been a very big day here. the end of qe. history in the making. dow down. nasdaq down. pretty much round trip to where we were going into the decision. thank you, steve, scott and thank you for watching "street signs." "closing bell" is coming up next. welcome to the "closing bell." i'm kelly evans at the new york stock exchange. >> i'm bill griffith. markets still trying to sort out what the fed said in its statement following the two-day meeting. one notable phrase, more constructive comments about the labor market. they had talked about all the slack in the labor market to this point and this time around they were more constructive on labor than quite a while so that has been believed to be a more hawkish tone for the fed.

>> get the talons out. i'm surprised the market is holding up as well as it is. the s&p off 8. nasdaq off 25. i would say that would be an encouraging sign, correct, bill? markets are so trigger happy at the slightest hawkish bias to, you know, to drop by a couple hundred points, we are not having one of those days but anything can happen in the next hour. >> an it normally does on a day like today. we have the typical stutter step move in the market immediately following the release of the statement and seeing as they continue to figure things out in the last hour of trade. talk about it in our closing bell exchange for the fed day. jack is with us. peter anderson. sharon stark joining us today and rick santelli, as well. rick, dollar higher. yields on the 10-year higher. in fact, the dlsh. >> no, no, no, no, no! nope, nope, nope. lower than before the statement.

30s are much lower. >> they were higher earlier. i was going to point out that the 2-year yield with the biggest move up since early '11 i was reading, as well. the question is, how do you read the market's response to the fed's statement? >> 2-year put off to the side. that's so close to the area of the fed tinkering. 5-year is poster child to monitor. it's now 1.60. it was higher so the curve definitely flattered. 2s as you pointed out, 3s, 5s, yields are higher. 10s and 30s lower or 5 basis points lower in the case of 30s. you have to almost look to yesterday to answer that. yesterday is reported there was a 58,000 contract 10s versus 30s spread put on in one second. they said the busiest one second in ever and that steepening

trade. so, you know, you have to kind of -- they didn't get it. i don't know. i don't read the statement anymore because, you know, i don't know. if i gave my daughter a marketing major the task to write something on cerebral cortex science, i think that what she wrote would be about the same as what i read in this statement. you know, underutilization, lay force. listen, if you have an education, you're more highly employed. it is what it is. >> rick brings up an interesting point, sharon, of the curve telling us. i wonder if we should be writing the obituary of quantitative easing. we have been here before. we thought it ended after the first round, after the second round and had to keep ending numbers. do you think it's truly behind us? >> it's definitely possible that

they could come back if labor numbers do disappoint us and we're starting -- and if we see prices pull back. i was a bit surprised the fed said that hthey seem to be on track of the target rates for both employment and for inflation when, in fact, you still have very high understood utilization rates. twice as high as the jobless rate and the deflator slowed down, not increased, so i think qe-3 is over but i wouldn't reel out more -- >> do you think they're going to a mistake going to that point you raised, excellent one. they have a mandate. are they making a mistake here? >> i don't think they're making a mistake. i think they really are signaling to the market that they are data dependent. they're going -- we know one month does not make a trend. we have one month of, you know, a slowing trend in both the cpi and the pc deflator. i think if we see another two

months of that, you may see them change their tune and their forward guidance. may sound a lot more dovish than it did today. >> now the waiting game begins. when they do start raising rates? alan greenspan on the wires lately and talkative this week and monk other things said he doesn't see how it's not disruptive to the market when the fed starts raising rates. do you agree? >> boy, talk about a lesson in irony. yeah. i agree. for once i agree with greenspan. you know? this is like buzzword bingo. everybody's trying to figure out when this is going to happen. i don't think the fed knew when it was going to take the foot off the gas. frankly, i didn't think yellen had the courage to do it today. to her credit, she did. the training wheels are off. i think mid next year and the fed set a dangerous precedent. they won't hesitate to put in another form of stimulus and won't call it qe if they have

to. mid-2015. >> operation bear claw. had a twist now. >> exactly. jack, what do you call all of this that's going on? >> brilliant. i think what janet yellen and the fed have been doing is absolutely wonderful. they have been able to maneuver their way through the cycle and they've been doing it with what? low inflation. they're starting to create jobs. starting to see the numbers. we have companies making money in this environment. and you know what? you know, it's about time that we quit knocking the fed. people are not unemployed because the fed is keeping rates low. bankers are not -- >> they're not 'em broadwayed because they're keeping them low! >> the fed is not the reason, rick. all right? >> one at a time. one at a time. >> the best trade in the last five years. >> jack, are you long stocks? you're long stocks? >> all right, all right.

i hope something had a good sound mixer there. a couple of good things were said at the same time. peter anderson, jack talked about making money in the environment. are you? are you buying? are you selling? >> well, yeah. we're buying. you know, i thought the news today was okay. kind of ho-hum and the market is reflecting that. the tough part, janet yellen has done a good job and only been on the job for a short time. now we really have to get a sense of how things are going to play out because i do think that she will be raising rates. i'm hoping, actually, she will be raising rates the first half of next year and a fantastic thing. you know, the shackles are off now with qe and it's about time we start looking at equities and start saying, you know, we don't need this life support to have good valuations and undervaluations, actually, and so -- >> the point is that everybody's been eager aenl desperate to get there, to when equities can stand alone, the u.s. economy

stand alone and bond yields are rising for the right reason. the question is are we yet there and when's the market reaction to the fed today telling us about whether we are? >> yeah. excellent point. i think we're getting there. you know, some of the things that i think she has to balance is we are in a very sensitive, precarious place right now. i think we'd all agree on that. equities, sure, i'm a bull on equities. not holistically a bull and she has to be very careful, kelly. i don't think it's a black or white answer right now. we are at a turning point -- >> look to your left if you would, the dow jones industrial average now down 100 points. we have just taken a bit of a gap lower here in the last couple of minutes. >> we have. and, you know, you will see that because we're all trying to figure this out just like we are on this segment. exactly where we are and it takes some time. takes at least a couple of days before we digest this.

meantime -- go ahead. >> let me move on. we're at the point to prioritize. fed or fundamentals? midst of earnings season and over 60% of the companies reported beaten expectations. they have been pretty good and the revenue numbers, as well. do you look to that as a positive or to this end of quantitative easing and the markets is taking negative live at least today? keith fitzgerald. >> i tell you what. you know, if you're an investor, you have to look to that bigger term picture. pullback regardless of the reason that caused it is an opportunity to pick stuff up going on sale. i would argue that over the longer term, the data is incontra veritable. energy is beaten down. a higher dollar, look at that. out of line with short-term expectations and long-term potential. there's fundamental demand

picture spelling growth. looking at medical tech, that's another area not going away. i could down a list of three or four industry segments and the long-term picture is there and the right perspective, i'm excited by days like today, actually. regardless of what i think of the fed. >> sharon, since your comments, we are down 100 points on the dow. is this the market perhaps thinking twice about what you said? you know, the extent to which this activity by the fed might be a little bit premature. >> yeah. i don't think we're there yet. i mean, i disagree with the earlier comments. like i said, the economy is improving. but we're still seeing a lot of joblessness out there and we're still seeing a lot of labor underutilization. yes, energy prices are down. one month does not make a trend. but i think if you talk to a lot of corporations they will tell you they don't have a lot of pricing power and for that

reason they've not made the investments that you would expect them to make. i mean, look at corporate cash balances. they're healthy ambulance sheets but they're not investing and that's what we really need to get the economy growing. i don't know if it's the fed's duty to do that but certainly we don't want the fed to do anything to con train whatever progress we have made. >> right. good point. we have to hop. rick, a final word here. it is interesting the timing of this. end of quantitative easing is less than a week of midterm elections and could maybe trigger more action, if you will, from congress. do you think there's any prospect of one hand handing off to the other here. >> if you tell me who will win. >> if the gop takes the house and senate. >> well then i think there's more action. i personally don't play the political games but it certainly seems to me there's been a lot more legislation created in the house than the senate and the senate will not take up any of those bills.

that could change. >> all right. we'll see. there's still a president obama in the white house for a couple of years. >> see, then -- then he has to veto it. same as bill clinton. that's what made bill clinton try and late. >> kind of what i was getting at. plenty of time to talk about that. meantime, markets are looking for support here getting less of it from the fed these days and maybe see if they get more from congress. off 101. s&p off 15. nasdaq off 35. >> i love days like today. one statement. we read the same words and we come away with differing points of views. i love that. we have a lineup of heavy hitters on the fed heading your way this hour. chief investment officer rick reider, jan hatzius, mark olson, austan goolsbee. >> visa, baidu, metlife and

kraft foods are reporting after the bell. don't go anywhere. more "closing bell" straight ahead. you do a lot of things great.

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minus signs for the stock market's major averages following the fed reserve announcement about 1:15 ago and more constructive about the economy. they ended the fed's 6-year-old bond buying program known as quantitative easing. once and for all. see if that continues at a future date at some point. the dollar is higher since then and short interest rates moving higher as a result at this hour. we're watching all kinds of moving parts and pieces. as you saw, the dow down about 90 points here. >> with more on the reaction to the fed statement is steve liesman with austan goolsbee, former chairman of president obama's council of economic advisers. welcome to you both. >> good to see you both. >> thank you. >> austan, i asked rick this question. is the federal reserve about to hand the baton to the u.s. congress after the midterm elections? >> well, if they are, i think it's a fumble because i don't think the congress is going to

do very much before or after the election. s so the reason it feels to me that the market is reacting somewhat negatively even though they have known that the fed would do, ending the qe now, is because the fed added the part that sounded like they're getting more and more optimistic and i think you saw what's coming out of europe and what's coming out of asia. we'll see what's happening to the dollar. i think people are a little nervous maybe the fed is once again getting ahead of itself. >> what do you make of the response? the fed constructive on the economy. willing to end quantitative easing and same time short interest rates moved higher and short rates down. we have a flatteninging of the curve and usually occurs for an an titicipation of a slower gro

economy. >> the long rates went up and came down and where they were ahead of time. >> right. >> i think overall what this does, the statement does, introduces the possibility, the risk of an earlier rate hike than the market consensus, the summer of 2015. and i think that's important because i think the risk was on the other side. i think more and more market participants were thinking, well, wait, maybe the fourth quarter given the concern of european economic weakness and the concern of inflation and kind of like you went from the risk being late tore the risk being earlier. i think that's significant. if i could, one criticism of the federal reserve here is they made a big leap from saying there were significant underutilization of labor resources to the current language is that it's gradually diminishing and no in between step and i think janet yellen maybe missed an opportunity between meetings to make that change. having spoken so strongly about labor underutilization, to give

the markets a heads up that the view was changing here. >> do you think they're risking a policy error here with the underutilization in the labor market and inflation expectations lately? >> i don't think it's an error yet but it could turn into an error. it is not an error yet because they haven't done anything. they have just completed what they said they were going to complete and they've hinted that they're going to do something sooner than we thought in the future. i personally do not think that the economy is coming back as gang busters as some of the biggest optimists think. i think we are making some progress but it's been modest progress in a lot of areas and so i would not be surprised if we get into next year and conditions do not improve the way the fed is forecasting if they say, well, maybe we don't need to be as aggressive as we thought. >> meaning they don't raise rates in a timely manner or could they bring quantitative

easing back? >> think of a window of raising rates from the late spring through the end of next year, right now the market is taking their statement as, hey, maybe they mean by the beginning of the summer to raise rates. i think if we go through the first half as we finish out this year and go to the first half of next year, i don't think the conditions are going to be as gang busterses a to warrant ear early. >> there's three tools to fed policy. they have gotten rid of one. it remains a tool and not being used right now. the three new ones are raising rates, how steeply they'll raise rates and a piece of that in the statement saying the federal reserve believes in the long run they end up lower than normal getting done raising rates and the third one is balance sheet and the balance sheet, by the way, is going to remain -- have effect on the economy even after quantitative easing ends and well to point out --

>> is that a fact or a theory? we'll, it is what the fed said they will not change the balance sheet until at least they begin raising interest rates. that's out there for a period of time and then what's going to happen probably is they'll begin to taper reinvestments. these fixed income securities they have, they mature. the fed to plow them right back into the same security for the duration of the policy of seven years and change that over time and the three new tools right now. >> remember, they view at the fed that one of the great triumphs of the last year is getting out of the dynamic on qe that every single meeting and every single month people say, well, what does it mean? will they do more? do less? put it on a set schedule so that every month they didn't have to make a public decision. they could just say, we're carrying out the taper as we indicated we were going to do and at the speed we indicated.

>> there's no schedule now, aust austan. now, there is a need for that kind of automatic pilot out there and it doesn't really exist. it's day da that dependent and very hard to take, for example, tomorrow's gdp number and plug it in and now much more -- we've been through a period of extraordinarily low volatility for the fed and now markets. >> let's add another variable of that. do you think that yellen and draghi burning up the phone lines going forward here? i mean, will there be conferences to discuss monetary policy? i mean, they're at odds with each other right now. we're going in opposite directions here. >> they're burning up the phone line. might be in anger that the fire is starting because they're going in opposite directions. no question about that. europe's in a very precarious position. there's arguments whether the stress test they did is

sufficient. if you start to see europe really kind of going over the event horizon and into the black hole, then i think the fed will have to get on the horn and have more coordination. otherwise, you know, financial crisis like that can spread quickly. >> bill, looking at the euro and traded after the fed announcement, i believe mario is sending a dear janet thank you note. >> euro plummeted. >> european central bankers miffed at the fed trying to loosen their policy, the fed loosened with them. today's a historic day in the sense that a very definitive break as austan is pointing out and two different ways and mario draghi needs to get to a place going to do actual european eqe we call it. that's the expectation of the market. most economists think. but in the meantime, the fed getting a little more hawkish is

a big help to europe. >> i love that, steve, they're miffed. how dare we pursue a policy. >> what's in their own interest. >> yeah. we'll leave it right there. thank you. steve liesman and austan goolsbee this afternoon. off the lows now. we were down about 100 points following the fed's announcement. now down 76 on the industrial average. s&p down 10. the nasdaq down 30 points. special fed division coverage continues with blackrock chief investment officer will be here. wait until you hear his take on today's moves. rick rieder straight ahead. that's more... shh... i know that's more than 100%. but that's what winners give. now bicycle kick your old 401(k) into an ira. i know, i know. listen, just get td ameritrade's rollover consultants

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oh, that's me. i thought we were looking at the market. we are. down 71 points here on the industrial average. at 16,934. s&p down 9 and the nasdaq down 28. dominic chu, tell us about the movers and what's shaking here. >> all right. so here's what we got. today wasn't the best day to be a 3d printer stock owner. hewlett-packard gave more details of the entrant in that market. they claim the printers will be ten times faster and cheaper to boot up. also having a lousy day, as well, st micro.

shares down 12%. very weak fourth guidance part of the mix there. the shares down about 20% so far this year. and we'll finish off with a piece of bullish news. check out goodyear tire. up by 5% on strong third quarter profits and solid guidance for the current fourth quarter profits, as well. cost cutting didn't trump the decline in revenues. gt shares, goodyear tire doing pretty well in the down session. back over to you. >> thank you very much. we have got a little over half an hour to go here. the dow off as much as 100 points after the fed's historic decision to end quantitative easing. >> bob pisani joins us. we have to be careful reading too much into one day's market respon response. what do you make of the averages so far? >> i'm surprised the stock market is not moving more.

i agree. the fed is building up the u.s. economy. look at the statement. the committee continues to see sufficient underlying strength in the broader industry to support ongoing progress of maximum employment and then saying if the incoming information is faster progress of the employment and inflation objectives increases are likely to occur sooner than anticipated. trying to set up for interest rate hikes down the road. the short end of the yield curve, of the interest rate curve, 2-year, for example, up 6 basis points. that's a lot 48 basis points in the 2-year. the dollar, moved up, indicated that somebody's anticipating higher interest rates. mabel not necessarily sooner than the middle of 2015 but i thought this was a substantially more hawkish statement than before. the stock market is let's call

it largely unchanged since the actual statement occurred. interesting response, though. >> completely agree, bob. thank you. bill, for context, it's the end of quantitative easing if you believe it is the end. >> it is for now. >> yes. and the market and other less momentous junctures performed worse against the backdrop and perhaps encouraging holding up relatively well. >> we'll talk about it more. we have blackrock's chief investment officer with us and then rieder with $680 billion under management and sleeps nights. and taking part in fed meetings. you may want to listen to what they have to say about the fed moves and where the market goes from here. when we come back after this.

following fed announcement, the dow down 100 points momentarily. we are now finding ourselves coming back here down 29 on the industrial average. s&p down 3. we have 30 minutes left. anything is possible.

>> see if we can make a go turning positive. >> could we see green by the close? bertha coombs, how about the nasdaq? >> today when you get your grades, obviously a "f" is not good. "a" is what you're aiming for. facebook is the biggest drag on the nasdaq following outlook for the pace of growth and combined with gilead. bio techs, that's the biggest drag. gilead and facebook combined today are what accounts for the biggest drag on the nasdaq. responsible for all of the losses right now on the nasdaq 100. bio techs, vertex also with disappointing results and under pressure. seeing a few places where some things better this afternoon. take a look at the regional banks. sub sectors trading to the upside. s&p 500 regional banks up .5% on

the back of the fed decision today with traction and bucking the trend major big caps. amgen in the green and all-time high with marriott and apple, guys, on pace to close yet again at a fresh all-time high near the highs of the session right now. back to you. >> ty, bertha. more reaction to the statement. blackrock's cio and we welcome back former fed governor mark olson. good to see you both. governor olson, you have been in this these meetings. doesn't it feel like it's counter dependent? said it's over by end of october and they were going to finish come hell or high water? >> yeah, bill. i think that's right. i think they had set a definite calendar and they met it and important to remember that what is ended is the increases in qe

and the determination that they're going to leave all of that -- everything that they did with qe stays on the balance sheet now for yet to be determined period of time. >> right. >> so, rick, does this mean interest rates are going to start going up or does it mean like we have seen at the end of some quantitative easing programs they might be under pressure? >> we think what the markets are doing right now is where we think they should go. the curve should flatten. the front end of the yield curve is wrong and distorted by easy policy. that is now evolving. when you look at long rates actually improving today, we don't think that's unreasonable. i think what will happen is rates drift higher and very slowly. this is still a dovish fed. rates drift higher and the back end is relatively stable. >> the underlying question we have been asking is, is the economy ready for the end of

quantitative easing? is that the markets are telling us in response to the fed's statement in. >> there's no question that the economy, the economy's in good shape. i think it's the first real time the fed reacted to employment, an economy running at if you take the last two quarters 3.5% gdp growth. the system can take it. in fact, i would argue to create a more normal rate pair dime and the plan going forward, i actually think markets, cap x will do better and long-term investors can invest more eff t effectively. >> a question to both of you. why doesn't anybody care about the fact that the fed's missing rather substantially on the inflation target? >> there are a number of factors contributing. one is technology and innovation. two, energy.

three, the global economy is still soft and i would argue a 2% goal of inflation in today's world very different technology. very different energy and global pa paradigm is a high bar in that environment and creating economic growth and not wrong at a significantly lower inflation rate than historically. >> i think of a couple of things. number one, it is a very soft economy still. we have increased by 2.5 million jobs in the last year but we have had additional 2.5 million people in the work force so it's a very slack economy. i think the real risks was not what -- getting to inflation, the real risk is an expansion of the money supply and yet nothing happened. in terms of inflationary pressure and not trying to achieve 2%. it's that they're trying to limit it to no more than 2%. >> which takes me back to the first question to you, mark, about, you know, whether this

was a calendar driven move on ending quantitative easing. you are admitting the economy is still pretty soft. we don't have the inflation targets yet that the fed is aiming for. why ending the easy money policy right now? >> that's the critical point. trees don't grow to the sky. you cannot keep increasing the size of the balance sheet. what they have done now is they have leveled the size of the balance sheet and keep it there. and it's $3 trillion higher than it was a couple of years ago. so there's a tremendous amount of incentive in that -- that they have put in the balance sheet. stimulus. >> rick, i'm just thinking through the paradigm of fixed income. you know, the fed's exiting the picture hopefully for good reasons. does that mean you guys and investors take a look and pile back in, for example, to the riskier parts of the fixed income space like high yields, leveraged loans, what have you? talk about where you see

opportunity. >> so i'd say there are a couple of things. we have been on your show talking about the long end of the rate curve making sense. pickup yield out the curve in a normalizing rate. long data munis we think are attractive and treasuries attractive at this these levels and might drift a big higher and talked about three weeks ago high yield is looking interesting. rates move higher, we are in a low rate cycle for a long time. high yield got to heady numbers back into where we were in july, august. you have backed off significantly. high yield are starting to represent high yield that especially if you believe that rates stay reasonably low which we do. >> governor olson, alan greenspan you probably heard this week he doesn't see it's possible and not be disruptive to the markets and a dislocating kind of an event for the markets. do you agree? >> yeah.

i agree with that. i think at that first rate hike is going to be a very disruptive element. and particularly because there's a new vehicle for doing the rate hike which is adjusting the interest rate on the excess reserves. that's different from what they have done for 15 years with respect to the money supply. think i it's very disruptive. >> do you agree, rick? >> i don't. >> john kennedy naming the cabinet members and speculation that his brother would be the attorney general, he didn't want to be seen as too much swayed by public opinion and the talk was stepped out of the georgia townhouse at 2:00 in the morning and said it's bobby and that was the announcement of the attorney general. is that the first inannouncement as a whisper of janet yellen? >> i think what the fed is trying and will create is when they really start moving rates, everybody's going to know about it so there's a way to communicate it f. you lay out the plan and i would argue it's

not that disruptive. i think you have to step back and put it in perspective of a 1% funds rate all we're doing is moving out of the emergency conditions that you were. required quantitative easing. 0% funds rate. we are not moving like prior cycles. all we do is move to a 1% funds rate and probably 2 or lower for a long period of time so i think as long as the communication is done effectively i don't think it has to be tremendously dislocating at all. >> i don't think -- i think that there is more likely to be a marching band going down constitution avenue two meetings ahead of that time rather than just a quiet whisper. they have got to signal it well in advance. >> that's for sure. maybe they already have started. good to see you both. thank you for your thoughts. >> thank you. >> thanks a lot. >> i'm already constructing a mental image of the parade of janet yellen as drum major. 18 minutes left. we could still end positive. there we said it. the dow down just 14 points

after having been down 100 after the announcement by the fed. and then, after the bell, visa, baidu, metlife and kraft posting results. we'll run through the numbers to beat when we come right back.

welcome back. 15 minutes to go and trying to see if major averages turn positive after the fed's historic decision just about two hours ago to end its support to the u.s. economy. the quantitative easing program or qe as we have so often called it. the dow off 13. s&p off only 2. russell only off a point here and the fed in focus today and after the bell shifting to earnings taking center stage. three quarters of the s&p 500 reporting so far beating street expectations. >> dominic chu has the names and numbers to watch for tonight. >> that's right. so let's start off with visa. expected to report earnings of $2.10 per share on sales of around $3.2 billion. shares down near the session lows ahead of the numbers and also down by 4% so far in 2014 so underperformers there. next up is baidu and reporting

earnings of $9.75 a share on sales of $13.6 billion. those shares also lowered to the tune of 2% ahead of its report. they're up about 26%, though, so far in 2014. moving now to the food front. analysts expect kraft with earnings of 74 cents a share of sales of $4.5 billion and entertainment side of things there's movie studio here, dreamworks expected of earnings of 6 cents a share of $177 million sales and ending the preview here with video games and anyone in the mood for grand theft awe tote? popular publisher reports after the bell, as well. look for a loss of 59 cents per share on sales of $111 million. bill, kelly, some of the ones to watch in the after the close session today. >> we will do that. thank you very much, mr. chu. 13 minutes away. kind of hovering here.

let's see. they're gong to tease us. >> that's right. >> see if we can finish positive after being down 100 points. s&p down a point. nasdaq down 12. in addition, jan hatzius with his reaction to the fed move. wait until you hear what he thinks the central bank will raise rates now. we'll be right back. she inspires you.

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you can't control where that ember will land only what happens when it does get fire adapted now at fireadapted.org ten minutes left. the dow down 27. art cashin said the bias to the upside. about a billion dollars the buy on the close which you would think would be enough to put us over the top and finish positive. we'll see. there's the possibility that those trades get paired off and very little impact. we are down to 16,977 right now. joining me, aarerin gibbs and ly mcdonalds. >> if you look at the fed, the language coming out two weeks ago, very, very, very dovish. now, this is hawkish turn. i think at the end of the day

what's been driving rates all year is global economy, and this -- they're talking up the u.s. economy. that's fine. but their policy i think will be much more dictated by the global economy and not alluding to that today. >> hawkish and the global economy is not doing as well as ours is right now. >> exactly. it will overrule them. it started to on the 15th and the dovish comments. today's statement is complete reversal of those comments. >> today we focus on the fed and don't forget about earnings, as well. they have been pretty good again. right? >> good, very good. running at about 74% beats which is unusually high. we're usually expecting about 65%, 60%. we are over halfway through the earnings season. q-3 earnings looking 7% growth and they came off of a he of below 4% so overall everything is tracking really well. >> a lot of companies buying back their own shares.

how much of the earnings so-called engineered result of things like that? >> we think there's a buyback yield a little roughly to about 4% so little -- about twice the rate of the dividend yield. and, yeah, we do expect that to slow down going forward and we already see that on the earnings growth slightly lower at 8%. >> okay. buying u.s. or buying globally here? i think i know the answer but -- >> well, the tax loss selling for retail investors is january 1st -- from now to january 1st and institutional invest or thes typically october 31st so i'm looking at the beaten up sect sectors. >> you think after october 31st the pressure in the market to the downside will be over? >> some of these oversold names. coach, for example. we're looking at the basket of names down 20%, 30% on the year and after october 31st, the

institutions where the deadline ends and you could have a nice relief rally in the year. >> what about energy, for example? >> energy, we are -- we are on oil itself i think we are going lower. on the oil sector, i'd leave you for the stocks but we make calls on the oil and maybe a bounce here and heading lower. >> what were you going to say? i'm sorry. >> for institutional, though, so hard to manage your accounts with tax insensitive, i don't know how much of a push you're really going to see versus retail client that is know how to trade the tax losses so we'll see if it makes a difference. >> we'll know november 1st. >> yes, we will. >> thank you for joining us today. appreciate it very much. we'll come back with the closing countdown. not seeing the bounce we might have expected with that much money, that much stock to buy on the close. after the close, erin knows all about this.

visa, metlife and kraft among the big news with earnings after the bell tonight. we will have the numbers the second they hit the tape with the instant analysis and the market reaction coming up here. an unprecedented program arting busithat partners businesses with universities across the state. for better access to talent, cutting edge research, and state of the art facilities. and you pay no taxes for ten years. from biotech in brooklyn, to next gen energy in binghamton, to manufacturing in buffalo... startup-ny has new businesses popping up across the state. see how startup-ny can help your business grow at startup.ny.gov

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left. we are not getting that bounce we might have expected. here's what the dow did today. focus on the last part of that chart there from 2:00 on where you got a classic stutter step move from the dow and the market. equity market trying to figure out what it means. the fed statement and so forth. in the aggregate, it's a lower equity market. what went up? treasuries. 2-year note with the biggest one-day gain for a time of more than three years and up 6 1/2 basis points there at 49 basis points. also, the dollar index, dollar sharply higher and pushed oil and put pressure on oil and gold but look at the dollar index, up appreciably there at 85.98. back here with erin and larry. first of all, the earnings. financials. do we expect financials to do all that well? >> no, 2% eps growth and one of

the lower growth estimates going forward. we started with negative growth and lower and health care is the only sector that has double-digit forecasted earnings growth next year and be careful. it's really all bio tech. >> it's been on fire this year. >> exactly. looks to be on fire for next year. >> would you buy bio tech? you've been talking about contrary plays. you want oversold things. what about overbought things? >> i don't know about bio techs. the investor watching us, look at the euro/futures curve and tells us about the direction of rates and been over the last month and mid-september, the -- the this predicts the first fed rate hike. but mid-september at june and then on october 15th during that debacle we were all the way out to september. now the futures predicting the first fed rate hike in july.

that tells you where the market is going. >> we have that on video. thank you both. good to see you again. going out well off the lows of the session as you can see there with the dow with 38 points on the fed day. stay tuned. a lot of earnings and jan hatzius with his take on the fed, as well. the second hour right now. thank you, bill. welcome to "the closing bell," everybody. i'm kel ri evly evans. the dow jones industrial averages down by 31 points to 16,974. the s&p 500 giving up about 3 points, same goes for the russell, by the way. that index off slightly after a strong performance yesterday. the nasdaq lower by about 15 points. facebook's performance not helping there. let's bring in our panel now to talk about all of this.

reaction from stephanie link, our very own kayla and kevin o'leary. guy adami will join us shortly. stephanie, so this is it. what did you think of the market reaction? >> it's impressive. i said they're going to remain data dependent. that's kind of consistent but they upgraded the job market a bit. they upgraded and all is not perfect in the world and confirms what we were talking about. the economy is slowly making progress. we don't need the emergency monetary policy. now the debate goads to when are they going to tighten? spring, summer, fall? that's the debate. and we'll have to wait and see about the information. i think most importantly, it turns the conversation to earnings, as well. right? earnings have been really good.

pretty good. >> chris? >> i think it's interesting how the fed is managing the schizophrenia on wall street. you have the equity guys wanting more ease and the bond market convinced themselves that rates are going up. right? we saw the bloodshed a couple of weeks ago from the trades that were on expecting higher rates. not going to happen. so it's easy for the fed in a way giving the equity markets kind of what they want to hear in terms of certainty and things are improving and stephanie was just saying, right? no real change in policy. we have had the same policy for a decade. low rates before the crisis and now. >> but -- >> other than subsidizing the federal government of debt we have had low rates. look at the chart. nothing's changed. >> kayla? >> in september, remember, the fed was raising the spector of what lower oil prices would mean for the market and weakness abroad and none of that was present in the statement and all

afternoon hearing people talk about bad news is good news and the nasdaq and s&p down. much of that facebook earnings. the dow held up fairly well in today's trade, also. it does seem what everyone is saying for -- since december when taper started that volatility coming alongside -- that's almost exactly what happened. >> good news is good news. we want more jobs. right? we don't want runaway inflation. we do want some wage growth. we'd all take some wage growth, right? good news is good news. as long as interest rates don't sky pocket higher but creep up and the economy shows improvement, that's a good combination. >> voice of wall street, though. the return to normalcy. >> no. >> we can't have. >> we can have good earnings. i think we're having it. >> earnings are fueled with zero rates. >> absolutely. and rates will stay -- you said rates are staying low forever. >> if you look at the execution

in the bond market last six months, where are rates going? nowhere. >> kevin, you agree on rates? >> no. actually, i'm trying to guess where rates will be in 24 months so where i go to get that is internal estimates of those that sell insurance to companies like automotive loan companies and insurance companies and people that actually bet money on where it will be and look at the consensus at 2.96% and sitting on a 2.33 10-year and tells me at least 50 basis points coming into the market in the next 24 months. we can debate but owning a basket of 10-year treasuries, you lose 8% in 24 months and make 2.3 of it back. i rest my case, your honor. rates are going up. >> people are annihilating making that change. when does that change? >> there's no risk in reducing

duration. i say that raits likely to go up in 24 months. i don't see a lot of -- i see a performing economy. i see concern by the fed about wage inflation. i see rates going up. i see with my little eye'll us the how you get rates to go up. >> i think the rate forecast is not extreme. right? i think the economy can handle higher rates and as i said before, we kind of want a little bit of inflation and job growth and wage increase. maybe not bonds but you want to own stocks. >> chris, give me the case -- >> i'm not talking about massive increases here. 50 basis points but woe the investor long the 10-year treasury. >> chris, give us the case -- >> look at the amount of liquidity in the insurance sector. and the banking sector. you know? earning a quarter of a point. if they could find assets to put that money into, believe me, they would. the industry as i'm saying for a

while, going into commercial, running away from resi which is a bad trade. lowest rate, you know, earning asset to put their money into. so they're making business loans. that's good but not enough of them. when you see -- >> your point, in other words, let's bring it back. this is the central debate of markets right now. are u.s. interest rates going up or snot you're saying not because the people investing in the instruments really have nowhere else to put their money and keep rates from going on. >> looking at the competition nor assets among large buy side firms, insurance companies, sovereign wealth funds, it is interest. it's not enough paper throughout to buy. >> i guarantee that corporate america writ large is more concerned of draghi pushing the euro lower, oil lower and how that actually affects their capital expenditures in a way of investing in their businesses and how they hedge themselves. pretty much every company borrowed as much as they can to

refinance the existing facilities, borrowed to buy back the stock and at this point it's really about letting those expenditures flatten out and some other bigger issues afoot for at least big companies not talking about financials. >> that's right. >> stephanie? >> well, i think that you're right in terms of lower oil prices and very important for the consumer. jobs are very important. wage increases. that's basically what the fed is telling you. they don't believe inflation is running away but getting tighter. so hasn't happened, not yet. that's what they're saying they're keeping the eyes out for and important. >> you know who i think i will dress up for as halloween? >> andrew of the bank of england. i'll tell you why. >> why? >> not sure what neighborhood you're trick or treating. >> hold that thought. mary thompson has visa's earnings. you can see it on the screen.

responding positively, mary. >> earnings per share above expectations, $2.18 excludeing items. better than analysts forecasting. revenue slightly ahead of expectations at $3.32 billion and guidance for 2015 pretty much in line of what annual itselves expecting and looking for revenue growth in 2015 in the low double digits and analysts forecasting in the mid teens and analysts are looking for earnings growth of 15% for visa in 2015. so again, the company beating on the bottom line and that's lifting the shares. conference call at 5:00. back to you. >> thank you. potentially seeing something here about a buyback. if you get detail on that, that's an area we know time and again has contributed to a positive market reaction regardless, stephanie of what the earnings number is, as well, here. >> it's interesting of

reiterating guidance. they lowered guidance and concerns of currency, their exposure to russia and a good sign to keep guidance in line. buyback is awesome. >> great utility business. you know? it is the infrastructure and the payment system, part of it. >> i want to say with spending growth, american express came in at 9% spending growth and i want to see that number and how it compares. >> kevin, the visa numbers, what does that tell you? >> first of all, let me disclose, i'm a visa shareholder and owned it since the romans were trading shiny beads. i'm totally in the camp saying this is financial infrastructure. they have lower customer acquisition costs of american expre express. really good of what they do and pay me, pay me, pay me a suck lent dividend continuing to grow. when's not to like? lipping my chops with the earnings. >> how do you feel about buybacks? if visa is making moves on that

front. >> no, i don't like buybacks of any stock. management doesn't have to deliver on that. look at what happened with ibm. they look like idiots today. buybacks for four and a half years. send me the cash. send me the cash in the form of an increased dividend and i'll decide if i want to buy more shares. >> i'd love to know what you think about this. ultimately isn't there an equivalent in emergency roterms and dividend? >> a lot of people have differing opinions about this. i actually prefer a dividend but if they are using the cash the right way, dividends, buybacks, m & a for growth and paying reasonable valuations for that, i'm okay with all of that, actually. because they're returning cash to shareholders, doing the best that they can in terms of getting the results to the shareholders and investors and that's a good thing over the

long term. >> you have to pay an investment banker to do the buyback. i think the dividend is always a better alternative. i agree with our colleague. >> corporate america savvy enough for dividends on their own these days? >> they are. why did they do buybacks? gratuity for the investment banks. there for advice. that sort of thing. >> there's also perception effect, right in there's a moment increasing earnings per share and the denominator effect works in your favor. >> that's true. you know what? raise the dividend. get more attention. i mean, i -- works for me. >> lower or suspend it, kayla. >> better for the company than investor. you allow the company to report better eps and only time really, really good is a company that has been issuing a ton of shares as compensation, the banks do this a lot and make sure they're buying back as much as they're issuing in compensation and don't do that, then the institutional shareholders get

diluted. >> kevin, a word about the paradigm that we're in today as the federal reserve ends quantitative easing. do you think they're totally done and changing anything tactically here on the back of it? >> no. i think what i'm concerned about now is how big a hit the equity markets take with a rate hike. if i'm right, i've gone back to 1989, 2004, you lose about 6%. you make it back up in ten months. so i'm ready. bring it on. hit me. hit me. hit me. i'm ready. >> buying opportunity. >> appreciate the view this afternoon. is there -- by the way, guy stood us up. we won't let you off the hook about that. there seems to be a communication gap between the market and the fed. jeff cox thinks so, anyway, and says it might mean another swing on wall street and the fed out of the bond buying business and

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welcome back. fed's decision to end the bond buying widely expected and stocks lower today. the tone of the statement was surprisingly hawkish as many are calling it indicating it may be more aggressive in hiking rates than originally thought. jeff cox is writing on the website many investors up until today were choosing to not believe the fed's rate hike time line and joins me with llon moi and jim bianco. jeff, you begin. >> i think that we can all agree that the fed has been incredibly transparent over five or year sixes in terms of the plans for the future. well, it is trying to be transparent with the market in terms of expectations for rate increases. the dot plot, the periodic chart that shows the fed's expectations for future rate increases is telling us that they believe that rates are going to go up a lot more than what the market is pricing in through the futures contract.

we saw today when the statement came out modestly more hawkish language caused a little bit of upset in the market and only magnified going forward and i think the market just not believe that the fed's got the backbone to increase rates as it indicates in the projections. >> it is an interesting question. jim, somebody else's research just posed the question, when will markets believe the fed? and, a, when will they, and b, why should they? >> i believe the market believe it is fed when stocks go up and the fed doesn't change policy. qe ended and we had a 17% correction and then ended qe 2 and twist and then bullard and rosengren talking about unsettled markets. the market has a belief that the fed will cave when markets get

unstable and start throwing money at them. once they go down and they show resolve, then the market will start believing the fed. >> it's a great point. >> kelly, i have to jump in here because rosengren didn't say that he was in favor of delaying the end of qe. he is in favor of addressing any lingering concerns of inflation or a weak economy through a lower for longer process in terms of when they raise interest rates but i think that jeff's point of communication to the markets and believe the fed, i mean, a real question is how vocal will the doves be, not just the hawks but the doves on the committee, you know, where will they come in next year? we saw it today with coach's dissent. now, charlie evans head of chicago fed who also believes that rates should not rise until 2016 will be a voting member next year and you could see a strong dovish push as jantd yet yellen tries to determine the right time for liftoff. >> do you think the fed is playing to the republican senate

they're anticipating? the republicans have been vocal on this. >> right. i don't think the fed is playing politics, at least in this regard. i do believe that when it came to qe, i think that they adopted the stein view it didn't work and might be distortion for markets to just get out and stop doing it and that's been what their driving force is all year is just a recognition it doesn't work and they have to end it. i think that's what they have accomplished and now what do they do next and if the market goes down? >> i think it's an interesting point with the makeup of the fed. president obama certainly successful in stacking the fed with dovish members. i think that yellen proves to be more of a pragmatist than given credit for. just come to the point and the fed can't keep ignoring the facts and moving the goal post and, you know, we'll see the gdp numbers are tomorrow. the economy is healing,

improving. ahead of the pace of the rest of the world and they're going to be forced into doing something that maybe the market's not prepared for. >> jim -- >> i don't think this is -- >> jim, do you think that a timing has changed after the statements today in terms of the fed's decision on tightening? >> no. i don't think it has. and i've been of the opinion it's longer than it's been. i know jeff talked about the dot chart and the average on the dot chart. let's throw a nuance out there. the market decided rightly or wrongly the fourth highest dot is yellen. and that's got a third quarter rate hike is what it has so the market learned to ignore everybody else and it thinks it's figured out yellen and priced itself to her and more dovish than anybody else and why the rate hike -- >> hang on! >> go ahead. >> i don't think this is a fed that's been afraid of qe.

if they were and wanting to get out earlier, they could have mused faster. a faster than expected decline in the unemployment rate and cited adds a reason for ending qe. substantial improvement in the outlook of the labor market. you are seeing the hawks point to ton employment rate to get out faster and seeing the doves point to low inflation as a reason to stay in qe longer and not a fed that's been afraid to use qe by any stretch of the imagination. >> we are focusing because the market and fed are together on the first hike happens. what happens in 2016 and 2017, the market thinks subsequent rate hikes are going to be slow. the dot plot says that won't be. by the end of 2017 at 3.75%. >> there's a divergence.

thank you. we have the numbers of dreamborks. yulia? >> numbers are moving higher. 14 cents versus expectations of 6 cents per share. what drove the results higher was the strong performance of "how to train your dragon 2." the stock popped up more than 7% one point earlier. now the shares up about 4%. back over to you. >> all right. not a bad move there. thank you. goldman sachs chief economist is here next with his take on the fed's words and actions today. regulators signing off on new mortgage lending rules that don't require big down payments. will banks make the same kind of risky loans that nearly brought down our economy? p. gunderman group is growing. getting in a groove. growth is gratifying. goal is to grow.

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with universities across the state. for better access to talent, cutting edge research, and state of the art facilities. and you pay no taxes for ten years. from biotech in brooklyn, to next gen energy in binghamton, to manufacturing in buffalo... startup-ny has new businesses popping up across the state. see how startup-ny can help your business grow at startup.ny.gov welcome back. we begin here with some news from our jon fortt and twitter. jon? >> kelly, i have been able to learn that twitter vice president of engineering jeremy gordon is leaving the company. this is a big deal for a few reasons. one, he i believe was in charge of around 400 people at twitter. and is very well respected inside the organization. also, adam kinny who's a four-year veteran in the engineering organization over some analytics projects is

leaving, director level. at time the company trying to tweak the products in order to grow users. something they talked about extensively on the call on monday. also i'm hearing within twitter and the engineering organization, there's dissension of the direction, lack of clarity and getting products out. exactly what the direction is. dick costolo was telling our own julia boorstin on monday in that exclusive earnings interview that they're all on board and proud of it and confident in it. not exactly what i'm hearing and some people connected to twitter are saying that these departures which do continue are indicative of that. so now, it is in the hands of twitter to make the case, in fact, they have this together and that they are going to be rolling out products to spur on growth and twitter did confirm that the departures are happening. we are, of course, the first to

bring that news to our viewers. >> jon, thank you. you can see the reaction in the shares, stephanie. down 1.2% after hours. >> you don't want to see this news after a disappointing quarter but you have a new cfo. the ceo on the call said they have to execute and grow faster and there's going to be changes. let's see who they brought in and i thought the announcement of ibm is a positive. so let's get a little bit more information and clarity and who they hire. >> i wanted to ask jon a question. isn't it strange the way we see the street, the analyst community pummeling the media portals, growth, growth, growth, maybe they're one dimensional companies. maybe they can't extend the basic core competency. >> all of these companies are different and you have to look at them separately. you look at twitter, it's a very

different scale than facebook is. twitter with 284 monthly active -- million monthly active users. facebook with 135 million monthly active users. and far greater percentage of those active daily. very sticky, high engagement and impressive profits at facebook. they have a platform with momentum, instagram, as well. by itself about the size of twitter and has the potential to monetize. atlas, as well, of course twitter with mopub and investors treat them differently and the prospects differently digging in here. >> jon, thank you. twitter down 1.5% on the news of that departures from our jon fortt. jan hatzius sticking with his fed rate hike prediction. jan joins us now to explain with our panel. welcome. first of all --

>> nice to be here. >> -- this was a hawkish statement relative to what you were expecting. yes? >> yes. i mean, i wouldn't overstate it but it was on the hawkish side because i didn't expect them to tone down the significant underutilization as much. i think in addition, a lot of people in the markets had looked for a bigger downgrade to the inflation language which also didn't happen. they did a little bit on that but fairly grudging. overall i think it was a little on the hawkish side. >> why do you think that is? >> why do -- why did they not go fourther in that direction? >> yeah, yes. >> things haven't changed that much. generally we have the same view on growth. last employment report was, you know, it was better. use x is coming down. this broad measure of labor underutilization and gone further in that direction than i would have thought. i wouldn't say it's big deal. mainly saying that, you know, all the volatility in the

markets that we have seen over the last few weeks on net hasn't changed that much from their perspective. >> there was a really interesting comment of i think rick rieder on this program last hour. he said, they're probably -- this is an economy that's growing and still getting low inflation and grateful for that. is that your view, as well? >> i think they're looking for some increase in inflation. 1.75% by the end of next year and that's not an unreasonable view i think as you get closer to full employment of a pickup. my own view is lower which is why we're a little later than i think what they're currently signaling and maybe expecting themselves in terms of liftoff. >> do you think the economy in the second half of the year can grow gdp 3%, 3.5% or a bias and the fed is right? >> i think 3%, 3.5% is where we

have been basically since the start of the spring. going forward, my expectation would be about 3%. so, you know, i wouldn't call that a slowdown but the acceleration is probably behind us at this point but, you know, things look solid. 3% growth is clearly above trend. probably .75%, maybe more than that. so i think that's decent performance. and will gradually get you closer to full employment. >> as the fed normalizes policy, do you see a chance they hold their ground if the equities market trade off? the fed is targeting them for decades with greater and greater intensity and so capacity, to courage to say, no, we are going to hold policy. markets figure it out for themselves? >> i think it matters what happens to financial conditions and i wouldn't say the equity market is all that matters or even necessarily the most important part of financial

conditions but it is an important part and getting a big move in one direction or another, you want to respond to that and, you know, maybe accelerate or delay your liftoff. >> when i worked at the fed for paul voek lcker, we cared if th were income vent and the equity markets were the private sector. that's not the case today. >> the bond market and insolvent, that's part of the private sector, so i wouldn't say that there's such a clear dividing line between these things and i would agree if you're in a credit crisis, that's, you know, some -- you have significant insolvencies and a much bigger deal. but that doesn't mean to ignore enequities. >> we have a little bit more than a week before the october jobs report and the fed said there's you be instant shl improvement in the labor market and basically we're out of the woods. i'm wondering if you think that we'll see a clear trend in the

labor market given what the fed said or if there could be something else that happens with a spottier set of data going forward. >> it is, of course, possible. but my baseline expectation is that we'll see continued improvement roughly on the same kind of path that we have been on since about the middle of 2013 which is, you know, relatively rapid decline in not just the unemployment rate but also broader measures of underutilization. i think there's quite a lot and i would say significant underutilization of labor resources out there. i wouldn't 100% agree with the fed statement on that because i do think that underemployment rate and even broader mshls still say we're far away from normal. >> indeed. isn't it interesting how the fed stopped talking about housing? they almost don't mention it anymore. >> yeah. i mean, it was a little mention in the statement, but it wasn't any -- >> it was the driver.

>> not as much of a focus. >> qe was supposed to help housing. >> i think not as much of a core area for the economic groerk anymore. nowhere near as central as it was either in 2003 to 2007 or in the crisis. >> we have to go but just a last question going back to the discussion we were previously having, which way is this resolved? does the market abe expectations move to what the fed's own projection is or do the fed's projections come down and meet the markets here? >> my expectation is that the fed liftoff is later than this mid-2015 that they're saying. if you want to translate that into june, then, you know, we're three months later than that. the market maybe september or later than that. so i would say the market is probably closer to right. >> is it 25 basis points or as some have indicated a smaller rate hike this time? >> i would expect 25 basis points but i think that's still unclear because that's more the tactics to get resolved closer

to it but my baseline is go from 25, you know, 0 to 25 at the moment to 25 to 50 whenever the first hike occurs. >> happens. we could be less than a year away from that. jan, thank you very much for being here on a big day. really appreciate it from goldman sachs. the federal reserve winding down the stimulus program and has cnbc.com lighting up apparently like a christmas tree. that's when we come right back. ...the getaway vehicle! for all the confidence you need. td ameritrade. you got this.

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welcome back. fed announcing it's ending the bond buying and the market reaction dominating the coverage. let's check in with allen wasler now. allen? >> you're right. 2:00 more than 30,000 people piled into that one fed story within the half hour of it. i mean, it was a huge wave of traffic coming in. fed days are always exciting. i tell the people, put extra hamsters on the wheels to make the servers go. the fed coverage itself got the main thrust of the traffic action and right now the story that's really trending up is our red line story and where we take the fed statement from last time

around and compare it to this time around and have the red where stuff is added and crossed out. that's getting traffic right now and huge hang time to studying them. we have a lot of fed geeks out there. and because we're the internet site, we tend to be light hearted and we put up a story looking at all of the funny little tweets that came out about the end of qe and the jokes like qend and my favorite zo my god from the kitty picture and that's bleed-off traffic there, too. all about the fed today, kelly. >> way to pick up on the internet with qe. allen, on a busy afternoon and the fed may be out but guess who's in. tapering, there's been a stealth group swooping in to take over the buying. banks and kayla has that story next. also, new mortgage lending

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stealthy buyers of treasuries at the same rate of the fed if not more and continuing and that's the banks because the fed is actually ironically part of the reason. this year regulators put a rule in place of rules to hold safe assets. they could sell to fund their operations for a month in a crisis scenario enstead of bailed out. no surprise u.s. treasuries which are among the safest assets in the market in general were included in that basket and banks buying them en masse to stockpile them to be in compliance of the rules and banks will begin to do this, too, to the tune of hundreds of billions of dollars over the next several years and we could get a little clarity on the rules next month when the g-20 meets in australia and so far the activity at home is fairly astounding. look at the chart. u.s. commercial banks seeing the stockpiles growing to $605 billion, a 23% increase just since the taper started in december. bank balance sheets have been

showing similar growth. citi, up 30% since last year and take a look at this. bank of america's stockpile of treasuries multiplying by a factor of 20. this time last year, $2.8 billion in treasuries. as of third quarter nearly $50 billion in treasuries. so, kelly, a fear as qe ends is fewer buyers in the market and push prices down. >> we fixed that, didn't we? >> regulation is ironically and perhaps perversely a reason why there's net buyers. >> ironic and coincidental they put the liquidity rule in place just as qe is ending. i don't want to be a conspiracy theorist this time of the afternoon. >> kayla, thank you. joining me now to react to that and give her thoughts on the state of banks in general, plus new easier mortgage regulations is former fdic chair sheila bair. welcome back. good to see you. >> thank you.

thank you, kelly. >> can you begin with chris's point? is there something to it? >> no. the liquidity rules and the risk based capital rules to treat treasuries as zero risk and there's government incentives to pile into treasuries. that is absolutely true. and if they're right, if this is, you know, a very low risk, we hope it is certainly in the foreseeable future, should be, then that may or may not be okay and skews relocation to sovereign debt and impedes investment in the real economy. it is what it is. they want to make sure in the next down it is turn they can liquid assets to meet the obligations. weren't able to do that a lot of them in the crisis so that's the reason for it but it has a -- absolutely sigh there anything wrong? say regulators have a just in case policy as the fed was ending the bond buying program. anything wrong with that?

>> well, i'm not sure. you know? i think that would be remarkable that if they coordinated that way and planned it that way. i think this is coincidental. you know, again, it skews resource allocation, treasuries in this country and there's an unpleasant experience in europe and they have a weaker governance than we do here and drives all this investment into government debt. and that may or may not be a good thing. i mean, personal view, i wish they would put more of a focus on ending short-term wholesale funding, extend the maturity side of the liability of the balance sheet. that's what you have. >> another question related to the kind of one hand working against the other, if you will, when it comes to banks which are the crucial way of dispersing

monetary policy in this country. here's kbw saying they believe that capital continues to accumulate as regulators experiment as a tool of monetary policy. if it is -- is it your opinion that that is a tool of monetary policy? again, this is not one that it's up to the fed to decide. this is coming from a different place with maybe different incentives and thwart what the fed is trying to achieve here. >> yeah. well, look. i think the thicker the capital cushion the more resilient the system is. if they see excesses build up in the system or getting in toward the end of a cycle, building up a bigger capital buffer is what's called a micro prudential tool and somewhat untested and in theory that's what should happen. it should increase the capacity of the bank to take on losses and worried about a turn so i don't know that's a bad thing. i just like to see elevated levels of capital pretty much across the board.

i still think we have made some good progress there. banks continue to rely too much on borrowed funds and not enough on equity financing and it's interesting. alan greenspan with the new book and his old book and paperback version now and added a chapter but he's arguing for quite high xwal levels and i think this is an area where, you know, left meets right on it. you want a resilient system. you need much thicker cushions of capital for losses when they occur. and borrowers, too. giving borrowers that bit of loss absorbency into a period of economic stress. >> listen. this comes back to policymakers trying to help and alan greenspan, the quantitative easing of the bond buying didn't necessary les achieve that. what's your take on that? what could be done in the case of housing, everyone?

>> yeah. you know, i think, look. i think structural changes going on and need to go on in our economy. the fed pushing on a string for a while. i have not -- i think past 2009 i question how effective it was. we have a demand problem. not so much a supply problem. and on housing, i think there's some structural changes going on. young people, there's just less demand. less interested in buying a house. some of that they have too much student debt and don't have the same job security you had. you have a job for year or two and moving some place else and don't want to be tied down by a mortgage. it may not be the right choice for them. i think it's ill advised and we need to let the economy be dynamic again and allocate where the market and consumers want them to go not the government. >> sheila bair, thank you so

much for your point of view on that one. something that we're all living at the moment, as well. >> that's for sure. the fed giving the bulk of the attention and the earnings parade marches on. dom chu will we come back. tune in tomorrow we'll have the ceo of lifelock on to break open the company's earnings report.

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is your network ready?" it has been odd round of fast and furious earnings. >> fast and furious is the way to explain it. let's start with akamai. they beat wall street earnings stims, another name we're watching is visa. they're on the top and bottom lines, moving higher by about 4% in the after hours session. shares of baidu falling by 1.5%. it came in just a little short on the sales side of things. share for take two interactive soaring. dream works also seeing big

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welcome back here. what is everybody going as for halloween? stephanie? i know you're dressing up. >> i was a '60s girl last saturday. i'm just taking my girl out. >> what will she be? >> a movie star.

>> what about you? >> top gun. >> you can drink lots of tequila. >> i'll be fully clothed with a beautiful companion by the way. >> i'm going to reuse a costume from last weekend. my fiance and i are going to be from "the grand budapest hotel." have you all seen the movie? >> yes. >> this all started off because i said i would be andrew haldain from the bank of england. we were debating how well the u.s. is doing. he had really interesting thoughts about the fact that the reason it is hard to generalize things right now is there has

never been more dispersion. there is not one u.s. consumer, there is about ten right now and they're all doing differently and that makes it very difficult. >> how do you plan to -- >> i'm going to print his face on giant colored paper, put it on a popcicle stick, and now i'll have to do it which is kind of scary. >> you should have been sheila bear, she is the most recognizable fdic chairman since like the '30s. >> you're right, and i will say she is a very popular -- >> nobody knows who the rest of them were. >> my life does kind of depend on it. thank you for being here. happy early halloween. as we continue to debate, "fast

money" is coming up in just a few moments. >> you saw the crush in 3-d stocks. we'll have a top analyst to tell us what this means for the likes of a triple d. >> i have a bone to pick, i want to know what you're dressing up for as halloween. >> i'm going as kelly evans. >> i was going to go as kelly evans. now what? now what will we do? i don't recommend any of that. over to you guys. >> thank you thank you "fast money" starts tonight. a hard landing for high flying stocks, facebook selling off after weak guidance last night taking twitter, linked in, netflix a long with it. are any of them worth buys? the moment many investors have been waiting for, and maybe dreading, the