you see the dow? shares of boeing plunging. the company has one thing after another. warning it will reduce production and delivery of the 7 737 max. shares are plunging. the world's richest person was target of protesters yesterday. protesters stormed the headquarters of lvmh it is friday, april 14th, 2023 "squawk box" begins right now. good morning welcome to "squawk box" here on

cnbc live at the nasdaq market site in times square. i'm andrew ross sorkin along with joe kernen and melissa lee. becky is off today we have earnings here on the screen it is likely to exchange i don't know which way we will see nasdaq off 42 points this comes after the dow rose 383 points s&p was up 1%. the nasdaq up 2% all of the major indices in possiblitive territory for the k to date. the 10-year treasury and 2-year treasury the 10-year treasury at 3.43 2-year treasury at 3.96. we will await the banks and await -- i think jpmorgan chase is the bellwether. not the earnings, but what the company says. >> i feel what the company says about normal things.

credit quality and consumer. not necessarily -- >> they will gain. >> they will say we gained >> when we hear from the pnc financials later today and next week with the regionals. >> the two inflation reports were very big this week. both of them >> yeah. >> yeah. that's dictating the trade we have austan goolsbee. we will talk to him. >> are you going to call him mr. president? >> he specifically said i need to refer to him as mr. president. he had already he is a smart guy. i don't think he knew about the inflation numbers. he said let's just have a light touch. he said that earlier this week with harker. >> right >> they're going to 5. they are still at 73% on the fed funds to go to 5

in two years, 3.9. i can drive a truck through that >> we will go higher how does the fed -- how does mr. president feel about that? >> it might not go higher. the reason they will not hike is because we're going into recession. >> right that is what yeswe have. >> this economy. you know how many times recession is coming. won't it be great if inflation goes down and we don't have recession? >> are we off to the races or on larry summering stagflation? you could bypass the recession and be in a ma los laise.

>> gold is telling you that inflation could be embedded. >> i'm telling you the spigots are reopening. same reason bitcoin is almost at $30,000 this morning that is almost an all-time high. i was thinking the same thing for gold the persistent inflation it seems to move when it comes down, the fed is obviously back on what it has done for the past ten years. print. the only reason the dow is down this morning is because of boeing let's look at where that stock is you can see it is down 5%. almost 10 points phil lebeau has the story behind it you know, you are not a guy to go into implications, phil you have been busy talking about boeing's problems.

>> sure. when you thought the 737 max production would increase. now boeing is preparing to do that boeing has not said they are increasing 737 max production. they have not shifted or paused or slowed down yet that is the question from wall street after this latest revelation from the company that it will be slowing or pausing deliveries of some 737 max not all, but some. the issue is two fittings from the supplier at spirit a s -- spirit aero systems. they were incorrectly installed. this is the not a safety of flight issue i can't stress this enough max planes built are safe and can continue flying.

they will be inn p spected to si a correction needs to be placed. boeing says the issue will likely effect a significant number of undelivere ed 737 maxi production and storage in the fourth quarter, boeing had approximately 250 in storage or inventory they continued production while the plane was grounded they have been working down. they have 250 or did at the end of the fourth quarter. that is likely what they have now. the production is currently at 31 737 maxs per per month. will that production go up now they will pause delivery and do inspections?

not all max will need to have some corrective fix. the dash 9 models are delivered. there are suppliers who have the fittings that were correctly installed for some aircraft. boeing has to go through now all of these by the way, look at spirit aerosystems. it was down pre-market more than 10%. largely because people are saying, okay, how much cor correction needs to be made with production and how much will this slowdown what spirit is delivers in 737 max and fuselage guys, this is the cash cow the max is where they get the cash flow for the company. a large percentage of it not all of it. $10 million per aircraft that is delivered. if you have to slowdown

deliveries, you really start to see a hit to the bottom line already jeffries is out to reduce deliveries. expect that from all those estimates on wall street >> the jets are one of the seven wonders of the modern world. i think of all of the installations across the board thousands of installations of whatever goes into the making of the modern jetliner. things will happen you try to do the old ge thing have no mistakes in 7 million processes. that is a perfect world. that doesn't happen. >> what you will see now -- go ahead. >> how does it effect the plane? it is not a safety issue >> there are eight of these fittings that go into the

fuselage where the vertical fin comes together and two are in question they talked with the faa they reviewed this boeing and spirit as well as the faa. they are comfortable that the aircraft in service are safe there is not an issue there. if there was an issue, joe, the faa and boeing would not hesitate to say stop >> if i had my druthers, give me the one with the correct installation >> phil, the certification that it is still safe to fly, that is based on information that boeing presented the faa? the faa has not done an independent look at this to ascertain if it is safe to fly >> well, that's a gray area, melissa. what do you mean independent >> not based on boeing data? >> how do you do that, melissa that is how the relationship

works. the regulator and the company. now are you getting into the gray area. i understand what you are saying here the faa works closely with boeing >> boeing thought that an was safe, right? >> joe i understand what you're saying. i'm not trying to sit here and defend the faa and boeing. what i'm saying is they can only go on the information they have. they are comfortable boeing got dragged through, rightfully so, with the max and the problems they had following the two crashes. rightfully so, dragged through the mud, and paid a price for the crashes. they have been working closely with the faa since those issues. i'm not going to buy into this it is boeing telling them it is safe it is not as simple as this. >> the big calhoun

there was grousing in recent quarters about all of the things that happened. would a ceo -- i guess everything rests on his desk -- eventually. >> joe, this is the supplier >> it is the boeing stock. >> i understand what you're saying will dave calhoun address this he has to address this they have earnings in a couple of weeks we are expecting to talk to him that day he will address this they will have to say our delivery forecast is going to be impacted in some fashion how much who knows if they put a number on it at that point. they will do inspections they have to have an inspection protocol signed off on the faa they will not say we'll go ahead and check it they are working with the faa. they have to go through property cease. this is -- process

this is not an overnight check all of the planes. they have this process moving forward where the faa is comfortable with what they're doing. >> you had the airbus guy on with us, phil. he almost couldn't disguise h his -- he said this has helped us this has put us into the lead in terms of the perception on building airliners >> absolutely. add another to the list. >> absolutely. it is a duoopoly >> i love it you are proud. the manufacturing gem of the u.s. economy >> no argument it is a dow component and important company to the u.s.

economy. i think everybody would like to see boeing succeed just as they want all companies succeed when you see a process like this or situation like this develop, nobody is crazy about it you know, we can't stress this enough they have been through this. they will have to go through it again. the question is how much does it hit the bottom line? >> right thank you, phil. we have three hours. >> we have a bunch of earnings dow's united health. we have bertha coombs with the numbers. good morning, bertha >> united health group raising full year outlook after beat bebeating estimates on the top and bottom line adjusted first quarter profit of $6.26 a share. that is up 16% from a year ago well above expectation revenue of nearly $92 billion beating up 15% year over year. now on the insurance side as we break it down, united healthcare

revenue came in at $70.5 billion. $600 million over estimate driven by growth in commercial employer plan membership which helped boost and bring down the medical care costs because of the shift in membership was younger. medicare advantage membership at 7.5 million was shy of exp expec expectation. 8.4 million in medicaid was above the estimate on the services side, this is where you see the driver optum revenue up 25% from a year ago. optum health which includes the practices and clinics and surgical posted $23 billion in revenue. up 37% from a year ago driven by value base care contracts with the physicians. the optum rx, that revenue up

14.5% year over year ahead of expectation as were sales in consults and data this is much smaller revenue up 40% year over year. benefitting from the change of health care acquisition. united health is boosting the 2023 guidance by a dime to $24.50 to $25 a share. that is above the consensus outlook at the top end andrew. >> bertha coombs, thank you for that that stock is up 1.5% this morning. thanks we are watching shares of blackrock. adjusted earnings at 7.93. revenue in line with estimate at $4.24 billion. it is the stock up 2% right now. larry fink will be on later this

morning. they talk about inflexion points it is an interesting interview coming up, we talk strategy after two straight days of positive inflation data and what it means for the fed's next move. on the earnings docket, wow. jpmorgan chase, wells fargo, citigroup, pnc finanalci in the next two hours you are watching "squawk box" on cnbc >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com.

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fed president bostic said the fed can hit the mark and hold he said one more quarter point rate hike can allow the fed to end the tightening cycle with confidence inflation will steadily return to the central bank's 2% target let's bring in carol she is the chief innvestment officer. this reminds me of 7 minute abs. you can't get a good burn with six minutes. okay, 4.75 won't do it

this is, to me, body language and psychology for going one more after the numbers this week, do you think we need another 25 >> we actually didn't think they needed the last 25 you nailed it with the psychology game. they are trying to figure out if we don't raise again, the markets will run away and that works counter to what we want to do underneath the economy, there is a lot of health under businesses great businesses that are looking to do different deals and looking to put capital expense out, but holding back because they are trying to figure out if they're done the fed is playing the psychology game if we level out, markets assume we go right to cut rather than hold steady for some period of time. they are treel i trying to play that -- they are really trying to play that game of not wanting

to go off to the races we do think the odds are likely they will do it again just to try to convince the market which is what they have been convincing the last 18 months. they are not cutting, but holdingcarol, managing money is big responsibility how much did you pore over the cpi and ppi? did you take that over component by component are there things you decide with the buy or sell with different security i was going to ask what was really in those numbers? is it coming down? is it systemic is inflation likely to get down to 3 or is it stubborn what could you tell from the reports? >> first off, economic reports are one piece of the puzzle.

they are not the only piece of the puzzle it is important to remember to look at the market the least correlated is how the economy he isis doing to the mat you can predict with last year's markets and it predicted the trouble and hiccups here it is a broader issue than that. to the inflation question, we think it is settling in to a more normalized rate we continue to question the fed fixation of 2% leveling off of the rate and you look at the long-term average and it was more than 3% to 3.5%. getting back to the normal rate of modest low single digit inflation and endemic in the system, that's healthy overall if you can get business and consumer confidence anchored to that fact, then you are seeing

more housing activity come out when the 30-year mortgage went from 7% to 6%. you have some people out there demographically waiting to buy houses you have companies waiting to do deals and other companies with cash waiting for other deals it is finding a better clearing price for valuation than the frothy markets there's a lot to factor in as we give advice to clients. >> carol, as we get further from the october lows of 3,600 on the s&p. 4,146. are you moving up your down side do you think this is sustainable or a corrective phase in an ongoing bear >> we came into the year thinking we were going to have more normalized returns on stocks and bonds and figure we would have range-bound activity for the year

we think this back and forth is indicative of the way the year plays out. more normalized returns on stocks and bonds are the expectation. we don't set targets for s&p where we think it will bottom or top. we are balanced in the way we arelooking at the risk in our portfolio. you are getting paid to sit in short-term cash vehicles the whole globe understands that now. there are interesting opportunities at the other end in non correlated assets these are the opportunities you lean into without getting too bold assuming we go way up or down on either side. >> carol, thank you. thank you, carol >> we're working on it i don't know what we have to do. >> she had a family office of

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welcome back the world's richest person widening the gap with elon musk. the owner behind lvmh jumped yesterday thanks to the rise in the shares in paris which follows earnings elon musk is worth $180 billion.

separately, protesters storming the lvmh in paris yesterday. men forcing their way to the entrance of the building to executive offices. protesters are in opposition of the pension overhaul bernard arnault has been at the front of the protests. protesters broke in yesterday chanting there is money in the pockets of billionaires. i don't know if you saw a similar thing happen probably almost a year ago at blackrock in paris this is a real issue there and we talk about p europe on one end and equality this is the manifestation about it >> we tried both

one ends up with 100 million people dead. >> it's a longer conversation. >> we with w ith will -- we wilt break. we will talk about the etoro deal we will hear from citi and wells fargo. as we go to break, look at what was a strong day in the market in the s&p 500 >> announcer: executive edge is sponsored by at&t business at&t 5g is fast, reliable and secure but seri y we nee a reliaby 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

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lower. big gains yesterday and everything is up for the week. elon musk is one step closer to the everything app. we will talk about it.

twitter teaming up with etoro to buy assets on the platform this expands the hash tags to cover more assets. we have dan from axios dan, this is a unique development because it is getting closer to what i think elon was talking about 20 years ago before paypal. it is not totally inside the twitter ecosphere. there is an outside partner. >> it is a step in that direction. as you say, it is far away this is a partnership. he is taking twitter users and helping direct them to a third-party exchange which is the one that would make money off the trades if there is money to be made the thing interesting for twitter, for elon, the guy with

tesla and spacex, twitter is the first time he is in everybody's pockets as consumers this doesn't get him there, but it is indicating where he wants to go eventually one thing we don't know is how long the partnership lasts you think ultimately he wants people to trade stocks and crypto just via the twitter app and never leave. >> that was my question which is to say do you think he ends up abandoning the partnership how does this work out if he is trying to become the super app >> i think if he actually is able to do this and we don't know how much money he is spending on getting this stuff inside the app that is why he does the etoro partnership. could he buy them down the line? maybe. he is unpredictable. etoro tried to go public last year with the spac i'm not sure this puts this int

the twitter app sg >> where do you think this is going? do you know how much money is spent or the future of what this looks like you hear most of the headlines, i'll say mostly negative head lines. you did cut the staff. maybe the economics are different. i don't know what do you think? >> the problem is the economics is elon said during the interview this week is they are at a round cash flow break even. we don't know if that includes the interest payments. he took on took on the enormoust of debt. twitter was an albatross of a company. it was losing money when he bought it. the debt he put on was so much the reality is the net worth he can put more cash into it if he needs

twitter is a break even and lose a little bit and make a little bit company. the question with elon musk is how long will he let twitter be that is he willing to spend that money to get to x.com? if you want to get to x.com, you have to add a bunch of engineers. >> dan, when we talked about the transaction and it was on the table, it was not just the future of twitter, but the future of the rest of the elon empire that is to say the impact on tesla and impact on spacex, et cetera do you think there is a meaningful impact on the businesses >> around the margins. you hear people say the way elon acted on twitter and public statements have hurt the tesla brand. i think if he comes out with the cheaper car, it won't matter spacex seems to be fine on its own. i don't think it impacted them, per se there was stock implication when

elon sold the tesla stock to get the twitter deal that was not a long-term deal. i believe he is still committed. >> what does the fcc think you click on a hash tag and an buy a meme stock there seems to be regulatory implications with the partnership. where twitter is encouraging people to do this? >> there was some indication that twitter was within the algorithm promoting or boosts tweets of amc or boeing, then patc possibly i guess we are way down the line with that. he is providing a link to the outside. we don't know it is promoting any cryptocurrency >> i would be curious if the arrangement is such that twitter

gets paid for each click on that link that could be perceived as promoting for their benefit. >> you have to assume twitter is making money elon should not let etoro in for no reason. we don't know the parameters there is so much about twitter we don't know. andrew said when we started talking about the deal, that was a year ago twitter doesn't have any transparency or senior management when it comes to twitter, what we don't know is more than what we do know. >> dan, i wanted to talk about the implications of what we saw happen this week with npr coming off the platform whether you think other media organizations and others that provide content to the service, typically for free, will stay or go and whether you see this as a one-off? we saw this with sub stack over

the past week where there was a limiting of the linking out because sub stack is now creating a service that is trying to compete to some degree with twitter what do you make of that >> i don't think you will see too many other media organizations leave. new york times did not leave after it lost verification check mark for a period of time. sub stack hasn't told users to stop using twitter and elon not telling the truth. i don't think you will see others leave i do think elon -- twitter is an interesting spot for media media companies don't need twitter much anyone knows twitter drives traffic, but it is far from the largest driver of social media facebook dwarfs it it is more of a watercooler and bigger newsroom.

you won't see others leave unless elon goes directly at them for some reason >> dan, great to see you. >> thanks. >> we have to finish this news. coming up, walmart unloading brand bonobos for less than a third of what it paid. later after the break, we talk to roger ferguson to get his take on the inflation data and fed meeting and more you can get the best of "squawk box" on squawk pod check it out listen any time. we're coming right back. you can't buy great conversations

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pnc earnings crossing the tape flat after the initial pop on the earnings revenue came in line with expec expectations $5.063 billion $3.67 was the estimate it looks like a beat on the eps. in terms of deposits, that is really in focus, we saw deposit growth of .3%. not a deposit loss stable at .3%. we are looking at delinquencies. decreased by 11% average loans increased by 1%.

primarily driven by commercial and consumer loans a lot of questions to be answered on this conference call. >> did you see it earlier? it looked like it spiked >> it looked like a v on the revenue and deposits were stable >> the last trade. you see what i'm saying. up $2 there. the last trade, i guess, very thin or not trading. i have a mbid of 123 the bidding 124 now. 124. >> i see it up 2%. on access. there it is. up 2.5%. bingo. >> that's what i'm saying. >> deposit level is stable >> that is big news. is that indicative of everybody? 12k >> pnc. >> it is considered a much larger bank. >> and higher quality.

>> good management over the years. remember, i know a lot of the guys pittsburgh midwest values like cincinnati. east pittsburgh is west -- far enough for midwest. philly you are thinking philly. pittsburgh's far enough. did you ever see how he votes? >> yes coming up, awaiting reports from more banks. jpmorgan chase and wells fargo due out any moment we will bring you the numbers and reaction on wall street. you can ask sharon >> wells far is goout. >> all right don't miss the interview with mr. president. chicago fed president austan goolsbee

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wells fargo crossing the tape the stock is flat in response. earnings coming in at $1.23 a share, 10 cents above of what we were expecting revenue beat estimates of just over $20 billion looking deeper into the press release, it looks like deposits were down just a touch by about 2% quarter on quarter. we'll be looking for that conference call later on this morning. so many bank earnings coming out, we had jpmorgan crossing the tape. >> jpmorgan looked pretty good i think the stock is up. you compare it directly to the estimates, $3.41 was the estimate

if we're going to -- a lot of times the revenue numbers aren't apples versus apples, but companies talking about revenue of 38.3, which would be above the 36.1 estimate that wasout there among analysts and then, you know, so many other things, there is assets under management, book value is up 9% at the end of this quarter, and i think it's one of the banks that really is trading quite a bit above book at 128 you don't see that across the board. you're paying for jamie dimon there and the credit quality and the way -- risk management and everything else that we think of when we talk about jpmorgan. in terms of equity, 18%, assets under management, $3 trillion at this point that was up 2% if you're looking at whether you saw an inflow

net credit loss provision reserve build of $1.1 million and the provision for credit loss is $2.3 billion in the current quarter. and i think all and all, once we talk to someone who does this for a living, and knows exactly what the estimates were for all those different metrics, but that's helping the dow a bit at this point, up two points, not upsetting all of boeing's losses, but it is down 35 points at this point. how iswells fargo with the stock going? >> the last i checked, the stock was higher again, a beat on the eps in line on revenues. net interest income is looking through here, year on year, it doubled. but quarter on quarter, it was down so, just because of the change in rates this is all -- so far, so good when it comes to the banks that we have gotten so far. regionals will be a whole other ball of wax next week. we'll be looking for a lot more detail on the state of credit

there, also the state of deposits there let's bring in victoria green for some reaction to the results we have gotten so far. top and bottom lines look okay deposits look okay so far. in terms of the headline numbers, victoria, everything looks fine and we have gotten a big reaction across the board had it comes to the banks in the premarket session based on these results. what do you want to hear about on these conference calls this morning? >> yeah, i think the market is a big sigh of relief on deposits it is actually pnc being the canary in the coal mine for the regionals. i think everybody is focused on what are they looking at for going forward and guidance on loan growth and what they're going to have to do with loan reserves, as well as not only do they keep deposits or grow deposits, but how much are they paying for the deposits now? interest versus not interest bearing and a good example of that is wells fargo. i don't have their q1 numbers

yet but q4, the average they're paying is 46 basis points for deposits that was versus 3 basis points in q2. you're seeing costs rise a little bit i think, again, the initial reaction, big sigh of relief, i think we expected jpmorgan to do well they were seen as the best port in the storm we did think there was going to be a flight to quality we were worried about ib, there was not a lot of deal-making to be had right now it is about guidance, where are they staying on cre and looking at loan growth going forward and if it is tightening too much. >> we're seeing wells fargo pull back a little bit. next week we're getting the regionals. you mentioned pnc being a sigh of relief. it was a sigh of relief but was always viewed amongst the regionals as a larger one, one of higher quality, one that may not have suffered as much in terms of deposit flight which we're seeing being born out by its earnings release in terms of the other -- do you think, you know, we are -- we have enough of a read so far to

say we're through the worst of the banking crisis >> i don't know if we can say that yet i'm not sure we can give the all clear. we got to see what happened with deposits everybody had a nice rally pnc benefited with -- they merged with bbba or bought them out and they have 61 branches in california they were able to pick up some of the west coast deposits that were flighting, flight out of some of the lower quality regionals. i think pnc was seen as best of read of the regionals. i'm not sure it is exactly going to play out what it did for pnc because of the quality of their balance sheet and size and scale. and another interesting thing, i think, investors should be thinking about, if we see deal-making, it may be slower, there is a $700 billion threshold the fdic, you have to start marking down your health and maturities and different rules and regulations. you may see a company like pnc reluctant to pick up assets because they don't want to hit that next threshold with higher regulation we have to be a little careful

i'm not sure what you're seeing today. you see three names of fair quality, even wells fargo is considered quality they cleaned up a lot since 2016. >> right victoria, thank you for your thoughts we'll hear from you again when we get citi's results due out in moments. >> coming up, much more on the big banks this morning we'll bring you all the earnings reports straight ahead we're awaiting numbers from citigroup at 8:00 a.m. eastern time as well you're looking at jpmorgan up about 4.5% wells up just about half a percent. citi, we're waiting. 2% up, though. pnc up 5.5% on the back of some good earnings news and deposits which is making people feel a lot better question is does that translate to the other ban akss well don't miss our exclusive interview with chicago fed president, mr. president, austan goolsbee later in the program.

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goo good morning we got a rundown of names to watch and what it means for the sector and amazon's ai ambitions. we take a deeper dive into what

ceo andy jassy told us yesterday on this broadcast about the technology and what it means to the battle between his company, microsoft, and google. and supplier issues from boeing as it plans to pause delivery now of some of its 737 max airplanes. the stock under a lot of pressure this morning. details coming up as the second hour of "squawk box" begins right now. good morning and welcome back to "squawk box" here at cnbc live from the market site in times square. the dow turned positive as you were talking i don't know whether it is you, might be jpmorgan, maybe pnc, it

is not a dow component, but getting some relief. >> the piece of it that is making people feel better, whether they should or not, pnc not in a bad place. >> boeing is still indicated down let me see whether it improved at all boeing is down a lot anything you see on that -- boeing's now 200 to 285. boeing is now down even more than 10. down 13 points >> 6%. >> do the deviser, the math, you can see it would be down 100 points or something. the rest of the components are offsetting boeing and we moved into positive territory. where we already were, i think, for the week, in all the averages. >> yes reason for this dow turn around, a number of banks reporting this morning. jpmorgan coming in at an adjusted 432 a share versus an estimate of 441 a share. revenue $39.34 billion, also ahead of estimates of $36.2

billion. quarterly average loans up 6%. average deposits were down 8%. the stock is up almost 5%. wells fargo reporting, joe. >> yes it did earnings came in at $1.23 a share. revenue up $20.73, beat estimates of just over $20 billion. probably going to mention united health eventually too. but since it is a $500 stock, it is only up a little bit on a percentage basis, but it is 7 points added to that to the dow too. so between united health, jpmorgan, and boeing, that's why we're now in positive territory. >> meantime, black rock also reporting just in the last hour the company reporting an adjusted $7.93 the estimate was for $7.76 revenue in line. estimates for $4.24 billion. black rock saw $110 billion of quarterly net inflows. and assets under management at the end of the quarter

just above $9 trillion, compares to $9.5 trillion for the same period last year the ceo will join the gang on "squawk on the street" later this morning. >> let's get reaction to this morning's bank earnings. joining us is chris whalen, chairman of whalen global advisers do we -- okay, normally we talk about jpmorgan and the majors, but maybe a little more interested in the regionals this time around? pnc or not because of the developments over the last month >> the regionals are more interesting to me just because they have the ability to grow and acquire assets. >> also the ability to -- right, but, you know where i'm going with this. we're watching the regionals to see if there is a deposit outflow from what happened with signature and first republic and silicon valley bank. is there anything in pnc you can extrapolate to the rest of the -- is it similar to the others >> no. >> no? >> no, they managed the duration better than the group.

that's the first thing you do is you compare the unrealized losses on their -- >> you can see, we just showed all the -- we showed them and they're all up to date they're probably not up on jpmorgan. >> remember, the third quarter was horrifically ugly. the fourth quarter was better. the ten-year treasury is your surrogate. now we're heading toward 3%. so the unrealized losses piece of this problem is going to look much better. but i think investors are will take comfort from that the issue is that we still own a lot of securities with 2% and 3% coupons and like the 1980s, you have banks underwater. either they'll sit with these things and just take the pain, or they'll sell them and take the loss that's the choice they have. and when the ten-year gets down to 3, it is tempting to take the loss and go buy a 6% or 7% coupon and that helps a lot >> so, any -- as yields come down based on inflation, that's helping these guys

they can bolster a little bit. they get a chance, they get another chance to get out of the long stuff. >> it means making a ton of money, offering credit to the street at 7% now on the other hand, yes, if you make loans, this is what first republic did, right? that ten-year bond heading toward three will not be a bad month for the mortgage guys. they're going to -- >> you think there is a bunch of guys who will take the loss at this point >> if you have the capital and your standing there saying i could go buy 7s, do it. >> isn't that to some degree what svb was trying to do. they were trying to raise capital. they hadn't filled the hole completely, but the idea is they were trying two swap what was a pretty bad deal for a marginally better deal. >> no, i honestly think they were swinging for the -- >> you think they were swinging for the fences with that particular transaction at the end? >> even going back to 2019 >> it was a mess i'm not -- >> remember what happened --

>> i have no sympathy for that part of it. >> the fed is dropping rates during covid and half of their book prepays -- >> no, but what i'm saying is here we have this moment, this sort of cataclysmic moment at svb and this was telegraphed, the other piece of it. but with a loss. it was taking the loss, the swap of the loose that pulled people out. but what i'm suggesting is if people -- if banks start taking the loss, does that freak people out again? >> no, because if i have the capital and income to do it and i have the strength to do it, yes, it is okay. with silicon valley, i was admitting that i had a problem and then i said, by the way, i'm going to go out and raise equity, no >> the loss is smaller. >> much smaller. >> that helped banks out a lot. >> this is going to become a balance sheet management issue i think looking at jamie's results, good. that's awesome because what that suggests is 140 plus for the

year now, if you won't do that for the rest of the year, but, still, out of the gate, that's a very good number. >> anything in the credit metrics that would indicate to you we're on the cusp a rece recession? >> we're normalizing credit and that is simply because quantitative easing forced credit down to zero or lower we're still negative and residential homes because of home prices, but the other sectors, autos, commercial real estate, which is what this next cycle is going to be really about, about commercial, not residential, they all normalized already, joe multifamily here in new york, you know, we're going to watch that auction of what is left of signature bank, could go at 50 cents on the dollar because of our friends in albany. so, you know, i think new york has got a lot of soul searching to do when it comes to real estate covid, oh, my god. the market came roaring back we had the worst volume numbers in the country now the question is where do we go from here and that, to me, is, you know,

governor hochul has been to be worried about this. >> the gap of where the fed is headed and where the two-year is, how does that finally close? >> i don't know. if the fed refuses to do what i think is the right thing, which is sellsecurities, when the ten-year is headed for 3, the new york desk ought to have instructions that says you sell mortgage securities until you get it back to 3.5 why shouldn't they hit their cap? they're not going to run off now the way mortgages are. nobody is refinancing a mortgage today. so those bonds might as well be treasury bonds they're going to be there forever. >> you wouldn't raise again? >> no. i would leave fed funds where it is, leave the short-term complex where it is, because it is painful now for the economy. you know, the job creating part of the economy is about the short end of the curve this is where we finance goods >> what regional banks would you own right now? >> well, i haven't been that tempted by regionals i might get back into u.s. bank if it heads down toward book

but they're still not cheap, you know 1.5, that's not cheap. his numbers suggest maybe it is cheap. and i think there is a lot of managers on the street that want to come and buy this stock >> what about the banks that have just been slaughtered i'm looking at first republic as an example of that they get bought? >> i think they get bought for the aum. >> there is deposit cap limit, the big ones can't really step in and buy. >> no, the top four, no. it would be the next ones down pnc, u.s. bank can do what they want. >> all right >> true can go do what they want they have plenty of capital. >> if that deal was to be had, wouldn't it already be done? what are you looking for here? >> are you looking ining to do if you're the ceo or board heb member of a top bank you want to see what happens this quarter or next quarter before you pull the trigger. there were deals in the pipeline already which turned out to be

home runs. my god that bank has gone from 30% noncore funding to 100% deposit funded for a wholesale and retail business. very sweet but, citi, i worry about citi. and the other interesting thing is the structural changes you're seeing in deposits as people demand that they get paid something after years of not getting paid at all, you're seeing big structural changes in all of the big banks >> right all right, for whatever reason, dow is now up 55 definitely feeling better about the banks. >> good number. >> positive on the economy >> look, jamie dimon, to me, jp and pnc, the two most interesting stories. pnc they're a tiny business. >> are you worried about citi? >> i think they need a partner they need to get married. >> who would you marry them with >> somebody with core deposits. >> we have to leave it there chris, thank you. >> oh, my goodness he's marrying citigroup off this morning out of desperation,

apparently, too. >> look,occasionally these things have to get done. >> we're going to talk amazon jumping into the ai game but will it help them win over consumers? we'll talk about the battle growing next and we'll look at futures turning positive on the dow. a complete reversal. up 61 points s&p also higher, lki toongo open up by 1.5 points nasdaq still suffering losses of 65 points now. "squawk box" will be right back.

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they're big, large language models that you can build these generative ai experiences on top of and you have to fine tune them for what is specific about your application so, that's bedrock, which i think will change the game for people. >> that was amazon ceo andy jassy telling us yesterday on "squawk box" about how the e-commerce giant now jumping into generative ai this comes, of course, as chuck schumer beginning to lay the groundwork for ai regulation for more on tech's ai race, i want to bring in brent phil, jeffrey tech analyst thank you for joining us does this change the game in terms of -- we always -- we have been talking about chatgpt and its relationship with microsoft. and then bard at google. this is different.

how do you compare these different services >> i would say right now it is still very early, andrew if you think about amazon, they basically own the market if you include microsoft and google together, there is a huge delta between amazon's lead. so i think the winners in ai will be the vendors that have the data and the users and amazon has that today with aws as the predominant leader. we think that many companies aren't exactly ready to roll out ai in full production yet. and so i think amazon has time they clearly relate as it relates to the pr. microsoft won the pr game. then google came and amazon now felt like i think they had to say something and investors were expecting them to say what they said but i think it is still early in terms of production customers, the degree of which those customers want to roll out but i do think that there is an

important point yesterday in the amazon letter they mentioned today, 80% of the data is on premise. many cios are saying ai can help bring more data to the cloud that's what amazon wants and when you use ai, you can't do it on old applications. so still very early and i would say it is hard to -- >> you just said that effectively that microsoft won the pr game of this. my question is, and i asked andy about this yesterday, how portable are these services, meaning if i'm a big company that has all my data sitting on an aws, is it -- do you see companies getting enticed by the idea of what open ai presents, for example, what bard might be doing or what have you and saying, you know what, i'm going to move my service from one to the other and how easy or hard is that

>> it is extremely hard. we don't believe that that's going to be as portable. i think there is a concept of multicloud, a lot of companies are going to use large enterprises, use two clouds so they may try microsoft and open ai for one service and keep other services at aws. i think right now, ultimately this isn't enough to change the game yet because we still won't have live referenceable production customers en masse at microsoft and open ai. until we see that, we don't believe that's going to shift away from amazon amazon today continues to hold the lead they're more innovative, they're holding many of the most important customers on the planet are still at aws. i do think that some will choose microsoft and experiment, but i don't think this is going to shift share very quickly. >> does amazon need to build not just a b to b platform for generative ai, but something that feels more like a consumer

platform, similar to what we have seen with bard or open ai because what they announced yesterday effectively is for engineers to build software as opposed to -- we say trivially, but to, you know, write poetry, but the truth is, the services that can write poetry likely can write lots of other things. >> i think there is going to be multiple applications written in my opinion google will win the consumer an amazon will win the enterprise, with microsoft microsoft will win too but they're going to be -- they're going to be number two and, again, they are number two with azure so, again, i don't think it is enough yet to change the narrative on aws again, we talked to so many customers and cios that said, you know, they're excited for this but they're not exactly ready to put this in production it is not generating massive revenue yet. you still, again, you have 90% of your workload still on premise, there is an incredible

amount of workload that -- forget ai, there is an incredible amount of -- $85 billion of revenue run rate that is not really driven on ai yet that is in the amazon cloud. to me, it is simply a consumer versus enterprise, amazon, microsoft, when enterprise wins, the consumer, there is room for multiple vendors to win this in the ai game. i don't think you can draw a clear box around, you know, the pure winner right now. >> just a quick question about earnings and what we can expect. the thing i heard out of andrew's excellent interview with andy jassy is jassy talking about working with businesses on the cloud relationships and when he spent time talking about that, it -- my mind jumped to price cuts, it jumped to margin pressures, it jumped to competition with other cloud vendors. are we being too optimistic

about the amount of spend we're going to see on cloud in the coming quarters, given tightening credit conditions, given slowing economy, et cetera >> i think the concern is the ai hype is long-term, so i think we're overestimating the near term, underestimating the long-term as they say. i think that the concern that i have is everyone is so excited about ai that this effectively we're still seeing tightening ente enterprise i.t. spend. this won't be enough for companies to push more budget into ai in the short-term. so i think no doubt long-term this is going to help, but short-term i worry about enterprise budgets still being cut. all hyperscale or growth rates are coming down. the buy side is looking for somewhere between 9% to low teen growth again, this was coming off of, you know, 30 plus percent growth a year ago there is no question growth is continuing to decelerate and i don't think these ai

conversations we're all having is going to have enough short-term to really prop up so i do think that is the concern about the hype right now in ai. it is not enough short-term to kind of mask what is happening in the overall enterprise pullback. >> brent, want to thank you for your perspectives on all this, this morning, and helping to make all this a little more understandable appreciate it. thanks. >> thank you. to dom chu with a look at pnc. hey, dom. >> joe, andrew, melissa, shares now off their premarket highs, up about 3.5%. just around 30,000 shares of volume what we're looking at now for pnc, to give you an idea of why the shares are higher, the positivity, it was an earnings beat revenues are relatively -- you want to call them inline, a slight miss. some of the things i want to highlight here, in the report, and in the presentation that they will give to analysts and investors later on at 11:00 a.m. eastern time today, they talk about their idea of credit losses, the provisions for

credit losses are now being reduced to 235 million, they were $408 million at the end of the last quarter, sequentially the deposit base at the end of the quarter, deposits were about $436.8 billion stable to slight increase. average deposits increased as well tangible book value per share, a measure that a lot of analysts and investors use to measure the kind of carrying costs and the overall value of the company, the tangible book value per share increased 7% to $76.90 per share. quarter over quarter net interest margins decreased to 2.84% from 2.92%, again, sequentially, quarter over quarter. higher yields on interest assets they do note that their share buyback activity is expected to be reduced in the current quarter, given what they say is

current market volatility and increased economic uncertainty one or two other things just to highlight, joe, melissa, andrew, before i let you guys go, the commercial real estate portfolio for regional banks has could under a lot of scrutiny because of what happened with regard to the overall portfolio composition. for pnc, they do say that for office buildings or office commercial real estate represents about 2.7% of their total loans, so a smaller percent there on a kind of total overall basis. and if you look at the split in deposits, versus consumers for commercial, $230 billion worth of consumer deposits versus $207 billion with a commercial deposit. i'm going through all of this, joe, melissa, andrew, i'll bring in more as i know more maybe that's some of the reason why you're seeing some of the positivity for this first of the big regional banks to set the stage for the rest of the slate coming up this coming week, guys i'll send things back over to you, joe

>> very good, dom. on this train? >> i'm going to check my email. >> pittsburgh is, like, cincinnati, columbus, indianapolis, st. louis, it is midwest. it is midwest. just got to get that out there and people are -- from pittsburgh, they got very -- i don't know -- i don't know why >> physically on the east coast? >> pittsburgh? >> pittsburgh is east coast. oh, no i'm sorry. >> on a map, you got to drive for hours west, young man. >> chicago is in the midwest >> so is pittsburgh. it is. i'm telling you. >> i don't know. >> we'll discuss. >> on a map. >> get a map. >> east coast. east coast is, like, the ocean needs to be there. >> they have three rivers. >> we're going to investigate during the break in the meantime --

>> coming up, much more on the banks reporting. and the whole attitude of pittsburgh is not east coast. >> that might be in a good way. >> that's different. >> a sharp drop in bank lending after the silicon valley bank collapse and the fed's inflation -- could make an interesting may meeting and decision on interest rates we'll speak with former fed vice chair roger ferguson about that. time now for today's aflac trivia question. adjusted for inflati, atonwh is the highest grossing film of all time the answer when cnbc's "squawk box" continues the story of my life. no coach, there is a goat here! whaaa! what's this? a thousand dollar hospital bill? but i have good health insurance! gaaaaaap! did you say 'gap'? he's talking about the expenses health insurance doesn't cover. but with aflac, you can get money to help close that gap. aflac, huh? gaaaap! aflac! gaaaap! get help with expenses health insurance

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now the answer to today's aflac trivia question. adjusted for inflation, what is the highest grossing film of all time the answer, mgm's "gone with the wind." >> still to come, don't miss our exclusive interview with chicago fed president austan goolsbee. he'll be coming up in the next hour you do not want to miss this nvsaon going to try to figure out where the fed is headed next stay tuned you're watching "squawk box" and this is cnbc invest in them.

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well, i could switch us to xfinity. those smiles. that's why i do what i do. that and the paycheck. kristina partsinevelos joins us now >> we're seeing beats at big

banks this morning wells fargo beating on top and bottom line, earnings per share of $1.23, ten-cent beat on $27 billion on revenue 17% increase year over year. net interest income came in at $13.3 billion, which was largely expected, up about 45% year over year, but slightly down quarter to quarter and this is due to fewer days in the quarter. but wells fargo plans to maintain its net interest guidance that it provided in january. keep in mind, definition which is income interest that a bank earns on lending versus what it pays out to depositors, we're seeing a $1.2 billion loss for credit loss provisions, which is about 26% higher quarter over quarter, which is basically that means it is putting aside more money for bad loans. but, still, not as bad as what we saw during the height of the pandemic as for deposits, this is a big number we wanted to see too, $1.36 trillion, down 1.5% quarter over quarter, which shows there was an influx for

regionals, but still not enough to offset net outflows into deposits and that's because you saw a lot of money move into money markets and direct treasuries you see now, wells fargo shares up almost 3% for jpmorgan, beat on earnings, $4.32, excludes 22 cent in investment loss with managed revenues of $39.3 billion. also a beat. the bank posting $2.2 billion in credit loss provisions, which is up year over year as well, but about the same from the previous quarter. deposits, another number we want, $2.3 trillion, with actually up 1.6 quarter to quarter. that's a little bit of good news for the company. you see shares up 6% on that >> all right, kristina, thanks kristina partsinevelos for us. >> this week, markets have been parsing through the words of several fed presidents, and two key inflation reports. for his take, let's bring in roger ferguson, former vice

chairman of the federal reserve, former ceo of tiaa and a cnbc contributor have you -- are you softening, roger? you thinking maybe we're close do we need another 25? did the inflation numbers do anything to change your mind >> look, i think you put it exactly right, joe the fed is att an inflection point. the choice is between stopping now or doing another 25. the argument is going to be yes the inflation numbers were positive, very helpful, but still early days those that want to go 25, they'll say the move is driven by energy, even in the service part of the economy, it was energy services, transportation services, they are going for 25, it is going to be, you know, not -- let's not declare victory yet. they once said the disinflation process was under way. and had the data coming and proving them wrong i think they're more likely than not to go 25, but it is a very, very, very close call.

>> the -- you are softening a little the only -- you say it is early stages of disinflation whenever we have rick santelli on, he points out that we can go back almost a year to see the actual peak and we really have been coming down for -- i don't know, he would take issue with we're in the early stages of it. we have been, you know, the highs of those trends we saw were all a long time ago, slowly trending down. it just seems like it has gotten a little bit more obvious at this point >> so, let me -- i hear you and i can't dispute that it is a slow trend recognize the fed is talking about inflation target that is still quite a ways way away. i don't sxut that. we have been coming off. given that we're saying aiming for 2%, not 3.5%, they will think they still have work to do the other thing is we have seen,

you know, the banking sector seeming to stabilize, at least a large bank area. which is helpful it is going to be a very, very close call i think what they want to avoid is stopping now and then having to restart that i think is the worst possible outcome >> that almost sounds like another sort of psychological concern, roger, which a lot of these are. i don't think anyone would argue 25 basis points here, 25 basis points there, one cuts demand and helps inflation, the other level does not so it all seems to be kind of, i don't know, a narrative that the fed wants to put forth and i guess that's important you can't just dismiss it as having no validity because of that but, you know, if you're just watching this, you have to be thinking, i don't know if it is that exact of a science. and if you've got the two-year, you know, below 4%, you're going to be at 5% at this next hike.

>> so, i think your big point is absolutely correct the average person, and in reality, you know, 25 basis point move one way or another really can't be the thing on which this entire thing turns. i agree with that. that's always the issue when you get to the last move every media i've been into that seemed to be the last move there is a legitimate argument on both sides. and so there will be a legitimate argument on both sides here and then it does get to your point, it is the judgment call as to which is the thing that we really need to focus on. and i think there is still, you know, enough concern about getting to 2% at a reasonable time frame that the 25 basis point argument will win. there may be a dissent in that we will see. the other argument, by the way, that you should bring up, those who think they should stop now is there is disinflation pressure, fortunately in the pipeline from the housing sector so those who say, well, let's

stop now are probably going to bring that argument up as well it is, as you point out, you know, i would say only 25 basis points yes. this is probably the last move and the last move is always one where you have really strong arguments on both sides and to your point, some of that is a bit psychological. how comfortable are we that we're going to get to that number, and you heard this week three fed people, presidents, speaking one of them, i think you have austan goolsbee on later, has taken a let's be prudent, which people interpret as let's not move this time a couple of others have taken the, well, we're not quite certain yet, and let's put in that 25 basis points the argument is out there in the public, yes, it is psychological to some degree, but that's always the case when you get to these inflection point meetings. >> for people that were there, for volcker, i mean, we should take some satisfaction in knowing that we're at least we're getting, you know, 25

here, 25 there, we're close already. do you remember where we had to go this is significant. this is nothing like the inflation of the '70s. >> no, no. this is nothing like the inflation of the '70s. fortunately we started a place where inflation expectations are relatively managed that was not true when chairman volcker was there. we had years of allowing inflation to get out of control. that was not the case this time around nevertheless, the number peaked, the inflation number got very high, very quickly and i think that created some concern and frankly it is also, let's be clear the fed was a little late in coming to the party, which i think also to your point about psychology may play a little bit of a role here, you know you don't want to stop too soon if you start it out a little too late but, nowhere near what paul volcker had to deal with fortunately for everybody. >> i hear it, though, roger. i hear it. you moved. you moved a little

and i hear it. and you keep -- you keep saying i got some good points you usually don't say why you got some good points you are -- we must be getting -- >> because the reality is -- the reality is we're close to the end. >> you say 25 more, if you're going to vote, you say let's do one more >> i would on balance go for 25 more, while recognizing there are legitimate points that you have made and others, austan made as well on the other side >> i'm going to say -- when i'm talking to andrew, on balance. >> i'm on balance. on balance >> that's such a good -- >> respectfully. >> recognizing your legitimacy. >> means i don't really mean it, i think. roger, thank you. >> recognize you have a legitimate point >> thank you >> for the first time you recognize it, kind of. implied on balance thanks >> i don't know about on balance fwo for the next story boeing shares not on balance, under pressure this morning.

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dow component boeing taking a hit. 12.5 points in the premarket after news this will pause or delay some deliveries of its 737 max planes amid new supplier problems and that's affecting the dow dow still managing to stay higher up 35 on jpmorgan, united health and some other components. but that's a big drag on the dow today. joining us now, sheila kailu, managing director at jeffries. we haven't had you on in a while, sheila. here we go again, though another -- i don't know if it is -- i don't want to characterize it as whac-a-mole, i don't know if you blame boeing for -- i'm seeing some arguments on twitter, people say you can't blame boeing, it is a supplier other people say, yeah, you definitely can blame boeing. the supply chain is part of managing boeing. whose fault is this?

>> well, making a plane with a million parts is very difficult, as we can see. i don't think it is necessarily anybody's fault. what is unfortunate is boeing is just getting going with hitting the right production rates and is ramping significantly on their max production so they're at about 25 a month in 2022. the last two months we're tracking the mid to high 30s, which was a really positive data point. so this news is disappointing that they're going to cause deliveries on some variance of the -- essentially everything but the max nine at the moment, which is a majority of their maxes. and the max for perspective represents 30% of boeing's revenue. >> so who is in trouble i mean, when they go to try to find some -- is there a middle management boeing type that was supposed to be on this, or do you find some of the -- spirit, do you yell at spirit or just write it off how complex and

difficult it is to make something like a 737 max unbelievable engineering feat, and i understand things happen that's why we have an expression called six sigma, you try to make sure there aren't any mistakes who do you think has to answer to this? some poor vice presidentis, thes eight brackets which are nuts and bolts on the fuselage and three manufacturers of those brackets that supply the system. and two of those are not conforming with the standard so, one guy is working out, and the matter of the fix will be can that guy ramp up production or can the other two suppliers fix it so from a perspective, boeing has a good backup of suppliers on this bracket. >> i don't understand why we are defending or -- anybody is defending boeing

i mean, you can have a supplier, think about it as a house, if you have a house, you have lots of different subcontractors, and then you have the foreman and the contractor who is supposed to put all of this together. it is ultimately on the foreman and the contractor to make sure it all works you can say that you have subcontractors, who are not doing their job, but that's not -- you can lay blame there, but ultimately the owner of the house is going to look at the person they hired and say, you know, what happened here >> andrew, i know we both live in new york city, so there is no way we're chasing contractors, because they don't take blame for anything to put it in perspective, there is two global manufacturers of large commercial aircraft, boeing and airbus. it puts in perspective how difficult it is, how the supply chain is stressed. we have known that for months and thought that's the biggest risk to ramping production from 25 in 2022 to 50 aircraft per month in 2025. that's a doubling in three

years. when the labor force across the u.s. economy not only engineering and manufacturing is quite weak so, i'm actually not quick to blame anyone and i think this is a very defendable situation because it is not a safety of flight issue like we had in the past and it is more of an issue of two out of three suppliers, which is great, but they actually have the suppliers for something that is a bracket, which is essentially a fastener. >> the faa has been inspecting all the planes that have come off of boeing's production lines. the 737 maxes in particular. since the two accidents in 2018 and 2019 those checks would not have detected this at all a plane inspection would not have detected it and so therefore been years later it can be detected i don't really understand that >> so, the issue we're still unclear in a preliminary of what the issue is it seems like boeing self-reported it it is back in actually with

february with the 787 as well and that issue -- that was a very quick fix on the pause in deliveries there i think post the max incident, there is a very careful examination that every plane and either faa is picking it up or boeing is picking or boeing is picking it up and self-reporting it or in this case it was reported to boeing over the last five years the supply chain has changed and the regulatory environment has changed and it's ultimately a positive outcome >> for whatever reason, though, on the quest to get back to new levels that the stock saw up above 400, this is just another production issue that's going to have an effect and another sort of a gift to airbus in a competitive landscape. so nothing is good about any of this regardless of whose fault it is. >> no.

and that's the saddest part, joe. this is the first quarter i think since 2018 that boeing outpaced airbus in deliveries and orders so just to say they reported that data earlier this week is a disappointment and it's about 60% of boeing's free cash flow, think of it is driving the airbus really. >> coming up, a number of stories this week involving apple, including production changes and rumors of an apple card saving account. we'll talk about the company's strategy when we return.

joining us is senior technology columnist at the wall street journal great to have you here on set. >> thanks for having me. >>in terms of india being an important market to apple, it seems like these phones are too expensive for the average person in india >> it's a really good point. being in indian is vital to tim cook we saw that in the end of 2022 couldn't find the high end anywhere that was because of the china issue. moving to india and out of china for production, vital. the market in india, apple is

opening two stores, this next month in india which phones, though, are the right target for that audience is a big question. apple has made plays in the lower end. they have the iphone se, phones hovering around the $350 range but what's really interesting is the secondhand market, the used phones it's not something apple sells themselves but it is part of the trade-in process and part of the cycle of the iphone. i see that being a way into india market share is the used or refurbished phones making a bigger play into that market and that being a place where apple can build market share >> in that case, a physical place is going to be important >> and if people are buying secondhand phones that are not the top lines, they're buying

iphones and air pods, which is what tim cook wants. >> did you make anything of the data that came out about mac books? >> sad times for pcs i guess everyone is using macs around here but the drop in macs in the last quarter surprising but not that surprising. apple -- the big shoot up in having more macs in the market was surprising and a really good move during the pandemic apple released a lot of new mac book with new chips. that was key to success. now people aren't buying computers as much. >> i have a total curveball for you. it just made me think about it because we were talking about the app store and i was thinking about apple and you probably saw about what's happening in montana around tiktok and things like that.

do you believe long term -- i don't know if everyone knows what we're talking about in montana, effectively they're trying to outlaw tiktok. the question is whether these phones of a geo targeting perspective, you can have one app available in one state and one not available in another state. >> in the u.s. this is going to be something really interesting. apple and google know a lot about limiting apps in certain countries, in india specifically tiktok not allowed they banned it from the store. in the u.s. that's uncharted territory. these are some of the big questions around the tiktok ban. >> thank you we got to run. big hour ahead auston goolsbee coming up.

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good morning earnings season kicking into high gear with the banks we'll hear from jpmorgan and wells fargo. and pnc and we're about to get citigroup. just crossing. make room for that boeing taking a hit. the company warning it may have to reduce deliveries of its flagship 737 max

and fed president austan goolsbee joins us for his first interview since taking his new job. the final hour of "squawk box" begins right now good morning welcome back to "squawk box" right here on cnbc we're live at the nasdaq market site in times square we have a big hour ahead melissa lee is in for becky quick. we're going to show u.s. equity futures on the back of some bank earnings this morning and on the back of that boeing news right now the dow up about 45 points the nasdaq turned down about 60 points, the s&p off just marginally let's talk citigroup >> looks like a beat christina has the details. >> thank you we're seeing citibank posting an eps of $2.19 a share on revenues of 21.4 billion.

we're aren't going to compare estimates but the bank reporting credit loss of 2 billion on an individual business segment, what we're seeing from citi is they are a player in fixed income so that segment is up 4% year over year compared to the 25% drop in equities market, which is a much small er unit fo the bank retail banking was up roughly 3% but not because people were setting up new bank accounts but because of mortgage revenues i'm going to pivot because i just got off the phone from the wells fargo media conference call and the cfo saying that credit and debit activity is increasing with americans and, quote, it feels like there's still a lot

of activity in the economy but given the pace of rate increases and sort of where that could be going, we do expect some slowing of the economies so far, though, it's been very, very strong. recap for wells fargo was a beat on earnings a 1.5% drop quarter over quarter for deposits. there was an influx in regionals but not enough to offset net so flows. there you go >> christina, thank you. interesting jamie dimon said something very similar in his letter that things are looking good in terms of consumer activity but with credit tightening, we'll see if that plays out. >> we want to get reaction to the citi piece of this with us again, chris whalen, chairman of whalen global advisers good morning let's talk about citi because a

half an hour ago you said that's one of the red flag banks on your list. is the red flag coming off or on >> it's a good quarter but two issues funding. really doesn't have a strong core deposit case and they're also the bellwether in terms of consumer credit because of the high default rate on their book. they have five times the default rate of jp it's a different consumer. their target is very different it's a subprime consumer as opposed to the more ped estrian. >> a lot of people looked at their deposits some would think it's a sticky deposit made because of the connection between credit cards and businesses and payrolls and this and all of those things that make it more sticky than maybe another bank >> parts of it, yes. the domestic part, yes but not the totality of it they still have a huge degree of dependence on non-core funding

what was the canary in the coal mine back in the third quarter it's went banking went up 100% and lending barely grew. the model that jumps out at you is citi. >> if you're going to marry them off, who do you want to marry them off to? >> someone with half a trillion in core deposits >> you can't marry them off. it's too big >> it's missing an asset leg >> so you want citi to pick up an asset -- >> they sold it to smith barney. that to me left them unstable. it's a two-legged stool. >> you want it to be more like a morgan stanley >> yes i think gorman has won that fight. if you look at the dollars he earns, he gets twice what goldman does he's got a bigger bank >> what do you think a proper

valuation of citi is >> the market is telling you half a buck. to me something needs to change. their overhead is too high they need to get their efficiency down next to jamie dimon and keep it there. >> that's still $4.80 to me. >> well, yeah. but the market penalizes you because of credit costs in the future and they penalize them because they still don't know what business bank -- >> it's not even a major >> what are the large implications of the jpmorgan report we heard from this morning and the pnc report the pnc report didn't seem to move, is maybe suggesting to some people in the market that they don't have to worry about some of the smaller regionals. should they or should they not be worried >> you worry because banks have to pay for money now that's going to hurt earnings. i'm not going to worry about runs with banks.

the fed dealt with that. >> you think the fed dealt with that >> yes in the short term. the medium term, fourth quarter this year is when banks start to show how bad the coupon loans from 2021 are going to hurt their earnings we get the ten year below three, you're going to see a lot of sales. >> a lot of sales of -- >> older securities from the 2020 -- >> which would be a great -- >> if they have the capital, yes. as soon as they reinvest, more sails up on the boat and it moves faster >> morgan stanley came out with a report about commercial real estate sitting on the books of a lot of regional banks and how concerned we should be about that and we heard the same thing from barry stern, sitting in the same seat you're sitting in this week >> texas, no if it's in the northeast in the

legacy cities, downtown, b and c kind of office space in new york city, no that's going to go half of book value. >> look at the regionals can you see this firstrepublic bank, comerica, pnc, pacwest, western alliance >> you can own any of the other four >> i own western alliance. chris is a mortgage guy. he's going to buy them cheap people going to sit with it. it was one of the best performing bank stocks in '21. >> they had an update. they botched it. they didn't give any department levels and the markets freaked out and later on they came out and said wait, wait, wait, here are deposit levels >> they already disclosed that in other areas they might as well just give it to investors >> you like western alliance is there something on that screen that you would run from >> i wouldn't be buying first

republic until they clarify what they're doing. i've been kind of a little surprised by their response to their problem. >> back to western alliance, western alliance is one of these companies -- for a lot of them in order to stabilize deposits, they're going to have to pay a lot more to depositors >> yes, but they're a wholesale bank why do you care about them it's not going to perform until mortgage rates come down so i'm happy to accumulate when it's cheap >> why not any of the other regionals? you were the one who actually went out and bought credit suisse stock >> that was different, a whimsical and stupid thing to do i'm going to keep it and buy ubs. ubs is the last man standing in europe >> you at this tthink that's goe a win in the end >> i don't think he wants to own

credit suisse. >> who are the winners ubs, morgan stanley. they figured out the universal bank >> goldman sachs >> weak because of funding they're chasing capital one, ally, american express citi has been leading the peer group on funding for a year. extraordinary, galloping increases in funding costs >> if goldman sachs was crazy, they would have been credit suisse themselves. >> if you had a big piece of equity coming into the mix, yes, you'd take out a very important competitor keep in my goldman is getting into the mortgage business >> when do they come down, rates? >> not till the end of the year. >> refinance >> the ten year is falling

so lenders have a bad month. the problem is the short end where they fund their operations >> chris, great to see you, sir. >> have a great weekend. >> coming up, two big interviews on the economy and the fed following this week's inflation data judy shelton joins us next and of a that we'll speak exclusively with fed president austan goolsbee. and likely delayed delivery of the 737 max and a problem with a part stay tuned you're watching "squawk box" on cnbc (cecily) you're looking pleased with yourself. (seth) not to brag, but i just switched to verizon. (cecily) so you got an awesome network... (seth) and when i switched, i got to choose the phone i wanted. for free. not bragging.

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central bank to stop raising rates. she's currently a senior fellow at the independent institute judy, i've got to warn you i'm kind of feeling half full. normally i'm a hundred percent full of something. i'm kind of feeling half full but maybe there's some type of fine line the fed can walk walk and we might get out of this in other words, inflation seems to be moderating we're in the going to 21 1/2% with the prime rate. people still bring that period up i don't know if there's any parallels at all and the economy, how many times have there been recession predictions where the economy just resists, resists the slowdown, consumers resist that. and maybe that could happen this time around with inflation moderating am i just pollyanna? >> no, i think there are reasons to be positive

if you have the lowest unemployment rate at 3.5% in history and you have strong or at least consistent aggregate demand and you're getting some economic growth, these are all good things. and i don't think that low unemployment is inflationary i don't think real growth is inflationary and i just wish that the fed would let the economy equilibrate. i think it's very positive when people are producing goods and providing services so for the fed to be targeting a higher unemployment rate as their means to slow down growth to fight inflation, i think inflation is coming down in spite of the fed and i would rather they quit man handling the economy. >> they might get saved in spite

of themselves. i guess that was my point. like we're getting, you know, five historically doesn't seem that restrictive it's coming from much lower levels, talking about like fed funds, but if we knew that that was going to do the trick or for whatever reason they perceived that they've done the trick, it may have done it on its own, but that leaves us in a position with a pretty strong economy and very low unemployment. i don't know, is a mild recession guaranteed in your view, judy >> i think so. i think that by pressing it further that the fed is risking that i think it would have been better to stop and just coast for a while and let the economy adjust the worst of all worlds is when the fed says let's just go a little higher to prove that we're vigilant about inflation because we messed up and so now they overcorrect and then the market starts thinking, well, now it means they're going to have to lower it again a couple

times this year. just quit helping us the fed needs to just let the cost of capital being determined by demand and supply let market forces decide what it should be. when i say they're man handling, i mean, i'm no feminist. i'm saying rule of law versus rule of men and the 12 people who are on the monetary policy committee making these decisions about what the interest rate should be i think are setting themselves up with a certain amount of hubris, as if they know more than the people who are actually in the real economy. >> yeah. i keep using that joke we know economists have a sense of humor because they use decimal points we need 25 basis points. that will do it. once we get there, that's it perfect. perfect. >> it's the fatal conceit that

you can finesse this those 25 basis points, are they going to push us over the edge it's the scene from the "monty python show," is that going to push us over the edge? if you throw in financial stability and climate change, that's a pretty broad mandate and i think that people are starting to say maybe you're doing more harm than good. maybe just let capitalism and free enterprise work >> so people have pointed out that when the fed was created that it was about financial stability. so we've layered on all these mandates, some of which seem to be mutually exclusive. you try and do one and you're going to violate the other you try to do the other and you're going to violate -- i

don't know if any group of individuals could manage that in a really elegant way but again, i'm back to being half full that whether it's in spite of their efforts -- the hippocratic oath you think they did makeit worse. you think we wouldn't be in this position so it's better than do no harm. they've already done harm but maybe they'll get out of the way in time. >> i think if you look objectively at the impact of the federal reserve on economic performance and you said that real economic growth was more important than increase in financial asset valuation, it would be very questionable whether we were better off having the fed managing interest rates. very interesting editorial in "the wall street journal" today saying that people are beginning to question the record of the federal reserve, and i think

this is getting attention from members of congress, both in the house and senate and it was probably the catalyst failing on the supervisory side and did they bail out and what about the fact that they're running at an operating loss and where's transparency on that relationship because the fed is now borrowing from treasury to pay those administered rates i think people are concerned about central bank digital currency and giving even more power to the central bank. congress has the power of the purse but the fed's created $5 trillion between february 2020 and about this time last year. they started whittling it down they got down to an $8.3 trillion portfolio and now it's climbing back up, about 8.6, 8.7. i think the public is asking congress and congress may find

itself willing to pierce that vail of federal independence because congress has constitutional responsibility for vetting the money. >> when it's all said and done, do you think it's a shallow recession? it lasts for how long and is it followed by -- is the ten-year right that there's actually cuts on the horizon >> i definitely hope that is wrong. but i don't see why we would have to have a recession the problem for me is that if the fed continues to hike, they're hurting supply more than demand so you could be cutting off companies, you could be getting people laid off, people who were formerly contributing to supply. and now they get either severance packages from the private sector or government unemployment benefits, so they still have demand.

they don't lose power or at least they're no longer contributing to output but they are still able to buy things so the model is not the right way to deal with this kind of inflation, which was the cause of the historic fiscal transfers during covid >> but it was covid. what did we expect so they were going to do something like that. and i agree with you that they stayed, you know, the transitory debacle caused them to be really converted and they have the conviction of the converted but the flux in the banking system brought reality back so they're not going to go as far as they were going to go before. we were going to keep going 50, 50, 50 and it's all of a sudden wait so whatever got us here, maybe we can still save things and you sound like you think maybe that's possible but that next time we need to do it

differently, we need to change the fed. >> that's the hard part, transitioning to a new approach. >> all right thanks >> great to be with you, joe >> coming upchag, ico fed president austan goolsbee in his first interview since taking his new post in january. don't go anywhere. "squawk box" returns after this. you know doug, ever since switching to workday you've been a real rock star. rock star? what do you know about rock stars? billy idol? i mean where's the skin-tight leather? my shoes are leather. where's the unnecessary zippers? that thing! billy, rock star is just how doug feels when he uses

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welcome back to "squawk box. we are paying close attention to the banks that reported this morning. jpmorgan ceo saying a moment ago he still expects a recession but that it may be, quote, pushed off a little bit still sees a pahealthy consumer with section cash and inflation is still sticky. jpmorgan up close to 6%. pnc financial was up a little built more it's actually come down, kind of a relief rally of sorts. and likewise whether what's happening there will carry over to other regional banks? >> march retail sales number and we'll speak with fed chairman president austan goolsbee. "squawk box" will be right back. what do you see on the horizon?

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this is the advantaged look so it will change down 1%, much less than expected the last time we were down 1%, that was the weakest month since down 1.1 in november of last year and if you strip out autos, down 0.8 of 1%. double what we were expecting. we were expecting down 0.4 the weakest, you have to go back to the last month of '21 and gas down 0.3, also a bit better than expected actually. we were expecting down 0.6 let's complete the four negative signs in front of the advanced retail sales, the control group which gets spinned into higher

economics. export prices, well, you know what, why dough we do import price year over year year over year looks are good. and this one is a whopper, minus 4.6% minus 4.6% we look at export prices and shift gears month over month, down 0.3 year over year 0.8 over import prices, all export prices, all metrics of retail sales. the good news is we started out the year with a rather strong retail sales number. but if you're looking at the rate of change, maybe something to pay attention to. we talk about funding to banks what about funding to consumers? and by the way, the atlanta fed wage tracker for the month of march moved from 6.1 to 6.4. so not all the news is good with respect to prices and yields continue, continue to firm up a little bit on the data points i just gave you but do keep in

mind we're 3.47 for a ten-year and settled at 3.39 last friday. joe, back to you >> two year, love that 4%. seems like a magnet. thanks, rick the cpi and ppi inflation were the two biggest economic reports of the week and yesterday we learned core producer prices fell in march. that's the first time in three years that's been the case more on how this fed views this data, steve liesman is here. he joins us with a special guest. >> just before we bring my special guest in, i want to say something that might be counterintuitive here. this number on retail is a bad number, it's a decline, minus 1% technically it's not abad as it appears because inflation was negative on the top line this is one of the few months we're going to add back.

so it's bad, it's down and it's down in a lot of categories. it's down in building materials, down in furniture, down in motor vehicles, it's definitely a sign of weakness on the consumer but you want to attend yuate it. joining us, austan goolsbee. thanks for joining us. >> great to see you again. >> as an official, i think the most important question to ask you right now is how are your jokes going over at the fomc are they laughing at you >> yeah, they're laughing at me. that's definitely true >> which is not what we've been doing here welcome back to the table here as an official you recently wrote or gave a speech the other day that talks

about the fed not raising too aggressively i'm trying to understand what you meant by that. does that mean not doing additional rate hikes from here or not doing a lot more from here could you maybe put some detail around that comment. >> steve, look, the detail around the comment is at a moment where you got financial stress and you're getting financial tightening from banks trying to conserve capital or trying to strengthen their own side of the ledger, that does the work that normally you're doing in monetary policy so fed's got a job to maximize employment and stabilize prices and fed's going to do that job if the credit conditions are doing the job for it, you want to be mindful of it and not be too aggressive we still gotseveral weeks before the fomc meeting so i don't want to specify to the basis point exactly what is that going to mean for what i would

be for at the fomc meetings because i still want to see the data, but let's just be mindful that we've raised a lot. it takes time for that to work its way through the system and with this retail sales number, you may be seeing a little bit of that lay and if you add financial stress on top of that, let's not be too aggressive. >> give me your impress, austan -- i guess it should be president goolsbee now, right? >> no, it's mr. president. and for joe that's air doctor pl plenty -- and, joe, we're going to get to the money you owe me

>> i don't think you can accept it now >> we're trying to keep this from going off the rails so quickly but president goolsbee -- >> mr. president >> mr. president given your impression for inflation this week and your outlook for inflation over the next several months. >> i think inflation is coming down we've still got this is it a cloud? it's probably not a cloud anymore. this issue of how much is coming fro from demand and how much from supply you've seen the supply easing around a lot of sectors and that's helping to bring inflation down but you still have some stickiness on some part of the prices when you see the producer prices co coming in on big negative numbers, you don't want to overreact to short run news but

it feels like that's moving in the right direction. the one thing i will highlight, what i'm looking at quite clearly before coming into the next fomc meeting, what's happening on credit? i'm talking about bankers, community development organizations, how tight is credit and how much of a credit crunch is there? the one thing i think we're spending too much time looking at is wage growth as an indicator of prices. there's research out by chicago fed researchers reflecting a longer tradition of research that shows wages do not serve as a leading indicator for price inflation. they're a lagging indicator. so when people are looking at what's happening to wages ow, that's more reflective of what happened to prices six months ago. i think we want to keep our eye on the price series, not on the wage series.

>> austan, you quoted analysts in your speech saying the tightening of credit conditions could be worth 25 to 75 basis points of fed tightening do you embrace that? is that sort of arm's length thing or -- >> no, i didn't embrace it even in that. i said we don't know wh what we need to study is how big is that in a fed funds equivalent and the ranges are all over the place. the median range from private analysts is 25 to 75 some people are saying 150 to 200. that doesn't seem realistic to me but it's something. so if you see credit tightening, you know that that does the job of monetary policy and this moment, sometimes when you're trying to strengthen the financial system and you're looking at either regulatory

forcing or the banks themselves trying to strengthen their financial positions in stress, a lot of times that's happening when the economy is in the dumps and so in a way your financial stability goes and your monetary p goals end up fighting each other. this is the moment where everything we do to strengthen the financial system to prevent that from happening strengthens the financial system so i don't think that's in conflict at this time >> the old expression becoming the enemy of the good, i like 2% inflation, that seems like a good number. but really got to be 2% it just seems like three might be okay long term. >> well, joe, while i've been gone, has he changed his breakfast regiment

>> i've been on your side the entire time on this and my next question to you, if it wasn't mr. president but if you were mr. chairman, austan goolsbee, wouldn't you talk everyone else into not doing another 25? i don't think you want to do another 25 >> okay, first of all, let's back up. did you plot -- you owed me money. your poor forecasting skills lost you money >> it was 29 -- >> and now i've taken -- i tried to get you dinner you said i'm going on vacation so i don't have to take us out. >> jason said it was about -- you squeak by by a tenth of a point and you never came back to let me pay you >> gentlemen, gentlemen, gentlemen. >> i did come back and now i can't even receive it. you waited me out and now i can't take the dinner from you

>> and there's been no inflation at taco bell >> this is a question i've asked a number of people on the fence, which is what do you think a politically palatable unemployment rate could or should look like in the united states >> look, i'm out of the politics business, andrew >> i know that but to the extent that if you're on the fed and you're thinking about -- forget about politically palatable. what is an economically p palatable. >> what do you think makes sense? >> it varies depending on what's happening on the supply side so in the pandemic, inflation soars when the unemployment rate is 6% and above. so at that moment it's different

than -- now it's different than in 2019 when we got unemployment down to 3.5% but there was no inflation. so i don't think you can actually answer what's maximum employment until you merge it in with what's happening with price stability. >> did you say if you were powell you wouldn't raise, austan did you say that >> that's what you said. i learned long ago, joe, to never let you put words in my mouth. >> if you were in charge, would you try to talk everybody else into pausing if you could right now? >> i would i'm an old school data dog i would spend the next three weeks getting out and figuring how much credit tightening is coming from the financial world. we got to stop inflation we got to stop inflation >> how much stock do you put in the staff of the federal reserve board, the 7,000 economists there and their models, which

think run 20,000 times saying that the baseline forecast now is a mild recession because of potential bank tightening? >> i put some stock in that. i put more stock in our chicago fed researchers. we got the best researchers of all. but there's no way you can look at current conditions around the world and in the u.s. and not think that some mild recession is definitely on the table as a possibility. i mean, the data show that and we've raised rates almost 500 basis points in a year that's historically an indicator of slowing gdp growth. when you get numbers like retail sales and others that are declining, you look at construction, i think we've got to think about what's the state of growth in the country fortunately the market continues to be very strong. >> so how does your reaction function change? how do you respond to a recession? there are people who have argued

to me that your average fed official actually has a recession built in in everything but gdp by pointing out you don't get a 1 percentage point increase outside a recession does a recession mean you stop hiking does it mean you cut >> let's not start chasing our tail here. it depends, is this mield recession, if they have it, it that caused by the raising of interest rates or is that pap happening because of supply rates or things happening outside? >> whenever the market gets a when whiff of the notion that the fed may pause, asset prices go higher does the fed care about that, that markets take it as a good sign and therefore stock prices will rally yesterday we saw a risk on rallies.

so we saw for instance the arc innovation atf rise, rally on the idea that maybe the fed is going to pivot >> it's an interesting point i think that's an interesting point. i've been publicly saying from the time i took the job and before on this program over the years, i'm not a fan of the fed tying let's call it its mandate or the doing of its job to how does is the market reacting? like i said, congress gave fed a job, which is maximize employment, stabilize price. it doesn't say anything in there about make sure that the markets stay happy or make sure nobody loses any money. so i'm not a fan of paying close attention to what the market response is going to be. >> that's a little weird because you do your job through the market, right? hang on. let me just call up a chart

here, auston you guys said you were going to pivot into rates in 2021 and rates went up and that was doing your job for you right now if you look at it, they don't believe you they think you're going to cut pretty deeply by the end of this year so in a sense the market is not doing its job for you. maybe you shouldn't pander to markets and -- >> in the past the fed has tried to use the wealth effect to bolster balance sheets and make things better. in seriously scary types it stayed at zero to bolster the health effect to help. that's why we had a fed put for so long. you don't think we've ever tried that -- >> i'm not going to get in an argument about history i'm going to just say at this moment when i say we need to look at what the market is doing

for us in monetary policy, i'm talking about credit conditions on the ground for regular -- in the real economy, regular businesses if the stock market reacts, so be it, but that's not what i think that the fed's primary instrument should be right now it should not be using the wealth effect of stock market wealth to try to steer the economy. i think that right now this credit condition is the -- >> but the fed uses the pandemic for saying -- why can't i use that as an excuse? you weren't back here. there was a pandemic how were we supposed to go to dinner or lunch when there was a pandemic you forgot there was a pandemic? >> you waited me out, joe. and now i'm not allowed to say anything now i have to pay for my own dinner and i'm not paying to go to dinner with you >> i'm going to settle this once

and for all. we don't have the kind of time to deal with this anymore, austan i want joe to be happy, i want you to be happy. i just want to settle this thing. thank you for joining us president goolsbee, austan, whatever it is we'll see you again on coming up on the other side, cramer's first take and the markets ahead of this friday's opening bell we got that after this oh, he's bragging. (seth) who, me? never. oh, excuse me. hello, your royal highness, sir... (cecily) okay, that's a brag. (seth) hey, mom. i gotta call you back. (vo) switch and choose the phone you want, like the incredible iphone 14, on us. (cecily) on the network worth bragging about. (vo) verizon dad, we got this. we got this.

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get down to the new york stock exchange, jim cramer's in pig heaven with all these earnings he loves these kind of stuff i guess jpmorgan is pretty good. let me ask you about pnc does that mean we're out of the woods for some of the things we've been worried about for, you know, not the majors, or can we not extrapolate it to the rest of the regionals? >> i don't know. at one point, pnc was being considered as a possible buyer for silicon valley i think they're a super, super regional i think there's this tier where they can still do a lot of things, still buy companies, and yet are, without a doubt, one of the most superior banks out there. so, no, i think that actually, in some ways, you could say we're still in the woods because the banks that we're seeing did far better than i thought they would. wells was really good. i was surprised citi was this good because there were some that said citi wasn't as strong. jpmorgan's just a huge beneficiary of what went wrong,

and i say that these minor r regionals are the ones we're going to have to worry the most about. this was an extraordinary quarter by jpmorgan, and i think that as the quarter progressed, it just got better and better, and people didn't have their numbers taken up enough, given what happened. net interest income, you talking about 81 billion, people were looking for $70 billion, so these are the strengths. these are the winners. >> do you have anything controversial to say about boeing can i just ask you to say something? >> i think boeing -- you know, it's just tough. i mean, this time, it's spirit they've got so many different suppliers. every time you think you get this one behind you, you say to yourself, you know what? i should just own ge aerospace that's what you have to do just go buy ge aerospace >> we'll be watching you might talk on that wa the yr mmts on that thanks, jim. we're coming right back with

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i'm on a roll-ay. how about you? i'm just visiting. u.s. bank. ranked #1 in customer satisfaction with retail banking in california by j.d. power. welcome back bank earnings and boeing, the two biggest forces impacting the dow ahead of the opening bell on wall street. we're set to open lower across

the board here with the nasdaq taking the brunt of the losses, down 100 points. joining us now, liz young, head of investment strategy at sofi great to have you with us. we got those retail sales numbers and saw yields go higher, a decline in gold prices i'm wondering how you interpret this data in the context of what the fed could do >> first and foremost, retail sales data came in negative, and that's something to pay attention to if you look at what happened in the first six months of 2022, retail sales was positive that entire time. there's been a decided turn down that's not necessarily some sort of catastrophic event. consumer spending should probably cool in a situation where we're trying to lessen inflation. but note that retail sales did come in negative i think that yields are up, because they were actually stronger than expected when you strip out autos and gas, so there was an upside surprise, although still a negative number i do expect that the consumer continues to pull back on

spending, little by little as we go, but remember, the consumer can change their mind on a dime, so if things start to worsen, you're going to see consumer spending change quite quickly. as for what the fed does in may, there's still a lot that's going to happen between now and then we'll have almost half of the s&p having reported earnings by then, so they'll have a lot more data than what we have today i think one of the biggest data points between now and then is the j.o.l.t.s. number and they'll be watching the labor market very closely. if i had a vote, which i absolutely do not, nobody calls me for my opinion from the fed, but if i had a vote, i would say it's probably a good idea to pause here and wait for more data to roll in. >> yeah. of the bank earnings, which stand out to you i mean, to varying extents, they're all sort of beats on what people had expected, but these are the bigger banks, not the smaller regionals. >> that's right. well, i think there's a few things at play here. obviously, a diversified revenue stream helps certain companies in a lot of ways

some companies lost more than other companies gain, and you're saying that come through in the results. this is a good start to earnings season it's good that we didn't start with a bunch of really bad news or something that gave people that fear of contagion in the financial system as we know, that's one of the systems that we really want to feel safe and secure in, so i like that the big banks have come out so far and given some positive news. we do have to wait and see what happens with the regional banks, and then of course, what happens with the rest of the sectors one of the most interesting things about this earnings season is that the sectors that are expected to contribute positively are mostly cyclical sectors, so if we are headed for a downturn, we have to watch those numbers very closely >> ey, thank you liz young. >> thanks, mel okay let's take a quick final check on the markets before we hand it over to our friends on "squawk on the street. you're looking at red arrows across the board, dow off about seven points nasdaq off 93 points

the s&p 500, off six points. we will see what happens to the banks by the end of the day. >> retail sales reaction >> right retail sales, you think? the banks have nothing to do with it. here we go ten-year note, we're going to show you >> we wanted weak retail >> you would have thought. make sure you join us next week. have a wonderful weekend melissa, thank you for hanging out all week with us >> my pleasure >> she says it so -- with such enthusiasm "squawk on the street" begins right now. ♪ good friday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber at post nine of the new york stock exchange something for everyone today a bumper profit for the banks and encouraging commentary, but retail sales dropped twice as much as expected, six negative reads now in the past nine months even so, yields pop, two-year is back to 4 .1%. our road map begins with the banks.