PacWest Tumbles on Deposit Losses, Disney "Streams" Lower, Inflation Watch 5/11/23

SPEAKER_1 (0:00)

Want to make smart trading decisions fast? DecisionTech from Fidelity can help.

You'll get heads-up alerts on market events and insights that can inform your buy and sell decisions. Plus, you can trade fractional shares with zero commissions for online US stocks and ETFs. Never miss an opportunity. That's DecisionTech from Fidelity. Get started at fidelity.com/trading.

Sell orders are subject to an activity assessment fee from one cent to three cents per $1,000 a principal.

David Faber (0:31)

Market insight and analysis. You're listening to the opening bell of CNBC's Squawk on the Street.

Carl Quintanilla (0:37)

Good Thursday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber, and post nine of the New York Stock Exchange. Stocks wrestling with some growth worries today. More regional bank stress.

Some very weak data out of China. Software PPI may be good for margins, but jobless claims 264,000 is the highest in 19 months.

A roadmap begins with the return of that regional bank volatility. PacWest says deposits fell 9.5% last week, but Jamie Dimon says the regionals remain strong.

David Faber (1:05)

Plus, Disney shares are under pressure this morning. Streaming losses improve. Subscribers though decline. And CEO Bob Iger, he ups the ante with Florida asking, quote, do they want us to invest more or not?

And the macro outlook, inflation pressures easing, jobless claims hit the highest since last October. And Treasury Secretary Yellen says it should be unthinkable for the US to default on its debt.

Carl Quintanilla (1:30)

Let's start with regional banks today. Under pressure, as we said, led by PacWest, down double digits in this regulatory filing. The company says it lost 9.5% of deposits in the week ending May 5, citing customer fears sparked by reports that PacWest was exploring those strategic options. At the bank ads, it funded the decline in deposits with available on balance sheet liquidity. Meantime, got an update out of Western Alliance as well. Jim, you've been all over this this morning.

Jim Cramer (1:56)

Yeah, look, I think they were in this position that there was kind of a lag when they report.

And it was clear that the news stories drove this.

And so I mean, I was going over this in my mind this morning. Do you want to make it worse? Do you want to make what happened on May 4 and May 5 after the news reports on May 3? Do you want to repeat those news reports? And David, as your responsible journalist, you know that if you emphasize what happened May 3 again on May 11, you can do some tremendous damage to PacWest. And to me, I don't want to be part of the story. You want to be part of the story?

David Faber (2:34)

No. Right. Not particularly.

But you got to cover it.

Jim Cramer (2:38)

I know you have to cover it, but I don't know. I mean, I'm listening to Vlad 10 I've offered $2 million in FDIC support and buying support for the company, for anybody who's got money with their company. And I'm thinking, is PacWest just going to just take this?

Carl, they issue release. They know the results of the release. Did they not, once again, like First Republic, when you issue these things, say, but we're backstopped by apps?

David Faber (3:05)

Well, they do. And they point out, again, as we've already said, that they have on balance sheet liquidity on unused borrowing capacity was $15 billion. That exceeds uninsured deposits by $5.2 billion.

Listen, it's a small bank at this point, market cap-wise, we know, but it is still something of a tell for the market. We are still working our way through these issues on the balance sheets of the regional banks. We've talked about it endlessly over this last six-week period. It hasn't fully gone away. It's not going to go away. And we're probably going to revisit it. The question then becomes, what happens here?

Can they withstand the pressures?

Jim Cramer (3:41)

I don't know. One of the things that was quite disturbing last week was that First Horizon had a $13 billion bid in hand from Toronto Dominion.

We didn't know what went wrong. It turned out that Toronto Dominion did not report the way that we would in our country, some suspicious transactions.

David Faber (3:58)

That's the reporting about why. They were never told.

Jim Cramer (4:01)

No.

David Faber (4:02)

First Horizon was never told why. It was always regulatory. It had nothing to do with the current tumult in the banking world.

Jim Cramer (4:09)

But my point is that First Horizon got 13 bid. They walk away 13 billion.

Then the stock goes down to 5 billion. First Horizon was not implicated at all. It had to be a very responsible bank. Just took over Iberia, did a really terrific job on it.