you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire welcome to "power lunch. first republic may receive support from big banks here. the ecb and u.s. treasury department both scrambling to reassure customers that the system is stable how will the fed handle this economic narrative >> at the same time the white house putting tiktok on the clock. just like that the most social media app could disappear faster

than it takes to watch one of its video helping rival stocks the market up sharply and the nasdaq by 2%, dow by 316 points and these reports of rescue plan we'll call it for the banks, more in a moment but thirst chri kristina partsinevelos is here >> from the swiss national bank lifeline and it truckles across the sector s&p financials is the second best performing sector with first republic up almost 11% but still over 55% lower on the week several banks are on the talk to deposit funds into regional names and relief theme regional banks in general represented are on pace for their best day since january 2021 up about 4%. it's already more than doubled its 30-day average as well

49 million shares trading when normal lith 18, 19 million lower treasury yields may not help in the financial sector but definitely helping big tech. lower yields, that's why megacap, big tech names like apple 1.4 and amazon almost 4 helping to drive the nasdaq higher, the leading indices right now. more details emerging on first republic and for that let's go to david faber. >> we've been working on the story, well, obviously for many days now including today, of course, when we came in, the stock of first republic down sharply on stories and other news organizations about a potential sale it seemed of the company. that is not the case at this point. what we have been talking about for the last, oh, couple of hour, not even, is an unusual plan that would involve the

deposit of as much as $30 billion into the bank to essentially create more confidence amongst its current dep depositors and anybody else in the financial markets who has an interest in first republic bank. the stock had a dramatic change in its trajectory having been down as much as 25%, 30% earlier and now up over 12% again on reports of this injection. don't have it yet, can give you some sense here as to what it's looking like earlier i left off goldman sachs, they are a part of this goldman and morgan stanley have committed to deposit 2.5 billion. the biggest bank, b of a, wells fargo and some of the largest regionals in capital one as well in for a billion add that up and gets you to about $30 billion. the idea here is we don't need to buy this thing at some discounted significantly discounted price or even after

the fdic has seized it we don't need to try to negotiate a deal to take assets off their hand or anything else. we think just by putting in $30 billion in uninsured deposit, how long it will stay there. whether there's a guaranteed time line at which they will make sure to keep those but we think by doing this, it willen gender enough confidence we will get past this mini crisis in the banking industry so we'll see we'll wait for the fine print here, wait for press releases but certainly given any number of people close to the situation we can tell you those are the details as we have them right now, tyler >> well, david, as usual, great reporting, thank you very much david faber, thanks. there's more details emerging on the fallout from the silicon valley bank's demise and the issues ripping around the banking sector and recap how exactly we got here. the last week on thursday, silicon valley bank basically started to collapse after much

uncertainty, the fed comes in and backstops svb's deposits relieving the market then credit suisse loses its chief backer, a saudi investment fund sending european banks plummeting along with fears of a total industry collapse now, until the swiss bank announced that it would -- the national bank announced it would step in to aid credit suisse, all this growing instability and uncertainty in the global banking area comes on the 15th anniversary, ironically of bear stearns agreeing to be bought out and last night on "fast money" one of the big short investors weighed in on svb and banking risks. >> even if silicon valley had been in the stress test given what the stress test says, i don't think regulators would have caught it. >> they would have passed it >> the stress test is basically fighting the last battle that battle has been won in the large banks. they're better capitalized and

risk with that is much narrower. as warren buffett says when the tide goes out, you see who's naked. this is a different tide. >> janet yellen telling congress she first found out about svb's troubles a week ago last thursday one investor raised red flags around svb before the collapse, much like eisman did years ago he joins us now. bill, welcome. good to have you with us what did you see when did you see it and how? >> well, i followed the company closely for some time. what intrigued me last year was the issues that venture companies were having and i was concerned that would translate into credit losses on their venture loan portfolio and i learned after digging in they bought a significant amount of long duration low interest rate mortgages at the peak of the market in 2021 and were facing a significant hole around that and

i shared that with my twitter followers in late january. >> so it was really the question of where they were deploying some of the excess cash that they had it was in those long dated mortgage backed securities and treasuries and the losses, the unrealized losses on them were blowing a hole in their balance sheet. >> yeah, correct i mean, we had a venture bubble and literally $100 billion plus float into silicon valley bank over an 18-month time frame and needed to put it somewhere and we had low interest rates for so long i think management got greedy and complacent and bought long duration low interest rate mortgages which was kind of the wrong thing to do at that time >> i'm kind of a basic question, bill why didn't they -- why did they get out of those positions, once they bought them, were they stuck? when they started to experience losses, i don't know if they could sell them or how it would

have worked against the size of the banks and so forth they would have realized they would have realized avoiding losses is that basically right? >> yeah, i mean one one hand the change in in interest rates was so rapid i think it caught a lot of folks flat footed and while an extreme example is one of many banks that is sitting with mortgages and lows below mortgage interest rates but in their particular instance they chose to hold a lot of those mortgages in the held maturity balance sheet which is an account machine nation that allows them to avoid running near-term mark-to-mark losses. >> bill, the most important question for people now and, again, major hat tip i don't know if there will be a movie but obviously you've got a starring role here are there next shoes to fall i looked back through your analysis and feels like this was an obvious problem out there, but i'd like to know now based on the deposit flight we're

seeing if you would screen others being this similarly vulnerable positions >> great question. obviously the markets are nervous and we're seeing every single day the news flow, and the psychology is stressed at the moment there are a lot of banks that have these type of loans and mortgage, but not in the significant, you know, position that silicon valley bank had so i think for the industry as a whole a lot of banks face a period of derisking, having to raise equity capital, which ultimately just translates into lower earnings and profits but not, you know, kind of the type of events we've seen over the last week. >> what do you think explains the error that was made here was it taking the eye off the ball was it a rookie mistake? was it hubris? what >> great question. i mean, you did have a five or ten-year period where rates were

low and investors weren't asking the tough questions. analysts weren't asking the tough questions and you look at the top three holders, they're all passive holders focused on other, you know, initiative, not necessarily going through filings and, you know, digging into the numbers. >> there must be so many other shorts or investors or hedge funds who are kicking themselves and saying, you literally tweeted about this are the markets efficient? i don't know we had martin warning about this and people starting to tally the size of the losses you've singled out the player most at risk yet nothing happened are you aware any other players who made big gains on this or were you all out there by yourself >> being a short seller can be a lonely business at times ironically for the kudos i was down a quick 20% in late january. >> sure. >> when management said everything was hunky-dory so it's never easy and, you know, i never could have foreseen it playing out like this, right i think the good news is, you

know, a lot of folks i knew were able to avoid the issue directly and kind of make backup plans and know of other investors who did capitalize on it. >> how did your short play out, michael, on money? >> well, ironically i had puts for february that expired worthless. i thought management was going to have to come clean at the end of january when they reported earnings and they kicked the can so i had, you know, large individual short position and covered a chunk in the wild trading last thursday and then i'm still short some which is at the moment, you know, frozen for trading so we'll see how that plays out. >> bill, thank you very much good to hear from someone who has been in the stock and it has clearly done the homework on the numbers. thank you very much. we appreciate your time. >> and i'm going to use this, bill -- i'll directly introduce our next guest who knows a thing or two about how to short

stocks jim grant. you blessed us with your presence not only to talk fed but a quick response, if you will, after hearing bill's discussion about silicon valley bank >> well done, bill. >> everyone in the community this, is where everyone is -- if people and wall street had gotten a better whiff of this, the gains that could have been made it's just -- it's a huge miss. >> well, it's ever thus. i mean, everyone is on the side of up and to the right and bad news is rarely greeted with open arms by anyone, and, you know, silicon valley was t this, a big rock candy mountain and had a bearish part and bill said a quick 20% yeah, ours, we -- the stock tripled after we wrote about it the next couple of years, deposits doubled over 18 months or less. what i would add to bill's analysis is there is a big loan

portfolio as well. not just securities and these were i think in good part loans to venture capital and start-ups and founders, as that word is now thrown around and 70 billion is 73 billion i guess is much, much larger than book equity, and, you know, what 0% interest rates do is bring on the phenomenon of zero gravity finance. imagination displaces analysis and if you were in the business projecting technology out into the wonderful 10 or 20-year realm, there is nothing like 0% rates to from sill tate the exercise and imagination that's what silicon valley bank had going for it so this portfolio, $73 billion loan portfolio, i think, might also have been problematic. >> so quickly then before -- i know we want to broaden this out. but when you look at the

response and the rhetoric, are we understanding the vulnerabilities and other banks in the rest of the banking system or not here >> here is, i think, a plain vanilla worry about the banking system as every depositor knows what has not happened in the past year or so is a big uplift in the rates one earns on savings balances like 88 basis points or something. so imagine what would happen to net interest margins on banks it if that were translated into a 4% money market rates which one can get in government guaranteed obligations, and so i think what is happening, for example, first republic people are mentally market to market the net interest -- it's not just a credit risk, not just the risk of combustion in the midst of a panic but rather reimagining the business model in the context, very much higher deposit rates. >> let me see if i can turn the

conversation in the way that i think kelly was anticipating and that is this, one of the things that bill just mentioned was the idea that we had had had very low interest rates for a very long time. and you point out correctly, having been an interest rate observer and observed a lot, man. >> i was actually at the invention of -- >> at the invention of interest rates. [ laughter ] the point here is that he was making the point that maybe the management got complacent because interest rate had been so low for so long they couldn't wrap their head around the idea of them not being that way you point out that now we may be in a scenario where higher interest rates become the new norm, not just for a little while, but for a long while and what might that mean >> the curious thing about interest rates on like almost any other financial variable or price we could think of or market is they tend to trend over generation.

>> long phases. >> so interest rates fell for the final quarter or so of the 19th century and rose to the first 20 years of the 20th they fell until 1946 and from 1946 to 1981 they rose persistently, not, you know, invariably but that was when 1981, kelly, you won't remember this, but 1981, the long bond got to 15% and mortgages, knocking on the door of 20 and for the past 40 odd years, rates have persistently fallen a lot of muscle memory you asked, bill, the prescient bill, what were the component factors of the era, so i would say that muscle memory is one of them conditioned expectations of falling rates and also the well observed pattern of the federal reserve to buckle in the face of a difficulty that rising rates brought on at intervals. for example, in 2018 a '19 the market was down around 20%

around christmas eve that year and suddenly chairman powell was not going to raise, you know, and then 2019 in september there was this -- repo thing >> you wonder if we're running through that again we barely shrank the balance sheet and ran into a bank reserve crisis we're trying to shrink the balance sheet. i don't know if it's the same but doesn't feel like an accident to me. >> i would say it is part and parcel of that you know, one of the things i've observed over so many years credit seems always to be more prolific money wants to be looser and, you know, people kind of elect inflation. they choose it they choose it by the government they put in place that spends and i think there's a persistent inflationary undertow to things that is now coming to the fore. >> i don't know if it's our last

question but ask nonetheless can the fed fight inflation and manage a banking crisis at the same i'm. >> no, chairman powell will tell you they're doing that next wednesday but, no, they cannot do that. already they're saying this was a costless intervention. but notice -- somebody, walter ba ba badget would have said it himself. they are delaying, we think, the rate rises that are necessary, we think, to stop inflation or to at least diminish it so that is a form of a tax everyone is going to pay for higher -- with inflation tax yeah so this is another to me highly unwelcome intervention to forestall markets doing their thing. >> why don't you think we'll end up in a deep recession because

of this the way the yield curves and leading indicators >> i'm in -- i'm not sure about deep well, you know, money supply, which was up with like a tornado is now reversed all that so we have a negatively sloped yield curve and we have money supply growth falling off the table. those are two very potent have been historical indicators of trouble ahead. and so i am expecting opportunity for value seeking people come the value -- >> in stocks still or -- >> well, yes, there will be a value reclamation project otherwise known as a bear market, i think, but make no mistake, nobody knows less about the future. >> than the one who's been through a lot, yeah. jim, thank you so much >> oh, you're welcome. nice to be here. >> great to see you again. coming up, a ticking clock for tiktok and some ai chitchat, two big stories in the chinese

tech space and break them down in today's tech check plus oil's slow drift down. brent higher but down 9% in a week and talk about that and more when "power lunch" continues. continues. we'll be right back. smooth, hed moisturize your dry skin. gold bond. champion your record label is taking off. but so is your sound engineer. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire lomita feed is 101 years old. when covid hit, we had some challenges.

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all right time for today's "tech check. deirdre bosa is here to help us break them down. welcome. >> i love the new studio i'm so happy to be here. >> nice to have you here on the east coast tiktok, biden administration demanding that the social media platform's chinese owners spin off their shares or face a nationwide ban this is the uk bans the app on all government devices the head, i believe it was of tiktok u.s. said that spinning off would not solve the problem. >> it won't. >> any better than their plan to ring fence u.s. data with oracle. >> it won't and let me say i

think we've seen this movie before remember huawei. we were searching and felt like every country in the world in the western economy was trying to search for a way they could have the affordable cheap telecommunications equipment that huawei provided but nobody could get comfortable with the chinese ownership. tiktok and bytedance is more transparent but so hard to repair that trust or have that with bilateral tensions rising and rising there probably is no way to know for sure so divestiture doesn't solve the problem and skeptical whether there is a solution short after banning the app which lawmakers are talks about. >> what would that mean if it was ban the? would there be workarounds or you just wouldn't be able to get it. >> i lived in china and couldn't get access to my gmail or google search or twitter, any of the apps that we're so reliant on so everybody including the chinese at least in the cities, right, had vpns to get past the great fire wall of china are we building up a great fire wall that we know youth will

want to access their tiktok? will they go through that trouble to get a vpn or turn to reels and other apps i don't know personally using a vpn wasn't that bad if the product was good enough. >> on the other hand a big fight over ai, my personal favorite topic. b baidu's rollout, will they disappear. walk us through it. >> if we have learned one thing in 2023, do not roll out your ai chatbot until you are ready. and even if you are ready like microsoft you have to go find all the problems with that it was so interesting what the ceo of baidu did he said, are we ready?

no did the market demand it, yes. he spent the whole presentation, recorded, wasn't attractive like the ones we've seen from the western companies, so disappointing and kept hedging it the entire time saying it's not ready, it's not perfect and it raises an interesting prospect, if you step back and say, okay, is china's general tiff ai going to be as good or better than ours what's been happening in the backdrop the chips, export ban. >> of course. >> that directly reels to this we're trying to stop using chips going to china companies like baidu. i don't know if that affected the rollout and quality of its chatbot but it is something to look at going forward. >> very quickly, they're telling us to wrap i can't help but ask what is the sense the feel on the west coast about silicon valley bank in your world >> oh, this may not be the

popular opinion but people still really like silicon valley bank. they get products and services and a flexibility that no -- none of the bigger banks were able to. >> because they were the easy teacher? the easier grader? >> i would say -- i think a lot of the vcs i talked to said, no. they were just more flexible and did banking thing, products that maybe now in retrospect like, you know, deals to give a venture capitalist a mortgage, right, because they had money but they were serving an ecosystem there and they have the data they didn't use the data like they should have in terms of that back-end risk management but talked to a ton of people putting money back with silicon valley bank. definitely not all of it nobody wants to make that same mistake. they're diversifying but almost everyone i talked to are putting money back. >> great to have you with us >> thanks for having me. marissa mayer will join closing bell overtime. she's remained a player in tech

and now the ai space and look forward to hearing from her in a couple hours' time. further ahead more on this market reversal. 271 points, a different picture from this morning prior to the details of first republic potentially and we'll speak with richard bernstein about where investors should find safety and maybe even opportunity that's coming up on "power lunch. for businesses of all sizes, there are a lot of choices when it comes to your internet and technology needs. when you choose comcast business internet, you choose the largest, fastest reliable network. you choose advanced security for total peace of mind. and you choose a next generation 10g network that's always improving, getting faster; more reliable; and more intelligent to keep you ready for today and tomorrow. the choice is clear: make your business future ready with the network from the most innovative company. comcast business. powering possibilities™.

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welcome back over to bob pisano hi, bob. >> two things interesting today. first is regional banks went positive late in the morning but david faber's report an hour ago about capital infugues into republic bank by some of the other big banks is moving these regional banks to the upside most interesting is what's going on in technology look at these big cap tech stocks again today this has been a rolling rally all week the big names here, google, amazon, microsoft, nvidia all up dramatically over on the week and some are up 10% on the week. look at that move here

11%, 10.5. 10%. this is quite remarkable remember, risk -- the risk is title everybodying and fed rate hikes are acting like they're not worried about them sectors this week, let me just show you some of the big moves, banks down, energy is down big oil is collapsing. industrials down and yet tech is up big and communication services these last two sectors are 35% of the s&p 500 when these two sectors alone get rolling in a big way every other sector can be down but the s&p can be up. that is exactly what is happening. take a look at the s&p 500 i know it sounds crazy, up 2.2% this week and, guys, it's because, kelly, it's because what's been going on with the big rally in technology. it's quite remarkable. most of those names up four days in a row now, back to you. >> up 2% this week is quite a stat the bond market. after all the volatility where is that shaking out. rick >> well, after all the

volatility, what's shaking out is that many including myself were pretty surprised that christina and the guard were pretty brave and raised rates cementing the notion we'll see a similar move by our fed next week if we don't have any bigger bouts of banking volatility. let's look at intraday of two-year note yields and a couple of spikes whether the ecb and christine lagarde was talking or this wonderful deal to save republic bank by other banks giving then the positives and those banks borrowing from the fed. boy, wish everybody could do something like that. ten-year note yields they're rising but can't keep up with short yields the comeback year fueled rate increases, gotten fed funds back on track for possibilities of tightening next week we're up 26 basis points in a two-year which means the spread reinverted 16 basis points, because it ran ahead of tens, 2s ran ahead of 10s if you look at the dollar index

it's holding up well and maybe the best trade, traders are looking at is the dollar yen why? because the bank of japan's odd man out sooner or later have to remove stimulus, at least the way the story goes kelly, back to you. >> thank you, rick let's get to bertha coombs for the cnbc news update. >> here's what's happening police used tear gas on a small group of protesters who were throwing stones and firebombs during larger demonstrations in greece the state of the country's railway system 57 people died when two trains collided last month. union staged a general strike today shutting down ports, airports and rail transportation meantime, in france, president macron's move to impose an increase in the country's retirement age without approval from lawmakers is prompting new protests in paris. opposition lawmakers are planning a no confidence motion that would force the government to resign if it is passed by the national assembly. and after months of strikes

by nurses and ambulance workers in the uk's state run health service, union leaders have reached a wage agreement with the government the deal still has to be approved by union members. a lot of unrest in europe, guys. back to you. >> certainly is. a lot of trash in france bertha, thank you. ahead on "power lunch. three-stock lunch. some other key stocks to watch we've got the details and the ad rhtft ts.tresig aerhi hi, i'm katie. i live in flagstaff, arizona. i'm an older student. i'm getting my doctorate in clinical psychology. i do a lot of hiking and kayaking. i needed something to help me gain clarity. so i was in the pharmacy and i saw a display of prevagen and i asked the pharmacist about it. i started taking prevagen and i noticed that i had more cognitive clarity. memory is better. it's been about two years now and it's working for me. prevagen. at stores everywhere without a prescription.

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welcome back time for three-tock lunch. intel getting an upgrade and bullish call on nike our reporters have the news. welcome, everybody let's start with fedex hi, frank. what is the story? >> hey there let's look at fedex, shares moving higher after a steep upgrade and outperforming rivals its rival u.p.s. year to date as the delivery giant undergoes a massive cost-cutting effort. investors in amazon listing for any updates on the 3.7 billion fedex guided it will cut this fiscal year and this all comes ahead of an event in new york city on what it calls its driv transportation initiative. here's what you got to know. it is a fixed asset network. the question is if the workers

hours will be enough to achieve this goal of cost cutting. fedex estimates have revenue declines eps falling by 40% already priced into the stock. this stock often trades on margin estimated are for a major margin contraction for its express division where it gets half the revenue. if they can cross the lowered bar it would be an encouraging sign their transformation plan is on track. >> danielle shaye, do you think them's deliver >> yes, i do i'm bullish fedex and agree with everything he said looking at the chart, traders could do something like sell premium prior to earnings to take advantage of implied volatility crush or trade it to the upside targeting 220, 230 on fedex and think it's a turnaround story. >> let's go on to intel and kristina partsinevelos >> the susquehanna upgrade for intel is a bet on the strength

of the u.s. economy calling for bottom or the bottom for sm smartphone, pcs citing i believe proved demand but intel and other chip names are the economically sensitive part of the tech universe. you need to be really optimistic about global growth if you believe this call and they argue it's not stealing much from intel but intel's dismal but reaffirmed first quarter guidance of 10.5 to 11.5 billion in revenue a 40% decline year over year expected in this current present quarter, yes, it was recently slashed almost 66% and the job cuts keep growing so costs coming down but the up front cost to build up fabs in the prolonged cyclical weakness should interest rates keep climbing could remarin an overhang, the stock is up over 5% >> kristina, thank you what's the trade here, danielle? >> so i'm bearish on intel but i will point out it does typically trade higher prior to earnings wouldn't want to short it here

if it traded higher it would be an even better spot to short it because after earnings historically it fall the last seven out of last eight quarters, what it's done, last quarter falling 10% so i think it makes sense to short it around $31 a share and trade the longer trend to the downside. >> so that's one up, one down. let's see how we go on nike. first, the details from melissa. >> hey, kelly, ahead of nike reporting next where there are clues that active wear may be more resilient than expected does that carry over for nike too. dick's sporting goods which carries nike posted a big beat on holiday quarter and lululemon had raised sales forecast for the fourth quarter so it may indicate some pandemic patterns may be stickier and lifting nike's sales on the other hand nike faces some heightened markdown risk. one factor is nike's inventory was up 43% year over year. at the end of the last quarter nike said that was its inventory

peak but lots of excess merchandise floating around that makes it more promotional. there's a geographic dynamic at play in the u.s. we heard a lot about a slowdown of the consumer in china another big market for nike, they could have a recovering consumer that's more out and about and revenge spending as the country opens back up again so it will be interesting to see how those two dynamics swhak out with its earnings. >> all right let's see what danielle thinks, melissa, what's the trade here >> kelly, i'm bearish and think the consumer discretionary sector is in a downward trend. if you look at the weekly charts it's just not looking good for xly or nike in general what i would like to do is short it right around the 125, 128 price point, but i will tell you that i'm wrong if it breaks up above 130 so that's where i'd have my stock. >> interesting all right, i don't like that warning for the rest of the

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oil prices are continuing to slide. let's find out from pippa stevens. >> sliding earlier >> that's what i thought. >> but turned around during midafternoon trading and that was because we got reports that top officials from saudi arabia and russia held the meeting where they reiterated opec & its allies agreement to keep the market balanced and steady according to saudi arabia's state news agency and reiterated that commitment of their 2 million barrel a day cut through the end of this year i wanted to look at where traders think the market is going longer term and, michael tran over at rbc crumped numbers and took a look at how december 2023 options activity is shaping up and as you can see on that chart there are quite a few call options at the 100 and up to $120 level on wti. also, of course, put options there as well but this is an inexpensive way for traders to express opt mitchel on wti

longer term and of course doesn't have to get to that level for the contract to still be profitable so all of that means that there is this demand rebound optimism still in the second half of the year. the elusive demand. >> you point out steel is not participating. >> it's down 3 1/2% today but had a health rally where it's shot up. i mean, this has been pretty wild for steel if you show a five-year chart it looks like the matterhorn and spiked and came down and back up, still over $1,000 per short ton and seen steel mills are cutting prices and producers are cutting production so right around 75% according to blake at a argus. copper fell but that's rebounding today it's interesting both on the demand and supply side so once again china and then global whack crow concerns hitting the demand

on the supply we've had a lot of disrupths from key purchases including peru, the second largest purchase and had production cuts after widespread protests over the government changing over so that curtailed production back online so both production out of peru and indonesia came back online just as demand is projected to slow so both of those together means some weakness for copper. >> all right, pippa, thanks very much appreciate it. coming up we'll take a look at the macro mystery to snap a five-day losing streak could be a bullish signal for the rest of the market think you know what its. i tweet us @powerlunch, and we'll reveal it next.

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welcome back to "power lunch. markets right now are about 100 points off the high for the dow. the nasdaq still leading the way with 2% gain dow turning positive on the week, believe it or not, it is the only major index that is negative for the year. let's get technical for a second the s&p 500, a lot of buzz about this 200 day, back above that after breaking below that level a week ago we closed below it yesterday the next number to watch, 4014,

the white line here. we're back above the orange 200 day, trying to get back above the 50 day as well for some support. the mystery chart, the group on track to snap its first five-day losing streak since december this might be a nice move to the upside, closed below the 200 day yesterday and it wants to provide now bait of support for that group >> virginia just lost 68-67 to a game, a team, too bad for the cavaliers. >> still ahead, hair on fire event, that's how i feel right now. that's how some banks in the tech sector are feeling. how cainstn veors avoid getting burned richard bernstein is here to explain. ♪ it's our turn now we'll make it up again. ♪ ♪ we'll build freelance teams with more agility. ♪

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my ameriprise advisor understands the markets and me. she knows my goals and can help me reach them with confidence. the markets may fluctuate but you're still on track. no wonder more than 9 out of 10 clients are likely to recommend us. because advice worth listening to is advice worth talking about. stocks trading higher as regional banks make a comeback investors hope for a change in monetary policy. let's bring in richard bernstein. richard, you point out, i think, accurately, welcome, first of all, you point out accurately that there are two things that really drive valuations. one is profits and the other is interest rates and both are moving in the wrong direction for equities >> right so, tyler, first, condolences about uva. >> yeah.

>> i know you're crushed life goes on, bud. >> it's all right. >> yes, earnings and interest rates. so i -- i'm not quite sure what people would have expected to happen in the market and to happen to the banking sector when we're in an environment where the fed is raising rates and profits are decelerating if you had to choose, tyler, between the fed raising or lowering rates, profits accelerating or decelerating, i doubt you would choose the combination of the fed tightening and profits decelerating that's what we have had. that's the environment where you get the most volatility in the equity market. that's when defaults start going up in the bond market. it is when banks start having trouble. and we're seeing all of the above. >> can the fed effectively -- i asked jim grant, can the fed effectively fight inflation and a banking debacle at the same time >> well, normally it would be very difficult i think the fed has a dilemma right now. they want to fight or fuel

inflation. what's going to help them in their fight against inflation is that the fdic and the treasury decided to ride in as the hero on the white horse and it made it very clear that they will support any bank failure. so the fed can still fight inflation. i think a lot of people missed that point the fed is not the only game in town and they have some good players on their team, tyler >> say that again, richard >> they have some good players on their team. >> yes, they have some good players. >> yes >> just rubbing it in. what are you like an anti-uva guy? what would you tell the investors now? they feel like tyler does. they don't know what to do in this market. >> i think -- i think honestly number one, this is a very unsettling but not unusual situation, right so what works normally in this environment, defensive things. time to hunker down, time to

look at necessities, staples, healthcare, utilities, things like that. the oddity in this market right now is that despite everything going on, we have not killed the speculative fervor cryptocurrencies are up. tech is up we can't kill that that's a bad sign for the fed. fed has to be very concerned that despite all their efforts, we're still seeing misallocations of capital in the economy and which are ultimately quite inflationary, and we're not seeing a more normal response in the financial markets. they have to be very concerned about that. >> ialways like to ask you about kind of where are we in the cycle, i saw bank of america saying we're definitely in the downtrend now. where does that favor in terms of sectors here? what would your advice be? >> so, kelly, i'm going to milwmake a subtle distinction we're entering a profits

recession. that's pretty clear. you're seeing a lot of that in the market a lot of response in terms of corporate cash flows and all the risks that go with that. however, the economy overall is actually remarkably healthy. i'm very surprised that people have been coming on your show today or this week talking about the weakness in the economy. we just had building permits which say leading indicator post its biggest number in almost two years. we have jobless claims, another leading indicator that is remarkably strong. gdp now from the atlanta fed is tracking at about roughly -- for a little above 3% right now. i don't get why people say the economy is so weak yes, corporate profits are, but i don't think the overall economy is. >> so you're not in the recession camp >> i don't think we're even close to one, tyler. as i said, gdp now is a real time tracker of the economy is at about 3%. that's not even close to even a week scenario.

>> what about the back half of the year, though >> back half of the year what could happen is that as the profit cycle deteriorates further, and let's say we have a deeper profits recession and people are anticipating, that will, of course, end up in layoffs and a weaker economy but that's a far cry from saying we're already in a recession >> who do you have in your bracket? >> i have houston winning the whole thing. we'll see how that turns out. >> is that a rangers jersey behind you, rich >> it is a rangers jersey. they're playing the penguins tonight, yes >> well, you know -- >> just you wait you'll get yours as you have for the last 40 years. you will get yours >> right i will -- i will tell you my alma mater hamilton college, the women's hockey team is in the frozen four for division three this weekend. >> that's good >> which is pretty cool. >> i didn't see them in my bracket. >> not in mine. >> d-3

the men's basketball team crashed out already. women's hockey is in the frozen zb four. >> thank you for playing ball. we appreciate it >> i'm just going to go away now. thanks for watching "power lunch," everybody. >> i'll be back tomorrow hopefully tyler will too "closing bell" starts right now. all right, kelly, thanks so much welcome to the "closing bell." i'm scott wapner live post nine. this hour we begin with stocks surging today on news of a rescue for first republic. one of the regional banks in the eye of the storm other banks sharply higher as well concerns around those names seem to ease a bit. at least for the moment. here is your score card with 60 minutes to go in regulation. dow ripping higher it is the nasdaq that is a key part of the story today. it is at the highs of the session. right now megacap tech stocks are outperforming the market a