good monday morning. i'm sara eisen with my good friends, dom chu, in for carl quintanilla. we're live from the florida of the new york stock exchange. setting the stage, canyon partners, josh friedman. morgan stanley says it's too early to buy stocks. friedman also agrees sara, double line's chief investment officer jeffrey sherman is with us yields are falling as investors continue to fly to safety, bidding up government bonds. we have details on why credit suisse bondholders are absolutely outraged this morning. later, former s.e.c. chairman jay clayton penning an op-ed with solutions to save the banking system and the levels to

which deposit insurance should be raised. >> it's a great conversation, given what you just said with nelson peltz this past hour. >> lots of ideas these days. markets, as you can see, heading towards session high level dow up over 1% the s&p 500 up 0.75% 3947 sara, still below that 4,000 level. the nasdaq is trailing, lagging, if you want to call it that, up 0.25%. if you look at the overall picture, it is stability, which the bulls could try to latch onto in some way, shape or form at this point. >> the nasdaq has gone positive in the last few minutes. topping the tape, the massive overseas bank deal with ubs agreeing to rescue, not sure they had a choice, credit suisse in what many call a shotgun wedding. ubs stepping in late sunday night with the help of the swiss national bank to acquire credit suisse for just a fraction of that, a total of $3.2 billion in

an all-stock deal. just one ubs share for every 22 shares of credit suisse. in the process, $17 billion of at1 or bonds wiped out in that takeover with both bank stocks falling earlier but ubs has recovered and is now higher. i think the regulators and everyone else should take as a good sign that they actually got a good deal. they're getting help from the government, plenty of liquidity and will make a lot of cost cuts. >> if you think about it this way, they couldn't have gotten more favorable deal terms with this with implied government backing. not just implied, outright government backing if you take a look at the picture for ubs versus credit suisse, there was a time over the course of the last several years when credit suisse was considered maybe the premiere swiss banking retail banking franchise. if you go back to the dotcom era -- >> more than three decades. >> right if you take a look at a

long-term chart, it's crazy it's the last 10 or 15 years where you've seenubs kind of take hold i only say this because at one point in my pre-cnbc life, i was a ubs guy. and i remember thinking to ourselves, this serit was -- its always a competition it was cs versus the old swiss bank corporation it's gotten back to that you mentioned it earlier, this is now an effective mondopoly. this is the swiss bank now for sure. >> and i think the question is, does it resolve some of the issues and confidence problems in the european sector first, we look for banks there we are seeing stability. you saw parinbas is trading higher the regional banks which the swiss were blaming the u.s. for sparking this, while you said it's been a slow-moving train

wreck for a long time. that's the eye of the storm. the signature bank collapse, svb, and a little stability in the market as we see -- we wonder what the future holds for first republic bank, which is making new lows. >> the trade playing out is one where everyone is trying to figure out if the bottom is in you have a number of analyst teams out there all talking about this idea that maybe some of these u.s. regional banks, who have strong franchises, could see some value investors come into play now because they've been hammered too far, too fast to the downside one of the interesting things i saw this morning, i think it was an analyst at baird who upgraded u.s. bank. usb over here. >> which has been beaten up. >> it's a super regional it's way bigger than silicon valley bank or first republic but any regional banks have been hit hard

is there a franchise value at some point that is now way below where it should be >> pnc and truist were part of bank deposit into first republic a lot of people thought it was notable it wasn't just the jpmorgans and morgan stanleys. >> or bank of america. >> that was on team we're safe and getting inflows. those super regionals benefitted from that. have the deposit outflows calmed down we heard that from a treasury -- deputy treasury secretary on the show friday they were encouraged to see deposit outflows calm down and liquidity in the system officials at treasury are still encouraged by that trend, but it's been tenuous. mike santoli joins us as we try to monitor if we're seeing a relative calm. is it a ring fence or the ups and downs we've been experiencing >> i think the latter is probably the safest assumption

i say that not because there has to be some other shoe to drop immediately. it seems as if there's enough stability created by the measures over the weekend to not press your bets you might have executed last week if you're leaning against the bank stocks and thought mega cap tech was the only thing that could work in this environment, you've had reason to back off both of those lags and essentially unwind that trade. that's what we're seeing so far today. other things of note, bond yields are not moving a lot. they're firming up that's maybe a slight backing up the real fear trade that had been in the market also the positioning trap that a lot of people who are bearish on bonds found themselves finally oil, i wouldn't lose sight of the fact we're kind of breaking down to new, call it 15-month lows in crude oil the macro story is not that it seemed very sunny but it is one of those deals where you wake up on a monday and nothing got worse versus what we were expecting on friday. >> good way to put it, mike.

thank you. mike santoli our next guest says the recent market turmoil exposes huge credit opportunity for investors and this environment will accelerate the next distressed market cycle joining us now, canyon partners co-ceo, co-founder josh friedman good to have you on the phone, josh you're licking your chops here what is interesting? >> i think you have to be patient in markets like this it takes a while before the full impact of the current environment is felt. the fed has been trying to slow down the economy by a combination of using the fairly blunt instrument of interest rates together with jaw boning people into maybe hiring fewer people or containing consumer demand difficult things to do when you have highly stimulative fiscal policy as well as highly accommodative monetary policy for so long. but now it may have gotten what it wanted. not by jaw boning so much but

because of the unintended consequence of bringing the banking system to a crisis point. i think the banks themselves will tighten credit quite significantly, and many of the credits that already have highly unsustainable balance sheets will find it very, very difficult to refinance in this environment. >> before we get into what sort of opportunities there are out there for you, josh, wanted to ask, we're all focused on these bonds and the wipeout, $17 billion wipeout for the bond holders, risky bond holders in credit suisse. did you have exposure there? >> no, we had none i think anyone who's been around the market for a long time probably remembers that at1 bonds in the past have been wiped out as far as financial restructuring. these particular bonds had provisions that permitted this specifically these were not the places to play in the capital structure, in our view.

there were other securities, senior debt securities held by a lot of institutional investors in switzerland, the type of investors the swiss government that would like to protect that were much better places to play that are being assumed or paid off as part of this restructuring. no, we did not own any at1s. >> in switzerland or the u.s., where he can wid holders weren't protected and the svb collapsed, both governments making it sound like it's not a bailout. certainly not for shareholders and all bondholders and there whether this is some new template where you can glean opportunities and potential pitfalls going forward. >> well, i think you have to be careful of who's -- what is a bailout. we've made depositors whole in regional banks but it's hard to ask a depositor who's putting

money every two weeks into some regional bank to make payroll. it's hard to see them having the burden of trying to figure out exactly what the balance sheet of that regional bank is, that they put money in. on the other hand, the long path of monetary easing did lead regional banks into taking more duration exposure. and, therefore, undertaking more risk, which was highly exposed when rates went in the other direction so suddenly. the fed keeping its foot on quantitative easing so long and suddenly taking it off and with such high magnitude, it encouraged those weaknesses and then, of course, exposed those weaknesses are we bailing out those depositors i suppose. but we're not bailing out the he can wid holders and we'll see what happens to the creditors and silicon valley bank. it seemsed on they would receive a recovery when under dodd/frank it's supposed to be a source of strength for the operating company and the federal government is, effectively,

making good on deposits that might or might not be covered by the assets of svb. but this has a much broader implication for the financial markets because i think that banks now in a desire to be careful and prudent will be much more reluctant lenders and i think it will be very difficult, whether it's a real estate project that's been financed through construction but doesn't have permanent financing or whether it's a company bought by a private equity firm that has a lot of leverage on it and has to refinance at some point. you're looking at situations that are sort of like the walking dead and i think if one is just patient enough, you'll see these two parallel universes of corporate and real estate where refinancings simply can't take place in this market the way they might have in a more heavily supported market by the fed. >> so, josh, it's dom. i want to kind of hone in on that point there have been a lot of

conversations that i've had, and i'm sure that are happening across wall street about the relativity of this particular crisis, if you want to call it that right now vis-a-vis what we saw in 2007-2008 leading up to the depths of the great financial crisis it doesn't seem like this is going to be one of those events. and it seems as though there's a playbook that's in effect right now from central banks, from administrations, executive branches everywhere. there's a playbook and they're saying this is the way, this is the new way that we will save it from crisis. is it going to work this time around and are people just going to not press on that downside like they have in the past. >> i think '08 was a whole other kettle of fish in '08 the financial institutions were extremely leveraged. and we entered a period of very high unemployment. i think in this situation we'll see much more softening than we

anticipated, particularly because the banks themselves will take the action without needing the fed to do it, of with drawing demand, of making the market a bit slower, which contains inflation, which is actually what the fed has been trying to -- trying to indicate in its public speaking it is constantly trying to get the market to do the work for it because interest rates themselves are such a blunt instrument i think this is very, very different from '08 i think we will have a slowdown, but we're not dealing with globally important financial institutions that are on the brink of disaster, generally speaking we have a few situation. we have a serious issue with the regional banking system because of the systematic system exposed was addressed. we're not dealing anything close to the magnitude of leverage that existed in the system in the central banking institutions globally we had in 2007 or 2008.

>> an important distinction. having said that, josh, you've been joining me for the last year or so you've been positioning for recession and expecting one. i think this event definitely speeds that up, given lending standards. what is your expectation now with what that looks like and when >> i think we're going to see a significant adjustment in the prices of almost all real estate i think we've seen it already. we don't know what that price is because buyers and sellers aren't meeting yet we see buyers that want to buy things at high cap rates and sellers want to sell at low cap rates when forced to the table because they have to do a refinancing. then we'll see what the prices are. we're also seeing the weakest players get shaken out early in real estate. that means secondary office, for example, in corporate land that means people with particularly bad balance sheets or particularly weak industries. but i think holding cash right now, being unlevered and being patient and waiting for these

situations to come to us is probably the right approach. certain things, i should say, sara, have already happened. for example, three-quarters of a $1 trillion was redeemeded from mutual funds in the fixed income space. some non1re6789 investment grade, some investment grade that produced a wave of selling of securities that were leaving a lot of issuers quite impressed with how low -- how low the levels were. that's what happens when a high-yield fund has to sell securities and meet daily l liquidity in a market that's not terribly liquid and in a world retreating how deep will the recession be and how strong it's very hard for us to predict that exactly i'm not sure any of the people on your show who predict those things have any -- have a lot better opinion than others there clearly -- >> but you see distress? >> yes, absolutely and part of the distress is simply in prices because of the

wrong holders at the wrong time when rates go up part of it is a genuine slowing down and balance sheets that are really not equipped to be self-sustaining in a world of demand reduction and higher spreads. >> josh friedman, good to hear from you on all of this. it's complicated it's interesting to hear your thoughts on the opportunities and some of the implications we appreciate it josh friedman joining us from canyon on the news line. >> this is going to be good. we're going to dove tail into this conversation with the banking contagion continuing to spread many are left wondering what's ahead for the regulatory front in a new op-ed, our next guest is calling for the deposit limit in america to be raised substantially to $2 million or $10 million, guaranteed by the government, in addition to size-based regulation to support a diversified banking system joining us is former s.e.c.

chairman jay clayton, also a cnbc contributor jay, it's great to have you with us here. i'm sure you were just tuning into josh's comments in the last segment here with regard to the current environment, distress and everything else. the regional banks have become the biggest component of this global banking narrative, at least for right now. they are arguably, some say, trigger what happened with credit suisse. is more regulation the way we have to go >> dom, thanks look, josh, as always, was terrific the question of more regulation, let's divide this into two time periods. there's -- there are the issues of the moment, and i think what we're seeing is stress and continued questioning around the viability of at least the long-term viability of the regional banking model whether we'll have deposits moving to treasuries and outside the banking system

i for one, and my coauthor, harry koehn, we think that's not a result if we want to drive right now. our regional banking system is very important to our diversified economy. geographically diverse and diverse in industry. what we should be thinking about now in terms of regulatory response is how do we preserve that banking system and preserve the stability in that banking system >> so, that -- >> go ahead. >> but you bring up an excellent point. i want to talk about the health of the regional banking system roger ferguson, former fed vice chair, talked about this idea that regional banks are hugely important to the american economy. they specialize in certain microeconomies here in america is there a case to be made that by upping deposit insurance to huge amounts, maybe $2 million, maybe $10 million, that it's going to ultimately benefit everybody else out there and who bears the cost of that

>> let's look at it this way i think we can very -- respond to the issue here. there are people in regional banks using accounts for cash management that have sums of $2, $5, $10 million, small, medium sized businesses i think we want to preserve that if what we want to do to preserve that is tier our deposit insurance, we should do that you know, i think it's fairly simple let's look at the aassem trihere. that's an asymmetry that does not make sense you can keep your daily cashing needs in the regional banking system, as roger said. a third of lending comes from our regional banking system. that lending is financed by

these kinds of deposits. i think we want to -- we certainly, we certainly do not want to rapid shift away from that. >> jay, i wanted to run by you something nelson peltz mentioned last hour with me as a potential solution here to the uninsured depositors across the system here's his idea. >> i would put together a plan that applies only to the u.s. banks. and that the fed gets an insurance premium for any money you leave in a u.s. accredited bank over $250,000 so you're creating income now for the fed. and in exchange for that, they guarantee the overage. they limit certain banks to how much deposits they can take.

>> in other words, consumers pay through a premium or fee to insure and then we don't have any more worries about uninsured deposits can that work? >> look, systems like this can be designed, and they can be designed and they can be designed to work well. are you going to have to pay more for greater certainty almost always that's the case. how much more? i don't think that incremental risk is going to be that great but let me just go back to the time we have time to design what i would say is a very efficient system where regional banks can be used like this. but in the immediate moment of this week, next week, we have to be ready to make sure we preserve that system so that we have time to design what i would say is the most efficient way to approach this. that's what gary and i were trying to say, which is let's deal with the issues of the moment and then calibrate that

deposit insurance and other system over time so we preserve our regional banking system. >> a lot of people -- jay, a lot of people might say, jay clayton and gary cohen are the problem because tougher regulation was rolled back during the trump administration you wanted to loosen the noose on regional banks and could have prevented things like the svb failure. >> yeah, look, there's a lot of people who have a lot of problems with gary cohen and jay clayton, but this shouldn't be one of them. if you look at what happened in 2155, which was a tailoring and you look at what happened at silicon valley bank, there's no there there. there was plenty of capital. you know, the liquidity measures people are saying things in a binary way like there were no stress tests there are still stress tests that apply to banks that are under $250 billion what happened here was, i would

say, a failure of both private and public supervision around this bank. and what we need to do is understand that supervision can't be just a bunch of metrics. metrics are incredibly helpful they add insight but you have to understand how businesses operate and how businesses will -- how businesses will respond to a changing environment. let me tell you, in my career, this is one of the most volatile environments we have had we have high inflation, we have rapidly changing rate environments, we have energy prices that have been fluctuating. i would say we have a coal technology with china. all of that can put exprstresse the system that aren't seen in the static moment but have you to be prepared for t especially in the banking system. >> it's something we'll have to pay close attention to jay clayton, former s.e.c.

chairman thank you very much. great to get your insights see you soon. >> thanks, dom thanks, sara. >> gary cohen will join us later this week. after the break with kre down 25% this year and pe ratios down to 7, is now a good time to buy the regional banks we'll dig through the rubble for potential winners. and they can out meta, another wall street firm turning bullish as edward jones upgrades it to a buy. saying the ad revenue could stabilize and return to growth by the end of the year meta is up 12% this month amid worries about the banks. we're back, as dom said, near session highs of 342 pntois and the nasdaq has joined the rally as well. a million different ways i should be trading. look! what's up my trade dogs? you should be listening to me. you want to be rich like me? you want to trust me on this one. [inaudible] wow! yeah!

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the svb-induced bank fallout has stoked uncertainty across the sector but has it also, some are calling extremely cheap

levels we're seeing p echle ratios dro to around 7 now. is it a buying opportunity let's bring in jason goldman, barclay's senior economic analyst. jason, is it an opportunity to buy some of these bigger banks >> you know -- one second, sorry. you know, it's certainly not for the faint of heart markets have been choppy and we expect them to remain volatile by and large, particularly the regional banks are well positioned against the current back drop. clearly deposits are moving and they're moving up kind of market cap. and we think, you know, over time, you know, certain regional banks, some of them, particularly more healthy ones, are in a position to capitalize. >> jason, sara mentioned the earnings of multiple being assigned to some of these banks right now. we know that you and many other investors and analysts cover it from a book perspective, a book value perspective. many of these now regional banks

are trading at deeper discounts to their tangible book value the carrying cost of their assets on the books. are there names, should we be looking at deep discounts to book value where exactly would they then be in those regional type banks >> certainly if you look, even on price to earnings relative to the market, you're at levels, i don't think we've seen before. and i've been doing this 27 1/2 years. certainly you're kind of discounted on book as well, the banks are trading, call it, 1.3 times handle book, closer to book value if you is adjust for aoci, this book trades two times tangible book. a lot of negativity is priced in when we look at coverage overall, the biggest banks, jpmorgan, morgan stanley, are capitalizing in the current environment. regional like fifththird or citizens that have been sold off particularly hard yet have

relatively clean balance sheets could capitalize against the current landscape. >> and before we let you go, jason, these regional banks that have seen the biggest hits, we're talking about the west coast kind of more silicon valley epicenter type banks like pac west, western alliance, first republic, would you be going into those right now, or are you better off waiting for a little bit for the dust to settle >> clearly, not for the faint of heart. there's been some anecdotally evidence that deposit balances are stabilizing, but we're cautious a few days. don't necessarily make a trend certainly kind of keep an eye on it but you'll see a fair amount of volatility over the coming weeks. we have a green screen today but i don't think that portends every day until we get further along, until figuring out who's where and who's better positioned with the current back drop. >> really quickly. let's say first republic doesn't make it through the day, the week, let's say a buyer doesn't

step in for it what happens is the government going to have to make whole the $30 billion of uninsured deposits it got from jpmorgan and morgan stanley and some of the other more solid banks? what does that look like >> it's obviously a situation we're watching very carefully. i think the biggest bank stepping up and putting $30 billion in late last week was a sign of confidence they have the thought that first republic can manage through this. they're meeting customers' demands. there was anecdotally evidence that deposit balances did start to stabilize after the biggest banks made that injection. clearly this is an important week for the company and something we'll keep an eye on >> wouldn't that be weird if it was a big bank bailout again weird concept. >> i don't be even know how you do it. >> just thought of it. jason goldberg from barclay's, thank you. after the break, the credit suisse brand has existed for more than 167 years.

longer than nearly every other big name bank you can think of, certainly here in the united states but the days of this banking giant are now over so, what's next? all of their logos are cnghaing to ubs we're back in two. would you stop calling each other rock stars? you're a rock star. you are a rock star. no more calling co-workers rock stars. look, it's great that you use workday to transform your business. but it still doesn't make you a rock star. so unless you work with an actual rock star. hi, i'm ozwald. hello ozwald. pam, you are a rock- i wasn't going to say it. ♪♪

here's your cnbc news update the leaders of russia and china are meeting right now in moscow. vladimir putin welcomed xi jinping to the kremlin with both

men calling each other a dear friend putin told xi that russia has looked at and respects china's proposals to end the ukraine conflict and is ready to discuss them united nations' secretary-general antonio gutteres says the world needs climate action on all fronts everything, all at once, his words. as a new u.n. report s, and he urged rich nations to stop using coal, oil and gas by 2040. well, spring is here snow is still falling in the california sierras. more than 8 feet of snow is piled up in lake tahoe one resident said the snow is absolutely needed in this area that's been struggling with drought. think about the ski runs up there and how incredible that is but what a mess to deal with if you live there sara >> absolutely. first day of spring as well.

thank you, contessa brewer. we talked about what's happened over the weekend with credit suisse and ubs. what happens now and what are the implications for businesses moving forward one question with $17 billion additional tier 1 bonds wiped out and additional cost savings, these are big questions that ubs shareholders and management will have to weigh. david faber comes back in with his reporting on the subject what happens now >> the feeling is that even though ubs was reluctant to actually buy credit suisse and had been, that they got a pretty good deal. that is being reflected to a certain extent in the markets. stocks off the highs but it had been down in the early going but has rebounded. a lot of it does have to do with the fact they have the freedom to cut costs and cut costs in a significant way, both in switzerland and here they're going to be able to consolidate a great deal in those markets. and that is ultimately seen as a real positive.

certainly there are going to be i integration issues equity holders did get something. they got one ubs share for every 2 22.5 they live on at least, as opposed to, as sara said in the intro, those certain class of bond holders that have been wiped out entirely to zero swiss government is still there. swiss national bank is still there. there are those cost reductions. when you get to an $8 billion annual run rate, that's pretty big stuff. >> that's huge. >> that can be very beneficial to bottom line obviously for the investment bank here in the united states, dom, as you know well, they bought dlg. >> donaldson lufgren. >> far in excess what the market cap has been in the last six months that's not looking very good in

terms of a growth business it's going to be cut down dramatically the deal they had, and have it run by michael cline, highly unlikely to go forward it's ubs's to decide what they want to do and every indication is they want to pare it down. >> this is an interesting point there. this is kind of the identity of credit suisse as a whole much of it for the last 20 or 30 years, at least globally, it was tied so closely to that first boston franchise that ended up buying dlj and ultimately got enveloped into this overall cs brand. if you look at the swiss banking landscape now, there is pretty much, as sara points out, just one. now there was one, highlander style. is there any way that ubs going forward becomes so much of a power in the swiss banking world that you kind of wonder about what happens to all of the banks, the regional banks, so to

say, in switzerland? they were never much of a press but even lesser so. >> yeah, this is the dominant player in that market. i don't know you're right you've got one bank that basically holds, i don't even know what percentage, a large percentage of mortgages in the country. that's for the swiss regulators to worry about, dom. they made the decision, when others were not ready to take cs's counterparty, they forced ubs to do this deal. they made that clear i know it to be clear given the conversations i had with people involved in the transaction. to your point, it doesn't mean it won't end up with a dominant financial institution in that market. >> maybe better for them to swallow than having deutsche bank own it which is a german bank financials are up today, but what is not is first republic bank, down 17.5% now bringing losses this month to 85%

who buys it, does someone buy it. >> these are important questions you're asking because it's seen -- the hope is in the markets that this is the last problem, really. i mean, pac west, western alliance come up a bit, but of a bank with a large balance sheet, $200 billion this is the one that is seen as sort of still an issue i think there had been a hope that deposit plan from last week we saw unveiled, the $30 billion that came in from 11 larger banks would be enough to sort of stem any problem there and create confidence. it's very much clear that happened sara, i continue to talk to many people who believe this company needs to be sold and they questioned, in fact, whether or not it can be without government help and then they question what is the government willing to do to enable a buyer or entice a buyer to step up for first republic? i reported on our couple hours together this morning. they have hired an investment bank i haven't been able to determine

who that bank is, otherwise i would be calling them over and over again we'll see. we've been saying that for first republic for a week. we'll have to wait and see what happens here. >> it's kind of a catch-22 for the government because they would have to try to get a deal done and might have to help or else face the proposition of bailing out the uninsured depositors which include jpmorgan, morgan stanley - >> which could cost more by the time it's not. >> and politically not to palatable. >> we'll have to keep our eye on. >> david faber, thank you. as we head off to break, take a look at what's happening with the ten-year note yield it's ticking higher today but on a relative basis we're talking about 3.48% right now. remember, we were talking about north of 4% just a few weeks ago. so, keep an eye on that. we'll check in with doubleline's jeffrey sherman. does the fed have a clear enough path to raise interest rates, raise them, on wednesday, or is

the market streaming, no more? that's next.

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try it for free at ziprecruiter.com welcome back what a week. we have got a fed decision coming on wednesday. our next guest says, he thinks we should see rates go up by 25 basis points but says it could be the end of the hiking cycle all together with us is doubleline's jeffrey sherman. that's pretty much what the market is telling you although it's close to a 50-50 shot of

whether they even raise rates this week. why do you think it happens? >> no, that's the case look, the fed has gotten themselves in a pickle here, right? there's the l.aaxity of the regulator but they have to stay with this inflation campaign if they step back and don't hike, ultimately they're succumbing to the withhims of t market and saying this was their fault to begin with. i think they want to stay committed. they to want show they are inflation fighters but ultimately it's the market that's letting them hike, sara that's the important thing to say here if the market does not at least have a 50% chance of a hike priced in, i don't think the fed goes on wednesday. just because we're focused on credit suisse and the things that have happened over the weekend, there's still weakness out here, as you were just talking about. look at first republic

so, the challenge we have right here is regional banking problem right now and the lack of confidence there and so really even though the market's price them, my stance is the fed should stop hiking at this point, at least take a pause and assess the landscape because the systematic banking is more important than trying to fight inflation in the near term >> right although you could argue the opposite what are you doing, are you buyers of treasuries right here right now after such a tremendous move already in the last week? >> no. we're not incremental buyers as i've been talking to you the last few months, we've been incrementally adding to our treasury position, positioning for bad things to happen i think i was on the show a couple weeks ago here, and i think you were off that day, but ultimately i was saying that you buy insurance before the storm comes. and here we are in the middle of the storm. it seems a little tlit be restructuring the port polio to

a -- portfolio to add to the treasury position right now. as i look at this materialization of what's going on in the banking system, to me this argues for the cost of capital going up the cost of capital going up and the cost of lending is going up. that's going to lead to tighter conditions so, that's where i say that at this stage we could argue the fed should pause because ultimately we know this is going to lead to more of a slower economy. this actually does the fed's job for them through that contraction. i think it's a little late to be adding to the treasury position. we're very comfortable where we are today. again, i think right now, there's nothing wrong with owning a little risk in your portfolio, but ultimately the risk you should be avoiding is that extremely speculative risk such as the lower credit tiers. >> so, speaking of, jeffrey, it's dom here, those lower credit tooiers they're coming io the forefront because of these convertible bonds, the tier 1 bonds in europe. we don't have them here in america but we have things that

act like they do in the risk spectrum are there dislocations that have been created in certain other parts of the credit market or even the preferred equity market that have now presented themselves as opportunities because of what happened with rates and where the tossup is right now with whether the fed should do even more? >> yeah, i think that the cocos or convertibles is something we never touched at doubleline. with yesterday's news, we're thankful we've always avoided that as we could never get comfortable with the risk of those securities you talk about opportunities, and i think it's too early to be hunting for those opportunities right now. we've only seen the tip of the ice iceberg. ultimately, as i said, if it leads to wider spreads, leads to a higher cost of capital, that means there's even more express in those companies although one should be thinking about it, i think this is not over yet and we need to be very

careful in terms of looking at some of those distressed opportunities. so, if the thesis plays out that the cost of capital is going up, you'll have plenty of time to buy some of these opportunities as we get more clarity on what actually happens within the banking system >> what are you doing with the dollar because, you know, if there was an all-out bank, crisis-style situation, the dollar would be strengthening. it's down so fa are for month. europe is raising interest rates. i guess the systematic risk here lies in the u.s. what do you do >> that seems to be the case, right, on the systematic risk, too. it is kind of odd we saw credit suisse go down in the middle of this credit suisse has had some challenges you're right, sara on top of that, if you think about this need for these swap liquidity lines out there, talking to our team that there does not seem to be many stresses out there in the system right now. so, from our standpoint looking for a place to kind of want to

short the dollar a bit more, we want to see that in terms of having a strength in the dollar, what you're not seeing at this stage. some of that is peeling back the rate hike. also, if you look at the way the pricing is in the bond market, look at the two-year today, it says even if the now or the nex the price of the marketplace, ultimately they're going to have to cut on the back half of the year i think that's some of the weakness in the dollar we don't have much positioning outside of the dollar today. we have been talking about looking in places to short it, but not with the momentum you're seeing to the downside here. >> got it. jeffrey sherman, thank you very much. >> thank you. >> with the wild moves in bond after the break, amazon cuts 9,000 jobs we're going to have more on how that will impact the bottom line when "squawk on the street" comes right back think i'm ready. heck ya! with e*trade you're ready for anything. marriage. kids. college. kids moving back in after college. ♪

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all right. time for to you "techcheck" and amazon doing another round of layoffs. let's bring in deirdre bosa for more on that story deirdre, what can you tell us? it's thousands. >> it is it's not particularly good for your workforce morale to have to do this more than once we talked about this, measure once, cut twice, that is difficult for these big tech companies in the current environment. andy jassy rights, some may ask why we didn't announce the role

reductions with the ones a couple months ago? the short answer not all of the teams were done with their analyses in the late fall. it does beg the question who else could be doing more cuts? we know alphabet did a relatively small proportion, not just of their workforce, but small compared to the amount of hiring that they did over the last few years during the pandemic so yes, there could be more. we've seen that with meta already. already today, i was working on this piece for you, a look under the hood of this big tech safety trade we have seen over the last week, week and a half. the new safe haven but apple up more than 4% in the last week, meta up nearly 9, microsoft 8%, google 12%, amazon 6%. we should note that cuts are not helping the stock price, on a hard market day. let's look at the companies side by side. take a look at their cash hoards because part of the reason they're safe a plays because

th they're seen as having fortress balance sheet, apple with nearly $170 million amazon and meta down the pack at 54 and 41 respectively a look at price to earnings, forward price to earnings ratio. another metric of valuation. take a look at amazon here it is 66 times for amazon. far more expensive than the others because of its profitability. guys, that does beg the question, how much is this going to help profitability? it already is coming from such a lower point. i think that's maybe why you're not seeing much movement in the market, because amazon is the least profitable of big tech. >> thank you for running us through the context there. goldman sachs throws in the towel on a $100 oil call for 2023 we have thengy oloe erutok and updated price target when "squawk on the street" comes right back

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uncertainty across banking, have you seen oil lately if big lower move in the price of oil in response goldman sachs global head of commodities jeff curry cuts the forecast on brent, price target $94 a barrel for the next 12 months, down from 100 with an eye on higher than expected inventories and lower demand one month ago goldman sachs said its conviction in the oil bull case had never been stronger they're kind of capitulating but with $94 that's a bullish call. >> it is it's $72 and change. still significantly higher to get to 94, not just the 94 call from 100, but the target for the middle of 2024 is 97, so it's not even at 100 into the middle part of next year. this is all -- by the way, the reason why the call was made was because there was surging demand in china, yes, but all of these banking crises, investor

outflows, basically counteract anything kind of demand surge you had. >> weaker demand goldman economists say only 35% of recession odds. i don't know how they come to that number but they have risen further. decent day dow up 318 points. s&p and the nasdaq joined higher as well. financials in the lead, reversal from last week let's see if it holds. that's it for us on "squawk on the street." thank you for joining us he'll be here all week to frank holland and the halftime report. >> all right thank you very much. welcome to the "halftime report" i am in for the judge. the financials front and center this hour as a banking crisis takes new twists and turns on both sides of the aisle. joining me for the hour karen firetone, jason snipe, joe terranova. we're looking at the dow right now at about 1% higher, the s&p half a percent higher. nasdaq dipping down into the