enough lead times to make sure that in strengthening the financial system we don't produce a credit crunch. and by and large, my own assessment is that credit is broadly available in the economy, but there are some exceptions. and i would agree with much of what you've said when it comes to mortgage credit. i think banks at this point are reluctant to lend to borrowers with lower fico scores. they mention in meetings with us consistently their concerns about putback list risk. and i think it is difficult for any homeowner who doesn't have pristine credit these days to get a mortgage. i think that is one of the factors that is causing the housing recovery to be slow. it's not the only one, but i would agree with that

assessment. and of course, there were a lot of practices in connection with mortgage lending that really need to be changed. we don't want to go back to those days, but it is important to clarify for us, to work to clarify the rules around mortgage lending to create an environment of greater certainty for lenders to be willing to extend mortgage credit. >> good afternoon. jason lang with reuters. chairman yellen, the fed has slashed its growth projections for this year, and you've gone to pains to explain that there is uncertainty in the path of interest rates and the economy. and yet, the fed's central tendency projections for 2015 and 2016 remain quite strong. are you confident that the u.s. economy has entered a period of sustained, above-trend economic

growth? thank you. >> well, when you say confident, i suppose the answer is no, because there is uncertainty, but i think there are many good reasons why we should see a period of sustained growth in excess of the economy's potential. we have a highly accommodative monetary policy. we have diminishing fiscal drag. we have easing credit conditions. we have households or becoming more comfortable with their debt levels and are more able to surface debt in an improving job market. we have rising home prices and rising equity prices and an improving global economy, at least in my estimation. so, i think all of those things

ought to be working to produce above-trend growth, and i think that's what's reflected in the forecast. but nevertheless, as i said, of course there is uncertainty around that projection. you know, nevertheless, the labor market has continued to improve. and over a number of years in which admittedly growth has come in at a disappointing level, we've still seen the labor market broadly, broadly improve, and i expect that to continue. >> steve beckner with m&i. madam chair, you mentioned that there were discussions of the mechanics of normalization, as you put it. i assume that that involved some review of the -- it was the third anniversary of the june 2011 exit principles. i wondered if i could get you to elaborate, in particular, is the committee reaching consensus about the reinvestment and

rollover policies, the timing of discontinuing those policies? i'd be interested in your personal view on that. >> well, reinvestment policy was included in our 2011 principles and it's one of the things that we are discussing and reconsidering. we have not yet reached -- we have made quite a lot of progress in our discussion, but we have not yet reached conclusions about that or other aspects of our package. there are a couple of things chairman bernanke indicated in contrast to our 2011 principles that we would be very unlikely to sell mortgage-backed securities, and that remains the case. broadly speaking, some of the principles that were incorporated in that 2011 package, the notion that we fully expect our balance sheet

to shrink considerably over time, back toward more normal levels, toward levels that would be consistent with efficiently conducting monetary policy. that's still an expectation. i believe it's an expectation that eventually, our portfolio will consist largely of treasuries, eventually. but there are quite a number of details. we have a number, as you know, a number of tools that we can deploy as we move to normalize policy. interest on excess reserves, our overnight rop facility, term repurchase agreements with the markets or term deposit facil y facility, and exactly how to deploy that set of tools to meet our objective of raising the general level of short-term rates when the time becomes appropriate and how best to

communicate to the public and to markets how we are conducting policy and what our objectives are. those are things we're discussing, and i hope we will be able to come back with a full description, or let's think of it as a revised set of exit principles, later this year. >> madam chair, donna borack with "american banker." one of the outstanding reform issues on the plate of the fed is to handle the risks related to short-term wholesale funding. you've been very supportive of this issue, but we've really heard little progress so far on where things stand. can you please explain to us why it's taken so long to get this proposal out, what are some of the aspects that the fed is considering in their approach to how they roll out this rule and where they may be in that process? thank you. >> so, i'm afraid that i can't give you a detailed timetable

for when we will move forward with that rule. i've been supportive. governor trujillo and others have been supportive in taking some action to diminish the incentives for heavy reliance on short-term funding. we still see that as one of the risks to the financial system that wasn't really addressed in the risk-based capital requirements that we put out or in the liquidity coverage ratio that's out for proposal. governor trujillo has suggested one approach could be to impose a capital requirement that's related to reliance on wholesale funding. and in my own past comments, i've been supportive, but i'm afraid at this point, and this remains very much on the table, to take some action to address this. it certainly remains on the

table as an unfinished agenda item, but i don't have a detailed timetable for you. [ inaudible ] i'm just not certain. i just don't have a detailed timetable for you. i'm sorry. >> madam chair, greg with "the economist." this is partly a follow-up to steve liesman's question. how would the economy respond if inflation pushed above target before full employment? your colleague has suggested that the committee might consider allowing inflation to temporarily overshoot because that might achieve a larger, faster reduction in unemployment. and will financial stability regulations play a role in when and how fast the committee normalizes interest rates? >> so, with respect to the question of overshooting, let me start by saying that inflation

continues to run well below our objective. and we are still some ways away from maximum employment. and for the moment, i don't see any trade-off whatsoever in achieving our two objectives. they both call for the same policy, namely, a highly accommodative monetary policy. so, at best, overshooting of inflation or the thought that we will reach our inflation objective before we've attained maximum employment, i suppose i would see at most as a risk that we could face somewhere down the road. symmetrically, it's also conceivably a risk that we would reach our maximum employment objective before we've actually attained our inflation objective. so, there are different ways in which we could conceivably --

there could conceivably arise policy conflicts or trade-offs somewhere down the road. now, quite some time ago, the fomc adopted, and we reaffirmed just in january, a statement on our longer-run goals in policy strategy. and with that statement said, is that, first of all, whenever either inflation or employment are away from their preferred or mandate-consistent levels, it will always be the fomc's policy to make sure that we get back to those target levels over the medium term. but a principle that's embodied in that statement is that the committee will follow a so-called balanced approach in deciding on its policies. and essentially, that means that when we see some conflict between achieving the two

objectives, that we would consider in deciding on a policy just how far we are from achieving each of the objectives and if the distance from achieving an objective is particularly large, it would be consistent with the balanced approach that we would tolerate some movement in the opposite direction on the other objective. but balanced approach is the general policy strategy, i think we'd follow. >> michael mckee from bloomberg television and radio. i'd like to ask you about your signaling mechanism going forward. at this point, you haven't decided on reinvestments. you've told people don't pay any attention to the dot plot. and your mandates in inflation and unemployment are backward-looking, lagging indicators. so, if something should surprise in the economy, with only four

steps and press coxsnferences a year, how do you signal to the markets what's happening so you don't risk an event like last september, when people were surprised, or some sort of credibility problem where people feel you're falling behind the economy? >> well, you know, again, we are very attentive to unfolding economic developments and understand that there can be surprises and twists and turns in the road so that the forecast that we've made become no longer appropriate and we need to respond to unfolding developments. i'm personally committed to communicating with the public whenever communication is appropriate. we have four press conferences, but i would feel it appropriate for me to either have additional communications, meetings with

the press or to give speeches or to, in a variety of opportunities i have to make clear what the committee's thinking is and my colleagues as well i think would feel it entirely appropriate to communicate changes in our views. >> pedro nacosta from dow jones news wires. thank you very much. since we're currently having a world cup, i thought it would be valid to ask a question about the world, and i'm a little surprised that the optimism of your forecast, given, you know, the darkening outlook overseas. you've got the conflict in the ukraine, right, escalation of war in iraq with implications for oil prices to potentially have global economic impact. you have a european recovery that's still fairly week and emerging markets slowing down sharply.

do you think the u.s. can be a lone engine of economic recovery globally? and if i could follow up quickly on greg's question. because you talked about the two sides of the mandate, but you didn't quite answer the financial stability part. do you think, is financial stability currently preventing the fed from being more accommodative than it would like? and if not, when do you expect that to happen, if at all? thank you. >> so, let me -- i'm sorry i didn't answer the last part of greg's question and the last part of yours, let me start there. with respect to financial stability, we monitor potential threats to financial stability very carefully, and we have spoken about some. i've spoken in recent congressional testimonies and speeches about some threats to financial stability that are on our radar screen that we are monitoring, trends in leverage

le lending and the underwriting standards there, diminished risk spreads in lower-grade corporate bonds. high-yield bonds have certainly caught our attention. there is some evidence of reach for yield behavior. that's one of the reasons i mentioned that this environment of low volatility is very much on my radar screen and would be a concern to me, if it prompted an increase in leverage or other kinds of risk-taking behavior that could unwind in a sharp way and provoke a sharp, for example, jump in interest rates. and we've seen what effect that can have on the global economy, and i think it's something that it's important to avoid. but broadly speaking, if the question is, to what extent is monetary policy at this time

being driven by financial stability concerns, i would say that, while i would never take off the table that monetary poli policy could in some circumstances respond. i don't see them shaping monetary policy in an important way right now. i don't see a broad-based increase in leverage, rapid increase in credit growth or maturity transformation, the kinds of broad trends that would suggest to me that the level of financial stability risks has risen above a moderate level. and we are using supervisory tools and regulations, both to make the financial system more robust and to pay particular attention to areas where we've spotted concerns, like leverage lending, which is very much the

focus of our supervision. now, let's see. there was a first part to your question. and the first part was about global risks. and we always pay attention to global risks and the likely evolution of the global economy. you expressed a lot of pessimism about emerging markets, and i see it more likely that we'll see moderate growth and a pickup the there. of course, there are geopolitical risks, the middle east, developments in iraq, of course. they're not only a humanitarian concern, they are a concern with respect, potentially, to energy supplies and prices. and so, i would certainly list that as something in the catego category, risks to the outlook. >> peter barnes, fox business.

just to follow up a little bit on what pedro asked about, specifically, what about equity markets? i mean, right now, today, the s&p 500 is on track to close at another record high. you have said that you have not seen any evidence of bubbles in equity markets and that they have been trading within historic norms. is that still the case today? >> so, i don't have sense the committee doesn't try to gauge what is the right level of equity prices, but we do certainly monitor a number of different metrics that give us a feeling for where valuations are relative to things like earnings or dividends and look at where these metrics stand in comparison with previous history to get a sense of whether or not we're moving to valuation levels

that are outside of historical norms. and i still don't see that. i still don't see that for equity prices broadly. >> anna lynn kurtz with cnn money. thank you, chairman yellen. i'm wondering, what's the fed's general exec asian fpectation f growth this year and next year? and if inflation out-paces wage growth, does that scenario make you more hesitant to raise the federal funds rate next year? or if conversely, wages rise just enough to keep up with inflation, moving in lockstep, let's say, is that enough to satisfy what you're looking for in the job market? >> well, thanks. that's a great question. you know, i see compensation growth, broadly speaking, as having been very well contained. by most measures, compensation growth is running around 2%.

so, that's real wage growth or real compensation growth. it's essentially flat, rather than rising. and low wage growth really has not been rising in line with productivity. my own expectation is that as the labor market begins to tighten, we will see wage growth pick up some to the point where real wage growth, where compensation or nominal wages are rising more rapidly than inflation, so households are getting a real increase in their take-home pay. and within limits -- well, that might be signs of a tighter labor market, within limits, it's not a threat to inflation, because consistent with the level of inflation that we have

or our 2% inflation objective, we could see wages growing at a more rapid rate and a somewhat more rapid rate, and indeed, that would be part of my forecast of what we would see as the labor market picks up. if we were to fail to see that, frankly, i would worry about downside risk to consumer spending. so, i think part of my confidence in the fact we'll see a pickup in growth relates to the fact that i think consumer spending will continue to grow at a healthy rate. and in part, that's premised on some pickup in the rate of wage growth so that it's rising greater, more than inflation. >> marty koretzinger, "associated press." today's statement repeated a phrase that's been used, that the committee has been using,

that there's likely to be a considerable period between the end of the bond purchases and the first hike in the federal funds rate. in march, you gave us some guidance, trying to help us understand that by saying that that is hard to define, but it could mean six months. is that a time frame that you still feel comfortable with, and if you feel like it needs to be modified, could you give us an assessment of the -- the markets seem to expect a second rate hike in the first half of next year. is that a good assessment? >> so, what i want to say, the guidance that i want to give you is say there is no mechanical formula whatsoever for what a considerable time means. the answer is to what it means is it depends. it depends on how the economy progresses. the committee said very clearly

in their statement that what they would be looking at and deciding on the timing of interest rate increases would be the progress we're making in achieving our objectives, how far we are from achieving our labor market objective and our inflation objective, and that we will be assessing that progress, and that's the key determinant of when interest rate increases are likely to come. there is no mechanical formula. >> thank you. greg rob from "marketwatch." there was a report this week in a salmon-colored newspaper, i won't mention, that the fed is thinking about, or regulators in

washington are thinking about an exit fee for bond mutual funds. this has sparked a lot of comments. would you care to comment on this? >> i am not aware of any discussion of that topic inside the federal reserve, and my understanding is that that is a matter that is under the purview of the s.e.c. >> thank you very much. >> all right. fed chair janet yellen completing her news conference. as usual, wide-ranging conference to discuss monetary policy, which they did announce no real big changes in monetary policy. they will taper back another $10 billion in purchases of treasuries and mortgage-backed securities, which was expected. they still see inflation below target range right now, which was expected, and another bit of

a headline, when they will increase interest rates, it depends. >> yes. >> which is about expected as well. >> recalling janet yellen's last press conference, when asked what a considerable period of time might be, where she indicated six months. here not only being sure not to make a similar stumble, but claiming that it's not mechanical, simply that it depends. >> she remembers from the last time she was asked about that and her response and the impact it had on the markets, which, by the way, welcome to "closing bell," bill ripa along with kelly evans here. the dow is up 66 points. the headline is that the s&p 500 is in record territory, if we to close here. >> 1,951 is the level we're watching. >> but we are in that territory, so we'll see how we do as we go into the final 35 minutes of trading. but let's bring in our all-star panel to react to this news conference, the fed's monetary policy statement. jim bianco from bianco research, david rosenburg, diane swann

from mesirow financial, jack bouroudjian from index financial partners, former fed governor mark olson joins us today. we welcome him. and our own rick santelli. steve liesman is just coming out of the news conference and we will hear from him momentarily. rick santelli, what do you think of the market's response to the fed's statement and her news conference today? >> there was a lot of volatility right around top of the two, when everything was being released, and most of the volatility were selling, pushing rates up in the intermediate part of the curve. i find that very fascinating. but as the day turned out, seems like equities again are the big winners. interest rates are pretty much where they were before the 2:00 statement was read. other than the ten-year, which is a couple of basis points lower, my own feeling, is and i think you asked the right guy about the press conference. listen, i've been a chicago cub fan my whole life. i think that the economy is now officially the wait until next year cub economy. i think when i listened to janet

yellen, it sounds like all the managers i've ever heard, platitudes and sound bites. i really think that the buryingsy that has evolved over the last three to four years and the way questions are answered about housing and why the economy isn't robust, they're not very deep. i fully suspect that we're going to have many more press conferences like that, and i do think there is a very good chance to see many more handles to the up side in equities. >> rick, that's exactly what i wanted to ask everybody else here about. jim bianco, to you. this was something that we heard, jeff saw it this morning, saying that barring some surprise here by the fed, this could mean the next major move is to the up side. does the action today and what you've heard from the chairwoman today indicate to you that that is the next direction here, the next move? >> yeah, probably over, you know, the intermediate term or short term, the next few weeks, a couple of months, the market's going to trade higher. this conference was surprising in that she really didn't break

any new ground. if you look at the statement, the number of words they changed in the statement was about as low as i've seen in a long time. there was no new information on the economy in the press conference. if there was anything out there that would be kind of interesting to take note is the word financial stability came up a lot. >> right. >> meaning that the fed is really concerned about it, but then proceeded to say that it's not a problem. so, given all of that, i think the trend in place, which was higher, will continue to be higher. the fed did nothing to rock the boat. >> governor olson, i know she reiterated that they're very mindful of economic activity, that they will be paying close attention to reports as the time goes on down the road and that will dictate monitory policy in the future. but in the meantime, do you sense they're still on sort of an automatic movement right now, that they will continue to taper by $10 billion and they have some time frame in mind when they will begin to raise interest rates? >> i think that's fair.

but let me parallel rick santelli's comment because i'm a washington nationals fan. the nationals are only three games above .500, but they're leading their division. there is a parallel with the economy. the economy is still just moving along very sluggishly, but it's much improved. and that's the good sign. but i think what we'rering between the lines, what they're saying is that monetary policy can be used very directly to affect price stability, but only indirectly for unemployment. and yet, they have the dual mandate. but i suspect they're going to no one that direction. now, there's a key here that i think gets missed. there is not a separate level for adjusting the interest rates. you adjust the interest rate targets by adjusting the money supply. so, i think what you're seeing is there has to be a lag between the time they quit the stimulus and the time they see a different target. >> david rosenburg, i want to ask you about inflation, but

first, let's bring in the quuy that asked janet yellen about inflation. steve leasen, fresh out of the press conference. were there any headlines to you and were you satisfied with the answer janet yellen gave about the fed as soon as next week being above target with inflation? >> i actually wasn't satisfied. she said it was noisy, but in fact, it's been rather broad-based, which is interesting. i read some data from steven stanley with the confusion index on inflation and that's how widespread it is considering different sectors with a 14-month high. we've also seen a sort of step up here. it makes it clear to me that the fed's going to hit ha 2% level. also unclear to me how the fed will react at that point. i think what i heard today, kelly, was that all of the default positions tend to be dovish more than anything else. inflation's too high. sounds like they're going to let it run. not too worried about markets. sounds like the other one wants

keep on this track of the mid-2015 rate hiblg and the taper going with it. that's the default position of the fed and it will take a lot, not just the 2% inflation rate, to shake it from them. >> diane swan, we all see the same data as the government does, and the pc will be above their target by next week, but inflation is still below their target at this point. what is she looking at that we're not? >> well, she's looking at the medium-term. obviously, if inflation goes. and waves don't, inflation has to come back down. she's arguing that it's a transit entry, noisy move and it could rb could not be valid. but the wage data she looks at -- and i disagree in rick in that there is a lot of depth in what she says. she also said that more than what people are giving her credit for, which is the humility. she's putting the monkey wrench

into the idea of forward guidance, saying there's always an uncertainty and there's an uncertainty in fed forecasts on inflation. you also saw the fed knock down their long-term norm on the fund rate. basis irony because it shows larry summers' stagnation argument is having an influence on the fed's view on the norm on interest rates. so, i see a lot of shifting going around. and i think by her not nailing down -- i mean it was good she pulled back on the six months. yes, it depends -- >> learned a lesson, huh? >> yeah, but that was important -- >> diane, she pulled fwrak six months to oblivion, right? >> right, which introduces uncertainty. >> that means nothing. >> but that's the whole point, steve, is she's -- >> i don't think that's works. >> it may not work, and you may be right on that, but it is a flip on forward guidance -- >> but when you bring in uncertainty, the vix just

dropped below 11. it's down more than a point. that doesn't seem to be rell rant at least to what the market is saying. >> that's what we're going to see going forward, because now we're seeing a fed who's acknowledging its own humility and ability to forecast, rather than this sort of belief that it could broadcast before. i think it will be interesting in how they use communication. she works on communications, she's thinking about forward guidance. >> let's get -- >> it's the beginning of an evolution in terms of a new shift in fed policy. >> okay, but -- >> david, what do you have to say here? i want to get your thoughts, because look, you've been talking for quite some time and i remember we argued about this quite a bit. is the aine flasion friend moving higher? the inflation trend continuing? what do you think of the recess conference from janet yellen today? >> well, i probably will disagree a little bit with jim bianco. the fed at the maxrgin said it more positive, tipping the hat towards lower unemployment, and

at the same time, upgrading its assessment on capital spending. i think that was very important. i think in terms of inflation, look, they're taking a big-picture approach. i'd say we've had three upside approaches in a twoew but they're really folked on the pc inflater. but i think less about inflate and more about expectation, kelly. i think that's the risk of becoming unglued in the future, because if you take a look at the fed's forecast, they have unemployment rate between 4 poib 4% and 5.27%, another at the end of 20016, but the end of 2014. you could argue they're already forecasting we'll be a fully employed economy. but when you look at the feds application rks the real funds rate at a time where we're going to be fully employed will be negative 60 basis points. how do you tell an investor that

expectations won't be unglide or unhinged when you're following the mother of all inflationary policies with a bonds rate at a tame time of full employment. >> why don't investors care? they have all this information in front of them. >> i'm not saying they don't care. i think the fact of the matter is the markets are giving the fed a lot of slack 37 janet yellen, the biggest thing she said was it didn't. you have it would be opposing forces here, though, right? they've taken down, as diane said, their long' term equal lib rum or funds rate. that should have been priced in, but that gives you a more unusual carry in the bond market. i think inflation expectations, and right now they are subdued, but we actually get to the mid-5s on fun employment and the feds only want something on the funds rate. my sense is the curve will be a lot steeper and bond yields off the curve higher than they are today. >> i know, everybody's anxious to say something and we all respect that.

we have another segment to do, so relax for a moment. as haven't heard yet from jack bouroudjian. we have a market raleighching right now. what's your thoughts on why that's happening? is there anything she would have said or didn't say to cause us to put it back in record territo territory? >> first, she mentioned inflation, which i always talk about, and she said it's not ov overvalued. if you want to take this simply, you don't get a hangover from drinking. you get a hangover when you're done drinking, and as far as i'm concerned, janet yellen just said the bar will be open, so we'll be around for a while. >> when does the bar close? it depends. >> it dpenz, right. >> we are going to take a quick break. steve liesman, we'll let you go. you have work to do. >> we have more coming after this with 25 minutes to the close. the dow is up 75 points, shy of

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welcome back. we're keeping an eye on markets here after hearing from fed chair janet yellen, stocks are rallying and they continue to do so with 20 minutes into the close. the dow is up 85 points, the s&p 13, which would be a new closing high here at 1,955. bill? >> all right, let's bring back our panel here. we have a cast of thousands. we'll introduce you as we ask questions. former fed governor mark olson, you were going to say something earlier, but i'm curious how you see the economy. chairman yellen sounded a little bit defensive about their policy, because there were lots of questions about whether inflation is overshooting and, you know, when will they begin the process of tightening? and you know, she just wants to stay the course here and let

things unfold. do you think the economy is where they think it should be right now? >> it's not where they think it should be, but i think they do a pretty good job at describing where it is. it's improving, but sluggish. i think something that she said that's important to look at is that she de-emphasized to an extent the unemployment number and emphasized the numbers of new jobs. so, the unemployment rate is way down, but the numbers of new jobs still isn't matching or equal to the numbers of new entrants into the job labor force. and so, it's still sluggish, even though we have almost 2 million more jobs today than we did a year ago. >> dave rosenburg, in a netshell, do you think this fed is behind the curve now? >> i do think it is behind the curve, but then again, they want to generate higher inflation, and they told us that all along, that 2% can be conceived as being a floor, not a ceiling. so, i got a sense of behind the

curve, if you're long duration in your bond portfolio, but this is their policy stance right now. this is not the preemptive fed of cycles gone by. this is not a preemptive fed, not a fed that's going to act on its forecast. janet yellen said in two words, "it depends." so, this is a fed that is going to be based in policy largely on a whole array of lagging indicators. so, if they fall behind the curve and inflation goes up moderately, i think that's actually part and parcel to what they want to see. >> jim bianco, she was asked about the low volatility. she says it's on her radar screen. she said it twice, it's on my radar screen and i hope it doesn't lead to leveraged speculation. is that a fear for you? here we are bemoaning the fact that the little guy, for the most part, is not in this market. the averages are at all-time highs, for the most part, and we are not seeing the kind of volatility that usually showcases a top in the market right now. so, are you worried about an increase in leverage speculation, as she seems to be

right now? >> well, i am worried that that could be coming as far as where the markets are with low leverage, because that's usually the case. furthermore, bill, i'm also worried that the fed is talking about this so openly, especially what jack pointed out, about her talking about valuation. the fed chair should never talk about valuation, should never talk about whether or not volatility is too low or too high, because that implies at some point they are going to say the market is overvalued in the future -- >> that borders on international exuberance? is that what you're talk being? >> yeah, we had the experience when the fed tried to go down that road and it didn't work that well. >> it would matter more if they were going to act on it. whether it was a period in the late '90s or anything we've seen lately, their approach has generally been, we'd rather clean up afterwards rather than beforehand at the risk of hurting the economy. >> but she's screaming at

everyone, leverage up. >> exactly. >> because i just told you there is no fear of leveraging up right now. she's creating what she's trying to avoid, low leverage and saying that the market is not overvalued is suggesting that we do exactly that, overleverage. >> but remember, she also suggested using regulatory tools -- >> absolutely. >> which was one of the most surprising things that i heard her say today. >> right. >> remember our inability to use margin requirements on stacks, when they could just shift over to options and accomplish the same thing? the regulatory tools to manage volatility is something that ought to be a real concern. >> diane, go ahead. >> they're willing to pull the trigger on the regulatory thing. that hits the nail in the head. listen, we're not going to use monetary policy because we're not sure how to lean against the wind, but we're reaching for yield and we'll use financial regulations to do with it. and that's not something we have not seen the fed aggressively do or execute on in the past.

they have more tools after some people's dismay on their tools in the regulatory framework, and i think they will use them. >> i guess jack asked the right question. if you believe as diane is saying, if the fed is serious about using other ways to deal with froth, if you want to put it that way in the market, is that a genuine concern, or are you hearing jim bianco and seeing this, frankly, as a green light? mr. bouroudjian. >> he's talking, but we're not hearing him right now. >> oh, sorry. >> rick santelli, what do you think? >> i think that we're all trying to make this question and answer much tighter than it really should be interpreted. and in terms of the regulations, the only question about regulation that i thought we should draw any significance from was when she was asked about the $50 billion-plus in fines to the banks and all of the kind of regulatory -- the stifling conditions out of the 9th district in new york. and i think ultimately, as the

head regulator, her answers are a bit scary. and then when you talk about the exit fees, you know, she didn't want to go into that. the long and the short of it is, mr. olson nailed it. he just nailed it! she described the economy the way a doctor would look at somebody in their waiting room. yes, you have a fever, yes, you look a little clammy. your color isn't good. but beyond that, don't ask me what's going to make you better, because i just don't know. >> i just want to bring everyone's attention to the fact that the s&p 500 has hit a new intraday trading high. the dow jones average is up almost 100 points. >> almost 100, yep. >> so, within 50 here of its own closing high, bill. >> and you know, there are other averages that have been at all-time highs otherwise. the transports are doing well. the utilities are at all-time highs. consumer staples are at all-time highs right now. >> what do you guys make, jim, of the fact that we are, to bill's point, both transports and utilities. in other words, something that's typically sickically sensitive

and utilities, a defensive play, both trading at highs. >> it's not surprising when the market's going up that you get that kind of cyclical rotation, but when you have a correction, i would suspect that that would end rather quickly. so, given the way the market trades and lists over the last several months, not surprised at all that the cyclicals like transport needs are doing what they're doing. >> jack bouroudjian, i think your mike works now, and don't blame rick santelli. >> no, he wouldn't dare come over here. i was going to say, i'd worry about the froth in the market if we were trading at 20, 25 times earnings. we're nowhere near that. in fact, one of the reasons that i'm glad she said what she said is because everyone's scratching their heads, wondering if, indeed, we're overvalued at 17 times earnings -- >> it's very much in the eyes of the beholder. plenty of people come on here and say this market's expensive, depending on the numbers you're looking at. >> bill, i think you have to look at -- >> for a fed chair to come out and say everything looks fine to

me, is that a responsible statement by a chairman of the federal reserve right now? >> no, she didn't say it was fine. she said it was not overvalued or in bubble condition, and i think that's very important for us to take that differential right there. what we have heard from her, basically, is one thing, over and over again, and that is something that we don't hear her say. and that is that we are doing all we can as a federal reserve. and unless we see real, pro-growth policies come out of congress, then we're stuck in this it depends market for a while. and unfortunately, that's really what it's about. >> and it's accurate. >> go ahead, mark. >> and that's accurate. >> absolutely. >> that's the limitation on the tools that the fed has at its disposal. >> all right, folks. thank you very much for your insights in today's market action and the chairman's news conference there. thanks all for joining us. >> thank you. >> heading toward the close, 12 minutes left here. yes, a rally under way here.

>> we've got ourselves in -- >> not sure what's going on, other than the fact that fed chair yemen said she didn't see bubble activity on the markets right now. the dow's up, the s&p 500 in record territory. coming up, fred smith talks about the state of the u.s. economy to the patent office repealing the trade decision. t. and the incredible rush... of the mercedes-benz you've always wanted. ♪ but you better get here fast... [ daughter ] yay, daddy's here! here you go, honey. thank you. [ male announcer ] ...because a good thing like this... phew! [ male announcer ] ...won't last forever. see your authorized dealer for an incredible offer on the exhilarating c250 sport sedan. but hurry, offers end soon. share your summer moments in your mercedes-benz with us. ♪

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welcome back. amazon's first-ever smartphone a close second story today. >> very close second. josh lipton's at amazon's event with all the highlights. tell us about it, josh. >> reporter: bill, let me introduce you to amazon's fire phone. ceo jeff baseos here in seattle introducing the phone today. just to first go over some of the spekdz. 4.7-inch display. bezos saying he thought that was perfect. gorilla glass, ultra bright display. bezos also talked about the camera, super fast lens and image stabilization built in, so it counters any natural tremors in your hand. compare the phone to competitors samsung and apple.

two, though, pieces of technology that bezos and his team think will differentiate this phone. one is what they call dynamic perspective. basically, there are cameras in this phone that are tracking your face. and what that gives you is, it kind of creates a sense of depth when you look at the phone. so, four cameras. bezos joked that they had to become experts in tracking faces. they took millions of images of faces from all around the world. in terms of applications, obviously, the first that comes to mind is for gamers. and bezos actually started playing a video game on stage to sort of show how dynamic perspective this new technology could give you a more immersive feeling when playing a game. also, they introduced firefly technology. what this does is it's a button on the phone. you press down the button and hold it, and it can detect and identify over 100 million items. so, both physical objects, but also music and songs, a lot of which, of course, would be available to buy on amazon, at&t. you can order it with them starting today, preorder. it will be available for about

$199. two-year contract. ships on july 25th. bill, back to you. >> firefly. that sounds like fun technology there. josh, thank you. great stuff. see you later. all right, we're coming back with a closing countdown on what has turned out to be a rally day after the fed. then, after the bell -- >> online shopping giving a big boost to fedex's earnings, but how are higher fuel prices going to impact the company's bottom line? ceo fred smith is here exclusively later on "the closing bell." you're watching cnbc, first in business worldwide. 24/7 i'm sorry- i'm just really reluctant to try new things. really? what's wrong with trying new things? you feel that in your muscles? yeah...i do... drink water. it's a long story. well, not having branches lets us give you great rates and service. i'd like that. experience a new way to bank where no branches = great rates. ally bank. your money needs an ally.

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hello, there. hi, bob pisani, how are you? >> how are you! >> we're getting there. we have about three minutes left in the trading day today. this is what the dow has done today. you had kind of a stutter step motion, as you often get after the fed's announcement at 2:00 eastern time. but then as the news conference went on and it was apparent that janet yellen's okay with the current levels of u.s. equity prices, the market was going higher. and we're finishing up near the highs of the day with a gain of about 95 points. what that served to do is push the s&p into record territory. we're not there on the dow. we're still about 45 points away from that, but the s&p now is in record territory by about five or six points with this 15-point gain. that's pretty good.

what did the ten-year yield do today? as she was talking, yields were coming down a bit. we're down to 2.59 now. we did come lower at that point. one thing we're going to keep an eye on here, bob pisani, is the volatility, the vix, the fear indicator has now what we call a ten handle. it's in the ten range. a seven-year low, she said -- >> seven years. >> it's on her radar screen, this low volatility, and she hopes it doesn't lead to leveraged speculation in the market. >> yeah, but she's also said that it's not exactly clear what it means that we're here right now. and i just want to point out, people keep asking, why did the market move up on this? well, the fed clearly implied they still believe the economy is getting better. they are not that worried about inflation. the first question, steve liesman to his credit asked about inflation. she said the cpi might be noisy. she batted away the inflation question completely. it was a good first question steve asked. and they'll continue to keep

yields low for a long time. the bond market like that yields move to the down side. so, overall, this was their way of saying we think the economy is slowly continuing to heal. >> as with any news conference, for a fed share, you're going to be parsing syllables and things. we get a little too caught up in that but she was not willing to say that she is confident that the economy is sustainable in its growth rate right now. >> yeah. >> she expects it to happen, but she's not confident right now that it's going to happen. >> i'll tell you what was initially very shocking, when they downgraded -- they didn't downgrade, they reduced the gdp growth rate. >> right. >> down close to -- >> shows you the impact the weather had in the wintertime, right? >> that's right, and it wasn't a prognostication that the u.s. economy was bad going forward it was an indication how bad the winter was overall. that's the important thing. the key thing, unemployment numbers are coming down and their overall assessment of the economy in the first paragraph was higher. that's why stocks moved up. >> very good. thank you, bob. so, rally day on fed day. let's see what happens tomorrow,

but very interesting. coming up, kelly talks to fedex ceo fred smith. they are trading at all-time highs in the transportation sector. that should be very bullish for the economy. we'll find out what that he thinks about that coming up now on the second hour of the "closing bell" with kelly evans. and welcome to the "closing bell." i'm kelly evans. in the session that started out quiet is going out like a bang. you know what those graphics mean, the s&p 500 rallying on the back, hearing from fed chairman janet yellen and the decision to put up almost 100 points on the board. the dow jones industrial average going out up 96, the nasdaq up 25, the s&p 500 adding about 15 points, 1,956. write it down. that is a new closing high. let's get right to it with today's panel. joining me is michel meier from bank of america, america lynch,

private investor evan newmark, cnbc contributor jon najarian and steve liesman will be joining us. and we have "fast money" trader guy adami with us as well. guy, i'm just going to ask again, a capitulation day for the bears. >> doesn't feel like it. hi, kell, by the way. >> hi. welcome. >> you know what the most interesting -- i mean, steve liesman, great job with the inflation. to me, the most interesting comments she made was they're concerned about the levels of complacency. okay. guess who's cloausing those levs of complacency? >> that's my point. >> it's madness! if you're that concerned about the levels of complacency, stop doing what you're doing. say it's over, we're done, sink or swim, party's over. then we'll see how it shakes out. >> if it's sink or swim, guy, though, isn't the signal -- just to to go back to color metaphors here, haven't we just been given the green light by the fed? dr. j., you're shaking your

head. what do you think? >> i don't think they give us green lights, though. yes! you got a green light, but the red's going to come up quick, and you don't have the little five, four, three, two, one things warning you when it's coming. >> right. and we have to, of course, this is going to become more of an issue, separate out stocks rallying from what is in the ultimate long-term, fundamental health of the u.s. economy. but again, just to focus on the market activity today, and for people wondering if this is the start of a bigger move, do you think it is? >> i think it is. and i said so when draghi basically went to negative rates over in europe. i don't know where money is going to be finding a home, kell, over in french, spanish, italian bonds at those minimal yields with considerably more risk or over here. if they're over here, and we had record inflows into our financial products last month, that indicates to me that all that money coming in will continue to flow this way, kell. again, safety at the equivalent yield. and i think that's very good for

the markets. i think you wouldn't see utilities up 2% across the board here if people thought that rates were about to skyrocket. they think just the opposite. and i think just the opposite. rates are going down. jeff gunlocke thinks they're going down to around 2%. i think we're going to see 2.2% or 2.4% on the move, not in the short term, but over the next several months as the money flows basically dictate to folks that it's not all about the fed. there's a lot of money out there outside of what janet yellen pushes. >> the thing, kelly, i do not understand is the internal contradiction that is taking place between the stock market and the bond market. if the u.s. economy is growing at 2% or sub-2%, how do you justify the valuations that a lot of the stocks have? and i think that is the issue. at some point, it may be three months from now, it may be six months from now, this contradiction will be resolved. and it will probably end in a disaster, as it always does. >> but what if it's years from now? >> it could be years from now!

>> so, then -- >> you can't, you can't, you can't guess the timing. >> exactly. >> but it should terrify you that the head of the federal reserve knows as much as you do! i mean, that should terrify you! >> no, does anybody think the fed would have some inside information? what possible kind of inside information would they have? >> she basically said today, it depends. >> right. >> it depends. it's all data-dependent. she was basically saying, your guess is as good as mine, so you might as well buy stocks. that was basically her message today, as least how i saw it. >> we'll get to steve liesman in a second out of that press conference. michel, how fundamentally sound is the u.s. economy? >> i think as we heard from the fed chair today, we're seeing some better data, but we're not convinced that we're at the point where the economy's going to really take off, and we're not convinced that inflation either is really accelerating. so, we're in a hold period where we have to monitor the data. we have to still, i think, see an environment of low rates. and to me, one of the interesting takeaways and something market participants were pricing in before hand is

at the lower long-term rates, that perhaps they're starting to think about what the steady state looks like for the economy and what mutual rates look like. >> and if that's the case, more or less for good, what that means for stock valuation. steve, i want to bring up something we just heard from our panel in the last couple minutes, and that's going back to the debate we're having right now. they say, look, the fed is creating the very problem it's trying to avoid down the road with regard to, again, look at the collapse in volatility today, look at the pop in the stock market, going out here at new highs. an overreaction, in your view, or, look, should the fed just be -- let me just ask, what's your read on all of this? >> you know, i don't remember the day when volatility became something that was followed so much and became a good thing. i kind of lost that thread, kelly. do you remember the day when that happened, when everybody was like, low volatility is a good thing, or is a bad thing? >> right, right. >> and so, what do they want yellen to do, introduce more

uncertainty and we'd all be better people because we're more confused about monetary policy? i think yellen has an interesting position right now in that the fed has real good agreement about the end of the year and has pretty good agreement about the first six months of next year. and that could change a few months early, a few months later. i don't know what else you want from monetary policy here. going out, it looks like about a year, we've got pretty good certainty about the trajectory. if they want her to be more circumspect, introduce more volatility, i imagine she could do that. i'm not sure she would think that that's going to benefit attainment of the fed's goals of maximum employment and low inflation. >> well, that's a point garcia was making yesterday, which is to say that if you're worried about financial instability down the road, fine, but the fed has a congressional mandate, and that mandate includes setting an inflation target and an employment target. >> i want to say one more thing. i think my trader friends have

introduced this, right? you have all these guys out there with itchy fingers that -- >> the credit crisis introduced that. the fact that 2007-2008 happened is why everybody's talking and rightly worried about financial stability today, including fed policymakers. >> i know that, but there is a contingent of people out there in the market who benefit from high volatility, hfts and a lot of short-term traders. and i'm not sure they're an interest worth placating when it comes to volatility. >> dr. j.? >> yeah, again -- >> with all due respect, dr. j. >> no, no, and i didn't say that. i'm not one of the folks rooting against this. and steve, i'm saying that abe and the ecb are far more to blame for low volatility right now, and that will continue, and we can't change what they are doing. so, we could basically wipe out the rest of qe and take it to zero right now instead of in october when we're likely to, but in my mind, steve, the fact that the record money flows into our bonds are telling me record

inflows from overseas are telling me that we're just the prettiest house on the block, and that's going to keep rates down -- >> hold on. >> -- and keep sending them down. it's not just the fed. >> but dr. j., the flow into bonds is a sign of volatility, in my opinion, in the following way. >> okay. >> there is more money in bonds than probably there should be, and to me, it's hard for me to know what should be right, but we know there's a big fear trade out there. and when you talk about stock levels versus bond levels, we know there's still a lot of money that's hiding under the rocks of risk-free bonds. >> agreed. >> michelle? >> i also think steve makes a good point, which is, there is a bit of a difference between what volatility's doing and low-volatility environment, which i would argue to a certain extent, the fed wants low volatility. they want to know people have the ability to understand borrowing costs going forward. and the idea of financial instability where it actually leads to systemic risk, that's what they're concerned about. if they can identify parts in the market where there is

systemic risk that filters into the overall economy, it's concerning and it could impact their monetary policy decisions. but thinking about gauging volatility, they're curious about it. they're going to monitor it, but i'm not sure it changes how they think about policy. >> can i ask steve one question? why is it a good thing that five, more than five years after the crisis, or almost, depending on how you measure the start of the crisis, we're still sitting here parsing janet yellen's words? how can that possibly be a good thing? >> oh, well, it keeps me employed. >> besides that, steve. besides -- >> no, no, that's not besides anything. that's very important. look, we're going to be parsing -- look, because we went off the gold standard and we've put the making of monetary policy into the hands of humans, we will be parsing the work of the fed officials from now until eternity or until we go back to some gold, or maybe the bitcoin standard. >> guy adami, the last word here. >> let me ask steve quickly, what was noisy about that cpi

number, when you asked her about inflation? >> i don't think it was noisy, guy. >> seemed pretty cut and dry to me, but that's to my point. when they yanked the 6.5% or whatever the unemployment rate, when they yanked that away, now they're basically yanking away this inflation number. i mean, it did seem pretty cut and dry, steve. i thought it was a good question. >> well, if i had -- thank you. if i had to guess what she means by noisy, we were 1.1%, what was it, four months ago? >> yeah. >> now we're at 2% or 1.6%, i guess, on the bce. she means there's been a lot of recent noise up and down between the golf posts of the federal reserve inflation objective. so, i think that's what she means. but you're right in that that inflation number was broad-based, and for the last four months, it's been persistent. i think she punted on that question a little bit. >> we'll pick this thread back up in a couple minutes. we'll leave it there and let guy adami get ready for his show. >> later, later, later!

>> guy's coming up with the "fast money" crew at 5:00 p.m. they'll be talking with chris roland from fbr financial markets about his takeover targets in the chip space. m&a's getting a lot more attention these days. don't miss it. dm dm c dom chu has a market flash. >> argentina is the target of the market flash. one of the main indices surged midafternoon. you can see in the middle of the screen there. news that argentine officials will begin to negotiate for the first time next week with hedge funds that refused to take part in the debt restructuring plan that argentina had. now, negotiations are part of an attempt by the country to avoid a bond default and investors are taking notice. that spiking midday, finishing backup 3% on the day's session, kelly. back to you guys. >> dom, thank you. fed chair janet yellen speaks and the market reacts. up next, blackrock's bond guru rick reeder, they managed nearly $7 billion with him. he'll tell us whether he's changing his investment strategy

based on yellen's outlook. also, fedex ceo fed smith will tell us what's driving profit growth and what that says about the health of the economy. you are watching cnbc, first in business worldwide. we give you the most free research reports, customizable charts, powerful screening tools, and guaranteed 1-second trades. and at the center of it all is a surprisingly low price -- just $7.95. in fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and e-trade. i'm monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. call or click to open your fidelity account today.

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welcome back. so, for everybody waiting to hear from janet yellen today, they apparently got the message and the message being to send stocks higher. the dow closing up almost 100 points, the s&p going out here at new record highs. rick rieder is managing director and chief investment officer of fundamental income at blackrock. dorothy weaver, ceo of collins capital investments and former chairman of the federal reserve of miami bran pech app welcome to you both. >> thank you. >> we'll start with you, rick. i know there's been some concern about the fed's messaging and maybe the exposure on the short end as well here. what's your takeaway from what you've heard this afternoon as to where the risks lie in fixed income? >> yeah, listen, the statement was, you take the fed's statement and you think about how the economy's accelerated and where the employment rate is and how inflation's picked up. it's hard to state that this was anything other than dovish, given what we've seen over the recent past. now, you've seen a little bit of movement in terms of where the dots are and that there's a

quickening of the pace or anticipated quickening of the pace, but also bringing down the back end of the curve. listen, we think for the foreseeable future, the fed has clearly laid out that they're going to wait for a longer period of time before they start to move rates significantly. and so, we're going to be in easy money for, certainly until the next meeting. >> dorothy, what does that mean for investors or the american public? >> well, i think investors obviously thought it was good news. we saw that in terms of the reaction of the market today. but i think janet's comment about complacency is definitely there. people are assuming the fed's going to take care of them. and i think hope is the strategy in terms of that this will continue and markets will continue to go up, but we're not seeing, you know, outstanding growth. obviously, we are in a stronger growth economy, but it is certainly not strong growth. >> right. before we bring in the panel, rick, i mean, what moves are you guys making, then, on the back of this? what does that imply for investments?

>> yeah, i mean, what it implies. you know, it implies a bunch of different asset classes. you know, what does it mean for the belly? we think the curve will flatten, ultimately. but at least for the near term, the fed's going to keep rates on hold for a bit so the curve can steepen out, at least temporarily. that's a significant dynamic. rates can continue to stay low. we talked about we like long-dated municipals, like the long end of the curve, but clearly we think the front end could hold in for a while longer. other shifts -- you know, we think the benefits, we talked about this a bunch, the benefits to low interest rates accrues to the equity-holder and i think markets misinterpret. as long as you keep rates down, you benefit accrues to equity, and we think that the equity market reaction is a natural off-take of that. >> okay. let's bring in the panel here. michelle? >> yeah, i mean, i think rick has it right, which is, the fed is saying that they're not in a rush to start hiking interest rates. they've told us that over and over again. they're not convinced inflation's trending higher.

there are factors talking about, year over year, the inflation's going to look higher because of where it was last year at this time. so, i think that we have to -- i think they're going to want to go fairly slow. we're in the camp that they first start hiking interest rates at the end of next year. >> okay. >> absent a much stronger acceleration in growth. and that's to say that we actually think growth will look stronger in the second half of the year into next year. we think we need to see much healthier growth before -- >> can i ask all the bond enthusiasts, of which there seem to be numerous, i'm surrounded by, explain to me the risk versus return trade-off here. when you have a ten-year that's trending plus or minus at 2.5%, how does that make a good investment? >> rick? >> so, i would throw out -- so, you take bonds, you take ten-year treasuries at 2.5%, or around 2.5%, and you compare them to bunds at 130 or jgbs at 60 basis points. i believe that if you believe inflation stays contained, you look at what the fed said about

the terminal funds rate, that it should be coming down. and as long as inflation stays stable over the long term, you know, treasuries, you think about where some of the spread asset classes are, where some of the core rates are globally. treasuries are not that bad. we think the ten-year will drift higher this year, but -- >> sure, we can understand in the global rates space, but if what if you're an investor looking at the allocate between stocks and bonds, why should you put money into, for example, the treasury at 2.5%? >> so when you think about it, and part -- >> i have an answer, kelly. kelly, i have an answer, and that's because in ten years, that bond will pay off at 100. the 2.5% is absolutely negligible. people are doing that because of the certainty of 100, not because of any other reason, i think. >> so, it's risk averse behavior, in other words. >> but you don't have to take any risk to do that. you can just put it in the mattress. >> yeah. >> well, then you get the 2.5%. >> yeah, i would throw out the

difference between if you believe that rates are going to stay relatively stable, which we do, then you're going to be in a range for a period of time, you're still clipping yield. and by the way, part of what treasuries do is they give you a hedge against other risky assets, and that potentially, there's up side from here. and i think you have to balance those effects. >> yeah, but how much real up side over the 2.5% yield is there? are bonds going to trade down to 1.6%, 1.7%? is that part of your forecast? is that the case for bonds, that growth is going to be so low that the world's going to be so horrible that you're better off owning the bond that may trade down to 1.6%? is that the case? >> so, i would say -- >> what you're pointing out is the asymmetric risk. >> yeah -- >> in terms how far it can go versus how high up it can go. >> exactly. >> can i just change it a little bit? because two reporters, myself included, and then greg, have tried to get janet yellen to give us what the tolerance on the up side was for inflation at the fed, and she said there wasn't much, except they're

going to be symmetrical about it. but i think what's interesting for investors to consider is that janet yellen said outright that she could see wage growth that's well above the inflation rate. and i think people need to take a look at that and be prepared for that, that if we start to see, and i think that we'd be lucky to see this, wage growth in the 3% to 4% range on an annual basis, that that is not something necessarily that yellen would believe should cause the fed to move. so, we don't know what the inflation tolerance is, but i think we're starting to get a feel that there's quite a bit of wage growth tolerance on the part of the fed, and that's inflation plus productivity would equal a normal wage growth for the federal reserve. >> michelle, last word. >> and what's important to remember is that we're running at 2% for wage growth right now. >> right. >> despite the fact that the unemployment rate's coming down, and that's why i think janet yellen will continue to reiterate that there is this hidden slack in the labor market that's creating this downward pressure on wages. so, even if core inflation starts to head higher, if it's not coming with wage inflation, i think the fed would be

concerned by that. the ability of the consumer to handle higher underlying inflation. >> rick, we've got to go. one last question. it's a big topic, but if you could just address it in a word or two to give us a sense here. is the bigger risk to the bond market from a move higher in yields or is it from poor liquidity, or do those two things go together? >> i think they go together. i think we live in a world where, you know, part of why treasuries are not terrible at these levels, you have to be sensitive to where liquidity is in other markets. so, when rates start to drift higher, you've got to think about how will treasuries do relative to other asset classes. so, i think they're linked well together. >> we'll leave it there. dorothy, thank you for your perspective as well. we'll send it over to dominic chu for an earnings alert. what's going on? >> from the bond market to stock market, two companies out with earnings after the bell. jabil circuit is an outsource electronics manufacturer. it reported a narrower than expected 6-cent loss in its fiscal third quarter on sales that beat wall street estimates. the provider of everything electronic manufacturing in

terms of services, reaffirms also its outlook in the after hours. you can see it's coming off session highs but still up about 2% in the aftermarket trade. red hat is a provider of open-source operating systems for operators. think linux, cloud computing. it posted better-than-expected first-quarter profits and sales and the stock is just off session highs here, up by about 4% on the trade. so, red hat and jabil both on the positive, both on the tech side in the afterhours. back to you guys. >> dom, thank you. fedex's strong earnings, meanwhile, driving their shares to new highs. perhaps it's an indication that the economy is stronger than some experts are saying. ceo fred smith weighs in on that exclusively next on the "closing bell." and amazon unveiling its first smartphone, but will the company succeed with phones the way it has with tablets? remember, another massive brand once tried and failed miserably to sell its own mobile phones. stick around. you may be shocked to find out who that company, in fact, was. we'll be right back. seeing the world in reverse,

and i loved every minute of it. but then you grow up and there's no going back. but it's okay, it's just a new kind of adventure. and really, who wants to look backwards when you can look forward?

welcome back. well, before the broader market followed suit, fedex shares spiking to record highs after stronger-than-expected earnings. morgan brennan has the details. morgan? >> reporter: profit more than doubled from a year earlier. the delivery giant reporting net income of $730 million, or $2.46 per share. that beat the street by 10 cents. revenue also better than expected, $11.8 billion, increasing across all segments, but biggest growth coming from

freight and also ground, which was powered largely by e-commerce and people buying more stuff online. fedex taking a bullish stance on its fiscal 2015 guidance, saying it will be even better than 2014, but keep an eye on the new size-based package pricing that debuts in january. and also one possible headwind, fuel costs, especially with uncertainty in iraq. the company's 2015 outlook does not account for any possible fluctuations in fuel prices. meanwhile, the stock ending today up 6%. kelly, back to you. >> morgan, thank you. for more now on fedex, we're joined exclusively by ceo fred smith. great to see you this afternoon. welcome. >> thank you. >> i'd like to begin with what morgan just referenced there. if fuel prices spike another $10 per barrel, not out of the question, how does fedex respond? >> well, we have a dynamic fuel charge, surcharge, which is applied to all of our segments, more on the air express than on

the ground and freight, which are surface-based. but it lags a bit. so, the biggest issue to us is that lag, and secondarily, what it does to both macroeconomic demand and the elasticity of service selection. >> you are raising prices, or that fuel surcharge, by 3% coming up, or you have recently, though. is that the case? so, in other words, you're already responding to the move that we've seen up 10% year on year for oil here. >> well, that's a little bit different than the dynamic fuel surcharge. our fedex freight unit actually still has an industry-leading or lower fuel surcharge than other competitors. so, it was simply trying to get us more in line with the market. the fuel surcharge changes each month for each service. it has a little bit of lag, so if fuel prices are running up rapidly, we take it on the chin. if they run down rapidly, we get

a pickup. >> understood. as janet yellen put it today, it depends. so, let's get back to demand fundamentally for goods that are shipped around the country. there are a lot of things that play in, obviously. but how do you see the economy for the rest of this year? >> well, with the exception of the fuel wild card that you just mentioned, we're relatively confident about the economy. we see a bit of an acceleration. we think the quarter that we're in now could be as high as 3.9%. >> wow. >> housing is back up, which is a very big part of our economy. with the flat quarter in the first quarter due to weather and inventory correction, it will mean that it will be 2.2% gdp for the year. but as you roll into calendar year '15, our economist is looking for a gdp of around

3.1%. and perhaps more importantly for the business of shipping things, industrial production will be up around 3.9% in '15. >> and that outlook certainly a positive one relative to where we've been recently. i wonder, though, when it comes to other things affecting your business, competition is the key one. so, it's been you and u.p.s. as more or less a duopoly for years now, but uber, which is only four years old and already disrupted the cab industry, is now offering uber courier service. granted, it's only a few weeks old, it's only in a couple of cities, but do you feel as though your business has been put on notice by this up-start? >> well, uber's a great app, a great company. i first got introduced to it by my daughter. i have an uber app. i don't think that uber will be a major factor in the logistics business for the simple reason that the demand for same-day

service is a relatively small, discrete segment of demand. we have fedex same-day city in 22 markets. it's a great service. it's part of our fedex office segment. so, they'll certainly be in the space, if somebody needs something picked up and moved on a same-day basis, but we don't see that as a big threat, or quite frankly, a huge opportunity, either. >> understood. that raises the billion-dollar question, then, i guess, which is amazon and it being at the forefront of a place where a lot of e-commerce is probably going, and that is the very same-day delivery you just referenced. >> well, again, i'll stick by what i said. the market for same-day delivery, with the exception of dense, generally affluent, vertical markets like new york, downtown chicago, san francisco, perhaps in the silicon valley, is not a big market because you

simply can't get the cost right. and so, overnight, whether it's ground or express transportation, will still be the vast majority of deliveries for e-commerce, and for that matter, commercial deliveries, too. >> and fred, when you started this business, you had identified the fact that there was spare capacity at airports that cargo companies could take advantage of, the express business grew from there famously. and i just wonder, when you look at the state of the industry today, what kind of opportunity do you see? >> well, we're right at the heart of virtually everything in the economy. our global express business is tied in to high-tech, medical, pharmaceuticals, the emerging markets. we have companies in brazil, mexico, india, throughout europe. our ground parcel company is very heavily involved in retail and consumer trade. our freight business is very much involved with automotive

and housing. and then our services segment, which includes our fedex office chain, is directly tied in to financial services, architecture and things like that. so, we have a very unique view, i think, on the economy, which presumably is why you're kind enough to invite me on here today. and i think we have a good handle on it. >> i guess what i mean, though, is that is there an area of disruption that you see today, similar to the opportunity you saw 40 years ago? >> well, i think you'd have to put it in that category, although it's nascent, 3d printing. we have an initiative in 3d printing. i think you would see for the movement of people the type of travel that i'm doing right now, which is by video conference. we're prolific users of teleconferencing, and i think that's disrupted to some degree. i think the whole idea about robotics and the google

automotive demonstration, the self-driving car, those are all going to be fantastic changes in the next couple of decades that will offer big business opportunities and many opportunities for fedex as well. >> well, i imagine with something like hundreds of thousands of employees, for you guys, driverless technology could bring down costs significantly. how serious are you looking into it? >> you know, we believe that you're not going to get rid of drivers, or for that matter, pilots, even though the military has shown that pilotless airplanes are perfectly feasible. instead, i think what you'll see is technology that helps people be safer and make fewer mistakes, like an autopilot has done in aviation. i think you will have to have -- you may have the need for fewer people, but i think the productivity improvements will be substantial. >> and fred is a partial owner of the washington pro football

team known as the redskins. do you think the team needs to change its name now that it won't be able to have the protection of patents? >> well, first of all, let me answer that question from the standpoint of fedex, which sponsors fedex field. we have a long-standing contract with washington football inc. the redskins play at fedex field. but there are many, many other events there, the rolling stones, notre dame and army and navy football, kenny chesney. so, that's our sponsorship, and we really don't have any dog in this issue from the standpoint of fedex. from a personal standpoint, i'm a share owner in the redskins football team, but mr. snyder, who's the majority owner, and the redskins speak for the franchise. i would point out that they've issued a press release on that today and i'd refer people to that. >> sure, but again, this is an issue that now has people

talking about everything from the limits of free speech in this country to the offensive names that might be used as this is considered offensive by 60 high schools across the country, many other types of franchises. and obviously, there's a lot of investment dollars at stake as well. so, your personal stance on the issue is? >> going to remain personal, kelly. >> okay. >> i think that fedex's contract is with washington football for the stadium, and i'm here representing 300,000 fedex team members and fedex shareholders. so, our sponsorship is a good one for fedex field and the redskins need to speak on the redskins name. >> understood. fred smith, thank you so much for being here. >> thank you. >> covering a wide range of issues this afternoon. really appreciate it. fred smith, the ceo of fedex, whose shares today trading at an all-time high. so is the broader market, we should add. the s&p 500 going out at new

highs today. fed chair janet yellen's news conference red hot on wall street. is the press conference topping the cnbc.com hot list? we'll find out next. we needed 30 new hires for our call center.

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welcome back. janet yellen making headlines in washington, d.c., today, but the news burning up the cnbc.com "hot list" involves the pro football team in the nation's capital. that story topping "the hot list." managing editor allen wasler. a pretty impressive late-day rally? >>er and it's beginning to jostle my top three, but even with the fed doing its business today and everybody focused on that, my number one is actually amazon's fire phone, okay? thanks to a lot of social pass-around and, you know, going through the internet universe, the amazon story is actually drawing three times as many readers right now as our fed wrap-up on the website, which is kind of unusual, but you know, you sort of figure, well, the fed sort of did what everybody expected. the amazon thing, you get a lot of people going, oh, did you check out this and check out that? so, that's the effect i think we're seeing here. my number three right now is the j.d. power survey that just came

out. phil lebeau wrote it up for us, where owners of new cars are reporting another year of increased problems with the cars. 116 problems for every 100 cars. that doesn't work out to a great average right there. >> no, it doesn't. >> phil got right into it. best is porsche, worst is fiat. people love car stories on our website, too. so, they're all going into that one as well. but amazon far and away the big leader right now. >> and in terms of tickers, where does amazon usually fall on the website? is it often one of the top? >> it's typically one of my top ten. it's usually near the end. whenever they have earnings or any particular news, it's right up there in the top five. it hasn't been able to jostle off number one, apple, number two, facebook. and it's been that way for about two months now. >> that will be the tell, though. you have to let us know when that happens. thank you for now. >> take care. >> amazon made a name selling online books, including from an author who wrote that those who don't remember the past are condemned to repeat it, and those wise records for amazon as it enters the mobile phone

business. up next, another big consumer brand that flopped and has a phone and what it could mean for amazon. and earlier, we heard from fedex ceo fred smith on how the u.s. patent office canceling the washington redskins' trademark affects fedex field. coming up, we'll take a look at how much that move could hit daniel snyder's wallet.

welcome back. so, amazon finally unveiling its highly anticipated smartphone. you just heard it's got plenty

of consumer interest on the website. so, josh lipton, has it lived up to the hype? >> reporter: kelly, you know, amazon's been involved in the hardware business for a long time, but today the retailer really pushing into a whole new category. ceo jeff bezos on hand here in seattle, washington, to unveil the new phone, the fire phone. you saw investors also respond today, by the way. they pushed that stock up nearly 3% in today's trade. bezos told the crowd, listen, he was patient, he was persistent, he did not want to unveil a new phone until he thought it was better than the competition and different enough from the competition to get the job done. if you talk to financial analysts, kelly, they said amazon really had two objectives here. one, amazon obviously wants you shopping at amazon.com as much as possible, buy as much digital content, music, movies and tv shows, as possible, getting a device in your hands is one way to encourage that. also, amazon wants as much data about you as possible, and if they straighten that ecosystem, a phone, a tablet, other

hardware, they have that data. data is powerful. it means they can cross sell you more goods and services more effectively and more efficiently. at&t will be the exclusive carrier. you can preorder the phone today. it will ship on july 25th. $199 with a two-year contract. kelly, back to you. >> josh, thank you. thanks for all the coverage this afternoon. now, some of you might remember another popular content-based company that attempted to create a mobile device back in the day. well, it's not facebook. the mobile espn phone. both amazon and espn have plenty of cash on their balance sheets to support these new projects. both rack up a fair number of members and subscribers, but the mobile espn reportedly had fewer than 10,000 subscribers. so, will amazon's fire phone meet the same fate or rise above it? mark spooner joins us now, editor in chief at laptopmag.com. a lot of people didn't even know about this espn phone. >> yeah, and i think you sort of said it right there, it was subscribers. it was people actually had to

switch carriers in order to enjoy all of this great content. so, the fact that you don't have to do anything, just go into an at&t store and pick it up i think gives a lot of customers who are already excited about the amazon brand and the content they already get more reasons to pick up this device. and i think it ties into the shopping experience in a couple of clever ways. >> sure, and before we get to those, john ledger over at t-mobile, before the amazon phone was introduced, was tweeting quite skeptically about it, saying it was going to go the way of the facebook phone, which also partnered with at&t. what about that as a prologue for this case now? >> i think facebook facebook was a lot more niche, in that it it was a social network already on every phone. the big question is could you be better off getting all the features on a regular android phone as opposed to with a specialized device? and in this particular case, i think it's about the shopping experience and the ability to use that camera to almost look at anything and then shop for it online. it's sort of like the ultimate showrooming experience. >> it is. dr. j., what do you think?

amazon shares moving up 3%. could this be a bigger deal than people who had kind of been shrugging their shoulders before the launch? >> i think it still could, kell, just like when they launched fire in the first place, because they ended up giving it away, virtually, right? >> right. >> or at least giving it away for the try, then if you liked it, then they would charge you the amount. i think this is going to eventually be linked to discounts. whether it's a discount to prime or a discount to your service that you subscribe through at&t for or whether the music streams and a certain amount of it and video are streamed free because of, you know, the various road blocks. >> you're getting a year of prime for free. so, for that 99 bucks, you're getting two days free shipping, all this free content. but yeah, it's basically -- >> that's where it makes all the sense. >> kelly, i'm going to come out and say what everybody's thinking, which is, this is a terrible idea. >> why? >> i don't think it's going to work. by the way, i'm a very happy amazon customer. you know, i use prime -- >> are you an amazon

shareholder? >> well, through index funds, i guess i am, but i don't hold individual amazon stock because it's one of those, you know, ridiculously overpriced stocks that you can never actually justify the value of. put that aside. purely as a business idea, the phone hardware business, which is what this is, is kind of a terrible business with very, very tough margins. and i don't see -- >> but this isn't a phone hardware business, this is an amazon platform business. >> by the way, you could turn anything into a platform business. espn, it's going to be a platform business! it's a great idea, trust us! look, these things are all about branding. maybe it will work for amazon. amazon makes -- i was going to say amazon makes a lot of money, but they really don't. >> they generate a lot of cash, how about that? >> they can justify this for a period of investment over a couple of years, but whether or not it's still around five years from now, call me a skeptic. >> michelle, just a word. were you impressed by what you saw? are you, what, an iphone user? >> iphone and blackberry. i have both. personal iphone, work blackberry. >> do you think this is

something that could be worthwhile? >> i think so. obviously, i'm not an expert on it, so i can only speak to the headlines and i think it's interesting. i personally love amazon. i'm a huge amazon prime user. i probably order something every other day there's a package at my door, so -- >> so, are you preparing to get a third a third phone, michelle? are you preparing? >> i think i'm leading. >> i think the answer is no. >> speaking of third, i think, ultimately, i in this is about. they're not going to overtake apple of samsung. this is about fighting for that third spot behind the likes of htc and lg. if they can make moment item there, there is a case to be made. there is no question they will overtake the leaders. >> mark, it's fwd to see you. for more on how jeff pesos turned amazon into one of the biggest companies in the world, don't miss "amazon rising." trademark trouble for the walk redskins. they trade off near trademark, find out what that means for the

nfl bottom line and the if the cleveland indians and chiefs should be worried. having the cloud allows us to rapid prototype a lot of ideas. being able to pay as we go is crucial for a start up. having to fork out a lot of money up front was risky. we can launch a feature really quick, and if the feature doesn't work, we haven't lost anything, and we can have something up and running in days. and this would not be possible without the cloud. we are now supporting over 25 million users each month.

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snyder has asked president obama to change the team's name, which is considered offensive to some. the u.s. patent is stripping the team of the trademark registration today. >> it's a big numbers game for the redskins. they are such a high profile franchise in the american nfl. some of the numbers are interesting. the number that's a $1.123r50ir7x stills the team is worth, that's huge. it makes it one of the top, three, four valuable franchises in the entire nfh. they made $120 million in revenue. this is where it gets interesting, in order to rebrand the team, a lot of estimates say it could cost between $10 and $20 million in terms of rebranding, getting everything

sorted out to get the redskins to change their name and logo. so that's about one-fifth of the overall teammates in 2012. the question is, is it worth it? 99 designs the design blog put up a contest last year asking people the rename the redskins and come out with a different logo. all of these were possibilities t. washington warriors ended up winning. take a look at the grip-ins and the red tails and washington renegades. we found out this is all, of course, a very, very big deal for a lot of people who think the red skins yaim name could be rename. they did come out with a response, if you will, to this whole idea that the trademark office is stripping them of their patents here. they said they seen this before. leak last time, today's rule willing have no effect on the team's ownership and right to use the redskin's name and logo. that's their statement. they say it happened in the past. that whole decision has been

overturned. they are not worried for right now about i. okay, 20 minutes ago, fred smith the ceo of fedex spoke to you about the same subject when you asked him about his personal views on this subject, this is what he had to say. >> you want to remain personal, kelly. i think that fedex's contract is with washington football for the stadium. i'm here representing 300,000 fedex members and shareholders. so our sponsorship is a good one and the redskins need to speak on the redskins name. >> kelly, that's the real deal, whether or nott the redskins maybe should or shouldn't change their name. whether the corporate sponsors care about what's happening right now. all of this is just at the beginning stages of the discussion. being over to you, guys. >> don, thank you for now. coming up, we will wrap up the fed day and look towards tomorrow's trading session. we will get your final thoughts

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welcome out. it turned out to be a big day, let's get a final thought, dr. j. >> i like amazon. >> i will comment on the

redskins, it's a negotiation if the owners dave dan spieder half a billion, he'd change the fame. >> i think for me, we will wait and zay see. they're monitoring the data. >> it depends. great to see you this afternoon. appreciate it. >> that does it here on the closing bell, melissa lee and ""fast money" is next! . >> fast money starts right now. at the nasdaq markets in new york city's time's square the s&p 500 closing at a record high today. i'm melissa lee the traders are here. we will have more on the fed move today coming up, plus, we are making "fast money" mystery right here tonight for the first time ever, we will have live voting on screen during our street fight. first, it is here. investors seem to leak it. amazon unveiling its fire phone a few hours ago. it's 199.99 with a contract. it is a