from some big players today. the dow off a half percent the s&p 500 down by a percent. we are at the session lows the yield on the ten-year is 3.4% that does it for us, as utilities are the leading sector here today consumer staples pretty defensive and energy is the biggest lagger thanks for joining us. "the exchange" begins right now. ♪ ♪ courtney, thank you very much hi, everybody. i'm kelly evans. ahead this hour on "the exchange," it's a red day for regionals led by first republic. they hemorrhaged deposits in the first quarter and now it's a battle for survival. we will see the same with west pac? google or microsoft? microsoft has handled disruption

with ai better and one luxury fitness company just crushed earnings. high membership fees are one reason why but what about a looming consumer down turn, what about weight loss drugs? we'll explore that but first, let's get to dom chu. >> it's been a down day pretty much all session long. that's the difference we're seeing there's no wavering right here the s&p opened lower to start, and the highs of this session, we were still down about 11 points, down roughly 42 at the lows so near session lows right now the s&p now below the 4100 mark, off by one full percent. the dow industrials down one half of 1%, or 1830 points the nasdaq the underperformer 145 points to the downside it's not all red, though take a look at these stocks.

there's at least two things they have in common -- pepsico is up 2% general mills, hershey, all up between half to 1% overall the first thing is they're all consumer staples yes, they're all green, and they also all get gold stars. one, two, three, four, five because every one of these tooks, consumer tapele in the green, hit a record high in trading so far today one of the reasons why so many traders are looking at these movements saying maybe there is a defensive tilt towards the market and then the stock of the day as kelly mentioned is first republic the worst performing stock in the s&p 500. it's not often that you do see a stock in the s&p drop by about 34%, but that's kind of what we are seeing right now it's a $10.54 a stock. deposits, not the way they thought they were going to be.

first republic looking at some of these headlines and maybe some are questioning about the moves. but you made a good point, kelly. pac west is one of those other embattled lendors that's reporting after the bell today western alliance was generally positive first republic is decidedly negative pac west may be the tiebreaker, if you will. we'll see what they do after the bell today >> it could tell us which way the wind is blowing. thank you very much. first republic, loan balances fell by nearly $100 billion last quarter. let's get to two banking experts and ask how they see this shaking out. joining me now is jared shaw and ben makavak. jared, real quickly with you this came as a big surprise to the market why didn't we realize how bad it

was going to be? >> yeah. we were expecting significant deposit upload this is worst than expected. it just shows the nature of the first republic model where they had very high deposit sizes. which saw the pressure with the banks that had very concentrated deposits that's where we saw the outflow. so more than we expected we were expecting a high number. this is even higher. it just shows the nature of the deposit base >> ben, what are the options now? the company basically has to shrink its balance sheet, eyeing up to $100 billion in asset sales. they're looking for loans that they can sell quickly, the kinds of loans that they would make at all. wealth management franchises in the middle of some turmoil what do you think the next couple of days will bring? it's odd how we have gone from exuberance yesterday to now

questioning again whether they can make it. again, the share price decline has gotten worse throughout the session today. >> so i think they have four paths on this. one, they can -- i don't think that's going to happen soon enough two, they can strategically and surgically shrink the balance sheet. so if you look at where the deposits are, they have a loan-to-deposit ratio of 165%. that's unheard of. so they need to shrink the bank quickly, probably $70 billion or more of assets they would have to sell. in equity infusion, they could recapitalize the balance sheet that would be an option as a way to survive number four, which i think is probably the most probable outcome, they need to find a partner to merge with and partner up with a healthier bank >> ben, you had been looking at regional banks, buying up some of them. i wanted to point out this

microcap blue foundry shares are up 6.5%. so where do you see opportunity, and as chaotic and difficult a landscape as this is right now >> it's been a very challenging start to the year. if you look at the too big to fail banks, they're about flat on the year. we've been focused on what we have been investing in what i call they're maybe too big to fail that's part of the problem we don't know if they are or not. and those are down anywhere from 20% to 40% i put regions, zion, key bank, 5th/third in that bucket where they are town 30% on the year and trading at 6 1/2 times earn ago, dividend yields of almost 6% that's not normal for a bank to be traded at 6 1/2 times earnings

they trade at average at 12 tils earnings so the market is saying those estimates are 40% plus too high, and our view is that is overly bearish. so we see opportunities. that next rung down in the big regional banks >> although i wonder at this point what happens in the near term if we are talking about a situation where those banks are left profitable in the longer room maybe there's more regulation as more of the lower cap as that would be hit by this but do you agree about this tier being a place to focus for some opportunities that people want to dip their toes? >> yeah. my coverage is a little below -- the level of those banks in terms of asset size. yeah, what we have seen through earnings is that there was not a broad-based contagion as some people feared in mid march when you look at banks in the southeast and strong geographies

that are still the adviser of their middle market customers, we think there's a lot of opportunity there. in terms of expenses, yeah, there is likely to be higher expenses certainly from fdic premium surcharges on capital, we're likely to see some change in the way that these banks have to calculate and allocate capital which will put incremental pressure on profitability. to the point where they are trading on a pe basis, there is still some good opportunities out there. >> ben, for people who are just so bearish, they say i don't want to have anything to do with this, you make an interesting point about 2008 and how the -- what would you say there about whether it's the maybe too big to fail and some of the smaller players, that being an interesting place for people to stiff around >> i think if you want to buy the common equity, these bigger regional banks are the way to do it if you want to go out further on the risk spectrum and get

involved in some of these banks that are more in the eye of the storm, the pac wests, the western alliance, the preferred stocks are probably the way to do it. there's two ways to win. one, the bank manages through the storm and navigates through it or two, like i mentioned with first republic, they partner up with a bigger bank and become part of a bigger, better bank. and when that happened in 2008, the preferred stock that was outstanding was converted to an obligation of the acquiring bank and so merrill lynch became a b of a preferred stock national city bank here in cleveland became a preferred stock of pnc bank. so i think that could be a blueprint for an attractive opportunity for someone who wants to get into the bank sector in the eye of the storm >> if they want to do it i get queazy just talking about it thank you very much for your time today despite those issues at first republic, my next guest says the predictions of a

banking armageddon after svb haven't come to fruition it means calls for rate cuts from the fed are still premature. joining me is the chief market strategist after jefferies and here onset with steve liesman. welcome to both of you do you want to key off what they were just saying i thought you were chuckling at the maybe too big to fail comment. steve, are we going to have to test that once again here if things look worse in the months to come, this kind of regulatory gray area and are policymakers going to have that worst comes to worst, we will step up here >> as our colleague reported, there is a plan going back and forth about the other banks stepping in. i'm not sure how much they're loving that plan of them stepping in. i'm not hearing they love it a whole lot. i'm pretty sure there's not a whole lot of appetite on the part of officials to provide a bucket of money to wash off the sins of first republic such as they may be.

i'm not hearing that's something they're willing to do. they're monitoring the situation as far as i know but i think they have spoken their piece when it comes to creating this bank term funding program, providing access at the window and honestly, you can't -- if you are a policymaker, you can't sit there and make policy for another black swan event it's like, well, something bad may happen, so i'm not going to do x, y, and z i kind of disagree with david about how dire the situation would be >> really? >> and i'll let him have his piece. >> david, explain a little bit if regulators came to you, would you say don't be too quick to jump into this, because it's not armageddon, and everything is fine last week, even the deposit data things were moving around again. >> i think things have settled first republic's been an issue now since the beginning.

its stock has been down at $12 to $16 and bouncing around there after losing 80% there's two big questions. one is are there spemcific evens the fed needs to react to? the answer is no they have set up the programs and they have involved those so it's not going to get in the way of monetary policy doing what it's supposed to do, which is anchor long-run inflation expectations that's done. then the question is, what are these banks worth? what is the whole banking system worth in a world where your deposits can disappear and you can lose $100 billion in the snap of a finger -- >> i'm going to move a couple hundred thousand dollars with my phone right now. oh, a deposit run on a bank because i just picked up my phone. >> and we're talking about the

banks largely creating where they were when trump was elected in 2016. this has been a terrible -- that was seven years ago already. so you have to wonder if that's already reflected in the valuations -- >> kelly, that's my problem. if you guys were -- banking equity values are down, and they're down and they're not back to where they were before and banking equity values matter for banking safety and soundness in a way it doesn't matter for normal companies it's part of how they might be able to raise money. to the extent that is down and remains down, it still suggests to me there are problems in the banking system, and not to mention the joke i just made about money, that's a big deal >> or it is just a bad business? >> it's a business that's changing and perhap there is is systemic risk. >> i think the point is, i think the fed has all the tools to deal with the systemic risk.

we built so many tools since 2008 and 2009. the uk dealt with the long end of the market. we dealt with our banks and the residential mortgage hedging problems we don't have that problem we can set up financial funding facilities on anything we like munis, corporates, commercial real estate. that is not going to get in the way of the monetary policy the fed is still fighting inflation demons are they going to let financial stability get in the way of that no but could it be that we are going to see a significant transfer of wealth from shareholders to depositors because depositors now have the ability to go to apple and get 4.25% and have a golden sacks bank account behind it these are big, big seismic changes that i don't think we have all processed yet >> so you have spoke yesterday, and we're all treat thing as if

there's amonetary policy and then the banking crisis. but aren't they one in the same? this kind of dramatic change in interest rates that has been undergone here, the fed not pausing to assess conditions, the fact that they are sucking deposits out of the system the bank crises systems symptomatic of a policy that was too much >> i wouldn't say one in the same i would say that the rate hikes caused some turmoil. we had team that didn't understand how to edge residential mortgages. the investment committee at sibb and maybe first republic and others will see how it plays out. and we had numbers that did understand it. the numbers out of citibank and bank of america were off the charts so that's not a systemic story the fed is on a mission to deal with one thing and one thing only two back-to-back 7% inflation years, and the need to maintain an anchoring of long-run

inflation credibility at 2%. i think right now, they look pretty small and are pretty small. but that's not the job at hand the job in hand is that. that's what they will be talking about may 3rd. this stuff is going to be dealt with, largely speaking, with balance sheets and funding facilities like we have seen >> i see we're almost out of time but we have only talked about half of the problem. half of the problem are the banks and whatever issues may exist. i call it banking turmoil. the other maybe more important part of this that they will be discussing next week is the macro fallout from tightening credit conditions. of course, i wrote a chart for that if you look at what's happened on the year over year in deposits, i'm not showing you the whole history that we have here but it's never been seen before. this kind of year over year decline in deposits, a piece of

that, you see it's turned negative there on the orange line there notice there's only a twinge of an impact on the loan side of things >> so far. >> so the more important economic fallout, which may be hoped for at some point by the fed, that's part of tightening conditions but that is another -- i don't want to call it a black swan type event where we don't know what the fallout is. the concern you would have, and i'm just being careful about this is that it's not a linear relationship between the decline in deposits and the impact on the economy. it goes nonlinear, which is sort of what happened in the great financial crisis i'm not saying it's going to be repeated but bears watching. f to the extent the fed says raise a quarter or not raise at all, to see how this dynamic plays out, that would be the reason.

>> as we are talking, first republic was down 44% just now before being paused for volatility there you can see the last trade. so it's trading under $9 a share. again, as soon as that earnings release happened, and the bank gave that short statement with no further comment, now to everybody's point, does somebody else step in here? steve, is that somebody going to have to be a private sector, another bank because this is not going to be a policymaker response >> or, we have 4,270 banks in the united states, all commercial depository. it's just not -- i mean, we see this happen. we have come down from 14,800 40 years ago. there shall lots of people lined up to take over the clients. >> the only question here, does renewed trouble at first republic bleed into trouble at

any other institution? if not, because we have these back stops now and everyone has moved their cash around, no one has to care, broadly speaking. if for some reason we get on social media or hear people talk about i better make sure my bank is safe -- >> before we came on air, david and i were talking about deposit base how secure is your deposit base in this world where you can go to a money market and get a government insured -- a government money market, it's not insured by the government but it's tight in terms of what it invests in. earn 4.5 p% or whatever it is, go into this apple thing so the question is not limited to first republic, but it's about the business model of these banks that rely upon what they thought were sticky deposits, that end up being

having lousy glue. >> i think the macro story, we are in the process of taking money from shareholders and banks and delivering it to consumers with higher deposit rates. apple is facilitating that, and this whole structure is getting people to think about why am i leaving my money there i'm not sure, kelly. that may be stimulative. shareholders don't spend as much as consumers you have high safers and wealthy people and joe six pack. joy six pack is probably going to spend that money. systemic issues are important, and if it happens quick, we'll have to deal with that but if it happens slowly, commercial banging depository business model gets less exciting, ala elizabeth warren saying let's make commercial banking boring again, i think that was her statement on the

date of the svb collapse there is a story here that sort of says, maybe we're not supposed to have so much of this stuff in our risky -- >> more than that is we have moved into a -- i want to say a word where it comes to daily access to my money i do not want to think about where my money is. i want my money, i want to move it where i want it to go i know the technology exists to do that. this nonsense about a three-day hold on my check, about this other stuff, it is not on in the world we live in today so we will have to figure out a way to provide safe, immediate access to your bank account. >> have you ever heard about crypto bitcoin could really -- >> you're leaving out the safe and stable part. other than, it's perfect >> gentlemen, we'll leave it there. great to have you at a moment where first republic shares are

under pressure, and just the point steve was making, we don't know where this chapter ends david, steve, appreciate it today. coming up, we'll talk about shares of lifetime surging 9%. there's more to this story than meets the eye. the dow is down 278. and google's chief, those report after the bell and here are the markets near session lowing as first republic shares have weakened again dow down 276 the s&p below 4100 the nasdaq down 1.5% the ten-year yield is back below 3.40 back after this.

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welcome back to "the exchange." it's not all gloom and doom. shares of lifetime group are up 9% they are a fitness club operator they raised their full-year guidance, a rare feet this earnings season. up 60% this year so far. and a recent note by wells fargo that was warning of the restart of student loan payments that could hit just as the labor market softens

so were investors too pumped up about this stock let's ask simeon siegel. good to see you, simeon. man, you know, banking crisis on the one hand and lifetime doing amazingly on the other >> i was listening to the last segment. i'm thinking how much of a x comedic relief i'm going to be here that was intense >> i know. >> great to see you, kelly we are seeing nice traction in gyms i think there are certain things people are spending on i know the skills like the recession that we have all been waiting so long to finally hit, people have never been so excited for a recession, but we are seeing people spend. i think what was interesting, memberships and the price per membership were up double digits >> it's kind of what dave was saying on the big picture, giving people 4% on their money is the kind of windfall we haven't had

in a long time >> yeah. but the question is, are they seeing that? or is it an outlet and this is something that after being cooked up, perhaps the gym is some port of a necessity for people perhaps it's less discretionary and more staple. so depending on how much you're spending, that may sound absurd, but people are spending on things they want and need, and perhaps this is a blend in between. >> i'm not even that familiar with the company, but for those that don't know, average membership $162 a month, over $200 in a lot of urban centers do you think these are going to be the first to crack in a macro slowdown student loan payments, they looked at the clientele. if they say i have to pay a couple hundred a months, i'm going to have to cut my pricey gym membership >> so it's a really interesting

question we're looking at the price level. on the other side, we have to think about demographics do we think people are going to buy luxury hand bags is a similar conversation so i think that it's a much smaller business the numbers contrast that line where we talk about 15, 17 million subscribers. so they probably do have a he will -- have a healthy clientele. it could be just someone that wants access to their pool, as well so i would say right now in the spectrum of things, we do have two publicly traded gyms, serving different roles. i think what we are seeing right now, lifetime is a little late to that recovery party, and now they are enjoying it i don't know how quickly they will lose it >> why only a market perform on the stock?

>> i think there are still stocks that we have been watching with the concerns you're raising and we have to figure out valuation but this is encouraging. we have been talking about planet for a while i think people went back quicker to this $10 a month that most people could jump on to. lifetime was later, and your seeing nice results where both of those are up double digits. but fair question. >> seem on, thank you for your time today appreciate you checking in on this the dow the down 288 points. coming up, a regional bank, a retailer and restaurant on deck with results we have this in a moment here is another look of shares of first republic which were paused again for volatility. down 40%, but back over $9 a share, which they dipped below in the last 15 minutes or so again, 40% drop today after lars night's earnings debacle "the exchange" is back after this

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down day for the dow, but that doesn't mean it's not final for your cnbc news update. the world health organization says there is a high risk of biological hazard in sudan after a laboratory was seized. this comes as the sudanese army and the rival paramilitary force agreed to a three-day cease-fire it's a shaky one the w.h.o. said on friday more than 400 people have been killed since the conflict began seeing huge success with

2 2021's "squid games" netflix will invest $2.5 billion in south korean film and tv production over the next four years. the ceo of netflix said they are confident that the korean creative industry will continue to tell great stories. and the 2024 election predicts that one in five of all election workers will be new and will have never worked a presidential election before experts warned that losing expertise and election workers may hurt the management of future elections kelly, back to you >> thank you very much phetotming up, microsoft and alab bh negative over the last 12 months we've got details with the

earnings looming right after this

welcome back to "the exchange." for today's tech check, it's all about the marquee names reporting after the bell alphabet and microsoft who will come out on top eric sheridan covers alphabet for us and keith weiss is here to preview microsoft.

and james is here, co-founder of clockwise capital, onset for all of this is diedra bosa welcome to you alphabet coming off three straight earnings declines, announcing cost cuts, including the first mass layoff and shoveling cash into ai and eric, you say that's one of the key things to watch. but how much is that going to show up in today's report? >> i think there are going to be three important components to the report number one, the strength or cyclicality in the advertising business that comes through in search and that will be the biggest results tonight. second is the cost cutting initiatives that you referenced, how that flows through numbers and how it maybe even changes some of the trajectory on costs going out to 2024. and lastly, i would say the ai initiative, the company has been much more on the front foot in the last two to three weeks.

putting on display some of what they have tried to build for the long-term. that contrasts with six, eight, ten weeks ago when the company was a little more on the back foot, and microsoft had a little bit more of the offensive. >> you have a buy rating of $128 a lot of people focus on the valuation. but maybe the discount is warranted, i don't know. >> i was surprised to hear eric say they're not on the back foot i feel like they're even more on the back foot. remember "the new york times" article that said that samsung was considering possibly bing. they said there was panic inside of google. i'm not sure if anyone is going to ask about it on the call tonight, but there is this sense this year that google has had to play catchup they continue to have to protect that at all costs. they said they have to balance the cautiousness with the

boldness is that going to be enough for investors when they have to cut costs? they have to cut costs but get really excited about this future innovation >> chuck, i know you're big on amazon if i had to correct you on google versus microsoft, who would you rather today >> definitely microsoft. i think it's going to be a back half story it will be a lot of opaqueness as it relates to the acceleration that we need to see on the search side, as well as the root resumption of growth on the youtube side i don't think we're going to get that much charity on the cost side of the cost side. there's a lot of generic language here. microsoft -- go ahead. >> let me come back to you on that in a moment i want to give eric a chance to respond. so what they just said >> about a month and a half ago,

no one was more invested in ai than alphabet has in the last five years i remember talking about it being the first ai company in 2017 i wouldn't measure who wins or loses ai based on the first three to six months of this narrative. a lot of this story still has to be told in the years ahead >> eric, thank you, sir. appreciate your time as we turn to microsoft, facing slowing growth on the cloud, perhaps arguably at the front here, talk to us about what your expects are, and what do you say to people that go, well, it's expensive? >> compared to the opportunity, it's not expensive as of yet you were talking about generative ai. that is a massive opportunity for microsoft, and we like their positioning, because they benefit not just on the platform side of the equation, posting

the gpt model that powers chatgbt. and they can monetize that, so there's going to be a co-pilot for office 365 at some point coming out so they have both the underlying technology, but also a lot of the avs to modify it that will expand out the opportunity a lot and more than justify the valuation in my view >> james >> i would agree with all those points but we take pause a little bit on the valuation side. it's till at ten times sales the comps are negative you're talking about deceleration growth on the cloud side question marks when we will get a resumption of growth on personal computing as well as gaming and at the end of the day, the ai question is a big one and probably will be material for all the companies we are talking about. but still very, very early so we like it.

but given the valuation, it's not a top five position. >> we said earlier about five times, in this conversation, it is very, very early. what we're going to get tonight is sort of the near-term risk for microsoft and google by the way, and a lot of that centers on cloud for microsoft such an indication of how the rest of spending is going in the enterprise world so if that disappoints, i can see a big problem. let's not forget where these companies now stand in terms of the broader marketplace. concentration in these names has only been increasing this year so it will have major ramifications. it stumbled for alphabet and microsoft that would have major ramifications for that stock price and valuation. >> keith, maybe you can add a comment here it would seem that microsoft should recover from it even if they have one better because they can tell this great story it's clearly prized into the stock and a couple of percentage points off its all-time high

>> i think the tension is there. the tension between the near-term cyclical pressures on cloud, and we talk about that in terms of cloud optimization. we think we're halfway -- more than halfway through that cloud optimization activity. on the other side, there's a much more expansive, sort of fundamental secular opportunity for microsoft and generative ai and more broadly in ai i do think this ass azure numbes going to be important. when we start to see that stabilize, that should be a good period for the stock >> everyone was in the google basket yesterday today it's microsoft thank you, everybody still ahead, is geothermal power about to go main stream? we have the largest geothermal

residential building in the country. what can you tell us >> they're not mining for gold, something even other valuable. that's coming up next.

welcome back an ambitious law to cut buildings from new york city goes into effect next year one building will be net zero in 2025 diana is at the construction site with a look at what will be the largest geothermal building in the state >> geothermal has been around for a while, but generally on small bluildings on single homes but it's being tested on a massive scale here in brooklyn 320 bore holes are being triled, creating a loop of piping resulting in the largest geothermal apartment complex in the u.s. >> what we're looking at now, again, i akin this to your heart

and veins and arteries in your body >> reporter: water below the frost line is at a constant temperature. by drilling down to it and creating a loop system of pipes, the water is brought up through heat pumpsky be heat or cool the building all year long >> it's approximately 55 degrees. we are using that constant temperature to cool in the summer and to be warmer in the winter >> reporter: the project, which takes up a full city block on the edge of the east river, will have 834 rental units across five buildings, including a 37-story tower user geothermal will reduce greenhouse gas emissions by 53%, but it will cost about 6% more to build >> however, over a 20-year span, we more than make that back. so as a long-term owner of an apartment building, we view this in addition to sustainability, financially a sustainable

practice >> reporter: they will get a $4 million clean energy grant from the state of new york. while there will be some affordable housing units in the building, given the view that they are going to get from here, you can bet the rents on this building are going to be top dollar, which right now ghifen the size, depending on the size, would be anywhere from 7,000 to $10,000 a month. kelly? >> i'm wondering about the privilege of geothermal for single family homes across the country. that's been a long, under consideration ideal, but is it economical >> reporter: it is we did a story in texas about a massive geothermal residential housing community of single family homes, hundreds of them that's easier to do than this, because you can spread it out over wide swaths of land it is difficult to do it in a large city, because you have to make sure it has all the things in it to support geothermal. but it can be done, and that's

what they are showing here they're hoping it's a template for other cities with laws like new york like boston and washington, d.c., also upping their emissions standards. >> that's a really interesting point, how it's even harder for some of these major complexes. thanks so much, diana. still in penske about 21% as freight recession talk fears ramp up and pac west is next regional bank to report it reported a loss last quarter. how to position ahead of these reports with the dow dn ow310 points near session lows right after this td ameritrade, this is anna. hi anna, this position is all over the place, help! hey professor, subscriptions are down but that's only an estimated 15% of their valuation. do you think the market is overreacting? how'd you know that? the company profile tool, in thinkorswim®. yes, i love you!!

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welcome back, everybody. time for earnings exchange we have the action, the story and the trade on three names, chipotle, penske and pac west today. we'll start with chipotle whose shares are higher into the print and up more than 50% off their recent lows. foot traffic, after introducing new menu items and reward initiatives, full-year margin expectations near 26% and chipotle posted a miss last quarter sending shares lower by 6% gina is here with our trades today and alito adviser

strategist and a cnbc contributor. good to see you. cl chipotle can they keep going, almost $1800 a share right now >> it is so highly priced 40 times forward earnings but if you look at the restaurant industry same-store sales have been declining, january, february, march, you see a steep decline. chipotle has been holding up chipotle was -- did not raise their prices as much as their competitors and so while that really hurt them and that was part of their miss last quarter, was that they, you know, got slammed by food prices, a lot of those food prices are finally starting to let up, food pricing starting to drop with the exception of beef, everything else is falling and should free up margin for chipotle which is badly needed the good thing as we go into a recession, this actually, because they kept their price increases more modest relative to their competitors they could attract more sales, while, quite

frankly, people will be spending less on casual restaurants >> it's impressive at a time when everyone seems to be beating because of the price hikes they're choosing a different tack let's pivot and talk about penske because those shares down ahead of the results, up 18% last quarter was strong, trucking recession, worries about rising inventory levels and the auto market generally. do you like the stock? >> this one is interesting because the forward -- this is, obviously, really cheap stock, 8.8 times forward earnings and expectations for growth next year, still expected to post a loss next year, but, you know, they're coming out of three years of a trucking shortage because of, you know, covid, you know, covid disruptions and there was a trucker shortage, there weren't enough truckers and they're coming into a slowdown when the whole industry was in shortage and people are

still needing to buy trucks and they are the leader in the space. so, you know, it's -- they have -- they're definitely priced down for a negative outlook but they have more upside. >> interesting then let's close with probably the biggy of the day, pac west after what happened at first republic, pac west shares down 8% kind of in sympathy with that. it's had its own challenges but western alliance was able to turn in better than expected results. what's your read here? >> you know, the trouble with pac west is that they are in a group right now that just is unloved. since the collapse of silicon valley bank their stock dropped and they lost a significant portion of deposits as well, along with many smaller banks who were losing deposits they were forced to go to borrow at higher rates from the federal reserve in order to shore up their capital and they are seeking a buy are for their

commercial real estate and small business lending unit in order to, again, shore up their balance sheet. none of these are exactly signs that, you know, make you think oh, this is a good one to buy. you know, but i think that this space you have to be very careful. if they can achieve this sale they could be set up nicely relative to the other banks. >> right or maybe -- any sort of parting comment as we watch one of the few days where we have some big stock moves, when the vix has been under 15, the market make sense to you here? >> the markets are -- the markets don't know where they're going. you know, i think that it's very clear and ike volatility is where we go from here. you know, we saw the markets destroy everything that had a high multiple and then lean into everything that was growthy. now it's saying gosh, maybe there is going to be a recession. they don't know. we don't know where we're going yet. the pricing still hasn't settled and i would say you have to mind

your actual, you know, mind the underlying fundamentals of every stock you're buying. >> to your point the vix finally gaegts two-point jump. more next hour always a pleasure. thank you so much. >> thank you. >> that does it for "earnings exchange" and for "the exchange." next on "power lunch" an interview with jetblue's ceo tyler is getting ready and i will join him after this break don'gonyert awhe. eatly impact . - are, are you qualified to do this? - what? - especially when it comes to your finances. - are you a certified financial planner™? - i'm a cfp® professional. - cfp® professionals are committed to acting in your best interest. that's why it's gotta be a cfp®. (cecily) you're looking pleased with yourself. (seth) not to brag, but i just switched to verizon.

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welcome, everybody, to "power lunch." alongside kelly evans i'm tyler mathisen coming up, earnings everywhere big reports out before the bell. bigger reports even after the bell throughout the hour we're going to dig into the reports already published and get you set for those still to come. >> plus, president biden officially announces his 2024 presidential campaign. we'll dig into the