♪ good morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber futures are steady after monday's upside reversal and ahead of powell's confirmation hearing today. some curve flattening. ten-year yield dipping closer to one and three quarters we begin with the tech turnaround >> it has been one year since the start of the reddit

rebellion after ryan cohen was named to game stop's board of directors. >> and powell back on the hill testifying when the q&a begins, we'll take that live. start with the market volatility and the nasdaq 100 erasing almost a 3% drop yesterday i know you were talking about what it means with joe a moment ago. >> yeah, but, look, we're sensitive to rates that we have a little tick in the rates and people who have been banging out or trying to leave the nasdaq suddenly turn around and the term was rather stark because it started, by the way, with adobe. i thought that was positive. adobe was the one that let us down both when they first reported a quarter that people didn't like of the $250 billion stocks and then -- >> and then the ubs note. >> and the downgrade last week you start thinking, maybe things are starting to get built in you have a lot of companies --

there was a downgrade of shopify today. some of these companies have had horrendous moves >> you're not buying at the top. >> no. all right. i'm not disagreeing with you i just wonder -- yesterday was an interesting day in that sense. a lot of hedge funds got crushed last week. down anywhere from two -- i was hearing as much as 10% for some of these hedge funds and i just wonder, yesterday, jim, whether in the morning and the early part of the day they weren't just getting out of risk, selling, selling, selling, because when you're down 8, 9%, you're not looking for anything more and then perhaps some of that selling abated and -- >> that's a good point when you're down 10%, you got to make that phone call listen, i kind of hurt you the first five days of the week. carl, one of the things that was just consistent was, i didn't matter whether your company is doing good or bad, it went up.

it makes me suspect. and then we saw some of the big cap, like alphabet, turners, and next thing you know, everything is turning, including the ones that were not profitable, the ones that are -- no, check that. cathie wood names. >> yesterday, you were saying that names she was buying were death. >> i pushed hard in a piece i did on friday about how to correct twitter. i think they should buy next door, which is a really, really good company and then it turns -- and then it turns out that she's been buying it david, that means -- i was thinking because of sarah fryer. get the good product and then i saw that she's buying

next door -- >> the ark funds are advising the atf to buy it. that's pretty harsh. >> this is the end it's kind of like the doors. >> yeah, i'm familiar with that song >> she's the blue bus. >> there is a lot of focus on her perhaps for a good reason -- >> everything she touches turns to -- >> well, for awhile everything she touched turned to gold by the way, years ago, she would sit at this desk and we would hear some of her projections on tesla and go, you're crazy in fact, she wasn't. >> she wasn't. she nailed it. >> enormous amounts of capital float into the etfs after that incredible performance, only to have that performance end and, in fact, those who went into those etfs are unhappy about it over the last, let's call it year or more and as i said, she's probably lost more money than was made,

because that oftentimes what happens with what follows after these great years. >> and you tend to say long term >> she says they're retaining assets i keep thinking of names -- i said, jim, what was the name of that -- remember garrett from the late '90s >> you go to some opera houses named after him, you say, that's substantial. >> i like to say, it's one of the few benefits to -- haven't been around for a while. i'm getting old. >> look, always hesitate -- you always caveat it by saying, she did find tesla but the fact is, is that i could not find a single reason why the stock of next door was down other than the fact that she was buying it. there are people -- even though -- >> now there are people firing against her, is that what you're

saying >> i don't run a hedge fun -- >> she doesn't she's incredibly transparent. >> when you sell -- flex, they have to reorient their etf i just wish she would buy periodically some companies that are just not on the way down the draftkings -- what, the draftkings honestly if tom brady steps on the field and you get $500 some of these -- if the knicks get one point, you get -- >> fan duel is offering you 1,000 bucks if you sign up for your first bet. >> did you see you can withdrawal some of fan duel money. >> you have to keep it on the platform. >> not everything. >> i was tempting -- >> now they're giving you a thousand dollars >> b of a cutting some overdraft fees this morning. we'll talk about deflation in financial services in a moment it's going to be a lot about

powell today and inflation and bonds and ratesand things that jamie dimon addressed yesterday. >> when you look at the economy, the consumer, all respect to the fact that it's not true for all consumers. some are still suffering and we're still kind of working through this the consumer balance sheet has never been in better shape >> all that said, he's got an above consensus inflation view he says at least four hike and is sort of echoes some of the analysts who say at least the economy can handle it. >> look, i find that -- i don't want to leave the takeaway which is the balance sheet is so good. remember, david, when we used to look at the heavily indebted consumer and say, we're in trouble with the stock market? obviously, it's a shaky time too much money being borrowed. we don't have that now when i look at china, every day there's some -- it seems there's

some new -- new construction company that is defaulting and i look at us and our companies and our individuals and i say, look, i think our country is at a much steadier given that consumers paid down so much debt obviously we have inflation. i don't know if you noticed a lot of the retailers are reported -- no matter what they say, it's bad because of omicron. >> well, yesterday we had lulu they're having trouble staffing stores apple, obviously right now you can't walk in, you got to order ahead of time in pick up. >> we got urban, shake shack, cvs. cvs not too bad. >> cvs was fabulous that preannouncement. but i had -- i was with laura albert in november for william sonoma, very good company, 151, they were -- they haven't preannounced

cvs has the benefit of the -- that is -- that may be the biggest covid winner of all time, carl because unlike peloton, you still got to get the shots peloton, by the way, is, well, david, it's got that zynga feel to it. it's a zynga situation nathanson teed off on tiktok >> we'll talk a bit about that later. >> that was brutal a lot of positive analysts on the deal, but he was not one of them. >> it's interesting to see -- i think people have to realize that most research is pretty positive. >> yes >> it's the sell side. >> intends to be why we focus on the sales because they're rare and give you something interesting. bye, bye, bye is the chorus of street. >> i'm reading the take two. i don't know the guy

i know moffitt davidson. but i'm reading it and it's like, well, wait a second, i know you want to talk about it, i don't want to steal your thunder. what he talked about is the change in the narrative. i love the concept of the change in the narrative i don't know, when did it start that that was the way people talked what was the point when people started talking about the narrative and the change in the narrative? >> somebody brought that into the -- >> i'm going to tell a sad one >> a sad narrative >> yeah. my father was 92 and he had a great run. but i remember, like, he was faltering and i said to the doctor, you told me he was fine. and the doctor said, there's a change in the narrative. and i turned to my sister and said change in the narrative does that mean that my dad is not fine when i hear change in the narrative on wall street, it means run! >> facts do change >> facts do change. >> and point of views change.

>> and change of the narrative of peloton was -- >> yeah. facebook's parent meta delaying return to office until march 28th adding that proof of a booster will be required facebook has been quick to delay return to office, but going as far as to late march is interesting on a week, jim, where we printed 1.3 million new cases yesterday. >> i did listen to dr. gottlieb say 60% of our country is going to get it. david, you can put people in the office -- >> we're running at about that rate 66%. >> yeah. >> i'm holding out i don't know why -- >> there will be some who don't get it you could be one. >> what's it like when you haven't had it >> i don't want to get it now because the inconvenience it will cause my family my daughter will probably not be

able to go to school i'm not worried. i watched you guys, you were fine i've had three shots the evidence would strongly suggest i'm not going to get overly sick. >> the president of mexico got it a second time >> but he's not overly sick. >> like a tennis player, give it to the whole country >> a microcosm of the emotion that's wrapped in all of this. he does have a lot of supporters. >> when i look at the retailers, did you really want to go during that three-week period rather than be online there was a push for amazon today and that i get because i was -- before i got covid, i was afraid of getting covid. and i was doing -- i wasn't going anywhere unless everyone had a pcr. and sure enough, well, the pcr doesn't last a full day. you can get tested and in the interim you can get it >> i went from a house this weekend finding things to return

to amazon. it's amazing how many things we had that had never been opened >> really? >> this book, we have three of them, i notice the same book. >> why is that >> who knows >> and they'll take it back. >> i put rice cakes on auto renew and my wife opens the door and -- [ laughter ] >> we wonder why fedex is having numbers like they have after the break, it's been one year since the reddit rebellion. we're going to take a look at names like gamestop. a lot of calls today, ge, ibm to sell, amd, intel we'll get to all of it after the break.

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get a great deal for your business with the ready. set. save. sale today. comcast business. powering possibilities. today marks one year since ryan cohen was named to gamestop's board exciting the excitement in the reddit crowd 120 was the lowest since march. >> i think they're making the crypto move. i think that a lot of people have -- all they're doing is getting into something that is wrong. i want to look at it the other way. they're getting into something after it's come down, which i like i think they may have -- they can have an interesting strategy involving nfts but at a certain point, you can take over the malls, go from the small format to being these

gaming palaces which have had great numbers and pay people in crypto i think people very much want to bank with -- in some place as crypto if you did a physical space where you knew that somebody took crypto, i think it would be a coup just because crypto is down right now, doesn't mean you want to flee from someone who is adopting it. >> but you believe we've exited the window in which an ice cream tweet can move shares. >> yeah. we're done with the fun part there's nothing fun about the market right now i think that -- >> are we done with amc too and your continued support for that stock despite the fundamentals. >> they got to sell. >> they did. >> bob saget went to the same high school as adam aaron. he was the class behind him. >> that's a good way to change the subject. >> no, no. philadelphia the reason i'm not switching the subject, he was able to sell a

lot of stock and now you're left -- >> $11.7 billion market value for amc. >> that one is as good as gamestop gamestop's balance sheet is fabulous >> meanwhile, those hedge funds last year, they ended the -- melvin ended the year down i think it was down. they all had brutal years in their public investing, anyway those that invest in privates, as we pointed out, had incredibly strong years because the private market valuations were so strong one has to wonder right now, given what's been going on in the market, particularly for a high multiple and/or lack of profit, tech, what that's going to do to some of the markets on some of the private investments that many of the hedge funds were bailed out by last year despite their inability to invest effectively on the public equity side. >> that's a good point i look at what's happening even

this morning things were looking so good and then interest rates ticked a little bit higher and everything was erased the stock market is the bond market there's really nothing to it >> any chance, though, powell says something that everybody goes, wait a second, maybe not as hawkish >> i don't know. i mean, look, we can run that jamie dimon clip forever there's powell i think powell is kind of -- look, i think we got a strong economy. we got a lot of people hired it's true. there's nothing wrong with it. we have a lot of people hired. we have red hot markets everywhere flank steak was $8 last year and now it's $16 that's a lot >> 100%. >> they're saying if the economy looks in march the way it does right now, she would support moving rates up and says the balance sheet runoff should be able to go faster than last time. >> i struggle with saying

anything negative about this -- i was speaking to a politician the other day. and he said, jim, you like the economy too much full employment, you know, everybody wants a job can get one. that's the definition. i don't know to me, david, that's kind of a positive you like the economy too much. what are you supposed to, like, buy houses are too hot -- what am i going to do the economy is good. it's good. you don't need rates to slow. >> we got powell today and, of course, cpi tomorrow which is going to be key tomorrow we'll get cramer's "mad dash." take another look at futures the opening bell less than ten minutes away don't go away. your shipping manager left to “find themself.”

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a little more than seven minutes before we get started with the trading on this tuesday. let's get to a mad dash. you mentioned shopify briefly. you want to come back to it? >> i send out what i'm looking for each day for members of the investing club there's a note from atlantic equities they downgraded from buy to neutral, talking about the problems with the fulfillment network, which we all liked. everything -- fulfillment is a problem for individuals stores david, i point this out because this is what you're really struggling against you've got this, and now this. >> it's descending, jim. >> exactly shopify is not a company that's going to be making a lot of money. but it's a great growth

trajectory that valuation where you go up, up, up is over so where do you go now and the answer if you're in this is to say, wait a second, this thing traded at 200. they don't mention that in the thing. the idea is, if you're in shopify, we may look back, if we hada three-year on shopify, we may, think, we're being greedy, even right here. yes, the fulfillment network may be taking a little longer. the fact is, yeah, so that's perfect, right and you can say, wow there's a lot that i can get back if i owned it from here, i got -- >> this is sell. >> right people are saying, this stock is up 600%. i don't care i want to get out. i wanted to declare victory. i've ridden this thing all the way. it's time to go. because i missed it here,

doesn't mean i'm late by catching it here i'm not going to disagree. if a company is not making a lot of money, that is a sound philosophy >> okay. got an opening bell just a few minutes away for you don't go anywhere. a lot more "squawk on the street" right after this

>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives and responsible investing. >> shares of abercrombie & fitch rise in the market for the q-4 net sales, flat to down two prior was up three to five things are less promotional, but they're being offset by higher freight costs. >> it's discouraging my friend at j.p. morgan would say, think about it, we had five below say that the first week in january, it was much better than last year. abercrombie said that january reaccelerated very, very nice. lululemon did say that traffic

picked up in january what are we going to do? are we going to decide what matters is the last four weeks or 2022? >> 2022 is what matters. >> bingo >> yeah, maybe you buy some of these. >> what about williams sonoma? >> i want to see them -- american eagle outfitters has been disappointing they reported good numbers for the second -- they reported a projection that was terrific everybody hates it they hate it why are they hating it now what is that it's a 3% yield. get fired up >> urban, meantime, comp holds at 14 versus prepandemic i guess -- >> that stock is -- >> we'll take it >> i know the stock is down. i think people have gotten a little too negative about retail based on -- 60% of the country has omicron, you're looking at everybody and thinking, maybe that guy is your distributor

there's a place next door where there were a big line. just clothes what happened? it reminds me very much of captain trips in the stand 99% of the people got it >> you think steve king is guy who used to be the ceo of -- he's a very famous writer. >> i've read some stephen king and enjoyed it. >> really? >> yeah. 1922 -- it was long. >> it was long wow. >> there's the opening bell. the big board it's vaneck. speaking of absenteeism, we got a piece up on our website about

united quoting scott kirby one day alone, nearly one-third of our workforce called out sick. >> people have to recognize that this thing is blowing through and, look, when i listen to gottlieb he did say two to three weeks. it's hard to measure this thing. but -- >> we seem to be on the -- have peaked in the new york area. >>probably has to happen everywhere in the country. my friends who are not vaccinated who have gotten sick are -- this is not meant to be political, are more sick than the people who are vaccinated. and i know there are certain people who just think here goes cramer again on a rant i said i wasn't going to do anything in 2022 other than report the facts which is the people who are more sick are people who are not vaccinated. now, united, though, was heavily vaccinated some people feel that the vaccine means you're not supposed to get it no, no, that was a false --

changed narrative. what it was, we discovered, you don't get as sick. i think if they could give you a dose of what we're getting in omicron right now, the ones -- it would end this thing. it would be like getting the flu shot which always hurt me more than the omicron. >> united points out prior to their mandate, their vaccine requirement, they had an employee dying once a week now, even though they have thousands with omicron, none are even in the hospital it's hard -- and the data seems straightforward. >> if you get bullish, david, based on that, what happens is, therefore, you think the ten year is going into and therefore the stock market has to go down. if you want -- right now we're in a damned if you do, damned if you don't. omicron is blowing through everybody and demand is going to turn back. i think you and i both know that there are a lot of stocks that can go up when the ten year goes to 180. >> yes we've watched a lot of them. mainly those that have the word

"bank" in their name. >> right like that guy, sam bank? what is that guy -- he's got some -- >> loan bank find. >> by the way, the crypto people, they have a terrific way of talking about things. when it's going up, they say it's going to go to the moon when it's going to down, they say you're getting an opportunity. i wish i could do that don't you wish you could do that >> you do do that. >> no, i'm just saying there are some times when it's maybe not good someone told me, how can you be so glum about ether? because it goes down a lot that's what it takes to do what to do what the crypto people, by the way, they tend to be believers. >> they are fully believers. by the way, don't dismisses how much money has been made among some people in the crypto world. those who have launched, those

who have been a part of some of these companies, we're not talking, you know, a million we're talking tens of millions of dollars in net worth that's been created for it -- >>you don't think gensler -- w have a chart right now of dogecoin i think he would like people to realize that not all cryptos are created equal. if we created a crypto right here, the three of us, we would -- it would have more staying power. >> we got to figure out something new. a year ago, this time, we should have created a spac, maybe even a little while before a year ago. we could have created a crypto maybe two years ago. we got to figure out what -- >> right now what would be -- >> for now, what should we have created? yeah, something in the metaverse, maybe. >> your metaverse avatar. >> something in the metaverse. >> did you notice that died down >> there was a memo yesterday in

which was talking about designing content for a metaverse. >> did he talk about mike bambi? >> jim wants the metaverse -- you want to be able to go into bambi and prevent bambi's mom from being killed. >> by the way, pinocchio, how scary is that fantasy island i want that place to be less scary. it scares kids. >> you can't screw with those classics >> i want to add davy. >> i want to play -- i don't want to play against georgia because then i'll be killed. i think that, david, having another dwarf that you get to name, come on? what that's the metaverse. >> i'll keep naming stars. there's a lot of them too. let's move on to stocks here -- >> i'm talking about facebook -- >> keep thinking about what we

should be doing. maybe we'll do it this year. you won't see us at the desk a year from now because -- >> i want to have a spac of all the different things i want to change i want -- >> rivian tells the world in a filing that it produced 1015 vehicles by the end of last year and delivered 920. doesn't seem to be exciting the investor base. >> a chief operating officer seems to have left. >> there's a lot of -- >> sorry, carl, to the ipo >> rivian coo, the story in the journal about microsoft losing people to meta >> this is the cfo of micron he's been to my set a couple -- he's -- that was a great thing i have been critical -- somewhat critical of pat. >> yes, you have >> but this, no.

this was a triumph it was a tour de force i'm trying to get him on the show tonight that guy is so good. he's so rigorous they need to surround himself with new people and that guy was fabulous. >> key cuts intel to sector weight management is doing everything a bull would want, we see limited catalysts. this continued shift to specialize compute is not a trend that will benefit intel. >> oh. i think intel is a long-term turn i don't see anything short term happening. the downgrade did talk -- you can't throw up a failure you couldn't do it overnight you notice the market wants to turn. >> it does >> when you say you notice, what are you noticing that would indicate that the market wants to turn? >> you got to watch adobe.

>> we haven't mentioned ubs. target is 124. lower i.t. spend, they argue and they argue that the spin made a lot of margin profiles look better, but not really. >> and it may be a little more difficult. but ibm did give you the dividend ibm trades like a small cap stock. this thing -- >> pretty soon it will be. >> come on it's $115 billion. >> yes, it is. 115 billion, that's true >> you have never ever bought into the idea that debt is all consumer -- corporate financed debt you have different views >> i think it deserves to be kept in focus. ibm. >> this quarter is going to be bad, okay, there. >> how does that compare to the last quarter it wasn't very good either, was it >> no. but this is going to be especially bad. >> okay. let's take a look at take two again. >> you're holding it up here.

>> it is up 2% this after what was really a poor debut in terms of the announcement of what was a large deal stock down, what, 14, 15% yesterday. didn't hit broadway at all you did have some shorting by risk arbs. it's trading below the collar. it's been affected until it gets back up to 156 who is what moffettnathanson had to say about the change in thesis they call it a departure from take two it's impossible to not be concerned about the health of the original thesis, expanded pipeline of games, would lead to margin expansion perhaps that piece still intact. perhaps it's not it is now, though, part of a bigger and undeniably different story. >> free mobile free mobile.

that was what -- a lottery ticket now he's talking about free mobile -- >> key bank note -- this is representative of largely what has been applause for many of the analysts, we tend to prefer mobile exposure. they're requiring a mobile asset with a strong five-year track record you talked about the nature of their revenues they like it we'll see. it is up today >> i think that strauss is a very, very smart guy this is something, carl, i've been working on. there's some ceos that you have to trust that they're going to do the right thing i don't think he said, i'm going to do this deal, i don't care. i think long and hard he's got this problem with wall street and problem with his own entity. it's hard to produce hits. it's much more difficult to make

a sequel to a "grand theft auto" than it is to make a ceo with marvel i don't know how many captain americas there could be, but you can't just do a "grand theft auto" every year what we're discovering, as the chips get better, the games get better, there are flaws. and a flaw in a game is much different -- more difficult than a flaw in a movie to change. so i think that the record -- there's recognition as we get better and better, the games are harder to make >> why not why not? i did want to get to a note this morning from barclays as well. sometimes we have to explain -- we tend to focus on those that are negative because they are typically more of the outlier. ross sandler has loss confidence that bellwether ad names can chase estimates higher in a knows this morning i do notice alphabet is down

consensus estimates call for google or facebook or meta to grow sevens -- revenues 17, 21%. they point out that it's coming off a couple years of heavy pull forward in demand and while the first half of this year, you're going to have very good comps because of over 20, at least, we think second half '22 and '23 is where the disappointment could materialize. or i should say, the tough comps. >> you always get these roku cuts for digital ads look, i think -- >> that's not what they're talking about here >> look, i think that we all feel it at home. let's say there's -- the mayor of kingsdale, and you go and say, all right, well, now i added paramount plus and my wife said, our cable --

our corn cut is now bigger than our cable bill we just keep adding and adding and adding >> that's why this report on apple supposedly looking into mlb rights was interesting people making big conclusions but arguing in some cases that it might mark a turn for espn's dominance. we'll see. >> when i saw that, i always felt when you get offline with people in that industry, they say what happens if you think alphabet is -- amazon is already there. >> they have unlimited pockets if they choose to evolve in terms of competing with the likes of a disney and espn that said, they still want a return on that capital as well they have kind of dipped their toe. apple has a lot of money to spend on content they have ramped it up i would say that if -- this is crunch time in the market. because yesterday was an amazing

comeback in the nasdaq so where are the buyers who felt that yesterday they missed their opportunity. are they just going to say, you know what, i am not going to go in, even though interest rates are barely changed i'm watching for a level like i said with adobe where buyers come right back. it has not happened yet other than for select ones and some chinese stocks. >> chinese stocks? >> speaking of china, maybe that's part of it, you got 20 million people in china in lockdown in three major cities goldman cuts their gdp forecast to 4.3 on covid concerns all that said, i mean, las vegas sand was upped by jpm and you have some of the operators up today. >> someone on twitter was saying all i do is talk about the winners. i don't know what turns win around, other than the fact that chinese have to, one, beat covid -- >> i do wonder how they beat it. we have a different approach at

this point -- you have people in our country saying let everybody get it and let's get it over there, they don't want anybody to get it. and it's having an impact on their economy. how long can they keep doing this >> whaut do you think will happn after the olympics >> it's not going to be a fun olympics you're going to be confined to your room until your event >> streamable on peacock >> maybe we should have cameras in the room with the athletes too. >> you have intel. when they pick them, the stock goes to 58 now it's down. this one -- this part is getting a little glum on even the good things david, the good things are sending things down. i think that yesterday was -- i mean, unless you felt that whole

rally was worthless, i would have bought things the only thing that is up on my screen is pfizer and adobe. >> let's check in with bob pisani bob, good morning. >> good morning, guys. it's a mixed open. they sure do like energy stocks and for very good reason we're getting some reversion there in energy. let's take a look there. energy, new highs, a number of big names. banks had had a great run in 2022 so far. first down day in a while. tech still lagging a little bit and we'll talk about that in a minute i want to show you some of the energy stocks. chevron, it's remarkable to see them have this run that they're having energy has gone nowhere for five years and we're getting some what we call mean reversion in some of these beaten up sectors like energy. it's about time. mean reversions are a powerful idea on wall street. it's the idea that prices revert to their long-term averages.

energy has been an underperformer for a long time but the stock market has had an amazing run since the federal reserve began pumping money into the economy back in 2009 to combat the great financial crisis and now they're reversing that we've had extraordinary period the s&p has been up 15% a year since 2009 that's remarkable. the historic average is about 10% a year is that significant? oh, yeah everybody notices that mean reversion would suggest that now that the fed is reversing this policy, they're going to be receiving below average returns. and in 2021, for example, technology stocks were up big, up 34% this year, they're down 5% these are short-term reversal. it's not clear whether there will be a long-term one. reits had a great year last year up 37% they're down right now 6 or 7% to start the new year. growth versus value, we talked about that for a long time

growth, again, outperformed. growth is mostly technology. value is mostly energy, industrials, pharmaceuticals, they outperform value in 2021. and this year, value is outperforming growth that would make some sense in a mean reversion way international, the u.s. stock market has outperformed the international markets for many, many years and u.s. is the place to be. 2022, though, generally, the u.s. has been underperforming. international markets like hong kong and mainland performing, taiwan has been outperforming. the uk is positive, we're negative there is a little bit of mean reversion going on here and i just think people should be aware of how powerful that is as a force, particularly with the federal reserve reversing policy right now. more on that, trader talk i have a discussion on mean reversion you mentioned cathie wood's ark

funds, they're down 1% some of her big names, zoom, roku, block, they're down. she's not even down as much as she would be because tesla is not down nearly as much. that's her primary holding i push back against people who think she's been wrong or a failure. she's not failed she has convinced millions of people to suddenly invest in these disruptive technology stocks the problem is, everyone bought into her argument. they didn't reject her argument, drove the prices up. now that we're getting a re-evaluation, people are looking at this more carefully and, of course, being more careful. that's what should happen. but i don't think she's a failure. i think she actually, carl, convinced people and now the question is not whether she's right or wrong, it's what's the right price for the stuff that she's recommending and that's what's going on a re-evaluation of her recommendations. back to you. >> sounds familiar if you've

lived long enough to watch cycles, bob. thank you, bob pisani. we'll take a quick break here take a look at the markets you got the dow down 270 s&p holding 4640 if the s&p falls today, that is if the s&p falls today, that is the what happens if you ever need to miss work for a long period of time? why would i miss work? i don't know. you could sprain your ankle,

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good tuesday morning welcome to another hour of "squack on the street. s&p currently on pace for six straight declines. that would be the longest losing streak of the covid era. we'll get there in a few minutes, morgan. >> we sure will. here are three big movers we're watching, starting with big blue analysts saying risks to

operating results as well as what they view to be an elevated valuation. you can see shares are down 3.5, almost 4%. and a management shake up shakingout announcing chief operating officer, coats has departed. with his duties absorbed by the leadership team. keep in mind they're still down around 20% since the start of the year ipo was $38 a share. bank of america doing a double upgrade, going from underperform to buy and analysts say management guidance seems too conservative. those are also up almost 2%. >> something they liked in the stock chart, maybe because it keeps going up. jerome powell is taking questions from the senate. this is part of the conformation

hearing. we'll take you there live. but first more on what we can expect to hear >> stenteres plan to grill fed powell on rate hikes, stability, and the central bank's independence powell tried to pree. the criticism, but democrats warn him against hirting the brakes too hard they say the fed should not allow wall street to recover while working americans are left behind and three democrats have already said they will not vote for powell senator elizabeth warren has raise concerns about banking regulations and ethics rules and another says he hasn't done enough on climate change and might lose marquee, who

recently blasted powell as failing to lead on the issue that means he will need republican support and he's probably going to get it the overwhelmingly vote was 84-13. but gop senators still have tough questions. the ranking republican on the committee, pat to meany is worried about fed, especially in areas like racial justice. powell has been very up front about making frequent meetings with lawmaker as priority during his first term as chairman says that's a way to earn lawmaker's trust and extremely important when the fed must take extraordinary action in times of crisis >> that will likely serve him as we see the hearing play out on the hill today i have to feeling we're going to see you again shortly. don't go too far and we'll see you. sig nothingaling what a second term could mean for stocks as you can see under selling

pressure, ahead of the comments and the q and a. we're joined by charles schwab, chief investment strategist. good morping to you both i'll start with you. we did see that hawkish pivot by fed chair powell back in the end of november. we had fed minutes last week that continued to gyrate markets as well. what are you looking for in terms of commentary, guidance, from the hill today? >> so, i suppose he'll be peppered with questions regard to policy as opposed to what might be the standard questions associate would the reconformation and lorraine out this morning saying she's penceling in three rate hikes and maybe a chance of tour the pressure is on and a lot more discussion, especially in the aftermath of release of minutes about, not

only potentially ending tapering sooner but initiating quantitative tightening in conjunction with rate hike i think that's been the reason we're seeing the weakness in the market we have so far this year. >> i want to get your thoughts on this as well. especially when we see a chart of the 10-year yield right now we saw it testing at 1.8% key level earlier in the week. we saw the down draft since the start of the year in tech and growth, this big rotation into value. is that something that continues here or are we going to continue see oo a push and pull as the market digests the tightening fed? >> that's a great question i think you have to biefr kate growth into the uber growth stocks trading at multiple of sales, don't have cash flow or earnings and the large cap tech stocks that generate great numbers last year

i think those stocks are attractive they sold off here theuker growth stocks are still trading at high multiples. i do thik -- look, we're going to earnings season right now the market is focussed on the fed, understandably so. but the story of last year was earnings were up revisions were up 27% and the market was up 28%. because corporate fundaments were bigger than wall street expected we're about to see koorperate earnings being reported again. and we're focussed on the fed. >> andrew, that being said, we're going to have a look back there. what i'm wondering about is the guidance, which is not completely clear it's going to be as good as last year, above 28%, verses what people expected going in

>> no question but until proven otherwise, i heard you had a great interview earlier today, right, with paul jones and the ceo and he talked about the concern of the fed and you pivoted to the ceo of censure and she said economy is doing really well. i think that's the struggle this year we're going to struggle between the fed and good corporate profits. to me, you have to pivot and say are there companies doing better than what has been white washed recently i don't know when it stops, david, but i'll tell you this much all the people that said earnings revisions are going to stop going up, they were stampeded by the bull last year. and until proven otherwise, that's where i'm going to come out. >> i wonder how you're thinking about -- i guess i'd call them signs of hope people are clinging to regarding inflation.

one is that labor supply keeps wages in check i saw this morning you tweeted that searches for hyperinflation on google have collapsed are those things the fed takes seriously or can they not afford to make a bet and they're going to plow forward with this point of view? >> i think they take all the data seriously but haven't even finished tapering nor started rate hikes, which is a different situation and some of the pressures further on in the rate hiking cycle. that might trigger them to think about a pause. it's way premature to look at the derivative chafg and suggest thes fed at this stage will blink. i think they'll finish tapering into qt as least two or three rate hikes this year before they decide the rate of change is sufficient that pressures down

the road are easing. i think this is very different than, say, late 2018, where powell did the pivot and moved away from tightening theflation back drop then was entirely different than now. >> given the conversation we're having right now, when it comes to positioning in the market, specific names you like here, gichblen the pull back we've seen >> we're over weight in our financials and energies. i those stocks have done really well so far. again, i wouldn't chase them we're gout to see earnings and let's focus on companies that have gone down but i think have a good set up going to earnings season and i think the large cap tech stocks, microsoft or google,

they free reported today and said their business is going to be better than expected. again, focus on going into earnings season, companies are doing well and have underperformed so, i like financials. i like energy but they seem a little hot relative to the market >> okay. well, thank you both for kicking off the hour with us as the nasdaq goes positive. david. >> thank you, morgan we're going to turn now to the so hf called reddit trade. it was one year ago that they joined gamestop's board of directeders. the stock is sky rocketing on that news and as well, well, a lot of hedge funds got caught or at least the number of prominent ones in a vicious short squeeze. more on the impact for hedge funds and investors that have held short positions since those events leslie >> yeah.

long verses short. bulls verses bears two sides of a trade make a mark but in game stop, it was like an online battle straight out of a video game the saga started months before gamestop started truly rallying. then at $12.5 billion hedge fund disclosed a short position through put options which got shared on reddit's wall street best forum more than 100% of the tradeable shares were held short a year age. so, as the stock surged over the course of january, thanks in part to retail investors swapping stock tips on social media, the general consensess was to force melvin and other hedge funds to cover at a loss that triggered a spike in gamestop shares towards the end of the month, which were propelled even higher. and posted returns of negative 39%.

thanks in part to the squeeze. while it can be fun to paint the narrative as the small guys beating out the big guys, that wasn't necessarily the case, if you peal back the onion a bit. then best had notched the year's best returns for any hedge fund with kwoivl% gains still, the events of last january were a cautionary tale about short seller disclosure. hedge funds became extrapresident protective about how they revealed it short positions don't have to be revealed but puts do and short interest in general remains tepped as investors believe there's a fundamental basis and chose not to over fire it would be the next short squeeze. >> nrtsesting. moevlen, by the way, i hear has had a brutalal opening, though not due to a short squeeze

i got numbers indicating as much as 10% in the early going. longer term, are we done with the red ddit trade could it come back or do we think it's going to be dormant for a while? >> as we reflect on last year, i started wondering whether anything's changed structurally that would prevent something like this from happening again i struggle to find a reason why it wouldn't happen again because there's been no change in regulation not much in changes in terms of structural aspects to the market robinhood is functioning essentially the same as january. there are no new rules to prevent something like the this from happening there are certainly stocks that have a high level of short interest that people say could be prone to squeezes

i don't see anything that prevents it from happening is it rare yes. but nothing necessarily would be in the way >> how many retail traders, how many new day traders to the market were lured in by everything that we saw take place last year and of course all the media coverage of it do we know a year later, how many people are still active in the market >> we don't have specific statistics on gamestop in particular, how many individual traders that were bullish or still holders of gamestop. however, if you speak with retail investor experts, they'll say often times they hold on for a lot longer than you'd expect if it's momentum stock, having said those words in a while. but you do tend to see people riding up to the highs and selling out, often times before it gets back up to those levels.

>> leslie, thanks. joining us with a bit on that. in the meantime, you're looking at live images of the fed chair, in a moment, delivering the opening statement in front of the fed. and we'll take you to the markets, bouncing off the initial dip. - [announcer] at southern new hampshire university, we never stop celebrating our students. from day one to graduation to your dream job, that's why we're keeping your tuition low for the 10th year in a row. - [student] the affordability and the quality of education, it can be enough to change your life. - [announcer] as a nonprofit university, we believe in making college more affordable for everyone. - southern new hampshire university, it was just amazing experience. - [announcer] find your degree at snhu.edu.

welcome back as we await the fed chair q and a, we're joined by professor, allen blinder. thank you for being here >> thanks. >> you were early in arguing for powell's renomination. what do you think he needs to accomplish >> not too much. just don't step into any mud puddles and he's too smart to do that i'm sure he's going to be pressed, for example, on whether they're going to start raising interest rates in march. he can dance around it and he will dance around it. he's good at that. . >> brown has already said this morning that powell needs to restore trust in the fed after the ethics controversy said trading by fed officials in brown's words, confirmed the

worst suspicions about government what do you make of that line of questioning? is it material to the fed right now? >> i'm afraid it is. i wish it wasn't i'm afraid it is the fed operates on trust. people have to trust the fed, not just to be nonpolitical, which it is, but to be beyond ruproach and i think those trading incident, scandals, whatever you want to call them, have not done the institution any good and the person that can put a stop to it, really, is jay powell. i think -- first of all, i think he should be asked about it and secondly, i think he shouldshould answer it as forth rightly as he can. i wouldn't be surprised if fed lawyers are drafting new resolutions as we speak and not finished i think he needs to come down

firmly on the notion that any hint that fed officials are trading for their own profit is unacceptable >> i'm sure there's going to be quite a bit of questioning around that. just to go back to inflation for a minute maybe he can't talk about rate hikes specifically in front of the senate today but how does he convince lawmakers that the fed is not behind the curve? i ask that given the fact that yesterday -- he said the fed has been operating in a, quote, alice and wonderland fantasy and it's going to result in more interest rate hikes than the market expects maybe he can't get into the specifics of near term policy but how does he calm those jitters? >> i think he has to talk antiinflation in a serious way maybe not have to sound like the

s second coming but something close to that. look, the fed isn't behind the curve. what a lot of people didn't realize, only people that pay attention to the details, was that the fed's new operating procedures in announced in august of 2020, basically guaranteed it would be behind the curve. because the fed says it's not going to act in advance on a forecast it wauptnts to see inflation gop it has and it went up a lot faster than anybody, including the fed, thought it would. and now they're certainly behind the curve. and powell shouldn't try to deny that but talk about how they'll get ahead of the curve so to speak, in the coming months >> how much of that will hinge on the reaction in the bond market and specifically the yield curve? we've got taper on the table, rate hikes on the table and now

a potential shrinking of the balance sheet on the table as well how much will the fed need to take its signal from the bond market >> not too much. i would say. a lot of us economists, all of us economists have not bond traders v been looking at bond yields for a while now and scratching our heads about why their so low there's lots of reasons why they should be higher, starting with the deficit, continuing with inflation and now fed tightening on the near-term horizon i think -- they've gone up a bit but i think it's amazing they're still as low as they are in real terms, for example never mind the short term burst of inflation but look at long term. and real term still negative so, i don't think the fed wants

to put too much store in the that and cert lainly not let the behavior be dictated by the bond market >> you know, last week morgan stanley said there's no concept of what the neutral balance sheet level is we've never had one before that's the big policy decision for the year do we know what a decent fed balance sheet looks like right now? you may remember a year or two ago, i can't quite remember the date there was a time when the fed was shrinking. several years ago, was shrinking the balance sheet and found, oh, my, the banks are scrambling for reserves and we actually need it i'm trying to remember the number then. i think it was around 3 trillionish or something might be more these days

but with a balance sheet of 8 trillion, they have a long way to go before they start scratching the surface i think they won't try to guess and certainly not announce what they think a neutral size balance sheet is but they'll start pretty soon shrinking the balance sheet and going slowly and testing the waters as they go. >> i think he is finishing his testimony, his opening statements and q and a will begin always good to see you >> i think president biden's decision to renominate you shows he's confident in you getting us through the cries. and the rise of the omicron variant poses risk to econic activity do you agree higher prices are

related to the supply and demand imbalances that can be traced directly back the pandemic and the opening of the economy? >> yes, i do, for the most part. you can trace to developments, including supply demand and supply constraints >> last year, they relegalsed the report on climate' related financial risk in the past, you've said climate change is an emerging risk to financial institutions, financial system and the economy, end quote the fed followed the reports recommendations, including recommending climate stress tests for the biggest banks? >> we are looking at climate stress tests i think it's very likely stress scenarios, as we like to call them, will be a key tool going forward. i would stress those are very different from the regular

stress tests, which effect capitol. climate stress scenarios are about insuring the large financial institutions understand all the risks that they're taking, including the risks that may be inherent in the business model regarding climate change over time >> will you make this a top priority if confirmed to another term >> yes, it will -- i would say within supervision, that is likely to be a very important priority over the coming years >> the position of vice chair of supervision and also yours >> yes >> it's the fed's responsibility, as you know, that means we need strong financial safeguards in place to protect them from risks in our financial system recently the fed has refocussed its full employment objectives to make sure it includes workers of all backgrounds

do you agree that when all workers, including women, and black and brown workers, are fully able to participate in the workforce, that our economy grows? and do you think it's important for the foed to understand and proactively address racial and wealth disparities in income in our country? >> what we saw at the end longest of our history is as labor market tightened, the benefits began to go more broadly to those at other end of the income spectrum and those more marginalized from an economic standpoint. that was seen as a highly desirable set of outcomes. our tools don't have general direct distribution effects. but we see the benefits a long labor mark could bring across the labor market and economy

>> you're suggesting, from your answer, that only when there is strong demand for labor do people who are more on the margins of society, people of color, women, people who have not done as well, only then will they benefit does the fed have responsibility beyond that? >> in bank supervision and community affairs and fair lending but just focusing on monetary policy, our principal tool is interest rates and they effect demand over time. i do think the main thing we can do is to make sure that, consistent with inflation side of our mandate, that we do foster a strong employment market >> is part of that more diverse workforce at the fed >> as you know, we work very hard to achieve diversity. as all major american

institutions do, public and private do these days. and we think having a diverse workforce makes us better at doing our jobs it's an important focus and high priority >> thank you >> thank you, mr. chairman chairman, powell, we noted with greatn interest the acceleration of the tapering and the indication that fonc members expect now a series of inters rate increases this year i'm trying to understand where this leads to. and i wonder if you could comment on the fact that if we had three or four 25 basis point increases we would still have a stance with negative short-term interest rates is it your view that it's

realist took bring inflation back the target level if short-term interest rates are negative, real rates >> the way i would look at it is this what we have now is a mismatch between demand and supply. we have very strong demand in areas where supply is constrained, particularly around goods and things like cars so, we have to -- how are those two things going to get betner better into alignment? we think partly through the return of greater supply i don't think we look to get all of the realignment between demand and supply through the demand channel, although we should get some. we do think we'll get, over the course of the year, return to normal supply conditions if we see inflation persisting at high levels longer than

expected, then if we have to raise interest rateds more over time, we will. the main reason is this. a reason is this to get the kind of very strong labor market we want with high participation, it's going to take a long expansion. to get a long expansion, we're going to need surprise stubltd in a way, it's a severe threat to the achievement of maximum employment and a long expansion that can give us that. >> let me also just ask you. as i mention i understood the need for quantitative easing and extraordinary measures taken during the crisis. i worry the decision to continue to use these policies well after the crisis had passed and in fact were in the midst of a strong recovery, increases the risk of normalizing behavior

like this bond buying. i think it's your view this not become normal routine, part of fed behavior could you clarify and if it is important this not become a routine matter, how do we insure that it doesn't? >> i guess i would start by saying the last two down turns -- there's been nothing normal about them. they've been two historically large downturns. one being the global financial crisis and one being the pandemic we were called to invent new tools and use all of our tools so, really if we had a regular session, a couple of quarters of negative growth, a typical recession, then the question would be what do we need to do in this era of very low interest rates, there's not going to be as much room to cut but that would bethe first thing we would do

now, just because we have been and probably remain in an era of low interest rates but we wouldn't use is it until it was necessary >> i would hope it would be a very high threshold, especially with the way it distorts allocation capitol one of the things i'm very concerned about is, especially the regional banks having strayed from the fed statutory mission on monetary policy into inappropriate and overtly politicaled a vrgsary. and the boston fed conducted a virtual event as part of the racism and economy series, in which the speaker is adamantally called to defund the police.

nothing to do with the fed's mandate. for seven months i've been asking for information from banks about their political activism i've requested documentation from the main fed with respect to this activity, all of this which is subject to foya in any case i'm sure it's not your opinion that they're entitled to less information than a member of the general republic would get so, can you commit to getting me the information that is now long over due >> i am aware that you have submitted a foyer request and we're processing it now i don't know if it's covered by foyau, but to the extent it is, you will of course get it. >> i think it's important that the committee and congress understands how the fed reaches the decision >> senator reed from rhode

island is recognized >> thank you so much mr. chairman i believe president biden has made two excellent choices, yourself and governor. i think you work together hand in hand for many years i think you'll be a superb team and i look forward to supporting your nomination and the governor's nomination also for vice chair and let me join my colleagues in commending you for an exceptional job with respect to the pandemic one of the interesting consequences of the pandemic and the employment market is we've seen wages rise. in fact, we've seen them rise with respect to factory workers, nonsup nonsupervisory personnel my concern is would an increase in interest rates begin to slow

down that rise or indeed reverse it >> so, like you and i think like everyone, we think wages moving up is generally a good thing but you look back through history, there are times when wages have moved up in a way that has fostered persistent inflation and that hurts everyone, particularly people on fixed incomes. we don't see that right now. these are the biggest wage increases in decades and so we're watching carefully to the extent we're looking at this year, what we see is an economy where the labor market is recovering, really beginning around the middle of last year the unemployment rate's been dropping at more than

three-tenth permonth since last june and now below 4%, which is close to half century lows that part is -- of the employment market is doing well. meanwhile, inflation is running far above our target and what that's telling us is the economy no longer needs or wants the very highly accommodative policies wee've ha in place to deal with the pandemic we're going to move over the course of this year. to a policy that is closer to normal it's a long road to normal from where we are we're highly accommodative and it's time to begin to move away from the emergency pandemic s settings to a more normal level. it should not have negative effects on the employment market sglilgts >> it's ironic because as you point out in your opening statement, when you took over,

we had 11 straight years of significant economic growth but that was not translated into the lives of most working people, particularly entry level and nonfactory workers, etc. and now we've seen a situation where that's reversed. and i would hope we could continue that type of progress and i know you'll be sensitive to that. going forward. one of the interesting things about the situation we face now is the fed tools most effective in reducing overall demand but a lot of what we're facing is supply problems the situation about automobiles, with the problem there and i think used cars are so expensive, they're distorting the inflation numbers and that's a result of a shortage of

microchips and other chips, which is a result of the pandemic these are supply issues. so, to what extent will your dealing with demand help supply? and maybe that's the real problem? >> we can't effect the supply side conditions. this really is a problem both of very strong elevate dd mand, particularly in part of the economy, the goods sector, the durable goods sector, things like washing machines and cars and all the things people bought when they couldn't spend money on travel and services, that's where spending is running at a level 20% above where it was before the pandemic and it's kind of overwhelmed the supply chains, most of which are global these days you're getting parts and fully assembled products this is a combination of the two.

>> and final point i want to make is that the issue of climate change is critical it's an economic issue i don't think you want to see a lot of banks owning property that's literally under water but if you look at analysis going forward, that could be the case i would hope the fed would view this as an economic issue and pursue it as an economic issue that's going to effect us dramatically and my colleague, senator whites whitehouse has been one of the most staunch visionaries in that respective and i hope the fed is responsive >> welcome back to the committee. you've spent a lot of time with us in the past inflation is currently surging at the highest rate in 40 years. while i appreciate the decision

the fed is made to begin tapering, i'm concerned that the fed missed the bolt on addressing inflation sooner. as a result, the fed, under your leadership, has lost a lot of credibility. i only have a little time. so, i have a number of questions and i know you can probably remember them and maybe together we'll remember them. i'd like to touch on this, if you would. why did the federal reserve initially forecast inflation be transitory secondly, has your view on the threat of inflation changed? why? what assurances can you provide that the fed has a better grasp on inflation than a year ago and what factors have caused the u.s. to have greater increases in inflation compared to other developed countries? and i guess lastly, yes,

important is price stability to the american people? that's a lot of questions but they're all relevant to your job. >> first, let me say price stability is half of our mandate. there's no basis in the law for preferring maximum employment over price stubltd they're equal. houvrg, at different times, one is farther away from the goal and that's what we need to focus on more. sometimes it's maximum employment, sometimes inflation. i would say now it's inflation transitory, we said because we thought the supply side bottle necks and shortages would be alleviated more quickly than they have been there's no experience with this before we haven't had the global supply chain collapse we haven't had a labor force shock before we, and essentially all other mainstream forecasters

forecasted that by now we'd see more inflation what's changed is, just as i mentioned, the supply side constraints have been very persistent and durable we're not seeing a lot of progress if you look across the global supply chains and what's happening domestically look at long beach and l.a., the two big ports for asia it's still at a record number. we're not yet seeing the kind of progress all forecasters really thought we'd be seeing by now. i think we did foresee the strong spike in demand we didn't know it would be so focussed on goods. that's really what happened. i think we learned that. it wasn't that it was just -- this is a unique set of circumstances. really the united states economy is so dynamic.

the supply side adapts quickly there are new companies be started and old companies dieing all the time this is a situation where there are hard constraints car makers can't make anymore cars because there are no semiconductors that's never happened and that's true across. so, what factor ss is the suppl side i'd like to think i tuouched at least all five of thoesz >> what have you learned and would you share with your fellow board of governors to get a grasp, as much as you can, on inflation? because a lot of us been on the committee a while and remember what voker did with the fed under inleadership it wa it was drake ownian but it worked >> we have achieve price

stability and i believe we will and am confident we will it's not just a question of restrai restraining demand we're stimulating demand with highly accommodative policy. as we move through this year -- we don't know the future but if things develop as expected, we'll be normalizing policy, meaning we're going to ending asset purchases in march, raising rates. at some pointer perhaps later this year, we'll allow the balance sheet to run off and that's the road to normalizing policy that's what we're going to be doing. we do believe, and i think widely it is believed, that the supply blockages will be aleaveiated. more people will come back in the labor force. we'll see more recovery, although it's been slow from participation.

and we'll see the global supply blockages coming down. more cars and that will help getting supply and demand back at the same level. >> senator menendez from new jersey is recognized >> let me start by reiterating a point i've made, unfortunately far too many times and the latest batch of nomainee leads meunse again to -- latinos makeup nearly 20% of the entire u.s. population. it's outrageous they have no representation in fed leadership there's never been a single member of the board of governors or regional bank president that has livabled the experience of being a latino in the united states and that means the voices

of one-fifth of the country's citizens are repeatedly drowned out when the fed is making critical decisions on economic policy decisions that effect whether a latino family can afford their first home, buying a job -- finding a job that pays a living wage, save for a comfortable retirement or get a loan for their business several of my colleagues and i sent you a letter requesting that you work closely with the boston and dallas banks to recruit diverse candidates for the open president positions we received your response last week and i have to be honest the lack of detail was thoroughly dispointing. i'd expect a more detailed value on the search process before your conformation vote, in terms of what change s have you made o the process and how they'll lead

to a more diverse pool while we've faced changes causing families to face higher prices for a variety of goods. the fact is we're facing a strong recovery from an unprecedented pandemic thanks to the american rescue plan and the policies put in place, we gained 137,000 jobs per month since president biden took office. if confirmed, how would you continue the dual mandate, while not dampening the strong wage growth we've seen in the last year >> so, by so many measures, labor demand, relative to the supply is at its highest level really than i can remember the level of job openings is at an all-time high

a level of quits they look at the level of quits at how strong is the labor market the problem is not lack of demand for labor the problem is there's a significant supply problem which is associated with the pandemic and a range of other factors as you can see, for people in the labor force, the unemployment rate is dropping at historically fast levels so, we don't have a labor demand trouble to solve through our policy what we have is a labor supply problem. what is the threat we're clearly on path to have an even better labor market over time what are our threats i would say near the top of the list is the threat of price stability, of -- if inflation does become too persistent, the high levels of inflation get

intrenched, then inevitably that will lead to higher monetary policy and that would be bad for workers. really, achievement of maximum employment, to which we mean continued progress in hiring and participation, is require us to use our tools to the extent they work on the demand side. while we also expect some helpful from the supply side. >> do you expect inflation to subside as vaccinations increase and supply chains are repaired >> over time, yes. over time, the question is how fast and the risks we're running in the meantime that inflation psychology starts to get entrenched certainly i believe that you make a great point about vaccination. getting ahead of the pandemic, i don't think two years ago we thought we'd still be having record level of cases, and even close to record levels of

hospitalizations getting past the pandemic is the single most important thing we can do. >> according to "the new york times," new jersey and other parts were hit hard during the recent surge while the midwest was strongly effected in 2020 and the south at the end of last summer how closely does the fed look at differences in regional performances in making policy decisions? >> we have to focus on the national level, but, of course, we follow, in this instance, the earlier delta, for example, kind of -- covid rolled around the country on a regional basis. that's not so much the case with omicron. it's so contagious and it's not the same everywhere, but it is really going through the whole country at a pretty rapid rate we follow that very, very carefully. i would say we didn't know much about vaccines and pandemics two years ago, but we've all had two years to learn but we defer to the experts,

though we don't substitute our judgment on medical issues for the experts but we talk to them all the time. >> i look forward to following up with you on the diversity question >> senator crapo is recognized from idaho from his office, i believe. >> yes thank you. and chair powell welcome back. when you last appeared, i also asked you about an expected fed report on digital currencies you indicated that delays in releasing the report was because the fed wanted to ensure their analysis was complete and that a release was expected in the coming weeks however, that report still has not been released. do you have an update you can share on the status of the report and are there problems with sharing this report with congress and the public and what the fed may be proposing with respect to possibly centralizing public digital currency? >> the report really is ready to

go, i would expect we will drop it, i hate to say it again, in coming weeks but it is in a situation where it's ready to go the fall for us, given changes in monetary policy and other things going on, it was hard to -- we didn't get it quite to where we needed to get it, but it's effectively there now and i will tell you, it's within weeks we will be publishing it and by the way, it's manufacture gonna be an exercise in asking questions and seeking input from the public rather than taking a lot of positions on various -- we do take some positions. >> thank you i hope that you'll be able to meet this couple of weeks, as you know i've been asking you and other members of the fed about this for a long time and i really do believe it's time that the fed release this report so we can engage in a further discussion of it i want to also with the rest of

my time go back to the issue of inflation. i know you've talked about it a lot with us this morning in response to my questioning about inflation last november you confirmed that inflationary pressures would certainly last, in your words, through the middle of this year -- this coming year. what do you now expect with the time we've seen since you last answered these questions in front of the committee, what do you now expect inflationary pressures to look like throughout the year? >> i wouldn't say things have changed much on that front since last november. i think that inflationary pressures do seem to be on track to last well into the middle of next year. and if they last longer than that, then i'll just say that our policy will continue to adapt. our policy has been adapting to this, you know, for some months, but if inflation is going to last longer, then that would potentially imply more risk of

its persistence and ultimately becoming entrenched and our policy will respond accordingly. >> you just said well into the middle of next year. did you mean this year or -- >> i meant this year, you're right. i still think it's 2021 sometimes. >> i thought so, but i wanted to be sure what you were -- you know, with regard to the question of what's going to happen over the next three to four months as we try to deal with the inflationary pressures you've described, if consumer price inflation were to persist the next three to four months somewhere between 5 and 7%, as we are now seeing and if the unemployment rate were to remain where it is now, below 4%, what would you expect the tools that the fed would need to use would be -- and i know in one of your responses on the inflation issue earlier today i thought i heard you say that the fed's overnight

interest rate would -- you may use it as a tool, would still be very low could you just discuss -- i know you can't predict what the fed would do, but could you discuss what you expect interest rates to look like as you utilize that tool >> sure. so i think to your point, you know, we're at a place where unemployment is now very low, historically low, and inflation is well above target and the economy no longer needs these -- this very highly accommodative stance of policy and i would expect that this year, 2022, will be a year in which we take steps towards normalization. that will involve raising the federal funds rate, that will involve ending asset purchases in march and perhaps later this year, depending on the run of things, we would also see ourselves beginning to allow the balance sheet to shrink. so that's -- i think that's the

broad picture of what i see happening. the committee hasn't made any decisions about the timing of any of that. i think we're going to have to be both humble and a bit nimble here we -- if you go back and look at where we were a year ago today in the economy, you know, vaccines were arriving, i think in my thinking there was a -- there was the idea that will really help us get past the pandemic it has helped a lot, yet we're at all-time record cases and approaching record hospitalizations nationally. so the thing that's stayed with us longer and i think we're going to have to be open to the changing environment and monetary policy is going to have to adapt as we learn more. we're going to learn a lot about the path of inflation, particularly as it relates to the supply side blockages we've had over the course of the first six months of the year and every month, really. >> so do i understand -- are you saying that if the pandemic

remains problematic and aggressive, that that would impact the timing of the -- of any decisions the fed might make in terms of the federal funds rate >> i'd say it could. but what's happenedis the economy has made all these gains in the face of two -- during the 2021 we had two major pandemic -- outbreaks, two variant outbreaks and really the beginning of '21 was dominated by a strong wave of the original covid. and yet the economy, we made tremendous progressin the market in 2021 and growth is at a multi-decade high in 2021. so i expect the economy to continue to be able to deal with these -- with these outbreaks. i think it is likely, though, if the experts are right, and omicron is going to go through really quickly and peak perhaps

within a month and then come down after that, i think it's likely you will see, you know, lower hiring and perhaps a pause in growth and that kind of thing, but it should be short lived. it should be and then the economy, the forecast for the rest of the year, or certainly for the next quarter or two, would be a very positive one very positive. >> and if that happens, would that increase the -- action to increase the federal funds rate or would it -- >> sorry, if that all happens, so i think we're -- what we're seeing is an economy that functions right through these waves of covid and i -- my colleagues and i see that and you see that every quarter we write down projections of interest rates, they're individual projections, not a committee plan or anything like that but broadly speaking, all members of the committee see interest rate increases coming

this year, the median was three. but that's going to depend on data, on the progress we see on the supply side, the progress we see on inflation and we honestly don't know there's risk on both sides, really, on growth and potentially on inflation as well so we're going to have to be just very attentive to what's happening in the economy and willing to adapt pretty nimbly our policy as we go through the year >> thank you >> thank you, senator crapo. senator tester from montana is recognized >> thank you, mr. chairman i don't know if there was any way to turn that mic down but it was painful. almost tough not your questions, just the intensity. first of all, chairman powell -- >> good tuesday morning, welcome to tech check. you have been listening to the fed chair,