unemployed basically we are doing all we can? is this the conclusion that given that balance of factors that this is the most we can expect? >> well, first of all, again, these -- the projections that you're looking at are based on each individual -- these are not a committee collective projection. what they are, of course, is 19 separate participants making their own projections based on their own views of optimal policy. so, for example, it includes those folks who think that we shouldn't be doing any more purchases, and their forecasts are including in there as well. so it's not exactly an apples-to-apples comparison. but it is true that if we could wave a magic wand and get unemployment down to 5% tomorrow, obviously we would do that, but there are constraints in terms of the dynamics of the economy, in terms of the power of these tools, and in terms of the fact that we do need to take

into account, you know, the possibility of other costs and risks that might be associated with a large expansion of our balance sheet. >> darren and then christina and then greg. >> so just following up on that last question. how helpful would it be to see as part of the fiscal cliff resolution some near-term stimulus? the president's proposed that. do you think -- how helpful do you think that would be, and i'll ask my followup now? whatever happened to your southern accent? >> well, on the second one i'd like to think i'm bilingual. when i go home, sometimes it comes out pretty strongly, but i won't try to do that here. so i try to be careful, as you know, not to give views on specific tax-and-spending programs.

i think, of course, obviously those are the province of the administration and congress. the attitude i've taken has been that at a minimum congress should try to do no harm, that they should try to avoid policies that -- that significantly slow or derail the recovery at this point, so i think that's the critical thing, along with the long-term objective of achieving a sustainable fiscal path. now, given that basic -- that basic recommendation, you know, congress can consider variations. for example, if they believe that they can achieve a strong, credible future path for fiscal policy, that would give them potentially some space to do something a little bit more expansionary in the short term, but those are judgments, i think, that congress has to make about whether they can simultaneously continue

supportive fiscal policies in the short term while maintaining the credibility that, in fact, they will be addressing our structural deficit programs in the longer term, and that -- that is i think really a question for them and for their staff. >> over to christina and then back to wyatt, greg first and then back to wyatt. >> christina peterson with dow jones. looking over the past year or several years, how would you evaluate the fed's accuracy in making economic forecasts, and how does that affect the ability to make monetary policy decisions, especially as it's connected to the thresholds? >> well, i think it's fair to say that we have overestimated the pace of growth, total output growth, gdp growth from the beginning of the recovery, and we have, therefore, to continue to scale down our -- our estimates of output growth, but

interestingly at the same time we have been more accurate, not perfectly accurate by any means, but we've been somewhat more accurate in forecasting unemployment, and how do you reconcile those two things? i talked about this in remarks i gave at the new york economic club recently right before thanksgiving, and i think the reconciliation is that what we're learning is that at least temporarily the financial crisis may have reduced somewhat the underlying potential growth rate of the u.s. economy. it has interfered with business creation. with investment, with technological advances and so on, and that can account for at least part of the somewhat slower growth. at the same time though what, of course, what monetary policy influences is not potential growth, not the underlying structural growth. that's for many other different kinds of policies affect that. what monetary policy affects primarily is the state of the

business cycle, the amount of excess unemployment or the extent of recession in the economy, and there i think we've also perhaps underestimated a bit the recession, but we've been much closer there, and i think, therefore, that we've been able to address that somewhat more effectively with quite accommodative policies. that being said, of course, we have over time, as we have seen disappointment in growth and job creation, we have obviously, as we did in september, have added accommodation, and we've continued to -- we continue to reassess the outlook. i think -- i think it's only fair to say that economic forecasting beyond a few quarters is very, very difficult, and what we basically are trying to do is create a

plausible scenario which we think is reasonably likely, base policy on that, but be prepared to adjust as new information comes in and see how the outlook changes. inevitably it will. >> all right. >> greg and then wyatt. >> thank you, mr. chairman. economists have long believed that central banks cannot affect the unemployment rate in the long run. that's one reason you've seen a move towards central banks being given mandates for lowering inflation only. if you explain whether that's consistent or inconsistent with the long-standing view and if consistent, how is it superior to simply having a threshold for inflation only, and would the approach you're now talking be possible if the fed had only a mandate for low inflation? >> well, it's entirely consistent with your view, with the point that you made. so let me just reiterate it.

as we stated, in fact, in our january set of principles, the central bank cannot control unemployment in the long run. i'd add a caveat. there's a little bit of a caveat here which is that very extended periods of unemployment can interfere with the workings of the labor market and so if the fed were not to address a large unemployment problem for a long time, it might, in fact, have some influence in the long-term unemployment rate, but as a general rule, as a general rule, and i think this is the right beeline, the long-term unemployment rate is determined by a range of structural features of the economy and a range of economic policies and not by monetary policy, so that being said, what our -- what our

6.5% threshold is, as i said in my opening remarks, it is not a target. what it is is a guidepostn terms of when -- when the beginning of the reduction of accommodation could begin. it could be later than that, but at least by that time. no earlier than that time. so it's really more like a reaction function or a tailor rule, if you will. i don't want to -- i'm ready to get the phone call from john taylor. it's not the taylor rule, but it has the same feature that it relates policy to observables in the economy such as unemployment and inflation. so what it's basically doing is how our policy will evolve over time as the economy evolves. it has noimpcati implication th will affect the unemployment

rate. we think it's somewhere between 5% and 6% according to our projections. we are a dual mandate central bank, and providing information on both sides is more helpful. so i -- i understand your point, but i think that it's -- that providing information on unemployment and inflation gives more information to the markets, to the public, that allows them infer how our policy is likely to evolve. >> wyatt. >>. [ inaudible question ] >> so long as the inflation condition is met, that's correct. >> wyatt and then josh. >> mr. chairman, wyatt andrews, cbs news. i'd still like to hear a little bit more about why you made this announcement today, specifically tying federal funds and your policy to the 6.5% number. i'm sure you have some sort of theory about what you hope

changes in the economy as a result of this announcement. if so, what is it? >> well, we think it's a better form of communication. we think it's -- by using the thresholds, which ties rates to economic conditions, we're more transparent about what's going to determine our policy in the future. the date-based guidance, it served a purpose, but it had the problem that whenever economic outlook changed, the committee was faced with the question of whether we should change the date-based guidance, and we did change it a couple of times, but that was a non-transparent process. nobody understood exactly why we made a particular change because we were not providing any kind of fundamental information about how our policies linked to the underlying outlook, and so i believe certainly that this approach is superior. i'm not saying it's the best possible approach. there may be other things that we can do. in the future we're always

looking for ways to improve our communication, but do i think it's more transparent, and it will allow the markets to respond quickly and promptly to changes in the outlook by adjusting when they think rate increases will begin and, therefore, it will act to some extent like an automatic stabilizer so if the outlook worsens and that leads markets to think that the increase in rates is further out in the future, that will tend to lower longer-term rates and that will be supportive of the economy, so that has an automatic stabilizer effect. so it's a better form of communication, as i said, we've discussed it quite extensively at the last meeting and so -- and frankly given that it's a relatively complex change, it seemed like it would be a good idea to do it at a meeting where there was a press conference, so we decided, since we were ready to go, why not make the change

earlier and get the benefit earlier. >> as a quick followup, are you -- did you see a level of uncertainty in the business community that you hoped to solve by this announcement? >> well, at the moment i think that the -- the expectations in the business community and of the federal market community happen to be pretty well aligned if you look at financial market indicators, a future federal funds rate path, it's pretty consistent with the mid-2015 date-based guidance we had been providing. i'm not saying there was a major inconsistency between what the business community was expecting, what the markets were expecting and what we were expecting. that really wasn't the issue. the problem is that looking forward that what happens if there is a significant change, either for the better or for the worse, in the outlook under the date-based guidance. that would require the committee to determine, you know, what the

new date is and to make that change in a non-transparent way, but under this threshold-based guidance the markets and the business community can make that calculation on their own and adjust that their estimates of when rates will continue to increase based only on their own forecasts and not have to wait for the federal open market committee to give them a date, so we just think it's a better approach. >> josh and then john. >> mr. chair, bloomberg news. by mid-20159 recovery is going to be nearly six years old. the average post-war recovery has been a little less than five. we're already banking on a very long expansion. do you expect by mid-2015 the funds rate is going to be at 0%, your balance sheet potentially at $4 trillion. if the business cycle runs out of steam and you're still at 0% interest rates, does the fed no

longer have a forceful response in that situation? >> well, the fed will always, you know, keep -- we've innovated quite a bit in the last few years, and it's always possible we can find new ways to provide support for the economy, but it's certainly true. there's no doubt that with interest rates near zero and with the balance sheet already large, that the ability to provide additional accommodation is not unlimited and that that's just a reality, and that actually is an argument i think for being a little bit more aggressive now. it's a really good objective to get the economy moving, to get some momentum that. protects the economy against unanticipated shocks that might occur and gets us off the zero bound earlier, so exactly for those reasons the kind of risks that arise when policy interest rates are close to zero and the

greater difficulty at providing additional policy support, i think that's an argument for being somewhat more proactive now when we still have the ability to do that and try to get the economy, you know, back to healthy condition. >> donna and peter. >> hi, chairman. donna borak with american banker. my question pertains to the volcker rule. regulators seemed optimistic they would be able to finalize a rule by the end of the year. however, that seems a bit unlikely at this point, and now as you know lawmakers are calling for a two-year implementation delay on the rule. given the fact that it's been such a lengthy process, can you tell us where things stand at this point? how much closer are we to a final rule? have the agencies been able to work out their differences, and if you may, a prediction on when we might actually see a rule. >> we've made quite a bit of progress. it's a different complex rushlgs as you know, and we've had i

think i recall 18,000 comments or something like that, so it's been a lot to look at. there are a lot of concerns that arose, even from, you know, foreign commenters about the effects on their bond markets, et cetera, so there's been a lot of work to do. i think there is quite a bit of agreement. i wouldn't say a final agreement but quite a bit of agreement on key points among regulators at this juncture. and, of course, if congress gives us some other instruction, we'll follow that, but so far we haven't received any different instruction, so it's our intent to try to get this done early in 2013. >> peter barnes, fox business, mr. chair. since your last press conference with us we've had an election. one of the candidates in that election, governor romney, said that he would not reappoint to you a third term as chairman. president obama did not weigh in on the issue, but he was -- he

did win re-election. if the president were to call you and say, ben, your country needs your continued stewardship at the federal reserve. we need you to stay and finish the job, see this through, would you consider it? would you do it, and by chance have you had any conversations to that effect with the president or anybody on his team? thank you. >> so to answer the last part, no, i haven't had any conversations. i think the president has got quite a few issues he needs to be thinking about from fiscal cliff to many other appointments and so on. from my own perspective i just -- i really don't have anything to add from the last press conference. i'm very much engaged in this difficult issue that we're discussing today, and i have not been spending time thinking about my own future, so i -- i don't really have anything to

add there. >> okay. we'll go to kevin and then katherine and then back over here. >> over here, mr. chairman, thank you. two questions, taking the goldbarb rule into effect, one having to do with the cpi, a lot of debate about the boehner plan about the cpi. as an economist is there a logic going to that? do you think it's a move that should be done separate from the politics of it, and, again, with the economists at the labor market, you talked about the importance, not looking at 6.5% threshold but the broader conditions, a big debate, steve liesman's nemesis talks a lot about people being beamed to mars in. your mind what is happening to the job market? are we creating jobs? is that why it's coming down, or is it because people -- the degree of discouraged workers? what's your sense of how quickly it's fallen because of new employment? >> so on the first question the

chain cpi versus the fixed weight cpi is a technical issue. the change cpi is better for most economists because it allows for changes in the mix of goods and services that people actually consume more effectively. however, whether that's more appropriate for say social security indexing or not, i think that's ultimately a political decision. i suppose the rejoinder would be that neither the cpi nor the change cpi may be particularly a good measure for the cost of living of social security recipients, so those are the kinds of questions that congress is going to have to deal with. second part of your question was -- >> what actually is happening to the debate over the extent to which unemployment rate is falling, new jobs versus people leaving? >> sorry, yes. well, you can see the -- the

comparison by looking, for example, at the household survey which gives estimates of how many people are added to the labor force, how many added to the employed, how many people are leaving the labor force, and it's true that part of the decline in unemployment and, indeed, all of it in the last reading, but over the recovery, part of the decline in unemployment has come from declines in participation rates, that is, people leaving the labor force. some of that decline in participation appears to be due to longer run factors, aging and changing patterns of work among women, so those things were probably not directly related to the -- to the recession, for example, but beyond that downward trend there's been some additional decline in labor force participation and in the

ratio to population which presumably is linked to discouragement about the state of the labor force. so that certainly is part of the issue. that being said, obviously there has been a good bit of job creation. can you see that either in the household survey or in the payroll establishment survey. so i -- i think there's no doubt that the labor market is considerably better today than it was two years ago. it's not any question about that, but it's also the case that many indicators of the labor market remain quite weak, ranging from the number of long-term unploimt employemploy number of people with part-time work that want full-time work and wage growth is very weak, and could i go on, so it may be

that the labor market is even a bit weaker than the current unemployment rate suggests, but i -- i think that it is nevertheless the case that there has been improvements since the trough a couple years ago. >> okay. katherine and then to greg and steve and that will be it. >> mr. chairman, katherine hollander from "national journal." how concerned are you that markets will have to tank in order to get lawmakers to reach a deal on the fiscal cliff, and what do you make of the recent complacency? is there a wall street/washington disconnect? >> interesting question. well, i certainly hope that markets won't have to tank. i don't -- we want to have confidence, not just in markets but in businesses and households as well, and the best way the fiscal policy-makers can achieve that is by coming to a solution as quickly as possible.

markets have obviously already responded to some extent, up and down. can you see from day to day how they respond to news about the negotiations. but, on the other hand, it's also true, if you look at experience, i think very informative experience of the debt limit debate in august of 2011, that both confidence and markets remain pretty sanguine up to pretty close to the point where it looked like there was actually a chance tat debt limit would not be raised. and then, of course, there was a pretty sharp shock particularly to confidence about the time of the -- you know, of the final debates so it's not unusual to see markets being complacent.

of course, there's -- from the market point of view there's risks in both directions. things go badly, but perhaps if things go especially well, that would be good news, and maybe right now markets are taking an average of those two possibilities. again, just to reiterate, i don't think any policy-maker, including the fed, should be responding to markets. what we should be doing is making policy, you know, based on the fundamentals and doing what's best for the economy, and i hope that fiscal policy-makers will follow that injunction as well. >> over here to steve and greg. >> mr. chair, steve beckner of market news international. with the federal government borrowing roughly $1 trillion a year and now with the fed on

pace to buy roughly $1 trillion a year in bonds, are you concerned about a public and possibly global perception that the fed is accommodating not just growth but accommodating federal borrowing needs, and are you concerned about what this might do to the fed's credibility and the credibility of u.s. finances in general and the credibility of the dollar as the world's leading currency? >> well, first of all, just a couple of facts. the -- we're buying treasuries and mortgage-backed securities, with half and half roughly, so we're buying considerably less than the treasury is issuing, and, moreover, the share of outstanding treasuries that the federal reserve owns is not all that different from what it was

before the crisis. while the holdings have increased so obviously have the stock of treasuries in hand so it's not evident that there's been such a radical shift there. you know, we've been increasing our balance sheet now for some time, and the we've been very clear that this is a temporary measure. it's a way to provide additional accommodation to an economy which needs support. . we've been equally clear that we'll normalize the balance sheet and reduce the size of our holdings, and whether by let being them run off or by selling assets in the future. so this is, again, only a temporary -- temporary step. it would be a quite different matter if we were buying these assets and holding them indefinitely. that would be monetization. we're not doing that. we are very clear about our intentions, and i think up until now it seems our credibility has

been quite good. there is not any sign, either of current inflation or of any -- there's no strong evidence that there are any increase in inflation expectations for that matter, looking at forecasts markets, looking at surveys and looking at economic forecasts and so on. so, this is one of the things that we have to look at. remember, i talked earlier about the potential costs of a large balance sheet. we want to be sure that there is no misunderstanding, that there's no effect on inflation expectations from the size of our balance sheet. that's one of the things that we have to look at, but as to this point, there's really no evidence that people are taking it that way, and i guess it's worth pointing out, of course, we've been very focused on the united states here, but we're not the only central bank that has increased the size of its balance sheet. the japanese, the europeans, the british have all done the same, and very much more or less the same extent, and in terms of the

fraction of the gdp, and i think the sophisticated market players and the public understand that this is part of a collective need, a need to provide additional accommodation to weak economies and not an accommodation of fiscal policy. >> this will be the last question. >> last but not least, greg rob, market watch. there seems to be growing evidence that some of the mbs purchases, the impact of the mbs purchases, banks are holding on to some of the gains and not passing them on to the borrowers. is there anything you can do about that, and are you concerned about that? thank you. >> so the question is just to restate your question is about the spread between the mortgage rates that the public pays and the yields to mortgage-backed securities that banks may hold, and the question is that spread

widening so that the full benefit of the reduction in mbs yields is being passed through. that's the question. >> yes. >> i just want to make sure that everybody heard it. >> so you can answer. our analysis suggests that it takes time. two points. the first point is that -- is that while we don't expect 100% pass-through of mbs yields to mortgage rates, our empirical and theoretical analysis, and the we've had quite a bit of work done on this issue, suggests that over time the great majority of the decline in mbs yields does get passed through to mortgage rates so we do anticipate over time that the full benefit or most of the

benefit will be seen by retail customers, and, indeed, we have seen already a pretty significant decline since september in retail mortgage rates, but what -- one thing that's perhaps confusing this issue a little bit is that there are other things happen in the economy which are affecting those greds, so, for example, there are capacity limitations which are allowing banks to, you know, charge higher yields. there's extra costs like concerns about put-back risks, for example. there's higher g-fees, so there's a number of things happening in the economy which will tend all else equal to raise that spread between mortgage rates and mbs yields. so that's unfortunate. what we can try to do there, of course, is to try to encourage good policy. for example, on put-backs that will reduce the perceived risk and cost to the banks of making

mortgage loans, but, again, you know, i think most those things, like g-fees, for example, are not really in our control, but, again, taking all those issues as constant, it does seem to be the case that over a period of time, not immediately but over a period of time most declines in the mbs yields do find their way through to mortgage customers and, therefore, strengthen the housing market. >> thank you very much. >> bill griffith along with mandy drury stepping in. maria is off today as we welcome you to "closing bell" as ben bernanke wraps up his final news conference of 2012 after the fed's two-day meetings in which they agreed to continue to buy treasury securities and mortgage-backed securities, but the new wrinkle now in monetary policy that we all heard about today was a new kind of target.

he called it a guidepost. to this point they said they would keep the fed funds rate at around 0% until 2015. now they say they will keep it there at least until the fed funds rate drops to 6.5%. it's currently at 7.7%, and while he was talking, mandy, the market lost ground. >> absolutely. let's take a look right in front of you. what you've got is the dow sitting right there on the line. it did actually drop negative just in the last five, ten minutes. we were at the highs of the day around 81 points to the positive on the dow. and then we really watched as ben bernanke was speaking the market lose its steam. the nasdaq also went negative where it is right now, and, you know, bill, i guess we'll ask our guests what it is that the market was disappointed by when listening in to him. a couple of things that i latched on to and one of them is the fact that we don't have the tools if we go over the fiscal cliff. it's going to be costly

regardless, even if we go over short term, and the other one was the ability to provide accommodation is not unlimited, ie, we may think that qe will go on forever, but he's saying, guess what, folks, it won't. >> sometimes reality hurts the markets there. >> yeah. >> let's get reaction from our guests, tyler verne oven builtmore capital and our friend ron insana and rick sell who got a shutout during the news conference identified as steve liesman's nemesis and steve who was the first questioner there during the chairman's news conference will be joining us shortly here as well. tyler vernon, what do you make of the fed's new view of monetary policy? they are targeting fed funds to go up when the unemployment rate goes to 6.5%? what do you make of that? >> well, i think what i make of that is that it's probably going to be around a lot longer than we think. before they talked about 2015, they continue to see an economy weakens, so i think it gives them flexibility to get the rates out a little longer. >> is that good or bad?

>> you know, i think short term it's probably a good thing? long term i think it creates a lot of issues, and he even said, and i quote, asset purchases are less well understood, and he doesn't really understand the costs long term of these types of things. the market is down, look at where the market was now versus qe3, market is down, interest rates up so there's concern. >> i want to know how wise it is, pegging things at 6.5, the employment rate that we could go down there due to a shrinking labor force because people are giving up work. >> okay. i'm not hearing rick. are you hearing rick? >> ron insana, i'll pose the same question to you. >> look, mandy, i think that it's not pegged per se as the fed chairman pointed out. that's the point at which policy would start to change. >> it's a target but it's not a target. >> no. he's saying the pivot point given the lag in federal policy that the interest rate could move below 6.5%, but that's when

they have to think about turning the super tanker because policy acted with a lag. what happened today was extraordinarily interesting. qualitative and quantitative easing added to our list so instead of qe3 and qe4 we have qe squared. i think the policy is a natural evolution of what bernanke has done at the fed since he's gotten there. looked at the 1930s and the experiences in japan, we's trying to make sure we have neither of the two outcomes. >> what are the implications of the bond market, rick santelli, now that we have it back? >> i want to go to the other question. i think there's a silver lining to the idea that the chairman talked about the labor force participation rate and shrinkage because now he has a vested interested to differentiate shrinkage in the unemployment rate versus good and bad, meaning whether people disappear or whether they get jobs, and in terms of the markets, you know, we just crossed 170 in the

ten-year. most of the traders i'm talking to think that the last several basis points of a higher yield in 10s and 30s has been due to the selloff in equities, and i think the selloff really in large part was, i don't know about you, but, you know, his press conference was highly detailed, highly quantitative but nobody on the floor really understood a word of it. it made them nervous. >> i always think about that fed news conferences, all the guys in high school with pocket protectors are just showing off now. >> exactly. >> we've seen the market behave like this on fed days many times in the past, only to rally in subsequent days and weeks. i think what the fed is doing here is extraordinarily positive for financial markets. i'd be a little loathe to judge the market's movement here in the last hour or so. >> that is my point. the markets seem to be disappointed. tyler, what do you think they were disappointed by? it doesn't change anything in terms of what you would do with investments. >> well, first of all, i think this is getting old. it's an old story at this point.

again, we didn't see any one run from qe3 and not seeing qe4, and, again, i think these qe4, though, again, not a popular thing to talk about, but i think one of the things that's very irresponsible, he even mentioned more asset purchases in the event we go off the fiscal cliff. i think it's very irresponsible. he's giving washing tonight ability to continue to kick things down the road and provide monetary policy. >> can i -- if i can just jump in there. >> i've got to go. you know how this works. they are yelling in my ear and that's happened to you many times. just for everybody's approval, ran, i can tell you, didn't wear a pocket protector in high school or college. thank you all for joining us here. steve liesman is with us now, and you asked about the new targets which the chairman says is not a target but a guidepost. what's the difference? >> it's important for people to understand. there's two things happening here. the first is that the federal reserve for the first time put

these -- put the funds rate, tied it to an economic target, but really it's a victory for charlie evans and those doves who wanted an advancement here. they wanted qe tied to it but it's not. qe is tied to this uncertain thing which is improvement in the labor market, assuming there's something anyone can do with the goals. there's a bit of confusion out there, and the markets will have to sort through how much qe for how long based on what targets. we don't real very that anymore. they moved away from a calendar date target on the funds rate but not qe, and the chairman was very explicit that qe is for stimulating the economy and the funds rate is for moving removing accommodation. never heard that before, bill. >> one quick little thing, steve, it was a throwaway line, but it caught my attention. he said he thinks the fed funds rate -- the economy is not as strong as the unemployment rate would suggest right now. that caught my attention there. >> right. >> yeah. well, he is definitely looking at those numbers and seeing

basically, bill, what you and i see on them when we look at the first fridays in the month. we see the participation rate going down and we also see job growth. he likes what he sees in payroll and doesn't like what he's seeing in terms of the participation rate going down and people dropping out of work force. that makes it uncertain. by the way, he also said that that 6.5% rate is not a hard trigger. >> right. >> it's going to be part of the discussion as to what they do when they do. >> it could be a moving target. thanks very much, steve. good job with the news conference today. so the fed has made its move. what does it mean for your investments? let's talk about that right now. >> greg mcbride warns that the risk of inflation could be closer than you think, and jeff says this is the time to be overweight equity. great you have to both with us. greg, let me ask you first of all. how much do we care about what ben bernanke said today in terms of what we do with our money? >> well, i mean, i don't think that this makes big changes in terms of how you govern your portfolio necessarily, about there are marginal impacts.

i think this is going to bring down long-term interest rates a little bit more which will facilitate home purchases. it will facilitate refinancing or re-refinancing for people who have previously done so, and i think this pumps a little bit more air into that equity rally, so, you know, clearly people long in equities i think stand to benefit provided we avert the fiscal cliff. >> and, in fact, jeff, you're overweight equities as we said. why? >> first of all, plett me back up and say i think this announcement from the fed was really not a difference of degree but a difference of kind. as long as you have the fed standing by their policy of quantitative easing, you have the central banks around the world doing the same, it's very hard to be underweight risk assets, so that's the primary reason, and then when we look out to the fourth quarter of next year, we see a lot of good news for the u.s. economy. stocks as discounting mechanisms already reflecting some of the good news that we have down the pike. >> certainly hope you're right.

sorry, gentlemen, got to cut this shortstop blame the chairman for doubling up all of our time. >> a long news conference. thanks for joining us today. >> okay. 20 minutes to go until we ring the bell. at this stage the dow is down by 13. >> iphone, ipad, now itv, a big rumor in the next big thing from apple, but it's not helping the stock today. find out why coming up. stay tuned. tdd#: 1-800-345-2550 when i'm trading, i'm totally focused. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab... tdd#: 1-800-345-2550 gives me tools that help me find opportunities more easily. tdd#: 1-800-345-2550 i can even access it from the cloud and trade on any computer. tdd#: 1-800-345-2550 and with schwab mobile, tdd#: 1-800-345-2550 i can focus on trading anyplace, anytime. tdd#: 1-800-345-2550 until i choose to focus on something else. tdd#: 1-800-345-2550 all this with no trade minimums. tdd#: 1-800-345-2550 and only $8.95 a trade. tdd#: 1-800-345-2550 open an account with a $50,000 deposit, tdd#: 1-800-345-2550 and get 6 months commission-free trades. tdd#: 1-800-345-2550 call 1-866-294-5412.

slars of apple down despite reports that the company is moving closer to creating this mythical apple tv set. could that turn the shares around at some point? that's what we're talking about in talking numbers on the technical side with richard ross and on the fundamental side it's max wolfe with green crest capital. guys, we're tight on time so you've got one chance to make your case. max, apple tv, what effect would have that on the company's stock? would you buy it? >> people will like it, a chance to use another samsung product and stick some of their stuff in it, rebrand it and advertise it

and sell it for more money. i don't think it's a game changer, but it will keep people buzzing in a positive way. i think ultimately they will lose market share in the tablet space and it's hard to bring the iphone 5 or 6 back up to where the iphone 3 and 4 and 4is were. i like the company, always have a good fourth quarter, but they will have to do something to stick apple tv in a box and charge three grand for it. >> rich, what do you say about apple right now? >> technology is unpredictable. right now charts are telling you, you want to hang in there and you want to be a buyer. when you look at long-term weekly chart, we're all familiar with the 25% pullback to key support at the well-defined trend line. what i love about this chart is the failed head and shoulders. that's right, the failed head and shoulders. you see, when you don't break below that neck line, that's the key to the pattern. the neckline, key sprngts 530, that sets you up for a contrarian buy signal.

look for the retest of the 200 day, and ultimately a retest of that high back around 700. you want to be a buyer right here. >> all right. you'll be buying shares from max, i'm sure. thanks for joining us on "talking numbers." mandy? >> counting down, 15 minutes left until we ring the closing bell. the dow is still in the red. even more in the red than a few moments ago. down by 20 points and up by 81 at the high of the day earlier on. meantime, jpmorgan's top strategist is out with a very bullish call for next year, and he's going to be here. he'll lay out top five things you need to know to make money in the markets in 2013. you do want to stick aron.

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made a retirement plan, they considered all her assets, even those held elsewhere, giving her the confidence to pursue all her goals. when you want a financial advisor who sees the whole picture, turn to us. wells fargo advisors. now to the other news in washington today. just 19 days until the fiscal cliff deadline, and it still doesn't appear like we are making much progress. aemon javers with the latest. >> reporter: not making much progress. dualing press conferences, one group brought out a group of adoring children and the other group brought out santa claus.

not a lot of action. jamie dimon was on our air earlier today on cnbc and says the economy is poised to take off if we get a deal here. take a listen. >> the table is set very well right now. corporations, middle market companies, small business in good shape. 5 million more people than working than four years ago, housing has turned the corner. let's just keep it going. >> reporter: bill, when is that economy going to take off? house republican aides talking about the possibility of actually being in session on christmas day? that's not a likelihood, but the fact that they are even talking about it gives you a sense that we're not anywhere close to a deal just now, bill. >> all right. thank you very much. heading towards the close. ten minutes left here, and we've come off the lows and had a pretty wide range. dow up 80 points until the fed chairman spoke and now we're down 6. heard a lot about how companies will have to lay off workers if we go over the fiscal cliff so why does a new manpower survey

show more companies are planning to hire workers in the first quarter of '13 than lay them off. we'll speak exclusively to the company's ceo to try to figure this out still to come on the "closing bell." stay tuned. try running four.ning a restaurant is hard, fortunately we've got ink. it gives us 5x the rewards on our internet, phone charges and cable, plus at office supply stores.

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jpmorgan has released its outlook for next year, and it's a figure first cnbc interview. we welcome back our chief, the u.s. equities strategist tom lehman and predictions for the new year. welcome back. >> thanks, bill, thanks, mannedy. >> what are you looking for in 2013? >> it's a continuation of the bull market, so, you know, we see s&p reaching 1580, but i think there's going to be some variations to this year. you know, the first is i think the economy will really surprise us both on housing starts hitting close to 1 million and credit finally easing, some of the things jamie dimon talked about this morning. the second is i think timing will be tricky. i think the first half will be potentially a period where the stocks could see a big selloff >> you like the second half a lot better. why? >> i think the second half is when the economy really strengthens, that you start to see the credit outperformance and the valuation gap closing, and i think we get much more conviction about a china recovery and europe exiting

recession so those really support stocks. >> what are you basing it on when you say we'll see a recovery in the second half? what's going to spur that? >> one of the things we studied pretty deeply in the report is looking at durable goods spending. never in u.s. history have we spent this little on construction and housing starts in cap "x." even s&p cap "x" is still pretty close to the 2009 lows, and, you know, when you think about all of that, you have to be very contrarian in terms of sectors this year or next year. >> right. >> and the surprise i think is going to be basic materials. that's the worst per forming group of the last two years. really almost a historic underperformance of that sector, and, again, it's very died to gdp picking up. >> very quickly, tom, do you change your outlook for next year if we go off the fiscal cliff? >> yeah. i mean, if we have a cliff and a recession, there is no bull market. you know, bull markets end with recessions, so if we do fall off the cliff and there's a recession, and both happen, there's no bull market. >> all bets are off.

thank you so much for joining us, tom. >> thanks, tom. >> 1580 end of next year. up 14% year to date for the s&p 500. not a bad year all in all. >> yeah. >> coming right back, back with the closing countdown. >> and after the bell, get ready for a rumble in the fiscal cliff jungle. steve forbes says nobody should pay more in taxes, but howard dean says everybody needs to pay more in taxes. they will battle it out right here on the "closing bell." it is pay-per-view material right there coming up on cnbc, first in business worldwide.

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welcome back. the last minute of trade here, and at least wall street eat fixation on washington continued, but at least it wasn't about the fiscal cliff. today it was all about the fed. the dow on the open this morning had a pretty good rally. kind of neutral until the fed announcement came out about what their intentions were for buying more treasuries. we were up 80 points at the peak, and then chairman bernanke started to speak, and the market went south, and we're finishing out the day to the downside breaking a five-day win streak for the dow jones industrial average and the yield on the ten-year note continued higher, so they -- t