things have gotten worse recently, down almost 890 on the dow. the 10-year, which we should check before we head out, and oil, the 10-year at 3.27 oil hasn't been the issue at this point and the dollar responding to some of the moves out of the ecb. we'll have our own situation on the 20th and 21st. join us tomorrow we'll be here. "squawk on the street" is next good thursday morning. welcome to "squawk on the street." i'm carl quintanilla at the code conference in beverly hills, california david faber and mike santoli at the nyse ew york stock exchange cramer has the day off goldman says the fed will likely raise this month claims to 222k and of course, david, we have powell in just a few moments.

>> we'll start with the fed in a few minutes. jerome powell will participate in the monetary policy conference that is virtual this year we'll bring that to you live his appearance comes with the next may major fed policy meeting less than two weeks away mike joins me here >> ecb raising rates about 0.75%. bond yields lifted on that i think that's in the immediate term what made equity futures more anppreapprehensive yes, a good rally, all the things that stock investors look at as kind of, you know, the traffic signals were green if not, you know -- at least not

red anymore. yesterday we got reiteration of the hawkish stance 3/4 in september and essentially affirming that i think that's what we're looking at right here. 75, and let's just say as goldman sachs is saying, 0.75% in september followed by 50 in november, 25 in december it basically gets the fed funds rate up to the precipice of 3.75% to 4%. maybe that's it, right that's the hope of the market, that at least in time, if not in absolute rates level, we can see the end. >> a number of guests yesterday seemed to be the chorus, when you try to push them towards there's lot of negativity, most seemed to be, like, well, i still need signs, particularly that inflation has peaked. we see them all around but i

need more. >> everyone needs to -- well, because we were burned people clearly have been trained not to be complacent about that. but inflation declining, you see what happens with oil and gas. it was the entire story in the first half of this year. now it's unwinding it seems as if falling inflation and the fed perhaps being closer to a pause gives only wiggle room for the market. i think the big debate is still about the june lows in the equity market, will they hold, did you see enough of a great true demand for stocks then, basically a new macro shot to get you below that, but it's a good distance now to get back there. that's the other piece of it >> carl, you know, we talked yesterday about the tone at code seems to include the idea of doing more with less, perhaps the reflection of economic realities. >> for sure.

surely what pichai talked about, getting more efficient evan speak iegel talking about t this morning jpmorgan says that the improving inflation environment probably keeps us from retesting 3,636, but you have to get to 4,025, 4,036 first. they said even though we are in the middle of concerns season, there's not a lot of conviction to do anything in either direction. >> no, there's not liquidity is not great you do have this sense out there that earnings estimates have to come down. maybe that's why we're on guard related to conference season i think my framework for a couple months has been that they had the good chance of being consequential based on how it came off of the june low with this pullback, it probably wouldn't require the s&p to go back there before you generated

a similar kind of extremes in sentiment and people being negative and positioned bearishly. i think that's kind of taking hold here, this idea that even if you did get further here, it's probably going to get to one of those extreme levels that did bring buyers in, probably bring them in at somewhat higher levels than 3,636. but who knows. >> we talk so often about the equity markets and what has been a difficult year for those but bonds, man, its has been brutal on all fronts, not just obviously government but corporate as well. >> absolutely. >> no real relief. if you want a bond fund, you're looking at declines to equal if not exceed the indexes on the equity side. >> you have to go back many deck aips to have that kind of situation where bonds did not provide any cushion for what was going on in an equity bear market the only thing that you can say

that is a slight glimmer of a silver lining in that is that the corporate bond market does remain open, so it's not as if it's just the rates are getting reset, people are taking losses on the principal, but on monday, $35 billion in new corporate debt on a single day got priced. that was one of the reasons people said that treasury yields went up so much. it's open but it's higher cost of capital >> and keeping an eye on high yields as well >> yeah. >> let's get to chair powell at the cato institute >> prior to his time as chair he served as the board of governors starting just over ten years ago. the one certainty that seems to come with the position of fed chair is that one will invariably face a time of great challenge. paul volcker confronted our last and worst bout of inflation. alan greenspan saw the stock market crash a mere two months after his confirmation and ben bernanke led the federal reserve amidst the financial crisis of 2007 and 2008. and chair powell, as we all

know, has served throughout the covid-19 pandemic and its aftermath, a period in which we've seen inflation reach its highest level in 40 years. as we've sat in front of zoom screens in the past 2 1/2 years, i'll speak for myself, many have watched with our hair turning grayer, but few of us have as good an excuse for this as chair powell we're delighted to have a discussion about key policy issues, what he's learned, and the challenges facing the fed. chair powell, it's good to see you today. welcome. >> thank you very much, peter. and thank you -- go ahead. >> i don't think it's a failure of imagination on any part, nor do i believe anyone will be surprised that the first topic we turn to is inflation. you know, as jim mentioned, it seems policymakers were initially given a bit of a head fake on inflation. we heard policymakers ascribing the increase in price inflation to the pandemic and related supply disruptions while this is undoubtedly a

contributor, it seems a stronger consensus it's been in larger part policy decisions. can you give us insight to how your thinking evolved on this top nic in the last year and a half and how those conclusions may have evolved as well peter, thank you jim, thank you congratulations to both of you and cato on four years of great monetary policy conferences. a good entry point for that question, peter, to start that recalling before the pandemic unemployment was at 50-year low, inflation was low and stable, and the economy was growing stable -- sorry, steadily, with no obvious balances and threatened continued expansion of course nb that sense, none of this high inflation we see around the world now would have had happened without the pandemic the pandemic severely disrupted the economy, gave rise to risks of much more dire economic consequences than actually transpired really, and that was thanks in part to the policy

response so to start with policy, there's no question that policy certainly supported strong demand, but in my view, you would not have seen anything like the inflation that we have seen without the pandemic effects. and those pandemic effects include both shifts in demand and also playing a role in, not solely causing, but playing a role in the s&pupply side contiu strants -- constraints that occurred. the pandemic did shift away from services to goods. that shift was a major contributor to inflation and goods prices, which was really the main inflation story at the very beginning when inflation broke out suddenly in march of 2021 it's worth remembering inflation actually declined in the early stages of pandemic and then suddenly ly rose up in march of

'21. the pandemic also contribute ed to constrain supply in a number of important ways, including a large and persistent reduction in the size of the labor force, which contributed to extremely tight labor market conditions and upward pressure on wages the turmoil in global supply chains was caused to some extent by pandemic-related shutdowns and particularly strong goods demand i think cars are a good example. yes, people had money and rates were low and demand for cars was strong, but also the pandemic shifted demand upward for cars because some people wanted to avoid public transportation. that amped up new demand for new and used cars, and also the shortage of semiconductors for cars emerged from pandemic-related demand shifts as well. so, you know, the bottom line for me is that there's really a role for both here, and the two are tangled up in a way that

it's really not easy to disentangle. >> those of us who grew up in the '70s, i think that the danger in cost and inflation can't be exaggerated in september of 1979, his first testimony a month after he was confirmed, paul volker made clear he understood the damage being caused by inflation and the need to bring it down even if it required great costs in other economic ways. one of the lessons of that episode was the greater the extent to which inflation slips the leash, the higher the cost and greater economic damage necessary to bring it under control. i worry whether we have the resolve to bring inflation under control today and face the potential economic costs i took some comfort from your recent remarks in jackson hole which seemed an attempt to signal that kind of resolve. but i do remain concerned the intense political pressure that might be brought to bear to avoid collateral economic damage

before the inflation problem is gone i wondered if there's any way you can help me sleep a little better on that score >> sure. so, i think it's worth going back and remembering -- and i pointed this out in my remarks two weeks ago at jackson hole, ten days ago -- that what paul volker did and the fed did to finally get inflation under control followed several attempts to get inflation under control. and what had happened over the course of that long period of the great inflation is that the public had really come to think of higher inflation as the norm and to expect it to continue, and that's what made it so hard to get inflation down in that case it is very much our view and my view we need to act now, forthrightly, strongly, and need to keep at it until job is done to avoid that. we think we can avoid the kind of very high social costs that paul and the fed had to bring into play in order to get

inflation back down and set us up then for a long period of price stability. that speech, the point was to deliver a speech that was narrowly focused on inflation, more direct, and a lot shorter than the typical jackson hole speech, and i thought was appropriate was a concise and focused message. to your question, the message really was that the fed has and accepts responsibility for price stability, by which we mean 2% inflation over time, that, again, to your question, the longer inflation remains well above target, the greater the risk the public does begin to see higher inflation as the norm, and that has the capacity to really raise the costs of getting inflation down so, finally, history cautions strongly against prematurely loosening policy i can assure you that my colleagues and i are strongly committed to this project and to

we will keep at it until the job is done. i can also assure you that we never take into consideration to external political considerations you know, we are accountable to the public through congress. that's a very fundamental, important aspect of our work but we focus solely on the goals that congress has given us, and that's what we're going to do here >> i think that, you know, that's really important because it's clear that we could see, you know, political pressure coming to avoid economic costs when there could be claims from political players that, you know, inflation is back in its box, you know, long before it is jim mentioned in his opening remarks that two years ago you moved to a new framework, flexible average inflation targeting. i'm bringing this up now because, again, just reiterating

the point about trying to sleep better at night. by many accounts this move has created more uncertainty in the market as you mentioned. and coming at a time when inflation now has increased so markedly, it creates concern that despite your stated resolve, the commitment to price stability has become less strong should you consider modifications to this framework to raise these concerns and better manage short-term expectations >> we began the work on the new framework in 2018 and announced the results in august of 2020 and really followed 25 years, basically, of global disinflationary forces and the problem was that monetary policy rates were close to the effective lower bound much too much of the time, much too close, and even during good times. so, that mentz that central banks were having a hard time all over the world, you know,

finding ways to support the economy when it was needed and that's why central banks including the fed resorted to forward guidance that's why we did that the changes we made were a mainstream part of the literature around makeup strategies, but really, the point of our framework changes, the point of all of them, was to -- and we said this clearly, was to have inflation expectations well anchored at 2% the average inflation targeting idea was meant to support having inflation expectation. that is the goal at 2% the reason is that we believe that the public's expectations of future inflation will play an important role in the actual path of inflation. so, that's kind of the fundamental basis of our framework, and, you know, as i just discussed, it is very important that inflation expectations remain anchored i think the evidence today is that if you look at longer-term expectations by households, businesses, and forecasters, and also markets, you'll see that

they are pretty well anchored around 2%. of course, short-term expectations are higher because of high current inflation and also the clock is ticking, as i mentioned. the longer that inflation remains well above target, the greater the concern that the public will start to naturally incorporate higher inflation into its economic decisionmaking and our job is to make sure that doesn't happen and we're committed to doing that job >> it seems to me there's a chance -- that -- there's a real risk that the labor market, the labor shortages persist. does that create a risk that takes some of the ability to manage this process out of your hands to the extent there continue to be labor shortages does that then feed into expectations that the public has about inflation, as you mentioned very prominently >> i think you're right, that if

it does turn out that we are in a world of a persistent labor shortage over time, that will be a challenging world for companies, and it will certainly create upward pressure on wages and that sort of thing today the labor market is -- demand is still very strong in the lake-effect. we're still printing new payroll job numbers at high-level wages, running at elevated levels, and so we think by our policy interventions what we hope to achieve is a period of growth below trend, which will take -- which will cause the labor market to get back into better balance, and then that will bring wages back down to levels that are more consistent with 2% inflation over time. that's what we're trying to achieve. the shock to labor supply we got from the pandemic was large and unexpected and unfortunately

persistent i will say in the very last labor market report that we got last friday, we did see a welcomed increase in labor force participation. nonetheless, it's still a full percentage point below where it was before the crisis, and i think it's important as a society that we have measures in place to support a strong labor market and high labor force participation. that goes beyond, you know, what we can accomplish with monetary policy >> you've made some contrast to how things are different today, what's different today, you know, the high inflationary period of the late '70s and early '80s i guess some other distinctions are, i remember as student in boston in the early '80s, the days before the internet, i remember seeing people actually line up at the fidelity office to see the monetary aggregates released on a weekly basis and, you know, money travels

through the economy has changed dramatically since milton freedman first said inflation is always and everywhere a monetary phenomenon how do you respond when people look to the huge spike in government spending and say -- i think you answered this in part in the first question, but, you know, when we look at the huge spike in spending, the fed has printed all this morning so of course we have inflation >> so, i, too, graduated from college in 1975, which was close to peak monitorism there was quite a focus on monetary aggregates. i recall it just as you do. this kumcurrent situation, as pt of our response to the pandemic, we did resort to large asset purchases to address what were pretty severe disruptions in markets and also to support the economy and our balance sheet expanded dramatically. but remember, our purchases of securities don't actually increase the quantity of government obligations held by the public they really change the mix because we issue bank reserves

to pay for those securities, so we're not changing, you know, the quantity of obligations. that is not to say that money growth wasn't high it was of course extraordinarily high in 2020 and then slowed down in '21 and now is quite sluggish i guess i would just say it this way. whatever caused -- you know, there are different theories on what caused the inflation that so suddenly jumped up out of the ground in march of 2021, whatever that cause was, the relationship between the money supply and inflation, economic output has been much more unstable than it was in freedman's day for a very long time and so, literally changes in monetary aggregates have not had a consistent, reliable relationship they haven't been a good predictor of the economy or inflation. now, of course, the economy is ever changing, and that, too, could change, you know, to where it is important again.

but for now, and for really many years now, monetarying a regalts don't play an important role in our formulation of policy u and we don't think they're generally a good way to think of fed policy or about inflation. it's more about demand, supply, and things like that so, that's where we would be on that >> that actually calls to mind at cato we have a strong aversion to a fully discretionary fiat money system, so we like to promote alternative frameworks that put policy in a market direction that eliminates some of this discretion jim mentioned that a consistent theme over the years at this conference has been, you know, potential monetary rules, and, you know, that kind of calls into question whether inflation and prices are really the best targets to use for monetary policy some folks have advocated for rules-based systems such as targeting nominal gdp, something

we've heard a lot about in recent years, partly because as you say monetary policy is not suited to -- well-suited to address supply shocks. can you share with us your thoughts on that type of approach and whether it's something that you would consider >> so, more broadly on rules, of course cato rules have become part of the fabric of economic ana analysis, particularly monetary policy analysis, in ways that must be far greater than john taylor could have hoped when he wrote his original article in 1993 but no central bank, and if fed has never explicitly tied our monetary policy decisions to any formula, including taylor rules, but they're ubiquitous all of the work we do, you have to have a model of explaining how monetary policy will react and some kind of taylor rule is very much part of the way we

think. in terms of nominal income targeting -- and i know cato is one of the home courts for nominal income targeting along with mer cato and some others, and i know a lot of well-known experts, many at your institution, you know, do support nominal income targeting. i'll just say that we've looked at that, i have looked at that, and really come to the view that nominal income targeting is not the right way to go. i know these arguments are well-known to nominal income targeting people and found to be persuasive >> i would interjek that we have debates internally as well, and i think for us the concept is really more, you know, wanting to socialize a number of alternatives and tripe to move towards alternatives that do have more of a market basis and, again, remove discretion >> i think that's a very healthy

process. and, you know, the whole debate over many, many years about rules and discretion is a fascinating and important one that is far from over. so it's really a mix of the two, i think. but getting to nominal income targeting, we've got to do a mandate, maximum employment and price stability, and it comes down to is nominal income targeting the best way to promote that we don't thip it is. i don't really think it is part of that is just it would be i think very difficult to explain to the public the relationship of a nominal income target, nominal gdp target, to chose goals. it's a level of complexity that, you know, even some economists and policymakers struggle with, let alone the general public so, it seems like it would be a reach to sort of put that -- for us to have that be our fundamental framework. a couple of examples that would be difficult, one in particular would be what do you do with changes in trend growth?

we have, you know, highly uncertain estimates of levels of trend growth that we amend down through the years, and many years later we may have very different views. but it is broadly understood or believed that trend growth has declined considerably over the course of the last -- well, since the global financial crisis how do you incorporate that into a nominal income target? do you raise the contribution of inflation or annually reestimate trend growth if you do, that you're incorporating both communications issues but also, you know, just big chances of policy error, because we just don't know these things with that kind of -- we don't know any of the starred variables so to the speak with that level of certainty. i'll just say it's really interesting and it works very well in models, but it seems difficult to implement from a practical standpoint and not something that we have chosen to do or that we are currently looking at

>> you mentioned the general mandate. i don't want to ignore the unemployment rate during this conversation you know, when i said earlier that, you know, we obviously have an aversion to a fully discretionary monetary system, many of us also regret the adoption of the dual mandate in lieu of the focus on monetary stability. the fed's own website says maximum employment is driven by nonmen tear factors. if we accept that, does it make sense for employment to be part of the fed's mandate >> peter, as you know, we're created by congress and it assigns our goals. it's my view that the dual mandate has served the public well and is generally workable in particular, at the moment, i don't see the two goals as in conflict at all because without price stability we will not be able to achieve the kind of

strong labts or market that we t far sustained peer that benefits all. i don't see a case for moving to a single mandate, but that's really a question for congress and, you know, we will of course implement whatever mandate congress give us to your point about maximum employment, it's true, and we say that, and have for some time, that nonmonetary factors are really what drives the level of maximum employment, which clearly changes through the business cycle and over time but we can and do assess that, and we do a transparency and congress said that should be a co-equal goal of price stability, so that's what we're implementing again, i don't think there's strong case for changing that. i don't think its happen v hampers us in our pursuit. i think we can achieve both goals. >> you stole my follow-up. you started out saying congress sets the manmandate, and my follow-up was going to be should

they consider changing the mandate. you've answered that anatural follow-up might be if the dual mandate weren't enough, there's been talk of adding more, you know, elements to, you know, the fed's objectives, inc including equity from the banking system to the broader financial system and regulatory responsibilities were wildly expanded in the wake of the financial crisis how does continuing to expand the fed's mandates not undermine focus on that fundamental responsibility of stability beyond things such as the employment element of the mandate? >> so, i think our current mandate is appropriate, and i would not want to see it narrowed or broadened for that matter we've got narrow and we've got well-defined goals that we're supposed to pursue, and what we get with that, what we've gotten with that is a precious brand of

independence that lets us pursue those goals without direct political control. for monetary policy, that's price stability. i think that dual mandate ha served the public well it would not be a good idea to broaden it to goals that might be inconsistent with those two mandates, and it would be very difficult to afor us to achieve with our tools mor broadly than that, though, i think it's really important that we stick to our assigned tasks and resist the temptation to take onish shoes that are the province of elected representatives or congress. if we do that, if we do stray from our mandates, that will eventually undermine the case for our remaining independence i think fed independence is an institutional arrangement that has served the public well, and i think that's pretty well documented and accepted. >> i mentioned a couple times our fully consumer discretionar and one of those concerns is in

the face of large economic dislocations we've been running an amount of unprecedented experiments. i would cite the, you know, quadrupling of the fed's balance sheet in the wake of the 2008 financial crisis, and then, you know, doubling it again during the pandemic to your credit, it was right before the pandemic that you were beginning to move towards reducing the balance sheet can you shed some light for us on where you hope to take the balance sheet over time and, you know, what's the way that you really try to get there? you see the fed ever moving back to a reserves framework like it had before the 2008 crisis >> sure. so, in the last cycle, after we entered our asset purchase, we froze the size of the balance sheet in 2014 and then allowed it to shrink passively relative to the size of the economy for about three years. so as the economy grew, the balance sheet didn't grow. then in 2017, we began to allow

maturing assets to run off, and that process went on until 2019. by the end of that period, we had a balance sheet that was significantly smaller relative to the size of the economy and smaller than it was overall. so then we resumed asset purchase, as you know, 2020, and once again we are embarked on shrinking the balance sheet, and the test will be back to levels that satisfy the public's demands for our liabilities -- that's currency and reserves and things like that -- but also with reserves maintained at levels considered with our reserves regime. the let's be is slibl larger now, obviously, and so the runoff process is designed to be substantially faster than the last cycle to the tune of on the order of a trillion dollars or more per year. that began in june and the face of the balance sheet rises this month. the plans are in detail on our

website around the january and may meetings one thing we always say is we're prepared to adjust the details of the plan based on economic and market developments at any time as far as returning to a scarce reserve regime, i guess i would say that i think that our current operating framework is a better one, and i don't see a case for returning to scarce reserves now, why is that so, the world has really changed as a result of the global financial crisis and the pandemic the scarce reserves framework would be challenged to work in a world where there's very high and sometimes volatile demand for safe and liquid assets central bank may need to rely on lower scale asset purchases from time to time in response to severe shocks. and remember that the large financial system has very large quantities of safe assets now as a liquidity buffer and that includes a lot of reserves so, the bottom line is that the quantity of reserves is just so

much higher, it would seem to be impractical to try to manage scarcity -- and demands will be volatile, too, so its doesn't seem practical again, we think that the current system works well and provides a lot of liquidity to the system, which is kind of a nets gain. >> i thought it might be time to shift gears away from inflation and monetary policy. i remember the first year i joined cato, i read an op-ed in the "wall street journal" advocating for the fed to develop an individual currency i was kind of horrified at the privacy implications of this prospect and said so in a letter to the editor. since then, the fed has formally stepped into the digital currency rating. digital currency has been a recurring theme in these conferences. but the fed has stepped in into this arena with a discussion paper on a central bank digital currency and several speeches from fed governors our team has reviewed the more than 2,000 comments that the

fed's central bank digital currency paper received, and we find that about two-thirds of them are concerned or outright opposed to the idea. comment ers raise concerns of oppression, the bank system, some of the same concerns that led me to write that letter to the editor seven years ago how can concerns about freedom be reconciled with the digital currency >> let me start by saying we haven't made any decisions at all about whether to issue a cbdc, and we continue to evaluate the pros and cons and look at the technical and policy questions, and we expect that evaluation process will take some time, appropriately second, i'll say we do not intend to proceed without clear support from both the executive branch and from congress ideally in the form of a specific authorized law

so it was very gratifying, 2,000 and some comments. i won't tell you i read those, all of them, but i've read some of them and the summaries. a lot of very thoughtful concerns, including the ones you raised there are things we're considering seriously. so, in our own paper, we suggested that a cbdc in our jurisdiction should be privacy protected, intermediate year to dated, widely transferable, and identity verified. on privacy protection, start with that, very, very important. we all see what's happening with the digital rnb and, you know, the issues of privacy. we would not want a world in which the government sees in real time every money transfer that anyone makes with a cbdc. that would not be something that would be at all attract nich the american context so privacy protection will be

extremely important. we're tentative to striking a balance of course between law enforcement and privacy protection but that can be managed in the same way it's currently managed in the banking system or in some similar way. another issue is disermediation. that is a question of say you had an interest-wearing cbdc, it could compete with deposits out of the banking system, limit credibility, that could be managed. one of the things cato mentioned are you creating an asset that would be very attractive in a panic or severe stress situation, and, you know, fostering runs so, look, it's going to be, as i mentioned -- we think our role is this. we want to carefully and thoroughly analyze the public policy and technical challenge,

tradeoffs and challenges and the idea is this will lead us to a better understanding of the trade aufs and hopefully fleed to a well-informed decision on whether to issue a dollar central bank digital currency. that's what we think our role is we think that the fed is the right institution to do that we can proceed without -- you know, we're a nonpartisan institution, nonpolitical institution that can do these things and i hope present conclusions and analysis that will support an intelligence decision when it's time to make that >> this is something we'll definitely have a lot of say on in the future as well of privacy concerns it's a very important role for cato i want to ask about cryptocurrency but first i should probably reveal in fairness that the

gentleman who photo bombed janet yellen five years ago by holding up a "buy bitcoin" sign behinds her during her humphrey hawkins testimony earlier this year became any son-in-law. so that'sa little bit of a disclaimer i'm going to puts out there. without debating the merits of cryptocurrencies, in the modern era, cato stands for seeing more monetary policy, to see more people concerned about the discretionary fiat system, and also, you know, we want to see private market innovation and expe experimentation in developing alternatives crypto is such a great example of this. there's a long history of government thwarting that, which we find really disappointing i'm wondering if you could respond to these kinds of

concerns, namely that regulators might actually take crypto to the extent it develops into a viable alternative system. >> so, i'll talk about it in two pieces one is unbacked cryptocurrencies as such. and, you know, those have not and don't appear to offer -- have not offered and don't appear to offer much in the way of public interest in using them as payments, let's say it's really -- it's not a great stored value it's a speculative asset it's not backed by anything. >> there could be an argument it's still in the development phase and something we could see emerge, but -- >> yes >> be that as it may. >> and i also have close and family member whose offer that perspective vigorously, as you suggest. so, but stable coins is a different that i ing. the question is are there forms

of private money like stable coins which can play a role in our financial system, which would -- and the answer is of course that we don't want to stands in the way of appropriate innovation, particularly including, you know, digital innovation but we think that something like that, which is, you know, purr porting to be money would need to be appropriately regulated. you know, i hear that wide agreement on that, by the way, from a lot of the stable coin companies now, are seeing that as part of getting to a place where they are a legitimate part of the financial system. so i think you need regulation people are going to think something is money, then it needs to actually have the qualities of money and, you know, if it doesn't, then you don't want -- i don't think you want to take money and make it into just another consumer product where sometimes it fails and sometimes it's good you want it to be guaranteed to be good. if the public is going to the look at it like it was a dollar, you want clarity, transparency, full reserves of very liquid, high quality as els and things like that.

that's all we need legislation on this. just, you know, it's typical of technological innovations. there isn't a regulatory framework that really gets after payment stable coins, you know, and so i think that's what's needed but i wouldn't think of us as being opposed to that kind of innovation we're more of the people who are saying, among others, that we need appropriate regulation. >> mm-hmm. the devil is ultimately in the details. i mean, while we have these debates, i mean, we would concede we're living in a world where we will see innovation, and we basically promoted, you know, a light-touch, market-focused approach because there is -- you know, there is a real risk of, again, you know, having an impact on the development of these innovations and really thwarting what could be very promising and useful innovation >> i agree we don't want to be in that

place. we want to be in favor of innovation but also appropriate regulation >> mm-hmm. and ultimately, some of the people who end up driving, you know, the regulation might be -- you know, you mentioned legislation. you know, the end product may not meet the objectives that you and i both say that we want. another topic, you know, as long as i can remember chairmen warn pd of an unsustainable fiscal path regrettably no one in congress or the white house seems to be listening. i'm -- particularly during a period of high inflation, i've been, you know, continually chagrinned at, you know, the number of big spending bill thasz continue to come down the pike and legislation that's passed, you know, long after i think, you know, the crisis of the pandemic has ended the lessons of the financial

crisis and covid might be that keeping our fiscal house in order is essential as preparation to meet the challenges of unexpected but inevitable, you know, economic dislocations but the opposite lesson seems to have been learned, we can keep spending what we wish without a day of reckoning i'm very concerned about the day of reckoning and what risks we're laying for the economic well-being of future generations. and i just wonder, you know, your thoughts on those concerns and, you know, the potential timing of that day's arrival and its consequences and whether you have any ideas about how we can build a real constituency for fiscal responsibility in america. >> so, i do share those concerns in effect, i was working on those issues before i joined the fed. but at the fed, my position is -- needs to be that fiscal policy really is the response of congress and the administration. wouldn't be appropriate for me

to comment too much on specific policy proposals or laws more to the point with inflation running so far above 2%, this is probably an especially goods time to focus on achieving our own mandate rather than doling out advice to others but like my predecessors, i'll point out our fed cal fiscal policy is not on a sustainable path and hasn't been for quite some time. we need to gets back to a sustainable point sooner than later. i guess i'll just leave it at that >> all right thanks we're getting close to the ends of our time, so i'm thinking about a closing question i wonder, with everything that we discussed thus far, what are some of the key lessons you've learned since you became fed chair? and, you know, what advice might you give to a lot of the young, you know, monetary scholars out there that cato and other places

are working to develop >> so, i guess i would say that both experience and also studying history are great teachers of what can be hard lessons. and i actually mentioned three lessons at jackson hole ten days ago. those were, first, that the fed does have and accepts responsibility for price stability. even now some are questioning that, but that to is us is settle preponderance of the evidence second, inflation expectations need to be carefully monitored because if they move up they can make the job of getting back to price stability to much harder third is that the record is -- there's a records of failed attempts to get inflation under control, which only raises the ultimate cost to society of getting it under control, hence the need to do this job now and keep at it so, tloez three lessons. i would say more broadly, i know the really fundamental lesson

is, to me, is that the structure of the economy is ever changing and highly complex and, you know, we see that today around the world many nations are experiencing the first high inflation in 40 years, all around the world. different countries have different composition and back stories, but it's really quite global and the question really is, is this going to be a temporary thing that's really related to the pandemic in some way, or is there actually something more structural and persistent happening? for example, if we're moving to a world where we're going to see more frequent, larger, and mer persistent supply shocks for whatever reason, that will have critical and difficult implications for the conduct of economic policy and monetary policy in particular so, this is not possible to know right now, but it's certainly a question that looms. i mean, to me, to sum it up, i would just say economics is not

physics. there isn't any specific temperature at which the economy boils over it does boil over from time to time, and when that happens, it often take miss years of analysis, discussion, and debate to reach general agreement on why that has happened. so, the point is that we are always making monetary policy under high uncertainty about the structure of the economy and the path ahead that makes our work challenging. it also makes it getting it right very important for the people that we serve and we do think about that every day. so, our understanding of the economy has to evolve as the economy evolves, as time passes. we do learn more, and i think it's okay to follow the evidence and change one's mind. i think advice to scholars young and old is that people shouldn't be afraid to say that they've changed their view and explain why. i actually find that refreshing when people say, you know, my view -- my view has evolved in the face of the evidence

i guess one more word to close for the young researchers you mentioned, and this is a commercial for public service and for the fed. the fed is a very special place where people can combine policy research with policymaking this is a place that has -- and automatic of us have a very strong sense of mission in our work, which is very satisfying, and that mission is to serve the public and it really matters. our work really matters to the public i would say there's no higher calling or more satisfying mission. so, i hope that young researchers and economists and others will consider public service as part of their career. for me it's been only a part but particular, consider working at the fed where you'd be most welcome. >> thanks for that i mean, i share those sentiments you mentioned your work at the bipartisan research center, and, you know, i'm at cato because i care about the future of our

country and the future of course of liberty and freedom in america and for the kind of world, you know, future generations are going to grow up in and if they'll have the same opportunities we all have had to live in a free country and to pursue, you know, the american dream and be part of that is a real privilege. part of that i a real privilege i know at cato, we work very hard to raise consciousness of monetary and the potential for reform we think this is a very important topic and that more americans should pay attention to it, even though it's complicated. we wish there were more policy organizations that were prioritize this policy area and, you know, raise the level of resources dedicated to this area as you know, mr. chairman, cato is not shy about being critical, and we enjoys intellectually

jousting with and your team, about you we also recognize, you know, we share common goals and objectives for our country, and it's in the country's best interests when the jousting and those debates and areas of disagreement, it's within that context that they occur. so i do thank you for your work. you're in a challenging position i thank you very much for being part of this conference today. it's been a real pleasure. >> thanks, peter the pleasure is mine, too. thanks so much, with that, i'm going to let the viewers know we'll take a break under the top of the hour, so we'll reconvene with the next panel at 10:00 a.m. we've been listening to fed chair powell we won't be reconvening, listening to about a 45-minute largely seemingly scripted back and forth between his moderator of the cato institute and the

fed chair. it obviously ended on a plea for people to consider working for the fed, but a lot focused more on what the market is focused on, since his surprisingly hawkish comments at jackson hole. >> it was mostly a reiteration of the message from jackson hole, which is to convey an urgency of the job of restraining inflation. at one point he said the clock is ticking, by which he means the loamer you allow the inflation to remain at a targeted level, they feel as if that's the moment where you've lost longer-term control the fact that he keeps hammering on this, the day after yesterday, there was some reporting out of the "wall street journal" that they are suggesting it leaning toward the largest hike next. so it seems as if that's now

roughly in harmony with what the fed is currently thinking. he did point to labor force participation as being a crucial swing factor in trying to take care of inflation, soften up the labor market, in that way get more people to work, maybe you can moderate wage growth, maybe asking people to work for the fed is -- >> we did see labor participation go up, one result the unemployment went from 3.5 too 3.7. carl is at the code conference at the same time, we've been hearing from the fed chair, we're also ecb press conference on lagarde making comments as well. >> the timing of lagarde, this cato appearance, the piece in the journal, all of that probably not a coincidence i thought they got to a fair

number of structural questions about the fed, single mandate, whether m-2 is an inflationary dynamic, crypto, whether we're in a new period of structural inflation, but it did sound like an effort to push back on the question of why are you feeling to hawkish when expectations have not become unmoored, and as you appointed out, the longer it remains over targets, the more likely that acts as a time bomb. people demand more in paychecks, they get used to rising price, and that feeds itself. let's bring in bob pisani for his reaction. >> not a surprise with powell. he reiterated that history strongly cautions against premature loosening of monetary policy take a look at the market here what happened is the growthier

parts of the market were weaker at the open. you sea semiconductor, cathyie wood's ark fund surprisingly bent positive. energy went positive, as oil moved up a bit and was a pretty weak day yesterday overall, but we've seen several business movers near 52-week lows, including some dow components. verizon at a new low, dow inc. a new low, mccormick interesting comments about cutting sales profit outlook that goes to the whole issues of margins. as for the markets, where we are now here, the debate it peak inflation, peak inflation likely, but certainly we heard powell we're not at peak hawkishness, reiterating that

history strongly cautions against premature loosening of monetary policy. the retail investors are not there, either. bearishness is extraordinarily high among retail investors the aaii weekly survey, look at this bearish level. 52%, almost twice the historic average, one of the worst readings in the 35-year history. bullishness only 18%, half of what it normally is. finally, i just want to make a point. gary gensler was making a point, again says the s.e.c. has a lot of jurisdiction here he's saying most crypt ooh tokens are securities, they come under the s.e.c. lending platforms, you come in and register, some stablecoins, maybe securities, this is going to be met with a lot of

host hostility. they don't want gentzler gensler is, again, making a big place it's the s.e.c. that could play a major part. >> interesting to see that needing moving forward. when we come back, roger ferguson with some reaction to chair powell's remarks as we go to break, how treasuries are faring today. i get the act you could argue largely viewing the powell appearance as somewhat incremental. you do have some movement in treasuries, oil reversed higher, the s&p holding.

lily! welcome to our third bark-ery. oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect. terrier-iffic i labra-dore you round of a-paws at&t 5g is fast, reliable and secure for your business. businesses have to find new ways to compete in order to thrive in an ever-changing market. the right relationship with a bank who understands your industry, as well as the local markets where you do business, can help lay a solid foundation for the future. pnc provides the resources of one of the nation's largest banks and local leaders with a focus on customized insights to help your business

achieve its goals. that's how we make a difference. ♪♪

welcome to another hour on "squawk on the street. i'm david faber. as you see, carl is in beverly

hills, california for this year's code. let 'call it almost flat >> had a bit of a dip. herer three people move rs. another name in the red is american eagle >> we will end with gamestop, but separately gamestop announcing in the new partnership ftx, stock is up

2.5% as risks that the public will start incorporating inflation. take a listen. the greater the concern the public will start to naturally incorporate higher inflation into the economic decisionmaking our job is to make sure that doesn't happen joining us is roger ferguson good morning to you. first off, just give me your reaction to the interview that the chair just concluded >> the first reaction is it was largely on script appeared on

message he ended with the with the jackson hole plus a few more they expect over time to get us back there >> he also mae mention of the fact that structure of economies are ever changing and complex. do you agree and how do you read them >> i found this interesting. one is exactly in the structure of the economy particularly changing he mused about the possibility that maybe, you know, the decades of disinflationary pressures may be behind us he recognized the possibility of ongoing disruptions that may make monetary fiscal policy more challenging.

while he's focused on the here and now, and intends to avoid the challenge that paul volcker faced, his speculation that going forward things may become more challenging, and maybe not periods of inflation below target, but managing periods of inflation with ongoing disruptions. not that it should take priority, but something that was on his mind and one of the lessons he ended with. >> he did essentially set aside the idea of a more strictly rules-based policy obviously at some point it's a judgment call. when it comes to trying to control for inflation expectation, i wonder what you think the state of that project is right now we've seen inflation

expectations by a lot of measurable sent emphasize-based gauges, but it's a moving target seem to have a lot thought with gasoline prices. and how does that fit into what they're trying to engineer here? >> you're right that inflation expectations have, based on market measures, moved down a bit. both 9 five and ten-year numbers are mostly 2%, so that's a positive sign for the fed. very said that, what we know about our individuals make inflation expectations, is less about what the fed is targeting and much more about headline, with gas prices in particular.

it has moved up and down expectations, so i think he's right to say they're comfortable where it is now, but not complacent so using tools to keep inflation expectations while bringing inflation down i think for them is job one. >> when you think back to how they framed the inflation initially as transitory, if we have cars and gasoline giving you negative prints, will they frame this now decline in inflation as transitory? >> i think they're looking for clear and convincic evidence

they'll observe it as a positive move, but not necessarily clear and convincing evidence i think that's the challenge, yes, it's moved generally in the direction we like, but they obviously want to avoid the stop/start issues from the past. i do believe they're going to be maybe more delayed any declaring victory, and they have been very clear they're also going to keep rates higher for longer than many people would expect positive surprises in inflation will not deter the game plan as laid out right now >> right the other thing, it gets a little inside baseball, was their discussion about monetary base and m-2 and milton friedman, he seemed to dismiss

that as less relevant. it got some pushback, at least from some viewers. do we have something to talk about it. >> it's been an uneven between monetary evidence and growth and inflation. that also has to do with velocity of money, so his mindset is much more towards we're going to target interest rates, as opposed to monetary arrogance, and use those rates to adjust finance conditions broadly to mike them tighter importantly, add something else, which is a continued focus on imbalancing in the labor market. while recognizing participation increased somewhat, i think he was also not embracing the fact it's gotten back to where it wants to be, and certainly he doesn't see it as coming back

into balance so i think he's moved very much art from monetary arrogance and focused on metrics such as inflation and inflation expectation and unfortunately what hi perceives as still persisting. >> roger, it being september, a lot of folks of today bill dudley is out with arch op-ed essentially saying don't worry about major descriptions this time around. do you that's safe to assume, the fed has sort of figured out procedurally how this might go more smoothly? >> i think they're feeling confidence they've been clear in their signaling and laid out their plans. i think the last time around with bernanke merely musing

about a qt, creating the so-called tantrum, but i think it's too early to say, well, because they signaled it's all year they are such a part of the rsm market as interest rates come up, they become a seller, not a buyer over time. i think that has a chance of creating some instability. so i would say so far so good, because they've been very clear on the plan, but the execution is still yet to come i would say i'm still a little cautious there may by more volatility, maybe a bumpy ride as it picks up over time. >> roger, thank you. >> my pleasure thank you. roger ferguson still to come this morning,

we're going to talk weakness in hike ease tech first check out shares of amd. stifel today initiating coverage on that name with a buy. they say, quote, amd continues to execute well on a product road map that's enabled share gains. we're back in a moment stay with us

at xfinity, we're constantly innovating. and we're working 24/7 to connect you to more of what you love. we're bringing you the nation's largest gig speed network. available to more homes than anyone else. and with xfi complete, get 10x faster upload speeds. tech upgrades for your changing wifi needs. and advanced security at home and on the go to block millions of threats. only from us... xfinity.

jong all streamers are created equal. i don't believe all streamers in it today will survive. there have been have's and have-nots. >> but now that you're not working, can you name some names? >> well, i think netflix will continue to thrive they have some issues now. clearly i'm a big believer in disney. >> that was bob iger on the second day of the code conference who else do you want to hear from from michael nathanson. you know, first off, just give my year thoughts on bob iger. >> i love bob iger he's right

i miss him in terms of a leadership role. there's going to be winners and losers i think it will happen seener than people think, i believe >> i notice i think you have a market perform a disney right now, but even today, it looks ugly what can you say positively about this ecosystem that we talk about a lot in terms of the stocks anything >> david, we have a buy on fox, we have a sell on paramount. what he's saying positively is hopefully we're closer to the end of this war, where people will start acting more rationally, but you and i have been saying this for a while

it's about margins, profitability, returning capital. it's a tough time to be in this business right now >> i do wonder, michael, when are we going to see the real cutbacks, how much we're spending on content, when does this so-called -- you know zaslov has been inching toward that -- >> we needs the families to get together to sit down in a room and figure out how can we put together some combination of these streaming services to scale, right you have this other guys basically giving away their product to get subscribers that's not going to end well there's a ton of ego involve

not everyone will come to the same conclusion, so, david, the worst part of this industry is you don't have independent boards or independent companies. you have controlled assets, right? in a normal situation you would have shareholders pushing to divest or consolidate, and until the families decide it's time to change, we're in this malaise. like i wrote yesterday, you're seeing the nfl on peacock, which i know peacock is owned by comcast, they're giving it away basically, with the nfl on it. that's not a good outcome, but they need to grow subs let's give the subs away for a few months and let people sample until that strategy changes, the owners wake up to this reality, we're stuck. >> right

carl's got a go ahead. malone gave up his vote, so you're really talking about the rob robertses and red -- you have to wonder when do people start saying this stock has been a disaster i know they say they expected it, but the business has gotten tougher, so i don't know how much to expect. >> not to pile on, michael, but he also said libyan tv, i can't tell you when, but it goes away. he says the movie business has

permanent scars from the pandemic it's no wonder he doesn't miss his job, with most of hollywood in anxiety. >> we think we'll lose another 50 to 60 million subs is kind of the norm, so you'll lose 20 to 30 million subs. we think sports and news, live content is what will remain in the bundle i'll disagree, the bundle will stay with sports and news. the theater business, yeah, it's permanently scarred, but i think think it makes sense to put the blockbusters in the theaters

we have a world that's much more fragmented that is what we grew up in to manage through that challenge is so intense. the world that we all came from is a great business model for all these companies, now the transition is going to be challenging. we're in the middle of it, as dave was asking, i don't see an end in sight i just don't. >> michael, aside from the fragmentation, the pie clearly is somewhat smaller than all of these players maybe thought it would be, and what they're willing to pay, but in that context, it's kind of a who would you rather be question at this point, isn't it if you're netflix and think you can be ad supported tier, and starting with a pretty good base of global subs, is there not an advantage from beginning from that point, as opposed to the

four or fife streamer trying to build scale. >> to your point, we separate at the stock call versus positioning. netflix can be very doolittling because if they go ad driven the i agree, there's winners and loser. we're not recommending stock, but, yeah, at least they have scaled, and they can slow spending down. they have that huge amount of impressions. that's going to be a real challenge. we're seeing that right now. it's one we discussed and will continue but for today, we're out of time michael, thank you, as always. >> great seeing you, david check out the biggest

laggards here ar the laggards they are dragging on the s&p 0. don't go anywhere. we'll be right back. ♪♪ the ey entrepreneurs access network has a tremendous impact on my business because it's given me networks, access to capital, and access to opportunities. the level of coaching that i get has had a tremendous impact. it allows companies like mine and others to grow, and it closes the wealth gap in this country.

we are monitoring the health of queen elizabeth for that, we will turn to shepard smith with the latest. >> carl, good morning. we got word just about three hours ago the queen's doctors were concerned for their health, as they put it the 96-year-old is currently at balmoral where she spends most of her summers buckingham palace released this statement -- the queen's doctors are concerned for her majesty's health and have recommended she remain under medical supervision. the queen remains comfortable at balmoral, end quote. that statement, remains comfortable at balmoral," is a

break from anything they have heard. recently they have said as little as possible, so this language is seen as significant. >> the heir to the throne, prince charles is here, and prince harry is there. prince harry and meghan markle were already in england and are head to do scotland. she pulled out of a virtual meeting after her doctor advised her she nedded rest. jest the day before, on tuesday, the queen had welcomed the new prime minister liz truss liz truss says this afternoon early in london, the whole country is deeply concerned. notes were passed in parliament early afternoon london time, the leaders of the party receiving words of the queen's health. notably bbc-1 has switched from regular programming to rolling

news coverage, something that is a dramatic break from form for the bbc-1. our own wilfred frost is there monitoring the situation we have live correspondents outside all the places of neat, as those in london wait and hope that they'll receive good news at some point, but so far no good news has come, only the headline that the queen's doctors are concerned for her health and she's resting comfortably at balmoral castle thine you, shep, and we'll turn to you for further update. we'll be right back. wow, we're crunching tons of polygons here! what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi.

okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq ♪♪ energy demands are rising. and the effects are being felt everywhere. that's why at chevron, we're increasing production in the permian basin by 15%. and we're projected to reach 1 million barrels of oil per day by 2025. all while staying on track to reduce our carbon emissions intensity in the area. because it's only human to tackle the challenges of today to help ensure a brighter tomorrow.

online sports betting to fund real solutions to the homelessness crisis. so how will that new revenue be spent? new housing units in all 58 counties, including: permanent supportive housing, tiny homes communities, project roomkey supportive hotel units... and intensive mental health and addiction treatment. in short, 27 means getting people off the streets and into housing. yes on 27. turning now to apple this morning, tim cook referenced the growing competition at the code panel last night take a listen.

>> we actually have fierce competitors. we're in the most competitive industry there probably is the smartphone market, you know, we're not the market leader in terms of market share. samsung is if you watch football or any other thing on your weekends, you will see their ads everywhere so there's -- of course, there's lots of other people in the smartphone business as well, including google, huawei and all these folks are spending tons of money around the world the company also revealed the latest in their product lineup yesterday wamzi, it's great to have you here so much discussion about pricing and what it mend to keep pricing on the norm although phones the same your argument is they're ride

any anything. >> yeah, thank for having me what was expected is the base models would maintain their pricing, essentially a price hike in the higher end of the pro models, where there's less pride sensitivity in general when we look at it from a perspective with foreign exchange and what's going on globally, there's an implicit almost 40% price hike ex-u.s so at this point to race pricing with all the competitors would mean they're moving lockstep with everyone else so what we really see here is apple making a push which it's ultimately going to monetize its purc

purc purchases appealing to some of the users that have just not been able to use lower-end version of the watches, for example. it's about building the ecosystems and then driving surfaces off of that >> 'where he start tracking lead times, what is important to watch? what are you going to be looking for, at least over the weekend >> yeah, i think that, you know, when you look at this particular cycle, they have nine selling days in the quarter, just the plus is what's going to launch a bit later. everyone else will launch on time we'll heard from the company that said supply issues are alleviating. they still expect some supply chain issues other product categories, but largely for the iphone, we will think this will be much more of an in-line launch relative to

the last two years that have had a lot of issues, we expect a more normal cadence around preorders. lead teems typically stretch out. they have stopped doing this now about releasing how many millions of phone they sold, but you can think a few million would be sold in september, given the amount of days they have. your price target of $182 is projecting the stock gets back to the recent high clearly it's done it's job of outperforming the s&p the past few months just the general earnings -- the market kind of wasn't aware of you i think

that, when we think about valuation but femmally you're right, this has moved from a boom/bust to one early resiliency we're talking about the significant gross margin lever, which is what i think is really not factored into valuation. over time, we've seen apple's gross margins gravitate from the mid to the high 30s, now into the 40-plus range, so it's all about maintaining the hardwar margins, which they can do and they're doing so much more work with the supply chain, all of those to keep the product margins stable while you're gut upward tension, as it that's

where the multiple has an opportunity to really expand, and it's not factored into most models they'll have gross margins flat to down. there is a potentially for gross margins to go up, on or apple could take the approach of right in this instance, effectively a price cut in the face of inflation. when you think about it in those terms, can you gain market share and get better top line. these are tradeoffs that the street harnlt factored in. that's really where the up side lies it is a choice to spends the first 45 minutes on watch. i just wonder what you think that says about how they're thinking about wearables and accessories? >> yeah. it's a very important part of broadening that ecosystem, right? the fact that so much time is

spent, not just on the watch, as a product itself, but on health, on safety, and on fitness. right? these are the three other key areas where we will see a lot more innovation. temperature sensing, blood pressure, blood sugar monitoring, all these things around health and fitness, they will get incomped, maybe there are apods, so there's so many innovative ways. that appears already, so you know there are productses in pipeline coming down the road. i think it's about broughtening, ecosystem i think it's important to see they are making efforts to target the -- users who traditionally would not be using, and broadening that

instayed -- stalled base of users. i think all the users in it are prone to stay in it. to the competitive front that tim cook mentioned, it's interesting, they're not the highest they've been converting users. i think that's important to watch. >> it was nice to have color of the event and then the cook interview here at code last night. womsi, great to see you, thanks so much. woms mohan, bank of america. powell certainly reiterated his mission to get the rate down higher good morning

david, this chair of the fed and the other folks on the policymaking front have a lot of message discipline now, right? they're not going to give the markets an explicit wink to say we think the market is almost accomplished, but place that in the context of what the markets are reading and what they're trying to project ahead to, just how much more is to be done in terms of the fed tightening. you know, i think the market is kind of telling you that they have a lot of this priced in, and, you know, you said it just before we opened the segment, we got a rate hight from the ecb, a leak that it's more likely a 75 than a 50 from the fed, and jay powell and the other governors sticking with the script there's no deviation, there's no lone dove out there trying to

pivot back it's a pretty straightforward message. i don't think that message has been deviated for a long time i think these levels we're getting to, they're interesting. we might have a bit more down side, we may have to test that 3650 again, but i don't think a big case for a big swish down to 3300 >> mona from an overall risk/reward perspective, we got that rally, at least part of that was on the idea the fed would shift, but not all of it you had some economic resilience where do you think that leaves us here with, again, the s&p about halfway between the june lows and august highs. >> yeah, you know, look, the fed probably wasn't thrilled they saw the rally from june to mid

august equities were up, bond yields were down, financial conditions were easing, not really conducive to that inflation-fighting mandates he really did reset market expectations here. we saw bond yields creep higher. the dollar is at a new high, this is the direction of travel that i think the fed is more comfortable with we do think going forward, you know, over the next few months, the old adage, don't fight the fed, certainly is still in play. but to the point earlier, we don't think that we'll get another bear market rally, if we do test those lows we do think a lots of the worked to the down side that was put in the first half, could we see some volatility in september and october? very notoriously volatile months, yes, but i think over time what we do expect is inflation will continue to

moderate the fed will pause at some point, probably by year end, and we're set up more nicely for more sustainable rebound so near-term volatility, not testing the 3100 levels, but could we get back below? perhaps. >> hey, david, i know you spend a lot of times with your clients, assets allocators, both equities and fixed income. i'm curious. what are those conversation light right now? what do they want to focus on with you >> well, david, that's a really good question, because i think it's changed a lot in the midsummer, a lot of people were said up for more weakness people were really nervous the fed had gotten aggressive, people weren't really ready for it, and i think people shifted their positioning to be much

shorter than normally would be, and they were anticipating some relatively large risk of downside moves that chase up was really a lot of people feeling they were underperforming the s&p and they needed to get back. to just standard global macro and other funds. so i think we got repositioning in the summer in a snap there. we probably went too far, based on what the fed is telling you and we're finding a more sensible place to settle into, and the fed is giving us a relatively aggressive move i think we they'd it i think we need to take the inflation down everything that jay is saying makes sense. i think the market had a positioning problem, and maybe it's positioned better this

time they won't have to chase it up too high like they did it last night. the big rally up doesn't seem like a huge risk to me here. people were definitely underweight, david, and you saw big movement in high yield, big movements in the riskiest parts of the market. >> mona, if, as you suggest, the market might not need to really have another flush much lower to make its peace where policy is, an the economy, what about the idea that earnings are this other shadow over the market, that's a lagging indicators that we still have to deal with the profitability of companies actually being pinched as we go through the rest of this years >> absolutely. we continue to feel that the 2023>> do have downside risk to them we think that continues, but

historically markets have been able to look past earnings revisions downward, and in for a can't can start to make a bottom that's a scenario that we see potentially likely as playing out. we do think the fed is probably going to raise rates through the end of the year. yields continue to move higher historically until about two months prior to the fed stopping, so perhaps through october/november time period as yields stabilize, then potentially reverse lower, that's when we could see a more sustainable up tick in markets as well, even if earns continue to deteriorate there's this notion out there that fundamentals still have to catch up so, you know, they'll take two to three quarters to be felt in the real economy markets are forward-looking, and

we expect them to continue this cycle ago well they're trying to look a few months ahead, for sure, mona, david, thanks very much. we appreciate it. >> thank you. >> always a pleasure. as we head to the break, shares of asana, yeah, upbeat quarterly results. don't get too excited. the 52-week high, but hey, you'll take it, right? we'll be back after this shh!

stealth mode? yeah. [cricket sounds] shh! shh! [light switch clicks] don't pta meetings end at nine? -it ran... late. -oh got lost. the lexus rx built for modern families. ♪ ♪ at fidelity, your dedicated advisor will help you create a comprehensive wealth plan for your full financial picture. with the right balance of risk and reward. so you can enjoy more of...this. this is the planning effect. you know real chili never has beans. you know a cappuccino is for the morning and an espresso is for the afternoon. you know which pizza is eaten with a fork and a knife... and which one is definitely not. the delta skymiles® american express card. if you travel, you know. go.

go green. go wind turbines. go gorgeous reliable grid. go emerson software. go science people. go breakthrough meds and safe science. go space age welds for super silent cars. go big. or go home. from software that delivers new cures at warp speed, to technology that makes clean energy reliable, emerson innovation helps make the world healthier, safer, smarter and more sustainable. go boldly. emerson. bubbles bubbles bubbles bubbles there are bubbles everywhere! as an expedia member you earn points on top of your airline miles. so you can go see even more of all the world's bubbles.

it was another busy day here at code. tim cook, bob iger, andy jassy and others took the stage. deirdre bosa is here just how many topics they got through, just with jassy alone and obviously health care has featured big here, whether we're talking amazon, alphabet

have a listen. this is what jassy said. >> ity if there's ever a customer experience that needs reinvention, it's health care, and that is part of what we're trying to solve with the one medical acquisition that we're doing. >> now, carl, i like how he framed it as his kids, were kind of amazed -- or that he didn't have the internet and the color tv before that so healthcare will change soism, that the way we do things now will seem foreign. and back to work, too. here's what he had to say. >> it's an evolving work in progress, is what i think. we decided about a year ago that, while people had different opinions on what they thought they were going to want to do coming out of the pandemic, when you spoke in depth with folks, nobody really knew how they were going to feel, but what they do want is some level of control

over how they came back to work. so we decided about a year ago that we would allow directors of teams to make the decisions for their own teams. >> this surprised me a little bit. when you put it beside apple that says we want you in the office three days a week, jassy corporate employees, of course, more of a laissez-faire attitude they're known for brew it will efficiency. >> he came on "techcheck" a year ago and argued that remote work made it very difficult to innovate in the meeting after the meeting, the white board you go to with a buddy after a sitdown with the broad panel i also thought it was interesting on tech regulation, trying to argue, hey, we're only 1% of retail. >> yes. >> and the idea that private label, want to regulate, let's do it but not exclude some players in a, say, a senator's hometown. >> i think he called them out, too. you've got to look at walmart,

target, look at -- amazon has been making this argument. it's getting harder to make. i also loved the discussion on the labor issues which we've been focused on the last year. it has such big ramifications for the logistics company that amazon has become. you know, kara, she pushed him and she said, well, you know, i'm not talking about a suggestion box that's what he's talking about, you know, the open flow of communication, real action so that's interesting. you know who was here last night. christian smalls. >> oh, my goodness. >> one of the main figures behind this labor push he showed up at code and said, listen, i'm here to listen to what they say. it's interesting. >> it's a bit of a showdown, at least in staten island where they continue to talk about the vote there fascinating. of course we'll have a lot more on "techcheck" coming up at the top of the hour. we'll catch up with jim briar live from code here, why he likes the big chip names, including amd, which kooefs this

initiation at steefl and nvidia. that begins at the top of the hour, stay with us

in order for small businesses to thrive, they need to be smart. efficient. agile. and that's never been more important than it is right now. so for a limited time, comcast business

is introducing small business savings. call now to get powerful internet for just 39 dollars a month. with no contract. and a money back guarantee. all on the largest, fastest reliable network. from the company that powers more businesses than anyone else. call and start saving today. comcast business. powering possibilities.

interestingly enough, i read the news these days about it, we did look very carefully at all of the tiktok -- i'm sorry, all of the twitter users i guess they're called users. >> yes. >> yeah. and we at that point estimated with at which timer's help, that a substantial portion, not a majority, were not real. >> how many did -- >> i don't remember. i don't remember the number. but we discounted the value. >> 10%, 20%. >> heavily don't remember don't remember that was one but that was built into our economics. actually, the deal that we had was pretty cheap. >> that was former head of disney, of course ceo of disney bob iger, back in 2016 when they were negotiating to buy twitter and, you know, he's making the point, he doesn't remember the numbers specifically but certainly that when they

were trying to sort of come to a number they were using, you know, a certain percentage of the accounts assuming they were not real and that was going into their valuation, he's probably put himself in line to be subpoenaed and deposed by elon musk's lawyers. but hey, he's got some time now on his hands mike, we've got other developments as well twitter is up again, about another percent. inching closer to the 54.20. october 17th remains thekey da here where the trial will begin in delaware. we did get another order from the judge yesterday. or i should say chancellor mccormick. by the way, always fun reading her opinions she writes well. she's very smart a couple of things that stood out here she's not giving twitter everything it wants. but she's making it clear in hearings and in her writing as well that she certainly doesn't have that much patience for

musk's attorneys or, you know, the length to which they seem to be going to try to take things down different roads she did allow -- and this was kind of key -- plaintiffs -- she did allow plaintiffs also asked defendants to obtain and produce phone company records concerning text messages. this is birchall, the financial adviser. they're going to get that, phone company records, i guess they have them, of your texts to make sure essentially, is he giving us everything we're asking for is he giving twitter everything they're asking for she said this is reasonable, it's granted and, you know, the plaintiff can confirm whether, in fact, they did text, and exactly whether they've given everything they said is true so there's that. she also mentioned earlier in this opinion something i thought was interesting, she was citing an example as to why she would allow this the defendants produced two

texts to musk from robert steel of praella on june 17th, 9:57, 10:15, and it asks the question, she goes on to say, and it says okay, got it implies musk responded assuming musk's response was not telepathic, one would expect some evidence of it in defendants' documents. you're going to have to produce some of this stuff she allowed for certain things on the musk side as well. >> those texts, twitter wants to get at this notion that musk just quite a few wanted not to do the deal and signalled to the bankers or somebody to say let's, you know, let's maybe just slow this thing down. >> slow this thing down, try not to do it who knows what may be in there but for reasons that were completely outside of what might amount to and what they're going to need to prove in court is fraud and a material adverse effect. >> right so it was not about, like we've somehow discovered that there

were more bots or more non-legitimate accounts than we agreed -- >> there is a reason the stock has inched up again. in the brief time we have left we have turned, you know, quite positive in the broader market any thoughts >> s&p 500, tagging 4,000 again, up .5% spent a few days on this other kind of a key support 3900 main thought is the market feels as if it's back in tune with where the fed is headed here, the idea of a .75 point hike week after next is not scaring it at the moment as i said earlier you have a lot of sentiment and positioning measures get very, very negative, well above the june lows for the market. it seems as if right now it's a show of resilience we'll see how much it can burn up in the way of that negative sentiment. >> thanks. we'll be seeing mike santoli throughout the day that will do it for us here on "squawk on the street. "techcheck" starts now ♪

good thursday morning, welcome to "techcheck," i'm carol quintanilla. jon fortt is back in new york. pretty fascinating day in global markets. reversing early losses following fed comments reiterating the commitment to bring inflation back to argument ecb raises 75 basis points goldman thinking the same in september. we are monitoring the health of queen elizabeth. we'll turn to shep smith. >> reporter: we got word about four hours ago the queen's doctors were concerned for her health, the 96-year-old currently at valmoro castle. she's not hospitalized but buckingham palace released this statement following further evaluation this morning the