morning. dow futures up 120 that's about 20 points higher than where we started the show this morning s&p futures up by about 14 the nasdaq up by 80. and guys, i guess oil is one to watch this morning we'll be watching that, too. >> winnebago it's stay at home, because you can leave home in your home. i wish i thought of that. >> with a tow-able a haul-able. whatever done called it. see you tomorrow right now time for "squawk on the street." good wednesday morning and welcome to "squawk on the street." i'm david faber along with jim cramer carl has the morning off let's get a look at futures as we get ready for trading a half hour from now and we're looking up from all of the major averages the road map this morning, it starts with what they're calling the new intel, the ceo doubling down on manufacturing. investing $20 billion in two new

chip factories and claiming quote intel is back. >> plus, a big drop. you just heard dom talking about it gamestop shares down and the company considering selling additional equity shares and cashing in on the incredible reddit-fueled rally. we will have an exclusive the adobe ceo, a day after the company reported strong results and more importantly, increased its guidance. let's start off with intel, jim. you've been a critic of the company. >> yes. >> in the past i've talked a good deal about it, of course, we broke the news that mr. gelsinger's arrival right here on this program, exactly this time, not that many weeks ago. he's firmly in control now setting a new plan, he says. and obviously, investing a lot they are going to be outsourcing more than they have in the past but he says they're back do you agree >> i think first of all, he's got some bravado he certainly is making a statement. he is on our network later

today. there is, let's say, a kind of a level of excitement from a man who started it, intel at intel, when he was 18 and he didn't put on a great show, and the conference call was terrific do i think it got a free pass? yes. because in the end, he did guide low below consensus and i think if he wants to do with taiwan semi and build your own foundries, i think taiwan semi will cut you off amd is lost in the shuffle amd is a couple of years ahead of intel but if i wanted to come in hot and make a statement to customers and internally and to wall street, i would do just what he did, and i congratulate him, but i still say that, be careful, because in the end, david, when you report, and your numbers are below consensus, and he said it, by the way, in what is the hottest market i've ever seen for pcs, i call into question how much you can change

in a month i mean david, this is a battle ship and one month? all of these things happen so i think we have to be a little more let's say nuanced and i applaud what he's doing but i want to warn people who love the stock, it is very difficult to turn around intel in a short amount of time. >> you pointed out and it's true and you admitted it, these are changes that will have long term implications and not necessarily things that really will affect the short term let's take a listen to what gelsinger had to say on the conference call last night >> intel is back right? this is the old intel, it is now the new intel, as we look to the future you know, we are excited for the things that we are laying out. >> you know, i see a note here from baird this morning, that says intel is going back to its core manufacturing roots, leveraging its manufacturing expertise, both for internal production, and foundry services due agree?

>> no, they do have someone who is terrific, that can, i call him cojack, who will do a good job, but david, 20 billion for two new fabs, that don't come online until 2024. >> right. >> is that really a threat to amd? i say no is talk cheap? i think that pat laid out a great road map i think he is terrific, with a change in pace from the previous ceo, but i also know that at one point, 1.5 nodes behind amd, and i think the most important thing, david, is just understand that as exciting as it is to be building these fabs in arizona, intel's tried that before, and it hasn't worked, they have to go back to the roots of being, what i thought, in the '90s as the greatest manufacturer in the world, early 2000s, too, but the good thing is bat was there and he understands -- pat was there and he understands >> and you are a champion of amd for years now. >> i got off the intel horse. >> it is one of best calls that

you have had, jim, and you have been consistent in it. i'm looking again at the baird report though. difficult to see how amd shares can outperform recurrent multiples, investors assess renewed execution, amd remains a successful yet number two player we doubt amd will exceed 20% market share in data center while intel is already coming back in pcs, and a competitor to - >> oh, please. oh, please lisa su, she has a lead, her most recent statement, and the most recent conference call, showed that she's become partners with a lot of companies that i never thought she aez part ner with, and i really think that we have to recentering on the idea that pat is a great showman he when he comes on today, you're going to hear that intel's back to the days of andy grove, and i wish that were the case intel's not back that fast i mean mr. swan ran the company, he didn't run it into the ground, but you know, when you get a new ceo, you get a lot of excitement, but this is a very big turn that has to happen over

multiple years, and then, you know, amd's got -- >> the chip supply, or lack thereof, this is the story every single day, jim. >> you got to relate it, it is not related to intel at all, but it is a broader story, and obviously, we hear phil lebeau reporting on it from the auto industry but it is more than that. >> lam research. do they suddenly have, these are capital equipment companies, do they suddenly have machine force him when everybody is back-ordered no and i think someone should ask pat, do you really have the machines, do you have, are they going to jump the queue, ahead of taiwan semi, for the

machines and david, here's something. if you're going up and saying listen, we will use taiwan semi, but look out, we're going to compete against taiwan semi, is taiwan semi going to drop amd? lisa su, we're dropping you for about nine months and come back to you when pat competes that's not the way this business works. i salute pat but i'm just saying let's be a little more circumspect. and that's fine, we will look to see that interview on "squawk alley". >> am i breaking the argument dox -- >> you're not breaking's >> it's okay i want to talk about gamestop. we want time to talk about spacs in a bit gamestop, down 11% reported earnings, you know, what i found so interesting is some of the research, the analyst, it just fascinates me to try to sort of make sense of it all and i'll share with you, we put together quickly here, two different excerpts from two different reports, one from jefferys and one from wedbush, the new price target is based on

a 20 times p/e multiple applied to our newly initiated 2023 estimate, plus an estimated number -- from 29 to 16. and they point out by the way -- >> 16 to 29. >> no, no, no. 29 to 16 sorry, we're raising our - >> they downgrade the stock and raise the price target thank you. >> the stock is at 16. it's at 160. >> they say, listen, the fundamental, we believe investors expect a financial return, that the buyers are prepared to be in the open market, that price vastly exceeds the fundamental value we believe investors can expect and at the same time, jeffries totally revamping the way they value the company. we're pivoting, they say, to a sales multiple, so we assume e-commerce grows at 50%, of 2020 store sales, transfer, applying a 20% discount, sorry about the

typo there, we are moving fast here, the digital peers in the four to five range 3.4 times to get to 175. >> i know. >> i mean what are you supposed to do with this stuff? >> so i tried to read it without the, the call without the context of the stock, and they're doing so many things right. listen up, wed, reddit, meme people, they did a lot of good stuff, they moved aggressively into ecom, they did a good job, it's obviously that ryan cohen is the savior, 29% of sales, up for e-com, and cul, cut the exps and closing the stores that aren't working dedensifying. >> the comp store sales are down 9.5%, we're dedensifying >> and a pickup from amazon and alphabet so everything here is positive and i can see why people shouldn't have shorted it at 15 bucks. >> yes, you can see why.

listen, it's been up here for a long time. jim, what about the potential for an equity offering >> they say listen, an equity offering, they at least put it out there. kurt wolf, strategic planner, he did an equity offering of the common stock in january a lot of it now there are a lot of people who say listen, it's just a fraction but he did raise, i don't know a substantial number of shares. $21 million worth. when he had seen half of the jan january numbers and i think he felt, look, 90, you say he's a dope, he sold some at 31, on january 13th, and he looked at the numbers and i think 31 is, he probably got to 31, and i think he used the number, strategic plan, he thought 31 was high. >> i know. the analyst at wedbush says it is important to note that since george sherman arrived the net losses have exceeded $200 million to the financial engineering accomplished keurig

sherman's tenure is a testament to his leadership and the acting cfo. >> and the analyst, you see who the analyst is >> no. >> michael pack. >> oh, yeah. >> what's he think about that? >> what about netflix? >> the tiny little - >> yes. >> maybe go with the other guy, 175. >> same store sales were up, stop the music for heaven's sake. >> we got to do the music. >> we have to play the music >> because we have a lot to talk about, about spacs because that's an important part of this market >> i didn't get to talk about how great that ryan -- >>s no, you didn't >> you're done it's enough about gamestop in fact, get ready for shantanu narayen. we will take a quick break and talk stocks. not just one, a lot. i ith right, mr. negative. >>'mn e negative i'm trying to keep us on time here. >> i was negative on income.

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the due diligence process for spacs that are looking for deals and how competitive it's become. >> you can't compete against stupidity. we lost several companies a few weeks before, one in particular, where we wanted to do, you know, 60 days due diligence and the competitor said he would do three days due diligence i can't compete against that i can't do that. it's a little out of control no, it's a lot out of control. don't expect wall street to regulate spacs and if you can walk, you can do a spac. most of these companies have been theoretical companies and make no money today and hopefully in five years, they're making $8 billion. >> this is the guy who has done what, i think six of them, jim, but he always gives you a great quote. he is obviously talking about the spacs that have gone public that are looking for deal, competing for transactions, how he wanted to take more time, obviously, for due diligence, and what may be a lacking process of due diligence, for certain spac sponsors. but jim, i also want to take a

look at, as we take a look at cnbc spac 50, there is now piling up, a bunch of spacs that have filed to go public, but have not yet done so and that window is closing because things, you got ten trading below 10 bucks a share and again, these have gone public, but they haven't yet announced their deal, remember 289 smpac ipos, looking for deal and then you've got a bunch that have filed, jim, that have yet to go public, and that's where i think we need to focus, because you're not going to see 10, 12 price in a day that is over because these things are not moving up anymore at all, and in fact, some of them are trading below ten right away. >> barry, that was a great interview, and barry went on and on and talked about the customers who are disciplined and i urge people, i don't know if you can get a copy of the interview but the point that he made, there are good and bad

and i follow barry really closely. when starwood property trust was down big, what did he do he came on "mad money" and he said not to worry, things are fine, and he was exactly right, the stock took off, i think that you and i both know, he's a rigorous person, he does a lot of due diligence, he is just not putting his name on anything, and at the same time, he really did savage, he savaged what i call the industry. and he even said there are bucket chops that are doing deals and he did indicate that has got to end soon. i think that there are good and bad ones >> as there always will be and you're right listen, i don't believe, based on numerous conversations with so many different players in this market, it's not going to disappear, jim it's going to be with us, we will be talking about spacs, it will always represent a new or different way to go public for many companies, particularly ones that maybe a bit more speculative or a little earlier in their gestation than we're accustomed to, but this tsunami may be finally coming to an end. i'm calling it a spac-out.

like blackout. the great spac-out. >> that is so good. >> thank you i was very proud of that. >> spac-out. >> yes >> spac attack >> right. >> and we may see one or two or three. we may but you're not going to see this avalanche any longer >> and the ones that are below 10 - >> for now. >> don't you get 10 bucks? >> you can, get ten bucks if you redeem or if they don't do a deal, it's there so it is time value money, those things, but they're trading at 990, you can lock in nine cents. >> $8, the last time there was an overload. >> i don't believe ones that have yet to do their deal. >> right and i want to point out, david, if you go over what he's saying pointblank, he is saying that there's just a lot of companies that are, i'm going to use the word worthless. >> yeah, well, listen, we go through the presentations and we look at the projections, many of them are based on 2025 or '26

revenues and/or sometimes ebitda, and the multiples are fairly high, some are going to win, though, all you need is one big winner, if you go, you know, out of 10, if you get a ten-bagger, so who knows, jim. >> maybe do what we call field bet when we play the ponies. >> it's going to with us for good we're going to be talking about it but the good moment we've gone through, 289, smack ipos in a little more than two and a half months, that is going to slow down. >> i think we're going to look at this day, and go back and look at sterling's interview and say it really was the spac-out your spac-out comment, his comments, beginning to see some secondary, we also have some primary, quantumscape, which is the one that you ice lated, this he did a big deal last night. >> yup. >> they've got the money and that means they could charge ahead. >> that's been a great one 57 that's still an incredible win for the sponsors there, oh, my god, they're printing money. let's not forget, that's behind

all of this. money, money, money. >> you are good. the spac-out. >> you like that >> i love it >> we got nothing but love for each other and a plaid dash coming up as well and don't forget opening bell ten minutes from now stay with o"sawonhe re."usn quk t four, five, turn, kick. we got chased by these wild coyotes! they were following her because she had beef jerky in her pocket. (laughing) (trumpet playing) someone behind me, come on. pick that up, pick that up, right there, right there. as long as you keep making the internet an amazing place to be, we'll keep bringing you a faster, more secure, and more amazing internet. xfinity. the future of awesome.

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you know, it's hump day. we're standing we're doing a mad dash >> not too close. >> but we're getting closer. >> general mills >> okay. so david, what we're trying to monitor right now are companies that did incredibly well, during the lockdown, all right? and one of them that did very

well was general mills because this is an ultimate pantry stock, but david, they announced today, the organic growth at 3.5% now they were going back with the repurchase, i really like that, but david, there's deceleration here. they had 8% increase in sales, operating profit was very good i love the fact that you're going to start talking about dividend increase and that's what you liked about general mills but i point out, once again, if you're buying what worked - >> it's not working. so do you believe potentially 4% decline when we get started a few minutes from now with trading is justified >> i look at clorox. i look at kellogg's. and pepsico. up 7 points this week. i wonder a little bit better for general mills. i wantsed a little better guidance i wanted to point out, those at home, look through your portfolio and if you have something that was a big win, you're going to have to reconsider, because we're going to have adobe on later, and that's an example of a big win,

that then became a continued big -- is that a picture of me >> no. >> he's coming on at 3:00, with sara. >> that has to stop. i want to be on with us. and which one of us is talking >> and you got to ask about the cinnamon toast crunch thing. following it on twitter. some weird stuff in a box. >> a great company a great american company. >> yes >> and using it as a paradigm for zoom, a general mills, a docu-sign, who has the ability to be able to go through, like amazon, very possibly, amazon today, and capitalize off of what happened, versus who is, well, wow, that was just that moment in time campbell's got that same problem. hershey, not as much because cocoa prices >> opening bell after this

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about two and a half minutes before we get started with trading. let's go over to jim here. and this is one i like to ask, of course these mornings when carl is out, what is the key to this market, mr. cramer? >> david, do you remember when your kids were little and they were scared of cruella de vil? >> yes. >> i think that others should be scared of cruella de vil because disney is going all disney plus, they're really pushing this, and you're going to get black widow, which is going to be, that's a very important movie and you will have cruella, i radar that one, that one is pushed back to july now, but i think this is just fantastic for disney plus basically winning the tug of war with what i regard as the marginal companies that are in the theatrical business. and david, it's something to watch, because we have a big offering in viacom today, that's

going to be priced - >> no doubt. we should make sure people understand they will be releasing cruella and black widow on the same day as movie theaters. no window again. similar to what they did, actually, that pixar movie that they released, i don't believe there were movie theaters open at the time or not many, but this is a new, this is just the new normal >> right >> so we don't know what they will charge for that for disney plus but one more reason to own disney, and you know, david, they are really doing this thing right. and i, if i were adam aaron and i would like to get adam on the phone or have him on amc and i'm sure, look, adam's doing his best to get things open, but i have to tell you, disney plus, a lot of people, there is a 70 inch screen tv that is in the hall next to me for too long at our office here, and i'll tell you, i would much rather have that with some natural popcorn, not that stuff that has the faux butter, sit back, and a diet coke that costs me 32 cents

rather than $32 and watch at home so that's the real competition we all got the big screen tvs. >> we do. >> i'll take that 70 inch screen if someone doesn't clean up our hall. >> we have a bunch of tvs around this place wanda vision, i don't know if you watched it, it was great >> i'm watching season four. >> really enjoyed it. >> we will tell you who is doing the ringing at the big board digital ocean. celebrating its ipo today. we will speak with the ceo a cloud computing company. they will be speaking with the guys on squawk alley over at the nasdaq, another ipo, acv auction, an online marketplace, for auctioning used cars >> wow, okay as we watch the realtime exchange right back here, at our headquarters, where's all the money coming from? >> back there at headquarters. >> and now here at headquarters. >> where's the money going to come from when we get the deal too far, kind of like a bridge too far? >> what do you mean?

>> we will have a bridge too far? you know where gene hackman, polish army. >> i'm sorry, where is the money -- what are you talking about? >> at a certain point there will be too many deals a marginal deal will come, and it will go below the bid and another one will go below the bid and then five chinese bids below the bid and then there will be, we will get back to david, what you and i know is ipo hell not just spac hell. >> you don't do them that's all you don't do them if the demand isn't there. they sit on the shelf. >> do you think they will stop >> i think they will slow down we were talking about that a little while ago it seems as though, based on conversations with participants in that marketplace, and the bankers who bring them public, that there is going to likely be a slowdown if in fact, you continue to see a number of spac ipos trade at or below the $10 price and because you're not going to get as much demand the demand has been there. remember, there are 250 million buck, 300 million, they're not

enormous, if you look at the spac 50, by the way, those are spacs that have priced and not done their deal and then an index that have announced a deal, and that's different, that's post, there's that one, post-deal, and then when they do it, when they close the deal, then they're not spacs anymore, a la quantumscape which you were talking about, issuing stock >> and apple very positive, doing nothing. adobe, fabulous quarter. fantastic guidance stock is doing nothing intel is up on a lot of hope notice i didn't say hype and viacom is out there with a gigantic deal. >> secondary was down. raising $3 billion something we were talking about that they should likely should probably do and it's going to help them for streaming, you were just talking about disney you know, the cost of these streaming services, enormous let's not forget, disney is not going to break even on it until when 2024, right? >> i hope they pull that forward.

>> they might. but the cost is enormous and when you're a viacom and potentially doing things for your home, for paramount plus, as opposed to selling, i mean there's costs there, and so they're raising $3 billion 2 billion common, one billion preferred and the stock is getting hit. >> look, what has staying power? lam research, staying power, applied materials. koa. because pat gelsinger saying we arein are going to build foundries and those companies are back ordered and be careful because there are some companies whose stocks should be pumped right now and there are too many companies and not enough buyers. >> too many company, not enough buyers >> it's happening right now. today's the day. i mean on a positive note, tesla is barely, you know, david, the spac-out. >> does that have an implication more broadly for the overall stock market, though, jim? or is it just going to be this pocket of new issues >> i think there's going to have be some discipline here.

and there are some good articles about how, where are the stims what happened to the stimis, the stimulus check, the younger people, the robinhood deal, now the robinhood deal is, that a deal you can't wait for if you're an investor, i got to get on some robinhood, even though it looks like the robinhood people who were buying robinhood just got gamestop. >> and listen, what robinhood went through and three 3 billion they had to raise in additional capital. >> over a weekend, yes. >> it does make you question, or hope that they've got their business model intact. >> right. >> and/or have changed it enough to, so that they're in a position to be able to weather any storm that might come at them, unexpected as it might have been, of course, which we could never have anticipated the events that week. >> right and i want to watch the nasdaq, rather than the industrials, the money goes back, look, i don't want to be too nev

estee lauder got upgraded and talking about how china might be good and the stock is flying i'm more worrying about tech, with the tech deals. >> speaking of tech deals, i did want to, iphi is the symbol -- >> i thought that was amazing. >> the chinese approved it anti-trust approved it special meetings on the 15th of april. closing fairly soon. stock is up 7% pretty big deal. and again, it is the china approval, jim, that perhaps got some people's attention. because it was not expected, at least not in that time frame, and they got it. now, still waiting on one for amat, and we know this is an important component of m&a, getting that china approval, and any number of names where it's an important part of the process, and there's still questions, so this one is interesting, but a one-off, sort of hey, or does it need something? >> it's not one-off because

marvel technology is a leader in 5g, and the united states has been very, very tough on china 5g, with huawei, and i wonder if, david, i'm going to use the term olive branch, if this isn't the beginning of what iregard as the thawing of commerce, that the chinese were saber rattling for home, biden saber rattling for home, but the fact that they let this deal through, david, i think it is significant, when it comes to geopolitical discussions. it should have been turned down. the old, under president trump, this would have been turned down. >> you think so? >> absolutely. >> i know so. >> it is going to be taken, generally speaking as a positive >> okay. >> by those who are pursuing deals that will require chinese approval but getting insight into that process is a very difficult thing. >> it sure is. let's talk about a company that had a remarkable quarter which to me is putting some pressure on the market, because it's, it's magnificent, and adobe announcing fiscal first quarter results, that just crushed expectations, and more

importantly, they saw fiscal guidance, they raised financial guidance, after the first quarter, and that's very interesting, for a company that's incredibly conservative joining us now on the cnbc exclusive, is the chairman and ceo of adobe that's shantanu narayen, congratulations on a monster quarter. you really blew out the numbers. >> thank you, jim. it's always great to be back on your show and you're right, i mean when we talk about what's happened in this world, and moving from where digital was part of it, to digital only world, i think all three of our businesses did exceedingly well. >> i absolutely love what you talked about many times on the conference call, which i urge people, if you buy adobe, you got to listen digital is mission critical, not nice to have big change >> it really is. i mean if you think about the fact that it has only been a year since the pandemic, and how the world has completely pivoted

to engaging digitally, and so whether you're an enterprise, wanting to acquire a service customer, whether you're an educational institution, trying to educate, whether you're an entertainment company, trying to entertain, i think the future of work, play, it is all going to be digital, and that's where i think, you know, we have these unique opportunities, to continue to invest in innovation, and deliver great value. >> i want people to know, there are three important points, creative, the experience, and everyone one is better than expected and i know it may be short knighted but-- short sighd but you know, when it was only 19, some of them went nuts and you're back to 20, and the important thing is, you're so optimistic for the future for all three of them? >> if you think about creating, jim, we always said everybody has a story to tell. and if you think about the fact that awful these mobile devices

are not just consumption device, they're creation devices, you see what happens happening with immersive media. think about it we used to be be able to do live photo shoots and now all of those live photo shoots if you're trying to make films is all happening digitally. if you're k-12 student, who is trying to create a book report, that has do o-to be done digitally, and collaboration is underlying all of that so i think on the creative side, we just look at it and say it's the golden age of design, whether you're interacting on a mobile app or interacting in the physical store, on a particular screen, when where you're in a car, and so that's where we are the platform of choice, and certainly stock as a service is also done well on the document side, jim, as you know, i mean everybody's saying, we cannot be in a physical location, so we have to electronically sign, our sign business grew 15% year over year because it enables to you

automate that last mile. and then on the powering digital businesses as we touched upon so many times, it really is about, trying to deliver that personalized experience, in the last mil second, and customers have such zero tolerance for a bad experience right now >> you are also, i think, king of trying to figure out where digital is you have adobe digital index, which i have used because it's been the most rigorous, and you are forecasting some terrific numbers, first trillion dollar year in e-commerce coming? >> we think so and you're right, i mean the fact that we have a pulse on what people are trying to do with all of their digital store front, what happens happening on commerce, where are people's sentiment in terms of what is a part and what's not and the adobe digital index predicts is next year is the first trillion year in commerce and i don't think there is any looking back, because we have made this shift, and you know, the world's moved

to a digital first world, and i think consumers are recognizing how wonderful that is, so yes, we just continue to think that everything is going to be procured digitally >> it's david faber. as one of the largest players in the so-called creator economy, i wondered, do you see adobe playing an important role in nfts, if in fact you actually think that's a real thing, or perhaps you don't, but i'd love to get your opinion. >> well, david, it's actually been interesting, because some of this nfp stuff has been done using our tools and yet, it's been nice to see, it we've always taken the approach, david, that our job is enabling that for others and when we talk about creative cloud, david, it's the one-stop shop from inspiration to monitorization, but we've not been in that business ourselves and i think digitally, some of the works being created digitally, these are truly spectacular. so you're the expert on whether

the growth and valuation for that is, but i think the trend in terms of recognizing that digital art is really special, and has value, i think we're going to see that trend continue >> and another thing that we talk a lot about here, i'd love to get your take on is spacs and i ask that because adobe like a lot of companies does smaller private company acquisitions, and i wonder, has that market, the enthusiasm that those private companies are meeting in the spac world, has that precluded your ability to actually perhaps buy companies who otherwise might have given the valuations are soaring >> i think if you take the big picture on this, david, i mean it's clear that there's so much money in the system that people are finding very, very different financial instruments by which they can buy companies, and i think the really good companies that there will always be a market for them, and there will always be an appropriate valuation, but i do think there's an element, where people

are able to raise all of this money, and unless you find great companies to buy, how do you put that money to good use i think as it relates to adobe, i mean we're always looking at it when we buy companies in terms of being able to say, do we have a shared vision? can we help scale that business? so we just acquired workfront, workfront which is a marketing work flow, it had a really great quarter, and so we actually don't worry about the fact that we will be able to acquire the right assets, because we do have the capital, but we would be disciplined, david, and if there's frothiness in the market, we're willing to, you know, let that play out, because i think at the end of the day, real companies will, you know, find a way to break through. >> every time you do a conference call, i learn something new. also when you do your giant presentation, i learn something new and then "mad money," i feel berift, because how do i not

know liquid mode, could you describe what we're all using because i better get on it >> well, you know, what's happened, jim, is multiple is where everybody is accessing all of this information, mobile is where everybody is accessing all of this information and there's trillions of pdfs out there and researchers have said, how do we understand, every single pdr that was ever created, and this is a pdf that might have been created 20 years ago where we no longer know what the structure was, a table, an xcel spread sheet and by the mobile device, by clicking on the pdf and the liquid mode approach it makes it completely responsive and we analyze the structure and understand the sy mantic usage of what the author was intending to do and i think the experience was incredible i was on the road, traveling in india, jim, and our entire track, we did it with me on a

small call with small bandwidth and liquid mode changed my life and filling out a form on a mobile device and electronically sign something on a mobile device, if we can analyze the pdf and understand the semantic meaning of what you are doing and make it more intuitive and fun, we're delivering value. i would love to get your feedback. >> john murphy, best of luck, fabulous cfo, he did great and you referenced the partnerships with microsoft and service now, you called them out about the this is now key. it is almost a triad over and over again, youthree win a lot of business together >> well, we were one of the first companies to say that, you know, when we think about cloud-based approaches, we literally have to have a preferred partner, and microsoft was that preferred partner we had the shared vision of saying how do they support azure, they have dynamics, we

have the experience cloud that's clearly the leading platform, and together, if we can make sure that we're doing the integration, that's delivering great value to customers so they are doing an incredible job. same thing with bill and i, we have created relationships, even when bill was at sap and so with servicenow, as they're completely automating what you can do within an enterprise, it's the ability to content management, that's adobe, what's the signing, that's adobe, and you know, what they have done is this incredible developer environment, to create these applications, so when you can come together, on behalf of the customer and find a way in which both of us can monetize it, those are the lasting relationships that, you know, really change the world. >> well, and they matter tremendously i want to congratulate you, for just a terrific quarter and another learning experience because we all do learn that we

are creative and every year, there's someone new, and there are kids in first, second, third, fourth, fifth, sixth, who realize they're creative and that's empowering and thank you for empowering maybe billions of people great to see you, sir. >> thank you, jim, thank you, david. for having me. >> david, yours. >> thank you, jim. let's get to rick santelli with breaking economic data and a bond report. rick >> yes, david, the market preliminaries are out, which are soon to get the finals markit, and the most covid high was january and the remaining two, very nice, 06, 60.0 on services, how does that compare? a post-covid high if it sticks 59.1 is the composite. that would also be a post-covid high if it sticks.

excuse me. i take that back 59.5 last look was the high. so this is very close. very solid numbers now, let's get to the market and if we look at what's going on in 10-years, in the 24-hour chart you can definitely see it looks like it is mostly climbing and the two-day chart, gives you the idea that it starts to climb when it comes to yesterday's low yields and if you go back to friday, you can see we reversed a bit and the month to date chart, it's a solid month. and as a matter of fact, we're up 25 basis points, in yield, for the month of march, let's call it a quarter point tightening, shall we and much of the retramts that we had didn't last very long and i think that's key because that has been the pattern since the end of february's fed meeting where we continue to see rates climb and if we switch gears a bit and look at the dollar index, once again, it may be the area that gives you the most information if you're investing in u.s. markets. why? because it's the only throttle

that i see that's giving us a clue as to how we're supposed to interpret janet yellen and of course chairman jay powell it really is strong. now, as you look at one 24-hour chart of the dollar index, mostly sideways. and then when you go to a one week chart, no way is it sideways as a matter of fact, that one week chart, we're up over a cent, up 1.23% just in five trading days and if you open the chart up to early november, if we close here, this will basically be a 4-plus month high in the dollar index so we want to see all of the testimony on the senate side and see how much more horsepower all this stimulus is going to give that dollar index, jim and david, back to you >> rick santelli, we're getting some breaking news now on tomorrow's big hearing involving technology ceos, let's get to ylan with the latest for us. >> david, the focus of that hearing tomorrow is on misinformation on social media,

and in the written testimony, the tech ceos outlined the steps taken to combat it so far. but they also acknowledge that more can be done facebook ceo mark zuckerberg argues that the content and the platform is divisive, because society is divided he says his company has removed 12 million pieces of misinformation around he said they have removed 150 million false claims around the election they have doubled the people in safety and security to 35,000 since the last election. on the section 230, he feys facebook is open to reform he said that liability protection should be contingent on having a system to remove harmful and hateful posts. he says platforms should not be held reliable if the detection is evaded. that would be impossible but they should be required to have adequate systems in place to address unlawful con tenlt. twitter's ceo outlined areas where his company and the industry can improve,

transparency, procedural fairness, algorithm choice and privacy. he said right now there is a trust deficit. not just on social media but across institutions. he said our efforts to combat misinformation must be linked to earning trust. without trust, we know the public will continue to question our enforcement actions. meanwhile, as for google's ceo, what the senator said is he talked about repealing or reforming section 240 and warned there can be unintended consequences including the ability of platforms to take responsible action to protect their users in the face of constantly evolving challenges david, that's going to make for some fascinating exchanges with lawmakers today. >> we'll cover it closely. appreciate you bringing that testimony to us. thank you. later on squawk alley, pat gelsinger. we talked a lot about intel on

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all right. we were talking a lot during the break, but i don't think you told me what you're doing for stop trading i'm waiting. >> people don't like tech today. interest rates are ticking up. it's a wrong faang day wrong faang. diamondback energy is the leader, and the other faang that we so effectively loved at one point is all falling short and that's because oil is going up, and rates are going up, and when that happens, people buy the industrials and they sell great tech stocks like faang this is good for whoever is doing an etf do a faang versus faang and make $50 million, and i make nothing. >> faang versus faang? this is the original faang

>> right buy versus buy when you went to the dentist when you were younger. i pointed it out what a show. >> yeah. interesting show >> you want a hot stock that fits this theme? >> sure. >> i have nucore on tonight. largest steel maker in the country. and then a reddit wall street bets extravaganza. >> tell me >> uwn this is uwm is the company that people want. almost as much as game stop. and it's a wholesale lender. boring >> yeah. >> we might make some fire works about it >> we will that's the kind of company they want >> this has a big short position and they're going up against rocket you know what, david we're going to get to the bottom of it. >> you will? you promise me >> no. >> i was going to ask the really tough questions? >> actually, i have a lot of tough questions. >> do you? >> yeah. >> the guy is probably going to

cancel now >> no? >> no? >> they're making it so if you do business with rocket, you can't do business with them. i want to see if that's a good or bad idea. >> got my attention. >> what a show >> yeah. >> how is enintel? >> it's hanging in there it's up a little bit >> we'll be doing it again tomorrow so rest up. >> rest up >> yeah. >> i'm going to go to bed. >> yeah. i know and then you wake up two hours later. >> yeah. ur athaking of time,noer ho of "squawk on the street" straight ahead don't go anywhere.

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good wednesday morning welcome to another hour of "squawk on the street. i'm david faber. carl as the morning off. let's get a check on the markets. we're up on the s&p and the dow but the nasdaq which is, well, running into head winds of late is down about .4%. we're watching capitol hill this morning. jay powell and janet yellen with facing questions this hour it's their second day of questioning on the u.s. economic recovery from the covid-19

pandemic the main message from yesterday's testimony? the economy is well positioned to bounce back, but it will take time with chair powell saying, quote, the recovery has progressed more quickly than generally expected. in large part due to significant fiscal and monetary policy we will start with the markets, and all the major averages in a bit. morgan, let's get to you as we look at the broader market, i wonder what you're listening for. obviously inflation and whether we're seeing it in corporate earnings is always an interesting point of perspective here >> yeah. look no further than general mills earnings this morning. the ceo on the conference call said, quote, inflation is broad based and global and that quote, we will realize pricing. i know we can debate especially when we talk about food prices or gasoline is also in focus right now. the possibility of 3 dollars for

a glan of gas. it can ebb and flow, but it gets back to the broader debate about what all of this stimulus in the market, whether it's fiscal or the monetary -- whether it's monetary you know, what longer term that is going to mean that is going to look like not surprising to hear the fed chairman basically hold pat on the message that we've heard from not only him but all the other fed officials and the fed speak we've gotten this week that that recovery is progressing faster than expected but still there's a long way to go and it's not likely to trigger too much inflation or too much inflation over the longer term. but in some ways i do think, david, we're kind of in unchartered territory right now. the other thing i'm keeping an eye on we talk about shipping rates a lot. also given some of the capacity constraints expected not to be a longer term issue. when you see the postal service saying they're going to raise rates, i think that's something to keep an eye on, too and what that is going to

company not only for company earnings but a push through to consumers as well longer-term as that particular agency tries to dig itself out of a really big hole we're going to start with the markets and keep going with this conversation all the major averages trying to rebound after finishing lower yesterday. it's a mixed picture right now the s&p is up about .4%. charles schwab, chief investment strategist joins us now. great to have you on the show. >> thank you so much nice to be here. >> i want to get your thoughts on this. i feel like we've been beating this drum for months again, i want to get your thoughts on this inflation debate and also just i guess more broadly, what you expect to see out of day two testimony from both the fed chair and also the treasury tech sayre. >> i don't expect too much different in terms of their general comments, i guess maybe the line of questioning could be different, but i think the theme will be the same on inflation at this stage i'm largely in agreement with what

powell and yellen said you've got the base effects which are going to boost inflation. you have the obvious pickup in economic growth. you've got the supply/demand imbalance. price shocks it's a question of the sustainability i think we'd have a pick up in m-2 velocity the velocity pick up relative to the unbelievable growth we've seen in money supply before we get the kind of systemic inflation that i think would be much more troublesome for the markets. >> yeah. in terms of what we are seeing in the markets, i mean, could probably make the argument we've started to see weakness in the chinese stock market a similar situation, some of the other international markets and emerging markets the dollar has been strengthening. it's testing key technical levels as well here. how does all of this i guess bode for the broader stock picture right now? whether it is domestic or looking around the world and seeing what is essentially now kind of a choppy possibility of

a choppy recovery given some of the covid case beta we're getting? >> i think the initial move up in the dollar may have to do with positioning and sentiment it's one-sided on the short dollar trade now you have hedge funds in a bigger long position on the dollar and just growth differentials as we move into the height of this pickup and economic growth. i think you may have to see some cuts to earnings estimates if the dollar continues its assent. the weakness in the dollar was a significant support for this turn back up in earnings i think that does remit a little bit of a risk to 2021 earnings if we continue to see this rebound. >> you mentioned the lack of sort of in your opinion, at least, seeing the systemics inflation that we saw in the 70s and early 80s. i wonder why what is the difference now what potentially could change your opinion >> i think it's slack in the labor market it's the wage price spiral

aspect in a much more direct phillips curve relationship we're seeing now it doesn't mean we couldn't sew the seeds to the extent we see a significant drop in the unemployment rate, but we don't know whether there's a secular shift and whether the phillips curve worked because we went down out at a sub four unemployment rate and it didn't cause a pickup in inflation. that's at least a necessary ingredient to generate that more systemic kind of inflation >> yeah. and on the market itself, we are seeing sort of a fairly rapid sector rotation, if you want to call it that i'm curious as to what you think or where you feel most comfortable right now if you're an investor. >> so you know, we have two outperform ratings at the sector on financial and health care that said, i think these flip-flop kind of days and weeks are likely to persist. probably the best strategy around that is more frequent or

volatility based rebalancing where you actively trim where there's strength and add where there's weakness and just try to kind of react to the market in that fashion versus trying to anticipate what the next one day or one week trend is going to be because some of these are literally happening in 24 hours where you go from financials at the top, techer come services at the bottom and the opposite the next day i think trying to trade around that and trying to anticipate what's going to happen i think is a treacherous effort. >> thank you for joining us to kick off the hour. >> my pleasure yesterday jay powell and janet yellen saying they are both confident in the stability of the sector. no plans to raise the interest rates until the economy is close to full employment the ceo of td bank is with us. nice to have you you have a decent insight into the behavior of the consumer the willingness to both save and

borrow what are you seeing among your customer base? >> well, first of all, good morning, and nice to be here and thanks for the question. you know, it's amazing given where we were just a couple quarters ago to see the energy that's in the market and to see quite frankly a fairly bullish sentiment that i think when we look out across various industries both on the commercial side and our consumer customer base, folks are starting to look on the other side of this pandemic, and i think folks are growing more and more confident that science is beginning to get ahead of this and you're certainly starting to see a far more bullish sign in the coming weeks and even months ahead. the way the customer and the consumer is behaving in particular, you're seeing record cash balances at most of the major banks in the u.s you're seeing the savings rate certainly increase dramatically year over year yet, you're beginning to see

signs of increased spending patterns i think that very much bodes well for the recovery. >> you know, i'm curious given that in particular, i don't know if you had time yesterday to watch chair powell or treasure secretary yellen or read about their testimony was there anything in terms of what they're saying that you're aware of that you disagree with based on what you're seeing in your business? >> you know, no. and even to your previous guest on, liz ann, talking about the nature of inflation and what we're seeing in the markets, i think it was a good commentary, and quite frankly, over the next several quarters, we would have a view that a little bit of inflation, not only in the u.s. but in the world economy, would be a good thing. so i know from a monetary policy and a fiscal policy, it's very accommodative these days but we actually support and applaud that very much given where we are at the cycle. we certainly want to see employment come back fully on and there are many, many industries that certainly have underperformed some of the broader and headline numbers

that we watch day in and day out. and we certainly want to see small business pick up in the coming weeks and quarters ahead. >> i'm glad you brought up small businesses ppp, we have another tranche being carried out right now. do you expect that deadline to get extended and just in terms of the activity you are seeing from small businesses that are making applications, what does that look like >> well, you know, we have a very good vantage point when we talk about small business. we're the number one small business administration lender in the country for several years in a row and you know, we have a very good lens on different industries really from maine to florida, and what that outlook looks like in the first round of ppp, we were the number six lender in ppp, and certainly our business customers needed it desperately to continue to support not only their employees but to keep their businesses afloat. in the second round, we're

seeing strong volume a high number of businesses coming to us for round two and i believe across the industry were also first-time filers or applied for it the first time as well they're coming back for a second tranche in strong numbers and we're seeing that very robust volume right through obviously it's passed the house. we're watching it closely. i think this would be very good for small business and their employees and really good for the overall economy if we extend this out a couple months >> i guess just looking at ppp and what that's meant for the small businesses that have been able to access that funding versus some of the reports we're getting that there's something like hundreds of thousands of small businesses that still had to close their doors in the midst of this pandemic, when we get past this, we're on the other side of the pandemic and we're truly in this reopen economy, what do you expect to see in terms of that small business landscape and i ask that in part because obviously small businesses are such a generator of new jobs

>> correct but if we just take a couple industries and have a little deeper dive on the perspective from restaurants to travel and leisure, to industries that really are tremendously affected by the closures we've had and the restrictions we've had, really across the u.s., you can definitely see as we begin to reopen not only because of stimulus, but because we get to the ere end of the science on this, and more people are vaccinated and the economy is really beginning to open up, i think you're going to see a flood of investment. not only back into new businesses, but back into existing businesses as well. it feels like there's a lot of pent up demand out there once we get to the other side of this hopefully in a couple months >> speaking of that, gregg, i know in your branches, you've got employees working the lines the entire time, but what are your plans in terms of bringing people back to head quarters and the like to the offices? where is -- when is that going to happen? where are you on that and what are your expectations? >> you know, as you can imagine,

when we thought about getting everybody safe and sound a year ago, right around now, our number one rule was let's keep our people safe and keep our customers safe and we'll find a way to run the business obviously we've done more than find a way to run the business when we're getting to this point in the cycle of where we are and people are getting vaccinated, we don't want to rush people back into the office where we are at this point and have a spike in infections or new cases. what we want to do is be careful and mindful. but clearly in the next couple months we can begin to see scenarios where if new cases really begin to fall, hospitalization rates begin to fall, more folks are inoculated across, we'll certainly be putting plans and we're looking forward to getting folks back in when it's safe and sound for the right reasons. >> yeah. we'll keep monitoring that it is an important component of the overall normalization. gregg, thank you for your time appreciate it. >> thank you still to come, we take you

live as jerome powell and janet yellen answer questions from the senate banking committee and don't miss the interview of the day pat gelsinger joins squawk alley in his fist interview since tking the job as ceo at intel inhe meantime, "squawk on the street" will be back in two. so you're a small business, or a big one. you were thriving, but then... oh. ah. okay. plan, pivot. how do you bounce back?

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it is time for the etf spotlight. we're looking at the ticker smh.

it's up over 100% over the past 12 months. slightly lower this morning. today, though, it is getting boosts from three of the top ten holdings intel, applied and lam all higher they are investing 20 billion to build two new plants in arizona which plant will be operational by 2024. the announcement signaling intel will continue to focus on chip production while many companies separate design and fabrication. squawk alley will speak with the ceo all about that and more in the next hour. david. >> yeah. it's going to be interesting to hear him, of course, talk about the fact that he believes they're back, morgan fully believes intel is back that was his key sort of phrase on the video chat yesterday. jim cramer, of course, he and i having a long conversation about

it begs to differ, perhaps not saying mr. gelsinger is not going to be successful, but it's going to take quite some time and not coming at the expense he says of amd. intel shares had backed off from what had been bigger gains earlier in the session >> it's going to take a lot and i'm sure they'll get to that in the next hour. it's going to take a lot to build out that capacity and to stand up more production ability here in the u.s. over the next couple of years. certainly we're talking about things like chip shortages digging autos. the durable goods orders number that actually posted a decline, a surprise decline as well but keep in mind, i know i've brought it up before when you talk about something like semi conductor manufacturing, it's very much become a topic of national security just given the fact that so much of the chip supply that we as a country and really the world depends on comes out of asia and comes out of some of those key countries that are as one lawmaker i think put it recently, within striking

distance of china as well. it has become this national security discussion. you do see entities like the defense department wading in to try to stand up more production and more manufacturing capability in the u.s. there's a lot of bipartisan support as well. and i would note there is a key event this week, a conference this week that is focussed on artificial intelligence from a national security lens so there are folks like erik schmidt, former google ceo who have been outspoken about this i would expect we're going to hear more on that front. >> and important to note intel's plan to spend $20 billion in arizona to your point about being u.s.-based of course, they are the largest chip maker in the u.s. we're looking forward to hearing from mr. gelsinger that's about a half hour from now on squawk alley. let's call it 45 minutes stay with us ♪ ♪ (upbeat music)

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and a portion of the senate banking committee testimony right now. we're going to take you there live as it happens in the next couple minutes first, let's bring in the former federal reserve governor thank you for being with us this morning. welcome. >> great to be with you. >> so fed chair powell has been pretty -- he's held pretty steady in recent days, recent weeks on this idea that we're seeing this economic recovery take root and perhaps faster than expected but there's a long way to go. and that while inflation might be picking up a little bit, he doesn't see it as a longer-term lasting situation. it's been interesting because we've had some fed officials former fed officials on in recent days who have been a little more skeptical about that outlook. how do you see it? >> i think he's trying to take the optimistic approach that yes, there will be a surge in consumption. we've had this enormous fiscal

expenditure coming but we can deal with that because it's just temporary. that's possible. i mean, i don't think that's an unreasonable point of view i think there's a risk that we'll get a stronger push up in inflation with a new approach that the fed is taking the average inflation targeting approach they will allow inflation to get above the target of 2 % for sometime to make up for being under 2 % for some time. that could lead to people getting worried that, well, is the fed really going to raise interest rates to bring inflation down if it does get above 2.5 or 3%? and that could lead to higher inflation expectations and to a difficult situation. i think there's a risk there i think it's a riskier situation than in the past i'm not saying that's the most likely outcome we're going to see inflation expectations become an -- but i think it's a clear risk >> some assume focus for secretary yellen on what she calls revenue raising for lack

of a better term namely higher taxes. perhaps on corporations and wealthy individuals in the united states. just give me your thoughts on whether that's going to make sense if, in fact, the administration does come forward with a large infrastructure plan that they are going to at least try to pay for >> the key thing is is it worth making that investment if you have investments that make sense, just like with a company, you have investments that make sense, then it makes sense to try to raise revenue in the most effective way possible. if you're just spending for spending, it doesn't make sense. you're raising taxes, giving incentives to work and invest. it slows economic growth it depends what you spend the money on we don't know what that is, but i find it hard to believe that after spending such a large p percentage on gdp, you'll find large investments that pay off for 50% of expenditures. >> you don't believe

infrastructure we all know the needs are that are abundant, roads, brings, airports, ports. you don't think that's a productive use of capital? >> it can be it depends if you do the right bridges and roads rather than roads to nowhere or roads for road's sake, sometimes these things can get up in politics and it isn't always the highest -- the highest value project that gets the result or gets the funding if we can find good projects that have good payoffs, the real bottle necks, that's fine. obviously we have a lot of issues on infrastructure of thinking about how cities are going to operate going forward you know, what was always see an increasing the size of airports, and we've got to increase rail transport from airports to central cities, are we going to see as much activity in central cities as much air activity as in the past? we don't know that >> we could talk about this all day. we are going to get that to the

that testimony, though randy, thank you for joining us. come back again soon >> great to be with you. >> comment on particular fiscal bills as you know. but i would just say generally this situation called for a strong fiscal respond and we had that >> secretary yellen, how does the american rescue plan help women and people of color and the people often left behind in our economy? >> well, the rescue plan is very much focussed on getting aid in a whole variety of ways to those groups starting with unemployment insurance, rental assistance for people who are in danger of losing their homes, food assistance. assistance to small businesses, especially in low income

minority communities just aid to state and local governments. much of which can be directed toward those groups that have been most adversely affected by the pandemic so there's also child support. an increase in the child tax credit to help families with burdens, household burdens there's an expansion of the child dependent care credit that will help women who were at home with family responsibilities get back to work so a broad range of features that are directed at those groups >> thank you, madamer is tear. i notice one of the first things you mention is particularly of interest in this committee, the work that a number of my colleagues did to help renters

pay their bills and keep a roof over their heads i hope you'll continue to work with others to get this help out to renters quickly secretary yellen, do you think getting people vaccinated as fast as possible as the american rescue plan are doing, does that help the economic recovery >> oh, yes absolutely as chair powell indicated in his own remarks, ultimately the economic recovery depends on success in getting the pandemic under control, and vaccinations are critical to our ability to accomplish that. >> and chair powell, as you said earlier, you obviously agree with secretary yellen from what you said earlier do you think chair powell, do you think direct payments to families help the economic recovery >> again, i'm reluctant to --

these matters are for congress, elected representatives. not us nobody has elected us to make these decisions. i would rather say at a high level, i think fiscal policy has provided a lot of support and it's been appropriate. >> secretary yellen, do you want to expand on that briefly? >> well, i think the direct payments are providing support to families for a wide range of burdens that many have suffered over the last years. there's support that's targeted, but i think this is a full spending that will produce, will speed the recovery one last question of both of you. secretary yellen do you think banks buying back their stock helps the economic recovery? >> i have been opposed earlier

when we were very concerned about the situation that banks would face about stock buybacks, but the financial institutions look healthier now, and i believe they should have some ability to abide by the rules to make returns to shareholders >> i said that was my last my last joint question to each of you, what are the lessons learned from the pandemic's impact on the economy that we should use to make the economy and financial system more resilient to the impacts of climate change do you want to start, chair powell on that and then close with secretary yell snn. >> on climate change, i'll quickly say that we have a mandate to supervise financial institutions and one to look after financial stabilities. so we don't have a mandate to do anything in particular regarding climate change we look at it as only to the

extent to the within those particular existing mandates and as you know, we are in the early stages of trying to understand what the implications are both for financial stability and for a microprudential basis. how should they think about those risks and ultimately manage them over a longer perion >> i agree i think it's important to make sure that financial institutions are resilient to the risks from climate change as well as other risks and i think it's important for regulators to assess those risks both to understand them and to help the institutions themselves understand and manage their risks. >> thank you, madame secretary ranking member toomey is recognized >> thank you, mr. chairman i just have to observe if you pick up almost any newspaper in

towns across pennsylvania in the last week or so, a prominent story has been recurring all across the state that is the story of mayors and township commissioners and county commissioners meeting to try to figure out what in the world they're going to do with this mountain of cash that just got dropped on them after having collected all the revenue they expected last year in some cases it's 50% of their entire budget really, just extraordinary. my question i'll start with chairman powell. and what i like to do, mr. chairman, is follow up on a conversation we had last week. i want to kind of understand how the recent fed projections fit together in some ways there are some apparent outliers, at least it appears that way to me i'm referring to the fed's recent revisions, economic forecasting revisions have a very significant upward revision in gdp growth, 6.5% i think is

your real gdp number for this year not inconsistent with where a lot of private economists are. that's a 2 .3 percentage increase the unemployment you project is only decline of half a percent, and the inflation rate over the course of the full year, you guys are projecting it will come in lower than it's been for the last three months. so on average, for the remainder of the year, you're projecting inflation to decline i think most economic models that would have that big an upward revision in economic growth would have a stronger reduction in unemployment, and higher likelihood of inflation and my concern is if your models systemically were to understate the progress we're likely to make on employment and understate the risk of inflation, it could lead to accommodative policy that goes too far for too long can you walk us through why you

have a relatively small improvement in the unemployment rate and a declining inflation despite the strong gdp growth? >> let me start by saying what we publish in the summer of economic projections is just that, individual projections totalled up and tabulated really, not -- it's not something we vote on but i'll address the medians which are what we publish. so the reason that unemployment doesn't go down further, given the level of growth, is really just that we see participation expanding on a different margin. it's people coming back into the labor market that holds the unemployment rate up it's highly desirable outcome. but this was the biggest drop in participation since world war ii that's part of it. there are a bunch of other things that go into it and of course, there's a good amount of uncertainty around that >> i'm just -- my concern is because obviously private sector economists are aware of the

decline in the work force participation and it seemed to come to different conclusions, but i understand this is an art, not a science. let me just -- i'm going to run out of time here direct my next question to secretary yellen but first, on the topic of imf, sdr, i want to thank senator kennedy of his leadership on this issue madame secretary, as you know from our conversation, i'm very concerned about the issuance of another 500, $600 billion of sdrs in the name of helping poor countries respond to covid sdr allocations are not meant to be a source of foreign aid that's the realm of congress to decide whether or not to extend foreign aid. and as you yourself have pointed out, this is an extremely inefficient we to deliver that aid since the money goes mostly to g-20 countries that have no need for this. so i'm just wondering why it is that you seem to have changed your position on the desirability of using sdrs for

this purpose, and is this a final decision that's already been made, or is it still in flux >> well, before committing to it, we will certainly as the law requires consultant with congress i would say that the current crisis has increased the need for global reserves, and that's the imf's assessment the global economy suffered a very severe collapse in 2020 it contracted by 3.5%. the emerging market and developing economies face considerable external financing needs, and an sdrl occasion will help countries meet this need for reserves without forcing them to tighten fiscal policy which could lead to further global divergence.

now, this is a joint effort of the global community, and there's broad support for an sdr allocation it's true that rich countries will get sdr that's how it works. it's tied to each country's quota in the imf, but many countries have indicated a willingness and desire to recycle the sdrs they receive either in the form or loans or grants to low income countries so that will magnify the impact of the sdr allocation in terms of providing resources to low income countries >> i see i'm out of time thank you, mr. chairman. >> thank you, senator reid from rhode island is recognized >> thank you very much, mr. chairman

welcome, madame secretary. good to see you. we are all interested in getting everyone back to work. you've indicated it could be a full year until we reach full employment in that interim, would you support enhanced unemployment benefits i think the american rescue plan has done a great deal to help the unemployed, but that effort, i think, should continue your views, please >> well, i think unemployment remains high, and it's important to provide the supplementary relief in the arp, and that begins to expire, i believe, in the fall when, i believe, the economy will be getting back on its feet people who have raised concerns about whether or not this additional aid will deter people from going back to work, that's

certainly not an issue when unemployment is as high as it is now, andstudies that have been done suggest that people receiving this have been accepting jobs it hasn't deterred work, but i do think it's appropriate as the economy recovers, and i hope it will by the fall that that should be phased out >> just a follow on point. i've noticed coming from the past recoveries, some areas come back much faster for many different reasons. some are slower. in the last major recession, nevada lagged behind significantly. would it be appropriate for states to qualify for extended benefits if they're over a certain level of unemployment, and even if other states have broken through >> i think the experience we've

had suggests that the time may have come to modernize our unemployment system, and to look for ways to tie the generosity of unemployment benefits to local conditions or to put in place automatic stabilizers that tie the local conditions to national unemployment rates. so that is an adjustment that would seem sensible to me. >> thank you, madame secretary further question, let me thank you, because you responded to a letter that senator collins and i sent with regard to the coronavirus economic relief and transportation services act. the act helped a school bus and passenger vessel companies around the country can you give us an idea of when you'll be issuing the guidance

for the distribution of these resources? because these companies are really hurting >> well, i know they're hurting. they're mainly small businesses. it's a highly complex new grant federal, and unfortunately, our need to better understand eligibility and the how to get money out to and we've done a lot over the last couple of months, working hard on it but we're working very hard to build an online application portal, and to write up the standard agreement so i hope soon we'll be able to get it out. it turns out that there are a large number of companies that are eligible we expect the demand to be very

large relative to the billion dollars in funding that is available and we'll have to sort through how to allocate it fairly >> thank you chairman powell, i have just a few minutes, a few seconds left, but we spoke about this previously bottle necks in the world economy, and today we have a classic example the suez canal is tied up but how are you reflecting those bottle necks and supply chain in your outcome if at all or your projections of economic growth >> we have a literal bottle neck in the suez canal today. yes, we're monitoring all of that and our staff is trying to model that as well we do have some slowdown in production what's happen second down that covid has changed both demand and supply in some cases we're seeing with chips that go into cars now, we're seeing it there. we're seeing it at various

places in economy. the sense of it is that there will be slower growth and maybe some modest upward pressure of prices on goods. that should be temporary bottle neck by definition is temporary as supplies adjust >> thank you very much thank you, mr. chairman. >> thank you, senator reed senator shelby from alabama is recognized for five minutes. >> thank you, mr. chairman secretary yellen, in 2017, when you were chair of the federal reserve, you noted that it was concerning to you that the u.s. debt to gdp ratio was about 75% at that time today the congressional budget office projects debt to reach 102% of gdp at the end of 2021 is the nation's growing debt something to be concerned about, and if not, why not? because it seems like we're

layering more and more debt because of the crisis and so forth. >> so, of course, our finances need to be on the sustainable long run half, and that's a very critical responsibility for all of us. my views on the amount of fiscal space that the united states has, though, i would say have changed somewhat since 2017. when i said that, and it's partly because the interest rate environment has been so very low. and most economists and observers believe that interest rates have been trending down in developed country the now for several decades. that that trend predates the financial crisis, and is likely to continue, and what it means

is whereas in 2007 when we had a 35 % debt to gdp ratio, now it's closer to 100% in fact, interest payments on that debt relative to gdp have not gone up at all and so i think that's a more meaningful metric of the burden of the debt on society and on the federal finances and so i do believe we have more fiscal space, but it certainly doesn't mean that anything goes. i believe in responding to a crisis with a needed surge of spending that's temporary that it was fully appropriate not to pay for it under the circumstances, but longer run, we do have to raise revenue to support permanent spending that we want to do.

>> what long-term issues could come to harm us dealing with substantial long-term debt to the economy? in other words, it can't be a benefit for the economy except temporary. what are some of the systemic things that could happen because of too much debt >> well, if a country has too much debt, it may drive up interest rates, and in the process of doing that, it can crowd out other forms of productive investment in the economy, capital investment, housing, or other intrasensitive sectors, and that may be a good thing or it may be a bad thing it depends on what your expenditure is for if it were, say, for infrastructure spending or for investments in people that had a

very high payoff, we might decide that was a worthwhile trade to make, but it does have the potential to crowd out private spending >> chairman powell, i have a question for you, if i could the ten-year treasury yield jumped above at one .7% last week 1.7, which was the highest level, more than the year. i think it's dropped a little since then but the yield curve between the two-year and the ten-year notes were 160 basis points. the steepest since 2015. what do you attribute to this uptick in yields in recent weeks and what about the yield curve did you get into that for a min minute. >> sure. it seems that rates have

responded to news about vaccination and growth so higher growth, higher inflation, lower cases of covid. in effect, there's been an underlying sense of an improved economic outlook that has to be part of why rates would move back up from the low levels they were at back up toward levels that were more likely to see. and that's been an orderly process. i would be concerned if it were not an orderly process or if conditions were to tighten to the point where they might threaten our recovery. >> chairman, we're all concerned about inflation, price stability. that's one of your mandates at the federal reserve. in the event that inflation does rise precipitously and it becomes an issue, we hope not, but it could what tools would the federal reserve use or have left to maintain and work toward price

stability? >> our -- fundamental and well understood tools are for that purpose. for the purpose of guiding inflation. that's really our tools that create accommodative or less accommodative monetary policy. that's interest rates and also asset asset purchases. let me just say we don't expect the kind of inflation that you talked about, but we have those tools and if we were to face inflation that moved up and that threatened to deanchor inflation expectations above 2% we would have those tools and use them in a way to guide them back to 2%. >> what dubl is going to be the -- >> senator shelby, wrap up if you can. >> my last question. ha do you think will be the growth rate of the economy, real growth, in the next nine months? >> i don't have a personal forecast i will disclose but i would point to the median of

fomc participants was 6.5% and that's very much as senator toomey mentioned, in line with public new york. i -- forecast it's going to be a strong year there's risks to the upside and downside should be a strong year from a growth standpoint. >> thank you senator tester from montana is recognized for five minutes. >> thank you, mr. chairman i want to thank both secretary yellen and chairman powell for being here thank you for your continued service and secretary yellen, it's good to see you back in the game again. >> thank you >> i'm going to start with chairman powell, following the passage of the american rescue plan, the federal reserve upgraded your economic projections, the fomc estimated last week gdp will rebound and unemployment rates decrease more quickly, but as you've highlighted already today, we still have a ways to go. over the past year i have shared

yourconcerns of undershooting the economic recovery and there are still many small businesses, workers and families in montana and across this country that are struggling because of this pandemic and the economic crisis that it has created. how concerned are you about inflation once the economy gets on the plus side >> we take the 2% inflation target very, very seriously. it's half of our mandate so we're strongly committed to inflation at 2% over time. to us that means inflation expectations need to be anchored at 2% and inflation has to average 2% over time it's fundamental we achieve that in the near term we do expect as many forecasters do, there will be some upward pressure on prices and also a technical thing, a base effect, as the low readings from april and march drop out of the 12-year calculation. we don't expect that those -- that upward pressure will

produce substantial hi higher prices or the effects persistent, but they will be transitory or temporary. if it turns out we see substantially higher inflation that would risk persistent inflation materially above our goal, then, of course, we would use our tools to bring inflation back down to 2%. >> and from what you just said then, you anticipate there could be some upward pressure, but long term you don't see this as being an issue >> long term we think the inflation dynamics around the world for a quarter of a century are essentially intact and, you know, we've got a world that's short of demand with very low inflation. the u.s. has had low inflation for some time and we think those dynamics haven't gone away overnight and won't. >> thank you, chairman powell. secretary yellen, i see you're working from your home there is a bunch of decisions you have to make about how this money is going to go out and

what it can be used for and the flexibility out there, from the american rescue plan different localities face different challenges the fact is that there was a concerted effort to make sure we get money with municipalities, and not only municipalities that are large, but municipalities of all sizes. the question is, is are you committed to making sure that these funds make it to the smallest of towns that haven't received any assistance yet without the states giving off any money off the top or adding additional restrictions that weren't included in the legislation? >> well, we're committed to following the instructions that congress gave us and i would agree that that was congress' intention where we have about 60

days to write the guidance on the use of those state and local funds. we're consulting broadly congress intended for there to be a lot of flexibility in how states and localities can use those funds and we will certainly try to make sure that they're distributed as congress intended and that flexibility is there, although we also want to make sure that you know, that we have requirements to make sure the money is used responsibly in accordance with congress' direction. >> i appreciate that you say you have 60 days to write up the guidance. could you give me a ballpark figure will it take the full 60s days for the guidance of municipalities or do you intend to get it out sooner >> we're working as hard as we possibly can on this there are a host of issues about

how to interpret the requirements of this statute i don't want to promise it will take less than 60 days, but we're going to try to get this done as soon as we possibly can. >> i appreciate that and your hard work on this. i get questions all the time about the flexibility in how the money can be used. the municipalities and counties in montana are thankful for these dollars. they've been running on shoestring budgets forever and the first time they will make some real improvements in their counties and municipalities, plus being able to pay for police officers and fire departments and make sure the garbage gets picked. thank you very much. i appreciate both of you and look forward to visiting down the line thank you, mr. chairman. >> thank you, senator tester senator krepo is recognized for five minutes. >> secretary yellen, i want to talk with you about another guidance issue that we need to toe kwus on in the american

recovery act in the act there's a restriction on the use of funds that was included that would prohibit states from using funds to, this is a direct quote, either directly or indirectly offset -- >> fed chair jay powell and janet yellen take questions from covid-19 stocks are higher right now. dow up 1%. we will take it back because intel's ceo pat gelsinger is ing the "squawk alley" crew after this break stay with us

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