por portend? we don't know whether the political will will materialize. >> of course, that's a great point. regulation has to go along with it if you're going to guarantee everybody's deposits you don't want the banks to doing all sort of risky things >> reporter: the risk throttle goes way up and what does that lead to? >> eamon javers, thank you that will do it for me over to carl and sara who are on the floor. and another busy morning good thursday morning again. i'm sara eisen with carl quintanilla live on the floor of the new york stock exchange. setting the agenda holly newman kroft at neuberger berman on financials and this market >> torsten shok pivoting to a hard one now why he thinks the fed is done raising rates. and later former federal reserve governor and deputy treasury secretary sara bloom

raskin on that decision from the fed next week and how the collapse of the regional banks factor into their thinking and potential government action. these headlines the last couple minutes about jpmorgan and morgan stanley potentially looking into giving first republic a hand has turned the dow around the s&p up 25. the best week for faang since early february signs of deflation and import prices >> the lower yields directly impact the buying for tech it's why we're seeing things like cathie wood and ark it means there are still questions out there about whether the banking system is in good shape for deposits and balance sheets >> adobe's quarter not hurting qualcomm and sky works one chart that did catch our eye

is the nasdaq's volatility versus the s&p look at that 52-week low it's not that volatility is down in the outright but versus what's happening to the broader market, it means -- it explains why you would be drawn to the tech trade >> it shows you where the problem is tech has been the problem amid higher interest rates. guess what, its financials now, and you see that exposure within the overall s&p. >> thoughts on that, mike santoli? >> it is the inverse of how those parts of the market have performed. so that's essentially the nasdaq/vix against the s&p 500/vix and the performance has been dramatic. mega cap growth vastly outperforming the average stock in the market. on a year-to-date basis it's 14 percentage point spread at this point. pretty stunning. a big comeback from a couple of years of underperformance. anything you would define as quality and stability in the market is going to be overweighted in the giant

nasdaq-like stocks that's where it brings us. interestingly this interday pop on the headlines about first republic shows you that the market's very much stretched, not necessarily as far as it can go but very far in the direction of grabbing for big growth stocks and selling credit-related or financial stocks, and you have some relief on the bank stuff, and it released the market higher there. it's unclear how much longer that can go where you have a relatively small number of stocks supporting the index. the s&p 500 has kind of taken advantage of that and stayed relatively resilient up on a week-to-date basis the low was higher than yesterday's low which was higher than monday's low so far at this point anyway, it seems the sellers don't want to get super aggressive at these levels with the uncertainty of the fed meeting next week even though that could be a negative surprise as well as a positive one. >> i was going to ask you to characterize the resilience of the price action at the moment

in the face of ongoing questions about the banks and in europe, couched, as they said, given their forecast might be a little dated given how quickly things are moving >> you can definitely explain it by just the very hefty allocation of big stable growth in the s&p but the other parts of it is we peaked on february 2nd, so the market was already well into kind of pullback mode. one of these 5% to 7% pullbacks. you already had people kind of taking exposures down. what i mean by that the silicon valley bank news did not strike a market that was happy and complacent, at least in the very short term and now it's all about sorting through. who knows if we do manage to get a circuit breaker in this process of concern about yet another vulnerable institution and worrying about deposit and all of that and then what's the economic impact of everything that's gone on, potential credit contr contraction, whether the market can withstand that

there has been some damage done under the surface. you see much fewer -- many fewer stocks making new highs versus lows and things like that. >> mike, thank you mike santoli amid all the volatility our next guest still forecasts three 25-point basis hikes and expects lackluster returns in 2023 so what do you do? where do you hide? joining us now is managing director holly neuman kroft. things are changing very quickly. >> up to down. lots of volatility >> there's word jpmorgan and other big banks are in talks to help first republic which i think shows how the market wants to see a deal or a buyer does it change anything for you. >> no, it doesn't. i think we have two things going on right now the fed is still forced with having to target inflation and how they're going to combat that because the numbers are still far too high for a sustainable economy and then have to instill

or reinstill confidence in our banking system that's been shaken this last week. we're not surprised to see a buyer for first republic it's a solid bank, and the run on the banks, you can't control them they have a solid client base, a great reputation this is only good for the system >> you have been joining me now for the last year and have been very cautious, not encouraged -- on some days we've had you, big rally days when inflation has come down because the fed is still at it. is that still the view >> sara, i would love to come on here with a positive attitude, and one day i will but we are still very cautious inflation, like i just said, is far too high there is a ton of volatility and risk in the system we are continuing to maintain this defensive posturing in our client portfolios. we are not a risk on environment for our clients. >> you manage billions of dollars for wealthy investors. what do you tell them to do? where do you tell them to hide we are seeing some big gains on

bonds right now and still fairly high yields, right >> we've been overweight bonds for as long as i've been coming on the show. we continue to be. you can get over 3% in munis high yields are 9% to 10%. that's where active management is critical. they are dealing with higher interest rates so you have to be very careful you can get higher yields, attractive returns and safer asset classes today. we're continuing to be underweight in our equity positioning. companies that have proven track record of operating in volatile markets, strong pricing power, not a lot of exposure to commodity and labor costs and, importantly, low leverage. >> you don't sound impressed by deflationary signals whether it's import prices today or commodities cracking here or today's jobless claims

notwithstanding, the idea that layoffs are going to turn into higher unemployment. why not? >> we want unemployment. in theory, i've said before, it sounds scary and maybe living through it is scary. we need unemployment to go up to bring inflation down inflation at 6%, getting to the fed target of 2%, there's a long way to go. we think the inflation number will be between 3 to 3.5% at the end of the year, but we don't see it hitting that until the second half of '24 at the earliest we do need to live through a little bit of pain to get that number back in line. >> is your sense that it could roll over quicker than the market thinks? >> maybe a limb bit quicker in light of what's happened the last week, but we're still not seeing a 2% number this year at all. >> so you're not encouraged by the fact that the market is seeing rate cuts this year and a total rethink on where the fed goes because of what's happened in the banking system?

>> yeah, the fed -- look, the fed i would have told you last week we were super confident in the raise. the market is over 50%, suggesting that there will be a hike again next week whether it will or won't, the banks are now also going to contribute to slowing growth because they're going to tighten their lending, and that's going to contribute, which is something we hadn't considered seven or eight days ago. things move very quickly but now with a little bit of help from the banks, perhaps the fed can take its foot off the pedal. and like i've said before, we need the volatility to end and that will happen when the fed takes its foot off the gas pedal. >> when powell gives us an all clear and says we are pausing for now, you think that's the equity low >> i think -- look, i think there are going to be a lot of dips this year, and i think that we will see opportunity to go in on equities on the dips, but the volatility is going to continue especially aroundall the

uncertainty we see today with the fed, what they're going to do, when they're going to do and how much they're going to do >> what is the level of alarm or concern from your clients right now? >> surprisingly not very high. i've been at newbuberger berman i had a bunch of client calls over the weekend asking if we were concerned about their deposits in some of the regional banks, but after we came out sunday night and said we're going to secure those deposits, our clients haven't been alarmed. there hasn't been panic. and i think that's helped by the fact that all of our client portfolios are defensively positioned and we're going to continue to maintain that. we might miss a little uptick but better safe than sorry we can hope for the best but you need to plan for the worst >> holly, thank you very much. good to get an update on your thinking, what you're telling clients. holly newman kroft from knew

burger berman. some significant money tied up in svb, why he's looking to keep it there and have portfolio companies do the same. sara bloom raskin, what will jerome powell do next week hike or pause? the ongoing conversation, no landing? hard landing apollo's chief economist will talk about that when he joins us later on this hour s&p 3920 did take out yesterday's highs we're back in a minute

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the fallout from svb continues today. regional banks still feeling the impact what about the vc space? our next guest still believes in the bank keeping funds with svb and encouraging founders to do the same joining us at post 9 managing partner is here. how did you resist the forces that were saying get out late last week? >> it's been a long weekend, a long week. i think there are arguments against some of the things that happened but generally we've been happy for their partnership. keeping your money with any bank now feels crazy. admittedly on our 2023 bingo

card, svb's failure was not one of the items we were expecting we want them to survive, to continue to exist while keeping your money with them or, frankly, any bank is not something we advise, we don't want everybody running away because we want a buyer to come in and try to keep them in the ecosystem. >> but you're not going to split your -- you're not going to diversify your deposits into 50 banks. >> no, no. into a few banks you need to have backups i think a bunch of companies were not thinking of treasury and a bunch of funds in smart ways you had companies that had raised $100 million, $200 million with the overwhelming majority sitting not even in money markets but just in cash with a single bank and while i don't think it's the company's responsibility to make sure deposits should be guaranteed at banks in the u.s., we live in a

new world now. >> can you talk about -- and, ben, i know this was a huge issue for you and you had a hellish weekend -- can you talk about how critical silicon valley bank was to silicon valley, to the startup ecosystem and venture capital and what its demise is going to mean? >> yeah, i think we're still sort of working through exactly what that looks like there's a bunch of different roles they played. one of them was that they were a big debt provider and i think there are certain companies that should have had debt with them, probably lots of companies that had debt with them that should have had debt with them. another group of companies that probably were using debt in not particularly intelligent ways but to extend runway and living off of debt. that's not a good practice for companies. it's something we've been advising against for a long time it doesn't mean that it wasn't something going on in the ecosystem.

it will probably be harder to get certain companies to get debt even companies strong and using debt for the right reasons will probably have more expensive debt for some period of time, maybe a long period of time. there's also silicon valley bank played a role as a connector, they played a role as a data provider they had unbelievable benchmarking against what valuations were, around what arr was required for series bs and they used that data to understand pricing, to help navigate some of their strategies we will live on without it we're going to miss them for more than just cheap debt. i think that's something people are missing. >> the knock is everything you just said and that tight interconnectedness fed group think. >> yes >> i assume you think that's broken now >> i do think that's broken now.

the run -- by the way, in some interesting way it's almost self-inflicted one of svb's great strengths they had a better platform than any other bank, easier to move money and so you go back to 2008, people are waiting on line in the street, it takes weeks to do anything. now people with one click can get everything out of svb and i think there was a panic moment no one is one single in general i think a lot of people were nervous and freaking out. the advice we gave founders was we're not going to sit here and tell you to pull -- there's questionable legality around sort of starting a bank run. we're not going to play that role, but we're also not going to say you leave every penny there. what we said this is your

decision, you are the fiduciary, this is your company you control your board you need to do what you think is right. we don't condone a bank run but you need to do what's right for you. other funds behave the same way we did >> is it business as usual for you now? if you go back to fund-raising >> no, it is not -- i say it's business as usual in the context we are continuing to deploy money, we're continuing to look for great companies, we're continuing to support our portfolio, but this is a shock there's going to be a little bit of ptsd. there's obviously other things happening in the environment right now, what's going on with first republic today i think we need to have our eyes wide open that there's -- i mean, look, the market in general has been uncomfortable, shaky. this has been a wake-up call coming off the highs of '21 and early '22 and that is going to continue this probably shines an even brighter light on fiscal

responsibility for startups, fiscal responsibility for funds, and, honestly, i think it's a good thing it's just a very sudden way of getting to a good thing. >> really quick, aren't you expecting a wach of startup failure now? >> not because of this >> you don't think lending -- >> i think, sure, at the margin there may be some companies living in really dangerous ways. they were going to fail in three months they might fail in three weeks now. generally speaking this not going to cause a wave of startup failures there will be a wave of startup failures because there was too much money in the system, because there's a disconnect between current valuation and companies doing things somewhat irresponsibly. i think you were going to see that with or without this crisis. >> ben, great having you i appreciate the intelligence. ben lerer. the european central bank raising interest rates by 50 basis points today what does that mean for jay powell, the fed chair, here in

the u.s. we'll discuss. the dow up more than 100 points, we're seeing a rally the s&p 500 up almost a full percent. we're building on those gains since we got the report that big banks like jpmorgan were willing to step in to help first republic the only sectors now, consumer ergyles and ener evyone else is rallying including financials made up wo♪ ♪ it's our turn now we'll make it up again. ♪ ♪ we'll build freelance teams with more agility. ♪ ♪ the old way of working is deader than me. ♪ ♪ we'll scale up, and we'll scale down ♪ ♪ before you're six feet underground. ♪ ♪ yes, this is how, this is how we work now. ♪

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the ecb raising interest rates 50 basis points, ahead of the fed decision here in the u.s. wednesday, next week. cnbc economics reporter steve liesman with more. so the euro is up strongly in reaction and now european stocks are rallying, steve, which, to your point earlier, the eye of the storm is really the u.s. regional banking system. we got word there could be a deal in the works for first republic and then everything went up. >> right, here is the deal this could be a dry run for the

fed next week, the european central bank, as you said, hiking by not zero, not 25, but a full 50. and insisting there's no conflict between the ecb fighting inflation and securing the financial system >> i believe there is no tr tradeoff between price stability. with this decision we are demonstrating this we are addressing the price stability issue by raising interest rates by 50 basis points >> lagarde insisting inflation is too high and the ecb should continue to fight it as long as that's the case. she did back off more rate hikes saying economic risks are tilted to the down side and financial tensions could end up tightening credit conditions. she insisted european banks are in good shape and the ecb has ample liquidity tools to deal with issues. she separated the central bank

tools for inflation and the tools for addressing financial stability. most of all, maybe she's pulled this off weak european bank stocks, mostly unchanged after this hike fed chair jay powell may have a more acute banking problem but taking a lesson from lagarde and i have here a list -- a script here, sara. here is the script for a dovish hike you say banks are in good shape, you have different tools for monetary policy and financial stability. you back off your promise and be data dependent >> that's what she did and what people expect the fed to do next week, too. the critics will say that you can separate financial stability but ultimately they're related because everything going on in the banking system will end up

resulting in weaker economic growth and disinflation or deflation. you can connect those dots easily and so they may be missing that in raising interest rates on lagging data. >> right i will get to the criticism on the other side the question is whether or not that's an issue for now, sara, or an issue for down the road. lagarde said i have an infrustration problem in front of me, and i'm not sure if this is the right call, but i have an inflation problem in front of me right now. i will deal with that with 50 and i will see if i have an issue with tightening financial conditions if you look, sara, you could argue they're wrong on the other side look at the massive cuts that are built in from the current rate i think we're at 4, 4.03 on the rate the fed could start cutting. that could be as wrong as the idea the fed should go the other

way. >> does that mean indecision or in the '70s they were flip-flopping or managing the dial, like greenspan did for years? >> yeah, i think the idea of indecision -- i wouldn't criticize that at the moment we did have the second largest bank failure since 2008. there's a lot of dust to settle. we don't know how this will impact the regional bank you were just talking about that the issue with the equity of the banks you have to watch. why is there a lack of confidence in the equity of these banks? what does it say about the deposit base, about the asset side they have to be concerned about that i think the idea of what lagarde did was stall a little bit but also use the time to address the inflation problem in front of here >> steve, thank you.

the other important message from lagarde and potentially from powell if they do keep raising rates to fight inflation, a, we're serious about inflation. we're not backing off from that. we don't necessarily see anything too worrisome that would cause panic and make us change course. it inspires confidence she said the european banking system looks safe. we'll act if we need to and the markets worry if the central banks see something they don't and if there are questions whether it's safe or not, the fact she's not blinking on this could signal confidence. >> you can look at ratios that argue maybe it's not -- the house is not on fire >> it's a signaling. >> the dow up 160. to seema moody with a news update microsoft says it is bringing the power of next generation artificial intelligence to the work place with the introduction of microsoft's 365 co-pilot

it says users will be able to use natural language prompts with its existing applications like word, excel and power point to create first drafts, organize data for analysis and enhance presentations. microsoft has already integrated open ai technology into its bing search service boeing has made its first dreamliner delivery since a data analysis prompted the government to order a pause late last month. it went to lufthansa gambling on games brought in more than $1 billion in january, a record high and a 58% increase from the same month last year. a lot of that due to an increase in the number of states where sports betting is legal but even when new markets were excluded revenue increased by 15% in states where it was already legal. carl and sara, back to you >> tough market. maybe turn to sports betting for better luck. thank you, seema seema mody after this we look ahead to next

week's fed decision with the former fed governor and former deputy secretary sarah bloom raskin to hear how the current crisis back tors in. torsten shok joins us saying bond yields haveead d pkeanis causing for a hard landing whatever you see, at pgim we can help you rise to the challenges of today, when active investing and disciplined risk management are needed most. drawing on deep expertise across the world's public and private markets in pursuit of long-term returns... pgim. our investments shape tomorrow today. somewhere out there is that one-in-a-million. someone who thinks with their hands. who can shape raw materials into something meaningful. and who wants to serve in their own way.

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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. things have definitely improved in the market the nasdaq is leading the charge it was higher all morning long to be fair but near the highs of

the day up 1.5%. there is the nasdaq, big tech outperforming on the drop in treasury yields. that's been a constant theme if you look at what's contributing, huge moves, carl amd up 6.5%. semiconductors have sprung back to life. some of the other groups right now participating including the banks. jpmorgan and others are looking at saving first republic >> put together adobe, about a one-month high today >> which is crazy and hard to believe. the s&p 500 is up for the week but i say that and it's only thursday >> the week is not over. >> it's been a year. secretary janet yellen in prepared remarks this morning says the u.s. banking sector remains, quote, sound. without an interest rate road map it's tough to test

liquidity. speaking of the rate path, u.s. prediction have is gone from a 50-basis point hike next week to 25 or potential pause. tough call joining us former federal reserve board of governors member sarah bloom raskin. it is great to have you here welcome. >> great to see you. >> how does the uncertainty of the interest rate outlook from the fed, which is now pretty uncertain for next week and beyond, factor into these banking problems >> right now we're at a point where we're going to have to see the fed bring together two sets of considerations. obviously the set of considerations regarding its inflation fight but now a set of considerations that have to do with bank stability and we know what is at the core of the svb and signature bank issue and the potential contagion effects that have been attempted to be

contained is a notion of interest rate risk management. so every bank really has to be managing its interest rate risk. what is interest rate risk essentially it is the risk of changing interest rates. and for a very, very long time interest rates were near zero. not much to manage in terms of interest rate risk as soon as interest rates really started moving there was a signal, a big signal to banks you'd better have a sound and viable and workable interest rate risk management plan. that is what we see didn't happen, what we see as the core of the failure how do you do interest rate risk management without knowing exactly where interest rates are going? that is why you sort of see this

connection between the path of interest rates and the management necessary to supervise liquidity. >> you bring a great point we were quite plain in what we were trying to do in helping you read the room and you didn't, and i wonder if you think this period where you begin to see some fissures is something the fed has long been waiting for and will try to explain how this maybe isn't a surprise >> really it should not be a surprise of course we've had interest rates moving up. the fed fund rate has been moving up for a while. should not have been a surprise for banks, not a surprise for supervisors. the fed supervisors should have been in there very early kicking the tires on all banks on their interest rate risk management well before, very well before

interest rates started moving up signatures were sent, messages clear it's time to make sure your risk management plans are intact and presumably supervisors need to be reminding banks, reminding them almost near constantly it's a question as to where that reminder was when it came to svb, but leave that aside, that's what supervisors are for. they go into the banks and they're kicking the tires on some of these risk management processes. >> so, i mean, we're playing the blame game now, right, which you have to do as we try to figure out how to make the system safer and put in place safeguards to prevent this from happening. where do you start, svb management congress rolling back the dodd-frank rules on regional banks? the federal reserve on the interest rate management and not

seeing the risk? who do you blame most, sarah who needs to have their business changed? >> not looking to point fingers. banks have primary responsibility for risk management they are the first line of defense. if they fall down on the task, they should have their supervisors there to remind them constantly here the supervisors were both the california state commissioner and the fed together those were the reminders, the second ring here if the bank isn't doing what it needs to be doing, the supervisors need to be in there. so that is essentially -- that essentially seems to be what was lacking here completely avoidable completely avoidable this is not -- this is not some kind of once-in-a-lifetime perfect storm that came about. it really looks like a failure

of basic interest rate risk management >> although we did go through that period for a couple of months where soft landing looked possible fed chair said the word disinflation 13 times in a presser. the market got seduced i wonder if you think that has implications for either forward guidance or just communications framework at the fed in the years to come. >> i think if we're going to improve on communications we really need to see some strong communications regarding risk management basic supervision. that's not really what you'll see a fed chair talking about. now that we've had this event, much wider and broader consequences, now this has occurred it would be really incumbent, i think, on the chair to speak to the risk management issues at stake here

and that is, again, the fed doesn't usually bring supervision into its monetary policy messaging, but maybe this is a wake-up call that actually needs to happen. >> bottom line, sarah, do you think the system is safe now because of the fed and treasury, fdic, actions, or will more have to be done >> well, it is still evolving. i would say the fed, fdic, treasury responded in a very big, bold way. they did pull out tools in a very quick way those tools could need adjustment as developments occur. but they pulled out some of their big guns >> all right stay close, sara we could use former banking regulators and monetary policy central bank experts around these days

thank you. sarah bloom raskin, appreciate it after the break, cathie wood and ark seeing the biggest inflows in two years is another risk-on rally in the cards? watching some social names, snap moving higher on growing calls for a tiktok ban in the united states as the markets holding gains. s&p 3933 as americans, there's one thing we can all agree on. the promise of our constitution and the hope that liberty and justice is for all people. but here's the truth. attacks on our constitutional rights, yours and mine are greater than they've ever been. the right for all to vote. reproductive rights.

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time for today's "tech check. looking at massive inflows for ark and cathie wood. hey, dee those inflows are part of this broader point i want to maybe, the tech trade is suddenly right back on a lot of folks i'm talking to are taken aback, called it a bizarre trade because of the speed at which this is happening and, remember, this is happening just days after the implosion of silicon valley bank. tech's biggest bank. we've been looking at yields look at the ten-year yield versus, say, the fas dabbing 100. you can see it has a distinct inverse relationship because higher yields put growth prospects further out, those earnings further out in the future plunging yields are making the case for growth stocks in the ark fund let's get to that because it saw nearly $400 million in inflows on friday and i believe that's

nearly a record since last april. that was only a few months, april 2021, a few months before the ark etf hit all-time highs, up more than 4.5% this week. it has been a big part of this tech trade coming back online. we talked about this yesterday, the flight to safety and these well-capitalized companies that have fortress-like balance sheets at the expense of some of those riskier smaller names. we get back into the bizarre world because everything is working in tech. >> is there any differentiation as we see this comeback, is what i was going to ask you as of a week ago we were trying to study cash flows and who is on the brink of profitability and who is cutting costs did all of that just get thrown out the window here because rates have moved south >> it's a good question. i think what you're asking have the fundamentals changed not really amazon's aws is projected to go

even slower and that itself is a main indication of enterprise spend which many tech companies in the cloud space are connected to fundamentals aren't matching up. if you look back to the ten-year yield and making earnings in the future look more attractive, that makes the case for some of these smaller companies. we did have adobe last night, guys, it was a clean beat. that is maybe adding some fuel the market is getting adjusted to lower valuations. mid teen growth may not be looking that bad in this kind of economy so that's another reason perhaps the tech trade is back on >> it is interesting to see a name like microsoft leading multiple days in a row, say, over an alphabet or an apple in the tech trade >> 20% plus revenue growth was okay now we're like rewarding 15 like it's the best thing in the world. >> and it's not just good enough deirdre bosa, thank you.

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tighter credit conditions. let's bring in apollo chief economist torsten shok it was a bit of a shock to get your note earlier in the week where you said when the facts change, we change our model. a financial accident has happened talk to me why you think this episode was so important >> absolutely. up until last week if inflation is so high there was so much that the economy was is not slowing down what happened this weekend is increasing the risk we might see tighter financial conditions and the smaller banks in the u.s., a large bank is 1 to 25 in the fed data bank number 26 to 8,000 is a smaller bank and if you asked the question how important are the smaller banks for u.s. credit expansion, the answer is they make up roughly 30% of total assets in the u.s. banking sector and account for 40% of

total lending of auto loans, consumer loans, real estate loans. the bottom line is over the next weeks and months ahead the risk is rising that we will see tighter credit conditions in the small and regional banks are likely to step on the banks and the big question is will they step really hard on the brakes or just be more slow moving in terms of slowing down their credit extension that's the key question going into the fed meeting next week >> i think you just summarized what's been happening in the market, torsten, this week, grappling with this idea of slower growth, a fed that's not going to do a whole lot more, if anything, look at the two-year and ten-year yield sharply lower. do you think we've already reflected the hard landing, or is there more down side ahead on those yields given the changed outlook? >> not in equity markets if we are going to see a significant slowdown in earnings because corporates can no longer

borrow from regional banks, if we see a slowdown because corporates are no longer hiring to the same degree, we run the risk of a broader implication of what happened last weekend it's not so much about what's happening. equity prices and credit spreads. it's really more the behavioral change is going to be in particular inside the regional banks. are they now going to step on the brakes and with the funding costs going up, you're also seeing the bank financials spread also widening if you also now have more requirements about stress tests, et cetera, coming to the regional banks, you wonder what the thought process is and whether that might not be indication for credit extension across the economy >> how do you explain a pause next week when lagarde just did 50 >> i was very surprised by the ecb move here.

the global financial system is under some stress at the moment and financial stability as your previous guest was talking about, instability risk bes are more important now than inflation risks. it must be the top priority for central banks in the sense of that's what i would have expected because inflation was very important last week and as you were saying no landing, no landing and inflation is still a problem. inflation is now in the back seat now the number one priority to get financial stabilities, have a calm market, stands fairly stable and credit starts flowing again. if that's not the case, that raises this risk the slowdown already in the pipeline because of the fed hiking rates will be faster because of credit conditions tightening. >> inflation still is a big problem and a big risk, torsten. i get your point, but why can't they doboth at the same time

lagarde and powell have shown us they can raise interest rates to fight inflagstion and still be there to provide liquidity in the banking system at the same time >> the funding costs for banks are going up so in very plain english, if you and i go into a bank and would like to, say, buy a car, and the bank has to find the funding on that or funding on deposits is more fickle because deposits don't look as stable at least as they did last week and now the funding costs if i go to wholesale funding markets have been widening out if i am willing to give a loan to someone who would like to buy a car the risk that might come at a higher interest rate. that will slow things down the real fear is if all banks at the same time on the regional side account for 30% of all assets begin to tighten, you could have the worst case of a sudden stop in the economy where no one can get a loan to buy a

loan, real estate loan or corporate loan, the slowdown could come faster simply because of this risk that a credit crunch could come potentially much quicker than what anybody expects if the regional banks step hard on the brakes. >> that is why we have gdp estimates shaved yesterday torsten, thanks for the time today. torsten shok >> thank you going super negative the latest on first republic's volatile trade today plus why bitcoin is on fire this week we'll hit both when we come right back td ameritrade, this is anna. hi anna, this position is all over the place, help! hey professor, subscriptions are down but that's only an estimated 15% of their valuation. do you think the market is overreacting? how'd you know that? the company profile tool, in thinkorswim®. yes, i love you!! please ignore that. td ameritrade.

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welcome back amid all of this craziness in the markets, take a look at what bitcoin has done this week it's killed it up 25% on pace for the best week since february 2021 when bitcoin gained 26. the bulls will say, look, the ultimate bullish case is playing out when there's a confidence problem in the banking system and people are pulling deposits and wondering if their cash is safe, go to bitcoin. it could just be yields are sharply lower because when bitcoin had a great week in february of 2021 unprofitable tech names and pandemic winners peaked >> big debate, does this justify

the long-standing thesis behind crypto gold has been doing well, too. not today with standing. >> a speculative rally is back on we hit that with the ark, with tech as interest rate yields have fallen sharply. >> we're right at moving average levels to post 9, the judge and "the half." carl, thank you very much. welcome to "the halftime report." i'm scott wapner front and center this hour the road ahead for stocks making a nice move here as we come on the air with you what the past events of this week mean for your money our investment committee tackling that key question right now. joining me for the hour josh brown, steve weiss, brenda vingiello, jim lebenthal, richard saperstein, a baron's top 100. good week to hear from rick saperstein we do have some important business to take care of