like a shopping cart. >> what? a fine check on the markets. [ laughter ] looks pretty good, up 67 on the nasdaq, and the s&p indicated up 15 and change. we will be back -- is becky back tomorrow >> i don't know. hopefully. hope springs eternal >> what am i, chop lped liver? but we miss her. "squawk on the street" is next ♪ good thursday morning. i'm carl quintanilla, along with david faber and jim cramer has the day off. congress, as expected, does look to avert a government shutdown

powell and yellen go to house financial services, and inflation and supply chain pressures are front and center. >> and the energy crunch, china's manufacturing sector also notching its worst months since the start of the pandemics. one top bank is telling investors it's not recommending well-known tech names. since jim is gone, we're lucky to have mike as we look back at the quarter, is it what the delta variant did to activity here, supply chains overseas >> i think the market did have a significant reset. most of it happened in september. >> you're going back to the

first week of july, it shows that essentially we kind of backfilled a fair amount from a high. >> you've also got the big five market cap names that are 25% of the s&p are average, down 7% from the highs oy do think it's delta, the cyclical stocks, and we're now ficking out what's next. oh, delta's seemingly being taken care of.

>> i think that the delta rollover is -- explains a bit about what we've been seeing in yields, explaining that financials and cyclicals have firmed up, but in terms of catalyst, i think it will be third quarter earnings, and what does august look like? bed bath & beyond's third quarter. the worst of delta, and then the most dramatic declines were this parts of the country that didn't lock down. it's not as if in the southeast there were outright restrictions, so i don't know what looking for in terms of reopening effect there. >> we'll talk about bed bath's quarter, but its reflective of some of the things we're talking about, supply chain and covid impact back to the ten-year that rapid move up to the 1.5 area seemed to have an impact on

valuations, however you want to measure it, mike nothing says we won't conceivably move somewhat higher as we end the year i do wonder will that continue to keep pressure, perhaps on multiples. >> that's completely the playbook it's been a high correlation between bond prices and big growth stocks for a while now. it's not that way throughout history. i feel like that's been the excuse for the extra little bit of valuation premium added to the faang names. well, yields are really negative, and you have to grab for scarce cash flows. that piece of it isn't the whole story with tech. you've had those stocks kind of find their feet until them at some point without yields going back to the old lows the market ratcheting itself and comes to a piece with each level of yields. >> speaking of rates and supply chain, i want to play a piece of sound from powell yet talking about supply chain, and come

back and talk a bit about the curve. >> it's also frustrating to see, you know, the bottlenecks and supply chain problems not getting better, in fact at the margin continues to get a bit worse. we expect to see that continues next year and holding up inflation longer than we thought. >> is the seeming ceiling on longer-term rates a sign that the market thinking these issues will get worked out? >> if it's a cele on rates might also be because it's a growth rest restraint, right ultimately we won't go surging into boom times. it's interesting how powell put the structural idea out there. the supply chain issues might create this higher level of inflation for a while to come. fed monetary policy doesn't really come to bear on that at all. it's almost a way of saying,

look, we don't want it, it wasn't in our forecast, but if it's higher inflation, what are we supposed to do about it kill the economy by ramping rates before the economy is ready? they're not going to do that it's almost a bit of an out in terms of the fed going to its taper plan, but in terms of long-term yields, i just think it's been a reluctant rise all the way. if you look at what's happening in germany -- >> it's true, though i wonder about global growth. 1% of the growth with what's happened, incremental growth it's not growing that fast there are continued questions, obviously the manufacturing weakens, power cuts are threatening. by the way, in europe the cost of natural gas has gone up enormously overall we know about the uk -- there's some things going on here that could be worrisome. >> jpmorgan last night, the

supply shocks, gathering steam globally, represent another drag during second half, have led us to expect a near stall in the chinese economy this quarter >> well, there's your explanation on maybe why yields will not necessarily fly i don't think the long end of the curve is necessarily going to sort of start pricing in huge amounts of rate hikes anyway the flattening effect has been pretty well established when the fed tapers, that has been what has gone on. comps were up six, we were looking for seven. it reminded me a theme of demand destruction in autos, right? cars are expensive, you might wait, right? >> if you can wait, sure though a huge revenue beat. when oil was going up, right, the outright number is high, but you're paying too much to get

the merchandise. i think it would be a fascinating third quarter earnings season. when fedex reported, it was like, well, i get we weren't ready for this sherwin-williams kind of shall rugged some stuff off. micron shrugged off some concerns in its report i think we're hyper focused. earnings forecast had been trending lower, a change from the past couple quarters where we've been up and away into the reporting season that probably will mott rate expectations, but i don't know that it -- >> it's going to be a showdown credit sweet, jonathan golub has been hot on don't underestimate companies' ability to navigate this we can't think of a time when analysts have so seriously underestimated u.s. corporate earnings power in a given year >> right but that's the past three quarters you know what i mean it's not like that goes on

forever. also the margin is -- >> and there is some question about margin overall given the inflationary pressures i think what i saw a stat today, 224 companies in the last three months during that you are earnings call talked about inflation? it's a record, whoever is keeping track of that statistic, but that number has never been exceeded, but it does give you a sense of what the companies are facing i was looking at target. it's had a pretty consistent slide, and it seems like, oh, the market has given you a chance, right, to maybe buy a little bit cheaper into this leading name the feedback was that apparently it's become a viral meme that the shelves are empty. shortages at target at retail are a thing now. i'm not saying it's going to be a thing for months or actually be material, but that's the story line the reason that you're kind of

punishing these stocks is we don't know if they can navigate that >> yeah, look at the downgrade of kohl's, they go to underperform at b of a, lower receipts, which you would think would help margins, but the sales headwind will more than offset that. page one of "new york times" is all about the vietnam supply chain. we were there back in june of 2019 -- back then it was about china and how much they could take of china's supply chains in tech, because we knew things were getting dicey with the trump administration and trade they're very good at it, but the fact that covid has rattled that economy, i think the front page photo on the times is an empty street that's where you get these issues. >> that's where it's come up for us, of course, which is nike there you are, carl. what were they making there?

>> i think they were doing some underarmour, calvin klein, make in nike as well. they have it down. they have decent distribution, but not the kind of distribution networks you would need to do, say, semiconductor there's -- by the way, all the raw comes from china, right? all the yarns, all the thread, chinese materials. we are going to continue to talk about the supply chain issues for some time we'll go ahead to bed bath, you saw the decline in that stock, but they're talking about unprecedented supply chain challenges that have been impacting the industry leslie, there's a lot of names that weighed in at yesterday's delivering alpha summit. >> you all were just talking about on a micro level how companies are faring, but we

heard a fair amount of skepticism on the macro level. jpmorgan noting the fact that the s&p 500 has gained 30% since last year's delivering alpha, and mentioned that is, quote, not normal >> it has continued. the question is only time will tell how long that will go markets move well in advance of where the world is going. >> even growth investors even known to be more optimistic expr expressed skepticism he cut his net long exposure almost in half, down to 50%, from last year's levels of 90% and then he is, quote, skittish, but hyper-growth areas are the

way to play it. >> it's not as if disinflation or hyper-inflation are permanent entities these are transient properties of a functioning economy my point is, when we are back to normal, if we go through an inflationary period, again, you'll want the thing that was growing a lot, not the thing that was growing a little bit. you'll want the thing that was generating a ton of cash, because, you know, in a rising rate environment, that has very positive attributes that work in your favor >> software focus orlando bravo also said tech can benefit in times of inflation, noting that the quality of software companies make it such that they can raise prices while noting the big mac rho

risk is really labor inflation guys >> overall, for the quarter, leslie, m & a, that's at an all-time high? >> yeah, it's remarkable i think you see ceos in a have had some of the this pent-up demand from last year, where it was more challenging to do deals, at least in the first half of 2020, therefore they're looking at what's going on today. some of the key areas, the fed potentially, you know, tapering, and then down the road raising interest rates it's a pretty ideal time given where valuations of. we've seen what's hatched with the spac boom and bust, by many measures, and what that means for dealmaking i think ceos are looking at this as a time to do deals. >> thank you, leslie

a look at futures this morning, as we wrap up the quarter and the month, even though the s&p is on track to snap that seven-month win streak it's on track to maintain what is a sixth quarterly gain. a lot more "squawk on the street" from the nyse is straight ahead that building you're trying to buy, - you should ten-x it. - ten-x it? ten-x is the world's largest online commercial real estate exchange. you see it. you want it. you ten-x it. it's that fast. if i could, i'd ten-x everything. like... uh... these salads. or these sandwiches... ten-x does the same thing, but with buildings. sweet. oh no, he wasn't... oh, actually... that looks pretty good. see it. want it. ten-x it. yum!

the senate has reached a deal to avoid a government shutdown ylan mui joins us now with the latest where do we stand, ylan? >> reporter: mike, democrats are facing a critical moment for their agenda and ability to enight their party, and trillions of federal investment are on the line. nancy pelosi told reporters last night she still plans to bring that bill to the floor today, but when asked if she has the votes to pass it, she replied, one hour at a time pelosi had promised this vote to moderates in exchange for their support and moving forward on the bigger social spending package. bottom line, snneither bill has the votes to pass right now. and democrats appear to be

growing farther apartnership joe manchin put out this statement -- i cannot and will not support -- there is one bit of good news out of washington today. the government will probably stay open, because the senate will start voting on a bill to keep the government funded through december 3rd that is expected to head over to the house, and then the president's desk before the deadline of midnight hopefully at least one crisis will be taken off the table today. back over to you >> there was, you know, some republican support both in the senate and the house for the infrastructure bill when it passed why are those republicans not being counted? or are they in the house that might actually support it and perhaps offset some of the no votes, if you got them, from progressives >> two things, david first of all, democrats want to

show they can do this on their own, that they're united, so they don't have to rely on republicans for that they say republicans are unreliable partners. the second thing is there are republicans in the house who might support the infrastructure bill, but they don't want to be the first ones out of the gate democrats need to get to that majority before the republicans will sign on board, so you may end up seeing an infrastructure bill pass with more than the 218 votes, but republicans will not come on until the last minute. that's why there's so much onus on the democrats to make sure their party is in line >> wow. >> okay. sounds like kindergarten. >> it does, right? >> you first let's get mikey, he likes it, he'll eat anything [ laughter ] a lot more to get to, including this deal between

merck and acsceleron. vix is down a touch. don't go anywhere.

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take a look at some early morning s&p premarket gainers. p perrigo will be one of the leaders, as it settle the tax dispute. we wilget l the opening bell in 6 1/2 minutes. don't go away.

yeah, that's half the fun of a new house. seeing what people left behind in the attic. well, saving on homeowners insurance with geico's help was pretty fun too. ahhhh, it's a tiny dancer. they left a ton of stuff up here. welp, enjoy your house. nope. no thank you.

geico could help you save on homeowners and renters insurance. >> announcer: the opening bell is brought to you by -- bed bath will be your big mover of the morning shares are down double digits, at least premarket, on this pretty bad report and guide. they do cite slower traffic in

the month of august, obviously higher freight costs for the fiscal q3. eps of flat line >> down 28%, a complete giveup trade. the stock had held up better than you might have expected if you look at the price-to-sales ratio, the valuation had gotten above where it had been in recent years. so some measure of top-line comeback was traded in i think there's a lot of two-sided sentiment on this one, that maybe they won't be able to get it figured out across the board, but this seems like a pretty good flush of a trade to a stock that would just been doing not a whole lot. if we opened at 16, wow, that takes you back to the beginning of this year or the end of last year, basically. >> we should point out it's a small company, market cap-wise,

and it will be smaller today with that decline, but its problems may be reflective of larger sures we've been talking about for quite some time. again, when you read the press release and they talk about unprecedented supply chain challenges impacting the industry pervasively, and steeper inflation, escalating by month, so month to month, especially later in the quarter, and they were simply unable to offset that in terms of raising prices and/or helping with their own margins. >> and clearly no tailwind from the housing-related spend. when i say they were traded up to a higher than average predict-to-sales ratio, it's amaze what these stocks trade at it got up to four times, and now plunging back to 0.2. the b of a downgrade of

kohl's going to underperform, again on this idea of lower receipts got a downgrade of starbucks atlantic goes to neutral, as they cite, david, china and u.s. labor costs. the only -- it's a theme that's running through a lot of the calls the last few weeks the one bright spot you might argue as well is on hd, home depot. they reiterate overweight. they increased their target. they met with management and say we're increasingly comfortable that the housing backdrop is strong >> home depot also a company that would be a payer of premium wages beforehand they may not necessarily be distressed in finding people on that front, and maybe not necessarily as big an input cost as some of the other retailers by the way, we have seen a slight uptick in jobless claims,

as you have plants that have to shut down for either lack of parts or covid restrictions, who knows what s. but it's definitely -- >> an old style of layoff, in the old days, where it was seasonal. the opening bell here on the real-time exchanges. the chip manufacturer celebrating a listing via spac >> david, did you have a lot of shots on what we heard about spacs yesterday? >> i do. i do some of which i don't feel might be appropriate for our air -- no listen, he is one of the champions of spacs he's made an enormous amount of money of being an early sponsor, benefited from some of the early enthusiasm of course, we saw so many different people bring their spacs forward, in terms of

sponsorship. we still have hundreds and hundreds of spacs that are looking for potential deals. i have talked often about what i believe is the misalignment of incentives, whereas, of course, the person buying it at 10, whether it's an institution or retail investor, needs it go up from that level. redemptions continue to be fine. again, back to this idea, you're talking about 74% of the shares being redeemed, the cash that's brought into the company is far less that had been originally anticipated. the pipe, if there is one, they feel pressure obviously in part because they're funding a company that may be underfunded in terms of its cash needs, therefore may have a dilutive

equity in its future i go back to the transparency, maybe we're not getting that in a timely fashion >> it's a massive six-month-long indigestion that the market has been going through what's also interesting, it's happened alongside this whole idea of the concept-type stocks. let me give you our five-year projection those types of stocks have struggled. even the classic theme of a spac target is a bit suspect right now. i think i come away with it saying you have $370 billion of equity issuance year to date, you're until 10% from last week, the markets absorbed a lot of that, part of it because $700 billion inflow the first part of

the year i think it's a net positive that the market has allowed spacs to fall by the wayside largely, but it's still an overhang, because all these companies looking for deals. still 400, roughly. >> if jim were here, he would say the quality of the street, keep eyes on these companies is limited. we don't have the bandwidth to absorb that number of companies with the same level of research. >> look, it goes back to a time where there was a retail kind of, let me buy the story type of thing in the market, back in the '80s and ' 0s, to some degree we have that energy in the market i was looking at these numbers this morning the retail traders have become less active in terms of buying call options that sort of demand out there is coinciding with the market struggling a bit here. you know, the s&p has spent most

of the last two weeks under the 50-day average before that, had not spend more than a day or two under there. it seems as if there's a bit of flagging of that bid maybe that's a slight character cha changes. >> i haven't looked back at our old friends. >> they're still up only a couple weeks ago >> i had actually not seen that. lucid shares had a nice day yet. the stock is up yesterday again. i'd like to come back to that name, zemplts you know, the air,

the air pure, they have all sorts of great names for their various cars that gives you the scale of what you give credit for maybe they have it figured out, but they may be eating their own legacy product line maybe it just means forte is that much cheaper. we did learn yesterday that chamap has been a seller. >> it didn't come up with the conversation at code the closest thing is when musk said, i said the stock is too high, and it didn't do anything.

i don't know what i'm supposed to do is what elon said. >> ark is not in the top ten larry ellison owns three times more it's been pretty consistent 10%, 12% weight it's just that it needs other owners out there it's too big >> merck is leading the dow. according to the study they presented yesterday, it's active against variants, and an eua, smith said, still possible by the year end. >> i think we have some sound from him the new ceo of merck, we'll do the faber report as well, and

talk about the exceleron deal. it was 180 price, and merck is buying it's interesting the deal itself as you watch those shares retreat ago bit. there had been some anticipation it would be even above $180. we're talking about $11.5 billion. this is the key drug here. the other drug you're looking at, the royalties, it was a celgene partnership from years back so totercep is the keep drug

here, and it came back celgene didn't want to develop it at that point, and they have. and it was in early 2020 when he got phase two data from that you can see that the stock did move up at that point pretty dramatically. but we're still waiting on phase three, which is an important component here this is the largest price ever paid for a company without what we would call pivotal phase three data, the $11.5 billion. merck is taking a big risk the face three data, they're just starting those trials they're not going to actually get the answer to say those trials until the end of next year the expectations is you would not see a drug on the market until, let's call it, 2023 that's being pretty aggressive so there is risk here from merck, no doubt about it

now, there's potentially multibillion dollar market for this dripping. it would compete against the likes of what j&j bought when they bought the drug for treating the same basic disease so look at merck shares responding quite positively s we talk so much about tech kneeling companies and their ability to obviously create a great deal of wealth this is part of tech, in a way, 400 employees, $11.5 billion not quite pharmaces that gilead bought years ago, but it gives you a sense of the firepower of these companies and what howard paying for, and what merck is paying for it's an important deal, under

new management, new ceo, new head of research their key cancer drug will come off patent over some period of time, so it is an important move that merck has made here, particularly given their sort of known as the high science pharmaceutical company, typically if it's not invented here, we're not interested in it a bit of a move away from that the first statement, as i said, of this new team they're getting closer to the oral antiviral if you would show early symptoms of covid, and essential knock down the virus very quickly take a listen. >> the primary completion date

for our studies is the beginning of november. we have potential look at the interim data before that with that, then, potentially an emergency use authorization before the end of the year >> there it is, carl we've been talking about this for a long time. there was a period of time where we thought it actually would be on the market prior to vaccines, and it would be so important then it appeared maybe it won't be as important, but with the delta variant and possibility of other variants as well this attacks them all. it doesn't affect the spike protein, so it has an effect against all variants. >> i did like how gottlieb's language got stronger. moderna is create agnew campus to do more mrna. the reproductive rate is below one in 47 states and the district of columbia, which is

exactly what you want to see going into the fall. we hope it sticks. ahead this morning, the fed chair and treasury secretary back on the hill, testifying before the house financial services the dow is up 57, off of the opening. we did get the ten-year up to 1.55. we're back in a moment we see increased efficiency connected to more comfortable homes. emerson's energy star™ certified sensi™ smart thermostat uses geofencing to simplify how homeowners manage comfort and costs. emerson. consider it solved.

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go get 'em, kev. well planned. well invested. well protected. voya. be confident to and through retirement. welcome back to "squawk on the street." rick santelli here this is breaking news. this is our september read on chicago pmi expected out at 65.0, coming in a bit light at 64.7 that's actually the lightest it's been since february when we were a bit until 60, the high watermark going back to 1973, that was 75.2, just to give you an idea, but we should put some

perspective on it. anything over 50 is expansion. even though it's been much stronger by historical terms, it's still running pretty good "squawk on the street" will return after these messages. america! after the past year-ish, everyone deserves something new!

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facebook's global head of safety heading to the capitol hill hot seat today. she'll soon testify at a senate subcommittee on mental health and social media julia boorstin has more on what to expect. >> in just over a half hour, tiffany davis will be testifying before the senate subeconomiee on consumer protection this comes after the "wall street journal's" expose he facebook's knowledge about the impact on teens. it referenced, saying it's not accurate to say thatted research demonstrates that instagram is toxic for teen girls, noting in certain areas teen girls say instagram made them feel better. slides are intended to give context around the controversial research one slide reports one in five

teens makes them feel worse, but the an station notes that the research was not intended and doesnot evaluate causal claims so the committee's chair, richard of today's event this hearing will examine the toxic effect of instagram and facebook on young people and others, revelations about facebook and others have raised profound questions, but what can and should be done to protect people the committee's ranking member marsha blackburn saying in a statement, quote, mark zuckerberg agency guiding principal for facebook is profit, aware that facebook had serious and harmful issues then, of course, next week on tuesday, the same senate subcommittee will hold another hearing, this time with the facebook whistleblower it will be interesting to see how this plays out >> yeah. speaking of which, julia, after

alls the coverage out of the journal, adam on the "today" show, talking instagram kids, that "60 minutes" teaser last night, although short looks interesting. let's take a listen. >> she left facebook concerned with copies of thousands of pages of research. ha don't they want you to know the facebook whistleblower only on "60 minutes" sunday >> i wonder if we're going to come in here monday morning with a little more intelligence on that >> i think perhaps i have to say, carl, having read through these slides, what's most surprising to me about them is less data in the slides and more of the way it's annotated and the choices that facebook is making to in a lot of ways discredit their own research they've talked about wanting to understands the impact, saying it's a good thing they're doing all this research, and then the annotation discredit its it. fascinating to hear how they respond toquestioning today an see who the whistleblower is

>> we'll watch that. julia, interesting, thank you. although david, we've talked about the share price before and 340 last two days looks like a pretty firm floor for now. >> it's funny because i do have this conversation with a number of asset managers about it, in the larger societal impact of facebook and are you concerned and many of them come back yeah, it's not great certainly hasn't been great for society but the stock is cheap that's where the conversation kind of ends it's not like it's expensive and this has not shown up in their ability to make money and/or at least have margin. by the way, people -- investors seem more concerned about the ios transition and what that's going to mean to the business than this. >> the ad targeting, the effectiveness of the dollar spent on advertising, although, you know, that is where it's coming to bear on the stock price which is the valuation it is now at a pretty appreciable discount to alphabet, than it has been in the cheap.

on an outright basis it's not falling apart, 11% below its high but, yes, it's certainly not, you know, changing the trend. it's just the earnings keep kind of growing to offset that and that's why it looks cheap. strip out the cash, they don't buy back a ton of stock and if you can make a case for why it's kind of steady value as opposed to, you know, you have to believe in the company's mission to buy the stock >> yeah. that conversation will continue until and i guess until we see material impact on their business beyond this apple transition which is of concern, but from -- well, listen, black burn and blumenthal on the same side maybe you should get worried they don't agree too often. chunk debt sales are soaring this year but is america's corporate bond binge about to go bust christina has a closer look at that >> yeah. there's no doubt corporate america is on a borrowing binge. you have high yield bonds, ak

junk bonds, carry a higher risk of default but at least $382 billion have been issued by firms from coin baste to crocs this year alone. that's almost $46 billion more than 2019 and i use that number 2019 because it was prepandemic, but should investors be worried companies will run out of money? >> our view for default and high yield is pretty benign over the short term period, over the next one to two years, which is part of why we're saying, you know, that outlook, despite there's some volatility and concerns out there, is still pretty decent. >> and we have default rates falling sharply since the pandemic era peak. you can see it on the right side of your screen on this graph companies are rushing to take advantage of cheap rates and refinance their loans. there are some negative catalysts like we know, the fed

tapering its bond program, higher inflation, slowing economy, but experts seem to remain optimistic. >> monetary policy looks ultraaccommodative it's near impossible to have a recession or a growth slow down enough to worry corporate america. >> you need a broker, but here's some etfs. look at ynk and unhy, high-yield bond etfs. they've been up double digit since the pandemic lows, but below the s&p returns during that same exact time, evens the yields on these etfs are just all above 4%, which is pretty much triple the yield of the 10-year right now. and as we've seen with evergrand, corporate debt can seem like a great investment until it's now and investors need to decide if these negative catalysts are temporary headwinds or a worry that debt binge bubble could be set to

pop. >> thank you very much. we are on watch now for the fed chair and the treasury secretary to testify in front of house financial services we'll see if we get any incremental headlines on top of the ones earlier in the week interesting the discussion i think lately is sort of pivoted around powell himself and the degree to which a second term might be clouded by either criticism from progressives or the trading controversy regarding -- >> absolutely. the betting market seen as even money as to whether he gets renominated. what's fascinating is that it's hard to know what progressives might want more out of his monetary policy. forget about the regulatory stuff that they're focusing on you've never had a fed chair that has had such an expansive year of what full employment is, fed is prepared to do tolerating inflation to get there and put forward the new framework. it's interesting that kind of gets villainized along certain

fronts what would it mean fundamentally in terms of a different approach to actual monetary policy? not clear at all >> yeah. lot of polling data shared today regarding the split between trust in the fed between democrats and republicans. it's been a fissure for a while but widening since the trading controversy blew up. we're looking at some early gains here dow up 100 we're hanging on to 4380 pelosi says she will have an infrastructure vote today. we're ba ia meckn mont

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emerson. consider it solved. welcome to another hour of "squawk on the street. i'm carl quintanilla with morgan brenner and david faber. treasury secretary yellen will testify before house financial services committee we're taking you there live as soon as q&a begins dumping up once again at 4380 down a touch from the opening highs as we close out september and q3 >> we're 30 minutes into the trading session. here are three of the big movers carmax the nation's biggest used car retailer topping revenue

projections, missing on earnings estimates. preowned car sales rising 6.2%, less than 7.3% expected. shares down about 10% right now. shares of bed, bath & beyond plunging as well after the retailers results missed on the top and bottom lines and also cutting its forecast citing supply chain problems and higher costs. shares are down 25% right now. but we're going to end with a name in the green, virgin galactic surging after the faa cleared the space tourism company to return to flight after completing a mishap investigation into the july mission that carried richard branson that veered out of designated air space less than two minutes, but triggered the regulatory investigation guys, the faa accepting proposed changes, corrective actions from the company for its future space flights. certainly it removes one piece of uncertainty where in the near term the launch manifest is concerned ahead of the unity 23

commercial revenue generating flight expected before the year is out for the italian air force, but keep in mind, the company earlier this month also said that it was moving its timetable and expectations for when that flight would take place to mid-october not because of the faa investigation but because of a potential defect with a compone front a third-party supplier we do not have an update on that right now. all we do know is they are targeting mid october for the next space flight. nonetheless see shares are up 13%. >> yep a little bit of a gain there bofa, under perform price target 25 where they are. just arguing that you're looking at a very long-term time horizon of demand. we don't know. >> you've got another year if all goes according to plan, until you see commercial service commence for this company. in the meantime october 12th, that is the date that it's most direct competitor and suborbital

blue origin is planning to send the next for potential astronauts to suborbital on not only its second crewed mission that is commercial and operational. you are seeing the competition play out here and you do still see uncertainty in the near term around virgin galactic. >> a lot of volatility in that stock which adds up to about a 7.5% gain so far for the year. let's get over to our steve liesman who has a look at what to expect from fed chair powell and secretary yellen in today's hearings steve? >> good morning, david even though the hearing is two days later than the one in the senate, fed chair jay powell and treasury secretary janet yellen testify before the house under different circumstances. there is an apparent deal on the government shutdown and mix of spending bills are at a high level and escalated. the question of powell's reappointment taking center stage. on tuesday with senator elizabeth warren declaring her

outright opposition to it. among the questions for hearing day two is do progressives press than anti-powell case. they may want a democrat in the job. whether president biden cares about that do supporters of powell rise in defense. how much do concerns lawmakers, press on monetary policy they say more and more now high inflation will hang around until next year. second and finally will powell be drawn into the spending politics he's tried to steer clear. a lot of money on the table and a lot of impact on the economy to come. on inflation the cpi running at 5.2% year over year in august. we got price spending, price index numbers from the gdp this morning, take out food and energy, comes in at around 4%. expected to be in that range until the end of the year at least, according to several fed officials we've spoken tos the last couple days one more question, we see some interest in the senate, the trading controversy that led this week to the resignation of

two fed presidents it remains to be seen whether powell's promise of a thorough review of existing ethnics rules and examination of the legality around some of these trades, whether that's enough to put the issue to rest for lawmakers. morgan >> steve liesman, it's been a busy week, thank you for bringing us the latest. joining us to discuss the markets, specifically, ahead of q&a is advisors capital management partner and private wealth management. good morning to you both i'll start with you, i mean it has been september has lived up to its rep pew utation in terms volatility but even as we get the bounce in the major averages to close out the month and quarter, at least in the near term, what is the trajectory that you foresee for equities >> you know, good morning, morgan, as i wrote in the commentary for the firm, we see a lot of positive drivers for a continued economic recovery and while there's a lot of attention

on the fed and what it's doing, this time around, as opposed to earlier years when we had a taper, so much more that's positive in the real economy, in the incentives for firms to continue to produce and raise sales. a lot of demand out there. even though there are shortages that are slowing down this recovery, that does mean that the recovery is going last longer when you look at the outlook for equities, we're, you know, driving our clients' portfolios into three areas -- secular growth, secular recovery and defensives there is risk out there like inflation. >> it sounds like you're very optimistic as we move into 2022 but as we go into another earnings season, we're already seeing some of those forecasts get lowered. i'm thinking about sherwin williams twice in less than a month as one example how ugly or i guess how volatile could this get, at least for now, as we close out 2021? >> i think there are two things

happening. first of all we had that delta surge and that clearly suppressed demand from consumers and some activity for firms, particularly in asia, and that's complicating the supply chain problems that pushed out the reignition of the recovery on the production side. so, you know, it's a little bit later, but we do see folks coming back to the labor market. so through the rest of this year there's a lot of risk that could cause volatility i would say i'm cautiously optimistic about the rest of the year and certainly things are shaping up better for 2022 investors need to be positioned for that and a lot of them are sitting on concentrated positions and we're trying to make sure they're well diversified across the three areas i mentioned. >> if you're counting on that re-acceleration why wouldn't you go whole hog on cyclical and value? >> because what we're seeing, right, is there's still some secular growth names out there that are going to be driven by the recovery as well and in those names, whether a broadcom

or a taiwan semi, they have both things going for them. they have cyclical recovery and also have that longer term secular expansion. we want to be exposed to both in addition to having some exposure to more pure what we call smart cyclical stocks, a t.j. maxx, you know, or a six flags or, you know, stocks like that it's worth being in both areas >> so given the conversation we're having, your outlook for rates for yields as we do head into 2022 and do await comments again this morning on the hill from the fed chairman powell about where we go from there, i guess just as importantly t is there a point at which a rise in rates has a net negative impact on the stocks that you're focused on >> well, morgan, as an economist i can tell you that interest rates are too low. when you look at the inflation forecast, even if the fed successfully keeps us anchored

around 2% in the longer term interest rates for the 10-year around 1.5%, simply don't match up with what inflation is doing and real growth is doing we do expect interest rates to rise and that's why we also have our clients in that third bucket which includes names like citigroup and toronto douminion on the broader market, the rise in rates is complicating for higher multiple stocks which is why we tend to invest for our clients more in the growth at ranl price we want to avoid those high multiple stocks or keep them under weight and that's i think a good way to balance those inflation and interest rate risks which are head of us with the opportunity for investors to see income off their portfolios and to see further appreciation. whether it's a bit rocky in the fourth quarter that's yet to be seen i do think it's going to be volatile but ultimately investors hopefully are focused on the longer term two, three, four, five years and longer >> all right

appreciate your time and insights this morning. always like having tangible names for our viewers to check out as well. thanks for joining us. >> sure. >> dow going red here the last few moments down 34. we want to bring in former fed governor randy crossner ahead of the q&a with the fed chair and treasury secretary s t-- the headline earlier in te week they found supply chain issues frustrating and if that means his transitory view is looking wobbly >> i think the transition is maybe a little longer than he originally expected it to be many in the fed were thinking this is sort of a three to six-month thing but looks six months to nine months or even a year thing many of these -- some sense it's because the economy has done so well and that demand is up so much in so many sectors that you're getting these crunches in particular sectors it's welcomed but obviously that

can lead to elevated price in some sectors for a while >> right so if you argue, i'm sure you've heard this a lot, the idea that the economy is seeing slowing growth, sticky inflation creeping down to the consumer, that equals stag pressure, do you push back? >> we're growing so fast and not as fast as before that it's hard to say that's exactly stagflation. we typically think of our long run growth being the 2% to 3% area and growing significantly above that there's a bounceback from the economy being locked down for so long fl inflation is high. some of that is transitory and a bounceback from where things were before. they want to provide the support for ongoing economic growth but need to take the punch bowl away at the right time so inflation

doesn't get too hot and lead to inflation expectations that are persistent and that's the challenge. i'm glad they're moving now to take the punch bowl away a little bit otherwise, inflation expectations could have and still have the potential to really move up they're moving up a little bit but that's natural >> certainly a tight rope walk we're seeing play out in terms of policy and the timing around it i'm curious, what would you potentially signal stagflation is that data you watch carefully to make sure that's not taking route? >> i think we saw very significant slowdown in economic growth and slowdown in the labor market one of the labor market reports was not as many jobs were created as people had hoped, but i think that's because people are being very picky about taking jobs. it's not -- there are record numbers of job openings available, people are quitting

in record numbers. they only do that when they're very confident about the labor market so i think we have to see very significant slowdown in job openings i think swrefld towe would haveo see a significant slowdown in growth we're in a stagflation spot. >> randy, do you have any thoughts on the resignations of rosengren and kaplan and their trading? they did nothing wrong, but obviously perception can erode confidence and i'm curious to get your thoughts. >> yeah. i think it's unfortunate that there is that -- that there could have been a perception as you said, they didn't violate any rules, weren't trading on insider information as far as we know and i don't see any evidence of that but just the optics were not what i think the fed would prefer it's one of the challenges of just the way the congress is set up the fed you have to remember the

regional federal reserve banks are not part of the federal government they're.org not dot gov. i was a presidential employee so they're -- i think it's a challenge to get the standards right for everyone when you have dot org and dot gov together that will change going forward but that's one of the challenges of having this system that the congress has set up. >> speaking of all of that, whether it's the turmoil regarding the trading activity or the pressure from progressives, there were reports, it's a delicate issue to address, reports that we would see movement toward a second term from powell, from the white house, some time around labor day or shortly after labor day. hasn't come yet. we've heard the likes of elizabeth warren with sharper words. do you think a second term is in

jeopardy >> i would hope not. i would thinkthat -- i think i you look at jay's record, i think he has done a good job of responding to the pandemic also people forget that he was raising rates, the fed was, as the economy was coming back before the pandemic. i think he and his colleagues made sure that shock of the pandemic last march didn't turn into a financial crisis which could have been quite devastating. i would hope that people would look at sort of the overall record and think, that's been a pretty steady pair of hands at the fed and that would be i think a reasonable steady pair of hands going forward. >> finally, just as we start to think about 2022 and economic growth not only in the finally months of this year but into next year, another piece of the push really there's a lot of uncertainty when it comes to forecasting, the fiscal piece a vote and potential bill that moves forward where

infrastructure is concerned or this $3.5 trillion quote/unquote social infrastructure package that looks like it may be whittled down somewhat if and when it does make its way through the reconciliation process, how does that factor into the outlook, especially as the fed looks to begin tapering and pulling back on its monetary sim lus? >> obviously that's one of the things the fed takes into account, whether it's lockdowns or fiscal stimulus or infrastructure spending and there's been an enormous impulse in the u.s. and other countries over the last 18 months. i think my understanding from although it keeps changing exactly what's in that $3.5 trillion bill a lot of that spending would not be immediate, but over time and so that wouldn't haves much of an impact on the next couple of quarters it's still an issue and still will affect people's spending behavior but i think it's not as crucial

as what was done before and having an enormous impact on the short run economic activity. i think the fed is probably going to say there might be something, but it's more of a longer run thing rather than a shorter run thing. >> all right randy, great stuff always great to get your insight on a day like today. see you soon >> great to be with you. >> we're going to take a quick break right here as we do await the start of the q&a portion of today's house financial services hearing. day two on the hill for both treasury secretary yellen and fed chairman powell. we're going to be back in two minutes.

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it is time for our etf spotlight. dom chu is taking a look at bed, bath & beyond. not great day for that stock. >> absolutely not. as you guys have been discussing right now, the disappointing results from the profit side of things, revenue side of things, cut to their forecast, all causing that huge plunge in the shares right now down about 25% on much heavier than average volume. perhaps no surprise there. but that 25% plunge is having reverberations in the etf market there are a lot of etfs that have exposure to bed, bath & beyond none of them really have it on a massive basis until they're really focussed on certain small parts of the small cap consumer discretionary space. take a look at some of the relatively larger etfs in terms

of overall assets under management the small cap 600 etf is about flat on the day but it has small exposure to bed, bath & beyond also ones that track the russell 2000 like the russell ticker iwm moving just slightly to the upside today some of the factor etfs that use maybe things like revenue or profits or momentum, those types of things, have some exposure as well s the invesco small cap revenue etf off one third of 1%. check out some of the other ones as well, perhaps having some exposure like the vanguard ecr there geared towards consumer stocks across the market cap spectrum, may have exposure there as well. keep an eye on etfs. bed, bath & beyond may be only fractional percentage allocations here, but they do have impacts on the etf market back over to you

>> thanks. dominic chu. as we go to break a live shot of another hearing on the hill we are watching, facebook's global head of safety, testifying before senate commerce subcommittee cussing on what facebook new about its impact on teens after the company pushed pause on instagram kids chair blumenthal quoted saying the more i know the more repulsed i am. we'll take a break as we get into the q&a at financial rves dot go anywhere. [crowd cheering] how's sanchez looking? with your qb's increased spin rate, any pass with a launch angle of at least 43 degrees puts sanchez in the endzone. you a data analyst or something? an investor in invesco qqq. a fund that gives you access to nasdaq-100 innovations like ai statistical analysis software. how am i gonna do? become an agent of innovation with invesco qqq.

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the first time around. we've got next.

welcome back to "squawk on the street." lots of big questions in congress from infrastructure to the debt ceiling, which is so important to investors ylan mui has the latest for us >> the debt ceiling is one of the issues still looming over congress we've seen some action recently but no real resolution yet house just last night passed a bill that would suspend the debt limit through december 16th, 2022, despite some initial

pushback from moderates. house speaker nancy pelosi said the fact that this bill got passed was a testament to the unity in her party >> in case you didn't notice, we lifted the debt ceiling now. we are very, very proud of our members for doing that this was a victory and you are ignoring it. it is a great victory. >> in the end, two democrats did end up voting against raising the debt limit, one republican voted for it, but in the senate, the gop remains united in their opposition just this morning minority le leader mitch mcconnell reiterated democrats will not get help from republicans and democrats need to realize the reality of that situation. instead they said dems use should use the fast track reconciliation process they're using to pass their social spending package to raise the debt ceiling we know chuck schumer has rejected that idea house speaker nancy pelosis also ruled out reconciliation as

well, so we are still in stalemate even as we are expecting to hear the treasury secretary say that congress needs to act quickly to raise the debt limit in a bipartisan fashion. back over to you. >> feels like game of chicken right now. stay with us we'll bring steve liesman back into the conversation. steve, you've been tuning in to the testimony so far have we heard anything new or groundbreaking versus what we got on day one in front of the senate this week so far? >> no. he's still -- both treasury secretary yellen read her speech the other day and powell is now probably towards the end of his, so q&a should start relatively soon on this and we'll get a feel for, you know, what the tenor is in the house when it

comes to powell on all manner of things including inflation and the trading controversy that's been out there eagerly awaiting the q&a on this. >> the fiscal piece of the puzzle you've been covering and losing a lot of sleep in the process, what are you watching for in terms of potential commentary from these two officials in the house today >> i think that what you're going to hear is them reiterate that congress needs to act, that even delaying this process sort of going through this political gamesmanship could be something that unnerves the markets and that rattles investors the reason why they're saying it's important to do this in bipartisan fashion is because you can hear them say it themselves >> thank you to the hearing and chair powell. >> 2 million renters, spending has increased over the past several months, i think we're

all concerned that the pace of delivery of this critical assistance is not happening quickly enough can you talk about the challenges you have faced after taking over oversight of era-1 from the trump administration? what do you believe are the most significant improvements to the program guidance you have made what impact have you seen? >> thank you for that question this is a critically important program that treasury has been very focused on, expediting the delivery of these rental assistance funds to those who need it. as i mentioned in my opening statement, getting these funds out ha involved creating a national infrastructure where none existed before. that's been a very difficult and

slow process treasury has done everything possible to facilitate getting these programs up and running around the country in particular, we've tried to give states and localities flexibility to administers the program in ways that are appropriate for different communities to reduce the paperwork requirements, while also making sure that we have accountability and transparency. we've provided technical assistance and working to provide more technical assistance and i think we're seeing a payoff as i mentioned, we've had a 1.4 million renters helped by this assistance and the pace it's flowing out is increasing i would note that the act

requires treasury to begin to reallocate funds on september 30 frth those localities that are either not effective in getting assistance out or have less need for the funds and to reallocate them to those that are more effective and have demonstrated need >> thank you very much i want to thank you and your team for working with me on hr-5196, the expediting assistance to renters and landlords act, which would make it easier for renters and landlords to apply for assistance and provide for the deeper involvement of treasury to support grantees to get the funds out the door are there particular provisions that you think would aid treasury's efforts to make the rental assistance program more successful you've given us quite a bit of information about what you have been involved with is there anything else you would like to share?

>> chairwoman waters, we're very supportive of your efforts to try to put in effect changes that would expedite the delivery and effectiveness of this program and we look forward to continuing to work with you. i think we've offered substantial technical assistance and absolutely want to work with you to make sure this program is as effective as possible >> thank you very much the gentleman from north carolina, mr. mchenry, who is a ranking member of the committee, is now recognized for five minutes. >> thank you so chairman powell, i know it's the policy of the federal reserve to not comment on fiscal policy, but fiscal policy does impact the fed's economic projection, does it not?

>> yes, it does. we make assumptions about fiscal policy and once enacted we put that in our models >> the public models are a statement about current law rather than proposed policies, is that largely correct? >> we don't publish a forecast as the federal reserve individual participants publish their forecasts. but that would include their personal assessments of likely fiscal actions >> so about these fiscal actions, you know, secretary yellen, i said this in my opening statement and i'll say this to both of you again, i am grateful as an american that you both are in the seats that you're in right now. because we're in a special circumstance here in the fall of this year, it was a foreseeable slow-moving disaster, but here we are, but your credibility of your relative agencies and the

credibility of you two individuals, is of substance right now and very important to us as the american government. so secretary yellen, you said in july right before the debt limit was reinstated the cbo said treasury would probably run out of cash some time in the first quarter of next year or the fiscal year, most likely in october or november. secretary yellen, you began exercising treasury's authority to take extraordinary measures to prevent a default back in august, is that correct? >> yes the debt limit, the suspension, expired on august 1st and we began using extraordinary measures to remain under the debt sdpleelg those extraordinary measures are just a band-aid for a period of time, night. >> as i indicated we expect them to be exhausted on october 18th. >> it would be a disaster if we did not -- >> it was a catastrophe if congress failed to raise the

debt ceiling. >> so here's the deal for republicans, democrats control the house and the senate and the white house. since january 20th the approach of this congress is that they do not need republican votes to do anything that's been the approach and now they want the political cover in the midst of this massive amount of new spending to have republicans raise the debt ceiling that's really the request. here's my question to you secretary yellen fort seat you sit in do you care whether the debt ceiling is raised with republican vote or just care if it's raised >> i think it's important that this be done on a bipartisan basis. i think it should be bipartisan in recognition of the fact that both republican administrations and congress' and democratic

ones, have run budget deficits for most of the postwar period with only a few years serving as an exception and that requires on a regular basis raising the debt ceiling it is not about -- the need to do so has nothing to do with future spending or tax plans that haven't been enacted. it's necessary to pay our bills. >> i understand. >> and that's something that republicans and democrats need to share that responsibility >> secretary yellen, as i said to you on the phone last week, i've been a part of every single debt ceiling increase for the last decade. every fiscal consequence of congress and have some have been bad. i have been a part of the solution for the last decade the call i received from you last week was the first outreach i've had from this administration to do something

on a bipartisan basis. you called me to raise the debt ceiling. not with a plan, not for a fiscal plan, not for my buy-in but for my vote. and that to me speaks volumes. i'm grateful for the outreach from you, but it speaks to the larger issue for the administration i don't envy the position you're in, i don't. the bad strategy from thiswhit house and the leadership of this house and the senate is showing they don't want republican votes. we did bipartisan bills last congress, last congress, in the mid of video, bipartisan bills, major bipartisan bills we can work together in a responsible manner, but to ask for my vote the week before it comes up in the house is not in keeping with the realities of the situation. we have the tools and the votes to get this thing done through congress it's just a question of who votes for it >> i would like to point out

that in 2017, when the white house and both houses of congress were controlled by republicans and reconciliation bill was in progress, that led to the 2017 tax cuts, the debt ceiling was raised and it was done in a bipartisan basis. >> and in '11 and '13 i vote god ar bill that president obama signed i'm willing to participate in bipartisan way >> the gentleman's time has expired. >> who votes for it in the circumstances of $7 trillion new spending this year. >> the gentleman from new york, mr. meeks, who is also the chair of the house committee on foreign affairs, is now recognized for five minutes. >> thank you, madam chair. i got to say initially i'm kind of shocked that ranking member mchenry saying that he wasn't asked for a vote, something that is going to determine whether or not american people, democrats and republicans, will suffer if

they don't raise this debt ceiling. i've been here for 22 years, between whether it's democratic or republican administrations, and each time when it cams to the credit of the united states and our economy it didn't make a difference to me whether or not the administration was democratic or republican or whether or not someone called me to ask me for my vote. i'm here to do the best thing for the american people, not play politics, and when it comes to the credit that -- for the united states and the economy moving on, it's not about who is the president or who called and asked me for a vote it's about doing the right thing for the american people. democrats and republicans. and moving up this to make sure that we don't default on our debts is essential to that it's essential to our responsibility as members of congress and not to say oh, nobody called me for a vote. that's simply not our

responsibility now, madam secretary, there are consequences if we don't pass an increased debt ceiling i mean like the increase in the cost of borrowing for a home or car or through one's credit cards of which folks will say on the other side i don't have to deal with that but then play politics with it i was wondering, as we are recovering from this economy, what setbacks will a default on debt cost american households be democratic, republican, independent, nonvoters, what cost would it cost us? >> i think it would be catastrophic for the economy and for individual families. nearly 50 million season could

stop receiving social security payments, or see them delayed. our troops would not know when they would get their next paycheck we have 30 million families who rely on the monthly child tack credit and they would not receive that relief, at least on time and as we saw in 2011 when the debt ceiling came, was raised at the absolute last minute and investor and consumer confidence was shaken in the run up, we saw a marked increase in interest rates, marked drop in the stock market, and when u.s. interest rates go up and the credit rating of the united states was downgraded, that means higher interest payments for everyone who has a loan, whether it's a small business, a homeowner with a mortgage, a credit card

payment, anyone who borrows would see a higher interest cost of their debt. >> we must raise the debt ceiling for the benefit of the american people. i don't care what party they're from let me go to chairman powell now, the fed is rightfully focussed on controlling inflation. while boosting employment with the aim of guiding our economy back to the prepandemic normal at the european central forum you mentioned it's urgent for the fed to resolve the tension between these two policies since ta taming prices by raising interest rates would weaken our labor market as the fed considers its monetary policy, how will you manage the tradeoffs between controlling prices and ensuring full employment and plan to resolve the tension between the two that you spoke on on wednesday? >> that's the very difficult situation we find ourselves in almost all of the time inflation is low when employment is high and so interest rates work on both problems now.

so right now, we are far away from we think away from full employment so that gives us incen tev to keep accommodate policy strong and in place inflation is well above target and, you know, we have an expectation that that high inflation will abate because we think factors causing it are temporary and tied to the pandemic and the reopening of the economy. what we say is we have to balance the two. i would say our expectation is that inflation will come down and we won't ultimately face that difficult trade-off of having the two goals >> thank you the gentle woman from missouri, mrs. wagner, is now recognized for five minutes >> i thank you, madam chairwoman secretary yellen, thank you for finally taking the time to appear before this committee i know that ranking member has

formally requested your presence, at least twice within the last few months, with no response last week treasury released the latest data on its emergency rental assistance programs as you know, $46 billion was made available to supposedly help covid impacted, low-income families pay off their back rent and to help make mom and pop property owners whole in missouri's second congressional district and beyond. after more than nine months and an entire summer of republicans pushing treasury your own data still shows more than 83% of funds remain unspent while millions of renters and property owners remain stuck in limbo. certainly doesn't sound, ma'am, like it has been an in your words expedited program. i have a series of yes, and no

questions. because my time is limited i would appreciate and will insist upon a simple yes or no, ma'am first, madam secretary, do you consider treasury's emergency rental assistance program to be a success, yes or no >> yes >> amazing are you aware that in december of 2020, when congress appropriated the first $25 billion for emergency rental assistance program funds were to be used by december of 2021? yes orno >> yes >> do you know why congress set that initial deadline? >> to get -- make sure that funds get to those who are in need. >> right to get it out the door to renters and landlords asap madam secretary, are you aware that just this past march democrat extended the timeframe

for emergency rental assistance programs for the years, 2022 and, are you ready for this, 2025 for the two respective programs, yes or not >> yes there's significant need and it will continue. >> in 2025, ma'am? i continue, does extending the program's deadlineincentivize grantees to get funds out by extending this does it incentivize grantees to get funds out the door, yes or no >> we're doing everything we can in the states and localities to get it out the door. as i indicated in my opening statement, in response to previous question, the infrastructure to do this had to be built and the pace at which money -- >> there was plenty of time for the infrastructure to be set our fed programs, our ppp programs, all of those,

expeditiously got money to people who needed that this is a complete and abject failure. >> i'm sorry this was -- >> i want to read a quote to you from a treasury official to journalists on september 24th, to simply take the amount of money that has gone out in the first five or six months and compare that to what was allocated for four or five years, is just a meaningless number meaningless number secretary yellen, is getting money out the door as soon as possible a meaningless gauge, particularly when we are talking about a pandemic related eviction crisis? yes or no? >> our objective is to get the money out the door. >> it hasn't gotten out the door 83% is still sitting in the treasury coffers. >> 1.4 million -- >> because my constituents in st. louis, i do not find it meaningless when talking about emergency assistance meant to

keep individuals and families in their homes not years later out to 2025. chairman powell, with spiking energy prices and bottlenecks and supply chains around the world there are concerns there is a rise in inflation may not be as transitory as you originally predicted given our current economic situation and the fact that democrats want to pass trillions and trillions more in spending, what makes you believe we will not see more sustained, higher inflation, especially when we've seen a significant consumer price increases, et cetera >> as i mentioned in my opening remarks we think that inflation will remain elevated before the supply bottlenecks are resolved and we think it will then move back down toward our goal. >> time frame? >> well, it's -- these are not things we control. >> not very transitory, sir.

seems pretty dug in. >> i would say that this is a function of supply side bottlenecks over which we have no control i would say that we do expect in the first half of next year to see some relief. depending on the bottle neck in question inflation should move down -- >> not a time to spend trillions of dollars i yield back >> the gentlewoman from new york, miss velazquez, also the chair of the house committee on small business, is now recognized for five minutes. >> secretary yellen, i would like to [ inaudible ] what chair waters -- >> miss velazquez, we cannot hear you >> can you hear me now >> you seem to be unmuted but the sound is not coming through very well.

>> can you hear me now >> no, we can't hear you would you try it again, please >> okay. can you hear me now? >> yes >> okay. thank you. chairman secretary yellen, i would like to continues to face from some state and local governments. how is the treasury department trying to expedite this funding to finance people who need it the most despite these challenges >> well, in cases where states and other grantees launch their

programs late, they faced an array of complications the most involved obtaining the necessary authorizations from a grantee's governing body, and there were procurement charges that arise when grantees have to engage outside partners and contractors. we've received a lot of feedback, indicating that the guidance that treasury has released really does give state and local programs the tools they need to move forward expeditiously. and i'd also note that we've been partnering with hud to send out technical experts who can help grantees accelerate their programs and help them document best practices >> thank you so earlier on new york was one

of the lowest performing states in distributing funding. but significant progress has been made, and the state now works nationally with more than $1.2 billion in payments made or obligated. unfortunately, more assistance is needed. so the treasury department is required to start reallocating excess first-round funds at the end of september can you tell us how this process will unfold? >> thank you for that question our objective will be to maximize the number of eligible households that are served by ensuring that the resources of the program are appropriately aligned with each grantee's needs and ability to deliver reassistance and reallocation will be really

critical in achieving that objective. our framework -- we will identify lokalts that need, have excess funds, will use clear expenditure benchmarks that increase over time we will strive to keep reallocated funds within the same state when it's possible and afford a venue for voluntary reallocation among grantees. >> thank you thank you. under the american rescue plan, secretary yellen, democrats reauthorized the state's small business credit initiative, providing $10 billion in federal funds to support up to $100 billion in new loans and initiatives for small businesses through state, territory, tribal, and local governments. under the program, potential

grantees must submit a completed application by february. how is the treasury department conducting outreach and working with local governments to ensure completed applications are submitted on a timely basis? >> well, thank you this is a very important program. our staff have contacted each state individually to follow up on the application notice, see if there are questions or if help is needed we have set up webinars. we're assisting in program design, in helping to develop programs and with respect to tribal governments, we've been conducting extensive outreach. >> thank you and chair powell, would you agree with what secretary yellen is saying regarding raising the

debt limit the debt ceiling >> yes, i think it's essential that the debt ceiling be raised in a timely fashion so that our bills are paid and the failure to do so would be potentially severe >> thank you chairwoman, i yield back >> thank you very much the gentleman from west virginia, mr. moony, is now recognized for five minutes. >> thank you j, madam chair. secretary yellen, do you believe that the proposal with the $3.5 trillion in total spending will cost zero and be fully paid for? >> yes, i do we have a full program that the president has proposed to raise revenue that would cover the cost of the program. in the president's budget, of course, there are changes under

consideration, as this goes through congress, but there are a host of revenue raisers, and i do believe it will be actually deficit-reducing beyond the first 10 years of the program. >> okay, thank you yesterday speaker pelosi claimed the same thing that, that the democrats' reconciliation proposal would cost zero, that it would be paid for president biden said the same thing earlier. call me skeptical, but given the record on the democrats' record with runaway spending is -- >> that is the fed chair and the treasury secretary testifying, answering q&a on the hill for a second day this week in front of the house financial services committee, where things have gotten a little bit fiesty as sometimes can be expected from the house. just in terms of the markets right now, we are at session lows the down is down 107 points and

the s&p down about .20%. technology, commune services and healthcare those are the only sectors that are now in the green for the s&p. but in terms of the headlines, david, i mean, recovering some of the ground we've heard in the senate earlier this week perhaps the biggest headline from treasury secretary yellen was her saying that the debt ceiling should be raised in a bipartisan manner and also that it resulted in a marked increase in rates and a drop in the stock market and as for powell, talking about the fact that we're not far away from unemployment. but the expectation suggesting that the first half of next year is when we can start to see that easing in supply chain bottle necks and thus prices coming down behind it them. >> yeah, catastrophe is a word

yellen used a number of times and in the senate on tuesday as well before we close out the hour, she is at the latitude conference, and she has some new data on hispanic households. >> an exclusive first look here that cnbc gets, david, at the hispanic wealth report, and in six years, the hispanic household wealth has more than doubled from a little more than 15,000 to $36,000. but now compare that to white, non-hispanic households, gigantic gaps in 2013. and while white households did not double their wealth in actual dollars, their growth outpaced hispanic households these numbers are based on reports dating to 2019 but we've had a global pandemic that disproportionately affected

minority populations the hispanic wealth project point to the 52% growth and says latino households are comfortably on track to continue that upward trajectory so where does that hispanic wealth growth come from? 14% from business equity why 15% in retirement accounts, and 33% in home equity in fact, latino homeowners have 28 times the wealth as latino renters. 53% of those renters in a hispanic wealth study in 2021 say they plan to buy a home in the next five years and more than a third say they'll buy investment property. hello, heads up to the real estate industry. and you know who is taking this seriously? home depot the ceo was talking to the latitude crowd and afterwards

they sent out an e-mail highlighting that over the next 20 years, 70% of new homeowners will be latino home depot says we'll be there for you. morgan >> contessa brewer, thank you. some really interesting insights there. we appreciate it just getting another check on the markets as i mentioned, we are at session lows right now all of the major averages sharply lower for the month as well that's going to do it. "techcheck" starts now ♪ good thursday morning. welcome to "techcheck. i'm carl quintanilla with julia boorstin tech continues to see a rough september. several cloud stocks are leading this morning's rebound it is no play day for facebook on capitol hil