good friday morning. welcome to another hour of "squawk on the street. i'm carl quintanilla with sara eisen on the new york stock exchange jpmorgan's chief economist, we'll get his reaction to the fed's move, echoing atlanta fed saying one more and done. the cfo of wells fargo on

results and the resumption of buyback and taking on the banking sector and why he says the company's work is not done when it comes to managing risk. the treasury's response to the strength of the financial system deputy secretary joins us exclusively. the bank earnings enthusiasm that carried stocks higher in the early trading fading with stocks close to the lows of the session. though, financials are an outlier, they're up today. jpmorgan and citi holding the gains. jp leading the dow with a big move higher and wells fargo have turned negative on the session pnc trading at lowest levels since december 2020. that conference call kicking off right now, adding to the losses which was down 20 pfrs in march. we'll bring you the headlines as we get them, but pnc, the message from the big banks and pnc is one of the biggest of the regionals is nothing alarming on

deposit outflows they managed to grow net income, of course, but interest rates are rising and there wasn't a lot over declines in loan growth or rise in deposit costs, which we're seeing a little bit. nothing too extreme. there was a lot of pessimism going in so a lot of big banks are bouncing. >> biggest upside reaction to earnings from jpmorgan in 20 years, as you were saying earlier. that 7% pop. dollar weakness was story of the morning. that got a bounce. >> turned around. >> on not just the fed speak but also -- and the banks, but then these inflation expectations we got. >> also had some commentary from fed governor waller this morning, just flat out saying, we need to do more tightening. if you put that with the inflation expectations and university of michigan, better consumer confidence in university of michigan and also better bank results. the market is on to a high chance of may. does the outlook change? do they add more rate hikes for

june the retail sales were weak but it wasn't a complete disaster if you look under the hood and the year-over-year numbers >> gas stations, department stores, e-commerce doing good. we'll dive into that for more on what we can glean from banking, let's bring in banking reporter hugh son. you say the investment case for banks, which a lot of people were doubting, is now intact. >> yeah, i would say so, carl. great to be with you what you saw today out of jpmorgan, wells fargo is their net interest income jumped by 45% to 50% at each bank. what does that tell you? tells you even if the mortgage business is in the dumps, that investment banking is still, you know, very slow because the ipo market's closed. it doesn't matter. the main core activity of what they do, which is they earn a spread between what they paid depositors and what they can earn from other investments or making loans, that that spread

is still very healthy and is getting better, in some ways the thing that is pumping jpmorgan today is they actually said net interest income is going to be $7 billion higher this year, so it's going to be $81 billion versus $74 billion guidance just a few months ago that's really pushing the stock up that is based, carl, on the assumption there's going to be interest rate cuts later in the year essentially they're going to have to -- jpmorgan will be able to pay less to some of their savers, less of these hot money, high cd rates later on in the year as rates go down. >> what happened with pnc, i thought it was a good quarter? >> look, pnc is another story. they are one of the bigger regionals in this space. i haven't covered that closely i do know they're exposed certainly to some of the things we're concerned about. certainly some of the things we're concerned about in terms of deposits, and they're not in

the same position as the jpmorgans and the we wills fargos of the world in terms of being sort of a flight to safety beneficiary. >> hugh, it feels like, you know, dimon had an opportunity to the call this morning to warn us about the rest of the space from which we've not yet heard, but his commentary was more surgical like, yeah, maybe there needs to be tweaks to regulation, but in his words, not a revamp. >> yeah, carl, he has a couple things of note he said -- and i assume his intel is very good being jamie dimon, but he said you can actually see really good results out of most regional banks starting next week and that, you know, over the long-term, and obviously in his letter last week he said the regional banking crisis, it's not over yet. jamie dimon said there could be a few more banks to topple the regional banking readout is mostly good and there are going to be a few who have great weaknesses based on the fact their balance sheets are holding

these unrealized losses and they have pressure on the deposit base, carl. >> the other big concern going in, and there were a lot of them, hugh, about the economy is these banks would just stop lending and that everyone was worried about credit tightening and rising standards and, i thought the commentary on the economy from a lot of these bank ceos was actually very benign, considering they've been a negative bunch before. >> yeah, sara, they're still making loans you have to understand they don't bank everybody in the country. they're preferentially banking the people generally better off, high income folks, people with better assets to their name. they feel like these people are good credits they're going to continue. jamie dimon was asked this about a potential credit crunch. he said, we aren't going to, you know, drastically pull back on credit he did, however, hint that there is a risk that the banking system as a whole pulls back because, as we get closer to recession, people are going to be risk-off.

>> finally, any read-throughs on goldman, morgan stanley next week when we start paying a little more attention to capital markets activity >> i'm going to say they're looking pretty good today. as you saw the results out of fixed income at both jpmorgan and some of the other banks, they look really good. they actually outperformed, jpmorgan, did, by roughly $400 million, exceeding expectations on fixed income. as you know, goldman and morgan stanley both have sizeable trading operations they're going to look pretty good there, carl >> hugh, appreciate it a good wrap-up there's a look at what's coming our way in the next five sessions so, from commentary on the banks to a resilient customer, jpmorgan says u.s. consumers and small businesses both continue to show some resilience. wells fargo ceo did add debit and credit activity is increasing and feels like there's a lot of activity in the economy, although they expect some slowing today's econ data shows cracks

in the retail sales, down 1% in march, the lowest level since november and the weakest ex-auto number since late '21 the odds of a 25-basis-point hike jumping for the may meeting. joining us mike. your outlook is q2 we're on guard for a drop-off in the consumer, right? >> i thought this morning's number was actually fine some of the weakness we saw in march was, you know, related to gas station sales. the january level was huge, so we're kind of coming off that. it was supported by some one-offs but overall, i think the picture looks okay for the momentum heading into the second quarter. i don't think second quarter may be tough to match the first quarter. still, that doesn't feel like we're slipping off the precipice or anything like that. >> right i did notice the chart you guys

published last night basically looking at claims in the wake of some of these revisions, and it feels like -- what's the number, is it somewhere around 250k where if you do meaningfully shoot up above that, then you might start building in more of a recession playbook >> yeah. you know, we're not there yet. we had a little bit of a drift higher in claims in january and february looked like they've stabilized over the last few weeks. but, you know, i think if we are going to have a recession some time in the next few quarters, we would expect claims to drift higher and payrolls to slip into negative territory, but we're pretty far from there right now. >> larry fink this morning at blackrock, another big winner in today's session with all the inflows, michael, said that he doesn't necessarily see a recession happening in 2023 and maybe '24 a shallow one. doesn't see a very big one is that something you agree we can get away with at this point with all of the monetary tightening, the high inflation, and now the worries about bank lending? >> so, you know, our main view

is that we have a mild recession starting very late in the year i would agree with the point that we could get out of this year without a recession i think the question is, can we have a disinflation from where we are to something closer to 2% without a recession. historically that's never happened we don't have a ton of data points on this type of inflation. it's possible. hope's not unreasonable but history would suggest to get back to inflation around 2% would require a rise in the unemployment rate of above a percentage point, which would be associated with a recession. so, i think that's, again, the most likely scenario one can always hope that we have something a little more benign but i don't think that's a starting point i would think about. >> do you think the market catches up here more with the fed? because the line from the fed, and i know there's a little bit of divergence lately, but it's basically not convinced yet on the disinflation story enough to

pause or think differently about the outlook. yesterday at the imf meeting, the managing director said, yeah, it's coming down but not fast enough. there's still more work to do. that appears to be a consensus among central bankers in europe and the united states. do you think the market is going to come around there >> you said if it catches up, the line from the fed. i guess it depends on what line we're talking about. fed officials are saying, you know, we're not going to be easing any time soon the fed staff is saying we're going to have a recession later this year. those are two different messages generally when you have a recession, the fed cuts interest rates. you know, i think the market may be a little more aligned with the staff forecast than what the fed's saying yeah, i would agree with what the line coming out of the imf, that unless we have something, you know, much more, you know -- a bigger setback in growth, it's

hard to see the fed easing for no other reason later this year. >> you were talking earlier about one more in may. earlier in the week i think you did say that there is room for a june move. i just wonder, how many meetings do you see a non-zero chance of a hike >> so, may -- our baseline is may. i think the risk is two more tilted towards zero. i think june is a live option. we have two payroll reports between now and the june meeting. if those don't slow down pretty significantly, i think it's going to be hard for them to stop in june july, i think it's a little trickier because we might be right in the middle of a pretty bruising debt ceiling battle, which could turn out in a way that's very unfavorable. i don't think that's an environment in which the fed wants to be -- wants to be hiking

i definitely think june's on the table here may, as i said, we have pretty much all the data we need between now and the may meeting. the only thing that could set back may is if we have a resurgence of stress in the banking system otherwise it seems to me like may is, i wouldn't say a done deal but seems very high odds on this and then june, i think june gets a little more interesting. i think it's really incumbent on the data slowing pretty significantly here to get june -- you know, to have a june pause, i think >> pretty remarkable turn from the conversations we were having, say, three or four weeks ago. michael, thank you so much good to sum up the work you've done lately. still to come this hour, much more on the strength of the financial sector cfo of wells fargo joins us. so far downplaying the impact of a banking crisis. then an exclusive with the deputy treasury secretary of the united states, a look at washington's plan to backstop the economy and how they're thinking about inflation right now and the current cycle. plus, boeing, a major drag

on the dow that story also coming up when "squawk on the street" returns we're down 171 right now on the dow. the s&p 500 also weaker than where we started, down about a quarter of 1%. financials, the only sector currently green.

boeing, big drag, following new woes phil lebeau joins us how does this compare to other

issues they've had, phil >> it's significant but too early to know how significant because it depends on whether or not we see a big drop in deliveries or if this is an issue that can be rectified, let's say, over the next several weeks. it's not a three-month or four-month delay or slowdown, i should say, in deliveries. here's what's going on some 737 max deliveries are paused i should point out the most popular model, the 737 max-9, that is not impacted by the slowdown in deliveries two parts from spirit aero systems incorrectly installed so they have to do an inspection to see which ones need to have those two pieces replaced at the fuselage where it comes together with the vertical stabilizer important to note, this is not a flight safety issue. the maxs in service, they remain in service it will impact deliveries. that's the expectation at this point. 2021 they delivered 263, a nice increase in deliveries as they ramped up production last year the expectation, according to fact set and analysts who are

surveyed by fact set is they're going to deliver 445 this year i should point out, that is not the guidance, that is the estimate from fact set that is pre-news coming out. what you're looking at is a number likely to come down as you take a look at what boeing and spirit are doing today, keep in mind that moody's investor service, they just put out a note a few minutes ago saying they think the 410 deliveries they are already modeling this year is still achievable they're not going to bring down their delivery estimate. meanwhile other analysts like sheila, she is bringing down her delivery estimate. it all comes down to how long this slowdown in deliveries last is this something for two or three, four weeks? is this something three months is it something for six months that remains to be seen. >> the immediate knee-jerk conversation, phil, is whether or not it has a meaningful impact on airlines' ability to

get fresh aircraft i noticed southwest heavily reliant on the 73 is down more than other carriers today. >> right and at this point -- we reached out to southwest haven't heard yet. we know from united, united came out and said, look, this does not change our plans in terms of aircraft we have in service, obviously, or aircraft we plan to put in service. so, we will likely hear from other airlines as well it really depends on how quickly they can get their hands on how many of the aircraft in production or in inventory are impacted just for point of reference, they had about 250 in inventory at the end of q4 the estimate is they probably have 230, 232. remember, not all of those will be impacted because many of those are the max-9, which is not part of the slowdown in deliveries >> what a story, phil. wow. coming up last night and impacting the market today phil lebeau once again on boeing thanks. still to come this hour, we'll talk to the cfo of wells

stock reversing some early gains along with the major averages. that call is wrapping up with the ceo saying there are pockets of risk. dow down an even 200 "squawk on the street" continues "squawk on the street" continues after a short break. (cecily) you're bragging. (neighbor) 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

let's take a look at the story abroad today european markets closing out a pretty stellar week. euro stock knocking out a win as they see their longest weekly gaining streak since early december watching the euro/dollar as well euro has been strong, dollar weak that's reversed today. it's near the lowest level in about a year i'm also, carl, watching infosys, the indian company. everyone is looking at that today. the stock's adr trading at 2 1/2 year low the company reported a miss on profit and revenue and said the outlook remains uncertain. some of the ceo quotes are interesting here we saw an unplanned project

rampdown we saw that in some of our clients this quarter in other words, weakness from enterprise spending. a lot of people look at infosys because it's one of the largest consulting services in the world. when we talk about weakening demand, surprising weakening demand, in pockets like finance, which the company did mention, that could be a pretty early tell on what's actually happening with company confidence and spending. >> that's funny. i was just looking at a table that b of a published. financials are the biggest spender of i.t it's a huge part of the i.t. business if you do begin to see cracks or more disciplined cost control within banks, there's going to be a bridge to tech and largely goes through software. >> we were already worried about tech pulling back because that sector has been in a slump and trying to preserve margins now worrying about finance you wonder where it's spreading. after the break, speaking of financials, mixed picture after

a strong start this morning. jpmorgan is still the big winner of the day the balance sheet, deposit growth, key concern over the past month for the entire sector deputy secretary wally adeyemo with the white house's response to the financial system to the financial system following some key results you can't buy great conversations or moments that matter, but you can invest in them. at t. rowe price our stratesting approah can help you build the future you imagine. t. rowe price, invest with confidence.

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inching towards some session lows here. dow down 222 let's get a news update with bertha coombs. >> here's what's happening at this hour. billing records of a social media platform helped the fbi identify a massachusetts air national guardsman as a suspect in the leak of highly classified military documents the new details come as 21-year-old jack teixeira appears in court this morning to face charges under the espionage act. a federal magistrate judge ordering teixeira to be held until a detention hearing next week. china will not sell weapons to either side in the war in ukraine, according to china's foreign minister the country has maintained it remains neutral in the conflict despite backing russia politically and economically this comes in response to

western concerns that beijing could potentially provide military assistance to moscow. and former president trump answering questions for nearly seven hours on thursday during his second deposition in a legal battle over his company's business practices here in new york the former president reversed an earlier decision to invoke his fifth amendment protection against self-incrimination and remain silent. sara, back over to you. >> bertha, thank you. as we head to break, let's check in on the markets again. down 229 on the dow right now. s&p 500 also under pressure. down about 0.4 of 1% financials are certainly helping. almost a percent of the sector but everybody else is down the biggest drag right now are utilities, health care down 1% real estate down 1.3%. as far as health care is concerned and the dow, united health care the worst performer, shaving 100 points off the dow earnings season, raising its

full year revenue outlook. expecting member growth for insurance business as well but wall street not sold session lows for the stock of course, the banks are the big winners again. just want to give you another check as we head to break. jpmorgan is the winner in this space. also helping offset some losses from united health and boeing. jpm adding 60 points to the dow. it's up 7.3% we'll talk to wells fargo cfo mike santomassimo after the break about his company's performance and worry about banks in general banks in general we'll be right back.approved pt. - why would employees wanna do all that? - this could be a stretch, but i think they wanna get paid correctly. i like getting paid correctly.

turning towards the bank, reports from jpmorgan, wells fargo, pnc and citi providing some context surrounding the health of the financial system we have yet to hear from some regional players, which were hit hardest from the collapse of the silicon valley bank and outflows of more than half a trillion in. joining us to discuss in a cnbc exclusive deputy secretary treasury wally adeyemo great to have you back. >> thanks for having me, sara. >> what's your early read here there was a lot of worry and i know you were at the center of the action trying to help restore stability in the u.s. banking system what's your read on what we've heard so far today >> so, sara, like you, i've been paying attention to the reports from various companies throughout the economy and i think that what we've heard from

the banks in particular is what we've been saying over the past few weeks and the american banking sector is resilient and the actions we took a few weeks ago helped reassure the american people that the government was using our tools to make sure we protected that system. we look forward to seeing how banks will provide credit to the broader economy to make sure that the economy continues to grow and produce the robust jobs we've seen over the course of the last two years. >> definitely signs of stabilization, not just in the share price, some of the read-throughs. so, you know, if you look at some of the fed balance sheet data, which was out recently, we continue to see a decline, but still a very elevated level of borrowing from the discount window, from the new emergency facility created so, it's not like all clear, is it >> what i would say is the situation has stabilized what we've seen in terms of the data that has been available is people have started to return collateral to liquidity, excuse me, back to those facilities in

exchange back for their collateral and the deposit levels have stabilized in some of these banks, you've seen deposits actually increase over time so that they're in a position where they can continue to do what banks do, which is provide lending and credit to the economy. >> are you worried about the tightening of lending and what we're about to get from the regional banks in the next few weeks on that front? >> so, sara, as you know, it takes a while to see the data but we haven't seen meaningful tightening i think the information we garnered today from earnings left us with the impression of what we know to be true. the demand in the economy remains strong and overall it's the consumer demand that drives a strong and robust economy. as long as that's the case, you'll end up in a place where you're going to have banks in a position where they're going to want to extend credit to businesses that are growing going forward. so, we look forward to seeing the rest of the earnings season, but fundamentally feel confident at the economy at its core is

continuing to robustly produce jobs and also the demand remains strong, which will help drive a strong economy going forward >> wally, street's obviously been wrestling for months now about what the future holds regarding the debt limit there are some reports that maybe the house speaker offers a one-year extension in return for some concessions i mean, i don't expect you to get in front of that too much. but is it being talked about today, this idea we might get some formal proposals moving >> i'm not going to get ahead of it at all, but what i'm going to say is what you know to be true, carl, it's critical that congress lift the debt limit the last thing we need is a manufactured crisis in our country. i'm right now in the midst of meetings with finance ministers and central bank governors from around the world who are all complimenting the strength and resilience of the u.s. economy the last thing we need to do is have a manufactured crisis that would take away from that confidence the world is showing in the u.s. at the moment and would slow down the momentum we

have we hope congress does what it needs to do and lifts the debt limit. >> i'm curious about those meetings you're having everyone in town, the central bank governors, the finance ministers. and there's -- there's some gloom as far as the global outlook is concerned the imf warned about this week in terms of what they expect for the global economy i wonder if the u.s. is still the beacon of growth in the world economy given the biggest problems and risk to the system are emanating from our financial system what are you telling your counterparts >> sara, i characterize it differently and my counterparts do in the meetings we've had fundamentally the actions we took a few weeks ago mitigated those risks by making clear to depositors they would be safe and the facilities the fed created also provides liquidity. what we've seen since then is we've seen healthy job numbers in the united states we've seen cpi data that's come down

we have to make more progress on inflation in the united states but the idea we're continuing to create low bust levels of jobs while inflation is coming down speaks to the underlying resilience of the united states economy. while there are headwinds and we all face these headwinds, not just in the united states but around the world, russia's invasion of ukraine or post-pandemic supply chain issues, what we've seen since the imf released their report in october when they called for the world economy to slow is that because of the actions policymakers have taken in the united states, europe, around the world, we've seen the global economy outperform the imf's predictions. that's what i expect to see this time >> you know, wally, we had warren buffett on our air earlier in the week. one of the things he said, someone who knows banks well, is the structure and the way the fdic is financed is not well understood in this country, and it kind of led to people, perhaps, being more was in or more panicked than they needed

to be in the month of march. does there need to be some kind of education/marketing push beyond just seeing that gold plate when you walk into your branch >> i think it's important that people know if you have insured deposits in this country that the fdic has an insurance scheme for dealing with that. more important at the moment has been the -- what we've done when it came to silicon valley bank and also signature bank where because we saw the underlying potential that depositors would leave institutions throughout the country, we use the risk exception, the fed, the fdic unanimously amongst their boards have sent a clear message to the american people that deposits of any size were going to be safe and the fed's creation of this facility which made sure banks would have access to liquidity fundamentally what we're saying is the u.s. banking system is resilient. that's what you've seen in terms of early reporting and what we

expect going forward >> but what if it happens again? i mean, i don't want to create alarm and i know there's some stability, but what if it happens again? do uninsured depositors get bailed out >> so, sara, to the conversation we've had and we continue to have, the system has stabilized and we're in a better position but we also have the tools to be able to deal with it if we get into a situation where we have those challenges and the secretary has made very clear that we're prepared to use those tools again. >> finally, really quick, hank paulson gave this fascinating interview to the ft, i think it was last night, where he talks about china and says, and i'll read you a quick quote here, great powers don't look to go into war, they stumble into it i think it's important we tone down the rhetoric on taiwan. sdpooft what you read, the last thing xi needs is a war for taiwan that comes on the heel of an op-ed earlier in the week.

do you think, perhaps, the u.s. is using fomination as a policy too much >> i haven't read the article or seen what hank said. ultimately our goal is to make sure that we're in a situation in which we can work with countries around the world including china to both teal with the challenges we have in a constructive way and also find ways in which we can cooperate and work together on things like climate change and address sovereign debt going forward this is why meetings like the ones happening here in washington matter because they give us an opportunity to meet with our allies and our partners but also with all the countries around the world to talk about how we forge a path forward. that's exactly what the secretary and i are doing with our counterparts, finance minister and central bank governors. >> we'll let you get to it, wally adeyemo, thank you for taking the time today. >> thanks for having me. >> deputy treasury secretary.

tesla with another price cut, this time in europe we'll get details on who may benefit later. nonearnings, one of the call today as goldman double upgrades going from sell to buy edward jones also upgraded to buy. you can read more on cnbc.com. ah, these bills are crazy. she has no idea she's sitting on a goldmine. well she doesn't know that if she owns a life insurance policy of $100,000

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tesla with yet another price cut this morning it's the focus of today's tech check. phil lebeau is back, having talked about boeing. now here to talk some tesla. hey, phil. >> hey, carl, not a surprise we're seeing more price cuts from tesla we've seen them in china and the u.s., their two largest markets. now we're seeing them in other parts of the orld. according to reuters, they have decided to cut prices on the model 3 and model y in europe. germany in particular, 4.5% to 8% cut in the prices there singapore, a cut of between 4.3% and 5% remember, in terms of global ev sales, tesla still leads the market i get this question all the time from people saying, well, yeah, they lead here in the u.s. but what about around the world? their strength in china along with the u.s. hems them get 17% market share you see byd nipping at their heels in china vw and gm. shares of tesla, keep in mind, we hear from them after the bell

wednesday. that's when they report their q1 results. interesting to see if they will say anything about how these price cuts might impact their guidance although i don't think we'll see them lower their guidance from delivering 1.8 million vehicle this is year. >> phil, i thought of you because adam jonas of morgan stanley did a piece this week where he looked at the norway market, which is about a dozen years ahead of us in terms of evs. one of the arguments they made is, yeah, tesla made a lot of inroads into a more mature environment but those chinese automakers are also making a stand. >> you know, the chinese automakers are extremely aggressive obviously, in their home market. they have some advantages there in terms it of incentives from the government then you look at what's happening in europe. i've talked with people who are active within the auto market in europe they make a point of saying, you would think people would say, boy, i'm going to buy tesla or a european brand in terms of an electric vehicle, not a chinese brand.

if the price is low, those consumers are no different than anywhere else, especially in the uk that's where you're seeing the chinese automakers become very aggressive and it's impacting sales they are picking up market share. not a lot but they are starting to pick up market share. >> yeah, something to watch for sure, phil thanks, phil lebeau. we're continuing to watch the banks. wells fargo trying to hang onto gains after a strong start to the session. the company warning to expect some slowing of the economy. we'll get into it thwi cfo mike santomassimo who joins us next we're back in two minutes on "squawk on the street" with the "squawk on the street" with the dow down 200 (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 athe phone you want, like the incredible iphone 14, on us. (cecily) on the network worth bragging about. (vo) verizon

we'll close out the hour where we started with the big banks, the story of the day. wells fargo delivering a beat across the board in the first quarter. on the heels of a turbulent month for financials did up their provisions for credit losses to $1.2 billion joining us now for a closer look and a first on cnbc interview is mike santomassimo. mike, welcome back it's good to see you >> thanks, sara. good to see you again. >> so there was a lot of worries going into the quarter, and it looks like, at least on the top and bottom line, things look okay with you give us a snapshot of

what you're seeing right now >> yeah, no, i appreciate that it was a really strong quarter i think across the board the revenue side, really performed as we expected and was quite good really driven by the increase in rates we've seen over the last year good fee momentum in the trading businesses and other areas and on the expense side we continue to just execute on our plan to drive more efficiency across and underneath that you see really good activity on both the consumer side and the commercial side still. you are starting to see a slight gradual increase in credit charge offs but that's to be expected given the environment that we've seen over the last few quarters but underneath that still is good activity, good spending, people came into this environment strong and you're seeing that play through, i think, across the board. >> let's just dive into those

rising credit costs on the loan loss reserve bill especially on the consumer, autos and cars what can you tell us about the trend there that you're seeing that might have you a bit worried? >> yeah, the increases across the consumer portfolios are quite modest when you dig into the detail in the card space you're seeing a very gradual weakening, which is what you see now over the last couple of quarters. and on the auto side you saw it get better than it was in charge-offs versus the fourth quarter. you'll see that move around a little bit, but it's still been gradual given the amount of liquidity people came into the environment that we're in with and also the behavior that we've been seeing over the last number of months. and so i think it's still quite good and the consumer side was quite modest >> what about in the commercial real estate book how exposed and how concerned are you about the trends there

>> yeah, look, there, too, the performance to date has been quite good you're not seeing systemic stress translate into loss content in the portfolio even in the office space yet the story is going to take -- play out over an extended time period there but we did up our allowance for credit losses in the commercial real estate business because we do expect to see stress there over time. it will take time to play out and it will be very specific to individual properties, individual cities and individual situations that i think drives that, but it hasn't quite translated yet into any significant losses to date >> mike, some of the commentary from other banks this morning, yeah, we got a bumper crop in deposits that's moderated but we don't expect necessarily those deposits to be sticky. i wonder if that's something you would concur with.

>> well, i think anytime you get a big increase in deposits in a short amount of time you have to be really cautious in how you sort of think about those, and it's likely some of that will revert across the board. i think it will just take some time to play out i think that's certainly a view that i would concur with at this point. until you get a little more history and a little more time to go by >> is there anything more you can tell us, mike, about what you've seen on deposits after march 9th? i thought overall down about 2% for the quarter, but what do those flows look like right now? >> yeah, look, we definitely saw, as we said on our call, a bit of an increase right in the middle of the first few days of when we went through that week, but that has abated and those inflows have really stopped. and so now you're back to just bau activity on any given day, and payrolls may be coming in or other things

are happening. so you see normal ebbs and flows on a daily basis across the different portfolios but, again, people are out there spending. on the consumer side, the biggest part of what you see happening people are spending the money they have. and i'm sure all of us see that in our daily lives in terms of the activity around us that's good to see and healthy and should help support the economy. >> what about loan growth and demand for loans what have you seen since the episode, the failure of svb? >> not a lot, to be honest, and i think if you zoom out just a little further, if you look at what happened last year, in the first and second quarters where you saw that strong loan growth across the board, not just us but across the industry, and since then it's been pretty moderate and has moderated quite a bit. overall loans are roughly flat, plus or minus a little bit over

the last three quarters. and so you really saw that moderate quite a bit and over the last few weeks that really hasn't changed in any significant way. you're starting to see a little bit more activity in some of our middle market customers particularly as inventory levels grow from really historic lows that we saw the last couple of years. but for the most part, i would say the events the last month or so haven't changed things in a significant way. >> i know expense control and efficiency are some big themes this morning i think it was jim this morning who said charlie sharp is back i do wonder, you think about a year ago where the street was really watching how far expenses were going to go across the space. there was this competition with fintech, competition for labor would you say we've done a 180 on that in the industry? >> well, i think we've been executing for the last couple of years now on a program that we laid out back at the end of 2021

of just systematically sort of executing on a plan to be more efficient across really almost every part of our business so i'm not sure there's anything unique about what you saw this quarter because it's been a very consistent sort of story over the last couple of years when you look at the trends there, you have seen some of the pressures that we saw a year or so ago from wage inflation moderate quite a bit so you're not seeing that as acutely as we saw 12 or 18 months ago and that's for sure you also saw attrition slow and other factors that help there. so some of that may have moderated a little bit for us, we've been just executing on the plan we laid out a couple years ago, so i think you'll see us continue to do that. >> well, part of the reason i think that it was a sigh of relief for people to see the net interest income reiterated, right, at 10% growth, mike i guess when you compare it to jpmorgan, it doesn't look as good they have that higher

expectation now of net interest income i'm curious how confident you are in the guidance there and relative to some of the other banks how it looks >> you'll have to ask them about theirs i'm very confident in what we lay out there. there's a lot of volatility that's still embedded in the environment whether it's a mix of deposits, the level of deposits, pricing. underneath our guidance really embeds the assumption that it's still going to be pretty competitive out there. we're hopeful in the second half of the year it will be better than we think. we try to put out guidance we can be comfortable with in a whole different range of scenarios. if things are better than we're modeling that will be great and we're hopeful that will happen and we'll see that benefit into the second half of the year. and as long as the economy stays strong and people and our customers are doing well, i think that will ultimately

benefit us and help on the income side. >> finally, mike, the street has been watching the banks. the last couple of quarters it's been about comp and bonuses coming down. it's been about reductions in force. i wonder if you think that chapter is ebbing as well. you talk about attrition slowing down >> look, we're just systematically investing across all of our businesses while we are driving efficiency, and so you have to look at the complete picture, and so while you may see head count and expenses coming down in some areas, there are investments happening in other areas. and with that, you need to be competitive on comp, and that may ebb and flow based on market activity or revenues in any given year, but i would say it's still going to be pretty competitive as you look forward to making sure you have the right people in the right places and that you continue to invest over a very long period of time.

but you can do both in terms of driving efficiency and overall head count down while you make the investments you want to make over a very long period of time to build really strong businesses and so we're trying to do both of those >> mike, appreciate all the commentary on the quarter and what you're seeing thanks for the time. mike santomassimo, the cfo of wells fargo. stephanie link, shareholder, also likes the reinstatement of the buyback, of course >> we'll get goldman and morgan stanley next week. let's get to "the half." carl, thanks so much welcome to "the halftime report." front and center the kickoff to earnings season, the banks deliver upside surprises between that and a flurry of economic data there is much today for our investment committee to debate this hour. joining us on this friday josh brown, stephanie link, jason snipe, baruch. let's check the markets. we are in the red across the board. a lot of the dow has lost, down 200, due to boeing and united health we will get into all