a traditional stand-alone bank, but they're not just trades for me they're good, strong companies i wouldn't buy them if i didn't believe in them. >> on that note -- >> it's like a rallying cry. >> peter, victoria green, thank you very much. we had a real diversity of opinion this hour. >> yes, we did i don't know what that tells us. >> yeah, we had bear market going to continue, and we had -- end on a more hopeful note and on that, we leave you. thanks for watching "power lunch. >> closing bell starts right now. >> i'm scott wapner, live at post nine, new york stock exchange major selloff in stocks. the banks, the pressure point on both sides of the atlantic today. all of it only adding to fears about what it means for the economy, the markets, and most especially your money. here's your scorecard. 60 minutes to go in regulation it's been a big slide today. s&p going negative on the year the real pain point today, though, the russell.

that index is full of regional banks, which may be small in size, outsized, though, in the concerns they have brought to this market. and that brings us to our talk of the tape. what is the fed watching now what are they thinking about now? as they decide whether to raise interest rates again one week from today is the svb earthquake and the aftershocks enough for it to pause? what would it mean for stocks if it does or if it doesn't we're going to ask famed finance professor jeremy siegel of the wharton school that very question first, we have mike santoli on these developments that have moved the market off the lows of the session, out of switzerland. so, the report is that switzerland holding talks on the options to stabilize credit suisse those include a statement of support or a backstop, could include a swiss spinoff or a ubs tie-up we've watched the cds. the spreads explode on the concerns all around this story the stock move in credit suisse

speaks for itself today. what do you make of it >> well, the first signal that the authorities always want to send is, we hear what the market has been saying. what the market has been saying is that other players in the market, other banks, investors, have had doubts about credit suisse and whether it was a worthy counterparty and whether we want to do business with it or whether the outflows are going to be too heavy and was going to need to raise more capital. all those things sometimes, just the words are enough everybody says, fine, we assume there's going to be some kind of a backstop, so it makes sense. it does also at least hint that regulators, central bankers, are a little quicker to react, both here with svb and in europe in this instance, having recalled that you just don't want these things to take on a life of their own. >> you know, s&p and nasdaq, by the way, have moved to session highs on these reports you said some interesting things there. the words and actions. the actions of counterparties, we talked all day long about,

okay, you know, wealthy clients of credit suisse's wealth management business picking up their money and moving elsewhere, very easy to do when it goes to the counterparty level, which there was a report from bloomberg earlier that b&p had reduced their counterparty exposure to credit suisse, i had heard of another place that was doing the same sort of thing that takes it to a whole other level, does it not >> it can. basically, what it means is that people feel like there's more risk than reward in doing business with them we don't know how pervasive that's going to be, but for a big institution, for a wholesale banking institution, that does matter a lot now, there are times when you get these false alarms i think back to the post, kind of, euro sovereign crisis when mf global was in the crosshairs and jeffries was at risk and they had to go out and give days and days -- they were perceived to be at risk, and they gave days of assurances and the market finally got some comfort around that.

i'm not saying it's a one-way ticket if, in fact, some of this is going up, but it's what the authorities are sensitive to, which is that your customers and your peers can essentially really undermine your viability. >> in this particular case, you know, i spoke a little bit earlier with a very senior-level executive of a bank who made a very good point, i thought in credit suisse's case, you're already going through a massive restructuring of right-sizing of that business. which is hard enough in normal times. put it in these times and then pack this on top of that, that's when all of the concerns and the fears become even more acute >> right i do think that that all makes sense. this has been an impaired bank for a while, just in terms of what it was going through and serial restructurings and capital raises and things like that on the other hand, does that also mean it's a lot less potentially systemic

we're not talking as we were back in the crisis days, of, oh no, there's this complete shadow supply of top seed securities that we didn't know about before it's not really what's going on here it's much more about, do i want to continue to leave my funds with you if you're a hedge fund, whatever the relationship is >> bond trading operations not wanting to trade with you anymore. >> right but that doesn't mean, necessarily, that it sort of unplugs other machines from the network, besides that one. >> right you'll stick around. we'll hear more from mike in a moment, but these headlines are nonetheless really significant, in fact, as we said the s&p and the nasdaq had moved to session highs on what has otherwise been a dismal day really from the start. let's bring in professor jeremy siegel, who's going to be with us today, the famed finance professor of the wharton school. give me your thoughts on what is top of mind for you. you just heard our report about what's coming out of

switzerland, the impact that it's had on the market all day long >> well, scott, i hope that this knocks some reality into the fed and chairman powell. you know, we have been talking about the big inversion, biggest in 40 years of the term structure, certainly svb down on that inversion bankers are not supposed to borrow short and lend long we know all about that, but there's a reason the last recession in the last 50 years has followed an inversion. something blows up, something goes wrong i think this ultimately could be good, because if you look at the futures market right now, they're saying, "one and done. and then a decline, as you know. i've been saying that they've been way too tight for the last six to nine months, actually, and have to look at the liquidity, the inversion, and i think that those realities are

finally seeping in i hope they're seeping into the fed. >> what should the fed do next week >> well, assuming that no further crisis in the next seven days, i think what's going to happen is they are going to do 25, but the message is going to be a likely pause. they won't commit to a pause, but they're going to say, look at the producer price index that we got, very good news this morning. they're going to say we're beginning to see good progress on that inflation front. we know the bulk of monetary tightening is yet to be felt, and given the financial climate and the risks, we could afford to pause in our tightening they won't commit it, but i think the language is going to be totally different from the

language we had after the last meeting. >> you just said that's what you think they'll do i want to know what you think they should do >> well, i thought -- i don't think they should raise them i didn't think they should have increased last time, because the bulk of the monetary tightening, the fastest increase in fed funds rates and real rates in at least 40 years was showing progress you know, we talked about the distortion in the actual, particularly, consumer price data on -- and housing i talked about the fact that i thought that the war against wages was inappropriate. we need to raise wages to bring labor into the labor force, and by the way, i thought it was a very promising labor report. we had 0.2% increase in the u-2,

the u-6 unemployment, a little bit of a loosening he's going to use that language. we see a little bit of a loosening of the labor market. of course, tomorrow morning, we'll get initial jobless claims it certainly did jump up on one week but that's a volatile series we're going to see what's going to happen tomorrow on that but it could change his story, looking at the, so to speak, slowdown side rather than only looking at the troublesome inflation areas, and i think he should have been looking at that slowdown side for many more months what he should do is not increase at all, but i think -- i think he's going to increase 0.25 with a very big change in language what's going to be interesting, scott, is the dot plot, because normally, the bank presidents and the fomc fills it out one or two weeks beforehand i think it's totally different after svb than before.

i hope they get them all a chance to revise it, because it was going up to 6% and now if you take a look at the futures market, it's barely going to 5%. >> yeah. so, you know, apollo said today, "when the facts change, my view changes. a financial accident has happened we're going from no landing to a hard landing the fed will not raise rates next week, and we have likely see the peak in both short and long rates." isn't he right i mean, we just had an accident. >> that's actually a quote from john maynard kooenz who said, when the facts change, i change my opinion, what do you do, sir? and i read the comments on that. again, i think they shouldn't, but my feeling was -- i'll tell you why i think they're going to go 25%

if they suddenly go 0, it could worry the market oh my goodness, i mean, they're giving up? are they so worried about the economy that everything they voiced and all the opinions they have had over the last six months, they're now throwing aside? i think a more measured way of doing it is 0.25 with a pause. we are seeing progress i think that's going to be the result >> okay. you mentioned, facts change, you change your opinion or thoughts on stuff, right? >> yeah. >> so, have you changed your own view about where you think stocks can go this year? remember, you said you thought we'd get 10 to 15% gain this year well, the facts have changed, haven't they has your view changed? >> yeah, they have i mean, obviously, what's happened at svb -- i mean, there's the good and the bad again, we always talk about the battle of the numerator and the

denominator, numerator being earnings and the denominator being interest rates denominator is going down, but really, the chill in the air, as a result of what's going on in the banking system, lending standards, i mean, the tightening that's happened from svb is in itself like two or three rate hikes in terms of how much loans are going to actually occur. would that mean that i am scaling down what i think might happen this year perhaps, a bit, but let me tell you. i'm more optimistic for 2024, because, you know, what i was worried about is that they are going to ignore everything, go up to 6% and beyond and all that tightening was going to cause the recession in 2024. now i think there's going to be more softening in the second half of 2023, earnings not being as good as i once thought, but i think that not raising it as much as they wanted to makes

2024 look an awful lot better to me >> professor, bear with me just one second i want to get to some more news which is crossing regarding credit suisse as we throw up another look at that stock at the moment swiss member of partiliament, according to reuters, says, "there's no discussion of state aid for credit suisse at the moment." so, these are fast-moving developments, obviously, and i just wanted to bring the very latest to our viewers so they can follow along, because this seems to be wagging the market around today, which it moved off the lows the nasdaq had even gone into positive territory, albeit briefly. we'll keep watching on that. so, professor, i come back to you. maybe you're scaling down some of your assumptions about the market >> you know, again, maybe from 10 to 15%, 5 to 10%, because we're just about unchanged on the s&p. remember, scott, we all say the

error on a -- if you want a year-end, that's a nine-month projection, is pretty high on the stock market but as i say, if they're seeing the effects now and are not going to go as high, i would raise my 2024 estimates. >> are you also -- i'm sorry to interrupt you. are you also raising your assumptions about a recession? >> i would say that they have ticked up a bit. the worst thing is slow growth the fed only predicted a half -- the fed only predicted a half a percent growth for this entire year actually, in the first quarter, we're 2 to 2.5% growth, so you know, it's -- and we had very slow growth last year too.

so, will we have two consecutive quarters we're going to have to see a much bigger rise in unemployment for the national bureau, who calls recessions, to actually call it. has my probability gone up yeah, somewhat i would probably go from 30% to 40%, maybe 45%, but i think a mild recession not a deep recession >> the other thing, professor, that some are suggesting as a result of the events of the past weekend, be it at wolf research, is the fed put is back do you share those thoughts? >> well, because they rescued the -- i mean, i predicted on friday, i was asked if i could insure the deposits, and i said, yeah, they've got to in today's electronic age with everyone tweeting to move it, they just got to blanket do that they did that to prevent a panic

in the banking system. i wasn't thinking -- i don't think they did that to prevent, you know, just the fall in the stock market they're interested in stability of banking, of the payments process. that's what they're responsible for. yes, of course, that will calm the market had they not done that, we would have seen a 2,000-point drop on monday so, yeah, in a way, but what they did it with the intention of making our banking system functional, because without that confidence there, we would have had an absolutely massive crisis on monday. >> yeah. last question before i let you go when do we get the first rate cut from the fed when does that happen? >> i think if we get one rate hike next week and a pause, i would say i wouldn't be surprised if, by the june

meeting, we get a rate cut the fed funds market is predicting, you know, two or three rate cuts by the end of the year into early 2024 i actually think it might be more rapid than that as they see the slowdown in the economy, and the fall of inflation using realistic numbers, i think they're going to be very encouraged on that front that will give them latitude to drop that rate. >> professor, i'm so glad we had you today. thank you so much. that's professor jeremy siegel we'll see you soon for certain more headlines coming out of switzerland, according to reuters. that same person that i quoted earlier says, "the swiss central bank would provide liquidity against collateral to help credit suisse. i wouldn't be surprised if the swiss national bank makes an announcement on credit suisse by monday morning." whether the market is going to give them the latitude to wait

that long remains to be seen and we'll have to follow that and discuss that in the moments ahead too. steve liesman joins us now, our senior economics reporter is on the phone. so, steve, you know, first, give me your reaction to credit suisse and what the swiss are saying, this idea of counterparties taking their business elsewhere maybe being the thing that lights the fire to where they have no choice but to do something. >> i think that's right. i did see that the market took a little bit of risk off with those head lilines. i don't know that the original headlines that gave the market some optimism really included a government or taxpayer money out of switzerland i thought it was always sort of an infusion of liquidity from the swiss central bank, so i'm not sure the story has changed as much as the market seems to think it might have. and i do think they will resolve credit suisse one way or

another. i'm also a little encouraged today, scott, that in terms of other names that have come up, there's not much else that we've heard today. usually, the -- you have a headline overnight like this, for example, auto of europe, and there are other names that are mentioned. nothing else seems to have come to the fore, and i know this is perhaps yet early, heard about much knock-on effect into the u.s. system from anything going on at credit suisse at the moment i'm saying that right now advisedly. perhaps we're missing something. perhaps there's stuff out there we're not hearing. but a lot of times, you get other names, and that's really what causes the concern, so that's good news, i think, at the moment, scott. >> so, assuming that the waters remain reasonably calm between now and a week from now, steve, what does that mean, then, for the fed and its decision next wednesday? >> well, i'm sorry, scott, if you mistook my words i don't think the waters are calm it's just not another tidal wave, if you don't mind a little

gallows humor there. the banks are down you look at some of those banks that we have been watching they're still down substantially. i think that will matter a lot to the federal reserve i think the fed's going to be looking at a couple things we'll all get a look, by the way, at 4:30 at the fed's balance sheet. we'll see how much lending there was in the discount window, how much takedown there was of the fed's new program. that will give us an idea of how much concern there is out there. what is the need for liquidity out there? i think the fed is going to be watching and listening and talking to bankers about how much flight of capital there may have been, and we don't know that there's been a lot, but there may have been from some of the regional community banks into the bigger banks. there are liquidity issues at the banks, at least they will have been solved by the new program. i completely agree with jeremy siegel i think the fed should pause there are several days yet to figure that out. it may want to keep going. the trouble for the fed here, scott, is two things

jeremy was absolutely right, professor segal, fed doesn't want to send a signal things are worse than they are. the fed wants to separate financial stability from monetary policy. it thinks it can do that it's a question as to whether or not it wants to run that experiment but in general, i would like to be able to conduct monetary policy with one set of tools and it would like to connect financial stability policy with another set of tools we'll see if it wants to run that experiment. >> good luck with that some respects, they already have, and maybe you have some -- too much smoke coming out of the beaker at this point we'll see. i also have mike santoli go ahead, steve. >> i was just going to say quickly, i don't know if you want to look at the charts where we're at, we're directly 50/50 on that march probability of a rate hike. it's finished as high as 60% from change and then if you want to take a look at where we are for the rest of the year, there's a lot of cuts built in the market is going up to 483 so

sort of thinking maybe that quarter point still comes in, but after that, the pricing right now is very dramatic about-face to the rest >> yeah. i have santoli sitting with me, steve. let's not forget the tool of the balance sheet could come into play here as well, and maybe we should expect in some way it does >> yeah, i'm sure they're also going is to be reluctant to be very reactive in this statement, in this meeting with regard to the balance sheet, even though there's a little bit of dissonance in terms of providing liquidity to this new facility and let things mature and roll off the balance sheet. i tend to think it's not ideal if we were to go into the meeting at a 50/50 market implied proposition. that's not usually the way they want it to work. but i also don't know that 25 basis points on or off in a week is make or break economically, whether it is about the message to the markets, and do they feel our pain or not kind of a question >> read the room, right?

>> if you go another couple of days, and there's no other institution that's suddenly in the crosshairs and in distress, then maybe we can start to, again, think that it was -- we cauterized the wound with svb. i don't know how it's going to play it's a long time between now and then i think it's a measure of how much the fed's jawboning kind of collectively brainwashed us into thinking 5%-plus on the fed funds was an absolute necessity, given everything that's going on given that they already went from zero to 4.5% in a year before anyone thought we would get anywhere close to that a year ago so, i think there's a little bit of, we have to kind of make our peace with the current conditions and what they mean for monetary policy, even though they're in the fine-tuning phase, no matter what. >> steve, the other idea is that once a federal reserve, a central bank, loses its own credibility, it essentially has nothing left, and there are

obviously a number of people who question the fed's cred based on the mistake, which i think we can suggest that it was by keeping rates too low for too long, and then having to catch up as briskly as they obviously have had to do so. some say that's one reason why -- and you brought it up -- why they should go 0.25 or they risk their credibility even further. you really think if they paused next week after this earthquake that we all lived through, that credibility would be further at risk >> it depends on what happens with inflation, scott. i think it's worth pointing out that the reason they would actually pause is because of a belief in the changing situation that's out there the idea professor siegel mentioned, i've been talking about this for several days now, the idea that a credit contraction in the economy will create, really, a contraction in the economy or at least less growth and bring down inflation

by itself. if you think about it, scott, there's two ways to make the basket here. one is you can raise interest rates and that should make credit expensive for people to borrow and reduce economic activity you can also have a credit contraction brought on by tighter lending standards and a banking crisis that would ultimately reduce lending and reduce economic activity so, they both have the same effect, and one may be more severe than others one may be more severe than the fed planned on but if you were looking at a credit contraction that should change your macro outlook, and if your macro outlook changes, your monitory outlook should change there's something slightly wrong here i'm not sure what the hitch is, but it's a little weird that they're still going back and forth on margin and then baking in these big cuts on the back end. that doesn't make much sense to me ultimately, if there's a contraction in the economy, from lending -- of lending in the economy, there will be lower inflation. >> hey, steve, we've gotten what feels to me to be the big

announcement that many were, you know, either hoping for or expecting would eventually come. the swiss financial market supervisory authority, finma, and the swiss national bank basically saying, if necessary, the snb is going to provide credit suisse with liquidity that's sort of the announcement that you would be waiting for and alluded to at the very beginning of our conversation, right? >> that would be what i would expect, and it's not all that i would expect, but i just wasn't -- didn't go into this, scott, thinking there was going to be a taxpayer bailout of credit suisse. i would think there would be other things that happened with credit suisse. for example, things that have been thought about would be some form of recapitalization, additional capital put into the company, but i don't know if this is more or less than the market expects here. i'm trying to read these headlines as they come through here, and all i see is the "if

necessary," which is interesting that they don't think it's necessary right now. >> although, you know, and that's what we discussed earlier. they say, you know, well, by monday, there could be a broader decision we're going to see whether -- you know how the markets work, steve. as does mike, who's still sitting here, and mike, we'll see how much runway the markets give regulators and authorities over in switzerland. >> right the other thing you'll see is whether -- if, in fact, we get assurance that there's going to be some kind of backstop or it's not going to be some kind of disorderly situation that sticks around for too long at credit suisse, we'll get a test of whether that's actually what's been bothering the market. we think it is it's today's fixation. it's not necessarily the whole story. the entire bond curve is just so twisted up right now in terms of whipping all over the place, steve talking about the probabilities and the fed moving all over the way they don't normally people are trapped, and there's a lot of illiquidity and a lot

of twitching around to react to a complete 180 in the things we were afraid of, from overheating and higher for longer to ice age for the economy and credit crunch that's not the normal way. i don't think we're getting a clean read on what's truly the likeliest outcome here, so we'll see. look, i was saying yesterday that we might be able to look at the whole situation, and say, if this is what it took to get us a fed pause earlier than we expected with the economy still okay, then maybe that's not so onerous a cost, but we still don't know final point on credibility the inverted yield curve is telling you the fed had credibility on inflation longer-term yields were not blowing out. the credibility is all about the path of inflation, not whether they do a thing next week that they implied they would do before the blackout window >> some are suggesting that's where their credibility metric or measure lies. >> being dogmatic does not mean you earn credibility >> steve, you'll be back a little bit later

right? no, you won't. i'm sorry. >> i'm going to try to get on a plane, scott, which is why i'm not there on the camera. >> you do that you do that. i misread something that was in front of me. my bad that's steve liesman you, mike, don't go anywhere you're coming back we'll see you in the market zone let's get a check on some top stocks to watch. kristina partsinevelos joining us >> i'm here, but airline names are not holding up today financial stability obviously comes into play but it's one particular morwarning on monday that is spooking investors united airlines is forecasting a first quarter loss from new pilot contracts but they also said weaker than expected demand is going to happen early this year, which already tends to be a slow period of travel. you've got a weak period of travel about to get weaker today, down, look at that, over 6% delta, over 6% lower american airlines, almost over 5.5% lower jetblue, the strongest of the group, but still over 2.5%

lower. despite today's turmoil, canadian pacific shares chugging along after getting approval to merge with kansas city southern to create the first single-line railway connecting the u.s., canada, and mexico lastly, i'll end with cybersecurity provider sentinel one. shares are jumping after posting an earnings beat last night and a 92% sales growth year over year you can see shares are up just over 8% right now. although they did put out full-year guidance, they came in weeke weaker than expected it's the strong growth that's driving this name higher >> kristina partsinevelos. stocks are lower as we head toward the close today big swings, huge swings in bond yields today our next guest says investors should prepare for even more volatility ahead let's bring in nancy davis, founder and cio of quadratic capital. couldn't think of a better person to talk to today than

you. volatility in the rate market, which you watch closer than most, has really picked up where from here, then? >> well, before the fed did their qe, most mortgage investors would hedge their interest rate volatility it's sometimes called prepayment risk and after the fed, having nine years of qe, a lot of market participants stopped that rate hedging. it's sometimes called negative convexity hedging. now, especially with silicon valley blowing up over their mortgage exposure -- and it's always short volatility that bites the market it's the same thing other and over again it's just different players each time i think it's even more pressing for financial institutions, banks, investors to be aware, like we talked about, about 30 days ago, scott, on your show, about the risks for investors and their bond portfolio being short volatility and how important it is to not just be short fixed income vol and to

also have long vol exposure like we do at quadratic >> what happens in your mind where do we truly go from here >> well, i think mike said it really well. the bond market is twisted the yield curve is still massively inverted it steepened a little bit. the all-time low was last week on wednesday, march 8th. we're still negative, though it's still not normal. just to put a little bit of global perspective, since we're talking so much about credit suisse, japan, which is doing yield curve control in qe still, and very dovish, they have a positive 50 basis point yield curve. the difference between the two and ten-year interest rate, even with yield curve control, where the u.s. is massively negative our two-ten swap curve is negative 65, which is not normal it's all twisted up. and it's very unhealthy for banks, and i think this little shake-up, whether it's various silicon valley bank or other banks that have had trouble,

including credit suisse, i think it's a real shake-up for the fed to pay attention to the yield curve, because it breaks the banking system banks borrow short-term, lend long-term. an inverted yield curve is no good for the financial stability. >> sure, but you -- you make the case in part, too, that what the fed has done so far with all of their rate hikes -- we have had eight thus far near 500 basis points in the calendar -- in the last year -- that it's failed in their job against inflation. can't you make exactly the opposite argument? >> well, realized inflation is very high. i think i'm making the distinction between the market expectation for future inflation. they have been very successful convincing the market that there will be disinflation, even though the last cpi print, it was 6%, the headline, the break even curves, which is looking at future implied cpi, it's all around 2%.

the, you know, call it 2.5%, 2.4%, 2.3%, so the market expects future inflation to fall dramatically, and as mike pointed out, the inverted yield curve is very much disinflation being priced into markets. so, i think the fed has inverted the yield curve massively, and also, they have jawboned the market to convince them that inflation will fall in the future, but that presents an opportunity for investors, because every market you want to -- they trade off of expectations, and the market is very complacent that the fed has got this and that they're going to kill inflation in the future. so, it's a good buying opportunity, in my opinion >> next week, the fed does what? >> i think they'll do nothing. i think they're just going to let it sit i think, you know, it's 50/50 right now whether they hike or not, but i think the balance sheet is really the key. that, i think, will really help to normalize the yield curve, to

make it a more, you know, a more stable environment for the banking system so, i really think, you know, using the balance sheet more and taking the pedal off the rate hikes, they have been going all -- they keep hitting the same nail with the hammer over and over and over again. we have had, in this one year, this 12-month period, so many hikes, and i think now if they just pause and use other monetary policy tools like the balance sheet, i think it will help >> yeah, mike and i were discussing that as well. nancy, thank you so much nancy david, quadratic, joining us on "closing bell" today should note for you as well, the nasdaq, still trying to go positive was just briefly a moment ago. it's down just a few points. there's microsoft, though, a rare bright spot on the tape today. it's one of the few mega cap tech trades that could serve as relative safe havens, at least for investors as the silicon valley bank fallout folds.

our next guest, it's good to see you again. are we back to thinking of mega cap tech as defensive, quote, unquote, safe places to be >> yeah, interestingly enough, as we go through the upheaval in the banking markets and we're seeing credit standards get tougher, you're going to want to be investing in companies that generate cash, are self-sustaining, don't have to tap the debt markets, mega cap tech suits exactly that parameter. >> what's so interesting, and mike santoli sitting here too, is that that's exactly the playbook that nobody expected was going to work this year, but has surprised investors that tech has been good, that what worked in '22 has not worked in '23, and here we find ourselves talking about it again >> to a degree and i think it all is about the sort of cash-rich, self-financing, dominant tech franchises as opposed to, you

know, lower quality, not-yet-profitable tech. so, you have to make those distinctions, and so they are being bought for the stability, but also, at this time, when nobody's afraid as much of rates and the economy running away from you, so therefore cyclical, maybe you have a little question about, and maybe the valuation -- maybe microsoft aside, perhaps, but the valuations have come down to a point where you don't have to make heroic assumptions about growth expectations from here the way they were in two years ago. >> and here you go there's microsoft up 1.66% microsoft, one of the stocks you really like out of this space, along with nvidia? >> absolutely. in part because the cash generation potential of the business, regardless of the economy, and the recurring nature of this business model. i would also highlight that tech had a lot of the earnings cuts already. >> yeah. >> so, we saw a majority of the earnings cuts through the last 12 months, and so i would say we're 80 to 90% complete, and we

have 10% to go, versus other parts of the markets that we're just starting, like some of the industrial names >> what do you think the fed's going to do next week? i want everybody's opinion on this, because it kind of matters more than anything else, i think. >> yeah, i agree i think the fed should pause you know, last monday, everything changed all at once everywhere, and that's a change in your data, and they should pause. will they pause? i don't know and i think i agree with jeremy in that if they do pause, i think it shocks the market because everyone will say, "whoa, what are you seeing in the market today? >> how would it shock people to say that when we're like, duh, aren't you seeing this rather than, what are you looking at that has us so scared we just had this bank shock. nobody truly knows what might be next, lurking under the surface. they really risk that >> historically, they have

looked at backward-looking data, and we hope they will look forward as we have had this upheaval in the banking market >> look, i don't think it's an easy call. we don't know what the financial conditions are going to be between here and there i think i would love for the conditions under which they can go a quarter point, right? that way, it seems orderly it seems like we laid this process out. we put a button on the whole thing, exactly one year after we started tightening now we can stop and pause. you also had jay powell on the record for no good reason saying, we prefer not to pause and then resume hikes down the road in response to questions. >> i know, but he could have also said, well, we prefer not to blow up the banking system too. >> my point is, there's no reason to lock yourself into one cadence, necessarily, except that they like the idea that they're being transparent and they're being kind of strategic about all this and i agree, they have not wanted to anticipate a turn for the better in the data so, that's why they've been fixated on what was the last

three inflation reports, right so, that doesn't give them the ammo to pause, but i think the rest of the world has, and so we'll see. >> you're still looking to pick some stocks in this environment? >> sure. i think cramer said this the other day. there's always a bull market somewhere. >> where is it now >> you know, there's -- we think that in health care, there's some really interesting opportunities. there's a small cap company called netera, and what's interesting about some of these businesses is they're completely idiosyncratic. they have their own catalyst path that will allow for appreciation in both the earnings and the revenue potential. and given that it's health care, they are -- natera, in particular, is non-economically sensitive. so, they do oncology screening, and they just got approval and for their -- the screening test, which allows for revenue and earnings growth. >> all right i got to leave i.t. there. ankur crawford, thank you so

much lot of moving parts today. ankur with alger joining us at post nine. s&p trading below all its major moving averages now, in jeopardy of giving back all the gains for the year at one point, the s&p was negative for the year today. for more on what the charts will tell us, let's bring in jonathan what are you looking at? >> hey, scott. good to see you. look, there's a lot of moving parts, things are moving very quickly, obviously, but big picture, we're kind of targeting the december lows, near term, around 3,775 on the s&p 500, but ultimately, we continue to expect those october lows to break, and i think one thing to note, last week on sunday, was the five-month anniversary of the october bottom, and so we look back throughout history and look at all new bull markets and how they perform five months later. the average return off the bottom five months later is about 31% back to 1928

we're only up 8%, which, if that october low was the final low, would make it the third weakest bull market start in history so, we think it's -- while it's possible, it's more likely that those do get broken, especially when we look at all the different cross-asset classes that we continue to monitor and look at a weight of the evidence approach >> if people agree with you and think we are going to go back to the october lows, what leads us down what sector would you be fading more than any other right now? >> you know, it's interesting. there's been a massive reversal in the value-to-growth trade as the narrative has quickly switched from inflation concerns to economic concerns, and i think that's pretty typical. as you get into bear markets, you get a reversion as the long end of the yield curve moves down, anticipating slower economic growth, you get some underperformance in the value areas, and you get some relatively outperformance in growth so, you know, that makes sense

i think here and now, in the near term, i think the rotation into growth is probably done so we've been highlighting semis. they're still up 17, 18% on the year they seem like a good fade to us here but then you look structurally, and you have had some pretty ugly reversals in areas like materials and industrials, which, you know, just a few weeks ago were showing multiyear relative highs, and they've quickly given those back in bear markets, things move fast, but we don't think that anything really survives in absolute terms it's just a relative game. >> does this breakout in gold have more legs and if so, how much? >> gold, it's been a frustrating trade. it tends to trade very strongly, inversely to the u.s. dollar, but today, look at gold, up with the dollar up as well, so it's acting really like a risk-off asset, and you know, you look at the kind of the structural

picture for gold, we basically had three years of basing, and now you have the other thing gold trades very strongly with are real rates, so real rates are starting to fall that should benefit gold we think it gets that 2,000 level. if it takes up $2,000, you're talking about a pretty nice multiyear breakout, so i do think gold is worth holding here >> all right jonathan, i'm going to leave it there. going to continue to watch this market btig's jonathan krinsky on the technicals just about 15 minutes to go before the closing bell. kristina partsinevelos has a look again at the key stocks we are watching with 15 to go >> well, charles sqchwab is higher right now as analysts at credit suisse upgrade the stock to outperform from neutral th they say there's a good buying opportunity, though the firm did lower its price target to 83 bucks a share down from $109 schwab up 9% schwab had fallen sharply in the first few days of the svb

fallout and is still off by 20%, despite these two straight days of solid gains and oil prices are continuing their pullback amid concerns over how a potential banking crisis could impact global economic growth earlier in the session, crude hit its lowest level since december 2021. the biden administration had previously said they would start refilling reserves at 70 bucks a barrel the overall move lower today is having a huge impact on the energy sector, which is the worst-performing sector on the s&p 500 today. we're seeing huge declines in names like marathon oil, halliburton, devon energy down almost 9% right now. scott? >> okay. kristina, thank you very much. that's kristina partsinevelos. let me give you the answer of the twitter question. take a look. we asked, "what should the fed do next week, hike or pause? it was close pause. getting 53%, the majority of you saying they should wait before doing anything else. very interesting there all right, now, the market

zone, let's do it. mike santoli joining us today, crossmark's victoria hernandez is back, eugene profit of profit investments here as well mike, i begin with you i'm just looking at credit suisse, because the notion of the swiss central bank pumping some liquidity into kwcredit suisse has brought that stock off its lows that was significant there i'm watching the nasdaq, which went positive for a touch, moving once again lower. what's on your mind? >> all of it has just allowed the market, you know, really, again, i say that u.s. stocks are a little bit the effect and not the cause of what's dwgoingn today, but it's allowed the market to hold in here we didn't even get to monday morning's lows in the s&p, which is a little bit surprising, considering how it seemed like straight down from 5:00 a.m. so, it seems right now that there's a sort of go to your respective corners and try and wait to see if anything breaks and how it plays out

right now, the u.s. regional bank, community bank area is still kind of on alert, but nothing really has incrementally gotten that much more alarming there in the last couple days, so it allows us to, i think, to sit here and reassess and figure out if microsoft and, you know, related stocks can sort of hold things together while we figure out what the broader macro implications are of the whole thing. >> you know, you got to forgive people, too, for the way that their sentiment has swung so much there's so much '08 ptsd still among market participants that when you start talking about banks failing, and it's more than one, it's only human nature to think, right away, to the worst. think about who could be next. and if not in a bank, where else and that's kind of where we've been the last handful of days. >> it 100% has i was saying this morning, though, that there are always more scares than there are

actual attacks from the area you're afraid of so, you do know that as well by the way, it was not really one of these complete, indiscriminate sell fests today, right? we definitely did not punish everything to a huge degree. >> felt like we might at one point. >> it really is in the context of, everything that's gone on has been detrimental to projected growth at the same time, yields have gone down for the wrong reasons. what do we make of that? is it an overshoot in either of those regards? and how do you play it really, in a news vacuum of no earnings and no fed speak. >> you make good points. you'll be back in just a second. stay with me victoria fernandez is with us too. what are you doing in the market today? how do you see things here >> well, i think you can actually look and find some opportunities in the market. you talked about us adding to our banks. bank position. jpmorgan is position that we have been adding to, because we

think some of what we're seeing here, it's not a systemic issue across the entire financial sector, even though all the names are getting hit. so, you want to look at some of these quality names that are out there. look at their balance sheets that was the key for silicon valley bank, the issues on their balance sheet. so, we look at jpmorgan. you look at their balance sheets and say, okay, they have stable deposit base their margins on deposits are increasing you look at their cash position. they have increased their cash position to 15% of assets under management so, they are well positioned for liquidity events, and you want to combine that with some diversification of their business model, whether it's community banking, investment banking, wealth management, commercial banking, i mean, they have a broad sector of different types of clients and businesses, and they have a strong management team, which, again, is something we were missing, athat least on the oversight for silicon valley bank. so we're adding to some of these

names that have been hit significantly. >> has this episode reset either your own growth or market or fed expectations now >> well, you know, we were talking, what, two weeks ago, and thinking, maybe the fed goes 50 basis points. i think a lot of what's happened over the last five days has done some of the work for the fed, but i still think they're going to go 25 basis points, scott look, we have got still a strong labor market i know retail sales were a little bit weak, but core sales, you look at the last quarter for core retail sales, which is what feeds into gdp, that's running at a 10.5% annual rate, so i think the fed is going to say, look, we still have work that we need to do maybe not as much as we did before, but we're not completely done so, i'm thinking they're going to go 25 basis points and then take a step back and change that wording to say they're going to wait for those long invariable lags that we have been waiting for. maybe the ecb tomorrow gives us a little look into what central banks are going to do globally, but i think they'll probably

stay with their 50 basis point move that they have been talking about. >> the problem is, you could make an argument that the fed's been too fixated on the labor market, thinking that the strength that it sees in front of it is a sign that it should keep the pedal on the floor while minimizing the potential damage that they were doing to the system, to credit markets, and the like and now that they've broken something, that may influence how they should be thinking about things here forward, no? >> it absolutely could change where they're focused not so much on the labor market and looking at it more who wholistically. we're seen layoffs in the tech sector we haven't seen it broad-based the consumer is still there. they're still spending we're still seeing it on credit cards. we're still seeing it within the consumer retail space that i talked about on those core retail sales that are there.

you're seeing it in the airlines and the hotels and the travel that's going on, so i think they can look and say, you know, there's a phrase that maybe they're too tight for the banking system, but they're too loose for the economy, and maybe that is where they're looking at how do they balance those two together i think they can todo it with oe more hike, and knowing everything that's happened has brought the recession closer to now than where we were a couple weeks ago, thinking it was going to be fourth quarter maybe see it now this summer >> lastly, before i let you go, what do you make -- you mentioned tech what do you make of the move in that space the prospects for it now, whether they've changed over the last five days or so >> you hear zuckerberg talk about the year of efficiency we've seen that across the tech sector we see the layoffs we see them trying to shore up some of their balance sheets in different ways when it comes to cost and expenses. i mean, they'll do better, i think, over the long run, but i

think short-term, it's going to be dicey there's long duration assets and with volatility going on, i think you still have to be cautious there i think they have a lot of work to do, so i would focus more on something like hmos. we like that space we like some of the names like general mills, staples or lowe's, and we're adding to jpmorgan >> victoria, thank you eugene, time to be defensive here to what degree, you say? >> scott, i think the best thing to do now is bar up your portfolio. industrials on one side, health care on the other side the reason i say is i don't think it matters whether the fed raises 25 basis points or not. i think the statement is going to be the important factor they have to certainly recognize that damage is being done and that because we operate in a lagging factor, and no one knows exactly how much damage has been done and who will show up in the

lag effect, that they should be more prudent now so, i think investors are better safe now than not. i'm not making a call to go to cash by any means, but if you look at today and before the banking situation last week, if we had to produce a price number that we had this morning, without that information, essentially the stock market would have rallied because the thought would have been that maybe the fed would slow down. now, the focus is more on the fact that the economic damage might be more intense and more sudden than was previously thought and most investors' portfolio, so there's a little bit of adjustment going on >> so, if that's the case, why to you favor industrials as one of the two groups you like along with health care >> if you look over the last five days, industrials got hit very hard. look at caterpillar and reynolds you still have a big focus on

governmental action coming in, infrastructure spending going on so, i think that you might not be right the economy might not -- completely, and on the other side of that, you're able to actually pick up a couple, like united, that have gone up quite a bit but sold off 18% over the last five days, still very reasonably priced and that's what you mean by barbell portfolio. you position yourself to benefit regardless of which way the economy goes >> hike or pause what happens a week from today before i let you run >> i think they pause, and i think it basically will be in a statement. they may do the 25 basis points. i know a lot of folks are talking about their credibility. i don't think the 25 basis points makes a difference one way or another they're going to basically be very strong, the statements, and we recognize the damage being done to the economy, recognize that maybe on the slowdown is occurring, inflation is

resolving, and whether or not they raise 25 basis points, i think the statement's going to suggest they're going to be pausing soon thereafter. >> all right, eugene, thank you very much for joining us today that's eugene profit we're going to wrap it up with santoli, who's going to give us an extended last word, because i think we need your insight today on all that you have seen over the past few days. now these credit suisse developments and the impact that that's going to have to where we trade in the hours ahead >> credit has not gotten better in the last week going into this week, you were able to say the credit markets were unbothered by anything going on the market's become more volatile in itself, and there's been a lot of deterioration in the breadth of the market. we've migrated to the lower end of the range a lot of things that you were pinning this idea that we actually were in a new uptrend on have fallen away to a fair degree if there's a slight upside, we're seeing more of it be kind of a messy rotation than an all-out exit you see things like

domestic-oriented stocks working today, things like retailers and restaurants as well as utilities. so it's not pure safety, but it's sort of out of the way of global turmoil is what's happening, and you know, i still think that we're going to be in this mode ahead of a big quarterly expiration and then the fed meeting where you just shouldn't be surprised by having a widening out of the band of trading right here do i take comfort that we've so far kind of found some support in the lower end of the trading range? maybe for now. also, sentiment was not overexcited coming into this phase, so i think we're not -- we weren't exactly positioned for great things, but that's only kind of a small long-term -- we might have to get the market a little more oversold before you finally get any kind of decisive move where there's really money deciding the values from surface. >> i know how loath you are to look at percentage in yields as any great indicator, but it is worth noting, and it was

eye-popping to see the two-year note yield up 10%, better than that at one point today. it's only up 7.67% now, but her we are, 3.88%. if we see this level of extreme volatility in interest rates, what's the ultimate implication on how stocks trade? because it can't be good >> no. no they will -- they will trade without conviction there's going to be all these pops and fades and air pockets because that's what happens when you have a tightly-wound market like this. but no fixed income volatility has been the thing that has destabilized stocks over the last year, year and a half, only more so in the last little while, so i don't think you need the percentage moves. you just tell me, two-year note is down 110 basis points in a week, and it is way off the charts in terms of, you know,

the norms of how short-dated u.s. government paper tends to trade. >> i knew i was walking into something when i brought it up that's why i gave you the disclaimer >> exactly you warned ahead of time >> i'm looking at the nasdaq too. i find it interesting to discuss what's gone on with tech so far this year, caught a lot of people off guard people said, no, it's going to revert back. this growth outperforming value to start the year cannot last. >> yeah. >> and here we go, thinking, okay, maybe in this particular new environment of the last few days, it's got some legs >> you can absolutely understand why it's happening it's not the first time. you often have seen this impulse where we're just going to migrate to kind of the new impervious staple-type companies, which in large part are digital right now. i think it's getting a little stretched if you look at microsoft relative to the overall market, look at apple relative to small caps, they've

done a lot of the work already and overall, you don't necessarily want to wish for the kind of market where those are the only stocks working, even though they do buckle the indexes. >> if you're just tuning in, like, oh, it's a down day at wall street, but we were down at 700. we're going to close well off of that on that note, i'll see you tomorrow i'll send it into o.t. with morgan and john. ♪ who knows what happens tomorrow that is the scorecard on wall street, but winners stay late. i'm jon fortt with morgan brennan. we've got the markets and your investments and adobe earnings just minutes away. also coming up in hour, w we're going to talk to dick kovacevich and tom michaud about contagion risk