Regional Banks After the Sell-Off, Apple's "Formula," Trump Weighs on Obesity Drug Stocks 10/17/25

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David Faber (1:00)

Market insight and analysis. You're listening to the opening bell of CNBC's Squawk on the Street. Good Friday morning. Welcome to Squawk on the Street. I'm David Faber with Sara Eisen and Mike Santoli. We're live from Post 9 at the New York Stock Exchange. Jim and Carl have the morning off. Let's give you a look at futures as we get ready to start the final trading session of the week, a half hour from now. And you can see futures are mixed. That's what they tell me in my ear. I kind of know that anyway because I was looking a little while ago. Let's get to our road map, of course. It begins with a significant turnaround in stocks. In fact, they are recovering what had been some steep losses overnight. Turning higher, in fact, is perhaps investors starting to shake off some of those concerns that we'll be discussing about bank and bank credit.

Sara Eisen (1:44)

Plus shares of Eli Lilly and Novo Nordisk on the move as President Trump calls for lower costs of GLP-1 obesity drugs. And Goldman Sachs saying, don't worry about the AI spending boom. We'll explain the latest.

David Faber (1:57)

Let's start with the markets one day after the KBW Regional Banking Index had its worst day versus the S&P 500 since March of 2023 Our viewers, of course, may remember that. That's when Silicon Valley Bank went bust, followed by First Republic, a couple of others as well. A lot of concern there, sort of more about their bond portfolios, the liquidity on the deposit side.

And commercial real estate and commercial real estate. This time, Mike, and yesterday, I think it may have taken some people perhaps by surprise, but much more focused on sort of what we don't know, and what may be off balance sheet and non-deposit taking financial institutions. But I saw that Zions and Western Alliance headline at around 1030, and frankly, I did not expect that we would end down the way we did.

Michael Santoli (2:49)

For sure. It obviously sort of picks at a little bit of a raw nerve for the market, which is, you know, starting with those bankruptcies of first brands and Tri-Color and Jefferies and the fund that people wanted redemptions from. I don't think it really builds to anything that says it's either some kind of major cyclical downturn in credit quality or something systemic. But it's very opaque. It's parts of the credit markets that you don't have a clear window on. Everybody was being was able to kind of reassure themselves by looking at like public corporate credit spreads. And that looks fine. And what the banks are telling you, which is in general, consumer and business credit seems OK. Certainly at the big banks, it is. I do think, though, that with this wave of private credit that is washed into all corners of lending, if you want to if you're a regional bank, you want to participate. What does that do? Where do you have to sit on the risk curve to do the kinds of deals that they're willing to do? So I think that's really just a source of unease. I do think the market reaction was very dramatic, given what we know. It seems anecdotal. It seems maybe fraud related. And people are trying to take some comfort in the idea that this is, you know, all of these instances are actually disputed transactions, poor disclosure or something else.

David Faber (4:00)

Poor disclosure or things that may not have been disclosed. In this case, I think it had to do with, you know, an agreement in terms of borrowers promising every pledged mortgage loan would be backed by a valid perfected first priority lien in the lawsuits that we're talking about from both Western Alliance and Zion said, that's not the case of some of the underlying mortgages. But Sara, it does go back to sort of some of the concerns that were raised by Jamie Dimon in the conversations that he, well, not conversation, in the conference call he had about cockroaches.