and mid cap stocks are poised to do well in that sort of environment. assuming that economy remains relatively healthy. >> okay. perfect time to end it since i have no time, brenda we appreciate your insight and thoughts this morning. we got five, four, three, two. make sure you join us tomorrow "squawk on the street" is next good wednesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at post nine of the new york stock exchange equity looking for bunes after the biggest pull back in three weeks. powell is on the hill and will reiterate cuts are some time this year, 10-year 4.12. fed expectations futures point to the bounce as investors seek new rate cut clues from the chair on capitol hill today. >> tech troubles apple is seeing what is its worst two-day stretch since

september, and if you haven't paid attention tesla shares are down 10% this week alone only two trading days. >> if they had gotten ai from -- oh. >> we'll talk about that, a war of words, openai is firing back at elon musk. >> there's 1% chance we'll talk about it. >> publishing e-mails appear no show the tesla co-founder did support creating a for profit entity. >> let's begin with the markets and the testimony from the fed chair today. jim, got some news on what he will say in terms of written words. >> yeah. look, i kind of when march is off the table, i think this is, obviously, one of those, i want to get a little more expansive and getting tired of the game of what month instead, what i see is a man who said listen, we're not going to have a hard landing or soft landing. we're fine if it gets weaker we'll cut. it's kind of a great central bank essay about what you need to do in order to be able to get

out of an inflationary period. david, i think he's becoming more of a, let's just say a true statesman how far to be able to do something everybody thought he couldn't do, which is continue good employment and not have a lot of inflation. i feel bullish about this. >> you do? typically beyond that, i mean, the questioning is - >> you want to say - >> most of the time not helpful. sometimes. >> greenspan-like, but i think greenspan, the difference, is greenspan was trying not to release anything substantive this man has a substantive viewpoint and he will stick with it which allows us to have a decent background when it comes to the futures versus the last couple days which has seen the level topeeness in tech we haven't had in a long time. >> we've seen rates, they've declined the last couple days. >> yes that's why mortgage applications are up very big. i'm glad you mentioned that. certainly revision of what we

thought. look, sometimes it's okay to say look, things are really good, but did the market anticipate it what i'm concerned about is, when i see the action in tesla or apple or alphabet, versus the action in the banks because we're starting to see that the regulators are starting to let up on the regulation, it seems like there's a shift going on out of the really, really high multiple and into a target which had a low multiple going into yesterday's analyst meeting and into the wells fargo which frankly had been neglected at 11 or 12 when used to sell ought 14 - >> two upgrades of target, honeywell, the banks, regulators, the reports are going to ease up on some of the basel end game cap requirements not to mention kre, best day versus the market in 12 months yesterday. >> look, there are things that are happening underneath that i find are not topee, but are s

substantive. the mag seven market everyone hated the money does not go to the 5% crowd, it goes to industrials, banks, health care, and it's rather pleasing to the people who have been freaking out that the seven are breaking down. >> yeah, well true, and most of the seven have been. not all. we'll get to -- we'll get to apple in a moment. amazon not - >> co-pilot -- >> tesla is, nvidia is not. >> nvidia is - >> microsoft is not breaking down. >> the pivot in nvidia, what they've done, we overuse the word pivot, i apologize, but what they've been talking about is getting away from the traditional. they're not talking about data center hard and fast they're talking about verticals. health care, yesterday was devoted to nvidia and health care nvidia in financial service, nvidia in cultural emancipation from being american. these are things nvidia and factory, he wants every down the

have it because what he's afraid about is -- he doesn't want the -- the dans to have rely on american ecosystem. >> generative ai for everyone powered by nvidia's chips in data centers created in the countries. >> correct. >> i think that the big speech that's coming up, i think it's going to spend a little more time talking about the need to be sensitive to other cultures and not make it into something that's dangerous. >> you have open source, a lot of the stuff, maybe it's -- maybe there's a little less being released, but a lot of it has been open source so there is open source available, meta, for example. what about bad actors and countries that don't have humanity's best interest at heart? >> i think a lot of us, like "the new yorker" article some thought it was glib, i said this seems a little glib, pr, because he has been saying look, it's

going to -- it's happening, so look, we're going to have to develop ways to stop it. he's not -- he's not, you know, like the musk e-mails where we say listen, this thing could be the kiss of death for society. he's going the opposite, jensen. what jensen is saying we'll control it and there are a lot of good people -- luwho is the ? >> me, jensen. >> two you you're the ash tore? >> the fate of humanity remains in the balance because of you and jensen. >> do you think i play this clark kent role all the time >> i thought he was literally standing at the gates stopping the end of humanity. >> i think what he -- he accepts we're going to -- it's going to happen he calls for responsibly not saying government shouldn't look at it can we understand that when it comes to compliance with china, periodically i hear that he, you know, he's unhappy with china.

he wants to do business with everyone, but he's the most xlooints with gina raimondo, let's get away with that, that's the militarization people are fearful. >> we have a piece up, interesting story on cnbc.com, just ran about 20 minutes ago, i guess, with a former ai engineer from microsoft, worked there for six years, who said he's sickened by the technology's ability to create violent images, sexual images, totally ignore copyrights. >> all very sensitive issues i know those of us who did some things in terms of trying to look at what say a brigade of soldiers that were from the other side in world war ii what they would look like, was not sensitive to the reality to put it -- boy, that's about as euphemistic i can get. i think it's an issue, the whistleblower, this is what to you were saying, we're not in control of this stuff. >> no. i hear you saying two different things we're not in control of it

it's a real concern -- >> jensen is saying -- >> we have to -- saying we have to get it under control. they are the engine under which all of this stuff is happening. >> both and by the way, just, you know, both software increasingly. >> yes. >> and the hardware. >> yes. >> you work in teams with him. >> right. >> so -- >> we don't talk as often. we talk about the h-100 chip and the h-200 but don't talk about the software that nvidia has which is as important in terms of helping these - >> helps - >> yeah -- >> run - >> it can take a look at your data it's interesting, we have to talk for a moment nordstrom versus target versus walmarts because target has enough resources to be able to use it, to inference when it comes to doing same day nordstrom seems to be going away they don't have the scale or the capital to do this this is an amazon game i mean, inference, 40% of their business is inference which shocked people that it was that much inference is their ability to be in your head and say, whether

you are buying a pair of new balance, you are probably going to like something from lululemon. >> right. >> it's getting better and better. >> requires a lot of data which they have more access to that than virtually anybody and requires computing power to your point which is - >> trying to get the power soon -- >> gets expensive to pay for that i'm saying to have -- >> oh, no. >> to have this running. i know, these are conversations we're going to be having for quite some time. >> these are - >> because we also are going to have a conversation about power itself. >> vernova, the launch, and carl, vernova not to talk about -- >> the ge spin. >> talk about 5 the 5% increase each year in a short period of time because of alphabet and amazon and then the need to have scope -- >> and microsoft and - >> and - >> all these data centers we talk about getting built

don't look at the public data center companies reit, they're rate based. >> i - >> well you talk about all these data centers but i don't see the stocks going up. >> absolutely correct. >> the -- >> it has the lowest yield of all the reits. >> we're talking about of the enormity of the construction projects going on right now. >> step further, who is going to be in control of the grid? is it amazon, alphabet, microsoft? or is it going to be the president and congress because amazon, alphabet, and microsoft do not -- they want solar. >> that's true you know the first thing you have to do when you want to put up a new data center, first thing you have to identify where your power is coming from. >> exactly. >> they measure the data centers based on how much power they consume. that's the way they measure them. >> a full day meeting with enbridge the largest provider of basically fossil fuels, and what's amazing they're trying to figure out and buy areas they can be low cost producer, nat gas for the customer so low, to entice these companies, these

mega companies really nation states within our country. >> you're going to need nuclear power. >> okay. >> what vernova will talk about, i'm glad you mentioned that. >> thank you. >> there's a small form factor they're doing in canada, which they'll have done in five years, tba about to announce a big deal with vernova and that will be extraordinary. >> tennessee valley authority? >> yeah. >> okay. just checking. >> yeah. >> tva. >> tva. >> ten vi. >> the pharmaceutical company. >> no. don't confuse everybody. >> somebody last night was out with leading intellectuals and they discussed the soviet -- side show? >> really. >> precious seconds shaved from our show. >> i love this idea of -- davis is going to have to start getting used to this because of what happened yesterday, but hate him or like him former

president trump is a fossil fuel guy. amazon is not. mark zuckerberg, who is now very close with jensen huang, head of nvidia, will come out in favor of scope 3. >> as the "times" reports elon met with mr. trump. >> how about that? wasn't that interesting? i'm trying to figure out who else would be in that room with some of these wealthy people wealthy people meeting with trump is that a story there? >> i don't believe so. >> no? >> elon musk meeting with him is it's interesting he did not support him previously it's unclear where - >> is this what you do - >> he's not going to vote for biden. still stung and perhaps should be the fact that the ev summit at the beginning of the biden presidency didn't include elon musk that started him down a path whether or not he supports trump now unclear, but the two did meet. >> he's anti-iger and anti-biden what is that >> anti-sam altman as we know. >> yes look, the only way to save that

chatgpt plant was to give it to tesla. i didn't know that. >> there was an interesting e-mail included in sort of this bit of a rebuttal from openai called openai and elon musk in which they cite a 2018 e-mail where he said listen, you guys, we're never going to be able to compete and maybe the only hope we have is, sure, maybe going for profit, but actually incorporating openai into tesla. that was in 2018 using tesla as its cash cow and then, you know, i don't think -- i believe attachments to other large suspects apple, amount would fail, due to an incompatible company dna. what is interesting is, that they believe that google was so far ahead in artificial intelligence in general that it could never be caught. >> amazing one of the things that my

retired lawyer litigator paul weiss would say, you know, jim, that's a bad letter. >> it's not helpful for the -- for any -- >> it changes into a bad set of facts. >> this probably doesn't even end up in a courtroom, does it you think it does? >> i just think that elon likes everything he likes - >> i know. >> wants a show trial. >> you think he wants -- >> i don't know. >> my guess there's some sort of settlement here maybe. >> he's a little erratic did he not have that e-mail which basically says i want to steal this from you not 1% but what percent sentence. >> we're sad it's come to this with someone we deeply admired and aimed higher and told us we would fail, started a competitor and then sued us when we started making meaningful progress towards openai's mission without him. we'll see if we hear from musk read the complaint. >> the complaint was a very good read they're so coherent and made it

clear he was absolutely wanted nonprofit and it's exactly the opposite of -- >> there's the e-mails. >> e-mail. okay yes. >> yeah. interesting, definitely going further out reportedly telling tesla employees to vote in a new d.a. in austin morgan stanley trims tesla's to 320. demand accelerating despite price cuts, fleets are selling units, jim, as we get hybrids pushing more competition. >> that was before last night's byd price cuts in china. i think -- you know i was watching the stock of hertz yesterday, $7. it was deep share who first brought it to our attention that the repair rate much higher than people thought people are -- that the -- jim farley has been saying hybrid, hybrid, hybrid the numbers are extraordinary. david, i'll go so far as to say other than california, ev have

peaked. >> peaked. >> without subsidies, hate him or like him, do i finish the sentence president trump would not give you the subsidies. >> no. one would anticipate that there will be a reversal, if possible, of the ira under a trump administration in general for all of those not just for evs but renewable across the board that said, listen jonas always worth paying attention to. and, you to your point - >> steven king and jonas - >> accelerating ev demand not key markets. it's growing the growth rate is decelerating. >> the chinese who couldn't make it in real estate have decided to wreck the world -- every single thing do you want clean skies, but even if it wipes out your auto? we got the solution. >> they don't have an auto industry they're happy to buy chinese ev snooze german exports up 6. >> can't buy them here. >> mexico is going to be the

battleground claudia steinbomb gets in as the next president, a scientist, look out she's esg. >> they don't call it that anymore, jim. >> right. >> esg skeptic. >> mrvl. >> take a look at the premarket trying to avoid three days down, which s&p hasn't done since the first few days of january. specialty retail, jim mentions crowdstrike, we'll get adp, jolts, beige book in addition to powell on the hill back in a moment like your workplace benefits and retirement savings. presentation looks great. thanks. voya provides tools that help you make the right investment and benefit choices. so you can reach today's financial goals. that one. and look forward to a more confident future. that is one dynamic duo. voya, well planned, well invested, well protected. power e*trade's easy-to-use tools, like dynamic charting and risk-reward analysis,

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as you might imagine i heard about platform imagination over the last week. to me it's kind of a made up term, but i believe our competitors are talking about is, bundling, discounting and giving products away for free which is nothing new in software and security software that's been done for the last 30 years. >> right. >> when we think about what

we've seen in the past with other competitors, free suspect free i've been around the block for a bit and i've seen this movie of wrap and roll and bundling with multiple products that were required and last time i saw that i was at mcafee. >> finish the thought. that didn't go too well. let's goat et to a mad dash. >> usually not as funny. technical term for you're a complete idiot jerk. >> coming after -- >> normally goes after microsoft. a dagger nikesh talked about the platform we have cheaper and better always takes a shot at microsoft. three separate shots at palo alto in part because it changed its model and saying changed the model because they don't have it it was a combative call.

george is not usually as funny as that. the stock up $65. >> huge gain tonight back of these numbers and the fact that they guided to 28 to 31% year over year revenue growth that was in line heading into print now. when everybody steps back, jim, they make the point that we're making here, which is he came right after palo alto. >> yes. >> poo-pooing the platform chippy one way to describe the rhetoric how does palo alto choose to respond? >> i think nikesh i don't think he wants a match here. i think nikesh is a higher end guy. they are, by the way, they're not frenemies but mutual respect. i thought this line, now i understand applied to palo alto is important, eight figure multiyear win where the falcon platform displaced five products

costing them hundreds of millions of dollars. someone had hundreds of millions of dollars breached and we don't know. >> they referred to that. >> what is that, david the sec you're supposed to in four days let us know. >> or maybe -- >> maybe one we do know. there have been so many of late. >> georgia taxed microsoft last night was about nick esh. he'll come back. >> and wlle' see george on "mad money" tonight opening bell right after this.

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nikesh,. the opening bell is brought to you by nuveen, a leader in responsible investing. a lot of news in specialty retail this morning. most of these names, jim, are trading lower premarket. anf, ross, jwn, foot locker. >> there were a lot -- foot locker directly this is mary dillon who ran ulta and the stock just doubled this quarter actually very good. same store very nice the inventory is good. pushed out a plan that i thought was going to be extreme profit in 2025. maybe not until 2028 i want to say this, mary dillon is a seasoned pro and we will

get it where it has to go. i felt nordstrom really had terrible things. i mean, wow, cautious consumer, minus 1 to 2 same-store sales v to wait for the special big sale in the second quarter. nothing good i didn't mind the problem [ inaudible ]. >> we'll get to a few of the other retail names last night and today. the opening bell and a cnbc real-time exchange. atlas clear celebrating its listing via spac at the nasdaq the 15% pledge calling on companies to dedicate 15% of purchasing power to black-owned brands. >> that's great. i didn't get to finish abercrombie, that was down 4, should not have been down. that was an amazing quarter. >> comps in line abercrombie up 28. >> abercrombie is the best up 57% and the fact that the stock was down 4, i was telling people, there is one opportunity in the world right now that is just wrong the other one is going to

surprise and stores are going to be good. >> the upgrade out of gpm. >> gap stores, i don't know if you've been to banana republic, that's the lagging division, it has a lot going. go to gap instead of -- i'm not going to gap over brioni that's not going to happen. >> of course, not. >> gap has great clothes. >> i was in a banana republic -- >> you were not. >> they had -- >> honduras. >> i wandered in there. >> there is a banana republic. >> trying to find things, valentine's day for my daughter. it was more upscale than i recall. >> yes it really is. >> i bought a pair of leather gloves - >> they were trying to make that move. >> i know. >> they just saw that. >> david - >> i saw it and noted it. >> old navy has not been -- it's been a while since i've been to old navy my kids think it's okay. i prefer walmart to old navy when commits to style. >> you prefer brioni or any number of or things.

>> cuccinelli and bwalmart are rarely put in the same sentence. >> gap a tough stock to own. up 66%. >> the newfeld came in and doing great job. we should talk about this. we were talking about shrink which is stealing. it's under control and brian cornell explained that better than anybody his conference -- his analyst meeting tour de force, david. >> tour de force. >> okay. >> because same store advertising, doesn't give numbers but target will keep going higher because they have 11 brands that make a billion dollars that are house brands and i think a lot of people don't realize gross margins on the house brands are extraordinary. >> 52-week high. >> that conference call was like -- it was kind of a beethoven 7. >> wow. >> yeah. >> today we get upgrades out of

hsbc and deutsch pricing interesting at campbell's, 1% versus 3 prior and 10 before that even though we had volumes down 1. >> but you know, one thing i would say, i think marc klaas is uniquely set up for this moment. the raos deal. good everyone keeps worrying about his cookies and glp. i have intuitive search on tonight, the bariatric surgery is being hurt. that's what's down klaas will come out and want that stock he doesn't have cocoa. cocoa is the big problem right. >> cocoa - >> prices are up so much. >> yeah. that's why hershey has been squeezed this guy is so good. he's so good but anyway, i was glad to see marc klaas beat the numbers. distinguished vet. has been instrumental in hiring vets who is doing that because you

want to see those companies do well, and i'm proud of him he's been struggling and this was a breakout quarter for him. >> you guys mentioning crowdstrike, nice halo effect on sentinel 1, zscaler and palo alto. >> trashing palo alto. >> and benefitting him. >> now only up 1 someone didn't bother to read the conference call. >> the nets have a lineup of fugazy. >> we have a lot of injuries we'll be back. >> it's a term used for -- >> don't understand why you're taking shots at the mets >> someone read the call and realized high travel trust one of the best performers. the platform that nikesh talked about, george had so much fun with it. look, when you have numbers like hertz, we realize the best suite, and you have the bad guys using ai and he's stopping them,

it's a feel-good story. >> apple and tesla are both down in the early going here. not much, but it's notable we started shows talking about what has been, as you look at palo alto shares have turned around, not benefitting from - >> the -- at one point this morning -- >> a look at apple and tesla we discussed at the top of the show what has been a decline for both that has been significant over a fairly short period of time. >> hardly magnificent. >> hardly magnificent. tesla we discussed the jonas note obviously, he still has a 320 price target for tesla, so say what you want, but the guy is still amazingly bullish. looks for almost a double in the stock price. >> he likes ford that's his favorite name. >> the other interesting point about his note only a fifth of his target is based on the car business. >> i know. look, i mean people are using

sum of the parts everywhere. every time you can't make the numbers the sum of the parts. >> sum of the parts is great if you can get the parts separated and see what happens. >> there's so much s.o.t.p., adjusted ebitda has made a comeback. >> adjusted ebitda is everywhere good for us to remind people that adjusted means we're not including stock-based com. >> right. >> like well what's going to happen if you can't give people stock anymore and you have to give them cash that said, it never seems to rise enough to become the issue that some would say it should be. >> who is at the forefront of stop >> gary gensler. >> marc benioff. his buyback insures that doesn't occur his stock has declined 20 points since -- >> your point is well taken which is a lot of buybacks are in place to offset the amount of shares that are given to employees. shares that, obviously, represent oftentimes significant part of their compensation, but is not included in what is

adjusted ebitda. >> but that's -- >> paying your employees should not be included. >> your job to tell people at home it's a joke i can adjust ebitda and be as risk as musk -- bezos, excuse me >> that's the new standard. >> why shoot low shoot for the moon. >> you know i used to enjoy a good game of hearts. >> i thought you were good at hearts. >> yeah. this net worth is declining and continues to do so that's elon musk i don't think we're worried about him. nobody is going to hold fund-raisers for him what about apple i know the old mantra is buy it don't trade it, own it don't trade it, let what go? >> well i'm just looking at nikesh's tweet right now. >> don't get distracted. >> okay. >> i'm asking about apple. apple came back like something from a disney movie, let it go. >> the cyber security market don't talk to me about disney. lots of room for good companies

to win, nikesh there's a story that comes out that says sales are down 24% we know from when the conference call came out that they already had a read about china and it was nowhere near as negative as that at the same time, i think anyone who has china, whether nike or starbucks, or -- >> or tesla. >> is stunned. >> last night i had a group called inspire brands. that's actually -- >> it's a private company. >> yeah. 36,000 stores. >> right they own dunkin'. >> baskin-robbins, sonic i said where are you in china and they said, you know, we like to be in growth markets. india. >> that said, how many starbucks are there in shanghai? >> 1100. >> too many. >> the numbers are enormous. >> they've been saying look, things are not great i still believe, i think i believe that the cup of coffee is transcendent.

you can afford it if you live in china. it's china, like, david, the apple phone may be too expensive for china right now. the knockoff phones look like apple phones. >> you've got huawei back in the market in a more significant way not with a phone that equals apple, but at the same time, to your point, that can do plenty. >> we need to hear that the 16 is going to have all the ai we want but that would freeze 15. we need to hear something that refutes the 24% down we have not. we need to hear something about vision pro doing well. and, you know, what's going to happen is, it's going to drift until we get a new data-point. own it but don't trade it, but i think it's going lower at 160. >> the drifting could continue for months because the developers conference is not until june. >> june. >> when we are expecting and there's going to be more pressure to deliver on something with generative ai being a part of the iphone 16. >> the other part the jonas note, a separate note where he talks about apple's decision to cancel the car, and he thinks that's going to spur other

companies to pull the plug on robotaxis and think long term it will be humanoid robots that might beat robo taxi investments. >> let's go back to apple -- >> tesla too, by the way. >> let's go back to the elephant -- someone said the elephant in the river yesterday. i thought it was elephant in the room, but -- because the river is like -- >> sure. watch out for hippos. >> alphabet, we have waymo and like they celebrate that they're going to be allowed to be able to take a waymo from the airport in phoenix to -- to phoenix but can't go to the venetian because they won't let you you have to get out. they will provide you with uber. this waymo -- thank you. david, waymo - >> yeah. >> you -- i think ignore the fact that waymo, they've spent billions and what do they have to show for it >> right. >> because at risk-reward of -- unfortunately, fatalities, you

have a fatality with a self-drive then it's just like that's worth like 1,000 fatalities >> alphabet's waymo unit runs a different kind of ai to instruct the automobiles different than what tesla is doing, apparently, which is using generative ai, and it -- they hope will actually get them to total self-driving - >> generative ai i wonder who that is. >> nvidia chips running it. >> i rest my case. >> at tesla. >> the prosecution rests. >> you're right. i think it's deterministic models versus imitation models what they call it now. >> remember that jensen will not rest until they solve the black ice problem, which is next to his office black ice, black ice also that behind him in his desk last time was his plan to put a man on mars and what it would take and at last mile issue. kind of like amazon with your -- >> jensen is thinking about mars the way musk is as well? >> he's beating musk. >> he doesn't have the rockets i'm not sure he's beating him. >> it's about --

[ bell ] >> just a distraction. get over yourself. >> they don't ring a bell at the top. they ring it all the time. >> i think this ai fight and spac between nikesh and george has legs because it's continuing on twitter and it's going to get nasty by the time it's done. i'm going to get over there and -- >> might be electric short - >> we have a new statement from microsoft regarding this piece profiling the engineer who shared his concerns with not just cnbc but the ftc as well. microsoft writes we are committed to addressing any and all concerns employees have in accordance with our company policies and appreciate employee efforts in studying and testing our latest technology to further enhance its safety, jim. the story and the engineer's concerns sort of spell out plug in anything, pro choice. >> it's true. >> and the library of offensive images it will give you. >> it's interesting when you speak to the people at reddit,

which is going to be front and center within the next month, they think communities are policing this so the communities will say this isn't right. this is a closed shop. there's no community to police it. >> no. >> and it's -- listen, i mean adobe, very different approach fire fly, all only uses copyrighted material. >> and it is so -- >> and so we'll indemnify you, in fact. >> were you able to see some of the things people are doing on fire fly you can't distinguish between lvmh and your own. it's like the highest end. >> that said since i think service soros, since the image generator came out from chatgpt, right, the one -- not -- the one of live motion, for example. >> that's used. >> adobe's stock has been down. >> it's a shamed small, medium sized businesses have adopted fire fly like you wouldn't believe. >> you're a believer. >> say my daughter used it for business in her shop. >> sure. >> a lot of creators - >> seeing some of the work, the

marketing she's done. >> it's all adobe. it's rather amazing what you can do with the product and we're not creating -- we are not creative we're looking at whether the big art deal is going go through. >> well, there's creativity to everything, jim. come on. sure don't under sell it. >> oppenheimer over here, creativity -- >> i go usually in the house, people they don't call me dad. they call me oppenheimer >> good for you. i thought that was the name of your dog. >> no. scoop. >> scoop. >> i'm aware of your dog's name. actually your dog is not named nvidia. >> nvidia do the. >> not the stock how much up today. not allowed go down lot. >> lowest -- >> up over 3% today, and i'm glad you mentioned it. >> going to go here and -- >> nvidia's market value has eclipsed $2.2 trillion. >> with learner and doesn't even know. >> i think he knows who learner and low are. >> i know who they are you missed the -- let it go, let it snow, my reference to "frozen" totally went --

>> witty - >> way past you. >> do you know who wrote that? >> that's rodgers hart. >> "let it go". >> no. i don't know nelson peltz. >> nelson peltz wrote that. >> he might claim he did. >> oh, my god! >> we haven't talked about iger's extreme confidence now in 24 streaming profitability. >> it's extreme. >> the moffett note today. >> yesterday came out the stock jumped a quarter that the quarter is going to be good. he's been saying that. >> he has been saying it for a while. >> a lot of things he said at morgan stanley are things he said previously including even talking about -- there you see sort of in terms of the parks and the parks performance and then even talking -- and raising, you know, free cash flow guidance as well. that was important the stock, though, well it was during the trading day yesterday. it was it was 1:15 eastern. he also talked ability netflix getting their technology up at disney plus to a level that

approximates what netflix is able to in terms of being able to cut marketing spend keep customers easily because they have better tech. >> addresses the last 20 pages of the mystery tour of nelson. did you read bring the magic back the last 20 pages this is how bad this company is. >> i know. you know, there was some interesting things about the presentation from them obviously, it was an interesting read the white paper i'm talking about. some are noticing that it was very similar in style and scope to elliott's white paper, so to speak. >> did you - >> that's not -- >> come to think of it, yes. >> look at that. isn't that interesting here, maybe we can show people there's the elliott -- there's the -- one is elliott's nrg slide and the other is the slide from trian and disney. >> sincere form of flattery. >> exactly. >> this is elliott arconic on

the top left and trian disney. >> the number of days that you thought you would be down. >> yes. >> by the way, these things do -- do -- they end up being similar. they're fight letters, fight decks what you call them or white papers, but it was noted by a number of people that there were significant similarity in terms of presentation from trian's white paper and a number of ones done by elliott. >> i thought it was interesting one of the director's they're targeting presided over the compensation of the final days of avon, where, you know, she was on the board - >> avon. that is -- >> avon board. >> avon was not a name i heard in a long time who is the lady that ran avon? >> andrea young. >> yeah. that was a suboptimal period of avon, the long standing company that kind of disappeared by the way, elf is on fire if you want cosmetics.

>> why music >> so is dj.com on fire. >> they're -- jd.com. >> they're doing a buyback. >> the government lets them do a buyback. >> haven't slashed the chinese communist party. we're running out of time. >> if you're a seller send me an invitation to your long-term confinement and beautiful prison perhaps where -- are. >> powell just around the corner coming up in the next hour as we go to break we'll watch what bonds are doing in advance of his q&a. 10-year down to 4.11 or so take you back to about the 8 tth of february don't go away.

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let's look at s&p laggards

today. the banks, regionals in particular, giving back some of yesterday's relative outperformance northern trust, pnc onthamg e big laggards tesla as well which is flirting of falling out of the ten largest market caps behind visa. do you is up 125, stop trading with jim is coming up. nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay.

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let's get to jim and stop trading. >> this is important, carl i've been saying the so-called browns in whiskey are doing this horribly their numbers are down 6%. this was the premier brand of whiskey in our country there's two things going on. one is younger people are turning against the browns and the clears, by the way but second this is gop, and no one is going to talk about it. i can tell these these are eliminated the ability of taste when it comes to whisk ey. >> i thought you were throwing cannabis in there as well. the phrase california sober is all over. >> whiskey is really being obliterated. but the taste, people tell me,

you just as soon have gatorade but what's amazing to me is this is the first one it's happening quickly. gop dash one and cannabis is one that people get a better buzz but they have to bring down the price. the bourbons raised price, raised price, good luck if i were powell what are you doing did you see jack daniels the price of jack daniels. >> wireless services and bourbon. >> but i would not touch that. big piece on the gop 1 how about tonight? >> i have crowd strike let's continue the spat. get it going here. just to be clear, george right now has the better numbers, he had some of the best i've seen and i think george is a fantastic spokesperson for an industry that's under siege because the bad guys are using generative a.i. like david

predicted. >> it's not going to get any better i hate to tell you. >> mr. bright side now they have a song about him, you know that? >> sorry. >> chain pot smoker. >> chain pot smoker? >> it's a more popular culture. >> you wouldn't get it. >> you know steal my heart he henry v, are you good on that? >> i thought silvia plat was deep. >> he thinks milton is milton burl >> no. >> busy session tonight with powell on the hill q&a with house financial services we'll get that going in a minute and this must be the ocean view? of aruba? huh. this listing is misleading. well, when at&t says we give businesses get our best deal, on the iphone 15 pro made with titanium. we mean it. amazing. all my agents want it. says here...“inviting pool”. come on over! too inviting. only at&t gives businesses our best deals on any iphone. get iphone 15 pro on us.

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you are looking at a live shot here on capitol hill where this hour fed chair jay powell will testify before the house financial services committee on the state of the committee, inflation, possible rate cuts. we'll take you there live when

the question and answer portion begins just moments from now good morning, everyone good wednesday morning i'm sara eisen, with carl quintanilla and david faber live from post nine of the new york stock exchange stocks are rallying today, up half a percent on the s&p 500, negative for the week but seeing strength today utilities are in the lead for a change, materials, health care, staple s are the groups that ar h higher consumer discretionary is lagging a little bit today nasdaq up about half a percent look at treasuries we got the testimony from fed chair powell and adp. we'll talk about both of that. buying of ten year goes to 4.1, five year goes to -- two year goes to 4.5.

let's get inventories and jolts with rick santelli hey, rick. >> yes do keep in mind right at 10:00 eastern we're seeing benchmark revisions in jolt. so some comps may change expecting a number under 9 million that's what we received. looking for 8,860,000 we received 8,863,000 and last month's jump over 9 million, the first time over 9 million since september of last year and that was a december number. what we find is that it's back under 8,889,000 and i find that fascinating. wholesale inventory, january read gheets moved. we see it. there's a lot more movement than historical standards now becoming minus .03

that's a wholesale drop from november of last year. and wholesale trade down 1.7%. this is fascinating. expecting down .03, this is the worst number going back to march of last year finally look at yields a two day of twos. we have a double bottom at 452 t tens we traded slightly below yesterday's 410 plus yield but the important thing we're on a pace for a lower month yield in twos and tens and this is based on no change in the text for chairman powell we want to watch what he says in front of those congressmen back to you. >> we can't wait i'll throw in the adp jobs report, coming ahead of friday's government number. it was decent, total private payrolls, 140,000 that was less than expected but look beneath

the surface, still strong growth and where is it happening? in the services part of the economy. goods only produced 30,000 services higher. most of them were big firms that were hiring. the other piece i was looking at is the wages and we've been looking at wage growth for job stayers, people who are staying at their jobs and job changers which has been higher wages and we saw a notable tick up in the month of february from january for those job changers to 7.6%. >> it kind of runs in the face of atlanta fed which looks at the workers who have not gotten a raise in the last 12 months, that's on a high which is why this is con cliflicting on that >> this doesn't correlate either in terms of wachlk wages and

jobs but we're taking the data and throwing it in the soup and seeing if inflation is more problematic than the market was expecting it to be at this time. that's why powell is going to be so important to listen to today. does anyone ask him about the hotter data in january on cpi and pce and what will he say about it so far we know that he said that he believes that they're at the peak on the tightening cycle and that if the economy evolves, it'll be appropriate to begin dialing back policy restrain at some point but the economic outlook is uncertain he didn't change anything in the guidance, talks about the balance of risk being both sides going too early or going too late and so far says inflation is not at 2%, where they want it. >> history would indicate we don't usually get any huge changes or anything that's going to really -- i mean, i don't want to say move the needle

because the market can react to so many different things but give me context, has there been a time when congressional testimony has really rocked the market >> nothing too crazy usually saves the policy statements and the monetary policy meetings for that but i would say there's been new information. like the january data that we haven't heard from him publically on. so just hearing the nuances of how fast he thinks we're moving to that 2% and how much he's itching to cut rates will be interesting because we heard it from every other fed member and most of the message there is we're patient now we want to see how the data evolves. >> you see the ticker there, nikki haley suspending her presidential campaign. speaking in charleston this morning saying the time has now come to suspend my campaign. she adds, i've no regrets that comes after her inability to make much of a showing on super tuesday, won vermont but it was

a romp by donald trump who sets the stage for a rematch with the president this november. we'll watch the headlines to see if she goes anywhere near endorsing former president trump but able at least to outlast several other contenders vying for the nomination. >> hard to imagine she would outright endorse we'll let you know she could easily sort of encourage trump to court the voters that appealed to her, and sort of broaden out the base for those that are going for republican candidate as far as, you know, david you asked what's changed from the fed chair to now, the other big changes, last time we heard from him on congress, it was june of last year. and things looked a lot different. we went back, our great producer chase went back and listened to the economic indicators in the testimony unemployment rate, 3.7% it was the same as where it is now pce, 4.7%. that's improved down to 2.4.

he mentioned core cpi, which was 5.3, down to below 4%. and he mentioned the 10 year yield which is just a little bit lower than it was right now. so there's definitely progress on inflation, which he talked about in his testimony the question is is it enough progress to lead them to start cutting rates say in june. on the flip side, there's a risk if they wait too long, the economy could turn and that's why we look to the consumer every single day and we look to what companies are telling us. this morning, campbell's soup reported earnings for instance i spoke to the ceo there he said there's a weird tension in the consumer where on one hand the low and middle income consumer is pressured and stretched. you see that they're, cooking more at home cooking products like tomato sauces are on fire because they want to stretch the budget but the premium categories are doing

really well. so it's this two tales of the consumer where sentiment and macro data looks good but at the same time they're dealing with higher inflation now for years higher credit card rates, higher debt payments. so you have a tale of two consumers and something the fed and investors are trying to figure out where that's going. >> which is also weird because real wage growth for the bottom is like 6%. >> it's growing. i think that's why the sentiment and consumer macro data continues to be good but they're still paying a high amount for groceries and still an outside share of their wallet, which matters for people >> minutes away from the fed chair, the q&a on capitol hill we'll bring it to you live let's bring in steve liesman and vice chair allen blinder, now a professor at princeton, university in terms of the testimony so far, anything else standout to

you? >> actually i want to answer carl's question because lou breene wrote a piece this morning. lou breene points out back in 1999 it was a 5,500 word statement today it's under 1,000 the reason is the transparency from the fed, they're telling us in their statement, in their speeches, interviews with us where they're going, what they're doing. so the number comes in, a couple of basis points movement in the bond market. almost unchanged in the stock market because most of what i'm seeing here has been expected. and the way i think about it is the fed chair saying you know what, i'm sleeping tonight but i still got a gun under the pillow when it comes to inflation this idea that we are attentive to the inflation risk he says the risks are balanced they're not really balanced. which is that the inflation

numbers are in a place right now where they have to prove to the fed they're coming down. the fed is not taking this decline on faith so they've been using this phrase we'll be cutting later this year. almost every fed official has provided the same guidance out there. so i'm not hearing much and i think the q&a is going to be very interesting, guys, as to whether or not there's a certain bias towards really worrying about inflation is really there. >> allen, how will they know when it's time to cut? >> they won't know that's the art of central banking. there's some science in there but a lot of art and especially when you get to subtle questions like that it's clear there's some cutting this year. that's obvious to everyone, including everyone on the fed. it would take something extraordinary to reverse that. but the exact timing, you know, it's always -- it's about tone and feel and how much weight do

you put on the latest data as opposed to last month's data and what you think next month's data are going to show. there's no pat answer. that's the bad news. i guess the bad news for traders. the good news for economists and fed officials it doesn't matter much whether it's one month earlier, one month later the broad movement in interest rate is what really matters for the economy. are rates too high for the economy right now? >> if you ask me, i want to emphasize this depends on subtleties and viewpoints and so on if you ask me, i say a little too high if it was up to me, which it's not, i'd be cutting now. gingerly not dropping rates dramatically but i'd be cutting rates gingerly and cautiously. but other people have, you know, the other view -- >> why where do you see it being too

high >> well, first of all, the lags, anything now is going to affect the economy later. that's point one point two is the real rate is pretty high now. it's definitely in restrictive territory as powell and others have said. and thirdly, it's a question of balance of risk. and powell has said this umteen times including his testimony today and will be repeated in the q&a. you have two sided risks you can wait too long to cut rates and that might do damage to the economy or you can cut them too into an that might do damage to inflation. and you have to balance those. as i look at the numbers i see just little signs here of the economy slowing, weakening it's still very, very good and i see more signs of inflation receding, leave aside

one month's data that's why i come to the judgment i did but someone else could easily come to the opposite judgment. >> steve, i mean, the way he talks about inflation, i guess is going to be key and i am curious what he says, if anything, about the january numbers. >> yeah. i think that's where you single out, sara, the upside and down side risk of today's testimony we'll be listening to how much he sees the january numbers as an anomaly and believes as the fed has forecast that inflation continues the march downward, maybe not at the pace you showed when you put up that screen ear earlier. i think the other side of the risk here is the extent to which he embraces the question you had for allen, which is that if it ain't broke, how much fixing should the fed be doing here it's not obvious where that restraint is in the economy. you see it in the housing but as soon as we get the strong consumer numbers we post these

decent gdp numbers, the tracking forecast for the first quarter have come down but they're in the 2% area. atlanta fed now, cnbc rapid update, in the 2% area right now. let's listen to how he characterizes the january inflation data as well as how much restraint he sees on the economy right now which leads to the question you asked allen, how much relief does it need. >> if i was in congress here's what i would ask do we need to see softer wage growth to bring inflation more confidently down to 2% because the real wage issue, wages are still rising that does still sort of spark fears we could see these higher levels of inflation primarily in the services sector of the economy continue allen, you don't think so? >> look i think that's a consideration and some people weigh it very heavily. i don't.

there's a tendency to exaggerate the effect of wage on prices it is there. i don't want to say it's zero. but it is there. people tend to exaggerate it secondly, there's catch up to do wages may be at the bottom -- i'll come back to that in a second -- real wages lost out as inflation soared and wages did not keep up. so there's still catching up to do the catching up is moving along v very nicely at the bottom. i think jerome powell and others think it's good news i think it's good news it's been a long time since we could sit up and applaud to what was happening to wages at the bottom of the economic ladder. he won't want to say anything that denigrates that or suggests strongly we don't want that to keep happening or anything like that that would be both in politics

and bad economics. >> that would be a bad headline for him, we need to see wages go down >> allen and steve thank you very much as we continue to wait for the fed chair. >> you're welcome. keeping an eye on all that we're not done by any means with the data we get beige book this afternoon at 2:00. i know you watch that sara, closely a look at what's going on in districts around the country. >> i love the beige book, so much color about the different economies. and the fed watches the beige book we know that fed chair powell has referenced it in conversations on policy days about what they're seeing tom barkin tells us he listens to companies what they're doing with prices on inflation that's where you get the data from the beige book. >> watching markets as well. dow up almost 200. oak mart manager bill nigel with

us this morning. good morning. >> good morning. thank you for having me. >> always good to have you i wonder how you characterize the environment for value given some of the swings we've seen the last couple of days. >> well, certainly so far this year it's not been a good time to be a value investor the russell growth is off to the races like it was in the prior year, 2023 but what that created, carl is an environment where a lot of the stocks in the s&p 500 trade at twice the multiple of the market market is about 20 times earning and a quarter of the names trade at twice that multiple at the other end of the distribution, a quarter of the names that trade at half the market multiple so for a value investor it's an exciting time we can put together a diversified portfolio and pay

barely 10 times earnings. >> alphabet is one name we always come back to, bill, how interesting is that story getting lately what do you make of the recent price action >> alphabet is one of the few names of the large s&p 500 names that we think has become more attractive than it was a year ago. the stock has lagged the other large tech companies we think some of the important things to look at is how much search revenue has grown a year ago everyone was concerned when bing incorporated chatgpt it would mean a market share loss for google. and market share data that we've seen, even so far in 2024, shows that google has not lost any market share at all. so the stock is selling below the market pe multiple if you make adjustments for cash and other bets we think we're paying something more like 13 times earnings for

search we think that's an incredibly -- incredibly good opportunity. >> bill, just because they haven't lost market share doesn't mean they're not going to it's very early days for generative a.i. and the reason the stock is trading where it is in part is people fear they're lock hold on search is going to be dislodged and i -- you clearly just don't agree. and i'm curious as to why. looking at backward data doesn't necessarily tell you, as we watch these generative a.i. models increase in scope, size, u bikty and usage. >> i think part of how slow they've been at releasing product is they have a lot more to lose than the companies that the a.i. is not supporting a large basic business consumers expect google to

deliver accurate results to them and if they -- they just can't risk losing that trust to the consumer by incorporating everything they've done in a.i. into the search program right now. >> and certainly you're right david, no guarantee that a backward look guarantees future performance like in fund performance past performance is no guarantee but i think it's interesting that the fear level for google was just as high a year ago. and so far the results don't indicate that a.i. has been a problem for search >> yeah. when it comes to value overall, it does seem as though investors are starting to differentiate, for example, within the mag 7 we talked about the decline in apple shares, tesla shares, for example. is that a good sign to you in some way, bill, in terms of how you approach or your perspective

on value in the market or does it not matter? >> alphabet is one of the mag seven and it's been differentiated. >> it has. in a negative way. >> not a way that has helped us. but you look at a company like apple. we get asked why we don't own it now. 20 years ago people asked why do you own it we bought apple in 2008. and it was an unusual holding for a value fund back then we sold it in 2020 after having made something like 30 times our money. but during that entire period -- >> bill. >> -- awll we had to underwrite to own it was apple was an average business. >> bill, i hope you won't mind me jumping in as the q&a is beginning on the hill. thanks for the time, talk soon. >> i'll recognize myself for five minutes let's begin with what's top of

mind, regulatory policy with the micro bar proposal on capitol hill and interest rates. we're in a political year and the lens of a political year falls heavily on all government, all parts of government. there's a lot of debate about the past three years of high inflation impact on american families and now that inflation is receding, there's been a great deal of speculation about when the fed would cut rates. some say it's going to be a lot of rate cutting this year, some say none what say you >> i say that really it will depend on the path of the economy. our focus is maximum employment and price stability. and the incoming data has the affect on the outlook and those are the things we'd be looking at i can go further if you like. >> at what point would the fed

be forced to cut rates what does the data point to, do you have any updates there >> what we said is the committee would like to see more data that confirm and make us more confident that inflation is moving down to 2%. we have some confidence of that. inflation headline inflation has moved down more than 3 full percentage points. we want to see more data so we can become confident and so we can take that step beginning to reduce policy rates. it's a very important step we think because of the strength in the economy and the labor market and the progress we made we can approach that step carefully and thoughtfully and with greater confidence and when we reach that confidence, the expectation is we will do so sometime this year and we can begin dialing back the restriction on our policy. >> let's pivot to regulatory policy as you know, there are serious

concerns expressed on both sides of the aisle and across america and across industries about the end game proposal that vice chair michael barr has proposed. and the fed is taking up the concern is on both process, meaning how the proposed rule was developed, analyzed and released for comment the general over lack of economic justification for these actions. and -- but also on the substance. the proposal goes much further than the basle three committee recommended. putting us at a great disadvantage internationally potentially. so is the fed listening to these comments that have been nearly unanimous in opposite to the rule is the fed listening to these comments on impact the rule will have on everyday americans and

what is the status on rule making and the plan moving forward? >> so you're right we've received voluminous and substantive comments we had asked for very specific detailed data based comments and i'm happy to say we did get that so we're just now reaching the stage we can begin to make decisions on how to proceed. we haven't made any decisions yet. but i think i can say a few things we do hear the concerns. i do expect there will be broad and material changes to the proposal i'll add that i'm confident that the final product will be one that does have broad support both at the fed and in the broader world. as far as process is concerned, we're really not at the stage of making decisions about that. that's down the road at least a bit. i will say the question we get

is reproposal, and i will say that we haven't made that decision but if when we get to that point that turns out to be the appropriate thing we won't hesitate to do it. >> you won't rule that out you would not rule that out at this stage of the game, reproposal >> not at all. it's an option depends on how things lie when we reach that point. >> there's interplay between the different parts of the rule and if you change one, what does economic analysis look r like for the new proposal it's good to hear you'll be methodical and the fed will do the traditional role of building consensus around substantive changes and that's your intention? >> that's right. i said this would be a thoughtful deliberative process. it's more important we get this right and do it fast we understand that this is an important rule making and it's going to have, you know, potential implications for the economy and the people we

serve. we're going to take our time and do it right. >> thank you the ranking member ms. waters recognized for five minutes. >> thank you mr. chairman. chair powell i want to talk to you about housing before i get there let me address the issue of mergers last week i led a letter along with 15 democrats to you as well as doj, fcc and fdic expressing my concern about the lack of progress you have made in updating your bank merger review procedures this is critical now we just learned of another mega merger involving capital one and discover, which would create the sixth largest u.s. commercial bank with a major role in the credit card market before too long experts have raised alarm there's a rubber stamping process of bank mergers where virtually all applications are approved all the while

unbridled market poses great risk to consumers and entrepreneurs. what is the status of your updates to the merger review process and does the fed plan to convene public hearings on the capital one and discover merger? >> i believe we're in regular contact with the justice department on what's going on with their review of merger practices. we are -- we're looking at that. and considering. i have think on the potential merger with -- that you mentioned, we haven't received an application so there's not much to say yet. it's early days. when we do get that application, though, we're going to evaluate that merger as always under the factors laid out under the law and that's our commitment. >> so you do believe that your bank merger procedures are ready to do the work that's necessary

when you evaluate this possible merger >> i do. >> and are you supportive of of organizing community hearings on this merger? >>. >> i haven't talked about that with anybody i will say this, we've done that in many large mergers but that's not a conversation we've had yet. we literally don't even have an application for the merger yet. >> thank you we'll stay in touch with you on that turning to the national affordable housing and homelessness crisis we've seen steady increases year after year in the home prices and rent cost which are a symptom of the chronic under supply of affordable housing more renters and homeowners are now spending more of their income than ever on housing costs. and as you know, housing costs continue to be a primary driver of inflation do you think the fed has sufficiently emphasized the role

that housing costs play in keeping us from your 2% inflation goal do you think it's reasonable to believe that monetary policy can accomplish this goal without a fiscal policy response and if you do, how long will it take to get there? >> housing services inflation is one of the three come po nenlts that we look at that make up the core pce index it has been coming down from the heights of a couple of years back it's part of the story i think the overall story is the goods price inflation has turned negative goods prices are actually coming down a bit housing services inflation you can see from -- you know, currently entered into leases as leases turn over, the increases are going to be smaller so in our forecast and everyone's forecast housing services inflation comes down. >> it's been reported the methodology used to assess

housing cost as an indicator of inflation is imperfect namely because it considers costs based on both new and old rent including owner-occupied housing on a month-to-month basis. this results in stale data since family's housing costs typically do not change unless they move or lease is up for renewal so the bureau of labor statistics and cleveland fed created an improved methodology based on new lease rents which is referred to as new tenant repeat index has the fed incorporated this indicator, if not why not, if so what change has had it on the housing observed by the fed. >> we're aware of that we do incorporate it into our thinking as i was starting to mention, that is the reason, the

fact that market rents are moving at a slower place the reasons housing services are coming down and that plays a role in our thinking. >> thank you i yield back. >> the vice char, mr. barr is -- i'm sorry -- >> wrong vice chair. >> wrong vice chair. >> the gentleman from arkansas, mr. hill, is recognized for five minutes. >> thank you, chairman i want to l welcome you, chairman powell to the committee. glad to have you back in your expertise. i want to pick up where chairman mchenry left off on his conversations about bazle three end game saying you're not taking the whole concept of reproposal off the table as you review the analytics and you all discuss the interaectivity of that rule with other rules if you were to repro pose the end game would the federal reserve delay the long-term debt

proposal on the table? would you agree the agency should not finalize the long-term debt proposal until banks have a better understanding what their capital end games under basel three end game might be? >> that's a question we'd be asking ourselves, what's the implications for the other rules, including the long term debt. >> is the fed concerning changes for the banks to issue long term debt right now it's 6% of risk weighted assets in abundance of caution incase there needs to be resolution as i understand it, it's required at the holding company level and the bank level that seems redid you know tena-- redundant to me. >> that's another area the

comment period ended a little while back so once again we're in the process of evaluating the comments there will be a thoughtful, deliberative process around that we welcome comments on these kinds of things. very important implications for the banks affected we want to understand the effects and make sure we understand them correctly to evaluate what a final rule should look like. >> let me turn to the monetary policy outlook as the chairman noted, consumer prices are 17% higher for american households since president biden was inaugurated back in january of '21. and yet in spite of that 17% increase in costs, real wages have fallen 2% over that period. so no doubt that inflation is the biggest issue facing american households. and in my view there's two principal, we've had supply disruptions and unprecedented fiscal policy laxity you

described it as unsustainable but we also think the federal reserve, in my view and many people commented should have reduced accommodation after the pandemic sooner. one of the things coincident with that is that the fomc announced in this august of 2020 this flexible average inflation targeting framework right in the middle of the pandemic which many didn't understand why the fed would take that decision then but it would give you flexibility on the 2%. saying the fed could allow inflation to rise above 2% and stay there above that level for some time because the fed had such challenges getting the price level to 2%. that was a major shift in the fed's approach do you think in retrospect what we witnessed, was that wrong and

a change of review >> we said we'd do a review on a five year basis so we'll do that at the end of this year. i think the question you raise is one of the questions we'll look at. but the bigger question is, that change in the approach was really based on the fact that we had low interest rates and low inflation for a long period of time and policy was also very close to the effective lower bound so there wasn't fire power for central banks so it was a way to keep things anchored at 2% now we have entered a different period the pandemic may have changed that in a sustained way. we don't know that yet but that's the question we'll ask ourselves. is the effect the lower bound to be thought of in a different way if it were that would have different ramifications for our framework. we haven't begun the review yet.

it'll begin this year and end late next year. >> thank you yield back >> we'll now go to the gentleman from new york, mr. meeks for 5 minutes. >> thank you were mr. chairman thank you mr. powell for being here i want to pick up where we are, 2019, 2020, the entire world was under the unprecedented pandemic with covid, is that correct? >> yes >> and that changed a lot of things with reference because not just for the united states but for the entire world and it affected the economies of countries just about on the planet, that's not also correct? >> yes and supply chains was disrupted. i can remember many americans and people around the world could not get toilet paper or paper towels and some of the basics so the prices because of the, you know -- you know, of supply/demand skyrocketed,

causing the inflation not only in the united states but basically all over the world, is that correct >> yes. >> and so, therefore, the fed had to do certain things because of what we were in at that particular time we couldn't just go back and act like the pandemic wasn't there. we had to do something to try to make sure that we were able to get through the pandemic, is that not correct >> yes. >> and now, we're at that point where we are about to get through this pandemic. and we can look at the rest of the world, what they did or didn't do at that time but what we did at that time. and as a result of that, three years post the pandemic when you look around the world, i think that you are correct with what you stated that by most accounts our economy is doing well. in fact, i would say our economy is doing better than most of the other countries in the world would you say that's correct >> i would >> and so, you know, i would say then that some of the other countries of the world maybe

should have looked at the policies we put in place thereafter so they could get out of it so they could have a labor market that's strong or unemployment rate near a 50 year low. and as you stated, inflation is also now coming down, faster than any place else on the planet just about. is that not correct? >> i think that's right. >> and i think that you also recognize a mismatch between the strength of the economy, that's what we're talking about, and the field. i think that ranking member waters touched on one of those issues of housing we're still trying to get that under control and i think the ranking member has some ideas how we can do that and that may be something you need to consider so we can further get down the inflation rate and the other would be the commodity markets because the cost of food is too high and people -- so that's something else we need to get in control

is that not correct? >> yes. >> let me ask this can you say there's a connection, for example, between conflicts in other areas of the world like russia's war against ukraine and/or the turmoil in the middle east and the economic pressures that the united states feels, does that not also go into the reason why the cost of commodities can be still higher? is there a connection therein mr. chairman. >> certainly the war in ukraine caused prices to move up sharply. >> could you tell what is the -- what would the connection lead you to believe that there is an urgent need for us, i would think, for -- you know, we're running out of the time for us to do everything in our power in congress to support ukraine so that we can make sure that that and other strategic partners that we can help the commodities market and that would help lower the cost of some commodities

bringing food prices down if we would just be able to pass certain things that's going to help ukraine here in the united states congress, is that correct? >> here's where it gets outside of our jurisdiction. i wouldn't have an opinion on ukraine funding. >> if we had more grain that was going through, wasn't blocked by russia, things of that nature. that helps bring the cost down, cost is higher because of the disruption in the black sea that's happened because of this war. so that would help bring the cost down. that's not necessarily the policies here in the united states but that's the policy because of what's going on in russia and we need to make sure that we do something to prevent that if we really are serious about bringing inflation down, is that not correct? >> i think it's correct that a full supply of grain would help with commodity prices. >> and so, you know, instead of us playing politics with this and acting like it is your fault

or anyone else's fault that we had to go and do what we did because of the unprecedented pandemic, what we did was save the economy then knowing we have some problems that we have now and now we're recovering quicker and better than any other country on this planet as a result of your policies and the poles of joe biden. >> the gentleman's time is expired. the gentleman from oklahoma is recognized now for five minutes. >> thank you and thank you for testifying today. when you were before the committee a year ago i cautioned against raising commodities, that are used to keep prices of food and power stable for consumers. at the time you said that was a specific concern and you weren't sure the proposal would address it in fairness that was before the basel proposal was published

we know the proposal does impact commodity revenues and they are among the most penalized financial products the banks offer. and i would note i very much appreciate your comments and responses to chairman mchenry about the nature of the overall proposal congress wanted end users to be able to secure their hedges without posting margins to keep the derivatives markets affordable but i've seen estimates that these transactions could face ten times the capital requirement. chairman powell, make me feel better ease my concerns here will you and the fed work to fix this >> let me start by saying, i i want to echo the fact that our commodity markets and capital markets are a huge national asset and we need them to be functioning well and with as little friction as possible. i understand what you're referring to is the things done

to increase capital requirements for various kind of derivative activities that's an area we're aware of the concerns and we're taking a close look at it. >> i appreciate that i was a member of the dod frank conference committee where there was bipartisan support to not disadvantage end users this had broad bipartisan support then and still does today. >> unfortunately the fed could -- i'd like to enter a few records into the record, first a joint agricultural trade association from the american farm bureau federation, among several others next a joint energy trade energy letter and lastly a letter from the american public power association and the national rule electric cooperative association.

>> without objection. >> thank you mr. chair >> chairman powell i'd like to focus on how plo po sal is set to disincentivize banks from offering clearing services in dodd frank we offered clearing as a way to reduce risk. the number of banks that could clear derivatives as reduced over time making it harder for end users to find a bank to offer the service. there are some estimates that the proposal increases activity by 80% i'm worried this makes it harder to find a bank to clear hedges this also comes at a time that the s.e.c. has just finalized rule in december that increasing clearing in cost and treasury markets this has an impact on cost and liquid activities, not just the commodities but the treasury market that plays a

role in the world economy. will you work with the ctfc to address this problem >> again, i'll say we're aware of those concerns and we're prepared to work with other agencies and also make sure our capital proposal appropriately addresses them. >> the strength of central clearing is depended on banks' willingness to participate and problems with the basel end game warrant a full reproposal to give us time to appreciate the consequences there are real consequences as you and i both know, mr. chairman with that, mr. chairman i yield back the balance of my time. >> the gentleman from texas mr. green is recognized for five minutes. >> thank you, mr. chairman welcome again, mr. powell. it's an honor to have you before us today i always enjoy hearing your commentary as you know, recession and

inflation, these are buzzwords and they're used in some circumstances to cast a dim light on perhaps the fed and others who are working to end some of these troubling circumstances we're dealing with are you now at a point where you believe that there will not be a recession? there was much talk about recession and many people worried that we would find ourselves having to negotiate our way out of a recession what is your position currently on a recession >> so u.s. growth last year was in excess of 3%. what we're seeing so far this year is continued solid growth

my expectation and that of other forecasters and of my colleagues is that we'll see continued growth at a solid pace i will say, so there's no evidence -- no reason to think that the u.s. economy is in or in some kind of short term risk of falling into recession. having said that, though, there's always, you know, a possibility -- a meaningful possibility that an economy will fall into recession. i don't think that possibility, though, is elevated at the current time. >> thank you i appreciate your saying this because we want to, at some point, eliminate a great deal of fear associated with just the term recession next point, the december fomc projections show case a slightly lower unemployment rate than last june's projections and

slightly higher gdp suggesting a soft landing remains likely. are you of the opinion that we're headed to a soft landing mr. powell >> i'll just say that what we've seen so far is an economy that's growing at a solid are moving u labor market's coming into better balance between supply and demand, and inflation has come down sharply, really, since the middle of last year, so those are the conditions we see. they're very attractive conditions and we're trying to use our policies to keep that growth going and to keep that labor market strong, while also achieving further progress on inflation. that's our goal. and do i think there's a possibility that we can achieve all of that while keep the labor market strong and the economy growing? yes, i think there is a possibility, indeed, that is what we're trying to achieve >> a soft landing can be difficult to identify.

we could possibly have a soft landing and miss the point at which the landing took place how do you divine the soft landing, such that a member of the public, a layperson, would understand that we have, indeed, had a soft landing >> so we really think about it in the terms i just discussed, which is, we want to keep the economy growing, we want the labor market to remain strong, 3.7% unemployment is pretty near 50-year historical lows. we want inflation to continue to move down, closer and closer to that 2% objective. and we've made quite good progress on that over just the past year. so, we want to continue those conditions and i don't want to put the label on it, other people can do that, but i would just say, we're using our tools to, you know, keep a strong labor market and strong growth, while, you know, making further progress on getting inflation down to 2% for the benefit of the public.

that's the economy that we're trying to achieve, and i think there's a, you know, we're on a good path so far to be able to get there. >> well, i concur. but i would ask this, as my last question will there be some announcement at some point that we've had a soft landing because, we have people who are continually indicating that we're not having a soft landing, there's a possibility of a recession, so will there ever be some official statement that would give people some comfort >> i don't think by us, no i think we're just going to keep our heads down and do our jobs, and try to deliver what we're -- what the publicis expecting from us. we wouldn't be, you know, declaring victory like that. but -- >> the gentlemen's time has expired. >> the gentlemen from texas, mr. sessions, is now recognized for five minutes >> mr. chairman, thank you very much chairman, welcome back

i think we enjoy this. i hope you do, too i know there's some bit of trepidation about all of the things that are available to us and you, to, to answer i learned a long time ago on a campaign trail, every problem can be solved on a campaign. reality's a little bit different. welcome back, despite all of that looking at the monetary policy report, march 1st, 2024, and as i review this, i would like to focus on the term that i would say high prices are here to stay because what i've heard you say today in this report really go to is, you've got everything under control, but we're going to keep the high prices. and i think the high prices really take a toll on the american people as you're hearing from our colleagues, no matter whether they be republican or democrat, page 7 of your report, you don't have to go focus on it, says, while

current services, poor service price inflation has been slowing, but remains evaluated it does. labor costs, as you know, and energy costs, are a driver to your monetary policy the question that i have is, because you began referencing policy two weeks ago or so, the president announced that he was going to slow down the gifting of opportunities in texas for natural gas to be able to continue the exploration and this in texas is a trillion-dollar answer problem to us. because if we do not constantly go find through these new finds, but also, through the permitting process, we're in trouble.

but we're also putting in trouble our contracts that we have with germany and a lot of other countries. this is going to mean also that business in america continues to have high prices, because as you know, wages are already high and now energy is high there's no resiliency to continue this and see the american people win. you talked about policy, so what's your advice to policy about energy and what this administration is doing on the policy perspective >> we have, you know, broad, significant important responsibilities, but we're really not responsible for energy policy, and we try to avoid commenting on -- >> but it has a huge impact on this report. it arbitrarily keeps prices high it arbitrarily means that business is not, while they're making money, and while

households, people do buy that, it's diminishing their long-term advantages to make progress. so, you're just going to leave that alone >> really not appropriate for us to comment on, you know, if it's -- if i'm commenting on energy policy, i should comment on everything. we have a mandate, which is maximum employment and price stability. we take decisions by the legislature and by the administration as a given. we're not in charge of second-guessing them it's just not our job. >> okay, all right, well, let's say we're not going to second guess them, i will i believe that the energy policies that this president and the democratic party have supported are causing a huge boom in prices staying high. they will not come down. a boom in attacking the energy industry, jobs that are associated with it are foreign policy, as it relates to

contracts that we have signed with foreign countries, giving up the natural gas market. almost entirely on a world market to qatar, it has a huge impact on whether we are going to keep prices high or control these prices it has a huge impact on, i think, your monetary report about how many houses get built, how many jobs get built. whether we have jobs in place, whether we continue to have more jobs available than workers that are there. because overregulation is having a lot to do with the nervousness, not only on this panel, but also by the american people it would be my hope that you would pass some sort of a memo and tell them, you have no opinion, but you want them to see what the impact is i want to thank you for being here thank you, mr. chairman. i yield back my time >> the gentlemen yields back the gentlemen from connecticut, mr. heims, recognized for five

minutes. >> thank you, mr. chairman chairman powell, thank you for being with us today. i have a question, but i want to start by acknowledging, not celebrating, but acknowledging what has been a really remarkable soft landing in our economy. and i'm not celebrating, because the american people, consumers, are still feeling the effects of high prices. wages haven't caught up with prices in some instances, but i think that it would be fair to say that observers would never have predicted the conduct of this economy you, yourself, said it in the final press conference of 2023, when he said, a very high proportion of forecasters predicted very weak growth or a recession, not only did that not happen, we actually had a very strong year. so, i want acknowledge that and acknowledge your commitment to independent monetary policy. and because i'm still burdened with this idea that truth and facts matter, i want to point out, especially having listened to my good friend, mr. sessions, talk about the energy market, truth, in fact, matter

we are producing more oil and natural gas today than any other country on the planet. we are the world's number one energy producer. i could spend my entire five minutes sort of pointing out facts. the fact i want to point out here, and this comes right out of the report, is that the premise that inflation is joe biden's fault, his fiscal policy's fault, first is faulty because half the fiscal stimulus that occurred in the face of the pandemic happened under the previous president, donald trump, and it has faded. and this report makes the case po core, and i quote, core goods prices have been declining as supply bottlenecks ease and import price inflation falls so, mr. chairman, i don't want you to comment on that, because it gets a little bit political, but i think it's important we keep some foot on the plane of facts. i want to ask you a question, though, mr. chairman, because i always worry about risks, risks that we see and risks that we don't see. and i want to use the remainder

of my time to talk about a risk you're very conscious of, which is the overhang in the commercial real estate market. as you know, the financial stability oversight council identified commercial real estate as perhaps the most salient risk to the financial system, $6 trillion roughly in loans, half of that on bank balance sheets in a 60 minutes interview a few weeks ago, you characterized distress in the commercial real estate market as sizable, but manageable do you still feel like that risk is manageable? do you feel like you've got the visibility and the transparency and the tools to address it? it makes me nervous, because this has echos of 2008, 2009, when vacancy rates were declined relatively rapidly we're not seeing that right now. so how do you feel does that risk continue to be manageable and do you have the tools to manage it? >> i would say "yes" to that i think it is manageable