good wednesday morning welcome to squawk on the street. i'm carl quintanilla with jim cramer and david faber market watches the renewed russian assaults on ukraine. reacts to the state of the union address last night, and, of course, waits for the fed chair in front of house financial services next hour oil hits $112. road map begins with, quote, "badly miscalculated." the president vowing putin to pay a price. powell's inflation moment. the fed chair is set to send his clearest signal to congress that the central bank will begin raising rates this month foord is reorganizing.

the automaker is displiting into distinct ev and measures into their own p & l. >> we begin with wti spiking again. supply disruptions during the state of the union last night, the president said his russian counter part putin badly miscalculated by attacking ukraine. >> six days ago, russia's vladimir putin sought to shake the very foundations of the free world. thinking he could make it bend to his menacing ways, but he badly miscalculated. he thought he could roll into ukraine and the world would roll over instead, he met with a wall of strength he never anticipated or imagined he met ukrainian people. [ applause ] one example is the selfse

self-sanctioning ships are not taking on the load of cargo that's partly why we're at $112 this morning. >> yeah. when the president said they miscalculated. i think he did believe -- putin did believe that the ukrainians would welcome that he seemed to have forgotten the history of the '30s but relying on the generals telling him it was all good or, you know, reverberation chamber. i am surprised that oil is being stopped. some is being confiscated. i'm surprised because oil is sack kro sank in this world. this is suddenly not politically neutral. they supply a huge amount of oil. they did not deliver a lot of oil. there's been a lot of misinformation during the month of february. almost nil to our country. the misinformation is so vast on this scoring whether it us looking at twitter and seeing there's a russian convoy that got in trouble. >> you're talking about not just oil but the larger --

>> yeah. the president said they miscalculated. you say, did our president miscalculate when we went into iraq it doesn't matter. you can pivot. it's apparently that -- apparent that putin is pivoting the question is, how much money does he have >> we're in a democracy where pressure can be put on the government and they're worrying and the next election. >> yeah. >> so a decision to wrong headedly invade another country can result in somer have -- reversals. it's unclear who putin is talking to and getting advice and whether he's taking it or whether his mental state is all there. >> yeah. >> these are key questions people in the market are tries to ascertain to your point, the price of oil is fungible. 11 million barrels a day come out of that country. >> no. >> about 10% of what we use every year -- every day in the world. >> is the west going to take higher energy prices our cars are 20% more fuel

efficient than 10 years ago when oil was up that does matter there's no reason why oil can't continue to go up. there's a lot of our companies -- it's a tremendous discipline don't want to produce more oil carl, what bothers me about the reor teenage whenever anyone seems to say that is positive about our side, so to speak, it may have been discounted as if putin is patented. there's no stopping putin. it seems to me from everything we see and read that putin is being stopped pretty effectively. so he encircles a small city and is excited the idea they can encircle a large city like kyiv or kharkiv during the summer, when there are a lot of holes i mean, winter the germans could encircle it's difficult to encircle a city in the summer when there's a lot of food and people can get killed on want russian side

once you encircle, you're stalled. no blitzkrieg and they come in and they're well armed and the russians are sitting ducks how long do they want to be sitting ducks? this is not talked about this invinceability of russia and, also, because of nukes, as andrew said. the invisibility is going to be sorely tested. the soldiers have mothers. don't laugh. it was a big factor in pulling out of afghanistan the generals don't like to lose. and i think putin is how long can he -- he hasn't filled the generals like stalin did in '38 and '39. there's a notion. >> yeah. lieutenant general earthling on cnn in their line is they're not controlling jack the number of soldiers you need to occupy some of the 21 which are half a million people each hundreds of miles apart. >> it raises the question what the expectations were in the first place. >> iraq.

>> iraq! could we have been more wrong? >> umm, no. >> no. >> when it came too the actual military incushion, we were quite successful we were not wrong there. >> the mothers of the people whose sons died. >> there was insurgency. >> i'm just saying. >> we don't need to go back to that. >> no. >> we need to say this powers can be utterly wrong. >> is that what opec plus means when they keep their schedule of 400,000 barrels? they barely mentioned the whole ukrainian situation in the statement this morning. >> greedy sons -- >> and by the way russia is a member. >> yeah. and remember our country instead of telling our -- well, by the way, the president says he's in touch with the oil people. so i decided to canvas the oil people and nobody heard from the president. now i did leave out, david, i

didn't get to some of the natural gas producers. >> you hit everybody else? >> yeah. >> we asked mike worth yesterday and he hadn't. >> there was others i checked in including the top five the president is not calling them saying we have to produce more the president doesn't like natural gas or oil or production two weeks ago they put some rulings through that made it harder to get a pipeline through? furyk. >> well, it's part of the agenda to combat climate change that's true >>well, that's right that's what i'm saying i'm not some crazy man you see the companies reporting there. shell may be -- there's some reports that shell is not as adamant about saying no to the oil >>well, exxon is saying no to russia after what has been a 1995 sort of those early days there.

remember they have a production sharing agreement there since 1995 they're shutting it down, as you can see there their report in the journal. a press release here, as well. about a thousand employees russia nationals but they produced a lot of oil out there. it's a 30% interest in the project, which they're also in with a number of other nations. >> right. >> and russia, obviously, is, as well that was an interesting decision they got out. >> yeah. >> some time ago unlike bp, which s, obviously, trying to figure out what to do with the 20% stake there. >> sold. they're going to sell it. >> yeah. >> we're going to sell that. >> maybe putin will buy it. >> aren't you professionals? why do you say stuff like that >> people say things they say things. oh, that must be right because they say it. it's not right. >> all right but back to exxonmobil who has

an investor day. we'll get to that. >> i'll stick around tomorrow. >> it's important. >> i'll stick around tomorrow. [ laughter ] >> david has - >> we have darren woods tomorrow. >> yeah. he doesn't know i'm sticking around. >> yeah. >> yesterday he met with mike worth. i mean, you have conoco coming on next? shell? >> well, don't see it as a threat the fact i want to learn about this business. >> next thing i know you'll have -- >> it's an opportunity. >> yes, jane fraser also tomorrow two good interviews. important. by the way, this has been investor week already. chevron, exxon, city, more to come march is investor day month, in many ways, jim a lot of companies trying to reset expectations a particular citi, which we'll talk about. >> i thought target was a yaun and it was the best! >> by the way, target can we retailers who have reported

amazing. okay amazing. nord storm was incredible. the rack is turning around all cybersecurity companies amazing. everything is bad because everything is bad because it's bad >>well, because there's a significant war going on, yeah. >> just saying -- >> mentally unstable leader of a country with a 6,000 nukes. >> i mean, that guy can use -- seriously. there's not enough drugs in the world. >> there's a reason people are a little uncertain now, jim. >> yeah. >> i'm not -- >> maybe a great time to get salesforce. >> i'm not a general, i'm not a two-star, i'm not a colonel. i'm saying if you listen to the companies, it's a -- time. i mean, mark last night, i hope we get to a clip, but i've never heard him on point best number in five years. and workday the important best number in five years the cloud is doing amazingly well the stocks have come down well foord i'm sure we'll get to

that a lot of great things. why isn't it oil a massive short here >> it's the steep nest years i think it's not a massive short because there's been such discipline among our producers that can easily produce another 2 million barrels a day. mike monfrief is being with us on friday. i have cotera just not producing enough why is oil not massive short i think that if you cut the

pipeline, chevron's pipe that goes through russia, that's a million barrel days. >> yeah. what are you doing >> i'm talking i'm trying to create a text for somebody but also listening. related to the oil in the meantime, powell on the hill two days of testimony begin today. this morning it's house financial services in his prepared text, he said it's likely appropriate to raise rates at the march meeting as for the conflict with russia and ukraine, it's highly uncertain what the effects on the u.s. economy will be still sticking, jim, with the notion that inflation will moderate during the course of the year as supply chains loosen up. >> yeah. i don't see that i had don't see any companies saying that to me. i think some companies are hopeful, but nobody has been able to, i mean, take dominos. their quarter was a fiasco they basically said, listen, nothing is getting better. many things are getting worse. dominos is pretty far reaching

it's a big company to say, look, everything supply chain is not good. can't hire people. not good chart not good and i just found, like, when i listen to dominos, i said, jeez, that is the essence of -- i think there are bad things i mean, dominos basically told the story of disruption and not being able to stay open when they want to this is just -- it's not a cataclysm but the supply chain. >> yeah. the number of containers ships imports is down. ism backlogs are down. >> right. >> prices paid down. you mentioned inflation expectations down. i'm talking essentially herely. >> oil is big. and we haven't produced more people i mean, it's the people problem, i find, that is -- i mean, they lowered the age of truck drooimps. >> you mean the labor shortage people from labor shortage >> yeah. >> okay. >> just making sure. >> hop off your phone. >> yeah. i was reading -- you want to -- you want to go back to the oil

market i can share some interesting thoughts. >> i'm just saying i'm talking about dominos. i'm trying to be imperial about this i'm not antidotal i hear on tv dominos is having a hard time staffing historically they haven't. they have cut back dramatically. if you order dominos, probably never in your life, you have to -- you probably never have. you can specify banana peppers or no cheese this is how you order. in is how you order. almost all the orders are this they managed to get rid of the person and it doesn't matter they have self-driving pizza delivery okay they have wonder truck. >> we got to go. >> okay. i was going to let you say it first. >> oh, you know, i have a guy talking. thanks for the support okay, see. >> it's not about the dogs it's not about -- >> it's incredible pizza all over the place you don't need to order from

dominos. >> sofi will open up 15% we'll get to sofi and salesforce ford, of course with the comments about exploiting the business and a couple of business units ev and ice we'll take a look at futures back in a moment

00. ford is up in the premarket. the company announces it'll run the ev and internal kbugs units as separate entities within the

automaker. @traditional business is called ford blue. jim farley said both units will, quote, "drive the success of each other." clearly the ice business, jim, will be the cash. >> yes. >> he'll run evs and a nice bump. >> yeah. one of the things i didn't mean said to me yesterday is, look, the industrial the come bugs people are industrials they're willing to be whatever is necessary in the end, they're internal come bugs people they're not buying into ev the ev people -- here is something excited. it's going to be run by doug field, who was later the apple car that wasn't developed but helped at tesla to launch the model 3. what is he banking on? the model e. by the way, did you know that musk tried to get that name -- >> model e

like model t but model e. >> i mean, this is the destroy tesla plan remember tesla produced 330,000 cars he wants to do 2 million i think farley's ambitions are remarkable it's good he didn't do the financial engineering the hedge funds wanted him to do that's amazing ev needed money. he has the stake in rif began. i would take farley over musk in 2026. >> huh 2026 >> they're going to make 2 million. >> yeah. >> all right i like it. i i like farley. i want him to pull back from the 2 million. i wouldn't have gone with the 2 million. >> from an investor perspective, it obviously will give a lot more transparency in the terms of the progress of both and

potential profitability. you'll see one going like this, probably, one like this. >> i don't know. the internal kbugs, my maverick gets 40 miles to the gallon. >> yeah. but i believe that he's making money on everything. farley will not make something he doesn't make money on i think it's incredible. and, by the way, you remember the electric. >> does it make it easier for them one day down the road to split the company? there's been some rumors there's benefits, though, to having -- >> yeah. >> sort of have their own management teams. >> they run that side. it's not like he doesn't like that side. it's just that -- they're going to use the body. >> yeah. ask the dealers to specialize? that was interesting

morgan stanley is saying maybe it's a legacy of oem to follow. >> yeah. jonas still has a sell on it wouldn't raise the price target. every time i talk to farley, i get furious about jonas. i wonder if his brother hates it as much as he does. >> the jonas brothers? yeah he shows disrespect to farley. it's almost as bad as the clown on the chevron call who showed disrespect to c.j. warner, who added to the board at chevron. he questioned that c.j. warner is on the phone call the disrespect i find on wall street is ridiculous. >> really? >> yes for people who make things can you believe they went ahead to split the company up so we can lose in both halves? farley. >> huh i got nothing for you. nothing. we got a mad dash, though. >> leave me hanging. >> we should move on to that. >> they said got to go. >> e with like the commercials they're good for us. >> yeah.

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this was an extraordinary

quarter, maybe the best quarter we've ever had you can really see it in not just in the quarterly guidance, but, you know, where we're looking for next fiscal year we're delivering guidance of $32.1 billion for the fiscal year '23, which we've started. that was mark benning half yesterday. i put you on the spot and asked you buy or not you said, okay, yes, absolutely. >> yeah. >> you got it right. >> thank you it was huge operating. the key number here the are. o. it's not run pass option but performance obligations. it's basically the money in the bank it's $1.5 billion beat that's extraordinary clean beat on the earnings here. >> what is a reflection of, jim? >> people are paying $100 million. these are $100 million contracts. so, like, the phone calls paying

$100 million. >> yeah. >> a lot of companies are turning over all customer activity to salesforce they change the accounting so you can't -- there's no -- but it seems not. >> right. >> by the way this slack is bringing in a lot of customers >> yeah. >> the customers have been paying $100,000 annually with an increase of 46%. caravan that comes in. i have to tell you, i have not heard him -- he was the ohana floor of the headquarters. >> oh. >> yeah. they're doing a lot of business in person. that matters workday doing business

>>well, he said we don't ever have to come back. salesforce is one of the companies -- >> it's optional. >> yeah. >> i just think this quarter represented the very big acceleration from the last five years. and taking lot of business -- [ opening becomes well -- opening bell ] [ opening bell ] >> when you bring salesforce in. i would have brought salesforce in before when i knew mark and the lift is rather amazing you don't really understand. so it's very popular there's the opening bell and the cnbc real time exchange. helping to curb the dropout rate and rigetti celebrating its

listing via spac a lot of interesting seaalesfor will open higher hpe up about 5%. >> you see -- >> oh, really? >> yeah. it was negative. and i've got to tell you, the gloomest so you to say why is the market going up, i mean, oil is bad, the fed is bad, interest rates are bad. and i say, well, look, when you have this kind of rally, some people who are kind of caught on the wrong side you can let some stock go the rally is not supposed to happen it's a rally not supposed to happen it's a rally that says something is wrong with the negative pieces and i'm working like, you know, a banshee to figure out what it is whether it's russia not winning or oil coming in or maybe fed navigates this well. but, carl, there's no reason for the strategy. >> which is often a compelling reason why. >> yeah. >>well, i'll tell you one thing, odds of no hike in march went to 10% yesterday.

after being at zero for almost a month. >> is that true? >> yes. >> holy cow. >> you think part is moderating fed? >> el with, with -- well, jay pl needs a narrative. he's getting a narrative jay powell, by the way, david, would love to things get better. we wants to try to, like, play it out play his hands trying to play his hand, which means he's trying to augment the hand in blackjack. >> yeah. >> you try to augment your hand. split hard >> yeah. >> put more cards out as a dealer in the sixth showing. that's where he is versus inflation. there's a sixth showing in inflation. a lot of things that carl said. >> i'll tell you one thing that is moving this morning is las vegas sands leads the s&p. >> yeah. >> they dropped the piece about china. actively exploring an exit from zero tolerance. >> that's amazing. by the way, the pmi yesterday in

service and manufacturing in china was good maybe china is going to join the cancelled nations and start doing better after the lockdown. david, a lot of people talking it was very successful because there was no big covid outbreak that is not exactly -- >> that's true. >> all that said the journal also reporting on the administration's sort of starting to move deeper into its own china policy not, obviously, removing the trade barriers put in place by the trump administration the fact the chinese has not made good on the phase one of the trade deal that was signed under the last administration. and whether or not they might start to get even more aggressive that's the biden administration. >> that was amazing. >> yeah. yeah on the holding and china's different technology sectors more accountable for certain competitors. >> yeah. great value. >> yeah alibaba is the cheapest its been know what else he likes? >> yeah. facebook he talked about the price to

earnings multiple of facebook was lower than ibm it's lower than a lot of companies. >> right. >> ibm thought it was -- >> yeah. >> it's still growing faster than ibm. >> i think that reels will crush tick touk. you heard that from me first morgan stanley doesn't know. sticking with a buy today. cut ebitda by 15%. they said reels will go 15%. that'll come in right from the hyde of tiktok mark dzuckerberg every day works on the destruction of tiktok when you speak to him, tiktok. >> tiktok is an incredibly powerful flat form the ai, the algorithm there is very effective in keeping and giving people what they want and keeping them focussed on it. >> yeah. >> and they're under monetizing. >> yeah. facebook -- >> i know you have faith in zuckerberg's ability. >> yeah. there are many things i may not have faith in zuckerberg but i

faith he'll come out and reels is going to do to tiktok what stories did to snap. >> okay. >> which is what facebook is under valued and the key issue is reels going to be -- remember when e came out and turned out it was a desk top program so then in 2018 there was cambridge analytica. >> yeah. there's been a lot not good. >> yeah. it mark said chief antagonist. >> yeah. with candace in the box last night. >> yeah. $100 billion. >> yeah. how about $500 billion

to be fair if you pass the bill. you have to pass the build back better. >> yeah. look, pat i love let me say from point-blank. i love him i love his optimism, i love his spirit they do generate a lot of cash but, you know, there's not a lot of stuff in ohio the reason ohio isn't the capital of semiconductors because there's another place. >> california? >> yes it's called california [ laughter ] >> and there are plants in arizona. i remember when they opened the plant in oregon. i wanted to go to that plant. >> yeah. texas is working on it. >> yeah. my take away is buy nvidia there's my take away he was busy building plants. he was busy making money. >> i think our viewers knew where were you going. >> he's an exciting guy. you see all the shots. he's right there.

>> yes i did. i did. lisa suh is campaigning to destroy intel. nvidia had the haus hack and it was bad. they got some information. if you're selling nvidia off the hack, you're a hack. >> okay. >> a lot of people are selling shares of citi this morning, guys yesterday the banks performed quite poorly. >> actually, worst day in almost two years. >> come on. >> it was a very bad day today we're seeing a bit of a rebound in the sector, other than citi. they have an investor day today. it's an important day for jane fraser she's been running the bank for one year today is the day when they're presenting a lot of new targets. she will join us tomorrow in an important interview, as well we'll go over to see her at citi's headquarters. >> we meaning me >> no. it'll be me. i thought i would be kind to you. it'll be me. you'll be back here.

okay >> i'll be there for now, jim, the market is not responding well to, i guess what had been expectations, perhaps, from some targets that would have been a bit more aggressive. >> they seem to be when you look at the presentation -- i haven't had a chance to listen when you listen to the presentation, upfront about their shortcomings including not spending enough on systems. >> yeah. they made it clear. >> you've talked about it a lot. >> yeah. brian moynihan was spending fortunes to get it right. >> term expenses will create they guide to total 5 to 6%. it's vesture impacts and overall 10 to 12% expensive growth for the first quarter of this year exdivestiture impacts. maybe a bit more than people anticipated. you know, they're targeting in rotc of 11 to 12% in the medium term. >> right. >> and low single digit revenue growth for this year so maybe a bit below, jim, what some hoped they were coming for in terms of their expectations.

>> yeah. and reference blackjack. i feel like she got a hand with the five dealer showing king. what kind of hand did she get? >> she doesn't know it was the easiest of hands to actually meet the dealer with. >> never got that call back that revlon one. >> no. it goes back to risk controls. >> yeah. >> the huge screw up where they sent enormous amount of money to revlon. >> yeah. at a certain point it seems like the book value -- remember glen fed? the value was three times. i mean, what -- when does it play a role there? >> they have the incredible global franchise it's sort of unparalleled, including russia but they have a global network they want to build on that. they're shrinking certain parts of the bank, as well. >> but you have to find out why

the book value is so high if it's tangible. it's almost impossible for that stock to be where it is. i don't understand that. you don't understand why it's where it is unless book is overstated. >> well, thank you we don't want to overstate a book. >> right some viewers have question about crmv being negative. the guidance was mixed a little bit. they guide fiscal revenue above eps below. all i can tell you it's the fundamentals was fabulous. it was it was a great quarter. >> yeah. if you want to sell it, fine but you're selling it because you think that the price is above 43 is too high but in

terms of how the company did what am i going say? i followed the company since the stock -- >> yes, you have. >> since it became public. it was a great quarter i can say it was a bad quarter i can't. >> and the guidance was also guidance was fabulous. >> yeah. >> and which does differ from the last quarter where tlfsz some disappoint. >> and i was worried but, yes, if you want to sell it, understand you're selling it because of the highest multiple understand you're selling -- it's clear when he's being conservative in the guidance but people want to get out of high multiple stocks be my guest. >> yeah. pretty good day for retailers. specialty ross stories you mentioned nordstrom earlier. gui guidance above. >> i thought kohls was good yesterday. the consumer is very, very strong and it's really interesting, what is the stock that is weak on the consumer? dollar tree.

>> oh. >> and a & m. >> yeah. but nordstrom was quite a call it was almost like, wow! hey, we did well wow! >> yeah. >> there was kind of a wonderment to them doing well. like, wow! and i think that target was so far and away the best. lowe's was the second best lo lowe's was amazing. >> yeah. >> home depot didn't shine i wouldn't have been as negative. >> yeah. guys, exxonmobil we mentioned earlier in terms of their pulling out of the project where they've been since 1995. but they also have an investor day today. and, you know, not much in terms of new targets the one thing that the company does plan to include annual structural reductions of $9 billion a year it's expense reductions, essentially, by 2023 compared to 2019 previously they were talking about as much as 6 billion it was february 1 when they

reported numbers they have increased the target interestingly that's above even where not the last round of activists but the round of activists prior to engine one had sort of been targeted. which was the hope they could get to as much as 9 billion. then you come back to how much cash the company is generating we asked the same question to mike worth yesterday they did $48 billion in cash flow last year i mean, if the numbers are going to be enormous, what are you going to do with the excess cash we'll have a chance to ask darren woods tomorrow. >> yeah. >> he joins us. >> i would love to hear what -- whether darren is going commit to the same level of esg that mike is. >>well, exxon is committed. >> yeah. without a doubt. >> yeah. but where is the auto bohn society? >> even in terms of the perm began where they plan to go all electric at some point.

( your comment -- that's a starbucks opportunity. you buy starbucks. >> yeah. and you see lock heed leading this lower. >> wow. >> they're down 4%. >> wow that's how it should be. >> yeah. the president said what we need is more javelin missiles i didn't hear that. >> no. remember president reagan said we need a 600-ship navy. but it didn't -- reagan was like, well, you know, we'll double everything. >> yeah. we'll watch that a lot of interesting moves today. by the way, reminder, you can get in on the cnbc investing club with jim. sign up and find out more at

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got 1% gains here as the rally gets extended in the opening minutes. dow up 300 plus. we're awaiting the fed chair in front of house financial services, day one of a two-day testimony here we'll watch it in the next few minutes. squawk on the street is back after a break.

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shares of next door, symbol kind tumbling more than 45% since november debut so it's probably not kind. but the social networking app beat revenue expectations yesterday in the first quarterly report since going public. we have to find out what's going on we're thrilled to have the ceo sara fryer you had 59 million rev quarter, increase of 48% and the market does not seem to care. so i welcome you on the show and try to figure out what this is, because you're a business person, a finance person

and that seems out of whack with what the stock is doing. >> yeah. thank you, jim we always appreciate being on the show look, we came off a great year in 2021. q4 was a highlight quarter, grew revenue 48% year over year, that's really differentiated the year grew 56% revenue, accelerated from 2020. engagement, which was really the future for nextdoor, wow our weekly activities increased 32% to 36 million year over year and what i love is people are coming back weekly over half of neighbors come back every single week and on average they come back four times a week making us one of the most active consumer platforms and then finally we raised guidance so, we lifted our guidance to 255 million up from 252. and don't forget, we put over 700 million on cash on our balance sheet. we feel like we're in a position of strength. >> okay.

so, trying to understand this. what is the open rate on the -- on all the emails we get >> the open rate is strong we are a platform that absolutely engages people through notifications. and one of our investments, our product road map is focussed on active, valued, communities. active is about often notifying you with the right notification at the right time to the right neighbor that draws you back to the platform and so that's why we see now 52% of neighbors back weekly an all-time high for us. so whether it's an email, whether it's an in-app notification, regardless a way to bring you back to local and so what's going on around you. >> sarah, do you think it's just the times so to speak? these were numbers i felt that a year ago would have sent your stock doubling is it just that we're -- you're right now where we don't want to see revenue growth, we want to

see earnings and no longer care about these early stage companies, spac companies, because this has not been -- the market -- it's been unkind to shareholders >> it's certainly not been kind. look, we have traded with our comp set i don't think that's anything to do with the spac market. if you look at pinterest, snap, twitter, even meta to some degree, that's our come set. since our deal was announced we traded even slightly better. so i think it's less about this incredibly strong business model that we're putting out and much more about the multiple what you're alluding to and multiples are driven, of course, by how the market is feeling about risk on or risk off what i tell my team all the time is control what you can control. so we're going to build a big, global business. we have the dollars on our balance sheet to keep investing against that our product strategy is working. it's really innovative and the multiple will ultimately take care of itself. the stock will take care of

itself so often these are times when we can be aggressive. we have a lot of great talent coming to nextdoor at the moment driven by purpose. but also driven by the growth that you're seeing great talent will build great products, so we couldn't be more excited right now. >> sarah, followup, this is david, what i'm hearing you say you don't think you're penalized coming public through a spac a as pursued the more traditional ipo route some time down the road >> i really don't, david we could have done an ipo, direct listing, could have done the spac, which we did again, i would go back and look at the -- we're a community platform but fall in that group of social media and community-type of plays like a roblox or bumble all of us had a rough time with the stocks as the multiples have compressed on high growth. market always has eras we may just be in an era

battening down the hatches, growing our business and that's why i'm delighted that we raised capital when we could. and that we have a balance sheet now to put to work >> i couldn't agree with you more, sarah. 800 million tells it all return investment. very, very strong. i think that people just don't know you well enough yet so i want to thank sarah friar, the chairman, president and ceo of kind, as i call it, which is nextdoor holdings. thank you, sarah great to see you as always. >> thank you, both take care now. jim, what's on "mad" tonight? >> okta, identity. stock has not been that hot and slootman as we know, fine dutchman, snowflake. got me staying till late i don't care -- i would do anything slootman wants he's a tough guy and know he can hurt me. >> got you living in fear, jim we'll see you tonight. "mad money" 6:00 p.m. eastern

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♪ good wednesday morning, welcome to another hour of "squawk on the street. i'm carl quintanilla with david. morgan has the day off dow is up 300. a lot of cross currents to watch today, powell among them as he speaks in front of the house in just a few moments most part, all eyes remain trained on ukraine, the possibility of new talks as defense names are leading the markets lower today, david. >> yeah. we're 30 minutes into trading and look at three big movers we're keeping an eye on. nordstrom those numbers surging. guidance up 4 to 7% from 2021 levels the retailer also saying that nordstrom rack saw improvements. we should note the stock is down, as you say, still more than 30% over the year

but 34% gain over the week as well sofi on the move, loss of 15 cents per share was smaller shan expected this morning, b of a downgraded to a neutral saying the recent surge does not leave a lot of room to run. not stopping shareholders right now or those buying up 7%. finally, salesforce started up but now down. gave up the early gains. ref knew beat was there. revenue guidance 32 billion, slightly above analyst estimates. also in terms of guidance and what it's focussed on, it said integrated products with slack which it bought for over 27 billion in 2020. management adding, by the way, it has no plans for material m & a, at least not in the neear term this is a company built in part through fairly large acquisitions. >> indeed. the fed chair testifying before house financial services

this morning we'll take you there live when q&a begins steve liesman with more on what we might expect today. hey, steve. >> good morning, carl. yeah, j. powell making clear the federal reserve is on track to continue to raise rates and reduce the fed's $9 trillion balance sheet even amid the uncertainty over the ukraine war. powell will tell congress that it be appropriate to raise the funds rate at the next meeting and eventually reduce the balance sheet. didn't put timing on that, however. he said the effects of the invasion of ukraine were, quote, highly uncertain and the fed will need to be nimble in responding so no real signal on which way it would go in terms of how to change the policy outlook. on inflation, powell will say it's running well-above target he does blame a lot on supply disruptions, larger and longer lasting than anticipated but does expect it to decline and lays out ways to help bring it down over time easing supply constraints. moderating demand brought on by

among other things declining fiscal stimulus and tightening monetary policy. on the plus side, powell said the omicron wave looks to have been brief and the labor market is tight and gains have been widespread there was some other fed talk this morning, separately fed president charles evans said that fed policy is, quote, wrong footed relative to high inflation and, quote, we need to get moving st. louis fed president jim among the more hawkish members out there said the current situation calls for aggressive rate hikes that might have to get more aggressive if inflation does not moderate. so at least, guys, on the front end of things, next several months, i'm not hearing much change in fed policy, but the market has changed in the back months >> yeah. and i wonder what you make, steve, of the story out of the journal this morning that china potentially looking to exit some of its zero tolerance policies on covid trying to incorporate some less sons they learned from the olympics and what that could do

for supply chain loosening >> yeah. that would be huge you know, we still may not have felt the effects of china's omicron shutdowns, right they have zero tolerance policy. we were already experiencing difficulty with supply from china. and if they were to speed things up, especially by the way there was also the chinese new year that would normally reduce things and make things harder, so if they were to speed things up, it would be very -- it would be a very big deal but then we have to deal with what the effects are going to be from russia. you know, russia is the oil apparently and the gas are ultimately going to keep flowing, at least so far but there's other things from russia there's wheat from ukraine and russia, by the way and there's also metals and all other kinds of commodities so those could add to the supply disruptions. >> steve, while i got you, the adp numbers this morning i know had you wondering a bit in terms of the reliability and what's going on with data and i guess that is the question, given the revisions

there. not to mention the revisions we saw from our last jobs report as well >> yeah. david, i guess the one thing that adp has going for it is everybody is terrible. the government is terrible i've been reliying with the high frequency data, as you know. the trouble with that data is it doesn't give you a point stronger or weaker than before the pandemic or whatever but it's very hard to get from there to a point i think it probably makes a lot of sense, david, that the job market is strong, that people are hiring we do seem to be on the backside of this omicron wave we're all getting out of the house these days we're all meeting with people and the band is playing again. so, i think that's -- there's some employment there, of course so i think that's important. and i think it's fair to say that we probably have some couple strong jobs numbers in front of us. >> yeah. we're looking forward to that interview we just promoed for tomorrow with you and loretta meser.

steve, thank you steve liesman. we continue to watch the markets, of course, as we await chairman powell's team bob? >> good morning, david important thing is near the highs for today, we stabilized the last few days. we bottomed near 4,100 last week we're 43 to 4,400 on the s&p right now. take a look at the sectors, banks which have been in a two-week down trend stabilized today. that's good to see energy is at new high. semiconductors down about 15% because a multiple contraction in the semiconductor space on concerns about higher rates. it's up a little bit industrials also have been a little more stable in the last few days it's good to see stocks who have gone parabolic stabilize a little bit lockheed martin was 390, went to almost 450 in just a few days and now it's down a bit today. north rup grumen is down after going up a little bit. shares l3 down a bit nice to see the banks stabilize.

citi is at a new low zion was at 75, went to 65 it's bouncing today and some of the regional banks that's good for the markets, stability. the key point from powell, his comment with inflation, well above 2% and a strong labor market, we expect it will be appropriate to raise the target range for the federal funds rate at our meeting later this month. the problem here is the glide path what exactly is going to happen? here is the problem for the stock market the s&p is down about 10% so far this year. the pe ratio is also down 10%. the multiple is down that's why the market is down. the other part of the market is the earnings growth estimates. that's not down at all and the market is concerned that could be the next thing that moves down the pe ratio is how much you're willing to spend for a future stream of earnings that's gone down, but not the earnings growth estimate the worry for the markets, the first worry is that the fed will overshoot the rate hikes it's going to cause a growth slow down.

as a result of that, the analysts are going to start reducing the earnings estimates. but they haven't been reduced yet. they've been stable. we've had earnings growth estimates of about 8%. it's now 7.8% since the beginning of january the worry is that could go very quickly down, perhaps to zero. that will initiate, carl, a whole other round of price cuts. so you've got a 10% cut with the multiple getting cut 10% now the worry is powell has to thread this needle and not kill growth so you're going to see today this very strange situation. you'll have some people come on, blame the fed for exacerbating inflation or blame for not addressing the inflation problem and then you'll have people come on say be very careful here, don't kill the growth story. what will be interesting today, carl, to watch how powell threads that particular needle carl >> as we watch him get ready for opening statements in q&a, bob thank you, bob for more on fed policy and the markets let's bring in former philadelphia fed president

charles. great to have you on days like this good to see you. in his comments at least his prepared testimony he does say that the implications of ukraine are uncertain. i wonder how far you think he takes that does he frame it in a way that suggests that you got to assess those implications before you start talking more about stimulus exit? >> well, maybe i mean, i think he's trying to play the middle ground and not trying to accelerate the market's expectations, but also not ruling out the possibility that things may turn out different than they expect after all, the fed has spent the last year dithering around inflation, blaming on one thing or the other blaming it on everything except their own policy miss ch so now they waited and waited and waited and finally made a move to recognize they have to tighten

and the market has recognized that as well and priced in rate hikes. in september of last year, the fed only expected 0 or no rate hikes in 2022. now they're up to five or six. this reminds me of the old stop/go policies or go/stop policies the fed followed in the '50s, '60s and '70s and returned to that. they did that for so long that now they're facing the proprospects of more rapid rate increases and the market is recognizing that and it's going to be exacerbated by i think you mentioned a few moments ago rising prices of commodities, oil and other things are going to aggravate inflation, not help bring it down in the near term and so, they don't want to be seen easing or not raising rates in the face of more inflation, so they're in a real bosh and

made this bosh for themselves. >> right it's interesting to hear you make comparisons to the '70s because bullard, of course, has no problem throwing tape bombs around, this morning, according to some of the comments that the journal is citing, says this does remind him of the '70s, even though some argued the picture is much different. what do you think? >> it does remind me of the '60s and '70s and the fed in the '70s eased appreciably or didn't tighten in the face of oil shocks, if you will and they just increased the risks or fed into the notion by not doing that -- fed into the notion that, you know, these oil price shocks were translated from temporary shocks into more permanent ones because the fed didn't tighten and address them. i think it's a very similar situation.

it's eerily similar for those of us who lived through that era. >> i'm sure it seems like just yesterday. i wonder, you know, last night the president -- >> i don't know if that's a benefit or cost evade. >> last night the president talked about repatriating a lot of production, which makes sense if you're looking to get supply chain resilience i'm not sure how it gets us to supply chain disinflation or better price stability how do you think that's going to work >> i don't think it's going to work i mean, i'm all for raising productivity but in the same breath he was saying that he wants to raise wages, he wants to spend more money and he wants to aggravate the deficits this may -- the russians may lead to -- russia/ukraine may lead to increases in u.s.

defense spending and aid of various kinds. so i don't see anything the president said along those lines as really addressing the sources of inflation here. the sources of inflation and certainly persistent inflation have been some of the most historic examples of monetary accommodation we've ever seen. and the same thing for fiscal accommodation and support. so, i think until we get policies under control, we will have no hope of quelling inflation in the near term and that's what i mean expectations are going to continue to rise i tell you, carl, it looks like the '60s and '70s all over again. >> right now, i mean, denny has done a lot of work with fixed income markets over the years said it's harder to be a disinflationist

if you look at what's happening geopolitically, but you still have a lot of technological disruption i.t. software, r & d spending as a share of gdp, record high, non-defense capital goods orders, ex-aircraft record high. productivity is trying to keep up with wages. do you think that's an era in our quiver to some degree? >> well, it's hard to say. but, no, i don't think -- i mean, all these things we see in terms of relative prices, prices of individual goods or sectors of goods and services, to the extent there's more productivity, that's a good thing. but i think the temptation, as i said earlier, is to try to blame the inflation or deflation all on things other than what's going on with policy i think that's an ax by congress, the administration and

the fed to try to absolve themselves of responsibility for these extraordinary policies we've had in place the fed should have cut its asset growth over a year ago and this dithering is leading to this situation where we now face probably very rapid rate hikes and nothing that's going on with ukraine and russia and the supply shocks that it's creating are helping that so, we have just gotten further behind the curve i guess is the way i think about it. >> yeah. well, the pandemic didn't make that any easier to handle, for sure he long said the pandemic would be the ultimate arbiter of their policy and we're looking forward to putting that in the rear-view mirror charles, we'll see what answers he has in a few minutes. good to see you. >> thank you, carl well, fed chair powell is delivering his opening remarks right now to the house financial services committee we're going to take you there

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got a mixed market -- well, actually no. looking at any my numbers here i thought the nasdaq was down -- yeah, it is. sorry. couldn't see in my screen there. mixed market with the s&p up as you see right there. of course, markets do remain

volatile the u.s. increasing sanctions on russia. our next guest says inflation not russia is the u.s. economic concern and exposure to russian equities, not die vesting yet. let's get to that guest, joining us is elizabeth burton always good to have you. we talked about inflation in the past and, in fact, carl and charles plosser talking about it a lot as well. how big a concern is it for you? and how in any way are you sort of dealing with it as you oversee the retirement system? >> sure. i think it's my number one concern right now. i think a lot of the risk with russia and ukraine have already been priced in so let's take a step back and look at what we were all concerned about weeks ago. it's still here. inflation i got laughed at two years ago saying it wouldn't be transitory and is coming and it's here. it may be the only one gotch ya statement the last two years it's a huge input in our asset allocation and really matters. you think about not just from investing perspective but on my

liability balance sheet as well. we're paying out retirement benefits unlike some of the other folks you had on lately, i don't think this is going away any time soon i actually don't really see a whole lot of possibility for that to happen so, i do think it's one of the largest, if not the largest, risk factor in my portfolio right now. >> well, you're sharing your screen with a man who might have a thing or two to say about inflation, and that would be the fed chair. you don't believe that fed policy is going to be successful in ultimately combatting what we're seeing right now in terms of inflation >> well, i'm not trying to pick a fight with the fed right now, but i'm not really sure what a 25-basis point hike is going to do most companies in my portfolio aren't changing their long-term plans over 25 basis point hike in the overnight rates they're not looking at liabilities on an overnight basis. they're looking over much longer hor ryesons. that hike won't affect the yields so i think if they really want to combat inflation, i don't understand why -- well, i do

understand why, but i think more effective would be reducing the bond purchases but, obviously that has negative consequences >> elizabeth, thank you. we go into the q&a with the dow up 250 let's get to the hill. >> can be traced back to supply chain issues, related to the pandemic and the fed cannot directly affect supply side conditions. these supply chain constraints seem likely to only significantly increase as russia invades ukraine. and the full effect of our sanctions take hold. if the fed's tools are mostly useful in stimulating or constrainting demand, how can we expect monetary policy to rein in inflation that is largely driven by supply side factors? >> our policies really cannot,

as you point out, affect supply side conditions. our policies affect demand what we're facing now though san elevated level of demand in the face of supply side constraints. it's the collision of those two things that's creating inflation. there's an important job for us to move away from these very highly stimlative monetary policy settings to more normal level of rates and perhaps tighter at a time when inflation is highly elevated and that is what the committee plans to do >> so, it seems clear that the fed has limited tools to address inflation and that congress has an important role to play. the monetary policy report notes major shortages in housing supply as a factor in higher prices if congress were to make investments to alleviate these shortages, do you think this would be helpful in addressing inflation? >> major investments in housing

supply so i think housing prices are high for a number of reasons actually difficulty in getting lots, materials, difficulty in finding workers, very high demand. it's been extraordinarily high so those are many of the features and also low interest rates have made credit widely available. mortgage rates are going up. that will probably begin to cool off demand i wouldn't want to comment on congressional legislation, but i do think there is no doubt a role for congress. >> so, i suppose i could conclude without having you comment directly on fiscal policy that you agree there are ways to manage inflation outside of monetary policy it's not only monetary policy that others have a role to play. >> i do think that's right, but more in a sort of medium or longer term sense. i think the fed does monetary

policy and inflation is largely a monetary phenomenon, and it's our tools that can be used to address inflation. over time, though, of course, anything that expands the productive capacity of the united states over time would in principle make greater potential output and a less constraining economy. >> fed forecasters expect that inflation will subside as supply chain disruption issues are resolved however, housing and rent prices, as you've said, account for roughly one third of the consumer price index and most economists do not expect the problem to be resolved as quickly as supply chain bottlenecks due to both the time it takes to develop housing and the lack of investment in housing that is affordable to low and moderate income families currently there's a shortage of nearly 7 million rental homes that are affordable and available to america's lowest

income renters and a shortage of more than 5 million homes for potential home buyers. in my district, there's a shortage of more than 34,000 rental homes that are affordable and available to the lowest income families while the state of california has a shortage of more than 962,000 affordable rental homes if congress does not make the investments to increase supply and access to the affordable homes in this country, how concerned are you that the fed will not be able to contain inflation? >> well, you're right that housing inflation is a significant part of the cpi. we also look at more prominently at personal consumption, pce, which is a different measure and it's something less than that. and unlike these temporary supply site constraints we see, housing inflation is much more of an indicator of the tightness of the economy rather than supply side problems it's something we watch

carefully along with wages, frankly. and it is a major contributor to inflation, as i mentioned, higher interest rates do -- housing is very interest sensitive sector and higher interest rates, back to normal level, should act to cool off the housing market over time >> thank you the gentleman from north carolina, mr. mchenry, was a ranking member of the committee is now recognized for five minutes. >> well, thank you, madame chair. chairman powell, thank you for your leadership in tumultuous times. this is certainly interesting times internationally, challenged times internationally. everyone else on the open market committee it seems has opined about the march meeting. everyone whether it's a tweet or interview or anything else what are your thoughts going into the march meeting >> the march meeting okay here is how i'm thinking about the march meeting. i guess i would start, of

course, with the u.s. economy, which is very strong, the labor market extremely tight and inflation running well above target the way we think about our work is we develop working plans for making adjustments to monetary policy over the course of the coming months. and then we are flexible, as plans meet the real world. so, we're never on auto pilot at a time like this what we aim to do is lay out our principles with whatever clarity we have and proceed to implement those policies carefully and nimbly. so coming into this meeting, let's say before the ukraine invasion, committee was set to raise our policy rate. the first of what was to be a series of raises expected for this year. every meeting was live decisions would be based on incoming data and the evolving outlook. i expected we would make great progress on our plan to begin to shrink the balance sheet so the question now really is how the invasion of ukraine, the on going war, the response from

nations around the world, including sanctions may have changed that expectation and so it's too soon to say for sure, but for now i would say that we will proceed carefully along the lines of that plan the thing is the economic effects of these events are highly uncertain so far we have seen energy prices move up further and those increases will move through the economy and push up headline inflation and also they're going to weigh on spending we're seeing effects on other commodities and perhaps from declining risk sentiment weaker growth abroad. the thing is we can't know how large or persistent those effects will be. that simply depends on events to come so, this is where that leaves me i do think it will be appropriate to raise our target range for the federal funds rate at the march meeting in a couple of weeks and i'm inclined to support 25 basis point rate hike we're also going to write down our new summary of projection,

individual forecasts to show each participant's views of the path forward in the economy and with rates i also expect that at this meeting we'll make good progress toward an agreement on a plan to shrink the balance sheet we will not finalize that plan at this meeting. we'll do that when we think the time is right at a coming meeting. the bottom line is that we will proceed, but we will proceed carefully as we learn more about the implications of the ukraine war or the economy we use our tools to support financial stability and macro economic stability we're going to avoid adding uncertainty to what is already an extraordinarily challenging and uncertain moment so that's how i would think about it >> very specific now, you mentioned 25 basis points from all the analysis about what the fed will do over the course of the next year, is 25 basis points the floor, the ceiling? is it the speed limit? is that the max you think the

fed could take on? how do you think of that >> here is how i think about that, we have an expectation, those of us on the committee have an expectation that inflation will peak and begin to come down this year. and to the extent inflation comes in higher or is more persistently high than that, then we would be prepared to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings. >> now, you mentioned the balance sheet plan for the balance sheet. and that is to come. but what i'm hearing clearly from you is that the fed is very interested in financial stability given what's happening and you're willing to make quick decisions on a question of liquidity, on question of market stability. those important works that you've focussed on as fed chair. and so, this is a -- it's actually substantial news for the house to be the first rather

than the senate to break news. so, thank you for your forthcoming -- well, being so forthright about your views on this and with that, madame chair, i yield back >> thank you the gentleman from california, is recognized for five minutes >> thank you very much, madame chair. and thank you for ranking member for holding this hearing chairman powell, thank you very much for being with us here once again. as we look at the unprovoked criminal russian invasion of ukraine, one of the most notable national security responses has been the president's recent announcement cut off much of the russian financial sector from s.w.i.f.t. financial services. our eu partners have also joined us and excluded seven russian banks from s.w.i.f.t chairman powell, what practical effect would this have on russia, its economy, its financial sector and its people?

>> so, thank you i should point out that the fed does not impose sanctions on other countries. we in this process of developing sanctions, we are not a principle. that's really for the administration, particularly the treasury department. we provide technical background support and things like that but i think questions about sanctions and their effects generally would be more for the administration and the treasury secretary. i think you can see -- i will just add, though that the effects of the sanctions so far appear for now to have been significant. >> yeah. i mean, we saw what happened to their ruble. we saw what happened to their market the market is still closed is a way around it for them crypto currency? could you talk a little bit about that i know it's a little bit of our bailiwick, but as you said, these are interesting moments in time we haven't had to face this

since really world war ii, and even all the comments that you made about inflation and watching the market, so much of it is tied obviously to what the russians are doing with respect to their unwarranted and criminal act there in ukraine. >> so, i don't have any information on the extent to which that is happening, but that is something you read about and hear about and i just think it underscores the need really for congressional action on digital finance including crypto currencies we have this burgeoning industry, which has many, many parts to it. and there isn't in place the kind of regulatory framework that needs to be there it was probably no different with railroads or telephones or the internet and ultimately what's needed is a framework and in particular ways to prevent these unbacked crypto currencies from serving as a vehicle for terrorist

financing and just general criminal behavior, tax avoidance and the like so, i think that's what i would say there. i don't really know the extent to which it's happening, although you do hear that and read it in the paper. >> seems like since we did go down this road, could you comment a little bit about the central bank digital currency? it seems like that would be something that would be helpful in situations like this. >> yes so we issued a paper after much thought and many drafts. we issued a paper -- was it late last year? i guess it was late last year, seeking public comment on the costs and benefits of a potential central bank digital currency issued by the federal reserve here in the united states digital dollars. and we await -- i think we gave an extended comment period and we gave and we very much look forward to reading those comments this will be something that we invest a fair amount of time and expertise and hiring people and things like that to try to get

it right but also to understand whether the benefits actually outweigh the costs, which i think is an unanswered question both here and around the world nonetheless, it's our obligation to move vigorously to understand the answers to that question so that we can deploy a central bank digital currency, if it's appropriate. so, would it -- you know, in principle, it depends on why people are using unbacked digital currencies if they're using them to evade, you know, visibility and evade the law, then for us just to have a law-abiding cbcd won't change that. they'll still be able to use those currencies for that matter the existing digital currencies that again are not backed are really vehicles for speculation. they're not used in payments they're not a store of value they're speculation like gold. that's what they're used for where as, you know, potentially u.s. cbcd would have a wider view i do want to stress we have not

decided to do it, but we do understand our obligation is to really get to the bottom and understand both the technical and the policy issues that need to be answered >> thank you and i know my time is about up i would just say from your lips to god's ears, i hope that the inflation does peak this year and does come down because people are hurting and thank you very much again for your steady stewardship. >> thank you very much. >> thank you >> the gentlewoman from missouri, mrs. wagner is now recognized for five minutes. >> thank you, madame chairwoman. welcome, chair powell. it's good to see you in the chair. we appreciate your time and service. chair powell, since the last fomc meeting in january, the global economy has become marketedly more complex. russia's unprovoked and unwarranted invasion of ukraine has led to a very steep increase in the price of energy as of this morning, when i checked, a barrel of crude oil

was priced at $112 per barrel. and, you know, this steep increase in the price of energy, risks pushing u.s. inflation potentially even higher. how does -- and you've touched on it a little bit -- but how does the war in ukraine affect your thinking as you prepare for the next fomc meeting? >> so, i think the first thing, again, to say is that the ultimate economic effects of the war and all of the sanctions and events yet to come are just very highly uncertain and we need to understand that and so as i mentioned, i think it's appropriate for us to move ahead. inflation is high. the committee is too high. the committee is committed to using our tools to bring it back down to levels of price

stability, which is to say 2% inflation. so, but i would also say that given the current situation, we need to move carefully, and we will we will be nimble. we'll be looking at the situation as it evolves. again, we will use our tools to add to financial stability, not to -- >> at this point in time you don't think it significantly alters your expectations for the rate increases that you've discussed this year? >> i don't think that's knowable yet. so we've run -- what we do -- what we like to do is run alternative scenarios and have done some of that, as you would expect it's easy to find cases where it would affect, but we don't know that yet we honestly don't. we'll see. >> thank you chair powell, could you explain the role of the federal reserve in implementing u.s. sanctions on russia? are you working -- how you're working with ofac, how this actually is implemented? >> right so sanctions are really designed by the administration.

they're a part of what the elected government does. we provide technical support we implement those sanctions, or we make sure that the banks obey them, that we supervise and regulate that's one thing that we do. we also consult -- we have knowledge about financial markets and financial institutions, so we're providing technical support, but we're not the decision makers on those things and honestly, these are decisions that are made at the level of the government, not at the elected government, not at the level of the fed. >> i know things are happening quickly and in realtime here, but what actions has the fed taken to date since the invasion of ukraine >> well, i would say first of all since, you know, late last year we've been on very high alert. >> uh-huh. >> for cyberattacks. we haven't really seen any notable incidents about that yet. we consult -- we're making sure the banks we regular late and

supervise are also on high alert. we communicate with the reserve banks where there's a lot of expertise in these years and other areas of the government. that's one thing we've done. we're, as i mentioned, we are in very close contact with the treasury department, as you would expect, between every central bank and every finance ministryaround the world but again, we're not the ones who design the sanctions. >> cyber security is certainly -- this committee and especially the fed is a top priority glad that you're watching it closely. chair powell, does our u.s. financial system have the financial capital and liquidity to handle any economic fallout from this war? what kind of data will we be seeing >> i mean, the evidence to me strongly suggests that the answer to that is yes. we just went through a rather enormous shock with the pandemic and the near closure of the global economy

and u.s. banks capital levels are at multiple decade highs liquidity level is the same. it's hard for me to look at that and say that a lack of capital is a threat at this point. there are certainly issues again, cyber, for private financial institutions is a huge issue and one that they spend a great deal of time on as do we. >> in 2015 the obama administration blocked the development of the keystone xl pipeline, decision reversed by the trump administration and president biden cancelled the permits. again, depriving the u.s. of over 800,000 barrels of oil a day. wouldn't expanding the supply of oil by 800,000 barrels a day reduce energy inflation and lower prices at the gas pump >> we don't -- we're not responsible for energy policy. that's a matter for congress and the administration of course, the laws of supply and demand do work >> laws of supply and demand do work i have used my time and i yield back

>> gentleman from guam, mr. san nicholas is now recognized for five minutes >> thank you so much, madame chair. good morning, chair powell and i would like to first recognize one of my senators all the way from guam, thank you so much for making time to join us today, senator mr. chairman, over the course of the uptick of inflation in the last year, you testified before the committee on multiple occasions that the fed believed that the inflation -- the country was experiencing was transitory and since that time, specially today, there's a seemingly change in that tenor could you elaborate more on that >> sure, i would be glad to. i think very widely among macro economists and other central banks around the world we looked akin to an energy shock. and supply side shock. and the textbook on monetary policy would have you look through that because the supply

shock comes and goes by the time monetary policy is having its effect, which happens with long and variable lag, we think, the supply shock is already gone so we looked at it that way. and you know, i think we expected to get relief, particularly going into last fall, i would say. we expected when schools reopened, vaccinations, you know, raised -- kids back in school, we expected supply of labor to come in, that kind of thing. and it didn't happen so, but it didn't happen because the supply side constraints didn't ease. they didn't ease so it's not like as a practical matter, what was wrong was not the theory it was just in reality the supply side constraints have been much, much more durable and persistent than we had expected. so we knew that we could be wrong. i think we always thought -- i always thought we could pivot pretty quickly and catch up. and we did pivot when we started to pivot the middle of last year and pivoted hard at the end of the year

but in the meantime, the economy was really healing incredibly quickly over the second half of last year, you know, record job growth and record decline in unemployment, record tightening in the labor market. so, you know, we know that what our job is now, which is to move away from these highly accommodative settings >> there's chatter, mr. chairman, public chatter that the intensity of inflation that we're dealing with today is a reflection of the fed not taking policy action soon enough, not taking enough policy action and there's chatter, public chatter, that causes the fed's credibility to come into question as to whether or not it is acting responsibly and appropriately with the data sets that are coming in and i bring this up, mr. chairman, because we have a duty to the american people to be able to raise these questions as pointed as they are and to give

individuals such as yourself an opportunity to really speak to the credibility question that's really out there in the community. if you could elaborate further on that. >> sure. it's for others to judge, many of the things you mentioned. and we understand that but, so, we starting in december at our december meeting began talking about significantly more rate increases the market took us very much at our word and as this year has gone on, the market has -- market participants do appear to be reacting, you know, what i would call as appropriately to our assessment, our on going assessment and reassessment of what's appropriate and you know, i'll just assure you and everyone, that we are committed to achieving price stability. we will use our tools to achieve price stability. really that is an essential bedrock element of everything else we want to achieve in the economy, including a strong labor market

>> when we face a financial crisis in 2008, a lot of lessons were learned about the fed to be more responsive about the liquidity traps that could take us by surprise given the circumstances we're dealing with today and the frustrations that the american people are facing, can you share with us any lessons that the fed has learned with respect to its responsiveness to the inflation that we have been dealing with over the past 12 to 18 months and the intense inflation that we're dealing with today. >> so the inflation that we're experiencing is just nothing like anything we have experienced in decades it's higher, of course, much higher than anything we have seen since i was much younger. but not only that, it's different. you know, it's coming from the goods sector the goods sector has been a source of disinflation for a quarter of a century because so many goods, so many manufactured goods have been -- >> but just specifically, reclaiming my time, what specific lessons has the fed learned from the outcome that we're dealing with today

>> well, i mean, we're still living through it. so the main focus we have is not on doing retrospective, it's on conducting policy appropriately to return us to price stability while also sustaining expansion. >> gentleman's time has expired. the gentleman from georgia, mr. laudermilk is now recognized for five minutes. >> thank you, madame chair chairman powell, thank you for being here congratulations on your nomination to continue your job for a second term. i think it's well deserved before i get to my questions, though, i want to hold up something here this is a ukrainian dollar i kept some of these when i was in ukraine several years ago doing some ministry work and i think it's interesting to think that what happens in the next few days may determine whether this is another defunct piece of currency and the nation returns to a ruble or will this

maintain some of its value but as you look at it, you can see it's a fraction, physically a fraction of the size of the u.s. dollar. it takes about 30 of these to match a u.s. dollar, but when you look at values, our dollar has decreased in value as you have mentioned due to inflation. now, a year ago when you testified before this committee, i asked what your outlook was for the committee and you said you expected economic growth to be strong for the rest of 2021 but, at that time i warned that the $2 trillion stimulus bill that was making its way through congress at that time was unnecessary and far too big given the economy was already recovering lo and behold these predictions came true. in your opening statement, you mentioned that you didn't expect inflation to continue at the rate it is right now, but i also recall throughout 2021 we heard that inflation was slight, it was going to be temporary, but i

also understand that that prediction probably didn't include the actions and the roles that congress had, as you had said now, according to a report from the federal reserve bank of san francisco, because the american rescue plan was so extremely large and was passed when the economy was already recovering, this was a significant contributing factor to inflation. do you agree with that report from san francisco's bank, that our reckless spending is a contributing factor to our inflation? >> really i wouldn't like to comment on any particular law. but i'll say this, all of the things that we did after the pandemic were -- we turned our dials as hard as we could, so did you with the cares act and the economy did benefit from that we have the strongest economy in the world now. but, you know, part of that -- no doubt part of what we did and what congress did without naming

any particular laws is also part of the reason why inflation is high now >> so there are multiple contributing factors to that, being reckless spending, which devalues our dollar is one of those. and what we heard last night was that there is not going to be a change in thedirection this congress is going or the white not be a change in direction this congress or white house is going. it sounds like we will make the same mistakes of 2021. you mentioned increasing 25 base points and mentioned it may be necessary to go higher i understand that. do you still think that inflation will be temporary -- and i believe that you said it would be short-lived going forward because of resolving our supply chain issues. since there other contributing factors to that, are you anticipating that congress or

the administration will undo some of the failed policies such as the spending policies and the suppressing of america's energy supply which has been a contributing factor. let me rephrase that if congress and the white house does not change the policies of 2021 and continues down that same path, do you still believe that inflation will stabilize, price stabilization will come this year? >> first, we have had this expectation, as you all know, for more than a year, and it hasn't actually come true. we are humble about the fact we can't call with any confidence the turn it does seem this year we will be withdrawing policy accommodation. a lot of the fiscal policy spending has happened now, so the impetus to growth will be declining and in fact negative

for fiscal policy as it stands now. those are things in the natural improvement of supply chains and labor supply those are things we are looking to for relief on inflation very difficult to say when that will happen. our job is to achieve price stability. >> i see i am running out of time i have several other questions, but i will submit those for the record >> the gentleman from illinois is now recognized for five minutes. >> thank you madam chair and thank you to chair pro tem powell pore joining us it has been a challenging year prices rising in the supermarket have caused distress to neighbors like mine in chicagoland. improved in labor are real, but not nearly enough.

constituents saw immigrants like my neighbors are hard hit. we can't afford that again chair powell, you have said that inflation has been driven by bottlenecks in the supply chain. last night president biden high lated their role in concentration and price increases. i will note companies like kimberly clark have bragged about raising prices without competition. last night biden said lower your costs, not your wages. my constituents were glad to hear that. how will prices lower for diapers or chicken last time my neighbors lost

their jobs and couldn't find diapers or chicken so is that the idea? >> well, the idea is that right now the federal funds rate is still set close to zero. that is a very stimulative level. i think it's eight basis points today. we think it's appropriate we engage in a series of rate increases over the course of this year and let our balance sheet shrink what will happen over time is demand will moderate as interest rates get into the economy over time these annual price increases in everything, where prices are going up, will moderate as well. that is how it has always worked with interest rates. we don't do competition policy so i can't really comment on

that part of it. but i will say that that's how we think about inflation and how we use our tools to get inflation under control. >> changing gears, we discussed corporate concentration. last night the president issued an executive order on competition that encouraged the fed and other regulators to increase scrutiny of bank mergers. it has been a long time since regulators blocked a bank merger, even like gsib in 2020 chairman powell, is it important to issue a moratorium on impe impending mergers while the fed updates for review >> i think we have a statute that congress passed that gives us the rules for evaluating potential mergers and

acquisitions by banks. i think we have a widely developed framework for that work and we are toing implement that any changes that would come would come either through legislation or new personnel at the fed, neither of which we have right now #. >>. >> /* as we learned from wells fargo, we see firsthand how banks implement or ignore controls and they can identify problems as they develop voices in our regulatory system would improve what we have and the voices to be heard chairman powell, would it be good to add to the advisory

councils why or why not >> interesting question. we have a diversity council. i don't know we have one, outside council, that vices on bank supervision, per se, but the advisory councils that we do have, we have representation from labor and also from people who live and work and represent the interests of low to moderate income communities >> thank you i would appreciate if you would consider that and i yield back >> the gentleman from tennessee is now recognized for five minutes. >> thank you madam chair and thank you chair powell for attending this morning a lot of times we look for historical references for a current event.

a number of pundits when they look at inflation today they reference back historically to the late '70s and early '80s, is that a proper historical reference for inflation? >> that's a proper historical reference for what we are trying not to replicate all of us have looked carefully at the history of post world war ii inflation and business cycles and all of that thing. one of the things that's difference now is that central banks, including the fed, that banks squarely take the responsibility for inflation that was not the school of thought back then. the school of thought was that it was too hard and congress

should to it now there is a target and transparency so they can be held accountable for it we are not waiting we are using our tools now that's really different than it was in the 1970s also, inflation expectations have been anchored for a long time they weren't then. they were allowed to become unanchored without much of a response that will not happen in today's world. >> a few weeks ago when the cpi number came out i was on the way to a meeting and one of my constituents and i were talking about the new cpi number he said i don't care what the number is, i know i am paying 50% more in gas than 12 to 18 months, 20 to 25% more in grocery prices than a year ago with the price of a new and used

card if you were a me, a member of congress, what would you tell your constituents about the rising costs to just live today? >> inflation is too high we understand that we are working on it, but we will get it back under control we are seeing it everywhere in the world. we are seeing it more in the united states because our economy is stronger, but we are seeing it everywhere in the world. >> let me follow up on a few questions my colleagues asked you about. you were asked about the next meeting and your plans for the next fed meeting i think you eloquently laid it out much you also talked about the situation that developed in russia and ukraine my inference to your answer was if russia had not invaded you a crane, that the fed would be more aggressive with the balance sheet and rate hike.