Power Lunch - Relief Rally, and More Meta Cuts 03/14/23

Episode Date: March 14, 2023

Stocks are jumping today, as inflation data came in just as experts expected. And bank shares are soaring, as investors seem to think the worst is over. We’ll tell you how to position. Plus, Meta is cutting another 10,000 jobs, and leaving another 5,000 positions unfilled. And its no longer supporting NFTs. What does the future look like for Mark Zuckerberg’s company? We’ll explore. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Welcome to Power Lunch, everybody. Alongside Kelly Evans, I'm Tyler Maths. I'm glad you could join us on this Tuesday. Coming up, a relief rally on Wall Street stocks jumping as inflation comes in sort of as expected, and bank shares soaring as investors seem to think, Kelly, the worst is over. Well, at the same time, Meta cutting another 10,000 jobs, leaving 5,000 positions unfilled. They say they're running better as a leaner organization and they're no longer supporting NFTs. What does the future for Mark Zuckerberg's meta now look like? Before that, let's check on the market. It's down's up 153. We've lost some ground after that news of Russian fighter jets of downing a U.S. drone.

The NASDAQ is still the outperformer of 1.5%. Actually, the small cap rustles leading the way as bank stocks rebound today. For more on that breaking drone story, let's bring in Aymn Javvers with the very latest from the Pentagon, Amen. Kelly, the Pentagon's European Command says the Russian airplanes targeted an unmanned American MQ9 Reaper drone

that was flying in international airspace over the Black Sea. The two SU-27 fighter jets conducted what the U.S. calls an unsafe and unprofessional intercept with the U.S. Air Force drone. They say one of the Russian jets struck the propeller of the U.S. drone, which forced U.S. operators to bring the drone down in international waters in the Black Sea. Now, that came just after the Russian jets had dumped fuel on and flew in front of the drone in what the U.S. side calls a reckless in the black sea. environmentally unsound manner. The American military says the incident demonstrates a lack of

competence on the Russian side. And the United States also says Russian pilots have engaged in a pattern of dangerous actions over the Black Sea, which the Pentagon says are dangerous and could lead to miscalculation and unintended escalation. The MQ9 drone is made by General Atomics, and it's mostly operated by the U.S. Air Force for long endurance, high altitude surveillance missions. The Pentagon says U.S. aircraft will continue to operate in international airspace. Now, remember, we saw similar market jitters in response to an incident back in November when a missile from the war zone landed in NATO territory in Poland. In that case, the missile turned out to be an errant shot fired by the Ukrainian side, so nothing to worry

about there in terms of NATO territory. A little bit different picture here today in terms of what's going on in the Black Sea and international waters. Guys, back over to you. All right, Aiman. Thanks very much. Amon Javis following this break. story for us this afternoon. Let's go over now to Dom Chu for a deeper look at the market moves. Dom, the market was really a bullion this morning. And then when this news broke, a little bit of the steam went off the boil. It wasn't just Tyler Kelly, to your point, off the broader market. If you'll take a look at the standout sector, it's got to be the banks, the financials overall, the best performing sector in the S&P. But take a look at the KBE Bank ETF, the Spider

Bank ETF. It's up 3%. Still a very solid move higher. but put in context with the fact that it opened up around 8 to 9 percent, and you can see we've lost a tremendous amount of steam in this bank trade. And remember, this is still down about 30-some percent from the highs that we saw over the past year. Now, if you drill down into some of the bigger moves in the banks, also the embattled regionals, especially on the West Coast, feeling some of that pain, and they're still up solidly, but off-session highs. Though First Republic is still up about 37 percent. It was up about 60 percent at one point today.

Western Alliance Bank up 21%, Pac-West up 42%, and Zayon's Bank Corp up about 3% right now. So outsized moves, but again, off-session highs. And then one other place to watch is those bigger banks, right? The money centers, the ones were from at least an investment standpoint, some people are looking at whether or not deposits hypothetically leave smaller banks and go to the benefit of companies like J.P. Morgan Chase, Bank of America, Citigroup in Wells Fargo. Each of those stocks has now given up gains for the day so far. JPMorgan PHS up just fractionally.

Same with Bank of America. City Group up 5.5% and Wells Fargo up 3. Kelly, I'll send things back over to you. Dom, thank you very much. The first domino to fall in the Silicon Valley Bank collapse was losses in bonds as yields rose. They fell in value. And it's not just banks dealing with those losses.

There's more institutions potentially exposed. Frank Holland is looking at some big tech companies with bonds on the balance sheet. Frank? Well, yeah, Kelly, as you mentioned, Silicon Valley Bank isn't the, only companies seeing losses from treasuries on the balance sheet. Some of the country's largest tech companies also reporting unrealized losses in the billions. For example, Microsoft of more than

2.5 billion in unrealized losses in treasuries, according to the latest filings, Alphabet, just over $2 billion, Apple just over $1.5 billion. Wedbush says we could be headed towards what they're calling a write-down bonanza when it comes to bonds in many company portfolios. And I've spoken to analysts and a Microsoft investor. Both agree. These companies, companies are in a much different position than SVB, and these losses, they won't fundamentally change their view on the stocks, but it does have the potential to impact earnings. And what we're seeing isn't a total surprise. According to Eurofinances, yield soared in 2022. U.S. mega-cap tech companies sold 75 billion in bonds with an average loss of 6%. Back over to you.

All right, Frank, thank you very much. You know, many regional banks have been under pressure this week, and that's kind of putting it mildly following the failure of Silicon Valley Bank. But Woffed Bank, headquartered in Seattle, and known for its conservative approach, has been a bright spot up 3% this week. Here for some more on the state of banking and the fallout from SVB is Brent Beardall, president and CEO of Wafed Bank. Brent, you know, I can't tell you how good it is to see you, because for those viewers who don't know, Brent was involved tragically in what turned out to be a fatal airplane incident right around New Year's, in which one of his dear friends, who was the pilot of that plane, perished. You have our sympathies over that, and you have our joy that you are here to join us today.

So good to see you, my friend. Tyler, great to be with you, and thank you for the kind words. I feel very fortunate to be alive, and it has changed my life. Yeah, absolutely. You know, it's nothing like coming back to a good banking crisis. Well, that's what I was going to say, and this is what you get as reward for all of the struggle. that you've gone through because your injuries were profound. Let's talk banking here a good bit. Have you been hearing from customers of SVB? Have you been talking to them? Are they repatriating

money to your bank? We have been hearing from them. We have been talking to them. And yes, I believe we will see a nice inflow of deposits. And I think many regional banks will. I have to say, you know, over this weekend, I think there was a crisis of confidence in the banking system in the United States when SBB failed and then there was questioned as to whether the depositors would be made whole. And I applaud the federal regulators for stepping in and saying depositors, you don't need to worry, your money is safe, you will be repaid in totality. And then the banks that survive will be the ones that foot the bill. So I think that is a good thing. And I think you will see depositors flow towards the healthiest banks.

There are regional banks, and then there are regional banks. Your bank has been known, and you have been known, for running a relatively conservative investment portfolio, more short-term securities than long-term. You hedged your long-term securities in your holdings. You had few unrealized losses as compared with SVB, and you have a diversified client base, which they did not. Are those the keys to successful bankers? management in this kind is is that the lesson here basically it is right and it's not news to anyone it turns out diversification can be a really good thing you know what what stands out to me as i look at what happened to silicon valley bank i cannot believe the bet they made on interest rates when rates were so low and they had this massive influx of deposits right from 2019 to 2022 they grew from 60 billion dollars of deposits to $190 billion deposits. And what did they do with that money? They couldn't make loans fast enough, so they instead invested that money.

And I believe, I'm old fashioned. I believe a bank is put here to be an intermediary. We bring in deposits, and then we should take those deposits and lend it out to good loans in the communities we serve. And they couldn't deploy those funds fast enough in loans. So they turned and they really became a hedge fund and invests. that money, and in hindsight, they made some strategic mistakes. Brent, one thing that I can't understand is if they had this huge influx of deposits and there

weren't enough loans to make and they put it in the safest stuff, they put it in treasuries and mortgage-backed securities, why are we so outraged by that? What should they have done instead? Well, it's not that they took outrageous credit risk, right? They put it in the safest from a credit risk standpoint, but what they did is they took interest rate risk. So they put that money to work at one and a half percent for the long term. And as you know, today you can get similar yielding securities at five, north of five percent. So now they had all a sudden, they essentially lost $15 billion of market value on that, which is the problem that they weren't hedged? Is the problem that they didn't sell soon enough? I don't know.

What would their other options have been at the time? You know, in retrospect, obviously, okay, that we did a bunch of rate hikes, those securities are underwater. But what were there other options at the time? The options at the time would be to keep that money short. Why go along with that money? They could have kept a good chunk of it short term, earning only 25 basis points. Exactly. They could have gone from two years, right?

They did not take credit risk from an outsider's perspective. They took interest rate risk. And so many of these failures, I'm a student of bank history, and so many of these failures go back to greed. And in essence, they were greedy. They demanded to have higher returns in the short term. But if we go back to that period of time, you're saying the only way for them to have done this more safely, say they're in bills or whatever, they would literally have made

25 basis points. So they basically, would they even have been profitable at the time? And what should regulators have done then to say, hey, even though you look like you're in something safe, this is all going to blow up? at what point were the regulators supposed to intervene and what should they have forced them today? Should they have forced them to go short? Not short, but short duration, I mean. Yeah, you know, certainly we should look at valuing companies not just on GAAP accounting,

because from my perspective, they were relying on an accounting gimmick, the difference between available for sale, which goes through your capital and held to maturity, which is where they put the majority of their securities. So by having it and held a maturity, that didn't have it. to flow through their capital. Then with what happened last week, everybody was brought to their attention. Oh, my goodness, look at the losses that they have on their portfolio. And they said, in essence, they have no economic value of equity. Brent, I want to close with one question. And I know that your bank does a fair amount of commercial lending to commercial borrowers.

I want you to listen to something Josh Brown said about an hour ago on Scott Wapner's program. Let's listen to his views on commercial real estate, and then I want to get yours. Commercial real estate is the next shoe to drop, specifically office building real estate. There is so much trouble coming to this sector, both in the forms of headlines, in the forms of large private investors walking away from buildings, in the form of leases being re-signed at much lower prices per square foot in cities like New York, Chicago, even Miami. Several of the banks that have been on the troubled list,

including First Republic, were exposed in commercial real estate, office buildings. What about you and how do you react to what Josh Brown just said about vulnerabilities in commercial real estate? Yeah, first, I don't think Josh is too far off base, but I think you have to look below the surface because there are different kinds of commercial real estate. Commercial real estate can be an apartment loan and it can be an office building and it can also be a speculative ski resort. So you have to look behind the headlines of commercial real estate and say what kind. The vast majority of our commercial real estate is shelter-based. People need a place to live.

I do think there will be weakness in terms of office, but the weakness will be concentrated on the large metropolitan areas. We're still seeing all kinds of strength in office in the market. it's where people are coming into. Brent, great to see you. Keep getting better. We appreciate your time. Brett Beardolph. Thank you very much.

Bye-bye. Incredible. Yeah. Let's turn to today's CPI data. Despite inflation rising in February, the report was in line with expectations. Is the Fed winning the inflation fight or not? Could the bank collapses change their plans for upcoming hikes?

Let's bring in Greg Dachau, Chief Economist at EY Parthenon. We're joking. It's Docco Tuesdays, Greg. Welcome. It's good to be here. So what is the significance of this morning's print in a nutshell, do you think? Well, I think if we abstract a little bit from the current environment of banking stress, which I know is very difficult, we would be in an environment that would have otherwise pushed the Fed to increase interest rates by 50 basis points at next week's FOMC meeting.

I think the discussion right now is likely to be more either a pause or 25 basis point rate hike, which I think is more likely. but I think you'll see Powell and the rest of policymakers highlighting a dual track approach. On the one end, monetary policy is still continuing to aim at reducing inflation. And on the other hand, macroprudential policy is essentially aimed at ensuring confidence and resilience in the banking sector. Do you not take the collapse of several banks over the past, or at least two, over the past week, Greg, as signs that the tightening is playing out and the business cycle is rolling over, and the lag is starting to catch up with us,

and why should they keep hiking? Well, I do absolutely think that we are in an environment where there is a gradual realization that the Fed can't do everything everywhere all at once, that essentially by raising rates, tightening monetary policy, it is leading to an environment of tighter financial conditions, and now, very importantly, tighter credit conditions.

Those will have an effect on interest rate sensitive sectors, but indirectly will also have effects on the broader economy. on business investment, on consumer spending, and that is going to continue to slow. I think the backdrop against which this is taking place is very important to keep in mind from a Fed perspective. So while they will continue to want to fight against inflation and the latest CPI print will give them reason to do so, they have to be very conscious that in trying to battle inflation, they are increasing some of the risks, some of the vulnerabilities in terms of financial sector stress. Greg, let me ask you what I fear is a dumb question.

but I'm going to ask it nonetheless, and that is this. Is it conceivable that the actions of the FDIC and the Federal Reserve in putting money into the banking system or bank stopping it is in and of itself an inflationary force in the economy? Or is that something we need not worry about? Well, I think we have to consider the fact that there is certainly interplay between macroprudential policy and monetary policy by making the new program, a program where the assets on banks' balance sheets are valued at par,

this to some extent offsets the drag from tighter credit conditions, tighter interest rates, or higher interest rates and tighter financial conditions. So there is interplay between the two, and I think to some extent that is why the Fed will want to continue pressing on the policy breaks in terms of raising the federal funds rate. A lot of observers were very quick to write off the possibility, of the Fed tightening monetary policy any further, but we're seeing now that there is a return and more nuanced to this narrative. I think we should not forget that Fetcher Powell and the rest of policymakers at the Fed are very much concerned about their legacy. They do not want to be seen

as having allowed inflation to run out of control. I'm more on the doveish side. I think we will start to see accelerating disinflation going forward, but the Fed seems to be more hawkish and convinced that it needs to do more in terms of monetary policy. Do you see that disincentral? Do you see that disinflation in today's report? I think we are starting to see signs of it. If you look at the composition of growth on a month-to-month basis, on a sequential basis, you're seeing that it's a large driver is still the shelter cost element. Services excluding shelter and excluding energy rose about 0.3% on a month-to-month basis.

To me, that points to gradual disinflation. It's not going to be a straightforward and smooth process. It will be bumpy, but I think we are likely to see accelerating disinflation over the course of the next few months into the spring and summer. And that will bring inflation down closer to 2, 2.5 percent by the start of next year. That we can hope. Wouldn't that be nice? Greg, thank you so much. We appreciate your time today.

Greg, Docco. Docco Tuesday. That's funny. All right, we mentioned today's big bounce back in stocks. That group up near, bank stocks, excuse me, that group up nearly two percent. today. Energy also higher. Every stock in that group is up. More on that coming up. And a huge sigh of relief for crypto. Bitcoin, Bitcoin, up 25% this week. And it is only Docco Tuesday. We'll be right back. Welcome back to Power Lunch, everybody. Stocks hire the Dow looking to snap a

five-day slide as regional banks rebound today after yesterday's debacle. Investors becoming more optimistic that the contagion from the closure of SVs, has been contained. And the consumer price index coming in just as expected for more on what seems like a little bit of a sigh of relief from the markets. Let's bring in Art Hogan, Chief Market Strategist with B Riley Wealth Management. Art, always good to see you. Let me ask you the question that I just asked Greg Doco, are you seeing signs that inflation or disinflation is in the air? Well, I can tell you this, the path of the CPI in February was a lot better than we were concerned about in January. I think that was true, the jobs report we just got for February, and likely will be true of the PPI and PCE.

The problem is it's not happening fast enough, but it's certainly getting there in the right direction. I would also offer up that when the owner's equivalent rent finally catches up with the reality of what's happening in housing prices, we'll likely see a precipitous fall off through the summer and into the fourth quarter. So we're likely going to see a core PCE that sits at her about two and three quarters to three and a quarter percent in the fourth quarter. At that point in time, the Fed will probably be at five and a quarter on the terminal rate. They've got to be plenty restrictive and likely what generates a rate cut in the first quarter of next year, being overly restrictive in their job getting close to being done. Remind me, five and a quarter would mean one or two more rate hikes of a quarter point. Two more 25 basis points, likely to keep the same cadence and wrap things up in May.

And I think what that does, Tyler, at that point in time is if they eventually pause, let's say they pause at five and a quarter, it's nay. It kind of flips a switch in how we look at economic data. We'll stop looking at economic data through the lens of what does this mean for monetary policy. Then we can actually celebrate strong jobs numbers and not be so concerned that this is going to jack the terminal rate up to six or seven percent, something we were talking about as early as two weeks ago. Give me some names of equities that you've got your eyes on, in light of what you're see as the interest rate environment. And in light of what you see, well, maybe you don't see,

more talk of possible recession as we move into the third and fourth quarter of this year. Yeah, I think if you look at the world and want to be defensive, which I think probably makes sense, at least for the first half of this year, you certainly want to look at things that you need versus things that you want and things that have strong balance sheets. So I would look at a company like Apple, which has got a fortress-like balance sheet. It's certainly shareholder-friendly and both their buybacks, paying a dividend, and creating demand for goods and trading out a multiple onto itself, but we haven't seen it quite some time. So very reasonable there. I would also offer up that a financial that's been beaten up in this sort of baby out with the bathwater environment

we're in is J.P. Morgan. I think J.P. Morgan, looking at a J.P. Morgan and saying that somehow that's related in the exact same way to a SVB or a signature bank, and not actually a recipient of a lot of those deposits that have left those regional banks, it is probably the wrong way to look at it. So trading close to one-time's book, you know, and clearly a great value here. Again, a great management team, rock-sol a balance sheet. A third one I would offer up this defensive. And healthcare is ad-fee. It's got a very consistent dividend. It's one of the dividend aristocrats. And clearly, a business that is well-run continues to reinvent themselves. And, you know, so if you're thinking defensive with a lean toward perhaps things need to slow down here in the economy,

those are three names that I would point to. All right, Art. Great, as always, to see. see you. Thank you for your time today. Thank you. Art Hogan. Further ahead on the show, Regional Bank Insiders selling over $100 million in shares ahead of the SVB collapse. We'll dig into the numbers and the reports. Plus a gig decision in California, a key court ruling in favor of Uber and Lyft when Power Lunch comes right back. Welcome back to Power Lunch, everybody. As stocks are higher, money is coming out of bonds, sending the yields sharply higher, unlike the past couple of days. For more on the volatility we're seeing in the bond market, let's go where else to Chicago and Rick Centelli. Hi, Rick. Hi, Tyler. You know, there's so many issues going on here,

but let's start at the beginning, the 8.30 Eastern beginning, CPI for February. And if you look at what I call the Super, the Super Core X, Food, Energy, and Shelter, you can see we've made some significant progress. And also, just to point out, the 6% on year-over-year headline today at 6%. percent was the lowest level since September of 21. 5.5% was what we had when you were removing X food and energy, unlike the shelter chart I just showed. That was the lowest since November of 21. And there's been a lot of talk, of course, not only about what's going on with Europe

and the UK and how there's a high correlation, our central bank seems to be the central bank of the world, but lots of eyes focused on the banking index in Japan. And when you overlay that with the KBW, you could clearly see. that they moved right in sync. As a matter of fact, you could even argue that the Japanese market was a little more aggressive on the downturn. But what's very interesting here, Tyler, is if you go back to 1989 when their stock market peak, you could clearly see the current event, at least in Japanese terms, just gets dwarfed by some of the volatility from 89 over the next several years.

And finally, this is a three-day chart of twos versus 10th. It's moved 21 basis points, which means twos are gaining on the comeback over tens. will figure prominently in the Fed's decision, especially considering it's next week. Remember, 443s were it closed last year. My call, they may do a quarter, but it's got to be over that yield and higher in yield than it closed last year. Back to you. Thank you very much. Energy stocks, meantime, rising today.

Even as oil prices are falling 4%. Pippa Stevens can explain all this. Yeah, so oil was down all day long, but then this latest leg lower came after those headlines about the Russian fighter jet hitting the U.S. Now, it's a little bit of a head scratcher because you might think that the escalation would be supportive for prices, particularly since Russian crude has held up so much better than anyone would have thought. But I just talked to Rebecca Babine over at CIBC Private Wealth, and she said this is another indication of the oil market kind of ignoring the fundamentals and instead moving on the

broader macro concerns, the growth concerns, concerns around the SVB fallout. And she essentially said that there's just not enough good stuff right now to keep people in the oil trade. We haven't seen those demand numbers materialize, and that really has been the bullish case. And John Kildoff at again, Capital, reminded me once again that, you know, wars escalations can also lead to a slowdown in demand. So that seems to be what's driving the lowest. So basically the explanation here is that long after we've stopped talking about the drone being hit by those Russian fighters, we will still be talking about the macro economy globally and the slowdown and how much demand their baseline demand there ultimately is.

Exactly. And oil's been in this range for such a long time. It is now on track for its lowest close of the year. I do think that we could see some support at that $70 level, which it's really approaching now. It's at 71.28. But I think until we get this sense of demand rebound, we're really not going to see any type of meaningful recovery. We also had OPEC this morning saying that in their monthly report that they see a surplus in supply during Q2. They see demand rebounding in China, but then that will be counteracted by slowdown in U.S. and European demand. There you have it. There you go. 71, stubborn, stuck there.

Pippa, thank you very much. Let's get to Bertha Coombs now for the CNBC News Update. Bertha? Hey, Kelly, thanks very much. Here's what's happening at this hour. President Biden has signed an executive order expanding federal background checks for gun purchases. He's also asking the Federal Trade Commission

to issue a report on how gunmakers market firearms to minors. China says the U.S., UK and Australia have gone, quote, further and further down a wrong and dangerous road, unquote, with their agreement to provide Australia with conventionally armed submarines. And prosecutors in Los Angeles have decided not to retry Harvey Weinstein on rape and sexual assault charges involving two women after a jury could not reach an agreement on the counts in December. He was convicted on similar charges involving another accuser. Kelly, back over you. All right, Bertha, thank you, Bertha Coombs.

Ahead on Power Lunch, META announcing 10,000 layoffs, getting rid of 5,000 more open jobs. They already cut 10,000 positions in November. Ramifications in Tech Check after this. Welcome back to Power Lunch and today's Tech Check. And Meta got to talk about this memo, the year of efficiency, everything. 10,000 more workers are being let go after the 11,000 cuts announced in November. 5,000 openings evaporated. Here to discuss Julia.

Borson joins us from L.A. And studio, Steve Kovac is here as well. It's great to have you both along. And Julia, let's just start with you. A huge move. And is this now the end of it or do we know yet? Well, it seems like this could probably be the end of it for now. But a number of analysts weighing in, very bullish reactions to this move by Mark Zuckerberg saying that the year of efficiency just got even more efficient in addition to announcing those layoffs and the fact that they're taking those 5,000 open job positions off the table. The company also announced, that it's lowering its expense guide for the year. But what's so remarkable about all this, Kelly, is even with these dramatic layoffs, 21,000 employees between last year in November

and the layoffs just announced now, the company still has more employees now than it did in summer of 2021. So we just have to remember this is a company that grew so dramatically. And Mark Zuckerberg has really changed his tune. He warned that there is the possibility that this new economic reality will continue for many years. But he's saying that they can cut costs and they can still return to growth. And what's amazing, Steve, is also his comments, which kind of go back to the Elon Musk factor and Salesforce and other stuff. But Musk's Zuckerberg said they are running more efficiently. Right. As they've done some of these cuts. Now, I don't know how they did it so strategically that they're able to make that the case. But number one, he mentioned that. And number two,

He mentioned the fact that they went through and looked at their engineers and the ones in office are more productive than the ones who are working for them. That really stuck out to me, Kelly, was at the very end of this memo to employees, they basically said, we're doing these studies on return to office and the people we hired during the pandemic who came into the office to work with colleagues are more productive. You can see what groundwork they're laying here, too. I would not be surprised if this summer or around Labor Day that, you know, come in three days a week becomes coming three days a week or else you're out. On top of that, like, what kinds of jobs are they eliminating, Kelly? And Tyler, they're eliminating middle management jobs. That's what I was going to ask. Where are the cuts coming from?

Become a contributor, is what they say, or the implication is you're going to be out. So they want teams to be reduced in size. They don't want managers managing any more than 10 people directly. And they're what they call it, they call it flattening the organization. This is a huge criticism when you work at a big Silicon Valley company, especially Google. It takes so many layers to get anything done and move very slowly. They're also trimming projects just this weekend they announced no more NFTs. They are done with that trend.

That seemed more core to the metaverse. That's what I don't understand. Yeah. But it was also just kind of, let's be honest, it was never really a thing. It was never really a moneymaker. The idea was we're going to have creators making NFTs on Instagram and Facebook. There's a way for them to make money. The NFT market has just kind of collapsed and so it's not worth for them to do it anymore.

Julia, one thing that I jump in. Tyler, I would just think one thing that's really interesting is he does mention the term Metaverse. Mark Zucker does mention the term Metaverse twice in this memo, but he also is sort of shifting the way he's talking about what Meta wants to do, saying that they want to be a company that enables human connection. So he, I think is really important to note that he talks about AI, how they're going to use AI to enable human connection, but he's sort of distancing himself from this idea that meta is a Metaverse company first and foremost. Either one of you jump ball here. When Facebook did his first round of cuts and then Twitter cut,

it gave covered, let's say, to other companies that then came in with their own cuts. Are you hearing either of you that more cuts may be on the way from other companies? Not necessarily, but a headline just crossed over Bloomberg just a few minutes ago saying more cost cuts are coming to Apple. And now Apple is, of course, we keep talking about this, the one company that hasn't done this mass layoffs. The last time I talked to Tim Cook a couple months ago, he said, we're still cutting costs. We're not hiring, but much like Facebook, they are, or Meta rather, they are hiring engineering talent still. That's what they want.

It's this middle management, the people who kind of don't have that technical expertise. Now, Apple has always run more lean lead than these other peers. So look, not really hearing much more about sales force might be another one, though. Julia, how about you? Well, I feel like Meta wants to get credit for the fact that they did their first round of layoffs in the fall before this was something that all the tech giants. we're doing. But I would also say I'm hearing a lot about the startups in the space, even those startups that are so relieved that they now have access to their funds at Silicon Valley Bank that they

still feel like they have to be more cautious. Maybe they don't have access to debt and they are looking at ways to cut costs. So that is a whole other part of the tech ecosystem that's looking at cutting back. We have to leave it there, folks. Steve, Julia, thank you very much. Appreciate it. All right, Silicon Valley Bank CEO Greg Becker sold nearly 30 million in stock over the past two years. Insiders at SVB dumped more than 60 million in stocks since 2021. And that's just one regional bank. We'll break down some numbers next. And as we head to the break throughout the month of March, we celebrate women's heritage,

sharing the stories of women leaders in business and those of our CNBC teammates and contributors. Here's Jenny Johnson, Franklin Templeton, president and CEO. We're all capable of way more than we. give ourselves credit for. Women need to dream extremely big for their lives. The bigger you dream, the bigger the outcome is going to be. I started Rent the Runway when I was 27. I didn't have any experience. And the thing that has led me to where I am today is just putting one foot in front of the other and continuing to be positive, continuing to be resilient along the way. So don't give up on yourself because you will actually be able to achieve way more than you've ever dreamed of.

A potential buyer emerging for some of Silicon Valley Bank's loans. Sima Moda has that. Sima Modi, excuse me, has that story. Seema. Hey, Tyler, there's been a lot of talk in the market today by different investment firms looking at SVP. CNBC can confirm that private equity from Apollo Global is reviewing Silicon Valley Bank's loan book and is considering buying a slice of the book at par.

Now, a person familiar with the ongoing talk said, while Apollo is interested in proceeding, it is unclear what the FDIC is aiming to do. And that might be because the FDIC is still trying to find one buyer of the whole SVP book. And it's worth knowing that Apollo is said to be one of a few private equity firms reviewing SVP's book. More to come as we get it, guys. Back to you. The loans, not the deposits. The loans specifically.

Yeah, okay. Seema, great stuff. Thank you very much. Sima, Mote, keep an eye there. Still to come, our big name financial is worth buying following recent declines. We'll trade it in today's three-stock lunch. Welcome back, everybody. Time for our three-stock lunch. And today we're sipping on some big movers, and not all of them are banks.

Uber is surging with other gig economy names after a California court declared they can keep classifying drivers as contractors. JetBlue, higher after boosting its revenue outlook, and J.P. Morgan rallying with the other banks today. Here to help us trade all three is Shelby McBadden. She's senior analyst at Motley Fool Ascent. management. Great to see you, Shelby. Let's start with Uber. Would you be a buyer here? You know, when it comes to Uber, I'm going to go ahead and hold. And that comes down to the competitive advantage and economic situation, both of which we use to assess quality at Motley full asset management. So even though I'm not one to make a habit of trading directly on

policy or rulings or legislations, it's important to understand how this affects the P&L on a go forward basis. So without having to expand their operational expenditure in the form of increased benefits for drivers, were they to be classified as employees, there's now an elimination of not only 100 million plus in explicit costs, but also a potential upgrade in their competitive standing, along with Lyft, in that whole industry. So there is a little bit of a battle one there, but what keeps me at a hold is the fact that I'm not quite sure that the growing pains are done and that this is going to be the end of these sort of labor-related snafus for Uber. So it's a hold for me.

Especially if unionization is now easier. Shelby, let's move on to a second company that also has had recently its interactions, shall we say, with government. And that is JetBlue. Sure. So JetBlue is also a hold. And that comes down to the fact that they are able to sort of deliver on a value proposition in an unfavorable macro environment, not just for consumers, but for their own operations. And, you know, we know that, as you said, they've bumped up that Q1 outlook, and they are potentially positioned to gain from increased share of leisure travel compared to business travel,

but they are still up against that fuel costs. In the case that they're able to go ahead and capture more volume of customers because folks are squeezed and they're price sensitive, and then they can go ahead and retain those volumes, then they may have an opportunity to go ahead and pass on price when those jet fuel prices start to eat at margins. But because of all those moving pieces, it's a hold. Let's then get to the banks, Shelby. You don't have to weigh on all of them, but what about J.P. Morgan? So J.P. Morgan's going to be a buy. And that comes down to the age-old tale of a flight to quality. So, you know, we find that quality is a bit sector agnostic. You can find it

in a lot of places. And oftentimes, there's still going to be a standout, even when an entire group has seemingly fall into the rubble. And J.P. Morgan, I think, is a really clear example of that. In light of recent events, we do know that there's going to be a stream of depositors looking for a new place to position their cash and their assets. And we know that it's very likely that some smaller regional banks are going to be up against regulation, and then, of course, the costs of that regulation. And so when we look forward to, or sorry, when we look at some of those larger stalwarts, it seems a bit more dependable in this kind of time. And that's why it would be a buy for me.

Very good. Shelby, thanks so much for your time. We appreciate it today. Got to love an investment company that has a confidence to call itself the motley fool. Yes. You've got to love that. Humble brag or something. All right.

Still to come, details on Silicon Valley Bank Insider Sales. We'll have that when Power Month returns. Welcome back, everybody. Take a quick look at Bitcoin, which continues to rally. It might have been up through 26K earlier. It's up 3% today. Look at the week-to-date gain of 25%. percent back above 25,000, 26 earlier was the highest level since June.

And just an interesting side of liquidity, Tyler, I guess if we want to call it that. Plenty of people saying, you know, that this is money sloshing from the traditional financial system back to the... It's one of the great ironies. Yes. You know, I'd rather have my money in Bitcoin than in a federally insured deposit institution. Exactly. So it goes.

Yeah. Well, so we'll take it as the liquidity gauge, perhaps, if nothing else. Yeah. interesting, about up 25% this week alone. Absolutely. And for those who say that the bank collapses were a huge tightening of financial conditions, perhaps this is the indication that maybe that's being unwound somewhat as we debate the Fed pause that there may or may not be coming. Yeah, very, very interesting. All of the interconnections. Yes. One little bank in, not so little, but one bank in Silicon Valley. Insiders at Silicon Valley Bank, speaking of,

and other regionals selling more than $150 million in shares in the years and months leading up to last week's collapse of SVB. Robert Frank is here to discuss. Some of these sales are so-called scheduled sales, I assume, others' opportunistic ones. Explain. That's right. They just happen to be very well-timed, many of them. So there was a lot of attention on this $3.6 million sale by the CEO of SBB, Greg Becker. and that was a sale that was less than two weeks before they made that announcement of their big loss,

and then the bank collapsed. So then I said, well, let's figure out how much he sold over the total. So over the past two years, he has cashed out $30 million worth of stock sales. If you look at the company officers, it's over $84 million of stock sales over two years. So that's a lot. Insiders selling there. I wonder what they did with those proceeds. Some of them, they were buying options.

So in the case of Becker, he was actually exercising options at a much lower price and then selling. The rest of it went into their bank accounts, which hopefully were insured. Hopefully they kept enough of them in different places and different titles. Is this an endemic to the regional banking center? Have there been others that we know of who have been big sellers lately? Yeah. Jim Herbert, the executive chairman of First Republic, sold about $28 million worth of shares over the past years. But what's interesting about these sales, particularly that February sale, is it raises this whole question of what are known as 10b-5-1 plans. These are pre-scheduled

sales of stock. So the idea is, if you've already scheduled it, you can't have been sold for insider information. You can't be charged for insider information. That's right. That's right. It's sort of a fig leaf. Was that $3.2 million sale, one of those scheduled sales? It was. And what's interesting about it, he set it up on January 26 and he sold on February 27. So the question is, at the time when he set it up on January 26th, did he know there was a potential of a big loss? And this is what Gary Gensler of the SEC has really been talking about for a long time, which is that these programs have been abused. And so he started new rules, which under these new rules in the SEC, Becker's sales could not have happened. Because one of the new rules says there has to be at least a 90-day cooling off period between the time you start the sale and the time you actually see.

sell. So he started January 26. He sold February 27th. Under a new rule, he would have had to wait at least two more months to do that. And that prevents people from saying, oh, something's coming. I better sell. I'm going to start a scheduled program. I'm going to schedule this for a month from now. And sometimes people schedule it even for a week or two later. And so it's a one-off sale. So these new rules are designed more transparency and this cooling off period. And I'm sure either way, they're going to look at this sale and say, what did he know on February 27th when he's And was he hiding under this umbrella of the scheduled sale rule? That's right.

That's right. And the SEC has already charged somebody who had a pre-scheduled sales program selling 20 million in shares before the stock plan. So they've already filed a complaint against this. We'll see if they do more, maybe even in this case. Because there's always that argument about democratize the information. Okay, if you're an insider and you think a storm's coming and you want to sell your shares, do it.

But let us see. That's the whole point of the disclosure. So you might go back and say, well, if people had been tracking these sales, they might have been tipped off earlier on that something was happening, or wouldn't they have viewed it that way? Would they even have raised any red flags? Well, and by the time you knew on February 27th, yes, you would have had some time to sell, but not a lot. You had less than two weeks, even if you knew that information to then bail out, and a lot of people just weren't looking at it. You know, what came as a bit of a surprise to me, though maybe it shouldn't have.

Congress people have the right once they leave office to earn a living, okay? Let's stipulate that. Often a good one. And a good one, in the case of Barney Frank, a member of the. board of signature bank. I read that he has made during that time at that bank something in excess of $2.3 million. Right. As the author for being on the board. Right. And for potentially lobbying looser rules, all the rest of it. His involvement is absolutely, and listen, he's somebody who would say, well, I was one of the people who tried to raise the FDIC cap and I tried to do all of these

things that would have prevented this particular situation going back five or 10 years. But the issues there, especially with their crypto exposure, I think there are still questions. It's interesting. I'm sure he'll be on. NBC here over the next few days. Or newsmax. Yeah. I think that's where, I think that's where he pops up. Frank and Frank.

We can have him back. Yeah. Frank and Frank Square. All right, Robert, thank you. Thank you very much. And thank you for watching Powerline.