the nerve. president emmanuel macron bypassed legislature to raise retirement age all the way up to 64 from 62 sparking protests in the city of paris. i know what day it is. i have a green tie on. st. patrick's day. march 17th is that green? >> are you color blind >> yes "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc we are live at the nasdaq site in times square. i'm andrew ross sorkin along with joe kernen. becky is off today welcome back you missed nothing >> the s&p is at 3960. down 1% from -- we know why the

10-year treasury was stubborn now. what will the fed do finally. you had to shake them. look, you guys, your actions have consequences. >> goodness. we have a lot going on in the next three hours. >> they will still go 25. >> we will talk about this >> let's talk about it now. >> we have the -- >> the futures are not doing anything up 26 points the 2-year treasury. have you seen a move like this in your entire life? >> hold on you want to get into it at 6:01. >> fine. i'm not tired like you cranky >> i have been working hello? >> doing a heck of a job >> thanks. >> heck of a job, browny you blame the fed for what happened at svb? >> no. i said actions have consequences i blame maybe the fed going back

further. if you have no reason not to invest in all kinds of whacky stuff, then when you are at zero for so long, things like this happen you have a bank that funds non-profitable crap. they thought they could put 80% in treasuries at the lowest yields ever and thought it would work they were managing climate risk. they weren't managing interest rate risk. >> preach personal responsibility >> that is what you have been talking about. i haven't seen it. i missed that. >> personal responsibility >> who >> don't you think that if you are an executive running a bank, whether first republic or silicon valley bank, not in the same category. at the moment, they are somewhat in the category. >> the executives? >> if you are -- yes, people made the choices to sit around and say it is the

fault of the fed for -- >> not the fault of the fed, but it makes it difficult for them to do their job. >> because we have people making terrible decisions who is supposed to -- are you supposed to make decisions knowing others have made af terrible decisions >> you aren't pointing a finger at the san francisco fed 80% in long-term bonds. >> a super advvi >> a super advory issue. no question. >> the san francisco fed is focused on climate risk. >> oh, my god. >> not interest rate risk. worried about climate risk let me ask you, will all of the employees at silicon valley bank sell e -- celebrate at net zero? at least wall street is stepping up

a group of financial insurances substi -- institutions agreed to deposit $30 billion as a sign of confidence. >> i was going to say we look at silicon valley bank and made the terrible loans i still think and i said it all week this is one of the great unforced errors of our time. this didn't have to happen the mistakes were in the balance sheet. >> you know who they were funding. i don't think they were done subprime loans to the tech startups >> that was not their problem. that was not their problem that is the talking point from the editorial page of the journal. >> they should have had better risk management and not been in the long bonds no other bank is 80% >> that to the degree there was a problem -- that was the problem. >> why was their eye off the ball how can the risk manager not

realize these are historically low interest rates and not last forever. if interest rates rise and everybody saw it coming. everybody saw interest rate risk everybody saw rising interest rates. >> everybody saw it. you had the smartest people in the entire country, supposedly, in the valley. depositors of silicon valley bank >> the vc people >> cfos with risk managers telling portfolio companies and telling them to put money here they have blinders on. the analysts have blinders on. >> and san francisco fed >> everybody does this and then we say it is because of the san francisco fed? come on. >> san francisco fed for not realizing. how many people knew before this

san francisco fed there was a problem? it was a twitter run on the bank why all the vc guys knew there was a problem? >> they didn't >> the private equity people did. they said get money out quick when the deposit run started. >> they were ridiculous that they announced a plan without a plan where they lost money and the ceo. i think you missed it because you were way the ceo had a conference call with the depositors. no bank ceo would ever do this we still have to raise this money. we stuck by you for last four years. you should stick by us what happened when that happened a little smoke. >> who is we >> smoke in the corner of the theater that could have been doused with water for half a second instead, people started screaming fire in the theater and ran for the exits. this wasn't a footfault.

this was a true self inflicted error. >> i think they had major problems >> the major problem was the run. that was the problem. >> whatwas their book worth versus the balance if you mark-to-market? a $1.8 billion loss for buying back a couple of bonds. >> $22 the billion. >> -- $22 billion. >> that was where most of the losses were embedded the whole point of what they were trying to do and i have no sympathy what they were trying to do was effectively get rid of the bonds that had locked in at these rates to get new capital and invest in higher yielding bonds to capture a higher multiple

from the stock market. that is what was happening >> when did the cfo or risk manager say she was leaving? she was on sabbatical for the last six months. do you think she had an idea it was easy to go in to the long-term treasuries sdplchlt a l lot. -- treasuries. >> a lot of conflation. >> that was not about climate risk or other crazy thing. >> that is part of taking your eye off the ball why do you think they funded that's where the money is after the inflation reduction act and all this we are trying to create an industry and fund where this bank was too happy. >> that wasn't their problem >> charging stations and batteries. >> they had a lot of problems. >> i think they had one major

problem. >> no accountability no responsibility? no personal responsibility that is your answer to what happened >> no. it can't be the fed's fault. everybody sees what is happening with the fed and you know it is about to rain and we don't have any umbrellas. it's crazy. >> it is like when the tide goes out, you can immediately see who is not wearing a bathing suit. the fed has to do what the fed will do. the fed will break things and think they can impunity they are going to 6% and they are definitely going higher. we will have gariela santos. >> i think jay powell's conundrum is he will not go to 50 do i go 25 if i go 25 and if i go for 25,

am i going for right or wrong reasons? i said i'm doing this and it is like extend and pretend. i'll keep going. if i don't do it, is that bad news or good news? is that actually really bad news that's the question. >> the real question is if these are isolated individual cases. then credit suisse it is also isolated and individual, most lickl l it is also isolated and individual, most lickely most of the things are still in place from the last book you we wrote. most european banks are in better shape >> the other element is the ability for -- this proved the ability for a bank run is different than it used to be. >> you have twitter. >> social media and not just combination of social media, but combination of the app to go on to the svb app.

you don't have to call the broker or banker or walk into the branch you can say i'm transferring the money right here this is the first of an era. >> do you think the moral hazard -- once again, fat cat vc guys get covered >> socializing the losses and privatizing the gains. >> how about if you -- we had the pandemic we had the financial crisis. should we have had no cost and no real interest rates no reason not to lend money freely to people that don't deserve it should we have had low credit standards because we were at zero for so long >> as we talked about it, i would like to see them raise rates sooner than they did there have been mistakes in how quickly this was going to happen

obviously it wasn't transitory >> there needs to be risk in inn ve -- investment >> what do you say to people who have $251,000? >> i don't know what would happen do you think taxpayers never get hit with this? >> of course, they do. they don't get hit with it in additional taxes, necessarily. they get hit with it in higher interest rates and banks loaning less money in the future and higher fdic insurance premiums to the banks which gets put on you. >> the inflation the fed is dealing with which caused dislocation is all due to overspending coming up, the futures right now -- >> 6:12 in the morning on friday welcome back from vacation, joe kernen >> ythank you. i had people appealing for me to get back and ss soon as you can.

what happened this week? >> we had some of the best shows we had in years. >> that's not what my people say. the major indices are in positive territory after the wild week for the banks. come back. the s&p at 3960. and charltes plosser gives uses his lifeline. you are watching cnbc. >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com.

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wall street continuing to grapple with the fallout from failed and struggling banks. joining us to talk about the impact of the lifeline of first republic is barry knapp and gabriela santos. we referenced your thoughts earlier, gabriela. what happens next week they do or don't they will not go 50. the europeans still do 50, but only to get to 3 >> exactly they are further behind in the tightening process for the ecb there was urgency to get there.

they apparently, the ecb didn't want to signal further issues by not raising 50 basis points. the fed is in an already different situation having already raised rates to that average of 4.6%. we hope they take the meeting next week to pause to let the dust settle condition the tightening they have done and all of the additional tightening in the economy through lower availability of credit and higher spreads. >> net for stock investors if the fed is done, does that become a net positive or is that an even weaker than expected or more risk to the overall economy and then does that offset? we are probably getting the pivot. they could even cut by the end of the year.

>> on average, it can take anywhere from 7 months to 15 months from the last hike to the first cut. it depends on how much the economy slows and perhaps contracts from here until the end of the year. it is possible we can start to see rate cuts by the end of the year the number one thing for us is the peak in bond yields are in the number one thing -- >> we are not going to 6%? the fed is not going to 6.5% or 7% not in the cards >> i don't think it is necessary any more to use interest rates as your only policy when you have credit tightening >> inflation could stay out of the bag then >> could i ask a separate question we are talking about this after the news of the last 24 hours. do you actually believe that the regional banking system in america is safe and finished do we wthink first republic was

the last domino and we held up the last domino and everything is just fine >> no, no. absolutely not >> i don't think so either in which case, there is a whole lot of dominos to go >> before we started, there was a paper that came out which is a paper that went through the banking system and this is the first off percentage losses in the securities portfolio >> silicon valley bank. >> yes excuse me. and half of deposits left through the system and there would be 1,600 banks with negative equity. it is a bigger problem than that the fed has declared the situation systemic the idea of separating macro prudential and monetary policy

is okay as long as you are not in crisis. we are clearly in a crisis we're taking that risk and continue to move forward and that would be a monster stage. if they try, they would -- first of all, that summary of economic projections forecast has to be -- can't be for higher rates. that caused the yen, pound and mortgage market to crash in september. they have to be careful about the forecasts. the press conference i think it would be a monstrous mistake to tighten >> will the slowing economy take care of inflation? if the fed thought they had to go higher for longer and if they don't do that, are they arthur burns? do they allow inflation to stay? the dagger is not in the heart yet? >> we don't think they would allow inflation to stay sticky at a 3% or 4% range.

we do think it could just be a pause should inflation not seem to be coming down toward the 2% target in 2024 with that said, we think it will because the economy was resilient, but it wasn't strong before this. there was already tightening happening in areas of the economy with long and variable lags meant other areas of the economy would be slowing down. now we're speeding this up with the tightening of financial conditions we do think the peak in yields in buying bonds now is the number one thing we would be doing to lock in higher yields. >> i have a different perspective if as much as if you break inflation into the three components as powell did back if late november, the first order pandemic effects is goods prices is down. that piece is under control. it is not going back to zero like the last 20 years because

of the chinese labor shock then you've got shell ter prices which are going up you have the super core services stuff. down from 9.5% on the basis to 4% that is not going back to 3% on the persistent basis because of the fiscal impulse i wrote a report where the idea that arthur burns is the reason we had the great inflation is wrong. it was fiscal policy increase in fiscal transfers during the johnson and nixon administrations that caused the inflation. >> listen, i would never quote muriel the mother of all breaks is coming it will be awful the fed with back-to-back crises and we have grown the balance sheet where you could expect a day of reckoning >> $660 billion of unrealized

losses. >> that is scary. >> ago toccording to the fdic >> this is a paper cut right now. mommy and daddy is here to save you. is something bigger going to happen >> you said this needs to be saved? >> i didn't think the stock market was down 3,000 points i think we are not taking our medicine i think it is once again moral hazard we have -- >> tell all your friends and libertarian friends in california that we are screaming that the world is about to come to an end if they were not saved immediately. >> they are not classy economic liberals i went to a bitcoin conference at the university of colorado in

2017 i listened to them talk for two days i said how many have read the de-na de-na de-na de-nationalization of money? none of them >> you went to a bitcoin conference look at charlie munger he thinks it is a beanie baby. >> joe, i do think that net aggregate credit ex-exposure to the banking system is low and this is like 1995 with the aggressive rate hike cycle when they stopped, they didn't need to cut. they stopped. >> given the fed and inflation cycles, how high rates will go >> if the fed didn't hold the third of the treasury market,

tips market and mortgage market, even the kansas city fed compiled studies, 10-year treasury would be 160 basis points higher. >> i through is one thing we would say. we think weak in bond yields are in the additional tightening means we will not go back to negative real rates that is some of the shift that occurred and it is structural. that is why days like yesterday when every tech company is up again under the sun and we should take with a grain of salt very much and not go back to the old platform >> he is your friend not my friend. we have to help. >> think about all of the depositors in the valley who was screaming and hollering. >> those are your friends. those are the climate guys those are not my friends. >> are you crazy are you crazy? >> the guys that are in companies that will never make

money. >> who is peter thiel? >> he got all his money out. >> right who screamed fire in the theater before there was a fire? >> he's a friend i do love him. i do >> i appreciate it, barry. >> bitcoin way to go, joe, on bitcoin no you said a word about that instead of buying the 2-year treasury >> i'll give you a way to go now and not when you turn 64,000 -- call me. >> please. that is total crap i said it at 81,,000 >> you kept going, going, going. >> i bought it back at 16,000. >> thanks for telling me >> i did tell you. i told you not to buy the i-bonds. >> i wasn't buying i-bonds. coming up, protests in paris after president macron forced a -- this is -- >> you missed it

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in france, president emmanuel macron is ypassing parliament and invoking powers to raise the country's retirement age that puts him at odds with the legislative branch and millions of protesters who streamed into the square earlier this week macron used article 49 to post the pension bill through without a vote it raises the retirement age from 62 to 64. he wants to ensure the pension system doesn't go bust now he is facing threats from the far left and right to hold a vote of no confidence.

it would kill the pension overhaul i think demographically we are living longer and facing the same issues here with the same type of problems of addressing them in a way without really angering people that they effect when we talk about it -- we talked about it with vice president pence. he said we need to raise the age of when you start getting these things not for people now 25 years from now. you can't say it unless you talk about it with people who are 30 years old right now. france had a good deal, andrew did you read the articles? vacation in the summer the one gentleman was 75 he had been retired 14 years hasn't worked a day in the past 14 years $70,000 a year income and goes to the coast every summer.

walks the beach every morning. it's a good life, but we know there's no free money. >> not enough dough for everybody. when we come back, we dig into the new investigation, this is fascinating, from pro publica raising shares with rival companies. >> announcer: executive edge is sponsored by at&t business. at&t 5g is fast, reliable and secure 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. there are some things that go better... together.

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good morning welcome back to "squawk box" live from the nasdaq market site in times square. nasdaq up 18 points. s&p is unch for now. new investigation reveals ceos have been placing multimillion dollar bets on stocks of direct competitors according to never before seen irs records. robert -- i apologize if i mispronounced your name. this story was fabulous. fascinated by what was happening here i don't think people know about the rules. obviously insider trading rules about trading in your own company, but you reveal that folks are trading in their rivals because it looks like they know what is going on over there. tell us more

>> so we have obtained this massive trove of irs data and in addition to information about how the wealthy americans are paying their taxes it also comes with the massive subset of personal stock trading data as we started going through it, one of the first things we noticed was time and again top executives across sector -- multiple sectors are trading in their competitors' stock in masses m mass -- massive quantities with incredible timing. we took examples to experts to, you know, former doj folks and former s.e.c. folks and they are troubled by this you know, as as the ceo of a company, you necessarily at

times know non-public information that relates to rivals and partners. >> the question is this information that the irs does or s.e.c. doesn't have, now it is out, do you think this should change the rules or do you think there sis a regulatory shift tht should happen? >> that is not for me to say i do think that the response from folks who were at s.e.c. and doj is very interesting. with w we talked to the former chief of the criminal fraud section if if -- if he was still at justice, he could investigate. the former chairman said executives at companies shouldn't be doing this. shouldn't be trading in companies that they could be argued to have non-public information. >> the question becomes should this be a law?

a rule enforced by the s.e.c.? should it be self governed by the boards public boards? by the way, what we don't know is what's going on in the private market universe. i assume similar things may be happening. >> i mean, when you talk about a new law, this is something you probably know, but most of the public doesn't there is no specific statute that defines what insider trading is you know, the rules around that have mostly been developed by regulators and by judges a lot of those rulings have been very defendant friendly and made insider trading harder to prosecute. a lot of these trades that we look at, the experts we talked to, said they could very well be legal. multiple elements you have to meet and definitions are sometimes squishy. >> robert, i thought about these

things and you think i will extrapolate in a certain situation. if you are a shareholder in one of the companies, you may have a lawsuit for making the trades and effectively miss appropriating information -- misappropriating information to benefit the corporation? >> you bring up a good point a lot of the executives are compensated with stock of their own company. the idea is you are incentivizing them to maximize the profits of your company. if you are an executive and you have the secret hedge where you own shares in your competitor, you have a conflict of interest there. you know, one of our examples is an executive at mortgage servicing company. at the time, one of the big banks was auctioning off rights

to hundreds of millions of dollars of mortgages you know, these two companies were competing and his company lost out very soon before that, he bought shares in the competing mortgage servicer its stock sky rocketed the company lost, but he won and took in a huge profit and immediately sold the stock. >> robert, do you think you were able to catch all of the suspicious trades that existed it appears you ran an algorithm overall of the data trove you collected to try to identify these things, but there were certain thresholds you were using. i wonder if there was stuff under the threshold that was missed >> we spent a lot of time combing through the data it is a massive data set without a doubt, there are interesting trades we did not

catch. i know for a fact there are interesting trades we have not yet reported >> i knew there was more i was digging for a tease for more stories coming. final question -- >> i would love to be back on. more stories to be told. >> jessie and i have been talking about it for years a lot of people read the articles some are the subject of the articles who say this whole thing is so crazy and unfair and it is illegal to steal irs information. we have considered irs and tax returns privileged in a way that we almost privilege nothing else in the country i know this was not something that propublica stole. someone stock it and gave it to you in some way. i'm curious how you feel about that >> it is a massive responsibility on our part, right? we have to be careful to use this data in a responsible way

and to make sure that everything we report is in the public interest i think we met that bar thus far. >> robert, congratulations on the report for you who have not read it, check it out it is worth reading. if you are a board member of corporate america, it is worth thinking about thank you. >> thank you for having me. coming up, fedex shares are higher after earnings. we show you the numbers next. reminder, get the best of "squawk box" with squawk pod on your foravite podcast app and listen any time. we're coming right back.

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shares of fedex are sharply higher relax. sharply higher earnings of $3.41 a share beat

$2.73 estimate revenue of $22.2 million missed ex-ppec expectation. coming up, we dig in the chaos in the banking sector in the role of stress tests next. reminder, you are watch or listen to us any time on the cnbc app >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com. rude. who are you? i'm an investor in a fund that helps advance innovative sports tech like this smart fitness mirror. i'm also mr. leg day...1989! anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq-100 innovations. i go through a lot of pants. before investing carefully read and consider fund

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the silicon valley bank collapse has regulators

scrutinizing what went wrong the next guest says the metric to test the health of banks, the stress test, is flawed let's bring in joseph mason. senior economist with the office of tcomptroller and louisiana s university and, professor, good to see you. it has been a while. but good to have you on. what -- i guess that was a premise that we just introduced. explain it why do you think the tresstresss misses things like silicon valley bank. >> the stress test has two scenarios, baseline scenario and severely adverse scenario. the idea of a stress test is to, well, stress the bank and see how well its financial performance holds up in a hypothetical environment this baseline scenario represented interest rates that we currently have in the economy, but the severely adverse scenario had rates

starting out with three-month t-bill very low and dropping to zero by 1q 2023. i would love to have that economic environment we don't have it that's not real at all i don't -- it seems like the designers of the stress test left out the idea that the fed itself would engineer a reduction in economic activity, in an attempt to reduce inflation. they ignored their own policy. this doesn't make a bit of sense and this certainly isn't stressful to banks and certainly not severely adverse this scenario wouldn't catch any -- >> what do you mean, that the lack of rate hike modeling by the fed points to a hole in how the fed thinks about risk. what does that mean? >> it is not just the lack of rate hike modeling it is the lack of acknowledgement we have seen rate hikes if you're going to

start history at today, even putting together some hypothetical, you know, future from today one would want to acknowledge that today the three-month isn't at zero, the ten-year isn't at a half a percent, our interest rates today are are nothing like that and you have to navigate those back down through a policy environment, that is a policy environment for the fed to begin to lower rates, which they haven't done, and then get to the lower rates and i don't know, six, nine, 12 months to where you can now address what you're hypothesizing as a recession following this fed policy but you don't just start history saying, well, loans aren't performing well, but rates are super low today. the fed already made those decisions, you kind of left out a step in between. >> do you think there is a

bigger problem here? and people point out that if real interest rates are zero, for an extended period, that money goes to a lot of places where it probably shouldn't go at this point. and is that -- is that partially to blame for what we saw would more regulation, for example, have prevented svb, silicon valley bank, from going where it went with a lot of its loans and the way that they conducted business >> you have two questions here, the first is were rates too low for too long and, yes, absolutely exiting stimulus policy following crises is something that frankly we don't know a lot about. i wrote a piece about this a few years back, following the exit from global financial crisis, noting that in the great depression, we didn't have to exit we had world war ii which

stimulated production so we never really thought about an exit, maybe we thought about that in the '50s and the fed and the treasury had to get along, so the fed no longer supported interest rates for borrowing for this war effort. one might imagine we did that in the '60s when we started to unwind policies like the reconstruction finance corporation, that kind of lending we see the fed doing today. this unwind is hard. and we don't have a lot of experience with it i would say we never got on with it following the global financial crisis, we certainly didn't get on with it in a timely fashion and when we did recently, it created problems. now, the second piece of your question regarded regulation you know, cnbc covered this back in 2017 before the 2018 gold act. dodd frank was too big it was 800 pages, required 400 rules, every economist paused their research and was writing

rules for two years, that's all they did it came to implementation, there were so many rules, you know, it is not like these agencies got increased budgetary authority and hired a bunch more people to implement these. it is hard banking regulation is hard and costly and dodd frank put huge weights upon the system. so, now for members of congress to come along and say we need more regulation, no, no, we have plenty of regulations. we need to look after them we need to still get our hands around them even more than ten years later. and implement them in an effective way. >> do you think -- well, couple of things, is there more to be done you said it is hard to unwind. so we got nothing since the financial crisis, we have been doing pretty well. the system was saved now, it looks like we have saved it again people are hoping we saved it again. is there something underneath?

is that just the iceberg there is a huge thing underneath that eventually will have to be dealt with in terms of the size of the fed balance sheet and the years and years and more and more hazard created with the latest bailout none of this helps in a free market >> i would agree, none of this helps. the fed is intervening more, buying more assets, expanding their balance sheet again while they're trying to contract the economy which doesn't make a lot of sense they're stuck between a rock and a hard place and eventually this balance sheet has to come down, currently talking about just rolling off these assets, holding them until maturity, that's going to be a long, long time in my opinion, you got to get out of this game of buying assets anna swartz once related to me that individual bank policy doesn't necessarily relate to

the banking system this is systemically important claim about silicon valley bank, is it really systemically important? i mean, that's kind of a tossup. what we're seeing with republic, with other banks coming to the rescue, that seems to suggest to me that the system is fine we don't have to worry about systemic importance. we do need to worry about niche lenders in the west coast that are in recession because of tech slowdown. >> exactly let's hope you're right. that would mean that the big day of reckoning maybe doesn't need to come. hopefully -- maybe not in our lifetime hopefully. thank you. >> thank you. coming up, former philly fed president charles plosser will join us to talk about the chaos in the banking sector. checking with futures right now. they have turned south, but the nasdaq is up a little bit and the s&p is basically even. we're coming right back. rotecti, expedia pays you back if your flight becomes cheaper.

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at pgim we can help you rise to the challenges of today, when active investing and disciplined risk management are needed most. drawing on deep expertise across the world's public and private markets in pursuit of long-term returns... pgim. our investments shape tomorrow today. good morning wall street to the rescue. major u.s. banks reached a deal to deposit $30 billion at first republic in a show of confidence for the industry that had the futures up earlier, but now you can see the dow is down about 70 points a big week upcoming for the fed. will the central bank raise rates or hold steady amid the bank turmoil former philadelphia federal reserve president charles plosser will be our guest. and a streaming shocker, youtube tv raising monthly prices and

closing in on cable pricing. is cutting the cord really worth it we'll talk about the move and what is next for the industry as the second hour of "squawk box" begins right now good morning welcome back to "squawk box" right here on cnbc we're live at the nasdaq market site in times square i'm andrew ross sorkin with joe kernen let's show you where things stand if we put the board around the dow off 77 points. nasdaq up about 13 but the s&p 500 off about 2. the treasury, the two-year at 4.13 and crypto on the move, now back over 26,000. actually creeping up toward $27,000. straight over to frank holland who has got the latest movers

this morning >> good morning, andrew and joe. let's start off with fedex fedex one of the big movers this morning. shares moving double digits higher, more than 11% after a beat on eps, surprising eps beat, profit 25% above estimates. it raised its full year eps guidance the story was pricing power. the company able to increase revenues for ground unit margin was over what the street was looking for. for fedex, that's an efficiency metric and gave investors confidence, massive cost cutting and transformation effort is making progress. the ceo will be in new york city on april 5th for an investor event about that transformation. turning gears over to nvidia, shares of nvidia up after a morgan stanley upgrade for the chipmaker. you can see shares up almost 2%. that upgrade on the potential growth of artificial intelligence and the banks' belief that ai demand could give a boost to capex spending as they look to capitalize on

investor interest in ai. the valuation is at 65 times forward earnings a look at regional banks today following that lifeline by big banks for first republic $30 billion. you can see it is down this morning, down .75% first republic down 14%. mixed picture the rest of the way. we're seeing fifth third up slightly, almost a percent pacwest and comerica down and in the red. joe and andrew, back over to you. >> thank you, frank. the fed meets next week and the turmoil in the parts of the banking sector is now complicating its fight against inflation. we're joined now by charles plosser, former president of the philadelphia fed, and, charles, we have talked for months that the fed put in terms of the stock market is gone but implicit there is always sort of a -- a put when you break something or potentially break something. and back when crypto started plunging, people said, well, you

know, interest rates are going up, that's probably part of it that's not big enough for the fed to worry about in terms of breaking something are we now at a point where they -- their hands are tied because there was some dislocation or can they continue along the stated path even with what we have seen in the past two weeks? >> good morning, joe yeah, i mean, always surprising and sometimes disruptive, but having said that, i believe the fed will stay the course i think they have spent the last six or nine months trying to convince the markets and the public that their goal is to solve the inflation problem, bring inflation back to target that is very important to keep inflation expectations down. i think it would be a big mistake with credibility and effective fight against inflation to now pause or cut rates in response to the current

turmoil. so, i'm inclined to think they will raise rates i think before the crisis and svb, they might have raised rates 50 basis points, maybe only go 25 i think it is important they stick to their guns and ensure the public's understanding of their commitments. >> the ten-year, now, you know, back in the mid-3, bounced a little bit, the yield, but it was stubborn in not -- the inversion with the two-year got big. it didn't follow short rates up as much. we questioned, what is happening, why is that why do you think the ten-year stubbornly held on to the notion we could have cuts by the end of this year? what was the -- >> i think -- yeah, i think part of the problem, to put it a different way, i was a bit surprised the ten-year didn't rise more last year due to

increase in inflation. so there is some stubbornness here it might reflect the confidence that the markets have about fed target, on inflation, but it also may be -- the fed spent much of the last decade or decade and a half trying to manage and control interest rates in what i would describe as an overly precise way and i don't think they have that capability once greenspan once told us that, you know, the fed really can't control rates. and shouldn't try. and i think the other piece of this is that the fed has made looking at the ten-year rate and some other rates too much of reflecting what the fed is doing rather than what market fundamentals will tell you so the fed is looking in the mirror here and that means these

rates may not be conveying as much market information, fundamental information, as we used to think. and i think that's one of the risks that the fed has taken in this overly interventionist move of how you conduct monetary policy so i think there is some puzzles there, but it is not quite sure what the right answer is >> so, do you think that the risk of a recession has increased given recent developments and we don't want a recession, but the fed was trying to orchestrate a slowdown, so does this help the fed to some extent if it helps with inflation, i don't know whether a slowdown in the economy is the answer for tackling inflation, but it seems like this is worth at least 50 or 100 basis points of what they needed ed to do. >> that remains to be seen the fed will be data dependent i don't see this as in the short

run adding a major impact on inflation, which is what the fed is worried about this is not an inflationary shock of some kind it may be helping to slow down the economy somewhat that remains to be seen yet. and we'll have to wait and see i think the fed, why i think the fed is likely to own raise 25 basis points and give some breathing room or time to see how all this plays out i'm not particularly happy with the way the fed intervened, whether the governor declared the banks as systemic and, i mean, svb, as you guys probably know, is a pretty specialized business model, and insuring uninsured deposits is going to cause bigger problems down the road in terms of moral hazard and the risk to the financial

system and the breakdown in markets, disciplining banks, and risk taking so, i think there are other problems down the road this event can lead to, which i'm equally worried about. but i think the fed's rate hikes will depend on what inflation does over the coming months. >> we talk about moral hazard all the time not like we don't understand it. and yet it seems to keep rearing its ugly head and here it is again. some people might say that the fed was hit with a couple of back-to-back crisis with 2008 and then the pandemic. but when you have money that cheap for that long, what are we supposed to expect, that it goes to places probably not economically where it wasn't that smart to fund some of these ventures and then so they do it, if it pays off, they get, you know, big rewards, and if it doesn't pay off, then, you know, the depositors are still

covered. that's not the way this is supposed to work and sooner or later, it seems like, you know, the system is going to -- it is going to hurt more than it does right now. >> i think that's right, joe i argue you probably remember back in 2008 and '09, we were setting ourselves up for problems later down the road and you're exactly right that every time the fed takes a step to extend the safety net and expand the backups for all sorts of risk taking, various signs, i think that this aggravates the problem and so the seeds for those kinds of problems down the road so i think it was a mistake to 100% insure those uninsured deposits, a major change in policy and i think that's going to have consequences down the road, leading to more intervention,

more extensions of the safety net and less efficient economy and allocation capital. >> there is not enough money to cover every deposit over $250,000 in the country. >> no. >> you wonder how many dollars you would have to print. so i could paint a pretty scary scenario about how this plays out. hopefully it doesn't but i could paint one. anyway, we got to run, charles good to have you on. it has been a while. good to see you. >> good to be with you, joe. thank you. >> okay. coming up on the other side, we'll talk technicals with katie stockton she joins us after the break a check on the markets look at the dow, off about 100 points nasdaq up there, 20 points higher s&p 500 up off about 2 1/2 points we're coming right back.

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reality of what the banks are going to do or not do, what the fed is going to do or not do what does the chart say at this point? >> well, you know, the bank sector is the first big breakdown that we have seen in any sector and unfortunately what it tells us is that the range that preceded the breakdown was not a basian phase. i think that's folks' hope right now that we have a phase in place as of october. i think the bank sector breakdown calls that into question reasonably fears are somewhat high here and you can really see that in the sentiment data if you look at something like the volatility index or vix, it spiked above 30 in the past few days and we tend to see spikes culminate as a threat in this bear market cycle closer to 35 to 37. and we always have been of the belief bear market cycles of

this nature require a reading much closer to 50 before we finally get that kind of capitulative low. >> and what about the fed is going to do as a result of all this >> i have no idea. as a technical analyst, i'll leave that to the macro types. my sense is it is a very fragile tape and that does influence decision-making. i think folks should reasonably be cautious, noting that we have seen not just the bank sector breakdown, but also the s&p 500 showing a loss of short-term momentum and intermeet term momentum that's the difference this time around with this 9% or so pullback that we have seen, it is not just impact in the short-term gauges, but also ones that have implications for the next couple of months. so to us that means that risks should be managed, where we're looking at moves in some of the large cap technology players that are look really very

stretched. i think nvidia is a good example of that. and while i don't like to fight trends, you see that steep nature of that up move and suspect that's getting overdone and i think that's helped sort of keep the floor under the market this week we have a oversold condition that could help the market rebound a bit next week. beyond that, i think risk is heightened. >> this is all short-term. so i don't know if you can look out long-term at all, given these charts, and where things are. i had a friend call me the other day, said, look, everything feels so negative. everything feels so negative is there anything out there? what is the upside story is there an upside story on any of the charts, really? >> there is. so, if you look at the long, long-term picture going back to '09 or so, that secular bull trend is still actually in tact. so we have been viewing this as a cyclical bear within that context. there is also positive seasonal influences that will manifest themselves or should manifest

themselves by the end of this year we're at a good point in the presidential cycle there are redeeming qualities that would suggest this year is actually a transition year and we can see the market move out of this bear market cycle. we're highly focused more near term because we think risk is heightened that the low is lower than current levels. so we're watching the s&p 500 with support around 3505 right now. we wouldn't rule out a retest of that level first. >> dare i raise the issue of bitcoin? 26,000, coming on 27,000 potentially. we're just a little under there at this point. what do you say? come on! >> i had a feeling you would bring this up. bitcoin has been range bound and the level we're watching is below currently, it is that 25,200 and to buy us a little time here, we always wait for breakouts to be confirmed on a consecutive weekly closing basis. so, for bitcoin that would mean a couple good solid closes above

that resistance area and while sometimes it can be frustrating to wait for that, it is usually the right thing to do, especially in such an emotionally charged environment. that type of environment is more prone to false breakouts, even false breakdowns, so that's where the confirmation really can help validate what we're seeing. >> it is possible. i don't hear you saying 14,200 anymore. >> yeah. the level and the downside was more like 15,600 but regardless, you know, you see a confirmed breakout, that would be a bullish development for bitcoin. with bitcoin, the only guarantee is volatility, right >> two weeks above what? >> 25,200. so that was just resistance based on a previous high on the chart. and that would suggest that the range that we have seen there for bitcoin is indeed a basian phase, the opposite message from the bank sector.

so we'll see how it goes. >> yeah. it is the opposite of the bank sector, fundamentally, i think that's what the holdlers say what is the next range then? 25 to what >> unfortunately the next resistance is quite nearby still also in the high 20s so it wouldn't be a clear path necessarily going forward, but it would be a major long-term breakout and would certainly bode well for an uptrend to emerge >> okay, katie, thank you. appreciate it. >> of course good to see you. coming up, world bank president david malpass on the banking turmoil here in the united states and in europe. that interview just minutes away then youtube tv raising its monthly prices to $73, citing higher content costs will there be a backlash among users and what is ahead for the streaming industry we'll discuss it in a bit. "squawk box" will be right back. time now for today's aflac

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last year. the two leaders met in uzbekistan in september. last month, china renewed the call for cease-fire in ukraine and for peace talks to resolve the conflict okay, still to come, world bank president david malpass will join us to talk about the pressure on the global banking system and what it means for the broader economy. we'll talk about that next. congressman ritchie torres introduced three new bills today in response to svb and signature bank's demise. he'll join us live with the latest out of washington stay tuned you're watching "squawk box. inner voice: (kombucha brewer): when i started my new kombucha business... ... i thought there would be a lot more kombucha... ...and a lot less business. inner voice (graphic designer): as a new small business owner... ...i've learned that trying to be the “cool” boss... ...is a lot harder when you're actually the “stressed” boss. inner voice (furniture maker): i know everything about my new furniture business. well, everything except... ...the whole “business” part. not anymore. with quickbooks, you can confidently manage your business. new business? no problem.

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coalition of 11 banks bolstering deposits at first republic by $30 billion saying the bank from potential failure. meantime in europe, the swiss government throwing a $54 billion financial lifeline to struggling lender credit suisse. here to discuss how to contain the global banking crisis in the fed's next move is the president of the world bank, david malpass. he also served as undersecretary of the treasury under president trump and, david, one of your -- one of the things you have talked about for years and years and years are things like moral hazard and no real interest

rates causing the misallocation of assets. and since you're at world bank, you think that it is not only ill advised, but it affects the people you're trying to help and the countries you're trying to help it adversely benefits wealthy people, wealthy nations, and doesn't benefit poor nations >> hi, joe when you guarantee something that is not costless and the cost goes to the rest of the society, so over the years we had the ze 0% interest rates and that channeled capital up at the top and now they're borrowing huge amounts so the problem this causes for developing countries and poorer countries and also i think for average taxpayers is they don't have access to capital it is being allocated toward the ridge and my concern looking forward from this current crisis is that it will make the

conditions worse in terms of growth going forward you know, there are guarantees going on around the world for basically for the elite, for the upper crust. that japan has a cap on the ten-year bond yield, that's a guarantee. the fed has its deposits guaranteed they can borrow unlimited amounts to buy bonds and the bonds themselves are a guarantee for people that sell bonds or issue bonds so we got this kind of circular system where all the capital is absorbed by the rich or the advanced economies, and there is not enough to go around for the rest of the world. >> what is this -- putting all this together into a cauldron and letting it simmer what does the future look like is there a positive outcome? is there still time to somehow let things sort of ease or are we going to face bigger problems down the road? are we facing them now

>> right now you stabilize they're doing that, i was pleased to see this first republic direction, also the credit swiss, there are all different pathways that they're using to stabilize the current liquidity problem. but then you still got to deal with long-term growth problem, the duration problem, that's where the world has been for years and years now, ten years, borrowing short, and investing long the fed is the biggest carry trade and other major central banks, they borrow overnight and buy bonds, and so it takes years and years to unwind that so i guess the longer term outlook is asset repricing, and slow growth for a period of time, maybe years, as we try to re-establish some kind of market principles >> so the slow growth, i made the point earlier, if the fed were to guarantee every deposit

in the united states, that's a lot of money, isn't it and that would be a lot of printing, and obviously if you do that, inflation is going to even get -- we're going to be like argentina, it is 100% so, it is a slippery slope to go down why did it become necessary for these special people out at svb? >> when there is a failure, you're in a difficult situation, so you take emergency actions and that's what they did by naming it as a strategic -- a systemically important financial institution, so they can do the bailout or the support, the guarantee for the deposits the way they did whether that spreads to the rest of the system is going to be really important do you -- it is vital for the u.s. and i think the world to re-establish some concept of small business lending from

medium-sized banks and if all the deposits migrate to the big banks, then who is going to be on the ground in communities making small business c&i loans, commercial and industrial loans. that's a critical part of re-establishing growth we lost the inner bank market, the repo market, these are critical mainstays of capital allocation within the u.s. and really worldwide and they have been lost in over the last decade. so, re-establishing some way for money to move around among banks in a market oriented way is really important for growth. and, i mean, you know, the ultimate goal is how do you get people's incomes up from the median income up, the middle of the society's incomes to start going up again, both in the u.s. and worldwide in developing k cou countries? >> when are you leaving? are you leaving at the end of june >> yeah.

by the end of june it has been a very busy, really six years. you know, i did the world bank for four, the u.s. government two years prior, and so i'm looking forward to new challenges, but we're finishing up some really important projects at the world bank, so i'm happy the way that's been going. >> david, nice to see you. i'm curious and i know you're leaving at this point or as we said in june there was a lot of controversy before this decision to leave and a new person to come in, in part because of some of the comments and i think your position, frankly, on climate change that sort of led to all sorts of commotion and i'm hoping you can just reflect on that for a moment, especially in light of where we are in our economy now, and how people think about climate and esg versus the economy, versus so many other issues

>> hi, andrew. these are complex issues, you know i was caught unawares at our -- and deer in the headlights in september. but the world bank has been really active, you know. in my presidency we expanded climate finance. one of the major things is what is the cost, how much are -- is the world able to pay as it makes a transition toward lower carbon fuels and how do you set up systems to do that? these are just big challenging issues and i'm very happy with the progress i've made that the world bank has made on these issues and also on the range, importantly, you know, i don't want it to get lost that world bank is a big organization, it has been really well run, we have been successful in our fund-raising we have done two big fund-raisings for the poorest countries. $80 billion and $93 billion, we

have a $630 billion balance sheet that has been well managed through multiple crises, covid crisis, the current banking challenges, and i'm so -- i'm proud of that. and really looking forward to finishing some critical projects at the bank and we're in a good period for transition. >> that's a nice way of saying, i think you are -- maybe the way you said it is cost versus benefit analysis maybe you're a little less green than the average climate lobbyist but there has been a lot written about silicon valley bank in terms of a lot of the things that the startups funded were unprofitable ventures that may mean something to climate, 10, 20 years down the road, but not profitable now i know you've seen some of that scuttlebutt. >> so, how you -- how you pay

for global public goods is a key part of the world bank's evolution that i've been working on and we're going to be making announcements. you know, we're finding within the world bank a way that we'll be able to lend $40 billion more, so we have got a delta that is going to increase, and people will be thinking about how much of that goes to food insecurity, which is a major challenge for the world. how much goes to education, to health and to climate costs, and so these are things the world has to work out. you're right, it is a cost benefit, how do you maximize what you're trying to do if your goal is to reduce carbon dioxide, what is a sensible way to do that and i think it is not the conferences that the world has been doing, there has to be projects that change on the ground and that's why there was a lot of resistance. people said, no, we want more conferences and fewer projects and i've been really arguing that you have to define what

your direction is in terms of adaptation and in terms of greenhouse gas reduction and do it in a sensible way with an eye on the costs and that's what i think the world bank is set up to do that effectively. >> all right david, thank you for your service across the board for -- in both government and in this job as well. but we'll see you hopefully before you leave, before you're gone it is march. st. patrick's day. >> we got -- we got lots of work to did and i know the markets aren't going to stop functioning. >> they aren't okay that's good to know. all right. see you later. >> okay. coming up on the other side of this, china's fresh welcome to business travelers. that story is next it's happening and youtube tv raising prices, the google-owned company blaming a rise in content cost for the change we'll hear from rich greenfield. , there's only one thing you don't have enough of.

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that's interesting good morning. >> reporter: you can come here and i can take you for a tour of the live market s or something if you don't come here, there are several american high level executives who are expected to come in, starting next week, to attend a government-sponsored event as the government here looks to try to attract more foreign investment the visas had been suspended at the start of the pandemic and are being reinstated and also the country is reissuing tourist visas. all of this has been welcomed by travelers here as i found out. now that china reopened, people started traveling more and more, including for business no more covid tests or health scans are required here at the beijing airport. though masks are advised it is a little quiet for this time, but the airline told us our flight is almost full. the lines are back

the foot traffic is up 80% since december people aren't buying just yet. so my first flight in china since zero covid ended is over it all feels oddly normal. though the memory of zero covid lingers on covid restrictions and geopolitics still weigh on travel that's directly between the u.s. and china for example, travellers from the u.s. still need to present a negative 48-hour covid test before boarding to come here also, direct flights between the u.s. and china have been capped at 12 a week and finally, another big development was that the expansion of group tours by chinese to other countries the u.s., though, was left off that list. guys >> all right eunice, thank you. keep us updated with the latest on that, the reopening is going to happen in stages as we're

seeing but at least we're on our way. good to have you on. coming up on the other side, rich greenfield on youtube's decision to hike prices. the streaming battle, tiktok and so much more look at the futures, dow off 134 points nasdaq up 5 points the s&p 500 off ten points we're coming back. ate types. would you stop calling each other rock stars? you're a rock star. you are a rock star. rock stars. please! do you know what it takes to be a rock star? i've trashed hotel rooms in 43 countries. i was on the road since i was 16. i've done my share of bad things. also your share of bad things. we know that using workday for finance and hr makes you great at your job. but that don't make you a rock star. ted! ted! ted! oh ted in finance. you're a rock star! hey liz in hr? can you do this? unless you work with an actual rock star. you are a rock star! thank you! who's the new guy?

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the china-based company has been exploring possible deals since 2020, including, of course, proposals from oracle and walmart. so we're going to talk about that and the ongoing streaming wars that now resulted in price pressure and increase to various services as the cost of content continues to rise. google raising the price of youtube tv to $73, up from $65, claiming content costs joining us now is rich greenfield let's talk about tiktok and let's talk about the streaming price. i don't know which way you want to go first, sir. >> look, i think tiktok is the one that is obviously, you know -- from a stock standpoint, if tiktok got banned, it is market cap-wise best for meta, just given how important it is but from a stock percentage move, it is going to have the biggest move on snapchat -- snap stock. it is very impactful that said i don't think it is going to happen. i think there is a lot of noise about it, but i don't think you're going to see a ban.

it is hard to do that. we're not just talking about a social media ban we're talking about sort of a direct attack on our relationship with china. and i think that is a thing that is going to give a lot of people pause before they actually try to do it >> and so, to the extent that people are playing this, sounds like you're saying don't play it, don't be buying snap or meta on the assumption that there is going to be some kind of ban the question is, could there be some kind of restriction that even just changes the business at all >> well, look, i want to correct what you said. i'm not saying don't play this from the sense of, look, there is definitely an impact on advertisers. the amount of noise you're hearing about the attack on tiktok i'm sure is starting to not worry, but certainly give that some advertisers or brands pause on what exactly happens. that said, you know, there is a huge shift of dollars towards mobile tiktok is where creation is happening.

the whole category is blowing up and more money coming into this category is good for all of these companies, but, look, any shift off eadvertising away fro tiktok or slowdown is good for meta, good for google, no doubt about it. >> let's shift to -- talking about google, let's shift to youtube tv that's, like, youtube live tv, raising the price of the package to $73 the bundle keeps getting more expensive, which is going to maybe, this is what i don't know, how much pricing elasticity do you think they have on the boundle? i am a youtube tv live subscriber >> so am i full disclosure -- >> this is personal. >> full disclosure, i am too i think it is the best product on the market. you made the best choice in the market and, remember, it started at $35 six years ago. so it has gone up at 12% a year on average over the -- >> just to be clear, didn't they lose money on it originally as -- i lost the lead, but to --

>> i still don't think they make any money. there is not a lot of -- even your parent company comcast says there is not a lot of money to be made in the video side of the bundle anymore it is about broadband now. i think the reality is youtube tv is still far cheaper than its peers. when you think about the is farn its peers when you think about the traditional bundle from cable or satellite all those fees, those $20, $30 of fees, there's no box required they raised price into the tournament, they took a day when you really sort of have to have it and it's still cheaper than the alternatives and the reason you and i have it and everyone on my team has it, it's a better product. so it's actually worth more than the peers but still cheaper than the peers. nobody likes when netflix went from 7.99 to 15.99

disney plus just went up $3. do yo . >> do you think it can hold the rate >> they're cheaper than the alternative so everyone is moving from traditional cable satellite to youtube tv or other -- but then you're missing the biggest thing of the year. sunday ticket is coming to youtube. they're going to get 2 million to 3 million incremental customers, if not more just from that event. >> hulu live, what do they price it at? >> i believe $69.99. a few dollars cheaper but you do get hulu that's an important point that gets lost. depending whether you take ads or not, you get a meaningful incremental value. >> do you like the interface,

the product that is youtube that much better, right >> i tried them all. it is definitely a better product. the only reason hulu is in that business is because historically disney and nbc wanted protection it's not a business that makes any money. as hulu is probably being sold, iger saying it's tricky and looking at alternatives for hulu, i wouldn't be surprised whoever buys hulu, if it goes to somebody else, i don't think they'll be in the hulu live business it's not a great business. look at fubo stock >> if comcast's parent network were to buy hulu, would they continue to run hulu live? >> yes, but they would call it xfinity. just like can you buy a tv that

has comcast software, i can easily how this could become the out of market product name >> what's your gamble on the future of hulu right now >> disney wants to sell it we broke that. disney wants to sell the asset i truly believe they do not believe to be in general entertainment. it's too competitive they don't have enough of an edge in the general entertainment. if it's not comcast, could it be someone like microsoft, a third party that steps in? it's not so obvious. could be apple obviously but the most likely choices is this is going to comcast >> go ahead. >> i was going to say i think disney's -- everyone is retrenching to what they do well disney is not a general entertainment company. what they do well is franchises

and even their franchises are suffering a little bit i think they're going back, slowing volume on marvel, on star wars. >> comcast stock up or down. >> in the short term it's going to put pressure. they're losing $2.5 billion a year on peacock and what comes with hulu. d do you get search light or fx? what do you get? are you getting a shell? what are they buying if you buy hulu in theory if you buy it and get all you want, it goes to profit, you just accelerate the future, that's what i would think how they're thinking about it is short-term cost to accelerate the future >> rich, i want to thank you

appreciate it. >> have a great weekend, guys. >> you, too. >> google is indicating to ex-staffers who got laid off on maternity or medical leave that they wouldn't get paid for all of their time off. more than 100 former workers have organized a group they called laid off on leave and they're asking executives to pay them for the weeks and months that they were through the take-off before the job cuts were announced in january and those who spoke with cnbc said they've been told they'll only receive pay through their designated end date along with standard severance you can read more on cnbc.com. there are a few changes coming to the s&p today. target, dollar general and dollar tree, and visa, mastercard and paypal will move

to the finance sectors >> coming up, what the fed should and do at next week's meeting with peter orzag as we head to break, check out the shares of credit suisse following this morning it's on track for the biesggt weekly decline since 2008. "squawk box" will be right back. when you choose comcast business internet, you choose the largest, fastest reliable network. you choose advanced security for total peace of mind. and you choose a next generation 10g network that's always improving, getting faster; more reliable; and more intelligent to keep you ready for today and tomorrow. the choice is clear: make your business future ready with the network from the most innovative company. comcast business. powering possibilities™.

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good morning another rescue in the banking sector this time a group of major banks giving first republic a lifeline but this morning futures are sliding down, at least on the dow right now. then we'll talk about powell's dilemma. we'll look at what's on the table for next week's fed meeting. and what can congress do to restore confidence in the banking system in house services member ritchie torres is about to introduce new legislation he'll join us as the final hour of "squawk box" begins right

now. good morning and welcome to "squawk box" here on cnbc. i'm joe kernan along with andrew ross sorkin. becky is off today u.s. futures had been up a little bit early on after that big gain yesterday but you can see triple digit losses now, at least in the dow the system s&p off about 5 and the nasdaq eking out gain up about 33 points. treasuries, those are some moves over the past week nothing like it, i've never seen in the two year. i saw some in the ten year back in 1987, similar moves it's been a long time. crypto currency, check out bitcoin. talking to katie stockton, the

report levels are like 14,000. she's still not very bullish on bitcoin, though it's almost 27,000 this morning. >> wall street to the rescue a group of financial institutions agree to put in $30 million into first republic. g goldman sachs would and bank of america would deposit about $5 million. deposits are obligated to stay at the bank for at least 120 days you're looking at shares of first republic still off 12% there's still some nerves and questions about whether that bank ultimately will get taken over in the next several days or weeks. take a look at some of the other regional banks you're looking at comerica,

keycorp, pacwest and western alliance i've been wondering if the government was going to do some shotgun marriages. i was hoping there was support about all this and they'd have time but i think it's going to be a busy weekend, folks i do >> and bloomberg reports that credit suisse and ubs are opposed to a forced combination. ubs would prefer to focus on its own strategy and credit suisse wants time to do its own strategy now let's get over to our senior markets commentator mike s santoli. what are you watching this

morning? >> the s&p 500 was down last week but we are up a little bit and in fact have traded it above the monday morning low for basically the entire week. a lot of that is thanks to the very largest growth stocks you see right in the middle basically of the range for the last 14, 15 months remember when we kind of made a fair bit of the market finally breaking above that down trend line we've kind of gone back and tested it, still delicately kind of dancing around it, still trading above december's low that's been a fixation of a lot of traders, is sometimes a little bit of a test to see if the market can stay above the december low i mentioned the big growth stocks take a look at the mega cap growth of the area on a year-to-year basis, nasdaq, that's a pretty massive spread especially when you consider how much of the s&p that represents. it's been a bit of a chase

the big tech stocks have regained their status as havens from cyclical and macro forces and they're generators of cash, not consumers of capital they're getting stretched with expenses again you have to wonder if they just allowed the rest of the market to reset lower and maybe can you have a rerotation back or if this is another huddle in, microsoft and alphabet and amazon and see if it turns out okay i've been looking at cyclical sectors such as mining and metals, people playing for a global reactionceleration you see semis continue to act very well. there's the a.i. excitement along with the sense that the cyclical trough has been seen. metals and mining really have

gotten hit here, been weak we'll see if that relationship evolves from here, joe >> it's just like some six-month charts, mike the s&p looks like notmuch going on then i look at the ten-year. 350 a bunch of times already i'm even looking at the two-year, which did have that spike up to 5% but this overall, that's about right where it's been, too if you came back from outer space and sat down and looked at those things, you'd have no idea everything we've been through given where the markets are now. >> it's a good reminder that most of the major moves across asset classes pretty much happened by the middle of last year, by late summer of last year i think that is one of the big debates right now is the fed gets towards finishing up and people are somewhat bracing for earnings to fall away.

m maybe that's going to be the next chapter sideways for this long is either a base or it's been a little bit of a false dawn depending how you look at it >> we said the vix has been up to just over 30 a few times but never got that big move to 40. maybe it's a duration capitulation instead of a week lip oweekly or monthly >> i've heard there's less of a need to urgently head in the moment >> we have breaking news svb financial filing for chapter 11 bankruptcy in new york. our next guest was on the show exactly one week ago when news was breaking about silicon valley, its bank and the impending demise at that time the initial

assessment was the situation was potentially dangerous. now we have the bankruptcy i don't think the bankruptcy itself dangerous i want to pull this forward. the ceo of financial advisory at lazard is here and former direction of the office of management and budget under president obama. but first republic, is there a fire wall? do you think we're playing dominos? where are you in terms of looking at co-maerica, packwest. >> what happened yesterday is not quite 1907 but it's a shot of confidence. but here's the problem writ large, the regional banks have relied on a business model that relied on uninsured deposits so i think here's what needs to happen at this point the government needs to make

explicit what i think a lot of people are assuming, which is that for the foreseeable future, uninsured deposits don't exist everything's insured they can't do that technically. >> they don't have the power to do it. what do you do >> you can come out and say we are going to propose legislation to do that and in the meanwhile we anticipate if there were any other problems, we are going to do the same thing. it would -- >> do you think there would be bipartisan support for that kind of protection? >> no. >> invariably it creates another hazard -- >> i don't think so. >> you don't think what? >> i don't think it creates moral hazard the moral hazard argument that -- >> the moral hazard is on the executives who then may take remarkable risk with depositors' money. >> at that point we need equity and bond protection and

regulatory and supervisory roles doing their job. there's going to be a lot more regulation and supervision at regional banks >> i don't know if this is going to be an evocative question, it's going to be unpopular i love the idea of community banks and regional banks, i love the idea of the connection they have and their ability to lend and do things for the community. there is an economic argument that actually we have way too many banks in this country, that we actually shouldn't have, you know hundreds of banks and maybe we should have a handful of banks from a just pure efficiency perspective and actually the ability to protect the deposit base and everything else you look at canada and other places what do you think of that >> i think you're mixing two things one is most of a number of those banks are not the mega regionals. >> we're talking about the small guys >> the really small guys >> the other question is do you want to wind up with a banking

system that is just the major banks? >> that's the question >> but that's not just an economic argument. there's a political. >> i know. that's why i'm asking you the question >> i think the fact of the matter is if we don't wind up insuring all deposits and even if we do you'll see continued flow of asset communication. >> there's going to be a lot of blame we're going to talk about in the last hour looking at svb. do you say this was the fault of management obviously there's questions about the fed. there's questions about the supervisors in town. you know, san francisco fed board itself there's -- imean, some people have looked at actually some of the venture capitalists who were the depositors who were screaming on twitter get your

money out before the fire was the fire >> the saying is success has a thousand fathers and failures and orphans. the short answer is there were multiple failures here i don't want to pontificate the actual allocation of them. clearly there were multiple different factors here, not just one. >> you're jay powell, this is all happening. you have to do something, say something next week. do you go 25 basis snopoints do you not do people go oh my goodness, things are worse than we thought? >> i want to back up we talked about this before. in protecting its bank runs and protecting financial stability, there is an argument for going hard and going fast and going big. in the price stability mandate, i don't think there is that argument there should be a gradualism

test and see, especially because there's a ton of ambiguity about what's causing inflation today i'll have a paper on that next week so given that ambiguity, it makes much more sense on the price stability front to go slowly and pause >> you say pause to zero >> i say pause to zero given what the ecb did, maybe that's going to be particularly challenging for him. i think it's at most 25 and maybe a pause thereafter >> that would kind of mean they got it wrong on the way in and the way out. >> two wrongs don't make a right. i think that's the fundamental value. when you go without price stability, you break things. >> i'd like to argue that it's fiscal spending enabled by zero interest rates that caused the inflation but i probably agree with you to some extent it's kind of a one off from the reopening and the pandemic and

supply chain and russia invaded and it probably is quasi transitory and to go as hard and fast and keep talking about higher for longer, i think they might be wrong about that >> and the important point there is people say the supply chain problems have eased. and the evidence suggests the impact on prices, it takes a while to -- >> did you see someone told them -- look around. someone told them peter orszag is here. does that happen >> all the time. can't go to starbucks. >> as an omb guy and as a lazar guy now, like a pseudo capitalist at least -- >> i'm a real capitalist >> that wasn't too bad, was it,

the needling what did you think about the budget introduced by the president? are you at least a little cynical about the budget just raise taxes here and there. >> it's not probably worth spending the time. >> it's not going anywhere >> opening salvo and debates are coming >> ban opening salvo >> we're going from a regional bank issue to credit suisse and the debt >> that budget was a crisis. >> okay. >> no consequence comes from that budget other than the opening salvo. >> that's even more cynical than what i was saying. >> that's the state of partisanship in washington >> peter orszag, thank you, sir. >> coming up, we'll talk more about the dilemma the fed is facing next week and how investors should prepare

themselves but next, targeting tiktok the biding administration staying it risk being sold but will it last that's next when "squawk box" returns. ( ♪♪ ) 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. boy: when the season started, i still thought about dad. but i could start focusing on the things he taught me. woman 2: at first, i didn't know anyone. i didn't know where to sit at lunch, anything really. but that season... that season changed everything. all: (chanting) who's lookin' clean, if you know what i mean? say what, what... (cheering) ( ♪♪ )

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the nutsfutures right now. we are now down about 100 points the s&p down about 11 points and check the big bank stocks. here's where the move is a-coming they've all been moving lower just in the last 90 minutes or so the regionals have come down even more. lots of questions about what's going to happen this weekend i want you to take a look at pacwest bancorp, first republic bank down about 14%. are these deposits enough? is a deal in the offing? morgan stanley has been looking at that company. and i think there's a lot of question of whether we're going to have a weekend of potential

shock and mergers. when you think back in 2008, this is when you need to take these things off the table the idea one is enough, you say first republic, everyone else gets safe, i don't think it's safe >> was it scarier last friday or this friday? >> i don't know about that you go back to what peter orzplorszag was going to saying. we need to get into explicit guarantees you can't do it because you don't have the powers. does congress want to get behind this you have $10 billion of fdic and 6 billion exposed and it's not a good picture >> would you say that we tried the let it go method once and -- >> and we're not doing that again. >> and we're afraid. we're even afraid of silicon valley bank? >> i don't think we were afraid

of silicon valley bank per se. i think we were afraid if they went, a, everyone else would go. >> regionals >> i think the regionals would go and you also had a concentration of companies, sometimes big companies that had payroll and the money for the payroll was in the bank >> right someday. i don't know the time we tried it was a the wrong time other times might be the right time and now we're afraid. >> another way is not to ensure all deposits, maybe raise it to half a million dollars on an individual level but then for corporate accounts, you guarantee payroll accounts the money is in a dedicated payroll accounts, you insure that that makes that a lot easier for everybody else to fail or not and you can maybe change that. it might be a little cheaper to

insure as well >> for individuals 500 would probably do it but if you got $30 billion at the bank, that's why i was asking 250,000 safe social media stocks soaring yesterday on the biden administration's calls for bite dance. >> tiktok saying a divestiture would not address it and a third-party monitor will but the uncertain future for the app, which has 100 million u.s. users and an estimated yearly $15 billion in revenues this year sent its rival's stock

storing. yesterday meta shares gained 4%, pin tres about 6% and alphabet shares the path forward is unclear. two and a half years ago, the administration worked on deal involving walmart and oracle investing $25 billion. this time the conversation is about a full-out divestiture and it's unclear what assets tiktok's parent could be pushed to sell. are we talking just about tiktok u.s. would it include the tiktok algorithm and what about tiktok's chinese national employees? would an ipo address u.s. government concerns? those questions are key to determining what tiktok's valuation would be this could all take months to figure out in the meantime we will be

watching tiktok chose to testify between the commerce committee next week. some say a forced sale would amount to a ban because the chinese government would not allow the sale of that very valuable tiktok algorithm. guys >> julia, thank you. a lot on tiktok over the weekend. the chinese are like can we definitely point to the things that we're talking about in terms of, i don't know, poisoning our youth, stealing all the private information? they're like there's none of that happening here, show me one example. they say it just paranoia. i fell for it for a second >> i think it will be really interesting to see how the conversation goes in congress n next week because this is something that has shown

bipartisan support cracking down on tiktok but tiktok has implemented a lot of protections because of this criticism. there are a lot of questions about the data and where it's housed that the company is going to want to answer. >> right it's held up in that balloon on the server next, restoring confidence in the nation's financial system. does that mean more regulation is on the way? house financial services member congressman ritchie torres joins us on set. he's nearby, the bronx ernight m. the smoothing benefits of retinol. are now for your whole body. plus, fast-working crepe corrector diminishes wrinkled skin in just two days. gold bond. champion your skin. my name is joshua florence, and one thing i learned being a firefighter is plan ahead. you don't know what you're getting into, but at the end of the day, you know you have a team behind you that can help you. not having to worry about the future

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treasury secretary janet yellen has reassured the senate that our banking system is sound following the collapse of silicon valley bank. congress is looking at other ways to rea surssure the public congressman richie torres, a member of the finance committee. it's good to see you in studio i was looking at some of your comments you think it was absolutely the right thing to do and like everything in today's sort of partisan atmosphere there are those that say why do these guys and gals deserve a bailout when so many other people don't get a bailout? and it's basically, you know,

socializing capitalism when capitalists are always disparaging socialism. but you think that it was necessary because it just needed to be done or -- >> the single greatest priority of the federal government should be to protect the safety and soundness of the banking system. >> was that what it was doing in this case? >> it's the beating heart of our economy and every house and every business there was a real concern about a contagion spreading to the broader banking system i thought the administration did act correctly and great to prevent the contagion. >> you know whose deposits are getting guaranteed here, let's say people who can afford to lose it. you talk about people not getting payroll. in general these are startups. you can even tie it back to the investment banks, venture capitalists and they're taking risks. they're going to ben efit if they hit it big, shouldn't

they suffer the consequences if -- >> if the damage had been contained to silicon valley bank, there would have been an argument against intervention. once it became evident the risk was spreading to the broader banking system, we have an obligation to intervene. that's the regulatory framework we crafted in 2008 >> first republic bank down 20% this morning you can see the nerves pacwest down 10%, western alliance down 8% the question is did it work, talking about contagion. are we going to see shotgun weddings this weekend and other capit capital investments made >> i was concerned there would have been cascading failures with lack of intervention. >> that was the first step in a long sort of number of steps of intervention >> look, it might take time for the banking system to stabilize but that's an argument for the

federal reserve, for example, to proceed with caution the federal reserve has a duel mandate of price stability and maximum employment and a case could be made to include financial stability. when it comes to raising higher interest rates, i think the federal reserve has done too much too fast and destabilized the banking system and there's an argument for slowing down >> when we did dodd frank, we maybe diluted it senator warren has been making that case. you think there could have been regulations that would have prevented what happened at svb >> hard to know for sure if they had been subject to enhanced standards and stress testing, there would have been a greater likelihood about flagging concerns about interest rate management. so i would argue yes look, we're we're going to provide broader deposit insurance to regional banks, it's only fair to subject those banks to a higher standard of regulation >> then the question is do you

insure all deposits? is that the answer we were talking about do you just raise it on individuals to a certain number i was throwing out the idea that you could create effectively an insurance program for accounts that could be sort of referenced as payroll accounts if you're a corporation and you have money simply for payroll maybe you don't ensure the entirety of everything once you insure everything, does it change the sort of moral hazard question? >> it's an issue that we have to explore but i kind of disagree with the premise of the question i actually felt like the system worked, that the regulators did have the authority they needed to respond rapidly to the situation. we insure deposits up to 250,000 but the systemic risk exception allows us to broaden that to prevent contagion. >> but right now it's not explicit if we have to test this -- i

worry about waking up one morning and we have another bank that has a true run and what happens then does the government backstop those deposits and then do we have another run? that's the kind of i think question mark that people have which i think fairly raises the question if you have more than $250,000 in a bank account on an individual basis or you are a business, do you stay i have to move some of that money? >> i think the government has made it clear we'll do whatever is necessary to prevent contagion. we have effectively expanded the realm of too big to fail to include the regional banking system that sends a powerful message to the public >> moodiys was aware, a lot of people on twitter were aware yet the san francisco fed did not seem to be aware of the problem. whose fault was that

>> there are layers and layers of failure there's a failure on the part of the bank executives who should be held accountable. >> should they be held accountable, claw backs? >> claw backs and a failure of supervision and monetary policy. all of those factors contributed. it was a unique circumstance more than 90% of the assets were uninsured and that's an anomaly. >> do you think that being so concerned with esg or bei or any of the things that you've heard from the right on this, do you think that ordinary risk management was ignored because of the focus on everything else? >> my view is if you're reducing the banking crisis to wokeness and dei, you're not to be taken

seriously. >> just in this particular incident many of the startups were climate related. climate is a good business to be in right now >> there might have been app assumption, you know, even though long-term assets become less valuable when interest rates rise, deposits become more valuable when interest rates rise and there might have been an assumption that the gains from deposits offset the losses from long-term assets but the assumption breaking down when you have a volatile deposit bank it was a failure of supervision. >> goldman sachs, there's been a bit of a debate about this, in the final week in part what led to this was they were going to offload some assets, $28 billion, taking a loss in the process. they were being advised to raise capital by goldman on one side and goldman ended up buying the debt from them on the other

side, making somewhere the estimates could be 50, 60, $100 million in fees. there are questions whether you think that will be clawed back or whether that was fair or the like >> i'm not sure i have a point of view. we certainly should explore claw backs because the priority should be to protect depositors. it was unwise for silicon valley bank to announce had it sold more than $20 billion in securities in a loss against the backdrop of silvergate >> without having rauzedised cal on the other side. >> exactly >> don't be a stranger. >> you're close. a quick subway ride. just downtown here >> next, the financial battle versus maintaining financial security "squawk box" returning in just a moment

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welcome back to "squawk box" right here on cnbc take a look at the futures now we are off 224 points. nasdaq that had been up now down 25 points, the s&p off about 22 points as i think some nerves are starting to emerge over the banks. we want to go over to rick santelli with a look at treasuries rick >> it's unbelievable

two-year note yields continue to drop in yield, rise in price at 405, they're down about 54 basis points down the week, a ten at 345 is down 25 basis points on the week if you look at a 10-year chart you see how quickly we've gone from 4% to under 3.5%. i think this next chart is the best of all. this is a july of 2020 chart on august 4th we made the all-time yield close at 4.1% as treasure yields moved up, what happened was the unrealized losses piled up and hedges were insufficient the rest is kind of history. look at fed fund futures now, i understand that they're pricing in probably around a 75% chance of a quarter point next week i'm not going to argue that.

once again, at this point in time that's the proper amount. will it change as we get more information? absolutely but as you look at that chart, we really jumped and i think the enfact that pris have jumped, we can clearly see the landscape has changed and much of the investors' opinions have changed about culpability as well. >> thank you, rick >> kind of like '87 a little bit, avery, rick, do you remember >> oh, god, i remember i was in the pits. i was buying calls i was buying 82 and 84 calls at 30-year bonds, the prices were below 80 and i made a decent amount of money. and we definitely at that point conditioned investors that when

you get a nasty looking stock market you usually get a rally in safety. this goes round and round. after watching negative rates in europe and not learning les lessons -- what happened in europe to see the deposits flee and to realize this little accounting game of unrealized lossesnot being hedged probably and i know andrew isn't going to like this but "the wall street journal" op-ed brings up there were other things that the banks were concentrating on i can tell you there's money all over the place that the government has sprinkled for those programs and that bank, at least the one in california, the svb bank, definitely was in the game of allowing people that didn't have very good track records of making profitable

companies try to create a passageway to get at that money and that ultimately i think created their demise anyway, that's just my opinion >> rick, if you look at what happened in terms of their balance sheet, it doesn't seem to be that was the concern >> you've seen the balance sheets have you combed through it >> i mean, i've looked at it like a lot of people have over the past week. unfortunately i wish i had looked over it two and three and four months ago. the question is when you look at the large loss -- >> is it something you see on the balance sheet, andrew? what was their concentration what was their focus did they have a good risk manager? i guarantee you they were familiar with the ins and outs of of some of the regulations i think we need to be very open minded here.

>> all right, rick thanks for a closer look at the fed's rate hike path ahead of there -- uh-oh, i'm going to use the "p" word, pivotal meeting. i want to bring in our next guest. thanks for joining us. what's going to happen next week 25 >> probably 25 i'm not sure that's the right move, though >> what's the right move >> the right move is to do something. we've got a situation where financial conditions are tightening some fed speakers have said treasuries have come down, that's an easing of financial conditions no, that's a case of a flight to quality, flight to safety. the banks are hoarding reserves. they're not going to be lending. this is a time to think about growth going down, not accelerating >> in regionals banks, the dow

is now down. when you get wide spreads and you get sort of, i don't know, volatile trading in very stayed investments, what does that say? >> it tells you that people are worried about -- they have the wrong positioning. it tells you they are changing their hedges they're trying to catch up with the risk profile that they want to have rather than what they have i worked for cls, a huge foreign exchange settlement operation. our volumes have ticked up the last couple of weeks as this has progressed you're seeing it in equities, bonds and definitely in fx >> the terminal rate in your view is now what >> we're not that far from it. the feds -- i mean, look, you know, the data right now looks okay but if you go back and steve liesman has done this work at some point, if you go back and

look at the green book, which is the fed's forecast you look at the middle of 2001, they were forecasting sort of growth for the rest of the year. we had already been in recession for nine months when that forecast was made. middle of 2008, same thing if you look at the fed's forecast in the sum early of '08, the question was can we avoid recession? maybe yes, maybe know. the data gets revised. you can see at some point later this year there will be massive data revisions we're probably in the early stages of a recession or we will soon be there. >> do you think the fed itself or san francisco fed, is there egg on the face of the whole institution? there there should be. we're talking about an interest rate mismatch.

we were talking about a bomnd market portfolio that was going to lose emoney. it's a fair question where were the regulators? why didn't they pick up on this earlier? yeah, there is some egg on their face >> because regulators enforce regulations. >> we need that. >> do we need more regulations or better regulators >> we certainly need more imagination, better awareness, more critical thinking about what can go wrong. when you go from zeer other interest rates to 4 1/2 in a short amount of time, not everyone will be able to adjust their portfolios so this is a risk that's not novel. the regulators should have been anticipated it and should have been anticipated that somebody is going to be caught with their pants down

>> we can blame the supervisors but if the question is the regulations don't allow the supervisors to take steps and you look at the the regulations that were loosened, this's a question about how much do you think this and we'll learn more to their credit, the cred has already so we are going to get some more information. even the existing regulations allow the primary regulator, the fed as the holding company to look into and assess and judge what is going on, you know, to rick's point about who was the risk manager what kind of risk did they have? you don't need extra authority to do that kind of assessment. >> i don't know where you put the put. it used to be a stock put. that's gone.

this feels like a put to me. i think the going gets a little bit rough and we're going to take our ball and go home and not raise any more rates it doesn't seem that if they were convinced we had to go to the mid 5s or high 5s, for inflation, i don't know how that changes it suddenly their resolve is gone >> the question is i think in a way will this change their forecast >> so they can hide behind that. >> to be fair, this is a change in the environment if the financial system is shifting to a much tighter stance, then had it is a fair point to say what is this going to be the impact on the country. >> this might be worth 50 or 100 basis points >> you bet >> thank you >> thank you >> coming up next, we're going to talk about financials, as the

sector is coming under pressure again this morning and one bright spot for today, fedex beating shipping expectations and raising its full-year earnings forecast. there's some nice news up about 11% this morning. "squawk box" coming right back i promise - as an independent advisor - to put the financial well-being of you and your family first. i promise to serve, not sell. i promise our relationship will be one of partnership and trust. i am a fiduciary, not just some of the time, but all of the time. charles schwab is proud to support the independent financial advisors who are passionately dedicated to helping people achieve their financial goals. visit findyourindependentadvisor.com

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♪ welcome back to "squawk. bank stocks all lower this morning. joining us right now to talk about the sector, chris, a managing director for oppenheimer and company. good morning to you. we're looking at the big banks down we're looking at the regional banks down how are you thinking about this, and should we be concerned i hate to use the word "rescue," but are there more rescues to be had? >> well, the first thing i

want -- couple things i want to say. one is, silicon valley was an outlier, and it was already very clear in the third quarter results last year. in the third quarter results last year, for the industry, the asset side of the balance sheet priced up 24 basis points more than the deposit cost. for silicon valley, it was the other way around the deposit cost repriced 36 basis points more than the deposit costs. in the fourth quarter, it was even more dramatic for the industry, the asset prices repriced four basis points more than the deposit costs. for silicon valley, it was the other way around to the tune of 60 basis points. so, it was already very clear, months and months ago, that there was an issue, and quite honestly, i personally had conceived of it in terms of an issue of an earnings squeeze i didn't see the liquidity crisis coming.

but it was obvious they were an outlier. let me give you one other statistic here their investment securities portfolio was nearly 60% of assets for the average regional bank, it's about 28% >> i'm not saying it's not an outlier, and clearly there are so many issues that are idiosyncratic to it, but at the same time, look at the kre, across the board so, we have had people come on the show, or you read "the wall street journal," and they say, you know, sbv was involved in woke this or that, and i look at that and say, go look at the index. are all these banks too woke that's what's taking them down i mean, it makes no sense. >> there's -- there's clearly a lot of fear in the market, but for the most part, these companies are very stable. the big regional name brand banks, you know, the banks that have branches all over your city

are pretty darn stable and you know, the thing about most banks -- like, silicon valley was a place where companies went to park money, right? i mean, a venture capital company would raise $200 million and then they would burn it over two years and so they would park a lot of money at silicon valley and draw it down generally >> right >> the big banks don't want that kind of money. what the big banks want are operating accounts they want -- you know, they want your checking account where the balances go up >> the question right now s, you look at a pac west, you look at first republic, down this morning 22%. pac west was down 8%, 9% this morning. right now we're down 12% are these bank -- what's supposed to happen here? >> well, quite honestly, i don't cover either of those, but i will say, the extraordinary measures that the fed has gone

to here with first republic tell me they think that it's probably basically a responsible bank that managed itself reasonably and just got caught up in a general panic. >> but when you look at the stock where it's sitting, is that a function and sign just of what the ongoing business is going to be in the future, or is that a sign that there's something else that's going to happen here? lots of questions about whether that company gets bought by a number of, by the way, a number of the banks that put deposits in have been looking at, including morgan stanley >> okay. i'll tell you. on monday, for example, there are a whole bunch of banks i won't name it because i don't cover it, but it was one that i watch. it started the day at 50 at 11:15, it was at $29, and at 12:15, it was at $51

are you going to tell me that that is fundamental analysis happening there, that people are changing their opinion about how much that company is worth, minute-by-minute, by those kinds of degrees or is that just lows in the stock market and fear and greed and all that >> chris, do you believe that all the deposits are guaranteed at this point? we've heard from the white house about this we've heard from the fed and treasury do you believe they're guaranteed in this moment? >> well, look, i think the regulators were able to secure the silicon valley depositors by acting quickly enough to be able to pay them all out of the bank's own resources by my analysis, and i did a report on this on monday, there was about $19 billion of loss-absorbing capital at the bank, and about a $15 billion

mark-to-market loss, and i'm sure that the reason -- >> yep chris -- >> the regulators were able to say it's going to be okay because they probably had bids in hand for the bond portfolio >> chris, i want to thank you for joining us we're up against a hard break. got to hand it over to our friends on "squawk on the street." thank you, though. >> markets are lower, lot of angst going into this weekend. join us next week. "squawk on the street" is next ♪ good friday morning, everybody, welcome to a final show of the week for "squawk on the street." i'm david faber with sara eisen and mike santoli we are live from post nine at the new york stock exchange. jim and carl both have the morning off. let's give you a look at futures. of course, as i said, as we get to the final trading day, 30 minutes from now, is when we begin, and it looks like we're going to have a lower open our road map this morning does start as it has all week with the banks. first republic getting that