to be even more tense than the previous weekend it is -- these are interesting times. i don't know if it's -- it's not 2008, obviously, but it's been a while, so you had a good financial look i don't know if it's a tbt f2 or not, sorkin. >> i'm trying to avoid a sequel desperately >> join us tomorrow. "squawk on the street" is next ♪ good morning, and welcome to "squawk on the street," i'm david faber with sara eisen and mike santoli we're live from post nine at the new york stock exchange. jim and carl have the morning off. let's give you a look at futures as we get ready to start the trading week 30 minutes from now. you can see things have turned decidedly positive we'll seewhen we get going again. 29 minutes or so from now. let's start with our road map, and that starts with a major development amidst worries about the banking sector

as you probably know by now, ubs has agreed to acquire its tro tro trouble rival, credit suisse also ahead, central banks teaming up in an operation to keep u.s. dollars flowing through the global banking system and shares of first republic falling to all-time lows this morning. s&p downgrading the bank deeper into junk status we'll discuss what's next for that troubled lender yeah, that could be the more important story in some ways today. let's start overall with the banks, including, of course, that ubs takeover of credit suisse i'm reminded in some ways of that line, i think, hemming way from "the sun also rises," how'd you go bankrupt? well, slowly at first, then suddenly that's kind of what this is here we've been watching the demise of this franchise for years at credit suisse. the numerous missteps, the numerous management teams, the boards without real money in the game, so to speak, very small equity stakes, for example, of

board members. we'vetalked about it, in particular, over the last six months we've been talking about it a lot in terms of the asset flows out, so some of it, predictable, and yet, when it actually happened, it still was somewhat shocking, and it happened very quickly. essentially, the swiss government said, you're done you're done, and ubs, even though you don't really want to buy them, you're buying them that's, at least, the way that my reporting has gone, and i think ubs made it very clear on the call as well you want to see the state's hand here no shareholder vote. they did a strange thing where they wiped these af-1 bonds, $17 billion worth, a number of hedge funds here in the states suffering on that one. but there was actually equity recovery value of, like, $3.2 billion, not to mention some upside because it's all stock. so, clearly, the state said, we're in, we're not going to

obviously let this bank fail, and now ubs owns it or will as soon as they get the proper regulatory approvals in other places it will close pretty quickly and you can see what's happening to the stock price that's a good sign there had been some who were concerned that perhaps you would see a negative reaction in the market, continued concern about so many different things in terms of asset flows and everything else. they're talking about $8 billion eventually in cost savings by 2027 >> originally, ubs stock was down sharply >> it's down like 16% at the lows >> we saw the credit default spreads widen out, which is a troubling sign for ubs maybe the market is coming the to realization that there's now a monopoly in the swiss banking system the two biggest banks come together that was always the case against doing this merger in the past. i think the other thing is market is grappling with is, it's not a bailout this is a common theme we're seeing in the u.s. as well they're not bailing out shareholders, even though shareholders get some bread

crumbs here. this was an $8 billion valuation on friday. $3 billion is peanuts and the fact that the $17 billion gets wiped out on the high-yield bank debt that causes a lot of concern in that market. >> it does a typical bankruptcy equity would go first in this case, these bonds have gone completely to zero, but there is some equity recovery value to your point. the market was misjudging it el paso as late as friday perhaps hoping it would just be able to keep going on. it had that lifeline from the swiss national bank. it wasn't enough >> yeah, and that typically tends to be the thing where the market is just going to test and test and test. is it enough until you get some kind of overwhelming convincing measure here, and you know, it is kind of fascinating, because there is that maxim that says, when policymakers start to panic, that's when markets can relax a little bit more. if they have to go to these extraordinary measures it's unclear that's exactly the moment we've hit just yet because it does seem as if

they're trying to do enough but not everything in terms of the equity value, $3.2 billion, i know it created a big stir in those bonds of other banks are selling off the similar bonds, but this $3.2 billion of equity value in the form of ubs shares, that's kind of for the common equity holders of credit suisse, it's not the same as the $18 billion in effectively cash or debt that would have been given to those cocoa holders. so, whatever the machinations and people thought that they owned something that didn't play as they thought it would, i think we set that aside. the bigger question turns into, is it going to be enough for the u.s. market to feel as if we have a backstop? and then what does the fed do at the same time it's expanding these swap lines and everything else does i change what happens >> basically, to the snb, the swiss national bank, to get the

dollars sbot into the something there. according to a u.s. official, the treasury was involved here over the weekend, treasury secretary yellen spoke to her counterpart in switzerland on friday when it became clear that something was going to have to get done, that what they were doing on the liquidity was not working enough remember, there were concerns about counterparties restricting trades >> that, to me, was the end here when i was starting to hear that on thursday, we talked about it on friday, it was unclear what was going to happen, but what was becoming clear is it wasn't going to survive in part because of counterparties pulling back that was the last straw for the swiss nationalist bank and the swiss government important to note here that ubs has complete freedom in terms of pursuing those cost-cutting programs >> layoffs >> as it chooses to do so. i mean, if you're going to get to $8 billion in savings on a run rate by 2027, you can imagine there's a lot of costs that potentially can be put. they're going to have free rein to do that there's nothing that comes along

with this forced purchase, so to speak, that says, now you can't cut any jobs they can do them in switzerland, and of course it comes back to the united states. remember, we've reported for some time about what was expected to be the hiding off of the investment bank here in the u.s. it would be under the name first boston, led by a gentleman named michael klein, who was at one appointment an advisor and on the board at cs, but then did a deal under which they were purchasing his firm and he would lead the investment bank here in the u.s. not going to happen anymore, it would seem this is ubs's show now, and it does not appear to include a plan that had been put in place. unclear to me. i haven't been able to get ahold of mr. klein, but unclear as to whether there's a break fee there that will be paid. that deal did not close. and what the people who work for csfb now in the states are worried about, of course, is

that jobs are at risk. >> when you talk about -- it's 167-year-old bank that, in two days, with very little due diligence, was just basically forced into ubs's hand, and they have 50,000 global employees how do we look at this, mike is this a bear stearns moment? there are some parallels but the course of this loss of confidence >> it's that sort of thing where you basically hope that getting absorbed by the bigger, healthier bank is going to be enough i don't want to say it's like bear setearns because you're saying six months later, we see the real crisis, which i don't think there's any reason to think. what's fascinating is a lot of the commentary in the press conference about the merger and everything was pointing to the u.s. regional bank stresses and svb as some kind of trigger point. it's totally questionable. once the psychology of bank investors and counterparties is

disturbed in a big way by something, it can be contagious, and we understand that but you mentioned, i mean, credit suisse for as long as we can remember, has been at the center of all the issues >> correct even in the last few years, whether it's arkegos, $5.5 billion loss. numerous management teams. poor risk management this is not a new story, and yet -- and we talked about for years, would they ever force it into ubs's hands but when you said it, you sort of went, well, maybe that could really happen, but would it? now it has let's listen to colm, who we know well, of course, been one of the leaders at morgan stanley for many years under gorman, but now chairman of ubs. here's what he's talking about in terms of potential downsizing >> having been chief financial officer during the last global financial crisis, i'm well aware of the importance of a solid balance sheet, especially in challenging times like these, and ubs will remain rock solid

this transaction confirms and augments our strategy of growing our capital-light businesses let me be very specific on this. ubs intends to downsize credit suisse's investment banking business and align it with our conservative risk culture. >> again, just goes back to what we were discussing in terms of potential future job cuts, both in switzerland, but also here in the united states. >> and it's not as if -- even though it is alarming that, you know, you have -- by the way, we remember, david, when they were the big three swiss banks. and now you have one it's not as if european banking is -- there's capacity constraints there, right there's plenty of banking capacity in europe, so it's, in that sense, the rationalization is not surprising. what i think is worth puzzling over right now is the broader signals. how do you think about it, as an investor, when you get to one of these moments?

you had, by the way, in october, when the u.s. market made its low, that weekend before the low, before that cpi print, it was about cs going down. the rumor mongers were, this is the lehman moment. that's when we bottomed. the history -- i don't want to say it's here -- but the history of important march market bottoms after you have had an october market low is something you can't lose sight of. it was '03, '08 into '09 you could even say 2016, october low and then february. i don't think that's here. the market's not acting like it. it's acting resilient because of the mega cap stocks, but i think that's one reason why you wouldn't be super negative, even though, if anything, this makes recession more likely than not credit krecrunch, a little moref a hazard than not. it is interesting in terms of what it's going to mean, market-wise, and that's what we have to puzzle over. >> i think it depends on the performance of the regional bank

stocks, right? we've seen a number of interventions there, starting from last weekend, on guaranteeing depositors, of sbv, that was last weekend's issue, and then the deposit infusion from big banks into first republic bank, and all these things and then there's word on friday, reports that the regional banks want the fdic to guarantee more depositors they've stopped short of that, partly because they can't do that they need congress for that. but it's not clear at this point that that needs to happen, because remember, we talked to wally adeyemo, the deputy treasury secretary, right here on this show on friday, and he said the deposit outflows have largely stopped in the regional banks and they were very encouraged they had that, plus a ton of liquidity. i think we have that sound byte. i thought it was really important. we'll play it for you later, but i thought it was really important that he signalled that, because we don't get the realtime data on deposit flight from regional banks, and if that's true, that does solve one of the big problems here >> there seems to be a sense right now, and you can see from what we're looking at in terms of the premarket, first republic

remains the issue right now. that's what i'm picking up in every call i'm making, and you can see it's down another 18.5%, this despite the plan -- that $30 billion worth of deposits it received from 11 banks last week it's still an issue. the hope is that it's the last issue, that this will be resolved in one way or the other. i can tell you a couple of things they've hired an investment bank, i'm fairly certain, to help them navigate this, potentially to help them sell themselves that said, it's unclear to me that there's anybody who's stepped up to really engage in serious talks with first republic and sara, you know, what i was hearing last week was a $25 billion hold, perhaps an unwillingness of banks to step up because of you have to take the marks and in doing so, you impact your own book value however, if the government were willing to be generous in some

way or helpful, that might change things. but i don't know what you're hearing from treasury, but what i have heard is that the government is willing to be helpful, but it's still not clear that that has resulted in anyone stepping up yet seriously for first republic >> as far as confidence measures go, i'm sure the government would be very happy to see deals get done in the regional bank spaces, especially >> it was a week ago that i was hearing the government would welcome seeing first republic potentially. >> but as far as backstopping, it's more complicated than that, not just politically, but also in the wake of dodd-frank as i understand it, it's more difficult for them to provide funding to do that so, we see if this -- if these deals get done on their own. i think it's interesting that nobody's stepped in for svb bank >> not yet >> i don't know if that speaks more to what was on the books. >> maybe signature is done. that actually did get done very quickly. >> and by the way, new york community bank corp., which is, you know, taking on signatures,

deposits and some other businesses, that stock's indicated up higher. all the analysts are saying, this is massively accretive they priced it to sell, and who knows if that brings out other interested parties when it comes to first republic bank and tracking the stock, it seems like it's just wild. and there's not a lot of information content really in the tick by tick it's a $3.5 billion equity market cap it's a $200 billion balance sheet bank so, this is just a stub end of the capital structure that's just a call auction on what happens next >> there's a domino effect in banking. >> there also seems to be a hope, mike, in the equity markets, at least, that once first republic is dealt with, whatever that means, and i don't know what that means, and i'm not sure anyone does that, we're going to move past this. i don't know that that's the case, but that seems to be the hope, that it's the last sort of problem child. it was unique in the -- in a similar but somewhat different way than svb or signature in that its assets are certainly

concentrated in a certain area and industry, that it has a large uninsured deposit base, so it sort of fit that, but -- >> big underwater mortgage portfolio too. >> there's a hope that once it is dealt with, then we're done >> it's the last acute situation. the chronic situation is, yeah, people -- a lot of other banks have a lot of fixed-rate mortgages that they're under water on and all the rest of it. that's what you have to do with after. that's -- also, weren't deposits more likely to leave immediately as opposed to two weeks later? i think to your point, sara, about the deposit outflow has slowed in general, the borrowing at the discount window and the fed was seemingly concentrated in the western part of the country. we see reports of that today so, that would all fit together with, you had a storm of deposit flight and then maybe it's calmed down. >> it's the alamo, as david rosenberg said in his report this morning, when it comes to first republic bank. what a set-up for jay powell on wednesday. >> we'll talk more about that, of course. when we come back, we're

going to talk about how you find a safe haven in this market. we're going to talk about whether technology shares can continue their upward momentum last week was the best week for the nasdaq since october lot more "squawk on the street" straight ahead you need to deliver new apps fast using the services you want in the clouds of your choice. with flexible multi-cloud services that enable digital innovation and enterprise control, vmware helps you innovate and grow. ♪♪ inner voice (kombucha brewer): if i just stare at these payroll forms... my business' payroll taxes will calculate themselves. right? uhh...nope. intuit quickbooks helps you manage your payroll taxes, cheers! with 100% accurate tax calculations guaranteed. thinkorswim® by td ameritrade is more than a trading platform. it's an entire trading experience. with innovation that lets you customize interfaces, charts and orders to your style of trading.

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at least be somewhat of a safe haven during a strong week there has been some difference of opinion here on this desk as to exactly why but we can't get to that now instead, we're going to get to our next guest, because he recommends sticking with internet stocks such as alphabet and meta joining us, barton crock and he has a buy on alphabet and meta what do you make of that move last week, and why do you believe it can continue? >> look, i think that, you know, there's a lot of emotion out there and so last week, i think interest rates, the view is that they're pulling back and that helps the yearlong multiple assumption so that's good for these high-multiple stocks i think that, you know, when i look at our coverage group and the internet part of that, you know, my preference is still for the quality names that are driving earnings and i think the biggest movement has been in the names that are still kind of pre-earnings or marginal earnings where the multiples are

very high. i think that a lot of the hope here is that the environment that the macro is stable and that if we look over the balance of this year, your comparisons get a lot easier as you go into the second, third, and fourth quarter, versus the first quarter. so, when you might be down, you might be flattish in terms of your revenue trajectory starting the year, but at the end of the year, you can be up in a steady state environment. you know, that's great i'm just not certain that that's how it's going to play out if the macro gets more difficult. estimates are going to be coming down, and you're going to be looking for the safer stocks, which, in my mind, are the guides for multiples and earnings like meta or alphabet, and i'd also argue for apple >> right obviously, meta shares have been an incredibly strong performer as well during the course of this year in part, or mainly, it would seem, due to the efficiency quest of its ceo. how important does that become in this overall environment, those companies, in particular, that seems to be embracing the idea that they could do more

with less? >> look, meta is a special situation. it's crazy, because it's such a large stock. but you know, they're pulling so many levers on expenses that were engineering earnings momentum that is well in excess of what you could see at the other companies just because of, you know, what mark's able to do on the expense side. i think there's more that could happen you know, i think one of the ideal outcomes for this company would be to take reality, spin it off it doesn't need to be in the meta capital structure you're getting no credit and a pure penalty for that and a separate capital structure, you know, those investors who align with mark that could rally into that is he talking about that no do i have a lot of faith that's going to happen? no but sometimes, when things make sense, they could happen, so there's option value there, plus earnings value, plus a company that's managing itself much better so, really tremendous story in a difficult moment for that stock.

>> yeah. barton, got to keep it short here, given we're up against an opening bell coming up, but thank you for your quick call there. appreciate it. >> great thank you. coming up, we're going to have a closer look at global central banks, new steps to boost liquidity amidst those concerns about the financial sector here's one more look at futures. nus ayenn opening bell sev miteaw don't go anywhere. ngs that go better... together. burger and fries... soup and salad. like your workplace benefits and retirement savings. with voya, considering all your financial choices together can help you make smarter decisions. voya. well planned. well invested. well protected. for businesses of all sizes, voya. well planned. there are a lot of choices when it comes to your internet and technology needs. when you choose comcast business internet, you choose the largest,

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well, you talk about the gainers, and you end up with the banks again, as mike said, of course, a lot of volatility. we've seen a lot of these companies down sharply last week, but looks like they're going to have a strong open. we'll see. of course, when we get that opening bell, four and a half minutes from now

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>> i think that lifting the fdic insurance cap is a good move now, the question is, where's the right number but recognize that we have to do this because these banks are underregulated, and if we lift the cap, we are requiring or relying even more heavily on the regulators to do their jobs. >> u.s. senator elizabeth warren of massachusetts on cbs's "face the nation" yesterday, making the case for lifting fdic insurance caps she joined us last week talking about her belief in the need for more regulation, generally, for banks such as silicon valley bank >> this is the problem $10.1 trillion of money in the u.s. banking system is insured that's about 56.8% of total

deposits so, $17.8 trillion uninsured and the question is, if you're at community banks, are you just going to want to distribute it more evenly, go to the money center banks like jpmorgan where you feel more secure that psychology is out there right now. if they don't do anything about it, a lot of people think it's going to pivot >> with the added pressure for now, of very short-term high treasury rates that's making it very attractive to get away from bank deposits, as opposed to keeping it in a smaller bank we'll see if that gets fixed, if the fed's going to be cutting by a full percentage point at the end of the year. >> look at the realtime exchange doing the honors here was visa, celebrating its 15th listing anniversary. that was one of the biggest ipos of all time, and that cell event management company, everbridge sara, we haven't really talked about the fed. >> it's a big week

it's an exciting week, because there's a real debate going on in the market, and beyond, about what the fed should do on wednesday, because a lot has changed since he last heard from fed chair jay powell when he testified before senate banking and he was leaning, it sounded like, toward a 50-basis-point increase will he step down to 25 or pause because of all the turmoil in the banking system the consensus appears to be still 25 we have an inflation problem all the data has shown that. we have a services inflation problem. there still are troubling trends on the inflation front, and i really think that christine lagarde gave him a blueprint on how to do this raise rates, continue your inflation fight, and keep financial stability by all the other measures that they have, including their balance sheet tools, which they have used already. they're doing swap lines now they are increasing liquidity. we saw a $300 billion increase in the balance sheet last week, so the idea they're going to do a dovish hike is really what is

priced in and seems to be the best way for them to signal. we're not done with inflation, but we are worried about what's happening in the banking system. the really interesting part of this meeting is going to be, this is one where we get a new dot plot, which means we get new projections from the fed members about where they think rates are going for the rest of the year and into next year, and the market thinks this is a one and done they're done with the tightening cycle. i think it will be interesting if they signal they can do another one after this, if there's still the inflationary problem and whether the market starts to fight that >> you know, i think it's interesting in the sense that i don't know there is a clear, true consensus i agree with you in terms of economists handicapping what's going to happen. but the market itself is almost 50/50. it's almost never the case two days before a meeting that you have that kind of a toss-up type of scenario. i also wonder, you know, how much they're thinking about this in terms of powell, you know, gets on the record and says they don't like the idea of pausing

and restarting, like, he's sort of locked himself into this mode of making a pause a much larger signal than it might otherwise be in a different cycle, where you could pause, look around, see what's going on, and some people feel like there's just a -- >> i think it would signal panic. >> look, i think that -- i've been saying it for days. they really want the conditions under which they can go to 25, and they think they might have it right now the markets are not falling apart at the moment. now, the tougher part to actually figure out is, this credit contraction that we expect coming from, you know, smaller banks pulling back, regional bank stress, all of those things, was not in their models in terms of what's going to happen in the latter part of the year oe on the other hand, the existing dot plot from december, their consensus projections, was for much weaker growth than we've seen in the economy so far, and probably lower inflation i think they thought inflation was probably going to start to come down a little bit more by this point in the year >> well, i think that's the debate now how much is this banking problem

going to shave off gdp we know it's going to lead to tighter lending standards. we've already seen tighter lending standards going into this it's going to get a lot worse. everybody knows that jpmorgan is out saying, a half a point to one point off of gdp because of where -- what we're about to see the thing is, community banks, regional banks, are such key players in things like residential mortgages, commercial and industrial loans, what's going to be very in interesting is the fed report, the savings and loan officer survey, which comes out in early may, which tells you just how tight the standards have become. >> what are you expectations, sara >> on the economy? >> no, on the fed. >> that they'll go 25 basis points this is a fed that has told us it is super serious about inflation. if it backtracks now, then that's a signal that is really worried not just about financial stability but how deflationary this could be, how much this could harm the economy, which,

by the way, there are plenty of economists who will tell you it is peter orzak, for instance, tweeting they should -- the fed should operate like a surgery where they should be very careful and pause and see how much damage is done. it's not what they've been doing. they've been front-loading rate hikes to try to squash inflation, and they might have just done that because they broke something, but it's not showing up in the data yet the signal is, they're not going to be as serious on inflation. >> goldman went to a pause he's been bullish on the economy, so he didn't think -- >> only 35 chance of a recession, though, he says >> you're going to have people in that room saying, look, everything that may say up inflation is rolling over, expect for shelter and we know the measures are really lagging. you're going to have that camp vocally saying, what are we doing here paul mcculley saying, the fed is done once you get to this point where you see some of the impact of the aggressive tightening you've done, it's time to, you know, in

a sense, back away and see what else -- >> then they're not data dependent. >> that's right. they're not dependent on the data they said they were dependent on we got inflation expectations, lower last week. those things are moving in their direction. so, it all makes for, you know, probably a pretty interesting couple of days >> look, the consumer is still in good shape. >> well, yeah. >> so far. the consumer has been in very good shape, and before this all started, the atlanta fed gdp tracker for the quarter was, what in the 2% range? >> almost 3% >> right >> closer to 3%. >> i'm not saying that this isn't going to have an impact. i think it for sure will, ewwe just don't know exactly how much or how >> the other thing we don't know is what kind of phone calls they were getting over the weekend, how much did it seem like they were being proactive >> on the swap lines >> on the swap lines and on other banks coming >> they're thinking a lot about other banks. i mean, they've been working on various scenarios for some time, i mean, i know any number of

people who have been involved at least in some discussions. listen, they can feel a little better today when you take a look at what we're showing you right there. many of the regionals are showing positive and gains this morning, at least, in the very early going. other than first republic shares, which remain very volatile, as reported earlier. my understanding that they have hired a bank to help them look at alternatives to the extent there are any out there. to sara's point, might be some help from the treasury, so to speak, in some fashion, if there were to be a potential buyer for first republic it's unclear at this point, but that's the one name that continues to be a focus, but overall, maybe the fed will feel better when they take a look at some of those stocks' performance in the early going, the idea that we're getting towards the end of this mini-crisis. >> yeah, financial conditions have tightened that would be the other case for pausing. but if we're not spiraling in a loss of confidence as the way it

felt when a few days -- i don't know, last week or the week before -- >> i also think, you know, a quarter point, as i have been saying, on top of as much as they've done, it probably doesn't seem like the stakes are super high unless the market just chooses to take it as, you know, kind of a complete ten-year on the fed's part as to what's going on. >> you can always get people worrying about -- you can make the institution. deutsche bank, right unclear that there's anything at all, but you can figure things out. that's the concern all right, where do people move next >> how much harder does the job get, though, if we're at 4.75 to 5% versus 4.5% to 4.75%? that's the question. in the grand scheme of things, they have these tools. there's some elegance to getting up thor end of the range for fed funds to 5% even and seeing what happens from there i would point out, at the open, we have seen a reversion of the trend in terms of nasdaq

outperformance that just got very stretched you have the nasdaq 100 in particular down 0.5% the russell 2000 up 0.75% so at least on monday morning it's spilling back from what happened last week. >> you need to do a relative index between banks and tech it's either banks working or tech working >> they're on the opposite ends of the spectrum, yeah. >> few movers to point out today. i was watching foot locker, because they reported and have an investor da i y today. it was a huge beat on the quarter for foot locker, 97 cents per share. the expectation was around 55. comps were better. but the guidance came in a lot lower than expected, so there was some concern about what that signalled, especially on margins and on comps mary dillylan is holding her fi investor day a lot of folks will be focused on the commentary we get in the next few hours appears to be a winner

there's a high bar because she's there. remember, she was at ulta and hugely successful, so foot locker's propespects have briebri brightened since her interest. nike reports after the bell. nike, a huge supplier for foot locker last quarter on nike's call, mary dylan and foot locker got a callout from the executives saying they were encouraged about working and growing together, something that made foot locker investors pretty excited because that relationship has been on the rocks in recent years. >> nike also getting a little benefit of the quality bid in the market they actually picked up 2% this month in a down broader tape not tech >> when i do think of nike, i think of china and the risk to that company and we should point out that xi and putin are together we'll see what comes out of any of those talks that they're having chinese try to assert themselves as a diplomatic player on the

world stage, but of course, there is also that concern that should they actually become more bellicose in terms of their support -- >> that's a scary thing. >> it would be very scary. >> how the u.s. would react to any escalation there >> very, if you were to see them say, "yes, we're going to support them with some sort of arms," that would create an entire new and very negative spiral in u.s.-chinese relations. and then also, we got tiktok here in the states, of course, that continues to be much discussed in terms of whether that app will be in some form or other banned, whether there are various structures that can be pursued, whether a sale needs to be pursued in terms of at least these national security concerns of tiktok. obviously, the potential demise of tiktok, were it to really happen, has been beneficial, at least to the stock prices of meta, as we pointed out. reels and snap, shares have also egg legged up higher since a lot of

this talk became more serious. >> i was going to point out, the biggest upside contributor to the s&p so far is berkshire hathaway it has, of course, done so much better than the rest of the financial sector, which it is categorized with, the rest of the financials, somewhat imperfectly. but yes, reports over the weekend, the administration perhaps had been in touch with buffett about maybe some kind of participation in investment or something else with the regional banks. you wonder if the stock's up because we didn't need it or it didn't happen or if it happens, it's going to be on incorrectly advantageous terms, which is typically the way when it comes to warren buffett. obviously, a big holder of bank of america he's in there. it's just not in this way of sub scale regional banks although, he might own u.s. bank corps as well. >> i haven't heard anything about it there's always a search, mike, for white knight, right?

jamie dimon last week or warren buffett. you know, and he was there during the financial crisis. >> oh, sure. >> buying shares too >> he was. also attracting incredibly great terms for berkshire that you were unavailable to anybody else because it's warren buffett and he brings the patina that says, everything's going to be okay. whether it was ge or goldman or bank of america through the years, mike, he has always gotten those convertible deals that were unavailable to anyone else >> look, his phone only rings. i'm not sure it goes out, you know if you're that person, and you've built that up over the years, you have this financially impenetrable balance sheet and all the rest of it, then if you need to call him, it's because you're willing to, you know, tilt things in his favor >> we should come back to ubs, stock of which is now up very nicely after, of course, that forced purchase, so to speak the swiss government stepping in, saying, you're buying credit suisse this is what you're going to

pay. and they are actually using their own stock for the deal hasn't closed as of yet, but they're expected to get all the necessary approvals very, very quickly. let's call it $3.2 billion worth of their own stock, but it's already worth a bit more to credit suisse shareholders you can see that stock is off of it lows. of course, it's worth about $3.2 billion, at least at the outset credit suisse's market value is some $8 billion, so you can see what's happened to the stock but much worse for some of those bondholders and those bailing bonds, high-risk bonds they had issued, some 17 billion that are being zeroed, and the saudi national bank, which maybe we can thank itself for starting all this last week when -- it would have been something, but in this case, it was this. they said they are not going to go past 9.9% they've come out and just said, their position in credit suisse constituted less than 0.5% of total assets, and 1.7% of their

investment portfolio and obviously, it's not a zero they get a chance to live on, given the potential benefits of the combination itself and the fact that it is all stock. >> they'll become a ubs shareholder, presumably. >> correct >> quickly wanted to appointment o point out gold it popped above $2,000 earlier it has backed off from there so, again, it's a little bit of that barometer of, how afraid are we the kind of money that's in motion when you're worried about swiss bank wealth management businesses, the sort of type that might diversify out into gold gold's been acting very well, but we'll see if this was a short-term crescendo of excitement about the safety attributes of gold >> just below that $2,000 mark before we head to break, let's give you a quick bond report take a look at how treasuries are faring this morning after quite a dramatic move last week where the two-year yield moved down 70 basis points, largest

weekly fall since october 1987 they're firmer today, edging a little higher. 3.87% ahead of a big week. the ten-year note yield, 3.4%. "squawk on the street" will be right back ♪ old school wisdom, with a passion for what's possible. >> announcer: the bond report is brought to you by pimco, a global leader in active fixed income that's what you get from the morgan stanley client experience. you get listening more than talking, and a personalized plan built on insights and innovative technology. you get grit, vision, and the creativity to guide you through a changing world. ♪ (♪ ♪) how do we demonstrate our thrunmovable strength?ld.

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bancorp,

. one of the big headlines from the weekend the world's major central banks taking coordinated steps to boost liquidity in the banking system. senior economics report steve liesman on the news line with more on what this means for the financial markets because when you hear about dollar swap lines it does take you back to crisis periods. >> yeah. that's the two times it's been used, sara as you said the fed announcing it agreed with five other central banks making dollars more available essentially what they do, they will provide enhanced swap lines. they will auction off seven day

money every day instead of once a week what's a swap line in case you haven't been paying attention. central banks, they exchange currencies, makes the currency more available in the banks so, for example, the ecb would deposits euros in the fed, fed deposits dollars at the ecb of a like amount. the question is, is this preemptive or needed there was no indication i can't find them in any of the rates out there of any dollar scramble or dollar shortage, which is why you might do something like this, but it does have the potential to suggest that one exists and that the situation is worse than it appears. you can see it as sara was saying, a lot during the great financial crisis and pandemic. they put in place preemptively for boston-ubs merger. if it's needed you stop the probability of something spinning out of control. if it's not needed you get a

data point every day showing it's not needed. question of financial stability linked to what the fed does next the market trading call it 50-50. it has been a little more towards no hike, now 47 no hike, 53 possibility of a hike goldman sachs, forecast nothing hike citi and jpmorgan they're on board with a quarter my take is powell and the fed will make up their minds about the financial system and the stability in the next couple days and that's all closely tied to the extent to which deposits are or are not flowing out of the regional and smaller banks. >> the indications look better on that, at least if you look at the share prices or, you know, the treasury deputy secretary joined us friday, said deposit outflows have stopped and are looking better steve, question on the balance sheet measures, which is sort of wonky but important because it's their way of dealing with all this financial stability issues. there's kind of a debate of whether that is qe or not. morgan stanley's mike wilson

says it's not qe, they will get the loans back we are seeing the fed balance sheet expanding and wonder if that's bullish for stocks. >> i don't think so it's qe. you have to think about, for example, if jpmorgan has a flow of deposits on its books, going to use that money to be -- require reserves for loans i don't know the extent to which jpmorgan will think of that as permanent. also these loans, looked like if you do a real wonky analysis of the balance sheet, looked like most of the money taken out of those funds was short term you wouldn't do that if you thought you were going to use it for lending. i don't think it creates new money in the economy it does boost the reserves at the federal reserve, but that money can relatively quickly go away once financial stability is restored. >> steve, thank you. steve liesman joining us. >> it's interesting the qe question sara, because on one

hand you look at the aggregate size of the balance sheet it went up, but it's collateralized lending. different than the fed bidding outright for bonds. >> pay it back. >> they will you have to pledge longer term assets at the fed. >> some are taking calm in the fact that the balance sheet is not tightening. >> sure. >> declining which is the headwind for -- but it's not like -- i get your point, not injecting global liquidity into a system that would find its way in risky places. >> the market has been uncomfortable and choppy for months, but it's not any lower than it was last may when the balance sheet was like $800 billion higher, right. you have had some qt while it was, you know, the market has been on the defensive, but not panicking. >> we do have, mike, that reversal not unexpected as money moves into the banks it's moving out of technology to a certain extent and see if that trend continues at all. >> the other piece the average

stock, the equal weighted s&p up 0.7%, outperforming the s&p because the larger ones are lags. >> we'll have more, of course, on the banks including the ubs takeover of credit suisse and first republic looking at what are close to all-time lows keep it here good night! hey corporate types. would you stop calling each other rock stars? you're a rock star. you are a rock star. no more calling co-workers rock stars. look, it's great that you use workday to transform your business. but it still doesn't make you a rock star. so unless you work with an actual rock star. hi, i'm ozwald. hello ozwald. pam, you are a rock- i wasn't going to say it. ♪♪

good monday morning. welcome to another hour of "squawk on the street. i'm sara eisen here with david faber and mike santoli live from post nine at the new york stock exchange carl has the morning off take a look at stocks. s&p 500 up about 0.4% and the dow is higher by 340 points, about a percentage the nasdaq lagging kind of the opposite of what we saw last week where it was tech stocks working, banks under pressure. right now financials are the top performing sector on the s&p we're 30 minutes into the trading session. three big movers we are watching and there's a theme here s&p cutting first republic's credit rating to b-plus warning another downgrade is possible this morning shares hitting fresh lows down 13.2%.

a subsidiary of new york bank corp has reached a deal with regulators to buy deposits and loans from signature bank closed a week ago subsidiary flag star bank will buy loans at a discount of $2.7 billion. shares of nycb are surging this morning. finally, story of the weekend, of the morning, ubs agreeing to buy rival credit suisse $3.2 billion deal with the swiss national bank pledging a loan of up to $108 billion to support the takeover that's the liquidity piece of this there's also, what, david, an $8 billion guarantee from the swiss government to fill any losses by the deal they wanted to get this done. >> enormous amount of liquidity available as well. the swiss government was in charge and they took the role of -- took over our understanding is when they started to develop significant counter party risks they were seeing in its business the banks saying we're not going to do business with you anymore. we talked so often over the last

number of months, of course, about assets leaving the bank or wealth management funds choosing to leave, but it's when the counter party risk became more severe that the swiss said that's it, you're done we're calling it even though ubs seemed resistant to a deal, they basically were told you're doing the deal and this is what you're going to pay. there was some negotiation i don't mean to imply that there wasn't in fact, you did have cs's board vote in favor of the transaction. they did vote in favor and you wipe these bond holders, sara said, $17 billion worth of that, but, you know, no shareholder vote you wipe those at 1 bonds. you have support from the swiss national bank. then you're saying you can generate run rate cost reductions of more than $8

billion. that's annual by 2027. and that's what's got ubs's stock up. >> maybe they got a good deal here, right, and now they have a monopoly in the swiss banking system and we're all going back and figuring out what contingent convertible bonds are, the $17 billion that was wiped out you know, in theory, hate to get too in the weeds, this is what they were supposed to do the notion they were created by the regulators to help banks raise capital, highly risky, paid high yields, and now, i guess an easy target. >> yep. >> for them. otherwise the math wouldn't have worked for ubs. >> you need to get rid of something in a big way and zero in the equity wasn't going to do it you needed to eliminate liabilities. >> and, you know, the other banks similar bonds out there, but you still have to have deep concern about the health of the bank to come into play it's not as if there's other banks perceived to be lined up

directly behind credit suisse in that type of position, so, you know, there's still yield advantage. that was the whole point reporting that credit suisse's research people were promoting other banks as a great investment, especially when yields were negative in europe for so long and they had somewhat positive yields. >> and now you can criticize them for going into something so risky because they're complaining about taking the losses the question becomes, what does this mean for confidence in the u.s. become sector which was still fragile at the end of last week the banks are up right now and financials as a sector up 1.8% we look to first republic bank, as a potential fallout, word there were deposit outflows last week. >> how much they borrowed from the discount window. >> more than $100 billion. >> at one point. they had that significant of deposits from 11 banks. the unusual plan to engender confidence $30 billion. didn't do it

stock turned around after moving up on thursday came back down on friday, down again today. this is where the concern is that said the regional banks, many are having a good morning so there is this belief that if you can deal with this, one way or the other somehow, you're maybe towards the end of the mini banking crisis. unclear to me how that is going to work its way out. are they going to sort of keep pushing ahead or is there a sale in their future? i'm not hearing great interest from any potential buyers as i reported earlier my belief they have hired an investment bank to help them with the process the federal government, what is the role, if any, they would play here in terms of either aiding a potential buyer or encouraging someone? >> if they want to see deals get done, they would need to lend a supporting hand. unclear where this goes from here if there still is a lack of confidence in the bank stocks. that's really what the thing is now. are we going to get an explicit

guarantee of all uninsured depositors it would take congress and the administration to push that forward. you know, a lot of -- we were all working the phones this weekend. some interesting ideas i was talking to nelson peltz, a billionaire investor in the asset managers, not the banks, has a new idea about how to fix this and instill confidence and he's going to join us in a few minutes to hear more about some creative ideas on how to get this shored up because we are in an unprecedented time and no -- this isn't the great financial crisis and it's not a good history lesson because the problems are different no two crises are the same. >> they aren't the institution in question were unique within the banking sector silicon valley bank was, signature bank, and that's why first republic has been a focus as well because it does have a lot of assets, that means loans and the like, made to one particular area, commercial real

estate, also mortgages, obviously, a lot of them at -- when rates were lower. a large uninsured deposit rates. this fear generally speaking, well, what's the downside to moving my money, of course, has been one of the key reasons why so many have chosen to do so we'll see if it ends there and even if it can end sort of slowly today or over time, as that bank sort of settles. >> the regional banks down coming into today more than 40% from the high. ton of smaller banks trading below tangible book value. if they go a while without crisis or further crisis, book value ends up being a buffer to whatever happens next, even -- >> as we pointed out a number of times, the earnings power may have been impacted, cost of funds up keep an eye on the rating agencies, they play an important role. >> commercial real estate has a million things to worry about. >> regulatory pressures, credit

issues, a new reality for regional banks let's talk about this big deal between ubs and credit suisse. geoff cutmore outside credit suisse headquarters in zurich for us for years they didn't want to see a monopoly, but that's what they got he they merged the two giants of the swiss banking system, geoff, what's your take >> yeah. absolutely i mean, i think you've described a lot of the challenges that the swiss regulators and the government had to take on board as they went through the weekend. it's all well and good to have a wedding, but ifthe bride or groom doesn't want to play, they have a problem ubs didn't want to do this deal, but ultimately the deal did get done over the weekend and we know the haggling was all about the price. we know the price is in excess of $3.2 billion. at the close of play on friday, credit suisse was worth $8

billion. so terrific, ultimately, destruction of capital here. did ubs get a good deal? it remains to be seen because so much will now be about how well ubs manages to execute and it's been well understood here in zurich for a long time that these banks have two very distinct cultures, credit suisse much more risk taking, ubs much more stayed, and in part, maybe that's one of the reasons why credit suisse has had so many problems over recent years having said all of that, at the press conference yesterday, the chairman axle lehman wanted to point to the u.s. banking problems as the reason for credit suisse's own difficulties let's hear what he had to say. >> translator: the latest developments emanated from the banks in the u.s. hit us at the most unfavorable moment. one time like lasty we were able

to overcome the market uncertainty, but not this second time. >> so we now have a deal the bond investors clearly very unhappy about the outcome here the markets were pretty unhappy early on, but i have to say, you know, following the u.s. lead, we've seen a euro stocks bank index, after a volatile session, move back into positive territory this hour. back to you. >> absolutely. stability, geoff, thank you very much a few parts of the market hitting fresh highs this morning. dominic chu is tracking the action. >> mike, part of the discussion that geoff cutmore laid out and the discussion that you, david and sara had about the banking woes have put a bid to what we've seen in crypto currencies, specifically in bitcoin. if you look at bitcoin prices today, we did top 28,500 and change and you can see here, 27,974 is where we stay right now. it's this kind of breakout area

that we're watching right here we've gone above there and hit the 28,000 mark. is there now more near-term momentum after breaking through this range that's something to watch. bitcoin prices something to keep an eye on because of the banking woes translating into the bitcoin related stocks micro strategy, coinbase global and hood showing more of a volatile strategy by the way, bitcoin may be considered digital gold by some people, actual gold is getting attention through the safety trade. if you look at gold prices overall at 1,974, we topped $2,000 per ounce giving a bid to bigger gold mining names like newmont, baricrick. >> strong gold, weak oil down 1.6%. wti down to $65. we'll see you for the 11:00 a.m.

hour of "squawk on the street." billionaire investor nelson peltz joins us to break down an idea that he has for how to shore up confidence in the banking system big show still ahead we push higher the dow up 280 points. 'lbeig bk.wel rhtac its your customers getting what they ordered when they expect it. discover how ryder ecommerce makes your customer's experience ever better.

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you have no idea how good you've got it. huh? what a time to be alive. introducing the next generation 10g network. only from xfinity. the future starts now. here on cnbc, big investors weighing in all week long on the banking crisis or at least the turmoil. nelson peltz from trian joins us

by phone thanks for calling in. you have an interesting idea about how to solve this problem which, i don't know, financials are up today, but first republic is still making new lows what do you think needs to happen >> well, let me tell you, sara, i don't claim to be a banking expert, but i think there are common sense solutions here, which i'm sure some regulators will find out why they don't work, but simplestically, all the money as we know is leaving all the small community banks and regional banks and going to the three or four largest banks in america that's a very dangerous situation, and it's got to be resolved what i would do is this, i would put together a plan that applies only to the u.s. banks and that

the fed gets an insurance premium for any money you leave in a u.s. accredited bank over $250,000, so you're creating income now for the fed, and in exchange for that, they guarantee the overage. they limit certain banks to how much deposits they can take. for example, if the cd rate is 3%, whatever it may be, you're paying a traction of that back to the government as an insurance premium, knowing that your deposits are fully insured by the u.s that should only apply to the u.s. banks i will tell you what will happen, you will have money flooding in here from all over the world. people will feel safe. you can leave your money in your bank down the block or you can give it to bank of america it doesn't make a difference

that's something i would do. they do it anyway. let's create some income for them and have the system smooth out and give people peace of mind. >> so in other words, just to understand it fully, you're talking having consumers, all of us who put money in banks, essentially pay for our insurance of our deposits through fees that small fees within our funds that we're depositing >> only if you decide to have over $250,000 in the bank. the first 250 is insured you can still spread it all over the place, but if you choose to leave it all in one bank, you're going to pay a small percentage of your cd rate as an insurance premium to the federal government. >> right so i mean, you can imagine the pushback would be on just putting fees on the consumer, putting it on the consumer's

shoulders. why not charge the banks which is what the fdic does? >> i like the idea of having the consumer do it let them understand they have a conscious decision to leave it in one place or move it around, that's up to them, and if they choose to leave it in one place, for convenience or comfort or what have you, they're not paying any money, they just are getting less of a return, for example, on their cds. >> have you pitched this idea to - >> i have. >> members of congress >> i discussed it with a host of our elected officials in washington they all either liked it or didn't understand it i've given it to -- i've spoken to two ceos of our four largest banks on friday.

there were varying degrees of affection for it and i have -- i was going to call the fund that the fdic today, but i decided i would tell you about it, sara, and you can decide and your viewers can decide whether they think it makes sense or doesn't. >> the regulators watch too, cnbc. >> i know. >> it's david. >> hi, david how are you? >> i'm well, thank you i'm well i'm happy to see you, via phone. did you move your money at all during this period i don't know if you had any at silicon valley bank, but you might have had at first republic have you been concerned at all >> i have been concerned i had a pittance in svb that i didn't even know was there because of something i made, but it was under the 250 limit most of my money is at bank of america.

i feel comfortable. >> yeah. it does feel, nelson, like this could be coming to an end. certainly there are many who hope so, that this sort of mini panic. you know, do you sense that maybe we'll just move past this? obviously, most of the regionals and community banks are made up of accounts far below 250,000. you know, my sense is the money has stopped moving certainly at the velocity it was last week. >> oh, i agree with you, david i think the velocity has come down a huge amount, and i think we have, i think, the peak of the panic is probably behind us, but that doesn't stop the next one from coming. >> no. you never know where that's going to be. of course that's always a question as well i'm just trying to understand sort of how this will be received or whether -- you know - >> look, hopefully - >> nelson, we've already got

wshs -- we've implicitly insured or fdic or the fed, we've already implicitly insured all these deposits you think they need more you think they need an explicit guarantee? >> they need the money. >> i think they need an explicit guarantee. i think it's only for u.s. banks and i think each bank has to have a limit on how much deposits they can take i mean, you know, bank of america will take as much as they want, but my bank down the street shouldn't but within that limit, then i as a depositor, if i choose to leave over 250 there, i know that on my cds, i'm going to get a smaller yield on the overage over 250, but for convenience, et cetera, i don't have to -- it's all there and it's insured. look, i should not be penalized in america today having money in a u.s. bank.

that's something i should have the ability to sleep comfortably at night about okay there are a lot of other things about junk bonds, bitcoin, all the other stuff, shame on me but if i have left my money in a bank, in a u.s. bank, i should never have to think about for a second that it's not going to be there. >> nelson, it's mike you know, i wonder if you think that maybe we've seen the worst of the deposit flight and the stress on the regional bank sector at this point we all hope that's true. whether you think there's any bargains there in that area? you have exposure to some other financial, the asset managers, the custody banks caught up in some of this as well, but what about more mainline banks? >> look, we don't have investment in mainline banks because i don't understand their balance sheets i wonder if they understand their balance sheets i did look at credit suisse's

balance sheet about five or six years ago with guys at trian much smarter than me and we had really a hard time finding any real equity, but that was a long time ago maybe they got better. i doubt it. >> what if we put in place a system like this, where basically the jumbo depositrs were paying their way to get insurance? would that make you more comfortable about buying a regional bank stock? >> i'm not following your question. >> i mean, now you said you don't like banks because of the balance sheets but if we saw something that -- whether it's your idea where they pay for the insurance on the large deposits or whatever it is, some sort of bazooka, if that makes regional banks an attractive investment? >> they may be attractive for people who are much smarter than me

i like financials without balance sheets janice henderson today is the one we like very much. we think it's got a lot of growth ahead of it but they are not -- they're not regulated. i like to be as far away from regulation as possible. >> nelson, of course last time we spoke was what's now become an iconic moment with you. announcing the proxy fight is over with disney given you're here i wanted to ask you, the stock is down a lot from that day. >> i noticed. >> do you still own it are you out of disney? just wanted to get your take >> we're neither we're not out and not in as much as we were we're watching very carefully and hoping that bob is going to do everything he said he was going to do, and i wish them luck, and we're going to watch and wait and hopefully he will get it done and if he doesn't, we will make a decision then,

depending on where the stock is, to get back in again. >> right all right. so you've sold some but haven't sold all is what i'm hearing you say? >> that's correct. >> nelson, this whole banking turmoil has made people fear recession more, that it's going to come sooner and potentially going to be harder what do you see from your company and, of course, following this market action is that something you're expecting? >> yeah. i think so i think you have to be more defensive than not at this point in time. if you put your money, which i think we do, in high-quality companies, then over paeeriod of time you're going goat well rewarded -- to get well rewarded the dotcoms we've seen them come in go. we're in unilever and wendy's, pretty boring companies, and

they're great businesses they do well through this period of time and they do well in good times. they're never the flavor of the week they're great businesses, pay dividends and their earnings grow those are the businesses we're comfortable with and we can have an impact on them. i can't have an impact on a bank i wouldn't even know where to begin. >> right just the regulators maybe here with this idea, finally, nelson, everybody has a strong view about what the fed should do jay powell has a big decision. he's got inflation still, but now he has this potential crisis of confidence in the banking system do you have a strong opinion. >> yes, i do that's what i'm suggesting, restore -- brings the confidence

into the banking system which is needed and we will save a lot of these fine local banks, which will lose -- which are losing their deposits, if they haven't been lost already. that's something you need to preserve and you'll wind up a lot of foreign money coming into the u.s. banks because they'll feel safe about it. you know, whether that creates inflation or lowers interest rates, i'll let some economists make a decision on that, but if i was someone living in turkey and i had cash and my plan was put forth, i would put all my money in u.s. banks. because i know i'm going to be protected by the u.s. government. >> we're going to put it to jay clayton. i wonder if you think they should stop raising interest rates right now? >> i always think they should

stop raising interest rates. >> it will help the market. >> there has to be a better way to stop inflation than taking a sledgehammer to everybody. i really do. but that's the formula, that's what they do, and it looks like they're going to continue to do it maybe this banking crisis will slow it down a bit, but i think we're in for rising interest rates for a while. and we've got to understand that we had a point in time, we had ten years basically of free money. money was free, that's part of the reason that we got into some of this mess, when money is free for too long it's a real problem. >> yeah. we're seeing things break as a result given this -- where we started this conversation on the banks. nelson, thank you for putting it out there with us this morning. >> my pleasure have a great day, guys thank you. >> thanks nelson. >> nelson peltz, trian it's an interesting idea if

we're trying to figure out how to make people with more than $250,000 at the bank feel like their money will still be there if something happens to their bank stocks or if they lose a lot of money because of their mismanaging interest rate risk. >> it's only 15 years that limit was 100,000. it was after the crisis it was 250. one thing about the episode in the last couple weeks the revelation of how much there is in uninsured bank deposits in the system a lot of it is business. it's not somebody that has built it from nothing to 250, but it's remarkable. >> yeah. >> it's probably a wake-up call and people can figure out how to -- there are these services you can spread it out among different banks. >> you can sort of spread it and get 250 everywhere to make sure that you are fully insured one idea amongst many, sara. >> yeah. we'll keep it going. we have jay clayton, an op-ed with gary cohn, the trump

officials are getting blamed for rolling back the regulation on regional banks how to smartly regulate the banks in the wake of this crisis because that is very much open debate right now you don't want to kill the regional banks, right, and make it m possible for them to compete. the good news, every member of congress has one in their district. >> yeah. he still have plenty of banks and they will try to preserve them all. we will have more on the markets. a mixed morning but mostly higher s&p 500 up half a percent. small caps up 1.5% nasdaq giving back last week's stay with us

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welcome back to "squawk on the street." i'm seema moody. stocks are mixed at this hour. however, a nice rebound in the industrial sector. some of last week's biggest

under performers are firmly in positive territory today that includes caterpillar, united rentals and john deere. united rentals down about 18% this morning on concerns around a slow down in the economy, though worth noting manufacturing production did increase month over month in february for the second straight month. "squawk on the street" will be right back

the dow up more than 300 points as investors try to digest all the headlines from the banks over the weekend and joining us at post nine is head of research tom lee and wolf research chief investment strategist chris sanyek. tom, put this in context here in terms of we have had an attempt at a market bottom last october. kind of a mid-performance in

that regard if you thought it was a new bull market. now we have the macro stress and a fed meeting. how does it feel >> i mean this -- the way the regional bank crisis and cs is another piece of the fed's policy sort of biting and it's creating more stresses i think it is making investors really cautious, and it's understandable because as long as rates are rising and we have inflation as a problem it means there could be further fractures in the financial system, whether cbs or regional banks. similar to '08 you can find places to find relative safety even thinking this is from october '08 to march '09 you did fine owning technology, fa f.a.a.n.g. and energy. i think that's the case now. parts of the economy are relatively unscathed and sticking with tech and f.a.a.n.g. is a way to wait it out. >> the gfc, nobody does think this is '08, unless you do >> i don't

but what we have to appreciate in the fixed income world, especially because of the move in volatility and drop in liquidity it's probably been like a gfc event in the credit markets. we saw last week a lot of large macro funds experience draw downs that only happen in systemic events. there was something big that happened i think equities have been unscathed. >> credit and performance based strategies not in the core banks, at least not at this point. tom, you still think that there are shoes to drop, whether the effect on earnings, where it's going to drag the s&p to, bring us up to date on your view. >> chris. >> chris, i'm sorry. apologies. >> no worries. thanks for having me on. we're bearish. we've been bearish for the last 14 months and the fed in our minds has no good options, right. i think they'll hike 25 basis points with some hedging language around that, but

inflation continues to run hot and sticky, and even if the fed ends up pausing at this meeting or future meetings they might have to restart again. i think it's an environment that we haven't seen in a long time meanwhile, the s&p is trading at 17 times forward earnings that we think are way too high. our earnings estimate for this year is 190, and we step back and think about the events over the last two weeks and what it means, the biggest loser is tech, we think tech spending is going to come under pressure financial services firms are among the largest, if not the largest, buyers of tech equipment. i think they're going to pause here. >> that's an interesting view, just on the fundamentals of tech not being that appealing i was going to throw at it, tom, that when you say it can, you really have to distinguish if you're talking about good balance sheet tech companies or, you know, unprofitable tech companies, which all rallied hard last week if we're going into a deep recession is that where you want

to be? >> well that's - >> or a recession. >> i think it's -- -- i would say at the end of the day, technology has a bigger end mark addressing wage pressures. if you have concern about wage inflation, automation and tech delivering solutions is sort of the way out of that. and i think we have to be mindful the fed is in a tricky spot but if inflation is slowing it's not wrong if the fed pauses here doesn't mean we have to see further draw downs in equity we're in a tricky spot but it could be positive. >> yeah. chris, you know, don't fight the fed has been kind of an effective rule, except, you know, the fed has done a lot in the last ten months and the s&p hasn't really gone anywhere on a net basis. do you think that's showing resilience or are there parts of the market that are going to give way >> well, there's a lot of mixed messages, right. i think the bond market is signaling one thing. look at the index of treasury

volatility that's off the charts and these daily moves in 2-year treasuries among others have been epic, something we haven't seen since the gfc -- the equit market is resilient. we haven't seen a number of revisions for earnings coming down meaningfully. there's a dichotomy between the survey day and the hard data as the credit conditions tighten which we think will happen across the board we will see in the hard data. what we see in the hard data and companies come out this earnings season and sound cautious and give more cautious guidance, that's when i think it will hit stocks i think stocks are in fairytale land right now. >> certainly been some delays. we thought that might have been the story the first quarter of this year. we'll see if it does hit, though tom and chris, appreciate the time today thank you. >> thank you just a headline crossing

cnbc is reporting amazon is doing more layoffs another 9,000 layoffs at amazon according to an internal memo sent by andy jassy, the ceo. this is not the first round for amazon it's been laying off staff before. we're looking at the stock down 2% hasn't got quite the benefit like a meta has gotten for its efficiency efforts, though had a pretty good week last week where are we in the cycle of tech layoffs because a lot of it is they're just -- they just bruisgrew so >> amazon hired 800,000 people over a two-year period now many were in the warehouse centers, obviously, that became so important to providing goods to americans at all times within a very short amount of time. unclear where this 9,000 is from cnbc.com, obviously, breaking the story referencing a memo we'll have more as we get it, i

think. >> i would say one distinction between amazon and meta, is meta cuts costs it's all at the bottom line. it looks profitable once it gets on the cost side amazon a different story, paying for the top line growth and franchise and aws market share story and i feel as though it's been a bad stock for two years honestly relative to anything you would consider - >> you're saying it's mostly in aws. pxt advertising and twich according to the memo. difficult decision one we think best for the company long term. part of their annual planning process in this memo and noting they have added significant numbers of head count over the last few years made sense given what's happening in our business and the economy as a whole, however given the uncertain

economy we reside and t uncertainty in the near future, we're to be leaner that enables us to invest robustly in the long-term customer experience. part of the memo outlining these cuts this is not the manifesto we got last week from mr. zuckerberg which was -- received very happily by many investors yet again on top of, obviously, layoffs they had announced some time back where he really talked about a far leaner structure, flatter reporting sector -- flatter reporting overall and also as i said imploringpeople to get back to the office. >> exactly. >> bit different than that nonetheless keeping with what has been the trend in big cap tech, namely, to try to do more with less. >> and it's the source of every question from an investor, too like the investors, you know these companies are getting that question, can't you be a little more efficient in terms of head count, based on what some other companies are doing. >> they want credit for what they're doing.

looked back at the last layoff from amazon. it was early march, 18,000 that was a bigger cut. and the more significant one, of course, year to date you always wonder from a more macro perspective, like the jobs market has been so tight and hot and we've seen job growth steadily every month we even started to see participation go up, although still below precovid levels, a big part of the story, about when the tech layoffs will filter through into the overall economy. haven't seen it yet because tech is a small component of the economy and they're so -- there was so much built up during covid, and these people are able to find new jobs, but eventually, the more we see, the more announcements and the more this spreads beyond tech it will show up. >> right also tech a big source of job openings i know zuckerberg's memo was like this many people being laid off, we're also closing out x number of open positions essentially. >> i think - >> 5,000 positions in the memo

last week. >> head count reductions a lot are unfilled. >> these are all moving targets. again, back to jassy's memo, he says, you know, for example, he kind of asks and answers the question why did we announce these reductions the new 9,000 with the ones we announced a couple months ago, not all the teams were done with their analysis in late fall. rather than rush through these assessments without the appropriate diligence, he chose to share these decisions as we have made them so people get the information as soon as possible. but again, leaner while doing so in a way that enables us still to invest robustly in key long-term customer experiences and says that a couple times. >> they're all about the customer. >> always have been. >> deirdre bosa covers amazon for us out west. what can you tell us about where this fits in with amazon strategy and the amount of cuts we've already seen >> i think it's interesting what -- i don't know if you have talked about this, i was getting ready to come on tv where

they're taking place, amazon web services and advertising these are some of the growthiest and also very much so the most profitable parts of amazon it's interesting they're taking place here and like david was just talking about, it took time to figure out where they needed to cut, so maybe these weren't the obvious places when they look at becoming a more lean organization even the growthier ones, parts of the company get cut. when you look at aws and we talked about it, the growth rate used to be in the 30 and 40%, that is expected to drop to the mid teens in the current quarter and potentially decelerate even more throughout the year it makes sense they were cutting here they cut 17,000 not long ago 18,000 excuse me. earlier this year. this is an additional 9,000. aept i'm not sure where that brings it. it doesn't make a dent in terms of the pandemic hiring which includes the work -- the factories, the warehouses, so this is part of them getting all of that in line.

when you look at some of the metrics, amazon versus other big tech, this is an expensive company. they have a lot of levers they can and might argue they should be pulling because the core business is just not -- it's not very profitable at all, e-commerce. >> that's a great point to raise, deirdre, basically, meta is so much more profitable that when they announce the plan to cut as many employees as they have, you can imagine it's going right to the bottom line in this case, amazon, there was a research piece talking about how long they've had negative cash flow, it's been some time now. >> yeah. i'm looking at the cash flow numbers for the next 12 months as well and you look at amazon, it's the net margin excuse me, the next 12 months net margin, is 3.2%. if you look at apple, that's 25%. microsoft 34%. google 23% meta, to your point, david, 21.5%. amazon, especially if you're thinking in this moment that big

tech is a haven in turbulent markets because of the fortress like balance sheets, amazon doesn't have the same balance sheets or growth as some of its peers. let me give you the free cash flow number for the previous year amazon is better than meta here, $37.3 billion versus $23.8 billion for meta it's a bit of a give and take here it is because of aws, its cloud computing unit and advertising that is the profit engine of the company so valuable, but again, when these are also two areas when you think about enterprise spending cutting back on the cloud costs and advertising two places that will get hit there was announced cuts in the pxt team, i was looking that up because i wasn't familiar with it amazon's people experience and technology solutions sounds almost like an hr function i'm not sure but i'll check with amazon on that it looks wide ranging, twich as well. >> deirdre, does this mean there's, you know, the fact that

aws and you highlighted that and it's so important, what kind of cloud slowdown are we seeing microsoft, for instance, we haven't seen the announcements from microsoft as far as cutting back there, have we? >> it's a good point amazon is so -- by far the number one player is so -- by f number one player in terms of cloud computing. they had a seven-year head start on the others, microsoft, azure. growth is slowing a lot faster than that at microsoft and google it may make sense, too a lot of folks will continue to ask, especially now, where are the cuts at google we know that they're tlig to get leaner, more efficient as well, but their culture, maybe it has prevented them from doing the same kind of cuts. some, but not to the exextent. google when you look at the cloud enterprising landscape,

it's a sddistant three. they say they keep want to investing because it's important for their future can they keep investing at the same pace? it's do or die amazon is in a pretty good position to scale back i would argue maybe in a better position than the number three player here. >> guys, it seems like there might be more to come. they're going through teams and doing all these evaluations. they aim to have decisions complete by mid to late april as the teams finalize which roles can be cut >> right in terms of what teams will be impacted fully and final decisions on roles that will be impacted >> including in europe potentially. >> again, i mean, to put it in perspective, deirdre -- is deirdre still there? >> i'm here. >> 9,000 jobs off this, off an employee base of what? i mean, you know - >> hundreds of thousands. >> over a million, if you include the warehouse workers.

number two private employer in america right now. what's interesting, at amazon, it has affected white-collar jobs but so far, as far as we know t hasn't affected those warehouse workers at a time we know e-commerce is slowing >> deirdre, thank you, for stepping in here on this breaking news. again, the big headline, we learned amazon is cutting another 9,000 jobs on top of the cuts we reported a few weeks ago at amazon. the stock is coming off the lows still down 1%. stop the partisan bickering. we need smart solutions to help our banking solutions. we'll break it down with jay clayton next in an interview you will not want to miss. stay with us we're up more than 300 on the dow. financials, the leading sector today. we'll be right back.

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that and the paycheck. a better way to stop inflation than taking a sledgehammer to everybody. i really do. but if that's the formula, that's what they do, and it looks like they're going to continue to do it. maybe this banking crisis will slow it down a bit, but i think we're in for rising interest rates for a while.

and we've got to understand that we have a point in time, we had ten years, basically, of free money. money was free that's part of the reason that we got into some of this mess. when money is free for too long, it's a real problem. >> that was nelson peltz who joined us earlier in the hour talking about his plan for additional fdic insurance somehow. also mentioned, by the way, he sold some of his disney stake, which i've been following closely. it wasn't that long when he said the proxy fight is over and clearly he said maybe some of the position is over for us as well. >> the stock has had a little rough stretch since that point it's clear everyone wants to come up with a fix here. it seems like congress could do something. they could do something on fdic insurance if that's necessary. the hope and the way the market is leaning is that it's a form we might be able to get through

without an overhaulof some kind maybe longer term you want the solution but it's interesting how we're okay here with a 50-50 proposition on what the fed is going to do in two days. >> meanwhile, the story of the day so far has been, of course, performance of the regional banks and the banks overall, which have been quite strong we'll keep a close eye on all of them another hour of "squawk on the stetbensig aerhire" gi rhtft ts break. ya! with e*trade you're ready for anything. marriage. kids. college. kids moving back in after college. ♪ finally we can eat. ♪ you know you make me wanna...♪ and then we looked around and said, wait a minute, this isn't even our stroller! (laughing) you live with your parents, but you own a house in the metaverse? mhm. cool...i don't get it. here's to getting financially ready for anything! and here's to being single and ready to mingle. who's ready to cha-cha?! ♪ yeah, yeah ♪ ♪♪ choosing miracle-ear was a great decision. like when i decided to host family movie nights. miracle-ear made it easy. i just booked an appointment

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good monday morning. i'm sara eisen with my good friends, dom chu, in for carl quintanilla. we're live from the florida of the new york stock exchange. setting the stage, canyon partners, josh friedman. morgan stanley says it's too early to buy stocks. friedman also agrees sara, double line's chief investment officer jeffrey sherman is with us yields are falling as investors continue to fly to safety, bidding up government bonds. we have details on why credit suisse bondholders are absolutely outraged this morning. later, former s.e.c. chairman jay clayton penning an op-ed with