be a little volatile. >> how are you feeling about the economy? >> not confident. >> why i don't know i think it's volatile. i think we've had a lot of highs within the stock market but then you don't know when something happens within the news or something unrelated to the stocks. >> taking a pulse of the people in times square. in the meantime join us tomorrow "squawk on the street" begins right now. >> good thursday morning, i'm carl quint neanilla and david faber. cramer aon assignment. the dow down 4% on the month powell is back on the hill and macro data and futures have improved europe still red 10-year close to a three-year low at 1.5

our road map begins with eyeing another day of losses. will powell move the market again this morning >> plus, it's been a tu multiuous 24 hours at the white house. the president's tweets are sending steel stocks higher. jim spoke with salesforce's mark bennyoffand mark plank last night. two important interviews as we enter the first trading day of march after the first month for the dow and s&p since 2016 and in an hour fed chairman powell will return to capitol hill and appear before senate banking to testify on the committee and monetary policy. markets of course sold off after powell's appearance on tuesday when the upbeat economic comments sparked fears of a faster pace of rate hikes. santoli was on squawk earlier and made the point it was more he didn't take opportunities to soften his language when he could have. >> exactly

>> we'll see if it gets modified at all here. the other question, if the market is going to price in higher chance of a fourth rate hike this year and maybe a three is a sure thing. would long term treasury yields follow the short term hire we don't even know how the yield curve would react to that. what i find interesting, you had waves the last two days, undid the late week rally last week and it wasn't about bond yields, they have been sitting there it's the market trying to find the right level. we're right in the middle of the range. >> and the data we got today, claims 2:10, to see 210,000 and core pce, fed's favorite gauge unchanged at 1.5 how does that play >> the headline piece, the headline pce is technically what

they are targeting, still 1.7, people think january even might overstate that i don't think that is really a prod to do anything more in itself it's a matter of which way the trend is going. >> reading tweets from the president on steel, that could have an impact here as well, we expect to hear at 11:00 a.m., he spoke about tariffs, he's interested in free and fair and smart trade. most reports seem to indicate 25% on steel, 10 on aluminum and after weeks of speculation, even this morning unclear reporting on just how embedded in the process this announcement will be. if you want to talk longer term, it is not necessarily to steel tariffs but larger issue with trade with china, what may be skirmishes and the possibility

of it breaking out into an actual trade war as unlikely as that may be. navarro has been hawkish in terms of trade in china. >> it's always there and a matter of are we forced to refocus on it and it's one of those things that the markets will use as an excuse to get concerned if in fact it seems like it's heating up no doubt about that. >> something like this today, certainly does at least focus on the prospect, not just steel but larger issue of trade and whether there is more to come. >> eamon javers was up watching that and busy day in washington. good morning >> reporter: you guys have been talking about it and you're exactly right. we are expecting an announcement from the white house at 11:00 on tariffs. the white house official confirming the announcement for me but not confirming any of e

specifics about what the president is going to say. you saw the tweet from the president saying the steel and aluminum industries and many others have been decimated by decades of unfair trade and bad policy with countries from around the world we must not let our workers be taken advantage of any longer, we want free and fair and smart trade. all of that coming on a morning where you would have to describe its as chaos here at the white house in terms of the staff. we saw hope hicks nouannouncing she's going to resign. she's one of the president's closest advisers, emotionally close and close on policy and press level to the president one of his advisers was in the room at almost all times for the major decisions and some of the major flashpoints of this administration and we're seeing now additional pressure on jared kushner from the "new york times" report last night that jared kushner took meetings with high level banking and hedge fund officials and then his companies -- family's companies received loans from some of those same officials

jared kushner's office issued a statement to nbc news saying he had done nothing wrong, saying mr. kushner has met with hundreds of business people during the campaign transition and in the administration to hear ideas about improving the american economy he has had no role in the kushner company since joining the government and taken no part of any business loans or projects with or for the companies after that nonetheless, this amounts to more pressure on jared kushner, ivanka trump, his wife has been under pressure and hope hicks close to both individuals. and then josh raffle, a spokes person close to ivanka and jared kushner announcing he was resigning earlier this week as well a real sense of confusion what the next steps are i can tell you mercedes shxtlap as one of the persons to take over here at the white house but there have been four communications directors in the space of a year. whoever comes in next will be the fifth, carl.

>> a lot to watch in your area of the world we'll come back to you later on this morning, probably close to 11:00 a.m. eastern time. more on the markets, let's bring in global market strategists. good morning, gentlemen. >> good morning. >> we have so much to handle here there's trade and rates with powell some of the retail earnings are good, ipo filings, march seasonality. what's the most important dynamic this morning >> i think as you're saying, a lot of it is good especially with the numbers coming out, i think the job list numbers that look so, so good i think there's a really good message there. one that the economy continues to be strong but i also think people need to remember that this is a structurally different economy than it was in the 1960s you don't have strong labor unions like you did then we really don't think it's going

to cause ab uptick in inflation like it might have in past decades. we actually think these numbers are pretty good and bode well structurally going forward >> ernesto, was the ugly finish to the month an indicator with sentiment and people want to be associated with what was a turbulent few weeks? >> i think it was the return of volatility which had been dorm ant for a couple of years and we haven't seen for quite a while i think i agree with phil, things are good in the economy, they are actually accelerating from the growth as accelerating from under two to over 2%, maybe 2.5% one of the things that's -- global asset management, the fact we have some -- some trade protectionism in the works and that could lead to higher inflation at the same ti inflati inflation as a matter of fact. overall it may lead to higher

inflation, beginning to cause some concern at least for us in the short term phil, it seems we're at an interesting moment where the possibility that inflation and interest rates accelerate from here is pretty much top of mind and what the conversation has been about the recent economic data hasn't been running to the upside you had durable goods and bond market is taking a breather here is there a chance the storyline changes a little bit has the inflation interest rate run ahead of the reality at the moment or no >> i think that's correct. i think it has run ahead of the reality. we'll now more march 9th when the new numbers on the jobs numbers come out but actually when we took a deep dive on last month's numbers and saw that bump up in salaries, what we saw was that a lot of it came from super advisory wages those are bonuses. if you talk nonsupervisory people much more than 80% of the

population, those wages didn't move that much we think yeah, we're getting a little bit ahead of ourselves and it's not a bad thing volatility is back because of the news but fundamentals impose themselves and be a little bit more moderate and the bond market will settle down relatively soon. >> as for howepowell, does he nd to soften his language >> i think he was honest in saying he was bullish in the economy. we are as well of course as fed chairman you have to be very careful in how you phrase things but we don't disagree with him. i don't think he needs to walk anything back. i think people over react d to how hawkish his commentary was because he did say in the q and a part of the interview that he wanted a sustained 2% on the

pce, we're at 1.7 sustained 2%, we're far away from that and sustained means for a while. so we don't think that the pace of fed tightening will be anything more than the market has priced in. the last thing that i would want to say, the fact that earnings growth is back with a vengeance in terms of the s&p 500. 26% for a 18 another 10% for '19, according to the consensus that's good for the stock market and with a little bit of inflation like phil said, bonds relative to stocks don't look as attractive, we're pretty excited about the stock market right now. >> that earnings picture being what it is, it seems confused about exactly what value to put on earnings growth that is great and may be on a rate of change basis. what's the correct number there for the market >> you know, we're looking this

year for the market to be up on a mid teens level. another maybe 14 or 15% from where we started if that gets us back to an '18 level with earnings going up, that may be a little bit high. maybe a little bit lower than that and high '16's, low 17s. but we're looking for these fundamentals to continue to impose them self-s and there's going to be more volatility but actually volatility is good for the market there's the old line that in order to make omelets you have to break some eggs and it will give us a chance to really find value on things and maybe buy some bargains out there when the market overreacts to just news or perceived signaling from the new fed chair. >> we'll find out a lot more in about an hour, maybe an hour and ten when the q and a begins again. see you next time. >> thank you >> later on "squawk on the

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ford is out first. let's get to phil lebeau. >> the numbers are weaker than expected ford sales dropping 6.9%, the expectation was for 6% that's february this year compared to february of last year suv sales down 11.8%, transaction prices up to $36,200 and numbers from chrysler, much better than expected, decline of only 1.4%. the expectation was a decline of 12.6%. jeep sales up 12%. we'll get gm numbers in 15 minutes. the sales rate expected to be about 16.7, 16.8 million for the month of february. back to you. >> all right, we'll watch those closely and look for gm and toyota and nissan later on this morning. some of the consumer confidence internals showed maybe softer enthusiasm about buying appliances and a house and car. >> the stocks are kind of reflecting this idea that gm and ford and very interest rate

sensitive perhaps and even if these are healthy annual sales rates, they are still the underlying anxiety as the cycle went past and what does that mean for next couple of years. >> certainly an industry that will pay attention to tariff moves if we get them. >> they are a net loser for more expensive steel. >> chrysler most leveraged perhaps to some of that. >> right, those guys and appliance makers are the ones that are screened the loudest when it comes to the idea of more expensive steel >> and consumers perhaps at the end of the day when prices -- >> if they can pass it along, yeah sales force gets a lift on quarterly earnings and not the only thing bennyofftold cramer on "mad money" and jerome powell heads back to the hill questions from senate banking and names like corker and warren take a look at futures dow just

had the worst month since 2016, in the month four days with a 4% interday range, more than the prior five years combined. more squawk on the street in a moment where's frank? it's league night! 'saved money on motorcycle insurance with geico!

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money, spoke to jim cramer but technological advances and where social responsibility fits in. >> technology advances the advancements in technology not just in customer relationship management which we've been talking about artificial intelligence as well that impacts our customers but that impacts the whole industry. and it's going to take a strong hand and that is the ceos and these companies have to take responsibility for the technology that they are building >> as for the quarter itself, they beat on the top and bottom line and raised the guide for 2019 the run rate of $20 billion by 2022 and cramer's view looks a lot easier today. >> the stock keeps trading well on the top line momentum the bite we had there when he's talking about how they run adid's e-mail market, that's incredibly helpful a lot of people look at the company and this black box, kind of in the background of the

works of various companies and what they are doing. i look at it, the stock for not one minute of history has been inexpensi inexpensive. it's been overvalued from day one. trades on the revenue momentum and free cash flow yield you could argue is pretty much in a steady range, 2 to 3%. that's how people trade it it's just the story works and they are not giving you anything on a kind of an operating basis that says the story is changed. >> yeah. >> beyond momentum -- >> it's fundamental momentum and stock price momentum and psychological momentum. >> benioff has been one of the more vocal in any number of different areas and this emerging debate about the power of ai and what it will mean for society is one that a lot of people will need to engage on. >> i think back to his interview with andrew and davos in which he used the word tobacco in reference to tech regulation,

we've since heard analysts say the same thing, big tobacco risk but this overarching story of regulation and large cap tech is something -- >> i don't know if it's the prevailing view across tech. i do keep pointing out that facebook and alphabet have lagged, they are farther below the highs than most of the rest of big tech and that's where the real focal point of business models clashing with the public interest seems like people are focused. whether it's correct or not or a phase, we don't know but that's what the market has been trying to sort out. >> amazon is also part of that and that is at its high. >> absolutely. >> and not a day goes by -- >> interestingly, what amazon gets a little bit as a protective buy is you can't yet say any of the businesses they are a monospoly. >> but 4% over the retail sales number as opposed to the percentage of online which is a market or not. >> sure. >> but market power is the thing that people are more and more

focused on to prevent or big guys like that to prevent potential competitors from even coming -- >> but your point is they've got big rivals in cloud and big rivals in retail and budding business logistics -- >> also the difference is if you're talking about amazon's ability to wield market power and put other companies out of business and dominate an industry they are not in yet, that's profound. but if you're talking about the impact of their business models on the operations of democracy, which is what we're talking about with facebook and google, that's a different conversation. >> totally different. >> you're right. those are different conversations although i think they come under in rubric of power overall. not that anything is going to happen here on the certainly on the antitrust front for the foreseeable future we'll keep talking about it because a lot of people are talking about it. >> yeah. >> we're going to get to speaking of sales force these

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you're watching "squawk on the street" live from the financial capital of the world as the o month of march begins, we watch the fed chairman return to capitol hill and we'll talk to alan greenspan in half an hour what his testimony means for rates and markets in the economy and so forth we do want to get to the retail numbers because the narrative here is that some players have figured out a way to pick the amaz.mmazon lock, and at least their own lane best buy, best holiday sales since '03. they raised their guide and dividend it's a very confident quarter. these are the ones -- guys that one category winner that people thought might be there in terms of traditional retail.

the market is saying that it doesn't really deserve a big discount of its valuation and basically the highest valuation of this cycle and skill at the slight discount to the market. it seems as if whether they were macro consumer tail winds as well as what they do in terms of oma omnichannel, it's sort of working. kohl's also hiked the dividend and beats by 22 cents, revenue ahead, comps up but not quite as much a beat over the estimate. 6.3, versus 6.1, tonight we'll get gap and nordstrom. >> several months ago everyone was talking about kohl's only because amazon might be interested in doing something with them and now they are holding their own. it's been amazing run, almost a double. >> good week between macy's and

tjx and lowe's the outlier with a not good quarter and home depot with very good numbers >> there's the opening bell. it is mule soft, a network application company and at the kna nasdaq, stellar acquisition, a blank check company. limited brands might be another outlier in terms of -- they did not perform as the prior did and cuts to market perform mad boss, his report, the turn remains elusive and we get price target cuts on both of those. >> it's interesting because the case on limit was that it could theoretically be that single category winner because it has such a dominant position with victoria's secret in that category but just not able to kind of have any kind of encouraging guidance for the coming year, just the exposure to mall traffic seems it's too much of a

head wind right now. and there's another one of these stocks with a huge comeback off the lows and giving a lot of it back. >> we've got ford numbers a moment ago it's time for gm and we'll turn to phil lebeau. >> greater than expected decline in sales for general motors last month, 6.t9%, the expectation wa 3% general motors is saying the industry sales rate for february could come in at 17.1 million vehicles, that's a little more optimistic than what we've seen from others who track the industry sales day in and day out. again, general motors down 6.9% last month. >> carl, back to you. >> thank you very much, phil lebeau. >> both ford and gm down see what the other numbers bring. better guidance on the overall industry of sales and stock not doing much we're looking at brunswick, this is a name i mentioned a few

weeks ago when owl creek a hedge fund put a letter out saying they would like to see brunz wick potentially split its fitness business from its marine business they make boats and also make exercise equipment and the like. that was january 30th and brunswick announced market leading companies and fitness to execute what they say are distinct growth strategies and they are delivering a bit of the value right away this morning. they move fairly quickly after that move by owl creek only less than a month ago, to have them consider in fact doing this. the segment manufactures and distributes names, including boston and bayliner and generated 3.5 billion in sales in '17 for people to get a sense on that. fitness company sales revenues were about a billion dollars and

brunswick shares up 6%. >> $5.3 million market cap sometimes companies of that size, they are a little reluctant to kind of shrink because you're creating two small caps was this something that seemed it was in formulation and activist gets in there >> it may have been. i didn't get a lot of feed back in terms of from the company but that is often the case you'll see activists get involved or push something put push something they are away the company perhaps has been considering. i can't tell you how many times of course the company will come back and say of course we thought of that and of course we thought of that and that, mr. actsty vi tactivist and decided against it and in this case they follow through speaking of activists since wur looking at newell, i thought everybody knew carl icon had been in there. he was trying to make a decision whether he would get board seats

but deferred not knowing who it was necessarily going to come forward, in the form of starwood coming after the entire board and martin franklin, who had sold his company on the board, stepped off dramatically, icon is in there. reports this morning indicate that that's the case and it has been the case. look, he's coming up i didn't even know what do you know, scott wapner to talk a bit about this but he was trying to figure out whether or not he was going to be the activist in new ell and step back but owns a good amount of shares and that's sending the stock higher this morning. >> do we know kind of going in line with more or less. >> following that effort >> yeah. >> he's aligned more with those who would say the performance poor and the performance the

under lying biszs not actually the businesses they bought at newell have not been what they want this is going to be a big fight. they haven't set a meeting date yet and not like newell will set there and there's the board, take over. we'll have a lot more as this goes on. >> i'm sure he'll dment on ackman closing a chapter on herbalife, another line of questioning for the judge and carl what a morning it has been in advertising. wpp, probably the worst outlook since the crisis, they lowered their full year guide on what sir martin soreell is calling long term impact of technological disruption and stock got hammered in the premarket and our parent, nbc universal changing the ad strategy, cutting the number of ads and ad time and there's the ongoing story regarding sky which david has been reporting

on and this week steve burke of nbc u talked about that proposal as we're calling it right now. and the degree to which the stock was affected take a listen. >> sky is a great business in its own right, it's got a very large market share in the uk and good business in italy and germany. we also think the combination of sky and comcast nbc universal is very interesting and in some ways we look at sky the same way as comcast and nbc universal over the last serve years have proven content and distribution can work well together. >> it's always frustrating when you propose something and the stock goes down. happened to him with the at&t broadband and gave guidance on

marriage margins that eventually surpassed. >> and built comcast into what it is today. it also is a reflection how aggressive comcast and brian roberts can be, our parent company in getting at&t to sell them a business that was part of the the company, wasn't as though they could make a hostile bid for the broadband business and the nbc deal but attempt to buy time warner cable that failed at the hands of regulators and now this competing of course for those fox assets we'll see what develops here important to point outcome cast wants to buy 50.1% of sky and take control of it 61% of it does trade publicly. the other 39% owned by fox you will need 82% of the minority -- of the 61 if you want to get to the 50, you follow my math, right? that's not easy. that may not be easy and as i reported yesterday, the expectation here is that fox and disney are not going to simply

lie back and allow this to occur but are going to compete it is seen as an important asset for disney it is not just the distribution platform but of course the content assets themselves at sky that are also very attractive for potentially both comcast, which conceivably could have made the move at any time over the last few years if they chose to and certainly for disney. but as with newexll and other situations, this is going to play out over the months to come and we'll have to say. probably not until maybe a june time frame do we really get the rat a tat tat of bid bid bid >> do we expect any statement of intention before that? >> possibly, they don't need to. also fox may have a regulatory lead in some ways although they are only in this position because it's taken them so long. the test inthe uk has been ver difficult. they have proffered new solutions that perhaps are going to be successful

so the clock also becomes important in terms of regulatory to what we say is this -- the proposal is not yet even a 2.7 under uk law you don't even have the clock ticking yet on when shareholders get involved. >> then we could see some overlap between this saga and the at&t doj trial. >> yeah. >> that would be interesting too. >> march 19 kt is coming up and that's going to be an important moment for any trust law overall and for the future to a certain extent of many companies we'll see how it goes. what disney will tell you, regardless of the outcome, they do not believe and fox potentially agrees that our parent company would have still -- still be successful in an acquisition of fox's assets, regulatory would still be a key thing. if time warner and at&t were to break apart, people say, well, maybe comcast would be interested in that they are not going to be able to

do that. if it's ruled by the doj and they win, clearly nbc will not get involved there either. a lot of different ramifications from that very important case. >> dow is down 61. cat and boeing, not a huge surprise leading the dow lower bob? >> first trading day of the month, we did get inflation data and looked roughly in line with -- 10-year yield moving to the upside and that's causing problem for the markets. we start on the upside and quickly move down. let's show you the sectors the main story is we've been watching the cyclicals continue to rule and tech was on the upside at the open and it's now flat energy, even though oil had a tough morning, we're about three-week lows on oil banks started up now down. consumer discretionary also down consumer staples are lagging we started out in the sick click cals and faded in the last few minutes. the big picture this is what you want to keep your eye on, the

big trend, cyclicals still rule. on year to date, consumer discretionary, there's your big cyclicals all doing well and of course, names like staples have been underperforming, this is the big trends to watch. two things are moving stocks number one far and away is mr. howell's testimony and velocity of rate hikes. a lot of debate whether he's being too transparent, too much of his own personal opinion, what i think the economy is improving, will he clarify what exactly he was talking about will he two out on a limb and talk about three or four rate hikes, that's what everyone wants to hear about. coming up on the radar, tariffs and trade wars the president will speak about this at 11:00. we've seen movement in steel and aluminum around this whenever you have a discussion about an economic linkage, that moves the markets, way down on the list is this white house turmoil and d.c. drama people might talk about it but i

don't see it actively moving the stock market, at least not right now. that could change however. look at steel companies today. again we're waiting for comments this morning from the president but century aluminum and alcoa and u.s. steel, cleveland cliffs, well known, bottom three steel companies, first two well known, aluminum companies, clearly moving on what's going on over at the white house right now. it's a new month but the old one was tumultuous, etfs first outflows in two years, actually three years since january 2015, 15.8 billion in overall etfs, that's not a lot compared to the size of the etf market but it's first outflow since january 2015 and not surprisingly you saw outflows in very big funds like the spdr and look at the inflows, a lot of international funds and efe, afterry ka far

east, emerging markets, some were putting money back in the short vix fund finally spotify, questions about that we don't have a date but it will be here at the new york stock exchange and they are not selling new shares here. they love it because they are going to save on banking fees but also remember there's no lock outperiod that means almost all of the shares are available for trade that's going to be a very interesting day as soon as we get the date foryou, we'll let you know back to you. >> will be interesting, thanks very much. let's check in on bonds with rick santelli at the cme in chicago. >> i'll tell you what, one week of two-year gives a lot of information, especially about our new fed chairman look at the one week we had the powell pop on monday and look what happened we continue -- excuse me, tuesday. we continually lost it we have been moving lower, however, having said that, if i look to the long ends, the 24-hour chart of 10-years looks

pretty good, right yes, it came back. one week gives a much more true example. we're pretty much right back where we started prepowell. >> reporter: with respect to it yields if you wanted to define february, i would say flat look at the tens minus twos starting on january 31st, it is incredible the reason it's incredible and maybe this isn't shocking to ni anyone, how it inversely correlated with respect to what's going on in the equity markets. of course, as the yield curve steepened dramatically, we saw that equity prices dropped and as it starts to flatten, they have regained their legs there's a lot of reasons for this when you think about what the curve represents, the long end may be motivated more towards inflation and shortened more by the federal reserve. for the stars of the day, one week of the dollar index, breakout, breakout if you're a technician, this is

a big day. dollar index above the mid closing point for the year it's above that hump in the middle you'll see on the next chart, let's go to the year to date and dollar index, certainly looks like from a technical standpoint all lights are green and the main reason is because all lights are red on the next chart. look at the euro versus the dollar all of the opposite is true, it's below its midpoint and below that middle part of the w. this is a trade you want to pay attention to carl, back to you. >> thank you very much rick santelli. still to come, markets are waiting part two of the chairman's capitol hill testimony and the q and a session with the senate banking committee. we'll bring that to you live before that we'll talk to alan greenspan, the former fed chairman about the testimony and rates and equities and everything else to think of. dow down 121 to start this thursday morning we're back in a moment

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higher this morning. we'll talk to spencer in a few moments as we count down to the fed chair's testimony as well. t 'll talk to alan greenspan a the top of the hour about what we may hear today. we're back in a minute well, it's earnings season once again. >>yeah. lot of tech companies are reporting today. and, how's it looking? >>i don't know. there's so many opinions out there, it's hard to make sense of it all. well, victor, do you have something for him? >>check this out. td ameritrade aggregates thousands of earnings estimates into a single data point. that way you can keep your eyes on the big picture. >>huh. feel better? >>much better.

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fed chairman jerome powell set to take the witness seat in day two of his congressional testimony. steve liesman joins us now for a look at what we might hear over the next couple hours. >> markets wondering what's the powell play. is new fed chairman jerome powell happy with the interest rate rise he sparked on tuesday? does he have regrets that some think he's more inclined to do four hikes does he double down and keep to that somewhat, not overly, hawkish tone he struck on tuesday, or is he a bit more dovish in my experience, they never mind taking a little froth out of the market or defrothing, as we call it here's the probability going into the testimony here, which happens in the next hour 95% chance of a hike in march. 75% chance of that second hike 51% chance, that's new, for that third hike happening in september. a fourth hike, a slight chance, 27%, in december between the two, 66% chance that

other hike happens by january. one thing that might factor into the testimony today, the pce data we got today. this is the fed's preferred inflation indicator. 0.4 on the headline, 0.3 on the core unchanged, 1.7 year over year on the headline and 1.5 on the core bmo saying stable core inflation could temper the fed's tightening enthusiasm. hfe says the opposite. one side is looking at the year-over-year rate. the other sat the three-month annualized core. we'll listen closely today to see how powell looks at it guys >> okay. steve, thank you steve liesman. as we of course watch chairman powell focus on rising interest rates here in the u.s., its impact on, for example, the housing market joining us now is the ceo of zillow spencer, nice to have you in the house. >> great to be here. >> let's start off on that macro

point. we have changes in mortgage deductibility under the tax code how do you see the impact on the macro housing environment? >> housing still is very, very hot. the big picture is home value has decreased 25% through the recession. they're back now 5% above the last peak. home value is appreciating 7% year over year it's going to slow though. we're forecasting about 3% year over year appreciation for the next 12 months the issue is limited inventory there are almost 20% fewer homes available for sale in the starter home category than a year ago 10% fewer homes overall. the issue is there are just millions of homes missing from the housing stock, homes that were not built through the recession. so we need to get more inventory built up, and then that can help accelerate transaction velocity in housing >> we are talking about a $1.8 trillion business. you're focused on the $80 million paid in commissions.

>> and the media >> spending associated with that you were recently talking about the so-called funnel, expanding markets to go towards that commission dollar. not necessarily the commission business what do you mean >> consumer expectations have really changed so consumers now expect you to be able to press a button and have magic happen. we're living in an instant world. it's time for real estate to catch up the days of pressing a button, having an e-mail sit in a real estate agent's inbox and hope they get back to you, that's very 2005. what we're doing is investing in software tools, training, working with the best agents so you're much more likely to get a response we've invested very heavily in basically creating a crm for real estate agents it's now used by tens of thousands of agents every day. it dramatically improves the consumer experience. we're doing all sorts of things to bring the consumer deeper down the funnel and into the transaction, but we're not a party to the transaction we're still a media company. we're connecting consumer and professional >> this week there have been,

goldman, for example, doing stress test cases on what would happen if the ten year went to 4.5. their argument is wouldn't mean a recession necessarily, although some important sectors, including housing and small business, would be hurt. how would you think about that in a model >> so we think about it a lot. mortgages on zillow have gone to about 4.25 for a 30-year fixed we forecast that it'll be almost 5% for a 30-year fixed bit end of t -- by the end of the year from 4.25 to 5% on a 30-year fixed, that's about $100 more a month on your mortgage it's significant, to be sure, but it's not -- i mean, rates are still historically so low compared with what we've seen in the past we should keep these rate increases in perspective >> and you have a podcast like everyone else. "office hours" is the name of it >> yeah, this is season three. season three launched today. i interview ceos and executives. >> they're all competing with us >> today's episode --

>> give me one very interesting thing. >> how to hit refresh on microsoft, how to keep a 40-year-old company innovative the way he did it was throwing away dogma when they did things like ship microsoft office on ipads, on ios, that's something that never would have happened five years ago. you revisit first principles, throw away dogma, and that's how you stay innovative. >> spencer, thank you. when we come back, dr. greenspan, we'll hear from powell, and tonight on "mad money," the ceo of conagra

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good thursday morning. welcome back to "squawk on the street." i'm carl quintanilla live shot here of the senate banking committee, where the fed chair, jerome powell, will once again testify today after appearing before the house on tuesday. we're going to monitor that. we're going to talk to dr. alan greenspan in a few minutes about what the committee may ask the president meantime is set to lay out tariffs this morning we're going to bring you that announcement as well on a day where some industrial stocks are

getting hit, perhaps on that overall, dow down 104. s&p down about 10.5. got some economic data crossing the tape on a busy macro morning. rick santelli has that >> all right i have big surprise for you, but you're going to have to wait for that construction spending for the month of january, big goose egg, unchanged. we were expecting up several tenths we did gain a tenth on the revision from december it's kind of funny unchanged actually is the weakest number that we've had since we have negative 0.9 back in july. already. ready for this one this is february ism we had chicago yesterday it dipped a bit. not true nationally. 60.8 why am i site andeexcited? you have to go all the way back to may of '04 to find a 61.4 read what's interesting about that read is it's a 20-year best.

i carry 20 years' worth of all data points with me. 60.8 is powerful and if we go through the internals real quickly, the employment gauge considering one week from tomorrow we're going to get the employment report, 59.7 that's up from 54.2. prices paid, 74.2, moderating from 72.7. finally, new orders dipped a bit, 64.2 versus 65.4. wow. carl, back to you. >> wow some interesting numbers, rick thank you. rick santelli. as we said, we're moments away from the fed chair's semiannual monetary policy report to the senate we're going to take you there live as soon as q&a begins meantime, dow and s&p coming off their worst month since january of '16 amid heightened volatility joining us to talk about that, former federal reserve chairman alan greenspan is with us. dr. greenspan, always great to have you welcome back >> thank you very much

delighted to be with you >> i wonder if you remember your first humphrey hawkins and if you think powell has anything to walk back from tuesday >> well, it's not only the first. it's every one thereafter. it's an interesting issue. a small minority, maybe a moderate minority, of the congressmen and representatives are truly interested in what the facts are that they don't know but there is a significant number of people who are trying to find ways to make themselves look good to their constituents back home. now, jay powell has been around quite a long while he knows his way around this particular problem, and i suspect he'll do very well as he did the last time and will continue to do so.

>> he's going to come in this morning armed with some fresh data that we've now seen, namely a core pce from this morning as rick just brought us, some of these ism numbers. a 6 1/2 year high on prices paid how do you think he's going to put that into a framework? >> well, are you asking how jay powell is going to do it or how i would do it? >> let's say how you would do it >> well, first, the issue is basically what is your economic forecast and why the last time i was on the show a couple months ago, i said i thought stagnation, which has been driven largely over the last five to ten years by a gradual encroachment of entitlement spending on gross domestic savings entitlements are rising because they're mandated, and gross

domestic savings is residual of what is left over. the data are unequivocal on this that some are flat, meaning the entitlements are crowding out the cross domestic savings but gross domestic savings, along with the amount of savings we borrow from abroad, is what gross domestic investment is, and gross domestic investment plus some educational issues is the key factor in productivity growth and productivity growth is the key factor in overall economic growth. so i'm reasonably short-term optimistic, largely because i think the tax cut is in the right place in the corporate sector but i find the longer-term outlook rather dismal. >> and chairman greenspan, it's

david faber. you've discussed this before, in particular entitlements. you mentioned it's been a couple months since we've spoken to you. on the same topic but a bit apart from it, deficits. i'm curious to get your take given the tax cut, the deficit will be generating, which we have a better sense of now and of course the budget deal as well, which is adding to that deficit, particularly given what you said about what is mandated spending on entitlements is it a concern, a growing concern for you, and will it crowd out others as well when it comes to the bond market >> absolutely. and i think that's the main problem we have that we're disregarding the real problem is not monetary policy that's going to run itself the fed is fairly sophisticated in all the increments involved, especially the new chairman.

but what isn't the case is the longer term outlook for the budget deficit, which is downright scary. budget deficits inevitably engender some introduction of an acceleration of money supply and price level exenpense. in other words, inflation is going to enter into the stagnation as i've been arguing for a long time, we are already moving into stagflation, which actually feels better than stagnation for example, are profit margins are moving up. the data for january are not too bad. and actually, if you look at the overall outlook short-term, you're beginning to see the effects of the substantial cut in the corporate tax rate.

remember, the corporate tax rate is the critical issue in this tax cut. the other elements of it are really secondary but this is an extraordinary effort because the last time it has been done was ireland. 're land had very much the same 3% to 3.5% marginal upward tax rate they brought it all the way down, cut it in half, more than that the result was an acceleration in productivity growth i think that's the one positive fact that's on the agenda at the moment, but longer term, the entitlement issue is irresistible because the population is ageing and ever more a larger number of entitlements are coming on stream that is going to make the

productivity outlook very iffy and that worries me considerably >> fed chairman greenspan, this is morgan brennan. in light of the comments you just made and this talk about budget deficits, we've heard a number of high-profile investors recently say they think the bond market is a bear market. what is your take on the markets right now in light of this fiscal situation >> well, you mean what do i think of the markets generally >> yes >> well, i would say we are in a bond market bubble a bond market bubble really means that prices are too high when they move down, long-term interest rates move up if you take a look at the structure of not price earnings ratios but earnings price ratios in the stock market, you find that the critical issue of what

engendered some of the strength in the recent period is essentially the decline in real long-term interest rates, as is factored into the market that is in the process of changing and i think that the bond market bubble is now beginning to unwind, and that is going to bring us ultimately into a state of stagflation beyond that is very difficult to tell this is not an easy economic outlook because there are too in variables, which we haven't seen in recent decades. >> right one final variable we want to ask you about, you know, people have gone back and looked at powell's transcripts in some meetings back in 2012. he was a little bit less convinced than some of his colleagues that the quantitative tightening would be smooth we're a month away or so from going to 90 billion a quarter.

some worry if it's going to no longer be like watching paint dry. what do you think? >> i'm not -- i don't really have a real opinion on that. what specific part of that do you want me to comment on? >> i guess, do we anticipate any noticeable effects on ancillary markets, equities, for example >> well, of course if the real long-term interest rates go up and you're in the process of having -- it's inevitable that the effect on stock prices is negative in fact, that's one of the really major factors determining equity price ratios, and therefore, as real long-term interest rates rise, stock prices fall. i'm not saying what we're

looking at in the last few weeks is meaningful, but remember, the last few weeks i think are responding to the good part of the tax cut. you know, before i got into government, i was on a lot of corporate boards in which i had to sit through preparations are of capital investment expenditure processes. what struck me is when they got down to the issue, the very end of it, you had what's the pretax rate of return on this investment and what is the after-tax return the after-tax return is a clean cut. so when you're going down from a 35% marginal rate to 21%, that's

impact on perspective investments, which is exceptionally high in a marginal sense. so i, on the one hand, in the short-term think the capital goods markets will be okay, but longer term productivity is in for serious -- >> that certainly rhymes with what we're hearing out of quarterly conference calls we're not going to get that you can to that you next week on your birthday, but happy birthday in advance. always good to talk to you >> thank you very much. >> see you next time and to another big story this morning walmart and kroger joining dick's sporting goods and raising the minimum age of purchasing firearms to 21. walmart will also remove items from its website that resemble assault-style rifles, including toys this as president trump pressured lawmakers yesterday to push back against the nra. we're joined by rick smith, founder and ceo of axon,

formerly known as taser international. thanks for joining us today. >> good morning. >> i know you reported some stronger than expected earnings yesterday. your stock is up about 8% on that i want to get into those results with you, but first just to sort of focus on this news of the day, as the ceo and founder of a company in security and weapons business, what do you think about these moves by retailers >> well, i think it's certainly interesting, but i'm releasing a letter to the president and congress actually proposing a very different approach. i think it's one we can all agree on that is that we should empower darpa to lead a grand charge the same way they did in driverless cars 15 years ago that's brought that technology to reality, to have a grand challenge on school safety and focus more on innovation than just politics. >> and in terms of some of the, i guess, you know, potential policy changes, some of the ideas that have been tossed around in recent days and recent

weeks, things like arming teachers in schools, what is your take on that? >> you know, i really try not to get involved too much in politics per se. i'm a technologist i believe technology can save lives, and we need to think in innovative new ways. i don't think there's enough happening there to move outside of sort of the politics over, you know, policy let's get into what new technologies could we have that could radically change things. >> what are some of those new technologies is there anything you're developing >> well, the challenge is there's no one to develop it for yet. if you developed a fantastic school defense system, which is possible, and we have great ideas, where are you going to go are you going to go to your local principal with that? that's why i think we need strong national leadership that would say, this is going to be a national effort. we're going to come up with new ways to defend schools >> and shifting back to earnings, which i know you reported after the bell yesterday, certainly saw an increase in weapons but also an increase in all of this software

and security business. the body cameras, certainly a big growth driver for you. last year you basically offered police departments the option to have for one year free of charge body cameras and access to cloud storage for all of that data how is that process going, and how many of those police departments are actually deciding to hang on to this product? >> that program has worked out fantastic. just this morning we announced the 38th major u.s. city that's deploying body cameras on the axon network we're now well over half of the major cities in the united states, over 200,000 police officers >> what's the bigger opportunity here continued hardware sales or the software services? >> you know, i hate to hedge here, but it's both. it's when hardware and software work well together that the magic happens. the body camera working with the

software or tasers creating more capable communication layers and just stay tuned. we have some fantastic products in the development pipeline in both hardware and software >> how have actual police officers responded to having these body cameras on? >> you know, at first, like with all change, people were skeptical. but when you talk to a cop who has a body camera, after about a month after wearing it, they'll tell you they will not go on patrol without it because it protects them too. police officers get accused of all sorts of things, and it's it not true, you know, how do you disprove it? if you have a body camera, it's pretty cut and dry >> and a couple days ago, you basically announced that you've got this ten-year performance plan for compensation. it's going to be tied to achieving market cap and financial performance milestones this sounds very similar to me to another compensation package announced at another company, tesla, elon musk a couple weeks ago, which a lot of folks said was very unusual why did you decide to adopt a

similar approach >> let's give credit where it's due. we think -- and i think in particular -- elon is just a fantastic noin fantastic innovator. he innovated around ceo compensation where you're held accountable. if you don't succeed, you're held accountable i was meeting with investors yesterday. they're really excited about this, as am i, to lead axon through the next decade while saving lives and solving big problems that our society is facing today >> and looking ahead the rest of this year and beyond, i guess, what are some of the big trends in terms of spending, security, areas where you're looking to focus and develop more for the company? >> well, you know, our core taser technology certainly is an interesting space. i publicly have come out and challenged our engineers to create a nonlethal weapon that will outperform a police pistol within the next decade so stay tuned for progress on that front watch our artificial intelligence group that's doing a lot of great work about how to

make police work more transparent and accountable and efficient. we got a lot of great things coming, of course. we'll be glad to come back with me make specific announcements on them. >> great we would love to have you back thank you for joining us today rick smith of axon when we come back this morning, obviously we'll take you to the senate banking committee. the fed chairman powell about to testify before lawmakers take a look at how the s&p reacted tuesday to powell's comments when he testified before the house you can see it right around 10:20 a.m. eastern time when the slow gradual selloff began and ended the month of february red. dow, though, is up seven points for now. "squawk on the street" is back in a minute. ♪ feel that? that's the beat of global markets, the rhythm of the world.

but to us, it's the pace of tomorrow. with ingenuity, technologies, and markets expertise we create the possible. and when you do that, you don't chase the pace of tomorrow. you set it. nasdaq. rewrite tomorrow. we bring you back early to senate banking as the q&a with fed chair powell begins. >> building on that feedback, senate bill 2155 raises the threshold from 50 billion to 250 billion and requires the fed to tailor regulations to a bank's business model and risk profile. i'd like to ask you some questions about this bill, if it does become law. there's five or six of them, so

i'd like to have you respond as briefly as you can but fully answer the questions is it accurate that the federal reserve would still be required to conduct a supervisory stress test for any bank with total assets between 100 billion and 250 billion to ensure that it has enough capital to weather economic downturns >> yes, it is. >> and is it accurate that the federal reserve would still have sufficient authority to apply any prudential standard to a bank with between 150 billion and 250 billion in assets if the fed determined that was appropriate? >> yes, that is true >> is it accurate that this provision does not weaken oversight of the largest globally systemic banks? >> that is correct >> is it accurate that the federal reserve applies enhanced standards to international banks based on their global total consolidated assets, meaning this provision would not exempt banks such as deutsch bank from section 165 of dodd-frank.

>> that is correct >> is it accurate that this provision does not in any way restrict the fed's supervisory, regulatory, and enforcement authorities to ensure the safety and soundness of financial institutions >> yes >> and finally, is it accurate that nothing in this provision would restrict the fed's ability to ensure that large financial institutions are well capitalized? >> yes >> thank you and to go on a little bit, as you know, the dodd-frank act included a provision known as the volcker rule, which placed restrictions on banks that trade for their own profit, otherwise known as proprietary trading uncertain relationships with certain private funds. as you also know, financial companies have incurred significant costs attempting to comply with the rule do you support addressing this confusion by exempting community banks with less than $10 billion in total assets and who are

engaged in a small amount of trading activity >> i think that is a sensible thing to do, yes >> all right thank you. and some have expressed concerns that this exemption would allow a community bank to purchase a hedge fund is it accurate that the federal reserve could use its existing authority to address any safety and soundness concerns arising from such an action? >> we would still apply all of our safety and soundness supervisory activities to that bank, and we would be looking for things like that and find them >> all right thank you. timely, and i'm shifting gears away from the legislation right now. i also mentioned in my opening statement that randy quarrels has been confirmed as vice chairman for supervision of the federal reserve but has not been confirmed for his full term as a governor yet i believe it's very critical that we do that confirmation and confirm governor quarrels for his full term. do you agree -- and if you do,

why is it critical for the senate to confirm vice chairman quarrels as soon as possible >> thank you for raising this, senator. mr. chairman, i absolutely agree. it's very important that vice chair quarrels get his full term at this point, he's working on an expired underlying governor term but has a four-year chair term to have him fully installed is very important that he have this underlying governor term >> all right thank you. i appreciate your emphasis on that and hopefully that will help to encourage our -- the full senate to move more expeditiously on that nomination senator brown. >> thank you i appreciate my friend and colleague's skillful narrow and leading questions about his legislation. i think it's important to point out that the question particularly about foreign banks, deutsch bank and those banks that have been both

troubled and troubling, will be mostly deregulated under this bill because they're under 250 that's not really my question. i want to get to questions, but i also want to point out in spite of this chair of the federal reserve's general satisfaction with the fact there have been serious, serious questions raised against it by former fed chair volcker, by former fed governor and deputy treasury secretary, by bush appointee, former fdic chair sheila baer, and by the former deputy governor of the bank of england, paul tuck i think it's important to note that it's not all candy and roses here let me talk about a couple other things unemployment rate has been steady at 4.1% wage growth has been slower to improve. at your confirmation hearing in november, you mentioned labor force participation for prime age workers was also lagging i'd like to see improvement

across the board, as i know you would. two questions related to that. do you think it's possible to achieve further improvement in wages and employment in workers that have been left behind without causing higher inflation? and will you commit to look at all the data and considering the workers who have struggled the most so has to avoid raising rates pre-emptively and cutting off the chances for broader economic gains >> thank you, senator. so as you mentioned, there are a couple places where it looks like there may be additional slack in the labor force the biggest of those is prime age participation by prime age workers, a full percentage point where it w below where it was before the crisis we don't see strong evidence yet of a decisive move up in wages we see wages by a couple measures trending up a little bit, but most of them continuing to grow at about 2.5%. nothing in that suggests to me

that wage inflation is at a point of acceleration. so i would expect that some continued strengthening in the labor market can take place without causing inflation. we'll of course be monitoring that i think the risks are much more two sided than they were two or three years ago when there was a great deal of slack in the labor market >> i appreciate, as i told you in person, your interest in commitment to both mandates of inflation and employment one fed nominee may have the votes, may not have the votes on the floor, doesn't take that position your position there is crucial as area yellen understood, as chairman bernanke understood morgan stanley said only 13% of the reduced taxes under the tax bill being paid by companies will go to workers' pay. 18% will go to mergers if that ratio holds up for

banks, 18% will go to mergers, 13% for worker pay that ratio holds up for banks, whether it's the tax bill or the chairman's bill he talked about, shouldn't we expect even more bank consolidation >> first i'd say we don't really know yet how that will shake out, but taking your hypothetical, would it add to more consolidation among the banks? you know, bank consolidation has been going on for 30-plus years. it's got a lot to do with smaller banks and economic activity moving out of the rural areas into the city and interstate banking and things like that. i'm not sure this would tend to change the trend >> i appreciate what you just said i certainly heard the deregulators in this body, those that suffer this collective amnesia about what happened a decade ago, always blaming bank consolidation on dodd-frank, when as you point out it's been going on for years mr. chairman, here's american banker article from november that discusses your bill the title is sify hike could

kick start bank m&a. i'd ask that you enter that in the record >> without objection >> thank you last question. most of the wall street -- the big wall street bank offenders have -- most of the wall street banks have been repeat offenders since the crisis the fed and other regulators have fined them. you were part of this. $243 billion in combined penalties, money laundering, market manipulation, deceiving customers, you name it the chairman's bank deregulation bill would mandate that the fed further tailor rules for the largest banks. meanwhile, vice chair quarrels is talking about the fed's plans to make living wills less frequent to reduce leverage rules to weaken the volcker rule why should big banks that have consistently failed to follow the rules benefit from statutory or regulatory roll backs >> i would just say that our focus is very much on the smaller, medium-sized banks.

we want the post-crisis regulatory initiatives like higher capital, higher liquidity, stress testing to apply in their strongest form to the largest institutions we want to make sure we're doing that efficiently there are some changes we can make in that regard. most of what we're doing really applies to -- >> well, i hear you, but i sat with a number of those in this room on the finance committee, and i heard republican after republican say the tax cut was all about the middle class, yet 81% of the ben fitefits went to wealthiest 1%. i hear you and hear the push for this s-2155 being all about the community banks, but we know much of it's driven by what happens for the larger banks, the weaker stress test, the periodic stress tests, what we're doing instead of annual, what we're doing for the foreign banks. so i hear your talk about your interest primarily is the

smaller banks, but i guess the question still stands, why should anything in this bill, why should we do anything for the largest banks, as this bill does why should we do anything for banks that have consistently failed to follow the rules why should they benefit from statutory, regulatory rules rollback >> as i see, the parts of the bill that i'm familiar with, they really apply to banks 250 and under. when i think -- when you say largest banks, i think you're talking about either the sifys, by the way, one of which is below 250 billion in assets. we're capable of reaching that to apply standards when it's appropriate. it's really those institutions that i would call the large and complex institutions and the focus there, again, is on sustaining the four pillars that i mentioned of post-crisis regulation and maybe looking at making them more efficient they don't need to be more -- they shouldn't be more burdensome than they need to be. >> i hope when your conversations with the chair of

supervision, that you will insist this is about the banks under 250 and insist it's not about the banks over 250, as some on this podium have suggested. thank you. >> thank you senator shelby and i do remind our colleagues that we need to stick to the five-minute rule >> that's prospective, isn't it, mr. chairman chairman powell, you referred to price stability just a few minutes ago. it's one of the mandates for the fed in your job. let's talk a little about price stability and unemployment being real low >> as fed chair powell talks to senate banking, market having a bit of a pop here as the chairman says while wages are trending up a little bit, nothing to suggest that wage inflation is at an acceleration

point. investors keeping that in mind at the same time, there's this tariff story developing with the president taking a stuff stance on those this morning. questions now about what the white house's next steps might be eamon javers is watching that this morning >> journalism a fluid situation. i reported earlier there would be an event here at the white house to announce new tariffs at 11:00 this morning i was then told shortly after we reported that, that the event was on hold and possibly going to be canceled i'm now told that the event is going to happen at 11:00, which is just under half an hour from now. but it will not be to announce new tariffs. the information i'm getting now is that the event will, in fact, be a discussion of the issues of trade. in the room at the cabinet room here at the white house will be the president along with aluminum ceos, steel ceos, white house staffers i'm told this will happen at 11:00-ish. the administration's goal is to get to a tariff announcement, but that tariff announcement is

not ready to be made public yet. what we'll see is an event involving ceos and stake holdsestakeholders discussing the issue i'm told there has been something of a political and policy food fight over the last 24 hours here at the administration between gary cohn, who's the national economic council director, also peter north america rar r peter navarro, the president's adviser on trade, on where this should land. the trade representative, wilbur ross, all weighing in with their various opinions, sometimes contradictory about what to do here the end result is that a meeting we were told this morning was on schedule was then briefly off the schedule, now appears to be on schedule again but will not include an announcement on new tariffs, simply a discussion on the issues that's where we stand now. there's still 27 minutes to go we'll see where we land. >> eamon, as you're talking, we're seeing some names pop.

caterpillar, bud, companies highly leveraged to the cost of aluminum and steel cater caterpillar has gone into the green. >> on the flip side, you're seeing some steel stocks, also some aluminum stocks coming off their highs of the day >> anheuser busch up almost 5% on that news we'll watch that dow obviously ral llying, up 12. steve liesman, you'll probably be interested in the tariff story, but also the ongoing testimony. >> that tariff story is a big macroeconomic story. fed chairman jay powell just said, quote, there is no evidence the economy is overheating. he said, the gradual path, quote, will continue to be the appropriate path he said he was surprised that wages hadn't gone up more given how much unemployment declined and carl, with the quote you gave from the chairman going into this segment right here, the idea that he's seen some strengthening in labor markets,

there could be some strengthening that could yet take place in labor markets without raising inflation. definitely off on a more dovish foot to badly mix a metaphor, this morning, compared to yesterday. i don't know if this is a conscious effort to redirect, but saying that there's room for the economy or unemployment to fall further without causing inflation and specifically saying no evidence the economy is overheating currently it's a bit more dovish than the tone he struck tuesday. >> steve, thanks dow up 155 let's get back to the testimony. >> we're trying to raise our game here. whenever we go out for comment, we also ask for the public's views on cost and benefits it's really important to us. as i said, as you pointed out, we're trying to raise our game >> a lot of it is letting the public know what this is about and what the cost would be to them as well as to the economy is it not? >> it is that is our obligation, to be

transparent. >> thank you thank you, mr. chairman. >> senator tester. >> thank you, mr. chairman and ranking member brown i appreciate you having this hearing and welcome governor powell it's great to have you here. there has been a perception being floated by some that the largest foreign banking organizations, such as barclays, ubs, deutsch bank has been talked about today, will be released from enhanced prudential standards under the economic package brought forward called s-2155. i fundamentally disagree with that i think it's -- those views are a myth and certainly not the text that is in s-2155 but i'm a dirt farmer, okay. i just kind of read things as they are and don't read a lot of extra stuff into it. you're the man on the fed. so i need to know your opinion does 2155 require the federal reserve to weaken any of the

dodd-frank enhanced prudential standards for the fbo, such as douch ba deutsch bank, ubs, or barclays >> it does not, according to my readings of the text >> can you elaborate, briefly if possible, on how those standards are applied to the largest fbos? >> well, currently what the bill does is moves up to 250 for these institutions, but it looks at their global consolidated capital. so you know, now we have intermediate holding company requirements for these companies, and none of those will be affected by this what that means is that they're required to keep capital and liquidity here in the united states that's commensurate with their activities they're also subject to living wills and things like that you know, it's a range of enhanced prudential standards. the intermediate holding company thing is an extra one that we gave them. >> okay. i thank you.

i'm also frustrated that some will jump to conclusions about how or what might happen regarding international holding company requirements just to clarify, from your perspective, the creation of the ihs was not included in dodd-frank, correct? >> that's right. that was something that we added on independent of dodd-frank >> and the legislative language in s-2155, the bill we've been talking about this morning a lot, does not require any change to the iahc, correct >> it does not >> okay. thank you for clearing that up now, i asked you this question during your confirmation, right around the time that 2155 was released it's been nearly three months. that bill has made its way through this committee and has overwhelming bipartisan support. hopefully it will see the floor next week. what i asked you at that juncture was, do you believe 2155 puts our financial system

at risk. at that moment in time, you said no so now you've had a little more time, get your feet on the ground do you continue to believe that? >> i do. >> okay, last -- go ahead. >> i can elaborate >> go ahead. >> probably the most significant piece of it is that you raised the threshold for enhanced prudential standards to 250 but give us the ability to look below 250. we'll publish a framework that addresses how we'll think about that we have not been shy about reaching below 250 one of the eight sifys is below 250 billion in assets. so i think it gives us the tools that we need to continue to protect financial to remember.

>> i just want to close with saying that i don't think for a second dodd-frank is the only reason we're seeing consolidation in banking i think technology plays a big role in that and population shifting plays a big role in that on this committee, i can deal

with dodd-frank. thank you. >> thank you senator corker >> welcome, mr. chairman glad to have you here. congratulations on your confirmation you've talked about the accommodative fiscal policy that's in place right now. just out of curiosity, i know there's people predict y'all are going to raise rates four times this year, definitely going to raise rates some how much did the tax bill -- is the tax bill that was put in place, how much of that is affecting your desire to -- or your likelihood of raising rates over this year >> i wouldn't single it out, senator. >> no, no, no. i'm not trying to single it out. just out of curiosity. it is, in fact, something that is going to be stimulative so how much of a factor is it in looking at raising rates >> fiscal policy is one of many, many factors

we're looking -- as you know, we're looking at stable prices, maximum employment everything that happens in the economy and financial conditions and fiscal policy affects that we can't really isolate one thing like fiscal policy i would expect that fiscal policy this year is going to add meaningfully to demand and that's going to put upward pressure on inflation and downward pressure on unemployment it's hard to quantify, but it wouldn't be the main factor. the economy is strong, and it's even stronger now. >> so as it relates to growth, you said it was going to increase demand. how much of a factor is it in your growth projections? the passage of the tax legislation. >> as i mentioned, i think it will add meaningfully to growth for at least the next couple of years. the real question is how much will it add to -- the amount of that is subject to very different estimates by different

approaches i guess the bigger question is, how much will it add to longer-run growth. there are a couple channels through which that might happen. higher investment should lead to higher productivity. lower tax rates should increase labor supply these are highly, highly uncertain, but we prohope the effects are meaningful there >> we've been through a decade now, i guess, since the crisis many of us were here during that time it was a pretty heady time trying to resolve those issues and yet, we went through periods of time when we were worried about deflation. obviously we had really accommodative monetary policy during that time here we are again at 4.1% employment, down from 10, as you mentioned. the economy is strong. yet, still, let's face it, 2% inflation, i know y'all are combatting anything getting out

of control elaborate on the factors that in this day and age, in this economy, in this world situation, what is it that is keeping inflation at such a low rate >> it's a global phenomenon. we don't perfectly understand it, but i would say since the crisis, a big factor that's been weighing down on inflation has been just the weakness in the economy. you've had a lot of slack, and the economy has not been tight so it makes sense that would press downward on inflation. we also had, you know, the strong dollar and lower oil prices in '14 and '15. that pushed down so more lately, we would have expected inflation to come up by a few more tenths than it has. we see identifiable idiosyncratic factors. there are other stories. the amazon effect story. there's global slack, the idea that slack around the world is affecting the tightness of the u.s. labor market.

really hard to tie those down from an empirical standpoint, but they may be -- that may be having some sort of an effect on inflation as well. it is a global phenomenon though it's not just tied to domestic factors. >> so i know that my friends on the other side tend to focus a lot on the tax bill. there's hope that growth is going to overcome any kind of deficit there. it may or may not occur. but we are, in fact, getting ready to spend $2 trillion more that we don't have by passing the bill we just passed. we've got an omnibus coming up over the next ten years. it's a minimum of $2 trillion in additional spending. almost twice what the president requested. and we have 21 trillion in debt today. how much does the deficit picture for our country come into play relative to the federal reserve? and how concerning is it to you that we continue just to party

like there's no time ending here in congress? >> we're not on a sustainable fiscal path. we need to get on one. this is a good time to be doing that, when the economy is strong and that's -- but that's a longer-run problem it's not a problem for today's monetary policy or economy it becomes a problem gradually over time as we spend more and more of our expenditures on interest rate, on debt service and we have less and less to do the things we really need to do. as we pass along bills to future generations. but it doesn't -- the unsustainability of our fiscal path isn't something that has too much of an effect in the near term on our policies. >> thank you mr. chairman, thank you. >> senator menendez. >> welcome, chairman powell. good to see you. i want to follow up on some questions that my colleague senator brown asked you. inflation is continuing to run

below the fed's 2% target, which has prompted a majority of regional federal reserve bank presidents to urge a study of the current inflation framework. while we have seen significant economic gains since the worst days of the recession, most hard-working families are still waiting to see their paychecks rise real medium wages increased by only 14% from 1979 to 2017 any recent acceleration in wages is accruing to high-paid executives and managers with production and nonsupervisory workers simply not seeing those gains. the fed's projecting a minimum of three interest rate increases in 2018. after your testimony on tuesday, the markets are now anticipating as many as four hikes. do you agree that the achievement of full employment should be associated with strong and broad-based wage growth for average workers? not just increases for executives and managerial pay? >> i do, senator

>> and if so, doesn't that argue for consideration of a monetary policy path that would allow wages to continue to grow prior to the fed's pumping the brakes? >> i agree that it does. i believe that is, in fact, the path we're on. these are gradual rate increases, and we do expect wages to move up >> what would the cost to the economy of overshooting inflation in the 2% to 3% range versus the cost to the economy of choking off growth if the fed continuin continues to tighten without a clear indication that inflation is going to exceed its target be >> one of the risks we're trying to avoid -- as i mentioned earlier, the risks are more balanced than they used to be. for many years, it was clear there was a lot of slack in the economy, and you know, i for one supported accommodative policy we have 4.1% unemployment, and the thing we don't want to avoid and that we don't want to have

happen is to get behind the curve, have inflation move up, and have to raise rates too quickly, cause a recession, and recessions hit the most vulnerable groups, you know, the hardest. so that's where unemployment goes up the fastest and that kind of thing. so to prolong the recovery, the committee's view is that we should continue on this gradual path of rate increases which balances lower inflation and low wages against the need to make sure that we don't run too far past the natural rate of unemployment >> well, i hope you'll continue to look at wage growth as part of your calibrations let me ask you this. during the confirmation hearing, i was pleased to vote for you. i asked you about the economic risks of adding an additional $1.5 trillion to the deficit and i just heard your responses to my colleague from tennessee that we're now in a sustainable path we need to get one we weren't on a sustainable path before we added $1.5 trillion to the debt in the tax cuts that were generated

and you then said in response and i quote, i think we need to be concerned with fiscal sustainability over the long term and in the same hearing you agreed with senator van hol len when he asked adding $1.5 trillion to the deficit would make a bad situation worse. now your predecessor previously testified before this committee when she said, "i'm personally concerned about the u.s. debt situation. taking what is already a significant problem and making it worse is a concern to me. do you agree with former chairman yellen that there is reason to be concerned about mounting deficits and growing national debt? >> i do. and i'll follow what my predecessors have done and not get too much into the details of fiscal policy but i will say a couple things. one is, as i mentioned, we need to get on a sustainable fiscal path in the longer run we know that we're not in the

longer run second thing is when we do fiscal policy, when do you fiscal policy, i think it's important to keep in mind measures that would increase the productive capacity of the united states of the economy things that would increase productivity that foster investment in people, in education and training, in r & d and in planning and equipment as well those policies can help the whole economy grow faster on a sustainable basis. >> i agree with you. that stock buy backs don't do that let me ask you last question in january the new york federal reserve bank president said that tax legislation is likely to generate frictional cost that will mitigate its effects on growth namely impacts regionally and in particular, president dudley was pointing out the gutting of the state and local income and property tax reduction which would raise the cost of ownership and adversely affect prices and construction activity in states like new jersey do you agree with president dudley's analysis that states like new jersey will see

regional economic disparities as a result of the tax bill >> senator, with -- i hope you'll allow me to say that i would rather not get into the particular details of any particular fiscal bill as chairman and i think that's -- i'm happy to talk about things at a high level. getting into commenting on particular sections in a fiscal bill which is not our responsibility for me is probably not a good idea >> your president of the new york reserve made that observation. so i would hope that we would look at the consequences to regional growth as part of your overall growth path. the region that i'm from generates nearly 20% to 25% of gdp for the entire nation. if we have policies that affect the ability to be that engine for part of economic growth of the country, we should be considering that as well >> thank you, mr. chairman senator cotton >> thank you, mr. chairman mr. powell, welcome. as your first appearance as chairman, first of many. i'm sure you have them all

circled on your calendar and looking foerld to them as eagerness, as a child does to christmas, right >> indeed. >> i'm going to talk about the labor market and in particular wage growth for america's workers. an article in the harvard business review last october discussed wa discussed wage trends and showed that wage gains have acrucrued o top earners and stagnant for the bottom half of the income distribution, the bottom half of the income distribution is kpri compromised of many americans who don't have a four year degree or high school i did ploem yach proema american workers without a high school education have seen their wages decline by 17% since 1979, adjusted for inflation workers with a high school education but no college, wages have declined by 2%. the chart to my left displays this, shows what i'm talking about. you can see the massive wage growth for those with a college degree or advanced degree and

wage declines in real terms for those with a high school degree or less. one of my top priorities is to ensure that hard-working arkansasians can share in the economic prosperity that we see in our country in ways that they have not over the course of my lifetime mr. chairman, you write -- i should say the entire board writes on page two and three of the monetary policy report although there's no way to know with precision the labor market appears to be near or a little beyond full employment at present. what's your personal assessment of this matter is the economy at full employment today >> as we say in our statement of longer run goals and policy strategy, we look at a number of -- there's no place can you directly observe it. so we look at range of indicators most of those indicators say that we're either at or beyond full employment. there are a couple that suggest maybe we're not.

i point to wages and labor for the participation. it's a long answer hard to give a really clear answer. we're not sure where full employment s put it all in the blender, it seems to me we're very close to full employment. particularly, i would add that isn't the case in every region >> to pick up on your point about labor force participation, while our unemployment rate is a bit of good news at 4.1% and jobless claims seem to be continuing to trend downward, it is somewhat surprising given those economic conditions that over the last year labor force participation continued to decline from 62.9% to 62.7% in january of 2018. even if you account for dem graphic change for the aging of the becaaby boom generation, two million workers are still missing from our economy job growth continues to outsee population growth which suggests

there is still slack in the labor market and a lot of the slack appears to be in part on the lower end of the economic scale of the workers who have a high school degree or less than that would you agree with that assessment >> generally, yes. we are -- labor force participation has been essentially flat since the back half of 2013 so a little more than four years. and the downward trend might be 25 basis points a year i look at us as having playmade the slack that emerged as part of the crisis. >> and the wage growth we've seen over the last year, while good, i would suggest still not good enough. especially as long as we have those missing workers. so i hate to say, putting aside the reasons you might see rate increases in the coming months ahead, rate increases, because of continued increases in wages, especially for working class americans.

and the labor market, like any other market, is a market that is driven by supply and demand, correct? >> yes >> if the supply of labor exceeds the demand of labor, then you'd see downward pressure on wages that's one reason why i and some other senators like senator purdue are focused on our immigration system if you could magically convert a million high school graduates in this country to a million stanford graduates that could go to work in our high-tech industry and presumably had a will be good for the wages of working class americans. that's essentially what we do every single year except in reverse. we bring in a million unskilled and low skilled workers that are competing against the very people that have not shared in prosperity and competing against the previous generation of immigrants i don't think that's good for american citizens. i don't think that's good for our economy. and we'll continue to work hard to make sure that those workers share in the prosperity that all

americans in the upper income brackets, college educated and more, have shared in the past. thank you. >> senator >> thank you chairman, thank you for being here thank you for being willing to serve. i want to talk about student loan debt. there is $1.4 trillion in outstanding student loan debt. highest category of consumer debt behind mortgages. it's also the most delinquent with 11% of borrowers seriously delinquent or in default the fed estimates that this number is more closely to 22% once you take into the account the number of borrowers in forbearance. in contrast, at the heist the financial crisis mortgage delinquency was under 5% and currently that rate is around 1% according to the federal reserve's data, high levels of student debt contributeded to lower rates of homeownership and new business starts. and so in your view, does the high level of student debt create a drag on the economy

>> on student loan debt, i think it's important that people be able to borrow to make what may be the most important investment of their lives which is in their education. so overall, i think borrowing to invest in yourself is something we should foster subject to a couple of important caveats. first, it's very important that people understand the nature of the borrowing and the risk that they're taking and the possible payoffs and that sort of thing so they make informed decisions. the second thing is -- fed chair powell testifying in front of the senate banking committee at the top of the hour welcome back to squawk on the stre street markets have been around the block here as we were watching the fed chair's testimony on capitol hill had a bit of an uptick when he said that although wages are trending up, there is nothing to suggest wage inflation is at an acceleration point went on to say there is no evidence the economy is currently