>> liz young, we appreciate a lot of, you know, the fed, oil, ukraine. it's all part of evaluations let's get a final check on markets. we're looking at oil that doesn't hurt the performance in the dow now up 185 points. big gains yesterday when it was all said and done. make sure you join us tomorrow. >> rumors of a deal with iran that could allow iran to export more oil. >> there grow. >> watching the market. >> there you go. >> it's involving iranians make sure you join us tomorrow sq"squawk on the street" is next good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer david faber has an exclusive with jane fraser later on this hour premarket trying to hold yesterday's rally as fed chair powell heads to the senate for

day two. another round of talks in progress between russia and ukraine. meanwhile, as you heard, oil is backing off this morning's high of $116. the highest since '08. our road map begins with fed chair powell futures look to extend yesterday's rally. city shares under pressure devastate will sit down with fraser pitching her growth strategy to transform that company. and snowflake shares tumbling we'll talk to jim about it we'll begin with market volatility after the rally yesterday, jim, it started the moment powell endorsed 25. we never looked back. >> right a lot of things that powell did wrong when he first came in, he talked about automatic lock step he just said we're not going to be on auto pilot i thought it was the most important. what that says, okay, i just took it out. not going to say anything that makes it so you're going to be thinking we'll have it a bunch of people came on the

air and said that. it gave a lot of analysts cover. to come out today. i mean, i've never had so many positive notes in some weird moment at beginning of march than this morning. everybody is out saying, listen, you center to buy them so the futures even turn on the analyst's notes. >> yeah. siti upgrading u.s specifically tech. >> i thought it was a great upgrade. they basically said the multiple shrinkage is now over. we have the fed doing what it's going to do. things have come down. we were talking about snowflake. sofi it was a significant note. it turned around a lot of semis. >> and, of course, talking about oil a moment ago there is some speculation that an iranian deal could happen within, say, 72 hours. >> well, that's an interesting call i've got rick muncrief, the dean of the group the ceo and they're talking about how, look, we're making so much money we have to figure out whether we discipline david, i know you are at a place where they have an international

perspective. maybe jane fraser is say we'll talk about what is going on in the world. she has got the most powerful network, say, of all the banks. >> yeah. citi does. we'll talk about russian exposure it's fairly minimal in terms of the assets .3% not the main focus here at citi headquarters when we get started with jane later in the hour. when it comes to banks, actually, i think it's the european banks i would assume you've, hearing the same that people are a bit concerned about. for any number of reasons. obviously even the swiss banks going after the oligarch, i don't know what their assets look like. they have to be coming down fast they owe the money to somebody. >> yeah. it's a used yacht problem. all though i'm told in the used yacht market, believe it or not, they held up i wish i was being facetious. >> france this morning seized the yacht of the rauz neft

oligarch a lot were parked in the mall dives and they don't have an extradition treaty. >> mall dives are really caught. they know russia at any moment could invade them. they've been holding off all the banks in europe are struggling and they sell our banks. that turned out to be a terrible call the banks over there are -- were more insulated from europe than anything i think it's interesting 10-year. but not credit sweeney -- historically haven't been great. i have to tell you, carl, what the hell are we doing selling some of the broejer age stocks here because what is going on over there that's the etf the big firms insist on doing etfs they need to make money. it's not a con game. we should expose it for what it

is people putting together baskets to make a little extra money. >> yeah. we'll talk to david in a second here about city, which gets negative calls today out of the atlantic on expenses, on the prolonged outlook for better returns, on russian exposure, on selling mexico. >> yeah. david, the notes today make it you feel the tangible book value of city is -- i'm not saying overstated that would be wrong maybe too aggressive.i is -- i' overstated that would be wrong maybe too aggressive what can she do to close the gap? >> well, whatever it is that jane fraser is going to do is going to take time that was, i think, clear part of the presentation yesterday it ended up being a virtual investor day it was originally scheduled to be in person but, jim, you know, that may have been what was something of a disappointment. the three to five-year time frame for getting to 11 or 12%

rotc at the same time during the course of the day yesterday, as you know, the stock did start to recover as each of the managers made presentations in their particular areas so perhaps a bit more confidence but we're going to have an opportunity to talk through a lot of this. to your point, you know, maybe you don't think book value is quite where it is. right now a lot of analysts have it at 75% of book value. but it's been a trading below book for a long time that's one of the challenges here to either get the investors who have been there for a long time and had enough to exit and trying to build a new investor base based on the promises made yesterday. >> and seen major buy back, david. i have to tell you three to five years, it reminds me, carl, of the morgan stanley downgrade of intel to sell. it took years they have to try to catch up. multiple years doesn't hit, you know, i tonight want multiple

year i want multiple quarters and then i'm okay. even then american eagle which is owned by travel trust, they're talking about multiple quarter and i don't have time for that i don't. i don't. >> because there are too many other better options >> yeah. we're going to wane super bowl give us five years no we don't have time for multiple years. we're in the here and now, david >>well, is that just control do you mean we don't have time, jim? we're running out of anytime that way or just in general investors have no patience >> investors have no patience. >> right. >> we don't have any patience for citi which continues to make miscues, david, over and over. >> yeah. >> i mean, i didn't understand that at all. >>well, listen, those were confronted yesterday in a very significant way, i think i thought it was an interesting part of the investors day.

again, we'll have that opportunity to talk it over with jane when it comes to lack of patience, jim, i'm kind of curious. so i know we're going to talk about snowflake in a little bit. these high multiple stocks people don't seem to have a lot of patience for any longer either even with only 25 basis points promised now by the fed chair very soon. but the prospect of -- i guess, i don't know how many rate hikes will come during the rest of the year >>well, we're seeing a buy forindication. i had todd mckinnon on last night. one, two, three, four, five, six, seven, eight, nine price target lowerings why? they're losing more money than we thought snowflake is harder because they have a different type of accounting you can't really pin down snowflake as doing badly they did have a january that wasn't that good i would tell you, and, carl, i have known frank for many years.

snowflake is fine. the actual progression of networks and the net retention over 170%, which is extraordinary, it sells 25 times sales which is high. it did sell at 100 times sales this is a real company with real growth perhaps the best he did guide down to 68% growth. i think that's going to be underpromised. >> yeah. it gets us back to the method of guidance in this particular take that is what is the upside to overpromising right now? >> zero. there's no upside. >> yeah. >> now box underpromised he overdelivered and box is flying yeah, i urge people to listen to frank and what he says he's got a business model that is, by the way, kind of rent the cloud. so unlike mark bennyhoff you give $100 million. he has to deal with customers that are -- they come and go but he hasn't really lost

anybody. i think snowflake being for sale is an opportunity. this is frank we're talking about. >> i understand. i understand i know you liked it yesterday you liked it higher. and saying something is down from 100 times sales to 25 is not necessarily a great endor endorsement, jim it could easily go to 10 times sales. why not? >> okay. i'll play that game. david, earlier i said that jane fraser, i was not going to give her time because i think there are structural issues. i'm willing to give frank time he's paid off. you're right my travel trust is not on it i feared it was selling too high a multiple not anymore. i'm trying to figure out if it belongs in a travel trust. carl, when you see some of the stocks in a discount and they have margins getting better, you know, look, snowflake -- let's deal with the reality here what did they do over and over and over again the quarters have been better and better and better. they were negative 105% on the mar jichbs three years ago

then negative 38 two years ago and negative 3 last year and positive 5 in the fourth quarter. they have an earnings break out coming people don't see it. why don't they see because they are impatient >> would you say the same thing about splung, which, by the way -- >> oh, gary steele. >> -- crushes. >> okay. gary steele has been on "mad money" a dozen times he took it from a second rate e-mail security to being one of the great cybersecurity companies. he buys splung a great quarter and gary steele is great operator, david, sometimes you have to -- this is why i did it sometimes so you to say that the ceos deliver it's intent we feel that way by the way, pat gelsinger, he was right after the uk -- ukrainian ambassador. >> give him your nice guy. i know he gets the nice guy. >> extremely --

>> he got a nice applause. >> yeah. >> $100 billion. >> yeah. how about $200 billion i mean, it doesn't matter. let's knock off the criticism. knock it off you know, don't say it, if you don't have anything good to say. >> yeah. >> feeling better about intel, you know. >> i used to be an intel alholic. >> we have the apple event coming up on the 8th who knows what they'll say they go further vertical on semis. >> i think there was a note today saying that cover vow may now make the quarter i think about that i don't i like it and i don't like it. they both are -- >> they are both cheap. >> cheap. >> we'll take a break here there's a lot to get to, obviously. get to best buy and do more on

what franc told jim last night on snow on "mad money. oil has turned on the speculative reports about a potential iranian deal and we have powell coming up in about 45 minutes don't go away! >> the market is a little foul now. but, you know, a quarter is a single mile marker in the marathon let's not get too excited here we're in the beginning so all the opportunity and transformation in the economy and, youno t kw,his is going to be a blip on the radar, you know, pretty soon.

shares of best buy are up. revenues and comes were missed they were hurt by supply chain and omicron issues the company announces the dip hike, 26%, jim. >> the ceo there is doing some amazing things one of the things i like i know short term $16.3 billion -- forget that. what matters here is a tremendous buyback $5 million that's a huge percentage of the company. they really dividend hike of 27%. from goldman today really look at the dividend hikes now we know the fed is up to. i think that she has this thing on a long-term growth path that says bye you just buy it. because very few people have a

caliber 2024 outlook she has it this stock should be bought. i think she's in there buying it you should be in there buying it it's very impressive long-term view. >> why are we seeing so much retail weakness? again in specialty a aeo and b.j. opened down big time. >> aeo is uniquely disappointing to me. they used vietnam in vietnam and covid. they couldn't get stuff it in time for christmas they ended up flying it in and cost them $80 million. they're spending a fortune on the infrastructure project i don't think is necessarily paying off they have too much inventory they said the first half will be miserable. all that put together says what the hell did i buy it for for my trust? the answer is not the dividend because i thought they put it together it was plain out disappointing their arrogance on the call, of not acknowledging this, i

thought it was shameful. who do they think they are >> do you think we're going have real consumer weakness do you think all those that inventory will be marked down? >> i think that -- no. i mean, look if you were knew what you were doing like costco, like the cfo you knew what you were doing, you ordered correctly and you got it if you didn't know what you were doing and sourced from vietnam, know gary freedman is having problems coursing from vietnam they didn't get covid right. it was on a boat and couldn't put it on the boat you put it on the plane. you put it on the plane it costs too much you miss the season and stuck with inventory even though aeri is doing well. i happen to like their stuff i have a big box in my closet waiting to give to my daughter at some point. this was one of the calls it was other worldly. when you go out there and you say, listen, i'm going miss the first half and you kind of congratulate yourself what the heck are you thinking this was -- i'm putting this in

the, you know, look this guy has the wall of shame. they blow up in the second half of this year wall of shame. that's usually for things like at&t >> yeah. >> i wish david were in this block. i would have to say -- >> he would be back. >> yeah. we're saving a lot of notes. >> yeah. >> jonas has 43 notes. who is he? edgar allen poe he has a poem every night. >> some are triplets of fire side chats. >> right-hand turn they? >> yeah. did you know their compliance blocked me isn't that something >> we'll get to it. >> it has to be virtual. i don't know i felt like lighting it on fire. putting gasoline on the fire. >> we'll get david back this morning. he has an exclusive, as we say, with citi's jane fraser and lor

loretta mester, and darren woods. take a look at the premarket as we brace for powell day two in a moment more "squawk on the street" after a break. stuff. we love stuff. and there's some really great stuff out there. but i doubt that any of us will look back on our lives and think, "i wish i'd bought an even thinner tv, found a lighter light beer, or had an even smarter smartphone." do you think any of us will look back on our lives and regret the things we didn't buy? or the places we didn't go? ♪ i'd go the whole wide world ♪ ♪ i'd go the whole wide world ♪

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time for "mad dash" as we count down to the opening bell kroger is opening at a 52-week high. >> people thought the ceo was too nice he was too at home every one of those is working. everything he did is paying off! he turned out to be a supermarket that uniquely is used to cook at home it's an exciting place to go i have to hand it to him the kroger number, 91 versus 72 compare that to the b.j.'s

number and then the two-year stack of digital 113% kroger is just cooking with propane! and i really want to congratulate mcmullen. the first time he made it out to me in the division, i said how nice guy usually when i say nice guy it's usually bad. >> yes. >> no. nice guy good. nice guy finished first story. it's a supermarket chain unlike albertson. how about you offer what he's doing! cook at home got staying power. >> why is this working when the whole environment we're in is people going out, covid, google searches going to post pandemic lows. >>well, i think that some of it is that he's made it so that you feel like it's your local kroger they put some local stuff in cincinnati-based but folk si i just think what rodney is doing is made it a more exciting place to go. imagine, by the way, if the redding terminal in philadelphia you say, wow, you know, here is

a steak sandwich it worked. i thought it was pie in the sky! not unlike target when he said, listen, we'll have five different kinds of target. by the way, brian cornell, another nice guy what is it with the nice guys finishing first, carl? what is this about >> it's sort of collides with the domino's story this week, as well, right? you exit the pandemic. you want to bring some of that with you domino's hasn't been able to. >> yeah. i've been speaking to the ceo of dominos. i think i have to have the pizza no cheese with banana peppers tonight. the quarter has to get better. >> we'll watch kroger, of course, and some of the other consumer names as we get the opening bell followed by david's exclusive with citi and jane fraser. we're back in a moment

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i should do a marketing campaign. clover does that. you're like a mind reader. secure payments, the tools you need, people who can help, we do that. we've never on auto pilot,

obviously. at a time like this, we need to lay out our principles and whatever clarity we have and proceed to implement them as policies carefully and nimbly. i think it will be appropriate to raise our target ranch for the federal funds rate at the march meeting in a couple of weeks. i'm inclined to support a 25 basis point. >> jerome powell talking about 25 in march. he would be inclined to propose. the cpi will be key. >> absolutely. and wages. can i say when powell speaks, people should start thinking this man is far better we used to have greenspan he would speak and try to befuddle us he uses great clarity and makes you feel like it's under control. he tries to answer any question about transitory

he really -- he does seem like a -- why he does that is because if you get into his cross hairs and saying he didn't get it right, he said, well, why can't i still get it right and all the people say he's behind the curve he was not behind the curve. he was very thoughtful about covid. very thoughtful about the world. including russia. >> yeah. that's exactly what he said. we knew we could be wrong, and i always thought we could pivot pretty quickly and catch up. >> right. >> in the meantime, the economy healed quickly we know what our job is now, which is to move away from the highly accommodative settings. he's like we gave it a chance. all right. it didn't work so we move on. >> right i mean, he does something that most -- he's not a politician. he basically said, look, i have to run he's not afraid of youtube where you endlessly do a tiktok about i gong it wrong. no i just want to -- because what he said is here's what we did. here's why we have to pivot.

move on with your life we have it under control i think a lot of people come on our show and want to talk about it i have one word for them stop stop he told you what is going to happen and now go buy stocks. [ opening bell ] the big board today is icl group. a payrolls company celebrating -- [ opening bell ] >> okay. look, i want to go back and talk about why i like splunk. splunk is cybersecurity. splunk is also a company that give use a great dash board analysis how you're doing. my fear is that -- okay. we still don't know why doug laughed. when you get a guy like steele in there i'm trying to get him on the show tonight maybe we can get him on. but he did a prove point he proved people wrong over and

over going that's what he'll do at splunk splunk is a buy. i disliked splunk for a long time. >> yeah. we'll get a little bit of a move in that direction beginning today given the quarter. interesting we got a lot of travel on the move mgm with a new buy back with some extensions of licenses and mccow. airlines got an upgrade at southwest today. >> i thought that was gutsy. we know the planes -- they run on jet fuel, for heaven's sake i don't want to touch those. i don't want to touch the airlines why do you have to go there? i saw that upgrade, i said why can you sit on your hands. sit on your hands. why do you have to say anything? the guy is on an intelligent y yule vacation. >> because you think oil has a more prolonged head wind >> maybe he knows about an iranian deal i don't think he has that kind, frankly. >> it's interesting city put on an oil short of december crude

back on the 7th of february. they unwind it the ukraine thing made it too difficult to keep up there's a better chance of short oil in the coming months. >> we're seeing some towels being thrown i happened to think when i hear what rick muncrief says tomorrow the club call at 12:30, if he says, look, we're turning on the jets everybody is drilling. take advantage of it and there's a chance of it going back under, let's say 100. i'm not banking on it, though. and i'm not banking on iran to be able to just, you know, just kind of turn on the jets either. i think people have to recognize that we don't know -- brian sullivan did a great thing tracking eight tankers of oil. we don't know where it's going one thing we know is we need it. >> as we get into summer driving season by the way, the readout of the phone call this morning between putin and macron said there's nothing encouraging in what putin had to say. >> yeah. well, i mean, i still go back to

who putin thought he was going to liberate ukraine from drug addicts and nazis and, you know, if you want drug addicts, thank you, thank you oxy codeine. we have a problem with drug addicts. nazi and zelenskyy with three uncles murdered in the holocaust. that doesn't work for me. >> energy is the only sector down today. >> there you go. people are anxious to take profits. shell chevron stock to mike worth. can buy up to 25% of the company. maybe you know that this move is not just iran. this is a move that says that putin might go i don't see -- the president for life is his term -- it would be different. if his term were suspended, it would not be good for him. >> speaking of shells shares of

the company. how about the deal of john foley of peloton made to sell $50,000 million to the dell-becomed office. >> you never sell the dell then you're selling to a great michael dell second, you never sell when you have barry mccarthy coming in. i wonder whether john foley doesn't owe some money i don't know we should ask john i happen to like john very much and you know why he's a nice guy! [ laughter ] >> you're using that with a pattern today. >> i like foley. i had dinner with foley he basically said, you know, public enemy number one then he added he's joking. >> right [ laughter ] >> umm, we did get some affirmation of guidance out of honeywell today. >> yeah. my travel trust owns it forever. i had spent some time with dave cody, recently he gave me tremendous comfort

for darius we're talking about darius if you want industrial that can do it better and the airlines can fill with new planes and has a lot of good businesses and he's got a great buy back. he has tremendous fire power my trust owns honeywell. has been buying it here but people say, well, jim, you bought it higher and lower i bought it all over the place i have faith in darius i have nin steele. i like mcmullen at kroger. we're seeing ceos who know how to be in control i know people want to sell snowflake. people are burying slootman. you bury him at your own risk. >> yeah. we're seeing snowflake down at the open on an index level, jim, 44.05 is going to take us back to the 20th of the february. >> a lot of my smartest guys say this is where we peak and start going down we can't -- i don't know

i think we're uneven i think we're hostage to events. i think that we're no longer at the bottom of the dips that's completely failed we still can be in the sell some but i'm urging people to not sell oil because you sell oil, what you're betting is we've made a deal with iran you can have nuclear power we'll take your oil. if biden does that, that's not good for biden i think that's a bad trade-off for biden. >> he's under pressure to block russian oil imports and retail gas will go to $4. >> people are asking why did it happen we filled the refineries to handle heavy crude coming from canada so we blocked keystone we have the wrong refineries we're moving our light crude to europe and other places because we don't have that refinery capacity we're taking russian and other bad crude and -- it's a mismatched cause by the oil

refineries people stop me, jim, is it true we're taking russian oil we did take 400,000 barrel days in december. >> right not a lot given total consumption. >> yeah. saying it's fungible where it comes from we build refineries to handle canadian crude then we didn't build the pipeline to do it. it's kind of like in poltergeist where they move the headstones but didn't move the bodies. >> yeah. right. it reminds me of what germany said today about their onat gas gone 2x. look at the spread between two years in europe and here since early 2020. >> predicted by the man who is building tuleran we do not have enough build out. we can ship up to 12 million it's a unit we have to sell to

europe a lot of us are committed to korea, to china. we can't help them other than sending our natural gas. we don't have enough space. >> doesn't it set up a scenario where our central bank has clearances to hike and the ecb does not >> yes and that will build in. >> yeah. the 12 billion esf we also have enough natural gas to light up the country. the reason we're sending -- we sent a lot of russian crude to boston we can't get the -- because it's been blocked by the environmentalists. i'm not saying good or bad if you want to the know why russian crude is here because we don't have the pipelines we have so much natural gas. mike worth has so much natural gas and wants to sell us to take care of our heats needs. >> yeah. take a look at losers this morning. defense, once again. >> yeah. >> and a lot of energy-related names. slb, oxy is in there looking at the tape, you would think the market is optimistic

about near-term resolutions. >> it does we did not hear biden talk about arming the you ukraine with our classic missiles we have, including the javelin. tanks are no longer invincible it shows you when you have a -- not unlike in august of 1990 when iraq invaded kuwait on day three of that invasion, you had oil starting to come down. >> you think it's related to -- the way in which the convoy is stalled north of kyiv. it's muddy. >> right. >> they don't have great tires they have to take the roads which limits a lot of -- >> yeah. the rainy season is supposed to be in the fall. >> yeah. tyutin got that wrong, too he got the weather wrong. >> yeah. >> he needs al roker there

you know, he needed a weatherman to know which way the wind blows. he got it wrong. i think that everything putin has done so far is wrong and, by the way, when you hit civilian hospitals we have facebook the war is not won by facebook that's a mistake when switzerland, which is historically rogue -- switzerland -- >> yeah. >> but they had no problem with nazis. and they were bank accounts. not russians. >> no. and more companies pulling out today. msci, stocks, deutsche, london stock exchange, and others it takes us to citi this morning. as we said, david is at citi headquarters with jane fraser. hey, david >> hey, carl that's right not too far from you guys at the new york stock exchange but happy to be here at citi's headq headquarters nice to see people walking around in the background, as well

jane, i've been in the building not that long ago and it was quite different. i'm sure nice for you, as well thank you for having us here. >> thank you so much yes, it is it's wonderful to feel the vibrancy and life back in new york city! >> yes a little bit will of life. yesterday, as well, you had an important day. it was an your investor day. you've been in the job for one year somewhat muted response from the analyst community to what you presented yesterday. a long road for improved roads patience required. are you happy with sort of the response you have gotten is that the message you want to spend in this is going to take time >> yes i'm very positive about the response we got. what we wanted to do yesterday was provide clarity to our investors, to the street about the vision we have for citi, the strategy, and our execution plan i think yesterday was successful in achieving that. we've been hard at work for a year it's a combination of the work

of a year and we have to provide that simply straightforwardly and we will now focus on executing >>well, executing is, obviously, going to be the key. but, you know, there are those who say you have three to five years to get to an 11 to 12% rotc it's longer than we might have thought. what do you say to those who question. >> the timeline, perhaps will be a bit too long and try the patience of some of your investors? >> well, i have said we had big years listening to our investors and so we have taken a big step back when we set the vision, we set the strategy for the firm to be a longer term vision and strategy and plan. we've taken a number of bold moves already in terms of the divestitures of a number of our historically iconic franchises to really focus citi around core strengths. we've taken strategic bets in businesses that we've got a high confidence and excitement about

around growth. but this is an organic growth strategy it will take time. i want to be completely transparent and realistic around what it's going to take. it is going to take a few years for us to achieve the medium term targets i absolutely aspire for higher returns and i'm confident we'll get back in the longer run right now i'm focussed on the job at hand. >> yeah. i want to talk about that. but to that idea of at least meeting the targets. i'm reading a note from goldman sachs. one of the key questions -- you got it yesterday, as well. during the presentation's q & a. the execution of the plan, is it different than four years ago or five years ago when citi largely missed most of the original targets set out at a 2017 investor day you know, again, the idea of why should we believe citi now when the company did not deliver on its previous targets yeah we have a very, very credible plan it's one that is grounded in a

simpler citi you can see that we focussed on five core businesses our vision goes back to core competitive strengths and capabilities, which is being a focussed around clients with global needs being there their trusted partner. we're the preimminent global bank in that respect i strongly believe in simplicity and focus. it's a more focussed bank today. it's going to be better connected. in addition to that, what we've been looked at is, as i said yesterday to our investors, we took a step back we looked at what are the different issues that have held us back. we're addressing them full on. >> yeah. you were somewhat unsparing in your criticism i mean, i think quoting you, somewhat disadvantaged business mix. we avoided making some hard decisions. we did not invest enough

how was that received amongst many of the people here who, perhaps, were here years ago during the course of the mistakes being made? >> i think there's important pieces we laid out the vision for what we're going to be it's a realistic one that takes into account what is on the elements of culture or operating model, investments that we haven't made enough of and laid out the vision of what the future is going to be. because i think that's the most important piece is acknowledging what held us back, what are we doing about them, and where are we heading to. >> what is an example of a hard decision that was avoided and you confronted head on and can show us an example. >> divestiture of consumer businesses in the retail banks, in asia, and mexico is an example of one orr the wind down of our business in korea. that, then, enables us to have a simpler organization structure enables us have a business mix

of businesses that fit perfectly well together with a lot of synergies for the shareholders so those decisions are actually enabling us to much better position the bank for the future and to make the investments we need to. and make strategic mets. are ones we're excited about we have high conviction behind. >> right obviously you did say you didn't invest enough. now you would, obviously, we would assume you think you are investing enough how much are you going to invest i know just $11 billion in technology alone both for changing the bank and running the bank. >> yes yes. look at the world today. the scaling up and the speed and scale of businesses is extraordinary. so i lif our crown jewel busines which is transaction businesses. think of payments, liquidity manager, and working capital for any company. we doubled the size of our nearest competitor in terms of serving those companies around the world with our network 95 countries, people on the

ground, everything is going on we're investing in a capability that will increase our scale by 100 fold that is putting us in a position for the digital age and that scale speed and agility that is required those are investments i'm really excited about. as we've done with citi velocity and citi direct and others we've head the industry. this is another example where we shall do so again. >> all right but to the extent there was historical under investment. something you said dplou you've increased that. it's not to expect, though, that there's going to be near term revenue benefits, right? it'll take some time, isn't it >> umm, actually, i'm quite optimistic around the revenue benefits we'll see it sooner rather than later on this. and we've got a plan that is really a question of when not if we'll realize the growth we've laid out if i look at different dimensions of it we'll get a recovery in the

consumer here in the states. we're seeing enormous growth in the client base that need our global services and capabilities and another growth driver. again, the middle market we have a commercial bank 30 different countries around the world serving these middle market companies who have global needs. and we see it every day. look how many born digital players are aboard the global at the same time. they need us they use us. we had the pleasure of hearing from google, fly wire, and a number of clients about how central citi is in it. >> so beyond the bigger rotcu, which everybody is going to be focussed on in terms of quarter to quarter or year to year, what else would you argue is how you should be held accountable in terms of some of the progress you're talking about being made from these investments. >> yes we laid out yesterday a strategy which will drive financial outcomes and we laid out a number of different metrics, which will be there. some of the ones related tosiner

gis. we realized how well we're referring clients from the private bank to the commercial bank from the commercial bank up to the corporate bank what are we doing in terms of cross selling our services clients into our markets capabilities with foreign exchange these synergies are very important ones that we haven't done a stronger job in the past that are examples of the types of metrics you'll see. you'll see ones around revenue growth and how well we're doing in terms of acquiring new clients. wealth management. we've brought in 400 new advisors last year despite a pretty hot labor market and talent market out there. how are we doing in translating that into new clients joining our platforms? these are the types of strategic drivers that will give our investors a sense of is a strategy working and then will it deliver the financial outcomes after wards. >> right. >> there's a lot of software

engineers. i think you have 30,000. >> yes. >> what are they all doing >> oh, they are busy coding. so as we look at some of the areas we had under invested in is the end-to-end processes. we're making sure that we're digitizing end-to-end processes to cope with that scale. we have them working putting different capabilities on the cloud, helping with kate they are also connecting us to other inzugss as being a bank for banks is a part of the strategy and the api is a key there. they are really embedded in the business they are almost more front line >> software engineers, probably most of them not in the building working from home, right >> no, they enjoy social interactions. >> they do software engineers i am kidding why are you still in councilman

banking. people know citi, they may know it as a result of your branches. why should you remain in what we call personal banking in the united states? >> it's our home market. we serve almost 75 million customers today. and we are one of the leading consumer lending franchises here in the states. it's a very important engine for us it has attractive returns. we have put a lot of investment over the years into digitizing it and we are excited about both the growth and return prospects there and continuing to be a leader in it so this is a core part of citi's identity in the states good connectivity with other businesses. >> one of the key parts of the identity, this is a global bank which brings me to current events, unfortunate as they are. your russian exposure to the extent you have it, 9.6 billion, 0.3% of your assets. what are the expectations there? is there going to be a write-off in citi's future for those

assets >> the situation is very fluid at the moment in, well, all of the world, frankly, right now. we are more focused on the humanitarian components. i have 200 people in ukraine who this morning opened our bank and continued helping our clients there with payroll, with food supply, with supply chains, and -- >> how can you keep 200 people in ukraine >> the people are extraordinary. they are just on a mission to try to make smoor that we are able to support the country -- >> is business still running there? >> as i say, more focused on humanitarian it's more focused on food supply and critical supply chains there. they are in the country. i don't think any of us know how long we will be able to keep going, but we are determined to do everything we can to support the country. and then in terms of russia, what we're seeing there is there is a big unwind going for across different industries, a lot of

our investors, our corporate clients are looking at what their own exposures, how do they reduce those down, where are we going to see a decoupling of the russian capital market, financial market - >> and in terms of destabilizing or concerns for potentially the european banks that may bear the brunt of some of those unwinds >> i think we are worried about the humanitarian side right now than the financial exposures for us as i say, it's 0.3%. it matters, but there are other things that are more critical. our teams are actively managed -- have been managing down the exposures that we've got, but with we are very much focused on serving our clients and helping them adjust to this extraordinary and horrific situation. >> yeah. it certainly is. another concern has been cyber the u.s. government has made that very clear. are you surprised that perhaps there hasn't been as much as might have been anticipated, and how focused are you and is the

u.s. government, by the way, to the extent they are in touch with you on matter in terms of protecting our financial institutions >> if you ask any of a head of a bank, major private infrastructure, this is probably our primary concern, is cyber right now. domestically we don't know what's going to happen, but we are certainly all on high alert and putting a lot of resources around making sure that we are protecting our institutions and making sure that key institutions in america are in a stronger position as possible in the event that something occurs we are as ready as we can be and we will help each other out. >> finally, i hope this will be one of a number of interviews as we track your progress when we come back, if we ever do, are you going to be trading at 75% above value >> there is tremendous upside in our stock and i am looking forward to do the job needed to get the execution done so it gets realized.

>> we will be watching appreciate your taking time with us. >> thank you very much. >> jane frazier, the ceo of citigroup. carl, back to you. >> good stuff. 75%. historical average on citi is 88. >> i can't believe how underinvested they were. that explains a lot, not only like what jamie diamond said wow. eye-opening interview. they could be so wrong about how much money just to keep the infrastructure up. >> well, i mean five to six is not unlike what diamond said two weeks ago. >> brian moynihan is doing three a year he has it all under control at bank of america. he got hurt over and over again because he was spending all this money. turned out, you know, better late than some of these guys are doing never, and they are bulking up i think citi is correctly down given the fact that -- >> the duration of the spend is what you are thinking? it's an arms race in a way. >> yes, it is.

>> the major banks >> i want to applaud moin ynihan who saw it coming and got digitized earlier. trail blazer, you see that they just said we are not spending enough on this, so they just plowed all the money in. now citi has to do that. she had a bad hand holy cow. >> really quick, on salesforce, morgan stanley me made a note of your interview symbolically. and we haven't mentioned google bringing back employees in april. >> just to go over what mark said, mark is not in the business of hyping his company when ukraine is going on he made that clear he said he was very uncomfortable saying things are great, which they are, because of what's going on and the tragedyism understand that it's hard to be bullish when you see putin killing people for no reason whatsoever, people are dying. >> the ukrainians said that the talks with the rundowssians are

progress. >> i read john ellis's fantastic newsletter but close. when it comes to iran, anybody can disable a talk i have got verizon tonight after a good analyst meeting i would like to hear david's thoughts on that they are not as covered 5g as t-mobile and block, the old scare a lot of people are interested in that. square cash so doing incredibly well and all these things with crypto and all the strange cryptos, blow your nose crypto i think is coming out tomorrow. >> twitter looking to decentralize with a bigger crypto presence. >> gary gensler has his work cut out for him. >> see you at 6:00 "mad money" with jim cramer 6:00 p.m. eastern time another big hour, cleveland fed president and darren woods don't go anywhere.

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♪ good thursday morning. another hour on "squawk on the street," i'm carl quintanilla, with morgan brennan. david faber with join us with the chairman and ceo of exxonmobil, darren woods the markets trying to hold 4,400. a two week high, a new round of talks between the russians and ukrainians ism services out a couple moments ago. for that we turn to rsteve ricchetti. >> data at the top of the hour ism services a february number, 56.5 this is a big miss we were expecting a number more towards 61 this is the weakest service sector ism since february of last year. 55.9 if you look at factory orders, factory orders are at 1.4%,

double expectations. if you strip out energy, it moves down just a bit to up 1% durable good orders january final. so we replace 1.6 with 1.6 if. if you look at ex-transportation, remains the same, up 0.7 capital goods order non-defense ex-aircraft a proxy for capital spending actually improved from 0.9 to 1% and 1% is a solid number haven't been at that level, that's the best level since september of last year finally, if we look to shipments versus orders, up 1.9% exactly the same as our mid-month read in january. these numbers are all pretty good except for the service sector and maybe that's the most important. the largest swath of the u.s. economy. morgan, back to you. >> 30 minutes into the trading session. here are three big movers that we are watching. they are moving big. we start with snowflake, shares are plunging, posting the

slowest revenue growth since 2019 shares down about 15% now. they are down about 33% year to date plus, best buy getting a boost despite falling short of earnings expectations hurt by supply chain and omicron issues. executives pointing it a brighter outlook ahead announcing a strong fiscal 2025 revenue forecast and a share buyback program. shares up 9.5, almost 10%. american eagle earnings and revenue in line with estimates the company warning the earnings would decline though in the first half of this year citing freight costs. those shares are down 11.5%. >> let's bring in bob pisani on set for a closer look at today's decent market action >> it's remarkable we were 4380 two weeks ago, back to h4,400. despite inflation concerns,

material stocks doing well, industrials doing well, the railroads some at new highs, 3m doing well, caterpillar doing well energy a rare down day, up 10% in the last four days. bank stocks taking a little bit of a pause consumer staples continue to get great reports out of them, kroger at a new high, new highs at coca-cola, altria, archer daniels midland as well. the london stock market is the final shoe to drop the last big exchange to suspend trading in stocks in russian stocks there they join the nyse, nasdaq and deutsch boards there is no major indices, no major exchanges, including moscow, that are trading russian stocks now as result, the index is out. ftse and russell have deleted the stocks and the russian etf rsx we had

on jan earlier this week still trading remarkably you make an estimate, you guess. and this has been done in the past, remarkably accurate. we don't know what the real value of the russian stocks are but it's trading about it $22 a week or so ago and now to 6 so we have seen a 70% decline. but still trading in the united states what happens after mr. powell's testimony? essentially a master class yesterday. calming the markets down very calm, measured rate hikes going on now what's next? the question is the spring reopening. what happens how strong is this reopening going to be this summer? a lot of debate on the inflation impact out there our sky high price going to reduce demand? we have had ability to raise prices essential will i what happens when the consumer balks? what happens if everybody just says no? that could dramatically impact profit margins because companies may not have the ability any more to raise prices

so take a look at what the battle is. remember why the stock market is down this year essentially, we are down 10% start of this week and it's all because the multiple, the p.e. ratio has contracted down 10% that's why the stock market is down the multiple is how much people are willing to pay for a future stream of earnings revenues. that's come down because the fed is tightening and concerns over ukraine. but earnings estimates which is the other major reason stocks move hasn't changed at all, up abo about 8% for the year. what happens if suddenly we have margins contract from the records of 13%, could come sumers balk and companies can't raise prices that's the issue what happens this summer and i think you will hear just say no for a lot of people gas at $5. hotel rooms double what they were three, four years ago a lot of complaints starting to surface in that. we heard this from carvana saying we didn't like 30% prices

higher for used cars we are seeing consumers push back on used car prices. carvana said some people are walking away i think you will hear that more this summer. >> there is a point of no return thanks. speaking of all this, our senior economics reporter steve leishman with a special guest this morning hey, steve >> good morning. yeah, cleveland fed president loretta mester is joining us now. thanks for joining us. i can't hear president mester. is it just me? >> steve, can you hear me now? >> there you go. that's great thanks very much president mester, i want to begin with the most pressing issue right now. the russian invasion of ukraine, the sanctions that are -- have been put on russia how does this alter at all your outlook for the u.s. economy, the global economy, and fed policy >> yeah, i mean, the task before the fed is to remove

accommodation at the pace necessary to bring inflation under control and sustain the expansion and economic activity and healthy labor markets. it's critically important to get that inflation under control for both parts of the mandate. the situation in ukraine certainly adds uncertainty to the economic outlook our first thoughts are with the ukraine people who are having to deal with a tragic situation but the uncertainty and the economic outlook changed the need to get inflation under control in the u.s in fact, it adds upside risk that high inflation might continue and that makes it even more important to take actions for the fed to take the actions we can and do what we can with both our policy tools to control inflation. so the potential here is that there is large rises, we are seeing energy and commodity prices and potentially global supply chain issues continuing for longer

it really increases the risk of high inflation becoming embedded in the u.s. because it could lead to higher long run inflation expectations that's why it's so critically important that the fed does what it can with its policy tools to get inflation under control. >> you know, that's kind of the way i have been thinking it through, which is that you have this huge impulse of inflation coming from this war, higher oil prices, higher commodity prices. as you said, worse supply chain problems and yet, yesterday fed chairman powell suggested that all of this means we ought to go a little bit slower and steadier and he ruled out 50 basis points it sounds like you made an argument right there for going 50 and doing more as soon as possible >> no, i mean i guess my view is, you know, we can -- we are on a path of removing accommodation. and starting with 25, followed

by further increases in coming months, i think puts us in a good position. now, we'll have more information in the second half of the year about the effect of the situation in ukraine for the median run outlook for the u.s it poses downside risk to growth but again those assessments might be a consideration in determining the appropriate pace at which to remove accommodation later in the year, but it's certainly not changing the need for taking action using both our interest rate tool and balance sheet tool to remove the emergency accommodation that was needed earlier in the pandemic which is not needed now and is counterproductive to sustaining the recovery so i think we need to be, you know, thoughtful about the situation in ukraine we certainly have to think about the implications of it for the u.s. economy, but the strength in the u.s. underlying demand, the imbalances between demand

and supply all point to being deliberate about removing accommodation to put ourselves in a better position and getting inflation under control. and i expect the fed will be able to do that without, you know, leading to recession in the u.s. because the underlying economy is so strong, because labor markets are considerably tight and i think we have some scope to do it, do it in a thoughtful way, but do take the actions we need to bring inflation under control. >> where do you think the funds rate ought to be right now given the underlying situation where do you think it out to get to i guess it's fair to ask the question along with that, what happens to inflation during the course of the year >> yeah, i mean, so my outlook for inflation is that we will see some improvement in the second half of the year, but we won't be near 2%

we will still be, you know, 3 to 4, you know, in the 3.5 to 4% or higher given the ukraine situation and its implications what i'm looking for is for inflation to be starting to stabilize and then move back down from the extremely high levels we have seen early in the year and we are going to have to be very -- we are going to have be data -- looking at the data and using the data to inform our outlook. if by the middle of the year after with we have taking those actions to move the funds rate up and to start removing accommodation or the size of our balance sheet, if we don't see inflation moving back down, that would be a signal to me that we have to remove accommodation at a stronger pace, at a faster pace, because inflation isn't moving down as we expect it to so, again, we have to be forward-looking and we have to use the incoming data and form our outlook and base our policies and decisions on that

we can't -- we have to take actions. we can't just say, oh, you know, inflation is going to come down on its own we have seen that that isn't going to happen and certainly situation on the ground that we need to actually remove accommodation. we are at zero still, and we are just ending the balance sheet expansion early this month so we've got to take actions and we have to use all of our tools to use it. >> president mester, it's morgan i understand there is a lot of uncertainties and the fed is data dependent here, but this idea of a neutral rate somewhere 2 and 2.5% when fed chair powell says in congress yesterday that it may be that we need to go higher than that, how do you see that i mean, is it possible that going above neutral is inevitable, and if so, what would that look like from your standpoint >> yeah, i mean, we're going to

have new economic forecasts that we'll release at the next meeting. in my last one in december i had the funds rate going above my long run fed funds rate level, which is 2.5%, but i didn't have that coming early. i had that later in the process of removing accommodation. but again my expectations are that we are going to have to do what we need do to get inflation under control and it could very well be that interest rates will have to move up above that long run level. but we have to wait and see how the economy evolves because there is a lot of uncertainty out there. so i think the real thing we're doing now is we're starting to remove accommodation in march. there are going to be more interest rate increases in coming months. we are going to continue to assess the situation but it is critical and we are committed to both sides of our dual mandate and getting inflation under control is important for also making sure that we maintain healthy labor

markets. so there is no trade-off here bus the best thing we can do at this point to sustain the recovery and to ensure labor markets are healthy is to get inflation under control. >> president mester, let's talk about the other tool the fed has, which is the balance sheet. right now the spread is like 36 basis points it's continued to tighten while we have been talking about this inflationary impulse and while the fed has been talking about higher rates so first thing is, is that a danger sign to you second of all, do you think the balance sheet can be used to steepen the curve? >> so the way i think about balance sheet is we had to by assets and we bought a lot of assets as part of our pandemic response we're out almost at $9 trillion of assets on the balance sheet we're going to be reducing the

size of the balance sheet this year we haven't, you know, as chair said in his testimony yesterday, we are going to be speaking about how we do that, the tactics of doing that, and when to start doing that at our march meeting. but my own view is that we can go a lot faster reducing that balance sheet than we did the last time we did it, after the great recession, and the balance sheet is much larger and also inflation is much larger that said, what i'd like to do is sort of set a plan and then allow that to happen, but only -- but then use the fed funds rate as a policy tool. that was one the principles at the last meeting about how to go about reducing the size of the balance sheet. so, yes, you're right. we have two tools. but the main tool, the primary tool that we are going to use is going to be the fed funds rate and then the balance sheet

runoff will be happening, but testit will be part of the environment and we will euse the funds rate to - >> so i'm sorry to cut you off we have very little time i want to be clear you don't sound like you are in favor of using the balance sheet so engineering the curve >> i don't think we have enough experience and enough understanding of how that balance sheet really flows out through the economy. so my preferred path would be we'll come up with a plan. it will reduce the size of the assets on our balance sheet, you know, and we've said primarily through runoff, although as i said, later on in the process i would be open -- in fact i would favor selling some mbs to get back to primary treasuries sooner and use the fed funds rate as the main tool for setting the pace at which we remove accommodations. >> president mester, thank you

for joining us perhaps next time we will do this in person. >> i'd love that thanks. >> thanks. morgan, back to you with a terrific question and a very interesting answer this idea of raising rates above neutral and the idea that mester responded that that could be in her forecast when they put some of the economic projections out in march. >> something to watch. a great interview, steve thank you for bringing it to us. still to come, don't miss an exclusive with exxonmobil chairman and ceo darren woods. his company exiting russia oil and gas operations this week we head to a break, let's check the markets. largely a mixed picture. the nasdaq is down 0.5 petito the dow is up 112 points we have a big show straight ahead. don't go anywhere. (vo) right now, the big switch is happening across the country.

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the indo-pacific the secretary of state antony blinken is heading to europe he was board ago flight to brussels this morning. he will be visiting baltic state. after yesterday, he said the u.s. will not be changing its nuclear posture despite what he called provocative rhetoric from president putin. meanwhile, ceasefire talks between and russia and ukraine have started with belarus. there have been mixed messages about the level of success of the russian troops and whether they have, in fact, overtaken a southern port city called kherson. we know that outside the capital of kyiv a convoy, a large convoy has long been stalled and remains stalled cdue it shortags of food and fuel the pentagon yesterday saying that president putin still intends to overtake the capital and to install his own government, but so far russia has not overtaken any ukrainian cities >> i'm sure that the russians would have never predicted they

would be in a place that they are in at this point our focus is to make sure that we do everything possible to provide as much support to the ukrainians so that they can defend themselves. >> the white house is asking congress for $10 billion in military and humanitarian aid for ukraine and also canceling or permanently postponing a long-planned test launch of a ballistic missile to avoid any sort of situation that could be misconstrued carl >> kayla, we will look for signs on how that aid request is being received this morning. meantime, businesses at home and abroad feeling the impact of the growing sanctions on russia. jane fraser discuss thad how she sees the conflict this morning take a listen. >> i think we are worried about the humanitarian side right now than the financial exposures for us as i say, it's 0.3%.

it matters, but there are other things that are more critical. our teams are actively managed -- have been managing down the exposures that we've got. we are also very much focused on serving our clients and helping them adjust to this extraordinary and horrific situation. >> tim adams, institute of international finishes ceo and former undersecretary for international affairs. good morning. >> great to see you. thanks for having me shlg i think it was the treasury secretary yesterday 80% of russian banking assets under some restrictions, half the central bank assets im poke mobilized as of monday does that strike you as severe enough to begin to have an impact >> it's going to have an impact on the financial system in russia and certainly ultimately on the real economy. i the citizens are going to is frufr this i think we are at the beginning. so more pain is coming for the russian economy and russian

people. >> what beyond the current sanctions do you have in mind? does it involve more private sector self-sanctioning or broader work among the partners? >> sure. there is still an opportunity for escalation oil and fossil fuels have yet to be designated with respect to sanctions. that's a huge, huge issue. i think it's, as the president said, as recently as yesterday, it's on the tablism wouldn't be surprised if we see that put in place. >> so along those lines, tim, as long as that carve out is in place for oil and gas and other key commodities and natural resources in the midst of this elevated inflation landscape the world over right now, just how much bite do current sanctions actually have given the fact that russia has already been pulling back from the global economy and certain aspects really since 2014? >> indeed they have been it's almost as if they have been planning for a number of years unfortunately, many of our member firms have been reducing their exposure

it will continue we are only eight days into this as weeks progress, the russian economy is going to feel the rest of us will peel it, too. elevated commodity price, locker room, wheat, oil it will be felt globally and the surrounding economies around russia the other question coming up in recent days is the role cryptocurrencies may be playing in russia to potentially evade sanctions. how do you see that? >> it's possible to be used for these purposes i'm doubtful i think it's a cumbersome and difficult medium of exchange i think there are other aefts they could the exchanges i talked, to the crypto exchanges are engaged in sanctions regimes and probust - i am not worried about bitcoin or other crypto assets being used for illicit purposes. >> citi tried to do work on this yesterday and they found some

elevated demand for bitcoin, but they said it was suggested the price action was more due to investors positioning for an uptick in demand from russian rather than russian demand itself. >> of course it's a speculative asset we have seen that for some time. i am sure there is investment flows taking advantage of this as a way to avoid sanctions, i don't think it's a huge issue. obviously, authorities are monitoring conditions. >> right we'll keep an eye on that. services, manufacturing, so forth. thanks so much. >> thanks. all right. we are going to talk more about that impact after this break as we do head to break, shares of kroger at record highs after the grocer posted better han expected earnings with eps guidance beating estimates the company did note higher inflation in those categories,

grocery and meat you see the shares up 11%. we'll be right back.

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it's time for our "etf spotlight. we continue to track aerospace and defers stocks as the fighting in ukraine continues. specifically today the xar, the spdr xar etf, down about 1%. though keep in mind on pace for the best week since november defense stocks in particular have broken out northrop grumman, l3harris, lockheed martin all up mostly up double digits just over the past week. for investors defense spending is key as the u.s. and allies begin pledging more money to weapons and intelligence some analysts betting military equipment spending could grow as much as 50% the next five years. today the biden administration is expected to seek a boost of $10 billion for ukraine from congress and the defense budget doubling by germany could mean morlock heed f-35 fighter jets and heavy

helicopter competition involving lockheed and boeing. all of those are sales that could take years to materialize. near term, raytheon and lockheed could see a bump as more missiles to ukraine mean more replenishment. l3 hairs, communications as well not to be swroefr looked increased cyber efforts and spending on intelligence could according to jeffreys benefit government i.t. services, names like leidos and booz allen hamilton also business jet makers companies are navigating dozens of pages of sanctions that will likely impact everything from titanium components, other areas of supply chain to aircraft, the ability to reclaim planes as maybe laid out within the sanctions and helicopters from russia also, tomorrow an insiders view of defense if ukraine, among other things have an exclusive interview with the ceo and chairman of

honeywell and, david, honeywell is trading up 2% today because it is holding the first investor day since 2019, reaffirming first quarter and full-year guidance, upgrading the long-term financial framework and talk about the new tech and innovations that the company has been investing in, what they call future drivers of growth from quantum and cyber and software to esg. this is interesting. the industrial giant actually saying today that its suite of products and services around esg are now its fastest growing business not just what it's applying internally, but how it's working with other companies to meet their public carbon pledges. so we are going to talk about all of that in an exclusive interview here tomorrow and fwee o geopolitics and supply chain and sanctions. >> looking forward to that and, man, it is investor day

month the month of march that brings us to our next gust. oil prices rising to the highest levels since 2008. you can see the action in the stock of exxonmobil as well. tensions between russia and ukraine, of course, continue to escalate joining me to discuss this and the latest from its investor day is darren woods, exxonmobil's chairman and ceo darren, great to have you. an important time to hear from you, as well if you don't mine, i would -- not that you would, like to start on russia, not just oil prices but the company's decision yesterday to cease operations at sock land one. you have been in russia as a company for 25 years i wonder what it was about this set of conditions as opposed to what has been no shortage of turmoil in the world or even in russia over that 25 years that warranted the decision you made. >> yeah, good morning, david god to see you again

and happy to be on i think what we announced on tuesday with respect to russia were actually three elements first was the work that we were beginning to discontinue operations for the bencher that we run that's one of the unique features of the presence in russia for 25 years that you mentioned, we're actually the operator of a fairly large oil production unit in sock land the second announced that we made or element of that i nouns. was the fact that we would start taking the steps to exit, and the third was a decision not to invest under the current set of circumstances in new investments. on the first element of the decision, if you look at the bank sections put in place, the export controls and, frankly, steps being taken around the world by countries and companies, the ability for us to continue to operate that

facility as we went forward, we saw becoming more and more strained and felt like we needed to put a plan in place that would allow us to safely shut those facilities down rather than find ourselves in a position where we couldn't access critical services and supplies to operate. the second element, as you know, our business engages significantly with the government, the host governments where we op rachlt we felt like the decisions made bit russian government with respect to the incursion into ukraine were inconsistent with our philosophies and how we run our business and we felt like that was a point we needed to start the process to take the steps to disinvest out of our venture that's going to take time. as the operator, we are responsible for the operational integrity of that facility, the safety of the people, the environmental integrity. so we have some work to do to start that transition. we will be working very closely with our consortium members.

and the final point we made was with respect to the conditions that we saw there, again the direction that the russia government was taking that it wasn't consistent with investments, new investments going forward given the current position >> right and again, it's roughly 1 to 2% when you look in terms of capital employed but your company. it's, obviously, not large you never like to say goodbye to reserves potentially if you are exxonmobil, the sense i have gotten from the company's history. do you anticipate that that's it for exxon and russia, that there will be, you know, no time in the future perhaps that you might not consider once again operating in that country? >> well, i think predicting the future is tough and we try not do that. i would tell you certainly the time that we spent there, it was a productive time. i think we helped advance the economy and provided -- we had

1,000 employees in russia, mostly russian citizens. had a very good business there and i think a good partnership, frankly. frankly, this recent move is kind ever the tipping point. but i don't know how the future will evolve. we will keep an open mind as we do all around the world. things would have to change pretty significantly, frankly. >> you know, i would love your take on something that's gotten some currency, this idea of being able to segregate and avoid and/or not buy russian-produced oil we know it's fungible. is that a possibility? if so, how would one implement that. >> you certainly in terms of the crude types that are out on the marketplace, you know the crudes that come from russia. so in the market, it would be possible in fact, you see some of that today with buyers being uncomfortable purchasing some of that crude so i think there is an element

of that where you could begin to differentiate what you chose to buy even in the commodity market i think an important point, david, is in russia, they have been an important supplier to the world markets and they are essential certainly with natural gas into europe and in the crude market they play a substantial role moving down that path will have significant market implications if that's indeed the direction that the world takes. >> yeah. well, give me a sense, your sense as to the market right now. obviously, with oil prices at heights we have not seen in some at least 13, 14 years. are we going to stay at this level if we should see, as you said, true ability to sort of segregate not by russian oil that would have even more of an impact what is your sense as to where we kind you have hit on oil prices, darren >> well, it's tough to predict what the absolute number will be

i think we have talked about in the past that the pandemic had a significant impact and we anticipated tighter markets and higher prices. we were seeing that before we got into this military action. and now on top of that tight market, circumstances, the tightness in the supply and demand, you are seeing the risk premium put on it and be uncertainty. i think it's difficult to know exactly where this end-up. frankly, if there is a significant supply disruption with respect to russian crude, which is about over 6% of the market today, that will be very difficult for the market to take, to make up, and, therefore, that will lead to, i think, significantly higher prices it's very difficult. we don't try to call the market. >> i know. of course. i know you wouldn't call the market now again, though, there are going to be calls for more production here in the united states.

what do you tell those, including the president, who may say we need produce more >> i start by saying we are doing all we can we have have been maximizing production for quite some time we showed a significant growth in permian from 2020 to 2021 we are growing 25% this year so we are advancing the production and growing the resources. of course, we have the developments in guyana that's bringing production on we've got developments in brazil that we're bringing on within the portfolio of opportunities that we have, we are advancing those projects and working to bring production on as quickly as possible that's good for the resource holders, good for the company and god for the world. so my main message is we're doing what we can to help in that space i think the good news, too, is that the markets are working, the price response that we are seeing is the outcome of a tight supply and demand balance.

that price incentivizes higher cost barrels, marginal sources of supply to come into the marketplace. so i think you will see that price draw more resources in of course, we have been working, low cost supplies, so we have been incentivized for quite some time we are currently at maximum production signal. >> yeah, obviously, you have been bringing costs down that price of course that you are talking about resulted in $48 billion in cash flow last year potentially a lot, even more for exxonmobil this year, darren and so one the questions i know you got yesterday and i'll ask again, excess cash what is the plan for beyond what you are paying in the dividend, beyond what your plans may currently be in terms of buying back stock and/or capital investment, what are you going to do if there is an awful lot of potential excess cash seems to be a possibility right now. >> yeah. first of all, i will make one point, david you talked about the $48 billion of cash and the prices driving that certainly the prices played a

role i don't want to underestimate the impact that the organizational changes and the hard work in the organization in terms of driving the business forward. i think we have taken steps the last several years to fundamentally transform the earnings power and the cash flow generation power of the corporation and that contributed to what we saw in 2020 as we talk with the analysts yesterday, our expectation going forward is we are going to double earnings by 2027 and double cash flow going forward so i think the plans that we have in place irrespective of market help, we have a robust cash flow and to grow the earnings with respect to the additional cash coming in above and beyond, first priority to make sure we are finding, finding and developing projects that are going to grow the value of the corporation and that they are advantage versus industry and we have a very good portfolio to do that of course, we are keeping our eyes open for that we are not going to chase the

cycle. we will stay disciplined, continue to make that the balance sheet is robust, make sure we have a very strong balance sheet because we know the cycle will come back around. we want to pay a secure dividend we've always said distributions through buybacks is an important part of the equation, whom we addressed those other key capital allocation priorities. so i think that would be a significant lever in how we think about the total cash flow that we're managing going forward. >> all right is there a point you decide during the course of this year, yeah, you know what, this is staying where it is and i feel like, okay, we can return more cash to shareholders if so, when would that be? >> sure, that's, obviously, a decision at the board, we talk about regularly. when we -- as we see the earnings come in, as we see the market develop, we will take a position on that you think it's reasonable to say if we continue to see a very high priced markets and

significant earnings that we've, you know, we will revisit that and i would, you know, i would announce what the board decide the that point in time but i think it's a reasonable expectation. >> yeah. darren, this is a rare enter sfrur us we are not really talking a lot about efforts to reduce your carbon emissions i can promise our viewers, there will be plenty of time for that. i want to end on that. as we have talked about in the past, you are spending 15 billion for low carbon businesses, so to speak. obviously, low carbon solutions and the like why not go higher? why not increase that, particularly given what may be the possibility of, obviously, having a lot more resources with which to do that >> a couple points with respect to the low carbon solutions business, one of the outcomes of the transformation we have been making to our business is positioning ourselves to centralize core capabilities that are going to serve all parts of our company

and part of that is the capabilities to serve our low carbon solutions businesses. we've got the ability today to allocate the right capabilities from a technology, engineering, project standpoint into the low carbon solutions business to continue to grow that portfolio of opportunities as those opportunities present themselves around the world and so we're very flexible with respect to that. we can also allocate our cash resources into that space. so the think the way we are organized today gives us a lot of optionality the opportunities begin to develop faster through policy or through market incentives, we can shift more resources into that space and continue to grow that business quickly. if, in fact, things move back the other way and there is more emphasis on the traditional oil and gas businesses, we can keep business there we have had optionality. with respect to the $15 billion, i think one thing that is important, these are

capital-intensive projects those projects began development in the 2018-19 timeframe so the spend that you see today is actually a result of the work that we have been doing for a number of years. within a short term, it's going to be difficult in that time horizon to throw a lot more capital into that because those projects are in development and are at the stage where they require capital. earlier on in our plan, as tunes come to fruition, the capital spend would probably happen outside that pipeline. so i think that level of spend, hard to see that changing materially with respect to organic investment simply because the timeframe associated with putting large capital projects in the ground the development associated that. the opportunity is growing significantly. the opportunity to invest is growing and we are doing a lot of work in that space all around the world. >> all right well, to be continued, darren. and always appreciate your taking time. an important time for the world markets right now and in particular the commodity that

you are focused on darren woods, thank you. >> thank you, david. nice seeing you. rz. meantime, the s&p, we opened before 4,400 this morning. about a two-week high on a couple of notes one the speculation of a potential iranian deal that would release fresh crude on the market within 27 hours those reports walked back a bet. a contentious phone call between putin and macron we lost some ground. it is the second day of testimony for the fed chair who is taking q&a. >> the federal reserve should, in addition to that, or even claim it is a part of that, that the federal reserve should stop so-called sub-optimal industries from having access to capital, either to restrict their access to capital or depruf their ac s access to capital. do you believe any kind of

standard should be something that the federal reserve board should review in its supervisory capacity >> no, i do not. >> i appreciate this this is a disturbing trend that has come in a number of contexts the last few years the negotiation to use our federal regulatory and supervision authorities to decide which industries are optimal and restrict those we don't like politically from access to capital a very alarming idea that i think america should reject quickly. finally, i have one more question obviously, related to ukraine and the issue of oil and energy markets have come to the forefront as a result of a number of different aspects, whether it's sanction questions or whether it is the issues of depriving russia access to the utilization of nord stream and many other aspects do you expect that the strains on the oil or energy markets that we will see coming out of

this war will act to push inflation even higher or will act as an impediment to our ability to get inflation under control? >> in the near term, and we already see this, oil prices are up, you know, substantially from where they were two months, three months ago, will get intoe prices and other fuel prices and that will show up in higher inflation. the question really is what will be the extent of those and even more important what will be their persistence? so typically with an oil spike, prices go up and they either stay at that level or they go down in either of those cases, they add to the price level but not to inflation it's really -- the concern is, though, there's already a lot of upward inflation pressure and additional inflation pressure does probably raise at the margin of the risk that inflation expectations will start to react in a way that is

negative for controlling inflation. >> all right thank you very much. >> thank you, sir. senator warner from virginia is recognized from his office. >> thank you, mr. chairman chair powell, great to see you at least remotely. i want to pick up where my -- at least point out because i want to move to ukraine where my friend raised some of the issues it is obviously the responsibility of the fed, as we are looking at the economy, to evaluate systemic risk to the economy, is it not >> yes >> thank you and you and others have testified that whether we call it climate change, sea level rise, dramatic changes in weather that brings about flooding, storms, you name it, that is appropriate for review and while obviously the terminology and designates a particular industry, i agree,

shouldn't be, but the systemic risk are critically important and i appreciate the fact that you've recognized that i think we need to continue to recognize that we lived through that literally if we look at the number of natural disasters from wires in the west to floods in my state or floods in the south, it is here to stay i want to talk about the intel committee and very, very concerned about what's happening in ukraine very proud of the fact that the administration has worked in concert with our european allies rather than acting solo. that was 11 days ago in munich if you would have told me 11 days later that the europeans would have used swift, struck down nord stream 2, germany would change its complete position on funding arms, sweden, finland, we would have sanctioned i think all terribly important to have a western

response to this aggression. on the s.w.i.f.t. issue, i think it's good. i do think we need to get our european allies as well to sanction some of the smaller banks as we have i think we also need to look at non-s.w.i.f.t. abilities of transfer and i am concerned, that chairman and senator warren and senator reed and i, are very concerned bt some of the leakage that could be taking place through crypto currencies. i think there is great deal of value in ultimately digital-based currencies but the concern i have is that there's a stat out the other day, 7,000 stocks on our public markets, 17,000 different crypto tokens on crypto exchanges, literally a million crypto tokens being developed in decentralized finance. and i know this is not

directly -- this is more secretary yellen's per view, but you and the fed have gained a lot of expertise in this space do you see the possibility of putin or his oligarchs using digital payments and other alternative payment methodology to avoid these sanctions in a sense to transfer their assets out since we've been able to plant down within the traditional banking realm? >> so you're right this is right in the heart of what secretary yellen is working on i believe she actually addressed this yesterday in some public remarks. and i don't have -- i'm not privy to any private information about this you are reading about it u saw in that transactions crypto transactions are spiking in ukraine and in russia i just think it really underscores the need to have a strong regulatory regime that

permits appropriate activity but that prevents inappropriate activity and we do have laws on the books and all that, but i think for digital finance generally we need a legal framework that would really take away as much as possible of the possibility that people could use unbacked crypto currencies as a way to evade the law or finance terrorism and hide their either real gotten gains or things like that i think it's very important. >> and again, i appreciate the fact that the fed has expertise wise ramped up in this space i do think the notion of the united states having a digital currency when we see the challenges around the digital yuan from china. but i do think the amount of capital flows going into this area, you know, there is not that clear, regulatory overview.

something we need to look at as an independent source we need to draw upon not only yours but the unlimited resources you have at the fed to at least follow the capital flows. i'm gravely concerned that putin and his oligarchs may use this escape valve to escape these sanctions. thank you, mr. chairman. >> thank you, sir. senator scott from south carolina is recognized. >> thank you, mr. chairman thank you, chair powell, for the investing the time with us we have had -- we have seen you a lot lately i think it's important that we continue to have the conversation in public about the priorities of the fed, one of the concerns that i have i think both senator toomey and senator crepele have talked about staying on mission and not looking for ways to expand their mission, looking at nominees approach in public statements as it relates to the environmental responsibilities that the fed should take on, i am completely unequivocally opposed to that direction. i know there's a lot of

attention paid these days to esg. i think that is a bad direction for the fed. i think the fed should focus its attention on its primary responsibilities and frankly not even get involved in congressional matters and know that the senator had important questions to the wrong person about truckers i think if we were going the to have a long serious debate about what congress should do to help truckers we should look at the hours of service that curtailed the number of truckers we have and the amount of time they can spend on the roads there's a lot of things the fed shouldn't do the one thing we want you to continue to do is to focus on the impact that our everyday folks like in abbeville, south carolina, or anderson, south carolina, or feeling the pressure from inflationary effects of this economy. we can't tie that to russia or conflict we can just tie that to bad decisions by democrats and the

biden administration when on day one you cut off the keystone xl pipeline which could have pumped 800,000 barrels a day. we are dependent on russian oil at 600,000 barrels a day the inflation impact that south carolinians felt since december, 2020, where prices were .99 an now they're $3.40, i think about the seniors who are trapped in too much month and too little money. and i think to myself that too many folks on fixed incomes throughout this country and specifically in south carolina are having to make decisions about rationing, money, food, energy whether in your car or at your home, this is a crisis i love to hear that our wages are up 4 or 5%, but inflation is up 7.5%. so the net effect is that the invisible tax that we refer to here in washington as inflation

is eroding, degrading the spending power of everyday americans and they are not gullible they know exactly what has changed and any time you put fuel on a fire you should expect it to get hotter and our economy reflects that same direction those are concerns that i have i know that yesterday you spoke at length about how the fed policymakers are working to game out a variety of policy scenarios to grapple with the economic risks posed by the on going geopolitical turmoil while simultaneously working to curb still rising prices. that's an important and incredible balance that you'll be in charge of. i'm frankly didn't vote for you the first time, i'm voting for you this time because i think you have proven that you have kept your eye on the ball and it's necessary for folks in my state and around this country. i would love for you to spend my 90 seconds left talk to me about

the gaming out of scenarios that the fed is going through so that the average person in our country can appreciate the depth that you are -- depth of knowledge and the time that you're investing in helping us understand the scenarios that could happen. >> sure. so we have tools to bring inflation down and they work by raising interest rates we do that over time and what that does is it increases mortgage rates but just at the margin and same thing with car loans and things like that. ultimately that slows down demand ideally in a way that comes to a gradual halt and economic activity continues. so that's what we're trying to do here. right now we need to move away from very low interest rates they're not appropriate for the current situation in the economy. the economy is very strong unemployment is low. wages are going up the labor market is quite healthy. and inflation is all