and its oil trading performance could take a hit as well. joe and melissa, big movers. i'll send things back over to you. >> we'll get a final check now on the futures. they've been up for most of the session. in fact, the dow is slightly positive again. nasdaq morning highs, same with the s&p. what's today? i'll see you tomorrow. make sure you join us. "squawk on the street" is next. futures pretty steady and the s&p comes off the 35th record close of the year, takes aim at a 36th. busy day on the hill with both powell and yellen in testimony. powell's last appearance before lawmakers ahead of the election. roadmap begins with the s&p 500's longest winning streak. >> tesla's nine-day win streak, the shares have surged 27% this

month alone, and nike is not so good, very bad year. shares have tumbled more than 30% year-to-date. what about a turnaround? >> let's begin with the markets as we await the fed chair's capitol hill testimony after new record closes for the s&p 500, nasdaq as well as all-time highs for apple, tjx, costco. >> there's a couple of notes we've been seeing. when you look at food and staples, it's costco and amazon. and it's amazon and alphabet. when you look at the next iteration of the iphone, people are talking about very big numbers for apple. this group, david, has a hard time not getting analysts to love them. some of the parts break up by brent on amazon gives you some

number that's absurd. i called last night and said, okay. break it up. i demand lina kahn break it up. >> embroiled in antitrust litigation that i suppose could result in some sort of a breakup. to your point, many people who put some of the parts out there say that it's worth a lot more. i don't think they have any intention from the strategic standpoint of doing that. >> none whatsoever. it's a fantastic company. david, standard oil was a great company. >> it was. >> and it broke up. >> yes, it did, jim. >> when we were doing the show -- >> i had some of the parts on that. >> chevron was going to -- >> i liked that one in particular. i thought john dee was going to do okay.

>> the wife founded the modern. >> yes, founded the modern museum of art. >> speaking of oil, bp with the impairment charge. following amazon yesterday, shell last week. these weaker refining margins, are they going to bite? >> today we got a guy that cuts valero by about ten cents. the the golden age of refinery as end sgld when was the golden age? >> valero has been up forever. this is the stock that people wanted to own. i just think when you look at these companies, a commodity company, refinery. they all make gasoline. this is a stock that went from 120 to 180 in a couple months. >> all these guys are in this business. by the way, bp has done a lot to try to figure out -- let's say, make batteries. trying to do a little alternative energy stuff. not working. >> which is weird because aramco

is investing in a company that's going to bet that the combustion engine will be around for -- i think the quote is a very, very long time. >> i'll tell david the magic day is august 8th. remember, china has self-driving taxis right now. >> they do, they do. >> but there is a belief that tesla is ahead given how many miles have been driven by tesla cars and so many things have already been recorded, moved to generative ai. we're at 12.4 in terms of self-driving. august 8th we'll get a lot more information about the future for the robo taxis, something elon musk has talked about for many years and would be significantly additive to earnings when you imagine, as he does, a fleet of said cars on the road. >> could he announce he has to put up more capacity in china

sending the stock to 300? >> i don't know, jim. >> that's good enough. i think it would have been better -- >> taking aim at ten days in a row. we'll see if it gets there. there is a piece in "the journal" about foreign brands struggling in china. volkswagen, tesla, a year ago 50%, this month 43. >> i just think -- this man is not calling a meeting. elon musk is not calling a meeting the say, you know what, status quo. he i think can be the foremost robotaxi guy in the country. we've got this big problem and the robotaxis are still district by district in our country. can he have something that transcends that? >> i don't know. i ever imagined he could have something that could navigate the streets of midtown manhattan. what our local government has bon to all the lanes, nobody can

navigate them. but it will happen. we've brn talk about self-driving for many years. i remember sitting here talking to you guys saying it's only a few years away. i was being told that by the likes of travis kalanick. it's taken a lot long. >> he said to me at the white house correspondent's dinner. hi, jim cramer, i'm richer than you are. a great opening line. my wife thought it was a stunner. >> he wasn't lying. >> no, no. as a matter of fact, it was one of the most truthful things said in washington that year. >> speaking of washington, we mentioned powell and yellen on the hill today. yellen in front of the house. powell at senate banking. jim, this is his last chance to address lawmakers before the election, and there's some chatter about whether or not fed independents get a mention or two. we used to talk about how great

greenspan was when he went in front of the hill. he said nothing. powell takes "say nothing" to a higher level. when you're finished with jay powell, i think you just say -- that's perfect. jay powell needs to be inscrutable when he's on the hill. he gets you nowhere. >> people can't see you nodding your head. >> i agree. probably highly unlikely we'll get news from mr. powell during his testimony today or tomorrow or certainly anything beyond what we heard in him during his time with sarah last week. >> we can show the nation how ill-informed many of our elected representatives are about the financial system.

i think that's always a helpful thing. >> i recently watched the gamestop hearings for something i'm doing. i'm talking about the most unaware group of people who have -- >> did roaring kitty know anything either? >> roaring kitty, he had a rap on gamestop. >> a republican on chewy as well. >> chewy was up a lot. >> $243 million. now, i assume he's getting some leverage on that. a quarter billion dollars. >> look -- 6.6%. >> did you watch the movie? he crushed it. also really good at the trap he was early. >> stock has not performed any better since he got involved. >> he should have got involved at 19 when they came on the show. just crushed it. he said, look -- i'm a huge dog lover. you know my dog at nvidia

someone thanked me for naming my dog nvidia. he came on the show at 19 and said, this is ridiculous. my stock is about to -- i'm doing great, ceo of chewy. and roaring kitty comes in at like 25. where is ryan on that? >> nowhere. he's not involved in this company. ryan cohen runs gamestop, not even on the board of chewy any longer. >> he's ill lieuive. >> did ryan do well on that -- he had people on the board -- >> he bagged everybody. >> benefiting, jim, from a solid tape. i do wonder what you make of the fact, as we said at the top, we have a few dozen record closes this year and the vixx at 12.5, jim. spoke points out that's the lowest it's ever been since '92 at this stage of an election year. >> only two times where we've had so many all-time highs.

one of them was 1995, we were coming out of -- mexico was being put behind us. i just find that the comparisons to the early '90s are fabulous. >> what do you mean all-time highs, i thought only 18% of the s&p was up. it's two-thirds of a gain in the second quarter was just apple and individual. >> so? where is the other guys? why aren't the other guys doing better? >> you said all times -- >> i rebel at the notion where there's two companies doing well and i come back and say there's 498 that need to get their act together. >> b anda says this will be the first quarter those 493 are in the black in terms of eps growth in a couple years. >> well, the number of justifications for the rallies at apple and alphabet, the rally in amazon, the justifications

are every day. we're not going to be left behind with a low price target for nvidia. you can take nvidia's price target to infinity and beyond. >> key goes to 180 today. not seeing any signs of demand pause for the h100. you said is it coming out of its post split crunch. >> we're finally through that. i think chipotle is still in that. people think they made stuff smaller. chipotle says no, avocado is very hard to come by. >> avocado problems in guerrera the state are contributing to smaller portion sizes at chipotle. >> worldwide avocado shortage. >> so is there a portion problem at chipotle or not. >> i have brian nickel on who said they're not changing it.

i saw a guy brother his price target from 3,000 to 68. wow, they're crushing chipotle. a split. nvidia is going through. you can't get a blackwell to save your life. just try to get a blackwell. >> i'm not on the market for a blackwell right now. i'm not running my own generative ai model. >> i've got one going in quaker town, pa, that will crush them. >> why are you watching the hearings of gamestop? what are you doing there, jim? >> documentary? >> i'm working on my own thing. >> your own thing? you don't have enough going season. >> no, i do not. i want a lot more. if i do it, it's a regard. when we come back, i have an apple story that will blow your mind. the best apple story there is. >> you're also going to touch on nike, i believe. >> i have to, i have to. i will give you -- >> you've got a break.

you already have a great tease. >> i'm not going to back down. >> tom petty is the guy they brought back. >> i miss tom petty. >> he was fabulous. >> take a look at the premarket here. we'll get to nike and a bunch of other names when we come back. (♪♪) what took you so long? i'm sorry, there was a long line at the thai place. you get the sauce i like? of course! you're the man! i wish. the future isn't scary. not investing in it is. nasdaq-100 innovators. one etf. before investing, carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com

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frankly, i've been down nike for a very long time. i've been worried about powerful competition typically from hole ka. on is one i've been recommending for ages. now that everyone else hates nike so much, never underestimate the power of low expectations. still, i feel a lot better about turning positive on nike right here, right now, if we had more

of a turn-around plan from management. how about an incredible blueprint going forward. right now the company seems to be focusing on making things less bad, launching fewer products. it's not a hood. i want to hear a cred nl plan about how to get business growing again. if they can't and won't give us that, we need new management. >> that's jim speaking out about nike on "mad money." the stock fell 3% yesterday. bloomberg says the company is rehiring a retired senior executive, tom petty, to oversee the retail partnerships after those relationships soured and sales dropped. doesn't sound like you're sold yet. >> well, i do think there's an excellent piece in the ft today about nike's new chief, turn around efforts falter that has some of the bones of what i've been talking about including a disastrous wu tang dunks legend

brought back. what people have to recognize is on the conference call which was one of the most depressing calls -- i used to be a piece about the choreography of a market call and how they told a story related to south pacific, rog irs and hoomer stein. one thing that drives me crazy is this conference call is now the conference call of a coach after a big loss in the nfl where they make you come out. if they are who we said they are, it's about on and about hoka. they talked abilityout bringingf back from the vault. that was a really bad idea. they didn't offer a vision, didn't talk about how they sold so much good stuff to the fanatic, how poor the actual content is. but they bring back some guy who is real.

tom petty is real. so my hope is they articulate a plan. by the way, donohoe had no plan whatsoever. if he says he has a plan, i think he ought to start wearing new balance because they have a plan. new balance is doing well. >> we've talked a lot about blowups in retail. it was levi a few days ago. hellen of troy is going to open at 28. >> i know those guys. they're good guys. they have a couple of brands that are somewhat marginal. i think once again we're finding the haves, the companies that can go to costco and walmart and say, listen, we want to be in. costco says you're going to make x. that's really unbelievable. the have have-nots is who has the power to go toe to toe with costco and walmart. can you have any power against them? i think the marge jal brands of hellen of troy will not have that -- they will not have the heft. you know what kind of heft you

need to be able to go toe to toe with costco? >> i would assume you need to be hefty. >> we lower your toothpaste, if you don't lower the price, we have kirkland signature toothpaste that's really good. they go head-to-head against procter. hellen of troy has good niche brands. >> trader joe's is a great company. >> zoo is liedal. >> what's their secret? >> location, location, location. >> i'll take you to costco, the free salmon dip. >> free salmon dip. >> you promise me you'll take a crew and get that on tape? >> the cfo is the greatest. he brought the guy from kroger. there was no one like rich, the

$1.50 hot dog. >> he retired. some people do that, jim, when they get to a certain age. some people choose to do that. >> salt pickles is what people like in china. >> we'll get cramer's mad dash, countdown to the opening bell. we're about 40 minutes ahead of the powell and yellen testimony. stay with us.

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welcome back. let's get to a "mad dash." opening bell six minutes away. we'll talk a little apple and the race for 3.5 trillion in market cap. >> there's new news? have you seen the trailer for f 1? >> no. >> this is the new movie coming out with brad pitt. it starts at imax, but apple plus is just gaining momentum, momentum. david, i want you to remember one stock. if you remember one stock from this morning's show, one stock. it's expense phi. it became public during the worst period of the market, during the spac period. it disexpense management that.

they are one of the sponsors of the mach team that's in f1, led by brad pitt. >> we're covering a lot of time now. >> shark ninja is one of the companies. >> now we're going to show the trailer. >> oh, my god. this is so good. an apple original film by the way. guys, i am telling you. first of all, coolest man in the room. >> still looks great. he's my age. >> on his head you have shark ninja. they're the people who ended up paying for this movie. >> got it. >> david, this is one of the smartest things i've ever seen. you get expensify in there. he puts a helmet on. and it's real. this is real. look at this. >> there's another public company called f1 to let you know.

>> look at these sponsors. wait until you see the helmet. look at this. expense phi, shark ninja. that's who you want. buy those stocks. >> all right. this runs a different direction than i expected. >> a white chip company. >> i'll saying this movie is going to be the first time people say apple, which is a wahher in brothers movie, i have to take apple plus. i have no choice. >> a warner brothers move. >> apple plus, start with imax. >> people trying to justify how apple keeps going up, up, up. i finally found it. it's the movie f1. it's expensify. >> you're very flexible. >> thank you. opening bell about 3 1/2 minutes from now.

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let's get the opening bell at the cnbc realtime exchange. at the big board, it's gen work financial celebrating 20th anniversary at the nasdaq -- [ bell ringing ]. >> we will once again try to get within a stone's throw of 5,600. >> remember, it's not just -- [ applause ] >> it is unequivocal that lilly's drug was better than novo nordisk. it was associated with significantly greater weight loss than novo nordisk. finally we have -- asthma,

arterial fibrillation, copd, glaucoma, hypertension, osteoporosis, major depressive disorder. david, this is like a trillion dollars' worth of illnesses. hundreds of billions, and they're trying. >> you talked about a lot of other indications. >> well, this is very big. you mentioned some of them. yeah. it sound like they're going to put it in the water supply at some point. >> like fluoride? >> yeah. >> dr. strange love. >> it's cheap enough they could do it, at least to manufacture. >> i've got to tell you -- by the way, just so you know, all the weg gove yeah, but try to get there. >> try to get mounjaro and it's harder. >> this piece is like, what am i doing with the low priced spread. >> maybe i only need to lose 15%. >> he's lean. he's lean.

>> should novo be down more on this? >> i think the problem is that people feel it just got out, and we're now seeing the results. we're a little late. i just thought it was important to point out that the disparity of why lilly keeps going up has to do with its superiority. it's very important. a lot of good stuff here. >> the reason that's important is because i'm tired of hearing, why not now? if jpmorgan is a $500 billion company, if they were to report a blowout and start talking about ai, they could get that puppy to 700. it's 12 times earnings. we have to find more stocks that are doing really well that deserve higher multiples. >> i'm glad you mentioned the banks. reuters has the piece on the surcharge, set the plate for more capital returns. then you've got the piper upgrade of bac, back to neutral. >> that was so significant, carl. so glad you mentioned it. that stock had been the laggard

in the group, and i'm now beginning to think -- that's the second upgrade i've seen, that people are no longer worried about their bond portfolio. people felt they had the wrong duration. now you've got a stock that has a higher pe than jpmorgan, david. >> that's interesting, but why have those fierce abated as much as they have. it's not as if the rates have come down dramatically. it's fine, it runs off. >> it runs off. that's exactly right. bank of america they've got to have good numbers. scale is key. if only they were allowed to buy as many banks as they'd like, maybe if there was a new president they could buy -- >> although i'm sure you saw the chart out of human being berti, a mixed record when administrations change. it's more about macro than policy. >> it is. i think we're never going to

climate change the rule. so many banks merged during 2008, jpmorgan above 10%. >> about the biggest. we still need a wave of consolidation potentially at the next level. carl, that may very well be correct in terms of macro. i will tell you, there are a lot of people in the m&a world who are -- >> salivating? >> yes, at the prospect of a trump presidency. even if they don't vote for him, frankly, many of them say it's going to be beneficial to my business because there is a belief that the regulatory breaks that have certainly been one of the key points to the biden administration, going to change significantly if, in fact, donald trump regains the presidency. >> i've heard that about energy. i've also heard they would probably keep some things in place when it comes to tech, jim. >> i still think there's a populous strain in tech.

remember, they brought lawsuits against big tech. they brought a lawsuit against google. >> they did. then there may be one offs that don't make sense. ala time warner. why did at&t time warner get a lawsuit, and obviously it took 18-plus months or more than that, two years and it did get approved. generally i think there is a belief that you're going to have, broadly speaking, a much more gentle hand on anti-trust enforcement if, in fact, donald trump regains the presidency. >> what's the biggest gainer today in the s&p, westbrook. >> how did that deal get through? my father sold corrugated box -- that's like the worst business in the world. the hell with hit, let them merge. >> decent business now, cardboard? the world needs cardboard. >> just like industrial gas. if you had everybody merge, you

can make a ton of money. that's why we have rules. >> yet we let everybody merge in the airline industry. they make a ton of money. when you go to europe, you know what you pay for airline tickets? like 40 bucks. you've got to stand, but still. >> i go on points. >> you can anywhere in europe for like $60. i may be exaggerating a little bit, but not a lot. none of the kids by euro rail passes anymore, not like we did. you can fly everyone on rye yeah a air. >> david, we don't stop -- now we're the component makers of companies that are somewhat tangentially related to ai. >> what name would that be? >> how about serous logic, up 5, 41,000 shares. it's not that big a volume.

carl, we're like, let's just take anything. if it has anything to do with apple. apple, by the way, went from being despised at 166. there isn't a day -- this isn't just f1 and expensify and don't forget shark ninja, i do think this company, people have looked at the 15 and the 16, and the numbers people are saying, the step-up, it's just extraordinary. >> piper today goes to 225 which is kind of mild given some of the 260s we have. also bofa global app store revenue up 13. >> did you see that piece? the global and its video games, apple, of course, is overtaking microsoft. remember, i like to look at this as the consumer is more powerful than the enterprise. >> look at that move in apple.

wow. >> at 180, the number of down grades -- that's where a lot of people said the best times are behind hem. >> i feel as though the big ai reveal got -- positive reviews -- >> it was all the -- i remember speaking to tim cook, the ceo of apple. >> i'm aware of him, thank you. >> not the ceo of paramount. what happened is he was talking about privacy and how people would really love privacy. i was talking about privacy and how important that was. we were talking about funny emojis. then what we realized, why are these analysts not recognizing that it's here. what was here, of course, is the idea if you want ai, apple became the central source of truth for ai. no one saw that coming. everyone was going to kowtow to apple. by the way, tim cook did not

gloat. he said, listen, everybody kind of wants our customer base, billion users, some people say 2 billion devices. what do you think? >> i think that's right. >> there you go. it seems to be playing out that way in the stock market. >> i got to tell you, david. it's 9:38 and i have not talked one minute about a storied studio in hollywood. >> there is one. it's called paramount. i don't know if you know, but they produced one of your favorite movies, "the godfather." >> yep, it was business. >> "chinatown," also. >> "indiana jones," "raiders." remember the hope crosby fairmont picture? >> they were fun. on the road. >> when i lived in my car in california, i tried to park near the gate. >> did you? was it safer there? >> yeah. they rousted me immediately and sent me under interstate 5 which

was awful. >> david ellison will be running this company. a lot of coverage in major must be cases and the like of mr. ellison who will be taking over as the company's chairman and ceo when the deal that we went through in detail yesterday is completed. perhaps it will be sooner than some think. some believe it will be a year. there's not that much regulatory to get through here. it's not like there are any stations being combined. so the sec role here, there's nothing that would seem to arouse the concern of antitrust regulators. there's a small percentage of ownership, i guess, at least at one point of skydance by ten cent, very much unclear. the point is, it could take shorter than anticipated. maybe it's nine months. but you've got people looking at the back end. once you get through everything, you have a 30% roughly out there of the stock and what's that worth on a multiple basis, using

the numbers provided yesterday, you're still talking about a company that's traded at about 7 times enterprise value on 26 adjusted operating income before appreciation and am morization. if you're a believer on them delivering on this combination of media and technology that they talked so much about yesterday, then you may want to own it. that's what's going on right now. >> can i put a question to you? >> of course. >> i'm seeing absurd numbers of synergies between skydance and paramount. david, what is skydance that it would have synergies? >> well, there's a lot of cost synergy, not as much merger sin verjee. it's mostly costs. it's mostly taking costs out. they have a large animation division or at least some under john lassiter. there is some, but most of it is

cost. i >> any cruises in store, any theme parks? >> no. >> that's where disney is going. >> tomorrow i will be able to ask those questions because david ellison and gerri cardale will be on "squawk on the street." we'll be automatic to talk to those two gentlemen about their hopes and dreechls. as i pointed out -- >> just a shell. >> 100% of the voting stock and roughly 70% of all the economics will be there once this deal is completed. as i pointed out yesterday, mr. ellison's father, larry emily son, significant capital contributor to that. >> every single sentence is entertainment and tech, entertainment and tech. still when you look at the numbers, so much linear, david. >> i know. there's a lot of linear, not going in the right direction. you've got to at least course correct to a certain extent.

>> the steph nap laos interview whether you repeatedly ask if he's lost his mind? >> it will not. i will not be asking that. >> it is a bet-the-firm kind of thing for redbird. >> all i can tell you is i don't understand why they would do this other than they have something to do with data set. >> they have a lot of confidence in their vision, they really do. in their ability to cut costs and create a growth engine. they do. we'll get more tomorrow. comcast shares are up one cent. we've got that going for us. >> there's actually reassuring data on time spent. peacock out of some boutique research themes looking at what olympics may do to viewing hours, we're just a couple weeks

away. >> we mentioned disney, jim. they're announcing a ninth cruise ship which will launch in 2028 as we have carnival, rcl. >> disney is trying to opt for fun. so far it has not worked. the stock keeps going down. it's been a nightmare. david, i come to you and say when is this resolution with how much disney will pay the stock you just mentioned. >> wait. what did you just ask me? h hulu. that's still in play. it's going to be a big number, potentially -- well, the variance may not be as large and we'll see what the number is. >> it's rbc that's doing it. >> they're the third party. >> so why can't they just say, listen, guys, it's going to be x. >> each side has its own valuation. then you go to the third party.

comcast will claim and say under the contract it has to be evaluated as though it was an auction scenario for hulu so that even companies that are obviously not a part of bidding for it would be considered to do so. so a price has to reflect that scenario. disney will say otherwise. >> disney stock, the actual earnings numbers have been going up because the movies have been better. yet the stock goes down. i'm wondering, that's why i mentioned the hulus. maybe that's the problem. >> maybe there's a belief it will be higher than people anticipated. >> hugh johnston has to come forward and talk about the synergies. >> what synergies? >> some of the combination of, say,experiential, like theme parks and cruise with the other stuff they do. >> you're looking for an opportunity to get positive on disney, but you just can't seem to find one, can sglou i'm putting words in your mouth. that's what i feel. >> it's like nike. it's like starbucks. i'm trying really, really hard. i may get there. no one wants the new mexico

theme park. the triple venti is like $438 now. what can i see about nike other than the fanatic pants them. >> you tried to get constructive on starbucks yesterday. some of your commentary was less negative than normal. >> 74 less negative than 110. >> what happened to starbucks to 90? >> i'm not backing away from that. there's efficiencies, people talking about efficiency. >> throughput. not waiting ten minutes for your coffee because of all the mobile orders. >> i'm getting more positive on that. i told you in the race to 100, my money is on starbucks. >> maybe robots will help. >> mcdonald's got rid of the robots. they did a study and didn't like it. >> that pesky accents. >> jensen huang stole me they

speak 28 languages. go make some fries, will you? >> sure, jim. i'm happy to make you some fries. >> don't get the basket thing on your arm. >> burn you. >> checkerboard. >> as we go to break, watch bonds. in addition to powell and yellen this morning, we will get a three-year note auction and bowman after that at 1:30 today. intel the best component as it's gunk for a fifth day higher. we'll be right back. [crowd chanting] they ignored your potential, and mocked your ambition. but it's not the critic who counts. with every swing and block, your game plan never changed. ♪♪ some still call it luck. let them.

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we've been given this great responsibility and great powers and really important we get it right and we've been told to stay out of politics and do your job, do your job. that's what we do. we don't try to get involved in issues that are not our issues and in particular, we're just focused on our goals and getting through that and if we do that

and do it well in the united states there's very broad support for an independent fed in both political parties on both sides of capitol hill and everywhere. i don't think that that's really in question, as long as we just are seen to be doing our job and staying on task at all times. >> as the fed chair with sara eisen at last week's ecb forum in portugal. in a few moments he will testify before senate banking and we will bring you the q&a with lawmakers as soon as that begins with the s&p fresh record highs by a point. ckn mont.

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it's time for jim and stop trading. >> first, we're going to be looking at tesla tonight whether it's real or not, and ben who is the master and scientist is going to give us that. i want to clear up something. guys, i am being facetious about a company called expensefy. it's a little company that happened to be when it came public, had a lot of capital and it was one of the sponsors of this. i did not tell people to buy efxy. i'm just saying they're one of the sponsors and that apple was

brilliant to have sponsors come in. and the most brilliant one i think is shark ninja. that's a fantastic company. fantastic. they make so many different products and knock off dyson. i saw dyson is laying off people. i'm not recommending expensefy, but i like shark ninja. shark ninja on the helmet. >> i saw that. i saw sara was d who is a big fan, sara eisen, who is -- right there -- taking issue with brad pitt's age. >> 60. >> i'm aware of how old he is. it's familiar age to me. >> is 06? >> it's not realistic to have a 60-year-old -- >> i have expensefy. it's everything in the world. there you go. >> jim, look forward to tonight. "mad money" at 6:00 p.m. eastern time. >> i get expensefy, he gets the world. what's the first rule of

expensefy? >> i don't know. >> don't talk about expensefy. >> that was a good movie. >> when we come back live coverage of the q&a and senate banking in a moment.

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>> good tuesday morning. welcome to another hour of "squawk on the street." i'm sara eisen with carl quintanilla and david faber, live from post nine of the new york stock exchange. big day for the market with fed chair powell and treasury secretary janet yellen tefg on capitol hill this hour. we will take q&a with powell as soon as it begins. ahead of that, we've got the s&p up a quarter of 1%. what's leading technology again. nvidia up a nice 3.4%. corning also has had a nice move higher this week, especially in super miro, micron.

communication services at the top of the list too. meta up a percent, alphabet all higher. some of the media names as well. paramount with a mini rebound. nasdaq comp is the winner up about 0.5%, thanks to some of the mega cap stocks. microsoft, adobe and amd are not participating in the rally. show you treasury, yields are firmer but still in the tight range of where they've been, 4.288 ahead of powell and cpi later this week. to steve liesman as powell's prepaired remarks crossed the tape. >> yes. fed chair, jay powell, will tell the committee on banking housing and urban affairs that the labor market conditions have cooled while remaining strong. most recent inflation readings he says have shown modest further progress, and he calls monetary policy restrictive and says restrictive monetary policy is putting downward pressure on inflation. the committee, however, still seeking greater confidence inflation is declining before

reducing rates. he quotes that part of the statement that says that. he uses the freight "more good data" would strengthen our confidence that inflation is heading towards it. elevated inflation, he says "is not the only risk we face." it's talking two sidedly about the risk and cites the risk of moving too early and late as he has done in the past. the risk of employment goals are coming into better balance and the economy continues to expand at a solid pace, moderating in the first half after strong growth in the second half of last year. here's what he sees on the economy. solid increases in consumer spending, moderate growth in capital spending, pick up in residential investment and labor market is strong, he says, but not overheating amid improving supply conditions. finally, he says that wages are modest, and decisions are made

meeting by meeting. i don't know if you want to check the probabilities right now, guys, they had gone into it with a 75% chance of one in september, 86% in november and the second cut was trading at like a 75% probability for december >> yep. steve, i don't hear much in terms of a different message than what we got from him last week in portugal, do you? >> i would say a nuance on the labor market. i would say in terms of the labor market cooling, but still strong. he's picking up on the recent employment report. maybe a little bit more wide open. i think he took a step in portugal. maybe this is another step towards the idea of being open to that rate cut, though not necessarily promisesing anything still, going back to the language of confidence. a modest step here towards the dovish camp, but not necessarily a big one.

>> yeah. i guess for those who were looking for powell to lay some sort of groundwork for an upcoming cut, that -- they're not getting strong language on that sense. it doesn't mean he still might not do that, either in the q&a or next meeting in july, but for to his credit he has three more cpi reports before the september meeting and two more jobs reports. he's got some time. >> yeah. he's got some time. i would say to borrow a phrase from powell, sara, i would say if you're looking for the evidence that powell is laying the foundations for a cut, i would say this language is sufficient. it does just enough to say okay, if this data continues the way it's going, but you're right he's not in a particular hurry. he's not gearing up here for a july cut, even though i think some of the data might suggest he could do that. but he's not gearing up for that, and he's not laying the foundation for that. i would say if you're looking for this incremental progress saying the labor market is cooling, talking about both

sides of the mandate, saying risk to both sides and then that phrase that i pointed out that inflation is not the only risk we face, kind of elevates the concern about the weakening job market to a slightly higher level. >> yeah. that dual risk that it's coming into focus. steve, thank you very much. we'll continue to check in with you throughout the morning as we hear from the fed chair in just a few minutes taking questions from members of congress. guys, which, you know, is pretty much the message that we got from powell, which is they are leaning towards a cut but not precommitting to any cut and i think that he lays out pretty clearly two factors would change that, either quicker or slower jobs, cooling but still strong, and inflation, which is showing progress on the disinflationary front but he wants to have a little more confidence because they got freaked out by the first quart data which showed a little bit firmer inflation.

we've had two months of good data and probably they want to see more, which is why the odds of a july cut as steve mention ready lower than say the september cut. a few other dynamics, though, that could be interesting to watch for powell on capitol hill today, you know, after the conversation. number one, we're in a heightened sort of political risk environment given the election and there's always going to be folks from both sides of the aisle, potentially, using the fed as a political football. you know, i did ask fed chair powell about this idea about fed independent last week, and -- because it's very much in the conversation, right. independent fed, could that be at risk, say, from a politician, there was a report a few week ago from "the wall street journal" that the trump camp was looking at something like that. he said he's not worried about it. it's important to look at the testimony and support from both sides of the aisle. listen to what he said last week. >> i am not focused on that at all, and that's not just a

talking point. i really think that we just keep doing our jobs. i mean the u.s. economy, we have 4% unemployment, it's growing at 2%, inflation is at 2.6%. let's keep that going and do our jobs. history will judge. i think if we can keep things on that path, that's what i'm focused on. that's the only thing i'm focused on. as i mentioned i do think support for the fed's independence is very high where it really matters on capitol hill in both political parties among the leaders and most of the following, and, so i worry about getting the job right. that's what i worry about. >> pretty definitive statement of support from both sides of the aisle. that's something we'll be looking for today in some of the q&a and the dynamic members of congress. and to illustrate the point goldman sachs has a great chart out today where it tracks -- and i don't know exactly how they do this using news sources, they do it with analytics -- and it includes europe here, too, in the yellow line, look at the orange and blue, which is the

uncertainty level for investors of fiscal policy versus monetary policy and orange shows that it has been elevated monetary policy, right. we're all trying to guess what the fed is going to do next. are they going to cut, hike again, stay pat. but just recently, the blue line shows a tick up because fiscal policy and taxes include uncertainty levels are rising and it's not a surprise, we're going into election, but the investors are really starting to figure out what the fiscal situation, especially given the very high debt loads look like in this country under either party and what the makeup of congress is. that's just a good chart i think going into a powell testimony where there's not that much intrigue about the monetary policy. there's more about the fiscal policy right now which what powell says we don't go there. >> won't say anything. >> although i did thing he was stronger last week than he has been on the level of debt is sustainable, the path is

unsustainable. >> the path in terms of adding more and more indentedness. >> correct. >> said he's kind of surprised we have not seen more of ap issue. >> >> i thought the comments from the brazilian central bank chief were interesting. >> about how the debt is being mispriced. >> how we have to get things on a different trajectory. he went there. powell wouldn't. >> the market is underpricing the risk of sovereign debt, both developed and deal countries. look we've got the cbo suspects a 7% deficit in a full employment economy this year. we're set to go into the 120s in the coming years. >> set to have interest costs exceed or roughly equal to defense right now. >> it's all very problematic. until -- unless it's not right now in the bond market, but you are having increasing concerns about it, and i think powell raised it as much as he possibly

could without getting into any sort of realm or politics. >> hemingway said about going bankrupt, right. slowly and then suddenly. >> that's the bond market, right, the vigilante question. on the plus side, we've got nfib small business optimism out today and there's a tick up there for third month in a row. it's still very depressed levels, but it's not getting worse, which is something to note, given where we are and given some of the concerns about the economy right now and this whole idea, carl, the cost of doing nothing is getting higher. on that front, the only other data point i pulled out today, which i'm sure you saw, corporate bankruptcy filings have jumped and jumped last month to 75, the highest level since early 2020. according to s&p global market intelligence. so that's also piling up. we're not in any kind of extreme levels or nowhere near anything like what we got during the crisis or recessions, but it's something to watch, as we remain

w what did powell say, restrictive. >> rare to see bankrupts have a month like that, up the highest of the year, small business is feeling a little more confident. >> still worried about inflation, still having trouble filling jobs and coming off of low levels, but i think that that shows that it's not an economy that's cratering or entering recession or anything, but certainly one that is potentially cooling. >> yeah. >> we look at signs like the bankruptcies, jobs data, opening data, for instance. >> vix under 12.5 tells you a lot of market participants are not terribly worried about v volatility in the near term. >> or its complacency, i guess. >> lowest level for an election year at this stage since '92. >> i don't know if that's early in the election cycle, if it's just early, or something else. but look, i think what we've learned from europe certainly and from even india, and some of these other elections, is that

there's potential for volatility and investors to get surprised and the crazy thing is we haven't started talking about the issues like tackling debt or inflation or potential unemployment with an unemployment rate that has risen to 4.1%. imd i mean do we have a clear sense? >> i'm not sure we're going to get to that stage of the discussion because of the factors weighing on people's votes. another voice into the conversation, joining us is richard fisher, former dallas fed. the, of course, a cnbc contributor. richard, great to have you. to sara's point about what we might hear today, if he does try to tee up anything dovish, do lawmakers then go after him on how dare you consider cutting before an election? >> well, i would expect there will be some political questions that are going to be asked in the q&a period and he's going to hold firm. what he said, and sara, you were there, that's portugal, i know him well enough to know that's

what he truly believes. his term expires in april of 2026 or so. there's no way a president can impeach him. they tried that with paul volcker under reagan. he out maneuvered reagan, who was a very powerful president, unlike the current president, on capitol hill, and i think he's totally indifferent. but sara, you touched on the key point. i'm going to watch janet yellen's testimony in particular here. the cost of carry for the government debt rolling over right now in the 5% to high 4% range, thus far has been 2%. another third of our debt rolls over next year and another third after that. that's where the pressure comes at the longer end of the yield curve. so powell's very adroit in avoiding that question. i don't have to worry about him. i'm no longer on the fo mc.

that is going to drive rates from the belly of the curve out. short term, think about the numbers. a 2% carry is being refinanced now by a 5% carry if it's one year or less or the high 2s if it's closer to one year. we have a real problem in financing our fiscal policy and it's going to be interesting to see since neither trump or biden have talked about how to reduce that burden, deal with it, and how the market begins to price that kind of debt and how it affects spreads above that debt. right now, triple cs are paying 1 13.25. the nfib numbers you cited the small businesses are paying 9.5. we'll have to see what kind of impact that has, and to me, it's dependent on fiscal policy. >> agree, richard, but, you know, there's plenty of demand for u.s. debt. everybody sounding the alarm, but can't get enough of it.

>> you're absolutely right. it's not just for u.s. debt. i came back from two weeks in europe and the uk in london. i met with ceos on behalf of jefferies who i advise and some of the biggest banker ceos. all of them are worried about what's going on in europe. to a person, they all voice an interest in investing real capital in equipment in the united states. by the way, to my delight they mentioned a handful of states, texas, tennessee, georgia, north carolina, that's pretty much it. so they look at what's going on here they are worried about the tariffs trump and biden seem to be to, trump 10% across the board, they realize we are the center of creation and enterprise and they all think whether it's spain or france or the uk or wherever, they all

think that europe is in decline. it's been growing subliminally for the longest time. their outlook is even worse. on the pure money front we offer a great nominal yield. 5% of the short end. 4% plus further out the curve. that's hafrd to resist. the canadians made a cut, british made a cut, and here we are united states of america with the most promising place on the planet for big capital to go to, of course we're attractive. i think that's holding yields down. the question is how long does that last? >> maybe we should take advantage of that, richard. you are in a position now and you can give a fiscal policy proposal, so do so. what would you like to see that would put us on a potentially different trajectory? what would it look like if richard fisher had the policy pen at his disposal. >> first of all if i had that pen i would abdicate almost

immediately because you have to deal with congress which is really hard to do. we're going to have to deal with rising military costs, where is it going to come from? it has to come from the social service side. we have to move the retirement age. that wasn't popular in france and everybody will argue against it, depending on which side of the aisle we are on. we have a recklessly irresponsible, in my view, congress. starting with the ways and means committee, that's where fiscal policy is made. it's up to the congress to get it done, and i don't see much leadership here. i do remember what george shultz, thegreat secretary of labor state treasury no longer with us but one of the great minds of you are country said, the only difference between republicans and democrats win it comes to spending money in congress is, then he would pause, and say, democrats enjoy it more. that's it. both sides are big spenders and

we have to root that out and it's going to take leadership in the house and senate to get that done. that's where it begins, particularly in the house. i would be leaning towards -- >> richard. >> sure. >> isn't that going to make it harder for the ted to squash inflation if we get more fiscal spending? >> absolutely. one could argue the fiscal spending we've had which is extreme, has fueled the inflation side. it keeps the economy going, that's the good news. the bad news is, that and hyper regulation, add to costs. if you squeeze the margins of operating companies how do you deal with that? you ramp up your productivity or push the price. those are your only two options. i think fiscal policy right here is the real issue. i do believe the fed has been doing the right thing. powell has been a very good leader. now it's up to the politicianson fiscal side to do their job. good luck.

>> the question then would be where's the line between irresponsible fiscal spending and the kind of spending you need to secure national security like we're doing in tech? >> right. i think you're right on that front, carl. it's not just us, by the way. every other nato nation and those that are worried about china, particularly japan and south korea, and the philippines are ramping up defense spending. it's not just us who will be issuing paper. everybody is issuing an enormous amount of paper and that's going to be the real issue here. i am worried about pressure at some point the bond vigilantes have to step up and demand a little bit more. it hasn't happened yet and we have to see when it begins. when that dam begins to break you will have real issues and maybe that will wake up the congress and get them to take some decent measures. >> great discussion. richard, as we get ready for the q&a here. appreciate it very much as always. thanks. >> by the way, congress gets some things done.

today is national cow appreciation day. one they passed. being a texan with cattle we appreciate that. let's get something done in congress. >> how do you celebrate that? >> the female bovine species is one of the greats and we celebrate that here in texas. >> give your cow a kiss. >> a milk shake. >> second tuesday in july. how about that. thanks, richard. >> thanks. >> we are just moments away from that q&a with the fed chair before the senate banking committee. bob pisani joins us here with some of the market action. s&p up a quarter percent. didn't do a lot. >> six days in a row we haven't seen that since january. you get to 7 and talking about really, really rare move. the problem is again, it's big cap tech. that new highs, apple new highs in amazon, new highs in alphabet. some of the semiconductor names like kla tin corps on the upside here. these are new highs we're talking about. microsoft is down. a little bit of a drag on the

down. a lot of discussion about how advance is very narrow and has been this year. one simple way to understand this how important the big cap tech is, is to look at the point impact of the biggest names that are out there. the s&p 500 is up about 800 points in 2024. of that, 800 points, 78% of those 800 points is because of nvidia. that's not a typo. 78%. microsoft is 12% of the 800. meta 9, apple 9, amazon 9. this adds up to more than 100%. how does that happen? the other stocks, many of them, have a negative point impact on the s&p 500. so this is a simple way of understanding how big mega cap tech has an influence on the s&p 500. and this is what gets into this question of breadth. david was talking about this earlier, the breadth is a little bit odd. 58% of the s&p 500 is up this year. 42% is actually down this year.

given the s&p is up 15%, that's lopsided historically. the problem with looking at sectors is you can get confused because of how big these individual names are. so yes, s&p, tech is at a new high. most of the s&p communication sectors at new high. consumer discretionary is a new high. a sector like consumer discretionary is up because amazon has had such a lopsided effect on consumer discretionary stocks. if you look at consumer stocks in general, most of the big names are to the downside. i got back from five days in atlantic city, people were spending like crazy. no matter what end you were looking at. i went to the sub shop, atlantic city, lines out the door, the best steak houses, full. i went to low end casinos, high end casinos, to caesars, mid-level, full, every gaming table was full. the problem is, you can delude yourself into thinking the whole country is spending and really this is about the top 20% doing most of the spending. the consumer stocks year to date

they must be doing great. nike down 30%, starbucks down to%, caesars i was in, down 20% this year. mcdonald's down 16%. darden down 12. pepsi down 5. pepsi is going to be reporting this week. we'll find out more about how their business is. lowe's down. yum brands down 2%. you think things would be doing better here. why are the consumer stocks doing lousy this year? what's at a new high today, costco. had a great year. revenues keep going up, memberships keep going up. 132 million members in costco. that's a historic high. there's a play contrary to most of the consumer discretionary stocks that are out there. the question is what's exactly going on here. if you look at the markets we're getting growth strong, slowing down. valuations are really expensive right now. microsoft is p pushing 40 times forward earnings. that's a huge number for microsoft. we haven't seen those kind of valuations in a long time.

so the expensive, the way i would describe the market right now. breadth narrowing. earnings still good. we're looking at 10% for the second quarter. that's the best since 2022. most of those gains are due to technology. cyclical stocks lagging, value stocks lagging. the commodity stocks are lagging as well. it's really something behind this breadth of the market. the one final thing i would point out asian markets are having a fantastic year. new high on the nikkei today. new high in taiwan. historic high in india. korea two-year high. the emerging markets etf eem near a two-year high. the asian markets are doing well, not necessarily on china, but just generally they're out performing the rest of the world right now. rather surprisingly. >> yeah. japanese yen taking it on the chin. 162. five days in atlantic city. >> that's what i was going to say. >> who spends five days in atlantic city. >> my family has houses in

margait and they're all having babies and i get pushed out of the houses. atlantic city, we're going to see the babies, essentially. >> that's a good excuse. >> it's a wonderful -- you know what, it's a very interesting experience just to walk around and see what people are doing. and i am telling you, i went -- i make a point of -- i believe in low end, high end. i go to hoagie shops and i go to steak houses and i go to -- avoid a lot of stuff in between, and everywhere i went, everywhere, i walked the ocean casino, friday night, high-end casino, looked at every single gaming table every single gaming table, i don't mean the slots, i mean the gaming tables all full of people spending. everybody, every seat was taken at all the gaming tables. it was amazing to me. and so again, this is 20% of the population i think that does most of the spending here in these kinds of places. i didn't see the slowdown. caesars is down 20% this year. >> it's experiences, right.

>> yeah. >> go to a taylor swift concert and you would never believe an economy is cooling, but, you know, it's a certain segment of the population and also the experience economy, which afwri if you look at consumer names it's not flashing very strong growth. >> no. and you know what, the important thing is, this is why indexing won out. this is why jack vogel won. for people who aren't sure how to pick stocks, how to time the market right now, owning the s&p 500 is a simple solution. you simply go along with it. this is why the etf business keeps going. this year we're probably going to have an all-time record year for etf inflows. we're probably due $800 billion in inflow. the etf business will probably grow close to $10 trillion business now. every year it pulls money away from mutual funds and pulls money into etfs because it's a simple way of playing the market and not having to figure out where do i go in, when do i get out. should i sell nvidia, should i

not sell nvidia. it makes a lot of sense. if you're just an average investor an don't want to go crazy trying to figure out the markets like we do, we obsess with it, owning index funds is a way. >> hank. >> where the q&a has begun. >> eliminate the federal income tax. first the question of what would the impact of tariff increases on prices consumers and the economy? >> thank you, senator reed. i'm going to say that we go very far out of our way not to comment on campaign type information. we just don't do that. we don't comment on trade policy. we have really specific and important jobs and we try to stick to those. >> well, i'm glad i allowed you to have that principle let me opine a bit, 10% increases in tariffs is going to have an effect on prices at the shop

aisle. it's going to increase them. they will be passed on like 60% tariff increases are significant. i've been told to replace the income tax we would have to raise tariffs across the board 70% to make up for the loss of the income tax, which would, i think, create huge economic problems. i respect your impartial shallty and neutrality, but the numbers don't seem to add up to anything that would help the country. let me switch to something else that might be more within your line of response. you said in your opening statement that the labor markets appear to be in a better balance. and that's one of the key factors to judge whether interests can be raised. i must say, i'm concerned a bit that we're not on a very faster track to decreasing interests at

the -- from the fed, and because of the better balance you cite, could you comment on that, mr. chairman? >> sure. so the most recent labor market data to your point send a pretty clear signal that labor market conditions are cooled considerably compared to where they were two years ago. this is no longer an overheated committee. this is an economy that is more or less back by most measures to where it was before the pandemic. that was a strong labor market but it was not an overheated labor market. so i think the upshot of that really is that we are -- we're well aware that we now face two-sided risks an have for some time, but now, you know, the labor market appears to be fully back in balance. we know that if we move too quickly, we risk, you know, unnecessarily hampering economic activity and possibly interfering with the ongoing expansion. we know if we move too slowly, that we may undue the good we've

done, actually the other way, if we loosen policy too late or too little, we could hurt economic activity. if we loosen policy too much or too soon we could undermine the progress on inflation. we're very much balancing those two risks and that's really the essence of what we're thinking about these days. >> the direction seems to be going towards lowering interes rates at some point, we would hope, might be a wish rather than a direction. >> if you look at the last summary of economic projections i would say it this way, the -- it doesn't seem likely that the next policy move would be a rate increase. we don't take things like that off the table, but that does not seem the likely direction. the likely direction does seem to be in as we make more progress in inflation and as the labor market remains strong, we begin to loosen policy at the right moment. >> thank you. just two weeks ago, the supreme court handed down two decisions

that impact every federal regulatory agency, including the federal reserve. they overturned the chevron case, which had eliminated jubl deference to agency decision making for many decades and extended the statute of limitations under the procedure act, what in your judgement is the cumulative effects on the federal reserve? more broadly, what does it mean to the economy virtually any regulatory decision the fed makes can be second guessed by a judge? what position are you in now? >> so we're, you know, as an institution, very focused on reading the actual letter and intent of the law and following it carefully. this is a strong institutional value that we have. those are brand new decisions that just came down, and we're really in the process of just studying them. i don't have anything for you on

them, but we will, of course, follow the law as the supreme court -- as the supreme court has wrote it because that's their job. >> thank you. i concur with compliance with the law, but when you do your analysis and if it is detrimental to your ability to regulate the banking of the states, i think you have an obligation to make that known. thank you. >> thank you. >> senator scott from south carolina is recognized. >> thank you, mr. chairman. chair powell, we've heard a steady stream of commentary that there will be changes to basel iii endgame proposal. that can be seen as good fuse. some reports say it could be finalized as soon as august. others say you're circulating a term sheet for revised proposal. through it all, this proposal will have outsized impacts on our banking system from big to regional to our u.s. base foreign institutions as well as impeding access to credit for consumers. even though you yourself have

said there will be broad and material changes, i believe this proposal is flawed, both in process and in substance, and should be withdrawn. do you agree and will you commit to withdrawing the existing proposal and issuing a new proposal with a robust notice and commenting process? >> let me update everyone on them. >> please. >> the status of all that. so over the past several months we've had vice chair barr held discussions with other regulatory agencies around potential changes to the original proposal. i am pleased to stay we've made quite a bit of progress on those and are very close to agreeingon substance of those changes. i can't be specific until everything is agreed, so i won't have a lot of specifics for you today. the question we're continuing to try to make progress is that of process. so it is -- it is my view, it is the strongly held view of the

members of the board that we do need to put a revised proposal out for commence for some period, and thep are is, you know, the reason is, when there are broad changes that has been our practice. we don't seem to deviate from that practice. so that's very much what we think. we're working through that question with the fdic and occ. we haven't reached agreement on that, but i am very hopeful that we will. you know, we're prepared to move forward at that -- when we do reach agreement on that. >> i appreciate most of your response, sir. i do want to discuss one aspect more of basel before we move on to another topic. i find it very concerning with how much of this proposal, this process, appears to have been done behind closed doors. the fed, the fdic, proposed

basel iii endgame in last july. in october the fed began the collection of data to conduct a quantitative impact study on the cost of the basel iii proposal, a study i will note should have been conducted before any proposal was ever issued. move forward to january of this year, vice chair barr committed to a public comment period once results of the study were published. we are still waiting to view the results. keep in mind, all the while we're hearing rumors that the fed is working on revising its proposal and moving towards ap updated version. please help me understand how will the fed revise or issue capital proposal before the fed receives public comments. >> we have received extensive public comments, and we've also evaluated the quantitative impact survey that you mentioned. >> yes. >> the idea would be when we do reach agreement with the other agencies fully, that we would publish the, you know, the proposed changes and also the

quantitative impact survey and also the effects that the qs suggests that the changes would have. we put all that out for comment again for a period of time, and then having had yet another round much comment and we can then move towards finalizing. that's basically the broad strokes of how i will see this moving forward. >> and how long do you see that opportunity for public comments? >> so it would be meaningful, i mean it might be 60 days. it doesn't need to be a long onep you know, before we do that, we'd need -- there's a lot of work that needs to take place before you actually put out the revised proposal. quite a bit of work. so it will take some time and then we would put it out and then there would be -- just taking that number 60 days of comment and then we would get the comments back and there would be another period of

evaluating the comments and only then would you go final. there's a number of steps here. >> thank you. just a final point as i'm running out of time here. senator reed made the comment about the chevron case and the impact that it could have certainly in curtailing from my perspective the regulatory state. the necessity of a cost benefit analysis on new regulations that will impact the economy are helpful. thousand plus pages of basel iii about 20 pages that reflected some kind of cost benefit analysis approach. i really hope that we see more of that going forward. >> thank you. >> senator tester from montana is recognized. >> thank you, mr. chairman. thank you for the courtesy. chairman powell, good to see you here today. appreciate your work. look, regardless of where i go in the state of montana, housing is a big issue. whether it's billings or beauty or bossman or big sandy, doesn't

matter. larger towns, medium sized towns, small towns, housing is a huge issue. and i think it's a huge issue all over the country, correct me if i'm not correct in that. i was wondering how the housing challenges fit into the overall economic picture that you're seeing? >> so we -- we do pay a lot of attention and i would agree with you, we have significant housing issues in the country and we had them before the pandemic, certainly the pandemic has created new distortions and, you know, monetary policy works thu intersensitive spending. there is no more intersensitive spending than buying a house and having a mortgage. for sure our tighter policy is having an effect on economic activity in the housing sector and you -- but i would also say, the best thing we can do for housing is to succeed in getting inflation down to 2% on a sustainable basis so that rates

can come down so that the housing market can get back to what was the prepandemic normal, which is to say, still a housing shortage but not dealing with the kinds of specific things we're dealing with now. >> so let me cdrill down a litte bit. i'm speaking not necessarily from a housing cost interest -- and you're correct on the things you brought up -- i'm speaking more from a standpoint of economic growth and that there are plenty of small businesses, schools, hospitals, main street businesses that can't hire people, that can't expand because there simply is no place for them to live. how does that fit into your economic outlook metrics? because i think it's -- from my perspective, at least, i think it's limiting the opportunity for expansion. it's limiting the opportunity for entrepreneurs, business startups, and does that fit into the economic picture that you're looking at? >> so our mandate is for stable

prices and maximum employment, and again, i think for housing supply, the best thing we can do is get inflation under control so that rates can come back down so that we can have a more normalized set of rates and more normalized housing system. i think policies to increase housing supply are really not so much in the hands of the fed. they're in the hands of legislatures, state and federal. >> so do you believe that if we were to put forward some housing incentives, whatever they may be, that could have a -- if it resulted, if those incentives resulted in more affordable housing in the market that it would have positive impacts on the economy? >> these are questions for you, but i would say this, that i'm aware that we -- that housing is in short supply, and that for many it's a critical feed for the workforce, and so more of it

is better. as to where the fiscal policy, how you should prioritize that, that's not up to us. >> look, i want to talk about the independence of the fed for a second because i know that you are a strong supporter of independence, as am i. and political influence, i don't think helps with monetary policy in the country, and so give me -- give me your perspective, at least, on why the central bank independence is so critically important? >> thank you. i would be glad to. so essentially all advanced economies have adopted a policy of central bank and operational independence, and that just means that we make our decisions, we're instructed to make them without taking in extraneous factors, one of which would be politics. the record is clear that that's a good institutional arrangement that serves the public well. you know, we -- we just want to stress, as we do periodically, that this is an institutional

choice that we make as a country and as long as it's seen to serve the public well, it's a good joys. we think so. >> on advanced economies, there's some that talk about the economy of this country not being in very good shape. from your perspective, tell me how the economy of this country is doing compareder to advanced committees that have central banks. >> i'm in lots of international discussions as part of my job and the story for the last two years has been how exceptional the performance of the u.s. economy has been. and that's not a secret. you know, there's -- clearly the u.s. economy has performed very well compared to sort of our advanced economy colleagues. >> is there any countries in the world in the krthat has perform better. >> an advanced economy that has a central bank that performance

better than us. >> none comes to mind. i think the answer would be no. >> thanks, senator tester. senator rounds of south dakota is recognized. >> thank you. >> first of all thanks for visiting with us. i just want to focus on two specific items. i'm going to start with basel iii end game discussion. i think senator scott did an excellent job of laying out concerns many of us have had with it. i think a lot of folks out there follow this and i know it's technical in nature but let me ask a specific question and you can kind of pick it apart for me, please. both you and vice chair barr have confirmed that there will be material changes to every risk line in the proposal. since there will be significant changes, do you believe where the agencies have landed now, would be considered a logical outgrowth of the original

proposal from last summer? >> for those people not familiar, that's the legal test that turns it if it's a logical outgrowth, if it's not a logical outgrowth that would legally require reproposal, and i don't want to make the legal judgment. you'll say again, from my standpoint, my view, and strongly held view of some of my colleagues on the board, it will be appropriate for us to point out the changes, again, for a period of comment just because it's the right thing to do and what we would do typically about the situation where, you know, there are material changes to a proposed rule. >> do you feel you have a consensus on the board to allow that to move forward in terms of an additional comment period? >> yes. of course we have to get the -- the fdic and the occ, you know, we're in discussions with them to work on something that would meet that need and we have to get their agreement too. >> assuming it sounds like that's the path that you would like to go down.

>> yes. >> if that were the case, would it be fair to say that we'd probably be looking at final determinations or recommendations for a basel iii endgame proposal probably into next year before it would become anything of a final determination? >> i think that may be right. you know, it's -- that's -- something like that could be right, yeah. it's hard to be precise. you know, we would put it out. it takes some time to write this stuff up, then you put it out for comment, then get the comments, read the comments, then you write the final rule. beginning part of next year is a good guesstimate. >> the only reason i push it, there are so many folks directly involved with this and the impact on our economy here and a lot of our financial institutions, this is a significant change and it's one that a lot of people are following so i'm trying to get you to get into the depth of this as much as possible and i thank you for that. i'd also want to go into one other area -- once again this is something you and i have had visits about in front of this

group before -- but i want to talk about what the parts of inflation are and what parts you can control and what parts, as the fed, you really can't control. the demand side of the evacuation on inflation is the part that you have the tools to work with. but there is the supply side of the evacuatiquation which is st there. as we to this in this setting it naturally becomes political in nature because one of the -- the starting points that we talk about is when this administration took office and what happens with supply side issues at that time, and as i work my way through this i want to share the concern and you don't want to be political in it, but i want to lay this out and talk about what you can control and what you can't control with regard to making changes on inflation through the processes that you have. when president biden took office, gasoline prices, since president biden took office, gasoline prices have risen over

54%. energy prices have risen 41%. fuel oil prices have risen 37%. now, i can go on and on, but you understand what i'm saying, is energy has increased substantially. and i think one of the reasons for -- this has been additional demand as we've come out of a pandemic but the other part of this is whether or not investors really want to go back in and invest in traditional energy resources after the president made this specific determination to cancel the keystone xl pipeline on the day that he stepped into office. when he did that he sent one heck of a message to investors about traditional energy and investing in traditional energy in the united states and the fact that a multibillion dollar contract or contract could be canceled with the stroke of a pen. now, my question to you is, what percent or has there been a discussion about what percent or what amount of the inflation that we've seen over 20%

increase in terms of affordability for a lot of our -- how much is attributable to the demand side and to the supply side challenges that we've seen in this country? >> it's -- that's a question that we've thought about a lot and any attempt to reduce that to a precise number would be inappropriate because it's so uncertain. i believe strongly there's a significant demand element and significant supply element and we've seen the supply side heal so much over the course of the last year or so and we clearly see that's contributing to lower inflation and see cooling demand, for example, in the labor market. the two forces are working together. i can't really break it down. it wouldn't be -- it would be such an imprecise estimate. >> just simply an acknowledgement it is both. >> it's both. definitely both. >> demand and supply. >> it is both, yeah. for sure. >> thank you, mr. chairman. my time has expired.

>> risen by half a percentage point over the past year. the number of job openings has dropped almost 50%, the hiring and quit rates are now below prepandemic levels, i'm concerned if the fed waits too long to lower rates the fed could undo the progress we've made on good paying jobs. full employment is part of the mandate as you say over and over. how are you assessing the risks of higher interest rates in the labor market? >>, so i completely agree with your characterization the latest data do show we've had considerable cooling in the labor market and we do, we're very much aware that we have two-sided risks now. as i mentioned earlier. we're determined to balance those as best we can. we want to see more good inflation data, and we also want to continue to see a strong labor market. those two things are equal under the law. we have this challenging thing to balance them, but we're very much conscious that that is our job and we're trying to do that. >> you know that if unemployment

trends upward you must act immediately to protect americans' jobs. workers have too much to lose if the fed overshoots the inflation target and causes a completely unnecessary recession. we will say that over and over and over again. i think you understand that. housing, higher interest rates are making housing more unaffordable, higher rates are supposed to lower costs yet housing prices are continuing to soar. the fed ignores the economic reality millions of americans struggling to make ends meet and get ahead. three quick yearn yes or no questions if you would answer that way. since late '22 when the fed began raising rates has the volume of housing decreased. >> i believe it has. >> has the median home price increased. >> i believe it has. >> since late '22 have monthly mortgage payments become more or less affordable for home buyers. >> less affordable.

>> thank you. in short despite housing sales declining the median price for a single home, single family home, has increased by nearly $20,000. people are spending a greater share of their income and mortgage payments so in some higher rates, it's clear from your data, it's clear higher rates are not bringing down housing costs. the cost of homeownership is only going up. let me shift to the bankruptcy, since mid-may tens of thousands of people, including ohioans have lost access to their money due to the bankruptcy of this fintech middleman. reports indicate as much as $95 million may have gone missing. the fed oversees one of synopsis' regulators. as a regulator, your job is to protect the bank and the people they serve. what is the fed doing to help customers who felt the impact by the synopse collapse.

what are you doing to regain access to their money? >> we do supervisethe bank or the level fintechs that feed into synapse. we are doing whatever we can do make money available to those depositors. we also, as you may know, did an enforcement action against before this happened, we did an inspection -- or looked at evolve, and we hit them with an enforcement action around these risk management issues. again, before the current situation developed. >> okay. it's critical that consumers are made whole as soon as possible. we will continue to talk to you about that. we will watch, we will let you know we're watching. the fed needs to use its supervisory authority to ensure evolve is committing the resources necessary to return toes funds to the account holders. last comment, i want to know one last thing, last year's fed report on the failure of silicon valley bank noted how incentive

based compensation encouraged excessive risk-taking that led to the bank's failure. you either watched or had reports of when those bank ceos testified in front of this committee. the report -- the incentive-based compensation that led to the bank's failure, i mentioned svp managers had, quote, an incentive to focus on short-term profit over sound risk management. that's what a number of us have said over and over, that the short-term profit over sound risk management causes significant problems to our financial system. compensation practices still pose a threat to our banking system. i urge you to move quickly to join your colleagues in the long overdue rule-making when executive compensation. you know -- you read the reports at the outrage of the public

about executive compensation continuing to go up and up and up. you have a role, significant role, a legal role, to deal with that. thank you. senator tillis is recognized. >> thank you, mr. chair. chairman, thank you for being here. want to be real quick on basel 3 endgame. can i get a commitment from you on releasing the results of the qis? >> we plan to release the results of qis. >> what time frame? >> first, we have to get agreement with the other backing agencies but as soon as possible. >> can you imagine any agencies have a concern with releasing it or is it just a matter -- >> not at all. it's just a matter of the bigger picture of getting agreement on the revisions to basel 3 and also how to proceed. >> i really appreciate the feedback i've received from you. i should have started by thanking you for your continued

accessibility and discussions outside of the committee. they're very productive and i appreciate that. your leadership at the fed. i grew up in the '70s. got my social security number in 1973 when i was 12 years old. that's when i made my first payment so i've been following the economy even as a youngster. that was a really lousy time to enter in the workforce. i'm hearing discussion among some of our members now that would also be reminiscent with prior fed members saying, look, we got to lower interest rates and we've got unemployment out of control. it sounds like we're -- taking some suggestions from some of my colleagues are plays from a playbook that didn't prove to be very effective back in the '70s. what can we learn -- what would -- i'm not going to ask you about where you go from here, but if we look back into a postmortem on some decisions that were made when we had

consistently high inflation, we had consistently high unemployment, what lessons can we learn there or what mistakes should we not necessarily repeat? i know this is a fingerprint of a challenge. it's not exactly like the stressors we had back in the '70s, but what can we learn from the decisions of what i think are arguably the wrong decisions made back then when we were dealing with high unemployment and high inflation? what have we learned? >> i think the number one thing we learned is it's up to the central bank to take it on and stick with it until it's done. and and that doesn't sound controversial but it actually was back then. so people didn't get in there and get it done so inflation kept coming back. i think there were significant differences this time to the questions a minute ago. this is a combination of a supply side that we had very significant supply shocks along

with big demand shocks from the reoepgs of the economy and the other things that happened. i think we have to -- each one of these things is different in its own way. we try to learn the lesson of history, though. >> you agree or disagree, any disconnect between inflation and inflation expectations from the 2% target should be addressed now and not at a later time? >> absolutely. >> i like that answer. i want to go to something different. i'm trying to go into a lightning round now and finish on time. we've seen the 2024 stress test results for the banking -- u.s. banking system. it looks like, to me, by every objective measure, we've got a strong -- we've got a banking system that's on strong financial footing. do you agree? >> yes. >> one last thing. as the fed considers making broad and material changes to the basel iii proposal, back on

that one, can i urge you not to overlook the second order issues important fbos in certain regionals to ensure the banks are not undual influenced? if the current proposal, the outsized operational risk costs were high, are we going to take care of that in any sort of reproposal? >> let me just say, we're very conscious of the comments across the spectrum. foreign banks, domestic banks, small and medium banks, everyone is going to get hurtly as part of this process. that is our obligation. >> and i think in response to senator round's question you mentioned because of the likely changes what senator barr expected. we're going to open to comment again? >> that's the strong view of the federal reserve. we're working on that question with the fdic and occ to try to find a path to do that. from our standpoint, that's essential. >> i think it's a strong view from at least several members on

this side of the dias, that would be very, very important. i think it's going to materially change. thank you, mr. chair. >> thank you, senator tillis. senator warner of virginia is recognized. >> thank you, chairman. chairman powell, good to see you again, coming this late in the questions. i'm going to hit a couple of items my colleagues already hit because i want to make sure it's noted i raised them as well. first, i agree with the chairman. i probably hear more on housing and housing affordability than any other issue and i agree with the chairman and i know we discussed this around a rate cut. i understand most of your answer but i still want to add my two cents here. we have to find a way to start bringing mortgage rates down and let people get -- unlock that housing market. again, we've discussed the rate cut issue and i know you've got to navigate that. hope it's sooner than later. i will not recap what i've done

in the last couple of hearings with you, but i think the discount window i've gotten, i know you're working on, before we think about additional regulations that we do need in some cases, i think the discount window is an underuse the tool. one of the original tools for the fed. a lot of my colleagues have talked about quantitative easing, or basel iii endgame. i do hope when we get the revisions we'll see the quantitative analysis that senator tillis already raised and other colleagues have raised. i also hope one of the questions i raised in my march letter to you was making sure any new regulatory structure, how it intersects with existing regulatory structure and turns a market risk, credit risk, and i hope we will have that as the revisions come out. i think one of the things that this debate around basel iii raised was that it is my understanding at least, looked

at -- you may be looking at revisions to liquidity standards as well. and wanted to see what you could say about that and whether that part of those standards are under review and what your thinking is. >> that actually connects to the silicon valley bank questions as well, where i think there seems to be a need to update assumptions about liquidity. that's a separate proposal we're also working on. and very important, i think we saw how fast that run was. it was exponentially faster than prior runs. that's the new world and that's some estimate of what that world is baked into things like the liquidity coverage ratio, for example. >> in what -- if you had 25 cents on every depository dollar in six hours, no matter what the capital standards are. one of the things, there was a lot of talk after svb that we need to think about internet-dri