>> stef? >> good for you. >> jason snipe owns it. >> zimmer holdings. i think you're going to see 5% revenue growth, margin expansion. >> it's going to be an interesting couple of hours. we've got the decision and the newser, and "closing bell." i'll see you then. welcome to "the exchange." i'm dominic chu in for kelly evans. here's what's ahead on the show. we're in the final countdown of the fed's big decision on interest rates. no cut is expected today, but any clues on when that first cut could come, that is what investors will be watching closely for today, and our guests disagree on when that is and why it's going to happen. they're here to make their respective cases. plus, the fed's higher for longer mantra may be coming to an end, but the ripple of high rates on the consumer could be

persistent. we'll talk about the trouble spots that may be brewing. and speaking of the red flags, there are self-around earnings that are popping up. we're going to tell you what they are, and what it may tell us about the market direction from here. we begin with a check on the markets. right now, we are seeing what could be characterized as a holding pattern. right now, the dow up just about 0.1 of 1%. the s&p 500 down about three quarters of 1%, and the nasdaq down over 1%. the reason why for the declines there we'll talk about later on. treasuries, interest rates, always a key part of every big fed day. as for right now, the two-year note yield, about a 4.24%. the benchmark ten-year yield, 3.69%. right now, boeing is currently up 6%, helping a lot of that outperformance of the dow average, better than expected report with regard to their quarterly results, driving that action. we'll talk more about that throughout the course of this afternoon. we are less than an hour

away from the fed decision, and steve liesman is at the federal reserve with what to expect and what to watch out for, all before he goes into that all-important fed lockup. st steve, what should we all be watching for at this point? >> i think it comes down to the statement. we'll be watching and listening to what the fed chair has to stay. the statement comes out at 2:00, and the focus is on one statement, which is this one -- in determining the extent of any additional policy firming. the idea is that the fed is believed -- the fed is probably going to come off of that. what's happened, if you look at the probability, we can come back to that later, the probabilities have changed, near 60% for a march cut. we'll see how that reacts to the statement. the fed will want to convey --

>> while keeping the door slightly ajar for march, that's the key. different ways to go about this. they may talk about the idea that they're going to take their time and keep rates at a restrictive level for some time, or may use the word "patience" which is a word they used in 2004. that's the key line in the statement, everybody is going to be watching that, dom. >> steve, i'm looking at my monitor. the two-year note yields, about 4.24%. what could that shorter end of the yield curve tell us about what we could expect at least about the fed? >> there's been a lot going on this morning. sort of apart from the fed. if you look at what's happened to the two-year, it was down 13, 14 basis points. what i've heard today is that it's the market reacting. you had some better data, the employment cost index came in below expectations. the adp data came in below expectations, pointing to the

economy doing some softening. the key might be what happened to some of the regional bank stocks. community bank corporation came out with a warning. it cut its dividend and reduced its outlook. and also talked about the need to raise regulatory capital. you can see what happened to the regional banks, dom. they were down quite a bit today, over 4% today. not the big banks, by the way. the big banks did not necessarily take it on the chin. they had been down a little bit. i guess they're even up a little bit right now. now, the idea being why the probabilities move. well, maybe some problems if they're brewing in the community banks, dom, could potentially move the fed a little more quickly and raise the prospect for that march rate cut. >> maybe, hypothetically. steve, thank you very much for that. see you later on. while our next guests don't expect the fed to start cutting rates today, they differ on when easing will start and why. joining me now are my two

guests. thanks all of you for being here with us. subadra, we talked just briefly with steve about the expectations here. there is some sign that the economy may not be all as rosy as we think it is, and thbanks y be prepping for a little more head wind. does that change the outlook for the fed at all? >> today it caught the market by surprise. as just before the news broke out on the regional bank, what we saw was the market wasn't fully pricing in a march rate cut. now the odds oh of a march rate cut have increased after today's news. broadly speaking, the economy has been relatively strong. you're looking at very strong

third and fourth quarter of last year, the momentum seems to be working its way into the first quarter, i should say the first month of the year. so we think it's probably a little bit premature for the fed to cut rates at the march meeting. perhaps in may or june start for rate cuts makes the most sense, given how strong the data has been, and how, you know, we've got to get an employment figure on friday. inflation has been trending lower. so i think that the fed has the luxury to wait before they cut rates. >> a weaker than expected private payrolls number. inflation perhaps softening. paul christopher, let me head your way, as well. the economic picture broadly, not have many people can dispute that someone in general headline numbers have been solid. does the fed have cover to be able to wait this out a little bit more, or are we keying more on things like the private payroll support this morning and the problems that we're seeing

at new york community bank? >> the fed does have cover to wait a little bit longer, and to be a little more patient. that's been their game plan the last several months. we think they're continue that. look, if the economy is going to grow strongly, earnings will be better than expected, with you inflation will take longer to get to 2%. if the economy will fall off a cliff, maybe we have banks leading the way, then you don't have a real good earnings picture, but you might get the fed to cut rates. we don't really see how you get this goldilocks scenario of the economy is still strong, but the fed cuts rates and inflation falls. >> that's a good point. joe, with that in mind, what would then be the strategy, and what are you seeing through your models? is the u.s. economy in as good a shape as the headline hard figures would dictate? >> i don't believe so, dom, because the income side of the economy shows a much weaker profile on growth than gdp does.

we don't have the fourth quarter numbers yet, but we have seen last year for example, employment being revised down in 10 of the last 11 months. so the income side of the economy shows a much different profile than the gdp data. when we get the fourth quarter income numbers in march, it will continue to show weaker growth. what matters in the short run is the fact that inflation is at the fed's target. it's a shade below. if you look at the six-month rate and the core pc inflater, we're under 2% in the last two months. the reason why i believe the fed should cut and cut as soon as march is because they have to anticipate where the economy is likely to go, and with where real rates are, with just the inflation numbers continue to trend down ward, the fed will want to lower those real rates and begin the process sooner rather than later. >> so joe brings up an dpe lent point.

in every part of a business with the exception of central bank and planning, you want to escape to where the puck is going to be. you want to anticipate what will happen and get ahead of these things and not be behind the curve. does that mean, then, we emphasize the soft, forward looking check data, which may be showing signs of stress, versus the data dependant hard data, which is still showing us maybe backward looking type views, but is still supportive of this idea that the economy is relatively strong? >> yeah. that's a very good question. i would say that to joe's point, there's another consideration that we should be looking at, which is that it's an election year and the potential that maybe the fed doesn't want to start cutting rates very closely. >> because they don't want to seem like they're being political tilting one side or the other? >> yes. but with the dramatic repricing of rate cuts, we have 150 basis

points already priced into the market. and we see a meaningful easing of financial conditions. ek w equities are at an all-time high. so this points to the fact -- going back to the november meeting, chair powell wanted to see a persistence of tighter financial conditions, and we haven't really seen that. so in some respects, it feels like they probably want to see inflation durably approaching the 2% target opposed to just looking at the inflationary prints for them to start cutting rates. so i think that they have the luxury to wait and they probably will. >> when do you think -- you mentioned may/june. is that your target? and if so, how many rate cuts do you think happened if they do start in that kind of may through july time frame? >> so our expectation coming into this year, it was probably cut rates by 150 basis points. but given how strong the economy is, i feel like the markets are

sufficiently priced and perhaps overpricing the risk of cuts this year. so we think a may start makes sense, but perhaps the market is pricing in too much for this year. so maybe three or four cuts for this year makes sense. >> three or four quarter point cuts. so paul, i'm going to ask you a similar question here. i would like to know your baseline expectations. you mentioned the cover that the fed has right now, they don't have to rush things in your mind. what do you think it should be in the fed's mind? they start and how many do we get throughout the course of this year? >> yeah, the liquidity point you just made is a very good one. we think three to four rate cuts this year, probably beginning mid year, maybe as soon as may. >> okay. so that's the condition there. joe, what is your outlook here? you think as soon as march? >> yeah, i think march. look, you have to go back to 1984, the last time -- the fed has started rates in a

presidential election year. so the longer you wait, the harder it will be for them to move. they think they're going to move, they have to have some confidence in the forecast and move sooner. on financial conditions, it is true for investors, but there's still high mortgage rates, credit card rates, personal loan rates because the yield curve is so inverted. banks have been tightening standards. the fed needs to cut 150 this year on rates and another 150 next year to normalize that yield kufcurve and prevent a ha landing. >> paul, last word here. one of the things we noticed a lot about, to joe's point, many of america's banks, whether they're small, medium or large, have increased their loan loss reserves over the course of the last few quarters. they are anticipating what could be a weaker economic outlook for the u.s. consumer is. do you feel as though that is a sign that we are not emphasizing

enough, or are the banks simply just trying to be ultraconservative with regard to how they approach the coming year? >> we would agree that the economy definitely is weakening. it's one of the clearest trends that we can see coming into 2024. but that liquidity, the ai theme, the idea of a soft landing, that everything is going to fall into place perfectly, seems to be what's driving this market right now. the fed cannot contribute at the moment to those kinds of conditions, the point about the fed looking forward is a very good one. but they really do have some patience that they can take here. we think they will. >> all right. paul christopher, joe, subadra, thank you all for being here and thank you for making the trip to the studio. coming up, we are tackling a ton of names in earnings exchange. two big movers from last night. two big names on deck, and what the results say about the overall health of the market. plus, mortgage rates,

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xfinity 10g network is made for streaming live sports. because it's only live once. join xfinity rewards on the xfinity app or go to xfinity1stand10gs.com for your chance to win. welcome back to "the exchange." we're more than a third of the way through earnings season, and so far profits have been far

better than wall street was expecting. but despite all the earnings beats, there are some worrying trends under the surface. that's where we start today's earnings exchange with bob to take us through what the big picture is telling us so far into the earnings season. bob? >> good to see you, dom. turning to a number of things here, we have a couple of companies right now, profits have been far better than wall street expected here. i think the most important thing, the s&p fourth quarter earnings are expected to rise 6% from a year ago, with 80% of the reports topping earnings expectations. they're beating by a very wide margin. thanks to drastically slashed estimates coming into earnings season. despite the earnings beats, many companies remain cautious, giving a weak course of guidance. techerred sales, more than a third of the reports have missed revenue estimates. some like ups cited weaker

demand. 3m and proctor and gamble have blamed china weakness. and then the red sea attacks have delayed tensions. gaza tensions have spurred anti-american sentiment. the middle east and southeast asia sales have been impacted. starbucks said even u.s. sales have been hurt due to misperceptions about our position. so dom, it's a complicated picture. here is the most important thing that's going on. the reason the s&p 500 is at a new high is because of technology. it's far and away the most important sector in the s&p. it's 25% of the earnings weight, and the estimates are expected to be up almost 20% this quarter. as long as the estimates and the numbers for technology continue to come in reasonably strong, that's going to help cower the s&p 500 forward, even when you get pockets of weakness, and we have seen pockets of weakness, particularly in the consumer staples and a few pieces of the

industrial space. >> it remains the most important sector out there. bob, thank you very much for the look there. turning now to that technology trade and amd, the company reported last night with results in line with expectations, but the stock has fallen 4% today on weaker first quarter guidance. let's bring in christina now for more of that amd story. >> the amd story revolves around ai. although amd did increase its ai chip revenue to $3.5 billion, that was expected. some of the buy side thought it would be up as high as $4 billion. so we're seeing the run-up in the stock, more than 25% year-to-date. most investors were expecting this, and the stock doubling since october. some were hoping for a bigger ai revenue for 2024, so that's strike one. why did stocks sell off earlier this morning? it's come back a little bit. amd's march guide came in a

little light, with outsized weakness in gaming, which is supposed to fall 30% quarter over quarter in q1, and a major drop in embedded chips. the size of those two drops was a little unexpected, so that was strike two on the stock. despite the weaker guide, wall street still loves amd. so many analysts, i went through so many reports this morning, and you saw massive price increases, price targets, some call thing a buying opportunity for amd, given the selloff today, which really has come back, right? it was down 5% this morning, and now down about 2%, as this is seen as a chip that can provide an alternative to nvidia's pricier chips throughout the rest of the year. >> a lot of investors looking as a possible catchup trade. this brings us to qualcomm. the company is set to report after the bell today. that stock is up 30% just the last three months. and you're in a pretty good location to see why.

>> yes, trying to keep the back ground a little generic, but yes i'm at qualcomm's headquarters. qualcomm has more exposure to smartphones, and with almost 75% of their total revenue coming from that segment, after two years of declines, we're expecting unit growth in 2024. that bodes well for qualcomm given their exposure with demands to improve. we saw that with sky works just yesterday, and this should help offset any weakness we might see from the auto sector. long-term, there are a few risks that still remain with qualcomm. you've got a growing chip competition within the mobile sector from apple, sam supg, huawei in china, and the lack of momentum of ai on the edge. so anything on your pc, your smartphone, bringing that ai technology to the edge. so the revenue montization for

that is yet to be seen and why investors may stay on the sidelines a little longer with qualcomm. but these issues i plan to bring up with qualcomm's ceo at 7:00 p.m. eastern time. that is on cnbc. >> i'm sure there will be a lot of interest in that snap dragon line they have over there. kristina, thank you very much. we'll look forward to your report this afternoon for qualcomm. let's stick with the tech trade. microsoft posting a beat thanks to strong azure cloud computing growth, but that stock is down slightly today. maybe 1 1/3% isn't so slight, but for more, let's bring in steve kovak with this. qualcomm focus is going to be on snap dragon. we can see microsoft being a little more on azure and openai and chatgbt, as well. >> yeah, that's right, dom.

azure was the big number that stuck out yesterday. beating for the second quarter in a row expectations. the street was expecting 27.5% growth, they got 30% growth, and six points oh of that growth, this is super important, six points of that growth, microsoft says came from ai services activity on the azure cloud. so while the other part of azure cloud may not be growing as fast as investors would have hoped, that could be why we're seeing some pressure on the stock in addition to the commentary on the call about all the capital expenditures going into this ai moment for microsoft, kind of dragging things down. look, it is a very positive ai story for microsoft to tell that, not only direct sales from co-pil co-pilot, and also that ai activity on azure, dom. >> let's go to the other of the two most valuable companies out there. we got apple after the closing bell tomorrow. shares are under pressure this year after a handful of

downgrades. steve, what are the three things that we want to watch for with regard to apple after the bell tomorrow? >> yeah, dom. the big one is revenue growth. can apple return to that topline revenue growth after a full fiscal year, four quarters in a row of declining sales for apple. expectations, you know, the street expecting about $118 billion in revenue. that sounds like a lot, but if that does happen, it would only be not even 1% topline revenue growth and still not exactly a record quarter for apple as far as top line sales growth. and there's just a lot of questions going on because of that. the second thing i would point to is china. a huge question about the consumer over in china, the reopening of china has not gone to plan, not just for apple but so many other consumer electronics companies. part of that on the apple side is, the return of huawei. that company, the homegrown company has been out of the smartphone game for a couple

years. smarted making phones last year, and we're getting real evidence that they're taking some share away from apple in china, and that's expected to continue throughout this year. a top apple analyst, dom, put out a report yesterday saying, iphone shipments could fall 15% this year, and weighing heavily on that is china, specifically huawei, and specifically this chinese consumer band for those phones that apple doesn't have. and then the third thing i point to, as i say every quarter, wait for the earnings call, because that is when we'll hear from the cfo. he'll give some guidance for the march quarter. there's a lot of doom and gloom in the analyst community around that march quarter. so any hints that we get, they don't do formal guidance, they haven't since the covid pandemic hit, but any hints of renewed growth in the march quarter and any other color of what they

expect to see for the rest of the year, that will be super important. so listen to the call, not just the earnings report. >> that's the state of play for apple and microsoft. thank you very much for the earnings exchange today. still ahead, we mentioned regional banks having their worst day since october on disappointing resulting from the financials, and one in particular. coming up, we'll speak to the ceo of frost bank and the lending environment and the path forward for the fed, as well. we got just over 30 minutes cionornde big interest rate desi, iecision. back after this. like your workplace benefits and retirement savings. presentation looks great. thanks. voya provides tools that help you make the right investment and benefit choices. so you can reach today's financial goals. that one. and look forward to a more confident future. that is one dynamic duo. voya, well planned, well invested, well protected.

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money that you get, go to live it up, you bet. call 877-sell-easy. 877-sell-easy. 877-sell-easy, and sell your policy. welcome back to "the exchange." i'm bertha coombs with your cnbc news update. joe biden's brother, james bidesen, is scheduled to face the house oversight committee in february, part of the committee's impeachment inquiry into the president. the closed door interview will see whether the president had any involvement or influence in his brother's business activities. the committee has not provided

any evidence yet that supports any such claim. james biden's interview is a week before hunter biden is set to appear in a similar interview. georgia legislators are weighing whether to add a water mark to the state's ballots. the decision comes as some supporters of donald trump continue to pursue claims of ballot forgery in the 2020 election. the measure still needs the state senate's vote before it gets to the governor's desk. organizers of the paris olympic games say 300,000 people will be able to attend the opening ceremony. that's only half of what organizers had originally planned. no reason was given for the revision. the ceremony will be held along the river, marking the first time it will not be in a stadium. >> you don't need one when you're in the city of lights, bertha. thank you very much for the news update there.

let's turn now to the housing market where ahead of today's fed, we haven't really seen mortgage rates move, at least in the last few weeks. diana olig joins us now. diana, why is this bad, and why could it be about to change? >> reporter: well, i don't think it's bad in any sense. they haven't moved because there hasn't been any unexpected economic data this the last couple of weeks. that said, rates fell a little bit today to 6.75% on the 30-year fixed, and that was because of some brighter than expected economic data, and some banking drama that might insinuate the fed could be a little softer going forward. again, all bets are off today in the afternoon. it's not a question of whether people think the fed is going to cut today, they don't. it's what they say. what is in the commentary? what comes out today about the future that could affect rates going forward? and you know it's friday jobs report. that's always a big game changer when it comes to mortgage rates, which loosely follow the

ten-year treasury. >> diana, mortgage demand for home buyers, it seemed to be bouncing back, but it dropped last week. what exactly happened? >> reporter: yeah, so we thought there was this great big surge, and there was at the beginning of the year. people came out of the holidays, they saw lower rates, more inventory and they came out ready to buy. realtors were saying they had lots of demands in open houses. but the big issue now is affordability. prices are very high. and rates, they're lower than they were. we had 8% in october, now 6.75%. it's not really enough to counter some of these really high prices, and then, while some inventory did come on the market, there's not a lot out there. and definitely not a lot in the affordable category. while you see more higher end homes coming on the market, most people can't afford those. so the buyers that want to get in, the first-time buyers, realtors told us last week they're just not. there we did see pending home

sales in december take a nice jump, but that was december when there was less competition. january now, we're just seeing a lot of competition, high prices, and that may be why the demand is coming down on the mortgage am applications. >> we saw yesterday that many home prices may be cooling. is that good news for buyers now, and in that all-important spring market that is yet to come? >> reporter: yeah, dom, i'm going to call that a little bit of a head fake. the report was for november. it's based on a tree-month running average, so at the end of november they saw this slight dip in prices. why? because rates in october hit 8%, and steayed high throughout november. so 8% mortgage rate effect on home prices, which was cooling the market and bringing prices down. now you've got the 6% range going forward, and i think

you'll see prices heat up again, because buyers have more purchasing power, and there's more competition. >> it's the eternal real estate paradox. diana, thank you very much. our next guest says perspective home buyers will get the most relief from interest rate cuts, while those with car loans and credit card debt might be in a tougher spot. but he says cracks in the consumer are growing, as we mentioned earlier in the show in the meantime. joining me now is ted rossman. ted, you just heard the report. diana lays out very eloquently the things that all home buyers are dealing with right now. you want lower rates, but if lower rates happen, people can use that buying power to bid up home prices. how do we break the cycle? >> that's what is especially difficult for first-time buyers, too. because they don't have any equity to trade in. existing buyers, they have their own challenges. you're going to trade a 3%, 4%

mortgage rate for a 6% or 7%? that's not a great trade, so that's keeping inventory low. >> what does the spring market look like to you? i understand that you're not a housing specific analyst, but there are signs out there that the spring season may not be just that robust because the inventory issues still remain. what does it mean for buying power and prices? >> inventory is an issue, but we are seeing glimmers of hope. rates briefly crossed 8% back in october. now the national average is 6.93%. still high, relative to the past ten years or so. but that's going to save you $222 a month on your $300,000 loan. that's starting to make a difference. the strong job market is helpful, too. some people are saying we're just going to buy because we're secure in our jobs, sick of paying higher rent prices. there are people coming in off the sidelines i would say.

>> let's key in on that positivity. we mentioned before this idea that the consumer may be showing signs of stress. there are anecdotal pieces of evidence, and maybe some harder pieces out there, but generally speaking, it's good. what exactly is good for the consumer right now? confidence is on the rise, right? and we do see people have at least keeping their buying power in some ways. is that all there is, or is there more to that picture? >> wage growth starting to outpace inflation. that's a big deal. >> real wage growth? >> yes. the strong job market is a big underpinning here. we do have this element of the rich get richer, the poor get poorer. we see that with something like credit cards, where have of credit card holders pay in full and they get cash back. the other half, they're paying higher rates and accumulating higher balances. we see that in credit cards more than anything. car loans, too. it's prices that have been a

bigger obstacle than rates. yes, rates have gone up, but the bigger hit is that a new car costs you $50,000. we're starting to see delinquencies at somewhat worrisome levels for credit cards and car loans, highest in about a decade. but even there, though, people are hanging in there. >> ted, a lot of expert economists and market watchers have been talking for moments if not over a year at this point about the tailwinds from covid subsiding, the stimulus checks starting to wear off, people drawing on savings, using credit cards most. is that an accurate way to describe the health of the u.s. consumer right now? and it is or isn't, what is the main thing you would key on? >> i think it's accurate. remember last year there was all this talk about we shifted our spending. so it was less goods and more services. we were traveling, going to concerts, going out to eat. i feel like we have started to see a pullback there. some of the airlines, most

notably delta, was down beat about future bookings in their recent earnings. maybe this two years of pent up demand is starting to wane. but then again, goods had a comeback during the holiday season. so that's where i say consumers aren't feeling great about things, but the actual data i think is more positive than sentiment. so i do think people are hanging in there because the job market is strong. >> all right, ted rossman, thank you very much. >> thank you. >> see you soon. coming up, social media ceos are testifying on capitol hill today. lawmakers looking for assurances that america's children will be safe on their platforms. we'll have the fiery dai of etls that testimony in that hearing coming up after this commercial break.

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welcome back to "the exchange." ceos of snapchat, meta platforms and x, among the high profile social media executives testifying on capitol hill today, trying to reassure lawmakers that they're working

to ensure child safety on their respective platforms. what you're seeing right now is a live shot of that testimony that's still ongoing in washington, d.c. on capitol hill. julia boarston joins us with the story there and some of the more shocking moments we have seen so far. julia? >> reporter: yeah, dom, one moment unlike anything i've ever seen before in a hearing on capitol hill. senator john holly pressing meta ceo mark zuckerberg, asking if he has compensated any of the victims or families of the victims for the harm that meta's platform has caused? zuckerberg saying he has not. holly then calling on the families to hold up pictures of their children and prompting zuckerberg to apologize to them. here's that moment. >> would you like to apologize for what you have done to these good people? [ inaudible ]

>> reporter: this comes as a number of senators have called for reform of, or elimination of section 230, which shields the platforms from any liability for the content that is shared on their platforms. senators klobuchar and graham stressing nothing will change until these platforms can be sued. >> julia, zuckerberg -- you're seeing a live shot of him right now. he continues that testimony with the other ceos that are there. we also know that the ceo of x is there. youtube is not there. what exactly are the expectations that maybe lawmakers have out of this? and by the way, i would also point out that it seems like mark zuckerberg at this point looks like a seasoned veteran with regard to these appearances

on capitol hill, and he doesn't seem fazed like he has in the past. >> reporter: yeah, zuckerberg has done a number of these. i think that the senators are asking for commitments from the ceos to do more. they're expressing a lot of frustration that these platforms understand that there is the posting and sharing of this sexualized material of kids, and that they have to be reactive and be taking it down, and sometimes not fast enough. they're also asking for support of specific bills. they want specific support for their legislation. we're hearing that about a number of different pieces of legislation, and the conversations also going into other topics, such as the fact that these platforms have been used to sell illegal drugs and people have died as a result. so the intent of today's hearing is to focus on child sexual exploitation, but it really is touching on a number of different topics. this question of accountability is front and center, dom.

>> as you can see there, folks, the testimony is live and ongoing. and julia will be monitoring that fully, and we'll look for reporting later on. julia, thank you very much. coming up on the show, the financials etf, that sticker xlf is hitting a 52-week high, but it's a very different picture for some of the regional banks in america today. we'll tell you what's weighing on the smaller and mid-cap players and check in with the ceo of cross bank, coming up next. keep it right here. trading at schwab is now powered by ameritrade, giving traders even more ways to sharpen their skills with tailored education. get an expanding library filled with new online videos, webcasts, articles, courses, and more - all crafted just for traders. and with guided learning paths stacked with content curated to fit your unique goals, you can spend less time searching and more time learning. trade brilliantly with schwab.

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welcome back to "the exchange." the spdr regional etf ticker kre is down 3% on pace for its worst day since last may. shares of new york community bank corps plunging more than 37% on an earnings miss, thanks to massive net charge-offs being increased. nycb slashed the dividend by more than 77%. other banks are down, but my next guest says because of its location, his bank is somewhat insulated from certain stressors that nycb is feeling.

here for more on an exclusive interview is phil green, the chairman and chief executive officer of frost bank. phil, thank you very much for being here with us right now. your geography is tilted more towards the southwestern united states, texas in particular. take us through the reasons why you feel nycb is having the issues that it's having right now, and why maybe your geography isn't feeling the same kind of localized pressures. >> dom, thanks for having me on the show today. you know, the way i respond to that is it's like real estate. the most important thing is location, location, location. and while i'm not familiar with the details of the community bank situation in new york, i am familiar with texas. and texas, this part of the country, we're having 1300 per day move into this state. those people need places to live. those people have places to work. and so that is a real key

ingredient of the success that we're having in the state of texas right now. and i think it's a key ingredient of why portfolios may be different at different regional banks around the country. >> speaking of portfolios, one of the main common threads many of these smaller this notion that commercial real estate, office space, multifamily housing, some of those bigger construction projects are ones that could be vulnerable. is that the case where you are in texas? is it a concern for you guys as well? >> it's a risk business. it's commercial banking. if it was easy, they would be having teenage boys do it, but the truth is, i think the important thing in real estate is what your structure is, what your sponsorship is, what your project is, and it's really not the most important thing, what

you are doing today. it is what you have done over the last three years. hold on, one second really -- we have some breaking news. we're watching the ceos that were testifying on capitol hill. they are currently leaving right now. hold on. we just saw mark zuckerberg leaving. we are watching the parade continue right now. what we are seeing right now, viewers can see it right now, we are trying to get a microphone in front of him. okay, viewers, what they saw right now was mark zuckerberg saying nothing, giving no comment to reporters on his way to his suv and speeding off. we will bring you more details as we know more on any of the other departures happening right now. we will keep you abreast of what's happening right now.

listeners on sirius xm, again, mark zuckerberg not saying anything to reporters on his way out of capitol hill. let's return to phil green of frost bank. one of the things we want to talk about is the health of the consumer out there. are you seeing signs of strength, relative weakness? where do you think the consumer is in america, and specifically, in your home geography of texas? >> i think what we are seeing is some softening, but it depends on the segment. we are banking people, who have really large retail, high end areas in north texas. they say that the activity there has been tremendous. some of the freight haulers, things like that, they are seeing a slight slowdown in some of the activity they've had. it really depends on the area. overall, the consumer is strong still. that's largely because they have jobs, and in this part of

the country, texas, jobs are continuing to grow, so the consumer has been relatively strong. >> phil, just a couple seconds left, what advice would you give jerome powell? >> read the numbers. don't be afraid. >> read the numbers, don't be afraid, says phil green of frost bank. please come back and see us again soon, sir. thank you very much for that. that does it for the exchange. we are just a few minutes away from the big fed interest rate decision. nothing is expected, but we will hear fireworks, perhaps, during the press conference. i'm going to join courtney reagan on power lunch, which picks up coverage after this quick break. just a ltlovite er six minutes away from the big fed rate decision. we will see you on the other side of this. and this must be the ocean view? of aruba? huh. this listing is misleading. well, when at&t says we give businesses get our best deal,

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welcome to power lunch, alongside courtney reagan, i am dominic two, and we are a few minutes away from the feds big rate decision. courtney, 3 1/2 minutes, just about. >> very exciting. let's get a check on the market ahead of that. the dow, basically, flat, but the nasdaq is off by more than 1%. the s&p 500 off by about three quarters of a percent. let's get right to our all-star panel. joining us, david kelly of j.p. morgan, kristin bitterly, investment research.

ladies first, we will start with you. what do you think, kristin, are you expecting to hear today? word on the street is no change, but obviously, we still care a lot about the details in the statement and the press conference afterwards. >> that's exactly right. i don't think there are surprises in terms of what we expect from the policy, no change there. there is a lot of discussion about what we expect, in terms of the policy statement, and perhaps, a removal of any tightening bias. i would say the major event is really going to be the press conference, and we are looking for the three key things there. one, quantitative tightening. anything that chair powell wants to give us in terms of insight into the trajectory of quantitative tightening and tapering. two, i think it's too early for him to declare that inflation, that the battle has been won, but we saw a really compelling data, in terms of quarter pce the past two quarters, really spot on, in terms of what they

were looking for. some context there. then, i think the context around the labor market, and yes, we saw it coming higher than expected. it was really concentrated in areas where there are concentrated shortages of workers, like education, healthcare and construction. we do see some underlying cooling. the devil is in the details and we will be looking to the press conference for more. >> fair enough, david kelly, i want to get your thoughts. what details are you looking for? >> i think they need to upgrade growth, or admit that it's going faster than expected. back in december, their forecast was 2.6%. we came in at 3.1%, and we do have 9 million job openings. the upgrade assessment on growth, i hope, as kristin said, they do recognize and admit that inflation is on the downward trend they were looking for. we think that inflation will hit 2% by all measures by the end of the year on a year-over- year basis.

i think the bottom line is, growth is just too strong to allow for early evening, and i think that powell will push back on march easing in the press conference. >> jim, you have a minute, share your thoughts. >> i come from the angle that the fed has a strong desire to want to start cutting interest rates at this time. they probably want to cut by 100 basis points, in my opinion. what i will be listening for is, what is it that they will try to pick out to open the store. we think they will open the door to rate cuts starting in march. maybe it starts a little bit later. i want to know exactly what is looking for and exactly what the criteria is. i'm trying to benchmark this. this will be the key factor i will look for. >> fair enough, let's get a quick check of the markets before we get to steve, and see where we are moments ahead of the decision. the nasdaq, again, is the laggard of the session. we have seen that continue to be the case.

although, maybe the s&p 500 is clawing back a little bit. flat for the dow. >> it's just about flat. this is the holding pattern. microsoft and alphabet aside, you would be seeing much more of that holding pattern as well. keep an eye on that. again, the fed decision is imminent. let's get right to steve liesman for the big rate decision. >> the federal reserve, leaving rates unchanged at five and a quarter to 5 1/2%. the statement twice mentions the possibility of changing the funds rate, for the rate cuts that are nebulous, maybe even a bit hawkish, depending on where you come from. i want to redo the statement. "the committee does not expect it will be appropriate to reduce the target range. it has gained greater confidence that's -- that inflation is moving sustainably towards 2%." he later says that inflation has eased but remains elevated.