today. it's really a unique opportunity, and we appreciate it we hope you come back and spend a little more time with us. >> thank you, becky. thanks for having me on. >> brian, i thank you, too, for jumping in today it's been great having you here. see you tomorrow morning >> my pleasure >> it's time for "squawk on the street." >> special night ahead, "exxonmobil at the crossroads premieres at 8:00 eastern. good tuesday morning i'll david faber with jim cramer carl has the morning off let's look at futures this mor morning. we have a reversal from yesterday's action europe has been weak, the dax down almost as much as 2%. you can see we are poised for a lower open

we are going to begin lower as fed chairman jerome powell goes to capitol hill for two days of testimony on the economy the senate banking committee we expect will have a lot of questions for him. certainly a focus will be inflation and as well interest rates hikes. we'll bring you that live. tomorrow powell will testify before the house financial services committee any thoughts on anything i have just mentioned, mr. cramer >> i'm wondering as we talk about the 18% tax holiday on oil, the otherworldly nature of president biden not really paying attention to the markets, oil has given back quite a bit in a bear market suddenly. >> it has. very strange is it because people expect a recession and therefore significant slowdown in demand >> yes

and therefore we should recognize that powell is winning. powell goes to the hill, now, oil can spike, of course, but there are some things that are coming down, and i think it's worth noting that the thing that was most visible that biden is just kind of, like, talking about that doesn't make sense is oil is in free-fall. and it tells me, david, for instance, exxon, watching your i don't care documentary tonight, exxon's stock is down big and it's been down for a week. >> had a big day yesterday >> given that back. >> of course we look at the actual commodity to yourself to your point, down about 5%. that's the stocks but we're also seeing the latest proposal for suspension of the gas tax. that's about 18 cents. unclear whether that will go anywhere it needs congressional approval. >> there's an unbelievable moment in your documentary where you talk about the idea of to

2040 and what's going to happen if it's all electric daren woods says, listen, if we have chemicals it's almost shocking to me but there is a universe which says that perhaps in the future, the futures are indicating this, nat gas is down, oil is down so i'm always questioning whether we should go all in on the inflation thesis when we have some things that are working. >> true. you do have to wonder what this means for overall picture, not to mention to your point that powell is sort of getting a little bit of what they may want >> yes but you have dow chemical downgraded say to a sell, downgraded 5%. credit suisse. a number of people say nike is doing the fight wrong, burlington stores down, bed balt seems to be on the precipice

i'm seeing, david, over and over again things that indicate that powell conceivably could be winning, yet we never hear that narrative on air i'm curious to hear whether behind the scenes did exxon ever talk about the fact that the longer-term projection for oil is to go down? >> they don't plan on it for it being anywhere near the price it is you know that. happy to point out two years ago, what did we get to, negative 47? >> but don't you prefer their view than the pundits on air >> to your point, one of the main questions is what demand for gasoline will be like in five, ten years from now exxon's model say you may have all electric vehicles on the road. >> when you press daren woods

about to if everybody were driving electric cars and some would still be doing well, not facetious, but you had kind of a smirk that -- kind of the smirk you give me when i say something that you think is kind of way out of bounds. do we have any film on that? >> you've got a big night tonight as well. this will be the last time we have to promote. people stop me on the stleet, exxonmobil 8:00. the message is getting out >> the no one has stopped me on the street saying how was usc and the metaverse? >> we'll talk more about that. the news flow has been going our way to our point it's been all about energy, the back and forth between the president and your friend mike from chevron what do you make of that, jim? >> that he's playing ball? >> he's not playing ball he sends a detailed letter about

all the things they can do and would do but he said it would be nice to have an honest dialogue and biden comes back and says why are you so sensitive >> to make had been one of the leaders saying let's sit down. mike worth took his budge fret $3 billion to $10 billion, spending so much money trying to be a better citizen and biden gives him the heisman. why does he get away with that because mike worth, as much as he's a terrific guy, is rarmded as an oil person, daren wood is an oil person. they make so much money. president biden doesn't want to be in the same room with him the most incendiary thing was biden calling exxon making more money than god god crushed exxon acouple year ago. >> he did. and $23 billion, the number

exxon won last year, and the number will be far, far higher this year, nonethelesspales in comparison to apple or google. >> that's my point and the stock's done nothing. >> they're making a lot more than god >> where is god in the standings? i would never be messing with this if the president had not brought it up. >> that's not interested money good for him or her. >> i think the president invoked this i thought it was incendiary and disrespectful. and he's gotten away with it because -- look, i'm not watching fox where they probably -- i don't know, where is god rated there low rated? i don't know but i feel very strongly that the idea that exxon lives by the sword and dies by the sword baurz they've had a lot of years, david, since 2013, that have been not so hot >> no. >> whereas i think that facebook, now meta, where i was with u mark zuckerberg last nig

in the metaverse, he can afford it >> he can. look at that oh, my god finally get to my doc and you're outdoing me. you got zuckerberg >> i'm sorry >> in the metaverse. >> i'm just trying to catch up look, my producer said it's really a shame because the docket should be the thing but i do have a long interview with mark zuckerberg tonight. so how about this? you just watch us, you watch cnbc the whole day through and isn't that terrific? >> until 9:00. or maybe after >> we'll go in the metaverse and have a pizza >> do we have anything from you and zuckerberg i don't know if we have a clip that of course means we have a clip can we see the clip? >> what did you do in the metaverse with zuckerberg? >> we chat we talk about things we like,

where we grew up and stuff what am i doing? here we go this is me and mark in the metaverse. >> i don't always think about business first i'm a product person >> right >> probably the thing i'm most excited about is i think by the end of this decade we're going to get to a billion people in the metaverse, probably spending hundreds of dollars a year each on digital commerce. >> the stock is such a buy, it's ludicrous. >> you believe that. >> oh, my god, yeah. >> the company formerly known as facebook, they spent over $10 billion last year. >> they could go meta bucks. >> all the engineers they've hired to develop this concept that believes will be a key

engine >> there will be a mall. there will be education. there will be travel you pay for a lot of things. if you pay for a lot of things on f"fortnite," you'll pay for things like that i'd be willing to change my clothes. you go to the mall there's a new fender thing, a fender jacket. >> fendee or fender? >> fender. product is in it tom brown, i can't imagine one of those, but you just -- there are people writing for this -- i know. >> how far away -- >> they're right there >> you couldn't get your seating right. >> i'm an idiot! >> they've got a long way to go. okay, but they improve every single day >> sure. >> i just think in a year you will want to come home, say hello to your wife,s i'll say hello to my wife -- wendy's has -- >> you have an interview with zuckerberg tonight not in the

metaverse. >> wendy's has a place in the metaverse. i can get my wife, chicken sandwich what was announced last night? maybe exxon will be in the universe >> is this enough to justify buying the stock >> the stock was being given away this guy has a vision jensen wong, brilliant man, nvidia, this guy brilliant man but also kind of much more regular -- he's very funny very funny he went to give me a high-five or a fist bump and i couldn't get it to work it took a while. >> you have to coordinate your movements? >> i'm not that good at me he's very fast. >> because you haven't spent a lot of time there. >> right i could have been part of the celtics and he could have been golden state >> awful looking chart >> don't worry, man. i wouldn't play any sports with

him for fear he would crush me, but i wouldn't want to play on the math team either maybe he's cool or i'm uncool. in the zen room i felt very uncomfortable. he felt comfortable. >> mark zuckerberg is cool >> he is cool. listen to me for a second. between daren woods and mark zuckerberg, i'm going with zuckerberg >> i'm hanging with woods. i did a lot of hanging with daren woods, the ceo of exxonmobil we'll talk more about the markets this morning jim mentioned an important point, which is what happens in 2040 when all the vehicles are electric and the demand for gasoline is far lower than it is daren woods says that will take us back to 2014, 2013, in terms of the demand for our earth according to models. why? he says chemicals. listen

>> as the ceo of a plant like this, what are you looking for, if anything? what's catching your eyes as important? >> when i zo a plant visit, i'll talk to the operators doing a job. one of the critical factors to successfully managing safety is keeping their head in the game the whole time it gives me a chance to talk to people doing real work in a day, this is where the money is made. >> this plant spread over 1,000 acres, is a joint venture between exxon and a saudi company. earnings last year $6.8 billion earnings >> it was a pretty good year people forget, too, they think about it being a chemical company. we are would you state your full name the largest in the world. >> plastics, polyethylene, plastics >> i have to tell you, this documentary -- exxon is a country. >> yes >> they really are a country. >> that's why their former ceo

prior to mr. woods became secretary of state. >> they didn't see eye to eye with president trump. >> fair point. rex tilson did not -- >> long-term thinker everyone told me he was a 50-year guy. same with daren woods. these people think >> i'll take my woods to your zuckerberg i'll be happy. what did you say he is >> a regular guy >> let's get back to the markets. >> or i'm crazy. >> i think we know the answer. >> we had a darn good time >> very much looking forward to what is going to be a serious interview tonight between you and mr. zuckerberg >> this is very serious. >> the metaverse part you did yesterday. this is going to be a live or -- >> we'll talk about the business of metaverse but the business of facebook, the business of instagram. we'll cover sheryl sandberg, who i got to know from small

business but the main thing we'll recognize is this thing is just a bonanza. >> all right that's a great get, and i cannot wait to watch. >> thank you >> let's give you a look at futures here europe has been lower. crude, copper, far lower that morning. the dollar is stronger yeah a lot of focus on a potential recession yet again. who was it this morning? citi's 50/50 >> they have to put these things out pop. >> more "squawk on the street" straight ahead with directv stream i can get live tv and on demand together: baseball, ghostbusters, baseball, ghostbusters, baseball... ♪♪

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we are set up for a lower open and start trading about 12 minutes from now a reversal from yesterday in which we saw significant rallies in all the major arches with the s&p up over 2.5%, i remember it was, at the end of the day yesterday. jim, you know, there are those who believe we are still headed lower as a result of the fed's continued tightening >> right >> and ultimately yes, we are going to see these rallies, but the trend is low >> yeah, look. we have too many people who when we get a rally immediately come out in force and downgrade or cut price targets. they want to not be associated

with the stocks that are falling. and it's kind of weird because the price targets are so high when they slash them hit up the stock price for say a darden, it's still well below. nike is so well below, you try to figuring ot what are they saying when they do the price cut? then you each got all these different i would say top-down people at the different banks. and they're trying to figure out if it will be a mild recession or a doozy recession there isn't anyone who says the consumer is strong and even though there might be a slowdown it's not going on a recession. no one is saying that. they're saying recession >> but it's funny because we had a supply-side problem, which we continue to have >> yes >> weird things. you know, movie theater popcorn hard to get a hold of. and pilots popcorn and pilots shortages but now we're creating a demand problem. >> yes it's almost like at one point is

going to happen, i saw kraft heinz upgraded at some point we're not going to eat fancy stuff, we'll trade down i think the consumer is more flush that maybe in the end the problem is the consumer is flush, the senterprise is flush. >> that may be the case. when it comes to food, you have to worry about the lack of cheat out of ukraine >> right. >> what that will mean for flour or pasta >> i think we're going to change our eating patterns. and the analysts all seem to think -- >> you really think so >> yes >> much more of a concern obviously in places where there could be actual shortages. >> when you buy a tomahawk steak, you say i'm not paying that, i have to buy chuck. there's a lot of people in their 40s, 50s, an 60s who just frankly remember the great

recession where they ratcheted back and they held back. and i think you're going to see fewer cars bought. i think you'll see different anythings bougts in supermarket. but right now we have a lot of money because the government gave us a lot of money and we have the 401(k). as i posited during the break, the vacation, the break, how long will these 401(k)s last for the people who retire? it seemed like a lot of money, david, but it isn't. most 401(k)s do not have a year or two's worth of give so i think people will come back to work. i also think that the whole hearted -- the problem with crypto, who are these people sam bankman-fried? turned out he was jpmorgan maybe they'll buy this building. >> yeah. sam bankman-fried.

sbf, jpm >> call him and see what he thinks >> he won't take my call coming up, "mad dash" time, counting down to the opening bell here's a look at futures more "squawk on the street" straight ahead

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so everyone has a chance to move forward financially. pnc bank: see how we can make a difference for you. well, wall street of course will be paying close attention to capitol hill this morning that is where fed chair powell will be testifying on the economy. he'll be before the senate banking committee and of course we will cover the q&a in its entirety the opening bell just a few

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all right. two minutes before we start trading, let's squeeze in a "mad dash." you're going overseas. >> yes when things get negative, peel get too negative there's a reuters story this morning about basf, giant chemical company, saying the ceo sees sharp second-half downturns. not true with frank who checked in with them not true at all. they don't foresee that. they're also talking about how there are some issues involving inflation but -- >> let's make this clear a reuters story saying that the ceo foresees a downturn. who is frank -- >> frank mitch is my go-to analyst. i followed up with the company, headline is misleading, taking quotes out of context. potential consumer demand impact, they reiterate their

guidance so it's not foresees second half this is just wrong, okay but if you read it and know this is as equal to exxon's chemical division, basf, they own this company town and i just think that the idea that basf is doing poorly, this is not true, it will matter, by the way, if natural gas stays high >> could it be a reflection of what we've seen overall in commodities this morning >> i'm talking about something that's not as gloomy and if you think about this, it's conceivable, i'm positive sitting it that maybe the the market doesn't have a big down day. maybe we're talking ourselves into negativity. oil is down from last week >> do you think you'll get anything different out of powell today than you heard last week [ applause ] >> probably not. >> seems unlikely. only a handful of days

we'll get the opening bell 20 seconds from now keep an eye on our realtime exchange, by the way, which should show a lot more red on the board. here at the big board, american express local distance travel. [ bell ] >> cannabis operators nationwide i think it's about time -- a good time for a cannabis loan company. >> fed chair powell is getting ready to testify, and we've got his prepared text. it's been released let's get to the highlights from that >> the stank has the toolings it needs and the resolve it will take to restore price stability in america fowl will say, "we understand

the hardship high inflation is causing. we remain strongly committed to moving it back down. powell will also say that taming inflation is storable creating sustained peerpd of strong labor market conditions. he described the job market as extremely tight and said that labor demand is strong however, he continues to point to russia's invasion of ukraine as driving up gas and energy prices as well as the ongoing covid lockdowns in china as creating supply chain disruptions that are exacerbating inflation pressures. on the data, powell said pce core inflation likely held study or eased last month. he said real gdp appears to be picking up and that consumption remains strong on the flipside, he said business investment is slowing the housing market is softening, likely due to that spoik in mortgage rates but he said that future rate hikes are coming he said, however, the pace will depend on how the data comes in and the evolution of the

economy. he said the fed is looking for compelling evidence that inflation is coming back down and the fed will remain nimble in its response. in closing, powell said the american economy is strong and well positioned to handle tighter monetary policy. so his main message is that the fed will not waver in its resolve to bring inflation back down >> thank you the q&a could be interesting and we will take all of that -- >> look, there are many people who want to know why jobs are no longer as important as inflation. and the answer is we have so many more jobs than we have people, and another trillion dollars in infrastructure. the president is so out of touch with what's happening in the country. i'm not trying to be too political here but, look, david, we don't have enough people to handle the jobs so to throw another trillion at more jobs instead of just

saying, okay, what we're going to do is make it so that this money is going to lower the price of food for america or we're going to use it to make it so gas lean is lower would be a much better allocation but the idea that -- i mean, there's no construction workers to speak of. they're all being -- they're all on jobs. i mean, senator manchin's debris had more of a kind of realistic view of things i don't understand did president biden not know that there is a job crisis and that we don't have enough people to work? we stopped growing stopped immigrating? >> i think he's aware of that, the lack of immigration and the labor pool but i don't know because i don't speak to him >> good union jobs this is not the issue in america right now. the issue in america is food cost it's about trying to make it so that people can put a dinner on

the table for heaven's sake, but not because of jobs, because of the cost i mean, i don't know i'm mystifimystified. i think many of us are afraid to say what i just said therefore take it all back >> no. >> does he not understand? >> you've been pretty critical of the administration. >> every single company i deal with says if we had more workers -- it's why a lot of companies are waiting for the robotics of nvidia and the digital twin >> "the journal" has a story about employers rescinding their job offers to people, to graduates, for example >> we'll have a lot surfeit of engineers. the major companies in silicon valley will need to reconfigure where they are because working from home and zoom working home from the metaverse is going to change people's

lives, as no one believes. >> i know you do you were in the metaverse with zuckerberg you'll have an interview with him on the but it's going to be a while until we can really do a lot of things in the metaverse in terms of the workplace >> years >> two years >> i was in a workplace -- >> do we have to wear goggles the entire time that we're there? >> we'll talk about the glasses. i've been in zoom meetings and i've been in work meetsings in the metaverse. the metaverse is a much more -- you can turn -- say someone is speaking, right, and you're in the metaverse. you can say mute he doesn't know anything you can't do that in zoom. hey, david nobody knows >> turn the corner and bump into somebody unexpectedly? i spent time last week at our headquarters, and one day in particular it was crowded. people were actually there

and i met people i hadn't seen in a while i actually got -- there were opportunities that came about in terms of the documentary, for example, that wouldn't have otherwise because i actually physically saw somebody and had a conversation with them that was unexpected. >> there's no covid in the metaverse. you can do that in the metaverse. >> you can >> absolutely. i have to tell you, i'm making small twauk zuckerberg about the math team -- >> are you talking a walk through the metaverse and -- >> yes >> running into someone unexpectedly in the metaverse. >> sure, a couple people showed up paul -- alex was in the metaverse. i'm not familiar with his work many peopl metaverse mark knows i like to garden. in the zen room, there's -- you never know who's going to show up >> i don't even know what you're talking about. what are you talking about [ bell ]

>> people know that i like the metaverse more than my real life, which by the way we'll discuss. a bit of a problem >> it will be great when everybody is in the metaverse. zuckerberg and the old facebook. what could possibly go wrong facebook has done so much good for the world. >> i think a lot of people are in touch, with each other. compare instagram to twitter instagram, i'm well liked. in twitter i'm lex luther. [ bell ] the bell thing is -- >> the bell won't ring in the met verse. >> it's all peace. >> all better there. meta platform, you are calling a great time to buy and apparently some people are listening because the stock is up this morning. >> i can try on clothes or do

anything ii can eat din tler. even though mark had a very nice suit betty used to do our suits >> i have no idea what todd is saying we don't have a lot of corporate nurz news this morning. >> that's not true >> revlon is bizarre dom was talking about it on "squawk box. revlon is bankrupt, the ron perlman company filed for bankrupt, se last week interestingly, i believe it's bonds are trapding roughly at the same level of the stock, about 5 to 6 cents on the dollar versus $5 to $6 a share for revlon >> it's a meme thing you're saying >> robinhood has -- >> going back there again? >> yeah. >> why don't they justcapital a

chimney. remember when len -- >> i'm trying to figure out what's on the screen there talking about revlon but they want to she us the s&p this is when we're doing one thing and the control room is doing another. >> david, how is that ridiculous bid going? monopoly money >> revlon shares are higher. wait one second. wait one second. revlon shares are higher it's unclear why because it is a bankrupt company >> ask kim >> the current ceo of hertz, which had a similar move two years ago. they actually tried to sell shares at hertz if you recall when it was bankrupt the s.e.c. prehaven'ted them f - prevented that from occurring then they came out of

bankruptcy there seems to be hope on the part of revlon holders that will be the case. >> these guys, the meme people still have no understanding of what it takes to make money over the long term. do you ever read the robinhood snaps? >> no. >> cheeses and dipped cheese >> the what? >> cheeses and anymore cheese. >> robinhood snacks? >> they have this thing that comes out every morning. like their little news letter. >> you short hand so many things >> it reads like eating a rice cake a snack. >> here's also altria. >> take the tobacco out of cigarettes the fda perhaps championing an effort to reduce nicotine substantially, and there's a

look at altria >> saving lives. positive >> yes >> speaking of saving capital, david, bed, bath & beyond turns out to be not a saving capital situation. they bought a lot of stock back. people are expecting an ebitda loss it looks like there are people who are thinking it could be a crisis they put a lot of stock back looks like they can't sell bye-bye baby >> not just altria it's because juul -- they're ordering those to cigarettes off the market krarlt carl did that documentary >> outstanding >> seemed to be a turning point for them that is the headline there >> big news. >> the u.s. fda. you remember, of course, i have

to go back -- i had this committed to memory, the enormous investment they had made, altria, in juu lel at a v high price >> i had a bad meeting with the previous ceo and he came in gave me the pitch at the end, i said i think you should quit, you should just stop and quit. like, i listened to your presentation, and you should leetch right now get out of my office and quit your job it would have been a great call. he could have cashed out at a high valuation how about winnebago? >> take look give us winnebago. apparently we just wanted to keep talking about powell. >> remember willard from juul? >> you're on winnebago now >> it's not horrible

i felt with oil up a lot winnebago would be down but obviously kind of saw it coming. we shouldn't minimize this juul thing. this was worth $40 billion at one time. >> yes yes. >> where was their -- >> i don't know. i want to go back and try to remember the valuation for juul -- >> $40 billion with a "b." billions billions >> yep >> and it kind of went up in smoke. >> yep >> i remember my wife trying to stop in at a student place at bucknell it was $12.8 billion minority investment they made. it valued juul almost at $40 billion. $38 billion. altria bought 35%, a story we brought in closely we still don't have the headline at the bottom for you the news

says juul e-cigarettes are banned there are other systems out there as well that we know for e-cig retss so to speak that are obviously still on the mark. >> i remember my admirer wasn't sure if that was something he could necessarily do >> right >> well, this fda just really didn't care, right >> nope. >> and juul is a very good cancer delivery system i thought a clever one i explained that to the president and ceo when he visited me i said i've never seen a better cancer delivery system than this one. this is just dynamite if you want to destroy yourself and get lung cancer. there's nothing like this. i think he thought i was being facetious. >> it is important to note the company could pursue an appeal through the fda, challenge the decision in court, file a revised application for its product. that's according to reporting

from "the wall street journal. and, again, we've been seeing shares down about 6% as though the investment had already been a fail. almost 35% stake >> the whole business of killing people doesn't have a lot of pe. my late faurnl died of lung cancer i wish we were being facetious. >> that's in the markets themselves, which we've been watching the economy can handle tighter economic policies. off the loos but -- >> affirmed is you were. you can son down badly but maybe they make a bit of a comeback here it was down 87.50, it's $88.40 this could be a comeback day, but it is early. >> it is but we're seeing the typical groups performing well >> drug stocks

>> absolutely. >> now, david, do these national championshipses at these firms feel compelled -- do the analysts expect everyone to say opine on a recession what happens how about if you say i'm not going to opine because i really don't know >> you are under some pressure at various firms to share some sort of an opinion at least you can try to get clients to do something with or communicate with you know that. >> i like to take around my strategist this is what you, do, i've got my strategist with me, has interesting ideas about a recession. it's a door opener >> right. >> like a fox got in there with -- >> going back to -- >> came in with flowers. >> the old door opener >> didn't get a call back on the hertz thing. how do you get these to call you during the show?

>> normally you're talk and i'm here, because we had carl manning the ship i'm able to text and make some calls. then you get annoyed with me why are you bothering steve sherr? >> he knew the hertz situation. >> but he wasn't the ceo during the period the stock went up. >> cfo at goldman, but he obviously studied what happened with hrertsz, dount you think >> there is a level of speculation-in around the bankrupt companies, a lot, revlon, running through ro robinhood with v which has a lot of trading going on, and almost always, not the case of hertz, the equity ended up being worthless in a restructured xaenl. the bonds are trading at pennies on the dollar. not talking about hertz. we're talking about revlon >> people are buying the common stock that is another hertz

mostly through robinhood could be friar >> yes >> stupid men in tights. >> in that one, there was a significant recovery value used car prices through roof >> i want to point out that you could have, bought philip morris until the cows came home and done quite well. >> really. >> yeah. kind of interesting. the europeans are not as -- they still smoke everywhere it's horrendous. >> that combination of the reduction in nicotine and then this ruling from the fda it's banning juul e-cigarettes. >> can we have the people on from stanford who perpetrated the theranos of tobacco? >> you're calling juul the theranos of tobacco? >> yeah. >> why >> well, the delivery system didn't work. >> it worked

>> juul was a delivery system that did work. >> yes >> it gave you less cancer that was its chief advertisement. hey, u.s. kids there's pitch for you. right? >> it can be used by younger people still a lot of juul flavors. the attempts to appeal to a younger audience they were no longer allowed to sell the fruit flavors >> listen, guys. cancer are you aware of the process of cancer >> by the ay, we bring up altria here because that's the only -- in other words, they bought 35% juul never made it to the public market ps. >> not to late to go back to exxon. >> another subject, which is ipos and the lack thereof. >> yeah. it's god send. >> you think so? >> the stuff they put out snu that's another thing the brokers.

they just crush people oakley, joe b. >> you're talking -- >> goodrx. >> there were plenty of ipos as well great ipos. plenty of good ipos. you think the window has closed on. >> there's one -- a lot of people i know went to georgetown, and i said it's 15 and 30 like, forget about it, it's losing money companies that lose money don't matter, but, david, people went to sweet cream, they loved it, they went to robinhood, they bought it, and now they can't afford sweet pea, because it's $1. >> they bought dutch bros

because they loved it, but they could afford the annihilator in the afternoon. this is happening in america, and you're laughing. you're busy in guyana? >> yes we don't talk about it enough. younger people owned plugged power. they've been plugged. >> wow. >> they own bloom energy they own rivian. i saw joe burrow at lordstown, what is he doing lordstown! >> that gets us back to the broader conversation we've had many, many times, the mountain these stocks climbed, only to come down the other side -- >> you warned us on rivian. >> yeah. >> you said we would be safe in rivian. >> no,i did not.

i was somewhat skeptical about the valuation. >> lose i had was one you they would perhaps wasn't on steady ground, right? >> lose ucid is -- those have ce until a lot of focus in part from the office of elizabeth warren, seem to be watching us on cnbc. in fact a lot of their footnotes had our reporting. >> i they continue to do inside buys, but david, you can't buy stocks of companies that are losing. >> you haven't even mentioned your friend sara fryer. >> why is everyone my friend >> nextdoor is at three -- by the way, they announced a buyback. it's up from two

it's up from two >> there you go. >> hey, listen, they don't have a cancer delivery system >> as you see there, fed chair powell is just about to finish reading his prepared statement of course, we got that from ylan mui when it was released when the committee begins its q&a, we will take you live we're not quite sure when he will be finished reading we think momentarily that would be the case. would you mind if i mention the roku interview he was amazing, very straightforward. netflix is moving up, david, i'm telling you, this could be an inside reversal day. we have to go to powell? >> they're about to begin the

q&a. let's go there live. there's senator elizabeth warren. >> all eyes turned to the fed. last week you announced the fed would raise rates by th third -- 3/4 of an percentage point. the price of gas is up 40% since russia invaded ukraine in february chair powell, will gas prices go down as a result of your interest rate increase >> i would not think so, no. >> okay. that matter, because gas prices are one of the single biggest drivers of inflation >> let'slook at another necessity -- food. americans feel the pinch, no matter how much grocery cost,

people still got to eat. chair powell, will the fed interest rate increases bring food prices down for families? >> i wouldn't say so, no >> okay. so a fed increase woman bring down these prices, and why because rate hikes won't make vladimir putin turn his tanks around and leave ukraine rate hikes bond break up monoplies, rate hikes won't straighten out a supply chez, or so let's talk about what it can do you have that they moderate demand can you just explain more about what that means? >> sure, then the economy through three broad channels, the first of which is intra-sensitive spending,

durable goods, automobiles, things like that interest rates go up, people's demand for -- as a result of higher interest rates will moderate or decline, so the supply and demand can get into better balance the second channel is asset prices generally interest rates as they go up will cause asset prices to moderate across the economy, and people spend a bit less. the third channel is the exchange rate, which is just another asset price. that basically, as the dollar strengthens -- sorry --'s rates go up, the dollar would strengthen. >> i appreciate this i appreciate the explanation let me see if i can put a little more plain vanilla explanation of what's going on here. if i understand what you said is that when you raise interest rates, there's going to be less money to invest.

that is it's going to dampen bit investment is that a fair statement >> i think it can been in better balance with supply. >> more expensive to invest, which in turns is going to throw workers out of work, and when they're out of work, they have less money to spend. so i get that rate increases stop companies from spending money to build new plants, buy new trucks or to hire new people, right, chair powell? when money is more expensive, they're less inclined to the that, on asset pricing, right? >> well, in the labor market, as you know, you have a situation where there's a shortage of workers, and there are two job vacancies for every person actively looking for work. part of this is to get it back

into balance. >> what i'm trying to get at, though, is what does the tool of raising rates do part of what you just said is increases, in effect, the cost to invest, to buy those trucks or new plants, or to hire new people the reason i raise there and the reason i'm so concerned about this is rate increases make it more likely that companies will fire people and slash hours to shrink wage costs. rate increases also make is more expensive for families to do things, like buy a house inflation is like an illness, and medicine needs to be tailored to the specific problem. otherwise you could make things a lot worse. right now the fed has no control over the main drivers of rising prices, but the fed can slow demand by getting a lot of people fired and making families

poorer while president biden is working to increase energy replies, break up monopolies and bring down prices, you could actually tip this economy into recession. what's worst is high inflationened a recession with millions of people out of work i hope you will reconsider that as you drive -- before you drive this economy off a cliff thank you, mr. chairman. >> thank you, senator warren. >> i will defer, sir >> thank you, mr. chairman >> chairman powell, earlier this month secretary yellen acknowledged she was wrong about the risk of inflation. previously you also acknowledged that the fed got it wrong in thinking that inflation would be

transitory yet myself and other members of this banks committee have been warning about inflation for over a year last july, nearly one year ago, when you came before this committee, i raised my concerns about the risk of rising inflation, particularly following the enactment of a $2 trillion spending bill at that time there was already evidence that inflation was affecting numerous areas of our economy. i discussed the year-to-year proo ises at that time i pointed out the rising costs of metal used cars, airline tickets, as someone who remembers, and i do, i warned that many of the same conditions present then, such as loose monetary policy and significant government spending

were occurring again, among other things my main concern last year was that the federal reserve would fail to address rising inflation before it was too late 11 months later, this concern has come to fruition as we sit here today, inflation, as you already pointed out is at a 40-year high average gas price is over $5 a gallon, and we are currently in the midst of 12 consecutive months of inflation above 5%, includes spiking to 8.6 last month. ultimately, mr. chairman, as inflation continues to run rampant, i believe the federal reserve and this administration failed the american people by not heeding these warnings and by not acting sooner to address it we're where we are today, i know that the consequences of being wrong on inflation are now being felt as has been pointed out here today, by american families and workers across the country

despite the recent decision to raise interest rates, the federal reserve has -- still has a long way too go. what can we expect in the future from the federal reserve i know you don't have total control over inflation, but you have a lot of sticks there, and what will you use to bring this under control? >> thank you, senator. so, financial conditions have tykened and priced in a string of additional rate increases that's proposed. what you pointed out, as senator tillis pointed out, our policy rate isonly 1.6%, but all out the conserve, so conditions have already priced in additional rate increases, but we need to go ahead and have them i think the most recent inflation indicators of various kinds suggest we needed to

accelerate the pace at which we gut up to level that is neutral, close to the longer run neutral level. then we can make an assessment of how much further and faster to go. i think you can see from the moves we're making now that we do understand the full scope of the problem, and we're using or tools to address it pretty vigorously now. >> mr. chairman, explain to us against how important -- one of your mandates is price stability -- how important is price stability to all americans? >> so price stability is really the bedrock of this economy, in the sense you cannot have a sustained period of maximum employment our co-equal goal, you can't have that without price stability. so we must, must restore price stability, and we will we have the tools and resolve and hopefully the judgment, you know, to accomplish that tasks.

>> what's your next step >> well, if you look, i think the market has been reading our reaction function reasonably well i think what you will see is continued progress toward -- expeditious progress toward higher rates rates would be 3 to 3 1/2% as of a week ago. >> is this federal reserve board of governors as committed as dr. voelker was, to bring inflation under control? >> i would never compare mimeself to dr. voelker in any way, but we are strongly committed. we understand it is the thing we need so we can get back to the

lake market that we all want. >> reaching the standard that voelker left at the fed would be a high reach, but one that in tibet there should try to get there, wouldn't it >> yes >> thank you. >> minus gas, food and rent, 4.9%, even slightly in decline from the previous report so that levels the real culprit, gas, food and rent first, the issue of gas price inflation is a global phenomenon is that correct? >> yes gas prices are a function of oil prices to a significant extent then the refining spread as well. >> right that had been exacerbated by the ukraine invasion

we deliberately cut off access in russians supplies and the other problem, also with hike roe carbon, it's a cartel that sets the price -- >> i'm sorry, what's -- >> the cartel sets the pride , yes, globally that cartel has a major impact on the price of oil. >> they have decided that further production is not as lucrative as just sitting back and making money that's what it appears like. with respect to food there are multiple factors there one is also climate. we have seen loss of arable land and more, all out of the purview of the federal reserve, but i think it's important to understand the driving forces. higher driving costs

again ukraine, a significant amount of wheat is not being exported from ukraine or from russia, as well as fertilizers that's driving the price the affordable housing issue, that has been a crisis sim i became a congressman in 1990 we just don't have enough are those the major causes for these increase in prices >> those are some of the major once you can't also point to some of the goods, that have restrained capacity, and seeing significance price increases, as it really reopening. that will be the travel and leisure sector. >> there's another issue, too, we talked about the cartels that dominate hike roe carbons, but we found during the pandemic

there are just four major meat processors in the united states, with four rather than a multiple, that there is the ability to indirectly restrain supply in fact some of my colleagues in the house have been talking about the antitrust aspects of some of these price increases. is that a pallausible ingingred >> possibly, yes there's other industries where it's less so >> so you have to take action, and your basic tool is interest rates. going in and out of buying public securities, but we have a lot of work to do, too, which is to try to resolve some of these issues, and we have to do it in

order to assist your efforts, the fiscal policy and other policy i was pleased to see the president sign legislation with respect to shipping reform that's a step, but we have to do more, too. is that accurate >> i think that's a question for you. we're focused to our knitting, and what we have been assigned. >> i understand. a final sort of issue that i'm thinking of, we're at a try i think turning point in the economy, factors that 10, 15 years ago were not active, in things like social media, et cetera one other factor with respect to hike roe carbons is perhaps the companies are consciously or unconsciously limiting

investment, because they're anticipating electric cars, electric everything. is that something the fed is looking at >> i think if you pick up the annual report of any of the big oil companies, you will see that is something that's happen it's a raggal economic response, you know, to expectations about where future policies have -- >> again, i think there's so many taxes here, but it's good to get some on the table thank you, mr. chairman. let me recognize senator tillis. >> thank you, senator reed and thank you, chair powell, for being here with the several rules, rates should have begun to rise long before they did. according to the fed's own analysis of these rules, the fed funds rate should currently be above 6%

this is in a report to congress, yet it is turnly 1.6%. likely the same rules should have prompted the fed to begin raising rates, q4 last year, q1 this year. i'm concerned the fed has opted out of rules based to discretionary monetary policy. as the fed reviews monetary strategy, chair powell, will you commit to considering an increased wait for a rules-based strategy and fed decisionmaking? and if not, why? >> we do use policy rules like the various forms of the taylor rule, in all the analysis that we do. if you're thinking about how monetary policy will affect the economy, you have to have some sort of rule like that fed's never really used them in a prominent way to actually set

policy in real time. that's not to say they don't shed light we do consult them on an ongoing basis. the rules called for deeply, deeply negative rates during the pandemic we didn't do that. they did call, of course, for rates to move up raids now are really moving up, and i think by the end of the year, we'll be pretty close to where some of the taylor rule iterations are i think in a couple years, when we look at our framework again, that's something we could look at chair powell, could you just briefly explain the variance between rules-based decisionmaking and being at 6, and where we are at today. what other factors came into play >> tailor rules just look at the

overnight policy rate. as you mentioned earlier, we began signaling, and the way we're set up now to signal policy changes going forward, with the summary of economic projections we do four times a year so markets priced that in, and you're getting a lot of policy tightening, well in advance of actually raising rates we're at 1.6% only on the federal funds rate, but look at the rate curve, only the very substantial additional rate hikes are already priced in and they're affecting financial conditions, and they have been for several months that's one way of thinking about it it's really only at the very short end of the curve where rates are still in negative territory from a real perspective. real rates are positive right across the curve that's where we're headed.

>> 2012, the fed adopted the current 2% inflation target, thenamended this in 2020 to allow inflation to run over the 2% target to that inflation averages over 2% many warned that this could -- now inflation is at 6.5% per year, many serious analysts are predicting a recession will the fed push inflation below 2% >> no, that wasn't the way the framework worked i should clarify, though, the framework was carefully focused on what we knew. the pandemic hit a few moments afterwards i think we've been aware reasonably quickly after that, the deflationary forceshave been replaced, at least temporarily, by a whole difficult set of forces. those are the forces that our

policy has been reacting and in dealing with we're well aware of that. this is a different economy. the real question is how long will this new set of forces be sustained 1234. >> there is renewed discussions about increased spending and increase taxes through reconciliation if congress were to pass a bill, and raise taxes, would that make your job easier or more difficult? >> i swore off getting involved in these fiscal debates. i'm determined to see if i can stick to that.

we can also incorporate. what we do is take fiscal policy as given and act appropriately. >> maybe policy that was passed by congress, do you believe that the $1.9 trillion package had any effect on inflation? >> it's really not our job to pass judgment. we didn't pass judgments on the the acts i think that's a job to the congressional budget office. >> the senator from nevada is recognized. >> thank you, mr. chairman >> which really is creating a financial hardship for too many families

in las vegas, about 5.60, in reno at $6 a gallon. as gas prices rise, we know are making record profits but are using that money to continue to consolidate their industry and pay for stock buybacks instead of investing in increased oil production and what i've ahead is over 9,000 permits that they have that are unused drilling permits or not expanding their refining capacity we also floe that reduced refining capacity is a real problem driving gas price hikes as much as 61 cents a gallon higher than expected. how much so form reserve -- and what also can we do to hold they

accountable for their contributions to rising prices >> those are competent for the competition industries they really aren't questions that we directly address we raise interest rates -- >> but you have to push back you have to consider that. you're considering what's happening in ukraine as a variable on inflation and high prices so you have to consider a fact that they -- that is key for this country we know that not only did it produce and decide how and when they're going to drill for otherwise quite honestly, the refineries here are not prepared to refine the oil that comes -- they're prepared to refine oil

that comes from outside of this company. we also know they have their own traders trading on the price of cruel oil in this country. listen, you just talked about an outside agency, this is why this is so important and why i'm a co-sponsor of the transparency act. g glencor was just fined, because they were manipulating the prices to their benefit. that's something you have to take into secretaries when we have an industry like they gas and oil companies that are so consulted, they are having an impact on the prices to the detriment of the people in my state. that has to be something you take into consideration when you're liking at the impact that the people across the country are seeing from these high prices i hope it is please tell me you are >> i think where he see the global oil prices that have very important facts on gas price

here at home are set on the global market. as we mentioned earlier, there's a large cartel to a significant extent so we take that as a given >> would hope you would take that into considering that it's going to continue these high prices, because there challenge in holding these oil companies accountable. >> i think the best thing you can probably do is look at oil futures in theory they could be taking into account all of these factors. that's what we do. ultimately the question is, do

we raise or lower interest rates? we don't have tools that would address these practices that you're discussing. of course, we understand them. do you have concerns that these oil companies are manipulating or controlling the prices we have now do you take that into considering with the tools you need >> those are not judgments for us to make the question about industry structure and competition are really not -- it's not our assignment. >> but the outcome of that infrastructure is something you've got to take into consideration. >> yes, very much. >> unless they change, the prices are not coming down unless they stop giving profits and sharing that with their shareholders and addressing and looking at actually the consumer at the other end bearing the brunt of it, these prices will not come down. i assume you take it into

consideration. >> we do have to have a forecast of oil prices, and we do, but ultimately the question for us is price inflation, what is happening with price inflation it's a make roe economic question, not a question of an industry structure or corporate behavior it's a question about what will be the behavior of inflation across the economy in particular, there's really not anything that we can do about oil prices food prices is a bit more mixed, but for oil prices they're said at the global level. and also the refines spread. does it concern you these oil prices have not come to the table -- >> honestly, i don't think it's appropriate for the fed or for me to be reaching out in areas of policy that are not assigned to us. it's not up to us to comment on that sort of thing we have a very specific job, and

precious independence to carry that job out i think the other side of that is stick to that job our job is maximum employment and price stability. >> the senator from south dakota is recognized. >> thank you, mr. chairman chairman powell, welcome again it seems the last couple times we've had you in front of this committee, inflation has been a primary item of discussion i want to follow up i'd like to clearly there is the supply side and the desalesman side. the real yesterday is a large pork stems from the high energy prices when president biden took office january of 2021 through january of 2022, the price of unleaded gas has increased by 50% during

that time period >> that was well before the russian invasion of ukraine. higher prices are instead, i believe, a direct result of policy decisions made by the biden administration, like prohibiting new oil and gas leases on public lands and waters, and choking off future access through the keystone xl pipeline, and actively calling on opec to produce more oil. all of these seem to send a terrible message to the market about the future of investing in oil and gas processes within the united states. at the same time, mr. chairman, your tools are designed to impact the demand side of

inflation. so if you attempt to use your tools that are available at this time to address what i believe to be the policy-induced side of inflation do you risk hurting the economy by using these interest rate increases when, in effect, as you've indicated here earlier in this meeting, that you really can't impact the price of gas or the price of oil? >> i think that's right. we know our tools can affect certain aspects of the inflation so nonetheless, our statutory goal is headline inflation we also know that core inflation, headline inflation is -- they tend to move up and down that's been the history.

that enables us to look through that and we focus on that ago, at any given time. if we're not going to include what we thought would be transitory in nature portions of the inflation they proven not to be -- on goods and services than they were when president biden took office due to inflation as you indicated, you focus on core see, summer chairman, what i believe is going to happen here, and i just share this, clearly you are aware you're going to be

the person that takes the fall if inflation is not brought under control, and this administration will point to you and the federal reserve saying you have the toots to fix inflation and you're not doing your job, when in essence it may not just be the core inflation that some of your tools do, but the total cost of inflation that my citizens feel to the tune of, well, $682 more a month in living expenses. >> there are parts of the economiy demand exceeds supply that's what we're focused on. >> just very briefly, the basel committee released a press release expressing substantive

calculations do you believe right now this change reflects the views of the federal reserve as an influential committee of the basel committee? it looks like it could provide in advances over u.s. banking based on the reassessment of how they view risk within the eu community? >> my understanding is it's being supervisors using discretion about transactions that go across the national lines. it doesn't apply at at here. ultimately, the rules that europeans apply are decided by europeans, not by us. >> thank you, mr. chairman

>> thank you for your service to our country, chairman powell the truth is what we're grappling with right now on inflation is clearly a global phenomenon i think even the cato institute, that doesn't always agree with people on my side of the aisle, frankly just returned on a bipartisan trip to finland, latvia and turkey, getting back late last night. turkey i think inflation is running at 7 or 8% a year. gas prizes were $9 a gallon. i asked one of my republican colleagues, it's amazing joe biden's inflation is hitting

hooer in finland, too. the point is a lot of these effects are not due to a single country's actions, but global. -- a long down on shanghai for literally months on end and how that supply chain disruption is floating through the whole global economy you'll see inflation rates quite similar to ours, but there are important differences in the characteristics of that inflation. ours is procedure out of demand, i would say, than most of the others theirs is about energy prices.

in terms of entrepreneur question on china. we really don't think we have seen the full effect of the lockdowns that we've, but we expect to be seeing some negative effects, bottlenecks. on the other hand china now seems to be coming out of that period of lockdown and advanced indicators are the economy may be recovering, but, of course, the zero covid policy, as long as it's in place, you could certainly have a relapse, given this highly contagious disease >> we're all looking for short-term items, frankly i'm glad that the president -- i know there's some folks concerned about the president visiting saudi arabia and have i evering with the leadership of that regime i think you have to use all the tools in the tool kit. i'm a little less i need more

proof to see if a gas tax holiday would provide relief, or simply, as we've seen some states, the price it is donnell change, the companies make more money, but it doesn't provide inflationary relief. as somebody who spent a long time as governor to make sure we pay for infrastructure -- there's always an excuse not to put taxes back on, but i'm open to seeing a better analysis. recognizing that not everything can be done with a flick of a switch, there's a piece of legislation floating around here for almost a year, i think the house frankly took the wrong approach, but it goes, at least one of the inflationary pressures here to make sure we have a domestic supply chain

every device with an on will off swing require this switch. and we have a lack of chip supply so cars can't towelly be sold they're literally sitting in a warehouse waiting for the semiconductors this legislation, $52 billion would build at least ten semiconductor facilities here in america. if we don't do this, i don't think a factory will be built. the fact that the europeans had no plan, intel recently announced $8 billion with the german government. when the german bureaucracy moves faster than the american process, we're in trouble. the nothing of investment in a key industry component, long

term, right move or not? >> i think it's an important area to explore, how to harden up and explore our facilities, including what should be here. >> thank you, mr. chairman. senator kennedy from louisiana is recognized. >> and to put a finer point on

it, our inflation at this time, and this is the case with respect to most in some parts of the economy, yes so we have a situation where >> you're trying to lower demand. >> i would say lower demand growth we don't know that the demand has to go down, which would be a recession. >> well, 70% of our economy is driven by consume he demand. you're trying to lower demand a slow the economy down.

am i correct you can also lower demand, but you can increase supply, can you not? >> yes a lot of the bills we impact demand, but that's the fed's job, okay? i'm not going to ask you to comment on any bill, tell me what congress could do as you're lowering demand, what we can do to increase supply?

inches well, i'm interested in the short run if we reduce the regulatory burden, let's say on refineries, wouldn't that incent to refine more and help on the supply side? >>. >> but would it help i'm not trying to get you to endorse legislation. mr. chairman, we have to handle the mess here, okay? inflation is hitting my people so hard, they're coughing up bones. i don't care what the inflation is in other parts of the world imi'm sorry they're having inflation in other parts of the world, but them and misery

didn't make my people feel better they're still miserable. inflation is hitting people so hard, they're coughing up bones, highest in 40 years. the national debt is greater than our national output and we have to handle the best, and right now you're the most powerful person in the united states president biden keeps saying, well, your 401(k) has crashed, gas has gone from $2 to $5 a gallon, because the economy is so good. the american people now that's not true what if the united

states consequence said, look, we have a budget, we're going to free spend been, we're going to stop spending, we're going to freeze spending until powell gets control on the demand side. would that help? >> i think maybe it's better to get our house in order and do the job you assign us. let's assume that every state got together tomorrow and said, we are going to flees our budgets. we're not going to spend a penny more than is already would it

help >> it might. it might -- again, i'm scoring fiscal policy. i'm really reluctant to do it. >> the united states congress, in addition to the regular budget, has spend $7 trillion. i'm not saying it was unnecessary. on top of that, the fed's increased its bleed from 1.5 trillion to $9 trillion. tell me what we can do. >> i'm focused on what we can do, gets inflation back down to

2%. >> thank you, senator kennedy. senator tester is recognized. >> i want to thank you for being here, mr. chairman, i appreciate it i've just got to say one thing about senator kennedy. i think freezing spending is probably a good idea, except we just had a flood that cost a billion worth of damage in southern montana, a billion dollars. we freeze spencing that infrastructure never gets rebuilt. i hear what you're saying. some aspects i agree, but it's a lot easier to talk about than to do i think that's the challenge the chairman of the fed has. if it was a simple solution, we would have already had it done i'm concerned about rural america and the impact inflation is having on rural america i knowthat you have seen it. you have seen it transpire over the last several years, particularly as this country has

come off this pandemic we've had a conversation it's two-e two-edged and you are probably one of the strongest people in the world to be able to deal with some of this stuff, but from a rural perspective, is the fed doing anything in particular that i can take back to my constituents and say, this is what the fed is doing to rein in inflation? >> of course, we are well aware. we have four, five -- that have large economies one their districts we hear excellent reports from them. it's clearly a tremendously challenging situation. fertilizer prices, all kinds of inputs are a different situation, can't get parts for

your equipment. >> when times do get difficult, we work carefully with borrow ers overall, we think we need to get back to price stability. that will help the whole economy, inclusion rural america. i'm not going to ask you where interest rates, but i think there's a fine line to walk, where if interest rates are raised too high it could drive us into a recession.

>> so when we pivoted, markets priced in rate increases interest rates have already moved up to reflect interest rates that we haven't made yet what we have now is a low short-term rate. the increase that we made, we made one decision at the last meeting to raise by 75 basis points, but only to 1.6% we thought that was the right thing to do. i'm happy to discuss why, but really the point is our policy rate is still at a relatively low level. in pring pell, we want to get it up to a more neutral-ish level that wasb hind our thinking. that's really the concern i don't think it was with the level, but the speed it was

important to do it now where we are with inflation is inflation coming above target over and over again, we thought it was appropriate, and we did >> so you said it is to get to things to a more neutral level are we to a neutral level now? >> no, we estimate the longer is around 2.5%. actually we think it will be appropriate to raise rates above a neutral level into a modestly restrictive level. this is very high infloridaition it's hurting everybody we need to get a job, get inflation back on a path to 2%

>> do you agree with the perspective that if interest rates go too high too fast, it could drive us into a recession? >> it's certainly a possibility. it's not our intended outcome at all, but it's certainly a possibility. frankly the events of the last few months around the world have made it more difficult for us to achieve what we want senator haggerty is recognized. >> welcome, chairman powell. essentially it's taking a long position in the securities that are required that means when rates rise, the value of the securities on the balance sheet drop that's exactly what's happening

today as of manage of this year, federal reserve had a unrealized loss on the balance sheet, probably close to half a trillion gin the rise in rates my questions is do these unrealized loss it is and specifically, will the fed set mortgage-backed security and realized a loss. so those unrealized losses have no effect at all on our ability to conduct molt tear policy. they won't be a consideration when we decide whether to sell and in what cant we said we would look at selling mbs when the normalization process was well underway, and that means not soon. we haven't decided exactly what it means by the way, the reason we want

to see that a to have a mostly treasury balance sheets, so to achieve the mostly treasury balance sheet we may well need to sell mbs. when we turn to that, we'll give lots of transparency, obviously, but we won't be thinking about the balance sheet -- remember that we have contributed a trillion in profits we given our earnings to the treasury every year, so it's not at all a concern for us >> but tore clear, you're not limiting your ability to do that >> no, no. >> that could happen i think the down side is very much illustrated for you when you find yourself in that situation. to tern to another point,

chairman powell, i realize there's a number of factors -- supply chain disruptions, regulations that constrain supply, rising inflation expectation, and excessive fiscal spending, but the problem hasn't sprung out of nowhere inflation was at 1.4%. by december of 2021 it had risen to 7%, a fivefold increase since the war in ukraine began, it's risen incrementally another 1.6% to a current left from 7% to 8.6%. given how inflation has escalated, would you say the war in ukraine is the primary driver >> no, inflation was high, certainly before the war in ukraine broke out. >> i'm glad to hear you say that the biden administration seems to intent on deflecting claim, spreading the misinformation is

putin's invasion is the single bigger driver. i'm glad you agree with me a recent survey of global ceos showed that more than 60% expect a recession in the next 18 months meanwhile, for its most

there is a mismatch between. supply and demand there. there are more job opening than a factor of 2 to 1 then unemployed people up to the. one on the inflation side, w are far from our target. we think that we have to restore price's ability to put the economy back in a meeting. in a longer term, we can have sustained period of maximu employment that is what we are thinking about. we are not trying to provoke o need to provoke a recession. we do think it is absolutely essential to restore price stability for the benefit of the labor market, more tha anything else. >> i agree you have an extremel challenging job in terms of th physical policies that hav been taken it is more challenging than it should be. thank you very much, miste chairman >> from minnesota is recognized >> welcome back to the

committee. chair powell, it is good to se you again. i want to follow blowup on a issue of imbalance of labo demand between supplies. -- there were 5.5 million job more in april than there wer available workers. we have a result, an extremely competitive labor market and a very strong wage growth. but, inflation is even highe than wage growth this is why the network fo gains is leading a lot of folk with a pay cut at the same time, they try t figure out how to pay fo higher prices for gas that has ensued let me ask you, this chair powell, with all this in mind, what is the basis to the argument that wages are to high and that they need to com down in order to rein in inflation? >> it is not that wage themselves is too high, it i that the wage grows is not consistent it is not consistent with 2% inflation overtime

it is great when wages go up we want them to go up. we want people to get a strong wage increases at a certain point, wage become high enough tha companies start raising prices you wind up getting high inflation. you reverse in jr. which wag increases will be in compariso with 2% over long term today's wage increases, if you look across the numbers that w measured, they are significantly above that there is some evidence tha they are flattening out. particularly in hourly average earnings there is a measure at whic this is flattening out it is no longer going up it is not about reducing wages but having a more sustainabl pay increase >> where would you suggest a pay started to stabilize and stopped increasing how long do you think before that the prices that consumers are paying with start to g

down -- >> prices, they do not have to go down for inflation to g down prices remain the same level inflation goes to zero it depends on differen businesses in some parts of the service economy, labor costs are a large portion of cost. you would think that this gets passed through very quickl into prices. we would think that this would be shown very quickly in som parts of the economy, and in others, less so. overtime, we would want wage to be moving up at the highest sustainable rate that is possible and consistent with 2 inflation. >> of course, at the same time the economy has a very stron labor market simultaneously, we continue to see higher unemployment rate among african americans, for example. it is nearly double th unemployment of whit americans.

how do you see this interpla between wage growth and what's the fed action has done to coo demand on this underlying issue? >> we do not target wage growth, of course. our job is a price stability we look at wage growth because over a long period of time, it is a long factor in determinin priced ability that is how you think of it. in terms of the disparities, w saw those disparities increase significantly at the beginning of the pandemic and then reverse as we point out in our policy report. the gaps have returned t historically low levels. there are still gaps those are not gaps that we can get out of with a monetary policy we point them up because the are an important aspect of our economy. we do consider them as we thin about appropriate policy >> i think i would agree wit you. i think those are systemic

challenges in our economy that needed to be addressed through the policy that we work on here it seems to me that, one, think we have a labor supply problem in this country. we should be dealing with this in congress in terms of what w need to do to make sure that people have the skills and capacity to do the job that ou economy is creating -- creating as long as wage growth i lagging, inflation and labor costs are dampenin inflationary pressures they are not keeping up with inflation. i think it is an interesting and complicated issue. >> no argument there >> and we have a couple minute left i will not have a chance to ge into this. i am quite interested also i what we are seeing around th country, everywhere, and especially in minnesota, about extraordinarily high increases in housing the fed is raising interes rates, which is going to hav an impact on increasing housin prices mortgage prices are going to g up and other costs are going t go up in terms of building housing which will go up

we are interested in how you weigh this dilemma >> so, after the pandemic, for a number of reasons, housing demand went way up rates were lower people decided that they wante to live more in a housing, single family homes rather tha downtown prices went up all over th country at a very high levels. now, you see the housing marke is slowing down. you see higher rates are havin an effect. this should have an effect o housing prices, perhaps even fairly quickly prices will not come down bu price increase will flatte out. we are seeing lower houma sales, lower starts, so we are seeing a slowing in housing ideally, the very low settings of rates during the pandemic were appropriate part of what that did is i supported a lot of demand fo housing. we want to get back to a place where supply and demand ar

closer i will say, i agree with you o the labor shortage issue it is a longer term issue that we have. with housing, there ar constraints on housing construction it is very possible that w will be in a position wher there is not enough appropriat housing at the right price that is a long run issue it is not so much for us as it is for you >> thank you >> senator from wyoming is recognized >> thank you, mister chairman. thank you, chairman powell, fo being with us today. it comes as no surprise to you that i want to focus on -- my first question is about a digital assets specifically, as cc staf accounting bullet in 1:21. the bulletin requires publicly traded companies, includin banks, to hold digital asset

in custody as an on a balanc sheet liability. well the accounting standard contained in this bulletin that requires it to be on balance sheet, be applied by the federal reserve to banks and bank holding companies >> so, that is something tha we are sought at and understan the implications it is something that we ar working on with our fellow ban regulators i do not have an answer fo you. that is certainly somethin that we are focusing on very closely right now. >> i will note that the basi committee on bank supervisio has declined to establish capital charge for custody digital assets because they ar always off balance sheet they created a framework calle the credentialed treatment o crypto assets, that continue

to acknowledge that they are off a balance sheet. if the standards of the s cc standard bulletin are adopted, that would be the first time that custody assets are priced on balance sheet do you think it is smart for the u.s. to be imposing bank standards be on internationa norms? >> again, the scc as authority over county rules. we now have to consider that exact question that is what we are doing. i cannot really say more because we are working our way through it my understanding of it is th same as yours, which is custod assets are off balance sheet they always have been. the scc made a different decision as it relates t digital assets for reasons tha explained. now we have to encourage this. >> thank you i encourage just to be considered and i appreciat that you are