11% organic growth i like this name here. >> joe >> ww granger. this is a stock that's been working for quite some time. strong fundamentals, strong technicals and getting an opportunity for a pullback sarat, you have the last word. >> i like morgan stanley, the classic stampel of a company that will do well when other banks will not and well an capitalized and great asset business. >> that does it for the halftime "the exchange" starts right now. thank you very much, frank hi, everybody. i'm kelly evans and don't look now, but shares of first republic are melting down again the day before the fed's meeting kicks off. will they hike or will they pause? questions over the health of the banking system remain. we'll talk to one economist who says the fed should pause and another who expects a dovish hike and he'll be here to explain why. why is bitcoin surging and crypto champions say this is precisely why it was created and

critics say it's a headfake and we'll talk to a crypto banker about whether this is sustainable and a closer collapse of silicon valley bank. regulator his concerns going back to 2015 greg zuckerman co-wrote the piece and he's here with the details. before all of that, though, let's get the latest market moves. if you didn't know dom chu, you would think it was a quietly positive day >> although i've switched telestrators, kelly. normally i'm 20 feet from you and now i'm over here at the noble, but yes, it is a green day and we are just about near session highs right now with the dow industrials up 366 points and 39.45, so still below the 4,000 level and the nasdaq composite is the laggard just about flat on the session although modestly green and up seven points to 11,637 one of the key moves we're watching is in interest rates with the fed meeting coming up

and an interest rate decision coming up, what's happening here we're ticking higher, actually, right now. so there has been a little bit of selling pressure in the face of all of the buying and bidding that we're doing for the safety of u.s. government bonds right now the two-year note yield is 3.93% the ten-year note yield is 3.48%. remember, just a couple of weeks ago. two or three weeks prior to the lows that we saw in yields because of the banking crisis we were dealing with it was 4.9%. the 30-year long bond 3.65 and all of that is playing out with the regional banks if you take a look at first republic, news today it gets downgraded to b+ single b+ and it was a single b+ before jamie dimon could be looking at a possible rescue package for first republic and those shares off their lows down 29%.

pacwest with the west coast tied to silicon valley and pacwest down 9 western down 4 and western bank and pnc financial getting a down play that some of the super regional could be beneficiaries from the turmoil as well and keep an eye on the big banks like u.s. bank and pnc financial. i'll send things back over to you. >> thank you i miss you my next guest says the fed should pause and it will be a minute by minute and market by market policy making week. chief economist and market strategist i did see the dog lift his head briefly and i want people to know he is centeent. >> interesting for fed chair powell going into the meeting this week. primarily because less than two

weeks ago he came out with a very hawkish message and essentially signaled that the fed was not only going to go to a higher peak on the fed funds rate, but would be willing to consider moving more quickly to get there if the totality of the data continued to suggest the fed was overshooting its inflation target and strong growth figures and that really met the february cpi,y so they' in a bit of a box. if they were forward looking they would be looking at inflation expectations which are collapsing and the yield curve is deeply inverted in money supply figures that had been collapsing in the banking crisis will lower the velocity of money and lower the neutral interest rate so even by skipping a rate hike, monetary traditions likely will continue to tighten, but if markets are stable they may go for the 25 basis points. i do think that is a mistake,

however. >> i saw lars christiansen and others highlighting and basically saying the fed's almost at risk and the market is signaling and missing the inflation target on the downside by the way, those who follow commodities say you're absolutely right and we're not paying much attention to the message. others looking at the inflation find how in the world could that be possible. do you think it's possible that cpi go from 4, 3, 2% to what they're telling us for the next five years, 2.1? >> it wasn't too long ago that you and a lot of people thought we would never see inflation again and going into 2021. the money supply exploded first, nominal gdp, mroeded upward and then inflation started to accelerate and continued to accelerate and persisted far longer than what the consensus was thinking back in early 2021

with the whole transitory imbrolio, and looking at leading indicators you really weren't surprised about how things unfolded the problem now is a backward-looking monetary policy will put us into perpetual boom and bust cycles and we are moving into the bust phase now, and you probably saw this chart in our research, but i have 165 years of history showing benchmark short rates. so even pre-dating the fed and yield curves when you get these rapid spikes in short rates and inverted yield curves, invariably you end up with a financial crisis in recession. so it's not a complete surprise that we are in this predicament. >> the sort of scary thing to contemplate is weather because they're backward looking and reacting to data could we risk a

re-run, not because we have to, but because that's an accident that can happen when nversions are as deep as they are. the risk of repeating an '08-style event is much higher than the risk of inflation or am i putting it too strongly? >> no. that's exactly right the strength in backward-looking sticky price indicators are a huge risk here because that's what the fed can see and feel. the forward-looking stuff, we have to take a leap of faith and no one wants to do that now that they're overshooting their inflation target and that sets up for a drastic tightening and monetary conditions which simply could be the neutral interest rate falling as the banking crisis gets worse. it may not be active fed rate hikes. so in the second half of '08 that's exactly what happened and it's the financial crisis intensified and the equilibrium interest rate fell through the ground and if you're watching the tips market, and real rates

soared and inflation break even collapse and the fed was just sitting there fighting the financial crisis and not doing much with monetary policy until you get into late, late '08 and '09 and what happened? we went into a deflationary spiral so there are a lot of differences now versus then, but the point is you will have acts of comission and acts of omission last year it was about the fed catching up and using its policy and increasing its policy rate target, 450 basis points in less than a year, and now you can have a situation where the neutral interest rate is falling and the fed is failing to follow suit. >> right. >> because it's in the rear-view mirror >> so then as we -- and this will be a theme today and throughout the week as we talk about the reasons why bitcoin is up and until today the nasdaq had been outperforming and all of those things and i'm sure you heard belaggi talking about the

inflation and it is back in easing mode. can you explain why we might see those liquidity momentum assets doing what they're doing and how sustained might that be if we're talking about the end of the fed's tightening campaign? >> yeah. you have contradictory information. i'm not sure how big of an inflation hedge bitcoin is and it's an asset class if we're talking about crypto and one that had crasheded if you have tightening expectations and that might be enough for a lift and i focus more and we're thinking about inflation and inflation risk watch the inflation break even market and watch the high-yield market here very closely and watch these money supply figures and we already had a situation where broad money supply was fallen even in nominal terms because of the high inflation period, more than 70% of the

2020-2021 had been reversed and the fed accomplished its mission in terms of monetary policy and now we're headed into a recession and the risk is with the falling velocity of money falling and the equilibrium interest rate the fed could end up in a way too tight monetary stance and that will send inflation a lot lower and that's not upward pressure on inflation situation. >> a quick final question, mike. which final sections of the market do you think are most at risk >> well, i would say the more cyclical areas for sure. the s&p 500 that thinks they could have 15%, ten%, 20% if it's a market opportunity ask health care because it steam are streams fairly well. we have been across the treasury curve in late september, but it is working now >> michael cardarda, appreciateo joining us on a day like this

from roth mkm. >> let's zero in on the nasdaq and it's coming back before underperforming today and it's coming as we get news of more big tech layoffs amazon cutting another 9,000 jobs apple cutting costs in an effort to avoid layoffs these measures and the dovish fed are setting tech up nicely for the rest of the year calling it the safety blanket trade and let's bring in dan ives from web bush good to have you. >> good to be here >> what do you mean by the safety blanket, the warm and cozy everything will be okay. >> and sunday night you don't have to worry about head-ones coming from tech it's a setup in terms of where the numbers have been cleared in terms of guidance. fundamentals are holding up better than expected and it continues to be compelling and that's why you're seeing more and more move to tech, and we believe it's not done, and i think tech continues to be the trade last year. if i were an investor saying let me get out of the cyclical stuff

and tech that's most like health care >> what would be most ignorant or least prone to the cyclical wayses and it seemed they would be more ad exposed and give us the broad picture and how resilient they're likely to be. >> it's like the rock of gibraltar. >> microsoft, salesforce.com and things like data dog and cybersecurity, palo alto, cyber arc among others with a lot of these tech companies ripping it off, it's laid the ground for what's in the next cycle and that's why the street likes what they're seeing in tech which is going back, in my opinion to 2010 in terms of the sentiment in tech. >> if i think back to the 2010s and this was the period that

took off it was also its creation google went public, and part of the beauty of the 2010s were in a low-growth economy that were massively growing and there were 25% on average and something insane like that, will that work this time around have these companies matured beyond that point which will grow to gdp which you would not want to be exposed to and what are the companies growing with gdp. >> if you're looking at the i.t. spending environment and clouds growing 23%, 25% and the microsoft and aws and then you can have cybersecurity grow in the upper 20s. so that's why it speaks to this fourth industrial evolution and despite the macro and uncertainty and that's what tech set off in terms of the next cycle and many use the 2022 playbook in 2023, and that's why i believe tech here is the safety blanket in the storm and as an investor sunday night, you're not checking your email

figuring out -- >> worrying if your company's going to fail. is there any risk there and people piling in because they're done very well we're 30% p/e low the average. if you're with others, that will catalyze these companies and we see a tidal wave of mm and a using title security >> i think we will have tech m & a up 25% this year it's public and that's why a lot of these companies have more cash than some countries despite the antitrust worries and they'll be going aggressively after and that's what your seeing in tech being green where others are red. >> we'll talk about the cash later on point well taken dan, good to see you thanks for coming on dan ives with web bush >> bitcoin has shot up to a

nine-month high in the midst of this global banking turmoil. why? we'll ask one wall street veteran who has been in the crypto space for over a decade regulators warning about svb as far as 2015, how did the red flags go ignored for so long we'll go inside the boardroom and break it down with the former head of the occ, and as we head to break, here's a look at the markets the dow is up at session highs and it and the russell is outperforming and after getting hit hard by banking and energy problems s&p 500 back to 3950 and the ten-year note just below 3.5%. we're back after this. ♪ ♪ th i"t ehae"n cnbchonly ao and vanguard retirement tools and advice can help you get there. that's the value of ownership.

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welcome back, everybody. we're up 400 points and a little off the session highs and the nasdaq, for one, is the laggard today. a couple of staples names are moving higher after sell from deutsche bank. the macro backdrop makes it more likely to pivot toward defensive names and kimberly-clark is up 10% since november and conagra, best days since january and raymond james is upgrading enphase outperform and it is now trading at 26. the two-year low and the stock is leaving the nasdaq 100 and rebounding from an eight-month

low. to buy from neutral saying investors are underappreciating the core business, plus it's newly acquired nuclear unit and those shares up 6.5%, and the best day since last may and head over to cnbc.com/pro >> still ahead, amazon cutting another 9,000 jobs after laying off 18,000 workers in january. we'll look at which jobs are going and what it means for the bottom line. as we head to break, take a look at the sector heat map with ten groups in the green today and that's energy leading the way despite declines in the price of crude earlier on 10.5% gain and the exchange is back after this. prevagen helps your brainh n and actually improves memory. the secret is an ingredient originally discovered... in jellyfish. in clinical trials, prevagen has been shown

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>> welcome back to "the exchange." you might think assets of all kind are collapsing in the bitcoin crisis, it doubled from its lows to the$28,000 after th collapse of credit suisse and thinks bitcoin will prove its staying power. caitlin long is founder of cuss toadia bank, caitlin, welcome. >> thanks. good to be back. >> are you bullish and it takes bitcoin up to a million bucks in 90 days' time. >> i would not make a prediction like that, but it is clear that a lot more folks are waking up to the instability of a traditional financial system and being orange pilled, so to speak, looking at bitcoin for the first time >> so why do you think it's taken this recent leg higher what do you think is driving that >> well, it's a couple of things there are some technicals where

stable coins have lost their banking access due to operation choke .2.0, the failure of the banking taking place among bank regulators coming out of washington, d.c., not to bank this industry and as a result the selling of stable coins going backto the asset in this industry has created some buying pressure and also, it is an insurance policy and it is a scarce asset, just like other types of scarce assets among financial instability and boy, i'm sure seeing it in my traditional finance kecks on so social media and there is a paradigm shift in the traditional banking system now. >> a lot of people are nervous about their careers. >> yas >> it is tough to watch this play out to see if the fed can support it and whether or not they choose to do so

let's talk about stable coins and some of the parts of the ecosystem. it's not necessarily teflon. when we saw going back two sundays during the collapse we saw it break the buck, 93, something in that range. are we so sure that it won't be tested again as this turmoil plays out? >> we're not, and it's because stable coins ultimately do rely on connectivity to the u.s. dollar banking system and if they're being shoved out by bank regulators then definitely there are questions about that it's interesting that tether which has -- which says they stayed offshore and only gets their u.s. dollar banking from offshore entity so they say. tether has massively taken market share among the stable coins because those that were trying to become regulated and get inside the regulatory perimeter in the u.s. including my own company, custodia bank

and what that does is push this activity into the proverbial shadows. >> right even looking at signature whose collapse has quite a bit to do about its crypto exposure. what does that tell you as someone trying to lead a banking effort in crypto >> there is a clamoring for safe banks. there is an interesting article in harvard business review that came out on friday talking about the need for safe banks. there are a lot of businesses whose payroll exceeds $250,000 every week or every month, and forcing businesses to put their payroll at risk to a sudden bank run just doesn't make sense, and they're not clamoring for a full guarantee of deposits in the banking system what they're clamoring for is exactly what cusstodia which sits 100% in cash for these critical pages and deposits that are volatile and can mov

around it's the only thing that makes sense instead of forcing businesses to put their payroll payments at risk to a bank run which is literally what everyone is doing if they hold more than $250,000 in a bank account right now. >> it's supremely ironic that people spent the last couple of years trying to figure out whether to sell custody crypto only to have their actual dollars be vulnerable to that scene and ownership question >> true. >> so if we spin this forward and there is nelson peltz saying, to some six tent, for instance, have the federal reserve be that backstop and the guarantee and deposits as one way or another, does that then kind of answer that call that you're looking for which is to ultimately build a bank that maybe is a one for one kind of thing for people's deposits or does it make people who are bitcoin fans get more bullish about needing and in some ways private ownership of the assets to not have to put them into the

banking system of some kind in the first place? >> i think it's a combination of both, kelly. i don't think that the u.s. dollar system is imploding overnight. there are some who think that it is and are cheering the bank runs i am not one of them because i am not interested in looking at a deflationary collapse of the banking system especially given that the digital asset ecosystem has a lot of infrastructure yet to build however, it is absolutely true that people really should be allowed to think about their bank deposits as theirs. what they haven't realized and are now waking up to is that when you put more than $250,000 into a bank you're making an unsecured loan to a leveraged party that might fail and that's inherently the way banking has always worked. it gets at the notion that banking is a confidence just like money is a confidence game. we can increase confidence by having the bank sit on a lot

more cash and -- and hold one for one cash reserves and boy, that would stabilize the system. >> it has not always been true in human history that banks heh lent we have this intuition that banks should lend and keep safe our deposits the problem is that when banks lend and keep the very same money the banks are unstable. >> they have to make money what's the business model if not that that's the fundamental question. >> great question. the business model is fee and a fee-based one for one bank which was that called for in the harvard business review over the weekend is acknowledging these would not be the low-cost producers because they could not subsidize their -- their capital costs and their operating costs with income from their loan portfolio. however, let people have the choice if people prefer stability and know interest on their cash,

great. >> if people prefer interest on their cash and acknowledging that they're unsecured creditors of a leveraged institution, great. give them a choice the federal reserve is blocking that choice. it has the ability to reverse its decision on custodia bank, and if a few more weeks would have passed and i wonder if the fed would have made the same decision. >> we'll ask the regulators, caitlin. great to have you on to get your perspective. >> thank you very much >> caitlin long, custodia bank jack mallers at 2:00 p.m. eastern. let's get to tyler matheson for the cnbc news update. >> i'll have my hoodie ready for that one, kelly. president biden has vetoed a bill for the first time in his presidency within the last hour he tweeted that he is rejecting a gop-sponsored measure that would prohibit retirement plan managers from considering social equity and corporate governance factors. biden says excluding them would

put americans' retirement savings at risk. a new york federal judge says today the u.s. virgin islands can proceed with a lawsuit against jp morgan chase with jeffrey epstein jamie dimon, quote, knew in 2008 that his billionaire client was a sex trafficker, an accusation the bank denies. and usaid worker jeffrey woodke and olivia dubois have been released in niger after being held by militants. back to you. the collapse of silicon valley bank, how could the 16th biggest bank go under so quickly? there were red flags as far back as 2016. guto wrelarsere aware of them and greg zuckerman joins us with the details next fresh, warm hot dogs, straight out of my torso!

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we have a news alert on first republic bank. david faber is here. hi, david. >> hi, kelly i want to build on the reporting that you have done and others have done. this has been a key bank of late in the marketplace, first republic because so many other regionals seemed to at least in term of the stock prices seem to be recovering a bit and there seems to be more confidence in the market and as i've been reporting this is seen as a stumbling block that we're hoping that we're toward the end

of this mini crisis. building on what "the wall street journal" reported about an hour or so ago that the j.p. morgan has been hired or at least acting as an adviser to first republic from an investment banking side, as well there are reports, of course, of jamie dimon being involved and trying to coordinate a capital raise. unclear to me if he's leading that charge certainly, he is one of a number of different banks or one of a number of different leaders of banks that gave deposits last thursday and there is a belief that in order for it to really potentially outrun any current issues and be able to actually get back to the business of being a bank, it needs to raise capital that would be dilutive that is why you see the stock getting hit to the tune of as much as 30%. as with so many things during this period, it is uncertain as to what will happen here, and as

i reported this morning, there is also advice being given in terms of the possibility of a sale would there be a buyer for the bank would that buyer require government assistance in some way? can the government come in if, if fact, the bank is actually not failing. these are all key questions, but right now, one of the efforts does seem to be focused on a capital raise, kelly you know, last sunday there was a hope that the liquidity facilities provided by the federal government would be enough to instill confidence it wasn't. on thursday you had the 30 billion in additional deposits and i.e., liquidity being attributed by 11 banks and there was hope that that would instill confidence it wasn't quite enough and so here we are talking about a potential capital raise for first republic to allow it the hope would be, at least to start to make new loans, get confidence to its investors, to its employees and to its customers and anybody else we'll see. it remains a key question mark, i guess, in terms of the return

to health so to speak of the overall sector, kelly. >> just a simple observation and a capital raise is dilutive to the equity base and you expect the shares to be rallying if you felt that this move would be the survival and instead you see the opposite happening >> good point. you're right you don't know how dilutive it would be and we're talking about a 3 billion or less market value at this point. so if you'll put in 25, $30 billion in capital and i don't know what the number is and it should be as much as 25 and that is going to be quite dilutive, and to your point the market has taken it so far as another sign of trouble >> it's heading back the lows just over $15 a share. david, thank you >> david faber don't think it's the last we'll see of david, maybe today, maybe tomorrow, definitely this week let's get to keith, chairman of the regulation group at potomac global partners and currently in control of the currency.

thank you for joining us, and welcome. >> thank you for having me. >> would you mind providing a follow-up to what david was reporting and what does that tell you >> look, there's a systemic issue across the banking sector with weakness and with maturity mismatch if you're an equity holder you'll look for the exits apparently by trying to mark to market balance sheets, and i think regulators have a real challenge ahead of them by getting real equity numbers, real accounting numbers in front of the marketplace right now there's the way regulatory capital goes by not including the accumulated other c comprehensive income after the 13,000 range in capital rules and silicon valley bank, for instance, was well capitalized and the same thing with signature. so there's fear and people are

going to typecast things and you have all of the liquidity you want if people don't think the bank's solvent, and people will look for the exits and the liquidity facility will fund the run, basically >> would the disclosure of deposit flight or lack thereof go way out and is the lack of disclosure itself one of the key problems >> i think that would help >> in this type of situation where you have funding facilities that people may not know the entire, you know, story of what they are and how they're collateralized and what the business will look like in the future and that's the key to what an equity value is. it's not like what it is today and there might be stabilization. it's what the banks will look at six, nine months and five years, for that matter and i think there's a lot of betting and rearranging going on in the banking sector and that banks aren't going to look the same in six months, nine months and let alone five years and that goes

into play into what an equity value is or the price of long-term debt >> our next guest, caitlin long, that it would not permit anything other than the banking system instead of reserve banking i'm going to charge you, keith, $50 a month for my services and i'll hold one to one dollars against your deposits. could a company like that get a charter? >> good questions. all options will be on the table and this was a thought dating back to my work in the early '90s that scholars had thought about and clearly fractional reserve banking system introduces the risk of run which is is why we have this heavy apparatus of banking regulation which i've spent my life and expertise in, but over time, you may have more stable ways to do

this if things are fully collateralized, as we saw with the stable coin issue and you have to put your money somewhere. put your money in the bank and the bank may lose money and you may put money in treasury bills and they may seize up or go sideways those are all issues that will arise, i think, with any sort of financial intermediary function and those are the risks that have to be dealt with both at the institution level and at the larger regulatory level. >> we are currently seeing a glut of cash and the money, and it sounds like they were very different from the crisis days when they were exposed to a lot of crap, for lack of a better word, this time they're in a lot of government securities and we're in this situation where it seems like one way or the other the government is paying businesses to hold its cash, right? it's either doing it through money funds or paying interest on treasurys that the funds are

holding and guaranteeing deposits on some level at some point, why do we have all of this apparatus when could or should people just get that return paid for directly by the fed? or is there a way to avoid it altogether it is basically implying the private system can't handle this fundamental need for companies or individuals to keep large cash deposits. >> yeah. it's been an issue throughout the history of the country, right? all of the way from the very beginning of the country and big banks have been even more controversial and we sort of get along and there's a large treasury market because of large government buying and that's view as a safe investment as long as the credit of the united states government is sound so people are using that market. i mean, i think -- i'm not a specialist in funds and the

like, but when you have people putting money in money funds that are supposed to guarantee the dollar and if the treasury market moves, it's a challenge to maintain at the bank level, as well. >> if you imagine if everything went through the treasury pill bills and what is it unlimited free deposit >> being you just weigh in on the appropriateness of those measures >> yeah, look, it would probably take an act of congress to legislate the $250,000 cap during the financial crisis before that law was in effect at the fdic and the government put in place a temporary transaction accounts you can imagine something like that being appropriate here. i'm not sure it could be done without an act of congress, but

that might stabilize the system until we had a better vantage point, vantage into the true health of banks and might stave off, you know, a really movement of cash and that's all we have left after it was over >> all right, keith, chatting with you thanks for your time keith noreika. let's stick with the banking sector as regulators shut down silicon valley bank just a little more than a week ago. the collapse surprised some, but according to "the wall street journal" there were red flags all over the place greg zuckerman, great to have you on the newsline today and back in 2015, what were the issues >> great to be with you, kelly again, so as long ago as you suggested in 2015, fdic regulators and other his identified issues and the growth dependence on one industry, the venture capital industry and others were concerned about lack of risk management and we delve

into more recently the poor risk management and your previous guest talked about the question about does this raise issues about the reserve and banking industry to me it's a question of poor risk management and dependence on models that were poor and reassured them they had vitals internally saying interest rates were unlikely to soar garbage in, garbage out and that really undercut their operations >> so their models were likely to soar. at what point did they soar and these dots are pointing into a massive increase in the funds rate and maybe now we need to hedge and think about -- so the first rate hike was january 2022, greg what play out over the ensuing months as the fed signaled and began a series of steep hikes. >> there was an argument that the inflation issue wasn't something endemic, that it was transitional and they had to be

higher rates and it won't be something that they would be raising aggressively part of the issue is society and business have become overly dependent on models and i'm a big believer of some of the big investors and others and companies have developed the models and you want to be careful about the information you input into these models and it seems like the executives that we reported in the story were beholden to models that were reassuring when they really should not have been >> wow, so really quickly then, the lack of chief risk officer, greg, should these have been flagged higher by the fed and supervisors with this massive lapse on this part to not push harder by the bank to rectify this >> yes that was something regulars should have identified and also the fact that so many venture capital firms and companies had put so much of their money into this one bank and frankly, they did it because they liked bankers at svb, they were helpful and knew the industry. as reported there was another

side of the bank where they pressured these borrowers. they said unless you put all your money or the majority of your money here we're not going to lend you and as a result so many people had so much money in these others that when things got rocked when questions were raised they got scared and there was a run. >> absolutely. with the great tiktok, i encourage everyone to read the piece. >> thank you for being here. >> thank you having me. coming up, looking at big banks' balance sheets and everyone's balance sheets and apple up 1.5% and amazon is down on the new job cuts and we'll dig into all of that when we come right back. my retirement funds allow me to enjoy what i love to do. i volunteer with the medical reserve corp. as long as you can make an impact, why stop?

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and offers high-quality municipal bonds from across the country. they provide the potential for regular income... are federally tax-free... and have historically low risk. call today to request your free bond guide. 1-800-376-4376. that's 1-800-376-4376. welcome back time for today's "tech check." as we mentioned at the top of the show, andy jassy doing a second round of deep job cuts just a couple of weeks after the first one. 18k in january and 19,000 more announced in amazon today. let's bring in deirdre bosa with the details. what spurred this? >> as you said, taking a page from meta's book it's painful for these forces

typically when you want to do job cuts you want to do it once and it's difficult, and in that announcement, someone asked why we don't announce the rule reductions the short answer is that not all of the teams were done with their analysis in late fall and kelly, you can imagine that other big tech companies that hired a lot during a a this as well and imagine, that there's a possibility there's more cuts to come from other places. >> amazon shares are down. with meta's shares be up in amazon's case what do you think the market is saying they didn't go deep enough >> that's a good question. with meta it's been the silver bullet fort stock that keeps moving higher. the fact it's not happening for amazon, it's down 2.25%. it's less than 10% of the corporate workforce and a tiny fraction of the doubling over

the pandemic that includes warehouse workers. it could make investors the areas where they did the cuts, it happened in the profit engine, aws and advertising. could lead some to wonder what is growth going to look like at these sturdy businesses in amazon we know the core e-commerce is under pressure aws and advertising are under pressure, that's a problem. >> i love when we show the chart of pandemic hiring thank you. still ahead for the first time post pandemic, downside risk has emerged according to bank of america michael gapen. he joins me where he's managing to find some bright spots. that's next. 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

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welcome back before we go my next guest says following the svb bank collapse he expects a quarter point hike on wednesday and for the fed to keep its balance sheet runoff or qt as long as the banks remain stable but the downside risk has emerged for the first time post pandemic joining me is michael gapen. good to see you again. >> thanks for having me on. >> correct to call your expectations a dovish hike and when can i start going why are we hiking and the market will have to cut by the end of the year anyway!

make your case not what they will do but why this would be justified. >> yeah. i think the justification is that they have two goals and two tools, right the goal is financial stability in the short run and price stability in the medium term and they can act in two directions at once. use the lenzder of last resort function and use the policy rate to keep inflation in check that's the argument that central bank can try to walk and chew gum at the same time it has two objectives and tools to do that we think they will lift by 25 basis points this week, but i think the mess age will be more dovish uncertainty has risen, things will be data dependent and data dependent includes financial market dependence. you hike, that's the hawkish side, but i think the message is

uncertainty, move cautiously, the dovish side. >> when you say downside risk has emerged for the first time what do you mean by that >> well, we've had a recession in our baseline for some time now, but momentum in the economy has always been stronger, that we were seeing slowdowns in say housing and some parts of business spending, but it was narrow the labor market was strong, consumer spending strong, so risks were in the direction of an economy that wanted to keep expanding and risk to the fed policy path were to the upside now you can argue we've seen -- we've already seen a tightening in bank lending standards before the recent events. those are likely to tighten further. credit growth is likely to slow further. therefore, you have more balance risks around the outlook and should you get a sharper contraction in credit than we're expecting that's where your downside risk would come from. that's what we mean by downside risk emerges >> you were early in the

recession call in the sense that you've always said maybe towards the back half of this year a lot of people are coming to that view. why not cut or pause >> well, because our thesis has been to get inflation down to 2%, you do need to correct some of those imbalances in the labor market and that would mean something that looked like a traditional recession. we think the costs of trying to get price stability would involve a correction in the labor market if that was the goal, we felt history tells us more likely than not you end up with something that looks like a recession. so you wouldn't cut now just because you haven't made enough progress in bringing inflation down to 2. certainly with balance risks now and risks perhaps to the downside, yes, the transition from hikes to cuts may come sooner, but i don't think that's baked in the cake either. >> all right market is heading in that direction. we'll see how the refst of thes days play out. good to see you again. >> thank you

appreciate it. >> michael gapen that does it for us. thanks for tuning in next on "power lunch," morgan stanley isn't worried about a spending slowdown. we'll trade their top pick for the e-commerce re-acceleration they're calling for. inimn l getting ready and i'l jo h othe other side of this quick break

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welcome to "power lunch. alongside kelly evans i'm tyler mathisen stocks higher as ubs rescues, so to speak, credit suisse, but bond holders getting wiped throughout and they are not happy. the credit suisse bond holders that is. the unhappiness a common theme in the story europe upset with the u.s. and a lot of people are blaming capitalism we will explore all those issues and more. >> including tech layoffs. a short time ago amazon saying it will cut 9,000 more jobs, apple making other cuts elsewhere, trying to remai