it is friday, march 24th. it is friday. i didn't know. it is friday. "squawk box" begins right now. good morning. welcome to "squawk box" here on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen. andrew is off this morning. so far, not looking too great. dow futures off 250. the nasdaq off 60. yesterday, stocks were mostly

higher. the dow up by 75 points. s&p up .30%. nasdaq was up 1%. it was led by netflix and meta and alphabet. netflix up 9% on reports of healthy subscriber growth. on the flip side, the financials and regional banks. zion and key corp and comerica was down. comerica off 8.5%. key off 6.5%. bank of america and wells fargo hit hard this month. they are set to open at new 52 week lows this morning. bank of america off 1.5%. same for wells fargo. treasury yields here with the fed reverse course at some point. right now, the 10-year treasury yielding 3.304.

2-year treasury is up this week. a lot of it coming of the financials this morning. >> i don't know how players approach these things. i think they start probing. they check something. that's okay. >> what do they see? >> credit defaults. deutsche bank. the capital ratios in europe, we have been told, are better than here. what is the problem with deutsche bank? is there a problem? do we know there is a problem? >> i think the banks here are in better shape than in europe. >> not in terms of capital ratios. much higher. you know, who knows? that's what is happening and the reason is because of the credit default swaps. this is after a jump in the cds under concerns of the stability of the european banks.

credit default swaps with the form of insurance on the bondholders against its default. other european banks tumbling on the news. it looks like whatever you thought happened with credit suisse and ubs, there is anxiety. broader european markets are down. >> let's go back to the credit default swaps back to where they were on tuesday. it looks like they were higher monday. you know, that sense of calm was broken and they came back. >> i think people -- i don't know. usually if there is smoke, there's fire. a lot of times, people that do this for a living are really looking around for something. it is not self fulfilling, but they can start beating the bushes for what is next and want

to be there first. whether there is a problem or not at deutsche bank. >> particularly when it comes to banks because banks -- if you can create a problem with the confidence and create a run on the bank, that's when, you know, things happen quickly. >> we have seen in the past that you can deal with the currency in terms with george soros. he made so much money. one of the greatest trades was the currency trade. >> or shorting. >> you could tell if you were to get it started, it almost starts snowballing and psychology kicked in. it would be self fulfilling. he would say it wouldn't work. >> both counts are right. it would not happen if you didn't have problems under the hood to begin with. >> right. >> that's always the reason why regulators or the fed or janet yellen is walking back again saying, yeah, if there are problems, we will step in.

>> i worry about this. >> about what? >> you can't do that implicit guarantee for silicon valley bank and say the depositors. then everybody assumes the next one. that means everybody's covered. you can't possibly cover everybody. it is just a slippery slope you go down. that was -- i don't know how you walk that back. >> she tried to yesterday. >> that didn't help. i didn't think deutsche bank was similar to credit suisse. >> there are other people saying they couldn't believe that credit suisse was before deutsche bank. i saw that earlier. >> you did? >> yeah. again, this is people who may have bets placed on the opposite side of things who are rooting for it and putting their money there. >> they are all there. pick your country. >> society general or bnp. deutsche bank. deutsche bank, clearly, the

worst performer at this point. down 13%. >> now what? we import this back here? it is just -- >> they are accusing us of exporting it there. that is not the case. credit suisse in particular. it had a troubled decade leading up to the problems they ran into. if you look at the united states, citizens financial group is looking to make an offer the silicon valley bank. that is according to reuters. the auction of svb private is handled by the fdic. the agency set a deadline of today for the offers. tiktok ceo grilled on capitol hill yesterday. it looked like -- i felt bad for the guy. he seems like a nice guy. i'm easily -- >> you saw his soul in his eyes? >> he seemed like an earnest young man. some of the stuff and they were loaded for it. >> this was set up in advance.

they said they were -- >> machine guns. >> senator warner saying he did not believe him before he stepped foot in the place. >> shou faced tough questions from lawmakers on both sides of the aisle. it is this exchange that is at the heart of the u.s. officials fears about the security of user data. >> today, all u.s. user data is stored by default in our cloud structure and access is under control of american employees. >> including engineers have access to u.s. data? >> congress member, i would appreciate this is a complex topic. today, all data. >> yes or no. it is not that complex. yes or no. do they have access to user data? >> after the project is done, no. today, there is still data we

need to delete. >> much more on this story later in the hour. what a grilling. >> by the way, he is a ceo that reports back to a chinese company and all the way back to 2017 and chinese companies priorities is the first priority to provide any information that the chinese communist party wants. >> ccp. >> why are we looking at this years later and wondering the end game? >> a large contingent saying you don't block -- you have to think long and hard if you shut it down. whether you really do that. >> at this point, it may be too late. 150 million americans who have accounts. it is not like it will be ripped off your iphone if you downloaded it. you may not be able to download a new app. there are work arounds if you

are tech savvy. the other story yesterday is shares of block, formerly known as square. that stock down 15% after the short seller hindenberg research accused block of allowing criminal activity to operate with lax control and inflates user apps of the cash app. block said we intend to work with the s.e.c. and explore legal action against hindenberg research for the misleading report that they shared about the business today. block said it is a highly regulated company with disclosures and it is confident in products and compliance programs and control. yet, this morning, the stock is down again indicated off 4.9%. >> they almost -- the report was almost tongue-in-cheek in places. the company decided to serve and

under served part of the economy. criminal element. went after that and that was the entire thing. >> i don't know the research behind that. clearly block is coming back swinging and threatening it is working with the s.e.c. to look into it. there was something in the options market leading up to it it. hindenberg disclosed this was a short for them before they did it. you will see investigations that play out from here. >> whenever we talk about short sellers, you can argue both sides. they are the most vilified parts of the investor world. they are the ones who are the whistleblower or doing the due diigence to find things that are useful. people say they are short and

come out with -- anybody who is long comes on and says i like this stock. >> i own it. you can say they are talking their book or putting their money where their mouth is. yeah. i'm sure we have not seen that. >> we should say that you probably shouldn't have this horrible. name any of them. they all have it. look at twitter. they get absolutely -- >> there are times where i understand elon musk who says the shorts have come after me when i was trying to build a company and put it together. they are relentless. >> you want to comment on the naked shorting controversy? then you play into that and you are going to have your -- >> right. an interesting argument. >> it is. there are only so many shares. >> there are shares that exist. you can lose your shorts in naked shorts. the stock goes up.

it happened people who were shorting tesla. you get squeezed in the short squeeze like that. when we come back, we will talk more about what is happening in the markets. if you check out the futures right now, red arrows have gotten worse. dow futures off 315 points. that is worse in the last ten minutes. s&p futures down 36. nasdaq indicated off by 67. we will talk strategy next as the european bank stocks continue to drag down the broader markets. especially in this europe at this point. later, former fed governor sarah bloom raskin joins us on the interest rate hike and the interest rate hike and turmoil in the banking sector. my dad was a hard worker. he used to do side jobs installing windows,

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let's look at the futures right now. a lot of red arrows and significant ones at this hour. the dow futures off 286 points. s&p futures down 32. nasdaq down 62. this is all coming because of the declines in european bank stocks this morning. if you look at the broader european markets, it they are seeing the pressure. those declines have gotten more exaggerated. dax and cac 40 off 2.2% each. the ftse 100 down over 2%. the

2.6%. same for spain. if you are watching crude oil, concerns over the bank issues bleeding into the broader economy and putting pressure on energy. wti off 3.75%. brent crude down 3% to $73.25. let's bring in ed yardeni. i know you have been watching this and your biggest concern is what is happening with the financials. what do you think of what you are hearing out of europe this morning? >> so, i can't say there is anything good coming out of europe, that's for sure. the issue is a lot of investors lived through and recalled the pain of the financial crisis back in 2007 and 2008 and 2009. the problem with that memory is that there is a sense of deja vu here all over again.

this time the epicenter of the banking issues seems to be in europe. i don't know the european banks ever recovered from the great financial crisis or did not recover as well as the american banks did. right now, i think their issues are becoming our issues in some way s. i think our banking sector is in far better shape. >> what is wrong with their banking sector? their big banks? what did they not do? >> it is important to recognize the banks are more important to the credit markets over there than they are over here. here, we have a very vibrant and robust capital market that supports the banking system and all of us dependent on the banking system. in europe, the banks are more

important in the lending markets than they are over here. i think the real problem is what the central bank did over there. the ecb provided negative interest rates which forced a lot of the banks to buy the securities at negative interest rates. now interest rates have gone up and they have large losses as do we and our banks. we don't have to realize them. as long as they don't realize them, it is not an issue. the issue is in europe, do they have the large banks to realize them? the ecb may have to back off of the aggressive tightening. >> we have risk weight to capital, ed. i don't know if the numbers communicate that. they don't have enough community banks or regional banks. they have a few. reportedly, europe banks had average ratio of 165%.

u.s. with the average ratio of 117%. their banks are better capitalized. are those not apples and oranges? >> you know, with counting for capital is an interesting exercise and now there are issues raised with these held to maturity securities. no, i think the problem over there is their economy is just not as diversified or strong as our economy is. forexample, look at the markets here. the mega tech companies have done well and provided the offset to the financials. usually when with the financials have taken a dive, that is not good for stocks generally. in the united states, we have seen offsets here with people wanting to invest in the u.s. and finding the technology, believe it or not, a safe haven

relative to the financials. over there, there is not a diversification. financials are more important than credit markets. they are more important than stock markets. so, it is one thing which leads to another. people will start to have questions about some of the loan quality of european banks because our economy -- >> that 165% could be not mark-to-market. the mark could be, especially not government securities. it could be nowhere near 165. it could be lower than that in reality. >> joe, you are right. the problem with the banking crisis is you never know what is under the carpet until you lift the carpet. i like the carpet example better. >> the carpet. >> ed, quickly, what does the ecb aside from stopping hiking

interest rates -- can they do some of the things the fed has done here and open discount window? >> absolutely. absolutely. one thick central banks have learned to do well is create liquidity facilities overnight. look how quickly the fed last sunday came up with a banking liquidity facility. i think they will focus increasingly on financial stability and less on inflation. hopefully inflation will take care of itself. the banking crisis means slower economies and downward pressure on inflation. i think they can let the liquidity crisis take care of the inflation side while they put everything and all resources on dealing with the financial crisis. that will mean liquidity facilities. >> ed, thank you. we really appreciate your time this morning. >> any time. thank you very much. >> i wonder if ed has taken all

of his $250,000 accounts, hundreds of those, spread them out. i don't know. do we know? this is muddled in terms of -- i bet some people think it is prudent to do that. spread it around? >> i mean, sure. >> if you had multiple. $250,000 accounts. >> it would be helpful to put in regional banks. coming up, coinbase coming up, coinbase responding to the wells notice

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coinbase ceo brian armstrong and other executives speaking out about the wells notice the company received. armstrong says the notice wasn't entirely unexpected. >> over a series of 30 meetings in the last nine months, we met with the s.e.c. and shared details of the business and answered every question. we spent millions of dollars are legal fees and explaining everything we could. they said we will schedule a meeting to give feedback. we said this is great. the first feedback we got in nine months. after 30 meetings, the day before the meeting, they canceled the meeting. we didn't know why. a few weeks later, boom, we get served with the wells notice. >> the forum on twitter did not

allow questions. coinbase is down 2.25% after dropping 16% yesterday. joe, there are all kinds of questions. the question is the scope of the wells notice that is coming through. what is the scope of the investigation? will they look into it saying we think all tokens are securities and you are trading tokens without s.e.c.? it is anybody's guess. >> coinbase -- it needs to toughen up in terms of complying with regulatory concerns that everybody has to do. big ipo. it should be a lot of disclosure and transparency. i think it is a new industry and so unregulated and i don't know if coinbase knows what it needs to do to satisfy. that is why some people think this may end up being a positive

for coinbase. >> it may be a positive for crypto overall. i don't know if it will be positive for coinbase. >> have you seen -- you know that i have trouble buying something online. i'm looking for the place. i do not know how to have my own wallet. anything i do -- i assume it is totally segregated and whenever i want it, i can get it and not have problems. am i wrong? >> i don't know. >> i would like to know for sure that everything is exactly the way it should be. that is why -- >> this is a situation where regulation hasn't kept up with the advances in technology and the issues that have gone through. there will be a lot of questions. people pushed into this space and said we will do these things

and hope we are doing it right. you don't know what the regulators will decide. >> initially i looked into it and you have to have your own wallet. your number is that long and you need to put it somewhere. >> write it down. >> if you don't, it's gone. >> yes. >> that's not good for me. i'll take my chances. >> and the banks. >> well, not silicon valley bank. exactly. right. actually, silicon valley bank would be great. that is probably the safest. it will get bought. maybe it is a safe time for the individual banks. my deposits are covered. >> up to 250. when we come back, tiktok ceo grilled on capitol hill. details next. as we go to break, check out the european banks. deutsche bank's credit default

swaps. they are up to 170 from 142. if you are looking the day before, it was higher than that. still, there is serious concern with deutsche bank shares off 13%. we will have more on the story later this hour. the futures here in the united the futures here in the united states under pressure. lily! welcome to our third bark-ery. oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect. terrier-iffic i labra-dore you round of a-paws at&t 5g is fast, reliable and secure for your business.

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good morning. welcome back to "squawk box." we're live from the nasdaq market site in times square. the good news is it is friday. the bad news is the futures are under pressure. dow futures off 300 points. s&p down 33. the nasdaq off 61. a new law in utah will require social media companies to verify users are 18 years old to open an account. those under the age of 18 will

need the consent of a parent to open the account. parents will have full access to the minor's account. the accounts will be locked between 10:30 p.m. and 6:30 a.m. ads will not be allowed. social media companies are expected to sue to block them before the law takes effect in march next year. this is an example of the growing backlash toward social media. members of the house energy and commerce committee grilling tiktok ceo over national security concerns with connections with the chinese government. here is the exchange with ohio congress member. >> today, all u.s. data is stored by default. >> any bytedance employees in china have access to u.s. data? >> congress member, i appreciate this is a complex topic.

today -- >> it is not that complex. yes or no. do they are access to user data? >> after the project is done, the answer is no. today, there is still some data we need to delete. >> joining us now is the senior adviser at the stanford center of geopolitics and adjunct professor for international studies. good to have you on set. >> thank you for having me. >> you're welcome. good day for privacy advocates and bad day for tiktok? >> it was a great day for privacy advocates and disaster for tiktok yesterday. >> and the final solution, a horrible term, but what do we finally do to figure this out? >> sometimes hearings turn into public trials. i think what you saw yesterday wasn't just the public trial of

tiktok, but chinese technology in the u.s. this is a conversation that the country started to a certain extent with huawei. we banned that technology. the tiktok popularity in the united states complicated the discussion around how the government should handle this technology in the u.s. what you saw yesterday was overwhelmingly concerns of tiktok not being addressed and you see bills in the house and senate actively under work. i think that debate will move forward. >> india banned them in 2020? >> yes. >> we are hesitant to do that, but people in india are fine? what do they miss without tiktok? i'm not missing anything. >> you know, they are doing great. you are right.

india banned 400 chinese software applications and the sky didn't fall and the world kept turning. >> you have 150 million americans already on tiktok. it almost feels like it is too late to come back and do anything about it. if you ban it, you will not rip it off. >> apple and android have the ability to block applications when they find an app might contain malware. they have internal tools to block a user's access to apps. so if they were legally required to do so, i believe they would have the ability to do so. >> they could wipe it off your phone? >> they could wipe it off your phone. obviously, a lot of these things are under the hood mechanics of how these work. i don't know if it disappears from the home screen or you being unable to open the app. they have tools to handle the malware to leverage.

>> is tiktok just this great growing entity for a chinese company p or -- company or is it a trojan horse? does the ccp want this to rule the world or is it a good money maker for bytedance? >> yesterday, what you saw is the number one mission of the tiktok ceo is to distance from the ccp. ironically, the very same day, the ccp came out saying they would actually oppose a sale and they would have to approve a sale to an american buyer. undermining the ceo testimony. i think that showed how much they care about this app. ultimately, the app doesn't just collect data from a user on the app, but collects data on your

phone which is another level of invasion. >> contacts and information on the app? >> exactly. >> do they want it for data collection purposes? you may say you are not collecting this, but we have examples where journalists and others had information collected. this is playing out on a broader scale. this is china against the u.s. >> absolutely. imagine the sovereignty and political independence for the country if the ccp had access to data from a presidential candidate's children. a presidential candidate running for office and kids on tiktok or her kids on tiktok. then the ccp can get access to that and imagine journalists which we experienced in the u.s. or judges. it is corrosive to the sovereignty of any country. one of the big questions that

was up for debate yesterday was is tiktok too big to ban? i think ultimately members of the house overwhelmingly said it is not. >> china having a lot of information about a president's child. that's strange. that could never happen. i'm not going there. so does the ccp like this is a very successful company and they have a stake in it or do they like what it allows them to do in terms of -- do we know for sure that's why this is so important? is this part of the balloon-gate or building islands or buying farm land near our weapons facilities? it sounds tin foil hat. >> for the ccp, all roads lead back to power. you saw when it comes to

software application companies, for them, lifestyle software application companies are less important from the strategic standpoint than hard sciences. we see semiconductors and space technology. they did a massive crackdown on a lot of the software technology companies early on in the pandemic. tiktok has the unique ability to serve as an intelligence tool for the ccp. that is why it is strategic. >> it could be both. >> that's right. >> how does this end? the executive branch can pick different chinese companies or blanket? >> you are seeing a big negotiation between congress and white house. you have a bill in the house and a bill in the senate. the question is do we ban all chinese technology in the u.s.? do we have more of a scalp approach for the executive branch to ban on a case by case

bases? ultimately you are seeing these play out in real-time. i initially went into the hearing yesterday to lead this to difficultjacob, thank you. when we come back, more protests in france over the pension bill president macron pushed through parliament without a vote. and later, investor anne wynnblatt will talk about the technology stocks. you can get

what do you see on the horizon?

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protesters in france are continuing to clash with police following president emmanuel macron's plan to raise the pension raise from 62 to 64. protesters blocked major highways and interchanges to cities. rail transportation was disrupted across the country. opinion polls show a majority of voters oppose the legislation which the government enacted

last week without a vote in parliament. interpol said a man arrested in montenegro is do kwon. the founder of the disgraced collapsed crypto company. kwon found the chain terra stable coin and luna. both coins lost value in a period of a few days. you may recall in 2022, it wiped out $40 billion from the crypto market. how did it get to 40 billion? kwon was arrested in the capital with counterfeit documentation. an arrest and eight-count indictment was made public in manhattan district court with wire fraud and conspiracy. kwon said he doesn't believe the

charges are legitimate and called them politically motivated. >> why are you on the lam? and coming up, apple ceo tim cook is among those expected to attend the meeting organized by the ministry of commerce. we will talk mor ae i promise - as an independent advisor - to put the financial well-being of you and your family first. i promise to serve, not sell. i promise our relationship will be one of partnership and trust. i am a fiduciary, not just some of the time, but all of the time. charles schwab is proud to support the independent financial advisors who are passionately dedicated to helping people achieve their financial goals. visit findyourindependentadvisor.com

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american t(i]ceos are trave to china this weekend for the china development forum. among those expected to attend is apple's ceo timpcook. the trip comes as relations

between washington and beijing 2%9■ turbulent. joining us right now to talk about all things appleji?■ cnbc technology correspondent steve kovach. steve, this is a place they haven't had to go for several years because of ñicovid. this is thec first time comingi back through. >> this is a business forum hosted by china and wefá saw yesterday how our government feels about chinese and chinese tech. but look, apple does a massive amount of business. up to g quarters can be hinged to china. their manufacturing is still there+■ in a very large= despite the optics, cook has to show up. by the way, apple is not confirming yes or no whetherfá he's going to be there but he's going$yitt there probably. to the chinese if he didn't come but do you risk either ■ by going or maybe morexd likelyf they feel like some payback for what the tiktok ceo jus4ñá wentk

through. >> look, it would be horrible for apple if china had some kind ofxd retribution for what our government may or may not be doing to tiktok. that would devastate their business, not just ini] china specifically but also the manufacturing around the world and it means j/hxt( in china, ts $hp'd tens of thousands, especially in the holiday season so they're kind of co-dependent on each other. we're seeingi] apple make moveso be less dependent like we saw last summer with the covid return. they're looking at india,w3 vietnam, asia, to alleviate the pressure. not totally killu/j theñi press- >> but to vary the supply chain. >>ó[■ exactly. that's why1guz seeing soi] much movement and activity in india. they just appointed a new head /-w3 sales so they're seeing it not just on the manufacturing side but the consumer side there. that's where they see the next growth opportunity but china is

really, really important today. that's whyu■c he's there. >> that gives china a lot of leverage in terms ofnb■ what happened yesterday. >> absolutely. but they already block -- keep in mind, joe, china already blocks plenty of american websites and ñrservices. you ceujf type in newyorktimes.com. >> are you talking revenue? >>t( yes. >> in the s&p 500, that's probably how many s&p 500 companies -- >> just the china business. >> just the china business. >> and especially china not just selling phones but the gamesok d the app store which has its own challenges because of the regulatory challenges there. you can't download a vpn app so they're already blockin■■p plen of apps in china.çó now they're mad at us for potentially doing it to/éohr(t&% >> so $117.1 billion is apple's revenue. >> a quarter? >> a quarter. >> that's a holiday quarter.

>> yaek, okay.i] oh, wow.l8(pr(t&háhp &hc% >>q and that was a weak quarter because of the iphonet( problem and production problems last quarter towétr(t&háhp &hc% >re1xd it was down fromfr■ç 123d billion. >> we better think long and hard because we got pretty strident yesterday what we heard. >> it was very telling, i think, when the ceo of tiktok, i forget e1 they're damaging the weaker t( population. he wouldn't even answer that. that says a lot about how scared heko■ is -- >> well,çóq he's in a ridiculou position, reporting back to a chinese-owned company which then has to report to the ccp.i4!r(t% tim cook would not be the only executive here who would have a fine line to walk. >> xdno. w3 starbucks, just toñie1 run thro some of the big ones. >> and look what happened when

musk criticized china a month or two ago. we saw some finger wagging in state media about that to scare them off of criticizing china.xd f all, tim cook is not the only american ñiceo, the pfizer ceo and a bunch of others are going to be here too. but when we saw those protests last fall at jfxdxdfoxcomm wher phones are made, apple said we are monitoring the situation. nolp criticism of the violence >> and the protests were from workers who were told they were going to get paid working throughfá covid. they got locked in and said they didn't get the bonfábonuses. >> ande1 we sawfáfá images of sy forces presumably sent by the uiy theirt(nb■ will. =@yf those who did escape just walking down the highway. it was really sa$■d to see that

going on there too. it's just reallynb■ hard for ook or apple ast( a whole to tow thatfá liner sure. >> it's not perfect. >> it's likeñi the oldi] saudi arabia. there's just no way. if you are an absolutist -- >> you can't ñiwin. >> nkr @r(t&háhp &hc% >> no. and we see this allw3 the time d r speaki out. netflix blockingc certainçó sho arabia. and, you know, they get criticized for maybe compromising on their silicon valley values, but that's the cost oft(jf doing business. >> there's a lot of crappy shows on netflix that ie1 wish they'd blockok here. >> añr new season came out toda. it's the only goodxd reality sh. the onlyq one i watch. >> we'll check it out. thank you. have you seen okit? >> it ist(ñi amazing.

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and even improve sleep! or, if you prefer, you can take a refreshing shower. all-in-one product! call now to receive a free shower package plus 15% off your brand new safe step walk-in tub. good morning. deutsche bankfá shares sliding

after a sudden spike in the cosq of insuring against its default. it hasxd bank stocks on the mov lower this morning. futures falling inqñuz on that news as investors weighqxdçó trs both here and jfoverseas. we'll get you caught up on what's moving. and congress grills the fác of tiktok over dataçóçóq privac concerns. we'll break down yesterday's hearing and what it could mean for u.s./china relations. the second hour of "squawk box" begins right now.ñiqfáfá5a■■ñr plenty to worry about, i guess. good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site ina times square. quick. andrew is off today.r equity futures weren't able to hold on to much oflp a gain aft that tough session theñrçó day before.

now we're backñiçó#t let's look at treasuries. theo#w÷ c10-year now 3.291.ñi people exiting some risk and going into things that are5a■ má sure, despite t all the way down at 3.59.e1ñi fridays we don't like. we do like them but you're5a■ gg into the weekend and the last two fridays we've been worried about what we were■going to hear. two weeks ago it was the silicon valley bank.q last week you didn't know whether firstjfñixdrepublic or of the otherlp regionals. and creditq t(é@■qsuisse.q now we've got deutsche t(bank. i don't wantñi to say it. look, if you've got ten yearsz%f

zero interest rate policies around the world, does the final sort of prob$ej that you see, does it last only three weeks? could we have a three-week financial not ñicrisis, but a testing of the financial systemd definition wouldn'tq only be three weeks. there's more to do here.xd >> the authorities are trying to rinse things. you've seen whatht■ the federal reserve did the very first weekend where it opened up the lending windows toé@■ banks to it's going ifqñi you're holding these things to maturity. we're not going to give you a haircut on it, you can do that and that sho% and there have beenok questions raisedñr and every time janet yellen speaks, the market hears a slightly different message and b.■. and you have people continue to prod and -- >> poking andq ññdprodding. >> we had barry sternlick on yesterdayok and he spent last

weekend with two colleagues running through a bunch of thee regional banks' statements,xd looking through their financial statements. so you have people looking who weren't paying as close attention and working with a different eye because the world has changed, like it or not. >> it is a lot of what theyi] cl money good securities that if maturity, they're fine. but if you value them where they are right now, they're not marked where they are. >> but barry brought up an interesting point. this is the occ's fault for allowing the rules that say you don't have to markñtt to market these are good because they're not garbage, and they're not garbage. but maturity matters. >> right. >> as we know very well around here. i was thinking, okay, we've had dire warnings about if you stay at zero that long, and it probably wouldn't be a three probably wouldn't be a three week -- itx4ráju e moreñi significant or might be morejfp work to do.fái] >> my guess is you willi] haveñ european authorities discussing that right now and through the

weekend. shares of deutsche bank actually tumbling in european trading, down by!u■ xd13.75%. that comes after there was a jump in the credit default swaps last night onñi renewed concern about the stability of european banks. this isg alle1 of the europe stocks. >> good morning, becky.c it's been quite the roller coaster ride for9(ut(z banks. weok walked in monday to the ne rescue package for credit suisse. the initial concern was there's a financial contagion but the first half of the weekñi europe banks did quite well. at some point on wednesday theú index as up 17 percentage points. you can see all of that has turned around. so the week as a wholexd ther european bank index is down half a percentage point so all of those gains have been given back.ñi investors are starting to focusx one of them is deutsche. you can see it's down 13.5

percentage points. yesterday we saw its biggestñiw jump ever on record on thet(fá credit default swap implyinglp higher degree of probability of default for the company. but it'sfá 8-1 debt. this was theçót( class of debt d out with the bailout package for credit suisse has jumped in yield terms. just a couple of weeks ago it was sitting at yields of lp10%. now we'reñi at 22 percentage points. we have seen some monumeez moves. last month bank posted its bestd year ever in terms of profitability for the year of '22 since -- well, ever in terms of the all-time record. but in terms of position, we are sitting at the best levels it's seenxd last 15 years as well as from a bank's exposure to commercial real estate in the u.s. butxdq european banking regulat

have kept a very close look on that and they do say that even if ;■ mark to marketjf some securities that they have in theirxd portfolio, it still implies minimal losses on the as far as fundamentals are f[ìá% concerned, deutsc(á looking stable.se1 of course there is that risk coming from the bailout ofñi credit suisse over the weekend but also thefá precedent it's s re over the weekend. european central bank hikedfá 5 basis points last lpweek. they have said that they're ready and standing by toe1q proe additional liquidity as needed but they don't see the need just yet. >>lp that's a goodfá point on t1 debtw3 that regulators proved they're not bonds. they are subordinate to even equity at this u■point. thank you. right now we want to get over to domfá chu who'sym■ maki took at the premarket movers here in the united states. dom, i assume you're starting with the same nature, taking a

look at some of the bank stocks here. you have to kind of do that because banking problems do have a nature of spreading around th% world.e1 so that sudden surge of protecting against default at deutsche bank, ripples here in the u.s. especially with some of the embattled regional banks. you have first republic, westeri like ecorp, zion. i'm going to put jpmorgan chase because they are down 2.25%. you can see the biggest american bank isn't immune to what's happening with ñideutsche. we also want to keep anñr eye o coinbase shares. they're down about 2%. about 160,000 shares of volume.i the compañyr fell 14% yesterday remember, in response to getting thatxd regulatory notice from t securities and exchange commission saying they founding possible violations of the ñila. t downgraded it to an underperform. it was a market perform. they cited thet( overhang that e

wells notice will create to incremental risk itt( hasxd to operations.çór 1.5%. we'll cap things off withe1 shas oflp block which are down anoth 4%. just about 225,000 shares of volume following upxd on yesterday's 15% drop on that report saying that the fintech company is likely, again, going to have a shorthc% position or s have a shortxdlp position again them. they say that some of the allegations therei%iu)u$ regarpr what's happening over at ñilp hindenburg with block inc. could have more of a lack of clarity on the situation there[gñ so th short position down anotherjf 2.5%. i'll send things back over to >> all right, dom. thank you. yeah, it's definitely sort of informing that the action across the board here. that's interesting. i guess you can't expect even at jpmorgan not at least thexd

general sentiment is risk off from what we're seeing andxd ase said, is the fed just a few months away from a rate cut? that's how the markets look to be trading this morning. steve liesman joinsmy more. i couldn't help thinking, and ì% remember when lagarde and we bm respyher, but i just remember thinking içó wonder if we're gog comments that this is not goinì% t(u what weá do in the slightest in terms of fighting inflation. and then you just wonder, really? okay. you going to stick with that? we'll seet(ñi what happens,fáxd but -- >> yeah,xd añr potent'y for great comments made by central bankers to head up crises, right? remember we had, what was it, greenspan onceçó said that the prices in portland,xd maine, to arbitrage the price of house in portland, oregon? >> bernanke said i don't see bi1

problems in housing or something. truche raising just at íh■ dawn of the financial crisis. joe, we have a really sharp downdraft in yields because of the banking concerns both in the u.s. and in europe, and they work themselves pretty dramatically to the outlook to the fed when the fed raised interest rates. markets nowa5■ pricing inñi a f rate cut of either june or july. take a look at you can see it pretty much goes straight s7■down. 4.73 by june, 4.57. so somewhere in that june, july period a fullxd ratexc7q■ok is in. at the endlp of the yea3.68. i want to show you the fed market gap here. this isxd something we've been tracking. what this shows is the difference between where the market is priced for the year

th forecast to be at theq year end. soq 1.42 basis point differential. the fed thinks it'st( going to 4.13 and the balance sheet we got last night showing stress levels remain high in the banking system but not muche1 worse than they were a week agoi so remember=u now rose 300q billion last week andfá 100 let me show you how we got i] there.ç$@r(t&háhp &hc% the di#uxueu window lending declined to ó[■$110 billion but there was more take-up of ther> fed's new program up 41 to çó53. there's those loans to the bridge banks for the banks that qere shut down, that was $37fáq billion more. four essential banks took downaa lot in this new repo program that's been used before.

they took $60 billion and thatq could be part of the unwind happeniún th downdraft in bank stocksok is a sign of renewedçóçó stress. the bond market seems to thinkr that the situation is serious enough the fed may be cutting by the summer, joe. that's what the data say anyway. >> steve, steve, steve. i thoughtçó we took --e1çó defi took rate cuts off the table for 2023, didñi we not?lpokq june? this juneñk june? it's t(march. >>çó i don't remember that. that's what powell said. powell said no rate cuts.xd not in '23. >> until it's march. you're talking about june. like april, may, june? >> it was a littlee1 think, of markets this week,lp joe, wh powell said no rate cuts and podium, closes the door and the market starts pricing in rate cuts?

pretty much that's the way itfá happened. >> we didn't talk about it, ñr steve, but we have talked about economists and their sense of humov( or lack thereof. i know we've got a lot of economist jokes. ô";q■ the other da wri,eb in and tell me you know that economists in fact do have a sense of humor. you know how you know, steve? they actually use -- >> howlp do you know,q joe? >> they actually use decimal points.jf >> oh, i see. i get it. >> as if. >> i mean they should -- you know, if they can gett( in the6 right base, that is qstaggering. we could be offq by 150 basis points on where we're supposed but they do itñi to the decimal point. >> it looksg!d+■ that way. >> they couldn't hit the forecast,■ó steve, could ñithey? >> steve, could i just ask what the conversations are going to

be this weekend? )÷áuq last two weekends. what are the conversationsr taking placakñi between federal reserve, other centralñr banks, other government regulators aroundokrthe globe? >> i'm guessing they're not going to be about their golf swing. u)z goingñ to say,xd which was some economt humor, by yn■ way,ñi that you gs completely missed.i] soç/r)háhinkq -- >>lpñr now we knowq they have ae of humor. >> exactly. so here'srtheq thing. i think they're going to be looking at the liquidity positions of the major banks. i think they're thinking hard about what else they could do to shore up the ñisystem. i think they feel that they have done a reasonably good job of preparing their banks for such a situation. i think the capital level requirements are somewhat lower in europe than they arefá in th united states, whether or not that matters a whole lot. a—q thinking aboutw3 ways that they can perhaps liquefy

and make the banksñilp --fá hel banks get through this periodq f mismatch wheni] rates are risin on their books6z■ is showing a because of what's happeñu! to ratec■3 and monetaryht■ policy inflation. so$x■ i thinka5■ they're going think about a captain in a shipq he's checking all the hatches and seeing if there's any holes. )ñeáhu(v to think about this, becky, i think when you hauu a situation like we've had in the banking system recently, i thini of the market or the shorts out there like a bunch of thieves. and i don't meani] that negatively, but they're checkin1 all the doors and they're seeing if one isñi open. and i think it feels like this morning they have cracked open the door to deutsche bank and they're going to take a look around. the question isxd what is the strength of the security of deutsche bank right now to withstand this procg by the market right here?

>> steve, we talkedñuq■>4)rj and justok real quickly, but, y know, for peoplejf who worry abt worry that the government can't do everything for youe1 andrcan always save you, i mean if we were to get through the 20 f1 o extraordinary measures there that we did, and covid,çó all t extraordinary measures that we st for that long, if it was justt( two or three week sort of a little mini financialq sort of scare and then we wentçó back t normal, we could do that all th■ ?%5ñ f1 o always save us.ernment could so there may be more reckoning to come. >> joe, i like the way you set this up in the sense that is thó amount of change that we have to go through equal to the amount of time that we spent at a lowv

ratew3 and essentially setting a bank system that was atwe to a lowçóñvó rate. i said change just to be nice. but we wereñi talking about thi earlier, how the banking system is different now when you can actually eçrr an interest rate on deposits. that's just oneát changes that's out there.9eìáhp &hc% i know we have to go, joe, but also how is theokanking system different int( a world where perhaps inflation is higher for longer. so there's a lotlp v7ñ change o there and how much that means to the bankingxd system is somethi that i think we're figuring out right now. >> all right, steve. that was newt( info from what y just showed lpt(lpus. where the rates are going to be in june. in june. coming up,lp ♪ at morgan stanley, we see the world with the wonder of new eyes, ♪ helping you discover untapped possibilities

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tiktok's ceo grilled on capitol hill yesterday. joining us right now with the risks that the platform may possess and the potential steps from here is alex stamos. he penned an op-ed that was entitled "when it comes to tiktok, the u.s. is blind." he's also the former security chief at facebook so he knows security issues when he sees

them. alex, thanks for coming in. >> thanks for having me. >> how safe are we if we're using tiktok? >> for individual users there's not a lot of concern. tiktok doesn't have any more access to your data than any other app that you're running. the concerns are collectively. if you think about all the data they have on 150 americans globally and you combine that with the history of the chinese intelligence services who are good from stealing data from equifax, the office of personnel management, chinese intelligence services are good at collecting up these huge data sets, putting them together and answering interesting questions about who americans are and what they do. the concern is on the collective risk not the risk on individuals. >> the other concern is about the algorithm and if they want to sow discontent in the united states or raise questions about elections or other things they'd be able to do it.

>> that's a possibility. one of the things that made tiktok unique was that when it came out, it was an app that was very much driven by the algorithm in a way that twitter and snap and instagram, the other products people were using were not, which were based upon who are your friends, who are they following. tiktok pulls videos from strangers and puts it in front of you. they're really good at that. it's not all that different now, all those companies have copied them. we don't have a lot of good evidence of that happening. >> let's talk about what happened yesterday. this was a pretty intense grilling of the tiktok ceo. what surprised you about it and what do you think the outcome will be? >> first, you've got to give the guy credit for showing up. this was the roughest house hearing i think i've seen in a long time. it's one of the few situations in which you see democrats and republicans completely united in their position. i think that the u.s. political dynamics here are there's no way either of those parties is going to let the other one call them weak on china. and for him to show up was a big

deal. i think a couple of the things that came out of there, one, the absolute worst fact for tiktok, something that's really brutal for them that they can't deny, is that they caught got spying on an american journalist last year. emily baker white, if they give a pulitzer for impact, it's got to be for her. her work on tiktok. chinese employees of bytedance were using their sources to spy on her and find out who her sources were. that he was not able to deny. right now chinese employees have a huge amount of access to u.s. user data. they have a plan to change that but are only in the middle of the plan. they have spent hundreds of millions of dollars but probably have six months to a year left of technical work to do so their timing was not great having to deal with those questions. >> you think the most likely outcome is mark warner's bill

will be passed, the one that will allow the executive, the president, to say, okay, this company or this company or this company, we're not allowed to do big with anymore. >> i do think that's the most likely because congress doesn't want to just kill one company. i think there's interesting constitutional issues that the law professors were talking about, so they would give the power to the biden administration to make this call. >> would biden use it? >> i think at this point in an election season when china is a huge issue, i don't think he would have a choice. i think it's actually kind of a mistake, though. part of the problem here is if you look at the top 20 apps, a bunch of them are chinese. and you have american companies that will take data and not store is securely. what we really need to do, i think we need to say, yes, tiktok is a risk but it is why we need an actual privacy law which says what data can you

store in china, store in russia, store in other places. >> alex, thanks for coming in. appreciate it. coming up, former deputy secretary sara raskin will be here. "squawk box" will be right back. time now for today's aflac time now for today's aflac tr you know coach k, retirement looks good on you. who needs championships when you can look at birds? uh, coach, i'm looking at a goat! a hospital bill for $1200 bucks? gaaaaaap! did you say gap? he's talking about the expenses health insurance doesn't cover. but with aflac, you can get money to help close that gap. aflac, huh? aflac! gaaaaaap! aflac! gaaaaaap! get help with expenses health insurance doesn't cover at aflac. official partner of march madness. ♪♪ ♪ a bunch of dead guys made up work, way back when. ♪ ♪ it's our turn now we'll make it up again. ♪

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raskin. and later, the story behind open ai and elon musk. he helped found the firm behind chatgpt and at one point almost took control of it. we'll dive a little deeper into that story in just a bit. the dow off by 300 points in the futures. we'll talk more about the markets when we come back. throughout the month of march we are celebrating women's heritage, sharing the stories of women in business an those of our cnbc teammates and contributors. >> women are underrepresented at the top of science and medicine, whether it's running pharmaceutical companies or research divisions or winning nobel prizes. but that's starting to change, and women are doing amazing things in these fields, from winning the race for covid vaccines to pioneering the science of letting us reprogram dna. i'm inspired watching what these i'm inspired watching what these women accomplish, and it shows

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shares of deutsche bank

tumbling this morning in european trading. the bank hit by a sudden spike in the cost of its credit default swaps sparking renewed concern about the stability of european banks. joining us on the squawk news line, larry mcdonald of the bear traps report. larry, credit suisse. so now we've got that sort of resolved with ubs. but credit suisse actually had the gall to say that it was partly silicon valley bank's contagion that caused that. number one, was there any veracity to that? could a regional bank -- it was pretty big, but could a regional bank here cause that at credit suisse? wouldn't that explain why other european banks are going to be tested because it looks like it probably wasn't svb, it's something deeper than that. i don't know what it is, maybe you do. but now some of these other european banks are going to get tested. why? >> well, yeah, this is a bit of

a stretch. but the silicon valley bank problem brought more attention on banks. and so banks like credit suisse and deutsche bank that have been horribly, horribly managed for decades. we're talking about really poor management and horrible decisions. all of a sudden investors around the planet phone us on that. then on top of that the ecb raises rates, celebrates that raising of rates and the cost of capital for banks in europe -- they don't understand when they raise this high, banks can fund themselves. they need lower cost to fund them. >> and the -- those were providing some of that and they're not going to be able to go to that well anymore. >> aren't the other a t 1 bonds

different? that they get be subjugated below equities. am i wrong, larry? >> no, that's right. what happens is there's such a shock and you're actually right about that. we had a conversation with institutional investors where people were mixing the two, but it's just like people after they watch it get eviscerated below equities, everybody goes, okay, i don't trust this and then all of a sudden bank funding across the entire at-1 ecosystem which is like a junior subordinated preferred stock, all of a sudden that funding evaporates and the cost of capital for banks to fund themselves dramatically alters and all the eyeballs come on. okay, who's the next victim? who's the next one? and the ser pent in the market wants to find that next victim. >> so what you're saying sort of

is, all right, the silicon valley bank brought the attention back to banks and the financial sector. so all of a sudden we're going to look under the hood at all these different banks. but the problems under the hood were already there. so we knew this renewed interest of what's going on at credit suisse or deutsche bank, is that going to spread across the continent? there's going to be -- how does this end, larry? is it going to be stemmed in some way? what would you do if you are regulators over in europe at this point? >> well, remember the regulators -- the regulators had -- two regulators had an office inside of lehman and the regulators had an office inside of credit suisse. so unfortunately regulation is difficult when you have people that make 10, $20 million a year at a bank and a regulator making

a couple hundred thousand dollars, it just doesn't work. >> larry, who could regulators and authorities do this weekend to stem some of this crisis of confidence? >> well, they're going to have to open the door. the ecb, what they did, remember in 2011 truche celebrated that rate hike and a month later europe was in flames. and the same thing just happened. the ecb did 50 bps. they're trying to put out the inflation. god bless them. they have horrible inflation here and i sympathize with their position. but you're hiking rates to put out an inflation fire and you're increasing the cost of capital making banks functioning in a very poor way. so they're going to have to at least acknowledge the fact that the hiking cycle is over and

that rate cuts are around the corner. that will put out the fire for now. >> all right. thanks, larry. thanks for the quick -- being available so quickly for us. the news keeps happening. we'll see you later, thanks. >> unfortunately. the banks borrowing from the fed is near the levels of the financial crisis according to the fed's latest balance sheet release. for more on the fed, the banks and everything else, we want to bring in sarah bloom raskin who served as a fed governor and deputy treasury secretary during the obama administration. she's now a law professor at duke university and a cnbc contributor. sarah, thanks for being here. let's just talk about what's happening, how these things are playing out right now, crisis of confidence. what can and what should the fed do? >> so you're exactly right. we are still siegel --

seeing elevated levels of bank stress. and as you just indicated, we are seeing elevated levels of borrowing. borrowing really from two facilities, from the traditional discount window, which is -- has been in place since really the founding of the fed and is a very important piece of central banking. it's the lender of last resort function, that's the discount window. and since the financial turmoil resulting from silicon valley bank and signature bank, you have this new facility that has been established called the bank term lending program. if you put the amount that has been borrowed from those two facilities in the last week, you'll see that those amounts are indeed elevated. now, whether this elevation means something pernicious or something calming is being debated. you can see the facilities being used, so some investors, depositors, stakeholders will

feel essentially okay. it's being used. that's a good thing. they're there. they're providing support. on the other hand, there are other people who say, wait a minute, these levels are so much higher than they traditionally have been in periods of nonturmoil that there still must be significant stress and that this is concerning. so you see really elevated uses of these facilities. the facilities, one of which was put in place, you know, the evening of march 12th, early march 13th. and so these are -- this is still -- this is still with us. the bank stresses are still with us. >> i guess the big question is insuring deposit. i guess that's one of the big questions and hot potatoes. the authorities don't have the same -- fed and treasury don't have the same tool kit that they had for the last financial crisis because of changes

legislatively that would prohibit them from doing some things like that. do they have enough tools to handle this and to shore up confidence? >> i think they do. the tools are really quite vast. you can turn -- you can turn the faucets up really high. so i would argue that not all the tools that were used during the financial crisis have been used right now, but the tools that have been used now are really quite forceful and you can see that they're being used. so these emergency lending facilities, they become used at times of systemic crisis. systemic crisis was the designated reason why these tools are now available by law in the u.s. a systemic risk was named after silicon valley bank and signature bank experienced their massive outflows. >> we were just talking with larry mcdonald, and you heard that conversation. the point was maybe the ecb is

not going to want to have raised 50 basis point nor the fed 25 basis points heading into this, pointing back to what happened to truche at the ecb back in 2007. there's definitely a relationship between the ability of a bank to respond to increased interest rates and that path of interest rate. so as any central bank changes the interest rate environment, banks need to adapt. one of the things that we are now seeing here is that the fed moved ahead on a very aggressive path of interest rate increases, which it was required to do pursuant to its inflation focus, but at the same time it did that, it may not have been particularly cognizant of the stresses in the system which had to do with the ability of banks to manage their interest rate

risk. that is looking to be very much the linkage between interest rate risk management and a fed funds rate increase. >> so what happened with the oversight from the fed? was it just not stringent enough? you hear about the stress test that took place just last year that didn't even really stress for something very obviously, rapidly climbing interest rates. >> yeah, yeah. so there's going to be a lot of focus on this. some lapses having to do with regulation, some having to do with supervision, and some may be having to do with a different kind of culture of what overnight actually means. but one thing that is certain is that there is this -- there was a movement of the fed funds rate that proceeded on the monetary policy side without the sufficient comfort that all banks were going to be able to

handle it from an interest rate risk management perspective. so, you know, ideally you kind of do a fed check, you know, before you engage in an aggressive change in your interest rates. >> make sure there's no bed bugs. >> make sure there's no bed bugs. guess what, in this case there were. so we are now seeing this so we are now seeing this linkage or, you know, the fe id

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good morning. and here we go again. u.s. futures pointing to a lower open. the financial sector is it leading the way. shares tumbling, bringing down european banks and markets and having an impact on the futures here, too.

we'll have a full update on all the action. and big tech is a safe haven. tech investor ann winblad joins us. the final hour of "squawk box" begins right now. good morning and welcome to "squawk box." i'm joe kernan. this is really keling and that is the current yield curve we're looking at. we look at the 10-year and the 2-year and a big difference in

the last two hours. the two-year is back about 4% just a day or two ago after it had dropped. and a lot of it -- you'd say all of it probably is due to the continuing concerns about the financial sector and this rearing its ugly head again today. >> and shares of deutsche bank down sharply in european trading as we mentioned. if you want to take a look at this, you'll see deutsche bank shares are off by about 14%. credit default swaps are a form of insurance for a company's bond holders against its default. it's what we watched so closely in the 2008 crisis, as you would see default swaps being a first indication of something bad happening. the fallout in deutsche bank taking out other banking giants as people continue to look at all of these stocks.

deutsche bank off about 7% and you can see some pressure there across the boards. and some of that is playing out here in the united states as well but to a much smaller degree than you've seen to this point. let's take a look at some of the u.s. banks now. we saw many down by 2% or 3% and now it's 2 to 2.5% for the most part. there are some big differences between the u.s. banks and the european banks. just looking into it a little more, joe, we were talking about it earlier. the equity risk-rated assets look different because they count them differently in europe. >> we do them in banks under 250 million. >> it should be looked at how much of the risk weighted assets the deutsche bank has under the advantaged approach because the standardized approach is finding u.s. >> it's not apples to apples.

>> the actual numbers, 160% -- >> it's not -- >> compared to 118% here. >> and denominators here are different. we are gearing up for another frantic finish to the week. we want to get over to mike santoli. >> when you have bank stress in focus, that's usually what happens as you get anxious toward the weekend. when it comes to these sort of worries about bank balance sheets. it's mostly just seeing ghosts and a what if trade, what could happen. it's not really focused on a particular catalyst. the market is really illiquid.

here we are with a chart of the s&p 500. look at the six-month. it captures the low we had. it was at 6% up to the highs on february 2nd. and it really has not escaped that zone here. we spent almost no time since november under 3800 but also have not been able to get back to the summertime high. it is uneven and choppy. we'll open around the 3900 mark. 38 is kind of where we started the monday after svb went into receivership. the index hasn't done a whole lot. it's been this kind of anxious back and forth. joe mentioned a crack below 340. that's somewhat significant in

terms of that was a four multiple times over the last several months and we have cracked below that. really the drama is on the short end, the two-year yield down from 5%, the market just screaming that the fed is going to have to get rate cutting pretty soon. we'll see if that does play out. and bond market volatility, i flagged it on monday, it's the main thing keeping the rest of the markets from getting more comfortable. the past 50 stocks in size are outperforming over the last couple of weeks, obviously russell 2000 going the other way. we know why, growth is scarce, mega cap has growth, russell 2000 exposed to credit and banks themselves. we get why this is happening. the market can't provide the obvious haven. we have to see how this

relationship evolves, joe. >> mike, this is not what i was hoping for. i don't want it to happen this way, mike. is there another way we can do this? this is not good. >> there could have been another way to do it. but typical it doesn't become a scripted -- >> it seems to me if it causes the fed to panic and cut, that sounds like you're describing some pretty dire thing. >> i'm describing that's what the bond market is. >> what does that look like? it's a scary scenario, isn't it? >> it is, combined perhaps with more benign inflation numbers. so we'll see if that provides cover. >> okay, good, good. i like that.

>> the june yield is talking about the next two years. >> all right, we're going to talk more about the banking turmoil and how regulators are watching the situation from washington to europe. special advisor to the ceo at tls bank international. people are texting me that the european banks never found religion after the financial crisis to the same extent that american banks did. >> i think to some degree that's true because in the u.s. we were the epicenter of the crisis. the u.s. regulators did as much as they could to correct the perceived problems that led to the crisis. in europe, this was a u.s. crisis. our banks weren't really -- we were kind of on the sidelines of that so we don't need to do as much. that was the view that i heard speaking to policy makers in

europe at the time. so i think probably we're in the seeing some. results of that unfortunately. >> what didn't they do and if you look on paper at capital ratios, why do they look better in europe? >> you weren't mentioning some of this before but just how the calculations were done and the robustness of the accounting standards. there are some differences. you know, but i mean, in this case there's a lot of other things going on, if i can just tick off a couple of those. this decision to wipe out the bond holders of the so-called at-1 bonds of credit suisse, that's something -- this cbs blowout that you're seeing probably is a contagion from this decision. the investors that own these bonds for other banks are saying is my bond at risk and is it priced correctly? how do you hedge some of these

things? >> i didn't think of the hedging aspect. >> another issue is just that how many rake hikes have we had this week? >> a lot. >> this is in the middle of the banking crisis. you understand why the central banks are doing this. they're focused on inflation. the news cycle, it's kind of odd you're seeing both these banking stresses and you're seeing these interesting increases. the third thing is the borrowing has been enormous the last two weeks. it's huge, about 150 billion or thereabouts or maybe a little more. that should not be happening because there's a lot of reserves in the system. the fact they're not reaching all the banks is because they're being hoarded. if reserves are being hoarded, that tells me the banks are not lending very much.

this is going to seep through into the economy. >> if jay powell says the credit crunch could be as much as a 50 basis point hike, what would you put it at? >> it's hard to know, is it 50, 75? who knows. but it is a positive amount, right? and the fed's decision to go 25 is just kind of piling on to whatever it was. so, yeah, we're probably going to have a slowdown. it's in the pipeline now. the government bond yields that you were just talking about is a reflection of that. the market's looking ahead. they're saying we are going to have a slowdown, it's going to be meaningful in the next couple of quarters and the fed's going to have to react. is it going to react in three months, six months, it's hard to know. that is what we're looking for. >> seems like one mistake cannot lead into another mistake. so they're still stunned from

the transitory incident. a couple people mentioned being very proud of this, quote unquote, only a month later with his tail between his leg come back to cut. is that going to happen? the fed wanted to be so firm in its resolve to fight inflation that they really were sort of whistling past the graveyard? >> to say he was egregious, i don't want to compare it to that. >> is it possible it's come to that and we look back to this historically and said my god, they never should have raised this 25 basis points? >> hopefully that doesn't happen. none of us want to see this. hopefully it won't dom come to that but you can't real it out. historically before the end of the year, there's a very good probability we're going to have lower rates. >> how big of a problem if the european banks are in worse

shape than the american banks? how much of a problem do we have from a global contagion? how can they shore things up, what can we do? >> don't we're, we're in the going to zero out any more bonds? >> that happened monday. a bunch of countries reacted and said that's not the way we're going to do it. the fact that the investors went back to read the fine print of these contracts, which they had not done before and they sort of said, oh, the swiss were within their rights, even if -- >> those bonds were a little different. >> yeah. people went back. they read them. they said what do we do? do we want to hold on to these, do we want to sell them or hedge

them? it's when the logical contagion takes over. >> do we let bankers always talk us into not raising capital requirements to the level they need to be raised? dodd-frank, all these different facets to try to fix something. if you just said capital needs to be here and here, and it needs to be a fortress -- wouldn't that solve anything? would no one ever loan again? is that the problem? >> wish that were the case. capital requirements and the results did go up here and there. they went up by a lot. >> but not enough? >> there were higher capital and liquid standards. there was ring fencing in a number -- >> right. here we are.

none of it worked when we really needed it. it didn't have to be self-reflection. >> is it just capital? >> it's more than that. >> what else -- >> it's going to have to be more than that and now we're bringing in deposit insurance in a much more active way. there is a big role that deposit is playing. >> i guess we shouldn't spend trillions fiscally. >> the notion you could be for 15 years and have no consequences is one where we're going to see the outcome of that. >> thanks. >> okay. a news alert for you. the u.k. market competition and regulators say they have narrowed the scope over the microsoft deal. they say the merger will not result in a lessening of

competition. the final report is due by april 26th. this is very important. the u.k. markets group is the one there is no recourse. if they decide against you, there's no way you can go and resolve to a higher authority. that is one that had weighed very heavily and the prospect of this deal getting through. right now microsoft shares in a day where the dow is indicated off by 324 points are down by just about 0.7%. act vision blizzard shares are up sharply. i guess that puts act vision blizzard as one of the best performance in the s&p 500 futures today. futures today. in a down day across the board, woman: at first, it was just a team.

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the banking sector under pressure again this morning. the major money center banks are a little bit weaker. you should put this in context with what you're seeing in european banks right now. right now jpmorgan chase down, citigroup down by 2.8%, wells fargo and morgan stanley each down by 2 1/3%. you're seeing different variations if you're looking at european banks. joining us right now is jason goldberg. he's the managing director and senior equity analyst for barclays. everybody is looking at all the banks figuring out what to make of any of this. this has been such a very quick moving story. what do you think this morning? >> there's certainly a whole host of uncertainties out there, whether it's over in europe or here in the states. the failure of silicon valley just two weeks ago, it seems like months ago has clearly i think created a lot of angst

throughout the financial industry, in the u.s., a lot of the focus is just on deposit flows amid depositor concerns that their balance at some of these institutions that have a high uninsured deposits or losses on the security portfolio that function as a higher interest rate backdrop. so you cover the top 20 banks in this country. have you changed your opinion on any of them over the last couple of weeks? have you changed how you're viewing them, what they're looking into? >> there's i would say increased concerns for the group. i think it's important to know you kind of entered from a position of strength, record revenues, record income, historically low loan losses. as you look out, expectations around deposits, the levels particularly at the regional bank, the mix and just the overall deposits are all likely

going to be more detrimental at the start of the year. for the biggest banks, it's not as a meaningful driver. for some of regionals, it's the majority of what they do and clearly will set expectations looking out. you're kind of -- in an information vacuum, ultimately where these deposit levels shake out. there's been move movement from the regional banks into the biggest banks. >> you've been covering the big banks for more than 25 years now. >> started young. >> what does this sound like to you, what does this feel like or is this one completely different and unique? >> i think it is different. we go back to 1994 when the fed raised rates fairly aggressively, that was only 250 basis points at the time. issues in orange county and like a bank one and shawmut and the like, those stocks finished the

year down 25%. here the carry has been down 25% in a blink. so just the ferociousness that this comes at us is a bit surprising. you think back to the financial crisis, that happened much more slowly. in that instance, a lot of the concerns were kind of tied to losses on loans and assets that were truly marked down. here loss extend to securities. the banks need time to work through them. >> jason, thank you. >> thank you. >> coming up, the renewed rush in the big tech. long-time tech investor ann winblad will tell us what's she seeing

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welcome back to "squawk box." we're just seconds away from the february durable goods report. the futures are down today. monday was good, tuesday good, wednesday bad, thursday didn't hold on to much gains and today we're down 300 plus. ten-year note reflecting what's happening over in europe with the banks. rick santelli standing by at the cme. what are the numbers today? >> february preliminaries. they'll change in a couple weeks. the durable goods numbers really volatile. expecting up 0.2% and we're at the lowest since april of 2020. if we slip out transportation, it does improve. it moves up to unchanged. we're expected up and if we look

at capital goods, a proxy for capital spending, it was expected to be down 0.2, that was a bright spot to some degree, came up better than expected. so we finished up last year up 0.2. finally, if you look at shipments versus orders, they were also unchanged, which matches transportation but unchanged was 0.2 less than expectations. we're getting some subtle revisions across the boards. minus 4.5, all the way down to minus 5 and transportation up 0.8. why am i spending so much time on that revision? the numbers weren't good on the surface and when you take into account that number was

downgraded, that adds into the notion. we all know that this quarter isn't shaping up to be necessarily a good quarter. many are seeing recession. i don't see a way to avoid it. just to put a face on this, we all see what's going on with interest rates, 356 in the two-year. on march 8th, though closed at the highest since 2007. now we're at the lowest since september ten-year and we did the charts a month ago and about five months ago i'd stake my claim here, 4 1/2 is the high. it was the high back in october. we never came back and challenged those fall levels. it was clearly the high yield close but, man, look at how far we've fallen there. is this really a banking crisis? it's a rate hiking crisis, it's a crisis built on a crisis we never solved and now we have walk backs, take backs, treasury

secretaries changing our mind. is there any wonder there's all this volatility in the market? back to you. >> people are testing -- i don't know if they know anything about deutsche bank. they're testing and they're going to keep testing, right? >> listen, folks, we all need to take a step back, okay? how many trillions of dollars of negative securities were hovering through europe? how could anybody be shocked? i was shocked that the news wasn't worse three months ago, two months ago. now we're starting to see the realities of it and, listen, i'm not picking on jay powell and the fed. their mission is almost impossible. when i do get a little stressed, it's when i ask questions about the government and spending and debt and fiscal dreaming and magic monetary theory and he says, oh, no, i don't comment about that. he certainly seemed to work with them when the debt was being

created. now they leave us out to dry. >> that's 150 basis points right there. did we go 150 too far? >> i don't know what too far is. another thing we always forget is that the signals for the market were broken long before covid hit. we had zero interest rate policy for so long. who knew. we became unable to notice all the aromas in the room and i think that those aromas of debt and the fact that we had abnormal monetary policy since the credit crisis, joe, there's no way to tell if this is where we're supposed to be with rates or not supposed to be. i think the most interesting trade to watch is the way it's reinverted because bills have been a lot more solid than two years. >> we saved the world twice, you could say, the fed and if there was a two-week crisis, that's

all had you to do or three-week crisis, that's all come-uppings there was for all that extraordinary government help we had. that doesn't make sense probably. i don't know what it portends. i'm saying it portends maybe inflation comes down. maybe our inflation problem comes under control. let's see what steve thinks. steve liesman joins us with more. i would say if they have to cut by june, i'm afraid of what kind of world that is but maybe it's a world where inflation is controlled with a little bit of a slowdown in the economy. would that work? >> you want to be a little careful how you get to where you're going, joe. you can arrive first class, economy or you can be hanging on to the wing, i guess, as you land. so i haven't done that before but i've done some other things.

>> you could freeze in there, the wheel well. >> not the wheel well. i have been standing in the aisle of a plane and took a couple of russian helicopters with loads that probabl exceeded more regulatory limits. in any event, i think you probably do get a downdraft to inflation and to the economy from what's happening right now with banks pulling back probably in the lending department and whether or not there's any offset in terms of lower rates or the idea that inflation comes down. it's not the way i would like to get there, to the lower inflation number. but i do want to look, joe, at the fed funds outlook right now, which is -- it's just -- it's head shaking in terms of what's happened. it's unprecedented. here we go. there's a -- you can see that cut, this is what rick was talking about. 455 now for july. so sometime by the summer,

there's a quarter whacked out it have. sometime by the fall, 80 basis points whacked out of it and then you get to -- we use the january 24 for the proxy for the year end and there's 120 basis points and you can see that difference a little bit better when you look at the fed market gap, which is also an unprecedented thing. we just started tracking this in updates immediately. and what you see there is i think 150 basis points. there it is. we're spot on, 150. what that's telling you, joe, is that the fed is 150 basis points more hawkish in its 2023 outlook than the market is priced right now. maybe all this concern about the banking system goes away and the market goes back to meet the fed or maybe the fed says you know what, what we just did was a mistake and maybe we have to backtrack to give the market something more.

you asked ark■■ great question,. what do the regulators do this weekend? i think they would love to come out monday morning and say here's a blanket coverage for all uninsured depositors. as i said all week, they don't have the authority to do that. they need congress to do that. so all they can do is say it's a case-by-case basis. i think they have the money. >> we can print it and it would be worth 10 cents of what it's worth right now. >> having the backstop. >> i know. it's unbelievable. i think they happen gradually but they happen all at once. there was no gradual here. >> i think that's the way -- yeah, i mean, i think that's the way these things happen is that you didn't really have an issue with banking. people were remarking and i was probably one of them that said, hey, all this qt is taking place and rate hikes are taking place

and the bank looks like it's in pretty good shape. you know the market, it finds the weakness and it found it in silicon valley bank and it started raising questions about other questions, how secure are the smaller regional banks and what does it mean to have -- and now what's going on in europe. >> tell me what happened at deutsche bank. i didn't think it was -- >> well, i mean, i think -- this could have been an unforced error, joe. i don't know. but the way the regulators treated those at-1 bond -- the guys in the back, we do have the credit default for deutsche bank in the system now. our great gina francola sent that around. that is higher, in the 170 range. it's about half of what it was during the -- there we go.

they're so good in the back, aren't they, joe? look at where you are there. that was 300 plus back in the financial crisis. it's not level. you can see it's quite a bit higher. and this according to the analysis i'm reading reflects the concerns about those bonds. those were supposed to be bonds. >> you have to hedge -- >> hedge -- >> you go and hedge it here. >> go ahead, guys. >> all that would be great but then it reflected in the equity. that's really the problem. you see what's happening to the equity of deutsche bank. all the big european banks are down. our banks are also down today, too. >> it's hard to normalize rates and i have a whole new view of what normal is. normal is not back to 7% or 8%. i don't know what would happen. normalizing rates, it's a new

normal. steve, thank you. you also said you did some crazy things on russian planes but we're all wondering about that. >> there was a goat once, joe. there was a goat in the aisle one time. >> whoa! >> we want to save you from yourself. >> you mike michael jordan was there? >> meta, apple, alphabet, microsoft are all up significantly since the silicon valley bank collapse just a few weeks ago. joining us is ann winblad. it's great to see you. good voice to have on to talk about what's happening in technology. do you think that technology continues to be a safe haven? >> it's hard to have anything as a safe haven right now. it's good to be talking about something comforting like technology today.

i do think that we are in a great innovation cycle and that usually leads to future growth for many of these companies, especially the leading tech companies. microsoft, google, nvidia, apple, amongst others. >> and i guess it's been the place for people to hide out. but you're right, if these are bigger problems, then does it bleed over into other sectors, including technology? and i guess you have to be thinking about that, too. >> of course. these companies don't make money by just creating technology. they create value for customers. so there is a worldwide recession. it does affect everybody. at the same time, i think these companies have very conservative outlooks. they all trimmed the fat and they're in a big innovation cycle, at least the leading companies are.

>> what do you think about all of this talk about a.i.? i have trouble trying to sort out what's real in this, how much of this is something that can really be put to good work and how much of it is hype on other levels. where do you make your decisions on those questions? >> well, there's certainly a lot of euphoria today. much about euphoria can be taken as truth. some of the examples already in process, if you look at what microsoft is doing with open a.i. and their example of using a.i. to co-pilot things. they've been working with their code creation tools with a.i. for some time and that's already settled in to the development community where they see increased productivity there. if you're using chat gpt, you've already discovered you can write excel macros faster there than just going back to sell yourself

so you're already using a co-pilot. we're seeing innovation across the vertical sectors, and announcing chat gtp co-pilot for training in mathematics. we're already seeing this bleed into applications and users are able to test it out themselves and they are by the millions. so there is a lot of reality here. the work that microsoft's done with open a.i. and open a.i. is not a company that was created last year. it's had quite a bit of work behind the scenes. so regenerative a.i. is really. there is a bit of overfunding for startups in the segment, but we will see some new companies being created here as well. it also has created new stakes for other companies in a.i. we'll see more innovation in the

space with amazon as well and their partners. partnerships are being built across the ecosystem, microsoft, google or amazon. we are seeing the next generation beyond cloud computing. >> you're a long-term shareholder of lots of these companies. the price still matters. when you see the safe haven they've been over the last couple of weeks, is that a time you'd be a buyer of some of these stocks or would you wait and see what happens over the next few weeks and month, especially with questions about the economy? >> well, i think right now is the time to pick companies, not stocks. and be a long-term holder. there are a few companies where the euphoria's gotten a little out of hand maybe. at the same time, they're a centerpiece of this regenerative a.i. economy. at the same time, microsoft, the stock is nearing 52. week highs, but the stock has

been higher and the company is really in great footing across all of the applications that they have in house this can use this technology as well as the ability to put it in their cloud technology itself. i think if you look at is there more value these companies can bring to customers versus just price control, is there more innovation ahead that is not priced into these stocks? is there an opportunity for these companies to navigate rough times and have they done that before? you see some of these company leaders like microsoft and nvidia is a really good example that have been around a long time and they continue to lead in innovation and to manage through crisis. >> ann, i'm going to merge the two worlds just quickly. is there going to be a vacuum in the valley after silicon and

what happened? did they really occupy a really important niche? did they do things that helped startups that might not have had as much success without them? what will step in to take the place? have you thought about that and did you hear anything about that? >> the missing element that will probably go away at least in the short term is what's called venture debt. silicon valley was very generous with their venture debt terms. that is sort of a piece of a funding that venture capitalists use to close the gap when companies didn't reach their milestones and weren't ready for the next funding. what the change will happen there is how the vacuum gets filled is venture capitalists will increase their reserves in

order to navigate the pattern of missing early reduction venture points. and that means venture capitalists will fund fewer companies and means they'll be more discerning in who they'll invest in. i don't think that is necessarily a bad thing. i think that from the standpoint of banking relationships and venture relationships, it's great to have a bank that you know and bankers you can call and pick up the phone with, but we'll get to know other bankers. >> anne, it's really good to have you here. we always appreciate talking to you and especially at a time like this. like this. we pe we see yoho u a third kid. what if she likes playing golf? it's expensive. we're outlawing golf. wait. can i still play? since we work with emower, we don't have to worry about planning for a third kid. you can still play golf... sometimes. take control of your financial future to empower what's next.

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the start of the new york stock exchange, jim cramer joins us now. i've been conditioned to love fridays, jim. i'm starting to wonder. every friday, we seem like we stop worrying about what's going to happen over the weekend. do we need to worry? >> yes. without a doubt. i think thatso1ó■ there are situations, let's put it this way, where things need to be rec,+q" before monday, maybe tuesday, if lucky. but i say that only because they can be resolved.

we do have a huge opportunity that the fed is offering at the discount window, and i think that only companies that have negative equity should really have a problem. these others should avail themselves of this, because normally their bonds may be under water as much as they may be at 80, but they can borrow at par, and no one's going to know if they did, so companies need to take action today. if they don't, they will be targeted by short sellers, and the short sellers will win. >> what can -- what would you recommend european banks do at this point? >> i've never trusted a european bank except for santander. i will not change. >> you think they need to somehow say something about the rest of the at-1 market over there? do you expect -- go ahead. >> i think the problem is that you have a bank that stands for germany, and germany stands for it. that's what's worrisome.

we know from credit suisse that those -- these low, you know, so-called low-quality bonds were all wiped out. so, i think people are just saying what deutsche bank said, which is nothing like credit suisse. what deutsche bank said was, we're weak, we'll be strong, and people are saying, oh, maybe the government backstops them, but what happens whether they do that is they wipe out a lot of bonds. they're in a trouble position being a most favored nation bank. the reason why i like santander is the numbers are going up and the business is good. these companies aren't making any money. credit suisse was making no money. that's the distinguishing point. when i look at what deutsche bank's doing, okay, making a little bit of money, but you know, come on. it has a lot to do with whether you're making money or not. deutsche bank will make money, so they're in better shape. santander raised numbers two weeks ago. >> all right, thanks, jim. my voice may be going away. is your voice too? >> if you talked to me yesterday, i could not even say

a word. it's not much better today. >> you weren't at an eagles game or something like that. >> no, but i did yell -- because you did say that, i did yell the night before, and that really hurt me. >> oh. i don't know if i want to know what happened. was it a sport? was it a sport? hopefully it was a spting or

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developing story. christine lagarde met with eu officials this morning. reuters is reporting some of her comments to those officials. she said, "the euro area banking sector is resilient because it has strong capital and liquidity positions," but she said the ecb is fully equipped to provide liquidity to the euro area financial system if necessary. if needed. and she said the ecb is determined to bring inflation back down to 2% and will decide on future rates based on incoming data. incoming. >> yes. that's the best we've seen the futures, i think, since we got here this morning, down just

233. >> on that, do you think? >> probably. look, that's the question we've been asking all along. what did they do this weekend to shore up confidence? this may be the first step. >> maybe. >> look at that. deutsche bank now down just 10.7% instead of 14%. societe generale is down. >> you had to throw in the inflation comment. >> this was, yes, you have my attention. >> here now to talk about the markets is the managing partner and portfolio manager at dcla as well as a cnbc contributor. another friday, another kind of nervous period again based on the financial sector. >> yeah, joe, the uncertain here, when you get these comments from these officials that, you know, we'll do something, but we won't tell you what we're going to do, it creates uncertainty and the bond

vigilantes are out there. it's doing the job the fed wanted, which is tightening at a really, really fast pace. so, i think until we put some certainty on here, you're having a credit crunch, and it's dribbling through everywhere. you're seeing it in a lot of the financial companies, but now you're going to start seeing it in the credit markets. i mean, we haven't had a bond issuance in two weeks. so, that tells you something's going on, and that ripple effect is going to have some unintended consequences. >> you can -- sounds like you can find a little bit of a silver lining, i guess. we're going to get to where a lot of people wanted to be in terms of a pivot and maybe it won't be as bad as we're thinking. maybe it will be a pivot based on lower inflation and the market doing some of the tightening for the fed. you got about 30 seconds. >> yeah. the market is doing it. but the fear factor there is, you know, will the fed now have to be reactive instead of proactive? i think, as an investor, you have to find some companies that

do not depend on capital markets, at least for the short-term, and those that can actually price. so, i think that's where you have to be. but going into a weekend, again, like you guys said, the uncertainty, the first thing is to sell or just not buy. >> all right. thank you. we're going into the weekend. becky, you don't have a team up. you're welcome. >> make sure you join us on monday. we'll get through this. "squawk on the street" begins right throw. ♪♪ good friday morning, welcome to "squawk on the street," i'm david faber with jim cramer. we are live from post nine at the new york stock exchange. carl has the morning off. get ready to wrap up another somewhat tumultuous week, although things have been a lot calmer in the banking sector