And, the options action on amazon ahead of the busiest week in earnings. On the desk tonight, tim see your, karen finerman, and guy adami. Regionals dropping more than 12 . Earnings falling short of estimates. Regions drop rippling through the sector. The weakness coming as the tenyear continues to hover around 5 for the First Time Since 2007. That historic jump in yield contributes to Broader Market volatility. The vix closing up 21, up more than 12 this week. Markets closinging lower. As we get set up for the busiest week of earnings season, will rate fears continue to be the driver of the markets . Guy, what do you think . I think so. Kre, huge bounce off april lows. Think we got down to 38 and a half, trade up to 48ish. I think its going to give it all back and we go back to 34 1 2. Then does it hold, bounce, or is there something more nefarious . Good news is all companies are 3 of the weighting. Bad news is companies are all 3 of the weighting. Theyre all in the same bucket, and thats not a good place to be. The last time it had a Consistent Group of closings above 21 was in march when we had regional banks failing. The fact that were starting the show with regionals making new lows, i say, where was the tenyear back then . Start of march, 4 , on its way to 34. 5 . Guys been talking about collective equality. We saw people going for treasuries. Back when you could. Back when you could. Ten year, in around 5 , all of the stuff that we were worried about banks going under for back in march and april is only worse right now, you know, so thats why bringing it back to the stock market or the broader stock market, vix hit 21. Be prepared for a bunch of closes in this 20 handle. The regions earning call is very apparent. Hes the same problem for all the regional banks higher for longer means its going to be costly, because its going to various deposits. Thats going to go longer. And then the normalization terms mixed. Customers are still migrating. The longer rates stay higher, the longer the normalization process takes place. More troubling for them. I thought there was a little other wrinkle to it, which is they had Interest Rate hedges on that cost them, and theyre not finished with that cost yet. Finished Net Interest Income was a big miss to your point, noninterest bearing accounts became interest bearing accounts, which is obviously far less profitable, but shortterm rates are still high. They can make some spread. That little wrinkle was a little disappointing. They dont seem to have a held to maturity problem. Wasnt great. Expenses were high. That wasnt great. Didnt have great reasons they werent high. That also wasnt great. And Everything Else that happened in the market. There was not a lot to not like with the middle east situation, tough speaker thing falling apart again, you had bonds actually were okay, right . But i think for a comerica, they didnt do terribly. Theyre trying to, i think, be cautious. Didnt matter. Theyre all going to be swept up in this, uhoh, is there a problem again in regional banks . And it felt today like that was a problem again. Guy pointed out the range in the kre. If were going near 34, stock markets going a lot lower. What were the reasons these banks had these excessive selloffs . One is Net Interest Income for 3q is 5. 5 . I guess bad checks are a thing again isnt that crazy . I thought that was really interesting. It was mentioned probably in the first ten minutes of the call. First thing out of the gate was this increase in check fraud activity, which was a continuation from the second quarter. I dont know. I mean, ultimately i think it really is about the pr profitability of their core businesses. We said forever, there is no alternative. Is it tia now, there is an alternative . There are a lot of alternatives. The stock market this week, unfortunately, last three days of the week closed on the lows, closed below 200 for the first time in this run and is now down to 8. 5 as we said on august 1st. Going into a week it puts more pressure on microsoft than ever when we all pointed out these guys have been caring the day, and its just a matter of when. Is this a tell, though, so something bigger thats going to break or that needs to break in terms of decline in regional banks . Or is this a renale bank problem . Huntington bank shares ceo was interviewed today on cnbc and he was asked why the stocks have been battered. He said higher rates impact the economy. Thats going to be a concern. Potentially weakening labor market and also regulatory. So he made it seem a little bit more specific. And all things we have been discussing here for a while. At some point all the things you mention ready going to have an impact on the stocks. Took a lot longer than i thought. Here we are. Is it something worse . I think so. You listen to what American Express said, discovery financial, capital one. Start creating a narrative maybe the consumer is not as in good shape as we think they are. The move in the bond market has not been great for anybody. The rates start going down, its because something really bad is happening in the stock market, not because the bond market fixed itself overnight. Talking about small caps for a while now. Close at a 52week low. When we talk about capital, the cost of the capital, these are things we have been talking about for months. Its manifesting itself right now. I know carters comiing on in a second. Half the stocks in the russell 3,000 are below the lows. Its very near its year to date lows. The price action on many, many sectors and houchbs stocks in the stock market actually feels like were in a bit of a bear market. When stim says, it puts all thi pressure on microsoft, remember how it acted coming off an alltime high. That really was the top in the nasdaq. I said this last night, if there are any disasters lurking in big large names or just a meaningful deceleration or not just evidence of all the excitement that caused those stocks to go up the way they have, i think the stock market is on its way to being unchanged in the year. The equal weighted stock market is down on the year. It gets back to there is a bear market. Theres a bear market in a lot of stuff. Look at the airlines. Airlines down 30 to 40 . Theres been a lot of pain. And the retail space where i think you have had real understanding of where the consumer may be or where the consumer is yet, discretionary and apparel, and the market sold them. It is interesting. Utilities kind of find a bottom. You see staples find a bottom, health care. This is what you do. This is the playbook during times like this, and i think those are some places after big selloffs in all those places. If you read the calls and hear what the ceos are saying about the consumer, you see all sorts of indications in terms of how theyre talking about the consumer xrp saying credit continued to deteriorate, the quality of the credit. Especially lower in the mid band. Then today with regions financial you dont get a good picture of how the u. S. Consumers doing. Right, it doesnt feel good. No, it doesnt feel good. The only positive to say about it is this credit cycle is just just getting into it, theyre very, very well reserved. So many institution really well reserved. Doesnt matter though, in the shortterm, if numbers tick up, in nonperforming loans tick up, everyone if theyre covered its going to be hard. You know whos not well reserved . The u. S. Government it turns out, and thats one of the many reasons the rates are going higher. Banks, Balance Sheets are fine. Im not worried at the banks necessarily. Its something more afoot here and it finds itself in the way of Federal Reserve and Balance Sheet of the United States and the fact that the market is demanding a higher yield to buyer debt, rightly so, by the way. All the thing wes talk about health of the consumer, the consumer is fine. What if the employment rate starts ticking higher . Its a much different conversation when all these things start to kick in. Thek were going to have later on in the show about the currency markets and whats going on dosh me, the whole japan story, ill save the headline for the block, is part of whats going on. A lot of consumer has been through all this. Jobless claims this week got better. We talked about this. The reality is the job market is tighter now than it was when the fed started, and if you increase the Participation Rate the way you have over the last couple months, thats why the unemployment isnt down closer to 3 . Wed be at record unemployment if more people hadnt come back in the labor force. It just means the fed is not going anywhere, and that not going anywhere and staying here for an extended period is something, and you have to factor that in. Gold meantime continued to surge briefly, crossing the 2,000 mark. Can rates and the bullion keep charging higher . Lets ask carter worth of worth charting. Carter, good friday to you. What are you see in the charts . Sure. Before we get to it, to your conversation about the market, it is characterized as the bullish year that wasnt. The russell 3000 which represents 98 of the investable capital in the u. S. Is up 8. 9 , but the median stock is down seven. 60 of the stocks are down. It has not been a bullish year, hard stop. But lets go to the gold. We are right now on the oneyear anniversary it was a friday, october 21, 2022 and rates hit a high of 4. 34 before dropping all the way back down to 3 . And now here we are a year later at 4 ha. 9. Look at that chart that picks up from the chart at the prior high. Friday october 20, 4. 34, and here we are at 4. 91. The question is, is this where it gets overdone . I think so, but i have been making that case and its gotten higher. Im a buyer of bonds. Gold look, these relationships there is this notion that, if the collars to strong, why is oil going up . Now the dollar stays strong, and heres these relationships are not always inverse. Theyre direct. Either way, the moon shot weve just seen, and weve moved up 186 an ounce, on a shortterm basis you fade that by all accounts. If you look at all rolling tensession moves like this, it usually gets a check back, a correction. The longer term, is this ultimately great backing and filling at those prior highs before we break out . Yes, look at the longer term chart, going back to the lows. Its a great setup for both. Depends what your time frame is. Its not going to keep going at this rate. Its excessive. If you structurally like gold and i do, this chart tells the story. Apple, bug earnings coming up, and i think we should look at that one, too. Might have a chart. Im a seller. Wow. Thats straightforward. Carter, i want to go back to gold. If you are a believer in gold in the longterm but believe your call that in the shortterm it will pull back, you whats does that support level that it bounces down to . Right, and that sounds like someone who doesnt have a clue oh, i think its going down then up, up then down, but structurally, nothings changed. Gold has been for three years, trying to break out despite all the movement. 10 in ten sessions is a bit much. We close at 198 an ounce on the high. I think you get down to 180 1,800, excuse me, and then youll get your bounce. Carter, thanks. Sounds like hes got a bit of a frog in his throat. He plays hurt. Thats what carter does. Powers through. I like gold. Do we check back . Maybe. Every sell has been less and less, the magnitudes smaller and smaller. When this institutional money kicks in, which it will, then people are going to Start Talking about it im telling you now cnbc will be leading with d you see gold . We should put a gold ticker. No our next guest hasnt seen a move like this in his twodecade career. Former head of fixed income research. Jans always great to see you. In your head, what do you think about in terms of what breaks when you see this moving yield so quickly . Oh, like you always keep an eye on credit, right, as the high yield really starting to impact the Corporate Bond market, and weve seen some of. That you look at whats going on with global credit and we start to see some weakness. A lot of different credit markets. Its been an accumulation of forces and we have had some incredible moves, even after the rally we have had today, right . We have am move on the week, everybody after rally, so that just chose how incredible big these moves have been. And it also is something that the fed clearly has taken into account. We have had five, six fed speaks now make reference to the bond moves. They are taking it into account in financial conditions as well. When powell was speaking the other day at the new york economic club, jens, he was asked specifically about foreign buyers stepping away. He dismissed that notion everyone though on wall street charts are going around with china stepping away. I want to read the quote. Bound by overseas entities has been pretty robust this year. So there have been small changes but i think by and large they have been buying robustly. Which seems to go in the fast of what many people think on wall street that chinas not in the position to buy anymore. They dont have the reserves. Japan is also stepping away. What do you think . So, when you analyze china, right, the big change is that they used to be huge buyers, and theyre definitely not huge buyers now. We can talk about how much theyre selling, but the big change is theyre not big buyers anymore. We track chinese intervention all the time, and we have had more intervention august, more intervention september, right . The pace of reserve is thats going to be funded by our treasury. Some selling there. But i think where the big picture is, that supplys going up, right . We need to man to go up somewhere as well, and its not china for sure. Probably not japan either. Really if you look at the big picture, its actually the domestic u. S. Investors have had to come in and fill the gap, and so far up until very recently, the yielded way more than the bonds. Much easier to park cash on the short end rather than go out and take duration risk. Now thats corrected but essentially u. S. Investors, households, even, have been helping to fill the gap. Have been doing it mainly through t bills. Thats probably why the long end of the curve they had to come up with a better yield point to suck in the man, and it will be very interesting to see what happens when the yield curve has a positive slope. Is the dynamic going shift . Thats one of the indicators well be watching right here. To me its all about supply. Also about a u. S. Treasury. This is a fed or essentially a government thats actually borrowing at really low rates and having to pay back and lock in at much higher rates. Lets go to your namesake and go to the currency markets. Kiss is 150 today. I would make an argument that part of the move in treasury yields could be less japanese participation. But it almost perversely, this carry trade is almost more attractive than ever when you look at the yield spread between the u. S. And japan. Where are you on japan, i guess, is where im rambling here. I think japanese yields are the trigger to take u. S. Yields everyone higher. Yeah, so all the marks are connected, right . So what happens in europe matters to u. S. Yields. What happens in japan matters to u. S. Yield, and japanese investors have been massive buyers of treasuries over the years. The fact that the jgb is edging close to 1 in the tenyear, and above 1 for that to occur is something the japanese investors dont have to come. Its definitely going to have an impact. We can certainly worry were going to have another relaxation in their yield curve control, so we dont have any anchor anymore, and tachat could be a factor for the u. S. Treasury market for sure. The one point i want to make is the u. S. Bond market is not, like, its own thing. What is going on with long end yield is intricately connect to the short end of the yield curve. You can see it today. The whole curve resets lower in tandem. Its not the bond market doing something on its own. Its the whole curve. If the market could get comfortable that the fed is done, im not saying it will totally mean the supply dynamics are not important, but its going to be the most important driving variable, and we shouldnt lose sight of that. If economy is weaker, if inflation is under control, the short end is going dig sctate a be the most important force for the long run as well. Jens, thank you. Have a great weekend. So, there is hope that yields move higher, karen, but what do you think . Certainly feels like theyre going to move higher, right . Also tonight talked about the vicious cycle of higher the government has to pay to issue, the more debt theyre going to issue. Ask yourself what would billion the causation or yields to move higher . Probably because the marketplace is going to u. S. Treasuries because something broke. Which means in our world, its not good. If yields are lower, the equity market is lower. And credit spreads blown out. And hryg goes down. You mean significantly lower. 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