and, a silicon valley bank, and signature bank, those in charge push their banks to grow too big too fast. they make risky bets, they got massive profits, executives were paying themselves bonuses right up until the moment that at least one of these banks crashed. to most americans, that is not surprising. people have gotten all too used to big bankers treating the industry more like a game, or maybe more precisely, endless atm for themselves, securing the knowledge that they won't pay any real price if things go wrong. mr. powell, mr. chairman, senators got 19 back with a 21 to 2 vote yesterday, those days for bank executives are over. chair powell, i look forward to hearing today how the federal protect american workers in the fight against inflation and promote an economy with a strong growing middle class. sarah scott? >> thank, you chairman. tara powell, thank you for joining us today. such an important time. your last appearance before this committee was about four months ago, just days before the collapse of two banks, and what we continue to investigate those bank failures, i

silicon bank really did have a fantastic business going. this company got its start as a normal regional bank in silicon valley thanks to its footprint in the land of invasion, it became the bank of choice for a huge chunk of our nation's startups, including founders and top executives. in the end they were doing anything and everything for these guys, even lending them money using nonpublicly traded stocks as collateral. in more recent years, they went into research and investment banking all for the same time of customers. given their relationship with tech startups, you had a lot of reason to believe their strategy would keep paying off. after all, for many years, it was incredibly successful. the average deposits grew from $20 billion in 2013 to $48 billion in 2018. and then $186 billion in 2023. and their stock caught fire along with the ipo market, skyrocketing to an all-time high of 763 right before the fed declared a war on inflation in 2021. stock plummeted back to $200. higher rates made it higher for startups to get funding and the ipo market shut down so the more mature ones couldn't become public. you don't want to be the banke

the biggest difference in silicon valley bank forget to first republic as they did a great job for thesehings. certainty is on a macro level were not right. did a lot of things on the microlevel that were right. how they service the client locally. we have unbelievable proxy service to bring the consumer subscription life, research. but it has to be in the way that you actually like it and want it. you are organizing around it. you can hear them talking about new space in palo alto, we heard one of the top people out of silicon valley bank. organized around the innovation economy, we will get it right. i just want to make sure it is happening a year from now and not just today. that is what we do all day, for us it is incremental risk. a slightly different kind of risk. this happened years ago where the bank lends to the nonrevenue company. the answer was zero, but we did facebook. we have learned how you can do that. but it's not the risk, it is the venture capital company, partners, the investing companies. it is the whole ecosystem. emily: you have a group investigating ai. what are t

socially silicon valley bank's struggles woke up some people in vcs and technology companies that theyeir banking relationships and to go to jp morgan in europe and get access to our offerings on a global basis, i would not say that hurt us by any stretch, probably jst raised the profile and exit limited our ramp by a couple months. ed: great to catch up and get the perspective from over in london in europe. thank you very much forget coming up -- thank you very much. coming up, we will talk about a sports fixture and mainstay in the community good the impact of levi stadium forget san francisco 49ers president al g uido joins us next. this is "bloomberg technology." ♪ the first time you connected your godaddy website and your store was also the first time you realized... well, we can do anything. cheesecake cookies? the chookie! manage all your sales from one place with a partner that always puts you first. (we did it) start today at godaddy.com is it possible to fall in love with your home... ...before you even step inside? ♪ discover the magnolia home james hardie collection. availa

look at something like silicon valley bank, why did silicon valley bank disappear? after four decades in existence? because they bought a really high quality, if you will, but low coupon long-duration bonds, there's a bond right now that the u.s. government issued, which is trading at $.45 on the dollar. when people think about buying that bond, they don't look about buying that bond and having a go be, everybody things about that as a risk- free bond. now, if you're in that bond, you'd be down 50 points. as rates have moved up, the fact that we have so much floating rate assets has really helped us because we don't have these big market to market losses in our portfolio that were the thing that crushed silicon valley bank. >> you obviously see the trends that are moving forward with a.i., which we clearly talk about every day, i think you're expressing your optimism and investing style in that, through insurance through zinnia. which utilizes a i. >> historically, we would have a big call center operation, because we administrate, administer policies for third part

let's not forget silicon valley bank was collapsed due to the fact that an silicon valley bank was notiding criteria to the customers. as a bank customer, i'm willing to pay the price of the solid banking system if this causes more issues on the bank loans. i think this is something we have seen in europe. only now with the banking industry in my part of the world has responded positively to the implem implementation. i think american banks should learn from the svb collapse. it was a regulatory failure. it was not a corporate governance. >> yeah, you know, we are hear in marrakech and we are discussing interest rates and the state of the global economy. i had a guest earlier who was saying this higher rate for longer environment is going to have ramifications on the broader financial system. there are pockets we are still not aware of. svb is a very good example of that. when you look within the banking system, where do you identify the areas of vulnerabilities? it could be a small number of u.s. banks that fall below the threshold for supervision. it could be the intermediaries. >> t

lingering uncertainties, earlier this year we saw with this interest rate environment date to silicon valley bank, i think people are so concerned about what is happening with commercial real estate, the idea if these banks could have been setting aside to borrow money for potentially bad loans, may be that would show prudence and if there is that out there, that could come back to bite some of the banks. how do you feel about some of the provisioning now? david: i think is why your see a bifurcation in the market where the larger banks are outperforming the regional banks. the reason for that is two fold. it is the higher rates. the aoc i marks senator bond portfolios were worse than what we expected this quarter. that is going to weigh on capital as a move into earnings next week. that makes you think back to march in terms of the capital issues. the second issue is what do higher rates due to you asset quality. the consumer fared very well this quarter. credit card charge were relatively stable. jp morgan lower their guide on charge-offs in terms of credit cards. we are seeing assets increase

this was clearly silicon valley bank and bank failures. that was the first step.ll of sudden all these macro investors piled on the short case. why do regional banks need to exist. that is clearly not the case, right? we just have funding pressures and three very unique banks failed. this rally, oh, ragernal banks can exist. it is not as bad as we thought. what happened in august? the thing that is immoveable for bank stocks, we'll talk about the fundamentals in a second, is the ten year. can't fight the 10-year. two things happened here. number one, a thousand page document from the regulators coming out essentially saying capital is going up for everybody including regional banks. charles: right. by the way, is that a mistake in your mind? is that a overreaction to this first line here? >> so look, they had to align with europe, right? so they had to do something on capital anyway because we had to align with europe in what's called basal iii or basal four standards for capital. you know what we did we gold-plated it. we gold-plated it feels like to me as reacti

it has something in common with silicon valley bank, what is going on and what will you be looking athe reports tuesday. >> bank of america and the other big banks invested heavily in bonds when interest rates were hiat historic lows and other big losses in bond portfolios. bank of america is around 105 billion and it could get worse in the third quarter and were looking at the number in the earnings release coming up on tuesday. carleton: a lot to look for next week. elizabeth we talked about the cpi report that did not necessarily move the market that much but it does have applications for social security, can you break that down for us. >> big new social security announced a cost-of-living increase for next year, retirees will get 3.2% raise. it will put an extra $57 into retirees reach retain thenth purchasing power and keep up with inflation. here's something to keep in mind medical costs tend to rise at a rate of 1.5 to two times that of cpi. what you see over the course of retirement medical costs in the coal is not keeping up, they have a 65 euro couple today they will be 46%

watching what was happening with interest rates early this year and ultimately saw the collapse of silicon valley banke jp morgan sees an opportunity there. also seeing an opportunity in ai. in the full interview, he says he sees a possibility for ai to be incorporated into all aspects of their business. you highlighted what's happening in the bond market but if you look at the stock market right now, most sectors have been under pressure but nvidia is outperforming so investors are still showing some conviction with those ai names that have ruled 2023 and ultimately, we will see where investors take us during the balance of the year is helping to outperform the canadian market which is negative for the year. this is bloomberg. ♪ fabulous surroundings... but everyone's looking at their phones for financial insights from merrill. is he hailing a ride to the concert hall? no. he's making sure his portfolio and retirement plans work in harmony. they want to adopt a child and build a new home. so they're talking numbers with their merrill adviser. she's not researching her next role. she's learning how to

. >> you had a double-barreled host of stimulus after silicon valley bank failed. balance sheet increased 400 billion in three weeks after silicon valley bank failed. because you were not issuing new treasurys you drew down all the cash reserves of the treasury department which is another 600 billion. it is not surprising in a way that you have strong growth. i would say though, avoiding a recession at all costs which seems to be what janet yellen and every one else in the administration wants to do has a cost and that cost is inflation and that's why i am of the view this is going to be harder, it will be harder to put the gene any back in the bottle than perhaps the fed and others in markets think. that inflation will be more structural moving forward because we are running deficits of 5 1/2% of gdp. larry: pce core deflator, core, ha, ha, up 3.9%. you're still running 3, 4% inflation. brian brenberg, president biden, treasury yellen says our problems are solved. >> they're not supply-siders, that's not the problem. they look at number, oh, my goodness, 4.9%, it i

but look at the way back managed their very large securities book versus silicon valley bank, okay?hwab actually is going to be a buy. it's three and a half times book. it was at five. will it go back to five? i don't know. but american express -- liz: yeah, ax -- >> it's at four times now. a lot of people are going to kick themselves in six months that they didn't buy that stock. liz: it's one of the laggards -- >> but it's the best performing bank in the united states. liz: on discount at the moment. we've got to run are. thanks to you. >>> accusations and blame flying on capitol hill after the house gop tosses out jim jordan after his failed third house speaker bid. coming up, we'll bring in republican congressman dan meuser of pennsylvania to ask what's going on? take and find a consensus candidate, and could he be the dark horse a ready to are enter the race? plus, bitcoin popping as crypto investors believe gary gensler's sec is on the verge of making a very important decision. gray scale bitcoin trustee etf, it's hit a 52-week high, right now it's up about 4%. we'll check bit

never joined the recession crowd but when we got hit with the banking collapses in march, like silicon valley banke bank, we really eventually got through that. that was when j.p. morgan was able to snap up the extremely troubled republican name. but i think the many bank crisis was positive. of course, the pull back on lending. at a time when everyone wanted to tamp down, the banking industry wound up helping them a great deal. the gains over the past year came over the summer, may through july, as investors gradually threw in the towel on their inevitable recession thesis is and then scrambled the buy stocks. at the end of may there was a lot of consummation about the fact that the s&p was up 7% at that time. over the next couple of months through the rally, it did broaden and that is when the market really did roar. august and september essentially served as a correction for some of the summer excesses. after we started worrying about recession, inflation started flaring up again. meanwhile, i've been telling you that you need to catch up with short rates for a long time now. the benchmark 10 y

caroline: i think about the crux point where we were concerned about silicon valley bank.ous 2023? it's only been six months since that debacle. for you, because you are watching this new product, do you have vc's knocking? >> we were boots on the ground in new york before it was popular. i believe in the ecosystem here. there are people knocking on the door because of the importance of the problem. fundraising is a specific thing and it should not be done casually. in the current environment there is time belted unlike 2020 when you are deciding and weekend. between you and your investors you can make a decision about what this will look like. you are settling into a lifelong relationship with people on the board. our board is 50% female. i can't rush the process. despite the interest in the environment, it's important to establish good relationships so when you say let's handshake and put capital into a business is growing you know that you are doing it in a way that will fuel the next chapter and not because out is what the environment is promoting today. caroline: you

silicon valley bank, republic bank. most regional bankers are cautious, conservative, even dour people. they are aren't exposed to the vagaries that those two failed companies were regional banks are very cheap, like seven, seven, eight times earnings and their prospects are much better than the experts are crediting them for. look to the regional banks which are down 40, 50% from their highs to rebound, possibly in the hopefully near future. liz: george ball, a pleasure to have you as the bell rings. it looks like the dow is trying to claw back there into positive territory. [closing bell rings] tomorrow, rich greenfield own netflix. ♪. larry: hello folks, welcome to "kudlow," i'm larry kudlow. 11 of the barbaric hamas war on israel. 1400 israeli civilians and soldiers and 30 americans have been killed. president biden is expect towed travel to israel tonight as our strongest ally prepares to invade gaza. fox news senior foreign affairs correspondent greg palkot is on the ground with all the latest. greg, what you got?

silicon valley bank, republic bank.ur people. they are aren't exposed to the vagaries that those two failed companies were regional banks are very cheap, like seven, seven, eight times earnings and their prospects are much better than the experts are crediting them for. look to the regional banks which are down 40, 50% from their highs to rebound, possibly in the hopefully near future. liz: george ball, a pleasure to have you as the bell rings. it looks like the dow is trying to claw back there into positive

real estate in the small specialist banks investing in the community is very different and frankly not as big of a worry. elizabeth: i would be remiss with silicon valleyously they were acquired and they said were still in business depended on what part of the business. i have to ask you this, coming up on october 5, the seven big banks that elon musk's investment in twitter are looking at $13 billion in debt that is losing value. barclays is one of them you don't run barclays anymore put on your big institutional banking hat. if that were brought to your desk to fund elon musk's buyout of twitter/ask would you have said yes? >> it's very easy with 2020 hindsight to say that was a bad decision by the banks that were part of the bridge but 2020 hindsight is awfully easy. what i would say most of the banks would look for an opportunity to exit and free up capital because their extraordinary opportunities and the leveraged finance business as you look forward over the next couple of years. obviously with hindsight i'm sure all of them would've preferred to not been a part of it. elizabeth: it is not looking good at the moment. although we have seen elon m

coming out of silicon valley bank looking at truist, pnc, and then they all shot back up all of those stocks are back to where it was a really serious second look it's interesting, too, steve, when you say you're going to short the banks, we have shares and some are reporting decent earnings the higher interest rate environment is benefiting them i think there's opportunity there. they're attractive right now >> there's a clip coming on the re-fi. number two, they haven't had to write down the portfolio though the office space isn't occupied -- jenny, please. though it isn't occupied, they're still current on the lease payments you can't write that down. you have this massive cliff, they also make money on lending, and, yes, net interest margins are higher it will be less of an appetite >> yeah, but if you listen to pnc's earnings call, they'll go through with you specifically here is our debt related to office buildings, and it's much, much smaller. >> that's a quasi money center, pnc. i'm talking about all the others >> if you parse through, the reality is a lot of them don't -- >>

so, the fed's not buying them, you've got silicon valley bank, post-sill icon valley banks, whh means the regionals aren't adding to them. and then of course you have japan and china supporting their currency. i really think part of it is a supply and demand imbalance that's caused all of credit to trade to a significant high and that is really to what tim just said, that's going to be the catalyst to rally this thing. really rally this thing, which isn't too far away, is when bond yields start to drop and reflect the weaker economy. >> you're light and tight right now. what does that mean? >> it's annoyingly boring for this long, mel. it means, just to stay in a little extra cash and tight to the benchmark. the reason for that, i'm bearish economically, all the clients know that, people that watch this show know. i think we're going into recession, i -- i really am highly convicted to that. the reason i'm more -- not more negative to the market, meaning get the heck out and don't look back, is because so many stocks are already so smoked. you guys talked about pepsico, the airlines.

. >> a double barrel dose of stimulus after silicon valley bank failed. issuing new treasuries you you true down all of the cash reserves in treasury department. and so, it is not surprising in a way that you have strong growth. i would say, avoiding a recession at all costs, which seems to be what ernments to -- everyone wants to did has a cost, that cost is inflation, i'm of the view that this is going to be harder, to put the genie back in bottle than the feds and markets think. we're running deficits. larry: core deflater, up 3.9%. you are still running 3% or 4% inflation. brian brenberg, yell eyellen says our problem is solved. >> they are not supply ciders that is the problem, it is built on this deficit and debt spending not income driven. real incomes north rising, people are dipping into their savings. and that is what they can feel, they know, they can say, high level, the economy grew. but at an individual level people say i know what i'm paying for things and i know where i got the money, i don't like where i'm going for that money, this summe

the silicon valley bank time-stamped also directly correspondence to the moment the hospital is struckthe idf also reportedly have recorded a conversation among jihadists that links them to the misfire. this is incontrovertible evidence that hamas has orchestrated a global disinformation campaign to thwart the israeli ground operation before it begins. hamas has a history of blaming israel for self-inflicted rocket accidents and as we have been reporting hamas rockets are built in garages, jerry rigged from water pipes and 20% miss their target. but the information war is critical to israel's enemies. these enemies don't have open societies so lies are highly effective. iran is warning israel that an access of mus lin resistance forces could be coming together to retal rate. just breaking european embassies are under assault. islamists have planted a palestinian flag in a compound in lebanon and tear gas has been deployed against a growing mob. this is almost 40 years to the day when a suicide bomber drove a truck packed with explosives into our marine barracks in beirut killing 241 am

this idea we got it done in march with silicon valley bank and signature just doesn't pass the common sense test for me. and the fed has raised twice since then and maybe they'll raise again. the same balance sheet pressures that occurred in march and the same earnings pressures on the regional banks from the higher rates are eventually going to break something. steve, would you please put me at ease or tell me, no, you're on the money? >> reporter: i have two comments on that. one, it's just fine for regional banks to slow down and reduce their lending. it's not fine if there's a blowup. if we've gotten over the hump of these bad banks that are going to create systemic concerns, then it's okay. that's normal. the other thing i have to say, did you hear brian moynihan? i know you're talking about regional banks. he said, yes, delinquencies have risen, but they've risen -- if i have this right -- to the level of 2019. we are used to, jim, a level of easy money flow from '20, '21, '22 that has gone away and we're normalizing. we don't know if we normalized and come up through the prior

index is back at highs it was at during the dash for cash, march of 2020, where it was after silicon valley bank went down. and mortgage spreads are widening, all these things are crucial prices to how the system works. >> steven, take him on >> well, i think the issue for me -- i mean, you know, you're focused on the markets, i'm focused on the economy as you said, a lot of borrowers came into this period flush. households had their mortgages locked in, they had access cash on the balance sheet same thing for a lot of corporations so the pain that comes with tighter monetary policy maybe isn't kicking in quite as suddenly as it would in a different economic environment >> but it will on businesses and banks and lots of places >> that's right. and i think the fed is missing that part of the banking story, to talk to brian moynihan or jamie dimon who can manage that risk but didn't take in all the deposits during 2021 because of regulatory policy to cap the deposits they can take and you just think about how smaller businesses operate they just take in cheap deposits and lend it long and they hav

. >> when silicon valley bank failed, you came on and were railing against the management for not appropriatelymproved? this is still sort of a lingering issue for regional banks in particular. >> as i said at the beginning, sara, i don't think it's just the regionals. everybody's got some kind of duration risk on their books no matter how big or small you are, you need to manage that, because you never know what's going to happen. just because the fed has paused and other central banks have paused, it doesn't mean they're not going to have to accelerate again for whatever reason it may be we still need to pay the bills and the way we pay bills is to issue debt if there's not a demand for that, you have to be careful where rates are going, so people need to manage that duration risk no matter what the size of your kpaecompanies are. >> one final one from me, are treasuries safe havens nimpl you mentioned the move we've seen in gold and bitcoin, dollar kind of mixed. what do you tell people when they ask about the volatile world and the geopolitical landscape and wonder if they should be buying

what you saw with silicon valley bank and first republic, you see how quickly the narrative can changeearnings season. has that been eradicated because of how closely regulated and specific of their business set is? charles: to a large degree it comes back to the makeup of the market. if we are talking about the s&p, 30% of the market is driven by seven or eight companies so by and large those of the companies that more than likely set the tone. many of those companies are remarkable. have invested hundreds of billions of dollars in r&d to drive future growth. they will be resilient in the backdrop that we find ourselves in. you have to think through the evaluation equation against those 7. some cell very expensive cars and have a lot of exposure in china -- some sell very expensive cars and have a lot of exposure in china. institutions -- lisa: it sounds like you like big tech. charles: we are in an environment where we are all debating what next year looks like. you want to own businesses you are highly confident that can grow earnings regardless of the environment. we like tech beca

interest rate risk with silicon valley bank and some others. abe through that now? where are we in that process? >> what you've asked for his not to rest easy. where we are is this. things have certainly settled down. we see the funding markets, we paid a lot of attention to banks that look anything like the bank that had the problems to make sure they had incredible liquidity plans and all of that. i think other that has worked in the senate this facility, and so all of that has led to a real settling down. we are still on the case. we will keep after that. banks are generally very well-capitalized and highly liquid in their country. thanks are strong. we benefit from all those years of reform under dodd-frank that we went through with former governor tarullo and many others. and so we benefit from a very strong, well-capitalized banking system that is much better and hedging its risks than the one from the financial crisis. >> a proposal. >> it is a rule for comments. there's not a lot i can say. we do expect a lot of comments and we expect to take them very serio

silicon valley bank which i mistakenly recommended based on its history got blasted to kingdom come while have saved it and then the stooges of first republic invested terribly and succumbed to the grim reaper. ever since then you've had to avoid the banks no matter what and the scrutiny is so great and liability is too outsized for anyone to handle. all the regionals have been crushed and many have large dividend yields. something that's often a red flag because wall street think that means it could be gutted. tomorrow we'll hold our monthly meeting where you'll speak and answer your questions at noon. this time we're changing things up and talking about what needs to happen for certain stocks to go higher like morgan stanley and wells fargo. for the former we need them to recognize it's now an asset gathering that advises individuals, very little credit risk which p give it a higher multiple versus pure banking stocks. but even with that yield morgan stanley has been pummeled to no end. meanwhile, wells fargo can't get any traction at all. a monster buyback in july although, i'd argue i

look what happened to silicon valley bank. they said this is a risk-free investment. would have ever thought one of the biggest -- >> that's the bigger elephant in the room. charles: right. because, i mean, on paper, hundreds of billions of dollars are being lost right now on paper. >> what's lurking under the surface that's even bigger or is the fact that 10-year rates are 75-80 points above where they were in march. that's something lurking under the fast that gives everybody pause. shar charles in the meantime, stock investors have been told, you know what? if you're going to stay in the market, get out of those mega-cap names that were rocking, they're too expensive. all year long they're told be defensive. utilities and staples getting hammered. so again -- widows and orphans. [laughter] you know what? we need a special fund for them because -- it's not so paint by numbers, this old wall street strategy, all of them one by one failing. >> they all a failed. and we're all, you know, we kind of look in the rearview mirror to try to get our direction. look, i'm stil

last march we had a scare because of interest rate with silicon valley bank and others. where are we now in that process? are you resting easy? >> so what you pay us for is not to rest easy. we don't do that. i would say where we are is this -- things have certainly settled down. we see the funding markets -- you know, we pay a lot of attention to banks that looked anything like the banks that had the problems. and we made sure that they had credible liquidity plans and plenty of liquidity and all of that. so i think all of that has worked. we set up this facility that's available for banks to borrow. all of that has led to a real settling down. but our job is to be on the case, and we're still on the case. and we will -- you know, we'll keep after that. banks are generally very well capitalized and highly liquid in our country. banks are strong. we benefit from dodd-frank that we went through, you know, with the former governor and many others. so we benefit from a well capitalized banking system that is much better at managing risks than the one that entered the global

>> it is a great -- listen, we brought back qe for a short period of time after silicon valley bank failed right. when i say this, people are, like, that's not going to happen for a long time. we switched course this year. >> it is debatable whether -- i personally think it is a decent bar bet, no one would ever know, but if we let silicon valley bank fail, i'm convinced we would be in recession already. but we didn't. the fed flooded the system with $400 billion of assets, we essentially backed every deposit. >> how do you convince there is not one? >> i think the only difference now is that two things that are different, one is that inflation is a binding constraint. in many ways, i said before here, the fed is fighting the federal government to bring inflation down. if you're serious about bringing inflation down, it is hard do it if you're running massive budget deficits. that's the first thing i would say. the second thing i would say is that interest expense on the debt is now spiraling out of control. so, again, the fed could step in and buy treasuries, as they have done before, but

silicon valley bank, signature bank.g to fail and bdm size companies, the one place you can tighten in the economy as small businesses and households in the fed has done that by overly relying on the fed funds rate. balance sheet reduction is catching up with the bond market and we are seeing treasury yields rise. lisa: to stick on the point tom was talking about, if you have such a swath of the voter base that is feeling this kind of pain and if you have small businesses that account for a significant portion of the jobs losing momentum, windows that start to trickle into a higher unemployment rate, when does it start to reinforce and bring rates down because of slower growth? tom: we were already at that point in march of this year. we had financial stabilization via liquidity injections. when does it begin to bite again? sometime between christmas and valentine's day when the consumer gets those late 2023 credit card bills in january and you start to see a pullback. i do not see any slowdown in consumption. we do not

one of the manifestations was silicon valley bank earlier. 7. -- same tune into late 2007. do you have a conviction that they will sustain and get through this carnage? dr. kroszner: i only speak for myself. i can't represent other views. it is interesting to look and go back to the financial crisis, it was when markets started to get word about the totality. it wasn't until the summer of 2007 that the top part got in trouble. jonathan: i love meeting with former fed officials because they can tell us what they think. the conversations go after the selloff? randy: i'm people will say finally the markets understand what we are about and they've got it and that does -- does our job for us. the markets kept thinking, these guys say they are going to hang tough but most people in the markets have only been there for 10 or 20 years and they don't realize that in the olden days, the fed would hang tough. we have only seen what has happened since the global financial crisis. there are willing to do that and the markets are getting that. that is the d

say something about it and it is a new situation we have not had 46-9 months, it releases the silicon valley bankt . jonathan: thank you as always. on the fed on whether they weigh in on this. later today, daly with bramo. i know where you're going with this conversation. mary daly on the bond market. are they willing to talk about it or will they take the line which i am puzzled by it? li: i am puzzled and watching but not necessarily changing his outlook or guidance as a result. at one point, does this change the view of the fomc when it comes to raising rates again, but also what the threshold is the cut rates going forward? tom: before this carnage, j.p. morgan was 15% greater market cap than bank of america. it is now 100%. lisa: is it an issue of stability or profitability? it is an important point. tom: mr. barr is about stability. jonathan: earnings two fridays away. coming up, why ozempic might be changing. from new york city, good morning. ♪ to find your personal style. endless hardie® siding colors. textures and styles. it's possible. with james hardie™. and your store was also the fir

you see since the silicon valley bank failures, we capped at 20. in the equity index. you need it to go up and then start to go down quickly and make a spike on the chart before the all clear. last year, 20 was more like the low. i will point out last friday where there was a bid in volatility. you had a lot of people buying protection ahead of the weekend with the unpredictable geopolitical situation. i'm watching that today to see if the vix is building in the distress in the stock market or yields. that would tell you dynamic is in play. typically you have volatility drain out on a friday. >> it is weird. we have been talking about how long the vix was stuck under 20. it doesn't seem like it is really stock market or bond market related. it seems like it may be geopolitical. now we're hearing is it a go for ground forces to move in to gaza? is that really what is it, mike? iran sabrerattling? >> some of that is bleeding over into equities. you somehave the unknown factor. it seems like there are many things we don't know how they will turn out.

that was the silicon valley bank panic in the spring.ere but not being felt at least at this point. take a look at the leverage corporate loan etfs. these are floating rates corporate notes, somewhat risky and you've seen you've got these important lows in the latter part of last year and recall this year and pretty good little up trend, in order,ther words, e willing to step in. so far it's holding in there okay, andrew. >> meantime, mike, wanted to understand what you think the setup is right now into earnings. i know we've been talking about a lot of geo political issues right now but to bring us back to sort of just the numbers themselves and the companies that we're focused on. >> it seems as if the setup is relatively undemanding in terms of what stocks have done in general on the way into the reporting season. so you've had the bar lowered to some degree based on what the market is done, basically looking for flattish, maybe a little bit up on the consensus. it going to be concentrated in tech. outside energy looks better. presuma

that was when silicon valley bank went down. there was a risk aversion.ts at the end of the market cap spectrum, and big growth stocks in the nasdaq, that's what's been keeping us going. arguably, the rest of the market has taken medicine, looks less expensive. let's take a long-term look at long-term bond yields, the tlt, eft, the treasury etf that holdings 20 years and longer dated securities. here we go, 84, draw that line all the way back, and you're basically, that's a bad line because we're basically going back to the mid 2000s which basically tells you when longer term yields were back at this level. i'm not enough of a chart believer to say there's some kind of magical support at these levels just because we did bottom around there almost 15, 20 yeerars ago. it is a big marker for value being created at the long end of the treasury yield for those willing to buy and hold them. the semiconductors in the overall market, those have been two leadership sectors. that's been good news for the market. you like when semis are out performing, housing a big

plunging the most since the march disruption we saw with silicon valley bank. if you wanted more input, we have fed speakers including atlanta fed president raphael bostic, susan collins at 4:00 p.m.. they say the same thing. we don't know comment on the margins if the bond market does our work for us, we will let it. what you make of the fact that yesterday we get the meeting minutes and some are the rally in bonds and it is the same thing everyone is saying. jonathan: is a strong nod towards what was already happened. does it stack up with what we heard from chairman powell? lisa: that is the massaging. jonathan: do you think there was some massaging? lisa: i can either confirm or deny. jonathan: susan collins had this to say. likely at the peak of the tightening cycle. u.s. secretary of state antony blinken giving statements to the press with prime minister netanyahu in the next 15 minutes. will look out for those comments. joining us as the lead equity analyst. go into the cpi report, what are you in the team looking for? sophie: good morning. we are, along

concerned as what we saw in the spring because we think the deposits are more stable at these banks than silicon valley. they are only losses if they he n need to recognize them. svb had to recognize the losses. having said that, if we have another sharp rise, that is where the stress comes from. we think high are fer for longe. the bad news is no news today and unknown news we need to worry about going forward. >> another majority of the holdings in the big banks. i want your take on the big banks. when it comes to the regional banks, what do you think of the valuation in that area of the financials? you mentioned the big banks are cheap right now. do you have the same thought with the regionals? >> the regional banks are also cheap. we think the credit concerns and lending concerns in particular the small and mid sized businesses and commercial real estate issues will be a bigger factor for many of the regional banks. in addition, they are seeing more pressure on the deposit side than the big banks which is a flight to safety for consumers who moved deposits there. we are less enthusiastic on the reg

bank like silicon valley, get away with not pricing assets of fair market value and customers started they were in march, and bonds it more since march, it will take less people leaving to create more pain so jpmorgan at an all-time high, and down 30%. smaller regional banks. stuart: the war continues does that have any impact on the national debt. >> absolutely. i'm not a national security or political expert that markets can tell you a lot, treasury yields drop with stronger than expected inflation report. they expect this to escalate or stay around pretty long. maybe a china/taiwan event, between russia, ukraine, israel, and hamas. the national debt is passed the point of no return and only go up from here, the scary part is government is spending money like it is wartime. we have the same level of debt to gdp we were at at the end of world war ii but our economy is 100 times bigger than it was in world war ii. that's a lot of debt. the other comparison is interest rates. in world war ii interest rates were less then one%. one person. now our debt is refinanced at 5%. that is unpre

banking? >> it's a mix. one of our largest holdings in the oakmark select fund is first citizens that bought silicon valley's assets out of rereceivership earlier this year it's an excellent bank, very well managed doesn't get the attention it deserves for its track record and its size, being a top 20 institution today. the stock's up more than 150% from the lows this spring. in our view, that's fully justified by the growth and the earnings power we've seen since then this company was going to earn around $70 per share before buying silicon valley. now it's on pace to earn around $200 per share next year at around 1400 for the stock price, we're still paying just seven times earnings it's companies like that, the large banks and some regionals where we have faith in the deposit franchise and see a low multiple. >> we were talking last hour with anthony of sofi, if the fed goes even further in december, it's not necessarily priced in, but just the size and scope of the unrealized losses on the balance sheet and potential more deposit pressure we could see in some of these regionals if the fed keeps raising.

banks. silicon valley happened at ten-year 3.6%. >> right. >> different time. >> i mean, we do have -- liquiditys abundant. everything got saved on deposits last time around. jim, i think that does help. any concern there might be about the banks this time, although carl's absolutely right, of course, and bank of america stock yesterday did reflect that continued concern, at least just about embedded losses in its portfolio. >> right, and look, i think that there are always going to be loss. i had macy's on last night. they have a credit card division, and it's experiencing losses, and defaults, and we know that the student loan, hear that endlessly, they have to finally start start paying, but i would say that we normally -- kind of the normal defaults that we have in 2019, i keep going back to the fed wants us to return to 2019, and it's housing that hasn't returned. food is coming down so quickly. >> you see egg prices this morning? >> throwing them away. >> yeah. >> i just think that we're not going to get to a point where a box of cereal is going to cost as much as 2019. it's going to cost

silicon valley. they had a much bigger problem in terms of the math than bank of america, and their depositors were all venture capitalists pulled their money. bank of america, i don't lose any sleep worries about bank of america, believe me. would i buy bank of america today? i wouldn't, because it has an earnings problem. it's an earnings progress, it's not a solvency problem. it's a question of, what do you want to pay for a wbank that ha net interest problems? when you have a $700 billion portfolio that's under water, it's a problem. not a disaster. >> small business hires, i think, almost 65%, 70% of the people in this country, the -- basically, the life blood of small business are small and regional banks. credit conditions tighten, regulation, how important is that whole set of circumstances to the economy? >> well, they are already tighting because they're losing deposits. i had a small -- small idea that when silicon valley happened, it would slow the economy. it hasn't. not sure why. but there's a lot of fiscal stimulus. people in business can still get loans. so, on the margin, it's restrict