we're going to have it live here on cnbc as you know. ben bernanke giving his last news conference as fed chairman today as well. steve liesman will ask that question, we'll see it later. that does it for us today. more fast at five, follow me on twitter. power starts now. >> lace them up. "halftime" is over. the second half of the trading day starts now. >> all right. countdown to the fed, everybody. you know the story, your investments and their performance could hinge on what takes place over the next two hours. the rate decision, statement on the economy and ben bernanke's final news conference as the fed chief. will he go out with a bang and begin pulling back on stimulus? we'll give you a playbook to how you might want to react. three big stories on the housing front. housing starts, six-year highs, but mortgage apps plunge to 12-year lows. why affording a mortgage is about to get a lot tougher.

and we continue counting down "power lunch's" top five business and finance stories of the year. number three is coming up later this hour. see if you can guess what it is. meantime let's go down to sue at a very busy new york stock exchange. >> yep. you're right, ty. the fed is front and center for investors in the markets tout today. just under an hour until the latest decision on interest rates and the statement followed, of course, by ben bernanke's news conference as fed chief. so what are the top minds on wall street expecting? steve liesman knows. he's been talking to them and joins us now live from washington. steve, over to you. >> hey, sue, thanks. there is a big debate about what happens here in a little under an hour with some of the biggest investment banks on wall street really having die met rickically opposed positions. let me show you, deutsch bank, or goldman, cued up first here, what deutsch bank is saying in their comment this morning, we're looking for a $10 billion treasuries only taper.

there's now much less concern on behalf of the fed that a taper will engender a further tightening in further financial market conditions. take that and put it against what goldman sachs is saying. we think the case for not tapering, which one is that? would be a hawkish surprise. that's number three. case for not tapering is compelling given the inflation trend remains worrisome. the committee has not likely come to an agreement on how to -- on how to advance the forward guidance. and the third one, do we have that there? it's messed up today. you see the goldman thinks there's not going to be a taper and those are the reasons. let me show you the cnbc/ fed survey and what you see is 20 % of our respondents believe there will be a taper in december. get to january it's up to 30%. the lack of conviction on the market is one of the reasons why some of the people think the if

fed won't taper. but jon riding from rdq economics on "squawk box" this morning said that's not a good reason. >> why does the fed care about surprising the market? they told us, well, back in september, we didn't say we were going in september and the market was primed for it. ten-year yields are back where they were going into that september meeting. i think it's ready. the short tenders got the message that the taper doesn't mean a tightening is coming in a few week's time. >> that's the key, sue. i think the fed feels it has the flexibility to do so. whether it will we'll find out in less than an hour. >> absolutely. i know you'll be in that news conference as well. we'll see you then. >> bring in bp and kenny polcari, director with o'neill securities and cnbc market analyst. what's this market telling you right now? we're up three points on the trading session. bad five-year note auction right before the fed coming out with its statement and whatever

decision it decides to make. what's the market telling you? >> i think the market is expecting the status quo, which is there will be no taper initiated this month but i think what you will get is the guidance saying very much if it stays like this you can expect it to start first quarter of next year. i think it's still march, but i think that's what you're going to get. more clarity and more guidance but getting no taper today. >> what if we see 3% on the ten-year? we're at 2.88, 2.89. >> that will not be particularly good. watching the vix futures has been interesting. when people freak out, they go to buy put protection and that's reflected in the vix. put up what the vix has been doing. we said a spike in the contract that just expired today, the december contract, but the bottom line is, it's really been very low for a long time. why is it so low? why aren't they freaking out buying more protection if they think the taper is coming. what jon said, better communications, convincing people the taper is not tightening and we got a budget deal, that's reduced volatility

issues as well here. the vix futures, the december contract was higher than the contracts out. they're expecting a little volatility around. the markets are saying the vix futures are saying there might be some volatility if they taper but not expecting it to last for months on end. >> we have to leave it there, it turn it over to "street signs" a little earlier today. ty, over to you. >> thank you very much. time for the power lunch countdown. three big stories in housing. diana olick joining us from washington. diana, some numbers out, housing starts, highest level in almost six years. what's fueling it? we know builders are feeling a little optimistic. >> they are definitely feeling more optimistic, tyler. remember this is kind of a volatile number, but that said, we did see a huge surge in housing starts in november after they were basically low to flat in september, october. one thing that was in this report that didn't get a lot of play is that september and october saw housing starts down year over year for the first time since 2011. so then when we see this

enormous jump we have to say there might be some revisions in the future. that said, household formation, we have all this pent up demand. we have only seen 380,000 households formed in the past year through september. that number should be up around 1.1 million in a normal market. so there is a lot of pent up demand for new homes and i think the builders are playing on that. you saw some good earnings from leonard today as well. >> builders are terminally inclined to build even when, here's topic number two, the number of people applying for mort again gauges has dropped to a multiyear low. what's going on? >> these are seasonally adjusted numbers. these were a big surprise and kind of a mystery as to how you have this big plunge in mortgage applications and yet see the big jump in housing starts. this is a weird housing recovery. one third of this market is all cash right now. that has not moved in the past couple of years. you have a lot of investors in there, not just on the low end anymore, but moving up into

the mid-range level. remember, mortgages are still very tough to get. we have seen this tightening that has not really eased up at all and also with rates moving up just what they have in the past six, seven months, refinances are down over 60% from a year ago. that's driving a lot of it. mortgage purchase apps down 10% from a year ago. that's the conundrum. >> pricier mortgages ahead. what's up with that? >> regardless of what the federal reserve does today, mortgages will get expensive in 2014 and that's because fannie and freddie are trying to get their market share lower. they have raised fees not just in general for lenders, but also for certain borrowers who have not terrible credit scores, but scores in the 720 range. they just announced this two days ago and it was a big surprise. it was a lot higher than a lot of folks expected. lenders, of course, passed those fees on to borrowers in the form of higher rates. so regardless of what the fed does today, you will see mortgages more expensive in 2014. >> and they're about to lower

the thresholds aren't they for conforming mort gains? >> yeah. absolutely. the fha is lowering that threshhold. talk about it at fannie and freddie. at fha they've lowered that loan limit so fewer will be able to get the fha 3.5% low down payment loan. >> thank you very much, diana olick, on real estate. to dominic chu for a market flash. >> those blockbuster housing starts are a putting a bid to the housing stocks. check out some of the other names tied to better home construction in america. shares of air conditioning and ventilation company lennox international up around 2%, 3% sitting near record highs for that particular company. then quan knicks building products. that stock around 3, 4% as well. not just the big home builders. the ripple effects in the market as well. back over to you. >> dom, thank you. counting down to the fed decision. the all-important statement on the economy and ben bernanke's last news conference as fed chief. is this the beginning of the end

of stimulus. is one of the greatest subsidies about to end for the rich? is the great american income gap holding back the economy? we'll talk about that with the chief u.s. economist for jpmorgan and morgan stanley. they will both weigh in. we'll get their one big prediction ahead of the fed decision. "power lunch" is back in two. (vo) you are a business pro. seeker of the sublime. you can separate runway ridiculousness... from fashion that flies off the shelves. and you...rent from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price. (natalie) ooooh, i like your style. (vo) so do we, business pro. so do we. go national. go like a pro. avo: thesales event "sis back. drive which means it's never been easier to get a new passat, awarded j.d. power's most appealing midsize car,

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did you hear there is a decision on interest rates in

about 48 minutes and 19 seconds? we're counting down. so will policymakers begin pulling back on economic stimulus? that's the big question. has been most of the year. one thing is sure, the biggest wealth subsidy for the rich in years is coming to an end. if not in an hour, certainly soon. robert frank here with more. >> the federal reserve certainly helped lift all boats out of the crisis, but it's lifted the yachts more than the smaller boats. let's explain why. a lot of the gains from qe have gone to financial assets, stocks especially. the wealthy hold most of both. according to the federal reserve's numbers, the top 5% hold 60% of financial assets and the top 10% of americans hold 80% of stocks. so most of the gains from the fed have gone to the top. the top ten billionaires in america saw their fortunes grow last year by more than $100 billion. 95% of the income gains between 2009 and 2010 have gone to the top 1%. the rich have fueled a boom in sales of art, wine, collectible

cars, luxury goods. we've talked a lot about that. on my web piece today, i wrote that every ferrari dealership in the country should have a picture of ben bernanke in the lobby and it should say, our number one salesman. because this really has flowed to the ferrari buyers more than the rest of the population. >> this was not the intent of this program, was it? >> no. we should be clear, i think the intent of the program was to inflate, reinflate markets, help housing, help the overall economy. i don't think they expected it would really had such a disproportionate effect on both. >> and halt the process of deflation. >> that was the big worry. >> thank you very much. moving quick, sue, down to you. >> we sure are, ty. we're going to pick up where you left off because according to a recent ap survey, economists say that the growing income gap between the rich and everybody else is hurting the u.s. economy. some of that may be because of those very low interest rates which have fueled some of the things robert frank talked aboutp. joining us with more on this

trend and future of fed policy are two people who used to work for the central bank, morgan stanley's chief u.s. economist, vincent rhinehart and jpmorgan's chief economist mike fur rolly. pleasure to have you here. >> thank you. >> vince -- >> thanks for having us. hi, mike. >> hey, vince. >> let's start with what i mentioned. this income gap. there have always been income inequality certainly, but it seems as though vince, the gap has become much wider, some of it is being laid at the feet of the fed? >> so i think you do want to separate income inequality and wealth inequality. both have always been unequal, income inequality has gotten worse. but that's not so much the wealth creation the fed has engineered. it's longer forces at work, like globalization, opening up of the u.s. economy, shift in the mix of what we produce. >> mike, do you agree with that? >> i do. i would add to what vince has said, income inequality has been increasing since the 19 0s but we have to remember that income

inequality tends to lessen as the economy does better. to the extent that fed is helping the recovery, that should actually narrow some of the cyclical inequality we've seen. >> how does the economy look to you, mike, at this point? what's your projection as we end up this year and go into a new year, 2014? what are you looking for in terms of economic growth? >> right. it's looking pretty good right now. i have to say the last week or two of data have looked surprisingly good and for next year, we're looking for a bit of a bicup from here. we're looking at for growth around 2.75, about a half point better than what we're getting this year. >> vince, weigh in on that. >> same story. our tracking estimate of gdp has moved up for the fourth quarter from 1% a week ago to about 2% now. our real-time indicators that we're following are really flashing green. and in our forecast, we've been stuck in a growth channel centered on 2.5 next year. >> vince, is that enough for the fed to begin its tapering at

this meeting or not? >> so, ben bernanke laid out three data conditions. you got to get employment gains, gdp growth picking up and disinflation ending. the problem is, inflation has fallen even more since over the last couple months. they're well below their goal and that's why we think they'll put off the taper until january or march? >> what about you, mike. >> we're looking for january. i think it's a close call. i would not be surprised if they were to taper in an hour from now. as vince pointed out inflation isn't going in the right direction but it's not too far off where they were projecting it in june. >> vince? >> after september 18th, you never put a zero probability on anything. they may very well surprise us in an hour. there's another factor at work, though. it's a different share. >> exactly. >> a person sitting in the chair

than anticipated. janet yellen didn't get confirmed in time. it would be a messy sendoff the person explaining what the federal reserve will do over the next couple of years is the person who will probably resign within a week or two. >> to both of you now, what would be your out -- what would surprise you at this meeting? mike, what's your forecast? what's the outlying thing that would surprise you from the meeting? >> i would think what would surprise us f we had no taper and no real indication that taper is imminent. i would expect if we don't get a taper at the press conference at the meeting the chairman will indicate we're getting very close to that point. i think if we had a message like september, that we're just kind of on hold, that would really surprise me. >> what about your prediction, vince? >> the biggest surprise to me would be a naked taper where they actually just taper -- >> what does that mean? >> they didn't do anything to soften the blow by say lowering the unemployment rate threshold or putting a lower bound on inflation. that they do something that would reassure us that they'll keep the interest rate low for a

long time. just a straight taper cold, would be surprising. next most surprising thing would be no taper and no guidance whatsoever. i agree with mike, the chairman's got the opportunities to use the press conference to tell us the end is near. >> very quickly, i know we have to go, but does miss yellen have more news conferences than mr. bernanke? >> i think so. i think they'll go to one a meeting because you don't like orphan meet where is you have a meeting with no press conference. >> thank you both. appreciate it very much. cnbc as you know is your place to turn for live coverage of the fed decision right here on cnbc. we're going to hand it off a little early to "street signs" at 1:50 p.m. eastern time today. that will be followed by fed chair ben bernanke's news conference at 2:30. steve liesman is down there, ty, he usually gets the first question. >> the naked taper. i love that. all right.

>> yeah. >> four shares getting whacked right now. warning investors. we'll give you the details ahead and the power pitch. >> coming up on power pitch, this start-up wants to turn a heel on the shoe industry by letting the customer customize their shoes. will the panelists find this a step in the right direction? stay tuned to find out. [ female announcer ] thanks for financing my first car. thanks for giving me your smile. thanks for inspiring me. thanks for showing me my potential. for teaching me not to take life so seriously. thanks for loving me and being my best friend. don't forget to thank those who helped you take charge of your future and got you where you are today. the boss of your life.

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flash. take a look at shares of ford, the stock is getting hammered today, suffering its biggest decline in more than two years. dropping more than 7%. it's issued a profit warning for 2014. ford expects profits next year to drop between $500 million and $1.5 billion. a big problem, the rising cost of launching new models, 23 new ones coming out next year. take a look at shares of ford and gm over the last three months. you see a bit of a split here as ford dropping more than 7% today, gm on the other hand, has been moving higher. back to you. >> all right. phil, thank you very much. power pitch time. 60-second pitch. panel of judges up or down vote. today, the agony or ecstasy of the feet. >> i'm mandy drury. on today's power pitch we have a company turning shoot industry on its heel by letting the customer, yes, you, become the designer. door reyan how werds is the ceo of milk and honey. she worked in the entertainment

industry at nickelodeon, disney and paramount pictures. let's see her step it up in the power pitch. >> my name is dory howard and the co-founder of milk and honey. it's an e-commerce platform that allows women to create their perfect shoes. after years of not finding presigsly what we wanted, my co-founder who's also my older sister and i developed a manufacturing system that allows us to create made-to-order shoes at sale. our customers come to our website and choose a silhouette, toe shape, strap options, embellishments, color, material and finally heel height to create their perfect shoes. in four to six weeks that unique creation is delivered to their doorstep. for the woman who needs a little help in designs we've debuted our first collaboration. we're working in conjunction shn with taste makers whose style we admire to release limited edition collections. our goal at milk and honey is to

take the power away from the shopkeepers and department stores and democratize fashion by putting it back in the hands of the shopper one shoe at a time. >> she can hear us but can't react yet. we have tamara, the former president, co-founder of jimmy choo and also the author of "in my shoes" a memoir. social media guru gary, the founder of vander media, that helps fortune 500 companies find their social voices and an investor in tumbler, and ubber to name a few and author of "jab jab jab right hook." let's huddle up on milk and honey what do you think? >> my concern is the manufacturing. how does she get the deal with the factory to do this? because it's labor intensive and costly. >> how do you feel about milk and honey? >> to me comes down to the product. something i would never invest

in unless someone like tamara was along for the ride. because he know nothing about the quality of this world. >> i'm a member of that rillen if you're talking about shoes i have a lot of shoes, love shoes, looked at the website, thought it was professionally done and a fantastic idea. my question is, and you were saying the department stores tend to be late to this party but only a matter of time before they also jump on the customization bandwagon. dory, come over in the beautiful shoes of yours. nice to meet you. >> come and have a seat. >> tamara, would you like to throw the first question to dory? >> i would like to know how did you persuade a factory this was a viable business? >> well, my secret weapon is my business partner and older sister who is the other half of milk and honey and she lives in hong kong. for us to get this business off the ground, she moved to hong kong and has a history and prior experience was all in manufacturing. so knowing how to make goods in south china is what she knows how to do. >> within this world where the brand matters so much, were you positioning the brand, are you

worried about the cheap of it, people may default into, as you're early? do you think you might be too early? >> yes, i do. but i would rather be too early than too late. we're seeing all the high luxury brands starting to do the customization. burberry did it and they've recently introduced modern customization. >> do you think that kind of curtails your growth curve? >> it feeds into it. what a design i don't think would ever allow is for a customer to actually change a design. what they are doing are allowing color changes or heel heights. we're giving power back to the shopper to create the shoe you want. >> how are you getting the word out there? >> we're a start-up. we don't have the marketing dollars we would like to do this. there are few things. one is, celebrity campaigns. we work with deliver celebrities and their charities. they design a pair of shoes and 100% of the proceeds to to the

charity of their choice. >> will you go into the expansion of men's shoes as well. >> gary, would you want to design your own shoes? >> the sneaker culture. >> at that level, me personally, i'm one person, i would never design my own. i don't want to wear -- >> never say never if given the option. >> no. i prefer never, never say never to wear dress shoes, let alone design them. >> let's huddle and find out whether or not we are in or out on milk and honey. tamara, you first. >> women love novelty, especially when they can't find something. i believe this is going to be a good business for particular occasion wear and i predict you're going to have a big bridal business. so i give this a thumb's up. >> thumb's up. >> from a business standpoint i believe in this model. fully. and i promised myself wherever tamara would go with i would go with. because i would need that support from somebody that understood the market. i would go with a yes as well.

>> i love this. i looked at the website and i was like oh, my goodness this is absolutely fantastic. i'm going to be in this and i'm going to start ordering shoes like this. i have to say it's rare that i feel that kind of passion for one of the power pitches and for this i am definitely in. dory, what is your reaction? >> you guys are the three people that represent ultimate in fashion, ultimate in start-ups and scrappy mentality and looking at you on the news every day, you are my client and you guys are the people that need to support me. i couldn't be more excited about what's happened. >> okay. and never say never, we're going to see you in a lovely pair of i don't know silver and gold pumps. thanks so much, dory howard of milk and honey and to our panelists tamara and gary. that is today's power pitch. >> if mandy's in, i'm in. she knows shoes. so are you in or out on milk and honey? logon to powerpitch @cnbc.com. or tweet us. sue? >> i can see your wife on that website, ty. >> you're right.

>> i really can. all right. let's take a look at the gold market. a modest advance in gold right now ahead of the fed's decision. and, of course, the news conference where sometimes you get more clarity on what was taking place in the room. the comex gold market is up just under 5 bucks at the close at 1235 even. we are counting down the top five power lunch stories of 2013. today, the year of the activist investor and we're also counting down to the fed's latest decision on interest rates. will policymakers begin pulling back stimulus or not? the dow is basically flat down 2 points. we're back in two minutes time. farmers presents: fifteen seconds of smart.

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welcome back to "power lunch." surging, the printer of newspaper inserts up 20% after bank check printer harlen clark holding says it would buy the printer of newspaper inserts an coupons for $1.8 billion, or about $34 a share. the shares are trading higher than that suggesting maybe some investors expect an even higher bid. and now for a check on what's going to happen in "street signs." i have a good feeling i know what's going to happen. >> you are a sharp one. we've talked about it, we've

dissected it, prepared for it, an looised it, some have tried to ignore it, but regardless the day has comep. it is fed decision time. will they taper or not? what is the forward guidance? lots of questions. an all-star panel to guide us through including pimco's bill gross and today has added significance because it is ben bernanke's final meeting as fed chairman. so you must be joining us. it is going to be ten minutes earlier than usual. the start time is not 2:00 p.m. it is 1:50 p.m. eastern time. please make it a date. guys, back to you on "power lunch." >> we sure will. see you in just a short while. to the bond market, a terrible note auction earlier that could be because everybody is sitting on their hands ahead of the fed but let's get rick santelli to weigh in on that. hi, ricky. >> most traders hands are asleep from sitting on their hands. looking at intraday five, looking at intraday ten, both elevated about four basis points. if you look at the ten-year market since november 1st at that point flirting with a 2.50

yield, now a 2.90 yield. seems auto the markets yelling about higher rates and as far as the dollar index closed unchange on the day but year to date how appropriate to go into a quarter cent above unchanged from where we closed last year. tyler, back to you. >> thank you very much. of course we have the countdown to the fed's decision on interest rates. it's coming up at 2:00 p.m. eastern time. will we start to see a pullback in that economic stimulus or not? we'll tell you how to play it. but first. >> all week on "power lunch" the top five stories of the year. we're continuing today with number three. the billionaire battle of the century. more "power lunch" in two minutes. tdd#: 1-800-345-2550 trading inspires your life. tdd#: 1-800-345-2550 life inspires your trading. tdd#: 1-800-345-2550 where others see fads... tdd#: 1-800-345-2550 ...you see opportunities. tdd#: 1-800-345-2550 at schwab, we're here to help tdd#: 1-800-345-2550 turn inspiration into action.

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perhaps one of the most fascinating billionaire battles of them all take a listen. ♪ >> fight of the century you saw it right here on cnbc. >> i was concerned about dealing with carl icahn because carl icahn unfortunately does not have a good reputation for being a land sheikh guy. >> he's the quintessential example that on wall street if you want a friend, get a dog. >> ackman announcing his short position or discussing it. we knew about it. icahn very coy but we now know it was a very long position. it has been a bad, bad bet for ackman in jc penney. >> sources close to the situation tell me that chances that icahn will bow out of his pursuit of the recap have grown considerably. >> carl icahn now filing an action in delaware chancellory court against dell and the board of the directors. >> bill ackman, the investor has filed a complaint with the sec after george sorso joined carl icahn in buying up a big chunk

of herballife. >> any opportunity to pit a hedge fund investor versus a movie star producer oscar is fantastic. >> bill ackman resigned from jc penney's board. >> we begin with jc penney which has entered into an agreement with bill ackman. the activist investor. it paves the way for him to completely walk away from this holdings in that company. >> we continue to follow this developing story regarding herbal life whose shares have spiked on the news that the company has received its reaudited financials. >> i would like to say that i never really doubted that this was a viable company. >> i think it's been a fascinating year to watch these market pros who have been in this market for such a long time like a carl icahn, really become headlines once again, ty, with what they're doing. >> if there were a business person of the year, i would nominate the activist investor as a kind of conceptual person because they really have made their mark on so many big

companies from dell to herballife to apple and many more. i should point out, sue, on a side note, the website of milk and honey which was our power pitch a few moments ago, went down. you guys crashed it. so many people apparently went on looking for shoes, but it is now back up, we're happy to report. so milk and honey, the shoe website, went down because of i guess internal issues and -- >> because of "power lunch." >> and now back up and working. >> that will show you the reach of "power lunch" and the power pitch. all right. we've been counting down the power's top five stories of the year. tomorrow we reveal number two. you won't want to miss it. we had a really good time strategizing on this particular series. up to you. >> all right. minutes away, of course, from the fed's rate decision. the statement, the news conference, how to position your trades for this afternoon and beyond. you can't afford to go anywherep. cnbc is your place, of course,

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all right. we are counting down to the fed

just minutes away from the fed's latest decision on interest rates and to be followed by ben bernanke's last news conference as fed chief. the markets are really holding the flatline at least in terms of the dow jones industrial average. the dow is up just a fraction. the s&p is down a third of a percent. but we should note the nasdaq is off three quarters of a percent. that in ddizzy is suffering. everybody is watching interest rates and they will be after the fed decision. at 2.875. we were at 2.89 a little earlier. the 3% handle is what a lot of people are watching for. >> how do you play it? jeff and jim at the cme. jeff kilburg and jim our rio. i always get suspicious when we or others say heres a how to play this decision. i'm fine letting pimco play it but for this it feels like a

game where you let the elephants crash and i want to stay where i am. >> you don't need me here. that was the answer i'm going to give. this is a coin flip, binary outcome. if you're looking to play it and put all-in on red it's a silly bet in my opinion. that being said, i do think they've led us to this point and they intend to taper. there is some small positions i would want to have on and i've talked about them all week. one to be short gold. i think at the end of the day we're going to see whether or not we taper, they're going to talk taper, i hate to hear taper said every five seconds too, but they're going to knock down gold prices and stocks will use this to correct a little bit. >> if you do want to play this, if you are a day trader or more active investor, what would you be doing in the market right now? >> well, sue, you're right. this is like a bull in the ring. something jimmy did not participate in. we are seeing the nasdaq, very telling this morning, if you see before september, that's when the nasdaq took off and broke

out and outperformed the other indices. right now i think some of these growth stocks, the nasdaq 100 you can light up on. i'm looking for the fed to come out and put the brakes on slightly but the gas on the economy, by taking away the interest rate they're paying on excess reserves. what will that do? that will create inflation. it can cause inflation for the last couple years. they need a way to cause inflation. be long gold, short these treasuries where we want to be. >> so you think -- >> you're the opposite of what iuroio says. jim says get short gold. talk me through that one, guys. >> that's how we make a trade. i think at the end of the day we realize that the bank of japan and the e kcb are still hitting the gas and we are in some form of taking our foot off the gas, but in comparison to them we're going to see tighter. >> i'm going to disagree on the short-term view of gold due to the fact that gold is oversold. in the event we see the fed make some type of suggestion they want to find inflation and produce inflation, gold will be

off to the races, short on the run. therefore, jimmy will be the receiving end of that bull in the ring. >> all right. >> wouldn't be the first. >> the other aspect of this, though, and vince rhinehart mentioned this earlier, the fed set out three different metrics before they will put in place a taper and one of them is improvement in the jobless rate, the unemployment rate. jim, have we seen enough of an improvement to satisfy that particular point? >> well, i think when they put their metrics out they weren't really talking about small levels, gradual taper. they were more talking about raising rates. in their mind this isn't raising rig rates. when you're moving away from a spot, one direction or the other, more towards tight than loose. i think we have seen enough good economic data, particularly in the face of the government shutdown and the sequester showed there is some underlying strength in the economy. >> to add on that, we have seen a 30% jump in jobs, jobs from

2012 to 2013, 30%. that should quality. >> and that homes number today was a fairly solid number as well. >> we will see. >> gentlemen, leave it there and to your point, we have an over/under going on how many times the word taper or its iteration could be used, we're way over. >> the whole floor would be passed out drunk. >> that will do it for today's edition of "power lunch." minutes away from the fed's latest decision on rates and more. >> a special edition of "street signs" begins right after a quick break. we'll see you tomorrow. the american dream is of a better future,

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over years of quantitative easing and a year after the latest program began, will today be the day that the federal reserve finally pulls back on its bond buying program? hello, everybody. welcome to a very special "street signs" and we are starting early because in ten minutes time, we are going to get the final fed decision of the year, the final fed decision of ben bernankes's storied career and we will find out whether or not the fed will do the so-called taper and reduce its stimulus and take its foot

off the gas pedal of the american economy. the markets certainly are setting up in a quiet way, but they could move in a big way once the decision, if it happens, comes down. >> talking of those markets let's see where they're standing ahead of the fed decision. currently the dow is just holding slightly above water, it is up by about 7 points at 15,882. the nasdaq is down by 28 points at 3995. the s&p is slightly lower down by 5 points at 1776. let's take a look at how bonds are doing. we bring up the ten-year note, yielding 2.877% folks. as for gold there's been a narrow trading rage ahead of the fed decision down about 26% year to date. today, it is up now by $7.60 at 1237. reporters all in place awaiting the fed. bob pisani at the nyse, rick santelli at cme and sharon epperson at the nymex. bob, whether or not we get the taper today, january or even in

march or later, this must be the most telegraphed move in fed history. >> it certainly is. i think that's one reason we're not seeing a lot of volatility around the markets right now. take a look at the dow jones industrial average, once again the first half hour was the best part of the day. we've been slowly drifting a bit lower but a narrow trading range, only 70 or 80 points in the dow. normally about 120-point trading day. the weak link is tech stocks, disappointment guidance, we had micron down, a concern of rival might build another plant in south korea. but i want to put up the vix index. this what is i'm focusing on. the key here is no big spike in fear. people are concerned, go out and buy protection. this is where you see it. no big jump up there. i mean around 20 would be an area of concern, mandy. this seems to be tell graphing right now everybody believes the fed is going to manage a modest tapering that's going to take a while and maybe starting to believe that tapering is not tightening. back to you. >> certainly hope you're right and we get a soft landing out of all of this.

rick santelli, we've got a very weak five-year auction going into this decision. >> come on, tapering is tightening. less liquidity is tightening. that's my take. look at the intraday charts. you can argue a two-year note up 10% to 35 today. the five-year crossed 155 the maturity you want to watch. the street is long at five-year on the yield curve. tens flirting with 287, 288, up about three to four basis points. the 30-year the wildcard, longest maturity, most volatile and could have the biggest reaction say some traders. foreign exchange, pay attention there. dollar index going into this unchanged but close to unchanged on the year. look at the euro versus the dollar. under a little pressure today, the winner by far is the pound, pound had good data out of the uk and flying high. see how they act after the fed statement. >> thanks so much for setting us up. hope everybody noted down all of those numbers. out to sharon epperson and ahead of this fed decision we're

giving off a mild shine on gold, up about $9 an ounce right now. >> but it's been such a tight range in gold today. everybody is in a wait and see mode. we're looking at gold here trading within a $10 range and what we're waiting, of course, is to see the indication of what the taper will peemean perhaps gold sentiment. investor sentiment for gold has been so poor lately. talk about the 26 % decline in gold we've seen this year and, of course, we've seen that in the largest gold etf, the gld as well. we've seen outflows out of gold etfs worldwide of $36 billion and that gld, the assets under management, are half of what they were last year. what's going to take a turnaround in investor sentiment. it may have to be a real decision here, definitive wording about taper an that is what a lot of traders are waiting for. that may be what a lot of retail investors are waiting for to get back into the gold market. >> sharon, thank you very muso .

we are minutes away from the fed's big decision. let's get to our all-star panel overseeing billions of bucks. with us bob dahl, as well as vanguard's ken volper. jpmorgan's ken will join us in a moment. i am a mind reader because i know our viewers and listeners are sitting and watching and think if they do taper what does it mean for me? so what does it mean for them? >> what it means is the fed is finally in a position when they begin tapering, it's only a matter of when, not if -- >> will that be today, sorry, will that be today? you think that will be today some. >> i have no idea if it's a today. i'm a 60/40 no. if it's today. the important point is they're going to do it. whether it's today or 30 days from now or 90 days is not important for an investor. what's important is the economy is doing well enough for them to begin this process. and i agree with rick santelli, it's the beginning of the reversing all they have taken the last bunch of years to do.

>> two ways to look at it, right? we automatically assume if the foot comes off of the these retcle gas pedal of the economy stocks must fall because the fed has been pushing up equities. yet if they do that today they will likely accompany it with a very optimistic forecast for the economy. they can't do one without the other. so could that mitigate any potential damage? >> i think that's right. i come back to if investors stop and think, why did they not go in september? answer, the economy wasn't strong enough. jobs weren't plentiful enough. not that both of them are operating on eight cylinders. we have more cylinders going today than we did back in september. that tells me earnings are going to get a bit better. the economy broadens, earnings get better. maybe i don't get as much on the p/e or the valuation side of the stock market but i get it on earnings. >> ken you think there's a 25% chance we'll get a taper, 75% chance it will be january. regardless what does it mean for the guy listening in right now? >> well, i think what it means

is that the conditions are much improved from what they were a couple months ago. it's likely that fed will be moving at some point here in the next couple of months. i mean what they were worried about in september, was the rise in rates that happened in june and july. and wanted to see what that did to the economy. i think now they're actually seeing numbers that are pretty encouraging about the economy. whether the rise in rates pretty well, we saw housing starts on 1.1 million pace, strongest since 2008, so we have a lot of very good, positive economic numbers, not like booming kind of numbers, but definitely strong enough that the fed could really start talking about tapering again here in the near term. >> if i can follow up, even if we get pretty positive forward guidance from the fed, right, to what degree are they going to emphasize it's still going to be data dependent, meaning that could completely mitigate and outweigh any positive forward-looking statements about the economy? because the data gets worse they

could pull back on the taper all over again. >> right. i think that's a great point, mandy. we're at a point in the cycle where we actually are going to have -- where forward guidance is going to be more difficult to achieve because you actually have slack being reduced in the economy and there you can't give a really long period of forward guidance because if numbers do show up to be a lot stronger than the market's expecting or the fed is expecting, then the market is going to start pricing in some rising short-term interest rates sooner, maybe still out a year or so, but instead of two years out it might be a year out or year and a half out and that's going to cause short-term interest rates to rise. >> we are about 90 seconds away, usually right at 2:00. never know. there was a that fax incident a couple -- 90 seconds until we expect that fed decision and steve liesman. bob, you know, if you look ten years out, is there anything that our viewers should be doing now with their own 401(k)s,

small time investors, should they be retatie in-- rotating a if so what? >> the answer is yes, ten years is a long time, but the story is the deflationary forces that have been so prevalent over the last several years, continue to wind down and today or the day the fed begins tapering, whenever that is, is the beginning of you know what, we dodged deet flags nary bullet and we can move on and renormalize some things. that tends to be good for equities and other risky assets. >> what about you from an investment point of view, how would you be set up going into this meeting and next year, ken? >> well, i think tying into what bob had just said, i think what we have is a period, we've gone from a period of trying to push inflation lower and lower to now where we are actually living through a cycle they're trying to push inflation higher and that's actually going to mean that real interest rates can still stay pretty low. i don't think investors need to be afraid of very significant rise from here in real interest

rates, but i do think we're going to have, you know, reasonably good economic growth for a quite a period of time that's going to lead to earnings growth and good returns on the equity market. >> ken thank you, bob thank you. a little more of an optimistic view from bob and ken. will be the fed be as optimistic, forecast positive, will they taper? find out steve liesman at the fed. >> the federal reserve announcing a $10 billion taper, $5 billion each of mortgage backed securities and treasuries the fed saying in light of cumetive progress in labor markets, they decided to moderate the pace of its asset purchases and if the data comes in as expected here with further improvement they will taper further at future meetings. however, tapering is not on a preset course the fed says. the pace contingent on the outlook and the outlook for inflation and labor and assessment of the efficacy and cost of the program. but they are providing very dovish guinc