429. and oil prices which yesterday had risen as well are up another 1.5% today, $73.40 a barrel for wti. that does it for us today. but we will be right back here with you tomorrow. >> cpi or cpi. >> that's i. >> forget which. one's first cpi. one's tomorrow. >> one's thursday. we also have today and tomorrow powell speaking before congress. we'll see you tomorrow. right now it's time for squawk on the street. >> good tuesday morning. welcome to squawk on the street i'm carl quintanilla sara eisen, mike santoli at post nine of the new york stock exchange cramer and faber have the morning off futures a bit red ten year back above four and a half as the president signs those tariffs on steel and aluminum. and the eu pledges retaliation. powell's on the hill. they'll likely be a lot of questions about all of that. our road map begins with elon musk, though, escalating his feud with sam altman and openai, making this $97 billion bid for control of the company.

we've got the latest. >> plus. >> coca-cola, the biggest gainer on the dow this morning, easily topping earnings estimates. >> on. >> strong global demand. >> the company's chairman and ceo, james quincey, will join us to discuss next hour. also, shares. >> of shopify shares are moving higher. >> in the. >> premarket despite a. >> weaker outlook. >> we're going to discuss the quarter with. >> shopify's president. harley finkelstein. it was. >> a pretty good quarter across. >> the board. >> let's begin, though, with the president's 25% tariffs on steel and aluminum imports and the fed chair going to capitol hill to testify on the economy before senate banking today. obviously, lots of buckets that lawmakers will quiz him about. but one might be the effect of the tariffs would be retaliation, the prospect of even further industries getting affected. and what that does to things like capex intentions, which we've got to look at today. >> and we. >> don't expect him. >> to really say anything as far as what it will mean for fed policy, because that's been his posture. >> and it's too soon. >> to know. is it a one. >> off inflationary. shock or is it something more prolonged? >> is it something the fed would.

>> have to respond to? >> these are all questions investors have. but he hasn't been able to, nor is willing. >> to give any. >> sort of. answers or or speculation. >> about what they might do. >> this is one of those interesting. >> two days of testimony. >> where. >> tomorrow. >> usually the second. >> day, is very boring and he. >> repeats himself. >> but tomorrow might be. >> more interesting. >> because we get. >> cpi out. tomorrow morning, the inflationary number. >> and look. >> there's been. >> a. >> little bit. >> of angst. >> lately about rising inflation. >> expectations certainly saw that in the university of michigan. >> didn't get. >> backed. up in the. >> new york fed survey. >> so that's. >> a good thing. >> but we've seen the breakevens, especially on the short. >> end, move a little higher, which indicates. >> there's a little. >> bit of worry, mike, that all these tariffs. >> are eventually going. >> to. >> lead to higher inflation. and that's the backdrop. >> for powell. >> without a doubt. also though a little bit of hesitation about what we've seen the last couple of years, which is inflation coming into the year hot. and so january actually was a cause to have a rethink as to whether inflation was coming down. and so that's the environment. i think the idea of him trying to

send the message of wait and see, we need to see what tariffs mean in practice. we need to have it flow through. the data fits right in with his preferred mode right now, which is there's not a lot of reason why fed policy should be changing very quickly. whether that's true or not. i think that's where he prefers to sit. feeling like we made the 100 basis points adjustment. right now the economy is fine. you know, you can kind of make your case as to what the actual underlying trend of inflation is. and, you know, interesting at the at the press conference recently, he had to or actually more in december, he had to give a nod in the direction of some people on the committee, clearly tried to make guesstimates about what the tariff and policy impacts would be on inflation, and it changed their dots. well, he kind of doesn't want to do that, but he had to make that accommodation there. so i think that's a good debate as to whether, you know, for example, the steel and aluminum tariffs. yes. big impact on a really narrow part of the economy in the stock market. let's be honest, it's not really a huge swing factor. we've kind of dealt with it before. we saw the price moves in. you know metals and mining

are 0.4% of the s&p 500 consumers. big consumers of steel and aluminum are bigger, but they're already trading at depressed multiples. so it's not going to be the mover of the market. and it almost seems like it's a targeted and tactical gesture as opposed to across the board. although the president yesterday said we're going to look at cars, this is it. we're going to look at chips. we're going to look at pharma. to sarah's point about breakevens, we do have the five year breakevens close to two year highs. and then this nfib survey, which i don't really like to pay a lot of attention to, it's so politically loaded. but today they do come out with the trade with the uncertainty index at the third highest on record. i see david rosenberg's already out with the. >> piece saying. >> the honeymoon is over. >> yeah. >> you pay. >> attention to it even. >> though it's politically. >> loaded, carl, because that's how small business. >> owners are feeling. >> and they. >> and they often are political. and they care. about issues relating to their business that come. from the government, like inflation. >> has been. >> a big problem in the last few years. >> look. >> the small business optimism

soared. after the. >> election of president trump. >> it's come down a little bit. >> but it's still above 98 and it's still above. >> the. >> long term average. the uncertainty index i think we charted that. >> one a little tick up because tariffs that that yields. >> uncertainty for. >> small business. and small business. >> gets punished worse than. >> big business when it. comes to. >> having to pay. >> higher. >> costs for things. >> that they. >> have to. i mean, to a degree that labor availability has been an issue too. >> that's you. >> know, i think one thing to keep in mind is uncertainty doesn't mean we're sure bad things are coming. you just don't know. it's literally uncertainty. and they you know, historically this is a group that's like really all it cares about is taxes and regulation. and so they think. >> those things are going to. >> be beneficial down the road. i also like to emphasize with this survey just. how small these small businesses are. three quarters fewer than ten employees, 85% fewer than 20 employees. they're not like making massive plans and really expanding, but they want to make sure that they have a path to keep in business and keep.

>> but i think if we. >> did a survey of big business or medium business, it would show the. >> same thing. >> yes. >> it wouldn't be. >> optimism off the election. on those issues. >> ceo confidence. >> is at the highs. >> better deregulate. i mean, we talk. >> to ceos. >> all the time. >> about. >> how much more optimistic they are about a pro-growth policy. >> coming from the white house. >> we're going. >> to talk. >> we're going to mention what david solomon said this morning in key biscayne at this ubs financial services conference about exactly that. the thing, though, about uncertainty, mike, is whether or not you're willing to take a leap on capex in the face of that uncertainty and the capex index on nfib did fall seven points. that's the biggest drop since 2019. what was going on in 2019? a lot of the same stuff we're dealing with. exactly right. yeah. and so even if it is just are we going to buy, you know, one more truck for the landscaping business that is capex. so i get that, you know, my mantra on uncertainty, i was i was cheering when powell said this last meeting in the press conference, which is uncertainty, is the essence of existence. if you feel certain you're missing something and you have a blind spot. so uncertainty means you're recognizing the range of

probabilities that we're in. and usually, strangely enough, when policy uncertainty indexes are at the highs, it means usually bullish forward going for stocks. but that's usually because the market's been struggling. it's not really been struggling. >> i mean and also i just think we. >> should. >> mention with. >> tariffs you know these steel and aluminum tariffs are out. and guess what. all the steel makers are up premarket. you know this. >> is. >> great news for them. they welcome this sort of. thing because they have to compete with everybody. >> else when it comes. >> to steel. >> and just for. >> some facts here. >> steel and aluminum we do. >> import a lot. >> of we're a net importer. >> we are a net importer of both of them. it hurts canada the most. they're our biggest import. >> partner of both. >> steel and aluminum. >> here's aluminum. >> look how much of our imports come from. >> canada, for instance. >> and then. >> and just for. >> perspective. >> about a quarter of all steel in the us is imported from neighbors mexico and canada or. >> overseas, like. >> japan, germany. >> south korea. >> canada definitely bears. >> the brunt. 58% of u.s. >> aluminum imports by volume,

followed by 6% from uae, 4% from china. so these are some of the countries that get hurt because there aren't exemptions for some of. >> our friends. >> right. although maybe for australia, i think is one of the things. >> by the way, we're. >> not going to build a single new aluminum smelting plant in this country. so in other words, this is an industry where there's kind of global overcapacity and the tariffs are about kind of protecting and subsidizing your domestic producers and, you. >> know. >> changing their consumption patterns. >> no, no, of course, i'm just saying that what you understand what the objectives are here, it's not like we're protecting as opposed to reshoring. reshoring in this case. meantime, this new chapter in the battle of the tech billionaire sam altman, rejecting that $97.4 billion bid by an elon musk led group looking to take control of openai. cnbc's arjun kharpal caught up with altman at this ai conference this morning in paris, which is the locus of pretty much all global attention today. hey, arjun. >> hey. >> good morning carl. look. one of the things and. >> the. >> rationales behind the deal from elon musk, which is very

important, is he thinks openai has strayed from its goal to create ai that. benefits humanity. and that's why he. >> says he's. >> put in his bid. but what does sam altman, the ceo of openai, thinks? this was amongst the questions i put to him. why do you think musk is putting a bid in? >> now let's listen in. >> to what he had to say. musk bid for openai. how serious are you taking it? >> not particularly. >> not particularly. why do. >> you think he's doing this? >> to slow down a competitor. >> and stargate. >> you have. >> the funding. >> i'm not the one who tweeted funding secured. i just actually. >> try to show. >> up and, you know, build. >> the thing. just a quick one. >> end game. >> what is the end? >> just a quick i don't know curious. i think it's to slow down a competitor and try to catch up with his thing, but i don't really know. >> yeah, but you. >> know. >> well. right. i to the degree anybody does. yeah. >> so look, a few things to unpack there. firstly sam altman saying it's a slowdown. >> a competitor. >> remember elon musk has x.ai a sort of rival service that's behind the chatbot grok as well.

>> there's another interesting. >> part of that stargate. when he. asked if he had the funding for that, this was something elon musk claimed that. >> openai and other participants. >> didn't have the funding for. and there. >> was another. >> dig from sam altman towards elon musk, saying, do you remember. who tweeted out funding secured? that was that infamous. >> tweet, 2023, when elon musk said he would take tesla private for four for. >> $420 a share as well. so there's real bad blood. about these two. but you mentioned. >> at the. >> top there, carl, about this is the focus of. >> the world right now. >> a lot. >> of. >> world leaders. >> in attendance. >> and ai ceos in attendance as well. and there was a big summit earlier on today with us vice president. >> jd vance. >> the. >> prime minister of. india as. >> well, and many other. >> countries in attendance. and jd vance gave a speech. there in which he said that america is a. >> leader in ai. but in. >> ai. >> but also. >> suggested that. other countries perhaps were overregulating. >> when it came to what is a very. >> rapidly developing. >> and still quite nascent technology. let's just listen in to his comments. >> the trump administration believes that ai will have

countless revolutionary applications in economic innovation, job creation, national security, health care, free expression and beyond, and to restrict its development now will not only unfairly benefit incumbents in the space, it would mean paralyzing one of the most promising technologies we have seen in generations. >> remember, the european union has already enacted the eu ai act, one of the world's first major. regulations around artificial intelligence. >> and it's something that's been. >> heavily criticized. >> for at this point. and just after. >> that, it was it came out. >> that the us and uk didn't sign the agreement. >> that was agreed upon here amongst. >> the world leaders. >> so a lot of tension here geopolitically around ai and around tech. for now. >> guys, back to you. >> i just think it's curious. >> that they're having this big global. >> ai conference in. >> paris. in europe, which is nowhere on ai. >> and i'm. curious if there are deals being done. if. >> the europeans. >> are courting. sam altman to. >> sort of take what he's doing

in the us. >> in a more. >> global, and if there's promise there. >> it's a great point, sarah. look, the conversation has so far centered around the us and china, and europe has been kind of left behind or caught in the middle of this conversation. now, there was a big announcement this week from president. emmanuel macron of france, who. >> pledged around. >> ■k7109 billion into ai infrastructure in france. it was something he suggested would be akin to the stargate project over in the us. so it will. >> be interesting to. >> see whether that galvanizes. >> some support here. >> but look, europe is creating some companies in the ai space. you've got mistral ai here in france, which is seen as a competitor to openai, and trying to develop competitive products to openai. and there's a number of other companies across the continent as well. so there really is a sort of. >> a europe. >> here throwing its hat into the ring and saying, we are here. and we do feel we can compete on the world stage with the us and china. >> yeah, it was interesting. arjun, during the olympics to watch france try to add an

ancillary story about their commitment to growth, tech incubators and all things ai. we'll hear from you later on today, i hope. arjun kharpal joining us in paris, by the way. altman did go a little farther in some other interviews today. i wish he would just compete by building a better product. probably his whole life is from a position of insecurity. i feel for the guy. i don't think he's like a happy person. i mean, you get a sense of how personal this is. >> well, and then musk shot back on twitter, calling him a swindler. it's drake, kendrick lamar. here we go. it's like super bowl. >> halftime show. >> on a huge stage. >> with like, hundreds of billions of dollars literally in motion based on, you know, these relationships or these kind of competitive calculations is kind of amazing. one thing you know, that's been kind of notable is the sharp pullback in tesla shares, kind of not really sure exactly what it might mean if anything. first of all, it's just unwinding like a one month massive sprint higher. so it's not as if it's down a lot. it just had its worst week since october. right. and it's down almost 30% from the highs. but

it's only back to where it was right after thanksgiving. so you have to keep that in perspective in terms of this move. but just this lack of clarity about intentions, what it would mean for him to get liquid. and, you know, obviously the intention, you know, what's interesting is tesla year to date versus byd. yeah. where you get a sense of how the chinese competition has heated up. and then there's a note out today about musk distractions. we're once again thinking about how much time he can spend on any one thing. >> well, this, this, this ai. >> back and forth. >> and the fact that he's. >> building such a competitor. >> i. >> mean. >> here's oppenheimer. well, tesla shifted focus to being a physical ai play. >> we view. >> musk's bid for openai as a distraction from some of tesla's challenges. we also believe ceo musk political activity has fans in. >> certain circles. >> but that his public life risks alienating. >> consumers and employees. as the trump administration tests the limits. >> of its power. >> kind of a cynical. >> take there on what's been going on with elon musk. yeah. >> you know, initially it. >> was it was embraced. >> tesla shares. >> ran up into. >> the election. >> and now they're projecting

images of his salute on the walls of tesla factories in europe. right. >> and part. >> of the run up was just kind of the atmospherics. but also you really, really had to buy into the physical ai story and these massive estimates about how many robots are going to be bought, because the actual car business has been been struggling in the near term. >> that's always. >> the thing with tesla. what's it about? what's it being valued at? >> when we return. >> we're going. >> to take. >> a closer look at coca-cola's earnings. >> beat stock. >> on the move. >> also, do not miss. >> an exclusive. >> interview with the company ceo, james quincey, coming up in the next hour, taking a look at futures. >> as we head. >> toward the opening bell about 15 minutes away. dow futures. down 132. nasdaq futures down 139. a lot more earnings movers to get to as well when squawk on to get to as well when squawk on the street comes right back. -what've you got there, larry? -time machine. you gonna go back and see how the pyramids were built or something? nope. ellen and i want to go on vacation, so i'm going to go back to last week and buy a winning lottery ticket. -can i come? -only room for one.

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omni luxe ledcom. >> shares of. >> coca-cola jumping in the premarket. >> the dow. >> component reporting quarterly results that did beat.

>> wall street estimates, helped by. growth in. >> case volume, but also growth in prices. >> as well. >> the fourth quarter. >> earnings. >> $0.55 better than. >> the. >> 52 expected. >> they saw global volumes. >> grow 2%. >> volume growth. returned to. >> the us, which. >> was a. >> big factor. >> because it had dipped last quarter. there was some concern. >> about that. >> they issued full. >> year guidance calling. >> for organic revenue growth. >> of 5% to 6%, which is lower than. the growth. >> that they. >> saw in 2024. but that's across. >> the board because. >> these companies just aren't. >> getting the same kind of price increases. >> what stood out about this quarter is that it was. >> broad based growth. across geographies and. across categories. i did. >> talk to james quincey, the ceo, a little bit just to get. more color. >> on the results. >> i mean, globally, the middle east got. >> better because they had some of. >> the. backlash to the war last year. so they're lapping that. >> china got better, he said. still lukewarm economy there. >> western europe was. >> a. >> little soft. >> they saw broad based category. >> growth. >> as i said. >> and in the us it's brand coke and fairlife. the milk

continues. >> to drive. >> the quarter. >> also, i thought this was interesting. color away from. >> home did better than at home. >> in the us. >> so people are still prioritizing those experiences going out. >> eating at. >> restaurants. >> going to concerts. we've seen that in the travel industry as well. as far as we talked about, you know, in pepsi, for instance. >> and some of the other. >> staples and food companies. there was discussion this quarter, hershey. >> to about. >> a more health conscious consumer and also. >> more people being on glp one, quincey said. to the extent that they're. >> seeing issues. >> it's not. >> coming to beverages. >> that he's not. >> seeing that. >> and then obviously tariffs and issue aluminum tariffs now in place, he said that will that will matter. >> we import. some from canada. >> it's not a mega number but it will be material. we have hedging. >> but we'll. >> eventually hit. >> the system. so he. does expect there to. >> be an impact. >> it's not in the guidance yet. overall guys it just shows that. >> they have a. >> portfolio where they have high prices and low prices. and in this kind. >> of environment where. >> there's a. >> lot of sort of. >> discrepancy by income level. >> it's working for.

>> them right now. sugar and not sugar. you know, it's pretty pretty broad and diversified. you know, also the stock has almost never as it is right now traded at a discount to the s&p 500. like in the history of forward estimates. it's now at a slight discount. so 21 times because the s&p is expensive but also on a relative dividend yield basis. so i just feel as if it's gotten kind of compressed on the valuation side, because the rest of the food industry and the staples have been so bad and coke has outperformed, but just by kind of going sideways. >> it's been so bad. >> the staples business, you know. it's like we've talked about alcohol for instance, they've gone into alcohol, but they're. >> not seeing it because they're the fastest growth. >> in alcohol. >> these pre-mixed. >> drinks, that sort of thing. we're going. >> to talk. >> a lot. >> more. >> with james quincey at the. >> top of the next hour at. >> 10 a.m, exclusively here on squawk on the street. >> meantime, take another look at the premarket. a lot of movers to get to today. there's humana, carrier, goldman autonation shop dupont marriott. when we. >> come back. >> for 32 years, red chip has been discovering tomorrow's blue

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>> we mentioned this fight between sam altman and elon musk. it's going to draw a lot of attention to tesla shares here. as we're looking at a down week of about 12%, of course just had its worst week since october, as we mentioned a few minutes ago, by the way. also keep an eye on musk's wealth, mike, which is now below 400 billion for the first time this year. yeah, obviously hadn't popped above there probably since until late last year. it's obviously largely about tesla, still a $1.1 trillion market cap. even with this decline in tesla. and look, it just feels like they are in this unwind period. what's interesting is it's also accentuates the massive divergence within the mag seven. you've really had obviously we've talked about meta, but nvidia has perked up quite a bit. microsoft really struggled and it's been you know, now it's going on ten months where microsoft really hasn't been a. net contributor to max seven. also excluding the mag seven. the s&p this year is up like almost 6%, whereas it's

more like under 3% for the index on market cap weighted. it's finally. >> going to be down today. is that. >> is that it looks like it looks like it might have finally. >> day win. >> streak finally empty the tank possibly there. it's been a fascinating revaluation of that stock. it's not just that the earnings revision momentum is there. and obviously they're seemingly in the right sweet spot in terms of ai, open source and how they can utilize. >> the presidency. >> the trump presidency, obviously, they've been viewed as very in a favorable spot there. but also it's sort of pulling valuation premium from alphabet. it really just completely diverged from what they've really been in lockstep for a while and actually trades pretty close to where microsoft does, which was the richly valued one in the group for a long time. they're both like 28, 29 times at this point. that's the other reason meta was able to have this run. it was not a super expensive stock just given the earnings call. >> yeah. >> 16 in a row is that that's a streak. looks like 17. will be tough as mike points out. but we'll see what happens. let's

get the opening bell here and the cnbc realtime exchange at the big board celebrating 50 years. it's saturday night live. we're going to. >> talk. >> with some of the cast members in a few minutes. heidi gardner, laraine newman ringing the bell. at the nasdaq. it's telecommunications provider global star. >> celebrating its. >> transfer to. >> the nasdaq. >> mike, a lot of market analysis yesterday. i know btig, for example. that's the response to snl. you can never go wrong. >> that's right. yeah, yeah. >> you got snl on on a tuesday. i mean, it's a little bit of an extra, extra treat. but btig yesterday said in years where the s&p does not test its 200 day, and every time since 90 it does the following year and three out of five times in q1. and we didn't do it last year is the point, right? so yeah, i think that's a kind of a relatively safe notion to say

we're probably going to get a real correction this year at some point. a real correction doesn't mean you plunge through the 200 day, but just the odds would suggest that you have other things working in that direction too, which include, you know, election year after there was a party change, second half of february sometimes is bumpy. and i think more more broadly, though very selective market right now. and that's not necessarily a bad thing. it's sort of like the market's kind of keeping itself supported with, you know, the themes that it's really willing to believe in and allow other stuff to cool off. i think that market breadth has improved, but now has come off the boil. i only have 60% of all stocks really in an uptrend right now. so, you know, it's not necessarily an all good or all bad, but it's a very kind of selective picture. arguably for active managers you should be able to make some hay. but we've said that probably every year for the last ten. so the 200 day would take us down to what, 5660? >> yeah. >> and that's an interesting area too, because it's basically the mid year 2024 level. so

there's been this idea out there. if things really crack, that would probably be a likely area of support. but there's no saying that, you know, we make a beeline for that for any reason. it's not really the market itself is not showing kind of really prominent stress fractures in my mind. credits. okay. obviously the volatility markets. >> are are. >> well in balance. just because the index itself has been kind of sideways for a few months. >> just i just noting that. >> energy is. >> continuing its outperformance. >> it's on top of the. >> market today. >> has been for the week. >> and. >> for the month. >> after lagging most. >> of last year. >> oil prices. >> continue to push higher here. >> they kind of. >> defy some. of those. >> worries about. >> tariffs and the impact on. >> on economic growth. >> and you know, materials. >> are another sector that are higher today. >> commodities across. >> the board. >> are higher. >> and gold, while not necessarily traditional commodity, is making. >> new highs, which. >> is just something to pay attention to. >> whether it's. >> tariff related. >> policy uncertainty related. >> you know, gold is proving why it's a good.

>> diversifier and a safe place in a portfolio. >> lately it has been for sure. you know, there's some work out of strategists today saying, you know, there's all this central bank buying and gold we know about that, but that it hasn't really gotten a lot of retail flows into the etfs yet, which you know, that's that that stacks up as a net positive because it means that, you know, retail is not kind of over its skis in this area yet. we'll see. it seems like the retail flow that would otherwise go to gold finds its way to crypto these days. but, you know, we'll see sarah's point about sort of the feed through on steel and aluminum, though some comments out of ford today. cfo says we're seeing, quote, a lot of cost and a lot of chaos on tariffs. and they're looking at where to build inventory to prepare for the mexico and canada stuff. carrier is interesting because they do guide okay. but they add that they're going to be looking at actions to mitigate any higher costs, which we heard from mattel, which we heard from mondelez, which we heard from stanley black and decker. >> they're all going. >> to be. >> trying to mitigate. >> it. and resource. >> products and try to. absorb

it. >> but ultimately. >> they'll have. >> to pass it on to the consumer. >> and to their customers. >> the higher tariffs, i think more interesting will be. >> the capex. discussion and. >> how much this hits confidence. >> and. >> willingness to spend. >> if companies. >> don't have a. >> good feel for. what their cost structure is going to look like. >> because of rising. >> tariffs, one thing we know is that it's going to be a common theme from this administration. >> so we'll. >> see if that impacts any of the actions. just as. >> far as other earnings movers we're watching today guys. >> marriott really. >> strong i mean this follows hilton. >> it follows expedia. >> but clearly. >> a good report card. >> on the state of. >> spending globally. marriott is the largest and most global stocks giving back. >> but it's. >> been a big outperformer lately. >> performer yeah. >> big performer. >> i just want to mention one fact on marriott, which i thought was impressive, which. >> is how much they're. >> increasing room. count 123,000 units. >> last year. >> bringing it to 1.7. >> million global rooms. >> which is at the end of this year. >> guidance for. >> next year. expects the rev par.

>> which is the industry metric of revenue per available room, to rise 2.2 to 4%. it was. up 5%. >> this recent quarter. but what we're seeing in the hotel. >> industry is. >> the big. are getting bigger. >> and stronger. >> because it's look, it's. >> high interest rates. >> it's hard to borrow. so these companies have scaled they're. >> making acquisitions. >> and they are growing their. >> footprint and they're growing. >> and their growth is in part coming from that, but also really strong travel demand where they're able to get. >> solid pricing. >> yeah, i mean, travel is without a doubt kind of the strongest piece of consumer cyclicals for a while right now. and you know that pullback in marriott. you see it's just kind of curl back to where its high was in in december. so it's a you know obviously a little bit of a of a of an air pocket. but it's not changing the trend. yeah. we've all time highs in royal caribbean. all time highs at hilton. if anything the wrinkles might start coming from stories like we saw in the journal over the weekend about disney and whether or not internally they're worried about pricing, locking out how far they've pushed on theme parks. yeah for sure. goldman's making

quite a bit of news at this ubs financial services conference down in key biscayne. david solomon today saying directionally, there might be volatility policy wise, but this administration is going to be gunning for a pro-growth agenda. it says that there might be some opportunities to bolster wealth management through m&a, but that the bar is high and also says not a surprise that m&a has been low in january, that they would expect activity to pick up through the course of the year. >> the stocks are at. >> a record high. >> he's getting paid a lot of money and. >> clearly the. >> the return and capital markets enthusiasm around deals is very helpful for goldman. but they. performed even in a tough environment when it. >> comes to deals. >> sluggish environment. >> i think it's notable. >> that some of the articles. >> now. >> there was a journal article. >> for instance, talking. >> about whether all this deal excitement is being tempered by. >> tariffs and a little more uncertainty as we get into the trump administration. >> it does take a little while for it to crank up, though. i mean, if you if you had the idea that you were kind of just wait

and see through the election, you know, you're not necessarily going to pounce. the activists are pouncing. you have the activists going toward, you know, bp and phillips 66 and those. but it doesn't seem as if, you know, everywhere else. you've had that really full pipeline of deals ready to go. i also think it feed all this stuff feeds into the instinct of ceos in the first quarter to kind of under-promise in forward guidance. and so, you know, we'll see. there's no reason to be a hero on that front just yet. out of the gate. >> big moves though in the stocks. >> by the way. we do have that sound. from david solomon at this. >> ubs conference. take a listen. >> i think that. that that. >> the. >> administration is. >> going to run a more. >> growth oriented agenda. >> and i think one of the reasons why the market has responded the way that it has is because the market believes that a more growth oriented. agenda will spur investment. >> maybe there's a little bit of unleash. >> of animal spirits, a. >> little bit of a. >> swing back of some of the

regulatory, you know, regulatory, you know, increase in the last few years. and so market. participants are excited about that. >> now. >> the ultimate direction of policy is a little bit. more complicated, you. >> know, than than that view. >> and i. can you know, certainly the regulatory environment should be a constructive tailwind. but the broad policy, you know. >> landscape is still uncertain. >> david solomon describing the landscape as. >> we. >> were talking about. >> and look. >> outlook is uncertain, which to your point. is healthy. >> and normal. >> and it means a range of possible outcomes. it doesn't mean get ready for, you know, for some kind of a of a big hit. you know, i think one of the things the market struggles with, of course, is that the market's good at trying to handicap a process that they know the rules to, and they can kind of track it along the way, whether that's legislation moving through, whether that's, you know, the polling averages ahead of an election when it comes from, you know, executive action, fast moving, multiple

things a day, you know, switchbacks, you know, kind of like the speed and unpredictability is part of the point. and the market just sort of, you know, kind of gets back on its heels and doesn't know, you know, whether it wants to make a high conviction move in. advance of those things. >> there's so much. >> going on. yeah. >> another mover just as kellogg, you know, we were. >> having this discussion about. >> consumers pushing. back on high prices. >> great example with cereal. >> here because prices were strong. >> but volumes. >> fell 6%. >> prices were. >> up 4%. >> stocks moving a. >> little bit higher. >> because earnings. >> came out. better than. >> expected for kellogg. they they have to show. >> their earnings. >> muscle like they're able to cut costs. >> and because sales. >> were disappointing. >> and were. >> lower, they were down about 2% from. year ago levels. which i think describes what's happening in the consumer staples universe. tough out there for food stocks, especially because consumers have pushed back on these high prices. >> yeah, for sure. >> which is. >> why it's notable. that coke is higher. for instance, they did see volume growth. they did see revenue growth. >> as well. >> carl has made it down.

>> over to the floor with. >> some special. >> guests here celebrating a big, big. >> day carl. >> yes. big day. big weekend. sarah. as you know, this weekend is the 50th anniversary of saturday night live. and joining us here on the floor of the new york stock exchange today, current cast members heidi gardner and original cast member laraine newman. ladies, welcome. great to have you on the floor. >> thank you. >> congratulations on 50 years. there's been so much mystery about what's going to happen on sunday. do we know a lot what we're going to see? lorraine. >> nobody's telling us anything. no idea. >> is there any rehearsal work going on? >> maybe this here, right now. this is all i've done. this is everything. but somehow a show is going to come together. it's sort of like the real show where we don't quite know what it's going to be. but then it always works out. >> it always does. did anyone? lorraine and i can't imagine in the original cast era that there was ever a discussion that you would get to 50 years? >> oh, no. no. >> it's hard to conceive. >> of that, because. >> we all thought that when we left, the show.

>> would be over. and she's devastated. damn it. >> can i ask about. i'm fascinated with lorne michaels and his ability to recreate. right? whether that's the tone of the show ride through various cultural eras, find new talent. do you have answers to how he does it? >> i think he has an amazing team that he works with that is always keeping their ear to the ground and the comedy theaters and going and seeing shows. even now they go see shows and see what new talent is out there. so between him and them, they they find some of the best of the best. i'm honored to be among them. >> yeah. you got thoughts on that, heidi? and what was your audition process like? do you remember? >> it was like a dream nightmare of sorts, where you do it on that stage. that was the first time i'd ever seen that iconic stage up close. and then suddenly you're auditioning for it for, like, the dream job. so i barely, barely remember it. lucky to get it, but lauren's

very smart and very funny. and to what i said, you know, he he's got the talent, and then he puts a lot of talent around him. and so i do. i say all the time, i'm like, i'm working with the funniest, best people in the world. >> everyone's got a favorite sketch and i know you. the stern conversation this week was hilarious, but are there sketches that you find that pop out in your mind as favorites? >> well, i think. >> i did. >> talk about that before. >> the beatnik sketch. >> which was also called plato's cave and the superman and lois lane giving a party for all the superheroes. >> yes. >> that was a good one. i mean, there's just. >> it's impossible. >> you have a couple eggo and heidi. >> oh. >> favorites that we were part of. >> oh my gosh. >> or just all time classics. >> in. >> your mind? oh, eddie murphy, the hot tub. yeah, yeah. playing james brown like that was the first snl sketch i ever saw on my parents show me. it was like appointment television. they're like, you need to watch this as a five and a half, six year old. yeah, yeah. >> how about.

>> eras that you're that you're not a part of that cast that you would have wanted to be part of? >> oh my god. oh boy. the first one. the first one first. absolutely. yeah. >> how about you, lorraine? >> well. >> i mean. >> they've had great people all. >> along. >> but. >> i think like the. >> the prominence. >> of women and i. >> hate to present it in that way, but i mean, just the style of these performers and maya rudolph. >> and kristen. wiig and. >> tina fey and amy poehler, i mean, just that what they brought. >> along that tone. >> as you said. >> just. >> really brought. >> the whole. >> style of humor forward. >> i agree with you, and i hope you guys recognize how precious, normal american tv watchers think of the show. i mean, it is so important to families, and i know it's kind of crazy, but it's an event for like me and my kids and i just 50 years is just an amazing cultural moment, don't you think? >> i do, it's so special. and to i have friends now who are watching with their kids and i'm

like, you sort of get to share this with your children, and then they'll share it with their children, hopefully. and i just think it's so special to be a part of that is remarkable. >> ladies. >> thanks for coming down. first time ringing the bell. >> that was amazing. >> good luck getting out of here without some autographs. >> i'll tell you that. >> and some selfies. laraine newman, ego nwodim heidi gardner. thank you. and break a leg this weekend. we'll see you sunday. thank you. by the way, you should. a reminder snl 50 the anniversary special sunday, 8 p.m. eastern time. red carpet coverage at 7 p.m. eastern time on nbc and streaming on peacock. sarah. >> it's going to be huge. cannot wait. carl. thank you. before we head to break, i just want to show you what's. >> going on with bonds. >> for. >> our bond. >> report and how. >> treasuries are faring ahead of fed. >> chair jay. >> powell's testimony. >> before congress. >> that's coming next hour. we'll have. >> it for you live. >> will he say anything about tariffs? >> will he say anything. >> about rising inflation expectations? >> those are a few questions. >> the ten year yield. >> is a little bit firmer 4.531. >> is the yield. >> so treasury is selling off. the two year. >> just below 4.3. >> we'll be right back.

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out ai. >> features that have attracted. >> more sellers to the platform. that's definitely. >> part. >> of the story. >> shopify president. >> harley finkelstein joins us now. >> to discuss. i'm looking at these metrics, 24% gross merchandise volume growth. >> revenue growth more than 20. >> your forecast for the first. >> quarter is the mid 20s. revenue i. >> mean, the stock. >> has turned around. >> it's now higher. >> but just talk. >> us through. >> the sustainability of this kind. of growth. >> you're seeing. >> yeah. hey sir. good to be here as always. look i think 2024 was one of shopify's strongest years in our 20 year history. i think our market position keeps getting stronger. we're now 12% of all u.s. e-commerce. last year alone, something like 875 million consumers bought something from a shopify store. and i think our operating model is really working for the year. we hit 300 billion of gmv. that's up 24%. we had 9 billion of total revenue, which. >> up 26%. >> and annual free cash flow margin was 18% for the year.

that's up five points. >> from the previous year. >> most importantly, what's exciting to us is that merchants everywhere, across every single vertical are choosing shopify. we welcome warner. music champion, gamestop, karl lagerfeld, goop, crocs, david's bridal, hunter. >> douglas. >> and shopify in the last couple. >> of months. and i think that the evolution. >> of us working not just with small business, but all businesses, shows. >> that we're operating. >> at. >> this incredible performance right now. >> who are you taking. >> that that. >> share from. especially on. >> the. >> bigger business side? >> yeah, the enterprise stuff is really exciting for us because. generally and historically, most people assume shopify was only for small businesses and only for online. but now we have merchants that are doing many billions of dollars a year with us. we have merchants selling online, offline, using us for b2b, using us to sell on social platforms as well. generally, it's coming from either some of the more legacy e-commerce providers or it's coming from, you know, in in house built systems. what we're seeing is that they're coming to shopify for enterprise for two reasons. one is they want to future proof their stack. they want to be able to sell everywhere at any time. they want to future proof their their commerce platform.

and the second is from a total cost of ownership. the value of shopify is absolutely incredible. and so we are winning across pretty much every. >> vertical in the. >> industry in that way, and that will continue. >> and harley, you know, we got some commentary in particular from elf beauty about the slowdown in social shopping chatter over the prior several weeks or months. is that something that you have a read on and that's relevant to your customers? >> yeah. we don't i mean, certainly we do have a read on that. obviously, as a percentage of total gmv, social selling is going to be a lot smaller. we announced in the last couple of months partnerships, obviously with companies like roblox and tiktok and instagram and meta properties and frankly, every, every place where a transaction can. >> take place. >> and every. >> surface area, we obviously want to empower that. but the way we think about the future of retail is going to be retail everywhere. it's the reason why, you know, we see offline revenue was up five, was up at $588 million for the year. our gmv for offline in q4 was up 26%. so we're really trying to build

this retail operating system to make it easy to sell across every platform. now, not every one of our merchants and brands should be selling on social platforms, but for some of them, some of the time, that's going to be a very effective way for them to reach new customers. and they can do all of that right from shopify. >> harley, i know you probably fielded the tariff question over and over again, but i think more broadly, too, i'm curious to know how you're thinking about this erosion. some would argue in us canada relations, whether that's just rhetoric or the booing at national anthems or what have you. but does that enter your field of view? how does it change things? >> well. >> certainly, you know, first and foremost, small and medium sized businesses are responsible for something like two thirds of all jobs globally. they account for almost all the new job creation. and our merchants alone move billions of dollars across borders. so i think tariffs impact real entrepreneurs who are carving out a livelihood and finding prosperity in this global market. and shopify, we are the champions of open trade. we've witnessed firsthand what can happen when you allow that. so

our job is to protect and empower every business, but especially the underdogs. and so what we're committing to is regardless of what happens, whether it's tariffs or it's de minimis, is to build fast to help merchants succeed in any environment. so for example, right now as we speak, you can actually display and collect duties during checkout. also, if you're a consumer, you can go to the shop app and you can actually search for products and brands from your home country using our new search filter. so we're to continue to do these sort of things and also handle, you know, to best handle that. but the beauty of our business model is shopify. we don't have any top customer concentration. we don't have any vertical or industry specific concentration. and we're really distributed well geographically. and we've seen, you know, you look back to the pandemic. our merchants are really adaptable. so when cross border, you know, gets gets slower, they move to domestic or vice versa. >> so harley. >> speaking of your. >> merchants, as. >> you. >> know. >> a widely followed famous. >> antisemite bought. >> a super bowl ad. directing people. >> to buy. swastika t-shirts. >> on. >> a website. >> that.

>> you hosted. >> why did you. >> not pull that website immediately? >> well, the website is down right now. but look, all merchants that use shopify. >> said yesterday. >> yes. so all merchants are responsible for following the rules of our platform. this merchant did not engage in authentic commerce practices, and we had an entire day to prove otherwise, which did not happen. they violated our terms. we removed them from shopify. >> but your terms of service say you can pull a. >> website. >> for any reason, as you. just said. >> so why. >> didn't why didn't you pull. >> it sooner? >> look, good process creates good outcomes, sarah. and we follow a good process here. it was down the moment we realized that this was not actually a real commerce practice. they weren't actually engaging in authentic commerce. we pulled it down. >> what's your. >> reaction to it? >> it's disappointing. i'm a proud jewish entrepreneur. i'm a proud member, jewish community member. you and i have talked about this on the past, that it's a big part of my of my identity. so obviously i'm devastated by that. but i do believe that good practice, good process leads to good outcomes. and that's what we did here. we pulled the shop down.

>> have you ever had to. >> do something like this before? >> from time to time, there are stores. i mean, we have an accessible use policy that we have millions of stores and we evaluate these stores on an ongoing basis. we see a store that infringes on that. we pull it down. but the important thing is to actually do it properly. so and we did that here. >> have you heard any response back from from the team? >> i don't know. not not today. >> yeah. >> well thank you for addressing. >> that for us. >> thank you. >> for asking. we appreciate it. and thank. >> you for joining us off earnings as well. >> harley finkelstein. >> ceo of shopify. >> stock has. >> come back. >> a lot. it was. >> indicated much. >> lower premarket. >> maybe some concern. >> on on. >> guidance although. >> it was very strong as you. >> just heard. >> when we come back even more exclusives this time with coke's james quincey followed by the fed chair, of course, testifying on capitol hill. we'll get you that q&a with senate banking when we come back from a break. >> it's the. >> omaha steaks presidents.

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>> fed chair jay powell is set to deliver his. >> semiannual monetary policy report. >> before the senate banking. >> committee this hour. powell's prepared remarks. just crossing the wires. let's get straight to megan cassella in d.c. >> megan. hey, sarah. so, powell, sending a clear. >> message today. >> on the rate outlook. >> telling lawmakers. >> in his opening statement that the fed does not need. >> to be in. >> a hurry. to adjust its policy stance. he'll say that's. >> because policy. >> is now significantly. >> less restrictive. >> than it had been, and. >> that the economy remains strong. >> on the economic outlook. >> specifically, generally good overall. >> here, powell will say the labor market appears solid, having cooled from its overheated state and that it is not a source of inflationary pressure. he'll also say inflation remains somewhat elevated, but much closer to. the 2%. target than it once was. activity in the housing sector, he also says, appears to have stabilized. now, powell also highlights inflation expectations. and i would note there has been a lot of focus.

>> here. >> given the recent. >> jump in the university of michigan survey. >> but powell says that longer. term expectations, importantly, appear to remain well anchored. now on the. >> monetary policy front. >> powell will say risks on both sides of the dual. >> mandate are. >> in balance, and that policy is well positioned to deal with what he. calls the risks and uncertainties. that the fed faces. but, as expected, no direct mentions here. guys of. fiscal policy or. >> politics in the prepared. >> remarks, something that lawmakers. >> will certainly. >> be focused on in their questions. and finally, guys, powell will. also say the committee is assessing data, the evolving outlook and the balance of risks. >> in considering both the. extent and the. timing of any future cuts. so overall. >> not a lot of surprises here. powell does. >> use some softer. >> language throughout about conditions that appear or seem stable, potentially giving himself some cover or some wiggle room. but overall, he seems quite. comfortable to have the fed remain in its current holding position. >> given where the. >> economy is right now. guys. >> megan, thank you very much. >> megan costello with that powell. >> testimony.

>> not saying. >> anything different than. >> he said during. >> the. >> last press conference. >> and he doesn't have any reason to because. >> the next meeting. is more. >> than a month away. >> i think a. >> month and a week away or. >> something like that. >> and there. >> aren't really expectations. >> in the market. >> for the fed to change course on policy. >> between now and then. >> i think the. >> first rate cut isn't priced in until september. >> really fully. >> priced june. >> and then september, maybe if we get two. of them, but not a. lot of conviction. the fed is certainly on pause, and. fed chair powell indicates that. that's where he. >> intends to be. >> you got two inflation reports that matter plus a jobs report before the next meeting. plus you also have this comment from the treasury secretary that well the administration is targeting the ten year whatever that kind of means that there you know, i think it was an explicit, you know, way to take a little bit of the direct pressure off this idea that they're going to be hammering for rate cuts on the short end from powell. interesting that he says housing has stabilized, maybe, but at a kind of a pretty, you know, kind

of tough level. that's not necessarily a big source of growth for, for the economy just yet. but i think, again, preserving optionality and characterizing things as if they could, you know, go either way, but are in a good place seems to be the message. yeah. i mean, take a look at, say, the homebuilders, for example, coming way off of the highs of october. the other little wrinkle that will be attuned to is the discussion about fed independence. musk did reply to an ex user this past week, saying that the fed is not immune from a probe by doge. in fact, he said maybe specifically, the federal reserve deserves some kind of audit and be interesting to see what powell thinks of that. >> i mean. >> i. >> would think that he. >> would say, bring it. you know, they go. >> through audits. >> all the time. >> and powell. >> you know. >> has a pretty. >> good handle on the staff. >> there always. >> talks. >> about how. >> important they are as far. >> as federal. >> agencies look there's a big staff but not as. >> big as other. >> departments like commerce or. >> agriculture or. >> some of. >> these other. >> look, there's always been this line that says they really don't. they really have to be a

dozen, you know, fed banks or regional fed banks around the country. obviously, it's in the law. i mean, there's a reason it's in the law. and one of the reasons i had heard years ago was that they wanted to be within one day's train journey to deliver checks and cash around. so maybe it doesn't matter anymore. but to your point, it's a net contributor to the treasury. the fed is right. it makes money. so you can talk about whether it's bloated or misdirected, but it doesn't seem like it should be the right target. >> and just in. >> terms of what the market. >> is, pricing in september. >> is the first. >> full priced. >> in cut. june, i. >> guess. >> could be a live meeting. but it's. >> at 34% at this chance. >> so we'll see if he gives any more hints. >> in this testimony. >> but so far, not really. >> deviating from the script. >> let's see. >> if he says anything. >> about tariffs too. >> i'm sure they'll ask him, especially. >> the democrats. >> well we wait those. >> powell q&a. >> let's get to one of the big earnings movers of the day. >> coca cola. >> shares are. >> rallying after comfortably beating estimates. >> joining us. exclusively is. >> coca cola chairman and ceo james quincey. >> and james. what stood. >> out here is. >> the.

>> growth from pricing from. >> volumes and. >> across the board at a. >> time where. >> other consumer staple. >> companies especially. >> are just not seeing that. >> so what's. >> working for you right now? >> look, i think we've. >> been building momentum over. >> a good number of years. >> and you're seeing that come through in the. >> fourth quarter and for the full year of 2024. >> and it's across the line. it's. >> the right. >> level of marketing, the right level of. >> innovation, execution commercially. >> with. >> our partners. >> putting the. >> right packs and prices and commercial execution out there. so it's not a silver bullet. it's the sum of lots of hard. work across a lot of levers. >> and it's turning into good momentum in. >> the. >> fourth quarter. >> and for the full year in 2024. >> yeah. >> talk about what you. >> see coming down the pike, especially. >> in the us market where. >> there has been a little bit. >> more concern lately. mcdonald's, for. >> instance. >> weaker us. >> numbers. i. >> guess they are. >> more more. >> exposed to the low income consumer. >> but what do you see? >> yeah. >> look. >> in the us, in north america, probably also quite similar to western europe. we've seen the lower income consumers remain a

bit under pressure from a disposable income point of view. and so we've had to really. >> double down on on some of our. >> affordability options. with packaging choices. but overall, the aggregate. consumer demand is still. pretty robust, still holding. >> up well. >> and that's. >> why, you know, our. >> north american business not only grew. >> in the revenue. >> line, but. >> actually grew grew volume in the fourth quarter. >> so we're. >> seeing, yes, pockets. >> of weakness. >> but overall good aggregate demand. >> and we. >> see. >> that continuing into 2025. so we're we're feeling positive and. >> confident about our ability to grow in 25. in the. >> us. >> one of the. >> questions for. >> the. >> industry is obviously tougher. >> environment for pricing. >> you still. >> see it working. >> but how. >> do you realize margin improvement. >> in an environment. where it's not as easy to. to pass on those. >> higher prices? >> yeah, i mean. >> firstly. >> obviously input. >> costs are moderating. the inflation is moderating. and so the price levels that we. >> need. >> to look. for are also

moderating. but we have a very clear strategy. >> of supporting. >> that, not just. >> with the marketing innovation, but making. >> sure we use the full. >> breadth of all our. >> packaging options. >> whether it's different types of packaging. >> the plastic bottles, the. >> cans, the fountain cups in all. >> different sizes so. >> that whatever your pocket level and whatever beverage category you want to be in. >> we have. >> a price point and a package size that works for you, and that that. >> has been. >> a. >> successful strategy. >> to. help manage these situations where you have certain segments of the population under income pressure, but overall good demand. >> and that's a well-honed strategy at the company. and it's certainly. >> working for us. >> in the. >> us. >> you have. >> a really good. >> global view, james. >> how are the brands. >> navigating the geopolitical headwinds. >> especially in. places like. >> the middle east, where you. >> and other. >> american. >> companies. >> have seen boycotts? >> yeah. as global as the coca-cola. >> company is, and. >> some of our. >> brands are truly some of the most global brands. >> in the world. >> it is also a profoundly local business. the cokes in each

country tend to be made. >> in that country. >> and that's as. >> true in. >> the middle. >> east as it is in the. us or. >> latin america. and so we've been investing a lot of money. and i. >> think the simple example, for. >> example, was turkey. >> in. >> the first. >> quarter where we'd come. under pressure for the situation. >> in the middle east, but we really invested money in demonstrating how local the business was and how made in turkey. the business was, and that helped. >> us rebound and pull it off. so i think. it's this strange. >> combination of being truly global. >> but also very profoundly. local and. >> letting people know that's true. that they're supporting local jobs, helps us manage. >> our way. >> through some of these geopolitical issues. >> james, i was mentioning earlier that if you just look at the long term in terms of coke's dividend yield, that's now around 3% relative to the overall market. it's as high as it's ever been. it's obviously kind of always been an important kind of retail owned stock. is there any way that you've

changed your thought in terms of how allocating capital, sharing cash with shareholders, by whatever means at this point? >> look, we. >> have over 60 years. >> of an. >> annual dividend increase. i mean, it's part of what we've been selling and attracting and what's. >> been attracting share. >> so we're very committed to our long term dividend strategy. but as we come out of this period. >> of the. >> last few. >> years and. 2025 as well, with. >> a with. >> a number of payments for m&a and all sorts of other. >> things. >> we will have. extra cash. we're in the. >> process of working. >> out what to do with that. are there. we obviously support organic capex. >> and the dividend. >> but do we are there bolt on m&a. >> or do. >> we take the approach of reducing our debt levels or returning shareholder. >> cash to shareholders? >> so we're going to be in. >> a more surplus. >> situation coming into. >> the back of this. >> year, and we will be very thoughtful about how we allocate that capital. but at the end of the. >> day. >> whichever way we. >> choose. >> we're trying to make. it the best. >> result for shareholders. >> so it will be a good thing overall. >> james, we've talked a lot

about changing consumer tastes in the face of glp one. and obviously whatever policy changes we might get in a new administration. i wonder how you're thinking about consumer tastes evolving over the longer term. do you get the sense that at least in north america, we are looking to get, quote, healthier? and will that affect the way you invest in, say, marketing or r&d? >> look. >> first and foremost, we want to be a total beverage company. so we want to. provide the beverages that people. >> love and. >> the ones they. >> want to buy. and i think we've been we've been at. >> that. >> for a very long time, almost. 140 years, including, you know, the fourth. >> quarter of last year. >> we grew. >> volumes in. >> north america. >> so we. >> are very. focused on adapting to consumer, consumer. tastes and changes. >> and if you. >> look at what's. >> been growing in. >> in 2024, in the. >> us, the. >> top two. >> brands in the beverage. >> industry in terms of adding. retail dollars. >> was coca-cola, predominantly. >> coke zero. >> and a bit of diet. >> coke in terms.

>> of growth and fairlife, our value added dairy business. >> so we have. >> found ways to bring. >> the classics, the long term brands to life and continue to be relevant, but also. >> bring new brands. and i think that is our mission, which. >> is. >> to deliver growth from both. >> the. >> new and the old brands. >> well, how. >> threatening is. >> rfk jr. >> on your on your business? >> there has been talk that he. >> you know in. >> his bid to make america wealthy again. >> could go after programs. >> like snap. >> benefits and restrict items. >> like soft drinks. >> yeah. >> i mean obviously we have to see what the. >> policy. >> what policies. >> we may come from, from different parts. >> of the. >> administration in the future. and we will we. >> will adapt. >> we will adapt to them. i mean, snap is not a huge program relative to the size of our business, but our. objective will be to continue. to offer all the consumers. >> in the us the beverages they. >> want in the. >> price points and the package sizes. >> that work for them, and continue to expand our total beverage portfolio to give

people. >> what they. want across all sorts of options. >> you visited. >> mar-a-lago with. >> president trump. >> did this come up, these sorts of policies? >> i'm curious. >> what you guys talked about. >> well, yeah. >> i mean, we i went. >> down there to present, like we, as. >> we've done for a number. >> of inaugurations, we've been. >> making. >> commemorative bottles. >> and we had the opportunity to go. and present the diet coke one. >> to the president. >> and we had a. >> great moment there with some. >> photos you've all seen online. and we talked about. >> all sorts of things. >> geopolitics, what sort of golf courses. he prefers. >> it was. >> it was a great meeting. and obviously, you know. >> it's a huge, super successful american icon, the coca-cola company. so having a connection with the president. is very worthwhile one. >> did you talk tariffs and how big. >> of a deal are these. >> aluminum tariffs. >> no we. >> didn't. get we didn't. >> get into. >> that i mean as it relates to aluminum. tariffs for our business. we are a buyer of some canadian and aluminum. but in. >> the. context of a. >> multi multi-billion dollar

business in the us. >> this is a this. >> is not something that's going to. >> destabilize our business in any shape. well we will of course look to adapt to mitigate. look at our. >> supply chain. >> see what options we have, see how we manage that within. >> the total. >> business portfolio. so it's. >> just another one. >> of the dynamic. >> elements that. >> we're going to. >> have to manage in 2025. >> what if. >> we. >> get. >> more trade restrictions i. >> mean. >> tariffs are. >> going to. >> be a. >> theme for this administration. which ones are you watching and what would what would more trade fights globally look like and. >> mean for a coke. >> for us. >> the most. >> important thing to remember is while we're a global. >> business, we're a. profoundly local business. >> the cokes. >> or the sprites or the. >> sports drinks or the. >> water, they're. >> made almost entirely in the country. >> that they're. >> sold in. >> so the. >> impact to us. >> of trade restrictions or increased friction in trade is largely indirectly via the

imports we buy. it's not the biggest driving factor for our business. and so. >> between our hedging. >> programs and our. >> long term. >> diversified supply chain of inputs with. redundancy in it, we believe we can accommodate and mitigate increased friction in trade and continue to. deliver the total beverage portfolio in each and every country for our consumers. >> so which. >> policy is it that impacts you most. if not tariffs necessarily? >> is it. >> taxes deregulation? >> i'm just curious what what. >> you're watching. >> and how investors should be thinking about the new landscape. >> i think it's the sum of the. >> parts in much. >> the same way that our success is not one thing we do. what matters. >> to us is not one single. >> element of all the geopolitics and economics. >> it's in. >> the simplest terms, it's what's going to be. >> the impact on total aggregate consumer demand. if consumer demand is growing, we have a tailwind. >> we can lean. >> into with the execution. >> we're going. >> to we're going to put into the marketplace. and to the

extent it's under pressure, it just makes our life a little bit more demanding of delivering what we need to deliver. but it's there's no. >> one lever. >> that is overwhelming any of the others. >> it's the sum. >> of all the parts. >> james. >> thank you for coming on. >> to talk about all of these live issues for investors, including earnings, of. >> course. james quincey, thank you. the chairman and ceo of coca-cola. with coke shares outperforming today. >> again, keeping. >> our eye on. >> jay powell before. >> the senate banking. >> committee today. >> he will take q&a. we will take you there live. he's presenting his his monetary report, his testimony. >> that we brought. >> you at the top of the hour, again. >> emphasizing that. >> the fed is. >> in no hurry. >> to be cutting rates. and they are pretty much on hold giving a vote. >> of confidence in the. >> u.s. economy. the question is, will he get hammered on. >> tariffs, and will he say anything about. >> what they might. >> mean for. fed policy? >> that's a big. >> question mark. still. >> i. >> don't expect him. >> to break. >> any new ground. he's been pretty careful about it. >> but let's. see what. >> happens with q&a. >> meantime, the battle between

elon musk and sam altman heating up, openai ceo rejecting that unsolicited offer from musk to buy his company. our kate rooney joins us this morning with the very latest on. i guess we are calling it a drama. kate. >> i think that's fair. >> to say. carl. so this is a $97. >> billion. >> bid from. musk and his closest inner circle. >> it's an unwelcome. >> offer in. >> the eyes of openai. >> and this new headache could stall its plans to become a for profit. musk is a co-founder. >> of openai. >> and now has a competing ai firm. he has sued. >> to block. >> openai's restructuring, and this is his latest counterattack. musk's lawyer calling the conversion basically unfair. the nonprofit, he said, is giving up control in exchange for a small stake in this new entity, as he put it, who on earth would make. >> that trade? altman. >> responding in a tweet yesterday saying, no thank. >> you. >> but we will buy twitter. >> for. >> 9.74 billion if you want. >> that's a jab. >> there at musk buying twitter for about four times that price. musk then responding to. that

with just swindler. so other investors that are involved. here are extreme musk loyalists. >> they're personal friends. >> antonio gracias. >> for example, gavin baker, ari. >> emanuel, you. >> have ron. >> baron as well. and people that i'm talking to that are close to these people in this inner circle speculate that the deal could be both a. >> genuine offer and. >> a tactic to get. >> in altman's head. either way, guys, it. >> could buy musk. >> more. time here. i have. >> been talking. >> to executives at. >> openai who. >> say this. has no shot. >> of. >> getting approved by the board. >> altman himself. >> telling cnbc. in paris he is. >> not taking this bid. particularly seriously, and that it. is meant. >> to slow down. >> a competitor. it all. >> comes, guys, as. >> openai looks. >> to close a. >> $40 billion. >> round led. by softbank. back to you. >> what's really going. >> on here? >> kate altman says it's. >> just. >> a. >> competitor trying. >> to come. >> after him. musk has complained. >> about the nonprofit vision of openai and where it's gone. what do you think is really happening? >> i

you hear that musk has brought to the courts? but i would say there's also sort of the psychological warfare going here. people that i'm talking to that are close to these, this inner circle that are close to musk are saying that this is a group that's very action oriented, that they have a bias towards action. so if things aren't going well, they're not just going to sit there, they are prone to do something. so this is an example of that. taking another shot here, whether or not the deal is serious or there's any chance that it gets through, could rattle altman, get in his head and sort of stall the process. so that might be as important of a goal to musk here as potentially buying part of openai, which, again, would be a good outcome for musk because he's he's wanted to control openai and has wrestled over this since he was a co-founder about a decade ago. so i think there's a couple competing strategies here and priorities. but again, we're i'd love to be a fly on the wall in that room. yeah. >> yeah, it's hard to know how much of it is sort of historic

in nature, given the relationship in the past. also, the point was made today, we don't have a lot of visibility into the metrics on xai and grok. does he feel like he's behind the curve on versus his competitors? that's stuff that's unknowable at the moment completely. >> and you know, if you look at the public company proxies, i mean, microsoft's not doing very much. you'd have if this were to move forward. you'd have questions about that in terms of how we're slicing up the influence and ownership of openai. >> we're moments away here from this fed chair question and answer. it'll be interesting to see, you know, the politicians who have mostly on both sides of the aisle, been very favorable to powell. he doesn't really get roughed up too often. >> and he's well, he's made such a concerted effort to communicate with. >> the hill. and that's part of why. and also he's in a spot where he's saying, look, we're we're good. we're not in a hurry to adjust policy. we can stay at these levels. if inflation surprises a little bit higher and a little bit firmer, or we can cut if unemployment starts to rise or inflation starts to come down. he's bought himself flexibility with where they are.

they've cut 100 basis points so far since september, and they're still in a place that feels restrictive according to the fed. and so they can move either way depending on what happens. let's listen to the q and a. >> and can manage the risks. yet you have admitted that the threshold has been a little higher for banks engaging in crypto activities. last week, i held a hearing on the banking and once again heard the federal banking agencies, in particular, the fed used reputational risk as a tool to encourage the banking of certain legal industries and law abiding citizens for political reasons not tied to safety and soundness. the banking is a top priority for this committee, and it certainly is for me, and one that i believe is a bipartisan issue. will you commit to working with this committee to end the banking, including working with the new vice chair of supervision, once appointed to revise the federal reserve's supervision manuals to remove reputational risk as a tool to weigh in on political topics?

>> i'm happy to make that commitment. >> thank you sir. accountability is very important. i would like to think accountability is a priority for everyone, especially the fed, given that failures and fed supervision can result in the loss of billions of dollars. yet following the failure of the silicon valley bank, which was in part due to the failures of its regulatory regulator, regulators to identify egregious mismanagement of interest rate and liquidity risks, we have yet to see any regulators be held accountable. and as you recall, that was the point of my frustration. i, as a guy who spent a lot of time in the private sector, 15 years running a few businesses, i can tell you that accountability is a necessary part of making the entire organization healthier and perform its job as as well as possible. i'm encouraged that the fdic has begun the process of holding svb executives accountable. that's good news.

but no fed employee has been fired, put on probation, put on performance improvement plan, all of which would be expected in the private sector. as i just mentioned, for employee failure. please explain to me why fed employees are held to a different standard for my perspective than everyone else. and what are you planning to do to take accountability for fed failures in supervision? >> so we've actually done quite a lot in in response to the events associated with silicon valley bank, as we've done many, many things in terms of specific accountability. what we found was this was not a case of malfeasance or nonfeasance so much. it was a case of people were were carrying out a specific playbook that failed to cause us to act in time for these things. so it wasn't it wasn't actually particularly fair to the employees to say you didn't. you violated our practices in some way. that wasn't really what happened.

what happened was, i would say, a lot of focus on process and on governance and controls and not enough focus on basic bread and butter, banking, credit risk, liquidity risk, interest rate risk, things like that. so as we discussed yesterday, we took very substantial steps to avoid further spread of those issues. and that was successful. but i understand your point on accountability. >> this is one of the areas where you see the approach of looking at safety and soundness. and with the number of mras and mras that went really documented, but no action was taken, that that leads me to the conclusion that individual employees, supervisors should have been held accountable for that. i'll move on, though. in the past you've supported tailoring regulations so that we insure banks of different sizes thrive and to preserve our diverse banking system. will you commit to working with me as chairman to make sure that

financial regulations do not impose more burden than is necessary? i'll say that this comes after a number of conversations with community banks and regional banks that have continued to stress that the cost of the regulatory framework around them isn't just harsh, it's oppressive. larger banks suggest that the cost per employee for the regulatory framework is $10,000 per employee. i think we can do better and we'd love to hear your thoughts on that. >> all right. first of all, i will commit to working with you on that. we do try to avoid excessive burden. look, i think it's fair to take a fresh look on frankly on banking. i think we all see both in your hearing and in the one on the house side. we hear a lot of people talking about that. and, you know, it's time to take a fresh look. i think we don't intentionally do these things, but sometimes regulation leads things to happen, and we need to be we need to be working on that. >> i appreciate that. and i'll turn over to the ranking member. i'll say this at after having a number of conversations with

ceos of banks around the country, one of the things that was clear to make clear to me with specific statement from the ceos is that the regulatory, occ and other regulatory agencies said specifically to debank certain industries, and that is the point that i'm making and one that i think we have to solve. if it's legal in america to do business, we should do our part to make sure that they're banked. >> thank you, mr. chairman. so over the weekend, co-president musk and acting director vote effectively shut down the cfpb. no more cop on the beat looking out for a family of four in south carolina facing an illegal foreclosure. no more cop on the beat looking out for your grandma, whose bank account has just been taken over by a scammer. no more cop on the beat looking out for people getting ripped off by giant credit card companies that are charging illegal junk fees. it also means

that the cfpb is no longer doing one of its most important jobs. examining big banks to root out illegal conduct before it happens. or at least stop it before more people get hurt. chair powell if the cfpb isn't on the job right now, then who is administering jp morgan or wells fargo's consumer compliance exams to ensure that they are following the law? >> senator, i believe that. and you would know that dodd-frank moved all the authority for examinations in the consumer space to the cfpb. we still have some jurisdiction. >> we'll talk about that in a sec. but the answer to my question, please, if the cfpb is not there examining these giant banks to make sure they are following the laws on not cheating consumers, who is doing that job? >> i can say no other federal

regulator. >> no one, in other words. so thanks to co-president musk and cfpb acting director vote wall street banks no longer have to show the bank examiners that they're not illegally opening accounts. people didn't ask for it, like happened with wells fargo, or charging illegal junk fees like the bank of america did. but cfpb has jurisdiction only on banks that have more than $10 billion in assets. so what's happening in thousands of community banks all around the country, those that have less than $10 billion in assets in assets. so chair powell, as you know, the fed oversees consumer compliance for state member banks that have less than $10 billion in assets. has the fed suspended consumer compliance exams for those smaller banks, or is the fed still on the job

to make sure that those smaller banks are following consumer financial laws? >> still on the job? business as usual. >> all right. by forcing the cfpb not to do its job, president trump, elon musk and the author of project 2025, russ vogt, are giving wall street banks an unlimited get out of jail free card so they can cheat working families, even while community banks continue to play by the rules. you know, for any americans who have money deposited at jp morgan or wells fargo or any other of the giant banks, they should now know that there is no one on the job to make sure that those banks are not scamming you, only the smaller banks now have a cop on the beat to make sure that they aren't cheating consumers. you know, if i had my money in one

of those giant banks, i might think about going to a smaller bank where the protection, at least right now, is a whole lot better. now, at the same time that the cfpb is under attack, the fed is buckling to pressure from wall street to erase other safeguards for the too big to fail banks. during the first trump administration. under your leadership, the fed weakened the big bank stress tests, including by giving the big banks some of the answers to the test in advance. i called you out on it, but you promised right here in this committee that you would not give those banks the whole answer key. i'm going to quote you back. you said complete knowledge of the models could lead to a model monoculture, in which all firms have similar internal stress testing models, which could increase the correlation of risk in the system and miss key idiosyncratic risks faced by the

firms. i agreed with you, but several weeks ago, the fed announced that it has plans to do exactly that. hand all of the answers over to the giant banks. chair powell, why is the fed about to propose a rule that directly contradicts your own testimony and in your own words, would render the stress tests toothless? >> senator, in essence, because the ground has shifted very substantially and administrative law and we actually want the stress test to remain resilient to that. and so we're making changes to accomplish that. >> well, the changes or changes you've identified earlier as making those tests toothless. look, the big banks are going to juice shareholder payouts and leave this economy more vulnerable to a crash. the fed is knuckling under to bank lobbyists. we know how this ends. people will suffer. wall

street will get bailed out. i urge you, chair powell, to serve main street instead of wall street. don't weaken these rules. >> thank you, senator rounds. >> thank you, mr. chairman. and mr. chairman, thank you for coming before the committee. i appreciate the opportunity to visit with you. and i've got a series of questions, but i would like to give you an opportunity, if you would like, the suggestion that the ranking member has made here is, is that the big banks can now scam individuals. right now, any change in the laws regarding how they're supposed to be treating the individual consumers out there, or anything along that line. >> law changes? no, i'm not aware of. >> any changes in any rules that they would have to follow. >> not that i'm aware of. >> are they still audited and do they still have the regulators in watching all of their businesses, just as they did before? >> well, they have all the regulators except for the cfpb. if, if in fact, in the hypothetical, the cfpb weren't carrying that out.

>> anything else you'd like to add before we move on? >> no i'm good. >> thank you. thank you, mr. chairman. as we continue to prioritize the stability and the resilience of our financial system, the ongoing basel three rulemaking process has remained front and center in shaping our regulatory framework. i guess i was rather outspoken with my opposition to the original proposal, and further work was stalled at the end of the last year. my i guess my question for you today, sir, is, is could you provide an update on the federal reserve's progress in finalizing the basel three endgame rulemaking process? >> i'd be glad to. so we remain committed to completing the basel three endgame. we think it's good for u.s. banks. it's good for our economy that there be a global standard beneath which foreign banks can't fall. and that was one of the big ideas behind the whole basel committee approach. so we're where it sits now is we await leadership arrival, arriving at the occ and the fdic. and that

seems to be happening. and when that happens, we're going to sit down with them and work our way through to a basel three endgame proposal. and i think we can do this reasonably quickly, one that is compliant, consistent with the basel requirements and also consistent with what other large jurisdictions are doing. i'm optimistic that we can do that fairly quickly, and we're committed to doing that. >> we always wanted our banks to be competitive with european banks, and i'm just curious. the original proposal that was in front of you, and i'd like your thoughts on this. it was estimated to increase our bank's capital by 19%, which i think may very well have created a potential disadvantage with within the u.s. institutions versus our european counterparts. with any new proposal, what's your thoughts? would you make a commitment that this would be a neutral approach with regard to capital? >> the main commitment i'll make is, is we'll work together with with the new leadership at the, at the other banking agencies to do something. but that's

certainly, you know, i've said many times in this committee that i think that the level of capital in the, in the largest banks is about. right. and so it'll, it'll shake out somewhere in that in that area, i would. >> expectation would be in the markets would expect that it would be neutral with regard to capital. >> in that range. but i want to i want to defer to our new colleagues and get their views as well. but that's that's a good starting place. >> okay. thank you. the federal reserve's partnership with the u.s. treasury plays a central role in supporting our nation's payment infrastructure, which processes a vast range of daily transactions from federal benefit disbursements to debt obligations. could you outline the federal reserve's role in supporting and managing the treasury's payment systems, including how the fed works to keep these systems secure, efficient and capable of handling the government's high volume of daily transactions? >> so it's a it's a complicated

set of arrangements. and i'll, i'll try to summarize quickly, effectively congress authorized spending and then the agencies carry out those spending orders. and then the way they do that is they send an order to pay a payee, a recipient, to the treasury department upstream before it gets to the to the fed. all of these decisions are made about is this an appropriate order? does the is this is this payee on the no don't pay list and all those things once it once all of that is set it comes to the fed. and by that i mean four or so of the reserve banks. and we actually make the payment. we take the money out of the treasury general account and we make the payment. we make no judgments whatsoever. those are all made upstream from us. and we are in fact the fiscal agent of the treasury. confirmed for me toda. is the system safe today? >> i believe it is. and i will tell you, we are very strongly committed to the integrity, efficacy, resilience and all those things of this system.

and, you know, people do depend on this in a big way, and we're committed to that. >> one last question for you, sir. the failure of silicon valley bank and the chairman brought this up. i'm just curious, recognizing a lot of banks out there looked at this. it cost the other banks in the system a lot of money to pick up the costs involved in the losses. nobody's been fired. but you did indicate that it was a failure in the playbook. has the playbook been revised, or can we expect that it will be revised? >> in a lot of ways, it's been revised. yes. i can go into some details. i mean, we're one thing that didn't happen was, for example, we didn't the supervisors didn't follow through aggressively enough on things that they'd said. if they'd done that, that that could well have been enough to stop it. but a lot of it was just not focusing enough directly on what was a very large amount of interest rate risk, a large portfolio of long term securities matched up with a an unstable funding base. and

somehow people wrote about that and not the fed. but others wrote publicly about this. but somehow we don't expect bank runs outside of a crisis in this country. and that's what that was. it was a bank run, and bank runs are incredibly damaging. i think everyone learned a lot from that and is determined to do better. >> thank thank you, mr. chairman. i think this is one that i think, as you appropriately pointed out, i think this is an area where a lot more questions are out there yet. and i think if it's the playbook that was the problem, i think perhaps a discussion about how that playbook has been revised would be appropriate in the future. thank you, mr. chairman. >> thank you. senator cortez masto. >> chairman powell, thank you. >> and thank you always for the conversations in between these hearings as well. let me focus on a couple of things of concern. and you touched on a little bit of this, and i think this is this is important to clarify. there was a change in the law when the cfpb was created. the cfpb examines the

banks and enforces the law, whereas the fed only supervises those banks. is that correct? or how would you how would you determine that relationship. >> with the cfpb. so dodd-frank took a lot of the consumer compliance jurisdiction away from the other banking agencies and gave it to a newly created agency, the cfpb. we retained a residual amount of that, as we just discussed, which was banks under 10 billion in assets. but the cfpb essentially took all of that when dodd-frank came into being. >> so as it was created, when you two were working together, the federal reserve collaborated with the consumer bureau when supervising those large banks. correct? >> yes. we still retain supervision over all the holding companies and also of fed member banks. >> and let me ask you this, then, does the federal reserve enforce consumer protection laws now for things like money transmitters.

>> not for money. >> that would be the consumer protection. that would be cfpb. >> yes. >> okay. and so when we're talking about collaborating with the cfpb for financial technology firms, what would the fed reserve now do that if the cfpb if the if the hypothetical is the cfpb no longer exists, what would be the fed's role right now with respect to technology firms. >> we don't have jurisdiction over we have jurisdiction over banks and some financial market utilities. >> so let me ask you this because i know there's a number of nevadans who file consumer reports of concerns about fraud and predators with the cfpb. the fed reserve doesn't receive those reports. correct? >> no. >> i don't believe. and you have no role when it comes to consumer protection like the cfpb does. correct. >> unless you're a fed member bank that has 10 billion or less in assets, then then we have jurisdiction, right? >> so there is a gap if the hypothetical is true. and what we're hearing that the cfpb is

being shut down, there is a gap. what we're hearing in enforcement out there, and particularly when it comes to consumer protection, is that would you say that's true. >> yes. for all banks that we don't supervise. >> and i think that's the concern we're all having right now is this concern of when we're looking to streamline government. and listen, i'll be the first to tell you there's a lot of bloat. we need to streamline it. we need to address regulations and overreach. but there's a strategic way to do it and not this burn down the house that is going to harm people across the country, including in my state, those nevadans that are looking for some sort of enforcement around consumer protection law. so that's what you're hearing from many of us on on our side of the aisle here. >> i just very briefly add that we do have some residual enforcement authorities, but what we don't have is examination authority and for the banks at the cfpb. >> thank you. let me let me ask you this. and you know, we

talked about this over the phone and i understand it may be difficult to answer this, but the federal reserve board members have been clear that future interest rate cuts are unlikely to happen, despite the strong economy. and but there are folks in my home that are are in my state that are waiting to buy a home, and we know that's still an issue. the high prices right now for home affordability, you add the interest rates to it. it is a problem. so do you think it's most likely that interest rates will remain above 6% for this year? or can you even address that. >> you know, so overall the economy is strong, growing 2.5% last year. the labor market is also very solid. unemployment at 4% of quite a low level. inflation last year was 2.6% for the year. so we're in a pretty good place with this economy. we want to make more progress on inflation, and we think our policy rate is at is in a good

place and we're not we don't see any reason to be in a hurry to reduce it further as it relates to housing. so there's a it's true that that mortgage rates have gone or remained high, but that's not so directly related to the fed's rate. it's really related more to long term bond rates, particularly the treasury, the ten year treasury, 30 year treasury, for example. and those are high for reasons not particularly closely related to fed policy. they may remain high. i think, you know, there's a once we lower rates and kind of rates return to a lower level, mortgage rates will come down. i don't know when that will happen. and even when it does happen, we're still going to have a housing shortage in many places. >> thank you, chairman powell. thank you again for being here. >> thank you ma'am. next will be senator kennedy. >> thank you, mr. chairman. thank you, mr. chairman, for being here. okay. my friend, our ranking member said that you are knuckling under to the big bank

lobbyists. is that true? >> no. >> okay. it seems to me that the big, big, big picture should not go unnoticed. do you recall? a year or two ago when inflation was raging? i think its peak was about 9%. many economists and other experts. based in part on history, said that you were going to have to provoke high unemployment. and put our country into recession in order to get inflation down. do you recall that?

>> very, very well. >> are we in a recession? >> we are not. >> would you, as an american trade places right now with germany in terms of the economy? >> no, i sure wouldn't. >> how about china? >> no trade places? >> how about france? >> no, thanks. >> things aren't perfect. inflation is obviously still sticky and long rates are too high, which i want to talk about in a second. but the fact is, knock on wood, we have experienced a soft landing, haven't we? >> not for me to say. really, i i'll let others have. >> we experienced a hard landing.

>> no, we. >> sure are. we in a recession? >> no we're not. >> i call that a soft landing. and it seems to me that you and some of the ladies and gentleme, who are your colleagues at the federal reserve behind you, deserve some credit for that. >> thank you. >> i don't know why you don't take the credit. everybody else in washington, d.c. does. again, i'm not saying things are perfect, but. i never imagined that our landing could be this soft, albeit not perfect. and i wanted to thank you and your colleagues for that effort. you sure didn't get any help from from congress and on the and our our president on the fiscal

side. i don't expect you to comment on that. you and the federal reserve can can, to a large extent control short rates, can't you? yes. through the through the open market committee. you can't control long rates though, can you? >> no we can't. >> why is that so? >> a lot of things go into long rates and one of them is the expected future short rate of fed policy. but many many other things go in expectations of inflation. in the longer run the, the sort of risks around around the economy and around the budget deficit go into something called the term premium, which is the part we can't explain when we do these decompositions. and so, you know, it's set by supply and demand in the in the bond market at the long end. and we're not particularly we have some influence, but mostly mostly not. >> many americans are looking at

short rates and looking at the fed's behavior and how you you reduce inflation. but they don't seem they don't they don't see the long rates going down. and obviously that affects mortgage rates. and i would encourage you and your colleagues to spend some time explaining to the american people why that is. final question. if you went home tonight and. mayor powell, your spouse said, you know, i got a call today from our bank and they're they're banking us. they're worried about their reputational risk because they don't like our politics. would you think that fair.

>> no, i sure wouldn't. and as i as i mentioned earlier, i too am troubled by the quantity of these reports and, you know, really want to understand better why this is happening. you know, one theory is that banks are just very risk averse around bsa and money laundering, and that's because we're so tough on them and that they just don't. any red flag is enough. but you know, we it may be that this whole thing with reputational risk needs to be thought about. i it's actually coming out of our, of our one manual that we use. we're taking that concept out, the manual that we've been using for account access for master accounts. we're just going to take that out. but i think this needs a fresh look. and i think it's time for that. and we're going to we're going to do that. >> well i've asked our chairman and he has agreed to invite some of the ceos of some of the banks that have been deep, deep banking people, the ceos, not

their lawyers, not their pr consultants, not their priests, them the ceos to come in and let's talk about this and find out what what the hell has been going on. >> thank you, senator kennedy. >> thank you, mr. chairman. >> senator reid. >> thank you, chairman scott. chairman powell, welcome. thank you very much. i think your monetary policy combined with the biden fiscal policy over the last four years, has made a tremendous difference. we've avoided a recession, and i'd like to remind people how far we've come in 2020. the gross domestic product decreased 2.2%. the unemployment rate finished the year at 6.7%. by 2024, gross domestic product grew 2.5%. the unemployment rate was 4.1%. labor force participation rate went up from 61% to 62.5%. and

that's a combination of your work together with the fiscal policy of the biden administration. so i thank you for that. one of the issues before us today is the issue of tariffs. in july 2018 testimony, you stated, mr. chairman, countries that have remained open to trade, that have not erected barriers, including tariffs, have grown faster and had higher incomes. do you still believe that? >> yes i do. i would stand by that. >> so president trump's tariffs on china, canada and mexico will obviously raise costs on families. in fact, some economists, many economists project about $1,200 per year in households will be paying extra, an increase of inflation by nearly 1%. economic growth, depression and, for example, the increase to the average car price by $2,700. is that a wise policy? >> so i guess i have to say this. you know, the i think the

standard case for free trade and all that logically still makes sense. it didn't work that well when we have one very large country that doesn't really play by the rules. and in any case, it's not the fed's job to make or comment on tariff policy. we you know, really that's for elected people. and it's not for us to comment ours ours is to try to react to it in a thoughtful, sensible way and make monetary policy so that we can achieve our mandate. >> just this weekend, the president removed the board of the kennedy center and made himself chairman. what would you do if the president tried to remove a member of the federal reserve board? well. >> it's pretty clearly not allowed under the law. thank you. >> we've communicated back and forth about synthetic risk transfer as a potential danger to the banking system. and could

you give us some insights on how we can improve financial stability by regulating these transactions more appropriately? >> so what we've been doing for some time now is looking at them on a case by case basis. and if they really do transfer risk successfully, then that's okay. i mean, you know, it's a good thing if a bank wants to wants to transfer risk off its balance sheet in a way that gets compensated for and all that. but what you want to make sure is that that the risk is really transferred. and that was the problem during the global financial crisis was sort of things that appeared to but did not accomplish a transfer of risk. so we see this coming and we've been, you know, we've been looking at these transactions on an on an ongoing basis. well. >> i commend you for that. and in fact, what happens typically is the transaction becomes complicated by synthetic synthetic risk transfers, as it was the case with synthetic derivatives. so thank you for

your attention to that. we've talked about housing. it's absolutely critical everywhere across the country. we're in a housing shortage of housing is difficult. two of the mainstays of our housing market are fannie mae and freddie mac, helping to support homeownership. does the federal guarantee backing fannie and freddie help make mortgage rates more affordable and homeownership homeownership more accessible? mr. chairman. >> i, i imagine it does hold down mortgage rates. the fact that they're sovereign risk. >> and how important is the 30 year mortgage to ensure that families can afford a home. >> in our housing market? the 30 year mortgage is very important. yeah. >> and i have heard some discussions about eliminating fannie mae and freddie mac, which would be detrimental, i presume, to the housing market. >> that's really a question for you. you know, i mean, we're putting putting them back in the private putting housing finance back in the private sector has

some appeal over the longer run. but i leave that with you. >> thank you, mr. chairman, very much. appreciate it. >> thank you. senator ricketts. >> well, thank you, mr. chairman and ranking member, for holding this important hearing. and thank you, chairman powell, for being here today to talk about our economy and all the things that are going on. i want to address, again, something that the ranking member started talking off about, which was characterizing the cfpb as being the cop on the beat here. but i can tell you as having been a governor and having a department of banking that reported to me that if any consumer would contact us and make a complaint about a bank, even a big bank like jp morgan, we would investigate, as could the occ, the ftc, fdic, the ftc. so to characterize it, nobody is out there looking for consumers, i think is inaccurate, and we ought not to try and scare consumers right now that somehow

this is the case. because if you do have an issue, if you're a consumer, please reach out to your state department of banking because those folks are going to look out for you. i can tell you that because i used to have one of those department of banking, and they did a fantastic job of looking out for the consumers. one of the things that has also impacted consumers is inflation. prices under the biden inflation were up 20%. an average household is paying $13,000 more today than they were for the same standard of living they had before joe biden got elected. we see that grocery prices, for example, are up 22%, rents up 23%. simply put, nebraskans are economically worse off today than they were four years ago, and i expect that that's part of the reason why we saw this change in the administration. they thought that that was not something that they wanted to continue to pursue. they didn't want the same policies being followed. we have to end the reckless federal spending, rein

in inflation and, you know, be responsible about how we make decisions to be able to grow the economy. one of those areas that i am concerned about is the expansion of the fed balance sheet. the fed's balance sheet, before at the end of 2019, before the pandemic, was about $4.1 trillion. by may of 2020, the fed expanded that to 7 trillion. and by 2022, the fed's balance sheet hit an all time record of $8.9 trillion. inflation peaked at 9.1% that year, a high we had not seen since 1981. now, i'm encouraged by the actions the fed has taken with quantitative tightening to shrink the balance sheet down to $6.85 trillion, but at $6.85 trillion, is still too high. and one of my concerns with this chairman is that that's kind of one of your tools to be able to guard against a downturn in the economy or some sort of shock. obviously used it during the pandemic. looking ahead long term, will the fed reserve continue to this course of

unwinding the balance sheet? >> yes. so what we said is that we intend to slow and then stop the decline when reserve balances are somewhat above the level that we judge, consistent with, quote, so-called ample reserves. the most recent data and the feel of the markets is definitely that reserves are still abundant. they're about the level they were at when runoff started, because the runoff has really happened out of the overnight repo facility reverse repo. so yes, it's an ongoing thing. and we're not we're not yet where, where we're headed. >> so what kind of pace can we expect. and i know that obviously there's going to be a lot of factors like what happens to the economy over the course of the next year. but if you were if things were going to go along the way they are today, you've already said the economy is doing well. inflation is a little higher than we want it to be at 2.6%, but unemployment is at 4%. if these commissions and i think you used the word stable quite a bit, if these conditions were to remain stable throughout the course of the year, would you have a range that you could give us where the balance sheet

might be if we were talking again here in january 2026. we. >> basically we're going to be looking at reserve conditions, conditions in reserve markets and trying to stop a little bit above what we consider ample. and we think we're, you know, meaningfully above that. now, we can't put a number on it because you can't directly know the demand for reserves other than by observing behavior in the market and then putting a little bit of a of a buffer on it. so i can't give you an exact number. but for now it's ongoing and we have a ways to go. >> what kind of conditions would happen, have to happen for you to start going back to quantitative easing. >> you know, so go to quantitative easing. so you know, that's a tool we tend to use when we're at the effective lower bound. we can't cut interest rates anymore. so nothing like what you're seeing in the current day. it's a different test for stopping quantitative tightening. but we would use qe going forward only only in a situation where when where rates are at zero. and you know, we're a long way from zero now. >> so that you think that again

just generally speaking then if things were to remain stable you'll continue to unwind the balance sheet to continue the quantitative tightening. i can't give you a range on this. is that what i hear you saying? that's right, that's right. okay. great. well, i encourage you to keep doing that because again, i think that's important to be able to make sure that you've got powder for the next issue that we may face. so thank you very much, mr. chairman. i appreciate you being here. >> senator warner. >> thank you, mr. chairman. chairman powell, good to see you. one of the things we've talked about in the past, and i've got 2 or 3 issues i want to get through fairly quickly. is that our that while our regulatory framework should always promote promote financial innovation, that innovation can't come at the expense of things like anti anti-money laundering, consumer protection, financial stability. i continue to worry and many of these hearings where we keep seeing this regulatory creep outside the