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 until, perhaps, today, and our

road map does start right there. banks in focus yet again, this time overseas, deutsche bank is dragging down the sector. it's the latest flare-up concern about the health of banks worldwide. we'll discuss this, of course. activision shares are rallying. why? uk regulators reduced their concern about microsoft's acquisition. and the tech space, apple, alphabet, they all are up quite nicely in the month of march. let's start with banking from deutsche bank. you've seen it on "squawk box." it's down sharply premarket. takes you back, of course. the bank's in a lot better shape than it was coming out of the crisis, jim, but it's not a name that's unfamiliar to many. i mentioned it earlier this

week. it's sort of, well, will they try and come after it? when i say, will they try and come after it, i'm referring to things like that tweet yesterday from a guy who used to actually trade and really created the tbs market in some ways when he was at deutsche bank years ago, getting people worried. >> okay. by the way, i'm going long here. >> that voice, still coming around. >> you were there when it went. first of all, the real problem with credit suisse is they didn't have any money. deutsche bank, let's start there. if i bail out a bank, second, you want to be aggressive on deutsche bank. short deutsche bank and buy.

>> they go up as -- essentially as the credit risk is increased. >> right, and we saw that. but perhaps the most easily misinterpreted is what happened with credit suisse fixed income. you had a swiss -- we had the country of switzerland, of course, going to bail out, but what happened to fixed income was so devastating that i think people were saying, you know what? germany does that, god, i don't want to be in the space. >> the bonds you're referring to, credit suisse, with regulators. come out and explain their reasoning. it was a very risky class. it was belated in some way. there were provisions that said, hey, if you rescue them, these things get zeroed. but it did take, as a surprise, it was taken as a surprise by a number of people in the market. 17 billion. >> i know. >> multiples of market value that was left at credit suisse, which they actually retained a bit of, surprisingly, perhaps.

>> isn't it interesting, if you buy the stock from credit suisse, and i'm by no means recommending that, there's earning power, and you have may have to deal with the fact that they have power buying back -- they're buying back some bonds. but i just think people say, wait a second, if germany wants to seize it, germany will seize it, and they're in trouble. >> they're not going to -- first of all, again, they're not near this. listen. market participants i've spoken to, we're not overly concerned about deutsche bank. they will admit to being concerned about the earnings power of banks across the board right now. >> yes. >> the funds have increased. their willingness to make loans has decreased. and so, there is a question as to what earnings are going to look like for any number of banks, and you can see that reflected, perhaps, in the equity, but are there many who believe somehow that this -- this large institution is in real dire straits? no. >> but david, a lot of things

are coming from the government itself. so, christine lagarde this morning reassures banks, and i'm sure that will be re-upped today. but here's the issue. we're still going back to when the fed raised rates, and we had that split decision between yellen, who gave a populist biden view on bailouts, and powell, who acknowledged there are no bailouts, it's just credit. if all these regulators were to speak as one, saying, listen, good banks are going to be protected, which then might -- a good bank needs positive equity. then, this goes away if they just use the term, protected. >> i know. yellen has come under some criticism. i keep hearing it. yellen again, just this morning, with a very senior member of the financial world, let's call it, yellen, a little all over the place. >> she is, because she's political. that's -- >> all over the place, and that's not been helpful. that was sort of a quote i wrote down. i can't tell you who said it. >> she played to the crowd.

it was disappointing. she's usually above that. i think she should have been aware that words -- >> let's listen to the latest thing she had to say. this was, i believe, yesterday on capitol hill. >> it's from 3:00. >> big difference in wednesday. >> we've used important tools to act quickly to prevent contagion. and they are tools we could use again. the strong actions we've taken ensure that americans' deposits are safe. certainly, we would be prepared to take additional actions if warranted. >> she's been saying essentially the same thing but obviously doesn't want to get in the territory of, yes, all uninsured deposits are now insured. >> they basically said, if you have 180, you can put them at par. she seemed to not acknowledge that. all she had to do was say, listen, we have facilities in

place. of course, we'll do more. it's her language. she needs to speak with the same language as another person who's in the government, which is powell. but i thought she played, on wednesday, and lost her credibility, because biden's against bailouts, so if you would have given me a democratic line as treasury secretary, then how about saying, we're fine. when you disagree, you make the situation where people short everythiohp >> so much of this is &hjust á related to hp &hcconfidence,% j. that's all we're reallyí talkin about. and it's, frankly, this was a somewhat, this week, felt better. it did feel better. performance of equities, including for many of the regional banks. it was a more complacency in the marketplace or at least i don't want to, you know, people seemed to be a bit calmer until deutsche bank. as i mentioned earlier, until, you know, weinstein of all people. i called him, didn't get through. i mentioned saba.

it was that tweet yesterday. come on, man. and he puts up the chart. okay, great. are you long? i don't know the answer. and by the way, he's an important player, and as we said, there is an interesting connection here, because he's got a lot of deutsche bank, making a lot of money for the bank before he left to start his hedge fund, obviously on the other side of the whale trade with jpmorgan, so a well known market voice. everybody uses twitter now to point things out. >> unless i hear they're short, like, and where they think it can go, and they can stay short, i will not pay any attention. >> well, the market does. it moves even more. >> then there's responsible journalism. and we can be on the other side. either way, a very important piece today about schwab.

talking about howbko the exposu that people think is not nearly hink. and why tschwab's books haven't you know, $7 trillion of action of clientele. >> loan devalue of mortgages, excellent. obviously, to me, it's going to be under attack. but if you read the article, i certainly would feel most positive. i've seen it from huntington bank, frost, banks should call us. m&t has a very good defense. >> i guess, though, as we end the week, you know, there's been a hope, particularly early in the week, that we sort of -- all you need is time, time where there's nothing happening, and it feels like we're kind of back in it a little bit. >> so, lagarde said some very good things, but deutsche bank left itself wide open. did they know they had left itself wide open? >> they knew. listen. there was many years of poor performance there.

those are years ago. >> they make money. >> memories are long in some ways, and people remember that name, and what else are they going to come after? >> it's not fair. >> true. >> you know, it's like the movie, deserve's got nothing to do with it. but let's distinguish our role as reporters and our role as responsible journalists. there's going to be big raid on deutsche bank, you can call it whatever you want. responsibility is to distinguish the difference between credit suisse and deutsche bank. i'm in this 50 years, tired of being referenced as a hack. doesn't mean they can't run it. credit suisse was nothing like f7■dit suisse was nothing like powell, very responsible. starting to worry, by the way,

about what the implicit basis point situation of this bank is. is it a hundred? >> it's certainly going to have a tightening impact. >> i think it's a hundred. >> you may be right. it may be worth a whole percentage point of interest rates increase. but again, coming back to it, you can make -- certainly make an argument that it's very hard to know where equities should be valued for many of the banks, because the environment as changed. their cost of funds is off the board unless you're jpmorgan, it's gone up. >> you want to be a hero? >> your ability and willingness to make loans has gone down. >> your money was safe and protected at bear stearns, meaning, if you had a deposit, the money would be good. >> and it was. >> it was, yeah. >> it's been misinterpreted. i don't know why you keep bringing that up. >> i only bring it up because your money is safe at deutsche bank. >> okay. i believe that would be the case. >> the only reason i bring it up. >> regardless, it would be the case. >> because things hurt. >> people are going to their

money is safe at first republic, jim. that's still the zombie that i talked about. >> it has to be resolved one way or another. >> it has to be resolved. >> i'm glad you brought it up. >> problem with first republic is that, you know, capital raise, hard to do. a buyer, okay, except none of the buyers want to actually come in where they have to take on the significant mark of their assets portfolio, particularly the mortgages, the health and maturity portfolio, because it would hit their book value substantially, so they want government aid. well, the government is not going to come in unless they take them into receivership. maybe this thing just stays as it is, works its way through for the next two years, and then is able to right the ship. >> now, i think the market is demanding parity. can they ride it out? they, too, can bond. they do have the wrong bond

portfolio. they took in a lot of cash at the same time. i'd like to know the following. how much of the loan book is against the ipo, and whether the loan book was actually good? >> you think they had a similar kind of thing as silicon valley bank? >> how about this, just give us our money. >> transparency, but then when they offer it, a lot of times, it backfires on them. >> well, i would say that if you wanted a backfire, it's called frc. it's textbook now. the idea of getting a group of banks together to do something has been destroyed by yellen, because she's so anti-bailout that she's saying there could be something, but every single equity holder, bondholder, must be taken to zero, which means the comments, we could use credit suisse. >> well, the bondholders won't

necessarily get zero. >> we had an interview on "squawk." can we get him over? >> yeah, i want to talk gap holding and garbage. everything else is fine. >> he mentions gap holding. >> still to come right here, we're going to try to talk to mayor adams, but we want to tell you about developments surrounding the microsoft-activision deal. interesting this morning from the uk. the uk. jim just walked right up to him.

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take a look at shares of activision this morning. they're going to be up. you may recall sometime back, i was on vacation as always whenever there's news. i think i came on, though, because we heard from the cma. they put out their list of objections to a potential acquisition of activision by microsoft. of course, that's under contract. and it didn't look good. and in fact, at the time, i said, well, this deal seems mostly dead. well, it's come back to a lot more life, and we've watched activision shares creep up lately in the hopes to have the cma revisit many of the concerns that it had about allowing microsoft to require activision, and in fact, in what they're calling their provisional findings in this assessment of

microsoft's proposed acquisition, they've done just that. this relates specifically to the console market, competition in the supply of consoles, but that's the most important part of this. that's what exists right now. stuff about the cloud is on the tongue, really. remember, microsoft gave them a lot of evidence related to these financial incentives to make activision's games, including "call of duty," for its own console. the analysis indicated that the strategy would be profitable under most scenarios, but the new data says, actually, microsoft would lose money if they did that under any plausible scenario. what does that mean? well, why would we keep "call of duty" for our own consoles if we're going to lose money? the cma went in thinking they would make money from doing that. they've reversed themselves.

jim, this has had a substantial impact on what people view as the cma's objections, and it is a significant moment in the hopes for this deal occurring. not to say there aren't plenty of other things ahead, including the ftc here in our country and a judge and a case that will happen next summer, extending the merger agreement, which will need to be done. 0?7 cost of business -- >> the eu has come down to this. it was not going to be

structural, behavioral. was there pressure on cma? was microsoft hoping that by moving the ball down the field as much as they did with the eu that it would pressure the cma? but cma is seen as being more political now than it had been, similar to our own ftc, so this is a significant moment, no doubt. it is interesting they seem to have screwed up their initial calculations in terms of profitability or not and were corrected by microsoft, but good for them for saying, we got it wrong the first time. >> yeah. i was glad to see this, because i was comparing this to what the justice department did when it comes to the books publishing. you take five down to two, it's going to make it so steven king can say, listen, there's not as much competition. this did not create a situation where you could ram down gamers, so come on, let it happen. >> important to point out, they have now basically said,

provisionally, that the merger will not result in a substantial lessening of competition in console gaming services. their provisional view that this bill raises concerns in the cloud gaming market is not affected by the announcement. so, that is still a question. but again, that is a nascent market versus the consoles. and stock is still trading well below the 95. that does still give you a sense that it's a lot better than it had been. >> okay, so, what are the -- >> still more to go, including time. >> help me with the hurdle. >> the hurdle is, will they extent the merger agreement? i haven't talked to them, but does he say, you know what? life's good, things are great here, forget it. i want more money from you, microsoft, if we're going to extend the merger agreement, for example. that's certainly possible because they have to do that in order to get to the court date with the ftc, which won't take place until august. jim, that's a key one. >> yes. i'm glad you brought that up. i do think that we need to get

away from ideology. get away from ideaing. by the way, lena khan will be very hard pressed because she doesn't think it's ideology. she thinks it's doctrine. >> they're going to have a hard time. activision shares up nicely there again. okay. not -- no longer mostly dead. coming up, it is cramer's "mad dash." we'll count you down to an opening bell eight minutes from no no w. you need to deliver new apps fast using the services you want in the clouds of your choice. with flexible multi-cloud services that enable digital innovation and enterprise control, vmware helps you innovate and grow. i think i'm ready for this. heck ya! with e*trade you're ready for anything. marriage. kids. college. kids moving back in after college. ♪ finally we can eat. ♪ you know you make me wanna...♪

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. let's get to a "mad dash," then we'll get you right to the opening bell, which is about two minutes from now. you weren't here yesterday when we watched block shares tumble on the hindenburg report. what are your thoughts? >> i do want to point out that what happens, i think, with anyone is their record. how have they done if you shorted one of the stocks? look at the day before. i think that's important. now, by the way, he's always been straight up. it's not like you go to a bubble, the s.e.c. is going to look at it and say, wait a second. where's the disclosure? they're not going to say, unless it's reckless.

that's kind of a gold standard. unless it's a reckless case where he knew things and didn't put in, it could have, you know -- david, 8 out of the 11 that i follow of the big ones -- >> hindenburg, in other words, you're saying 8 out of 11 times, what? >> of the ones that i follow in america. i'm not even talking about the -- >> adani, for example. >> i'm not talking about adani. when you look at the ones he's lost on, david, so minor. he's lost by three points. you can argue -- i could argue he's lost by ten. look at the way it's going. win on well tower. >> what about the cogency of the argument itself? i know you had the day off yesterday. did you read the whole thing?

>> yeah, i did. i think there's a perception that it's -- a parlor game, so to speak. that's wrong. there are many actual charges about acquisitions and buy now, pay later. here's an announcement. earnings power. or lack thereof. i can't come away saying it's a joke. the group is always going to lose versus the regulations. they've not disclosed the way others have. so, this is a valuation call. i saw nothing in there that was dishonest. and that should be what companies should be fighting.

>> let me do the opening bell so we can get back to this discussion of block. by the way, take a look at the realtime exchange. lot more red on the board. at the big board is the ceo of model n, celebrating ten years of listing. over at the nasdaq, that's water.org, global nonprofit cofounded by matt damon that helps people get access to safe and sanitary drinking water. >> much bigger issue than we talk about. you and i the other night, talking about, saving trees, saving water. saving water is underrecognized. >> without a doubt. did you finish your points on block? >> no. what you have here is a situation where if they were to use other metrics that are more traditional, say, what jpmorgan used or what paypal uses with buy now, pay later, and where the industry is in fintech, you would say, you know what? their earnings power has been overstated. that's what you have to look at. and to me, the earnings power is

overstated. versus if they played by everybody else's rules. but they don't have to. that's my point. coinbase doesn't have to play by the rules. bitcoin, not by the rules. square, not by the rules. the rules, meaning, by regulation that we all think. they don't have to. >> the jamie dimon will talk to you for a long time about the variable -- the stringent regulations he's under versus a company like this. >> square does everything on the up and up. everything. >> right. >> block. i mean block. everything on the up and up, except for the fact that the up and up is very different from jamie dimon's up and up. change the rules if you don't like them. but change the rules and they'll be in violation of the rules >> atlantic equities says, significant portion of profits could be impacted longer term by including risk controls to

reduce illegal activity. >> i know that what would happen there is that your rate of growth, the rate of change would go down, and therefore the stock would be much more like paypal. did they overpay for afterpay? i could argue, yes. it looks like to me, a firm loan book is much better than plot. but all of these, david, come back to the same thing. if you can get block to play by the jamie dimon rules, really expensive, but they're taking advantage of all the different loopholes the government allows, and loopholes are legal. >> yeah. >> they're legal. >> all right. let's move on, jim. we got other things we want to hit this morning. not quite sure even where to start. obviously, the banks continue to be in focus as we pointed out. deutsche bank's weakness in both its edfs and its stock prices is down. certainly going to be a focus,

although perhaps more than it should be. it's well off the lows from morning, and as jim said, it has earnings power back in the states. the question becomes, are we done with a lot of this lack of -- crisis in confidence? there's a willingness to make loans not there as much, and therefore, they may not make as much money. whether or not any deposits are leaving or not, there is that question. and sort of how you think about earnings for many of these companies. and that's being taken into account by market participants. >> i think janet yellen has to take a walk on "60 minutes" and say, we're done. rumor run. >> he was the fed chair.

she's the treasury secretary. >> yeah. well, you say that. she's, to me, directly opposition to what he said, so we need her to get in line with the fed. maybe they should all take a walk together, a walk in the woods. >> maybe. maybe. schwab. i'll tell you something else we are seeing, which is weakness in company shares that perhaps need access to capital, because the capital markets right now -- i have no idea why that ran. somebody hit a funny button. >> jensen huang a.i., we look exactly as we do except for our skin is cleaner. >> i was making this point about access to capital markets. for example, here's a dish, a company i once covered. >> too early? >> now it's a $4.5 million value. many of our viewers know dish. it needs access to capital, and

they have noted that stock has been down and seems to be down in part because that's the concern right now. how many companies that need access to capital are going to be paying more for it if they get it at all, jim, given current conditions. >> does he know when to fold them? >> no, he's a great poker player, but he may have stayed at the table too long. >> wow. that's bad. >> lot of spectrum. lot of wireless. >> there's a lot of companies. >> there are. what are they willing to pay for it? i don't want -- we don't have to spend a lot of time on that. i just put it up as an example, again, of something that's a new theme in the marketplace, which is, let's keep an eye on those companies and the handful that need access to capital on a regular basis and are therefore going to be paying more in order to earn money or just keep their business going. >> i'm glad you mentioned this, i'll tell you why.

our biggest problem, when you think about the basis, this whole banking system, it's the equivalent of a hundred basis points. >> you think it is? >> yeah, i think it's a hundred. some people feel 150. but the way to avoid the regulators is to say no. say, listen, guys, we like charlie, we think it's a good company, but we gave them a hike. you need to be able to show regulators that we show great -- in terms of people, but we didn't make the new goal. >> all right, let's talk tech a bit, because we also started the show by mentioning the fact that, hey, it's been another good week or certainly a good month, and nvidia, let's just start there, jim. you had jensen huang on the show earlier in the week. we obviously talked a great deal prior to his big speech, if i can call it that, about the future. and the stock has had a great week, nvidia. today, you know, i've got a.i.,

what's next for chatgpt, nvidia, of course, is the focus of it. everybody wants to talk about chatgpt iv. there's all sorts of things being done with it. yesterday, i saw a citi note that included, would it help figure out the diversity of a portfolio in an effective way? the answer seemed to be, yes. so, they're just starting to think about chatgpt's impact on things like portfolio diversity. >> right. >> what's your take on where nvidia stands right now in the week we have had? >> i don't think there's been a more staunch fan and believer in nvidia other than jensen huang. >> correct. >> so, i will say that at this point, what we need to see are earnings going up. i've seen that. we need the others to go. we need to see numbers. we need to see something. until we see those, i don't know why it keeps going higher and higher. right now, you're paying.

let's put pen to paper and see how much they can make and at that point, there's a thing called rate hoppers, next the next gen, and you can put numbers on. right now, david, we're talking about company estimate to earn four bucks ends at $259. >> quite a multiple. >> right. and i think jensen huang is not focused on earnings per share. but can we see numbers go up where we just continually pay up for the same stock? that's not been the way to do it. would i sell the stock? i said the otherjr apple camp. you can't,i■ it.i@ i also believe best stockñ have a moment where they can come in. so, let it come in. >> yeah, i mean, it's almost like a flat year, and you can see last year was horrific, but again -- >> remember, stock is up -- >> 84% thisw]y year.

>> it never had a $2 million ■f rundown, basicaljc■ and this man is so terrific, but i think he, too, would like to show earnings power, and so i don't blame anyone for saying, please don't sell it. that's wrong. but anyone who doesn't have it yet, we are saying to people in the club, okay, it's a great start. let's get an opportunity to do better than what we have. >> i want to get to steve liesman now, because we have st. louis fed president jim bullard saying some things. let's get the headlines from steve. >> yeah, david, thank you. st. louis fed president, jim bullard, the first fed official to speak since the meeting, he's calling the fed response to financial stress "swift and appropriate" and he stresses that the fed can address inflation with monetary policy tools and financial stress through financial stability tools. i want to redo the direct quote on this, because i think it's important. "continued appropriate macro

prudential policy, they can contain financial stress while appropriate monetary policy can continue to put downward pressure on inflation." notice he says, appropriate, doesn't talk about raising it or cutting it. he just says, appropriate policy. doesn't talk about the direction of rates at all. regulators stand ready to take additional action if necessary. he points out and goes through the history of a couple other financial blow-ups, says, "not all financial companies in the past adjusted to changing interest rate environments, and when there are blow-ups like this financial crisis, they need to -- they always lead to poor economic results. the economy," he says, "is stronger than expected in the first quarter. inflation remains too high. labor market remains strong." uses the term, "unprecedented" to talk about the market. he says, "low inflation expectations bode well for

disinflation this year. current declines in interest rates may also be bullish for the economy and offset some of the impact of financial stress." guys, just a very quick look at another unprecedented thing, which is what's happening in the fed funds market right now. you are now taking in interest rate cuts, as you've been discussing, through july, and a hundred-plus basis points of cuts by the end of the year, and i don't see much reaction at all to bullard. it looks like the market has a mind of its own. it's thinking cuts, and powell said, no cuts, and he went out and left the podium, closed the door, and the market said, whatever he said, we're going the other way in a big way. guys? >> all right. so, steve, we have been having the conversation to death. jim thinks that this -- the contractionary impact, so to speak, of the financial or the bank crisis is worth a hundred basis points in rates. do you have any ideas that you want to share? >> i'm not going to argue with jim on that. i think that could be right, but

the only thing that i would caution is that that -- it has to come through the inflation channel. in other words, i don't think that the fed's going to move if the financial or the tightening of financial conditions doesn't lead to lower economic activity, which leads to lower inflation. i think the fed's going to be in a pickle here, a real pickle, if you have this decline in economic activity, but inflation doesn't respond. that's going to be the big issue. just one other thing, david, which is, my read of what's happened is that deutsche bank, what it did is it cashed in one of those at-1 bonds, and that's what's raised the concern about whether its capital levels are sufficient and whether it did so because it needed additional capital. and that's one of the things rifling through the market. there's also talk, by the way, of a dollar shortage, and let me just tell people, that is not something that can actually physically happen. there are as many dollars as are needed out there, david, so some

of the commentary out there, i want to lean against that. the fed has the ability to provide the amount of dollars that the global system needs. >> yeah. appreciate that, steve. and the additional color on deutsche bank. steve liesman, of course, with those bullard comments. >> i'm assuming that what jay powell is doing right now is saying, okay, let's figure this out. that's why we're waiting. he's not saying it's -- that he sees economic activity dropping. he's saying, it could drop, so let's pause. >> right. all right. few things in the market that we have been talking about this morning, jim. i don't know if there's anything that's caught your eye in particular. you said schwab is the key to the market, why? >> because you have a very current piece, really good piece in "the journal" yesterday talking about schwab. ceo bought a lot of stock.

i'm not recommending any bank stock, but this one, along with another one which my travel trust owns, morgan stanley. there's risk, but i don't want to recommend any one. what i'm saying is that -- when that bottoms, you have a more likely chance that you'll catch bottom. but david, i happened to catch, because i was at home, not being able to talk, which was a great pleasure to everybody else in my house, the testimony, i mean, at one point, i felt like it was mao getting grilled by congress. i mean, i was waiting for -- and were you in favor of a hundred flowers blooming? what is your five-year plan? it was -- it was a true trade work, and i've got to tell you there's no doubt about it. they got to separate this thing. the communist party has to give it up or buy the heck out of reels. >> and meta is up again. perhaps on continued belief that

at some point tiktok, u.s. is going to have to have a true change of control or even be banned. all right, we've got some more economic data. want to get to rick santelli for that. >> yes, david. we have our march preliminary read on global pmis and remember, the pmis have really been early indicators. no exception here. 49.3 on the manufacturing pmi. we're expecting 47, so one might say it's better and indeed it is. however, it is the fifth month of contraction and if we look at the services, pmi may be the more important aspect here. it is much better than expected, which makes life difficult. the fed's paying very close attention to the service sector. 53.8 and that's the best level since april of last year, and if we look at the composite, also stronger than expected, 53.3. that's the best since may of

last year. and it does underscore how difficult it's going to be for the federal reserve on this quick run-up on rates, which is hurting the financial system, but yet we see the service sector really seems to be still holding its own. "squawk on the street" will return after a short break. all across the country, people are working hard to build a better future. so we're hard at work, helping them achieve financial freedom. we're investing for our clients in the projects that power our economy. from the plains to the coasts,

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that's why i do what i do. that and the paycheck. we talked about what a grea related names, but one name that two days was e1netflix. >> yes. >> another 2.4%. yesterday it was up about 9%.

gains for the year 11.3% for th1 ast twoñr days.ear 11.3% for th1 not really any news other than ! a la continue to be fantastic? >> it hasn't been fantastic until the last two days. >> but bob iger came out and said -- >> ife1 bob came out andxd said seeing strength in b.■ko■ht■can he go above >> no. is this thing shorted? i don't r i haven't picked up what else. >> we know the advertising q model, maybe things aren't soñi badu■c with the joint -- >> what was your take -- what do go to netflix vir sus your kids? >> i don't remember. >> i have jimmy chill. >> my daughterrsays i'm

>> my vocal chords a)b >> a couple things i want toe1

come back before we wrap up the hour on the week. >> sure want to go -- >> shares 7.5%. >> okay. np >> on the news from the cma in terms of their lack of opposition to the deal whençó i the cloude1 market could still represent a threat herur and thereq aren't behavioral t( remedies, but the market believes or investors believe that the hurdles have been -- >> coming -- >> that microsoftt( faith in th uk. more to go herexd but the stock notable there. 95 for the firrv timeu■ in a ve very long time. >> oh, no. >>q maybe t(ever. >> i thinkxdw3 that's higher. take two reported a disappointing quarter. look at the cohort, right. >> cohortfá doing well again. >> right. >>ñi eako■ reported this quarte that's been moving. >> what are you thinking a! uá this weekend? anything in particular?

i'm about to win if texas wins. i am going to think aboutko■ ano a deepçó dive about where each bank is in terms of what the they can borrow.xd i think facility is radically under talked about because you don't havertoçóñi disclose youre if you use cit. why wouldn't everybody useok it? it's not expensive money. >> thereçó it is. >> anotherq weekend where we're going to at least be thinking about the banks, although again the broader market off the lowsr we're down a half a percent on theok -- >> not all european banks are created equal. >> no. >> santander,çó they ain't gotl problems. they can buy all thesak problem. they can buy all thesak problem. >> they tell me i have to go. ♪♪ inner voice (kombucha brewer): if i just stare at these payroll forms... my business' payroll taxes will calculate themselves. right? uhh...nope. intuit quickbooks helps you manage your payroll taxes, cheers! with 100% accurate tax calculations guaranteed.

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good friday morning. welcome to another hour of "squawk on the street." i'm sa. carl quintanilla has the week off. david faber is here. take a look at stocks in the

early action. dow down 117. s&p down a third of 1%. we worry about the banks overseas and in the u.s. saw the turn yesterday in the session we had a 2% intraday reversal with pressure on the regional banks. the nasdaq still outperforming technology, catching a bid here, all week and the last two weeks on the back of lower treasury yields. 30 minutes into the trading session, three big movers we are watching right now. it's the story of the morning. which is the financial sector, deutsche bank, front and center right now, after some concerns around the bonds and the stock price, look at it down almost more than 6%, recovered a little bit. >> lot better than it was. >> it was uglier earlier. credit default swaps in the eye of the storm. the cost to protect against default rising, four-year highs and the european banking fears hitting the embattled regional names in the u.s., first republic, western alliance, key bank and others, down as well.

charles schwab under pressure, the ceo isn't worried and told "the wall street journal" the bank has enough tloikts cover -- liquidity to cover 100% of deposit outflows, building on the confidence where he came out and said people don't understand our model and we're seeing deposit inflows. look the story today, david, was deutsche bank and the spark is a little unclear. i mean, they -- >> it is. >> they called the bond at par, trading at 93, inspire confidence. >> pointing to the -- i think it's important to point out that stock is well off the lows. it had been down as much as 15% i believe, now down 6%. take a look at the cds. we've been down this road before and mentioned this name because people's memories to a certain extent cap be long and you come back to deutsche bank and the credit problems that it faced after the financial crisis of '08. it's a different bank now, and a very different place. nonetheless it has been seen as,

you know, is it a weak link and so when a well-known market participant points to it, things start build on themselves in an environment like the one we find ourselves in where there's a lack of confidence. >> every day we've asked ourselves is this thing, have they got it under control? there were some good signs of stability earlier this week. >> without a doubt. >> and yesterday afternoon when the regionals started selling off and this morning, we wonder, are they going to have to do more? for ecb's part, amid all of this, the european central bank christine lagarde has been meeting with leaders in brussels and the word is she continues to assure them the european banking system is safe, they go through the liquidity rules, telling the leaders the sector is strong despite the market turmoil and held up because of the strong regulatory regime and repeating what we've heard from her lately, there is no tradeoff between price and financial stability and they're determined to bring inflation down to 2%.

that was the story of this week, right, and last week where the european central bank raised rates, fed, the bank of england raid rates and kept financial stability with the other tools, balance sheet tools, being used still we got from the report yesterday, but the market is telling them that it might not be true today. we are seeing another sharp drop in bond yields and a very sharp rise in expectations that federal reserve is going to have to cut. so the message from the market is that the fed and potentially the ecb are going to have to get a little more active than just putting the financial stability tools there if we continue to see the financial market contagion. >> and that's the key question. of course you mentioned lagarde. janet yellen, you've defended her communication but there have been any number of others i've spoken to say she's been a little, put it, all over the place so to speak. fair or not that seems to be the perception in terms of some of her comments.

>> the "wall street journal" did an op-ed on it. >> wednesday the weakness that occurred in the regional banks in particular was a result of her comment. yesterday she had other things to say. i mean it's basically of the same theme, of course, which is we're going to do whatever we need to protect the system and depositors, but we do it on a case-by-case basis. >> i don't think it's been inconsistent. >> you are defending her. >> i'm trying to read into the language she's used. she said yesterday -- >> this has nothing to do with the particular business of the bank in question. it really is a judgment about whether or not the failure of the bank and the losses imposed on uninsured depositors threaten contagion that could undermine the broader banking system. >> basically there she was defending the move to insure

uninsured depositors of svb bank but she said we're willing to do more if we need, something she said before. she's not going to congress, clearly, or at least talking about going to congress to expand the blanket protection for uninsured depositors. >> no. >> or talking about ways around it. however -- >> on wednesday she said no discussions about it. >> however, this morning, she did convene a meeting which is a bunch of financial regulators including the fed and the fdic and others, not necessarily for action but just to talk about what's happening. clearly they're on it. usually we get a statement from that after the close. but the bottom line is, more may be needed, right, as we're seeing -- >> more may be needed. things this week seem to be calming down and then as the week has gone on they've gotten revved up in terms of concerns and fears. this goes back to confidence. it's not necessarily -- you know, everybody doesn't just stop worrying about their deposits there wouldn't be a problem. look through the health of maturity portfolios of any

banks, but not worrying about deposits flowing out that's not an overall concern. that's what they would like to see, is just things calm down once again. and that did seem to be the case since this week was moving along until the comments on wednesday and the concerns about deutsche bank that started later yesterday. >> again, not at the scale of the week before. i think we can point to that, that which is usually the weekly balance sheet operations, so boring, but it's the best high frequency measure of bank stress and loans on the fed balance sheet increased $94 billion last week, less than the $300 billion, but go through the details, that bdfp the new facility, the emergency -- >> lets you put whatever asset it is to the fed at par or get par back from it. >> correct. those loans jumped by almost five times last week in that emergency facility. in the discount window, the more traditional primary credit lending facility from the fed, $110 billion down from the week

before $152 billion. and based on disclosures we get from first republic and pac west, those are the ones that are tapping into the liquidity. the next fun one is today after the close, the bank -- the bank balance sheets. something that we can glean from that is, if deposits overall are leaving the system, you're not going to get bank by bank, but a deposit flight overall and a little bit we could see on lending, high frequency economics putting out a moment where you're looking for a moment if banks stop lending you might see it in the weekly reports. >> one of the key questions for the banking industry overall has not been whether or not it is viable in any way or your particular bank is, but whether their earning power will be impacted an the result of higher cost of funds, certainly for those banks borrowing at the discount window, but overall, needing to pay your depositors more to keep them, and the unwillingness to lend or a lack of willingness to lend or

lending at higher rates that don't attract as many borrowers and there is a question as to whether there are going to be significant earnings hits. >> which can explain the big falls in the bank. let's bring in our reporter steve liesman with his take on the action and new fed speak today as well, steve? >> yeah. the first fed speak out of the box of st. louis fed president jim bullard, he calls the fed response to financial stress swift and appropriate, says the fed can address inflation with monetary policy tools and financial stress, financial stability tools, sounding like lagarde on the other side of the atlantic. i want to read this quote and talk about it. continued appropriate macro prudential policy can contain financial stress and appropriate monetary policy can put downward pressure on inflation and one more headline he says that regulators stand ready to take additional action if necessary and that, you know, might allude to the meeting that's happening today. who knows. it could be an interesting

weekend. he's not giving up anything when i read his comments there when it comes to the outlook for rates and it is dramatic, guys, the way that the market right now thinks the fed is wrong and folks in the back, if you could bring up the two charts i have, one is the fed rate outlook which shows you got a cut dialed in by the summer, so there you go, faber, your summer is gone because the fed will be cutting according to this, and then forget about the fall because they're cutting more and then just take a look notice the year-end rate and what we call the fed market gap. it's 128 basis points. what that tells you is that the market is 130 basis points below where the fed wants to be or thinks the fed will be by year end. the fed has the 5.13 and the market has 3.80 and change. we can debate is that right. whatever you're going to do this summer forget about it.

>> why do i have to forget about it again? rates are going down or because -- just a little -- >> i guess that's me. i guess i'm talking to myself, david. >> you seem to be. >> i forget you're guy that has to deal with that, not me. >> exactly. >> bullard's argument was last week's argument and that's ultimately what the fed did this week. it raised interest rates to fight inflation and used the macro. but if this continues to spread and we continue to see contagion processing the comments from fed chair powell who made it clear they are watching the impact of this, i mean he's talked more about the credit standards in the economy than he did inflation in the last meeting. i do wonder if those two things have to converge at some point. >> right. >> well, you know, i give you the same answer i gave you in the last hour, it has to happen through the inflation channel, right. it will be interesting the fed could do what you're saying preemptively without seeking

inflation data but the expectation here is what will happen the downdraft or the financial -- rise in financial tensions is going to reduce economic activity and have an impact on inflation that will allow the fed to reduce rates. the market is already -- i think they're beyond pencilling it in. i think they're using indelible ink in terms of what they think the fed is going to do. i will note, though, that if you remember what happened in february, there was a massive coming to terms between the fed and the market, where the market came up 100 basis points and then some, back to the fed. it can happen very quickly the adjustment. we went apart very quickly and could come back together very quickly and i think the key here is going to be the extent to which they can get ahead of these fears and concerns that are riffling through the market. and your a right we're going to look at the h 8. we have a full screen in the back that looks at what happened with the balance sheet and i

would like your take on that, sara. it wasn't measurably worse. i wouldn't say there's not stress in the system but when you look at the change in the two different strumtsz, the discount window look at what happened with the fed's new program the total was the same. it was still at a high level, but it wasn't worse and the new addition is that $60 billion that was taken down by the foreign central banks in the new foreign central bank repo program that people think was linked to the unwinding of cs first boston's dollar positions, so we don't know for sure what it was there, but that's the thinking. that is the maximum that a single bank can take down. we don't know if it was a single bank. that's what's happening. high level stress, but not worse and today what we'll look for in the h 8 is the extent to which small banks have lost deposits to big banks. that will be at 4:15 this afternoon. >> yep. very exciting after the close on a friday. who knew we would get geared

four h 4 and h 8. >> it did, it's almost -- the decrease at the discount window is almost what the increase was. >> thank you. >> you were mentioning that many of the health and securities maturity portfolios or loans that were deeply under water two weeks ago, are looking better, given the move in rates. >> sure. >> it helps. >> it helps. but that is the root of the problem and the interest rate volatility you just so high. >> yeah. >> a lot of people thinking what is that signaling? the equity market is looking calm relative to this move in volatility from the bond market. is a bond market who is usually right more worried about the reese and what's going to happen here and the equity market up for a wakeup call? that's the question. our road map for the rest of the hour, more on what to do with the regional banks here. as european banking fears hit financials this morning. >> plus, 3m, the biggest laggard on the dow year to date. could a lawsuit over ear plugs

send that company's shares even lower. more on that story this hour. finally the view from the c-suite as volatility continues, accenture julie sweet and franklin templeton julie johnson franklin templeton julie johnson jois us.n do you ever worry we'll live forever? no, it's literally never crossed my mind. what if we live to like 100? that's 35 years of being retired. i don't want to outlive our money. and i have been eating all these stupid chia seeds! i could totally live to be 100! why do i keep taking such good care of my- since we started working with empower, we're able to get all our financial questions answered, so we don't have to worry. so you never- no. never. join 17 million people and take control of your financial future to empower what's next. start today at empower.com what does it mean to be ever better?

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i was trying to work. we're workin' it too. yeah! work it girl! woo! i want to hear you say it out loud. well, i could switch us to xfinity. those smiles. that's why i do what i do. that and the paycheck. the eagle has landed. that's one small step for man... hey, what's up? uh... houston... we have a situation. how did you get here? you're characters in our video game! video game? yeah, it's what we do with xfinity 10g. it's like, you know, the best network imaginable. what the heck is that? those are the bad guys. are they friendly? the 10g network, only from xfinity. one giant leap for mankind. welcome back to "squawk on the street." turmoil in european banks, also

hitting the regional banks here in the states. let's talk about what is ahead for those u.s. banks. joining us erika najarian. from your coverage universe how are you accounting for what may be more expensive cost of funds and lack of a willingness to lend overall? what's the impact on earnings? >> sure. i think there's going to be a pretty significant impact to consensus earnings. so, you know, there are three things. number one, you know, even in the before times, before silicon valley bank, the balance sheets were shrinking. the h 8 data steve liesman was mentioning it was already dow 3% in the before times on march 8th. the issues with the banks today are going to exacerbate some of those deposit issues and deposit costs are going to ac kel sell

rate more than the banks anticipated. the largest banks that i cover, i think there's going to be some belt tightening heading into recession. so you not only have the impact of lower net interest income generation in terms of adjustments but we have to think about higher credit costs heading into a u.s. recession. >> yeah. credit becomes tighter. what about the regionals overall? the scenario you're discussing does it lead to consolidation? assume we get past the crisis of confidence, where are they looking in terms of their ability to earn money over the next few years? >> i think consolidation is an inevitability and this is why. so even if we get past this acute liquidity stress, you know, at the end of the day, what i think is inevitable as a result of all this stress is

tighter regulation and i think the tighter regulation is not going to be just concentrated as it has been, but could be dragged down to the regional banks. in order to fight the roe from tighter regulation, you're going to have to have scale and thereby, consolidation could be inevitable. >> i just wanted to mention two more names. we were watching first republic as the next domino here, and i know you don't cover the smaller ones, but comerica and zions bank corp are down 45 to 50% for the month. what -- i mean that's more than just a rerating on earnings, isn't it? >> i just want to go back to the fed data you put up on your screen. so what the market is pricing into these regional banks is the fear factor of who is next, right. who is experiencing acute liquidity stress. the relative good news here is that when you look at the fed balance sheet, we definitely

remain in the high stress situation, but the situation is not getting any worse. so i think that some relief will come at 4:15 today in terms of really seeing what the deposit data flows are telling us. right now, what the market is pricing in and fearing, we're lacking hard data from the lion's share of regional banks in terms of their individual deposit flows. the good news in terms of, you know, the fed balance sheet with the fed balance sheet it's telling us it's not getting any worse. >> and erica, to that point, i don't want you to name names but are you concerned that there are a handful of regional banks in let's call it more of a dire position? >> i actually think that the situation isnm probably more stability than what the equities are pricing in. again, as we think about, you know, the conversations we've had with my regional banks, the mid cap analyst spoke to his

coverage universe, it seems like trends are fairly stable, other than the names that have been most mentioned in the media already. right. some of those that have been mentioned in the media have filed a case telling of stronger deposit positions than what the market is fearing. i actually think the liquidity stress is happening underneath is not -- is a little bit more contained than what the equities are pricing into the system today. >> okay. got another weekend ahead of us. thanks for taking time. appreciate it. >> absolutely. >> as we head to break, check out some of the top gainers on the s&p 500 this week. a lot of talks on good week. we talked about regeneron. accenture is on there, 7.25%. we'll talk to the ceo after the break. a company that had earnings and

accenture. the end of the last hour, netflix having a good couple

days here. you see those gains. analysts weighing in on optimism surrounding the company's crackdown on password sharing. in canada. that's right. they expect strong subscriber numbers in canada. numbers in canada. the crackdown could prove 92% still active? seems high. seriously? it's just a bike. wait. they make a treadmill with an intuitive speed knob? yeah. want to try? 92% stick with it, so can you.

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i'm bertha coombs. this is your cnbc news update at this hour. the white house says no americans were injured this morning in what it is calling an ineffective rocket launched by militants against a u.s. base in syria. a spokesman calls it an initial reaction to u.s. air strikes against groups in the region aligned with iran. they were in response to an earlier drone attack in syria that killed an american

contractor and wounded five u.s. troops. president biden is north of the border today where he is scheduled to speak before canada's parliament and meet with justin trudeau. the prime minister and his wife greeted the bidens when they arrived last night. an agreement designed to stop asylum seekers from crossing the border between the two countries goes into effect tomorrow. and french president emmanuel macron says today that common sense in friendship required him to postpone the state visit of britain's king charles. there are ongoing protests, some of them violent, against mach ron's unilateral move to raise france's retirement age. back to you. >> thank you. >> a little under one hour into the trading session and as sara mentioned, s&p is basically back to flat on the week. more volatility in the bond market in some ways these days. mike santoli joins us on set.

>> that's exactly it. i think everyone is puzzling over whether equities are under reacting to something real and threatening elsewhere or other explanations for this. obviously, the breakdown in the 10-year treasury yield below 3.4 we were here a year ago but 3.4 was a floor on that yield for several months now. the way that 2-year yield is inverted with fed funds all those are true. they're at extremes and yet, equities have managed to sort of anchor themselves on the largest stocks and also outside of financials, there is an s&p exfinancials index, exfinancials and real estate, and it's up 4.5% year to date. it has a 2.5% out performance attributable to the mega caps because apple and microsoft are like 16% when you exclude financials as opposed to 13% just in the regular s&p. the question is whether this is

an escape hatch from the macro stress, whether the stock market is saying look, the banking system is undergoing a panic attack that isn't based on economic reality, it's about their own accounting and balance sheets and credit contraction and, you know, we're begging the fed for a cut and several cuts and can that be a scenario that unfolds without further pain and hardship. >> right. >> bond market are screaming about rate cuts when fed chair powell said it wasn't in the forecast. kbe just turning positive. i would note that half a percent. there's something else going on here, related to the banks, mike, that i think we should mention which real estate, the reits and the s&p under performing the financials this week. when i was making calls on deutsche bank some of the concerns, a lot of people were saying there's general concerns about commercial real estate exposure too.

we were worried about it as a result of the banks and now worried about it pressuring the banks. citi note 33 billion euros on the cre, deutsche bank, more than half of that is in the united states. >> no doubt that continues to be a question and that will run off over time or take the hits over time and we think the banks have adequate capital to do that. the shares to see how people feel about -- >> the whole sector almost back to the october low. >> the real estate sector. >> insurance companies their stocks also starting to get hit and their credit default subs starting to flare up on the same concerns. now, obviously, there's unrecognized loss throughout the system. we know this. we don't know how big it is. it will be filtering through. financial markets over anticipate at times and they move more quickly. and so that's what we're seeing. you see the market trying to reprise for a dire scenario that is going to trickle us or involved in an unexpected way.

>> it is amazing to see tech and high yield hold up amid what's happening. thank you, mike santoli. the economic headwinds causing another company to cut jobs, accenture, slashing 189,000 jobs, 2.5% of its workforce over 18 months, the move to cut costs and streamline business coming alongside a slowdown in i.t. spending. the economy, plus a.i., and supply chain with accenture chair and ceo right now julie sweet joins us. it's good to see you. going over the job announcement in particular, unbelievable. you have more than 700,000 people. it's a humongous company. explain why you made this decision now and what it says about the environment? >> actually, to understand the environment which is actually really positive for i.t. spending, we just announced that our highest level of sales ever, $22 billion, and -- of record -- these are record sales, with 35

clients with over 100 million in bookings and so right now, as you think about i.t. spending, it's hovering about 5% of the market growth just, you know, not that much down from earlier last year, later last year. we see i.t. spending really holding up. our decision to take out -- to take a charge wasn't really about the numbers and the sense that we every year, year in and year out, depart about 5% of our people and we'll do the same this year, the difference is, we're being very proactive to go after structural costs and so we're transforming our corporate functions, we're being able to run accenture with less leaders and that's actually dealing with the issue around wage inflation over the last couple years. so, you know, we're pretty bullish in the sense that we just confirmed 20810% growth this year on a $60 billion base

of revenue. >> and i know you wouldn't have seen this shown up yet but you have a good chunk of your clientele in financial services don't you? are you worried about that sector given everything that's going on? >> financial services is one of our strong -- we're very balanced across industries, financial services is one of our areas of strength, and, you know, what we're looking at is how do you help the financial services sector which includes banks, capital markets and insurance weather the volatility? what we're seeing now is net another example of the volatility of the environment, which is why our -- what we're helping clients do is what we call total enterprise reinvention driven by tech data and a.i., about becoming more resilient to address the volatility in the environment. >> what typically happens to your business in a recession? and it sounds like that's not

something you're seeing, but the bond market is telling us that's what's coming. >> yeah. so, you know, we've been actually quite resilient. if you think about the pandemic, right, the real question there was how would we -- how would we fair? since the pandemic, more strategies, you know, we really say that all strategies for, you know, major companies lead to technology and transformation. i want to reiterate, you know, very volatile environment. we just did the highest level of sales in our history because we're helping clients use tech data and a.i. to optimize costs, to find new growth models, creating new platforms, to access new ways, you know, new customers, marketing has turned into a cost and a growth play, which plays into our ability to provide marketing services and what we are focused on is how do we help our clients deal with the different macro environments

and that's why, you know, that's what continues to drive our growth in this environment. >> julie, it's david. many of us may be using chatgpt for enchanted, frightened by it, i'm curious how you see it getting integrated over the enterprise? over what period of time? how will it be used, perhaps help your clients and the human beings that still work for them? >> great question. we've been working with generative a.i. or large language model for the past few years. we're working with a bank using it in post-trade processes where you get a ton of e-mails. generative a.i. is able to look at the e-mails, understand the context, prepare the initial response which is improving customer satisfaction. moving from technology to implementing it and value is much harder in the enterprise than the scary part when you see

your high school student you spend $20 and create a paper and that's really the opportunity for accenture. we're partnering with the major companies across the board to help think through for our clients how to not just, you know, be excited about the technology, but implement it. of course it starts with data, right. so many of our clients would love to use generative a.i. but their data architecture is not there yet and we see a lot of opportunity to help our clients use the exciting technology and it's hard work, however. >> yeah. just on a related note on the tech clients, does it help your business to consulting and i.t. services that we're seeing a lot of these tech giants laying off focusing on efficiency because they need to outsource some of the functions or does it ultimately hurt as they pull back on spending? >> well, you know, i think it's

important to talk about how we think ability industries, right. at any given time, an industry will be up or down, which is why we serve 19 different industries in three markets. so what's happening, for example, in high-tech in the u.s. is different than what's happening in europe or in our growth markets. we generally think that change is good for our business because we help our clients navigate that change. >> thank you, julie. it's good to see you. good to check in after a good quarter and positive stock reaction as well. >> great. thanks. i appreciate it. take care. >> you're welcome. julie sweet, ceo of accenture. >> $180 billion market value to remind people. >> more than 200 countries. >> yeah. >> got a good read. >> she does. >> that was positive. >> bring her back spend more time with her. back into the broader market outlook as well, franklin

templeton's ceo jenny johnson who said the fed has more work to do to tackle inflation joins us now. let's start there, jenny. good to have you. because we've been reporting this morning the way the bond market is looking, many expect the fed is going to start cutting in a number of months. why do you see it differently? >> i think first of all, i think chairman powell was very clear, right, he is going to address inflation and while, you know, the headline inflation numbers were showing that they were down, you looked at core inflation and things, apparel, eating out, airlines, those were all higher. the claims report that came in yesterday showed that the labor market is still very tight, but they're also starting to see, you know, some things like durable goods that showed that the raising rates indicates that, you know, it's being effective. having said that, i think you have to separate kind of where the inflation is and then also what's the impact on the

banking? we tend to think what happened in silicon valley bank is more idiosyncratic and not a systemic problem. what will its impact be on credit and how will that slow down the economy? i think you have to remember, there's been a massive increase in private credit since the gfc. our private credit team says they've never seen deals as good as they had with the gfc. that will fill in somewhat. our base case is that fed will be data driven. right now we'll still be on the path to even raise 25 basis points, but certainly not cut in 2023. >> i'm curious what you're seeing from your client base, affinity fixed income, rates moving down, where are we in terms of what they're looking at and what you're looking at when it comes to equities versus fixed income right now? >> so definitely we're seeing clients if they have remained short duration, right, 4.5% in

your money market fund, so client have remained short. those who are starting to think that we're towards the end of the cycle of the fed raising are starting to go longer duration. really the majority of fixed income still remains short. as i mentioned in private credit, the opportunities they think this is going to be a great -- so you have capital being raised there. on the equity side, again, i think people are worried about if we go into recession, you're going to want to stick to companies that have solid balance sheets, can withstand any downturn with good earnings, tending to weight more towards large cap stocks and then i do think there are folks who think that dollar will peak at the point where rates, you know, it tends to when rates hit the highest level and at that point you start to see a good tailwind on currencies and opening up investments into emerging markets, areas in asia where china has opened up, they were

slower to open up post- -- on covid and you will start to see some economic growth there and as well as having a tailwind of currencisies. >> one big number going around this morning $5.1 trillion money market funds assets, a record high. clearly a lot of money has been moving in there. can you just give us some color as to where it's coming from? is it coming from bank deposits or other assets and what that signals to you? >> well, look, you know, i think this has been the challenge for banks, right. it's a tough situation to have rates increase so quickly, you know, you have loan portfolios and investment portfolios that are locked in and so banks are paying depositors in some cases 0, 1, 1.5 and you can get a money market fund at 4.5% backed by u.s. government securities. i think actually all this media attention has woken people up to that fact.

yeah, i think that you're seeing people move from banks into money market funds. >> what is that -- >> as well as investment portfolios as people want to take risk off. you've seen that as well. >> i guess the question is how does that end? what does that signal? because the last few times we've seen a buildup in money market funds, fed cuts, michael hart net of bank of america says it's a bubble. how do you think what that signifies. >> the fed is doing the job they're intending to do which is to pair economic activity and inflation and as that happens, you will have more normalization around interest rates. again, we've come off a decade of central banks printing money and keeping rates artificially low. we're going to move to kind of a more normalized environment. >> jenny, thank you. >> thank you. >> ceo of franklin templeton. biggest laggards on the s&p 500 this week, a lot of banks as

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. more than 200,000 military service members and veterans are suing 3m claiming combat ear plugs the company made for members of the armed forces were defective and caused hearing loss. the stock the biggest laggard on the dow this year and one wall street analyst says there could be more pain ahead with liabilities costing billions in the future. let's bring in seema moody who has been digging into this story. one that we followed for some time but you've done a lot of reporting here. >> wall street is clearly concerned, david. 3m has lost 10 of the 16 cases that have gone to trial with a total of $265 million awarded to 13 plaintiffs. at this rate jpmorgan says the liability risk could be in the

billions. >> if you do the math on the number of plaintiffs, which is north of 200 to 1,000, and you take the average settlement value of the simple math on that, gets you well north of 10 to $20 billion. >> now the combat earplug lawsuits have been consolidated in florida's federal court making it the largest in history. 3m is not settling its top lawyer said when properly fitted the earplugs do work. >> we're talking about the military, some of the most highly trained professional in the world, so are you basically saying that they don't know how to use the earplug? >> we are not saying that. clearly the military idsologists were well trained in how to train people and fit people for the use of ear plugs. it should have worked and protected their hearing. >> 3m did reveal new data that could help its campaigns records from the department of defense

showing 90% of 175,000 plaintiffs have no hearing impairment under medically accepted standards. one lead attorney for the plaintiffs called it a misrepresentation of d.o.d. data. we're watching 3m shares under perform down 35% from the 52-week high. the service members are accusing 3m of using bankruptcy to shield itself and asked a judge to dismiss it. a hearing on that is scheduled for april. that's when we'll get the decision.+c;2w[t >> i did not realize this is a big deal. 10 to $20 billion risk and one of the reasons the stock has done so poorly. >> you referred to the bankruptcy. 3m has tried to isolate it.

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♪♪ good friday morning. i'm sara eisen with dom chu live from the new york stock exchange. setting the agenda today. bruce richards, his takeaway from the fed and clues about the credit markets. and we got former wells fargo ceo reacting to the banking crisis and where the fed lost the plot. first up, take a look at stocks this morning. s&p is off