what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq (vo) if you've had thyroid eye disease for years and you go through artificial tears in the blink of an eye, yeah... oh. don't worry i got it! it's not too late for another treatment option. to learn more visit treatted.com. that's treatt-e-d.com. welcome to "power lunch" on a very busy friday alongside kelly everyones, i'm

tyler mathisen coming up, the big bank blowup silicon valley bank shut down after efforts to raise cash failed the pressure spreading now throughout the banking industry. we'll survey the damage being done to stocks and ask an analyst how real the contagion risk may be. and don't forget the jobs report 311,000 added in february. more than expected but the unemployment rate rose and wage growth slowed could it be signs the job market is cooling before that, a check on the markets as we head through two new session lows dow is down almost 400 points. russell 2000 with big financial exposure down 3.5%. >> to dominic chu for a little more detail on silicon valley bank its effect on the broader market today and more dom? >> tyler, kelly that word halted it hasn't traded at all in the regular session today. the embattled silicon valley bank is no more, not in the official sense the bank that serviced so much of the venture capital bank startups and tech entrepreneurs in america was officially taken over by government regulators

today. the department of financial protection and innovation in california moved to shut down svb and then asked the federal deposit insurance corporation or fdic to oversee the bank's winddown as well as oversee the return of deposits to customers. now, the fdic said that all insured deposits will be available to customers, no later than this coming monday morning, march 13th those customers with deposits in excess of the federally insured $250,000 per person, per bank, will receive an advanced dividend payment over the next week with any remaining balance paid contingent upon the selling off of svb's assets. now, shares of the company, depend, have not traded so far today. so, that number that you're seeing up there, 39.40 is not official in that sense but they have been absolutely crushed. they were as high as nearly $600 in the last 12 months and the premarket indication earlier today was $39.40

other western-based u.s. regional banks hit hard for a combo of different reasons including that fear as tyler pointed of possible hardship contagion spreading to other banks and the availability to trade shares of those stocks like pac west, first republic, western alliance among others with no trading happening in sivb shares. the big question is whether the actions to separate svb from the rest of the financial season was enough to quell depositor and investor fears as well back to you. >> stick around. we're going to bring in problem be pa bob pisani and mike santo. we just looked at the numbers for the peer banks, i guess you would call them of svb and the numbers were not in any sense reassuring what do you sense in your spidey sense and you've been watching these stocks for years and years

now, what do you sense the conc contagion risk really is >> there is two separate stories here one is the rising costs of deposits, and the hit that banks are going to have from that and the hit to net interest income that's a legitimate story and that's going to happen i've been joking about my mother taking money out of her bank account and buying short-term treasuries when my mother is doing it, that's a big story there is a separate story, a contagion story with silicon valley that is unique to them. they're part of the innovation economy, part of the funding ecosystem for biotechnology and technology you can look at sectors this week like the s&p biotech index, equal weight index, it is down 10%. there is no other news out there other than this that is really pressuring this. so the question is it really too big to fail for the innovation economy? are they going to have to step in, the government, and try to make them hole above and beyond the deposit insurance.

if they don't what is the impact on the innovation economy? what happens when tech entrepreneurs don't have any cash or don't have any money or don't have any interest? what does it mean for the innovation in the u.s. economy you can say, well, that's just too bad, but, remember, these tech startups use huge amounts of services from the much larger s&p 500 companies. you can see little pieces of contagion going on in companies that don't appear to have anything to do with this, simply because it is part of the whole food chain issue out there so two very interesting questions here >> mike santoli, who might take svb's place? >> i don't know if there will be a single institution that would do it. this is about a 40-year franchise that kind of grew up alongside the venture economy and the tech industry out there. there is going to be plenty of other institutions that are going to be happy. if not certainly to swallow up svb and all of its liabilities, to hire some of its people and

try to kind of pick up some of the relationships. i think that the stock declines in some of those adjacent banks are largely because of perceived overlap in borrowers and depositors, if you can't get all your money out of svb, you can maybe you'll be pulling it out of the other banks it is not great for the local kind of real estate and just in general the liquidity of the area i don't know if anyone knows anything one thing we have to keep in mind in terms of market reactions is we have a case of the fridays here in '08 and '09, friday was what is going to happen over the weekend, what is going to surface in terms of things that we haven't known about it means we have to ask what if it is there. >> on that note, dom, the thing that makes this a little bit different from -- we remember big failure fridays and that sort of thing, when that was going on for some time, but we didn't wait for the market close here and there wasn't a buyer. and the really important thing,

if i'm the fed, if i'm regulators, i want to make sure this stays a unique situation is not to scare people in other banks who look at this and go, i guess the people who got out were right to have gotten out here. >> so, you bring up an excellent point about the lessons learned during the great financial crisis, right? if you look at the way things shaped up, when mike santoli brings up this idea of maybe what other banks are out there, who else could take them over, you remember that when there were these kind of takeovers, bear stearns by jpmorgan, wells fargo with wachovia/first union back in the day, there were oftentimes certain problems that arose once those bank operations were taken over, you didn't kind of know what was really wrong with the bank until after you had to deal with them post your takeover the lessons learned there, right now, are that you wait for the assets sale and try to pick up those pieces, without having to assume the liabilities associated with some of those banks. that might be one of the reasons why you're waiting or at least

some of these possible other lenders who could be looking at assets for silicon valley bank to wait to see how the auction process plays out and see how the liquidation goes before they take these positions on. >> apart from all of the circumstantial differences, i'll ask you, dom, since you're right across from me here, was the fact that this bank was so exposed to one sector of the economy. was that the fundamental risk here >> it was one of them. >> i'm thinking back to 1989, 1990, when s&ls and texas banks and arizona banks went blewy because they were so singularly exposed to real estate risk in texas. >> it gave rise to girouard cassie and rbc's texas ratio he was looking at the financial solvency and the credit risk associated with some of the texas lenders. that texas ratio aside, yes, there was a concentration risk in some ways

but it was also the business model geared towards this kind of higher risk funding for some of these types of companies. it is not that they weren't compensated for it, but as soon as the fed started to raise interest rates in a dramatic fashion, that does a lot of things to change the capital structure of that particular bank, the value of the assets -- >> a ton of long dated treasuries >> yes and those values come down so what do you do? now you don't have enough to kind of make good on the deposits that you have, so it is not that they don't have enough deposits to cover what they have, it is the fact that they are now in a situation where they may not be as well capitalized because of the -- >> they have taken a lot of their deposits as banks do and put them into investments. >> right and -- >> investments lost value. >> that's why we have reserve ratios, mandated amount of banks have to hold to do their lending activities >> all i know, i think it is going to look worse over the weekend and weeks to come than it does right now unless there is a way to make sure all these

businesses are able to keep their operations going, retain the funds they had over that fdic cap, make payroll why would regulators let this happen if -- not because we aren't saying this is a failure of management, it is, that's fine you want to make sure this doesn't spread to other institutions where depositors perceive there could be a problem and the precedent they have set today is not a good one. >> the precedence, also, we don't know how things will go. this is not being perceived as a fire sale of svb assets. the fdic made allusion to the fact in their statement about this, there are over $200 billion worth after sets at svb. if there is an orderly disposition of those assets, everybody might be made whole and there would be no issue whatsoever the concern was during the great financial crisis, there was stress everywhere. you couldn't find a bid. when you did, it was 10, 20, 50% below where the other asset sale

was. that's a fire sale that means people don't get made whole f whole. if you can get a decent amount, there is a good chance everybody gets made whole. >> we hope so. we absolutely hope so in this regard dom chu, mike santoli, bob t pisani. let's stay with this topic and get to today's tech check and to deirdre bosa. take it away >> tyler, great conversation there. let's continue it with up-front ventures mark stusser who joins us thank you for taking the time to be with us today yesterday, you were one of the first and one of the most prominent to tell the vc community to not panic what were you telling your portfolio companies? did you advise them to stay calm and keep their money in svb? >> well, let me start with the fact that i don't believe anything was fundamentally wrong with svb what happened during the global financial crisis is banks were lending money to people who shouldn't have had money but that isn't what was happening here i believe svb was largely

solvent, hasn't violated the banking ratios that were talked about. what happened was a classic panic. everybody said race for the door and then all of a sudden you're in a movie theater, people stampeding for the door, everyone trying to get out first. what i think the fed did today was an important move. by the regulators stepping in, they stem the outflow of cash and i believe, i don't have any inside knowledge, i believe you'll see this bank purchased by the end of sunday night or soon after >> as you said, everyone panicked, but when everyone was panicking, you were saying don't, stay calm what did you tell your portfolio companies to do? >> we believe that portfolio companies should have been diversifying where they hold their money in the first place it is a message we have always given people you should have your money in multiple financial institutions and that diversifies your risk i don't believe, we do not know, but i don't believe depositors will lose money. >> they may not lose money in

the long run, but for cash burning startups, some of those in your own portfolio, timing is of the essence they have to make payroll. what do you tell them, especially the ones that didn't take their money out there was a big scramble yesterday, and you were voicing to hold steady in retrospect, do you take any responsibility for not telling your startups to get their money out? >> deirdre, if you're in a movie theater and it is not on fire, and you yell fire and everyone races out, are you the person congratulating yourself that you got out first while other people are laying on the floor? i think right now that what is going to happen is depositors are going to be made whole, we are in a problem over the next week which is there is a period of time where people have payroll to meet and may struggle to make payroll. we're all going to try to help portfolio companies get through this most sound vcs were giving the same advice that i was and i know that because i was on industry calls where they were saying that. so, listen, end of day, we all in our country have a vested

interest and this thing quieting and the contagion not spreading. >> okay, you talked about the quality of assets at svb bank. it, of course, a storied name, been around for decades, hugely respected here in the valley, but i wonder, did it deserve that much respect, did they get complacent in an era of easy money and the tech boom we have seen they have loans to wineries, to innovation economy influencers, 9% of their loans, the repayment was dependent on borrowers' ability to fund-raise or exit. this is a problem that we have been seeing going on in the market for a year now. why did they wait so long? can you really still say at this point they were doing everything right risk-wise? >> i didn't say they did everything right risk-wise to be clear, but let's put things into perspective. there are loans to wineries are sub 2%, they are based in silicon valley, they have been doing that for 30, 40 years. that's not what happened here, deirdre. what happened was they bought

long-term bonds and long-term treasuries that were yielding 1.25%, and the fed raised money. they raised the interest rates and the interest rates now will yield you north of 5 %, let's call it 5.15%. what they tried to do was sell long-term positions, take a $1.8 billion loss and then buy short-term positions if people hadn't yelled run for the door, it would have been fine they were going to shore up their balance sheet, 500 million committed from general atlantic, and they were in a quiet period because they were trying to raise $2.25 billion. >> startups are not long-term depositors why were they buying long-term treasuries and not shorter term ones >> svb understands the normal orderly outflow of cash from their business, they have been doing this for 40 years, they did not have a risk unless everyone ran for the door. what any sensible bank does, every bank, they take deposits, and they make money on those deposits by lending them out at higher rates what svb did was they put them

into secure things, treasury bills, it just happens the interest rates went up that would have cost them money. they would have lost money on that but their business was sound it is only running for the door that started to hurt the svb and regulators stepped in today to stem the outflow so that a purchase and -- an orderly purchase can be made this weekend. i'm pretty sure that's what's happening. >> the lessons are always learned in retrospect. one thing i would say, though, they were not in treasury bills. they were in long dated treasury securities, as i understand it it wasn't like they were in six might have month, 12-month bills, that's number one you said the real exposure here was when everyone ran for the exits at essentially the same time, the depositors did run me through one more time what was it -- what was it that caused those depositors to hit the eject button in such a flurry all at once what was the proximate cause

here was it concern about the other -- the crypto lender that was going to liquidate what was it that triggered it? >> you are correct, they had u.s. treasuries, but not t bills because those are shorter terms. but let me say this, i think what happened, and we'll only know through history, is some prominent vcs started telling their portfolio companies to pull their money out the reason that they were saying that is first of all, it may have been the crypto bank that went under, but i think more likely the fact that svb said they were out raising capital and people were worried they weren't going to have access to cash so vcs rushed to tell their portfolio companies to head for the door most did not do that, i want to be clear but enough of them did it and svb, because they were in a quiet period, couldn't speak up. and as a result of not speaking up, panic ensued and ensued in less than a day. >> very interesting. fascinating story, a screenplay, whatever it is going to be

deirdre bosa, thank you very much mark, thank you as well. >> thank you what a day what a weekend coming up, fallout from silicon valley bank being felt in the bond market. the ten-year is down 20 basis points, down like 30 this week a big jobs report out today, should have had them going the other way maybe. we'll dig into it and talk about how it is affecting the financial markets coming up as we head to break let's look at shares of apple. tim cook saying at the annual meeting they continue to plan for dividend increases ghnow yielding less than 1% rit and the share is down 1.5% for businesses of all sizes, there are a lot of choices when it comes to your internet and technology needs. when you choose comcast business internet, you choose the largest, fastest reliable network you choose advanced security for total peace of mind. and you choose a next generation 10g network that's always improving, getting faster; more reliable;

and more intelligent to keep you ready for today and tomorrow. the choice is clear: make your business future ready with the network from the most innovative company. comcast business. powering possibilities™. lomita feed is 101 years old this year and counting. i'm bill lockwood, current caretaker and owner. when covid hit, we had some challenges like a lot of businesses did. i heard about the payroll tax refund, it allowed us to keep the amount of people that we needed and the people that have been here taking care of us. see if your business may qualify. go to getrefunds.com.

nervous investors buying bonds today sent yields down rick santelli in chicago for us. rick, explain it >> yes, maybe let's start with the most aggressive maturity, two-year note. if you recall, two weeks ago today, it closed above its fall high yield at 4.725%, which really kicked off a lot of aggressive selling, pushing yields higher, and it even dragged the three-year note this week above its fall high yield close. not anymore. if you open the chart up, you can see that early november high yield at 4.725, we're now well below it and many are saying, well, it

doesn't really matter because this is a flight to safety, it is different yes, it is different but it does matter if we close below a key level, technicals kick in now, at 4.60, current yield, we're down 27 on the day, 26 basis points on the week high yield etf, over the last three days, see the differentiation there? that's important to pay attention to if you look at the dollar yen, usually the yen is a safety trade and definitely that way at this point look at the dollar dropping, granted it is coming off a three-month high and finally the dollar index as you can see there, the dollar isn't where everybody is going, even though they are going into treasuries and one thing i will say, being an alma mater of drexel, it is not about how many assets you have or how big your balance sheet is, it is about how high quality liquid assets you have because when things get ugly, it is liquidity, liquidity,

liquidity. kelly, tyler, back to you. >> rick, thank you. for more in the bond market and what it all means for the economy and the fed, we're joined by gilbert garcia, garcia, hamilton and associates owner and cnbc contributor and lindsey pieksa, chief economist. welcome to both of you give us some real world wisdom here there is some people talking about 50 basis points for the fed on a table as a cut in the wake of this you got any sense of what is going down here? >> sure. first and foremost, thank you for having me. i think the fed will be making a big mistake to be raising rates at all anymore you got to go back in time, when we were back at this point in inflation, back be in the fourth quarter of '21, we were still doing quantitative easing, all those things with inflation just where it is now. and here it is, it is back, and here we are tightening money, we got quantitative tightening, money supply growing, and negative growth. i think they should stop raising rates now, and let the economy

settle it was inevitable they were going to break something and i think this could be just the tip of the iceberg. >> lindsey, react to what gilbert said provocatively there? >> i think i'm going to take the other side of the coin i don't think today's events are going to impact the fed's policy decision and just about two weeks' time now as long as the fed used this as an isolated event and not an indication of a broader trend of contagion or crisis in the financial market and assuming the former, i do think coupled with this morning's employment reports, the still hot level of inflation, the fed is going to continue to raise rates and, in fact, looking out to next week's cpi and ppi report, if we see a hotter than expected number, the fed is likely to keep the door open for an even larger 50 basis point increase. >> let me press a little bit because gilbert's point is an important one. and that is that there are often unintended consequences of

policies whether they're monetary policy or fiscal policy or whatever. and here may be one of those intended consequences, ie, banks or other investors who bought treasury securities or other securities at low interest rates are now finding that those -- the value of those assets on their balance sheets have been cut very, very dramatically. and that puts them in some cases, in this case, in a truly precarious position. speak to me about that, and how sensitive the fed may be to the idea that, oops, here is an unintended consequence that could be rather more, i don't mean to say systemic, that may overstate it, but more widespread than just one isolated incident. >> well, i think maybe i would push back on the notion of unintended consequence the fed is well aware of what they're doing and the consequences that are likely for not just financial markets, but

businesses and consumers alike and so the fed has been very clear that as they continue to raise rates, again, they have been communicating this to banks, to financial institutions, to the markets, and so they're trying to get us well positioned to anticipate this further backup in rates they have been very clear that not only is it a period of pain likely, but it is necessary to get the -- >> you don't seriously think they wanted a bank as big as silicon valley with as many business customers as it has, you don't seriously think they wanted it to fail? >> no, certainly not that's not their intention to cause further bank failures at this point either. but we do have to be cognizant of the limitations of fed policy the fed, again, has been communicating to these institutions that rates are going higher so it is not on the fed to hand hold risk management of individual financial institutions >> let me close that, button

that point off and go back to gilbert. lindsey makes a good point there, does she not, that it is not on the fed to guide the risk management policies of individual banking or other kinds of institutions. and they have been really clear as lindsey points out, we're raising rates, man, we're taking them up to 5% and if that cuts the value of your bonds by x percent, that's on you, you got to be nimble enough to move and redeploy >> i think if you look, remember the old -- we're not even thinking about thinking about raising rates. and here we already had inflation at 5%, 6% in the fourth quarter of '21 and there was still quantitative easing. i think they recognize they made a mistake. >> i agree with that, but really over the past year you got to say they've been bloody clear. >> well, hold that thought because at the end of the day, i

think what is important about this failure, number one, its size and magnitude this is not an everyday failure. this is not like a small business closing this is significant in the financial system and what makes it more significant is the mere fact that about 60% of their assets were private assets. and for some reason, that will trigger a larger market of private assets throughout the system, that could be devastating because of the amount that private assets that we have in the marketplace today, that are not worth the market i think the real key here, it all goes back to money supply. they flooded the system with money, year over year, grew it at 30% and now it is growing negative and nothing good happens when you have negative money supply growth it is inevitable that a recession will come and you see it with all the forward indicators why they're fixated on employment, which is a lagging

indi indicator in my view is a mistake. they should be looking at money supply growth, other leading indicators, they're all staying red hot to stop raising rates, just look at the inverted yield curve which is almost 100 between bonds. anytime we had that type of inversion, of course it is going to put extraordinary stress on the bafrpi banking system in my view, they should slow down, they should stop raising rates and inflation is already moderating, and i think they should get out of their mind this concept of we got to get to two, we got to get to two and my view is they're going to wreck the economy to get there. >> clearly put, really a good conversation, lindsey and gilbert. thank you, we'll have you back soon that was good. that was fun enjoyed it enjoyed it still to come, an engaging day. >> it is >> more on the markets and the economy. the jobs report showing the labor market is still strong clean energy, one industry seeing a big boom.

but are there enough workers but are there enough workers that story is next what if you were a trendy apparel company facing an avalanche of demand? to ensure more customers can buy more sherpa-lined jackets, you call ibm to automate your it infrastructure with ai . now your systems monitor themselves. what used to take hours takes minutes. and you have an ecommerce platform designed to handle sudden spikes in overall demand... as in actual overalls. ♪♪ inner voice: (kombucha brewer): when i started my new kombucha business... ... i thought there would be a lot more kombucha... ...and a lot less business. inner voice (graphic designer): as a new small business owner... ...i've learned that trying to be the “cool” boss... ...is a lot harder when you're actually the “stressed” boss. inner voice (furniture maker): i know everything about my new furniture business. well, everything except... ...the whole “business” part. not anymore. with quickbooks, you can confidently manage your business.

new business? no problem. yeah. success starts with intuit quickbooks. i'm so glad we did this. i'm so glad we did this. i'm so glad we did this. i'm so glad we did this. i'm so... ...glad we did this. [kid plays drums] life is for living.

let's partner for all of it. i'm so glad we did this. edward jones

welcome back to "power lunch" on this jobs friday we look at where the jobs are, and there are a lot of them in clean energy but not enough workers to fill them pippa stevens joins with us those details. hi, pippa. >> jobs in the clean energy space are booming on the heels of the inflation reduction act in the six months since the bill passed, more than 100,000 jobs have been created, according to data from climate power. that's because we have seen a wave of factory announcements including for solar panels and electric vehicle batteries and these new projects come with new job bes. in terms of where the jobs are, we have seen additions across more than 30 states with arizona, georgia, kansas and tennessee seeing the most. types of jobs include specialized sciences to mechanics, construction workers and electricians moving to a greener grid means an overhaul of current systems and some are warning that electricians specifically are in short supply here's michelle hicks from schneider electric >> no matter where you go, you

see that electrification is everywhere look at the need for ev vehicles, right? we're estimating 48 million homes are going to need upgraded energy panels over the next few years. so really where are the electricians and where are the installers to do that? we have to do a lot of outreach to get people into this industry >> she said it is both about retraining existing workers as well as educating young people around new opportunities she added there is interest from workers in other industries including the oil and gas sector guys >> that may help explain why construction employment, for instance, holding up relatively well, even with the housing market fed tightens, fiscal -- pippa stevens. thank you very much. now to seema mody. >> large areas of northern and central california are covered by excessive rainfall alerts and flood watches as another pacific storm comes ashore with heavy rains that is being fueled by

what meteorologists are calling an atmospheric river, a stream of dense subtropical moisture coming from the warm pacific waters around hawaii florida governor ron desantis is not a presidential candidate yet, but he's increasingly looking like one. he's in iowa signing copies of his new book and promoting his freedom blueprint before voters in the state decide who they want to be party's nominee. tomorrow, american skier mikaela shiffrin will try to set a new record with her 87th career world cup win her 86th win today put her in tie with a skier from sweden who held the title for the last 34 years. still to come on "power lunch," we're looking at the regional banks down as a result of svb's demise. we'll speak to an analyst who says this is not contagion and recommends some of them as a buy. buy. we're back after this. at adp, we understand business today

looks nothing like it did yesterday. while it's more unpredictable, its possibilities are endless. from paying your people fr to supporting your talent everywhere, we use data driven insights to design hr solutions and services to help businesses of all size work smarter today. so, they can have more success tomorrow. ♪ one thing leads to another ♪ real zero energy is coming... and yes, that means cutting carbon emissions... but it also means cutting costs. because now clean energy is more affordable energy. we've been investing in american infrastructure for thirty years... lowering electricity costs today, and protecting from volatile energy prices tomorrow. so walk with us— and let's make cutting energy costs real.

everything's changing so quickly. before the xfinity so10g network,s— we didn't have internet that let us play all at once. every device? in every room? why are you up here? when i was your age, we couldn't stream a movie when the power went out. you're only a year older than me.

you have no idea how good you've got it. huh? what a time to be alive. introducing the next generation 10g network. only from xfinity. the future starts now. welcome back the regional banks are under a lot of pressure as you can see, following the failure of svb financial. despite that bank collapsing, our next guest is upgrading key corp. to outperform today,

saying the svb problems are unique joining us on the phone, the analyst on the call, david george at rw baird great to have you here welcome. >> good afternoon. >> we're coming full circle this week because it was key bank on monday that sent the regional banks lower when it took down its guidance for net interest income and what it could make from that this year. there is a lot of head winds facing the bank. you're not chacnging your stanc despite what we're seeing play out today? >> i'm not thanks for having me with the stock down today, i think it is providing probably one of the best buying opportunities for regional banks than the covid lows. just to give you some context, we don't cover silicon valley bank, but this bank grew four fold during the 2021 and 2022 time frame they had over 160 billion of their 200 billion in deposits over the $250,000 limit. keep in mind, silicon valley had

17 offices you contrast that with the regional banks, many of them have an average deposit size per branch of just 15 to 25 million per branch from our perspective, it is not something that is really relevant and cannot be convstrud as a meaningful read through. >> you're joining us from the airport as you try to move through. i appreciate it. i want people to hear what you're saying about the difference in business models fundamentally. the market is looking to banks that have for instance a high share of uninsured deposits and worrying those are going to be flighty. and are you concerned about your coverage space in that regard? >> we're always mindful of liquidity and liquidity is obviously paramount and of the utmost importance. but, again, the other thing i should mention, kelly, and ty, silicon valley was not a party

to the stress test or the liquidity coverage rules that govern essentially the top 25 to top 30 banks so, this is something that regulators have been testing for, for the last 15 years so it is something we're obviously keeping an eye on, but, again, the lower the stocks go, and this seems counterintuitive, the lower the stocks go, in our opinion, we think it is an opportunity. >> do you like the stocks as a group? in other words, as a kind of index fund play? or would you be more selective and if so, tell me which ones or how to separate the wheat from the chafe here, the ones that might have a little more liquidity risk or business risk from those regionals that do not. >> yeah, it is a fair question i would say, tyler, that given the move down in the group, i

think the entire group is particularly attractive. i think there has been pronounced weakness in a number of the regional banks you mentioned, comerica, huntington, pnc, m&t bank. we think all of those are super attractive here. the valuations are as low as they have been since the covid lows and we think overtime the business models will prove to be very resilient and customers are not big vc funds their customers are main street customers. small businesses, consumers, the average checking account for most regional banks is $4500 not a million to 2 million like you saw at silicon valley. it is important to really differentiate the liquidity profiles and the funding profiles of these banks when making blanket statements like many in the media are making >> david, would you comment, finally, on the the securities portfolio? if we say, okay, they have 4500 in deposits on average, maybe that stickiness isn't a risk but at the same time, if they

need to raise funds, will they have to turn to their securities portfolio where they may also be facing some haircuts >> we don't think so we expect bank management teams to start to manage these balance sheets even more for economics and if it doesn't make sense to make loans on a profitable basis, i think you'll see maybe loan growth slow a little bit. many banks have the ability to access the federal home loan bank as well for borrowing so it is not something that we're particularly concerned about. we're keeping an eye out for deposit trends and certainly there is heightened competition for funding, that's something i think has been out there in the market for some time it is just now finally coming into the forefront given the failure of silicon valley today. to answer your question, it is not something we're concerned about. again, given where the stocks are trading. many of these are trading at or below their tangible back value today. >> joining us from the airport, hope your flight leaves on time, david george, appreciate it. and more on the markets and

svb next we'll be right back. we planned well for retirement, but i wish we had more cash. you think those two have any idea? that they can sell their life insurance policy for cash? so they're basically sitting on a goldmine? i don't think they have a clue. that's crazy! well, not everyone knows coventry's helped thousands of people sell their policies for cash. even term policies. i can't believe they're just sitting up there! sitting on all this cash. if you own a life insurance policy of $100,000 or more, you can sell

all or part of it to coventry. even a term policy. for cash, or a combination of cash and coverage, with no future premiums. someone needs to tell them, that they're sitting on a goldmine, and you have no idea! hey, guys! you're sitting on a goldmine! come on, guys! do you hear that? i don't hear anything anymore. find out if you're sitting on a goldmine. call coventry direct today at the number on your screen, or visit coventrydirect.com.

new projects means new project managers. you need to hire. i need indeed. indeed you do. when you sponsor a job, you immediately get your shortlist of quality candidates, whose resumes on indeed match your job criteria. visit indeed.com/hire and get started today. welcome back to "power lunch. the shutdown of silicon valley bank has wall street on edge the banking sector putting

pressure on stocks today our next guest expects stocks to test the october low of 3650 on the s&p 500 let's bring in our friend and cnbc contributor michael parr. good to see you. i've rarely seen you quite as cautious as i sense you are right now. among other things in my note, you say not going into a recession would be unprecedented. a few moments ago, gilbert garcia said fundamentally the same thing and urged the fed to stop raising interest rates right now. do you see it that way do you think the fed will stop raising interest rates do you think they should in light of the fact that you view a recession as the sort of base case >> i think that when you look at the data, tyler, and this isn't me just holding my finger in the wind when i say these sorts of things, i've been doing this for a long time, as you know when you look at the data that

says, look, every time 100% of the time we have seen an inversion of any part of the yield curve versus the ten-year right now, we have gone into recession. a lot of other factors also say recession. so, if you were going to vegas with, like, eight of your historical indicators saying 100% it is going to be red, would you bet on black probably not with your own money, even though you don't like to be negative. so, if, in fact, all of the data does argue for a recession, i think it is a reasonable expectation. also, recessions are normal. economies contract and they expand i think that the fed is still trying to tighten rates and what should they be doing is a much tougher call because the one thing every fed governor will tell you over and over again is we don't want to make the same mistake twice. the federal reserve, all the things it wants to do, never make the same mistake twice. they backed off too early in other cycles and it has been kind of disastrous leading to

runaway inflation. powell doesn't want to do that, they're going to stay with it. the question is, should they have they done enough? knowing a fed intervention takes about 12 months before you see the results in the economy, there is a very good argument to be made to say they should pause in here and wait a couple of months and look at the data again. given the current inflation data that continues to hammer, they feel they need to keep with it so, it seems to me that they're going to keep with it, that's going to be the excess in this cycle and that's the cause of the recession and that's my reason for caution >> all right we're expecting a little bit of a news break here shortly, but i want to get one more question in regarding silicon valley bank and whether you see its demise as potentially a systemic risk, that there could be some contagion. a lot of investors today are thinking 2008, here we go again. >> yeah, i know, this is very

different. this is not an asset problem this is not a credit issue this is an interest rate issue this is a concentration of a certain type of tech volatile, fragile kind of investment, investor base. i've gone through my other banks, i own banks. i own pnc and i own truist these people had 60% of their assets in securities truist, 27%. lots of liquidity. very different animals so while i think there's something of a canary in a coal mine, you raise rates this much, something's going to break, this was probably the most fragile bank out there, and when you look at the other banks, and you listen to the last pair of analysts david was just on, he is coming out with buy recommendations and i think you look at truist and some others, there is value to be found here as the prices are getting beaten up today i believe it is unrelated. this is an interest rate issue this is not a credit issue this is not 2008. >> clearly stated, thank you

very much. always great to see you, sir >> tnkouha y. and more power lunch right after this after this stay with us ever better. it's sruption hits your supply chain and ryder makes sure you're ever delivering with freight brokerage to transportation management, truckload capacity and dedicated trucks and drivers. it's hard to run a business on your own. make it easier on yourself. with shopify, you can have everything you need to streamline your shipping, returns, and product storage, so you can focus on growing your business. because when we work together, the future is bright. it doesn't have to be lonely at the top. join the

millions at finding success on their own terms. start your journey with a free trial today. - in the last two years, we quadrupled our team and the pace we're growing, i couldn't keep up without ziprecruiter. they do the legwork and they get my job posting in front of the right candidates. i love invite to apply. i instantly see great candidates and i can invite them to apply. we have hired across all departments, engineering, marketing, hardware, field techs. you can basically tell ziprecruiter who you need, when you need it, and they deliver. - [narrator] ziprecruiter. rated the number one hiring site. try it for free at ziprecruiter.com try it for free at ziprecruiter.com (funky electronic music) try it for free at zip(narrator)com all in. as in, never partway in. never halfway in. all in is more than just buying in.

it's investing in... her. them. him. and them. do they look "sort of" in? this is a place you can live in, build in, move in, thrive in. if you're all in, it's all in north carolina. ranked america's top state for business.

i think i'm ready for this. heck ya! with e*trade you're ready for anything. marriage. kids. college. kids moving back in after college. ♪ finally we can eat. ♪ you know you make me wanna...♪ and then we looked around and said, wait a minute, this isn't even our stroller! (laughing) you live with your parents, but you own a house in the metaverse? mhm. cool...i don't get it. here's to getting financially ready for anything! and here's to being single and ready to mingle. who's ready to cha-cha?! ♪ yeah, yeah ♪

lily! welcome to our third bark-ery. oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect. terrier-iffic i labra-dore you round of a-paws at&t 5g is fast, reliable and secure for your business.

some breaking news the government, federal government is starting to take notice of the fallout, kayla joins us with the story. what is happening? >> treasury secretary janet

yellen convened financial regulators this afternoon, specifically to discuss the situation around silicon valley bank, and in a statement that we just got from treasury, janet yellen, the treasury secretary said she met with the federal reserve, the fdic, and the office of the controller of the currency and says she has full confidence in regulators to take appropriate actions around the bank, that the banking system, in her words, remains resilient and regulators have effective tools to deal with this situation. it comes a few hours after she appeared on capitol hill and went out of her way to tell lawmakers, while testifying on the federal budget, that she knows that the treasury department is monitoring the situation at svb, they are monitoring it closely, but at this time, she feels confident in the financial system. and we should also note that on the note about the tools that regulators have in this situation, that the fdic, after the last financial crisis, made banks go through a process to design what we call living wills, or essentially, if a bank

were to go belly up, how would its assets get wound down? that's what you can imagine the fdic is poring through behind the scenes trying to separate out the good and insured assets at sit con valley bank, from the bad assets, underperforming assets and whatever deposits are uninsured, and if there is enough to sell the good portfolio of asset, perhaps they will still pursue that path, but that's what regulate rers doing behind the scenes, and they essentially have a road map from the bank because of the regulations that were put in place the last time around tyler and kelly? >> it is interesting, takes me back to 2008 when we had the idea of separating the good bank from the bad bank, and in that case, i suspect the differentiation between the good assets and the bad assets may have been a little bit simpler, because there was a lot of garbage-y mortgage-backed securities in those portfolios this is a case where, as if i'm understanding it correctly, the

bad assets were long-dated u.s. tre treasury securities and they were bad because they lost value because interest rates went high >> yes, well, certainly, there was that big portfolio of u.s. treasuries that the bank had sold at a $2 billion loss, forcing the bank to sell shares against it to shore up its capital levels, and we're still reporting out exactly what the catalyst was that got the bank to make that sale in the first place. was it regulators raising questions about the bank's capital levels was it the bank itself, looking at its own balance sheet, and saying we can't announce another quarter of earnings, and have these numbers look the way that they did that's what we still need to know at this point, tyler, and certainly, you know, we'll need to know more about what is under the hood and exactly who the bank was lending to, what some of these underperforming loans looked like, and whether they had exposure to other industries specifically like crypto, that, you know, where some of that exposure could be a little bit more troubling. >> well, that was it, the crypto

exposure was the one and the other bank, silver gate that lick tated, that certainly is not totally unrelated to this one, but a different case. great to see you have a great weekend. >> you too. that's it. what a day >> what a day. another hour to go and then a long weekend. >> that's right. and it may be a long weekend thanks for watching "power lunch," everybody. "closing bell" is coming up. thank you very much. welcome to "closing bell." i'm scott walker, live at the new york stock exchange. the make or break hour begins with stocks down and fear up, about the fallout from the collapse of silicon valley bank. other bank stocks, especially regional ones plunging again big questions about what this all means for the fed on a day when the jobs report comes in hotter than expected here is the score card with 60 mince to go in regulation. the dow on track for a fourth straight day of losses there is the s&p 500 reaching a key technical level yet again. down 1%. a look at yields very much a part