good afternoon, everybody. welcome to "power lunch." with kelly evans, i'm tyler mathisen. glad you could join us. coming up, we're 24 hours away exactly from the fed's big decision on interest rates. this time, it really, really is one of the most important meetings in recent memory. will the fed raise or will they pause in light of all the turmoil in the banking system? coming up over the next hour, we'll discuss that. what will the fed do? what impact will it have on the markets? how should you invest ahead of it? should you be? first, let's check on the markets. stocks rising for the second straight day. the dow trying to hang on to a 100-point gain. we were up 300 at the high. the russell 2000 is once again leading the way.

all righty. for more -- are we going to dom chu or not? dom at the new york city. yes we are, and there he is standing by. take us through it, dom. >> tyler, kelly, stop me if you've heard this before. first republic is one of the biggest movers. one of the best performing stocks in the s&p 500. a gain of 45% or so off the session highs, as speculation continues about what is next for the regional bank seen as the most direct victim of the regional bank fallout tied to silicon valley bank's failure. speaking of the regional banks, they're collectively some of the best performers in the entire market. check out the other games, like pac west. western alliance. even broker dealer and bank holding company charles swab is up. it was caught in the mess, up nicely today. more positivity from the analyst community driving new york bank

shares. davidson is upgrading them to a buy rating on the deal to deposit loans from now failed signature bank. we're ending with a check on the autos, specifically electric vehicle makers. tesla is up big, help aid long with a credit ratings upgrade from moodies, making it investment grade. no longer high yield. s&p did something similar back last fall with its rating up to bbb, also investment grade. check out general motors, rivian, ford, lucis, all up on the day. >> dom, thank you very much. we begin with the fed as we are less than 24 hours away from one of the biggest fed decisions in years. so is another rate hike on the table, or will the collapse of silicon valley bank and problems at other banks cause the fed to pause and wait things out a bit? here with insight, former federal reserve board governor and economics professor at

columbia university. professor, welcome. good to have you with us. what will the fed do tomorrow? what should they do? >> let me tell you where i stand. i've been taking the view that the last time they should have done 50. the fed has been a little behind the curve and has to move and move rapidly. i have to tell you, my views have changed right now. we're dealing with an issue which is frequently referred to as financial dominance. if the financial sector is unstable, the fed raising interest rates will make the instability worse. so in a sense, the central bank gets put between a rock and a hard place. that's really the situation the fed is in currently. i think, actually, this situation is going to resolve. i think there's steps the fed can take, but i think that, right now, they have to let the

markets taum calls for a legal opinion -- markets calm down. when you see it's under control, we have to get back to our business of really tightening monetary policy and tightening it quite a bit. >> so -- >> and really start moving back to bigger changes. 50-day sprint moves until we get where we need to get to, in the range of 5.5% to 6%. what does the fed need to do? the fed needs to go to the bank and do stress tests right now on their interest rate risk. there really has been regulation on this. i was a little surprised by it, but the fed monitored the risk management for these firms. interest rate risk is one of the easiest to calculate. it is not rocket science. it is banking 101. i have it in my textbook on money and banking, which is used

by undergraduates of business. it's very, very straightforward stuff to do. it hasn't been done. it now needs to be done. in fact, the fed has to let the public know that if a bank doesn't have -- has too much risk, they need to deal wit. or if you borrow, recapitalize. i suspect most banks will be okay. the fed really needs to say, we're going to get on top of this. when we get on top of this, then we have to get back to business. >> so on what you're saying, professor -- >> the fed was able to tighten and keep inflation under control. they have to basically express that, single that very strongly right now. but i would pause right now to let the markets settle down. not a crazy thing if they do 25 basis points and indicate they're watching carefully. i might be more conservative when having been hawkish recently. i'm moving to the conservative time. to indicate the fed really needs

to do the business as soon as we get it straightened out. >> let me summarize what i think i heard you say. one, the fed has considerable unfinished business to do with respect to restraining and bringing down inflation. whether they do that business tomorrow or they pause a little bit is to be seen. but also implicit in what you -- i think you said there, is a criticism of the fed for not monitoring the levels of risk, specifically interest rate risk in the portfolios of some of these banks. are you critical of the fed for the jobs it did or didn't do? >> i don't know the details, but this is a surprising thing. interest rate risk is very easy to measure. >> sure. >> in fact, firms and their asset liability committee, they're supposed to be looking at exact li this. somehow, svb and other banks dropped the ball. regulators are supposed to spot that. so i think that one is we need

to relook at how regulation is done. for example, allowing banks to hold to maturity in terms of assets when they have gone down in value, and it's not market to market, i think the a huge mistake. there needs to be a look at this. i don't know if people remember the "i love lucy" show, one of my favorite shows. ricky would say, "lucy, you have explaining to do." the fed needs to do that. mistakes are made, but then you fix them. the fed made some serious mistakes in terms of letting inflation get out of control. to their credit, they realized they made mistakes and turned the tank around very quickly and changed the policy. i don't think this is that hard to do. they need to do it. we need to actually look into our regulatory process to make sure that this interest rate risk, which should have been easy to deal with, doesn't happen again. >> what are they going to do with the --

>> doing that will restore confidence in the market. >> what are they going to do? they have a problem here. they -- because they ignore things like break evens and don't talk about leading indicators, they have no conceptional framework to lower the dots, but they're going down. are they sticking with the high projections? if they raise a quarter point tomorrow and leave the dots where they are, i don't know what the term would be to describe that. i don't know what else they can do. what basis could they bring them significantly down? >> well, it's not clear they should bring them significantly down. they have to describe the uncertainty here. the bottom line is, they've got to get -- make sure, which i think is not that difficult to do. i think the banking system in general is healthy. the biggest players seem to be fine. they have to restore confidence that this interest rate risk is

not going to bring down a lot of banks. then the banks need to do something about it. put in the risk controls. they need to recapitalize. that's what stress tests are about. the issue here is make sure you get the financial things okay, then you can do your business. there are many instances of the fed having done this. the 1987 stock market crash, feds did a big intervention. once things calmed down, which they did in two months, the fed was back in business. lccm example is where -- in 1998 and russia, the fed lowered the interest rates a lot immediately. but then they made a mistake. once things calmed, which they did quickly, and fed had control of the situation, they needed to raise rates quite a bit. that's what you don't want to see. the fed basically can provide

the information to the markets as to whether the banks are in good shape. if they need to be fixed, fix them, and then back to business. as soon as you do that, the more -- the policy would be back in control. in fact, not to fix -- provide the information to markets and get the banks to be solidified, then, in fact, they're going to get behind the curve. eventually, it's going to get out of control and they'll raise rates further. >> all right. >> i'm talking about doing a one-two step. first step is get the financial dominance out of the way. fix that problem. i think it can be done quickly. it's not rocket science to deal with interest rate risk. to me, it is remarkable that this is the problem. this is much less complicated than we saw in covid or the global financial crisis. so fix that. mix markets if you're going to fix it.

stress test of 2009 was successful. >> right. >> they need to do something like that and do it quickly. basically, they need to be tough on raising rates and controlling inflation. make sure that raising rating is not going to bring down the bank. they need to fix it and fess up about things didn't quite work out. we all make mistakes. the key to being successful is not that you don't make mistakes. you actually learn from them. don't keep digging the hole. dig the hole, fix the problem and make the business right. feds can very much do that. i'm confident they can do that. they need to get on the stick. >> all right. >> they need to signal that. that's the most important thing at this particular meeting. >> all right. professor, thank you very much. we appreciate your time today, as always. >> my pleasure. >> thank you. for more on what to expect from the fed at tomorrow's meeting and the impact on stockings, let's bring in victor that green, and the president

and chief investment monitor at hennion investment. what is the setup? how do you describe it to people? >> they have to go another 25 basis points, especially on the heels of what the ecb did. they're in a tough spot. i look at this as the hierarchy of needs. they need to put out the fire before they rebuild the house. there's been a lot of response from the fed, both from what yellen said today, trying to do fdic insurance. we're all going to be looking at, what does powell say? what is the trajectory going forward? will we see cuts like what is being priced in now? we saw dramatic shifts in the bond yield curve as well as futures projections on wherewe go now. it's less about the 25 bases points and more on what is going to happen going forward. will he back off of the

hawkishness? >> is the stock market resilient in the wake of everything that's been happening? tesla is up 58% this year. >> that's the stock in the index. the dow, nasdaq and s&p, you'd think no banks failed and everything was fine. yes, maybe a little bit it's that dog meme where he is drinking coffee and everything is on fire, saying everything is fine. a little bit, that's what the market has been doing. i think it is also looking past -- there's the saying, we have government intervention. there won't be other failures. the fed is about to come off the gas pedal. risk on. >> kevin, talk to us about what you see the fed doing and what it will mean for equities throughout the remainder of the year. it feels as though the conventional wisdom is dictating that we're close to the end of this rate hiking cycle. one way or another. it may be a pause tomorrow, may be all over tomorrow.

it may be 25 basis points now and again in may. talk to me about the impact that potentially the end of the rate hike cycle is close. >> sure, tyler. since march of last year, the fed's primary focus has been on fighting inflation. essentially telling the markets that we were going to continue to raise rates and reduce their balance sheet until something broke. well, something has broken. if there is a silver lining to the banking crisis, it is that it is going to prevent the fed from being as aggressive as they want to help curb record-setting levels of inflation. if we expand our investment horizon, tyler, out over the next two years, when rates should be lower, when yields should be lower, when inflation should be lower, and when markets should ultimately be higher, there's some very attractive opportunities in the stock market. particularly in sectors that were beaten up in 2022 and should help lead the recovery out of this economic slowdown, which may ultimately lead into a

recession. those areas, of course, are technology, consumer discretionary, and a biotech area of health care. we like names in that sector. technology front, we like broad come. on the consumer discretionary front, we like dick's sporting goods. and we like regeneron. i think those are the opportunities investors should look at. >> is it too early to start -- if i buy your thesis, is it too early to start accumulating positions in these kinds of shares, or put another way, are you going to have a better price opportunity a few months from now? >> tyler, as you know, trying to time the market is often an exercise in futility. historically, the stock market is around 9 to 12 months prior to the economy recovering. that may very well be right now. these opportunities are trading at attractive multiples, have

been beaten up over the course of the last year, year and a half, and i believe it'll help lead us out of this economic slowdown. now may be the very time to consider adding them to your portfolio. >> pressed for time today. we have a packed show. victoria greene, kevin mon, appreciate it. ahead, the outstanding portfolio manager award. what is expected from the fed tomorrow. energy the best performing sector in the s&p 500. every stock in the group is higher. apa up 7%. apa up 7%. ♪♪ choosing miracle-ear was a great decision. like when i decided to host family movie nights. miracle-ear made it easy. i just booked an appointment

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welcome back to "power launch." morning star out with the 2023 awards for investing excellence. our next guest is the winner of the portfolio manager award. investment officer of fixed income at blackrock, also the strategic opportunities fund and the total return fund. rick rieder. fixed income and more on this day before the big fed decision. welcome. good to have you with us. >> thanks for having me. >> why don't we start where we must, and that is what you expect the fed to do and say tomorrow, because they have quite a needle to thread. >> yeah, you know, tyler, i think, you know, there's a lot of focus on going 25 or not going 25.

i don't think that is a critical issue as, like you say, how are they going to describe the condition of where we are today and where they're going from here? listen, the terminal funds rate is 5.25, 5.5. i think that would have been a bit higher, save the epic set of events we've had in the financial world. i think they're going to get there. if they go 25, my sense is they're going to say, something to the effect they'll provide liquidity in the system. they've grown their balance sheet an extraordinary amount. it's up $300 billion since march. incredible. >> yeah. >> how they describe it, it is really important. if they pause, i think they'll say, listen, we are taking a breather to see where things are, and then probably still get to the same place. from an asset valuation point of view, certainly, over the intermediate term, i'm not sure the 25 or not makes a huge difference. the communication, like you say, and how they interpret financial

environment today and economic environment today is critical to listen to. >> if i'm hearing you correctly, what you're saying is that whether they do something or do nothing tomorrow, the terminal rate is likely to be in that 5 and 5.25. they may get there quicker or may cause and get there later. let me turn a little bit and talk about what we've been seeing in fixed income products over the past month or so. specifically the fixed income products of banks or bank-like entities likesyncrony or ally. the prices have come down a bit there. what is going on in the regional banking subsystem, and what does it tell you, if anything, about those banks' willingness or ability to make the kinds of small business, personal, auto, mortgage loans that they're famous for? is there going to be a credit

tightening? >> i don't know how much time we have, tyler. that is a complex set of questions. listen, i think the key is -- by the way, to summarize the last question, i do think the fed is going to go 25. >> right. >> but i think, like i said, i'm not sure the importance of it. however, to get to your question, listen, the fed moved, and the terminal rate is going to 5.25, 5.5, i think. what happened in the banking system, you've shocked the system. particularly, the sensitive parts of the economy that created some real stress. the epicenter being commercial real estate and how that's impacted the regional banks. commercial real estate came under pressure, which is a big portion of the balance sheets, simultaneous to uninsured depositing be being removed from institutions. where do we go from here? it is important, what the policymakers have done around semi-in

semi-inshur semi-inse deposits. there's going to be regulation on the industry. how is capital going forward? that is critical. you have to assume there's some contraction of lending from here going forward. certainly for this year, and part of, you know, an economy that i would argue has been operating pretty well, do you see some pullback in the economy. i'm not, by the way, i'm not convinced we're going into deep recession, but i think you have to assume the velocity in the system, you have to assume the banking system is going to at least marginally pull back and interpret how is the bank going to be regulated, how is capital going to be -- how much capital do they have to run going forward? big questions we'll learn the next few weeks. >> rick, looking at the award you've received, the funds you run, income, total returns, maybe on both of those counts, for people at home, why do you think you got this award? what were the decisions over the past year in what has been an

unbelievable year? how are you positioning now in a way that might benefit those who are trying to figure out what to do in this environment? >> thanks forfj7cñ saying t. couple things. one, we are incredibly -- and morn morningstar said this, but we are pursuing data and analysis and regime identification. the big thing for us is trying to identify the regime you're operating in. if you can identify the regime, we use tons of data and artificial intelligence, risk systems, et cetera, thinking about where are your convexity of return? you have to get regime right. one of the things we did a pretty good job with is figuring out, last year, the fed was behind. they had to move quickly. so you reduce your interest rate exposure. reduce a lot of your beta in your portfolio, your risk assets. anyway, that was last year. i think this year is a different framework. today, the biggest thing that you think about -- and i think for every asset, debt, equity, real estate, is that the

risk-free rate, we can sit in treasury bills, sit in commercial paper. i've been buying six to nine month commercial paper at 5.25, 5.5. that changes the paradigm of how do you think about equities, about financing? boy, if i can sit in the risk-free rate or quasi risk-free rate, that's the deal. more cash, more yielding assets, clip 5.25. there are tactical things around credit to take advantage of. you know, by the way, some of the quality income in the markets and mortgages, you can get pretty good deals at these rates today. >> interesting. rick, thanks for opening the notebook a little and talking to us today. great to see you again. >> thanks for having me. appreciate it. >> rick rieder with black rock. still ahead, the sector posting the largest inflow since 2008. we'll tell you where investors we'll tell you where investors ar buying withe ♪♪ what will you do? will you make something better? create something new?

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just a fun, spontaneous thing. i'm looking for someone who will let loose. dress up a little. see a show. order the steak and the lobster. some people say i'm excessive, but who cares. i'm just looking for a saturday to remember, and a sunday by the pool. think you can keep up? welcome back to "power lunch." stocks higher, a nice rally heading into the fed decision tomorrow. nasdaq, the leader here, up more than 1%.

bob pisani is at the new york city. hi, bob. >> hello, tyler. we are reversing everything that happened last week. remember the big story last week? treasury yields dropped dramatically. yield plays all rally. yield play, the classic one, utility. utilities had a big week. con ed, for example, moved 6% in four, five days. guess what's happening? treasury yields are going back up, and all of the utilities, these are among the worst performers in the s&p 500. there's con ed. these play 3.5%, somewhere around there. some get as high as 4%. but they compete for the treasury bonds in terms of yield. so there's a day where we're moving to the downside. we also had other yield plays also that did really well. i'll give an example. real estate investment trust american tower. they sell communication sites to cell phone providers.

they're a yield play. 3%, 4% in the yield. it varies. bottom line, that had a great week. last week, it moved up rather significantly. it's all down today. again, the rate plays are down because the treasury yields are moving to the upside. opposite case with the banks, of course. we're having a titanic day in the banks. focus on the regional banks. we had volumes we've never seen in history on some of these regional banks. u.s. bank corps normally does 13,000 shares a day at the new york city. friday, 206 million shares traded hands. 15, 16 times normal volume. this has come down again now, now it is only two or three times normal volume. you get the idea. we've never seen this volume here at the new york stock exchange on these numbers. i'll show you what a reversal this has been. we were at $38.50 five or six trading days ago.

we're about to crack 4,000 here. in fact, we were just standing at the door of 4,000 just earlier in the day, off the highs. it'll depend on the federal reserve tomorrow. >> 39.86 for now. thank you. oil is jumping today. energy stocks with big gains, as well. pippa stevens what's going on here? >> marching back to the $70 level. currently at $69.50. energy stocks up more than 3% in the top s&p group today. i want to take a look at this data from bank of america, which actually shows that last week, we saw the biggest inflows into the energy sector going back to 2008. >> wow. >> on the face of this, this seems like a very bullish indicator. we do have to look a little deeper because the sector was actually doing 7% last week. we saw outflows from some of the largest funds, including the xle and xlp. that begs the question, where are investors putting their money? it is more going to individual stocks rather than energy focused etfs. one area of etfs where they are

putting their money is into high dividend funds like the vym. that includes a number of energy stocks. >> i'm shocked it's higher than when we had oil at 130 last year. pippa stevens, thanks. let's get to see ma modi for the update. >> an earthquake was felt across pakistan. a producer reporting it was strong enough to prompt people to leave their homes in case they collapsed. some women crying in panic. there is a report of a wall falling on a girl. school workers are picketing in the rain as they strike for higher pay and better working conditions. teachers also walked out in solidarity. the country's second largest public school system is shut down, cancelling classes for 420,000 students as they look for higher pay.

>> enough of the disrespect. we refuse to be invisible. we refuse to be silenced. we are ready to fight. we are proud to be joined by teachers who are striking in solidarity with us. united we will win. thousands of signatures were delivered to a louisiana governor's office today, but there weren't enough of them to trigger a recall election in new orleans. opponents of democratic mayor cantrell needed 49,000 signatures and submitted 67,000. only 27,000 on them were valid. kelly and tyler, back to you. ahead on "power lunch," signs of life for the housing market. market. existing home sales on the rise ♪ old school wisdom, with a passion for what's possible.

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welcome back. the saying is go big or go home. we're going all out for tomorrow's very important fed

decision. we have full fed coverage on "the exchange" after "power lunch." so much at stake, market, bonds, banks. rick santelli is live for us. rick? >> i have a special guest today. managing director of anything short term. jerome schneider. thank you for being here. >> sure. >> many believe the federal reserve was an agency that rarely made mistakes. seems like 2022 and 2023 are really hurting their record as deposits left the system and emigrated. we see there was a vacuum there that has created an issue. is the fed going to raise a quarter point tomorrow like the markets want? if they do, will it make a big difference with regard to the nervousness of the banking sector? >> it's a coin flip. you could have a dovish hike or hawkish pause. the reality is the feds are

going to manage the evolving situation between growth, financial situations and the immediate need for financial conditions, and then -- >> how did they respond to financial conditions tightening up? >> in the mediate term, they looked for deposits from the fdic. that took the strain off the system in the near term. there's concerns about how the economy evolves, about the high interest rates and how it evolves in the economy, and the financial ecosystem. from an investor point of view, we should be rationalizing that this takes time in the sequencing. >> it does. that's the whole point. long and variable lags. i guess so many traders on this floor have expressed to me the notion that, how could the fed have missed the point that regional banks are holding all these losses at a time where interest rates have been raised in a quick velocity. why didn't they anticipate this? it's a mixed moment, though the

market dealt with it. >> markets have dealt with it. obviously, the moment has been pushed off, if at all from this point in time. from the asset management point of view, for all investors, there's a lesson to be learned here. understand that assets have a duration to them. liabilities have a duration to them. as a cash practitioner, the one thing we've learned from this issue is cash management simply isn't a passive situation, a passive process. whether you're a depositor at institutions -- >> and it's counterintuitive. >> exactly. >> moving your money to a short-term instrument is causing more volatiity and risk in the marketplace. >> this is the first time in a generation where we see reducing your risk profile, moving to the front of the yield curve offers more concerns rather than taking more risk. >> how is this affecting funding? >> we are simply watching the funding mechanisms work. they're adapting. we're not seeing stresses in the repo markets. the currency markets are operational. >> corporate securities is a hot topic.

quickly, let's talk investment grade and junk. what is the prognosis here? >> we're defensive in terms of where we think the corporate spreads are going to be because of the economic outlook we see. the recession probabilities brought forward probably later this year. at the same time, the headwinds we've encountered over the past few days are simply bringing gdp lower. >> when we come back in one year and discuss the post more item mortem on this, is tomorrow's hike the last in the cycle? >> close to the end. more importantly, and this is the more important thing, investors need to recognize the horizon for the fed to be on hold with the neutral rate is probably at least a little longer than people expect. the timing is tomorrow. counteracting the conditions with the growth outlook will be the key to investing in the near term. >> and make sure they keep the regulatory eyes on the ball. kelly, back to you. >> rick and jerome, thank you both very much. a sharp turnaround in the housing market. let's get to diana for the

details. >> existing home sales in february dropped a whopping 14.5% month to month. that is the first monthly increase in a year and the largest jump since july of 2020, which was the surge at the start of the pandemic. i'll tell you, home sales don't usually change this much month to month. sales were still down, though, 22% from the year before. now, this jump is a clear sign of just how sensitive today's buyers are to mortgage rates. take a look why. the sales count is based on closing. that's controls likely signed in december and january when mortgage rates dropped to the low 6% range, down from the 7% range where they were in the fall. boom, a slew of buyers. unfortunately, inventory is still historically low as sellers are not stepping up and neither are the homebuilders. even with that low supply, price s went -- >> all right. looks like we're having a little trouble there with diana's

microphone. >> i think we got the message loud and clear, the falling prices. coming up, nvidia's iphone moment. the chip giant revealing a bold the chip giant revealing a bold push into a.i. what if you were a trendy apparel company facing an avalanche of demand? to ensure more customers can buy more sherpa-lined jackets, you call ibm to automate your it infrastructure with ai . now your systems monitor themselves. what used to take hours takes minutes. and you have an ecommerce platform designed to handle sudden spikes in overall demand... as in actual overalls. ♪♪

welcome back, everybody. time for today's tech check. we have a ton of nvidia headlines. let get to dierdre bosa. >> another day, another slew of a.i. announcements. these aren't the gimmicky ones like using a.i. for writing your remarks. this comes from nvidia, abode. jenson huang summing it up. >> chat gpt heard around the world. a new computing platform has been invented. the a.i. moment of a.i. has started. computing and a.i. have arrived. >> as kristina partsinevelos put

it, nvidia wants to power the revolution. most analysts in the market sees the company as best positioned to do so. in terms of the top down, google opened up its chatbot to the public, intensifying the battle to microsoft to own the window to chat a.i. the ceo warning it'll go wrong. he stopped short of integrating bart into the flagship search engine, painting it as a complement. adobe, a.i. for creatives, the tool is firefly. it'll integrate it into an existing suite of products, photoshop, illustrator and express. today in san francisco, it's not half over. >> i got invited. i don't want to brag, but as a google, you know, paying customer, dierdre, i was invited and am on the wait list now. how is it going to work when i get access to this bart?

>> you're going to be able to ask it questions like many others. i hope you'll be posting all of the quirky, accurate and inaccurate responses that are already coming. >> i'm not interested anymore. i got access to bing and used it for three seconds. couldn't get an answer on my kids' snow day, so i lost interest. >> because you're not trained to use it yet. think about how we use search. it's kind of this learning curve. i know i am still telling people like my mother how to search for stuff and sort through the garbage that comes up. it'll require new tools, new savviness to figure out how to best use these generative chat bots. i have one that gives me access to a bunch of different ones. i kind of compare them. ask the right questions. you don't always think about it right away. >> it's true. now that's the whole new industry, is people -- >> the phrasing is critical. >> oh, yeah. people put programs on top of it with these prompts that are, themselves, an entire -- >> special pronouns?

wait a minute. >> no, special prompts. they go on and on. you know what i'm talking about, dierdre. >> i get you, kelly. >> "mad money" exclusive at 6:00 p.m. eastern on cnbc. no matter what the fed does tomorrow, thredifferente 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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j.p. morgan if the fed hikes, and third, nvidia. we'll be talking about that if the fed hikes but the statement hints at a pause in the future, to handle this incredibly complex assignment, we invited

boris, no one could get their head around complexity. >> i'm ready to be tom cruise here. >> number one, the fed pauses and you raise the idea of xhb, the home builders index? >> yes, because i think obviously, you know, the home builders index, very sensitive, that gives it a lot of tail wind behind it. housing is, you know, rising up because even though upward mobility has gotten much worse, inventory is not there. demand is very strong for housing. if you can ease affordability a little bit, it's going to create a ball under water. it's going to pop it. also, all the builders are seeing much better supply chain issues now, so that really also provides them with much better incentives to go forward, so i think you don't need to be a hero, just buy the index. i think it will do well in a pause scenario. >> this is clever. if the fed hikes, boris, then you turn to j.p. morgan.

>> if the fed hikes and sort of stays the course, which is the most hawkish scenario of all. in other words, jay powell gives no corner here, and basically says we're going to focus on inflation, that basically suggests a couple of things. one, we're obviously going to have contraction in the economy. the yield probably should tighten at this point because he's clearly concerned that inflationary pressures are going forward, and that creates a defensive situation. there's no better defense than j.p. morgan chase, a 3 1/2%-year-old. -- yield. and of course as a result of it, they're going to make more money on trading and services. money goes to the best. so to me j.p. morgan chase is a great defensive play. i love the stock. >> and scenario number three, fed hikes like a fledgling hawk, but talks like a little dove. >> like a dove, right, in other words, where he hikes and sort of makes it clear this could be close to a terminal rate, which

is probably the most likely scenario. i think that, of course, yes, it's very positive for all tech. tech is obviously starved. every time interest rates go up, tech goes down because of valuation. nvidia to me is a very interesting story on tech. it's sky high valuation, if he does pretty much bring the rates to a terminal rate, that means valuation concerns are going to come down. as you guys reported. they are really in the forefront of ai. the negative story in nvidia is there's other people getting into the ai space. i think people utterly underestimate the first mover advantage. if we all believe that ai could be an iphone moment, then you have to better nvidia going forward. >> that's what the ceo said just a few minutes ago. you probably heard. boris great to see you, my friend, thank you. >> thank you, guys. >> thank you, guys. >> you b.et you're doing business in an app driven, multi-cloud world. that's why you choose vmware. with flexible multi-cloud services that enable digital innovation

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economy to reward for negative emissions. >> with a big platform, we can tackle climate change and really make a difference. welcome back to "power lunch," we are 23 hours away from the fed's decision on rates, markets on pins and needles, and just recovering from the nervousness caused by the collapse of silicon valley bank, now hitting the u.s. and europe, having a trickle down effect on emerging markets. seema mody is here with their side of the story. >> the narrative has changed since the start of the year when there was so much optimism

surrounding china's reopening, we have seen accelerated emerging outflows in the past two weeks. asian investors have exposure to the tier 1 bonds. the biggest concern is that foreign banks will start to tighten their lending standards. that puts extreme pressure on large deficits. countries like turkey, chile, and colombia. worth noting, central banks, including the ones of these countries have implemented new risk management tools since the greater financial crisis. they're smaller countries. they have less of a buffer than developed economies like the united states. those are the countries to watch or are potentially at risk if we see some type of contagion effect. looking ahead to the fed decision, if we do see a smaller than expected interest rate hike, goldman sachs points out that is good news for the emerging markets that are sitting on high dollar denominated debt. they want lower rates and a weaker dollar. by the way, we have seen four consecutive days of losses. that sort of tells you how the market is positioned going into

tomorrow. that trend continues. that is very good news for emerging markets. goldman sachs, because they're suggesting there's a hold, that that would be an inflection point for this em trade. >> wow. i was thinking knowing that the dollar's been a little bit weak lately, they should suffer from the macro but at the same time, be helped. it depends if the banking crisis gets worse, unless they're going to struggle from the tightening that we could see by some of these major banks. >> you could also, you know, argue latin america, india, countries like brazil, they have started their rate hiking cycle well before the federal reserve. that positions them to outperform. that's what goldman sachs shared with us as well. china is its own ball game tomorrow, in addition to a fed meeting, we have a state council meeting instead china where the premiere is expected to unveil a stimulus measure. we didn't get the stimulus

announcement, chinese stocks sold off. tomorrow, if we get that announcement, we'll see if that changes the story there. >> great point. we've got china to watch, the fed to watch. >> thanks very much. before we go, tune in at 1:00 p.m. tomorrow. the exchange and powers, we're going to merge like ubs and cs, we've got full coverage, leading up to. i'm supposed to look right there. up to and through jerome powell's press conference. it's the words that are really going to matter. thanks very much for watching "power lunch," join us tomorrow, closing bell starts right now. welcome to closing bell, i'm mike santoli in for scott wapner. we are live from the new york stock exchange. this make or break hour begins with relief, lifting bank stocks and the broad index as well as suspense builds ahead of the crucial fed decision. a group up 5%, a two-day bounce in that sector. that brings us to our talk of the tape. is the market's rebound this week showing