>> jpmorgan. >> abercrombie. >> even with the europe exposure? >> because of that. eight times earnings. cheap. >> that does it for us. "power lunch" picks up the ball right now and has more on the fed decision. "halftime" is over and "power lunch" and the second half of the trading day starts right now. the decision is in. the fed-ex tends the operation twist program to keep lower interest rates intact. the news conference in the next hour. what is the fed chief mr. bernanke going to say? how will he say enit and what will wall street say about what he says? the first dow 30 ceo to respond to the decision. the ceo of caterpillar, the stock, hiring, the dollar, exports, the global growth story. and speaking of a story, this is one whale of a story. wait until you see what our kate kelly has found out about the

trader in the center of the jp morgan trading mess. he's known as the whale. all of that is straight ahead. we start with my co-anchor at the ncse, brian shactman. >> look at the dow. almost positive in the average now down five points. we were down as many as 75 when the announcement came out. s&p and nasdaq off of the lows. you have gold was down about 28 bucks a few moneys after did decision came out. crude bouncing a bit off of the lows and really the theme trying to dissect it all. let's bring in mr. pisani. to me it seems like we're where we were yesterday. we have qe3 on the table and twist is extended. >> that's good point. the markets first drop, put up the dow and s&p was we didn't see qe3 and the statement's sell. but then people took a few minutes to read the statement carefully and led the grownwork for qe3.

employment growth and fighting inflation. what about employment growth? growth in employment slowed in recent months. what about inflation? declined. what do you want? a road map? the fed said the groundwork is there and i expect at the press conference of hins of mr. bernanke. >> quickly going to steve. you don't think that the market was disappointed? >> first knee jerk is no qe3 and then selling off. the groundwork is there. >> let's go to steve liesman with reaction. this was the consensus view, not the home run others thought. what are some of your observations here? >> i think it's more than the consensus view. there was no actual, you know, to a decimal point consensus. i heard guys talking about extending through september. we got an extension through the end of the year and in fact maintain about the same average pace of twist as they've been doing. about $50 million a year.

they buy long-term securities to drive down longer term interest rates and writing $44.5 billion a month and keeping that pace. this is backing up what bob is saying and not all the way where he is. employment was changed to slower growth. household spending rising at a slower pace. the only good thing in it is inflation decleaned and growth it says will pick up very garage quully. so that's like a step back. they definitely downgraded the economy. enough for qe3? i think two things, bob. they have to back off a little bit in terms of more downgrade of the economy. we're gong to see at 2:00 just how they backed off. remember, their 2012 forecasts for 2.6% growth and very hard for them to hit that. look for a serious downgrade of 2012 growth and also the incoming data, bob. we need that confirmed for additional qe3 from here. >> steve, stay with us.

we'll bring in vince reinhart right now. he headed the monetary division at the federal reserve. vince, you were expecting more. you thought that we would get qe3. what is your reaction? and given the fact that the fed apparently is cognizant of the political cycle we are in, have they missed if they wanted to make a bigger move their window to do so? >> you can almost hear that window closing. the fed took the path of least resistance. there's pretty widespread expectation they do something, in fact, because they have a forecaster already short of their goals. and the data coming in to the meeting have them marking down further but they did just what they needed to do so not to completely disappoint market expectations. why'd they only extend it through the end of the year? why no mortgage backed securities purchases? keeping a low profile. >> does that then -- what pressure does it put on mr. bernanke to clarify things when

he comes out at the news conference in an hour or so from now? >> i think he can only reveal, you know, his committee's views and must have a pretty divided committee, resoigned to a sub pr outlook and not confident that they have much further traction in the tools of poll is. >> do you agree with that, steve? >> yeah. i agree. and i was a little bit surprised of vince's call, i have to say, because i didn't think he had the committee with him for qe3 and i didn't think the data was there yet, although you could make a justification based upon where we may be going and be firm or have a deep-seated belief the economy is going south from here. i think he did what was incrementally the easiest thing to do, although i think it does maintain the status quo which the market should be happy about and now we have metrics to see whether or not additional easing needed. >> does it indicate to you,

vince, that the fed is acting regardless of what happens in europe? because a lot of people were also pegging a qe3 to the fact that europe didn't resolve things, that the spanish bond yields moving up. is the fed acting simply based on the data from the u.s. regardless of europe? >> so the fed is acting on its forecast for the domestic economy. that's its responsibility. that's its goals, maximum employment in the stable prices in the u.s. europe affects it indirectly because european risks are one reason the forecast is sub par. europe uncertainty is weighing on global markets. that's why we won't have sustained wealth creation and why we're not growing above trend. i don't -- the fed doesn't draw a line at the border saying things outside past this line don't matter. but they have to pass through the forecast. they have to matter for the u.s. economy to warrant policy action by the domestic central bank. >> vince, isn't that another run

for the fed not to go all the way with qe3 today and may get ecb action and on the eu front in terms of banking union, as well as from the bank of england and this kind of does shift the ball a little bit towards congress to resolve the fiscal cliff issue and doing qe taking the pressure off of them. >> yeah. but this doesn't seem to be a congress that responds to encouragement to act a little better, does it, steve? i take the point. i think that -- but is there really a reason to hold in reserve your policy because you think things might get worse later on? to have an instrument somewhat ineffective, the policy recommendation is front load the accommodation so when the shock comes, the economy's on a stronger footing. >> all right. vince, thanks a million. steve, we'll see you throughout the afternoon. brian, back the you. >> let's get market reaction. we are up across the board.

gold's down only 13. oil down less than 2 bucks. what is going on? >> they keep stimulating and stimulating. artificial. i'm not buying in to it. not seeing volume. i think we get this rush and then people start to sell it off. we have had qe1 and then the market collapsed. qe2, ended that the market collapsed. it is just wanting, wanting, wanting. market's calling for more and then they have to let it readjust. they have to stop the foolishness and let the market readjust. >> if that's self evident then why do they do it? >> because listen. we're going no n to an election season. the last thing to see is the u.s. economy getting weak. looking at the macro data. the first quarter flat to positive and now flat to weak. it continues to get weak every macro report we get and last things the democrats want to see is a market rolling over and therefore they have extended it enough. didn't give it the real blast that everyone would have started

to scream partisanship and just enough to hold it here and i think actually investors will smarten up and see the market retreat. >> leads me to the question, this is the pop, a short-term pop. how short term? when's the downturn if your thesis is right? >> i think over the course of moving in to the summer. right? today the market ends low and moving past june in to july and the summer, macro data points continue to be weak and then money off the table and people realize that the economy is weaker than they tell us it is. >> right. we are now up 35. this basically forces their hand to do qe3 at some point? >> he can't do it now and too close to the election and not able to do it then. the only saving grace of qe3 is europe falling off the cliff. that's how you get a good bazooka. >> this is a traders' market. what gets investors comfortable doing anything here? >> they lost confidence in the

market, right? we have seen it in terms of lack confidence. investors lost confidence. they won't get confident until there's clarity on washington, tax policy. >> could be a while. >> could be. unemployment, right? >> kenny, thank you very much. back the you, sue. >> good luck with that clarity. jp morgan, more clarity here. getting progress on the troubled trades that caused at least $2 billion of a loss for the company. kate kelly is live in new york breaking the details for us all day. hi, kate. >> reporter: hi, sue. thanks so much. so the word this morning is jp morgan is out of 65% to 70% of its losing long position in a credit derivativesen deposition that tracks corporate bonds. this is not the only trade in the london whale portfolio uncovered by reporters. but actually, copped to on may 10th by the ceo jamie dimon who said they saw at least $2 billion in losses and that this was a poorly executed, poorly

monitored trade undertaken by an office called the chief investment office or the cio. shortly after that, he parted ways with the head of that office and replaced her with matt zames who was the co-head of global fixed income at the time. since he took over about three or four weeks ago, they have gotten to work on unwinding the trade and made significant progress. there are other pieces to the trade. not just the long position in the cdx, of course, but the position was kind of the culprit i'm told in terms of where the biggest losses were seen. the firm is not talking about how their losses may have ballooned but the market conditions within the cdx market gone against them at least in the initial aftermath of the may 10th announcement and expensive to make the exit and as a result people thought it would take months or years in order to stave off further losses but seems like they can accomplish a

lot in the last month and it looks like they may have some of the worse pain behind them. however, the issue remains srks there a management issue at jp morgan? they have someone in the seat they like right now but taking the eye off the ball in this case, they can't perhaps manage a bank of this size with all of the different divisions and trades going on. of course, sue, jamie's been weathering the very questions on capitol hill in the last week or two and probably not going away. so good news that they've been able to exit this thing at least in large part but bad news if you think about the fact that it really does seem like a management oversight. >> all right. kate, thank you very much. looking forward to more on that later today. big news on the state of car quality after a quick break here on "power lunch." plus, congress takes up the facebook trading problems and we are counting you down to ben bernanke's big news conference at 2:15 p.m. eastern time. but before the break, a look at five big names on this fed

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welcome welcome back to "power lunch." i'm bertha coombs and watching chip stocks, strong in a flat market all day. we are seeing some moves higher there, extending the gains here this afternoon. applied materials among the best performers.

hiring a new president, gary dickerson, the former coo over at kla and reporting to chairman and ceo and an upgrade of barclays and good reviews on that hire. brian, back over to you. >> thank you very much. brand new information out on the quality of the new car s of the lines and good news for manufacturers and consumers. phil lebeau is live in chicago with the details. >> we have never seen the quality of vehicles sold in the u.s. at a better level. this really shows what we are talking about. j.d. power tracks the problems. problems down 5% year over year. the bad news, let's get to that first. the biggest problem remains in-car entertainment, communication systems. report shows that has spiked about 45% in the last 6 years, up 8% in the last year. the good news, however, reporting new cars have fewer mechanical problems and japanese models in particular in the

latest report ranked highest in 11 of 21 segments. what are the top five brands, lexus, jaguar and porsche tying for second, cadillac and honda. go to cnbc.com to check out the full list. shares of tesla up today and have been on a move the last month. latest move, goldman sachs says that near term price target of $50 for shares of tsla why the stock up more than 5% today. that's delivered for the first time on friday. back to you. >> thanks, phil. appreciate it. listen. up 23 points on the dow and mr. pisani with us. not just about the fed. >> what's going on in europe is very important. i think in the last 15 minutes or so this rally going in to positive territory largely out of headlines of europe. reuters is reporting the chancellor of germany says they

do include the possibility of buying sovereign debt. this is a very major topic of discussion here. >> right. >> about whether it was, in fact, included and do without a treaty change. she side there's no concrete plans for the efsf to buy bonds at this time but could be done. i think that's a mayor factor here. >> qe for the whole euro zone, right? >> well, not qe3 but it is some kind of support for sovereign debt over there and a major issue right now and remember the stability of europe is important. is now we have the fed laying the groundwork potentially for qe3 and miss merkle talking about the possibility of the bailout funds. >> first question comes to mind then, is that coordinated action? >> no. it is not. it is not a european central bank action going on. >> coordinated maybe. >> they're the bailout funds -- >> right. >> -- for europe.

operated independently -- >> the timing, interesting to get the comments of the fed and merkle comes out -- i'm just -- >> i don't think it's a coordinated statement, no. >> appreciate it, bob. see you in a little bit. the fed making the move today continuing the twist program. the news conference at 2:15 eastern p.m. time and almost bigger than the announcement itself. coming up, the first dow 30 ceo to react to the dow today. the ceo of caterpillar coming up. now that's like sunblock before or sun burn cream later. oh, somebody out there's saying, now i get it! take beano before and there'll be no gas. i'm making my money do more. ♪ i'm consolidating my assets. i'm not paying hidden fees or high commissions. i'm making the most of my money. and seven-dollar trades are just the start. i'm with scottrade.

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welcome welcome back to "power lunch." apparently it is tea time. starbucks, seattle times reporting that the famous coffee roaster opening a tea store near its flagship in seattle. they're going to sell under the tazo brand. they're going to have a tea bar where customers can blend their own tea mixes, i guess tea sandwiches. this following the fact that starbucks recently also bought a juice brand and they also bought that french bakery, sue. so i guess maybe little petit fors with tea. i'm all in for tea time. >> reading the tea leaves if you will today, bertha, because t fed came out with the decision as you know. it stands pat. extended operation twist. in a cnbc exclusive, the first dow 30 ceo reaction of

caterpillar. doug oberhelman joins us from capitol hill. he spoke on russia and trade. welcome, mr. oberhelman. did the fed make the right move given the way they said that the economy is not performing the way they would like to see it? would you have liked to see them do more? >> the economy is not ber performing as we would like to see it. we are in recovery. all of the indicators we watch and we watch many, many, many different kind of indicators, housing starts, money supply, you name it, still in a growth mode. lots of risk and lots of cautions out there but the fed did pretty much what was expected. i think what they did was just about appropriate for today because we are still fwhebl an economic recovery coming out of a very deep recession. >> you -- >> we'd sure like to see a stronger recovery than we have and there's lots of issues in

the way of getting that done. >> what do you think is the key issue? is it jobs creation? >> well, it's an entire plethora of thing that is are in the way right now. the risk and uncertainty in our own economy. gridlock in washington. i'm here in washington, d.c. talking to waying's means committee drumming up i hope a way to increase jobs and exports. we need to do that. but we have all the uncertainty around the budget, the deficit. next year's tax increases that happen as scheduled and by law today so there's of uncertainty and a draw on the economy and seeing the anemic recovery we are. >> you're down on the hill to talk about rush why and trade. russia will soon be admitted in to the world trade organization. and you would like to see certain amendments repealed back which you say will create more jobs for workers here in the united states and more exports to russia. which is, of course, one of the

growing, emerging markets. >> well, that's right. as you say, rightly so, russia will join wto this summer. it's going to happen. it's already in process. it's a done deal. we need some amendments, specifically jackson vanick amendment and permanent normal trade relations with russia in order to join the wto and engage them as about 150 other countries will do. if we do that, our company will see an immediate reduction in tariffs and sales to russia for mining trucks built in central illinois and hiring a lot of hourly workers and employees at illinois. we think we have to have this increase jobs, exports and join the world trading system and puts russia on the same playing field with other countries in the world today. >> if you look at russia versus, say, asia and europe, can you divide it up as to which is the

more important region for your company as for growth of your company and how has the debacle in europe impacted your bottom line? >> specifically russia is a huge market. we have exported from illinois about $2 billion of goods from our plants. that's a fairly low number given size of the economy and given when's going on over there. we have lots of competitors, asians selling in to russia, doing things we like to do. this kind of normalization of trade and joining wto will help us. we see russia as a tremendous opportunity over the next ten years as they upgrade and replace obsolete equipment there for years and years. they want to join wto, join the world economy. as they do that, they require lots of goods and services. >> what about the situation in europe? it's kind of a two-pronged problem. one, you have the economic

problems that they're facing, the debt problems that they're facing. and at the same time they also have a weak currency and the dollar is strengthening so for a company like yours doing exporting, it's a difficult situation to navigate. >> well, we're kind of used to that with europe. we have seen the ups and downs of europe over many decades and europe is a risk to be watching and certainly this summer and keeping a close eye on the countries. but when it comes down to it, we build products in europe to compete in europe and stay in europe and we offset the sales and the cost to some degree. we're pretty well balanced around the world in terms of dollar exposure and not so worried about that as i am an event politically motivated i think in the case of europe to spill out beyond the european borders and cause havoc for the rest of us and i think the biggest threat to worry about right now. >> all right. thank you very much, doug ol ber hell man for joining us. the countdown to the metals close is coming.

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welcome back welcome back to "power lunch." gold prices whipsawing in to the close. i saw down 28 and then i thought positive. now down about 7 bucks. what gives? >> we heard the fed statement an saying they're not doing anything as far as qe3 is concerned. right now extending the operation twist. same thing with silver and gold and copper dropping and then equities turn positive we saw a turnaround happen in the metals complex, as well. so right now here gold closing and settling not too far from the negative side after dipping down to 15.90 and that was the session low hearing that announcement from the fed tracing equities and the euro. taking a look at silter have and copper, selling here right around the flat line, too. so not a bad end all in all after we saw all of that whipsaw effect and settling out here. brian, back to you. >> thank you. let's get some of the trading action. bob pisani joins us back here.

>> try explaining this day. >> up 12 and so many forces involved it's not a boring 12. >> very interesting to follow europe and the, of course, the federal reserve. three legs to what happened here. put up the dow jones industrial average and see what happened. number one, disappointment of no specific qe3 program announced and then dropped and said, gee, they're laying the groundwork saying employment slowed and said inflation declined. there you go. that's the groundwork and then 1:00, angela merkle said the bailout funds do include the possibility for buying sovereign debt although she said no concrete plans now and there's a point of further german concessions. that's the point. there have been some point of changes in treaty rules or things like that. she's slowly starting to back off. another little bend back.

>> a first of many. now the forecast coming up and then the news conference. i mean, do you anticipate some more violent reactions or is this sort of where we'll be for the day? >> he's handled this very, very well. he'll clearly indicate they stand ready to act. stick by the statement. he'll say employment has slowed. saying inflation declined and going to say these are our mandates and going to point out, going to -- i don't know how much more to hold your hand and say here's where we're at right now. the groundwork is there. i agree with your point about politically it's more sensitive for them to act at this point. >> going qe3, the later, the more it smacks of -- >> you can see the confused reaction in the markets like gold. inflation concerns, gold came back up. >> thank you, bob. appreciate it. news on phone space samsung, every day a new launch. this time, the android galaxy s-3. the iphone's biggest competition

to date some say and microsoft. jon fortt covering both for us. we have all these debuts. >> reporter: lots of news. well, here we are talking about windows phone 8. the next version of what runs on this device here, the nokia lumina 900. the big deals here, one, the core of windows phone 8 similar to windows phone 8 and they have changed some things about the home screen you see. the tiles when you turn this thing on. downside to all this and announced stuff of nfc, near field communication for data swap between devices. the new software won't work on devices like this that just came out. a little bit of a bummer there. talk about samsung and also this comes out tomorrow. it is kind of a biggest android launch to date of a phone. samsung, the biggest provider and a big player in mobile. this phone is going to be marketed unlike any other because samsung convinced

operators to call it the s-3 across all the carriers. only apple accomplished that up to this point. it starts at 200 bucks. sprint sold out of the low end model already it sounds like. this is a big deal. the biggest competition of iphone. sue, over to you. >> all right. thank you very much, jon fortt. rick santelli checking the action from the cme. going in to the fed decision, the 10-year at 1.664. i just looked over. 1.657. so not all that much movement at this point. we have really been moving around a lot. what are they anticipating at the news conference in a short while, ricky? >> well, we are going in reverse order. in terms of news conference traders think the meat of the voluntariatility in the stateme maybe surprised on the news conference and you sailed it,

sue! you get the prize. look at the intraday charts. the short maturities. threes are around 38 basis points and now 41. so they had volatility as every chart you'll see will have but it stuck three basis points higher. move down to 10s. we saw lower yields around 160 and 166 going in. we shake it all up and now we're at 166 again. 30-years, they were around 279. 275. four-basis point stuck. seems like the long and short end saw it stick in different directions. that's the point of the twist. now if we look at the dollar index, sue, up about ten and then 20 and now unchanged and where did that positive go? it went in to the your ro currency above 127. it was around 126. 5 or so right at the time of the decision. back to you. >> all right. thank you, rick, very much. more reaction on the fed and the bond markets right now from

the next guest, bob michael. 145 billi$145 billion in assets management. welcome back. >> thank you for inviting me you said that the fed chief has some explaining to do at the news conference. tell me what you mean by that and were you disappointed by the fact they extended operation twist? >> i think they took the easiest possible way out of the situation. continuing a program without changing it. i wish it was somewhat different. i wish they had the courage to do something slightly different. maybe increase the size of operation twist to four or 500 billion. maybe include mortgages. maybe do qe3 and i think they missed on that opportunity so i want to hear why. >> what does your gut tell you about why? because if you look at the political cycle, the thinking is they won't be able to do anything more later in the year

because it will be viewed as partisan or do you think that perhaps they see the economy and the european markets differently than the rest of us do? >> well, i think there can really only be two reasons. i think the first reason is there has to be some concern about europe and the fiscal cliff. so, they have to try and keep powder dry. they have to be sensitive to the fact that if things get worse there is something that they can do. and i think the second reason, quite frankly is they don't want to change the reaction function. in the past, they have gotten out in front of the slowdown. they have waited for the markets to tell them what to do and think they're ret cent to change that at this point in time. >> i think the markets were telling them they wanted more but the fed didn't give them more so against that backdrop how do you invest in an environment like this? >> well, i think the one thing that we can take away from the

announcement today is they intend to maintain some stability. we may not get the upward tick to the economy that we want, that ken talked about wanting to see, as well. that's good for bond investors. bond investors like to see that stability and in that environment i have to accept that rates are going to stay low an i want to buy things where we are going to see forced buyers and they're out there. if you look at what banks need to buy now, they're certainly being encouraged to buy agency mortgage debt. 2.5% doesn't excite me but better than 10-year treasuries at 1.58%. >> what about europe? how are worried are you about the situation in europe and the lack of willingness it seems by some countries to take that extra step that might resolve the crisis in a more meaningful way? >> i think it's interesting that merkle came out between the bank of england and the fed meetings

and has announced sort of the implications of the efm andecfs and telling investors europe is not leaderless and that's my biggest concern is if you go back to the engineers of all the bailouts, nine, 12 months ago they're not there. sarkozy isn't there. you have merkle hanging on. it's a long, hot summer. i think that the germans feel they have the upper hand and the peripheral countries feel they have the upper hand, as well. >> the betting right now or the turmoil in the currency markets is the debate over whether the euro zone as we know it and the euro as we know it exists a year or two from now? how do you feel about that? where do you come down on that debate? >> i think it's in no one's interest to see the euro disappear f. you're a peripheral country, you will benefit from aid at some point in time.

if you're one of the core countries like germany, you benefit from a lower fx rate to export more. but i think it's going to take bringing europe to the brink before both sides come to some agreement of fiscal austerity and reform and fiscal integration. in exchange for say, debt mut l mutualizati mutualization. that's the sticking point. >> you will be with us again. okay? >> great. >> thank you very much, sue. also facebook shares today. take a look at how it's trading. down by about 1% at this hour. that bungled i 3o, the backdrop of hearings today on capitol hill about market fairness. kayly is live in washington. >> reporter: hi, brian. it's nothing but an elephant in the room here in d.c. today. both congressmen and panelists sticking to more pressing regulatory concerns.

the first panel concerned of competition and second panel dealt with a tiny facet left off of the jobs act and recently passed an enthat's the tick fee. now, that's a the spread of the bid and the ask on a stock trade and potentially a source of revenue of market makers, brokers and banks and they're saying that they need more incentive to trade small cap stocks and that spread widening that spread is the key to do it. cowan and company, an adviser and the ceo solomon explained why it's so important. >> mostly what we talked about in terms of market structure is more liquidity, using the widening of spreads to induce more people to come in to the market, make more liquidity and write more research, more research means more companies access the market to raise money, raising money means creating jobs in america and the

private sector which we really think is an important thing. >> reporter: of course, even though there's more market makers trading the stocks, there's more volatility and trading more expensive. nonetheless, all panelists on the same page of that policy. we have to see whether it's implemented. guys, back over to you. >> kayla, thank you very much. a long way to go on the controversy. thank you. you remember the dreaded mortgage backed security? a sequel to it may be popping up. find out about what it is before it's too late. if you made a list of countries from around the world... ...with the best math scores. ...the united states would be on that list. in 25th place. let's raise academic standards across the nation.

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chances are, you're not made of money, so don't overpay for motorcycle insurance. geico, see how much you could save. welcome back welcome back to "power lunch." listening on satellite radio, the dow and s&p slightly negative. the nasdaq ligslightly positive. applications for u.s. mortgages

falling from a week ago and refinancing get a bit of a bump. two big other housing developments to get to. jane wells but first diane olick with details on what could be the sequel to the dreaded mortgage back security. pray tell. >> why do you say dreaded? come on, look. we have reported extensively on reaping rewards and how some of the investors are creating reits for the properties to raise capital. now get read did it for the next step in the emerging asset class and the search for yield. tradeable securities backed by pools of formerly foreclosed rental properties. standard & poor's says they have been approached to rate the potential securities. >> clearly an opportunity. people said there's lots of reo properties coming in to the market and there have been a lot of properties over the last few years. what is the best way to finance them? so the next thing then is to say how do you assemble a pool? >> reporter: okay.

so here's how it could work and a mortgage-backed security with the rental streams rather than the mortgage payments providing the cash flow. say you're a big bank or investor and you have owned a bunch of foreclosed homes and renting out. you pool the rental income of the homes based on rent rates and geography in to a tradeable security and then you sell that security to investors. if the homes themselves are eventually sold, well, the investor could get a cut of that, as well. investors, please take note. this rent securitization could require you to look at three components. one, rental cash flows, of course. two, property values. here's the trickiest one. property management. now, several investor groups are already expressing interest but they're clear in their needs. >> from an investor standpoint, what we're looking for on the look forward is more transparency. so whether it's reo or

performing loans, whatever the underlying assets are what we need in the new world is a better, clearer understanding of what's in that pool. >> now, this idea is really in its infancy right now. the folks at s&p say they have to find out if there's government requirements on this and remember the government itself through fannie, freddie and the fha owns these properties. brian? >> thank you, diana. jane wells following the economic forecast focusing on how real is this housing recovery. if there is one. jane? >> reporter: brian, remember what diana just talked about with rentals. the good news in the ucla and forecast is closely-watched forecast believes the housing market bottomed though not in california. foreclosures peaked and a threat to the recovery. the spector of exploding student loan debt keeping them out of the market for years to come and

the quote real drama is the boom in multi-family construction with vacancy rates below 5%. rents growing mid single digits an investors looking for somewhere to put their money. but get this. by 2014 the forecast says rental supply will begin to outpace demand. especially with all of those foreclosed homes. as rising rents demanded by investors in the face of more supply may start to backfire. the american dream of home ownership is comatose but not dead an the wake-up call in the form of higher rents. whoa. back the you. >> that's quite a statement. thank you, jane. appreciate it. all right. the countdown is on to ben bernanke's news conference. see it live here on cnbc. coming up next, more on what the move to keep rates lower for longer means for your stock market investments and bond market investments. [ female announcer ] it's time for the annual shareholders meeting.

♪ there'll be the usual presentations on research. and development. some new members of the team will be introduced. the chairman emeritus will distribute his usual wisdom. and you? well, you're the chief life officer. you just need the right professional to help you take charge. ♪

all right. you know the news now. the fed-ex tends operation twist. leaves rates unchanged. a preview of the 2:00 p.m. press conference and briefing, job

michel and brian shactman and bob piasni yochlt you said this is one of the first fed meetings you recall with so much division from the big names on the street about what the fed should do. >> yeah. i think it is. when you look at should they have moved or shouldn't they have, there are very good arguments for not to move. things are relatively stable. the break even inflation rate they look at is pretty moderate. and they could have said we've done enough. let's wait and see what happens. and even if they did move, there was a lot of division on what they would do. would they include mortgages? would they go to full blown qe? as i said, they took the easiest way out. >> what do you want to hear this afternoon? >> i want the hear why. if he tells me that he feels the fed has done what they should at this point in time, 'hen'd like to see a bit of help from congress on the fiscal side, i'd

be happy with that. but i want the know that. if he tells me that they feel things are improving, i would disagree. but at least i would know. if he tells me that they're ready to act, very shortly, i also want to know that. >> bob, what are you hearing down on the floor of what the traders want the hear from mr. bernanke? >> i can tell you immediately. number one question, mr. bernanke, it is going to be august. you've laid out a groundwork for qe3. you have told us employment is weak. you toll us inflation is under control. would you do it? would you pull the trigger this close to the elections? will the elections inhibit you at all? that's the thing everybody wants the know down here. >> what did you think of pointing out that outside of politics, you know, just the fact, what if they should have just done nothing? >> i don't think they should have done nothing. i think they probably did the reasonable policy response, the one that most people anticipate right now and i think there's an argument to be made that maybe

they need to wait longer and see further evidence and not a strong case still for qe. >> not like headed toward recession. i mean, no one's got recession on the table in these conversations. >> sub par growth may -- in this environment with the things going on globally, the u.s. going notely sub par, that may be grounds itself for some kind of policy action. >> after 2010, i don't think doing nothing was an option. >> that's right. >> i think they learned their lesson and they come back and swallow the pride at jackson hole. i don't think they were going to not do anything. >> what should they do if things worsen or if europe or the united states fails to pick up a steam by just extending operation twist? what would you like to see them do preemptively? >> $500 billion qe3 including mortgages. >> what are the odds, do you think? >> there you go it. the market would like it, bob? >> that seems aggressive to me

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welcome back to "power lunch." shares of marathon petroleum moving up. it was upgraded saying that the efforts to return cash to investors makes it a good thing. back to you. >> thank you very much. oil down 2.50. positive in the dow. positive in the nasdaq. slightly negative in the s&p 500. it seems as if after going down 75 and whether it was the merkle head loons or just the fact that qe3 is on the table and the fact that twist is continuing, we rebounded or maybe we're pausing, sue, before we get to the next step which is the forecast and the news conference and a lot of people obviously waiting to see how bernanke spins this. >> i think that's why you see the 10-year yield basically