that's likely to mean that the dollar is going to stop falling, and also, we have more earnings visibility in the u.s. than there is in europe at this time. >> okay. barbara, thank you very much by the way, we should point out we were just on some boards of trading in europe. the footse is closed european markets are closed for labor day there. that does it for us today. make sure you see us back here tomorrow we'll see you later. ♪ good monday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer at the new york stock exchange david faber at the milken institute global conference in beverly hills. futures pretty steady here as we kick off may with a big week ahead. jpmorgan buying most of first republic we'll get 20% of the s&p reporting earnings, including apple, fed decision, j.o.l.t.s. and a jobs number. our road map begins with the first republic failure, jpm taking over after being seized

by regulators. the third u.s. bank collapse since march. stocks are coming off a month of gains and signs of a slowing adoption of evs. gm gets an upgrade about that over at morgan stanley let's begin with the collapse of first republic the fdic announced that the jpmorgan chase has agreed to assume all the bank's deposits and substantially all of its assets just last week, first republic disclosed that in march, customers pulled more than a hundred billion in deposits following the failures of both svb and signature. but on a conference call in the past hour, jamie dimon says the american banking system is extraordinarily sound, and they took pains, jim, to paint this in a much different light than what happened in '08 >> i like that, because they talked about how the pristine loans this time, that really matters. these are homes that are very big -- these are, like, $5 million homes i'm sure that jamie has looked at the book. there's a nice cushion from the fdic

of course, they are actually paying that's not been talked about it won't look like just a giant gift, and david, it looks like to me that this is just a win for jpmorgan but also a win for the system, because the banks that had looked like they were going to write off the fdic money are going get it back. >> right yeah i guess it is overall. i'm just trying to think through what you just said in terms of writing off the fdic money, jim, because there was an expectation that jpmorgan would be incented to be the highest bidder because it's the largest provider of assessment when given it's 11% of the insurance deposits, essentially. even more than that now. $10.6 billion goes in. there's a lot of movement going in and out in terms of assets, but overall, i mean, let's just get to the basic facts here as we know them from jpmorgan they'll get $173 billion in

loans, $30 billion of securities they're going to pay the fdic $10.6 billion, and we assume they were the highest bidder, of course, of the other banks that were at least competing to buy this franchise, or what was left of it. fair value marks on acquired loans, roughly $22 billion so the average loan mark act 87%, jim. that gives you a sense as to what they're buying. it's going to be accretive but there are going to be restructuring charges associated with it as well. >> the loans in value that you mentioned is very strong they gave very rich people a break in order to get their business maybe those very rich people stay with jpmorgan you know, david, one of the things that jamie's talking about is, look, we're kind of at the end of this concern about deposits, and yet the market's actually down. i think the market's stupid. this is really very positive for the system, which i got to tell you, david, on thursday, it looked like everybody was going to get -- wells fargo was going to get hit and lose the money that it put in

morgan stanley lose the money, and it looks like that's what i'm talking about versus what they had to bail the bank out. >> i see i get it i get it the $30 billion in deposits that was made by those large banks to try to instill confidence in the system that was march 16th, of course it didn't really succeed in doing that, but it did at least result in first republic having some more time, an important interim of time as well, given during which we heard from many of the regional banks. we saw their earnings. we got a sense of the deposit flows. we always knew first republic was having a hard time, potentially, and had lost more deposits than many others. jim, though, to your point as well, you know, because of that amount of time that went by, things have stabilized, but i don't think that if you're a banker, you can ignore the fact that it took four hours for $42 billion to leave silicon valley bank, and that is

something that we may have not fully dealt with yet so, that's got to at least be top of mind for many of these regional bankers yes, the deposit flows have stopped. yes, we expect that this is the end of this mini-crisis. we always knew -- not always knew we had -- we suspected that first republic might be a victim here, and ultimately, it was but you know, that $42 billion in four hours, that's a new thing, man they still have to adjust to that >> yeah, the federal reserve report, they basically admitted, look, we didn't expect that money could pull out that fast we also didn't expect the concentrating group of people pulling. they're going to have to start factoring it in, david this is one of those where maybe 18 months from now, they'll say, what we're going to start using is artificial intelligence it's the government. maybe two and a half years from now, they'll use artificial intelligence to be able to spot minute by minute or second by second they are going to have to do

that you can't spot the stuff without artificial intelligence and realtime information to pull out. and the only way you can do that is for the fed to be -- actually to get reports the way everybody else realizes, which is instantaneously. >> yeah. one thing i would also make a point of, jim. there was no way if this went a typical receivership for the fdic, where they took it in, that they weren't going to insure all the deposits. if you want to create a crisis, it would have been saying all those deposits made by those banks were not insured i don't think that was ever in play, to be fair it just would have been the fdic taking it on but yeah >> how about the fact that jamie now has more than 10% of the deposits, david, the so-called anti-consolidation rule is just being overlooked or they'll say it doesn't matter, but that's a big deal >> it is and they had to do it because as you say, they passed the cap and they needed an exemption in order to do so but we have to believe again that this was the best deal that the fdic saw as we first reported thursday morning, they were looking at the bids, encouraging bids, and

one would expect that jpmorgan was, by far, the highest we don't know what the cover was. we may find out. sometimes we did i remember in washington mutual, though, i don't think there was a cover and they raised their bid when they didn't need to so, you know, we'll find out what other banks perhaps had been we may, at least, get some sense as to what the cover bid was, jim. but we can expect we paid the most, and it's a strong franchise, at least it was at one point. many of the wealth advisors already were leaving first republic some of them actually already going to jpmorgan, but nonetheless, they do see a lot of strength in the franchise that they are able to get to take on. we heard from dimon in the call this morning talking about the strength of the u.s. banking system take a listen. >> no crystal ball is perfect, but yes, i think the banking system is very stable. you guys have reported already on tons of regional banks who have good results, very modest

outflow. a lot of the deposit outflow is because of quantitative tightening it wasn't because people were having runs. there are only so many banks off side this way, and i think this is -- there may be another smaller one, but this pretty much resolves them all this part of the crisis is over. down the road, rates going way up, real estate, recession, that's a whole different issue, but for now, everyone's just taking a deep breath >> yeah. there he is saying a deep breath carl, i think an important point here as well is first republic didn't make bad loans. they just got caught they were a well respected bank, and jim has made this point many times, and they treated their customers extremely well they just got caught, you know, obviously in a significant upturn in rates with a lot of mortgages and securities sitting on their balance sheet that were obviously returning a lot less, and then when people were able to earn money instead of keeping it there, they maduoved it out. the typical client was somebody who was willing to keep a lot of

money at the bank in part because there were no interest rates to be had anyway, and you get a great mortgage but then, when rates go up, you move your deposits out then you get the banking worries that we had in early march and a lot more deposits move out and that's where they found themselves it wasn't through bad underwriting, so to speak, that they found themselves in the difficult position that they're in >> right one of those reasons why we're pointing out things that don't echo with '08. meantime, jim, b of a, we believe the sale should likely end forced sales of banks due to deposit flight sounds like you go along with that >> totally i also think it's interesting to see how much pnc is down i think pnc may have been the cover and the stock is down severely, and what that tells me is that everybody recognizes in the world that this would be a great deal not a giveaway but a great thing. for pnc, in particular, they do not have the kind of wealth advisory that jpmorgan does. that would have been a real step up for pnc to have those kind of accounts with them >> what about the notion, david, that the costs of all of this

are not necessarily going to be dollar-based mea meaning, jpm gets bigger we were talking about moral hazard even the resolution process seems a little ad hoc here how do we process that >> that's a good question, carl, and i'm not quite sure i mean, you know, they are obviously the biggest banks are subject to significant regulation one would expect that will not change any time soon but it is an issue it is certainly something to at least have some concern about over time. the big keep getting bigger. obviously, during that period in question as well, we did see deposits, certainly, we know from jpmorgan's results, move to jpmorgan and so, they ended up with more than they would have otherwise had to begin with, and now they get another whatever the number is we got to take the $30 billion out, but it's still a big number of additional deposits, to your point, that will have them exceeding the cap that was in place. but they're being exempted from that

>> right meantime, we'll talk to the bny mellon ceo later this morning at 11:00. there's a sense, jim, that this being resolved, plus the clarity that we got out of the bar report on friday, means maybe there's some room for the regionals to start making a stand here >> yeah, i mean, jamie was abject about how things will be tightening, and that is -- when he speaks about that i do think that these regions, we've emphasized them as being the weak point and there's a lot of stuff from charlie must thinker this weekend about commercial real estate sl green, probably the worst, so to speak, kind of talking about how they can restructure if they really had to, but they don't. boston properties being good among the insurance companies, they have a lot of commercial real estate. still can't find the black hole there. i know people want to find black holes. i felt a sense of comfort from what happened this weekend, carl, and i want to say that, yes, the regional banks are

never good buys because we don't know about the regulation. all they cared about was, listen, our deposit base is good that's comfort for the fed too >> munger saying there's a lot of agony out there, although he did couch it by saying it's not as bad as '08 and he kind of echoed what buffett told becky in japan a few weeks ago, and that is that there's large runways for banks to get into trouble over time because the -- you know, the bill only comes due so often and there's a good way to hide your cost of goods over many years. >> yeah. there is and we will continue to focus on commercial real estate as an area of great concern, although as we've said many times, it's not all one thing, commercial real estate. we focus a lot on office space, but obviously, there's a lot more there than just that. final point from me, guys, on first republic, but i think it's important to make.

we haven't shown you the chart because there's nothing to show. it's a zero. let's make that clear. first republic stock is a zero it's preferred as a zero the debt, zero sorry. we tried to tell everybody last week, jim. >> you did on friday >> maybe i should have made it clearer. yeah >> you couldn't have made it clearer. >> for most of the week, really. i mean, yeah >> i made a joke with david that when david said it's worthless, the stock was at $5.30 and then it jumped to $5.50, which demonstrated the power of faber. the thing was worthless, and the media is worthless, away from david. >> listen to me now, believe me later. >> david says it's worthless and the stock goes up? who is doing this, the same guys who bought bed bath at $17, i guess. >> it was kind of -- yeah, it was a lot of different things going around last week, but i think we sort of had the story

right, thankfully, from the beginning. i'm floating that private market -- that private solution that obviously then we reported was not looking like it was going to happen. but certainly nothing we take -- >> reporting does matter, david. it's easily ignored and the other guys have louder voices. but david was right. >> dimon said they looked at open bank solutions but just did not happen great work by david on friday. when we come back, a big week with that fed rate decision, the jobs number, apple. later on this hour, david with apollo's marc rowan. we'll get to sofi, norwegian and these upgrades on a o re, mct.gmndur verizon small business e back. april 27th through may 3rd. get a free tech check and special offers. like a free 5g phone. get started today with verizon business. it's your business. it's your verizon.

take you to paris this morning, some live shots of these protests after, of course, the government raised the minimum retirement age from 62 to 64. the protests have been going on for a while, but today, with the may day holiday, has the unions saying they expect maybe to a million people at this particular gathering, which of course comes after weeks of strikes. we'll continue to watch that lot of domestic government turmoil in france. >> i don't think people -- my wife happens to be over there right now. everything's shut. it's like, what are we going to do today this is something that a lot of people in our country accepted,

but you don't do that in european countries where labor is very powerful >> yeah. macron's popularity, under severe pressure. meantime, we do enter a new month today with lots for investors to digest this week, including the fed decision on rates, april jobs. the dow and the s&p did post a second straight positive month, nasdaq eking out a fractional gain and then some comments over the weekend about whether you really do sell in may lazlo says, be careful, up 70% o. time since 1990 >> well, look, lazlo is the absolute best. he is. he has the best quantitative works. and i think that this sell in may, they ought to say, sell this in may, because we have so many sectors that are trading divergent from the averages that you're going to -- you better sell this and buy this in may. be a little more thoughtful, because look, if it weren't

doggerrell, if it didn't rhyme, you wouldn't hear it >> the saying should be, short in may, then panic cover in july it have i like that. it's good to hear someone with some horse sense about this stuff being hallmark-like. we should bring david in >> what do you want to bring me in about >> i don't know. someone in my ear said, bring david in >> oh, thanks. i thought you missed me. i thought that's why you were bringing me in >> you look great, first of all. i'm glad you're wearing a tie. hey, david, what are you out there for? >> well, jim, i'm out here to cover the milken institute's annual conference, and get some interesting interviews we're going to start that off with marc rowan in a little while. good day to hear from the man who runs apollo. certainly will have some thoughts as well, i think, about the banking system, commercial

real estate, so -- and he's got really good hair too >> well, david, aside from that, thank you. one of the things you've got to talk about with him is that the loan market has opened up. there are a lot of companies just coming, doing ten-year deals, seven, eight, j&j coming up, so maybe the stock market's coming up. isn't there a feeling there may be a thaw in investment banking? >> i think there's a hope that there will be. i wouldn't go so far as to say a complete thaw, but i think there's a hope and expectation that capital markets will and are starting to open up a bit. you will know the day when we see people having ipos again but yeah, the debt market's to a certain extent, but i wouldn't go too far there's a little lag things are -- >> comcast just stepped forward with a four-part offering. tractor supply, one of your favorites, that's not suit supply, that's tractor supply, is in the market with a ten-year

note sale. it really is kind of -- meta >> meta today with a shelf of course, we haven't mentioned the confidential a.r.m. filing on saturday. >> oh, my, yeah. so maybe this is the moment, david, where we can start thinking about buying even a goldman-sachs. >> you had a hard time getting that one out >> it was a punchline. >> you've made the point that you're probably, at this point, it's discounting a very lackluster capital markets business, and therefore, any pickup would be beneficial i think i'm not putting words in your mouth i know you've talked about that in the past. >> do people come to work on fridays there? >> there are some signs of life in the debt market >> i was thinking about 34 degree because he was talking about no thaw. 34 degrees >> reuters has an exclusive on the subway deal maybe getting

some runway here we can put a few of these together >> buy investment bankers in may and make money we'll get cramer's "mad dash," countdown to the opening bell on this first day of may. we're back in a moment ♪♪ at morgan stanley, old school hard work meets bold new thinking. ♪♪ partnering to unlock new ideas, to create new legacies, to transform a company, industry, economy, generation. because grit and vision working in lockstep puts you on the path to your full potential. old school grit. new world ideas. morgan stanley. no, no, no, no, no, no, no. there's a problem with my paycheck. it's short. someone messed it up? i'm in the middle of nowhere.

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some of the premarket gain recognize going to be led by on semi they did have solid results, surprise upside on operating margin, reassuring comments about auto we'll talk about that after the bell don't forget, you can catch us any time, anywhere, just listen to and follow the "squawk on the street: opening bell" podcast. and this is ready to go online. any questions? -yeah, i got one. how about the best network imaginable?

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dash" as we count down to the bell >> downgrades exxonmobil, and i don't want people to read into this exxonmobil has been an unbelievable performer just had a big find in the permian. listen, maybe swap into conoco what i say is, just hold oil there's nothing that's going to necessarily make it go to $90, although a willot of the ceos tn it will. at this level, the oil companies make a lot of money. when oil is at $90 or $100, it's halcyon times, but don't abandon oil. >> it has crushed s&p energy this one name is the -- is by far the leader of the year >> it shows you that it's been kept back previously by a board that, believe it or not, may have not been as active. you put an environmentalist on >> you mentioned that on friday. >> let's get audobon society in here it makes sense to have a

greenpeace-like board. it's time for mike wirth to put a greenpeace person on >> certainly wasn't the view when they thought it might be contentious. >> i thought it would be darren woods is a great ceo. exxon has unbelievable properties i know we can't bring in david right now, but what david -- david's special showed you how special exxon really is, and that's one of the reasons why there was just upside. just tons of upside. >> you mentioned earlier the narrow breadth of the market in terms of year-to-date leaders. goldman, over the weekend, says breadth is now a standard deviation below average. it's happened nine times since 1980 and most times, when it does happen, when it's that narrow, you get substandard returns over the subsequent period. >> look, i would say that we're probably going to have a fight over the debt ceiling. i think it's going to be hideous. it's actually, i think, the republicans think it's an interest to default, even though they say it doesn't. a default would reflect so badly on the president they might make a run for it >> so, you think there is a bit

of a ceiling >> yeah, i do, because the republicans have already offered a plan on -- that will avoid the fall, and it's just being laughed at by biden. it's whoever has the strongest going into the presidential election >> the debt ceiling didn't get any jokes at the white house dinner this weekend. >> no. it should. >> let's get the opening bell in the cnbc realtime exchange at the big board, it's quinnipiac men's ice hockey. congratulations, guys. >> big deal. >> at the nasdaq, the beauty health company celebrating its second anniversary we're going to get a bunch of consumer names estee lauder is later in the week, in addition to uber and yum and peloton. >> this is a big week. i'm glad you mentioned uber. i think there's a sense that lyft has pulled back a little under the new ceo. this may be the time for uber to be able to give a very positive forecast, and i think that's worth it, because that's really

the stock that's emblematic of that period where there's just a giant black hole of money. so, i actually am looking for a good number there. >> all right yeah and we'll get some media in there as well. we mentioned we'll get wbd on friday, but before that, this upgrade of our own parent, they go to buy. they talk about film is on fire as "mario" is the first billion dollar movie of the year >> it's obvious that comcast is disney without a governor suing them with a great balance sheet because that's what's happened here comcast, when you look at -- read jessica's piece she's fantastic. video doesn't matter as much as some of the other things they have like business connectivity. what they did was they broke out. it was that -- i'm not saying that comcast was a black box, but it was basically all you looked at was video. they -- david, they broke things out on the comcast call that made you realize that video may be faltering, but there's

three or four other businesses that are just really on fire >> yeah, i know you were very encouraged by sort of a somewhat different approach during the call taken by the relatively new cfo, and clearly, the market has been encouraged by it as well. we've talked about this a number of times obviously, the stock has been very, very strong. you can see it there since they reported earnings. our parent company as we always like to point out, but yeah, perhaps quantifying the expected losses at peacock, giving people at least some since they're going to come to an end, although right now as much as $3 billion in losses broadband didn't lose subs, didn't gain a lot, and not that much concern, at least for comcast, in terms of the losses, 614,000 video subscribers, but as i had -- and the free cash flow numbers, which was the key, which were stronger than expected but jim and carl, i mean, that loss of video subscribers, which does point to the acceleration of cord-cutting, is not unimportant for the likes of

wa warner bros. discovery or paramount or disney or nbc universal. the way people are all seeing us right now is through a cable subscription that's where it matters, jim and we'll see when it comes to wbd, when it reports later this week, what those free cash flow targets look like, because that's the key for that company as well, as it tries to navigate, you know, not the gre greatest ad market, cord-cutting, putting money into its streaming business and delivering on these free cash flow targets that david zazlov has. >> yeah, david, he has a lot of debt he paid down a couple billion. i think he's got another 50-plus to go. but i got to ask you, mike cavanagh is now basically running, again, our division i work there $3 billion $3 billion is a number that was arrived at by people who are not finance. can you imagine you get a

financial guy, jpmorgan, understands numbers, what happens if he just said, you know, i just figured out a way to cut $500 million out of the loss >> right you're talking $3 billion for the peacock loss yeah i mean, sure >> mike just says, fine, let's lose 3 he's not dirkson >> i don't know what the plan is it's not being shared with me. mike obviously was the president. he still is of comcast, so it's not as though he wasn't already in part focused on nbc universal and peacock, so i don't know if there was already a plan in place. you're hitting on the key thing, which is, well, how do you agree those streaming services, particularly because you need to have them in light of the fact that your cable networks and everything else are not going to have as many subscribers as they did. you need to have a way to monetize your programming and a lot of other things. jim, it's the key question whether you can ever get to scale in that business continues to be a key one. without a deal, as we've

discussed many, many times, will there be some sort of a transaction in the future? could it be one that would be allowed by regulators? would it be a paramount deal a warner bros. discovery deal? is there a hulu transaction that could be beneficial? these are all the questions that cavanagh is going to be dealing with as this year unfolds. >> well, i would say that there are two ways, obviously, to get through this -- some of these problems there's the revenue side and then there's the earnings per share side, the actual costs, and how those could go down and may not -- won't help the revenues, but it would be nice not to lose as much money. why would you ever commit to a loss of $3 billion that's, like, you know, carl, it's like, listen, we're committing to no playoffs. we're committing to not winning a lot of games we're committing to a lot of ls, and you know what? we may not even commit to anything good next year. you don't do that.

a guy like cavanagh doesn't do that he says, this is a clean slate >> b of a argues that the losses at peacock are peaking, that the strength is film is going to help it's going to help theme parks she also says, by the way, ad market is stabilizing with upside potential in the back half of the year >> right you've got barclay's going from 36 to 38 these are for funny. you see the stock is at $41. so either i'll change that 3 to a 4 and upgrade. wells went from $42 to $46 this is a kicking and screaming story. >> the barclay's note is much more about the move in cable has been overdone in the last couple days >> i keep thinking about zuckerberg there was an article this weekend about morale is bad. >> at the "washington post." >> i got -- let me give you a little sense of that morale gets good when you start winning. morale is bad when you're losing, and the people who are losers tend not to be with the winning team, because they go. so, i think zuckerberg, as a coach, is pretty damn good, and the people who are, woe is me, when you're making 4 or

$5 million, i don't want to hear about it lenin was right. you know it's the rich's own fault when they're not happy, so go solve your morale problem. go on your darn yacht and solve your morale problem, will you? >> interesting piece about meta today. speaking of going to $38, that's what jonas does on gm as he upgrades to overweight bull case, $60, but the larger point is that, jim, people are expressing interest, and our phil lebeau did a piece on this. less interest in ev. >> this is i.c.e this is the internal combustion -- maybe it is a revenge of internal combustion when you speak to the oil companies, they're not even talking about the ev yeah, offline, they'll say, basically, ev is not going to dent our business. our oil and gas business ford reports -- and ford is an interesting mixture of the lightning f-150, which can light a whole party, but they have a

lot of internal combustion f-150. i feel confident that ford's going to be not -- this is faint praise -- not as bad as people think. >> behind on semi, and we mentioned some of the guidance on gross margins, on revenue, on earnings for the june quarter, not bad. >> yes, and owen is one -- they are industrial and they are auto. so, what you're looking at is that auto might be doing better, and industrial might be doing better that's a different and contrary view from what texas instruments said last week they're in these markets, and they did not have anything positive to say. on's got the best -- the best a automatic adas they've got good ev. the market is healthy. mercedes is in that market now, and they've got a high-end for $130,000, and ford is in that market with a pretty decent 150 lightning. so, i'm not writing off the ev, but i think that the gm call is

right. mary barra had a really good quarter. she's been disrespected repeatedly maybe this is time for her revenge. >> travel not doing too badly. >> let's see the wave season frank del rio's retiring frank del rio is the backbone of that industry, and i hate to see him go as a matter of fact, i'm going to demand that he stays. >> okay, done. you've seen some halo out of royal caribbean. lows, jim, today, mgm also on the winners list >> i just think that today is one of those days where you come in, and the futures are down, not even with -- not even off europe, and you say, okay, who else is up at 4:00 a.m.? but you see, at 4:00 a.m., i'm thinking they're acting i'm trying to figure out what's going to happen. they don't care. they just act. they say -- these are futures. i'm watching frank holland i'm thinking, do they know anything at all? the answer is, you can't take your cue from any of the early morning trading because it tends

to be people who, i think, haven't gone to sleep yet and may be drinking my wife's mezcal >> we haven't done a touch on the fed quite yet. what is the trade going into this decision here, jim? >> people want tspect that he does pause. he has another meeting in june where he could easily say, we don't have enough time by june to make a determinant about what happened with first republic that's what i would do if i were jay powell i would say that, which is different than, we're going to take a pause we need to look at what we've done to the economy. and then, we wouldn't have an explosion, but it would be pretty good. >> yeah. we'll keep an eye on that in the wake of elon musk's tweets about the -- what he thinks might be already a recession that we're in >> elon is erratic again, which is fine. he has every right to. starship trooper didn't work you know meantime, dow is up 65 let's get back to david at milken with a special guest. david? >> thank you, carl

yeah, we are joined by apollo global ceo marc rowan, mentioned it earlier, of course. and it's good to have you here, particularly on this day >> thank you, david let's start on that news, because i'm curious to get your perspective on the banking system right now, particularly the regional banks does first republic sort of put an end to this, as i've called it, mini banking crisis. >> maybe the first part. deposit structure, knowable. the thing that i always find of interest is what didn't we know? what we didn't know is that $42 billion could leave the banking system in 4 hours without a line i mean, to me, that's the takeaway out of these three bank failures what is the business of regional banking going forward? if you pay more for your deposits, if you have increased costs from operations from regulation and all of a sudden you don't know about the stickiness of your deposits, are you in the loan business anymore? i don't think we're going to find out this year, but i do

think the business of banking, particularly regional banking, is going to change >> well, how long will it take for us to figure that out? >> i think we have phase two still. i mean, you know, on the one hand, regional banking is very supported politically. everyone has a regional bank in their territory. on the other hand, they're going to find themselves asking for leniency during what i would consider phase two of this because their exposure to commercial real estate in particular is worrying that does not mean crisis. it doesn't mean imminent, but i think we will see the same kind of rolling wave of concern, which leads to loss of confidence, and likely more failures but i think it will make them unsympathetic. >> maybe not today, maybe not tomorrow, but soon >> we live in interesting times. >> and commercial real estate, we talk a lot about it for obvious reasons. it's certainly a weakness on many balance sheets. that said, it can't all be painted with one brush there's office space, $80 billion in refinancing this year, but then there's industrial space, warehouses, there's so many things that

don't seem to be nearly as impaired >> it's true let's start with the macro anything you bought in a period of low interest rates is worth less how much less is a question of asset performance and cash flows, but everything is worth less even if your cash flows grew at 10% a year, your real estate is worth less banks are not primarily equity owners of real estate. they are primarily lenders to real estate. but we've already seen, particularly in office, very challenging conditions, which have led to people giving back the keys i think we're just going to see more of that and what's interesting about regional banks is they are exposed to a particular region, so places like chicago, san francisco, other cities that are particularly suffering, those for -- >> so, you think the concentration of geography and particular asset class is going to be a hindrance? there are those who say, it's not going to add up to many of these banks given the diversity of their portfolios. >> for the bank, i don't think that's true.

it's just what we've seen so far. t are the failure of these three banks relevant to the system probably not >> you run the biggest retirement insurer, essentially. how secure is your funding model? >> fortunately, very secure. we actually run the two businesses first, we have the asset manager, and second, we have the insurance company. we run two countercyclical balance sheets first institutional investors, pension funds, endowments, retirement systems, they know their funding for the next 20 years. one of the huge advantages they have over other investors is the ability to go long banks borrow short, lend long. institutional investors borrow long and lend long insurers, particularly retirement services companies, are in the exact same position we are almost always as an industry countercyclical, and that's what people will see, and that's what we've seen so far this year. amazing amount of money flowing into retirement services,particularly annuities. i would say the golden age of annuities.

but we are -- >> you think this is the golden age of annuities >> consumers have spoken they prefer 5% to 2% it's no more -- we can make it really complicated, but when they have had a decade of very low ability to provide for retirement income, all of a sudden, they can lock in 5%-plus, tax-free, for the next decade they're doing it, and they're doing it in size >> we're taking a look at a chart of apollo right now. you and i have had this discussion in the past, but i think it's still a work in progress, meaning, educating people in the investing public how this company has changed so many people still think private equity, big deals. they're much more about taking huge, chunky bets in investment grade credit >> our entire industry was $40 billion of aum every one of the companies, plus/minus in 2008 we ened the year at $550 billion each of us made a different bet. some bet on commercial real estate some bet on infrastructure

some bet on subordinated debt. we went for the private investment grade market. that is the dominant franchise we have built. what we're seeing right now, particularly the turbulence in banking, these are the kind of assets we compete for. we want top of the capital structure, senior secured. we want to provide investors excess return per unit of risk also, our own balance sheet. >> you know, you've said something interesting that i wanted to come back at you on. it was during, i think, a financial conference the marginal buyer of everything is an etf. an open end mutual fund or derivatives trader, and therefore, if you want alpha, you can't be in daily liquid markets. in the equity market, 80% of the volume is s&p. five growth stocks, now 30% of the s&p. we're all levered to five growth stocks and the fed." >> there we go doesn't feel like i need to -- >> what does that mean explain that to our viewers, by the way, who we don't want to go away from watching public markets. >> i say it this way

in the fixed income markets, we have believed, for the past 20 years, there is no alpha the marginal buyer of everything is an open-ended mutual fund, etf or derivatives trader. you need to escape with competition with those private has been growing at the expense to have public that doesn't mean public is bad. that's why you get to buy public at six basis points from a number of different providers, because it is beta if you want alpha, you need to step away from public -- >> people don't seem to understand how quickly and how enormously the private markets have grown over the last five years, do they >> i don't think they do they also don't understand what's happened. we used to think public was safe, and private was risky. we now know after '22, public can be safe and risky, and private can be safe and risky. the only difference between something that's public and something that's alternative is whether it's publicly traded >> and you think the biggest area of growth is going to be in credit, why? >> that's the sizable asset class. i wish it were private equity. private equity is an amazing business we do it, i think, better than anyone

but it's not a growth business our job there is simply to provide the highest rate of return to investors and at roughly $75 billion of private equity, we're quite large. at $400 billion of private equity, we're not relevant the markets are $40 trillion blackrock alone is $9 trillion-plus we have a long way to go being in a business that we're good at, where we're not relevant, i like that. there's a lot of growth ahead in that business. >> we started off this conversation you didn't sound particularly positive, marc, whether it's with regard to the future of the banking system or i should say the banking industry, regional banks, commercial real estate, and yet i've got you here on record saying, i think we're going to have a no-recession recession. so, just square those two things for me >> that is what i believe. i think we're going to have a nonrecession recession >> which means what? >> think about what happened since 2008 we printed $8 trillion exactly what we thought was going to happen, happened. everything went up

you name it, it went up. so, guess what we're removing that stimulus, and assets, asset prices, are coming down. some of it came down in '22. some of it's come down a little in '23 more to come we in the financial markets who benefit and live in an asset world, we're going to feel like we had a real recession. rates going up as much as they have, we're going to feel it but is most of the country going to feel like there's a recession? most of our country does not own assets in any significant way. 3.5% unemployment. job creation, still happening. wage gains last month. even if we have a recession in formal name, i doubt we're going to have the kind of recession that we've thought of historically with massive shifts in unemployment. i think we're having a nonrecession recession >> okay. we're going to leave it there with those, i guess, hopeful thoughts >> i'm an optimistic person. doesn't mean you can't be a pessimist as an investor >> i understand it you got to be a realist as well. marc, thanks for taking a little

bit of time. marc rowan from apollo >> thank you so much, david faber out in beverly hills manufacturing pmi crossed the tape a few momentsin ago we were looking at 50.4. market steady on that news .

take a look at some of the chips. mixed picture today. we have the smh back above the 50-day for the first time in a week and some of the winners including the likes of nvidia, microchip, marvel, not all are winning. qualcomm, intel and micron are so lower this morning. dow up 80. back in a minute imagine, a car that goes as far as it does fast.

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it's time for jim and stop trading. >> wells fargo, was at 47 when the problems with the bank system started it's at 40 they get their $5 billion back and i would -- they put in the fdic fund and i would -- that much deposits but -- and i would say why doesn't that go back

why does it go back to 47? i don't see why not. people underestimating how much this means for the system, how positive, because they're focused on being negative. it's okay. they have every right to i thought the interview with david, where he's like, you know, kind of not so bad. >> yeah. >> i thought it was smart. >> good. >> i will see you tonight, "mad money," 6:00 p.m. eastern time. >> more reaction to jpm taking over first republic and what's ctg take for the larger bankin seor don't go anywhere. dad, we got this. we got this. we got this. we got this. we got this. yay! we got this. we got this! life is for living. we got this! let's partner for all of it.

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visit coventrydirect.com. good monday morning. welcome to another hour of "squawk on the street. i'm carl quintanilla with mike santoli live at post nine at the new york stock exchange. live with david faber at the conference in beverly hills, california decent action to start what will be a busy week jpm and frc are front, apple and jolt and a jobs numbers on friday, berkshire on saturday. fresh data crossing the tape rick santelli for it rick >> carl, march read on construction spending expected

to be up 0.1%. it's up 0.3% that is the second highest reading of the year next to january where we were up 0.4%. if you look at ism manufacturing, manufacturing ism, wednesday service, ism manufacturing headline 46.8 expected, 47.1 is the number that is the best read since february's 47.7. 53.2 on prices paid, 53.2, is the highest level of prices paid since july of last year. and that is not a good thing if you're monitoring, of course -- excuse me f you're monitoring the federal reserve, the higher prices paid for potentially more aggressive fed you have. that is the highest level but still well off the bigger levels think last year highest level was 87.1 employment week, we'll get

employment, 50.2, second best level of the year next to january's 50.6 finally new orders, they remain under 50 they are in contraction mode 45.7 and our last look was 44.3 the best read this year so far is 47.0. that was in february haven't been over 50 since august of last year. you can see interest rates moving up a bit on that prices paid and we will continue to monitor that in front of the numbers tomorrow on factory orders and durable goods and tomorrow is the first day of a two-day fed meeting. mike santoli, back to you. >> sure is thank you so much. we are 30 minutes into the trading session. here are three big movers we're watching general motors, in the green, as morgan stanley's adam jonas takes the stock to a buy jonas says the stock is oversold and raised his price target to $38 a share, up 3.1% so far this morning.

norwegian cruise lines higher beating estimates on the top and bottom line. the company also raising guidance for the full year on strong demand. up 4%. we're watching the regional banks after jpmorgan takes over first republic, something of a mixed response across the board. you see pretty much red on the regional banks etf down about 0.5%. >> we will begin with the frc news with david. third major institution to fall in a couple months, second biggest bank failure in u.s. history. we talked about it with jim in the prior hour and it will be interesting to see how this resolution resonates where you are today. >> yeah. i mean always important to point out for our viewers, of course, if you own the equity unfortunately at this point of frc it's 0, if you own the preferred and debt, that's what receivership or this liquidation is you wake up today with jpmorgan owning first republic, an outcome many of us had

anticipated. it was only a question of when first republic did stumble out of that tumultuous period in early march when two large banks in the u.s. were taken into receivership by the fdic first republic had since then been a real question mark. i described it any number of times, at least as a zombie bank, because deposits were funding was so high and the assets on the balance sheet were not worth what when they made many of the loans or bought the securities on that balance sheet leaving what was a 25 or $22 billion hole and it finally came to fruition after the bank reported earnings last week which raised yet again concern when we saw specifically the deposit outflows, despite the $30 billion that was put in by that consortium of banks as deposits on march 16th and so here we are today. of course the key question is, whether this stabilizes the system, whether that amount of time that did go by between the

failure of svb and signature, was enough to sort of give people confidence? because we did get earnings from the regional banks we did see the deposit outflows but saw things stabilize and so we're in a different place right now. mike, that seems to at least be the takeaway the market wants. for the specifics of what jpmorgan gets, $173 billion of loans, $30 billion of securities, they'll pay the fdic $10.6 billion, they'll take some marks on the loans, down $22 billion for an average of 87 cents on the dollar. all of which, again, is seeing, well, now much stronger hands. this was a franchise as well that was coveted, despite the fact that so many of their wealth advisors had already gone out the door. >> for sure. there is irony here that jpmorgan portrays itself as something of a reluctant savior acquiring this franchise, which two or three months ago would probably not have been permitted to make a run at

we have this kind of crisis pieces moving around, and in terms of the nature of the deal, you mentioned the only question was when this would come together i guess the other open question had been which bank would be the buyer and pnc shares down 4% this morning as jpmorgan is up 2 so it seems as if some investors thought this was going to be a good deal for somebody and jpmorgan got it. >> yeah. the question, of course, is what that cover bid was there was a willingness perhaps on the part of jpmorgan to play more it didn't come into play the way i anticipated, but i made the point jpmorgan is about 11% of all the deposits, they pay 11% of any assessment from the fdic, so in a sense they're incentived to pay the most because they get something for the money they put in back and forth in this deal. i will leave it to leslie to sort some of things out for us specifically back to the question of whether we're at the end of this and i was struck by marc rowan's comments in our interview only

1015 minutes ago, he runs apollo, no stranger to the capital markets in this country and around the world for many years and said a couple things i thought were important one the $42 billion going out in four hours from svb has created a new reality for many regional banks. and two, while i'll let him say it, he doesn't seem to think that this is over. >> they're going to find themselves asking for leniency during what i would consider phase two of this because their exposure to commercial real estate in particular is worrying that does not mean crisis or imminent, but i think we will see the same kind of rolling wave of concern which leads to loss of confidence and likely more failures. >> so, some sobering words there, mike, from marc rowan not necessarily any time soon, but he says it may not be over it's simply a new world for many of these regional banks that face higher funding costs and

yet, don't have that stability of the deposit base they once thought they might have. >> for sure. with the fed raising rates likely this week it creates a little more of a gap even between money market rates and deposit rates and that maybe it's not going to be a rush out of deposits, but the trickle might still continue for a while. we have to be aware of all the possible, you know, knock on effects there. david, thanks. let's bring in leslie picker into this conversation, fresh off of jpmorgan's investor call. looking at some new street commentary around this deal, leslie, seems like generally a positive reception >> generally positive, and i, too, was struck by marc rowan's comments because it seems, and i would be yours to get your thoughts on this as well, this kind of bifurcation in sentiment in terms of whether or not this is the last domino to fall here. you have on one hand the street, all of the analysts reports so far seem to indicate they believe that this is essentially

been firewalled and that what happened with frc, that was kind of the most vulnerable bank, they don't see many other s&p 500 banks that are likely to fall to that same kind of fate, and then on the other hand you have kind of the investor class which seems to force some water on that idea and concerns that there will be additional banks to fall from this, that credit tightening, liquidity issues, none of that really gets solved by what we saw today, and therefore, we could see additional dominos fall, that the crisis is essentially not over yet. >> leslie, it's david. you know, just in terms of some of the financials here, it's a bit confusing and i don't know if you've had a chance to wade through it all one time gain of $2.6 billion for jpmorgan at closing, restructuring costs of about $2 billion, taking fair value marks down $22 billion roughly,

average loan about 87% of what they're taking in and then pay the fdic $10.6 billion do we know when it's said and done how much has gone in and coming out and sort of where it all settles? >> yeah. that was a lot of the questioning on the analyst call and the media call and they referred everybody to a conversation with investor relations on the specifics there. there's a lot going in and out there's the fdic consideration as well, which is about $13 billion into that fund which as you mentioned affects the larger banks more than some of the smaller banks there. but yes a very complicated transaction. obviously, the receivership aspect kind of changes the calculation of things as well. >> leslie, thanks for that leslie picker and david, talking about frc to kick off the hour it's not the only story of the week obviously, we'll get that fed rate decision, the new

conference, second busiest week of earnings, about 20% of the s&p including apple, a big one to watch mike you're looking at what you called a winner take most market today? >> which is what we've had for a few weeks now, since svb went down this is the fixation of everybody on the street, all the strategy notes are focused on the fact that a relative handful of very large stocks have supported the indexes, brought the s&p up to essentially highs for the year while the majority of stocks have struggled the market breadth in general has been poor, the s&p looks like it's in stronger shape than maybe it would under the surface. what does it mean? is it a reason to be further worried about the -- what market is going to have to go through, or is it just the ebb and flow i think it's a feature of this defensive rotation we've had you've had some macro slow down stress filter into most stocks, and that's been the small caps registering. what i find interesting if you look at history, it's not fully

clear now, broader rallies are healthier than narrow rallies, but narrow rallies are not fatal. bad breadth is not fatal to a rally. you've seen 60% of the time this gets resolved by breadth improving. the russell 2000 up 40 basis points, all the mega caps are down so you can have this waxing and waping of market breadth it doesn't necessarily change the fact that s&p itself is right up at this level it's been a ceiling for a hiwhi. higher for longer on rates and figure out what that means we have seen that's the breadth chart from goldman sachs. >> is that - >> that's goldman over the weekend looking at breadth becoming one standard deviation below the average results in substandard returns. >> yes modestly substandard returns, reliant on one episode when you were down 40% the next year. it's mixed, it's not good, but

mixed and i think it is a bit of a rejoineder to those people who say it's been a narrow rally and the other thing, the market is ignoring all the macro risk. it's not ignoring the macro risk if you look, we talked about capital one on friday a weak stock for a while and looks super cheap based on earnings if the earnings are going to come in they put a draconian economic assumption through their numbers on friday and the stock was up, right. it shows you the parts of the market have gotten into this defensive crouch and they can relax. consensus earnings estimates for the 12 months forward have curled up a little bit we'll see if that's real. >> back above the historical median which is interesting to watch. as we go to break, our road map for the hour jpmorgan one of the top stocks on the s&p today two analysts who were on the call and find out if they liked what they heard about the first republic deal. softbank hoping to bring a much-needed boost to the ipo market we've got the details. >> the health of housing, the

ceo of tripoint will join us with the dow shuffling off the prices paid number on ism. stay with us you founded your kayak company because you love the ocean- not spreadsheets. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire

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months given the resiliency and reasonable policy making joining us this morning, moody's chief economist mark zandi joins us great to have you. i would like to get you on the banks first. this notion we've heard it a couple different times the frc episode likely ends the forced sale of banks because of deposit flights and others say there are 4,000 out there. how can we know that what do you think? >> 4700 to be precise, carl, and falling. i think the worst of it is over. i think the institutions that failed are idiosyncratic and business models are kind of outliers and i think because of the pressure on the system, they failed, but we're now on the other side of that i think it feels better going forward. there may be smaller banks that fail because the pressures are still quite intense as long as the fed is raising interest rates that's going to remain the case i sense the worst is over, yes.

>> how do you think this gets folded into the chair's commentary on wednesday? >> if i were him i would explicitly acknowledge it. the financial system is under a lot of pressure. it's not just the banking system it's the nonbank part of the system under pressure and as long as rates remain where they are there's still the risk that something breaks there as well i think he's going to acknowledge it and probably acknowledge it and this may be more hope than anything else, i hope he uses it as a basis for telling everybody that this may be the end of the rate increases. obviously, depends on the data between now and the next meeting in june, but, you know, given, you know, the way things are unfolding here,ed banking crisis, the terminal rate, the highest the rate will get in the cycle is here at 5% on the funds rate. >> we're heading into the meeting on a run a little bit firmer than expected economic data you can make the case that broad economy has held together, maybe

a little bit better than anticipated, and then you have that judgment call trying to quantify the effect of credit contraction and still this pricing in the fed funds futures market suggesting there is a downside to rates likely later in the year, where the probability spectrum brings you. do you think the economy is more resilient than anticipated and what is that going to mean for how i guess the market takes a higher for longer message? >> well, mike, not more -- it's not stronger than i anticipated. i think it's kind of threading the needle here, right it feels like growth is -- it's growing. but it's growing well below its potential, so that means parts of the economy are in recession and today's ism manufacturing survey is below 50 to that signals contraction, housing is in recession and i expect other

parts other parts are going to start sinking. small businesses under pressure because of the restrictions on credit related to the banking crisis you know, this feels like this kind of threading the needle exactly where you want it to be to get -- to quell the inflationary pressures but avoid an economic downturn a lot of script to be written and a lot of things could go wrong, but at least so far feels pretty good. >> speaking of scripts to be written, i want to get your take on the debt ceiling. you know, you've always had pretty good connectivity to the democratic administrations and been involved maybe in the past in those kinds of conversations. what are your thoughts here in terms of what treasury is going to do, the biden administration is going to do, and what happens here and when? >> yeah. well, at the end of the day they will pass a piece of legislation before the debt limit is breached and someone doesn't get paid on time my sense, the mechanism for

doing that would be marrying the debt limit decision with the decision around the fiscal 2024 budget, that's the funding necessary to keep the government open on the other side of the fiscal year on october 1 they marry those two into one piece of legislation and in that, they can strike a compromise, at least to the degree that house republicans can declare some victory, the president can declare victory and we can move on at the end of the day, no significant change to fiscal policy, certainly not in the longer run. >> mark, we'll talk a bit more later about what the -- any credit crunch might do to overall gdp growth for the year. appreciate it. good to see you. >> any time. thank you. clip maker arm finally filing to go public in what could be the biggest ipo to come what investors need to know about that as we go to break, don't miss the fresh episode of "binge" out with the white house plumbers mini series. you can tune in at 12:15 eastern

p.m. on cnbc's youtube, linkedin or twitter to watch that conversation live or cnbc.com/binge for the full episode later on this afternoon. we're back in a couple

the ipo's pipeline has slowed to a trickle this year, soft banks arm registered for what could be a blockbuster listing. let's get to deirdre bosa with the details. >> this is the big one we've been waiting for, arm filing confidentially that could breathe signs of life into the ipo market which has been frozen shut this year to put its size, the current market in perspective, arm is looking to raise between 8 and $10 billion according to reports. total u.s. ipos including spacs have raised a fraction less than $2.5 billion it is a huge -- it would be a huge listing bankers have reportedly pitched a valuation between 30 and $70 billion, which is a very wide range and that also reflects the uncertainties in markets and economy and volatile semiconductor prices but just getting it out successfully would be a win for softbank which is being pressured by the declining

valuations in tech, particularly in the start-up world where division funds are a major player the japanese comgom rate acquired arm and tried to sell it to nvidia for $40 billion, regulators in the u.s. and uk ultimately shut the deal down on antitrust concerns and eventually that led soft bank's ceo and co-founder masayoshi son, to devote himself to getting arm on public arms he and arm one step closer with this filing, but guys, it is confidential so that means that we don't yet have the prospectus or financial details of the strategy here, and they can essentially just test the waters right now, and gauge investor interest and withdraw ultimately if they don't feel that market conditions are right back to you. >> yeah. deirdre, it's david. i got the sense previously from some conversations that might not be until the fall. they seemed to be targeting later in the year. i don't know if you've heard

anything or have any sense as to when we might actually see this come to market >> that matches the timeline that softbank itself has set out. remember when that nvidia deal fell apart, they then looked for a listing on either the uk or u.s. exchanges ending up looking like it's going to a u.s. exchange they said it had to happen within a year. the question is, if the market conditions don't look right, how prepared are they to push it out anyways? >> deirdre, appreciate that. a big story when it comes. deirdre bosa talking some arm this morning. when we come back, jpmorgan taking over first republic we'll talk to two analysts who were able to speak with dimon on the call today and we'll get their take when we come back

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neighbors after a dispute. authorities have been unable to find the suspect as it appears he may have slipped pastpolice checkpoints outside of cleveland, texas more than 250 officers continue to search on sunday, but the fbi's special agent in charge says they have, quote, zero leads as to the whereabouts. russia launching more missile attacks in ukraine, striking a rail hub in the east of the country ukrainian official said 34 people were wounded and dozens of homes were damaged overnight as russian rockets rained down on the town. the attacks came three days after russia killed 23 civilians with a missile that hit a high rice apartment building in uman. on this international workers day or may day, workers are marching across france against president emmanuel macron and his pension reform plans. workers have taken to the streets again to protest the

decision raise the retirement age to 64 from 62. union leaders have encouraged citizens to continue the unrest until macron listens to their demands. back over to you. >> thank you. we are an hour into the trading day. you have the major indexes most of them holding slim gains the nasdaq under performing and small caps out performing, betterthan expected data from ism top of the hour. let's get to bob pisani with more on what's moving so far. >> 4179 was the february second high we're knocking on doors. it's like two steps forward and one step back. what sectors are moving right now. semis are doing okay, on semi that's terrific numbers overall. excitement about the arm confidential filing. and it's been slipping a bit oil is tough staying over $80, below that right now semis are strong the banks have been split.

the banks right now, it's basically the money center banks are holding up well. jpmorgan, citigroup, bank of america holding up, and the regional banks, u.s. bank corps, region financial and pnc the weak ones on concerns there's contagion risk out there other than that, everybody just keeps buying consumer names. every single day, the small number of new highs are the same it's ulta, chipotle, it's starbucks, every day how many days mcdonald's sitting at a new high. here's where we are. the sentiment call around on the street, everybody is bearish, nobody wants to believe the soft landing or the earnings but there is no recession. earnings system for the first quarter are going up, not down, and they are stable for the second half of the year. that is no recession, at least on earnings right now. inflation is still high and if you want a risk for this week, the risk is the fed sounds more hawkish than people wanted them to sound on wednesday. let me talk about the arm

filing deirdre was mentioning this. everybody is excited about this. a confidential filing means we know nothing about this until about two weeks before it happens. this could be out in labor day for all we know, but we've got a big one right in our face here coming friday. k kenvoo the spinoff for johnson & johnson and this is everybody you know, band-aid and tylenol, listerine, this is a huge one. it's going to be right here at post 6, we'll be covering that on friday morning. the important thing is, this is going to help break, mike, the giant ipo drought. we've had $7 billion so far. this deal at the mid point, 2150 will be $3.5 billion so far this year, $7 billion this would increase 50% the offerings and if we got the arm deal, that arm deal by itself would be the same amount that we've raised essentially this year. >> both of those deals, the johnson & johnson carve out as well as arm, are exactly the kinds of deals that you might

see maybe break a market open, meaning mature companies, it's not some kind of long -- sellers who want to do this for strategic reasons, they need the deal out there, and you have sectors that have done okay. semis and consumer staples have been decent safe hey veps. >> -- safe havens. >> confidential is a confusing word and means they're negotiating with the sec now to when they can do it. they don't have to make the terms public until about two weeks before anybody that thinks this is going to happen next is [ inaudible ] themselves maybe labor day before it goes public david want in there in. >> yeah. i'm -- i'm moving on to banks. thank you, bob. >> okay. >> markets carving out small gains following news that jpmorgan is taking over first republic it's the second largest banking

collapse on record, third bank failure since march. our next guests were both on that call with jpmorgan earlier this morning joining us rbc's gerard cassidy and ubs erica najarian gerard has a buy rating, erica a 157 price target and says it's a buy. good morning erica, i'll start with you, good deal for jpmorgan and are we at the end of this unstable period for the nation's regional banks? >> great deal for jpmorgan and we are at the end of the acute liquidity crisis issues for regional banks you know, that being said, i think that what we're seeing in the marketplace today is not necessarily concerns about contagion, but concerns over going back to the cyclical challenge that are facing banks, higher interest rates and the impact to funding costs, the prospects of recession, and especially for the larger

regional banks the prospects of tighter regulation. >> why is it a great deal as you just said for jpmorgan >> so for jpmorgan, right, they ended up buying this bank and the costs to their capital is only 40 basis points and the fact is is jpmorgan's earnings power allows them to ecreate about 40 to 50 basis points of capital per quarter. they're able to warehouse this franchise into their own franchise that have dealt with well-to-do clients on both coasts without taking a huge hit to capital i'm sure gerard will weigh on this as well, we think their earnings ekreegs math in terms of the benefits of first republic to their stand alone earnings power seems conservative. >> you know, when it comes to just this opportunity having emerged out there, i think jpmorgan folks on the call said

we're buying a clean bank in the cleanest possible way. which means pretty much anybody buying it in this way would have had a similarly good deal. you see pnc shares down 4%, maybe on the lost opportunity. are there going to be other not deals like this but other opportunities to consolidate, given the other more macro pressures that are happening right now? >> i don't think so -- >> gerard, i'm sorry >> thank you i'll just fill in what erika was going with because i agree with her. i don't think so either. it's a good question what we have seen over the years is that when banks go into receivership with the fdic, the buyers of the banks do very well and that's what you saw here you already pointed out that pnc stock is down. we're one of the bidders we believe that did not come up with the win that jpmorgan did but when you take a look at the

consolidation of the banking industry, there is going to be a number of changes coming over the next two to three years. we're not going to see any big deals, i don't believe, over the next three to six to nine months, but once we get the new regulations in place, i think you'll see more consolidation amongst the big regionals to get the profitability they're going to need to deal with these higher costs regulations. >> and erika, where does that leave us then from an investment perspective in the regional banks? even the larger regional banks that have not traded well and look cheap and have high dividend yields and everyone is bracing for the continued wear and tear of deposit flow out because money market feels so much higher? >> so i think the cyclical challenges and more importantly the structural challenges of tighter regulation, which remains quite unknown, are going to have the effect of capping

market multiple for regional banks. while there is a lot of cyclical pain that seems to be priced into stocks today, i think what's going to prevent the regional banks from really truly breaking out, is that spector of structural change which we think could take a bite of say 200 to 300 basis points off of natural recurrence on equity. >> and gerard, let's end with, you know, you mentioned this idea of consolidation. i think there is still a concern as well and i've raised it any number of times of others, of the $42 billion that left svb in four hours these regional banks, i mean, you know, things can be fine right now, but longer term, are you concerned at all given how quickly the deposits can disappear? >> david, no, we're not, because when you look at silicon valley bank and first republic their business models were different

than your normal regional bank as you might recall in silicon valley's case, the amount of consumer deposits, less than 250,000, were in the low single percents, 2 to 3%. your typical regional bank, that number is anywhere from 40 to 60% depending on the regional bank and the other important point is that, you know, we don't want to demonize the deposits over $250,000 because many banks have those working relationships or operational accounts as they're referred to of their business customers and those customers use the operational accounts to pay their payroll, pay accounts payable, so those deposits could be 40 or $50 million and they're sticky it's the nonoperational, which is what silicon valley bank and signature was stuck with that caused problems. to answer your question, we don't see this continuing going forward. >> got it. gerard and erika, thanks to you both. >> thank you

meantime housing is a key part of the inflation story this year as you know, as the market prices in another rate hike from the fed this week. we'll check in with the ceo of one of the country's biggest meuier try point, after the break when we're back in two.

financials and health care, the leading sectors this morning but you'll see tech in there as well with semis guidance for the june quarter has the shares up 7% cruise lines enjoying a good day. on the laggards you will see the financials in there. citizens, pnc, obviously, a couple names that did not get frc. let's get into the housing market and the impact of another rate hike. our next guest optimistic on the housing outlook. joining us tripoint's ceo doug power. there were good charts circulating over the weekend

looking at how metrics were beginning to bottom out, traffic, confidence, average home sales, the number of offers per property is that being reflected in what you're seeing? >> yeah. carl, thanks for having me on. you know, we reported last week a really strong first quarter, but what was really encouraging is the engagement of the consumer in the spring selling season we're definitely seeing that rebound. we started to feel it at the beginning of the year, once the consumer kind of got over the interest rate shock of the back half of 2022, and so we really have seen the consumer re-engage the spring selling season at a pretty good clip. >> do you think that means that those that have been resisting listing, meaning suppressing inventory, are going to jump back in the market and help supply >> well, i don't and let me -- let me touch on two major macro factors, carl,

which i think are a strong tailwind for the housing industry the demand side, we've got this millennial generation at tripoint that represents about 59% of our backlog, our sales, with our mortgage company, actually another 9% of the gen-z. two-thirds are people that are going from renters to homeowners, which is a very, very strong factor on the supply side, which you just talked about, if you bought -- if you own a home and don't have a life-changing event, you're probably not going to move when you have a rate under 4% and our sales people constantly talk about the fact that there's just really a very limited resale market, which historically has been the biggest competitor for the new home builders, but right now, there's, what, about 2.6 months of supply, so it's really given us a really strong runway to

work with. >> that sounds really great for your business outlook, but not as great for maybe the broader economy and for the fed just because it seems as if that doesn't mean that housing outright cost will moderate as fast as perhaps has been what are you seeing on the pricing side and are you laying to buy down mortgage rates still and get people into homes, or is there a ready buyer at list price? >> great question, mike. one of the key factors that the new home builders have been successful with, if you take a look at where peak pricing was for the new home sector, roughly speaking, we reported this, we've adjusted pricing net net down 10 to 15%, some markets closer to 20%. the consumer, when they come in to our sales office, have now seen product repositioning, price repositioning and the key

factor you mentioned are incentives to buy down the mortgage for $15,000, depending on your down payment i can take that 6.5% mortgage and drop it down to 5.75 depending on the level of down payment. the new home builders have a significant advantage against the resell market where we can offer not only good pricing, product reposition, but an attractive interest rate. >> doug, in terms of geographies, i've been kind of diversifying away out of your home market in california, seems like that's the direction of migration as well. what are you seeing right now in terms of areas of real kind of percolating demand in other regions and maybe where has it softened up? >> good question over 64% of our active communities are now outside california i would tell you that the first quarter this year we saw a lot of strong success in orders in

the carolinas, and in texas. those markets have really picked up a lot of steam for tripoint as we've grown our community accounts in those markets. >> finally, doug, lumber last week almost a three-year low and i did see a nice chart this morning that mentions of job cuts on corporate earnings calls is now ahead of mentions of labor shortages. i'm wondering if you're seeing broad-based relief in input costs? >> our company goal, carl, was to reduce costs by 10 to 20% by the end of the year. so far we've enjoyed about a 10% decrease, about half of that is lumber, and again, that cost relief, along with the pricing ajud adjustment, has allowed us to keep some pretty healthy margins in the business. as we look forward, though,

labor is sticky and housing starts, i believe, will slowly start up i think things will moderate i call housing a very normal business right now it's a very normal spring selling season i think in the fall, you'll see things slow down a little bit before school and then they in of fall. the housing business feels very normal compared to those several -- couple years of pandemic craziness >> yeah. threw some wild curveballs at all kinds of markets, doug interesting and we hope to touch base with you as spring evolves here >> thank you throughout the month of may, cnbc is celebrating asian american and pacific a lajder heritage through the business leaders. here's debora lue's story. >> i grew up in a small town in south carolina one of the very few asians in the state. and i grew up going to football

games and eating hot dogs and going to state fairs i love that. yet at home i learned a different language, married those things together, sharing that with others, it's such an important part of what it means to be an asian american and i'm so proud of that that's also why i'm part of ancestry and i joined this company to help people connect around their family history because we all bring the experiences that we have, our cultures, our history, and make this country as rich as it is because we can bring it all together

92% still active? seems high. seriously? it's just a bike. wait. they make a treadmill with an intuitive speed knob? yeah. want to try? 92% stick with it, so can you.

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all right, let's get this over with. switch to xfinity mobile and get the best price for 2 lines of unlimited. just $30 a line per month. i should get paid more for this. you get paid when you win. from xfinity. home of the 10g network. markets pushing to modest gains to kick off the month of may. the nasdaq flat. let's get to dom chu with key names to watch. >> mike, as we talk about some of the momentum plays we've seen over the course of the last month or so, there have been some defined areas of the market where there has been a trend that's been fairly well established over the course of the last several weeks we'll start off, first of all, you spoke just about the housing market right now that's one of the places many traders and investors have been focused on it has been the relative strength in some of the home builders, especially the s&p 500 ones we're looking at dr horton,

pulte group and lennar, up anywhere from 7.5% to almost 15% for some of the biggest home builders in america. all of that move is happening as we talk about mortgage rates and housing supply that upside move looks like it still has legs we'll see whether or not interest rates play more into that discussion. the other place to look on the opposite side has been this steep falloff that we've seen volatility wise in some solar-related stocks all amongst those down from 7% to 22% during that span. so the downside volatility there might have legs as well. if we don't see any kind of change in that overall trend watch solar stocks one other place to give you an idea, carl, mike, is this vaneck etf has been losing steam. that might be one place as a leading indicator for the tech trade. we know how important that tech

trade is back over to you. >> by the way, s&p 500 4180. if holds here, it would be the highest close of the year. let's get over to milken and see what's on the docket hey, david >> yeah, i'm joined by a special guest, the chairman and ceo of "squawk on the street," sara eisen joins me here. >> wow, thank you. i thought that was you no, i'm -- >> you're like my cfe? >> i'm emeritus now. you have good guests coming up, in particular given the news, bank of new york mellon, interesting to hear what they have to say. >> robin vince, part of the $30 billion infusion into first republic bank, what was that, over a month ago. >> march 16th. they'll be getting their money back, their $5 billion or whatever they put in as that gets dissolved jpmorgan taking on $92 billion

in deposits but that includes the $30 billion that will go back now. >> i think it's a big sigh of relief for him and others in the banking system today they got a deal done looks like an okay deal for the government and certainly a good deal for jpmorgan if you look at the stock market it will be great to get his thoughts on how secure the banking system is from here. they also touched 20% of investable assets across the world. just what they're seeing and how they're able to help their clients. we'll talk to robert vince of mellon we'll talk to brookfield, and we'll talk to the ceo of kkr -- co-ceo of kkr and the ceo of mond on. >> a good list of guests coming up for our ceo sa areisen. that's it for this hour of "squawk on the street. here. aspercreme arthritis.

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good monday morning. i'm sara eisen live at the milken conference in beverly hills, california, along with carl quintanilla at the new york stock exchange setting the agenda today, huge lineup the ceos of bank of new york mellon, brookfield