time at 4100, even if the fed pauses with interest rate cuts wouldn't necessarily go into the multiples, above 19 times. so we're really looking at a range-bound scenario at markets probably for the remainder of '23. >> very good, cameron, thanks for the update. >> thank you. >> the more things change, the more they stay the same. make sure you join us tomorrow. "squawk on the street" coming up next. ♪♪ investors good morning, welcome to "squawk on the street." jim cramer, david faber on the new york stock exchange. the market fairly stable following a light volume day. in about four weeks, bank regulators on the hill earnings from walgreens, pbh. and the breakup planning to split into six units and explore separate ipos, shares are

popping ahead of the open. plus, ai, is metaverse getting into the act with the significant labor market due to ai. and there's a leadership shake-up at lyft, will it be enough to span that spot's continued slide. >> let's go to alibaba intending to split into entities, cloud, chinese e-commerce, global e-commerce and media. each will have its own ceo on board. it comes one day after jack ma returned to mainland china for the first time in almost a year and sort of dovetails with this push, jim. >> yeah, the trauma center. everybody knows, the stock, coming up, you start thinking does amazon do this. where did amazon go? this is the typical chinese

strategy. this is what they do. go with the big bonds, suck everybody in and get things copacetic between the two of us so they can take more of our money. now, david, they're as brilliant as i've seen in terms of cons. it's one of the best cons as i've ever seen. >> wow, why are you so cynical on this? >> because of the fact, the seven fleets, taiwan, the two countries aren't talking. they're talking, let's go get some american money. and jpmorgan, there's money to be made. they're just capitalist dolts. >> it's not certain they're ipos. e-commerce being by far the largest part of it. >> brazen capitalism versus totalitarian capitalism.

this is our chance to get in, but you said it, if amazon were to say something like this, or alphabet which has segregated a number of its businesses into other bets that don't really seem to work out and everything else -- >> yeah. >> -- the stock would respond positively. in this case, you've got a lot of analysts doing some the parts and saying, listen, the thing trades at less than ten times earnings. so if you get a 10 multiple on e-commerce, 100 bucks a share. cloud intelligence, 15 a share. three times revenues. again, based on sort of what typical multiple markets for these businesses. very small here. >> digital medial entertainment, not quite sure on that. >> i was just being honest, okay? >> but you're talking macro versus micro. >> i mean -- >> you can invest in allah baba -- >> what a great opportunity. it's fantastic. a lot of ipos, maybe morgan

stanley, goldman is integral, everybody is happy and then the investors come in now and they are just completely butchered but that's okay because this is international commerce, david. and the fact that i'm willing to tell the truth is shocking. >> how are they going to get butchered, jim? is this a head line that won't be followed up or what? >> i just have to say they have to lure a spac, because lately, they've not been able to take any money. the ipos have been failures. this is good, david. >> right now, they're a long way in ipos and there are people encouraged simply by the idea when you segregate the businesses you can fire more people, actually. you have direct reporting lines that's a lot more helpful. >> if i worked at goldman sachs, i'd go in today, i'd go into my kitty -- i don't know, guys, we're back, back better than

ever. did anyone say -- joe's back. joe, what's going on? >> let's go back to ipo day for alibaba, jack ma back to us. talked about forrest gump and david asked him how he ladders the priorities of customers, shareholders. here's what he said. >> a lot more shareholders today. is that going to change in any way how you view your business or run your business? >> well, i think, too, customers number one, income number two, shareholders, number three. but today, what we've got is money. what we've got is the trust from the people. millions of small businesses, so many shareholders. i'm very honored and very excited. because when you see the

shareholders, there's also responsibility. i've been thinking about next five to ten years, how i can make sure these shareholders are happy. but the very important thing, making these guys happy. people standing there, if they're successful, we're all happy. that's what i believe. >> there you go. now, i feel better. it's a long road for alibaba, since obviously the company had a $700 billion market value, sort of at the top -- i think the beginning of the pandemic. >> you know, they give us kind of a lull. >> yeah. >> they give us a lot of shopping, amazon. you know what they want, they want $2.5 billion in land research equipment so they can make semiconductors that are better than what went into the 46. that's what this is about. it's about applied materials. it's about wham. they can't make the stuff that

they need to be able to defend themselves. in the coming -- whatever they have to do against our military. david, they get land -- >> you're jumping from alibaba, saying this is basically being done as a result of pressure from the communist party to do this because of the continuing competition between our countries, specific to technology and the chips act, for example, which does not allow those who take money from the chip act to actually help the chinese to develop the semiconductors? >> well, i can't say it as well as you do. that's completely it. >> really drawing that connection, huh? instead of saying the stock has had a rough go, you feel like it's better off splitting off? >> it's lenin in 1995. this is what they do -- carl, the communist party is very worried about the

semiconductors. >> yeah, asml met with legislators saying china is promoting good hiring company. >> let starbucks -- come on, it's so naked, it's almost famous. this is just saying, weren't you such a bunch of capitalist fools in this country. we're actually buying it. here we are, the secretary of commerce willing to stand up to them, these guys come back and say, ipo, holy cow. >> whether or not you played in this one does it not open the runway for ipos in general? >> china? >> no, of any kind. >> no i don't know, this is different. >> right now, the capital market shares are not doing much of anything as we know.

getting hard anily deay hardly any deals done. >> you don't find it visible -- >> what about tiktok? >> well, tiktok, it's important that 150 million people are watching because they need that data. >> i'm having a hard time believing, call me naive, that the communist party is dictating corporate actions like at alibaba? >> you're kidding, right? you need a vacation. >> i did spend time there, i used to hang out with jack ma. >> i studied jack. >> he was not a favorite of the party. by the way, do you remember what he did a number of years ago that completely screwed the ant ipo which would have been the biggest of all time and then they banished him? >> now, you're taking my side. >> i'm trying to work through it

in my head. i spent enough time with you it finally happened. >> okay. let me back up and just state something. what an odd coincidence, they're worried about tiktok and 150 people, because they want that information. >> sure, they want our data and our chips. >> who can blame them, they want our credit, our social security. they're worried about tiktok. they need to have the american capitalists and goons on their side which is easy enough because they've got a lot of ipo money, and they need to have land research. because you can't make the chips that can make effective battleships and aircraft carriers in planes if you don't have those. so what do they do? they give us shares of alibaba, and then they mute us, because we're going for it. they're right. that's what's interesting. they're smarter than we are. they know in the end if you throw away --

>> if we were smarter, would we also insist that apple and tess la stop selling our manufactured goods? >> made in china, it's okay, it's what you export. >> it's okay if it's made in china and exported here? >> did i say that i said made in china, sold in china. >> this is made in china. >> look, i'm just saying it seems like a quizzical time to bring the deal given the fact every day -- >> they haven't brought the deal, jim. they announced the reorganization of the unit. >> okay. >> they're going to have a board of directors and ceo that will lend itself to an ipo at one time. >> i'm going over here. carl, what a great opportunity, maybe we ought to give them $2.5 billion from land, because that's cutting edge, in return, a lot of banks get fees. it's good, because the quarter for banks as we know is going to be very weak. this can offset commercial real

estate. and to tell you the truth, make it that the insurance -- >> you are calling on a ban for china for a long time. >> because i hate people to lose money. >> we need some kind of cooperation with china. >> yeah, we do. >> we do. we can't have complete and separate system which is is the way it seems to be going which is not a good thing. it may be ultimately what happens. >> but they have to give in on certain things. >> okay, fair point. >> i think, look, you want alibaba, you want to do that here, back off on tiktok. stop having china come with that. >> that's an ipo that you're in favor of. >> actually, tiktok and -- i'll keep -- >> will it take over your brain with tiktok. >> all i'm saying, going back in fine, superman with eight

seconds and say i find it quizzical. >> okay. >> i keep imagining this big board back at his house. >> oh, yes, exactly. >> he's got the whole thing worked out. >> here we go. >> yeah, communist party, this and that, jack ma. >> did you notice we haven't gotten -- we have a commerce secretary that stood up to him. i'm backing her, okay? how many of the tiktokers vote? >> how many parents want to vote against tiktok? because they want kids to go to school and be productive. >> all right, i said it. >> otherwise, favor competition, welcome it and the chinese bans a lot of tiktok apps. >> interesting wrinkle this morning. when we come back, disney ditching its metaverse unit while goldman warns of labor

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disney has exited the metaverse, according to the journal today the company has eliminated its next generation story telling and consumer intelligence unit which was responsible for developing metaverse strategies. the division had about 50 members but the cuts are part of

disney's larger plan reducing head count by 7,000. iger's memo said there will be more coming up this summer. >> i thought this was a big deal, kpex wanted this deal with metaverse. >> espn related as well. >> yeah, espn, maybe you can contract players, can get deeper into -- >> right in the middle of the action somehow. >> yeah. >> it was a good plan. >> it might have been. i mean, i don't think iger is necessarily opposed to the idea. they're in a cost-cutting mode, but they may not do this in the future. it's not part of their plan. >> and saying metaverse is proving hard. >> why do you think that is, jim? >> first of all, you need that. first of all to write them checks, then you have to follow

players individually. i also think the term itself has become a turnoff. >> and why do you think it's been harder for meta, the metaverse? >> well, because they're going about it in a way that surprises me. let's look at what jensen has done. first, you were ride the blog part. and give us what you need. meta is, you build it. metaverse, that's not a good way to do business the way jensen does business. jensen sitting down and says to adobe, guys, we'd like to have a summer scene instead of a winter scene. okay, jensen does it. jensen is profit-oriented. he does not do any missionary work. what he does is makes it so your product is better than you thought. the product that i see in metaverse, meta, is a product where i'm a cartoon figure.

>> right, right. >> the journal has got the additional story about meta, making some bonuses, offering more frequent reviews, incremental year of efficiency steps. >> somebody from wall street will read that and say, what do we do? everybody stays? it's like a big party. mark zuckerberg is not a partier, he's not. >> the attitude over there has changed, i think, you could say almost dramatically. >> no more free lunch. >> literally, probably, no more free lunch. >> cutting out the cafeterias on every floor. the gourmet foods. >> yep. and it's the year of efficiency, and ladder organizational structure. a lot of things going on at meta. obviously, they were spending enormous amounts on the metaverse. let's not forget the thousands of engineers they hired. >> you see what they saved by eliminating people. obviously, there's out in the

white collar, you did six interviews with them. and bidding for alphabet which you mentioned is just ludicrous. what happens is, that day is over. a time a dozen. >> let's go to cal tech. >> it wasn't that long ago when it was difficult to find engineers. i would assume it's difficult to find the best engineers. >> best engineers. >> yes. >> i just think they're doing what i call performance reviews, these days, you can have chat write it for you. >> we mentioned this on goldman yesterday, 300 million full-time jobs subject to some form of automation. that requires engineers. >> what was that meeting like at goldman? i say 200, i say 400. >> yeah, i don't know where they became the experts on this. any number of different surveys going on right now, is that chat

is going to replace jobs, unless you're a motorcycle repairman, or apparently a fry cook or there's one other -- >> they will eliminate the person who does the drive-through. >> yes. >> now, they don't say they're going to do that. they say they like the person's touch. you don't know it's not a person. it's called a pointer. you know, you don't know. >> replace a lot of accountants, apparently. >> if goldman said we see 287,536,000 jobs, i'd go with it. but that broad money. >> well, it's early days. early days. it's huge productivity gains. and then you get to a point and then no more. >> jensen says it's going to produce more jobs because more new things. it's not -- david, this produced

a lot of jobs. >> maybe jensen is just a simulation or an alien himself. when i went to him, i said is this a simulation on his speech. no, it was actually jensen. >> people used to say einstein is an alien. maybe he is, too. >> einstein. >> they're among us. >> exactly. >> and your buddy jenson is one of them and he's planting the seed for the end of species, and then his species can come and take us over. what do you think? >> i think he's a humanitarian, he's trying to combat ways, and everybody loves him accept you. i patched you up. and i'll do it for you. >> you did. mark is a great man. when we come ba

take a look at laggards on the s&p. you'll see stocks at the top there, bofa, downgrades to neutral. as we struggle for the catalyst to drive shares higher, even argues that the portfolio may be less sensitive to potential recovery recovery i

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we got a minute and a half before we get to opening bell. let's squeeze in a mad dash. mccormick is the name. >> yeah, one of my favorite executives is the chairman of mccormick. they've missed the quarter a bunch of times. this is the first quarter he tells me they may be out of the woods. they've got a 5% currency sales point which is pretty good because they've got business overseas. i do think this may be the beginning of return of growth we're waiting for. now, a lot of the growth came from price, not from volume. a lot of people saying wait a second, that's not the situation. general mills says volume and price. but i do think it's the start. people are going to open the books and say there was a big negative impact with china. that's over. spices are something that do well when people cook at home but also a services component that work. it's on the bottom.

[ applause ] >> all right, let's get to the opening bell this morning. and "the exchange" on the big board. the animal leaders summit with nasdaq systems, infrastructure engineering software. [ opening bell ] . >> and involved yesterday -- >> i say, okay. it's 5,000. spent a lot of time, once a month, and then that's opened the door to what's reported last night. and then you have the report, it was the lightest night of research for anyone who cares about stocks. literally was nothing.

this morning is walgreens, everything is okay. mccormick, obviously, the alibaba. this was the lightest night -- this is a great night to work on "the investment club," because, there is nothing. you can talk about lyft. >> right, we're going to get to that. >> lyft, they couldn't pivot. >> we're going to get to lyft in a moment. >> and on lulu, beat nike's inventory -- >> nike, the world just dropped for nike, i think the quarter is okay. i think the problem with nike is foreign holdings, i'm not kidding. this is the first true challenger. nike is generally out of your mind. the trajectory of them getting to a billion dollars versus nike, they did it in one-eighth the time with nike. so nike better wake up, vaughan is a performance shoe. and hopefully, with deckers,

that took ten years to development. i don't know, with nike, i think lulu has low expectations. nike has high expectations. galvin mcdonald, i'm not so sure how mirrors is doing. i know people at peloton are saying, be careful that the mirrors not selling. and lulu are going to miss big. i looked at pbh, larson, with tommy hilfiger and calvin klein, wow, look at that. >> that's great numbers. >> that's real turf. they have a lot of europe and currency problems. and they are on their game. they are re-energizing their business, don't get in the way of them or r.l., another company doing well. >> do i want to take follow-ups?

in terms of consumer -- >> europe. >> that's one reason we got the cco upgrade, europe. >> and then a nice road map in china. look, multiples are ridiculous. and the people that are running these companies now, they are pros. >> there's expectation over recession we're seeing. >> no, no, this is highest end, if you just -- patrice lovier, stephen larson, these are seasoned fashion hands. the highest in fashion. think of lvmh. >> yeah, lvmh, nothing stops that man. >> i just think the highest end, david, is working. yes, a downgrade of ollies.

not doing much of anything. >> i thought the report was good. take a look at walgreens, i didn't see anything in the release about theft. >> guys, on the research front, and carl, you mentioned a downgrade of erlich whether she was just collins or -- >> i don't know why. >> she's the ax. >> she's been there a long time. paramount up 7%. she talks about active value at paramount. saying in the near term, they appear focused on scaling their flagship dtc service, but sort of skeptical how well they can succeed, given the relatively

smaller scale versus peers. however, she thinks, two likely outcomes, one is they successfully execute. the other is, they don't, which could lead the company to sell. likely a premium. she knows there was an interest until showtime. >> uvp, was that really. >> i heard it might be real. david nevinson along with private equity tried to buy showtime, but it was decided it was better off being part of paramount plus. that said, the company is on track to potentially lose money. negative cash flow this year, you know, still spending a lot on paramount plus. real questions in terms, at least, why they maintain the dividend -- well, we know why. and then the question becomes she controls the company, what does they want? will she consider a sale in pieces or whole?

clearly there's a belief that our parent company comcast would have interests in pursuing it were it available. >> i don't know. >> it's pretty unscripted. >> you know, it's pretty unscripted if you ask me. >> a lot of it comes down to what sheri is -- >> pretty unscripted if you ask me. ful if you go to the end, scripted -- >> jimmy stewart's book "unscripted." >> that's the name of the book? i read every page of the book. i didn't like the title no offense. >> but the book was good? >> it is sheri's call. >> all of these years of trying to get it, why wouldn't she just sell it? >> that's the question, that's the question. >> would you like a scripted one? >> no, i needed something that stuck in my head. >> it could have been anything. could have been anything. >> really quick, oxdy and oil,

23.6, upgrades, they go to 70, oxy, a lot of people feel that oxyis the formulation for decarbonization. oxy permeates, all -- warren buffett, his stock would be down, much, much lower. then again saying so what. >> so is paramount, by the way, lower. i don't know, 16%. >> do you really think it's him sitting there buying oxy? >> i think some transaction is coming, i don't know if it's him. >> i haven't talked to management. >> what, oxy? >> no, paramount. >> no, paramount is x and o. >> are they going to buy the rest of oxy? >> well, the problem with oxy, everybody says, ooh, i've got a buyer, then they realize that oil is slowing down.

i think oil's bottoming. >> there's a piece on the tape today that the white house has blown their chance to refill the stv, the sale that we had for two weeks. >> it was a great short recovery. >> yeah, cover. got to ring the register. most impressively, it was the center and being so proud of being the points member in the senate. >> you don't think he's a good trader is what you're saying? >> well, i think -- >> they told but -- >> buying back lower but they're not going to. >> look, he ought to just buy it, fill it up again. but they had this, that we had so much oil in the country it's not a necessity. >> you tweeted about that, too last night. >> you got to have that shreveport facility open up. >> it is starting to open up.

>> there was no russian offense they've took out natural gas capacity. it wasn't a cold winter. and so we're swimming in nat gas, we can't export enough of it. look at it, it could go past production easily. >> wow. >> and a very good pipeline. >> below 2 makes it very difficult for -- >> trust pioneer, and it's been a challenging time for scott sheffield. he's able to pivot to oil. the most natural gas as a percentage, they actually made the quarter. it's kind of funny. i do think that oil is bottoming, natural gas is different. we're not -- what's going to happen to new england. solar is not evidence. and there's not enough sun there. i mean, i think new england is going to be a lot like germany. >> like germany. >> yeah.

>> like springtime in germany? sorry. i've been on vacation a couple weeks. >> you're on an intellectual vacation right now. listen -- >> that was a good one. that was a good one. >> i just think if you shut down all forms of energy and you don't extend the pipeline that there will be a lot of angry voters, even more angry voters than would be in tiktok, if you want to flip to full circle. >> a lot of angry teenage girls, man. >> they're going to vote their heads off. >> something else will come along. >> yeah, why can't the communist party just say here we go -- >> all roads lead to the communist party. >> i actually believe the biggest existent threat to our country is taiwan. i do. >> by the way, nearer term, if the chinese start to harm the russians, that's a huge threat. everything will happen as a result, if that would actually happen, would be very bad.

>> thank you for recognizing it. there wasn't a cold war for many years. >> queen of hearts, right. guys, angela lancebury. >> yes. >> i'm going to do a report on ongoing potential auction in m & a land. >> emerson? doing emerson? >> no, i'm doing wwe. you should be a wrestling character in the ring. wwe? why? because the company is in the process of potentially being sold. a lot of people had doubts about it for any number of reasons, including whether or not vince mcmahon who owns 40% of the country would ever really sell it. what i'm hearing from people familiar with the situation, it's chipping up to be good profits. somebody selling pretty hot and heavy. those doubtful to the fact that you get to a sale at the end

seem even less so. does that mean something gets done here? unclear. who's participating? we can take various guesses. as i reported previously, endeavors from what we could presume would be a complex from. reverse, spin off usc and merge with wwe, sure, they'd like to explore that concept. and a private equity for some? yes, a partnership with well-known names in the sport? that's a possibility. does liberty have an interest, at least taking a look? sure. the saudis who are heavily into golf we know, take an interest in formula 1? >> yes, something indicates to me that it's not just liv, but it's going quite well. many times going to continue in the not too distant future.

the key here remains mcmahon's willingness to sell. it's a topic i brought up with the company's ceo not that long ago right here on the set. listen to what he had to say. >> intentions declared to the board, to me, to the upper management, he's 100% included in the transaction where he's not included in the move going forward. keep in mind, he's also a large shareholder. he's 77 years old and i think he's ready to take a look at the landscape. >> if he really does take a look at that landscape, it would be clear it's going to be populated by the company. $500 million in ebitda value. the parent company, between peacock and usa, that's where wrestling gets seen. and they got wrestle mania coming up, it's like their super bowl. that's a real new york term. by the way, comcast, again, my understanding not part of this

sale profit. >> you know, they have unbelievable subscriptions. >> yes, direct to consumer, they have. they were the first to do that. >> i know there are some really smart people out there why have they been so much better at subscriptions than anybody else? >> i don't know. >> just a rabid fan? >> yeah, a very contained fan base. that said, peacock, obviously, is an important distribution partner for them. >> they had incredible research, body of research, understanding the top fundamental concept. carl, they have the best minds i've ever met in subscriptions. and they're unheralded. they've moved on to other places but it's a huge winner. and they've managed -- they're very lucrative, if i were disney -- the teams there are. >> yeah. and depending how we talk about the importance of sports media, it seems a natural to watch that. and co-founders logan green out

as ceo and president. david grishner, board member is going to take that role. >> what a great interview last night that deirdre did. deirdre bosa. i came back and said, those sites have sailed. you think doordash for me. and leader of the pivot, pivot being actual profits. and the salesperson, which, david, it's prescient. so, lyft, they just kind of didn't do it. you know, a lot of people off of it, david, they're just too nice. >> they're nice. >> nice is not going to get you anywhere, it's going to get you $3.8 billion market value even when your stock is up. >> there's something to be said they're not a cut throat business people. >> well, they're a cut throat business.

>> let's get to deirdre bosa. morning, dee. >> it's unclear whether the new ceo is going to be more than them. they were better to their riders and drivers. i asked him, what's the first thing he's going to do as ceo, have a listen. >> i think you start with making sure you're price competitive. >> okay. >> at the beginning, people were looking at it and we were not winning or matching. >> that seems like the price alerts are going to continue. >>s awe you drive by, assuming economics, every time a person takes a ride you make a little money. you got to make sure people take a lot more rides to make a lot of money and making sure we can drop to the bottom line. >> jim, i was really trying to figure out what that pivot will be. he's got to do something different because the stock's been in the garbage as you well know, ipo, 72 bucks a share

after today topped higher than $10 a share. he was short on answers, however, it's the only, you know, we're going to be competitive pricewise, potentially price wars, which wouldn't be good for the whole ride-sharing environment. and but he hasn't been a ceo for more than a decade. he's been in the nonprofit world. i wonder if he's equipped for wall street. he came out, had was confident, but like i said, few answers. >> given that he's from the nonprofit world, he understands the lyft model very well. i've got to tell you, deirdre, when i listed to your interview, i felt that this is a person with amazon talent. what they lack i think is a clear path to profitability. this man definitely knows it. i came away from the interview thinking, wow, i've got to reopen the book because this man is too smart to avoid. i just said, this is not the same lyft under this man.

anyway, congratulations for getting it. and i think it's important. >> thank you for saying, jim. i did ask him, too, if he's able to operate independently, how involved green and zimmer were going to be. he said he's going to operate independently but that deal structure is still in place. keep in mind. >> how do you do mergers? i go to david -- david, i mean, i can't even get it do emerson. >> get me to do it? >> i stopped on that one. >> thanks, dee. we do have headlines regarding sam bankman-fried with the indictment. to eamon javers. >> prosecutors adding a superseding viement against sam bankman-fried. they're charging the found of conspiring the antiviral division of the foreign corruption act. they're saying in the new document that just dropped minutes ago that sam bankman-fried was involved in a

plot in china. saying that he wanted to unfreeze certain accounts in china, was not able to get chinese government cooperation to do that. and decided bribery was allegedly the way to go here. they say after months of failed attempts to unfreeze the account, the defendant discussed with others and ultimately agreed to and directed a multimillion-dollar bribe. they say it was a $40 billion bribe that was transferred to one or more chinese officials to unfreeze the account. the bribe apparently worked, guys, in the superseding indictment. at or around the time of the bribe payment, the accounts were unfrozen. they say on confirmation, bankman-fried authorized the transfer of tens of millions of cryptocurrency to complete the bribe. so, we don't know exactly who was being bribed here. or it looks like the total amount just yet. but at least a $40 million initial payment in cryptocurrency transferred to

one or more chinese officials. guys, this document is quite lengthy. looks like 43 pages. we're going through it now. we'll bring you additional details as we learn them. back to you. >> eamon, appreciate that, eamon javers. >> i think this might complete the drum beathington. excellent interview with the ftc head. we know that ginsher is upset with coinbase and binance. congressional emmys trying to get something done here. what would happen if the sec went after, directly after both coinbase and binance and just went for the emergency temporary restraining order? what would happen? >> yeah. the terms they used this morning ongoing fraud. i mean mince nothing words. >> okay. then, of course, the ftc says we don't have the ability to do anything but we can do injunctive relief.

go against binance, injunctive relief against binance, a move by and then this there. if the arrogance of these guys is amazing. ever been in front of the sec? >> no. >> here's what you say, yes, sir, yes, ma'am. two great words to say ever in there. >> yes. >> i do it in front of my fire like gensler does with us. >> someone said be careful with mccormack. i'm glad i'm careful. shut up, people. >> the dow has about a 50-point gain to start the day. busy day in bank regulation. senate banking in a little bit. take a look at bonds as the 2-year back above 4. a round trip that was. we're going to watch that. back in just a moment.

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it's time for jim and stop trading. >> i have a 12:00 conference convening the investment club and morgan stanley makes emerson, one of my worst names, their top pick. they think they're going to get neti or do a buyback. emerson has been in freefall they announced a hostile takeover. i thought this was important not just face saving. i felt embarrassed because i picked the stock. ever hear like managers on our show never say they're embarrassed. i'm embarrassed and didn't a bad job because i believe, 16 times earnings, maybe anything can happen. >> it's a natural human emotion. the other morgan stanley jonas on who in the world is going to make entry-level priced cars. >> talking about ford dealer was unhappy they didn't have a bad car. that was a very interesting

piece. because it was provocative. we didn't get it. it was provocative. we didn't mention tesla. >> tesla 1.5% different than the rest of the sector. >> katie, her chart she's looking at, which was internet, u.s. retail internet coming back, walmart, amazon. now if amazon were to go to china right now and offer like listen we'll split this company, what they would say. what do you think we're idiots like americans. >> that's a great chart about sort of curbside, which is less diluted than delivered to home. >> i thought that was an amazing stop trading chart. >> what's on tonight? >> you know, tonight. >> tell me, i'm going to offer charts that will blow your -- blow your mind. >> huge. >> what? >> just you tonight. >> i got my call. i do monthly, i have a club. >> i heard you have a club. >> not a club i can get into.

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. good tuesday morning. welcome back to another hour here of "squawk on the street." i'm sara eisen here with carl quintanilla and david faber, live for you as always from post nine of the new york stock exchange. take a look at stocks here about half hour into trading and the dow is positive up 41 points. s&p down 0.2. nasdaq down 0.6. let's see if we can hold on to the momentum. two back-to-back weeks of gains for stocks. 30 minutes in, here are three movers we're watching right now. alibaba shares higher on news that the company plans to split into six units. more later in the hour. >> walgreens also higher off earnings. prescription drug prices fueling a profit beat as demand for covid-19 vaccines continues to decline. also watch shares of mccormick, the spice maker, surging after results beat estimates came in higher despite

price hikes during that quarter. a lot to talk about. look at that move in mccormick. not every day you see a 12% jump in the staple. the ceo next hour on "squawk on the street." 10:00 on the east coast, fresh data hitting the tape, consumer confidence out. let's go to rick santelli in chicago with that. rick? >> yes. we're expecting consumer confidence from the confidence board, march data points i don't see the headline number but on the present situation, i see that we are now at 151.1 on present situation. just to put the face on it, our last look was at 152.8. we digress just a bit. if we look at the expectations or what lies ahead, that's at 73.0. in the rearview mirror 69.7. 73.0 the second best number of the year. finally the headline number coming out, we're expecting

101.0. 104.2. much better than expected. a revision of last month which was a whisker under 103, moves to 103.4. when was the last time we had a numbers at 104.2. the second best number of the year. 106 in january. and do keep in mind, that we continue to see short maturity yields moving ahead a bit more aggressive than the longer dated and seeing reinversions back into the yield curves. carl, back to you. >> rick santelli this morning. meantime the senate banking kicking off a hearing on the collapse of silicon valley bank today. with fdic chair martin group grun berg and michael barr among the witnesses. we did get testimony prepared by barr yesterday, guys, to talk about what fed was talking about prior to the collapse. certainly there will be a lot of questions this morning about why the extended insurance on this issue and whether or not that's going to happen again. >> i just want to know why gary

becker isn't at the testimony. we need to hear from him. remember the former svb ceo who was apparently unavailable for the hearing and i think he's going to get more calls to come to washington. the guy who collected millions of dollars worth of stock sales in the two years leading up to this, 3.6 million in the few weeks leading up to this in february and who lobbied for loser regulation and who is now called out not necessarily by name, but david, the fed, at least, according to their vice chair of supervisor, mr. barr says there was classic mismanagement at the bank for risk and interest rates. >> wave talked about the duration -- we've talked about the duration risk they chose to take on at the bank. something else you want to discuss, perhaps, is the nature of the bank run itself because that's where i at least am hearing a lot of focus from banking executives. we're reading prepared remarks about the banking system being --

>> sound and resilient. i think i'm going to do a word count for safe and sound. >> one question when you take about safe and sound, the rapid movement of funds of silicon valley bank. to put it in perspective, washington mutual lost i believe it was $8 billion in deposits over a four-day period and was put into receivership by the fdic. obviously, jpmorgan buying it. svb lost $42 billion in four hours. >> right. >> $42 billion in four hours. >> can you regulate that? >> i don't know what you do, but it has to be a question for every bank ceo at this point because it changes the nature of your relationship with your deposit base in a way that maybe you hadn't been thinking about previously. >> i was hoping they would call on peter teal, who i'm not saying -- he did play a role. these people played a role and to your point about the nature of the digital speed here. >> right. >> the nature of the ability -- >> on twitter fired the alarm

and telling his portfolio companies involved with they would be best to take money out of svb. that did not help the situation at all. you know congress will be political, they don't talk about the digital technicalities. it's the democrats saying the republicans rolled back in 2018 dodd/frank and it was president trump's fault and also this bank executives too woke to focus on running a sound bank and the democrats will say that that's what the republicans will say. it's all political points and they have their narratives, does anything get done from a regulation standpoint or fact finding standpoint. >> barr's testimony is interesting. it's not the job of supervisors to fix the issues identified. it's management and the board to fix its own problems. steve liesman with his take on this morning's hearing. hey, steve. >> guys you have it right. the political act is swinging as the first hearing on the bank failure gets under way. democrats blaming deregulation

under the trump administration. republicans blaming the biden administration's fiscal spending. regulators in the spotlight for their own failures. we learned from the testimony of bank supervisor michael barr supervisors made five findings of problems of silicon valley bank through the end of 2001 to 2022. the staff presented the board with the issue of interest rate risk at svb in mid-february. month before the collapse. no word on what the federal reserve board did about that. most agree as you were saying the finger of blame should point first at the failure of management but regulators already thinking about whether rules need to change and that could increase the regulatory burden on the banks, especially mid-sized ones. is there enough interest rate risk supervision? should they stress test multiple scenarios, they are not stress testing for rising interest

rates. all dealt with declining interest rates. and they're accounting for customer behavior as in bank runs. the impact of social media, rapid growth, and the ability for depositors to run very quickly. finally, a big thing here, the overriding issue of the role of the fed's monetary policy. the fdic chair pointing to the rapid cut in rates and their rapid rise as stressing. by the way, continuing to stress the banking system. >> he says the financial system continues to face significant downside risk from the effects of inflation, rising market interest rates and continuing geopolitical uncertainties. this is likely only the first chapter in a saga that could result in more regulation on mid-sized banks and maybe, guys, more focus on the interest rate risk created by the fed and the policies it creates. >> i think another question, steve, that will be interesting is, you know, we can feel better that things have stabilized a

lot if you look at the stock market or the financial stock prices but there is a lingering question as to whether more dominos will fall and what the regulators, the folks sitting in the hearing testifying will do and members of congress will do about it. will we get clues there's openness towards insure all uninsured bank deposits in the system. the immediate questions i think that market would like to know. investors. >> that is for sure. regulators have been walking the fine line between the implicit and explicit guarantee. nelly lang will say today all deposits are safe and strongly hint that other banks insured depositors at other banks will enjoy the insurance that the depositors at svb and signature have been given. but it's not explicit. wuchts one of the things that won't happen is some

introspection in congress about the rules they have passed, right. it's congress that says, you cannot insure the uninsured depositors without coming to congress. congress also, by the way, took away the ability of the regulators to save the bank with any kind of taxpayer money before it goes under. and i think david will attest and others as well, that a bank is worth more as a going concern as a closed concern. one of the things that might have led to the cost is the idea they couldn't take action ahead of time to keep the bank open and that's a congressional rule as well. >> yeah. steve, i'm curious, you included your prepared remarks a moment ago what the fed, whether the fed should be more aware of the risks of the rising interest rate environment on financial stability. but what does that look like for the fed if they start to focus more, as you at least question?

>> so i think it raises a fundamental question at the federal reserve. the federal reserve, everybody talks about the dual mandate of employment and inflation. another dual mandate at the fed, soup are vision and monetary policy. there was an effort in dodd/frank to separate those. the question is whether or not supervision is poorts relation at the fed. everything is all about monetary policy and why aren't either some fed officials or supervisors speaking up more and talking more about the impact of the very quick changes they make in monetary policy on the banking system and the potential risk there. that would have, perhaps, suggested maybe the fed went slower cutting rates and slower raising rates if it was going to be focused on the impact on the banking system rather than on the macro economy at large. that requires i think a cultural change according to officials that i've spoken to at the federal reserve that they're going to have to elevate supervisory oversight into more

into their thinking about the making of monetary policy. >> yeah. the mandate grows larger. the implicit mandate. thank you. steve liesman. david, what i would ask if i were a senator at the hearing today. >> tell me. >> which would be interesting, how the deal for svb came together? how the fdic put it together? why couldn't they get a stronger bank to buy svb that weekend before it collapsed? wouldn't that have been a lot more, i don't know, positive, a sign of confidence for investors if they were able to do that? were there concerns about big banks buying svb, political considerations here. background -- >> there was a short window under which there was hope perhaps you get an acquire error to come in and actually buy the bank, take the marks if you buy the bank outside of receivership, pay some prees for the equity, takes the marks,

that hurts. so quickly because the positive in the bank at such a rapid rate. >> even after there were bidders. why it's unclear why others didn't or why that was the best they got. >> they will be too busy with other things. >> broader market. harris associates partner portfolio manager and cio of david hero. the lingering impact of the last few weeks and what that means for u.s., international, and also to some degree the tech trade which some argued met some

resistance yesterday. >> first of all you have to separate crisis from a bank crisis to a banking system crisis especially when you look at a situation with the european bank, it's a different situation given deposit base, given that they already mark to market their securities. so you don't have the same accounting system in europe as you do in united states and as a result, you have a much different situation in terms of financial stability and when you add to this the fact that the banking system around the world since the global financial crisis has doubled or tripled the capital on the balance sheet this is a different story than '07 and '08 when banks were under capitalized and assets were rotten. today the banks are over capitalized and the assets are solid. you take -- i would say europe's

best bank it sits at over half book value sold bank of the west closed in january, sold it for $16 billion, sold for 1.75 times book and used the proceeds to buy back their own bank stock at just over half book. so i think this -- we have to separate crisis from certain banks that are in crisis but i don't believe the banking system itself is in crisis. and because of the rapid movement of news and events, you know, these things get all ginned up. >> two questions then. what about the argument that the episode surrounding credit suisse allows once again u.s. banks to go in to europe and take market share there? and do we believe that the rolling crisis some are beginning to spin out and commercial real estate and reits, for example, is a u.s. story not a european story? >> you are going to have certain

sectors, there are certain sects, of course, that are going to feel more stress and i think you bring up commercial real estate, especially in the office sector will be stressed and i think it will be stressed in various places. there's certainly a global aspect. however, as i was getting at earlier, the banks are extremely well prepared for the stress and the challenges they face. in terms of credit suisse, as you know, we were investors in this company for a long time until recently where luckily we sold out before the thing really blew up. but this was an instance where you had a complete inability to manage one of the four businesses the investment bank and unfortunately dragged down the other three businesses within the bank, the private wealth management, asset management and the swiss universal bank were unable to sustain themselves because of what was happening at the investment bank.

i would suspect that u.s. investment banks will pick up some of that market share, but in some of the other businesses, especially the very lucrative wealth management business, i think that will be more divvied up amongst the swiss and other banks who are really proficient at managing, you know, a private banking. >> i just have to pause on the credit suisse thing because we haven't talked to you since you sold a stake in early march. you have been on for years one of the most loyal shareholders i can remember on credit suisse all the way down. so does it make you question your belief in other european stocks since that one was so wrong? >> no. it really got wrong -- we've owned credit suisse since probably the early 2000s, and i have to tell you, about the first half of our ownership was a very good experience. more than double, tripled our money. sold a lot of it out.

and then started putting it back in, in 2012, 2013 and 2014. it was a big problem. when we saw their restructuring plan in october, early november, that's when we became dissatisfied and our belief to be able to accurately value the business was shattered. we believed as a result of the restructuring plan they put forth for their investment bank, there were so many unknowns that we as long-term, bottom up, value investors, were unable to adequately price it based on the information or the lack of information that we had in terms of proceeds, the cost of restructuring, et cetera. so basically, late october, early november decided time was up and we probably sold our last shares. we started selling three or four months ago and probably sold our last shares in late february, early march.

but, you know, i've been doing this for 36, 37 years and unfortunately, you have some losers. but we have a process and a philosophy that i believe works that generally speaking if you look at our long-term track record, you know, out performance of the key fund by over 300% over 31 years, we certainly had more winners than losers. we're going to make mistakes and we made a mistake holding on credit suisse as long as we should have. >> and david, you hope as well to learn from your mistakes. i'm curious, credit suisse is a victim of many of its own missteps over a long period of time in terms of execution, series of different management teams, but what have you learned from that perhaps that you could apply looking forward some of the banks may be in your ownership or you may consider in the future? >> very good question. i mean, one of the learnings was you may recall about three years ago, there was a somewhat aggressive battle going on between the chairman and the

ceo. our belief was the chairman presided over these, and he had to go. he was there for each and every one of these episodes and before he was chairman he was the general counsel and this is a guy that came from entertainment business. he was an entertainment -- he was involved in tv. went to credit suisse. we lost that battle and we had over 30% of the shareholder base behind us. when you lose a battle you don't like the leadership and you think well, how much damage could he do in a year because kind of the settlement was he's only going to stay for one more year, we should have sold out. we lost the battle. shouldn't have been patient. we shouldn't have thought how much damage could he do in one year because he did do a lot of damage in one year. we saw inherent value in the business and thought they could get a good chairman, we'll be able to realize inherent value. that was a mistake and i think number two was, we looked at the

business sum of the parts. this was a mistake. the three businesses which earned mid teens returns over decades were being robbed of the returns by inefficient, ineffective investment bank never properly derisked. i think that lesson, you can't necessarily be fooled by some of the parts because you would be surprised how one rotten egg can ruin the whole crate of eggs. >> what a journey through the spac craze and everything else. david, appreciate it very much. good to talk to you and good insight about international banking. >> thank you. >> the senate banking hearing on the collapse of svb just getting under way this hour. we'll take you to lawmakers q&a as soon as it happens. as soon as it happens. s&p 500 remains positie just v you ok, man? the internet is telling me a million different ways i should be trading. look! what's up my trade dogs? you should be listening to me.

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we hope in the next 50 years the world changes because of us. we want to be bigger than walmart. it's not -- we want to learn and change the business. we hope 15 years later they say this is a company like microsoft, like ibm, like walmart, they change, shaped the world. >> that was alibaba's founder

jack ma on set with us back in 2014. it was the day that alibaba went public here at the new york stock exchange. fast forward to today, the company announces its plans to split its businesses into six separate units. doesn't mean they're going to take them all public, but it is a possibility in the near future. let's get to eunice on that story from beijing. >> reporter: thanks, david. thanks for playing that. it brings back a lot of nostalgia hearing jack ma saying that. what company has also said, alibaba, not jack ma, is that this is the biggest restructuring in the company's 24 year e history. each of the six units is going to report to its own boss and board of directors. the main group is going to adopt a holding company management model with the ceo daniel john retaining the top job. the commerce business will stay wholly owned earned the main

group but the rest of the units will be allowed to independently raise funds and eventually ipo. ceo john says the market is the best litmus test. he's going to head the cloud unit which is the fastest growing unit. as for the reason behind the changes, jong told the staff in a letter the move is to make the business more agile and release the entrepreneurial spirit. for the investors based on the stock market performance, it looks as though people are hoping it will unlock a higher market value as well. the expectation is, though, that listing status of the new york as well as hong kong listings isn't going to be affected at all. guys? >> eunice, thank you. eunice yoon on that. alibaba had been up more than that in the session. we'll see how long it takes to

get to the point where ipos are considered. analysts doing the sum of the parts on the company. that's a different -- look, let's go -- thank you. the sum of the parts, the retail business by far the largest single component worth perhaps, if you valued roughly 10 times earnings, over $100 a share of just that. you can see the stock at $92.65. doesn't mean they will get there in anyway and those are based on multiples analysts are coming up for market cloud trades, retail trades, entertainment trades and so forth. >> speaking of the consumer, david, did want to bring more of my conversation, i was in vegas yesterday for shop talk, the huge retail conference and trying to get a sense of what is going on right now with the american consumer which has remained pretty resilient so far, but, of course, we're all worried now with the banking crisis, higher rates and

inflation. levy's shares are up almost 5% this morning. i had a chance to sit down with chip bergh yesterday and asked him about the state of the consumer after we all came out of covid buying new jeans. what's going on now. >> coming out of the pandemic, there was a huge spike and like we've seen in many categories, there's a little bit of a correction moment from this artificially induced spike because of all the pent up demand. but, you know, denim is here to stay. we've been around 150 years making blue jeans and it's not going anywhere. i'm very, very confident that we're going to continue to see the category grow, driven by these new -- >> there are worries about the economy and we've got this banking crisis and we're wondering, how much consumer demand can hold up? >> he yeah. i mean the big sound bite is, we're a discretionary category and with inflation kind of high single digits and the consumer being squeezed or consumers still going to buy jeans and the

answer is that they're still buying jeans. there's no question we're seeing a bifurcation in the consumer today. the lower end consumer, we have two value brands, signature by levie strauss sold more in the mass channel, targeting a price point that's well below levie's red tap that appeals to a lower income consumer, those businesses have been challenged for the last almost 12 months since the middle of last year. and we're definitely seeing it in that business. but our business and our retail stores, where we're in control of the brand and how we show up it's still really strong. last year our business was up 18%. our total business was up 12% in constant currency. we're in a quiet period right now. i can't talk about q1. but our dtc business is an area of growth for us, and where we can control the consumer

experience we're growing. and we feel good about, you know, the strength of the brand. the brand is really strong globally and arguably has never been stronger. >> what's happening on pricing? i know you can't go into necessarily specifics on quiet period but it does feel like the inflation in apparel as a category has come down? >> yeah. so i mean, if you look at overall long period of time, 30 years, apparel has been deflationary which is part of the reason, you know, we've been chasing the supply chain around the world because of cost pressures. apparel pricing really has not gone up. it's actually gone down over the last 30 years. over the last two years or so, though, with all of the cost pressures that we were seeing, you know, and especially even in cotton which is the main commodity that we buy for jeans, but supply chain costs, distribution logistics costs, all the supply chain issues we've been through the prior year, all that put intense

pressure and we have taken pricing over the last two years, and it stuck in the early days. there's no question we were able to pass the pricing through. our aurs were up, average unit retail prices were up single digits last year and the consumer still buying. now we're in a promotional period. consumer prices are coming down. it's not the ticket price is coming down, it's more promotion activity. >> inventories are high. >> driven by higher inventories, exactly. and everybody just trying to get back to a clean position driving a much heavier promotional environment and that is continuing to drive the consumer to stores. >> is supply chain fixed? that was an issue for everyone including you? >> yeah. we are continuing to work through inventory issues that we have that has negatively impacted our efficiency at our distribution centers here in the u.s. particularly, but by and large, the supply chain is back.

it's kind of normalized because the peak of this pandemic consumption cycle has now abated and we're kind of back to normalized consumption and the supply chain is kind of normalized as well. >> you've been focused on your succession plan. hired michelle. she's a few months in and waiting to find out when she takes over. >> michelle has been in now for three months. she has a real job i like to say, so she's an incredible leader. it takes a huge amount of humility, a ceo at kohl's for five years, to come in as company president, running the levy's brand and our commercial and digital operations globally. she has about 85% of the company's pnl under her control. what's great about michelle, i was the right guy for 12 years ago, i was a brand guy, the brand was broken, company

broken, my high poth stis was fix the brand and it will turn around the company. >> that's what happened. >> that's what we've done over the last 12 years. as i said we're investing in direct to consumer and retail stores and investing in digital and michelle is a retailer. and she has spent 30 years of her career almost at starbucks and kohl's. 17 years at starbucks, 10 years at kohl's. she brings a different set of eyes, different skill set and she brings what the company needs for the next ten years. >> chip bergh, ceo, of levi. trying to pin him down on when that would happen. didn't get that. that's in the works. michelle becoming the next ceo. my takeaway from talking to a number of ceos, you'll hear from tap stri in the next hour, is that if there's a consumer recession coming, they're not talking like it is. they're talking about the

strength of the brand and the fact that they've had all this pricing power and we're starting to see promotions which is a change, but nothing like a sharp deterioration in consumer spending as a result of everything that's been thrown at the consumer. higher inflation, higher rates, questions on banking. we got consumer confidence at the top of the hour, and it looked good for march. >> yeah. household disposable real income on the rise. you mentioned the conference board member today, second highest of the year. we'll see what lulu says tonight. nike was able to whittle away at the inventory. >> nike did not talk about slowdown. in europe and the u.s. as well, china slow recovery, but starting to see that as well. so it's interesting david, with some of the prognostications we're getting from economists and the market which is getting more confident the fed will be cutting rates to seat consumer in this shape going in. >> yeah. we've made note of that. even the credit card data has

been fairly positive in terms of consumer spend so i'm not sure what that means for the looming recession that as you say so many including jeff gun locke. >> worried about the credit crunch. >> that's going to hit mortgages and auto loans. how much continues to be a question and, in fact, one raised by powell. >> cushion that's for sure so far. so yeah. >> all the more tron watch the data on friday. we'll get income and spending and pce. meantime a mixed morning for stocks as we've lost early gains. hard to get back to 4k. to bob pisani. >> we started negative, went positive and now flat on the dow and down a little bit on the s&p. what's interesting is where the sectors are moving here because we're getting some changes towards the end of the month here. the big story is, sectors in the

technology area like communication services and tech have had a fabulous month but they have been faltering in the last several days and then at the same time, cyclical sectors have had -- which had a downturn are reversing. materials and industrials are now improving. look at these names here. put back the tech names if you will. these names were up double digits going into the close on wednesday and thursday. most of them are down 5, 6, 7% in the last few days and that's because rates have been rising a little bit and that's a real headwind for growth names like the big technology names. take a look at cyclical stocks. they've generally been down. most of the names are down 6, 7, 8% on the month. they have been rallying recently so mosaic, union pacific, cf industries, even the airlines in the last several days have started coming off the bottom. many of them were at the bottom for the month and started rising. switch in trend. consumer stocks holding up okay,

but even they have started rising in the last several months. bath and body works, walgreens, auto zone moving to the upside. guys, back to you. >> thanks very much. bob pisani. to senate banking q&a has begun. >> now chair of the nec, lael brainard, the only dissenter. the fed rolled back stronger rules, and responsible for silicon bank. did the fed drop the ball. >> >> thank you for that question. fundamentally, the bank failed because its management failed to appropriately address clear interest rate risks and clear liquidity risks. that interest rate risk and liquidity risk was highlighted by the supervisors of the firm beginning in november of 2021.

the board and -- sorry the federal reserve bank brought forward these problems to the bank and failed to address them in a timely way. that exposure led the firm to be highly vulnerable to a shock and that shock came on the evening of march 8th when it attempted to adjust its liquidity position and reported losses on its available for sale securities. the market reaction was quite negative and that eventually on thursday sparked a depositor run. >> so some of their practices appear to have violated the basic principles of banking 101, concentration risk and reliance, poor risk management, the list goes on. how poorly managed was this bank? >> supervisors had rated the bank at a very low rating.

normally we would not be describing these matters, confidential matters, but given that the firm failed and triggered systemic risk determination, i'm prepared to talk about that confidential information. the firm was rated a 3 in the scale which is not well managed and at the holding company level it was rated deficient which is also clearly not well managed. >> thank you. chair gruenberg, heard from many small businesses over that weekend who had money in svb and were worried about making payroll in ohio, making payroll as a result of the failure. i heard from ohio small banks and credit unions worried about deposits leaving their institutions. i'm not unique. many of my colleagues from both sides of the aisle heard the same concerns in their state. given the unprecedented scale of the bank run what would have been the impact on small banks and businesses across the nation if you and other regulators had not taken action to protect depositors at svb and signature

bank? >> that was our central concern. i think the evidenced suggested from the sequential failure of first silicon valley and then signature, that there was a significant risk of contagion to other institutions and, in fact, over that weekend, we were seeing serious stress at other institutions. i think that and the potential knock on effects of that contagion is really what led the federal reserve board and the fdic board unanimously to recommend to the treasury secretary -- >> you're saying the actions taken were the least bad options for small businesses and banks across the nation if you hadn't acted that way, you think there would have been a contagion? >> a contagion and we'd be in a worse situation with consequences for the actors in

our economic system -- >> regulators, republicans, democrats, all across the board there was agreement on those actions. >> yeah. >> under secretary lang, do you agree with that? >> senator brown, i do agree with that. i think the actions that were taken have been working to stabilize deposits. had they not been taken the runs by uninsured depositors from many small and region-sized banks and mid sized banks would have intensified and caused serious problems for small banks, liquidity and their ability to support small businesses. >> thank you. if you can answer this briefly because i don't want to go over my 5 minutes, the fdic announced the sale of svb and first citizens bank and trust from senator tillis north carolina estimated would cost the deposit insurance fund approximately $20 billion. how is that cost covered? >> well, as required by law and i indicated in my opening

statement, the fdic has to impose an assessment on the banking industry to cover the cost of a coverage for any uninsured deposits and i would note that law provides the fdic authority in implementing that assessment to consider the types that benefit from any action or assistance provided. we expect to issue a notice of proposed rule making for public comment in may to implement the assessment. >> thank you. i would point out in your testimony and answer, there are no tax dollars, nothing funded through the congressional appropriations process. senator scott. >> thank you, mr. chairman. what is the future of regional banking? >> sure. >> i think we have a strong set of regional banks in the united

states. i think it was -- and as a general matter, their liquidity has remained stable through this episode. and i think it was a good indication, frankly, that in the two failed institutions, in both of those cases, the strongest bids we received to acquire those failed institutions were from two other regional banks that had the capability and strategic business interest rates to acquire them. so there are a lot of cautionary lessons to be learned from this. i completely agree with that. and we're going to need to carefully review this episode. but as a general proposition, i think the regional banks in the united states remain a source of strength for the system. >> as i walked in on the chairman's comments about the actions that were taken the weekend of the march 9th and how important it was and the importance of making sure we get credit for doing something that actually i thought could have

been avoided, frankly, if we had someone in the private sector make the decision to buy the bank, buy the assets. had that been done on friday, march 10th, i think we could have literally eliminated the fiasco we saw over the weekend. were there folks interested in buying silicon valley bank on friday? >> senator, to be clear, before the bank failed on an open institution basis? >> after. >> oh, after the failure on a closed basis. >> yes. >> we had expressions of interest. remember, this was a rushed process if i may say. the bank failed on friday morning. we had to -- the other institution failed over the weekend. we had to set up two bridge institutions to manage those failed banks. to your point, though, we had expressions of interest. we quickly set up a bidding

process that we ran on sunday. we received two bids. one was invalid because it had not been approved by the board at the bank and the other after we evaluated it, indicated that it was more expensive than a liquidation of the institution would have been to the fdic. so in effect we did not have an acceptable bid and it was really a determination we made to try to set up two bridge institutions to manage for a short period of time these two failed banks and then be to organize a bidding process, an open bidding process for both institutions, which we ultimately were able to implement successfully and sell signature bank previous weekend, two weekends ago and sell svb this past weekend. >> are you suggesting that the fact that board had not approved

the decision, the offer that was on the table, was the primary reason why you turned down that offer? >> it was one. we required for a bank to make a valid offer for the board of the bank -- >> approve the offer. >> the primary reason. >> for that. the other bid did not have that issue, but the other bid was more costly than liquidation would have been. >> you're suggesting that a private sector engagement would have increased the cost, not decreased the cost? >> at that point i think in part because it takes a bit of time for -- this is a constitutional shoougs. institution. it takes time for the bank to evaluate the assets and liabilities and make an informed bid for the institution. and i think as a practical matter that was difficult to do given the compressed frame over

the initial weekend and why we set up the bridge institutions to try to put in place quickly and orderly bidding process for any interested party could submit a bid, have an opportunity to do due diligence to evaluate the institution and make an informed bid. i think we were ultimately able to do that for both of these failed institutions. >> i will say with my remaining time looked forward to the second round of questions but without question that we would have had a better private sector engagement with quicker action from the fed i think we could have avoided the concept that rushed us to a decision which was a concern of contagion in part. that could have been avoided if a decision had been made on friday. we'll have an opportunity hopefully on the second round. >> thank you nor warner from virginia. >> thank you, mr. chairman. thank you for having this hearing. it's good to see all of you.

a couple weeks ago when in a finance committee hearing i asked secretary yellen, i thought it was very important that we try to get all the facts out about what happened here. i very much appreciate vice chairman barr you taking on this unenviable task of sorting this out. because i have real questions. was this a regulatory and bank management failure? or was it, as some on my side of the aisle have indicated, a statutory failure? if it was a statutory failure an additional test or activity was needed, i'm all for putting it in place. but my operating premise at this point is, you know, if this had been not a $200 billion bank but a $5 billion bank, management

mistakes, and failure basic regulation, should have caught this. we had two chief regulators, a state regulator, at some point m chairman, i hope we would get into where were they and then the san francisco fed. i'm going to be very interested in making sure we get to the bottom of this. things you already pointed out, the bank's business concentrating in one industry, an industry i used to be part of, but the fact that there was such high concentration of counter party risk, my understanding, ten depositors alone had about $13 billion of deposits, again, seems to me interest rate mismanagement is banking 101 and again, even at $5 billion bank this should have been caught. i also think the speed, i've often cited the fact that largest bank failure we've seen was wamu back in the crisis. $16 billion left -- >> regulators from the fdic and

the vice chair of supervision for the fed, in front of senate banking talking about silicon valley bank and michael barr making it clear that bank failed to address what he called clear interest rate risks and liquidity risks, saying that it was already rated as a bank that was not well managed and the holding company level it was rated deficient trying to put the onus on the fwoonk have solved the problems he argues identified. >> why i wish the management of svb was there, including gary becker, the ceo. they're not. that was the answer from the fed about whether there was an oversight failure from the fed. he punted it to the management. so far, david, we were saying it, not too political. there have been good questions here. >> the questions we've heard from the two senators, mark warner in the midst of his questions, perfectly legitimate questions. >> senator scott asked why was there no deal over the weekend and we learned there were two bids, one not approved by the

board, according to the fdic, so, therefore, they couldn't consider it, and the other one they deemed more expensive than a liquidation and didn't go forward with that. >> took them a couple weeks and they did get a deal better than what they saw initially. the banks had failed. let's make it clear, by that point. point, both svb and later signature bank that same weekend. interesting questions. didn't get the answer as to whether more regulation would have potentially stemmed this crisis at svb. you know, sherrod brown's first question didn't get answered, which is did the fed not do enough or could the regulators have done more. >> he said the fed flagged some issues. this was on management. they could have gone there when asked about the health of the regional banks and the future of the regional banks in this countries. what the fdic chair responded is they are strong. in fact, look at the two buyers for some of these failed banks. they both come from regional banks in better shape. >> there's a look at some of the

bigger regional banks out there. at least some of them. first republic at the top, which we continue to watch closely because it's still quite vulnerable. meanwhile, a new study reporting u.s. banks hold $2 trillion less in assets than appears on paper with risk ofs svb-style runs in the future. one of the coauthors of that report joins us now, northwestern university finance professor. gregor, what did you find? you know, give us our -- our viewers a sense to the headlines i just reiterated there as to what's behind them? >> thanks for having me on the show. so, big picture, what we were trying to do is figure out what svb's special, if you think about mismanagement or if you think about their long duration assets, did it just have so many, that it stands out relative to the other banks? what we found, not to our surprise, u.s. banking sector

has long duration assets. svb-style losses are quite present for many banks in the u.s. banking sector. think of it broadly as 10% of u.s. banks suffered bigger percentage losses for their assets due to interest rate increases than svb banks. if we add those losses up, we're talking ballpark $2 trillion in losses. so, think of it as you hold long-dated bonds, government bonds, interest rates rise because we're fighting inflation, the value of those assets decline. >> are those held and available for sale or held to maturity where you don't actually have to take the marks? >> right. we were trying to do both because, you know, just because you call something work $1 doesn't make it worth $1. it's held to maturity loans. in short, we were trying to

adjust both for held to maturity and available for sale, securities and their decline due to interest rate increases. >> understood. but again, you know, unless you're actually facing an avalanche of deposit withdrawals, you're probably not going to be in a position where you have to recognize those losses and you can ride those things out to maturity and never recognize losses. they pay off. >> very good. that the is sort of right. i think the key question is, is the uninsured depositors never pull, can you keep on paying them very low interest rates? then you can ride those losses up. if you have to adjust interest rates to market, you cannot. so, that's step one. step two is, we were trying to understand exactly what you asked, which is if there was no regulatory intervention and a small -- you know, a sensible share of uninsured deposit hold your assets, how many with these unrecognized losses start

becoming an issue because you have to start liquidating on securities? we found about for 190 banks, you might be subject to fragility. >> yeah. i guess that's the word that's been word a lot lately to describe our banking system. i wonder, a, if you agree? b, you seem to be painting a picture for a less profitable banking system in some way. the cost of funds is going to go up, even if they don't have to realize the losses and held to maturity portfolios. what is your sense there when it comes to fragility? >> think of it as two situations. one, you have sleepy depositors. sleepy depositors where you can keep paying low interest rates when interest rates go uhm. i think the situation people had in mind for the last year. you don't pay depositors much. your assets and liabilities are declining in value at the same time. banks could be equally profitable as they were before.

you don't make much but you don't pay much. the problem is, depositors start panicking. they are pulling things out. at that point you're realizing, you know, mark to market and bank becomes less profitable and could become insolvent. that's the key thing right now. >> yeah. another key thing we're dealing with is the change and nature of people's ability to actually withdrawal money in a rapid fashion, isn't it? that's different than it was even 10 or 15 years ago. >> that's right. that's right. sometimes it still takes time to pull money out of the bank. i think it is true that coordinating depositor withdrawals, the big issue that can bring banks down, has probably become a bigger issue. the silicon valley bank is the poster child for this. but i think in some ways we are much more important than we were even a decade ago, which can lead to panicking.

>> all right. it's a lot of issues that we have to continue to monitor. thank you. appreciate your time. >> pleasure. it's a bit of a mixed morning for stocks right now as we close out this hour. let's get over to dom chu with a look at key names we're keeping an eye on. >> david, outside of the banks, which we are very intensely focused on right now, a handful of earnings movers are driving some of the story. let's start with walgreens, the big pharmacy retail, health care retail operator comes out with results. better than expected profits and revenues. you can see there, those shares up about 3.2% and trading right now. that's driving some of that walgreens action. we're also checking out some of the action on the earnings front with pvh, a huge upside mover. you can see up by 20% right now. this is the clothing apparel company that's kind of the parent of big brands like tommy hilfiger and calvin kline. better than expected on profit line and revenue line because of growth in those two.

also better than expected revenue guidance is helping to provide pbh a big move to the upside, about 20%. we'll finish with occidental petroleum. maybe not a shot perform buffet, berkshire hathaway very much of the store. buffett adding more shares of occidental petroleum. that now means berkshire owns roughly 23.6% or around $12.6 billion worth of occidental. back to you guys. back to you guys. >> thank you. what does it mean to be ever better?

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