2% >> but we've talked with economists who have advised democrats and republican presidents who both said that the fed is so far behind the curve on inflation that a recession is inevitable. >> and, as i said, i think we have a good chance to restore price stability without a recession, without a severe downturn and without materially high unemployment, and i mentioned the reasons for that i see a strong economy now i see a very strong labor market, for example. businesses can't find the people to hire. they can't find them typically in a recession you would have unemployment. now you have surplus demand, so there should be room, in principle, to not put people out of work. the issue will come we don't have precision surgical tools. we have interest rates, the balance sheet and forward

guidance they're famously blunt tools they're not capable of surgical precision. i would agree, no one thinks this will be easy. no one thinks it's straightforward but there's certainly a plausible path to this and i do think we've got a good chance to do that our job is not to rate the chances, it is to try to achieve it that's what we're doing. there are a range of opinions, though, and that's only appropriate. >> thanks, steved dorsey, cbs you mentioned fading fiscal policy do you feel the fed has been supported enough from policies at the white house and in congress in combatting inflation? >> you know, it's really the fed that has responsibility for price stability, and we take whateverarrives at the fed in terms of fiscal activity, we take it as a given we don't evaluate it it's not our job really.

we don't have an oversight function there given all the factors that are happening it's our job to sustain. if congress and the administration has ways to help with inflation, i would encourage that i'm not going to get into making recommendations or anything like that it's really not our role we need to stay in our lane and do our job when we get inflation back under control, then maybe i can give other people advice right now we need to focus on doing our job and i'll stick to that stick in our lane. >> steve >> steve matthews with bloomberg news a number of your colleagues have said rates will need to go above neutral to bring down inflation. one, do you agree with that?

two, you've recently spoke in great praise of paul volcker who had the courage to bring inflation down with recessions in the 1980s and while it's certainly not your desire, the soft landing is the big hope of everyone, would this fmoc have the courage to have a recession if that were the only way necessary >> so i think it's certainly possible that we'll need to move policy to levels that we see as restrictive as opposed to just neutral. we can't know that today that decision is not in front of us today if we do conclude that we need to do that, then we won't hesitate to do there's no bright line that you're stepping over you're looking at what our policy stance is and what the market is forecasting for. you're looking at financial conditions and how that's affecting the economy and making a judgment we won't be arguing whose model

of the neutral rate is better than the other one it's much more about a practical application of our policy tools. we are prepared to do that wouldn't hesitate if that's what it takes i am, of course, who isn't an admirer of paul volcker. i shouldn't be singled out in this respect i knew him a little bit and have tremendous admiration for him. i would phrase is this way he had the courage to do what he thought was the right thing. that's what it was it wasn't any particular thing it was that he always did -- he always did what he thought was the right thing. if you read his last autobiography, that really comes through. that's the test. it isn't will we do one particular thing we do see, though, restoring price stability as absolutely essential for the country in coming years without price stability, the economy doesn't work for anybody really and so it's really essential particularly for the labor market if you think about it, if you look at the last cycle, we had a

very, very -- the longest expansion cycle in our recorded history. in the last two, three years, you had the benefits of this tight labor market going to people in the lower quartiles. income gabs gaps were coming down it's a great thing we would like to get back to that place. to get back to anything like that place, you need price stability. basically we've been hit by historically large inflationary shock since the pandemic this isn't anything like regular business this is we have a pandemic, the highest unemployment since the depression we have this outsized response from fiscal policy and monetary policy then we have inflation then we have a war in ukraine which is cutting the commodity patch in half, and now we have these shutdowns in china it's been a series of inflationary shocks that are really different from anything

people have seen in 40 years so we have to look through that and look at the economy that's coming out the other side, and we need to somehow find price stability out of this, and it's obviously going to be very chall challenging, i think, you do have numerous supply shocks which are famously difficult to deal with. so i guess that's how i think about it >> chris >> thank you chris from the associated press. earlier you just said if necessary, i think were the words, that you would -- or if it turned out to be necessary or you said it's possible that we'll need to move policy to restrictive levels given where inflation is and the hot economy, the hot labor market as you described it, why still the hesitation shouldn't it be -- what else do you need to see in order to determine that wouldn't the fed naturally be looking to go to restrictive level at this point?

thank you. >> so if i said necessary, i meant to say appropriate we're not going to be erecting a high barrier for this. it's more if we think it's appropriate. the point is we're a very long way away from neutral now. we're moving there expeditiously and will continue to do so and we don't have to make -- we can't make that decision really today. the decision about how high to go will be on the table to be made when we reach neutral and i expect we'll get there expeditiously as i mentioned it's not that we're not -- we don't want -- making the decision today wouldn't really mean anything. but i'll say again, if we do believe that it's appropriate to go to those levels, we won't hesitate >> mike mcgehee from bloomberg television and radio the balance sheet. why did you decide to wait until

june 1st to begin letting securities roll off and not immediately start in the middle of this month, say, and do you have another -- a newer or a better estimate for the monetary policy impact of letting the balance sheet decline? and then finally i'm curious why you felt the need to address the american people at the top of your remarks are you concerned about fed credibility with the american people >> so why june 1 it was just pick a date, and that happened to be the date that we picked there was nothing magic about it it's not going to have any macroeconomic significance over time we just picked that. sometimes we publish the calendars on the first day of the month. i wouldn't read anything into it in terms of the effect, i would just stress how uncertain the effect is of shrinking the balance sheet.

we run these models, and everyone does in this field and make estimates of what will be -- how do you measure a certain quantum of balance sheet shrinkage compared to quantitative easing. these are very uncertain i really can't be any clearer. there won't be any clearer -- people estimate that broadly on the path we're on, and this will be taken probably too seriously but sort of one quarter percent, one rate increase over the course of a year at this pace. i would just say with very wide uncertainty, very wide we don't really know there are other estimates that are much smaller than that, by the way, some of you may have read about that. that's a mainstream estimate we know that it does -- that it is part of returning to more normal, more neutral financial conditions and our strategy is to set up a plan and have it

operate and really have, you know, have the interest rate be the active tool in monetary policy in terms of speaking to the american people, so i feel like sometimes i just want to remind us really that's who we work for and it's inflation people are feeling all over the country, and it's very important that they know that we know how painful it is and that we are working hard on fixing it. i thought it was quite important to do that so that was really the thinking behind it. >> do you think the fed has a credibility problem? >> no, i don't a good example of why would be that -- so in the fourth quarter of last year as we started talking about tapering sooner and then raising rates this year, you saw financial markets reacting very appropriately. not to bless any particular day's measure, but the way

financial markets -- the forward rate curve has tightened in response to our guidance and our actions really amplifies our policy monetary policy is working through expectations now to a very large extent. we've only done two rate increases. if you look at financial conditions, the two year is at 2.80 and it was at 20 basis points. people are feeling it already. so that shows that the markets think our forward guidance is credible and i think that's -- we want to keep it that way >> hi there. brian chung with yahoo finance to expand on steven's question about paul volcker there was great pain that came

with that as well, higher interest rates obviously affecting households and businesses and wondering how you kind of square what might be demand, are you already seeing that is the idea here to incentivize a lack of spending, to decrease consumption to perhaps table business investments is that what's happening thanks >> as i mentioned, you can see places where the demand is substantially in excess of supply and what you're seeing as a result of that is prices going up at unsustainable levels, levels not consistent with 2% inflation. and so what our tools do is as we raise interest rates, demand moderates. it moves down. interest rates -- businesses will invest a little bit less. consumers will spend a little bit less that's how it works. but ultimately getting supply and demand back in balance is what gives us 2% inflation, which is what gives the economy

a footing where people can lead successful economic lives and not worry about inflation. so, yes, there may be some pain april soes yated with getting back to that the big pain is in not dealing over time, not dealing with inflation and allowing it to become entrenched. >> thank you, chair powell greg from market watch i was wondering if you could take a step back and talk about in march looked like steady quarter point rate hikes, get the funds rate up to 2% end of the year now it seems like you're much more aggressive. so could you talk about the thinking that's behind that? thank you. >> so, look, i think what you've seen is really i would say last fall, in the middle of last fall, there was a time when our

policy stance was still pretty much in sync with what the data. if you remember there were a couple jobs reports and inflation had actually -- month by month inflation had come down until september a few months in a row, stayed low, and then around the end of october we got three or four really strong readings that just said, no, this is a much stronger economy. and, by the way, then with the restatement of the jobs numbers it looked like the jobs market was much more even and stronger in the second half of the year anyway, we got an eci reading, employment compensation index reading the friday before the november meeting and then a really strong jobs report and then a really high cp ireport. and so i think it became clear to the committee that we needed to adjust and adapt, and we have ever since then, ever since then we've been adapting. the committee moved by the time of the december meeting to a

meeting of three rate increases, then to a meeting of seven at the march meeting. that process is going on and it's clearly continuing. that's why i say and i mentioned this at the march meeting that no one should look at any single sep as sort of a real resting place for 90 days because we're in a fast-evolving situation, and that's what happened you can see, unanimous vote today, of course, and i told you the guidance that broad support on the committee to have 50 basis point hikes on the table at the next couple of meetings so, you're right and, by the way, other forecasters have been doing the same thing and it's just us adapting to the data and to the situation and using our tools to deal with it. >> we'll go to nancy for the last question. >> hi, nancy marshall with marketplace, sir chair powell, i want to ask how you are able to balance your dual mandate, stable prices and

maximum employment especially when the unemployment rate for black workers is still roughly double, roughly twice the rate for white workers? >> unemployment rates for all racial groups have come down a lot and are now much closer to where they were before the pandemic hit so that's one thing i would say and that's important but the bigger point is this i do not at this time see the two sides of mandate as intention. i don't. you can seethe labor market is out of balance you can see there's a labor shortage there aren't enough people to fill these job openings and companies can't hire and wages are moving up at levels that would not over time be consistent with 2% inflation, over time. of course everyone loves to see wages go up and it's a great thing. you want to see them go up at a

sustainable level. these wages are being eaten up by inflation so what that really means is to get the kind of labor market we really want to get, we want a labor market that serves all americans, especially the people in the lower income participate of the distribution, especially then, to do that you have to have price stability we have to get back to price stability so we can have a labor market where people's wages aren't being eaten up by inflation and where we can have a long expansion, too. that's the good thing, as we have several of the longest expansions in u.s. history have been in the last 40 years and that's because it's been a time of low inflation and long expansions are good for people and good for the labor market. that's the way i sympathy about it we have to think in the medium and longer term, and i do think that the best thing for everyone is for us to get back to price stability to support really a

sustained period of strong labor market conditions. thanks very much fed chair jay powell first in-person news conference from the fed in two years first half a point rate hike that we have seen since back in 2000 also announcing plans to trim the $9 trillion balance sheet. boy, what a rally. take a look at the stock market. turned on the fed chair's comments and kept going higher we're in session highs with the dow up more than 700 points. the s&p 500 up 2.4%. the nasdaq up 2.5% everything rallying. treasuries are also rallying yields are coming down and the dollar is weaker the takeaway there, he wasn't as hawkish as maybe some had feared and he ruled out the 75 basis point hike that was the question from steve liesman. we'll talk to him in a moment. if the market was thinking that was coming next he really said more on the table. the most actively traded names as we enter this final hour of

trade right now. uber down 4% earnings after the bell, at&t, nio and ford continuing to be among the most actively traded joining me for some instant fed reaction former goldman sachs president gary cohn. great to have you on a fed day what a rally it was baked in. >> i think it was baked in i think the chairman drove it right down the middle of the road, didn't hit either guardrail. he said exactly what people probably would have hoped he said he gave pretty good information on the balance sheet i think people are priced in the rate side of the equation. what they're worried about now and what people are starting to talk about the quantitative part of the equation. we've gone from qe and going to qt i think the chairman obviously told us how they're starting, where they're starting they're going to ease in and expand and we're going to the number that we were told he was going to

he even laid out how they were going to do it, what securities they would sell. and the market likes that. the market has been trained to have transparency and we got transparency >> he has this new forward guidance where he is open about what he's going to do and it gets priced into the market and then we have a relief rally like this i thought it was interesting he opened the news kconference wit an address to the american people inflation is too high. we get it. he used the word attentive and expeditious a number of times in terms of how many rate hikes we're going to see to try to correct it >> he opened up talking inflation is too high, labor market is tight. he talk about the pc being 6.5%. he talked about without food and energy it being 5.2% and then he used a new word, a i dapting. we're adapting >> their view on inflation has totally changed. >> i thought that was very interesting in his prepared remarks he came out and talked about adapting we have a fed that is now adapting to the new inflationary stance that we live in >> so what does it mean? we'll get another 50 basis point

hike >> so, look -- >> in june >> he mentioned, if you listen clearly, he said two 50s i think he admitted to two 50s we have five fed meetings left there's no august and no october fed meetings he admitted two already. most people think fed funds end the year around 3% probably conventional wisdom right now, where the market has it priced in that would most likely mean we would have three 50s and two 25s. we don't necessarily have to have the three 50s in a row. so the chairman already told you it looks like two 50s for the next two meetings. june and july. then we take a break we have august off so when we come back in september -- >> 25s >> well, look, he'll have a lot of data between now and september. so if things are start to go moderate, inflation is starting to moderate, he's having his effect on demand win the chair

also admitted. he can't deal with the supply side he can deal with the demand side if he's having the outcome effect he wants on demand then he has optionality when it comes to september f. he's not having the effect, september could be another 50 and then you could have november and december be 25s. so i think he sees laid out sort of the road map for the next two rate hikes being 50s >> so what does it mean, gary, for the markets? stocks are zooming here and bonds are rallying the curve is steepening. it all makes sense it's priced in do you see a potential for more of a rally on this idea that the bond market just got too hawkish? >> look, i think a lot people have priced all this in and the fact that the chair came out, he acknowledged where they are, reconfirmed they're behind the curve. he said we're adapting we're going to do what we have to do. we're no longer talking -- he didn't mention the 8 or 11 increases that he mentioned last

meeting. he's now talking about 50s i think the market is starting to say, okay, we've got this pretty well priced in. i don't think there's a lot of surprises out there. we've taken a lot of the fluff out of the market. we've taken a lot of the hot air out of the market. >> the excess. the excesses have been removed >> good word we've taken a lot of the ex excesses out we have real value the stock market today is reflecting some of those values, asset prices that have been beaten down, and the rate market had already moved. we already saw ten-year rates more than double we've already seen two-year rates more than quadruple. and so we've had the movement. the market has put the movement into rates already and the market is getting a vote of confidence that they're right where they have things priced and it's probably not going to get much worse than that and so that tends to leave market practitioners to say, okay, we sort of understand the outcome and we maybe have a

little bit more predictability today than we did last week, and we like predictability and, therefore, we are willing to put a little bit more risk on the balance sheet. >> i think even hawkish powell isn't too hawkish. could be more hawkish. every sector is higher the dow up more than 700 points. every dow stock is higher. gary, stay with us our senior economics reporter steve liesman who was part of that news conference, steve, and inthought asked the money question which turned the market about consideration of a 75 basis point hike >> reporter: yeah, it was the question to ask, and i was lucky to have it to be asked being up early in the roster there, but i think what's really important and i think i just heard the tail end of what gary was saying when i came. i think gary has this right. here's the deal. 50 is the new 25 and 75 is the new bell bottom jeans. and i mean that by it sounds like 50 is the new base case i think that's what gary was saying essentially let's listen to what he actually said and listen very carefully

to what he says at the very end and we'll talk about it on the other side >> we need to really see that our expectation is being fulfilled, inflation, in fact, is under control and starting to come down. again, it's not like we would stop we would just go back to 25 basis point increases. it'll be a judgment call when these meetings arrive. again, our expectation is if we see what we expect to see then we would have 50 basis point increases on the table at the next two meetings. >> reporter: the next two meetings that's what he said. so here is what the market is so excited about. it's kind of interesting the market had priced in four 50s before this meeting. it got one of those 50s now. so call it three 50s and one of those possibility a 75 now it has two 50s for sure and now he's taken 75 off the table. i don't know how great, it's interesting to me how incredibly discomforted the market was from the idea that a 75 was hanging

out there and how comforted it is that the 75 was off the table but instead two 50s for sure now. well, pretty much for sure >> i agree i was surprised how far the market went, steve, at pricing in a 75 basis point hike you talked to bullard about it it wasn't even his base case and he's the most hawkish one out there right now. >> reporter: that's what started all the nonsense you're right jim didn't make a strong case for it i think jim was not taking it off the table. he said 75 basis points is out it's possible. mary said 50/75, we'll debate it >> -- said no way. >> reporter: he came in and he put the hammer on it and said 75 is not on, not going to happen and i think, to be fair here, sarah, the idea for the market that there are some rules or restrictions around how much the fed might make the market digest every month, i can understand how that's comforting. if the whole thing was random, that's, i think, what scares the

market now i think they have an idea of the projected trajectory of the fed funds rate for the next couple of meetings >> making new highs on the day up 775 steve liesman, thank you very much the question, gary, is it going to be enough >> the other thing i'll point out we had a unanimous vote. >> true. >> remember a month ago we did not have a unanimous vote. what steve is saying, we're agreeing, universal consensus in the room that 50 is a good number, the chairman said 50 the next two meetings. now there's unanimity in the room a big difference than dissenting votes. >> in the sound bite, if anything we move from 50 to 75 i guess my question is, is it going to be enough if we had not seen the highs of inflation, he mentioned all of these new shocks that we're seeing from ukraine, from china, which was mentioned in the statement for the first time, are they going to be able to get

a handle on it >> i think the chairman admitted something everyone knows they can deal with the demand side with interest rates they can't deal with the supply side so to the extent that we continue to have an oil shock, and insaid a month ago i'm not worried about oil as much as food i'm worried about food, grains, the agricultural products. the oil is outthere. we can get it if we need to get it the grain market is the one that scares me. we're just now in crucial parts of the grain market in certain harvesting seasons for winter, in planting seasons, and they're not going as well as we'd like them to go for drought conditions and war conditions. >> you can't plant crops in the middle of ukraine in a war there's nothing the fed can do about that >> the fed acknowledged that if we're seeing some of the inflation numbers and he went out of his way to quote the inflation number, they realize

they can't deal with the food and energy number, they're going to deal with the core numbers. what he can tamp down is the wage inflation we saw 11.6 million job openings, 4.6 million quits which to me is almost more interesting. it's a series high people don't quit a job unless they're going to get another job. and they're confident they're going to get that other job. >> meaning the fed is going to be tricky for them to bring this -- are you saying inflation is entrenched? >> it's not easy he's trying to soft land an economy. they are behind the curve. they're not out in front of it it would have been easier when we saw the beginnings of inflation which, look, they thought it was supply chain issues >> no more transitory talk >> i didn't say the word

transitory i refuse they thought it was pandemic issues they thought it was restarting the u.s. economy and would come out of the system. not a totally irrational thought. this was real demand this was real economic factors at work here they're behind the curve he admitted he can control the wage growth by tamping down economic growth. that's where he has to go. >> what will that look like and will it lead us into recession >> over the last two days -- >> the overnight flights back. >> corporate america feels good. if you talk to anyone in a consumer facing business, they'll tell you business is good, robust business is still good, sales is

very good. you look at corporate investment, it's still very good people are out spending money. we talk about job creation job creation is here for the foreseeable future, which i will call between now and maybe the end of the year in economic terms, the economy looks pretty strong. going into next year it's harder and harder to predict because we've got the fed raising interest rates, the fed starting to liquidate their balance sheet which i think people should spend more time thinking about what that means. not only are we going from a buyer of securities, we're stopping buying, we're flipping around and being a seller of securities someone has to buy those treasuries we may end up in a recession i do know something. we're going to see a recession >> that's helpful. >> we have to look forward it doesn't feel like we're there now. there's a lot of positive factors. the good news is we're starting

with a lot of positive momentum. >> i want to point out what's happening. it's a broad-based rally and picking up steam as we go into the close. very strong. the dow up 2.5 stock home depot is the biggest contributor, again, where some of the pain has been, housing related. goldman sachs, your old firm, contributing to the dow rally. honeywell, 3m, ibm, it is broad based. energy is in the lead up 3.5%. on this proposal to cut off, staples, materials, tech is having a solid day right now the nasdaq 100 is up 3%. that's where the brunt of the pain has been on higher interest rates. would you buy netflix? >> it's not what i do for a living i don't buy single stocks. >> valuations have really corrected like tech, appealing

now that we know from powell what the plan is >> when i was here a month ago i talked about multiples when money is easy and multiple is expanded. they naturally have to contract. did they contract enough to buy it right now >> that's what i'm asking you. >> it feels like we've clearly gotten there i'm not smart enough to say we have jump in. it's not what i do >> what about bonds? on the down side, ten-year reached 3% yesterday >> it looks like you're getting some return but we've seen orderly moves.

we have not seen really volatile market or irrational markets we've seen it move in an orderly fashion. we've not seen massive widening. the credit markets have behaved very orderly you are getting a much higher rate of return today than you were three months ago. that doesn't mean the underlying yields can't go higher the chairman made it clear, we are going to do two 50s, take august off, come back in september and we'll see. another 50 in september we'll do it >> 900 on the dow, it's all you. it is up 900 now on the dow,

almost 3%. >> i'm watching ibm over my shoulder come on. >> gary, should note wearing another hat today, a lot of talk about neutral. what is knewneutral, the significance of it and should the fed be telegraphing a neutral rate and worrying about going into restrictive? explain? >> you and i have talked about neutral a lot. i'm not sure the fed might make it disappear if they could wave a magic wand is it the same rate tomorrow was it the same rate yesterday it's a hypothetical place we're at a standstill. it's a nice concept. we can pass through it for a

millisecond but i'm not sure we can stay there, a place we can say our target will be neutral >> does the fed still -- he was asked if he worries about his credibility. he addressed the american public we understand inflation. we know it's painful they were late, as you said. do they still have credibility when it comes to this fight? >> i think the opening prepared remarks clearly had to do with the fact he, the chair, is trying to assure the american public about their credibility, they're on top of the situation. we should feel confident that he was trying to be sympathetic, feels people's pain when they're holding down the gas nozzle and it's a triple digit number to fill up your gas tank i think the jury is still out on the credibility.

he's late it doesn't mean the last chapter of the story has been written if he miraculously lands this relatively softly or if he even lands it not hard, i think he will have credibility. he went a long way to say i have two 50s lined up, time off and we're prepared to do more. he's going to need things to go well as he said, i'm in control of demand not in control of the supply side. >> gary cohn, thank you for the time and analysis. come back soon the dow just roaring up almost 900 points technology also on a tear. apple, microsoft, facebook leading. in the market zone, uber and lyft sitting out the sharp rally. what lyft's president is asking from investors as his stock loses a third of its value today. plus exclusively to cbs ceo karen lynch about her better than expected results and

guidance and do not miss jeffrey gundlach on "closing bell overtime."

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not considering 75 basis points, which would be a triple hike and fed chair powell really laid out a pretty clear road map that was already there. what do you make of the reaction >> exactly we were somewhat spring loaded the market we've been talking about was beared up and investors going around collecting new things to worry about and that included the possibility the fed was going to be even more full steam ahead, wanting to keep that 75 basis point potential for a hike out there. and essentially being interested in breaking things as opposed to just trying to get back to normal given the position we started in, it seems as if we triggered that same reaction we had the past two fed meetings, went into all of them at the correction lows, late january and mid-march and once we cleared away the actual fact of the meeting and in the last case the rate hike, we did spring higher the s&p 500 is essentially just burned up a bunch of the oversold conditions at 4,300 or so that's where we closed last

thursday there's work to be done, and i think a lot of people said let's not get too negative the interesting part happens are we still trapped in this real narrow range up to 4,400 or can there be a little bit more lift to it as we clear this uncertainty away >> and i'm just looking, everything is rallying right now. it's very broad based, mike. if you look at what's working best, yes, energy. higher oil prices on more concerns out of russia, ukraine and europe but also communications services and technology those are your two best performing sectors the nasdaq 100 jumping about 3%, more than that, 3.25% right now, just the most beaten down names? >> the beachballs held the furthest under water have popped the most if you want to look at the lower quality super trashed sectors of the market, they are flying as well that's normal. that's the way it happens when you basically go from a deeply oversold spot and then finally get a little bit of relief and buying power a lot of the selling had dried up coming into the last couple of days. people were talking about volumes were light but it just

was no conviction on the buy side so this was enough, i guess, to get people to say maybe we can try again and see if we get another one of those 5%, 7%, 10% rallies which is what happened after january and march. >> treasury yields are falling and the dollar is weakening, both relieving pressure and those hard-hit areas shares of cbs climbing the company beat estimates, raised its guidance. cbs also reported increased demand for prescriptions, covid vaccines and testing has declined joining us for a cnbc interview is cvs health ceo and president karen lynch. it's great to see you. first talk about the raising of guidance and what gave you confidence to do that? we haven't seen it too much this earnings season given the uncertain outlook right now. >> hi, very nice to see you. first of all, i would say that we had very strong revenue growth, 11%. we grew earnings, over 8.5%.

every single one of our businesses performed, had very strong performance and clearly this is our strategy in action we rolled out a strategy in december, making very strong and meaningful progress and we're meeting consumer demand across every single one of our businesses >> what about the covid factor, though how do you calculate -- it's obviously been very helpful and the retail sales were strong, prescriptions. but with the vaccines and the testing demand, how do you forecast what that's going to do to the rest of your business, for the rest of the year and into next? >> obviously what we've learned with covid is most unpredictable variant that we've seen. what we've predicted is that testing will continue to see testing but can see a decline in testing. we factored in the fourth booster but we'll continue to see a decline, but we've got strong performance across every single one of our businesses

we're having good results from our front store. we've taken scripts share eight quarters in a row. our health care business has performed quite strong we are benefitting from our strong revenue growth in medicare advantage and we have the strongest selling season for the first quarter in our pharmacy business so solid results all around. >> what about inflation, karen topic du jour. heard from federal chairman powell everything from the drugstore business to the prescriptions to insurance, where is it showing up the most and how are you coping with it >> it's interesting because it shows up across each of our businesses very differently, in health care inflation will have an increase in premiums. we'll offset some of that through the change in interest rates. we have a strong bond portfolio so as we're selling off bonds we recognize and realize capital losses but we'll see gains over time in that portfolio as those

higher interest rates kick in. in our pharmacy services business we haven't seen a big impact all the brand inflation, generic inflation within our expectations and then in our retail business we've had very strong pricing power. we have alternatives through our store brands and our subscription program are offsetting impacts for our customers. >> quickly, karen, just in light of what happened yesterday, the leak of the document from the supreme court, potentially overturning roe v. wade and states like texas to crack down on abortions, i'm curious in your insurance business what you're seeing from companies, whether they're making moves and adjustments to cover abortions out of state and to make reproductive care more accessible even if the last 24 hours? what are you seeing? >> yes, we've been talking to our customers for a long period of time. they've been interested in what

opportunities they have in benefit designs, we're working closely with them on the choices that they want to make relative to their benefit designs and we'll work with them in making sure we administer those plan designs in accordance with applicable law and every day we're having those conversations with customers we've seen an increase in the conversations today. >> yes, i would expect that companies are doing that karen, thank you for the color great to talk to you karen lynch, ceo of cvs health, jumping 5% along with the broader market which is sharply higher right now top investor bill gurley was on "tech check" earlier today here is what he had to say about sky high valuations. listen >> everything trades on price to revenue multiples. people talk about all kinds of numbers and they don't talk about the bottom line, so you have a ton of this adjusted that and people want real earnings,

they want real free cash flow now. and so all these companies that have lived in this environment for the past decade, they have to readjust and i think the sooner they do it the better >> question, mike, have we started to see that from some of the companies and other frothier parts of the market where they are more focused on things like cash flow and profitability given the market's complete mood shift that he talked about >> i would say the peak is buy it at any price based on high sales multiples and total adjustable market. probably 15 months ago was the peak we've had a lot of those types of stocks crash. the ipo markets have been closed for a few months right now especially to those types of high-growth companies. to me the interesting question is if that psychology pervades the private market, private companies, what is it going to mean for the pipeline of spending which goes into things

like facebook ads to build brands for a startup company that's the big question for investors right now exactly what the profit trail that goes from indiscriminate spending of venture capital money toward the profits of existing large companies that we now try to place a multiple on. >> session highs up 3% right now on the s&p we've been showing you the dow up 950 points right now as we head into the close. take a look at the ride sharing companies, uber and lyft not in the celebration under heavy pressure uber reporting a narrower than expected loss. the company also says it won't have to offer incentives to maintain its driver's base at a post-pandemic high lyft shares plunging down a third of the company on weak guidance, warning it will have to continue spending on those driver incentives. lyft president john zimmer weighing in on "squawk box." listen >> it's a choppy market

environment right now as a whole. and the market wants to understand the business model coming out of the pandemic, and we asked them to give us one more quarter to make investments that we feel like is the right thing to do for long-term profitability. >> not giving them the benefit of the doubt today deirdre, it doesn't need to spend significantly on driver incentives but with lyft continuing to spend, will uber eventually have to is that why it's down today as well >> yes, i think that's exactly why. the market doesn't really believe uber when they say they're going to get to free cash flow, they're going to get to a better measure of profitability. if they are spending on driver incentives that will change the balance once again so will uber have to continue to invest i did speak to the ceo earlier and said what makes you so confident this is the right strategy that you're not maybe giving up your lead to your competitor he says he's confident in the

super app strategy so they're getting drivers and couriers from the delivery side, from the ride sharing side we'll have to see how that plays out. to what you and mike were talking about in reaction to the bill gurley shot you just ran, these companies are well aware they need to start showing a better measure of profitability. it used to be adjusted ebidad. they've hit that now free cash flow in the case of uber. so we'll see when they get there. right now i think based on what the stocks are doing the market doesn't buy it >> so just to be clear, deirdre, not a problem with demand, right? certainly not from lyft. didn't seem like it from uber. people are going out again it's all around this driver shortage issue and what they're going to have to do to fight it. is that the big, you >> lyft is near pre-pandemic levels they are cautiously optimistic this year will be better than last based on what happens with

trends it is the driver supply. many of them left. we are in a tight labor market this is the independent contractor model which they say employees like because it gives them flexibility, but we haven't really seen that in a big way because they are having trouble getting drivers back on the platform so, yes, that is the problem. >> deirdre bosa, thank you do not miss the interview tomorrow on "squawk box. david, it wouldn't be a fed day without him. what a reaction to fed chair powell do you think it was the fact that he ruled out that 75-basis point hike and confirmed market expectations >> i think that's a part of it, sarah. we now know what we're dealing with the inflation looks like and a lot of us didn't know what that was.

the market was pricing in the risk of something stronger and this is where we were thursday and friday last week in terms of s&p, the dollar and other indices we would look at for financial conditions so i think the market just saw the beginning of this week and got nervous it could get more aggressive after last meeting when they delivered a hawkish relative to market expectations, so i think it's a standard relief rally to a fed that is not as panicky as some might have feared and i think that's important. >> well, also big reaction in bonds, yields came below that 3% on the ten-year yield, a big bounce there the dollar is weakening, even the japanese yen is strengthening. powell did it all. investment implications beyond

this reaction in the near term >> we're going to get hit pretty hard with monetary combination of removal the punch wasn't as severe i think the other thing about the press conference that was important he is so focused you really need to see this inflation come down and come down in a relatively -- i don't want to say aggressive but in a calculated and continuous way. less than aggressive but i think we should all be on the lookout for something that's more aggressive in the future not an

immediate pullback and say all is clear, we nailed this, it's good even if the inflation data comes out. >> also to your point and the fact that he was so serious speaking to the american public about inflation and the duties that they have, i do wonder if there is a policy mistake more in the camp of recession than in letting inflation stay too high for too long and they're willing tolerate that. that's a big risk. >> they are pushing inflation back into a hole they will remain -- a point in the press conference someone asked about fiscal policy and he made an off the cuff remark about let me figure out getting inflation down here and i'll be able to give some advice on fiscal policy. >> sure. >> i think there's a bit of self-deprecation going on.

soul-searching they're hoping this is enough. they gave less i wouldn't get too excited about a runaway. >> mike, what is the market on the notion of a soft landing and whether he can pull it off >> well, first of all, i don't think the market is presuming a hard landing if that were the case we would be a good deal lower, that would mean a recession, a lot lower earnings that we're contemplating. there's some decent probability assigned to some version of a soft landing there's always scares along the way whether you get to the soft landing or not, so i think it's going to just take it in bits not necessarily trying to project nine months ahead to say where this all ends up, and i think for now it's palatable given all the risk we've discounted at the moment also, another piece that the market seemed to grab on to from the press conference jay powell

said the obvious thing, forward guidance has had a lot of effect we're already there in terms of the known tightening trajectory. >> david, would you be buying tech stocks? the nasdaq is still down 17% this year. >> your short-term views are to sell around that i think this is a covered call kind of year that's how we set it up from the beginning. i don't see the big runaway upside i'm coming to grips the runaway down side isn't there either and that's all what the vix is starting to price in i think the upside is going to get pushed very hard again by the fed. they're going to use that as an opportunity to be more hawkish when they see the s&p down 13 to 14, the nasdaq down 23 to 25, they probably don't want to push

as hard. they don't want to create anything too messy maybe that's what we started to see -- >> s&p down 9.8% david, thank you for your first reaction mike, what are you seeing in the internals? >> it's positive obviously it had a big buying binge once we did get clear of the fed meeting. you see there 4 billion shares advancing to half a billion declining. basically very comprehensive banks versus energies, diverge this measures when inflation became a threat to growth and credit as opposed to a good thing. that's a slight necessary positive the vix crushed down to 25 it was 36 a couple of days ago that's another good spike in the chart. the market trying to stabilize the vix futures are back in an orderly direction as well. >> as we go into a close a 3% gain for the s&p 35500. the dow up 935 points just about at the session highs every sector is higher, every dow stock higher

energy leading the way communication services, technology and materials are your three best performing sectors. names like apple, microsoft, tesla, meta, alphabet. a gain of 3.2% that's it for me on a crazy fed day for "closing bell. to "overtime" now with scott wapner welcome to "overtime." i'm scott wapner you heard the bell we are just getting started. we go right to our talk of the tape today, a historic fed decision what it means to your money and stocks which jumped and jumped big time on a very specific comment from the fed chair. so is a broader rally really ready to happen? the biggest question of all, can the fed actually pull off its most delicate balancing act in decades? let's ask doubleline capital ceo jeffrey gundlach with me live in a cnbc exclusive interview welcome back, jeffrey. it's goo