giants there. >> all right. >> all right. we're going to end interesting perspective. weqxd appreciate it. up last year, although you can't get tooq specific, but we're =oo going to listen to you. thanks, dan. >> my pleasure, joe. all right, tha4> ( does it usñi today.fá we are looking at the futures as we head outñi to "squawk on the street." your going futures up by about 60 po)uáip % >> no. >> just where they have been the entireñr show. we'll see you back here tomorrow. right now, it's time for "squawk on the street." ♪♪ñiñifáq good thursdaynnmorning, welcome to "squawk on the sara eisen and mike santoli. we're live at post nine at the new york stock exchange.b.■ morning off. let's give you look at futures as we get ready to start this thursdayçó tradingñi day. we can see where we are. no, we'reym■qñ not going to sho ght now.ñi take my word for it. looks like we're going to haveç

an upvote at least slightly. our road map starts with the 1r its ninth straight interest rató hike. asis points there. plus, ceo of tiktok headed to the hill, testifying before congress over hisi]xd app's secy concerns. and just out, a new short call from íujjtt research saying the short payment company, block, that stock is sinking premarket. we will, of course, discuss. it's a long report, lots to getr start with the fed and the interest ratew3ñiw3 hike. in yesterday's press conference, chair powell saying the fahlure of recentt( banks could have ripple effects. >> we were trying to reflect the uncertainty about what witltxd happen.lp turn out to have very modest effects, these events, on the economy, in which case, an inflation will continue to be strong, in which case, thg3xde1 will look -- might look different.

it'sñi also possiblee1 thatñi t potential tightening willlpçó jt)( tightening in credit conditions over time, and in principle, if that -- that means that monetary policy may have less work to do. >>e1xd we simply don't know. wrappin the things that we discussed at this desk for at least the last week and a half or so, sara. >> i think that if you come out today and wonder wherexd we aren theqok hiking cycle, you can pry much assume we're either done or he's got onev0z moreq left,çó at was where the market qçówas, an don't think he said anything change that, basically acknowledge that we don't know what the path is from here, becauser this banking turmoil will weaken the economy, and he talked a loi about tighter lending standards, as we have been talking xdabout and i thintheqt( read-through fr the markete1 is that whereas before this news conference, we would have gotten some weaki] da because of all thelpq tightenin and the fed kind of would have excusedxd that because they wer

strictly in inflation-fighting mode, but now, whene1 we get we data, that's going to pay morex attention so itó[■ because it i now keen to undáotáand how this banking problem is impacting the economy. >> without a doubt.çó thet(e1 market reaction absolut net dovish, the dollar cracked pretty hard, bounced just slightly late in the day, but afl saying, as youlp mentioned, the language of somefá addition firming might be necessary was much more muted than whatñrçó t previously said, and jpmorgan pointing itfá it almost exactly bernanke fed us%ep inlp mid-200 when they were about to pausefì% after a veryxdp,■ extended hiki cycle. so, it'si] coded that "we'reçó they're trying to evaluate the this fed has said, we're not going to anticipate anything, we're going to look at the data of inflation as it comes in. now they have to, at least dot(

some of that. also, the summary of economic predictions, the dot plot implying a 0.4% real gdp gain for the u.s. this year.[ìáhp &h% slightly lower from what they p1 if you believe anything abt■ how strong the first quarter has &háhp &hc% >> expecting afrybig slowdown. >> it meansçó you go in negativ for some period of time. that all builds in+■ this. okay, we have a fed pause okay, we have a fed pause perhaps earlier thai]p,■ we suu we were going to get it a few weeks ago,xde1 but attwhat cost? that's where we are. we're at the, at what costu■ pot in figuring out exactly how much banks are going to pull back. >> well, when it comes to figuring out just how much banks are going to pull u■back, when e are going to pul=c going to kno what is theq fed going toi] loot to determine the impact? >> they're going to look at tightening conditions. senior officer loan survey because that was already tightening prettyçó dramaticall almost to recession levels going into this banking crisis, and everyone thinks that that's where you're going to see it the most. auto loans,x$$(ááá(rp& real

estate 1-úvcjúññkñiloans, mortg commercial and industrial loans. everything. and it's notxd justñi regional banks. it's the big banks too. what will that do to the economy? well, the viewsñare all over the map. deutsche bank putting out a note sayinge1 0.5% to 1% of growth. but the truth is, nobod9■d know zejjuáh$ow severe thisjf tighter lending standard is going to be. goldman-sachs says it's going to be less severe because it's already been so much, so it's going to be less. the bottom3w■ line is, if you'r wo worried about rate hikes, 5.1% is where they expect the rate to end this year. that's exactly what they said in december. it did not go up. they're definitely taking a much more cautious view. he even said, powell said, they talked aboutñr pausingfáwsr thi meeting but then unanimously decided to go ahead. bank of england joined them thid morning, the idea that we're watching the banking system but raising interest rates because we have an inflation problem, and that message came across loud and clear. i think it was mostly as

expected except for that janet >> what was not expected is that janet yellen would be speaking at the same time in front of a senate committee and thew3 treasury secretary saying things that would have an impact on thr broader markets at the same time powell was conducting hisçóq pr conferen"ñ]■ some words f usually chooses them quite careful that perhaps, i don't know, maybe she wants to take back. takee1e1 a listen. >> failure is deemed to create systemic risk,xd whiche1 i thin as the risk of a contagiousxd bk run that we arer invoke, this systemic riskñi exception whichlp permits the fc to protect alllpçóçóq depositor. that was be a case-by-case determination and is not considered or discussed anything having to do with blanket

insurancet( or guarantees of deposits. >> i have not considered or discussed anything having to do witht( blanket insurance or guarantees of all deposits. incongruous to any$ylejt that se has said before. i mean, you would need congress for that. she would need to go to congres3 for that. i think the more importanti] thg that she#rsaid, which was very consistent to what she told the americanñr bankers association,s that they would consider using for any other bank that failed, including small banks. there's the implicit uninsured deposits guarantee. >> there it is, but it was that line that was taken by the markets. you saw what happened to the name, for example, firñ4j■ .pv¢r>d#añ9wñ?c á5l:

it. you're put in that position during a jay powell press conference. the market just, i think,xd got overloaded with the staticñr of the situation. >> i don't think sheó%■misspoke and i don't think it was different from what powell said, which is that people should &háhp &hc% she has said people should assume we're willing tooku■lpñr systemic risk application, which is what they used for svb and signature bank to insure deposits. it wasn't a misspeaking. what it was, why it surprised people, isi] because bloomberg t out a report earlier in the week that there wasokw3xd discussion treasury officials to tr?áxd to ■3 out how to circumvent congress, so she sort of poured cold water on thatfá report. that's what people had exciteléo >> she said, th then. >> right. >> givenfá she said it has not been discovered or discussed at

all. >> in terms of the market q >> in terms of the market q response, look, this is a marke to can withi] we please just set tt aside? they're not going to getw3 immediate satisfaction on that. so, when you hear powell and yellen effectively say, look,xd case-by-case, if something gets to at( distressed situation ande have to respond, we'll do it. have to respond, we'll do it. but the market doesn't wan "áip r(t&háhp &hc, >> why does shet(@'edw3 toñiñi that last sentence in there? >> perhaps because th @r(t&háhp% "dq$eh!they're trying to get congress to use their funds to expand blanket insurance, and i think there's -- there would be criticismc of that ñrtoo, that we're nationalizing the banks. you've heard that as well.

that might be very hard to do, and it would cost a ton of money, and ultimately, could impact u.s. taxpayers, which is also somewhereñi she definitely has made clear they do not want to go. i think the bottom liner powell says,ñi deposits should assumed&eir deposits are çósafe i donymq%9-■ she said anything in conflict with that. i think it was a good news moment, and i think further, what powellr conference is thatt( deposit fls in the banking system have stabilized over the last week. he gets more data than we do. >> he does, and that's important y perhaps mo important right now in terms of understanding where those deposits are goingi] or whether they're moving at all. to thec extent this has slowed down and not stopped entirely -- >> you can imagine from a financial regulator's perspective, from a central banker's perspective, you know, what we're really seeing is deposits being reallocated within the banking system from somewhat smaller, more they're not seeing -- obviously,

markets and treasury bills and all the rest of it, an$■d."■ it destabilizing parts of the !m&tt thelp wayq he responded to the question, does that mean svb waf systemically9)cimportant? and he basically said, no,w3 bu contagious bank runs are systemically important, so, in effect, that's the policy. >> i think it's not just systemic bank runs. i think it's something that :1ñw3 and we have had heard this from a number of conversations we have bank executives, which is the idea of a digital and social media-fuel'> jane fraser talked about it i don't know if we have that particular quote. citi's ceo. and a number of different comments.cxd but you're right. the speed of it. like everything else, it's a -- do we have that sound from jane frazier? >> the banking system is pretty

sound, and we're talking about a few banks. we had iti] from thexd chairman powell today that this is not something that is spread across the entire banking system. this isn't like it was last time. this is not a credit crisis. this is a situation where it's a this is a situation where it's a few banks that have some make sure thatt( we ni the bud. >> all right, that was not what we were lookingko■ for. she also spoke about whahú> the danger of digital. >> this is what distinguished @r(t&háhp &hc% have continued on that mondayt( had theyv over svb. >> still, "this is not a credit crisis" is a good headline from one of the biggest bank'se1çó c. if you are looking for assurance these are one-off, mismanaged interest rate -- which, by the way, people are piling on to that idea. why weren't theyçó hedging? why weren't they using the cme

group of products? >> all offá it. thereçó sooner? rates areçó moving up. >> i'll tell you why they weren't hedging. banking, when the fed was lifting rates was, what's your net interest margin going on? investors hounding them, just like they&mq houndingcjf tech. what's your total addressable market?cq how are you growing? >> jpmorgan stayed pretty conservative. they kept their duration. >> jpmorgan'st( brand is, we'll >> others too. >> i'm not sure about citi, frankly, but yeah, others. b of a, not clear. >> but we're seeing more stability todayi] as we look evy day to see what the confidence factor is around the bank. first republic is up in the premarket. >> there you go. that is the barometer. >> it is. still to come on the show, the ceoq of tiktok, big day, se to testify beforeñi congress, hoping to save the app in the u.s. we've got all the details. plus, we are watching shares

of block this morning. tumbling after hindenburg research says, shortq the stock. more on that story straight ahead. ahead. takng a look at fi utat morgan stanley, old school hard work meets bold, new thinking, ♪ to help you see untapped possibilities and relentlessly work with you to make them real. ♪ (torstein vo) when you really philosophize about it, there's only one thing you don't have enough of. time is the only truly scarce commodity. when you come to that realization, i think it's very important that you spend your time wisely. and what better way of spending time than traveling, continuing to educate ourselves and broaden our minds? (woman vo) viking. exploring the world in comfort. ♪♪ for skin as alive as you are... don't settle for silver. harness the power of 7 moisturizers & 3 vitamins

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tiktok ceo set to testify for the first time before congress today as his app faces

q8er(artisan criticism and the threat of being shut down here in the united states. guys, we'll bexd watching this carefully. it's kind of a qno-win situatio for xdhim, though, becauámx yout both sides of the aislex:jjt on about the security risk, and i think that the toughest and most important question is going to be, does bytedance buy oni] u.s. citizens now that you have using tiktok? >> not to mention time spent, which, when you talk about the possibility of this being shut down, would be very beneficial note1 just to thee1 obvious beneficiaries such as meta or snap but even t+á the streaming companies. it's all about time xdspent, an so if that were to be the case, to your point, 150 million people spending an awfultpju of their time in a given day on thisi] app. whether it really will be banned, who knows?xdlp there's certainl■*q a hostile reception from both

sides of the aisle.e1 unclear what they can offer to do, given the deep level ofy; distrust there is of the chinesó government. you can saye1 almost anything, d people will say, they're still going to figmr!■ out a wo9u to y on us and steal stuff. it's not clear they're not doing that anyway. it's not clear how beneficial tiktok is to the overall chinese efforts of cyber espionage. >> they can also say that's propaganda. th)tnj the othere1 worry. >> yeah. there are other s; they can use forfá that. >> sure. >> i do think it's -- the big question is just exactly how re politicians on canxd they offer anyq insurance that you can hive off the data or sell theq business and be safe? is it just a matter of, this is an excuse to essentially press the caseñi that this company cat be trusted. >> it's going to be a big show, right? we know that. but what can they actually do? so, there are four proposalse1 congress to ban tiktok, but only one of them has the backing of the white house, as i understand

it. that's the warner-thune bill from the senators, and what that does is actually would give the commerce secretary and commerce department authority toçó ban tiktok. so, again, that would be a process, and it could take months, years, and then we get to the 2024 election, and guesá what? we're banning tiktok, 150 c÷'illion users, who not just dance, but cook, get their financial advice, haveu■ communities on there. >> without a doubt. >> that's a factor. >> not to mention a lot of people are earning their living, as you say, or !■( lot oft( the living. major. >> there's the question as to whether or not bytedance would consider a sale of tiktok u.s. thene1 you would have to have t algorithm here, and you wouldn't be able to updateg anymore, and that is really what has powered this fora5■ so long terms of the success they have and any numberq of bankers thati have talked xdto, at least, thi about that. who would ite1qñi be? microsoft? no. apple, amazon, meta, i mean, none of them would be biased.

cpl >> oracle was thexd first time around. the question is, is there another buyer you're not thinking about? netflix? is there a sponsored spin of uáu$row in a lot of potential moneyçó fromñi privat equity, and kevin mayer comes over and runs it against black stone? who knows? people are thinking about these things down the road. >> but china doesn't seem eager for a sale. >>3w■ no. and onr to eunice for the reaction from china. >> only a moments ago,ñr china' mi saying china would oppose a forced sale of tiktok and that business confidence globallylp towards a spo+qperson also hinted as to the steps that china might take next, saying a saleñi or ñrdwes of tiktok involves technology ááuqáhp'd that

procedures must be carried out hinese law. it also added that the chinese government would be the o making a decision in accordance with the laws. back when the trump administration had also atte-túq" to force a sale of had come up.in 2020, this issue thet( chinese government had attempted to block the sale at that time, saying that tiktoke1 hadxd proprietary technology th should notw3 en) upq in the han introduce the new export restrictiont([çm back thenxd th governing advanced ñia.i., whic includes algorithms such as bytedance. now, the sale didn't happen back then, and we don'tjf know wheth or not the chinese government would be able to -- or allow anything this time around. there's been afá lot of confusi in the legal community herei] a to whether or not the chinese government could evenq legally o it,xd but it's been interesting

because up until qqw3now, this c has not actually garnered a whole l/p&hc% this is definitely the strongest statement thatfá we'vexd seenoh overnment in the coming weeks or months, as you guys were fásaying, this could drag for a fáwhile, could become muc more critical of añi forced sal1 guys. >> eunice, thank you. another point of contñ course, betweenw3 china what do you see on the horizon? uncertainty? or opportunity. whatever you see, at pgim we can help you rise to the challenges of today, when active investing and disciplined risk management are needed most. drawing on deep expertise across the world's public and private markets in pursuit of long-term returns... pgim. our investments shape tomorrow today.

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>> announcer: the opening bell is brought to you by nuveen, a leader in income,xd altqnatives and responsible investing. noted short seller hindenburg research hast( a new target this morning, block. hindenburg saysq the payment company is facilitating fraud. mike, you've gone through this report. what are the key arguments? >> that's one big element of itd essentially, they have insufficient compliance against fraud. so, in other ñiwords, the cash p being usedxd for payments for criminal activities, theyw3 allege, as well as during the covid relief programs, a lotçó fraudulent payments to individuals and smalli] businesses. it's more than that, though. the bear caseñi alsoxd rests ont they insist -- what hindenburgr insists are inflated userxd i] counts, kind ofçó double and

triple-counting individuals with multiple accounts. and then another piece of it, which is the revenue line from interchange fees, somethingt( a lot of payment processors get.ñi this is merchant fees, @r(t&háh% basically saying they route these through a small bank to get around a cap on certain large institutions. paypal does the same thing. a lot of thingse1 funneling toward, this is a company that's willing to play fast and loose with regulations to allow its users to essentially move money around without a lot of scrutiny, in someñr cases not requiring social security numbers when theyfá did. so, b#k on hindenburge1xd ñidoes, employee interviews, former employee interviews, public records requests and things likee1 that sow3 it really is about corpora behavior, which makes the business seem more than it is, as opposed to reae[ñ just a valuation call or something like that. >> wildly overstating its genuine user accounts and understating its customer acquisition costs. hindenburg, people may or may not remember,xdçó nikola, remem the truckok going down.fáe1qlpw3

let's get to the opening bell.fá probably a little more green, i think. that's allt(>2%ght. here at the big board, ñi refounded, and at thew3i]t( nas kludein. it continues. not as many as4é$erelp once wer not a lot going public, but still, some of theym■i] are tle bit, mike, of a delayed reaction to the fed meeting, because if youe1g market in the early going, communication services, technology and consumer discretionary, and if the message and the takeaway from the fed is that maybe one, maybe no more hikes left, and they're considering this banking crisis

as a de facto5a■ tightening so their work is getting done for them, then that would support technology. it would make rat' the dollar come down, that whole trade goes back on.'c■ that kind of got disrupted because of thet( way the:6pp÷ m interpreted the treasury secretary's comments around the insurance. nasdaq up 1.25%. >> as we often mention, there's often añrçó next-day reassessmef what the real takeaway was from the fed. a lot of times, after the press conference, there is a bit of an overshoot. that did happenñi yesterday. but just for context, s&p was down 1.6% yesterday. so, it got backq at the open, about half of that. if you're worried about the economy wobbling from here because of the bankw3 credi,o■ issues, the obviousu■ flowu■ wo be into the strong balance sheet companies that aren'tñi quite a geared toward the macro, and that's --e1 thatq gets you intoe nasdaq names that have jf &háhp &hc% significant among those is the semiconductors ase1 well, andñr

nvidia has been almost kind of a microsoft and apple. so hereábe nvidia popping anothr;3% now. r(t&háhp &hc% market capçó again, and it's bigger than tesla, as i noted yesterday, market cap-wise. >> bigger than ñitesla. it has been -- the keyh obviously, has been thexdñr enthusiasm around all the different applications forçó generative a.i. and the fact that nt

begin fairly soon. he may take some questions. let'sxd listen qin. z here. z there are many misconceptions about our company, and i'm proud to come here and represent them and all our users in this country. i'm going to make four commitments to this committee today. number one, we're going to prioritize safety, particularly for jfqteenagers, and we're goi "/um9ñ second, we're going to firewall orok protect the u.s. leaders fm any unwanted foreign access. three, we commit to keep tiktok free and ae1xd free place forxd freedom of expression without any manipulation by any39 goversnt. ó9 foo transparency, and we're committing to third-party monitoring. we'll givelp them access to kee us accountable to our commitments that we're making. thank you very much. i'll see you inside.

ceo who will be grilled, no doubt, by thefá committee he's appearing in front of. but giving his four reasons. we didn't even discuss much of the criticism that comes tiktok and otherw3 social media's way terms of mentaswxdqhealth, particularly for teens, the crq&xmjez this country, and tiktok certainly is onejf of a number of these social mediaqlp platforms that are -- >> but i feel like those will be good points for him, because he's ready for them and can say what tiktok is doing to fight them and also it does not lump them as a national security risk, which is reallyr issue here is in terms of+■q a . it's an industry problem. meta's faced questions like tha"ç @r(t&háhp &hc%h$as questi well. so, to the extent that they arer about teenage mental health, child safety,fá pornography, the type of questions, which are emotional, and they're real, and we should be asking, it's not a tiktok-specific problem. >> no, and it's not necessarily a reason that congress would move to ban the use of the app by all americans. which, again, is a process that could take quite some time, and

we simply don't know at this point where it really ends up. as you pointed zv■out, sara, th election probably will mix in l heated -- snap and meta trade in response to all this, both stocks up 15, 16% thisé@■i] month as people h focused on the possibility of tiktok going away. it's probablyjf worth asking exactly if all that activity, all that attention,ñi all the a dollars simply shift over.q we just don't know enough about how thelp whole industry might reorganize itself, even if tiktok were toxdfá go away. i mean, i just think it's worth questioning that linear logic thats%mehow snap is going to grab all thatt(5a■ time. clearly, be a benefit. >> andj(jáu form would benefit, but as i saidlp earlier, there'ó theoryñap that, as well, just because of how much time is spent on tiktok in particular, that perhaps people would spend more time on longer form asñi well. we saw regeneron at the top of

the leaderboard there. it's worth hitting a good old straightforward news storyr have. they're saying it's notu■xd demonstrated, as a result of phase 3 trials, the potentialñio become thea5■ first biologic to treat copd by showing what they say is significant7oo reduction exacerbation. that isxdi] deemed very benefic to regeneron stock, and look at sanofi as well. copd, by the way, a life-threatening respiratory causes progressive lung function decline, and you can see it's having a beneficial impact onxd regeneron shares, of course, as leading cause of deathxd worldwe with no new treatment approaches approved in more than a decade. >> another potential winnerclhee in the market is general mills, which i want to hit, gis. anotherr

especially impressive, guys,q because general mills raised guidance atxd cagney, which is consumer analyste1lp group conference, which was a few weeksfáok ago. they raised guidance even further from there today. it's up 2.5%.t( for axde1 staple, that's a big . they are uevting higher prices.i 16% organic revenue w3growth, mike,ñi 16% pricing, zero t(vol. >> amazing. >> that's thefá whole word ofe1 elasticity, which just means in the consumer world, consumers arexd eating it, and they're no sacrificing volumes and they're not necessarily cutting back on spending. that's what's at play here. they're ablej&$uz get the stron pricing.q i think there will be more questions, especially for the food manufacturers, about just how much they're trying to expand their profit margin in the face of what has been declining commowuk costs and !báter freight costs.sts and we're seeing it across industries, not in ñrfood. they are still getting this crazy high pricing,çó andñit( t kind of quarters like this.

>> because consumers are eating >> because consumers are eating the food cost increases? i,=jfz%, ahead and hold thisok k?ypricint that's been a pretty consistent >> by the way, the earnings call is just going on. 0vtu(q), for sending me notes here, but they're getting a lot of questions on pricing and how muchxd the consumer can tolerat here. they feel comfort(sq with where they are, but with the amount of pricing they've taken, according to ceo jeffq harmoning, thatko■ ow much the consumer can reallyó[■ stomach, would sugges much biggere1 declines. they're not seeingt( that. so, lpoverall, the theme is,

resilience. resilient consumer, resilient3w pricing power for some of these packagedé@■ñir it's amazing. >> for sure. >> also, people are still eating >> we want to come back to block, mike, and talke1 a bit me about that. >> i was noticing paypal down 2.7% just on the general idea. >> hindenburg isi]ñi never know for, you know, mincing?úwords. they'reñ$uv straightforward in terms oft( their criticism. we haven't heard from the company, and we want to give block every opportunity to respond to what is a long report from hindenburg.-k; jack dorseyr tie-dyedxd t-shirts and a guru ñ i] some kind of criminal activity. >> gang. >> gang activity.

one of which was named the cashapp gang. so, obviously, kind of xdunseem stuff in genera)% but heñi also points out, dorsey and his cofounders sold a billion dollars worth of stock near the highs. it seems like there was a sense that they had this great rush of pandewpkq)añi usersçó thatñit(t then oñ$]nibujuáh%ust tried to maintain -- supposedly,r expenses related to fraudulent activities,they tried to hide, according to former employees and according toe1 hindenburg, within the sales andxd marketin line of the income statement, so really, justlp a lot of -- on a fronts, saying there was kind of mq&]9q company, and it was less than it and by the way, not a lot of it aboutñi bitcoin, like, about th in that direction, renamingçó t company block in that regard. and you know, this is a stock that was at $260 at the highs back in, you know, the nasdaq peak. it bottomed right in the low 50s

at the market low last year. so, already a tremendous amount of value given up. and you know, what's also whole xdrethink of what fintech is. isxd fintech really anything ne and specialnaáhu(j it a new gloss that seemed le" financial services and payments are a growth business. >> hindenburg, obviously, very markets activity of adanids?oo f one of the most important that was not that long ago following it up with this report on block, saying they have 65ñio 75% fundamental downside, they believe, from the current levels. now, obviously, it's an interesting business model that hindenburg has, mike, where they put out what are detailedq fá the past, certainly in certain circumstances and obviously they also face a lot of resistance from those companies, though, that they do go fáafter, but they're taken seriously. you better do your work if you're going to put something like this çófácout. f>b yes.

>>÷n and they do have a significant impact. they're already short the stock. >> they're already short the stock, and they actually, yesterday, the firm tweeted, we have a new short idea and it's a big one. there was a lot of put option activity on square -- on block, ■lp leading up to this. people are pointing out. so, clearly, they were doingx,■ theirw3pwi-■ orlp they were kin ruffling enough feathers in this area that there was aok sense ty were closing inokxdñi onq this. >> have they had any big misses, hindenburg? >> that's a goodfá question. i think it's tbd on some of them. >> yeah, i mean, adani has managed to right itself to some extent,lp but again, it's beenu while now.c on nikola, they were kind of the key axe there. they crushed it. >> on such a weird issue. >> i know. but it went to overall andc obviously the ceo at the time and what were so many different

least hyperbole. >>xd this one definitely blindsides the street a little bit. still hadr with buyv >> they were upgrading recently. block was one of those tech companies thatu■= knon expense management story, which is, you know, the best thing you can say about a high-flying,çó r high-growth tech company these yúzays. cathie wood, we had on, she was buying millions of dollars in block, and i remember askingq her, why are you doing that)sn■n %=9iuñbjjñ consumer spending is set to slow down? she defendedr the technology. here's cathie earlier this week on block and why she loves it so much. >> what we're seeingxd with blo, square, cashapp, we're seeing two things. it is reducing the cost of financial çóservices, and so, me people are flocking to it.ñi andxdt( in çófact, it's develop closed-loop ecosystem, and we

believe could be one of the pij winners in the digital wallet space where it won't even have toq interact with their clients won't have to interact with banks. >> so, not because of consumer discretionary and notçó necessarily just because of cashapp either. for cathie, like a lot of these names, it's the ecosystem they're building and the d}u(tion in their space, and looj. we see a lot of those white card readers all over the place. , >> think about criminals. >> nothing about sex trafficking. >> realw3 quick, we should mentn coin because it ist( down. coinbase is down sharply on that wellsok notice that was reporte yesterday. for those who may not be aware, wells notice basicallylp indicas the ftc is going to bring charges but gives you an opportunity to respond prior to doing so, sort of writtenñr statement to thee1 decisiont( m1 and get to respond. remember, civil, not crimina

security taking significant chunk of marketok cap from that company as a result of x t move there. >> ugly. down 15%, though it's been a bid win they are year. yú>> before we head torfybreak, is timei]e1 for a quick bond re. let's see how treasuries are faring this morning.ñr signal they will do less in the that's happened in the banking system. lower yields.q 3.49% on the ten-year. eue%9 dollar is getting more of a

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welcome back to "squawk on the street," the federal reserve raising interest rates a quarte1 point and projections calling for one more hike thislp year.c says thefáe1 collapse of silico valley bank could slow the economy. joining me now is professor from

harvard lawxd school, daniel.ok first on monetary por[hvi think the fed was in line with the markets, hiking rates, signaling it's going to slow down bigtime or pause soon. the one part where there'sxd a disconnect is the market expects the fed to be caughting rates as of july, and fed chair powell said, we're not looking to cut rates this year. who do you think ends up winning that battle? >> well, i really don't know, obviously, but i think what was going on int( that discussion w e&a9ii=]■xd liner that everybody hase1 about ir q conditions tightening on the one concerns about inflation. so, he was, i think,ó[■ using t we're going to stick wherever we get for a while as his way of reaffirming that they're still focused on inflation, even though, as many people have commented, it was a quite dovisl hike, which was obviously meant

toñ1 nod in the direction of kd8>> so&háhp &hc%een a((áhe fei for a long time, 2009 to 2017, and you were in charge of bank supervision, xdright, financial regulation. what do you think went wrong here at svb? >> t( svb? cle powell said yeste2ke1ñ there was clearly a failure at the mana'sent level, but i think it's clear there was a failure of supervision as çówell. the question is where and howxd did that failure occur? based onjf the reporting that we've seen over the past week or so, it does appear as though a new team of r (s&ey bank identified some of the issues thatr demise but there wasn't a follow through on cthat.lp i should say one sees that not infrequently. if you look at failed bank reports, the material loss revi

oftentimes you will e%cçó the but didn't push hard enoue to get the fwoonk resolve it. maybe the -- the bank to resolve it. maybe that's what'sñi going on. toxd what degree was the çóon-s1 from washington+■ over the past several years so the question of supervisory responsibility may be a shared one.c >> so, do you think there was a lapse here by the federal reserve,xd the -- >> oh, yeah. there's absolutelys7■e1 a lapse. there's absolutely a lapse. the question is, exactly howok d that lapse fáoccur, and i think on-site team bears some of the responsibility, but the questioá i'm also putting on the table ir whether some of thexd failure o the team to follow up in a very rigorous way,e1 may have had something to do with the y%m%=9■ gene)

mean on svb, but as you know over the last four or five years the message went out that there was going to be a lighterth$uáu on bankt( supervision.kñtr(t&háh >> would new regulation,r likes of which elizabeth warren, for example, have come on the show and said we need, do anything to change that? ut regulations, but you th enforcing them, it wouldn't seem to matter. >> right. there are two se!vpáe issues one, you know,fá should one rol back what both the 2018 legislation did and thee1 2019 d implementation which went wellt beyond what the legislation called for? you know, i think that legislation was built on the false premise thatjf banks of under $250 billion are not collectively systemically important. they are. so some change inxru■lation

the fed has authority to do it even wi) no changes. whatever kind of regs you have0% in place you relyçó onlp supervision. look at it this way, if yout( ry totally on regulations, you have to setlpe1 your regulation with not the worst case, one of the worst cases in mind and thus, &háhp &hc% banks. if you do that, the credit constraints on an ongoing basek ris going to be considerable. so you want to be able to set your regulueon in a way thatñrñ fill in. >> we'll have to haveryvu back ne history lesson here on this and @úaut figure out what happened. for n'. thank you very muchák >>p,■w3ñixd sure thing. still to come, you're not going to want to misslp the forr nec dir ♪ ♪ why are there two extra seats? are we getting a dog?

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we'll take a quick break here as we await the start of the hearing as the tiktokxd ceos

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of "squawk on the street."r a mediae1 spectacle going on inside the house energy and commerce committee hearing where the ceo of tiktok has justlp chew is there, right now leading this ñ)(áu(áey the chinese-owne company, tiktok. it's ownedñrñi by barnts compan ■ to face for the first time aboutt(ñr national security concerns, doe1 tiu4&k spy on thefáxd 150 milli users in the united states, does it feed propaganda, should it be banned, and a lot of them want this company banned, whether they're legally able to do itq s another thing. we're going to watch because look, it hast(xd ramifications some of the public stocks like meta and snap which have been increasing on thew3 process of tiktok getting banned and real questions about social media and

our society.q we're going to talk more about this. but we are getting breaking housing data. let's go to rick santelli ine1 c he has that for us. rick?c thank you,xd sara. our february read on new home sales expected to be up 650,000. seasonally adjusted annualized units. a littlo■ light,lp 640,000.[çm but it is the third consecutive month in a he row overxd600,000. it's well above our low orfá excuse me, ourok major low mark which is 543,000çó mid-last yea and these numbers are a bit bettert( primarily because earl february, we were at 6.4% on an é@■óónrtgage. by the end of the monthñr it wa over 7%. but there wasc a windowñr therec downward pressure inq thatpr potentially helping housing and for that, of course, let's head east to diana olick and see what her thoughts

about 1%.çó diana? >> well, rick, i think this is still añr good number and that' because in february, we saw añi sharp spike in mortgage interesk r"íqáy these numbeb&f are based on signed contractsmy■ñi forp,■ñi t homes, not clothing. it's the same as we sawçói] in "déb&aeháhe, existing home sales report, based on contracts signed in december and january when mortgage ratesq@(ere lower. to see at least someñii] strengn the builders continuing into february, when those rates spiked up, that's a good sign going forwardúp what's interesting to me, though, i huge jump in the number of homes sold that have not been started yet and that seems to say that builders are going to need to ramp up production quickly and that's important again for the builder stocks an what wejf see going forward in housing starts because we've seen weak housing starts so this would imply we're going to see a lot moree1 home construction over thexd next couple months. prices still up 2.5% year /,çi■

year for new construction.[0br(% the builders are putting in incentives and doing mortgage rate buy downs. that's helping pull in more buyers. we sawfá builder sentiment go u because they were still seeing continued demand even in februa22 when rates shot higher. so not a terrible report. back to you guysw3 lpdiana, more rates are set to drop a lot here with the new fed outlook and lower rates? >> not necessarily. in fact, we di:5 rates droplp significantly yesterday, where you might have thought that, and thatfá actual has to doñrñiq with why the spr arefáe1 widening betweeni] thecr treasury because of the ba cnt ] stress. )s& pressure on mbs and that's keeping rates higher than you might expect. >> that's surprising. diana, thank you very much. good to have you. well, as wec look, david, t the market in rally mode today, bonds are rallying, the takeaway i think is from the federal reserve and what we heard and maybe more importantly what we

maybe more importantly what we fed9ájhrj they got rid of that ongoing rate increases are appropriate kind of hawkish > although to that point, he said, we don'ti] know yet. the true contrack narrowly impact of the bankingfxi%m%m■ñr

andxd we don't. we will, but don't. he's indicated we're going to get more data and be dependent on what we see. >> he offeredlp assurance on th banking crisiss;n in particular which the fed has played a hand in tryingçó tot( rescue, right, feel safe andq starting to seat deposit ñioutflows stabilize, things psychologically important as wee1 wonder isjf this reallyg fenced? is it going to be ac handful of general impactlp on the economy >> we are seeing the rallyq tha had sort of been under way until f8>> the treasury secretary was testifying at the same time. >> testifying yesterday, the last sentence in her answer to one questioni] they hav #&áár"ered ori] discussed anythg having to do with blanket insurance orht■ guarantees of deposits that did pressure the banks at first a$ñ then seemed into the broader market at least dampening the response to what seemed to be a dovish stancenb■ from the fed, d for the broade4@emarket.

>> i don't think it wasu■ inconsistent with herfá view th we use the systmh5z application to bail out thelpxd xduninsured depositors of svbq and sirs tur reiterated that point if needed, even for smaller banks,ñr but is on congresse1 to do ac blanket 3 insurance. >> it could perhaps have been more artfully communicated. maybe there's a realization today in why theñr banks are rallying, it wasn't anything different. >> maybe. >> we have someone whoxde1 has probably some strong views on theselp topí3treaction to fs chair powell's comments, gary cohn, former economicñi directo cohn, former economicñi directo andçó goldm;j president at fed nine, used to do a fedw3 sh together. now wew3 do thewn fe which is how we should all react nowlp that you've w4q"ñi a nigh think about it. what do you think? >> so, i think we're in an interesting position. so if you go back a month ago, we sat here and talked about hop

confidentok chair powell was an &háhp &hc% where thexd f5p was.tj?j■we tak happened over thexd last month d it'sokw3c understandable the chs not nearly as confident as (g■ ûw+. we're almost to get to a point right now where he's outsourcing monetary policy.[b&e6yro based on what i see, and he's got good datac on what's going n on these small regionalxd and medium sized banks,xd what i se on deposits leai, i don't believe they're goingñio be able to loan money or as much money and we're going to see a natural contraction iq,uhe economy. that natural contraction, he ■ probably another 25 basis pointsw3 of tightening ort( maybe even more. so now we've got thee1 fed doin what they're doing with their 25, we've got the banking communityw;7çe1q contracting th economy because they no longerx% havefá enormousçó excess deposi]

recirculate back into the economy, so he's in this situation where he has tofá mak that assumption that that's going toht■ happen. that's why he leftñr himself in thisq fáposition. 7"yll see what happens. >> which you think was appropriate. >> totally appropriate. >> so you were a soft landing ó■ guy. did you throw that out thexd window? >> i hadt( been a soft land gig. i think it's getting harder. now that fedt(ñrc has lost cont oretdifficult. when the fed was in control of slowing down the economy,ñi by raisingxd rates andu■ making ite expensive, i felt like we could maneuver a soft landing. now thatc we're taking money ou of the systemçó and taking loan availabilitya5■ away, notñi loa just loan availability is gone, i think the availability■[çq tot land gets more difficult. >> your viewñr)j notw3w3xd base another cascade of failures or anything like tñ 9ñ it's the current conditions if they prevail as of right now

uiten what we've seen from the deposit flows? ?

incremental worker orq borrow that money.t( you're going tow3 stay at ae1e1c level. it is a slowing of the economy by notq having to borrow the money. >> do you think the fed will be kd8>> içó look at the dot plot, know you have -- >> dot plot shows cutting ina5■ '24. >> the dot plot shows dramatic longer. >> not in '23. market shows '23. >> again, i think thatlp the fe is going to sort ofxd stay heres long as they can.lp my view is they want to stay here as long as they i]can. the worstñi mistake they can ma is to cut and thenxd have to rai so they're betteré@■ off to stan extra month or two than have cuts and saynb■ oh, my goó- >> they said that. !aam■ to inflation?soeqs what >> look, their goal is to fight inflation. they're dual mandated to fight

the inflation.u■ we've seen thexd central banker around the world declare the same goal. j÷■ goal is to fight inflation. we are goingokñr to use monetar policy.xd up)e going to use interest rates to fight inflation. we understand what's going onñi potenti*p'king and the negative implications to banks' portfolios raising rates. we still have axd mandate to fit our tools. i think powell decla)b" that yesterday, and we've seen other central banks around the world declare that. >> back to the banking system, is it your sensee1 that these regionalsv!q" smaller banks, which play such an importante1 role, have been crippled in terms of theirlp ability to participate so to speak and what does that me#vñ if, in fact, its proof their earnings power going forward or their own i]viabilit? >> yeah. t lost some excess deposits. lost some excess and that wille1 definitely, w3dv affect their earnings power.

#q"á(p'ks earnings asxdok youfá in the demand deposits andlp th lend them out on a longer term duration, always the risk of banking, take in something that someone can take out the next day and you helped it for e1 duration, sometimes up toq 30q year, and the spread between what i'm paying youxd for yourf overnight money and whatfá i ca get for 30xd years is how i mak money as a bank, so the lessç! moneylpb.■ -- >> fees. >> and fees. the less moneyfáñ i have at+■q disposal toxd lend out u i]xde1 duration, the less profitable i am.nb■ there is going to be an impact tolpu■ profitability of these b. out at goldman sachs and haven't been there for some time, you opportunity they might have been able to save this thing. half a billion from generalfá atlantic potentially on

a week before, i don't know, do you talk to your colleagues, an handled particularly well by the advisors? >> i have notxd talked to anyon there. i don't ñiknow. i would have hoped my old firm, i've been gone seven years, done everything they could to help their client out. i don't know the particulars of the situation. >> no comment çóthen? >> yeah. >> fl/' you? >> i heard the client wanted to get a dealc done quickly on tha. so gary, is it enough what secretaryñi yellen and theñi treasury and the fdic and the fed have done thus far with the implicit guarantee of uninsuredo depositors? >> xdwell, we've all beençó aro through these, i would say, crisis in mm4eip r(t&háhp &hc% what we have is a crisis in confidence. we don't have bad assets %$■ banks. this is not 2008. we had a crisis in confidence. and when you have ae1 crisis in confidencefáe1 depositors want ■

moneye1 out of an institution a put it in ane)já they have confidence inxd it. i think they've done enough for today. but tomorrow, we could lose confidenceñrqyjez another institution and i think we're getting more and more mixed signals every day. as you said, yesterdaye1 we had the fed chairman saying one thing, we had the treasury secretaryxd reminding us of something else, whichi] neitherr them were wrong in what they were saying. they were both 100% accurate in their statements. but they were just reminding us that fdic+■ insurance is up toq $250,000. yes, we can invoket( a risk exemption which is in dodd/frank and well written out in dodd/frank, title 2, and there's getting together the fed ctg gover& jñ that systemic risk exemption. >> gary, i've had market

or at least the marketse1 asxd fragilefá as a result of what weoiz■seen. do you agree with that? don't think we're totally fragile. never been stronger. so at the coreñrçó of banking i biggest banks that we havet(+■ thatok weñi dei for the vaste1ym■ majority of corporate banking, international banking,xd money transfers, the big payroll accounts they've never been strongerñi and they probably have deposits today than they know what to do with. the issue and i think we'll see this at some point in the e @r(% future, is those banks have gotten significantly bigger. we've got banks wellxd over $3x trillion in the united states and theyñrok may be appáo trillion after cñrçóthis. >> wow. so gary, you're a ñrmarket's gu. what do you dojf with stocks he? do you buy on .9■ idea thatxdxd confidence has returned and the tqxd has now doneçó most of the work on rate hikes,

if not all? or do you sell on worries thatl the recession is coming? >> look, i think that's thei] conundrum. the conundrum we were talking about the inverted yield curve, inverted yieldr plus. >> you criticized mee1 on it. >> you've been talking about the inverted yield curve over a yeap and how we have to havexna recession because of the inverted yieldq curve. so there's been these recession fears because the fed hasok bee raising rates. it feels like the fedxd is clos to the endr maybe there'sçó 25 basis points more if bankse1 don't doçó thei piece. but on the other hand, if banks do their piece and they stopñi providing credit in the system, 1e■ is going to affect potential earnings. >> right. >> now we're sort of making the shift over fromfá fáokay, the c of capital is going up, the cost of operating a businessq is goig up, the profitability of

is other side of the equation is, we don't have credit i]availabl. we can'thy7+,p]" our business. we can't build inventory. our whole cost of operations is going up because we don't have and we can't expand so now you've got another, as , asked, you have another worry about earnings. so iíhpink we're just shifting the earnings a litt,oue1 xdqmor. i'm actually more concerned about thejf equity market now because i think it'snb■ harder manufacture a soft!u■ landing w yocwhuze1 dependent on banks th when the fed was in control of this. i think it's harder tob.■ have strong view on r that said, we know the labor market isñi still ñicstrong.t( powell said yesterday we're still laborñi dependent and kno the job market is strong, wages are strong and consumers are spending, so many companies continue to come through on the earningsn;np,■&in%/mp r(t&háhp % >> all right.çó gary, thank you. ■ yr(t&h/p&h day. we're monitoring washington.

q&a with the tiktok ceo set to ghin a moment. kayla tausche foád moreñi perspective on what we can expect here. >> certainlyx:juá—q going to hear the ceo of the company talk seeing here, the number of americans who use this app, hoì% crit6pp& it is for small businesses toñ1 get their messa out and ther of those businesses can reach. weqfá saw a post this weekñi li 7,000xd u.s. employees fort( tió so establishingt( q critical technological function here in the country and an engine of growth for part of thq economy, but complicating all of that is the general conversation here in washington about howi] tiktok should be allowed to operate in this country, especially given it tices to the cheese government --fb ties to e 95q9 the ceo is going to bexd talk about how the companur is independent andñr does notçó gi data, going to be"n■e1lp compliy the ministry of commerce today said it would not allow ai] divt

sur- of the company's algorithm to the united states in orderñit satisfy somexd national securit concerns that have been raised by the biden administration. on one hand the chinese government saying it will not allow the company to operate in a specific structure as a standalone company in the united states, all while the ceo is trying to say that itfá operate as a standalone company that is government. that isxd ath$uvxd delicate dano walk. >> kayla, what are theu■ option? one thing we were discussing earlier, a numberxd oft( ban legislation through congress, but the white house wouldt( giv the commerce4p)tmentq authority. what is the likely option? >> there was a schism on the council of!u■ foreign investmen deliberati for several years with the pentagon andxd fbi andhdmpartmñn board with the plan for tiktok

toçó ringñ)h#ences data in texa with oracle because that wouldx not include the algorithm, the strings pulled by the chinese government. the only way to get the consensus at the sifus level to sell theq company, have the algorithm live here in the united states and that's what china today said it would not allow. that was something that w to have the support of the commerce secretary who would be charged with enforcingñi such a deal but a few weeksçó ago madet with banning the app saying that doing something like that would the age of 35 because of the app's popularity. clearly the administration wattá ñxd app to keep operating in the united states but without that diverse tour it's hard tow3 see what oing to take you there live for q&a now.lplpe1e1xdxd >> kelly jong chong is the bytedance overseeing the chinese

version of tiktok. are you in regular communication with kelly? >> i'm not in regular communicatione1 withlp her. >> the bytedancefáñi editor in chief, correct? >> i believe so. >> and wu is beijinge1 bytedanc technology board member and also an officiali]q of the cyber spa correct? >> i believe so. they areñi not in the -- >> thank you. all y&ñ÷ñ these individualsq wod affiliated with the chinese communist party, azv■ company we you served as the chieft( financial officer and communicate with their ceo. tiktok has told us."■ you weren sharing data with the ccpd leaked audio fromr hasxd proven otherwise. american citizens, youwere, tiktok told us you weren't

spying onq journalists, you werk in your testimony you state bytedance ccp. each of the individuals i listt chinesew3 communist party incl=x'g chong whoó[■ ist( repo to be the communistñ] party secretary ofxd bytedancew3 and called for the party committee to, quote, take the lead across to, quote, take the lead across all party liness7■ toxd ensurey algorithm is enforced by, quote, correct political direction,ñi jqá ths+ morning,ñi "the wall street journal" reported that the ccp isñiq opposed to axd foe of tiktok by bytedance. quoting a ccp spokesman sayingç fd sale of tiktok. the ccp believes they have the â i have zero confidence in your assertion that bytedance and tiktok areñi notw3q beholden to ccp. jtxd content is a wayr moderating couldn't in your current or previous positions

within chinese w3companies. have employees engaged in content for users china? >> our heeding process is approved by local teams in the various companies. >> the answer is yes, thank you. have any moderation tools been used to remove content on tiktok associated with the uyghur jen know guide, yes or not? >> we do not removeeq$u$at kindf content. tiktok is a place offá freedom expression and li/]z i said, if you use our appi] you can go ont and you will see a lot of users around the world expressing content on that topic and many others. >> thank you. what about the massacre inxd >> i'm sorry. >> the massacre in tiananmen square? >> that kind of content is available on our platform. go and search it. >> i will remind you."■ making false or misleading statements to congress is a federal crime. >> i understand. again you can go on the platform and find the t(content. >> thank you. reclaiming my time, can you say

ñ that marc benioff -- bytedance or the ccpñ cannot use yourñr company for a taiwan? >> we doó[■i] not promote or ñr content■jv at theñi request of chinese company. to this committee and allñ uáq)s we wil keep this free from any >> if you can't say with 100%s7 cñr iktmy■e1 spiedñi on american journalists. can youw3 say neither bytedance- >> i disagree with the characterization that it is spying. it was an internal investigation. >> yes or no? can you doñr surveillance of otq americans? >> we will protect the u.s. user data and fire itlp all from all foreign access is a commitmentx

we've given to the committee. >> my question is, canñri] you certainty thatt( neither bytedae nor tiktok employees can target other americans with similar surveillanceq techniques as you tere t given our commitments. t$(v any jfgovernment. >> the doj is investigating this surveillancei]u■ right now. today, toçó hear that tiktok is weapon by the chinese communist partyt( to spy on you and manipulate what you see and exploit forxd futureñr generati a ban isi] only axd short-term to address tiktok and a data privacy bill is the only way to stop tiktok from ever happening againt( in the united states. ié@■ yield back. i now yield to the ranking member for five minutes. >> t a(k you, madam chair.

let me start out byi] saying,a5 don't find what youw3t(t( sugge with project texas and the firewall being suggestedfáq to whoever, wilswbe acceptable toxp me. in otheíú+ords, you know, i still believe that the beijing communist government will still control and hav=d■i5a■ the abil influence what you do and so te) idea, this project texas, is simply not acceptable. according to a recentúpl =iq■ tiktok is on-9■ target to make betweenq 15ñr and $18 billion i revenue this year. is that anñi accurateñr forecas? >> congressman,vg as a private company, we areq not sharing ourx-gtr(t&háhp &hc% >> how much money will tiktok make by delivering personalized advertisements,ñi just to■k you 1zwill you give me information? >> again, congressman, respectfully as private company we're not disclosing that.

>> look,xd my concern -- the impression you're giving, ande1 know, you know, i can understand why you're trying to give that impression, is qthat, you know, you're just performingfá some kd right? this is ajfxd benign company performing a public service. maybe you're not -- maybe tá) not what you're saying, but i dofn(uv it, right.!m5e■çóe1 co kinds of money #q■lp collecting about americans that they don't needçó for their business purpos and sell it. it( mentionedi] this legislatio thatvp ranking -- that chair anb have that would minimize data collection and make it much more difficult forfá tiktok and othe companiesú#!■5a■ do that. so if you want to make some commitments today, why don't0-z i'll ask youfá to make commitmes

with regard to the legislation and, you know, you're going to tell me well the bill isn't passedy9 so have to do it. you say you're benign and wantñ to do good things for the public let me ask you, what about a commitment that says that you won't sell the data that youfá collect? >> would you commit to that not selling the data you collect? >> lbvcongressman, ?ñxd believe don't sell data to any datat( >> we don't sell data to datañr brokers. >> i didn't ask you datat( brokers. do you sell it toñv■many?p,7(pr% e1 you could only use the data for ywác■ own purposes, not to sell it to anyone. would you commit to5a■ not sell your data to anyone? >> i didn't ask you about rules. i asked whether tiktok would commit to not sellingxd its dat to anyone and just using it for its ownc purposes internally. details. >> all right. another thing that's in ourxd bi says that we would prohibite1

targetingq marketing to people under the age of 17. would youç'ittxd willing to agro prohibit ta./eut marketing to americans unde ofxd 17? uf forxd advertisers in what t+ey can show to our ñiusers. >> would you be willing to those under 17 in oure1 bill? >> i understand there's some talk and somelpñc3çó legislatiod the country. >> i want youñi to make commitment without the legislation. since you say you're a good company why not. >> it's something we canñr look into. >> we also have in our bill a requirement ofñr heightened protection foró[■ sensitive dat. particularlyq location and healh data. wouldi] you commit to not 1=q%=9z%ñ health datañi unless you get affirmative consent from the consumer? in other words, underfá our bil

those arexd categorized as specifically says i want you to collect that data,jf you wouldn data, would you committ(lp to t? >> in principle i suppo lpnblát gps data at this point and i do not believew3 we collect health data. >> would you be willing to make that commitment you won't collect location andxdjfx#rqp&ta you're saying att( all? >> this is data that's frequently collected by many ejju other . )eóxej$u$ink they should withoute1 affirmative consent. why not make thata5■ commitment meé@?htoday? transparent with our ursz about what we collect. t what we collec0y m#!my problem here isq you're tryidgñ to give the impressionf you're goingz tojfñir beijing and the communist party and trying to@#nvelp the actor, but theñi commitmentsxd we would seek to achieve those

goals are not beingyjva(q todayr they'reqú you're going to continue toht■ gather data and continue to sell data and you're going to continue to do all these things and continue to be underok the ages of the communist party through your, you know, organization that owns you.w3 thank you. thank you madam chair. >> gentlemen yieldsçó back. the chairr gentleman from texas, mr. burgess, for five minutes. >> i thank t(■ xdchair. thank you, mr. chew, for joining i think we've heard you sayñr multiple timesñzthat tiktok is not a chinese company, that bytedance is not aq chinese company. but acc$j%9 lpçóhere, china's commerce ministry said thursday a sale or ;involve xdexporting technology that has to be approvedñi by th chinese government. the reported effort businessq te biden administration would undermine globalñiçó investors

confidenceokq in the u.s. said ministry spokeswoman,çó contim)t )yk]%11■ affirmly oppose it, sh said, referring to thexd forc(÷ñ despite your assertions,xd chin think it's in control oft( tikt, and its software, is that not correct? >>ó[■ congressman, tiktok is no avail!■ inxdjf mainland china a we're headquartered in los angeles and ñisingapore. i'm not saying the founders of bytedance are not chinese nor am i sayi-ue1q that we don't use chinese employees just like many other companies aroundxdfá the world. we do use the expertise on some engineeringçó projects.é spokeswoman it would be a divestiture of xdexporting jjt+h#rom china and china thinks they own it even thought you do not. madam chair, i would like to put

r into the record. >> without objection. >> i wouldn't askedú@l you tot( discuss privileged attorney> i prepared for this hearingx with my team here in d.c. directly provide bytedance instruction for your testimony today? >> congressman, this is a veryx high-profile hearing. my phone is full of welllp wish, but i prepared for this hearing with my team here in d.c. >> are you willingr helped prepare you for this hearing with theñiñi committee? >> youc can -- >>e1 i can follow up with you. >> can you guarantee that noñrñt at bytedance hade1 a role in preparing you for today's hearig$ >> like i said, xdr this is a high-profile hearing. a lot of people arount■3 the wod were sending me wishesokq and

unsolicitedt;/s advice. i prepared for the hearing in d.c. >> are the attorneyse1 representing tiktokxdv!tár @o co representing bytedance? >> ixdt( believe so. what percentage of tiktok revenue does bytedance retain givñl me ae1q ballpark estimate you don'txd precisely know? >> like i said as a private company we are not prepared toj kd8publice1 today. >>bv(z we askt( you to get back( to axd ballpark, we're not aski for the precise figures,çó so t committee can have some understanding of the percentage of tiktok revenue bytedance r]■%9mñ >> i understand the question.e1 company will not disclose our financials today. >> prior to today's hearing did anyone affiliated with the chineseht■ communist party disc this hearing with you or anyone else on tiktok's seniorqá, managemenum @r(t&háhp &hc% >> congressman since i've been ceo of this company i have not had any discussions with chinesñ

governmentñi5a■w3ht■q officials >> [ inaudible ]. >> but what about the chinese(i k itself have any of those officials discussed this with you? >> like i said i havexd not had any discussion with chinesexd government a5■5a■officials. i don't know the political affiliationñr of everybody i spk to, so i can't verify the statement. >> a question in a different direction a few weeks ago the committee had q■[ fieldu■ hearin mcallen,t( çótexas, on the issu fentanyl and illegal immigration and one of our witnesses random judd, veteran border patrol agent, saidñrr immigration, one of the wayrin cartels advertise their services throughout the world and convince people to putñi themselves in their hpds and come to the united states. the cartels all use social media platforms. are you aware of this?

>> any content thatxdxd promote humant( abuse is viee1 laytiveq ourlp community guidelines. remove them from our platform. >> it would be veryjf helpful i you would share with the qúc=55%qq■ examples of how you have removed people because what we heard at the hearing was thap tiktok was one of the platforms that recruitst( adolescence in e united statese1 to help with transporting peoplexd who havew beene1 -- into the country as wl as contraband substances. have removed from your platform? >> i will be delighted to check with my team and be collaborative. >> the gentleman's time isxd çóo expired. the chair recognizes the lady from california forlp five minutes. >> thanke1 you, madamñr chairwo. mr. chew, thank you forfá beingl

here today. ofy first and toplp responsibility to protect ande1e1 defend. protect and defend our constitution and the national security ofp,■$x■ our country. i viewfáçó thisú are many parts not part of our!o national security in my view, but first and foremost for our5 from bytedance, i would like to askw3 you sum! questions about thatq and how a severancecr terms of the relatnships7■ with

bytedance, how usere1 data, american user data, would beokr protected? article 7e1 compels companies t provide data. article 10 makesxd the reachw3 the law extraw3e1 territorial. now this is very clear. i don't need to read all of it into the record. but those aree1xd the laws of t prc.t( howi] doesçó bytedance --ñi howr tiktok convince thelplpe1 congr be a clean break?e1 why wouldfá the chinese governmt

side-step their national law, including article 7,xd article , in terms ofñi usert( data? >> thank you for the question. glad you asked this.e1 as i said in the opening american data to be stored on american soil -- >> i understand that. i understandd but you're side stepping or i u't read anything inu■ terms of tiktok, how you can actually opening statement about a firewall relative toñfá+■ the d. but the chinese government has thatx÷÷ñdata. how canñx> congresswoman, igeuz seen no evidence that the chinese government has access toc that data. they have never asked uss7■xde1 have not provided --

>> i find that prepost ster russ. >> i have seen no evidence of this happening and in ordere1 t assure everybody here and all our users, our commitment is to move the data into the united states to be stored on american soil by an american company overseen by american personnel. american companyxd asking for data. >>e1 well, i'm one that doesn't believe that there's really axd% private sectorxd in china. and whether you look at theirt( national law and what specifically these two articles, article 7 and 10, are veryjf clear, so i think thate1 there a real problem,ok a real proble relative to our nationallp secur))cñ aboutxd the protectiof the user data. i don't believe that tiktok -- that you have said or done anything to convince usxd that

that informatioe information of 150çó millionxd 1 a&1ár(p's, that the chinese government is not going to give thatr >> congresswoman -- >> can you tell me who writes the algorithms for tiktok? >> today the algorithm that powers thexd u.s.q user experie isxdok running inxd thee1 oracl infrastructure. yes, initially there were parts of the source xdcode, an infrastructurenb■ layer that doesn't touch the user experience that's a global efford■ç including built by engineers in china like many other companies by the way. the phone you use and the car you drive is a collaborative effort. today the business side and main parts of thed written byfáq tiktok employees. congresswoman, while we are offering is xdthird-party monitoring of our source code.ñi

american companies or otherwise, that has actually done that. because we are saying we want to give youe1 transparency andñió[ on third parties tofá make suree get all we need about the experience. >> my time is up and i yield back. thank you.w3q >>cñrq yields back. pleased to yield to the e1 minutes. >> thank you, madam chair. unlike the chinese communist party,t( the united states is - believes in individual freedom, innovation andñixdlp entreprene. that is, in part, why congress enacted section 230 of the communications decency act. communications decency act. the on-line ecosystem in the united states andr companies from being held liabli forq good faith efforts to moderate theirxd platforms. a federal judge in pennsylvania found sectionçó 230 protected tiktok from beingxd held ju$ee1çóq death of a

10-year-old girl who th of a challenge known as the choking challenge. tiktok accurately pushes video on her feed. this is one of the many devastating examples ofe1 childn , content promoted by tiktok. 230 was never intended to shield companies like yours from amplifying dangerousçó andxdñi life-threatening content to children. do you consider this to be a good faithq moderation? >> congressman, aslpqçó a fathe myself, whene1 i hear about the deaths of young people it's heartbreaking. >> do youp,■ find that good fai mod ht■moderation? >> section 230 is a complex zrááuq >> yes or no. >> weñi are focused on saturday >> okay. i'm going toñr havejfxd to take >> do you believe tiktok deserves this láuk protection? >> i'm sorry? >> do you believe tiktok

230? >> as you pointed out 230 has been importantlp for freedom of expression on the internet. one o&@?!■e commitments we've given to the committeet( and uss .?■ important tot( preserve tha. bar. >> from your own testimony when you told us andfá repeated a5■i we'll keepñr saf;jñ particularl teenage>g the commitment internally in all my priorities which is to my priority. >> this company is a picture perfect examplei] of why this committee and÷ take action to amend section % communist party1s9■ access user data and you did not have a you heardxi5■ a little bit. i want to be sure of this

answer. are employees of bytedance subject to chinese law,jfxdt( including thgñ e12017 national intelligence law, which requirer support,ok assist and cooperate with statet( intelligent work i accordance with the law? >> like many american companies we lie on the global workforce including engineersq in t(china >> yes or no. >> yes, but we are buildingr texas ande1 committingw3 to firl all protected data. >> i'm taking that asi] a yes because again yourqñi article 7 the 2017 national intelligence li.m which i just r inok addition, askedfá earlier, 2014 counter espionage law states that when theok state security investigatesq-and understandq a situation of i] espionage, and collectlpe1 releá evidence,xdlpfá the relevant organization and individual,

does not say may,fáb.■ it saysñ provide it truthfully and may yes or no? do any bytedanceçó employees in china including engineers have data? u. stored byu■ default in the orac cloud structu >> the question is do any 1váed including engineers, currently have1jttáj toq u.s. data? >> congressman, i would appreciate this is a complex topic. today all data -- >> yes or no. it's not thatxd complex. >> yes or no do they havet( accs to user data?tamoyrñxd afteis d no. member, project texas -- so i think i'm taking that as a no because agai

f l)+v year when bytedance confirmed some of its chinese employees accessed tiktok data physicale1 location ofñifá journalists, so i took that as a yes from an earlier answer? earlier this week youe1 posted tiktok video askingx#psq)ican users to mobilize in support of your appq and oppose the potential u.s. government action to ban tiktokw3 in the unitedew states. relationship between your company and thexd chinese communist party, it#■ impossible áx video is anything different the ccp requires chinese companies to push on its >> the chairfá recognizes the ly from colorado for five minutes. >> thank you very much, madamxd chair. mr. chew, like my colleagues, mr. chew, like my colleagues, i'm concerned influence of china on tiktok and what that does for u.s. users.

but i'm also concerned about how the content in tiktok isçó bein distributed particularly toi] young fápeople. this isñr not a problem unique tiktok. but tiktok+■ has 150 million uss inxd the unitedfá states. and so i think you'll agree that tiktok hasçó a particular responsibility toe1 monitor content to make sure it's safe and accurate, would that be fair to say? >> i agree withq that. >> you know, i know you said in 13 and under 18e1 and so on. but i'm -- i know it won't be newsq fori] you, that computer some of those restrictions quite frequent=ió9 th even if they have parental oversight.ìáhp &hc% so what i wantq to ask you, isú rather than puttingzv■ the burdr

on young people and parents to accurately put in the birth date accurately put in the birth date and so on when emisqing for tiktok, i want to ask you what tiktok can do to make surexd to monitor this content? and i wa examples of some of the extreme content. mr. lata talked about the blackoutlp challenge andñzthexd t people's safety but there's also extreme content around health care information. in one study, 13ñrxd out of 20 results for the question does mugwart inducet( abortion, it talked about herbal so-calledxd abortizations like papayañi see, which don't work, andok so if people searching for int0nscái)t on safelpu■ abortions went on çó tiktok, they could get devastatinglyxd incorrectl information.e1e1

another study showedt( that tikk was --e1i]e1t( had a tuer toalxo fabricatemf%is from grapefruit. there's two problems with that. hk you can't even make that from grapefruit. again, this is ae1 really serio er((á health care information that people looking at tiktok are ableok to get. in fact, it's being pushed out to them. so, i want to knowe@%rom you, ad i will give you time tolpe1 ans but the current controls are not working to keep this information mainly from young people, butfá from americans in general.

to strengthen its review to keep this information from coming across to people?jfñijf >>xd thank you for the question congresswoman. theq dangerous misinformation yu mentioned is not available on our platform. >> i'm sorry to report, it is available to them. here and say wexd are lpperfect. we work very hard -- >> how can you make yourself more perfect? i don't wantlp you to say it's t there or you apologize. what can you do to limit it as o much as possible, more than what you're doing now? >> wet( invest a significant amount in content moderation. >> i know you're investing, but what steps are you taking to improve the ai or whatever else you're doingñi to limit thisfá content? >> for example, if you look for certain search terms, we do direct you on tiktok to safety resources. that's one of the things we have done. we will continue to invest in

this and i recognize and fully align with yo our industry that we needfá to address. i'm very much in alignment.fá there are people whoxd do spout to take that very t( seriously, invest in itfá proactively, identifyxd it and remove it from our mras form. >> i'm going to stop you right now. i asked you specifically how you were increasing -- how you are trying to increase your review of this, and you gave me onlyc generalized statements that you'rexdfá investing, that you' concerned, that you're doing work. that's not enough for me. that's not enough for the parents of america. i'm going to ask you toxdxd supplement your testimony and have your experts tell me what you're doing to make this a jt qscrutiny, not just at the hearing.lp @r(t&háh% i yield back.

>> lady yields back. chair recognize es the gentleman from north carolina for five minutes. >> thank you for holding this important hearing. i appreciate the e1ñrwitnessv] mr. chew for making yourself available today. while many consider tiktok to be a sharing app, it's been surveillance program, collecting vast swaths of people worldwide1 in includes data from personal devices of federal employees, contractors and most concerning, u.s. military service members and their families in places likelpñi fort bragg in north carolina. i haveok serious concerns about the opportunities tiktok gives jujz and women in uniform. this data can bec harvested and used for blackmail for espionage and reveal troop movements. while department of defense have banned tiktok on moste1 governmt issued e1devices, i believexd m needs tor

app from the personal devices and having an appoh9■ in one make sense to me. i believe the dod should look at tiktok on u.s. military mr. e1chew,ok does tiktok accese homeeiiu)k#i network?x >> only if the user -- i may not understand. >> ifñixd i havew3jf tiktok on and i access my homeñr wi-fi, ds ñ >> it has to accessxd the internet. > access other devices on that >> congressman, we do not do anything beyond industryko■ nor. i believe the answer to your question is no. it could be technical. let me get gak to you. >> iq would appreciatir you to answer that. i would like to change questions.

do you receive personal employment salary, compensation or benefits from bytedance? >> yes,ñi i do. >> what is your salary from bytedance? >> congressman, if you don't ñi mind, i would preferñi to keep compensation private. >> you personally have any company shares orxd stock in bytedance? >> congressman, if you don't mind, i would like to keep myìá% personal assetsñi ñiprivate. >> is tiktok the only source of compensation? what is your other source ofokñ compensation outside of tiktok? >> it's myok o(u, source ofxd compensation. >> do you have any financial debts oryy?■ñr obligations to bytedance or any other bytedance affiliatedqxd entity? >> personally,xd no, i do not. >> does yourxd management recei separate salary compensation or benefits from bytedance?q> we receive salaries from the entities we aygñ employed in, bt we do shareok in employee stock option plani] available from

bytedance top company. >> ñiso, yourq primaryñia5■ sals from tiktok but you have other compensation that comesko■ direy from bytedance? >> you can characterize it as that%■! >> does+vx■ your management tea havelp stock in bytedance? >> yes, some of our employees are compensated in s tiktok. >> does tiktok share technologicalñiñi resources wit doin or the two i.t. systems connected inñiko■ any way? çó . >> currently. there is shared technology or interconnected i.t. systems? >> with congressman, içó have t get back to you.i] we could all be using micref] windows. >> if you could get back with details on that.

data? >> by both doin andlp tiktok? >> i do not believe so.+■ >> i don't believe so. if i could5a■ getñi tlnb■ -- >> i'llu■ find out. >> a pattern of misrepresentation from your company in regard to the amount of extent ofok data you're collecting as well as how much as been accessed inside china.!■ they have bee&■] collecting dat on u.s.ht■ users and i'm

referencing project raven, which was first reported on by "forbes" last october. their investigation reveai -- i'm sorry. do you want to respondd >> yes, congressman. we do not condone the information ofñr certain employs to access tiktok datalp forr confidential information. welp condemned these actions. after learning about them,v found a highly lpreputable law firm and took swift disciplinary action against employees involved and implementing meashm■ to make sure this again. we made this team availableytz you. i believe we have briefed many of you on this committee extensively and i'll make them available as part of our transparent commitment. >> thank you. my time is expired. t)ip r(t&háhp &hc, >> the chair recognizes the lady from illinois for five minutes.■

>today in "the wall street journal,"t(d china'st( commerce minister imp

that you mention. now, the whole discussion on.b%% this -- the resolution of this is an ongoing and developing fá event. we'll continue to pay attention to this and we'll get backçó to you when we have more specifics. >> so, if it's an ÷uájjt debate,i] apparently, with chin so it'sfáq hard to say with any certainty that china would not have any influence. but let me ask another question. so, last fall along withfá chai and co-chair of