tv Squawk Box CNBC March 29, 2023 6:00am-9:00am EDT
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ubs to lead the bank through its takeover of credit suisse. and new details about the collapse of silicon valley bank and the billions of dollars of deposits customers tried to withdraw that triggered its failure. plus lululemon shares its story after a blockbuster holiday quarter for the maker of those innovative clothes it's wednesday, march 29th, and "squawk box" "squawk box" begins right now. ♪ good morning welcome to "squawk box" here on cnbc we're live from the nasdaq market site in times square. i'm becky quick along with joe kernen
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andrew is off this week. here we go let's take a look at what's happening with the equity futures. you're going to see what's happening after modest investments yesterday. futures are up by 256. nasdaq up by 126 the two year, still above 4% barely 4.008 the 37 you get back, i think the s&p closed at 3971 that would put us above 4,000. >> it's been above and below for a matter of quarters at least at this point i'd have to add them up. new oversight. former ubs ceo sergio ermotti to t take change over the takeover by
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credit suisse. he'll replace current ceo ralph hamers on april 5th. hamers will be there to advice the bank the leadership change comes, in its words, in light of the new challenges and priorities facing ubs after the acquisition, the announcement of the acquisition of credit suisse hamers was rumored to be unhappy about the shotgun wedding between the two banks. by contrast, ermotti told the newspaper last september there was no compelling economic reason for switzerland to have two big banks. >> this is seen as a pretty difficult transition to try and combine investment banks and really put things together hamers is the guy who redid the investment banking division at ubs after the financial crisis he has a very good understanding of things. my understanding is he also has a pretty close relationship and is able to work politically with
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the government and -- this was a big question for swiss citizens too. a lot of unhappy people about this being put together and there's a lot of pressure for this to succeed. >> yeah. i'd be unhappy if i had owned some of those bonds, i'll tell you that much. >> good luck you have unhappy taxpayers who don't want to be in the position of bailing them out. this is the last big bank standing. >> this is the last of swiss chocolate, swiss bank, swiss watches. those are things we talk about when you go there, things run on time. >> trains. >> trains, a guy at luggage is pointing, here's yours >> the coffee's pretty good. >> and the coffee is pretty good that's a weird comment there's no reason to have two banks in the country that's weird sounds like a monopoly, doesn't it >> it does
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but you probably want more region at banks like we have more. >> great put in more regional banks that don't have the same -- but a lot of interesting scuttlebutt, again, about silicon valley bank even though it wasn't because of the amendments, the dodd/frank in 2018 that relaxed some of the rules on the regional, it still would have -- if you looked at it the way it presented itself, it still would have been within the guidelines. >> look. it grew its deposit base it doubled over the last year or two since the pandemic starts. >> since 2019. >> it grew enormously with over $200 billion. >> a lot of free money flashing around especially out in technology land. >> something like 97% to 98% of its money was uninsured. they had a lot of clients and the clients yanked their money we're learning more about the run on silicon valley bank
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depoitss this comes amid testimony yesterday. on march 9th panicked customers withdrew $42 million in a single day. then the vice chair for the fed michael barr said 42 million was nothing compared to what would have gone out the in fact day. >> a total of $100 billion was scheduled to go out the door that day the bank did not have enough collateral to meet that, and, therefore, they were not able to actually meet their obligations to pay their depositors over the course of that day, and they were shut down. >> that combined withdrawal figure of 142 billion dollars in two days represents 81% of the bank's $185 billion in deposits as of the end of the last year regulators shuttered svb on march 10th because clearly the bank couldn't meet those deposit and withdrawal demands barr will be one of those testifying before the house committee today on the failure of svb and signature bank.
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committee chair patrick henry will be joining us in the 8:00 hour i think the thing i thought when i heard this is, oh, my gosh, we knew things were bat, but i didn't know it was that bad. >> it's not just fed supervision, but you have zero interest rates for 13 years or ten years. you're going to fund a lot of stuff that probably shouldn't be funded because there's no cost to capital and you're out in silicon valley where all these guys, all these startups, evaluation at zero for all these exciting new technologies and tech companies they enriched all these people, and they kept their money. which was the thing to do. >> they required you to do if you're going to get balloons, you're going to keep your money here. >> however they get out of these
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great investments. all of them have millions and millions of dollars. it should have raised some eyebrows and then silicon valley bank -- you know, the risk managers there, god, look at all this money, what do we do, what do we do put them in treasuries >> long term. >> put them in yield which looks okay, but we want something that's fortressed balance sheet-safe. >> part of it is you can go back and say because of dodd/frank and the changing of the rules afterward, which barney frank was one of those lobbying for it to be lowered because he's on signature bank. >> right. >> part of the concern was that bank wasn't stress tested for several years, but it didn't matter because the stress test was for dropping interest rates, not rising interest rates. they weren't even looking at the right thing. >> the fed was telling everyone not to worry because inflation
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is transitory. the other thing is the san francisco fed, the point is made that they did flag a lot of things but didn't tell anyone they had to do anything. they didn't kick it up to higher supervisors at the fed they didn't say, this you must do they just alerted them and the bank didn't do anything about it. >> here's what i don't understand if the s.e.c. sends you a wealth notice, you have to identify and tell your investors because it could be material. how come when regulators are telling you that you're unsafe and you're barely getting passing grades like a c, how come you don't have to notify your shareholders? >> they must have sniffed it out finally. they must have known. >> if you listen to barry, he said in a weekend he and two of his colleagues went through six of the banks and realized all of them have similar situations with the duration risk i don't know if you're looking closely, i guess guess it's there.
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>> patrick mchenry should be interesting today. have fun with him. eibel here too i'm sure he's got a viewpoint. >> the one thing i'll say is all these politicians who say they're not interested in bailing anybody out and things are bad, we've heard if there people who follow things closely who have a lot of concerns about this i didn't realizen till the tchl yesterday about the idea of $142 billion walking out the door in 48 hours, demands for those kinds of deposits, if you look at that, i saw another report that 168 banks would be in the same position if 60% of the liquidity went out it was bad it was systemic. you don't want to be in a position where you're looking at the great depression i don't know that any of the politicians have looked into the seriousness of that. you don't want to square people, but you want them to understand
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the severity of terrifics. >> in a perfect world when you're hit back to back like the fed was with the pandemic and this, it's almost the perfect storm that keeps you at zero, keeps inflation low, and -- but there is a good reason for it, and every time they tried to normalize interest rates, something else like i picked a bad day. >> maybe they should have done it a year or two earlier. >> you had two unprecedented things nothing bad can ever happen again probably i think we're out of the woods for the rest of the -- what the u.s. can do to prepare for a war with china "wall street journal." it's not technological it's a strategy designed for low intensity conflict if we go to war with china -- i don't know
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clemcy i don't know i'm looking for good news to bring viewers today. not only are we not prepared for the war, but we're talking an potential future war with a super power a billion and a half. >> is this too much to consider on the front of "wall street journal" is about a giant meatball made from dna of a woolly mammoth. >> they used the dna to make -- >> we're bringing back the woolly mammoth and we're going to eat him in the form of a meatball. >> i have a couple of questions. is it gamey or taste like chicken? >> tastes like chicken i would think it would probably taste more like beef. >> if you go out west, you can have everything. they eat everything, elk, anything -- any type of game there's that one restaurant.
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>> mac. >> did you order it? >> i did. >> going to break -- i can't do the. >> thank you you spit all over me thank you. we're going show you what's behind -- >> oh, boy. >> -- the move in micron and lululemon. how many years ago was "mr. ed?" later don't miss our interview with acting administrator billy nolen on the've of congestion at new york's airport you're watching "squawk box" on cnbc you got this. let's go. gobble gobble. i've seen bigger legs on a turkey! >> announcer: this cnbc program is sponsored by baird. visit bairdifference.com sports tech like this smart fitness mirror. i'm also mr. leg day...1989!
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we are watching shares of micron the rise regarding the loss of rohr because of the inventory writedown of $1.4 illion they lost 1.91 cents a share sales of $3.7 billion were down from $7.8 billion a year ago but investors are focusing on comments from executives who suggest the memory market may be reaching a bottom. they were in line with estimates and the stock up by 2%
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then there are shares of lululemon which are sharply higher this morning, adjusting earnings of 40% beat the company's estimates of -- back that up. >> $4.40 >> it was better than expected the sales were up by 27% guidance came in above what the street was expecting that stock was up by 15% this morning. >> let's take a closer look at the markets with markets reporter i need you to explain to everyone how you view what you call a recession trade it's interesting and nuanced but it's like technology stocks do
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better because i guess if a recession is coming, rates don't keep going up and people run to the growth that's still left it's the innovators that may have left some of the other, i don't know companies that do things, staples, things like that. is that what a recession trade is >> that's right, joe i think that's what the recession trade over the past few years during the covid-19 pandemic has evolved to be where the kinds of stress, people are turning to treasury and gold gold prices have hit the highest levels in around a year and people have piled into the nasdaq, anticipating the lower interest rates we've seen investors dramatically be priced with a trade cut this year. that shows you people are betting on a downturn earlier this year. that's just escalated during the recent banking crisis.
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when you look at our personal lives -- i was trying to book a trip to maine and hotels were booked solid we just don't see a lot of signs that the downturn is here yet, so that really ups the ante for some of the figures that we'll see with the price data and job stickers next week. >> so there had been a pause in that trade so we had seen it. you described it it had been for the last couple of years, but until the recent tumult in the financial sector, that wasn't a trade, but now it's returned. do you think this is going to last this time or have we already stemmed the banking crisis >> i mean that's really the crux of it, isn't it, joe think about last year when people were positioning for cyclicals. everyone going into 2023 were saying we think bond prices are going to continue to fall, yields will continue to rise we saw a lot of people positioning for cyclicals to rally.
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one word of caution to our investors, it has turned from time to time you look at last summer when we saw the pep rally and bond yields drop dramatically it proved to be short lived, so i think the big question is how much longer does this last they think the fed is going to keep the interest rates locked, cutting them because of the inflation process. that's sticking around a lot longer than many people expected >> we haven't been talking about it in fact, i remember when we said -- it was about three or four weeks ago we said, when are the next really important inflation numbers, and we talked about it. in the meanwhile they had, you know, signature bank, silicon valley bank shares but there's a big inflation number coming on friday. that's hot i don't know how you set yourself up for that
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those are two opposing forces that are hitting treasuries right now. inflation is hot and you have trouble in the banking sector. you do the opposite things, i think. >> exactly and everyone is kind of on the lookout for is there going to be another shoe to drop, you know this banking crisis, i just want to remind viewers, it's only been a few weeks this could take a lot longer to play out one thing that's remarkable is how quickly silicon valley bank and signature valley bank went from flying high to shareholders who were wiped out they started trading in the market yesterday at under a dollar a share apiece, so things were moving -- those key stocks went from really high to really low in a very short period of time i think that's left traders in kind of a limbo. we saw that yesterday where trading volumes in the stockmarket hit the lowest level since 2022, and i think that tells you some people are taking
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big risks right now. >> the duration is not gone. it can't just be silicon valley bank, right? but the fed at this point is lending out and now the fed's balance sheet is expanding again. there's all these things to thinking, gunjan that's part of -- taking back qe, it's hand in hand with higher interest rates to try to calm the speculation down, so i don't know i don't know is the duration risk -- can we stop worrying about that because there's a lot still left, i'm sure. >> i don't think we can stop worrying about that duration risk it goes back to inflation is still too high you know, the fed at the last meeting, chair powell ended the
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meeting saying by cutting interest rates is not his best-case scenario, yet that is exactly what is priced into the market that is a huge risk out there. the fed and the market are still saying two different things. i think the fed got on board with the market for a few short weeks. and that trade has completely reversed since the banking crisis unfolded. they have mixed messages are they not protected are they protected there's still so much to wade through here. >> gunjan, thanks. a lot of stuff to think about. friday -- what's today wednesday? >> yes. >> all right thanks >> almost there. hump day. when we come back, sticker shot shock at ivy league schools. the cost of attendance jumping 4% to 5% at some institutions. we're going to tell you how much a year there would cost you. you're going to be a little
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now to the rising cost of college especially at the highest level, a new bloomberg report says that the annual price to attend an ivy league school is approaching $90,000. the full cost already topped $300,000 for four years. al yail it's up 4% at dartmouth and yale, up 5% it's eased by financial aid. at most institutions students receive at least some sort of assistance. >> you should get a good job
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after all that, you think. there's a lot of majors that won't pay that back any time soon should you not do that then? >> probably. >> which financial aid will you get? >> it depends on the school. a lot of the endowments kick in. >> athletics >> athletics. >> not at ivy league schools. >> no. >> no, that's not true >> they don't give you the same sort of money. >> i don't know. coming up on news breaking overnight, ubs is bringing back its former ceo to take over
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credit suisse. we're celebrating the women's month of march here's girls who code founder. >> the advice i would give to women as a ceo is all of us have power. our job is to find it and use it for good as a founder of girls who code, i use it so they can find a code for covid, climate, and cancer and as a ceo of moms, we don't want to have to choose between our child and job. all of us have the ability to make a difference, use our power for change lily! welcome to our third bark-ery. >> announcer: executive edge is sponsored by at&t business at&t 5g is fast, reliable, and secure seriously we need a reliable way
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for the equities markets this morning you're looking at much bigger gains in the futures. dow futures up by 243 points the s&p up by 35, the nasdaq up over 116. eamon javers breaking news this morning out of washington it's been less than 12 hours you were on cnbc, eamon javers, because i saw you on "last call." you have details did you get any sleep? this involves credit suisse, or were you working on it all night? >> we've been working on it for a while. the senate finance committee is releasing at this hour a new report on allegations of credit swes, the centuries-old zurich-based bank that collapsed and was rescued earlier this month. the report alleges that credit swes has been helping americans hide hundreds of millions of dollars from the irs despite
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agreement to cooperate with u.s. tax authorities a decade ago investigators have found 25 families who have secreted away $775 million in recent years and that played at least a part in the bank's ultimate failure. i sat down with two former credit suisse bankers who served as key witnesses for the committee's investigation. cnbc has agreed to disguy the identities of the bankers in order to protect them because they fear retaliation from the bank our interview was conducted before the bank failed. >> what secrets did you turn over one specific about an american family that over years, years, and years and years hid their money in switzerland.
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>> you knew the name of the family >> correct. >> you now how much money they had? >> how much money they had, i knew the account, the secret accounts that were made by credit suisse. >> in 2014 credit suisse pled guilty to aiding u.s. citizens in filing false tax returns and agreed to pay a penalty. at the time they pledged to comply and they say the swiss bank didn't do that. instead they engaged a long running scheme to hide american assets by switching the nationalities of some u.s. taxpayers to other countries back in 2014 they told senators on capitol hill they had cleaned up their act. >> we have proactively taken steps that only those u.s. kpliemts who establish laws with u.s. tax laws can be clients of our bank. >> that was a lie.
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>> why do you say that >> well, they testified that they were 100% compliant they testified they've gone through all the accounts and they no longer had a problem not only did they have a problem, they had a very big problem on their hands >> how do you know that? >> i know that because i've seen it first hand. >> reporter: one of the whistle-blowers told us how the scheme allegedly worked, by making sure the welty american clients got second passports so the bank could justify calling them foreign and not american accounts >> you're talking about-mile-an-hours who hold two passports. they open the account in the foreign passport and put it this their possible it and the irs obligations in their pocket. >> exactly. >> reporter: investigators found emails inside the bank one who was an heir to a $200 million fortune writes to a swiss banker
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it reads u.s. citizenship renounced. and he says i just tried to reach you. congratulations the banker replies. this is a big step the heir to the fortune says, thanks, hopefully this will make cs more relaxed. he closes with a smiley face ron wyden told me it's not clear how much if any secret american money remains in the bank as ubs takes over but he wants the the u.s. department of justice to tack another look at the bank's 2014 plea deal which he says gave them a penalty discount for cooperation. >> it's still going on as of the last couple of days, each more money has been found to have been concealed, and there are very substantial issues here. i'm not taking anything off the table, but clearly it's time to
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prosecute and ensure that there are penalties that send a strong message. >> now, we reached out to credit suisse, and a spokesperson told us credit suisse does not tolerate tax evasion in the core of its report it describes legacy issues some from a decade ago and we have implemented extensive enhancement to root out individuals who seek to conceal assets from tax authorities. now to be clear, the two swiss bankers we spoke with here do have a vefedsted interest in wh they're saying whistle bleers stand to win 15 to 30% of anything the u.s. government collects. they stand to make potentially millions of dollars in that case in that case, u.s. taxpayers would potentially recover even more. >> that's a pretty good deal 156deal 15% to 30% that's almost a cliche
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we shouldn't be surprised -- >> it's been going on for generations. >> now we've got the cayman islands who must have taken some business. >> a lot of it went to other banks around the world. >> and crypto. >> the thing about this -- the fascinating thing is we thought after 208 and especially after 2014 the u.s. had cracked the swiss bank's secrecy and this stuff wasn't going on anymore. what these whistle-blowers are telling me is they found system of the bankers inside the credit suisse found a way to protect some of the super wealthy clients and keep that money hidden from the irs years afterward. >> this is a big problem for ubs. they're going to be faced with having to deal with the liabilities for anything that's come out of this this has long been the talk, the culture of credit suisse has not been up to par
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in the past in trying to trim down on fat, they cut down on risk management and oversightnd now it's coming back it has to be a huge issue at this point when they're talking about merging these two banks together. >> absolutely. if you're ubs right now, it's a giant question mark how much liability you face as a result of this. one big open question is whether the u.s. department of justice will try to claw back, so to speak, any of this money or if there is a mechanism for them to even do that this many years later given that there's now everyday here that credit suisse did not live up to its obligation in that plea agreement back in 2014 the question for ubs is how much would they have to pay. >> even if they can't claw back, you heard, look, we thought everything was well. even if you don't get clawbacks, you say, okay, the fine's back on, you get your money back one way or the other. >> senator widen clearly wants the department of justice to take action here we'll see what they do
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there's clearly movement behind the scenes on this and we'll see where it ends up landing it's tbd how much they're on the hook it doesn't seem to affect the americaner remember, the swiss government set aside about $9 billion for liability issues when they did this deal. this could be coming out of that buck and we just don't know how many millions or hundreds of millions or whatever the ultimate answer is going to be but the whistle-blowers are saying there's a problem in the culture at credit suisse, and it's been there for years. >> ssbf was indicted yesterday it's so surreptitious. >> the allegation there is did they lock down the kept sbf wanted and sbf sent crypto to
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certain chinese officials. we don't know how many officials. to bribe them to open the gates. that seems to have worked. >> eamon, you know that scary voice you did? that scares me when i hear that voice. it's like the guy who calls the babysitter and says where are the children it just scares me. >> we worked on that for a while, joe we worked on that for a while. i was thinking of calling you and having you read the lines yourself. >> would you take it less seriously if it was a helium voice? >> i think it would have >>it doesn't have to sound like the guy from "i know what you did last summer," does it? i'm unsettled. >> look, we agreed to protect those people. >> it's a serious matter
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>> it's a serious matter i think helium would be funny. try that. coming up, apple rolling out its buy now pay later service. we have the details will coming up. and starbucks howard schultz testifying before the senate we'll talk with senator bill cassidy with the latest out of washington and a reminder get the best of squawk bainuks our daily podcast. we find something every day. find your favorite podcast and listen any time. we'll be right back. e to find a space. why are 93% of sleep number sleepers very satisfied with their bed? maybe it's because you can gently raise your partner's head to help relieve snoring. so you can both stay comfortable all night. save $1,200 on the sleep number 360 i10 smart bed. ends monday.
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welcome back u.s. equity futures right now solidly higher i guess each day we're a little further away from the last couple of weeks and what happened in the banks -- banking sector, a couple of them anyway, out in california -- we were in california a source tells cnbc this is new. jpmorgan ceo jamie dimon will be deposed over his bank's links to disgraced financier jeffrey epstein. dimon agreed to be deposed in the future the suits accuse jpmorgan of ignoring red flags about epstein
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and profiting from dealing with him, but earlier this month jpmorgan filed a lawsuit against former investment banker jeff staley alleging he's to blame for any legal fallout for the bank's dealings with epstein i don't know what the questions would be for jamie i could imagine -- i love jamie and he gets a little prickly at times. during the depg i deposition, ih can keep his cool. you have jeff staley who's like snow white it doesn't have anything to do with jamie dimon, does it? >> i think there are questions whether he should have been overseeing it or not but, yes that you know what? when you're the ceo -- >> the buck stops here. >> get it over with and move on. >> but i think jamie morgan ha
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been pretty up front and cooperating with this. they're also suing jeff staley as part of this, too, and the layers have been vocifvociferou when we come back, the ceo out with a new letter outlining the company's vision of work he'll join us right after this bank. a reminder for you you can watch "squawk box" live right now on peacock that's every day on morning news live in includes news from the "today" show, morning joe, and "squawk box." check it out we're coming right back.
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letter to shareholders last night. in it he outlines the future of the workplace and compares this moment in office real estate to the e-commerce shift in retail joining us right now is the wework ceo wework went public by a stack merger back in 2021. it's dropped pretty significantly since that time, its valuation, and currently has a $500 million market cap. sandy, we want to thank you for being with us today because commercial real estate and office workplaces are really things that are in flux at this moment we're trying to get a feel for all of it. what do you see happening right now? >> good morning, becky, thank you for having me on today we are sitting in a very interesting moment, i call it the wework moment. clients, occupiers are looking for flexible office space. i remember three years ago when i first came on to be ceo and came on this show, we talked about flexibility in a pre-pandemic world as we all know in the
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post-pandemic world flexibility is key occupiers are looking for turn-key solutions, immediate solutions, no long-term leases so it's sort of the wework moment so we are seeing tremendous occupancy. our revenues are up and we don't own the real estate. and so we're not bootstrapped by mortgages, we're not bootstrapped by giving large tenant allowances and concessions to tenants, we're a turn-key solution. unfortunately, we are put under the same umbrella as owners of real estate but we're actually a tenant and get the benefits of a tenant and are able to provide that value proposition so we're seeing today's occupiers are looking for turn-key solution, flexibility on cost, flexibility on time, flexibility on space, and it is almost as if this moment in the commercial office market was made for wework.
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>> i've been trying to think about all the conflicting kind of pressures that you're facing. benefits on some sides and some pressures on the other it makes sense that as a tenant you would have pushback trying to negotiate better deals with the companies that own the buildings you're in but it seems like you would probably have some pressures short-term leasers put different pressures on you with different situations and i would guess with tless tech companies coming back, it just seems like there's a lot at play. what does that mean? your occupancy is up is that up from the end of the year the last time we heard the numbers? >> our occupancy continues to go up year over year our occupancy was up 17% to 75% occupancy. >> since the end of the year, you aren't seeing any weakness in occupancy since then?
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>> actually we've seen an uptick in demand through the first quarter. the reason for the uptick in demand has been more and more u.s. companies are obviously coming back to work. to address your one issue you just brought up about companies announcing layoffs, you know, when you look at the pre-pandemic employment of these companies and look at the post-pandemic employment of the companies, even after the layoffs, they are more employed at each one of these companies as they're all getting people to come back to work, they actually don't have enough desks to accommodate them so our demands have accelerated in the months of february and march as people look to come back to work in april and may. so we see that demand actually going up, not down small, medium businesses, the other one you just talked about which actually carried wework through 2022 and 2023, we continue to see the small
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business were the first in the pandemic to leave and to go home and work from home they have been the ones to come back much faster and take space. so our leasing activity is almost 60, 65%, small, medium businesses 30, 35% enterprise. it used to be 50-50. in the march for the first time we're starting to see that shift back to 50-50 -- >> sandy, we're almost out of time and i want to get to the question, though your stock is trading at 71 cents. when you went public it was at $a $8 what's going on there? is it the debt that you carry? i know you've been restructuring some of that why do you think the stock is trading at such a steep discount. >> my opinion is essentially we're put under the umbrella of commercial office. the commercial office sector has been hit quite hard but we are
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unleak commercial office, like i said, we don't own the building and we don't have to give concessions. that's misunderstood that we're a turn-key solution. we are for people here and now as a matter of fact, the shift is coming more to flex and not flex it's like in the e-commerce, when all retail was down, e-commerce was going up, bricks and mortar was going down. you couldn't make a blanket statement that it was going down we find that we're stuck in that same analysis. >> so profitability not a concern for you? >> no. we are ebitda profitable for the first time last year in december it was ebitda positive in 2023. >> ebitda profitability? >> yes, we were profitable and we restructured our debt so the debt overhang which was a big
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loser around our neck had been extended until 2027. we have $1.2 billion of debt and given ourselves some liquidity so all the concerns that we had where the stock was getting knocked because of the debt, that has been stalled. so we've pushed the debt out to 2027, we've added a billion dollars liquidity and we have $1.2 billion of debt on the balance sheet. so we're in a better position than we were six months ago and a year ago and it is now coming our way. >> thank you for your time "squawk box" will be right back. . strategy to execution. oh, looks my laces have come undone. a business card? yes, for ey. tech expertise? $2.5 billion invested. impressive. okay, you've convinced me, i'm back. just gonna... get this...
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good morning futures are rising as investors look to recover from yesterday's session where we were down just slightly we're going to find out what's moving this morning. plus, the ceo of hp will join us to talk about the state of technology, the pc market and the rise of ai. and faa acting administrator, billy nolan, on the push to ease congestion at u.s. airports. the second hour of "squawk box" continues right now.
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good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square, are people watching on peacock right now? >> absolutely. >> i'm joe kernen. well, if you're hearing me, you are watching never mind, but we're on peacock. along with becky quick appea andrew is off today. u.s. equity futures up nasdaq is strong, tech trade has been good in recent weeks. maybe it's a recession trade and then we'll take a look at treasuries suddenly i think alan greenspan, god bless him, he may be watching, the 10-year 3.55 he always loved that i think the 2-year would be on the radar too. i think we need both of them on any given day.
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we also have some breaking news from macy's the ceo is going to be retiring in february of 2024. bloomingdale's ceo tony spring is going to be taking over for the retail veteran he's going to be serving as president and ceo-elect. in that role he'll be responsible for leading macys, inc., also overseeing bloomingdale's and blue america. their chief financial officer, adrian mitchell, has had his responsibilities expanded too. he'll take over the role of chief operating officer. by the way, gannett is doing this, this is being called a thoughtful transition. he'll be around through february of 2024 working with both of these gentlemen to ease the transition check jeff tonight on "mad money" speaking with jim cramer. right now we'll get to dom
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chu with a look at the morning's premarket movers. >> good morning, thank you speaking of ceo changes, ubs is getting a bid, u.s. listed shares of the swiss banking giant up 2%, just about 60,000 shares of volume so it's getting a new boss who's the same as the old boss it's former ubs boss, ceo sergio armati he's returning to the bank as it looks for its acquisition of credit suisse. the current ceo is stepping down but will remain at the bank during a transition period of sorts. he ran during 2011 and 2020 and he's the chairman of swiss reinsurance so ubs shares up about 2% back here in the u.s., shares of lulu lemon are surgin. they report better than expected quarterly results during its all-important holiday shopping
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quarter, perhaps showing its more affluent customers continue to spend on things like high-end yoga wear, accessories sales grew by 27% at established store locations, same-store sales. lululemon gave a better than expected forecast for full-year results. we'll ending with a check on shares of meta platforms, also qualcomm and american express. you can see they're all up roughly 1 to 1.5%. they're among a slate of a dozen names that analysts over at bernstein are calling their top picks for the next six months from a fundamental and qualitative perspective. they like meta's position to benefit from a bottoming and ad revenue growth also qualcomm's focus on smartphones and also american express' stronger loan growth among credit card issuers but still maintaining credit card quality. so an interesting mix.
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but those three names moving in the premarket. you can learn about the rest of them on cnbc pro right now subscribers can get the full story. our next guest says the market has not seen the lows in equities for this cycle. sell-off coming later this year. with us now is luke ellis. we get to take our pick, it could be a credit event which brings us down, could be earnings, could be margins, could be a lot of things but you think that the october lows eventually are broken >> yeah, i think try to imagine that there is some perfect landing which doesn't seem possible to us. >> not after the last two weeks. >> no. look, we weren't thinking credit was going to be the cause but clearly there's a lot going on in the banking sector and the credit sector. more likely earnings is the cause, but now we've got what's going on in banking. either rates have got to go back up because inflation is not cured. or if rates are right, that
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means we've got an earnings recession coming, which means we go lower >> i sound like a frog something is going around, lasting. we can put a man on the moon but we don't have a cough switch so everything goes out. the banking situation in your view isn't over. you think that small banks, community banks, it's going to be even harder for them to compete at this point. is it all about being a zero for so long that there's all this duration risk just everywhere? is that what it is or what is it? >> well, you've got two different things there we've got duration risk and we've got carry everywhere carry is sort of broken now. everyone who has built carry into their business, whether it's a bank or other things, their earnings picture looks horrible the thing in the regional banks and small banks everywhere, we've just gone through a process of saying that you can
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agree or disagree, i know you have strong views about it but in the end when pushed with the idea that depositors would lose money, central banks stepped in. the regional banks are going to get a form of regulation which makes it hard for them but the big banks having advantage of scale and diversification. so sort of how does a small bank compete? >> you're right. we can't afford $17 trillion socialized that just means more money printing and more inflation and lower growth and it's just bad for everybody to even talk about. implicitly or explicitly. >> but the reason there is an implicit guarantee of all these things is because of what we heard yesterday in the testimony, the idea that $46 billion was drawn out of svb in one day and the next day was
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$100 billion that was wanted in withdrawals. you can't have a run like that you have to say this is not going to happen, otherwise everybody everywhere would have pulled their money out of banks. >> that's the reason they put a fire break in because they thought it would spread to other things you could argue svb had a pretty unique business model but there are other people like it but i guess i don't spend much time worrying about what they should do, i worry about what they're going to do. governments have clearly said in the u.s., but it's true in europe as well, they said if there's what looks like it might be a bank run, they'll put the brake on very early, which means the next thing that's going to happen is more regulation on the banks here and on smaller banks in europe that's going to tighten their standards to being the same as they are for jpmorgan and bank of america and then why would you have your deposit at a regional bank rather than with a big bank? >> that's going to be tough. >> but it means don't buy banking stocks even if there's not a banking crisis. >> i think banking stocks are
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never more than a trade. >> what's the real capital ratio on european banks? stronger than here or it's apples and oranges i've heard both said on paper the capital ratios are much higher in europe. others say the banks in europe are in a lot more trouble than our banks here. >> no, i think the big banks in europe are fine and equal to the big banks here it was interesting that the market took a run at deutsche because somebody started a process because deutsche had a load of bad stories, but it's out of date. its balance sheet is in really good shape relative to other banks. but the market is going to keep looking for banks -- >> what are you guys doing what about at-1s, is that a problem? >> you have to pick your names you have to read the documents
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there has been a lot of people complaining what happened to the credit suisse 81s. the rules in switzerland are different there than somewhere else you can say that's not right, but that's the rules you go into a game of poker, you have to play by the rules of that game of poker the swiss did what they were able to do it's different in other markets. there was a nice opportunity to pick up some at-1s when all the other european ones did that. >> you did that? >> it was a nice trade it's such a short-term trade, it's not a long trade. >> you had a big influence last year at man group, right why? management >> it's never about the ceo, whatever we like to say. it's because we were able to deliver returns to people by delivering absolute returns. so we delivered returns last year and liquidity every client came into last year with too many equities
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with the benefit of hindsight it was probably visible before and not enough liquidity in their portfolios what we do is deliver both of those. people like that in the end. >> are you in town i'm trying to think of where else what can you tell us you said my favorite restaurant and i said taco bell that wasn't good enough for you. >> i'm a sushi person. >> you are you can have mercury poisoning if you eat too much sushi. remember who happened to the guy on "entourage. >> i almost forgot. >> luke, thank you >> pleasure, guys. >> i was about to say luke donald >> if only i hit a golf ball h
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hike he does. >> all right, thank you. >> it's a pleasure. when we come back, faa acting administrator billy nolan will give us an update on keeping the skies and the tarmac safe, and what he's expecting to see this upcoming summer travel seas. > d enon>>anth the ceo of hp wi join us to talk tech, the pc market and the rise of ai. "squawk box" will be right back.
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coming up, the summer travel season is expected to be a busy one and the airports in the new york area are preparing. we'll hear from acting faa administrator billy nolan next about the shortage of air traffic control workers and what the agency is doing to prepare the nation's aviation system for the summer rush. before we head to break, let's get a check on the markets we're higher we were up a little more than that earlier but still solidly higher we'll be right back. time now for today's aflac trivia qstn.ueio what year did walmart offer common stock to the public the answer when cnbc's "squawk box" continues a hospital bill for $1200 bucks? gaaaaaap! did you say gap? he's talking about the expenses health insurance doesn't cover. but with aflac, you can get money to help close that gap. aflac, huh? aflac! gaaaaaap!
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and it's ripe for travel headaches this summer as a record number of people are expected to fly through laguardia, jfk and newark airport. that's a live look right now at flight aware you can see the number of planes that are in the tri-state area at this moment this is a precursor of things to come phil lebeau joins us right now with a special guest good morning. >> good morning. let's bring in billy nolan, the acting administrator for the federal aviation administration. he joins us from washington. billy, thank you for joining us today. you were joining us before you have a meeting later today airlines, airports, unions, general aviation, you're all talking about ways to ease congestion in new york city. i have to be honest with you, i flew in yesterday. i told people i was going to be talking with you everybody said i'm not looking forward to the summer in new york, i think it's going to be a nightmare. what do you say to those people? >> let me just say our goal for the summer is to make sure it's safe and as efficient as we can make it while minimizing the disruption for the flying
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public, and that's why we called a summit this afternoon and that's what we're looking forward to discussing. >> one of the things that you guys announced just within the last couple of weeks has been bringing down the slot restrictions for the three largest airlines, bring down their schedules about 10%. in doing so you said, look, we just don't have enough air traffic controllers to handle all of the flights this is a prudent thing to do. are you having trouble hiring air traffic controllers, finding the talent that you need in order to ramp up and add more air traffic controllers? >> no, in fact we are on track to hire 1500 controllers this year and 1800 next year. we went out with a posting last year and had overwhelming response to that, so we're hiring as aggressively as we can and we want to get those through the pipeline and on the scopes as quickly as we can, phil. >> you had a meeting a couple of weeks ago in washington. it was your safety summit. and you said, look, we have to do better.
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we can't have the near-misses, the runway incursions. coming out of that, essentially what you guys said is we need to be more diligent there was nothing that came out of that meeting specifically in terms of either new technology that will be implemented and i understand it's only been a couple of weeks. is that enough to say we need to be more diligent >> well, you know what, we have a lot of technology in place we've got great procedures in place. our goal and my message to the global industry was vigilance can never take a day off we have to do what we call basic blocking and tackling. that we're getting the fundamentals right and we're looking at technology, be it around runway safety first and foremost it's about let's just get back to the basics, dust off the rust if there's any and make sure we deliver a safe operation for the flying public and also make it efficient. >> billy, should we have a cap on flights in some of the busiest airspaces, whether it's new york city, florida, maybe
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chicago, other areas is it time for us to say we've hit our limit and there's just -- we can't add any more flights? >> well, that's one of the reasons. you think about new york if you recall our conversation from last year, we did something similar in florida we addressed it, we added controller staffing, the airlines did what they could do and we're doing the same thing that's why we're bringing the industry together this afternoon to say what else can we do as you know, the new york airports are already slot constrained. so let's just make sure that we pull every lever to make this summer as least disruptive as we can make it together. >> i understand that but to get back to my question, billy, should there be a cap is there a limit it seems like there has to be a limit at some point. >> our goal is we are working with the industry, we are working with the airlines and recognize the airlines have to deliver for their customers. for us here at the faa we have to deliver in ensuring we have the right amount of staffing for our controllers, that the
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traffic is -- yes, we're back to 2019 levels already, and in some markets even above that. and so we're looking at everything, phil, and that's exactly why i called this meeting this afternoon. >> hey, billy, just on that point, there is no more slots when it comes to airlines moving around there's probably a limit as to how many you can bring in. do you blame this on the hub and spoke model that airlines use? shareholders love it because you can move more people with fewer airlines and then you have bigger planes going out but it seems like it would certainly add to congestion too. >> thanks, becky i think the airlines are working from their endi we do expect them to deliver on the promise they make to the flying public. and my focus is on making sure that the operation in our national airspace is as safe as we can make it we've seen lots of efficiencies. we are working and using tools at our disposal. i believe the industry is using
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tools there. and that's the reason for this summit this afternoon. let's just explore, is there anything else that we're leaving on the table to make sure that the summer is safe, is efficient and the flying public gets to where they need to be. >> billy, i was with a number of executives yesterday for ev startups i know you're a big proponent of urban air taxis is what a lot of people call them you've got a number of companies bringing new aircraft on you've got drones that need to be certified and more than a few executives said yesterday does the faa have the capacity to certify and to say all of these aircraft are ready to fly and are ready to join the system, whether it's '25, '26, '27. do you have the capacity to do that >> we do indeed. there are three things involved here we've got to certify the airplanes themselves, as we've talked about before, phil. we've got to ensure that we can safely integrate them into our national airspaces and third
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we've got to make sure that our traffic management framework can accommodate all of that. we have a very robust plan in place to make sure we can hit those milestones as we said the regulatory framework will be ready by the first entry into service late next year or early in '25. >> billy, one last question. phil washington withdrew his nomination over the weekend. i know it's not up to you to say you should be the next head of the faa, no longer acting administrator. would you like the job >> my goal, first of all, the goal -- it's up to the president to decide who he wants to be the administrator. my focus is on the operation, my focus is on the safety for the flying public, the efficiency of our nation's airspace and everything else that i have on my plate the rest i leave to the president. >> you've got a lot on your plate. billy, thank you for joining us this morning billy nolen, acting administrator from the faa, guys they're going to be meeting. think about three years from now
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air taxis going back and forth to different airports. >> and is the existing infrastructure able to do it forget just the people do we need -- for over a decade, maybe 15 years or longer so many of the ceos say we need a better infrastructure >> the airspace you just need to monitor it very close. there's a lot of room up there, phil. >> there have been some close calls recently. >> there is a lot of room -- >> but both go 500 miles an hour so you can get close pretty quick. >> which is why they're having the meeting today. >> thanks, phil. >> good to be here. still to come -- i'm pretty smart, there's a lot of space up there, you know what i'm saying? the ceo of hp joins us to talk everything from the state of the consumer to hybrid work and more that's next. starbucks founder howard schultz testifying in front of the senate later today on the unionization of the company
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stores we'll talk to senator bill cassidy for the latest on what to expect. stay tuned, you're watching "squawk box" and this is cnbc. at pgim we can help you rise to the challenges of today, when active investing and disciplined risk management are needed most. drawing on deep expertise across the world's public and private markets in pursuit of long-term returns... pgim. our investments shape tomorrow today. why are 93% of sleep number sleepers very satisfied with their bed? maybe it's because you can adjust your comfort and firmness on either side. your sleep number setting. to help relieve pressure points and keep you both comfortable all night. save $1,200 on the sleep number 360 i10 smart bed. ends monday.
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two of hearings on the recent bank failures after a dramatic and new revelations yesterday about the failure of silicon valley bank. senior economics reporter steve liesman jones us with the details and how it could change banking. hey, steve. >> good morning, joe yeah, the bombshell dropped at the senate banking hearing yesterday that $100 billion would have and more importantly could have left svb in a single day threatens potentially far-reaching changes in the banking industry and to regulation here's what fed vice chair told the senate banking committee happened after svb, the day after $42 billion had already left the bank. >> that morning, the bank let us know that they expected the outflow to be vastly larger based on client requests and what was in the queue. a total of $100 billion was scheduled to go out the door that day the bank did not have enough collateral to meet that. >> by comparison, senator warner
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said the biggest bank failure in history, $16 billion left in ten days they always try to hit the weekend to get two days to find a buyer. the money moved too fast and the bank had to close. so what's the potential result it means potentially faster bank runs, banks will need to hold more liquidity regulators will need to be tougher earlier. there may be a need for more deposit insurance to prevent these fast runs and costlier bank resolutions because it costs more to shut a bank and sell it than it does to sell it and close the doors. bill dudley told me when the bank is closed, the franchise is damaged as customers flee and there may be other costs such as ri writing off technology assets. writing off business lines and legal exposure from the failure. that could account for the large $20 billion tab and counting for shuttering svb
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there's a theory that says all of this is unique. the bank run, the supervisory failure, poor asset management and a bungled sale by the fdic so no big changes are needed that may ultimately be what's concluded meaning you don't need to do much but the other idea is that the banking industry, regulation and bank liquidity need to catch up to the age of fast money joe. >> and -- yeah switching accounts on your phone, moving deposits on your phone. it was a perfect storm we talked about it earlier, steve. the financial crisis followed by the pandemic we stay at zero. the pandemic enriches all these startups and tech companies out in silicon valley. they get money for their startups from silicon valley bank they all become cazillionaires they're asleep at the switch with duration risk because they're all in their 20s and they don't know interest rates can go up, they don't have a
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risk manager, so they've all this duration risk and someone figures it out and of course $100 billion is going to leave but the concentration of high net worth deposits there -- you see how all those things sort of move it's still not a one-off. >> well, that's the thing. you sound like you're arguing the one-off. >> no. there's duration risk everywhere so it will rhyme it may not be identical or history repeating but there will be another situation where it rhymes with it. >> to be clear, joe, i think we're going to hear more of the one-off today in the house they're hearing it today and it's run by republicans. you'll have patrick mchenry coming up and their argument is going to be the bespoke nature of this and the other is a unique supervisory failure at the federal reserve and the third thing will be the fdic maybe bungled -- there's an idea that i can't find much support for and make you'll ask the congressman about this, that there was another buyer out there that was perhaps rejected
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by regulators for whatever reason we're trying to find out. >> another bank or hedge funds >> either one, that's what we're trying to figure out but there's certainly a statement that chair mchenry put out that says they want to investigate this idea whether there was another bank but the key thing, guys, is they couldn't hit the weekend you know why all this happens on the weekend, right because you get two free days. you don't have to close the bank technically. the money cannot leave but the speed of this is what maybe is unique and is really what suggests some changes are needed as you were talking about with the gentleman earlier, specifically those midsize regional banks. >> i know i'll get an eye roll from you, steve, but also some of the great "wall street journal" pieces, mary daly, san francisco fed, she talked about how great they've been managing climate risk out there at the san francisco fed. they have just -- almost all their time was spent making sure
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companies managed climate risk instead of the city being underwater, the bank goes underwater because of duration risk. >> joe, i do want -- >> and you've got a bank -- >> i want to say one thing. >> all of the stuff was green startups everything they were doing was dei so you go woke, you go broke. >> let him reply. >> joe, let me make one response i don't know what mary daly was doing, i think she's a hard-working central banker. they asked michael barr, the vice chair bank supervision when he first learned about silicon valley bank. he said as far as he knows not until february and i'm thinking you're the vice chair of bank supervision. the 16th largest bank has been warned several times over the course of a year why don't you know that? >> right >> so i don't know about mary daly i don't know about woke or not
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woke, but why didn't the vice chair of bank supervision know about this bank earlier. >> very good question. >> their carbon footprint was going down and down and down it should have been fine. >> if not for woke, it would be utopia >> woke equals broke. >> all problems would be solved. >> good questions for mchenry. thanks, steve. right now let's get a check on the markets it looks like futures are still up dow up 235 points, s&p futures up 35, the nasdaq up 114. when we come back, the ceo of hp will join us first on cnbc we're going to talk about the rise of ai, the supply chain and the state of technology. "squawk box" will be right back. ...the host doesn't stay with you. it looks exactly like the picture. because without privacy in your vacation home... it's a full log cabin guys. ...it isn't really a vacation... we can snuggle up by the fire. ...is it?
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hybrid work is here to stay, at least according to hp hp sees the new normal at the workplace as a business opportunity. today the company is unveiling a new product line tied hybrid work at the conference in chicago. joining us live is the hp ceo. enrique, thanks for being here this morning let's talk a little bit about
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this because we were just debating whether hybrid work really is here to stay what do you see in terms of demand and what do you see in terms of companies wanting products that will help them with workers working anywhere? >> first of all, thank you for having us. it's a very exciting day for us here in chicago. we think that hybrid work is here to stay because office flexibility to employees and we have learned that they really value that but at the same time we have learned how to operate the companies offering that flexibility. and this differentiates what work can be done at home and some want back at the office hybrid means working from home and working from the office and being selective on what activities are done in every place. >> ei know this has been a big business for you, that it's doubled over the last year or so you haven't broken out those numbers yet. what size business are we talking about? >> we have not disclosed the numbers, but let me tell you
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that we look at how work is going to continue to evolve in the future the opportunity that we see not only in portfolio offering better functionality in our pcs and printers but expanding into new areas like headsets or video conferencing systems is a great opportunity for us to grow you think about video conference rooms. there are around 90 million rooms in the world only 10% of them have video conferencing system. this percentage is going to increase dramatically. that's a very significant opportunity for us that we can use also to deliver new innovation and new customer experiences for our customers. >> let's talk about the health of the consumer and the health of companies right now consumers really kind of flocked to hp and were buying a lot. there were probably some sales that were pulled forward during the pandemic as people needed new pcs. last quarter you reported sales were down 18.8%, better than the street was expecting
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but consumer pc sales were down by 36% how are consumers feeling right now? we hear this talk about recession and hear about consumers pulling back in some areas. maybe not on travel and experiences, but certainly when it comes to products what are you seeing? >> we have seen a shift on where consumers are spending their money on products into services. as we shared in our last call, we think that this is going to continue to impact our business for the coming quarter we also are reducing the inventory. it is impacting the next quarter and this is why we expect also that during the second half, we will see some recovery of the business. >> what about when it comes to commercial sales we've also seen a lot of layoffs happening in the technology industry there's a credit crunch with the banking crisis out there does iany of that show up in you
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sales or what you see? >> what we have seen starting in december and this is not a new trend is that companies have become much more -- in terms of how they manage their budgets. they are being more careful. they open projects but the translation into these projects into orders has slowed down. at the same time, it continues to be very large products are starting to be old and we know there is a big opportunity for refresh. we don't know when it will happen but we know it's there and will happen at some point in the coming quarter. >> you still think the second half of this year is going to be stronger than the first half that's what you said at your last earnings. >> we continue to believe that because we believe that the current inventory will be reaching normal levels in the second half and also because we expect to see normal seasonality in terms of demand for the year. >> let's talk about ai because that is the buzz word on wall street these days.
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you've got a new partnership with nvidia where you're going to be putting together some super high-end computers to try to take advantage of some of these things what can you tell us about that? >> ai is a very exciting opportunity for us, but this is not new. this is something that we have been working on for some time already. we have products that have been designed for data scientists to really be able to develop algorithms and take advantage of ai we are embedding ai in all of our products for pcs to include experience to do preventive maintenance, to remove, for example, a dog barking during a video conference, really helping us to improve the experience also we have ai to improve our productivity as a company so across the board we see many opportunities and we're really excited about the work that we're doing with multiple partners, nvidia being one of the leading ones. >> enrique, i know this partner conference is the first one
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you've hosted since the pandemic back in 2019 you do have -- anything we can expect to hear >> for us this is an important day. as uyou said, we haven't been able to do a meeting like this for four years it is an important meeting for us we have partners coming from all over the world with a very clear objective for really winning together that's the message we're going to be driving. and as i said, we have invited some of our key partners lisa will be with me on stage talking about some of the new innovation, talking about ai, talking about the co-engineering that our companies are doing to build better solutions really an exciting day and really exciting to re-engage with all of our partners from all over the world. >> enrique, thanks for being with us. >> thank you have a good day. >> you too. coming up, starbucks founder howard schultz testifying today on capitol hill about the coffee chain's alleged labor law violations
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we'll hear from senator bill cassidy ahead of that hearing next and a programming note, you can hear about the latest in health care investment opportunities plus the ceos of novo nor 'tis, bc hltmithkline and many more at cn'seahy returns today there's still time to register scan the qr code or visit cnbcevents.com stay tuned and i remember kind of thinking like, "oh my gosh, i think we could be sisters." because i think we looked... yes. right. yeah. and i don't think at that time- i think you're the one to tell me that we had the same birthday. yes. it's really unbelievable when you think about it, because it's been, like, really over 20 years that you were my mother and father's banker, you became my banker and now fran is in her third year of college and you're her banker. it's so unbelievable because i'm just 20 years old. [laughing]
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starbucks founder howard schultz will be in the hot seat today answering questions from the senate health answering questions from the senate committee about how the union tried to halt campaigns. and senator cassidy, it's good to have you on you're from the right side of the aisle obviously. how do you view of current state of the nlrb? would you say that's a totally -- it's supposed to be totally down the middle, not take the sides of either labor or management in all these disputes is that what we have in the nlrb, with my leading question >> it's not what we have thank you for having me. we have an nlrb in which there's credible whistle blowers who is
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saying their nhlb is on the side of the employees, sharing information with congress, et cetera, with those attempting to unionize and not sharing the same with the employer that's wrong, against the rules. this hearing with a very provocative title is based upon nlrb unfair labor practices investigations we should have done our own investigation to find out if this is true the process is not what it should be. >> and it's an odd, strange thing to see howard schultz being paraded in front of congress as sort of the enemy to workers when he spent years building one of the greatest -- you know, young guy. can you believe he built that company from scratch, bill and how many people does he employ woo good benefits, good wages? i don't know
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suddenly he becomes someone who is basically a union buster because -- has he done things he should be held to account for in terms of anti-labor practices in your view, senator >> i'm not quite sure. i'm not here to defend starbucks. if they've done something wrong, they should be held accountable. their benefit package looks pretty reasonable, they pay much more than the fast food average of $17 or $17.50 an hour and for those working 20 hours or more, they gave them health care benefits so that's pretty good. on the other hand, this will be the second time in eight days in which chairman sanders has called a ceo for what i consider a show trial, to have them commonwealth before the committee and before the cameras
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to defend their business i suspect mr. schultz will handle himself very well i think the reasons he's brought here are somewhat flimsy >> only in america i just -- i don't know no one sees the irony. he's a socialist not that there's anything wrong with that. howard schultz, he did do this before he came back as ceo, he personally conducted captive audience meetings while workers had to attend to hear him talk about how great things were without a union. then he returned to starbucks as ceo. so is that specifically bad form is that not allowed to come in employees had to listen to why they shouldn't join a union and then come comes back as ceo. i guess that might raise a few eyebrows so does some of the stuff the
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nlrb does, i should say. >> since 1984 that has been allowed where a business owner or management with bring in employees and can speak to them about why you should not join the union. it's equal time. it's been allowed, it's totally legal. i will say that nlrb wishes to end that practice, but it's been in effect since 1984 he's done nothing illegal there. >> some of the other allegations don't seem like they're going to stand. about 50% of unfair labor allegations typically are dismissed and yes, sir these allegations are what we're basing this committee hearing on we should have done our own investigation but i think the title tells it all in the title, the title accuses starbucks of labor busting and that's before we've had the hearing. >> it's been well documented and
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ascribe different reasons for the decline. union in the united states but it's single digits and jobs from much higher levels in the past a lot of people say there a lot of laws that have been written that prevent unfair labor practices. others would say that the marketplace itself rewards companies that treat and pay employees more, have better benefits, that they retain people a lot more easily what industries do you think, senator, really have employed the desperately needed union representation bernie would say every single industry, everyone in the world should probably be union used in bernie's view but it it should all be probably state run in the first place. where do you think we really still need unions at this point? >> i would say it's up to the employees, that everyone has a right to unionize and they should but for me or anyone else to prescribe you mus be in a union no matter what is kind of wrong.
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>> why the decline why only 7% or whatever it is now, it may have gone up i think it's had a little bit of a bounce recently. why did it deklein why did the employee workforce not demand unionization? >> if you look at louisiana, we passed a right to work and since then we attracted a lot more industry to move to our state. if you're a well-trained welder in my state, do you very well financially. plumbers do very well. not because there they're in a union but because there's market demand it was part of the strategy to attract more people to work in the state of louisiana there are other right to work states that made the same call the trend is that industry migrates to right to work state.
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an employee is more likely to have a job competing in there their work than in a state where it is not right to work. and the uber, the lyft, the door dash, that's another case where people don't want to be unionized. they like the flexibility of being able to work when they want, not work when they want, getting the best fare they cannot. senator, thaeks. it should be interesting howard schulz, bernie sanders, i think c-span might have some good senators today. >> i might go down to d.c., see if i can get a ticket.
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>> when we come back, regulators testifying today on the and representative patrick mckinley for the latest out of washington >> tomorrow is baseball's opening day. red sox manager tom werner will join us for a look at the sports business, streaming and much more "squawk box" will be right back. science proves quality sleep is vital to your mental, emotional, and physical health. and we know 80% of couples sleep too hot or too cold. introducing the new sleep number climate360 smart bed.
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chairman of silicon valley bank committee as "squawk box" continues right now. good morning welcome back to "squawk box" here on cnbc we're live from the nasdaq market site in times square. i'm becky quick, along with joe kernan andrew's off today there we go. joe and i are here >> love being here >> the dow futures up by 221 points, s&p futures up by 33 pt nasdaq up by about 123. treasury yields have been a little lower but you're still talking above level that we've seen recently. the 2-year yield just picking up to 4.062%.
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ubs is rehiring its former chief. amati said the stock is up by more than 2.6% we also have headlines on credit suisse this morning. they say the investigation finds the bank violated an agreement for enabling tax evasion by wealthy americans. in a statement to cnbc, a credit suisse spokeswoman says that the company does not tolerate tax evasion. and macy's ceo is going to be retiring early next year after a four-decade career at the company. he'll be succeeded by tony spring, who is the ceo of bloomingdale's let's get back to the broader markets and our own mike
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s santoli. what are you up to this morning in. >> the s&p at the 4000 mark, has been sloshing around there for a little while now there has not been any fresh banking stress, the consumer confidence numbers and just general economic data suggests that the overall economy has not really given way as fast as the recession callers might be implying and here you go it does look luke very much a range-style market one of the things to watch was 4040 was the high earlier in the week this monthly high for march is not much hyper than that, it's like 4080. you're talking about potentially breaking this little down trend that we've got going in march. we're talking about give or take we did have the big running growth stocks going into the weekend. they pulled back for a couple of weeks. today they're firmer the market did not have a lot of down side, even though the big stocks driving it did pull back a little bit in the last couple
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of days. semiconductors always worth watching micron numbers last night not great but maybe the stock will look through this. the semiconductor versus the s&p. they are now in a pretty good relative position and some people take a little bit of comfort in that. the credit side of things has not been a complete flight away from risk but it is worth keeping an eye on high yield debt, how it's trading this is a comparable maturity etf relative to the high yield etf. this is a two-year chart that meant that credit spreads were very stable and then it weakened as the fed tightening took hold and the economy started to slow. so this gap is among the bigger ones of this cycle that does show you the risk
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spreads are widening up. we're not back to even where we were let's say in the late 20s, 18s. this is the kind of thing, joe, we're keeping an eye on for signs that macro stress is building >> for years it's been interesting to watch micron, isn't it, mike if you're the ceo, you got to strap in strap injyourself in. it's unbelievable the ups and downs. i guess that's why it called a cyclical business. it would be nice to get the chips on board if you want a lasting chips rally. it's necessary but not sufficient for a sustained rally in tech. >> you want it to be broader than just nvidia it largely has been. amd has been up there in the last months. as of last august, this fiscal
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year was supposed to be $5 earnings per share and new you're looking a at a 2.50 loss. that's your swing in one cycle >> and the ceo could be houdini and maybe then it would be $5 or loss of $2 >> the world benefits from the fact that they produce so much in the way wf ever cheaper memory, that's for sure. >> thanks, mike. >> our next guest recently said inflation could be higher by the end of the year than the markets expect, meaning the fed would raise rates. joining us is joe amato. joe, welcome this was a broad call by the firm, just thinking that inflation was going to be pretty sticky and as a result the fed would have to hike rates and all of the things we've seen happen in the financial industry, the banking crisis, has a lot of
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players betting the opposite there's tons of turmoil, not just equities but also if you look at the two-year note. what do you think this morning >> thanks for having me. it certainly points to the challenge the fed has. first there's the unflags issue that you renkesed. our view has been a number of the stickier comb opponents of inflation will be pretty resilient and end theier more in the 3.5 range than where market expectations have been, which has been a more modest than that the fed is trying to compartmentalize these tw challenges and continuing to raise rate, tighten financial conditions and at the same time use other tools in the tool box to deal with the situation that we all had exploded on the scenes a couple of wooks weeks
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back we think they may go one more time if it wasn't for the silicon valley issues we think the fed would have been more aggressive but clearly they need to go back the market is doing it for them, right? banks are going to pull back on lending given the situation that we're dealing with and that's going to serve to do some of the fed's job for them >> joe, the weird thing is watching equities, you're still talking about the market of today, talking about the s&p around the 4,000 level where it's been bouncing around. everything in the banking crisis, the idea that companies are not going to be able to meet earnings expectations, has that all already been priced in >> it's pretty amazing we're at about the end of the quarter, stocks are up 3%, bonds are essentially up 3ish percent.
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it doesn't demonstrate how volatile the quarter's been. the economy is proving to be pretty resilient, roughly in the 2 1/2 range. expectations right now are for first quarter to be down sort of mid single digit percentages again, not that bad and i think that's partly why the market's up but i think when you think about the s&p it really is two components there is a half a dozen or so mega cap technology companies. they're up strong this year. they're up 20% in aggregate or so the rest of the market is essentially flat for this year the mega caps trade at 27, 28 times earnings and the rest of the market is pat 15, 16 times earnings so it really shows the dichotomy when you're using the s&p as a
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broader market gauge >> i guess my question is would you be telling people to buy if you think the rate hike cycle is done or like mielk wilson has been out there saying he thinks it's going to be the end of a bear market but a pretty painful one. >> we've been defessive. we've stayed consistent with that since the early part of '22. i think the last shoe to drop, if you will, is earnings and i think that's where the equity market will be driven by we think you now have these potential credit challenges and risk though you're toward the end of the rate height cycle so we've been advising clients to get more healthy we haven't seen earnings down which we expect since the laster
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part of '23. >> good to see you thank you. a developing story for you, "the wall street journal" is reporting that the fdic has hired a group to sell about $60 billion in signature loans that weren't sold last week much of that loan book is comprised of commercial real estate including rental apartments and office buildings. a sale on those loans at distresses could have ripple effects. you got to won what they'll do with the $90 billion in loans after the sale of sbc. >> startups, which a lot of probably never had a chance. at 0% interest rate they looked a lot better now high end, the -- >> that story had been for a long time that the an buildings
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were holding up and you were getting rents there. the journal this morning reporting that's not necessarily the case recently kpocoming up, it's the house's turn. we'll speak with congressman patrick mchenry. but next, the second part in a series on america's pharmaceutical failing we'll look at shortages of generic drugs based on "squawk box" on cnbc unlimited premium data. unlimited hotspot data. (woman 2) you know it's from the most reliable 5g network in america? (vo) when it comes to your business, not all bars are created equal. so switch to verizon business unlimited today. woman: at first, it was just a team.
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and this is ready to go online! any questions? yeah, i got one: how about the best network imaginable? let's invent that! that's what we do here. quick survey. who wants their internet to work pretty much everywhere? and it needs to run smooth, like, super, super, super, super smooth. hey, should you be drinking that? it's decaf. 'cause we're busy women... we don't have time for lag or buffering, right? who doesn't want internet that helps ai do your homework even faster? come again? -sorry, what was that? uhhhhh... the next generation 10g network. only from xfinity. the future starts now. give your small business one tech solution that checks all the boxes. it's all here with the comcast business complete connectivity solution. peace of mind with cyberthreat security. the power of the largest, fastest reliable network. plus, save up to 75% a year with comcast business mobile.
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the complete connectivity solution. from the company powered by the next generation 10g network. get started for just $49 a month. and ask about an $800 prepaid card. comcast business. powering possibilities™. welcome back to "squawk box," everybody. the futures have been up all through the morning, up by about 250 points, up by 215. s&p futures up by 32 and the nasdaq indicated up by 120 >> yesterday we brought you the story about why some critical antibiotics are in short supply in the united states today in the second part of our series, we look at the market phase in generics and in that industry it can have devastating
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consequences >> reporter: as medical director of the poison control center of philadelphia, this doctor relies on crucial medicine to treat things like lead poisoning, which can be devastating for children >> i characterize lead as a burglar. >> reporter: the treatment for lead has faced a shortage. the drug for brain swelling is unavailable when its manufacturer went bankrupt generic drugs are critical to the u.s. health care system, making up 90% of all medicines sold, but they're also the most likely to be in shortage because of what experts describe as a market failure, when important drugs become too cheap >> we rarely see a shortage of a
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branded product. in part because of financial incentives are there we've never had a shortage of some drugs >> of drugs that went into shortage, 60% were general eric with a median price of less than $9 and had been on the market for an average of 35 years wall street has soured on the market as revenues shrank and debt piled up. as the u.s. struggled with record high drug shortage, experts say addressing weaknesses in the drug industry, as well as building up manufacturing is critical. >> and bringing in more and making sure the industry operates a the a more prftable level so spry can be steadiy
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going to happen but takes too long >> when those rare events look encephalopathy occurs, it's really important to have these drugs on hand. and that's the shortage we're facing right now. >> as much attention as the high prices of drugs get in the u.s., generic drugs cost an average of 16% less here than in other countries and that contributes to these ongoing problems. joe? >> the age old question, meg, is well done, pharmaceuticals save so much money for the health care system. but there are times sometimes companies will do what they can do and that including tricks of patents and spend a lot of money
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on tiezing to get doctors to that's why we need regulations, i guess, meg, but when we overdo it, we hurt innovation it's a fine line we have to walk usually it's not happening necessarily because of market forces sometimes we do these things on the edges in terms of regulations and there are unintended consequences many times. >> yeah, definitely. that's the question here we've reached the situation where generic drug prices have gotten so low, these products are so old, there's just no incentive to invest in plans to make them. we heard about shortages for the new diabetes and weight loss drugs but they are investing lots of money in making sure they can meet the demand there is just not the incentives
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on these old general eric. >> and you can see if there were drug price caps and it wasn't economically beneficial for a to invest the years and money in developing them, then they're not going to be developed. look at orphan druggingso we got to do it right but it can be the best thing versus weeks in a hospital or, you know, chronic disease so you can stay at home instead of being under constant care keep up the good work, meg it's what's really important not just for me. getting more important for me maybe but for everybody. you can hear more from meg's reporting on america's prescription drug shortages. check out a special edition of our podcast. scan on-screen code and follow
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box from the squawk pod. >> the squawk pod. >> orphan drugs. >> it's a serious need that's really hard to find. >> got to do it. >> anyway, when we come up next, house financial services committee chair patrick mchenry will join us on an upcoming hearing on the implosion of the silicon valley bank. and when we come being up we'll talk sports and much more with boston red sox chairman tom werner
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z testifying in front of a panel yesterday, the run on banks went much deeper than we knew $49 billion was withdrawn on march 9th. a total of $100 billion was scheduled to go out that day the bank did not have enough collateral to meet that and therefore they were not able to actually meet their obligations
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to pay their depositors over the course of that day and they were should down. >> barr, along with others, is set to face members of the house financial services committee today. joining us right now is that committee's chairman, patrick mchenry. chairman mchenry, what do you plan to ask today? >> i think the basics. they didn't really cover this yesterday but the basic decision making of that week. what did they know on monday, tuesday, going into wednesday where the bank run began, thursday where it got heightened and obviously all their decision making on friday and so the fed has some questions to answer about that week, especially the vice chair for supervision, who has all the regulatory powers of the fed reporting to him and the chair of the fdic from that moment on friday where they took the institution going into sunday. on friday they said it was an idiosyncratic institution and by sunday that a systemic risk
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designation that said it going to backstop all the deposits i want to understand the decision making of those key hours and key moments. i think the american people deserve that transparency. >> the idea there was $100 billion scheduled to go out after losing $142 billion? i don't think i've receiver numbers like that. >> jaw dropping numbers. fr frankly we have a massive amount of regulation looking very specifically at details in banks. a wall street report as of november detailed this at the board level in february. they're aware of the hole in the balance sheet because of the inflationary environment >> february was shocking
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the month before was too late but the fed did have some people out at the san francisco regional fed bank that was looking at things as early a as year earlier why didn't that get called up the flagpole sooner? >> so they had the right documentation and the institution was attempting to comply but did the vice chair for supervision make provisions for the institution in the moment of crisis in the key hours of thursday when the bank run began at silicon valley bank, what was the decision making of the fed so we want to understand that. the magnitude of the withdrawals was something that we've not seen the likes of in any wang run in human history so it's very hard to say it's a regulatory change or law that would anticipate something that bank supervisors had assumed would in the be the case in a moment of stress >> i guess my question to this
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is what do you think obviously we don't know everything yet but heading into this, is it your suspicion this was a one off or two off or do you think there are a lot of other institutions, other banks out there, that could be at risk in similar mans are? >> that's a very good question that we need the panel to answer it's also important that we actually lay down facts of the matter that would be a and report of how valiantly they fought the fight, what we don't know is the data they were using and the methodology that they undertook these extraordinary measures >> i know you've raised some questions about whether there was a viable private sector if option for svb and for tur
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you heard testimony from the chairman that the fdic had two bank bids, two bids from banks was there a length to the fdic they wouldn't take a willing and it seems so in that weekend it seems to me they failed to do their duty at the fdic and hitched a bank up with the going concern to make them hole and calm the markets. >> when it comes to the fed's oversight, so many questions have been saved. first of all, the idea that svb didn't need the stress test and even if they were $ into the stress test and run through the same tests, they were looking a the a scenario where interest rates were dropping, not rising rapidly like was happening at
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this moment. >> right and you're only as good as the math, right, in the assumption of those stress tests. i think the arjest the vice chair for supervision saidies going to have this liquidity. and liquidity was the ish of their performance on wednesday, thurns and friday of the week they failed. and you have the institution of signature bank and first republic regulated by the fdic the fdic has support are they have as well >> we're looking to try anding if and they can work their way threw it at this point there's a lot of -- if you're
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waiting to see what happens with mortgage-backed securities and if waiting to stee what's happening with mortgages so far they don't want continue to sure deposits i'm sure there are some democrats who feel the same way. is there anything that you might hear this week that would change your mind on a subject like that, just based on how quickly these things were moving and what the potential contagion for risk was >> i kept an open mind about this i was a member of congress during the financial crisis. i want to make sure that we have a resilient and safe financial system in america today. we simply can't rely on the regulators to get it right we need to have public data and world transparency so the market can get it right i think that's the key transand
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the data they used, it's made our system less certain than more certain and less stable than more stable >> the speaker of the house was on talking i know you september the letter he said to president biden it got a lot of attention. i'm not sure whether the president responded directly to what's happening, but it is a concern for the markets given -- i mean, if, you know, you can imagine that silicon valley bank or something like that can put tremors into the financial markets, you can imagine as we get closer to the debt ceiling, there are some people who said that speaker mccarthy has got his own problems in his own caucus and maybe that was an treatment to maybe, you know, push off on the biden administration and democrats is there a con as soon as ceiling and how to arrive at some type of negotiation with the biden administration or
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democrats? >> well, look, the speaker made it clear his approach on raising the debt ceiling is different than previous speakers he'd prefer to sit down with the president and negotiate this out, no brinksmanship, do it ahead of time, have an active set of conversations like they did in 2011 when vice president biden led on behalf of the obama administration that's the speaker's preference. that is different than what people assumed everybody assumed he'd want to be a hell raiser and be a flame thrower because of how the tight margins are in the house he wanted to take this thing in a different direction. i welcome that i don't want any brinksmanship here on the debt ceiling i made that very clear internally to my colleagues, very clear publicly. i don't think america needs that sort of trep i dags around the treasuries market in a time of rising rates now, having said that, the speaker had active outreach to the president, the president did not respond.
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there are no conversations happening between staffers for speaker. those of us that work on behalf of the speaker, the leadership team in the house of representatives, there's no conversation with the white house. i have been an optimist that we can get this thing done, that reasonable minds can work things out without a lot of drama i don't see how we get there at po poun. >> there would seem to be some forced limitations as to how much you can put into this if you're looking at ways to cut the budget, fine, let's talk about that, let's have a budget from both sides. but the idea you're going to throw in a wish list of everything you want to negotiate may not be the best starting point for a negotiation. >> that's actually what the president did with his budget. a budget has not a damn bit to do with the debt ceiling increase everyone knows that here in washington so what i'm saying here is that the speaker had a sincere
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outreach to the president, the president rebuked that we can send a bill over to the senate like what happened in 2011 and 2013, which ended up in see ear brinksmanship and bad outcomes we're trying to avoid that i think what the speaker said was his prief frustration that he shared with us personally for the last couple of weeks this is not my preference. i don't want drama let's work it out. >> that was conveyed yesterday by tom >> but you're getting mad and i. >> that was not a serious document >> that was not and nobody said it was what i would sayi believe that mccarthy was actually trying to make outreach and start the negotiations i believe that 100% but i also
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think both sides are flowing in way too much to get to any negotiation. >> if we did have total independence in energy, that would free up a lot of things. and that would be a big help for dp growth. >> if we grow, it's better than just raising taxes or cutting spending we need to grow. >> thank you and we'll be of. coming up, boston red sox chairman tom werner injos us to break down the biggest business stories of the upcoming mlb season and woo he got anything from watching ttv. start for free at godaddy.com
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westerner. i'm always craving content you got so many places to show something now. it's the golden age with streaming and all these other pipes to get content out you got anything for us? >> sure. well, first of all, the content of baseball this year is improving. as you know, we've spent a lot of time at looking at how to make the game faster, how to have more balls in play, how to make the action on the field more exciting and after a number of years of talking about it, we actually now have a pitch block, which i think in spring training has proved that the games are almost 30 minutes faster and more importantly the players have embraced it and i think our fans will love it, they'll be able to watch you having slept another half hour. >> i can watch it slow or fast i don't know i guess i've been watching
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baseball for so long if it's 0-0 in the tenth, i can still watch. i would take my time if it was 0-0, wouldn't you? but i understand the changes anything in the way of shifts work i don't know if that's so great. >> oh, i love the defensive shifts analytics have taken on an improper place in the importance of having an edge. this is a way of getting baseball back to having two infielders on the right side at second base and two on the left and it's going to increase more balls in play and show more athleticism from the infielder again, we've tested these in the minor leagues, we've tested these in spring training, these changes and they've really been embraced by our fans i think when you go to a baseball game, you're going to feel that the pitcher has the ball, he throws the ball and he's going to increase the intensity of the game. >> we had commissioner bettman on the other day and we were talking about like the local
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sports in baseball, so important for baseball for, you know, it seems like it should be easy tto make money does there need to be consolidation with all the local sports networks? >> this is obviously a disruptive time. we've all seen that the people who are getting their content, they don't necessarily get it from their cable provider or their satellite providers. what is important get is getting more people to watch the game. we've obviously gone to an era of direct to consumer, showing the game on linear broadcast, as always on streamers but the important thing is our fans are going to get the game this season i know there's been a lot of
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talk about sinclair and at&t, but the commissioner has assured the fans that they will get the games this season while we sort out how to get the games to the fans as economically as possible >> i haven't paid attention to how much teams are worth at this point. mlb, would you say it's the same type of appreciation that we've seen, for example, in the nba. i probably can't match the nfl but it's still -- i mean, it's still a great busy think, isn't it >> i think sports franchises have increased whether it's the nfl or the nba or mlb or hockey. because there's so few of them and because this is again sports is must-see content. there's no question that we're a polarized society but everybody loves sports and you can see the top ratings for any show in television like 70 out of the
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top 80 are sports contests so the content is strong how we distribute it to the fans is something that going to get sorted out but there's no doubt that franchise values are increasing because people love sports >> you add in some of the changes we're making and then you add in things like online betting and draft kings and fan duel and the future looks pretty bright i bet on a preseason game yesterday. >> i don't bet but, joe, we have seen an uptick in fan engagement >> if the guardians -- i had the over on the chicago game with the white sox and i had the brewers winning. but that's sad, bets on preseason games. the first string isn't even in half the time. >> you went to m.i.t. so you
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should able to figure out how to -- >> i don't know better i don't know if anyone's good at it i'm in the quite good as pete rose used to be. you think pete rose should be in the hall of fame or not, tom >> i'll let the commissioner resolve that betting is a line you cannot cross. >> i know. i know no one's ever going to get that many hits again, do you think? >> i actually think we've got a great new crop of young players and someone will beat that record >> it's been 20 years at 200 or more hits a year >> we have a player in otani who i think is the greatest athlete in 70 or 80 years. >> yeah, that's cool i'm excited, tom it's that time of year it coincides with spring, too. all those good things are happening. >> hope springs eternal and the
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red sox are undefeated at this point. >> tom, thank you. >> one story before we head to break, several technology executives, including elon musk and top a.i. researchers have signed an open letter calling for a pause in the development of enough a.i. tools the future of life institute calling for a moratorium of six months or later to head of potential harm up next, jim cramer's first take on this morning's premarket acon tiand you can now watch "squawk box live" as part of the morning lineup on peacock.
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let's get down to the new york stock exchange. jim cramer joins us right now, and jim, big news this morning with maricy's this seems like it's pretty well thought out, just the idea they are announcing this almost a year in advance. he'll be there through february of 2024. >> exactly, and i think jeff weathered one of the toughest periods there could ever be in this business. obviously, you had covid you had tourism going down
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he reinvented the company. he's fixed the balance sheet i wish the stock were higher, but thin agen again, if you loot it versus nordstrom, it's held in there new ceo coming in for bloomingdale's, so yes, it's a sierra smooth transition, but i think jeff will be very much missed when he leaves because he's done a lot for, i would say, for larger issues beyond just macy's. >> he's only 61. i was just wondering, is this a case of exhaustion like you said, he's had a lot to deal with. >> ywell, i don't know he's got a life in him he's got a lot beyond what he's done he's completed a lot of things at macy's. he's done a north star program that's terrific. he's done a good job with e-com, but i think he's also just an inherently interesting person and wants to do more than just run a department store >> what are you thinking about about some of the starbucks news
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today? there's going to be a hearing looking into union movements there and what the company has done to push back. you've been close to this company. >> we have a president who's very worker-oriented at the same time, we have someone who's done more to be able to put people through college, perhaps, other than the old united technologies. i find it hard to believe that they're targeting someone who is, i think, has more to do with the dignity of workers than almost anyone. why don't we go after the people who have never thought about putting anyone through college i was there when he set up the arizona state program. i thought it was rather amazing, but a target's a target. he's broad, he's big, and they'll go after him, but i think it's very misplaced. there are a lot of other people who have done nothing to help workers outside of their job place. >> looking forward to "mad money" tonight, and we will see you to hear much more in just a few minutes. thank you. we'll be right back with what you need to watch ahead of the opening bell on wall street. this is "squawk box. it's definitely softer.
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good ball flight it doesn't wanna... flight was amazing. it just goes. sat down like an old dog in front of the fire. errrt. stopped on a dime. you need to be on tour, and you need to take that ball with you. that's the sound of a good ball. let's go! maxfli. tour quality performance without the tour ball price. next time we gotta find a tougher course.
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kumar global strategies. things happen quickly. when were you last on? all this stuff happened since the last time you were on. i'm talking about all this stuff with signature, first republic, silicon valley bank. have you -- has any of that stuff changed where you think interest rates are headed or the dynamic of the whole future of what the fed does? >> good morning, joe good to be back with you again yes, lots of things have happened very quickly, but the overall scenario remains exactly like i have been anticipating with the fed's excessive easing of 2021 with an excess of tightening in 2022 i've been saying to you, it will lead to a credit event and cause the fed to pivot, so i think the fed is now going to pifvot, so t is no different from before, and therefore the trajectory of interest rates is also going to
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change i am anticipating that the ten-year is now going to go to 3% and go lower. the 2% -- the two-year, which is just over 4%, will also go down below, and what we are looking at is even though futures today are showing positive movement because the interest rates are lower, they're not going to like the reason for which interest rates are going lower, which is that the recession is made even more probable. but what is happening in the banking crisis and the banking crisis is by no means resolved, so it's still going on, so the question is, when will the recession begin, not if >> what -- when will the recession hit in your view will it be -- how would you characterize it, moderate, bad, or a soft landing to some extent when do you expect the fed to finally realize that maybe it needs to cut, or will it realize
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that >> your first question first i think the recession sets in in the third quarter of this year, sometime between july and september. when does the fed cut? not immediately, because the inflation number, the fed cease favorite index coming out later this week is going to remain elevated, so there will be pressure on chairman powell to continue to have a high interest rate, so i expect a 25-basis-point increase again, and thereafter, my anticipation is they will say they are pausing, and it's just a euphemistic term for saying, we are about to pivot so, second half of the year, i would look for at least two rate cuts before we reach january of 2024, and in terms of what that does, i don't think it's going to help the economy very much. the problem is there may be more credit events to follow.
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>> the -- if they go up another 25 basis points and the ten-year and the two-year do what they said you're going to do, they're going to be so far off from where the fed is and where the markets are. that's going to be apparent to everyone >> it is going to be apparent to everyone except for those who think that the fed can somehow engineer a soft landing. that takes me to the other question i think more and more, it looks like a hard landing. it would have been a soft landing had the recession occurred a year ago, but it did not. we had much higher interest rates. now, we have a banking crisis, very likely a credit crunch following. all of those say to me that the recession is going to be severe, rather than slight as you know, i was never a fan of the no-landing scenario i think it was a fairy tale. now i think hard landing becomesing even more of a reality than before, joe
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>> it's great to have you on, sri, because you said things -- you didn't waffle about anything you said, so we know exactly where you stand, and i've seen a lot of it come through over the last three or four years so -- >> thank you, joe. you're kind to remember. >> we should probably have you on more, because a lot's happened since last time we'll see you soon, i'm sure thanks >> thank you, joe. okay, make sure you join us tomorrow "squawk on the street" is next ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer at post nine of the new york stock exchange. david faber has the morning off. market hanging on to gains two-year, 4.12%, vicks still below 20 as we've got higher-profile earnings to watch in micron and lulu our road map is going to begin with stock
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