please >> stay with what's working, united health care >> all right josh brown breakout in progress on oracle >> okay. farmer jim >> steve and i grow on something, health care cvs. >> wow jenny? >> pioneer i love it. >> all right, guys see you in a couple. "the exchange" is now. ♪ ♪ thank you very much, scott and gang i'm dominic chew in for kelly evans. here is what is ahead on "the exchange." the nasdaq, the big underperformer during this week, down about 2% or so. so we're asking, does the tech rally still have legs? sam lessen says yes, while our stock picker says some names are in "serious trouble. also, in that tech today, we're following that bipartisan group

of lawmakers traveling to silicon valley to meet with executives about china the latest and what the group can realistically achieve. plus, there's this week's jobs data it came in weaker across the board, and now revisions are painting a far uglier picture that initially reported. we'll dig into that and what the fed needs to do. but first, let's start with today's market action on the last trading day of this holiday shortened week as you can see, we're mixed, but the better part of the story is, we are well off our session lows the dow is down about eight points, which call it flat on the session. the s&p just a hair below 4100, 4,0897, the last trade there, up about seven points at the highs of the session, we were up roughly 13, down 21 at the lows so decided wlily higher given wt we have seen earlier today the composite is 12,044, the last trade

one of the big things to keep a close eye on, we're seeing a lot of bullishness in the regional bank names yes, we know, they've been embattled. but today, up from 1.5 to 2.5% even first republic, 3.5% gains there. and western alliance now up about 4% today, trying to find some stability in the regional banks. and then the stock of the day is arguably an economic well weather. that is costco, shares down 2% right now, off the worst levels of the session costco came out and reported numbers for monthly sales after yesterday's close. if you look at the numbers, u.s. same-store sales, sales growth at existing store locations came in 0.9% higher if you strip out the effects of gasoline prices the reason why that's important, it's the slowest same-store sales growth going all the way

back to april of 2020 in the wake of the virus pandemic so watch those costco shares now to the story rocking the economic world today when the labor department reported the latest numbers this morning, it announced some mayor revisions. and steve liesman is here to explain why that's important ahead of the big jobs print coming tomorrow. >> dom, thanks the pandemic played havoc with the economy, but we're learning with the economic numbers, the department of labor issued revisions t ss t ss to jobless t told a different story the seasonal adjustments show that since the beginning of the year, there were 312,000 more applications for unemployment insurance than originally reported, the largest upward revision this shows it's going up we thought it was flat before, it was a little better than expected. the bigger story is what economists thought was a flat number is a rising number.

the labor department says the pandemic created disportions in the seasonal adjustments, but the noose claims numbers make more sense, as companies announced increased layoffs. the clams numbers barely budged. they said there were 80,000 job cuts in march. that totaled 270,000 in the first quarter. little of that showed up in the jobless claims the new data adds to a series of reports. they've come in below expectations and show the job market is, indeed slowing. while the revisions could play a role for the fed, the proof it needs to stop hiking is not likely to come from job creation or job cuts, it's going to be in perhaps lower wage increases, and whether that shows up to bring down inflation dom? >> steve, come on over we're going to add to this discussion about what's happening with the economy if the job market is cooling faster than the original data

suggested, are we closer to a fed pause or an outright cut in interest rates joining me now is chief global economist, and rick as well. rick, i go to you. steve laid out an interesting case with regard to what the data could suggest is there anything in the markets right now that is painting more of that disconnect picture between what the eco data suggests and what the expectations are >> well, it's a game changer to be sure. but interest rates look like they haven't been affected dramatically the problem with that reasoning is, the flight to safety and the recent spat of weak economic data have so depressed yields that this new news, which in my opinion is a game changer, might look like it but it really is a game changer. steve had some good lines, but let's go to the real numbers real quickly here.

look at continuing clams, we haven't had 1,713,000 in four weeks. and there wasn't many over 1.7 million as you see look at the new data not only did we have one, two, three, four, five in a row, but three in a row above 1.8 million. if you look at continuing claims, the psychological level of 200,000, we had one in the last four weeks. you have to go back another nine weeks. now look at this we have one, two, three, four, five, six, seven, eight, nine in a row that are above that psychological area of 200,000. why is any of this important well, we have a three-day weekend in the u.s. with the holiday tomorrow we have a four-day weekend with europe with the holidays and all of this is going to happen when we release potentially the biggest number ever tomorrow. and jobs, after all these revisions going back to 2020, anything could happen here, dom. we have recalibrated on the fly, and it really does just put in

bold letters -- i don't trust the data >> rick, i like what you said in the beginning. the market is already there. the market already has this weakness built in, and when you look at the fed funds outlook in january 2024 -- rick gets me excited. but here's the thing, you look at what's happened to the yields the market says, we're going to have this weakness it didn't know about the proof, but it felt it >> so look at it another way -- hold on. if you are thinking there's a bounceback after the flight to safety, think again. >> that's a good point >> the markets are sorting it out. so to both of these gentlemen's points, what a time to be alive when you're the head of fixed income and those instruments in these types of markets it's got to be a time when you're maybe a little confused or is there something that you

can take away from this mishmash of economic data >> the data got rick excited but look, i think risk management principles tell you if you're the fed, it's time to pause. heightening another 25 basis points, it can produce small, incremental gains in terms of cooling inflation. at this point, the risk is so much larger and nonlinear amount of pain. w we're seeing more evidence of an inflection point in the labor market with the data if you want to land this economy softly, you can't be strictly dependant on the spot data you have to be forward looking you have to look past some of the lagging indicators like inflation, which will probably look sticky next week. and you have to focus on the rate of change and the leading indicators to the labor market and make a judgment about the shock in the banking sector, which i think will be large with a long tail. >> if that's the case, and if

that's what your belief is, then the markets do have it correct right now. we have seen this bigger medium term move in rates lower as a bid for government bonds has come, because of perhaps fears of a softening economy perhaps because of fears of a credit tightening or a possible recession, hard or soft. so then what is the path forward? is it going to stay this way for a while? will we see a bounceback in some of those fields if the data is not the way people think it will be >> when we get a shock, markets tend to overshoot. initially after the news, you saw rates markets overreact to some extent. now that we have settled into a territory where i don't have a disagreement with the market two to three cuts by the end of the year after a peak of around 5% in fed funds. that seems about right to me >> can we put in a little context, which i think is fairly important. rick is right, it's a game

changer. what's a game changer about this number -- guys, if you could bring up that first chart that we started with. this is the trend, the trend is now up and rick was right to make an important point about how we thought it was flat and under 200. and now it's rising. however, i would make the point that for me, 250, and rick, tell me if i'm wrong about this, is the top of the range okay, or the bottom of the range where i start to worry in terms of actual numbers now, the trend is what's worrying here, but the actual level is not one that is one that says, oh, my god, things are going haywire. rick, is that the wrong way to think about it >> new york i o, i don't think . 250 can be your fulcrum, for me it's 200,000 the bigger issue is to go the other way. that we have seen the best numbers, we've seen the highest

yields, in my opinion, in the rear-view mirror so to me, the proof is now in the trend and the notion that this recalibration has potentially caught the fed and investors off guard. they're going to be left footed here for a while there's much more risk all of a sudden in many portfolios that be there was before these revisions. >> so speaking of risk in portfolios, if you are looking across the entire fixed income market, be it on the treasury rate side or the credit side of things, there has to be certain pockets of opportunity or places that you want to be positioned, if there is, in fact, this notion that the economic picture will worsen, and that the fed likely, at least the market has to cut rates in the next six to nine months. >> i think it means that high quality, risk-free fixed income with long duration, is a place

where you'll see more rotation of money the labor market are going to tell us the direction in terms of the economy but we've got to get through the banking sector shock, and then we're staring at the debt ceiling. this is the path ahead i think they all point towards lower yields and longer term securities >> okay. now, rick, i want to ask one question to end our roundtable discussion here. if it is, in fact, a scenario where some of those risk-free assets with longer duration are now the place that you want to see the rotation too, doesn't that help with the regional banking crisis >> yes, i think it does. >> all right steve, what do you think >> i think it does i think there's still stuff to play out here. i think that there's a couple things that are in motion here one is the underlying credit, which is, is some of the stuff on their books going to go bad that's the first thing and they're going to have to

take preemptive action for that, maybe additional reserve it is that happens the other aspect is how they negotiate this very complicated issue, dom, of net interest mar margin do they want to pay or not pay for these deposits a banker looks at his book and says i'm not going to pay up, i'm going to keep my sticky deposits, the ones i'll get divorced before i move my bank account. i want those let the other ones go, let somebody else fay for them shrink my book, which means when the auto dealer comes for a loan to buy the lot next door to expand his dealership, he may not be able to get that loan that begins to have an economic impact >> i think the economy is going to slow down enough they're not going to want the loans. that's the issue >> okay.

gentlemen, you get the last word here >> i want to agree with steve. look, shocks tend to reveal fragileness that have been lurking all along. this is no different only half of the deposits in our country are insured. there's a 400 basis point cost, relative to putting your money in a money market fund meanwhile, the switching costs have never been lower. our collective awareness has never been higher with 24/7 social media that's a toxic mix >> collective knowledge seems to have gone as far as the fed and stopped before it got to the front door >> i knew this conversation was going to get spicy i knew it from the beginning thank you very much. rick, thank you very much. and steve liesman here in studio, thank you very much. >> pleasure. don't miss a special edition of "squawk box" tomorrow morning. steve is going to be around,

8:00 a.m. eastern time steve and rick will join joe, becky and andrew to break down that big jobs report remember, 8:00 a.m., live television >> you've heard of good friday >> this is going to be great friday thank you very much. sticking with the fed, if it keeps hiking, can rate sensitive technology stocks keep on rallying our next guest are getting a little more selective to what they are picking joining me now with where they are putting their money to work is keith fitzgerald, principal at the fitzgerald group with nancy tingler. thank you both for being here. nancy, this technology trade, do you think it still has legs? >> dom, thank you for having me. great to be on with keith. i do we have been taking some gains in the previous weeks. we were adding to the group, as you know, in the fall, and continue to add risk into our

portfolios we have liked those investments. but as they appreciate, we wanted to be sure to capture some of those gains. with those gains, we have been reinvesting into energy. we still think you need technology to solve the productivity problems we're going to have from a tight labor force. the baby boomers don't seem to be willing to come back, and they don't have to, because their financial assets are well above where they were prepandemic. old economy companies are embrace thing. >> what are the providers, what kind of companies are they cloud providers, cybersecurity providers, are they, you know, infrastructure and commuter networking equipment providers what enables that trade? >> all of the above. but certainly a name like service now is one of our major holdings along with microsoft, which is a

cloud play we recently reduced our exposure to salesforce, because we got that nice bounce there are better places to be. a name like broadcom providing not just cloud solutions but ai solutions. >> seems like a pretty revealing theme there. keith, i see you nodding your head it's got to be because you agree in some ways with what nancy is saying about the schematic element of that tech trade that's the key nancy is as sharp as they come we pricreated 90% -- companies k apple and microsoft are leading the charge because of all of the work in this area. chatgbt is a google killer google is on the defensive, because they raised the bar. so to us, this is a matter of going forward with schematic

changes. i think thers important that not all tech companies are. meta and google are significantly at risk. >> if that's the case, how exactly does the allocation go, keith, in your mind? these are mega cap names, widely held if you're a mutual funds or etfs, you probably own these names. are there ones being missed who are just in some of those passive instruments? >> well, that's an interesting question i think that's a sign of strength, the fact that they are so widely held by the etfs and funds, the endowments, all of the big money has to tej hedge s names. if you are looking at smaller names, i think you've got to get into defense, which is not commonly thought of as technology to nancy's point, it's small companies, down to your gas stations that are adopting technology, usually coming from the big providers, which is why to me you stick with the winning

horse, not switch in mid ration. >> nancy, we just got through a whole very animated discussion with the panel here about the future direction of interest rates. it seems to me like the consensus, at least among the panel, was that rates are going to head a little lower and stay there, that the highest rates that we have seen are in the rear-view mirror for the time being. if that's the case, wouldn't that be a tail wind for technology or does the xheconomc narrative of a slowdown far outweigh the valuation component? >> that's the question they sold off last year on interest rates if you think about it, a company like service now, which i mentioned earlier, they were generating 20 fer% earnings gro, among others one of the things you have to think about when you enter what we think will be a recession, not super traumatic, but a recession nonetheless, you want to own companies that are

reliable earners if those are in the technology space and you're getting the benefit of lower interest rates, which i do agree with that assessment but you want to continue to ease weakness, because they'll shop around here, and add to name th keith mentioned, earlier this year and so that's the way you want to play it adoby was an add when you get an opportunity to trim them back, you do when you get more volatility, you add back in. you will get more chances to buy these stocks this year before the third quarter is out >> keith, nancy, thank you both very much. enjoy the long holiday weekend, guys >> you too, dom. coming up, from turmoil in banking to threat from china, silicon valley is facing serious head winds

but one says don't worry, because deal making is about to tick higher. that's next with at landscape. and can the momentum continue for mega cap technology? we'll look at the technicals and let's get a quick check on the markets right now. you can see higher across the board with some outperformance in that tech heavier nasdaq index. "the exchange" is back after this ♪ ♪ a cyber-attack can grind everything to a halt. cisco security keeps your company moving forward.

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welcome back to "the exchange." it's been nearly a month since the collapse of silicon valley bank and the tech sector has emerged largely unscathed. in fact, it's rallied, and was

the best performer in the first quarter. meta led the way, up 76% apple, amazon, microsoft and alphabet, the part company of google, posting big gains. but my next guest continues the good times to continue diedra, we have seen and watched this mega cap story play out just how important is that mega cap tech trade still to the overall market narrative >> it is hugely important and a big test coming up in the form of earnings seasons. big tech is back and we have seen more of the market concentrated in these names. if they disappoint, that is going to have a wider effect, as you very well know, on the broader mah stocks

the big are getting bigger, but in the wake of the collapse of svb, you're seeing the private market face even more pressure than it was under. >> sam, this is an interesting point, because there hasn't been so much focus on the financial ties that kind of bind venture capital firms to their companies in a while the silicon valley bank failure triggered a lot of scrutiny onnt silicon valley bank had ties to nearly half of all of the d.c. backed companies in america? >> first, let me say i think big tech is the big story here, and isle very bull ish on those names. the reality is, they're incredibly well positioned with ai and a lot of the other future coming out look, people forget, software is an incredible business you can look at how you look at growth or profitability as long

as you have a system that can run a business, which the big names show they do that is the bigger story in terms of the startup ecosystem, svb, everyone feels like we dodged a big bullet, but the reality is, people will be smarter how they manage their cash going forward but that was a very scary week and, you know, the ecosystem is the ecosystem. yeah, sorry. >> not a long-term impact, sam it's much tougher financing environment. you f you need a line of credit, you can't turn to the banks very easily isn't that problematic >> that's no question, if you look at ai and the mega trends that people are excited about now, big tech is way better positioned there is a lot of money being poured this week, this month into ahink it's

a great startup opportunity as people think from a fundamentals perspective, silicon valley bank was a good partner to a lot of startups i don't think that the financing options available are highly depen dent on the silicon valley bank good companies, again, are going to get the financing they need everyone is being a little more conservative, because there's no ipo market and no late-stage market prices are down from where they are, but there's plenty of strength still in the ecosystem. i think you're starting to see more deals getting done, more rationality in pricing i think the next six months will not be as bad as the last six months >> diedra, i want to tilt this conversation, because i want to hit a little bit of the story around some of these big tech

leaders meeting with government officials with regard to what's happening, in your tech and media relationship with china. it's going to be a huge tend over the next 10, 20, 30 years, this competition between us and china. diedra, i'll go to you first what are we expecting with regard to the content or what comes out of some of these meetings with these government officials and tech ceos? >> i mean, the beneficial part is this is happening behind closed doors so you can have a more candid conversation between lawmakers and apple, which is dependent on china not just for the supply chain manufacturing but for customers, as well. this has separated apple from other companies, that huge amount of success that they have seen but companies like google and meta have not had access to this but i think the big tech companies, apple in particular, will have to explain their china

policy, and how they're going to diversify to this china plus one strategy, because they're feeling the pressure as we see geopolitical tensions rise, lawmaker also have some of these tough questions, and they will be very interested in the fu future manufacturing plans, whether they're made in india or here in the u.s. >> sam, this is an excellent point here the reason why this is so key is this is, in fact, going to be a race between the u.s. and china. it was super computing for a number of years, it still is but ai is the offshoot of that super computing arms race. now you have investments that are spanning different parts of the market, here in the u.s., chinese companies investing here and even our companies investing in technology in china what exactly does that race look like from a venture capitalist perspective? >> you know, the information yesterday broke the story, and

that threw us some heated twitter discussions about what we should and shouldn't be doing. you know, about a third of the reports are in policy roles. so this is the story we haven't had to contend with an anti-globalization trend in a long time. silicon valley has grown up in a world of globalization and there is no question that the tensions with china and how you think about ai applications and uses, even in today's forum where it's just very powerful for things like misinformation, are a big deal and some battle lines are going to have to be redrawn. there will need to be comprehensive policy and where we are willing to collaborate versus compete >> that is your edition of "tech

check" here on "the exchange." thank you both have a gre coming up in the show, could the spike in layoffs lead to a hike in your taxes the numbers you'll need to know, especially if you live in new york and california. as we head to break, shares of boeing turning positive on a report that it's poised for a 23% jump in 737 model jet production by mid year that's helpingheow t d to erase a 157-point loss at one point. microsoft leading the blue chips higher "the exchange" is back after this what if beer could get to the right place, at the right time, all the time? not like that. like this. getting this beer... all over the world... right when they need it. yes, with ibm consulting, ai-powered software can help automate your supply chain— so beer can be ordered, produced and delivered more efficiently. so happy hours keep going. salud! and the beer keeps flowing. that's the automation solution

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welcome back to "the exchange," everybody i'm tyler mathisen this is your cnbc update a japanese military helicopter crashed into the sea near okinawa. it was carrying out surveillance activity at the time of the crash. the japanese coast guard is searching for the ten people on board the aircraft media reports say officials have found parts of the helicopter in the sea, but no bodies have been rescued or recovers yet. militants in lebanon fired rockets at israel, according to the israeli military that's raising tensions during what is the region's holiest week of the year of the 34 rockets that were fired across the border, the israeli military said its defense system shot down 25. however, at least two people were wounded in the attacks. on this holy thursday, pope francis washed the feet of a dozen juveniles, serving time in a rome prison. the ritual symbolizes humility

and replicates what jesus did to apostles at the last summer before he was arrested and crucified. the pope's visit comes after he was discharged from the hospital last weekend following a bout of bronchitis >> thank you very much still ahead on the show, the nasdaq 100 is up about 19% so far this year. but should you trust the tech rally? the bull case r fothe stock market and revealing the one tech name that's facing the big head winds coming up next. wanted. for free. not bragging.i (cecily) you're bragging. (neighbor) oh, he's bragging. (seth) who, me? never. oh, excuse me. hello, your royal highness, sir... (cecily) okay, that's a brag. (seth) hey, mom. i gotta call you back. (vo) switch and choose the 5g phone you really want, on us. like the incredible iphone 14. (cecily) on the network worth bragging about. (vo) verizon

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welcome back to "the exchange." the nasdaq 100 climbed more than 20% in the first quarter while it's lost some of that positive momentum in the first week of the second quarter, falling a little more than 1%, the next guest says there is still a strong, bullish case forming for that so-called ndx, the nasdaq 100 joining me is jessica, director of product at options play jessica, a lot of folks out there who hope that you're right, because those mega cap

technology names are so important. >> it could be driven by fundamentals, but tconsistently when the markets are running on e, gets that refill around earnings from tech so there is the january 30th high, i want to see that overcome next the second milestone is the late gap in august that was formed from 13,175 to 13,210 we need to see that overcome to have more of a bullish case. i see it stuck in between, so the two keep bull milestones, are going to range bound until we can break above that 13,175 level. and when i look at a broader

picture of a chart, i look for the trading cycle. is there a bullish base forming, where is the trend and ndx has consistent closes up to 26 and the 40 weekly moving averages so i look where is the security above the arms in addition to the slope of that line as prices are increasing, we see an upward slope so that tells me that there's a bullish base forming, which validates a larger view that we support this level where we're at right now, and have continuous momentum to go upwards, which is focusing on an earnings. >> so jessica, that begs the question, that's the index level. there has to be stocks with good patterns and bullish patterns forming that are going to drive that index performance what is the most compelling bull case to you in that trade? >> microsoft microsoft, you know, ai is certainly all of the frenzy and overhype but let's look at it from a technical perspective.

there are a really big bullish milestone ahead. we have that milestone of 292, which is mid august, low or high if we overcome that, we can go to about -- a little above 300 to 312 that gap we talked about it needs to fill, microsoft is one step ahead and already filling that gap and now we're on to the next milestone, which would be a march 2022 high, which is insane to even think about in this current environment. and the trading cycle, of course, just like we were looking at with nasdaq, consistent closes above the 26 and 40, tell me that quarter over quarter, we have an increase in prices so that supports a solid base and a bull case, giving us bullish momentum >> so there's some bullish momentum it's one of the biggest companies out there. let's talk about where there is

the flagging element, where there could be a big drag, what are the charts showing for the bear case, or what stocks are going to have the most in terms of head winds? >> amazon, which falls under consumer discretionary there is another significant ahead, but their trading cycle is an immediate near-term bearish, which tells me it doesn't have the momentum it needs. if you look at the chart, we look at the 26 and 40 week this is a step behind the ndx. we have closed above the 26 weekly moving average, which becomes our support level. we are having difficulty going above the 40 weekly. i'm looking for consistent closes above that, in addition to price increases to have a bullish case as i see the downward slope, i suspect that amazon has some short-term momentum to get to that 106 40-week average, before

it tracks down and will probably rise to support around 96, which is the 26 weekly, that could trigger the earlier lows around 88 what i think is really interesting is a different type of chart is we've been talking about absolute charts. relative charts will give me a more early indication. so how is the security performing versus the broader market or perhaps even the sector in this case, we look at amazon versus the s&p 500 you see this downward trend line, which supports there's movement to go up to that trendline. but we have not come close to even surpassing that so that tells me, and supports that case of we'll probably have some near-term mow mentum to tht 106 level and then trace back down >> jessica, the bull case for microsoft and the bear case for amazon, thank you very much. we'll see you soon, jessica. >> thank you still ahead on the show, this consumer staple is climbing over 8% over the past month,

hitting another all-time high wday. weill reveal that name and the other stocks also marking that record high milestone coming up next after the break life is for living. let's partner for all of it. i'm so glad we did this. edward jones

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welcome back to "the exchange." markets right now in the green the dow just on the highs of the session. the s&p up by one quart herb of 1% 4101 the last trade there. the nasdaq composite up about 2/3 of 1%, 75 points up. 12072 for that composite communication services the best performing sector followed by technology health care is up 1/3 of 1%. the mist try chart before the break we showed you, it's hershey. it's riding a six-day winning streak at this point hit a record high in trading today, along with shares of lamb weston and progressive, as well. so a lot of people like me drawing these yellow stars by the way, honorable mention going to mondolese they notched a record high

still ahead, job cuts topping 270,000 in 2023 alone according to new data. and there are more job cuts coming the industry's most at risk, coming up next out of my torso! one for you, one for you. oh, you're a messy one. cool, right? anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq-100 innovations. hot dogs! fresh, warm hot dogs! before investing carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com

welcome back to the exchange. new data shows layoffs are up nearly fivefold in 2023. there have been over 270,000 planned cuts year to date. a nearly 400% increase year- over-year. with more likely to come, the job loss risk index was just long. it measures the industries most likely at risk for more cuts ahead versus sectors deemed least at risk. here to discuss is the president and ceo, steve. he is also a contributor for us. it is always great to get your thoughts. let's talk a little bit about why the jobs market right now is so in focus and what exactly is it telling you from a business sentiment perspective? >> it is projecting that the

u.s. will have a recession this year. saying it will be relatively mild and brief, but it could occur sometime between now and the end of the calendar year. that will have job loss as part of it. this is consistent with what the fed is saying as they try to battle inflation and bring the rate down toward the 2% target. they are willing to take some pain not only in gdp growth but also in the job market. we are projecting it should be something around the north of 1 million jobs lost during this cycle. the latest job loss index shows it will not be even across all sectors. some sectors are at much higher risk. they are the obvious ones. during the pandemic and the locked down there was the big rush in information services and tech. everything e-commerce. those are the areas that over hired during this time. now you see a falloff with

that. those sectors will be the hardest hit. following that will be warehousing and transportation. those areas that follow on from that same trend but also construction repairs and personal services. construction because as the recession kicks in, construction should come down. the places where you are not going to see layoffs are in the health and social service areas which healthcare is booming for all the reasons we know, aging market and so forth. the lowest risk is in the federal government and private educational services and so forth which are very stable. >> you have been a ceo in a prior life as well for a private sector business. i wonder in the time we have left here if you might talk a little bit about what you think or what you are seeing from the conference board perspective about just how big of an impact the regional banking issues that we have right now will

affect the overall business environment. referred credit crunch mentioned quite a bit over the last couple weeks. do you believe the business environment will slow down because of the regional bank issues we have had? >> the short answer is yes because mostly this midtier bank to smaller bank service of the small business sector. that's where we have the most worries. it's not the large businesses who are suffering lack of access to capital. small businesses run their companies based on loans or lines of credit from regional banks. they use their own credit cards. the cost of debt goes up. the cost of credit cards goes up. the cost of borrowing and liquidity comes down as the banks have to replenish their balance sheets. that liquidity comes out of the marketplace. you saw this in 2008 and 2009 all throughout the sector where liquidity went to the banks.

that was the right thing to do but the bank said they did not provide that liquidity back out into the market. that is the risk today. i think that the fed gets it. the treasury is flooding the markets with liquidity and backstopping everything. i think it does a good job of cutting the panic and so forth, but there are these ripple effects as banks become more conservative with their balance sheet. our recommendation is every ceo should be getting more conservative as well. you need to have cash on hand and lines of credit. you have to make sure that in the worst case you have enough to get through whatever is coming. >> thank you very much. we will see you soon. while real estate investor bill rudin told us this morning don't bet against new york, the drastic job cuts intech and wall street are having an impact on revenues.

>> as you are mentioning a lot of these layoffs are high income jobs and tech finance services. that is starting to show up in the tax revenue. new york is down 1%. the rest of the states are up 11%. new york and california are down more than 10% from last year. one reason is the falling stock market and the tech wealth reducing capital gains revenue. the big warrior right now is that withholding taxes, that is payroll taxes, those are also falling. unemployment is rising in both states especially among high income workers who, of course, pay more taxes. bonus income is falling. high income tax players who moved out during the pandemic may now finally be showing up on the tax roll. both states have potential budget problems as a result of all of this, especially as

federal aid starts to run out. california had a $100 billion surplus six months ago. now it is looking at a $22 billion deficit. new york's budget is the latest as the state legislature battles the governor overspending and potential tax height on the wealthy. they are also facing a sudden squeeze from higher spending and lower revenue. mayor adam caesar for billion dollar budget hole in new york city that will force cuts in almost every city agency. there are potentially some state job cuts with all these other private sector job cuts. >> we just have a few seconds left. i have to ask, what could the impact be for a potential recession? >> if two of the biggest states have to cut jobs with some of the biggest cities, that will cut payrolls and add to layoffs and cut taxes even further. >> thank you very much. before we go, i want to draw

your attention to a result that is just coming out from a new survey regarding layoffs. 41% of respondents said mass layoffs will improve profits short term but only 26% think that will hold for the longer- term benefit of companies. when it comes to the overall economy nearly 71% of americans see job cuts as having a negative impact. coming up on power lunch mpncerns of tightening credit raing up. we will talk to the ceo of lendingtree about what he sees ahead. power lunch is back after this quick break.

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