Stock market today: Stocks climb to new records after Fed sticks to the plan on rates | March 20

>>> WELCOME, WE'RE MOMENTS AWAY FROM THE FED'S DECISION ON INTEREST RATES. WE LOOK AT THE MARKETS AHEAD OF THE DECISION. AND WE SEE A MIXED PICTURE WHICH IS NOT UNUSUAL ON A DAY LIKE THIS THAT WE TEND TO SEE A LITTLE BIT OF INDECISION BECAUSE PEOPLE WANT TO KNOW WHAT THE FED WILL DO. TODAY WE KNOW WHAT THEY WILL DO IN TERMS OF RATES. NOTHING. HOWEVER, WHAT WE DON'T KNOW IS WHAT THE FED'S SO-CALLED DOT PLOT THWILL SHOW. THAT IS THEIR SUMMARY OF ECONOMIC PROJECTIONS. IT SHOWS HOW MANY INTEREST RATE CUTS MEMBERS OF THE FED WILL PROJECT THIS YEAR. AND EACH MEMBER OF THE FED IS REPRESENTED BY A DOT ON THE SO-CALLED DOT PLOT. >> YES. TWO THINGS I'M KIND OF LOOKING FOR. ONE IS DO INFLATION EXPECTATIONS SHIFT. THE DIFFERENT READS, RMENCPI, P. AND LAST TIME THEY SAID THAT KEY INFLATION DATA LOOKED TO GAUGE AT 2.4%. SO DOES THAT TICK UP. AND FOLLOWING THAT, HOW MANY CUTS. STILL COMFORTABLE IN THREE IN 2024 OR AFTER THAT FIRMER THAN INFLATION DATA. >> AND SOME SAY MAYBE THERE WOULDN'T BE ANY CUTS AT ALL ABOUT. >> BASE CASE STILL TWO, BUT THERE ARE INCREASING CHANCES. >> AND THIS IS A AFTER A COUPLE HOTTER THAN ESTIMATED INFLATION REPORTS IN JANUARY AND FEBRUARY. SO THE MORE GOOD DATA PERHAPS THAT THE FED WAS LOOKING FOR, THEY HAVEN'T NECESSARILY GOTTEN IT WITH THE SAME TYPE OF MODERATION IN INFLATION INCREASES THAT THEY HAD BEEN HOPING TO SEE. SO THAT IS WHAT WE WILL SEE HOW THEY ARE REACTING. OVER TO JENNIFER WITH THE DECISION. >> NO CHANGE. THEY ARE HOLDING RATES STEADY AS OFFICIALS STILL SEE CUTS THIS YEAR, EVEN AS THEY REVISE INFLATION HIREGHER TO 2.. AND ALSO REVISING OUTLOOK FOR GDP SHARPLY TO 2.1% FROM 1.4% PREVIOUSLY. UNEMPLOYMENT NOW SEEN FINISHING THE YEAR AT 4% VERSUS 4.1% PREVIOUSLY. NINE OFFICIALS NOW SEE CUTTING RATES THREE TIMES THIS YEAR, THAT IS UP FROM SIX WHILE FIVE SEE TWO CUTS. AND TWO SEE ONE CUT. NEXT YEAR THREE CUTS AS OPPOSED TO THE FOUR FORECAST. AND THEY CAUTION THEY WON'T BEGIN LOWERING RATES UNTIL THEY RECEIVE GREATER CONFIDENCE THAT INFLATION IS HEADING BACK TO THEIR 2% TARGET SUSTAINABLY. AND I DO WANT TO ALSO MENTION THE NEUTRAL RATE BECAUSE THAT WAS RAISED BY A HAIR TO 2.6% FROM 2.5% PREVIOUSLY FORECAST. REMEMBER THAT IS THE RATE THAT NEITHER SPURS NOR SUPPRESSES GROWTH. AND SEPARATELY ON THE BALANCE SHEET NO CHANGES IN LANGUAGE IN THE STATEMENT. OFFICIALS SAID THAT THEY WILL CARRY FORWARD WITH PLANS AS PREVIOUSLY ANNOUNCED. THIS DECISION WAS UNANIMOUS. >> JEN, THANK YOU SO MUCH. SO WE SEE THE CHANGE IN THE DOT PLOT, NOW ONLY THREE CUTS EXPECTED BY MEMBERS OF THE FED ON AVERAGE THIS YEAR. OR AT LEAST THAT IS WHERE THE CONSENSUS IS COMPANYALESCING HE. AND LET'S LOOK AT THE MARKETS. AND WE SHOULD MENTION FIRST OF ALL THE INITIAL REACTION IS NOT ALWAYS THE FINAL REACTION AT THE END OF THE DAY OR EVEN THE FOLLOWING DAY AS PEOPLE SIFT THROUGH THE COMMENTS. AND WE STILL HAVE THE PRESS CONFERENCE TO GO. ALL THAT SAID, THE DOW MAKING A BIT OF A MOVE UPWARD HERE. BUT VERY SMALL. SAME FOR S&P 500. AND ALSO SAME FOR THE NASDAQ UP HALF A 1%. AND ALSO WANT TO TAKE A LOOK AT WHAT IS HAPPENING IN TREASURY FUTURES. THE TEN YEAR, YOU CAN SEE IT ON THE RIGHT SIDE OF YOUR SCREEN. AND SHORTER END, SIMILAR THERE. SO MOVE UP IN PRICE AND MOVE DOWN IN YIELDS HERE AS WE LOOK AT WHAT IS GOING ON. AND ALSO WANTED TO GET A QUICK CHECK OF WHAT IS GOING ON WITH THE U.S. DOLLAR INDEX. LITTLE CHANGE TO THE DAY NOT SEEING MUCH REACTION AS OF YET. BUT WE'LL KEEP WATCHING ALL OF THIS. >> LET'S GBRING IN GEORGE MATTE. AND IT IS GREAT TO HAVE YOU ON THE SHOW. LET ME START WITH THE HEADLINE HERE, FED HOLDING RATES STEADY, BUT KIND OF INDICATING THREE CUTS STILL COMING AT SOME POINT THIS YEAR. LET'S START YOUR REACTION TO THE HEADLINES. >> I THINK THE DOT PLOT IS PROBLEMATIC BECAUSE IT ONLY SHOWS BASELINE OUTLOOK. AND THAT HAS NOT CHANGED AT ALL. IT IS ALMOST IDENTICAL TO THE FED RELEASED THREE MONTHS A AGO THE PROBLEM IS THERE IS ALTERNATIVE SCENARIO WHERE INFLATION DOESN'T SETTLE DOWN CLOSE TO THE TARGET THE WAY THAT THEY HAD BEEN HOPING. AND IN IN DECEMBER I SAID THAT 24R6S A PROBABILITY THAT THEY WON'T CUT RATES AND I STILL SEE THAT AS A SIGNIFICANT ARRIVING. WHEN IS UNFORTUNATE HERE, THEY SAY THEY ARE ATTENTIVE TO THE INFLATION RISKS BUT COMMUNICATIONS IS NOT FLAGGING THAT VERY EFFECTIVELY. >> AND ON THAT POINT, DO YOU THINK JAY POUM WELL WILL ACKNOWLEDGE THAT MAYBE NO CUTS COMING AND CAN HE WITHOUT CAUSING CHAOS IN THE MARKETS? >> I THINK ONE THING THAT WILL PROBABLY COMING TODAY IS KIND OF PUSHING BACK A BIT ON THE TIMING OF THE CUTS. THE MARKETS ARE EXPECTING CUTS IN JUNE. WHAT SEEMS MORE PLAUSIBLE IS THAT MANY FED OFFICIALS ARE THINKING SOMETHING LIKE SUMMER OR EARLY FALL. SO THEY COULD CUT THREE TIMES BUT THAT WOULD BE SEPTEMBER, NOVEMBER, DECEMBER. AND THAT'S WOULD GIVE THEM MORE SPACE SPRING INTO SUMMER TO MAKE SURE OF IT. INFLATION SETTLING DOWN THE WAY THAT THEY ARE HOPING. IF IT DOESN'T, THEY COULD WAIT LONGER. >> AND SO IS THIS ABOUT WHAT YOU EXPECTED, GEORGE? >> I THINK THAT IT IS LARGELY WHAT I EXPECTED. I THINK IT IS WHAT THE MARKET WANTED PROBABLY MORE IMPORTANTLY. THE MARKET SEEMS TO BE TAKING THIS AS GOOD NEWS. BUT I THINK THAT THE FED PROBABLY MISSED AN OPPORTUNITY TO TRY HE TO RECALIBRATE IT SLIGHTLY. I THINK THE MARKET MAY HAVE GIVEN THEM AN OUT IF THEY TOOK A CUT AWAY THIS YEAR. BUT THEY KEPT THREE IN PLACE AND I THINK WITH GOOD ROBE. THEY SUGGEST THAT MAYBE THEY DON'T HAVE CONFIDENCE TO SUGGEST THAT THEY ARE FULLY BACK TO NORMAL. SO WE THINK INFLATION WILL BE SOMEWHAT PROBLEMATIC ON THE SERVICES SIDE. WE'VE MADE PROGRESS. A YEAR AGO THIS TIME INFLATION WAS RUNNING CLOSE TO 5%, TODAY IN THE HIGH THREES WHICH IS STILL PROGRESS AND IF MARKETS ANTICIPATE THAT, BUT AT THE SAME TIME, WE HAVE A RETURN TO WHAT NORMAL POLICY RATES SHOULD BE AND WHAT THE FED WANTS THEM TO BE. SO I THINK THE FED MISSED AN OPPORTUNITY TO TRY TO SLIGHTLY READJUST POLICY. YOU ARE RIGHT TO POINT OUT THAT THE INITIAL REACTION IS NOT THE FINAL REACTION BUT DOES SEEM LIKE THE MARKETS ARE TAKING IT AS GOOD NEWS AND REJOICING IN THAT. BUT I THINK AT SOME POINT WE STILL HAVE TO COME BACK TO SOME REALIZATION THAT INFLATION IS NOT YET CURED AND NEEDS TO BE ADDRESSED. >> AND SO ARE YOU A BELIEVER IN THE SO-CALLED IDEA THAT THE LAST MILE IS THE HARDEST HERE? GASOLINE PRICES ARE CREEPING BACK UP. WHY IS IT SO HARD? >> AN IMPORTANT POINT HERE IS THAT WE'RE NOT ON THE LAST MILE. JUST TO UNDERSCORE THIS. SIX MONTHS, A YEAR AGO, CHAIR POWELL WAS EMPHASIZING WHAT HE CALLED SUPER CAR WHICH WAS THE SECTOR EXPLODING HOUSING AND UTILITIES. AND SUPER CORE INFLATION WAS LOOKING REALLY GOOD DURING THE FIRST HALF OF LAST YEAR, COMING DOWN REALLY FAST. GETTING CLOSE TO WHAT EVEN LOOKED LIKE THERE COULD BE A 2% OR 3% READING. WHICH WAS VERY REASSURING. BUT THE PROBLEM NOW, THOSE ARE GOING BACK UP. LATEST THREE MONTH SERIES SUPER CORE NOW AT 6%. 12 MONTH RATE AT 4.5%. AS TO IT IS NOT JUST GASOLINE PRICES. SUPER CORE ARE THE INERTIAL PARTS OF THE ECONOMY, THE MOST STICKIEST PRICES. AND SO IF THOSE ARE RUNNING WELL ABOVE THE FED'S TARGET, THEN IT COULD TURN OUT TO BE VERY PREMATURE FOR THE FED TO START TIGHTENING THIS YEAR. AGAIN, IT IS A RISK CASE, NOT NECESSARILY THE BASE CASE. >> AND GEORGE AS THE MAR GETS GUY, LET ME BRING YOU BACK IN. I'M CURIOUS YOUR TAKE ON DOES THE FED HAVE TO CUT FOR THE MARKET TO MOVE HIGHER OR, NO, IT IS NOT ALL ABOUT THE FED ANY MOST OF, THEY ARE MORE FOCUSED ON THE ECONOMY AND CORPORATE PROFITS? >> I THINK THE MARKET IS LARGELY FOCUSED ON AI RIGHT NOW. I THINK THAT THE FED HAS KIND OF STEPPED AWAY TO TAKE AWAY NEAR TERM RISK. I THOUGHT FRANKLY COMING INTO TODAY'S REPORT WE MIGHT SEE SOME VOLATILITY PERHAPS EVEN A SELLOFF IF IN FACT THE FED ADJUSTED POLICY AS I SUGGESTED THEY MIGHT HAVE. THE FACT THAT THEY DIDN'T SUGGESTS THAT MAYBE IT IS ALL CLEAR. BUT I AGREE, I THINK THAT WE STILL HAVE NOT REALLY MADE SUFFICIENT PROGRESS FRANKLY ON THE INFLATION SIDE BUT MARKETS REALLY FEEL UNCOMFORTABLE. AND I THINK THE FED HAS TO ACKNOWLEDGE THE WEALTH EFFECT THAT IS HAPPENING. AND THAT COULD LIKELY LEAD TO FURTHER SPENDING. WE'VE SEEN SOFTNESS IN SPENDING THE FIRST TWO MONTHS OF THIS YEAR. SOME OF THAT IS THE GIVE BACK OF WHAT WE SAW LAST YEAR. BUT THUS FAR SPENDING HAS BEEN TEMPERED THIS YEAR AND WE'VE SEEN CONSUMERS REACHING TO THEIR CREDIT CARDS AND OTHER FORMS OF PAYMENT TO TRY TO BRIDGE THE GAP BETWEEN THEIR SAVINGS. BUT MAYBE THE SPENDING BOOM MIGHT REPEAT ITSELF SECOND OF THIS YEAR AND WE MIGHT HAVE TO ADDRESS INFLATION UNTIL PRESSURES COME THE SECOND HALF OF THIS YEAR STILL. >> SO DOES THAT SUGGEST THEN THAT IF INVESTORS ARE SORT OF IGNORING THE FED OR NOT PAYING AS MUCH ATTENTION TO THE FED BECAUSE THEY ARE LOOKING AT THE AI SHINY OBJECT THAT THEY DO SO AT THEIR PERIL, THAT THERE IS A RISK THERE? >> I THINK THAT YOU HAVE TO BE CAREFUL BECAUSE I DO THINK THAT AI IS REAL. AND I THINK THAT THERE IS LONG TERM BEHIND THE AI TREND. BUT WHEN YOU SEE MARKET MULTIPLES APPROACHING 22, 23 TIMES EARNINGS, THAT GETS TO BE ELEVATED AND THERE ISN'T AS MUCH RISK IN THE MARKET ANYMORE, SO I THINK IT ALSO BEGS THE PROBLEM WE'RE PROBABLY DUE FOR A PULL BACK. SO I THINK INVESTORS SHOULD BE PREPARED FOR VOLATILITY SHORT TERM BUT LONG TERM I THINK IT COULD AFFECT THE ECONOMY IN A POSITIVE WAY. >> AND I WANT TO GET YOUR TAKE ON ANOTHER ISSUE. YOU WILL HEAR SOME ECONOMISTS WHO SAY THE FED SHOULD BE OPEN TO THE IDEA OF MOVING THE GOALPOSTS, THAT THEY SHOULD LEARN AND LOVE 3%. WHAT IS YOUR REACTION TO THAT? >> WELL, THE MANDATE FROM CONGRESS IS NOW MORE THAN 50 YEARS OLD. AND MAXIMUM EMPLOYMENT AND PRICE STABILITY. AND WHEN CONGRESS GAVE THE MANDATE, PEOPLE THOUGHT THAT PRICE STABILITY MEANT SOMETHING CLOSE TO ZERO INFLATION. IN THE '90s, CHAIRMAN GREENSPAN SAID 1% MIGHT BE OKAY. AND IN THE 2000s, FED SAYS 2% IS REALLY A GOOD NUMBER. CENTRAL BANK TARGET 2/%, THAT ALLOWS A BIT OF A BUFFER. I THINK IF THE FED WERE TO CHANGE THE TARGET UPWARD FURTHER, IT WOULD BE A MORE CLEAR DEVIATION FROM WHAT THE LAW SAYS AND I THINK THAT THEY WOULD TO HAVE CONGRESSIONAL HEARINGS TO DISCUSS EITHER CONGRESS CHANGES THE MANDA DATED GIVES THEM MORE LATITUDE OR GET IT BACK TO WHAT IS REASONABLY CONSISTENT WITH PRICE STABILITY. >> INTERESTING. SO GEORGE, AS WE TRY TO FIGURE OUT WHAT THE FED IS GOING TO DO HERE, ARE YOU MAKING ANY CHANGES TO YOUR STRATEGY HERE AS YOU -- ARE THERE THINGS THAT YOU WILL BE LISTENING TO SPECIFICALLY FROM JAY POWELL TO KEY OFF OF WHAT YOU ARE DOING WITH YOUR PORTFOLIOS? >> I DON'T THINK NEAR TERM THAT WE ARE LOATH TO MAKE ANY CHANGES. THERE ARE CERTAINLY ELEMENTS OF THE MARKET THAT ARE STILL ATTRACTIVELY PRICED WHERE SOME HAVE BEEN OVERPRICED IN OUR VIEW. BUT WE STILL THINK THE MARKET IS ENREASONABLY VALUED TO SOME EXTENT AND I THINK THE FACT THAT WE HAVE TO RECOGNIZE THAT THE FED IS STILL TRYING TO FIND THEIR CONFIDENCE AND FINDING WERE EQUILIBRIUM SHOULD BE. AND SO WE'RE NOT LIKELY TO TAKE RISK OUT, BUT ALSO NOT LIKELY TO TAKE RISK DOWN BECAUSE THERE ARE STILL SIGNS OF HOPE AND SIGNS OF OPTIMISM IN THE ECONOMY STILL. FACT OF THE MATTER IS THAT THEY ADJUSTED GROWTH TARGET UP AND I THINK IT NEEDS TO BE MENTIONEDER RESPECT TIVE OF THEIR OUTLOOK F INFLATION, BUT THEY ALSO ADJUSTED FORECASTS AND OUTLOOK FOR GROWTH WHICH ESSENTIALLY IS MARKET TO MARKET WHAT WE KNOW, BUT STILL VALIDATION THAT THERE IS ECONOMIC STRENGTH. >> AND IF YOU WERE AT THE PRESSER, WHAT IS THE ONE QUESTION YOU WOULD HAVE FOR MR. POWELL? >> WELL, BY THE WAY, I WOULD WANT TO WORK WITH THE RANKING EEMENT. WE DESIGNED THE DOT PLOT A DECADING A GO. BUT THERE IS ALWAYS ROOM FOR IMPROVE. A LIMITATION IS THAT IT SHOWS THE END OF THE YEAR WITHOUT ANY TIME. IT WOULD BE CONSTRUCTIVE IF THE CLAIRE CHAIR POWELL LIKELY THAT 28D NOT COME EARLY SUMMER OR EARLY FALL. THAT WOULD HELP THE MARKETS. I THINK PART OF THE MARKET RISK THAT I SEE IS THE FED KEEPS PUSHING BACK THE MARKET EXPECTATIONS INCREMENTALLY TO LATER. AND THAT CREATES DOWNWARD PRESSURE. >> WE'LL SEE IF THAT HAPPENS. REALLY GREAT TO CATCH UP WITH YOU. FOR MORE ON WHAT WE HEARD ALREADY TODAY, THREE RATE CUTS FORECAST FOR 2024, WHAT IT MEANS FOR INVESTORS. LET'S GET TO MORGAN STANLEY INVESTMENT MANAGEMENT CIO AND BROAD MARKETS FIXED INCOME HEAD. MICHAEL, THANKS FOR BEING HERE. SO SORT OF FIRST BLUSH REACTION HERE. DO YOU THINK THAT THE FED IS MANAGING THE MARKET'S EXPECTATIONS APPROPRIATELY? >> I THINK THAT THEY ARE DOING A GOOD JOB OF STEADYING THE SHIP. THERE IS NO CHANGE IN THE LONG TERM VIEWS ABOUT INFLATION WHICH HAS BEEN UNDERPERFORMING OR TOO HIGH IN RECENT MONTHS RELATIVE TO WHAT PEOPLE THOUGHT IS MORE A BLIP. OF COURSE THE 2025 FORECAST, THEY WILL BE WHERE THEY THOUGHT THEY WOULD BE. SO NO CHANGE IN THE LONG TERM VIEW THAT THIS INFLATIONARY PROCESS IS ON TRACK. THEY DON'T HAVE TO ADJUST MONETARY POLICY ANY SIGNIFICANT WAY THIS YEAR TO ACHIEVE THE TARGETS. SO STEADY AS SHE GOES. NO REASON TO THINK THAT WE WON'T ACHIEVE OUR OBJECTIVES. SO NO SURPRISES. EVERYTHING IS OKAY. AND SO IN A SENSE ON TRACK. >> AND THEY DID LOOKING AT THE PROJECTIONS HERE, IT DID TICK UP A BIT. WHEN YOU LOOK AT 2024 AND TRAJECTORY OF INFLATION, WHAT DOES IT LOOKS LIKE TO YOU? >> I THINK THAT THEY ARE REALISTIC IN TERMS OF MARKING IT UP A BIT. BECAUSE THE FIRST QUARTER HAS BEEN QUITE DISAPPOINTING. CORE WAS UP JANUARY AND FEBRUARY. AND THAT IS WAY TOO HIGH TO ACHIEVE THE LOW TWO NUMBER AT THE END OF THE YEAR. SO I THINK THAT THEY BOUGHT INTO THE IDEA THAT THIS IS MORE OF A BLIP. BUT WHEN WE RETURN TO THE DISINFLATIONARY PROCESS WE SAW IN THE FOURTH QUARTER OF LAST YEAR, WE WERE TICKING ALONG AT ALMOST BELOW TARGET OF 1.6% ANNUALIZED RATE. NOW WITH ACCELERATED HIRE. YOU LOOK BEING AT A MOVING AVERAGE TREND. I DO THINK THEY TOOK OUT A RATE CUT AT 2025. I THINK THEY ACKNOWLEDGE THE FACT THAT GROWTH IS STRONGER THAN EXPECTED. AND I THINK THEY UPGRADE THE GROWTH FORECAST ACROSS THE BOARD AND RAISING THE LONG TERM FED FUNDS RATE IS REASONABLE GIVEN THE GROWTH OF THE ECONOMY WITH MORE POTENTIAL THAN EXPECTED. >> AND SO HOW DO THEY MAKE THE ARGUMENT THAT THEY SHOULD BE CUTTING WITH THE INFLATION PROJECTION STILL AT 2.6%. >> I THINK IT IS THE TREND IN THE ECONOMY. IF YOU LOOK AT MODELS THAT PEOPLE TYPICALLY USE TO THINK ABOUT HOW THE FED SETS INTEREST RATES, THERE ARE THINGS THAT LOOK AT RELATIONSHIP OF UNEMPLOYMENT TO FULL EMPLOYMENT. RELATIONSHIP OF INFLATION TO TARGET INFLATION. BUT THOSE MODELS ALL SUGGEST THAT THE FED SHOULD BE CUTTING INTEREST RATES A BIT THIS YEAR. THREE CUTS, TWO CUTS? HIGH ENOUGH OR EVEN TOO HIGH TO ACHIEVE THE OBJECTIVE OVERTIME. IF THEY DIDN'T CUT THREE TIMES, INFLATION COULD BE TOO LOW. IN OTHER WORDS, THEY HAVE TO KEEP ADJUSTING THE FED FUNDS RATE DOWN AS THE INFLATION CONTINUES TO DRIFT LOWER OTHERWISE POLICY PASSIVELY TIGHTENED OVER TIME. SO I THINK THAT IS WHAT THEY ARE SAYING. POLICY IS MORE THAN SUFFICIENTLY TIGHT. IT CAN EASE AT THE MARGINS BUT NO BIG TIME EASING ANYTIME SOON. IT IS MORE A GLIDE PATH. >> AND I'M LOOKING AT THE YELLED ON THE TEN YEAR AT 4.29. CURIOUS WHEN YOU SEE THAT HEADED IN THE NEAR TO INTERMEDIATE TERM HERE. >> IT IS PRETTY TOUGH FOR IT TO MOVE MUCH ANY WHICH DIRECTION FROM CURRENT LEVELS. BUT THE FED CONTINUES TO CUT RATES -- CONTINUES TO CUT RATES AS EXPECTED, THEY WILL GET DOWN TO 4 AND SOMETHING, BUT TEN YEAR IS 4.29. SHOULDN'T THE YIELDS CURVE BE P SLOW. AND DIFFICULT TO SEE THAT GIVEN TRAJECTORY OF MONETARY POLICY OR FED FUNDS RATE. SO I THINK THE TEN YEAR YIELD IS STUCK SOMEWHERE BETWEEN THE VERY HIGH 3s, 3.8. MAY NOT GO A WHOLE LOT HIGHER IF INFLATION CONTINUES TO GET BETTER. BUT AS WE HEARD FROM EARLIER, INFLATION HAS TO GET BETTER. Q1 INFLATION'S NEGATIVE SURPRISES HAVE TO GO AWAY AND WE HAVE TO RESUME THE 0.2 MONTHLY OTHERWISE THE YEAR END NUMBER WILL BE IN JEOPARDY. >> AND MICHAEL, YOU MENTIONED THE YIELD CURVE INVERSION. AT LEAST BETWEEN THE 10s AND 2s THAT WE CONTINUE TO SEE. IS THAT JUST BROKEN AS A PREDICTOR OF RECESSION, SHOULD WE JUST NOT PAY ATTENTION TO IT ANYMORE? I MEAN, IT HAS BEEN INVERTED FOR A WHILE NOW. >> FOR A VERY LONG TIME. ONE OF THE LONGEST PERIODS OF INVERSION WE'VE SEEN. I THINK IT REFLECTS A COUPLE FACTORS. ONE IS THE TEMPORARINTEMPORARIN. PEOPLE WILL THINK INFLATION WILL DROP TO LOWER LEVELS. AND ATTRACTIVENESS OF BONDS IS PRETTY GOOD. REAL INTEREST RATES IS ALMOST 2%. AND 2% REAL RATE OF RETURN ON U.S. TREASURY SECURITY IS VERY ATTRACTIVE BY HISTORICAL STANDARDS. SO THE ABSOLUTE LEVEL OF A LONG TERM YIELDS LOOKS PRETTY ATTRACTIVE TO LONGER TERM INVESTORS LOOKING THROUGH THE LAST COUPLE OR NEXT COUPLE OF MONTHS. A SO YEAH, I CAN GET MORE YIELD IN TWO YEAR, BUT WHY NOT LOCK IN THE HIGHER YIELDS BECAUSE I DON'T KNOW HOW LONG THEY WILL LAST. AND PLUS WE KNOW THE FED HAS DONE A LOT OF QE AND THAT SHOULD BE SUPPRESSING RISK PREMIUM AND LONG TERM YIELDS. SO THAT SHOULD PUT UPWARD PRESSURE. >> AND FOR THE FIXED INCOME INVESTORS LISTENING, WHAT AREAS WOULD YOU GUIDE THEM TO AVOID RIGHT HERE? >> I THINK TO AVOID BEING TOO BULLISH ON BONDS. EXPECTING SOME BIG DROP IN INTEREST RATES. THE ECONOMY IS DOING JUST FINE. THINGS ARE TICKING ALONG. DON'T EXPECT ANY MAJOR ECONOMIC DOWN TURN SUCH THAT WE'LL HAVE A MAJOR BOND RALLY OF 4.3% ALL THE WAY DOWN TO 3% AT ANY POINT IN THE FUTURE. AND THAT WHILE RISK ASSETS PARTICULARLY STUFF THAT WE LOOK AT IN TERMS OF THE INVESTMENT MARKETS SEEM PRETTY WELL SUPPORTED MOVING IN TO THE FED RATE CUTTING CYCLE WHEN THE ECONOMY IS DOING JUST FINE. SO THE ECONOMY IS CUTTING RATES NOT JUST BECAUSE OF GROWTH NEEDS, BUT REFLECTING THAT INFLATION IS HEADED TOWARD THE TARGET WHERE THEY NEED TO BE AND ACTUALLY VERY SUPPORTIVE OF RISK ASSETS IN THE ECONOMY. SO DON'T GET TOO BEARISH ON RISK ASSETS OR BULLISH ON INTEREST RATES. >> AND WE'VE TALKED TO INVESTORS WHO SAY THE MONEY MARKET FLED WE'VE SEEN, BECAUSE OF THE YIELDS THERE, SHOULD START TO REVERSE. PEOPLE SHOULD START LOOKING TO THE MORE RISKY AREAS OF THE MARKET. BUT AS THE FED PUSHES IT OFF AND PUSHES IT OFF AND PUSHES IT OFF IN TERMS OF RATE CUT, WILL WE SEE THE FLOWS BE MORE PERSISTENT PERHAPS? >> IT IS CERTAINLY POSSIBLE. I THINK THERE ARE A LOT OF RETAIL INVESTORS, MYSELF INCLUDED LOOKING AT WHAT DO I GET FOR EXTENDING MATURITY. IF YOU DON'T GET PAID A REASONABLE EXTRA PREMIUM, WHY SHOULD I BOTHER UNLESS I'M TRYING TO LOCK IN A LONG TIME RETRACTOR OF ABSOLUTE YIELD. I DON'T KNOW WHEN YIELDS WILL COME DOWN, BUT IF I LOCK IN THE YIELDS TODAY, LONGER TERM IT LOOKS PRETTY GOOD. SO PENSION FUNDS, INSURANCE COMPANIES, LIABILITY MANAGERS WOULD LOOK AT THE LEVEL OF TREASURY YIELDS AND INVESTMENT GRADE YIELDS IN SORT OF THE TEN YEAR LOOK. 5.5% CORPORATE BOND YIELDS LOOK ATTRACTIVE FROM LONGER TERM PERSPECTIVE. SO I THINK THAT YOU WILL TRICKLE THE MONEY OUT BUT IT WON'T SEE A BIG REVERSAL UNTIL WE GET A REVERSAL OF THE YIELD CURVE. >> MICHAEL, THANKS SO MUCH FOR JOINING US. >> YOU'RE WELCOME. >>> FED'S UNCERTAINTY ABOUT THE STATE OF THE ECONOMY STILL LOOMING AHEAD OF THE FED DECISION. FEW EXPECTING THE FED TO CUT RATES. SO MANY SHIFTING FOCUS TO THE DOT PLOT. AND FOR MORE WE BRING IN CLAUDIA. GOOD TO SEE YOU. SO ZERO CONFIDENT IN THE DOT PLOT. W WALK US THROUGH THAT. >> IT IS NOT A USEFUL TOOL FOR COMMUNICATION. THERE IS SO MUCH ATTENTION IS THE MEDIAN THREE CUTS OR TWO CUTS AND MARKET COULD HAVE MOVED IN IT SWITCHED. AND I THINK WHAT WE FORGET IS THAT THE DOT PLOT, MEDIAN IN PARTICULAR, IT IS NOT THE CONSENSUS FORECAST FOR THE FMOC. YOU HAVE 19 PEOPLE RUNNING OFF DOING THEIR OWN PROJECTIONS AND THEN DOING THEIR APPROPRIATE POLICY. IT IS FINE FOR IN THE BUILDING BUT IT SHOULD NOT BE OUT IN PUBLIC. AND THANK GOODNESS JAY POWELL KEPT IT TOGETHER. THIS IS A BORING DOT PLOT AND BORING STATEMENT. YAY, GOOD, WE NEED MORE DATA BEFORE WE GET EXCITED. AND IT IS FUNNY ABOUT THE DOT PLOTS. EVEN AN DRYDREW LEVIN SAYING MA WERETHINK THE SITUATION. SO DO YOU THINK THAT THEY SHOULD JUST GET RID OF IT AND BRING IT BACK INTO THE MEETING ROOMS AND THAT IS IT? >> THEY NEED JAY POWELL AT THE PRESS CONFERENCE. THAT IS IT. HE SPEAKS FOR THE FMOC. THOSE DOTS ARE LIKE PLAYING FED CHAIR FOR THE DAY AND IN FACT IT IS EVEN WORSE. IT IS LIKE PLAYING FMOC FOR THE DAY. AND THIS IS NOT THE WAY WE SHOULD COMMUNICATE. THEY ARE HIGHLY TECHNICAL. I KNOW WHY ANDY PUT IT TOGETHER. AND BEN AND JANET ARE GREAT, I COULD SPEND HOURS ON IT THINKING ABOUT WHAT THEY MEAN. BUT THERE IS NOT WHAT MARKETS SHOULD BE DOING AT 2:00 ON A WEDNESDAY THAT THE FED HAS PUT OUT THEIR AT THE STATEMENT. SO JAY POWELL IS CAPABLE OF DOING THIS AND I'M SO HAPPY WE WON'T SIT THROUGH A PRESS CONFERENCE OF HIM FIGHTING WITH THESE DOTS. >> THE PROJECTIONS FOR INFLATION DID PICK R. TICK UP A BIT HERE. I'M INTERESTED HOW DO YOU SEE INFLATION PLAYING OUT IN 2024? >> I AGREE WITH THEIR TRAJECTORY. INFLATION IS COMING DOWN. WE'LL LIKELY LEARN AT THE END OF THIS MONTH PC CORE INFLATION WAS 2.8 SOMEWHERE THERE. THE FED HAS A DUAL MANDATE. AND THE FED IS FULLY AWARE OF THAT, SO WE HAVE GOTTEN A MIXED BAG OF DISAPPOINTING NEWS OUT OF GATE. I THINK THEY ARE RIGHT, I THINK THAT IT WILL BE SLOWER. IT HAS BEEN A SLOG. AND YET WE ALL AGREE THIS IS WHERE IT IS GOING. AND THE DATA EVEN THE LAST COUPLE MONTHS IF YOU LOOK UNDER THE HOOD, THIS IS WHERE IT IS GOING. WE'RE GETTING BACK TO TWO. >> AND SO WHEN IS THAT HAPPENING? WE TALK ABOUT HOW UNEVEN IT ALL IS, THE EFFECTS OF THE INTEREST RATE INCREASES THROUGH THE SYSTEM. BUT I THINK THAT ALSO, YOU KNOW, YOUR CONFIDENCE NOT WHERE STANDING, I THINK A LOT OF PEOPLE ESPECIALLY CONSUMERS ARE HAVING TROUBLE GETTING THEIR ARMS AROUND AND UNDERSTANDING WHY IT IS NOT COMING DOWN FURTHER AND FASTER. >> ROOT OF ALL EVIL IN THE CYCLE HAS BEEN COVID. WE LIVED THROUGH AN EXTREMELY DISRUPTIVE EXPERIENCE BOTH IN OUR LIVES AND LIVELIHOODS. FRANKLY, I WANT TO PUT IT IN THE REARVIEW MIRROR TOO. PEOPLE MAKING DECISIONS ABOUT ECONOMIC POLICY LIKE THE FED CANNOT. LIKE THEY HAVE TO UNDERSTAND THE DISRUPTIONS THEY HAVE TO WATCH THEM WORK OUT. AND IT HAS BEEN REALLY HARD TO SEE IT, BUT LAST YEAR IT WAS VERY CLEAR, INFLATION CAME DOWN A LOT, NOT ENOUGH, BUT A LOT. AND WE KEPT THE LABOR MARKET GOING, UNEMPLOYMENT WAS LOW, GROWTH WAS HIGH. AND SO THAT IS A REALLY CLEAR SIGN. AND I DO NOT EXPECT THE REGULAR PERSON TO GET THIS, BUT THAT IS SUCH A CLEAR SIGN THAT WAS COVID, THAT WAS PUTIN, UNVIND I WINDING IT IS VERY SLOW. BUT TO WORK THINGS OUT, THIS IS NOT TRIVIAL BUT WE'RE HEADED IN THE LAST DIRRIGHT DIRECTION. >>. >> AND SO DOES IT TRACK WITH WHAT YOU ARE SEE SOMETHING. >> FED IS CATCHING UP WITH REALITY FED THOUGHT WE'D SEE BELOW TREND GROWTH AND WE SAW THE OPPOSITE, WE HAD FAST GROWTH. THERE IS A LOT OF REASONS. WE HIGHER PRODUCTIVITY GROWTH. AND SO THE ECONOMY HAS SOMETHING GOING AND YET INFLATION COMING DOWN. SO HONESTLY, THE FED IS LEARNING. THEY LEARNED FROM LAST YEAR. WE DIDN'T HAVE TO SLOW IT DOWN AS MUCH. WE CAN GET INFLATION DOWN. IT IS A GOOD FORECAST. THIS IS WHAT WE REALLY WANT TO HAVE HOLD UP. INFLATION COMING DOWN, MAYBE A LITTLE SLOWER. GROWTH HIGH AND UNEMPLOYMENT LOW. IF WE DO THIS, THIS WILL BE A GREAT YEAR. >> CLAUDIA, DO YOU THINK THAT THE FED WILL BE CUTTING THIS YEAR IN JUNE AND JULY? AS WE'VE BEEN TALKING ABOUT, THERE ARE SOME WHO ARE SAYING THAT WE MIGHT NOT EVEN GET ANY CUTS THIS YEAR. >> FED HAS BEEN VERY CLEAR AND I'M SURE WE'LL HEAR THIS MANTRA AGAIN SOON, IT IS ALL ABOUT GOOD DATA. THEY NEED MORE GOOD INFLATION DATA. AND PLUS NOBODY CAN FORECAST THAT. WE'VE DONE A BAD JOB OF THAT SO FAR. IF WE'RE ON THIS PATH AND GETTING AT LEAST OKAY TO GOOD DATA, THEN YES THEY WILL CUT. FRANKLY THIS JUNE VERSUS JULY, THIS IS LIKE REALLY SPLITTING HAIRS, I AM ON THE SIDE OF JULY JUST BECAUSE I THINK THAT THE FED WILL DRAG THEIR FEET UNTIL IT IS PAINFULLY OBVIOUS. AND YET I STILL THINK IF THEY START IN JULY, THEY COULD DO THREE CUTS. BUT THERE IS NOTHING MAGICAL ABOUT EVERY OTHER MEETING AND FRANKLY AS AN INSTITUTION, THEY DO NOT CARE WHO WINS IN NOVEMBER. THEY CARE ABOUT AND ARE BY LAW BOUND TO THEIR DUAL MANDATES SO, YEAH, I THINK SUMMER, FRANKLY, I THINK THEY SHOULD BE CUTTING SOONER, BUT THE FED IS THE FED. >> THE FED IS THE FED. CLAUDIA, WE ALWAYS LOVE TALKING TO YOU. THANKS FOR JOINING US. >> THANK YOU. >>> AS CLAUDIA ALLUDED TO, WE'RE EXPECTING TO HEAR FROM JAY POWELL IN JUST A FEW MOMENTS.CHAIRMAN OF THE FEDERAL RESERVE IN HIS PRESS CONFERENCE. WHEN HE WILL LIKELY BE DISCUSSING ALL OF THESE ISSUES THAT WE HAVE BEEN DISCUSSING THE PAST HALF HOUR. HE WILL BE FIELDING QUESTIONS FROM THE MEDIA. AS YOU CAN SEE, WE HAVE SEEN THE MAJOR AVERAGES TAKE A LEG UP AND THEN SORT OF STAY THERE. WE COULD SEE MORE MOVEMENT IN THEM OF COURSE AS WE GET THROUGH THE CONFERENCE. WE NEED TO TALK ABOUT FIXED INCOME TOO. SO IT IS INTERESTING THIS SORT OF, YOU KNOW -- I WOULDN'T CALL IT SIDEWAYS EXACTLY, BUT NOT LIKE IT IS A BIG MOVE AFTER WHAT WAS AS CLAUDIA SAID A BORING STATEMENT. >> THE FED IS THE FED. THAT'S IT. >> LIKE DON'T FIGHT THE FED. >> AND LOOK AT THE YIELD ON THE BENCHMARK TEN YEAR IS FLAT, NO FIREWORKS RIGHT NOW. YOU SEE MODEST MOVES ACROSS THE MAJOR AVERAGES. SBX UP ABOUT 0.3%. IT WILL BE INTERESTING TO SEE JAY POWELL KIND OF TONE HE STRIKES. AS CLAUDIA WAS SAYING, THEY DID TICK UP THE INFLATION EXPECTATIONS AND I THINK THAT HE WILL SAY THE TRAJECTORY IS GOING RIGHT BUT I NEED A BIT MORE GOOD DATA. >> AND THE OTHER THING THAT IS INTERESTING THAT BOTH SHE AND ANDREW LAVIN TALKED ABOUT IS THAT THE DOT PLOT SHOULD BE TAKEN WITH A GRAIN OF STALT. A SALT. JAY POWELL HAS SAID THAT BEFORE. DON'T TAKE IT AS GOSPEL. PROBABLY NOT GOING TO CHANGE IT. >> AND WITH THE DIVISIVE ELECTION COMING, HE COULD GET A QUESTION ON THAT TOO. >> AND LET'S LISTEN IN NOW. >> GOOD AFTERNOON. MY COLLEAGUES AND I REMAIN SQUARELY FOCUSED ON THE DUAL MANDATE TO PROMOTE MAXIMUM EMPLOYMENT AND STABLE PRICES FOR THE AMERICAN PEOPLE. THE ECONOMY HAS MADE CONSIDERABLE PROGRESS TOWARDS OUR DUAL MANDATES OBJECTIVES. INFLATION HAS EASED SUBSTANTIALLY WHILE THE LABOR MARKET HAS REMAINED STRONG. AND THAT IS VERY GOOD NEWS. BUT INFLATION IS STILL TOO HIGH. ONGOING PROGRESS IN BRINGING IT DOWN IS NOT ASSURED. AND THE PATH FORWARD IS UNCERTAIN. WE ARE FULLY COMMITTED TO RETURNING INFLATION TO OUR 2% GOAL. RESTORING PRICE STABILITY IS ESSENTIAL TO ACHIEVE A SUSTAINABLY STRONG LABOR MARKET THAT BENEFITS ALL. TODAY THE FMOC DECIDED TO LEAVE THE POLICY SBR INTEREST RATE UNCHANGED AND CONTINUE TO REDUCE SECURITIES HOLDINGS. RESTRICTIVE STANCE ON MONETARY POLICY HAS BEEN PUTTING DOWNWARDS PRESSURE ON ECONOMIC ACTIVITY AND INFLATION. AS THE LABOR MARKET TIGHTNESS EASED AND PROGRESS ON INFLATION HAS CONTINUED, RISKS TO ACHIEVING OUR EMPLOYMENT AND INFLATION GOALS ARE MOVING INTO BETTER BALANCE. I'LL HAVE MORE TO SAY ABOUT MONETARY POLICY AFTER REVIEWING ECONOMIC DEVELOPMENTS. INDICATORS SUGGEST IT IS EXPANDING AT A SOLID PACE. GDP GROWTH IN THE FOURTH QUARTER LAST YEAR CAME IN AP3.2%. IT WAS BOLSTERED BY STRONG CONSUMER DEMAND AS WELL AS IMPROVING SUPPLY CONDITIONS. ACTIVITY IN THE HOUSING SECTOR WAS SUBDUED OVER THE PAST YEAR LARGELY REFLECTING HIGH MORTGAGE RATES. HIGH INTEREST RATES ALSO APPEAR TO HAVE WEIGHED ON BUSINESS FIXED INVESTMENT. IN OUR SUMMARY OF ECONOMIC PROJECTIONS, PARTICIPANTS EXPECT GDP GROWTH TO SLOW FROM LAST YEAR'S PACE WITH A MEDIAN PROJECTION OF 2.1% THIS YEAR AND 2% OVER THE NEXT TWO YEARS. PARTICIPANTS GENERALLY REVISED UP THEIR GROWTH PROJECTIONS SINCE DECEMBER. LABOR MARKET REMAINS RELATIVELY TIGHT BUT SUPPLY AND DEMAND CONDITIONS CONTINUE TO COME INTO BETTER BALANCE. OVER THE PAST THREE MONTHS, PAYROLL JOB GAINS AVERAGED 265,000 JOBS PER MONTH. THE UNEMPLOYMENT RATE HAS EDGED UP BUT REMAINS LOW AT 3.9%. STRONG JOB CREATION HAS BEEN ACCOMPANIED BY AN INCREASE IN SUPPLY OF WORKERS REFLECTING INCREASES IN PARTICIPATION AMONG INDIVIDUALS AGED 25 TO 54 YEARS. AND CONTINUED STRONG PACE OF IMMIGRATION. NOMINAL WAGE GROWTH HAS BEEN EASING AND JOB SAY KANSAS I HAVE HAVE -- VACANCIES HAVE DECLINED. BUT LABOR DEMAND EXCEEDS SUPPLY. MEETIAN UNEMPLOYMENT RATE IS 4.0% END OF THIS YEAR.DETIAN UN 4.0% END OF THIS YEAR.TIAN UNEM 4.0% END OF THIS YEAR.IAN UNEMP% END OF THIS YEAR. 4.1 PORT 4.1% END OF NEXT YEAR. LONGER TIME INFLATION EXPECTATIONS REMAIN WELL ANCHOR AS REFLECTED IN BROAD RANGE EVER SURVEYS OF HOUSEHOLDS, BUSINESSES AND FORECASTERS AS WELL AS MEASURES FROM FINANCIAL MARKETS. MEDIAN PROJECTIOCEED FALLS TO 4 2.2% NEXT YEAR AND 2% IN 2026. FED'S MONETARY POLICY ACTIONS ARE GUIDED BY OUR MANDATE TO PROMOTE MAXIMUM EMPLOYMENT AND STABLE PRICES FOR THE AMERICAN PEOPLE. MY COLLEAGUES AND I ARE BEING A DUTIESLY AWARE THAT HIGH INFLATION IMPOSES SIGNIFICANT HARDSHIP AS IT ERODES PURCHASING POWER ESPECIALLY FOR THOSE LEAST ABLE TO MEET THE HIGHER COSTS OF OF ESSENTIALS LIKE FOOD, HOUSING AND TRANSPORTATION. WE ARE STRONGLY COMMITTED TO RETURNING INFLATION TO OUR 2% OBJECTIVE. THE COMMITTEE DECIDED AT TODAY'S MEETING TO MAINTAIN TARGET RANGE FOR THE FEDERAL FUNDS RATE AT 5.25 TO 5.5%. AND TO CONTINUE THE PROCESS OF SIGNIFICANTLY REDUCING OUR SECURITIES HOLDINGS. AS LABOR MARKET TIGHTENS AS EASED AND PROGRESS ON INFLATION HAS CONTINUED, THE RISKS TO ACHIEVING OUR EMPLOYMENT AND INFLATION GOALS ARE COMING INTO BETTER BALANCE. WE BELIEVE THAT OUR POLICY RATE IS LIKELY AT ITS PEAK FOR THIS TIGHTENING CYCLE. AND THAT IF THE ECONOMY EVOLVES BROADLY AS EXPECTED, IT WILL LIKELY BE APPROPRIATE TO BEGIN DIALING BACK POLICY RESTRAINT AT SOME POINT THIS YEAR. ECONOMIC OUTLOOK IS UNCERTAIN AND WE REMAIN HIGHLY ATTENTIVE TO INFLATION RISKS. WE'RE PREPARED TO MAINTAIN THE CURRENT TARGET RANGE FOR THE FEDERAL FUNDS RATE FOR LONGER IF APPROPRIATE. WE KNOW THAT REDUCING POLICY RESTRAINT TOO SOON OR TOO MUCH COULD RESULT IN A REVERSAL OF THE PROGRESS WE HAVE SEEN ON INFLATION. AND ULTIMATELY REQUIRE EVEN TIGHTER POLICY TO GET INFLATION BACK TO 2%. AT THE SAME TIME REDUCING POLICY RESTRAINT TOO LATE OR TOO LITTLE COULD UNDULY WEAKEN ECONOMIC ACTIVITY AND EMPLYMENT AND CONSIDERING ANY ADJUSTMENTS TO THE TARGET RANGE FOR THE FEDERAL FUNDS RATE THE COMMITTEE WILL CAREFULLY ASSESS INCOMING DATA, EVOLVING OUTLOOK AND BALANCE OF RISKS. THE COMMITTEE DOES NOT EXPECT IT WILL BE APPROPRIATE TO REDUCE THE TARGET RANGE UNTIL IT HAS GAINED GREATER CONFIDENCE THAT INFLATION IS MOVING SUSTAINABLY DOWN TOWARD 2%. OF COURSE WE'RE COMMITTED TO BOTH SIDES OF OUR DUAL MANDATE AND UNEXPECTED WEAKENING IN THE LABOR MARKET COULD ALSO WARRANT A POLICY RESPONSE. WE'LL CONTINUE TO MAKE OUR DECISIONS MEETING BY MEETING. FMOC PARTICIPANTS WROTE DOWN THEIR INDIVIDUAL ASSESSMENTS FOR THE FEDERAL FUNDS RATE BASED ON WHAT EACH JUDGES TO BE THE MOST LIKELY SCENARIO GOING FORWARD. IF THE ECONOMY EVOLVES AS PROJECTED, MEDIAN PARTICIPANT PROJECTS THAT THE APPROPRIATE LEVEL OF THE FEDERAL FUNDS RATE WILL BE 4.6% AT THE END OF THIS YEAR, 3.9% AT THE END OF 2025, AND 3.1% AT THE END OF 2026. STILL ABOVE THE MEDIAN LONGER TERM FUNDS RATE. THESE PROJECTIONS ARE NOT A COMMITTEE DECISION OR PLAN IN THE ECONOMY DOES NOT EVOLVE AS PR PROJECTED, THE PATH WILL ADJUST AS APPROPRIATE. TURNING TO OUR BALANCE SHEET, OUR SECURITIES HOLDINGS HAVE DECLINED BY NEARLY $1.5 TRILLION SINCE THE COMMITTEE BEGAN REDUCING OUR PORTFOLIO. AT THIS MEETING, WE DISCUSSED ISSUES RELATED TO SLOWING THE PACE OF DECLINE IN OUR SECURITIES HOLTDIN HOLDINGS. WHILE WE DID NOT MAKE ANY DECISIONS, GENERAL SENSE IS THAT IT WILL BE APPROPRIATE TO SLOW THE PACE OF RUNOFF FAIRLY SOON. CONSISTENT WITH THE PLANS WE PREVIOUSLY ISSUED. THE DECISION ON SLOW THE PACE OF RUNOFF DOES NOT MEAN THAT OUR BALANCE SHEET WILL ULTIMATELY SHRINK BY LESS THAN IT WOULD OTHERWISE BUT RATHER ALLOWS US TO APPROACH THAT ULTIMATE LEVEL MORE GRADUALLY. I PARTICULAR SLOWING THE PACE OF RUNOFF WILL HELP ENSURE A SMOOTH TRANSITION, REDUCING THE POSSIBILITY THAT MONEY MARKETS EXPERIENCE STRESS AND THERE BY FACILITATING THE GOINGONGOING DE IN SECURITY HOLDINGS. WE REMAIN COMMITTED TO BRINGING INFLATION BACK DOWN TO OUR 2% GOAL AND TO KEEPING OUR LONGER TERM INFLATION EXPECTATIONS WELL ANCHORED. RESTORING PRICE STABILITY IS ESSENTIAL TO SET THE STAGE FOR ACHIEVING MAXIMUM EMPLOYMENT AND PRICE STABILITY OVER THE LONG TERM. TO CONCLUDE, WE UNDERSTAND THAT OUR ACTIONS AFFECT THE COMMUNITIES, FAMILIES AND BUSINESSES ACROSS THE COUNTRY. AND EVERYTHING WE DO IS IN SERVICE TO OUR PUBLIC MISSION. WE AT THE FED WILL DO EVERYTHING WE CAN TO ACHIEVE MAXIMUM EMPLOYMENT AND PRICE STABILITY GOALS. THANK YOU. >> PROJECTIONS SHOW SOMEWHAT HIGHER CORE INFLATION AND ALSO SHOW SOMEWHAT STRONGER GROWTH. WHAT SHOULD WE INFER? RATES WERE KEPT THE SAME THIS YEAR, BUT INFLATION IS HIGHER AND GROWTH IS HIGHER. >> WHAT IT MEANS IS THAT WE'VE SEEN INCOMING -- AS I POINTED OUT IN MY OPENING REMARKS, WE DID MARK UP OUR GROWTH FORECAST AND THE ECONOMY IS PERFORMING WELL. AND THE INFLATION DATA CAME IN A LITTLE HIRE AS A SEPARATE MATTER A AND THAT CAUSED PEOPLE TO WRITE UP THEIR INFLATION. BUT WE CONTINUE TO MAKE GOOD PROGRESS ON BRINGING INFLATION DOWN. >> SO WHEN YOU SAY EITHER MAINTAIN THE RATE FOR LONGER, WHAT IS THE TOLERANCE OF THE FEDERAL RESERVE FOR INFLATION COMING IN ABOVE ITS SUPER TARGET? >> WE'RE STRONGLY COMMITTED TO BRINGING INFLATION DOWN TO 2% OVER TIME. THAT IS OUR GOAL AND WE'LL ACHIEVE THAT GOAL. MARKETS BELIEVE WE'LL ACHIEVE THAT GOAL AND THEY SHOULD BELIEVE THAT BECAUSE THAT IS WHAT WILL HAPPEN OVER TIME. BUT WE STRESS OVER TIME. WE'RE MAKING PROJECTIONS AND WE'RE COMMITTED TO THAT OUTCOME AND WE'LL BRING IT ABOUT. >> HI, CHAIR POWELL. RACHEL SIEGLE FROM THE "WASHINGTON POST." YOU AND OTHERS ARE SAYING THAT RELIEF ON HOUSING INFLATION IS COMING BUT IT STILL HASN'T SHOWN UP IN THE CPI OR CPE. SDL DOES THAT CHALLENGE ABOUT WHEN THE SHIFT WILL BREAK THROUGH? >> SO I THINK THAT THERE IS SOME CONFIDENCE THAT THE LOWER MARKET RENT INCREASES THAT WE'RE SEEING WILL SHOW UP IN MEASURES OF HOUSING SERVICES INFLATION OVER TIME. AND THERE IS A BIT OF UNCERTAINTY ABOUT WHEN THAT WILL HAPPEN, BUT REAL CONFIDENCE THAT THEY WILL SHOW UP EVENTUALLY. BUT AGAIN, UNCERTAINTY ABOUT THE EXACT TIMING OF THAT. >> AND WILL YOU BE ABLE TO GET OVERALL INFLATION DOWN TO TARGET IF HOUSING DOESN'T BREAK THROUGH QUICKLY AND DOES THAT AFFECT THE TIMING FOR THE EVENTUAL CUT THIS IS YEAR? >> WE'LL GET TI AGGREGATE INFLAN DOWN TO 2% OVER TIME. AND I THINK THAT WELL GO DOWN PERHAPS NOT AS QUICKLY AS THEY HAD BEEN EARLIER THIS YEAR WHERE HOUSING SERVICES INFLATION WILL COME BACK DOWN AS CURRENT MARKET RENTS ARE SUGGESTING. AND SOME COMBINATION OF THOSE THREE THINGS. AND IT MAY BE DIFFERENT FROM THE COMBINATION WE HAD BEFORE THE PANDEMIC WILL BE ACHIEVED AND WILL BRING INFLATION BACK DOWN TO 20% SUSTAINABLY. >> DURING YOUR CONGRESSIONAL TESTIMONY, YOU SAID YOUR TESTS TO MAKING THE FIRST CHANGE TO INTEREST RATES DOES NOT REQUIRE YOU TO BE TERRIBLY COMFORTABLE THAT INFLATION IS AT 2% BECAUSE INTEREST RATES WILL WELL ABOVE NEUTRAL. AND AT THE SAME TIME, YOU SAID HERE AFTER THE LAST MEETING THAT THE FIRST CUT IS HIGHLY CONSEQUENTIAL. CAN YOU RECONCILE THIS FOR ME? IF RATES ARE WELL ABOVE NEUTRAL, WHY WOULD THE FIRST CUT BE HIGHLY CONSEQUENTIAL? IS IT BECAUSE YOU ANTICIPATE ONE CUT ABOUT BE FOLLOWED BY ONE OR TWO MORE ON THE MID CYCLE ADJUSTMENT OF 1995? >> I'D PUT IT MORE IN THE CONTEXT OF WHAT I SAID IN MY OPENING REMARKS THAT THE RISKS ARE REALLY TWO SIDED HERE. WE'RE IN A SITUATION WHERE, YOU KNOW, IF WE SEIZE TOO MUCH OR TOO SOON, WE COULD SEE INFLATION COME BACK. AND IF WE SEIZE TOO LATE -- EASE TOO LATE, WE COULD DO HARM TO UNEMPLOYMENT AND PEOPLE'S WORKING LIVES. AND SO WE DO SEE THE RISKS AS TWO SIDED. SO IT IS CONSEQUENTIAL. WE WANT TO BE CAREFUL. FORTUNATELY WITH THE ECONOMY GROWING, WITH THE LABOR MARKET STRONG AND WITH INFLATION COMING DOWN, WE CAN APPROACH THAT QUESTION CAREFULLY. AND LET THE DATA SPEAK ON THAT. THAT IS REALLY WHAT I WAS THINKING. >> HOW MUCH OF THAT INFLATION WE'VE SEEN SO FAR THIS YEAR DO YOU CHALK UP TO ONE OFF CALENDAR ADJUSTMENT AFFECTS VERSUS SOME CHANGE IN THE TREND WE SAW SECOND HALF OF LAST YEAR? >> I WANT TO START BY SAYING THAT I ALWAYS TRY TO BE CAREFUL ABOUT IT IS DISMISSING DAY THAT WE DON'T LIKE. SO BE CAREFUL ABOUT THAT. BUT THE JANUARY CPI AND CP EFLT NUMBERS WERE QUITE HIGH. THERE IS REASON TO THINK THAT THERE COULD BE SEASONAL EFFECTS THERE. FEBRUARY NUMBER WAS HIGHER THAN EXPECTATIONS BUT WE HAVE IT THE WELL BELOW 30 BASIS POINTS CORE CP EFLT. E. BUT NOT LIKE THE JANUARY. BUT TAKE THE TWO OF THEM TOGETHER AND I THINK THAT THEY HAVEN'T REALLY CHANGED THE Y OVERALL STORY WHICH IS THAT OF INFLATION MOVING DOWN GRADUALLY ON A SOMETIMES BUMPY ROAD TOWARD 2%. I DON'T THINK THAT THAT STORY HAS CHANGED. I ALSO DON'T THINK THAT THOSE READINGS ADDED TO ANYONE'S CONFIDENCE THAT WE'RE MOVING CLOSER TO THAT POINT. BUT WE DIDN'T -- LAST THING I'LL SAY, WE DIDN'T EXCESSIVELY CELEBRATE THE GOOD INFLATION READINGS LAST SEVEN MONTHS OF LAST YEAR. WHAT YOU HEARD US SAYING IS THAT WE NEEDED TO SEE MORE THAT WE COULD -- WE WANTED TO BE CAREFUL ABOUT THAT DECISION. AND WE'RE NOT GOING TO OVERREACT AS WELL TO THESE TWO MONTHS NOR WILL WE IGNORE THEM. >> HI CHAIR POWELL. COULD YOU SPEAK MORE ABOUT THE TIMING. IS THERE ENOUGH DATA BETWEEN NOW AND SAY MAY TO BE ABLE TO GET THE KIND OF CONFIDENCE THAT YOU SAY THAT YOU STILL NEED OR BY JUNE, IS THERE ENOUGH DATA FOR YOU? JUST GIVE US A SENSE OF YOUR THINKING THERE. THANK YOU. >> SO WE MAKE DECISIONS MEETING BY MEETING. AND WE DIDN'T MAKE ANY DECISIONS ABOUT FUTURE MEETINGS TODAY. THOSE WILL DEPEND ON OUR ONGOING ASSESS THE OF THE INCOMING DATA, EVOLVING OUTLOOK AND BALANCE OF RISK. SO I REALLY DON'T HAVE ANYTHING FOR YOU ON ANY SPECIFIC MEETING GOING FORWARD. >> AND JUST A QUESTION OF, I MEAN, IS THERE EVEN ENOUGH DATA FOR YOU TO BE ABLE TO -- >> THINGS CAN HAPPEN DURING AN INTERVENING PERIOD. IF YOU LOOK BACK UNEXPECTED THINGS. SO I WOULDN'T WANT TO DISMISS ANYTHING. SO I JUST WOULD SAY THAT THE COMMITTEE WANTS TO SEE MORE DATA THAT GIVES US HIRE CONFIDENCE THATTEN NATION IS MOVING DOWN SUSTAINABLY TOWARD 2%. AND I ALSO MENTIONED AND WE DON'T SEE THIS IN THE DATA RIGHT NOW, BUT IF THERE WERE A SIGNIFICANT WEAKENING IN THE DAT PARTICULARLY IN THE LABOR MARKET, THAT COULD ALSO BE A REASON FOR US TO BEGIN THE PROCESS OF REDUCING RATES AGAIN. NOTHING IN THE DATA POINTING AT THAT. BUT THOSE ARE THE THINGS THAT WE'LL BE LOOKING AT IN UPCOMING MEETINGS WITHOUT TRYING TO REFER TO ANY SPECIFIC MEETING. >> HI, ASSOCIATED PRESS. THANK YOU. IN THE PROJECTIONS THERE IS AN INCREASE IN THE NEUTRAL RATE AS YOU KNOW. AND HIGHER RATES, QUARTER POINT HIRE RATES PROJECTED IN 2025, 2026. CAN YOU SPEAK ABOUT WHAT MIGHT BE BEHIND THAT, IS THERE A REAL SENSE THAT THE ECONOMY HAS PERHAPS CHANGED IN SOME WAY THAT HIGHER RATES WILL BE NEEDED IN THE FUTURE? THANK YOU. >> SO YOU ARE RIGHT, PRETTY MODEST CHANGES, BUT YOU'RE RIGHT, UPTICK IN THE LONGER RUN RATE AND 25 BASIS POINT INCREASE IN '25 AND '26. IN TERMS OF ARE RATES GOING TO BE HIGHER IN THE LONGER RUN, IF THAT IS YOUR QUESTION, I DON'T THINK THAT WE KNOW THAT. I THINK THAT WE THINK THAT RATES WERE GENERALLY LOW DURING THE PRE-PANDEMIC POST GLOBAL FINANCIAL CRISIS ERA FOR REASONS THAT ARE MOSTLY IMPORTANT, SLOW MOVING, LANGUAGE THINGS LIKE DEMOGRAPHICS AND ROW DUCTS DIFFERENT AND THAT SORT OF THING. THINGS THAT DON'T MOVE QUICKLY. BUT I DON'T THINK THAT WE KNOW. I MEAN, MY INSTINCT WOULD BE THAT RATES WILL NOT GO BACK DOWN TO THE VERY LOW LEVELS THAT WE SAW WHERE ALL AROUND THE WORLD THERE WERE LONG RUN RATES AT OR BELOW ZERO IN SOME CASES. I DON'T SEE RATES GOING BACK DOWN TO THAT LEVEL. BUT I THINK THAT THERE IS TREMENDOUS UNCERTAINTY AROUND THAT. >> AND YOU HAVE 2.6% CORE INFLATION FOR THE END OF THIS YEAR. YOU MENTIONED IT 2.8 IN FEBRUARY. DOESN'T SOUND LIKE MUCH DISINFLATION AT ALL. SO ARE YOU STILL CONFIDENT -- OR LAST PRESS CONFIDENCE YOU SOUNDED PRETTY OPTIMISTIC THAT YOU WOULD GET MORE CONFIDENCE THIS YEAR. IS IT RIGHT TO SAY THIS SUGGESTS THAT YOU ARE NOT SEEING A LOT OF DISINFLATION THIS YEAR COMPARED TO WHAT WE'VE SEEN 2023 AND SO FORTH? >> I THINK THAT THAT HIGHER YEAR END NUMBER REFLECTS THE DATA WE'VE SEEN SO FAR THIS YEAR. BECAUSE YOU ARE NOW IN THIS YEAR. SO -- SORRY, SAY THE LAST PART OF YOUR QUESTION AGAIN. >> ARE YOU STILL OPTIMISTIC THAT YOU WILL GET THE CONFIDENCE YOU NEED THIS YEAR? >> I THINK IF YOU LOOK AT THE S.E.P., WHAT IT SAYS, IT IS STILL LIKELY IN MOST PEOPLE'S VIEW THAT WE WILL ACHIEVE THAT CONFIDENCE. AND THAT THERE WILL BE RATE CUTS. BUT THAT IS REALLY GOING TO DEFEND ON THE INCOMING DATA. IT IS. AND THE OTHER THING IS IN THE SECOND HALF OF THE YEAR, YOU HAVE SOME PRETTY LOW READINGS. SO IT MIGHT BE HARDER TO MAKE PROGRESS AS YOU MOVE THAT 12 MONTH WINDOW FORWARD. NONETHELESS, WE'RE LOOKING FOR DATA THAT CONFIRM THE KIND OF LOW READINGS THAT WE HAD LAST YEAR. AND GIVE US A HIGHER DEGREE OF CONFIDENCE THAT WHAT WE SAW WAS REALLY INFLATION MOVING SUSTAINABLY DOWN TO 2% -- TOWARD 2%. >> "NEW YORK TIMES." THANK YOU FOR TAKING OUR QUESTIONS. YOUR COMMENT THAT WEAKENING IN THE LABOR MARKET WOULD BE A REASON TO POTENTIALLY CUT RATES OR AT LEAST A CONSIDERATION, WOULD CONTINUED STRENGTH IN THE LABO MARKET BE A REASON TO HOLD OFF ON RATE CUTS AND JUST IN GENERAL IF LABOR SUPPLY CONTINUED TO REBOUND IN 2024 THE WAY IT DID IN 2023, WHAT WOULD STRONGER HIRING AND POSSIBLY STRONGER GROWTH MEAN FOR THE PATH FORWARD ON POLICY? >> SO IF WHAT WE'RE GETTING IS A LOT OF SUPPLY AND A LOT OF DEMAND AND THAT SUPPLY IS ACTUALLY FEEDING DEMAND BECAUSE WORKERS ARE GETTING PAID AND THEY ARE SPENDING AND, YOU KNOW, WHAT YOU WOULD HAVE IS POTENTIALLY KIND OF WHAT YOU HAD LAST YEAR, WHICH IS A BIGGER ECONOMY WHERE INFLATIONARY PRESSURES ARE NOT INCREASING, IN FACT THEY WERE DECREASING. SO YOU CAN'T HAVE TAKE IF YOU HAVE A CONTINUED SUPPLY SIDE ACTIVITY THAT WE HAD LAST YEAR BOTH WITH SUPPLY CHAINS AND ALSO WITH GROWTH IN THE SIZE OF THE LABOR FORCE. >> SO STRONG HIRING IN AND OF ITSELF WOULD NOT BE A REASON TO HOLD OF ON RATE CUTS? >> NO, NOT ALL BY STEFLG. ITSELF. YOU SAW LAST YEAR VERY STRONG HIRING AND INFLATION COMING DOWN QUICKLY. WE HAVE A BETTER SENSE THAT BIG PART OF THAT WAS SUPPLY SIDE HEALING PARTICULARLY WITH GROWTH IN THE LABOR FORCE. SO IN AND OF ITSELF, STRONG JOB GROWTH IS NOT A REASON, YOU KNOW, FOR US TO BE CONCERNED ABOUT INFLATION. >> NEAL. >> AXIOS. AND HOW DO YOU ASSESS THE STATE OF FINANCIAL CONDITIONS RIGHT NOW AND PARTICULARLY -- IN PARTICULAR DO YOU VIEW THE KIND OF EASING FINANCIALEN CANS SINCE THE FALL AS CONSISTENT AND COMPATIBLE WITH WHAT YOU ARE TRYING TO ACHIEVE ON THE INFLATION MANDATE? >> THERE ARE MANY DIFFERENT FINANCIAL CONDITION INDICATORS. AND YOU CAN KIND OF, YOU KNOW, SEE DIFFERENT ANSWERS TO THAT QUESTION. BUT ULTIMATELY WE DO THINK THAT FINANCIAL CONDITIONS ARE WEIGHING ON ECONOMIC ACTIVITY AND WE THINK THAT YOU SEE THAT IN A GREAT PLACE TO SEE IT IN THE LABOR MARKET WHERE SYOU'VE SEEN DEMAND COOLING OFF. JOB OPENINGS, QUITS, SURVEYS. THE HIRING RATE. THINGS LIKE THAT ARE REALLY DEMAND. THERE ARE ALSO SUPPLY SIDE THINGS HAPPENING. BUT I THINK THOSE ARE DEMAND SIDE THINGS HAPPENING. YOU KNOW, WE SAW THAT HAS BEEN A QUESTION FOR A WHILE. WE DID SEE PROGRESS ON INFLATION LAST YEAR. SIGNIFICANT PROGRESS DESPITE FINANCIAL CONDITIONS SOMETIMES BEING TIGHTER, SOMETIMES LOOSER. >> AND BLOOMBERG RADIO AND TELEVISION. YOU CAN GIVE US MORE COLOR ON HOW THE COMMITTEE IS THINKING ABOUT INFLATION DYNAMICS NOW, WHAT WE'VE SEEN AT THE BEGINNING OF THE YEAR, ARE THEY MORE ONE OVER INCREASES THA S OFF INCREASES THAT WILL FADE OR MORE OF A SECULAR RURNLG WITH SERVICE PRICES STAYING STICKY. AND HOUSING PRICES HAVE BEEN THE GADEAU. HOW DOES THIS PLAYING OUT FORWARD SINCE YOU RAISED INFLATION FORECAST? >> I SEE THE COMMITTEE LOOKING AT THE TWO MONTHS OF DATA AND THE SAME QUESTION SAYING WE'LL HAVE TO SEE WHAT THE DATA SHOW. AS I MENTIONED, YOU CAN LOOK AT JANUARY WHICH IS VERY HIGH READING AND YOU CAN -- I THINK MANY PEOPLE DID SEE THE POSSIBILITY OF SEASONAL ADJUSTMENT PROBLEMS THERE. BUT YOU HAVE TO BE CAREFUL ABOUT DISMISSING THE PARTS OF THE DATA THAT YOU DON'T LIKE. AND FEBRUARY WASN'T AS HIGH, BUT IT WAS HIRE. SO THE QUESTION IS WHAT ARE WE GOING TO SEE. WE TEND TO SEE A LITTLE BIT STRONGER INFLATION IN THE FIRST HALF OF THE YEAR, A LITTLE LESS STRONG LATER IN THE YEAR. AND WE'LL LET THE DATA SHOW. I DON'T THINK THAT WE REALLY KNOW WHERE THIS IS A BUNCH ON THE ROAD OR SOMETHING MORE. WE'LL HAVE TO FIND OUT. IN THE MEANTIME, THE ECONOMY IS STRONG. LABOR MARKET IS STRONG. INFLATION HAS COME WAY DOWN. AND THAT GIVES US THE ABILITY TO APPROACH THIS QUESTION CAREFULLY AND FEEL MORE CONFIDENT THAT INFLATION IS MOVING DOWN SU SUSTAINABLY AT 2% WHEN WE TAKE THE STEP TO DIAL BACK THE RESTRICTIVE POLICY. >> YOU'VE TALKED ABOUT THE DESIRE TO HAVE CONFIDENCE THAT INFLATION IS CONTINUALLY MOVING DOWN. HAS THE RECENT NUMBERS WE'VE GOTTEN TO INFLATION DATA DENTED THAT CONFIDENCE AT ALL? >> IT CERTAINLY HASN'T IMPROVED OUR CONFIDENCE. IT DOESN'T RAISE ANYONE'S CONFIDENCE. BUT I WOULD SAY THAT THE STORY IS REALLY ESSENTIALLY THE SAME. AND THAT IS OF INFLATION COMING DOWN GRADUALLY TOWARD 2% ON A SOMETIMES BUMPY PATH AS I MENTIONED. I THINK THAT THAT IS WHAT YOU STILL SEE. WE'VE GOT NINE MONTHS OF 2.5% INFLATION NOW. AND WE'VE HAD 2 MONTHS OF KIND OF BUMPY INFLATION. WE WERE SAYING THAT IT WILL BE A BUNCH PI BUMPY RIDE AND NOW HERE ARE BIMPS B BUMPS AND THE QUESTION IS ARE THEY MORNING BUMPING. WE CAN'T KNOW THAT. SO WE APPROACH THE QUESTION CAREFULLY. IT IS VERY IMPORTANT FOR EVERYONE THAT WE SERVE THAT WE DO GET INFLATION SUSTAINABLY DOWN AND I THINK THAT THE HISTORICAL RECORD, YOU KNOW, EVERY SITUATION IS DIFFERENT, BUT HISTORICAL RECORD, YOU NEED TO APPROACH THE QUESTION CAREFULLY AND TRY TO GET IT RIGHT THE FIRST TIME AND NOT HAVE TO COME BACK AND RAISEAPPR. >> THANK YOU, MR. CHAIRMAN. EDWARD LAWRENCE WITH FOX BUSINESS. I WANTED TO ASK YOU, YOU RECEIVED A LETTER FROM FEDERAL RESERVE INDEPENDENT BODY UNDERSTANDING THAT CONGRESS HAS OVERSIGHT, YOU RECEIVED LETTERS FROMELIZABETH WARREN AND SHELDON WHITEHOUSE TO CUT THE RATES. BECAUSE IT DELAYED SIGNIFICANT CLIMATE AND ECONOMIC BENEFITS FROM THE PROJECTS. AND SO HAS HIGHER INTEREST RATES CAUSED THAT? >> WELL, FIRST OF ALL, I RESPECT -- IN OUR SYSTEM OF GOVERNMENT, IT IS CONGRESS THAT HAS OVERSIGHT RESPONSIBILITY OVER THE FED. WE PLACE A TREMENDOUS AMOUNT OF IMPORTANCE ON ENGAGEMENTS WITH CONGRESS AND ALWAYS TREAT THEM WITH GREAT RESPECT. IN THIS CASE I WOULD SAY THOSE ARE -- OUR MANDATE IS FOR MAXIMUM EMPLOYMENT AND PRICE STABILITY. AND THE OTHER THINGS WE DO AND THAT IS WHAT WE'RE TRYING TO ACCOMPLISH. WE'RE TRYING TO DO THAT IN A WAY THAT SUSTAINS THE STRONG GROWTH WE'RE SEEING, STRONG LABOR MARKET AND ALSO ALLOWS US TO MAKE FURTHER PROGRESS WITH INFLATION. THAT IS HOW WE CAN BEST SERVE THE PUBLIC AND LEAVE THE OTHER ISSUES WHICH IN MANY CASES ARE INCREDIBLY IMPORTANT SUCH AS THOSE YOU MENTIONED, LEAVE THOSE TO THE PEOPLE WHO HAVE RESPONSIBILITY FOR THOSE. >> THERE IS ANOTHER LETTER FROM TWO DOZEN LAWMAKERS SAYING THE HIGHER RATES ARE SQUEEZING THE WORKING PEOPLE. HOW DO THESE LETTERS AFFECT WHAT YOU GUYS ARE DOING POLICY-WISE? >> WE RECEIVE THESE LETTERS WITH RESPECT AND WE WRITE CAREFUL RESPONSES AND ADDRESS CONCERNS. WE LISTEN BECAUSE AGAIN WE'RE TALKING TO THE PEOPLE WHO IN OUR SYSTEM OF GOVERNMENT HAVE OVERSIGHT OVER OUR ACTIVITY. SO THAT IS -- BUT AT THE END OF THE DAY, WE TAKE THAT ON BOARD BUT WE HAVE TO MAKE OUR JUDGMENTS AND WE HAVE TO STICK TO OUR KNITTING WHICH IS MAXIMUM EMPLOYMENT, PRICE STABILITY, SUPERVISE AND REGULATE THE BANKS, WORK ON THE PAYMENT SYSTEM, THE THINGS THAT WE DO. >> HI. FINANCIAL TIMES. THANKS FOR THE OPPORTUNITY TO ASK A QUESTION. AS CHAIR OF THE FMOC, WOULD YOU WANT TO SEE UNANIMITY ON THE COMMITTEE OR SOMETHING CLOSE TO IT MEANING NO MORE THAN ONE DISSENT BEFORE YOU BEGIN CUTTING RATES? THANK YOU. >> WE'RE VERY CONSENSUS ORIENTED ORGANIZATION AND WE DO TRY TO ACHIEVE CONSENSUS. AND IDEALLY UNANIMITY. PEOPLE DO DISSENT. IT IS SOMETHING THAT HAPPENS. LIFE GOES ON. AND IT IS NOT A PROBLEM. WE'VE ALWAYS HAD DISSENTS. AND YOU RESPECT THOUGHTFUL DISSENTS VERY MUCH. YOU MAY NOT AGREE WITH SOME ARGUMENTS, BUT YOU REALLY WANT TO UNDERSTAND THEM, SO YOU MAY READ A BOOK THAT TAKES A POSITION THAT YOU HAVE LONG OPPOSED JUST TO UNDERSTAND THE BOOK. SO I TREAT DISSENTS >> SIMON WITH THE ECONOMIST. CAN YOU HEAR ME? >> YES. >> GREAT. OBVIOUSLY, INFLATION IS SOME WAYS AWAY FROM TARGET, IF YOU LOOK AT THE PROJECTION OF 4.0%. IN FEBRUARY WE WERE ALREADY AT 3.9% SO QUITE CLOSE TO THE MEDIAN PROJECTION. ARE YOU CONCERNED AT ALL THAT NOT WITHSTANDING THE STRONG JOBS GROWTH THAT THERE MAY BE CRACKS APPEARING IN THE EMPLOYMENT MARKET? YOU TALKED ABOUT THE SIGNIFICANT KET DETERIORATION IN THE MARKET. WHAT WOULD CONSTITUTE THAT IN YOUR BOOKS? THANK YOU. >> WE ALL MONITOR THE LABOR MARKET VERY, VERY CAREFULLY AND I DON'T SEE THOSE CRACKS TODAY AND WE FOLLOW ALL OF THE POSSIBLE STORIES THAT ARE OUT THERE ABOUT THERE BEING CRACKS, BUT THE OVERALL PICTURE IS REALLY STRONG LABOR MARKET, THE EXTREME IMBALANCES THAT WE SAW IN THE EARLY PARTS OF THE PANDEMIC RECOVERY HAD THIS BEEN RESOLVED, YOU'RE SEEING HIGH JOB GROWTH AND YOU'RE SEEING BIG INCREASES IN SUPPLY. YOU'RE SEEING STRONG WAGE GROWTH, BUT WAGE GROWTH IS GRADUALLY MODERATING TO MORE SUSTAINABLE LEVELS IN MANY, MANY RESPECTS. THE THINGS ARE RETURNING MORE TO THEIR STATE IN 2019 WHICH WE CAN THINK OF AS NORMAL FOR THIS PURPOSE. THAT'S JOB OPENINGS AND QUITS AND SURVEYS OF WORKERS AND BUSINESSES ARE ALWAYS INTERESTING ON THIS. HOW TIGHT -- HOW EASY IS IT TO FIND A JOB AND HOW EASY IT IS TO FIND A WORKER? THOSE HAVE BOTH COME DOWN. SO THE LABOR MARKET IS IN GOOD SHAPE. YOU KNOW, YOU SEE THINGS LIKE THE LOW HIRING RATE AND PEOPLE HAVE MADE THE ARGUMENT THAT IF -- IF LAYOFFS WERE TO INCREASE THEN THAT WOULD -- THAT WOULD MEAN THAT THE NET WOULD BE FAIRLY QUICK INCREASES IN UNEMPLOYMENT. SO THAT'S SOMETHING WE'RE WATCHING, BUT WE'RE NOT SEEING IT. OF COURSE, INITIAL CLAIMS ARE VERY, VERY LOW AND HAVE TRACKED DOWN A BIT SO WATCHING IT CAREFULLY AND WHEN I SAY SOMETHING -- I USED THE TERM UNEXPECTED WEAKENING IN THE LABOR MARKET. SO WE DO EXPECT THE UNEMPLOYMENT RATE AND THE FORECAST IS THAT WE WOULD MOVE UP CLOSER TO THE LOWER RUN, SUSTAINABLE LEVEL AND THAT'S PEOPLE'S FORECAST, INDIVIDUAL FORECAST, BUT WE'RE TALKING ABOUT SOMETHING THAT'S UNEXPECTED. THAT'S WHERE I'LL LEAVE IT, THOUGH. >> STEVE MATTHEWS WITH BLOOMBERG. YOU MENTIONED IN THE BEGINNING OF THE CONFERENCE THAT THE COMMITTEE THOUGHT THEY WOULD SLOW THE PACE OF RUNOFF FAIRLY SOON. WHEN YOU SAY FAIRLY SOON DOES THAT MEAN THAT THE COMMITTEE WOULD MEET ABOUT THIS AGAIN IN MAY AND A DECISION COULD BE REACHED THAT SOON AND I WAS WONDERING IF YOU COULD ALSO JUST DESCRIBE THE SCOPE OF WHAT THE COMMITTEE IS DISCUSSING HERE. YOU'RE AT $95 BILLION OF CAPS RIGHT NOW. WOULD THAT BE CUT ABOUT IN HALF OR SOMETHIG OF THAT NATURE? THANK YOU. >> SO THAT IS WHAT WE ARE DISCUSSING ESSENTIALLY AND WE'RE NOT DISCUSSING ALL OF THE MANY OTHER BALANCE ISSUES AND WE WILL DISCUSS THOSE IN DUE COURSE, BUT WHAT WE'RE REALLY LOOKING AT IS SLOWING THE PACE OF RUNOFF. THERE ISN'T MUCH RUNOFF IN MBS AND THERE IS IN TREASURYS AND WE'RE TALKING ABOUT LOWER PACE AND I DON'T WANT TO GIVE YOU A SPECIFIC NUMBER BECAUSE WE HAVEN'T MADE AN AGREEMENT OR DECISION, BUT THAT'S THE IDEA AND THAT'S WHAT WE'RE LOOKING AT. IN TERMS OF THE TIMING I SAID FAIRLY SOON. I WOULDN'T WANT TO TRY TO BE MORE SPECIFIC THAN THAT, BUT YOU GET THE IDEA. THE IDEA IS AND THIS IS IN OUR LONGER RUN PLANS THAT WE MAY ACTUALLY BE ABLE TO GET TO A LOWER LEVEL BECAUSE WE WOULD AVOID THE KIND OF FRICTIONS THAT CAN HAPPEN. LIQUIDITY IS NOT EVENLY DISTRIBUTED IN THE SYSTEM AND THERE CAN BE TIMES WHERE IN THE AGGREGATE RESERVES ARE AMPLE OR EVEN ABUNDANT, BUT NOT IN EVERY PART AND THOSE PARTS WHERE THEY'RE NOT AMPLE, THERE CAN BE STRESS AND THAT CAN CAUSE YOU TO PREMATURELY STOP THE PROCESS TO AVOID THE STRESS AND THEN IT WOULD BE HARD TO RE-START, I THINK. SOMETHING LIKE THAT HAPPENED IN 19 PERHAPS. SO WE'RE LOOKING AT WHAT WOULD BE A GOOD TIME AND A GOOD STRUCTURE AND FAIRLY SOON ARE WORDS THAT WE USE TO MEAN FAIRLY SOON. >> AND WILL THERE BE A DISCUSSION ABOUT RETURNING TO AN ALL TREASURYS BALANCE SHEET AT SOME POINT? SO OUR LONGER-RUN GOAL IS TO RETURN TO A BALANCE SHEET THAT IS MOSTLY TREASURYS. DO I EXPECT THAT ONCE WE ARE THROUGH THIS WE'LL COME BACK TO THE OTHER ISSUES ABOUT THE COMPOSITION AND THE MATURITY AND REVISIT THOSE ISSUES, BUT IT'S NOT URGENT. WE WANT TO GET THIS DECISION MADE FIRST AND THEN WE CAN -- WHEN THE TIME IS RIGHT, COME BACK TO THE OTHER ISSUES. >> HI. VICTORIA GUIDO, POLITICO. WITH THE BALANCE SHEET, HOW CAN THE SECTOR IMPACT YOUR BALANCE SHEET PLAN? DO YOU WORRY AS DEPOSITS START TO SHRINK THAT WE COULD SEE MORE TURBULENCE? >> YOU KNOW, WE'LL BE WATCHING CAREFULLY, BUT ONE OF THE REASONS WE'RE SLOWING DOWN, WE WILL SOON ENOUGH FAIRLY SOON, I SHOULD SAY, SLOW DOWN. WE WANT TO AVOID ANY KIND OF -- OF TURBULENCE. I WASN'T THINKING PARTICULARLY OF THE BANKING SECTOR TURBULENCE, BUT WE -- WE HAD SOME INDICATORS THE LAST TIME. THIS IS OUR SECOND TIME IN DOING THIS, AND I THINK WE'RE GOING TO BE PAYING A LOT OF ATTENTION TO THE THINGS THAT STARTED TO HAPPEN AND THAT FORESHADOWED WHAT EVENTUALLY HAPPENED AT THE END OF THAT TIGHTENING CYCLE WHERE WE WOUND UP IN A SHORT RESERVE SITUATION AND WE DON'T WANT TO DO THAT AGAIN, AND I THINK NOW WE HAVE A BETTER SENSE OF WHAT ARE THE INDICATORS. IT WASN'T SO MUCH IN THE BANKING SYSTEM AS IT WAS AROUND, FOR EXAMPLE, WHERE FEDERAL FUNDS IS TRADING RELATIVE TO THE ADMINISTERED RATES AND WHERE SECURED RATES ARE RELATIVE TO THE ADMINISTRATIVE RATES AND THOSE SORTS OF THINGS. WE WILL ALWAYS BE WATCHING THE BANKING SYSTEM FOR SIMILAR SIDES. >> IS IT YOU DON'T KNOW HOW THEY'LL REACT WHEN THE FACILITY DROPS NEAR ZERO? >> I THINK WE BROADLY THINK THAT ONCE THE OVERNIGHT REPO STABILIZES EITHER AT ZERO OR CLOSE TO ZERO THAT AS THE BALANCE SHEET SHRINKS WE SHOULD EXPECT THAT RESERVES WILL DECLINE PRETTY CLOSE TO DOLLAR FOR DOLLAR WITH THAT. THAT'S WHAT WE THINK. >> HI, CHAIR POWELL. JEAN YOUNG WITH MARKET NEWS. I WANTED TO ASK ALSO ABOUT THE BALANCE SHEET. WILL YOU -- YOU SAID THAT STARTING THE TAPER SOONER COULD GET YOU TO A SMALLER BALANCE SHEET SIZE. DOES THAT MEAN YOU DON'T HAVE TO MAKE A DECISION ON WHEN TO END QT AT THIS POINT AND WILL YOU BE SETTING UP THE PROCESS FOR DECIDING THAT SOONER OR WILL YOU WAIT UNTIL MORE CLOSE TO THEN? >> SO. IT IS SORT OF IRONIC THAT BY GOING SLOWER YOU CAN GET FARTHER, BUT THAT'S THE IDEA. THE IDEA IS THAT WITH A SMOOTHER TRANSITION YOU WON'T -- YOU'LL RUN MUCH LESS RISK OF KIND OF LIQUIDITY PROBLEMS WHICH CAN GROW INTO SHOCKS AND CAN CAUSE YOU TO STOP THE PROCESS PREMATURELY. SO THAT'S IT. IN TERMS OF HOW IT ENDS, WE WILL BE MONITORING CAREFULLY MONEY MARKET CONDITIONS AND ASKING OURSELVES WHAT THEY'RE TELLING US ABOUT RESERVES. RIGHT NOW WE WOULD CHARACTERIZE THEM AS ABUNDANT AND WHAT WE'RE AIMING FOR IS AMPLE WHICH IS LESS THAN ABUNDANT. THERE ISN'T -- THERE'S NOT A DOLLAR AMOUNT OR A PERCENT OF GDP OR ANYTHING LIKE THAT WHERE WE HAVE A PRETTY CLEAR UNDERSTANDING AND WE WILL BE LOOKING AT WHAT THESE -- WHAT'S HAPPENING IN MONEY MARKETS. IN PARTICULAR, A BUNCH OF DIFFERENT INDICATORS, TO TELL US THAT YOU'RE GETTING CLOSE. THEN, YOU REACH A POINT ULTIMATELY WHEN YOU STOP ALLOWING THE BALANCE SHEET TO RUN OFF AND THEN FROM THAT POINT THERE'S ANOTHER PERIOD IN WHICH NON-RESERVE LIABILITIES GROW ORGANICALLY LIKE CURRENCY AND THAT ALSO SHRINKS RESERVES AT A VERY SLOW PACE. SO YOU HAVE A SLOWER PACE OF RUNOFF WHICH WILL HAPPEN FAIRLY SOON AND THEN YOU HAVE ANOTHER TIME WHEN YOU EFFECTIVELY HOLD THE BALANCE SHEET CONSTANT AND ALLOW NON-RESERVE TO EXPAND AND THEN THAT ULTIMATELY BRINGS YOU IDEALLY IN FOR -- YOU KNOW, BRINGS IT INTO A NICE, EASY LANDING IN A LEVEL THAT IS ABOVE WHAT WE THINK THE LOWEST POSSIBLE AMPLE NUMBER WOULD BE. WE'RE NOT TRYING FOR THAT. WE WANT TO HAVE A CUSHION AND A BUFFER BECAUSE WE KNOW THE DEMAND FOR RESERVES COULD BE VERY VULNERABLE AND WE DON'T WANT TO FIND OURSELVES IN A SITUATION WHERE THERE AREN'T RESERVES AND WE PUT BANKING SYSTEMS IN RESERVES THE WAY WE DID IN 1920. >> HI, NANCY MARSHALL AGAIN, SIR, WITH MARKETPLACE. CHAIR POWELL, YOU ARE BECOMING MORE CONFIDENT OF GETTING TO THE 2% ROLE BEFORE YOU CUT RATES, CAN YOU SUM UP WHAT DATA YOU'RE LOOKING AT THAT WOULD GIVE YOU THAT CONFIDENCE? >> SURE. MOST IMPORTANTLY, WE'RE LOOKING AT THE INCOMING INFLATION DATA AND THE CONTENT OF IT AND WHAT THEY'RE TELLING US. SO THAT WILL BE -- AND ALSO THE VARIOUS COMPONENTS AND MORE CONFIDENCE THAT INFLATION IS COMING DOWN SUSTAINABLY TOWARD 2%, AND OF COURSE, WE WILL ALSO BE LOOKING AT ALL OF THE OTHER THINGS THAT ARE HAPPENING IN THE ECONOMY AND WE ARE LOOKING AT THE TOTALITY OF THE DATA INCLUDING EVERYTHING, ESSENTIALLY AS WE MAKE THAT ASSESSMENT, BUT THE MOST IMPORTANT THING WILL BE THE INFLATION DATA COMING IN. >> ARE THERE THINGS THAT YOU WOULD GIVE MORE WEIGHT TO LIKE WAGES? >> WAGES -- OUR TARGET IS NOT WAGES. IT'S REALLY INFLATION, BUT WE WOULD LOOK TO THE FACT THAT WAGES ARE STILL COMING IN VERY STRONG, BUT THEY'VE BEEN WAGE INCREASES, AND WAGE INCREASES HAVE BEEN QUITE STRONG AND THEY'RE GRADUALLY COMING DOWN TO LEVELS THAT ARE MORE SUSTAINABLE OVER TIME AND THAT'S WHAT WE WANT. WE DON'T THINK THAT TE INFLATION WAS NOT ORIGINALLY CAUSED, WE THINK -- I DON'T THINK MOSTLY BY WAGES. THAT WASN'T REALLY THE STORY, BUT WE DO THINK THAT TO GET INFLATION DOWN TO 2% SUSTAINABLY, WE'D LIKE TO SEE CONTINUAL GRADUAL MOVEMENT AT STILL HIGH LEVELS AND BACK DOWN TO LEVELS THAT ARE MORE SUSTAINABLE OVER TIME. >> THANK YOU. GREG ROBB FROM MARKET WATCH. pCH THIS MEETING WHETHER THERE WERE MORE OFFICIALS WHO WANTED TO BE CAREFUL AND GO SLOWER THAN ABOUT RATES THAN WERE AT THE LAST MEETING? WAS THERE THAT SENSE OF MAYBE IT'S SMART TO WAIT? THANKS. >> I GUESS I WOULD PUT IT THIS WAY, THE -- IF YOU LOOK AT THE INCOMING INFLATION DATA THAT WE'VE HAD FOR JANUARY AND FEBRUARY, I THINK THAT VERY BROADLY SUGGESTS THAT WE WERE RIGHT TO WAIT UNTIL WE'RE MORE CONFIDENT. I DIDN'T HEAR ANYONE DISMISSING IT AS NOT INFORMATION THAT WE SHOULD LOOK AT OR ANYTHING LIKE THAT. SO I THINK GENERALLY SPEAKING, IT DOES GO IN THE DIRECTION OF SAYING YES, IT'S APPROPRIATE FOR US TO BE CAREFUL AS WE APPROACH THIS QUESTION. >> THANKS, CHAIR POWELL. PUNCH BOWL NEWS. I WANTED TO ASK YOU ABOUT CURRENCY STUFF. WE'VE BEEN HEARING A LOT FROM REPUBLICANS IN CONGRESS ABOUT WHAT THE FED IS OR ISN'T DOING IN A DIGITAL DOLLAR, BUT I KNOW YOU HAVE SAID TO CONGRESS THAT YOU ARE GOING TO WAIT FOR APPROVAL BEFORE THE FED DOES ANYTHING, LAUNCHES ANYTHING, BUT FOLKS LIKE HOUSE MAJORITY WHIP TOM EMMER HAVE SAID THAT THE FED IS ACTIVELY RESEARCHING OR HIRING PERSONNEL TO STUDY THE IMPLICATIONS OF THE CBBC. CAN YOU GIVE US ANY CLARITY ON WHAT THE FED IS DOING RIGHT NOW ON A DIGITAL DOLLAR? >> SURE. SO I THINK WE'VE BEEN PRETTY TRANCE PI TRANSPARENT ON THIS, BUT I'LL TRY HARDER. WE HAVEN'T PROPOSED AND WE HAVEN'T COME TO A CONCLUSION THAT WE SHOULD PROPOSE OR ANYTHING LIKE THAT THAT CONGRESS CONSIDER LEGISLATION TO AUTHORIZE A DIGITAL DOLLAR AND IT WOULD TAKE LEGISLATION BY CONGRESS, SIGNED BY THE PRESIDENT, TO GIVE US THE ABILITY TO THE DO WHAT WE THINK AS A CBDC, WHICH IS A RETAIL CBDC. SO WE ARE JUST A LONG, LONG WAY FROM THAT. WHAT WE ARE DOING AND WHAT EVERY CENTRAL BANK IS DOING IS WE'RE TRYING TO STAY IN THE FRONTIERS OF DIGITAL FINANCE AND IT HAS MANY, MANY DIFFERENT AREAS AND THE APPLICATIONS IN WHOLESALE FINANCE IN THE PAYMENT SYSTEM AND SO WE -- TO SERVE THE PUBLIC, THESE ISSUES HAVE BECOME VERY FRONT BURNER IN THE LAST FIVE OR SIX YEARS. WE NEED TO BE KNOWLEDGEABLE ABOUT ALL OF THAT. WE ACTUALLY DO HAVE PEOPLE TRYING TO UNDERSTAND THINGS THAT -- BUT IT'S WRONG TO SAY THAT WE'RE WORKING ON A CBDC AND WE GOT A LAB HERE AND WE WILL JUST SPRING IT ON CONGRESS AT THE LAST MOMENT. WE DON'T. I HAVEN'T AT ALL IN MY OWN MIND MADE A DECISION THAT I THINK THIS IS SOMETHING THE U.S. SHOULD BE DOING. YOU KNOW, I THINK IT'S SOMETHING THAT WE NEED TO UNDERSTAND AND WE DO HAVE PEOPLE THAT ARE KEEPING UP WITH THAT AS PART OF THE BROADER PAGES LANDSCAPE. THAT'S HOW I WOULD CHARACTERIZE IT. >> MARK? >> THANK YOU. IT'S MARK CAMERON WITH BANKRATE. APRIL 13th WILL HOLD THE ANNIVERSARY SINCE THE CHAIRMAN BEGAN HOLING REGULAR PRESS CONFERENCES. HOW HAS THAT BEEN IN YOUR VIEW WITH THE PROPER FUNKING OF THE CENTRAL BANK AND ALSO IN ACCOMPLISHING YOUR VISION AND IS THERE MORE THAT YOU AND YOUR COLLEAGUES CAN DO ON THE TRANSPARENCY FRONT AND WHAT MIGHT THAT LOOK LIKE? >> I -- I GENERALLY THINK -- THIS MOVEMENT ACTUALLY STARTED, YOU KNOW, 30 YEARS AGO. 30 YEARS AGO WHEN SOME ACADEMICS DEPOSITED A MORE TRANSPARENT CENTRAL BANK IF IT UNDERSTANDS THE REACTION FUNCTION AND THEY'LL REACT TO THE DATA AND SO IT ALL HAPPENS THAT WAY AND SO THERE'S BEEN A MARCH TOWARD GREATER AND GREATER TRANSPARENCY AND CHAIRMAN BERNANKE ADVANCED THAT AND CHAIR YELLEN DID. SO WE WENT FROM FOUR PRESS CONFERENCES A YEAR TO EIGHT AND EVERY MEETING IS LIVE NOW. I THINK THAT'S A GOOD INNOVATION. I WOULDN'T WANT TO TURN IT BACK. I'VE ALSO DONE A BUNCH OF OTHER THINGS. WE'VE HAD AN ANNUAL SUPERVISION REPORT AND THE FINANCIAL STABILITY REPORT, AND I MEAN, THERE'S A LONG LIST OF THINGS THAT WE'VE DONE. I THINK YOU -- I MEAN, NOTHING COMES TO MIND AS REALLY DESPERATELY IN NEED OF DOING IT THIS MOMENT. WE ARE VERY TRANSPARENT. WE HAVE NO SHORTAGE OF FOMC PARTICIPANTS SPEAKING TO THE PUBLIC THROUGH THE MEDIA AND THAT CHANNEL IS FULL, I WOULD SAY. IT'S GENERALLY BROADLY HELPED AND MADE THINGS BETTER, BUT NOT IN EVERY DAY OR IN EVERY WAY. >> HAS THERE EVER BEEN A DAY WHEN YOU'VE WANTED TO PUT THAT GENIE BACK IN THE BOTTLE? >> OF COURSE NOT. [ LAUGHTER ] >> LET'S GO TO JENNIFER FOR THE LAST QUESTION. >> THANK YOU, CHAIR POWELL. JENNIFER SHONBERGER WITH YAHOO FINANCE. NOT TO HARP TOO MUCH MORE ON CONFIDENCE AND INFLATION, BUT YOU DID SAY EARLIER IN THIS PRESS CONFERENCE THAT THE RECENT DATA HASN'T RAISED ANYONE'S CONFIDENCE, BUT WHEN YOU TESTIFIED BEFORE THE SENATE A CUP OF WEEKS AGO YOU TOLD LAWMAKERS THAT YOU ARE NOT FAR FROM RECEIVING THE CONFIDENCE ON INFLATION NEEDING RATES. SO ARE YOU STILL OF THAT BELIEF OR NOT? WHAT ARE WE TO TAKE BY THOSE WORDS "NOT FAR"? >> MY MAIN MESSAGE IN THOSE TWO DAYS OF HEARINGS WAS THAT THE COMMITTEE NEEDS TO SEE MORE EVIDENCE TO BUILD CONFIDENCE THAT INFLATION IS MOVING DOWN SUSTAINABLY TOWARD THE 2% GOAL, AND WE DON'T EXPECT THAT IT WOULD BE APPROPRIATE TO REDUCE RATES THAN THAT IS THE CASE, AND I SAID THAT ANY NUMBER OF TIMES AND THAT WAS THE MAIN PART OF THE MESSAGE. WE REPEATED THAT TODAY IN OUR STATEMENT. I ALSO, TO THE LANGUAGE YOU MENTIONED I POINTED OUT THAT WE'VE MADE SIGNIFICANT PROGRESS THAT THAT PROGRESS WILL CONTINUE. WE HAD A SERIES OF INFLATION READINGS OVER THE SECOND HALF OF LAST YEAR THAT WERE MUCH LOWER, AND THAT'S WHAT I HAD IN MIND. >> BUT GIVEN THAT PCE, 2.8% AND WE HAVE SEEN CORE P.C. WOULDN'T YOU BE THAT JUNE, JULY TO THE POINT THAT YOU WOULD CUT THEN. WE GOT REALLY GOOD INFLATION DATA IN THE SECOND PART OF LAST YEAR. WE DIDN'T OVERREACT TO IT. WE SAID WE NEED TO SEE MORE AND WE SAID IT WOULD BE BUMPY AND NOW WE HAVE JANUARY AND FEBRUARY WHICH WE'VE TALKED ABOUT A COUPLE OF TIMES SO WE'RE LOOKING FOR MORE GOOD DAYS AND WE CERTAINLY WELCOME IN. >> THANK YOU. >> THANK YOU. >> THANK YOU. ♪ ♪ >>> WELCOME BACK TO MARKET DOMINATION ON YAHOO FINANCE. JAY POWELL THERE SPEAKING AFTER THE FED HELD INTEREST RATES STEADY AND MADE THOUGH CHANGES TO ITS FORECAST THAT IT WILL BE NECESSARY TO CUT RATES THREE TIMES IN 2024. IF WE TAKE A LOOK AT MARKETS HERE, THEY SEEM TO LIKE IT. IN FACT, WE SEE MARKETS EXTENDING ON THE EARLIER RALLY. THE MAJOR AVERAGES ARE SET TO CLOSE AT A RECORD TODAY. SO OBVIOUSLY, NOTHING TO UPSET THE APPLECART. >> NO. THE STOCK MARKET CLEARLY LIKES WHAT IT SEES AND HEARS TODAY. LOOKING AT THE MAJOR AVERAGE, THE DOW IS TACKING ON 360 POINTS AND THE S&P 500 IS ABOVE 0.8% AND BROKE ABOVE 200 FOR THE FIRST TIME. KHLOE LEAKED WHAT SHE COULD AND THERE WAS RELIEF THERE, BUT SHE'S DONE TOMORROWER WITH INFLATION. THAT IS SUPPORTING RISK ASSETS. NOTHING IT CHANGE SUBSTANTIALLY AND THE MOST SORT OF OFF-THE-CUFF PART OF THE CONFERENCE CAME TOWARD THE VERY END WHEN A REPORTER ASKED CHAIR POWELL HOW HE FELT ABOUT THE TRANSPARENCY, THE PRESS CONFERENCES THAT THE FED DOES, IF HE HAS ANY REGRETS THAT THEY CHANGE THAT AND HE SAID OF COURSE -- NOT, PAUSE, PERHAPS SAYING A LOT BECAUSE TRANSPARENCY HAS BEEN HELPFUL TO MARKETS AT TIMES, BUT IT ALSO SOMETIMES MUDDIES THE WATERS AND MAKES HIS JOB HARDER IN TERMS OF MANAGING THE MESSAGE, AND THAT ALSO SPEAKS TO THE COMMENTARY THAT WE GOT FROM CLAUDIA SOMM THAT THE PLOT IS PROBLEMATIC FOR THE FED BECAUSE THE MARKET AS KRIEBED SO MUCH IMPORTANCE TO IT. >> THESE MOVES HERE AND WE WERE TALKING ABOUT MARKET REACTIONS, AND THIS IS A BOOST TO FINANCIAL CONDITIONS AND YOU WONDER HOW IT COMPLICATES JAY POWELL'S WORK AHEAD. >> YEAH. JUST LIKE GEORGE WAS SAYING EARLIER. WHEN MARKS GETS GO UP, IT IS NO SOMETHING THAT THE FED NEEDS NECESSARILY RIGHT NOW. WE WERE TALKING ABOUT THE IMPORTANCE OF THE FEDERAL RESERVE'S DOT PLOT. IT WAS A FOCUS OF TODAY'S DECISION AND THE CENTRAL BANK IS STILL LOOKING AT THREE CUTS THIS YEAR. YAHOO FINANCE'S SENIOR REPORTER ALEXANDRA CANAL WITH THE DOT PLOT MOST COMMONLY KNOWN AS THE SUMMARY OF ECONOMIC PROJECTIONS. >> THE SUMMARY OF CHECK PROJECTIONS, THE SEP, THE FED RLEASES THAT DATA QUARTERLY. THE DOT PLOT IS PART OF OF THAT AND AS YOU WERE TALKING ABOUT HEADING INTO THE TWO-DAY APPROXIMPOLICY. ALL EYES WERE ON THIS DOT PLOT LIKE GDP, UNEMPLOYMENT, INFLATION AND INTEREST RATES HAVE BEEN THE BIG BIGGIE. SO LET'S START THERE. AS YOU CAN SEE, EACH DOT HERE REPRESENTS A SPECIFIC FOMC MEMBER. BY AND LARGE, THE CENTRAL BANK DOES EXPECT INTEREST RATES TO TICK DOWN OVER TIME. AS YOU CAN SEE, THE FURTHER WE GO, MY HANDY DANDY -- THERE QUESTION GO. IT'S NOT WORKING HERE. THE FURTHER WE GO IT'S HARDER TO PREDICT SO LET'S FOCUS IN ON 2024 THIS YEAR. THE MAJORITY OF MEMBERS EXPECT THIS TO COME DOWN TO 4.6% AND WE ARE RIGHT IN THIS AREA WHICH MEANS THAT INTEREST RATE CUTS WILL LIKELY COME IN THREE STAGES, THREE 25-BASIS-POINT CUTS AND THIS IS THE SAME PROJECTION THAT WE HEARD IN DECEMBER, BUT NOTABLY HERE ONLY ONE FOMC MEMBER EXPECTS INTEREST RATE CUTS OF MORE THAN 75 BASIS POINTS AND IF YOU COMPARE THEM TO DECEMBER THERE WERE FIVE FOMC MEMBERS. SO THIS MANTRA OF HIGHER FOR LONGER IS LIKELY GOING TO CONTINUE. I MENTIONED SOME OF THOSE OTHER ECONOMIC INDICATORS AND THE GDP WAS SAYING THAT IT EXPECTS THE GDP TO COME IN AT 2.1% IN 2024. THAT'S SIGNIFICANTLY HIGHER THAN THE 1.4% THAT THE DECEMBER PROJECTIONS HAD AND EVENTUALLY WE'LL HIT THE 2% THROUGH 2026 AND IF YOU TAKE A LOOK AT INFLATION AND THAT ALSO COMING IN HIGHER IN THE PROJECTIONS HERE AND CORE PCE EXPECTED TO BE 2.6% IN 2024 AND WE'RE NOT GOING TO GET TO THE 2% TARGET UNTIL 2026. JEROME POWELL HAS CONSISTENTLY SAID THAT THE PATH WHEN IT COMES TO 2% INFLATION, IT WILL BE BUMPY AND WE ARE LIKELY TO SEE THAT THROUGHOUT THE INCOME FEW YEARS AND UNEMPLOYMENT, WHEN IT COMES TO INFLATION, WE ARE CURRENTLY 3.9% ON EMPLOYMENT AND IT EXPECTS TO TICK UP TO 4% IN 2024. BY AND LARGE, NOT TOO MANY SURPRISES HERE. THERE WAS A LOT OF TALK WHETHER OR NOT WE COULD SEE PROJECTIONS OF JUST ONE OR TWO CUTS, BUT THAT WASN'T THE CASE AGAIN. WE GOT THOSE THREE CUTS THAT WAS EXPECTED. WE'LL SEE ULTIMATELY IF THAT HAPPENS THIS YEAR, BUT MARKETS RIGHT NOW ARE REALLY CHAMPIONING THESE PROJECTIONS AND THAT THE FED HAS HELD RATES STEADY SO FAR. >> FOR SURE, ALY CANAL, THANK YOU SO MUCH. FOR MORE MOVING FORWARD, LET'S WELCOME THE VANGUARD PORTFOLIO MANAGER. ROGER, GOOD TO SEE YOU. WE HAVE A RAL ON WALL STREET AND JUST GREEN ACROSS THE SCREEN. ALL THREE MAJOR AVERAGES AND THE S&P 500 BREAKING ABOVE 5200 FOR THE FIRST TIME, ROGER, BUT LET'S GET YOUR REACTION. WHAT DID YOU MAKE OF WHAT THE FED DID AND SAID TODAY? >> NO, I THINK THE MARKET REACTION IS UNDERSTANDABLE AND THE SEP THAT YOU GUYS WERE JUST DESCRIBING SEEMS VERY DOVISH. THEY WERE REVISED UP THE PROSCOMBREKS AND THEY REVISED UP THE INFLATION PROJECTIONS AND YET THEY STILL THINK THEY WILL CUT THREE TIMES THIS YEAR. SO IT'S AN OBVIOUS THING ON THE MARKET, BELOW THE SURFACE IT SHOWS MORE IS AND LESS RISK. >> DARE I SAY GOLDILOCKS? IS IT TIME TO BRING BACK THAT WORD? >> CERTAINLY GOLDILOCKS WAS LAST YEAR AND THE QUESTION IS IF THOSE FORCES THAT POWELL REFERRED TO WILL CONTINUE. THIS TIME COMES HIGHER INFLATION. SO WHETHER WE WILL HAVE THAT, THEY WIN THAT THE FED LAST YEAR WAS WITH HIGH GROWTH AND IT IS STILL YET TO COME IN AND OUR VIEW, THE INFLATION WILL REMAIN STUBBORN AND IT WILL CAST MORE REVISIONS IN TERMS OF THE RATE CUTS AND IT WILL BE VERY DIFFICULT FOR THEM TO GET THROUGH THE FIRST CUT UNLESS THE INFLATION PICTURE STARTS GOING DOWNWARD. >> TO THAT POINT, ROGER. I WANT TO ASK YOU WHEN YOU SEE THE STOCK MARKET REACTION LIKE THIS, THIS IS A BOOST TO FINANCIAL CONDITIONS, ROGER, RIGHT? DOESN'T THIS COMPLICATE JAY POWELL'S WORK AHEAD? >> ABSOLUTELY. THE FINANCIAL CONDITIONS ARE THINGS THAT SHOULD BE FACTORED IN. IT'S A FORM OF POLICY MISTAKE IN SOME SENSE, IN A SLIGHT WAY, RIGHT? BECAUSE BY MOVING UP THE GROWTH AND THE INFLATION PROJECTIONS, AND THE MARKET WHICH IN TURN SAYS THIS, MAKES THE JOB MORE DIFFICULT TO REENVISION IT WHICH IS ULTIMATELY WHAT THEY WANT. SO PUT IT ALL TOGETHER FOR US. WHAT ARE THE SORT OF RISKS TO THIS CONTINUED RALLY AND YOU KNOW, EXEMPLIFIED BY THE REACTION TODAY? >> TO ME THE RISK IS -- WE HAVE SEEN IT SINCE DECEMBER, HONESTLY, THAT THE MARKETS ARE BUYING THIS IDEA OF SELF LANDING AND DECLARING VICTORY, IN OUR VIEW. I THINK THEY WILL BASICALLY HAVE TO GET BACK TO REALITY AT SOME POINT IF INFLATION CONTINUES BEING STUBBORNLY HIGH OR NOT ENOUGH AND THEY WILL PUT DATA IN THE FIRST CUT MORE AND MORE. SO THAT'S TWHAT AS INVESTORS WE NEED TO KEEP IN MIND. >> WE DO HAVE A VERY DIVISIVE ELECTION COMING UP HERE. I JUST WONDER TO WHAT EXTENT, IF AT ALL, THAT IS IMPACTING THE FED'S DECISIONS? >> YEAH, THE PROBLEM I THINK WILL BE WITH THE TIMING OF THE FIRST CUT IF IT FALLS RIGHT THERE IN THE SEPTEMBER TIMEFRAME IT COULD COMPLICATE THINGS, RIGHT? KNOW THAT THE FED WILL DO WHAT THEY NEED TO DO BASED ON MONETARY POLICY, AND ULTIMATELY THERE WILL BE PRESSURE, WHETHER THEY DO IT OR DON'T DO IT WILL PUT THEM IN THE SCRUTINY, RIGHT? THAT IS SOMETHING THAT MAY LIMIT A LITTLE BIT WHAT THEY CAN DO. >> ROGER, THANK YOU SO MUCH FOR YOUR TIME. APPRECIATE IT. >> I APPRECIATE IT. ALWAYS HAPPY TO BE HERE. >> THANKS. WE JUST HEARD FROM JAY POWELL CONFIRMING THAT THE FEDERAL RESERVE WAS HOLDING RATES FOR AN EIGHTH MONTH AND OUR OWN JENNIFER SCHONBERGER IS JOINING US LIVE. WHAT WAS YOUR IMPRESSION FROM BEING IN THE ROOM AND SEEING JAY POWELL IN PERSON AND AS YOU'VE HAD A FEW MINUTES AT LEAST TO DIGEST WHAT YOU HEARD? >> JULIE, YEAH, I THOUGHT IT WAS VERY INTERESTING THAT CHAIR POWELL AND THE FED DON'T SEEM TO BE PHASED THAT MUCH BY THE HOTTER INFLATION DATA IN THE FIRST TWO MONTHS OF THIS YEAR AND HE SAID IT REALLY DOESN'T CHANGE THE OVERALL INFLATION PICTURE ALL THAT MONTH AND DOES IT INSPIRE GREATER CONDIFIDENCE? NO, TAKE A LISTEN TO WHAT HE SAID. >> THREE BASIS POINTS CORE PCE WHICH IS NOT TERRIBLY HIGH, BUT I TAKE THE TWO OF THEM TOGETHER AND THEY HAVEN'T CHANGED THE OVERALL STORY WHICH IS THAT OF INFLATION MOVING DOWNGRADEALLY ON AN OTHERWISE BUMPY ROAD TOWARD 2%. I DON'T THINK THAT STORY HAS CHANGED. I ALSO DON'T THINK THAT THOSE READINGS ADDED TO ANYONE'S CONFIDENCE THAT WE'RE MOVING CLOSER TO THAT POINT. >> POWELL WOULD NOT SHOW HIS HAND FOR THE POTENTIAL FIRST RATE CUT OR WHETHER JUNE WOULD BE PUSHED BACK. WHEN ASKED ABOUT THAT HE SAID DECISIONS WILL BE MADE ON A MEETING BY MEETING BASIS. I THOUGHT IT WAS INTERESTING BECAUSE THE CHAIRMAN USED LANGUAGE HE'S BEEN USING ALL YEAR TO CATEGORIZE TIMING AND HE SAID IT WOULD BE APPROPRIATE TO BEGIN DIALING BACK POLICY RESTRAINT. HE DIDN'T SHIFT TO USING LANGUAGE LIKE LATER THIS YEAR WHICH HIS COLLEAGUES HAVE CHOSEN TO USE. THAT INDICATES TO ME THAT JUNE IS STILL VERY MUCH IN PLAY IF THE INFLATION DATA SOFTENS SOME MORE FROM HERE AND CONTINUES FOLLOWING AS THEY HAVE WHEN IT COMES TO CORE PCE ON A MONTH OVER MONTH BASIS. ON THE BALANCE SHEET, THE CHAIRMAN SAID THAT THE MEMBERS OF THE COMMITTEE DID HAVE A DISCUSSION ON THIS, BUT THEY DID NOT MAKE ANY DECISIONS TODAY. THEY BELIEVE, THOUGH, THAT IT WILL BECOME OPPORTUNE TO SLOW THE PACE OF QUANTITATIVE TIGHTENING, QUOTE, FAIRLY SOON. THAT DOESN'T MEAN, HE SAYS, THOUGH, THAT THE FED WILL END UP WITH A LARGER BALANCE SHEET AND THEY COULD END UP WHITH A SMALLR BALANCE SHEET. GUYS? >> YOU'VE BEEN TO A LOT OF THESE PRESSERS AND COVERED THEM SO CLOSELY. ANYTHING FROM THE MEETING TODAY OR ANYTHING JAY POWELL SAID THAT SURPRISED YOU, JEN? >> ANYTHING THAT SURPRISED -- I THINK IT WAS INTERESTING THAT HE JUST WOULD NOT TOUCH TIMING AND EVEN THOUGH THEY HAVE UPGRADED THEIR ASSESSMENT OF THE ECONOMY AND INFLATION AND THEY ARE STILL RETAINING THREE RATE CUTS THIS YEAR. HAVING SAID THAT, WE DID SEE SOME OF THE DOVES THAT WE'RE SEEING FOR RATE CUTS PREVIOUSLY BACK IN DECEMBER COALESCING THROUGH THE UNION OF RATE CUT, BUT FOR THE MOST PART THAT THEY STILL SEE EASING THAT MONTH AND TELLING THAT HE ALSO SAID THAT IF YOU DON'T FEEL THE HOLISTIC PICTURE FOR INFLATION HAS CHANGED ALL THAT MUCH EVEN THOUGH WE'VE HAD THE HOTTER INFLATION DATA FOR THE FIRST HALF OF THIS YEAR. >> JEN SCHONBERGER, THANKS. APPRECIATE IT. ♪ >>> ALL RIGHT. TIME TO TAKE A PAUSE FROM THE FED AND TURN TO ONE OF THE DAY'S TRENDING TICKERS AS WE APPROACH THE CLOSING BELL ON WALL STREET. WE WATCHING SHARES OF INTEL. THE SHARES ARE ONLY UP A QUARTER PERCENT AND WE GOT NEWS THAT THE U.S. WILL PROVIDE THE COMPANY UP TO $8.5 BILLION FOR CHIP MANUFACTURING AS PART OF THE CHIPS AND SCIENCES ACT. CEO PAT GELSINGER WORK TO POWER THE NEXT SEMICONDUCTOR INNOVATION. IT MIGHT TAP INTO MORE MONEY IN TERMS OF TAX INCENTIVES AND LOANS. HERE WITH MORE ON WHERE THIS PLACES INTEL AND THE COMPETITIVE SEMIS LANDSCAPE, LET'S BRING IN SENIOR EQUITY ANALYST ANGELO ZINO. A AVERA ANGELO, I CAN'T EVEN TALK AFTER THE FED. THANKS FOR BEING HERE. WE EXPECTED THAT INTEL WOULD GET ONE OF THESE GRANTS, RIGHT? SO WHAT NOW IN TERMS OF HOW THIS AFFECTS THE INVESTABLE CASE FOR THE COMPANY. >> THANKS, JULIA. THE STOCK ISN'T MOVING MUCH BECAUSE IT WAS IN LINE WITH WHERE WE ANTICIPATED AND WHERE MOST PEOPLE ANTICIPATED AT 8 TO 10 BILLION OR SO. MAYBE SOME OTHERS WHO WERE HOPING FOR A LITTLE BIT MORE, BUT THAT SAID, THIS IS A COMPANY THAT'S GOING TO SPEND IN EXCESS OF THEIR 100 BILLION IN TERMS OF CAPEXSPEND AND IN TERMS OF BUILDING THEIR FOUNDRY BUSINESS AND WE SAW THEM SPEND NORTH OF 20 BILLION IN EACH OF THE LAST TWO YEARS. WE EXPECT THEM TO SPEND MORE THAN 20 BILLION NEXT YEAR AND THE NEXT TWO YEARS. THE FACT THAT HALF A BILLION IS GOING TO HELP, BUT AT THE END OF THE DAY THEY WILL CONTINUE TO UTILIZE ALL THEIR CASH FLOW THAT THEY'RE GENERATING FROM THEIR CORE BUSINESS INTO CONTINUING TO KIND OF BUILD THIS FOUNDRY EXPANSION INITIATIVE OUT THERE. SO AS WE LOOK HERE OVER THE NEXT COUPLE OF YEARS. WE DO EXPECT THEM TO POTENTIALLY BE A NUMBER TWO OUR THREE PLAYER ON THE FOUNDRY SIDE OF THINGS WHERE TAIWAN SEMI WILL CONTINUE TO LEAD, BUT LISTEN, WHAT EVERYONE IS HOPING FOR AND LOOKING FOR RIGHT NOW IF YOU'RE AN INVESTOR IS YOU'RE LOOKING FOR MORE WINS FROM A CUSTOMER PERSPECTIVE. I THINK THEY GOT TOTAL LIFETIME DEAL VALUE THAT WAS ANNOUNCED ABOUT A MONTH AGO ABOUT 15 BILLION OR SO. THAT'S NOT MUCH OUT THERE. SO WE NEED TO SEE MORE IN TERMS OF THE ORDER SIDE OF THINGS FROM INTEL. >> ANGELO, YOU LOOK AT PAT GELSINGER. HE'S BEEN CEO THERE FOR TWO YEARS. HE CAME IN WITH THIS BIG TURNAROUND PLAN AND FOCUSED ON DESIGN AND MANUFACTURING AND HE SAID FROM THE BEGINNING, HE SAID IT WOULD TAKE ABOUT FIVE YEARS. >> YES. >> WE ARE HALF WAY THROUGH. JUST FINANCIALLY COVERING THE COMPANY, WHAT GRADE WOULD YOU GIVE GELSINGER SO FAR? WHAT DO YOU MAKE OF HIS PERFORMANCE? >> I THINK HE'S BEEN GIVEN A VERY, VERY DIFFICULT HAND AND I THINK HE'S DONE THE MOST HE CAN WITH IT. I THINK HE'S MAKING ALL OF THE RIGHT MOVES OUT THERE. THIS ISN'T A COMPANY THAT'S NECESSARILY GOING TO BE A WINNER ON THE AI SIDE OF THINGS, BUT DO I THINK THEY ARE WHERE THEY HOLD A COMPETITIVE ADVANTAGE RELATIVE TO OTHERS AND IT'S A MANAGEMENT PRESENCE AND BEING ABLE TO SEE THE GEOPOLITICAL PRESSURES AND THE NEED TO HAVE ANOTHER PLAYER OUT THERE OUTSIDE OF ASIA I THINK IS THE RIGHT MOVE AND ULTIMATELY THEY ARE GOING TO WIN A LOT OF BUSINESS. THE REASON WE'VE HAD A HOLD RECOMMENDATION OVER THE LAST THREE YEARS IS BECAUSE WE KNEW THIS WAS GOING TO BE A FIVE-YEAR PLUS PLAN AND AS A RESULT IF YOU'RE AN INVESTOR OUT THERE, THE OPPORTUNITY COST OF OWNING INTEL RELATIVE TO ESSENTIALLY ANY OTHER COMPANY IN THE SEMICONDUCTOR INDUSTRY ESPECIALLY SOME OF THESE AI-ORIENTED COMPANY LIKE NVIDIA IS ABSOLUTELY HUGE. SO WE GIVE HIM AN A MINUS AND AT THE END OF THE DAY HE WAS GIVING ME A DIFFICULT 10 AND IT'S NOT YOUR FAULT THAT YOU HAVEN'T SEEN THE CAPITAL APPRECIATION IN TERM OF THE STOCK PERFORMANCE. >> ANGELO, INTEL IS NOT THE ONLY COMPANY THAT WILL LIKELY GET ONE OF THESE GRANTS, TAIWAN SEMI, SAMSUNG, MICRON HAVE APPLIED. TO BE FAIR THOSE ARE IN DIFFERENT PARTS OF THE SEMICONDUCTOR STACK, IF YOU WILL, BUT SORT OF, HOW DO THE COMPETITIVE OPPORTUNITIES LOOK FOR THEM VERSUS AN INTEL FROM GETTING THESE GRANTS. >> YOU'RE ABSOLUTELY RIGHT. ALL OF THOSE COMPANIES WILL PROBABLY GET SOME SORT OF FUNDING. WE DO EXPECT INTEL TO BE THAT WINNER IN TERMS OF GETTING THE MAJORITY OR AT LEAST THE LARGEST PIECE OF THAT PIE. I THINK ANOTHER NAME OUT THERE THAT WASN'T HIGHLIGHT SIDE TEXAS TREATMENTS AND WE'LL GET A GOOD AMOUNT ON THE SIDE RELATIVE TO WHAT THEY'VE BEEN SPENDING AS OF LATE, BUT AS FAR AS THE FOUNDRY SIDE OF THINGS IT WILL BE TAIWAN. IF YOU LOOK AT SEMI HERE THEY ACTUALLY PUSHED OUT SOME OF THE INITIATIVES AND THEY'RE TAKING MORE OF A WAIT-AND-SEE APPROACH TO SEE WHAT KIND OF SUPPORT THEY WILL ACTUALLY GET FROM THE U.S. GOVERNMENT OUT THERE, BUT MAKE NO DOUBT ABOUT IT, ALL OF THE LEVERAGE RIGHT NOW FROM THE FUNDING PERSPECTIVE WILL CONTINUE TO GO TO INTEL. >> ANGELO, GOOD TO SEE YOU. THANK YOU VERY MUCH FOR HELPING US BREAK THIS DOWN. APPRECIATE IT. >> THANKS FOR HAVING ME. >> STILL TO COME, WHAT TO DO IN THE LATEST CLEAN ENERGY PUSH AND IF IT'S TIME TO GET IN THE SPACE AND THAT'S IN TODAY'S INVESTOR PLAYBOOK. STAY TUNED. MORE "MARKET DOMINATION" ON THE OTHER SIDE. ♪ ♪ >> TAKING A LOOK NOW AT SHARES OF CHIPOTLE. THE BOARD OF THE FAST CASUAL CHAIN APPROVING A 50 FOR 1 STOCK SPLIT. A NICE 4% POP, JULIE. THAT WAS THE NEWS THAT CHIPOTLE'S BOARD POSING A 50 TO 1 STOCK SPLIT IN THE COMPANY'S HISTORY AND OF COURSE, THE STOCK GOES PUBLIC BACK IN 2006 AND NOW TRADES AT 3000. >> NOT BAD FOR A BURRITO CHAIN. THE CHAIR WOULD APPROVE THE SPLIT AT THE ANNUAL MEETING JUNE 6th AND IT WOULD START TRADING ON JUNE 26th. >> YES. WHAT WE LIKE TO SAY ABOUT A SPLIT IS THE PROS DON'T NECESSARILY LIKE THIS. IT DOESN'T DO ANYTHING FOR THE FUNDAMENTAL VALUE OF THE COMPANY. IT'S MORE A MOVE AIMED AT RETAIL INVESTORS WHO CAN BETTER WRAP THEIR BRAIN AROUND BUYING SOMETHING THAT'S NOT 2900 BUCKS A POP, BUT RATHER IS A 50th OF THAT. >> YEAH. >> SO THAT'S WHY YOU SEE THESE KINDS OF MOVES. THERE HAVE BEEN FEWER STOCK SPLITS RECENTLY, BUT WE HAVE SEEN COMPANIES LIKE WALMART DO THEM AND ALSO TRYING TO HAVE RETAIL INVESTORS AND IT'S INTERESTING TO SEE THAT POSITIVE REACTION IN TODAY'S SHARES. >> AND GIVING A ONE-TIME EQUITY GRANT TO CREW MEMBERS WHO WORKED THERE FOR MORE THAN 20 YEARS, AND I SAW SOME ANALYSTS THAT TO THEM THIS WAS A POSITIVE SIGNAL, SPEAKING OF MANAGEMENT CONFIDENCE. >> YOU ARE THE LAST MAN IN AMERICA WHO HAS NOT HAD CHIPOTLE. IF YOU'RE OUT THERE, PLEASE TWEET ME BECAUSE I THINK HE'S THE ONLY GUY. >> I'M NOT ANTI-CHIPOTLE, I JUST HAVEN'T SAMPLED IT. THE MORE WE'RE TALKING RIGHT NOW THE HUNG RIER I'M GETTING. >> WE SHOULDN'T TALK ABOUT IT ANYMORE. IT'S NOT BAD. IT'S QUITE GOOD. LET'S TALK ABOUT ANOTHER TRENDING TICKER AND THAT'S DIGITAL ACQUISITION AND THE COMPANY FILING A LAWSUIT TO FORCE ARK GLOBAL INVESTMENT TO VOTE IN FAVOR OF ITS MERGER DEAL WITH TRUMP MEDIA AND TECHNOLOGY GROUP. THE SHARES ARE UP 22% AND THIS IS A VERY VOLATILE STOCK UP AND DOWN, RIGHT? AND THE SAGA OF DWACH HAS NOW BEEN GOING ON FOR QUITE SOME TIME. THERE IS A VOTE SCHEDULED FOR FRIDAY FINALLY TO SEE IF A MERGER WILL GET DONE. IT'S BEEN PUSHED BACK AND THERE'S BEEN MANEUVERING AND THIS IS THE LATEST TO GET IT OVER THE FINISH LINE. >> YEAH. BASICALLY, THIS IS DIGITAL WORLD TELLING ARK YOU HAVE NO CHOICE. I THINK THE MONEY IN THE LAWSUIT WAS ARK MUST VOTE IN FAVOR PURSUANT TO THE TERMS OF THE LETTER AGREEMENT. THERE ARE NO EXCEPTIONS, DESPITE ARK MANAGING MEMBER TO FORCE ARK'S VOTE HOSTAGE FOR HIS PERSONAL GAINS. >> THAT'S WHAT THEY SAY, ANYWAY. >> INTERESTING. BLOOMBERG POINTED OUT, IF THIS WENT THROUGH IT WOULD BE A WINDFALL FOR TRUMP. $4 BILLION. >> AT A TIME THAT IT WOULD COME IN HAND. >> GIVEN THE LEGAL VERBIAGE, HUGE FINANCIAL PENALTIES. >>> SWITCHING GEARS TO THE ENERGY INDUSTRY, AND IT'S THE GATHERING BY THE S&P GLOBAL CONFERENCE. I WAS THERE THIS WEEK AND I GOT TO HEAR FROM LEADERS FROM ACROSS THE SECTOR AND THE MESSAGE THAT CAME THROUGH LOUD AND CLEAR, FOSSIL FUELS ARE NOT GOING ANYWHERE ANY TIME SOON. ONE OAK, FOR EXAMPLE, PIERCE NORTON TOLD ME THAT ENERGY NEEDS WOULD ONLY GROW OVER THE NEXT FEW YEARS TO MEET THAT DEMAND, HE SAYS. THE FOCUS WILL BE ON ADDING ENERGY SOURCES AND NOT JUST TRANSITIONING TO NEW ONES. >> WE'VE ACTUALLY BEEN IN A TRA TRANSITION FOR 200 YEARS AND THE COUNTRY STARTED USING WOOD FOR ITS ENERGY SOURCE AND THEN WE ADDED COAL, NUCLEAR AND NOW YOU HAVE GEOTHERMAL AND THE RENEWABLES WHICH IS THE SOLAR AND THE WIND. WE BELIEVE IT'S MORE ABOUT ENERGY ADDITION THAN NECESSARILY ENERGY TRANSITION. >> THESE BIG NAMES ARE TAKING STEPS TO CLEAN UP, SO TO SAY BY INVESTING IN OFFSETTING EMISSIONS AND ONE WAY TO DO THAT IS BICAPTURING CARBON DIOXIDE AND STORING IT OUT OF THE EARTH'S ATMOSPHERE AND IT'S PART OF CARBON CAPTURE OR SEQUESTRATION. I ALSO TALKED TO CHRIS POWERS. HE'S THE VICE PRESIDENT OF CCUS AT CHEVRON, AND HE TALKED ABOUT THE PROFITABILITY OR LACK THEREOF OF TECHNOLOGY AND ACKNOWLEDGED THE VERY EARLY DAYS, AND HE SAYS THE PATH HAS BEEN LAID OUT. >> THE 45Q CREDITS THROUGH THE IRA. I VIEW THOSE AS A FOUNDATIONAL ENABLER TO GET THESE BUSINESSES MOVING AND IF YOU THINK ABOUT IT IT'S NOT REALLY THAT MUCH DIFFERENT THAN WHAT THE OTHER INDUSTRIES, SOLAR AND WIND, THEY HAD POLICY TO GET STARTED AND THEN THE BUSINESSES GROW AND SCALE OVER TIME AND COST CURVES COME DOWN AND THEN THE BUSINESSES CAN GROW INTO A MARKET. ♪ ♪ >> AMID TALKS OF DECARBONIZATION THE QUESTION REMAINS IS THE ENERGY TRANSITION A SMART INVESTMENT RIGHT NOW. WE'RE LOOKING AT HOW TO NAVIGATE THE BIG PICTURE WITH THE YAHOO PLAYBOOK THE SENIOR MANAGING DIRECTOR AND THE SENIOR DIRECTOR OF U.S. EQUITY STRATEGY. THANKS FOR BEING HERE, FIRST OF ALL. I REALLY APPRECIATE IT. WHEN WE TALK ABOUT THE ENERGY TRANSITION HERE THERE ARE A LOT OF DIFFERENT WAYS TO GET INTO IT, BUT BROADLY SPEAKING, IS IT SOMETHING THAT INVESTORS SHOULD BE LOOKING AT RIGHT NOW? WELL, JULIE, GOOD TO SEE YOU AND GOOD TO SEE JOSH. GLOBALIZATION IS NOT AND IT WILL CONTINUE AND I THINK DECARBONIZING THE WORLD IS SOMETHING THAT'S IMPORTANT TO ALL OF US NO MATTER OUR AGE AND AS A RESULT OF THAT, YEAH, I DO THINK THE COMPANIES ARE LOOKING TO BE CARBONIZED AND IF YOU LOOK AT COMPANIES THAT ARE DECAR BEENIZING. REALLY, IT'S THE ENERGY DU COMPANIES THEMSELVES THAT ARE DECARBONIZING AND SOME WHICH YOU HIGHLIGHT. >> I WANT TO IN BACK TO YOU IN A MINUTE AND IT'S NOT JUST ABOUT THE ENERGY COMPANIES WHEN YOU'RE TALKING ABOUT THE TRANSITION OR AT LEAST NOT OIL AND GAS COMPANY SPECIFICALLY AND IT'S ABOUT SOLAR. IT'S ABOUT WIND AND OTHER TYPES OF ENERGY SOURCES. SO HOW SHOULD INVESTORS BE THINKING ABOUT IT RIGHT NOW? >> I'LL ACTUALLY TAKE YOU A STEP FURTHER BACK AND I THINK YOU HAVE TO LOOK THEA THE VALUE CHAIN FIRST. WHEN WE THINK ABOUT THIS THEMATICALLY, A LOT OF THE PURE PLAYS, THEY'RE HAVING A DIFFICULT TIME PROVING OUT THEIR BUSINESS MODELS AND I THINK IF YOU GO BACK IN THE VALUE CHAIN WE HAVE TO BUILD THE INFRASTRUCTURE FIRST. I ALWAYS FIND THIS QUIPPY, BUT IT'S INTERESTING. THERE ARE WIND FARMS THAT DON'T REALLY MAKE A TON OF MONEY, BUT I CAN ALMOST GUARANTEE YOU THE COMPANY POURING THE CEMENT AT THE BASE OF THAT WIND MILL PROBABLY DIDN'T LOSE ON THAT CONTRACT. I THINK FROM AN INVESTMENT STANDPOINT WE WANT TO MOVE BACK IN THE VALUE CHAIN AND WE WANT TO INVEST IN THE ENERGY TRANSITION. >> AND BILL, LET ME EXTEND THAT A BIT OF AND HAVE WE SEEN THOSE BUSINESSES GET AN ADDED BOOST BECAUSE THERE'S AND HOW WOULD THEY BE TAKEN DWNAGE OF THIS. >> I DON'T THINK A LOT OF THE STREET ANALYSTS PUSH INTO THEIR NUMBERS AND IT SHOULD BE A TAILWIND FOR THE COMPANIES AND THERE IS A LOT OF SKEPTICISM AROUND IT BECAUSE A LOT OF IRA ARE POLITICALLY DRIVEN AND WE ARE IN AN ELECTION YEAR AND A LOT OF UNCERTAINTY THERE AND THE TREND REGARDLESS OF POLITICS IS STILL IN PLACE FOR ENERGY TRANSITION AND INFRASTRUCTURE BUILDOUT ACROSS ENERGY AND JUST INFRASTRUCTURE IN THE UNITED STATES MORE BROADLY. >> I WANT TO COME BACK TO YOU FOR SOME NAMES THERE, BUT FIRST I WANT TO GO BACK TO ROB BECAUSE HERE, TOO, OF COURSE, THE IRA IS IMPORTANT AND ACTUAL INVESTMENT WHEN YOU TALK ABOUT THIS DECARBONIZATION PUSH BECAUSE OF CREDITS AND INCREASING BASICALLY THE VALUE OF CARBON CREDITS THAT THESE ENERGY COMPANIES ARE TRYING TO GET A HOLD OF. THAT SAID, THE BUSINESS DOESN'T REALLY EXIST YET, RIGHT? THESE BUILDOUTS ARE VERY EARLY ON, ROB. SO IF I'M BUYING AN EXXONMOBIL FOR ITS CARBON CAPTURE BUSINESS, I MEAN, WHEN AM I GOING TO SEE PROFITS FROM THAT? >> WELL, IT'S A LITTLE WAYS OUT AND EXXONMOBIL IN ITS CARBON CAPTURE BUSINESS, IT WILL TAKE A LITTLE WHILE, BUT THINK ABOUT THIS, JULIA, AND IT DOVE TAILS INTO WHAT DREW IS SAYING AND LAST YEAR EXXONMOBIL BROUGHT IT, AND WHAT DOES THAT MEAN? HE HAD THE LARGEST NETWORK OF CO2 AND NOW EXXON IS THE LARGEST OPERATOR OF INFRASTRUCTURE FOR CARBON DIOXIDE. SO WHAT EXXON CAN NOW DO IS TAKE CARBON DIOXIDE OFF OF THE PLANTS IN THE GULF COAST AND TRANSPORT IT IN THE PIPELINES AND OBVIOUSLY ULTIMATELY SEQUESTER, BUT YOU NEED THAT INFRASTRUCTURE IN PLACE TO REDUCE THE COSTS AND SO IT'S EXAMPLES ■LIKE THAT OF OPPORTUNITIES. OCCIDENTAL IS GOING TO CAPTURE AND THEY'LL TAKE ADVANTAGE OF THE IRA AND GET SOME OF THE OPPORTUNITIES FOR THE TAX CREDIT THAT PEOPLE WERE REFERRING TO EARLIER. THAT BUSINESS COULD GROW AND THEY EXPECT IT TO BE AS LARGE, AND POTENTIALLY AS SIGNIFICANT A PROVIDER AND MAYBE THAT WAS NOT A THOUSANDS FOR BILLIONS. I JUST JUST TALKED TO THE CEO OF OCCIDENTAL AND I SAID TO HER, WHEN IS THIS GOING TO MAKE MONEY? SHE SAID ASK ME IN A COUPLE OF YEARS. SO THERE'S NOT EVEN VISIBILITY ON THE TRAJECTORY OF PROFITABILITY YET, AND SO I JUST WANT TO MAKE CLEAR -- IT'S NOT THAT THESE THINGS ARE NOT GOING TO BE REAL BUSINESSES. I JUST WANT TO MAKE CLEAR TO INVESTORS THAT IF YOU'RE BUYING THESE COMPANIES TODAY WITH A VIEW TO THAT BUSINESS, YOU'RE GOING TO BE WAITING A LONG TIME. I MEAN, IS THAT FAIR TO SAY? >> YOU'RE SPOT ON, JULIA. IT'S A WAYS AWAY. THAT'S WHY I THINK THE LARGE, INTEGRATED OIL COMPANIES AND THE EXISTING ENERGY COMPANIES ARE THE BEST COMPANIES TO OWN AND OPERATE THESE ASSETS. THEY HAVE THE ENERGY EXPERTISE, THAT GOT THE TECHNOLOGY EXPERTISE THAT GOT THE EXPERTISE AND THEY'RE COMMITTED TO DECARBONIZATION, BUT THAT TAKES TIME AS YOU HIGHLIGHT. SO YEAH, THAT'S WHERE WE ARE IN THE CYCLE. >> SO, DREW, IT'S INTERESTING BECAUSE YOU GUYS ARE PROVIDING US WITH A NOW AND LATER PLAYK BOO, I GUESS YOU COULD SAY, AND DREW, YOURS WOULD BE MORE OF THE NOW PLAYBOOK AND THE INFRASTRUCTURE THAT YOU'RE TALKING ABOUT. SO WHAT ARE YOUR NAMES THAT ARE DOINGING THIS THESE BUILT NOW AND POISED TO CAPITALIZE ON HAD. I WILL ADD ONE MORE THING THAT ONE SAID. THEY ALSO R FREE CASH FLOW TO FUND ENERGY TRANSITION, AND A LOT OF THESE IN THE STAND ALONE BASIS WERE RUNNING OUT OF CASH AND THAT BECAME A PROBLEM WHEN THE FED STARTED RAISING RATES AND WHEN BWE SAW THE CAPITAL GOING OUT OF THE COMPANIES AND THEN IN THE BLINK OF AN EYE IT WENT DUOWN 80%. THIS GOT US FOCUSING ON WHO IS PROFITABLE NOW AND WHO WILL BE SOON AND WHO HAS OPERATING LEVERAGE AND THEIR SEGMENT OF THE INFRASTRUCTURE BUILDOUT. A COUPLE OF NAMES THAT REALLY STAND OUT TO US, ACON, AND IT'S AN ENGINEERING AND CONSTRUCTION COMPANY AND AGAIN, THEY SUPPORT BROADER INFRASTRUCTURE, BUT PART THEIR BUSINESS IS UP ARTS POLLUTION SOLUTIONS AND ANOTHER STOCK THAT MIGHT BE OFF -- WE'RE GOING TO MORE THAN JUST CLEAN TRANSITION. WE ARE GOING TO NEED THAT IN BETWEEN PERIOD, AS WELL. THIS COMPANY ALSO PLAYS TO ENERGY STORAGE AND MORE OF A BUILDER IN THE INFRASTRUCTURE SPACE. BOTH OF THESE ARE IN THE MIDCAP AND I THINK THERE'S A WAY WE CAN DO THIS NOW AND WHEN WE FEEL BETTER ABOUT CAPITAL MARKS, INTEREST RATES AND FUNDING SOME OF THE LONGER TERM PLAYS IN THE SPACE, I THINK WE ROTATE TO THE PURE PLAYS LATER ON. >> AND IT'S INTERESTING BECAUSE I LOOK AT SOME OF THESE COMPANIES YOU'RE TALKING ABOUT LIKE MARTIN MURRIETA, THEY'RE UP, 86% OR SO OVER THE PAST YEAR. SO WE'VE SEEN THIS RALLY. GUYS, I WANT TO ASK BOTH OF YOU ABOVELY AND DREW, YOU TOUCHED ON THIS WHAT THE POLITICAL RISK IS HERE, RIGHT? IF YOU DO SEE IF PRESIDENT TRUMP RE-TAKES THE PRESIDENCY, FOR EXAMPLE, AND DOES, GOES THROUGH WITH HIS THREAT TO PULL BACK ON SOME OF THESE MEASURES THAT WERE ADDRESSED TO THE IRA EVEN THOUGH HE ALONE CAN'T SCRAP THE BILL ENTIRELY, ROB, WHAT IS THE RISK? YOU SAID THERE WAS A REAL COMMITMENT ON THE PART OF THE OIL AND GAS COMPANIES. WHAT HAPPENS, THOUGH, IF THE POLITICS CHANGE? >> A LOT DO AND THERE'S NO DOUBT ABOUT THAT AND IF WE WILL SEE SOME PULLBACK IN THE TAX CREDITS, THAT WOULD LIKELY SLOW DOWN THE CAPITAL INVESTMENT. I STILL DON'T THINK THERE'S THE DESIRE TO DECARBONIZE, BUT IT WOULD DEFINITELY REDUCE THE COMMITMENT BECAUSE THE ECONOMICS WOULDN'T WORK FOR A LOT OF THESE TECHNOLOGIES. >> DREW, WHAT ABOUT YOU? IT SOUNDS LIKE YOU'RE TRYING TO FIND PLAYS THAT ARE SORT OF AGNOSTIC. >> IT'S FUNNY. NOT EVERYTHING IN CLEAN ENERGY NEEDS A TAX CREDIT. A LOT IT DOES, AND I AGREE WITH ROB THERE, BUT UTILITY SCALE SOLAR, FOR EXAMPLE, ACTUALLY HAS DECENT ECONOMICS. SO THERE ARE EXAMPLES OF CLEAN ENERGY PLAYS WHERE WE HAVE THE BABY BASICALLY BEING THROWN OUT WITH THE BATHWATER HERE. SO AGAIN, WHERE WE THINK WE CAN SURVIVE SOME OF THE NEAR-TERM POLITICAL ISSUES AND THE NEAR-TERM RATE ISSUES AND THE NEAR-TERM CAPITAL MARKETS BEING OPEN OR NOT ISSUE, YOU NEED PROFITABILITY AND YOU NEED NEAR-TERM CASH FLOW. SO WE'RE LOOKING FOR CLEANUPS WITH THE PROFITABILITY NOW, AND I CAN'T STRESS OUT ENOUGH. GUYS, VERY INTERESTING STUFF. THOUGHT PROVOKING. I REALLY APPRECIATE IT. ROB AND DREW. WE ARE MINUTE AWAY FROM THE CLOSING BELL ON WALL STREET. THE FEDERAL RESERVE CHAIR JEROME POWELL HELD HIS NEWS CONFERENCE AND SO WE'VE GOT ALL THREE MAJOR AVERAGES SET FOR RECORD CLOSE. WHAT'S INTERESTING IS THE OPTIMISM HAS ALSO SPARKED A TURNAROUND IN CRYPTO. BITCOIN, AFTER FALLING I BELIEVE AS MUCH AS 7% EARLIER TODAY NOW HIGHER, NOW CLIMBING BACK TOWARD 66,000 HERE. SO I GUESS THE BIT COHN BULLS WOULD SAY, NO MATTER WHAT HAPPENS WITH THE FED, I DON'T KNOW, BITCOIN GOES UP. RISCON, WE HAVE YOU COVERED WITH THE MARKET ACTION. KEEP IT RIGHT HERE. >>> >>> THERE IS THE CLOSE ON WALL STREET AND MARKET DOM NATION TIME AND LET'S YOU GET UP TO SPEED. A RALLY AFTER WE HEARD JAY POWELL AFTER WE DID NOT SEE A SIGNIFICANT CHANGE TO THE EXPECTATION FROM THE FED. THE DOT PLOT SHOWING THREE RATE CUTS THIS YEAR AND IN FACT, THE FED RAISING ITS FORECAST FOR GDP EVEN AS IT RAISED THE FORECAST FOR INFLATION EXPECTATIONS AS JUDGED BY THE DOT PLOT OR THE SUMMARY OF ECONOMIC PROJECTIONS AS IT'S TECHNICALLY CALLED. IT LOOKS LIKE THE DOW IS CLOSING AT A RECORD WITH THE 400-POINT GAIN ON THE DAY. THE S&P 500 UP 0.9% AND ALSO CLOSING AT A RECORD ON THE DAY AS IS TRUE OF THE NASDAQ, AS WELL UP 1.25% AND AS WE SAW STOCKS GO UP, WE SAW YIELDS GO DOWN TODAY. NOT A BIG MOVE, HOWEVER, IN THE WAKE OF THE FED AND PERHAPS THAT WAS SOMETHING ELSE THAT WAS SOMEWHAT REASSURING TO INVESTORS. NOW TAKING A LOOK AT OTHER MOVERS UNDER THE HOOD IN TODAY'S SESSION HERE, LEADING THE GAINS. WE ACTUALLY HAD A CONSUMER DISCRETIONARY LIST AND THIS IS ESPECIALLY INTERESTING GIVEN THE FACT THAT WE HAD THE OWNER OF GUCCI ISSUE A WARNING THAT SENT THAT DOWN AND THE CONSUMER DISCRETIONARY UP BROADLY AND THE COMMUNICATIONS SERVICES AND INDUSTRIALS EVERYTHING UP IS EXCEPT FOR ENERGY AND ENERGY HAS BEEN A STRONG PERFORMER AS OF LATE SO THIS SAY BIT OF A SHIFT FROM THAT AND THEN TAKING A LOOK AT THE NASDAQ 100 AND THE BIG MOVERS HERE WITH NO SORT OF GAINS IN YIELDS YOU CAN SEE THE GAINS IN TECHNOLOGY IN PARTICULAR. SO ALL OF THE -- I KNOW WE'RE NOT CALLING THEM THAT ANYMORE, BUT THE MAGNIFICENT SEVEN STILL UP. >> HERE'S MORE GREEN ON YOUR SCREEN AND LET'S TAKE A LOOK AT STERILE LABS AND THE CHIP CONNECTIVITY COMPANY AND IT SOARS. ITS INVESTORS INCLUDE INTEL'S VENTURE ARM SUTTER HILL VENTURES AND BLOOMBERG POINTING OUT THIS IS THE LARGEST LISTING COMING ONE DAY BEFORE HIGH-PROFILE REDDIT IS EXPECTED TO START TRADING AND IT MAKES SEMICONDUCTOR-BASED PRODUCTS USED TO BUILD OUT CLOUD AND AI INFRASTRUCTURE. INVESTORS ARE HUNGRY FOR WAYS TO PLAY AI AND SOME BELIEVE THEY FOUND ANOTHER ONE HERE. >> I'M SURPRISED AT THE STOCK GAIN. WHEN I WAS UP, AND THE EXTENDED THE GAINS BEFORE THE END OF THE DAY. FIRST, IT RAISED THE RANGE FOR THE IPO ON MONDAY FROM 32 TO $34 AND IT PRICED AT $36 AND THEY BEGAN TRADING AT 56 AND THAT GAVE THE IDEA AND WE MIGHT SEE SOMETHING QUITE DIFFERENT FOR REDDIT WHICH ITS VALUATION HAS SHRUNK OVER THE PAST COUPLE OF YARS, IN A DIFFERENT BUSINESS, CLEARLY, BUT INTERESTING THAT THIS ONE SNUCK IN THERE, AND REDDIT MAYBE BECAUSE IT'S A BETTER KNOWN NAME, IF YOU WILL, BUT INTERESTING -- JENSEN HUANG PROVIDED AN ENDORSEMENT IN THE ROADSHOW PITCH, AND IT ALSO DOESN'T HURT. >> FEDERAL RESERVE JAY POWELL HOLDING FIRM ON THE CENTRAL PATH THAT CUTTING INTEREST RATES THREE TIMES THIS YEAR, JOSH SCHAEFER, OF COURSE, WATCHING THE PRESSER, WATCHING THE ACTION TODAY AND WHAT ARE SOME OF YOUR TAKEAWAYS FROM THE DAY? >> YEAH. WATCHING THE PRESSER WHEN WE STARTED TO GET EXCITED IN THE NEWSROOM WAS WHEN JEROME POWELL AND THE STORY HASN'T REALLY CHANGED AND THAT SEEMED TO BE THE BROAD TAKEAWAY FOR US AND THE BROAD TAKEAWAY FOR MARKETS AND ALL THREE HIGHLIGHTED ALL THREE INDEXES HIT RECORD HIGH CLOSES, RIGHT, GUYS? IF THE STORY HASN'T CHANGED AND WE SAW A LOT OF SIMILAR ACTION THAT WE'VE BEEN COVERING OVER THE PAST COUPLE OF WEEKS? THE OTHER THING WITH THE STORY HASN'T CHANGED NARRATIVE WITH THE EXPECTATION FOR RATE CUTS AND THE FED COMING OUT THAT THEY EXPECT THREE RATE CUTS AND THAT'S WHAT THE MARKET HAD BEEN PRICING IN AND I WAS TAKING A LOOK AT WHERE MARKETS HAD PRICED RATE CUTS AFTER FED MEETINGS, THE LAST COUPLE OF FED MEETINGS. WE'RE BASICALLY BACK TO WHERE WE WERE IN NOVEMBER WHICH IS INTERESTING BECAUSE IN NOVEMBER WE WERE LOOKING AT THREE INTEREST RATE CUTS AND WHAT HAS CHANGED. SO THE STORY FOR INFLATION HASN'T CHANGED OVERALL AND IT WILL BE BUMPY AND IT WILL COME DOWN AND WHAT HAS CHANGE SIDE ECONOMIC GROWTH. THE FED COMING OUT TODAY SAYING THEY THINK ECONOMIC GROWTH WOULD BE BETTER THAN THEY INITIALLY THOUGHT. WE SHOULD NOTE THAT THAT IS COMING TO THE MARKET CONSENSUS AND THAT'S BEEN IN CONSENSUS FOR A LITTLE BIT NOW, BUT THAT'S WHAT THE TRADE WAS AND THAT'S THE SECOND TAKEAWAY. WE SAW PEOPLE BUYING IN SECTORS THAT BENEFIT FROM ECONOMIC GROWTH. CONSUMER DISCRETIONARY DOING WELL. INDUSTRIALS DOING WELL. >> SMALL CAPS. >> SMALL CAPS ARE DOING WELL AND THE BROADENING TRADE IS WHERE THINGS WERE BROUGHT AND THE TAKEAWAY FROM THAT WASN'T NECESSARILY BIG TECH AND SOME OF THE TECH STOCKS DID WELL, AND THEY WERE UP. >> BUT IT WASN'T ONLY THAT. >> IT WASN'T ONLY TECH AND WE'RE LOOKING AT -- >> WE WERE STRUCK BY CONSUMER DISCRETIONARY BEING THE BEST PERFORMING GROUP AND THEY WERE ONE OF THE BEST PERFORMING OF THE GROUP ENTERING TODAY AND IT WAS UP OUTPERFORMING THE MARKET AND IT WAS NOT OUTPERFORMING THE SECTORS BECAUSE SIX OF THE 11 SECTORS WERE UP OVER 1% FOLLOWING THIS MEETING AND THAT WAS A BROAD TAKEAWAY. OH, BOY, WE ARE ACTUALLY BROADENING OUT AND LET'S JUST STOP TALKING ABOUT IT, AND I THINK WE HAVE MOVED ON FROM THAT CONVERSATION AND IT'S REALLY OVER. WE ARE TALKING ABOUT AN ACTUAL BROADENING. >> HOW MUCH OF THIS -- AFTER YOU GET THOSE FIRMER THAN INFLATION PRIPS WITH THE CPI AND PPI AND IT'S NOT GOING TO BE FREE AND IT WILL BE TWO, BUT JAY POWELL WHO HE SAYS IS NOT BLINKING AND THE OTHER THING, TOO, THAT I TOOK NOTE OF AND WE TALK ABOUT THE LABOR MARKET. HE SAID THAT STRONGER THAN EXPECTED DATA ISN'T NECESSARILY GOING TO MEAN THAT THERE ARE CUTS WITH THE LABOR MARKET THAT THEY'VE HAD OVER THE LAST YEAR AND THAT CAME WITH SUPPLY GROWING AND NOW THEY'RE TALKING ABOUT THE SUPPLY GETTING BIGGER AND THAT ALSO OPENS UP PEOPLE'S EYES TO MAYBE THE ECONOMY CAN JUST KEEP GROWING AND AGAIN, GOOD, ECONOMIC DATA ISN'T BAD NEWS FOR STOCKS SO THEN AGAIN, THAT WOULD BE AN OVERALL GOOD STORY AND I HATE BEING SO OVERLY POS POSITIVE RIGHT NOW. >> WE JUST CLOSED THE RECORD HIGHS ACROSS ALL INDEXES. >> IT'S HARD. >> IT IS HARD, BUT I'M SURE WE'LL FIND -- I'LL COME BACK TOMORROW. THANKS, JOSH. APPRECIATE IT. >> WE HAVE EARNINGS NEWS THAT WE HAVE TO TELL YOU ABOUT MICRON, THE MEMORY CHIPMAKER AND THE FORECAST IS SENDING THE SHARES HIGHER AND THE THIRD QUARTER ADJUSTED REVENUE THE COMPANY SEIZED $ TO $ 4.8 MILLION THAT THE ANALYSTS AND THE ADJUSTED GROSS MARGIN AND THIS IS THE FISCAL THIRD QUARTER THAT IT'S PROJECTING AND THE GROSS MARGIN ESTIMATED 25 TO 28% FAR ABOVE THE 21% THAT ANALYSTS ON AVERAGE HAD BEEN ESTIMATING HERE AND SECOND QUARTER NUMBERS APPEAR WHAT'S IMPRESSIVE KEYING ON. >> THE STOCK WAS ALREADY'S MONSTER. IT WAS UP 10% THIS YEAR AND IT WAS UP 60% OVER THE NEXT 12 MONTHS IN PART, OF COURSE, BECAUSE WE TALKED ABOUT ANALYSTS WITH THE NAME BECAUSE THEY SEE THIS AS A SMART AI PLAY, AS WELL. >> MEMORY, I THINK EVEN MORE THAN OTHER PARTS OF THE SEMICONDUCTOR STACK IS SORT OF COMMODITIZED, RIGHT? IT GOES IN CYCLES AND SO MICRON HAS BEEN A VICTIM OF THAT AT TIMES, BUT NOW MORE RECENTLY HAS BEEN RIDING THE AI ENTHUSIASM. IT LOOKS LIKE I'M ALSO SEEING THE COMPANY HAS A QUARTERLY DIVIDEND AT 11.5 CENTS. IT DID KEEP THAT SAME DIVIDEND THAT IT HAS HAD, AND I'M LOOKING AT THE STATEMENT TO SEE IF ANYTHING STANDS OUT. THE COMPANY WILL HAVE A STRONG FISCAL SECOND HALF OF THE YEAR AND MENTIONS AI AND THE CEO SAYS WE BELIEVE MICRON IS ONE OF THE BIGGEST BENEFICIARIES IN THE SEMICONDUCTOR INDUSTRY AND THE ENABLED BUY. >> WE'LL SEE WHAT THE CALL BRINGS. >> TREASURY YIELDS PULL BACK AND FED CHAIR JEROME POWELL REITERATE THE OUTLOOK OF THREE RATE CUTS AND HARRAH'S ASSOCIATES CO-HEAD OF FIXED INCOME AND PORTFOLIO MANAGER. GOOD TO SEE YOU. >> GOOD TO SEE YOU. >> YOU HEARD US TALKING. IT IS RISK ON AND WE HAVE THE RECORD CLOSE, THE DOW, THE S&P AND THE NASDAQ AND THE INVESTORS CLEARLY LIKE WHAT THEY HEARD? >> I THINK JEROME DID A GOOD JOB TODAY AND I THINK THERE WAS A TENDENCY AND THERE WAS A RISK THAT HE WOULD COME IN AND SPEAK ABOUT THE LAST TWO INFLATION PRINTS AND THE HOTNESS AND MAYBE EVEN PIVOT HAWKISHLY FROM A VERY DOVISH MEETING FROM DECEMBER AND THE RISK THERE IS THAT WE HAVE A FED THAT'S FLIP-FLOPPING. YOU KIND OF LOSE CREDIBILITY AND WHAT HE SAID AND WHAT HE SAID CORRECTLY AND WE HAD TWO DATA POINTS AND SOME OF THAT WAS SEASONAL AND WE WILL WAIT FOR MORE DATA POINTS TO CONFIRM A TREND AND HE GAVE US EVIDENCE THAT THE LABOR MARKET CAN BE STRONG, AS WELL AND THAT THERE'S NO REASON TO CHANGE ESTIMATES. YOU SAW THE DOT PLOT IN THREE CUTS AND I THINK THAT WAS APPROPRIATE AND HE DID HEDGE AND THAT WAS DATA DEPENDENT AND IF INFLATION WERE STICKY WE WOULD HAVE MADE CHANGES IF THE LABOR MARKET WERE TO TICK DOWN AND WE WOULD MAKE SOME CHANGES AND IMPORTANTLY, HE DIDN'T CHANGE HIS FORECAST AND HE REITERATED TO THE MARKETPLACE, WHY? I THOUGHT THAT WAS A GREAT JOB. >> SO DO YOU SHARE THE SORT OF POSITIVE VIBES THAT WE HEAR ABOUT FROM JOSH SCHAEFER? THAT WAS MOATLYSTLY SEEN ON THE EQUITY SIDE, TO BE CLEAR, BUT THE IDEA THAT THEY'VE ENGINEERED THIS THING AND THAT IT'S WORKED? >> I THINK IT'S TOO EARLY, UNTIL WE'RE JUST ABOVE TWO, AND I NG IT'S TOO EARLY TO DECLARE VICTORY AND I THINK THIS IS THE RIGHT DECISION AND HE GAVE US EVIDENCE THAT HE KIND OF LEAKED OUT AND I DON'T KNOW IF YOU NOTICED THAT AND HE GAVE US THE CURRENT PC PRINT THAT WAS INTENTIONAL TO BASICALLY TELL THE MARKETPLACE THOSE WERE ANOMALIESES AND TO PROTECT FROM THE BIG MOVEMENT HIGHER THAT THEY'RE NOT GOING TO SHIFT COURSE AND THEY ARE READY TO CUT SAY 2.5% AND IF YOU THINK ABOUT THE SKEW HERE AND THE FRAMEWORK IF THE LABOR MARKET GOES BAD WE WILL CUT AND IF INFLATION COMES BACK DOWN FROM THOSE TWO ANOMALIES WE'LL CUT AND WE WILL NOT RAISE RATES FROM HERE. SO WE KIND OF ARE SKEWED TO A DOVISH STANCE. >> THERE'S A 10-YEAR RIGHT NOW SO 4.3, CALL IT. WHAT DO YOU THINK THE RANGE IS IN THE NEAR TO INTERMEDIATE TERM AND DURING THE SHOW, HE WAS TALKING RANGEBOUND, 3.8 TO 4.3, AND I THINK THAT'S RIGHT. THE TEN-YEAR IS NOT TOO FAR OFF WHERE IT SHOULD BE AND AT HARRAH'S WE THINK THREE TO FIVE YEARS AND THREE TO 4.5% AND IT'S IN THE BELLY OF THE CURVE. YOU CAN GET REAL YIELDS FOR SAY FIVE YEARS ABOVE 2% AND IF YOU THINK THE FED WILL MEET ITS INFLATION OBJECTION YOU SHOULD SEE WHAT'S HAPPENING TODAY WHICH IS A CURVED STEEPENING, AND IT WILL BENEFIT THE FIVE YEAR, SEVEN-YEAR PART OF THE CURVE AND IT WILL HURT THE LONGER END OF THE CURVE. SO WE LIKE TO BE IN THE FIVE TO SEVEN-YEAR PART OF THE BELLY. WE THINK INFLATION, THEY'LL HAVE SUCCESS, IT WILL COME DOWN. TIMING IS A QUESTION MARK HERE AND IF YOU NOTICE HE DID NOT SAY WE'RE GOING TO CUT, BUT WE'RE NOT GOING TO CUT NECESSARILY OVER THE NEXT FEW MONTHS AND WE MAY BE PATIENT AND THAT'S THE LAST VARIABLE HERE AND THAT'S IMPORTANT AND HE'S GIVEN HIMSELF FLEXIBILITY AND GIVEN HIMSELF A LITTLE OUT IF SOME THINGS ARE INTRODUCED TO HIS FRAMEWORK THAT MAY CAUSE HIM TO BE MORE HAWKISH. >> DOES THAT ALSO IMPLY THEN, JUST NOT A LOT OF TREASURY MARKET VOLATILITY THIS YEAR IF YOU SEE THIS? >> I THINK SO. MY EXPECTATION OVER THE NEXT 12 MONTHS AS WE GET CLOSER AND CLOSER TO THE ACTUAL CUT CYCLE AND WE CAN LOCK IN ON INFLATION THAT WILL COME DOWN AND STAY DOWN AND THE LABOR MARKET IS OKAY. IT'S GOING TO BE SOMEWHERE BETWEEN 3.8%, 4.25, BUT THERE IS NO BIG SPIKE IN UNEMPLOYMENT. THEN THE TREASURY VOLATILITY WILL BE LOWER AND MORE RANGE BOUND AS WE HAVE MORE VISIBILITY AND CONFIDENCE IN THE OUTCOMES HERE. THAT'S GOOD FOR ALL MARKETS. >> BESIDES THE FIVES AND SEVENS, WHAT'S EXCITING? >> THAT SORT OF IMPLIES THAT THE FIXED INCOME IS NOT AS EXCITING RIGHT NOW. >> SURE. WHICH HAS PROS AND CONS. >> SURE. >> BUT ARE THERE PLACES THAT YOU THINK ARE BEING OVERLOOKED RIGHT NOW. >> IF YOU CAN GET 3% REAL YIELDS IN HIGH QUALITY INVESTMENT GRADE CORPORATE CREDIT AND WE BELIEVE THAT INFLATION WILL COME DOWN TO 2.5% AND THERE'S NOT STRUCTURALLY STICKY INFLATION THEN REAL RETURNS OF 3% ANNUALIZED DEFAULTS LESS THAN 1% ANNUALLY, THAT'S INTERESTING TO ME AND MAYBE YOU CAN CLASSIFY IT AS BORING AND THAT'S EXACTLY RIGHT. SO I THINK IT'S NOT THE TIME TO BE TOO ADVENTUROUS AND REACH IN THE LOWEST QUALITY PARTS AND U.S. TREASURYS AND AGENCY-BACKED SECURITIZED OVER THE NEXT THREE YEARS. >> GOOD TO SEE YOU. >> APPRECIATE IT. >> ADAM ABBOTT OF HARRAH'S. WE WILL DIVE INTO THE MICRON AND GET ANALYST REACTION AS THE STOCK SOARS ON ITS NUMBERS AND ITS FORECAST. STAY TUNED. MORE MARK DOMINATION ON THE OTHER SIDE. ♪ ♪ >>> MICRON JUST OUT WITH SECOND-QUARTER EARNINGS MOMENTS AGO REPORTING ON THE TOP AND BOTTOM LINE AND INTERESTINGLY, ITS SALES FORECASTS UP 13% ON THE NEWS. JOIN US IS THE ANALYST AT NEW STREET RESEARCH. HE IS BASED IN SINGAPORE, AND YOU'VE BEEN GOING THROUGH THE NUMBERS HERE, ROLF. WHAT STANDS OUT TO YOU? THAT FORECAST IN PARTICULAR, A PRETTY BIG BEAT. >> YEAH, IT IS A BIG BEAT. THANK YOU FOR HAVING ME. WHAT WE SEE HERE IS A 9% BEAT ON REVENUE AND THAT IS AN INCREASED DEMAND FOR DRAM CHIPS, BUT ALSO PRICE INCREASES IN THE DRAM. THE GUIDE IS 6.4 BILLION WHICH IS A 10% BEAT AND IMPORTANTLY THE COSTS IS GUIDED TO INCREASE 4% G ON Q. THAT SIGNALS THAT THE DEMAND FOR CHIPS IS ALSO SET TO FURTHER INCREASE IN THE COMING QUARTER. >> ROLF,THERE ARE SO MANY IMPORTANT END MARKS INCLUDING PCs AND SMARTPHONES AND WHAT DO YOU EXPECT IN THOSE VERTICALS IN 2024? >> PCs AND SMARTPHONES, THE RECOVERY HAS BEEN A BIT LACKLUSTER SO FAR. SO WHILE I DO EXPECT THOSE SES SEGMENTS TO RECOVER, THE RECOVERY WILL BE SECOND HALF WEIGHTED AND THE SMARTPHONES CONTINUE TO BE A PULLBACK IN THE HIGHER END OF THE MARKET, BUT AS IT STANDS TODAY THOSE MARKS SH MARKETS SHOULD RECOVER IN 2024 AND IT IS ALL ABOUT THE DATA CENTER AND FOR DATA CENTER, WHILE HIGH BANDWIDTH MEMORY WHICH IS A MASSIVE TOPIC IN MEMORY DOESN'T DO MUCH YET FOR MICRON, TODAY IT IS SET TO INFLECT THE GROWTH IN THE REMAINDER OF 2024 AND INTO 2025. >> AND DOES THIS SALES FORECAST, THIS ISIS SET TO INFLECT THE GR THE REMAINDER OF 2024 AND INTO 2025. >> AND DOES THIS SALES FORECAST, THIS IS NOT AN NVIDIA-SIZED FORECAST, BUT WITH THE DEMAND FOR HIGH BANDWIDTH MEMORY, DO YOU THINK THAT THERE IS ROOM FOR M MICRON TO EVEN BEAT THE FORECAST IF YOU HAVE THAT INFLECK, RIGHT? WILL WE SEE A BIG UPGRADE, EVEN? IT'S DIFFICULT TO SAY AT THIS POINT, IT IS PRICED WITH THE ELEMENT, BUT WHAT WE SEE TODAY IS THE INDUSTRY WITH MICRON ARE BEING DISCIPLINED WHEN IT COMES TO ADDING CAPACITY. IN MEMORY, IT IS ALL ABOUT THE EQUATION BETWEEN DEMAND AND SUPPLY. MICRON IS BEING DISCIPLINED THERE AND BEHIND THE OTHER TWO MAJOR PLAYERS IN MEMORY, SO AS LONG AS THIS DYNAMIC PERSISTS WITH THE INDUTRY WHEN IT COMES TO ADDING SUPPLY, IT IS VERY STRONG FOR THE REMAINDER OF 2024. >> I AM ALSO CURIOUS, WHAT DO CUSTOMER INVENTORIES LOOK LIKE RIGHT NOW? WHAT ARE THE TRENDS WE'RE SEEING THERE? THEY HAVE LARGELY NORMALIZED. IN DATA CENTER, THEY ARE VERY CLOSE TO NORMAL LEVELS SO ON THAT FRONT, EVERYTHING LOOKS OKAY. THE INDUSTRY STILL NEEDS TO WORK DOWN THE INVENTORY HAS BUILT UP THEMSELVES. SO SAMSUNG, DO HAVE EXCESS ON THE BALANCE SHEET AND THAT NEEDS TO BE WORKED DOWN OVER THE REMAINDER OF THIS YEAR. WHAT WE'LL SEE IS THE GROSS MARGIN AS A RESULT OF THOSE INVENTORIES DOWN AND THE PRICES RECOVERING SHOULD CONTINUE TO TREND UP AS OF THESE LEVELS AND THE PRINT THAT THEY JUST GAVE IS A STRONG TESTIMONY TO THAT AND THE SAME GOES FOR THE GUIDE SO 25 TO 28% GROSS MARGIN WITH THE EXPECTATION OF 20% IS A GOOD INDICATION THAT WE ARE ON TRACK FOR ■THAT RECOVERY. >> FINALLY, TO TAKE A STEP BACK FROM TODAY'S NUMBERS, WE GOT NEWS THAT INTEL WAS THE RECIPIENT OF A GRANT FROM THE U.S. COMMERCE DEPARTMENT TO BUILD OUT PRODUCTION OF CHIPS IN THE UNITED STATES. IT'S EXPECTED THAT MICRON WILL BE THE RESIVECIPIENT AND DOES T PLAY INTO THE INVESTMENT CASE FOR THE COMPANY ALSO? >> IT IS IMPORTANT TO SOME DEGREE. WE SEE -- WE SEE A LARGE POOL, IF YOU WILL, OF MANUFACTURERS AND THIS IS ACROSS MEMORY, ACROSS LOGIC TO GET THOSE FUNDS TO BUILD IN THE U.S. FOR MICRON, THEY ARE ONE OF THE FEW DOMESTIC SUPPLIERS OF MEMORY IN THE U.S. AND IT IS IMPORTANT FOR THEM TO REMAIN COMPETITIVE IN KOREA. >> THANKS SO MUCH FOR ENJJOININ THE SHOW. APPRECIATE IT. >> THEY RECEIVED A BID FROM PRIVATE EQUITY FIRM APOLLO ACCORDING TO "THE WALL STREET JOURNAL." IT IS THE PARENT COMPANY OF YAHOO FINANCE AND OUR REPORTER ALEXANDRA CANAL JOINS US WITH THE DETAILS. >> ALI? >> $11 BILLION FOR ITS TV STUDIOS AND JUST TO PUT THIS NUMBER IN A CONTEXT HERE. PARAMOUNT'S CURRENT MARKET CAP IS 8.65 BILLION AND THIS $11 BILLION BID IS HIGHER THAN THE SEGMENT OF THE BUSINESS AND SOMETHING THAT SHERRY WILL HAVE TO SERIOUSLY CONSIDER HERE FOR THE BACKGROUND AND THE FAMILY DOES CONTROL PARAMOUNT THROUGH THE HOLDING COMPANY AND PARAMOUNT HAD NO COMMENT ON THE REPORT AND APOLLO DID NOT IMMEDIATELY RESPOND TO THE REQUEST AND THIS IS WHERE RUMORS HAVE SWIRLED AND IT COMES TO THE POTENTIAL ACQUISITION AND WE ALSO HAVE A PRODUCTION COMPANY, SKYDANCE MEDIA AND THEY HAVE A UNIQUE DEAL OF WHAT THEY'D WANT TO DO AND THEY'D WANT TO GAIN CONTROL OF NATIONAL AMUSEMENTS AND DO A SECONDARY DEAL, AND SORT OF A TWO-STEP DEAL THERE AND WE HEARD FROM MEDIA MOGUL, BYRON ALLEN AND HE'S INTERESTED IN THE LINEAR SIDE OF THE BUSINESS WHICH IS INTERESTING CONSIDERING THAT'S SORT OF DYING AMID THE STREAMING BOOM OF WARNER BROTHERS DISCOVERY AND ANOTHER NAME THAT'S BEEN THROWN AROUND AND A LOT OF POTENTIAL OFFERS ON THE TABLE AND IT WILL ALL COME DOWN TO WHAT SHARI WANTS TO DO. SHE'S BEEN PRETTY HESITANT TO BREAK UP THE COMPANY AND SHE'S INTERESTED IN SELLING PARAMOUNT AS A WHOLE, AS A UNIT AND THEY'RE ONLY INTERESTED IN THIS STUDIO SIDE. THE HOLLYWOOD SIDE AND THE MOVIE MAKING BUSINESS. >> I WANT TO DIG INTO THE VALUATION AS YOU MENTIONED AND $11 BILLION JUST FOR THAT PART, WHICH IMPLIES THAT THEY SEE MORE VALUE THERE THAN THE MARKET IS AS SCRIBING. DO WE KNOW WHY? IN OTHER WORDS, DO ANALYSTS THINK IT'S UNDERVALUED? DO ANALYSTS THINK IT IS THIS JEWEL OF AN ASSET THAT'S LUMPED IN WITH THE REST OF PARAMOUNT? >> I THINK IT ALL COMES DOWN TO THE I.P. PARAMOUNT HAS PRODUCEDED A LOT OF HOLLYWOOD HITS AND THE TOP GUN PEOPLE WAS ONE OF THE HIGHEST MOVIES IN THE LAST FEW YEARS AND YOU HAVE "YELLOWSTONE" AND THE SUCCESS OF THAT SERIES, SO THE IP IS VERY ATTRACTIVE AND THEY HAVE THAT BUILT-IN AUDIENCE FOR A LOT OF THE PROGRAMMING. THIS REPORT SAID THAT APOLLO COULD TEAM UP WITH OTHER COMPANIES TO FINANCE THE DEAL AND MAYBE OTHER COMPANIES ARE INTERESTED IN ACQUIRING THAT LIBRARY AND THAT CONTENT. YOU CAN LOOK AT SOMETHING LIKE AMAZON'S PURCHASE OF MGM. THAT REALLY HELPED BOOST THEIR AMAZON PRIME VIDEO SERVICE AND I THINK THERE'S AN ERA WITH STREAMING COMPANIES AT THE MARKET AND IF YOU CAN GET THAT RECOGNIZABLE CONTENT, AND THE FILMS AND THE TV SHOWS THAT PEOPLE ARE ATTRACTED TO AND BRINGING THEM TO YOUR SERVICE AS AN EXCLUSIVE OWNER OF THAT, WHY WOULDN'T YOU WANT TO PURSUE SOMETHING LIKE THAT? TO THAT POINT, I DO THINK IT MIGHT BE UNDERVALUED AND I'M CURIOUS IF YOU WOULD SEE ANY NOTES WITH THE ANALYST REACTION TO THIS WHEN IT COMES TO THAT POINT, BECAUSE NOW THAT THAT NUMBER IS OUT THERE THAT MEANS IT WILL BE EXPENSIVE FOR ANY OTHER COMPANY INTERESTED IN PURCHASING THIS. >> ALI, THANK YOU. APPRECIATE IT. TIME NOW FOR WHAT TO WATCH THURSDAY, MARCH 21st STARTING OUT WITH THE FED AFTER A BIG DAY FOR THE FED. WE ARE GETTING MORE COMMENTARY TOMORROW FROM FED VICE CHAIR FOR SUPERVISION, MICHAEL BARR, CENTRAL BANK HOLDING RATE STEADY AND THE NEW DOT PLOT INDICATED THAT MOST MEMBERS SEE THREE CUTS IN 2024. >>> AND SWITCHING TO EARNINGS, WE HAVE ACCENTURE, NIKE, FEDEX AND LULULEMON AND WINNEBAGO ALL REPORTING TOMORROW. NIKE ANNOUNCING AFTER THE BELL AND THE CONSENSUS ESTIMATE IS 74 CENTS A SHARE ON REVENUE OF $12.31 BILLION. THE RETAIL GIANT HAS BEEN HAVING A SLOW START TO THE YEAR AND THE SHARES ARE DOWN MORE THAN 8%. >> MOVING OVER TO HOUSING, NEW DATA ON EXISTING HOME SALES DUE IN THE MORNING AND THAT NUMBER EXPECTING TO GO DOWN FOR FEBRUARY. >> AND FINALLY, MONTHLY PMI DATA FOR MARCH COMING OUT IN THE MORNING AND THE MANUFACTURING CAN TECH DOWN SLIGHTLY GIVING US MORE INSIGHT INTO ECONOMIC ACTIVITY IN THE UNITED STATES. >>> ALL RIGHT. THAT WILL DO IT FOR TONIGHT'S "MARKET DOMINATION OVERTIME." COME BACK TOMORROW. STAY TUNED. WE HAVE MORE YAHOO FINANCE ON THE OTHER SIDE. >> A NEW NOTE FROM EVERCORE, SI AS THE NEW SET STOCKS AS THE ELECTRIC 11. NAMES MAKING THE LIST, TOO, AS WELL AS COMPANIES WITH PROMSING GROWTH OPPORTUNITIES. FOR MORE, WE HAVE THE ANALYST BEHIND THAT NOTE, EVERCORE ISI HEAD OF INTERNET RESEARCH, MARK, MAHAY. MOVE OVER MAGNIFICENT 7, IT'S ALL ABOUT THE ELECTRICAL 11 NOW. BEFORE WE DIVE INTO THE SPECIFIC NAMES, MARK, THERE'S SOME KIND OF COMMON THEMES IN THIS BASKET OR SOME COMMON FEATURES AND ATTRIBUTES THAT THESE NAMES SHARE? >> OKAY. I DON'T WANT TO GET TOO CARRIED AWAY WITH THE BASKET AND I JUST LOOK AT 16, 18 STOCKS THAT WE COVER IN THE LARGE CAP INTERNET SPACE AND THE FUNDAMENTAL TRENDS AMONG THOSE COMPANIES AND I CALL THEM THE BEST NAMES THAT WE LOOK AT. I WOULD NEVER PUT TOGETHER A BANKET OF STOCKS JUST IN ONE SECTOR, BUT IF YOU WANTED TO, JUST ON THE INTERNET SECTOR, DON'T DO THAT, BUT IF YOU WERE THOSE ARE THE BEST NAMES THAT INCLUDE GOOGLE, META AND IT CAN COMPOUND A DOUBLE-DIGIT REVENUE GROWTH FOR THE NEXT COUPLE OF YEARS WITH THE MARGIN EXPANSION AND THIS GROUP INCLUDES MORE AND MORE DIVIDENDS AND THERE ARE FOUR OF THEM IN THERE NOW AND I THINK THERE WILL BE MORE AND THAT WILL ENJOY THE DIVIDEND LIST AND THESE COMPANIES THAT ARE ALSO BUYING BACK THEIR STOCK AND YOU HAVE 20% EARNINGS GROWTH FOR THE MARKET WHICH THE S&P 500 USUALLY GROSS EARNINGS HIGH, SINGLE DIGITS AND IT'S JUST THE PREMIUM GROUP AND IF YOU CAN FIND THEM AT REASONABLE VALUATIONS WHICH IS WHERE I THINK MOST OF THESE NAMES ARE. AND BY THE WAY, THE LAST POINT IS IF THERE'S ONE TREND OUT IN THE MARKET TODAY AND I KNOW IT'S BEEN OVERHYPED AND IT'S STILL VERY IMPORTANT AND THAT'S GENERATIVE AI. I THINK MOST OF THESE DIGITAL FIRST COMPANIES ARE BENEFICIARIES OF GEN AI. THEY'LL BE ABLE TO FIGURE IT OUT AND THEY'LL DEPLOY OR ALREADY HAVE AND THEY'RE OFFERING PROCESSES AND I THINK SHAREHOLDERS WILL BENEFIT FROM THAT. >> SO, YEAH. I LIKE THE HIGHEST QUALITY NAMES IN THE INTERNET SECTOR. >> MARK, IT STRIKES ME HERE, YOU ALSO TALK ABOUT IT IN YOUR NOTE THAT DEMAND TRENDS ARE LOOKING STRONG, BUT YOU CAN TALK ABOUT INTERNET AND WHETHER YOU'RE TALKING ABOUT CLOUD HERE AND WHETHER YOU'RE TALKING ABOUT ADVERTISING RETAIL MOBILITY AND DELIVERY AND ENTERTAINMENT ALSO. IT DOESN'T SEEM LIKE FROM -- IF READING BETWEEN THE LINES THAT ALL OF THAT HAS TO DO WITH GEN AI AND WHAT IS GOING ON HERE THAT IS SUPPORTING THE DEMAND ACROSS THESE DIFFERENT SUB SECTORS WITHIN THE INTERNET? >> YOU'RE RIGHT. I LOOKED AT THE INTERNET SECTOR AND IT'S GOT AT LEAST NINE VERTICALS WITHIN, AND EVERYTHING FROM CLOUD AND NOT ALL OF THEM WILL BE ACCELERATED THIS YEAR. TRAVEL DECELERATES AND WE'VE HAD SUCH A STRONG TRAVEL CYCLE POST-COVID AND MOST OF THE OTHER SECTORS ARE ACCELERATING AND CLOUD REVENUE WILL BE FASTER FOR NAMES LIKE GOOGLE AND AMAZON, AND IT'S A SERIES OF THING. PART OF IT IS WE STARTED OFF AND THAT'S GOOGLE AND FACEBOOK. WE STARTED OFF LAST YEAR, IF YOU REMEMBER, WITH A LOT OF UNEASE, UNCERTAINTY OF THE GLOBAL ECONOMY AND THERE'S A LOT OF SOFTNESS IN THE END MARKETS AND THAT ISN'T THE CASE NOW. END MARKETS HAVE FIRMED UP AND THAT'S PART OF IT THAT THAT COMES WITHIN AN INCH OF THESE AREAS WITH A COUPLE OF SPECIFIC CATALYSTS ON THE ADVERTISING GAME. YOU DO HAVE THE ELECTIONS AND THE OLYMPICS AND THEY'RE BIG CYCLICAL EVENTS AND THAT'S SPOTIFY ANY NETFLIX THAT IMPLEMENTED NEW PRICE INCREASES ON VERY LARGE USER BASIS AND THAT CAUSES ACCELERATION AND GROWTH RATES. ON RETAIL I WOULD THROW OUT THIS EXPEDITED SHIPPING THAT IT'S BEEN ROLLING OUT FOR A WHILE FOR A YEAR NOW, ACTUALLY AND IT CAUSES SHIPPING ELASTICITY AND FAST WHERE PEOPLE SHOP AND I THINK THAT'S ALSO EFFECTIVE. THERE'S A COUPLE OF GENERAL FACTORS AND A COUPLE OF SPECIFIC FACTORS THAT ARE CAUSING GROWTH RATES TO BE THE SAME THAT'S GOOD FOR STOCKS. >> MARK, WAS THERE A HEADLINE I WOULD LIKE YOUR THOUGHTS ON, TOO, BECAUSE YOU CALL ON ALPHABET, TOO. YOU SAW THE REPORT THAT UPOAPPL MIGHT BE LICENSING GEMINI FOR iPHONES. I'D LIKE YOUR TAKE ON THAT REPORT AND HOW MUCH OF A WIN WOULD IT BE FORRAL FA ALPHABET WHAT THE ECONOMICS WOULD LOOK LIKE? >> I DON'T THINK GOOGLE OR APPLE DO EITHER AND IT'S A NEGOTIATION, AND THE COMMENT THAT ALL I HAVE SEEN IN THE REPORT IS THAT IT COULD BE POTENTIAL LICENSING, REVENUE STREAM FOR GOOGLE AND IT WOULD BE RELATIVELY STRONG. LOOK, THE IMPORTANCE OF THE DEAL IS JUST A REMINDER THAT WHEN IT COMES TO GEN A AND GEN AI AND GOOGLE IS WELL POSITIONED WITH APPLE ANYWAY GIVEN HOW BIG THE PARTNERSHIP IS BETWEEN THE TWO OF THEM AND THE SEVERAL OVERHANGS ON GOOGLE STOCKS IS BELIEVED THAT THE GEN AI PARTY IS HERE AND THAT'S THE WRONG ANALOGY, BUT THE GEMINI PRODUCT, YES, I KNOW WE'VE HAD HIGH-FROM FILE MIS-HITS AND THE TRAUM ATEC IMPROVEMENTS THAT YOU'VE SEEN IF YOU'VE BEEN EXPERIMENTING WITH GEMINI FOR A WHILE AND ESG, THEIR ENHANCED SEARCH OFFERING, I MEAN, I THINK THERE WILL BE A STEP UP WITH A STEP FUNCTION INCREASE IN THE QUALITY OF THE SEARCH EXPERIENCE FOR MOST PEOPLE, AND I THINK GOOGLE WILL BENEFIT FROM THAT. THERE'S NO SIGN THEY'RE LOSING MARKET SHARE, AND I THINK PEOPLE WILL FIND MORE AND MERE USE CASES FOR GOOGLE AND I THINK IT WILL LEAD TO A MATERIAL INCREASE THAT PEOPLE DO WITH GOOGLE AND THERE'S AN UNNECESSARY OVERHANG AND THAT'S ONE OF THE REASONS WHY FOR THE FIRST TWO OR THREE YEARS, ONE OF THE TOP PICKS SUBPLANTED META. WE PREFER GOOGLE FOR THE FIRST TIME IN SEVERAL YEARS AND THERE'S BEEN TOO MUCH THAT'S BEEN DISCOUNTED. >> INTERESTING. >> I HAVE TO GET YOUR TAKE ON REDDIT. THIS IS WANT A STOCK YOU COVERED AND IT IS NOT COVERED YET AND WE SHALL SEE. WE ARE WAITING FOR THE SHARES TO PRICE. IT'S IN THIS INTERNET UNIVERSE. WHEN YOU SEE A SPLASHY IPO LIKE THIS, DOES IT HAVE AN EFFECT ON ENTHUSIASM FOR THE REST OF THE SECTOR OR DOES IT GIVE IT ANY MORE FIRE POWER IN TERMS OF COMPETING IN TERMS OF THE COMPANIES THAT YOU DO COVER? >> I WON'T COMMENT ON REDDIT SPECIFICALLY, BUT I THINK THERE'S A REIT HERE. YOU ARE STARTING TO GET MORE. YOU HAVE SEVERAL IPOs IN THE BACK HALF OF LAST YEAR. THE INSTACART IS ONE THAT COMES TO MIND WHICH IS TRADING NOW AND PEOPLE REMEMBER THAT AND THEY FORGET THE FACT THAT IT'S THE IPO PRICE NOW. LOOK AT TECH. IT'S BEEN TRADING PRETTY WELL FOR THE LAST 18 MONTHS, 16 TO 18 MONTHS AND VALUATIONS, IT IS A VERY DIFFERENT LANDSCAPE AND SO WHEN YOU SEE COMPANIES GO PUBLIC IT'S USUALLY A SIGN THAT COMPANIES AND PEOPLE WHO ARE ADVISING THEM AND THAT THE MARKETS ARE NOW MORE RECEPTIVE TO RISK. I THINK THAT'S ABSOLUTELY THE RISK AND THAT WASN'T THE CASE IN THE BEGINNING OF '22 AND '23 AND AS I WRITE THE FUNDAMENTALS ARE FIRMING UP COMING ACROSS A LOT OF DIFFERENT VERTICALS AND THAT'S WHY COMPANIES WOULD POTENTIALLY CONSIDER GOING INTO THE PUBLIC MARKETS OVERALL AND ANY RECOMMENDATION AND IT'S STATING THE OBVIOUS. THE MORE FIRM THE PUBLIC MARK THE MORE REASONABLE IT IS THAT INVESTORS ARE WILLING TO LOOK BEYOND THE CORE GROUP OF TOPICS AND LOOK FOR OTHER WAYS TO GET A RETURN WITH REASONABLE RISK. >> MARK, ALWAYS LOVE HAVING YOU ON THE SHOW. THANKS FOR JOINING US TODAY. >> THANKS, GUYS. >> COMING UP, THE DOLLAR'S SUPER POWER'S STATUS MAY BE LOSING ITS SHINE. WE'LL TELL YOU MORE ON THAT WHEN YAHOO FINANCE RETURNS. >>> THE DOLLAR'S SUPER POWER STATUS MAY BE LOSING ITS SHINE TO THE ECONOMIC POLICY IMPACTSES AND OUR NEXT GUEST SAYS FATE IN THE DOLLAR IS ON SHAKY GROUND AND IN "PAPER SOLDIERS" SALEA HAS THE DOMINANCE IN THE GLOBAL FINANCIAL SYSTEM. THANK YOU SO MUCH FOR BEING HERE. I APPRECIATE IT. >> THE DOLLAR'S DEMISE HAS BEEN LONG PREDICTEDED AND WE'VE SEEN IT HOLD UP PRETTY WELL, BUT YOU OUTLINE SOME OF THE MORE FUNDAMENTAL STRUCTURAL RISKS IN YOUR BOOK. SO LAY OUT THE TOP THREE IN THAT FASHION. >> THE TOP THREE IN THE U.S. ARE OUR OWN INTERNAL PARTISANSHIP AND THE DIVISION ACROSS THE ELECTORATE AND THE FACT THAT WE PLAY CHICKEN WITH OUR PUBLIC FINANCES AND I'M TALKING ABOUT THE DEBT CEILING, THE SHUTDOWN THREAT THAT IS ALWAYS LOOMING AND THE THIRD ONE COMES FROM OVERSEAS AND THE TWO MAIN ONES ARE INTERNAL AND AFTER THAT IS OVERSEAS AND WE HAVE WEAPONIZE THE DOLLAR SO MUCH THAT THERE ARE, FOR THE TIEFRT TIME PEOPLE ARE TALKING ABOUT DOLLARIZATION AND THERE'S MORE MOMENTUM AND LIKE YOU SAID, EVERY GENERATION, AND EVERY DECADE THERE IS A NEW KID IN TOWN WITH THE IDEA THAT OH, THE EURO IS NEW AND MAYBE THAT WILL TAKE OVER THE DOLLAR STATUS AND THE YEN COULD AND SOMEONE ELSE AND THE DIFFERENCE IS THAT THE WORLD ECONOMY AND THE STRUCTURE AROUND G20 NATIONS AND EVERYTHING IS BECOMING MORE FRAGMENTED JUST AS U.S. LEADERSHIP IS UNCERTAIN. >> IT'S INTERESTING. A LOT OF VIEWERS WATCHING THIS MAY NOT TALK ABOUT THE RELATIVE STRENGTH OR WEAKNESS OF THE GREENBACK AND BRING IT HOME TO WHY IS THIS IMPORTANT TO VIEWERS AND WHY IS THIS A TOPIC THEY SHOULD BE FOCUSED ON? >> THERE'S TWO KINDS OF STRENGTH FOR THE DOLLAR. THERE IS THE EXCHANGE RATE AND WHETHER YOU'VE TRAVELED TO JAPAN AND IT'S CHEAP ARE FOR YOU BECAUSE OF THE STRENGTH OF THE EXCHANGE RATE COMPONENT AND THE OTHER ONE IS HOW EVERYONE IN THE WORLD NEEDS THE DOLLAR. THE WORLD RUNS ON DOLLARS SO YOU COULD BE A BUSINESS TYCOON, AN OLIGARCH, A MULTINATIONAL COMPANY OR SOMEONE, SAY IN GHANA WHO IS PICKING COCOA BEANS AND NEEDS TO EXPORT THAT TO ANY OTHER COUNTRY AND YOU'LL BE TOUCHING THE GLOBAL FINANCIAL SYSTEM AND WHAT THIS MEANS FOR THE EVERYDAY PERSON AND SOMEONE WATCHING THE SHOW RIGHT NOW MEANS THAT WE GET A LAYER OF SAFETY BECAUSE WE OWN THE WORLD'S RESERVE ASSET AND IT GIVES A BIT OF A CUSHIONING FROM EXTERNAL ECONOMIC RISKS AND HEADWINDS. IT ALSO MEANS THAT WE CAN USE IT AS A WEAPON TO PROTECT THE COUNTRY. LET'S TAKE 9/11, THE FIRST ACT IN THE WAR ON TERROR WAS NOT A MACHINE GUN OR MILITARY TANK ROLLING. THE FIRST ACT THAT VERY SAME MONTH AFTER THE TERRORIST ATTACKS WAS GEORGE W. BUSH SIGNING AN EXECUTIVE ORDER MORE POWERS TO TRACK THE MONEY FLOWS THAT GAVE FUNDING FOR THESE TARIFFS AND TAX. >> THE REASONS YOU OUTLINED AT THE TOP FOR WHY THE DOLLAR MIGHT LOSE STEAM MAKES SENSE, BUT WHEN YOU LOOK AT THAT LAST FACTOR, THE FRAGMENTATION AROUND THE GLOBE, IT'S STILL DIFFICULT TO SEE IF IT'S NOT THE DOLLAR WHAT IT WOULD BE, RIGHT? SO WHEN YOU WERE WRITING HOW DID YOU EXAMINE THOSE CONTENDERS BECAUSE THAT'S BEEN ONE WEAKNESS TO THE ARGUMENT THAT THE DOLLAR WAS GOING TO FALL? >> YOU'RE RIGHT. THERE'S A COUPLE OF INCUMBENT ADVANTAGES AND ONE, WE ARE SO BIG AND WE ARE THE LARGEST ECONOMY IN THE WORLD TO START OUTSTRIPPING THE SIZE OF THE ECONOMY AND ANYONE COMING OUT WITH THE ECONOMY AND WHETHER IT'S BIT COIN OR OIL, COMMODITY AND THE U.S. CURRENCY IS SO DEEPLY ENTRENCHED IN THE GLOBAL FINANCIAL SYSTEM. THE WORLD RUNS ON DOLLARS. IF YOU WANT TO MAKE A TRANSACTION YOU NEED DOLLARS TO SUBPLANT IT WITH SOMETHING ELSE, THERE'S A LOT OF TECHNOLOGY THAT NEEDS TO COME INTO PLAY. MOST OIL TRADES ARE SETTLED IN DOLLARS AND YOU WOULD HAVE TO START UNWINDING A LOT OF THAT BEFORE YOU CAN ADD IN SOMEONE ELSE. >> IT'S WANT HAPPENING TOMORROW? >> NO, IT'S NOT. >> BIG IMPORTANT TOPIC WE DON'T TALK ENOUGH ABOUT. THANK YOU VERY MUCH. APPRECIATE IT. COMING UP, NVIDIA IS BRINGING IT TO THE POWER GRID AND TO TAP UTILITIES' BIGGEST PROBLEMS ON THE OTHER SIDE OF THIS BREAK. >>> AMERICA'S ELECTRIC GRID IS UNDER PRESSURE. PLUG-IN TECH LIKE EVs REQUIRE MORE ENERGY AND ADDING RENEWABLE ENERGY SOURCES MAKES THE SYSTEM MORE COMPLEX. IT'S A LOT TO NAVIGATE, BUT AI CAN HELP. DATA IS LOOKING TO MAKE THE GRID MORE RELIABLE AND RESILIENT WITH THE AI PLATFORM AND THE UTILIDATA IS JOSH BRUM BERGER.p. FOR THE VIEWERS WHO ARE NOT AS FAMILIAR WITH YOUR COMPANY, WHAT IS THE PROBLEM YOU'RE SOLVING FOR? >> SURE. THE PROBLEM WE'RE SOLVING FOR, IF YOU TAKE A STEP BACK AND THINK ABOUT WHAT OUTTIMS ARE UP AGAINST TODAY, I THINK THERE ARE THREE MAJOR ISSUES THAT ARE MEGA TRENDS THAT ARE ALL HAPPENING AT ONCE. THE FIRST IS THE AMOUNT OF CUSTOMER ASSETS THAT ARE NOW BEING DEPLOYED ON TO THE DISTRIBUTION GRID. SO EVs AND SOLAR AND INDUCTION COOKTOP STOVES AND HEAT PUMPS. SO LOTS AND LOTS OF NEW ENERGY DEVICES COMING ONLINE AND SECOND IS WE ARE ABOUT TO SEE A HUGE UPTICK IN THE NEED FOR POWER AND MORE MANUFACTURING COMING ONLINE AND THEN THE THIRD IS THE WEATHER. WE'RE STARTING TO SEE THESE 500-YEAR STORMS FAIRLY REGULARLY. SO ALL THESE THREE MEGA TRENDS ARE MAKING IT REALLY DIFFICULT FOR THE UTILITY TO OPERATE IN A MUCH MORE COMPLEX ENVIRONMENT TODAY AND THAT'S WHERE THE POWER OF AI COMES IN. AI IS WONDERFUL AND ACCELERATED COMPUTING AT TAKING A LOT OF DATA IN COMPLEX PROBLEMS AND DRIVING THEM TOWARD BETTER OUTCOME AND WE PARTNERED WITH NVIDIA FOR ANY UTILITY AND HARDWARE COMPANY ON THE DISTRIBUTION GRID. >> SO, JOSH, TALK TO US ABOUT HOW IT HAPPENS AND YOU'RE NOT ONLY TALKING ABOUT THE DEMAND ON THE SYSTEM AND IT'S OVERWHELMED AND IF YOU LOOK AT STRUCTURE IN THE COMPANY IT'S WOEFULLY OUTDATED IN THE SYSTEM AND NOT IN GREAT SHAPE AND OPERATE THEM BETTER. >> A TERM I HEARD WAS ANTIQUATED. IT WAS BEAUTIFULLY ANTIQUATED WHICH RESONATED WITH ME AND IT WAS GETTING A MORE COMPLEX MACHINE ANY SO WHEN WE LOOKED AT THE NEED OF THE DISTRIBUTION GRID, THE FIRST QUESTION IS HOW DO YOU GET BETTER TECHNOLOGIES INTO THE ENVIRONMENT FAST BECAUSE THE TRENDS ARE HAPPENING IN REAL TIME AND INTENSIFYING. WHAT WE LOOKED AT WAS THE QUICKEST WAY TO GET A MAJOR UPTICK IN THE DEPLOYMENT OF THE TECHNOLOGY WAS VIA SMART METERS. IT'S AT THE SIDE OF YOUR HOME AND MORE OFTEN THAN NOT IT'S THERE TO BILL AND SORT OF ELEMENTARY OUTAGE MANAGEMENT AND IT'S ALL OF THE THINGS ON THE SIDE OF THE HOUSE AND IF YOU PUT AI CAPABILITIES RIGHT THERE YOU CAN SPOT PROBLEM AHEAD OF TIME AND YOU CAN START TO SEE WHETHER OR NOT A TRANSFORMER WILL OVERLOAD BECAUSE TOO MANY EVs ARE NOW PLUGGED INTO THAT PARTICULAR AREA. YOU CAN START TO SEE SOME OF THE ISSUES THAT MAY BE HAPPENING FROM A POWER QUALITY PERSPECTIVE BECAUSE AN ANOMALY OR QUICK-MOVING CLOUDS. SO YOU JUST START TO SEE AND YOU ARE ABLE TO RESPOND TO ALL THESE INSTANCES IN REAL TIME AND RIGHT NOW THE UTILITIES DON'T HAVE THE CAPABILITY. >> NVIDIA IS AN INVESTOR IN YOUR COMPANY AND I'M CURIOUS,JOSH, HOW THAT PARTNERSHIP CAME ABOUT. >> SO WE MET NVIDIA IN 2021. SO BEFORE CHATGPT AND THE GENERATIVE AI BOOM AND WE WERE BOTH CIRCLING AROUND THE SAME PROBLEM AND NVIDIA BELIEVED THAT THERE WAS AN OPPORTUNITY TO TAKE AN INCREDIBLY IMPORTANT MACHINE AND THE DISTRIBUTION GRID AND START TO MAKE IT REALLY SMART, REALLY CONNECTED AND OPTIMIZED AND THEY WERE LOOKING AT IT FROM HOW CAN THEY THINK ABOUT BRINGING THEIR TECHNOLOGY INTO THE INDUSTRY AND WE HAD BEEN DOING MACHINE LEARNING IN RELL TIME IN THE DISTRIBUTION GRID FOR THE LAST 10 YEARS SO IT WAS A UNIQUE MARRIAGE OF TWO SKILL SETS AND NVIDIA, OBVIOUSLY, THE UNDERLYING AI CAPABILITIES WITH THE ACCELERATED COMPUTING AND ALL OF THE TECH STACK THAT IS INVOLVED THERE IN UTILIDATA WITH THE SPECIALIZED LAYER OF SOFTWARE SPECIFIC TO WHAT UTILITIES NEED. IT WAS A WONDERFUL PARTNERSHIP AND THE RIGHT TIME FOR US. >> JOSH, VERY INTERESTING STUFF. WE'LL KEEP IN TOUCH. >> THANKS FOR HAVING ME ON. I APPRECIATE IT. >> THANKS. LET'S TAKE A LOOK AT TRENDING TICKERS AFTER HOURS. CHEWY SHARES, AFTER SALES TOPPED WALL STREET ESTIMATES AND THE COMPANY DELIVERED BETTER THAN EXPECTED SALES WITH THE CUSTOMER RISE YEAR OVER YEAR. CHEWY SAID IT DOES EXPECT TO DELIVER CONTINUED ADJUSTED EBITDA MARGIN EXPANSION THIS YEAR. THE COMPANY DID REPORT LACKLUSTER NET SALES GUIDANCE FOR THE FIRST QUARTER. WE ARE ALSO WATCHING SHARES OF 5 BELOW. THEY ARE DOWN BY 13% AFTER MISSING EARNINGS ESTIMATES. THE RETAILER ALSO DELIVERED LOWER THAN EXPECTED GUIDANCE FOR THE FIRST QUARTER. CEO JOEL ANDERSON SAYING SALES PERFORMANCE WAS BY HIGHER THAN ANTICIPATED AND IT COMES FROM THINGS LIKE THEFT. THAT RESULTED EARNINGS AT THE LOW END OF THE GUIDANCE RANGE AND KB HOME REPORTING A BEAT ON THE FIRST QUARTER AS WELL AS FORECASTING HIGHER THAN EXPECTED REVENUE OUTLOOK. THE SHARES ARE UP TWO-THIRD OF A PERCENT AND THE DELIVERIES UP 9% YEAR OVER YEAR AND HOUSING REVENUES UP WITH 1.5 BILLION. JERRY METZGER SAID CONDITIONS HAVE IMPROVED HEADING INTO 2024. THAT WILL DO IT FOR YAHOO FINANCE LIVE AND BE BACK TOMORROW FOR ALL OF THE COVERAGE LEADING UP TO AND AFTER THE CLOSING BELL. ♪ ♪

Channel: Yahoo Finance

Views: 5,493

Keywords: Yahoo Finance, Personal Finance, Money, Investing, Business, Savings, Investment, Stocks, Bonds, FX, Currencies, NYSE, Equities, News, Politics, Market, Markets, Yahoo FInance Premium, Stock market, bitcoin, bonds, market, recession, inflation, stocks, federal reserve, CPI, S&P 500, Biden administration, Congress, jobs report, nonfarm payrolls, unemployment rate, US banks, Middle East, Wells Fargo, JPMorgan, Gaza, Israel, Russia, Crude oil futures, Microsoft, Activision Blizzard

Id: -0F-7okcex8

Length: 182min 52sec (10972 seconds)

Published: Wed Mar 20 2024