New Market Week, Yellen's Debt Ceiling Warning, Buffett on Banking Crisis and Apple 5/8/23

Carl Quintanilla (0:00)

Market Moving Insight and Analysis join Jim Cramer, David Faber and me, Carl Quintanilla on the opening bell hour of CNBC Squawk on the Street.

Good Monday morning, welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer and David Faber at post nine of the New York Stock Exchange. Following through from Friday's rally with some continued uplift for the regional banks, at least today.

Busy week for consumer earnings, the debt ceiling negotiations and inflation data. We'll get the loan officer survey this afternoon. A roadmap begins with a big week for investors. The banks rebound, we'll get that latest read on CPI, PPI and the president set to meet Speaker McCarthy.

David Faber (0:35)

Plus Warren Buffett delivers a gloomy outlook for corporate earnings, says Apple remains his best portfolio business and cautions that fear is contagious as we continue to watch that regional bank volatility. And Treasury Secretary Janet Yellen warning of economic chaos and a constitutional crisis if Congress fails to raise the debt ceiling.

Carl Quintanilla (0:55)

Let's begin though with a new market week featuring, as we said, a lot of data and earnings and some of these talks of the White House, Jim. What is going to be of those buckets? What's most important going into the market?

Jim Cramer (1:05)

I think it is the Janet Yellen on ABC News because there was this moment where George Stephanopoulos, who is obviously a very shrewd observer, tried to press her on whether the president would use the 14th Amendment.

And she kept coming back to saying, look, it's catastrophic.

I don't think that she spoke for the president. I think she spoke for Treasury. And it's very difficult to make good investment decisions when you have a situation where someone is trying to play chicken. David, it's not clear who benefits, but one of the things that she made it clear was, listen, we're not gonna play Social Security. We're not gonna play Medicare. We're not gonna pay interest. So, I mean, well, that's like the trifecta of what you would do if you're a less developed country.

David Faber (1:56)

Yeah, it wouldn't be good.

It would be chaos. Also saying, resorting to the 14th Amendment could elicit a constitutional crisis, I guess.

Jim Cramer (2:04)

They would go right to the Supreme Court. The Republicans would go right to the Supreme Court and they would win against the president.

David Faber (2:10)

Because that is a question I know Lawrence Tribe as a constitutional scholar wrote an op-ed this weekend saying, I've changed my opinion. He previously said he thought it would be unconstitutional, now he says it wouldn't be.

Jim Cramer (2:20)

Well, it's up to the court. I mean, I think the president would invoke it. I mean, look, they have a meeting tomorrow. And I think that the Republicans came up with a, you know, a very large number of Republicans said, look, without any sort of actual real look at the budget, which is the first time they've done that. It's just been a game of chicken without any of that.

We're not gonna pass it. And I don't understand how the president gets around that. If the president feels that they, he can say the Republicans are the reason why you didn't get your social security check. So I think this is a much bigger game than a lot of people think. I think that that whole notion of the one thing that you don't have to worry about is that it will default. It's based on the fact that Speaker McCarthy has control of the party.

Who's thought that?

Carl Quintanilla (3:10)

Well, it's a slimmer measure of control than in prior eras.

But certainly some pieces out today looking at how McConnell and McCarthy have locked arms. McConnell basically saying to the White House, you're dealing with the Speaker, not me. I'm not going to get involved.

Jim Cramer (3:24)

Look, I think the Speaker's a reasonable person.

And I've spoken to him many times. I don't think he knows the consequences here. But I just don't want to dismiss it. I don't dismiss it because as we get closer and closer, I keep thinking about 2011 And there's a lot of people who weren't in the business from 2011, but there was much less rancor in 2011 than now. The Republicans and the Democrats didn't hate each other as much as they do now.

And yet we still had that vicious S&P downgrade, which remember Tim Geithner, the Treasury Secretary, was calculated incorrectly. It was never taken back.

David Faber (3:56)

No, it never was. It was never taken back.

Well, if you want to trade it all, Goldman Sachs now has the US debt ceiling basket.