we'll see. >> i'm an acrobat. [ laughter ] >> vertex pharmaceuticals. i think the stock pushes well north of 400 >> proctor and gamble, i thought it was one of the best companies. it's a little expensive but they beat earnings and guided higher. >> good stuff, everybody see you on "closing bell." "the exchange" is now. ♪ ♪ thank you very much, scott hi, everybody. i'm kelly evans. welcome to "the exchange." we are just about 24 hours away from the fed's decision on interest rates, and the markets couldn't even go 24 hours believing jamie dimon that the bank crisis is over. the bank etf down % now. some regionals, including pac west, we have the voices you want to hear from. the regional bank ceo, randy

crosner, and chris davis he's managed money through three different bank crises. we'll ask him how he's managing through this one, what he's buying and the one sector he's steering clear of. first, let's get over to dom chu with a look at what's happening. >> so i know that you're coming down here to see what i'm looking at it's a sea of red out there, the likes of which we haven't felt in a while but if you look at the s&p 500, at 4108, still above that 4100 mark but down 1.5%. just to give you an idea, at the lows of the session, we were down 78 points, so it's been generally a negative day for the most part, the nasdaq compo composite, the focus is very much on those financials you mentioned some of those names like pac west, multiple trading halts. it's not the only one.

pac west is down about 26%, but western alliance, these two names, western alliance has had multiple trading halts today as well, down about 19%, 20% off session lows bank of hawaii, still western focused bank down 10%. zion's bank in utah, down 13%. and the s&p regional bank etf down 7%. and to give you an idea, the regional bank move, the kre, if you look at a chart over the last year, we know it was march, right? that's the white line lower. if you look at that versus say this, it's down but not as much, and then the s&p overall is only down about 1% during that span so that relative performance you point out there is dramatic. very much to the downside. that's something a lot of traders will be watching to see whether that regional bank story can stabilize.

that is where we were supposed to be stabilizing. >> here is where we are today. dom, thank you despite the selloff in the banks today, my next guest owns several big ones in his portfolio. as you can see here, capital one and wells fargo, they're both down 4.5%. this is the third banking crisis he's managed through since the '80s and this one is different joining me is chris davis, chairman of davis advisers and a berkshire hathaway board member. chris, great to have you here today. welcome. >> thank you, kelly. glad to be here. >> having weathered bank crises before, does this one give you deja vu that we are living through one all over again, or could you say this is more contained? >> this one is very different in the sense that the last two banking crises were driven by credit that's usually when people think about risk for bank stock investors, i loan and people don't pay me back. in the '80s, it was wildly

centered in commercial real estate and then the financial crisis around residential real estate but credit was the focus here it is interest rates. it was losses in the securities portfolio of banks that got crazily aggressive in taking interest rate risks that made no sense. it was transparent the amazing thing is why nobody cared about it until everybody cared about it so this one is different and i think the stocks are behaving as if it is a traditional banking crisis it's a traditional credit c crisis but what's different is by looking at the interest rate exposures, you're really able to see which ones took the risk and which ones didn't. i think that's creating opportunity. >> what kind of opportunity? because a lot of people who are talking about opportunity yesterday or a month ago are make looking at some of the things they thought they were buying on the cheap and realize they didn't. >> well, it's always dangerous

to think you're going to scoop something you think is fragile off the bottom this is a time -- i started our financial fund more than 30 years ago. the real focus has to be on resilience you know, the model of making the spread on money is about as old as human history so the model is durable. the banks that we -- we loan banks in their second even third century. so there's enormousresiliency to the model so when you get a panic, you have to look at where are the companies vulnerable you have to avoid these because trying to scoop them off the bottom is risky. but if you open the companies that are beneficiaries, where are those depositors going when they leave these smaller regional banks they are fleeing to the big banks. that's where there is enormous safety you can look at the balance sheet of wells fargo and see just how conservative they were in terms of not taking big interest rate risks.

at the same time, that they have had enormously resilient deposits that's a wonderful combination with higher interest rates heidening profitability. so i think it's very different, because it's not systemic, it's really a flight to quality and the fact that the big banks are going down so much is creating that opportunity. >> so you would be a buyer here. wells fargo, sort of ironically benefitting from the asset cap that maybe they didn't grow deposits more during the pandemic and go out on a limb the same way other institutions did. so when you say that the crises is contained, athe only remainig question when we see scare headlines right now at drudge that say, the u.s. banking system is insolvent basically, what would you response be to that >> well, it's a stupid comment, because of course, they're only marking one side of the balance sheet to market.

insolvency is when your liabilities exceed your assets and so, you know, what's interesting in bank accounting is people are very focused on marking the assets to market your oeloans, your securities well, what is the value of your deposits when you have a source of funds at 1%, 1.5% and you have available rates at 4%, 5%, and those deposits are sticky, which in the case of many of these banks that have smaller retail deposit bases, those have not just been sticky but growing during this period at a very, very low cost. so you have to mark both sides to market. of course, what matters, kelly, is not whether or not somebody has longer term asset, but whether their assets match their liabilities in duration. and so what we have seen in the case of somebody like wells fargo is very, very sticky

deposits think of all the bad headlines that have plagued wells fargo over the last five, six years. yet the deposits have stayed at something like 92% deposit resense rate so in a way, that's longer than your cable bills very, very sticky and very, very valuable and so when people talk about marking the asset side and saying they're insolvent without marking up the liability side, i think they're just showing ignorance of basic accounting. >> what happens from here, chris? you obviously have holdings across the economy, you have applied materials, texas instruments, some semi prlays there, and the macros that hang over the banks where you go okay, it's not just that they got into a mismatch here because of a fed rate hike, but we appear to be heading into a recession. you can quibble about when it will start, but is that priced into any of these stocks that

you hold >> i think when you look at the fed's stress test, of course it seems crazy that it didn't include interest rate exposure any analyst was making those adjustments anywhere, or should have been. but certainly the fed's stress test speaks to enormous resilience in the face of a recession in the banking sector, particularly in the large banks where you have the highest capital ratios in history, enormous resiliency to withstand 10% unemployment, big declines in commercial real estate. all of those stress test factors put in after the financial crisis to ensure that the banks would withstand something even worse than the financial crisis. so i think they're in good shape. you make a very important point. the banks are discounting the recession, but is the rest of the market discounting the recession? banks off lead the way in, the

stocks go down first, and the rest catches up. in our portfolio, i think it would be crazy to invest, not imagining or contemplating that there will be a recession, guessing the timing has always been a loser's game. but we want to have a portfolio with durable, resilient businesses our largest position is meta which six months ago everybody thought was, you know, a complete disaster and basket case six months later, you have this wildly different perception. you mentioned some of our holdings like texas instruments, applied materials, these are durable, resilient growth companies. so you can have some volatility and economic sensitivity, but they aren't cyclical they are growth companies, and i think there are opportunities to buy them at reasonable prices. so we love some of those global internet leaders and someof th high quality financials. we think that's a terrific place to be here >> you mentioned meta and

amazon let me ask you about energy. it's one of the areas that you don't own. it's obviously down today, as well they've got amazing cash flow but possibly a bad macro to contend with is there a reason why you don't think these stocks should be in the portfolio right now? >> well, we have a general belief that's sort of long-term emergence of the global middle class will drive energy demand for a long, long time. so when you look at the question of how to participate in that growth and demand of the energy sector, one way is oil but for us, oil is so difficult a commodity to analyze because of all the forces that come on top of supply and demand you know, prospects of carbon taxes, windfall profit taxes, political and geopolitical

actions that affect this most super charged economy. and on top of that, you have things like electrification of transportation that could bend the demand curve in ways that aren't necessarily consistent with history and so our view has been if we want to participate, which we do in this long-term growth and demand, we preferred things like tech industry's copper, for example. copper is a beneficiary of electrification. now, the real problem owning energy over a long period of time has been capital allocation in the sector as a whole that has generally been so poor if you can own a company where you have high conviction that there is capital discipline, there certainly could be opportunities in energy and we wouldn't be averse to looking at them >> maybe buffet needs to explain himself better he picks his targets carefully we'll see if they get more active in the months to come

chris, thank you for your time today and joining us on a day like this especially >> of course, kelly. thank you so much. >> chris davis with davis advisers don't miss berkshire hathaway's shareholder meeting this saturday, may 6. the next fed move on rates is coming in 24 hours, and economists are worried steve liesman is here with the results oh of the latest c nbc fed survey >> reporter: this is a perfect segue. the responses to the survey are looking at an elevated chance of a recession because of all of the banking issues out there we're looking at a 56% chance of recession in thenext 12 months now, look, if you come over here, this is sort of normal in any one year, things going okay, there's a one in five chance of a recession. as the fed began to raise rates, that probability kept rising to being where we are right now at

56%. a little more detailed look at the views about a recession among our respondents. 62% said it will be mild september 2023 is the beginning date that's interesting, because the second track in a row we have come up with that september 2023 date it had been june, but they pushed it ahead, because the economy has performed stronger and that recession has not happened yet eight months is the average expected wait of the recession we don't really see a big rebound. here is a couple quarters of sooeo or negative growth for this year. it comes up, call it around trend, 1.6%. a lot of times after recession, we get a bigger boost. now, i love this chart, because you can see the relationship, at least the expected relationship between inflation, which is seen coming down, and that happens in part or because of unemployment going up quite a bit of unemployment is built in there

4.69% is the rate. no recession is still the most likely outcome, but financial instability has raised the risks. there are risks to the overall economy. and here, a narrow recession is most likely and the path on the other side is optimistic for corporate earnings and the fed ends hikes soon and lawmakers have a fighting chance to avoid a recession 100% think the fed is going to hike rates 59% say the fed shouldn't do it. >> steve, come on over my next guest is concerned about the banks for the same reason charlie, is their exposure to commercial rel estate. despite that, he sees the fed

hiking tomorrow. randy, thanks for your time today. you know, i guess i have to ask you first and foremost about fdic deposit insurance here. not because you're an expert per se, but becausethat might be the only solution. for instance, eric rosengrin just tweeted, ceiling need to be raised or eliminated is he right? >> well, i agree with the latter part, that it is disruptive. we need to rethink the entire bank funding model we used to think -- well, basically in response to the global financial crisis, we said we don't want banks to be funding themselves through borrowing and the markets. we want that steady source of funding deposits now we know that they're not so steady as they once were deposit insurance is fine, up to its limit. we've had firms holding very large payroll balances in some of these banks

they unsurprisingly have gotten skittish and moving to some of the larger banks i think we need a broader rethink about how banks are funding themselves >> by the way, after the fed hikes, we see a lot of the money market future funds offer 5% here is the tweet. >> look, i'm ready to tell the positive story on regional banks. i was unconvinced by chris davis, who said there is a low cost there at 1% i don't think that low cost remains. randy is a former banker, he should be out there supporting the regional banks, but he can't because it's very difficult, kelly, to say the regional bank deposit base is safe there is one ace in the hole they have, which is that -- >> did they already play it? the ace in the hole was the jpmorgan and they already played

it >> the longer term business model ace in the hole is, in order to lend locally, they have to be located there. and that's it. but i don't know that the deposits have to be there locally. that's the problem we are having trouble with is joining and understanding the connection between both sides of the balance sheet. >> and randy, this is going to impact the macro economy it cements ludicrous to hike rates tomorrow am i wrong >> it's going to be a nailbiter. you have two views one is that there are banking and financial problems, and we use policy to deal with that and with an inflation problem, we have to go head of into that. others are saying they're related and if we raise rates, that will be problematic it will be interesting when the transcripts come out five years from now so they're going into this meeting expecting to raise rates. and i'm not so sure they're going to do that if they do, they will make it

really clear that they are sensitive to issues that are happening right now, and that they are not going to be going forward with more rates. >> let's do the transcript now, okay i'm at the meeting hey, look here, jay, i've got the kbw down whatever it is down today. >> 7.5%. >> 7.5% today. look at what happened to the january fed funds rate, it fell by 20 basis points it's ridiculous. i don't know if they have that chart to >> what are we down to roughly >> 4.40. so the gap has widened look at that >> that means by january -- >> by december that's why we use january. >> seven months away they think the funds rate, which they will raise above 5.5% tomorrow will be down to 4.4%. >> randy, does somebody come forward and say hey, you know what, is this something that

should be cause to pause, or somebody else says we're not going to be messed around by today's gyrations in the market. >> exactly the people who say we need to move ahead, we have the big picture problem is inflation and if we just move to respond to the market movements, we will be pushed around and won't solve the problem. they're going to go back to late '70s when they paused too soon the last time inflation was this high in the u.s., we had interest rates at double digit levels mortgages were 12%, 14%, if you could get one. we don't want to get there ultimately, 25 basis points, one way or the other, is not going to make or break the u.s. economy. if it does, we'll touch difficult situations >> look what we heard from kaplan, who said he could have dissented from the last one. i mean, you are starting to see

former fed officials come out and say, we've gone too far. i don't know which way you want to look at tin nhe inflation ga, but there's just not -- look at prices paid on the ism it's consistent with a 2% inflation trend. >> so you can pick different pieces of data certainly, we're far off of our peaks, but if you look at things like the core pce, that's flatlined around 4.6%, 4.7%. if you get the super core that takes that sherlt, it is down a bit. but the goal is 2% we're still pretty far from there. so we're starting to see evidence of that the key thing is what will happen to the labor market and is the labor market going to crack? the fed is not going to quit, the labor market quits we're seeing evidence that the labor market may be cracking although our models say things

move smoothly, i can tell you from my time at the fed and the way the world works, it's never smooth once it moves, it moves rapidly. hopefully we can have that disinflation where we have the unemployment rate go up one percentage point and inflation comes down we have never seen that before it's possible but not likely >> the cfo council member we had on the program today, there were cfos who warned if the fed hikes again, they could face an abrupt stop in the economy. that's the kind of thing that people have to plan for. we risk pushing to the point at which we really trigger a broader problem. >> it's interesting you say that it reminds me when i reported on the twu2001 recession, and i tad to the president of kodak. he said it was as if all the cameras around the world stopped clicking at once the idea of an abrupt stop is a

possibility. i wanted to add to your litany of fed comments, one made very conse consequenceially, esther george was the one dissenter because he didn't want to hike as high because of the banking industry. >> we have to leave it there thank you both tyler and i will head to the beltway tomorrow to cover the fed decision that's at 1:00 p.m. eastern time treasury secretary janet yellen warning the u.s. could hit the debt ceiling june 1st on a day when the banking sector is back in the cross hairs. here to discuss this is emanuel roman, the ceo of pimco. do you want to just jump in here when you hear all the doom and gloom, are we right to be concerned? >> we should be concerned,

kelly, and thank you for having me i think we have a situation where we have three things happening at the same time we have the debt ceiling problem, which needs to be resolved and most likely will be resolved, but i think we're going to have rocky markets until mid june to mid july i think we'll have a situation with the banking system where you have a lot of volatility in the banking system and the regional banks, and then the geopolitical situation where there are issues with china, which are not going to go away so all of this, we get to a better place, and you're right to be concerned. the most likely scenario is we will have a soft landing with a recession by the end of the year >> soft landing, recession, regional banks down again today. how do they stop this problem? if they came to you, what would you say?

>> i think randy summarized it very well. first and foremost, you need to fight inflation, and you need to hike rates as you said, we expect the fed to raise by 25 and then pause. and pause doesn't mean stop, it means pause. so it will be data dependant if inflation remains high, the fed will rise again. so we'll have a pause, and then we will see what happens >> i'm surprised to hear you as such a financial markets firm to say inflation is the number one problem. the yield curve is now 171 basis points inverted. doesn't that say to you an economic crash is a bigger risk than high inflation in the next six months >> no, i think what the yield curve is telling you is the central case is there will be a light recession, and the market is telling you that you expect inflation to be slightly above,

and the fed will cut rates starting in the second half of the year and into 2024 and you will have the tale of the hard landing, which is a 20% probability, and you also have the possibility of no recession, and always think that the yield curve is an average of views so you also have two separate scenarios. >> it has a pretty good track record in telling us a storm is coming i don't hear a lot of concern from policymakers. the fact that we are now hiking -- first, people said it would be one day in march. then it was just going to be first republic the narrative keeps changing doesn't that worry you >> well, we don't know what we don't know the regulators are aware of what

is happening with the banks. i think the fdic is -- i think the resolution of first republic was exactly what you would expect the fdic to do. and then we'll take it from there. i think none of us know what's happening inside these banks we look at the same data, of course, the move of cash from deposit to money market or from small, original banks or large bank su bank is unprecedented. it's oven, but the modern technology makes the banking system much faster and quicker so one of the lessons in the fdic situation is for people could wire all of their money within a few hours that's new and i think that's a response that policy holder will have to think about in terms of how to deal with the next problem, if there is a next problem. >> right >> that being said, the u.s.

banking system is in pretty good shape. >> do you think they need sek na -- the fdic is maybe looking at things like trying to exempt payroll accounts from the fdic insurance cap. do we need to move in this direction or do people need to be more prudent how they manage their money and where they put their cash >> i think the cash is very important, and i think it's a good argument to be made that we should raise the fdic limit. but it is harder for a company who also has payroll with a specific bank to not give cash away it's never a cash-only problem i think it's -- the devil is in the details here so having one policy response may not be ananally cable i

>> so the kid is going to have a problem to solve >> it certainly does emanuel roman, thank you for your time. with the markets so busy and your firm right in the middle of it all we appreciate it >> thank you for having me, kelly. >> next hour, don't miss our interview with brian smedley really look forward to his views on this situation at 2:00 p.m. eastern. still ahead here, how are home prices holding up better than you might expect we have the details and where demand is the strongest. and take a look at the dow, with chef lon, walgreen's and amex the worst performers today "the exchange" is back after this

welcome back it's not just the banks but a rough day for the energy trade, as well. oil is down 5%, back below $72 a barrel >> oil is down more than 5% on weak economic data out of china. and jitters ahead of tomorrow's fed decision we're well below where prices were ahead of opec's cut announcement in the beginning of april. energy stocks are getting hit hard today by far, the worst sector marathon oil and diamondback all lower. we're seeing weakness in the services companies the oih is down 6% halliburton falling 7% diamondback said rig costs are coming down, so that could be playing a part here, as well as

the issue as commodity prices stay down. that will hit the services companies. today's weakness is despite what has been a very strong quarter for energy earnings. the positive results are getting lost in the market turmoil recession concerns and sentiment is trumping earnings reports profits did peak back in q2, but companies are still earning a lot more than prior to the pandemic, and of course, they are using those profits to reward shareholders. >> or they're trying pippa, thank you let's get to tyler mathisen for a cnbc news update >> thank you very much here is your cnbc news update right up to the minute the cost of russia's invasion of ukraine growing more deadly for moscow as the fighting drags on. russian forces have suffered more than 100,000 killed or wounded fighters since december alone. u.s. officials say half of those killed were from the wagner

mercenary group who died f fighting over bakhmut. a former minneapolis police officer has been convicted of aiding and abetting manslaughter in connection with the death of george floyd he was last of the four former officers facing judgment in state court. but unlike the other three former officers, he maintained he did nothing wrong he's currently in prison after his conviction in federal court for violating floyd's civil rights and the canadian folk singer gordon lightfoot has died at 84. he had hits like "sundown" and "the wreck of the edmond fitzgerald." he was recognized by his native country, being called one of the country's greatest singer as

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welcome back, everybody. it's another painful, you might even say brutal day for the regional banks a day after jpmorgan took over first republic, and some are saying the turmoil only benefits the big banks, one regional is higher for the year. shares of triumph financial is up, they operate across six states joining me now is the ceo. aaron, welcome to "the exchange." >> thank you for having me, kelly. >> we were going to talk about what you're doing to transform payments 8% of gdp. you took this bank over when you were 32. just so many incredible thanks to discuss i'm going to have to ask you about the banking crisis, though just tell us from a banker's point of view, what do policymakers need to do to get this contained >> i think it starts with what

do you define as a crisis? i think we're see thing play out at multiple levels of course, there was the crisis that came about 90 days ago or 60 days ago if we want to call it that, that was driven by liquidity, and ultimately a crisis of confidence i mean, capital cannot replace confidence so i think what the market needs in order to move forward is the confidence that the banks are in a position to weather the economy, whatever rates do, whatever -- if we have a soft or hard landing, everyone is looking for confidence >> uh-huh. so that said, one of the things the only way people are saying we can instill confidence is to raise fdic insurance let me quote here, look at what happened with first republic the big banks got what they want, they avoided having the cost of failure imposed on them. the fdic gets what it wants, depositors are made whole. the lose rers the rest of the

banks. the non-giant banks and customers. do you agree with that, that this all benefits the big getting bigger >> oh, i don't know that everything benefits the big getting bigger of course, that's part of it and that makes for great headlines when you look at the way the deal was structured with frc upon its failure but what i would say, obviously the market does not believe the tangible book market calculations of many of the large regional banks or they wouldn't be trading where they are. the market has decided there are banks well below that, like triumph financial, who have a business model that will thrive in whatever new regulatory environment, whatever rate environment is coming our way. so i think there's always opportunity, whether you're one of the largest banks or one of the smallest banks, as long as you understand the markets you're in and understand the markets you serve. >> right and by implication, maybe there

were some bankers that did not do that or manage risk that well i mentioned commercial real estate four years ago, you guys thought returns weren't attractive and those valuations were highest. do you think in other words that the banks that are weakst right now from your point of view ought to let the market do what it's going to do with them >> you know, i think this is capitalism, and the market is going to sort this out anything we try to do to kick the can down the road i'm not sure is valuable for anyone. to your point, commercial real estate is a place historically where community banks have been able to grow it's by the way the markets work it's a great opportunity but when the market starts pricing infperfection, that commodity class becomes that risk, because it generally adds duration risks to your balance sheet. so it wasn't fun for us for the

last three, four years to lay out of that market but at the end of the day, you have to decide is it about optimizing for the near term, or are we going to run this bank so that even if we're wrong about our own view that we're in a position to weather that storm and having been part of turning around a troubled bank, you have to be prepared for what you don't predict. >> so let me leave it on this, what are you going to be doing in the next 6 to 12 months, how do you navigate a bank through a period like that give us a sense of what that means and what are those decision points? you guys have a low-cost deposit base is that going up >> oh, sure, it's going to go up hopefully it goes up slower than our peer group, but to your question, if you're making decisions now, you're probably too late on many of those decisions. the biggest part of weathering the storm, those were decisions

made two, three years ago. for triumph, what we do now is continue to focus on what we do well we bank main street in the markets we serve and we bank truckers that's what we know, what we built this institution to do, and we need to serve both of those markets, whatever comes. so that's what we will continue to do. >> you're making decisions now, you're making them too late. that resonates today aaron, thank you so much for your time. >> thank you by the way, if you're looking for advice on how your business can handle inflation and navigate any uncertain economy, our cnbc playbook is happening this thursday, may 4 still coming up here, mortgage rates are back on the rise so are home prices in some areas. what that means for housing. and take a look at shares here of chegg, it's worst day since

november of '21. so they're not unfamiliar with volatility, but they blamed chatgbt and ai for slowing customer growth. the ceo will be on "closing bell" at 4:00 p.m. eastern n'day. dot miss it.

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welcome back, everybody. home buyers beware home prices are heating up again. what has it moving higher? let's get to diane with a look at that. >> reporter: yeah, there's a couple of things consumers are getting used to a higher rate, and a drop in new listings in the heart of the spring housing market. 30% fewer listings came on in march compared to prepandemic norms. this is when demand is historically highest home prices rose 0.45% from february, according to an early

look at the black night home price indecision, provided to us after revisions to january and february, this is the third consecutive month of price increases. while this is the national look, major markets in the west, where prices were the most overheated, are still coming down but not as steeply as they had been prices overall have dropped month to month last years the average on the 30-year fixed mortgage rose sharply. last june, prices were cooling at the fastest price on record then rates peaked last october and started to come down at the start of this year, causing a major bump in home sales, but not a big bump in supply because the majority of current homeowners are paying low home rates. this is especially true of baby boomers who would normally be down sizing now, but they're not. >> absolutely. i thought i read affordability is at its worst point because

prices keep rising and rates are higher >> you have the higher rates, which people are sort of getting used to. they are just adjusting the size and maybe the location of the home they want to buy. but if prices keep firming up, it's just more trouble for the market >> diana, thank you. still ahead, netflix, google, apple all lower today as the market fell off, but they're all streaming standouts according to a new survey. it was this name that saw the largest increase in users the past year. one of the only mega cap names in the green today and chris davis mentioned it top of the hour right here on "the exchange," we'll reveal it and whether it canol hd on to that top spot. that's next. agine, a car that gs as far as it does fast. as sleek as it is spacious. as smart as it is beautiful.

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welcome back to "the exchange." media stocks getting caught up in the sell-off today as netflix, disney and warner brothers are lower it's the discretionary consumer spending you'd expect to pinch heading into a possible recession. morgan stanley's media survey shows consumers are continuing to increase the number of active subscriptions they have, and netflix remains number one in streaming despite hiking prices. but it was amazon that saw the biggest nearly increase in

usage. for more, let's bring in the head of u.s.stanley. good to see you, ben what jumps out about amazon. >> good to see you thanks for having me on. look, i think the headline for us on the amazon front is probably the impact of sports. thursday night football, as you probably know, made its debut exclusively on prime last fall that seems to us to be probably the biggest driver of the increase i think it is a big debate for investors, particularly as we come back to netflix, whether or not live sports, you know, makes a big difference we did ask consumers, for example, about apple tv plus, which is still kind of a niche service in terms of penetration. how much would sports matter we saw a significant increase in intent to sign up if live sports were included. those are some of the things that are interesting about our survey this year. >> although, netflix, you know, what was the dating show they couldn't get the sunday night -- "love is blind.

anyway, a long road ahead. overall, the findings of the survey, respondents report using 3.2 paid streaming services, up from 2.9 last year was this the first time we cracrac ed three, or were we previously there? >> it is interesting we titled the survey, reaching adole adolescence, because it was the 13th year of our survey. mostly, there's no way we could actually, as americans, stream more, pay for more, and we saw every service see increases in year-over-year usage pretty much we saw the number of paid subscriptions rise 10% to, you got it, 3.2 per user, which was a new all-time high. >> wow so the question is, how much can it keep growing? you know, many industries, you get to three or four major players, how much consolidation is implied if it can't really grow much beyond this? >> yeah, i think a significant amount you make a great point the thing we try at morgan stanley to highlight to investors all the time is that the tv business, streaming

business, however you consume your content, does not have a demand problem this survey reinforces that. consumers are spending more money and time on streaming and on video and tv, more than ever before it has a major cost problem. outside of netflix, the rest of the traditional media companies, like disney, paramount, warner brothers, discovery, so far have not figured out how to create a profitable streaming business. that's the project at hand that ultimately often leads to consolidation, to your point. >> right, absolutely what about apple obviously, they're about to report you think people would subscribe if, again, they offered live sports >> yeah, we're very bullish on sports as public equities if we can find them. our top pick is endeavor we have an overweight rating on formula one. we think sports properties, if you can find them in the public markets, are attractive places to invest in tmf because they're one of a kind.

there's one of these sports, and they tend to be increasingly global in nature i think the competition among all the platforms we surveyed for sports content is only going to continue to grow. apple has a, you know, fairly landmark global mls deal that started this season. all eye, at least in our world, kelly, are on the upcoming nba rem remonewa renewal. >> absolutely. >> i heard, and alex sherman here reported well on this, it's like the last big one up for a while. do you expect prices to ratchet higher what does it mean for the economics of the companies one hand, we're talking about streaming beneficiaries. if the cost goes up because they have to pile up into sports, i can't imagine what it does to profitability, which is already an issue i appreciate the frowny face, the blue screen of death strikes again. that was ben swinburne reaching adolescence about the streaming service providers, he says market looking better.

dow was down to a 400 point decline. more coverage in a moment on "power lunch "nasdaq, s&p and dow down 1% regional banks are the worry spot fed day tomorrow at 1:00 p.m. eastern, senators warren and kennedy will join tyler mathisen and i, d.c. before all that, ashton kutcher is going all in, launching a $240 million a.i he is always ahead of the curve. remember twitter he'll join us live tyler is getting ready for it, and i'll join him on the other side of th bakisre

♪ good afternoon, everybody. welcome to "power lunch. with kelly evans, i'm tyler mathisen we're having a big market day right now. it is lower, as you will see, by about 1% on the dow, but it was

worse earlier. roughly 1% declines, as well, for the s&p 500 and nasdaq. >> yeah, once again, we're watching the regionalen banks they're getting crushed again. the first public rescue is not stopping the slide also, oil down nearly 5% hurt in part by the likelihood of another fed rate hike tomorrow we'll hit the market-moving stories. first, the latest leg of the bank slide leslie >> hey, kel, regional banks in focus again as the market digested the fallout of the first republic failure and sale to jpmorgan. down a little more than 6% co a coamerica, western alliance, zions and keycorp leading the downs today. it is the real estate exposure, level of uninsured deposits, various factors and variables causing them to sell-off the bearish thesis