evidence that i think strengthens my confidence in that view and looking at the full range -- >> technical problem. we'll hopefully bring janet yellen back to you as soon as we can get that shot back up. of course, we have been watching the last live news conference of chairwoman janet yellen of the year. but let's take a look at the markets and see how they're reacting. watching a lot of gyrations. the dow up by 189 points. but right after we got the decision and statement, we were up about 250 points at the highs of the day. which was a significant gain on where we were going into 2:00 p.m. eastern. do we have janet yellen once again? let's see if we can go back to her. okay. >> what ought to matter in thinking about the stance of

policy is with the entire path of interest rates will look like. and i really don't have much for you other than to say that they will be data dependent. that over time the stance of policy will be adjusted to try to keep the economy on a track where we see continuing progress toward achieving our goals of maximum employment and price stability. there's, you know, the federal funds rate has been sitting in this zero to a .25% range now for 6 years. this is -- and we have a large balance sheet. we're providing a very highly accommodative monetary policy. and even as we begin to normalize the stance of monetary policy when that becomes appropriate, it's important to remember that monetary policy

will still be very accommodative for a long time. and as we begin to normalize policy we'll be looking at unfolding economic developments and as the economy strengthens and we come closer to achieving our objectives i think it's very likely that we will, you know, progress on the path of normalizing policy. but i can't tell you specifically other than saying it will depend on progress and moves will be data dependent. i can't say much more than that. >> chair yellen, the committee's projections show unemployment below your own views on where full employment should be. does that reflect a desire on the part of the committee the economy runs above potential for a while and if so can you elaborate on why it want that is

and the purpose achieved and the question of john asked earlier, you called market based measures is pronounced in the five year forward range and talking about expectations that inflation many years from now will be below target and some market participants see that as evidence of declining credibility in the committee's long-term objective. why do you still view that as transitory? >> so you -- your first question is why is it that the committee sees unemployment as declining slightly below its estimate of the longer run natural rate. and i think in part the reason for that is that inflation is running below our objective and the committee wants to see inflation move back toward our objective over time.

and a short period of a very slight under shoot of unemployment below the natural rate will facilitate slightly faster return of inflation to our objective. it is i should say very small under shoot in a situation where there is great uncertainty about exactly what constitutes maximum employment or a longer run normal rate of unemployment. we also do see the different measures of slack in the labor market point to different assessments of just what maximum employment is. the standard unemployment rate for quite sometime now has been signaling a little bit less

slack in the labor market than measures that are somewhat broader that, for example, include the unusually large number of people who are part time employed but would prefer full-time jobs. and the portion of the decline we have seen in labor force participation that looks like it would disappear or be eroded in stronger economy and so it may be that with a very small under shoot of this longer run normal level of the unemployment rate is measured by the standard unemployment rate will be seeing further progress on those other margins of slack. but it's important to point out that the committee is not anticipating an overshoot of its 2% inflation objective. [ inaudible ] >> longer dated expectations,

what i would say and we refer to this in the statement as inflation compensation. rather than inflation expectations. the gap between the nominal yields on 10-year treasuries, for example, and tips have declined. that's inflation compensation. and five-year, five-year forwards as you said have also declined. that could reflect a change in inflation expectations but it could also reflect changes in assessment of inflation risks, the risk premium that's necessary to compensate for inflati inflation. that might especially have fallen if the probabilities attached very high inflation have come down and it can also reflect liquidity effects in markets and, for example, it's

sometimes the case that when there is a flight to safety that flight tends to be concentrated in nominal treasuries and could also serve to compress that spread so i think the jury is out about exactly how to interpret that downward move in inflation compensation. and we indicated that we are monitoring inflation developments carefully. >> madame chair, peter coke with bloomberg television. want to follow up on firming of normalization once liftoff takes place. you said data dependent. does that suggest to markets, to those watching the measured pace in tightening cycle and the increments that that's not something markets should expect? what is your own takeaway of how effective that measured pace was back in the previous tightening cycle? and separately on the dissents at this meeting, there were

three. notal number, certainly. what does that suggest about the debate and the table and the ability to forge consensus. are you disappointed with the number of dissents? >> so let me start with the number of dissents. there is a wide range of opinion in the committee. i think it's appropriate for people to be able to express their views. and in the sense you see dissents on both sides. i think the statement does a good job of reflecting what the majority of the committee thinks is appropriate policy. so, you know, at a time like this where we are making consequential decisions i think it's very reasonable to seedier

have divergents of opinion. there's no dissension of the part of the committee to use a language like that. i think quite a few people looking back on the use of that language in the -- i can't remember if it was 12 or 16 meetings, where there were 25 basis point moves, would probably not like to repeat a sequence in which there's a measured pace and 25 basis point moves at every meeting and i don't want to encourage you to think that there will be a repeat of that. many members of the committee participants have said that they think policy should be based on the actual evolution of economic activity and inflation which tends to be variable over time. and that's why i say i

anticipate it will be data dependent. we have continued to provide guidance. the same guidance that we have for sometime that says the committee anticipates that even after employment and inflation are near mandate consistent levels that economic conditions may for some time warrant keeping the target federal funds rate below the levels the committee views normal in the longer run. that's a mouthful but it says in effect that the committee believes that the economic conditions that have made recovery difficult we're getting beyond them. they're optimistic that those conditions will lift. they see the longer run normal lift of interest rates as around 3.75%. so there's no view in the committee that there is secular

stagnation in the sense we won't eventually get back to pretty historically normal levels of interest rates but they have said it will, you know, the economy is required to get where it is a good deal of monetary policy accommodation. we expect to be able to normalize policy. but until those conditions have lifted that have held back economic activity monetary policy will need to stay accommodative. so in that sense,valent to sayi path of normalization anticipated to be relatively gradual but, again, the path of rates will depend on how economic conditions actually evolve. and that's nothing more than an expectation on the part of the committee. >> pedro with dow jones news

wires. enough about rates. i want to ask you about the new york fed. new york fed's been in the news a lot lately. president dudley was invited to congress to testify about conflicts of interest there. you had things like the cigar tapes. the byrum report and the revelation that a former new york fed official was exchanging information with someone at goldman sachs and also had new york fed connections. i just wonder, and also scandals in the crisis regarding the new fed and purchase of goldman sachs stocks. do you see the new york fed as a black mark on the system? have you talked to bill dudley about reforming the image of that particular regional fed? and do you think a person that's spent 21 years of his career at goldman sachs is in a position to regain public confidence of

conflicts of interest? >> let me say that i -- i think it's very important for the federal reserve system to have confidence in the quality of its supervision. and i do have -- i have a good deal of confidence in the quality of our supervision program. for the banking organizations, we super vise in general and that also also applies the largest banking organizations. we rely on examiners who are in the field and at the reserve banks to be providing information about what's happening in those organizations. but that information feeds into a process in which it is not individuals at any single reserve bank but at the board, it's a board-led process. and it involves senior officials at a number of different reserve

banks. it's also a multi-disciplinary process that involves not only people from supervision but those from markets, from economic research, experts who focus on financial stability all come together to evaluate the information that they have and to assign supervisory ratings and decide on the appropriate program for all of those large institutions. we have strengthened the process of supervision enormously since the crisis. and i feel -- i feel a very good sense of confidence in how we're carrying that out. now, it is important to make sure that we have fed into the this process all the information

that's relevant to making the right decisions. and when there are individuals who are examiners, who may disagree with others in their team about how to interpret when's going on at a particular institution, it's important that there be channels by which they can make sure that disagreements are fed up to the highest levels. this is true throughout the work we do. we do economic forecasting and the fmoc receives information to help us make decisions. but obviously, there are disagreements about among economists about how to interpret developments. it's also important for us there to make sure we understand alternative views. so this is important and supervision we have announced that the board is undertaken a

review of whether or not there are appropriate mechanisms in place in all of the reserve banks that individuals who disagree with decisions can make those -- make their own views known and feed into the process and we have also asked our inspector general to look into that. >> thank you. jeff kearns of bloomberg news. i would like to get off monetary policy and ask you about the relationship with congress. specifically, how worried are you about legislation that has been proposed and may be proposed again in the next congress that would reduce fed independence? would you see yourself trying to fight back or would you see yourself trying to go to congress to work with them to do more with transparency or something else to reduce their concerns? without making them law.

and if there were bills sent to the white house would you talk to the president about vetoing them or do you have any confidence that he would veto bills that would reduce the fed's independence? thanks. >> so, let me simply say that congress assigned us important tasks in monetary policy and other roles that we perform, and the federal reserve is highly focused on attempting to carry out the mandates that congress has given us in the area of monetary policy. it's our dual mandate to promote maximum employment and price stability and that's what we're working on. you know, i would say that the ability of a central bank to make the decisions about monetary policy that it regards as in the best longer run

interests of the economy free of short-run political interference is very important to the effective conduct of monetary policy and i think history shows not only in the united states but around the world that central bank independence promotes better economic performance. so, i do think central bank independence is very important. and that it's important to make sure that we can make the decisions we think are best free of short-run political interference. with respect to monetary policy. we should be accountable and we are accountable to congress in explaining what we do, i believe strongly in transparency and i believe strongly that we should communicate as clearly what

we're doing in the rational for doing it and am very open to looking for ways ourselves to improve our communications and transparency. and working with congress to do that. but i would be very concerned about actions. back in 1978, congress explicitly passed legislation to ensure that there would be no gao audits of monetary policy decisionmaking, namely policy audits. i certainly hope that will continue and i'll try to forcefully make the case for why that's important. >> with a veto? >> i cannot speak for the white house. >> peter barnes, fox business, ma'am. i'll stay off of interest rates and first want to wish you happy

holidays. >> thank you. >> second, want to ask you about the russian economy. did that come up in the meeting in your discussion about global economic developments? as you know, there's a lot of concern with the drop in oil prices the russian economy could be in some trouble. russia owes a lot of money to u.s. and foreign banks. and russian companies. is there any concern about default? any concern about possible contagion? and if so, is the fed taken any steps to prepare for that? thank you. >> well, we certainly did review global economic developments. including developments in the russian economy. clearly, russia has been hit very hard by the decline in oil prices. and the ruble has depreciated enormously in value. and this is posing a series of

very difficult economic conditions in the russian economy. of course, we discussed what the potential spillovers are to the united states. which could occur through both financial and trade linkages but these linkages are actually relatively small. russia accounts for less than 1% of u.s. trade volume and u.s. banks exposure to russian residents is really quite small in terms of relative to their capital. in terms of the portfolios of u.s. residents, there are russian securities but they account for a very small share. so, i expect that the linkages back to the spillovers to the united states, both through

trade and financial channels, would be small. europe, of course, is somewhat more exposed to russia. both because russia's an important supplier of oil and natural gas to europe and the financial linkages are somewhat greater but in the case of the united states, i see the spillovers is pretty small but we're obviously watching that closely. >> greg rob of market watch. also happy holidays. >> thank you. same to you. >> there's a contagion risk from low oil prices that people are talking about in the markets. what does it mean to the banks that have lent, you know, into the oil patch with the low oil prices? and i guess, you know, your

warnings about leveraged loans, you have made warnings over the past year of leveraged lending. are you worried they haven't been heeded? thank you. >> so, i mean -- you are talking about the united states exposure? i mean, we have seen some impacts of lower oil prices on the spreads for high yield bonds. where there's exposure to oil companies that may see distress or decline in their earnings. and we have seen some increase in spreads on high yield bonds more generally. i think for the banking system as a whole the exposure to oil i'm not aware of significant

issues there. this is the kind of thing that's part of risk management for banking organizations and the kind of thing they look at. stress tests. but the movements in oil prices have been very large. and undoubtedly unexpected. we in terms of leverage and whether or not levered entities could be badly affected by movements in oil prices, leverage in the financial system in general is way down from the levels before the crisis so it's not a major concern that there are levered entities that would be badly affected by this, but we'll have to watch carefully.

there have been large and unexpected movements in oil prices. >> good afternoon, chair yellen. steve beckner. i will go back to interest rates if you don't mind. actually, it's a question about balance sheet affects on the overall appropriate level of monetary policy in reaffirming the reinvestment policy, the fmoc says once again that this will help maintain accommodative financial conditions. in the past it said that the large portfolio securities will exert a downward effect on long-term interest rates. as you look forward to raising short-term rates, to what extent does the fmoc need to take into account residual accommodative

effect of a large balance sneet. >> so i agree and that's why we stated it that we typically think of the monetary policy impact of our asset purchases as depending on the stock of assets we hold on our balance sheet rather than the flow of purchases and so we're reminding the public that we continue to hold a large stock of assets and that is tending to push down term premiums and longer term yields. we make clear when or tried to make clear when we issued our normalization principles in september that we intend to use changes in our target for the federal funds rate as the main tool that we will actively use to adjust financial conditions.

rather than actively planning to sell the assets that we've put on to our balance sheet. sometime after we begin raising our targets for short-term interest rates, depending on economic and financial conditions, we're likely to reduce or cease reinvestment and gradually run down the stock of our assets. but our active tool for adjusting the stance of monetary policy that it's appropriate for the economic needs of the country, that will be done through adjusting our short-term target range for the federal funds rate. >> sorry. kevin, i can't believe nobody

asked you the most important question of your san francisco 49ers. since everybody wished you a happy holiday. can you talk about housing? few things are more important to americans than their wealth creation than housing. you have in your statement noted that it continues to be a drag. mr. dudley has -- relatively upbeat in his forecast. i don't know if that's a view shared on the committee. what do you think is holding housing back? what can congress do and what will you tell congress in the coming year and you didn't mention mr. dudley individually. are you pleased with his handling of the events? >> so let me start with that. i have great confidence in president dudley. he's done a fine job in running the new york fed and i want to be very clear that i have great confidence in him. he's a distinguished public

servant and he's worked very hard in the aftermath of the crisis to make sure that the new york fed is doing all that it needs to do to contribute to the work that we do both in financial stability and in supervision. and let's see. the other question that you asked was about -- >> housing. >> about housing. so, you know, i've been surprised that housing hasn't recovered more robustly than it has. in part i think it reflects very tight credit -- continuing tight credit conditions for any borrower that doesn't have really pristine credit, you know, credit ratings. and my hope is that that situation will ease over time. in addition, household formation has been very depressed.

in my expectations is that as the labor market continues to improve and households feel better about their financial condition that we will see household formation pick up and somewhat stronger recovery than we have seen thus far in housing. >> okay. thank you. >> all right. fed chair janet yellen completing her last news conference for 2014. more confusion here and there in terms of language. i'm bill griffeth with kelly evans on "the closing bell." >> we are looking at a dow up 272 points and basically a moment during her press conference where the market had given up all of its gains after that statement hit where they

kept the considerable language. that was the big surprise initially sent stocks higher and started to talk about a couple of meetings, bill, might mean two. >> two meetings ian posturing, okay, an april rate hike and you saw the market walk back and then again as it wraps up here look where we are. pretty much the highs of the session. >> just joining us, really the headline is that they are slightly altering the language in their statement to say that the fed will have patience in waiting to normalize, to begin the normalization of interest rates and raise them and that is not -- does not alter the considerable period of time language they have before and referring to previous considerable time language. they are not changing it but they took it out and added patience. >> yeah. >> and, you know, the fed chair speaks in broad terms and we journalists are trying to pin her down to specifics. and she's not going to do this. >> also a couple of interesting moments there.

she was asked a couple of times about the confidence in the new york fed as the fed has been dealing with scandals there. her confidence, she said i have great confidence in bill dudley, the president of the new york fed and, again, questioned at times because of the background of goldman sachs and that was certain think focus and additional questions which didn't come up in the statement, specifically about oil, about russia. she tried to be reassuring on both notes noting that the exposure of russia to europe and greater than the u.s. >> it's transitory, too. they expect to get to normalized inflation expectations down the road. let's ask the expert what is they thought of all of this. diane swong from chicago. jack bouroujisian in chicago and rick santelli in chicago. steve liesman will join us

momentarily. rick, let's talk about the market, response. yields gone up a little bit. wild gyrations for the stock market. what did you guys think of what she -- i know you said -- i heard you say it earlier. you thought the fed statement like a rumba and how did the market treat this? >> well, really, i mean, if you blur your eyes a little bit, rates aren't much different. 2s, 5s, 10s and 30s than before the statement. what is dramatically different, the equity markets. dollar index, isn't all that different either. in the end it's about equities. in my opinion about the risk-on trade but i don't know. just this is my own opinion. i thought that janet yellen in the press conference just seems so unsure about the gps of where the economy is and where they need to go. and i consistently go back to the original 1977 legislation about stability and pricing.

stability and prices. doesn't say 2% inflation. could be 2% disinflation or deflation. it seems to be talking more about a variance issue than level issue and all created by the fed. i personally think it's very hard to defend looking at the data of late for the u.s. economy but there's no argument as to whether it's commiserate with crisis style zero interest rate policy. end of story. >> steve liesman joining us from the meeting there. what jumps out to you from her answers? any surprises? >> you know what's funny, kelly. i couldn't disagree with rick more. i thought the statement -- >> not surprising. >> -- a real muddle and confident and actually much more explicit about the outlook for rates than i thought she would be. she said no rate hike for two metings and agree a rate hike

next year. >> that's not what she said, steve. she said it was possible. it was possible. she didn't say -- >> rick, you bet on possible. >> a couple of meetings. right. but possible isn't raising rates. >> what you should be doing, best bet and the best bet remains exactly what it was a mid-2015 rate hike. and i thought -- >> anybody else here disagree? jack, what do you think the takeaway was? >> you know what? i think janet yellen said everything that every other fed govern for a has been saying, data dependent. not date dependent. they changed the wording to reflect that. one thing that i'll say is that she's talking about an economy that's starting to do better. look. you know, and the bottom line is this. if they are going to raise rates, it is going to be because the economy is expanding to the point of liftoff. i love that term.

and the other term by the way i love and, steve, she refuses to deflation. she calls it inflation compensation. >> that's part of the confidence. she is not letting when's happening with oil prices alter her belief that you have have a stronger u.s. economy. she's not -- looking through this oil price the way she looked through and i would argue correctly the october volatility and markets and that so many people thought was the harbinger of the end of u.s. growth. >> spot on. >> i think spot on. >> diane? >> you know, i take away similar to steve. i think she was much more clear than the statement. the statement sort of a muddle of, is the next statement patient and gradual? just really silly. >> okay. so what is it she's saying now? >> she is saying what she has said. >> expecting to raise rates and, you know, what are they waiting for at this point? >> they're waiting for wages to accelerate and inflation to firm. they do not need to see

inflation go back to the 2% target before they raise rates because as she pointed out they do look at the long legs and monetary policy and there is still even though they're going to be slow, gradual, walking as if they're walking on thin ice even as the economic ground firms they also are going to be preemptive and inflation could be lower. lowered the inflation outlook with the transitory nature of oil prices and global economic risk and acknowledge that and not important enough to highlight and she was more confident by saying she addressed the issues, talked about what russia meant, she talked about the exposure of lower oil prices in our banking system, in europe. all of that and they still said we're on course. the best we can be. we can't tell you exactly when it will happen but they said nothing new to the shape of it and that's why the market is rallying now. >> a quick question. as we turn towards 2015, first on the 3 dissenters in the statement.

>> yes. >> a whhabitual thing and how ds that change the outcome? >> it is interesting because we are getting more doves rotating into the voting position and people that dissent don't vote in a void. we have two hawks retiring soon and this was their last stand. they used the voting position to amplify their positions which have been very clear all along. on the flip side of it, the dove, the dissenting dove does reflect incoming votes like evans from chicago. there's another chicago reference there. i think that's important to understand is this the people coming on are caution and patience, gradualism, slow, low rates for longer and the idea of having room showing traction to catch up on what we lost to the

great recession. >> you asked her about oil and immaterial pact of inflation and monetary policy down the road and repeating that this decline is transitory and fully expect the inflation rate to get back to, you know, where they expect it to be and projections down the road. do you buy that? plenty of people expect the next year to be the year of low oil prices and going to have a huge impact on the economy here in the united states. she seems to be down playing that. what do you think? >> so, bill, though the question, the sub text of that question is, probing that very issue i was arguing about with rick, how aft in her forecast? saying -- answering the question, you know, there's some possibility that there's a signal from oil that we have a deflationary problem down the pike, that changes the calculus. i think that, you know what? the policy right now until proven oerz is to look through this and make it and believe it's a transitory factor and

that they're on target. i think the fed of two kids. employment and inflation. employment kid is doing great. the inflation guy, the inflation kid, he comes along soon enough. >> i love she reiterated the fact that the fed doesn't want to overshoot the inflation target an just this morning, rick -- >> that was important, too. >> the cpi number declined. i mean, overshooting is clearly not the issue here. if anything, it's a question about how much they might let, for example, the unemployment rate keep dropping. more so than they might otherwise feel comfortable with to perhaps try to get the cpi rate to be at -- i know back up to 1.5% or 2%. >> kelly, that's in the forecast, as well. i think that's really important is now starting to see that forecast of unemployment lower and in fact the fed i think is starting to move that sort of threshold on what it thinks is full employment because, let's face it. we have seen unemployment come down quite a bit and yet to see

the wage acceleration. >> all right. brian jacobson joins us, as well. what do you think the takeaway is today? >> well, i think the big takeaway is it's a dovish fed and trying to set us up for 2015 being like 2004. in 2003, they said that rates would stay low for a considerable time. four months they dropped it cold turkey and january 2004 meeting replaced and now melding them together. patient and considerable time and we have had considerable time for 27 months and thinking about rate rises, they're very poirnt and very gradual and setting us up for when they hike rates in june, maybe they wait a meeting, let it pause. >> brian, that's not consistent with the year-end forecast to imply they have to raise rates three different times and get the funds rate or whatever rate you want to get it over 1% by the end of the year and imply to kind of get on it.

>> well, actually, those aren't really forecast. remember. they're projections and tried to clarify forecasts or projections on the basis of other assumptions so it's not taking into consideration sort of what might happen. it's what they wish would happen. so it's more like wishful thinking opposed to an actual forecast. >> more than -- yeah. sorry. >> did the basis of good public speaking is we know three points. tell they will what you're going to tell them. tell them and then tell them what you told them and clear that the fed is still in the first camp. tell them what you're going to tell them. then the next meeting, tell them what you're going to tell them. are they overdoing this preparation, playing the groundwork for the day-to-day start raising interest rates? >> i don't think they can possibly overdo it. go back to the tamper tantrum and shaken by that. they want a smooth transition. i don't think the statement i think was muddled. i agree with steve on that.

yellen has come through time and time again and sort of shown this is what i know. this is what i think. this is where the risks are and been very clear on that. the bottom line is they can't overprepare the markets far transition that is the first time in a very, very long time. i think it was important she also said we're not going to put that measured pace in there and just raise rates like every quarter point, every meeting, either. i think it is very important to refact a variable fashion to data as it comes in and i think that's setting the fed up to be. i wish the statement was a little more clear but i think yellen carried it to the next level with the baton put in her hand. the statement may not have reflected all of her views alone. >> bill? >> i think it was pretty clear. >> hang on a second. the dow up 300. back to the highs of the day here. steve, go ahead. >> they didn't need that. the market was ready to simply drop considerable period and then the way she explained it

after the meeting. kelly, a little bit of math, next year, the median forecast of the fmoc, two meetings and said not raising rates, six meetings to get there. go about 20 basis points per meeting or 40 or 50 in 1 and get there over time and even though -- >> brian just said -- >> steve, she also said -- >> as an idea that they would like to be -- should we be taking that 1.13% as a game plan or not? >> no. >> yeah. it's the -- >> it would be a mistake. >> not to do it. you don't have a choice. >> brian? >> i think it's a bad idea as a game plan because things will change, change their opinions and dots move around and -- >> hopefully higher and the economy is stronger. >> hopefully but -- >> keep in mind. >> now it's all about inflation. >> go ahead, jack. >> until they see evidence of inflation they won't change it' she also said that she could do something or the fed can do

something between meetings. remember that. you don't have to have a meeting for there to be an action by the fed. >> she talked about calling a press conference and letting us know. >> just to be clear, she wasn't, jack. look. they can always move in between meetings. we have seen that. i think what she was trying to clarify is a lot of people think the fed makes a major policy move at a -- >> that's right. >> like today. >> reiterated that they can make the move at any one of those meetings. >> that was important. >> quite clearly one of the first points in the press conference. >> that's why i think the fed isn't overdoing it. i agree with steve. i don't like the statement this time. i think it was muddled and didn't prepare the markets and silly. that said, her press conference did clarify it. but i think it was really important to say that the press conference isn't only time to be clear. hopefully they can get the transition on that whole theory into reality when they have a statement and more clear than today. >> to the point of the clarity of the statement, i think it was

actually pretty clear and dovish. and they didn't want to create any conditions that would suggest to tighten things earlier and create a transition period now to then remove the considerable time language. >> bill? >> i thought it was pretty clear and wise what they did. >> steve? >> bill, i want to ask the market mavens out there. stock movements have befuddled me for decades. this 300 points, do you think the market is there because it believes the fed is going to be less hawkish than before because my takeaway is i don't change my best bet scenario of a mid-2015 rate hike from this. i don't know why the market would rally on this unless there's a sense that the fed to emerge more hawkish from this meeting than sooef sli. >> what do you think, brian? >> a lot of people expecting perhaps a march rate hike so i think this just shifted expectations. >> yeah. but that was sort of side lined in recent days. i think there's been -- you know, it's been amazing to see

where we have been over the last two weeks with the employment report and things surging and people moving up their expectations. i didn't but certainly there were people who did that and then moving back out. the market's been all over the board. bottom line is, you know, steve, i think you said it. the survey showed that the market expected them to perhaps drop the considerable time and language and clearly worried in the context of what's happened in recent weeks if they dropped it outright and needed to bridge it. i don't know that they need to worry about that. they were. i don't know. maybe the market going up is validation to be worried because the market's happy. >> jack? >> rick? >> if wages continue on the flat line, we are not going to see my house on a different aggreddres the fed moving. that's what the market's pricinging. >> jack, what do you think? >> i think the market should have never gone down and one of the reasons it snapped right back.

>> jack! >> seeing the v-shaped recovery, it tells you that something was happening. whether it's a fund getting blown out. i have'm a fundamentalists. i don't look at the technicals. that's voodoo. we can argue about that. when i see the movement of october, like seeing now, that tells me that the market should not have been pricing there. it was an ash ration. whatever it was. whether it was a hedge fund tied to oil blowing out but the reality is that this fed is going to move because of growth. they're going to move because they see expansion in the economy. because the data requires them to move. and if that's the case, you've got to be long equities. >> so, jack, rate the economy 1 to 10 for 2014. 1 to 10. >> 1 to 10? the economy is a 3. the stock smarkt 59. >> there's been a disconnect. we have been talking about this. >> yeah. certainly has. i can tell by all the testimony of the defendants in this case.

>> one at a time! somebody parse that out there a little bit. dow up 320 a moment ago and moving higher. steve? >> i was going to wager with rick $100 to a favorite charity if the fed doesn't raise next year. they're going. >> you're on! you're on! you're on! >> i think veterans. wounded warriors, isn't that right, rick? >> or the taxpayer depending on the fed does. >> is she underestimating the impact that russia could have on the global economy? i mean, everything you guys threw at her that was tangental to the u.s. economy, nothing is worrying her right now. russia of a question and oil being the other one. >> i don't think russia's

underestimated but the issue is, bill, whether or not there's a broader pressure on emerging markets. the outflow of currency from those emerging markets and also not clear to me that she has a handle on the issue of leverage related in the financial system. >> right. >> relative to the oil business and not very confident answer i thought in that regard and we have looked at it. we have quantified it. it's not a big deal. she wasn't very firm in terms of seemed to grasp of the extent of potential and risk -- >> agree with steve on that one. >> yeah and reiterating -- >> not a good answer for the exposure to energy -- >> and european banks, as well. >> a response there. >> diane? >> she talked about europe with greater exposure and not the effects for us that they're more exposed to russia than we are and more exposed to the -- >> diane? >> she also did mention the strong dollar backwards saying that falling import prices could

hold inflation down, as well. that's something we worry about a bit. >> that's actually -- >> it was in there. >> to back out a little bit and talk about 2015, in a way you have two means of tightening were already happening. u.s. dollar rallying and inflation expectations down and means that rates are higher. we shouldn't overlook -- that's pretty significant stuff going on out there. >> well, i think that gets -- >> that's why me said -- >> and the second -- >> hang on, bliian. >> the issue on the dissent and the voting members coming on, the role of charlie evans in the vote and where they stress on how the statement is actually formed. i think that's important and inflation at the end of the day, inflation played higher role in the statement this year moving into the year and employment a lesser role. you will see that go very much into the inflation direction. the single most important mandate although they have a dual one is inflation and very important for them and it being

too low will become an issue if it continues to decelerate even as oil prices stabilize and if it continues to decelerate is a more broad based nature and something have to be acknowledging much more. >> i have a minute left. let's go around the horn now. steve and rick already have a bet about when they think the fed will begin liftoff, starting to raise interest rates. steve, you think it will be in 2015. yes? >> certainly in 2015. i think the fed is going to normalize policy. >> rick, you don't think they will? >> no. >> jack, when do you think the fed raises rates? >> third quarter of 2015 unless there's 4 and 5% gdp numbers and then it's faster. >> brian? >> june 2015 but in 12.5 basis increments instead of 25. >> very, very gradual at that point. >> very gradual. >> diane, when do you think? >> late in the third quarter. i think the fed will have to

deal with the inflation issue and ultimately i think they'll raise rates if inflation is flow last year and set it up as a preemptive strike. >> by the way, brian, who win it is bet doing it that way? >> they do it that way, maybe 25 basis points and skip every meeting and affects to the same thing. >> i don't want to win the bet. i don't want to win the bet at -- >> i want to lose the bet! i want normalization. i hope i lose! >> we should -- >> that's the way to -- >> the economy is strong. >> there they go. like the closing bell holiday party sounds like just there. thank you all for your insights. >> appreciate it. >> thank you. we have just under 7 minutes to go here into the close. the dow jones industrial average having one of the best days of the year up almost 300 points. the nasdaq is up almost 100 so we're talking about 2% rallies both the s&p and for the nasdaq.

extraordinary, bill. makes you wonder if the point is that the fed left in considerable time and you're looking at the result across the market here. >> look at the s&p 500 heat map. all 500 stocks there, it would take us less than 30 seconds to name all the stocks negative right now in the s&p 500. that's crazy. when we come back, much more market reaction to the fed today when the special coverage continues and wait until you see the panel coming up next hour, as well. steve forbes is right there ready to go. he can't wait to talk about fed policy. my name's louis,

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and sleep train's 100-day low price guarantee. but hurry! sleep train's interest free for 3 event ends sunday. ...guaranteed! ♪ sleep train ♪ your ticket to a better night's sleep ♪ inside the three-minute mark, crazy day. we knew it was going to be light because of the fed meeting waiting for a language change which we sort of got and sort of didn't get. this is the dow today. pretty good rally going into the meeting when the statement came out, instantly 150-point gain became a 270-point gain and gave it back and back up again. 289 points there or 1.7% gain for the dow at the moment. very quickly, what oil stocks

today, xop etf, up 8% today. oil prices moved higher for a time but oil stocks have definitely benefited from this with that gain there as you can see. finally, the credit markets and the treasuries, five-year note shows you the tremendous volatility that was going on after the fed statement came out and they're trying to figure out what it means and raising rates and what patience equals, considerable period of time and peter costa, you famously got out of this market. >> yes. still -- >> still out of this market? >> still out of the market. even though we had opportunities to buy it over the last week, i'm not stepping back in. >> why not? >> i think that even where we were, we came from, you know, bordering on 17,000. i still felt that a lot of stocks were fairly priced and i don't see for me to go back to get 2% is not worth it. you know, the risk i find and i know that i'm on the very small part of the spectrum, very few people feel this way, i don't

think the risk is worth the reward. >> okay. >> two things, why is the stock market rallying? patience, the fed says, equals dovishness to traders. number one. they made the clear the economy is improving and didn't mention the foreign risks at all. this concern about oil. they called it transitory. how many times in that conference, transitory? put it together. the stock market is up. may or may not agree and obvious why the market is up. >> the message is that the longer the fed waits to raise ratds is bullish for the stock market. >> i think once you start seeing an uptick an i'm hoping and i think without it the expansion in the economy will stall and once you start seeing an uptick in wages and see it in some sectors, i think that's where the problems will lie. you will start seeing more inflationary pressure and wait a little bit.

>> huge short covering. trying to find a bottom. somebody sees bargains. >> all right. and when we're bargaining hunting today and make some money. the dow up 285 on the close. very smart people standing by now for hour number two of "the closing bell" with kelly evans. see you later. thank you, bill. welcome to "the closing bell," everybody. i'm kelly evans. looks like the market will have one of its best days of the year. a big day on wall street, a big meeting from the federal reserve with the surprising decision to keep the considerable time language in the statement and the markets moved around a little bit as the press conference continued and things shake out here the dow going without a gain of 287 points and should be good enough for the best gain of the year. the s&p 500 certainly is going to take that trophy. 40 points higher today and the

nasdaq up almost 100. gains of 2% in the s&p and across the nasdaq today. get right into it with today's panel. joining me now is forbes media chairman steve forbes. michael santoli and sharon epperson and with us for more to the conference is "fast money" trader guy adami and welcome one and all. steve forbes, kick us off here. i have to know what you're making of all of this. i have a guess. >> it just shows central banks around the world and the federal reserve really don't know what they're doing. they think suppressing interest rates help the economies and it's hurt credit flows to small and new businesses which is where you get the job creation from. >> we just had one of the best u.s. jobs report in years. 321,000 jobs last month. everything's coming up roses.

>> 1960s with a population less than half of what it is today you got many months in the early 6s with those kind of job creation number. participation in the tank. median incomes still in the tank. we are in the sixth year of a recovery and not above in terms of incomes where we are six years ago? my goodness. men in the private sector are fired for that kind of performance. >> what do you think about the decision today, mike? >> the way the market played it is context, s&p 500 down 100 in 11 days. rally back to friday's levels. very oversold market and looking for a reason to celebrate something and i think the message of the statement that it was -- that the fed will ease gently along in the process of raising interest rates next year is well received and i also think there's some good news to be taken out of the fact that janet yellen did not rely on the lower oil price to say we don't have to worry about inflation. that gains credibility saying you don't ignore oil on the upside and the downside. so to me it was a reflex move,

oversold market and basically nothing really much changed from a week ago. >> what's the take away, sharon, for the average investor here? >> looking at the trader perspective with the volatility of the press conference, i think retail investors should be aware that we're going to see a lot more volatility in 2015 regardless of when the rate hike occ occurs. of course, watching very carefully what happens in april and june and consumers need to be ready to happen eventually. this is the time to refinance that mortgage at lows we have seen, lowest rates since may of 2013. this is the time to pay off that credit card debt and the rates are going to start to go up and the average consumer needs to be aware of that. >> let's dip out of this for a second and waiting for quarterly results of oracle. josh lipton has the details for us. hi, josh. >> kelly, yeah, oracle just reporting here. 69 cents on 9.6 billion. wall street looking for 68 cents

on 9.5 billion and a beat there on the bottom and the top. just quickly, kelly, looking through here, software and cloud revenue, 7.3 billion. new cloud bookings up 140%. new software licenses 2 billion and hardware at 1.3 billion. conference call kicks off at 5:00 p.m. eastern and expecting calls of analysts about oracle's move to the cloud as well as just a general state of i.t. spending. on that call for head lines as they cross. back to you. >> all right. josh, thank you. want to get some quick reaction to the oracle shares up 3% after hours here, as well. then back things out from that for a second and daniel ives in here. what is it that has oracle shares popping higher do you think? >> this is a step in the right direction given the disappointing numbers we have seen over the last few quarters and comes down to cloud. that's putting fuel in the engine. now you start to see investors going glass half full on oracle

here and the key question is can they continue this to see the type of growth and go gins what we have seen a large cap tech? softness in the hps, emcs. this is definitely good news we haven't seen in a while from oracle. >> up better than 4%, dan. read through for the other companies you cover here? >> positive. in terms of -- if oracle can have a good quarter, almost anyone can. they're the one that struggled the most. it's a good indicator of i.t. spend in q4 and focus on cloud and if oracle with ellie son not as ceo to continue this sort of momentum going into next few quarters and a positive read for the environment. >> dan, thank you. good point there from dan ives and that's a look into what's happening in that piece of the market today but the view overall was decidedly positive. we had an s&p 500 heat map up earlier and s&p up 40 points

today. best gain in point terms in three years and pivot and bring in greg ipp in the meeting with janet yellen addressing the media taking questions and answers. if you had to guess why the market had a strong performance, what would you say is the reason? >> i think there's everybody thought the fed was going to make the move, open the door to high interest rates. and they did. but they did it in such a reluctant way and replacing it with patience and in the statement saying that it meant the same thing as considerable time. and then janet yellen in the press conference going further and saying, patient means no rate increase for a couple of meetings. they basically bent over backwards to make it as painless process as possible. they gave the market the spoonful of medicine and lots and lots of sugar to help it go down and appropriately so, you know. she really played down the affect of inflation on oil prices and look at the forecasting.

they have inflation coming down and unemployment dropping a lot and run with unemployment very low which is and allow that to happen and great for the economy and the markets and largely because they're still so low on inflation. >> i want to get back to that in a second. guy, someone was saying seeing a bounce in energy names, maybe a bid in oil s. that why we had a good -- >> shout out, man! i'll shout out to him! >> yeah? >> huge shoutout. steve forbes brought up a lot of good things. two things today. look at fed-ex today on what was a remarkable day in the broader market. stocks down. janet yellen said the move in oil was transitory. right? that was the word she used i think. so the biggest commodity of the face of the earth is cut in half in four months and that is somehow transitory? that to me is emblematic of the problem with them in the first

place. that's so preposterous to me an it's scary. if nobody is scared but me maybe i'm the problem. >> what do you think? >> clarify what she meant by that. referring the drop in oil she didn't mean the drop in oil is transitory ie oil to rally back but the affect on inflation is transitory and downplay the notion that this decline -- >> doesn't that imply that -- well, i mean, all right. play semantics but that implies she -- there's some bounce coming. the bottom line is, again, the largest commodity and mankind is cut in half. there's something structurally going on so to downplay that to me is either not that inte intelligent -- >> she didn't down play it at all. she said that this does have implications for the united states and they are on net positive. that is not down playing it but it does put a positive rather

than negative spin on the implications. >> my question is whether or not the inflation targets is hit the fed is trying to achieve based on the fall in oil prices and the belief by many that we have not seen near a bottom yet. if this continues to fall, how will we get to what some of the inflation targets or spots may be there? >> well, look. if you look at the forecast, they do not expect to hit the 2% inflation target for three years. and it's clearly something that continues the bother some people on the committee. that's one reason of one dovish dissent. yellen went back to the point over and over again. she thinks that if you have an economy that's steadily better, unemployment falling below the normal natural rate and the public's expectations of inflation stable, those things together will drag inflation back to 2% and personally skeptical that it will happen but she and the colleagues seem pretty confident. >> mike? >> perhaps some kind of a floor on core inflation and i do think

we have to keep in mind that ben bernanke pill ried trying to sort to speak ignore food and energy prices pushing cpi up. >> 3%. >> exactly. he said -- >> european bank raised rates. >> focused on the core and pilliried for maybe saying -- >> could you concede that point or no? >> no. the fed's policies have slowed the economy down. we should have a much more growth than we have had. >> aren't we -- the base accelerated each year. >> come on. if you are batting .200 in baseball an you get it up after 6 seasons to point 250, that's not a satisfactory performance and the fed does not realize the policies were hurtful, not helpful. and then one of the reasons why they're so waffling about raising rates is looking around the world and thinking if it continues we may have to go back

to what they think is easing which is actually tightening. central banks thinkease ing but they're tightening around the world and like doctors in the days of old bleeding patients and wondering why the patient doesn't get better. >> we have a quick earnings alert with dominic chu. dom? >> here, watching what's happening with jabil circuit. moving higher. did beat on the earningse es estimates and the shares up by about 8% in the after market trades. keeping an eye on it. back over to you. >> quite a move. thank you very much. all right. coming up here, the fed fueling the big rally. how should you be investing in the volatile market? blackrock bond guru and others join us straight ahead. president obama taking a major

step to noshlallize relations with cuba. potentially opening up trade and investment in the communist nation and could have an impact on many american businesses from airlines to baseball. steve forbes herishing to weigh in. you may be surprised by what he has to say. you're watching cnbc.

welcome back. what a day it is today in the markets. looks like actually a recordbreaking day not in terms of closing levels and last couple of weeks taken us below that but the dow adding about 288 points. s&p adding about 40 which is the best point gain in 3 years and granted the higher we move the les those points matter in percentage terms but still for the nasdaq which had been really beaten down of late. more reaction to this market day in light of the fed's meeting with rick reiter and ron kashevski. rick, the central question for you here is where does the 10-year go from here, for

example? we were shocked yesterday flirting with the 2% level. what happens now? >> so we think rates will drift higher. the hard thing of rates significantly higher particularly in the long end of the yield curve is such tremendous demand internationally and when you look at where german bunds or japanese jgbs it's hard. we think the fed signals some change in guidance, the yield curve will flatten like this afternoon and but we think the 10-year will drift higher and hard to move significantly higher. >> great point. ron, we had criticism of janet yellen for not talking about the financial sector's exposure to the drop in oil prices, for example, and maybe to some of the global concerns ala russia. what would you say are those risks in the system from the declines? overlooking them? are there areas of concern to highlight? >> look, i think the biggest concern and the one the fed is doing a good job of combatting is deflation. it is a deflationary concern.

plunging oil prices, great for the consumer and gail force wind with respect to deflationary concerns. equities are undervalued in any growth scenario and deflation would cause serious problems. >> how likely do you think that is, ron? sounds like rick here doesn't see deflation on the table. correct me if i'm wrong. >> that's correct. no doubt a lower inflation range and the goal of 2% is darn hard to hit and so much growth momentum and lagged effect of wage pressure. europe is a concern. and asia's a concern. >> ron? >> look, look. look at the market. the 10-year tips, inflation expectation is 1.6, down from 220 this summer. that's a huge move and wages, really no increase in real wages. we have had wage income and

hours are up. we don't have deflation around the corner but the major risk is deflation today just like it was inflation back in the '80s. >> ron, steve forbes here. let's get away from that loaded word deflation. use contractionary policies or trends around the world. do you think what you see in terms of contraction around the world almost everywhere any relation to central banks are doing or not doing? >> well, look. i think central banks are dealing with a slack in demand. what is oil? plunging oil prices really is a -- you can argue is a lack of worldwide demand. so, you know, i understand the deflation is a bad word today and i think that's what we're combatting just like volcker to keep real interest rates above the rate of inflation today fed funds needs to stay below core inflation rate longer than we

think. >> rick? >> so, you know, i would argue that there's no doubt, i think what people confuse a bit is why are prices decelerating as they have been and global growth no doubt continues to be moderate. that being said, if you lock at the demand function relative to supply of energy talking about a very, very different pair dime and look at demand and how much it's come off from a global perspective it's come off and moderately. big difference is a supply glut. you have clearly one that is going to be -- it's a different energy price range for a long time. there's a different production capacity than historically. >> we went from 2013 the treasury market really panicked proactively about just the prospect of short rates higher. now we are a point where the 10-year today didn't react radically. is there a chance that the market today is not really conditioned for that mid-year rate hike potentially? >> it is an incredible dynamic. if you go back to october and think about when the fed, the

statement was hawkish, equity market did well for a period after that and when the minutes, prior minutes more dovish and equity market after october 8th trading down and 1% funds rate is extraordinarily low. in fact, we tracked it at this sort of payroll growth, a 6 6-month average, the average funds rate over 6%. zero. the markets can handle a 1% funds rate and seeing it in front of our eyes. >> the markets handle 475 basis points. equities are undervalued with earnings. again, if you reduce the equity risk premium reducing earnings per share that's where we have a problem. otherwise buy equities. >> so, ron, is that you would tell a retiree listening to this, low interest rates for a very long time and even if there's a hike sometime in the middle of 2015, what do they do? >> well, look.

i'm not saying it's deflationary. the concern is deflation. i think you will have an interest rate increase next year and not the liftoff. it's the pace of rate increases. so look. if i'm a retiree, i'm not pan panicking here but saying what the fed did today, i think the statement deals with deflationary concerns. >> understood. ron, thank you so much. rick, as well, rick, we might have to bring you back for the greenspan conundrum if the long end doesn't move amid all of this. now a quick market flash. hi, dom. >> kelly, we have kirby corporation, provides marine transportation and diesel engine here in the united states and moving lower to 6% after hours after cutting the fourth quarter and full-year guidance due to a sharp drop rather in oil prices. again, those shares down again by 6%. light trade, 8,000 shares traded

so far in the after hours back over to you. >> damage from that decline, thank you. a ton of other news today outside of the fed and wall street and historical day here in the u.s. is president obama's move to open relations with cuba a good move? we'll talk about that next. plus, it's being pulled by more movie chains after threats of violence and more may follow suit. will sony release "the interview" on christmas day? and are theaters making the right decision not to show the movie? your chance to weigh in.

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president obama shocking the world today by announcing plans to normalize u.s. relations with cuba after more than half a century. john harwood is at the white house with details. john, maybe more surprising than the news the news that it wasn't leaked first. >> reporter: exactly, kelly. you know, he may be a lame duck president, the party may have just been walloped in the 2014 midterm elections but president obama today was able to announce three things. the release of a u.s. contractor alan gross held for five years in cuba. a swap of spies who were imprisoned in both the u.s. and in cuba. and his decision to fully normalize diplomatic relations overturning a 50-year policy that began with president john f. kennedy. >> though this policy has been rooted in the best of intentions, no other nation joins us in imposing these sanctions and it's had little

effect. beyond providing the cuban government with a rational for restrictions on its people. today, cuba is still governed by the castros and the communist party that came to power half a century ago. neither the american nor cuban people are well served by 0 rigid policy rooted in events that took place before most of us were born. >> reporter: but the image of raul castro, the cuban president in military garb hailing the same decision on cuban television riled opponents of the decision like senator marco rubio of florida. >> the cuban government in exchange for all of these concessions that the who is has now made has said nothing or done nothing to advance democracy. no freedom of the press or organization. there will be no elections, no democratic opening, nothing. zero. all they have done here is make it easier for the castro regime and their system of government

to be permanent forever on the island of cuba. this president has to be the worst negotiator we have ever had. >> reporter: now, senator rubio who's of cuban dissent vowed the try to block funds for the establishment of an embassy, u.s. embassy in cuba. josh earnest, the white house press secretary later said he did not think it was necessarily the case that the administration needed additional funding to open the embassy. but the one thing we know the administration does need from congress is a law to be passed in order to end the embargo that president obama wants to end which also began in the kennedy administration. one thing's clear, though. politics of this are changing not just nationally but in florida where the anti-castro sentiment is so intense. president obama carried florida in two presidential elections, kelly. >> and john, thank you very much. that's exactly what we want to do now is check in on just how exactly this news is going over down in florida. but also, asking our panelists here, steve forbes, your

response? it sounds as if the republican party for the most part upset or am i reading too much into what we heard from a couple of senators there? >> well, senator rubio. >> i think has a right. not changing the regime one wit. as the president said, the rest of the world is trading with cuba. had the opportunity to invest in cuba and time they start to exercise freedom, get a little bit of an exchange market with the $and the euro, the government clamps down. so this regime is going to no more change than the north korean regime. senator rubio is right and try to prop up the regime and again the president is looking like he's weak. he gives it all away so worry less about cuba. worry if he gives it away with the negotiations on iran on the nuclear program. >> you're a free market guy. what about the argument and people make which is that you open up cuba and trade more with the u.s. and that becomes the incentive -- >> they have had a thriving

tourist industry because of investment of canada and europe for years. that money doesn't go to the workers but the government. they get worthless currency in return. >> it's a good point, mike. >> it is. look. i don't think there's a big swing factor here in play in terms of the policies there or really economically for us or the world or businesses here but i think it was an opportunistic move and russia is compromised and so let's do something here that does seem like a -- >> sharon? >> the timing struck me why it was done today and perhaps some to do with elsewhere around the world and what happened with the falling oil prices and just the timing was very interesting. and the fact that it was kept quiet and not leaked as you said earli earlier. >> right, steve, there are people making a trade on an etf cuba, tons of volume. speculation, of course, is that you start to open up cuba, talk about the ability to get in at 1950 prices in the u.s. and ride

that whole wave of innovation and growth. is everybody making the trade betting in the wrong direction here? >> well, the key words you said were critical. opening up. the government controls this rigidly. any time, again, they'll sacrifice economic growth if they think it's going to imperil their regime. they won't ease up at all. they have plenty of opportunity to do it in the past. everyone else is open. didn't change that regime one lick. >> we have though in the last couple of years is raul castro that talked more of privatization of parts of the economy. does that show any softening, any indication that this is the beginning of a process of opening up? >> the only thing that's going to change a regime like that is going broke and no source of funds at all. after the berlin wall fell in 1989 russia cut off their subsidies in '91. that regime put the island through a horrific downturn recession and not easing up even

if it was misery for their people. >> the reaction and we were hoping to get an on the ground perspective as well and read already online how people for example in the heavily cuban miami feel about this. news reports indicated those that those that left cuba in protest and feel as though to some extent the life question is called into question and going to quote/unquote normalize relations with cuba. >> that's right. they know the regime better than most people because they have lived through the horrors of it or parents have and grandparents have. and again, this regime made no change at all. maybe allowing us for major league baseball players from cuba. very nice for the mlb. but for the cuban people as a whole, no real change. that's the sad part. >> typical american. embargo in the threat of cuba

and soviet union and we happily deal with china without asking for very many concessions. seems like an outdated policy. >> is it, though? we have to jump but have we gotten too soft? in other words, because we now depend so heavily on china, have we missed an opportunity to be more aggressive, to stand for the values and to the rest of the countries including cuba? >> it's soft or pragmatic. i don't know how you come down on that but yeah. it's obviously inconsistent, though. for one thing. >> that's for sure. thank you. oil gaining back some ground today. coming up, my next guest says anybody who claims to know where prices are going is a liar or delusional. david rosenberg will explain why in a moment. tomorrow, russian president vladimir putin making a speech on the state of the country's collapsing economy. a preview of this potentially market-moving event coming up. (vo) rush hour around here

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russian president vladimir putin will hold an important press conference.

in the wake of plunging oil prices. we have the details and what to hear tomorrow. >> he gave the annual speech to parliament and spoke about how important this was, how important the context was. now, it's unprecedented because of the economic situation that russia finds itself in. take a look at this. this video is from russia's channel 1, biggest state-owned channel in russia basically running a hollywood-like preview of the speech complete with a sound bite of one of the putin's interviews, quote, the bear never asks for permission. well, not asking for permission, especially coming to crimea. that is, of course, one of the ripple effects of a situation right now. sources and experts i spoke with say tomorrow expect putin to announce or at least get more specific about financial reforms and measures to stabilize the currency and the economy. perhaps even announce or hint at a change within his cabinet. prime minister medvedev's name

is thrown by and the head of the central bank and they say it's a way to pin the blame on the economic situation on these folks even though we all know he's the one making the decisions. where, of course, expecting him to place some blame on the united states and europe, but the tone might be a little bit different this time considering that he's really backed himself into a corner and we could hear him sort of extending a hand to the west reiterating that russia doesn't want isolated economically. now, i spoke with an oligarch saying the crisis is deep and will last for a listening time and hoping that whatever he says will not make the markets worse and they say that the bottom is yet to come and one of many reasons why this press conference is so important and why we're watching it so closely. >> thank you. my next guest says no one knows where oil is going next and anyone that claims to know is either a liar or delusional.

his words. david rosenberg joins me now. good see you again. and i guess just begin here if we could since we heard about russia with the impact that crisis is having on financial markets here. >> right. well, i should just say that there's a lesson to be learned about what i wrote that you quoted which you don't publish anything after three glasses of pinot noir. that aside, i think that, you know, this oil price situation is interesting because nobody questions what the driving forces were that brought us over $100 a barrel to begin with last summer. and those forces were never sustainable to begin with. this transcends, you know, the market being in a physical surplus globally. the fact that opec isn't meeting until june is something else that we know since ultimately

they could be the swing producer like they were when they cut by over 4 million barrels and helped put in the low back in the spring of 2009. but what nobody talks about is financial demand for oil. >> right, right. what is the financial demand for oil, david? how much did that continue to the run-up now and getting out no wonder we're seeing the other side of it. >> well, you know, what's interesting is that, you know, we had the first 25% decline and before this opec meeting oil at $75 and then everything that happened since then so i think a lot of speculators expecting saudi -- options. >> yep. >> they peaked at 500,000 contracts and now down to 280,000 and demand destruction on the financial side and

principle cause for the latest, you know, swoon in the price of oil. but, you know, the reality is that we're not going to get a fundamental bottom. whatever that price is until the net spec long contracts eliminated altogether or 100,000 contracts of flat. i did try to estimate the price of oil would happen in that environment and try to answer the question, you know, without being disingenuous and you could talk about $40 to $45 by the time those contracts are out of the system. >> take a quick listen today ceo jeff immelt of ge had this to say about the ill-timed shift being an oil-based business. take a listen. >> we have modeled the business at $60 a barrel. i like the business a lot. we're going to go through a cycle in the short term. but look. this was a business before thanksgiving that needed better execution around the big projects. all the ceos in the industry looking at the supply chain

saying the costs have to come down and do a better job of lowering the break-even cost and been on this path more than a year and i look at it as an opportunity. we think we have hedged the upside and downside appropriately. >> so david, sum it all up for us. what's at stake for u.s. companies and economy if the price settles where you mentioned. >> you know what? kelly, this's the thing. i'm not saying necessarily settle there for long period of time. i think that that would be a real what we would call a capitulation low. not like we had back in 2009. we got, you know, below $40 temporarily and didn't exactly stay there. i think that longer term probably settle somewhere in that $65 to $70 range and not saying that $40 to $45 is anymore permanent than 100-plus was. and so, in answer to your question, look. like any other shock, kelly,

there's winners and losers and we know the winners and the losers. losers are producers and the services and the manufacturing that cater to the energy industry and the winners are practically everybody from consumers with a pick-up in the purchasing power and in the manufacturing sector and cost base goes down. remember that oil fundamentally is something we consume. it is a cost. >> right. >> actually a classic table of the u.s. economy and you do a real dynamic analysis and you look at who the losers are, winners are, you can counter the multiplier impacts, the u.s. gdp comes in plus point five to the better out of this and not saying monumental but a net positive and not negative. >> on the same page as janet yellen on that one. thanks for being here. sony hack offering gossip and now a threat against moviegoers and now more than

more theaters are choosing not to release the nil m on christmas day. do you think they're making the right decision? weigh in right now cnbc.com/vote and tomorrow "closing bell" live from the yale ceo summit. exclusively here. don't miss the show. we have bob diamond. all coming up.

welcome back. a quick market flash from dominic chu. >> kelly, we are watching shares of ak steel high tore the tune of 6% after the company gave guidance above wall street expectations. this due to lower materials costs so they cite things like falling oil prices, also lower iron ore, carbon scrap and energy costs in the fourth quarter compared. those shares as a result ak steel up 6% after hours. >> and there you have it. just after hearing from dave rosenberg. national release of comedy "the interview" in serious jeopardy as the play jor theater chains say they won't be showing it on christmas day. julia boorstin joins us from los angeles. how can they release it at all now? >> reporter: sources said that sony will move forward and without the five biggest that's in smaller theaters or offering it through video on demand. with the theaters pulling, sony

could be freed of restrictions and could stream it much sooner than originally planned. selling the movie via vod is primary way to earn back the $42 million spent to make it and tens of millions of dollars more to market it. it's too soon to quantify just how much sony will lose on the entire hack attack. take a look at sony's stock decline since the hack was first reported at the end of november. of course, a cost to rebuilding the network, dealing with lost employee data and facing two class-action lawsuits. some estimates say those costs could be as much as $100 million. "the new york times" premier of -- the new york premier of "the interview" is canceled and tonight's screening in detroit, baltimore, cincinnati and austin. the national association of theater owners says the members are working closely with security and law enforcement agencies and are, quote, encouraged that the authorities

have made progress in their nchings. kelly? >> all right. thank you very much. we want everybody to tell us what you think. did the chains make the right decision? you can vote right now. for more we bring in entertainment consultant katherine arnold and worked as a film producer and executive. i want to point out it's early minutes and more than 90% of people say it's a wrong decision. what do you say? >> well, it is a really tough call, kelly. there's financial implications and also censorship implications. we are denying the creative freed freedom. is the next step to pull jon stewart back or tell seth rogan not to make a movie like this? it's a tough question. >> would the chains, katherine, be liable and cover terrorism like -- i mean, to what extent

are they making a decision they have to make and to what extent is this more an issue of free peach? >> well, the legal and the security implications are not really my area but i would assume that the lawyers looking very closely at the liability they could have if anyone did get injured. i think the real question is to make sure that the theaters are safe and people enjoy the christmas viewing habits as they always would every year. >> yeah. >> this is a very tough call for sony as to what to do but what do you about a serious movie of north korea or political movie and not a satirical film? pull that, as well? that sets a precedent and the reason you're seeing the poll aenl 90% of the view earls saying, no, i don't think it was the right idea but the question then becomes now sony in a better position of off the hook now they don't have to have tv advertising. they can pull that. they can not have those dollars to spend. >> i wonder if the 90% of people who think it's wrong decision

and would show up to watch this film. >> i think they want the opportunity and they're not looking at the forgone revenue and the estimates $50 million or $60 million over 4 weeks and pl. but you have to consider all the other movies shown during christmas. if you're afraid of something happening, i do think you have understandably skittish theater owners given that there have been random attacks in theaters before. and it's a function of what small risk we're willing to bear versus others for the exchange of watching a comedy. >> what is the right call here? >> it was a cowardly decision. they can make all the rationales they want, but a barbaric small regime like north korea can bring down a major entertainment conglomerate and have millions of moviegoers not go to the theater because theater owners are afraid, i mean everyone now knows. this underscores the narrative. this country is perceived as weak. >> than have a giant showing in

bryant park, for example. you can say it right here that you're going to screen this movie in new york city for anyone and everyone who wants to say this. >> i'll say this. if it's at any theater, i'll go to it. i wasn't originally going to go to it. but i will now as a protest. and buy extra popcorn as well. >> there you go. we'll leave it right there. 88% as we close this poll of people say it was the wrong decision. 87% there for theaters not to show the chain. that's coming up on christmas day. new diplomatic relations with cuba. that was today's big international story on cnbc com. marco rubio's comments that congress will not support an embassy in cuba caught the attention of our digital audience. if it attracted enough visitors after the dow was up nearly 300 points after that fed meeting. we'll be right back.

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a huge rally after the fed's statement today that had cnbc.com on fire this afternoon. allen joins us with the hot list. quite a reversal from the hot stories driving us for the last couple of days here. >> yeah, it was. still kind of the same effect. i kind of had a trifecta of fire today. the market coverage with the same people piling in, this time to find out why are we rallying.

from that into the fed coverage too. people piling into the live blog of janet yellen. some thought she got a little snippy with the meetings thing. and cuba, a big cuba lift that got a lot of fire too. so it was a three-way burnout today on the website, kelly. >> plenty more for people to check after hours. thank you. we have more on this day. final thoughts with our panel when we come right back. new cadillac.... ♪ ♪ my baby drove up in a brand new cadillac.... ♪ ♪ look here, daddy, i'm never coming back..... ♪ discover the new spirit of cadillac and the best offers of the season. lease this 2015 standard collection srx for around $359 a month.

welcome back. some breaking news on the interview now. julia boorstin with the latest. hi, julia. >> that's right. big news here. sony announcing in a statement to nbc news that they are no longer planning to release the movie "the interview" on december 25th, saying in light of the decision, the majority of our inhibitors not to show the film "the interview." we decided not to move forward with the planned release. we understand our partners decision and share the interest in the safety of employees and theaters goers. they're deeply saddened that this brade brazen effort to suppress the distribution of a movie do damage to our company, our employees and the american public. we stand by the right to free

expression and are extremely disappointed by this outcome. really unprecedented in the film industry. >> julia, stay right there. i want to bring in the panel on this as well. julia, can you give us any indication as to the language they used. they say they won't release it on december 25th. that doesn't mean they're not going to release it altogether, does it? >> it seems like they're certainly leaving that door open and they could do some video on demand release, as i mentioned earlier in the hour. and the theater owners themselves while they say they're cancelling the planned december 25th release have not ruled it out entirely. it seems like the focus is allowing law enforcement officials, the fbi, the department of homeland security to investigate exactly the nature of the threats and whether or not they're credible. >> we heard from nato on this. >> yes. we don't know what this means in terms of streaming this movie, right? they may still be able to do that, while they won't recoup all of the losses for putting this movie out. that's something with two stars who are very, very present on social media. it will be very interesting to see how they now remarket this

film. >> but where -- go ahead, julia? >> they haven't made any announcements yet about streaming premium video on demand. but that's certainly an area to watch. >> i think the theater chains are willing to have this be -- i think the lesson is that the self-interests of a corporation often does not go according to any principle. >> shocking news there. thank you for joining me this afternoon. straight over to "fast money" with melissa lee and the gang. live from the nasdaq market site in new york city's times square, this is "fast money." i'm melissa lee. these interest traders tonight. steve grasso, dan nathan, karen finerman, and guy adami. and yes, you're listening to the song "patience" right now. it is that word that led the dow and the s&p to the best days of the year today. the federal reserve saying it will be patient when it comes to raising rates. and oil showing signs of life again today, though it's down 40% over the last three months. our own steve liesman asked fed chief janet yellen for her take on the oil drop.