gain for the dow so building on the gains at this point. a lot can happen with j. powell testifying before congress we'll see what happens as we get closer to that but the ten-year note, this is what stocks have been keying off of every move grow see in the ten-year, 2.89% for now. that does it for us today. make sure you join us tomorrow now it is time for "squawk on the street." we are one hour away from jerome powell testifying on capitol hill for the first time as fed chairman. of course, we'll bring that to you live good tuesday morning welcome to "squawk on the street." i'm carl quintanilla powell's testimony was released a half hour ago. we'll see what the q&a brings. europe is a bit lower. ten-year as you saw below 2.86

and the parent of this network challenging 21st century fox by offering to acquire uk broadcaster sky for $31 billion. the share is higher than the portion to buy sky it doesn't already own. comcast's chairman and ceo spoke about the bid on a conference call moments ago take a listen to brian roberts. >> when it became clear it was not only sky for sale but that every share was potentially going to have a change of ownership, we thought now was the time to make a superior cash proposal >> and that is exactly what they are calling it a superior cash proposal >> and it is now, that proposal word is important having to do with uk takeover law this is actually a proposal under 2.4. they need to go to 2.7 but it doesn't mean or take away from the significance or seriousness. they just have to get their financing together they haven't gotten the board approval

that is all technicalities for the bigger picture, which is as carl just said, the $31 billion cash all 50 versus the 1075. timing was the key for fox unable to get the regulators to give them the go-ahead otherwise, this deal would have been long done remember, it was announced in december of 2016 that fox wanted to buy the remainder of sky it didn't already own things have changed a bit since then as we all know with fox's decision to sell most of the company to disney. now, comcast was very interested as well in competing with disney in trying to convince fox to sell many of the assets to it. many are asking me this morning, of course, as you might expect, what does this mean for that it doesn't mean anything in the sense of this is an asset that brian roberts and comcast have wanted potentially for time given it is content similar to what we have in the states with

the international presence, that comcast has not had. it has sports and news, two areas we are quite familiar with, but it does not necessarily mean that comcast will not come to try to play yet again in competing with that disney deal to acquire those fox assets if, in fact, you get a positive ruling on time warner/at&t. there's so much going on in terms of this deal, but what about the bigger deal? that said, you have a 39% opener ship stake that fox already has here fox and disney are not supposed to talk about that fox is continuing to try to buy that of 61%. and does disney want to compete with come past here? or do they want to say, perhaps we'll compete and let you take it or is a deal being done in the bigger sense where disney says, we'll save 39% when we get to own it if you stand down on any challenge to our deal to acquire

the fox assets. >> let's back up in terms of the fundament. comcast has long told us that they want to be more international. david, who needs this asset more >> well, comcast needs this asset in some ways you can make an argument. because of the diversity that would involve in terms of the business, the footprint, the concern here in the united states about how investors will view the decline in video subs that we all know will continue despite what are not particularly bad numbers or the contrary opinion that says broadband is the far more profitable business and not to worry. nevertheless, you may want to construct the portfolio differently to give them a construct on it. you can make the argument that comcast needs and wants it brian roberts is one of the most aggressive executives out there. i have been reporting on his

interest, not just in thassets r this but overall he likes to play this guy made a hostile bid for disney remember that? this guy pulled out at&t broadband from at&t and managed to get that done he's aggressive. and he's being aggressive here. >> it would take comcast shares to the mid-20s spooning it around the globe and we talked to brian in south korea a couple weeks ago, not specifically about fox or m&a, but the degree to which in this case they said they would be be changing or adjusting their target leverage. take a listen. >> the world is changing and so every company has to constantly reassess how do you feel about your business we think for comcast universal, we feel really well positioned and nbc's in first place we just came off the fabulous year at universal theme parks. cable we had a terrific

broadband sale again and that is wi-fi that is more important. we have the best wi-fi so our products are good, our team, our leadership i'm really proud of and so i don't feel the need how do we add value for shareholders and nbc universal is a perfect example seven years later. we have almost tripled in cash flow and there's a lot of value in our stock because we own nbc universal. so i think that is our job we have a high bar, love the company we have, and it's an exciting time to think about new things >> there's a wonderful montra at the company, which is profitable it's always been the montra of all corporate companies. it is the ethos. but david, growth must come in a way that is organic and not zero

sum. when i look at fox sports, i think to myself, that is still nascent in this country. not any different when tim cook says we must be in india, apple. why? because that's organic growth. how much organic growth does sports still have in europe? because i can tell you, in this country, it isn't. >> it isn't. and up don't know the answer, jim. they were encouraged to pay less for the rights to soccer, a certain part of it that had been previously believed it would and that was somewhat encouraging to them. sports is very important to the portfolio. you know that overall. but i don't know the answer to that overall i can tell you when it comes to this leverage issue that brian raised with carl when talking at the olympics, this is being embraced by investors that said comcast is typically conservative when it comes to

that and therefore they are happy to see the leverage turn up a bit it would come down quickly with a cash flowing company overall, but this is on the conference call that took place about going up three times and adding the 23 million customers at sky that said, big picture here, guys, as well, it's not the greatest if you own 61% of something. there is a benefit to owning 100% it still would be a good deal. it would be a better deal to own 100% or conversely, if disney owns 100% there are benefits to having it fully consolidated >> well, this is one that you have been from day one saying that we have not heard the last of comcast mike cavanaugh, very conservative man, these are not numbers that many companies can handle the cash flow here must be enormous to be able to fund this bigger than i thought from last quarter. >> that won't be an issue. the financing is not an issue.

the company won't be able to do that fairly easily by the way, again, this is going to go on for quite some time the regulatory approvals, they have already started that process even though they have not gotten the board approval. remember, it's a proposal under 2.4. it will go to what they call 2.7 to be a formal offer in the not-too-distant future the regulatory will go a long time by the way, fox was in a position where, in part, that seemed to influence their belief on selling the assets to disney. they were not going to get the requisite approvals they needed because of a number of different opponents in the political sphere in the u.k. >> i think part of the story is understanding what sky is and how it might fit with things like comcast x1. for that we go to jeff cuttmore in london. >> reporter: if you look at the european landscape, chi is the business that looks most like

comcast's media assets at the moment it has broadband, it has television, it has mobile. and it's also a content creator. and the recent win for the premier soccer rights for which they paid 3.5 billion pounds means they also have a critical sports franchise for the next three years. so brian roberts, i think, understands very well the kind of business that he would be taking over. and you know what? the multiple is not too stretched at this point. the bid that fox had on the table at 10 pounds 75 p, valued the company at over 18.5 billion pounds what we have seen from comcast is a bid that lifts that now to 22 billion or 31 billion dollars in your money, which is a 16%

premium. but the analysts say even on that takeout price, we're only talking about a pe of 22 times on the sky business as it exists at the moment. so that is the math. and very quickly, just to come back to david's point about regulators here, the politicians in this country are very uncomfortable with rupert hurt doc these days, all sorts of bad issues in the past around phone hacking and his newspaper businesses and at times they talked about him not being a fit and proper person to run the sky business going forward. so i think it's hard going for fox at the moment to make this deal get over the line and they would have to come up with quite a bit more money, i think, to make that a better deal than the comcast one that's on the table at the moment back to you guys >> certainly a big part of the regulatory argument on the comcast part that the u.k. is

murdoch heavy. we'll find out over time what regulators think thanks, jeff still to come, we'll take you live to capitol hill with the new fed chairman jerome powell testifying in front of the house panel today. s also ahead, looking at palo alto networks. we'll talk to the ceo who happens to be on qualcomm's board. and the s&p moves the last three sessions, they have not had three since brexit we'll have more from "squawk on the street" in a moment. when this bell rings... ...it starts a chain reaction... ...that's heard throughout the connected business world. at&t network security helps protect business, from the largest financial markets to the smallest transactions, by sensing cyber-attacks in near real time and automatically deploying countermeasures. keeping the world of business connected and protected.

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now you can get it, too. welcome to the party. live shot of the house and financial services committee where jerome powell will make his first testimony as fed chair in the next 45 minutes or so in the meantime, we'll head to rick santelli at the cme group on a busy chicago already. rick yeah, carl if you look at the ranges low to high that we have so far, they are pretty interesting but the real issue is how they have ended up. look at the intraday of two-year, obviously there's not a lot going on, but as the market expected mr. powell and his texas release in durable goods to be weak, we had volatility you also see it on the intraday ten-year in the intraday boon, the similarity is on the rates at

least escalated at 8:30 on the dot. and it is more aggressive. i'm mostly thinking it is weak durable goods. mr. powell at least the lead-up to him seemed to be a positive so rates moved higher. and as you see, if you look at the dollar index, it's one of the markets that stuck to some extent, but it is still early in the day. and finally, you know, for those of you out there that are technicians, we have talked about the dollar index a great length about how it couldn't get above the mid-point in the year. if you look at the low closing for 2018, which was 90, 60 or just barely trying to get at 90, we'll look at the euro versus the dollar this is a lot easier look at the year-to-date chart see the mountain range in there? that's a double top at 125 i'm not saying all double tops prove to be great resistance levels, but in foreign exchange, sometimes they do. it's a pattern they pay close attention to weapon continue to monitor what is going on with the curve

there doesn't seem to be curve implications at this point and i do realize we had steepening when the volatility was big and the vix was big and the stock indices were really wild, but it seems things have settled down we're seeing the current flat, maybe that's an indicator we have at least temporarily put in a top of 295 on a closing ten-year basis let's see. we have the whole gang, carl, jim, david, the three musketeers back to you. see you in a minute, thank you. we have a full screen on what powell said in prepared text, the fomc will continue to strike a balance between avoiding an overheated economy and bringing pce price inflation to 2% on a sustained basis. he said market volatility was not weighing on the market outlook. so the risks are balanced. he said that former headwinds have turned into tailwinds, things like fiscal policy. >> he sets the tone for rate

increases. i just got to say something, this guy is a pro. j. powell is a pro there are a lot of people that might just say, the first go-around, he knows what it is going to be like this man demonstrated from minute one, i have known him for longer than i care to admit, but this is impressive and this is not a man who is looking. he is coming to the forum at this moment to say, we've got this under control and will continue to do the right thing and i think maybe somebody is going to try to throw him off his game i have never seen him thrown off his game. >> he is an attorney by training he's not the labor economist like we have had from cal and from princeton the last couple of times. >> by the way, can i just say, he's got a great sense of humor. so it's not like he's going to be dry if -- >> so you're telling me we could have an exciting testimony here? >> i'm saying it won't be one of the showdowns where elizabeth

warren says, you know what, i want to talk about wells fargo and what they did. and i think he can be rye and say some things that will be serious. but he's not going to be trapped. he's too wiley, he's too smart and he's too light this is a good different person, he's a practical person. and yes lawyer, yes, banker. i think it will be, not an exciting time, but the opposite. >> you think there won't be drama. >> do we want drama? if i want drama, i'm going to netflix. this is not going to be "the punisher" so to speak. >> interesting the first nomination did meet with gop resistance if you recall this is a different time, of course different political environment. >> true. some people are delighted. they don't see the delights.

but i think many are going to say, wow, this is good right from the get-go. we have somebody to do it right. there are a lot of bears who need the market lower because it is uncontrollably higher there's going to be some who parse the thing to say, he made a mistake there about real wage growth or something. it's a big gift. >> we'll see what q&a brings in 40 minutes we'll get cramer's mad dash in a moment, countdown to the opening bell, we'll look at the futures as the nasdaq recovers from the sell-off lows the sell-off that bottomed february 9th and the s&p is 3% from the all-time high. back in a moment gglobal bonds, and high-dividend strategies. sure, these are investments. but they're not what people really invest in. what people really invest in, is what they hope to get out of life. but helping them get there takes a pure focus.

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we are looking at macy's and seeing resilience that they are all going out of business. >> kohl's was the first to show it he made a statement as ceo we are not going to defend the company, we're going to play offense. how do you play offense? we're going to fix the balance sheet, we're going to cut the debt remarkable. then we'll turn the com stores around we'll look at how queens is different from how short hills, new jersey, is different

david, i think the key takeaway is that january was strong, too. so once you get a momentum in a turn in retail, it is not a one-quarter phenomena. this is a person who is changing the face of macy's and also monetizing land as the star board wanted but i'm quite impressed. they are committed to com sales growth in 2018 there will always be people cautionary in rear guard action. so many people will miss this. if it comes back down, that will be good news for people. >> bears are already chiming in. this is as good as it gets. >> well, it is interesting when people are that wrong and want to declare that. i always enjoy people who have the right to be as wrong as they are. maybe they should spend time in the district like i have substantial time it is not a one-quarter phenomena. i went to law school

there's nothing in there about being able to -- you're allowed to be as wrong as you want or stupid. protected by the founding fathers. believe me, that's jefferson and madison. we have opening bell coming up we have a lot more to get to in terms of stocks. and mr. powell will be testifying on capitol hill this is going to be his first testimony as fed chairman. that room will be filling up soon we'll take you there live back after this

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and infrastructure upgrades that help us share our produce with the world. all across new york state, we're building the new new york. to grow your business with us in new york state, visit esd.ny.gov you're watching cnbc's "squawk on the street. live from the opening bell in 90 seconds or so, the fed goes to the hill we'll see him in front of the senate on thursday we have covered the news out of comcast and sky. i'll keep track of that. overall in the markets, the nasdaq 100 falls 12% in ten days and in the following ten days, it's 1%. is this a true v-bottom?

>> well, loorks itk, it's a gre point. i think the margin outplayers from the various vix strategies did create an opportunity then filled by some really, really good quarters of companies this would be theoretically retracement we are finished with, but then we come up to palo alto, to speak to tonight we are coming up with a company called pegasus integral to psn you end up with good numbers and boots on the ground. good numbers, good numbers we can put what happened behind, but we must understand that the speed with which we came back, i think, does worry people it worries the person at home. is it really that kind of asset that can be worth that much and so little again? let's keep that in mind. >> that's a really good clue about the sentiment. let's get to the s&p at the

bottom and the opening bell at the nyse it is international polar bear day. so canada goose rings the bell at the big board here celebrating the first listing anniversa anniversary. over at the nasdaq, mobile media provider of storage solutions. you guys covered macy's and it is not the only good retail store. dillard's comes in with 3% comps looking for 1% stocks up 30% in the last few months. >> i think it was pretty much universal that brick and mortar was dead and what obviously happened is that brick and mortar is changing one of the things that jeff is stressing is that our omni channel is now working there are questions about it,

like using amazon services and the google platform. but retailer who is as who are become savvy after spending fortunes on the web with their omni channel and it didn't work. now everyone is getting more sophisticated. so you're seeing not just the brick and mortar strike, but go over the kohl's quarter. these companies have a presence online and i know this sounds a little bit -- i hate to say it, but buy online, purchase in store, these are works. so what i'm saying is that the web is no longer their enemy it's become their friend and that is important. along with the strength of the consumer, which that is something that -- >> is that something that can be maintained and can continue for a long period of time? >> well, i've got a piece in front of me. amazon private label sh advertising thoughts, amazon is

always going to be relentless in its pursuit. brick and mortar could have certain wrinkles ahead, little geographic love for queens versus as i mentioned. but i go back and study, you have studied retail, my family is from retail, it is never one quarter. it is never one quarter ever it is always four quarters minimum. and this is q1 you can't get a turn in retail and have it go away this quickly. it's important >> macy's, by the way, the first quarter of comp sale growth in three years. and they will return to full year comp growth in 2018. >> they showed laying that january is strong. that's not supposed to be happening. >> macy's best day since november 9th followed by a bunch of other retailers, nike, but footlocker, gap, kohl's,

nordstrom -- >> they are taking this ahead of the other quarters footlocker is at the end of the week some will say they get ahead of the skis someone is going to miss s i come back to say this is the hot group. everyone, after kohl's, could still have a higher move remember, footlocker is nike adidas is doing better and the level of seriousness which he has come back and the team envy assembled and the inventory being so low the only one i'm concerned is tjx. they executed that poorly in the last three quarters, but they could put together a good number even tjx. >> so the retail renaissance continues. renaissance. okay >> i like the retail i think it is great. i have to salute everyone at 19 said this may not balance yet.

when i met with him during that period, he was talking about how to make it so there's better shopping spree, the hangers. wanted better hangers at malls i mean, this intention to detail is sorely lacking, but the double-digit is very exciting. >> comcast shares are getting hit hard today, sorry to say, colleagues we should point out it is the parent company of nbc universal, hence cnbc which is part of nbc universal shares down 4.5% after the decision to come after the 61% of sky that is not already owned by fox fox had a competing bid on the table and has been trying to get that deal done for well more than a year and unable to do that fighting with u.k. regulators here comes comcast getting in the game our parent company is, both here because they want to own the asset or control the asset, though they won't own it outright, unless either fox and/or disney if it completes the acquisition of the fox

assets owns the 39% and decides to sell it to comcast. but they will own a controlling stake in what is a company with 23 million subs, distributes and owns content, sports, news, amongst that, certainly two areas comcast is very familiar with but guys, it also raises the larger question still that we don't have the answer to, will comcast try in some fashion to compete with the disney deal to acquire the fox assets we have reported in the past there was frustration on the part of comcast and the ceo brian roberts in terms of the inability to get fox to consider in a real way selling those assets to comcast. fox wanted disney's stock. they thought the prospects for disney, frankly, were better than for comcast over time for any number of reasons. you can't force fox to sell you the asset. you may be in a position to s l

sell, but murdoch's voting stake, some 39% or so of fox shares, you can't get it you can make life very difficult for rupert murdoch, but if he chooses not to, there's no way to force him to sell the assets, even if it is potentially a higher price we have yet to see the proxy on the disney deal. to sort of understand what exactly went on there, who bid what and how though we have reported on it a lot. and time warner at&t will be the key for decisions beyond today's competing to try to control sky. if that should go to time warner's way, many believe comcast will try to mount yet another offensive, even in the face of a deal already signed. >> i work for comcast, and when you see this decline, it kind of takes your breath away. >> it is picking up, down almost 6% now some shareholders are not

particularly happy with the belief that being emboldened they are going to try to be as aggressive as possible that's what you get. brian roberts has always been incredibly aggressive when it comes to deals >> and not just -- >> remember the mall >> he came to compete for time warner cable, too. that didn't work out he got nbc universal from ge made a mohostile bid for disney that went nowhere. and the man keeps coming >> but a history of short-term hurting stock for longer-term gain >> willing to take the pain. >> it is family business to some degree those of us who are along with him have learned to take the pain. >> it doesn't make today any less painful. >> well, yeah. >> well, hit me over the head with an anvil.

>> it's a low for the year on comcast to take you back to early december or so that's at 37.25. citi makes a top pick to call it the micron of 2018 there's no other semi company with the fundamentals are improving this much and the sentiment is that bad. i use the word terrible. >> i love that piece i'm a big believer that brian is reinventing the company's data center mobile eye. he's consistently underestimated out in silicon valley. he is consistently putting the numbers together since he came in it is a very inexpensive stock they sell at five times earnings, which seems wrong after hp ink talked about sales being up but talking about semi, microsemi. >> that's reported by the journal as a potential deal,

yeah. >> i think what is happening, this is a trying of the semiconductors to get back some of their power in the face of the consumers. when you spend time with him, he's cerebral and understands where the world is going he's someone who is not a salesman he's someone who understands autonomous driving as well as anyone i've ever met he understands data center and he's somehow not given the respect he's deserving of. i like the piece >> speaking of chips, different chips, but we have not talked about our favorite subject, broadcom/qualcomm. broadcom sold at 79. we're getting closer to the vote on march 6th there seems to be some confidence in the broadcom camp. but will they take control of

the board? qualcomm dud produce a non-disclosure filing. but everything they put out there at this point, the merger agreement they proposed, it's not what they were asking for when it comes to antitrust but it might as well should be >> it is sheer hell if he agrees to the prices that qualcomm is talking about. it's kind of like building a ridge over the river and say, what have i done it's going to blow up. >> meaning you don't think he's going higher. >> the prices that qualcomm is talking about in good faith -- >> we don't know you get in the room and negotiate, the price doesn't necessarily -- >> 88? >> maybe 87 don't you think tough to say no to 87. >> real hard even if you put 12 times 7, you know, we are talking about the earnings per share price ratio but i have to tell you, i want

to hear mark mclaughlin talk about it i'm going to deal with cyber security to make your job harder than mine. >> did you see the acorn this morning? i don't know if you though this thing worth mentioning now the company is conducting an independent investigation using external experts into the data integrity requirements related to product development at acorn. akrx down 30% this morning. i don't have great integrity >> it is a $12 billion deal that breaches fda data requirements

to me, that's an optimal situation. >> it is suboptimal today >> for shareholders. >> almost a third of its value >> no, i'm going to say no to that one if i was someone who is trying to buy that company >> okay. when we come back this morning, history on capitol hill as jerome powell gets ready to deliver his first testimony to the economy as fed chair we'll bring you live coverage with the q&a session with lawmakers. palo alto's networks react to better than expected numbers. we have the dow up 23.

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you have been on "mad money" with me for six years. this is the most bullish i have heard you be how come there's such a step function and more importantly, last year at this time, we had the big decline. you said it was execution. those are clearly soft. >> thank you for having me this morning. we have really been pulling ahead of the market as you can see for quite some time. we did have sales execution issues behind us playing out in the numbers. just posted a 28% revenue growth quarter. i think the market is clearly coming to the platform approach. >> let's go over what you're doing with amazon web services you also call microsoft azure and you mention google cloud platform you're talking about, i think, a new level of cyber security. i guess you're kind of calling it cyber security 2, which is that there is a great worry for

companies to be able to migrate to the web you have been ahead of this game talk about that amazon remember services deal you singled out. >> yeah, absolutely. so in security, we have been driving evolutions we call them in the security market and they build on each other we are on the third evolution today, but one of the very important parts of the evolutions is what we consider consistency of security data so sometimes data will be in your network, sometimes it will be on end points and increasingly data will be in the cloud, including third-party cloud providers like azure or gcp, for example one of the platforms is that we can consistently provide the exact same security outcome in all those data locations and we have been doing that for over five years now working with the cloud providers to ensure we can do that in their environments in a very native way. and that is what we have discussed on the call yesterday was the continued work with aws, azure and gcp and others to ensure we can make that real >> mark, let's say we get a credit suisse piece more aggr s aggressive than you were and you

called it an outright win for cisco. palo alto is undoubtedly gaining share from competitor cisco, checkpoint, fortnet, giving superlative results at scale it appears the company continues to recover from miscues and missteps when you win a deal over one of the other companies, how does that work? because it's really hard to dislodge a competitor in this business >> it sure is. and the ability to do that is because security is so important. so obviously the incumbent has a very unique advantage as an incumbent, but when it comes to security, you have to get it right. it's so important for companies today, for everybody, so you'll have to pay attention to what the best technology in the market is. you can see with the growth rates, at scale, by the way, a couple billion dollars, so we are one of the biggest or the biggest company out there, we clearly have to take market share with the market growing 7% to 8%. we are putting up 28% revenue

growth we are taking share from everyone including the companies you mentioned. >> mark, we watching, obviously, business equipment sales and data and the light of tax cuts the new noneffective tax rate goes from 38 to 22 what does that allow you to do now? >> we are paying lower taxes in from what we can do with the extra money we save, we'll invest that into the business. we have eps appreciation from that, which is great we got about 11% pick-up from the tax cut act in this quarter and expect 36 cents for theful year but even aside from that, we were handling the good eps already. >> mr. mclaughlin. we are looking at the board and believe the 82 offer or the $79 offer is insufficient. but a number of the directors, i'm curious to your reflections on the meetings on the price you

want us to take. >> i have been doing the shareholder meetings myself. qualcomm is very important in the technology space and it has a great board 9 of the 11 members are independent. it's a very independent board. it is laser focus on the board level in maximizing shareholder value, including the conversations with broadcom. >> which means what at this point? what are your expectations as we head into that march 6th vote? do you believe that the board is going to remain the same or do you think a lot of directors will be changed? >> here's what i have told the shareholders is, you have a board very focused on maximizing value for you, the shareholders are doing that a change in the directors right now, i don't see how that will help anything. and frankly, it will slow things down we are very edge gauged with broad dcom and price discovery and things the shareholders want

us to do i don't see why there needs to be a change. >> thank you, mark thank you for the latest on the qualcomm situation delivering an excellent quarter at palo alto at an all-time high and deservedly so. when we come back after a month of being sworn in as fed chair, jerome powell is preparing to testify before the house panel and answer lawmakers questions on rates, inflation and the economy. we'll bring that to you live the dow is up 32 points. we are back in aine. mut

we are going to hear from the new fed chair jerome powell in about five minutes. we expect testimony to be read and q&a afterwards we'll bring it to you live the dow is slightly in the negative let's go to cramer to stop trading. >> there's a fantastic multi-page coming at you, a thesaurus. everything i've read in the presentation i like, but this is one of those when we talked at the top of the show when stocks move so much, what can it possibly do for you? the answer is, well, maybe this

is one of the reasons why it ran. there's nothing in here that doesn't encourage me and rate hikes are a holy grail for them this is an example some people may want the stock to come down my take is, please come down >> the broader points they make, macro credit trends are good, low risk of recession, rising rates, you made the point, and tax cuts are the four big ones >> this is -- it's the time for the banks. and i think one of the reasons why they have been leaders is that the story is so, so positive i don't think there's anything in here that is going to make anyone feel anything other than this being a really good story so if it comes in, we have to buy it and that is exactly what is going to happen. people will buy this stock >> jim, what is on "mad" tonight? >> we are kind of going pretty freelance tonight about some

stories that just turned tech. i don't think people realize it, but it turned tech it happened in the least tech term responsible. >> so you're not telling me what it is. >> but you know what it is >> i do? >> yes it's a remarkable term that is admirable and i'm happy about it. >> it makes me want to tune in >> you should tune in because sometimes the good guys win. >> all right, jim. see you tonight. "mad money" at 6:00 p.m. for the first time as fed chair, jerome powell will deliver his capitol hill testimony on the economy aine.overage is headed your way in mut at ally, we're doing digital financial services right. but if that's not enough, we have more than 8000 allys looking out for one thing: you.

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history on capitol hill. fed chairman jerome powell will begin testimony in a moment. welcome back to "squawk on the street." i'm carl quintanilla a quick check on the markets, obviously, investors are keeping their cards with the dow and s&p

down one the big news is durables for january down 3.7 we were looking for the first back-to-backdrops in equipment spending since 2016. more economic data is crossing the tape and now we'll go to rick santelli in chicago for that thank you, carl. we expect the february read-out on consumer confidence obviously, we have had lofty numbers as of late 130.8, much higher than the 126 and change we were expecting it's eventually following 125.4, which is unrevised and just to put this in a little perspective, if you look at 128.6, that read was november of last year, which meant it was the highest since november of 2000 so now we have to go in the way back machine 130.8 is the best number since

november so a very strong read takes to it a strong read still comping the same interest rates. they just popped up a smidge on the long end, but what we are concentrating on, of course, is mr. powell's first testimony in front of the house and many traders are glued to that. carl, back to you. >> rick, thank you very much rick santelli. on the left-side of the screen, a live shot of the hill. the new federal reserve chairman jerome powell will deliver the semiannual monetary policy before the house of financial services elan moody is with us. help set up what we are seeing here >> he said he does not see it as weighing heavily on the economic outlook going forward. the job market is robust consumer spending is solid and he expects wages to rise at

a faster rate as well. and twice powell mentions that both exports and fiscal policy being increasingly stimlative, those are the tailwinds for the economy. he also knows the housing market is slowly improving. on inflation, he characterized it as slow and stable. so appearing to suggest there that the pickup in the data really just underscores the fed's confidence to hit the 2% target rather than stoke the fears of overshooting down the road still, powell said the fed is monitoring inflation developments closely and the risk to the economic outlook is roughly balanced as for rate hikes this year, powell says he sees further gradual increases. again repeating that word further as a sign that the fed is growing in its conviction, that it actually raise rates but not boxing themselves into a certain number he also said the balance sheet runoff is progressing smoothly

and again, guys, with this being his first appearance before congress, we'll see if there are political fireworks. he did say he personally feels that monetary policy rules are helpful. back to you. >> we can see the fed chair taking his seat now. thank you for that as he's getting his picture taken. in the meantime, we'll check in with the senior economic supporter steve liesman back at hq we have been having this conversation for a few weeks now. he's a banker, not an academic he's an attorney could this be different than the last few years >> i think it will be different. it may be more boring in the sense that at this moment j. powell doesn't want, i think, to create any waves in markets. he likes the handoff that he's gotten from yellen the stability in markets is a little higher in rates i think the volatility does not concern the federal reserve. but one word stands out to me. and that is what you do when you are a fed reporter you look for new eng wanlg

and the word overheating is the key here and it really characterizes the difference between the beginning of the yellen term and the beginning of the powell term janet yellen came in with an issue of, we have a little bit of growth, are we concerned about deflation? now the debate is lower inflation or not as high as the fed wants it and potential overheating. and it really shows, carl, how the tax cut has changed the game for the federal reserve and for the economy. >> he's really going to have to walk a tight rope, steve, when asked. i imagine he'll be asked whether or not hebelieves the tax cuts will spur 3% gdp and what impact that will have on rates. >> i think that is right i think it is probably useful to say that economists don't really or the federal reserve don't really care very much about the actual number. that number three is a political number i think the fed will think in terms of growth, that's above

potential and how much above potential. but 3 or 2.8 or 3.2 doesn't really matter so much to the federal reserve. i think he gave a hint that he sees the potential for potential productivity growth from the tax cuts and thereby higher wages and also increased growth without inflation, but like randy said yesterday, the vice president of the company and new fed governor, he's not quite willing to say that yet. it's a wait and see. but he'll look at inflation running somewhat below the fed's potential. and the potential for overheating. >> steve, our friend john brady wrote this morning that, in terms of what powell needs to say, just keep it on the fairway, he writes market and economic conditions don't really warrant any pressing communication needs right now. is that true >> i do think that's right there's a need for the market, and especially the fed observers out there selling billions and

trillions of dollars in treasuries to understand how the new fed chairman will process incoming data. kind of recalibrate the reaction function for the new fed of course, we're missing four members of the federal reserve board. so there are other three members of the board right now, so it is totally hard to recalibrate, but we'll have to understand how he processes these things and we'll hear a little bit of political sport, how the fed chairman deals with the political questions that will be asked. let's not forget that the real purpose of this these guys are not working for the market, the senators and congressmen out there, they are working for their own political career think of the fed chairman in this context as the bank of a pool table where they are going to try to get things going at him to see how they bounce off so they will talk about the deficits and you'll see the republicans try to ply him with questions about how the tax cuts will increase productivity. depends on the kind of political

points they want to score. and we'll see how the fed chairman wants to play the political game here. >> yeah, we often see that a little more overt on the house side as well steve liesman, we'll come back to you later today and we'll continue to monitor the hearing and take you there as soon as the chairman begins his testimony. in the meantime, we want to get to some of the big news this morning involving our parent company comcast, which is challenging a deal already in the works for what fox would have been the 61% of sky broadcasting it doesn't already own. this morning, early morning, so that it could be, in fact, they were in london for the announcement comcast unveiling an offer that is a significant premium above the current bid from fox to buy what it doesn't already own of sky. and overall would value sky at $31 billion. that's if they were to buy the entire company of course, all that is currently available is 61% it is a bold move by comcast at this point of course, inserting it into a deal that has taken far longer

than fox had ever hoped it would. in fact, that is the reason comcast is even in the position to make this bid because regulators in the u.k. have held up this deal from ever closing. it was announced back in december of 2016 that was fox's bid to buy what it didn't already own or control of sky broadcasting for comcast, well, it is an international asset. one that is certainly attractive to the company that has been looking beyond the borders of the u.s. to diversify the revenue streams outside the u.s. they say it would be free cash flow per share in one year post close. it would take leverage of the company up to three times at this point immediately following. and then a lowering it from there. it would add sports programming, news programming and distribution to the comcast fold, all areas that it is very familiar with. and it also raises the larger issue as to whether comcast will continue to try to put the pressure on to buy the assets

that fox has already signed a deal to sell to disney and that is another reason why you're seeing disney shares down this morning as well comcast shows getting hit hard, but disney was down 3% this morning on the news that this is perhaps the first of what will be a follow-on effort by mr. roberts, brian roberts, the man who runs our company, to continue to apply pressure to stop the disney deal and force somehow fox to sell them the assets they currently have under contract to disney that would be a long shot, but mr. roberts is not afraid of long shots he's been very aggressive in the past many, many times. whether it is a hostile bid for disney he undertook years ago, or prying at&t broadband out of at&t to create the modern comcast. whether it was the ge universal deal or the accrual of time warner cable which they failed

to do. brian roberts is also aggressive and in this case, it's the sense of being in the game we'll let you know where it goes from here. certainly they do want to only own 61%, but it would be controlled. >> seems willic a bidding war brewing ear? >> possibly. fox has to make the decision to go higher? that's a disney decision in a way given they would be the ultimate owner here. and you can allow leverage on the comcast part to say, well, sell us the 39%. we'll bring in larry halver ty tom rogers, good to see you. you know brian roberts, pretty aggressive guy, isn't he >> he is when he goes after something, he tends to get it, at least in the latter years

>> does the deal make sense to you, tom as a comcast shareholder may consider it, or does it worry you because of the time, the effort and obviously the expense? >> what seems like chaos in terms of multiple parties going for assets, i think good for everybody close to this. i think this makes sense for comcast. they are a much more natural owner of the sky assets than disney is. that was always part of the disney fox deal that didn't make a wheel lot of sense in terms of disney's operating prowess, which is huge in the content and theme park area. but when it came to owning distribution, wires, boxes and homes, all the elements that go into operating a business like this, this is comcast's core business this is not disney's core business it would be like netflix making a bid for t-mobile

yes, they have something to do with each other, but from the operating point of view, this makes more sense quite frankly, i think this makes the fox assets acquisition by disney much more pure and a better deal for disney i think it worked out well for murdoch who gets a higher price for the combination of the fox and sky assets i think it provides an easier ending to a tough regulatory story overseas because this is a cleaner shot than a fox acquisition that the regulators have problems with, with the transfer to disney or disney closing the deal and then trying to get a transfer of the assets. i think actually it may help at&t in that directv, cnn, is the sky news it's the same thing. and if european regulators are willing to let something go through in the comcast acquisition, european regulators are tough on the antitrust front, what is it that american

regulators can't see to allow the transaction to go through, rather than obviously the political issues so i think this ends up well for everybody. >> you love it all around. >> it's welcome in good order. >> larry haverty is here, what is your take on this >> it's hard to add to the phenomenal analysis that tom just performed i think, frankly, david, we're watching the battle at fort sumter, and that was kind of the start of the civil war the thing that i will add that tom missed is sports and bob baker started out in sports and the thing that really propelled b sky b is when they got the premier league believe me, when i learned this i was a quick opener sky sports is very powerful. and it is operating in an

economy much, much stronger. and the weak link, which was italy, is moving along, unless they have big disruptions from the election so this is a very desirable asset. when you satellite the business that has built the satellites, but the business does nothing than your cash flow. you are able to finance it if you are disney or comcast at a very low rate of interest, 4% to 5% i suspect on a blended rate in my long career, i have never seen a company that has more intelligently youed leverage than comcast and brian, i think, is way in his circle of confidence using leverage to do this deal disney has, from time to time, been aggressive with leverage, but not as consistently as comcast. >> and people do like that >> bob is not going to let them get it >> you think he's going to compete here >> yeah. >> really? >> i think we're talking the end deal, someone is going to win

20% of 30% above where we are right now. >> let me say right now why this deal had some very difficult elements to it for everybody this is satellite. satellite is not our leading consumer technology today. satellite is not at the forefront of broadband hi-speed streaming, all the ways that people are now moving to consume content. this is a very troubled technology we see it over here in terms of the dish and directv sky has a different position in europe a more commanding position, but if i were disney, i wouldn't want to get into the distribution business on a technology that is already stumbling. comcast is going to have its hands in this business what disney does get out of this, dave, your point is right

on i think disney will find a way to come to terms with comcast to take comcast out of being a bidder for the other fox assets. and very importantly, resolve the hulu ownership issues, which is key to what disney gets out of the fox deal. getting pulled over, having that to be able to function as itself it's a lot of things for a lot of people. >> the important point you raised, they will be able to have the power of their ownership in hulu. tom raises the point that at&t and time warner are going to convey >> let me interrupt you and take you to the fed chair beginning to read his remarks. i'm pleased today to present

the federal reserve's semiannual monetary policy report to the congress on the occasion of my first appearance before this committee as chairman of the federal reserve, i want to begin by expressing my appreciation for my predecessor general janet yellen and her important contributions. during her term as chair, the economy continued to strengthen and federal reserve policymakers began to normalize both the level of interest rates and the size of the ballot sheet together we have worked to declare a smooth leadership and provide for continuity in policy and i want to express appreciation for my colleagues from maximum employment and for transparency about the federal reserve's policy and programs. transparency is the foundation for our accountability and i'm going to clearly

describe what we are doing and why we are doing it. today i'll briefly discuss the current economic situation in outlook before turning to monetary policy. the u.s. economy grew at a solid pace over the second half of 2017 and into this year. monthly job gains averaged 179,000 from july through december and payrolls were an additional 200,000 in january this pace of job growth was sufficient to push the unemployment rate down to 4.1%, .75 of a year earlier. and the lowest rate since between of 2002. in addition, the participate rate has remained unchanged as it has for the last few years given a sign of market strength, given retired baby boomers are putting downward numbers on the precipitation rate strong gains have let to all major demographic groups

for example, the unemployment rate for adults without a high school education has fallen from about 15% in 2009 to 5.5% in january of this year while the job let rate for those with a college degree has moved down from 5% to 2% over the same period in addition, unemployment rates for african-americans are at or be below what we have seen for whites the extent in pickup in wages has likely been damped in part by the weak productivity growth in recent years. turning from the labor market to production, inflation adjusted gdp rose at an annual rate of about 3% in the second half of 2017 a full percentage point faster than its pace in the first half of the year. economic growth in the second half was led by solid gains and

consumer spending, reportedby wealth and upbeat sentiment. in addition, growth in business investment stepped up sharply last year for productivity growth in time the housing market has continued to provide smoothly and been solid in the recent quarters and the demand for u.s. exports has provided considerable support for the manufacturing industry against this backdrop of a solid market, inflation has been low and stable in fact, inflation has continued to run below the 20 2% league that is -- overall, the price index for personalcustomer expenditures or pce inflation as we say increased 1.7% in the 12 months ening in december, about

the same as in 2016. the core pce price index which excludes the price of energy and food items is a better number of future inflation over the same period somewhat less than 20. consistent with this view, the monthly readings were a little bit higher toward the end of the year than in earlier months. after substantially easing during 2017, financial conditions in the united states have reversed some of that easing over the past month at this point, we do not see these weighing heavily for economic and inflation the economic outlook remains strong the robust job market should support consumer spending. solid economic growth among the trading partners should lead to

further gains in u.s. exports and upbeat business sentiment and strong sales growth will likely continue to occur and wages should increase at a faster pace as well. the committee views the near-term risks to the economic outlook as roughly balanced, but we'll continue to monitor inflation developments closely turning to mop tear policy, the company has assigned us the goals of promoting maximum employme employment they are trying to reduce monetary policy and consideration. specifically, we raised the federal funds rate by a quarter percentage up point at the december meeting bringing the target to a range of 1.25% to

1.5% in addition, in october we initiated a balance sheet nor l normalization and has proceeded smoothly these balance sheet actions reflect the committee's view that gradually reducing monetary policy accommodation will sustain a strong labor market while fostering a return of an inflation to 2%. engaging in the appropriate path for monetary policy over the next few years, and bringing pce inflation to a 2% sustained basis. while many factors shape the economic outlook, some of the headwinds the u.s. economy reached in previous years turned into tailwinds

stimulus government -- in the committee's view, further gradual increases in the federal funds rate will best promote attainment of both our objectives as always, half of the monetary policy will depend on the economic outlook as informed by incoming data. in evaluating the stance of monetary policy, the fomc conducts policy rules that connect connections for the possible rate and objectives personally, i find these rule prescriptions careful. i would like to note that this monetary policy report provides further discussion of policy rules and their role in our policy process extending the analysis we introduced last july thank you very much. and ilook forward to taking your questions

>> thank you, chairman powell. the chair now yields to himself for five minutes chairman powell, in your statement, you used the term "normalization." so i would like to explore that for a moment and particularly with excess reserves is our expectation, should it be that this will be the new monetary policy tool, or will it be the fire extinguisher behind the glass you break out in times of emergency what should be our expectation >> mr. chairman, interest on access reserves is current policy we use the tool to keep the federal funds policy in the range we raise we have not made a decision over the framework or something to something look tha /* like that

this gives us control over the rates and the market seems to understand it. >> so it remains an open question >> the long-run operating framework does remain open, yes. >> as you heard in my opening statement, it still remains a concern. you would be hard-pressed to find in the congressional record or any testimony from federal reserve used to market this power. i trust we'll have further discussions about that with respect to normalization, i think you have said publicly that you expect the new normal with respect to the size of the balance sheet to be roughly 2.3 trillion and to get there over the next three to father years do i understand that >> yes

>> in composition to the balance sheet, i believe you're currently traveling 1.8 of mortgage-backed securities is our expectation, that's rough by back in the envelope, is it your intention to keep that same ray owe motion-backed securities because of the allocation decisions. because right now i don't see a glide path to the treasury's own balance sheet. >> no, sir our intention over the long-term is that the balance sheet would be no longer that it needs to be to consider monetary policy and consist primarily of treasury securities we have purchased the mortgage-backed securities in the aftermath of the crisis that was an unusual practice and something we did in unusual circumstances. and those will runoff over time.

and i don't expect that we will use that situation. >> the monetary policy report that came out days ago shows the balance sheet rolloff camps. what i'm having a little trouble with is as i look at the charts in the report, mr. chairman, i don't know -- you don't seem to have sufficient mbs redemptions that allow you to reach your $20 billion runoff pace. so as i read the charts, the expectation is by the end of the year, we're looking at a $50 billion balancesheet roll-off. but as of today, i don't think you have enough in the treasuries, so how do you expect to do that >> with treasuries, you know when they are going to mature and can see what the roll-off is going to be. with roll-back securities, that

depends on the interest rate and the level of people refinancing their mortgages. so as rates go up, refis go down and you see slower roll-off. >> should the public expect a $50 billion roll-off >> i would say the public should see a up substantial roll-off this year and next year. over the next four years, we will approach the new normal. >> but we don't know the exact pace >> no, and i don't think the caps are going to be binding in the case >> my time is winding down, and i would like to explore that the fed is keeping to the 2% inflation target i struggle with how this is with the statutory mandate for achieving price stability, but i also saw from the fomc minutes the most recent minutes that there was at least discussion about moving from the 2% target

to a target range. at least 2%, a range is obviously not. so i'm really struggling with how is this commensurate with price stability. and some commentators are calling for a 3% to 4% target. so two questions, number one, do we have an expectation the fed will move from the 2% target and at some point, at 3%, 4%, 5% inflation targeting, have you violated your price stability mandate? >> our current framework says that the committee would be concerned with sustained or persistent deviations of inflation above or below 2%. so we understand that inflation is going to be buffeted by various factors. and that it may not be exactly at 2%, it will be above and below. and we see it as a similymmetric

we have been trying to get up to 2%, but generally inflation has been low and stable for 15 to 20 years now. >> my time has long since expired. the chair now acknowledges the ranking chair for five minutes >> thank you very much chairman powell, with the voting seat and the role in supervising the largest and most complex institutions in the country, the president of the new york federal reserve has one of the most porngt economic policymaking rules in the nation as you know, bill northey is stepping down. and the close proximity to wall street has led to the selection of an individual with close ties to the financial sector. in your view, how important is

it that the strong commitment to the maximum and plum mandate responsibilities to look at the gender, race and ethnic backgrounds need to be given consideration. are you prepared to exercise your power as chair to reject such candidates as the next new york fed i know you have a lot on your plate, but i have to put this question to you. because we have got to do better about diversity. and particularly at the highest levels not only am i looking at what is happening with the new york fed and the possibility there, but we have to look at our own fed and think about howdy verse fied is it at the top management levels

help me out, what do you think about this >> thank you, ranking member watters. i have been involved, this is the seventh process to the reserve president since i joined the need in 2012 so i'm very familiar with the way the process works. and so we always insist that the search committee which is the higher national fernlg ser-- the diverse candide are given serious chance and i will tell you we will always have diverse candidates. you will always have a fair shot i cannot in any individual case guarantee the diverse outcome, but i can guarantee you that the process will always be working in that direction. >> i appreciate that

and i'm sure that you're committed to that, but the diverse candidate is a question that each of us have and we don't know if there's consideration for diverse candidates with these very important positions. and i'm wondering, where do the recommendations come from? how is the outreach done and how can you ensure that a there are diverse candidates to be considered. >> just diverse banks have really raised their game in this area the new york fed has done great with outreach to community groups and that. in addition, the national firms have a long list and trying to

find new candidates. so it is something we work very hard at. and we are always interested in having new ideas for qualified candidates as well so we invite the general public, generally, to offer their thoughts as well as some of the interest groups. >> you know there is an organization, maybe more than one, that is made up of minorities and financial services that include everything from those doing management in the financial services industry, working with hedge funds, with equity firms, et cetera. have you reached out to those firms, not you, but do you know if those firms have been contacted? >> i know that the search committees and the head hunters have reached out to many groups of that nature. >> how can i follow-up on that and is it possible that those of us who know about these organizations can ask them if

they have been contacted, and if not, how can we refer them >> we'll be happy to provide you with the contact person at the new york fed responsible for the current search and in the case of any future searches, will be able to do the same. >> i will follow-up on that. and i thank you very much and yield back the balance of my time >> to the young lady yielding back the chair recognizes jill from kentucky m mr.. >> thank you, mr. chairman i appreciate your commitment and our conversations to transparency and your demonstration of that commitment to date to clearly communicate the feds monetary policy trajectory you have noted numerous occasions that the remaining slack that may exist in the labor market is at least in part atributable to stagnant wage growth and in your confirmation

hearing, a senator in banking decided that the 2016 research paper says corporate tax cuts do not translate to lower wages but we have seen a wave of corporate announcements of bonuses and raises since the tax cuts were enacted, specifically over 4 million workers and counting have received $3 billion in bonuses and raises i the last few weeks and we have seen the largest increase in wages since the recession. based on these numbers, are the fed researchers wrong and helped increase wages as your testimony indicates that wages should be increasing as a faster rate as a more stimulus fiscal policy in. >> thank you, chairman br arr. it is very growth to integrate this into the wage growth and the economy, but let me try. if lower corporate taxes, they

should lead to the investment. and it is not easy to make, but higher investment should lead to higher productivity over time. and high er productivity is ver, very welcome and will be driven by higher investment. >> and clearly, the wave of bonuses and raises and the announcements certainly suggest there's upward pressure on wages as a result of the tax cuts. in the 2015 speech, you expredsed concern that quantitative easing and monetary combination could fuel dangerous risk taking. specifically, quote, the current extended period of very low mom mall rates calls for a high degree of vigilance, end quote what specific risks have been created that the fed now has to watch? >> this is a time when we need to be alert to build up either

financial imbalances and to inflation building up. we don't really see those right now. i think i also said that in my 2015 speech. but if you look at the financial stability situation broadly, we see high asset prices. what we don't see is the build-up of leverage among households we see the banking system and the financial system generally as being, you know, very resilient. so i think the financial stability picture shows it at most moderate risks. >> if i could point out a possible risk out there and have you react from it created by the conventional monetary policy some blamed the fed for continuing to the 2008 financial crisis when the interest rates exceeded the long-term rates at the beginning of 2007, the trend rate was almost 3% but as of february this year, it was a mere half a percent.

given the economic conditions that you can see all for raising the fed funds rates, how will affect another inverted yield curve. and there's normalization to roll off it isassets off the yie >> largely because in many priority sessions, the fed had to raise rates quickly to hold inflation down that's not the situation we have now. it is very typical for the yield curve to flatten as short-term rates come up and the economy strengthens. i don't see a particular ly amount after this.

>> to dove-tail in terms of the roll off strategy, if there are not enough mature and order facilities, to avoid the negative yield curve, do you participate selling the assets >> no. i think i certainly feel that our balance normalization plan was carefully craft ed >> thank you, my time is expired. >> time of the gentleman has expired. the chairman recognizes the woman from new york. >> thank you, chairman powell. the fed's median projection is for three interest rate increases in 2018. what would cause you to raise rates more than three times this year would you have to see a material

increase in inflation, master gdp growth, the higher rate growth, or what happens with this >> you're right. every quarter each participant submits a projection of what they feel will happen in the economy and the appropriations of the december policy then the median participant called for three rate increases in 2018. since then, we will submit another annualysis in three wee, but incoming data suggests a strength in the economy. we have seen some data that will, in my case, add some confidence in my view that we have seen continued strength around the globe and we have seen fiscal policy become more stimlative

so each of us is going to be taking the developments between, since the december meeting into account, and writing down our new rate pass going into the judgment and i don't want to release that >> for the pace of interest rate increases was in mid-budget agreement. is your outlook for how quickly the fed should tighten monetary policy changed in light of tax reform and budget agreement? >> i would say that my personal outlook for the economy has strengthened since december. and again, each member of the fomc is going to be writing down a new set of projections and a new estimate of appropriate monetary policy going into the march meeting, beginning three

weeks from today i wouldn't want to reset the projections, but we'll take everything into account since december. >> yesterday the fed governor who is leading the fed's requirement of post crisis regulations stated, and i quote, we are not looking to relax regulation, end quote. he also said, and i quote, we're not looking to reduce capital for banks, end quote do you agree with governor co l coral? i con sesent to place these comments in the record >> no objection. >> we have several sort of primary pillars of post-crisis financial regulation that we want to strengthen and protect and those are high-risk stress testing and resolution

we want to keep those strong and transparent as they apply particularly to the largest institutions i think as we move down to smaller and smaller institutions, down to the community banks, we want to make absolutely sure we have tailor ed needs >> last week, several academics published a paper, claiming that the fed's quantitative easing programs during the recession were largely ineffective at stimulating the economy. the new york fed president dudley and boston fed rosengreen disagreed and thought the quantitative easing was effective. my question to you, do you think the fed's quantitative easing program was effective? and should the feds keep this tool in its tool box for future

challenges >> i do think our post-crisis policies were effective. and i have not carefully study reports, particularly the fed announcement, and price that into what was in the market. and this paper takes a different way of doing that and comes up with the answer it comes in. overwhelmingly, it studies advance this through the term premium. and so i would say that that is very likely. >> thank you, my time is up. >> time of the gentle lady has expired. and now the chairman of the

institution subcommittee >> thank you and welcome, chairman powell. congratulations. and it is nice to see a banker being the chief banker of this country instead of an economist. to me, we get to look at different policies andthink we have a different perspective and think that's healthy so i just want to start by talking about leverage lending a little bit i don't want to follow-up on the gao that determines the lending guidance is a rule under the congressional review act and is therefore ineffective because it was never submitted to congress. as i point out in the past the president of 52 should have matters of attention for mras based on guidance. so no one seems to be disputing the gao conclusion, the word

does not appear to be getting out. would you agree rules are rules and guidance is guidance, and guidance is not binding? >> yes, mr. lukemeyer. in the case of lending guidance, we do accept and understand that that's non-binding guidance. since the gao ruling, we have made a point to go out to make sure the message is getting out to supervisors in banks. and we're also thinking of -- we're in discussions and thinking about ways we can underscore that, perhaps putting it out for further comment >> well, i just left another meeting before i got here of a group of bankers from one of the states around the country. and we were discussing issues similar to this with regards to the culture within agencies and the ability of change to be taking place even though we changed the head of the agency, sometimes the message up doesn't get all the way to the bottom. and when i made that comment, i saw a lot of heads nodding in

the audience there's concern that while the leadership has changed, good intentions may be there, that again this needs to filter down all the way through the entire agency and an understanding needs to take place by everybody that this is a new wave of doing business guidance is guidance, rules are rules, and there's a different way in how they are absorbed by the body itself. i appreciation that consideration. >> it's an important feature of the structure of our system. and i think we know how to manage that problem and do a pretty good job at it. and we're going to continue to try to do the best job we can. we are the heads of supervision of the banks are in constant contact and discussion with others on the board. and i don't sense any reluctance to engage in those discussions

and i think it is on us to communicate well and successfully and we'll try to do that >> i look forward to working with you i told the bankers, if you see a problem, let me know i have a chance to talk to mr. powell this morning, so i will carry on the message. one of the many entities that examines for cybersecurity there is zero harm onization between the agencies the result is that financial firms spend thousands of hours complying with regulations rather than actually froektiprog systems and customers. do you see this as a problem >> i think cybersecurity overall is one of the really significant threats. and we can never feel like we've done enough to deal with it. we try to harmonnize through the

soup advisory guidance on what we expect from firms on cybersecurity issues and data safety and that kind of thing. i'm sure we can do a better job and committed to trying. >> i know that's an issue that financial institutions in particular sort of write in the cross hairs of this because the amount of personal data that they hold and the risk that is there. they're an easy target so we want to make sure that we work on that issue and work with you. you know, you are in a position where can you harmonize the rules and regulations i think easily with the different discussions and different groups of regulatory agencies that actually meet on a regular basis discuss things is this ever discussed at all in your meetings with the fed, the treasury, fdic, you know, comptroller, any of those meetings is this ever discussed at length >> yes, it is. in fact, there's a group chaired by treasury which focuses on cybersecurity issues which the chair -- i haven't attended one

of those yet -- but as chair i'll taenld ti will taen will attend those meetings >> the time of the gentleman has expired. we now recognize the gentleman from california. >> chairman powell, welcome. as our committee points out, you're required to independent and accountable and tall and shor short. your opening statement mentions great exports. but you don't mention that our trade deficit has gone up by $60 billion in the last year i would point out that the entire economic establishment in this country has made it almost prohibited to discuss the trade deficit and when -- and that's why we elected -- that's why the country elected donald trump president. now the chair of the subcommittee boasts that we had a good economy in 2017

he's right we had obama's fiscal policies, obama's tax policies, obamacare, dodd-frank and big balance sheet and had a great year as a matter of fact, we have been on a roll since 2011. we were closing in on having a high enough employment rate so that we would have a labor shortage and higher wages. we were going well and so instead of continuing to be on a roll, we've band ond those policies and adopted a tax and spending policy, throwing away the budget caps, $1.5 trillion plus trillion of the debt from the pachl bitax bl i think we'll still do well because our scientists and entrepreneurs and workers are the best in the world and they'll make up for all mistakes we're making here in washington. i see behind you, sir, the green shirts that call for full

employment and it's not enough to go with the economist's definition of full employment, say 4%. we need real full employment that causes a labor shortage and desperate employers bidding up the price of labor and that is also consistent with the fact that many economists are saying that you should be aiming not for 2% but 2.5% inflation. that's the kind of expansionary economy that will allow the folks to come back and fancy polo shirts with the same slogan on it in a couple years from now. now when we talk about some workers getting $1,000 bonus, yes, you have. but a family of five's share of the increase in the national debt from the tax bill is $26,000. what greater proof do we need of

the need for financial literacy in this country than that some charlatan can say here's the deal i'll give you $1,000 it's money in your pocket. and we'll just slap a $26,000 mortgage on your future. now chairman powell, in your confirmation hearings you said that, i believe, that no bank is any longer too big to fail i would point out that the biggest banks are bigger now than in 2008 when they came to us and said they were too big to fail they would pull the entire economy down we had to bail them out with $700 billion and i point out that the wall street prices into the val you've tvalu of the bank stock and unsecured debt and implicit guarantee and assumption that they will be bailed out so i have a number of questions for the record but i will actually ask one for

you today to respond to. we've adopted these fiscal policies huge tax cuts leading to a massive increase in the deficit number that is right behind you. en that we busted the budgets caps as -- is our monetary policy going to need to be more restrictive this year than it would have been had we not adopted these tax policies >> thank you so, of course, when we're setting monetary policy, we're focused on achieving stable prices and maximum employment and in doing that we consider many, many factors all around the global economy, et cetera. fiscal policy changes, can have an effect and changes of the size can have an effect. and that can be seen, of course, in the path of policy. it's very hard to say in advance what that would be

but the answer to your question is generally we take all those things into account. >> so the more profligate, the higher the interest rates you need to set? >> all of the things being equal. >> i would just say our own job is to focus not on fiscal policy but on monetary policy and so that is our frame of reference. >> thank you for evading my question >> the time of the gentleman expired. the chair recognizes the gentleman from california mr. royce, chairman of the house foreign affairs committee. >> thank you, mr. chairman and chairman powell, thank you very much for being with us here today. and i also wanted to thank you for another effort you undertook and that was in 2011, you spent a considerable amount of time with members of the house trying to walk them through the debate that we had on raising the debt ceiling. you were trying to get us focused on all the unintended

consequences which would occur if we did not raise that debt ceiling. and i very much appreciate it, the time and effort and facts that you put forward so you've got a new voice now at the fed. and i assume your opinions on the severe consequences of failing to raise the debt ceiling remain i know that in august it looks as though the federal government is going to have to borrow or have to roll over $500 billion of debt in august. and if we're inform a default, it's a real question who will want to purchase that debt and at what cost would they purchase that debt? and clearly a premium on that, 10% premium, will be a $50 billion hit right there to the

interest expense but there's much more than that. that would befall the impact on our markets and, frankly, at corporate debt and maybe i could just give you this opportunity to explain some of the concerns about that issue >> thank you, mr. royce. so, of course, we don't do fiscal policy at the fed but i'll accept your invitation and just say that it is very important that federal government and government generally be on a sustainable fiscal path, meaning as the babyboomer generation retires, we'll need to address the significant fiscal issues that are coming to us over time, over time and i think it's important that congress do that at the same time, the debt ceiling should be something that we always raise in a timely fashion. there is no other country in the

world that has a separate vote over whether to pay bills that we've already agreed to incur. and i think the united states has never defaulted on a principle or interest payment and never should and i think doing so would be, you know, something i'd really hate to see and could bring very significant consequences >> well, i appreciate your articulating that. you also said raising the ceiling is only the first step the job that must be attacked is deficit reduction and addressing the cost associated with mandatory spending and we heard a similar thing from chairman greenspan -- >> we've been listening to jerome powell speak in front of the house services committee you can see the markets fallen from session highs dow was up 90 and down 73 as yields ticked higher following the comments that his own