rate cut shares of first republic when it was all said and done yesterday lost half their value. word that jpmorgan chase or jamie dimon is taking a lead roll helping the bank evaluate its options. it is tuesday, march 21st, 2023. it is still in the 20s for the temperature. let's go unless it is the lion and the lamb is not here yet "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc we are live from the nasdaq site in times square. i'm becky quick with joe kernen and andrew ross sorkin here we are, guys. it's tuesday

take a look at the equity futures. after the gains yesterday, you are looking at continued green arrows this morning. dow futures are indicated up 220. s&p futures up 24. nasdaq indicated up 41 that comes after the dow was up by 383 points in yesterday's session. the s&p was up .90 f nasdaq up .40% first republic shares down, but all 11 sectors did close higher. first republic suffered. those shares are up though morning. the treasury yields with the 10-year treasury yielding 3.56%. 2-year treasury is back above 4% 4.053% andrew let's talk about first republic that stock is up sharply, but context is context

this after the 47% decline yesterday. sources tell david faber that they are advising on alternatives for a capital raise or sale. jamie dimon is leading discussions with other big bank ceos about efforts to stabilize first republic the stock was down 90% month to date despite the deposits from 11 banks last week to shore it up which was meant to be a sign of confidence it had a high number of deposits on its books which was part of the problem with the now failed silicon valley bank. we should mention jpmorgan chase and jamie dimon was the one responsible for bringing all of the deposits from all of the other banks to first republic bank bank as part of the rescue plan. the question, of course, is whether jpmorgan chase actually would be allowed to take over first republic if it wanted to

clearly one of the things the government has been unwilling to do so far is let the biggest banks get bigger potentially that is something that could be on the table joe? >> a big difference between depositing $30 billion and actually buying something with $30 billion. i could see it all right. deposit money with you >> that's insured money sd >> it is still my money. $30 billion. pretty good. a $30 billion investment is a different thing. then you are on the hook you could not have that money down the road. did you think it wassing inter -- wa interesting, first republic was bleeding it is like any who still has a

lot of angst about the banking sector, focused all of the anxiety on one name. >> there are so many uninsured deposits because there is anxiety and, of course, i don't want to cause more anxiety, but there is more anxiety about the flight of deposi deposits not the new $30 billion of deposits i think there is a lot of customers and small businesses asking a lot of questions whether they should keep deposits at that bank. that is what led to some of this by the way, when that $30 billion of deposits was moved there, there became a separate conversation people were starting to call the banks that moved their deposits there to say is that my deposit and is that now moved to first republic how does that work it creates questions >> one thing this has done is

made every person in america start thinking closely about not only where their money is, but rate of return the deposits that were supposed to be sticky and you have people talking about these things and people say could i get a better rate for return if i put my money elsewhere? it is not a lot of families who has more than $250,000 it is also businesses. >> small businesses. they were talking in last hour frank talking about $108 billion moved to money market funds in the last week. the fifth highest week on record going back to 1982 that money wasn wan't coming fr the stock market it was deposits that were going there. small businesses trying to make sure they can still have payroll preserved in money market because the last financial

crisis in 2008 and the fed did -- remember the federal government stepped in and broke the back on the money markets. bloomberg is reporting that there is a movement afoot to see if they can ensure all deposits. these are conversations taking too long and money is moving out of it. my understanding is the movement of deposits has slowed significantly because so much has already moved. >> talking to the average american we don't always do that as much as we try. we have an audience. it is corporations and small businesses and wealthy individuals. few americans are worried about $250,000 cap on deposits small businesses are and startups >> and first republic clients.

they are the ones getting the super jumbo mortgages. that was one of the few banks serving that individual or group. >> the same people who wit benefitted from the trump tax cuts rich individuals and corporations that's not me talking. that would be a narrative you might read. now to a conversation about the banking turmoil. generating buzz on twitter. looking for ways to insure fdic beyond $250,000 cap. that sounds like a lot without congressional approval, elon musk commented absolutely it is required to stop bank runs bill ackman posted about the move he is saying the same thing. it is about time ackman argued that the federal reserve should pause on

wednesday because of major s shocks in the system musk said the fed needs to drop the rate by at least 50 basis points on wednesday. >> that's not happening. >> everyone has an opinion i wonder what steve liesman's is he will tell us from others. let's bring him in senior economics reporter. steve liesman. he is a freshman, sophomore, junior year you loved. senior economics reporter is the pinnacle, is it not? >> or i'm messing around until graduation >> you are in grad school somewhere. right. >> exactly joe, i'm nervous this morning. i don't know if i can engage you and andrew on this issue here. the stocks are doing well --

>> do you care about me? >> becky will mediate, i guess >> go ahead. >> i apologize, becky. of course, you >> chopped liver >> so, the stocks are trading higher this morning. there is a report out there that the treasury is studying this idea of blanket fdic insurance i spent most of the morning and last night trying to run it down more importantly, trying to understand the legality of it. i just don't think they can do it i don't know if you guys have done any reporting on this there is a guy introducing a bill in congress to let them do it why would you introduce a bill if they can do it already? i can't find -- >> the emergency funds that the treasury has is used for foreign exchange and different things. maybe under that pot of money they can take emergency measures until they get longer term

we heard crazier things >> that is one piece of it they pledged it to the bank fund at the federal reserve i don't think they need that money at the federal reserve i'm trying to figure out if that fund could book losses i think everything inside it is guaranteed or will payoff over time that is one piece of it. i think dodd-frank took away the ability to provide insurance above 250 for a bank that is not in receivership. my understanding is they have to now -- >> the bank is systemically important. does that give them leeway we talked about this with roger altman yesterday >> right >> the bigger issue is it is per bank that is the point here they cannot do this on a blanket basis, steve all of the government officials

i've spoken to over the weekend said we cannot do this we like to do it, but the reason we have the implicit guarantee is because we don't have the implicit we will be implicit. i know there is room afoot to get -- they all want this, but they know the way they are going to get it, effectively long term, is in congress can they buy themselves enough time doing it this way to do it that way by the way, one separate issue >> they will say this on every bank and you can't say it legally. they are trying to thread the needle >> that's why i mentioned at the top of the conversation. i know you were talking to government officials i was talking to officials trying to figure out don't under estimate the ability of the lawmaker to read the law and find out that's what they want to do and what they can do. these people are smarter than we

ever will be at that kind of game >> a big bank, steve, what would my insurance bill be as a big bank -- >> big >> i would be a utility. i would be a money losing utility if every single deposit was covered and you need an a actuarial assumption some people would like that. >> joe, i don't know if you want the broader conversation now or some other day about what exactly banks are doing and what good they do right now if you could take your money and sweep it into a money market or treasury, with a couple colliclicks of your phone, then what is the bank doing they are providing something you don't want you want your deposit back it is providing local loans. you can have a banker come on

and talk about what positive they are providing if you sweep in the treasuries with a click of a button, why am i putting money in a bank? what is the bank business plan i don't know we had that conversation i think what happened is -- >> you have not tried treasury direct web site recently it is is clunky and slow >> that is a big hurdle. let's say they fix out over time let's say the technologies have the ability to move money instantaneously. because interest rates were zero -- >> we already have that. we show it on the lower right side of the screen it will come up any minute btc. >> bitcoin work with me, joe. work with me let's say the technology is

being developed. nobody cared because interest rates were zero. all of a sudden in the dormant bank account, you can earn interest the technology that was developed matters. now what happens is the banking crisis has exaccelerated the wa any kind of shock to a system does this question about what are the banks and what are they going to do to earn -- is it a toaster? let's talk about what the banking and i have information on that, by the way, in the survey today go ahead, andrew >> the one question and we were hinting at this yesterday with roger altman if it requires congressional approval to get an fdic every deposit insured around the country, the question is and this is, by the way, the government officials are

concerned about. here we have the implicit guarantee. the second we have a raging national debate about whether there could be an explicit one, the question is if there is an implicit one at all >> i heard you ask that question. >> if all of a sudden, everybody is saying should there be guarantee or not guess what there is no guarantee. there is a strange dance happening. if you talk to people in washington how to do the dance, the question of how it is communicated becomes the central issue. >> i think that is a huge part of it. i think it is interesting this idea isdangled out there i'm nervous, andrew. i don't want to avoid your question, but talk about history. remember the t.a.r.p. program? >> all too well.

>> there was a verb i called t.a.r.p.ing. the next day a media report. treasury considering covering industry with t.a.r.p. i'm worried this story is about this it is wishful thinking on the part of the treasury covering it i just wonder if the industry itself is forcing this conversation and also whether or not treasury really wants to go there. i think congress didn't want them to. >> right >> steve, thank you. we will check in with you later this morning a lot more to get to including what the fed will do this week. when we come back, president biden exercised his first veto

to block an anti-esg bill. now democrat joe manchin is blasting that decision details after the break. and later, former fed governor kevin warsh will talk about the fed meeting. u e watching "squawk box" and this is cnbc >> announcer: this cnbc program is sponsored by truist wealth. where meaningful relationships matter most.

if your business kept on employees through the pandemic, getrefunds.com can see if it may qualify for a payroll tax refund of up to $26,000 per employee. all it takes is eight minutes to get started. then work with professionals to assist your business with its forms and submit the application. go to getrefunds.com to learn more. everything's changing so quickly. before the xfinity and subm10g network,cation. we didn't have internet that let us play all at once. every device? in every room? why are you up here? when i was your age, we couldn't stream a movie when the power went out. you're only a year older than me. 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.

president biden has ex exercised veto power to nullify a rule for retirement plans. it would require retirement plans to only consider a rate of return when it comes to investment decisions instead of allowing them to consider environmental and social and corporate governance factors in the video released on the president's twitter account, he rejected the bill because it would put at risk retirement savings of individuals across the country. senator joe manchin supported that bill and called the veto absolutely infuriatinfuriating. he said it would jeopardize the retirement savings of americans. when we come back, robert frank will talk about the auction model where homes are

sold like our cars we have details next. a programming note for you you can hear about the latest in healthcare investment opportunities and the ceos of novo and gsk at cnbc's healthy returns. it takes place on marc29h th scan the code on your screen o sit's hard to run a business on your own. make it easier onr register bn. you

regican have your inventory, payments, and customers in sync across all the places youg cnbcevents.com cnbtheir own terms. start your journey with a free trial today. ♪ this feels so right... ♪ adt systems now feature google products like the nest cam with floodlight, with intelligent alerts when a person or familiar face is detected. sam. sophie's not here tonight. so you have a home with no worries. brought to you by adt.

you'll always remember buying your first car. but the things that last a lifetime like happiness, love and confidence... you can't buy those. but you can invest in them. at t. rowe price, our strategic investing approach can help you build the future you imagine. back when i had a working circulatory system, you had to give your right arm to find great talent.

but with upwork, there's highly skilled talent from all over the globe right at your fingertips. it's where businesses meet great remote talent and remote talent meets great opportunity. ♪♪ ♪ this is how we work now ♪ welcome back sothby's are looking at mansions sold like art. robert frank is here with more what do you mean >> andrew, luxury real estate sales were down 45% in the recent quarter buyers staying on the sideline until rates and prices

stabilize. more are selling to auctions auctioning off eight properties in one hour on thursday night for a total of $38 million now they aim to sell properties just like picasso. sales were up 58% last year to $526 million. >> buyers are interested in purchasing and they don't have a lot of real estate to look at right now. an auction can create momentum with the buyers and bring them into one place at one time and allow them to compete to own the property they wish >> reporter: all but one of the properties were sold with no reserve which means it is a final sale to the highest bidder bids came from 14 countries. the mansion in the bahamas sold for $50.7 million. the buyer bid online against 15 other bidders. the other hot property of the night was the ski and golf

chalet in park city, utah. it had 12 bidders. luxury homes in malibu and spain were also sold andrew, there are no contingencies which means if you win the bid, you own it. this came last thursday amid the banking crisis really strong bidding. >> i got two things. first, i have actually seen it i think i have skied past that house in park city the second question is these folks are bidding on these properties without visiting them once that's what's going on >> reporter: well, for instance, in the bahamas property, that buyer bid online, but he had seen it before it came to auction. so a lot of the bidders, at least the oness who won, came to the property once before coming

to auction >> unlike going to a sotheby's and looking at the art briefly and everybody raising their hand instead of walk around the room looking at the art, you have to fly around the country or the world to look at the properties before you showed up >> reporter: if you are bidding on more than one w these people live in the area or had an interest in buying in that area. they have seen it. they have been stalking that bro property for a long time and the seller was unrealistic in the price. the seller then had to decide what it is worth and wanted to get it done. these are typically people who lived or looking at properties and finally see them come up for sale >> are you thinking these are fire sale prices or discount prices or fabulously new high prices >> reporter: these are the fair

market value the issue with these big properties is they are unique. the sellers with no real comps they don't sell for two years and you just say, okay, i need to find out what it is worth i want the certainty of the sale the property of the bahamas was priced over $28 p $28 million. it sold for $16 million. the market flushing out the real sale price. >> robert frank. always bringing us something new. thank you. when he cowe come back, we have more on "squawk box." sallie krawcheck has more on the latest in the banking crisis. and as we head to break, a

look at the winners and losers of the s&p >> announcer: executive edge is sponsored by at&t business sponsored by at&t business at&t 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 5most 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. secure 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.

good morning welcome back to "squawk box. we are live from the nasdaq market site in times square. this morning, futures are looking strong gains that come after the gains yesterday where the dow was up

350 points this morning, dow futures up 218 points s&p futures indicated up 24. nasdaq indicated up by 47. we are watching the banks, becky. the big one is first republic bank rebounding a bit this morning after plunging 47% to a new low yesterday. sources tell cnbc that jpmorgan chase now advising that bank on alternatives they have been trying to look at a sale or potentially a fresh capital infusion as we reported for the past week, morgan stanley is among the banks that would like to buy the bank of course, if they get it at the right price. this after 11 banks showing a confidence in first republic infusing money into the bank we invite in sallie krawcheck here with more

there is a bit of ptsd here for you and so many of us trying to think through what is happening here how does this for you compare to 2008 and where do you sort of land on the big deposit insurance issue? how do we prevent what seems like a -- we haven't had a second or third run on the bank, but that is what people are roird worried about. >> andrew, it is great to be here with you. i said the same thing. it is ptsd deja vu all over again we have been reminded by a number of things one of which is that banks and wall street firms are essentially bundles of risk. they are interest rate risk and property risk and basis risk and stock market risk and corporate credit risk and information security risk and liquidity risk they are built on the case of

banks on top of the deposits which are critical struck truck f -- structure for the united states the banks are less leveraged than in 2008 you can drawn in a pond as much as you can drown in the ocean. you don't have to see it get hit too hard before you get to crisis mode. we are seeing that now happily, the regulators are incredibly experienced and learned an important lesson of 2007 and 2008 which you have to move decisively and quickly. they are doing that. >> do you think they are moving quickly enough do you think they are moving quickly enough there is an argument to be made that you look at a first republic and still out there and blow ining in the wind. there is concern about that.

i think people thought there may be a forced shotgun marriage over the weekend that didn't happen. >> remember, andrew, how long it played out in 2007 and 2008. remember hank paulsen begging nancy pelosi if you put that liquidity facility in there and they have to figure out where this thing burns itself out it will at some point. it is a matter of does it burn out with first republic or is it another bank the regulators are on the case. >> where witdo you land with the deposit insurance? does everything have to have insurance across the board do they become utilities and can they afford to do it then i want your opinion on what jay powell will do in the next 24 hours. >> i'm not an expert on what the fed can do certainly we are closer to the

end of tightening than a week and a half ago by a week and a half if the fed needs to break something before it tightens, the fed has broken something in terms of what to do for the individual investor, i can tell you the great news where we are an investing platform built for women helping women build and manage their wealth. the great news is women are standing firm. we are seeing them understand if you go back to 2007 and 2008 and at that point in time, that was a great time to invest there may have been more down side to it, but move the women have recurring deposits. they are weighing in on the markets. this is during times like this which are good times with volatility to get into the market >> have you seen, talking about flight to deposits or fleeing deposits some people are fleeing and

investing in the market. some going to money markets. is that something you are seeing >> we are seeing the women stay the course and hang firm they have questions. can you remind me where my money is can you remind me the difference with a bank deposit and money fund what you did not see from 2007 and 2008 is the panic broadly what happens in history is the big get bigger the one shame of this, though, is the lesson we seem to have missed during the downturn is the power of diversity and diversification. if you look at why was silicon valley bank the first? because it was in an area of excess which was venture it wasn't diversified. more than 50% of the deposits were for the tech industry the industry itself. venture capital industry is not

diversified. when they moved, they all moved together one of the tough things from ''0 and '08 is the diversity after that crisis. >> question of con versation of diversity. the regional banks play a huge role because of the relationships they have on the ground throughout the country. there is another argument to be made that perhaps we would do better with less banks there is an economic inefficiency to them and makes the job of the regulators harder i'm not saying that is the case. the biggest banks got in trouble in '08 when you look at the hundreds of banks around the country, do you say this is good for the diversity point or do you say we have too many? >> i'm in favor eveof the commuy banks. they fund the small businesses

out there. that is the vibrancy of the economy. getting the bigger getting bigger and we have to have room for the small. we have to have all of them regulated in a way that we don't keep having the upside when times are good and taxpayers have the downside when times are bad which we are seeing again. >> what do you do about that this goes back to concentration. look at canada or australia. look at the banking systems in those countries. super conservative highly concentrated. they have not had the kinds of problems we had. i don't know if you ascribe that to the regulators. what is that >> look, having our banks more regulated, we can argue that the bigger banks which have been

more regulated are so far making it through the downturn okay it is the medium sized banks where there is not as much regulation where, in fact, silicon valley bank itself, fought for less regulation that is where we have the issue right now. so, i know knee jerk we don't want more regulation. these make the economy go. the financial system is a critical infrastructure for us they see the economy go. >> final one for you are you in the category of blaming the fed for the problems the banks have today and that jay powell and the fed should have seen what they were doing and the risks created in the environment or say this is on the bank ceos who led the banks and took on too much risk and buying bonds at low interest rates and not hold-to-maturity

basis and not appreciating what could happen later >> first, i don't love monday morning quarterbacking the issue of everybody knew this would happen being on the front row, it is perfectly clear with hiendsight. we are fortunate to have the regulators we have with the experience they have you hate to monday morning quarterback. when you look at silicon valley bank and say wait. you didn't have a chief risk officer? concentrated in venture and you were that concentrated in the least diverse industries around. monday morning quarterbacking is e easy when you look back, fortunate to have the regulatregulators it is important to have a chief risk officer. >> sallie, great too h see you thank you. talk to you soon

joe. coming up, two guests coming up to talk about the fed decision and turmoil in the banking system former fed governor kevin warsh at 7:30 a.m. then at 8:30 a.m., jeffery lacker will tell us why he says the fed should raise rates tomorrow, but probably won't reminder, you can get the best of "squawk box" in our podcast. follow squawk pod on your follow squawk pod on your favorite podcast app help you find and unlock opportunities in the market with powerful, easy-to-use tools power e*trade makes complex trading easier react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity there are some things that go better... together. burger and fries... soup and salad. thank you!

like your workplace benefits and retirement savings. with voya, considering all your financial choices together... can help you make smarter decisions. any time any time we'll be right back. you can't do that by yourself. voya. well planned. well invested. well protected. what if you were a global bank who wanted to supercharge your audit system? so you tap ibm to un-silo your data.

and start crunching a year's worth of transactions against thousands of compliance controls with the help of ai. now you're making smarter decisions faster. operating costs are lower. and everyone from your auditors to your bankers feels like a million bucks. let's create smarter ways of putting your data to work. ibm. let's create

welcome back to "squawk box. look at equity futures 270 points higher on the dow we will see what the federal reserve does in the next 24 hours. meantime, a new york federal judge claiming jpmorgan chase can be sued claiming the bank benefitted from participating in the jeffery epstein sex trafficking scheme women who accused the abuse can proceed with similar slclaims against the bank those include claims that the bank knowingly benefitted. two weeks ago, jpmorgan chase sued the form eer invest many banker jes staley.

in response to the question from cnbc, jpmorgan chase said the u.s. virgin island statement is baseless our ceo has no recollection about this it is irresponsible for cnbc to report on this as arguments as facts. saying it doesn't make it true becky. thank you. when we come back, president xi and president putin are expected to sign a dozen agreements this week we have full analysis after the break. reminder you can watch or listen to us live any time on the cnbc app. helping you discover untapped possibilities and relentlessly working with you to make them real. ♪ because grit and vision working in lockstep

puts you on the path to your full potential. ♪ it's hard to run a business on your own. make it easier on yourself. with shopify, you can have everything you need to streamline your shipping, returns, and product storage, so you can focus on growing your business. because when we work together, the future is bright. it doesn't have to be lonely at the top. join the millions at finding success on their own terms. start your journey with a free trial today.

chinese president, xi jinping, kicked off his visit to russia yesterday the discussions involved around enhancing talks between the countries. joining us is a cnbc contributor. i realize ukraine may not be the primary reason that xi went to putin. what are the potential implications when it comes to the war in ukraine >> thanks for having me, becky you are right, this was not the primary focus on xi's visit, and china has made a good public showing of wanting to bring an end to the war, and the reality is this is not a near-term

reality for china to broker a peace in ukraine china is aware of this this message is largely for the chinese domestic audience as well as the global south, who are also pretty lukewarm on the ukraine war, seeing it as a distraction from some of the issues that they hold dear like climate change they would like for china's 12-point plan to be real, but this is not a near-term reality. >> the economy in russia is in much more dire straits than some of the numbers they put forth would suggest, it's quite a bit tougher there. what does the visit from xi mean to russia's economy? >> it's the focus, really, of

this trip. becky, you know chinese trade with russia was about $190 billion last year. that's up 30% over where it was in 2021. both sides benefited from the increased economic relationship, and for china, china has been receiving some pretty secure and cheap energy resources from russia, so this trip is about doing more of that but the real question is, what is going to happen after the visit, and what the u.s. is looking for is whether or not this visit yields some sort of systemic and consequential lifeline for russia to evade sanctions, and, becky, they are looking for whether or not there will be some sort of lethal military aid there's a lot being said, but here in washington, we are watching what will happen after this visit

>> if the peace plan is smoke and mirrors at this point and not something that will able ey - stabilize, how does it end up reflecting on our relationship with china, our reflection and other western nations? >> i think the relationship was already bad. this is certainly not going to improve it, but, again, the trip on its own won't really damage relations. it's going to be what happens after this visit but to your point, europe is very concerned because they obviously do not want to see a prolonged war in ukraine europe has often looked to china as a way to try and bring this war to an end, and there's more hope in europe than in war, but -- >> what do we really want,

because we hear people say if putin is backed into a corner and feeling like a caged animal at that point, there's a potential for nukes to come back up, so what is our end goal? what are we trying to achieve? >> here in washington we have allowed for the ukrainians to speak to what their end goals are, and i am not sure everybody believes what ukraines would like, which is all territory achievable, and here in washington, people get ahead of what the outcomes are. to some degree, becky, for right now, we're going to see how the spring offensive goes, and i think people are hoping that ukraine is able to win on the battlefield, and, again, there's still a lot left to be done with that -- with that as the goal.

>> what should we read in the headlines out of this, anything you are watching for >> for me, what happens in terms of economic terms, and keep an eye on the battlefield, to see if chinese ammunition or other weapons appear in a systemic way on the battlefield that's what i would be keeping my eye on. >> thank you the fed kicking off the two-day policy meeting we will talk to former governor, kevin warsh. and then the futures right now in the genre across the board, in the genre across the board, the dow up 245 points.

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. coming hello ozwald. pam, you are a rock- i wasn't going to say it. ♪♪ ahead.

>> good morning. investors look to build on yesterday's rally as beaten down regional bank stocks bounce. walking a tightrope. we will hear from former federal

reserve board governor, kevin warsh. tech stocks as a safe haven. will that trend continue we will tell you what that means for your portfolio as the second hour of "squawk box" begins right now. good morning welcome back to "squawk box" here on cnbc i am andrew ross sorkin along with joe kernen and becky quick. look at the u.s. equity futures, and investors are thinking with their feet looks like the dow is up 260 points this morning. look at treasuries as well

indicative of perhaps of what a slowdown in terms of the fed increasing rates and look at crypto bitcoin still on quite a run janet yellen set to give remarks to the bankers association. kylah joins us with a preview. >> she will defend the government in the financial system three years after the covid pandemic began and 15 years after the global financial crisis the rescue last week was meant to shore up the entire system saying, quote, the steps we took were not based on aiding certain banks but the intervention was necessary because similar actions could be warranted

the treasury is suggesting deposits at other banks could be insured at $250,000 if there's an exception granted because that bank poses a systemic risk. a white house official tells me an im a decision is not imminent there. despite the uncertainty surrounding regional banks, western alliance bank up, all led by first republic, and banks led by jpmorgan chase are undergoing efforts to strengthen the bank i am told by sources familiar with the bank that the talks are focused on longer contingency planning separate from the sale process happening in the meantime >> i was trying to parse what janet yellen is saying, and kind

of go through the words and where she said this will not be done for separate classes of banks, and it made me think she was referring to what the mid size bank coalition of america was asking for, which is coverage for everybody, and then the second part of the sentence made me think they would do that if it's needed >> the first part of the sentence is to deflect any criticism that the u.s. was coming to the rescue of the tech sector by closing signature bank and taking silicon valley bank into receivership, but they were not showing special treatment for any sector or region what follows from there is the suggestion the intervention could continue if there's further weakness i think what she's trying to say is there should be confidence in the u.s. banking system that the regulators have more firepower

left if they see the weakness spreading, and those are two lines that will be parsed pretty closely. >> the white house and treasury may be talking about extending deposit insurance beyond the $250,000, but that there's nothing near term, nothing that is imminent? >> right certainly that will fall to congress to change that threshold set in the 2008 crisis, and it would take an act of congress to lift that, certainly, and there are different numbers being thrown around by different sides of the aisle. when i speak to white house officials they say something like this doesn't happen overnight, and it will take the regular timeframe and it would not be under the crisis timeframe that the regulators are doing what they need to do now, and washington is going to deliberate on that as it sees

fit. >> thank you >> first republic was above 15, and now it's back in the low 14s. we were watching yesterday, and it might hold 19 the high on the banks, 174, and today it's up barely able to hold a 2-point rebound it's at 14.30 bid right now. $2 billion market cap for this bank >> joe, that's to the point, though, why is the government not -- i hate to say i don't love arranged marriages, but i think all weekend as talks were going on there was an expectation the government was going to effectively force a shotgun marriage or some capital injection, and here we are -- >> they talked to credit swauis.

>> we talk about piecemeal, but we talk about insurance and the likes. >> supposedly the depositors fleeing, that rode up on friday, and do we need to check exactly minute by minute about the credit flow -- >> credit suisse was saying things about the flow and things that stabilize >> i would like to see all these things we put up on the screen, if deposits have not moved or slowed, i think it behooves them to come out publicly and say here's our deposit position -- >> i don't know if you want to be in the business of reporting that on a day by day basis >> maybe not on a day by day basis, but from the

conversations i have been having is what they are trying to do is raise capital, and they want to go out publicly and say we raised x amount of capital and this is our deposit situation right now, and they don't want the deposit situation by itself. if they have the capital with it, they think that's a match. the secondary question is -- we will talk about the fed in a second, but if powell says tomorrow that he is raising rates, and if he raises rates he could say, i feel comfortable that i am not seeing deposit flight that could be an argument. >> the former treasury secretary, when she was walking offset we asked what he might do in that situation, he would say raise it by 10 basis points, and. >> should do one basis point

>> he was kind of looking at it as, you know, splitting the baby, and you still send the signal but not doing much in terms of -- >> it's odd, the fed isn't what they just do mechanically, and it's how they do it and what they say, and with any bank situation it's all about psychology with the fed, you could argue they need to separate the inflation fighting from the -- what is happening in the banking system >> if you look at the balance seat, and kquantitative easing s back on. >> this is not our problem, they might say. we have a job to do for the people being eaten alive by inflation. will they hike, pause, and what should they do? steve liesman is here and has

the cnbc survey. steve, weigh in, please. >> yeah, great conversation you guys are having. this is an unusual meeting in extraordinary times, and it gives us a survey about the disagreement about what will the fed do and what should the fed do take a look at our fed expectations chart 72% said there willbe a hike, and our survey was from the end of last week 52%, only 52% say the fed should hike some say the fed should hold i its power right here, and then 86% says the fed cuts or pauses at the next meeting in july. okay, we ask what is the more important fed policy reducing inflation or protecting

financial stability, and 52% say it's financial instability rather than inflation. and then here's a quote that suggests a further marking down of our forecast for growth and recession severity then we have mark of pieteed crescent the fed should not compound its earlier mistake by giving in too early in the inflation fight what about a recession 55%. it's up from the prior survey at 51 interestingly, september of 2023 is the average start date, and that's a quarter later than the last survey, and the average length of the recession is eight months the fed's decision tomorrow comes down to pretty much what you guys were just talking about, if the banking turmoil

has settled down and whether it can handle monetary inflation with one set of tools and financial instability with another. i don't know if the fed wants to run that experiment right now. >> yeah, i mean, that's the interesting thing. again, that was kind of jack lew's solution, you raise rates but basically by 10 basis points, kind of like a token saying we are not done raising rates just yet, and we are going to pause and look around but we don't want the markets to be off to the races again thinking that all risks -- it's all risks on again and that the fed put us there. >> yeah, i mean, i don't think the fed right now will be that concerned with where the stock market is. i think you guys were saying, i think, correctly that powell is going to be looking at deposit

flows almost every day i think he's looking at bank stocks as a sign of confidence in the banking system and probably helps some of the bonds or the defaulted insurance is trading, and it has been day-to-day what i am a little worried about, and we were talking about it, but i don't know if your twitter feed has blown up with the question of deposit insurance, and people are passionate about it and a lot are against it, but what i am worried about is the market trading better because of the blanket security, which they may not be able to do, so what if the fed gets a false signal from the market >> as you mentioned, they are probably not watching the bank stocks as much because the bank stocks are not just a reflection of if you have faith in the bank

but what you think about the prauf tp profitability. do you remember when the fdic changed its deposit insurance from $100,000 limit to $250,000? >> i don't -- >> that was in dodd/frank. >> it was part of the emergency financial stabilization act, and it was supposed to be temporary and it's not >> it was part of a law. >> in dodd/frank it became law i think it was 2012 when it was passed >> look, i will say another good point that jack made yesterday was we are talking about no limit on insurance, but maybe there's something between $250,000 and infinity that makes sense to raise the minimum insurance level. as time goes on, obviously, $250,000 is worthless. if you are a small business

trying to ensure payroll maybe you could raise it to some extent but not to infinity >> becky, i have been talking to officials about this idea that we talked about last week on the show, and could you effectively create payroll accounts and those accounts be fdic insured if they are boxed as a payroll account, that's insured. if you would do that and maybe raise the individual level to -- i don't know, half a million dollars, i don't know what you think is appropriate -- >> i don't know. >> but most should feel good about that >> if the fed's intention is to raisin e raise unemployment -- you don't want the payroll, and when the fed is not really sure that

destroying demand is definitely going to handle inflation, it's just such a blunt force crappy way to try and run things to just go up another 25 basis points to try and hurt the economy even further seems odd to me that that would be in the back of their mind because this is going to cause a pretty good slowdown, you would think, or it's going to have people predicting a recession is more likely, and it will hurt demand for loans and hurt a lot of things with the banking sector, so just be so stubborn about we're going to -- now, if they were saying we are going to normalize rates because they have not been normal, do they know what this economy right now, what is the rate that an interest rate should be. maybe they know it's still too low, and maybe that's what they know but i don't know that they know that >> it's specifically one of the

things they don't know, and powell became famous for that in monetary circles is the idea of look, the interest rate is not something we could know -- >> it's purely to keep piling on to hurt demand >> i would give them a little more credit than that, and what they are concerned about, joe, is the idea that inflation expectations get out of control. >> we're back to the psychology. >> yeah, it's not when the inflation is high, it's the psychology thing more than hurting the economy. >> people -- it's all about psychology a lot of it is not just -- if we went up one basis point, that would be weird >> i would enjoy reporting that with a straight face >> do you remember when they did

10 >> why not 11.5? i don't know >> you need 12 basis points. >> you need 12 and a half. >> coming up, what is moving this morning then -- the goal post for one thing. and then the nhl getting a new look from fanatics the fanatic ceo, michael rubin, the fanatic ceo, michael rubin, will joi from the plains to the coasts, we help americans invest for their future. and help communities thrive.n

"squawk box" will be i screwed up. mhm. i got us t-mobile home internet. now cell phone users have priority over us. and your marriage survived that? you can almost feel the drag when people walk by with their phones. oh i can't hear you... you're froze-- ladies, please! you put it on airplane mode when you pass our house. i was trying to work. we're workin' it too. yeah! work it girl! woo! i want to hear you say it out loud. well, i could switch us to xfinity. those smiles. that's why i do what i do. that and the paycheck.

♪ sports company fanatics scored a new deal with the nhl, and the merchandise giant will replace adidas as the league's

uniform and outfitter. our friend, commissioner of the national hockey league is with us you already manufactured a lot for the nhl, you just didn't have the uniforms? >> yeah, we have been in business with the nhl, and this is the next step to making all the fan jerseys, and we make a lot of performance -- >> it's just another addition to the stable, isn't it >> we do make all the uniforms >> you make two. >> this is a strategic expansion for us hockey is a big business for us, and having our logo is an incredible exposure and it's a

big move for us. >> he said it all. frankly, when you are in business with michael, he's just a force of nature. we have had a partnership that has been very broad-based in ae compassing e-commerce, performance and fan-friendly merchandise. this was the next logical step for us in being business together and we have complete confidence they will do a great job. >> what is better about it than the adidas deal? >> it's different. adidas, good partner, but they are more focused on soccer and footwear, and michael and fanatics cover the spectrum of what we are doing, and we have had double digit growth over the last few years, and we love the partnership and think fanatics does a great job in everything they do, and michael is a

visionary and can execute. >> in terms of marketing, in terms of making sure it's available in a lot of different places >> he does it all, especially on things like special events, stanley cup merchandise, when we do our winter events like the winter classic and other outdoor games, they do it all. >> we go to bed thinking about how we better service the fan, and we are going to do the best job, and that's what we try to do every day we made a lot of progress over the last 18 years. >> what was the temperature the last time we were together, the last winter classic? it was like, 10 below. >> you were shivering. >> do you know anything about regional sports and how it plays out?

>> we are 100% focused on the three businesses we are in today. we have the growing merchandise business and the collectibles business and we just started the trading card business, and then we have gaming, and we are focused. he said, michael, be patient, there's a lot to unfold here >> there's so much value there, but the costs are too high right now, but these are essential things they are not going to go away. >> it's almost a perfect storm fans connect, probably first and foremost, on the repgionals with their teams. particularly for baseball, basketball and us, what we have during the regular season, we are touching our fans through the regionals, and there's the factors, the evolution to streaming. i think we are at a point in

time where you will see the business continue to morph from streaming to digital, and over time it will find its normal level, with all the cord cutting and cord nevers, our viewership has not gone down, so the business model needs to adjust >> he is denning it, and he see -- i want to ask you about disney, too, or espn >> you think all the time, michael. >> that's accurate we do have a balance sheet, more than $2 billion on our balance sheet today. here's the reality we have incredible growth in the three businesses, so we don't want to rush into anything else today. there's so much unfolding in live sports, watching the

digital streamers and how that will unfold and perform, and watching how regionals and local sports really changes. these are incredible valuable rights and make a lot of sense for us long term but we don't want to rush into anything >> disney says they are going back to what they do best, and does that include espn in your view >> i don't want to speak on disney's behalf. >> you spoke to iger, yes? >> i have not spoken to iger about espn, and i spoke to him several times but not about espn we are not focussed on live sports today look, i am very transparent, as you guys know. >> you are so skinny i can see right through you. that's how trim and fitter >> one of the things i did wrong in my first company, gsi, which i sold to ebay, and knowing that we have such a big opportunity in the three businesses we are in, we want to do a great job.

do we look at everything we looked at 500 companies last year and bought three. we will continue to do that? absolutely i kind of want to get some popcorn and get on the couch and watch it unfold, and then we will figure out what the right time is for us over time >> this is a slow version that we are seeing of michael >> he's in a place where he is touching sports fans in lots of different ways, and having said that we are on espn and with disney and we love it and the connection is great. if you think about last week, we did an animated game in real time with big city green on the disney channel and disney plus, and as much as we love fanatics and michael, we like espn with disney and think it works well >> sports values only going up from here?

>> thank goodness, yes >> we think sports content is the most valuable content in the world, and what makes us exciting long-term is you can say if we had live sports within our platform, is that going to help us to sell more merchandise? sell more online sports betting? sell more collectibles long term is why we say it does make sense having an ecosystem where you can get the digital sports fan everything in one place, but -- >> your decision to get out of some of the teams you own, you are business first and fans secondly >> i have the greatest job in the world, and i wake up -- >> no, i have the greatest job >> yeah, we have the greatest jobs in the world. i don't want anything to get in the way of fanatics' success >> thank you when we come back, former

federal reserve governor, kevin warsh, will join us to talk about the fed's tightrope walk this week and beyond

"squawk box" will be right back. - [soldier] take a look at this! - they've left us a gift. - [soldier] i think we misjudged them. - i love horses. (birds chirping) - [soldier] we should open the gate. - let's see what charlotte thinks. - [narrator] at crowdstrike, we monitor trillions of cyber events to detect threats and prevent breaches before they happen to keep your business from becoming history. we stop cyberattacks. we stop breaches. we stop a lot of bad things from happening.

crowdstrike. protection that powers you. welcome back to "squawk box. i am dominic chu with your morning movers the volatility continues first republic share is up right now, and just remember that's

after a 47% plunge tied to reports regarding everything from strategic all turn teufrs and possible share sales and more, and other western regionals have been caught up in the volatility, like pacwest, and charles schwaab seeing gains, and then davidson also out with an upgrade. and then the real estate investment trust is down around 15 shares of volume. it's among a slate of real estate investment trusts and higher relative debt levels and a higher proportion of older and dated office buildings in its folder

meta platform, up 250. it's upgraded to overweight and the price target to 250 bucks, and it was 190 they decided their refocus on costs and better modernization those media shares up 2.5% those media shares up 2.5% we at pgim we can help you rise to the challenges of today, when active investing and disciplined risk management are needed most. hav drawing on deep expertise across the world's public and private markets in pursuit of long-term returns... pgim. our investments shape tomorrow today. up after this break.

i think i'm ready for this. heck ya! with e*trade you're ready for anything. marriage. kids. college. kids moving back in after college. ♪ finally we can eat. ♪ you know you make me wanna...♪ and then we looked around and said, wait a minute, this isn't even our stroller! (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 ♪

in his latest "wall street journal" commentary, former federal reserve kevin warsh is calling for a regime change. kevin joins us this morning. he's now a distinguished visiting fellow at the hoover institution, and kevin we were talking about this off camera, just the idea of the headline itself, the u.s. needs an economic regime change with a picture over jay powell, and that's not what you are calling for? >> no, we have a team on the field and we need the team to be successful we have one economy and one country in a time of a huge stress, and what i am say something the economic policies that put us here have shown the economy is weaker, credit is going to contract because of free money that was practiced

for a decade that they doubled down on just a couple years ago, and so all of these problems that you talk about every morning about panics at the banks and distress and bailouts, they remind me uncomfortably of the 2008 financial crisis, and those are a sign of bad economic policies for more than a decade, and the regime that we need is a change in economic policy, a change in regulatory policy and fiscal policy, and most importantly, a change in monetary policy that created all these disturbances that we are seeing today >> the change being that we should not be at zero interest rates, that should be a thing of the past >> nothing is more expensive than free money, and free money causes a huge amount of complacency, and it's huge

allocations of money, and they find themselves in a crisis and what should they do about it i think they need to call a big time-out, a big time-out they have been providing forward guidance on these dots for a decade, and i thought it was a bad idea a decade ago and a worse idea today what jay should do tomorrow is make whatever decision he should make, probably raising rates a quarter, and when reporters asked what he should do next, he should say i don't know. even in normal times there's very little value of the short-term forecasts i think it confuses markets and contrains their decision making, and when you ask yourself why did the fed make such a mistake keeping rates at zero when the economy was booming, and their first move was a quarter bases

point, and they had tied their own hands through the dots and talking too much the central bank needs to be a still and steady point in a turbulent world, and if not they find themselves doing the weekend bailouts >> basically the idea that they are tying their own hands by doing this, they are not data dependent, and they say all the time they are data dependent but they are less able to be data dependent when they have these points out there >> they are strained, and when the facts change we need to change and instead we think that squanders our credibility. the other piece you bring up, they do talk about data dependance, and there are two problems about that, the data, and the dependance the economy was not

strengthening according to everything i saw and touch, and the economy was weakening week over week and month over month, but the data said otherwise and the fed flip-flopped and came in and said inflation is under control and the economy is weakening, and they got a few statistics from the department of commerce, and they said the economy is strengthening and we will have to do more it was in the committee when powell said i might have to raise it 50 points, and the economy is hotter and the terminal rate might be 6%. >> i am trying to understand, maybe the fed should be behavioral scientists. i hate to play the blame game, but when you think about what is happening in the banking system right now, do you say that's the fault of the federal reserve,

that's the fault of the money and they should have known that people are going to go to the risk curve and do crazy things, and our job is to stop them or do you say it's on them, the people that took that risk >> in a word, yes, free money affects everybody, and it affects regulators that get complacent over the decade, and then the federal reserve has continued to show that they have a lot of interest in keeping money free we are all infected by it. we can't help it i blame them all, but i would say at core when the history is written, they will see another regulatory failure by bank regulators, and that's in part, andrew, because the art fist did not work you have heard me talk about this for a decade, we need three pillars to make sure we have a

safe and sound banking system. market discipline, and standards discipline, and we should not be surprised 15 years later we are back >> do you have an algorithm for the interest rates, do you have -- what is the neutral rate what should we set it at if jay powell doesn't know and has to admit it and if the data is not great, where should interest rates be right now? how would you gauge what the right level is >> most of us ended up in economists because we were m mathematicians or physicianises and it was too hard, and so this is a dynamic economy the right interest rate in 2023 is different than the right interest rate would have been five or ten years ago.

the supply side of the economy changes, global economy changes, so i think the best advice i can give is the advice i got when i was 35 years old, and i showed up, chairman volker, he was voting yes or no on my confirmation as a governor in the fed, and i brought my autograph book i was so excited and i said to volker, how do we do this? he said, kevin, let me give you two bits of advice, you have to get the interest rate about right, and we never know what that means, so be in the zone, and by the way, zero was never in the zone. and he said the second is more important than the first, and when you do that, be sure you look like you know what you are doing. >> fake it until you make it >> well -- >> or an amount of confidence in the banking system --

>> show confidence it doesn't mean you say you know where rates should be at the end of the year, but preserve your options so you can make prudent decisions. my own judgment is we should have different interest rates. >> should jay powell should have spoken out about some of the fiscal successes in the last two years, or is that a independent body -- judy shelton, i don't know if you agree with her on things, but she said staying back and staying at zero and enabling all of this was part and parcel to being a partner in the fiscal spending? >> the horse left the barn on that one, too. the fed encouraged expenditures during the repeated hearings, and not only in the dark days of the crisis, but when we had vaccines and when the economy was strengthening, and it's rich

to say now they should say nothing when they were so aggressive in supporting it. more importantly, joe, we talk about interest rates and i write op-eds about interest rates, but quantitative easing, whether they like it or not the line has been crossed between fiscal policy and monetary policy for one, i don't believe we would have had the fiscal explosion under democrats or republicans if the fed had not been financing it. >> let me ask you, yesterday we had scott reclor hear, and he was saying we need help for commercial real estate, they want time to extend loans that are becoming into maturity in the next three years, and they need to extend the loans, and unless there's help or pushing from the federal government they are not going to be able to do it and there will be problems

for commercial real estate and apartments and all kinds of situations what would you say to him? >> that sounds awfully like the f-word that we used to hear in this business, forbearance, and becky, i don't know where you think i was going. >> it's not the f-word i think of >> i think the crypto meltdown, the uk pension scandal and now what is thought to be a few problematic institutions far and wide that have had deposit runs as if they are not connected the episode of free money has had all of these consequences, without stricter terms and a cost of capital there was an economic boom, an everything bubble, and i am afraid that credit is now contracting, and the economy is continuing to slow almost nothing we are talking about on bank balance sheets is evidence of a deteriorating tkp economy, and i am afraid that is

to come, and the sector is working through this the best the fed can do is not be in the extensive bailout business but try to be a steady happened here. i am afraid they are going to be racing from weekend to weekend for quite a while. >> does that mean they should not be raising rates this week >> i think they find themselves in a terrible situation. price stability says they should be raising rates and financial stability says they should be cutting rates. like christine, for whom i have had a ton of respect, she tried to have it both ways in their last meeting, and the bank of england when they had their crisis they tried to do both, but there's no principle in monetary policy between financial stability and price stability.

my guess is jay powell raises 25 basis points if that's the big mistake he makes in this cycle i would be surprised. the big mistakes have already been made over the last few years. >> you said it's already an unstable financial situation what does that mean for additional pain in the immediate future >> i think most of the pain is already finding its way into the system i don't think 25 basis points is going to be the thing that cracks this thing. the harm is largely already done by the way, i said this repeatedly, the fed makes policy interest rates that we all focused on, and the market sets almost every other rate behind the short-term rate, and the markets are saying yields will be cut dramatically, rates will be cut dramatically by year end because i think they figured out the economy is weakened. >> is there still a huge overhang of banks that have --

they call it money good because it's 10, 15 years, we know it's going to be at par, but we know where it is right now. is there a huge overhang there of people sort of, you know, just not looking at the marks, at what is really happening? it has been ten years of zero. doesn't everybody have this on their balance? >> it pains me to agree with you, joe, but i have to. yes, after ten years where the fed said we will keep rates at zero and inflation is too low, at 1.7%, and we need to goose this thing, everybody has it nobody was looking under the hood at banks and all these other institutions as they went out longer in duration, except when the market gets scared and panicked, then we see the cracks everywhere all at once >> do you agree with me because it's a bad thing to consider, or because you disagree -- >> because i don't want to

encourage you, joe >> you don't want to encourage me to say things are bad, you mean >> i don't know. you might start throwing things at me. >> i just think that -- svb, they were crazy in terms of just thinking you can have stuff valued at par and never worry again, but we saw what happens when they have to come up with money. i don't want 90% of the banks to be like that >> the banks can bring it all to the window though, at par, does that paper over the situation, resolve it >> that sounds like more bad loans. if you lend them money at par, isn't that making it worse >> it shows how worried the treasury and fed are, and we didn't have the courage to do that ten years ago i will leave you with one last thing, the silicon valley bank and signature, these are not one

offs it's indicative. i am afraidi what is happening faster is what happened in 2008. >> great coming up, we will talk tech stocks, and in the next hour, chnder former rimo federal reserve president says we've got to go higher in '25. >> jeff's a good man >> we'll be right back

welcome back to "squawk box" this morning amazon is going to be cutting 9,000 more jobs as layoffs continue to rock the tech industry but amid this current banking turmoil, investors seem to have found a safe haven in, can you believe it, tech stocks. the nasdaq composite now up nearly 2% in march, outperforming the s&p and reversing lastie iyear's steep decline. i want to bring in danielle flax to talk about it what's happening here?

is this a risk-on trade or is this just, these folks were so unloved that now people are loving them again? what are you -- what do you crack thisup to? >> good morning, andrew. i think -- i think the market's focusing on the innovation and the growth potential of these companies later this year and into next year and you couple that with, we saw the move from amazon yesterday they're starting to take a much more aggressive stance in terms of managing cost and so if they're able to do that, i suspect what we'll see is that free cash flow and earnings growth will improve over the next year so that is what i think the market is focused on >> so, of the stocks on the screen, those, of course, the f.a.a.n.g. stocks, which ones do you like, which ones don't you >> we like google at current levels the search business is durable it's seen cyclical headwinds and i think they have an underappreciated opportunity in their cloud business amazon, which we touched on, i

think ecommerce will continue to become more important to buyers, and of course, to third-party sellers. really, it's about empowering small and medium businesses. we continue to like amazon's growth prospects in cloud, even as it, too, is facing some cyclical pressures with facebook or meta, it remains important to customers and to advertisers they're transitioning their business we're seeing transaction in ro reelz and we're continuing to round that out apple sees some pressure in parts of their business, which are consumer facing, but i think the product cycles are healthy, the installed base in iphone is growing and the services business remains robust. >> i want to go back through that list again. google, really alphabet in this case, speak to the ai of it. because if we weren't talking about a banking crisis right now, we would be talking about chatgpt. and everybody is concerned about whether chatgpt is going to take

over the world and whether google, which effectively had this technology first, is now officially behind. >> google has a tremendous amount of intellectual property around generative ai, or artificial intelligence. it's very, very early. one of the exciting things about chatgpt is, all of us across many different industries are seeing the potential and i think google has capabilities and will roll a lot of that out in the weeks and months ahead, it's important that they're able to do it in a thoughtful way a lot of the data has to be managed carefully, of course, the truth behind the answers is very, very important so i think google will compete, certainly from a pr perspective. we'll hear more from them. ultimately, it's about delivering a robust service, which they've been able to do to date and i think that's what we'll see more of that >> that stock is about 100 bucks right now. 140 is the high in the last

year what do you think is a realistic price target for that company right now. >> i can't give you a specific number, but i think what we'll see is, double-digit revenue and free cash flow growth, as we look out later this year and into next year and if this business and the company is able to trade at an above market multiple, given the growth prospects, the intellectual property, and the significant opportunities in cloud, i think there's significant upside from current levels, andrew >> okay. we're going to leave the conversation there danielle, great to see you, appreciate it. thanks >> thank you >> joe >> thanks, andrew. coming up, presidents xi jinping and vladimir putin set to hold formal talks today after the chinese leaders' arrival in russia we'll bring you what you need to know from overseas that's next. plus, former richmond fed president jeffrey lacquer, on why he says the fed should stick to its guns and raise rates tomorrow tomorrow but his view

the first time you made a sale online with g thedy was also the first time you heard of a town named dinosaur, colorado. we just got an order from dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. start for free at godaddy.com you'll always remembery pry won't. you can't buy those. but you can invest in them. at t. rowe price, our strategic investing approach can help you build the future you imagine. "squawk box" will be right back.

the eagle has landed. that's one small step for man... hey, what's up? -one giant... uh... houston... we have a situation. how did you get here? you're characters in our video game! video game? yeah, it's what we can do with the xfinity 10g network. basically, the greatest achievement since the moon landing. i think they're talking about us. i know. you can play from anywhere. -yeah, i'm in the basement. i'm at the dentist. check this out. it's super smooth even when everyone's online. whoa, can i try that? you're in the game!

what the heck is that? those are the bad guys. -are they friendly? nope! ok, here's the plan. on the ship there's some wire cutters, some tubing and rubber bands. now with our know-how and some elbow grease and a little bit of luck, i — you're probably going to want to start running. the next generation 10g network, only from xfinity. one giant leap for mankind. good morning futures higher so far this morning, building on monday's gains. hopes rising that the banking crisis will be contained, as jpmorgan trying its best to save first republic and hike or pause? that's the big question of the morning, as the fed kicks off a two-day meeting. former richmond fed chair or president jeff lacker, he's going to be joining us, telling

us where he thinks this should all land and friendship on display. china's president xi and russian president putin meeting in moscow, talking ukraine and more we're going to have the latest, the final hour of "squawk box" begins right now. good morning and welcome to "squawk box" live along with andrew ross sorkin u.s. equity futures adding to the gains we saw yesterday, up another 267 points strong for most of the morning the s&p indicated up about 34. becky, andrew, i looked, just get a quick look at where the s&p was again. because we have talked about a lot of stuff over these past few

months if it goes up 30 points, it will be at 39.80 again. and then i was thinking, if you went away, if you went on a sabbatical and came back and left when treasuries on the ten-year were like 3.6 and get back, oh, nothing's going on and even the two-year, that's about where we were, two to three months ago >> it's up pretty significantly. >> it was. but it was almost, it was 4.6 or 4.7. and i just checked first republic again and it's hanging in there, but it's not setting the world on fire >> in fact, let's get to the latest on first republic bank. that stock is up sharply after a decline of 47% yesterday sources told david faber that jpmorgan is advising the bank on strategic alternatives that could include a capital raise or a sale other reports say that jamie dimon is leading discussions with other big bank ceos about new efforts to try to stabilize first republic before this morning's move,

first republic's stock was down 90% month-to-date, despite an objection that came of $30 billion in deposits from 11 major banks, just last week. that was meant to be a sign of confidence frc had an abnormally high number of uninsured deposits on its book, which was part of the problem with the now-failed silicon valley bank. you can see this morning, first republic bank, up by about $2.50 to $14.67. if you take a look at some of the other regional banks this morning, you'll see green arrows there, as well comerica up by over 4% key corp. up by about 3.25%. pac west up by more than 7%. and western alliance up by about 6.75%. andrew >> thanks, becky meantime, treasury secretary janet yellen set to give remarks to the american banker's association about the government's intervention in the financial system yellin expected to reaffirm the rescue as meant to shore up the entire system, saying the steps we took were not focused on aiding specific banks or classes of banks our intervention was necessary

to protect the broader u.s. banking system and similar action could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion now, treasury suggesting that deposits at other banks could be fully insured above $250,000 if there's an exception granted because that bank poses a systemic risk. that is pretty much the powers that they have of course, the big debate about whether that deposit insurance should be much higher, implicit in this case, explicit in the meantime, i want to get over to dom chu, who has some of this morning's top movers. dom? >> let's start off with a check on shares of harley davidson the motorcycle, electric bike maker, you can see here, just up about 4% right now, helped along by analysts over at morgan stanley, who say the stock is now an overweight rating, up from an equal weight they cited amongst other things a bigger focus on the core business at harley, as well as a stronger and better consumer profile, so those shares getting some help, up about 4%

then you've got shares of footlocker, which are up nearly 4% premarket as well, thanks in part to analysts over at citigroup, who have upgraded that athletic apparel and footwear retailer to a buy rating it was neutral rating. increased to $50 a share, they cited more optimism about re renewed excitement digital offerings and kids offerings as well. we'll end with a check on nvidia, which is up right now. the computer chip maker is getting somewhat of aed by ahead of its software development conference that's happening out in the barrier later on today if you see those shares right now, up about 1%, still down about 2% over the course of the last year, as you can kind of see here, a lot of upside over the course of the last couple of months with thall of that optimm about artificial intelligence powering some of that move we'll keep an eye on those shares of nvidia >> we know you will. thanks, dom. >> it was just over a year ago

when the fed began raising rates to tame inflation. i guess that might work. now the financial system is in the middle of a crisis and economists are split on whether the fed should hike rates or pause for what's at stake in the capital markets, let's bring in michael kantorowitz with piper sandler, and pria mitsla with td securities pria, i was just looking over some of your notes again, and i think at this point, the market believes that financial stability is going to take precedence the fed is torn between market stability and harnessing inflation. you think that they think it's more important, the latter, harnessing inflation so they're going to raise again. >> yeah, so you know, i would say the fed views both importantly, but they've got different tools. they've got the balance sheet. they've got liquidity facilities, all of that to deal with financial stability

they've got monetary policy to deal with inflation. so, you know, given how inflation is, given that the labor market is still strong, we think they go another 25 i think the big challenge will be, how do they communicate? they're supposed to be forward looking. i think we're seeing this bank crisis, you know, more from a liquidity to a capital issue that starts to impact bank lending standards. i think you'll hear chair powell say, they'll be extremely responsive to data the problem today is one of inflation. so they have to hike and then say that they've lot the liquidity tools. i think you'll hear a lot about the liquidity tools, the new facility that they launched. i think that needs a pr campaign they need to tell banks that there is no stigma around that btfb facility. banks should access it that's what it's there for i think that would really help shore the liquidity issues capital is not something the fed can anyway do. i think they'll try to address both issues, the market is more focused on financial stability, but we've got this price stability issue that the fed has

to be extremely focused on >> michael, i think it's interesting you say that we could be range bound between pivot hopes and recession fears. and i think we may now be witnessing both. we may, you know, maybe pria's right, maybe they still raise, but maybe we're in mid-pivot here, after things started breaking and maybe recession fears are still front and center so, it may be -- that may not be between the two. we may have both >> yeah. and i think that's exactly what we've seen in the market, depending on the day of the week, the sentiment of investors, the data that come out, markets are kind of willing to take one narrator over the other. and it's really kind of felt like it's been back and forth. maybe not on a daily basis like it's been the last couple of weeks, but certainly on a monthly and a quarterly basis going back to really mid-june. so almost a year and we think that continues, ultimately, until inflation has

clearly been beaten down and goes away, or the labor market starts to deteriorate more clearly in the form of rising unemployment claims. we're in the latter camp we think that's going to happen middle of the year, that occu occurred, and in our opinion, that's where markets will start to price in a recession. >> that's key, the "h" word. we do everything like that now, p-words, f-words, h-words, and they never what you think. the h-word is hard landing >> the f-word matters, too, fundamentals >> kevin had -- what was his funding. i already forgot fundamentals >> no, no, no -- >> that was his. >> that was his. >> that was michael's. >> mike, last time you were on. >> forbearance >> that's right! last time you were on, you were talking about 3,200 on the s&p and my point is that, wow, we have a lot of the negative issues are front and center, and they're already well known

so something would have to get significantly worse for those levels possibly to be hit, you know, breakthrough 3,600 on the way down and you said, well, earnings are going to be that bad or there will be a hard landing you didn't say anything about banks. and now we've got that so maybe that's one of the things that just adds to your arsenal of reasons why the stock market probably is, you know, maybe the underpinnings aren't that strong right here >> yeah, i think at the end of the day, looking for where problems are going to arise and nobody was looking at banks, if anything, people thought from the '08 experience, that was the last place we needed to look our point has been that we have the conditions for problems to arise. and the last couple of months and the last year, interest rates have gone up, that's where all the problems have been, in the uk pension system and now in the banking system what we're more concerned about is that all of these problems, whether we know of them or not,

ultimately end up hitting the profitability picture for corporations and the confidence picture for consumers. and that's what it leads to lower earnings and ultimately, weaker employment. so it's really just that we have the conditions for problems to arise, and i think there are more unknowns as well as all of the knowns that we've talked about, where problems will arise going forward. >> so, pria, are you, are you that negative, as michael? or do you think that -- you're most concerned with rate strategy i'm not going to ask you about where the s&p is going to be, but do you still think a 6% terminal rate is possible at some point could inflation stay really bad in the face of some of this negative economic news that seems to be coming in? >> so inflation is high and it's broad-based. and i would say it's the most lagging indicator out there so if we contain the crisis in the near-term and inflation stays high, i think the fed keeps hiking our terminal rate forecast is 575.

even though we are also in the hard landing camp. but the economy right now looks strong i'm getting a little nervous how quickly this can result in a tightening, in essential financial conditions or bank lending standards. maybe the fed stops at 5.25, 5.5, not all the way out to 5.75 or 6 but why i'm negative on risk assets here, and i know i'm not an equity analysis, but we're used to that fed put and with high inflation, and the fed saying, we've got these liquidity tools out there, i think the fed put or the fed coming in to start to cut rates with high inflation, that's going to be really hard. we're used to the fed slamming on the brakes. here they might just say, we're going to keep rates here so we're going to look at congress we've got a debt ceiling fight that's coming up so when i look at official sector help, i struggle to see where that comes very quickly and the fed is data dependent. i think it's hard for them, given the credibility shock of last year for them to be forward looking. i mean, i think they should stop pretty soon, but they might just

say, look at how inflation is and we're data dependent and we think inflation is going to be very sticky on the way down in fact, i'm not sure that we get all the way down to 2% by the end of next year the rates market is pricing in rate cuts, but i think it's interesting, even after the cuts, we're pricing in 3% fed funds by the end of next year. i would argue the rates market, even though it's a little more negative, is not pricing in a hard landing because if we're in a recession by the end of this year, next year, the fed is going to cut more than 3% i still think bonds are attractive i think owning five-year treasuries, ten-year treasuries start to protect you in that hard landing camp where the fed is unable to respond rather than being in the front end of the treasury market. >> pria, very good thank you. piper's michael canterowitz, good to have both of you on today. we need a whole new -- our network has totally different -- right -- p-word, f-word, instead

of tmz, for example. i mean, you know -- >> fundamentals are what -- >> forbearance >> the p-word is pivot totally different -- almost a different language, andrew >> much more civilized language. >> much more civilized >> we'll try to be civilized today. we've got a lot more coverage of the fed and its big challenge. former richmond fed presidentla guest. but first, china's president xi in moscow meeting with russian president vladimir putin. what this public display of friendship could mean for the war in ukraine we'll discuss it all when

"squawk" returns

your brother has landed in the dark lands. they're under bowser's control. hang on, luigi. yes! fire! only in theaters april 5th. rated pg. millions have made the switch from the big three to the best kept secret in wireless: xfinity mobile. that means millions are saving hundreds a year with the fastest mobile service. and now, get the best price for two lines of unlimited. just $30 per line. there are millions of happy campers out there. and this is the perfect time to join them... right now, switch to xfinity mobile and save up to $800 on the new samsung galaxy s23 series. to learn more, visit your local xfinity store today.

welcome back to "squawk box" this morning i want to show you the futures right now. we are in the green, ahead of hearing from the fed tomorrow and lots of questions about what may or may not happen there. but in the meantime, i want to talk about this happening right now. president xi and putin set to hold formal talks today after a formal dinner in moscow last night. this after president xi's first trip to moscow since the invasion of ukraine began more

than a year ago. eunice yuan joins us now from beijing. eunice >> reporter: thanks so much, andrew well, business here in the russian district of beijing is thriving and it looks as though the situation is only going to get better official meetings for president xi's visit to moscow are underway and so far the summit is about deepening ties. russian state media has been reporting about how the two have had a very warm greeting, referring to each other as dear friend state media there has also said that president xi invited both putin and the russian prime minister to china. xi predicted that russians would re-elect putin next year for his quote, strong leadership, even though he hasn't officially announced that he's running, while putin praised xi for securing a third term and for his so-called peace plan to resolve the crisis in ukraine, which was unveiled last month. putin said that he, quote,

carefully studied the 12-point plan and the kremlin said that during the four and a half hour informal discussion that the two had yesterday, that they had a very thorough exchange of views on ukraine now, the chinese have said that putin praised their plan's fairness and said that he is open to talks for peace. of course, no word, though, on russian concessions or on the preconditions that ukraine has had, for example, all of russian troops withdrawing today's talks are going to focus more on the bilateral relationship, though both sides have said that they would also be discussing ukraine. and they're going to focus on what they call a blueprint for a comprehensive strategic partnership and the kremlin says that the two leaders are expected to sign a dozen agreements or so on economic cooperation through 2030 and afterwards, they're going to address the media and go to a

state dinner guys >> eunice yuan in beijing this morning. you know, we can spend a lot of time talking about a banking crisis, but boy, is there another crisis called a war going on around the world. and we're going to be keeping our eyes, of course, on that as well becky? >> thanks, andrew. up next, banking stocks on the move today this time to the upside. we're going to check out the major developments impacting the sector and the names to watch. and a reminder, you can get the best of "squawk box" in our ll sawbodcast. ll sawbodcast. foowquk dy on your ♪ imagine something of your very own. ♪ ♪ something you can have and hold. ♪ favorite ♪ dreaming is free. ♪ accenture, let there be change.

and start crunching a year's worth of transactions against thousands of compliance controls with the help of ai. now you're making smarter decisions faster. listen anytime listen anytime we'll be right back. bucks. let's create smarter ways of putting your data to work. ibm. let's create woman: st, it was just a team. now, i can't imagine my life without them. man: that coach changed our son. on the field and off. (cheering) (cheering) (cheering) ( ♪♪ )

welcome back to "squawk box. futures right now, 279 points on the dow. the s&p indicated up about 33. nasdaq, higher as well, as things seem to be at least at this hour, it's 8:21, you know where your children are, do you know where your stocks are

they're up right now but who knows by 4:00. it depends on a lot of things. interest rates we won't hear tomorrow, but tomorrow we'll hear. first republic, regional banks, keeping an eye on all of those things >> let's check out the banking sector right now the regionals are pushing higher today on hopes that jpmorgan can orchestrate a rescue plan for first republic the nation's largest banks also higher this morning, if you want to take a look you can see up by 2% or better for most of these banks. jpmorgan chase up by about 1.78%. joining us right now with his thoughts on the financials is kevin heal a fixed income strategist for argus research what do you attribute the gains across the board to today? >> good morning, becky you know, i think it's more of, you know, an ease that we're going to get, you know, maybe the worst is past amongst the banking sector and that, you know, we see some -- we've seen

some kind of resolution with the regional banks and the fed in allowing them to, you know, backstop their assets and pledge those and the new funding programs you know, we believe that all deposits will eventually be backstopped by the fed and it's potentially run into a different levels of whether it's a retail or a business deposit. >> if that's the case, if you think part of the reason behind this is because people are convinced that backstopping all deposits will be the answer, i mean, it looks like it's a pretty heavy political lift. the freedom caucus, 45 members in the house came out yesterday and said that they're opposed to any idea, either implicit or explicit, when it comes to backstopping all of these things they think it's just going to lead to riskier behavior down the road and if you've got a 45-member caucus in the house saying, no way. what makes you think that this is actually something that happens?

>> well, as i mentioned, you know, it could be bifurcated it could be that, you know, the big concern is for, you know, the average consumer is worried about whether or not his deposits are going to be guaranteed but for the most part, you know, 250 and under, you do have those deposits guaranteed. the question becomes, you know, what do you do about your business, you know, banking relationship, you know, if you have $10 million in cash flow in your business bank, you know, it's not really feasible to have 40 different banks so something has to be done. or maybe there's levels of deposits that get insured. >> when you look across the board, just in terms of what happens to the bank stocks, but also what happens to the economy as a result of liquidity kind of drying up, how do you try to come up with what you think is a fair and reasonable stocks for price, for financial stocks at this point >> obviously, the multiples are down right now, and a lot of

the -- we're looking at, you know, you know, that -- looking at the regional banks that we cover at argus and looking at their investment portfolio, their different available for sale or held to maturity looking at liquidity but the other regionals that we do cover, you know, have a pretty diverse customer base and all have active hedging strategy -- interest rate hedging strategies in place. >> meaning that you think that these are solid banks and stocks that you would recommend >> yes, absolutely, we, you know, we had a list out on monday and, you know, a couple of the banks that we continue to like, citizens, huntington, regions, all feel that we have, you know, a diverse customer base versus the sivb that was pretty much the tech industry start-up bank. >> do you get the sense that

there is going to be a rescue plan or a sale of any of these banks? if you look at first republic in particular or do you think that what's been done at this point, the talk of putting deposits in and then the talk of potentially shoring things up, is going to be enough to say, okay, we think things are much better there? i realize first republic isn't one of the companies that you cover, but obviously, it does have implications for some of the financial stocks that you do, in fact, cover >> yes, absolutely and we believe that either the -- i don't think the fed wants the big five or whatever to continue to grow and get bigger you know, somewhere in there, there's a sweet spot for, you know, a larger regional to be able to pick up maybe different parts of the bank. you know, it could be svb securities, you know, the boston private that they bought you know, i think that, you

know, jamie dimon and his, you know, consortium are trying to, you know, foster together some sort of relationship where, you know, where they can take, you know, first republic's rather large wealthy base, that's the same situation where it wasn't necessarily, you know, they do have obviously large individual customers that had all of their money at that bank, and it's just, you know, kind of flowing out the door right now and they also, you know, similar to svb, you know, sitting on a pretty huge loss in their held-to-maturity bucket. >> right kevin, i want to thank you for your time this morning >> thank you >> okay. coming up on the other side of this, elon musk and bill ackman, they've been tweeting about the banking crisis also, the fdic and interest rates. we're going to break down the twitter debate plus former president of the richmond federal reserve, jeffrey lacker on why he thinks the fed should hike rates, but probably won't and throughout the month of

march, we're celebrating women's heritage, sharing the stories of women leaders in business and those of our cnbc teammates and contributors here is nyse president, lynn martin >> what i would love others to learn from my personal journey is, don't be afraid to take risks. don't assume your career has a linear path. mine certainly didn't. as someone who started their career coding, i never thought i would be president of the new york stock exchange and leading the world's largest global exchange exchange so don't be afraid to take the♪♪ ♪♪ ♪when the day that lies ahead of me♪

♪a lovely day (lovely day)♪ ♪(lovely day) (lovely day)♪ ♪(lovely day)♪ a bank that knows your business grows your business. non-linear patbmo. you got this. let's go. gobble gobble. i've seen bigger legs on a turkey! rude. who are you? i'm an investor in a fund that helps advance innovative sports tech like this smart fitness mirror. h inalso 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 investment objectives, risks, charges, expenses and more in prospectus at invesco.com. you'll always remember buying your first car. but the things that last a lifetime like happiness, love and confidence... you can't buy those. but you can invest in them. at t. rowe price, our strategic investing approach can help you build the future you imagine.

♪♪ alex! mateo, hey how's business? great. you know that loan has really worked wonders. that's what u.s. bank is for. and you're growing in california? -yup, socal, norcal... -monterey? -all day. -a branch in ventura? that's for sure-ah. atms in fresno? fres-yes. encinitas? yes, indeed-us. anaheim? big time. more guacamole? i'm on a roll-ay. how about you? i'm just visiting. u.s. bank. ranked #1 in customer satisfaction with retail banking in california by j.d. power.

welcome back to "squawk box. futures continuing to show some solid green numbers today after a big gain yesterday it would be almost 600 points on the dow in two days, not quite, but almost 550, 560 nasdaq indicated up as well, sharply. 70 points hifrg. and that will put the s&p, if it were to close just under 4,000 again today. treasuries, which have hit a big run-up, not the yield, but the

principle value in the last week, a little bit of backup in rates that we're seeing today. 357 on the ten-year. the inversion, though, if you don't like inversions, it has lessened a little bit. it has widened in the last session or so. >> right now, let's get to a conversation about the banking crisis that's generating some buzz on twitter. u.s. officials are reportedly considering ways for the fdic to ensure deposits beyond the $250,000 cap without congressional approval elon musk responded to a tweet about that report. he commented, absolutely required to stop bank runs investor bill ackman later commented on a similar post about the fdic move saying it's about time ackman then tweeted a long post arguing that the federal reserve should pause on wednesday, because of major shocks to the system musk replied to that tweet saying, fed needs to drop the rate by at least 50 basis points on wednesday so, andrew, i guess, add all of that into the many, many

opinions out there about what the fed should do tomorrow >> yep and it's worth noting that elon, for the last, i don't know, couple of months, at least, has been calling for lower interest rates. >> maybe even longer than that >> maybe longer than that. >> meantime, that fed meeting starting its two days -- or the two-day meeting starting today but this time, of course, in the middle of a banking crisis i want to check out the expectations of a hike or a pause with steve liesman what do you think? we talked to you last hour is there -- there's news >> well, before i get into what i wanted to say, andrew, i want to commend on mr. musk and mr. ackman, who i think they need to read the law i just got a briefing from a major banking policy organization and they say there's two ways to provide blank deposit insurance. legislation and fastrack legislation, both of which have the word legislation in it so it runs through congress,

andrew i just want that to be clear maybe there's another way. >> no, you talked about it, both of us -- >> it runs through congress. >> both of us seem to know that, for reasons that are beyond me i don't know why, the folks on twitter don't. >> okay, so, anyway, markets are trading this morning andrew with renewed certainty of a hike coming tomorrow. even while several former fed officials say, maybe that's not the right call take a look here we are trading with an 84% probability of a 25 basis point hike one of the higher probabilities we've had for this meeting, since the banking crisis unfolded there was also a 56% probability, by the way, of a may hike built in. but several former fed officials think the fed should pause robert kaplan telling a dallas radio station that fed share jay powell should make clear that he's still fighting inflation, but, and i quote here, the reason i, that's kaplan, wouldn't be in favor of raising rates is i don't really understand yet what the state of the economy is and what the

fallout is of this small regional banking situation eric rosen from boston tweeted, tightening into a financial stability problem created by rapidly rates could have unpredictable results, particularly while several banks are being resolved risk management would argue for a pause now. there's a lot of speculation powell and the fed could take their cue from the european central bank remember, they hiked by 50 basis points, but they withdrew forward guidance and the president of the ecb saying, as powell has suggested, we have tools for dealing with inflation and financial instability. and maybe that's coming. andrew >> thank you, sir, appreciate it very much. right now, we can talk about what we can expect from the fed today. i want to bring in jeffrey lacker, former president of the richmond federal reserve jeffrey, it's great to see you

this morning we're all trying to make sense of what the fed will do and what it should do why don't you break it down like that, first. >> i think they should go ahead with the 25 basis point increase i think they have still more work to do and that would sign the signal of worry and convey that it's worse than people on the outside think. i take jay powell seriously. that what happens is less important what shows up in the summary of economic projections. what the dot plot looks like that could go all over the map you could have a wide divergence of views within the economy. some marking down their path,

but on the basis of the inflation and real economy data that's come in since the december meeting, the last summary of economic projections that were released, you would think that the path would be marked up. so i think that's the critical issue for them he may take a path, they may just punt and say, we're not releasing anything, they did that in early 2020, but i think that would be sort of a bit of a dereliction now. i think they can -- >> yeah, go ahead. >> did you see, we had warsh on in the last hour he effectively said two things he said there should be regime change he says there should be a massive pause. and effectively, he thinks the dot plot game, i don't know if you want to call ate game, has been a terrible, terrible mistake. what do you think? >> so those dots, any of the paths that the fed releases are

the center of a forecast of a range of possible outcomes i think people understand when you say that the temperature in midtown, manhattan, at the high on thursday is going to be 55 degrees, that it could be higher and lower than that. and i think sophisticated financial market players understand that they're just giving you the midpoint of a range of possible outcomes that they think are likely. >> but we've also had situations it's like the weatherman -- when the weatherman says there's going to be a massive storm and there's no storm or the weatherman says it's going to be sunny out and it's actually raining we've also had that, too >> i think the deeper critique is that they, the fed, the way and the structure in which it provides its forward guidance doesn't provide a sense of the way in which policies likely can depend on the data and this is where the role of rules like rules that have been

sort of fit to past data, providing those would give markets more information it would let them adjust their estimates in between meetings, with more alacrity and more accuracy i think conveying a sense of how policy is likely to depend on future data would be more valuable than further elaborating what they do now >> how do you think about whatever -- i don't know how you want to describe what seems like a banking crisis of sorts, and how deflationary that ultimately will turn out to be. obviously, there'll be a delayed reaction to that, but, in terms of how jay powell should be thinking about that. >> so if these deposit withdrawals that we've been hearing about represented people taking currency, paper notes out of the banking system and holding on to them, i would be very concerned that's what's happened in the 30s and the fed's failure to

respond caused the great depression but my guess is that's not what's going on. my guess is that people are moving deposits from one bank to another. so you have that some banks are losing deposits, others are gaining them the banking system as a whole is going to retain those deposits and as a result, i don't see the necessity of a dramatic change in credit conditions some banks might be reigning in, but other banks would be willing to take up the slap in a competitive banking system and i think that's what we have. i think fundamentally, monetary policy and credit policy are two different things and it's important to keep them separate and keep them fighting inflation. because at times in the past when the fed has paused out of a concern for financial stability, have often turned out badly. we're slow to raise rates in 1999, and then inflation rose.

and they had to raise rates more aggressively and tip the economy into a recession. so i think it's important to keep them separate we have the tools to deal with credit market problems that are separate from monetary policy tools. >> jeff, i guess you think that they immediate to stay in hiking mode, because 25 basis points isn't going to do anything to inflation, in and of itself. but it is going to make all of these marks even worse it's going to -- the marks that we're worried about, maybe svb, and these other banks, maybe they're not canaries in a coal m mine, but maybe they are and there probably are a lot of people that wish they didn't have these long-duration bonds so 25 basis points, that's not going to cure inflation, but certainly going to make matters worse for people that are stressed or individuals that are stressed right now with where their marks are. but you think it's going to be 25 and then maybe another 25 and then maybe another 25 after that i'm wondering why you're so sure

that interest rates need to be higher, for what reason? >> real interest rates need to rise when inflation rises. that's how you get the inflation rate down. they haven't raised the real interest rate. it's about where it used to be we're coming into this episode they need to raise the real interest rate by 1 or 2 percentage points. and coming into this banking crisis, that looked like it had to be like 6 or 7% they can do what they want to do to patch up the capital losses that are in the banking system they're substantial, but they're not life-threatening at this point. but they do bear a superficial resemiplablance to what the snl industry dealt with in the beginning of the 1980s the bank term lending facility seems to be a template for sort

of indemnifying, sort of monetizing those capital losses. i think they can think of ways to buffer the financial system from those capital losses. >> jeffrey, how should the banking system think about this? so there's two views of this one is they go up 25 basis points joe is 100% right. obviously, there are going to be more embedded losses by default. what the responsibility of the fed is in that case to actually consider that or not what responsibility is there for the bank leaders to have considered that in advance or not? how do you look at this other sort of debate happening around the country, about frankly who's at fault >> i think it's important to frame this in terms of a cycle we've been seeing, going back 50 years, of expansion, of the implicit federal financial safety net that is the set of things that aren't legally insured, but

people believe are going to be rescued by officials it goes back to the early 1970s. and in each case, what happens is that some risk materializes on the edge, on the boundaries of what's perceived as the guaranteed part of the financial system the officials have a choice whether to intervene or not, not intervening threatens financial stability, because people will reduce their probability attached to whether they're going to intervene somewhere else so they end up intervening more often than not that sets a precedent that expands the implicit safety net. and then we're off down the road of the aftermath of, you know, cracking down on the risk -- the specific risk that was the proximate cause in the last go-round but then, you have a new safety net and you still have a boundary out there and there's a risk that materializes on the outside of the boundary

and the crackdown on risk-taking inside the boundary, shifts risks to outside the boundary. and you're just going to have it play out again somewhere else. we extended the safety net to all commercial bank liabilities, essentially, in the '80s, in the financial crisis, we extended to it bank holding company liabilities. at least at the large end. i always thought that the regional banks would be the next site of problems, the next terrain to contest the cycle and so it looks like that we're probably going to do something to extend protection either explicit or implicit to the regional banks and then there's a question of where it shows up next but we ought to set back and reflect on the instability that this whole process and their behavior has given rise to >> jeffrey, i want to thank you for your perspective we will see what happensin the next 24 or so hours.

appreciate it. >> joe >> thanks. >> thanks, andrew. next, we're going to head down to the floor of the new york stock exchange. find out what jim cramer is watching this morning. as we head to break, check out the s&p 500 winners and losers "squawk box" returns in just a moment

(vo) if you've had thyroid eye disease for years and you go through artificial tears in the blink of an eye, it's not too late for another treatment option. to learn more visit treatted.com. that's treatt-e-d.com. welcome back to "squawk box. the futures this morning really on a tear.

dow futures are already indicated up more than 300 points you've got about 45 minutes to go until the opening bell. s&p futures up by 34 the nasdaq up by 73. we want to get down to the new york stock exchange to check in with jim cramer ahead of the opening bell and jim, you are putting out some tantalizing thoughts here that you've got your own plan for what should happen with deposit insurance or how we should deal with some of these things i guess the question is, if you look at the bank stocks right now, the regional banks, they're up across the board, first republic, by the most. but all of them after a pretty good day yesterday for most of the rest of the banks, regional banks and the big banks, with the exception of first republic yesterday, but already, looks like there's a little bit of calm what do you think the real answer is? >> well, i think -- >> well, they must -- the regulators must have seen something which indicated that there's more than first republic being in trouble maybe there's just a lot of deposits coming out of all of those. so they've got to protect every one of them. because if it's just first

republic, there's lots that they could do to save it. or to close it and have it be bought by somebody else. i do believe that there's been some big deposits out of these banks, so they have to take some action but the action is so positive for the stock market that i think people are trying to catch up they were negative were negativ. now they come in, and everything they were selling they've got the buy back all the banks featured are still way low. i think there's a lot of people saying, okay, i'll take my chances that the crisis is over. >> or the expectation that the federal government is going to do something more to insure all deposits, although we keep going back and forth about whether they even can, whether the government has the authority to do that without congressional approval you've got the freedom caucus out there, 45 members in the house saying there's no way they have the authority to do this explicitly or implicitly. >> look, if they want to do it

and pay the price of some sort of onslaught, fine is congress going to seek an injunction against them? a lot of times the regulator are cowed by congress. if it's a real murder scene, do it first and ask questions later. i think they know that if they're going to be cowed by congress, they'll never get anything done. any time you speak with someone from business they say, if it goes to congress, we're all sunk i think they've got to do it before they go to congress and then pay the price. >> overall looking at yields, that two-year note, that's 4.13%. >> yeah. i think that's a sign that maybe people feel that everything is under control. we've got to see one of the things we know about first republic is it keeps causing -- it fools you. it goes up a little, goes down a little i don't know let's watch and see what

happens. i'm watching new york community bank which was able to use signature. a very, very positive reaction there on that. >> jim, thank you. we'll see you in a few minutes we'll see you in a few minutes >> with apple music seamlessly integrated. the all-new, all-electric eqs suv from mercedes-benz thank see your dealer for exceptional offers on mercedes-benz electric vehicles. ♪♪ inner voice (kombucha brewer): if i just stare at these payroll forms...

>> manage your payroll taxes, cheers! with 100% accurate tax calculations guaranteed. ♪ old school wisdom, with a passion for what's possible. back 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. ♪

as we have learned today, opinions all over the map on what's important, what the fed should or shouldn't do i was listening to jeff lacker and i was hoping our next guest was listening. if not, at least recap what lacker said. joining us to explain how she feels, kelsey barrow, fixed income portfolio manager at jpmorgan asset management. if there was a debate, you could be here and former president lacker could be here you say, and this is really interesting, kelsey, the fed was created, federal reserve in 1913 in response to the banking crisis of 1907 not even in their wildest things did they think they'd have the dual mandate of unemployment and inflation as their most important things

they were created to manage the financial system what the hell happened >> that is exactly what they're doing. thank you for having me on and for starting with that the fed has to keep in mind that above all else, their biggest goal is to be the lender of last resorts, and that's why probably the most appropriate thing for them to do at this moment, given the amount of uncertainty in the banking system is to pause now, on the other hand, you talk about the two-year yield, it's moving higher today. the market is pricing in 85% probability of a 25 basis point rate hike. what the fed normally does is they do what the market allows them to deliver. right now the market is saying go ahead, do that 25 basis points it may be too much, but i think what the fed is going to really need to focus on here is the dot plot what are they communicating beyond this most upcoming meeting.

two weeks ago we were talking about the fed getting to 5.5, 6.5% that's completely out the window i think the real reason why is because, even if they pause, and inflation is high now, inflation is coming down and the stress in the banking system is ultimately disinflationary. >> i asked just give me an algorithm for where rates should be, what is normal rates if you were to just purely do that based on giving people a real return, you can take an inflation number and find out where you should be, that locks you into this weird box where you're absolutely certain that your answer to inflation is demand destruction and bringing higher unemployment, lower gdp, a slowdown in economic activity. you're so sure that's it because you're locked into this, i've got to get rates normalized to where they're above inflation. that's like operating in a

vacuum there's other things happening, aren't there they seem to have lost sight of why the fed was created in, as you say, 1913. >> i think this gets down to the idea that monetary policy and the fed funds rate is a very blunt tool really it only impacts the demand side of the economy so that is really the only way that they can operate. on the other hand, they do have the liquidity tools. they have been putting back stops in place what they have they have interest rates, that's what they have they reset interest rates significantly higher it is important to note that this is the most aggressive rate hiking cycle since the 1980s and what happens when you move that quickly is ultimately you break things, and that is essentially what we're seeing in the banking

system over the last two weeks >> those two mandates are almost diametrically opposed. i understand how it works, but it is -- you wouldn't design a system like this this is like a goldberg game on trying to control inflation by demand construction. the fed is supposed to maintain full employment. that should be against their mandate. i guess, kelsey, at this point they almost want to act like no way are we going to allow the stock market or the banking system to influence what we need to do when that's what they were created for in the first place was to keep the banking system stable maybe they need to be reminded of that. we're out of time. kelsea ballerini no, you're somebody else, kelsey berro from jpmorgan. have you heard of her?

>> i've heard of kelsey berro. >> i have heard of both of them. >> let's take a final check on the markets, folks it's likely to be a wild day as we get news tomorrow midday from the federal reserve on what they plan to do jay powell is set to speak join us. "squawk on the street" right now. good tuesday morning welcome to "squawk on the street." i'm david faber with jim cramer. we're live at the new york stock exchange carl has the morning off a look at futures as we get ready to start trading on this tuesday. you can see we are looking for a higher open. let's get to our roadmap