>> final check on the markets. 78 points now on the nasdaq. now the dow looks like it's going to open in positive territory. do you think you could say anything in front of the house that changes things? maybe, right? >> it's possible, but probably not. >> i'll miss you tomorrow, but see you friday. >> see tonight on "fast." >> that's right. 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, david faber at post nine of the new york stock exchange. five record closes in a row for the s&p. futures suggest the bulls will take aim at a sixth with powell, day two on the hill, more deflation out of china. two-year yield, lowest since march. our record begins with the records rolling on. s&p and nasdaq extend to new highs. tesla targeting its 11th straight daily gain, and apple tops $3.5 trillion. plus, chips, semi a.i. boom

on a eight-day win streak. taiwan semi as well. and the paramount skydance merger deal, what is the future of the media company? i'm going to be joined by skydance founder and ceo david ellison, redbird capital founder gerry cardinal. lots of target increases for meta today. apple, amazon, we knew these first couple weeks of july would be good. >> yes, first ten days, as you said, the best days. i get up early because taiwan semi has always been very exciting to me. it's a trillion dollar company, by the way, and it was everything we thought it was going to be with 33% sales up. remember, they report in a couple weeks so this is not -- but what you can read through here is nvidia. you can read through amd. and then, of course, reverberations of all these, super micro. we can talk about micron.

there's a -- there's a moment where i was watching another show, and it was a guest, i don't mean to criticize, but saying, listen, until it broadens out, and i'm saying, it broadened out from nvidia to super micro. what do you need? does it have to -- does warehouser have to run here? is that what we're waiting for, wk kellogg? are we waiting for you to finish someone texting someone and answering me? sorry, that was a little aggressive in the first two minutes. >> i don't know if this mic is working. is this mic working? you can hear me. all right, we're good. at the top of the show, i got some texts that said my mic wasn't working. >> so, anyway, carl, we are in a call -- no, david, you know what i feel. >> i know you're talking about the broadening out, but the broadening out is -- super mic? come on. >> super micro? i'm trying to book them. are you kidding? do i need huntington bank shares to go up before i pull the trigger here? >> no. >> well, you did tweet a few

moments ago about this downgrade of kellogg as b of a goes to underperform. >> that is the paradigm of what's not working. they raise price. the cardboard box is worth more than the corn flakes. everything is inflated, and that is what you have to stay away from. so, the reason why i keep thinking that you have to own certain stocks that are talked about every day is because they are winners, and typically, in a fed-induced almost recession, you would buy kellogg. but a lot of these companies raised price, raised price, raised price, and frankly, i don't want them. >> that's why you said to be wary of pepsi conagra tomorrow. >> i do think it's glp-1. there's nothing but ads from companies i've never heard of who have glp-1. they can get them because of an fda exception because you can't get enough lilly product. so, i don't want those stocks. i just don't want a company -- you know, i think conagra is a great company, and they did a

lot of froezen food, and it's that cold aisle, you know, open it up, and you try to open the second one and it won't work. >> yes, jim. we've all -- i actually have been to the supermarket. yes, i experienced that. >> they doubled down on an aisle, which was great, but the aisle that you need to be in, david, is the datacenter aisle, which is why i like the honeywell deal this morning. >> buying the lng business from air products. >> i'm waiting for what tom jordan from coterra, which i think is the best nat gas company, said would happen, which is that one of these hyperscalers -- i call them tech titans -- not the record company that john coltrane was on. >> great philadelphian. >> yes. what's there for that? there's not even a plaque. anyway, it's probably far afield. >> you mean, coltrane's -- yeah,

a little far afield. i got it. >> yeah. >> your knowledge knows no bounds, and when it comes to music, nobody beats him. >> anyway, let's go back to lng. >> thank you. >> i think that it's only a matter of time before one of these hyperscalers buys an lng nat gas company and goes soup to nuts. >> come on. by the way, i said something not dissimilar from it about buying power plants, but they're going to buy an lng company? >> deal with it. >> soup to nuts? >> deal with me. this is from the -- >> delta went vertical in fuel. >> yes, they did. remember the refinery? the philly refinery? >> so, amazon or microsoft are going to buy an lng company? come on. >> is it any different from apple making their own chips? >> i'm going to strangle him. >> it is different. >> coterra is a great -- >> i can see the press release. amazon's buying coterra this morning. they're an lng company. >> i'm not going to talk to you.

your mic's not working. >> you wish it weren't working. >> tom jordan came on "mad money," my show at 6:00. >> you want to tell people who tom jordan is? >> the ceo of coterra, the best natural gas company. they have $1.20. and he said the hyperscalers are out looking to buy a nat gas company, and they were debating whether they should sell to a hyperscaler. >> he said that? you sure you understood what he was saying? he said, a natural -- this is an exploration company that's finding natural gas, transporting it -- >> he said, listen -- >> not just a natural gas-fueled power plant? >> i'm going to get the transcript of tom jordan saying it. >> we've been talking about all the different ways that they're looking to secure power and/or, by the way, so many players are looking to secure chips in other ways. buying bitcoin miners, for example, that have access to gpu chips, for example, that can be repurposed for generative a.i. but buying a nat gas company?

all right. >> we're going to get the transcript. >> great. basically -- >> he's going to have to eat paramount. >> you're talking about widening the universe of marginal buyers, like we saw with media and big tech. >> i think we're in this sea change moment where if you're not involved with the datacenter, you know what, blackstone is a great datacenter play. >> yeah, they own an enormous one. >> if you're not involved in a datacenter, you're not involved in what -- anything a.i., and we're going to talk about it and i've done some work on it. then, you're cereal. >> you're right. >> you're cereal. and i ain't talking about the bear serial. >> that's what everybody cares about until something changes and they no longer do. i don't know what that will be, jim. >> i don't either. maybe it's going to turn out that life sciences comes back. other than lilly -- i know merck's made a couple good acquisitions but lilly's the one that goes up, and that's the one that says, why can't they all be lilly? >> when do our shows not be 90%

glp-s and nvidia? >> when we do tesla more. >> tesla today going for 11 straight. goldman goes to $248 but they keep the neutral. bill gross yesterday said tesla's trading like a meme stock. >> we have an analyst today who writes a great deal, by the way, and his name is jonas, and he's talking about maybe this is the huge business that tesla has, the electric business. david, the store is business. you didn't -- i have his piece. >> would you? >> the title is "tesla energy worth more than tesla auto." >> that's classic quantumscape from jonas. i love it. i love it. >> quantumscape. >> that was a low blow. >> you like to hang that one on me. >> you used to be safe in quantumscape. >> i never said that. by the way, spacs are not going away. they're kind of back. they're bigger names.

>> we mentioned a company yesterday that was an apple sponsor for formula one. that was not a spac. >> there are bigger names, bigger things. the sponsors are not -- they've changed the compensation level, but they're not going away. >> ea is one of the sponsors of formula one. there you go. tesla energy's being valued -- it should be valued at $183 billion, according to adam jonas. do you think he has a dart board? and it hit 183? i think it might be $183,247,000,000. >> that is something a lot of investors are getting enthusiastic about. >> because it's datacenter. >> well, but it's -- but energy storage is a very important part, and it's growing very significantly for them. >> remember, we're supposed to have 25% solar is going to be in the mosaic of 2030. that's what it's going to be. unless project 2025 comes into play, so you will not have a 2030 solar. >> then we bring coal back

entirely? the entire country's run on coal? >> is coal super cycle? >> that's the -- that's way down on the project 2025 list. >> is what? >> is energy at all. >> oh yeah. >> it's mostly the consolidation of the justice department and the presidency. >> that said, though, on tesla, most overbought, jim, since june of '23, and this "times" piece about market share in the u.s. now below 50. >> but jason put out that fantastic piece, hence the meme, our internal brain trust, i call him the scientist -- actually, i call ben stoeder the scientist. this guy is the uber scientist. he pointed out the day trading options in tesla -- we don't talk about day trading enough, the zero dark thirty option that people lose money every day. people are making money this time. have we covered everything? >> we've talked some m&a. talked sometime mega cap tech. >> we called coltrane, which is important. >> what do all those things mean

for the indexes in the back half? >> what i think it means is that you have to go back to what ben righteous said about how amazingly, nvidia was not valued correctly by a lot of fund. they had to go buy more in order to have the equality of being -- to match the s&p, to mirror the s&p. what's happening is -- i mention that because there's a leapfrog effect. every time something happens, somebody comes out and says, well, look, just a second, i've got a new reason, and then i want to go back to 2000. we had new reasons, but there weren't real reasons. here, we have new reasons. i was going back and forth with nvidia. blackwell sold out. >> you said it sold out. >> it sold out. $35,000 a pop. what do you do? do you just ignore? >> i mean, there is an argument roger mcnamy made, saying these companies are pouring so much money and they'll never have a return on capital.

it's going to be a while before we know whether he's right or wrong, first of all, but he says it's overhyped and it will underdeliver, essentially. i made the point that, yeah, you can say the same thing about the internet in 1997, '98. the fact is it delivered everything and way more, but it just took a while. >> jensen huang, the ceo of nvidia, said, over and over again, you can't be third, fourth on this. you got to be first. this is a -- it's not a winner take all, loser take none, because there's so much business, but you have to be a first mover, or else you're going to be left behind. i believe that. i'm sure google, which there's a great piece about alphabet and how laura martin, the biggest business out there is youtube. but they -- >> she's been calling for that split for years. >> i know. i know. gra gratuitous mention. but 7% of the chips are going to google. that may be not enough. >> meantime, we mentioned the kellogg downgrade. we've got this initiation lower on target. we've got a cautious note from

ubs on retailers and tariffs. does everything else get shuttered? >> the 10% tariff, i had to deal with that with constellation brands because you get the tariff, they bring in modelo and corona. if you're going to be that nitty-gritty and talk about the 10% tariff, everybody's going to have it. >> the downgrade of visa and mastercard. >> i didn't like that at all. the idea that these companies are overvalued -- now, david, within the next 30 seconds, is going to give me the market cap of visa and express some faux wonderment. >> in three, two -- >> $531 billion? >> oh my gosh. >> thank you. >> and that's why you don't downgrade those two stocks. if you downgrade them, they never get back in them. they're juggernauts. >> b of a says some clouds might be gathering, regulatory makes it harder to take price. >> regulatory problems have been -- mastercard down $9.

let it go down $13 and then snap it up. >> had a great -- great back story there, bank of america sending out all those cards to people. >> i like bank of america stock. >> back in the '60s or '50s? forget these things. i listen to these great podcasts. >> you listen to podcasts? >> i do. i forget the name of the podcast. >> final thing we didn't get to was whether or not powell was truly dovish yesterday, jim. labor, no longer a source of inflationary pressure. elevated inflation, not the only risk we face. >> he did use -- and i'm going to paraphrase -- labor is strong but weak. hear when he said that? kind of -- that was his weakest moment in his testimony. he said, we've got a very -- wages have gotten cooler, but we have a strong job market. what he's really saying is, ideally, we're still hiring people and they're not getting raises, which is -- it's

disinflationary. >> we're going to talk layoffs at intuit today, new i path, cnn. >> incredible report this morning that was right in david's face. we're starting to see people leaving -- new york to florida. >> it's starting to abate now. he was talking about 2022 numbers, jim. >> let me finish. >> no, i won't, because i'm going to play you, and i'm not going to allow you to finish your thought. no. zip it. zip. zip it good. >> so, anyway -- >> zip it. >> i think that shari is completely out. >> she is. that is true. she will be completely out of it. >> take diana olick, a little more positive on housing than i am, but i told david that there was going to be a decline in manhattan pricing and he laughed and laughed and laughed, and doesn't he look like carrie in the seminal gymnasium scene? >> a decline in pricing in manhattan where for what? >> it's finally peaked and it's coming down. >> oh, it is? rentals? >> everything.

but that's -- it was great. report by robert frank this morning. >> nobody's better. >> it was on at, like -- >> i watched it. i must have missed that part about the housing market. sorry. >> you did write this morning that everything was beginning to break. >> yes. everything other than -- that insurance, and there's a piece saying insurance rates are going to come down. that's the last -- i mean, carvana. >> yeah. >> david, used cars are coming down big. so, what's still climbing? i don't know. i like that. >> well, to that point, one-year yield with a 4 handle, first time since almost memorial day. actually, no, late march almost. >> i was checking to see. i got some treasurys rolling over. i'm allowed to own treasury, just so you know. >> i know. >> i'm thinking, just go out two years. >> yeah, extend duration. we'll talk more about that. we'll get a check on the chips sector on this tear, riding the a.i. rally. take another look at the premarket as the s&p goes for the sixth record close in a row today.

up almost 17% for the year. best 13th best start to a year in history. stay with us.

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for more watching and less spending... x marks the spot. do it all on the network made for streaming, and bring on the good stuff. all right, coming up a bit later in the show, david ellison, jerry cardinal going to join me for a first on cnbc interview. obviously, the big deal finally got done. got the press release. really interesting slide deck as well on monday, and you know, now they've got to start to try to convince investors why it's going to be a great turnaround. we're going to discuss that and we're going to discuss that and a lot mo t othhoreopf e ur i'm really just here for the at&t internet, .'s super-fast so, any pre-launch concerns? what if nobody buys them? that's mean or, what if everybody buys them? oh, i hadn't thought of that

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i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire let's get to a "mad dash" with jim. we got about seven minutes before we get started with trading here at the new york stock exchange. want to talk a little walmart? >> yeah, because we keep talking about, as i mentioned, my bug-a-boo was this broadening out. well, this one may be the next one. >> what do you mean, the next one? look at this performance. >> well, it's at 28 times earnings. multiple enxpansion, but the fat

is an excellent piper sandler piece this morning. e-com marketplace, membership, walmart fulfillment, everything's going their way and if you were to ever go with me to a walmart store, you would say, oh my god, it's high fashion for $9. >> is that what i would say? >> yes. >> you still feel positive, despite what is a very strong performance through the year? >> i think we're going to begin to think of this company as an e-commerce company, the first retailer that transfers. now, costco, which i believe reports monthly numbers tonight, is not going that direction. costco says, you got to go to the stores. by the way, the buying of gold at costco, unabated and congratulations to rich galanti, retiring cfo, who's on the cover of ceo magazine because he's just that good. costco and walmart are breaking out and they are the two of the retail that could join the trillion dollar club. not this year, but i think that walmart is no longer just a

brick and mortar. >> what's in this piece today? >> it talks about unlocking the significant value of high-margin revenue streams, but it's saying, remember when amazon discovered it's an advertising company? and the gross margin there was 99%. >> by the way, now it's moved to prime too. i've been watching the show. now i got ads. >> david, you got to click and get rid of the ads. i had ads in the bear, and i called my wife and said, this is grounds for divorce. it's like the baconator. >> prime, i'm not paying for ads. >> hit some buttons, will you? david, amazon, the advertising tier, it's like the netflix tier. you can't -- young people -- >> it's an opportunity for walmart to start to garner serious -- >> young people don't mind watching ads. elderly people think it's a sin. >> walton family, don't forget, they still own almost 50% of the stock. >> doug mcmillon is such a great ceo. >> he was empowered by the waltons to do what he needed to do, and he took his time doing

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. it's been a pretty interesting 24 hours of executive moves at chipotle, jim. u.p.s. and 3m today, which is moving on this president cfo move. >> they had to fill the slot there. remember, mike roman really did get -- you got to understand that 3m was on the ropes, and he came through and got them through the -- both the combat arms litigation, which was very sticky, and the forever chemicals, and i think mike roman has done a good job. the new guy, bill brown, i think is excellent. i want to talk about jack hartung for a second. he came in in 2002 under the previous regime. they do have a guy -- one of the things i love about him is he's not stepping down until next year, so we know nothing's wrong. >> you got to tell people who

jack hartung is. >> the cfo of chipotle. >> not everybody knows that, jim. >> okay. anyway, he navigated through e. coli and novo virus. the stock went from 14.5 to 7. you do have a split. i think he navigated through, and he's heart and soul of chipotle. i wish him good luck. don't worry -- wow. this guy is a titan cfo. we don't talk about cfos enough. rich galanti, costco, tonight cfo, annette ashkenazi, and jack hartung may be the king. >> i love it. after rich galanti at costco and now hartung at chipotle. >> rich glalanti, i'm going to miss his conference calls where, by the way, he doesn't brook a lot of -- if you haven't done your homework, it's not great. you got to do your homework with rich galanti.

you have to do your homework. >> meantime, opening bell, the big board today, it is spectrum 360, a nonprofit focused on special education for people with autism. at the nasdaq, it's talen energy celebrating its listing as we're now ten points, nine points, jim, from 5,600 >> oh, my. look. we've got a very explosive market. we come in. we know these days are the best. we're right on the eve of earnings, so we don't have any earnings disappointments. and david, the magnificent whatever -- >> what are they? >> it's the race to a trillion. there's a whole bunch of companies that are going to be trillionaires and obviously, tesla, back again. it's a halcyon moment for stocks. and then you start reporting, and i think that we're going to find that not everybody is equally prepared for a slowdown that we're getting. >> what -- all right. we head into earnings season a couple days from now. we start with the banks. what do you mean when you say, not everybody's equally prepared? >> thank you, david. i think that the banks have

jumped off this idea that we don't -- that the regulations may be not as stiff, the idea that if trump gets in, there won't be a lot of regulations, more mergers, and i'm saying, can we deal with the earnings first? and i think there's going to be people who endlessly complain about commercial real estate, even though i think that sl green is telling you new york's gotten better. one of these companies is going to color this earnings season in a negative way. one of the banks will do that. >> and you believe that? >> i really do. i don't think it's going to be wells. >> well, last quarter, it was jpmorgan. stock of which has recovered fully from what was a very -- >> great buy opportunity. >> not particularly well taken earnings report. >> no. and you know -- >> and the commentary around it on the call. >> i know, and they did that thing. ill ill-fated. >> jim, it has recovered all of that and more. >> these companies are prone to having something go wrong. and i think that someone is going to secret card

delinquencies -- carl, when you see the consumer a stretch is what helen of troy said yesterday in one of the worst conference calls of all time, because every single division's got headwinds, you can't just suddenly have every division not do well. there's some divisions that did well. >> stressed consumer, maybe choosey. there is the joke going around that the consumer is so stretched, they're living airport to airport. >> badumbum. >> i will say on helen of troy, they're no longer talking about a frugal consumer. they're talking about a consumer who basically is very cautious and very scared. we will see costco. i think that consumer is going to costco. they're going to walmart. costco, by the way, does not let anybody get away with price increases. rich galanti does more to bring down inflation than jay powell. >> we have piper initiating target lower, down to neutral. they think guidance is reasonable. >> no catalyst.

it was just one of those things with just -- basically, we really like to shop there, but we don't have any other reason to talk about it, and the walmart piece was so much more compelling. i really liked that. by the way, the samsung strike, okay, let's -- i just want to mention this because i think the chips are going to lead us again. that's good for micron, and micron is another stock that really got dinged when it reported, and that started to sneak back. so, you're seeing that jpmorgan -- i love that. that's a good idea for tonight's show. >> what is, jim? >> the stocks that have come back from -- >> but micron has had a great year, great 12 months already. >> but it did get hit badly. the stock was at $157, david. it dropped to $130. >> you're talking about the major comebacks, tesla, apple? >> major comebacks tonight. i think it's really good. >> that's not bad. >> you have some other major comebacks? >> i'll think about it. >> anybody on that mets team. >> the mets, it's a major comeback. we were 11 games under .500.

we're back to even. >> the knicks? nova? apple? sometimes i have to do both shows. >> apple is the most major of comebacks as it approaches a 20% year-to-date gain, which would outpace that of the s&p. this was a stock that was flat much of the year until, of course, you see it right there. since may. >> there's a piece that says that apple advertising is going to do well. advertising could double apple's revenue growth, and this is -- wow. this is -- >> needham? they go another 260. >> some people were critical of laura martin, but her overall thrust that these companies are worth more than people think, my hat's off to her. i think she does a great job. the apple piece is something i hadn't thought about, the ad margins are 70, 80%. all the advertisement that used to go to things like, i don't know, who do you have on? you're doing an interview? >> ellison. >> that deal goes to -- >> advertising used to go to traditional media companies and now goes to youtube.

of course, it's been doing to meta and to alphabet for many years. but to your point, it also goes to amazon, and now it goes to walmart. >> i know, and i just think -- >> specific to product placement on the website. >> i like pinterest and i like reddit. i think they're getting their fair share. >> cowen takes amazon $245. bezos selling more. >> he's got a lot of things on his mind. did you see that "washington post" piece? it was mean. he basically saved "the washington post." give the guy a break. >> it's an abstraction, one would think, for him. although i know he does think about it or spend maybe a few hours -- i forget. i once talked to him about it. >> two hours of his time is worth like 80 hours of the rest of us. >> few hours a week or something like that, he's told me. he's selling stock. >> yeah. >> continues to sell stock. but he's got an awful lot behind it, and you can't blame him, given the move up in the share price as well, not to mention he

redomiciled to florida, which i believe makes selling of stock easier, and he went quite a long period without having sold a share. >> $863 million. he's got a lot behind it. the wealth that's been created, we don't talk about enough. like larry ellison, he could lose $20 billion and make paramount into a hyperscaler if he wanted to. >> having that kind of capital behind you is a -- is a great benefit, one would think. and to your point, yeah, larry ellison's got one of the great fortunes in the world. you just do the math on the oracle stake, but it's well beyond that, obviously. he was a large shareholder in tesla. took a big position. >> remarkable guy. i wish he liked me more. >> the bernstein note today on the paramount pro formas, i think, their title is, yuck. it widely misses consensus. 20% miss to consensus, actually. >> well, it depends. they're talking about pro forma adjusted operating income before

depreciation and amortization of $3.4 billion in '25, going to $4.1 billion in '26. you do it off the '26, that number, you get a multiple that's in line or even below a bit a number of the competitors, but you're right. the back end and the question becoming after you tender your 48% of your bs, obviously, everybody would most likely go for the 15, you know, what is that going to look like in terms of a multiple? and some had been saying, well, it's still above that of warner bros. discovery, which is perhaps the great -- the single best peer you want to look at for evaluating. stock of which is down yet again. as is our parent company. >> well. you report on it every day. >> i do. netflix is down today. although it has a 40% gain on the year versus warner bros. discovery. comcast, down 14%. disney, up 7%. netflix keeps winning.

i love when he -- i like -- >> the face to the forehead? >> both hands. then i know i've really hit home. >> i should mention, perhaps, that i own comcast stock, and i work for comcast. >> yes, you do, and i do as well. so does carl. >> we all do. zaslav at sun valley. >> zas. >> of warner bros. discovery, asked about the presidential election, says, "we just need an opportunity for deregulation so companies can consolidate and do what we need to do to be even better." >> i think there's a general belief, coming back to media, that you need consolidation. it's not something that can be participated in by the biggest companies. i think zas would say or those would say, hey, if amazon was able to buy what it wanted and under a trump administration, perhaps that would be the case, they would buy warner bros. discovery. whether that's true or not, i don't -- can't say at this point, but it's not something that's possible. there is a belief, perhaps, and a hope that it would be possible under a new administration with a much more lax approach to

antitrust. our parent company as well, for example, couldn't participate in even trying to buy paramount, probably, let alone warner bros. discovery. will those change? will that seemingly necessary consolidation take place amongst these media companies in a new administration if one comes in? perhaps. perhaps. and maybe big tech will be able to play. apple never has, regardless of whether they could or couldn't. they haven't -- they've chosen not to. i think the largest deal they've still ever done is beats. $3 billion. >> i know. i tried to get them to buy netflix. >> how'd that work out for you? >> well, it didn't happen. >> no, it didn't. >> it was good. the company was like 75, you know -- >> would have been a good deal. >> 75 -- yeah, it was $750 million. look, i'm not -- i made a few -- i've made some bad calls too, you know? >> yeah, occasionally. >> yeah. >> occasionally. that always puts me in mind when you mention apple and netflix of carl icahn, if he'd held on to

both those stocks when he owned them big -- >> he was worried about china with apple. >> speaking of china, ppi down 0.8. cpi is a miss. that's one reason we got this decline in yields here. >> yeah. i mean, i keep coming back to that you just have to think about nikke. nike, david, they didn't raise the dividend. that's actually a 2% yield because the stock's come down. nike is the poster boy for everything that right now is going wrong. the frugal consumer. china. management being a little bit off. the vault. how many times have i mentioned the vault? those old shoes that they could bring back, you know? like the ones that are hanging from the wire when you go up. he's laughing. >> meantime, oil, below $81. it's going the lows of the month. we your sound from coterra racked. >> it's a little attenuated, but let's just hear that. >> take a listen. >> okay. >> i am kind of surprised that at a certain point we don't see

what i regard as being a deal between a natural gas company and a datacenter company. i mean, why not? they're spending fortunes to put windows up and they're doing that themselves. why not contact directly a nat gas company, line it up at a consistent price for the next five years so you don't have to worry about it? >> well, we're looking at that long and hard, as you can imagine. >> you are? >> i think many of our peers are. we're going to see that. it's just -- it just makes too much sense, and ultimately, logic will prevail on that. and you said five years or more. you know, there's a lot of natural gas in this country ready to be brought to market. i would look out a decade or more in terms of secure supply against a reasonable contract that's win-win for the datacenter and the producer. >> now, why would -- >> jim, you said a contractor question was would somebody line up buying the natural gas. what you said on our air earlier was they would buy the company. >> that -- >> that was different.

you said a contract over five years. that's what he was answering. >> he came back and said, maybe a company. >> no, he didn't. he said, i see them lining that up over a long period of time. >> i interpreted that as being they might buy the company. >> why? he didn't say that. that was not your question. >> i think you need to listen again. >> i listened. >> i think you were too focused on -- >> i heard you ask the question which was, would they contract to buy all the natural gas from a particular company? he said, yes. that's different than buying a natural gas company >> i took it to the next level. >> i rest my case. >> the prosecution rests? >> you did the interview, jim. >> i just felt that was really kind of the takeaway, david. you know, the takeaway? >> i don't think that is the takeaway. i think it's highly unlikely. >> if it happens, we're going to come back to this tape of today's show. >> oh, my god. you're going to eat more than just paramount >> amazon and alphabet, they're not buying natural gas companies. they're going to contract, as you say, for --

>> ouch. this is getting serious. >> starbucks goes to $100 ahead of nike, and we're going to see a deal. >> more likely to buy nuclear power plants first. >> they want to do that. >> that, they might do. they want to buy three mile island? >> why not? >> i'm taking that bet. >> that's called tmi, david. >> we're not going to set a time limit on this? whatever. in perpetuity. >> wdavid's been here 40 years. >> five years. >> you have not worked here -- >> i have been here -- no. what did you say? once i've been here 40 years? >> it's going to happen. natural gas company's going to get a bid from a hyperscaler by that point >> by what point? >> be the time you retire. >> that could be any time. >> really soon. >> really soon. >> don't put a gun to my head. david, look at the promote you're getting. see the bottom right? david ellison. >> yeah. he just looks at -- by the way, he just looks at the tape constantly. >> mongodb can't lift its head.

broadcom is exactly -- just one for one with nvidia. it's terrific. and by the way, hock tan is someone who has a lot of money. you want to talk about people who have a lot of money? >> sure does. >> the ten for one pays out friday. >> that is going to be, let everyone know, that right after chipotle and right after nvidia, there was churn. don't feel like you should buy it ahead. that has been a bad strategy. >> and broadcom is in the $800 billion market cap. >> that's my point. >> i know it is. with lilly, tesla. >> lilly, i think, is $900. >> lilly is under nine. >> we mentioned barclay's going to $932, jim. they think mounjaro beats. >> how many plants can you build? how quickly? these are $5 billion plants. they are very hard to make, and in the meantime, all that happens is people say they might have a pill. believe me, david ricks, ceo of eli lilly, is going to be first with a pill too.

and now they securichanged the . they've changed a lot of names. >> the alzheimer's drug. >> very important. >> could be yet another potential blockbuster for the company >> a lot of people, because i do this stuff with the american brain foundation, american migraine, a lot of people feel this really does forestall or make it so that alzheimer's -- put it off a couple years. >> that's conceivably a very important, and a game-changer. will the federal government pay for it? medicare is already stressed. >> i was talking with people about what would turn eli lilly into an absolute sure, and it is everything hard, which is still the biggest killer in our country. everything cardio that it does. really remarkable. how about glaucoma? what can't this thing do? okay. fabulous drug. >> we're going to know. >> fabulous drug. >> in a few decades, we'll know what it meant for public health policy. as we go to break, it will be a busy day once again in

fixed income. you see the ten-year below 4.3%. powell starts in a few moments. we'll get that q&a when it gets going. bowman and goolsbee on the tape and a ten-year note auction at 1:00. stay with us. (♪♪) ♪ well i was raised by careful hands ♪ ♪ yeah, they made me who i am ♪ ♪ so i'm off to see... ♪ we invent them. we design them. we build them. and one day, we have to let them soar. ♪ i'm always coming home ♪

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it was a complex deal of course that took quite a long time to get to the finish line, plenty of ups and downs. but they got there. what is the key question. we'll ask that odaf vid ellison, chairman and ceo of paramount when the deal closes and gerry cardinale from redbird, his partner in the transaction. my protein shake. the future isn't scary. not investing in it is. you're so dramatic amelia.

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good race. - you too. you were tough out there. thank you. i'm getting you next time though. oh i got you, i got you. down goes jewett. jewett and amos are down. what a lovely sign of sportsmanship. you okay? yeah. ♪ ♪ time for jim and stop trading. >> one of my favorite comeback stories, carvana. when it was in the teens we said this is it, a good model. this morning, buckle up, growth ahead, upgrade to buy, 160. i think it's fair it gets there. they are expanding nationwide. they have a terrific one that we visited on long island that was

a vending machine one. i say it's inventive, fun to shop there. i bought a car, didn't like it, took it back, no harm, no foul. it was like easier than returning an amazon package. >> is this on your comeback list? >> i didn't think about that, yes, thank you. it's good to have the show written from this show. a nice synergy. speaking of synergy, i have one of my favorite ceos on tonight hochman from brinker. this was the guy recognized mcdonald's was raising too much came in with the smash burger, unlimited drinks, and this thing propelled the company, number one on twitter when he unveiled it, to almost everybody, became -- he's really sensational. that was when i realized the mcdonald's stock was in trouble. >> that's where you mention

margaritas. >> yes. why call it brinker. >> one of the greatest restauranteurs in history. >> okay. the other thing that mike santoli pointed out, if you look at chipotle, you can see the day that mcdonald's launched $5. >> that's true. and that was the controversy about size. brian nickels said the prices have gone up but the size hasn't. a lot of people feel there's been, david, a controversy about whether the sizes have gotten smaller. >> i know. >> and i continue to believe other than the problem from chipotle for avocado when it comes to gawk, i think it's great company but i think there's an undercurrent with chipotle that i think is untrue. i think the company is being

sha slaged unfairly. >> not the ceo. >> no, jack is retiring. >> till march. >> march next year. >> i wanted an excuse to have jack on. i love him, he's been terrific. during the really terrible airborne illness, i owned a restaurant, there by the grace of god, i said you will make a comeback, absolutely. what a buying opportunity that was in october of 2016. >> jim we'll see you tonight. >> i love you. all the animosity is strictly -- >> it's all for show. it's an act. >> it's a show, man. 100%. >> see you at 6:00. when we come back, david's first on cnbc interview with paramount and powell in a moment. at least, not the way it could work. your people are buried in busy work. and you might be thinking... can ai make it all work? it can. on the servicenow platform, ai transforms your entire business.

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good wednesday morning, welcome to another hour of

"squawk on the street" i'm sara eisen with carl quintanilla. another big day for the markets as fed chair powell testifies for a second day in a row, this time before the house financial services committee. we'll take q&a live as it begins and david faber joining us for a first on cnbc interview you will not want to miss with the founder and ceo of sky dance and gerry cardinale the founder of redbird talking their deal with paramount. it's going to be a big one. we're a little bit higher again, s&p up a thirds of 1%. nasdaq up half a percent because tech is leading again today. amd on semi, micro chip technologies, micron, nvidia yes, higher again. week-to-date nvidia up almost 6%. the ten year treasury note yield, there's buying of treasuries. wholesale trade numbers are

crossing the table, let's get to rick santelli with the numbers. hi, rick. >> hi, sara. we're getting our final read on the inventories, the mid month read was up .6%. it remains up .6%. what is noteworthy there is that is the biggest inventory amount on a month over month basis going back to august of '22. we know that inventories, of course, potentially are building. it depends on what type of demand it meets. on the sales side, this is a fresh number for me. up .6%. that follows up .1% so far unrevised. up .6% that is the strongest number back to february when it was up 2%. so the numbers are better than expected. we see interest rates moving up a bit, geeoating near unchangedn tens and twos. we had a solid two year sale

yesterday. and now we're getting to the l longer. these are very important auctions and even though demand has been better at recreant auctions it's worth watching to see if we continue to support the notion we can borrow at current interest rates while spending continues to move higher. sara, back to you. >> we will be watching that back to you. as we await day two with the q&a with the fed chair, mike santoli joins us at post nine to break down the action. mike, the fed chair yesterday i don't think broke any new ground. he stuck to script and said the thing he said last week we're happy with the disinflationary progress we have to see more evidence and we're not committed to pinpointing any timing. he reiterated the message we have to pay attention to both risks in the fed, inflation and

also the job side of the mandate. i want to play for you a quick sound bite of what he said on the labor market, which shows how the fed is thinking about it right now. >> the most recent labor market data, to your point, do send a clear signal that labor market has cooled considerably compared to two years ago. >> he characterized it as still strong but cooling considerably. i made a chart to show that, we know the fed pays attention to it, the jobs opening data. we saw there were so many job openings coming out of that post covid -- well, covid they dipped, obviously. and coming out of there, you can see how elevated this number was. it got really high and now it's come down pretty steadily. it's still above the prepandemic normal levels but that could be one chart besides the unemployment rate they're watching. >> the number of job openings per unemployed person is back to

normalized to precovid levels. i think he welcomes that news and implies to the market and everybody else they're not looking to engineer further weakness beyond what's already in process at this point. that's pretty welcome. i think he can go back and remember when he was talking a lot about we think the economy is going to have to be running below the normal rate. essentially below trend for an extended period of time to get the inflation problem under control. this is 2022 type of rhetoric, even into last year. that's kind of what's been happening, right. the first half of this year you're under 2% real growth probably on the past couple of quarters. so everything seems to be lining up. the market is welcoming this because we knew the restrictive policy probably would take hold and we view it as restricted. we probably want a couple of more benign inflation readings before you move. but everything seems to be in order.

and the stock market is there. i think the stock market is registering some concern about the cyclical momentum because if you look at consumer discretionary and equal weighted basis back to april lows, so are industrials, what's not, the s&p 500 up 12%. it's up 17% on year-to-date basis because we know the money has been following the fundamental secular growers, mostly. so everything is kind of acting like a bull market. i know that people are a lot of people, anyway, are up in arms about the manner in which we've gotten here. breath has been negative on a tremendous number of days when the s&p 500 has been higher. that's an outgrowth of what we know, which is the math, stocks 3% of the s&p right now. i don't see reason for alarm. i also don't see the catalyst for everything changing on a dime and it becoming a broad rally, even if we get a rate cut. i think the earnings have to show up in a broader way, maybe

by the fourth quarter to justify a move like this. >> i made one other one for you, which is the tech versus transports. dow transports have really started breaking down, that's a good cyclical read, right. investors are worried about growth. that's the bottom line. >> it's generally a good cyclical read but what's interesting is some of the weaker areas of the transports has been trucking, freight. this pro longed freight recession, why? it was a massive build up during covid. and it's almost as if that's subsidizing a lot of activity out there, the struggle in terms of freight rates because there's so much more capacity it's helping on the inflation front. i think it's something that a lot of indicators of cyclical momentum as i mentioned are not really lining up that well. and that's why it seems a little bit delicate they have to do this handoff from restrictive policy to something easier. >> the survey in the deutschle bank note. they surveyed a bunch of consumers i thought it was

interesting. inflation is still at the top of the list but the second is government debt, biggest economic risk. government debt. we did see demand yesterday see if we get demand for the ten years today in the auction. but u.s. political instability. this election fiscal risk is coming to the fore, almost in a bigger way than monetary policy risk right now as fed chair powell has been steady and clear with what's coming next and what they need to see to get there. climate change also a bigger economic risk than higher interest rates. that surprised me. >> those are the almost perennial things in the air you would worry about and probably in the background way should be worried about but it's almost the problems that arrive in good economic times. people aren't worried about how many jobs are out there, they're not worried about incomes, they're worried about the big picture, macro stuff that's not

an immediate problem. >> i guess the house can be more entertaining, figuring out what's on their mind. it's political they barely ask about monetary policy and when they do, he's made it clear where he stands. >> no doubt about it. there was some talk yesterday in the senate of the critique of the treasury department for p how it's deciding what matureries to raise money at, which is interesting but ithe's not going to answer. >> no, that's a yellen question. >> it's posturing, politics. there were a lot of banking questions -- >> the bank stocks rallied in the last couple of days because there have been signals not just handicapping the election but signals about the fed backing and easing of some of those capital requirements. >> along with a trump administration and a republican congress that would be very friendly for the banks. although they are under pressure

today in the market. you continue to see the lift for the semiconductors. is there a catalyst? it's not coming from the fed. >> there's a conference this week -- >> semi-con. >> yeah. there's always something that's going to bring further attention and under score the demand in the investment cycle. if i wanted to look for something to be worried about in a bigger way in the market, it's this is all mall investment, this is like never feeling the need to put multiple billions into the plants to build capacity and we're not sure if the payoff is down the road. goldman sachs throwing cold water on the a.i. story right now. the investment itself is so lucrative and urgent and coming from the deep pocketed players, it's not really debt finance.

>> and we made this point the past couple of days. the money they're spending, hyper scascalers, given the siz it doesn't put them at any risk. >> they have to do it. it goes to the bottom line of nvidia sboand others so for nowe machine keeps grinding forward. i think the biggest question is, and maybe the software names are showing this, they're the net victims of the a.i. boom around the software applications but also it maybe just necessarily doesn't bear that much fruit in terms of direct economic en enhan enhancement. >> salesforce is down another 2.6%. >> do you have any reason to believe that cpi might be a land mine tomorrow? >> only because of the set up, not because the numbers themselves look like they'll be

that scare. b of a is saying it could be firmer than we priced for. this morning the economists were saying that. i suppose it could be. it's a high barr to change the overall trajectory of inflation. we've gotten some good readings. i was saying yesterday, remember in may of 2022, they had done a second or third rate hike and they were desperate to chase inflation. powell said this is not a time for terribly nuanced readings of inflation. don't tell me what it's going to be, what the base is going to be and we get lower readings down the road. i wonder if we get to the inverse of that, maybe it's not the time for readings of inflation. are we 2.6%. >> rounding decimal positions. >> also the used car numbers were good as an input which we know is a factor.

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welcome back to "squawk on the street." we're now going to turn to that merger of sky dance and paramount, a long time in the making. the two gentlemen behind that transaction. first on cnbc sky dance media founder david ellison and redbird's managing partner,

gerry cardinale. thank you for being with me a couple of days after you announced the transaction. david i'd love to start with you. in the interim, since the announcement, you've been talking about technology tratr transformation inside paramount that you told people will position it for growth. i'm curious what it means beyond those words? >> yeah, absolutely. firs first, thank you for me me the last time i was here was "top gun: maverick." so this is a business in business. you have paramount pictures which is a 100 year studio. cbs, the number one broadcast asset for years, remarkable sports package with the nfl. nicke nickelodeon, iconic brands, kids and family. but we believe that content need to work seamlessly together. the core of paramount will be a

content company, story telling company, entertainment company and we need to make paramount the number one destination for the most talented artists in the world but we believe that technology will transform everev everevery aspect of this company. we'll completely transform the business and allow us to emerge from the period of transition stronger than ever. >> does it extend beyond a better user experience? it wouldn't be enough to move the needle towards the growth you're talking about. give us a sense as to where you see the numbers adding up. >> absolutely. so david we're comfortable in businesses in transition. i think if you, you know -- there's real restructuring that needs to take place at the business. linear business is in decline but we can restructure and slow

the curve and we are going to invest in growth areas of the business. when we emerge from the transition we'll return to being a growth company. in addition to that, when you think about how a.i. will adjust the way content is created. when you talk about what we build with studio in the cloud with oracle we've been able to reduce costs and improve efficiency. when you think about how cloud infrastructure will transform every aspect of this business, we will be able to emerge from this stronger than ever. >> stand by. i have plenty of questions for you, gerry, but i want to follow-up, david. you talked about slowing the curve in terms of linear decline. you targeted 8% ebitda growth from 27 over 26, 2027 over 2026. that's after a lot of cost synergies you talked about have taken effect.

how do you get to that number and do what others haven't been able to? slow that curve you just talked about? >> as i said, there's significant restructuring we intend to do in the business we talked about that number publicly. when you look at what we want to do in streaming, how we want to evolving, improve the ad technology what we've done with studio in the cloud we believe in the future of paramount plus and i said, i believe what will occur over time in this business is you will have the linear curve continuing to go down, growth areas of the business will continue to accelerate and grow and we will emerge from the period with returning to growth and maximizing shareholders and investors. >> that has to be something that happens for you, you're making a huge allocation of capital here at redbird, bigger than by far.

you know it well, i've covered it for years. there have been so many other media companies trying to navigate this transition and not all are successful. what gives you the confidence that david ellison and jeff shell are going to be able to do this given how much money you put at risk here? >> i say the context that's important is our style of investing at redbird is a continuum. there's one perspective here, i've been at this for 30 years to get to this point. i've had the benefit of the last five years working very closely with david and the team at sky dance. this is about the great intellectual property. you go back to my career and look what we started with the regional sports networks, the yankees, 25 years ago, it's a continuum across that spectrum. and great intellectual property today is hollywood and sports.

we built a career in monetizing those two verticals. and a lot of times it's creating companies around it. the great thing about this deal we don't need to create a company around it, we start with the work that david and his team has done at sky dance. in that 15 years david created a partnership with paramount, so this is really about taking an over 100-year-old company with a great portfolio of intellectual property and positioning it for the new world. this notion there's tech and hollywood is the wrong notion. those are venn diagrams that would be working seamlessly together. the only time that seems to have dawned on people is with unleashing of streaming wars. well, david and the team at sky dance has been doing this for a while. i'd say for 30 years i wanted to invest in this space and it really took david ellison and sky dance to get me off the dime to really start to put money

into it. >> david, back to you, then, about paramount plus in particular. i think you indicated you believe in it. i'm curious how you view it, though. some argued maybe it should be shutdown, go back to being an arms supplier to the other streamers, for example. many argue the needs are beyond technology, you need scale. how do you view that asset given that it is key to getting you to the growth you're talking about? >> it's key in getting us to the growth we're talking about. as i talk about the core principles here we need to deliver two things one is the core comp tensive is entertainment and story telling company. that is always going to be the core competency of paramount. the technology is really in service of that content. and by using technological tools to first make sure that the creative side the most talented artists in the world call paramount their home.

but when you think about the power of netflix and how much technology has been investing in the media space it's time we invest in technology and start to go in the other direction. and believe that art and technology will improve the user experience, reduce costs, allowing us to invest more in that content and have a far greater reach vehicle in terms of paramount plus and also believe there's several options of the management team that paramount is going to explore -- >> what are those options, david? what are we talking about there? possible they'll do an international deal while you're still on the sidelines, so to speak. i'm curious, again, how you view the future for this asset that has been a drag, obviously, on profitability at the company for some time. >> so look, i think all options should be on the table. i think one of the things that cannot transpire here is there can be no browse at the company we have a tremendous amount of

respect and admiration for the management team that exists at paramount they need to be able to explore and make decisions during this interim period. there are conversations around what a licensing approach to international might look like as it relates to streaming. there have been incoming conversations, and all those who believe it's prema dhur believe they need to be evaluated but fundamentally what we believe in here is the stand alone case, what we presented and everything i'm talking about will be significant upside to what we talked about earlier this week. >> gerry, you have this three-headed monster. i've rarely seen this, if ever, three ceos, trying to run a company. i doubt you have. what gives you the confidence that the people running paramount in the interim period before you close are going to do the right thing, what you need them to do, deliver on the cost cuts they have introduced as well before you close the deal?

>> they're very talented. we all know each other. there's a real trust factor there as i said because david and the team at skydance has been working for many years with this team. so we have a lot of confidence in these guys. we're all aligned. the fundamental construct -- there were two fundamental con instructs to the deal, number one embracing the entire portfolio, not looking to break it up. and number two is alignment. if you look at our investment, the bulk of our investment is alongside the common shareholders here. i'd say everybody is aligned, starting with the two management groups as well as the share how would -- shareholders. >> what can you stop them from doing? you're on the outside looking in for a period of time? >> we can't stop them from doing anything. but i think there should be -- look, i think there's a lot of collaboration that should be

going on in terms of vetting of best ideas. but at the end of the day, it's still their show, you know, between signing and closing and we're going to support that. >> you wanted to say something, feel free, go ahead. >> we have 15 years experience working closely with paramount and we have the appropriate seat at the table but as gerry said, the team is managing the business during this interim period. i also just want to say that we're really comfortable with businesses in transition. i think if you look at the technological prowess we have on the family side, that was a time period when people were nay sayers we bought more stock and emerged from that transition stronger than ever. remember conversations around tesla when we made that bet as a family. what we believe in here is the ability to transition this business. double down on our core

competency and invest in technology and create that media company in the future where art and technology can work hand in hand and believe that when we come out of this, paramount will be a winner. >> you mentioned your family and oracle and investments in tesla. how involved is your father, larry ellison, going to be involved in running the company. >> i'm running the company with jeff shell but i have an amazing relationship with my father, we talk every day, had the privilege of learning from him and other mentors like steve jobs. when you go back to skydance 15 years ago, the score thesis of the foundation of skydance was the bridge was going to get built between silicone valley and hollywood and that was going to create disruption and skydance is a pure play content engine that was the tip of the spear for that disruption. and really paramount is a

business that needs to follow suit and make that transformation and be able to meet this particular moment in time. when you think about the incredible actors we have at skydance the remarkable television studio, one of the greatest animators of all time, the core principles of pixar was art and technology working hand in hand and we have a great relationship with the nfl with sky dance sports. when you inject the story telling with the licensed games of cbs, you create an unmatched experience for sports fans and on boarding and on ramp for story telling for new fans into the nfl. so by bringing the two companies together we're going to supercharge the core assets at paramount that we think are under valued and transition the business of the future. >> one of your business partners

as well is tom cruise given the mission impossible and maverick franchises which get brought together under this deal. what would cruise say if i were to talk to him about what skydance has done in terms of contributing to the success of those films? >> one we made nines movies together. g.o.a.t. ghost protocol was the third film and we collaborated and delivered the most successful ever. i'm proud we made the most successful mission impossible, "star trek," and top gun. and maverick was the first film

i put into development. my first meeting with tom was talking about top gun and with the late great tony scott and jerry bruckheimer. so i'm passionate about this business, the stories we put into the culture. and, you know, believe that while utilizing technology, the best management team around the world we have a very bright future ahead. >> have you talked to cruise at all about the deal? is he supportive? >> tom is supportive and what i would also say is the outreach we have received from the entertainment community has been pretty remarkable and humbling. i think there is a great opportunity, the fact we'll have one of the first owner/operated studios that will be stable, that can think long term, that's not just going to have to focus on tomorrow but can focus on several years from now. we are going to take the long term approach to this business. it's been really both exciting,

encouraging, and humbling that the greatest film makers in the world are supportive of this transaction. >> you can afford to do that as a result of your family and your father's commitment in terms of capital. i think it's great you talked to him every day i wish my kids talked to me every day. how important is oracle going to be? you have a partnership at skydance does that extend and deeper with the paramount skydance? >> it's a great question. there are some things in this period i can't speak to but i can speak to what we're already doing with oracle. when you look at studio in the cloud, traditional wisdom when you look at animation was that it needed to be an on premises business. the thought process to be able to move that amount of data to the cloud from the artist's hands, everybody thought it was too expensive and slow. we partner with oracle on studio

in the cloud and found out it was not only significantly more cost efficient, it was faster and that's scalable. and that level of technological touch point is going to transform every single aspect of the entertainment business. and given the background and technological prowess we have, it is that theme. i apologize for repeating it, of making paramount the number one home for artists, it's always going to be about entertainment, sports, video games these categories that i could not be more passionate about and the technology will support that, make it more efficient. make the experience better, the advertising more efficient. when you think about the resources we've had and what we've been able to do in the tech space we can help pioneer the next generation of that with an asset that has a 100-year history. is a remarkable institution and we're going to win. >> that helps answer the first

question. gerry to you quickly because we have to wrap up on. but i think you're talking about perhaps nine months to a year. is this going to need a review? i know 10 cent was or is an investor in skydance, what are your expectation oss on that? >> we'll be with the regulators, we should be clean from all aspects. we don't believe there's any issues, should be no licensing issues, antitrust issues. i think we're clean. but we'll work closely with the with the regulators to ensure that. >> it should take -- maybe be less, maybe nine months? are you hopeful of that. >> i think we're going to go out of our way to make it as transparent and in the review process as possible. don't know how the election, you know, impacts that in any way, but we're going to be fully embracing of the whole regulatory process. there could be a pathway here

for this to be a light tighter and quicker in the review process but it's not in our control. >> you speak about the election. let me end on that david, a different note here. i think you gave $1 million to the biden victory fund earlier this year. do you still support the president? are you perhaps a concerned donor in terms of what we've seen recently? >> i'm not going to make any political declarations. so apologies. not trying to skirt it. obviously i mean, we're here to talk about today entertainment. one of my favorite things about making films like "top gun: maverick" or mission impossible, when you think about sports, story telling, it's something that brings people together and our number one concern is always the audience and delivering for them. that's what we're here to talk about and i'm excited to do. >> i know. i was ending here. i was hoping to get you to weigh in. hollywood and supporting the president. you're at the center of that.

you got nothing to give me? >> apologies, it's -- i'm a big believer in let's let the work speak for itself and that's not going to be something to comment on. >> the great thing about cob tent, david, it's neutral. >> we'll be watching closely, of course, as things get under way. guys i appreciate you taking the time. david ellison, gerry cardinale, appreciate it. let's get back to capitol hill, q&a has begun at house financial ervices. >> i would like to compliment you on the job you've been doing. i'd like to compliment you on keeping us informed about inflation. not only do i welcome you here today, i look forward to working with you for years to come. i yield back. thank you. >> thank you. >> gentleman from arkansas, the vice chair of the committee, mr. hill is now recognized for

five minutes. >> thank you, chair. chair powell welcome back to the economy. i want to reiterate my strong support for your comment yesterday in the senate about the need to re-propose the basle three end game. the supreme court's precedent makes clear if a rule under goes broad and material changes from the proposal to final rule, the public must be given a meaningful opportunity to review and comment on those changes. you generally share that view, is that right? >> yes. >> i'm looking forward to seeing the results of the quantitative impact study and the separate comment period as well as an interagency agreement you ref re -- referenced yesterday. because of vice chairman barr's role and the fed's role would it be fair to say the fed is first among equals on proposing a rule

like this? does the fed have a supremacy position on determining whether it should be fully reproposed or not or do you view it as strictly a collaborative basis. >> i would say it's strictly collaborative. and the discussions with the fdic which vice chair barr has been conducting and the occ, they've been productive so far. i want to to say we continue to work our way through this and i believe we'll get, fairly soon, the to a resolution of the remaining process issue. >> let me turn to the court's decision to overturn the chevron doc doctrine. many believe this is the first step to reigning in decades of an unprecedented, uncontrolled growth in the administrative state, and so i think all of us, on at least this side of the aisle are saying to the federal reserve and other federal agencies in our jurisdiction that we want to reassert article

1 authority over the direction that independent agencies work. would it be fair to ask you to certify because of the change in chevron, the fed would commit to new rules only at the explicit direction of congressional authorization. >> first of all we're studying that and several other decisions that have come down in the last week or two, so i haven't got anything definitive for you on that. i think you know us to be an organization, i know us as an organization strongly committed to law. the supreme court says what the law is, and we'll do what the law is. >> i'll submit that question in writing and maybe you'll have a chance to reflect in that. back in february you were on 60 minutes and said the debt is unstainable. do you believe the u.s. is on an unstainable fiscal path?

>> i agree. the level itself is not unsustainable but the path is. >> i think many of us agree with that. we know when the deficit is three times the economic growth rate and growing, it's of concern. and it's contributed to inflation just three years ago in jackson hole wyoming you gave a speech that inflation was transitory, which is not the case. this hearing is a can't miss opportunity for the fed to demonstrate humility on the monetary policy decisions that some on this side of the aisle particularly think made inflation worse. you said the flexible average inflation targeting 2% that would let it run above 2%. was the fed blinded by the previous 20 years of global

change that was deflationary and you were not alert enough in 2020 to be more cautious about that change in policy? >> we were certainly mindful of a long period of time in which there had been very low interest rates but also very low inflation. suggesting the neutral interest rate must have fallen quite substantially. that was the view. the thing we didn't see coming was the pandemic. it's not like everything went off the rails. we had the pandemic and it changed the way the economy is working. so the concerns that led us to -- those concerns that we were in a world of very low interest rates -- >> now wouldn't you say we're in an opposite situation because of reshoring and tariffs and other policies that are quite inflation nar. >> i would say this. those concerns are -- rights now we have the policy rate in the mid f5s, right and the policy i

restrictive but clearly the neutral interest rate must have moved up in the short term. so the question we'll be asking yourselves in the review -- >> we look forward to that. >> how much of what we did in that time period is irrelevant to the new world where rates appear to be higher. >> the gentleman from georgia, mr. scott is recognized for five minutes. >> thank you, chairman. welcome chair powell. great seeing you. last time i saw you you had -- we had the gracious pleasure of you visiting with me in my office. and we discussed a great variety of things. thank you for that visit. now chair powell, this year the fed tested 31 banks, up from 23 last year, is that correct? >> i believe that's right, yes. >> and by estimating losses, revenues, expenses and capital

level under hypothetical stress scenarios, we did that, correct? >> yes. >> and all 31 banks remained above their minimum common equity, one capital requirements, after observing losses of nearly six hundred and $85 billion, is that right? >> yes, that is correct. >> i wanted to get those figures out and provide you with -- you may have heard this. but i want to share with the nation because your vice chair barr made this statement. and i wanted to put this in the record. his exact quote from this great achievement. he said, our goal of our stress test is to help ensure that we

have enough capital to have served losses in a highly stressful scenario. and this test shows that we do. i thought that was a great statement. of your record. let me ask you my question. it's simple. will the 2024 fed stress stress results have an impact on how prudential regulators roll out a new and updated capital proposal? >> so the two are really two different things. there's the basal three capital proposal and then the stress test. really the basal 3 as i mentioned we discussed we're almost ready to put forward for further comment a revised proposal with material and broad changes to it.

the stress tests are a different thing and, of course, we realize we have to adapt those over time and be open to changes. and we have -- it has evolved significantly over time but it's a significant thing from the basal three end game. >> give us more information on the basal three because i work with you on this. our work goes all the way back to the obama administration when we responded to that crisis with the -- our banks. and you and i worked that up where we came up with the hardest-hit program to help those who were suffering with -- those states that were suffering with high unemployment and at the same time high home foreclosures. and we were successful. and we've established that program and it's still going on and helping many of our states.

but, you know, i want to also share what is happening around the world. as a result of our activities. the european union is now set to delay key parts of its bank capital rules by more than a year. so that their leaders, lenders will not be at a disadvantage. in canada it's important to know their banking regulators have also delayed for another year imposing high capital rules on countries' banks at the risk of making them uncompetitive. the swiss national bank is highly unlikely now to adopt a proposed 15% capital requirement for ups and other swiss banks. and the bank of england has issued a near financial proposal

to increase uk bank capital by 3-2%. and i think this is all a measure of your great work and that of your vice chair, and i just wanted to let you have a comment on that, please. >> sure. we're committed to finalizing this proposal. our banks are going to live with the rules for a long, long time. so we want to get it right. that's what we'll be doing. we'll do it with the basal agreement and it'll be consistent with what other large districts are doing. >> recognize the gentleman from pennsylvania, mr. muser for five minutes. >> thank you very much, mr. chairman. thank you chairman powell and thank you for continuing to indicate you will look at the entirety of the whole economy. appreciate that.

so one of the nation's largest banks warned in a me mow and it's also been voiced by smaller banks that the current pace of -- could lead to new fees associated with checking accounts and other increased costs for small businesses. this does come amid expiring tax provisions that are sunsetting as we speak that are critical for small business such as the r&d tax credit, interest deduct deductibility. this does raise the question, are you considering how these regulations and tax increases will work against your mandate to achieve 2% inflation? moreover with the proposed changes to basal it's crucial to ensure all stakeholders have a voice in the process which you are stating will occur. a repro sol and comment period are welcome.

chairman powell yesterday in the senate you mentioned the majority view of the board is to re repro pose basal 3 for comment period. will it be from scratch and any other specifics you can provide. >> we haven't reached agreement on this. we're working through it with our colleagues at the fdic and occ. i can't tell you exactly what the form of it will be. the sense will be though we're making material changes and that we would want the public to have a chance to look at those changes in the light of the way they play off against the kwan tayive impact survey and should have a reasonable time to comment on those. in addition, we're focused on one big area. but they're institutions that have made comments across the spectrum and reading those carefully. we're not going to, you know, republish all of those. some of those we can make

changes and move forward on. so that's -- it's going to be a very labor intensive, time consuming process. writing these things uptakes a long time. we'll get it right. >> that's great. obviously you know, canada recently postponed as did the eu and uk for international competition standpoint. it seems to make sense. so that's appreciated. chairman, would you agree that excessive spending increased taxes, limits on domestic energy production in principle are cause for higher costs for business, contributes to inflation and as well tightens the labor market? kind of running contrary to your two mandates? >> you know, you're asking me kind of a political question there. i don't want to criticize a parlia platform of economic policies that are not ours to decide. >> when you mentioned

recalibrate policy yesterday in the senate hearing, was part of your thinking taking a more wholistic view of economic conditions? >> yes, very much so. >> okay. chairman is there any data to support the so-called gr greed-flation. this term greed has somehow increased inflation? >> we look at it as this inflation has been caused by a combination of very strong demand and constrain supply. so it was really a high speed collision between an economy that was reopening and, by the way, there was inflation all over the world at the same time, so these are common factors. but at the same time you had tremendous demand for automobiles, you had constrained supply because there weren't enough semiconductors, so that

to us is what this inflation is all about. so we've observed you know the healing of the supply side at the same time restrictive monetary policies weighing on demand and we've seen inflation coming down. >> there's no data that supports that couching of consumers is part of the inflation. >> t earnings and things. >> secretary yellin mentioned that she didn't feel that there was grocery price shock and that sort of thing. groceries and gasoline are the two driving problems for american families and certainly my constituents. do you believe your policies are helping to alleviate in those two areas? >> so, a lot of things affect -- let's take energy first. the energy prices are generally set at a global level. >> i'm sorry, chairman, i've run out of time. >> we can continue. >> gentlemen from missouri, mr. cleavers is now recognized for five minutes. >> thank you, mr. chairman. thank you, mr. chairman, for being here.

and in some ways, i want to follow-up or at least respond to a very civil but, i think reason of why we need an independent central bank. and your response was, we have the question you raised, if i answered it, it would be along some kind of a political avenue and you didn't want to drive on that avenue. so, i'm also very much concerned about a lot of the discussion. i've been on this committee a while. and it comes up quite often. when the federal reserve was birthed around the turn of the century, i think, e, 1913, 1918, something like that, prior to

the establishment of the central bank, did we -- was our country experiencing a lot of recessions, because of, you know no security, people felt most security, particularly in the business community, in making big investments because nobody was in control, this kind of thing. what went on went on. >> yes, i think the lack of a central bank between 1836 and the founding of the fed was a period of lots and lots of depressions and a lot of it had to do with the crop cycle and the banks not being able to handle the very large seasonal swings and there was no central bank to provide liquidity. that's really what gave rise to the founding of the fed in the early part of the last century. >> do you think it would be -- that it is damgs to blend

monetary policy and fiscal policy? >> to blend them? >> yes. >> we try to keep them very separate. and we try not to express views on fiscal policy. that's for elected people, who have undergone elections and won and make those very difficult decisions. we have a really specific narrow, but important mandate that we do that you've given us and we try to stick to that and so we take your policies as given and we conduct monetary policy with that. >> i don't want to draw you into any kind of a political response, and i have not read all of this project 2025 document. i read some of it online, but even whether it comes out of

2025, or 3039, one of the things i'm concerned about, reading this from this little document, the document argues that the federal reserve is the inflation problem and eliminating the federal reserve and imposing the economic policy on the fed does not come from within the fed. so i'm wondering here, would you agree with any of that that i just stated? >> i would just say, first of all, we're certainly fair game for any criticism people have. i think we've -- what we've learned and what we know is that having an independent central bank is really essential, if you want to have high and volatile inflation, then the quickest

road to that would be to undermine the independence of the central bank, of the fed in our case. soy frankly think that our view is very widely held. i find up here on capitol hill, in both political parties, so -- >> so eliminating the federal reserve is best for promoting economic stability? >> yes. >> thank you. i knew that our chair, that our ranking member was going to come in and deal with the issue of housing. she always does, and we all appreciate the fact that she's obsessed with it. and i like that obsession. but i'm wondering, as we try to figure out to deal with this issue, oh, my goodness -- my times up. >> was that a question? >> i didn't finish it, but i sure -- yes, if you knew where i was going, please. >> gentlemen's time has expired.

we'll now recognize the gentlemen from new york, mr. gaborina for five minutes. >> chair powell, thank you very much for being here today. based on some comments made today and yesterday, it appears that you've made quite a bit of progress to the changes on the basel 3 end game proposal and very close to the substantiative of those changes. i know you won't get into specifics, you said that, i don't know how deep you won't get into them, but i want to confirm what you said to my colleague. there will be -- you're not re-proposing some things, it's just going to be a partial reproposal? >> that's what we're looking at doing, is major things that we've been working on. and if there will be additional changes that will be made, that won't be re-proposed. that's what we're working on rather than a full wide proposal. >> so just -- it's not a complete re-proposal, just kb partial? >> yeah. >> can you tell me at least which components?

>> until it's all agreed and ready to go and vetted, i'm reluctant to rye to get into too many specifics just because, when you're doing these things, nothing is agreed until everything's agreed. >> i'm not asking specifically your changes -- if you're willing to say which parts -- >> i hope to be able to come to you with a really clear answer on that soon. i think we're ready to go at the fed. >> okay, that's my next question. so it's been said several times that you and many of your members at the board are at odds with your counterparts over how to proceed with putting out a proposed revisual for comment. so if they're not yet on board, who is holding up this consensus? is it chair bloomberg, director chopra? >> i don't want to say that we're at odds. i just want to say that we're working through this issue together -- >> someone's got to be holding it up? >> well, you know, we're -- it's a discussion that we're having, and i think it's been constructive, and i think we'll try to keep it that way. >> can you at least answer

whether or not the five-member fdic board needs to sign off, or can you just go to the chair? >> no, i think it's the board. and of course, the comptroller is one person, but i think -- i mean, the fdic can speak for themselves, but i think their board would be the question. >> okay. one final question, before i move on. you mentioned yesterday that a reasonable prediction would be that basel would not be until the first quarter of 2025. under this timeline, would it be safe to say that implementation would not occur until at least the beginning of 2026? >> again, i can't be that specific. and you know, that's -- someone asked me, does it sound like the first quarter of next year might be -- it might be. there's a range of times it would take. the thing is, as i mentioned, u.s. banks are going to be living with these rules for many years. the point is to get it right, not to do it quickly. we want to get it right, listen to the comments, make sound decisions and move ahead in a way that is, you know, gives us a sustainable set of rules that

we don't have to come back and fix all of the mistakes in. >> thank you. i want to move on to another topic, long-term debt. you mentioned yesterday that you would like most likely not move forward with other rules until people reach a place of understanding and acceptance of a revised basel proposal. i hope that's the truth, as banks need to fully understand the implications of a basel proposal before any action is taken on long-term debt. finally, chair powell, i would like to emphasize the need for the fed to conduct a comprehensive data-driven and most importantly, transparent assessment of the current liquidity framework. so very quickly, will you commit to conducting a public quantitative impact study and a full notice and comment rule making before imposing any new liquidity requirements? >> i didn't catch the first part of that. the first part of your ask? >> will you commit to conducting a public quantitative impact study and a full notice in comment rule making before imposing any new liquidity liqu.

some of these are novel ideas and we understand that. >> as the chairman said before, these exact studies are very important, because they're to show what impact these rules will have. i think that's very important that we have that, because we had a mucked up process with basel 2.0, and i don't think there's -- we don't want to repeat that. and i have a little time left, i'm going to yield to my colleague from pennsylvania, mr. m museick, because i know he had another question. >> i thank my colleague. pack to what we were talking about, the price instabilities of groceries and gasoline, where we have somewhat of an affordability crisis, as it's been termed. with lowering rates in the near future be a pro-growth initiative, perhaps? is that something that's being considered that would actually drive investments and give a clearer picture for investments? and perhaps help in these two categories and in the end, increasing