good morning stock futures again at a higher open as we await jobs and economic growth. we will show you what is moving. more red flags in the banking sector one firm warning a second wave of deposit outflows could be coming the new report says fdic wants the big banks to shoulder the hit. the capitol hill grill highlights from the standoff with howard shchultz and bernie sanders. it is thursday, march 30th, 2023 "squawk box" begins right now. good morning

welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick with joe kernen. andrew is off this week. let's see the futures indicating higher there were big gains from the markets. gain of 323 points which was 1% for the dow. the s&p was up 1.4%. nasdaq up 1.8% those gains are continuing with the dow up 141 for the futures s&p futures up 17 and nasdaq up 50 let's look at treasury yields the 10-year treasury is sitting at 3.572%. 2-year treasury at 4.091%. the news alert biden administration announcing a new round of public and private sector investment as part of the ev challenge that includes a major investment from amazon which is now rolled out more than 3,000 electric vehicles with the target of

100,000 by 2030. the white house says google will commit resou credits and eligible vehicles in the new search tool. wells fargo will launch a the t -- launch a tool to help calculate costs on electrification and tax credits and cost savings for evs. house lawmakers tore into top banking regulators the day after they were grilled by the senate. patrick mchenry said we need a competent supervisor that set the tone for the hearing over existing rules to prevent a crisis had been enforced >> i don't think we need to look at rules until we see which rules were not enforced and not

delivered to the bank to do your j job. at that point, we can look and see if we need to do something else for you to say we need more rules and regulations, how about enforcing the ones already >> we will look at the existing framework. >> the lawmakers accused the regulators of being asleep at the wheel and having a light touch with svb >> by the way, the heat came from both sides of the aisle democrats and republicans. nobody is happy right now. everybody is pointing fingers at everybody else congress released the rules and if the stress test was not looked at, we are looking at rising interest rates. that was the fed policy. the idea one hand is raising rates and the other one which is

the evnforcement division not taking it into account. >> the risk-to-weight capital and duration risk. now we know. maybe next time. >> blaming svb for allowing the accounting rules you don't have to mark-to-market and planning on holding until the end >> fool me once. there will be more credit contr contraction. we will have simon on from m.i.t. he used to be in the business of regu regulating saying the idea of some form of enhanced deposit -- for payroll. for business interaction >> this is where you have to have more than $250,000. >> right it is actually important to the economy that the deposits are protected. it is all tied into it even the

chips bill andf financed by the me medium-sized banks >> by the way, we will specak t dan turillo. and the fdic is facing billions in costs over the bank failures it is looking to steer that burden to the biggests banks according to the bloomberg repo report it is shoring up a special assessment for the insurance fund they have authority over what they do with that. if they give a higher portion to the bigger banks officials are looking to limit the strain on community lendse -- lenders. you can look at this 15 ways they don't want to create more

stress on the regional banks that is why there are problems that looks like the ones who are not looking at the bad risk. putting the burden back on them. >> he was chief economist of the imf. he is the co-chair >> the other issue is you can put the heavy burden on the big banks. the big banks are the beneficiaries from the deposits and they can turn around and put the deposits to the discount window at the fed at 5%. it is a way to balance you will see big fights. the biden administration is reportedly preparing a new wave of rules in the wake of the collapse of silicon valley bank and signature bank a quarterly report showing the administration to announce tougher rules for mid sized banks.

$150 billion of assets could be announced this week. the white house is expected to task the federal reserve and other agencies to create the regulations. fed will think a number of rules related to mid-sized lenders i'm in a bad mood. i got a call from my realtor all of my real estate in the metaverse is down 90%. you know, i bought a lot of it in decentraland. i don't have any i'm kidding. i'm reading this story people have realtors and they bought land at a place called decentraland where the avatars can hang out i'm reading it you really thought this was going to work? the land is now 90% of

shock of all shocks. there is a realtor called meta >> they get a 6% transaction on each purchase? >> do people nod who is spending money? >> there were celebrities that took some spots. >> in decentraland >> they were trying to make neighborhoods. i don't know if it was decentraland in the metaverse properties and given a spot, the celebrity. that would convince others to buy houses around them. >> why did mark zuckerberg swallow this hook, line and sinker is he really socially awkward? does he feel better? >> i think they are always looking for the next new thing >> some people laughed and called me a boomer because i

didn't believe >> the metaverse you feel pretty good now >> well, does it sound like a naked ememperor? did the emperor ever have any clothes? mark zuckerberg is saying it will take longer he is now a.i. focused now the smart guys are saying take a six-month pause. >> elon musk and steve wozniak >> and andrew yang it might be a good idea to take a step back before machines think we are super -- anyway, i'm not moving should i sell? i can get 10% on the dollar for my real estate on the metaverse. if you read the article, it says a lot of people in technology that did not buy into it

i want technology that raises people's heads up from the screens and helps you in the real world not something that immerses you into the strange existence >> i was never into the idea, either we'll see. >> all right >> it will take a long time. >> i can't sell you? >> no. >> we have bargain level rates it reminds me of nfts. when did buying something that everybody has and you have the original on your computer -- no. >> you can't even hold it. >> no. >> there were brands that set up in the metaverse and convincing people to buy. >> a chanel bag for your avatar in decentraland. then what? >> wait for other people

in the meantime, former starbucks ceo howard schultz answered questions from the committee yesterday and bernie sanders specifically after he declined to testify initially. >> were you informed of or involved in a decision to discipline a worker in any way who is part of an organizing tribe? >> i was not >> have you ever threatened or coerced or intimidated a worker who supported a union? >> i had con vversiations that e interpreted in a different way than i intended. >> senator sanders and schultz sparred over negotiations with stores over unionizing sanders said this is best for the company and defended

refusing to bargain over zoom. >> strange bed fellows and strange enemies. i thought howard has made a living being very woke for lack of a better term. >> he is a progressive >> he is getting eaten alive by his own people at christmas, the cups that don't have anything on it. >> they have given higher wages and paid for colleges for people >> part of the solution and not part of the problem. i don't think bernie -- anything that is not basically -- >> go ahead and say it >> i don't think he likes the private sector i don't. >> he is not a fan of capitalism >> he does not like capitalism that ends the conversation for me

right there. >> that is the chairman -- >> a lot of his viewpoints were informed from his honeymoon. it wasn't russia then. it was the soviet union. an odd choice for a honeymoon. >> i don't know. i don't know where he honeymooned. i guess. >> siberia not nice in the winter >> no. there is an american journalist who was just picked up in russia today and held on espionage charges. >> i tweeted out yesterday i know i love vermont, but i don't get elected anywhere but vermont when we come back, we will talk about something that came up earlier this week larry mcdonald warned of contagion from the banks to the insurance companies.

contessa brewer talks about the exposures the two industries face. and we wl lkilta to former governor daniel trujillo you are watching "squawk box" on cnbc >> announcer: this cnbc program is sponsored by truist wealth. where meaningful relationships exist. ♪ ♪

a cyber-attack can grind everything to a halt. cisco security keeps your company moving forward. because if it's connected, it's protected. cisco. new projects means new project managers. you need to hire. i need indeed. indeed you do. when you sponsor a job, you immediately get your shortlist of quality candidates, whose resumes on indeed match your job criteria. visit indeed.com/hire and get started today.

when i was his age, whwe had to be insideed mto watch live sports.a. but with xfinity, we get the fastest mobile service and can stream down the street or around the block! hey, can you be less sister, more car? all right, let's get this over with. switch to xfinity mobile and save big on the new

samsung galaxy s23 series. i should get paid more for this. you get paid when you win. from xfinity. home of the 10g network. insurance companies are feeling the pain from the banking turmoil as investors worry about contagion.

contessa brewer has the story. con tates contessa, good morning >> the crisis falls into two bu buckets, becky first, portfolios. the stock price has plummeted. down 22% that is spinning off aig with 78% ownership. metlife is down. the worst hit of the group, lincoln national down 31%. lincoln national specifically held $89 million of the unsecured debt it was about 1% of the total surplus from of the end of the year insurers total investment in svb and other banks moody's downgraded is less than $5 billion. when the industry holds assets

and cash they could get pinched in the shareholders which filed a lawsuit against svb claiming mismanagement. if there were to be a jury award or settlement in the case, insurance would pay. among the biggest providers is chubb and aig and travelers. svb bought $180 million policy through chubb. my sources tell me this is going to play out over years, not over weeks and months the risk to insurers would be manageable banks and other institutions will see premiums climbing higher because what we have seen play out. >> larry mcdonald said the insurance companies have the same assets the banks held

long-term maturities about to be safe for the most part treasuries or other issues further out the line just like the banks, if these are dropping in value as interest rates go up and hold to maturity and the insurer is in a better position. >> the deposits -- >> larry was bringing that up. >> for years, we talked about it >> you can't have a run. he worries that some of the things are going to come back. >> i think if we separate out the pnc and the biggest risk is from the liabilities, not assets life insurers can get pinched i this case with the portfolios.

they have long-duration assets they match the maturities to pay out. it becomes less risky for them they know when those are going to be called for you can't have a claim come in ahead of time. it comes in when it comes in so, generally speaking, they trade like the financials, but the risk is not the same >> why >> they trade with the financials >> they make the money it is an existential issue >> larry laid out good points. it may not be the treasuries that come due, but other issues that are not treasuries. >> svb if you hold svb debt or credit suisse and that evaporates >> i get the idea that is the liabilities they have on the financials that were the concerns >> those would be manageable

>> i think there life insurers are bracing for losses as i said, with lincoln financial, if you have $89 million in bonds from svb that is 1% of surplus of last year. >> not just svb but some of the other assets the idea you are getting is it is oversold. they shouldn't be down >> that is where analysts think coming into it and maybe this could be an opportunity and not looking for immediate contagion to impact the companies. >> in the situation like this, you go around and markets push on all locations sometimes they push too hard in places it is not valid. other times. >> there is a lot of fear and loathing people don't know how it plays out. seeing the puzzle pieces fit together is complicated and complex. it takes time to see that's the point

>> these guys, i respect -- >> better risk managers. >> they layoff the risk facility and they insure and spread out over so many people. almost reminds me of bookies he lays off a certain amount so if something happens, it gets absorbed you know all about it. >> gambling and insurance. talk about the risk. the insurance is facing headwinds. they had the toughest payouts for pnc because of the fraud and catastrophes many are facing regulators that won't hike the rates to compensate for the risk. that is what is happening. creating as we talked about pinch points in florida. try to get profperty insurance n

florida. >> contescontessa, thank you. >> insurance industry and all of the attorneys involved >> i like the comparison to the bookie risk manage the the. >> -- risk management >> i see stuff from a couple of years ago. i don't know what they're talking about. >> camp lejeune. coming up, a tax sending the wealthy citizens scrambling in one city to unload mansions. this is in the real world. not in the metaverse i have a couple of properties in what is it called? decentraland >> i'm saving up >> you are saving up it is cheaper now. 90%. robert frank lays out incentives rolling out to lure in buyers. you can now watch "squawk

box" live on peacock wsery weekday on the morning ne live morning news hub. check it out i'll check it out. i could be on right now. >> from your phone >> yeah. we're coming right back. ance tea wi ore agil ♪ ♪ the old way of working is deader than me. ♪ ♪ we'll scale up, and we'll scale down ♪ ♪ before you're six feet underground. ♪ ♪ yes, this is how, this is how we work now. ♪

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

wealthy residents in los angeles are racing to unload high priced homes before the new tax takes effect some are pulling out all of the stops to get the deals done from offering discounts to even including luxury cars. robert frank has the story hey, robert. >> good morning, joe the mansion tax in l.a. is the

highest in the couplentry it starts on saturday. 4% tax over $5 million and 5.5% on property over $10 million that is on top of the existing transfer tax you sold your home for $20 million, you will owe a new tax of $1.2 million starting on april 1st. the seller of this home in beverly hills listed by dream living l.a. is offering a new aston martin or mclaren or bentley if you pay $16.5 million. you have to close before saturday josh altman and his company is offering a bonus if he gets a buyer to the home in bel air this tax will not raise the expected revenue and drive more wealthy californians to lower

tax states sales volumes in l.a. falling 51% in the fourth quarter. this tax applies to commercial and multifamily real estate sales. largest share of the tax is expected to be paid by commercial real estate, especially office and retail guys, that could pose more problems for all of the empty office space in l.a. putting a lot of pressure on the high-end market as well as the commercial market. guys >> with a sale, robert, if someone bought a beautiful mansion and live in l.a. for the f foreseeable future, are they concerned? >> they are not. they will make sure their property taxes don't go up once they own a place this applies to sales of

buildings. a transfer tax on top of the transfer tax just like here in new york that was passed in 2019 this is expected to raise money for the homeless problem and affordable housing it effects sales, not ownership. >> they tell me we have to go. you are a jeagenius on all thins real estate. i was going to ask if i should sell my real estate in decentraland it is down 90% >> when becky was talking this morning about the celebrities, there is somebody who paid $450,000 in the metaverse to be by snoop dogg. >> i didn't want to say it i wasn't sure it was snoop >> snoop house became oceanfront somebody paid $450,000 they may want to try throwing in

a virtual ferrari. that market down 90% >> your avatar can drive sort of. when i questioned it, people laughed at me and called me a boomer. >> not me. s>> real estate >> it's in decentraland. >> un-real estate. >> there is a realtor called real meta. come on. d do they show you around? >> they do i interviewed two brokers who had opened the shop on metaverse hoping to sell real estate they expected to do $1 billion in transactions at some point. i think they are sticking with real estate for now. >> oh, my gosh >> i hope the emperor is in shape.

he has no -- it's a man. a lot of naked emperors around the tide goes out. there they are >> lady godiva >> thanks, robert. red flag on the banking sector one firm warning a second wave of deposit outflows is next. and programming note tomorrow is the final day of women's history month. cnbc has a special live event with three successfufelel ma investors. go to cnbc.com/pro/talk. tune in tomorrow at 1:30 eastern. >> announcer: executive edge is sponsored by at&t business at&t 5g is fast, reliable and secure but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you.

so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect. terrier-iffic i labra-dore you round of a-paws at&t 5g is fast, reliable and secure for your business.

good morning welcome back to "squawk box. we're live from the nasdaq market site in times square. yesterday, the dow was up over

320 points this morning, it is indicated up 168. you had bigger gains for the s&p and nasdaq s&p futures up 20. nasdaq up 60 now to the health of the banking sector and impact on the economy. a note the from bar clays says the first wave of outflows may be nearly over, but the second wave is still to come. barclays warns the confusion with deposit safety may have awakened sleepy depositors of the existence of higher rates available in money market funds as flows continues to hit record highs. joining us is former imf chief economist and professor at m.i.t. professor, good to see you thanks for joining us. do you agree with what barclays said do you think the second wave is

likely >> i think the second wave may sound dramatic i agree awakening sleepy customers is a thing people are now looking around and say why do i have $50 million in a bank? why not a money market fund? where can i get better rates how do i keep may payroll account safe that is an important consideration. >> the fine line that treasury secretary yellen has tried to walk, we're still debating what it means implicit, explicit we won't do it, but if it happens, we will do it on an case-by-case basis you feel we need congress to come up with something in a bipartisan way to protect deposits needed for payroll and implement certain acts of congress important to the country? that istintermediaries which

are the banks. >> i think we need insurance for operational deposits cash flows for businesses small and large. no reason to worry about the health of the banks. that is a matter of distraction for them i think beyond that, it is wise not to insure all deposits to ci s syndicate through all banks. there are solutions out there. the piece we are missing is the deposit guarantee for oper operational deposits at banks covered by the fdic. >> do you think that can be done -- nothing can be done on a bipartisan basis at this point do you think some federal understanding for both sides it is not ideological differences? >> there is a basis for bipartisan agreement

there are some republicans who expressed interest we will see if that can become legislation. i think focusing on the operational deposits of businesses and don't get disruption on business operations with the financial disturbance is an important priority that level is bipartisan consensus or proposal. >> you are making it systemic situations for the banks is svb systemic? >> one is make payroll that was a terrible thing. the other was the knock-on effect to other banks and what would other uninsured depositors do on monday i'm sure you heard that they would make a move. that is why you have a clear statement of what is and is not guaranteed by the fdic we don't have that right now for

$8 trillion of deposits in the system. >> really good point, simon. the moral hazard i tried to figure it out it is not necessarily from the taxpayer i imagine you have banks promising ridiculous interest rates and saying we can do that when they probably can't in the back of their mind, they are covered by having all of the deposits insured that is a recipe for disaster, is it not? >> yes, it is. that's why any ex-ppansion of deposit insurance comes in the issue of supervision svb and signature, it wasn't enough i think you will have to watch out for exactly the crazy schemes, as you are saying more deposit insurance means more moral hazard. >> we may not have the drastic

credit contraction if congress got its act together with what are yo you are proposing. >> i think we are looking at a significant contraction or redistribution away from banks and smaller community banks. deposits are shifting to larger banks. shifting away from the middle of the country to the coast that is not what we see at this time >> yesterday, simon, someone said why do we need two banks? why do we need more than one bank we have a different viewpoint. it works better to have the community banks. someone said that. ubs. credit suisse. you still have ubs simon, thank you where do you live? cambridge?

>> washington, d.c. is where i spent more of my time. >> you are at sloan. you live in d.c. i got it a pretty long commute. six hours, i think,isn't it? >> on the many is a much better deal. >> all right thank you. when we come back, a warning on a.i we will dig into the letter signed by elon musk and steve woz wozniak and andrew yang pasking for a pause to be put in place "squawk box" will be right back. >> announcer: currency check is sponsored by interactive brokers. the most informed investors choose interactive brokers

this is ge aerospace, advancing flight for future generations. ♪ welcome to a new era of flight. what do you see on the horizon? uncertainty? or opportunity. whatever you see, 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.

welcome back to "squawk box. i'm dominic chu. the sixth biggest sector in the s&p. it has many of the names that we all cared about. from the performance pers perspective, it is a driving force behind the s&p 500 and specifically the nasdaq 100 has seen some of the more outsized gains in the first quarter of 2023 the s&p 500 the last year is

down 12% the communications services sector down 19 the last couple months is where we have is seen out perform ance in the orange line valuation is here with the high flyers check out the profile names and discounts they are trading to. netflix right now is trading at on 27 times forward earnings expectation. that is half of what it has traded on average over the course of the last five years. that discount playing up for netflix despite the rise we are looking at other names. one other one to keep an eye on is disney. trading at 30% below its five-year average in terms of valuation. 20 times next year forward expectation. we end on one that everybody cares about. it is a driving force behind the sector alphabet trading at 19 times

earnings roughly 20% discount there keep an eye on ahalpbet and disney and netflix the driving force behind the sector keep it right here "squawk box" will have more when we come back after this break. >> announcer: sector nomics is sponsored by sector spdr etfs. you founded your kayak company because you love the ocean- not spreadsheets. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

your brother has landed in the dark lands. they're under bowser's control. [ screaming ] hang on, luigi. [ ominous music playing ] [ screaming ] yes! fire! [ chuckling ]

we told you yesterday about the letter signed by a.i. researchers and executives, including elon musk that called for a pause in development of a.i. tools to give the industry time to set safety standards former presidential candidate andrew yang spoke to brian

sullivan on "last call." >> there will be different i idologies and you end up with what is real and not real and you could have fraud and identity theft at a scale you cannot imagine you could have someone calling on the phone and it is a.i. and it is not able to distinguish from reality >> there should be a regulatory agency and warned the world is relying on creators to self mon monitor. joining us is michael wolf he is a former yahoo! board member michael, this is a scary place that andrew yang laid out. >> there is also another side of it which is a little much.

they say we will reach the end of democracy and human interaction. if you look at the points they make, they are concerned about misinformation, but also concerned about the world being ruled by non-human minds >> one thing i will say, this is a sign that elon musk and steve wozniacki lead the rules if they are concerned about it, it gives me pause. >> yes >> the idea of breaking into the bank account and tricking you, it could be nice to come together and talk about the rules of the road. >> six months is not an eternity it is a chinese superiorof a.i so, the idea you take a pause

that the industry will self regulate and that's unrealistic. you really don't want the government -- >> i saw congress members say we have no role here role here. >> they are not saying take a break. they are saying take a break in rolling it out >> people will try to get a leg up and if it is not a strict requirement to not do so, people will cheat because it is an arms race >> they say they don't want anybody to continue to train a.i. beyond the professional version of chatgpt i think this is a really un unrealistic issue and the i industry will not regulate

itself it will hold back itself >> there is no cause for concern? >> we don't need hunter killers with terminator. we're not talking about that that is possible down the road we are talking about what our kids are seeing on tiktok now is bad enough can you imagine if it was exponentially worse with deep fakes and fake twitter already with the debate that goes on and on about what we should allow and shouldn't allow. this will make it worse. >> the deep factkes are already here there are flaws in the programs. they were developed and they don't have history before 2021 they use questionable sources of information. wikipedia and others that can't be verified. there are a lot of problems. doesn't mean we need to stop the second you stop -- >> i think it is good to put it

on the radar don't you wish in terms of bio-technology and ethics and caution that maybe we set it up? and research did we learn anything in the last two years >> we did. at the same time, this is an area where it is not like it is vict victimless, but you can't hold back what people are using 100 million people uses chatgpt. 13 million people a day. >> it seems like a defeatist argument too much to let it all slide somebody should talk about the rules of the road. >> we can't stop it. >> there is another thing. pausing for six months versus an industry getting together and figuring out a way that they create standards and self governance difference between that and let's stop development >> i don't think they were saying that.

they were saying continue working on these things. stop rolling things out to the public. >> that is part of it. we need a six months timeframe to train the systems to be more sophisticated than what is out there today. >> i hear your point i don't think a pause of six months will fix any of it. you look at how long it takes to regulate crypto. i hear your point. we should strive to come up with some sort of oversight i feel this is an issue that has huge implications and i wish we had some forum for dealing with it >> as much as you want the industry to self regulate, you certainly don't want the government in it sdp >> there are other things i want to talk about, but this dragged on >> i think you can't stop the forward march of technology. any time somebody tried, they

lost >> thanks for coming in, michael. >> pleasure. coming up, futures pointing to gains at e thopen we will show you what is moving straight ahead including a downgrade for charles schwab details after this science proves quality sleep is vital to your mental, emotional, and physical health.

the sleep number 360 smart bed. it's temperature balancing, so you stay cool. it senses your movements and automatically adjusts to help keep you both comfortable all night. our smart sleepers get 28 minutes more restful sleep per night. so, you're at your best for yourself and those you care about most. it's our lowest price ever! save $1,200 on the sleep number 360 i10 smart bed. plus free home delivery when you add an adjustable base. ends monday your shipping manager left to “find themself.” leaving you lost. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire ♪ ♪ a cyber-attack can grind everything to a halt.

cisco security keeps your company moving forward. because if it's connected, it's protected. cisco.

good morning stock futures pointing to more gains this morning as investors assess the state of the economy. house lawmakers grilling the regulators of silicon valley bank we will speak to the vice chair of the financial services committee french hill. and we will find out if big tech can keep the ball rolling and get picks for the sector as the second hour of "squawk box" begins right now good morning welcome back to "squawk box" here on cnbc live from the nasdaq market site

in times square. if you are watching us on cable or peacock," joe kernen along with berky qu-- becky quick futures are indicated higher the back drop is not necessarily positive unless you think it makes the fed maybe tap the brakes on the march to 5.5% or 6% we look at treasuries. they are not cooperating the 10-year treasury and 2-year treasury you have to get cranking we're back to 4.1 on the 2-year treasury almost 3.6 now on the 10-year treasury. let's get to dom chu with the market movers. >> becky, let's start with the

movers rh is down to 8,000 shares of volume restoration hardware issued quarter and full guidance that came in below expectations rh says it expects business conditions to remain challenging for the next several quarters and possibly longer due to the weakness in the housing market and to joe's point, the uncertainty with the banking crisis shares down 5% and shares of walmart are higher of 1% to 20,000 shares of volume the largest retailer and private employer in the u.s. is getting help from evercore who upgraded that to the out perform. target price at 160. it was 145 they cited better customer traffic and profit margins 1.5% gains for walmart we end on shares of charles

schwab down 1% the discount giant and bank holding company is getting downgraded by morgan stanley they cited less visibility for customer deposit outflows and increasing regulatory landscape which could be a drag. charles schwab shares down 1%. becky, back to you. >> dom, thank you. charles schwab with a rough few weeks. thanks, dom. let's talk more with meghan horneman at capital vadvisors how did you view the last couple weeks? i'm referencing the flux in the banking sector is it positive because the fed, at least, has that on its radar and maybe is not quite as

hawkish or does it portend a deeper landing what does it mean for stocks >> i would not say it is a positive it put the fed in a more difficult position now they have to weigh the fact we still are above the inflation target that they want. they have to balance that with keeping stability in the banking sector short term, the banking stuff may be behind us, but longer term this is a growth issue. when you look at the stock market, the stocks you see in the past three weeks is getting complacent for the rest of the year as we start to see the banking crisis filter into economic growth. >> as a credit contraction and earnings estimates have not come down enough. that could introduce some risk to where stock prices are. i can argue this i can argue maybe one of the reasons that technology has been out performing is because rates

might not go up as much and what you lose in earnings, you might gain in not having multiples con contract why do you think technology is out performing for the last month? >> you mentioned it. interest rates are lower the expectation if the fed goes another 25 basis points which we believe they need to and will and the market is pricing in rate cuts as early as the second half of the year that is way too optimistic considering where we are with inflation. that is why tech is rallying we have seen the spurts in technology the last year when interest rates decline, large cap tech stocks go up and you see it lose its luster when people get realistic where the fed can go and where they will go >> inflation will stay stubborn and the fed doesn't want to make another mistake in terms of

under estimating something like inflation. they will be hesitant to not get the job here what does this isay to you they stay in the trading range or go to new lows? >> i think in the near term and not over the next couple days, but remember it is month's end with a lot go on with the near term, the direction for stocks is lower. a 10% correction from here is probably likely. then i think we can see after the fed gets past the last rate hike in may, they will be on pause for a long time. we get through the banking crisis and we will start to absorb some of the downside from the economic standpoint. we will look at a very nice bull market coming out if we see inflation come down as well. >> that would just -- quick math, you think the lows get tested, but hold at 3600 on the s&p? >> yeah.

i think we made the official low. i would not doubt we try to get back down and test that before we start to have the multidecade year bull market >> if you hold stocks now, i don't know whether you sell to try to buy back in 10% lower or, you know, do you pick quality names and if we go down, do you add to the quality names do you add to that >> it is challenging right now the one thing i would stress is to have the liquidity and dry powder we have been increasing cash in the portfolios over the past few months we started at the end of the year we are doing it again with the anticipation that the market is getting ahead of itself and getting too optimistic you have to be selective still focused long term from the valuation perspective that are really, really cheap or inexpensive. we like international stocks over the u.s. stocks at this point, we are still

focused a little bit p momore overweight on midcap they are so much cheaper than large cap. once we get out of the uncertainty of the economic growth, those are the ones that rally the most >> do you think the 10-year treasury matches the-- or the 2-year treasury matches where the fed goes or paying forward and anticipating rate cuts by the end of the year? it is not cooperating. who meets who? the fed meet the yield curve or the yield curve meet the fed >> you will see rates go higher. i think we are done with the massive inversion in the yield curve. the 2-year treasury will price in expectation for rate cuts remember, markets are always

looking 6 to 9 months ahead. the market will price that in for rate cuts in 2024. >> megan, thank you. time will tell we appreciate your viewpoint thanks >> thank you >> yeah. absolutely >> is it ever really absolute when someone answers that? >> no. >> it isn't. >> it was a good thing time will tell >> time will tell. >> at the end of the day sure >> what about at the beginning of the day she says 3600. i am not sure we see 3600. >> i'm not sure either the guy we were talking about who said 3200. >> the guy on earlier. i don't know i don't think the market knows what is going on >> make assumptions about the fed and potential for government rescues. they say they will not fix

things we'll see. >> right i think they have to do something fundamentally worse than what we have right now. the market has factored everything in. >> i think you are probably right. something else i'm not ruling out something worse happening. >> you stayed at zero and this is not enough pain yet >> excellent producer. when we come back, auto sales making a u-turn and coming in hotter for the first quarter. lebeaphil lebeau breaks down th industry. and later, lawmakers tearing into the regulators into the collapse of silicon valley bank. we will talk about the blame game and much more "squawk box" will be right back.

your record label is taking off. but so is your sound engineer. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire [ ominous music playing ] matching your job description. here we go!

level up your speed. mario! yea! [ screaming ] introducing the xfinity 10g network. super fast internet today. with even faster speeds tomorrow. woo-hoo! everything's changing so quickly. before the xfinity 10g network, we didn't have internet that let us play all at once. every device? in every room? why are you up here? when i was your age, we couldn't stream a movie when the power went out. you're only a year older than me. you have no idea how good you've got it. huh? what a time to be alive. introducing the next generation 10g network. only from xfinity. the future starts now.

despite record hig payments, rising auto loan interest rates and transaction price, auto sales are hotter for the first quarter. that is as estimates for 2023 are rising phil lebeau has more >> joe, this is an interesting first quarter.

everybody thought we would see a cool down with auto sales and pricing. costs out with the estimate in terms of what to expect for the first quarter. it is coming in hotter than expected as a result, you are moving sales forecasts for vehicles up to 14.2 million. used vehicles as well. near record highs in pricing and terms of the showrooms the demand is still there. it may be cooling off a little bit more than people thought than a monthionth ago you had transaction prices peak in december and come down a little bit don't be priced if it kicks down for the automakers, they are noticing people are saying, wait 7 $750 monthly for a vehicle

40-day supply is out there now we get month end numbers in a week don't be surprised if it is in the mid-40s in terms of supply that is an increase compared to june of last year. normal inventory is 60 to 70 day supp supply look at gm and tesla they report the march deliveries next week. i suspect we get tesla over the weekend and we hear from the legacy automakers on monday and tuesday next week. at that time, we get a better sense of how much the market may cool off in the second quarter i have to tell you, i'm increasingly hearing new reports. adam jonas wrote about this. people say when they get to the showr showroom, you want what for a new vehicle? they are offering to trade in lease vehicles after three years and people are balking at the prices they are seeing right

now. >> you want to buy and you don't want to turn your car back in. you can buy your car and sell for more >> joe, i was with people in new york yesterday everybody said the same thing. i had a vehicle within the last six months on lease. i went back in and i was stunned. i said i'm not going to lease another vehicle. i'll buyout the vehicle i have i think we are going it see more and more of that that is the issue with the used market, joe. the used market is always fueled by the three-year turnover that is not happening to the degree it once did >> carmakers like that >> no. >> no, they want that lease turnover >> low profile i'm scratching up my expensive rims they want to charge me for that when i turn it back in they don't care.

we don't carewhat is wrong wit the car. they were going to sell it immediately for a lot more than the residual was >> sure. right. that's the value of the used market right now the lease market has turned upside down. that is really putting pressure on the used market right now >> forget it i'll buy the car and sell it for the higher premium instead of giving it back to the car company. >> becky, you have to turn around and buy something else or lease something else the payments right now are going to kill you. they will kill a lot of people >> what percentage are evs what percentage are teslas anyone making inroads? >> in the ev market? tesla still has 2/3 of ev sales. >> what is the total ev percentage for new sales

>> overall, evs are 5.81% of the market it is still a small percentage of the market. it is growing. it will be up around 6% to 7% by the end of the year. >> phil, if you turn in the car and buy a new one or lease a new one, are you better off taking that and selling it or is this the arbitrage. >> you say that is ridiculous. i'll sell it on my own you say this is great. look at the price i'm getting. you turn around and you will pay more it is a little bit of robbing peter to pay paul. >> a shell game. >> yeah. exa exactly. >> phil, thank you coming up, we talk competition and tech and science and engineering and all things future google, metaverse and other

things which have been in the cross-hairs. that interview is next. futures this hour are higher probably like the mirror image of yesterday we'll be right back. >> announcer: time for the aflac trivia question. in the 1880s, charles brown invested the popular product that now comes in a varietofy flavors, including ice cream and strawberry and mint. what is it the answer when cnbc "squawk box" continues gaaaaaap! did you say gap? he's talking about the expenses health insurance doesn't cover. but with aflac, you can get money to help close that gap. aflac, huh? aflac! gaaaaaap! aflac! gaaaaaap! get help with expenses health insurance doesn't cover at aflac. official partner of march madness.

92% still active? seems high.

seriously? it's just a bike. wait. they make a treadmill with an intuitive speed knob? yeah. want to try? 92% stick with it, so can you. start a 30-day home trial today. terms apply. what if you were a major transit system with billions of passengers taking millions of trips every year? you aren't about to let any cyberattacks slow you down. so you partner with ibm to build a security architecture to keep your data, network, and applications protected. now you can tackle threats so they don't bring you to a grinding halt. and everyone's going places, including you. let's create cybersecurity that keeps your business on track. ibm. let's create

>> announcer: now the answer to the aflac trivia question. in the 1880s, charles gobrown invented this. what is it the answer chapstick alphabet's google cloud accusing microsoft and competitive anti-computing cloud practices. the first public comments on microsoft and european deals

exec executive told reuters, they raised the issue with the regulators s to take a closer look let's get to kayla tausche for a special interview. ka kayla, good morning. >> good morning. we are here in washington with the executive vice president of the european commission. thank you for being here. >> my pleasure >> we were talking about an anti-trust you were here for the white house summit for democracy the administration announced that with ten countries trying to coordinate policies on spyware and policies, there were countries attending and others not. how much work is left to do? >> there is a lot of work to do. we have a small window to make sure we do not lose the charter of human rights. once we get so much more digital

to make sure we have rights and privacy and protection and freedom. this is the work that needs to be done in the years. >> you are meeting with the commer commerce secretary and treasury secretary and anti-trust chiefs in the country talk about the dialogue you have with them and what happened so far. >> we have something called technology competition policy dialogue we discussed what to do when markets change so dramatically i have seen my case for it i have had not one, not two, but two open apple cases which is really difficult to maintain that digital market which is open and contestable and small businesses have a real chance of making it out there. we discussed mergers and misuse of market power and discuss the course of the legislation. >> both sides of the atlantic have cases, as you mentioned,

against google department of justice suing google for the monopoly practices. is that the first of many coordinated lawsuits we can expect in. >> we have exactly the same case looking into the practices google has the stufffull stack we need to make sure how this can be opened to have a fair chance in the open market. if we have the waivers, we need to know the companies don't face difference charges, but one approach >> there is an argument to be made there i wonder if there are any specific industries or sub industries that you and the doj and ftc are evaluating currently? >> we need to look ahead, of course now we have virtual reality coming up.

we have a.i. which has become a thing at our finger tips i think everyone has tested it now. we need to push on we are on top of this when it comes to acquisitions and, you know, governing small companies and issues of market power we need to look ahead. how will markets develop with widespread use of a.i. >> you talk about the metaverse. we see disney and microsoft and many companies pull back ambitions in the metaverse it is not as popular as they expected do you think it was getting too far ahead of where the market actually is? >> i think it will take a number of years before we see that the metaverse or virtual reality world is a real thing. we will see it in many sub uses like training or expertise or gaming we have a lot already in gaming.

i think it is a good thing we have breathing space to figure out how should this work and how to maintain our humanity if we live more and more digital lives. >> you did not follow the tiktok hearing in the u.s. last week. i'm wondering you have a lot of policies to evaluate tiktok regulations and tiktok has to meet in the european union does tiktok have the trust of european regulators right now? >> there are two open major investigations into tiktok if they live up to the rules of privacy. the data being protected and as a precaution, we have said the european commission employees should not have tiktok member states are following the same example >> it should not be on government devices, why should it be on consumer devices? >> i hope officials have

essential data because they have an important job i think there are differences. as from the autumn, tiktok, as any other platform, will have the obligation to assess are they potentially harmful to people am i living up to what i'm supposed to do when it comes to taking down illegal content? violence or misuse of children and all that crap that exists. >> that is what is you are trying to regulate you are talking about data harvesting in meetings you had with the tiktok ceo. will it reach the level of the ban in europe and if it reaches a ban in this country, would you support that >> it is too early to make the final call we want the open investigations and how they are dealing with our data and we have the set of

things saying now people with important data on their phones and not have tiktok. then we will see >> madame, we appreciate your time safe travels back. >> thank you my pleasure. >> becky, back to you. >> thank you, kayla tausche. coming up, congress hmember french hill on the collapse of silicon valley bank. and we will talk about what is behind the big moves. throughout the month of march, we are celebrating women's heritage here is stephanie link >> i learned early in life the importance of financial independence i found a job that helped me get there. it is empowering and challenging and also a sense of freedom. it's possible to have it all to have a career and to have a

family follow your dreams stay focused anything is possible (eagle call) nope. how do we show that we'll stand tall through the storms? nah. (thunder) how do we make our clients feel secure and- ugh... not lions. (lion rumbles) we do it with our people. people who've been looking after people for over 170 years. ♪ icy hot pro starts working instantly. with two max-strength pain relievers. ♪ so you can rise from pain like a pro. icy hot pro.

welcome back to "squawk box. futures are up 194 points on the dow. s&p in the 4,000 range 4,050 if the gains last through the session. nasdaq, as we have been talking about, has been strong on a relative basis not necessarily the financials in the nasdaq, but the tech issues in the nasdaq out performing in the overall markets. i don't know what that means people have ideas about what it means. yeah lawm lawmakers grill into the regulators over the failure of silicon valley bank and signature bank our next guest criticized the failure to fill the role of super visor for the fed joining us is congress member

french hill. it is good to see you. i think there are lots of places we can place blame i think the democrats resand republicans are united in the blame. you brought up the problems of not filling the jobs and specifically the vice chairman i think it begins with the banks and moves on to the regulators congress shares some blame in this, too. what do you think after everything you heard yesterday >> good morning, becky good to be with you. i think we have to start with the banks. that is right. you have to look at the bank management strategy. it was a risky liquidity strategy and risky interest rate sensitivity strategy that put the bank at risk too dependent on too few deposits 90% were over the insurance deposit limit. they made mistakes those mistakes became apparent

in the first quarter of 2021 this is my principal concern of supervision. the biden administration did not name a vice chairman of supervision and have them confirmed until october of 2022. during that entire period, the top supervisor fed job was vacant when i asked michael barr who had that delegated responsibility with no confirmed leader he could not answer that question he said there wasn't anybody i found that concerning at the top and lack of urgency of the san francisco fed and bank commissioner concerning in the two-year period. >> i agree with you on those points you can check out the stress test that the fed was putting forth. ridiculous stress test that if silicon valley bank had been subjected to it, would not have caught things. they were measuring the wrong

metrics and become too formulaic. we will speak with dan later today. there is also some reason to look at deregulation that came from congress. the idea there was going to be less oversight on banks with far bigger numbers than had been previously under dodd-frank. a big move for that and that could have led to the problems, too. >> becky, my view about that is the bill that you are referring to is a bill in the senate 21955 which was signed in law in may of 2018. it had a strong support in the house and senate janet yellen supported it and other fed officials supported it barney frank >> he also sat on the bank that just failed as a result. >> yeah. yeah he's got issues there.

my point is it was a technical corrections bill about tailors and not a one-size-fits-all approach i don't think anything in dodd-frank or 2155 would improve the position at silicon valley bank or signature. bank supervision is about safety and ceasing and doesisting that was before dodd-frank that isis why i think this is nt made into a big issue for some >> this is tough for regulators to do anything with the signature bank and silicon valley bank did. the fed was picking up issues going back to 2020 with svb. i don't know if it was the regulation that prevented them

from doing more, but that certainly has been positive before >> i hear the hypothesis on that i have been in the industry for 40 years when i haven't been in government i know for a fact in 2155, the rule of construction says nothing in the bill shall prevent the federal supervisory process of conducting the supervision, basically, any way they want. that is the bank statute if they see something unsafe or unsound, they have the full power to use all of the powers to cause that institution or management team to cease and desist with the systemic concern or threat to the deposit insurance fund >> congress member, let me ask you about the fdic there are reports out there and bloomberg considering the reassessment to make up for the losses with the two banks down

they are estimating $23 billion which is more than in 2009 that was $5.5 billion back then. they have to find a way to fill the hole and apparently they are discussing the idea of putting a heavier burden on the big banks rather than the smaller banks. does that make sense >> they have discretion there. marty gruenberg will come back on may 1st to the committee on that i was a bank ceo from 2008 to 2012 timeframe i remember the assessment we got to replenish thedeposit insurance fund it is not a fun thing. that's how the deal works. the fact he is looking at the risk base levels and see if he should adjust those and including by bank size is something we want to hear from him in may. >> as a former banker, what do you think? this is the situation where the

smaller banks were behaving risky, but you don't want to put additional stress on banks which may have issues to come. >> this is an upon issue we havhave deposit insurance unr $250,0 $250,000 if ywe have a deposit insurance -- that is something chairman gruenber, gog will loot >> congress member hill, thank you. >> thank you, becky. and coming up, we have a preview of the latest with meg tirrell. >> joe, how much do we know where our drugs are made that is leading to the record drug shortages of critical medicines. how governments are trying to fix the problem when "squawk

box" returns look, it's great that you use workday to transform your business. but it still doesn't make you a rock star. so unless you work with an actual rock star. hi, i'm ozwald. hello ozwald. pam, you are a rock- i wasn't going to say it. ♪♪ ♪

♪ a cyber-attack can grind everything to a halt. cisco security keeps your company moving forward. because if it's connected, it's protected. cisco.

experts say we're at a pivotal point to make strides and fixing drug shortages after the pandemic brought two decade

of issues to bring manufacturing back to the united states and improving transparency in the supply chain what are governments and companies doing to try to solve the problem? here is meg tirrell. >> at the height of the pandemic, governments across the world were accused of banning exports of critical medicines and vaccines now vaccine maker moderna is striking partnerships with governments to build locally they have been announced in the uk, canada and australia >> this means the countries can have the capability to deal with any future pandemic and independent manufacturing ability. >> reporter: a playbook some experts are urging the u.s. to follow for vaccines and older medicines increasingly falling into shortage. >> 20 or 30 years ago, most of

the pharmaceuticals were manufactured in the u.s. and eu. a lot of it has shifted to other parts of the world that have not been as reliable >> reporter: a recent report from the senate committee on homeland security noted that more than 90% of generic drugs for acute care in the u.s. rely on ingredients and substances from china and india that can be just the beginning of the complex path to finish medicines. >> ingredients are manufactured in one place and drugs in another and shipped to the united states and finished there. it is complex and the more complex the supply chain, the less stable. problems with arise. >> reporter: the senate report calls on congress to act including through investing in technologies in and near the u.s. most crucial for drug shortages is transparency. >> medications are one of the few things we buy every day and

spend billions on. we have very little information about who makes the product and where it is made you know, anything about just the manufacturing process good or bad >> reporter: people who studied the issue have discussed a rating system for quality of drug manufacturing opposed to the pass/fail amsystem now this could incentivize quality high and avoid shortages joe. >> so, meg, at this point, anecdotally, where are the antibiotics, for example how serious is that? are people in parts of the country and if they need anti

antibiotics, is it not available? >> reporter: we heard you have to call around two people in this region in the northeast of the country faced delays and could not get amoxicilian and had to go to the next antibiotic that you don't want to take unless you are no longer responding to amoxicillian it is harder in rural areas. >> i was asking for a friend i have a virus you have it moving -- >> you have a virus for more than three weeks, you could have a bacterial infection. you told me two weeks five days ago. >> it is a cough i don't know what do you think, dr. meg >> i only play a doctor on tv. i shouldn't discuss medical advice >> i have no problem >> i keep telling you to go to a doctor and make sure your lungs

are okay. >> if i spray it on -- >> or windex. >> okay, greco you know what happens when you try that thanks, meg. for more on her reporting, check out our podcast. scan the on-screen code and follow squawk pod. becky. well, what is that is that really your hair how is that for a teaser >> the color is real yes, it is real. i swear. when we come back, former federal reserve governor will join us to talk about the fed response to the banking turmoil. he understands how the oversight is done. here are the futures dow up 200 points. s&p up 23. we'll be right back.

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.

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™. . the nasdaq is up nearly 15% since the start of the year. financials in the nasdaq, up 15%. technology itself up probably like 18 or 19%, led by names like meta and apple. joining me is paul meeks, portfolio manager. people that owned the stocks

long term, probably small consolation. they're up but they sold off a lot over the past couple of years as the fed has move interest rates higher. but people who weren't in that bought them, they're doing pretty well here, paul is it more than just a bounce after a big selloff? are there fundamental reasons why technology is outperforming now? >> i don't think there are enough fundamental reasons now, the big theme in technology as meta says it is the euro efficiency a lot of the gains have come from very aggressive cost cutting, which i expect to continue to bolster operating margins. i don't think we've seen a really clear inflexion yet in revenue and of course you do have the artificial intelligence theme. that's real. that will be big i think that we tech investors are manic impressives and we're

a little too manic right now with a.i that's what everyone is focused on this morning i read two or three reports from south side analysts all talking about how to play a.i. so, yes, a combination of some good and bad but i do think the biggest driver will continue to be relief on interest rates. when rates stabilize and then start to drop, that will be the biggest tech driver of all, joe. >> that's the big macro. i was going to get to that eventually that's a big macro factor that's probably at play in an article today i saw zuckerberg last time and we know he changed the name to meta and dumped billions into it but recently i think he said the term a.i. is mentioned 27 times and metaverse. do you think there's big promise

for the -- real estate values are down in the metaverse. i can't believe people are buying property in the metaverse. do you think it's going to be a big thing down the road, paul? >> i think the metaverse or however it is described in the end will be pretty significant but here's the rub the metaverse might be driven which hardware and hardware has -- be careful what you ask for. it might be dominated by hardware-oriented products that are much less profitable than the social media business, which is very profitable >> you promised your picks so would you be just buying these because, i mean, you wouldn't put a lot of money into tech right now would you wait to see the whites of the eyes for the fed to cut

or are there names you'd buy right now or -- >> last year i was in the bunker with a huge cash hoard i have gone to a fully invested position but i try to play it pretty defensive, i like data connected teams, automobiles sold into applications and i do like some chinese reopening plays. so i'm not going with a broad brush stroke i actually think it's okay now to be fully invested in tech but let's take a look at the smaller cap, more defensive oriented names, not all of these artificial intelligence fly by nights i start to really worry about them because some of them are egregiously priced >> would you just by fangs or wait on that or buy the big caps, buy all the big names? >> among the fangs, i own them all except for amazon, continue to be a little bit worried

i would say my favorite among the fangs, joe, is alphabet, not that it has any better forecast than the others. it actually probably has it worse but i think the stock is the best value among the group and even though it's been poo-pooed for its roll-out product, they'll get it better and that's probably my favorite. >> a.i., i say this a lot now, it was very gradual and then all at once it seems like. i had a stock broker and he had an a.i. company that didn't work out. but there was a.i. wait back then and all of a sudden it is just the rage, paul, and -- >> you always have these themes that kind of go in and out of favor. this one is the hot dog right now. if techs were manic depressive, right now they'd be on the manic

side >> okay, call me thank you. >> when we come back, a bill introduced by steve scalise aimed at lowering energy costs d r americans. anlater we will hear from foreigner fed governor dan tarullo about the banking industry and oversight issues. "squawk box" will be right back. clap on blue. on what? on blue! blue! in a place like westinghouse, there's just a lot of opportunity for kids to go down the wrong path. good. i have no idea where i would be, or my kids would be, without football. coach is, like, just our rock, for real. he's preaching our future every day. jackie nevels: the impact that he has on taymir makes me want to be a better mom. donte taylor: these coaches really want to see you become successful young men.

they put it all on the line for you. (cheering, applause) coach green... without him i wouldn't be where i'm at.

(woman 1) i just switched to verizon business unlimited. it's just right for my little business. coach green... 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.

good morning futures set for some solid gains again at the opening bell. the s&p 500 now back over 4000, closing in on 4050 and we'll get reaction from former fed government daniel dwriel and house majority leader steve sc scalise will join us as the final hour of "squawk box" starts right now

good morning and 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 is out today. we've been watching what's happening with the equity futures and they've been in positive territory treasury yields have moved a little higher. you're talking about the two-year, the ten-year is 3.564, a little lower today among today's top business story, chinese tech giant alibaba said it is considering giving up control of some businesses and it wants to monetize non-core assets two days ago ali baba announced the biggest corporate restructuring in its history that stock traiding down by 1.2%

and in hong kong up which 2.35%. >> and a report says as of late 2019 tesla was aiming to install a thousand roofs per week. the company installed an average of just 21 systems a week last year and facebook owner meta platforms is planning to let europe users of its products opt out of highly targeted ad. that's according to "the wall street journal," which says meta is trying to limit the impact of a privacy order. >> now let's get back over to dom chu >> we'll start with shares of roku, which are in focus this morning. the streaming video device make

smake is up about 4% but the news is not good related to job cuts. they are cutting roughly 6% of its workforce. that's the second round of layoffs. the first round occurred last nov november keeping a close eye on the biggest cruiseline operators, caribbean, carnival. carnival is up 2% right now. continuing this up side since the lows that we saw tied to carnival's earnings outlook released on monday that sent its stock prices lower, its peers lower each of these three is working on a three-day winning streak. thematically watch the cruise line try to get a bounce charles schwab down about a

percent or so. the discount giant getting downgraded from equal weight to overweight the target price goes down to $68. it was 99 prior. they cited among other things less disability for customer deposit flows and increased regulatory landscape watch schwabs shares >> and joining us is scott sieffert, managing director and senior research analyst at piper sandler. let's talk about the banking crisis to this point the immediate crisis has been one where deposits were fleeing from the smaller banks, people were taking out their money and pushing them into bigger banks because they thought they were safer. have we stepped the losses when it comes to that at this point >> hey, becky.

i certainly hope so. we got a little bit of validation last weekend. i'm hopeful at a minimum we're restoring a sense of calm to the system we got a little resolution from one of the bank closures three weeks ago, just validation that deposit outfloats weren't as bad as the early days of the crisis. hopefully that's an indication that investors are feeling confident that perhaps the worst of things has passed and ideally that will be the case and some recent volatility will begin to subside. we've just undergone a real and pretty jarring shock from the system healing is going to be a pretty extended process and that in and of itself means a host of new headwinds for the space more broadly. we have half a dozen longer-term land mines that investors trying to navigate. hopefully that can create a

safer system to represent shocks like that again. we're going intoan arena of general growth and profitability and that will have negative indications. we're past the worst but still have some yet to come. >> the immediate crisis being a viral infection but maybe there's a bacterial infection to follow you talk about the other land mines that are out there what do you see? what are the potential problems? z >> excellent question. that's a pretty good analogy it would include higher capital requirements, balance sheets were less interest rate risk, probably less loan growth, the possibility for a credit cycle and higher regulatory burden speaks for itself and happy to get into a little more detail on how any of those might manifest themselves >> okay. what's it look like? if i'm an investor and i'm

trying to avoid the land mines, what do i look out for >> we start with higher capital requirements one. concerns has been these unrealized losses. the largest banks already have to include those losses in the regulatory capital when i say largest, the bfas, citis, wells fargos. most banks do not. a large cohort of the hisindusty will probably have to bridge that -- >> meaning if you're a shareholder right now, you're going to get crammed down by other money coming in? >> hopefully not in a perfect world the banks will be given time to grow into a knew capital base. the worst of all worlds would be if regulators said you have one month to come up with some sort of a new capital plan. more realistically i think cooler heads will prevail and we'll get one or two, ideally

closer to two-year transitionary phase that banks can grow in they'll really be more conservative with how they deploy their existing capital and liquidity. an easy way to do that is to limit and even reverse your loan both that's why a lot are concerned about the notion of a credit kurch. >> does it meanno more share buybacks >> bingo i think dividends are going to be fine. there still is a pretty healthy capital base in there at least i don't see risks to dividends however, if i'm a large regional now, i just put my purchase plans on pause one very easy way to build capital is to not give it away >> right >> and then just reducing or eliminating loan growth, that's another factor because capital ratios have a numerator and denominator. denominators are risk-weighted

assets to the extent you can squeeze downs denominator, that helps to cosmetically create capital as well >> they are playing us out and it's really interesting. i'd talk to you tore another ten minutes if i could we'll have you back soon >> thanks, becky >> steve joins us to take on the b -- taking on the biden administration we'll be right back. ♪♪ ♪when the day that lies ahead of me♪ ♪♪ ♪seems impossible to face♪ ♪a lovely day (lovely day)♪ ♪(lovely day) (lovely day)♪ ♪(lovely day)♪ a bank that knows your business grows your business.

bmo. a third kid. what if she likes playing golf? it's expensive. we're outlawing golf. wait. can i still play? since we work with emower, we don't have to worry about planning for a third kid. you can still play golf... sometimes.

take control of your financial future to empower what's next.

now to the disagreement between disney and florida governor ron desantis. this is getting weirder by the minute the governor signed a bill that created a new oversight board that in effect took control of the special district that governs walt disney world. they say the previous board passed an agreement that strips

the governor's hand-picked members of much of their power the deal grants the committee a perpetuity clause that says the deal is valid until 21 years after the death of the last survivor of the descendants of king charles iii it's basically a way of saying, hey, this is forever in contracts and avoiding objections to forever contracts. desantis's board apparently discovered that agreement only recently one member said at yesterday's meeting that the board lost the majority of its ability to do anything beyond maintain roads and basic infrastructure you got to think that this is just the next move in the chest match. >> charles >> charles iii >> that's got nothing to do with this great country that's why we fought the revolutionary war, isn't it? >> there's always kind of things that come from magna carta and

beyond >> the administration is highlighting amazon's 3,000 electric delivery vehicles on the road with the goal of 100,000 by the year 2030 the white house also says google will help users find up-to-day information about the availability and coverage of ev tax credit >> later today the house will consider an energy bill introduced by our next guest but the measure is already taking heat as it's threatened to veto. steve scalise joins us as leader i see glimmers of hope for something that might work for the debt ceiling talks we had speaker mccarthy on the show earlier this week after he said that letter to the white house. we're having a hard time seeing any common ground.

but in the permitting arena, i.e. joe mancion, other democrats and people on the left that want reenoughable permits, is that fertile ground for further information or bipartisanship, leader >> good morning. great to be with you we have the lower energy cost act as you talked about permitting reforms a lot of important other reforms prp the real focus is on lowering costs for american families and making our own energy in america. it's the leasing process and all the convoluted tangled web of red tape in building energy infrastructure like pipelines we remove all of those barriers so we can make our own energy again. nobody makes energy cleaner in the world than joe biden and yet joe biden threw attacks on american energy for two years,

has made it harder to make energy in america but made us dependent on countries that don't have the good energy we have why should we be begging putin for oil that's nowhere near as clean as ours. we need to be making more oil and natural gas, moving it around through pipelines, bringing more critical minerals. he talks about evs over 70% of the electric vehicle batteries are made in china because president biden won't let us mine those elements in america. >> if you had a republican in the white house and maybe the senate could get there eventually, but right now they're already promising a veto and there's things in here you just know are not going to fly with democrats you're going to repeal parts of the big climate law that was recently passed. they got a 50-year-old national

environmental policy act that's sacrosanct to many environmentalists. even leases, it's just going to get vetoed but the permitting stuff, it's been said that could be a bargaining chip that maybe republicans could use to maybe at least everyone gets to save face with this debt ceiling debate right now do you agree both sides are entrenched the president says it's got to be a clean bill and leader mccarthy and his caucus are saying they're looking at a lot of spending cuts but also maybe this permitting could be used as, i don't know, as a bargaining chip. >> as it relates to the debt ceiling, speaker mccarthy sent another letter to the president because it's been almost two months since the president sat town with speaker mccarthy last to talk about how to deal with not just the debt ceiling but

out-of-control spending in washington that's driving us to get tho this point so you don't solve that problem by giving the president another credit card to go max out. you also got to get control over spending as you're talking about the debt ceiling so we laid out a number of things that will do that for example, work requirements right now the federal government is paying billions of dollars to pay millions of people to sit at home and not work when everybody is looking for workers not only is that bad for the economy and for rising inflation, it hurts social security because those people weren't paying in to social. so there as lot of opportunity to have a negotiation on the debt ceiling and so that's what speaker mccarthy was doing, saying it's time for us to get back to work >> but both sides are dug in pt president says i'm waiting for the republicans to have a budget and, you know, leader

mccarthy said, well, your budget was late so ours is going to be late right now it looks like the house budget is going to be after the debt ceiling already expires. so, you know -- >> and the budget doesn't have anything to do with the debt ceiling. >> i understand that but the president can pretend it does and that's what he keeps saying to dig in >> he can try to talk about the easter bunny and all that. we need to deal with the problems that are in front of us that's what we're trying to do the president needs do that as well >> what is does a real largest look like? the 19th largest bank in the country can send shock waves through the intelligence system when it goes into receivership this is a whole different level of angst and flux and, i mean, this will be disastrous. what is the end game when you've got the president dug in here

and the things you're talking about, he's probably not going to agree to a lot of those things hichlt the end game is for adults to get in a room and talk saying i'm not going to sit do you and talk with you so he can, the failure the sal and p but also gets at the fundamental problem of what is driving inflation and that's too much spending in washington that's why the credit card got maxed out. talking about paying off the minimum balance on the credit card, let's talk about not maxing over the -- that will not only stop us from having which right now is a gut punch to hard

working families at the same time the president can't delay this it been from and wants to get the whol country spun up in a crisis most in pork don't want that >> i think the overriding question is should the debt ceiling be used as a judgel to force one side or the other to thinks that it should not be used as a cudgel, whaef party is not in power thinks that is should be and they i want to be sure you will say next type you are in power, it. >> becky, it's a good point.

i think what oouf got to look at is f so if you look at debt ceilings in the pass being, a lot of -- >> it doesn't have anything to do with the actual debt ceiling. that's the bigger question >> no, spending is the reason that we've hit -- the reason we've hit the debt creeling is because of spending. spending is what maxed out the nation's credit card if we're taking in $1 and spending $1.39 p 29 in washington, that's the problem if we were taking in a dollar land spending out, and the reason we got hit.

>> why did the democrats spend all that money because they can this if in. >> they had their constituents, put them in power, chips act, ira, take your pick temperature trillions of dollars hp. it's got to be paid for. so it already done losing the election was the first mistake for republican, right? >> well, he has hide from this problem. >> all right >> i love fch perment and passionate and we need that. s that >> and when we come back, a response to what we learned this week about the silicon valley bank collapse withorr fmefed

governor and you can now watch box bach live weekdays on peacock with the morning news live. >> what? >> yeah! >> since when? >> yesterday i promise - as an independent advisor - to put the financial well-being of you and your family first. i promise to serve, not sell. i promise our relationship will be one of partnership and trust. i am a fiduciary, not just some of the time, but all of the time. charles schwab is proud to support the independent who are passionately dedicated to helping people achieve their financial goals. visit findyourindependentadvisor.com

coming up, jobless claims and a final look at fourth quarter gdp when "squawk box" returns.

go. go lights. go big city lights. go spotlights. go stadium lights. emerson software helps clean energy become reliable electricity. go “good night." go boldly. emerson.

[ ominous music playing ] [ engines revving ] become rhere we go!ctricity. ♪ ♪

welcome back to "squawk box. rick santelli here live at cmh

initial jobless claims, it delivers 198,000 we remain under that psychological 200,000. so far 191 in the rear view mirror is unrevised and we haven't been over 200,000 since the very first week in march and prior to that you have to go all the way to the end of -- beginning of the year, end of december the point is that the longer they stay lower, most likely the more aggressive the fed would be, know we have the asterisk of banking issues continuing claims, 189,000, under the important 1.7 million psychologically. that's actually what we were expecting. and in the rear view mirror we revised lower, 1.694. 1.685.

e -- we were al 1.4 in the rear view mirror. consumption is the lowest number since june of 2020 if we look at the pricing index, the high water mark was june of 2022 at 9% which goes back to 1981 and its 3.9% remains as it was, has no revisions and if we look at the core, quarter over quarter, 4.4, not good this actually ticked 1/10 higher in the rear view mirror than our second look which was 4.3 and 4.4 is the highest level going back to the third quarter when it was 4.7 now, we probably will see a little bit of a spike up in interest rates, maybe just a

smidge because of that, but in the grand scheme of things, it really is an old number and of course we know in about one month we're going to get our first look at first quarter gdp with the knowledge that at some point down the road, maybe one, two, three quarters, we may have a recession given some of the data we've seen and of course what's going on with regard to manufacturing and services and potentially lower inflation. but at this point, even with the inverted yield curves changing due to vol taelt and short maturity pressure ris, much of the day looks pretty good on the surface. joe, back to you >> it's a lot to chew on and liesman's head is probably spinning steve liesman joins us with more what did you hear that made you sit up and take notice, steve? anything on pce? >> it's the jobless claims we're waiting for those layoffs

we heard about last year to start showing up in this under 200. i'm listening to to rick's comments on continuing claims, it refuses to tick up. it's high time they should have -- obviously men and women are losing their jobs and then they're getting jobs right away. that seems to be the implication and they're never getting unemployment insurance maybe it ticks up at some point in time. we also have sheila bard talking saying she disagreed with the decision to bail out depositors and we have to finish dodd-frank and look at some of. hedge funds. so a lot of discussion but one thing that's interesting, i think it wasn't on rick's list or maybe i missed

it, one of the things all the economists are bracing for, joe, is the potential economic impact is what is expected to be a credit tightening. they're trying to figure out was it dinner last night and people try to figure out how so there's going to be a big when you think of how much of that come through the credit sectors with banks pulling back and going from so a lot of talk about that here, joe. >> where are you you're at the conference what city? >> it's in d.c >> oh, you're in dncht c >> and there was a dinner last night with a bunch of economists that sounds wild >> it was an awful lot of fun, joe. >> big bar bill, did you say >> i said it was an awful lot of

fun. >>. >> a lot of wild and crazy guys. no lamp shades on anybody's head how long does this go, steve >> it was yesterday and today, show temperature. >> did you have any room service? >> no, joe, we're at a pretty decent hotel here. >> as you should be. as you should be be. >> it's okay >> the wild and crazy economists nobody parties like those dudes. i don't understand, steve. there have been a lot of layoffs. what's it going and it they seem to be getting jobs or maybe it's just the extended fen it a

package that makes them inevitable the eyity poor we would have had a surgeit. >> i know there's going to be a first read on first quarter of gdp. give me your preliminary read on first quarter gdp. >> yeah, we're seeing like 2% i think was the latest, joe. i was just trying to look it up before because i was inside listening to sheila -- >> former chair bair the last that i saw, joe, was around 2%. so that recession that everybody thought was going to happen in the first quarter ant it down the road someplace and at opt but i was talking to somebody last night who saturday they a

lot of retail clients and the retailers were preparing for this downturn. and once you prepare for the downturn, sometimes the shock neff happens because you prepared for it it >> you have a little froggy in your throat? or are you okay? >> no, i'm good. >> that might have been from last night >> i walked right into that. >> you do. you did. you did. >> it's justified all those guys thank you. seep you later have fun >> let's get to the fallout over the clafs of sill i connell valley bank and signature banks. reports say the white house may soon call for tougher regulations on mid-sized institutions joining us is former federal reserve governor daniel tarullo. dan is also the form are oversight governor in charge of supervision and regulation of the banks and was responsible for implementing dodd, being.

>> well, big and we don't know how much of that was from the message of washington going out to supervisors around the country, saying a light touch, require a threshold before you push on the banks. somewhere along the line there was a supervisory failure. the question that many members of congress have mentioned in the last couple of days whether there was a regulatory shortfall and i think you all. >> did deregulation have any impact on this because we had a conversation with congressman verchily many i don't know if the deregulation of some of the dodd-frank laws would have actually changed anything the stress test wasn't

calibrated for what's happening now, higher interest rates instead of low are interest rates. >> that's absolutely right, becky. i think woo is that the premise of that 2018 legislation, which is that the mid-sized banks as a group was in the >> you are absolutely right about the stress test. even if silicon valley had been in the stress test for real last year, rather than their dress rehearse al, with the scenario, i think that would have come out just fine. that points us to the fact that the stress test has become a compliance exercise, it's become eminently predictable. i would be surprised, becky, if there hadn't been some voices in the fed over the last several years saying we need to be testing for increased interest rates. but just as supervision generally, i think the stress test has just weakened over the years.

>> whose fault is that, dan? i'm just trying to if i of solutions. how to roo, they need to take these rules and regulations and this is hard because europe signatures rg is not something written into the legislation in the sense that you should be 90% tough or 60% tough it just a function that congress gave to the regulators i do think that a stress involved every year with multiple scenarios would there if the business model of these mid-size regionals between 50nd 250 billion is under a lot of strain, i think we've known about commune bank

business model challenges for quite some time now, but i think we're seeing the morning in so as we go forward and think about what kind of regulations would be directed at the mid-sized banks, i think it's really important to make sure that the additional regulation is targeted to actual vulnerabilities. if until we move on, those banks are going to have an we have to make sure they're insulated from their vulnerabilities but i wouldn't say let's jump to the other side of the room and flg if it's been cap fachl

just make capital requirements higher don't allow -- don't gloss over the fact that some it have is 10, 15, 20 years off if interest rates raid just put in real capital requirements at higher levels. would the smaller banks not be able to do anything? >> well, i -- >> the mean, actually, across the board generally speaking truly small banks have higher capital levels because they don't have access to public markets. but i would just say capital is of course central to the stability of the banking system generally. how one measures capital, i mean, i do think that the principal approach to capital regulation ought to be an attempt to measure the actual risks that a particular bank faces, not just the leverage

ratio the problem of course is nobody gets risk that includes the banks for the regulators if but, you know, the familiar it started with the classic runs because a very large portion and uninsured deposits for me the most striking revelation is the size of the deposits of those ten biggest depositors at $13 billion f are we going to allow 80% of her deposits to be uninsured and

eminently runable? >> so $13,000, biling out they're going to have to do a special assessment where at the they raid if, from many from banks. they're discussing apparently the idea of putting higher fees on the big banks, not the mall bank. >> there and they're going be targeting the people had tn if on how this should play out. what do you think. i heard the same thing you, becky, which is i'm not sure i

picked up where the line for larger banks is going to be drawn, 150, 200, 250 your question raises the point that i was mentioning earlier. what are the viable business models here for banks of different sizes? you know, i said last year when people were rethinking mrjer policy for the inc. we need to have a few drk, what's it going to look like era when there's increasing competition from non-banks? are banging business models for 160 billion dollar banks so under stress that we need to had hmm if the answer is no, that are nrm let's have a view of

what banks's business models are viable and make regulatory decisions based on those >> and a all of the flights of the it is it f and they can turn around and bop or rate than par >> the irony has not escaped a lot of people that the most regulated banks, the strongest regulated banks have actually been the beneficiary of the deposits one cannot necessarily jump from that to the conclusion that regulating every bank down to the little community bank would give them a business advantage as as well >> dan, it's not the regulation, though it's just that these are too systematically important so they're going to get bailed out if something goes wrong. >> well, there's an assumption

in that but also look at how -- look at their liquidity and capital and resolution plan requirements and the chances of them failing have been diminished substantially. and so, yes, do we expect that they're going to continue and that the fed would not allow the entire banking system to collapse i think we do. but just as we saw in the fall of 2008, the flight to jpmorgan because jpmorgan was rightly considered to be the best tallized of the major banks, i think we're seeing that to some questionry. >> thank you very much goo sure good to with you >> coming up jim cramer's first take on the trading day straight ahead. market from wherever you are. power e*trade's easy-to-use tools make complex trading less complicated.

custom scans help you find new trading opportunities. while an earnings tool helps you plan your trades and stay on top of the market. i am here because they revolutionized immunotherapy. whi am here becauseool helthey saw how cancerades adapts to different oxygen levels and starved it. i am here because they switched off egfr gene mutation and stopped the growth of tumor cells. there's a place that's making one advanced cancer discovery after another for 75 years.

i am here... i am here.... because of dana-farber. what we do here changes lives everywhere. i am here.

look ating at the new york stock exchange, jim cramer joins us i know you've been talking about tech and its effe■)÷ on the nasdaq, and that's been the strongest partq■ on a really active basis and what's been a has it got legs? >> look. these companies,i■ they're banks in themselves. need money. they don't need financing. a lot of the competitors8■ might not be ableçó■to go public anymore.c■w■ñ■

they just keep trading up. it's like hiding a big capñ■ stock, high marginstock trade. all over the place all over the place summit's a great place andq1brod what do you own in the metaverse?ñ■ do you have any prime real estate in theçó■mettrse and are you worried becauseok it'sç■ do 9% 9% how oftençó■k does your afte vatar stay my dad was a hard worker.

he used to do side jobs installing windows, charging something like a hundred bucks a window when other guys were charging four to five-hundred bucks. he just didn't wanna do that. he was proud of the price he was charging. ♪♪ my dad instilled in me, always put the people before the money. be proud of offering a good product at a fair price.

i think he'd be extremely proud of me, yeah. ♪♪