learned that alphabet employees have been mocking their ceo on an internal forum for taking a $226 million pay package amid layoffs and cost cutting it is thursday, may 4th, 2023 and "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc live at the nasdaq market site in times square. i'm melissa lee along with joe kernen let's look at u.s. equities futures. jay powell delivered the tenth rate hike. we have futures down for the s&p and dow. this is after the dow closed 270

points down. s&p falling .70% nasdaq fell .50% look at treasury yields. an interesting reaction. 10-year treasury at 3.37%. 2-year treasury at 3.$3.816 -- 3.86%. look at brent crude. it loss 9% from friday to yesterday. >> it didn't hold. weird flight to quality in bitcoin. >> you thought it was weird? >> it goes up. >> it goes up with doubts on the central bank. >> right or regular banks >> right certainly we have plenty of both at this point. >> we will talk more liesman is here. i thought a pivot would be

bullish some day months ago this looks like a pivot. we have the financial issue now hanging over us. a pivot will not make us feel absolutely great only 300 points the day before 270 yesterday. you wouldn't call that a huge reaction liesman, the disbelief in the fed being at 5.25% widened yesterday. what is the difference where the fed funds are and the 2-year treasury people believe less that they will never cut >> it widened a bit yesterday. i have to call up my spread sheet here. >> call up what? >> spread sheet. >> call what >> call up my spread sheet it is updating right now, joe. the gap, let's see where the january -- call it up in the back, the january contract

it was like 75 or 80 basis points it is more 4.30 that is 82 basis points. that's the disbelief with the year end. >> you are on tv you were on tv yesterday did you know that? >> i did >> you were on tv with jay powell i saw you ask a question i know him. >> the best question >> the best question i thought the press conference and i thought was weird when people are saying are you pausing. he goes, no. we raised rates today as you saw. that is not specifically a pause. we understand that, chairman we didn't mean did you pause today. we meant are you pausing they dodge things. why do they dodge? >> he is hedging his bets. you said it in the makeup room can i reveal what you said >> i'm not sure. >> without the curse words you

threw at me. >> there was not much time and only one makeup person i said if -- >> that's not what i was going to talk about. >> if we are doing one person. >> for the viewers, take me. >> i was being nice. >> close call. >> what joe said, i'll tell you, he said one lousy inflation report and one strong spending report and he will back to hike. he is not taking the stress in the banking system seriously enough you passed on what i was going to say in my scripted remarks. >> we talk. >> here is what we want to do. cue up the s.o.t. from powell. this was not from me of he said are we there yet or not there yet? we will talk about that.

are you ready in the back? >> people talked about pausing, but not so much at this meeting. there is a sense that -- that we are close tore the end of this than the beginning as i mentioned, if you add up all of the tightening through various channels, we feel like we, you know, we are getting close or maybe there >> so there you go that's the -- you were talking about it he didn't want to give it up. >> the rope-a-dope. >> that was the conspiracy theory he kept it a possibility becaus friday was going to be strong. >> it doesn't matter how we employ it is how many people to employ. the big influx of people into the labor force the last couple months that made the stronger job growth palatable from the fed's

point of view. the difference i had the other day is the fed should pause because i thought they should take the banking stress fomore seriously. and he said he thinks things very broadly improved since the -- >> what does that mean credit conditions have tightens for sure we know that for sure. we know that every single hike and rates go higher, it makes it difficult for the banks and assets >> right here is the thing. broadly improved how do you mean broadl $400 billion in the past month regional banks are down 30% or more >> you want to read that >> i was going to make the point i felt encouraged because he was

so sure of the tool of raising fed funds. maybe it works 10% of it works? 15%. all of the other stuff that goes would it may be bad. he said we will get to 2%. if you keep going 25 every time you get a chance, do you get to 2% does night follow day like that? >> that is the belief. they can control inflation bring it back down the question is what's the cost. what is the timing in which you do it? >> or the unintended consequences >> the regional banks. the regional banks all went lower. pacwest plunging it was down in the after hours session as much as 60% it down 38% this morning on the news that the bank is weighing options. >> it is not a huge bank

>> compared to first republic, for sure. >> or svb. >> it is not more. >> you think if everything is playing out in the same way, it may not be first republic, but combined, the same impact with the assets leslie picker has more on the news line. >> mel, you bring up a good point. pacwest seeking to calm investors after the headlines that crossed yesterday that it was working with advisers to explore a potential sale that sent the stock plummeting after market trading still down this morning usuallily ry reports of a sale send it higher after first republic in receivership, the concern is the next domino. why would a buyer keep any

transaction now when it could follow the same playbook with jpmorgan chase and first republic in a statement from pacwest, they said in according answer wh normal practices, they are looking at options and they have been approached by investors and discussions are ongoing. they say the bank is not experiencing any ordinary deposit outflows and the core customer deposits have increased since march 31st total deposits of $28 billion as of may 2nd there were no unusual deposit flights this week. pacwest is working with piper sandler to explore options which may include sale i'm told a capital raise is not on the table at this time which makes sense where equity is

trading. i was told that the fdic is not involved yet this is a very fluid situation with you guys mentioned the small market cap at this point this was a multibillion dollar lender a few months ago. the next bank or regional bank in focus as we sort through what is going on in the banking system, guys. >> leslie, thanks. keep us posted leslie picker. we have more news in the banking sector td with a merger deal. the deal has been called off due to uncertainty over regulatory approvals. the deal had been announced back in february. >> ten minutes flew by since the beginning of the show. normal morning shows do you think they are talking about this are we strange we could go until 9:00 talking about the 25-basis point hike and what it means.

>> i want to talk about the separation principal in answer to my question >> that's the next segment >> i don't know if they are yelling in the back. >> they are doing recipes. how does anyone watch anything else it is interesting. >> he said to me he didn't remember the meeting where they were presented with the february >> i thought that was weird. >> i didn't say alarming he said alarming >> he said it was alarming the question becomes is the fed taking supervision as seriously as it takes the monetary policy? >> steve, you pushed him on. here's what they said. they said this it is major problems and then he goes my view is they were on it they weren't on it they didn't do anything. >> a senior fed official said it

was an information report and not an action report do you know i told my wife that and she said, steve, when i tell you the garbage is full, is that an information report or an action report? >> action report for sure. >> okay. then i asked him, what are you doing now? he said the banks are doing stuff now. it is not clear to me that there's more stuff going on right now in terms of sharpen your pencils we are hiking rates by historic amounts. get to work. why didn't that come from the chair or vice chair of supervision with significant risk >> it is not that the garbage is full the garbage is full and a smoldering ember in it we decided to pull gasoline on that fire. >> look, here is what i'll say if you defend the fed. they are focused on the eight biggest banks. i did a couple of lectures

one at georgetown and one at m.i.t. recently. the point is to show so much of what happened in '08 informed what happened in the pandemic. it is like they are fighting the last war somewhat bureaucratically incapable of adapting. it is great on the capital where does it come from now? in the medium sized and regionals. >> are your parents still alive? >> no. >> sad you lectured at georgetown and m.i.t. >> my mom was very happy i guess i'm dropping names. >> no. did you notice >> i was impressed. >> that's what i mean. >> my mom was most impressed by the suits i got to wore. she just loved that. may she rest in peace. all right. we have more to talk about

we went another four minutes people -- >> they ask me not to come in from now on. shut me off when i'm at home. >> coming up, johnson & johnson spinoff set to make the public debut today. we have details next. programming note becky quick is live in omaha at the berkshire annual shareholde meeting. then saturday, cnbc is the only place where you can watch the live coverage of the annual meeting. for now, you are watching "squawk box" on cnbc

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ipo news that's news that i'm saying ipo news johnson & johnson consumer health business kek kenvue at i2 a share. it would bring in $3.8 billion at that price. making it one of the largest ipos in more than a year in the u.s. i like that name it is simple >> kenvue. >> remember the last company

what was that other one? the kraft? >> mondelez. >> what is that? kenvue is fine that mess. >> the pricing above speaks to the environment we're in with the search for safety. >> if there is an ipo. stop the presses especially being here where most in the normal times we will sit here during the show and confetti will come down from the previous day's ipo we have not seen that. it gets stuck up there. >> a little burst of wind. >> the stray one comes down. that hasn' n't happened for a l time are you here tonight >> i'm here for "fast money" at 5:00 >> crazy stuff happens my keyboard is here.

twisted over here sdp. >> the whole thing is to complain about how our show messagm messes with your set. and cnbc learned google employees are mocking the ceo for his compensation of $226 million last year at the time the company has been cutting costs and eliminating 12,000 jobs that come pensation of a $218 million stock award every three year tim cook of apple received a pay cut in january and zoom ceo's reduces his salary and declined his bonus after his firm cut jobs >> i don't know if mocking is the right word

>> maybe agrieved. >> if someone mocks me because i make $200 million, it will roll off my back. i understand how they say you are laying off that is not mocking. if someone gets to the point where you have done something so well and people argue and does a left-hander -- if you do something so well and you are in that position, i don't know if mocking -- >> reevaluate the word and next time i read that, i'll change it i'll take it into consideration. coming up, the congressional stock trades in the banking turmoil. kate kelly is digging into that data. we have the acndrew intervie with brian chesky. >> as the economy slowed down, we see people the travel

the reason why is the more the offices like zoom and netflix, it makes it difficult how people leave their homes. it will obviously get balanced with the fact that people have less money to spend. >> announcer: this cnbc program is sponsored by truist wealth. we focus on person-to-person investment so you can focus on what matters most. and stopped the growth of tumor cells. there's a place that's making one advanced cancer discovery after another for 75 years. i am here... i am here.... because of dana-farber. what we do here changes lives everywhere. i am here. what do you see on the horizon? uncertainty? or opportunity.

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welcome back to "squawk box. amid regional bank failures, congress is cashing out. first republic bank is the most sold stock on the hill in march.

sales of $48,000 between five members of the house of representatives. one lawmaker of florida sold first republic on march 16th she bought shares of jpmorgan chase before it purchased the regional bank. frankel said my account is managed by a money manager who buys at his discretion joining us is kate kelly kate, some of the guys have the amazing money managers who time trades so well i want their names and get them on the network they are able to buy and sell at perfect time >> is that the right time? we had ro on yesterday he was down t80% when his guy sold >> it wasn't much higher. >> if you sold in that second week or third week of march at

the 15th or 16th or 17th, you did manage to avert additional losses naturally, you had participated in the down turn it is really the optics in the case more averted losses as you say, melissa, people find it outrageous. 2/3 of people polled say they like there to be a total ban on congressional stock rtrading. they are privy to know inside information. that doesn't sound right they are invited to confidential briefings on the war in ukraine before it broke out or military assistance that we are planning to provide them. the coronavirus back in early 2020 when the public did not know the extent of what likely was to happen or banking crisis. the issue with this is she bought shares of community bank

at a moment before the upswing that was fueled in part that the bank bought assets from signature bank in new york she had beameetings with new yok state regulators at that timing. >> none of us knew the deposit flight would get worse at 14 when it was down 70% and at that point, did congress people know more than we did over where it was headed i think chip stuff i love paul pelosi he is a wonderful guy. that is amazing. the chip stuff we were involved with litigation that benefitted. you could have known something and have good timing there >> with the chip stuff, we looked at that closely last year i wouldn't say nothing the thing about the chips act is

it was telegraphed for years we knew which semi companies would benefit from it. >> everybody knew? >> >> pelosi is a terrific trader he deals in options. you can game out the games here. it is hard there are a lot of unknowns in the congressional filings. he has done extremely well. >> he did before he is a smart businessman. >> i'm glad you brought this up. the counter argument or push back of banning the stock trading that people find problematic. there are members and member spouse ws who make a living. a senator from minnesota whose husband is a professional medical associate. active on insulin prices he invested in insulin-related products do you give up your career

does paul pelosi give us his career >> and insulin pricing and drug pricing? she could say i will recuse myself and work on something else >> there was a famous case in minnesota a few years ago. i think this happens all the time a younger man had gone without insulin because he could the not afford it and died she and others have been active on bringing insulin prices down. her husband happens to have investments. for her constituents, should she give up on the issue if you have a career you had forever and the six-year member, do you give up your career some of the others we mentioned at the top, ro is a name example. josh and daniel.

our new representative in new york they all have family wealth. they have a broker that trades assets of spouses and sometimes children they say, it is diversidiversif. it is the s&p. we are not in the know other than the filings you are talking about. >> here is ro. we asked representative khanna about his recent trades. he was on the show yesterday he disclosed share purchases of first republic on march 9th and 10th and sold a few days later on the 15th. here's what he had to say when we asked him. >> it is not my money. it is my wife's money. it is in a blind trust it is diversified. they had stock sales 80% down and it was already at a loss. >> i feel we are headed toward something. you will not be able to do this. >> regulation? >> yeah. no >> i don't think this has legs we came close last year.

there have been several bills in circu circulation. >> do people who benefit from it stop it? >> the counter argument is what i was talking about. this is a mcconnell argument it puts a damper on new talent if people come into public service -- >> you see how academics manage their affairs. it would be nice if real world people were in congress. >> when a senior deputy to nancy pelosi came out with a comprehensive ban with some nuances to it. it was on the calendar for two seconds and steny hoyer said take it up in the lame duck. it has gone nowhere. >> my daughter said it was built on a swamp

that's why it is called a swamp. it was built on a woswamp? it is a swamp and it is a swamp. >> in both the ecological perspective and political revolving door respect yes. >> kate, great to see you. kate kelly of the new york times. more reaction in the fed decision to hike and potentially pause. former vice chair roger ferguson will join us next.

good morning welcome back to "squawk box" live from the nasdaq market site in times square. ahead of the trading session, apple numbers after the bell nasdaq is indicated higher by 35.5 td bank and horizon ended the merge r deal the deal has been called off over regulatory approves unable to be opbtained.

horizon is down 34%. and the vaccine maker reporting a quarterly profit and revenue exceeding forecasts from moderna. the ceo will join us in the next hour to talk about the quarter and launch of the rsv vaccine for older adults i was trying to figure -- i want to know how sales compared to a year ago, obviously. pfizer, yesterday, were actually backing out the vaccine and paxlovid results to show 5% gain if you back that out of revenue. if you leave it in, it is down one-third. the comps are impossible the pandemic is over you wouldn't know it around here with people still wearing masks outside. i don't get it >> they may be coming off the subway. >> i know. is that how we will be in case

there is a cold around i need to wear a mask? how do you see people or hear what people are saying if they are a mask on? i can't hear them. maybe i'm hard of hearing. part lip reading i want to see their expression if i say something >> i want to see people smile. >> i want to see humanity. fed chair powell announced the tenth straight rate hike raising by .25 signals a possible pause at the next meeting in june for the review, let's bring in roger ferguson a former vice chairman and titiaa ceo. you are on quite a bit we never run out of new things to add to the discussion or add to our anxiety or take away from our anxiety.

you have pacwest today and first republic everything the fed has been doing and it wasn't we were worried about presidenthe finan system steve liesman asked powell about that yesterday are they taking that into account enough the stability of the overall system and what could happen >> thanks for having me on i heard what chair powell said in response to steve and others yesterday. i think what we are trying to do is difficult and may not be working. they are trying to separate out the need to control inflation by raising rates, which is the only tool they have, from the correction of financial stability. the bank oversight tools are working well according to them a i'm not sure i agree with them that the banking system is stable the banks are well capitalized, but we see anxiety with the

small and medium banks to some degree, they are not focusing in on that. let's be clear their first job is inflation they are worried about that. i do think they could be more nuanced and subtle in the communication and give more nod to and recognition of the strains in the financial system and not simply say everything is fine because the evidence from the market, at least, is anxiety. >> you make a good point, roger. while you were talking, it thought about this raising rates works for inflation, but obviously, this is a blunt industrument you hope 25 basis points hurts demanded somewhere that ev eventually ends up with less inflationary pressure and adds to that. it seems like a blunt instrument you don't get 100% for your money. you might get 20% of the effect. when you are doing it to the financial system, it can be a

multiplier effect. i don't know what 25 basis points does when you have the institutions with duration risk. that is a real 25 basis points risk you don't get much for your money with inflation and you can do damage if you are not careful. >> that is what they are con front -- confronting. powell raised rates in restrictive territory. we are starting to see the real economy slow i.e., job market slowing and growth slowing as we talked about the other day. unfortunately, inflation is still sticky i think they are caught between the dilemma of inflation which is gradually moving toward 2% and the kinds of impact that rising rates have had in the housing sector overall in demand

and the financial services in the banking sector that is their dilemma and tool they have is the blunt one with. all the more reason for them to significanal yesterday of a pau the future will be very thdata dependent and liquidity conditions and credit conditions based on the stresses in the banking system >> roger, i know the fed historically has not cared about stock prices when it comes to the movement and trades in regional banks which we are seeing decline across the board this morning and they decline on the heels of chair powell's pre-confkcon pree we are seeing pacwest down 45% pre-market and the worry spreading to western alliance and others should we start thinking about a banking crisis in the broader

term it is the not the too big to fail banks, but a number of regionals, doesn't that impact sentiment and credit in many ways, they are very harmful to the economy >> melissa, i agree with you i think we heard him nod in that general direction yesterday without being as explicit or as concerned as you are and i share your concern to some degree. yes, they should recognize the market, the equity markets are saying there are stresses in parts of the banking system, not in the large ones, but the medium sized and regional banks. they talked about the fact they have an impact on credit conditions which they want to continue to monitor which i think is right i think where they haven't gone and they probably will not go to the place of saying at this stage is thinking about cutting rates as a result of this. you heard him say clearly yesterday that the market expectation of the rate cut was

this year was not his base case. they are observing and commenting i'm not sure it is driving them yet to action because of the dilemma of inflation. >> he needs to tell the two-year that it is not -- it's fascinating. i was going to ask whether you were anxious you admitted it. i don't want to do scale 1 to 10 you watch the regional banks and it gives you a little bit of anxiety. you never know what's to come. we are the bot and cypscypscyprs anything can do it the hippocratic oath is not the fed. that is doctors do no harm >> the fed clearly wants to do no harm, but it's a tough

situation that they are trying to balance i'm concerned as others are. >> i appreciate it, roger. roger will be a speaker the at the cnbc financial summit on june 15th. he will join top advisers and experts to discuss risk and opportunities. scan the qr code magic. register go to cnbc.com "squawk box" will be right back. >> announcer: currency check is sponsored by interactive brokers. the best informed investors choose interactive brokers

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commercial real estate crisis is getting worse. h we have robert frank with more

>> melissa, 94 million square feet of empty space in new york city it is up 75% pre-covid now a record rate of 17% there are no signs this will improve soon new leases were down 44% over the same month last year and the office occupancy rate, which is how many people are still coming to the office, has been stuck in manhattan at 48% for the past year the concentration with the new york office space with stock decline. vornado trading at a 27 year low. it will take a breath in the time line for developing penn station. the $2 billion plan to develop 5 million square feet. you have sl green and empire state down other urban markets are in trouble. san francisco rate is nearly one-third of office space now

unleased melissa, this is feeding into the regional banking crisis. >> robert, thank you robert frank. coming up, the latest read on consumer trends johneyn lloius ptowi jn after this break >> announcer: executive edge is sponsored by at&t business at&t 5g is fast, reliable and secure oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect. terrier-iffic i labra-dore you round of a-paws at&t 5g is fast, reliable and secure for your business. ♪ you were always so dedicated... ♪ we worked hard to build up the shop, save for college and our retirement.

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some restaurants and food brands are focusing on meal deals for consumers looking to spend less joining us with a closer look at the consumer and what he's seeing in the sector is john peyton of dine brands. >> we need to talk about that. >> you're a big taco, mexican --

>> the worst taco is great, right? >> i don't know. bad tacos are bad. anyway, the company reported first quarter earnings and sales that beat expectations this week john peyton joins us now great to have you with us. we were talking about the quarter. first quarter was better than expected you kept 2023 guidance unchanged which allows for softness in the back of the year what are you seeing so far in the trend of q2? >> we did have a good quarter, thank you. nine consecutive quarters of comp sales growth for applebies and ihop, driven by several things we just got new batt data back n appleby's, we can see that we're getting younger guests and more family oriented guests and higher income guests ihop launched its largest menu

transformation in ten years. and so when we reconfirmed our guidance, we're pleased with the sort of steady results that we have seen from the last quarter. and we're also anticipating and listening to the talk of potentially some recession or something like that. we say it is the recession that has never come and so we're waiting for it and we're planning for it. that's where we are. what i can tell you is there is two interesting things about guest behavior that changed, if i may. one is that they are managing their check. average check remains the same despite prices increasing. and so they're finding the value oriented components of our menu. and the second thing is their expectations around service have changed. so, last year when everyone was emerging from covid, they had a lot of tolerance for short staffing and guests were willing to deal with that. this year, when it comes to service levels, it is all about pre-covid expectations, particularly when you know they're coming back to prices that are 10% higher than they were before.

>> specifically in terms of what you're seeing after the quarter closed to date, what have you seen in terms of those trends as we have a consumer that is digesting maybe headlines about the banking crisis, for instance. >> we're seeing what the industry in general was seeing we're seeing a little bit of a slowdown but as i mentioned, we confirmed our guidance for the year. and that's really because all three of our brands, ihop, applebee's and fuzziy yfuzzy's u oriented brands and have spent decades establishing that reputation with consumers. and they perform well during tough times. and they overperformed during the last recession so that gives us confidence. >> labor costs are still high. are they going higher and food costs, some have come down, what we have been hearing from other restaurants. >> good news on both those fronts when it comes to labor, we still have the late night hours particularly at ihop, overnight hours that are the most difficult to staff however, overall our franchisees

report 90% of full staffing. in the late night hours, which we viewed as a tailwind, we had 1,000 ihops that were open 24/7 in 2019. at the end of q4, we had 700, now we have 750. so, slowly we're pulling back on those hours as well and will reopen overnight. >> people go late at night >> the college kids. >> you don't need to explain really don't there is two kinds of people in the world, you know that, ihop people and waffle house people. >> really? >> i'm both. >> you can live in a region where there is a choice? >> i feel fervently about both. >> and if you have a choice, you choose ihop. >> there's more there. there's more there you don't have biscuits and gravy, do you? >> we do not but -- >> i got you. >> you're handing me this we

just rolled out our new menu we have a new crepe menu, new benedict menu. >> crepes. >> sweet and savory. crepes for lunch and dinner. >> what kind of cream do you use? we could talk forever. we could talk forever. >> you love ihop. >> you don't love ihop >> you don't love tacos or ihop? >> i've been a couple of times >> you got to live a little. >> there are no better pancakes than at ihop. >> they're so good with butter shares up. >> thank you >> shares of industrial parts maker arconic are surging in premarket trading. nghesaction is expected to close duri t second half of the year "squawk box" will be right back. you're a rock star. you are a rock star. no more calling co-workers rock stars. look, it's great that you use workday to transform your business. but it still doesn't make you a rock star. so unless you work with an actual rock star. hi, i'm ozwald.

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( ♪♪ ) constant contact delivers the marketing tools your small business needs to keep up, excel, and grow. constant contact. helping the small stand tall. good morning the fed hiking rates 25 basis points but, signaling a pause could be coming a breakdown of his comments and what it means for your portfolio. not so great so far today. down 93 now in the dow another bank on the brink. shares of another bank on the brink. shares of pacwest bancorp plunging in the premarket,

weighing strategic options at this point quarterly results from moderna ceo's, he's going to join us to discuss the company's drug pipeline and more. the second hour of "squawk box" begins right now good morning and welcome back to "squawk box" on cnbc we're live from the nasdaq market site in times square. i'm melissa lee with joe kernen. andrew is off. becky is making her way to omaha, nebraska, where "squawk box" will be live at the berkshire hathaway meeting shareholders can submit questions and charlie munger by emailing berkshire questions at cnbc.com and saturday, cnbc and cnbc.com are the only places where you'll be able to watch live coverage of the all day event.

let's check u.s. equity futures on the heels of the fed's decision yesterday to raise interest rates the dow is looking to open lower by 85 points, the nasdaq, a flight to safety here on the heels of this latest round of bank turmoil the nasdaq is higher by 16 points moderna revenue, give me a guess, how much is it down >> including covid >> how much is it down yeah, yeah, 70%. and the headline says the revenue crushes estimates. so 1.8 billion was way above the 1.17 people were expecting but last year was almost 6 let's get to dom chu with a look at this morning's premarket movers is the p&g coming up am i missing something, dom? what is that >> it is coming up, they reorganized everything else, it is going to be up at oak hill, rochester, outside rochester, new york we have another major coming up. it is a good thing

feels like spring. masters behind you, the p&g coming up. so, anyway, i will talk golf with you after i get done with the morning movers if you still have time. let's talk about the regional banks. they're still top of mind for a lot of investors we have new developments on a number of different fronts first of all, pacwest bancorp down 35% or so heavy volume, 3.5 million shares already changed hands premarket and by the way, those levels are off the worse levels of the extended trading session this is all after of the bloomburg report that was exploring strategic options. those shares are in focus. also watch western alliance, down 23% keep an eye on toronto dominion and first horizon. td bank and first horizon called off their $13.4 billion planned merger td cited uncertainty around when and if it could get any regulatory approval for that td shares, the u.s. listed ones up 1.5% and also, well, first horizon down 48% as well sticking with the banks, moving

across atlantic, u.s. lists shares of deutsche bank down fractionally, despite help from analysts at citigroup, buy to hold, based on among other things deutsche's ability to meet the higher end of the relative growth guidance and more transparency about its liquidity position and cre exposure deutsche bank shares off fractionally we'll cap things off with a tech check. specifically on shares of computer chipmaker qualcomm, down 7.5% now, 35,000 shares of volume it reported quarterly results after last night's close and profits were in line with estimates, revenues were better than expected for its current quarter profit forecast seen as disappointing. so qualcomm shares off 7.5%. back over to you. >> worth noting too, dom, apple shares under pressure and we're also on the heels of the results yesterday, looking to be down about 1% here. >> right and we got earnings after the bell joe, you wanted to -- >> i don't know.

it is basically a couple of weeks, right the week of the 15th, i think. what i didn't give you grief about, didn't you pick rory for the masters? >> i did pick rory, you're right. >> that was like your worst pick ever. >> i still have faith. to me, it will feel good to me, and i think a lot of other golf fans as well, when rory eventually, hopefully wins the career grand slam. >> he's either on or not on. i had, i think, four guys to make the cut three did and rory did not. >> i got to say, now you kind of have to just keep betting jon rahm, right? the guy just seems to keep winning or coming in second every week so, but the odds are probably not in your favor at that point. so much money flowing to jon rahm that you won't win anything >> no. yeah i'm getting really -- getting some stink eye from my co-anchor here go ahead see you later, dom. >> like, is stink eye different

from any other time i give you stink eye during the show? >> no, looked more intense. >> we got to get to the main story. the federal reserve hiking rates by 25 basis points, the tenth rate hike in the cycle seemed to soften its language on future increases steve liesman joins us with more on this. >> interesting day yesterday the fed delivering that expected quarter point hike that brings the rate up to 5 to 5.25%, the highest level since 2007 and hinted at but didn't promise a pause. said the fed will be determining whether additional rate hikes are needed the prior statement said the fed anticipated future rate hikes were needed. >> people did talk about pausing, but not so much at this meeting. there is a sense that we're -- that, you know, we're much closer to the end of this than to the beginning, that, you know, as i mentioned, if you add up all the tightening going on through various channels, it

is -- we feel like we, you know, we're getting close or maybe even there >> powell downplayed banking stress saying conditions in the industry have improved broadly since the failure of silicon valley bank a month ago. the fed did emphasize concerns about tighter banking credit standards in the statement the statement saying, quote, tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring and inflation the extent of these effects remains uncertain. the statement also said inflation is elevated so the fed remains stuck between inflation running well above the 2% target, but slowing economic growth at a possible credit crunch that could bring inflation down the fed, it doesn't know by how much, so it is hedging its bets, suggesting a possible pause bought not promising a pause >> it is interesting to see what is going on in the banking sector this morning on the heels of what fed chair powell said about the banking crisis seeming to be -- we csee pacwest shares

declining, the unraveling of the deal >> we don't know why that fell apart. >> down 42% since the beginning of the, you know -- >> we talked about this yesterday. why should they have paused? because of concern over the regional bank. look, they're smarter, i guessen than we are in the sense that we do not see -- there is two pieces to the banking thing. the one is the idea that the banks fail the other is the impact of tighter credit standards on the economy. and at one of the breaks, which is what we're saying during the breaks, joe points out that, you know, the idea that inflation is the present threat from most americans. if you notice what powell did, he comes to the podium and he says, we're aware that americans are feeling the pain of inflation and that's how we're focused. so, between this issue and i think you had either roger ferguson on this morning who talked about this pickle the fed is in, they decided that

inflation is more important and they have not elevated the financial stability threat to be one that is over and above the inflation threat and some people think that's wrong. we quoted a couple central bankers who think that's wrong we have paul mccauley who thinks that's wrong i thought it was wrong too because who was it that bernanke said, the banks that made the great depression great i'm not saying we're going there, but there is an impact that bernanke made his, you know, became famous for, which is the banking channel and the credit channel and he was very spooked by that and that's what led him to the axis he took in '08. are we there no, we're not there, but the effects of what can happen to the banking system are unknown and uncertain to quote the chair. >> you're talking about the -- the assets of 90 billion >> that's what i just looked up. >> yeah, i was checking out the market cap it is headed to what was 9. >> what does it mean

>> it was 8. >> asked the question the last hour which i brought up yesterday that banking stocks are different from other stocks. >> right it is part of the capital structure. >> it does not care that much about stocks as much as we think the fed cares about stocks it is not what they're focused on banking stocks are different it is part of the capital structure. and i think that roger ferguson, who is, you know, generally one of those guys who supports what the fed is doing, i thought he suggested that maybe the fed should be more concerned about the banks, and, you notice again, i keep coming back to this, our cnbc fed survey, a collection of folks inclined to agree with what the fed is doing. 59% thought the said should not have hiked yesterday. >> the fed probably doesn't mind that shareholders sacrifice. >> it is not the shareholders. because they're not going to let any of the banks fail. when push comes to shove -- >> who's going to come in -- >> more hazard associated with that than the fdic and if we

cover everybody, if we go to $1 million. >> who is going to come in to rescue these banks at? >> jpmorgan is off the board. >> jpmorgan, because the deal was accretive, it may still yet come in to be helpful. what are the shares worth? what did they pay for the shares in the last one, nothing, right? the assets were discounted so you take that model, you superimpose it on the regional banks and i'm not an expert at this, but what do you come up with not a whole lot. >> steve, thank you. >> they deserve that >> and maybe -- >> once again, bankers are going to bank. bankers are going to bank, which means stupid things eventually but and you wonder do they get -- i guess some of their compensation from stocks they feel it too. >> that's one thing they decided they needed to look at in the review is compensation whether or not it is appropriately tied to results. >> steve, thank you. coming up, moderna ceo and

quarterly results from the company's drug pipeline. and howard lutnick shares his thoughts on regional banks, the fed an the markets "squawk box" will be right back.

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joining us, stephane bancel, ceo of moderna the -- your business has its ups and downs obviously. and, you know, i wouldn't say that good times for moderna are necessarily good for everyone, because we know why your profits and revenue are so much higher last year and the year before than this year, stephane what is it like to try and navigate through -- you're in a pandemic, you do 6 billion in revenues in one quarter, the next year, revenue is down 70% >> good morning, joe thank you for having me. well, i'm actually very pleased with q1. i'm happy that the company is really firing on all cylinders, not only on revenues and on development, so on the revenues, of course, you know, we always say 23 -- covid is not leaving the planet

we are saving a minimum of 5 billion. we did 1.9 in q1 we're well on our way to executing 5 billion. that number in the u.s. with pharmacy chains, hospital chains, with agencies, in japan, for 2023, with europe, and asia and so it is a big change. but as you know very well, we have a platform company. and the pipeline is really firing on those cylinders. flu is in phase three study. if it is positive, which we believe, we launch in '24. as you know we presented with very exciting cancer data. we believe we have the technology to change cancer

care 44% alone, that's a game changer for patients and last night we announced that our relative business, those drugs that go and fix, you know, replace genes in the liver are moving into study where we think we find those and we need to confirm that signal and so we're really happy about where things are. it is a transition year. we're investing aggressively to grow the company >> the -- a lot to talk to you about. i have to ask you about your pay last year. we were talking earlier about what was it -- >> alphabet ceo. >> alphabet ceo, compared to you, i think you made half of what -- of what you made last year stephane, you enter into an employment agreement with moderna based on performance

and if it comes out to $400 million, i'm not -- for a year, on paper, that looks ridiculous. but it is what it is i mean, what is your viewpoint on -- how do you explain that to, you know, in a rising inequality world, how do you explain something like that? can you defend it? >> so, first, let's talk about the data, joe. i think some of the media are reporting that correctly what i did last year is i sold my first stock option that i got granted by the company in 2013 why did i sell it? because it is expiring this year it is a ten-year grant and so it is a grant, i got ten years ago, when we were starting the company. and it's so much value because at the time moderna valuation was a couple hundred million dollar, not the company it is today. the other thing i have done is i

have actually committed on the blog last may and gave an update, after paying taxes, 100% of a gain of that grant has been granted -- given to charity. i have no idea why the media is portraiting my pay last year as more than $4 million it is not accurate it is my option, i use if not, it goes to zero value and we give everything to charity, 100%. i don't know what the topic is. >> i glad that you're able to make that point, stephane. that is obviously helpful for you. you got six vaccine launches all for the respiratory franchise. is that for different -- that's not all rsv. i didn't know there were six things -- i have six things i have to worry about now? >> so, rsv is one, and then we have flu that we just spoke about. then there is a new covid

vaccine, which will be -- the current products are frozen for all products on the market we work on new generation covid that is now actually in phase three as we speak that we will launch in the normal -- that will be much easier for pharmacies to carry and so on. then this combination to make your life easier, joe, and my life as well covid and flu and rsv shot, so the combos we think will be able to launch first combo in 2025, that's when we combine covid and flu and those will be adapted that year. in the current world as you know sometime the flu products eventually worked well because there is a mismatch of strain. what we want to do is to be able in the u.s. or in the uk or in japan to adapt those covid

strains and those flu strain and have them combining the single dose so you can just walk into your pharmacy and have one shot and then add rsv to it another vaccine is cmv it is a number one cause of birth defect in the u.s. there is no vaccine available today. but 20 years this has been the number one priority of national academia of medicine it is in phase three right now the data looks fantastic and that's one of the vaccines we aim to launch in the next few years. >> stephane, you talked about a more stable covid vaccine. i'm not sure if you saw this article in "nature" magazine about this ai software tool which helps optimize mrna vaccines to make them more stable and in theory increase the efficacy of getting the antigens into the human body i'm wondering what role ai is playing if any this goes beyond the current optimization that is widely used and do you anticipate that could

help get all of these vaccines more quickly down the pipeline towards fda approval >> so, how long do you have to talk about ai and moderna. very briefly, we have done that years ago. the way our system works, we designed the covid-19 vaccine in two days there is a lot of informatics in the background to help optimize the best structure that we use by for several y years. we use ai in manufacturing we learn about new proteins and enzymes. we have to gather complaint data that we get from around the world and so we use ai to be able to see signal very quickly because there is so much data, you know, hundreds of millions of people are getting the vaccine every year so you want to be able to get that data, so if there is any safety signal you can see it very quickly

before our teams interview prospective candidates, we use an ai system to screen down the number of resumes. we're planning a new team in seattle, we got several thousand resumes for 200 jobs and so the team using ai system to basically screen down couple hundred resumes of people they met. we use ai, we started an ai academy two years ago at moderna. i believe every employee needs to be trained in ai. ai is an amazing tool. most companies don't really understand it. >> right. >> i think it is a management challenge and we're embracing it fully. >> stephane, we got to go. when is your next big data point for these unbelievable -- the interesting cancer vaccines that we talk about all -- we didn't talk about it this time.

you come back on, next time you have a data point to talk, when is it, in the next month >> we want to keep updating on how the data is progressing. we have shown two weeks ago that all curve of survival is flattening i'm very excited to get more -- >> all right tell us when you have something that we can talk about new with that and we'll talk about it again. stephane, thanks. >> thank you. >> okay. coming up, with the fed rate decision behind us, investors will be watching washington and the debt ceiling drama jon fortt joins us next to talk about whether or not congress should use the situation as a bargaining chip to rein in spending here are the biggest premarket winners and losers on the s&p 500 this morning a lot of banks zions bank down 9.6%, leaving the board there. "squawk box" will be right back. time now for today's aflac trivia question.

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name the top three automakers by revenue. the answer, volkswagen, toyota, and general motors >> well, with the latest fed rate decision now behind us, investors can turn their attention to other market moving challenges including the battle in washington over the debt ceiling, a key question, should congress use the debt ceiling as a bargaining chip to rein in spending jon fortt is here to weigh in. >> joe, i can't believe you're talking about this this is like should i threaten to burn down the house if my kid won't clean his room no that's definitely not something you should do. first, what is the debt ceiling? also called the debt limit it is the amount the u.s. treasury is allowed to borrow to pay the nation's bills as a country we're spending more money than we before in, which is bad, it is like putting it on a giant credit card. the problem is the card that treasury uses is maxed out and only congress can raise the credit limit, the debt ceiling

i know what you're thinking. time for tough love. cut up the credit card failing to raise the debt ceiling isn't cutting up the credit card. why? because congress approved all this spending in the first place. by threatening not to raise the debt ceiling is just threatening not to pay the credit card bill on time. for spending congress approved you know what happens when you skip a credit card payment, your credit score drops, you have to pay higher rates to borrow again and you don't get to live in the nice neighborhoods that would be like threatening to ruin your own credit score to control your spending. >> i don't really think i need to question britain for me to get to -- >> to get to the other side. >> would it kill you to at least look at future spending in light of how much we have already run up and just have a discussion to try to maybe get it under control? >> as a matter of fact, joe, on the other hand, i hate to say

it, but it is perfectly fine for congress to use the debt ceiling as a barrigaining chip because apparently nothing else works. the national deficit, more than $1.1 trillion according to the treasury department. we had $2 trillion in revenue coming in, 3% less than last year and we spent $3.1 trillion, 12% more than last year. and that's just for one year the total national debt is nearly $31.5 trillion right now. so, the fundamental threat to the full faith and credit of the united states isn't about paying the bills on time this year. it is our addiction to spending. making matters worse, the fixes for today's economy are worsening tomorrow's deficits. the fed raised the benchmark rate a quarter point to get inflation under control. that means the government now has to pay out higher interest on debt, making the deficit harder to close. all of that adds urgency to the mission of cutting spending, raising revenue in these tough times, both of which would be unpopular. let's be clear

revenue means raising taxes which republicans want to keep low, and a lot of the spending is in entitlement programs which democrats want to keep high. this debt ceiling drama will give each party cover to make essential but unpopular compromises. >> and you combine everything with -- we know what works we know what the best thing is and that's growth. >> that's the best thing. >> the best thing is growth. >> oh, yeah. >> the best thing is growth. we got to figure out how we get to that and do raising taxes dampen growth if it is not done properly >> yeah, growth is essentially making more money, which we all want to do. >> growing the pot >> if you live beyond your means, it doesn't matter how much money you make as we learned so many athletes -- >> i think this might have been your best on the other hand. >> that's saying a lot i mean, there has been so many, right? >> well, on the other hand, you have had some good ones -- >> some bombs? >> well, they have all been

pretty good. but this one i feel very deeply about because june 1st june 1st. >> yeah. >> june 1st. you know how quickly time passes >> it is right around the corner so, mother's day is right around the corner >> it is >> june 1st is very close. i'm glad you like this on the other hand because i'd like to announce starting today, the launch of the "on the other hand" newsletter that's right there is a cnbc newsletter the qr code, everybody sign up right now, and you will get this on the other hand in your inbox. there is a poll also in august, joe, it is going to be three years i've been doing this with you guys yeah, melissa. three years in august. just about every week, looking to take it to another level. so the newsletter has the text above, you can look at it, see what you agree with. link to a linkedin poll, like real people on linkedin, vote for the side you think is the strongest. the poll is already up

last "on the other hand" there is a poll, strong opinions on that, which is apple's most popular growth market, 74% say india over china so, vote on should the debt ceiling be a bargaining chip. >> are you there is going to continue to be opposing viewpoints on a lot of different subjects >> as long, joe, as you and andrew are alive >> that's another -- that's a good point that's all you need to do. >> it just keeps on giving. >> there you have it >> we're a microcosm of the country. >> that's true. >> left and right brain. >> we're just regular people. >> ebony and ivory, you know >> anyway, jon, thank you. jon fortt. >> which reminds me of the great skits on s"stay aturday night l" which is not on this week.

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fed chair powell signaling the bank may be near the end of its tightening cycle let's bring in howard lutnick. great to have you here on set. i don't want to just talk about

the fed decision i want to talk about it in light of what we're seeing with the regional banks, turmoil and lack of faith there, pacwest is down almost 50% on reports it is evaluating strategic options td backed out of the first horizon deal what is your take on what the fed has done and how that impacts if at all what we're seeing in regional banks in terms of the crisis? >> let's start with the big picture, which is a trillion dollars came out of the regional banking system went into money funds, went into treasuries and went into the big four, right? a trillion dollars you know what that is? that's putting your hand on the neck of the lenders. they're all lending less i think that's 100 basis point equivalent to 100 basis point interest rate hike so, of course the fed is done. of course they're done they're not pausing, they're done we're actually 100 basis points higher it is not a rate hike, right hike rates so you borrow less. >> are we 100 points too high?

>> i think we're 50 basis points high, higher than they thought they would be. now -- >> i was showing off i said i would, i'll do the -- i take out the words that say i'm going to cut and i'm going to raise anymore. >> you don't think it is a big mistake that backfires and they have to cut? >> they're not going to cut so fast this concept, the market is -- >> it hits the fan, they might. >> the market says three cuts this year, three cuts this year, you think they raised yesterday and they're going to cut this year here's my call stays the same remember, if the moneys come out of the banking system, raising rates doesn't change as much, cutting rates doesn't change as much they're just going to stay steady eddie i think the treasury market is too low. right? i think the dollar is too high >> the yields are too low? >> yeah, come on you think the two-year note is calling for like six cuts. come on.

they're not going to cut -- imagine these central bankers, like this, right, you think they're saying, i'm sorry, i was wrong. >> if you're right in terms of the 100 basis point hike, they might have to. if they came out yesterday and said we're going to hike 125 basis points over the next three months, right, let's just pretend, you're saying that's what the end result is going to be so if that is the end result ultimately, maybe they do have to pivot maybe the markets have it right in terms of 4% fed funds by end of 2024. >> if they cut, it won't have the same juice what happened is the string got really loose, right? so when you push that string and nothing happens, right, the hike isn't that big a deal. they just took a trillion out of the banking system but the cut, is that really going to motivate. that trillion dollars is not going back in the banking system if they cut. what happened is the juice of

the fed is weaker than people think and therefore they're probably not going to show that they're weaker, they're likely to do nothing. >> is the banking -- is there a banking crisis still ongoing in your view? is it a problem? pacwest -- >> how can it not be a problem you know, look -- >> well, there are a lot of people who say it is not a problem. jamie dimon said it is contained. jay powell said it is contained. >> come on >> they're pretty smart people. >> the guy who makes my suit says suits look good he doesn't -- he's not going to talk about everyone is working at home and no one is buying suits. if you ask any banker now, they say banking is fine, except for what who is calling pacwest to make a loan today answer, nobody >> do you ever say, god, things are going to be god soon it is always a seller or buyers market 50 basis points too high, does

that mean it is worse than we're anticipating right now >> it has a higher rate in it, not officially, right, that's why the dollar will do badly imagine the central banks going to raise rates today, raise rates again, raise rates again, they have three hikes coming, we're not raising rates anymore. so the dollar is going to be weaker >> did you see oil today >> the world is weaker of course it is weaker so, now, here is an example. real estate businesses, everyone was assuming the rates were going to keep getting hiked, hiked, hiked, they're done they're done all of a sudden you have what should have taken us until january to stop raising hikes, guess when it stopped. yesterday. so the brokered worlds, they start to get better starting when yesterday. it is a miracle for them, right. and next year capital markets start seeing buildings start to

sell again, things start to -- >> how about inflation we should be able to tame it if we're 125 basis points higher. >> oh, yeah. oh, yeah it did it for the fed. it did it for the fed. >> okay. nice suit. what does the guy tell you >> still making suits. everybody says nice things >> you have a suitmaker? >> well, he's got to take it in because, you know, i got big up here, my belly >> from places where they make it for a lot of people and they have -- >> mine just fixed it up for me like yours does too. you buy a suit in the store, they take it in. >> they don't take it in here. >> howard, great to see you. it is a nice suit. howard lutnick coming up, a read on small business and how they're feeling about the state of the economy and the impact of several regional bank failures lila: before i was diagnosed, there was nothing

really to worry about. and then when i was diagnosed, there was just such a big weight put on my shoulders. every night, i felt like maybe i won't wake up tomorrow. but there's no way that this is going to win. i'm winning. announcer: st jude children's research hospital works day after day to find cures and save the lives of children with cancer and other life-threatening diseases. beth stewart: there are treatments that were invented within the walls of this hospital that have continued to improve the cure rates for pediatric cancer, and st. jude's not going to stop until every single kid gets that chance to walk out of the doors of this hospital cancer free. lila: if it weren't for st. jude, i wouldn't be sitting here today. peter: this place has really shown us the strength of what can happen when so many people work together as one. people want to be a part of the cure.

announcer: thanks to generous donors like you, families never receive a bill from st. jude for treatment, travel, housing, or food so they can focus on helping their child live. for just $19 a month, you'll help us continue the life-saving research and treatment these kids need. join with your debit or credit card right now and we'll send you this st. jude t-shirt that you can proudly wear to show your support. christen: i think it's the most worthwhile place to put your money when it comes to childhood cancer. lachaka: because it takes a heart for somebody to say that i'm willing to give to st. jude so that they can help save more lives. that's huge. damon: our giving to st. jude is right up there with our mortgage. that's the priority that we put on giving to st. jude. announcer: please call or go online right now. become a partner in hope today. you know doug, ever since switching to workday you've been a real rock star.

rock star? what do you know about rock stars? billy idol? i mean where's the skin-tight leather? my shoes are leather. where's the unnecessary zippers? that thing! billy, rock star is just how doug feels when he uses workday. thanks, rory. i'll show you rock star! be a finance and hr rock star. workday. for a changing world. billy idol just stole your golf cart! earnings on paramount global down by 14%. the company added subskcribers n the quarter but added on estimates. we're watching the shares under a lot of pressure this morning that is sort of the story of a lot of these streamers, joe. that is you can gain subscribers, but at what cost do you gain subscribers and this interest rate environment, do you want to pay

for that >> it is all coming back to me i'm never cutting my cord, okay. so i'm a legacy cable guy. suddenly what is going on with -- are there any buzzfeeds or any of these new media entities that are going to -- suddenly "new york times" is -- subscriptions are soaring. what is old is not going away. >> right. >> my world is not leaving forever. >> and i'm going to hold on tight until i'm, like, dead fingers. >> aren't we re-evaluating streaming. look at disney hulu remember hulu? you take it, no, you take it >> the streaming model and what it costs to gain subscribers to new data on small business owners confidence in the wake of the collapse of several regional banks. kate rogers is here with more. >> good morning. our new cnbc survey monkey small business confidence index is out taking the pulse of main street. the data shows split between the owners polled on those who do and do not have confidence in the banking system right now at 49 versus 50%.

a majority of small business owners say they are confident that their business capital is secure, but less about 53% say it is easy for them to access the capital needed for their businesses to operate right now. the respondents said they were banking mostly a community and regional banks with a total of two-thirds, remaining 40% at larger banks the survey was conducted among 2,000 small business owners in late april generally small business owners say they're feeling somewhat more confident with the business index showing an overall score of 46 out of 100 but the broader outlook on the economy not so hot just 21% say the economy is good or great part of the big issue here is inflation. it has been a stubborn top concern for small business owners for more than a year at this point back over to you. >> kate, thank you kate rogers are. coming up, lawmakers looking at the cnahi forced labor in u.s. companies be right back. at morgan stanley, old school hard work meets bold, new thinking,

♪ to help you see untapped possibilities and relentlessly work with you to make them real. ♪

we moved out of the city so our little sophie andcould appreciate nature.you to make them real. but then he got us t-mobile home internet. i was just trying to improve our signal, so some of the trees had to go. i might've taken it a step too far. (chainsaw revs) (tree crashes) (chainsaw continues) (daughter screams) let's pretend for a second that you didn't let down your entire family. what would that reality look like? well i guess i would've gotten us xfinity... and we'd have a better view. do you need mulch? what, we have a ton of mulch. we moved out of the city so our little sophie could appreciate nature. a literal ton.

but then he got us t-mobile home internet. i was just trying to improve our signal, so some of the trees had to go. i might've taken it a step too far. (chainsaw revs) (tree crashes) (chainsaw continues) (daughter screams) let's pretend for a second that you didn't let down your entire family. what would that reality look like? well i guess i would've gotten us xfinity... and we'd have a better view. do you need mulch? what, we have a ton of mulch. in a series of letters, the heads of the house select committee on china have requested information from companies. i know you were supposed to be

on before, congressman it's great to have you on. i don't know what happened last time i think maybe -- i can't remember i've seen you on every other cable outlet i'm glad you're finally here we ask the question, are these companies benefiting from that type of labor? >> well, there's allegations that were unearthed during the hearing the select committee had on the ongoing genocide. 80% of cotton is sourced in china so what we're asking is for nike and adidas to address theallegations unearthed at ou hearing and we're investigating two chinese companies taking advantage of loopholes that are basically selling goods that are made by slave labor. we filed a bipartisan bill that had a de minimis invention that

avoided customer scrutiny due to your tax about 2 million packages enter without scrutiny our concern is they might be exploiting the de minimis loophole, which was designed to help our agents so they wouldn't have to go over everything under the sun. >> also joining us, how select committee on china ranking member, rajakrishnamoorthi

>> this is one of those situations where americans doesn't want to support or buy products made by slave maybe why the -- while the uighur people are being forced to work in these factories that's why we identified these four companies that witnesses at a hearing before us in march had identified as potentially sourcing products and we got to stop it. >> i'll be back in a second, congressman. congressman gallagher, i don't want do relativism but we moved an all-star game because of a voting legislation that was asking for i.d.s

however you view that, at the same time there's things that are happening in china to these major multi-nationals that are so virtuous when it comes to things that happen in the united states and almost a blind eye is turned to what's going on in china. this is just one small part of this whole thing, which it's hard to understand the hypocrisy. >> there's a lot of hypocrisy going on the most ardent evangelists on wall street are the ones most willing to turn a blind eye to the atrocities going on. if you analyze on behavior on the e, the s and the g, i think we have to take seriously the

threats of taking taiwan by force if necessary that has to be priced in to your business model one thing i hope we can encourage major multi-national companies to do is to start derisking, diversifying their supply chain american consumers are going to absorb a lot of pain all the more reason to be smart about this on the front end. >> congressman, you think about people like apple or starbucks that have such a vested interest in china you heard from congressman gallagher about taiwan what would you do if you were tim cook how would you prepare for that possible outcome in. >> i think folks like tim cook and others need to two do things one is they need to increasingly

think about what does it mean to have redundant supply chains that don't necessarily involve sourcing all your stuff from the prc and that means potentially even moving it back to the usa to manufacture smome of these items or to other countries. the second thing is i think that folks like tim cook and others are actually people that the ccp might be listening to, and i think they should use their voice with regard to some of the issues this we care about so much, whether it's taiwan or other matters. but i think that folks here in the u.s. are going to have to think hard about their supply chains and their connections to the prcbecause at the end of the day, the ccp is a strategic adversary and competitor to us and we have to protect our values and our interests, even at the same time that we engage

them >> very good thank you. thank you to you both. both congressmen we appreciate having you on. we got talk more events going on on this. the guy at the bottom, the coupling, do we need do that >> coming up, roger altman plus, the ecb will be out with its own rate decision in just a few minutes. nasdaq up by just 5 1/4. plshes are down 1.4% premarket. "squawk box" will be right back.

>> right now, a child is being diagnosed with cancer. >> [ voice breaking ] being a parent of a child who is diagnosed with cancer [sniffles] is a parent's worst nightmare. >> st. jude children's research hospital works day after day to find cures and save the lives of children with cancer and other life-threatening diseases. >> st. jude, to me, inspires hope. it gave me the power to believe that anything is possible. >> st. jude is...everything. [ voice breaking ] i feel like they really changed me and my family's life. and i'm really grateful for everything that they do. >> in the united states, one in five kids with cancer still dies. and in many other countries, four in five kids with cancer will die.

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good morning futures are mixed as the fed hikes rates again and another regional bank coming under fire. meanwhile, the biden administration detailing the potential market fallout by failing to raise the debt ceiling. we'll get the latest from delaware senator chris coombs. and air bnb. the final hour of "squawk box" begins right now good morning welcome to "squawk box" here on cnbc we're live from the nasdaq

market site. becky and andrew are off today on the eve of apple's earnings report, the nasdaq is lower by 7.7 points, the dow looking to lose 132 looking at treasury yields, the 10-year is a 3.5%. >> here are some of today's top business stories pacwest the latest down sharply following news that the company is weighing strategic options. pac west is calling off more than $13 billion deal to aquake first horizon and the two banks said that they mutually decided to end the deal because there was no clarity on when they would get regulatory approval. and johnson & johnson's consumer health care business pricing its

ipo at $22 a share the spinoff will be valued at who $40 billion. >> how many regionals do we have left >> there are a lot of regionals. >> there are but the ones we've been showing from silicon valley, we have a list >> there have been four failures so far they are under severe distress so that's a concern with the bank equity is part of the capital structure. that's a concern let's get to one of our main stories today, the impact of the fed's tenth rate hike. joining us on that and the debt ceiling drama, roger altman. great to have you here >> thanks for having me. >> you said the fed did the right thing. >> i think the fed did make the right decision, for two reasons.

everyone knows inflation is still running too high it's running about 4 1/2%. it's just too high so for the fed to have stopped relative to that i think would have been a mistake and would have undermined confidence and actually would have been a very negative result. secondly, if the fed had paused, i think the implication would have been the banking turmoil is much worse than all you guys think and i think that would have been destabilizing from a market point of view and the fed knew that. for those two reasons, i think it made the right decision we'll see based on the data whether this is the end of the ik hi hiking cycle or it isn't >> it's weird you think two psychological effects would be more destabilizing than the move itself in other words, the 25 basis points, all the marks on the duration mismatches and t-bill

yields and anything causing deposits to flow out of regional banks is going to be exacerbated by another hike of 25 basis points you're saying just because the fed would look like they knew something or just because it would look like their resolve for inflation is being -- both of those things are psychological reasons. >> i'm not sure the first one is psychological. >> how do we know about the lag effect given what we've already got, especially with the credit contraction, how do we know inflation is not already headed to two >> we don't. we don't our view is that we are going to have a moderate recession by th end of the year and by the middle of 2024 it will probably hit the fed's 2% target, but i think for the fed to have stopped and said we've done it in terms of inflation, i don't think that would have been the

right decision. >> because they were so bad on the way in >> they were so late on the way in >> that's not a good reason to go too far now >> if you step way back. look, the fed's had a tough year probably the worst year in the federal reserve system, they misjudged inflation and then give markets reasons to think they might pause or pivot and playing catch up for so long for them to have stopped yesterday and then have been wrong and they could have been wrong in terms of inflation not trending in the direction everybody wants. >> how about having to cut a month from now because of making things worse you've seen that happen. >> i know. i agree with your previous guest, though. with short-term cuts, i don't think that's likely. >> how much do you think the credit tightening we are about to see how much do you think that translates into in terms of

tightening >> i think the combination of qt and some of, you know, lesser lending capacity or willingness is relevant. and i'm not smart enough to know whether that's a hundred basis points equivalent on the funds rate or what precisely number that is but i think that is relevant >> on order of magnitude, a hundred basis points is a tremendous amount. so why would you take off the table a fed cut later on this year if the fed came out and said we were a hundred basis points higher right now you might say that >> melissa, i don't know that the fed won't cut at all by year end but the spread in the federal funds futures market as you were talking about earlier, between the fed's official forecast of the funds rate at the end of the year, which is in round numbers 5 1/4 and the futures market forecast, which is up to a hundred basis points lower than that depending on the day, that implies series of

cults. that i doubt >> a lot of people -- strange bed fellows always in politics i was watching senator elizabeth warren on our air yesterday and i found myself nodding like a lot. so then i just pulled myself away for a second and slapped myself a couple times but i really was agreeing with everything she was saying about the fed. this is no way, you know, to -- putting people out of work is no way to try to improve an economy. trying to slow the economy -- that's the only tool they have but in a perfect world, you'd wish you had something better than what the fed is trying to do and when you raise rates on the supply side of things, that's inflationary for anybody trying to start a business or borrow money. it dampens -- you have fewer people with jobs because they aren't expanding because rates are too high it just seems like it's

counterintuitive how it works. >> the degree to which the fed originally misjudged the tenacity of this inflation, as we all know has really been -- >> what caused the inflation, roger? >> i think it's the pandemic >> you don't think it's the spending >> i don't think that's the primary effect if you step way back, the economy stopped. everyone was at home large recycling of stimulus payments the economy starts up much faster than people think people are home, they can't spend on the normal things they spend on, going out to eat, travel, hospitality. they have a lot of liquidity because most people retained their jobs and they received these payments and they couldn't spend on a lot of traditional things so what did they do they spent it on goods, especially on goods that pertain to the home, might have been a bicycle, a grill, whatever you

can do diy at home demand for certain types of goods were huge, outstripped capacity on the supply side and it leaked over to labor. to me that's the main -- if we hadn't had a pandemic. >> that happens like a pandemic one-off but you think it has become more engrained because of the labor. >> i think the fed is going to achieve its goal, but i can't disagree entirely with senator warren because powell has said several times and his predecessors sometimes do we need labor markets to soften, we need the unemployment rate to go up that's tough that's hard. >> and then she started talking about big companies gouging and trying to make profits, you know, and then she was back to the same old elizabeth warren who doesn't understand the free

market economics very well >> coming up, delaware senator chris coons joins us and we'll hair from airbnb co-founder and ceo brian chesky. d a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect. terrier-iffic i labra-dore you round of a-paws at&t 5g is fast, reliable and secure for your business.

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welcome back to "squawk box. futures across the board negative s&p looking to lose 13 at the only right now >> let's get over todom chu. >> some of the late breaking headlines are out. shares of shopify are soaring, nearly 2 million shares of volume better than expected revenues and it announced the sale of its logistics position in exchange for equity stakes. shares a paramount global, movie, tv and streaming giant global down 14%, nearly a million shares of volume after it reported disappointing profits and revenues and it

seeks to save cash towards its streaming operations and we'll end on shake shack, up around 8, 9% after reporting a smaller than expected loss on better than expected revenues. melissa was also up more than expected back to you. >> thank you very much steve liesman is here with the latest european central bank rate decision. >> it just moved across the wire i have wires scrolling across. they raised it to 375 versus 350. so it's up it looks like by a quarter. all three ifacilities up by a quarter. incoming information broadly supports assessment of medium term inflation outlook that ecb formed at the previous meeting >> you want to decode that >> it means we haven't changed our outlook for inflation i

think is what that means ecb says the futures will ensure policy rates will be brought to level. we're at 3 1/4 now on the main rate i've seen estimates out there that they have to go to 375 is probably their peak. they're behind the fed take a quick look at the differentials in inflation their inflation is running hotter than ours ours began to fall before theirs has. they're at a flat 7%, we're down notice 5ish areas. >> thanks steve liesman. coming up, we'll hear from airbnb ceo and his company's enough initiative, more like a throwback. and then when i was diagnosed, there was just such a big weight put on my shoulders. every night, i felt like maybe i won't wake up tomorrow.

but there's no way that this is going to win. i'm winning. announcer: st jude children's research hospital works day after day to find cures and save the lives of children with cancer and other life-threatening diseases. beth stewart: there are treatments that were invented within the walls of this hospital that have continued to improve the cure rates for pediatric cancer, and st. jude's not going to stop until every single kid gets that chance to walk out of the doors of this hospital cancer free. lila: if it weren't for st. jude, i wouldn't be sitting here today. peter: this place has really shown us the strength of what can happen when so many people work together as one. people want to be a part of the cure. announcer: thanks to generous donors like you, families never receive a bill from st. jude for treatment, travel, housing, or food so they can focus on helping their child live. for just $19 a month, you'll help

us continue the life-saving research and treatment these kids need. join with your debit or credit card right now and we'll send you this st. jude t-shirt that you can proudly wear to show your support. christen: i think it's the most worthwhile place to put your money when it comes to childhood cancer. lachaka: because it takes a heart for somebody to say that i'm willing to give to st. jude so that they can help save more lives. that's huge. damon: our giving to st. jude is right up there with our mortgage. that's the priority that we put on giving to st. jude. announcer: please call or go online right now. become a partner in hope today.

the travel industry can tell us a lot about the state of the consumer a airbnb showed us a lot a year ago i decided to live on airbnb and halfway through the last year i realized we needed to get more supply. i'm like, well, i need to become a host i wanted to be a host. i was thinking renting my second home the problem is i don't have a

second home. i have one house i'm not really traveling my only option is i can rent a room in my house and then i was thinking i'm going to let strangers rent a room in my house? i'm going to bite the bullet joe and i were the first ones to do it. i'm going to do it i put up a room in my house. i called it beyond the air bed this is basically experience where you get to stay and there's like memorabilia of air bnb. i started realizing when i had a room in my house, i had this memory that staying in a room in a house was something that young 26-year-olds do because that's what i was when i started bnb. and people staying with me were like mid 30s and it's a bigger audience i realized we should relook at this product, this idea of staying in a house with somebody else is not a weird thing. it can be very mainstream. >> how would you vet the person

who was going to live in your house in. >> people requested a book and they would have a full profile you also have reservation screening technology we've done over a billion and a half guest arrivals on air bnb we have a lot of indicators of when there's a problem and then i'd have a conversation. good thing they all had some point of reference like one was a founder of a start up another was a top host in brazil on airbnb. >> shared bathroom or ensuite bathroom >> this is technically a shared bathroom in the house but i said while you're here, i'm not going to use it. >> how do you imagine this new product is used in that regard the bathroom is a big deal >> here's the thing. we now ask hosts do you have a private bathroom or an ensuite bathroom or shared bathroom? you can filter for it.

if you want your own bathroom, you can filter for it and a lot of private rooms have their own bathrooms so you can choose whatever you want. >> what is this going to do to your margin? this is going to be a lower price point. >> i don't think it's going to be that cannibalistic. i think people who are going to stay in entire homes will stay in entire homes i want to make sure the next gen, generation z, that we get that next generation they book rooms and entire homes. >> so of this is the feedback that you get how much of it is looking at the economics of the business today and seeing people actually trading down we had andy julasty on the proga and he was talking with how people byinguying more expensive

product, are you seeing it in the rates today? >> it's pretty stable. it's about what it was a year ago. there might be a littlebit of replacement where people are booking but it was actually pretty stable. >> let talk about the privacy piece of it. it's one thing to get in the back of an uber, which you're in for half an hour with somebody else, it was another to get inside somebody's home but they weren't typically supposed to be there. >> yeah. now they're there. >> are there any other mechanisms you're going to have to create you had issues with parties and people doing all sorts of crazy things. how do you police that when there's now two humans or more in the same house? >> well, the good news, andrew, is this is not new this is the thing we started with we've been doing this for 15 years and it's been used more than 50 million times. good news is the five star ratings are often higher than entire homes

we have profiles for each side we verify the identity of every guest booking and every host, we have a 24/7 safety line, tips for solo travelers and if there's any issues, we occur every host to have a lock on their private door if they don't have a lock -- >> a lock on the private door inside the house >> yes, int the bedroom we encourage every host to have a lock on the bedroom door >> we spend a lot of time talking about chat and expedia has announced a plan how do you see it changing your business >> this is going to be probably bigger than the internet, somewhere between the internet and the industrial revolution. it's going to be profound. i can imagine short-term, long-term. short term, number one it's

going to make everyone more productive i think engineers will be 30% more productive and maybe twice as productive. >> does that mean you do more or you have less people >> we will do more because we're really efficient we have great people we're already very profitable. we're one of the most profitable companies in silicon valley. for every dollar we earned, we made more than 40 cents in free cash flow. what we really want now is growth we're going to keep the at the same time amount of people and hopefully they can ship more we are not limited by cash we have $10 billion in the bank. we're limited by our ability to build product and great software number two, customer service i would argue airbnb is one of the hardest customer service products in the world. two different people living in two different areas. there are so many different

issues we have 70 different user policies some of the policies are as many as a hundred pages long. imagine you're a customer service age and you were just hired and suddenly two angry people are calling you in two different languages. a.i. can augment it. the third thing is matching money we're not really a search business we're a matching business. nobody goes to the third page google. it's not relevant. the third page of airbnb in paris are relevant so the more we can learn about you the more we can match you. sam altman, he's building what i would call the base model. he's building the highway. we're going to build the car on the highway. we're going to build the layer of tuning.

we want to be the most personalized interface for a.i. on the internet, we learn about you, we care about you and what do you want? what we're building isn't a travel service, it's really a travel community >> what is your acceptsense of going to happen on the real estate market? >> hard to say i don't know if i know enough about real estate to opine i can speak about our business i think cost of housing is becoming more expensive and it's going to turn a lot more people to hosting and the other thing we're seeing is more and more real estate developers it used to be ten years ago if a real estate developer reached out to us, it was a bad thing. now we're getting real estate operators saying can we partner with you

this is something people are really interested in i do think there's going to be a blurring of the line between hotels and apartment buildings where a lot of people are mobile, they're living more month to month eventually i think more and more of your rent will be paid like netflix, on a monthly basis and supply will be furnished a bit of trivia for you. airbnb was a disruptor 50 company. tune in next tuesday as we reveal the disruptor list. we're just a minute away, a little more than that for some initial jobless games and a new look at the u.s. trade deficit the futures right now indicated down about 88 on the dow, red across the board

the 10-year note after yesterday you would have expected some movement, i don't know if this is what you would have expected because we're down to 3.33, the 2-year is down i think we should looking at oil, too can you get up an oil board, too? okay, saudis, what did do you? >> they look pretty smart money. >> maybe they should have done more >> buy the spr >> they can't. the debt ceiling. >> it's so stupid, the dpft sh government should be buying the spr and selling the future and that would even out the curve. >> that would make sense >> rick santelli standing by at the cme in chicago we got more left in the fdic or

in the fdr which is more depleted at this point? >> i'll go with the oil any day of the week. when it comes to the fdic and what's going on in banking, it does make me nervous especially when the fed chairman of course says all is clear. and i respect that and i'm sure that his heart's in the right place but it really does seem too early to call with respect to energycongratulations new y york, no gas ovens and it's in the neighborhood of expectations it's a nice drop of 70.5 billion in the rear view mirror. it's a first quarter preliminary look, worse than expected, minus 2.7. this is not good that's the special sauce of the economy and it certainly doesn't seem very special. of course when productivity isn't good, unit labor costs

usually go higher and that indeed is the case shooting up to 6.3, almost double our last look at 3.2. initial jobless claims, 242,000, that's up from a slightly revised 229,000 originally reported at 230,000. 242,000 is the highest level actually going back to just the week before last when it was at 246,000. it seems as though 250 is the threshold many say to pay attention to i particularly like to look at continuing claims expected to be around 1.86 million, a little bit under, 1,805,000 all those are basically in the neighborhood of 2021 when we were right around the 1.9 million mark they're hovering just below

those levels if we look at interest rates, we could clearly see 10-year note yields have moved a bit higher here and i think that's pretty interesting considering what's going on with jobless claims because obviously initial claims have been on the low side and the preopening equities, i don't see a lot of movement there, they're a bit underwater most likely they're not going to be very enamored with productivity we see the euro currency was hit a bit. real quickly, joe, i think it important. the three-month bill is hovering around 520 and if you look at what's going on with three months, the recession inverted spread, that three-month aspect makes it that much more inverted, the most inverted in history actually and if you look at the euro currency, it is hovering and fell from a 13-month high, and

it has moved down a bit after the quarter point increase that we saw from the ecb. and i love all your discussions this morning should the fed go, should the fed not go i don't know that the quarter point is going to make that much difference and i certainly don't know that the banking industry is going to be dramatically affected by that quarter point to be honest it's there and it doesn't seem to be going away very quickly. back to you. >> yeah, but we got the pivot. basically we got the pivot we're supposed to have fireworks. the market is supposed to be off to the races you ever read "the monkey's paw" they get what they wanted but there's strings attached you got a banking crisis and a recession. we're looking at be careful what you wish for >> the administration in control of a u.s. economy that won't even discuss $31 trillion

deficit. you can't make this stuff up, joe. >> we're going to talk about that with senator koons in just a second i don't know how -- yesterday row ro khanna had real trouble trying to define it. they changed it in the rundown >> you have knowledge that they changed it because you were calling me crazy >> it says liesman data without a space. and to me it looks like liesmania. >> it's like the beatles tom jones. >> i'm giving the whole productivity story a pass. we had that huge surge in productivity from the layoffs and we're bringing back some less productive workers. i don't know what the trend is rick is right, long term it matters. in the short term if you just

look at lxmfa, i just asked them to put it up we go up, we surge up and then we kind of come back down. that's what the chart looks like but we're kind of meeting the old trajectory of where we were before i'm not sure that we have a productivity problem right now we're still in this adjustment process. it goes up and down like that. jobless claims, we'll see if that's the beginning of something. what i want to show you is the fed rate outlook every single point is inverted to the current rate. the first full cut is baked in in september 2023. so that's the first -- you're down 27. by the end of the year, i'll give you a fresh number on that. the market thinks it will be 85 basis points below where the fed believes it will be. so that's where we are right now. the market still does not believe the fed after yesterday. you listen to gunlock yesterday and his idea was i don't think

the fed interest rate -- there's the fed market gap that chart, it surged yesterday. if you went back yesterday, you would see it surged more after the banking crisis look at how great they are in the back there that's the gap the higher it is, the less the market believes in the fed and that is the market saying the banking crisis has more of an impact on the economy and the outlook and inflation on the fed than the fed is saying it does >> right or the fed even knows it does. >> you pick your winner here, melissa. that's what you do in this market the fed got it right or does the market have it right that's what the market is saying in that chart right there. >> never disappoint. you wonder why there's lease maniacs. >> careful of the people outside. >> oh, there's a coffee cart, too. >> you'd be surprised. >> the men at home during the

day who work at night. the guys who work in the parking garage at night, they know who we are >> and the shoe department at sachs, by the way. >> and the pilots. hello, pilots, we love you >> you can get a table near a waiter >> i got a table at joe stone crab one time because they knew who i was. >> the white house says there could be a floalut from a debt ceiling breach stay understood. you're woatching "squawk box" o cnbc and expertise you need to bring out the innovator in you. ♪ imagine, a car that goes as far as it does fast. as sleek as it is spacious.

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(funky electronic music) (narrator) invest in. believe in. move in. grow in. build in. thrive in. all in north carolina. ranked america's top state for business. welcome back to the house gop bill to raise the debt ceiling. expected to come under fire today, the senate budget committee hearing. at the same time the biden administration is laying out the potential damage of the failure to raise the nation's borrowing limit. the president's council of economic advisers could plunge and more than 8 million people could lose their jobs in the worst case scenario. the cea expects several hundred thousand people would still lose their jobs

joining us, senator chris coombs great to have you on this morning. >> great to be with you. >> speaker mccarthy was able to pass a bill that raises the debt ceiling. at this point it's gone nowhere, as you know, and the president continues to insist on a clean raise. senator schumer hasn't proposed any legislation to deal with the situation either just for argument sake, if speaker mccarthy does not accede to the president's demands and the president continues to stick to his guns and re ffuses to negotiate, should we let the united states default on its debts? >> absolutely not. >> would the country blame republicans if the president continues to refuse to negotiate and is that really the wish that republicans would get blamed >> well, of course it is not anyone's wish that we default. joe, as you well know and as the

council of economic advisers just announced i guess yesterday, it would be catastrophic for us to have a sustained default. it would weaken the united states globally, it would throw millions of people out of work, it would cut probably 40, 45% out. stock market, it would throw us into a deep and sustained recession. even if we had a brief default, a few days, it could cost hundreds of thousands of jobs, turn all indicators down this would be a self-inflicted wound. so, joe, there is no reason for us to default. president biden is meeting with all four leaders of congress on monday to talk about the path forward. under the previous administration, we passed a clean debt ceiling raise three times. democrats provided a majority of those votes. i don't remember hearing anyone here in the senate saying we won't do that until there are significant and sustained cuts in spending. in fact, the addition to our

nation's debt under the previous administration was a record amount and president biden has reduced our annual deficits by $1.7 trillion. there is a time and a place for the discussion about the balance of revenue and spending and that's our annual appropriations process, which is already well under way. so we should pass a clean debt ceiling raise, avoid default and the sharp costs that would impose on everyone watching the interest rates rise that would affect everyone who has a mortgage, a student loan, a car loan and make sure we can deal with our spending and our budget >> i was watching some senate leaders and gop leadership the other day. senator thune said that in the last 11 debt ceiling raises, eight of them have had negotiations and i've seen some articles written where speaker pelosi was demanding that the trump

administration negotiate to raise the debt eight out of 11, there have been negotiations everyone on your side brings up what happened during the trump administration it's not unprecedented it's more common there are negotiations my simple question once again is if speaker mccarthy does not accede to president biden's demand for a clean raise, is the president willing to let the country go into default? >> i don't think either side is willing to shoot the hostage and i'll remind you the hostage is us, the american economy. neither side should be willing to dou to default >> then it looks like negotiation is coming and we're just doing to kabuki dance and i don't think the people like

watching this play out, senator. we like sausage, we just don't want to watch it be made >> joe, it's not fun to watch. it also not fun to be a part of it it is deeply unsettling that we are just three weeks at this point from needing a clean debt ceiling raised bill to be moving through the senate and the house. this is bringing it awfully close. deadlines seems to force action here in the senate in my 13 years. all the ways the bill was narrowly passed by a two-vote margin to the house would be unacceptable to the americans. we just passed the act to take care of veterans exposed to burn pits this would cut that. and it would take away meals and wheels for seniors >> no one expects the whole bill

to pass. that's the starting point. so you get with the senate, you get with senator schumer, you get with the president, you get with kevin mccarthy. you say no way we're doing -- whatever your priorities are, the democrats' are, get rid of the veteran stuff, keep the covid stuff if you get to use the unspent covid fund there must be something you can agree on at 32 trillion that we could modify to let both sides end up coming to an agreement where we raise the debt ceiling instead of the brinkmanship where if you don't do a clean raise, we're going to default. >> joe, i agree with you that we should be able to come to an agreement about the balance of cults and spending revenue and expenditures that's what our annual budget and appropriations process is for, when we can't resolve that, the federal government shuts down and as you know --

>> it wouldn't kill you to just throw a bone on spending somewhere. insisting on a clean raise is just bringing us towards the brink. >> i'm not sure i understand you, joe >> i'm saying that insisting on a clean raise without -- you're not precluded from talking about some budgetary things at this time >> that's right. >> it's not like it's your reserve for this next time and can't possibly be discussed now. it wouldn't hurt to at least address some of the 32 trillion where both sides say you know what, i agree with you, speaker mccarthy and up you know what, senator schumer, i agree with you. we all are just crazy spenders that want to take the country to 50 trillion in debt. >> joe, i think we can agree that we ought to be able to take up debate, discuss and pass an annual spending and revenue package that makes the cuts and

increases the revenue that will get us on a solid footing. >> talk to the president >> without coming close to default. >> good. i'm going to play that for the white house. then we're all going to come together before june 1st time is flying by. >> that's different than negotiating about default. >> senator, a great discussion whenever you're on, my daughter knows your kids and i just am glad to see you and have you on whenever you're on, sir. i thank you for what you do. >> we should take default off the table. >> we get to bloviate all we want you're the ones that actually have to come up with something i appreciate your service. thanks >> thank you coming up, jim cramer's first take on the trading day ahead and a programming note as we head to break tomorrow becky will be live in omaha, nebraska at the berkshire hathaway annual meeting and sue

decker saturday cnbc and cnbc.com are the the only places to watch live coverage of the meeting.

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vice president kamala harris set to meet with a.i. leaders today. i think we mean, leaders of, like, human leaders about a.i. >> not, like -- >> not actual a.i. have i got that right? >> i hope so >> they're the ceos of google, microsoft, and chatgpt creator open a.i some day -- some day, we may be meeting with a.i. leaders. ahead of that this morning, the white house detailed a set of actions it's taking to promote responsible a.i. innovation that protects americans' rights and safety these include more than $100 million in fund-raising for new a.i. research institutes tomorrow, we're going to be

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an update on the european central bank's latest decision on interest rates. >> hey, melissa. christine lagarde taking to the podium and saying she's not

looking for things to be too high for too long. incoming information widely comports with the long-term. underlying price pressures remain strong. they're stopping the reinvestments in one of their programs as of july 2023, and she's calling on the european governments to roll back their energy subsidies done in the wake of the invasion of ukraine. little bit of a sympathetic rally in the two-year german treasuries because i think there had been some concern they might do 50 today. instead, they did only 25, so a rally in the german two-year >> steve, thanks our next guest says like a lot of people, he thinks of yesterday's fed rate hike as dovish he was surprised at the tone coming from the central bank with us now is jason good to have you with us what did you make -- what was interesting was his talk about regional bank failures >> right >> and banking crisis is contained, largely, and then as he's talking, regional banks are

declining. >> no, it's -- it's difficult to know these days whether what the fed is saying that it's contained makes you feel better or worse, because -- and i think what you saw from the fed yesterday, at a minimum, is that based on what they're seeing, they don't think the regional bank crisis or problems are systemic and so, again, that could either give you comfort or make you worried, because a half hour later, you've got a problem. but i think the fed has been behind on a lot of these sthings obviously, with regard to inflation but also, to a certain extent on regional banks, and at a minimum, it suggests to me the economy's going to continue to slow down, just because lending standards are going to continue to tighten, given what's happened >> we've already seen tightening and so, i want -- in terms of credit standards i'm wondering, in your view, does ta fed sort of dismissal of what continues to go on in regional banks, we're seeing

huge declines premarket today, and the equity for banks, part of their capital structure, so we can't ignore the stock declines for banks if they're being too dismissive of this when it comes to the impact >> it's hard to know we have 4,500 banks, and you do -- i mean, i know it's very much out of favor to let free markets work and let banks fail and certainly that's not been a part of the fed or either administration's approach over the past 13 or 14 years. i would prefer it that way, but this is a little bit of the problem when you do this much meddling in the economy over such an extended period of time. we've described this as a little bit of like the hotel california monetary policy. you can check out any time you want, but you can never really leave, because every time you try to leave, every time you try to exit this, something blows up, which some people say requires more fed easing and so, this is a very difficult situation, and i don't envy the fed. there are no really good options here, to be frank.

it's either you accept structurally higher levels of inflation or you let things fail >> you watch steve steve was talking about the failure of svb, and twice, chair powell said, yeah, the supervisors were in, and they saw all that, and they were on the case >> yeah. >> are they on the case now with the regionals? is it the same sort of -- i mean, it's almost like, you know, nothing to see here? >> yeah. >> i mean, does that -- doesn't inspire confidence >> no, it doesn't, i think for all of us, and we're coming to the conclusion, a lot of us, which is true, i think, is that the fed, for the most part, they have a lot of smart people, a thousand ph.d.s. at the end of the day, they don't know that much more than we do, clearly just based on what's happened over the last couple of years. and that's what argues for them having a very narrow mandate, which is price stability as opposed to all this other stuff that they have been worrying about for a long time. >> your broader view on stocks, though, has it become dimmer,

less optimistic versus a month ago? >> it's just as dim, which is to say that my view is that we're likely to go into recession. i've never seen a bear market that bottomed before the recession started. so, if the recession hasn't started, it means we're probably going to revisit the lows, and i would say what i have seen over the last month makes me feel more confident in that view. it's the same view, but more confident in that view that we're going to see more trouble later on this year, sadly. re regrettably. >> jason, thanks for coming by >> and a final check now on the markets. at least for today hopefully it's not the final check unless somebody knows something i don't know the nasdaq, indicated down about 14 the s&p down about 12.25 we got about 30 seconds. let's look at yields, which steve has pointed out, the two-year and fed funds are

getting even further apart, so still the market doesn't believe everything and then, you know, saudi arabia needs to go back to the drawing board. $68 now, and we can't fill the svr until when >> we can't do it now, not with the debt ceiling >> what? oh, not with the debt ceiling. we need to get that done thanks for being here. >> pleasure. >> make sure you join us tomorrow "squawk on the street" is next ♪ good thursday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber at post nine of the new york stock exchange premarket's had a lot thrown at it this morning, weak guidance in semis, and a big ipo today. ten-year, 3.34% is about a one-month low. road map begins with the banks, though first horizon plunging after this deal to be acquired by td