was down .3. minus .1% is the number. minus .1% it is the first negative number since april of last year. actually, i'm sorry, april of '21. and as a matter of fact, in order to find a lower number,

because that equalled minus .1 you have to go back to june of 2020 to see an inventory month over month negative change larger than minus one tenth of one percent. we know interest rates going down hurts housing we saw mortgage rates following the wild markets and more information in the housing sector national association of home builder housing market index and for that we go to diana olick. >> reporter: builder sentiment in march rose two points to 44 on the monthly index the street was looking for a drop but that's the third straight gain and the highest level since september of last year anything over 50 is positive, but not there yet. but even as builders continue to deal with stubbornly high construction cost and material supply chain disruptions, they

continue to report strong pend up demand as buyers are waiting for interest rates to drop and turning to the new home market due to a shortage of inventory and buyers now see today's interest rates as, quote, the new normal current conditions rose two points, buyer traffic up three points to 31, strongest since last september but sales expectations over the last six months did fall to 47. regionally, sentiment was strongest in the south we get the read tomorrow at 8:30, but the housing market keeps turning. back to you guys diana olick, thank you good wednesday morning, welcome to another hour of "squawk on the street" i'm sara eisen with carl quintanilla and david faber. watching the market today. dow down more than 500 points

the nasdaq down 1. % check out the move in the regional banks the eye of the storm. a good rally yesterday first republic down 11%. not the 60% we saw monday but selling off today,, 3, 4%. european banks the eye of the storm as well. credit suisse hitting a record low. we watch for probability of devault, which is alarming some as the company falls and has been a slow moving train wreck for months down 19% no more saudi extra money to help all of those triggers show us there are more cracks in the financial system than svb. christine has a meeting tomorrow where she's expected to hike interest rates 50 basis points >> hard to do that with what looks like there.

>> they have an inflation problem and a mandate. they have to keep the system from shaking and collapsing and do what it takes but also fight inflation. same problem for fed chair powell we'll see what happens tomorrow. >> credit suisse shares are off the lows a bit of a rebound in the last ten minutes or so. market value, down about $7 billion, only november when they did raise 4 billion one of the investors was the saudi national bank, they just said they will not buy any more. they have confident in the plan under way at the company but the chairman said we're not passing the 9.9% stake we currently have that concerned people. for its part the bank will tell anybody who will listen we have the ratio that's 14.1% liquidity ratios strong at 144 plus%. we've heard no resistance to our

plan in terms of what we're executing here to cut significant costs. remember they are having off the investment bank in the u.s., sold the investment portfolio, they are trying to cut costs none of that matters because the focus for the market are on how many assets are leaving the bank in october, november a lot slowed down a great deal but the recent volatility, recent concerns in the u.s., sarah, even if you're a wealth management client you may think, why not just move? >> move out. >> as the case here, not that hard not that hard to change wealth managers so that's a focus. they're focused on liquidity there. this is an hour by hour situation but it hurts confidence when your stock is down 25% keep an eye on the credit swaps as well. >> i was talking to people about the credit default market. one thing they point out that

curve is very inverted that shows the risk is in the near term but some betting they're doing something to fix it the regulators, central banks whatever you're paying up more the premium in the near term ray dalio, a quote that stood out to me in his post, he called this the canary in the coal mine, part of the debt cycle we've been in. and says it is likely this bank failure will be followed by many more problems before the contraction phase of the cycle runs its course, which ends in the fed easing and changing course he said it's too soon to do that but the market is expecting that to happen as soon as this year. >> it plays right into ray dalio's long term thesis of what he calls the classic event and the classic bubble bursting part of the debt cycle. and he starts talking about cycles, including more

significant collapses that happened in his view every 75 years or so, give or take 25 years. >> we had cheap, free money for years. >> which was also echoed in larry fink's letter, the price we're paying for free money. >> and they expect inflation to remain high in the near term the data today on retail sales, weaker in february after stronger in january. ppi, producer prices at the wholesale level, negative number there month over month those are good signs for the fed. shows what they're doing is working. not that they needed proof after three bank failures in the last two weeks. >> doesn't unwind january, though. >> no. consumer is not collapsing but they're spending and we saw it in the retail sales data, spending on grocery and health care and they're not spending in retail stores and auto

dealerships. so what does powell do next week almost a coin flip a 50% chance he goes 25, and that's it. that's a rethink where we are. mortgage rates went down for the first time in five weeks. >> a lot of things have gone down, including the yield on the four but the two year we haven't seen a move like that, sarah ever 5 prnt 1% a -- 5.1% a week ago >> and part of the rate volatility is what got us into this mess on the regional banks. >> without a doubt so if their maturity portfolio is looking better, if they were on the curve having bought silicone valley bank was putting money to work two years ago getting 1.5 if they were lucky is still way off from the ten year right now

but this move, though, sara, i wonder does it have any other impact any other people whip sawed and hurt badly >> there are a lot of people on the wrong side especially when it was higher for longer, higher for longer, leading up to last week, jay powell's testimony the change has been tremendous the question is have we gone to pricing a hard landing as well the stock market is not rallying off the lower yields stock market is down 450 points because it's worried about the financial system. >> that's outweighing the prospect of lower rates. >> rough morning, especially for european bank stocks let's get to hadley gamble with the latest she's been talking to executives what have you learned? >> reporter: it's really significant that the fact that i'm coming to you from the financial sector conference it just speaks to the concern

surrounding not just credit suisse but underpinning what we've seen playing out in the crisis the last several days how it's global and the fragility for investors in terms of the sentiment. i got the chance to sit down with the chairman of credit suisse and i asked him questions about how do you have regain the confidence of investors? how do you regain their trust given the issues you faced over the last several months? to your point he was saying we're well capitalized on a transition path, doing everything we can to get the investor confidence back when i pushed back, does that mean you're ruling out future support from governments if listen to what he had to say. >> would you rule out some kind of government assistance in the future >> that's not -- that's not a topic. look, we are regulated we have a strong capital ratio, very strong balance sheet all hands on deck. so that's not a topic whatsoever

>> reporter: sounded like a hard no to me from the chairman of credit suisse but a few hours later we saw the stocks tumbling saudi national bank holds a 9.9% stake in credit suisse, the largest lender in saudi arabia and backed by the saudi government but what he was saying in his thoughts today in the conference was listen we can't, due to regulatory concerns, we are not allowed to give more to this bank than the 10% stated even if we thought they needed it, which we don't, we're unable to give it i think the fact you see the stock going lower 30% following his comments speaks to the concerns about credit suisse and what's happening in banking stocks and the markets >> hadley, the stock is off its lows, down 16% right now

but you raised the important point in your question, how do you create confidence? that becomes a difficult thing to do in this kind of environment, even if the reality of your capital ratios is strong you have a lot of concern from counter parties who may require you to raise your -- may raise their margin requirements for you. you're kind of dealing with a day-to-day kind of issue any sense from the swiss national bank perspective how they would deal with credit suisse were it to hit that point where its liquidity was in real question >> that is the big one, isn't it i thought what was interesting when i pressed him further in our conversation this morning, obviously coming off the back of svb, how difficult does this make your thought process in terms of that strategy, in terms of the outlook, and frankly, in terms of the investor sentiment? you're getting a lot of calls here. >> he said we have the

confidence of our major backer, and that was reiterated later in the morning. but he said at the same point listen we are not looking for government assistance opinion i'm not one to criticize the swiss government that was a strong message from the chairman but remember, that was several hours ago. >> hadley gamble, thank you very much for your reporting there. guys never a good thing when we have to check credit swaps and go back to them. there's only modest widening in other european banks today it's most pronounced in credit suisse where the odds of default go up. i want to bring in mike santoli with his teaake on the morning action as we look at the financials in the u.s. and how they're under pressure as a result of what's happening in europe. >> i agree it's never great when we are focused on credit default swaps on big institutions but they are just prices of an instrument people are betting on you can remember people lost

money betting on the default of these banks in 2010, '11, and '12. it means it's impossible to disprove the existence of ghost for people who feel like they saw a ghost. that's what we have to deal with but for the u.s. stock market it's interesting testing a lot of different things at once testing the tolerance of uncertainty around the fed not ideal one week out from the fed decision to have it be a 50/50 proposition. although it doesn't matter if it's a pause or quarter point, the p market might feel differently on that score. at this point, not even testing the lows from monday by the way. the s&p 2% above where we touched monday but also december lows, not far below, that would be a break of the trading range if we went below that. final thing is, we're testing the ability of a handful of large tech stocks to insulate the market for further damage,

microsoft has been unbelievable this week being a destination for scared money that's continuing again today. but we don't know how long that can really last as those are basically the insulators of choice at the moment you mentioned the whipping moves in the short end of the treasury curve that's wild action that should comfort nobody. the yields are lower we have resteepening of the curve that happens when people are trying to price in not just the fed pause but the economic downturn as oil cracks 70 >> we talked about confidence and shoring up confidence in some of these institutions, the schwab interview yesterday who came on after that stock was in the fire lining of contagion from svb, i felt did a long way, listen to what he's saying about his bank when it comes to

depos deposits. >> we're seeing asset inflows. in february our clients brought in almost $42 million in net new assets to us in march to date they've averaged $2 billion a day. interestingly enough last friday when we were at the heart of -- the peak maybe of some of these challenges before the actions taken by the federal reserve around liquidity our clients brought about $4 billion into the firm that day alone. another interest fact. the number one stock our clients bought on friday was schwab stock. >> he told me he himself yesterday bought 50,000 shares of schwab because it was cheap couldn't say if the company was doing buybacks but the stocks are up. a reminder the share prices are not reflective necessarily of the fundamentals but once you get the spiral, it can move. >> not just him.

a story about basically 100 executives at various lenders, pack west, metropolitan bank buying it's not a large dollar amount, $14 million of their own stock the past couple days. >> you have to get that for the intended signaling effect an executive is trying to convey there because they know we're going to talk about it it's real money a vote of confidence we had the news of execs selling not that long ago. it's a net positive. when it comes to schwab it's a situation, there's client inflow in the firm, a concern where money is coming out of the firm. if schwab doesn't have to sell any assets at a loss because like many firms it has bipolar disorders -- it has bonds on the books at a loss. but the question is does it

spiral to the point they have to raise liquidity in some other way. no, at this point the market is taking that as the word for the moment >> you know, the other question is what is the earnings power not just for schwab but the other banks or banking institutions what does it look like in this environment where they may need to pay more for deposits, where they can't just rely on customers saying i don't care. i don't care if i get no money there's no interest rate to be had any way. >> that's one of the reasons it was down 25% month to date so i think that's the ongoing overhang for a company like swab that used to trade at a premium multiple and and potentially at the beginning of a credit erosion cycle everyone is looking at real estate, at the credit card charge off rates that ticked up the last couple of days. yes, i think it's a huge

question what you want to pay to the institutions on a market wide perspective if it's not a headlong rush of assets ahead of the system if it's not about contagion you don't have to care because it's a small part of the s&p 500. >> is the government going to look -- thanks mike -- at it that way or do they need something bigger or is this a reset on earnings expectations i don't think it's clear yet. >> not clear. >> s&p financials down about 2.6. that is off the session low, even though the dow isn't off as much as we go to break, let's look at the road map for the rest of the hour more on the banks and what it means with roger altman. credit suisse has hit record lows we will bring you the latest. and finally an exclusive, this hour, senator elizabeth warren as she takes aim at a

banking industry she said is under regulated. the dow is down almost 500 points don't go away.

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one giant leap for mankind. elizabeth warren is going to be joining us very shortly of course talk to her about new potential bank regulations a lot more you can imagine to speak with about the senator but let's get back to the stock market shall we the s&p down 1.3%. renewed fears or continued fears really about financial sector.

our next sector said equity markets face down side risk while inflation remains too high here at post nine. what impact do you think the -- i don't want to call it a crisis but this turmoil we see in the financial sector will have on the fed and the willingness to raise rates? >> it's a close call for the fed at the moment. if next wednesday they feel they have looked at the financial stress they can look at the broader economic backdrop and say it warrants rate hikes that's consistent with retail sales and the cpi yesterday where it looks like there are concerns the economy is reaccelerating, the inflation is much too high. the fed wants to respond aggressively to financial stress, and they want to show

that they can chew gum and walk at the same time, they can be a lender of last resort and at the same time respond. >> is there an impact from the events themselves even if they do not lead as we hope to any significant financial crisis >> it depends on exactly that. if they're able to look at the problem, then the economic fallout should be relatively mild if not we have to see how things play out. >> i feel like the question is almost will they make a mistake if they go 25 basis points as a lot of people think they're going to do because they still have inflation fight on their hands. what will that do to these problems in the system and the economy? >> i don't think that's going to be a mistake from our perspective. simply because they're trying to handle two things right now. the bigger problem is obviously a financial stability in the banking system and equally a different objective of theirs is to fight inflation

so unfortunately they're in a tight spot in which in some way or capacity to handle both the problems at the same time. and you know, as we know, inflation is proving to be a little stickier than people expected it's not just a linear decline, which many were optimistically expecting. so i think the solution, obviously, is somewhere in between, 50 basis points is the hold out and the market is talking about 25 or zero, but i think 25 is not probably touches on both objectives trying to say yes, we care about inflation yes, it is a problem we don't want to get imbedded, especially in terms of expectations, at the same time deeply care about not creating imbalances in the financial system which is a breeze for the real economy. so it's a tight spot >> i'm afraid we have to keep it tight this morning given various

events we'll bring you back, though >> in an op-ed this morning our next guest said the recent bank failures are a result of washington leaders weakening financial rules and is calling for doj and s.e.c. to probe potential criminal violations. joining us is massachusetts senator elizabeth warren senator warren, welcome back good to see you. >> thank you, good to see you, too. >> just as far as the immediate, potential legislation here, reinstating the rollbacks from 2018 on small and mid size banks is that something realistic. even the democrats that voted for that are backing up their decision >> what matters is what we learn right at this moment and what we know is that five years and one day ago we rolled back regulations donald trump, the republicans, support from some of the democrats said we're going to

make regulation over these banks that are bigger than $50 billion, we're going to make that regulation lighter. there's just going to be less stress testing, the tests will be easier, easier liquidity requirements and on and on throughout the system. and the consequence of that is that the bank executives did, some of them, exactly what you expect and that is they boosted their profits by loading up on risk. and they boosted their salaries. they boosted their bonuses all by taking on more risk and it worked great right up in until the banks exploded so what we need to do right now here in congress is to say, we now have evidence of what happens when you ease up on the regulations for banks of that size we just need to put those tougher constraints back in place and tell the regulators to toughen up against banks of that size, because remember the argument, the argument was that

these banks made we're just little tiny banks just like community banks we pose no risk. i think we've seen that's not the case >> no question there's going to be regulation out of this. that's probably the right move but do you really think it's a one size fits all policy where the smaller banks will be able to deal with the cost of regulation the same rules that the big banks have to face won't it make it very hard for them to compete? >> no, no, no, it's that banks above $50 billion will all have the same set of rules in terms of having stress tests and just more stringent oversight all the banks under $50 billion won't be touched by this change in regulation. they'll have the much lighter regulation that is appropriate for banks not posing that kind of risk to the economy overall so this is really about that

portion of the change in the law back in 2018 that said we're going to lighten regulation for banks larger than $50 billion. the tranche between 50,000,000,250 billion i think we've seen that's just too dangerous. too dangerous for our economy and that's why we need to change the law. > > >>an. >> even though that are smaller, smaller than $50 billion we had a number of those on in the last few days, they do their own stress testing not everyone was behalfing in a risk profile and manner that cert silicone valley bank was. >> i'm sorry i taught schools for many years and i did not let my students do their own testing. the testing is meaningful when it comes from the outside and

you don't give the answers before the test. so the testing is for someone outside the bank to go what could go wrong here and make sure the bank could with stand those problems like an increase in interest rates. that's the point behind the stress testings. and for the banks to say not to worry we're testing ourselves is truly laughable. >> yeah, but i do wonder on this idea of risk, senator. silicone valley bank which started this conflagration a few years ago was taking the deposits and tried to earn many more by buying treasuries, government sponsored debt, they were not underwriting incredible risk they were going out on duration, which cost them. is that something they should be fully faulted for? it doesn't seem as if they were act maliciously? >> the point is they loaded up

on risk. you're saying they didn't load up on one kind of risk, they loaded on a different kind of risk that's what stress tests are about. they're about testing different kinds of risks that maybe the bank management does not want to take a hard look because those are the risks that actually boosted profits. keep in mind, svb increased their profits by 40% over the last three years how did they do that they did it by loading up on risk they paid themselves, the executives paid themselves big bonuses, big salaries. they were handing out big bonuses as the fdic was starting to shut the bank down. we need tougher regulations in place so that we never get to the place where there's a run on the bank it's to test these banks early on to test the direction that management is taking and to tell the regulators, like the fed, you've got to be tougher on these banks

keep in mind, congress is very much in the position of being responsible for this failure, because they loosened up the regulations. but the fed also, when they got the opportunity, they ran with it and jerome powell was presiding over weakening the stress test called it tailoring, but weakened the stress test and that brought us to last friday with two banks imploding. >> do you blame the san francisco fed for lack of oversight? nothing said they weren't in a position to say your duration looks long here, you're better off bringing things in, taking a couple of unfavorable marks maybe but they didn't do that? >> this is not an either/or problem. we have a problem that starts with congress by opening the door to weaker regulations, then goes to the regulators that ver much weakened those regulations,

and then to the executives who thought you could run a bank like any other business and they could load up on risk in order to improve profitability for the shareholders and boost their own salaries and bonuses we have to shut that down. shutting that down starts with congress tightening up regulations to begin with. >> senator, i think a lot of viewers might know you for years of, i think, criticizing the large size of some banks in this country. and i wonder now if today you're grateful we have some large institutions that didn't take the kind of risk you're describing >> i am glad that we have many banks who have not taken the risk of course i'm glad that's the case and indeed, remember, those largest banks do have somewhat tougher regulations in place in fact, you might say there's some evidence that regulation actually works not just to benefit that one bank or benefit shareholders

it's there to benefit all of us and keep the system more secure. i love the fact that there are people in the country who want to get out there and take a risk and they want to say i can win big when i take those risks. that's great but they should not go into banking. banking should be boring banking is about making sure money is there every small business that wants to deposit money into a bank needs to know, the money will be there when it comes time to make payroll or pay bills. that's what banking is about the big risk takers they need to go into one of a million other places in this economy, not banking. >> i don't know, a lot of people would say that taking risk is what is our economy is all about. just on this question of the number of banks senator warren, we lost 500 banks over the last few years. we haven't created a new bank. do you see that as a concern is that a problem?

>> bank profitability is up. as long as banks are serving their essential function you have to think of banks you have to think of them a little like the water pipes. the idea is, they make other things possible. and they do that just by being steady and the job of the regulators is to make sure the water is clean in those pipes when you turn on the tap you know you can drink the water same kind of thing with banking. we need to know when we put money in the banks we'll be able to get that money back out of the banks. it's a steady -- it's a profitable business but steady profits. not just giant profits not enormously growing profits but steady profits because of steady management. and to make that happen, that's why we need regulations. >> maxine waters the last couple days on our air and elsewhere talked about expanding deposit insurance.

is that a material question on the hill, are people talking about it do you think it's important? >> i do. i think we should re-examine, just overall, about why we have limits of $250,000 of protection i always think of it this way. some small business, some nonprofit needs a place to manage its money, they need to make payroll, pay the utility bills and a safe place to have that money where somebody is going to keep it safe. they shouldn't be in the business of having to examine the books of the bank to say, i'm worried that this bank is a little too risky or i'm worried that another bank has taken on a certain kind of risk they just ought to be able to rely on that banking system. the $250,000 cap was designed to do that for individuals, to protect them so they didn't have to make that kind of examination of the bank, so they should have

confidence i think we need something similar for small businesses for nonprofits and it may be that they have to pay a little premium for that. but safety and security in the system is it what it's all ant i see a billion dollar depositor very differently because a billion dollar depositor does make that inquiry. they're not getting the same deal that a $2 million depositor is and i think they should be treated differently. >> you know, senator, you talk about risk i feel as though it's 2008 it wasn't as if the banks were buying secure products that are risky or giving mortgages to people who didn't deserve them or wouldn't be able to pay them back we have a different level of risk right now in our financial system it would seem and occasionally we do have bank failures it happens >> you know, we've just seen the second largest bank failure in the history of the united

states so i'm not sure what argument you're trying to make here, but if the argument is there are lots of different ways that babank risk can show itself, you're right. that's why we don't have just one rule like capital reserve requirements instead the rules are stress test where the regulator, the supervisor, says let me think of different things that could go wrong. not just one thing, not just mortgage backed securities but a lot of different things that could go wrong and test whether or not this bank can survive that's what supervision when done right is all about. that's why it is that congress needs to tighten up the rules again and tell the bank supervisors to do exactly that >> i have a related -- unrelated sort of related question on regulation i was sort of surprised that the u.s. approved the merger between the two american railroads

canadian pacific and southern after the accident do you think that was the right thing to do? . >> no. i spoke out against it we don't need more concentration in the rail industry we have seen part of the trouble we have when we keep concentrating these industries so no, i don't think it was the right thing to do. >> appreciate you, wanted to get you on the record there. senator warren, thank you so much for weighing in today with us >> you bet good to see you. >> you too. meantime, a volatile morning for stocks another day of global concerns for the banks. hanging on to 3850, dow close to session lows down 570. more after the break don't go away. benefits... and retirement savings. with voya, considering all your financial choices together... can help you be better prepared

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>> markets are still negative right now off the worst levels of the morning but not by far. credit suisse weighing on names across the continent that includes even giants like hsbc which are generally viewed as larger, more stable we have two hours left before the european close which we will bring you at 12:30 easten time turning back to the u.s. markets, energy stocks under pressure as crude prices hit the lowest levels back to 2021 the biden administration talked about the idea of perhaps buying oil to reville the strategic petroleum reserve. so maybe that conversation playing out. oil stocks lower as well canadian pacific is higher as u.s. regulators green lit the activity with kansas city southern and len fornar. and coin base higher as well as

bitcoin hits some of the highest levels since june of last year some green in a sea of red back to you. the rails as we see. thank you, dom speaking of red, let's look at the biggest laggards on the s&p this morning led by first republic. yesterday it was one of the biggest gainers, significant gain but obviously well off highs of the year, continued concern about that bank's balance sheet also going to breakdown what's going on in the markets, particularly in the financial sector with ever ce'ors roger altman don't go anywhere. we're back in two. 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

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welcome back to "squawk on the street" our next guest said the collapse of svb has highlig fragility of the banking system. good to see you, roger fragility. is that -- talk to me about how you've come to that word >> well, let's step back what's the message of these events around svb, credit suisse, and so forth and it's a message i think of fragility. the world financial system, unfortunately, is fragile and it's fragile because we live in an age of global digital finance, where someone in a remote part of the world can swipe her phone and move money instantaneously out of an institution. and we live in a world where a

bank that most americans never heard of a week ago, svb, suddenly within a 72-hour period is seen as threatening the entire u.s. financial system global market stability and the federal authorities decide not just to guarantee all of its deposits, but de facto, and i feel strongly that this is what they've done, guaranteed the entire deposit structure of the u.s. financial system. so it's a world where confidence is the coin of the realm more than it's ever been, if you have it, you have an advantage. if you lose it, you can be dead. >> so you're looking for a structural stairstep in, i guess, what we're now calling deposit beta, right? the ability for outflows to happen quickly and is that the more important story than, let's say, the rolling squeeze on liquidity, that larry fink is mentioning in his letter this morning?

>> well, i think in historical terms, it's the more important story, because sunday -- sunday evening, when this decision was announced, i think will turn out to be one of the most important moments in the history, at least of u.s. finance, because, sure, the authorities won't say we just guaranteed the deposit structure of the entire financial system, because they don't want to imply that there's a degree of nationalization going on but ask yourself, having guaranteed all the deposits at svb, if a week from now, another institution, pick your favorite name, were to wobble, can you possibly imagine their saying, we took care of svb, but we're not taking care of you inconceivable. so they've in effect done this guarantee. >> what about the notion, i mean, the knee-jerk on svb was in the words of morgan stanley

that it was highly idiosyncratic. that they had no risk officer for months that their client list was highly connected they all knew each other is that not -- you think their worries were more universal? >> well, look, one hopes that having guaranteed the deposits of svb and having implicitly guaranteed everybody's deposits, that that will eliminate the fear that causes someone to wake up in the middle of the night and say, oh, my god, i have to take my money out of x, y, z institution. and it may well do that. but it will do that because if it does eliminate that fear, it will do so because people know that the deposit structure, wherever you are, whatever institution you're in, is guaranteed and if it has that effect, that's what the authorities are seeking, and that will have been a success. >> so roger, it's sarah, i'm trying to read between the lines

of what you're saying. do you expect more bank failures in this country, as part of this domino >> if the decision they took sunday is understood by everybody in terms of its momentous implications no, i don't expect anymore because think about it, sarah. >> some people think they need to go out and explicitly say what you're talking about. a bigger bazooka we're going to guarantee all the depositors in the banking system >> well, my point is, de facto, they just did it but they're going to be very reluctant to say that, because it's going to kenote a degree of nationalization of federalization, whatever your favorite word is, that has a lot of questionable implications for example, if you believe that the key liability of the u.s. financial system or depository system, namely deposits, is now guaranteed, well, then, why

should senior bank leaders make lots and lots of money and why should shareholders have uncapped returns eventually, these questions are going to be asked. and they're not -- you know, they're not questions that are going to make most people feel great. >> yeah, well, to your point, though, roger, we live in a world where you can cause a bank run on your phone via twitter, via whatever else you want you know, there are conditions -- you seem to identify -- >> "the wall street journal" had a fascinating article a couple of days ago, entitled how silicon valley turned on its own financier. and it told the story of someone who was going to a conference at a ski resort in montana and flew to bozeman, montana, and got on the bus that the conference people provided to transport folks up to the ski area for the conference, and he noticed or she noticed that everybody in the bus was frantically working their phones

and this person said, what are y'all doing. and they said, we're taking money out of svb i think these folks were from the barrier. and they were doing this on their phones on a bus on the way to a ski area in manhattan what does that tell you? that tells you this that era of global digital finance is fragile and treacherous. >> it's been good getting your perspective as former treasury official, roger. but now, as an investment banker, we're wondering what the upshot of all of this is, and hear about more regulation for small and mid-sized banks, lower earnings power, and potential consolidation. is that something that you think we're looking at >> i don't think the authorities are going to be keen on further consolidation, sarah, number one. they want less concentration, not more concentration so unless it's unavoidable, i don't think that's going to happen i think in the big picture, the odds of a fed rate pause are

rising the odds of a recession, i think, are rising, in part because of the level of interest rates and all of those effects, and in part because events like these, including this morning, frighten people. and people say, well, maybe i won't buy that new car or maybe i won't take that trip or maybe i won't move. and so, i think those are some of the great big implications here in terms of bank regulation, look, the 2018 law that rolled back some key features of dodd frank, i happen to think was a big mistake. you know, as you know, it raised the threshold dramatically in terms of total assets for purposes of defining an institution as systemically important. so think about it. silicon valley bank was not defined as a systemically important institution. but in retrospect, of course it was! otherwise the fed, treasury, and the fdic wouldn't have spent the weekend frantically trying to save it and ultimately

causing -- resulting in guaranteeing all its deposits. so something is wrong with the regulatory structure and the rollback in 2018 among other things because there were supervision failures here, was a mistake. and should be corrected. >> in that you agree with elizabeth warren, who was just with us. >> i don't agree with her all that much, but in that one respect, i do. >> i understand. it can happen. >> a pleasure, roger altman. >> thank you, david. >> we have the s&p down about 1.6% let's go over to dom chu and get a bit of a market flash from him. >> so david, as you just pointed out, we are just bouncing off the lows of the session right now. the dow is down 550 points at one point in just the last five minutes, we were down 600 plus points. again, trying to find some kind of stability here. you mentioned the big banks and the financials right now, if you take a look at the overall sector look right

now, energy and materials, financials, the three worst-performing sectors out there. a check on some of the banks that have been a big focus for many investors right now first republic is now down another 17% after a big run yesterday on a relief rally. fifth third bancorp, citigroup, jpmorgan chase, bank of america among some of the well-known regional that are all taking larger hits after a bit of a bounceback relief rally yesterday. also checking in on megacap technology, because it's a big part of that story, arguably the most important sector from a market perspective banking issues aside all outperforming. and there is this theme developing that commodities like

oil, copper, aluminum are pricing at a slowdown. check out gold prices factoring in that flight-to-safety-type trade. keep an eye on gold prices, up on an otherwise down day i'll send things back over to you, david >> interesting to note and microsoft shares perhaps up on that introduction of chatgpt 4. that was yesterday afternoon over to carl and var >> i'm carl quintanilla along with sara eisen >> today, shares of credit suisse hitting an all-time low, taking its europe peers with it as saudi arabia declines to increase its stake >> meantime, barclays' chief economist mark giannoni is with us calling for the fed to pause next week with wall street all over the place on its predictions for the fmoc meeting. >> let's start off with what