we'll all be watch be ing todayt 2:00 to see what the rate ultimately turns out to be and what jay powell has to say about all of it. you've been seeing green on the screen we've still got half an hour ahead of the market. we will see where we end at the end of the day we should take bets. that's what people do every day. make sure you join us tomorrow, sq "squawk on the street" begins right now. good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with david faber here. jim cramer's at 1 market in san francisco. big day. fed decision at 2:00 eastern, big bank ceos at house financial services, potus at the u.n. as putin begins this partial mobilization futures taking all to in a road map this morning begins with fed watch 75 basis point rate hike is expected, but it is the outlook for future rate hikes that investors will watch more closely.

>> plus, geopolitical risks, russia's vladimir putin escalating the war in ukraine, seemingly issuing a nuclear warning to the west. and extremely disturbed. ftc chair lena addressing the twitter whistle-blower allegations, and she says the agency may target the ceo as part of its enforcement efforts. >> let's start with the markets and decision day for the fed jim, lot of stats being thrown around about the positive way the s&p has tended to react, at least in the last 18 months after a fed day. >> look, i think that this is one of those fed days where there actually is some good news i think that we know that commodity inflation has been tamed, the actual commodities are all down, but we are now beginning to get, when you check around with ceos, and this place i'm out here in san francisco, filled with ceos from all over the country, it's just not that hard to hire anymore these are people i talked to last year or zoomed last year who say we can't find any workers and we're paying up. that's not the case.

there has not been -- i'm talking healthcare, tech verticals, retail, food service. it has gotten easier to hire and david, you know that a lot of what -- of what powell is targeting is wage inflation. if it gets easier to hire, that is at the beginning of what would be the end of the wage inflation part of this inflation nightmare. >> this has been your mantra now, three days in a row talking about this as a focus. it seems to be moving pretty quickly here maybe it will get easier to hire because there are a number of companies, particularly that you are near out there, jim, that are aggressively looking for cost cutting, and that is ending up in part sometimes with people being let go i mean, snap comes to mind, but there are many others. >> look, david, you know, if you want your stock to get to even just to, say, stop going down,

you've got to stem the losses. no longer is just revenue growth the be all and end all a lot of people don't have enough business as they used to and i think there's still a lot of companies that are trying to figure out how strong their business really is, post-covid, but when you see a ceo and you're speaking with him about trying to get high-grade engineers, which last year was a problem, now they're just talking about a flood of resumes. david, a flood of resumes. that miens you don't have to pay people as much and that's what powell is hoping for and he's getting it. i hope he realizes his he's getting it, though does he have good people who does he talk to that knows this stuff >> meaning, what, though he's getting it more quickly than he may have thought and therefore the policy response may not be what the market thinks >> well, i just think that i often wonder, as i did in 2008, who are they talking to? do they have the right canvassing because if you're out at dream force, the scuttlebutt is not

about how business is. the scuttlebutt is how few people they need to still do their business well and how many people are trying to get jobs right out of school, hard to get a job, trying to move from one firm to another, not easy. i think that this phase of the economy is the one where there are more people joining the labor force, and i wonder whether powell's information from the fed's researchers is as up to date as the information you can get if you were here >> yeah. carl, it's funny, because i had a conversation with a couple of people recently that also indicate that the back to work movement, so to speak, where companies are calling workers back, some of whom, particularly in technology, who may have moved, is also going to result in what jim is talking about overall diminution in your workforce because certain people who moved to austin who work in cupertino are not coming back. >> i was noticing the top of the jpmorgan note today, jim national restaurant chains saying it's getting easier to hire workers

staffing levels approaching pre-covid levels i don't know if you saw candidate api down red fin today, smallest gain in a year and then jpmorgan this morning says that rent inflation, essentially, shelter cpi, may be peaking on a sequential basis. that's a third of cpi right there. >> right look, when you talk about rent, that's supposed to be intractable. it was supposed to be intractable that we would -- wage inflation would be -- the bears always come on and say, it's embedded. i'll tell you something that's happened to me out here in the last 48 hours. people have been asking me to help them get jobs these were people who wouldn't even look at me before, and now they want to know, david, hey, what are you hearing anyone hiring in social? anyone hiring? social anyone hiring in finance david, this is like the old days, expect i can't place anybody. >> all right, well, you know, yeah

i'm just trying to understand exactly how this connects, and i know it does in terms of the response and the market to the idea that we're already getting ready for a slowdown, jim, and therefore the cost cutting is going to come through sooner so that margins won't be impacted by companies that built themselves up in part to respond to higher demand that is now going to decrease. >> i'm going to be like you. >> does that make any sense? >> yes yes. >> okay. yes. >> you giving me back to me? >> what's it feel like when you're -- you know, when your mother comes to you and, goes, yes? >> i guess i did sound -- >> you laid this story out perfectly. i don't know if you believe the story. >> i didn't think it made any sense whatsoever >> you made an incredible amount of sense, and it's not just, by the way, david, feel atpeople a

twitter looking for jobs, which i think they are lot of people out there at twitter looking for jobs i don't know if you know that firm and how they're doing >> i'm somewhat familiar with that company >> yeah. lot of resumes lot of resumes, david. >> they don't have a back-to-work mandate >> no. >> no, no. >> they're, work from wherever you want, whenever you want. >> or don't. >> everyone thinks that musk is going to lose and going to own twitter. i poll everybody on that it's great cocktail party, jay leno-ish, and everybody says, he's going to close it he's going to close it but nobody thinks that this current management team is going to be able to keep this thing. nobody i keep hoping for someone who says, he won't even regard the delaware court he'll just say, i'm not doing it but i don't know a soul who thinks he's going to win he's going to get this company i don't know what it's going to

look like. >> he's getting deposed on monday and tuesday perhaps -- i think it's monday and tuesday. maybe tuesday and wednesday. next week. the 26th, 27th, and 28th potentially the 28th >> do you know how those depositions begin? you know how they begin? >> name, rank, and serial number what >> you have to say where you live i'm telling you, by his fourth house, he's going to say, i've had enough of this i'm not doing this >> he doesn't own any houses i think he still, like -- not even in austin sleeping on friends' couches >> well, i don't know. he lives somewhere i'm saying that the cadence of a deposition is for normal people. i mean, it's for people who just, you know, they kind of get up, they put their clothes on, brush their teeth, go to work. that's not musk. >> he lives nowhere and everywhere >> i don't think there's any time for depositions coming anywhere we got to get in that deposition room is there a way fly on the wall? >> no, we're not allowed in the deposition room. we don't even know where the room is yet. i'm trying to figure that out, actually >> david, do you know anybody

who thinks he doesn't have to take twitter a soul >> of course there are people who still wonder whether there will be a settlement and therefore he'll be able to pay a lower price. >> yeah, $30 billion >> that continues to reverberate. the likelihood of that, who knows? as i've said, these checks are getting a little old at this point. the board did not seem to have any interest right now, the weight of the evidence, as presented, even with the whistle-blower, would seem to not argue in his favor >> and people talking 15 that's where it would be when you poll people $15. >> yeah. >> not 41. >> overpaying a little >> jim, you know, we started the block talking about moderating inflation. at the same time, the streak in declining gas prices has come to an end after 99 days we got gnat gas up 5% today. oil up 3%. and defense names, obviously, responding to putin's

mobilization and his discussion of nuclear risk. put on top of that the possibility that shiner really does reopen this time. we'll talk moderna in a moment but how much of an offset might that be? >> i think that this is something that's -- that when you see natural gas go up, it's not instantaneous to people's bills and it's been very erratic and a lot of that, it goes up because people expect the germans need more natural gas, that kind of thing we're sold out in this country for coal we still have a lot -- our nuclear has had a down tick because the number of reactors that are offline so almost everything is related to nat gas, which has gone from 38% to 44% this year, which is an awful lot of natural gas, so you can see why the price is higher thank you to russia and brazil for that the thing i would emphasize, carl, is once again, why don't people see that powell's winning on some fronts you can say, that's happenstance, but this decline

in gasoline wasn't supposed to occur. carl, it just wasn't supposed to occur. and yet, he got it that used to be front and center as the main reason why we're in trouble. it's just wrong. people are paying three bucks, having fun >> yep yep. there was some policy behind it, but also, you know, demand, david. maybe that's a return to work. people didn't have to commute as much, which is sort of a -- will be a question for a while, how much structural demand destruction is there, and just gas gasoline usage in this country at least >> it will be an interesting question because again, when we come back to it so often, it's not as though people are going to be going back to the office five days a week that is over and done with but perhaps two to three and therefore some of the commuting although the roads around here, even though people don't come into office buildings, carl, seem awfully busy and have for quite some time so i think it's hard to judge what people are actually doing and whether they really are driving less. >> well, david -- go ahead, carl >> i was just going to pivot

briefly before we have to go to break to the bank ceos leader on today. we have a sense from financial services what diamond's going to tell them about storm clouds building and then asking for more patience on some of these regulatory issues. >> one of the things that we just -- i think we just didn't realize is that charlie, when he took over wells fargo, he was presented with any number of different consent decrees and problems, not the ones that people thought the company, wells fargo, may not have been as forthcoming as -- we didn't know how much trouble it was and one of the things that charlie inherited i think was far more trouble than he realized. so, david, you know charlie scharf is a tough guy, but when you get a real bad hand and you think you have a decent hand, you got to play through, and that's what he's doing >> how far has he played through on that? it's, you know, time's gone by here he's not a new ceo any longer.

>> i don't know. five that's incredible, isn't it? when you think that in february of 2018, when that bank was last sanctioned and they're not -- they're making progress. but it's a big slog, and i think that the bank -- it's fine to have the bank guys up there because they're pinatas. they make a lot of money they are considered to be pride still in the country, david, it's not changed they're not nobel laureates. >> no. you know, i am curious to see the tenor of the questioning >> you think it's going to be pleasant and funny >> no, it never is, but we're not in the midst of a financial crisis, and certainly not current economic problems, certainly not caused by the commercial banks >> what do you hear about the layoffs in the business, david >> layoffs in the business? >> in finance. corporate finance. layoffs. david, layoffs

layoffs for people who do -- >> when you don't -- when you have the worst ipo run in 20 years, you might expect that capital market professionals may not be too busy right now. >> well, but that's wage that's part of what powell had to worry about was that the endless wage spiral, so they could buy ever bigger houses in the hamptons, get more appliances, do more roofs, put up more tracks or whatever david, they can't do as much to build mansions, which actually will slow the economy a bit. you ever been out there on, like, dune road or anything? egypt plain? you ever been, southampton >> i've toured that area, sure >> you need those people to stop spending as much, and can we just say that they -- that the fed jay powell wants bitcoin below $10,000? >> below $10,000 >> or $10,000. a lot of those people, by the way, are not investment bankers. you got to go above that >> private equity? what are they? >> yeah, pe, hedge funds >> did you know that the

president couldn't be seated any closer to the -- on the funeral because all the dominions had to be ahead of him, including ones that have 150 people and we shouldn't feel so insulted did you know that? apropos of nothing >> no. you like our ties, though, jim >> look at that. that doesn't happen too often, jim. >> i almost put a striped one on but now i would hang myself. >> you're not realizing. it's not just the stripes, jim it's the same tie. >> it's the same tie doppelgangers? holy cow >> we didn't communicate >> well, you dress in the dark anyway, david. are you wearing two suits? does he have the two suits on, carl pants and jacket >> i am, yes >> two suits that's what they call you. two-suit faber >> that's a really nice tie, though >> david two-suits when we come back, heavy hitters in big tech. you'll hear what salesforce and nvidia told jim last night on

"mad money." lot of interesting calls on estee lauder

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they did about $7.5 billion. we're now the largest enterprise apps company in the world. that's amazing >> that's salesforce's marc benioff on "mad money" talking about the company's success with enterprise apps. there's a lot to get to on crm and just about dream force in general, front page of the chronicle in san francisco is about the $40 million the conference is bringing back to a town with a troubled local economy. >> i found myself when i was interviewing marc, in the middle of it, just getting -- i don't want to say misty-eyed but i did feel that there's an incredible, genuine nature of people just reveling in being back with each other but i also think there's deals being made this an exceptional moment for marc, and he does say over and over again, it's very hard when putin is talking about nuclear war to close a deal. but there are a lot of people here, and it's traditionally been a time that marc has done a lot of business, dream force has been a major catalyst to closing

contracts, and i saw a lot of name plates that were pretty amazing, including, by the way, and we haven't talked about it, whatsapp the coalition between mark zuckerberg and marc benioff, david, i think you'll like this, seems much stronger than a few years ago at davos >> tell me more about it >> whatsapp is a way to communicate with customers and marc has really kind of coalesced to say, look, if you use whatsapp, we have a -- we have a salesforce infrastructure that can use whatsapp in the same way that they use slack slack is really taking off, doing very, very well. marc has said that over and over again. brett taylor today, the co-ceo, i think slack is a major focus i think that they're taking share from microsoft they feel very emboldened, and they're very positive on business, but they also accept the fact that the mentality is

so bunker, david, that it's just too close to the bunker for people to feel liberated >> talk to me about -- we're taking a look at a ten-year chart here and obviously we can see the appreciation but i can remember it was that august quarter of '21, i think, where it just -- it soared after those numbers, jim, and it's -- and then, like much of the market, it has fallen dramatically i mean, where are we on multiple for this company and you know, when you look at the performance and the peak, kind of that pandemic peak almost, what are your thoughts in terms of 150 bucks a share right now? >> trying to figure out what 20% consistent growth gives you, and does it give you a 31 multiple in an environment where all multiples are shrinking? i think the answer is, no. the multiple will be lower unless you get inflation under control. people just aren't willing to pay up and people keep feeling that it's only a matter of time because the dollar has heard marc's company so much, whether

it be in japan, whether it be in europe, the dollar is front and center here. a lot of these companies do a lot of work international and the translation's been terrible. a lot of people feel that europe has just stopped and it's very hard to get big orders so, i think the answer is, the multiple's too high for salesforce i have liked the company since 2008 but i recognize that that spike that you saw was overenthusiasm and the decline to the right was when jay powell decided to get tough but david, there's no doubt in my mind, people just think that every tech stock is overvalued the only one i heard that people had a lot of conviction on was workday because they crushed the number but most people are very concerned. >> interesting, jim. it's the one important reason why you're out there this week, of course. when we come back, get ready for the most powerful investment event of the year and that's cnbc's delivering alpha, returns in-person a week from today, featuring economic leaders, policymakers, and the world's top investors. just go to cnbcevents.com for

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futures pretty steady here in the green ahead of the fed decision b of a this morning points out over the last 18 months, s&p has risen after 8 out of 10 fed decisions and in march, june, january, up 6% to 9% in the following days we'll see what happens opening bell coming up in a few moments, and don't forget, you can catch us any time, anywhere, just listen to and follow the "squawk on the street" opening bell podcast

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all right, let's get to a mad dash cross country yet again, general mills reporting numbers. >> right, and defensive stock, really good numbers. here's a number for you. organic sales up 10%, but david, i find underneath this, there is an undercurrent of, look, we're able to raise price because people love our product, and we are raising price. we have to, because of headwinds, including supply chain. david, there's nothing in this report that makes a guy like jay powell feel good this is what must -- i don't want to say must come down, because it's a great american company. but you don't want to read that they have supply chain problems and they're able to raise price at will because what you want is for them to say, look, we've got lower costs,lower pricing, but we'll still do well, and that the numbers are being made by volume, not by price so, this is a disturbing positive, is what i'm looking at

>> guys, let's get the opening bell here and the cnbc realtime exchange at the big board, the coordinating minister for maritime and investment affairs of indonesia, the nasdaq celebrating a listing, nayax, a commerce enablement and payment platform jim, you mentioned general mills raising the guide. they now see four-year revenue up 67 versus a prior 4 to 5. also raising the guide this week, cody also raising the guide this week, ralph lauren i wonder what you think that says about consumer. >> well, i think that consumer is back. this upgrade that we got today, really incredible upgrade of estee lauder from goldman, says, look, people are spending like mad to look good and it doesn't matter about china they're doing it in excess of china. that's important by the way, indonesia ringing the bell, indonesia is an incredibly important market for the new iphone and people forget, indonesia, huge country.

they're taking the -- apple's made this country a major focus, tens of millions of people there that might be buying it, so let's not forget so i've got positive news on apple, positive news on general mills, by the way, the pet business is just on fire i mean, i cannot believe it. ralph lauren, that was -- i thought that was a great interview with sara. really feel that he has got some great mojo, david, to use a very specific word on wall street so, we have some positives we just do not have a definitive statement from what powell's going to say during that incredible press conference that i know you like so much. >> and we know you do too. jim, you're a big fan. >> it's the biggest waste of federal time i can come across >> oh, i'm sure there are a lot of people who would submit lists on which that would not make the top ten. >> but why can't they do what netflix does pick one member of the press, in this case, probably steve liesman, and he gathers the

questions and they have an interview. wouldn't that be better than this hollywood squares thing come on. >> i hear you. take a look at the realtime -- >> i hear you. i know you forgot to say, i know where you're coming from >> i do. i usually do know where you're coming from. few other people do, but i do. >> you do. >> yeah, i do. >> look at that red, david what do you think those stocks are? >> you tell me, jim. >> losers. >> that was not what i expected to hear. losers alibaba down about 2%. guys, i did want to talk about a succession process that we're now aware of taking place in a company that i have covered closely through the years, charter communications of course, they, of the spectrum broadband and wireless brand tom rutledge, long-time ceo of the company, ten years, since

2012, is going to be stepping down as of december 1st. he will be replaced as ceo of the company by its current chief operating officer, chris winfrey. and you know, rutledge, obviously, has had a long career in cable, some 50 years. remember when he ran or was president of time warner table and also ceo of cablevision as well and obviously has been running charter for this last decade there are the charts that's this year we can take a look, of course. we've talked a lot about how -- what a terrible year it's been for, overall, cable, including our parent company, comcast, at least in the stock market is what we're talking about as, of course, sub growth has slowed dramatically number of other concerns but there's a ten -year. that's actually better than salesforce's performance over the last ten years, jim. >> i'll be sure to point that out to marc when i see him later today. look, the problem, all these tech companies, including

nvidia, during the month of november, spiked up, parabolic move, and now they're coming down, and they're not -- they may not be done coming down. the charts are so horrible and then you look at general mills' chart and you say, okay, i get it consumer, raise price, people love it, defensive, that's what they want. and there's not that many said, they can't create more stocks like that. we need them >> yeah. take a look at the ten-year, pretty good run there. of course, a year ago, it was a lot better run, but mr. rutledge has done just fine and he did have an options package that kicked in at numbers that at one point were thought to be unobtainable in terms of the stock price, but they happened you know, you can see there where it peaked. and so, nobody's concerned about rutledge's ability to support himself in semiretirement. it's actually going to be chairman of the company until the end of 2023. so, he will still be running the board of directors, so to speak,

through the end of '23 but here's the case as well, carl, and we don't talk about this enough. clearly, a fairly well-orchestrated succession p plan, and that's a key responsibility of a board of directors, and oftentimes, we just don't see it play out the way it should. but mr. winfrey, in that chief operating officer role, and clearly ready to step up to replace rutledge as ceo about two months from now. >> pretty fascinating. jim, you mentioned some of the losers on the tape today it's a lot of airlines i'm looking for some reasons, there was some discussion about united yesterday, some maintenance issues regarding the 777 on the wing slats forced them to cancel some flights. there's been yet another small hack at american this time, been a tough week for hacks, jim, whether it's uber or obviously the take two stuff >> we really have to watch this. because we know that the service economy has been the brightest

star i know that from expedia last week when we interviewed them. and the packaging economy has been not great because of fedex fwl , but that's a broad-based list of negatives i'm not seeing numbers being cut for those companies, love to speak to phil le bow about it. we've seen over and over again that the upgrades in the cruise ships have been rather amazing so, i don't know where people are going and what they're doing, but those numbers -- these declines are rather savage and we've got to spend some time on it, got to get to the bottom of it. carl, by the way, i'm watching a security that i think is really important for people to look at. and this is the rinf, the pro shares inflation expectations. this peaked. this peaked in june. and it's been going down rinf this is what we have to look at, and it includes a lot of the

expectations for travel, for tickets, people trying to figure out whether that's going up. so, carl, i think this is worth looking at, because it does show -- so, a peak in commodity prices in june and now we're seeing a peak, i believe, in the -- in everything else that's been so-called intractable, which makes me feel bullish. we need to see airline tickets come down. that's a problem and david, by the way, you know what i think that auto prices are going to start coming down >> you do? >> yes, i do >> why >> why because i think that they're beginning to get all the parts i think that ford was a false tell it was not semiconductors. not semiconductors there were things that will make it so that ford will be able to recoup those sales and david, we know that steel went down in price, so i'm, you know, again, i know i'm trying to be a little more positive. you would probably say i'm more pollyanna, but i wish you had something newsworthy that we could take action on right now >> what do you mean by that?

>> well, that was a segue that apparently you have something. in my ear -- >> i don't have anything that's overly newsworthy. yesterday, you did pummel spacs. we talked about liquidating two outstanding spacs that hadn't done deals we got one this morning doing a deal and it's worth mentioning it's this company. they say their peers get investors into alternative assets and this company gets them out they have this platform where they create liquidity for people who own alternative assets, whether it's mid to high net north individuals or wealth managers, small institutions, general partners, and they get them out they're targeting the alternative asset class, total addressable market, they say,$51 billion in 2022, expected to grow to $106 billion in 2027 and they're going public

through a spac and the spac is avalon and they're going to have what they say is a $3.5 billion enterprise value as you take a look at avalon acquisition in terms of how it's traded very recently, but it's right around ten bucks. $207 million in the trust. they're also looking for a pipe that could be as much as $383 million, and again, you never know with these things because how many people are actually going to ask for their money back we have seen many spacs that complete their deals but do it with a lot less money because so many people actually ask for redemptions, even though they approved the transaction itself. guys, just worth mentioning. spacs are still coming public here and there, and this is one of the larger ones with an estimated equity value of $2.5 billion enterprise value, $3.5 billion take a look at avalon, which is around that $10 level. not in of them happening, but every so often, you still see one announced. >> no ma'aamateur hour

that would be a kind of stark and exciting >> well, it may be and again, we'll have to wait and see how it performs from here they're talking about a 14.5% compounded annual growth rate in terms of the liquidity demand for alternatives kind of an interesting area for beneficient. did want to mention it, carl, because we did obviously pouncebacks yesterday for good reason we talked often about, for years now, in fact, about the differential in economics for the sponsors, in this case, 2% for the company, versus the shareholders, not to mention outrageous projections that we saw for so many of these companies that did not belong in the public markets that has calmed down most of the 500-plus spacs that are looking for deals, unlikely to find one, but here, they did. >> that's interesting. jim, before we get to pisani, i

want to talk about your interview with jensen wong by the way, micron -- cuts micron missuo cuts western to neutral jensen talked to you about the gaming channel and how they're plowing ahead, even as that market corrects. >> gaming market's great and the gaming market is larger than ever. in fact, the overall gaming market grew 70% today relative to the before the pandemic and so, over the course of the last two and a half years, the market has grown some 70%. >> jim >> well, i think that jensen was -- i can't tell you he was effusive i know that he still has pr problems with ethereum cards in the channel. ethereum has a system where you won't have to mine with nvidia cards. i know jensen's really happy that's finally over, hard to

forecast there's some inventory in the system, david. if there's inventory in the system, then you can't necessarily believe that nvidia has reached a bottom this is another one of those stocks that we can put up the chart and it is incredibly bad for the last two years, given up so much of the gains but we didn't get what we wanted to hear. for 2022 but 2023, when the new chips will really be in, which are apparently making it so that video games are even more lifelike, carl, you'll have a bottom i think we're close enough to a bottom, but i don't think we're there yet. >> all right interesting. as for the leaders today, guys, pretty interesting mix of consumer names on general mills, defense names, energy. let's get to bob pisani. good morning, bob. >> industrials, too, finally bouncing they've been terrible recently so, two to one advancing the declining stocks, not bad at all but fomc days have tended to be up in the last few sessions so look at the sectors like carl

said energy's having a good time. oil's stabilized a little around $84 or $85 industrials had a terrible couple of weeks. they're looking a little bit better today and consumer staples, carl mentioned on general mills up about 2% they raised their full-year '23 outlook. that's certainly a very good sign overall consumer staples tech's been lagging. cathy wood's arc fund to the downside there's the ita. that's the aerospace and defense etf, one of only about two or three aerospace defense etfs that are out there it's down about 1% for the year, believe it or not, that's pretty good considering you're dealing with the s&p 500 down, depending on what week, 15% to 20% on the year so, defense stocks have done very well and they had that big move up in february, of course, and that was on the russian invasion in the ukraine. and you see these defense stocks moving today, the usual names,

textron, lockheed, the usual names. some of the smaller stocks, we don't bring up a lot so, 75 or 100 basis points the consensus down here has been 75 for a long time chris at wolf research, maybe he's sort of the consensus opinion right now. our sense the markets could be set up for a short-lived relief rally if the fed hikes 75 basis points and powell doesn't ratchet up his hawkish rhetoric even more. we could use a relief rally, for heaven's sake. the s&p 500 is about 70 points below where it was at the close of the last meeting that was july 27th. remember that? essentially modest little rally, then straight down that's head and shoulders chart if there ever was one, folks if you're looking for a pattern for what happens on fomc meeting days this year, there really isn't one. that's a problem one pattern that's obvious is on the day of the fomc meeting, the s&p has ended to the upside, but

there's no pattern after that, so the last one we were up, and it was a two-day rally after on june 15th, we were up, but june 16th was the low for the year, the next day may 4th, we were up but then down the next three days march 16, we were up but had a three-day rally after that so there really isn't any pattern to what's going on with the fomc meetings there's a pattern with the relentless rise in bond yields killing the bond funlds there's the biggest one, the vanguard total bond etf is the biggest bond etf out there a lot of institutional holdings in that. that is up a little bit today, but these are all new lows these close -- the two big ones, vanguard total and the ishares core u.s. aggregate, agg, closed at the lowest level since 2010 yesterday. so we're going back a long, long ways, and if you look at corporate bonds, they're not doing any better those two other ones there, ishares, iboxx and the vanguard

short-term corporate bond, they're closing at essentially the lowest level since 2010 or so, if you exclude a brief moment in 2020 so, no real hope or help here, and carl, remember, that big one, that vanguard total bond, down 13% this year, even with a 2% yield, that's a pretty awful return stocks and bonds both down this year. carl, back to you. >> bob, thank you very much. bob pisani coming up in tonight's all-new episode of jay leno's garage, elon musk shows jay around spacex >> i would say life on mars is difficult, dangerous, people might die. it's just, fundamentally, are we going to become a multiplanet species or not even if we're sure earth will be fine forever, do we want to be here forever it's not like, let's escape to mars do we have a spurt of adventure? do we want to go out there and see the rest of the universe do we want to find out what's out there and maybe meet some alien civilizations? do we want science fiction to not be fiction forever

if so, we need to -- multiplanet species. that's the next step and then we can go from there to being a multistellar species and get to other star systems >> you know, david, musk has talked about this before you remember at the time when you and i were young where the idea of the future overall was promising, aspirational, what's going to tomorrow bring? you didn't worry about it. you looked forward to it that's kind of what musk wants to get back to >> that would be nice. multiplanet species, multistellar -- wow. but that's -- jim, that's elon musk that's why he is the most consequential businessman on the planet and to carl's point, he thinks about things and does things that others can only dream of. it's kind of funny that the cnbc interview is with jay leno >> well, i mean -- >> it would be nice to have him here one day >> every year, there's usually

someone people talk about at dreamforce there was a time when you talked about mark zuckerberg. the last three years, talked about -- well, pre-covid, it was always about bezos what's bezos really up to? bezos, bezos, bezos. everyone wants to know who has spoken to musk what people -- what did they do with musk? what was it like with musk and everyone has kind of a -- i would say a little anecdote with musk, but he is almost -- he's on the present here without being here and i bet you people will be watching that show rather than doing a lot of things at dreamforce because he's the man. david, he's the man. >> he is the man agreed >> pllook forward to that. stocks are higher, dow up 20, s&p up, you do have the two-year approaching 3.98 vicks is actually down this morning. interesting as the market kind of yawns in the wake of putin's

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let's get to jim and trading. >> watch micron, downgrade, local price target cuts, large semiconductor company considered to be a commodity. stock has just been horrendous, down 45% f. this one can stabilize, semiconductors are a leadership group, leadership group down, then i think you'll be able to see amd stabilize and nvidia stabilize watch micron to see if it breaks 50 or not. >> all right, jim. big show tonight, right? >> yes we have brett taylor, chairman of twitter

the focus is he's the co-ceo, a very straight shooter. matt murphy does high-performs computer semis liam griffin has a lot of -- just great stuff when it comes to cell phones cell phones are just despised out here, even as we're hearing about carriers having to sell, give away apple phones to be able to get business i know david has focused on that i think these three people plus micron will define whether we have a leadership group that can turn around tech or not. >> to be clear, you are going to ask bret taylor about twitter? you're going to ask him if they'll settle i'm sure he won't say a word, but you'll ask. >> i'm a reporter. whether i do my job is your focus? >> just making sure. >> i think it will come up

it's a pride of elephants in the room. >> if you need more help, jim, we're here for you. >> i want you guys to come out here by the way, i've got to tell you, it's actually very happy. you'd be optimistic if you came out here people are happy it's kind of cool. >> i don't buy that for a minute what are you talking about >> dreamforce, people dressed as bears. mark turned on a waterfall behind me and soaked me. thought it was funny there's cotton candy it's different, david, like the great midway in a hollywood movie. >> there's cotton candy, carl. >> that's what we need, more cat ton candy. "mad money" at 6:00 p.m. eastern time when we come back, the president at the u n. and house services financials. don't go away.

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existing home sales in august fell 0.4% to a seasonally adjusted annualized rate of 4. million units, slightly less than the drop the street expected, but the slowest pace since june of 2020, the brief drop at the start of the pandemic, outside of that, slowest pace since november 2015 sales were 19.9% lower year over year one thing to note, these sales are based on closings, so contracts signed likely in june and july when the 30-year fix rate spiked, hitting affordability higher median price in august was $389,500, an increase of 7.7% year over year usually prices fall month to month seasonally from july to august, and they did but the drop this year was much bigger than usual. take note of that. much of that is because there's still not a lot to buy there were 1.28 million homes for sale at the end of august,

unchanged from a year ago. supply actually fell month to month as sellers just don't want to get into this market. we're now at a 3.2-month supply at the current sales pace. carl >> diana, thank you for that good wednesday morning welcome to another hour of "squawk on the street. i'm carl quintanilla with morgan brennan and david faber. we have two live events to watch today. the president is set to address the u.n. general assembly, and the ceos of major banks testifying before house financial services we'll monitor those two things markets hanging in there on a day where we're getting a fed decision at 2:00 eastern time. s&p 500 back to 3880 >> here are some of the big movers we're watching this morning. we'll start with general mills getting a boost after reporting better-than-expected quarterly profit, raising the full-year sales forecast the packaged foods company expects to benefit from higher prices and strong demand for cereal, snacks and pet food.

shares up 6% leading the s&p tips, meantime, are trading higher i don't mean food there. downgrading micron analysts saying seeing steepening price declines. we're seeing the trade higher, a reversal there we'll end with the defense names, rising after russian president vladimir putin ordered a draft of reservists for his faltering war in ukraine and went so far as to threaten a nuclear response saying, quote, we will without doubt use all available means to protect russia and our people. lockheed martin, northrop grum man, raytheon, l 3 harris. this threat of nuclear war, this possibility of deployment of chemical warfare, these are two things that have basically warned about, risks seen and add sesed based on my conversations with government officials,

analysts, really since the start of this war. it has been a concern. it arguably speaks now to the losses and the retreat we're seeing by russian military taking place in key parts of ukraine right now. whether it actually is something that materializes, huge question mark right now it is rhetoric that being said, it's really important to remember that nuclear capabilities and technologies have changed drastically since the last time we even considered having conversations around something like this from a geopolitical standpoint analysts say moscow could actually use tactical nuclear weapons, this could be a smaller warhead used in regions of ukraine potentially, very different than, say, an intercontinental ballistic missile. this has been a real threat, a real concern and something that could potentially affect defense spending here in this country as the federal government is poised for another continuing resolution and orders for these

defense contractors from our allies as well as far as the stocks are concerned, this is really a knee-jerk reaction if you're going to see greater demand for some of their products, that's going to take a long time to hit the bottom lines. >> when you talk about nuclear war -- >> it's scary. >> it's hard to even think about the stock market, even if it's tactical, so to speak. of course, god forbid something should actually occur. the question then is the response and what that would lead to. >> just from a markets standpoint, and to your point, very grave, very serious, it goes beyond the market from the stock standpoint with the stocks trading higher, there was a time not that long ago under this administration when there was things like the nuclear triad and modernization of our own capabilities were seen as areas where you have spending cuts. now you're potentially going to see more money go to those areas. >> ask i ask a question.

the hypersonics, has russia been using them >> yes based on reports, yes, not with nuclear warheads, but these are nuclear-capable missiles that they have been testing out on the battlefield in ukraine this is the type of thing that has raised eyebrows and why you hear senior air force officials talking about hypersonics and looking to field as quickly as possible those technologies here, too. i'd also just note, what's been interesting -- this is according to cowan, about $13 billion the defense department has received so far -- been allocated so far for ukraine military aid that we've been sending overseas. only about 20% of that has actually been procured and replenished here in the u.s. even though we've seen these big numbers, they have not yet translated to sales at these companies like lockheed, raytheon, l3harris, et cetera. >> certainly the crux of the

president's speech as we continue to hear from erdogan, last week modi, and even china calling for a seize fire through dialogue and consultation, in china's words. we'll see how much this relates to the president's speech and whether or not russia gets further isolated in the meantime, the fed widely expected to raise interest rates by 75 basis points today markets expecting the fed's hawkish outlook to continue. with more joining us onset, pleased to have charles schwab's liz ann sonders and credit suisse's jonathan -- what's important today is it important about what he says about the future and higher for longer or overwhelmingly important mandates, what >> i wouldn't be surprised if the formality of the statement mirrors what he said in jackson hole of course, there was no q&a after jackson hole i think probably that part of the meeting will be focused on how long is it going to take to

get to your destination. maybe even more important, how long will you stay at the destination. they'll go for a quick visit and turn around. even though the market has raised the end point, it still has an expectation that they'll be a pivot fairly soon after that i think he'll probably reenforce once we get there, we'll stay there for a while. >> you think that's right, that participants will be like, don't get all hooked on the idea that there will be multiple cuts next year >> there's two things. i agree with liz ann the first thing, it's about the terminal rate. how high are they going to go and how long might it take them to get there i would expect the 75 basis points seems to be baked in. so assuming they do that, there's no story but i also think you're going to see a 50-basis point increase in their statement on how far they're going to have to take this process the market is already predicting that that's going to tell you a lot

more about the broader process and what they're going to try to do -- exactly your point -- is to get the market to not think the second they get to that point, they'll immediately start easing i do think the fed is going to pause sometime in the -- let's call it the second quarter, whatever the things they're doing now are not meant to affect inflation today. they're meant to affect inflation at the end of '23 or even into '24. they need to give the economy some time to react to it so i think they're going to push really hard probably through the end of the kwfirst quarter. they're going to pause, most likely let things materialize in front of them. my guess is they'll probably have to push further beyond that later on, but i think the market is probably going to respond really well to them saying, we're just going to take our breath and watch things come in. the market may overreact as a positive response. >> you think that's true, we're conditioned for that moment, liz ann? >> i'm not sure that the market as an entity still understands

there's a big difference between pause and a pivot. i think that that's likely what the fed is going to reenforce today, staying there for a while. i do think at some point the fed will be able to take a breather just to assessment the issue, though, is that the fed is taking its cue from lagging indicators, and the effects of what they do are in the future there's these lead-lag issues that i think make it a bit of a disconnect it's a tough needle to thread, what they're trying to do there. >> jonathan, to bring it back to the stock market, i'm curious with strategists like yourself, what you hear from clients i talk to a lot of asset managers they're all over the place i would say largely negative, very concerned about earnings coming down dramatically in this quarter and into the next quarter and don't seem particularly willing to step up

in a big way to put risk on. that said, there may be some stock picking that could work. >> david, yesterday evening after the close, we had a meeting -- we do this regularly with nine guys who are either head trader, cio, hedge fund founder. we get people to share their ideas and the like there wasn't a single one who was anything but negative. the guy whose are positive said i don't think the market necessarily falls apart, i just don't see anything i want to invest in. there was a lot more talk about credit as an alternative to equities. >> do you push back on that at all? introduce something a little more positive in terms of at least where we are in revisions, for example, on estimates? >> a lot of this is me trying to navigate personalities there's a couple of positive signs. first of all, the tech earnings look much worse than anything else, and that's a bit of a concern. but they're expected to come back next year and get stronger.

the energy, which is holding up unbelievably well because of refining margins, look like that's going to fade and they're going to be a drag on market earnings next year it looks like from an earnings perspective, there's a lot of movement underlying something which we think about as a general number. >> credit is exactly where i was going to go with you, liz ann. as you have rates rising, does it become more attractive? is this where investors should be putting more money to work? if they continue to rise, do stock valuations continue to fall >> you've seen a move by individual invest ors, which is our bailiwick at schwab into the more safe government securities side of things i think our opportunities into the corporate spectrum, i think you have to be pretty cautious out into high field. even though we haven't seen the full blow-out credit spreads, i think there's still a lot of pain to come that will inform the equity

market, too. i think we're reconnecting what's going on in the credit markets with the equity market i just think there's a lot more to go on the downside with earnings >> the one term that came up over and over was equity duration that may be kind of an odd term for most people. basically, those companies that have safe near-term cash flows, people want things that can withstand the recession if it hits if you look at the companies that are in that bucket, they're really expensive right now so it was a lot of conversation about kind of where you can hideout that other people aren't already in those bunkers. >> liz ann, why do you expect earnings to still come down dramatically >> i think we're just at the early stages of the downward earnings revisions i think the anecdotes are starting to pile up, the rate story, the higher labor cost, the waning demand, the

fedex-type announcements are a bit of a canary. seeing it across the consumer and good side of the company i think it's only now starting b to be reflected. >> you had a great chart the other morning looking at forward operating margins and how they've diverged from asset prices or equity prices. you think that's going to come to roost this quarter? >> we thought you would start to see a bit more of a hit in the second quarter which we did not. i think you're going to start to see it -- only because companies are essentially explicitly saying now this is going to be a problem. so i think third quarter will be a bit of a reckoning to reenforce what analysts have only just started to do which is bring down those second half 2022, first half 2023 numbers. >> it does seem, though, many of the early pronouncements we're getting on the industrial side, they're companies with global food prints. hearing a lot about china, a lot about europe, a lot about the strong dollar.

jonathan, i think that kind of raises the question, does something like small caps now, if you are going to hideout somewhere in equities, does that become more attractive >> fedex was kind of the poster child for what you're talking about. when they talked about where the problems were, it was largely overseas as opposed to domestically you are seeing less on the revision side. the earnings estimates have come down by about 5% in the last ten weeks. if you look at that compared to history, that's an enormous downside adjustment. i actually think what we're going to see is the estimates were lower too much and we get a beat if you look at the city economics index. the economics got lowered a ton. the data is bad, but the estimates got lowered so much, you're seeing enormous upside beats on the economic data i think you'll see that in q3 as well. >> good to see you both, liss

ann, jonathan, thanks. still to come this morning, we'll take you live to that bank hearing at house financial services as soon as q&a begins busy traffic situation in midtown manhattan. don't miss big interview with former new york fed president bill dudley. "squawk on the street" continues in a moment. don't go anywhere. to adapt in the changing world,

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we are waiting for the q&a portion of that hearing going on today. it's a bank hearing, of course, house financial services committee, bringing a bunch of ceos in. let's get over to leslie picard and find out what we might expect. >> the hearing kicked off about 15 minutes ago witnesses include ceos from the largest seven consumer banks among those expected to be grilled by congress on a whole host of issues today as they were entering, our producer caught up with diamond to get his thoughts on the state of the economy >> a lot of pluses and minuses out there. >> what are you hoping to see from the federal reserve today >> whatever they do is fine with us >> really? >> yes. >> are you concerned about inflation and what you're seeing

from your customer base? >> yes, of course. they're taking proper action at this point we'll get through it >> the hearing began with chairwoman maxine waters who spoke about how the nation's largest banks got bigger due to the pandemic due to acquisitions ranking member patrick mchenry said he disagreed with the premise altogether calling it theater. the committee con seend this group to discuss things like overdraft fees, crypto and zelle and privacy protection it's likely that during the q&a portion lawmakers will venture into other areas including the increasingly politicized world of esg and the regulatory environment. currently the executives are sharing their testimony which we received yesterday which covers most of those issues we're looking forward to that q&a portion, guys. >> i wonder if they'll ask if

they agree with the fed policy as you point out, it can go in a lot of different directions. interesting comments from jamie, seemingly positive in terms of the fed. >> i think they will definitely delve into some of the more macro issues just given the state of inflation, given what banks have been doing with regard to keeping what they pay depositors, the rate they pay depositors relatively low considering how high rates have gone and what they're doing with regard to loan making, things like mortgages, how they're looking at the state of the economy with regard to just all of the various macro factors that are out there i think both the ceos, talking to sources close to them, and talking to sources close to the lawmakers, are expecting some pretty big-picture conversations today as well. >> leslie, thank you leslie picker. it is decision day for the fed, expected to approve its

third consecutive .75-point hike steve. >> you say it like it's nothing. it's absolutely historic what the fed is going to do what's going to happen, the fed and fed chair will probably be on guard at this meeting, not provide markets with any wiggle room in which they come to believe that the ped is anywhere near apivot point like it did in the last meeting in the plans to hike rates and battle inflation. most likely powell will stick to three basic points he made in his short jackson hole speech, racing sufficiently restrictive return to inflation to 2%. restrictive policy stance for some time. some pain to households. see points one and two the fed will keep rates high despite the pain you can see here, after today's meeting, call it another 100 and

change of rate hikes through the end of the year. a peak rate of 4.51. at a much higher rate than before the 2024 -- the end of 2023, january '24 contract at 407. the shoe is on the other foot. where investors will pay close attention with how far the fed comes to meat market pricing and the june forecasts will have to rise substantially that's in yellow t june forecast compared to the market and where it is now. the question is whether they go even further if there's to be any dovish daylight, it would come from the forecast in the funds rate not rising as high sz the market is priced we'll also be watching the fetd's growth and employment forecast to see how much economic pain fed officials expect and how much they're willing to accept. morgan >> steve leisman, thank you. let's bring in phil dudley former new york fed president. great to have you on today

i want to get your thoughts on what steve just reported, and that's specifically the forecast, before you think it's going and whether there's a point at which the fed would potentially blink? >> i think they'll reiterate the comments powell made in his jackson hole, getting inflation down to 2%, will it drive up the unemployment rate and they'll have to slow down the economy. the last summary that we got in june, very optimistic about the lack of pain involved. the fed tightened a little bit inflation melted way back towards 2% this time i think their moethods show much higher rate trajectory, higher for longer. a meaningful rise in the unemployment rate and inflation coming down but taking longer to achieve their objectives i'm hoping for more realism. the policy speech was the first step what they write down today is an important second step. >> just to read through on that,

if jay powell is channelling the ghost of paul voelker, is it safe to say a recession especially if inflation is still elevated, wouldn't necessarily be enough, at least at the onset to have the fed change course here but continue to tighten >> the fed is not going to show a recession in their forecast, that's not what central banks do, but a recession is highly likely the fed made it very clear that the labor market is too tight to be consistent with 2% inflation. we can see that in terms of the trajectory of wages. wages are rising 5, 6, maybe 7%. that's not consistent with 2% inflation. the fed has to push the unemployment rate up sufficiently to bring wanls down to be consistent with 2% inflation. every time they push unemployment up by more than .5%

historically, the u.s. has ended in a full-blown recession powell will talk about how they'll try for a soft landing that's what they have to say t. reality is a soft landing is very underlikely given the currt set of circumstances. >> based on your calculations and given the fact that the unemployment market is still so tight, the labor market is still so tight, how much more could we see the fed inflict in terms of those tightening gauge, those levers it has at its disposal for that to actually change in a meaningful way >> well, i think they're going to write down something pretty close to what the market has priced in. the market repriced following powell's speech. the funds rate is expect 4d.5% i would expect the fed to write down something pretty close to that in their summary of economic projections the sect thing they'll do is show the rates will stay higher for longer it's not just we're going to

this week and will be there for a couple months. we'll probably be there for perhaps a year or more it takes time to slow down the economy. it takes time for the persistent inflation pressure we see today to subside it's not just that rates will go higher they'll stay higher for longer that's what the markets are starting to reprice to. >> bill, it's interesting, not just joining us on a day that we'll hear from the fed, but all these bank ceos in front of congress right now you were one of the main regulators of the banks, obviously, running the new york fed for all those years. i'm curious, as we enter a period of economic weakness, it seems, in the liquidity and capital standards put in place after the great recession and after the financial crisis, how are you feeling about where things stand when it comes to the big banks as we take a look at mr. dimon right there on the screen >> i'm not worried about the stability of the u.s. banking system the increase in liquidity requirements, capital requirements, stress testing all

mean that the u.s. banking system could take a long and deep recession that's not what i expect i expect a recession, but i don't think it will be long and deep i think the u.s. banking system is in very good shape. >> any concerns at all that others have raised about the treasury market itself and perhaps the lack of liquidity there? >> i think the issue in the treasury mark, if for whatever reason, people need to sell treasuries, i think the federal reserve has a standing repo facility i think they can make that open to a broader set of parties and allow the fed's balance sheet to come to the aid if there were future turmoil in the treasury market i think treasury market reform is important what we saw in march of 2020 when everyone was trying to turn their treasury into cash disrupted the treasury market. i think we do need to take some steps to address that. >> just looking the world over, bill, it's not just the fed in this tightening cycle. we saw sweden's central bank

just yesterday surprise with a 100-basis point height, expectation you'll see other large hikes from other banks as this week unfolds. the dollar has been incredibly strong stronger today because of geopolitical happening and everything going on with russia and ukraine. does that strength continue to persevere here if so, what does that mean in terms of other economies and recession risks across the world? >> well, the dollar strength is something that the federal reserve is probably pretty comfortable with, because a stronger dollar does two things. it slows down the pace of economic activity because it reduces u.s. trade competitiveness, and it also holds down inflation by reducing the cost of imports. so the federal reserve is not at all unhappy about the firmer dollar the firmer dollar, though, causes lots of problems for other countries because it makes the costs of their goods and services more expensive, so it exacerbates their inflation problem.

>> bill dudley, thank you so much for being with us today. >> thank you dimon is expected to reference economic storm clouds and talk about capital requirements let's take a brief listen to what he's telling the committee. >> economic volatility and inflation, energy insecurity and climate change and a pandemic. it also shows we're great companies with the size and scale that jpmorgan chase can do as a source of strength to the economy. because we have a strong and healthy company, we consistently serve american households and businesses while building our communities and protecting america and the american economy. we are all here guardians of the financial system we support government and national security efforts to combat financial crimes and carry outcome plex sanctions each year we proactively identify nation state and cyber criminal threats with the energy industry and united states government to protect critical infrastructure and we fuel good american jobs

the businesses we all finance collectively employ hundreds of millions of americans. we employee people in every state in the country with starting wages that far exceed any government minimum wage, plus full ben facilities, retirement, job training and career growth opportunities. i want to close by thanking the more than 200,000 employees of jpmorgan chase i would like the public to know how proud i am of these people who work at every state in the unto can you all work tirelessly with customers with the singular focus of doing the right thing you work on behalf of our shareholders including teachers, law enforcement, health care workers and the people saving for retirement many of you have faced personal challenges throughout the pandemic managing your children's education and child care needs at the same time our work has never been more important or more difficult than the last several years. you continue to persevere with grace and a fortitude that makes

me proud i've been particularly moved by our central worker population. the tens of thousands of you who continue to come to work during the height of the pandemic to serve our customers when they needed you the most. you have my deep gratitude for all jpmorgan chase employees who performed your jobs with integrity and excellence every day, you embody the best of american values and make your country proud. thank you members of the committee for the work you do for our country. i look forward to working with all of you to help solve the challenges facing our country and help to grow and safeguard this great country >> thank you, mr. dimon. next we will go to ms. frasier you're now recognized for five minutes to present your oral trump. >> thank you very much indeed chairman waters, ranking member mchenry and members of the committee. good morning and thank you for the opportunity to represent citigroup today. when a skim group convened with this committee last year we shared how our banks supported

the economy during the global pandemic today, while the worst of covid may be behind us, the economic challenges we are facing are no less daunting. the reforms you've put in place and the work we've done since the financial crisis to strengthen our bank's financial foundation have enabled us to continue to serve as a source of stability. while today i'm a proud american citizen, as someone who grew up in the uk, i can attest the banking system and capital markets in the states are the envy of others our financial institutions and our financial markets, they're essential to american competitiveness abroad, and they're a reason why the u.s. is the top destination for foreign investment as living expenses for americans increase and concerns about the economy grow, we remain very

focused on our role as a bank in job and in wealth creation through citi's exclusive global network, we partner with the most iconic american businesses as well as the frpt to help them navigate the global economy. we've been supporting our clients as they build resiliency, supply chains and adapt to inflationary pressure, and we held these institutions invest in projects that put them in position to succeed in the 21st century it's these investments that put a lot of people to work in the u.s. private sector clients we serve are where millions of americans proudly earn their living. those clients rely on vendors and suppliers that, in turn, employ millions here at home citi employs 70,000 people in the u.s. working in cities across the country such as jacksonville, st. louis and los

angeles. the work we do with our public sector partners is a prime example of how we put our balance sheet to work to benefit local communities. in 2021, we partnered with state and local governments to capitalize more than $27 billion in infrastructure investment for schools, hospitals and roads many of these large projects just wouldn't have been possible without a bank of citi's scale to back them we financed more than $5.6 billion in affordable housing projects last year in communities across 32 different states from california toohio to new york, and this total made us the number one affordable housing lender in the u.s. for the 12th year in a row. breaking down the barriers to banking is also a top priority for us

in fact, this past summer we became the first of the largest u.s. banks to completely eliminate overdraft fees and returned item fees for our customers. we have been a leading proponent of pay equity. earlier this year we launched a first-of-its-kind diverse financial institutions group to lead our engagement with minority depository institutions and diverse broker dealers and asset managers this group is focused on helping these diverse institutions scale and expand into new markets. it includes a groundbreaking rotational program that embeds citi executives with ndis for up to a year. the bottom line, my citi colleagues and i understand and embrace the responsibilities that banks play in advancing economic empowerment and mobility i hope my pride in citi's story has come through, but i also want to be clear about

recognizing the need to continue improving as we strive to build an even safer and sounder bank for the future thank you for your opportunity to speak with you about the work we're doing to support american consumers and businesses i look forward to your questions later on today thank you very much. >> thank you very much, ms. fraser next we'll go to mr. monahan you're now recognized for five minutes to present your oral testimony. >> thank you chairwoman waters, ranking member mcwrenry and distinguished members of the committee. good morning to all of you it's an honor to be here to represent my 210,000-plus teammates at bank of america and talk to you about how we deliver responsible growth this is how we run our company, the same thing i told you last year and the year before every time we've done these hearings we deliver for our clients, our teammates, for our communities and for our shareholders

we believe in building both profits and purpose. that includes being a great place to work which is a core tenet of responsible growth. we invest heavily in our teammates and families this year we raised our minimum wage to $22, on track to increase it to $25 by 2025 we also made an across-the-board pay adjustment for all employees in the midyear and late spring that earn $100,000, to increase wages by 3% to 7% based on years of service for the fifth time this year we delivered special compensation awards to our teammates. this year $1 billion over and above other compensation to 97% of our employees we did not raise medical premiums that earn less than $50,000. our global workforce is 50% women and people of color. management team is 55% diverse including 32% women. our board is 53% diverse,

including 33% women. we also continue to help our clients manage their financial lives. over the past year alone, our lending individual and families grew by 9%, loans to small businesses grew by 8%. the top small business lender with $22 billion in outstanding small business loans today our brand and customer scores are in the best sustained shape we've ever seen. we support our clients with a trillion dollars in loans to help them live their financial lives. we hold $1 trillion of their deposits 95% of ppp loans have been paid off or forgiven. we continue to expand nationwide network of financial centers and award-winning digital capabilities we deliver transparent easy to use products and services to help our clients save, spend and borrow as an example, beginning in 2009, we've been taking steps to empower clients to reduce overdraft usage.

we first eliminated fees for clients when using debit cards upon a sale. we also created overdraft fee accounts, now over 4 million in our client base. we've since eliminated fees for non-sufficient funds in our consumer deposit accounts, reduced overdraft fees from $35 to $10 per occurrence. we removed the ability to overdraft at atm you can see in the second quarter call reports that show our non-sufficient funds and overdraft fees are down 66% from last year's second quarter our responsible growth shows how we make an impact in communities where we live in work. in 2021 we continued our long record with $375 million in charitable giving. our teammates report reported 1.6 million volunteer hours. we provide more than $2 billion in cdfis to advance affordable

housing and small businesses we've also committed a unique program, $350 million to over 100 private equity funds that are run by women and minority entrepreneurs as private equity partners and invest in companies with like owners responsible growth requires us to work with clients of every size and every sector to support a just transition to a sustainable future and energy security for the united states and around the world we believe capitalism remain it is best way to tackle the challenges facing soes siechlt we all face a transition for a secure energy environment. the private sector has the funding, the scale, the long-term thinking to help with these toughest issues including those. in 2021 we had $250 billion in loans and other support declines in the area of sustainable finance. this includes more than $150 billion focused on a clean energy transition.

we work with all companies in energy sectors, oil and gas clients who are also investing to help drive clean energy solutions. responsible growth means delivering for our shareholders. we delivered strong profitability and returned billions to shareholders in dividends and stock purchases. our balance sheet capital and liquidity are the strongest in our company's history. this is responsible growth is capitalism in action. thank you, and we look forward to your questions. >> thank you, mr. moynihan next we'll go to mr. rogers. you're recognized for five minutes. >> that's brian moynihan of b of a, jane fraser from citi we'll await the q&a as it begins markets hanging on to gains even as oil has gone red. s&p at 3,875

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unless of course it's highly recommended. the delta skymiles® american express card. if you travel, you know. welcome back to "squawk on the street." we're awaiting president biden

speaking before the united nations general assembly our eamon javers is on site with the latest. >> reporter: good morning, morgan this will be president biden's first opportunity to respond to that dramatic and escalatory set of remarks we saw from russian president vladimir putin overnight to the russian people. we do see the president here speaking on the largest global stage possibly here at the united nations to give you a sense of the scale of all this, we saw the president of iran walk past our camera position with an enormous entourage. only a few people actually noticed him. that's the scale of this event the world will be listening to president biden today. president putin said he's calling for a partial mobilization of military veterans in the country. he said he's expected to call up about 300,000 reservists, that's people with military experience inside the russian military. he's accusing the united states of what he calls nuclear blackmail. this was the sort of one everyone is paying attention to. he warns that russia also has

various means of destruction, which is widely seen as a hint, a threat of nuclear action of some kind by vladimir putin. all of that puts a set of challenges on president biden's table as he addresses the united nations today. here is what president biden's challenges are now he's got to rally the entire western coalition here that he has assembled in response to the ukrainian invasion he's got to get the europeans on board even though they are essentially going to be absorbing the most economic pain here he's got to figure out a way to craft a message to deter vladimir putin from using those nuclear or chemical weapons in ukraine or elsewhere of course, he's got to make decisions about what kind of western military technology he's going to allow to be transferred to ukraine the ukrainians want a lot more sophisticated weaponry here. we'll see what president biden says that's one of the things we'll be watching for in this set of remarks. a whole tier of challenges here for president biden as he addresses the united nations, trying to rally the world in response to that putin speech.

we understand things are running a little bit behind here at the united nations we expect the president to make his way to the u.n. in manhattan any time now a lot on his table, morgan. >> when you talk about sophisticated rep uponry, things like aircraft that ukraine has called for and more advanced missile defense systems. it's important to note that putin is not in attendance at the u.n. this week neither is china's xi. but when it comes to russia, it's been suspended from the human rights council for the u.n., not the security council because it's one of the five permanent members. is there expectation, especially with the comments overnight, that this changes the calculus around discussion that reforms need to take place where the security is concerned? >> one of the things we do know about all this, there are no formal meetings wean the u.s. and russian side here. we don't expect any direct diplomacy, at least nothing

scheduled in advance they can always have the accidental meetings on the sidelines where a couple things can get hashed out we don't expect a sit-down discussion between the two sides. we saw the head of the national security council pr team on television this morning responding to the putin threats last night and saying hedoesn' think this represents a significant change in rhetoric around the use of nuclear weapons. he says this is more consistent with what vladimir putin has been saying over the past seven months of this conflict. we see the presidential mode tore cade is going right by us i see the president of the united states right now, morgan. the president is making his way inside the united nations building as we're talking. the motorcade traveling heavy this morning with lots of aides and assistants we have a long list of people traveling with the president in the motorcade. we'll expect the press vans to be following behind. to pick up where i left off just a second ago, look, this president is seeing a strategic

posture by the russians that has not changed according to the national security council this morning. therefore, they're seeing the strategic posture, nuclear posture by the united states has not changed either so some calming words from the national security council on national television this morning, morgan. >> i think back to some of this morning. >> i think back to the conversations i had with defense and military officials earlier in the year and this was part of the conversation both on camera and off, some of the concerns that you could see an escalation by a putin if things were not going according to plan for him in ukraine but maybe this is more public, these comments. but that risk has already been sort of gamed out, if you will, by the u.s. and perhaps western allies who knows. we'll see. >> sure. >> that being said eamon, democracies versus autocracies, president biden has discussed this so much is the expectation this will be the thrust of his

comments this morning when he gets into place in the u.n.? >> we don't know exactly what he's going to be saying today. we haven't received an advance copy as sometimes happen with presidential addresses we know they've been fine tuning the speech through the morning in response to what vladimir putin said and the president has set out his entire agenda as democracy versus awing to be a superintendent around the world, this is the chance to rally the rest of the world to the agenda. i'll look for those talking points and push back to vladimir putin in terms of what he's doing in ukraine and figuring out some sort of end game here is a question. what is the result of this war that everyone can accept or at least land on and have a declaration of peace in ukraine? that's not exactly clear a lot of diplomats around the world trying to figure out what is an ending to this war that the ukrainian government could accept, the united states could accept, europe could accept and russia could accept.

there you see the activity here as the president's delegation makes his way into the building, out of the motorcade and making his way to where he'll give the speech in a moment's time. we'll hear from volodymyr zelenskyy this afternoon so we'll get the ukrainian perspective remotely, directly from ukraine so a lot to come still here at the united nations. >> thanks for that we'll keep our eye on the general assembly and house financial services let's get you back to d.c. >> since you've been there, your commitment was to clean up the culture of corruption that existed in wells fargo since you last testified, the occ fined your bank $250 million for violating a previous consent order regarding risk management and for engaging in unsafe and unsound practices related to serious deficiencies in your home lending loss mitigation

program. in may 2022, "the new york times" reported that current and former employees of wells fargo described hiring practices that led to fake job interviews so that internal diversity goals could be achieved. 2021 report by the committee for better banks found wells fargo failed to sufficiently disclose employment diversity data, making it impossible to examine advancement opportunities for workers of color one wells fargo employee, who is a call center worker in san antonio, texas, responded to the last report saying and i quote, it's extremely deflating to be a person of color at wells fargo in the past couple of years i've watched a handful of black managers at wells fargo get fired or leave quote/unquote mr. sharp, i know the bank has made various commitments to address the racial wealth gap

and you agreed to do a racial equity audit i also appreciate that wells fargo is one of the few banks that have maintained a presence in the caribbean as a correspondent bank while, of course, we had citi who responded to us when we were in barbados that they had closed their correspondent banking operations and so i do appreciate but it is not all clear that you're doing enough to finally break the pattern of repeat offenses so take another example, a bloomberg investigation found wells fargo approved fewer than half of black applicants for home refinancing i know you will point to things like fico score, requirements of the gse. but this doesn't fully explain why your bank was comparatively worse in this market compared to

other major lenders. when you look at the track record and hear feedback like that from your own employees what is your assessment of your performances since you last testified before us? you gave us some indication, but would you respond to the fines and the criticisms at this point? >> the chairwoman, first of all thank you for the opportunity to address those things i was brought in to bring about substantial change at wells fargo. and we have made tremendous changes. i've also been very clear since the day i arrived, including when i testified before this committee in march of 2020, that it was going to take multiple years to make all of the changes thafrp necessary so that the company was run in a way that i'd be proud of, our regulators would be proud of and you'd be proud of we closed four consent orders since i've been there. we have returned our cra ratings

to outstanding we have plans in place for all the remediation work that has to take place and i firmly believe we are making progress across that body of work. and as i said in my remarks, i'm very confident that we have the team in place but that we also have the processes, discipline and sense of urgency to get done what is needed. >> if i may interrupt you, will you respond to the accusation of fake interviews. what does that mean to you i think you've heard this criticism. >> congresswoman, no one should go through an interview without belief that they could have a reasonable shot at getting that job. we firmly believe that having a policy in place that requires diverse candidates helps us attract the best candidate we believe that that's, in fact, what the policies that we've put in place is happening. and that's the reason why our diverse hiring is up

substantially since we put these policies in place. to the extent anyone feels as if they have not been treated properly, that's something that's on our management team to ensure doesn't happen. >> is it true that you int interviewed an african american employee for a position after you had already hired a white employee >> chairwoman, we're in the middle of continuing an investigation to make sure that we understand every instance where people felt as if they were not treated fairly. and if we have findings we will take appropriate action. >> thank you very much at this point in time i will call on the gentleman from north carolina, mr. mchenry. you're now recognized for five minutes. >> thank you for your testimony. let's talk about the main thing. the main thing is the state of the economy. we see a changing rate environment that has a severe

impact on financial institutions and families we see it with the housing market seven months of resceding home sales at a time we need more housing units in america we see inflation eroding familis' budgets on a weekly, monthly basis, made worse out of policies out of washington i want to know the impact as you see it, ms. frazier you have a global footprint you're in jurisdictions with rampant, persistent inflation huge pressures placed on consumers and businesses in that environment. what are those economic consequences and challenges of a high inflation environment >> thank you very much for the question, congressman. we are very concerned about the high prices that consumers are facing in america and, indeed, around the world we certainly have lived through very unusual times through the

pandemic, the recovery from that, and then the impact greatly exacerbated by the war in ukraine so the impact of the higher rates that are required to try to tame the inflation is likely to be moderating growth in america and around the world and will be putting pressure on many of the drivers of the recovery that we've been looking for. >> you have this backdrop of the economy, and all of you are making decisions for institutions in our economic system of america, banks are a key piece of our economic system, and the multiplier effect you all provide and the lending risk in our economy. let's talk about regulatory capital and what that would do truist, in the regional bank we've heard from regulators, additional long term debt

requirements placed on institutions like yours. so ms. rogers, what effect would that new layer of capital requirement have on an institution like yours and your customers? >> ranking member thank you for that question. and first and foremost, we think that regulation ought to be tailored and followed the risk of individual institutions and i think that's consistent with a philosophy that we all support. additional capital at higher cost causes us to actually potentially impair lending or slow down lending. it may cause us to do other things from a competitive standpoint to cover the cost of additional capital. >> is that what u.s. bank thinks >> thank you we continue to have a very simple business model and although we are larger than we were a few years ago, the businesses we're in are substantially the same our capita