inflation will linger long into next year, at least well into next year and that it will be easing off some time next year but he hasn't been using the word transitory as much anymore. and now i think he's officially burying it and erecting a tombstone, david. >> steve, thank you. steve liesman. well, with the market at its lows that will do it for us on "squawk on the street. let's send it over to "techcheck" which starts now ♪ ♪ so easy to watch but so hard to say, good morning and happy tuesday. welcome to "techcheck. i'm jon fortt with carl quintanilla and deirdre bosa day two of cloud week is a big one. you'll hear from the new head of aws, andy jassy's successor in

just a moment. plus, be there or be square. why bank of america says jack dorsey's departure from dwirt will do wonders for his other company. tech comes off the best day since may falling again this morning with rest of the market over covid uncertainty apple the only big stock that i'm tracking that's significantly higher plus, an update from the fed chair. dee? oh, carl >> you're right, jon big leg lower now dow down almost 560 points. we're going to start our feed with the markets as we said, stocks are dropping on those comments from fed chair powell and his view it is appropriate to consider wrapping up the taper of our asset purchases perhaps a few months sooner. who better to break it down than mike santoli. >> clearly investors thought that this new covid threat probably would have bought them a little more slack in terms of the fed moving ahead with their removal of accommodation and

tightening eventually. the testimony today says not so much still already was a fairly cautious setup in terms of what's been working and what has not been working within the markets and within technology. here you see this performance split between the s&p tech sector, of course dominated by the megacaps and the small cap techs from within the s&p small cap 600. so you have the big divide that's opened up again now, keep in mind, it's happened before, not that long ago, right, back in october then you did have catchup moves by small caps once again back in the summer so it's not to say that we can necessarily just extend these lines out and say this is the way it's going to be, but clearly this is the instinct of the market in times like this to respond to volatility by hiding in megacap techs very similar story if you look at the qqq, the nasdaq 100 etf, again, very dominated by the top five and then you have the equal-weighted version of those same 100 stocks. that's actually a pretty stark divide here. not a lot of upside in the average or the equal-weighted

nasdaq 100, going back a few months where as you do have some extension there. we've seen this pattern before, guys obviously we don't know if this is the kind of thing that's going to be enduring or just a little scare and gut check as the overall market kind of tests the lows from friday at this point, dee >> yeah, mike. what we're seeing is sort of different than what we saw friday when concerns over the variant first hit markets. there was that sort of clear stay at home versus the reopening trade. today you see shares like zoom and peloton are lower and since we heard from powell and he sounded more hawkish, we're now seeing tech underperform somewhat so a bunch of different factors playing into today's session. >> yes, i do think that that was a little bit of an unexpected blow in terms of having powell not really try to ease concerns about this now, clearly there's a lot we don't know i don't think he went out there saying i want to necessarily put the market on alert but he is clearly thinking that he has to be seen as responding to inflation. a lot of questions as to whether

the fed can do anything to get to the sources of inflation, if in fact, they're mostly supply chain, pandemic-related. but for now, the market already in a little bit of an off balance state is not necessarily taking it all that well, at least just yet i think you should keep in mind, we are looking toward friday's lows just under 4600 on the s&p. >> mike, we've been watching the vix pretty closely we're not quite back to friday's high, but we're really not that far away at this point in the 28 range. i mean, how much of a tell is it for those who are looking for things like all clears, not an all clear but at least asemblance of one. >> when you get one of those spikes, it sort of negated if the vix kindof pops by let's say 3 or 4 points as it's going right now. i wouldn't say negated meaning all of a sudden we have to spill lower, but it's not telling you that you reached peak fever. also, i don't think it's necessarily as much of a leading indicator. does show you there's a hedging

instinct that shows you a bit of a slippery uncertain moment in the markets. people feeling like they don't necessarily have confidence in the trench i'm lookinging at things much m like how the market responds break to a new low, get back to the 50-day average of the s&ps, like 45, 30s in that area, that was also the september 2nd high. it seems like a lot of people would be focussing in on that to see if that's an area where you get a little traction, if we get down there. >> yeah. over the last few moments, mike, we have seen indexes come off their lows a little bit. thanks for that. let's stay with the stocks remaining lower across the board. tech was outperforming after those powell comments actually slipped lower than the dow and the nasdaq here to take valuations within the sector, wells fargo bob peck bob, good morning to you what did you make of fed chair powell's comments last hour? did they surprise you at all in terms of its hawkishness and potentially speeding up the

taper? what does that mean for tech stocks >> yeah, first of all, thank you for having me. it's great to be back on the show, first hit since joining wells fargo. very excited to be here. you know, as far as the comments and what we have been seeing, i think you ought to pull the lens back just a little bit first the first thing to realize is the s&p is up 23% this year, so nasdaq up 21 or so percent that's coming off years since pre-covid up 60% for the nasdaq and 40 for the s&p you had a tremendous run here. obviously investors are thinking about inflation, the new variant. but really going after growth and new tams and new opportunities. tech has outperformed the s&p over the period since pre-covid as well as this year as well as investors are looking for new growth parameters they can get and new capabilities they can't get in the non-growth sector i think you'll see tech continue to outperform. you heard us talk about the covid bucket or work from home bucket covid being collaborative software and security, online commerce, video gaming, in-home

services and delivery. what's amazing when you look at that bucket, yes, it's up 140% from pre-covid levels at 250 from the bottom, but still up 15, 20% this year. trailing the s&p a little bit but still doing strong you'll see investors continue to look for new tech ideas. >> right that covid basket and some of the darling names in that basket saw huge run last year, but as you said, they've come off their high where do valuations stand from your point of view you thought some of the covid accelerated themes will continue into next year is that the case if we got a sped up taper and rising interest rates next year >> yeah. when you look at valuations, look at the s&p just in general, you can see that the pe ratios are up a couple turns from the high teens to low 20s. same with revenues and ebitda, up a couple of turns you look throughout the year, those multiples have been very stable, right, they increase going into 2021 and stable throughout the year. more importantly, throughout the

year, starting in about april, you start to see a lot of earnings to the upside right? you had earnings growing faster so therefore when you look at these numbers on a growth adjusted basis, you're looking at pegs around 1.3 or so which is lower than where it was at the end of 2019. so i don't think you're seeing -- i don't think you're seeing valuations get egregious. i do think you're seeing investors being discerning and looking for particular names where they see reoccurring revenues, large tams after disruptive ideas an try to pick the names they want to be a part of. >> bob, it's jon fortt welcome. i think it might be a stretch, though to say that even at the end of 2019 the valuations were seen as sober. so i wonder, how much does -- do these new tams justify the new multiples and is there going to have to be a lot of mna in' 22 consolidation wise to fuel some of the names that will continue to be successful, perhaps? >> it's a great question

and just putting it in perspective, those pegs around 1.3 once again looking at a growth-adjusted puts you easily in line with where you were in '018 and '019. it's a growth aspect what is the tam going after, ev, internet of things, a.i., what exactly are you targeting? mna you raise a really good point. as you probably know we have 4.7 trillion of mna this year, globally it's the all-time record in mna. and then in the u.s. we're on pace for 2.3 trillion. another phenomenal year. so mna would continue to be a big factor going forward couple things driving. one is the pe in strategics with tuns of cash on their balance sheet. the tech strategics are looking for further ways to get engaged with their customers and better serve their customers, sort of filling out their portfolio of

offerings. so you're sighing it across not only the sponsor group but strategics in tech and non-tech as well and look at the premiums paid so far, pretty consistent with the past in 25% or so premiums so not egregious i think the big question there tech side of things will just be what can the large tech player do >> bob, let me get us back to the hearing really quick as powell is commenting further on inflation. >> those are highly unusual and very difficult, very non-linear and it's hard to prediblgt those things that's what we miss and why all of the professional forecasters had much lower forecast projections. you ask about the taper. yes, when i mentioned earlier, since the last meeting we have seen basically elevated inflation pressures. we've seen very strong labor market data without any improvement in labor supply. and we've seen strong spending data, too.

so, and remembering that every dollar of asset purchases does increase accommodation we now look at an economy that's very strong and inflationary pressures that are high. and that means it's appropriate i think for us to discuss at our next meeting which is in a couple weeks whether it will be appropriate to wrap up our purchases a few months earlier, as i mentioned. >> thank you >> but in those two weeks we're going to get more data and learn more about the new variant >> okay. thank you, mr. chairman. madame secretary, you and i don't agree on everything, but i have great respect for your intellect and your experience. and i understand you have a job to do, but i would be remiss if i didn't point out that in my opinion there is no air-minded

person in the milky way who believes the infrastructure bill and the build back better bill are not going to require the american people to incur substantial debt and here is my question, and i'm looking for a number how much in the biden administration's opinion is too much debt? at what point as you incur debt will the biden administration say, okay, that's it we can't borrow any more or it's going to hurt the american people >> well, first of all, i want to say that i disagree with your assessment of build back better. it is fully paid for or even more than fully paid for and cbo

just completed a comprehensive review of it in which they found essentially the same thing and i believe it was important that it be fully paid for. now, i think no single metric is appropriate for evaluating whether or not the level of debt in an economy is reasonable and sustainable. and we used to -- we're accusto to looking at debt to gdp ratios and using those kind of metrics and looking around the world, many economists have found that debt to gdp ratios of 100 or more tend to be associated with significant problems. >> are we at 100 and more? >> we are, but we are in ver different times. that's why it's important to

recognize there's no single metric that's right and especially in a world of very low interest rates, it's appropriate to look at the burden of that debt on society, which is better measured by the real interest burden of the debt and that is exceptionally low negative currently but projected as interest rates normalize to rise -- >> i'm going to run out of time. let me ask you this, madame chair, very quickly, you gave a great speech back in september of 2019. it was actually an interview and i ordered a copy of the time and you -- i'm trying to find my copy here. you said -- this is what you said i'm going to quote i thought this was such a wise statement. you said the former fed chair said she is not worriyied about

the debt to gross ratio to the united states right now but added i'm worried about the trajectory of where it's going it's not stable. we're not living within our means right now. debt is going to escalate and that's going to create problems down the road, but then most important is the demographic way that lies ahead of us is going to essentially over the next 30 years double spending on three programs social security, medicare and medicaid, this is a shared gdp and the increases both because of the ageing population and on the healthcare side medical expenses those things put us on a trajectory of a completely sustainable budget path. now that was when the debt was 17 trillion. it's 29 trillion you're going to add trillions more through the build back better why is that not true today >> well, i want to repeat again, build back better is fully paid for and will not add to the debt or to deficits.

>> right. >> in fact -- >> you and i don't agree on that >> well, cbo certainly agrees with what i said we do have problems eventually in financing medicare and social security, which need to be addressed. >> thank you, mr. chairman >> senator van hollande is recognized for five minutes from maryland. >> thank you for your service, chairman powell, congratulations on your renomination and secretary yellen, i really want to pick up just where you left off i remember three years ago in both this committee and the budget committee talking about the republican tax breaks for big corporations at that time the congressional budget office did assess that it would add $2 trillion to the deficit. is that not true >> that is my recollection that

that was the kind of number that came. >> that was the cbo score. >> yes. >> so it's interesting to hear so many of my colleagues who three years ago didn't give a damn about adding $2 trillion to the debt, now talking about the build back better bill, which, as you said, doesn't add to the debt at the end of the ten years and, in fact, congressional budget office has already done its analysis and one of the ways that it does not add to the debt is that we close some of those big -- >> yes. >> tax breaks for multinational corporations -- >> some interesting q&a between the senators on senate banking, the treasury secretary and the fed chief. dow has bounced off of its intra-day lows s&p did briefly take out its friday intra-day lows. take a look at the selloff here. stocks are reacting. steve liesman has insight on what we just heard a few moments ago. steve? >> yeah. this is fed chair powell i think moving towards what he must have judged as the new center of his board which is a board that or

committee that wants to accelerate tapering. we heard it from several fed officials. interestingly most of those comments came before thanksgiving and then even on friday, rafael the atlanta fed president still seemed to suggest he was okay -- that's when we got the news about omicron, still seemed to suggest it was okay. what fed chair powell said today is he thinks the fed ought to discuss an accelerated taper now, he did say we're going to get more information on the new variant over the next two weeks, but my sense of this, carl, is the default position of the fed right now is to certainly discuss accelerating taper and maybe to actually accelerate it and it really comes from the fed chair's testimony where he seemed to suggest that the right reaction to the new variant may be less policy or less stimulus. let's listen to what fed chair powell said.

>> at this point the economy is very strong and inflationary pressures is high and it is therefore appropriate in my view to consider wrapping up the taper of our asset purchases with announced at the november meeting, perhaps a few months sooner and i expect that we will discuss that at our upcoming meeting in a couple of weeks >> and in case you didn't get that the first time he actually went back and repeated that again later on in response to another question from a senator, carl so, all this again comes from his testimony where he said, look, if you're going to have another round of virus, you may have people not coming to work and that could exacerbate the supply chain problems. >> right but just to put a koe da on it, steve, you see a line from the comments last week the last couple weeks from waller, bostic and daily to some extent and what powell said today. >> yeah. what's that shakespeare quote,

you rarely see a vice chair get way out in front of his chair. the idea that made you think, wait a second. maybe powell is thinking it, too, this idea of speeding up the taper, this idea of rate hikes in the summertime, it is interesting, carl, i think all the action there's obviously action in the stock market, a lot of action in the two-year which really just shot right up and kind of went back to where -- not quite where it was pr pre-thanksgiving but right around the 54 or 55 range. we're watching those fed probability if they price back in that rate i think now you have to do the calendar math right? a few months early, they were going to end in may or june. now they may end i don't know if they do -- i have to do the math on 30 billion a month is twice as fast, they could end february and march. that would give them the flexibility to think about rate hikes. you know what maybe if the fed

is seen as tougher on inflation in its rhetoric and jawboning maybe doesn't have to raise rates quite as quickly if it gets in position to do so. >> and perhaps markets got that question as well because we have seen them rebound from those steve liesman, thank you so much let's turn back to bob peck. did the move surprise you? i wonder something that steve just raised. are we seeing a shift perhaps in how the fed might respond to variants if we don't see any further lockdowns as president bide suggested yesterday, is stimulus needed in the same way that it has been >> yeah. it's funny the question of inflation comes up a lot with investors. and i mentioned earlier about looking at the revisions that took place during the year, estimates. we found really interesting is that revenue estimates continue to get revised upwards that happened all throughout the year and earnings on the flip side went up but not as much. we think what you're seeing there is investors counting for spending supply chain, having to pay workers more and that

getting baked in the ultimate real question for investors now is enough of the inflation baked into the estimates outlook at '22 and '23. >> bob, it also occurs to me that i think we have seen narrative shift over the past two, three years in tech, both on the hardware and infrastructure side in cloud and on the software side in productivity what i mean is in cloud on the hardware side, hybrid has come to mean not entirely either on premise or in the public cloud, but a combination of both and we'll be hearing more from aws's ceo on that soon then also when it comes to productivity software, omni channel meant that software is a part of the instore experience how much of that factors into the growth that you expect from technology companies going forward from here? >> i think you're hitting it right on the head, john. you'll see these hybrid platforms, hybrid models quite

honestly look at the recent ecommerce data, how much was done shopping in stores ahead of time? you look at the november numbers, november 1st, yesterday, you know, ecommerce was up about 14% cyber monday numbers weren't as strong, what you're seeing is a little hybrid right there. some do shopping offline some doing it online and i think you're going to couldn't to see that across software, across the cloud you're going to see the customer, the consumer ultimately trying to optimize their experience and the supplier, the tech provider trying to optimize experience and offering to give that customer. >> bob, thanks for your insights this morning bob peck, head of internet banking at wells fargo, jon? >> now let's bring in edgar on this intra-day move lower that we're seeing for stocks. ed, good to have you. >> thank you. >> what do you make of the overall move but perhaps on -- beneath the covers what's moving

more or less and how this relates to the move that we saw friday, just an echo of that or are there different moves beneath the covers that you're seeing >> i think it's a continuation of the new story line that we have as a result of the new variant of this covid. and friday the selloff was the news that there is a variant we didn't know much about it and it could be dangerous, but again not much was known about it but there was a sense -- >> ed, sorry to talk about you they are talking to powell about the variant. >> we're dealing with subsequent waves that are variant at what point do we just get back to a more normal execution of fed policy that's not influenced by maybe the next threat, as if it is suggesting we're going to go back to where

we were last year. i don't believe that most people think that we would treat a variant the way we had to treat this new virus that's among us so at what point can we get away from seeing the markets, seeing the fed appear to react based on and implement policy that looks more like what we had to do last year with something new affecting our economy? >> so, we're not thinking and i'm not thinking that the economy -- the effects on the economy will be remotely comparable to what happened last march with the shutdowns or that there will be additional shut jouns. we tried to adapt -- we're focussed on maximum employment and price stability and we tried to adapt our policy as we moved along. we'll continue to do that. and part of the world is -- i agree with you, we're going to see this disease being around for a long time. i think the economic effects over time will diminish. we have to be humble about our ability to predict or understand we're not at all thinking that we haven't made progress on the

economy or as you suggest. >> i think it would be helpful for the administration to maybe be more specific to the american people to understand that covid is going to be among us. it's a new virus it's going to be here. we have to deal with it. we can't have talk or expectations that we would in any way react the way we did last year, last year rightfully. but now we have to deal with the fact that it's among us. first, i like unanimous consent for washington post fact check on the economists, the nobel winners that president biden cited as the build back better plan actually being noninflationary. i think if you read further into the letter and hear other comments by those economists, they say that longer term it may reduce inflation but shorter term it may increase inflation. my time has expired i would like

unanimous consent to submit the fact check and say secretary yellen, i think there are loudable goals in some of what's put into the build back better plan but i don't think they're sustainable. the way they've been passed out of the house are problematic and i tend to agree with senator kennedy that we have other pressing problems, promises that we already made to the american people with respect to medicare medicaid, social security, are promises we already made that if we continue to add more and more stressors on our debt and our deficit, those are going to be promises that are broken and that once we get that on sound footing maybe we should consider other ways to help others. >> not objection so ordered senator warren from massachusetts is recognized. >> thank you, mr. chairman so as you know in the early 2000s the fed stood by and failed to use its authorities to regulate and supervise the biggest banks in this country.

and the result was a financial crash that cost millions of families their jobs, millions their homes, millions their savings. that's why i believe that vigilant regulation is an essential part of the fed's job. chair powell, you recently stated that it would be appropriate, quote, for a new person to come in and look at the current state of regulation and supervision and suggest appropriate changes. end quote. is that still your position? >> yes it is. >> good. >> the press also reported this as your agreement to defer to the vice chair for supervision so i want to ask you a specific example of how that deference would work in practice if you're confirmed and if the new vice chair for supervision suggests a regulatory action that you disagree with, will you

bring that matter before the full federal reserve board for consideration? >> so, let me just say that what the law does is it -- the law gives the vice chair for supervision the authority to set the regulatory and supervisory agenda and i would expect to have a perfectly normal, good, constructive working relationship with a new vice chair for supervision. i would not see myself as stopping those kind of proposals from reaching the board since the law seems to indicate that that's the job of the vice chair for supervision. >> good. i'm just trying to be clear on your understanding of it so you would bring that before the full board for consideration, even if you personally disagree? >> you know, that would be my general intent, yes. >> okay. >> i can't cover every possible, conceivable situation, but yes, that's my understanding of how -- this is the only other office that has specific legislative grant is the vice chair for supervision and that's

what the job is. >> okay. i appreciate that. so you're saying you would do it and you would actually feel like you were legally bound to do it? >> i would say the law -- that's how i read the law. >> okay. if the vice chair for supervision recommends a regulatory action with which you disagree, such as undoing a rule that vice chair brought forth and you voted in favor, what does it mean to defer under such circumstances? >> i don't think i used the term defer. you mentioned that was a press report. >> yeah. >> we're a commission structure. the person is not the comptroller of the currency the soul voice every vice chair for supervision and those who held the job before there was a formal job they have to convince the other members of the board that's how it works. and that's how i would expect it to work going forward. >> and i appreciate that but, your specific language was

that you would respect that authority, which is i believe why many, many in the press interpreted that as defer. that's why i'm trying to understand respect that authority. those were your words means. >> i would say couple things first, respect the authority to bring these proposals. i also think a person who arrives nominated by the president, confirmed by this body with particular views, i would say that that person is entitled to a degree of deference, i wouldn't overstate that the person would still interest to convince the members of the board to vote for whatever that person is proposing. >> okay. then if i can, just one more example, if the person in this role proposed new capital requirements to incorporate bank's exposure to climate risks, would you vote for that >> would i vote for that i have to see what you're really specifically talking about >> all right very helpful i appreciate your answers here

you know, during the last four years, while the fed was chipping away at regulations piece by piece, new and emerging threats to our financial system continued to grow. i just think about the list right now. climate change, right now climate change is on pace to depress the global economic output by as much as $23 trillion annually. by 2050. crypto, the market cap of crypto currency market is now $3 trillion six times bigger than it was just a year ago. and this is explosive growth that is coupled with almost no regulation and no guardrails to protect either investors or our financial system the crash scenario here writes itself non-bank financial institutions grow bigger by the day black rock alone manages nearly twice as much money as the entire economy of japan while the fed refuses to work to declare them a systemically

significant financial institution. growth and collateralized loan applications, new covid variant, the list goes on this is why i believe the fed must take a much more active role on regulation failure to do so puts our entire economy at risk. thank you, mr. chairman. >> thank you, senator warren senator haggerty of tennessee is recognized. >> thank you, chairman brown ranking member, i appreciate you holding the hearing today. secretary yellen, chair powell, thank you for your testimony chair powell, i want to con congratulation late you on your recent renomination. i look forward to the hearing that's coming up i also appreciate that we're going to see the feds' report on the digital dollar soon. we've been long awaiting that. i think it's an opportunity for americans to take a real lead in innovation so thank you for that. secretary yellen, i would like to pose my first question to you. every move the president biden has taken so far has seemingly improved russia and vladimir

putin's strategic position from capitulating on the new start treaties and extension to not fully enforcing mandatory sanctions to halt in order stream 2 and russia and putin with strength -- >> we have been listening in on that senate hearing dealing with a number of topics, including how the fed would deal with banks and before that, how the fed might address this variant and whether it would use the play book from earlier in this pandemic scenario last year. ed yardeni still with us ed, the indication from fed chair powell seemed to be that the 2020 play book would not be useful for a variant necessarily in 2021. >> right. >> but at the same time, there is the question of a faster taper and potential interest rate hike. so how much does this action

that we're seeing cause you to want to revisit your play book overall? >> well, you know, we're in a real roller coaster ride right now. on friday, with the variant announcement, the market seemed to have been discounting the possibility the fed might slow the pace at which it was tapering now, because of his comments, the markets are thinking that, well, actually he might accelerate the pace of tapering and they might start raising interest rates before the middle of next year instead of the second half of next year so it's -- you can really get whiplashed here if you're not careful. but i would stay invested in the market i think what we're seeing here is the fed is indicating, powell is indicating that the fed is more spooked about inflation than they are about the pandemic situation and he basically said he doesn't expect anything like what we went through in march and april of 2020. and i think he's right

the fed has been behind the curve on inflation and now they want to catch up with it that's actually healthy thing, especially if it starts bringing down some of these commodity prices which would be a leading indicator suggesting that the fed may not have to raise interest rates all that much to bring inflation down. >> ed, he talked about the stronger position the economy is in, but at the same time are we seeing sort of a knee-jerk reaction in the markets? yes, fed chair powell sounded more hawkish tone, but he also said that he's monitoring the variant, the omicron variant much more closely and he's going to know more in seven to ten days so the market perhaps getting ahead of itself right now? >> well, i think the market is just jittery and naturally when we have a market that had this extraordinary run, thursday the economy has been very strong and a lot of profits and valuations aren't cheap the market has been elevated so there's room for people to

take profits especially here as we're approaching the end of the year and people are starting to factor in taxes. so, all in all, it's just the jitteriness is going to mean volatility here. looks like the variant has struck santa claus we all expect the santa claus rally this time of year and that may not happen as a result of all this volatility. >> ed, one thing that is markedly absent today in powell's commentary is any notion of productivity giving us a safety net or cushion from some of this you have capital goods orders running 20 plus percent above pre-covid levels you track this closely is that still a valid argument >> yes, that's my position we're not going to have anything like the 1970s all over again because in the 1970s productivity absolutely collapsed we had a huge increase in the labor force. the baby boomers came into the labor markets. this time around, we're seeing the baby boomers retiring and not being replaced very rapidly

by younger people and so there's a real chronic shortage of labor and companies are scrambling to increase productivity and they've done an amazing job so far as evidenced by record profit margins but look, the fed also has to respond to the news of the day and the news of the day that spooked them the most is the consumption deflator up 5% and i think that's just getting too uncomfortably high above 2% for them and they want to show that they feel they've accomplished what they wanted to which was to bring the unemployment rate down and i think the number that we're about to get here in a few days on november unemployment is going to be very strong based on what i have seen from initial unemployment claims. he's doing the right thing, i think. he's a little late but better late than never when you're dealing with inflation >> i was going to say, there's a lot of commentary this morning especially you look at the labor differential this morning that the fed essentially can declare

victory when it comes to employment. >> absolutely. >> i imagine you think this is going to win powell some fresh fans. >> yeah. i think so look, i wrote a book not too long ago and one of the -- on the fed and one of the chapters is called jerome powell pragmatic pivoter and he's doing it again he's very good at pivoting, just in the nick of time. >> all right ed, thank you. >> very welcome. let's bring in steve liesman for an update. i would like reaction, too, steve so what yardeni just said. >> i'm sorry, carl i have to admit live on national television i was listening to the hearing not yardeni. >> ed was appreciating powell's pivot here, maybe a little bit late but as he said, better late than never. >> yeah. no, i think i heard him say something about the fed was late to the inflation party and now trying to catch up and that's a good thing i did hear that in one ear i had two things going at the same time. listen, this is a surprise

he is surprising markets here by saying he believes the fed ought to indeed consider easing back more quickly on stimulus to the economy. the market was focussed over here on the issue of the virus he's talking about the inflation response to a question he said in testimony let's play it again for the first time the fed should consider accelerating its taper. >> is very strong and inflationary pressures are high and it is therefore appropriate in my view to consider wrapping up the taper of our asset purchases which we announced at the november meeting perhaps a few months sooner. and i expect that we will discuss that at our upcoming meeting in a couple of weeks >> so, carl, that came after his comments earlier in the day that maybe the right answer to another round of or another wave of this virus is possibly not to provide more stimulus but to take it away because people could decide not to go to work, that could make the supply

problems worse you'll note that during the hearing he did say the big thing that the fed missed was the supplied bottlenecks that's the thing that led to more inflation so the idea that they would provide stimulus, increase demand while you still have a supply problem, that could be exacerbated and the inflation problem. i was thinking back on this, carl, i believe it was jim bullard over the years has done this he kind of threw out a, you know, a fire bomb by talking about this idea that maybe the fed was doing more harm than good months ago. and i'm hearing gradually this idea maybe working its way to the center of the committee is maybe why in response to the inflation problem they're talking about an accelerated taper. >> okay. to your point, steve, i think yellen is discussing supply chain right now. let's listen in. >> ships waiting for many days to be able to off load their containers they have agreed to remain open 24/7, which they're now doing. and also the administration has

worked with major retailers that were leaving containers for long periods of time on the docks without picking them up to make sure that they begin to expedite movement of those containers away from the ports. in other areas in savannah, the president has worked to establish locations away from the ports where containers could be brought, moved and deposited to create more room at the docks to keep cargo moving and so there are just a wealth of interventions and working really with private -- these are private sector paresis pants that are responsible for the supply chain, but bringing

together parties we're looking at ways that maybe we could work with states and cities to expedite the licensing, commercial driver's license to raise the supply of truck drivers, which are in short supply and of course, a lot of this is related to the pandemic and it comes back to increasing vaccinations, boosters, get the pandemic under control so that demand pattern shift back toward more normal towards services and away from goods. but they're a wealth of interventions that the white house is involved in. >> no, i appreciate that i think there's also a role for congress to continue to support not only the administration but there's legislation that we could pass to actually help us

address this as well which is why i support the supply chain resiliency act which has been introduced by me, and several of my colleagues creates an office of supply chain resiliency at the commerce department charged with monitoring, researching and addressing vulnerable supply chains the office will provide loans, loan guarantees and grants to small and medium manufacturers to allow them to address supply chain bottlenecks by expanding production we should be prepared for this knowing this has happened for the future, short term and long term. >> long term is important as well. >> i notice my time sup. thank you. i will submit the rest of my questions to you for future response as well thank you again. >> thanks, senator cortez. senator scott from south carolina is recognized. >> thank you, mr. chairman and thank you, ranking member for holding this hearing this morning and thank you to the guests for being with us here this morning i was thinking about the conversation i had over thanksgiving about the consequences of elections and we heard over and over again that elections have consequences.

elections have consequences. perhaps no finer point that elections have consequences is simply losing a single seat in georgia. >> we continue to follow the testimony and we do see the dow industrial average heading closer to the lows of the session. the nasdaq also extending losses down 1.7% at the moment. let's bring in megan chu, head of investment strategy at williamston trust investors. powell's tone perhaps surprising but markets were shaking on these variant concerns plus, as bob peck mentioned earlier, we are near record highs. valuations have run up what do you make of the moves today? are they knee jerk are they overdone? what do you think going forward? >> well, i think that what's happened with the omicron variant is that it's really blown open the -- a wide range of possibilities for the next few months and i think what we're hearing today from chair powell is that

there's also a wide range of possibilities for monetary policy he has really done i think a phenomenal job of trying to telegraph what the fed is thinking, what they're likely to do particularly when it comes to the taper sos that it's not an alarming event i think he did a very good job of that in starting for the taper. but going forward i think it serves markets well to increase optionalty and i think that's really all that's going on here i think he is -- been a cloud chorus in terms of a taper, perhaps earlier start to rate hikes and chair powell is acknowledging that and really letting the markets know that there is a possibility of an earlier start to taper and earlier liftoff of rate hikes. we continue to believe that the trajectory of rate hikes is more important than the date of liftoff and i think that what

you could see is this ends up being better for markets that there's an earlier start to hiking rates but a shallower rate hike cycle. that's a better outcome for markets. and so, i think we're trying to all digest this higher and wider range of possibilities means more volatility. we're now looking at perhaps a slow down but also maybe higher rates. so, you're going to probably be hitting the market from both ends, which i think is what we're seeing today in terms of cyclicals taking it on the chin but also tech selling off as well. >> so you're talking about perhaps earlier, but shallower rate hikes, steve liesman brought up the idea a few moments ago that if the fed tapers more quickly, that could afford it more time to push off rate hikes is that a possibility as well? would that be positive for the markets? >> i think it would be positive in the sense that you might have -- get the taper out of the way so that is one less thing that we add to investor

uncertainty and then just focus on rate hikes, perhaps giving more time to delay i think it's probably more likely in my view that if we get an earlier end to the taper, we're probably also seeing an earlier liftoff. but again that doesn't mean that the fed has to be much more aggressive we're baking in about one hike per quarter with terminal fed funds rate of around 2 maybe 2.25 and i think that is an environment where the market can continue to do well. we think the economy continues to be supported by three important pillars, the consumer, cap-x and very important inventory restocking cycle that that's already taking hold so, we're watching all of that we think the economy can with stand it, but certainly the omicron variant creates a lot of uncertainty over the next few months. >> megan, how do you factor tech into that because there are all kinds of arguments out there that tech is in itself

particularly certain kinds of technology, deflationary and it certainly seems that investors are turning toward some of those say software names and productivity names when this uncertainty occurs how does that factor in for you? >> yeah, absolutely. we definitely seen a strong positive correlation between cases rising in terms of covid-19 and tech outperformance so i would think that that would be in play here, plarticularly s we see maybe some further doubts sewn in terms of those reopening sectors and consumers getting out there to do different activities, to travel. a lot of the reopening type of plays. i think that tends to benefit technology because it means that that tech, that productivity, that hybrid, that lifestyle is certainly with us for the time being. i think what might be a little

bit in question over the next few days is as i said, if we're talking about a rising in cases in terms of the omicron variant but also perhaps more hawkish fed, that does fed, that does create a bit of a which one wins out, and i think it's just going to add some more volatility we still like areas of technology we are neutral overall, and i would definitely avoid those highest flying, most highly valued, it's debatable whether they're overvalued, but the highly valued pockets of technology they're still highly valued if you look at the social media platform, the cloud platforms. we still like the technology over a three-to-five year time horizon. >> it's interesting about tapering powell has taken great pains to separate the notion of a taper from the notion of higher rates. he hasn't been as clear in

separating those two today >> well, i think that in all else equal, they would be separate, but in the current inflationary environment where the last inflation print was over 6% and there's concerns that that will stay elevated or continue to rise not our base case, but certainly upside risks to the inflation outlook. i think when you're looking at that backdrop it's harder. i think it's much harder to separate the end of taper and the start of rate hikes because the only reason, in my view, that the fed would be accelerating taper at this point is because inflation is so much of a concern that they really want to give themselves the option of hiking rates so i don't think it is set in stone that when the taper ends, whenever that might be, the next move, the next immediate move has to be a rate hike and it is more linked and just coming back to that optionality, chair

powell is a fairly humble person, in my opinion in recognizing the uncertainty and certainly the fact that inflation has been more persistent and higher than many people first expected when we thought of it as transitory, but today i think he's just recognizing that there is a wide range of possibilities that are made even wider by the new variant. >> meghan, thanks for being with us today we should note, too, that the dow is down 600 points, john, as losses accelerate. >> that's not quite 2%, with that, let's bring in mike santoli. mike, the market has run up quite a bit, particularly the dow. the numbers are big, so we always have to keep that in context, but what's your read on what the action is telling us throughout the morning as we head toward noon >> clearly, john, first of all, yesterday's bounce was certainly respectable and there were more

stocks down than up yesterday and the downside jolt like we got on friday, it remains in a testing phase and it's in a concussion protocol, right so that's your backdrop. then when you do this get effort by the chair to assert that they will be more determined to get the tapering done, i think it's a psychological thing. people would think they could get clearance on that front. i think chair powell and the rest of the fed does not see this asset buying every month as having much of a tangible economic effect and it's purely a signaling instrument to say they'll not go ahead with rate hikes very soon. so they want to get that out of the way. i don't think that in itself should be that concerning and then we have this fog of war when it comes to the variant that's why we have some uncertain activity the testing phase, i mentioned, were still around friday's lows and the s&p 500.

this is a pretty good purge today and you had the new york stock exchange volume 9% to the down side. so some people will look at that and say, good, we needed a fuller flush, but there is a lot of house money out there you mentioned how much the index is up and the instinct to take profits and optimize on the tax front by selling the year to date losers from their highs and that's all going on today. it's not a matter of making excuses and it's an uptick in the uncertainty about the policy path and the growth trajectory along with a market that was knocked back on its heels and that causes them to reassess their equity exposure. >> at 49.65, mike we've taken out friday's low, and the 30-year low is pretty much the low for the year your point with the volatility and the tax loss selling

i wonder, how would you characterize the degree to which we would see non-economic selling? >> it's certainly an undercurrent here. again, i hesitate to say oh, this is all mechanical stuff because when the market was clicking higher every single day and there was no fresh news and you had the growth stocks that were going up just because they were a sass company. nobody was saying there's a lot of non-economic buying here and not sure we should cash these check, but it is happening right now and emotions run higher on the upside than the down side. and the buying will be there, but it might need a fuller pullback to get there. i mentioned before, 50-day average in the s&p and the september 2nd high and it's a few points lore than the 45, 30, and we'll see if that matters if we get to it yeah, mike it's like a roller coaster nobody screams on the way up, right? >> right >> joining me now is krishna of lafayette college endowment cio.

krishna, help us think through what we see happening in the market this morning and in the context of what we saw happen on friday how much of this is new information that's causing you to re-think how you look at a portfolio and how much of it is emotional? >> it's really not emotional the markets are reacting to a new factor in the marketplace which is the new variant i think what is, perhaps, exacerbating the situation is powell's comments, but powell's comments are not the driver at the moment it's a virus-related thing, but from a longer term perspective, however, powell's comments matter a great deal because the fed is now in a bind it can't get the markets to where they would like it to be for support purposes because of inflationary pressures and that's not going away.

this is the first time in probably 15 years that the fed finds itself in this situation, and therefore they're keeping all their options open, and that is going to be something that is going to hang over the markets for a lot longer than we anticipated two, three, four months ago >> so what are you going to do differently here >> so the first thing is the instinctive buying the dip is shg tsomething that you have to restrict yourself in some way. that's one and second, it's really the opportune time, again, in a long time for people to be looking at their overall risk level and make sure that they are comfortable with that level of risk because you can have a very meaningful drawdown without much happening if we get some news on virus or somebody comes out and says something with authority, the markets can react to that. so having a good handle on your risk rather than trying to buy the dip, i think that's the

overarching theeris at the moment >> so, christian, who would have to happen with the omicron variant to potentially change powell's latest tone to reconsider an accelerated taper. is there a scenario where you can see the fed keeping its policy in place? >> i think the accelerated taper is pretty much given so the real question is when does the fed raise rates and for that, we probably have six months of time for the virus issue to play itself out, but i think we will have a good handle on the situation at least for the interest rate outlook relatively quickly once we have some idea with the people and a few weeks with the hospitalization rate and the mortality rate i think the interest rate and the markets are telling you problems are from a longer term perspective will go away, but

not any time soon and that's the dichotomy that we have to deal with >> krishna, thank you. >> as we continue to watch these markets, overall, the indices has been selling off we were near session lows, a little bit off of that, carl, and you know, it's interesting, just looking at tech, apple is still up better than 1%. it's the one sizeable stock i see that's doing that. yeah, mega-cap tech and the only working specifically and it is almost uniformly red >> these names are seen as tech value and if you look at potentially interest rates rising, and they have held up, carl, in the last few weeks and months and the growth and momentum names that we've been watching so closely. >> we're at levels right about the low from friday. we'll keep an eye on energy and oil briefly got below 66 which

is interesting and that's almost a $4 drop and powell to his point earlier, we still have a lot of data headed our way and the adp tomorrow and the jobs number on friday along with earnings don't forget the crm tonight and be benioff on that mono pep let's get to the half. >> the new uncertainty for stocks what it means to your money for the remainder of this year and beyond we debate that with the investment committee today joining me for the hour, stephanie link, degas wright, josh brown and jon najarian, co-founder of market rebellion.com. the stocks are under considerable pressure today in large part because of the right-hand side of your screen that hearing on the hill today the fed chair is there the treasury secretary is there, but it's those comments from fed chair powell about a sped-up taper, also retiring the word transitory as it relates t