♪♪ good friday morning. i'm sara eisen with dom chu live from the new york stock exchange. setting the agenda today. bruce richards, his takeaway from the fed and clues about the credit markets. and we got former wells fargo ceo reacting to the banking crisis and where the fed lost the plot. first up, take a look at stocks this morning. s&p is off by 0.50%.

strength in utilities, real estate. defensive, even though it's had a horrible week. >> we were -- within the 7:00 a.m. hour we thought we were going to open down 300 some points, maybe 400. we've gotten back a considerable amount of momentum from the session lows so far, sara. like you point out, it's some of the weirder pockets. it's a weird mix. it's not straight cyclical, straight defensive. this today is going to play out. >> what's amazing is the s&p is up 0.3% for the week. >> for the week. >> the nasdaq is up 0.10% for the week. month to date, strong in communications and services and financials are down 15%. >> it's shaping up to be, by the way, a tremendous quarter for technology overall. so, a huge reversal from the consensus just six to nine months ago where people said, it's going to continue to be energy, continue to be some value sectors and all of a

sudden -- >> the banking turmoil. >> and then we got this and people are going back to them. >> more cuts being factored into the market. our top story today is deutsche bank because that is the eye of the storm right now. the read-through for the credit market and the u.s. banking system. joining us for his take and what he's doing about all of this, marathon asset management ceo bruce richards at post 9, what a treat on a day like today. welcome. >> thank you. >> you've been known to dabble in european bank debt. >> we have. just before credit suisse merged with ubs, we went out and bought a significant portion of their bonds she short dated this calendar year because we didn't want to buy long dated, we didn't want to be in europe and didn't want to go down a structure in at1s. that worked out. >> weren't betting on the bailout. >> we were betting on this calendar year getting paid and we bought that at a huge discount.

now it's merged with ubs, it will work out quite well for us. >> do you have any exposure to the coco bonds? >> no. the $250 billion structure, at1s across. the biggest banks in europe are bnp and hbsc, so they have big sized cocos and -- and the at1s as well as deutsche bank. to put this in perspective, when lehman bailed they had $710 billion of assets. it was mayhem. credit suisse has $525 billion of assets and not a problem at all for to be merged with ubs. ubs is such a strong institution, so well run, just like jpmorgan, very strong institution, the strongest in the world is able to absorb bear stearns. ubs with the backstop will be able to absorb credit suisse, so no problem there.

the question to deutsche bank, they have $1.3 trillion in assets. it's a rather large institution. not quite as large as $2 trillion at bnp, and too big to fail. so, it's a well-run organization. we think management has got a good handle on it. they went out and bought some of the debt, the at2s and bought that back to redeem them. >> you thought it would spark confidence, but it didn't. >> yet the stock is down and the ceiling is falling out. >> what's interesting about this, you mentioned the relative size of these people. earlier this morning we were looking at those five-year credit default swaps. you mentioned bnp paribas. compare that to deutsche bank, which is at 170 for obvious reasons, but even jpmorgan chase is at around 70 to 80 basis points. you're talking about this relativity playing out about who is more exposed or less. the european banks, for the most

part, don't seem to be as effected. >> we're more focused on the cds of subdebt. it's broken up at deutsche bank into seniors, cds and seniors, and cds on the subdebt, which is trading beyond 500 basis points. that's blown out from 200 basis points to 500. we're watching cds, the entire capital structure. that part of the capital structure is a bit more relevant to -- >> you said it was a well-run bank. >> it's a well-run bank. >> so it is an opportunity here? >> it's a complex -- deutsche bank is too big to fail. it's 1.3 trillion in asset but it's essential to the german economy and one of the most relevant banks in all of europe. it's not going to fail, but will it need assistance? i don't know. we're rooting, praying for the success of deutsche bank because we want the markets to settle down a bit and they should

settle down, the ey. b with a big bazooka and the fed has just as big a bazooka. to stop this bank mayhem that's been going on recently. we think the central banks will have all the tools in their toolkit will be able to implement that immediately and that's why they were so quick to the draw in using their one-year term facility as well as the opening discount window. >> just for transparency, you don't -- you're not exposed on deutsche bank. do you own any of the debt? >> don't currently own it. we're looking at it now and at lower prices we'll probably be a buyer. >> if you take a look at the way -- you mentioned how quickly, and sara and i -- i remember when silicon valley bank first got taken over by the regulators, we were on air together talking about it. we used that term ring fence very quickly. they tried to ring fence it very quickly. you mentioned the swap lines, the discount window and everything else. we learned these lessons during the '08-'09 financial crisis.

how quickly or how severely could it affect the u.s. banks? we've been talking so much about the regionals and everybody else. is there -- >> so, the big banks, start with jpmorgan, the big four, you know, wells and bank of america and citi, are rock solid. they've never been stronger. their balance sheets have been very much deleveraged from where they were. they have a huge amount of buffer capital. most importantly, deposits are coming to them so they have greater liquidity and nem, and they are in a good position. the regional banks, the country needs regional banks. they're a central part of funding around the country for small businesses throughout the country. regional banks are essential. but there are certain regional banks where we know deposits are flowing out and going into money market accounts because when the fed took rates up as high as they've taken them, and that's what broke, treasury bills

actually broke it because when treasury bills got to 5%, people like you and i and everyone around the country was saying, why get 3 in the bank when same day money markets are 5%. that's what started the outflow. the first time you get outflow, then you see where thewpd weakn is in the system in terms of -- because a bank without deposits is just a leverage loan portfolio. it's a lot of risk. you have to really watch, a, deposits, and b, the balance sheet. you talked about commercial real estate. it's a big problem. in the regional banking system, they own more loans than the big banks do. so, by a factor of two or three to one so it's big. just think about this for your viewers. when cap rates were 4%, because rates went down to zero, real estate prices got priced on the moon. so cap rates got to 4%, which means you're paying 25 times for that annual cash flow.

>> yeah. >> 25 times. now the cap rates have moved up 200 basis points because rates have moved from zero to 5. they moved from 4 to 6 in terms of cap rate. that cap rate expansion is worth about 33% decline in the price of commercial real estate building. starting with office buildings, imagine if you made a 65% ltv or 70% ltv loan. now all the equity's gone. that loan has no cushion. >> no cushion. >> that's pretty bearish. >> you have to be bearish -- >> what's the stress -- >> you have to be bearish in real estate. i don't think it's begun to even play out because you're just starting to get into higher funding rates and lower valuations. it's really about the maturity walls. so, this year, next year, the next five years, you have $2.5 trillion of debt coming due on commercial real estate properties and the maturity of

that is owned by who? the banks. >> the regionals, yeah. >> there's a problem with commercial real estate. office is the new retail. it's the new problem within commercial real estate. >> you've been positioning for a recession the last year and a half we've been talking to each other. i imagine this just feeds it up in your view. what do you expect as far as economic pain? >> when we talk about positioning for recession, what we were saying is equity markets were overvalued. when the s&p was at 4800, it's currently 20% lower than that, we thought it was overvalued. going into recession we think earnings can decline 10% or so and stocks, s&p can get down another 15% to 20% from here. i think there's a lot of risk in the equity market. with the bond market is telling you and what the fed is telling you and what tighter financial conditions are telling you and the banking crisis is telling you, recession is coming. the yield curve is telling you,

and that's inverted. >> we've gone so far back and forth, this narrative about lower interest rates being better for stock prices and higher interest rates being worse for stock prices and lower interest rates pricing in what could be a recessionary environment and how does that affect things. if the outlook is there -- we're seeing signs prices are coming down in things like soybeans, lean hogs, commodity prices are showing declines. does that mean interest rates are still the primary driver? is it a valuation story or one where the economic downturn could hit businesses way harder than the valuations? >> look at the c&i loan, the commercial and industrial loans, that banks hold. you're seeing default rates go up a lot. during covid, the government came out with the main street lending program. main street was to finance small companies to keep them in business when the country was shut down, which the economy was shut down. since then that liquidity has

been withdrawn from small businesses and now they're surviving in what is going to be a slowing economy. you're seeing default rates go up five-fold from 1%, 1.5% to like 6% in the last few months. that's the recent trend. among some of the c& i loans that we're looking at. you see the nasdaq going one way and then the russell 2000 started to dip relative to that. that's the extension of smaller businesses, relative to microsoft and apple, which are leaders for the marketplace. getting back to the economy, you know, we think it's -- you know, there's an opportunity for, you know, a hard landing, a soft landing or no landing at all. that no landing is out the window, we think, because you can't have financial conditions really tightening the way they're going to be tightening here without the lending markets being open. on top of that, a banking crisis that we're starting to first see, which i think the fed will contain. i think people should not be so nervous about the banks because i think yellen and powell will

step up, despite congress not changing the law yet, will step up and one by one control depositors from losing money. so, i think be calm, carry on, have fun with the volatility of the market as opposed to letting like your central nervous system take over at times of, is this going to be '08, the banking crisis? it won't be like that. but i think we are going to a hard landing. >> right. so, where are the opportunities for you? you're looking at deutsche bank bonds. what else? you take on what appear to be the riskiest assets. >> with banks lending less, and banks will lend less because their balance sheets will be constrained and they'll have to buffer capital and they can't raise equity capital, these smaller banks so they'll be shrinking their balance sheets. number one is an opportunity to buy assets out of the bank. so, we're talking to a number of banks about providing financing solutions or buying their assets, number one. number two is with banks not

being active lenders, we're stepping up, we have available capital to make loans to small businesses and the middle market for capital solutions and the lending. number three, it's not great to be a real estate property owner but at new crisis, reset, down 30%. $100 million property is worth 70. 60% of 70 is $42 million. i would make that $42 loan against the 70% current valuation where the market is now. so, lending into this is a big opportunity for us. finally, high-yield and leveraged loans we expect great dislocation to happen in the next many months. we're going to back up the truck, pounding the table on this one, back up the truck, buy high yield, leveraged loans, emerging market debt, buy structure credit when it gets to 9.5%, 10%. that's the call. because everyone when we had

zero rates couldn't really buy high-yield leveraged loans because the pension plans need to earn 7%. if you can deliver them 9%, 10%, that's a really nice return profile. >> bruce, thank you. it's a great day to have you. i knew you'd have a lot to say on all of this. i appreciate it. >> we need more time. >> more time. we need an hour with bruce richards of marathon. ahead on the show, a lot more on the slide in the bank stocks, especially in europe. deutsche bank leading the declines, down 10% right now. we have former wells fargo ceo with us. he'll give us his take on the fed's next move and whether he sees more trouble spots in the u.s. banking system. that's coming up ahead. back in two with the dow right back in two with the dow right now, y thinkorswim® by td ameritrade is more than a trading platform. it's an entire trading experience. with innovation that lets you customize interfaces, charts and orders to your style of trading. personalized education to expand your perspective. and a dedicated trade desk of expert-level support.

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banking concerns are bubbling up yet again. today deutsche bank is in focus as credit default swaps or bond insurance jumped to an all-time, well, relative high through the european dent crisis. they were much higher back in 2011. the stock is now down more than 6%, as you can see here. this is all happening as the s&p 500 bank index hits its lowest level since november of 2020. our next guest believes the banking industry is strong and well capitalized, something you just heard from bruce richards at marathon. and that the bank will run its

course soon. joining us is former wells fargo ceo dick kovacevich. dick, it's perfect having you on here to talk about this because you used to run one of america's biggest banks. that bank as its legacy problems have had bubbling up over the last couple of years have shown that, perhaps, the u.s. banks are in a stronger position. is wells in a position, jpmorgan, citibank of america, to weather this banking crisis storm? >> no question. as you mentioned, the industry, the larger banks are strong, well capitalized, profitable, and they have all the capacity to support credit-worthy customers and continue to have the economy grow. >> now, the issue right now is about whether or not we feel there's a contagion effect happening. we remember people harken back to the resolution trust

corporation days, savings and loans back in the '90s, early '90s, back to the great financial crisis in 2008-2009. there's been an evolution. what does it look like now? can we expect the same kind of crisis we saw then as today? >> absolutely not. this is nothing like 2008. i lived through 2008, and i can assure you that this is not a systematic risk of the industry. there are some issues, particularly as you mentioned, some of the regional banks who have a liquidity issue. not a solvency issue but a liquidity issue. most bank failures are due to liquidity. and it's because they were shocked, the rapid and unexpected demise of svb and they've taken that and they're not waiting to find that out, especially uninsured depositors. they're making sure they

diversify their deposits through other financial institutions. and that's understandable. but this is a panic fear, not facts. typical run, i understand why, people are cautious and they want to diversify their deposits, but the deposits stay within the system. that's why the banks are able to continue to loan money and support economic growth. >> dick, we've got some more real-time information and news coming in to kind of color some of this commentary. headlines out of st. louis, fed president james bullard. steve liesman joins us with those. what can you tell us, steve? >> st. louis president talking about a lot of the things dick kovacevich was talking about. he says he has an 80%

probability in the scenario the financial stress we're seeing abates or goes away. he's also saying the probability of a global financial crisis is very low. he does say there could be a downside scenario where financial stress gets worse. in that case, if the -- if the high financial stress scenario comes to pass, he says, quote, i'm willing to react in that situation. in that case, he means more on the rate side because he's been very insistent in a speech earlier today and in a meeting he just had with reporters to say he thinks there's financial stability tools on one side and rates on the other side. what was he thinking about rates? at the last meeting he acknowledged raising his year-end outlook to 5.58, that's about half a point higher than the meeting at the fed. on the svb situation, he said it was very unusual, different from almost every other bank in the country. i asked him about what's going on at his local banks in the st. louis district. he says he's not seeing any

actual problems there. the one thing heúx hearing is he says local bankers are expressing what he calls angst about how sticky their deposits are. he says no actual problems. now, on the markets, as you note today, dom, have been pricing in very low -- seriously reduced outlook for the fed. he says markets are pricing in a lot of bad things for the second half and if those things don't come to pass, it's going to have to change that pricing if financial stress does, indeed, does away. sara? >> he was one of the high dots, right, on '23 rate predictions, higher -- >> he's a high dot. he's not giving anything, sara, on the idea that he really -- he doesn't want to be cutting rates. he wants the financial system to be dealt with through the fed's what they call macro prudential policy. i don't want to use that word but i think viewers have to get used to the word macro

prudential. >> fat balance sheet, tools, that sort of thing. steve, thank you. given a few more days like this and i wonder if he'll change his tune. by the way, bullard not a fed voter. dick kovacevich still with us. do you think the fed will ultimately be cutting rates this year because of all this? >> i doubt it. it depends upon -- how bad the recession is that's going to happen. i would like to comment. bullard is exactly right. i couldn't agree with him more. he's actually been right for a year or so in terms of his policy. what's important, again, to understand is what an outlier svb was. i don't know any other financial institution like svb. but depositors don't understand that they think it was so rapid and unexpected with svb it could

happen to their bank. i believe it is going to settle down. it may take a week, it may take a couple weeks but but there's nothing fundamentally wrong with the banking industry. this is a fear not about facts. >> it's really good perspective, dick. the problem is once you get this confidence problem, the market starts looking for weak spots. signature bank, all the crypto bank. we also had credit suisse in an emergency shotgun wedding to ubs over last weekend. and now worries about deutsche bank. so, there is some domino effect that is leading us to wonder, a, will governments and central banks have to do more? and will there be a bigger risk here systematically? >> well, that's panic, too. again, i think you talk about

switzerland and so on, there were problems there. there's problem with svb. there are going to be problems with other regional banks, but it's not systematic. and that's the important part. there is not going to be contagion other than institutions that have liquidity issues, and you can handle those. some of them -- the issues could lead to lower profits and because they're now paying -- having to pay market rates as opposed to lower rates. this can increase their -- decrease said profitability and they may have to be acquired or get more capital. but it's a situation that can be handled and will not, in my opinion, come anywhere close to previous financial problems we had like in 2008 and times

before that. >> dick kovacevich, former ceo of wells fargo, thank you very much. >> that makes me feel better. >> wells fargo has experience. they bailed out wachovia during the financial crisis. that was a big deal back then. >> absolutely. i think the headline for me is there's nothing wrong with the banking situation. there were some individual cases and he thinks this will blow over. >> ring fence. >> ring fence. after the break, are money markets the next bubble to break? plus, today marks the three-year anniversary of the pandemic lows. take a look at the major averages over that time, rallying still more than 70% after the federal reserve and other central banks stepped in in a huge

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welcome back. let's take a look at a few charts today. all focused on money markets. bank of america notes that fund assets have reached new heights, record $5.1 trillion, with a t. the bank points out the last two surges coincided with fed interest rate cuts in 2008 and again in 2020. in fact, the last time we saw consecutive weeks of $100 billion plus inflows into money market funds was during that last surge, according to barclays. where is the money coming from? strategis thinks maybe commercial bank deposits, have fallen by half a trillion dollars since rate hikes began last march. the question becomes, are people using their money market funds as alternatives or proxies for formerly guaranteed bank deposits, are they moving them there and does that create a

market dynamic that's not sustainable? >> we talked last hour to jenny johnson of franklin templeton who sees this in real time and says a lot of money into money market funds is coming from banks. you ask, why would you hold it when you're not getting paid nearly as much as what you're getting paid from a treasury right now? it's the impact of the fed having raised rates. rates are now coming down sharply, so what does that signal? it's also a flight to safety. >> if you look at the vast majority of holdings of all of these money market funds, they're in treasury bills and whatnot. are you taking it away from banks and just putting it in the full faith and credit of the u.s. treasury and government? >> you pay a much higher yield to do that but it exacerbates some of the problems in the banking system. we'll watch that update on deposits coming after the close from the federal reserve, the commercial bank balance sheets -- or the banking balance sheets. that's the h8. >> which h is it?

>> exactly. sara, time for a news update with bertha coombs. good morning. >> good morning, dom. four of the five former memphis police officers charged with murder in the death of tyre nichols will not be able to work again as law enforcement officers in tennessee, no matter what happens to them at their trials. a state panel voted this morning to decertify three of them and ratified a decision by the fourth to surrender his certifications. another officer who has been charged has not yet had his certification hearing. israeli prime minister benjamin netanyahu is in london for talks with british prime minister sunak, but he couldn't escape protests against his attempts to weaken his country's judiciary. hundreds of demonstrators gathered to attack when they -- when they see as a threat to israel's democracy. and with western brands

leaving russia over its invasion of ukraine, chinese automakers are filling the gap. even though many buyers say they have doubt about their quality and they more expensive. sara, back over to you. >> bertha, thank you. are you looking to capitalize off the recent volatility? one wall street firm says buying cboe stock is the way to do it, cboe stock is the way to do it, but the stock is only3% you need to deliver new apps fast using the services you want in the clouds of your choice. with flexible multi-cloud services that enable digital innovation and enterprise control, vmware helps you innovate and grow. there are some things that go better... together. burger and fries... soup and salad. like your workplace benefits and retirement savings. with voya, considering all your financial choices together can help you make smarter decisions. voya. well planned. well invested. well protected.

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good research notes out today. one grabbing our attention this morning, cboe, it's in the green after credit suisse named it a top pick among exchange operators as they think an economic downturn could drive volumes. they point to its attractive valuation, trading at a lower pe multiple. the stock is up over 12 months. mike santoli joins us to discuss some of these calls. not surprising that they benefit like the -- like we saw from the cme. we heard from terry duffy, high trading volume. this is the options exchange. >> yes. even more so than cme, which is mostly futures. index options, equity options, specialty of the cboe, have had much bigger volume surges than traditional futures. so, the market has recognized that. you mentioned it's up 12% in the

last year. just massively outperformed all the other exchange stocks, whether it's intercontinental exchange, this one, nasdaq, cme. part of the reason for that is they now list options every single day, that expire every single day. >> the date of expiration. >> this huge fa nom nom. s&p 500 options are up last year versus last year. the ten-year growth is 12%. there's a rule of thumb, derivative volumes grow faster than the underlying securities volumes. this is a decent way to capture this. >> mike brings up a point that i've heard so many traders at the retail level and even at the institutional level talk about, that the emergence of these so-called zero dtes or zero date exter rags options have made it more casino-esque.

now people can take binary views on certain things with very little time delay for any of these outcomes. you wonder whether or not that's a theme that can continue or go away like a fad. >> i think it continues. i don't know that it can grow as fast. obviously, we had this huge rant. there's always part of the financial markets that have been casino. you had to buy a monthly option even if you only wanted to bet on today's action, right? i think about it, it isn't compared directly to gambling, but when daily lottery drawings happened it drained the weekly drawings. i've been doing a lot of work on the zero ddd options. they say it runs the gamut of people saying, i know my payoff values, i want to buy red or green and i'm going to do it right now. and interday, they sweep in and out, so they create some interday back and forth swings,

perhaps, in the indexes and some stocks but not really over time creating that kind of powder keg effect. it is a fascinating phenomenon. a lot of institutions using it to modulate their daily exposure. >> i'm just looking at the vix, a little under 24. hasn't jumped as much as people might have thought given what we're seeing, certainly on the volatility front in the bond market, the equities. >> i think a lot of the explanation is the s&p 500, for all the drama, has been kind of in a range, so you haven't really had massive swings. most of the downside acceleration was into the june and october lows of last year. people do hold a lot of cash and they have built up their cushion of cash holdings, which means you don't have to urgently spend up a lot of money to hedge with a one-month downside option in the s&p 500 indexes, which is kind of what drives vix going up or down. that's the argument.

although, fixed income, as we've been talking about, is way, way high and kind of wild. it's mostly there because that's where most of the uncertainty really does get concentrated. >> i think it's a good debate, whether it's the canary in the coal mine or other assets. mike, you really went deep there on volatilities, thank you. up next, deutsche bank says up next, deutsche bank says the fed is not done king hi lily! welcome to our third bark-ery. oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect. terrier-iffic i labra-dore you round of a-paws at&t 5g is fast, reliable and secure for your business.

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interest rates by 25 basis points on wednesday, the next question for investors when it comes to the fed, is this it? strategist pricing in cuts now? interest rate cuts towards the end of the year? some economists think the fed could hike another quarter point in may, including our next guest, deutsche bank senior u.s. economist brett ryan here at post 9. the market suggesting otherwise today. >> the market has been swinging around back and forth a lot recently. and to be sure, that's definitely up in the air at the moment. and, you know, just as bostic said, there was a lot of debate going right up into the meeting. our base case remains they'll get one more hike in at the may meeting. but that obviously depends on financial stability issues and bank turmoil, you know, becoming under control and the fed regaining control of the narrative. >> that's what i was going to say. are you expecting one more hike because you see inflation still

as a big problem and not coming down fast enough or because you see the bank crisis as not getting worse? >> no, i mean, i think it's balancing between monetary policy goals, which is guiding inflation back, and also financial stability goals. in fact, st. louis fed president james bullard points to our financial conditions index earlier this morning in a speech. what makes ours different is we include the senior loan officer survey, which is a really important measure of banks' tightening its credit standards. our research, we said that could cause 50 to 100 basis points drag on gdp growth in the back half of the year. that's something the fed will take into account when it meets next in may. we'll get the next edition of the survey in may. that will be an important data point to help ourselves and the fed. >> we have to wait until may to find out how the lending

standards are changing. you say half a percentage point of gdp to one percentage point of gdp. how do you know how severe this lending crunch is -- >> sure. we take the senior loan officers' survey and our conditions index, which has a nice history, and we run regression on what that has tended to lead to in terms of gdp growth in subsequent quarters. the senior loan officers' survey is a great leading indicator by about two quarters on gdp, for capex and on businesses. that's how we come up with that range. we do a shock of a mild shock versus a more severe shock. a mild shock would get you something closer to 50, whereas a more severe one, a percentage point. that's important because we're already expecting baseline recession to start in q4 of this year. >> if you do kind of have these scenarios playing out, this kind of like tree of outcomes, if you look at the way things are priced out right now in the marketplace, is there a

dislocation in your mind? we're looking at things like spreads for high yield securities, corporate investment grade, certain parts of the market in the stock market with regard to small cap, bruce richards brought that up earlier on. is there things that lend you to believe the base case has a higher probability of happening or something, perhaps, softer than that? >> sure. so, it's certainly making a fundamental story out of the moves we're seeing when two years flying around 30 basis points is a little difficult. take a step back. the speed of the move over the past three weeks was of historic proportions, but we're kind of pricing in the curve similar to where we were at the beginning of the year when the market was expecting the fed to be cutting in the back half of the year. so, you know, and the amount of cuts are changing daily and the fed's going to have to see where the dust settles. but it does increase our conviction these latest banking sector turmoil that we are heading for recession. in fact, if you look at the

fed's forecast of 0.4%. if they're anywhere where we are for q1, which around 2.5 and assume positive growth in q2, by definition the fed is assuming a technical recession in the back half of next year -- or this year, excuse me. >> is this the kind of week you'll go revise your forecast for when the fed cuts? >> i would say we are not revising anything until the day of the meeting. this is one of the situations where making a strong call is not a great idea because things could change very quickly. treasury secretary yellen can come out with an announcement and we could be talking about something totally different by this afternoon. and so our approach is, you know, take all the information in, make a decision when we have all -- you know, a good enough handle on things. >> but you don't have any cuts penciled in for this year? >> no. we have the fed holding steady until the beginning of next year. >> well, so does the fed, for

whatever it's worth on the dot plot. ryan, thank you very much. >> thank you for having me. >> sara, i just want to point out, right now, take a look at what's happening with the dow. we're not down only 65 points. it's been a pretty sharp reversal right now if you take a look at the interday moves. we're approaching session highs. >> and also approaching the european close. >> that could be something as well. it's something to keep an eye on as we head towards the midday point in the u.s. after the break on this show, is the ai buzz artificial? we look at the money pouring into artificial intelligence companies. some of which don't even have a revenue stream to support the reports. that's coming up next. then we're watching netflix as well coming off its best day of the year in

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just want to show you the bank, because we came in thisñr morning all worried about that stock which was down pretty low. &háhp &hc% bond ñijfmarket, the spread, wee come back a lot. >> $8.85 is the interday lowñr the u.s.-listed shares,i] now u to $9.29 off less thant( i]4%. >> a lot of analysts have come % out, citigroup and others this morning saying this is a bank

basel capital ñixdrules. there have been concerns and it's made it through another confidence crises before. >> it's not just that, too,ó[■cg we've talked aboutcñrs7■ having banking issues. it's been profitable for ten straight quarters. it is notq inqñ distress, distrq deutsche bank certainly is starting to jockey for position here in terms of the overall -- >> a lot of commercial real estate exposure and that is a concern right now. >> we want to take a look at a possible bubble forming in the artificialok intelligence space the topic of çótoday's "tech check" with deirdreçó bosa. after a bigú)dy of announcement from the biggest tech companies in ai i thought we would take a look at the private market and despite this overall malaise in the wake of silicon valleye1ñr , it is booming.&ñ @r(t&hz

they are being burst almost by the day it feels like. the latest i want to mentionw3 character.ai.5a■ñi a billion dollar valuation.r

surging on their own ai announcements and developments over the last month, so there are concerns starting to build, guys, whether there is a bubble forming both private and public markets. >> deirdre thank you very much. we have lower yields, expectations of fed cuts, that helps the multiples. the ai buzz definitely helping the momentum. >> nvidia the stock up this quarter. >> up next, banks have captured 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,

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while an earnings tool helps you plan your trades and stay on top of the market 92% still active? seems high. seriously? it's just a bike. wait. they make a treadmill with an intuitive speed knob? yeah. want to try? 92% stick with it, so can you. start a 30-day home trial today. terms apply. the next five years you have $2.5 trillion of debt coming due. there's a trillion of debt coming due on commercial real

estate properties and the majority of that is owned by who? >> regional banks. >> there's a problem with commercial real estate, particularly office. office is the new retail. it's the new problem within commercial real estate. >> that was marathon asset management's chairman and ceo bruce richards with us earlier. runs $23 billion hedge fund, big player in credit. commercial real estate the next shoe to drop. real estate sector, the reits down 3% since monday and that is worse than the financial sector, dom, with only one component higher in the reits name. people are worried. >> there are so many layers to the onion. falling interest rates should be good, right, for real estate, maybe on the residential side for certain people out there. the banking crisis, so it's emphasized in different ways. central banks are emphasizing more than the banking crisis. the commercial real estate market is impacting the

overall -- be. >> it's a bad firewall. even though rates are coming down, they're way up from where the loans were originated. as they come due they will be paying much higher rates. the recovery, are we going positive? >> we're down 33 points, right near session highs. anyone's guess what things happen or look like going to the week, but you just never know. >> the trend is looking better. deutsche bank well off session lows. that's it for us. have a great weekend. dom, thanks for being here all week. carl is back next week. the ceo of carnival monday. to melissa lee and "the halftime report." welcome to "the halftime report." i'm melissa lee in for scott wapner. front and center fears out of europe spilling into the u.s. market. our investment committee is standing by. joining us for the hour steve weiss, joe terranova and rob sechan. another potential bank blow-out.