manhattan court today. it is tuesday, april 4th, 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 along with joe kernen and andrew ross sorkin. yesterday, the futures were up for the dow and s&p. they have seen advances four days in a row. nasdaq was down 32 points. there are green arrows across the board. dow up 35. s&p up 12. nasdaq up 76 treasury yields pulled back a little bit 10-year treasury below 3.5%. the 2-year treasury is below 4%.

it doesn't make sense when you look at what is happening with crude oil. up by 6% yesterday this morning, climbing once again with the wti back almost to $81 a lot of people talking about that is inflationary yields are down from recent days let's talk about the drama in the mouse house bob iger going offensive ripping governor ron desantis. calling his actions retaliatory and anti-business. he also said anti-florida. comments come after the governor asked the inspector general to maintain controlling of the special district is legal. at the meeting, iger asked about the opposition of the legislation of the don't say gay bill he said the company may not have handled that position it took very well. of course, that was done by his

predecessor. iger defended free speech and criticized the governor for punishing the company for excising its constitutional right. i think folks thought he might stay away from some of the issues he went right into it and said here we are. i think he thinks that the florida citizens are actually on his side, not on desantis' side. >> he tried to negotiate and realized it will not work. these are tough measures and you should take it head on >> perhaps if you say nothing, it is not going away could you keep it simmering under a boil >> i don't know how it turns out. i don't know it is the whole king charles thing. different king charles, i'm told. >> what do the citizens think of

florida? what do the employees think? >> they are spending billions of dollars to ramp up more parks there. >> either he is being held hostage in florida, bob iger, or desantis with the strange situation. >> all of this was known at the time over the last election. i'm not saying a vote for ron desantis in florida had anything to do with his position on disney he was still an incredibly popular in an election where republicans as a rule, didn't hit their mark at all. >> you start to think about the national ambitions and start to think you are up against not just other candidates, but a corporation which is a beloved company in america, which is interesting to me. if bob iger is convinced his

customer base is coming with him on this and doesn't matter or something else my point is you are putting yourself up -- >> it depends. republicans are monolithic there is a company that wishes the government wasn't getting involved >> we had a lot of republicans saying it is a huge mistake. >> another part of the republicans that probably are, at least raising eyebrows with the disney moves if you go woke, you go broke >> the republican syst symbiotic relationship don't go hand in glove. there is a huge movement to go against the chamber of commerce. >> we decided we like -- we

don't always love business here. in this case, it's against desantis, we like it not us, but overall how our coverage is being directed it's nice to be pro business i like it. the u.s. virgin islands amending the lawsuit over jpmorgan chase and alleging jeffrey epstein's behavior was widely known at jpmorgan chase that executives joked about his interest in young girls. that referred to one executive's t 2008 email which was redacted. the claim was previously stated as meritless >> people did know that, by the way. that part everybody knew >> what kind of legs does this have still talking about jeffrey

epstein? >> 2008. >> he got indicted. >> the sweet deal from who was it someone who had a national position and i can't remember. a national position who arranged that sweet deal. in the trump administration, wasn't it? >> yup. >> arranged. the deal -- suddenly epstein was out again. not out of incarceration, but out and about. well known people started fraternizing with him. >> even after. >> because the deal he got sort of didn't exonerate him. oh, it is okay now you know, i'm not going to mention names. high profile people. >> a lot of them >> after that deal the guy's name it began with an "a. he had been in florida and became a national -- >> we'll look it up. >> he was in the cabinet

former president trump is in new york city this morning ahead of his historic appearance in the manhattan courtroom later today. we have eamon javers with more on that. good morning >> reporter: becky, good morning. we have never seen anything like this before. former president left his mar-a-lago mancsion and boarded his plane and landed in new york city where he faces a much less welcoming scenario today some details are still fluid hours before the event we do expect trump to depart trump tower this morning and motorcade for arraignment where he will be booked and fingerprinted and proceed to his hearing. it is not clear what images of all of this will be made public. media requested cameras to capture as much of the historic event as possible. perhaps the most important event

unsealing of the indictment. it is not until that moment that the country will learn what the former president has been charged with and evidence consists of. we expect trump to make his way back to florida this evening and make a speech when he returns. president biden, for the most part, has remained silent about the predecessor's trouble. he said he is not worried about the unrest because he has faith in the new york city police department trump's woes are not confined to new york two attorneys entering the u.s. district courthouse as the handling of documents continues there. troubles on a number of fronts for the former president guys >> thank you, eamon. we have service cuts to talk about at google. they are cutting back according to the email sent friday by the

finance chief. portions of the email viewed by the wall street journal. other documents saying google t cutting back on fitness classes and staples and tape we are making practical changes to remain stewards andbenefits google thin the middle of the cs cutting plan google declined to pay maternity and medical leave for those laid off. how many are using stipaplers >> the guy in that movie >> do they have paper at google? maybe that is why they are getting rid of staplers. >> she carries a blackbetter i

> -- blackberry >> i have an iphone. >> it has been so long >> you sound like my children. >> if it is cursive, forget it my name doesn't look good. virgin orbit has filed for bankruptcy protection after failing to secure the funding. the company is looking to sell assets cnbc obtained an audio of dan hart saying the company was ceasing operations and laying off nearly all of the work force. hart has pledged to help find jobs for employees and creating a direct pipeline to virgin galactic and richard branson owns 75% of the company. he was unwilling to fund it

further. google is testing a price guarantee program for goingogle flights. the feature is available as a pilot program in the united states it is making the program available for flights which is confident the flight would not drop. >> this is similar to kayak. they still do that i thought there was a time with a company offering a service like this. it was years ago. when we come back, we talk about the disney shareholder meeting and the plan for the film business and driving profitability at disney plus we will talk to barry sternlicht about the fed move and more. you are watching "squawk box" live from times square at the nasdaq market site on cnbc

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annual letter to shareholders is out. a well read letter about the world of the economy and banking. especially what he is saying now. very, very important let's talk about what he is talking about. it looks like he is talking about inflation. if we have higher inflation for longer, the fed may be forced to increase rates higher than people expect despite the recent bank crisis. note, by the way, he is calling it a bank crisis he is describing the economic or banking situation as a crisis. meantime, on the current economy, dimon writes, quote, pretty good, but storm clouds ahead. he addresses the turmoil and role of banks given everybody with svb and signature and first republic, the failures of svb and credit suisse have changed the market's expectations.

the market's odds of recession increased and this is nothing like 2008, it is not clear when this current crisis will end again, using the word crisis on regulatory response, dimon warns, quote, it is extremely important we avoid knee jerk or whack-a-mole response in the intended response. then he says this about bank valuations we need banks to be attractive inve investments. it is the best interest of banks become un-investable because of the uncertainty of regulation of capital and profitability and long-term investing. that happened after 2008 as everybody watched and waited to

hear where dodd-frank would land and what it would look like. >> that is what people are talking about now. >> if you want to be invested in the banks. then he talks about the company strategy i don't know if it is a new strategy we really don't like crying over spilled milk, but sometime do. holding certain credit is more efficiently done by a non-bank i don't know if that is a turn for him, but shifts the apollose world move through we will have more on fiscal spending and fed and he makes interesting comments we notice on a.i. with the chatgpt conversations. >> he is one of the few people

who writes his own annual letter without lawyering it up. what it reads like is how jamie talks like it is the authenticity. >> not exactly no f-bombs >> pretty close to what he speaks and how he speaks his views on the financial crisis are important you are right. he called it a banking crisis throughout that puts people on notice his calls for not getting too into the regulatory mess with things or making the banks un-investable are what people are saying banks can't do share buybacks. they can't issue dividends >> they have to keep so much capital. that wasthe argument to let smaller banks not adhere >> by the way, this is now fully -- 43 pages. total of 43.

>> it is not chatgpt >> i don't think so. he makes an impassioned plea on this which is considering. he has been a beneficiary of the banks which struggled. he says it is super important. >> the new york times laid out what happened behind the scenes with jamie dimon pushed by the secretary who invested in the $30 billion. he was tasked with going to the other bankers to put in for first republic the pressure put on him and he said i don't want to do this again like from 2008 where he was pushed into buying some of these. he didn't want to buy the bank these bankers will pay for the sins of bankers who were not risk adverse >> the age old tension

bankers want to be investinvest. you need to deploy capital that is people saying you want a completely safe banking. they will push back on that. you will not make nearly as much money if you have capital ratios as high as people and hawks would want what is ironclad >> i don't think it is ironclad. it is capital ratio. the issue is are you guaranteeing everybody's deposits if you are guaranteeing everybody's deposits, which we have implicitly done and as long as that is the case -- by the way, that is not good for the capitalistic system or the compensation of the bankers or the margins. washington will sit down and say if we are saving you every

single time, which we are, we're if the bailout business. >> the swipe he is taking. the non bank institution to say all of the risk is moving to the places where the regulators are not had looking >> bankers knew there was a run and they would promise all kinds of things. >> you don't think this is happening here >> kind of it is not good it is not good the whole idea is if you are going to try to risk capital to make money, you have to be able to lose money. we are losing sight of that. >> that's the issue. the question is do you save all those guys at svb or not >> the way to do it is not to guarantee all deposits it is increase the capital ratios so you don't worry about a deposit run ever >> you raise the capital ratio to where the money runs out.

>> then you are un-investable. >> and it hurts the economy. >> the age old tension bankers want to go wild. you know, remember stan o'neill said we have to get into this. >> there are two things here we talk about -- capital ratis matter in many ways. in 2008, it was a different function now they are levered investments. >> now it is still capital ratios it doesn't tell you what your capital is you are calling all money good total difference between assets available for sale and assets held to maturity that worries me. how many people have long duration balance sheets? if there was a deposit run, would they have the same issue

>> this is not jamie dimon covering cash reserves setting up a potentially calamitous situation down the road. $360 billion went into u.s. money markets as people are seeking higher yields. that is separate. >> this is not over? i put it behind me >> i don't think we're out of the woods yet, my friend >> i'll go in the top four bank business coming up, what we learned from disney shareholder meeting about the plans for the film business and streaming services and theme parks. that's next. later, get ready for the friday jobs report the markets closed for good friday holiday i use that in the loosest possible term. we will be here for a special edition of "squawk box." 8:00

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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 earlier, we covered disney ceo bob iger's beef with disney. beef that's what they use between

musicians? it is an easy way to describe it a beef with florida governor ron desantis now iger's challenges to film division and driving profit profitability. joining us is the bank of america entertainment analyst. jessica, i understand a lot of assumptions you have to make about the culture wars and what happens with the disney board. i don't know how you factor that in to decide what to do with disney stock that's why i don't know if i want to figure that out. there are too many variables let's stick to the fundamentals of the business. >> i think bob iger has handled him several incredibly well.

he dealt with a lot of distractions even at the shareholder meeting, there were antagonistic questions and he treated everybody with respect he doesn't sound like he is putting fuel on the fire i heard in florida and your comments earlier he has a point of view he said it very respectfully >> exactly with that said, now the hard part probably begins the theme parks are the bright spot >> yes theme parks have been packed it is rolling spring break the demand for disney products, particularly the theme parks, post-covid, surprised everybody. this feels like a multiyear run. with a downturn of covid or 9/11 or major recession, the gas

crisis, or whatever happened in the past, this is a period of growth and disney has a lot. besides the park itself, they growing and adding attractions it is almost insatiable demand from consumers >> at -- a lot of people point out was that a pandemic bubble it is a long way from the highs. from $190 a share. >> absolutely. bob iger came back to a company with many challenges he dealt with the distractions to focus on improving the company. there's a lot to do. there is a lot to fix. film division, profitability of disney plus and strategic issues with hulu or espn

it will take time. >> it seems like a good problem to have. you can all tie it back to expectations for streaming, i guess. disney plus would grow forever and who knows about profitability, necessarily for it hulu, whoever would get it would be in the cat-bird seat. now it is a hot potato the world changes quickly. the content is still king. if people are cutting cords and weeding out streaming services, what is the survivor what is the winner what is the future for delivering content and who will do it? >> there will be a few diversified services i think the comments that bob made earlier in the year about general entertainment may be confus confusing. it sounds to us -- hulu seems

like disney will buy it. it is not like they are walking away from general entertainment. they need to do more than just disney plus. they don't need as much content and they need to spend less per show they will, of course, will have general entertainment to attract all corners. you have to deal with pricing and disney is introducing ad tiers. they increased prices in the u.s. by 38%. that was early december. we have the benefit of that to come then the cost of realignment that will take time. introduction is introduction it will take time to execute it is the combination of driving revenues which they are doing from subscription and

advertising as well as cutting or restructuring the cost base. >> jessica, we have to run what does he try to do in 18 months does he try to fix everything? does he spend time on succession to find the next person? could he go longer than 18 months in your view? >> that's not a long time. getting the successor this time has to be right. obviously, really important. it seems like a short time we would not be surprised if he extended his tenure. >> yeah. we talked about that yesterday what's it called >> versa-climber >> i can do a minute and lay down >> he does 45 minutes. amazing. >> age isn't what it used to be,

jessica, for bob iger. thank you. when we come back, we talk strategy ahead of the opening bell we have been watching futures. picked up from the last half hour dow up 70 points nasdaq up 77 s&p up 15. crypto dogecoin getting a boost after musk changed twitter logo to the dogecoin mascot. we will talk more after that we'll be right back. >> announcer: executive edge is sponsored by at&t business at&t 5g is fast, reliable and secure liable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect. terrier-iffic i labra-dore you round of a-paws at&t 5g is fast, reliable and secure for your business.

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good morning welcome back to "squawk box" live from the nasdaq market site in times square. we're in the green dow up 80. nasdaq up 80 s&p up 16 points despite jamie dimon's comments this morning suggesting that we are in some form of a crisis as he sees headwinds ahead. our next guest says she is a

tepid bull and markets may be under estimating the risks in the banks. for more, we bring in victoria green who is chief investment officer of gsquared. victoria, when it comes to the banks, you are concerned about the financials, but not all of them jpmorgan chase you actually like >> i do. i think the smaller cap and regionals are under pressure that split with money market and treasury rates and what is offered in checking and savings is driving deposits out. we see flows to money markets. i'm not sure deposit flight is done yet it is done if you are worried about the bank going under and if you have fdic moment and you pulled your capital out. regionals will struggle. large caps will be a beneficiary. i like the jp. it will be under more regulation pressure they had raised lending

standards. i'm not saying this is the sector that will take off. if i play financials, i'll play blue chips and large cap and not chase after the risk y regional. >> jamie dimon brought up whether or not regulators will make the banks un-investable saying you will not buy back stock or limit because they want higher capital >> i don't think there is any doubt there is more regulation in the small to mid size area that maybe missed the too big to fail regulation. what that does to the amount of risk and the type of loans and what they can do with the capital and the compliance cost of the audits will take time for them to work through that is a factor that may slow down profit margins and look at the deal market. it dried up in q1. anybody with investment banking and deal making is looking at lower revenue.

maybe up on the trading side which was volatile at the end of the quarter. >> the other place is a major card company like american express? >> absolutely. charge-offs are lowest on the street quality card company what might surprise people is they are picking up the millennial and gen z they are not just an older person credit card for the people traveling and wetalthy. they are doing a great job of diversifying the card base they are higher end. they have the funding that people are not talking about if banks step back from lending, there are small to mid sized start up lenders which may see more as well as the high yield savings account. they pay 3.25% on savings

deposits they are part of the area of the financials picking up deposits they are paying 5 basis points. >> the trade that really was evoen >> the trade that really was ev vogue in the first quarter is technology technology is up 27% anything in the technology names that you like or would you steer clear because they have run up >> we like the mega caps one i like is netflix. netflix has found its footing in the streaming wars we will see a pick up of sub dess subscribers. they are looking at a major pickup bank of america came out saying there was a meaningful acceleration of canadian accounts they started the password

crackdown. s they have the ad based supported tier i think they are finding their footing. they are capitalizing on the true crime and they will continue to build around that genre. they have a really good content. >> victoria greene, thank you. coming up, dogecoin regetti a boost after elon musk changed twitter to the dogecoin mascot details are lar.te and don't miss the interview with barry sternlicht. he will talk about the economy and so much more we'll be right back.

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welcome back the cryptocurrency dogecoin surged after musk changed the twitter logo to dogecoin >> on mobile, it is not. if you look on the laptop, it is i don't know if it is permanent. >> musk addressing the change. tweeting a conversation about making the move writing as

promised logo change coming days after he asked the judge to throw out a racketeering lawsuit to support the price of dogecoin. coming up on the other side of the break, mcdonald's closing corporate offices this week to l layoff workers remotely. we will ask a workplace culture. is this more dignified or less mierified to do it this way? rend, you can watch us any timeon the cnbc app. a live look at new york city where history may be made today. - rator] aowdstrike, we monitor trillions of cyber events to detect threats and prevent breaches before they happen to keep your business from becoming history. we stop cyberattacks. we stop breaches. we stop a lot of bad things from happening.

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welcome back to "squawk box.

mcdonald's temporarily closing its offices as the company lays off hundreds of workers and are doing it virtually, and drawing scrutiny from some hr professionals. here to discuss the fire-from-home trend, good morning to you we have seen this repeatedly, including probably the most famously at twitter, jessica, but now you have a company like mcdonald's doing it. there's some people that say, obviously, this is a terribly undignified way to fire people, and it creates a distraction, and i heard from people yesterday that said actually this is more dignified, the idea of having to walk out of an office with a box in front of all your colleagues. what do you think?

>> we work from home, and that means all the business of work, collaboration, innovation and getting laid off mcdonald's is teaching a master class in layoffs they broadcasted in january they were coming and people were able to prepare and now april has come, and now in the comfort of their own home, they don't have to walk their stuff down the hall way and get escorted out. if i was going to be laid off, i would want to be laid off at home and not the office. >> there's a lot of people that say they are on the undignified side of this, and they say, no, this totally undoes a relationship between company and employee, and the idea that they are going to ship your stuff home if they ship it at all, and it changes your psyche about whether you are going to be

allowed in, and then the long-term loyalty employees may or may not have to companies >> listen, culture is not about being at the office and around the water cooler it's not about the way that we interact at headquarters around the ping pong table. it's about the experiences we have, and those experiences lead to beliefs and they can happen on a zoom call or in a text message. they happen on the phone just as much as they happen in person. i have laid people off before and it's incredibly emotional, and they get angry, sad -- it's difficult for the person being laid off and the person doing the laying off in those moments, do you want to, as soon as you hear the news, have to go walk outside and deal with the people who are staring at you and pack up your

stuff and walk down the hall way, or do you want to hang up and go cry and talk to your family and deal with the emotions you are having. now that we are working in a virtual environment, the idea that we have to be in person is not the way anymore. >> i imagine you have gotten feedback from others that say, jessica, come on >> yeah, and i say, what experiences happen at a virtual level. those experiences lead to beliefs, and the belief i would hold if i got laid off at home is mcdonald's cared about me and didn't want me to do the walk of shame. that's going to lead me to take an action that would allow me to have the experience to work through that >> just to level set for the audience, because it sounds like

you are a proponent in a big way of a hybrid workplace? >> yeah, absolutely. all of the people that say it's not productive or creative, they are going based on a feeling that it worked better in the old days, not results or data. >> jessica is it okay to fire people by text or email? because a lot of these companies have >> no, the middle of the night slack disconnections, no, we need to be humane and we can be humane virtually >> you think the future of this -- i mean, in the end, do you think hire something going to happen virtually? are you moving to a fully virtual world? where are you in the hybrid versus fully virtual universe we will live in >> i think it depends on the

strategy the organization has, but the more flexibility we offer the more talent we will be able to hire and we can create more equity and diversion in the workplace. i am a single mom, and being able to work from home is necessary for me to be successful the fact that we have to be in the office together and that's where culture gets created, that's not true. >> jessica, we appreciate you, with very provocative views. i imagine your twitter feed may get filled up if you have one. >> bring it on when we come back, we will talk about what is happening with the markets today if you check out the futures right now, you will see the dow is up by 70 points it has been four sessions in a row that the s&p and dow moved

higher the nasdaq was off but just a little bit yesterday later, barry sternlicht will be with us at 8:00 a.m. eastern time we'll be right back.

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good morning, everybody. the futures in the green so far this morning the markets waiting for the next big data point, and that's the march employment report. the inflation, and we have highlights from jamie dimon. and we will talk about the magic kingdom. the second hour of "squawk box" begins right now good morning welcome back to "squawk box" here on cnbc we are live. i am andrew ross sorkin along with becky quick and joe kernen.

the nasdaq is higher, 63 points. the s&p 500 looking to open at 15 points higher we will bring you comments in just a moment from jamie dimon and his comments about where the economy may or may not be headed, and uses the "r" word, as in recession. oil, we are now at $81.16. that's moving higher as opec decided to reduce output and look at crypto we talked about the deutsch coin, and bitcoin now at $28,224. >> what would be your thought about the last time we uttered

the word deutsch coin? >> i don't remember. wait what donald trump is in new york city i have not been reading the newspapers what is going on >> you may have missed the news, joe, but that's the case this is the courthouse at 100 center street. we expect the former president to motorcade down from trump tower by about noon today to go before the judge to plead not guilty today the whole thing could be over in minutes, but it will leave an impression on history. it's not clear what images will be made available, and the media requested cameras, and not where the courthouse will come down on all the access

the unsealing of the indictment against the former president will happen today and it's not until that moment that the country will learn exactly what the former president has been charged with we expect trump to be headed back to florida and make a speech when he returns president biden has remained silent about his presidecessor's legal woes the investigation continues into trump's handling of classified documents, so the former president facing legal challenges, i guess you could say, on multiple fronts, joe back to you. >> all right thank you. i always say one thing, that i watch one side and you can

choose your channel, where you want to watch -- i watch one side and it's, like, woe, you guys are nuts, and i watch the other side, and it's like, whoa, it's -- it's here. it really is i can't believe -- i must be getting more moderate or in the middle or something, but i am sick of hearing it -- i am sick of hearing it from both sides, and i hear it from one side and they have their own problems, this network, and then i think about the other side of things -- >> you are sub tweeting another network on live television right now. i love it. >> people definitely feel a certain way, and both extremes, seem to me, to be a little extreme. >> i will tell you what -- >> predictions about the future,

one of the hardest predictions to make, too, i noticed. >> that's right. my approach is and will always to be not to have a side i think there's important space out there for objective journalism and tell the people what is going on and don't put your thumb on the button, don't put a spin on the ball we are subject to our own individual preferences and up bringing and experiences, but to the extent you can keep your opinions out of it that has been my approach. >> except for the economy where we know the kind of things we need to do >> we know exactly what is going to happen there, yes right. other than that. >> thanks. let's get over to dom chu. what has your eye this morning >> becky, joe, andrew, some of the news with these stock moves comes among some of the bigger

movers we are seeing right now the price of oil is up again a surge higher tied to the surprise move by the oil cartel opec to cut production and boost prices, and that led to some of the biggest gains in the s&p big interated oil companies like exxonmobil are up. oil services companies are up as well take a look at some of the energy stocks there. and we are looking at disney shares shortly before the meeting started yesterday afternoon, florida's governor, ron desantis, a republican said he would have officials investigate whether disney broke laws when it took last-minute steps to give the state of florida more control over the operations at the disney world area.

in response, disney ceo, bob i canner bob iger made comments. apple was once again identified as a top brand among younger consumers, and they cited near record high of shipments of iphones, and also increasing ownership of apple watch devices. andrew, shares up half a percent over the premarket meantime, morgan chase ceo's jamie dimon says, if we have higher inflation for longer the

fed may be forced to increase rates higher than people expect despite the recent bank crisis for those folks who are betting that maybe jd powell will have to modulate things, jamie dimon saying maybe not while this is nothing like 2008, it's not clear when the current crisis will end. he uses the word crisis throughout this letter, quote, even if we go into a recession consumers would enter it in far better shape than during the great financial crisis on russia's invasion of ukraine, he writes the tensions are leading to the rethinking of many economic alliances as well as trade and national security and it creates unpredictable and dangerous outcomes

joining us to talk about this and more, a managing director at jen trust. good morning to you. what do you make of his comments, specifically about the issue of inflation and what jay powell may have to do relative to what the markets seem to think he will do >> we are not penciling cuts there are this year, let's say that, even though the market is pricing in cuts for later in the year with respect to the banking crisis, we think lending standards are likely to get tougher. it's not going to be an easy road for the fed to navigate, but we think inflation will be stickier and take a longer time to come down and the fed will have to continue to either, you know, hike slightly more, or at least keep rates in this restrictive territory that we are at right now >> where do you land on the "r"

word also jamie dimon suggesting a recession is in the future, and he has a little more certainty in his language in this letter >> yeah, we have a recession pencilled in, too. the flip side of that equation is this is possibly the most widely telegraphed recession that we have seen. i mean, it has not come to fruition, but we are seeing slowing in the ism, and we feel like the fed may have to push rates and hold rates high to the point where that might be the thing that ultimately controls inflation. it's in our forecast, a recession later in the year. >> we have been talking about jamie dimon's letter and the idea that he called this a banking crisis throughout, and this is not a letter he wrote yesterday and "the new york times" explained he holed himself up two or three weeks

ago with first republic when they put all the money into it, and that's when he wrote it, and not knowing when it's over or where it goes next, where do you think we stand in terms of the turmoil in the financial industry >> we don't think it's over either we have seen a couple big bank failures and we have seen the fed react with the lending program, which we do think is helpful to those banks, but this idea of deposit shifting away from banks into broker/dealers or into stronger banks, that has been going on for a long time or even before the bank failures when it really accelerated the banks right now, the small and medium banks are going to have to make choices of how they can retain those assets by starting to pay higher interest rates or tap into the home loan bank system which is a more expensive funding source for them the assets on the balance sheets

in the held to maturity accounts are not going away, so we don't think this banking system crisis, if you will, situation in the very least is over. it'sgoing to take time to play out. >> the other piece of this, though, i think, for a lot of folks is what happens to the other banks, these small and regional banks, and jamie dimon makes a big call for suggesting how important they are to the e u.s. economy, and at the same time he says there's lending and other things that should go to nonbanks how do you see all that getting regulated, and i ask because what he's saying is you could be in a situation where some of the banks become, quote, uninvestable, and he effectively tells folks in washington we can't have a financial system that is uninvestable >> yeah, no doubt, community

banks are part of the fabric of our banking system across america. we think there's an important role for the small and medium banks. on the flip side of that you have regulatory environmental shifts towards easier standards, and i can see a bit more of those regulations coming back, you know, possibly stress test them on the stystemically important financial institutions, so we could see more regulation in the environment. we think they are very important members, but we need to kind of work our way through we don't think that -- we don't think all the banks are going to survive. let's say that certainly we don't have it pencilled in that they will all survive. in the past we have seen banks fail it's part of -- it's part of -- it's not popular but it's part of it. we could see other banks fail through the process, i think

>> we want to thank you this morning. >> thank you very much coming up, i don't know, markets are not cooperating, the stock market is not cooperating with jamie dimon and the bond market is not cooperating with jamie dimon, and the bond market is so big, and on the day he writes that, why is the ten-year down and the -- >> why is it down the day after opec cut production knowing that higher prices -- markets have been rallying in the face of all the bad news that is out there, and it's tough to pinpoint why >> markets are the only thing in the world that supposedly takes everything into account and -- >> yeah, because the markets are always right this is you. >> i know it is. i trust the bond market.

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china is open for business that was the message from chinese leadership in a summit that has been called asia's answer to the economic forum meeting in davos the co founder and executive chairman of impath we have been speaking with you, carlos, for a while about tensions between the united states and china, and how was their message they are open for business received? >> it's interesting. the united states was absent you know, i think there was one ceo -- a couple ceos -- there was 17 at the china development forum. a lot of european companies and asian companies, but the u.s. is sort of taking its fight in the

game, which is hard to understand, and ceos don't want to get criticized if they go to china. i think that's hard to understand because there's so much investment in china we are leaving a lot of money on the table, becky, whether it be u.s. companies not being present or part of the debate. a senior dialogue is not taking place between u.s. officials and chinese officials. we are not part of cptt, and we are nowhere. it's alarming. i wish i had an answer for that, and there doesn't seem to be a reason or national strategy for what we are doing. >> i have an answer. it's washington, d.c both sides -- this is the only issue democrats and republicans tend to agree on right now, and that's if you are doing business in china you will get called on the carpet and brought before

congress, and you may get lambasted by the white house i understand why they would want to keep a low profile right now. >> that's true there was press and a lot of media talked about tim cook being at the forum, and he should be there and owes it to the shareholders this idea that don't go to china because you will get criticized or called into congress, you know, we have -- we are becoming, almost by default, not sure it's deliberate, it's no longer about the private sector but about what the federal government decides what the private sector should do i think that's not just our strategy we are all about the private sector we are about private investment or private sector innovation

china is about industrial policy those are the two models right now we are straddling and not sure where we are, but as we talked before in the past, becky, we need a china strategy, which we do not have you know, you recall when china had the 2025 vision -- there was a lot of concern on china's part that it was being misrepresented, over interpreted by the u.s. so they got rid of it and no more mention of china in 2025. china has become assertive, this is who we are and what we do, get used to it or go someplace else >> carlos, who are you speaking to business leaders saying they need to step up and see what is going on, or washington? i don't blame any business leader for not wanting to be caught in the fray, and if there's a message in the word,

it should be directed at washington hello? tell us where to go with things. >> i agree washington needs to have a strategy it needs to understand how it's going to deal with china i continue to insist that this is about coexistence we are not going to get rid of china, and they are not going to get rid of the u.s. so why don't we sit down and really just challenge how are we going to co-exists? we have two separate models. we are not going to have one model. we are not going to convert china into america, and i think we have seen that in the past 30 years, so how are we going to co-exists. >> right >> the key businesses in china, their key concern is washington continue to do the sanctions and criticisms and allegations and that they get caught in the middle china has yet to retaliate, by the way. they are just wondering when is china going to retaliate >> there's tough talk coming

from china, too. let's take tiktok for example. you have congress doing hearings with the ceo of tiktok, and beijing saying letting tiktok exist as a seconding business at bytedance is not going to happen if you buy a business you are completely beholdened to the cpp if you are doing business in china. if you are somebody trying to cross the border, it's not going to happen. i appreciate your viewpoint but i don't know if it plays into the situation at the moment. every business leader out there who has a big presence in china, including tim cook, is looking for ways to diversify and make sure you are moving out. if you look at apple, a huge portion of their new investment is going outside of china, the majority of it is going to

places like vietnam and other places because they don't want to get caught in the same trap, not just the back and forth between china and the united states, but don't want to be caught up in a supply chain that could be problematic that we saw with the global pandemic >> that's a fair point they don't want to rely on one place. apple has a huge export in china, and companies have to decide do they want the china market do they not? do they want to be there i thinkpart of the concern -- really, ironically, part of the concern is what is china going to do to retaliate against what the u.s. is doing? there are 1,000 chinese companies that are on prohibited list, u.s. companies can't do business with them china has two u.s. companies, basically aerospace companies

that do little business with china, they do business with taiwan they have a tool called the unreliables list, which is pretty much blank. companies are just saying how do i keep myself away from that unreliables list, and they wish that washington would just stop it, you know, stop with the tactics. if we have a strategy, let's communicate it right now the uncertainty is the name of the game, you know >> yeah, i think that's -- it's not unintentional uncertainty. i think the u.s. administration from business leaders i spoke to have intentionally said and left the thread out there, if you do this you could get called on the carpet for it. it's an intentional unintentional strategy, if that makes sense. >> without going into names, there's a u.s. technology company that asked the government for help, and it will give it's subsidies so it brings

business back to the u.s., and it comes with a catch. you cannot expand in china in the next ten years, and that didn't go well with china, and that company could write it off because they are in bad standing if you ask for u.s. helper in trouble because the u.s. goes overboard. if you are serious about china, build relationships with regulators look at china as more than just i want to manufacture and export and just look at it as a cheap place to manufacture, that's not the china of today they want to see a regional headquarters and a product development center they want to see a strategic commitment to china, but, becky, the i am not here to talk, you know, to represent china, but i am telling you our stance on

china is dramatically exaggerated. this idea that taiwan is next and china is going to -- that kind of talk just elevates the tension, it elevates the fear and it just creates uncertainty, but -- >> carlos, i think -- look, they are playing us out and we will have to continue this at another time, but there are legitimate concerns, just the way we behave and the way they behave, but anyway, i appreciate your time we will have to have you back to talk more about it >> the u.s. needs a strategy >> if they have one. >> yeah. coming up, more comments from that jamie dimon shareholder letter "squawk box" coming back with that, after this time now for today's aflac

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welcome back to "squawk box" this morning take a look at the futures we have green on the screen despite, well, negative words, i think, from jamie dimon. let's call them cautious, not negative, cautious words >> about the economy and the banking crisis -- >> s&p, 4124 now it's like a stealth bull market. investors are bracing for a fresh read on the labor market

on friday, and it's a good indicator of the fed's measures, and economists are expecting 240,000 new jobs in march. a former member of the council of economic advisers under president obama, and tomas phillips, a professor at the university of chicago. we should get some interesting take -- i think you guys have different viewpoints betsy, i will start with you you are looking at the enter play between sectors that over hired during the pandemic and h have to h have to pair back, and there's an enter play, and now does the net net show up on friday? >> what we have been see something a massive reallocation

of workers first, we expanded how much good stuff we were buying, and it was early on in the pandemic and it was theservice sector that got hammered and it was the slowest to recover the two big parts of the service sector, leisure and hospitality, hotels, lodging, dining out at restaurants, and also health and private education services health and private education services have been one of the leading sources of job growth over the last 20 years, and it re really hrepbg wished during the pandemic most of the job growth was driven by leisure, hospitality, education and health services. i expect to see continued strong growth in both of those sectors, so the wildcard will be what do we see in the other sectors, particularly those that over

hired like technology or business services. do they start to pair back you don't see that much going on in the aggregate when we are looking at overall at the information sector it will be a story of strong continued growth in some sectors and how big are the pullbacks in others >> tomas, i was fascinated by some of your views that were provocative a few times. you think the entire picture of the labor market is kind of skewed because the participation rate is so low because we paid people to stay home, or made it advantageous for them to stay home with all the programs during the pandemic, and now to bring them back they are asking for more money looks like we have wage gains and strong unemployment, but we sort of made the bed we are sleeping in based on all the extraordinary assistance through

the pandemic >> well, i mean, probably we have seen this movie before, right? the same thing happened with the obama recovery typically an economy grows fast after a recession and then slows later in the cycle, and we have seen the opposite twice with obama and biden mainly due to redistricted policy. the way you can see it, the redi redistribution, it has been procyclical, meaning you have quarters when you have the economy expanding but people are getting more money because the programs are expanding so much in the recessions, and they are taking advantage of the crisis to expand each redistribution program, and the largest one is

medicaid, it's going into the middle class and people don't have to have a job anymore to get health care. the early cyclical growth has happened twice if you twist my arm, i have to compare it to trump where we had a late cycle, robust growth, even though we had higher rates than obama >> betsy, i will let you respond to that, and i am sure you want to tomas, you made interesting comments about the debt ceiling, that republicans have already shown their hand, they said there will not be a default so that takes away any leverage they have, but you don't think we can tax our way out of 32 trillion either? >> yeah, the white house has taken their view and the republicans said they have no leverage we can't tax our way out of this if you look at biden's '24

budget, it's erasing debt held by the public essentially from 100% to 200% with that spending. what that means is that if you just want to stay afloat at 100% of gdp debt, you would need to collect 10% per year in ten years to avoid the 200 essentially. what that means is 10% of gdp is 50% revenue growth of what we currently collect in taxes with that said, everything is off the table with both, republicans and democrats in cutting spending, health care is off, social security is off, interest is off, and everything is off the table except for 25% of the budget, which is 6% of the gdp, and you can't play with that and cut this debt >> betsy, you want to respond? take your pick >> let me start about the labor force participation.

just to be clear the rates from ages 25 to 54, are higher than in 2019. so a full recovery there >> they are off track. >> the thing tomas is referring to is older people, and those are people particularly over the age of 55, and even over the age of 65 who might be relying on the programs he's referring to, not medicaid but medicare and social security. i think this doesn't compare to the 2008 recovery in the sense that in the 2008 recovery, it was really slow to see both labor force participation and jobs come back then it sped up much later on, you know, and tomas, look, our fastest growth in the labor force was 2015 to 2019 i am not picking on any particular administration here, just stating the facts that what we had coming out of a financial crisis was really a very slow,

slow but steady recovery that really accelerated in the end years. what we had here was an absolutely vast recovery, the v-shaped recovery the trump administration promised us came about, but what we see is ongoing strong growth and that's not something that we want to say -- i don't know how you blame government support for people wanting to continue to work at higher rates than what they were working before to respond to what tomas just said about if it's on or not on trend, and the female p participation rate, we have seen mothers work at the highest rates we ever seen in history since 2015, and we are back at those rates. men are back where they were if you look at a trend that goes

back to 2000 or even further back which has been struggling to get men back in the labor force after each and every single recession we have had in the united states. when men get kicked out of the labor force or they voluntarily leave, they struggle to come back i think no political party or administration has been able to solve that problem >> tomas, final points you want to make, quickly >> i was referring to -- like she noted, i was preferring to the pretrend and not the level, obviously. >> you were talking about medicaid, right? >> yeah, medicaid. >> yeah. >> what i meant is that what are people relying on that are not back at work it's older people. >> yeah, you made the point it was older people mostly, but there are younger people with medicaid probably, as well

>> good debate between you two you guys going out for lunch maybe? >> i will take her to lunch anytime. >> i think that's a great idea we need to talk to each other. betsy, tomas, thanks friday may be a market holiday, but the government will still release the march jobs report, and we will do in an hour what it takes some people to do weeks. we have special coverage, 8:00 to 9:00 on friday eastern time >> big number. next big number. >> an important number >> the markets will be closed, but we will be here. >> yeah. when we come back, jpmorgan ceo, jamie dimon, a letter on the future of a.i.

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jpmorgan ceo, jamie dimon, says artificial intelligence is an extraordinary and ground breaking technology, and the data will be critical to our company's success, the company's future success, the importance of implementing new technology can simply not be overstated we will have more reaction to the jamie dimon letter and also, dizzy's ceo ripping into ron desantis. we will have more on that feud, next

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ai and so many other issues. liz offman is here curious what was your takeaway it's 43 pages, i should say.

with lots of nuggets throughout. >> this is jamie reasserting himself, not just the banking industry, but corporate america, writ large the banking crisis gave him a pretty good opening, to make some pretty fair points, which is that nobody here looks that good and to, you know, be frankly pretty deferential and say, this is not -- because i think jpmorgan is clearly going to be a winner coming out of this and he said, look, this is bad for everybody. we need to kind of reassess how we got here. >> the other piece of it that i found fascinating was this idea that he effectively said, look, the banking system is different. he seemed to be supportive of the regional and community banks. i would like to think that he believes it, but i alz recognize that he's in a position now where because he's the winner, and a winner potentially at their expense, saying something

else would prove problematic >> i think both of those are true i think the latter is exceptionally true the big banks held up incredib well here. they tried to be helpful i didn't totally understand the value of that magnanimous deposit move i don't think it solved the problem it needed to be solved in the moment. but clearly, they were trying to say, and it's a similar message that you saw them send in the early days of the pandemic in 2020, which is, we're here to help and actually, genuinely, they are much stronger than they were in '08 jamie is right, this is not 2008, this is not rat's nest of toxic garbage that will take years to sort out. fairly simple problem. i think, probably, a more simpler fix than last time but, you know, the too big to fail guys look pretty good here. and i think they know it >> the other question is about regulation he makes the point, you need to make sure that these banks are quote/unquote investable and he's 100% right about that the question is, once janet yellen made the decision that

she did, which is to implicitly guarantee effectively all deposits, does that come with other forms of regulation and is that something that the industry effectively needs to be worried about. was ate mistake for janet yellen to back all of those deposits in the first place? >> i mean, the fight that we're clearly going to have now is whether it was largely a regulatory problem, whether the rules were too lax, or whether it was a supervisory problem, which is that the cops enforcing them were asleep at the switch probably a little bit of both. but you have to remember that like the big banks subsidize the small banks in terms of the fdic insurance cap, and it's not good for them if the cost of capital across the system goes way up. so i think there's a little bit of, but i think the cost of capital across the spectrum is about to get more speexpensive that doesn't help anyone >> i want to pivot the conversation to this the other conversation of this morning for us has been this feud between florida governor ron desantis, and disney, which

has been escalating. the governor calling for an investigation into disney's new development contract, while disney's bob iger called florida's actions against his company antanti-business, and anti-florida surprised a lot of folks because there was an expectation that he was going to shy away from that. >> i think it was that he was waffling that it is okay for a ceo and bob iger is a celebrity ceo and has a lot of years of credibility behind him, that it's okay to pick a fight, but you have to do it with some conviction the other thing that struck me about this entire fight, just to zoom out, you have a republican administration being accused of being anti-business and you have one of the biggest companies in america being accused of being

too progressive. sk and just in the historical lens that we put on politics and business, that's weird usually when companies complain about governments being anti-business, it's things like, you know, the pushback in new york city that kept amazon from building its headquarters here it's on the other side of the spectrum i think this shows how toxic this has become. this is not about economics, governor desantis is willing to foist higher taxes on to his own constituents to prove a point. and disney is willing to pay higher taxes to keep control of its business and keep i have out of the hands of a government that's become pretty antagonistic towards it. i'm not a contract expert. i don't know whether the legal maneuver seems pretty clever, but perhaps too clever is going to hold. but this thing is far from over, i think. >> the debate continues. liz offman, thank you for walking us through both pieces of news and both debates >> thanks for having me. coming up, another big hour.

"squawk box" is just ahead starwood capital chairman and ceo barry sternlick getting ready to sound off on all of these things that's just ahead. squawk returns in just a moment. i know some consultants with great ideas. can they help us improve our digital experience? absolutely. they've invested over $2 billion in tech. that could really help us manage inventory. and save us a ton of dough. then let's take back our market share. checkmate, chess heads. girls, i said “bedtime”!

good morning when jamie dimon speaks, the markets listen meanwhile, former president trump expected to turn himself in today to face criminal charges. the latest details straight ahead. and fluctuating interest rates creating a lot of anxiety in the world of real estate fortunately, starwood capital's barry sternlicht is here to talk us through all of it the final hour of "squawk box" begins right now good morning and welcome back to "squawk box" here on cnbc, live from the nasdaq market site in times square. it was above 30 degrees this morning when i woke up so, april, we might get some

showers that will bring some may flowers, but maybe the lion is gone and the lamb has arrived. i'm hoping i'm joe kernan barry sternlicht has arrived i'm joe kernan along with becky quick, along with barry sternlicht will be joining us in just a few minutes there he is! and we've got the wardrobe made the right decisions, i think we had a possibility of a cardigan sweater or just the shirt. >> we do this with all -- andrew -- >> i almost wear a tie this morning. >> i went for the creative look. no suit today. >> that's fine because you're going to be scrapping today. i know you're going to be -- especially on some of these diamond -- you know, is he smarter than the bond market we'll see. u.s. equity futures at this hour with the s&p now at 41.50. must be smarter than the stock market, too. because we have been in a self-rally and i don't know if it's so

ste stealthy, but we're back around 4100 now treasury yields, all prices go up, you would think the fed's got to go up, but yields go down of course, maybe not right now but yields could be under pressure, because global growth, it's a tax on everybody on the planet, when all of a sudden, we're back above $80 a barrel. and here we go this will be a goodstepping of point, andrew, for -- >> barry sternlicht. >> let's talk about it jpmorgan chase ceo jamie dimon's annual letter out this morning, all 43 pages of it among the headlines, he writes the following. quote, if we have higher inflation for longer, the fed may be forced to increase rates higher than people expect, despite recent -- the recent banks crisis that, of course, at odds with what may have become the conventional wisdom about what jay powell may or may not do next meantime, he says, quote, the failures of svb and credit suisse have significantly changed the market's expectations the market's odds of a recession have increased and while this is nothing like

2008, it is not clear when the current crisis will end. note, he uses the word "crisis" throughout this document meantime, even if we go into a recession, he says, consumers would enter it in far better shape than during the great financial crisis and that may be a conversation we'll have with barry in just a moment we're going to talk about the other big news happening in the city today >> nothing's happening >> nothing >> you haven't heard >> here it is. >> former president donald trump is set to be arraigned on criminal charges in new york city today eamon javers joins us right now with the latest on that. eamon, good morning. >> good morning, becky take a live look now at the scene in lower manhattan this morning at the courthouse at 100 center street. we do expect the former president to motorcade down from trump tower by about noon today for fingerprinting and processing and he'll go before a judge juan merchant to plan not guilty. the whole thing could be over in minutes, but it will leave an indelible impression on american history. no former president has ever

faced criminal charges before. now, it's not clear what images of all of this will be made public the media have requested that cameras be allowed to capture as much as the historic event as possible we'll see what the courthouse allows later today perhaps the most important event that's going to happen today is the unsealing of the indictment against trump. and it's not until that moment that the country will learn exactly what the former president has been charged with and what the evidence against him consists of. we do expect trump after that to make his way back to florida this evening, and make a speech to supporters there when he returns. president biden for his part, he's remained mostly silent about his predecessor's legal troubles, but said during a trip to minnesota yesterday, he's not worried about unrest at the courthouse today, because he has faith in the new york city police department. trump's legal woes, of course, not confined to new york city. reporters in washington yesterday spotted two key attorneys for trump leaving the u.s. district courthouse there, as the investigation into trump's handling of classified

documents continues as well. so troubles sort of across the board here, for the former president. we'll see how the day unfolds today. an historic one, guys. back over to you >> eamon, thank you very much. all right, let's get back to jamie dimon. the comments he made this morning. and we want to bring in our big guest this hour. barry sternlicht is the chairman and ceo of starwood capital. and barry, i'm sure you've seen the letter jamie makes comments about how the odds of a recession are even higher now you could be looking at this banking crisis continuing, not knowing when it ends but he also said that inflation could be much more stubborn than people realize and that could force the fed to raise rates even higher than people are anticipating what would you say to that >> first, i'm a huge fan of jamie's, so he runs probably one of the best banks in the world and hooste's been an amazing str of shareholder value we don't agree on everything i agree on the recession, as you know, from my last appearance. and i think, i think inflation is going to drop, hard and there's a cpi slide that i

brought with me that shows why it is about the rent component of cpi and food is already dropping and energy was dropping. energy is a wild card. you can't actually model what the saudis just did. if they choose to keep energy prices high and inflation could be a little bit more stubborn. >> you brought an actual slide >> i did bring a slide >> it's like a whole three >> there you go! this is really important the blue line is actual rents. and the orange line is what the government is reporting. and you can see last month, actually, rents were up 0.8. which is almost a 10% rise in rates. and in fact, rents are falling if you correct for this, and there's a lack in the way the government reports rental data, this is one third of cpi, it's 33% of cpi if you just make the correction of plus 10, which is what they're reporting, to plus 4, which is what the nation is seeing, it will take headline

inflation from 44.3 to 2.6 you will see this in late summer into the first month of the fall all else being equal, inflation is going down, the ppi is down, lots of things coming down, wage growth slowing this isn't a bull market >> where does the national rent data come from >> that rent data? from -- it's national database but we have 125,000 apartments we can model it. it's not even across the country. if you go to florida, south florida rents are up 10% go to austin, they're down 4 denver is down 4 there are also places where they're going down all over california, rents are falling. actually double digits so in apartments so the way they do that, that survey of households is somewhere arcahaic they started this survey 50 years ago and updated it three or four times, but it's not the way -- they could go right online to apartments.com and pick up actual rents that people are charging

they call homeowners and ask people what they could rent their house for. if the government calls me, i am hanging up the phone i'm not telling them what my house could rent for >> we saw though lines eventually, they get back to -- there's a lagged effect. do you expect two or three months that actually shows up in the cpi data >> like four to six months can you put the chart up for a second again what you'll see is what the fed missed when rates were going crazy in '21, their data didn't show it. while we thought inflation was through the moon and beyond, they said, we'll keep rates low, because there's no inflation, it's transitory, that was 100% the result of all of the stimulus packages. that was flush consumers coming back to the city and rents rose everywhere. new york, peoria, you know, dallas, everywhere it was albany. i was in shock and they went up 20% and so that is what really drove cpi. for five months -- >> by the way, i will give you credit for saying, at the time, you thought they needed to raise rates sooner

>> yes, yes, and they did. i don't know why the fed has this credibility today when they really are -- >> they don't have -- do the markets give them any credibility? >> i think jamie is wrong. i think we're going into a serious recession. and the government has an interesting problem, but not for the reasons he stated. they have a massive deficit. and they keep feeding the deficit. that forces a supply of paper to pay for the deficit. receipts are going down, because capital gains are going away real estate, as we'll talk about as a complex, values are down. >> that's the one thing i would say. >> receipts are going down, interest expense is going up the deficit will grow. he'll have to print more paper that should force rates up, which would make the economy weaken further so he's going to have the opposite problem he'll have rates going up and the economy weakening, and he'll have to lower -- >> why aren't they going up now? >> i think it's a -- i think the markets -- i agree with -- first of all, i agree with you the credit markets are smart they know that this cannot last. and you know, you have very low consumer confidence, very low

savings rates, very low ceo confidence, recessions to serious layoffs covering through the service industries i heard earlier, education and health care are not interest rate sensitive and the one thing that we missed and jamie talked about was the region al banking crisis. we just missed it, but when you look at what it actually looks like, the only thing powell affected with his last quarter point increase in rates was knocking another 50 billion out of the bank -- of the regional banks' balance sheet for every point he raises or lowers interest rate, he's adding or taking away $200 billion of losses or adding capital to the banks so if he goes down two points, he adds $400 billion of capital to the regional banks. >> yeah, that duration risk is because they didn't have to mark to market as a significant portion of their books >> lee cooperman was here yesterday. he said the next place he thinks this hit is obviously commercial real estate. a business you know well where do things stand? >> you've seen -- in the regional bank crisis, what you

saw was the svb sale of a small portion of their held-to-maturity book, which popped at a $1.8 billion loss. if you went, whoa! everyone starts looking around every bank that we looked at was insolvent. they haven't touched the cre book the cre book, the commercial real estate book for regional banks is almost $2 billion, trillion dollars the big banks are $800, $900 billion. it's 28% of loans versus 6% of loans for the big banks. they are long cre. and we know that rates are up, real estate values are down, and there's no markdowns yet of scale. so that's why this regional banking crisis, i totally agree with jamie, is far from over and you know, signature bank, which failed here in new york, is about to auction $30 billion of their loans the whole loan book the government took back, it's going -- we'll be bidding, i'm sure, most of my peers will be organizing to bid. but it will be the first of the rtc-like, ftc-like --

>> will the government make a lot of money doing this? >> will they make money? >> no. >> they'll lose? >> actually, it's up to powell if he lowers rates, the government will make money if he keeps rates high so -- >> it's just what the government did back in 2008, we bought a bank and it failed, a $9 billion loan book original cost, $6 billion book, and we paid $3.7 billion for it and we borrowed $2.7 billion-something from the government the government partnered with us unlike the rtc days, we went 60/40 with the government. >> what'd you do with the bank long-term? >> there were 11 branches, so they shut them and just sold the loans. which is what's happening with signature bank they're going to sell $30 billion, $19 billion of which is multi-family in the tristate area it will be fascinating to see what happens, because it will b a first step of, what's the

clearing price >> this is pure market-to-market >> thaz took these loans out of the bank, sold the remnants -- >> is that the deal you got hammered for >> we made almost 25% of our money. >> they overpaid by $500 million. >> when you think about the regional banks that are going to -- >> this is going to play out -- if this happens, this will play out across the country for the next year and a half >> this is reflected consider morgan stanley put out a statement about commercial real estate and it just suggested a bloodbath is coming. which bank -- would you own a regional bank right now at all >> no, i mean, chairman powell said the banks are solvent because the government is standing behind their balance sheets they borrowed $300 billion from them they probably wouldn't own a regional bank. they won't all fail -- i mean, they won't all fail. but what happens is a prolonged credit crisis. >> i'm making you janet yellen for the day or jay powell for

the day or whomever can whisper. >> it's all in powell's hands. >> beyond lowering rates, what would you do >> there is actually, other than the office asset class, real estate is performing really well like, apartments are full. houses, single-family for rent houses are full. hotels are really full >> you just talked about rents going down >> in some cities, that have situations like austin, where they have mass layoffs, but in general, rents, there's no overbuilding there's almost -- >> the real estate -- >> does that support jay powell saying, maybe we've got to -- >> you have rents that are full and income streams from these real estate assets, but he crushed them by raising rates so far, so fast so the cap rate or the yields you're willing to pay for the property reflects interest rates. and obviously, the availability of credit. so in the multi-market, you have fannie and freddie willing to lend to you. so those markets are very healthy. we just put an asset for sale in virginia we had 33 bids for a multi and they're trading around 4.5,

4.25%, which is actually in line with fed funds and below the total cost of the borrowing, right? >> we're going to take a break >> let's do that there's too much information >> but that's great. so the saudis cut production, we've got to go up we've got to deal with these higher oil prices by raising interest rates >> no, we don't. it's ridiculous. >> that's what i mean. much more with this gentlemen, barry sternlicht and next, we're going to talk taxes why new york leads the country in a category its residents probably won't like, as we head to break. a few of this morning's top free market movers. cnbc's parent company comcast is higher after key bank upgraded their stock to overweight with a $44 price target and piper sandler, upgrading insy to overweight, saying it thks that the platform's active buyer growth can reaccelerate over the medium term stay tuned you're watching "squawk box" on cnbc

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let's talk taxes now a new report ranking u.s. states with the top total tax burden and new yorkers, buckle up robert frank joins us with more. >> it's never good news for new yorkers when you're going to talk about taxes and we all know that california, new jersey, new york, they all have high income tax rates but when it comes to all state taxes combined, new york ranks first in the nation. this new ranking from wallet hub, you add together the total tax burden for each state, that's income tax, property tax, sales and excise tax, as a share of total income. new york topped that list with a tax burden of 12.5%. hawaii ranked second at 12.3 followed by maine, vermont, connecticut, and new jersey. alaska had the lowest tax burden at just 5% also near the bottom was tennessee at number 47, florida at number 46, both with burdens around 6%. so that's half of new york's red states had average lower tax burdens than blue states and

lower tax states have seen some of the biggest population gains over the past year florida, the highest net migration gains last year, up 2% followed by texas, the carolinas, and tennessee >> goodness. >> amazing, california is not in your top tax state >> it's because of proposition 13, which keeps property taxes fairly low florida, as you know, pretty high property taxes in florida >> can i ask barry a question? i know you're like a pseudo new yorker, but not really a new yorker if you were the mayor of new york, let's make you king of new york given the budget crisis and challenges that new york faces, or states that have high cost base, what would you do? i would certainly freeze and probably i would lower taxes i would begin the concept of

credits for investment i would make it a very positive environment. i would stop harassing business and haranguing business and welcoming them it's funny, i had a friend who had an accident in miami over the weekend. he almost got killed by a driver and the police were not acting quickly enough and i texted a friend who texted the mayor and the mayor was on it in five minutes and got the police -- that can't happen up here one of the things, it's not just the tax breaks, it's how they value success. and the american dream is still alive in many of these red states in the blue states, they've basically said business is evil. that seems to be the narrative of one of the parties. that's just absurd >> except, disney is not evil anymore. >> how do you go after mother pie and mickey mouse >> will you revisit the total tax burden, federal and state and everything else -- what are

we in new jersey, isn't it 60% almost >> when you combine state, city, and federal, it's over 50% >> but 59 or something -- >> and don't forget under capital gains taxes. >> under biden's plan, it would going to 57, 60% in new york, but right now it's around 52% in new york >> i always have to remind, you know, taxes really, i would say -- i don't think anyone should pay more than -- should work past june 30th. that should be when you start working for yourself you don't pay that you have write-offs! it's like, there are no write-off write-offs >> there are only two states right now that are seeing declines in tax collections, new york and california. because of the tax bracket and what's happening on wall street. but it's interesting that those are the only two states that are seeing declines in taxes also, the only two states right now where there is a big push to raise taxes on the wealthy still despite what they're seeing without migration >> and they both have double-digit capital gains taxes which are zero in florida.

13% in california, i think 10 in new york but if you're wealthy, you have gains, you leave that's a lot of money, 10% just on taxes >> they've done a very good job of chasing out the rich people >> they're working on it you have to change that narrative. california is not a sales tax, it's not an income tax it's a resort fee. it's the nicest place to live in the country for sure you change the marketing but really, between safety and the attitude, those are the two things that i think drive people out. new york is a fabulous place it's wonderful to be back here but, you know, it's getting crushed under its social services we need to put people -- >> not hawaii. i understand the tax rate in hawaii >> well, they're an island nation >> they are. i would pay a few more taxes -- >> we just opened a hotel there, if anyone needs a job, we could use some help. >> on kawaii former st. regis, we gutted it

and brought it back. it's called the one honalay bay. >> what are you offering for housekeepers that you can't find people >> like $30 an hour. we can't find anyone bring your own bed, your sheets, sorry, not bed we'll give you a discount if your make your own bed there's no -- there's no housing. there's no worker hougs hsing and you can't get people there you know, if you ship goods from asia to hawaii, they have to go to l.a. first and go back. because that's some old law in the 1800s or something why do we do stupid things like that the government can spend a lot of time cleaning itself up and making itself a lot more streamlined. go see the hotel it's really lovely >> from a real estate perspective. are you seeing that continued shift from the northeast to florida. and you still taking advantage of that from a real estate perspective in florida are you building are you buying >> and the market, it actually slowed down and it's picking up

again. all my friends from the northeast, and there are a lot of them that have moved down, anywhere, naples, palm beach, jupiter, miami, they're asking me when the housing market will slow down. there's such incredible demand and such a small supply of waterfront or close-to-water homes. it doesn't look like it's slowing down in fact, the slowdown up here makes people want to get out of here more, because they're worried about -- their incomes are stagnating and they're looking at their taxes and say, i don't need to pay this anymore. so, florida 's achilles heel is its school system. you need private schools or better public schools, because you can't move to miami without getting your kids in school and the same thing in palm beach, people have started their own schools. >> should he take that surplus he have in florida and putting its towards education? >> absolutely. he is doing that his spending on the $22 billion surplus is pretty good he's investing in teachers and education, that's really smart and that becomes a positive

rolling stone episode the negative going on in some of the p blue states. new york will be a great city forever, but it has some serious issues, including its office stock, which is memptying very difficult up here right now for offices. >> robert, depressing news >> thank you >> young people will never leave new york >> what happened to your lamborghini story? we're not doing it on this show? >> you'll see it later >> okay. when we come back, barry is going to stay with us as we get into this year's bank failures, lessons learned, the potential long-term impact on the economy and much more. and a reminder for you, there is still time to register for today's cnbc equity and opportunity events we'll be digging into more ways to bridge the wealth gap and talk about the steps we need to take now to create a more sound economic future for all. just register for the virtual event at cnbcevents.com or you can scan the code that's on your screen right there we'll be right back.

welcome back to "squawk. the impact of hundreds of billions of dollars recently flowing out of banks, both large and small as we head to a break. take a look at futures this morning. right now, you're looking at some green on the screen treasures as we debate what jamie dimon said in his annual letter this morning about potentially higher rates coming. ten-year note at 3.471

the two-year at 4.017. stay tuned you're watching "squawk box" and this is cnbc

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on cnbc. among today's top business stories, richard branson's satellite launch company called virgin orbit filing for chapter 11 bankruptcy after it failed to secure any new long-term funding. the company has been struggling since a rocket failure earlier this year. uk privacy regulators fining tiktok about $16 million for what it said were failures to protect children's information britain's data watchdog estimated that tiktok let up to 1.4 million uk children under the age of 13 use its app in 2020, despite users needing to be 13 to create that account and bill gates throwing some cold water on the idea of a temporary ai development pause, which is championed by elon musk and others in an interview with reuters, gates said a pause wouldn't

challenge ahead. he said it would be better to focus on how best to use development in ai. when silicon valley bank collapsed, many thought it would only be the smaller banks that saw their depositors flee in the chaos, but there's actually been an exodus underway for quite a while from the big banks, as well steve liesman joins us to talk about how much money has left, where it's gone, and why and steve, i would guess part of the why is that you can get higher yields other places >> and i've got a chart for that concern about these bank failures have eased at the moment but the economic fallout from hundreds of billions of dollars scurrying around the financial system may have yet to be felt, as many surge into a place where it may likely not be helping the real economy money started leaving the bank system and accelerated with the failure of silicon valley bank $600 billion is out of the biggest 25 banks, $150 billion

leaving the smaller banks. money market funds, they were among the big recipients, with their assets surging by more than half a trillion dollars the bulk of that in just the past month other funds, of course, went directly into treasuries in turn, money markets keep a lot of money on deposit at the fed or in short-term treasuries, where it finances the government, but not necessarily main street. money has moved out of banks for two reasons, concern about safety, and as becky just said, low rates. take a look at this. money market rates rose along with the fed funds rate, the banks, according to the new york fed, they kept rates low and saw deposits -- that's the green line that's the bank deposit rate part of this was a choice, though banks decided to keep profits high by not paying up for deposits, but it also reflects their lack of need for deposits to make loans, because what did they do? they tightened their credit standards. what does that all mean for the

economy? a sudden tightening in lending standards says oxford economics now would imply a peak drag of 7.7 percentage points on gdp growth later this year or early next credit tightening could mean the fed needs to raise rates less, but the expense of the tightening can't be known yet. the money, it's still moving around the financial system, but for now, more and more it's in a place where it's going to be tougher for main street businesses to get a loan to start up and to expand becky? >> steve, just the impact of tightening credit standards on the economy, i mean, i've seen some estimates that it's quite a bit more, 1%, 1.5%, even potentially more than that >> oxford is maybe a little bit on the low side. it also depends on how much credit standards -- or how much tightening you're really building into your base case you know, autos could be harder to get the trouble is, becky, it's not necessarily linear, right?

is that you have x decline in lending standards, but you could have 2x impact on the economy, if these things don't work themselves out it's really interesting. you know, jpmorgan, they would have been a recipient of deposits, but they may not want those deposits, right? that could have been a flight to safety and jamie dimon may not want that money he may not need it for lending a real question, it's like a game of musical chaser irs whert all ends up in the end, and could it be harder or easier for businesses to get a loan and expand >> steve, there's another point which is even if they want to lend, these regional banks, the cost to their funds has gone through the moon and beyond, right? so they're going to lend you money at 7 before, they lend it at 9, 10, like, i don't want to take that loan to buy that small laundromat and convert it to my mcdonald's franchise the country is going to go through a massive credit

contraction. and if that happens, just because they were paying depositors a point, point and a half, and now they're paying the government 5 so the bank pnls, the regional bank pnls will look like a horror show. they're not going to be growing. >> that's why they're letting those -- barry, that's why they're letting those deposits flow out they don't want to pay up for those deposits they're trying to keep -- what they want -- they want the stickiest deposits possible. they want the people who will stay when the bank tells them to go that's the whole point they do. they do right now. >> for powell not to change, not to pivot in that last raise when he just saw what happened, those two banks that failed were as large as all the bank failures just about in 2008 $318 billion, it's almost the same number, except that was 147 institutions and this was two so, i mean, he -- you ain't seen nothing yet. >> barry, before you go, barry -- barry, before you go, tell me what it's like when you go -- barry, what's it like when

you go to your lenders now do you have to give more are you experiencing that title lending standard >> yes we do deal mostly with the larger lending institutions, and the major banks -- really, there were three sources of tightening, they raised rates, they were selling off the balance sheet, and the third one you didn't see was that the occ was at all the banks basically saying, stop lending you can't grow your balance sheet, we don't want you to have this office exposure, so the banks went, like -- they had no choice they cut back on their lending so we were feeling that. and the only lender you have really is the guy who has your loan today so you go to him and say, okay, extend it, i'll pay it down a little bit, give me some time, and you negotiate. but across america, i think the banks are definitely seeking to reduce their exposure. because their balance sheets are shrinking. if they lose those deposits, they have to get rid of assets, right? they have to shrink their balance sheets to offset the loss of deposit, if you don't live on the government's

handouts, and don't live off of the federal home lending windows. so, you know, i think, i think it's a self-fulfilling prophesy, and it's the wrong message there are really good office buildings, by the way. if you're in san francisco, we just renewed our lease in our building in san francisco, actually a different building. if you're in the ten best buildings in san francisco, rents are solid, in fact, they're rock solid and they're full and there are people in them if you're in the "b" and "c" buildings, there's nobody home there was a building in new york i heard about last week, it was worth $200 billion and the bank offered it to the buyer at $70 and he's not taking it you would say, why because he has to put the money in to bring in new tenants, 70 will be 150, and he doesn't know the cap rate, the yield it's worth on the way out is he going to bet interest rates are down and it will be a six yield or is it a ten yield >> so you wouldn't take that deal either? >> probably if it's a "b"

building in new york, probably not right now. >> let me ask you -- >> "b" and "c" buildings, these mid-block buildings that are a dime a dozen in the diamond district, but vanderbilt, it's a trophy it's leased. and it's full. >> you talked about getting loans from, i assume non-banks at this point. a lot of places you're going to, right? >> private funds at the moment >> all right, private funds. my question to you is, how much do you think the profit, this sort of shadow banking system, i don't know if that's the right phrase or not you want to use, is impacted by this and we just don't know it? >> people like ourselves have been raising debt funds right now, private debt funds to fill the void that's how i started star properties, the nation's largest -- large loan lender we have an $18 billion book. and we're pretty solid we're monitoring every loan. most of our loans are multis so, you know, i just did a stress test, unlike jamie dimon, the whole team and a stress test on the wlhole book, we think we cannot only survive, but we have

$1 billion of liquidity. we're holding it for a rainy day. we are not lending right now on that book. >> you just said that you would be willing to make some deals for the signature bank portfolio. >> that's the equity side. that's our opportunity funds looking for 20% plus returns and that's what you do with the equity side. there's $220 billion of dry powder in real estate equity funds looking to deploy it and you're going to buy that stuff, because you can't really -- i mean, i think there are certain asset classes like, by the way, if credit comes back, you'll see the reits take off. like, the reits are on sale. there are some unbelievable bar gains -- like, we did the same thing in the pandemic. we bought a dozen stocks all over the year. we were already starting to buy some stuff in the public market. because i do believe rates are going down i think the credit market is right and powell's job owning is wrong. he gets to lower those rates, because inflation is going down. i absolutely, 100%, jamie and i don't agree on this.

he's -- he runs a bigger institution than i do. >> the jamie dimon letter that is out this morning, 43 pages, his annual letter to shareholders part of what he said he said, quote, higher fiscal spending, higher debt to grows domestic product, higher energy costs and the inflationary effects of trade adjustments all lead me to believe that we may have gone from a savings glut to scarce capital and may be headed to higher inflation and higher interest rates than in the immediate past >> where you diverge from him. >> and the consumer needs to feel >> if we start getting layoffs, you have -- i made this point the last time i was on here. the government has got the floor on the accelerator $1.7 trillion spending, 1 trillion infrastructure bill, a $400 trillion climate bill and the fed has their foot on the brakes to the floor, usually that doesn't end well. you can't be on the accelerator and the brake at the same time

something explodes and i think you have to be careful today. i think there's going to be some time bombs that are going to go off. and it's -- the problem in real estate is, we can pay these loans. we have caps in place, but when the loan matures, we cannot refinance it and there's no one to take us out. if he lowers rates, everything gets a little bit better the regional banks get capital, the losses go away, you know, right now -- >> if he lowers rates and everybody closes their eyes for two years, you might be in a better place >> i believe the inflation was born by so much money facing too few goods and supply chain is fixed. it's largely done. so there's -- it's 95% finished, the supply chain and consumers are kind of flushed. these savings rates are 2.2% 50-year lows loans are way up and bank of america, my college roommate, is the ceo of -- not my college -- he went to school with me. brian moynihan, we went to brown together >> do you think the supply --

>> they're seeing dlingelinquens pre-pandemic levels, they'll go beyond that. >> do you think the supply chain issues, which you said, you thought 95% fixed were anymore resilient than we were before, or actually just back in the same place >> no. >> if there was another pandemic or another weird thing happened, that we would be in the same suit >> yes, the sad part about high interest rates is it will delay capital investment in the united states in new plants and equipment and things that would materially change our supply chain for the long-term. we never got a chance to do that >> also creating a housing shortage higher rates will create you'll get through the existing multis that are being built. and we own land that's like $18 million. we're just going to wait >> so higher interest rates makes it harder for the supply to be brought -- >> to be fixed >> it costs more to open a company, more to start a company. adds to inflation. >> when you have a supply issue, means the prices continue to go up >> no. >> you're saying there's no supply >> i think we bought everything. we've bought more or less everything we needed in the

pandemic and now we're traveling. >> on real estate. you just said that you thought that there was not enough supply on real estate >> i think long-term he's creating more growth in apartment rents. more pressure on housing prices to go up because he's getting -- we're short like 4 or 5 million homes and it's going to get worse, not better it's going to get worse. >> you think higher energy prices will increase production, or do we need to -- >> you know, it's oil and gas. gas -- we have so much gas, it's okay oil -- we're not a net importer of oil anymore so it's -- i think the axis of saudi, and iran all wanting higher oil prices is pretty powerful right now i think that was more a move the pif was in miami on thursday and friday, the saudi wealth fund i think that was really more a move on what they saw global demand was going to do they were getting ahead of a degrees in demand that was going to come. you saw the airline numbers were beginning to go down airline prices, watch those. because that's a real tall tell,

what the service economy is doing. his problem is he's crushed one-half of the economy, or not even half. it's half his health care, education, all of that stuff is not even sensitive to interest rates. he's -- manufacturing is going negative, just about to cross negative services, you've got layoffs, in tech and they'll come. and then construction is delayed. it will show up. open jobs dropped in half last month in construction industry so east going to get what he wants. i keep saying, just be patient now he has another crisis on the side this regional bank crisis is serious for america. not for new york, where jpmorgan has an outlet every three cities you go to these towns where these banks, i grew up in connecticut, there's people's bank and all of these other banks around they got problems. they got serious problems. he should pay attention. there's $23,0023,000 people at e fed. how could you have missed this >> barry sternlicht, telling it how he sees it >> when we come back, we'll talk

to someone else who tells it like he sees it, jim cramer's first take on the trading day ahead. and you can get the st obef "squawk box" in our daily podcast. i think today may turn out to be barry's day on the pod you can check it out and listen name we're back after this. 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. what if you were a global bank who wanted to supercharge your audit system? so you tap ibm to un-silo your data. and start crunching a year's worth of transactions

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jim cramer joins us now. usually you see some of the show, jim. there's the barry stern version of the world and jamie dimon.

>> so diametrically opposed. >> jamie says inflation will be higher for longer so fed needs to keep going. barry says the fed will be cutting before they raise again. what do you say? >> i do think that i agree with barry that we are in a moment here because of ne'er-do-well banks that it casts a pull on everything i think the difficult thing about reading jamie's note that in terms of investability, your weakest link brings everybody down so consequently, let's say the first republic doesn't find a home, i think barry will say we'll have another round of this stuff. certainly not to feel the fed has to raise rates i think credit is tightened everywhere i've been with a bunch of banks in the last couple days. really big guys at kban, credit is tightening everywhere when credit tightens everywhere, it's difficult to justify another hike >> it's more than that, jim. it's not really fair

the government told these banks to buy treasuries. they actually wrote the capital regs so they would buy treasuries maybe they should have hedged them, but they also told them don't worry about it i was making the point to becky off camera it's like if there are no hurricanes that never hit your house, you'd never buy hurricane insurance. none of these banks reg hiked themselves they did not really think -- i'm sure silicon valley, never in a billion years did their risk officer, who were all risk all the time, ever think $42 billion would leave in one day it's unbelievable. peter teal, i thought it was incredibly irresponsible. >> everybody is talking about that you're right there everyone is talking about that what is the value proposition of

keeping your money at first republic. >> it's a great bank it is a great bank, great ceo, fantastic. they have the wrong balance sheet. >> they were playing by the rules and then powell changed the rules, changed the game. he raised rates and they couldn't react fast enough >> seems like everybody in wall street is hedged, right. >> how can you say it's still great? >> well, they do a great job for sthar customers, a great service bank >> a lot of my friends bank. >> a great bank. >> thank you, jim, we'll see you again in a couple minutes on secrete. we'll be back with more from barry stearns. more with what you need to watch

on wall street

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capital. you're a real estate expert. is that the next shoe to drop, commercial real estate >> yes and no. the asset class for real estate is in very good shape. we're not seeing declines in rents in almost anything, industrials are strong, apartments are strong. we have this infamous non-traded read our online business is terrifying what's happened to us is interest rates have gone up. if the credit markets are right, they're going to go down the long-term effects of rising rates means much less supply we think the rents will accelerate coming out of this. we always come out of these things there's never been a recession that didn't end up with a recovery it's just a question of timing for investors. >> timing and being able to roll over some of the maturities that come due >> the family market, the skrurtization markets reopen a lot of what will happen is paper will go to the public markets, the banks, big banks

with securitize the debts. >> will the invests be as good if you have to pay a lot more. >> as an investor today you have to have a view where you think rates will be in the year or two. if you make the right bet, you'll make a lot of money if you make the wrong beach, we'll be at the beach drinking pina coladas >> they'll have to do something to make it easier because this is such a credit crunch. >> they were buying mortgage backs when they didn't need to the spreads on jeannie mays and fannie maes and also the agency paper, they've gapped out because all the banks are trying to get rid of this stuff on their books right now. the markets are in shambles. it's not functioning correctly the feds should be paying attention to that. they can pay either way. they can lower tr rates and the banks will recapitalize or they can raise rates and take the

banks over either way, i would go -- the same way they shouldn't be focused on increasing unemployment as opposed to increasing the labor force by removing barriers that keep people from working. harvard business school, my son's friend can't stay in the country. she's desperately trying to stay here we need to revise these laws quickly and get these people that are qualified into this country, give them jobs and then we should really work on removing silly stuff there's a lot of crazy laws -- the housing authority was speaking in boston this weekend how they want more affordable housing. everybody wants more affordable housing. the reason we don't have it is usually the regulation, the time it takes to do it, the cost to do it, the unions you have to use. it's prohibitively expensive the problems and solutions are in the government. they create the problem, they have the solution. we need a different attitude of politicians, not just to get elected. >> we haven't solved the problems of the world or even

the united states. barry, thank you for the stuff. >> it gets better. it will get better. >> glad to have you onset. >> thanks, becky. a quick final check on the markets. the dow futures indicated up by about 26 points. s&p futures up by 11 right now the nasdaq up by just 42 points. that does it for us today. make sure you join us tomorrow we'll be right back here -- >> for three hours, until friday. >> then one hour see you later. ♪ ♪ good tuesday morning welcome to "squawk on the street." i'm carl quintanilla with james cramer david faber has the morning off. the s&p coming off four straight gains, the longest win since january. oil continues its climb. australia becomes the latest central bank to pause after ten straight hikes the dow an