Transcripts For CNBC Squawk 20240703

Tenyear note at 4. 556 . Twoyear note at 4. 927 . As you imagine in the energy world impacted by this. Wti crude is not impacted much. Check out crypto. For you trying to watch what the markets may do over the weekend as people were focused on bitcoin since it was trading as the strikes were taking place. 6 66,609. What was the low, mike . Low 60s. I was actually on twitter trying to understand the maneuverings because of the thesis, if you will, around what bitcoin should or should not be in this moment. It doesnt conform to anything lyinearly. This was pretty well telegraphed. You have the broader context which is typically an expected potential escalation of geopolitical conflict is not the thing to really drive the next weeks and months in markets. I do think markets are dealing with other stuff. Right now, a little bit of pressure is taken off because doesnt look to spiral. Oil is in the lied. Lead. The other part of it is were only getting back at the open if this is how it stands, a third of fridays loss in the s p. Leslie picker spent time with jamie dimon and one of the things he said in the annual report two weeks ago was how much he felt like we were on the precipice in a way we hadnt been. You were right at the beginning of the war i go back to what happened on october 7th. Yeah. It did. You still have three weeks where it was weak after that. It wasnt driven mostly by that. Oil seemed to react this way. That begs the question to your point about jamie how the markets price in changing world order and can they do so despite the fact so many stocks driving the market are algorithm based. I go back to specifically tell me what the market is supposed to be pricing . The middle east is volatile and it is a hazardous place and awful things going on. What should the markets be taking from the events over the weekend today that is incremental to what we knew on friday . If you look at it that way and all of the other factors that we are dealing with like the repriced fed and all the rest of of it. If it creates the supply jolt and oil going up and the flip side of how much spending. If you believe this actually was going to spiral into a war, the amount of spending as a result. Sure. Thats true. Thats always a bit on the back end as another consequence. Lets get to the reaction in washington to irans attack on israel. Eamon javers is joining us with the latest details. Reporter good morning, mike. The white house said this weekends iranian attack on israel was rebuffed by israeli and u. S. Defenses. Most of the work was done by the Patriot Missile battery over the offensive over the weekend. Because they were able to destroy most of the drones and missiles fired by the iranians, israeli officials said cas casucas casualties were limited to one, just a 10yearold girl, injured by shrapnel. This raises the prospects of the wider middle east war at the time the u. S. Is urging a ceasefire in the gaza strip. President biden returned to the white house from delaware on saturday and monitored from the situation room in realtime. President biden urged House Speaker mike johnson to pass a military aid bill this week to support israel and ukraine. The speaker was publicly noncommi noncommital in the media appearance yesterday. We will see how it goes this week. The iranian attack is the response to the israeli strike in syria appears to be over for now, but the situation is tension and not clear if the forces will retaliate or if there will be further strikes. Back to you. Eamon javers, thank you. Joining us now is sylvia jablonski. Siylvia sylvia, we were chatting how we have not experienced the flight to safety trade and safer have trade had it not been so clearly telegraphed on friday. What do you make of the premarket activity this morning and do you agree with mike that the market has other things that it is focused on right now . Good morning, leslie. I think there are a couple of things going on. First, because of the news going into the weekend, we saw the flight to safety and pick up of metals and gold and oilrelated products. I expect that to happen. It will not propel forward, but there is enough to hedge and enough of a good reason to do it. To mikes point, there was a major strike this weekend, but prior to that, there always is instability in the region and there has been for a while. I dont think people necessarily panic or come out of Growth Stocks and high risk stocks and go completely to safety. You will see pickup in vix or alternative metals in the near term. Do you think the markets may have overreacted a bit on frifriday especially to earnings because of the overarching concerns or is the Market Pricing in earnings so far . What does that portend for the rest of earnings season . It feels like it did with the russiaukraine news with the stark reaction out of the gate and things slowed down. I think that there was a bit of an overreaction. That bodes well for earnings season. I expect earnings to look good coming out of tech. The bar is pretty low. Although, the expectation is hyped up with the low bar. And in terms of what we have seen in the last few weeks, people are hedging and picking up energy and metals. Tech has fallen the last three weeks. For an investor on the sidelines, microsoft and google and amazon and chip names have fallen off the alltime highs and we will start to see the cash flowing that way. Of course, some of the stocks sometimes act as a defensive destination in the market. Sylvia, the question is if you go back a few weeks, it seemed like there was almost nothing pushing against the further advance in the market. You have the economy out pe performing and the fed cutting into the good economy. Bond yields were tamed. A lot of those were complicated at this point and we only have a 3 pullback in the s p. How do you think about the risk reward looking ahead . I think it is a good time to come back into the market and as you said, we might not necessarily get those three rate cuts we want. The fed is uncertain with the geopolitical issues hanging over us. All of those things were more or less there. In terms of rates, earnings have within strong. Companies have performed. We have seen gdp growth. If the fed cuts two over three times, it doesnt matter much. Were there. Maybe were not there in the next couple months, but i think were going to come to a point where financial conditions ease. Although, they are not that stringent. You can see a good case to come back into stocks. I think sitting in the treasuries for the long term with the 6 trillion on the sidelines means stock markets with the nasdaq or s p 500 have proven you are better off in equities. Barring any major reaction in the middle east that is beyond what we have seen, the markets are ripe for the year you are buying chip makers, nvidia and amd and adding to tsmc. Why are those areas you want to add more money . Thats my point of interest. Generative a. I. And quantum computing story. We heard the story that it will revolutionize every industry out there. Communications and needing more information. It will change the way we live, work and play and bring efficiency into every industry. I think that you have to buy the two leaders there. Nvidia and amd. Everyone is buying up the chips. Companies like meta and microsoft and google are the winners there. Taiwan semiconductor with the 6 billion off the chips act. They will build three factories. Biggest pbuyers are amd and taiwan semiconductor. You will see growth. Thank you, sylvia. Thank you. As we try to make sense of everything taking place, just in the last hour, the u. S. Government awarding samsung 6. 4 billion in funding from the chips act. Samsung promising to spend 40 billion to build logic chips in the u. S. The governments aid will help it in the facilities in texas and the existing plant in austin. Commerce secretary Gina Raimondo will be on cnbc today at 2 00 p. M. When we come back, more on everything taking place over the weekend and what it means and where it is all headed. David sanger will join us next on the conflict in the middle east and the ripple feefcts around the world. Squawk box is coming right back. Her uncles unhappy. Im sensing an underlying issue. Its tmobile. It started when we tried to get him under a new plan. But they they unexpectedly unraveled their price lock guarantee. Which has made him, a bit. Unruly. You called yourself the uncarrier. You sing about price lock on those commercials. the price lock, the price lock. so, if you could change the price, change the name its not a lock, i know a lock. So how can we undo the damage . We could all unsubscribe and switch to xfinity. Their connection is unreal. And we could all unexperience this whole session. Okay, thats uncalled for. After military service, you bring a lot back to civilian life. Leadership skills. Technical ability. And a drive to serve in new ways. Syracuse universitys Daniello Institute for veterans and military families has empowered more than 200,000 veterans to serve their communities and their careers. From professional certifications, to job training, to help navigating programs and services, we give veterans access to support from anywhere in the world. Welcome back to squawk box. Tensions in middle east are at a new high after the missile and drone attack by iran on israel. We welcome david sanger here with us. One of the great veteran experts of this space. His book is out. New cold wars. Chinas rise and the efforts to defend the west. Lets get into it because it relates to the story. Just right at this weekend and where we are in this particular moment. I know heit is impossible to handicap, but does this escalate . Where do we go from here . It is a fraught moment. A really hard one. It is really interesting to see President Biden on the phone to Bebe Netanyahu hours after this was over saying take the win. You know, you shot down all this stuff and you started this in some ways by doing this strike in damascus which the americans were upset about and didnt think the israelis should go do for fear of this. The effort by biden so far has been avoid escalation here and i suspect that at least for a while, we will see a calm. There is a rubicon that has been crossed here in the 45 years since the iranian revolution, iran has never attacked israel directly from its soil. I think the taboo on the israelis attacking back has now lifted. Biden may put pressure on netanyahu. He doesnt have a great track record. Thats the question. The extent you have been reporting on this over the weekend, what is your sense of where netanyahu is and where the israeli people are and the government around netanyahu is telling him . He is, obviously, desperate to stay in power. I think the longer the crisis goes on, generally helps him. He also recognizes that if he goes back too hard on iran right now and this turns into a bigger conflict, he will lose his objectives in gaza and lose the other. He is probably going to stay focused on gaza. He has to do something in response to this. The question is can they calibrate it . The biggest mistake is someone reads wrong how the other guy will react. Ill ask about a different read and it goes to the book which is russia and china of it all and their relationship together and potentially as a supporter of iran and how that relates to whatever pressure points and leverage we have or dont have with those countries. This is thebig change from nine or ten years ago. You remember the 2015 negotiations to stop Irans Nuclear program. Right. Russia and china were part of the negotiations. They were sitting on the american side of the table, right . This time, they are part anof wt the iranians call the axis of resistance to the west. Iran is providing drones to russia. They may be on their way to providing missiles to them. The russians are not going to be part of the effort to bring this down. Also, china and russia are happy to see the u. S. Wrapped into the middle east again as you were saying before i came on. What about the relationship with china . Janet yellen just got back from china. Is there leverage to be shad . There is leverage. Chinese economy has finally slowed down. How many times have we said they will hit the rocks . They finally hit them. I think it is the sense of the americans who deal with china the most, particularly the government officials, that this warming that we have seen, including the yellen visit, is a temporary thing. Book tries to trace where we have been with russia and china. The theme of the book is while we were busy doing the wars on terrorism and focused on the middle east, we basically ignored the revival of super power conflict. That will be the dominant theme of the next 20 or 30 or 40 years. We did it by deliluting ourselv by thinking russia and china would sign up to the norms of the western philosophy. Did we miss it and were on the back foot . Yup. If you want to get on the front foot, what do you do . Three things. The first is you recognize that this is the primary thing you have to focus on. Biden tried to go back and do his pivot to the pacific. Once again, he is caught up in the middle east. You cant lose your focus. The chinese dont lose focus. The second is you have to sustain the pressure on putin. All of the record of our dealing with putin is when he detects weakness and they will back away, he will go on the next step. The idea that the United States would say, okay, we were allin on ukraine, but this is too hard, that is what putin was betting on us doing. The third thing you need to do is if you are focusing on the investment, including bringing back the Semiconductor Industry and if you decide you are doing industrial policy, you have to be allin and do it in a big way. Here is the hypothetical counter fact. If President Biden today or becomes president again in november, this dynamic changes how . Two different ways. On russia, he said he will solve the problem in 24 hours. There is only one way to solve it in 24 hours. Go to the russians and say take this, this and this. I think if we did that, that would begin to shatter the alliances. I have been reading on europe and they are clearly concerned about that. On china, it is a slightly different thing. He was very eager to go strike deals with the chinese until covid happened. Thats when he turned around. I actually think he would probably try to reengage with xi jinping. Now, would he reiengage on the right issues . Hard to know. Would that solve or deal with the israel iran issue . I dont think it would. The think the russians have more influence on iran. The reason i think the chinese would be perfectly happy to see trump come back is the trum p ea is the chaos era and they get to move around the World Without his focus. David sanger, one of the smartest people i know. Thank you. Coming up, well have the action to the escalating war in the middle east in the energy markets. That story is next. Later, we hear from white house adviser john kirby in the 7 00 hour. Dude, whatre you doing . Im protecting my car. Thats too much work. Weathertech is so much easier. Lasermeasured floorliners up here, seat protector and cargoliner back there. Nice out here, side window deflectors. And mud flaps. And the bumpstep, to keep the bumper dentfree. Cool its the best protection for your vehicle, new or preowned. Great. But where do i . Order. Weathertech. Com. Sfx bubblewrap bubble popped sound. [alarm beeping] amelia, turn off alarm. Amelia, weather. 70 degrees and sunny today. Amelia, unlock the door. Im afraid i cant do that, jen. Why not . Did you forget something . My protein shake. The future isnt scary, not investing in it is. Youre so dramatic amelia. Bye jen. 100 innovative companies, one etf. Before investing, carefully read and consider Fund Investment objectives, risks, charges expenses and more prospectus at invesco. Com. Oil prices are relatively stable and israel fought off the iran strikes on saturday. We have Pippa Stevens with more. It was telegraphed ahead of time which indicates the country doesnt want fullout war. Irans move was a facesaving exercise and well planned without engendering further conflict with israel. The key is how israel responds because that could determine if the conflict is contained for now or escalates. That according to citi is not priced into the market. Additionally, no oil supply has actually been impacted by the conflict which is putting a lid on oil prices. Its still a precarious market. Iran has increased production 3 Million Barrels a day. This comes amid the ongoing russia and ukraine war. Ukraine stepped up the drone attacks on russian facilities which has been pressuring prices. The upside move in oil is impacting the energy sector. The prior high stood for a decade. Guys. Pippa, the g7 leaders are discussing more sanctions against iran. Im curious how it impacts the oil complex. As iran increased the production to 3 Million Barrels a day, they increased exports and other nations have turned a blind eye because oil prices are rising. Who doesnt benefit from it being higher especially in an Election Year . We have seen the price rise 20 cents in last month loan. Oil is a big, big input into inflation and if prices rise further, it complicates the issues. World leaders want to cap how much these countries earn from the oil revenues without disrupting global supply. That was the nature behind the price cap on russian oil. It was to not ban exports entirely as they did with gas because that would have a shock on the Global Markets. It is a difficult position to limit irans revenue from the oil exports without actually leading to an increase in oil prices. Thats been the trick for a while. Pippa, thank you. Coming up, earnings season is in full swing. We will get you ready for Goldman Sachs set to report later this morning and give you a look at the busy week ahead. We will have former vice chair Roger Ferguson with his latest on the hot flinflation data. Good morning. Welcome back to squawk box. Live from the Nasdaq Market site in times square. Look at the futures after the attacks over the weekend and the jitters of what will happen next. Not so jittery in the marketplace. Dow would open up higher. Nasdaq up close to 100 points and the s p up 21 points. Leslie. Now to the planner. Goldman sachs is set to report in the 7 00 hour. That comes after the rough start to theearnings season on friday. Jpmorgan chase reported lower Net Interest Income and guidance fell short of forecast. The stock dropped 6. 5 . The worst oneday performance in four years. It was down 8 for the week. Citi and wells fargo closed the week lower. The earnings calendar is out and we hear from United Airlines and johnson johnson. We will hear from travelers and p g and american express. On the data front, we have march retail sales at 8 30 and Housing Starts tomorrow. The feds beige book is due wednesday and jobless claims on thursday. We are watching apple shares this morning after the report from idc which said iphone shipments fell 10 in the First Quarter. Apple shipped 50. 1 million iphones in the first half of the year. Sales in china struggled thanks to the offering from huawei and the ban by beijing on foreign device in the workplace. Apple indicated lower by 1. 2 . In the meantime, a cool event over the weekend. The ceremony in los angeles this weekend. Hollywood stars and leaders in business and technology hitting the red carpet on behalf of science. Fascinating dinner. I have been to it before. Kim kardashian and Bradley Cooper and mooelon musk at the event to celebrate science and scientists. Musk had this to say for his predictions on the election. Who will win the white house in 2024 . Who do you think will win the white house in 2032 . Which type of a. I. . Transformers or the future . There are treatments in Cystic Fibrosis and cancer. It has become the oscars of science. You laugh in some ways, but we dont put enough attention on sciences and to go out and celebrate them this way and put attention on them. Im waiting for the scientists to show up on the oscars red carpet. We can only hope. With the goodie bags and all. We have two more terms of human president s according to elon. Which type of a. I. . We have a full eight years to figure it out. Coming up, the escalating war in the middle east could impact the feds next move. Steve liesman has the story. And follow squawk pod on your favorite podcast app and listen anytime. Were coming right back. Hi, im janice, and i lost 172 pounds on golo. When i was a teenager i had some severe trauma in my life and i turned to food for comfort. A friend told me that i was the only one holding me back from being as beautiful on the outside as i am the inside. Once i saw golo was working, i felt this rush, i just had to keep going. A lot of people think no pain no gain, but with golo it is so easy. When i look in the mirror, i dont even recognize myself. Golo really works. Investors as ever are closely watching the fed. Steve liesman is joining us with the latest. Mike, i think what happened as you look at the trade sunday night through the futures markets and this morning, i think it was revealed that what happened friday was a flight to safety. You take a look at the tenyear yield and it looks like a v. We have basically put it back. You had a surge above 450. It was like, okay, we take notice of that and then coming back and it went down to below 405. The tenyear yield. It locks in the feeling of the market. Go back and look at the januarys fed fund contract. It shot straight up last week. You look at the cliff at yosemite. Thats what it looks like. It added. 25 for the fed. There is the cliff. You can see it. What time was that, leslie . Wednesday at 8 30 with the cpi number coming in. You see they flirted with taking that off. Whenyou listen to fed officials these days and geopolitical risks were on their radar. Which way on their radar for inflation upside. A pure surge in the cost of oil. That looks to be today to be flat. Theres no additional risk there. Its just one of the things the market was dealing with. Earnings and retail sales coming up at 8 30 this morning. There were a slew of things out there. The fed is mindful of this. If there is a surge in oil, it asks the question how long is the surge going to be. I guess it would seem to matter why the surge in oil is happening and if you think it is more of a restraint on consumption and inflationary. It is worth remembering when russia invaded ukraine, it was weeks before the tightening campaign in 2022. That was an exacerbating factor. They didnt see it as something they were still in the transitory mode. Mike, you have been here as long as i have and been doing this and there is a pattern for the market. There is a selloff and sometimes within days, it gets back to where it was. This did not rise to that. I think there is still headline risk and some may come in and say you are doing what . Youre long . The extent to which david sanger sat here and you cannot do this without listening to somebody like that because this is the focus you need to have here with the risk of the israeli retaliation. It is all out of our pay grade. Can i ask a different question . Yeah. We will talk about it later in the broadcast. Bitcoin. I saw your i dont know. Dont ask me. Saturday night, it tanks on the back of the news. I honestly was trying to figure out what it means to the extent it was supposed to be a safe haven and you think it may go up, not down. If you thought it was supposed to be a hedge against inflation, you would think it would go up, not down, or at least hold. It trades with the nasdaq. If it trades with the nasdaq, it is a speculative asset and thats all it is. It is the eye of the be beholder. It made a lot of people rich. Thats the other problem. I have completely thought that people who trade in cryptocurrency mostly dont know what a currency is because it is not a currency. It is not a currency. Even if you said it was a digital goldover a weekend and at that particular moment. What was interesting is gold has been on a huge tear and peaked in the middle of the day on friday. That is why we had the crescendo. They wondered if it was a true flight to safety with gold. It did not make sense. In the classic flight to safety. No time before that. You have to use what the price has been doing already for a while while. I think what were learning, andrew, and this is interesting. You put gold and bitcoin together and you say once something becomes, you know, highly or speculatively valued and loses that value as a safety an thats interesting. If it gets to be and then look at the dollar which is interesting. It is up near 106. It was stronger this morning. It has been stronger throughout this. What do you have going on there . The idea the ecb is probably on track to cut in june. By the way, what i was going to talk about today before the concern about iran as we talked about it on friday, i dont think cuts are off the table. No. I think the market has said no. Are you saying you dont think all cuts are off the table . Right. If he we had the conversation in june when the first cut was supposed happen as of two weeks ago, which is now not in the cards if you believe the market and you are saying it could be in the cards . Not june, but july is possible. I think Larry Summers has once again dominated the conversation and his pessimism over inflation and his pessimism over what the fed will do here. I think that you can have a couple of good months. I wish i had the great clips of ian who said, i have a mediumterm forecast for inflation to come down and i have no reason to change that. All of the things that were out there and nothing has changed. He calls the blips at the beginning of the year. What is the key driver for the cuts sooner rather than later . When you hear fed officials speak, it is all about patience and we want to see what happens. Now patience as it pertains to potential flareups with g geopo geopolitics. What is the inflation to cut sooner . I think the fed wants to cut. You think the fed wants to cut with whats going on . Yes. Tlo listen to the rhetoric, andrew. The fed says we do not believe it is what does that tell you . The policy is to cut. Mica degrees with me. You know, Roger Ferguson, who has been he is saying patience. He is not saying no cuts. You have roger coming up at 7 30. That is a tease. When roger comes on, i turn up the volume. Im sorry joe is not here to talk about the masters. Listen, i want to finish answering leslies question. The fed, i believe it believes or thinks it is restrictive territory. I think it also believes it is higher than it needs to be. Maybe we can ask roger this question, too. Therefore, i believe it can cut or it thinks it can cut and still remain restrictive. All it is looking for right now is the ability to do so. It cant do so with inflation stuck where it is now. What will happen on april 26th . Ask me. What is going to happen on april 26th . Thank you. The fed is pce at 2. 8. It will get progress and some of the other things. And the dots at the end of the year is 2. 6 and there will be three cuts. Does the man do my job for me or what . The framework is funneling you if that direction. The framework is to cut and for lower inflation. I think we have been through a bout here. Look, leslie, the first part of your question, if you have Higher Oil Prices and if those Higher Oil Prices are bleeding in, then all bets are off. Dont forget the direction the fed was leaning and dont forget the policy. I can do both stories with this story about the idea that i still think there is a framework out there and possibility of what you have to get. That is the april data. All right. We will see. Steve, thanks. Coming up, more fallout from the escalating war in the middle east. We will look at how the oil market reacts if israel retaliates. Crargerahear from seetynel john kirby in the 7 00 hour. At corient, Wealth Management begins and ends with you. We believe the more personal the solution, the more powerful the result. We treat your goals as our own. We never lose focus on the life you want to build. And our experienced advisors design custom built strategies to help you get there. Its time for a Wealth Management experience as sophisticated as you are. Its time for corient. Welcome back to squawk box, we want to check this on the Global Oil Market after irans attack on israel right now. Youre looking at wti crude at 8505. Johnson joining us now is the global head of energy analysis. Are you surprised at where things stand this morning given where they might have stood over the weekend . I dont know whaft was going through your head. No, not surprised at all. Friday was the anniversary of the first peak for gasoline prices last year in the futures market. Theres such a strong seasonal template. Watching it on the weekend, it looked to me it was the equivalent of on d day if they dropped leaflets to let everyone know exactly when it was coming. This was very choreographed. It was a show, but it was tele telegraphed, and nowhere near probably what the market was anticipating on friday. You know, we were talking to david sanger, though, and i agree with you it appears at least in this moment that the risk of something greater has diminished, but he suggested to some degree that, you know, all you need is a little bit of a mistake. Somebody to misread what happens next. How do you handicap that . Well, i think thats true, and i think that there is a geopolitical premium thats been put on crude oil prices, probably 5, 6, or 7 a barrel. The thing that the market has working for it is that there is a tendency to peak on prices for crude and prices for gasoline early in the second quarter. Whats more worrisome to me is what happens in august. If the saudis decide to keep their production cuts and opec plus keeps their production cuts, theres a lot of things that happened in august, the highest demand month of the year that could really send prices ballistically high. Youre not worried about an escalation from here in terms of whats going on in israel with iran . Im worried about it, andrew, but i think that its a real reach when people Start Talking about the strait of hormuz and 20 or 20 plus Million Barrels a day, you know, perhaps being impacted by a closure there. It makes absolutely no sense. Now, a lot of things in the middle east dont make any sense. Thats a given, but i think that the worry quotient has ramped up and we fit right into the template of, you know, a typical rise in crude oil from midwinter to midspring of about 30 or so. Tom, thank you for helping us think through this. Appreciate it. Thank you. Coming up, well talk tech ahead of the opening bell on wall street. That is next. Later, Mohamed Elerian will give us his take to the attack on israel over the weekend. Squa squawk box will be right back. So you can rise from pain. Icy hot. Tesla is laying off more than 10 of its global work force. The report cites an internal companywise email. The news follows a bad delivery report in which tesla missed delivery estimates and had a rare yearoveryear reduction in sales. Lets check the tech sec ton ri sector right now. Six are still magnificent, joining us now doug clinton, deep Water Asset Management partner. Is tesla the one that got booted out. We have ev demand questions that have been popping up over the last few quarters. We have questions now about whether theyre going to build the low cost model 2. Price cuts on fsd. I think that investors are still questioning now is tesla still one of the magnificent 7. For us its clear there are six that are incredible companies. I think teslas still a really Great Company but its the one that has the most to prove. The six that do remain for the most part are being animated maybe with the exclusion of amazon and apple by the ai excitement. Is that correct . Obviously theres been some break in momentum in things like apple, but what would you right now at todays prices prefer to emphasize in terms of these names . I think one thing that struck me this weekend, we think about the global conflict that were dealing with, something we were saying last october when we were concerned more in the markets about rising rates is all these names, all six names are in a way both offensive and defensive, and thats the thing that we think a lot about when we try to position our portfolios with the mag 6. I think these stocks are offensive because, to your point, most of them do have ai exposure. They all have pretty great growth profiles, but theyre also defensive because they have fortress Balance Sheets and because they generally sell products that i think would be wellpositioned to weather any sort of economic issues. So i think thats the way that we should be thinking about these stocks. They arent trading at egregious multiples despite what some other investors might think. The group trades about 30 times forward earnings. The peak over the last ten years, 38, the trough is 20. Are they cheap . No, but are they egregiously expensive . I dont think they are that either either. Netflix is a fraction of the size of those six, but obviously its been a great stock and they are going to be reporting and does have 30 plus p e as well. How do you think that one is set up . I think its set up where the bar is pretty high. You think about the story for them over the last year, the question has been are they kind of at the end of their growth phase . Theyre moving at adsupported models. Theyre looking to crack down on password sharing. Weve seen that now for a year. They had an incredible q4. 13 million net sub ads. I dont think investors thought wed see numbers like that anymore from netflix. We got to see really good net sub ad numbers for q1, and i think we want to see strong guidance for q2 as well. That bar is high for them. It certainly seems so. It was a 700 stock two years ago, boy, that was wild. Thanks for your time. Appreciate it. It is now just after 7 00 a. M. On the east coast. Youre watching squawk box right here on cnbc, imandrew r sorkin wloengalong with leslie. We should tell you about some of todays top stories. In addition to all of that, Goldman Sachs set to report earnings in a few minutes. The street looking out for earnings per share of 8. 56 on revenue of 12. 92 billion. In the meantime, apple now losing its spot as the worlds top smartphone maker go samsung. Data from Research Firm idc showing iphone shipments fell nearly 10 in the First Quarter, and i can imagine apple even though theyre not happy about it, using that data to suggest were not a monopoly. The ftc and everybody else. What are you talking about . And speaking of samsung, the Biden Administration awarding the company 6. 4 billion in funding from the chips act. Samsung saying it will build new chip act, expand its existing plant in austin. Gina raimondo is going to be on the network a little bit later today, i think at 2 00 p. M. Hour, commerce secretary talking about that. Lets check on the futures right now. There is a bit of a relief trade going on, the s p 500 up about 24 points. Thats around a third of what was lost on friday when the market did sell off on some tough Bank Earnings reactions as well as anticipation, perhaps, of escalation in the middle east. You see the dow up 111 points and the nasdaq is the outperformer in percentage terms up 104 in the premarket. Now to irans attack on israel over the weekend. Iran launched more than 300 drones and missiles against military targets. Israel said 99 of those were inte intercepted. Eamon javers joins us with the details. Good morning, mike. In jerusalem, Prime Minister Benjamin Netanyahu is set to convene his war cabinet right now at this hour. This is the body that can decide on any israeli response to the iranian attacks over weekend. So well see whether this conflict can be contained in the days to come. Now, the white house said this weekends unprecedented iranian attack in israel was largely re rebuffed by israelis. Most of the defensive work was handled by the israeli a aerosystem. Because they were able to destroy most of the drones, cruise missiles and Ballistic Missiles fired by the iranians. Israeli officials said casualties were limited to just one, a 10yearold girl who was severely injured by shrapnel. Still, the fact that iran and israel are in direct military conflict raises the prospect of a wider middle east war at a time when the United States has been urging a cease fire in the gaza strip. And in a call with congressional leaders on sunday afternoon, President Biden urged House Speaker mike johnson to pass a military aid bill this week to support israel and the ukraine, but the speaker was piublicly noncommittal on that idea in a media appearance yesterday seeming to suggest he might strip out the ukraine funding and move something for israel. Well see what happens during the course of the week. The iranian attack a response to an israeli strike in syria which killed a number of iranian officials appears to be over for now. The situation is tense. Its not clear whether the Israeli Forces will retaliate or whether iranians will further direct strikes on israel. Eamon, we were as you probably heard talking to david sanger of the times who said some of the communication from the white house is to go to netanyahu and say, look, youve kind of come out ahead netnet in this whole situation. Just do wonder if thats going to be a message that is heard . You know, theres this theory called the escalation ladder, right, and you get on the escalation ladder. The trick is how do you get off, right . You go up rung by rung by rung, and it can become more dangerous, more dangerous, but countries have a hard time getting off this sequence of events once it starts to play out because of their own domestic politics. We saw the president of the United States, joe biden, over the weekend was working the phones, on the phone with regional leaders throughout saturday and sunday. Clearly trying to see what he can do to stem this and kind of keep it contained here. This war Cabinet Meeting thats happening at this hour is probably key to all of this to get a sense of whether the israelis feel they need to continue to escalate or whether they think, as you say, you know, they came out more or less ahead in this exchange and now its time to let things settle down again. All right, eamon well be back to you for more very soon. Lets get over to dom chu with a look at this mornings premarket movers. A few analysts callsare getting some attention this morning. Well start off where eamon left off which is with the Defense Industry overall. The specifically with unto single out is Lockheed Martin up about 1. 5 on around 7,000 shares of volume, helped along by those events and of course by jpmorgan this morning which is upgrading it from overweight to neutral. Raising its target price to 518 bucks. It was 475 prior. Theyre citing those heightened geopolitical catalysts. Even before this weekends events between iran and israel, so watch the entire defense complex. Lockheed martin indicative of that trade. Then theres cisco systems, which is up over 2 right now, around 75,000 shares of volume helped along by an upgrade at bank of america. It was a buy or it was a neutral. Now its a buy. The target price goebefore. They are citing potential catalysts for growth acceleration like more normalized spending, Artificial Intelligence customers. Synergies from ciscos recent purchase of Cloud Computing platform splunk. Well cap things off with a check on shares of reddit, which is higher by just a little over a percent or so right now, roughly 5,000 shares of volume. The newly public social media, internet Bulletin Board plat formal company is getting a slate of new Analyst Coverage this morning. Goldman starts it as a neutral. 40 target price. Morgan stanley says equal weight or neutral with a 45 target price. Meanwhile, youve got shops Like Deutsche Bank and Loop Capital Markets among some of those starting reddit with a buy or equivalent rating. Reddit shares up 1. 25 on thinner volume. For more on those calls head to cnbc. Com pro. Leslie, ill send things back over to you. Dom, thank you. I dont believe its already been four weeks since that company has been public and theyre getting those analyst initiations today. Coming up, well talk markets and the fed. Plus, its tax day. Irs commissioner danny werfel joins us. We are awaiting earnings from Goldman Sachs. The numbers and Market Reaction are coming up. Well be right back. grandpa vo im the richest guy in the world. Hi baby woman 1 vo i have inherited the best traditions. woman 2 vo i have a great boss. Its me. man 1 vo i have people, people i can count on. man 2 vo i have time to give grandma vo and a million stories to share. grandpa vo if thats not rich, i dont know what is. vo the key to being rich is knowing what counts. 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Joining us now, pree ya miz ra, fixed Income Portfolio manager for jpmorgan asset management. Thank you for being here priya. So much to get into on the fixed income front. You think those three strong cpi prints are a bump in the road similar to what the fed has indicated as well. Why is that . I think a few things. The inflation data itself has been mixed. If you look at the ppi report or the pce report, some of the components that took cpi higher, thats much weaker than some of these other reports. The inflation strength has been in services. I think thats linked to wages. If you look at wage growth, despite these 250,000 payroll numbers wage is moderating. As wages continue to moderate, thats going to bring down repression on Service Inflation and also weve had significant progress on inflation. Cpi was 9 , okay, its running 3. 5. Its still not at the feds 2 , but the feds telling us maybe they can start. They know its going to be a bumpy process globally. We heard that from the ecb as well. Our view is, yes, its three strong data prints. I do think they want to cut rates later this year, were thinking july, september, in that time frame to start the process of normalization. 5. 5 on fed funds is not noerma. Perhaps we can argue its going to be 3, 3. 5. But not 5. 5. Theyre going to view this as a bump in the road. Theyre going to still say no further hikes. I think thats what the market is focused on. The tenyear at 4. 571 right now. Where do you see that peaking light of this dynamic . One that is going to have an impact across asset classes. We hit 5 late last year. If youre going back to 5 , thats a problem for every asset class. There was concern around the deficit. There was concern around the fed hiking a lot more. If you think the feds not going to hike, and were actually going to talk about rate cuts, i would argue were close to that peak. 4. 5, 4. 7, somewhere in that on the tenyear treasury rate is where were going to peak. We can debate how much our rate is going to fall if we stay in a soft landing, i think we stay 4 to 4. 5. If theres a recession coming our way, that tenyear can rally a lot more. Right now were in a soft landing, the data looks very solid. I think rates have peaked. We can just debate how much theyre going to come down. You mentioned that Services Inflation is largely tied to wage growth. If you go back a year, you had fed chair powell who would be pointing to that relationship as a way of saying we probably have to slow down demand and services in order to get inflation where we want. And one of the reasons it seems that markets in general have been more comfortable with the whole setup starting late last year with inflation was down enough. The fed said we dont really have to run the economy below potential for a long period of time. Is there any threat that that equation changes, that the fed starts to question whether we can have it all . I think the labor supply i think the surprise for us has been how much the supply side of the economy has worked. You know, its allowed the soft landing to continue, and i think the fed is viewing that very positively. Not just supply chains on the goods front but the fact that labor supply has been so strong. Its allowing these 250,000 payroll growth per month to still be consistent with the 0. 3, 0. 4 average earnings. What can threaten that is if lay labor supply stops. If you get a reduction in labor supply and Companies Continue this hiring pace, i actually think the hiring pace is likely to slow down as well. If it doesnt slow down and we start to see wages reaccelerate, then this nightmare scenario for the fed and i would argue for broader markets reacceleration, which brings hikes back on the table, i would still watch the totality of the data, watch wages. If the consumer starts to think Inflation Expectations are heading higher, theyre going to demand more wages. I still do come back to the labor market wages, and if the supply side continues to operate, i think that soft landing i dont want to take it for granted, but we can keep that as our base case. Very expensive chicken and egg problem, priya, thank you. Thank you. Eggs are very expensive too by the way. They are. Well talk about that maybe. Up next, the last day to file taxes is here. Hate to tell everybody that, a number of changes have been made to help those waiting until the last minute. Irs Commission Danny Werfel will join us after the break to talk about that and the agencys efforts to crack down on tax cheats. Were watching bitcoin this morning after what was a very volatile few days over the weekend, an outlook as we move closer for the bitcoin having and whats happened over the weekend and how thats impacting everything. Squawk box returns after this. The future is not just going to happen. You have to make it. 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I want to bring in irs commissioner danny werfel, good morning to you. Good morning. I was asking if you were watching the masters over the weekend, you said its a busy weekend for the irs. It is. Its a busy weekend for everybody else whos trying to get their tax materials completed. Its a busy weekend for you because . Because a lot of the returns come in over the weekend. Over the weekend and today on a day like today, april 15th, we might see a million returns come in every hour, and at this point its really making sure that our technology can handle the load, and so far so good. And you were saying how many filings an hour . A million. A million an hour. Yeah. On april 15th. Yep. Can i ask a terrible question . Please. And ive been that guy. Ive gone down to the mail the post office down here on 34th street because its still open until like midnight on the 15th just so i can get the postmark. Yes. If i got the postmark tomorrow, what would happen . You potentially would get a late filing penalty or fee, yes. But heres what im going to tell you to do. Is there a grace period or not . Heres what im going to tell you to do. Dont walk down to the post office, file electronically, select direct deposit and we will get your refund in under 21 days. And heres something that a lot of taxpayers dont realize. Two out of every three taxpayers that are going to file by tonights deadline are owed a refund. Its in your interest to get your taxes done because two out of three of you were going to pay you. One of the things you are doing this year, and youre running a Pilot Program, which is fascinating to effectively create a portal where people, some people not a lot of people, but some people can actually file online. They dont have to use turbo tax. They can go straight to the website. Yes, its a new way of filing your taxes. First time weve done it, online, direct with the irs for free. Its called direct file, and we ran a pilot this year. Right. We were in 12 states. We had 19 Million People in 12 states eligible. And can you tell us how many people have tried to use it . We know for a fact that its in the tens of thousands and i also know that in the last24 to 48 hours, its really ramped up in terms oof the number of people who have filed using direct file. The feedback on it has been great. Weve heard from taxpayers its easy to use. It was quick. Of course everyone loves the price tag. Its free. You dont have to use turbo tax. Do you need an account teant . This year the eligible taxpayer had a standard deduction, no separate business income, and no, you dont need an accountant. The reason why this is important is because we want taxpayers to have options for how they file. Were not saying use direct file. Its the only way to go. Were saying when you come to irs. Gov or youre searching whats the best way for me to file my taxes, its better for you to have options. If you want to work with a Software Provider you should. But the folks at intuit have been lobbying like crazy people to avoid this from ever happening. Is your expectation i know you dont talk politics, but is your expectation this is going to roll out in a major way come next year after this Pilot Program . We are going to make an announcement later this spring on the future of the program. I will say the results have been encouraging. Id also say that the irs doesnt run the tax system alone. These companies are partners and they play a Critical Role in making the whole thing work. Heres whats interesting about this filing season. We had a significant increase in the number of people filing for free. Not electronically, not just with direct file, but with the Software Providers as well. Can we talk about tax cheating, no the tfolks who are not filing at all . What is the stuff youre looking for this year . Itsall about complexity. Its the complex returns. What happened was the irs was under funded for many years before the inflation reduction act. What happens is you lose pace with whats going on in the world and whats going on with the economy, and for simple filers, middle, low income, and mom and pops, we didnt lose pace. Theres no new wave of audits coming for those individuals and those Small Businesses. Where we are really working to increase scrutiny is on the complex filers where we believe theres a risk of tax evasion. So im talking about, for example, multinational corporations who may be inappropriately moving money to other International Tax jurisdictions with a beneficial tax rate. Youre not talking about now were into businesses. Youre not even talking about individuals. We are looking at theres always the focus on millionaires and billionaires. You think the real money is in corporations. You brought a lawsuit, i believe, against microsoft recently as it relates to taxes. Im not going to comment on any specific taxpayer, but our focus broadly is in these three buckets. Large multinational corporations or large corporations in general, complex partnerships, some of the largest in the world, and then the wealthiest individuals in the United States. These are millionaires and billionaires, and where we started was at the most simple issue, which is millionaires and billionaires who owed back taxes or who havent filed, ask weve already in just a couple of months collected 500 million in tax delinquencies for millionaires and billionaires. Okay. Last question for those just its like news you can use. How long do you need to save all your stuff, and what is, dare i ask because i think there are people who have said to themselves, you know what, nobodys auditing me. Im going to take a risk here and there because no ones ever going to find me. What is the true statute of limitations for this stuff . Let me start by saying you play by the rules. Im suggesting they do. Im asking for those who are trying to understand. Look, weve had people on this broadcast forever say, well, youre never going to be audited. The chance of you getting audited is like infinitesimal. Our audience is in the millionaire and billionaire class oftentimes. Heres what i would like to say, i like to look at it from the positive standpoint. Let me give you an example. In 2020 if you didnt file your taxes and we owe you a refund, today is the day. File your 2020 taxes and we can pay that refund. Hold on, hold on, if you didnt you did not even file a return in 2020 and youre offering refunds for people who i am. We want people look, heres the mission of the irs i dont even understand this. You just told me if i file tomorrow i could get fined. Right. These people are going to file four years later and theyre going to get a refund . The only reason why you would get a lit pate penalty is if yo owed money. If you do not owe money and you file late, theres no penalty. If we owed you a refund all the way back in 2020, you mentioned statute of limitations. That is running out. And heres what im to get the refund. Heres why im in your studio emphasizing this is because the irss mission, our goal is to make sure people pay what they owe and not a penny more, but also that were getting people the refunds and credits theyre entitled to. That is just as important to us and so when we sit here and know that there are thousands and even millions of people out there from 2020 who we owe a refund, who havent filed yet. Im urging them, file by today so we can get you your refund. Okay, commissioner, thank you. Go file your taxes, folks. There may be money in it. Absolutely. Appreciate it, thank you. Thank you. Goldman sachs Quarterly Results just hitting the wires. Goldman sachs reporting First Quarter top line that beat analysts estimates thanks to greater than expected performance in Investment Banking and market shares, liking what they see up 2. 7 right now. Goldman reported net revenue of 14. 2 billion surpassing the streets expectation. On the bottom line, goldman earned 11. 58 per share up 32 yearoveryear. The Global Banking and markets division, generating 9. 7 billion in revenue up 15 . The biggest driver of those gains yearoveryear was Investment Banking feeing, although goldman notes in its presentation that the backlog there has decreased in sequential quarters, primarily in advisory. Its asset and Wealth Management division reporting 3. 8 billion basically matching estimates there, and a gain of about 18 compared with the same period last year. Of that the firm generated a record 2. 5 billion in Management Fees and 24 billion in longterm net inflows. The firms Smallest Group Platform Solutions also beat expectations in the quarter. In the release chairman and ceo David Solomon saying our First Quarter results reflect the strength of our world class and interconnected franchises and the earnings power of Goldman Sachs. We continue to execute on our strategy focusing on core strengths to serve clients and deliver for shareholders. Operating expenses in q1 coming in 8. 7 billion. Additionally, goldman paid out 78 million for that additional levy by the fdic special assessment to cover the Bank Failures from last spring. Thats on top of what they already paid. Shares now up nearly 3 on this First Quarter beat on the top line. 14. 8 return on equity. So thats higher than almost any whole year, except for 2021 in a whil yh. E. Ea all right, more on those numbers and the Market Reaction in a built. Well be right back. Bitcoin prices tumbled over the weekend after irans missile attack on israel. This morning crypto prices are firming up once again. Bitcoin 66,250 or thereabouts. Joining us, kavita gupta, Delta Blockchain fund founder. First, ill just get your read on the price action recently. Obviously it had had a huge run and then a little bit of a retreat going into the weekend. Hi, thank you. I actually saw andrews tweet also today like what is happening in the space. So i would just say its been a very interesting weekend actually for me personally. Saturday night has all been looking into the market. Combination of taxes and the announcement that there was maybe a possibility of much more elevated political issues between iran and israel. I think the combination of that really squeezed in the liquidity, but we are already seeing that with the approval of bitcoin and etfs in hong kong today and the sentiments are back, and we see the same numbers as we saw pretty much very closer to before the weekend. Yeah, the mention of taxes is helpful, just a reminder that obviously this is a liquidity driven instrument in the shortterm for sure. Of course you also have the big over arching story of the having, which is underway. You know, its interesting that every time we stack up all these factors why perhaps folks should be bullish on the price of these coins, its known things in advance. Doesnt the market kind of get to this and figure it out, you know, before the events actually hit . You know, i think liquidity around april, march, april, we have always seen that theres a liquidity squeeze. Sometimes we will finally end up realizing they owe more than what they were thinking, or last minute filings. For bitcoin, and especially over the market we saw 15 to 20 for all the tokens, which i love to Call Technology tokens is more because its going to be more conflict in the middle east. That triggered a little bit more fear on liquidity. Is it going to be longterm . Are the oil and gas prices going to go high . And i think that combination got and shocked the market a little bit for a day, but as i said, even with the taxes, we are already seeing price volatility for a month, even though bitcoin is about to come where usually the prices are much more higher. We did see bitcoin prices going high reaching a new alltime high. So i think its just that particular combination of those two events. But you do think that theres the possibility of a somewhat deeper correction here, do you not . 100 , and thats what ive been saying. I was on your show like a month back, i said the same. Ive been saying that, i do see a little bit correction of 15 to 20, 25 . But i dont see a much low volatility, said that later this year with so many new projects which are ability to come into the market on the Technology Basis and more and more demand for bitcoin and etfs, i do see a huge in the market reaching especially for and a lot of Technology Tokens to reach their alltime high. Well see how the cadence goes in the markets, kavita, thank you so much. Coming up, how the israeliran conflict could add caution to the feds decision on Interest Rates. Former Federal Reserve vice chair Roger Ferguson is going to be with us in just a menomt. Do not go anywhere. He has been right pretty much across the board on every decision the fed has made, and hell be with us after this. When it comes to investing, we live in uncertain times. Some assets can evaporate at the click of a button. Others can deflate with a single policy change. Savvy investors know that gold has stood the test of time as a reliable real asset. So how do you invest in gold . Sandstorm gold royalties is a publicly traded Company Offering a diversified portfolio of mining royalties in one simple investment. Learn more about a brighter way to invest in gold at sandstormgold. Com. What is cirkul . Cirkul is the fuel you need to take flight. Cirkul is the energy that gets you to the next level. Cirkul is what you hope for when life tosses lemons your way. Cirkul, available at walmart and drinkcirkul. Com. Fridays market selloff has added to a complicated economic picture for the feds Monetary Policy trajectory. Joining us now Roger Ferguson, former fed vice chairman and a cnbc contributor. Roger, thank you so much for being here on a day where i think a lot of people are tuning in to make some sense of the events over the weekend. How do you think the fed is assessing the geopolitical risks that we are kind of witnessing in realtime, especially as it pertains to their quest to bring down inflation . Well, i think the first thing they notice, while theres a great deal of turmoil in the middle east and some loss of life, obviously from this most recent attack in israel, you know, the markets themselves seem to be taking it in stride thus far. Oil prices have not spiked as far as i can tell. European markets seem relatively quiet, so i believe right now the fed has the ability to continue to focus primarily domestically because these geopolitical crises at this stage seem not to be spilling over into financial instability or increasing the pressure from oil markets that could lead to greater inflation right now. So in terms of their posture of being patient and kind of looking into the year, we were having this conversation earlier with Steve Liesman and mike santoli about, you know, what this means for a rate cut perhaps this summer. Do you think this changes that dynamic at all . At this stage, i dont think it changes that dynamic. You know, the fed has been saying that they want to be convinced that inflation is on a downward trajectory. The last three cpi reports body headline and core i think are not consistent with that conviction increasing. So you know, the markets have pushed off the notion that there will be a cut this summer, and i dont think this geopolitical concern has changed that. Things that might change it if there is some sign of, you know, dramatic absence of liquidity in markets and disorderly markets, that does not seem to be the case right now. Or if there is a change in terms of, you know, the outlook and, you know, markets collapsing leading to a decline in socalled wealth effect and putting downward pressure on growth. But right now the economy seems to be solid, so i think theyre going to stick with their, you know, waiting to be convinced and i think that means cuts are further delayed, and some possibility no cuts at all this year depending how the data play out. The no cuts category a little bit. This is what Steve Liesman and i youre on the other side of this, mike santoli. I dont know if im on the other side of it, roger, but i do wonder if you do think what the fed is doing right now is kind of looking for the min minimally acceptable progress on inflation to where they can at least, you know, do some of these optional cuts in there, certainly not necessarily by june but at some point if thats the way theyre leaning . Look, i think theres a 10 to 15 chance of no cuts so im not in the no cut at all camp yet. Its too early to say that. Having said that, look, i think they really have to be very consistent in their message. Its hard for them to look back ask say their degree of conviction should have gone up, so obviously postponing, and lets wait and see. The other thing to understand is, you know, underlining inflation does appear to be a bit stickier. That may be a little bump in the road. Right now i think its too early to presume its a bump in the road, and they certainly dont want to make the mistake of starting a cutting regime, and having to reverse that later. So i think the wisdom is wait and see, no rush to cut, and, in fact, if inflation doesnt continue to come down in an orderly fashion or some fashion, no need to feel pressed to cut because the underlying dynamics dont support that move. Roger, i know you have always said and insisted and i like to believe it is true, that the fed is completely independent of politics. We were talking earlier about the idea that in truth this year as it happens, the fed could raise or lower Interest Rates literally the day after the election. Lets forget about prior to the election. Do you think that would weigh how often has that happened . I dont recall it happening very frequently and certainly not recently. Look, i think at the end of the day, well have to be able to say weve made this move because the data pushed us to do it or allowed us to do it or our interpretation suggested it was right. Now, there will always be some in the political world who will second guess that. There may even be some in the journalistic world who would report that as a possibility. But the reality has got to be focused on the economy, and ultimately, the reason is the moments in the feds history when it has leaned towards the political have proven to be moments when they did the wrong thing, and i dont think anyone wants to get caught in that trap yet again. Definitely lessons from history there. Roger, thank you. Thank you. Coming up on the other side of this, how israel should respond to irans drone and missile attack, and what is americas role in the middle east conflict, National Security Communications Director john kirby is going to join us next. Its an important conversation. And then at the top of the hour, what investors should be thinking about when it comes to iran, the fed, and earnings. Mohamed elerian will be with us. Were coming right back with all of it in just a moment. Had are you keeping as much of your investment gains as possible . High taxes can erode returns quickly. At creative planning, your portfolio is managed in a taxefficient manner. Its what you keep that really matters. Book your free meeting today at creativeplanning. Com. Lifes daily battles are not meant to be fought alone. Were not powerless. So long as we dont lose sight of whats important. Dont be afraid to seize that moment to talk to your friends. Cloud, you okay . Because checking in on a friend can create a safe space. The first step on our new journey. You coming . Reach out to a friend about their mental health. Seize the awkward. Its totally worth it. My name is oluseyi and some of my favorite moments throughout my life are watching sports with my dad. Now, i work at comcast as part of the team that created our ai highlights technology, which uses ai to detect the major plays in a sports game. Giving millions of fans, like my dad and me, new ways of catching up on their favorite sport. Coming up, National Security Communications Adviser john kirby. And as we head to break, a check on shares of Goldman Sachs after reporting First Quarter results this morning up 3. 7 after the top line came in with a sizable beat and sizable jump on a yearoveryear basis thanks to a revival in Investment Banking fees. Squawk box will be right back. Your shipping manager left to find themself. leaving you lost. You need to hire. I need indeed. Indeed you do. Indeed instant match instantly delivers quality candidates matching your job description. Visit indeed. Com hire [sfx wind, rain and rolling thunder] nobodys born with grit. British announcer rose is really struggling. Its something you build over time. American announcer thats 21 missed cuts in a row. [car trunk slammed shut] for 88 years, Morgan Stanley has offered clients determination and forward thinking to create the future. Crowd stop it . Only you can see. American announcer rose, back in the winners circle. [crowd cheers] [music out] welcome back to squawk. The white house saying this weekends unprecedented iran attack in israel was largely rebuffed by israeli and u. S. Defenses. Richard engel joins us with more. What a weekend. Reporter it certainly was. We saw a lot of it right here in jerusalem. Im just across from the old city, you can see some of the old city walls behind me and around 2 00 in the morning early sunday morning, we saw the israeli air defenses in action over this city as the iranian drones and missiles were approaching this country but the attacks were largely unsuccessful because of israeli air defenses and because they had lot of help, the United States was involved in a major way shooting down dozens of the drones and missiles. Also france, the uk, jordan, this operation this International Coalition being led by centcomm general, so this was a quick, quickly organized defensive campaign on an International Level that was successful. But its not its not over yet, just because this last round didnt start a major war and by the way had things turned out differently, had these Ballistic Missiles caused casualties we would be in an iran israel war right now with the United States involved. And the Israeli Security cabinet habit said at this stage that its going to respond or not. Keeping the cards close to its chest saying that only it will respond at a time and place of its choosing. Right now, the u. S. And other governments are urging restraint calling for calm, calling for deescalation. The ongoing war in gaza continues. Campaign against rafah is still pending. So, it didnt we didnt have a major war this weekend. But i wouldnt count it out. Richard, whats the sentiment on the ground, among the israeli people about retaliation and what kind of pressure points do you see on netanyahu and this government . Reporter you said very quickly, its not very quick, the israeli people are very divided right now, theres a group in israel that loathes Prime Minister mettian hue thinks hes doing harm to israels security when it comes to the gaza, they believe hes not handling the gaza war correctly and hes not doing enough to get the hostages out, putting his own political survival first and were now seeing large demonstrations on the streets of israel again mostly around tel aviv every saturday night the same way we saw them before the october 7th attack, then theres the camp that spots netanyahu and his coalition who want to do more and so this country is really, really divided right now the antinetanyahu camp believing hes using these National Security issues in order to bolster his career and try to postpone any legal challenges or the major legal challenge that hes facing richard in jerusalem this morning, thank you for all of your reporting over the weekend and this morning and please be safe. In the meantime, we want to bring in john kirby who serves as the National Security Communications Good morning, admiral. You know, right now the white house clearly putting pressure on netanyahu and israel not to respond saying this was a win how successful do you think that the president has been or will be in persuading netanyahu and israel from not retaliating. The president has been very, very clear many, many times. We dont want to see this conflict widen or deeper or escalate any further and what the president was willing to do on saturday night put american Fighter Pilots in the air to help defend israel, proves how strongly were committed to israels selfdefense and thats not going to change and the president s message to Prime Minister netanyahu on saturday night when they spoke, first of all, congratulations for an incredible military achievement that israel and its partners accomplished in defending israeli sovereignty and the israeli people. But also a message that it sends to the world that israel is not alone, theyre superior, iran completely utterly failed. To think that message it sends on its own in the moment n the region, and again, i wont get into the details or the discussion further than that, but the president obviously has remain steadfast in not wanting to see a war with iran. Do you believe the u. S. Support over the weekend for israel in this context will change or persuade the dynamic with which netanyahu is approaching gaza . I cant get inside Prime Minister netanyahus head to determine what will or wont do, will or will not decide. With respect to gaza, he and the president had a very direct conversation a week or so again. The president asked for some direct commitments and some action from the israelis in terms of allowing more humanitarian assistance in, and thus far they have answered that call, there has been a dramatic increase more than 2,000 trucks in the last week or so alone getting into the gaza. Thats a good start. We need to see that sustained. As the president also said our policy with respect to gaza will have to change if we dont see significant changes over time on the israeli side. Can we talk about funding for israel, the bill that connects funding for israel with funding for ukraine, reporting out this morning from punchbowl and number of others mike johnson may be leaning an israelonly aid package, is that the something the president. President will support the bipartisan bill, if it did there will votes for it. If saturday night didnt demonstrate anything it should demonstrate to everybody the sense of urgency here and the real threat to our friend and ally israel is under as well as our partners in ukraine, that bill if it gets on the house floor would pass quickly and the president would sign it. I wont get into speculating what other proposed legislation would look like and what the president would do. The best course forward the one we prefer and the one we urge the speaker to take up is that Senate Bipartisan bill. Admiral kirby, do you believe iran is satisfied with the attack given the vast ma jr. Ty of missiles and drones were intercepted, do you think it will feel compelled to strike again. All i could do is point you to the public comments. They said the matter was concluded. I cant get inside their head and what theyre thinking about, what they accomplished or didnt. They utterly failed from a military perspective. Very few missiles and drones got through. Very little damage to one israeli air base, this proves how militarily superior israel is and again that israel has friends in the region, they can count on the United States for their selfdefense. We had david singer on the broadcast in the last hour and a half. We talked about the frenemy relationship with china, what kind of leverage do we have on china to put pressure on iran. Using the influence we know they have in tehran to try to get iran to modify its behavior, thus far, if they have had such conversations it certainly hasnt had any practical effect. China is trying to manage its own place in the region, President Bidens more concerned about our place in the region, our interest in the region, our alliances and partnerships and again that was on display saturday night. Finally, how do you handicap the next several weeks in terms of what happens next . Well, i cant predict whats going happen next, but i would just say a couple of things, one, everything that President Biden has done since the 7th of october has been designed to make sure we bolster our ability to defend our allies. We have held iran accountable. He met with the g7 yesterday virtually. Everything were doing is trying to december collate the tensions. And i think again, i cant be predictive, but im pretty sure whatever you see President Biden say and do will be in line with that effort. We dont want to see a war with iran or a wider conflict. We want israel to defend itself against the threats. And is facing some significant threats. Just after 8 00 a. M. On the east coast. Youre watching squawk box. Got a lot of things going on. The markets in just a moment. As we try to make sense of whats happening over the weekend. Among the top stories right now, here on wall street, Goldman Sachs beating firstquarter estimates. Well bring you more on that. Plus, tesla melee off 10 of its global workforce, duplicate roles and job functions. The Biden Administration will provide more 6 billion to s samsung to produce in texas. A look at future at this hour, the dow is up 200 points. The nasdaq up 100 points. Treasury yields this morning, an updated picture of those, 2year hovering around 4. 95 and we mentioned Goldman Sachs a moment ago. Dom chu joins us. Some nice upside surprise in goldmans First Quarter. Its helping to power that dow up. Lets kick things off with that recap of the earnings headliner of the morning, Goldman Sachs the Investment Banking giant, is up north of 3 , now 3. 5 over 50,000 shares of volume it reported profits and volume, driven in part by better results and commodities as well as Equities Trading as well. Pretty good quarter overall for Goldman Sachs. Next up, though, another dow component, apple, which is down roughly three quarters of 1 . The iphone make iris getting hurt by new numbers out of an i industry Research Firm showing iphone shipments fell by nearly 10 this year over the same period last year. Due to increased competition. Lets end with an analyst call on nvidia. Which is up right now. The worlds most valuable is getting help from citigroup, its already buy rated over there. Check that out, nvidia shares getting some more upside thanks to what they think is positive catalyst. For more on that call and other top calls of the day head over to cnbc. Com pro subscribers can get more. All right, dom, thank you very much. Joining us the chief eco economic we saw part of fridays decline anticipation of what might happen of this anticipated attack. Doesnt seem to be carrying to todays market action. Bond yields going back to their highs of last week. Repricing what the fed might do. Whats the thing youre most focus on. Its fascinating that the marked has concluded a fact, that the damage over the weekend was contained. Hip though sis is there will be no further conflict. The market is willing to put that aside and be comforted by three things. One well continue to see productivity enhancing innovation. Two the fed at the end of the day will be accommodating to markets. Three, the soft landing is the most likely baseline. Its good thing for the marketplace in the short term to have those three things but we should listen to the National Security people. Things have changed in the middle east. You mentioned those three things, youre underlining the premise of where the markets have gotten to this year, of course im looking at the s p 500 only picking up a third of what was loss on friday. It seems as if the outlook has become a little less clean from a macro perspective given the way people are wondering if the fed is going to get itself into a corner and not get through the easing they want. We have been pricing in, inflation is going to prove sticky, the last mile is really complicated. Were not sure what the feds reaction function is, if the fed remains data dependent, the fed will be more hawkish. If however the fed looks forward and embraces a framework and model it will deliver on the two cuts this year, so the marketplace is having to price in this reality that inflation is sticky. Im unclear where you are. Im hoping that the fed will be less deda that dependent and look forward that the economy is weakening and theyll implement two cuts. If the fed does two cuts and the inflation has been stickier, wouldnt that be kind of wouldnt people blame the fed for acting too prematurely. My macro model, were leaving in insufficient supply side. Very different from the world we lived in after the financial crisis. Slight high inflation target. The fed cant declare a high inflation target because it memess missed by so long and by so much well settle at an inflation at around 3 and i suspect its stable, i suspect the other bit of your thing, inflation can comes roaring back like the 70s doesnt happen. First of all, pc inflation is under target. They only think it should get to 2. 6. The other thing is, through the span of history, inflation is not necessary a big impediment to the economy and the markets. 2 is the obligatory target. Back in 1991 the bank of new zealand adopted 2 , right thats why we have 2 . So, yes, all that youre absolutely right, mike. Can i ask you about bitcoin, im trying to understand it in context of money and context of the dollar and inflation, as you were watching bitcoin trade over the weekend, what did you think . Im with you on what you said earlier but ill tell you dont try to overthink this, at times bitcoin is an asset at times a bitcoin is a risk on asset. No one can guess beforehand what its going to be and it reflects the nature of bitcoin. Were trying to read way too much. Is there another asset in the world that you think thats like that, meaning, usually theres thesis around some kind of asset, right, that its either a defensive asset or riskon asset, when its everything there seems to be an inconsistency about it, then what is this . The inconsistency, you have the fundamentalists who believe that bitcoin will emerge as the global currency. Others see it as an asset, that its diversifier. Third category, momentum traders, right, when you put these three together you end up with incoherence. This is an asset class thats still maturing. The technical holders, you get these the residents and the tour tourists. Thank you very much. Thanks for having me. When we return, retail sales data set to be released the numbers and the Market Reaction, well bring it to you straight ahead. Jay clayton will be our guest, well discuss the situation if middle east and so much more. Squawk box returns after this. Welcome back. Join us to talk about irans attack on israel over the weekend, israels thinking now and what could come next in the middle east. Dan senor, coauthor of the genius of israel. I want to z you the same question i asked Richard Engel which is, what kind of pressure do you believe todays exist on netanyahu from people in israel to others to escalate this war or not . The way i think abit in talking to a lot of israelis over the weekend including those in government and average israelis is the difference between the october 6th mindset and the october 8th mindset in israel. October 6th mindset, where the rockets used to come from hamas, start to begin in earnest in 2007, because of the multilayered Defense Missile defense capability that israel has developed over the years, israel got kind of used these missile attacks, these rocket attacks, normalcy to them, rockets would come, the sirens would go off, people could get alerts to go to the shelter or safe room. Go about their business. Back at their Tech Companies and cafes and bars would be bustling again. October 7th changed that. Mindset we cant learn to live with this threat here in gaza and so i think with the risk with what happened over the weekend, if israel doesnt respond, what im hearing from israel, if israel doesnt respond in some way the kind of attack that iran launched that would become tthe new normal. Theres a real concern iran was undeterred. The u. S. President said dont. Literally in the 48 hours before the attack he said, dont do it. Iz rayi government said the response would be overwhelming. If theres no response there will be more of this. Dan, given the advanced warning that it appears iran gave how much of this was calculated, what would happen if iran didnt give folks advance warning, could the iron dome hold up, how much of these missiles that were taken down, were taken down by the iron dome and by u. S. Forces and other forces . So, most of it was taken by the Israeli Air Force but the jordanians did a lot to take some of these down and the brits and the french took some down. And saudi arabia played an important role. It was clear that iran wanted to target this Israeli Air Force base in the south the air force base where the fishgs35 squadron is there, the operation launched in damascus against those generals on april 1st was launched from. So the advanced warning was important. They could have taken out most of it without the advanced warning but the advanced warning is mportant. Number of intelligence agencies including the u. S. Had picked up that the iran was up to this. We also asked the admiral kirby about this, whats your sense about netanyahus plans as it relates to gaza in light of what took place over the weekend, both if terms of feeling like theres some kind of not retaliation in gaza as it relates to iran but to the extent that the u. S. Supported israel over the weekend, does that change the relationship and the direction that biden has given netanyahu . You know, i think netanyahu and the war cabinet are in a tough situation here, they believe if iran reconstitute itself in gaza the nucleus of that reconstitution lives today in rafah in southern gaza. Hamas leadership is still there. The israeli public and the war cabinet doesnt believe it can finish off hamas without going into rafah. Ive asked them a hundred times, they dont see a way around it, where they are with the administration being more openminded with how they do it that doesnt put 1. 3 million palestinians living there turned same risk. Whether to do it i just dont see i dont see any Israeli Government surviving if they dont finish hamas. You cant finish off hamas without going into rafah. Theres this funding bill thats making its way or not through, well see, the house and the senate. It sounds like right now the speaker would like to separate israel from ukraine, clearly the president doesnt want to do that, what do you think happens next and what should happen . They need to pass some kind of version of this package very quickly, i think the events over the weekend have put new pressure both on the speaker and actually on some of the democrats who were, didnt feel a sense of urgency, supportive but didnt feel a sense of urgency, so i think the speaker is going to be under enormous pressure. It should pass. One of the reasons we wound up where we were over the last few days, one, irans lack of no deterrence, not feeling deterred at all. And hamas still basically rejecting any negotiations for hostage deal, both of these things happened. Why do those things happened . Variety of reasons. Confusing signals out of washington, right, a sense that, a, the president and other governments around the world particularly g7 countries were increasing pressure on israel, pressure had been mounting on israel in recent weeks. So iran and hamas i believe were sitting there looking, why do we have to alter course . Why do we have to do a hostage deal . Pressure is on israel to slow down, to restrain itself, to commit to a ceasefire before hostages are released. Lot of confusing messages out of congress, if theres any wakeup call from the last couple of days is a clear voice from washington, really has impact on the ground. This aid package moving quickly now would send a strong signal. Dan, you live with multiple hats on and we have an audience of investors trying to think through all the permeations, how do you handicap things Going Forward and what do you tell people . Look, my view is we the potential for miscalculation is high. I believe iran miscalculated over the weekend. I think the potential to misread the decisionmaking and the assumptions of other parties. I believe the israelis in a sense miscalculated. Right to launch the attack in damascus on april 1st, they didnt anticipate the kind of response they got from iran. So i think our understanding of how other actors and stakeholders will respond to different actions is increasingly complex and so that leads me to believe you should assume the potential of volatile is high. Preworld war i scenario, you can stum intoobl a world war i wouldnt go that far. But the volatilvolatility. To over the weekend, 300 cruise missiles and Ballistic Missiles launched into israel. Perfectly in their right to have an overwhelming response im not saying they should. And russia ukraine. I think things are volatile. Dan senor, thank you very much. Thanks, andrew. Coming up, much more on this weekends attack on israel by iran and the fallout for Worldwide Energy markets. But next, live to texas for details on a new round of chips act funding. Ay tuned. Squawk box will be right back. Power e trades awardwinning trading app makes trading easier. With its customizable options chain, easytouse tools and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. E trade from Morgan Stanley. Welcome back. Futures right now are looking up doe spite the attacks over the weekend. Dow on the move, about 230 points higher. Nasdaq up about 127 points and the s p 500 rebounding up about 31 points, 32 points. Gold at the moment, right now at 2,373. If you walk into costco and try to buy it by the bar. And you can. And you can. I havent. Run it at a marginal discount. 2 premium. Right. The Biden Administration announced billions of new computer chip funding. We have more from tyler, texas. Reporter good morning, were here in tyler, texas, where the company is set to receive 6. 4 billion in grants from the chips act, samsung is set to invest 45 billion in this community and in austin. Theyre manufacturing the eco system. It will include two leading edge logic fab and advanced packaging facility. It should create 21,000 jobs in construction and manufacturing. It will produced some of the most advanced chips to power a. I. The Commerce Department has roughly 16 billion to dole out after this. To get a sense of the scale of this project, take a look at this drone footage, commerce secretary told us yesterday that each two here will be size of 11 football fields. Well get a chance to talk with her about this investment in an exclusive interview on power lunch. Im curious, just for those who dont know where it is, do they have the capacity and the people in town to staff 21,000 jobs to build and to kind of run the function thats there. Reporter so were about 45 minutes outside of austin. Its a fairly rural area here. They dont have the capacity for those 21,000 but samsung vested in the community. They expect this investment is going be transformative for this area. Samsung is clearly the biggest thing in town. They really do expect this to have a big impact here. Thank you for the on the ground reporting. Appreciate it. Were approaching march retail Sales Numbers and some new manufacturing data from new york, lets take a look at the futures and how were set up here, rebounding after fridays losses the s p was down about 75 points, 77 points on friday. Getting back just under half of that. Positive reaction to Goldman Sachs earnings. You see the dow up by 218. Treasuries, take a look there, yields resuming their rise. Treasury yields did come in a little bit. You see there that the 10year is up around 4. 59. Basically last weeks high as well. 2year note, 4. 96 as we reprice what the fed is likely or not likely to do. The inflation data. Were waiting for retail sales data, that will fill in another side of this picture, lot of questions about the effect on consumers, the ongoing inflationary episode here and whether in fact that side of the economy can in fact hold together. Its gotten some comfort with the better than expected economic numbers this year in being patient on potential rate cuts. Steve is here. Pretty good numbers, mike. Up 1. 1 , the consensus was 0. 4. February again doubled 0. 6 versus 0. 3. Cars and parts sales were down 0. 7 . Be careful with that number, we had a little deflation in the car used car area. Take out autos and gasoline, 1 . A good number. Retail sales, control group, an important number, up 1. 1 . The consensus was 0. 04 , number thats going to lead to upgrades to an already pretty strong gdp and the economy is accelerating. All this is happening by the way, ongoing conversation with one of our producers about whether or not people can buy gas and do other things at the same time. You had a surge well, the persons theory is that when gas prices go up people stop spending elsewhere. In this case thats not the case. They bought more gasoline and bought other stuff as well. I dont have the category breakdown. Ill look at that now. Except i would also tell you the new York Fed Manufacturing i index, that fell, it was up but its negative for the fourth month in a row, but there were some good numbers in there which i can tell you by looking at a different screen here, new orders were up and employment was positive. Sorry that was negative. Prices paid up 5 points. Thats problem. Margin pressure. We also had the markets reaction here. Treasury yields are up. New high in the 10year about 4. 61. Stock futures backing off just a little bit. Also your probabilities are also down. We started the morning up 28 on the june probability, and we were up near 50 with july, 44 . Youre running out of time and data to get those in place. Steve, stay with us. As we bring in a couple of guests. Welcome to you both. Dana, i love your initial reaction to really a pretty much surprise across the board for these retail numbers. Absolutely, definitely shows that consumers can walk and chew gum at the same time. Energy prices and gasoline prices are rising we saw that in the infrags flags data, theyre still out there buying goods. Own survey consumers are saying less keen to buy goods but more keen on buying services. This is blowout number. This is the, you know, what they do part of do what i say, do what i do, your read here, not a lot of quit. You know the consumers healthy by a little confused, lot of nuz, geopolitical situation, the election coming up, one party talking about how good everything is and the other party banging home the inflation message. So the consumer i think is slip sliding. The march numbers look strong. This easter shift going on, it does impact much more the discretionary area and whats going on there. The consumer is reacting, spending, theyre moving more and more to the value sector. Ross stores, on the apparel side. Department stores being hurt and their suppliers and on the nondiscretiona ary area walmart and costco continue to put up strong numbers. Have you seen the algorithm for calculating the data of easter, its this long and very complicated. Theres one for it. Only one issue, you had the leap day, i dont know census we went in circles trying to s seasonally adjust our numbers for the leap day every four years. Mike, when i look at the detail here its all over the place, this is a very mixed and somewhat confusing report here, i like to look at things Like Electronics and appliance stores, that was down 1. 2 . Sporting goods and hobby materials, another discretionary area, down 1. 8 . On the other hand, your mon store retailers, your internet, up 2 . Lot of the home related issues Building Materials were up by furniture and home prices were down. An all over the place report that doesnt really give us a great picture of whether or not theres strength across the board. How much can you read from this report as it pertains to kind of the top 50 of income versus the bottom. Or how the top sperndz are pulling up these numbers because we heard from the banks ceos last week the bottom half is drawing down that extra kind of covidera spending and the top group has been turning really, the group thats getting hurt is that bottom 20 . Everybody else feels pretty healthy. On balance has a job, everyone else is really performing and you see it in at hoff the numbers when i look at some speck retailers, you start to see it playing out that way. One thing that happens, that consumer does in some regards will trade down on by challenge distribution and until you use that up. I mean, you can only trade down to store brand one time. Exactly right. Theres a limitation to that. Dana, usually when we have a question about the economy dana has a survey for that. I want to ask dana if she can help ask leslies question at all whether or not were seeing more stress, less spending on the lower income side and is higher or middle income powering the spend zblg its interesting. We asked about Consumer Confidence byincome group its been all over the place, one thing consumers are complaining about is inflation, even though theyre buying stuff theyre complaining about it theyre concerned prices are still are really elevated. Shifts in services towards things they need as opposed to discretionary items. Certainly consumers are using their credit cards to finance this spending, on the top line up to gdp its positive. By the way the markets treating it as good news now. High zmr did the bond yields stay up. Yes, they did. About 4. 61 on the 10. Thank you very much, dana, manny and steve. Appreciate it. Coming up, jay clayton will join us. Join us. Squawk box will right backate. Wait a minute. Alligator. Are you kidding me . You got to be kidding me. Rolling towards the cup, and its in the hole what an impossible shot brought to you by comcast business. voya there are some things that work better together. Like your Workplace Benefits and retirement savings. Voya helps you choose the right amounts without over or under investing. Across all your benefits and savings options. So you can feel confident in your financial choices. They really know how to put two and two together. 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The price of isle right now is just under 85 a barrel the energy world, the world in general is breathing a bit of a sigh of relief that defenses held up so well. The big question now for the oil market is, is 85 the new floor on the price of oil, andrew, were seeing 84. 89 even with 99 of those missiles and drones being knocked out of the sky. Were seeing oil move down a little bit, remember, were not at 72 or 65. Were basically at 85 a barrel and most of the reports and of course theres a flood of them out there on the there today, this might be the new floor, in other words maybe 85 is the lowest were going to go in nearterm, but of course as we know, andrew if we see a significant retaliation by israel that ramps this back up and iran does what theyve threatened to do is mine or close the strait of hormuz, that would be your 100 a barrel scenario. Were not seeing a spike that many feared going into the weekend. Okay brian, i was curious, as we kind of think about the potential for israel to retaliate, are there different scenarios that would impact oil in a more outsize manner, things youre watching in particular as those meetings are taking place in israel . Its a great question, by the way, a quick aside to that, its going to come down to china, we havent talked about china a lot, weve talked about iran, israel and u. S. China could play a major in deescalation, theyre supplying these drones to iran that didnt work so well. Also, theyre a big buyer of iranian oil. China is heavily dependent on imported oil. On the economic precipice, they dont want to see a spike in the price of oil, we dont want to see a spike in the price of oil. This potential retaliation by israel, remember in 2008, 2008, israel reportedly went to thenpresident george bush take out Irans Nuclear. Coming off a couple of wars in the middle east. The white house backed off that. If israel pushes for that again u youre talking about 110 oil. Lets hope cooler heads prevail. China, on the back end, lets settle this thing down because the world needs that iranian oil. Andrew has been pointing out, the interconnectivity there is definitely important to be paying attention to. Thank you, brian. Coming up next, a wideranging interview with former s. E. C. Aianchrm jay clayton. Stay tuned. Youre watching squawk box on cnbc. Its time to feed the dogs real food in the right amount. A healthy weight can help dogs live a longer and happier life. The farmers dog makes Weight Management easy with fresh food preportioned for your dogs needs. Its an idea whose time has come. I cant believe you corporate types are still at it. Just stop calling each other rock stars. And using workday to put finance and h. R. On one platform. Tim, you are a rock star. Using responsible ai doesnt make you a rock star. It kinda does. You are not rock stars. clears throat okay. Most of you are not rock stars. Oooh. Data driven insights, and large language models. Oh, thats so rock roll. It is, right. He gets it. Yeah. Welcome back to squawk box. Take a look right now at shares of trump media, the Company Filing to issue up to 21. 5 million shares of common stock. Share price falling sharply on the back of that news. This is after having fallen sharply many times. It is also filing for the sale, what they say, from time to time, of 146 million shares by security holders, and as you mentioned, we are digging through the filings right now. It does not appear at the moment to release former President Trump from the lockup period just yet, but this filing that suggests that from time to time, theyre going to be selling shares in the future, i imagine i dont know, mike, if youve ever seen a filing like this. Oh, yeah. What its trying to say here. You want to have the filing in place when, perhaps, the lockup expires, you get clearance. I dont think its too unusual to have that set up before you actually are going to execute the sales. Were fortunate to have our next guest onset with us. Hes looked at a lot of s. E. C. Filings over the years. Maybe he has a take on this. I want to welcome jay clayton. Good morning to you. Good morning. Do you understand this filing at all, by the way . I think mike has it exactly right. To the extent youre going to raise primary capital or to the extent people are going to be selling shares in the future, you want to get your ducks in a row. I have a million questions about whats taken place over the weekend and how the markets have raektd, but i want to start with the very basic idea that were watching the markets this morning obviously rebound quite remarkably, given the fact that we had dan senior on, effectively quite worried about this escalating, and im curious, someone whos just watched markets over the years, and seen what happened last week, and watching bitcoin over the weekend, how you think about it. Well, thats kind of an off the top of my head question. Yeah. But what have we seen over the last two years about markets . And what have markets seen . Markets have seen that we really dont want a sharp dislocation with china. We actually are continuing to allow oil to flow out of russia for stabilizing purposes. We dont like 5 gas. We dont want 120 oil. I think markets are seeing the reaction around the world to this of, look, things are okay as they are. China has no interest in their economy going down. Russia has no interest in their economy going down. We, you know, we are continuing to have many bilateral discussions with china. We were talking about china earlier with david sanger, with admiral kirby. What is your sense of where we have leverage or dont with china as it relates to whats happening in iran and israel . Meaning, what kind of pressure points do you think that china can put on iran, or do you think they wont . I think we had a really good discussion last week about this when rahm emanuel was on, that china uses economic coercion to get its way around the globe, and we have to recognize that. We also have economic coercion with china that a sharp decoupling from the u. S. Would definitely cause a continued deterioration in their economy. I think everybody why did janet yellen go . Everybody likes the status quo now compared to a decoupling. Do we have to get somewhere in the future where were not as susceptible doesnt it appear that were moving thats why were building the plant in texas. I was going to say, meanwhile, the kmiechinese are saying, were not going to be using intel chips, for example, in our networks in the future. What does that say about where this all heads . We always look at it from our side, if were going to decouple from them, theyre going to decouple from us over time. That will leave us, ultimately, with less leverage, not more. Well, but we may have less leverage, but theyll have less leverage over us, which is if you ask people, you know, what did we learn from the pandemic . There was a tremendous amount of economic leverage going both ways. We definitely learned that. Companies you know, ive called for large Multinational Companies, not in some kind of mandatory, you know, check the box way, but to discuss with their investors just how dependent on china they are so that we have an understanding of that. It goes both ways. I think leaders in each country, you can tell, are nervous about that level of independence. Its a very interesting question about dependence, because dependence creates relationships. We have no dependence right now on russia, right . Happily. But we also have no relationship with russia at all. But relationships can be all relationships, all human relationships, they can be mutually beneficial or corrosive. Right . People can use relationships to their advantage in a very corrosive way. And so, right now but your view is, you would just get out of dodge, if you will . No. I think but i think showing that lets put it this way. Showing that you can leads to a more healthy dependence. Right . When youre dependent and have no options, youre at somebodys beck and call. When youre dependent and have options, you know, you have a much more cooperative relationship. Its that way any business, you dont want to have a single supplier, right . That supplier, then, has a great deal of control over your business. You can have an incredible relationship with a single supplier if you have alternatives. Do you have a sense that Multinational Companies have adjusted to a degree . Because for so many for a couple of decades, it was, greater integration, you know, you can kind of get costs in line, trade was going up at all times, and they wanted access to all markets. And it seems like the organizations were built in that way. Are they dialing it back . Are they opening that it kind of can remain open . I think we look at this this is why ive called for disclosure from companies. We look at this in a very binary way. I think people have dialed back the easy things to dial back, the things where theres marginal cost items, where theres a great deal of production in china, and it would be a lot of Capital Investment to do it elsewhere. Not so much. Im not a Big Government interventionalist. I like the chips act. We discovered that, for, you know, innovation, a. I. , wherever were going in the next generation, we better have access to chips. How do you see a. I. Functioning from a regulatory standpoint as well as just the ability of regulators to monitor a. I. And come up with some kind of enforcement against a computer . Well, that is thats a fabulous question. Youre seeing regulators be very, what i would say, cautious about a. I. , and one of the reasons theyre cautious about a. I. Is we regulate by putting responsibility on individuals and firms or both, and to the extent that a. I. Would diffuse responsibility from individuals, regulators get nervous. When i was a regulator, i know that that person is responsible for ensuring that theres not Insider Trading going on. And to the extent that you are replacing particular people with a computer, makes it much more difficult for regulators to get comfortable with their job. You want to know that theres a human being whos responsible for compliance. Right. Real quick. I was kwoingoing to ask you abo Morgan Stanley and this whole antiMoney Laundering, but i had a separate question that relates to, i think, iran and russia, which is to say, tether and bitcoin and all of these and crypto right now, are you of the view that money is being effectively laundered through crypto to the worlds of iran and russia . Given all that were seeing . Do i think that theres let me step back. Do i think that there is a great deal of Money Laundering going on around the world that we should crack down on . Yes, i do. Do i think we should be using better systems . Yes. Is bitcoin and other Digital Stores of value being used . I have no doubt. But i dont think theyre being used, you know, as i understand it, to any meaningful extent compared to, say, the dollar, the cash dollar. Because they leave a digital trail, we actually ought to be able to do a better job. You think you dont do a good enough job . Well, lets just note this. We use the regulated Financial System to deal with aml and kyc. To the extent weve held bitcoin and stablecoin outside of it makes it more difficult. Jay clayton, i want to thank you. Mike santoli, leslie, thank you for hanging out. What a big show. Lot going on. Make sure you join us tomorrow. Squawk on the street begins right now. Good monday morning, welcome to squawk on the street, im Carl Quintanilla with david faber, sara eisen, at post nine of the new york stock exchange. Cramer has the morning off. Futures solid as Global Markets look for deescalation in the middle east, but were close to session highs in the morning as march retail sales crush estimates. Strongest control group in over a year. Road map begins with these geopolitical risks for stocks, futures rallying on the hopes that conflict will not escalate further. Plus, tesla cuts, se