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tv   Closing Bell  CNBC  September 18, 2013 3:00pm-4:01pm EDT

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confirmation of our broader scenario, which basically is that we'll continue to see progress in the labor market. the growth will be sufficient to support that progress. and inflation will be moving back towards target. that's what will determine our policy decisions. in terms of press conferences, i think it's important to say there's ann understanding in th committee that we've had for a while that there are, quote, eight meetings every year. every meeting in which a policy decision can be taken. should anything occur at a meeting without a scheduled press conference that requires additional explanation, we certainly could arrange public on the record, conference call, some other way of answering the media's questions. >> reporter: you said that you -- the committee would be
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unlikely to raise federal funds rate if inflation remains below target. your own proceyour own projecti below target through 2016. is that consistent with a lift-off in thorough fund rates in that period? related, is there a case to be made your threshold should be supplemented with lower balance for inflation, i.e., you won't tighter if inflation is lower bound? >> so, in the latter part, you know, of course you're seeing interest rate projections and inflation projections separately. you're not seeing them combined by individuals. each individual is making their own projection. i think you're right. we should be very reluctant to raise rates if inflation remains persistly below target. that's one of the reasons that i think we can be very patient in raising the federal funds rate since we have not seen any inflation pressure. on having an inflation floor,
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that would be in addition to the guidance. we are discussing how we might clarify the guidance on the federal funds rate. that is certainly one possibility. i guess an interesting question there is whether we need additional guidance on that, given we do have a target. of course, implicit in our policy strategy is trying to reach that target for inflation. but inflation floor is certainly something that, you know, could be a sensible modification or addition to the guidance. >> reporter: victoria, dow jones news wire. many investors were expecting the fed to move at least a little bit in pulling back the bond-buying program today. given that you all decided not to do that, do you have any concerns that once again the fed is confusing investors and
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sending mixed signals? >> well, i don't recall stating we would do any particular thing in this meeting. what we are going to do is the right thing for the economy. and our assessment of the data since june is that taken collectively that it didn't quite meet the standard of satisfying our -- or of ratifying or confirming our basic outlook for, again, increasing growth, improving labor markets and inflation moving back towards target. we tried our best to communicate to markets. we'll continue to do that. but we can't let market expectations dictate our policy actions. our policy actions have to be determined by our best assessment of what's needed for the economy. >> reporter: peter barnes, fox business. you mentioned fiscal business in
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the statement today. are you concerned about a government shutdown? we're hearing more about that possibility. did that come up in your discussions at this meeting? what do you think will be the impact of a government shutdown on the economy? and what could the feds -- or would the fed be prepared to respond to that and help the economy with additional accommodation? for example, additional asset purchases. thank you. >> a factor that did concern us, as in our discussion, was some upcoming fiscal policy decisions. i would include both the possibility of a government shutdown but also the debt limit issue. these are obviously, you know, part of a very complicated set of legislative decisions, strategies, battles, et cetera, which i won't get into. but it is the case, i think, that a government shutdown and perhaps even more so a failure
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to raise the debt limit could have very serious consequences for the financial markets and for the economy. and the federal reserve's policy is to do whatever we can to keep the economy on course. and so if these actions led the economy to slow, then we would have to take that into account surely. this is one of the risks we are looking at as we think about policy. that being said, you know, again, our ability to offset these shocks is very limited. particularly debt limit shock. and i think it's extraordinarily important that congress and the administration work together to find a way to make sure that the government is funded, public services are provided, that the government pays its bills, and that we avoid any kind of event like 2011, which had at least for a time a noticeable adverse effect on confidence and on the economy.
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>> reporter: this week marks five years since the financial crisis began. and hank paulson, who you've worked closely with, said his biggest regret is that he wasn't able to convince the american people that what was done, bank bailouts weren't from wall street, they were from main street. what is your biggest regret as you reflect on the five-year anniversa anniversary? and do you believe the fed, congress and the president, have put the necessary measures in place to prevent another deep financial crisis? >> well, on regrets, i have many. i think my -- you know, reasonably, the biggest regret i have is that we didn't forestall the crisis. i think once the crisis got going, it was extremely hard to prevent. you know, i think we did what we could, given the powers that we had. i would agree with hank that we were motivated entirely by the interest of the broader public
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that our goal was to stabilize the financial system so that it would not bring the economy down, so that it would not create massive unemployment and economic hardship that was even more -- that would have been even more severe by many times than what we actually saw. so, i agree with him on that. and i guess since you gave me the opportunity, i would mention that, of course, all the money that was used in those operations has been paid back with interest. so, it hasn't been costly even from a fiscal point of view. now, in terms of progress, that's a good question. i think we made a lot of progress. we had, of course, the dodd/frank law passed in 2010. we recently have, you know, come to agreement internationally on a number of measures including
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basel iii and a number of agreements relating to shadow banking and other aspects of the financial system. i think today our large financial firms, for example, are better capitalized, by far, than they were certainly during the crisis and even before the crisis. supervision is tougher. we do stress testing to make sure that firms can withstand not only normal shocks but very, very large shocks, similar to those they experienced in 2008. and very importantly, of course, we now have a cool we didn't have in 20 08 which would have made, i think, a significant difference if we had had it which is the orderly liquidation bill dodd/frank gave to the fed. under the authority liquidation, the fdic, with other agencies, has the ability to wind down a failing financial firm in a way that minimizes the direct impact on the financial markets and on
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the economy. now, i should say, i don't want to overstate the case. i think there's a lot more work to be done. in the case of resolution regimes, for example, the united states has set the course internationally. other countries and international bodies like the fsb are setting up standards for resolution regimes similar to those in the united states, which is going to make for better cooperation across borders. we're still some distance from being fully geared up to work with foreign counterparts to successfully wind down an international, multinational firm. we made progress in that direction but we need to do more. so, i think there's more to be done. there's more to be done on derivatives although a lot has been done to make them more transparent and trading of derivatives safer. but it will be some time before all of this stuff that has been undertaken, all of these measures are fully implemented
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and we can assess, you know, the ultimate impact on the financial system. >> reporter: steve beckner. a number of economists and, indeed, some of your fed colleagues, have argued the effectiveness of quantitative easing has greatly diminished, if not disappeared. and they point to the recent performance of the economy as proof of that. and there have been a number of people who have argued there are regulatory and other impediments to growth beyond the reach of monetary policy. to what extent are these valid arguments? and if the economy does not speed up, if it does not reach your objectives, how will you ever get out of quantitative easing? >> well, on the effectiveness of our asset purchases, it's --
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it's difficult to get a precise measure. there's a large academic literature on the subject and they have a range of results. some suggesting this is a quite powerful tool, some less powerful. my own assessment is that it has been effective. if you look at the recovery, you see that some of the strongest sectors, leading sectors it, like housing and autos, have been interest-sensitive sectors. these policy have been successful in strengthening financial conditions, lowering interest rates and, thereby, promoting recovery. i do think they have been effective. you mentioned that there hasn't been any progress. there has been a lot of progress, as i said at the beginning. labor market indicators, while still not where we would like them to be, are much better today than they were when we began this latest program a year ago. and importantly, as actually referenced in our fmoc statement, that happened notwithstanding a set of fiscal
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policies, cbo said would happen and hundreds of thousands of jobs. the fact we have maintained improvements in the labor market that are as good or better than the previous year, notwithstanding this fiscal drag, is some indication that there is at least a pasrtial offset from monetary policy. as you say, there are a lot of things in the economy that monetary policy can't address. they include the effectiveness of regulation, they include fiscal policy, they include developments in the private sector. we do what we can do. if we can get help, we're delighted to have help from other policymakers and the private sector. we hope that will happen. the criterion from ending asset purchases is not, you know, some very high rate of growth. what it is, is criterion -- the
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criterion is substantial improvement in outlook for labor market. we have made significant improvement. ultimately we will reach that level of substantial improvement. at that point, we will be able to wind down the asset purchases. again, you know, and i think people don't fully appreciate that we have two tools. we have asset purchases and we have rate policy and guidance about rates. it's our view that the latter, the rate policy, is actually the stronger, more reliable tool. when we get to the point where we can -- you know, where we are close enough to full employment, that rate policy will be sufficient. i think that we will still be able to provide -- even if asset purchases are reduced, we'll still be able to provide a highly accommodative monetary background that will allow the economy to continue to grow and move towards full employment. >> reporter: chairman, donna with american banker. the financial stability
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oversight council has designated two non-bank firms and presumably a third and others to follow. however little has been said in how specifically these firms will be regulated by the fed, which has been a chief criticism of the entire process. given that, can you provide us any guidance at this point in term of how far along the fed is in terms of letting the banks know how they will be regulated besides, you know, tailoring the plans. >> well, the two firms that have been designated, aig and ge capital, actually are -- have been regulated by the fed because both of them are savings and loan, thrift holding companies. we have already a lot of experience with those firms and and a lot of contact with those firms. we will -- i mean, i want to use the word tailor because we want to design a regime that is appropriate for the business model of the particular firm. but our other objective, and what makes designation by the
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fsoc, particularly noteworthy is that the primary goal of the consolidated supervision by the fed is to make sure that the firms -- the firm doesn't in any way endanger the stability of the broad financial system. so, we'll be looking at not just the usual safety and soundness type matters or supervision, which both can be again tailored to the types of assets and liabilities that the firm has, but also we're going to want to focus on things like resolution authority, practices relating to derivatives and other exposures, interconnectedness, et cetera, to make sure the firm in its structure and in its operations doesn't pose a threat to the wider system. that's what is going to be distinctive about our oversight. not only of these designated firms but also of the large bank
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holding companies we already oversee and which we're already subjecting to tougher supervision, higher capital, stress tests and all the rest. >> reporter: peter coke with bloomberg television, mr. chairman. one of my colleagues was remarking as we came in here, we don't often get surprises from the federal reserve. this was a surprise. you talked about you hadn't telegraphed anything specifically but you've seen the market reaction, i'm sure. my question for you is, were you intending a surprise today? and did you get the intended result, judging from the market reaction, and related to that, by taking this action today, continuing the bond purchases going forward, at what point do you believe you're starting to complicate the exit strategy simply by continuing to keep the fed's foot on the gas pedal? do you make life more complicated for the federal reserve down the road? >> well, it's our intention to try to set policy as appropriate for the economy. as i said earlier, we are
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somewhat concerned. i don't want to overstate it, but we do want to see the effects of higher interest rates on the economy. particularly mortgage rates on housing. so, to the extent that our policy makes conditions -- our policy decision makes conditions a little bit easier, that's -- that's desirable. we want to mike sure that the economy has adequate support and we, in particular, it's less surprising the market or easing policy as it is avoiding a tightening until we can be comfortable that the economy is, in fact, growing, you know, the way we want it to be growing. so, this was a step -- it was a step -- precautionary step, if you will. it was an -- the intention is to wait a bit longer and to try to get confirming evidence to whether or not the economy is, in fact, conforming to this
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general outlook that we have. i don't think that we are complicating anything for future fmocs. it's true that the assets that we've been buying add to the size of our balance sheet. but we have developed a variety of tools. and we think we have numerous tools that can be used to both manage interest rates and to ultimately unwind the balance sheet when the time comes. so, i -- you know, i'm -- i feel quite comfortable that we can -- in particular, we can raise interest rates at the appropriate time, even if the balance sheet remains large for an extended period. and that will be true, of course, for, you know, future fmocs as well. >> mr. chairman, kate davidson from politico. do you think the recent
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attention paid to who will be your replacement has had any immediate effect on the fed? could it have any lingering effect on your successor? do you think the process has become too politicized or is this part of a healthy debate? >> i think the federal reserve has strong institutional credibility. and it is a strong institution, highly competent institution. and it's independent. it's nonpartisan. i'm not particularly concerned about the political environment for the federal reserve. i think the fed will be -- continue to be an important institution in the united states and that it will maintain its independence going forward. >> reporter: thank you, mr. chairman. greg rob, market watch. was there a discussion among the committee today about changing the forward guidance to 6 .5%
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jobless rate? could you say why the committee decided to hold that steady in light of the weaker economy? >> well, as i mentioned earlier, the committee has regularly reviewed the forward guidance. and there are a number of ways in which the forward guidance could be strengthened. for example, they mentioned inflation for. there are other steps we could take. there is other information we could take after we get to 6.5%. if we could provide precise guidance, that would be desirable. now, it's very important we not take any of these steps lightly. we make sure we understand all the implications and that we are comfortable that it will be -- that the -- any modifications to the guidance will be credible to markets and to the public. so, we continue to think about options. there are a number of options we have talked about, but today
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we -- as of today we didn't -- we didn't choose to make any changing to the guidance. >> reporter: l.a. times. as you may know, the census bureau reported yesterday the poverty on medium household income saw no improvement last year. i wonder when you see median incomes turning up significantly for most people? and in light of the fact that people in the middle and the bottom have seen very little of the gains relative to higher income households, how would you assess the post-quantitative easing and fed policies? >> sure. so, that's certainly the case, there are too many people in poverty. there are a lot of complex issues involved. there are complex measurement measures. i would just have to mention
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that. there are a lot of issues that are really long-term issues as well. for example, it might seem a puzzle that the u.s. economy gets richer and richer and yet there are more poor people. and the explanation, of course, is that our economy's becoming more unequal. the more -- more very rich people and more people in the lower half who are not doing well. there's a lot of reasons behind this, this trend, which has been going on for decades. and economists disagree about the relative importance of things like technology and international trade and unionization and other factors that have contributed to that. i guess my first point is that these long-run trends, it's important to address these trends. the federal reserve doesn't really have the tools to address these long-run distributional runs. they can only be addressed by congress and administration. it's up to them to take those steps. the federal reserve is -- we are
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doing our part to help the median family, the median america, because our -- one of our principle goals -- we have two principle goals. one is maximum employment, jobs. the best way to help families is to create employment opportunities. we're still not satisfied, obviously, with where the labor market, the job market is. we'll continue to try to provide support for that. and then the other goal is price stability, low inflation, which also helps make the economy work better for people in the middle and lower parts of the distribution. so, we use the tools that we have. it would be better to have a mix of tools at work and not just monetary policy, but fiscal policy and other policies as well. but the federal reserve, you know, we only have a certain set of tools and those are the ones we use. again, our objective -- our objectives of creating jobs and
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maintaining price stability are quite consistent with helping the average american. but there are limits to what we can do with regard to long-run trends. i think those are very important issues congress and the administration, you know, need to look at and decide, you know, what needs to be done there. >> reporter: hi. jeremy with afp. some emerging countries are blaming the fed for distress they're experiencing. i want your take on that. and also how did you judge the way markets reacted to your announcement back in june. thank you very much. >> let's talk a little about communication in june. let me talk just about the emerging markets, which is an important issue. let me first say we have a lot of economists who spend all of their time looking at
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international aspects of monetary policy. we spend a lot of time looking at emerging markets. i spend a lot of time talking to my colleagues in emerging markets. we're watching that very carefully. the united states is part of a globally integrated economic and financial system. and problems in emerging markets, in any country for that matter, can affect the united states as well. and so, again, we're watching those developments very carefully. it is true that changes in longer term interest rates in the united states but also in other advanced economies does have some effect on emerging markets, particularly those who are trying to peg their exchange rate. and can lead to some capital inflows or outflows. but there are also other factors that affect inflows and outflow. those include changes in risk preference by investors, changes in growth expectations, different perceptions of
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institutional strength within emerging markets across different countries. so, there are a lot of factors that are there playing a role. that's one reason why different emerging markets have had different experiences. they've had different institutional structures and different policies. but just to come to the bottom line here, we think it's very important that emerging markets grow and are prosperous. we pay close attention to what's happening in those countries. it affects the united states. the -- we -- the main point, i guess i would end with, though, is that what we're trying to do with our monetary policy here is, i think my colleagues in the emerging markets realize s trying to create a stronger u.s. economy. and a stronger u.s. economy is one of the most important thins that could happen to help the economies of emerging markets. and, again, i think my colleagues in many of the
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emerging markets appreciate that notwithstanding some of the effects they may have felt, that efforts to strengthen the u.s. economy and other advanced economies, in europe and elsewhere, ultimately redounce to the economies of emerging markets and economies elsewhere. >> thank you very much. >> thank you. >> welcome to the "closing bell." i'll bill griffeth along with maria bartiromo. i'm at new york stock exchange. where are you? >> i'm coming to you from blackrock headquarters in new york. we're at the trading desk looking at the news. the fed elected not to taper, as we thought here on the "closing bell." does not warrant reducing asset purchases. we'll keep with $80 million a
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month of bond buying and with that the markets took off. >> what you and i were looking at were the benchmarks the fed set for themselves in terms have inflation expectations, employment gains, growth in the economy. we aren't anywhere near any of those benchmarks right now. i mean, while i left here yesterday maybe convinced they were going to cut some of the tapering because that's what sh was talking about, i was still scratching my head as to why when we hadn't reached those benchmarks. they answered it today. chairman bernanke said inflation is not where they want it and job growth is not where they wanted it. >> that's right, bill. that's why i never expected a tapering because the fed was clear on those benchmarks. every time we speak with ceos they say a similar tune. that is, this is an anemic growth pace in the economy. having the fed pull away at this point brings up a debate on whether or not the economy in terms of the growth pace you
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would expect at this point in a recovery in this cycle is just not there yet. so, again, it's about the data. bernanke just said that. he reiterated that a number of times in the press conference. it is about the data. that's what we're looking at for the next meeting. i would say the data has to improve in the next two months. i would probably expect tapering to begin in december. as we have discussed, that means it is somebody else's problem come 20 14, unless of course bernanke chooses to stay, which is unlikely. >> he was very coy about that. meantime, major averages in the stock market, all-time highs in this big rally we're seeing. dow up 142 points. about 30 points above its old all-time high. the s&p is up 19, about 15 points above its all-time high. gold has skyrocketed by $30 today. and the yield on the ten-year note is at a five-week low down to about 2.67%.
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let's bring in the experts and bring in this surprising decision not to taper. bringing in ken fisher, brian jacobson from wells fargo advantage funds, mike, and our own team of rick santelli and steve liesman. >> ken fisher, this has to be your worst nightmare today. you are not a fan of ben bernanke. you're not a fan of quantitative easing at all and now it continues at the same pace for the foreseeable future. >> let me say i'm a bull. the market's rising, i'm happy. but i'd much rather see the wicked witch of the east go away. i think we'd be way better off if we ended quantitative easing real fast so this scapegoat can get behind us. quantitative easing is bad, not good. bernanke is bad, not good. >> you think the economy would be better off without quantitative easing? >> absolutely. we have done well without quantitative easing, not in
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spite of it. it's an evil. look at britain when we thut kwan ta -- when they put quantitative easing in, things went to the tank. leading curve has been a leading economic indicator. steeper yield curves, auger in more bank future lending because it's a reflection of the marginal proceed pmargin al propensity for banks to lend. you could get a marginal bank curve of zero to zero and nobody would lend to anybody. >> perhaps, perhaps. and yet as this period moving into this meeting has created real volatility and interest rates moved up about a week ago, touching almost 3 %, the market for housing has slowed down. so, i mean, you can't have it both ways. brian jacobson, let me ask you your take in terms of the move in the ten-year today, five-week
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low, back down to 2.6%. is that going to spur the momentum? housing? >> well-being i thi, i think it help a little bit. i think more significant is the pass-through on the mortgage interest rate side. a lot of banks have announced they'll be cutting back on staffing due to the decline in mortgage refinancing applications. so, perhaps some of the effect of the decline in ten-year treasury is not going to percolate into the housing market much like the fed would like. maybe they've painted themselves into a corner with a lot of the taper talk. i wasn't convinced they were going to do the tapering but the markets certainly appeared to be. now there's going to be the problem that given there was no taper, that this might not actually be stimulative anymore. >> ken, what rn ywere you going say backup in rates and potential impact on the housing market? that can't be good for housing. >> let me go back to the british
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example. when they ended quantitative easing, the same thing happened and housing took off. >> i think we have to draw a distinction with the british example, though. >> moreover in terms of having it both ways, when everybody thought tapering would end, every day the market rose right into it. they found out it wouldn't, the market keeps rising. why? it's a bull market. it's in spite of this nonsense, not because of it. >> michael, what do you make of what's going on today? where does the stock market go from here? we're at all-time highs. is this about the economy or the continued drip of morphine coming from the fed? >> morphine. i think it's all about morphine, bill. i think we really should not be surprised. i was calling for at most a $10 billion cut. yesterday we were talking about how you would not be surprised to see no cut. bill, something that's inte having, on milton friedman's 90th birthday, commenting on -- excuse me, my glasses, commenting on tightening during the great depression and he
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said, i quote ben bernanke, regarding great depression, you're right, we did it. we're very sorry but thanks to you, the friedmans, we won't do it again. bernanke says he'll be very, very cautious unwining any stimulus efforts. whether it's right or wrong, it's here to stay. i think the markets go higher. i think it's a sentiment issue more than a data issue. i think people are way too wound up about how much tightening was going to occur. i think this is really positive for the markets. >> it certainly has been already. we're seeing this market take off once again record territory. steve liesman, let's go through some of the things ben bernanke said. he said the downside risks have, in fact, diminished. that's a positive for the core fundamental story here, although not ready yet to actually begin to pull away the punch bowl given the fact that the growth numbers that we're talking about are still considered anemic. >> yeah, maria, having covered this for the last five years,
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this financial crisis and the innovative and creative response of the fed to, it i find policy right now and the outlook about it inskrutable as i ever have. i think things are confusing and i think the outlook is confusing. i heard bernanke say three things. one, they don't have confidence in the outlook. the second is financial conditions have tightened and they're concerned about that. and the third is concerns about fiscal restraint. when i puzzle this through about when the fed will ever actually be able to tighten, you think about better growth. the fed talks about tapering. rates rise. and then ultimately you have this concern about growth and then the fed talks about not tapering. it's like a hamster on a treadmill. it's hard to understand how the federal reserve gets to a place where it's happy enough with financial conditions. i mean, if you can't take 285 on the ten-year, what can the economy take?
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>> what about the marker? bernanke was clear to point out 6.5%. remember a long time ago we were saying -- >> but that's interest rates. moo ma rhea -- >> hold on. he was very specific. he said 6.5%. >> you have it wrong, marie dwra. >> when was the last time -- >> but that's -- >> i know it's higher interest rates. however, de -- he did put that out there, unemployment rate at 6.5%. once that's out there -- >> it's been out there. >> i know. but before bernanke was so specific, you very rarely had any chairman be so specific in terms of what they're looking at in term of an actual rate. and he was. >> that's right. but you had the unemployment rate come down, which everybody thought was the precursor for tapering. now that unemployment rate is not really the metric to follow. the 6.5% is not so much a metric. it's a metric for interest rates, not necessarily tapering. i wonder if we get to this place where we have to do it all over again.
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you have better economic numbers. is it a month from now? two months from now? and what the fed actually buys here by not tapering this time around when the market was already primed for it. >> steve's right. we're in a ham centster cage. if it gets withdrawn, it will be slow. we're in a vicious cycle where it's very difficult to get out from under this. regardless if we like it or not, more money will be pumped into the system for longer than perhaps it should be. >> rick santelli -- >> but the economy is not doing so great. >> rick santelli -- we've gone how many minutes and we haven't gone to rick yet. ken fisher doesn't like qe as much as you don't like qe but it's still in place in full force. what are you talking about on the floor today? >> i ado agree with ken. put it curve is steepening. five to tens steepened five basis points.
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so even though we're -- well, you know, listen, they don't call him helicopter ben for nothing. i found it the most factual aspect of the statement is when he quoted "my way" when asked about regrets. i think the fact the song is called "my way" today it's so appropriate. as you look at interest rates hovering as lowest levels since the second week of august, only maria's words are ringing in my ears. so many ceos have been on talking about anemic growth. i don't know where eye been. there are been a few. but the story is, interest rate is going up because the economy is better. candidates flip-flop, ben flip-flops but eventually interest rates will level. >> thank you, mr. sinatra. you like the rise in the stock market but are you investing because of the fundamentals or
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investing because of the morphine drip from the fed? >> there is no morphine drip from the fed. if there was, it would be rising at a rapid rate. it's not. >> it's rising -- >> you don't think the stock market is going up because of the fed's -- >> no, it's going up to spite it. i like a bull market. there is no morphine drip. that's ridiculous. >> maria? >> i don't know why people are questioning -- >> if it was morphine drip, the quantity of money would be going up. >> i don't know why people are questioning ben bernanke's news today. the bottom line is, we hear it every day, that people, companies are sitting on cash. the corporate sector today is probably the strongest we've seen in a long time. three-plus trillion on balance sheets. because of the uncertainty, skyrocketing costs for regulation, health care, uncertainty of tax policy, companies are sitting on that cash. as a result, we have a persistent unemployment problem.
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that's what bernanke and company are looking for and looking at. that's why there is no tapering today. that's the bottom line. i mean, i don't know what you guys are seeing. look at the corporate earnings. >> i think that's a good -- >> the third quarter is over in eight-days. revenue has been squat. we're not seeing the growth that is warranted in order to -- >> maria, you're saying 15,685, the current level of the dow, is all fabricated completely? are you on record saying that now? >> no, i don't i think it's fabricated at all. >> then how can you have it both ways? >> i think there are very few alternatives. i think this market is on fire -- >> exactly. >> so, it's rigged -- >> it's three-part monty? >> is that why the stock market is going up if it's not the morphine drip, because it's the least best looking house on the street? >> the market is going up because globally the economy is doing better than people think it is, and that's the surprise. it's the power of capitalism
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despite terrible policies. >> gentlemen, we thank you all. >> where is the economy doing best? housing. and people are worried it's vulnerable because interest rates have been so vuler? able. is it doing so great in spending? probably not. >> very, very sluggish growth. very sluggish growth. >> maria, they have given themselves an out to actually start the tapering in october. if you think about, they want to make every single meeting important. so one way to do that -- >> that makes no sense. >> they're trying to get through the fiscal year. every single reference as far as in the statement f you read through it, it takes about the fiscal drag. perhaps when we get through the fiscal end of the year, the fed wants to wait to see whether or not there's actually a budget, is there going to be a shutdown of the government. that would give them cover if they want to to actually begin tapering at that point. >> we got to go. >> one more thing. i want to say who the smartest guy of the week is now. it's larry summers. larry summers gets my vote because he doesn't want any part
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of this. >> there you go. >> no water left in the water cooler. we exhausted it. thank you for your insights. ken, great to see you. maria, we expected fireworks and we're getting them. 20 minutes left in the trading session. all the major averages in record territory with the dow up 153 points right now. >> we want to look at repercussions. how will today's move or not move impact blackrock's strategy? they manage for money than the federal reserve, $3.8 trillion. coming up, an exclusive interview with larry fink. rick receipt ereither is with m. jooishg o?" ♪ [ woman ] i'd be a writer. [ man ] i'd be a baker. [ woman ] i wanna be a pie maker. [ man ] i wanna be a pilot. [ woman ] i'd be an architect. what if i told you someone could pay you and what if that person were you? ♪
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. we have bob pisani, maria at blackrock. there is so much chatter on the floor today. nobody can believe what the fed did today. >> never have so many been so wrong about something. kudos to you, my old friend. you two got it right. kudos to both of you. >> we were just looking at the numbers. >> take a nod. you were right. there are a lot of mad people
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out on the street. they're mad because they're losing money. they were flat or short the market and they're not happy with these developments. they're convinced the fed has misled them. they're not convinced they misread the fed, which is the logical thing to anticipate. it's the fed who misled them. whatever you call it, there was a mass psychosis. we all convinced ourselves that even though the data was weak, it was strong enough to warrant a taper. that's the bottom line for all of this. there was a lot of people who felt mr. bernanke was making a political decision but for his legacy he needed to begin tapering right now on his watch. a number of other people said, however, he was more concerned, perhaps, about making it even a bigger mistake. it would turn into japan. japan raised interest rates suddenly, about ten years ago, a little more than ten -- less than ten years ago. >> prematurely. >> that's what he was worried about. john mentioned that to me. kudos to him. >> maria, i'd be interested to hear what your guest will say about that because his thing is
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interest rates and fixed income investing. what do you do now? what are interest rates going to do now if they keep this? the dollar has tanked today. rates have gone down to a five-week low again. you wonder -- >> one thing that blackrock has been noting, is that it hasn't been necessarily money coming out of one area and going into another but a reallocation within bonds. we'll talk to rick reiter about that. they're seeing a reallocation within bonds. we want to get to dominic. we have a $1,000 price on one former high flier. looks like it's flying high again. >> records are being set all over the market. one of those stocks hitting a record high is priceline.com. that's the online travel booking website. it went over $1,000 per share for the first time ever just in the past 10 or 15 minutes. that eclipses old record high of
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$995 on august 9th. the move makes priceline worth $52 billion and makes it worth just about as much as gm. get this, bill griffeth, making it worth more than shipping giant fedex. back to you. >> that's the world -- we're not in the 20th century anymore, dominic, that's for sure. we'll head toward the close here. we have about 12 minutes left in the trading session here. what a wild day it's been. up 145 points in record territory for the dow, maria. >> unbelievable, rock 'n' roll. we'll take a quick break. when we come back, we'll talk fixed income with rick rieder and howard fink. how are bond managers raeking to the fed's decision? i'm sure pretty happy. larry fink on the docket. what does this mean about the overall economy? could the fed think it's worse than we thought?
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we'll come to you live from blackrock headquarters in new york. rch. rch. my doctor and i went with axiron, the only underarm low t treatment. axiron can restore t levels to normal in about 2 weeks in most men. axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. women, especially those who are or who may become pregnant and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. report these symptoms to your doctor. tell your doctor about all medical conditions and medications. serious side effects could include increased risk of prostate cancer; worsening prostate symptoms; decreased sperm count; ankle, feet or body swelling; enlarged or painful breasts; problems breathing while sleeping; and blood clots in the legs. common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. ask your doctor about the only underarm low t treatment, axiron.
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the yield on the ten-year note is at a five-week low, 6.27%. now back to 270.
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all of it means a higher stock market. the major averages, dow and s&p are in record territory at this hour. the dow was up 179 points. the nasdaq, that's far from its all-time highs but that's a high we haven't seen. s&p is up 20 point. we've got our fireworks, as expected, maria. >> we sure did. thanks very much, bill. we are looking at the ten-year 2.07%. want to talk about yields and the implications of the no tapering news today out of the federal reserve. rick reiter is with me, chief fund manager at blackrock. thanks for being with me. your thoughts on the lack of tapering. 2.7% on the ten-year. how does that change your strategy? >> you heard we wouldn't taper
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interest rates. it was actually pretty surprising. you had a window. you think about back in may, he opened the door to actually start the tapering. i thought they would do it in treasuries, not mortgages. i thought they would be easy in terms of guidance, in terms of forward guidance bs which they were. at 270 you ratcheted down the range of the ten-year. you have to ratchet down 25 basis points. >> this is something -- we got the evidence and the bow tie from the federal reserve knowing -- saying that the economy is just not where they would like to see it and not growing at the pace one would expect, gwynn where iven where the recovery. this is something we've been hearing a lot from ceos, sitting on catch, unwilling to put money to work. what does this tell you, the fact they are downgrading the assessment of the economy going forward, holding back from taking back the stimulus. are things worse than we thought? >> i don't think -- i think the fed has been aggressive in terms
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of their economic forecast. i think they're bringing more in line to where the economy will grow going forward. i think they're suggesting we're in a decent economic period but, boy, we need to ratchet down where we've had an aggressive growth paradigm. i think they're reflecting that. i think forward guidance has been pushed out to a very long period of time to where rates were going to be. i think they're trying to adjust to that. you've said at blackrock investors need a new core bond portfolio. you're seeing a reallocation within the bond market. not money going out of bonds into equities. what are the opportunities you see now in the bond market? >> there's been the great story out of debt into equity. what's happening is great rotation within fixed income. >> not out and into equity. >> people are looking, how do i get income in my portfolio? you have an aging population. people still need the income. how do i get it without the interest rate hit. the drawdown in terms of
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interest rate and losses. people want income. they're buying high-yield loans, inconstrained funds. i think that continues for a while. people being flexible without taking fixed income. >> are you looking at ash local debt, european local debt. there are yields to look at there. >> we think european high yield will be a good opportunity. we think given the nature of the change in the banking system you'll see more debt issued to european markets. same thing with asia. part of being flexible is finding areas in the world where you with find opportunity. >> larry summers is out. you think it's janet yellen. does she become even more accommodative? she's basically been drinking the kool-aid with bernanke, right? >> let's say it's don kohn or janet yellen, whoever it is, we'll continue down the road with the fed laid out. both are pretty pragmatic people and see where the committee laid out the forecast and i think they'll continue down that road. do i think it takes the committee a bit more dovish with
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janet yellen? i don't think so. >> thank you so much. >> we're heading to the close here. we're waiting to see if the dow can remain in record territory. we're losing steam as we go. the bias is to the downside by a little bit. in fact, we're just below that record high. we'll come down with the countdown. plus, yes, there's more. oracle earnings are due out at the top of the hour. we'll have full team coverage of that coming up in a bit. >> also take a look at china's credit bubble, jim chanos has been warning us about, telling us how he's allocating capital. i put in the hours and built a strong reputation in the industry. i set goals and worked hard to meet them. i've made my success happen. so when it comes to my investments, i'm supposed to just hand it over to a broker and back away?
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that's not gonna happen. avo: when you work with a schwab financial consultant, you'll get the guidance you need with the control you want. talk to us today. ♪ unh ♪ [ male announcer ] you can choose to blend in. ♪ or you can choose to blend out. the all-new 2014 lexus is. it's your move. but it doesn't usually work that way with health care. with unitedhealthcare, i get information on quality rated doctors, treatment options and cost estimates, so we can make better health decisions. that's health in numbers. unitedhealthcare.
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closing up a crazy day on wall street. fed announces no change in tapering. growth is not strong enough to sustain job growth or bring inflation rate back where they wanted. the dow and s&p are in record territory. in fact, the dow is strengthening as we go into the night with a gain of 140 point. gold skyrocketing by $57 as dollar tanks. the yield on the ten-year goes
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to all-time low. oracle earnings coming out at the top. maria bartiromo is at blackrock to talk with larry fink himself. stay tuned for hour number two of the "closing bell." i'll see you tomorrow. >> 4:00 on wall street. do you know where your money is? hi, welcome back to the "closing bell." i'm maria bartiromo coming to you from the headquarters of blackrock in new york. historic day on wall street, dow and s&p 500 close at all-time new record highs. after the federal reserve said they would keep their foot on the gas pedal and did not slow down the bond buying at all. take a look at where we stand as question close out another day. the dow jones industrial average up 145 points. we had been up better than 170.

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