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Inside Energy: Power Rations & Asia’s Supply 03/24/26
00:38:47
As Iran denies President Trump’s assertion that the U.S. and Iran have held talks to end the war, CNBC’s Dan Murphy reports from Dubai. Former deputy national security advisor for the Trump administration Victoria Coates shares her perspective on the region’s future, including support for reliable, secure internet in Iran. On the ground at CERAWeek with the world’s energy executives, Brian Sullivan reports on oil pricing and supply amid the Iran War. Plus, prediction markets Kalshi and Polymarket are moving to ban insider trading, asset management giant Apollo is limiting withdrawals this quarter in the latest concerning signal in private credit, and Valley National CEO Ira Robbins shares what he’s seeing from the small and medium sized businesses that he banks. Dan Murphy - 04:09 Brian Sullivan - 17:41 Victoria Coates - 24:44 Ira Robbins - 36:26 In this episode: Dan Murphy, @dan_murphy Brian Sullivan, @SullyCNBC Joe Kernen, @JoeSquawk Becky Quick, @BeckyQuick Cameron Costa, @Ca...
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- [00:00]
Keith Lansford
This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, monetary policy decisions and key results and statistics that may impact your trading. Download the latest episode and subscribe@schwab.com Market Update podcast or find Schwab Market Update wherever you get your podcasts.
- [00:29]
Producer/Technical Staff
Before we had AT and T Business
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Joe Kernen
Wireless coverage, our delivery GPS wasn't the most reliable. Once our driver had to do a 14 point turn to get back on route.
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Keith Lansford
A 14 point turn.
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Producer/Technical Staff
An influencer even livestreamed the whole thing.
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Joe Kernen
Not good for business. Now with AT&T business Wireless, routes are updating on the fly and deliveries are on time. And the influencer did get us 53
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Dan Murphy
new followers though at&t business Wireless connecting changes everything.
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Joe Kernen
Bring in show music please.
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Cameron Costa
This is Squawk Pod and I'm CNBC producer Cameron Costa. On today's episode, an update from the Middle east with CNBC's Dan Murphy, Iran's
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Dan Murphy
parliamentary speaker Ghaliba accusing the president of spreading fake news to manipulate the market.
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Cameron Costa
President Trump's former deputy National Security Advisor Victoria Coats on the importance of Internet as Iran grapples with its own future.
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Victoria Coats
Everyone's saying, oh, there's no popular uprising going on. Well, quite frankly, we don't know. So that's something I hope we're also working on while dismantling the odious state Internet system, the so called national information network that they imported from Communist China.
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Cameron Costa
Then a look at small and medium sized businesses with Valley National Bank CEO Ira Robbins. He says between lo employment and sentiment, it's the healthiest environment he's seen in two years.
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Ira Robbins
Typically most of our clients are the small businesses which account for, you know, 80 to 82% of the total jobs in the country and they're hiring.
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Cameron Costa
Plus insight into the energy markets at saraweek and prediction markets Calci and Polymarket are making moves to stop insider trading.
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Joe Kernen
It's it's a problem with the whole thing. It is, but it's a problem with the whole thing.
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Becky Quick
Right?
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Cameron Costa
It's Tuesday, March 24th and Squawk Pod begins right now.
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Producer/Technical Staff
Stand Becky by in three, two, one.
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Becky Quick
Good morning everybody. Welcome to Squawk Box right here on cnbc. We are live from the NASDAQ market site in Times Square. I'm Becky Quick along with Joe Kernan. Andrew is off today. We've got a lot to look through with what's happened over the last 24 hours. Huge spikes yesterday that we saw just about 23 hours ago at this point. Huge spikes with the oil prices dropping off significantly with the futures jumping. And the markets managed to hold on to about half of those gains from the initial spike. We saw the Dow go from down 200 to up about 1200 in a matter of minutes. By the end of the session the Dow closed up by about 630points.s and P and the Nasdaq sort of followed suit. You had the Dow closing up by 1.3% along with the Nasdaq. The S and P was up by about 1.11% by the end of the sess. Massive moves taking place in the treasury market too. We saw yields initially dropping pretty significantly. Now you see the 10 year sitting at 437. The two year is at 388. And energy has been the one place we've been watching ever so closely. That's where the biggest moves began and ended. Right now WTI is trading at $90.51. Yesterday at this time we were sitting right around $99, actually a little bit above that for WTI. By the end of the session it was down by more than 10%. Closed at $88. It's up by about $2.50 right now. Again $90.60. Brent crude yesterday at this time was above $113. It's now trading at $101. And we will continue to keep an eye on this. If you're watching over the one week crude oil down by close to 6%.
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Joe Kernen
And Iran is pushing back on President Trump's claims progress towards ending the nearly month long war in the Middle East. We will be talking at length about this and who the person is and everyone's pointing to the same individual as far as who Witkoff and Kushner had been talking to. So a lot of outlets want to make it as nebulous as possible. But oil has not rebounded to 99. Futures were down maybe 90 points 100 points earlier on the Dow. I don't know what's happening but now there's a name, Mohammed Bagar Gallaba. He was I guess head of the Iranian. He is head of the Iranian Parliament, was a general in the Revolutionary Guard and former mayor of Tehran. Maybe Dan Murphy of CNBC can join us with more. Have you heard of this guy? I don't, I wouldn't want anyone. He's probably mad that I said his name right now because it, it, you know it. There have been a lot of short timers over there that have assumed some leadership position.
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Dan Murphy
Joe, good morning to you. Well, it is a name that has been floated around and in fact, Politico was reporting early this morning that he is among a list of candidates that the United States could potentially prefer here as a future leader of Iran. He's viewed as somewhat more of a pragmatist and someone that the United States could actually negotiate with at the same time as well, someone who the Gulf states could also potentially negotiate with as well as they seek to resolve this crisis that's still engulfing the Strait of Hormuz. In the meantime, let me update you on what's happened in the last 24 hours as well, because we have also seen a fresh barrage of Iranian missiles targeting multiple locations in Israel this morning, including in Tel Aviv, where multiple casualties have been reported. We are also seeing Iranian missiles and drones continue to target Gulf countries, including Saudi Arabia, the UAE and in Bahrain, where we're also following another Amazon Web Services outage due to a suspected drone strike. The president insists that there has been productive conversations to end the war, but as you say, Iran is really doubling down now, saying there's been no dialogue with Washington. Iran's parliamentary speaker Galliboff accusing the president of spreading fake news to manipulate the markets. Even as I mentioned, Politico reporting the administration floating him as a possible future Iranian leader. And of course, oil traders still following the headlines around the Strait of Hormuz as well. European officials weighing in overnight and calling on the US and Iran to return to the negotiation table. The Adnoc CEO Dr. Sultan Al Jaba also taking it one step further, calling the blockade of Hormuz economic terrorism against every nation and also saying the status quo cannot continue when it comes to the situation inside the Strait. And what's also interesting in the last 24 hours is that the Gulf states are obviously increasingly frustrated at the path of this conflict. And the suggestion that Iran could stay in control of Hormuz after the war ends, even charging a toll on ships passing through, has clearly ruffled some feathers. The Wall Street Journal also reporting this morning that countries here, including Saudi Arabia and the UAE are now inching towards joining the fight. And the paper actually reporting that Crown Prince Mohammed bin Salman is now close to a decision to enter the war. But of course, it's still unclear how credible that suggestion is, given President Trump has already hinted at an off ramp to this conflict of sorts.
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Joe Kernen
Joe, Dan, I've also maybe you can confirm it. There's been some reporting that some Chinese tankers hugging the Iranian coast have moved through. Yeah, one in an Indian tanker. It's almost like there's. There are some countries that have reached some type of an arrangement with someone in Iran allowing them to pass through. I also read something about people know where there are a couple of mines. I mean, is it. Do we count the number of mines that we're worried about in the strait on two hands? I thought when you mine an area that it would be, I don't know, dozens to, you know, to tens of dozens of mines that you would put in. You know, can you shed any light on that, how many minds we're talking about?
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Dan Murphy
This is something that the Energy Secretary hinted at in his conversation with CNBC yesterday. On this conversation of attempting to open up the Strait of Hormuz. You have to remember as well, this is such a narrow waterway and the transit path for the ships is complex at best. Of course, that transit path made even harder by the fact that we have seen these reports suggesting the Iranians have been laying mines inside the Strait, and also reports that American and Israeli efforts to try and remove them have been successful, but of course, they can't clear all of them fast enough. And at the same time, as well, we have also heard those reports that you've referred to, Joe, with regards to some ships now being able to pass through. Actually, it was one US Official who described it as a trickle of ships that are now passing through the Strait of Hormuz. No surprises to see those Chinese ships starting to pass through. Iran is the top buyer, sorry, China is the top buyer of Iranian crude. But at the same time, as well, India also opening up a pathway here to try and get some of its own ships passing through as well. So we're seeing a trickle of ships pass through, of course, those ships that have the insurance and captains who are willing enough to actually transit past, given just how dangerous the situation still is. But of course, the big question at the moment is who is going to safeguard Hormuz moving forward? You've heard from top leaders like Dr. Sultan Al Jaba here in the UAE saying the status quo cannot remain. And given just how dangerous the situation still is now, and the hot conflict that we have between the us, The Israelis and the Iranians in that very, very narrow waterway, then you really do get the sense that something's going to have to change here. It's going to have to change pretty soon. And that's something that's going to have to be on the negotiation table if and when the US Is able to sit down with whoever it is that they're speaking to inside Iran as well.
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Joe Kernen
We're going to have a long conversation about this. Also, there's something coincides with the five day warning too, doesn't it? Then there aren't some Marines or at least a contingent of Marines arriving. There's, there's people whispering that this is the way Trump operates, that this may be another diversion, that yeah, we're not going to do anything. And then, you know, on the day of the deadline, you know, who knows what. Nothing would surprise anyone at this point, I don't think. Have you heard things about that?
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Dan Murphy
That's exactly right. It's exactly right. So there was a report that suggested that perhaps this is the President buying time here. Of course, more US Military assets are en route to the region, including thousands of Marines. The US has kept the door open, keeping its options open when it comes to a possible ground operation inside Iran or an operation inside cog, which is that critical island responsible for the majority of Iran's oil production capacity at. So the US and the Israelis keeping the option open here to push forward if they need to. But at the same time it's been suggested that given the time it's going to take for those new ships and those Marines to actually reach the region, then the President has given himself a five day negotiation window here to see exactly what Iran might do next. If Iran comes to the table, then perhaps the chances of a ground invasion or a long conflict will be reduced. If it doesn't, then the President at least has the option. That is the working assumption at this stage.
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Joe Kernen
Keep your, we know you will keep your ears to the ground. Try to do so many things at once. Anyway, Dan, thank you.
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Becky Quick
In the meantime, asset management giant Apollo Global telling investors in its flagship private credit fund that it will limit withdrawals this quarter to just under half of the money that has been requested to come out. In an SEC filing, the $15 billion fund said that it received redemption requests equal to a little more than 11% of the shares outstanding in the first quarter. That's more than double the 5% cap that the fund allows. But Apollo will stick with that industry standard limit, unlike some of its rivals that have recently relaxed the rules. In its SEC filing, Apollo said as long term stewards of capital, we have a fiduciary duty to act in the best interest of all Fund invest, balancing the interests of shareholders seeking liquidity with those who choose to remain invested. This is one of those situations where again you could be looking at a liquidity issue. Semi liquid assets are basically liquid when you don't want them and not liquid when you do want them. That's the way that this goes. I understand Apollo's statement on this saying that they are long term stewards responsible for the well being of all of the fund's clients. If you are forced to sell at what they think are fire sale prices, the long term people who stick around in it will be hurt by those sales.
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Joe Kernen
And sometimes you have to give the manager some discretion as to how long or really acting in your best interest. Because when you went into this I'm sure that there was plenty of in the disclosure documents, plenty of.
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Becky Quick
This is the question though, do retail investors really understand when you're marketing something
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Joe Kernen
semi liquid assets, should they be there?
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Becky Quick
Should they be there to get a
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Joe Kernen
big question for the SS to get
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Becky Quick
to allow them to participate about how much growth you will see in any of these funds when they've been relying on new retail money coming in.
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Joe Kernen
But when, if you want retail investors and others to be able to benefit from the higher returns that semi liquid assets can offer, what goes along with higher returns, higher risk liquidity and higher risk. It's like this. You can get 2% with no risk or you can.
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Becky Quick
There are all kinds of questions that people have raised about leverage being used in some of these funds. Again, I can understand both sides of the argument on it, but you can
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Joe Kernen
understand how someone would say no, we're not going to let you sell now because it's not. Well, because it's not a good idea.
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Becky Quick
Right? If we had to sell it at a much lower level and then we hurt our investors who are sticking around. It's just how are these things marketed? Did the people understand what they were getting?
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Joe Kernen
Paul? I would say leave it to the professionals. Prediction market Kalsheet says it will block athletes and politicians from betting on markets in which they're involved. Athletes and politicians because you don't want
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Victoria Coats
anybody betting on a game.
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Joe Kernen
What about journalists?
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Becky Quick
Well, if you're the one who can create the.
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Joe Kernen
I can think of 10 more.
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Becky Quick
If you're the one who can think of pull the legislation.
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Joe Kernen
I can think of 10 more.
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Becky Quick
These are the two biggest. These are the two most ripe.
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Joe Kernen
It's a problem with the whole thing. It is, but it's a problem with the whole thing. That's just the tip of the iceberg. The company rolling out new technological safeguards, politicians be able to bet on their campaigns and athletes.
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Becky Quick
I thought it was more than that.
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Joe Kernen
Athletes, referees and others will be banned from wagering on Their own sports as we've seen referees on their own campaign.
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Becky Quick
What about their own legislation? What about their own?
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Joe Kernen
How about referees which in recent months referees have more to do with it than the players.
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Becky Quick
I was just reading a story about Virginia and Tennessee getting this sweet 16
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Joe Kernen
and it's hard with instant replay too. And then you don't want to spend every two seconds. You don't want to spend a minute and a half micro analyzing like as it's rolling off the gut. But you have to. CNBC and Kalshee have a commercial relationship that includes a CNBC minority investment. Separately, prediction platform's polymarket updating its rules to say users can't trade on contracts for which they might have confidential information or where they could influence the outcome of the event. The updates came as a bipartisan pair of senators in Washington introduced legislation to ban prediction markets from offering sports related contrast.
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Becky Quick
So this is the move, I guess the implication is this is the move to suddenly react before legislation comes your way. Okay. We're going to try and self regulate some of this before we get regulated and have it run right over our heads.
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Joe Kernen
I think these are going to look really different in the end. Exactly what you mean.
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Becky Quick
The markets.
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Joe Kernen
Prediction markets.
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Becky Quick
Prediction markets. I think you're probably right.
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Joe Kernen
Totally wild, wild west.
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Becky Quick
That's the way any new technology or
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Joe Kernen
any new words mentioned in a conference call.
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Ira Robbins
Right.
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Becky Quick
And then that was Brian Armstrong's conference call for Coinbase and he said, hey, I saw what was on the prediction markets. I'm going to say all those words
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Ira Robbins
that were out there.
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Joe Kernen
What color you're going to wear, whether we're going to match. Because we do a lot.
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Becky Quick
We do inadvertently.
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Joe Kernen
Yeah. Not today.
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Becky Quick
Yeah. We'll continue to watch this because I think you're right. This is a place that is rife for evolution. Sarah Week is off and running with the biggest names in the energy sector gathering in Houston. And that's where we find our Brian Sullivan. He is there and he joins us right now with more on what he's hearing at that conference. And Brian, Sarah Week is big every year but this, this is perfect timing to try and find out what people are thinking as we watch these huge swings in crude oil and beyond.
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Producer/Technical Staff
Yeah, it's been a crazy 24 to 36 hours. Becky and Joe, good morning. Thank you very much. I mean listen, we're here live at Sarah Week and to your point, coming into Sarah Week this weekend, it looked a little different than it did yesterday. Obviously the President's comments, Joe's discussion with President Trump setting futures up, commodity prices down. There's a little cautious optimism and when I say a little, I mean a very little bit. I want to talk about two other themes though that are not getting a lot of attention because I understand that oil is going to make the headlines because it goes to gas prices, can determine elections, whatever. But there's two things with the natural gas side that I think are critical and maybe not getting enough attention. Number one, and I just literally, it's six, whatever 55 in the morning, ran into longtime analyst Paul Sankey downstairs and we were talking about this. The last cargoes of liquefied natural gas going to Taiwan, going to parts of Japan and South Korea, LNG imported LNG is their biggest source of energy. The last cargoes from Qatar Energy are arriving now. The last shiploads takes about two weeks to get there. After that, it's unclear what's going to happen to Asia. Are they going to have enough natural gas to make power or are they going to have to start rationing certain types of fuels like we are seeing in countries like Slovenia? And some of the emerging markets are starting to do that. So focus on that one first. And we talked to Venture Global, they're a big seller of lng. We talked to Venture Global's CEO late yesterday, Mike Sable, about Asia. They're a huge seller into Asia. And we talked about what kinds of prices, shipload prices basically per unit of natural gas are being commanded right now. Listen to what he had to say.
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Joe Kernen
Asia is a little bit more expensive because it's a longer transport distance. So roughly $1920 versus $18 going to
- [20:01]
Producer/Technical Staff
and where was it a year ago?
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Joe Kernen
A year ago roughly 10, 11, $12 depending on what month.
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Producer/Technical Staff
So we, we're paying 3 to $4 here for natural gas. Asia was paying 11 to 12, but now they're willing to pay 18 to 20 guys per unit because they need the gas so much. Unclear if they're going to even have enough at any price. The second big theme, and it goes to natural gas is of course the main sort of theme I would have said a month ago before everything happened in the Iran war started, which is the AI dreams AI obviously earnings growth, capital spending plans powering a large part of the stock market. It's powering a large part of the Mag 7 which kind of run the show and whether or not rising natural gas prices, maybe not here, maybe not here, but around the world are going to hit or hurt the AI buildout dreams. I think theme number two would be right now there is Absolutely no indication that any AI Capital spending plan will be impacted negatively, at least here in the United States. But I think, guys, the Asia story undertold, so critical, not clear where Asia is going to get all of its electricity from in the weeks and months ahead.
- [21:15]
Becky Quick
Brian, we were just reading today that a ship made its way through the Strait of Hormuz on its way to China. I guess one off like that is not going to be enough to really sustain any of this or make it feel like it can stretch things out. They need that strait to be opened completely and get everything back through for this not to become a sea serious problem very quickly.
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Producer/Technical Staff
Yes. And China has enough oil. I'm going to go back to oil for a second. China has hundreds of millions or maybe a billion plus barrels of floating storage. They've just been kind of accumulating oil mostly from Russia with the sanctions that are on Russia, of course, some of those sanctions, floating oil, by the way, have been suspended for a couple of months. China has plenty of oil. Again, going back to the gas story. And countries like Taiwan, South Korea, Japan, Japan can probably get the LNG that it needs because they can afford to pay that 20 that Mike Sable, Adventure Global was just talking about South Korea as well. The question on some of these regional players, Becky, can they get the fuel at any cost or will you and Joe and will Squawk Box and CNBC be having headlines power rationing in some pretty major economies in Asia over the next couple of weeks?
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Becky Quick
Brian, thank you. We look forward to what you're bringing today and amazed by everything you were able to do yesterday. So thank you very much.
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Joe Kernen
Thank you. Thanks. Cheese will be next.
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Cameron Costa
Coming up on Squawk Pod, former deputy National Security Advisor Victoria Coats on the latest headlines out of Iran.
- [22:54]
Victoria Coats
And it's going to be one of the great stories coming out of this world war is how the United States and Israel coordinated through CENTCOM down in Tampa and pulled this off jointly. It's really, really impressive.
- [23:07]
Square Representative
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- [24:06]
Keith Lansford
This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Join host Keith Lansford for this information packed daily market Preview delivered in 10 minutes or less, including projected stock updates, Monet decisions and key results and statistics that may impact your trading. Download the latest episode and subscribe@schwab.com MarketUpdatePodcast or find Schwab Market Update wherever you get your podcasts.
- [24:35]
Becky Quick
Not every sale happens at the register.
- [24:37]
Cameron Costa
Before ATT Business Wireless, checking out customers
- [24:41]
Becky Quick
on our mobile POS systems took too long.
- [24:43]
Cameron Costa
Basically a staring contest where everyone loses.
- [24:46]
Becky Quick
It's crazy what people will say during an awkward silence. Now transactions are done before the silence takes hold. That means I can focus on the task at hand and make an extra sale or two. Sometimes I do miss the bonding time.
- [24:59]
Dan Murphy
Sometimes AT&T business Wireless connecting changes everything.
- [25:08]
Cameron Costa
Welcome back to squawkpod.
- [25:10]
Joe Kernen
Here's Joe the US Says talks with Iran will continue this week. Joining us now, Victoria Coats. She served as deputy National Security Adviser in the first Trump administration and is now vice president of the Heritage Foundation's Davis Institute for National Security and Foreign Policy. Victoria, there's so many nuances to what's happening and differing opinions and reporting I don't know from individuals. Some that are really in mainstream media are very quick to want to believe Iran. I'm not sure where that comes from. Do you have facts about what actually occurred? Do we know who the president was referring to in terms of on the other end of the negotiations? Do we know now that it was the leader of the Iranian Parliament? And did Witkoff and Jared Kushner actually have conversations over the weekend?
- [26:11]
Victoria Coats
Well Joe, good morning. What's clear now is that everything is quite unclear. Yes, it does seem that the head of the parliament, who's a well known politician in Iran, he's run for president a couple of times. He was member of the irgc, so has some name recognition, is the interlocutor. And what's interesting about that is who it isn't. It isn't the new Supreme Leader, Mashtaba Khamenei. It's not the president of Iran. It's not the foreign minister of Iran, the folks that you would expect, it's, it's this, this parliamentarian. So that is in and of itself, you know, an interesting development is this sort of a lesser known figure for the United States who's maybe a little bit less radical. So that, that could be interesting. He might have a little bit more credibility. But this is intensely murky. I think we probably shouldn't speculate too, too heavily about what might be going on. But wait, wait for the facts to reveal themselves.
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Joe Kernen
Right. And I was reading about the pushback from Iran and I mean, just reading it is. Iranian state media cited an unnamed senior security official in a post saying that there's been no negotiations. And you know, I'm old enough to remember Baghdad Bob. I've watched a lot of spokespersons for Iran in the last, over the years and when I shouldn't be flippant about it, but if their lips are moving, they're likely lying. Whether it's for negotiations, whether it's about enrichment, whether it's about how far the missiles can be sent. We saw that it was 4,000 kilometers. The Diego Garcia, they said they had nothing over 2,000. I mean, they do this for a living. And it reminded me of Baghdad Bob. So why do you think so many newspapers, websites immediately would say, well, Iran says there aren't any talks, so Trump obviously just wanted to work on gasoline prices.
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Victoria Coats
Well, I think we're dating ourselves by admitting we remember Baghdad Bob from 2003. But yes, this is a very similar situation. And what it speaks to is absolute chaos in Tehran. Bear in mind, most of the senior leadership has been killed. The decision making seems completely opaque, not necessarily rational. And one other thing I wanted to mention, Joe, is we are facing a catastrophic meltdown and the Iranian economy and there's really nothing anyone can do about it, even if people wanted to help. They've been at zero Internet now for almost over three weeks, or 1% Internet. And so that commerce has ground to a halt. They just announced they are printing a 10 million real note after two months ago. They announced their 5 million real note. And that 10 million real note is worth about $7. So they are running out of zeros in Tehran. And they know that, that when the fighting stops, the second front of this war is going economic and they are at a huge disadvantage.
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Joe Kernen
And then you layer over the idea that the President himself may have known that possibly that he was, you know, maybe being more positive than the facts warrant because he may be planning something five days from now. There are Marines on the way there's no reason that he, the United States had to rush to bomb these, these power plants and electric grid immediately. That could still be coming. This could have been a diversion to set something up for the next weekend, couldn't it?
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Victoria Coats
Yes, I think certainly after, you know, the Maduro operation and the launch of this war three weeks ago, it's more important to watch what President Trump actually does. And as you said, we've got the Tripoli Marine Strike Group about to arrive. There are elements of the 82nd Airborne about to arrive. The Gerald R. Ford, which had to go to Cyprus for some, for some upkeep, is headed back to the region. That could be a reason that he wanted this five day pause on the operation against the electrical plants, not because of any sort of kindness of his heart, but rather because we needed a little bit more time to get everything in order. And if you listen to his quote then from yesterday, I mean, he pretty much lays out how we're going to do it if we do take out their electric generation capability. And if you think about that, on top of all the other economic disasters they face, you know, a national blackout on top of everything else really will be disastrous for, for Iran. And it's hard to see them surviving in any kind of coherent state.
- [30:48]
Joe Kernen
And we need to connect the dots. I've actually heard, heard someone say it might not be great if, if the general population of Iran didn't have Internet connectivity in case there is a popular uprising in the, in the cards down there might not be. So we at least need to think about wiping out that capability as well, if that's what we're hoping for at some point.
- [31:16]
Victoria Coats
Oh, absolutely. And I think, you know, our brand is the United States is free speech. So there's a lot more we can and should be doing in terms of getting secure Internet access to the Iranian people. This is something we worked on in the first Trump term. And Starlink is great and is very, very helpful. But at the same time you need greater encryption that Starlink is capable of. You need hardware to get into the hands of the people and so that they can communicate, they can get their story out. Right now they're largely mute. Everyone's saying, oh, there's no popular uprising going on. Well, quite frankly, we don't know. So that's something I hope we're also working on while dismantling the odious state Internet system, the so called national information network that they imported from communist China. So hopefully that can be taken down and free Internet access can be provided.
- [32:05]
Joe Kernen
We haven't Even talked about Israel and what Israel's ends could be, whether it could be different for what our end goal is, and whether they were, I guess they were consulted on all the things the president talked about yesterday. Do you think they go along with that? Are they on board with. With ending hostilities, perhaps in some people's view that it's too early to be ending?
- [32:31]
Victoria Coats
Well, I think that'll be the topic for conversation. And obviously, we're a sovereign nation. Israel's a sovereign nation. All the folks who say that President Trump is being dictated to by Israel obviously didn't watch when he very publicly said, hey, don't hit the gas installations anymore, publicly disagreeing with them. But at the same time, Joe, what I've heard from everyone, both Israeli and US Government colleagues, is that this joint operation has been unprecedented, and it's going to be. One of the great stories coming out of this war is how the United States and Israel coordinated through CENTCOM down in Tampa and pulled this off jointly. It's really, really impressive.
- [33:10]
Joe Kernen
And having the nerve to give the go ahead to do it. And still hearing about Taco, still hearing about, oh, yeah, chicken, after watching this operation and still having that. I mean, people, the tea is already coming out of a lot of people in mainstream media in their mouth. It's already. They're starting to say it before anything happens. Even though all these facts. I don't know. You know what? We didn't talk about Karg, we didn't talk about the Strait, and I don't know what happens. Those are both important elements strategically with, as you say, the 82nd Airborne on the way. I don't know what any of it means. So just. I think you need to keep the TV on. Right.
- [33:55]
Victoria Coats
Every morning we wake up to something new. And just one quick point about Kharg is. Kharg is important, obviously, for the oil export facilities there. But there's three other islands very strategically located, sort of at the mouth of the strait, and those are claimed by UAE. They have been since the 1970s as sovereign Emirati territory. And the Iranians have been hanging onto them. So a more targeted operation might be to reclaim. Reclaim those islands and return them to the Emirates. And then the Emirates have a much greater strategic position going into the Strait. That is a more concise operation which would put right a harm done to one of our great and good allies and then also give us more strategic control over that waterway and diminish what the Iranians can actually do.
- [34:43]
Joe Kernen
Okay, Victoria, we'll see again. And we could probably see every hour really with so many things happening. But thank you.
- [34:52]
Victoria Coats
Thanks Jim.
- [34:55]
Cameron Costa
Up next on Squawk Pod CEO of Valley National Bank, Ira Robbins with his look at the state of the consumer and the state of small and medium sized businesses.
- [35:06]
Ira Robbins
The loan pipelines up and even loan closings are up that strong. You know we're seeing all across the small and middle market businesses.
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- [36:33]
Cameron Costa
Welcome back to Squawk Pod with Joe Kernan and Becky Quick. Here's Becky.
- [36:38]
Becky Quick
Our next guest has a pretty unique view of the consumer, how things are going there, the lending environment, the economic impact of higher energy prices. Right now we want to welcome Ira Robbins. He is the CEO of Valley national. That is a bank that is kind of defying what's happening with many of the other financials. Year to date. Your stock's up by about 3.6% over the last year, up 32%. You've got a market cap of about $6.67 billion and a pretty large footprint to 250 branches all across the country, but really focused especially on New Jersey and Florida. Right, right. So what do you see?
- [37:14]
Ira Robbins
You know, honestly, the economy for the, through the eyes of our clients still seems very, very strong. You know, typically most of our clients are the small businesses which account for, you know, 80 to 82% of the total jobs in the country and they're hiring from different types of sectors. We have see continued expansion in lines of credit, in working capital, and there is still strong belief that long term growth is going to be there. A little bit annoyance as to what's going on, but it's not stopping any of their ability to really drive growth.
- [37:41]
Becky Quick
I was really surprised to hear your loan pipeline is up 30 to 40% this year.
- [37:45]
Ira Robbins
The loan pipeline's up and even loan closings are up that strong. You know, we're seeing all across the small and middle market businesses, we're looking at clients. $15 million loan lines of credit to do security for data centers, 2 million Dynes lines of credit to do work on the utility infrastructure that sits within the United States. So these are projects that people believe from a long term perspective are still going to have high demand and strong conviction that there's going to be a need for this moving forward and they're moving forward with all their borrowing needs.
- [38:15]
Becky Quick
Is that a situation where these are large projects and these are contractors who are picking up pieces of those projects? Or is this often the entire project is based on the loan that you're, that you're giving out?
- [38:25]
Ira Robbins
These are largely pieces of the individual larger contract. Some of them from a security perspective. This would be their own individual contract though from an entirety perspective. But it's really a mix. We're seeing it across most of all
- [38:37]
Becky Quick
of our segments, up 30 to 40%. How, how does that compare with what you've seen over the last five years?
- [38:45]
Ira Robbins
This is, is really, really strong. Obviously when we go back to Covid, you know, there was a tepid demand in the beginning from an uncertainty perspective and then people really got back into the market. Then there was some quiet tenure. But this is probably the strongest we've seen the last 2ish years.
- [38:58]
Becky Quick
Wow. We hear so much about concern about what's happening in the Middle East. Does that slow businesses down at all? Are they looking at higher energy prices? Are they looking at higher costs and thinking time to slow down to reassess?
- [39:12]
Ira Robbins
It doesn't sound like it's a conversation. Without question. When I go and talk to borrowers there's first topic, you know, what's going on there, Expectations, cost of energy and what that expectation looks like. I think people got to realize that not everyone is a large conglomerate company though. So when you look at the smaller entrepreneurs that we deal with, they get excited about AI and the opportunities that presents within their individual segments. They believe any type of uncertainty and volatility is the market allows them to react quicker than maybe with some of the larger companies do. So while it's definitely a concern, we don't see them easing back on doing anything they're looking at from a capital expenditure perspective.
- [39:45]
Becky Quick
We had the conversation earlier today that for the most part people have looked at what's happening right now with, with energy prices as maybe a temporary inflation situation. Is there a point where that concern about inflation then leads to concerns about a slowdown in growth?
- [40:02]
Ira Robbins
I think it's a great question, right? I mean we hear the same thing. Everyone says, you know, when oil hits 140, what does that mean? And I talk to sit there and say the same thing. So they're repeating what they're hearing. However, when I look at behaviors, it is not changing. I mean these are making long term capital investments, A warehouse company looking at buying a building. If he or she doesn't believe that it's going to actually be a viable entity in two to three years, they're not going to go buy the building today. And we see that continuously.
- [40:27]
Becky Quick
And the capex that we've seen from the large companies inevitably leads to this trickle down effect where everybody's trying to play catch up or playing their part in building some of those projects.
- [40:37]
Ira Robbins
It's massive. Even think about the data centers, like I said, the smaller utility companies, even the security companies that now have to go ahead and look at securing these individual data centers and the lines that come out of them. Massive, massive infrastructure, expensive, like you said, trickles down and has impact on most of America, which is what we're not talking about.
- [40:55]
Becky Quick
All right, let's talk about credit issues because we've spent a lot of time kind of focusing on that too. When it gets to private credit, what do you see? What do you think about the marks that have been made on some of these things? Does that impact your business at all?
- [41:09]
Ira Robbins
I mean, I would say we still have to see some of the marks. I'm not sure that even what we're seeing today is actually actually real marks, which is an interesting conversation separate from what we're talking about. I mean all this goes back many years ago to the regulatory environment 2008, 2009, when they started to restrict what banks were able to lend into. So we create the shadow banking environment, put no requirements around what fair market value looks like surrounding any of it. And the regulatory environment actually restricted banks from getting into it. Commercial real estate, arbitrary restrictions, around 300% concentration exposures. What does that do? Purchase commercial real estate into private credit and all these other, other areas. I'm not quite sure that's really, really what was intended from a long term perspective. But yeah, there's going to be cracks and most of the cracks today that I see are really liquidity cracks. Right. We talk about capital requirements from a regulatory issue. So Mickey Bowman's out here fairly great talking about easing some of the capital requirements for, for overall banks. It's the liquidity that creates the issue. Liquidity created Washington Mutual. Liquidity created SBB First Republic. It's going to be an issue issue for these private credit funds also, as you see the outflows begin to happen. It's not going to be the marks as much as the liquidity.
- [42:20]
Becky Quick
Okay, Ira, thank you so much. Good to see you.
- [42:23]
Ira Robbins
Nice to see you.
- [42:25]
Cameron Costa
That's Squawk Pod for today. Thank you for listening. Squawk Box is hosted by Joe Kernan, Becky Quick and Andrew Ross Sorkin weekday mornings on cnbc starting at 6am Eastern. To get the best bits of that three hour TV show right into your ears, please follow Squawk Pod wherever you're listening now. We'll meet you right back here tomorrow. Have a great day.
- [42:47]
Joe Kernen
We are clear. Thanks guys.
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