died. she was the bomb. >> a reminder, "street signs" is your place to turn to for the fed decision the moment it happens. in 23 hours' from now we'll carry ben bernanke's news conference. >> and would he ge get a look a6 projectio projections. big show. "closing bell" right now. hi, everybody, into the final stretch. welcome to "closing bell." i'm maria bartiromo at new york stock exchange. investors are worried about fed taking away the punch bowl -- >> do you think they're worried? >> no, i don't think so. i don't think we'll see tapering tomorrow. you and i agree on that. >> i don't think we would expect it given what the fed said they were going to wait for, but they haven't gotten that yet. >> they are expecting something. i think it's the credibility of the fed. maybe they do something. peel it back $10 billion, i

don't know. >> the dow is about 120 points away from all- high. the s&p about four or five points away from an all-time high. both of those were set on august 7th. only nine days left in this third quarter. it's the best third quarter -- first three quarters we've had since 1997. >> nine days left. earnings, that's the catalyst for this market. we're talking about fed meeting, and special interview coming up with byron wien. he says loosening up will have the same effect as interest rate hike. we'll ask him about that and a lot more. >> is there a fight brewing over the next fed chair between president obama and first-term democratic senator elizabeth warren of massachusetts? some d.c. insiders say she led the charge against larry summers who pulled out of the running on

sunday. the president may want to teach senator warren a lesson. we have that intriguing story coming up. >> politics behind the headlines. let's check where we stand on the market. dow jones up quarter percent higher. as bill said, market close to all-time high. nasdaq pretty much at the highest devils with a gain of 27.23 points, 3745. s&p 500, up half a percent at 1705. above 1700 on the standard & poor's. stocks creeping closer to record highs despite concerns the federal reserve may, in fact, announce the beginning of the taper tomorrow. bob pisani, people weren't worried? >> no, four points away from the historic high on s&p. art cashin has been using a great word to describe how they're not worried,

rationality. he says nothing has blown up. everything has worked out and they think everything is going to work out. europe, china, syria, summers, everything has worked out. i know it sounds like complacency but they believe the taper will work out. most believe there will be a modest tape tomorrow. debt ceiling is the next problem. they don't worry about that. they think a deal will be made. where do we go from here? a lot of people think muddling along is the best solution. gdp 6.5% to 7.5%. the stock market can advance on those kind of numbers. just got off the phone with charles biedermann at trim tab, he says it's shaping up to be a bad month for bond withdrawals. he says $20 billion so far. that's the worst record on may. here's what's interesting, guys.

no big dramatic inflows into stock funds. there have been inflows but they've been modest so far. we're waiting for that big tidal wave to come to the stock market. so far it's not happening. first thing that has to happen is you get outflows from bonds. we're starting to see enough to make my eyebrows raise up and say, uh-huh, this is starting to get a little more interesting. >> do that again, raise those eyebrows. >> i have a hard time doing one and the other. some have better skill sets than i do. >> groucho there. >> joining us, danny hughes of divine capital, michael guide, richard bernstein and our own rick santelli. can you raise your eyebrows? >> go ahead. >> rich bernstein, let me start with you. i want your overall take on the fed, the climate and whether you would be putting new money to work here. >> i think it's important to remember midcycle environment,

which i think we're in right now, are always characterized by a tug of war between rising interest rates and improving fundamentals. that seems to be the story right now. where people are concerned, you know, is the fed going to taper, a word nobody ever used until about six weeks ago, eight weeks ago, versus the improvement in profitability and fundamentals. this is much more normal than people think. you mentioned before about byron wien and byron wien saying that a taper is going to be equal to a rise in interest rates. i would agree with that. but i don't think it's a deathnell because the middle part of the cycle is characterized by this tug of war. what we're starting to enter is this tug of war. >> danny, what is the fed's announcement and how do you think the market will take it. >> i don't know exactly what the announcement will be but i think they'll taper. we'll probably see a mixture of treasuries and mortgage-backed securities, probably heavier on treasurie

treasuries, which markets will like. maria, you said it earlier, the market loves what's happening right now. they think the taper will happen but yet the market continues to rise. i think what they're concerned about is if there's a rise in interest rates. some much our economy is sensitive with respect to interest rates, housing, autos, the cost of money, leverage. if that happens, i think we'll see a real pull back. >> that would be a negative. michael, do you agree with that? also, what would be the magic number on interest rates that would cause you to recommend taking money off the table in terms of equities? >> i've been addressing not level but speed of the movement. don't think the taper matters because the market shows the fed has no more control over it, given this historic move in ten-year. i don't think the taper matters that much. what i want to pay attention to tomorrow is if the fed is going to acknowledge the dangers that yield spikes historically have on the economy. you know, home builders have been weak all year. now they're starting to outperform a little bit. that might be because of

anticipation the yield curve will begin to narrow. >> you don't think if they announce some form of tapering, whether reducing the amount of buying by $10 to $15 billion a month, as some expect, you don't think we'll get a spike in rates tomorrow? >> not unless they completely remove everything. this yield spike, people are underappreciating how severe it was in speed. what seems to be holding beta up is emerging markets is not in crisis mode. >> rick santelli, all you guys on the floor there in, which ra wha are you hand kaeping tomorrow? what are you expecting? >> they're not handicapping much when it comes to fixed income market. they're handicapping how they want to trade the s&p and dow or nasdaq futures. we can talk about all the

research of mid-cycles but none n my opinion, holds water. mid-cycle at 6$6.3 trillion balance sheet to the fed. there's a lot of distortion. we'll get a lot more information tomorrow. no matter how big or anyone skul t miniscule the taper is, we'll see -- interest rates are playing less fed. a day after or a month after the meeting has begun. if it surprises the market, i think the surprise would be in higher rates. don't see any surprise for lower rates. >> are you saying you agree with michael that maybe the fed doesn't have as much control over the kufb right now? >> i never thought they did. yeah, i think that's the standard boiler plate. there are times where they try to have an outsized effect. and i think, of course, the q oeche response is one of those times.

>> nine days away from the end of the third quarter. amazing. rich bernstein, look at fundamental back drop, how was the third quarter in terms of results, do you think? >> the second quarter in the united states was reasonably quite strong. third quarter, i think, will be strong as well. i think we have to worry a little about multinational stocks because the emerging markets are not the growth -- not showing the growth we thought they were going to have. if you look around the world and look at growth projections for earnings, not necessarily gdp, but for earnings, you'll fine the united states is way up there in ranking. the united states is a much better growth story than emerging markets. that's on a projected basis. i think most people don't appreciate that. one thing, if i can add win thing here, i think it's important to remember that ten-year trough more than a year ago, interest rates have been backing up for more than a year and that hasn't disrupted the bull market. i think that's very important because that is what you see in a mid-cycle.

>> very quickly, you buying anything right now? even with the taper -- >> we are here and there buying dry bulk shippers. we believe in the global growth story even though it's a little slow right now. we still think that backstory is real and it's happening. we believe in that global story. >> all right. thank you all. appreciate it. >> thanks, everyone. >> appreciate it. we'll see you soon. over to dominic with a market flash. >> you'll day we've been telling you how the biggest gainer in s&p is safeway, the grocer, because they invented a poison pill. in a regulatory filing jana partners disclosed a 14.9 million share stake in the company, 6.2% all outstanding shares. more color. we know it's jana partners, activi activist investors, building up their stake in grocer safeway.

that's new news on what's happening with safeway so far today. >> now he we know. thank you. heading toward the close with 50 minutes left in the trading session. this is a wait and see day. waiting for the fed tomorrow. right now the dow's up 38 points off the highs for the session. >> gm launching a new cheaper electric car that will be about 50$,000 cheaper than tesla's electric charge. which will put a charge in your portfolio? the fed spills over into full-on fight between president and senator. or does it? hear one theory about why president obama may not nominate jan janet yellen.

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welcome back. in case you hadn't heard, microsoft out with a huge buy back and dividend increase announcement. it's not close to leading the dow today. what's driving today's move higher? >> boeing, one of the best performers in the dow today. defense andnd aerospace reveale

the new dreamliner. facebook is up over 5%, breaking a three-day losing streak. the record set on december 12th. stands at $45.62. shares of drugmaker kythera surging saying they got positive test results to treat the double chin. that could provide patients with a nonsurgical option. willis group getting boost from positive comment. and outerwall, dvd maker and red box coin operator is one of the biggest losers. >> thank you. the s&p 500 marching toward

another higher close today. that would make it the tenth day out of 11 that the s&p 500 has finished in the green. >> september is supposed to be the worst month for the stock market. to get reaction we have john, ceo mizuho. why is the market where it is, given the headlines going on. do we have any business being this close to highs at this point? >> people are waiting to hear what the fed will do tomorrow. tapering, no tapering, what's going on. obviously, the fed's painted itself in a corner. they have to do something. consensus is they're going to do between $10 to $15 billion. >> ahead of investment firm, what does that mean to you? if we see interest rates move higher, do you need to adjust your business differently? >> absolutely. but the fact is we saw what happened to interest rates when they got to 3%. it hurt the market. hurt the mortgage market and hurt everything else.

our economists, and i believe, if rates go much, much higher then they'll fall back because the economy is not ready yet for rates to increase that steadily. so, we think there will be a taper but not a huge one. >> let me ask -- go ahead, bill. >> we were talking during the break about this big investment conference you held in tokyo recently. biggest attendance you said? >> over 2,000 people, over 300 corporations, 3600 one-on-one meetings. we had -- >> 3600? >> 3600. a logistical, incredible feat to put this together. the room was like nasa, you know, where -- >> why did that happen? here in this country we keep hearing about the apathy of the individual investor, they're not in this market to a great degree yet. is that different in japan? >> japanese market is hot. a lot of things are working. abe, the new prime minister, is changing monetary policy, fiscal policy. now, a new era in his quiver is what they call the olympics. they just got the olympics

announced in 2020. that's supposed to add over $30 billion, 150,000 jobs, probably about 0.6 in gdp over the next seven years. that's a big, big tail wind for the japanese economy. we're seeing it. >> i'm glad you mentioned that. when the olympics happen in japan, that will obviously mean infrastructure in japan. how are investors playing that? the nikkei average up, what, more than 35% year to date. >> almost 38%. >> we're seeing money move into exporters of japan. where are the areas that you think will benefit most from this big catalyst, which is coming in japan, the olympics? >> since the announcement, you've seen, obviously, construction stocks, equities in japan, have gone up. people need to pace themselves, though, because it's not going to happen -- >> everybody's figured it out at the same time, haven't they? >> exactly. they want to get ahead of it. we took a survey from investors at the conference.

38% of all the investors are continuing to be overweight japanese equities. another approximately 14% will go from neutral to overweight. and about 12% are going to go from underweight to overweight. so, there's a lot of sentiment there that the equities in japan will be very, very strong. >> is the -- you know, they had their lost decade. we had our last decade. is theirs over, their double decade they suffered? >> that's a great question. it wasn't investable for 20 years and all of a sudden this year it's been hot -- hotter than hot. >> is this for real? >> it's for real. we talked about on the show previous times. abe and minister of finance are taking methodical steps and checking themselves each time. they have 70 plus percent approval rate. we're starting to see a tremendous amount of buying. look what's going on in etfs. biggest growing etf, wisdom tree, and a lot of it is due to

they're a japanese index that's not correlated to the yen and it's up two-fold in the last six months. >> yeah, that's dxj. i have a report here, japan's abe vows to keep the economy stronger and continuing to rise. i mean, when is the last time you heard a prime minister say, this country is a buy? you know, abe said japan is a buy. tell us what japan feels like. you're just back from tokyo. >> a couple days back. >> give us the fundamental back drop. >> we had finance minister, the fundamentalist of abe-nomics. people know and feel there's a change. it's happening. we're seeing buying, both institutionally and in retail. in retail is really, really a lot slower. and there's a lot retail money and investors in japan. there's $15 trillion of investment in retail in japan.

>> you're saying that's slow still? >> that's slow. that's going to ease out over the next couple of years. >> interesting. >> clearly, you're benefit willing, your firm, given you've got the flows. >> it doesn't suck. >> we've seen buying increase by 50%. number one japanese equity house in the united states. number one jjb house. it's been a good opportunity for us, yes. >> john, good have you on the program. >> thank you for having me. >> appreciate your time today. final stretch of trading for the day. 40 minutes before the closing bell sounds. market is up double digits, 37 points on the dow. >> general motors is developing a $30,000 long-range electric car that's half the cost of tesla's model s. when we come back, we'll take a look at which stock you're better taking for a test drive. someone who says president obama may not nominate janet yellen to be the next fed chairman to get wean a senator from his own party. that outrageous story coming up. my customers can shop around--

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let's face it. general motors' volt was a dolt, it says here. now trying with a pure electric car that allegedly goes further

and costs less. phil lebeau joining us with details. >> reporter: bill, the keyword there, allegedly. this is something still in the planning phases for general motors. a lot of people are saying, wait a minute, don't they have the volt? aren't volt sales slowly improving? they are. the volt had the best month ever in the month of august in items of monthly sales. many will point out that sales increase came after the company announced a $5,000 price cut on the volt. now gm is saying it is working on an electric car with a range up to 200 miles. the challenge for gm and for all of the automakers, developing a smaller, more powerful battery for electric cars. the benchmark gm and everybody else is chasing, the tesla. model range of 280 miles fully charged and is developing a mass market electric vehicle that will cost around $35,000. tesla says that will be out within the next five years. as you compare shares of general motors and tesla, keep this in mind.

tesla is actually developing that mass market electric vehicle, maria. general motors has said, we want to develop it. we're working on it. but at this point we have yet to see any concrete plans. maria, back to you. >> thank you so much, phil. a $30,000 electric car from gm and the basic tesla goes for $75,000. which stock is more likely to electrify your portfolio? on the technical side is ross and gina sanchez on the fundamental side. rich, kick us off. which stock looks better in items of the charts? >> you and i discussed tesla back in may with the stock at 105. i was a buyer then and i'm a bigger buyer here today. love the chart. i love the stock. let's start with the longer term chart of tesla. i'll show you how we get higher here. you see earlier this year the stock emerges from that textbook multiyear basis of support. goes up 300%.

we formed this nice bullish here which is a continuation pattern. it tells me the stock has considerable upside. zoom into that year to date chart. i'll break it down further for you. you can see these moving averages on the shorter term chart, the 20 and 50. this stock has only been below the 20-day twice since april. now we settled into a sideways consolidation range. parabolic stocks like do not go away into good night. this is not how it end. i have a $220 target on this stock. i'd be a buyer right here. >> gina, what about the fundamental story? what's your view on these two companies in the context of the auto sector? >> tesla is clearly a growth story. i think a lot of that growth has been priced in on that last run. i like gm between the two. if i had to buy today, i would buy gm. gm has three reasons to buy. first, they're a leader. they're the leader in north and

south america. they had second strongest q2 results. i think that's going to continue. we've seen continued growth and recovery in the u.s. markets. that has resulted in growth in the housing market. their biggest seller is the silverado and that sells into construction workers. you've seen 20% growth in that market alone. that's fantastic. finally, they're investing into china. we're looking at four new plants in china that will increase their vehicle capability in china tremendously. i think right now, in fact, from a valuation perspective, gm's a better buy. >> so, gm's a better buy. rich, any thoughts on that in terms of what -- >> i do, maria. gm is the past. we've been down that road before. in this business we pay for potential. tesla is the future. we discount future cash flows, not what we've done in the past. which isn't all that great with general motors. i think you have to be a buyer of tesla here. in is apple pre-iphone, think

about that. we have to have vision, look into the future. we could see a multiple here. this stock could double, could still be cheap three years from now. >> thanks to you both. appreciate it. we'll see you soon. >> heading toward the break, we've got the dow up about 38 points. again, we're waiting for the fed. the market's waiting for the fed announcement tomorrow. we'll slide home here on this day. we're about 120 points to an all-time time. >> amazing. political pressure forcing president obama to give up on his top choice for fed chairman, larry summers. now something he's blaming elizabeth warren for and he'll make janet yellen pay for it. that story next. >> if the fed announces a tiny tapering tomorrow, investor byron wien says it could be anything but tiny. he's joining us exclusively coming up on the "closing bell." >> check out online edition of "talking numbers" at

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in the wake of the larry summers being forced to drop out of the race to succeed ben

bernanke as next fed chairman is due to political pushback? we have a new fed survey on top exists, thinking who might be next. our resident fed head himself, steve liesman joins us with the result of said survey. >> thanks. we went back into the field yesterday after summers left on sunday -- or took his name out for consideration for the nomination and asked our wall street economists and strategists and fund managers who they think president obama will pick. and the percentage is, hands down, janet yellen. right here, pictured right here. 88% of our respondents think janet yellen will win. 6% went for don kohn. 2% for ferguson. there's our chart. 88% think obama will appoint janet yellen. we also asked, who do you think president obama should appoint? yellen scores highly. 57% say obama should appoint

yellen. 11% for john taylor. larry summers, 7%. don kohn, 5%. ben bernanke, 5%. not sure if that's possible. here's the average taper amount, 14.5 billion from our respondents. that's up from september after the jobs report. but it's down from where it was, $22 billion, back in july. i can tell you, though, $14.5 billion is misleading in the sense that over half of our respond ens picked $10 billion as the amount of the taper but others said it would be higher, that's where we get the $14.5 billion average. 14% think the taper comes in september. no surprise there. fed is seen maintaining the taper level for 3.6 months and qe seen ending in august 2014. the or thing to watch is taper

mix, how they reduce the amount of purchases it makes. our respondents think 77% will be in treasuries and 28% in mortgage-backed securities. this is a number we'll watch carefully when the statement comes out. is it priced into the market? in general they think it is. about 80% of the taper is said to be priced into markets. a little less in equities. something to watch tomorrow as well, how the stock market reacts versus how the bond market reacts. here's some of the commentary we got. guy saying the taper hands down most single telegraphed move in the history of of monetary policy. that's extreme but it is telegraphed. rob morgan says fed chair bernanke said that tapering will begin some time this year if economical data holds up. what's not to like? joel says starting the tapering

is not being based on economic growth which is still not strong enough for the fed to declare victory. you can read a full report on the fed survey and we'll be back tomorrow covering the results of the fmoc meeting. >> thanks, steve. we'll get back with you in a moment. in the meantime we want to talk about janet yellen, is she the clear frontrunner with summers out? ben white is here, from politico, because the president is holding a grudge against elizabeth warren. >> ben is laughing at it as much as we are. and joining us is ted bracco to handicap it. do you think that's true, elizabeth warren is influential, she would have to approve any fed chair nominee. do you think the president would be spiteful enough not to nominate yellen to get back at elizabeth warren for killing

larry summers' nomination? >> i don't think that would be the sole reason but there is annoyance throughout the white house that they came out and made their comments about larry summers before the white house could make comments about summers. there's residual bad feeling. does that mean they wouldn't pick yellen? i don't think so. i think there would be other reasons we don't know about. my question is, if it's janet yellen, why isn't it jaet janet yellen yet? a lot of people want her but they're still casting around thinking there's somebody out there. at the end of the day do they go yellen? it's probable they do. they're in no hurry and i think they're talking to other candidates at this point. >> that's a good point. if it is janet yellen, why haven't we gotten beyond this, janet yellen is the woman and that's it. let's ask you about what this matters in terms of market activity. do you see a difference in terms

of market reaction if it's janet yellen or somebody else? >> i think either way it will be within the margins. whether it's yellen or another candidate still to be named, i think we'll see a continuation of the existing policy. we're all eagerly awaiting the next days of meeting and some announcements tomorrow but certainly from our standpoint, any sign of tapering is to be expected. quite honestly, notwithstanding the throes of market reaction, we believe the beginning of tapering signals something good for the economy because finally the economy begins to stand on its own. so it's a good thing. >> steve, what about the timetable issue. do you have a sense, have you heard anybody from the white house say why they're waiting or what they're waiting for to make the nomination announcement? >> i have not, other than i know that the president wanted to put some distance between the blowup of this issue in the summer, and i think now he wants to put a little distance between the summers -- not a resignation, but stepping away from the

nomination. i think there will be a couple weeks there. no reason to think ben is wrong that they maybe are casting about for other candidates. i'm not sure why they're doing that. but i think the notion that the president would not pick yellen out of spite to get back at warren is kind of preposterous on its face. >> yeah. >> there are, by the way, other ways to get back at warren he might avail himself of, and it has to do with bills in congress and things she might support. have i no doubt that ben is right, the white house is angry at elizabeth warren. i would say this is something that's an issue for the president, which is that a president who is so clearly focused on the far right, hello, mr. president, there's also a far left, elizabeth warren might be saying. >> the other question is debt ceiling coming up as a potential crisis, a government shutdown as a potential crisis and we don't know who the next fed chair is going to be, they could take that off the table by making an announcement.

they haven't done that. and the question on market rakz, is don kohn not as dovish as yellen. i think there would be a different market reaction for kohn versus yellen. i think that would be a surprise to the market and he would be seen as more hawkish. maybe i'm wrong about that. >> that was one of the knocks on larry summers, he's more hawkish than yellen. >> i think you'll see some talk about tapering and actually getting to that. what we're seeing in the market at td real time from our own clients is the fact that the market has withstood all of this drama over the past year. only 12 months ago we were talking about europe, all of these issues coming to a head. the debt ceiling was first going on, first presidential election. here we are and people are beginning to invest in their business. starting to loosen up the balance sheet, talking about how we get out from the end of this four, five year run. we are seeing good signals and i think the momentum is good for the economy. >> quick survey, janet yellen?

>> i think the market would say yes. >> steve? >> i think so, but i have to add, isn't this a political decision? i don't bring much to the payable. this is made by the president and a couple people around him. >> ben, you can't blame all of this on elizabeth warren. there are a number of senators -- >> yeah, yeah, we're seeing -- three zoo three key senators. >> let's be fair to elizabeth warren. five. >> five. >> five in the end with test art having the end. warren gets singled out because she's the loudest voice, gets the most attention and she gets singled out because the person close to the process mentioned her. yellen, with a low level of confidence. if they can find somebody else they like better -- >> the president can stick it to her? >> not stick it to her. if he felt comfortable with her,

he would have done it by now. >> any chance he asks ben bernanke to stay? steve? >> no way. >> i believe politically there's a lot of reasons why that's good for president obama, especially a year when i don't know how bernanke would respond to that. i don't know bernanke -- obama wanted bernanke to do. >> i thought he fired them on leno -- or charlie rose. >> i will saber nan i can is not where he thought he was going to be in in terms of the exit strategy for what he thought he was going to debart. i think he thought ed be way further down the line as far as passing off an exit strategy to his successor. >> president wants to put it on the fed, his last big appointment. he wants to put someone in there, not go with bernanke. that's last resort. this is an important appointment

for obama. he wants to put somebody in there new. >> thanks, gentlemen. 15 minutes before the closing bell sounds for the day. a market up 30 points on the dow. >> the latest on yesterday's mass shooting tragedy in d.c. and just how easy it is for contract workers to get security clearances. those reports coming up. ready to run your lines? okay, who helps you focus on your recovery? yo, yo, yo. aflac. wow. [ under his breath ] that was horrible. pays you cash when you're sick or hurt? [ japanese accent ] aflac. love it. [ under his breath ] hate it. helps you focus on getting back to normal? [ as a southern belle ] aflac. [ as a cowboy ] aflac. [ sassily ] aflac. uh huh. [ under his breath ] i am so fired. you're on in 5, duck. [ male announcer ] when you're sick or hurt, aflac pays you cash. find out more at aflac.com.

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welcome back. officials are confident the navy yard shooter acted alone. now the investigation is moving into the evidence gathering phase. >> we have some team coverage on this. eamon javers with details on what we're learning about the shooter and hampton pearson looks at what goes into giving contract workers those security clearances at military bases, which is facing new scrutiny in the wake of these shootings. let's start with eamon first. go ahead. >> reporter: yeah, that's right. we had a press conference from officials earlier they said they were acting out of an abundance of caution when they kept this party of the city near the washington naval yard under lockdown for much of the day and other portions of the city. they said in the end, though, they're confident this shooter acted alone. the nbc news investigative unit has but together a picture of

how exactly how this happened. the shooter entered this facility, parked in the parking garage with his rental car. went into a men's room here. he did not have the shotgun he brought onto the facility out visibly as he crossed security but he was able to either remove it from its hiding place or assem assemble it in the men's room. we also have a complete list of the names of those who were killed yesterday. i haven't had a chance to do this on the air yet but i wanted to read all of the names names because we had focus on the shooter. let's bring up the complete list. michael arnold, sylvia frasier, kathy gaarde, john johnson, frank kohler, kenneth proctor,

vishnu pandit, arthur daniels, mary francis knight, gerald read, martin bodrog, richard michael. a lot of people are now looking for answers, guys. >> thank you very much, eamon. u.s. military installation should be one of the most secure in the country. now it's raising security questions, including how contractors get security clearance. >> reporter: the white house says in the aftermath of navy yard rampage, security policies have moved to the front of the director of national intelligence and omb. there are over 4.9 million government employees and contractors with those clearances. >> dni is currently undertaking a review of security clearance policy for certain contractors. and i can tell you that at the president's direction, omb is examining standards for contractors and employees across federal agencies. >> reporter: so, how did navy

yard gunman aaron alexis, who had two gun-related brushes with the law in texas and seattle and mental health issues, get a security clearance to gain him access to a military facility in the heart of the nation's capital? security experts tell us getting a security clearance as civilian i.t. contractor is at the low end of the security scale when it comes to background checks. >> it's not that difficult to get a security clearance if you do not have major red flags in your background. if you have anger management issues but you've not seeked treatment f you have an arrest record that does not trigger any type of indications of violence, if there's nothing else in there, then there's no reason to deny a person a security clearance from a safety perspective. >> reporter: and, guys, this just in. a key report from inspector general looking at possible security issues and breaches in military contractor facilities, making its round with key

committees on capitol hill as we speak. maria, back to you. >> thank you very much, hampton pearson with the latest there. back on wall street, 11 minutes before the closing bell sounds for the day. a market that's up, about 36 points. as you said earlier, bill, we are in wait and see mode right now. >> let's agree to gather here tomorrow about this time. i guarantee you, we'll have a bigger number to show you as far as the dow and the s&p 500. is tomorrow the day for new all-time high? that's the question. could the fed and what it does cause a massive selloff instead? we'll look at both sides when we come back. when does your work end? does it end after you've expanded your business? after your company's gone public? and the capital's been invested? or when your company's bought another? is it over after you've given back? you never stop achieving. that's why, at barclays, our ambition is to always realize yours.

welcome back. ten minutes left in the trading -- actually, seven minutes if we want to be precise. >> with us ross singletary sxr ben willis. good to see you guys. thank you for joining us. ben, what's the word on the floor today about tapering tomorrow? . it's going to happen. the odds are -- the only real question is how it will be divided between pressure treasuries and mortgage-backed. >> why does that matter? >> the fact of the matter is fed's own research says buying

treasuries -- it's come from mortgage-backed securities so the concern is what will happen with the housing market when that 800-pound gorilla leads. >> so keep supporting the houtsing market? >> yes. >> what do you predict? >> we predict $10 to $15 billion. i would be surprised if we don't see something in there. i would be surprised if they do no tapering at all. i think that would surprise the market at this juncture. >> would that be a pleasant surprise or negative? >> i think that could be viewed as a negative. that the fed sees more problems we're unaware of at this point. i think that might be viewed negatively. >> what do you think the impact of the tapering will be? are you expecting this economy is going to see any changes as a result of the fed not being consistent with $85 million a month? >> they've been consistent with 85 a month. we're about to find out where we can go without that. >> s&p had its best three quarters in the beginning of this year since 1997. you still willing to buy this?

what are you doing? >> i'm still nervous on the buy side. i've been looking for that correction. a lot of the inflow i see from trader friends today, fof seeing -- >> fof? >> friends in fermentation. we have a group we send e-mails throughout the day. we find market tops. the dow is up 30 points but so is the vix. that tells professional money managers are hedging. they're nervous. that can be bullish indicator or self-fulfilling prophecy. >> what would be the leading groups if, in fact, we were to see a correction? what's most vulnerable? >> financials. >> they're up big. >> they're up big. and they have that exposure to the housing market and that all goes with tapering. industrials, this is an old fashioned bull market lately. industrials have been leading along with some technology names i consider industrial as well, so the idea is that the guys who sell the shovels made more money looking for the gold than the

gold diggers did. >> that's usually how it works. >> thanks, guys. >> heading back to closing countdown. >> then we'll look at microsoft, once the quint sessential cutti edge company of the future. looking like a 21st century kodak. could it end up the same way? i'm angela, and i didn't think i could quit smoking but chantix helped me do it. i told my doctor i think i'm... i'm ready. [ male announcer ] along with support, chantix (varenicline) is proven to help people quit smoking. it reduces the urge to smoke.

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we talked about how this is the best three quarters for the market going back to 1997. here's the dow, up 18.5% in that time. s&p up 19.4% in that time. terry dolen, you've been skeptical of the rally to this point. can we keep this momentum going after the fed announcement tomorrow, do you think? >> we focused the rally was ahead of itself. i think the market looks fantastic. i expect september to be more of a swooning market. >> you and everybody else did. >> yeah, yeah. at this point, you know, the flags out that we're at the top end of this trading range so we want to proceed with a little caution here. might see them back off from the highs. >> the last few times the fed meeting has occurred, especially are with a news conference, the market goes south. >> you can't bank on that but that's true. i think the market is looking for more signals out of tapering and a little more expectations of what they can get going forward. >> absolutely. good to see you, terry. thank you.

that's it for the first hour. we'll wait to see what the fed does. we'll have full coverage coming up tomorrow. don't go anywhere. we have the second hour of the "closing bell" coming up with maria bartiromo. i'll see you tomorrow. welcome back to "closing bell." stocks modestly higher as investors take a wait and see approach ahead of the fed two-day decision on tapering. we'll get that decision tomorrow at this time. take a look at how we're settling with dow up 37 points. a steady day in terms of volatility. 15,531. volume on the light side. 493 million shares at the big board. nasdaq picking up 27.25,