anyway, in any case, i continue to think that it's possible that this time is really different. and the reason is there's just so much excess demand really in the labor market. it's interesting as, you know, we raise rates by five percentage points in 14 month, and the unemployment rate's 3.5%. pretty much where it was, even lower than where it was when we started. so job openings are still very, very high. we see by surveys and much, much evidence that conditions are cooling gradually. but it really is different -- charles: jay powell. and, you know, he's really, really focused on this jobs market. that seems to really is have him so perplexed, for lack of a better word. he he talks about it being robust, excess i demand and really not being able to get to where he wants to be there. liz claman, i think this is going to be the wildcard, we hand it over to you. liz: absolutely. we're about to go back live to the news conference at the federal reserve, but we need to

show you just telling you how confused the markets are by not the widely expected 25 the basis point rate hike, but by chair jay powell's comments. if you look at the dow intraday chart, it has crossed the unchanged line 1367 times since -- 137 times since the unanimous decision to tighten rates for a 10th time. right now the dow jones industrials up 13 points, the s&p dipped briefly in the red. the nasdaq's actually been up the whole session, but powell could not be more clear. he has already stressed many three different ways that during the news conference that inflation remains elevated, and the committee remains highly attentive to inflation risks. he did concede that the fed had seen the effect of our policy tightening, meaning their policy tightening, on demand in some sectors. but elsewhere restoring price stability, meaning quelling inflation, is essential let's go back to the news conference. >> sure. so we look at at a range of wage measures, and then -- that's nominal. so you assume wages should be

equal to productivity increases plus inflation. and so you can look at, you know, the employment compensation index average hourly earnings, the atlanta wage tracker, compensation per hour, basically those four, and many others, and you can look at what they would have to run at over a long period of time for that to be consistent with 2 inflation. they can deviate, you know, corporate margins are can go up and down. there is a feature of long expansions where they do go down, labor gets a bigger share later in a recession. sorry, later in an expansion. so, yeah, you know, and we calculate those, and you have to take the precision with a degree of salt. but i would say that what they will show is that, you know, if the, if wages are running at 5%, 3% is closer to where they need to be. wage increases closer to 3% roughly is what it would take to

be consistent with inflation over a longer period of time. >> reporter: -- >> by the way, i do not think wages are the principal driver of inflation. i think there are many things. wages and prices tend to move together, and it's very hard to say what's causing what. but i never said that, you know, that wages are really the principal if driver because i don't think that's really right. >> reporter: great. chris -- at associated press. you mentioned profit margins, those have expanded, did expand sharply during this inflationary period. and while there are some signs that they are starting to decline, many economists note they haven't fallen as much as might be expected given that we're seeing at least some pullback among consumer spending. so speaking of causes of inflation, do you see expanded profit margins as a driver of higher prices, and if so, would you expect them to narrow soon and contribute to reduced inflation in the coming months? >> so higher profits and higher

margins are what happens when you have an imbalance between supply and demand. too much demand, not enough supply. and we've been in a situation in many parts of the economy where supply has been fixed or not flexible enough. and so, you know, the way the market clears is through higher prices. is so to get -- i think as goods pipelines have gotten, you know, back to normal so that we don't have the long waits and the shortages and that kind of thing, i think you will see inflation come down, and you'll see corporate margins coming down as a result of return of full competition where there's enough supply to meet demand. and then it's, then you're really back to full competition. that would be the dynamic i would expect. >> michael. >> reporter: michael mckeon from bloomberg radio and television. can you tell us something about what your policy reaction function is, your policy

framework is going forward? when you look at the economy at the next meeting, are you looking at incoming data which is by definition backward-looking? are you going to be the forecasting what you think is going to the happen? are you ruling out the rate cuts that the market has priced in? >> didn't catch the last part, ruling -- >> reporter: markets have priced in rate cuts by the end of the year. do you -- >> yes, sorry, sorry. got it. we look at a combination of data and forecasts. of course, the whole idea is to create a good forecast based on what you see in the data. so we're always looking at both. you know, and it will, of course, it'll be the obvious things. it'll be readings on inflation, it'll be readings on wages, on economic growth, on the labor market. and all of those many things. i think a particular focus for us going now over the past 6, 7 weeks now and going forward is going to be what's happening

with credit tightening. are small and medium-sized banks tightening credit standards, and is that having an effect on loans, on lending. and, you know, so we can begin to to the assess -- to assess how that fits in with monetary policy. that'll be an important thing. i just, you know, we'll be looking at everything. it's, again, i would just point out we've raised rates by 5 percentage points, we are shrinking the balance sheet9, and now we have credit conditions tightening not just in the normal way, but perhaps a little bit more due to the what's happened. and we have to factor all of that in and make our assessment of, you know, of whether our policy stance is sufficiently restrictive, and we have to do in that in a world where policy works with long and variable laggings. so so this is challenging, but, you know, we will make do our assessment, and that's's what we'll be thinking. >> reporter: what about the idea of rate cuts? >> yeah.

so we, on the committee, have a view that inflation is going to come down not so quickly, that it'll take some time. and in that world if that forecast is broadly right, it would not be appropriate to cut rates, and we won't cut rates. if you have a different forecast can, then, you know, markets have been from time to time pricing in, you know, quite rapid reductions in inflation. you know, we factor that the in. but that's not our forecast. and, of course, the history of the last two years has been very much that inflation moves down particularly now if you look at non-housing services. it really hasn't moved much, and it's quite stable. and, you know, so we think we'll have to, demand will have to weaken a little bit, and labor market conditions may have to to soften a bit more to begin to see progress there. and again, in that world it wouldn't be appropriate for us

to cut rates. >> courtney? >> reporter: courtney brown from axios. i'm curious how you view the role of the overnight reverse repo facility in the context of the current banking stress. do you think it's contributing to the stress by making it more aattractive for money market funds to compete with banks for deposits? and did the committee discuss any changes to the structure of the facility, or do you see the that being put on the table in the future? thanks. >> sure. is so we looked at that very carefully, as you would imagine. and, you know,stst the really not contributing, we don't think now. it hasn't actually been growing. it moves down and then moved back up to where services. where it was. what happened when there were the big deposit flows which, by the way, have stable the eyesed now, what happened was -- stabilized now. institutional investors put it in money market funds which

bought paper from the bank -- over the course of the last year, retail investors have been gradually, as hay do in every tightening cycle, they've been gradually moving their posits into higher yielding places such as cds and other things including money market funds. so that's quite natural and happens during a tight thing cycle. what was unusual really was the institutional investors moving their uninsured deposits and spreading them around, things like that. but it doesn't seem to have had any effect overall on the overnight repo facility. that is really there to help us keep rates where they're supposed to be, and it's serving that purpose very well. >> [inaudible] >> reporter: sara -- cbs news. i want to go back to the debt ceiling for a moment. i know you talked about that in terms of fiscal policy, but can you just speak towards what the impact of a default would mean for americans across the country, the markets and

borrowing? >> yeah, i would el just say -- i would just say it's, i don't think we should be, we shouldn't even be talking about a world many in which the u.s. doesn't pay its bills. it just shouldn't be a thing. and, again, i would just say we don't -- no one should assume that the fed can do, can really protect the economy and the financial system and our rep asian the globally from -- reputation globally from the damage that such an event might inflict. >> scott. >> reporter: thanks, mr. chairman, scott -- from npr. in his report last year, vice chair barr identified a couple of factors that the he thought contributed to the supervisory lapses at silicon valley bank. policy change in 2019 to exempt all but the biggestbacks from strict scrutiny concern banks from strict scrutiny and what he called a sort of cultural shift towards less aggressive

oversight. you were here in 2019. do you share that view, and what would it take to get the stronger oversight that you and he said in your release would be necessary? >> so i, i didn't, i didn't take part in creating the report or doing the work, but i do -- i have read, of course, and i find it persuasive. i mean, i would say it this way: a very large, a large bank, not a very large bank, a large bank failed quite suddenly and unexpectedly in a way that threatened to spread contagion into the financial system. i think the only thing that i'm really focused on is to understand what went wrong, what happened, and identify what we need to do to address that. some of that is, it may just have been technology evolving, you know, we have to keep up with all that, but some of it may be our policies and supervisory and regulatory,

whatever. what our job is now is identify those things and implement them. and that's kind of the only thing i care about. and i feel like i am accountable for doing everything i can to the make sure that happens. >> [inaudible] >> reporter: thank you. evan riser with mni market news. chair powell, are we in the early stage or nearing the end stage of the banking turmoil among regional banks? and we couldly -- secondly, do you still have a biases to tighten rates? is that what the statement is saying? >> so i guess i would, i guess i would say it this way: there were three large banks really from the very beginning that were at the heart of the stress that we, that we saw in early march, the severe period of stress. those have now all been resolved, and all the depositors

have been protected. i think that the resolution and sale of first republic kind of draws a line under that period of -- is an important step toward drawing a line under that period of severe stress, okay? i also think we are very positioned -- focused on what's happening with credit availability, particularly, you know, with what you saw in the beige book and you will see in the sluice, is small, medium-sized and small banks who are feeling that that they need to tighten credit standards, build liquidity, what's going to be the macroeconomic effect of that. more broadly, we will continue to very carefully monitor what's going on in the banking system, and we'll factor that assessment into our decisions in an important way going forward. >> greg. >> reporter: thank you, fed chairman. greg -- from market watch. i just wondered if you've cone

any if reflection on -- done any reflection on your own actions during this crisis and leading up to the it over the last, since you've been fed chairman. i think i've heard you say a couple of times that you deferred to the vice chair for supervision. do you think that was the right way to go about this? do you have comments on that? thank you. >> sure. so let me say, first of all, aye been chair of the board for five plus years now, and i fully recognize that we made mistakes. i think we've learned some new things as well, and we need to do better. and as i mentioned, i thought report was unflinching and appropriately so. i welcome it, and i agree with and will support those recommendations. and i do feel that i'm personally accountable to do the what i can to to foster measures that will address the problems. so on the vice chair for supervision, you know, the place to start is the statutory role which is quite unusual.

the vice chair, it says, shall deploy policy recommendations -- develop policy recommendations for the board regarding supervision and regulation of depository institution companies and shall oversee the supervision and regulation of such firms. so this is congress establishing a 4-year term for someone else on board, not the chair, as vice chair for supervision who really gets to set the agenda for supervision and regulation for the board of governors. congress wanted that potential to be, to have political accountability for developing that agenda. so the way it works, the way it has worked in practice for me is i've had a good working relationship, i give my counsel, my input privately, and -- i offer that, and i have good conversations, and i try to contribute constructively. i respect the authority that congress has deferred on that potential. on that person. including working with vice chair barr and his predecessor.

and i think that's the way it's supposed to work, and that's appropriate. i believe that's what the law requires, and, you know, but it isn't -- i wouldn't say it's a matter of complete deference. it's more i have a, i have a role in presenting my views and discussing, having an intelligent discussion about what's going on and why. and, you know, that that's my input. but ultimately, that person does get to set the agenda and gets to the take things to the board of governors. and really in supervision, has sole authority over supervision. >> [inaudible] >> reporter: just wonderedded if you had any regrets. was there anything, no decisions that maybe you regret now in light of what's happened? >> i've had a few. [laughter] sure. i mean, you know, who doesn't look back and think that you could have done hinges differently? but honestly, you don't get to do that. again, my focus is on control the controllable. as one of my great mentors used

to always say, control the controllable. what we control now is make a fair assessment, learn the right lessons, figure out what the fixes are and implement them. and i think that vice chair barr's report is an excellent first step in that, but we've got to follow through. >> [inaudible] >> reporter: hi there, megyn ca sell low with barron's. did the possibility of pausing at this meeting come up at all, and how seriously was that considered? i'm curious if i you can give us any color as to whether there were any initial concerns or what those discussions entailed. >> so support for the 25 the basis point rate increase was very strong across the board. i would say a number of people and, you know, you'll see this in the minutes, i don't want to try to do the head count in the realtime, but people did talk about pausing but not so much at this meeting. you know, there's a sense that

we're, that, you know, we're much closer to the end of this than to the beginning, that, you know, as i mentioned, if you add up all the tightening that's going on through various channels, it's -- we feel like we, you know, we're getting close or maybe even there. but that, again, that's going on the an ongoing assessment, and we're going to be looking at those factors that we listed to determine whether there's more to do. >> i'm curious how to interpret that and the changes to the statement. is the bar higher now to raise rates at the next meeting, or would a strong jobs report or inflation print be enough to push the fed to tightening again? >> i don't want to -- i couldn't really say. i just think we're, i think we -- look, i think we've moved a hong way fairly quickly, and i think we can aboard to look at the data -- afford to look at the data and make a careful assessment. >> we'll go to nancy for the last question. >> reporter: hi, chair powell. nancy marshall again, sir, with marketplace. you mentioned a few times about

the lessons you've learned from the banking crisis, that you would learn the right lessons. what are those lessons? >> well, you know, i just would start with something that's changed really which is this, the run on silicon valley bank was out of keeping with the speed of runs through history. and that that now needs to be reflected in some way many regulation and in supervision. now that we know it's possible, i think we didn't, no one thought that was possible. i'm not aware of anybody thinking that this could happen quite so quickly. so i think that, you know, that will play through. i, you know, it will be up to vice chair barr to really take the lead in designing the ways to address that. but i think that's one thing. i guess i would just say that. you know, we're going to, obviously, we're going to

revisit, it's pretty clear -- to me, anyways -- clear that we need to strengthen both supervision and regulation for banks of this this size, and i'm thinking that we're on track to do that as well. >> reporter: can you be any more specific on stressest thing or looking at banks that have specific concentrations in certain parts of the economiesome. >> yeah. see, that that's what vice chair barr's rolle really is, and he'll take the lead on that. >> okay, thank you. >> thank you. of. liz: no covers at the federal reserve -- doves this time around. fed chair jay powell revealing that the idea of pausing the rate hike trajectory got very little oxygen or momentum during the federal open market committee meeting. the decision to tighten by 25 the basis points bringing the benchmark rate to 5-5.25%, unanimous, and the markets don't appear to like it. we've got the dow jones industrials down 12 the 7 points -- 127. the dow has been particularly jerky here, it's been crossing

the unchanged line 159 times. now we've e got the s&p, as you see, dipping into megaterritory. the s&p is now down about 12 points. the nasdaq now up only 1 point. i'm pretty sure the nasdaq has been positive most of the session, at one point it was -- oh, there it goes, turning negative here at least at the moment. nasdaq is down about 4 points, russell is up 18. during the news conference, powell defended decision to a raise by another 25 basis points by specifically insisting that inflation remains elevated. he mentioned this several times, and he said the committee is highly attentive to inflation risk. because, in part, job gains remain robust. but he did make a very significant hint about credit tightening and how that's almost moved to the front burner of his concerns or certainly what he's watching. now as you see, the nasdaq is flat at the moment, slightly down. while markets are pricing in a

pause in june and possibly maybe even a cut by september, powell is not confirming that. here's what he said. >> a decision on a pause was not made toed. today. you will have noticed that in the, in the statement from march we had a sentence that said the committee anticipates that some additional policy firming may be appropriate. that sentence is not in the statement anymore. we took that out. instead, we're saying that in determining the extent to which additional policy firming may be appropriate to return inflation to 2% over time, the committee will take into account certain factors. liz: he mentioned multiple times the regional banks because he was asked about it. take a look at jpmorgan which, of course, over the weekend swept in to buy the chanced first republic if regional bank. jpmorgan is at a session low at the moment, down about 2%, marking fresh lows throughout the presser, as you can see. and then if you look at the regional banking etf, the r --

kre, it gave up all of its gains right around the time that jay powell discussed the fact that he is now looking at credit lending and whether it is tightening pretty dramatically because of the fears swirling around the regional banks right now. many of them have turned negative as well. we've got a jam-packed show including jon najarian, quincy crosby, dan greenhouse, but let's dig in right away with peter schiff and global fixed income head andy brenner. andy, i will go to you first. your gut reaction of the most important issue here. >> the most important issue, i think, is the fact that he's focusing on credit. he's already seen the senior loan survey that's going to officially come out monday, and i think going on the ugly, similar to the what the ecb survey was yesterday. so he knows that that things are really looking bad in the regional bank space, and i think that's something he's very much concerned about. and, yes, i do think the fed is paused for now. liz: okay. maybe we can put up some regional banks, because i think

what you're seeing is a problematic behavior here. what was it that he said? because one of the things he said, and i was, i kind of was a little shocked by this, i mean, i get it from mary daly, the san francisco fed who said, oh, there's really -- we've stabilized the situation, but he specifically said the banking system is sound and resilient and strong. >> liz are, i've heard so many times since the first of silicon valley bank the banking system is fine, the banking system is stable. and then what we heard on monday, oh, first republic has been bought by jpmorgan. then look what happened yesterday. i mean, you had some of the banks, pac west down 25%, e western alliance down 20%. the kbw index down 7, 8, 9%. liz, it's not over by a long shot. when you have treasury bills yielding 5.20 and banks paying 1% and the ease -- this is the thing that powell said he can't understand. and what he doesn't understand because he didn't mention it is

how easy it is to move money out of banks into markets right now. st the never been the case, and they have to factor that in, and it's going to continue to be a problem. liz: peter, interpret why you believe the fed tightened rates 25 basis points this i'm the. >> because that's exactly what the market expected them to do, and that's what the fed does, what the markets expect. but it's not going to do anything regarding bringing inflation down. you know, the elephant in the room with respect to inflation is the fiscal policy. the debt, not the ceiling, but the fact that we're running these massive deficits. and until the federal government reduces spending, these quarter-point increases are going to be completely ineffective. and the problem is powell refuses to call congress out and mention that the driving force behind all the inflation that they've been creating is reckless government spending. and as long as the government keeps spending, inflation is going to to get worse and so is the current financial crisis. and nobody wants to admit we're

in a financial crisis. it is worse than the one we had in 2008. it's just getting started. ultimately, the fed is going to cut, but it's going to cut as inflation is accelerating. liz: okay. you just brought up the elephant in the room? let me bring up the canary in the coal mine because when he was asked specifically -- this is significant, folks -- he brought this up because he was asked and he talked about how in the past his focus had been the labor markets and the pricing pressures, etc., maybe even wage inflation. kind of pushed that to the side, and here's what he said about the near future and what he's looking at. listen. >> i think the particular focus for us going -- now, over the past 6, 7 weeks now and going forward is going to be what's happening with credit tightening. are small and medium-sized banks tightening credit standards, and is that having an effect on loans, on lending.

and, you know, so we can begin to assess how that bits in with monetary policy. -- fits in with monetary policy. that'll be an important thing. liz: peter, if it has an effect? i know you have said specifically that everything that was built, meaning every investment that was built on a foundation of 0% interest rates which which we had for very long are, will crash. can you be specific about exactly what? >> well, one thing in particular, the banks. i've warned for years that the banks could start collapsing for the precise reason that they're collapsing now. the fed kept interest rates at 0 for so long, that's what allowed these financial institutions to load up on overpriced, low-yielding treasuries, mortgage-backed securities and oh loans -- other loans. plus u.s. government auditors from the fed fdic, they encouraged the banks to buy these long-term treasuries and mortgage-backed securities because they gave favorable treatment. the banks didn't have to mark

them to the market as long as they could preend the they would hold them to maturity, so the entire house of cards was erected by the fed and the u.s. government, and now it's collapsing, and they're acting like they had nothing to do with it, and they're trying to figure out how to put out a fire that they lit. and, of course, the problem is they're not putting out the fire, they're throwing gasoline on it. liz: okay. andy, as it pertains to that discussion specifically, the reason the fed has raised interest rates over and over and over now for the 10th time is because they were trying to quell inflation. we get that. however, if you look at the trajectory over the past several months of how inflation has come down, you know, back in june it was at 9.1%, and then you can see it coming markedly down. i believe we have a bar chart of all of in this. and i'm just wondering from your standpoint, has, is the inflation horse back in the barn yet? he didn't say yes. >> is the inflation horse back in the barn? a little bit, but i really do believe it is going in the right

correction. but it's going to be sticky. i think one of the things he said today is wage inflation does not lead to real inflation. i'm not sure about that. but nonetheless, getting to peter's point, you know, on banks there's basically $1.94 trillion of unrealized losses on their books based on a lot of these treasuries if and mortgages that they own. that's a problem -- liz: how many banks are still in trouble? marshall school of business and stanford, they did a study, they said 186 banks are in distress right now. >> that number, i don't know. but i know the fed looks at 6 or or 8. if that number's expanded. of course, pac west and western alliance are part of those in my estimation, but, you know, you've taken out a couple. no question, the banking crisis is not over by a long shot. too many easy alternatives. liz: peter, in a word, who's going to feel the move today the most? is it the banks? but if so, which part of the

banking system? >> of course. everybody that has debt is going to feel the pain of rising interest rates that makes that debt harder to service. and, of course, there's a lot of debt that is sill sill low because it hasn't matured yet -- still low. a lot of corporations, a lot of people in the real estate market, particularly commercial real estate, borrowed money two, three, four, five years ago at a really low rate, and the higher rates are when those loans mature, it's going to be the that much harder for them to get the financing to roll them over. and then you have the prospect of very disorderly bankruptcies throughout the economy. liz: andy, just want to quickly look look at the 10-year and the 2-year. the 2-year is most sensitive to fed policy. that one had dropped 5 basis points, let's see where it is now. and in doing so, treasury investors are appearing to shift their positions moving to to the longer-dated bonds versus the shorter-dated ones. >> liz, they think that the recession is coming. there's no question that this

fed is not believed. just taking the 2-year for a second, the 2-year's running 100, 115 basis points through fed funds right now, so there's a of the disbelief. the 5-year is somewhere around 3.38, 34, give or take. that is telling you people are investing, they don't think the yields are going to be here and the fed is going to turn around and start easing regardless of the fact that they say they won't. liz: andy, peter, thank you. i want to just quickly check s&p, s&p is down 20 the, the nasdaq is now more solidly in negative territory, down 25 points. let's bring in our floor show traders, jon najarian and ernesto ramos. jon, detailed stock screen ors in front of you, tell us what you see that's sending you really important messages, either good or bad? >> well, again, not to scare people, but there are so many signs that the consumer is basically out -- cutting back dramatically.

they are trading down can. now, whether it's from restaurants like cheesecake factory and dardens which aren't exactly at the high en, but those are -- end, but those are both down fairly significantly over the past month versus mcdonald's, chipotle, wingsop the, those sort of -- wingstop. those sort of fast-casuals are doing much better. that's a sign to us that the consumer is trading down. and i think you could look at it, liz, at almost every level. whether it's the people dropping out of organic foods and getting whatever the cheapest sort of produce they can get is when they're grocery shopping to the people when they're shop anything department stores perhaps cutting back the spending there and looking for the burlington's and the ross and the tj maxx -- liz: estee lauder is down 16 points on the s&p because there is always that lipstick indicator. what are you extrapolating for this move to the downside? >> well, worst earnings in 9

years over at estee lauder. and it was everywhere. it wasn't just the u.s. consumer, it's china, it's africa, it's europe. but if we focused on on the u.s., liz, what you're looking at is something that's extremely difficult for people that want makeup to cut back on. everything from mac to all the other types of makeup that estee lauder is famous for. if they're cutting back there, liz, that's one of the last places people cut back, or quite frankly. and we all kind of -- [laughter] have an estimate as to why that might be. but i think this is another canary in the coal mine. you've also a had disney9 with the job cuts in. you've got gap stores, david's bridal, all of these places cutting back as severe arely as they have, liz, and it's because of inflation. it's also because of what people perceive as the risks in these banks that your previous duo with was addressing. liz: okay. and now to the ernesto because,

ernesto, we're also seeing commodities dropping. if we look at oil, and i'm not just talking about west texas the intermediate which is -- oil's having an ugly day, not to mention an ugly month. we've got oil at the moment considerably lower, and then what you see as it is certainly below, let me see, we got it $68.27 at the moment, ark rbob gasoline -- arbob gasoline is also falling. that isn't necessarily a bad thing for the consumer out there, we like less expensive energy, but what is that telling you, and how do you invest through something like that? >> well, what that easel thing us is that there is a slowdown, a pretty sharp slowdown coming in the economy. the commodities are anticipating that. the consumer, as jon mentioned, has started to cut back. and the only way that the inflation horse will be back in the barn is through a pretty dramatic contraction in the

economy. there's just no way around it, and that's what we're perceiving a lot of signs in the market telling us, for example, the inversion of the yield curve. so you have to be ready to invest in a market where the economy is contracting, and that's a pretty off situation because usually you want growth in the economy, growth in earnings, and you're not going to get very selective companies and perhaps not even industry. you have to be on a company-company basis looking for those opportunities in this very tough environment. liz: dow jones industrials down 234 points at the moment. red on the screen, but the markets since the last rate hike and we've got this on the screen, have actually been up. the dow up 4.5%, the s&p up 4%. the nasdaq up 3%. jon, somewhere right this minute there is a silent, gigantic whale underneath the market waters making some type of trade

or starting to make a trade the that will make a lot of money. what is that trade if you could venture to guess? >> well, i'll throw two at you quickly, liz. one, the tlt, that's the 20-year bond. there are massive bets that by you said september, i agree with you, by the end of the third quarter we're going to see rate cuts. and perhaps massive rate cuts depending how deep we go into this recession. that's just a fact. and there's big money being put on both over the counter trades that the big banks have to hedge, and they're hedging in the tlt providing that access to those lower interest rates for the people that want to bet there. and then there's tjx, tj maxx. if people want to shop still and they don't want to pay retail, that's the best place for them to go. it's better than burlington the, better than ross stores. you can compare them on graphs.

those are the two places right now based on my trade-down theory and the idea that we're going to the see lower rates into the end of the year, those would be my two picks right now, liz. liz: maybe or maybe not lore rates, but certainly a consumer slowdown. jay powell was asked about that. i want to to play exactly what he said and then,ar necessary toe, we'll -- err ernesto, we'll yet on the other side what you think the whale trade is at the moment. >> we're trying to reach and then stay at for an extended period a level of policy, a policy stance that is restrictiveive to bring inflation down to 2% over time. and that's what we're trying to do with our tool. i think slowing down was the right move. i think it's enabled us to see more data, and it will continue to do so. liz: yeah, it doesn't feel when he says slowing down, ernesto, i think he means having done three 75 basis point tightennings in a

row, is so now it's 25 basis points. but sense there will be a pause, and if so, what is that big trade? >> well, there's certainly a pause priced into the markets. and if you think and agree that there's a recession coming, we're probably cone with hiking -- done with hiking and going to be looking for the cut at some point. the more interesting ideas and the biggest potential ideas that we're finding right now are not in the large cap space but, rather, the small cap space. one example is a company that is in the business of testing -- silicon carbide for semiconductors and electric vehicle batteries. the benefits here are they're riding the wave of electric vehicles which is something that is not going to go away because of a recession. and they're turning a very decent valuation of 16 times earnings. so the silicone carbide replacing pure siliconing in

semiconductors and riding the wave of electric vehicles is pretty recession-proof, and this company's got a lot of runway to deliver positive returns in the next 3-5 years. so we're pretty excited about that. but it's a small cap company about $200 million market cap. liz: well, on a down day, it's up 1.6%. ernesto, thank you. jon najarian, great to have you as well. fox business alert, we want to get into some individual names. you just heard ernesto talking about electric vehicles, investors in chipmaker advanced micro devices are not happy at the moment. we do have advance micro devices down about 9.5% after the latest quarterly report. a 9% dip in revenue from a year earlier due to big declines in pc and processer sales. amd's data center segment sales edged up to the 1.2 the 95 billion from 1.293 billion during the earlier period, but they did warn a little bit about that. and that's what's interesting

here. intel with, which has a big data center business, actually moved in the inverse direction, up 3%. it's at the top of dow jones industrials. so investors may be transition thing for the moment out of amd and into intel. and we've got to flip it over to generac. generac's stock is getting pulley energized by 12.25% after the generate or manufacturer beat with on both the top and bottom line despite solid results, sales and earnings per share were down year-over-year. what's interesting though is they said they got a lot of benefit from some of the storms and outages to over the past quarter. so at the moment you see generac at about $115.38, like i said, a gain of 12.25%. pershing square ceo bill ackman and article icahn, of course, the nemesis bill ackman is taking a jab at his old rival, icahn, after short seller hindenburg research disclosed a short position against icahn

enterprises yet. we had showed you yesterday the stock had really tanked. ackman tweeting out today there is a karmic quality to this short report that reinforces the notion of a circle of life and death. so today the icahn enterprises down another 20%. the slide in shares also caused icahn's personal fortune to fall by around $10 billion. of course, on paper. eye candied respond to the hindenburg report saying he stood by iep's public disclosures, icahn enterprises, and its performance will speak for itself over the long term. kraft heinz, let's take a look at that one. the maker of big brands such as kool-aid and gel-o -- jell-o beating estimates as higher prices offset volume dedeclines and foreign exchange headwinds. the company also raised it adjusted annual earnings outlook to between $2.83-2.91 a share up

from previous guidance of 2.67-2. 75. speaking of foreign exchange and the head headwinds that some people see and certainly affect some of big, you know, companies that have geopolitical or -- gigantic -- [laughter] what am i trying to say? footprint around the world. we're checking a basket of currencies, the greenback sol off initially after a dovish tone weighed on the u.s. dollar. and you can see most major currencies are stronger against the dollar. we have the euro now at $1.10. the canadian dollar also strengthened too. the dollar index, the whole basket of it, fallen about 8.3% from a peak in september and is experiencing its worst start to the year since 2018. what does this mean for you and your portfolio? joining me right now, chief market strategist art hogan. first, your reaction to the fed the meeting, the fed announcement, the news conference.

what jumped out at you, and has anything changed as far as your investment focusesome. >> yeah, i think chair powell did a pretty good job of really setting up a framework for them to pause and without committing themself. in a broad sense, they used the very same language the last time they were in a rate hike cycle where they were pausing, and that was in 2006. so if you compare those statements, they're very similar. and i think that's important, right? i think the market really got what they expected, a 25 basis point rate hike and then that's it for now, and we're going to watch the long and variable lags of monetary policy take place and leaned into the fact that credit tightening has already started. i think they did a real good job. that was our base case that this was going to be it, and i earnly think when you think about -- certainly think when you think about invest anything this new environment where the economic data can now be viewed through the lens of not affecting monetary policy, i think you can continue to look at things that you need versus things that you want on a barbell. so think about staples, health

care and to to the a certain extent some of the necessities. on the other side, you still want to lean into some of those large cap technology companies that are agnostic and pace of economic activity the, don't need to go to the bank and lend and have depend bl cash flows. and i think that's outperformed and will continue to. liz: the vix has turned around. it had been lower, you know, it was very calm, and then it popped up about 4%. certainly at the moment 4.5%. still well below 20 the, that's the key. art, you just mentioned some opportunities in the market. i'm surprised that you say that he is setting the markets up for a pause. because he specifically stress thed multiple times inflation is still way too high, well above the 2 level that the fed calls -- 2 level that the fed calls its target. i mean, the market over and over has done this, we hope kind of betting on it, for the fed funds futures. and now you see for the june fed funds futures, there's a much

bigger percentage or even september of the possibility of a cut. that would be for september. do you really think it'll come that soon? >> i think sometime in the fourth quarter they will have a cut or two, but i certainly think that is going to be predicated on the fact, to your point, that inflation has gotten closer to the their asymmetric target of 2%. if you were to pack if to have what's happening in residential real estate and take away with the fade concern what the fed uses to measure that and actually used realtime data, they'll like likely have a 3-handle on inflation in the fourth quarter of this year. they don't have to cut rates in the fourth quarter because the economy's gone into a shallow recession. they likely need to cut rates because they're too restrictive at 5% with inflation running at 3%. liz: we've already seen the stresses in the regional banks. do you see any -- and this may be a totally ridiculous questions -- but any bargains in the real estate that space where some are all getting thrown out, the baby with the bath water expression.

is there one that looks particularly good or do you just buy the basket and hope for the best? >> that's probably the safest thing to do. if you want to highlight names that have already reported earnings and actually broken down their exposure to commercial real estate, just look at the earnings report from pnc bank in pittsburgh. they clearly went to work to say, okay, deposits are fine and, oh, by the way, here's our liabilities. they actually took it down to the detail of how much exposure they had to office real estate which is really the canary in the coal mine or the next issue we're going to have to deal with and said our liabilities are less than 3%. i think moses of the banks are well reserved for commercial real estate and certainly have not waited until march 10th to start reserving for some of those loan book to market. liz: yeah. maybe we can pull up some of those regionals. there we go. pnc down 1 is.5%, truist down 2.6%. citizens financial down 2.8%. key corp., u.s. bancorp and i would think those are some of

the stronger ones. art, the the-year -- 2 the 2-year yield slipped, right? and i believe it hit its lowest point in more than a year. excluding the fall during the banking panic in march. what does that say about a recession, possibility of that? >> welk i would tell you, you brought this point up in the last segment that the shift now is starting to move out of the curve, right? the 10-year seems to be getting more sponsorship for the 2- than 2-year percent first time. typically, that's what happens when you're going through ap an economic slowdown. so likelyly by the september quarter we'll be in a short and shallow recession and/or seen the economy slow down the a pace such that the 2-year and 10-year can uninvert, and that's typical of what happens when things start to slow down in earnest. remember, we've been waiting for this session every quarter for the last year, year and a half. it just hasn't gotten the memo because the consumer continues to be resill credibility.

resilient. liz: argument, it's great to see you. thank you very much. very not dull moments here with the markets at the moment. the dow down 25 the 7. low of the session, folks, is a loss of 274. so we've had a pretty significant swing considering the dow's high was up 125. and we're continuing to watch all of it. we just, as you know, heard that federal reserve chair jerome powell said that the u.s. banking system is, quote, sound and resilient. do major investors who have the power to make decisions about whether to pull their investments feel the same way about regional banks? charlie gasparino's been doing some work. >> i think he's talking about the entire system, including the big banks, the jpmorgans, the bank of americas, the citigroups, the banks that hold most of the assets and deposits. liz: he was specifically asked about regionals. >> and he said he thinks they're fine. liz: he said the whole banking system -- >> that's what i'm saying. you've got to look at exactly

what he said. the banking system, if you take as a whole, we're not in 2008 territory. no one's betting against that. what they are getting against and they will continue to bet against because, you know, once you see the jpmorgan-first republic deal, you start pricing other assets, other banks of similar size, the regionals and the mid-sized banks. you start pricing that based on that deal. liz: jpmorgan's at its low of the session right now. >> okay. so if you price it at that level, people are are talking about haircuts on all these banks, and they're looking at their assets at 85, 87 cents on the dollar. these are the banks that sold off yesterday, the pac wests. all those mid-sized banks, anywhere between $200 billion of assets, pac west has something like $90 billion. it's based in l.a -- liz: selling off again. >> and that's why. that that's why, liz. i mean, clearly, they're not -- wall street, the consensus on the street is that these banks are not out of the woods. they have a similar asset base,

deposit base characteristic as the other ones. that means their deposit base could flee to money market funds. it's hard for them to pay up for that that deposit base. their asset base is, you know, real estate loans, maybe commercial real estate loans that they went own out on the spectrum on and, as you know, that's one of the problem areas in this economy right now particularly if we're going into recession. on top of the fact that their capital levels were bought at much higher prices when treasuries were through the roof because of fed money printing and easing. now, the question is, does the present an understood for anybody? -- an opportunity for anybody? i can tell you this, david solomon, the the ceo of goldman sachs, has always signaled when asset prices normalize, stabilize, come down, goldman could be in the market for something. i mean, you could see them in this environment if northern trust, we should throw up on the screen if you can real quick, i

know i didn't ask for this, but it just came to my mind -- liz: for the moment, gold goldman's down 1.5%. >> northern trust could be something that they could look at. solomon's a keelmaker, okay -- dealmaker. he's an investment banker by raid. something like that could happe- liz: agreed. >> so watch goldman as an acquirer here. they're not going to go buy something that's filled with toxic assets, just so you know. northern trust is an interesting company because it's mosesly a trust company, has a concern mostly a big -- liz: they are in a different position than perhaps the rest. >> who? liz: goldman may be in a different to be and stronger position. >> okay. by the way, look at that chart. look at that chart -- liz: yeah. >> it's getting pretty cheap. liz: yeah. you know, the banks were incentivized, obviously, to buy long-term rates at, you know, treasuries at very low. but -- >> low rates, high prices. liz: exactly.

>> now it's kind of the opposite. >> you've9 got u.s. banks' exposure, pretty dramatic and the market value is now when it comes to their assets $2.2 trillion lower than suggested by their book value of assets. >> right. liz: this mark-to-market is going to come and slap many of them in the face. >> right. so, again, i say this with all due respect to jamie dimon because i believe he has the best risk management out there, citigroup is better managed than it was in the past, is so -- so is bank of america. if you don't believe that bank is going to protect your deposits whether it's at 250 or above, $250,000 which is the deposit limit that they cover from the fdic for insurance, you often pull your money out. and it doesn't matter if the bank is decent or crappy or great. if you don't have confidence in that bank, you will pull it out.

and that's why the mid-sized banks are so vulnerable. jamie dimon talks about a fortress-style balance sheet all the time. he's got the world convinced he has that. i believe he has that. but some of these other mid-sized banks, and that's why you see them trading off -- liz: thank you very much. >> i'm sorry, did i talk past my time again? liz: no, you did perfectly. [laughter] >> all right. i'm hearing wrap. liz: dow swing today, 401 pointses from peak to trough. let's look at the vix, right now it's the up about 5%. on the week though, it's up 18%, and it's the only wednesday. so there was this question, soft landing, hard landing or something in between when it comes to the u.s. economy. federal reserve chair jerome powell >> the case of avoiding a recession is in my view more likely than of having a recession but it is not the case

of having recession, i don't rule that out either. it is possible we would have what i hope would be a mild recession. liz: a lot of people said that not just jay powell. find out how the best of the best are trading through around that. joining us with $1.18 trillion assets under management, lpl financial quincy krosby, sullivan, investment strategist dan green house. how do you go forward if there is a shallow recession? >> you have to look at companies that have strong balance sheets. that is crucial. you have to have companies that have market share. the other part of it is that you have got to also include fixed income in your portfolio, investment grade. we wouldn't get carried away start looking at high yield because it is attractive. because of uncertainty. that is what this market today is telling us.

it is uncertain. short duration, high quality, investment grade. also short duration treasurys. the fact of the matter you could also look, speaking of the bank sector, take a look at the preferreds. preferreds stock for the big healthy money center banks. they're offering very attractive yield right now as charlie pointed out, there is tremendous uncertainty. but we can look at these banks and say, they have been through stress tests. they were the targets for the regulators. so they offer very attractive rates in those preferreds. we like industrials. say we do go into recession. say it's by the deeper than the fed thinks is going to happen. industrials tend to do welcoming out. right now industrials are underpinned by defense stocks. they are not going away. and also infrastructure, and machinery. you still have money left over

from the biden administration. infrastructure spending continues right now. we expect it to continue. >> okay, hold on. we're going a little bit deeper into negative territory here. the dow is down 272. if we show intraday at the moment. dan green house, bring you into the conversation. just couple days ago we were saying nasdaq would exit a bear market. will that happen? >> i don't know that is it will happen as you've been talking about the whole hour. central banks remain the issue. and near term there will be some more negative headlines. what i was getting at respect to the technicals you have had a terrific move off the bottom, for nasdaq, s&p, admittedly both very concentrated the top largest stocks driven a lot of gains. however it is impossible to ignore the fact, the degree, the length of the rally off the bottom is unlike any other bear

market rally 50 or 60 years. you have to pay attention what price is telling you. for right now, for better or worse, narrow or not, price is telling you prices are going higher. >> somebody tunes in right this minute, hear 25 basis-point hike, 10th in a row by the fed what is the trade? >> i don't think anybody should do based off the one headline. the important takeaway from the fed meeting, it seemed to me, watching the press conference, that jay powell wanted the market to increase its pricing, its odds of a hike in june and was probably at least to me not satisfied with where the market was. then you have indeed seen however minor so far, pricing move for a higher rate in june. i think the data between now and then is the main takeaway, not whether any trade one way or the other. i would pay more attention to the data going forward. liz: quincy, all we've seen lately, prices paid indexes of

some big inflation numbers, whether non-services ism, the services is-m, manufacturing, rather, inflation is still entrenched in a way. well off what it had been. i found it very interesting, we talk a lot about wage inflation, which is great for workers, it makes things more expensive. here is what he said about that. maybe you can expound on what you think is a sector that works here. listen. >> i do not think the wages are principle driver ever inflation. you asked me a specific question. i think there are many things. wages and prices tend to move together, it is hard to say what is cause what. liz: how do you interpret that? >> he has been within the federal reserve system he has been accused of paying too much attention to higher wages. liz: right. >> remember, most of those higher wages are for low wage

earners. there is social implication for that. he believes that companies taking the higher wages as an input cost want to pass it along to the end consumer, hence higher prices. what do you do as investor? who has been successful passing those along. we saw it with proctor & gamble. we saw it with coca-cola. liz: mcdonald's. >> pepsico and mcdonalds. his view we will slow down, stop accepting higher prices as the economy slows. liz: okay. dan, what about travel, leisure, they have been able to price things in? >> unissue with companies that can't pass through higher prices. not just consumer goods. everything in travel and leisure, reports that hilton and marriott consumer strong. reports from visa, mastercard

consumer remains strong. very hard to find somewhere where some company telling us there is tremendous pushback on price increases. a large degree of those consumer package goods companies are paying for it in form of lower volumes but there is very little evidence consume remembers not able and willing to pay higher prices. i don't know how you would that to delineate which company is investable or not. what i will add real quick, remarkable degree consumers have borne the price increases. companies used it as an opportunity -- liz: that is the place to stop and say inflation is still here. boy is it sticky, not transitory. [closing bell rings] liz: we're at the lows of the day. our fed kay coverage, powell's inflation stance could deep-six a pause at the june meeting.