it's going to be a concern for them. it's like earnings costs. >> as medical bills -- they might have a different view on inflation. >> but they don't. >> but i think there are a few things here. first of all, don't pay too much attention to the fed fund because -- >> you got a very great comment coming. we also -- the fed rate call is coming. right now let's go to hanson pearson with the statement. the language is identical with the december stating saying based on its current assessment, the committee judges that it can be patient in beginning to normalize the stans of moan monetary policy. since the committee last met in december, had he say economic activity has been expanding at a solid pace.

abalance they suggest that they continue to diminish. household spending is liesing moderately. recent declines in energy prices have boosted household purchasing power. business investment is expanding, while the roer in the housing sector remains slow. inflation has declined further. below the committee's longer run objective, largely reflecting those declines in energy prices. going on snars inflation, it's anticipated that to decline further in the near term, but the committee expects inflation to rise gradually towards the 2% over the medium term as the labor market improves and the further transitory affect of lower energy prices and other factors dissipate. the last word on the dual mandate, the committee currently anticipates after employment and inflation are near mandate consistent levels, economic conditions may for some time weren't keeping the targets at funds rate below the levels consistent with the committee's

news of normal in the near run. the vote was unanimous. >> thank you very much. we're going to get eninstant reaction from steve liesman. just through the statement, this is a little wonky, but maybe it's total garbage or maybe it plays to something. the last five statements that the fed has come out with either in a word search for inflation, the number of times inflation -- >> was 16 in december, 17 in october. 12 this time. can weigh read that inflation is lets of a concern because of this? >> it's not a big concern, but not on the up side. >> because of lack of. lack of inflation. the fed -- i think it's doing the proverbial exercise here holding its breath. it's going to hold its breath for nearly six months. while this energy issue works through, we were just talking about it ahead of time. these headline inflation numbers are going to go negative. make yourself a policymaker here. i want to raise rates.

probably some of that bleeds into what i told nobody to look at, which is the core numbers, and i don't have wage inflation because probably what's happening, we may talk about this later is you have a lot of people out of the work force because of the loss of benefits coming back into the work force at lower wage rates. i have declining wage inflation. loo are you saying six months on hold means six months on hold for any sort of language change? >> until the data catches up with where they want to be. zoo think they'll remain status quo until june? >> no, because now the honeymoon is over for janet yellin. why? because she had a year to coast and to hang out and chill under the old regime. she put that word patient in, and now the expectation is going to begin. does patient come out in march?

remember what patient means. it's code for two meetings. >> what happens when patient comes out in march? what's the market reaction? if it come out. >> i think there's zero chance of the fed raising rates this year. i think the markets -- >> you're -- 2016. >> i -- >> can you envision? >> one more point -- >> yeah. let me sober you all up. we're going to get -- >> i would like to be. >> sorry about this. look. this is central bank. the kind of economy we have and the kind of economy that gives us achievement of a full employment objective is not an economy that a central banker can leave with zero rates, let alone zero rates forever.

and they'll look at inflation as at transitory low, and a couple of years from now inflation will be higher. it isn't going to be zero rate. the question is when do we have a small rate hike and what will the path be because the economy is going to get very hot. tell me what you could tell janet yellin right now about when to raise rates, especially in the scenario that we just laid out. declining headline inflation assuming even the unemployment rate if it drops, there's no wage inflation. what do you tell janet, alan? >> zero rates and negative real rates, small positive real rates. doesn't make any sense when you have an xhst economy has really moving very strongly with good

momentum, and so the central bank has to lean against that by raising short-term rates. that's the history of monetary policy. always leaning against a strong economy because inflation will show up later. they don't have to lean too hard, and the fact that the inflation rate is coming down the way it is, partly because of oil and energy, says that they ought to be very gentle and then wait and watch the data before they lean against an exuberant strong economy too hard. >> david kelly, lack of an inflation. apparently a good thing in professional football. what about investing? do we see this being a good thing for equity, for our viewers 401k plan? >> as a loyal new england patriot, i think deflation is an over worry about issue. >> all these derivative markets are being distorted by central bank buying at the long end.

>> don't trust the futures market. that's not what people on wall street or economists actually believe. that's not what the federal reserve itself believes. that's on futures markets, and deflation expectations are also being sorted. don't trust those. they're not telling you where it's headed. >> we should note that the reaction in the equity markets, you don't sigh it in the overall averages, but where you do see it is in the bond market. we have the ten-year yield at 1.786%. it tracks the bond market, and it's sitting at session highs pretty much. up about .8%. that really rose on the back of this decision. >> want to make one more point. the last vote 7-3. three disenters. three on the hawkish side, one on the dovish side. this time 10-0, and i think this reflects the new make-up of the can i. you had a couple of the hawks drop off.

>> thank you very much. david kelly, steve liesman, brian kelly, thank you. melissa sticking around, wrovl. we'll see all these guys in a bit. let's get more from the fed statement. >> rick santelli on the bond pit. let's go to mary thompson live on the floor of the new york stock exchange. mary. >> hey there, melissa. rick is going to tell us about this later, but there's an interesting move from the ten-year. the yield initially kicking up after the sfaimt statement from the fed, but it's recently unmoved. very close to session lows. iffen at them at 1.755. in the equity markets, what we saw is a bounce to the -- in the dow up to about 90 points as investors expect that the fed will maintain this fractionan

gains are lower than -- the index lower than it was before the fed decision. holding on to a 20-point gain. initially it looked like a positive for the stock markets, but it's given up the gains in light of that, and pretty of the much where it was before the fed decision. back to you. he reminds us that job gains were solid in december, and are now "strong." the economy was expanding at a moderate pace in december, but now it's a solid pace. you know, listen, the federal reserve may get a little more -- >> he is saying it's good. >> dovish on inflation, but let's not forget the underlying aspect of the economy is getting stronger according to those changes and language, although rick santelli in chicago, you know, i just -- i think i need -- what's another word for

thesaurus every time we have -- i a fed statement. now we're parsing language like greenspan's briefcase. >> the only thing i see that is significant here is we've had nine sessions since the 20-month low yield close on the is ath of january in ten-year. the bottom end of that range is basically 179. we have intraday trade, but if we should close below that or we should below 235 and 30 we have been there before, that will be suggest southeasting. whether it truly has to do with any interest keys to the fed or not, i think what it has most to do with is the notion that more and more trade thaefrz i talk to are not looking for a 2015 move.

i think with my superficial read on what i think we kindly call this statement, i don't see any reason to think that that doesn't have an equal probability to be the case, and in terms of the economy, anybody who doesn't feel that we have slowed down a bit from some of the data we were getting before the holidays, i just don't think it's going -- outside of things like consumer confidence where gasoline for those people on the retail level is a bright spot as evidenced by the strong consumer confidence. you have confidence number yesterday. >> rick, back to you. >> all right, rick. thank you very much. bottle of something. maybe the quote of the day. now it's time for an interview that you can not afford to miss. bill gross, joining us exclusively in his post-fed interview since joining janus capital group. >> that is where the action is. note the ten-year yield at 1.762%. street signs will be right back. welcome back to showdown! i'm jerry rice, here discussing the upcoming big race between the tortoise and the hare. jerry, the hare always brags about his speed.

fine, but he crossed the line when he told... hey, turtle neck. want a head start, how about a week. yeah, my performance does the talking, ok. jerry, thanks for having me, i have film to study. hey, how about you rice cake, wanna race? you don't want none of this. introducing... a pm pain reliever that dares to work all the way until... the am. new aleve pm the only one to combine a safe sleep aid plus the 12 hour strength of aleve.

let's get more reaction to the fed's statement. joining us exclusively from the cnbc newsline is janus capital group's bill gross. it's great to chat with you again in the new year. the last time we talked out in denver -- i'm going to paraphrase, you said the fed won't raise rates until the sun in our galaxy goes dark. are you standing by that? >> i can't remember those words, brian. i can remember saying that it

would be a long time. let me amend that. i fwrae with some of what alan said a few minutes ago. i think the fed will raise rates by 25 basis points sometime this year. their statement indicates that they still believe inflation will go back to relatively normal levels on a immediate wrum term, and they recognize the economy is stronger. all of those points, but let me suggest that the real reason that they want to raise interest rates at least symbolically is that even in the face of this low inflation, they recognize, i think, that 0% interest rates are near 0% money market rates are distorting capitalism, and the 0% interest rates are moving up into the financial sector and emphasize profits and very little is going to the real economy for investment. to begin to correct it and even

if only sim bombicly to think they want to get off the zero line. >> wow. so let me reiterate that. if anything just -- do you think, bill, that janet yellen, the other fed governors care about teaching the markets a lesson? >> well, i didn't mean teaching the markets a lesson. i did mean that i think they're coming around to the view that 0% interest rates distort capitalism because it produces very low returns on investment and the real economy as they follow interest rates down to the zero level. same thing has happened, obviously, in germany and some of the euro land economies in a negative way. they have negative interest rates. there's very little incentive for investment in the real economy, which speaks to plant and equipment and new innovation and so on. the returns are so low.

i think if only the sim brolicily they want to produce an interest rate hike that speaks to that in a round-about way where. >> 25 basis points sometime this year, bill, is pretty wide forecast. it's not very specific. when you expect this hike to happen and what will we need to see on the inflation front, and in particular on the oil front in order for that to happen? >> i see it sometime around june. i mean, most fed governors and the market participants, fed participants have suggested june as a satisfactory point, and, you know, absent further declines in oil, which you mentioned, and absent further deflationary conditions in euro land or perhaps surprises from china in terms of their growth rates, which i think all are important, and in combination a

continuing strong dollar, which would be deflationary here in the united states, i think they stick to this june or perhaps the meeting after june because they want to send a signal to the market that the real economy is important as well. >> and as we pointed out from their words, bill, the economy, according to the fed, does seem to be getting better. words like moderate became solid. words like solid became strong. how much of the fed's job is it to get ahead of the curve? instead of waiting for inflation, don't they need to in some way anticipate? most data is backward looking. some of it considerably backward looking. >> it is. the fed does try to anticipate, and it's here where i disagree with the fed in terms of their expectations. remember the dots, brooen, that come out periodically when there's a press conference from the fed members, and those stocks indicate that they think

that the long-term inflation rate is 2% and that the long-term real interest rate for fed funds would be close to 2%, much like the taylor rule. right now the market thinks that the fed will reach 2% by 2019. by february of 2019. i don't disagree with that. i am suggesting that the pace will be very, very slow, and if 2019 at 2% is the number, then the treasury market is fairly priced. it doesn't mean that you've got a huge capital gain ahead of you if you are an investor in treasuries, but it means that it's fairly priced if the fed moves at that slow price. >> you know, this question comes from a viewer via twitter, bill, and it's a better question than i could ask, so i'm just going

to steal his question. david duran, do you believe a rate increase is needed in the market more than just symbolically? do we need a rate increase for any sort of fundamental market reason, or would it literally be a little more symbolic? >> well, i do. first of all, it would be symbolic. it would tell investors that there's a necessity, and this speaks to the real reason. there's a necessity for savers and investors to receive a positive return on their money. at the moment 0% short-term rates are near 0% short-term rates and produce a negative return on money from the standpoint of inflation, and so, you know, at some point they've got to move closer to an inflation rate, of a future inflation rate, in order to allow savers, and, therefore, investors to take risks in the

market. that's what capitalism has been all about. capitalism for centuries has been about hope and the expectation that you can reach -- receive a return on your investment. that's not the case. i agree with your listener and the tweet that, wrau, there's symbolic reason, but also a real reason sairz need to make some money. >> bill, let's say that you are correct and that the fed will raise interest rates. everybody is in this. is everybody going to want to get out? >> i think the danger ultimately is in particular, melissa, if europe and euro land, you know, grows at a stronger pace than currently expected, i -- you know, treasuries are trektly

linked to german bonds and high quality investments over there, and, you know, as draghi has suggested, they're not going to move off the zero line for a number of years, and so if the german bond, ten-year bond continues to trade at 40 basis points or lower, then treasuries even though, you know, a low interest rate and seemingly very artificial as your question indicates, it probably will be anchored by what's going on in the rest of the world and especially in germany and the united kingdom. >> is it safe to think that the turmoil elsewhere -- >> i think so.

while would i continue to suggest that those are artificial yields and you better be careful about squeezing through the door and the exit, but i don't think that occurs for the next six to 12 months. >> six to 12 months. all right. >> unfortunately, we have to make our exit. bill gross, it was a real pleasure to chat with you again. i know it's a busy day for you. thank you for making time for us. >> thanks to both of you. >> thank you. >> don't let the fed dominate too much of your attention because we are in the middle of earnings season, and the earnings clock takes over next with three big names you need to watch before they report. >> later on, forget too big to fail. why too big to hack could be the number one concern for your money going forward, and check out oil, folks, with the fed decision. oil moving down again. another multi-year low hit. we traded as low as $44 .08 for crude oil. we're down 4% to $44.31. we'll get you the oil close in

just a few minutes. inflation, that, my friends, a lack of. least tlooers for commodities. we're back after this.

>> time for the earnings squad. the co-aink o of squawk valley and brian kelly. let's kick things off the score card of the 29% of the s&p 500 firms reporting so far. 70% reported above estimates. 10% met estimates. 19% reported below estimates. let's kick it right off here with the big one after the bell, john, and that would be facebook. >> facebook. well, if are you looking for 3.77 billion in revenue. 49 cents, i think it is, in eps adjusted two big factors here. one is currency. unlike some other companies last quarter facebook talked about currency at 7% euro drop, and they factored that in to this quarter. it fell a lot more since then. in order for facebook to overcome that, they're going to need to see an iphone-like quarter for them. what that would mean is such strong demand among retailers over the holidays for facebook's targeted advertising that they were able to have a whole lot of pricing power. that is possible. discounting happens so much, and

retailers are having such a hard time at the end. we'll have to see that come through to balance things out. guidance could be the key areas to take a hit because the euro has fallen so much in january. >> guidance on spending. keep in mind that since the third quarter when they reported facebook shares down 10%. on that earnings report, wron if you remember this, but after the bell the stock really took a tumble because of the commentary about spending. the spending would be up very sharply. zuckerburg had talked about investing aggressively. the ceo comes on and says rnd spending rose 55%. >> these are big line items. in this market, investors aren't going take that well. look how they punished amazon. in this market i don't think investors will like that very much. stock has been basically flat. they came out in november and said for the full year chip set

revenue growth would be less than what analysts had been expecting. 3% to 9%. the big question at this point that's sort of in the past month or so is did samsung drop snap dragon from its newest line of phones because if it did that could be for the full year 3% to 4% of chip sales. that's going to be a big issue on that conference call, and, of course, any update on china and the investigation into the fees it charges for its patent, that is a huge overhang. it's been an overhang for a long tile. you see that will in the stock price. that's why this had been dead money for the past year. >> last time i spoke to the ceo, he sounlded more optimistic about the china stock getting wrapped up. i also ask him about apple strength and samsung's relative weakness. they get more money out of samsung than an apple. i got the sense that there was an impact there. >> out of technology. brian, you're watching ryland. >> right. because of the home building sector. housing is about 40% of gdp. that's interesting.

what receive seen out of the some of other home builders, right? again on fast money, we're tracking all the action, particularly the facebook conference call. they could drop a bomb on that call, and we'll be all over it, and trading that. >> what does herb greenburg think about apple's quarter? the calls you need to know about right now. street talk coming up after this quick break. stay tuned. financial noise financial noise

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you might have seen the big flashy red headline during the commercial break on oil settling. $44.47. down 3.8%. that is the lowest for oil since march of 2009. the lowest in six years. why is oil at this level? simply put the supply and demand, way too much supply. according to the u.s. government, we grew 8.9 million

barrels in inventory last week. the biggest weekly build in at least 30 years. we are 49 million barrels up from a year ago according to the government. this is econ 101. i wonder what you could really buy a barrel of oil for right now. >> i wonder if you could go out to $25 or $30. >> i'm sure in the shale, you could. >> now, goldman saks put out a note on commodities, i got the note. here's what they said. >> it's going to be los to averaging $40 a barrel for most of the first half of 2015. that's missing for the graphic. they think oil should move back to about a $65 barrel a day average by 2006 sfwloosh it will be an interesting setup because we are expecting a lot of big

oil companies to report on thursday, so to get their commentary on where they see oil and at what level oil has to be in order to maintain projects, that will be really key. >> i think what you are going to see -- again, just from reporting talking to people, going out in the field, you're going start to see more and more capital spending cuts. we already had a round. pretty much every major oil driller cut their capital spending budget for this year. most of those cut budgets are based on $65 to $75 oil. most of the sources saying, listen, we're going to get a second round. we start to get the earnings coming out on a lot of the roll-out on your show, fast money." we'll see another round of cap spending cuts pretty quick here. >> i hope not. >> it sounds like we are. >> wonder weight under credit suisse. >> wait until you hear. >> same thing. >> exactly. >> they cut their targets on national oil to $43 from $60.

that's about 20% less in the current price. if that's not a sell, i don't know what it is. >> upl is the next one. this is a sell call. the ultra petroleum is the name. real big haircut on this one here. >> this is also from goldman saks. a different note. more of a stock call. goldman cutting upl to a sell from a neutral. the houston-based oil ask gas company, their target on upl is $11 a share. now, when we did street talk this morning, the stock was 9% higher than it is now. it's still below even with will call. >> 9% higher. >> basically because we had the sort of look at street talk before the market moves. >> sure. >> you get the point. we're still below where we are. >> let's pick it up here. packaging corp., d.a. davidson up from a buy to a neutral. >> stock getting a little boost. up 1%. d.a. davidson analyst sees growth quicker than the ris of the industry. target boosted to 90. you can do the math.

>> that's from $8 to $50 a share. >> that's more than 50 up side. the price on acadia, and had he do it because of rising sales for a drug that is a buy rated stock. they see 50% jump in apad. >> mercury systems under the radar name. >> massachusetts base big data processing company. raised to a buy from a neutral. they bump their target to 20 from 4.5. about up $35% up side on the current price. the average tarlgt is a five lowest who covers it. it's $17. five analysts, $17 average price. >> are there some companies that are too big to hack? if they got hacked, it would create a huge problem for the country. our next guest says there are such companies.

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zimpl in the last couple of moments a big move in the bond market. the ten-year benchmark treasury getting a lot of buyers coming in. all of a sudden the yield falling to 1.73%. you can see the last couple of really minutes we're seeing a big move in the bond market. >> there is a new 52-week high. the fed is not going to do anything for a little bit now. loo if are you listening or watching the show, and you are a real estate agent or a mortgage broker, i want you to immediately stop what you are doing, unless you are driving, stand up, hug somebody. this is -- >> rates are going to remain low. >> mortgage rates are going to be even lower. refis are going to boom. stand up. hug. not inappropriately. just a nice friend hug.

>> a friendly -- >> a slap on the back. do something like that. express joe. >>. >> they continue to pile into the instruments that have worked so far. >> it's going to look spectacular because they may be yielding 4 periods, 5%. everything look great unless are you trying to save money safely, good luck. bill gross hinted that in our interview. approximately five billion connective devices will be auto nuss this year. those are all the things that the center received data from the enter web. that number expected to surge to about 25 billion such products in five years. are some of the companies too big to hack.

adam of trust layers. adam, almost every week now we're getting a big this company was hacked, let's watch out story. as we get more and more on to the internet, how is this going to create a major macroeconomic problem? >> well, i think it's a really good question, brian. we were really seeing an explosion this year in 2015. companies that, as you mentioned, are collecting a tremendous amount of data under their roof. that is something that you can't spend all that time just reacting to the breaches after the fact. we have a need for companies to be proactive about that. the more data you have, health data and consumer data and citizens data all under one roof. you really get into the situation where you have to proactively protect against the misuse because it's incredibly important to the health of

companies. it's becoming a national interest. >> let's drill down on this. as i understand it, what the fcc is saying is it's the devices and the companies that make the devices that have an obligation to embed security in those devices. where do you think is the graet threat? is it hacking those individual devices, which could be anything from a heart rate monitor to a fitbit which then transmits medical data to your doctor, or is it the companies that simply house the data so the companies that own the server farms that's really the issue here? >> you know, melissa, it's a really good question. hacking one device, nobody wants that to happen. if you look at it on a very pragmatic level, that's one person's information. it would be hashl on a individual level for very sensitive data to get out there. the real danger comes when companies are collecting all of that data, the quantified self, all of the information, as you mentioned, from the connected devices. when the companies are

collecting that all under one roof, there's a few dangers there. one is just it all gets assembled together. as you said, they become too big to hack. the other danger is that there's a lot of predictive segmentation, predictive algarhythms are that are run on collect i data, and companies need to be a lot more proactive about the monitor and use of that data. it's not just about getting ahead of the breach and making sure that you are proactive and protecting against the breach, but it's also about being proactive about understanding how that data is being used, so we can restore a little more confidence in the use of the big data in all of this collective data sitting under one roof. >> adam, trust layers. adam, big stuff. kind of scary stuff too as well. i'm wearing a fitbit right now. when i get home, i'm taking a hammer to it. thank you very much. if you or your kids don't have student loan debt, you may not think you have to care about

the issue are but former indiana governor mitch daniels will join us next with why everybody actually needs to care. >> yeah. >> plus, win or lose on sunday, which team's home state has the better economy? the battle that really matters. washington versus massachusetts. that's next. 6 the quietest or nothing. the sleekest... ...sexiest, ...baddest, ...safest, ...tightest, ...quickest... ...harshest... ...or nothing. at mercedes-benz, we do things one way or we don't do them at all. introducing the all-new c-class. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services.

. we've got to talk more about the big move. joining us on last minute notice, thank you. dan fuss. we do appreciate you joining us. i'm looking -- >> thanks. >> to melissa's point, the elt 20-year treasury bond fund of 2% or 1.5%, up two points right now, what has happened in the last couple of minutes in bonds? >> well, somebody wanted to go long. that's for sure. >> in a big way, dan. >> and this also, even though it's a treasury market, is thinner than it used to be. i wish i could say the same, but it's thinner than it used to be, and the -- i would guess that the specific instigator of this with a few words tossed in to, you know, the announcement after the meeting today that had not been there before.

they'd been in the minutes. that was a reference to the international situation. and the reasoning behind that is how long will the fed be able to delay raising rates? inflation, but off the beaten track or outside of their mandate in a sense is the situation internationally, which is, quite frankly, a worry. and it's complicated much too long to get into right now, but it seems they've been getting more concerned with this. it's been in the minutes, but it's not been in the statement. >> so walk us through, dan, if the fed is getting more concerned about the international situation as a bond investor, then i think that perhaps there is more pressure on the bund market and, therefore, in a bigger flight to safety in the u.s. treasury market? is that what's happening here?

>> exactly. and so the. you have that pressure. let's say the fed says, okay, let's let rates go up. what happens to money in southeast asia? it leaves. it wants to go to dollars now for even more yield, and if you compound that on top of some of the worries in the world, you've got a real problem. so you don't really want to yank money out of the developing world, bring it back to the developed world because, you know, they need it. we've got a surplus, they need it, and so if you raise rates, you just make matters worse. the fed is in a box. they really are. i don't envy them because some day the inflation numbers will start to kick in. i don't know when. there is a lag built into those

numbers, and there are some reasons right now to say, well, wait a minute, they're going to start to bottom and rise, and you can only keep ranging the employment targets for so long. >> right. >> so this international thing, which i venture to say is in many respects more powerful than small moves in the inflation rate or the unemployment rate -- >> right. >> -- is now being at least put out there publicly. i think it's been, i would guess, discussed for well over a year. >> sure. dan, we've got to leave it there, but we appreciate you phoning in on such short notice. >> you're very, very welcome. thanks for having me. >> dan fuss, loomis sales. let's get to rick santelli covering the cme and the move in the bond market. >> this is a very, very significant move in the long end of the market i'll give you a quick rundown as to what traders are telling me is the main

reason and it's mostly technically we could argue with what the catalyst was. look at the intraday of 10s, 1.73 open. the chart up to roughly made january. we're looking at a regard low yield close. even if it only settles under 1.79, it breaks a nine session streak. the 30-year is much easier. look at the intraday. hovering at 2.30. this is for all practical purposes now six basis points under what would be a new all-time historic low yield post world war ii yield close and that is not only making some of the slight shorts panic, we're hearing new asset manager driven buying and it looks like it's substantial. >> rick, very quickly, is there one firm or person or fund that would have the power to make this kind of move in the bond market or would it have to be a group of people all camming in at the same time maybe figuring thing out tame or could one

person or fund do it? >> no, you know what? obviously that could always happen, but considering what's been going on with the low end of yield ranges the last nine days, i would think this is more of a group activity. >> rick santelli. rick, thank you very much. appreciate it. >> keeping our eye obviously on this big market move in bonds recently but he want to talk about the issue of student loan debt. former indiana governor will tell us why we all need to care. barbara just bought ke.e wrot.

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with college tuition on the rise, more students in debt is a growing concern. according to the federal reserve, educational debt has reached $1.3 trillion this year. our next guest is out with an op-ed in "the wall street journal" on how student debt harms the economy. mitch daniels is a former governor of indiana, currently the president of purdue university. >> glad to be here. >> when you start off life with a whole lot of debt it makes it harder to do anything. what's your greatest concern? >> it's a long list, melissa. we already know it's hurting consumer purchases. today's young people have lower incomes than their predecessors, not higher as we've always experienced. we know it's weighing on housing. they're postponing marriage, child bearing, and home purchases, and now we discover that it is pretty evidently limits the percentage of young people who start a business or try to do something entrepreneurial, and that's maybe as big a long-term worry

as any because we've counted on american inventiveness and innovation to cover over a lot of the other economic problems we've enflikted on ourselves. >> so there's a generational impact here. in terms of the economy, there's also the impact potentially of these loans being in default. there's some pretty staggering statistics. student loan 90 plus day delinquent rates are at historic levels. this according to the federal reserve bank of new york as well as experian. are you concerned there's a broader expert. maybe this is the next ticking time bomb in the economy, these defaults? >> every citizen and taxpayer should be concerned about it, and especially the young people themselves, not only who are struggling with these debts but who are going to have the -- you're quite correct, there's no question a lot of these loans are not going to get paid back. it will be the next big burden on them really throughout their lives in addition to the $700,000 of lifetime debt

service that they're already sat saddled with by the programs in place today. >> do you believe, governor, college costs are in part so expensive because there's such easy credit? you can charge whatever you want because, don't worry about it, just borrow the money? >> no question. this has been well documented by scholars for some time. it matches your common sense, that this market is a lot like health care when you think about its features. people believe it's a necessity. there's been little or no price elasticity. people are insulated against the cost by the flood of subsidies, and -- but the chickens are home to roost now. you know, purdue university, we're in the middle of a three-year tuition freeze. we've cut the cost of room and board twice. we're working to reduce the cost of textbooks. everybody has got to get on board this because the machine will go tilt otherwise. >> governor, great to have you with us. thanks so much for joining us. >> and the new president of my college, virginia tech, is a

former head of purdue. nice connection there. a special "street signs," mandy will be back from a much warmer location. she'll be live from san diego. lots of big interviews and interesting guests. >> otherwise known as san diego. in the meantime, i will see you tonight on "fast" at five. full coverage of facebook earnings. >> i can't wait. >> all right. "the closing bell" is up next. thank you, guys, welcome to "the closing bell," everybody. i'm kelly evans down here at the new york stock exchange with my pipe and my french coat and my sherlock holmes hat trying to figure out what's going on with this market. >> i'm sitting here with a rubic cube taking to make it make sense. we had two reports that had an impact. clearly the fed's statement had an impact. we saw the price of oil move lower. we saw yields on 30