Nasdaq is leading the way again. 9,996. Will we get to 10,000 again before the quarter and the half year are over . Its a 1. 25 gain today. Its the only of three majors to be positive year to date ill start that there, josh brown. The nasdaq is reminding everybody how we got here in first place. Thats right. It continues to be a tale of two markets despite those days where it looks like were about to have this massive mean reversion for the rest of the market it really is these names that are getting the job done day in and day out. Ive highlighted the fact the nasdaq equal weight is doing as well or better on some days than the regular market cap weighted triple qs. Thats indicative of broad strength not just five stocks dragging the whole market higher. Then the coronavirus losers are doing what think have been doing for quite a while. Each day were getting new names added to the list. This is just another casualty of this two speed economy that were going to have. If you focus on whats working really well right now, i want to highlight the smh. This is the Semiconductor Index up over 2 today dramatic winners littering this index. I own nvidia thank you, micron having a big move today what do semiconductors have that the coronavirus losers dont have to finish out this mini monologue. Even though people arent going from place to place, their data is theyre usage of devices is going up orders are as strong as they have been for so many categories that use semis traditionally and for new categories where products have more chips than they have before thats not going to stop on a dime regardless of the economy the moves in these stocks make sense. Lets continue this conversation nasdaq right now month to date up 5. 5 . Up 30 for the quarter thats the best quarter for the nasdaq since the Fourth Quarter of 2001 year to date its up 11. 5 . It blows everything out of the water. Technology is up 6. 5 . Best quarter for tech since 2001 up almost 30 for the quarter as well growth, by the way, is the best quarter ever for the growth etf. Growth stocks. Is this the way its going to be for the second half as well. We do expect this trend will continue i think were looking at economic data. While the initial bounce off the bottom was robust and suggestive of a v shape recovery. Were seeing some tapering and slowing. In that environment, Growth Stocks, tech stocks give some really attractive optionalty they were defending on the way down and supported portfolios. We expect that to continue this is, you may have some case of pull forward. Of demand for technology specifically but if youre willing to look longer term, these are trends that are going to continue and we are going to be seeing more Technology Utilization in nontech parts of the economy. We still like the growth play and we recently added a little bit to some of those growth to year stocks in the portfolio are some of the growth names, pen expensive . Maybe. Thats the whole story thats why people have been willing to pay up and pay up for these kinds of stocks as the analyst raise the price targets and the price targets get blown through. The analysts just bump them up higher and people are still willing to pay up. Its not just about the stock prices going up. Its about the fundamentals improving. If you take a look at microns report and they cited mobility they cited were seeing these trends maybe be pulled forward a bit and thats what it is. Covid did not create new trends. They just pulled it forward. It also expanded thebr breadth them technology will continue i feel bad for the value players. They have their moment in sun. Maybe it will come back for another ten minutes. Youll be rewarded by fundamentals and growth instead of guessing are the airlines going to be at full capacity is caterpillar going to be able to resume operations fully are we going to see those types of Companies Come back into the consciousness and get a big infrastructure plan out of the government why make it so hard. Go where the growth is go where you will continue to be rewarded and go where the fundamentals are today and will be tomorrow. Ive said that repeatedly when we had these discussions and conversations and debates. Why make it so hard on yourself . Why make the market a guessing game like wiess says you go where the growth is i know people had flocked to value stocks clients are moving out of value and going back into growth youre going for the upside, right. You want to find something thats working where you can see a dollar that you nvested toda will be worst a 1. 10 or 1. 20 tomorrow theres very few stocks that are getting that done. I dont think its as mump as matter of people paying up for Growth Stocks. Its the safe Growth Stocks that people are paying up for its the johnson and johnsons and the microsoft and facebooks. Theyre paying for a lot of other things have you seen shopify and spotify. Those are the paying up for big time im not paying up for those. The safer Growth Stocks make sense to me. Then you can have your opportunistic stocks i dont go for the shopify and nosebleed stocks id rather find those with solid Balance Sheets and in the fedex and disney kind of names if youre buying a stock and the other thing, you have to think about, markets are trading near all time highs whats your upside expectation today. How much are you going to have to see to get a 10 or 20 return when youre paying prices near the all time top i think a core make sense. The nosebleeds, id rather go to vegas. They give you a free drink when you lose your money. Mega cap tech names facebook is up 33 apple 43. 5 . Amazon 40. Microsoft 27. 5 alphabet has been the laggard. Its up 21 its had a muted month for the most part whats been a muted year whats going to win in the months ahead well, i think youre still going to win with a lot of the names were talk about not Just Technology but josh points out the broadness i think thats missing for a lot of months. People were commenting on it now were hearing more and more about the broadness of what were seeing here. Its not just power five its the broad market sweep and we have seen it through the semiconductors, bio tech and other tech names now in the power five grouping. I think theres a lot going on beneath the scenes, scott that has been sort of mislead a little bit because its really been going on now for a couple of months. I like what were seeing there there is growth. Now theres names up that are difficult to get your arms around to see what is the real valuation of some of these names. Theres a high number of those generally, i think were looking at a lot of really good quality name, quality leadership, great fundamentals you look at the Balance Sheets in general were seeing a nice sweep. Pete, you added the facebook. Tell me why. I did we were talking about this on friday you and i had a nice long conversation not a debate a conversation about what do they need to do. Facebook is what i was describing i think their leadership is phenomenal i may or may not like Mark Zuckerberg but i do think hes an incredible leader hes a gutsy guy he sort of stumbled here for not just a short period of time but hes been stumbling around a little while now when it comes to the social side of things is he going to address this . I think hes going to. The stock was trading all the way up to 245 a share it got beaten back pretty badly on friday about 8 or more i said i think they will do the right thing and react. I think they will be transparent. If im right, i think im buying an inexpensive facebook down here underneath 220. I think the opportunities for the upside are still there fundamental side of it and those eyeballs when you got 2. 5 billion people looking at facebook and then add in instagram and messenger and the marketplace and the different categories that they continue to grow in, i think this is company that has a lot of upside. Thaifr got to get over that hurdle we need josh to continue this debate over value versus growth in the months ahead. If you agree with steve that theyve had their 15 minutes or whatever it is and theyre done. There are too many questions about the virus and reopen and who is doing what when and where. Closures, delays, et cetera. Thats going to be with us its going to be fits and starts its going to be good headlines and bad headlines. The money in that environment will flock to the tried and the true the big five i think youre framing it exactly right. I agree with steve what makes it tough is if youre armed with the history of markets then one thing thats undeaniable is over the last 50 years, Small Cap Value has been the leading bang for your buck coming oult e ining out of ever recession. Small cap value is where most of the money is made. Its a question of time frames if you want to be right, right now, if you want to be leading the performance parade right now, those stocks are asbestos luts poison. Not everybody wants that there are people who are saying to themselves, i dont have a score card nobody is looking at my performance but me and maybe my spouse i want to own the cheapest stocks im going to get the most bang for my buck that havent worked in a long time one other thing that i think is important for context, Small Cap Value has baetseaten the stock market in 92 of all rolling 15year periods going back to 1928 thats just a fact its not my opinion. For the last 15 years it hasnt. We have been in the 8 period of time if you do something differently other than owning the glamorous stocks that are working right now, its going to suck. Its not going to feel good. Every day is another opportunity to have the market tell you how dumb you are thats the way it feels now. Its not definitely going to be the case that you wont be able to make money there. I really feel you have to ask yourself what matters most how i do long term or how i feel over the next 90 days. You have to calibrate accordingly. Tell me about the stock you bought which is another reit i would love to i bought prologis this week. This is company that i think, steve talked about the acceleration of trends hes exactly right pld is a terrific kpamplg exampf that they probably had three years of ecommerce growth pulled in its not a negative. I dont think youll see that market share gain reverse. What they do, its where house reit they are amazons landlord they are biggest customers are like walmart, best buy, home depot. Anyone that needs anything warehoused or moved is probably using prologis 2. 1 trillion worth of goods flow through their buildings stock has resistance at 97 i think third time is a charm. Thats where she breaks out. 2. 5 yield while you wait. I own this in an ira im not paying the distribution tax at ordinary income im not paying it at all and im reinvesting dividend if you hold for five to ten years, unlike paying through the nose for a shopify youre getting the benefit of the same trend but youre paying a reasonable valuation and getting a much better yields and you have potential Capital Gains on your side. I think the stock works its way higher i know prologis they are a phenomenal company. I dont view it as that cheap or an ebitda basis. Thats not how these things are measured its high quality. They are the ones that you go to for the Grocery Stores and the at Home Delivery for the restaurants. Their business is bad there. Its manging up for it elsewhere. I think its phenomenal. In terms of Small Cap Value, yes, it has performed. I dont know if it will or not financials which make a part of it, i dont think are going to form for a bunch of reasons i mentioned. Lets keep in mind that its not going to be another 15year period and you should have balanced portfolio growth will continue because of the trends those trends that have pushed Small Cap Value are now different trends thats why i think they will continue to perform. Value stocks are not cheap airlines are looking at bankruptcy how is that cheap because the stock prices are cut in half or three quarters a lot of those stocks have ripped off the bottom in the quarter. A month to date american is up 26 delta 12. 5 and united 23 bring in mike mayo hes managing director at wells fargo security size up whats ahead for the banks. Welcome back its nice to see you thanks for having me. This is a big deal this week with the stress test were looking at the second half im looking at a ten year. Is there a good picture to paint today for the banks. The fed stress test is pretty stressful. It assumed a one third decline in commercial real estate. A onehalf decline in the stock market and after that, the fed stress test showed that most banks are resilient enough to still pay their dividend and all banks exceed the minimum it shows whats under appreciated about the u. S. Banking industry is the resiliency these are sobering times we expect loan losses to increase two to three times from where they are now but banks can absorb those losses and still support customers and most banks will pay their current dividend level. What about the ten year now that hurts Net Interest Income thats in our models thats not new news. Whats exciting is that the Bank Dividend yield is 4 and the tenyear treasury yield is 65 basis points thats the widest spread in history. Scott, what i would tell you is take your money out of the bank and put it in the highest quality bank stocks and get that 4 yield its not new news but what if it remains constant news or rates even go lower as the reopen and the snap back to whatever normal is is uneven its painful to earnings. We had earnings held in first quarter. Well have earnings held in the Second Quarter where you have the full impact of those lore for longer Interest Rates. Thats why we recommend the more diversified financials the largest banks have half the revenues in fees especially Capital Markets which are going well they have more levers to pull when it comes to expenses and Digital Banking is taking off in spades if anything these last two months have accelerated the technology planned by two to ten years. The expense levers can help mitigate that revenue pressure which is there from low rates. Michael, you have a question considering that goldman is on your list and its at the very top of mr. Mayos list i think mr. Mayo is a genius when it comes to goldman of course, he agrees with me my question is well have another round of these stress tests coming up in the fall. A lot of people are expecting they will be a lot tougher banks are encouraged to sort of keep money to fortify their Balance Sheets and not go out and lend it. Do you expect tougher results in the fall how will that play out among the banks on your list in. These are Uncertain Times the fed will come out with another fed stress test at a time to be determined with assumptions to be determined its not clear cut among the banks, Goldman Sachs has less than one tenth of thaer revenue in traditional lending the big risk is credit losses and low rates. When it comes to the new capital rules for the fed, worst in class among the large banks is Goldman Sachs they dont like to be worst in class. I think that results if higher earnings were close the high on the street for earnings that get reported for july 15th were 40 above consensus. Goldman needs to restructure restructure its Balance Sheet and reduce some of their assets. They have a track record for doing so the other thing they need to do is contest those results from the fed. Boy did the fed come down harshly on Goldman Sachs. They probably should contest, appeal over the next 15 days the bottom line is Goldman Sachs needs to dance. You know the ceo is known as dj sol. This dj needs to start dancing and dance to make the new capital rules set by the fed i think that will be good for investors. Before i let you go, i dont want to put you in a corner and get you in trouble if you cant answer, i fully understand because you work for Wells Fargo Securities the decision by wells fargo to cut the dividend from 51 cents, we dont know what the number will be. Are you able to answer that question and do you have a guess . Yeah, scott, im not i love working at Wells Fargo Securities ive worked at eight different brokerage firms. I havent always changed out of choice because i try to be independent and i appreciate you having me on your show when we look at the rest of the industry and the pay out ratios, the payout ratios like banks pnc and bank america, we feel very good about those four banks. If you want yield, get that 4 yield, thats where we would go for yield. Gi get it josh brown, youre up. Hey, mike its good to see you the rise of Digital Banking, Digital Wealth management, now the insurance start ups like lemonade coming along. What advantage, if any, do the incumbent banks that youre talking about have in this coming world what makes incumbent bank have an advantage versus a competitor who gets funded in Silicon Valley comes along and is offering the same service for lesser price and is better at finding new customers online why would Digital Banking be a catalyst for goldman, wells or anyone else in your coverage universe im so excited about being a bank analyst during this transformation this is 30 years in the banking. This is the biggest banking transformation in history. The change has been forced by the bpandemic customers have been jolted out of the branches especially older customers, Small Businesses have been forced to use Digital Banking and the best players around are really bank america and jpmorgan youre trying to create something new. Youre going ahead and impacting tens of millions of customers immediately. You have banking charters at these banks. You know they are safe you have existing customers and you have a lot to spend. Youre spending over 10 billion a year with all the expense control taking place at the banks now, the one area that the largest bank still look to invest in is technology some of those players have had problems recently. Tha theyre not quite add safe its nice to be with the safe, big banks. When it comes to banking, goliath is winning you see that not only in the resiliency and the Capital Markets but you also see that in the Digital Banking. Mike, i got to let you run. I have some breaking news at the bottom of the hour i need to be there for that. Well talk to you soon fedex is getting ready to report its earnings after the bell as ubs points it out last week, margins for the company have been under pressure for several quarters now this is due to the roll out of its six day and seven day service and the loss of amazon as a customer. Shares have been trading in positive territory all session fedex poised for its best month in a year. The best quarter since 2016 up 14 . That said, its still down about 8 for the year which is slightly worse than ups which is down 6 scott, i do believe fedex is one of michael farrs stock picks for 2020 it is it is talk about running into a fan blade. You have the rest of Core Companies out there. Johnson and johnson north of 20 times earning. You think about the commercial airlines arent flying as much fedex has figured this out fedex is here for the long term. This is the kind of company when you buy it out of favor, its going to come through. Its one i like and im very happy to own it. I think it will make me a lot of money over the next few years. I dont know about the next month. I never know about the next month. Next few years, i want to own fedex. Pete, you own ups instead why . I like the fact they have the domestic and ground delivery it gives them an e commerce advantage. They trade at a very great the valuation of this company is fair and you have a great dividend yield theres a lot of things going on i lieke both companies. Ill go with u. P. S i love fedex but u. P. S. Has much more upside at this point. Yeah. Interesting. Steve, if you had to pick between the two, which would it be i did i own u. P. S. Its pretty decent size position xpo, i own that. Thats in the same space u. P. S. Management has been a lot steadier while fred smith, phenomenal ceo, theres some calls for him to step aside. The last year they missed three of the last four quarters. They have to get a better grip on their business. I like their exposure to amazon which fedex kicked out allowing u. P. S. To raise prices, which they have done you have a good perfective on the broader industry the Toll Brothers upgraded to out perform today at kbw price target increased to 40 bucks. Are you positive on the Home Building space i think generally speaking you could say that youre going to have this tail wind where household formation just purely on demographics, forget about the pandemic, it was getting into the right place and now the pandemic does add this layer of people looking for more space people looking for homes large enough to accommodate a home office which youll not be doing in an apartment. People just generally realizing its not work from home. Its work from anywhere. Employers being more accepting of the fact theyre not going to see every one that works for them five days a week. I think thats secular i dont think were going back to the way things were even if there were a vaccine at 8 00 p. M. Tonight if you agree with that take then you want to look at things like toll i prefer pulte i prefer some of the other names in the space and if you want to own them broadly, i think the ibt looks good too megan, let me get a word and pete i want to try to get into unusual activity before we have to go down to d. C. I would say on housing, i think it is a secular story but in the shorter term were a bit more cautious. Were concerned not only about a second wave of the virus but a second wave of layoffs as you approach the period where ppp loans can be converted to grants and those companies are free to layoff excess workers they dont need. Also the deadline for airlines that is not a great set up for people to be making a gigantic purchase like a home i think that will feed its way into some modest sentiment for Home Builders over the shorter term i appreciate that if we can get a split screen of the room down in d. C we are waiting on the treasury secretary of the United States along with the fed chair theyll be testifying in that room right there on the state of the recovery we already know from the prepared remarks what the fed chair is going to say today. He is going to say that the economy has picked up sooner than the central bankers had expected but that does come with some added risks he is pointing to the surge in new covid cases that we have seen in some places. Ill read a quote from the prepared testimony that he will deliver. We have entered an important new phase. The fed chair will say and have done so sooner than expected this bounce back in Economic Activity is welcome, it presents new challenges notably the need to keep the virus in check the room is filling up dr. Anthony fauci is testifying today in another room on capitol hill where he says and im quoting here, he would not be surprised if the u. S. Has 100,000 new coronavirus cases a day if this does not turn around it could get very bad. Hes alluding to these outbreaks that we have seen in several southern states. The state of florida and texas which have been setting records. California, also remains a hot spot put into context in the last couple of weeks were seeing about 20,000 new cases every day. That number has ballooned over 40,000, approaching 50,000 a day in some places but dr. Tony fauci sounding an alarm today if we dont get this under control, in his word, you could do 100,000 new coronavirus cases a day and you may recall that dr. Scott gotley said you could have laugh of the u. S. Population infected with covid19 by the end of the year given the pace that we are on. Thats more than 160 Million People if we continue to pace that we are on for the virus well take you to capitol hill live they are starting to fill up the room pete, do you want to do unusual while were waiting here how about cloud flair they were buying the july 37 calls. Now with the stock at 35 they are buying the july 40 call. Paying up about 80 cents wendys is one of these names thats hit on multiple o kccasis in past. They are buying the july 23 calls. Very inexpensive options give you a shot and stock was trading about 21. 50 at the time. Two really opposite types of names but a lot of unusual option activity hitting all over maps today those two stuck out for me michael, weigh in on the broader picture. I toeltds yld you what dr. Faucs suggesting where we could go we had had these hot spots of late the market hasnt paid that much attention except for maybe a day or so. As the virus data come out and they look bad, markets dont react well because i think the virus reminds us of the unknown. That we really dont know what will happen. We dont know how the fall will play out we dont know exactly whats happening with the economy, with the reopening and whether the data will continue to improve economic data, whether job gains will turn around i think we are facing that unknowable unknown through the fall and thats why i think a more conservative approach to investing and thinking about that core along with some things that are more opportunistic that meghan and steve and josh and compete have complained and given some great ideas i think its important to say we dont know how this will play out. Lets not stray too far from the chairperson because the music could stop at any time we just dont know the fed chairman will reiterate some of that yeah. Kayla with help us walk up to hearing at the bottom of the hour as the room is still filling up we know from the prepared remarks what the fed chair is likely to say. We also know that the last time that the fed chair was speaking publicly after fed day in News Conference there that larry kudlow the president s economic adviser said mr. Powell should lighten up a little. Tale of two messages today one from the cabinet secretary looking ahead. Prepapered testimony. You have chair powell talk about the outlook for the u. S. Economy being extraordinarily mentioneds by the virus the prepared system from the treasury secretary focuses on the better than expected may jobs number. Better than expected retail numbers. 80 of private businesses have reopened focusing on the positives in the economy the one thing youll hear both of them say is there will be more stimulus needed they will talk about it in a different way. Expect powell to say that the fed stands ready to do anything that congress and the administration needed to do because the fed doesnt necessarily have negotiating power in the role of what this new stimulus should look like. Chair powell said the fed will act with whatever authority it is given it will stand ready to put wide ranging fire power behind this economic recovery. On the flip side, youve had hear mnuchin saying targeted stimulus is needed look for him to talk about the 130 billion plus dollars that is left over. The irs will pursue of the tax delay beyond july 15th those are some signals, some action from that wing of administration that they believe the recovery is going better than expected even despite some of these hot spots that have broken out we also expect them to talk about the short term, medium term and long Term Economic response short term being the stimulus direct payments issued this spring medium terms, the fed trams that have just been getting under way in recent weeks and longer term, any potential payroll tax holiday and infrastructure plan and a regulatory relief. That is how were expecting these buckets to fall when they are pressed by lawmakers for the upcoming two hours appreciate that thank you. I gather its going be virus versus vaccine news. Absolutely. I think that we have a bit of a race between the vie ris and a vaccine. In the obvious sense but in the sense that the recession wheels have been put in motion for the economy and if we arent able to get the virus under control an make people comfortable, theres a fear factor as were looking at activity. Its tapering off in some of those hot spot regions of the country but in areas like the northeast that are not seeing a take off its just that people are scared fwheed to get the problem on the vaccine so we can halt those normal channels that happen in a recession with bankruptcies. People being laid off and just a decline in Consumer Spending that will be the story and theres obviously some policy risks. Good point there that you make we havent really discussed that, at least today of all the things in front of us as we will hear from the two gentlemen here on hill and you have fauci in another area speaking. Gotley to take into consideration too and by the way, not that far away either from an election i think its not realistic to expect a trillion dollar infrastructure teal or anything like that so close to an election why would anyone from either of the parties really go out on a limb to help each other. I know that sounds cynical come on. I would just say that. The second portion of this is how much is the market already baking in bidens lead i find that question to be really difficult to answer on a day by day basis i tend not to formulate Investment Decisions based on it i do think its something in the back of every ones mind it will be more so with every passing day. Stocks will move on election headlines soon do you think the market starting to factor any of this in doesnt seem to be yet. Bidens lead according to Washington Hill capitol loblyists, he is way ahead in the vegas polls. It does seem this election seems to be joe biden to lose at this point. Wall street is not going to have a really favorable reaction if that left wing agenda and those negative attitudes toward wall street banks and investment banks continues and is seen as being embraced by a new administration if theres a blue waver that takes the house, the senate and the white house. Steve, what matters most to the markets in the months ahead . If you had to pin one thing down we can get over some hurdles as long as they dont get too big clearly we wont have vaccine until the first quarter. We may see more data coming out as we get there. If we see continued spike, continued resurgence, that will pressure the market. On the other hand, if they get into trouble, market will move higher the election will start being more front and center and the base case about democrats winning the presidency and taking over the senate and that question of the market, i think its really misplaced. Its Interest Rates that matter. The president has very little to do with it if they roll back taxes and put it to the right place like playing down the deficit, thats not bad thing either meghan, you are underweight u. S. Equities. Thats interesting thats right. Were underweight equities overall. Were trying to have a bit of a bifercated portfolio again, the underweight u. S. Large cap is on the idea that the other parts of the world are a bit ahead of us with the virus. Their recovery has already started and maybe a little more robust just given the spread that we have here. Then theres also a bit of the valuation concern. That is one area that we expect to lag in this recovery even for the economies that are bit further ahead. Were not overly enthusiastic but on a relative basis, a slightly higher position thats a live picture right there of the fed chair hes getting ready to tlifr his remarks. He is wearing mask as you can see. He is delivering these marks quarterly as required by the passage of the relief bill he and the treasury secretary must do this quarterly it looks like they will begin with their prepared remarks with the fed chair. Ill walk you right up to it we have entered an important new phase and have done so sooner than expected. Hes expected to say the bounce back is welcome, it also presents new challenges. Ill take you to the room. Prohibit attendance in more than one virtual proceeding at any given time this hearing will be live streamed and available to the public for viewing if you have any technical difficulties inform Committee Staff as soon as possible fo our awareness so we can get you set up with tech support and get you back on. Are there any last questions before we go live . Okay then i will turn it over to the chairwoman to start the hearing and to Start Recording the econocommittee will comeo order. First, i want to thank secretary mnuchin and chair powell for your patience while we wrap up the recent of our votes. I appreciate that there may be a vote called during the hearing i plan to continue the hearing if votes are called. Im told by my staff that both you have have agreed to be here for two hours from the start of the hearing. I thank you. Without objection, the chairs authorized to declare recess of t committee at any time. I want to welcome all members and our witnesses for the first full Committee Hybrid hearing. As congress breaks new ground with these remote hearings, i want to remind members of a few matters including some required by the regulations accompanying House Resolution 965 which established the frame work for remote and hybrid committee proceedings. First, i would ask all members on the web platform to keep themselves muted when they are not being recognized this will minimize disturbance while members are asking questions. Members on the webex platform are responsible for muting and unmu unmuting themselves. The staff have been asked to not mute members except when not recognized or theres background noise. You may only attend one remote hearing at a time. If youre praarticipating today remain with us during the hearing. Try to avoid coming in and out of the meeting during the question hearing if during the hearing, members wish to be recognized, the chair recommends that members identify themselves by name so as to facilitate the chairs recognition. I would also ask that members be patient as the chair proceeds given the nature of the Online Platform the committee is using be the chair informs the members participating in person enforcing order and decorum, the chair has a duty to protect the safety of members. For u. S. House of representative meetings in a limited enclosed space such as a Committee Hearing room for greater than 15 minutes, face coverings are required accordingingly the chair will treat Wearing Masks as a matter of order and decorum and all members should wear masks. The chair has a strong preference for members to continue to wear masks even while recognized members who do not wish to wear mask may participate virtually through the webex platform before proceeding to the hearing, i have one Committee Business matter. Without objection, two resolutions distributed in advance to all members offices establishing Committee Task forces for the remainder of 2020 are approved this hearing is entitled, over sight of department of the Treasury Departments and Federal Reserves Pandemic Response this hearing is the committees first quarterly hearing required by the cares act for oversight of the various facilities and programs under the act i would like to inform members that our witnesses have a hard stop today at 2 00 i now recognize myself for four minutes to give an opening statement. Secretary mnuchin, chair powell, welcome back the pandemic continues to have a terrible impact. More than 126,000 people have lost their lives in the United States and this past sunday there were 40,000 new cases of covid19 the highest number of daily cases. The Unemployment Rate in may was 13. 3 . Nearly four times higher than last may all of the job gains of the past decade have been wiped out communities of color have affected disproportionately both by the virus and its economic impacts. The centers for Disease Control reports that is june, black and Latin Americans are four to five times likely to be hospitalized for covid19 and half of all black adults are not working during the 2008 foreclosure crisis, we saw a similarly disproportionate impact on communities of color this was followed by an unequall recovery where white households gained the wealth they lost, black and brown households are still trying to catch up we cannot endure another unequal crisis or unequal recovery your agencies and Congress Must do all that we can to ensure that history does not repeat itself so, i want to thank both of you for your efforts thus far. And for the ways that you have worked with me and my members of this committee, including taking my many calls to strengthen the implementation of the cares act. Secretary mnuchin, you have used your authority to provide community development, financial institutions, that is city and minority depository institutions greater access to the paycheck protection program, including by setting aside 10 billion for them to lend to ensure more loans go to small minority owned businesses chairman powell, you have worked with us to reduce the minimum loan size at the main Street Lending facility from 1 million to 250,000 and to extend the length of the loans. You have also brought the eligibility of the Municipal Liquidity facility to increase access to a greater number of cities and towns the cares act has provided important relief to struggling families and communities but as the pandemic has strengthened, so must our efforts. And so with that, i now recognize the Ranking Member of the committee, the gentleman from north carolina, mr. Mchenry for four minutes. Well, thank you thank you all for being before the committee and before these guards we arranged for you good to see your Smiling Faces behind your masks. And but im grateful were able to assemble. This is certainly a large undertaking for thesecond largest committee in congress. And i do want to commend the chairwoman for those efforts so that we can actually have this hybrid hearing i think it shows that congress and our government are still working. Even if we have to do so using technology thank you all for your response and your active response since this crisis began. So i want to say first of all, i believe the fed and treasurys decisive actions prevented the worst of the economic catastrophe. But theres still much work to be done. Its important to remember this is not a crisis that was caused by irresponsible choices by any specific industry or corporation. What weve seen is the impact of a voluntary shutdown of our economy and an effort to save lives. The bipartisan cares act directed both the Treasury Department and the Federal Reserve to stand up responsible programs that would have been unthinkable even months ago and to do so quickly and you hav done so rather quickly now that many of these programs are up and running, we must be forwardthinking to Seek Solutions and return us to the roaring economy that we experience right before the Global Health crisis that means we need to understand the nature of what weve done and what we need to do going forward. We know the pandemic has touched nearly every aspect of our economy. And every family facilities discussed today need to be similarly far reaching and responsive to economic conditions, not political ones and i heard there are a number of programs that have been desired by policymakers to be Company Specific or Something Like that. Thats not the appropriate response nor commensurate with the law. More over, members are going to have a lot of questions about fiscal policy, which i think secretary mnuchin is best fitted to and monetary policy, which chairman powell is best suited to and i think the understanding of that is important for us as policymakers to experience at the beginning of this hearing rather than to hear you defer to one another. Our role in congress is to assess the effectiveness of existing programs. Determine the goals for additional relief, programs and identify the appropriate entity to provide that relief thats our role. Of course we need to access to key programmatic data. I want to commend secretary mnuchin for coming forward with the type of oversight material and massive unprecedented way with the type of loan level data that we requested in congress and to provide that in a transparent way. The thousands of pages of documents that you and your team have assembled for just this committee alone is staggering. In such a short period of time so, i hope my colleagues will use this data appropriately so that we can assess these programs and make sure theyre working. And so i do want to commend you, secretary mnuchin for the delivery of the ppp program so effectively and so quickly it wasnt perfect, of course, but it saved millions of jobs. And chairman powell, i want to commend you. Youve made your word good in terms of action. And that builds confidence in the institution of the Federal Reserve that your words actually are as good as action by the Federal Reserve. So thank you for following through on your word and your commitment so, i think there is positive news in terms of the assessment for this initial response. And i want to thank you for being here the first quarterly oversight hearing under the cares act. Madame chair, on a personal note, i would like to welcome back our friend and colleague, the Ranking Member of the oversight Sub Committee, andy barr, from his family concerns hes been attending to so thank you, andy we welcome you back. Thank you thank you very much. I know recognize the chair of the Sub Committee on oversight and investigations, mr. Green for one minute thank you, madame chair thank everyone its an honor to serve under your leadership, madame chair. The 2019 Home Mortgage disclosure act data were released last week and demonstrate that unequal access to credit on the basis of race and ethnicity remains the norm in America Today this is something that we can do something about. But theres a problem. Many of the people who have the authority and who are in positions to make a difference refuse to even acknowledge that the problem exist. I have the evidence. I have pictures from prior hearings the one to my right ask do you believe that discrimination in lending exists . One person has his hand up he is with the naacp he is africanamerican the four anglopersons on this panel refused to raise their hands. These are the problems that we have to contend with i yield back the balance of my time thank you, mr. Green. I now recognize the Sub Committees Ranking Member, mr. Barr for one minute. Madame chairwoman, before i deliver my opening statement, i rise to a question of personal privilege. Personal privilege be requested. I didnt hear it. Without objection certainly. Thank you, madame chairwoman. As you know, two weeks ago i lost my wife unexpectedly to a heart condition. And i want to express my sincere appreciation to you, madame chairwoman, Ranking Member mchenry and to all of my colleagues on this committee on both sides of the aisle for the outpouring of prayers and expressions of sympathy for carol and her greatest legacy, our two daughters. Your friendship and kindness during this difficult time for me and my family means so much and i thank all of you thank you very much, mr. Barr and now you may take one minute if you would like. Thank you. On the subject thats before us today. Thank you and thank you secretary mnuchin and chairman powell for appearing before the committee today and for your continued efforts to familiaruate the effects of the government imposed shutdown of the economy arising out of the pandemic. Congress acted decisively through the passage of the cares act and other legislation to mitigate the damage to the economy, keep people employed and businesses strong to ensure that the economy can emerge on the other side in a position for longterm Growth Congress directed the fed and treasury to play a Critical Role in the response and throughout the process you both have been decisive and aggressive in using the tools at your disposal and have been incredibly responsive to congressional concerns. Youve made appropriate adjustments, including several that ive dis youre mute and they cant see you right now. Each of you personally and elements of treasuries in the feds resfons to the pandemic that could still be improved or adjusted to honor congressional intent i look forward to talking to you about those today including and especially in commercial real estate look forward to discussing that today and again, thank you, both of you for being here today. I yield back. Thank you, mr. Barr i want to welcome todays witnesses. First, we have steven mnuchin, secretary of the treasury. He has served in this current position since 2017. Mr. Mnuchin has testified before the committee on previous occasions and i believe he does not need any further introduction next, we have jerome powell, chair of the Federal Reserve bank system. Mr. Powell has served on the board of governors since 2012 and is chair since 2017. Mr. Powell has testified before the committee and i believe he does not need any further introduction so without objection, your written statements will be made part of the record each of you will have five minutes to summarize your testimony. When you have one minute remaining, a yellow light will appear at that time, i would ask you to wrap up your testimony so we can be respectful of the Committee Members times secretary mnuchin, you are now recognized for five minutes to present your oral testimony. Thank you very much mr. Barr, let me express my condolences for your loss. Chairman waters, Ranking Member mek henry and members of the committee, im pleased to join you today to discuss how the Treasury Department and the Federal Reserve are working together to provide liquidity to the credit markets, business, households as well as state and municipal governments. We remain committed to making sure that every american gets back to work a