welcome to ""power lunch." i'm dominic chew alongside with kelly evans filling in for tyler mathisen we are watching everything going on in the regional bank. pacwest, western alliance getting absolutely crushed pacwest says it's weighing a possible sale at least sale of assets western alliance says it is not, absolutely not, kel. >> both of those stocks down big as you can see apple down fractionally. we'll get you ready for the big report as we take a look at the broader markets which despite the turmoil, it's moved off the low. >> we were down 40 points and we're down 20 points now let's get right into the latest leg of this banking crisis joining us now is leslie picker. leslie, i think what's the state of play is the best question

because at this point there are so many statements which is, i guess, good that these banks are getting out on the record and saying something >> yeah, it's definitely welcome for reporters like us. western alliance is off the lows but steeply lower after putting out a statement saying it's not for sale it hasn't hired advisers and an ft report suggesting otherwise is false pacwest has a separate statement this morning reiterating our reporting from last night that it has hired advisers to explore strategic options including a sale i'm told those advisers are piper, sandler and stooiephens d that they've had talks with partners on the investment side rather than a strategic buyer. the stock price plummets as well down about 44% right now first horizon also sharply lower

today after the bank announced this mornings that their $13 billion merger agreement with t.d. bank was terminated over a lack of regulatory time line for approval in speaking with sources close to this one, it's my understanding td has not communicated to first horizons the nature of the regulatory holdup but reports in march suggested investors had been pressuring td to abandon the tieup that highlighted vulnerabilities. the regulatory problems could be a welcome coincidence for them as one analyst said, the stock is not the bank. in other words, deposits appear to be largely stable as are the load to the bank ratios. short sellers are behind it. we'll see once the dust settles exactly how this all transpired and what's left, guys. >> leslie, stay with us. what is the next step in this

crisis many are claiming the fed is in way over its head unable to remedy the situation alone as a matter of fact, former fdic chair sheila baer saying regional banks should have a temporary unlimited guarantee for transaction accounts let's bring in were erin clyne and hugh san you think they should take bank supervision away from the fed? >> any organization can only have one number one priority they used to call it their telos. for the federal reserve, that's monetary policy. that is as it always will be bank regulation is going to fight to be second fiddle at the fed and the fed's own report on svb said it created problems that left regulators or unwilling to challenge bank ceos how many more regulatory failures on the fed's watch do

we question whether or not the fed is right for this job? >> hugh, this has opened up a lot of concern about what the health of the overall regional banking sector is. we know that there are those who believe that the regional banking crisis now is not about deposits, it is very much about the market and short sellers is there any way that the banks can win in this kind of a situation even if they put up their strong numbers, stable deposit bases? are short sellers able to assail them no matter what the fundamentals are >> dom, great to be with you the market has divorced itself from the fundamentals. how do we know that? svb, first republic, both banks failed because as we learned later, 60 to 80% of their deposit base had fled in a very short amount of time take a look at pacwest in the 1q they lost 70% and

gained some in the intervening weeks. their deposit base is relatively stable compared to other situations what does that tell you? it tells you if this situation we're going through with pacwest and other banks has nothing to do with fundamentals, what's going to make it stop? the two things analysts and investors point out, the way they put the fire out in regional banks is to do one of two things one, fdic insurance, blanket either expanded vastly or have much higher limits than today or, two, a ban on short selling and, you know, there doesn't seem to be that much indication that either is imminent and so we are in a situation we're going to see this happen the play for short sellers is very clear you know, push a bank to the brink, profit from that, find another rinse and repeat, dom. >> to that point, aaron, let me turn to you as well. on that policy question, there's two things in the air right now.

there's the idea of raising deposit insurance for transaction accounts and maybe not and the question of whether banning short selling is going to be the next move here >> so raising the deposit insurance cap is the wrong move. 90% of americans have every dollar in their bank account insured. raising the number from 250 to 500 or a million isn't going to stop the issue of the uninsured which are often very long people svp didn't bank people most of these have 1,000 bank giant tech firms, roku, circle, et cetera. that's not going to be solved. blanket lien on all transaction accounts, congress could consider that. raising the insurance deposit limit is a wrong move. ultimately that's paid back in fees by you and i and regular americans. >> it is what sheila baer called

for last hour. i'm curious -- we understand there would be a cost associated with it, but the argument is if you don't do that, then you're going to continue to kind of worsen the fortunes of small and regional banks across moerk and leave only the biggest that are being perceived as safe. >> i'm not sure i agree with that outcome america has 4,000 banks, we're talking about the failure of four or five of them banks that were poorly managed, took on interest risk, that went well over their skis so a temporary guarantee of that, to the extent they're divorced by fundamentals, where this were would solve these problems if it's divorced from fundamentals look, congress all the to consider it. we rewrote the law in 2010 to say congress gets a vote in

this let's see where the votes are. >> leslie, you came back from a leave into a banking crisis to a beat in banks that has now seen some of the biggest turmoil since the great financial crisis you've been working the phones a lot, i know you, because this is what you do working these banks. what's the general sense about which way the winds are blowing now? is there a feeling like the ceos at western united states banks are able to fight off the barbarians at the gate or the hedge funds and short sellers are on the urge to really get some momentum around that. >> thank you, dom, for covering when i was out in talking with the ceos at regional banks right now, they pretty much unanimous live predict the short sellers. with regard to first republic, jpmorgan, equity was wiped out

they made a lot of money on that trade. they see it as a profitable trade to get into and they're piling into other areas as well. we've seen short interest tick up massive put options expire tomorrow in pacwest which could contribute to some of the volatility there that's the ceo camp. on the investor side of things, a lot of the investors -- not all of them, but a lot of them see it where there are too many regional banks could be consolidation there could be additional failures it's hard to say which one ultimately pans out. there is a clear bifurcation. >> much first republic was a zombie bank and walking dead

short sellers saw the zombie and attacked >> so are we then to presume the share price declines all reflect an accurate assessment of all of the small and regional banks >> not at all, no more than the fact that silicon valley bank was trading at 200 bucks a share the week before it failed. equity markets are not knowing all things they trade on momentum and other things like that my point is the short sellers saw a zombie bank in first republic whose problems have been known in weeks and they attacked it. that's what happens when you allow zombie banks to live these other ones aren't necessarily zombie banks but first republic was. >> if you are right about that, they better come in in droves. >> leslie picker, i'm trying to figure out which floors. >> at "30 rock." >> i think leslie's a little

higher >> thank you all we really appreciate it. we want to draw your attention to a shot outside the white house where vice president harris just wrapped up a meeting on artificial intelligence a.i. ceos are there. president biden did make a brief appearance sam altman will be on "squawk box" tomorrow morning at 8 a.m. >> chatgpt man. the dominos keep falling in the regional bank space. seemingly one of them by one of them by one of them we see them. is there a pattern emerging? does it go beyond just the simple deposit flight story? chris maranack is director of janney montgomery scott. janney looks at these things from a more holistic point of view kelly had a great question in the past segment about whether

or not there are banks out there whose prospects are being foretold by their stock price because it looks terrible for every single bank out there? >> well, i disagree with the narrative, i disagree with a lot of the narrative that have come out in the past 24 hours i think the banks are much better making money this past quarter and banks having higher liquidity today than they did in early march. the idea that the stocks are foretelling something i think is incorrect. we have banks being used as weapons of destruction it's sad, it's disgusting, it's where we are the information flow from the banks has been wide open i think the information of pacwest andwestern alliance is very helpful and honest. it's where the companies are they're stable their deposits aren't running yet the short sale marketplace and negativity is driving the idea that there are going to be

outflows happening that hasn't happened we did see outflows at first republic that's a mediation and it took the company down it's a much different story at pacwest and western alliance the capital levels are strong enough not only for them to survive, but to continue to work forward on their strategic plans. pacwest had a game plan in place long before silicon valley was ever known to be a fill-in bank. >> i want to extend this conversation only because i was the one at cnbc staffed with covering western alliance bank and pacwest and be first republic on earnings i remember first republic aside, let's focus on pacwest and western alliance, i was the one who kind of went into the earnings reports and i talked to people in the wake of them and they all thought it was over and

we saw the last 48 hours happen. how do you describe this could that also happen to a western alliance or pacwest? >> sure. there's a fear i would never say never. anything is possible i put it at less than 10% only because the companies have raised liquidity to raise what is around the corner i think the depositors are a lot calmer than people understand. that's true for the entire industry let alone western alliance and pacwest. >> as we leave it here, people are trying to figure out what's going to contain this. do you think what sheila baer -- >> i think dusting it off and bringing it back would make

sense. i think the short sale ban should also be dusted off. that was helpful it's unfortunate that we're here, but we are we should consider changing gears because it's really unfortunate to have the industry that provides liquidity to households be damaged. >> a short ban will cause a near term short squeeze or a day or two reprieve but will do nothing in the long term is that right? >> i disagree because the fundamentals are way better. banks have less leverage we're lending on 55, 60 cents on the dollar where we were lending all day on 100%. there are losses in the banking industry, everybody needs to deal with them so i think the banks can handle their own issues and honestly i

think the marketplace has not been reading the wide disclosures and the deep details banks are giving which is way better today than it was 15 years ago. >> thanks for joining us today appreciate all your time. >> thank you as well. >> chris marinac. still to come on "power lunch," we'll talk more about the problems with regional banks. if dimon can get a deposit waiver, can any big bank we'll speak with former wells fargo ceo. outside the banks, apple arguably the most important stock in the market is on deck for earnings later on tonight. so far tech earnings have been fairly positive this season amid the darkening macro outlook. we'll discuss what to learn with apple earnings. the white house hearing more we saw the key a.i. techs leaving their etmeing with vice president harris

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welcome back, everybody. the ceos of alphabet, microsoft and more meeting with vice president harris at the white house to discuss a.i the president dropped in i want to know all about this drop in. deidre bosa has more is it the nature of his drop in?

did he say something in passing? >> reporter: i wish i knew to be a fly on the wall. in the morning we saw the arrivals from some of the biggest names in tech. you named two of them. coo of alphabet and the head of microsoft. sam altman founder of open a.i. and chatgpt. vice president kamala harris hosted them in the roosevelt room yes, we did hear that the president dropped by as well why? well, the stakes are so high here if generative a.i. is the biggest platform shift, or as they put it, more important than fire and electricity, washington better get on it time and time again we've seen technology develop faster than government policy. government is trying to take early action and be ahead of it. the white house announced a number of actions around a

including research hubs. the v.p. said, the private sector has an ethical, moral and legal responsibility to ensure the safety and security of their products and, you know, guys, the private sector public pointing the finger back to the public saying that they have this responsibility as well. they're all trying to figure it out as it moves so very quickly, something i think i say every day on this program. >> lena khan had that in "the new york times", op ed, if you had to guess, deidre, as we read through the comments there is this meeting at the white house. this is all pointing in the direction of some kind of platform legislation coming. they realize they have to get ahead of it. it's already growing so quickly. >> they've got to get ahead of it because of so many missed opportunities in the past on areas like social media. i'm skeptical, and i think many are skeptical, maybe that's warranted, because the technology just developed so, so quickly and public policy takes

so much longer to develop. but maybe encouragement perhaps that this meeting happened today. you can point to the fact that players like apple, amazon, nvidia weren't there they're going to be part of the platform shift as well at least the government is doing something. at least they're putting money into it and looking at the guidelines and asking for feedback so perhaps this is a much better chance of being seen in the past. some of the coos, biggest players in the space will say, at least the alarm is being sounded. >> are there any awkwardness, google saying they're the problem, no, they started it they thunt have let this out of the bag. >> are this is the perfect way to bring it up, kelly. the biggest balance sheet of all of them, and deidre mentioned, is not there apple. they report after the bell dead dre, is there a scuttlebutt out there in the valley, bay area, about apple and its a.i. ambitions, what it could look

like and coming quarters and years? >> i don't think that anyone doubts apple is going to be a player here. you had tim cook referring to its secret car project saying it's the mother of all a.i. projects it's developing its platforms. the four players being used today, bard, microsoft, chatcha. you'll want to watch tonight what apple, what tim cook has to say about their efforts. i think it was only mentioned five times on the last earnings call but you can bet it's going to be mentioned today. >> i think it was mentioned dozens of times between microsoft and alphabet >> dozened and dozens. see you soon. >> paramounting problems

see what i did there is this a bad omen for the streaming industry overall plus, macy's shares lower today. working on a big move away frth strategic markets. as sleek as it is spacious. as smart as it is beautiful. introducing lucid air. experience the best. ♪ ♪

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welcome back to "power lunch. what you're seeing now are shares of paramount sinking more than 20%, 25% at this stage. the weak results there showing some potentially troubling signs for the streaming industry overall. let's get out to julia boorstin with the stock down, again, nearly 25% for what the story is or isn't. >> well, dom, after the company missed on the top and bottom line, paramount shares are down 25%. nearly giving up all of this year's gains the stock is now up just about 1% year to date. concerns about a weak ad market. content licensing shortfalls and peak streaming losses this year

outweighing the company's subscriber growth in the streaming space and also increasing some of its 2024 subscriber goals 46% of analysts have a sell rating on paramount. 29% have a hold and 1/4 have a buy. they think of them writing, quote, it takes the company one step closer to further asset sales or potential total company sale should the underlying media. and it's sending warner, brothers, fox and disney shares all plummeting even further today. disney is bullish. 41% are hold we are watching out for the earnings tomorrow morning. >> julia boorstin with the latest on paramount and streaming overall. we're watching the macro

bond yields. shorter maturities rick santelli in chicago with the markets? >> now mid the long maturities are higher in yield on the session. the let's start with 2-year notes on top of the kbw index. there's the chart. we can see what's driving the short duration into higher prices and it's been a bank to a normal more trade and poil si. now look at how this has been affected in 2-year note yield. we've seen minus 35 to minus 5 it may be the least inverted

when it's only 37. thes would have been done. five 1/4 is nervousness in another mogul in the treasury complex, the debt issue. the highest yield close, what has that done? whoop for yourself at the close, back to you. >> rick santelli, thank you for that. ahead on "power lunch," the dow down 300 points. declined -- >> we've still got an hour and a half of trading left to go, kel. >> we do if you told me this is what it was going to do,we're waiting

for apple earnings we to have a stable environment. what about a.i.? we'll be back with more if you're on "power lunch." how's the chicken? the prawns are delicious. oh, i have a shellfish allergy.

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welcome back to "power lunch. apple is set to report after the closing bell the consensus is for a drop in revenue for the second straight quarter amid falling demand for both pcs and smart phones. the stock is up 30% for this year how will this tech giant's earnings match with others let's bring in chris sanghar, analyst at cowan and covers apple. chris, we largely expect that most businesses are going to have revenue declines year over year they pretty much told us that in january. so what's going to move the needle >> yeah, hey, dom. thanks for having me like you mentioned, yeah, they kind of said revenue, something will be done year over year in march. we are monitoring growth in june on a relative basis year over year we have it up 2 1/2 parts and

june tends to be the weakest in terms of iphones and purging of the iphone inventory so i think what analysts will be looking at is reading the guidance of being revenue commentary on iphone demand. i think fx is less of a demand now it's not a big concern i know at the margin, any kind of commentary on services, new store in india >> we were talking about paramount. maybe apple would buy it, maybe this, maybe that as steve coukovac was pointing t maybe apple would buy it no, they're not.

as we're all watching what's been a fun series between budgeting teams in early playoffs, do you have a comment on that? would it be worth it >> you know, it's tough to say to be completely honest. and we have that much catch with such a strong balance sheet, the world is your oyster focus on the media side. i have no idea whether they will make a bid or not. going into the earnings season i think people have speculated apple buying anything and everything given their robust balance sheet. it's hard to speculate sitting here. >> he's probably right not to. apple was reportedly in the running for "sunday ticket" in the nfl. alphabet got it instead. they had the money, they didn't

spend it. >> there's not limitless packages. >> there is not. that's the thing if apple is going to spend their money, what is it going to be on where do you deploy that cash? >> if you look at what they've done, on a relative basis of the last seven years, you mentioned "sunday ticket." i feel like there are a lot of options you could go through increment a new product. headsets, ar/vr. we're doing it in a very conscious way of approaching it.

the dividend, they've done at a steady cadence in the april or may time frame there is one aspect where they want to. dividends and buy backs. it's an equal opportunity. investment in organic. >> i think you're right that capital return, shareholder return be is something to lean on for sure. krish, we'll leave it there for now. thank you. >> thanks for having me. contagion concerns, pacwest and western alliance we'll discuss what's at stake for with the former ceo at wells fargo. sharing stories of business leaders across their community here's meta's head of social

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welcome back macy's trying to adapt to the retail environment melissa repko visited two new store designs, one in atlanta and one in fairfax, virginia the this seems very off brand. this is the future though? >> yes these are called market by macy's and called bloomies they're 1/5 the size of a typical store in the mall. macy's is looking for a way to

drive higher sales and excite investors from dying malls shares have under performed the s&p 500 and the retail focused xrt. sales at the new smaller stores outperformed macy's larger stores in the holiday quarter. they said proximity to grocers and off priced retailers is drawing traffic. >> the market by macy's really dial in more so on to discovery and to convenience they're local. they're easy to get to the format is simple to shop >> and the retailer hopes to appeal to a new generation, including many millennials who moved to the suburbs during the pandemic bloomies has special attractions where they can order wine to sip while they shop. >> new consumers, younger consumers are not necessarily as inclined towards kind of the fortress mall experience as their parents may have been. so providing alternatives.

you know, and that's really what bloomies is. >> the company has ten off malow cases and plans to open five more this fiscal year. ceo told me it will be a pivotal year for the off mall strategy as it wraps up testing and decides on strategy by year's end. >> i've been to walmart neighborhood stores, the smaller format ones. this seems kind of like that same concept but is it -- can we call it the final nail in the coffin of traditional brick and mortar retail, that these big shopping mall type centers are done and we're focused on the small stuff now. >> macy's said the big anchor stores are still part of the future but they want to go to where the action is, which is the suburbs. they've done buy online and pick up in the store. the challenge they'll have to strike is to be complementary rather than moving sales to the mall and off mall and not adding sales. they've talked about how they're going to try to avoid

cannibalizing by having a different mix of things. going after a newer shopper that may not shop at the mall stores. >> melissa repko, thank you. while macy's finding opportunity on the struggling reit space, office space no such luck empty office space hitting a new record robert frank the empty empire state buildings one. i don't know if you have that still in your head was it 70 empty empire state buildings? >> this matters. manhattan is the largest commercial market in the country. lots of eyes on the commercial market as it relates to the regional banks we just had numbers, 94 million square feet of empty space that is an all-time record that is equal to 37 empty empire state buildings. if you look at the overall vacancy rate, we're now at 17% that is also a record. the number of new leases declined 44% in most recent month over last year and you look at the reit stocks, you

look at s.l. green, cornado, empire state realty, they're at 52-week lows they had a moment of optimism where maybe people would come backto work. 48% is basically the limit we've seen in manhattan for the office occupancy by workers horseback to work. we haven't been able to get past the 50% number. >> two crosscurrents on the one hand we have people who might have to come back to work now maybe we can punch above that level. on the other hand, if you start to see broader layoffs coming in head count reductions. >> especially in banks and tech. >> exactly great point. that can't be great for the trends either. >> you see goldman sachs, its expansions are all in texas and florida. whether they're layoffs or not, the expansions, the marginal buyer is now outside of new york city coupled with the financial issues where unless you're in a

brand-new class a, class b and class c you're headed to a cliff. the owners say i have to put a ton of money into the building or just give it back to the bank that's why the class b and class cs olding buildings, that is a lot of supply. they don't get a lot of attention. >> we'll see a lot much people handing it back, defaulting and walking away. >> absolutely. the regional bank etf, the kre is sliding 15% this week and facing its worst fear ever, ever in existence one analytics firm is estimating short sellers have raked in nearly $400 million in paper profits just betting against it, first horizon, pacwest and western alliance today former wells ceo says this is all a short squeeze, not a systemic issue it's a short problem he'll explain why that tsis heis

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western alliance is recovering a bit after denying it was considering a sale jpmorgan chase earlier this week rescued first republic beware the unintended consequences our next guest thinks the government needs to help customers of the small banks feel safer let's bring in the former wells fargo ceo. good to have you here. your perspectives are welcome. you've seen it before. take us through the big ba bank/mall bank dynamic jpmorgan chase almost gost a dispensation to become bigger. what's going to happen >> it's unfortunate if that's the case we've had some bank failures, particularly those who were concentrated and didn't have -- who had a lot of depositors who

were large depositors and over the $250,000 limit many of them at 70 or 80% of their deposits and they failed that's not the case for most small banks in the country they are not concentrated. they have many small depositors and they're well capitalized they're profitable they have liquidity. they don't deserve to be considered to be in any way, in my opinion, to be likely to fail but depositors are concerned and they put their money with larger banks. that's not good. we need all banks of all shapes and sizes. >> is this an existential enough crisis to force the word i've been hearing so much,

consolidation? that is to say that many of the small and medium size banks have to get married with each other because it's the only way they can survive a crisis like this is that the only way out >> i don't think so. i think this is not a systemic problem. there's so much publicity put on the media as a result of this and this will blow over as people see that, in fact, most all the banks today, except for a few, their deposits have stabilized they're doing business customers are coming back. there's a much of short sellers out there collaborating and taking one bank at a time and seeing if they can bring it down and make some money in the interim. >> dick, i just want to be clear. you think that the shorts could get -- last hour we had sheila

baron and she made some of the same comments. she thought the selling pressure was overdone and some of the regional banks could be a buying opportunity. i would like to hear your thoughts on that whether we debate whether short selling should be banned. >> i've been buying banks all morning. >> which ones, pacwest >> i don't think i should say. you have very, very good banks with p.e. ratios below ten, some at eight their yields on their dividends are 5, 6 and some even at 7% they've been -- it's unwarranted that, indeed, we have this pressure doesn't make any sense and i think it will blow over and those that picked up these banks at these prices are going to have some good gains.

>> do you think we need to raise deposit insurance? you think we should raise the limit, but also give people a penalty for taking all their money out right away >> the risk is moral hazard. the moral hazard is if you raise the deposit insurance to such a level that no one pays attention to the risk at their bank, then we'll have people who are -- have banks that go under, a lot of them, and there's no consequence to the depositor we have to do two things the first is the operating accounts of businesses, the accounts that are used for payroll, paying their suppliers and so on. $250,000, even in a small

business, needs more than $250,000 in order to be sure they meet payroll, yet alone large businesses who need $10 million. i think we have to raise the insurance for operating accounts at no interest, checking accounts with no interest, to maybe 5 or $10 million so that the customers of the small banks feel they can put their operating accounts in a small bank and don't have to give them to big banks in order to protect from moral hazard, we may have to raise the $250,000 to some level, but not to a high level. >> sure. >> i think what we need to do is, when a bank fails and there are depositors over $250,000, you give them the option, the option to get their money back

with a 20% discount so the deposits -- >> immediate liquidity. >> exactly. >> brings into focus dack, thanks for your time toy. we appreciate it former ceo of wells fargo. former ceo of wells fargo. more after the break with its customizable options chain, easy-to-use tools and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. e*trade from morgan stanley. power e*trade's easy-to-use tools make complex trading less complicated. custom scans help you find new trading opportunities, while an earnings tool helps you plan your trades and stay on top of the market. e*trade from morn stanley.

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do not miss a special cnbc event live from omaha, nebraska. mike santoli speaks with thomas russo. head over to cnbc.com at 11:30 a.m. eastern time. >> that does it for "power lunch," everybody. guys, thanks welcome to "closing bell." i'm scott wapner apple earnings, the final fang to report. there's your countdown clock little more than an hour and a half stocks remain unsettled after another rate hike from the fed more turmoil around the regional banks. here's your score card with 60 minutes to go. the dow weaker several household names come under