we haven't mentioned the bank of america credit card data numbers. spending came in for march numbers. up 11% year over year. card spending for household up 6.7% airline up 91% restaurant spending up 17% the lower households are feeling pressure points. there's a split mr -- there make sure you join us tomorrow now time for "squawk on the street." good wednesday morning, everybody. welcome to "squawk on the street." i'm david faber along with jim cramer carl is on assignment this morning. a quick look at futures as we get ready to start trading a half hour from now what jim and i like to call the old hump day it starts with treasury secretary yellen's warning or being ready to tell congress of

the, quote, enormous repercussions from the russia/ukraine war plus a low cost carrier battle jetblue's potential disruption for frontier's deal. and big oils big capital hill showdown. the ceos of exxon, chevron, and others are set to face what may be a grilling for the high gas prices this morning. we'll target with the markets. the capitol hill testimony from secretary yellen jim had a few conversations this morning. there's real concern about a slowdown a slowdown overall does the fed engineer a hard landing? look at the data look at mortgage rates look at what is coming from china or lack thereof. globally the economy is slowing. just giving you some of my notes here i want to get your reaction. >> i think that's right. i think we have something that was amazing change from two fed

heads, so to speak what they're basically saying is i think there's a lot of truth to it. i would summarize it by saying inflation running at 40-year high is as harmful as not having a job, according to the fed's daily. i thought it was very good then we had some very thoughtful comments by brainer who was really, you know, she'll be a number two really talking about the idea that we're going off the rails here because the working person is going to get burnt these are people very protected and persons trying to get jobs now they feel that maybe they screwed up and went too much a little remorse at the same time maybe there was a slow down to begin with. >> all right what does it set for as the bond market trying to tell us something here >> yes l

l likelihood -- what seems to be signs of a slow down. >> we have to look -- there's an analog it's the october 2018 analog you saw tremendous decline in tech in particular the fed decided it's time. and they talked it into a downturn most importantly, you saw tech down between 20 and 50%. >> right. >> in three months time. that's what you have to be worried about. those are the ones that go down when they want to tighten. but also, david, i had a thought -- $17 billion in freight. he traced out a series that some rates are down 30 or 25. they're up 60% year over year. he made the point saying we see trucking finally easing up at the same time that inventories are building. >> right.

>> that's a recession. >> it is. >> we talked about there's been a lot of focus on the transports in trucking, in particular but others, as well. fedex and ups. >> yeah. >> yeah. >> major slow down in freight. the transports are really signaling a slowdown there's no let up in production. yet we seem -- we could run into it very quickly. 2018 scenario is much more an attack on tech because that's the highest multiple no reason topanic, if you're in a lot of other sectors growth is hurting the working person instead of helping because the growth is too high more importantly, inflation is too high we have inflation running at 9 and wages running at 5

that's a real slaughter on the work force. >> it's worth a listen to barry even when he's wrong on carried interest kudos to sorkin on that one. i listen to barry because he's smart. this is what he had said this morning on the fed and the challenges ahead. >> the fed will have a challenge because i think the economy is slowing. the globalization is real. imports from china are -- we're buying everything. it's sitting in containers at warehouses are full. there's a lot of problems in the supply chain costs are rising rapidly construction costs are up 10 to 30% year over year you have to charge more to make it economic or stop construction because nobody will pay you. >> when it comes to residential housing, jim, 5% mortgage rates may give people some pause. >> you see the numbers put out

today 40% decline in a number of people trying to buy a home. >> yeah. >> that can happen fast. >> yeah. a month ago, you might have five offerings for a place is $4 million. now you have none. they had to cut the price. the moment, again, like barry said, inventory builds there's buyer, buyer, buyer. they make inventory equal to buyers then the rates go up but there's still putting out inventory. that's what barry said then you've got not a cliff but a decline where the buyers walk away in almost everything. so what does it mean for the stuff that is sold at home depot? let's use paint. it's a simple one. paint has been putting through price increase, price increase, price increase to equal the raw costs. at a certain point, people say i don't need the paint that's where we are. now i don't want to portray this

as dire. in 2018 they pivoted at the end. >> you keep referencing 2018. >> that's when the fed changed very aggressively. very aggressively. and you had people who basically were kind of pro growth who suddenly said, you know, wait a second maybe we're creating inflation and, david, rates were higher. rates were higher. inflation was nowhere near where it is. is are deutsche bank has a note today that is basically nuclear winner note. fire and ice you're getting the analysts -- if they all go negative -- >> that's probably a positive? >> yes. >> i can't figure out where you are, frankly, these days. >> more conservative yesterday the speech was thoughtful she said, you know, i've been pro working person it means we have to have growth. now i know i'm hurting the

working person she's now aligned with the hawks, this has to be more conservative higher rates to a slower growth? >> yes in 2018 -- >> in 2018 he backed off you sat here and criticize the him. every day. >> backed off when he was down 40%. what they're saying -- i think what they're saying is, you know, rich people, we're not interested in your assets. we don't care about the stock market instead of sending a switchblade and javelins we send them willie nilly -- how many times are they going to ratchet up whatever the heck they're ratcheting up when putin wants to kill people. >> true. they seem to be doing a fairly successful job of defending their country. >> we decided to have cut off the oil imports to japan they bombed pearl harbor

you know, sanctions don't work what works is, okay, listen, we're going to arm the people who are against you. they're going to take back the land >> you think we should be arming them even more so? it's not that we aren't. i don't want to get into a session about military strategy. >> i mean the sanctions themselves i say we up them and up them and see massacres. do you massacre people when sanctions are going up only if you think they don't matter. >> i care more about an administration that may be anti-business where it's now servicing. >> let's talk airline. >> yeah. okay >> yeah. get us there. >> it's a good opportunity to move to things we like to talk about. take overs and stock markets jetblue announcing -- >> yeah.

unsolicited take over spirit airlines it's all cash worth about $3.6 billion in february they did a merge with frontier. it's a $2.9 billion cash stock deal it's valued at a bit less because spirit is down spirit said it will evaluate jetblue's proposal while frontier claims the rival bid will lead to more expensive travel for consumers don't miss an interview with ceo of jetblue robin hayes we'll go to it, jim. what i hear this morning from my crowd they know a thing or two about the takeovers. not to mention myself as the department of justice is probably not going to let either one of these happen. it doesn't matter. maybe you do something to stop the deal the deal isn't getting done and the other one probably isn't getting done either >>well, let's say that i was

going to say exactly what you said i'll say it again. i want to attack some lawyers today. i don't know what i would have given this advice. we haven't heard from the most rig louse thing. jonathan cantor -- >> anti-trust -- >> yeah. basically the equivalent at ftc and doj. doj will get this and doj really regrets allowing american airlines to buy u.s. air am i ahead of you? >> yes. >> i have some others i did. >> give me some color, man give me some color. >> okay.

the obama administration cannot believe they -- they realize what were we thinking? alaska version how could we have been so wrong? frontier/midwest what were we thinking? jonathan cantor -- >> not lena cahn. >> everyone should be scared of cantor i want you to be the high-priced lawyers saying this will be fine. >> yes. >> are they the same people who said it would be at&t to buy sprint >> t-mobile. >> t-mobile. were they wrong? >> dead wrong. i don't know if it's the same lawyers. >> are they getting paid >> the bankers get paid when it's done. the bankers are the ones upset when deals get -- the lawyers don't.

they're happy. i think cantor will go after the lawyers. and, by the way, the market share numbers, if completed, they would have 10% domestic market share that puts them well in the number five. >> have you gone to florida have you flown to florida >> yeah. not that long ago. >> they're paying you. you'll be paying them to fly to florida. >> yeah. >> the rates to florida are so low. >> spirit to frontier would be 8% you can make an argument it's the market share we have would be nothing we would be a bettercompetitor you can make the argument. >> why do you know you're sure. >> we never know because, first of all, the

companies -- it's going to take a year and a half. 18 months. >> what does it matter don't own the stocks. >> yeah. i don't have to tell you whether cantor will attack so and so i wouldn't own it. that's my practical advice let's sol the next problem. >> oil executives are heading to capitol hill this morning. they'll face a house panel that'll be a hearing on, of course, surging gasoline prices. plenty of theater going on there. a look at futures. we have an opening bell about 15 minutes from now more "ua othstet straight ahead

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oil executives will testify on capitol hill. the spike in gasoline prices brian sullivan is joining us he has more on what we can expect to see. brian? >> thank you very much i think the title of the hearing which starts at 10:30 a.m. eastern time says it all gouged at the pump or something

like that. you have six oil and gas either ceos or executives coming to capitol hill before the house energy subcommittee. they'll be drilled on why gas prices are so high the price of oil is back above $100 not at the high of $130 about two weeks ago but above $100 a barrel we have the prepared remarks from the ceo that are coming exxon, chevron, whatever here is one of the things scott sheffield will say excessive drilling, lower turns, and volatile commodity prices, combined with pressures to div divest fossil fuel holdings caused them to reduce or

eliminate equity holdings in energy companies over the past decade saying they've been wiped out a number of times. hundreds of companies have gone bankrupt and now as we're trying to increase production you simply don't have the people, the tubing, the water, the franks whatever it may take. we can go back and forth i think you were in the permian recently you were talking about tuleran last night natural gas, which we want to shift to europe, by the way, is a by-product of what mostly oil drilling. only the one hand, we want to ship more gas to europe to help them get out from under putin but we're making it tough, in some cases, to produce more oil because of whether or not it's job losses, supply chain woes, or leasing/permitting issues, lawsuits, et. cetera

i have just a hunch. >> that was a good run down. we'll go back to scott sheffield from pioneer he's basically been saying, look, we can continue to drill recklessly we won't be able to have more capital or stock prices go up. i think he represents a rational actor. are they ready on the hill for rational actors in the oil patch? do they want everyone to be like the late mcclendon that said produce whatever we can. >> good question i think the industry has to be careful here, jim. they're walking a political tight rope yes, their profits are up from last year. yes, dividends are up. buy backs are up production is also up. they're not producing as much

oil quickly as enough. it used to take from the time you got a permit say, okay, you can put a piece of tube in the ground about six weeks from the permitting process to starting drilling it now takes about six months because you can't get steel tubing you can't get people you can't get water and sand and all the things you need. here is the thing, jim, i know you've been to williston and texas. it's 120 in the summer negative 30 in the winter. it's a hard job p the pay can be good but it can be brutal working conditions when the lockdowns hit and demand collapsed, people said, you know, i can probably make more freezing in williston but the job i'm being offered here in a warehouse may be paying less but it's more secure and better quality of life you can go to the permian basis now and look at midland. there's help wanted ads

everywhere you can't find the people. i think congress wants answers on stuff, guys i'm not sure the oil and gas ceos will be able to give them the answers they want. we all know this is a lot about politics. >> yeah. all great points. >> yeah. >> i was in the delaware basin in carlsbad, new mexico. they were happy with the weather because they knew it was going to change quickly. to your point. it's somewhat inhospitable in the summer when the dust starts blowing. we'll be monitoring the hearings we'll have jim's mad dash coming up we'll count you wn tthdoo e opening bell less than 8:00 from now. stay with us ♪♪ ♪♪ ♪♪

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keep an eye on the big banks they continue to give up ground and it's not been a good year to own them jpmorgan not seeing a lot of up days you can see some of the biggest names. we'll be keeping an eye on them and more when we come back

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we'll get to a mad dash and opening bell 2:00 from now rivian is not a good performing stock so far this year, jim, to say the least. >> it's a tough day. morgan stanley out they cut the number of cars that'll be produced. deutsche bank is calling for nuclear. i are picked rivian. the analysts are happy with the production you know, you talk about being able to do 25,000 cars now, david, rivian is the favorite of amazon i don't know i just want to say that in a market where everybody feels everything should be sold. there are people looking at stocks that have been sold down horribly and rivian is one

saying, you know, maybe it's time i think it's too early but i also am conscious we have not said a single positive thing yet today. >> 25,000 and well positioned to deliver on those rivian's market cap fell below for some time. and, obviously, well below that of ford, which exceeded in a period of time last year, as you know and gm both of which are down sharply, jim. gm shares are down almost 30%. >> i mean, i have to, you know, respect mary barrie a great deal i think she has a phenomenal line up of antonymous driving and electric vehicles coming up. david, no one cares. i speculated yesterday it could be so bad that gm and honda would get together simply because you can't have this -- [ applause ]

>> yeah. opening bell about 10 seconds from now keep an eye on the real time exchange [ opening bell ] oil companies are under fire and the kind of company that the nasdaq is exactly ground zero of what went down during my analog. so sometimes irony is the novelists. sometimes it's stuff on the new york stock exchange. >> yeah. what is your point, though >> i'm just saying the high-flying nasdaq stocks are the ones that were cut sometimes in half by a fed that gets

tough. in part, david, because these are -- >> yeah. by the way on that note, we have the fed saying series of deliberate methodical rate hikes are coming said this is the delaware chamber of commerce will begin to reduce the balance sheet, quote, soon. inflation is wide spread and running far too high. >> is there any way it could cause a relief rally we kind of heard -- >> right. >> look out. >> yeah. it's coming. is there a possibility i'm trying to -- i'm trying very hard to put my head on the side who says, you know, we know all

this. >> when you say pairing back, what do you focus nonyour port -- in your portfolio? >> not touching the banks even though the banks -- but tech all of tech. even considering an adverse security that i typically do not want to the embrace. >> one that would short an index of technology? >> yes i don't want to do that. bli whole strategy in life is to sell i think the downturn will be a separate it. not wheat from ukraine janet yellen got the numbers wrong, i think. >> we'll be covering yellen. >> drugs pharmaceutical.

i have burke up, pfizer, j & j. >> anything oils. >> yeah. >> and there it is we've been emphasizing it's the drugs and oils and, you know, those are what i call -- >> you don't like that >> no. drugs and oils. >> yeah. and the therapeutics instead of broad -- >> have you seen the comments out of china it's saying things. >> i have. we ought to do that. we ought to mention the state media director saying it's extremely grim there we can't ignore that. >> no. we can't ignore it that lockdown in shanghai is an absolute factor. are they really shooting your dog if you're walking your dog >> oh, god i don't know why would you bring something like that up

>> well, because i have lots of friends -- >> they're not making you separate from your children anymore. for awhile they were separating children from their parents. >> that's a dictatorship >> you're right to bring it up it's not necessarily about shooting dogs. >> you know what we haven't talked about >> tell me. >> do you think it's possible jamie dimon had 1942 tequila when adam came to see him? >> have not watched it i remember at the time and jamie was very involved in advising mr. newman i remember, of course, when it began they were trying to get it to the public markets and getting a lot of advice. >>yeah.

>> 1942 -- >> i went to see adam newman it was 11:00 p.m he had the giant bottle of 1942 tequila. i said i don't know it's a little early he said that's preposterous. he poured me a shot. shot you don't really shot '42, by the way, and i realized by midday i had to take a nap. >> he promised me a big night out drinking tequila but we never got there. things kind of wrapped up for him. but, you know, let's get back to some of the news from this week. there's something i would like to throw-out which is elon musk and the twitter position 9.1% not 9.2. on monday i said it's a passive position therefore, you know, it's

unclear it would have any interest in the board. of course, not many hours later i got wind he may have been in talks with them for some time and it was yesterday we learned he would be added to the board it never should have been the 13g filing, which is a passive filing this is come up in a number of conversations i've had in part with investors who were short the stock and, of course, upset at the huge move that twitter has made over the last two days today as you see it's down a bit. but it's a fair point. it should have been filed as 13d. not necessarily seeking to take control but what is applied by a d in terms of changes and conversations. he was having them how this got away being filed as a g, which allows more time for the filing of it and the disclosure of the position itself if it was a d, he passed 5% of the 14th of march. he would have had to file by

march 24th we would have known he was in conversations to potentially join the board of directors. none of this would seem to rise to a great challenge to the fcc. unclear what, if anything, they'll do it's a fair point people are making it never should have been filed as a passive stake it isn't it's filed as a 13d. >> let's say elliot did this. >> he never would have their lawyer would have made sure -- it's what they do. it would have been a d. >> so if you're the fcc, do you put a fine out >> you fine the world's richest man $100,000. >> who is richer >> it's going to teach him a lesson. >> who is richer this man or the man massacring people in ukraine. >> i don't know, jim. >> one is filing a 13 -- >> i know. >> they're rule violators. but let me is you something,

elon mos elon elon musk has a playful attitude he's not viewed as being a villainous force. >> you don't do what he does by following the rules, so to speak. if he follows the rules, he wouldn't have done suffhalf the stuff he's done. >> he's very smart. >> it was conceivably unfair to those who wanted to be apprise of the ownership stake earlier and understood exactly the dispositions he had in terms of his approach to the company. which was not passive. but much more, hey, i'm getting on your board. how he has time for that and the endeavor board and tesla's board, not to the mention spacex and every other effort he's got underway i have no idea. >> how about if warren buffett did it don't you think it would be the same it's warren buffett.

>> which you go from passive to active after you bought the stock, i understand it to be contrary to the government's rules. >> i mean, that's the thing it's a 13d. he started with a g. it never should have been a g. >> i'm saying what is the point of the ruling? >> i don't know. it doesn't apply to him. it applies to everybody else. >> wait a second, david, you're talking about a double standard. >> i may be. i may be all right. >> just because we like him? i want to move on to other names. your list is so macro today. you get down to 11. >> this is my ladder people should note. most people don't -- >> no, they don't. sherwen williams and dock you sign.

docusign, if you don't have as many real estate transactions, that's bad for docusign and the document you got handed. i would like to know where that stands. >> my producer gary is -- it's a conference call that jetblue had. we'll have mr. hayes join us shortly. >> why does he join you at a time when he should be -- >> and, you know, one thing we have here from the department of justice after all this -- by the way, they're dealing with the department of justice on the american airlines cooperation agreement they have. and there's still trying to get that through maybe they think the president is still trump. >> to your point being, there was research less predictable. nobody would have anticipated,

for example, that at&t would have been challenged by the department of justice. >> they had a serious person. >> make. serious. he was lost. >> yeah. he was lost. robin hayes. but these days anti-trust figures into virtually every deal it doesn't mean the deals are being approved they are they continue to be. i said this many times, the bar seems to be higher this one in particular about the regrets of improving amr-u.s. air. it's going to be a hard part to get passed even for frontier and an spirit. >> yeah. >> and certainly for jetblue we'll ask mr. hayes about it and get some thoughts from him in terms of why he believes this is a combination. that's will get past the anti-trust regulators. lots of deals, jim, to your point, have to be looked at more closely in terms of their ability to potentially get done or be willing to go to court.

>> if you listen to let's say you step back and listen to the very neutral words of phil lebeau. >> it's not working out. >> no. those are ill advised. if you listen to phil lebeau, you know, there's not a tremendous overlap. >> right. >> there's not. >> no. there's not. it's just we have a different -- they have to get the reading of the room you have both cantor and cahn. they've been told, basically, the agencies are told don't go in i mean, it's like the agencies in oil they're telling you, listen, don't drill but drill. >> yeah. >> it's difficult. >> yeah. it's difficult >> the government is hard to read right now. >> it is the agencies are digging in because -- >> and cross purposes, no. >> the agency is digging in

their heels because they're the ones that are going to be appointed and can be very liberal. >> all right the markets before we get to bob, give me your sort of wrap up the nasdaq down almost 2% now. the s&p down over 1% we talked a lot about the fed continuing its mission to tighten in the midst of what appears to be something of a slowdown. >> right. >> in growth by the way coming off incredibly high growth. we have very low unemployment. we have incredibly high inflation. >> i don't want to pick on any one company. let's take the smh it was crushed, david, in my analog i'm using i have the numbers memorized you're looking at smh down 30% in a month. >> right. >> actually october to december. it's the one you have to be most concerned about. or you can say that's how you hedge. >> god, i wish we were more

bullish. i'm conservative here. i have my conference call tomorrow my 12:30 conference call i'm not going to be positive i'm going to be very regretful. >> what do you have to regret? >> i was hoping it would all come together. i was hoping for a little more bullish scenario. >> yeah. >> i'm conservative here i had to raise $570,000 to giveaway. >> you went from conservative to very conservative in the space of five minutes. things are getting worse every second. >> that was arbitrary and capricious what i mean to say is i'm looking at the prices and saying, you know, they may be overdoing it at this point but i don't want to buy them now, david, the minutes come out. >> yes. >> maybe someone says, oh, okay. so there you go. and they buy things. these little rallies need to be sold. >> okay. all right. we'll see. we have to get to bob. make it quick.

>> all right i want to know -- >> oh, jeez. let's get to bob psani. >> oh, boy you're bringing back memories there. david looks sharp, folks and jim is absolutely right. sell the rallies is sort of a thing that is happening with tech now tech got burned. remember, take a look at the sectors. we've had a great two-week rally in tech until 10:00 a.m. yesterday. it got blown up. tech is down % you see cathie wood. here is the difference what you might call quality tech of high earnings and high multiples or high margins or good profits and lower quality tech you see the big disparity there? that's what we're talking about. interest rates keep going up aggressively in the market it starts to believe they'll keep going up agrelszively energy still holding up.

defensive sectors. we noted this. utility and health care continuing to hold up. but stuff is starting to really by forkate here. the market is in a box it's in a difficult situation. so right now take a look at what we've got new lows for we have new lows on the list here you heard diane talking about 5% mortgages. dr horton, lennar, home depot new lows pay attention there. there's a sector that is fading. speaking of fading sectors, we've got a lot of stuff that is just quietly fading away, jim. this morning was talking about the transports that's another sector that is just looking terrible. so the high for the s&p was march 29 thd we'll use it as a date here. transports down 10%. since the march 29th close where the s&p was at a high. home builders down 9%. retail down 9% banks going into earnings next week down 8% the most important parts of the

markets like financials are starting to fade here. what is still standing well you know, talking about new highs with utilities stild holding up energy is holding up we'll stick with march 29th again. y utilities at new highs consumer staples holding up. energy is flat health care is modestly flat metals and mining topped out about two weeks ago. it's down 1% let's say commodity stocks and defensive sectors are holding up for the moment better. so here is the problem, this has very big implications for earnings we'll go into earnings season. it's a very treacherous macro environment. it creates enormous confusion for the analysts because they don't have a good grasp on things often so q1 will be fine in fact, i think the numbers actually come in higher than expected they have low estimates they haven't changed. we'll be okay. q 2 i suspect will be strong because the consumer and the economy are still going to be

strong the problem is q 3 and q4. the numbers are much higher than q 1 and q 2. in fact, record numbers. that's where i think the problem is going to come you're going to start seeing analysts, at this macro environment continues. i don't see why it wouldn't. you'll see them start adjusting those numbers downward and that's where we're going have a little trouble. we're expecting right now, david, 8% increase in earnings for the s&p 500 in 2022 over 2021 which was a record year that 8%, i think, is certainly in jeopardy right now. remember, david, we're in the blackout period for the analysts they don't want to say anything and front run what the ceos will be saying. that's why the earnings numbers have been steady for the last several weeks. i suspect that is going to change in the next couple of weeks. david? >> thank you yeah, we'll be keeping an eye on it all right. we have a great report from jim, as well. reminder, as well, get innen out cnbc investing club with jim he has the monthly mentioned

tomorrow at 12:30 p.m. eastern. >> can you come to one of mine >> sure. i'll come. if you want me to. tomorrow i'm getting the sense it won't be a particularly uplifting affair >> i like to tell stories to make people understand this, too, shall pass. >> okay. all right sign up and find out more at c cnbc.com/jointheclub before we head to the break, we'll look at bonds. an important sector, to say the least. we've talked about mortgage rates exceeding 5% well, that -- you can see why. that is a significant move up across the curve you get a sense for it there's a spread, at least, between the 2 and the 10 we're not talking much we'll be right back.

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welcome back let's get to stop trading. >> one of the stories that we don't talk about enough versus say work at home, is citi.

today credit suisse said they will miss the numbers. noweverybody is almost unanimous in missing the numbers so how do you miss the numbers when everybody has cut the numbers but i say this is an ongoing problem. russia, they have exposure to russia. >> they haven't told us as much about russia as we might have anticipated. remember my interview with jane frazier, certainly didn't seem at that point willing to share a great deal i don't know what the numbers are now, what people are anticipating >> but when we don't know, we sell and i'm worried. i think they have a big exposure and i think that we should know maybe when they say in the quarter of the exposure. but you want zero. you want to be a community bank where the only thing you know about russia is the dressing >> what do you have on the show tonight. >> i have perhaps the most important guest you could have right now since carnival, i have

norwegian cruise line's frank del rio. i want to see if the exuberance of carnival has carried over and because i'm ready to cruise. >> i know you are. >> the haven part of norwegian cruise it is so cruise. fact that my wife is willing to travel, on the cruise, they do not have baconators but i bet you that they can. >> we're going to have treasury secretary yellen on the hill she'll be facing questions from lawmakers. we'll take you there live when that q&a begins. meanwhile, more sq"squawk on the street" after this break

good wednesday morning and welcome to another hour of squawk on the street i've david maybe ear long with morgan brennan carl has the morning off we're live from the new york stock exchange one half an hour into trading and by the way moments away from treasury secretary janet

yellen's testimony on capitol hill we'll take you there live when she begins to take questions. >> that guy is sitting back and relaxing from lawmakers morgan. >> it is a busy day on the hill in general we're 30 minutes into the trading session and here are three big movers twitter on pace to break a three-day win streak seeing the tock gain more than 30%. but one potentially positive side for users, the company announcing plans to test an edit button shares down 2% rivian losing premarket gains on track after meeting 25,000 evs this year. keep in mind though, that target is 50% lower than the previous forecast that slashed just last month. shares are more than 75% off of their highs for the year down another 2.5% right now finally, we're watching jet blue and spirit this morning. jet blue offering an unsolicited cash bid of $3.6 billion to buy spirit airlines throwing into the question the planned merger with frontier that had been struck earlier this year

shares of jetblue down 8.5 end spirit down 3% robin hayes joins us this hour to discuss the news. david. >> looking forward to that well stocks are down rather sharply this morning of course you could see it will with the s&p down 1.3% and nasdaq almost 2% lower ahead of testimony from janet yellen. that will be fairly soon and we'll get fed minutes this afternoon. here to break things down, goldman sachs u.s. equity strategist david costin. like he's any co-anchor and first time back in our studio here in over two years >> yes. >> welcome back. >> great to be here. >> and let me throw a few things at you because we during the course of the day talk to similar people, people allocating capital for a living and making decisions. this is what i'm hearing this morning. slowdown in the data, is the fed going to engineer a hard landing, mortgages above 5% and

the lockdown in shanghai and what does that mean overall and is the economy slowing and the consumer slowing and the likelihood of a regulation higher, i put it to you mr. chief equity strategist at goldman sachs. >> those a big topic of conversation with clients. stagflation and the higher rates are sort of the top commentaries that people are pressing us on and try to understand. our view, at goldman sachs, is that we are in a decelerating economic environment but still unlikely to have a recession. and yield curve is suggesting maybe one in three probability, one-third probability of a recession maybe in 2023. so we're still looking out into the future, probably more than a year and in fact, the history of a inverted yield curve suggests when the yield curvin verts there is a recession 20 months into the future. there is a pretty long time. and the more immediate issue is

thinking about earnings season which will dock off next week with the banks and we'll get data points from companies in the next month and i think what is notable about that, is that the skp expectation is around 5% earnings growth. but, david, if you remove energy, energy companies will have some 250% growth in earnings, there is to earnings growth so that is one issue and the second is margin and the margin compression, broadly speaking around 9 basis points of compression and a 60 basis points of compression when you take out the energy sector so that is -- >> and that is from wages, supply chain, everything >> wages, supply chains, some disruption and those are some issues that will be weighing on i think investors. >> so, david, if you're correct in your assumptions that it is aways away, where does an

investor want to be focused on to hold its value but not increase. >> the number one area is on companies with resilient margins and that is why the topic of margins are so pertinent we want to think about the companies in terms of high and stable gross margins and the idea over the last five years that before the pandemic, sort of during the pandemic and then after the pandemic, where companies have been able to maintain those high and stable margins. you could see nike and alphabet, these are company where's they have demonstrated prima facie evidence that they're able to maintain the market in the challenging environment through the last five years. >> morgan. >> i want to get your take on this piece from bill dudley that is titled if stocks don't fall, the fed needs to force and it is getting circulate and discussed on wall street today with basically dudley flagging that powell has said financial conditions need to tighten and if this doesn't happen, the fed will have to shock the markets to achieve their desired

response how real is that risk? is that prices into equities here it sure doesn't seem like it. >> well, bill in the office next to me at goldman, so he has talked about the idea of tightening financial conditions. my kmeef economist at goldman has been focusing on this a lot. and our view is that there will be tightening financial conditions and we want to think about this in the context that bond yields have increased like 70 basis points in the last month that environment alone would suggest the pace of back-up and races so swift, it is like two standard moves in a month. that would suggest near term over the next month and that equity will face some pressure as rates have gone higher. there is different building blocks to measure financial conditions tightening. higher rates is one of them. brand or credit spreads is another one and ten years will be another, that is definitely a head wind for equity prices and

i think about the models that we do we have earnings growth this year of 5% over the course of 2022, increased relative to last year and a margin or multiple that is roughly around 20 times. and the idea that ultimately we here had this conversation at the end of the year, morgan, we'll have already experienced probably nine interest rate hikes, or the equivalent there of, bringing rates to probably 2.5% and then we'll have midterm elections behind us and so the uncertainty will be a little bit behind us. so the idea of higher or tightening financial conditions are certainly a risk and something we've incorporated into our forecasts. >> in light of that, is u.s. still the best place to be >> it u.s., well i think the uncertainty and and the recession prospects in europe would suggest that companies with a lot of revenue exposure there are more challenged or at

least more at greatef risk as compared with company where's end markets are here domestically so yes, i would prefer as a portfolio manager to own and pivot with politicals 100% of the revenues domestic and where the end market is more here as opposed to exports to asia or into europe. so i think that is a strategy to think about it valuations have come down across the board globally it is an area of some discussion as well as in addition to some of the points that david raised earlier. valuation compression, so the risk is more modest at these levels. >> and i'm looking for your lates latest note in terms of the conversations with clients and scaring them with discussion of the early 1970s experience and what happened to equity during a period that you say is somewhat similar in terms of what we're seeing here, involving the yield curve and inflation and when the

bear market was brutal. >> so you should be worried. we are worried we're paranoid former chairman of intel said only the paranoid survive. famous quip. so the thinking about that, that is a risk. and the idea of the market has evolved in the sense it was much more economically sensible much more industrial oriented and the shift almost 60% is technology and one argument might be the resilience of that business is less ses sentible to what we saw in the early 1970s so that is a one comparison to think about. it is certainly a risk we think about it. overall the u.s. equity market maybe has 5% upside between now and the end of the year. should we go into recession, it is a meaningful down side but that is not base cases right now. >> so nice to have you back here in person. and somehow you got younger over the last two years

how did you do that? >> it is magic. >> no work done. no david costman from goldman sachs. >> shifting to the airlines, jet blue making a $3.6 billion all cash offer after frontier and spirit reached a deal. >> robin thank you for joining us this morning. left's get to the main question people have. when did you decide, that the jet blue board decide, you know what, we think that -- that spirit is the airline that we should be partnering with, let's put in a rival bid >> hi, phil. thanks for the question and good morning, everyone. obviously the sort of landscape is something that we think about a lot. and we've watched a lot of consolidation happen here in the u.s. where you have four large airlines that control about 80%

of the market. so for the rest of us, you know, i think we're always thinking or from a jet blue perspective, how could we best compete. and when -- so we've been thinking about that and we see the spirit offer with spirit transaction as really a way to turbo charge jet blue's growth and do something much more quickly because of the order book and the presence that we're having and really just bring more low fares an the jet blue experience to more customers. so we've been think being it for sometime and then obviously once the frontier/spirit deal was announced, we had to make a decision and we felt that the benefits were compelling >> robin, you know the big concern that is out there. regulators and whether or not the doj will sign off on this deal that is what frontier hit at when it responded to your bid yesterday. in fact, they said in it, it is unlike the competing

spirit/frontier combination, an acquisition of spirit by jet blue, a high fare carrier, would lead to more expensive travel for consumers in particular the significant east coast overlap between jet blue and spirit would reduce competition and limit options for consumers. i mean they're saying it right there. they do not consider you guys a low cost carrier and they do not believe that you'll have low costs with spirit. what do you say to that? >> no, i mean, first of all, we do expect a lot of regulatory rigor or review of this transaction just as there could have been with the frontier/spirit merger we've had a lot of consolidation and that is something that i know that the regulators are expressing some concern about. what i would say is when i think about the fits of a jet blue/spirit transaction, you don't have to choose between great service and low fares, you

could have both. we have a blue basic fare. which is our fare designed to attract the most price sensitive customer but we also offer other things as well. we could offer buy ups to more bundled fares and more leg room and let's remember, phil, even customers buying our blue basic fare, they're getting on a jet blue airplane, they're get more leg room and free wi-fi and tv and free drinks and snacks and yes, the price is kpcleersly important but people want more when they fly and jet blue could bring you both >> robin, if the doj comes to you and it said, okay, you can buy spirit, but you've got to unwind your northeast alliance with american airlines would you do that and do you think that is a possibility? >> well, i think these deals are very complementary when we look at benefits of the northeast alliance with america, jet blue is 50% bigger in this

sumner new york than we were three years ago, enabled by the nea. we've competed with the other large two legacy airlines. our true kblue members have access to now flying on american i mean, the benefits for the consumer are just so pro-consumer i don't see how you could for a minute say that you should trade back for this. if we were to walk away from the nea, jet blue could get smaller again in the northeast, you would have let flights that would be able to do. and through all of the destinations, we just added milwaukee and kansas city, one of our legacy competitors reacted that and added it into the northeast. so they are already driving more choice for customers and more competition and so we certainly don't think should we trade the nea for this these are two very complementary deals.

the spirit transaction will allow us to grow outside of the northeast and complement what we're doing with the nea. >> robin, this is morgan if this combination moves forward, to dig into it more deeply, are we talking about two different brands or spirit is deeply integrated into jet blue and if it is integration, what would that involve because analysts are raising questions around aircraft retrofitting and pilot pay. >> sure. so, i want to be very clear, i mean we are welcoming, we are really welcoming all of the spirit team members. we think it is a fantastic team to combine with our own teams so we're excited about that and the airline will be jet blue, though and certainly things that we could learn from spirit. i think they've done a good job on the airport technology side there is a number of other things that i know we can learn from that focus on cost but the brand is going to be jet blue because we think we are perfectly set up for both value

conscience leisure and business flier. and there is a -- there is obviously a cost that go with this type of acquisition in terms of things like reto fitting and bringing everyone on to common pay scales this is normal in this type of transaction. it is something that we've ready for. we've just retrofit 119 of our own 320s in the new speck so we know how to do it. and so the accretion is so significant that even with those costs, this deal will be earnings accretive for shareholders in the first year. >> robin, it is david faber. i don't know if spirit is going to say that it might lead to a higher offer for you coy see that board deciding that the risks of anti-trust scrutiny or rejection are just too high it is an easy defense to hide behind what will you do to try to convince them. offer a large termination fee or

hell or high water or a willingness to go to court should the doj say we are challenging this >> i mean, one step at a time. we'd made an offer we're standing by and ready engage we've done a lot of work on the regulatory side. we understand i believe what the concerns are we are -- we have a lot of data to support the effect of what they call the jet blue effect. interestingly, when jet blue flies into a market and competes with a legacy airline, the overall fares come down more than when an ultra low cost carriers, and they do that because jet blue is not ignored. jet carriers will bring their fares down and when you scratch behind the service and look at what the regulators are trying to do which is to make sure that fares go down rather than up, we believe a jet blue/spirit combination will have a more permanent effect nationwide on lower fares than a merger of the

low cost carriers. so we have a lot of -- behind this and we'll lay the case out to the spirit board. our offer is clearly a superior proposal to what they've got today and we expect them engage seriously as they already said that they will. >> what are your shareholders not understanding about the benefits of this given your stock is down 8.5%. >> the market is down today. i think we're down a little more than that. it is a surprise for people. this came out last night so we're doing a lot of investor calls and hosted a analyst call earlier and get investors to understand the strategic rationale of this transaction. if you compare this to the last margin marger, when alaska

airlines paid for about an airline about the third of size of spirit. so this is a $3.6 billion. just under a billion dollars more but it is an acquisition of airline that is three times the size and again allow us to turbo charge our organic plan which is a plan our investors are already familiar with. so we're going to be making the case over the next days and weeks. >> robin, part of making that case and you just talked to analysts about this, the potential to grow into some markets where you have been constrained in terms of growth potential. talking about los angeles for example at l.a.x., but you want to grow into markets like las vegas, secondary markets like chicago where you don't have as big of a presence as you like. how important is that to convincing the spirit shareholders, look, this is a smart move here and it helps everybody grow here. >> yeah, i mean, absolutely, phil not only does this allow us to offer our combined customers more flights and more markets

like orlando where we're both -- we both have a presence. but you named it the ability to grow in los angeles. we've made no secret of the fact that we would like to grow there more quickly it is a very constrained airport and also by having more access into legacy hubs, we could offer more choices to markets that have suffered from higher fares. so we think that is a core part of the argument. >> robin hayes, phil lebeau, thank you for joining us today. >> thank you into lael brainard warning about a plan to reduce the -- and janet yellen warning of quote, enormous economic repercussions from the ukraine war in her prepared remarks before the house today steve leaseman is here to discuss. steve? >> -- as the pandemic continues

into a third year. if you supported the g-20 debt service suspension -- >> reaching the minutes of the fed's march meeting at 2:00 p.m. today and it should provide new details about the plans to reduce the balance sheet the minutes come a day after the governor lael brainard continued with a warning that plans are likely to be very aggressive they said the balance sheet runoff could begin as soon as may and would involve large caps that is limitations on how much the fed could allow to run off during the pandemic. more than double the size of the balance sheet to $9 trillion in response to the pandemic it bought large amounts of treasuries and mortgages to stimulate the economy by further driving down interest rates after cutting the funds rate to zero now, calls for an aggressive wind down and that is to a sharp policy reversal since the fed isn't even buying bonds up until last month now the fed will no longer replace bonds in mortgages that mature accord them to run off.

brainerd's comments saying that the fed could reduce the balance sheet $100 billion a month maybe in the 80 or 90 range. that would be double the pace of the runoff in 2017 ever core writes we do worry about the fed being too aggressive into a bond market that is subject to war-related volatility and potential future stresses for her part, janet yellen, she just said russia's invasion of ukraine will have large economic effects both in ukraine and beyond including for both energy and food security. she's going to say she's going to press the international financial institutions to help offset the war's impacts in the most vulnerable country as long with keeping up very, very strong and stiff sanctions, david. >> steve, of course you're splitting a screen with the treasury secretary who is completing her opening remarks and i believe q&a is about to begin. there is chair maxine waters of course she is in front of the

house financial services committee. let's listen in live. >> -- concern about how our caribbean neighbors are treated in the international community by u.s. financial ins ttitution and by our own government. in particular i'm concerned that as a result of united states government actions, and overly cautious u.s. banks, countries like bash arbados and jamaica ad others have been cut off to capital and credit, derisking as this issue is called, has direct and negative effects on the ability for the caribbean to build businesses, employee citizens, facilitate economic development, and allow families to send and receive funds from abroad the derisk has consequences for the united states as well. the caribbean region is both geographically and historically close to the united states and it is not only an important trading partner, but also a

strong reliable ally in security cooperation. this is why this committee passed legislation which was signed into law through the anti-money laundering act of 2020 that directs the treasury to lead a government wide strategy on de-risking and providingthat strategy to congress later this year madam secretary, can you speak to the importance of the caribbean region to the united states and what the treasury is doing to address derisking and including treasury's progress on the strategy >> thank you for that question, chair waters financial inclusion of course is a very important goal of the united states and the treasury department and we have been concerned about derisking in the caribbean and other areas of the world i would say that in spite of

that, the united states has one of the lowest costs of sending remittances of any country in the world and we have seen remittances increase considerably, the data that we have on the caribbean shows that there have been a significant increase in remittances there and to latin america more generally. there are diverse drivers of derisking. one issue is profitability concerns of banks that have led them to cut back also changes in global business strategy following the 2009/10 financial crisis our amlcft rules be a further contributor to derisking and to the extent that that is true, we think that the best way forward is for jurisdictions to make

meaningful and publicly visible improvements to their amlcft regimes. that is something that will give foreign financial institutions confidence that their operated in an environment in they could mitigate the risks effectively and treasury is happy engage in dialogues and provide support to jurisdictions that are seeking to make those changes. >> thank you in the interest of time, i yield. the gentleman from north carolina, mr. machenne who is the ranking member is now recognized for five minutes. >> secretary yellen, thank you for being here as we know russia is earning hundreds of million dollars of dollars through oil and gas exports. even though the president banned russian oil imports which i

welcome. treasury continues to provide sanctions licensing for banks, trans acting and transactions related to russian energy. this includes financial services allowing other countries to import russian oil and gas why are these licenses being provided >> so, we are working very closely with our partners to have a coordinated set of sanctions. and our goal from the outset has been to impose maximum pain on russia while to the best of our ability she'lling -- shielding the united states and our partners of undue economic harm. >> i'm commended the approach on sanctions but what i'm asking about is the licenses permitting bank transactions related to russian energy >> well, in following up what i

just indicated, unfortunately many of our european partners remain heavily dependent on russian natural gas as well as oil. and they are committed to making the transition away from that dependence as rapid as possible. we're doing all we can to help but if the meantime, we issued this license and they have taken steps to make sure that there can be a continued flow of russian natural gas and oil. >> and if the europeans take more stronger action against russian energy, your department would take stronger action as well >> well, we are working closely with them on sanctions and want to remain aligned with them. >> so i want to pivot to china because i think that the government of china is -- is

watching us very clowely it is clear when russian troop as massed on the border last fall, the administration lacked a cohesive strategy to respond many of us have warmed that a similar situation is occurring between china and taiwan now, for example, chairman xi has vowed to quote, smash end quote, any attempts at independence by taiwan and we've seen incursion into air space including sending tons of planes into the identification zone has a warning of sanctions been issued to determill action of china against taiwan. >> so clearly the administration and the treasury department are opposed to any unilateral change in the status quo with respect

to taiwan and we are working very closely with our partners in the administration to make sure that we have at our disposal tools to respond to prove -- to provo cases in that regard i'm not commenting on hypotheticals on what we would do in any particular scenario, but i assure you that we are closely coordinating with all of our interagency partners to make sure that we will be able to respond appropriately. >> has the administration contemplated a sanctions strategy in the event of a chinese move against taiwan? >> i'm not going to comment on specifics. we have put sanctions in china on -- in place on china with respect to forced labor in

xinjiang and provocations with hong kong. but certainly we are concerned about taiwan and will act as appropriate. >> and that would include, including sanctioning senior leaders of the chinese government as has been done with russian oligarchs? are you to say, am i to hear from you that you're open to all tools available in the event that china moves aggressively towards taiwan. >> absolutely. i believe we've shown that we can in the case of russia, we threatened significant consequences, we've imposed significant consequences, and i think that the should not doubt our ability and resolve to do the same in other situations >> thank you >> thank you very much the gentle woman from new york, miss valazquez who is the clair of the house committee on small business is now recognized for five minutes >> thank you

madam chair. secretary yellen, many of us on this committee are concerned about a potential use of cryptocurrencies and other digital assets to evade international sanctions imposed on russia for its illegal invasion of ukraine. the u.s. and other g-7 nations recently pledged to work together to ensure that the russian state, its elites and oligarchs will not be able to utilize digital assets to side step this sanction how is the treasury department working to carry out this pledge >> well, we are concerned about sanctions avoidance and we recognize that digital assets present opportunities for doing exactly that so first i would say that we are monitoring for any attempts to

use cryptocurrency to evade our sanctions. and we have ample enforcement authority which we won't hesitate to use. we are tracking carefully using all of the tools that are at our disposal the assets of oligarchs and other sanctioned individuals, we're working very closely, exing information on this with our partners in the so-called repo task force and the department of justice announced klepto capture which is designed to use u.s. law enforcement resources to identify and prosecute sanctions evasion. and fin sin issued an alert to financial institutions to help them recognize suspicious transactions in this regard.

>> thank you for that answer secretary yellen, i want to commend the treasury department on yesterday's announcement sanctioning the currency exchange gano tex and hydra, russian's most prominent dark net market on one hand i think this announcement demonstrates the concern i have about how the dark web and cryptocurrencies could be utilized for illicit and criminal behavior. and that cyber criminals operating in russia observe operate with support of vladimir putin and his regime but more importantly, sends a message to putin and cyber criminals around the world that the united states in coordination with its allies will continue to disrupt this network and cut off all avenues for potential sanctions evasion by russia. my next question, secretary yellen, is one of the many tragedies of russia's illegal

invasion of ukraine is the refugee crisis it has created. the united nations estimated 500,000 ukrainians have fled and early estimates suggested that refugee totals could reach up to 4 million. support for ukrainian refugees could cost states as much as $30 billion over the next year according to some estimates. how is the treasury department working to assess and possibly alleviate the economic and financial impact that the refugee crisis is having in other countries in the region? >> thank you for that. we're very concerned about the refugee crisis we are monitoring this situation very carefully and recognize the enormous burden that it is going to place on most governments that are already struggling with

other stresses because of the pandemic and their proximity to the conflict so we're working with other agencies and also with international partners to support the host governments and the refugees themselves. and there will be a variety of channels, by lateral support, multi-lateral support, working with the financial institutions and as an example european bank for reconstruction and development recently announced a $2 b $2 billion package but this is a high priority for us. >> thank you, i yield back. >> thank you very much the gentle woman from missouri, mrs. wagner is now recognized for five minutes. >> i thank you, madam chairman

and secretary yellen, thank you for joining us today last month i introduced the isolate russian government officials act. to ensure that russia becomes a pariah in certain international organizations. i was very pleased to see the committee pass this legislation unanimously in march could you please reply the simple yes or no unless you feel the need to elaborate, regarding russia's involvement with the following groups that are within treasury's jurisdiction. secretary yellen, should russia be removed from the g 20 >> so, president biden's made it clear and i certainly agree with him that it cannot be business as usual in any -- for russia in any of the financial institutions he's asked that russia be

removed from the g 20 and i've made clear to my colleagues in indonesia that -- >> good. >> -- we will not be participating in a number of meetings if russians are -- >> and i'm going down to the legislation that make it to the floor. you're echoed the legislation vis-a-vis g-20 should russia be removed from the national transaction task force. >> that is one i haven't looked into it. i'll get back to you on that one. but it's role certainly should be minimal. >> please do as it is again part of this legislation. and the media reported last month that russia had, quote, stepped back from participating in the financial stability board, fsb, but it is still

listed as a member should russia be removed from the fsb? >> well certainly it is rule should be minimal. >> well i hope it would be removed from the fsb that is what the legislation does that passed out of committee. i hope that the administration and i believe that the -- that it has indicated such. >> you know, these are not unilateral decisions of the united states and each one of these organizations has its own set of membership. >> we need to make a strong stance ourselves as leaders in these organizations. >> we have made clear that we do not want russia to participate actively in these organizations. >> so that would be the fsb. later in month the imf and world bank will hold spring meetings will russia be represented at those meetings even virtually and will you refuse interaction with russian officials.

>> well russia is a member of the imf. and in spite of the fact that the great majority of imf members, i think agree that russia's actions are horrific. it doesn't look like it would be possible given the rules to remove russia's -- >> i understand that but what i'm saying is that the u.s. must lead and be strong in our resolve on these sanctions and in making them the pariah in these organizations. so i would hope that you would urge participants to refuse interacting with russian officials vis-a-vis the imf and world bank. >> we will denounce russia's actions in all of these -- >> thank you very much moving on to china as you know china has faced major challenges in the real estate sector including debt problems at one of the largest developers ever grande

opaquing had a liabilities of unknown size and chinese regulators have warned about a rise in nonperforming loans. beijing has also announced restrictions on private investment in news media which would only tighten the chinese community party control over information and make china's economy morre opaque which parts of the chinese financial system pose the greatest risk to stability beyond china's borders and what is treasury doing in the f-sock to mitigate this risk. >> well, i do think that there is significant risks in the chinese financial system and the property sector is an example of where there is severe risks. importantly, a slow down in the property sector beyond its

global implications would possibly weigh on china's growth outlook which would have impacts on its economic partners and this is something that we're carefully monitoring. >> and any information on that, i would appreciate it. and writing could follow up. i yield back >> thank you the gentleman from georgia, mr. scott who is also the chair of the house agriculture committee is now recognized for five minutes. >> thank you, chair lady chair yellen, you and the treasury department have refused to sanction russian oligarch alashare uzman who is worth $20 billion and who also vladimir putin's favorite oligarch and i want to know why

why would the u.s. treasury department issue a special license exempting this oligarch and making it legal for his identity and entities to continue to do business as usual with our american companies when putin is murdering children, bombing hospitals, raping children, raping women why? >> so, we have sanctioned a large number of russian oligarch. >> no, but, my question is this -- there has got to be a reason we need to get answers to this the international world is wondering why and there has got to be a reason

with the deeds, the criminal crimes that this -- that this administration is taking and here you got putin's favorite oligarch, worth $20 billion, being exempted and given the right to continue doing business answer me, please. >> well, i can't -- >> the world wants to know >> i can't give you the details on this specific individual. but i could tell you that every day we continue to impose additional sanctions this morning we announced just 15 minutes ago, a further set of sanctions including on putin's children >> yeah, but -- >> and sometimes beyond blocking

an individual, when an individual owns companies has an interest in companies, it is important for us -- >> let me ask you about this my time is marching on tell me about your office of foreign assets control what role did they play in this decision >> they play an important role in preparing sanctions, packages against individuals. >> no, what -- chair yellen, this is serious here this is becoming a black mark on our nation we need an answer as to why. you may have a legitimate one. if it's the office of foreign control, we need to know if it is -- if it had some desperate situation in which to do otherwise would impact our

own nation or our security why? >> we work very closely with the state department and the national security council in deciding on sanctions packages. >> was there any internal disagreement within the treasury's department office of foreign assets control about how certain oligarchs would be protected from the deep economic impact on these sanctions. why putin's number one oligarch, that sends a false image of what we're doing. and let me tell you, our reputation as the world leader is at stake when these types of

things are happening and there is no explanation for it so, help us with that. >> i'm not going to offer comments on this specific individual that we have sanctioned -- >> you have offered -- you have refused to sanction others key oligarchs? is there a pecking order. >> we have imposed a large number of sanctions on russian oligarchs and continue to impose further ones where we're not finished. >> the gentleman's time has expired. madam chair, would you ask that you make arrangements with mr. scott if it is classified, you may meet with him, whom ever you designate, but he needs an answer thank you. >> thank you, chair lady. >> mr. lucas is now recognized for five minutes. >> thank you, madam chair. secretary yellen, i would like

to discuss a significant concern. the u.s. economy is facing significant challenges off the heels of the global pandemic that we're still studying the effects of and the u.s. economy is experiencing supply chain backlogs and inflation at a 40-year high and the russian invasion of ukraine exasperates it and in oklahoma farmers and ranchers are navigating volatile marks like for grain and fertilizer and at this uncertain times, they seek to protect their retirement and safeguard their businesses as i'm sure you could see, in the face of substantial headwinds, should be a priority. unfortunately, i'm concerned about the volume and significance of rule making proposals coming out of the securities and exchange commission in such a short amount of time runs counter to this goal.

since november the s.e.c. has proposed over 20 new major far-reaching rule changes. these rules impact every asset class under the s.e.c.'s jurisdiction the sheer amount and complexity of the rule makings compounded with the short and simultaneous comment periods and i know that short in in cases simultaneous comment periods could negatively impact markets and the public that depends on. it is important for congress to be able to fully understand the impact and potential unintended consequences of the s.e.c. sweeping new proposals so here is my question, secretary. can you speak to the importance of market liquidity during times of massive economic uncertainty? >> well, certainly, having liquid markets is extremely important to businesses and consumers to be able to engage

in financial and transactions that they count on to deal with risk so i certainly agree with the idea that that should be and is an important priority. >> and i realize you're not on the s.e.c. but the current approach, i worry, could rattle markets by rolling out current approach i y could rattle markets during a time when strong capital markets are essential for our constituents growth and national security second question, it is suggested there will be a new round of sanctions on russia. the european union is also said to be preparing new sanctions. in your discusses with your international counterparts, could you speak to the urgency with which the eu intends to impose sanctions particularly focusing on coal, oil and

natural gas exports? >> i think our partners are outraged by the atrocities that are being committed in russia, as we are. and we are working very actively with them to impose new sanctions that will cause russia significant aim. this morning we announced our own sanctions package that will now fully block russia's largest bank, spare bank, from participating in the u.s. financial system as well as their largest private bank, alpha bank the president will assisign a nw executive order prohibiting new investment in russia by all u.s. persons and additional sanctions

have been placed on elites and some state-owned enterprises europe is also working at a rapid pace to announced a digsal sanctions. i am not going to try to tell you exactly what they are, but they certainly intend to add to the sanctions they have in place. >> you don't see a reluctance on their part that is janet yellen testifying before the house committee. secretary yellen saying the treasury is monitoring any attempts to evade sanctions including the use of crypto currency a lot of conversation about russia actively or perhaps not act actively now participating in international organizations. the secretary saying the u.s. will not participate in any gs

meetings if russia participates. and also comments about china including significant risks including in the property sector, this as they announce a fresh wave of sanctions on russia and individuals we are going to move on as well and the world's biggest largest pharmaceutical companies it has its hands in both diagnostics and drugs. let's get over to meg who joins us with the ceo of roche >> let's start on the response to covid and how you are modeling the pandemic going forward, both on the impact to the business and more broadly, the way you are responding to

it >> we have seen strong demand for covid tests in the first quarter. we expect it to decline with infection rates going down in europe and the united states of course there is a question mark what is going to happen later this year. will there be another wave especially during the winter season >> how do you make decisions about production in the face of such uncertainty and how are your decisions affected by governments here in the united states waffling on continued covid funding and purchasing last summer we were caught flat footed not having enough home tests as one manufacturer wound down with less demand. how do you ensure that doesn't happen >> early on in 2020 we took a

lot of funds we invested in our manufacturing facilities and so did the whole industry as a result, we could quickly upscale production and ensure supply eventually that was the right decision, but the pandemic was much more severe than we originally thought and lasted much longer than we thought. >> one product you also had is that covid and flu combination test do you see this as something that could become available as a home test for consumers? has covid changed consumers relationship with diagnostics in general? we will expect to take home tests for all respiratory infections >> we do believe for the upcoming winter season, there will be a need to differentiate

infections if you visit your doctor and have symptoms, at that time you want to know is it the flu or covid. for that reason they have developed a combination test which will be available and in fact we believe it will be an important contribution for systems in the u.s. and around the world. >> do you see taking that directly to consumers as a home test as well >> yes, it is a home test. it will be available for patients at home actually, we have seen a big demand for home testing. so i do believe that also for the flu and this combined test, there will be demand for such tests at the home of the patient. >> i want to ask you about your work in cancer roche is one of the biggest cancer drugmakers in the world you had results that were

disappointing on target immuno therapy. tell us about the success for future trials considering the last one didn't work out >> this target we feel is a very important one. and we have actually a range of trials for different con ser types. the first trial was for a very difficult type of cancer, so we knew that the probability was low that this trial would succeed. but there are other trials upcoming let's keep our fingers crossed i think there is a good chance that other indications will work out fine i should say as well, this is one of only many medicines in our pipeline we have 14 new medicines in our late stage pipeline so there is a lot to come in cancer and beyond >> also in youpipeline is a

drug for alzheimer's disease how do you look at the landscape for these that target the buildup in the brain you are expecting data later this year for a similar medicine what are the prospects and how important is the cms decision coming out of the united states how to pay for these decisions >> we have robust clinical trial which will give us information whether this works ornament. it's up to the fda to make a decision about the medicine. let's keep fingers crossed we have a positive readout. if the trial is positive, which we will learn at the end of the year, i think it's important to provide access to all patients in the united states and worldwide. >> just one quick last question

for you. before we run out of time, have to ask you about biotech are you looking to buy right now? >> our strategy will not change. we continue to focus on targeted goals. we will seize on opportunities along the way. prices have been extremely high. they have come down now, but it's still rich valuation. we will not rush it, but we will continue to look out for opportunities. >> thanks so much for being with us we appreciate the time >> thank you for having me >> thank you, meg, for bringing that to us before we say good-bye, a quick look at the markets. the s&p is down. many of the tech names are down rather sharply apple is down 2.3%

and met aa down over 3% one bucking the trend is twitter with elon musk buying ten percent of the company "tech check" starts now. ♪ good wednesday morning and welcome to "tech check." today markets are in the red nasdaq falling more than 2%. chips under pressure is this a positive rally or the sign of a bigger sell-off. uber wants to get into planes and trains