right to cnbc's steve liesman live in washington, d.c., ahead of the fed. steve, take it away. >> reporter: markets trading right now with an 84% probability of a 25 basis point hike. that's below the 100% level we go into these meetings with on the day you have an announcement. the fed is expected to hike 25 basis points. you can expect the fed chair to say banks are well capitalized and talk about this idea of separating monetary policy with financial stability dealing with the bank turmoil. and he might, and this is the key, uncertainty about future moves. it is in the guidance where all of the action is likely to be in markets today and there could be sharp reckoning in those markets depending on what the fed decides and what fed chair powell says. the market is priced in the chance of one more hike and then cuts beginning in the summer. pretty sharp down. it is priced right now, there's the 4.40 again and the fed that currently predicts year end will be 5.13 and could today ratchet it up to 55.37. the fed chair and how much concern he expresses about th

let's get to steve liesman with the details. what's happening, steve?. >> steve, thank you for clarifying we appreciate it our steve liesman. let's bring in my next guests to respond to this as we see negative stock market sentiment as well has been surge of late chris is chief equity strategy mangosuthubuthelezier and jim is with bianca research. how important is the next fed rate hike or two or three? do you prefer stocks or bonds at this juncture? >> well, the next rate hike is going to be really determined by what is the fallout of this banking crisis are we going to continue to see some kind of credit contraction because banks cannot credit their deposit bank i happen to be in the case that the deposit base sun sure for the loans and that's going to lead to a faster and broader slowdown in the economy. if so the fed won't hike rates if i'm wrong on that they will overstimulate the economy and they will hike rates and go right to where they were in the beginning of march and look for 6% or more so expect extreme volatility in the bond market which i

. >> i have some breaking news with our steve liesman in washington regarding the fed boston fed president about to speak at the economic policy conference what's she going to say, steve >> reporter: yeah, scott, we have two officials talking, tom barkan just on the wire now and susan collins here collins is going to say some additional policy tightening will be needed and barkan will say policy will need to be nimble if inflation persists, we can react -- we, the fed -- the range of outcomes is wide. on theish be up of the banking turmoil and impact on the economy collins will say increase in certainty about monetary policy. bajs are likely to take more on lending and reduced bank lending may partially offset the need for additional rate hikes. barkin will talk about this idea -- both of them see the banking system as sound and resi resilient. barkin doesn't see any change in the lending out there or deposits right now he says lending pullback would limit consumer spending. business investment as well. but it's too early to note if that will happen tightening credit could bring inflation

. >> so steve liesman is with us, as well. we asked him to tell us what he thinks the fed might be thinking about all of this. i would love your answer to that question this seems to be part of the direct fallout of what they've done over the past year. >> no doubt. it's wise, scott, the fed prefers to move more carefully, and if you ever want to know why, people say the fed shouldn't telegraph it it does so generally in order to give banks and other players in the markets time to adjust of course, we've just gone through one of the most aggressive rate hike cycles in the generation or two, i guess you might say, and so the result is that some of these assets on the books of the banks are having very large losses in them, but what we don't know, scott, is the extent to which, a, the fed knows about this already. you would hope in this post-dodd-frank world in scrutiny that the fed knows about this, that this is partially taken care of and gamed out, scott, in some of the stress testing they're doing and you also hope, scott, w

steve, i wonder if you think that they've worried about this enough >> scott, you're more charitable to the fed than i was. all i did was look back at the report -- >> we have to work on liesman's audio. steve, i can't hear you. let us fix that. i do want to get back to you and get your thoughts on that as one of the clear questions also remains what all of this means for fed policy coming up not only in the march meeting but in those ahead. let me know when we have liesman back we have tony with us, too, for more on the fallout of svb i assume you can hear me and i hope i can hear you. >> i can hear you. thanks for having me >> i want to know what your thoughts are as this story unfolds before i ask you another series of questions. >> this is very unfortunate because silicon valley bank has been a cornerstone of the ecosystem for technology companies and life sciences for 40 years it's estimated almost half of venture capital dollars at some point have flowed through silicon valley bank. silicon valley bank not only provides deposits for startups, a lot of the venture capital funds also bank there. startups have venture debt to be able to provide additional financing outside o

steve liesman's got it. hey, steve. >> hey, carl.yeah, vice chair for supervision, michael barr, saying the fed is evaluating whether the application of more stringent standards would have prompted the bank to better manage the risk that led to its failure. by way of context, he's talking a lot about right there the 2019 changes to the dodd/frank act. he does seem to suggest that, perhaps, had those changes not been made -- i will tell you some of the banking industry disagree with this, but barr is suggesting that maybe had these changes not had been made, the bank would not have failed. the bank system he says is strong and resilient and well capitalized. the fed is committed to ensuring all deposits are safe and continues to monitor conditions in the banking system. i want to go through some of the tale of the tape here, which is maybe potentially interesting here. he says that silicon valley bank was assigned a new team of supervisors in 2021. they were issued three warnings of ineffective oversight in may of 2022. the fed's rank

you the last word where are the markets telling you about where we're going with rate hikes >> steve liesman i see our next guest getting ready there in the panel and i'll keep them waiting for just one more moment steve, are you there can you put a button on this >> can you hear me >> i can hear you. if you can just put a button on this of where the market is in terms of rate hike and terminal rate >> if you can put up that fed funds chart for 2024 it's everything it's the opposite of the chart rick showed you the price and i'll show you the yield. we're down 4% and we were as high as 5% in terms of the 2023 funds rate let me quickly correction, kelly, i middsaid ten accounts t the bank and a lot of companies use cash management software that distributes to insured accounts and it's one way to do it and david was talking about the ability to use corporate cash and a variety of other ways is out there and they shouldn't have had all of that money in the bank. >> before i say good-bye, everybody. raghu, just tell us what will you be watching to see if the contagion risk has been stopped or no

to meet demands for withdrawals and any potential run on any banks we will have the latest with steve liesman here in studio this morning we should tell you that hsbc is buying the silicon valley bank uk it will protect the deposits of uk clients that deal went through for 1 pound. also, regional bank is getting lending from the federal government it is trading down 58%. we want more market reaction you see the equity futures at this hour showing positive signs. dow jones industrial average up 58 s&p up 19. nasdaq up 85 this comes after the rough week for the markets. last week, dow down 4.4% s&p down 4.5%. the nasdaq off 4.7%. if you look at treasury markets this morning, last week, there was a flight to quality on friday you saw yields down across the board. that is continuing this morning. right now, the 10-year treasury is down at 3.605%. 2-year treasury at 4.347% after being above 5% on thursday finally, let's look at the dollar and see where things stand. you see right now the dollar is a little weaker. down .50%. >>> to add this, crypto circle will be made whole the company saying $3.3

following those hawkish days of testimony from the fed chair now down to just 30% let's bring in steve liesman man, we thought they had a lot to absorb a couple of days ago, steve. it jets more and more complex by the day. >> you have ever seen anything that as wiped out, essentially, the testimony of the chairman? if you could put that three-bar chart up, it's like it never happened and i can show you three or four different charts that have completely gotten rid of it. we were at a 23% probability on monday actually, if you go to 9:59 a.m. on tuesday, it was right around there. then 72% where it becomes not only the odds-on probability they'll hike 50. now we're back down as if the chairman didn't speak. and i think what we're learning here and what we knew from the great financial crisis, even from the pandemic, guys, is systemic risks, concerns about the bank trumps everything as far as the fed is concerned. i don't think they're at a point yet where they could get rid of the 25, but i don't think the market pricing here that they're more likely to do a 25 than a 50 is wrong especially if

steve liesman digging through all the red and yellow and green highlights and he joins us with the detailssteve? >> the federal reserve's collection of economic anecdotes from the 12 federal reserve districts as economic activity increased slightly over the six-week period. inflationary pressures did remain widespread. though price increases moderated in many districts. so that's good inflation news. leave market conditions, however, did remain solid. six districts indicated activity expanded at a moderate pace. supply chain conditions continued to ease he was another of the big headlines there consumer spending helped steady auto sales were little changed inventory levels did improve inflation continues to reduce consumer income and discretionary spending according to the beige book here concern was expressed about rising credit card debt in self-of the districts. travel and tourism a stalwart of this economy these days, it did remain strong. manufacturing activity stabilized interesting comment here because there had been a period of contraction housing market remaining subdued. labor av

steve liesman joins us now with more good morning, steve. >> good morning.e available. the ecb would deposit euros at the fed, the fed would deposit dollars at the ecd the question is whether it's needed or just preempted no information we can find yet of a dollar shortage or dollar scramble around. it does have the potential to suggest that some problems exist and that the situation is worse than it appears. you can see it was used a lot during the great financial crisis, that's the spike on the left and then again during the pandemic and then they're pretty quickly unwound and have not been needed. the market trading with about a 60% probability of no hike and a 40% probability of a hike. weep put together a list of what might be on powell's notes there figuring out whether to hike inflation is high, and then this attempt to separate monetary policy from financial stability policy well, why not hike the credit interaction could be disinflationary or deflationary and the pause would give time for financial stability to take hold as we reported, sachs says n

steve liesman.what he needs to do or not >> the fed has distinct tools for, on the one hand, monetary policy, macro policy, and on the other hand financial stability as steve pointed out what we saw last fall with the bank of england is that a central bank can provide support to the markets in the middle of a tightening cycle, and i think that's what the fed will continue to do i expect a 25 bases point hike later this month i always expected that i never thought a 50-basis point hike made sense. i think the fed will continue to tighten. >> this is sort of the argument that we heard yesterday, and it was said if you go the route of letting the market dictate to you what is happening, you can't do it. what would you do? >> well, andrew, i think it's right in that, you know, it's really about the strategy of monetary policy. unfortunately, chair powell made a big mistake last week when he gave his testimony because he laid out a careful strategy. last year was about how fast we are going to raise rate

steve liesman filed this report. >> dramatic new details about how fast and furious events were movingthe final hours of silicon valley bank before it was shut down. michael barr testified to the senate banking committee that on the thursday before it was closed, svb executives told regulators they feared more than double that amount was headed out the door friday morning. >> a total of $100 billion was scheduled to g out the door that day. the bank did not have enough collateral to meet that, and, therefore, they were not actually able to meet their only gages to pay their depositors over the course of the day and they were shut down. >> it created a hyperchallenge now facing bank regulators the fees that could flee the bank as a result of technology and social media that could spread to other banks. it's a problem that regulators at the moment have no answer barr had harsh words about the interest bank saying not at all in line with reality supervisors cited problems that were numerous over the years no word or testimony on what the fed board did about it then. another key issue, new

. >>> all eyes are on jay powell ahead of the days on the hill with testimony steve liesman has more >> reporter: he has to tell the u.s. congress that a year into the rate hike cycle and the fed is not on the road back to the 2% inflation target. powell is likely to suggest the possibility of rates that would go higher than the 5.13% he could suggest rates to remain at peak level for some time to come and indicate some, but not sufficient progress with inflation. the big trouble for powell is the economy not cooling and inflation not showing it is headed to target rubeela farooqi spoke out about monetary policy knotting having the effect on prices or the labor market or the economy. farooqi think there is is little to do to slow service sector because it is driven by higher wages and pent-up service like travel powell can be expected to affirm the market's hawkish outlook on the fed and sees a rate of 5.45% by october he could do more for easing this year and more easing next year the fed chair might be a little cautious here to keep options open in case the jobs report on friday sh

. >> i want to get to steve liesman now, because we have st. headlines from steve. >> yeah, david, thank you. st. louis fed president, jim bullard, the first fed official to speak since the meeting, he's calling the fed response to financial stress "swift and appropriate" and he stresses that the fed can address inflation with monetary policy tools and financial stress through financial stability tools. i want to redo the direct quote on this, because i think it's important. "continued appropriate macro prudential policy, they can contain financial stress while appropriate monetary policy can continue to put downward pressure on inflation." notice he says, appropriate, doesn't talk about raising it or cutting it. he just says, appropriate policy. doesn't talk about the direction of rates at all. regulators stand ready to take additional action if necessary. he points out and goes through the history of a couple other financial blow-ups, says, "not all financial companies in the past adjusted to changing interest rate environments, and when ther

steve liesman joining us with the ñrxddetails. it sounds like the big takeaway so far is don't expect any big change in the way it's currently be being done. >> no, they still have a lot of debate to do in hearings and things like that to figure outi but let's start with what top financial regulators were saying. they acknowledged this morning mistakes wereok maid on their i the recent bank failures but most pointed the finger at svb's management and what regulators say was a deeply flawed approach to handling interest rate risk. >> they were issued a matter at based on the w.!ccuracy of their interest rate riskñr modeling. essentially the risk model was not at all alignede1xd with rea. >> we also heard dramatic new details about just how fast and furious events were movinge1 in the final hours of svb beforee1t was shut down.e1 fed vice chair mich#Ñ you just heard there he told the committee thcf■ after $42 billin left the bank on the thursday before it closed, 100 billion was scheduled to go out the door friday morning, leadingg+

economics reporter steve liesman, great to have your insights, steve. thank you very much. so we are still watching this rally on wall street, jason. we talked about the quality tech names that are well funded right now. are there other areas you're looking at now a lot of people believe, hey, the fed's hands are a bit handcuffed, they can't hike rates anymore, other areas you see upside in? >> steph made a really good point earlier. there's aspects of the financials i think are opportunities. one, i think the insurance company, there are some opportunities there. the bigger banks, the morgan stanleys, the jpmorgans and goldman sachs is an opportunity. i don't think underwriting is coming back online anytime soon. i think they will benefit from a little bit of a sentiment shift as it relates to the regionals. i like financials, specific financials, and i like the semis. i think the semis are, as steph mentioned earlier and i agree, well priced, well positioned, and they're in a lot of everything that we do. and i think that we can continue to benefit from some of the growth

. >> from more on what to expect let's bring in steve liesman steve. what do you think? what do you think he's going to say? do you think he'll talk about the circumstances for a pivot or pause and say i can't see a pause or pivot happening in the first half of next year? >> no, i think he's going to go out of his way to make sure any doves on your panel don't have any reason to trade. i think there was perhaps some concern coming out of the press conference that, you know, why did the market take it as dovish, maybe because he said that word disinflation 11 ftime. people understand that to the extent there's risk it's to the upside and i think he will affirm the market pricing which has that october contract up near 545 and almost eliminated by now any cuts by year end and it'll be interesting to me to see if he starts working on the rest of the cuts that are built in, which are now will show you the chart for the first time we put june 2024 on our bar chart we use all the time and that's where the cuts are now built in the question is whether or not powell wants -- i'm

banking committee meeting tomorrow morning should we expect any clues for the fed's next move and steve liesman more what are you expecting, steve? >> it is interesting because fed chair powell is sitting for two testimonies this week and he'll have to tell congress that a year into what is the most aggressive rate hike cycle in a generation the fed isn't still confidently on the road back to 2% inflation target. i think powell is going to suggest the possibility of higher rates than the 513 consensus of the fomc in the economic projections and he'll suggest rates will remain at peak level for some time and indicate some, but again, not sufficient progress. the big problem for powell, it is not showing headed to target any time soon and not according to the most recent data and high frequency writing over the weekend, quote, a part from the slump in the most interesting housing sector and monetary policy has not yet had the desired effect on prices and the labor market or the economy. powell can be expected to, i think, at least affirm the market's new and more hawkish outlook on the fed that h

news alert from the fdic on the banking industry and steve liesman has it. >> thanks very much. the fdic chair in testimony he will deliver tomorrow to senate banking says the financial system is sound and says it continues to face significant downside risk. those risk comes from inflation, importantly he says they come from rising interest rates, as well as geopolitical uncertainty and credit quality and profitability could weaken at banks due to these risks. as well banks could tighten their loan underwriting standards and slow loan growth. makes a point of saying more interest rate hikes could heighten unrealized losses at the banks. the fdic chair talking through senate banking to the federal reserve. decline in deposits he says but the vast majority say there's been no material outflows. he says the banks are prepared to access discount window and bank chair funding program lending as needed to meet their liquidity needs. banks he said responded to zero interest rates by, quote, reaching for yield. what's important about this, he's pointing to the fed's monetary policy as p

let's get to steve liesman, who i think is following too steve. >> yeah, carl, it is 50 across all threeifferent benchmarks of the european central bank, so i will tell you this, we went into this thing, the odds had been moving around all morning, the probabilities. we went into it with a 65% probability of a 25 based on comments that were made just before the number came out or the decision came out from the ecb vice president about concern about the banking system that suddenly led people to believe that all of a sudden the ecb might go 25, but they're projecting ahead, and i've got a few more headlines here, i'm looking at the comments here from the elevated level of uncertainty reinforcing the importance of data-dependent approach for the ecb, which is interesting. and they'll say it's going to be determined by an assessment of the inflation outlook in light of new data. so, they're kind of taking future rate hikes, it seems to me, in these comments here and making them a little bit uncertain. now, i want to check what's happened with u.s. markets and interest rates across the board

steve liesman.sis points asçó aÑi hik but what will the fed signal moving forward when we hear from ujjñ let's bring in evercorps isi vice chairman, krishna guha. you're expecting 25, are you in the camp that says they should not do it, bjú or they'll go forward? >> i think on balance,+■ they'r okay to go forward wit today given that we see some encourage inge1çóÑi stabilizations@Ñthat interventions are working to tamp down some of the instability in the system. i think it isÑ)hrs(ortant that they maintain control of through this bankingp,■ stress. for inflation control, butxd al for financial stability, as well, because we don't want them to losew3 control of yields at this pointfái)háime, but -- it' a big but, if they go forward, i think they really should wrap it in cotton wool and signal after hiking 25 today, they're going to be very careful, very cautious looking Ñiforward, whe they accept there's more uncertainty with more tightening might be required. and that they wouldt( be prepar to pause

steve liesman joins us now with more on those efforts. ave not seen anything like this, steve, in a long time. >> reporter: no, but tyler, that was an excellent explanation, and while the worst has opinion avoided, it appears both banking stocks and fixed income markets trading with continued uncertainty, continued concern over whether enough has been done to fix the financial system evercore isi writing banks will remain under pressure from less stable and more expensive deposits, attention will turn to other parts including insurers and bank interest rates swap counterparties carrying larger unrealized mark to market losses concern about the economic and financial falliot of sbv's demise showing up in a massive fall in the massive outlook for rate hikes funds rate now trading around 4% folks, last week it traded as high at 570 so 170 basis points of expects easing has now come into the market. here's what's been done just to underscore what tyler said the guaranteed deposits at sfsk including the uninsured deposits creating an implicit b

steve liesman has that news and joins us now from washington >> reporter: tyler, thanks very much juste the 2:00 hour, kayla tausche came on with information from the white house about changes they intend to pursue in response to silicon valley bank. those changes include rolling back some of the alterations to the dodd/frank bill that were made during the trump administration, but the bank policy institute, which represents some of the biggest banks in the country, has a statement from its president saying, quote, it would be unfortunate if the response to bad management and delinquent supervision at silicon valley bank were additional regulation on all banks that would impose meaningful costs on the u.s. economy going forward. the fed has barely begun its promised review. this is a strong feeling of ready, fire, aim so tyler, a very strong response from banking association there to these proposed changes which come as indicated in that statement, before the fed on may 1st and the fdic on the same day are scheduled to put out their reviews of just what happened. kelly. >> all right >>

. >> joining me is sheila baer which had to take control of silicon val owe friday, and steve liesmaneve, let me start with you. what will happen tomorrow morning? >> we are waiting to see what the federal reserve says. do they do anything? do they calm the market through a statement or programs? we don't know if that's the case at this point. it's a big, big question tomorrow morning, chuck, two things. one is does the fdic announce how much deposits will get and the number could be critical as to the kind of confidence that would permeate through the market and if the market is 80 cents or 90 cents on the dollar and there might be some calm that might pervade the market and uninsured depositors at other banks will be concerned. that's one. the second thing is does the federal reserve work with other agencies to provide anything regarding insurance or some kind of assistance to those sitting in uninsured deposits at other banks. >> sheila baer, you ran the fdic. what can we expect tomorrow morning? >> you can expect what the advanced dividend on the uninsured. that will be a number t

on his radar i don't think it bothers him right now. >> all right steve, thank you as always, steve liesman michael, always good to see you. what was your takeaway here? were you surprised by the market's reaction? >> you know, steve is absolutely right. with regards to, you know, everything he said about chair powell being happy about the market's reaction today. this is a fed that needed to get more hawkish so maybe i would push back a little bit on karen only from the perspective, karen, that, you know, i just don't think he did enough to articulate the view that the fed wants basically a slowdown of the economy and is okay with that and what chair powell has done over the last, you know, several months is basically reiterate this idea of a soft landing, how it's possible, how the unemployment rate doesn't have to go up that much, a and i know he is trying to be optimistic but it served against the purpose of actually being hawkish, which really the committee is, right? so i think today's reaction is exactly what it should have been you know, the curve is really, really important i think

the latest balance sheet showing just how much banks tapped its lending window this past week steve liesman joins us now with some new details steve? >> melissa we have some new numbers, some big numbers. but we don't necessarily have answers what all these answers mean let me talk you through it and i'll tell you what we know and what we don't know so the federal reserve balance sheet increases by $297 billion. that's the most we've had since the pandemic began and that started liquefying the economy a record, up by 148.2 to 1 first $4 billion that's a big number to take from the emergency discount window. the new fed facility we have, borrowing of 11.9 billion. half of that increase in the 297, remember that number at the top, that was from a bridge loan to the failed banks. okay what we don't know, melissa, and i'm preempting a question you're going to ask me, because they asked me this in the last half hour, is in all inflation stationary we don't know what we don't know is was this one bank, two banks, three banks or a whole bunch of banks borrowing from the window, trying to liquefy t

. >> senior economics reporter steve liesman joining us now what are you hearing at this moment >> you lay out a fact here, a fact play here for you, scott, which is 87% of silicon valley banks deposits were uninsured the percentage for banks of similar size is 40%. they were really running on the edge here. and the idea that, which everybody is trying to figure out, right, if you're an uninsured depositor at silicon valley, you want to know more detail for everybody else, the only thing that matters is this a one-off or something bigger, broader? the extent that this bank had flighty deposits, i was asking sheila barren about the structure of the bank and here is what she told me she said it is a good reminder, banks that have to rely on uninsured deposits are subject to runs i think that is on one hand self-evident but owner, the regulators, where were they, scott should they be concentrations as much on the liability side of the bank plete as they were -- bank balance sheet as they were on the asset side. and sometimes looking at what is the bank holding in terms of assets to offset

week on interest rates we'll size it up with the investment committee joining me today we have steve liesman, too, who will join us bryn talkington is with us, jason snipe, steve weiss, joe terranova and bill baruch. the dow down 575 we're down across the board as you know by now. pressure on banks across the board. yields are a very big story today. there's the ten year, 3.41 the move into two year has been absolutely stunning. let's put up the interday of the two-year that gives you an idea of so many different things. fed expectations, sentiment, where the economy may be heading. before we came on the air today goldman sachs' chief economist handed to me as we come on, they take down their q4 gdp outlook on all of the fallout of all of this joe terranova, where do you want to begin ppi was negative, retail unchanged. we have a lot to discuss >> we know the massive deflationary shock unfolding in an odd way when you look at the s&p and the nasdaq, a degree of resiliency because the breakdown in confidence is leading to this massive reallocation within the market where once again the mega c

steve liesman, my friend, cnbc economics reporter. professor marissa worry from the law school.tor of polling at harvard canadice cool of institute of politics. and paula pounced on is here, she hosts a podcast, no one listens to paula pounce known. tonight we are all listened to you. and of course she is a phenomenal comedian. steven eternity first on this. why is public support waning? we didn't change our view on russia? >> from the latest polls. it looks like it's a partisan issues. becoming more partisan. you have republican leadership, from what i can tell, is a little bit loop war. there is a contingent of the republican party that is continued on supporting ukraine, and others dead set against it. they've gained some support among their base in opposing aid to ukraine. and i think that right now it's been a tough time over there militarily. right? it's a deadlock right now. around the city of mahmoud, which has been an incredible tragedy. the whole world, obviously, a incredible tragedy. the concern amongst ukraine shows results on the field and american support can wane

steve liesman is hear.he is in washington with the latest from washington with this story. we kick things off with dierdra b bosa. >> from the tech community from the founders that had money in the bank and they can continue to operate this week and investors, many of them had made bridge loans over the last few days to keep their portfolio companies floating the longer term outlook, though, this is more uncertain for startups with higher cash burns and those that need to raise more funding soon, they could be facing a tighter financial landscape. the hurdle for bank loans and other debt financing will be a different world going forward. one investor tells me there's a lot of gear in the sands with silicon valley it occupied a very unique spot here, becky and a fly wheel for the ecosystem. they had services, products and a certain amount of flexibility that big banks didn't or couldn't offer and many say that that is going to be very difficult to replace jeffries in a note says that short-term volatility no

steve liesman is here and has the cnbc survey. ase. >> yeah, great conversation you guys are having. this is an unusual meeting in extraordinary times, and it gives us a survey about the disagreement about what will the fed do and what should the fed do take a look at our fed expectations chart 72% said there willbe a hike, and our survey was from the end of last week 52%, only 52% say the fed should hike some say the fed should hold i its power right here, and then 86% says the fed cuts or pauses at the next meeting in july. okay, we ask what is the more important fed policy reducing inflation or protecting financial stability, and 52% say it's financial instability rather than inflation. and then here's a quote that suggests a further marking down of our forecast for growth and recession severity then we have mark of pieteed crescent the fed should not compound its earlier mistake by giving in too early in the inflation fight what about a recession 55%. it's up from the prior survey at 51 interestingly, september of 2023 is the a

steve liesman thank you.it that q&a from chair powell before the senate banking and continue the conversation about what this means for the markets. goldman sachs chief u.s. equity strategist david kostin joins us on set great to see you. >> nice to see you. >> anything here change your view you're 4,000 for the s&p which is basically what we are are you monitoring the may and june rate hike probabilities of what to do with stocks. >> what matters is what the market prices and in the equity market the market is pricing the idea that the economy is strong. why do i make that conversation? because cyclicals relative to defensive stocks, would imply, ism closer to 54 so the equity market embrace the view the economy is continuing to grow. i visited clients in asia, the market is essentially flat and fully pricing the economy doing well the four nos, no recession imminent, no earnings growth no change in valuation and you have no net money flow into the market and that would drive a view the market is basically f

also with us steve liesman. we want to get a check of the markets here as dom and sara

steve liesman joins us now, our senior economics reporter is on the phone. so, steve, you know, first, give me your reaction to credit suisse and what the swiss are saying, this idea of counterparties taking their business elsewhere maybe being the thing that lights the fire to where they have no choice but to do something. >> i think that's right. i did see that the market took a little bit of risk off with those head lilines. i don't know that the original headlines that gave the market some optimism really included a government or taxpayer money out of switzerland i thought it was always sort of an infusion of liquidity from the swiss central bank, so i'm not sure the story has changed as much as the market seems to think it might have. and i do think they will resolve credit suisse one way or another. i'm also a little encouraged today, scott, that in terms of other names that have come up, there's not much else that we've heard today. usually, the -- you have a headline overnight like this, for example, auto of europe, and there are other names that are

steve liesman is standing by steve. >> joe, waiting on these numbers here -- there it is, just came across than expected, a tenth better than expected that's all i have now on the personal income number here. i'm going to check the web site of the b.e. ooa. i don't see the number there now. pce price index, a little hotter looks like the headline is 5%. that is down from 5.3 on the headline core p.c. index up 0.3%. that's a little less than expected how about that for february. january was 0.5, revised down from the 0.6 that was there originally overall price index 0.3% real consumer spending minus 0.1% that's a big miss. that was supposed to be up 0.2 -- sorry, supposed to be 0.3% i'm looking for the income number savings rate is -- let's see what the savings rate is i can get that 4.4 so that went up. let's see. one more thing if i can find the spending number. there it is. minus 01 so that came down quite a bit. the idea on this whole story here, big, big numbers on income and spending in the month of january. they came down a bit it's still going to be good for gdp because we rose to t

let's get to steve liesman. steve? >> yeah, respondents to the latest cnbc fed survey, trying to figure out what the banking turmoil means for the banking industry and broader economy. 78% say it will be disinflationary or inflationary. give the win to the disinflationary side of things. 100% say it will mean moving from small to larger banks. 97% say tighter lending standards. 93% say reduce profits, because 72% say higher deposit rates must be paid. now, as for their support for what the government did, 62% say it was right to back up silicon valley bank and signature with government intervention. but 52% say support for future -- only 52% support future bank failure protections. why? we'll hear some of the commentary. one respondent says it may not be that palatable, but not guaranteeing uninsured deposits guarantees there will be runs on many more banks. another correspondent says the government has eliminated any responsibility in the banking system. as to what they think the government will do with rates tomorrow

bring in stephane, jf hightower advisers, a cnbc contributor along with senior economics reporter steve liesman in. maybe frame it with some contex] here, in terms of the fed's communication challenge. look, we were just at a 5% i] two-year note yield a fewr ago. people thought inflationq would force it to go to 6%. so maybe conceding in the press conference, and saying we may be cutting, it is not necessarily that tone deaf a message. >> yeah, let me first weigh in and say i don't necessarily share the professor's certainty about a negative outcome bq(m i do share his concern. i'm not sure that thexdq move o wednesday was the right move, andçó i think, it is a bit oflp cop-out to say time will oktell one of the classicçó monetary policy blunders. the fed's running an experiment here. and i think professorg just grabbed what is left of his hair and pulled it out. but they are running an experiment here. i can sayÑi that, right? i'm allowed to say that. stephane can't say that. but i can say that. what they're trying to do is they're trying to figure out, can they run monetary policy to attack i

you can call it either way >> which would be a hawkish pause as steve liesman said.e do you see it? have authorities stopped the problem in its tracks? p. >> not at all. i think we're in a world where inflation is higher. real interest rates are higher china is not going to be the growth force that it was it's not easy to have a soft landing here it's just surprising something hasn't happened earlier. so i think they did a good job in preventing bank runs, and credit both what the swiss national bank and what the fed did. but, you know, they can't necessarily fix the deeper problem in some bank's books it's not just banks and the economy more broadly we're in a situation where things are going to break. >> ken, i'm trying to figure this out in my head. if you guarantee all the deposits, implicitly, explicitly, whatever, do you think there's the political will to regulate it on the other end at the smaller banks and do it in a way it doesn't cost those banks their livelihood in the end but not create the moral hazards that everybody would therefore take >>i think the

know, our own steve liesman was flabbergasted by that as well, and tweeted as much, which begs the questionng, nick, is new. does the fed not appreciate the degree to which moneye1 moves i our system? and ifxd not, how in the world would that be possible? >> well, yeah, it seems very likely that people didn't appreciate howjf quickly the moy could move. this is a bank that didn't seem to be an obvious distress onq tuesday. after that announcement of the capital raise on wednesday night, alle1 hell broke loose o thursday. the other fact that got my attention, which was in martye1 grudenberg's testimony, the chair of the fdic, the top ten ac-.ezts ore1 depositors of thi bank had $13.3 billion. the concentration risk and the ability for thoseok concentrate deposits to move very quickly, i do think that's a game changer here in terms of5a■ thinking ab, well, this is what we thought@5b knew about, you know, money ant banks, and deposit run risk. >> you know,e1çó i can't help b also think, you know, whenever there's a change in any level oá leadership within the fed, we mentioned these titles,e1

steve liesman joins us with the very latest. > they are plunging concerns about the banking system rekindled after credit suisse plunging more than 20%. it's a furious fight to sa safety in the bond market. if you look at the next thing, the january '24 fed funds futures, that's the one that's down 56 basis points this morning. i have to say i don't think i've ever seen a plunge like this it's quite remarkable. we were at 450 yesterday, now we're down to 394 so there's an idea that the fed would hike another quarter and shave another basis point off. with the regional banks playing a key role, the fed will not raise interest rates last week and we've likely seen the peak of short and long-term prices in this cycle the federal reserve does have existing an existing swaup line but if the european central bank does want dollars and just to be clear, the fed is not saying anything, this program had already previously been in place but they do have an existing ability if the ecb -- if there's a need for dollars for the federal reserve

steve liesman has new and surprising reporting on how involved she may have or have not actually beene in supervising the bank what have you learned? >> san francisco president -- >> oh. d steve, are you there no we heard his voice for a moment. we'll have him when we can get it sorry about that >> we'll fix the audio issues and get back to steve. biggest laggards on the s&p today, chips, micron not helping the space on the wake of this headline that the chinese are going to review micron on a cybersecurity basis. but the dow is on pace for best week since november. stay with us >>> now let's get to steve liesman. we've fixed his audio. concerns around the san francisco fed and mary dailey watch you learned? >> herdistrict is the second - saw the seconde elargest bank failure in u.s. history. she's become a target of criticism. she would not have been involved as a key player in the bank's supervision according to several fed officials. you have a highly centralize dead sign to the fed's oversight of large banks like svb. it protects supervision under the fed board of governors in was

joining me now is nbc's jake ward in northern california and cnbc's senior economics reporter, steve liesman. so, steve, take us through how the regulators worked all weekend, how the markets are reacting, but importantly, where the money is going to come to cover the deposits that are now going to be protected beyond what is federally injured? >> right, andrea so it was aweekend i guess wit shades of the great financial crisis maybe not as hairy as one has experienced before, but what they did is they were staring down the barrel at a possibility of a broader run on the banks. the silicon valley bank was victim of a bank run concern about the safety and soundness of the bank. depo depositors starting withdrawing. they insured the uninsured depositors, the ones over 250 in silicon valley bank and signature bank they recapitalized another california bank, first republic, and sent an implicit signal of a guarantee for other uninsured depositors at other banks. they also put together a special fund at the federal reserve where banks could go and borrow at somewhat easier terms if they have a ru

. >>> let's continue the conversation on that note with our senior economics reporter, steve liesman.teve, you got a lot to chew on between what bostic said yesterday, waller last evening, and then this op-ed from furman. >> yeah. i think that waller spoke in the direction that the market was already moving if you look at where rates were -- in fact, believe it or not, they're a little bit lower, but the damage has been done there's been, scott, you know, a dramatic rethink of the fed already. then you got furman, i think, somewhat -- what's the right word not hysterically, but a little over the top, arguing the fed should panic the fed may get there, but i think it wants to get there a little bit more slowly, in a measured pace, is what i'm hearing from fed officials it may be they need to do 50 and go back to the front end loading, but they are conscious of the idea they don't want to tank the economy if they can help it. scott, we have had a 100-basis-point rethink of where the fed is going to be at the end of the year, but the big adjustment that i think the market needs to make h

steve liesman joins us with those. what can you tell us, steve? >> st.nt talking about a lot of the things dick kovacevich was talking about. he says he has an 80% probability in the scenario the financial stress we're seeing abates or goes away. he's also saying the probability of a global financial crisis is very low. he does say there could be a downside scenario where financial stress gets worse. in that case, if the -- if the high financial stress scenario comes to pass, he says, quote, i'm willing to react in that situation. in that case, he means more on the rate side because he's been very insistent in a speech earlier today and in a meeting he just had with reporters to say he thinks there's financial stability tools on one side and rates on the other side. what was he thinking about rates? at the last meeting he acknowledged raising his year-end outlook to 5.58, that's about half a point higher than the meeting at the fed. on the svb situation, he said it was very unusual, different from almost every other bank in the country. i asked him about

steve liesman brings us some of the highlights of that hearing. steve? >> yeah, kelly, dramatic new details about how fast events were moving in the final hours of silicon valley bank before it was shut down. the fed vice chair testified to the senate banking committee that after $42 billion left the banks on the thursday before it closed, svb said they feared more than double that amount was headed out the door friday morning. >> a total of $100 billion was scheduled to go out the door that day. the bank did not have enough collateral to meet that, and therefore, they were not able to actually meet their obligations to pay their depositors over the course of that day, and they were shut down. >> the detailed highlights, a hyper contagion challenge facing regulators these days. the speed which they can flee with the technology and spread to other banks, a problem for which regulators at the moment have no answer. barr had harsh words about the interest rate modeling, calling it not aligned with reality. barr's testimony made clear that supervisors cited

andy, nancy, peter, welcome to all of you and our own steve liesman is here, as well. steve, if i may, let's kick it off with you and bring us up to speed on what the market is now pricing in for the fed, which decision is due out a week from today. >> yeah. i think i'm overusing the word "dramatic," but i think it fits here a dramatic change in the outlook for the fed after a dramatic move earlier this week the march fomc rate hike probabilities, we're probably at 59% of no change, 41% for a 25 basis point hike it had been reverse. take a look at the outlook for the peak rate. a week ago wednesday, we were 100 basis points off of that here is the broader fed outlook. they're still toying with this idea that there is something of a hike coming. but then look at the cuts that are baked in for the rest of the year, all the way down quite a bit, into the 3s there one last chart i believe we have, which is the ecb rate hike probabilities picking up on what rick was saying. 85% now for a 25 basis point hike, and 15% for a 50 it had been virtually 100% for 50 before we had is

steve liesman is on the set this morning. we're going to talk about the jobs number.nk the fed is thinking about this, and whether you think really there is contagion here or not >> i'm curious now or are you curious now? >> now >> i thought you were still reading the -- >> no, you're -- my curiosity is -- >> i think the fed is going to watch this very closely. i was just going back and reading the monetary policy. >> reporter: to coreport to cons they did not see issues at the bank we have a quote from the monetary policy report to congress in which they say, you know, funding risk at domestic banks and broker dealers remain low. >> when was this >> this was reported to congress a week ago friday. >> okay. >> so pretty recent. from everything i'm hearing, this is a bespoke situation in the sense that they are a silicon valley bank, right and what we understand is that they have a lot of depositors there who have been taking out their deposits and that creates a liquidity problem. they should have, by the way, which is curious to me, beyond my level of knowledge right