what is the bond market reaction to all this inaction in d.c.? and this keeps on getting worse. hamas launching a rocket from the gaza strip and israel even more reason to mobilize in the oil market reacting. the top of the hour, stocks down every 15 minutes nicole petallides talking about the stock market at the new york stock exchange. nicole: the stock market across the board for the most part down arrows, we have seen selling since the election transpire. we have seen the selling over the last seven or nine weeks if you include this week right here. down about 30 points again, some names wing and the dow jones industrial including hewlett-packard, verizon, jpmorgan, the fear index is slightly higher. often with an equities and commodities so we're seeing oil

higher today. nike, a familiar name we all know. a lot of people know the bags, they're actually selling it off to the apex partners 570 million. they raised their quarterly dividend. back to you. dagen: thank you so much, nicole. beginning negotiating ways to avoid the fiscal cliff. time is not on their side, we're joined by congressman from both sides of the aisle, from colorado and equally fine wisconsin represented by democrats. good to see you. to you first, there is discussion of stories in the "wall street journal" today about change to be sequestered to get rid of it and instead of that, put in place spending cuts

and tax increases getting us six months into the middle of next year. i want to hear from both of you. you agree with a temporary measure to avoid the big decisions that need to be made. >> the answer to the fiscal cliff reaching a long-term deficit deal, now we need to let the political dust settle. there is a way to listen together and find some common ground. 80 ceos gave their recommendations. that will be the fair and balanced approach moving forward and something we will all be working in focusing on in the weeks before the end of the year. dagen: avoid a big picture by the end of the year. >> some broader outlines, what it will look like.

i want to mention the fiscal cliff remains. there will be little incentive for us to negotiate and to compromise at the end of the day. even though president obama win a big electoral victory, still a popular vote, still divided government will have to cooperate with each other to reach that kind of agreement. dagen: certainly reaching over to you, but answer that question about would you be comparable with something temporary that gets us to midyear? >> it comes the issue of sequestration, that is what we have to do. reduce spending and grow our economy. i would support something that did it in a way that doesn't cause the kind of damage, so if we could find something to reduce spending and give us the time we need to put together overall comprehensive tax

reform, that could be something we could support. dagen: do you think they are inevitable for this country? >> i do not and they are inevitable. we need to grow the economy and put rubber on the table through a series of plans bringing down the taxes but also grow the economy and bring more revenue to the federal government for tax increases, the president's plan would increase taxes on millions of small businesses around the nation and heard as many as 700,000 jobs. dagen: congressman, do you think tax increases on that note, tax reform is doable and tax increases just rate increase is avoidable? >> we do need comprehensive tax reform. it is not leading the type of growth we need in this country to help businesses large and small to be as competitive as they needed to be. but revenue is revenue.

revenue is something that we need and every bipartisan commission formed to look and find solutions to this concluded themselves. how we get the additional revenue i think we can reach an agreement on. the largest and fastest growing area of spending is rising health care costs. we have to get rid of the service and go to a value reinforcement system tremendous amount of savings from the federal budget if we can do that will be the key to getting our fiscal house in order. dagen: i want you to say to my ya and hope the rest of washington is listening. good to see you both. get to work. >> thank you. dagen: take care. if the bond market reacting to the contingent remarks or not so

contingent remarks from both sides of the aisle was to mark overseeing nearly three quarters of a trillion dollars in assets. it is always fantastic to see you. tell me about the reaction you are seeing in the bond market, what is or is not happening in washington right now. >> i wish those two congressmen were involved in the negotiations. unfortunately the guys at the top seem they are really taking in their heels. the 10-year treasury benchmark is nearly at a three-month low yield, typical reaction when the market is worried about the economy. they drive off the fiscal cliff between now and the end of the year. gdp in the first quarter of 2013 dropping off very sharply.

dagen: how low can the 10-year ago at this point? >> we certainly could go lower, really depends on the rhetoric taking place in washington. for my personal perspective the only one i thought was even attempting to put an olive branch out there to some degree was house speaker john boehner. ms. mcconnell digging his heels at democrats in the senate digging their heels and the president appears to be doing the same as well, as we will have to see what happens. dagen: what has been the reaction the corporate bond market? this thread has gotten wider, but is that because the yield on the 10-year is falling? >> we have seen some selling take place, corporate are linked to equities to some degree, we've all seen the trade-off

they place in equities. there have been several new issues come into the marketplace over the last several days. if you look at a couple of weeks ago they were substantially oversubscribed. if you look at one place where the market has benefited from all of this comic has been muniz. units have reached all-time record lows. a lot of demand take place, certainly all this discussion about tax increases have gotten people worried. also another impact as well, a series of ballot measures that took place last election day, and the ones that were passed were generally bond market friendly. for example in california the income tax top rate raised

13.3%, that will help california's credit and also increase demand for california tax-exempt muni bonds. dagen: that makes a lot of sense. bubba, of those groups, treasury, corporate really quickly, or any of them attractive to you as a bond manager? >> i would probably lean toward muniz was corporate for a second. venture this will get fixed. it has to. if congress continues to go around, the economy will fall flat on its face. i ultimately expect treasury yields to move back up. dagen: thank you so much. you have some races to watch this weekend. just so you know.

have a great weekend. and then we sit down in washington, general petraeus was on capitol hill this morning testifying on benghazi. wwe're joined with the very latest. an alarm sounding in jerusalem, tense situation they're getting worse. and what is the impact on the oil market? watching the oil move up, how high can it go?

dagen: coast guard officials confirming there is a fire on oil drilling platform in louisiana. the south louisiana coast about as much as we know, these are reports, fox news confirming at least the coast guard said there was a fire on the platform. it is said to be in shallow water. not deep water to be compared to the bp oil spill last year. in 2010, rather. this is said to be a shallow water platform but there is a

fire at the coast guard conference. meanwhile, david petraeus testifying on the attacks in benghazi. katherine harris joins us with a the very latest in washington. what did we learn this morning in this hearing? >> good morning. former cia director david petraeus classified before the house intelligence committee for the better part of two hours. an opening statement of about 20 minutes when he touched upon his affair with the biographer, which he very much regretted. but appear to be front and center in that hearing of these talking points prepared by the cia about the attack and what led to the attack and how those talking points in some ways were changed by the time they reached susan wright where she blamed a demonstration o on the video.

it was not clear if the intelligence committee and who made the changes to those talking points that affected the emphasized the role of the l. sharia in that attack. and if they believed with terrorism within 24 hours of the attack. ia senior committee said the former director saw this in the scope of the evolving intelligence picture. >> he reinforced the fact the first 24 hours he felt at that point that this was a protest as a result of what happened with the film in egypt. he clarified that after more information came in it was not a protest. >> that said, senior republican house and committee said there are discrepancies, if you will, between what the former director

said to today's lawmakers and what he said on september 14. >> testimony today was that from the start he told us this was a terrorist attack, terrorist involved from the start. i told him my questions and the impression we were given was that the amount of evidence was that it was a spontaneous demonstration. >> again, two major headlines of today, one with the former cia director told the committee that he believes extremist were responsible for the attacks very quickly after that, and number two, who or what was it that did the editing that the emphasized the role of the groups that were ultimately put in front on ambassador susan wright. that does not seem to be the case. seems to have come from

elsewhere. perhaps the white house. dagen: the situation in the gaza strip getting worse. the oil market, will the violence spread to other parts of the middle east? the critical question we will ask coming up. and why republicans have to accept some sort of tax hike for the rich. we have someone very important who says that very thing. let's take a look at how the world currencies are faring. he better get your financial house in order or watch the dollar tumble against the currencieforeign currencies. stay with us. ♪

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>> 22 minutes past the hour, your fox news made. coast guard confirming there is an oil rig unwired in the gulf of mexico off the coast of louisiana. the shallow water platform unlike the deep water site back in 2010.

reportedly a south central louisiana coast. the four soldiers who died yesterday in a horrific train collision. a float carrying four soldiers and their spouses was struck by a freight train during a parade in texas honoring wounded soldiers. that is not appear to be an injury. hamas continues to be sold against the jewish state. they continued their attacks on ben gaza as they signal an invasion could be imminent. those are headlines, back to dagen. dagen: thank you for that. more the violence between israel and the gaza strip. talking with the marketing into this story in particular with new developments. there was some talk of a story

out there were some comments made coming out of iraq that the arab nations needed to band together and use oil as a weapon in fighting all of this. is that much to do about nothing? >> that is something that will be underlining if you see that type of talk probably continue because it seems like that is remaining source of revenue, the remaining driver is oil. they want to use that against anybody they can as a power player. you have underlining themes keeping pressure on the price, the fiscal cliff, european debt concerns, the supply issue is the biggest glut we have. you would see oil prices moving aggressively higher on this least attention.

we could see prices go up from here. dagen: what would be the driving factor that could have lower, would be a weaker economy? >> yes, it is the weaker economy, it is a larger supply that is keeping the lid on the prices. we will probably move back down to 78, $80 range. we see this violence escalate, they will forget about the supply and demand fundamental and work on the geopolitical risk and wishes to aggressive move up to 90. it could go either way. but how does this story for israel pan out? dagen: thank you very much, we will see you again. he says it is a mistake to fight over the bush tax cuts, but bill kristol might say what ar whethe rates go up? and the death of the twinkie.

or is it? what will they do with those recipes? do they disappear? what about ding dong? we will answer that. first, a look at the winners on the s&p 500. before copd...

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for republicans, time to let taxes go up under rich. bill kristol is here to tell us why. the death of the twinkie. what happens to those delicious

recipes? the spotlight on fedex and ups and the role those companies play in the illegal shouldn't of prescription drugs. it is almost the bottom of the hour. a few seconds before it is 30 past that now at is. stocks every 15 minutes, dell down after reporting. what do you know? nicole: reporting that once again pc demand has plunged to. quarter after quarter, that is what we're seeing for del once again, come at with quarterly profits plunging nearly half, 47%. weak demand for pcs trying to give an outlook of revenue growth in the future but not enough to give them any help today. stock is down, number one loser on the s&p 500. they lower their price target to $11, steve and nicholas, and the

stock has moved to a new low, an annual low and back to levels in february of 2009. we are a dull shareholder trading disappointed today. dagen: that has been the case for a long time. thank you so much. we told you at the top of the hour president obama was meeting with congressional leaders to find the beginning of a solution to dealing with those automatic spending cuts and tax hikes coming january 1st but my next guest says in negotiations the gop should be willing to raise taxes. at least on millionaires. bill kristol is editor of the weekly standard. great to see you. why do you say that? >> for two reasons. president obama won the election. i wasn't happy with that. iran on letting the tax cuts for millionaires expire. the second fact is taxes bill on january 1st as you know. not that the gop would vote to raise taxes but i don't think republicans have enough leverage

to prevent president obama from letting the tax ike that is already planned going to affect from millionaires. of the republicans resist and don't actually cave a little i am afraid obama will say fine, we will all the tax hikes going to affect and blamed the republicans for raising taxes on middle-class and we will go over the fiscal cliff and there is panic and republicans will cave only after a showdown which they will lose and hurt themselves more. dagen: part of the thinking would be if you cave on just the top brackets and let them go back where they were under the bush did ministration you are opening the door for those rates to go even higher which plenty of democrats would like to take them in that direction. >> let's have that fight. we lost the election, republicans lost the election and obama campaigned on tax hikes for families making more than $250,000. republicans could do themselves in good with a lot of families

by saying that is too low. for millionaires and the -- not help the economy. will hurt the economy. is foolish policy. we will try to get big tax reform to do someone's rates in 2013. you ran on this and won the election and we don't have the ability to stop you. we will at least tell the middle class got to $1 million but i don't think republicans can win the fight on millionaires. is there a risk on raising taxes more on millionaires or everyone else? shore. republicans should fight that and make it clear, but they are not championing this or voting for it. they just vote for preventing taxes from going up on the middle-class but i don't believe they have the leverage to win this fight. i which they did. dagen: do you think we will ultimately get tax reform? when i talk about tax reform i go back to the people who don't pay any federal income tax and making sure most americans pay at least something just to fund our national defense which if you're not paying federal income

tax you are not doing. is that a tough sell? do you think ultimately we could get that done? >> we could. i don't think either party has the position we should raise our have little income tax for lower middle-income americans. people have the payroll tax and that is enough. i am not disagreeing with you as a matter of principle but i think we can get big tax reform in 2013. not the tax reform my would like but we have president obama and democratic senate. i think there could be real negotiation for real tax reform and spending cuts in 2013. my only concern is in the short term i think what president obama have the tax hike for millionaires. it won't reduce much revenue and might slow down the economy a little bit but it is what he ran on and it is his policies and elections have consequences but the republican position shouldn't be -- republicans did in their heels they are the party of defending the bush tax cuts. that is not our vision. the republican vision is big tax reform which would really

unleashed an awful lot of entrepreneurial spirit and economic growth. let them know little bit, that is a backward looking policy to dig in on. dagen: good to see you. maybe a little more steve forbes if you want to talk about that. >> that will be fine too. dagen: really good to see you. take care. head of the weekly standard. air raid sirens wailing in jerusalem as israel's army radio said a rocket has landed in the jerusalem area. fox news's leland vedder has been doing incredible reported along the israel/gaza border and has the latest on the ground for you. >> good evening from the gaza border. we are seeing rockets fly out of here hitting televisa and in one or two rockets falling to jerusalem certainly a major escalation and through the night you see these big flashes behind me, they are hard to time but

the israeli air force pounding at targets inside the gaza strip. today also hundreds of rockets flying out of gaza towards a number of areas in southern israel. with so much talk of the iron dome intercepting missiles it is not perfect and doesn't work this close to gaza where homemade rockets fly out, there's not time, impacted right here a couple yards from a house. you see what it did to the barbecue area. people adhere have started chance. any idea what it would do to a person had someone been standing here? this is the wall of the house and you see where the shrapnel embedded itself all the way in. had this been a person would have pulverized them. >> we were outside the house, inside the area downstairs. >> had you been out side, this would have been inside you. ten seconds, life or death.

wooley four or 500 yards from the border, we have seen a number of them driving down. not only the israeli armored personnel carriers are moving the division but also the giant tanks, did you see the roads, the trees where they are moving these in and all the trees giving them a little bit of cover so they can stage these weapons without having the palestinians able to take a shot at them? there are reports in israel that the internal security cabinet is meeting right now some time through the next hour-and-a-half to authorize a ground invasion of the gaza strip. whether it happens tonight or some time over the weekend will be determined more by the army than the political establishment here. there's a lot of talk that the israelis in some way want a cease-fire to come about. so far that hasn't happened. the egyptian prime minister was in the gaza strip earlier today and talked about trying to push hamas towards a cease-fire but

neither side is linking right now and that is why we are continuing to see this violence escalate. the question is does it spiral out of control or does everybody finally, the day? tonight and with daylight tomorrow we will know the answer. dagen: thank you for that. please be saves. more breaking news to bring you on the oil rig fire that happened off the coast of louisiana. the coast guard confirmed that fire was happening and we are finding out now that blackout energy, this is an oil and gas company based in houston, texas, confirming to fox that an explosion did happen on the company's rig in the gulf of mexico. the black elk is investigating the cause of a fire but would not confirm any details on the location, time of the explosion or any fatalities that may have occurred. the company working with the u.s. coast guard to put the fire out and find out more

information. more information will come out this afternoon at 3:00 central time but this was off of the southern coast of louisiana. meantime jamie dimon has company working with the government on a settlement over how they manage mortgage-backed securities. charlie gasparino will bring you the latest. does the twinkie go bye-bye? and the ding dong? don't forget yodels? is it over or not? dennis kneale is here to tell you what happened to those important recipes. take a look at the treasury market and bob was talking about prices were up and meals down again today. would you buy a rush to save the? are these save? not so fast but that is where the tenure is right now.

dagen: john boehner speaking outside the white house flings by senator harry reid. listen to him. >> our meeting today, what the president called for a fair and balanced approach to show our seriousness we put revenue on the table as long as it is the

company for significant spending cuts and we are going to continue the revenue on the table, over my colleagues to show the american people we are serious about cutting spending, solving our fiscal -- i believe we can do this and other the fiscal cliff that is right in front of us today. >> this isn't the first time we have dealt with these issues. we feel we understand what the problem is and we felt very good about what we were able to talk about. we have the cornerstones of being able to work something out. we are both having to give up some of the things we know are a problem and so it is like the point where we all know something has to be done, no other time than to do it now.

we feel comfortable with each % other and something we will wait until the last day of december to get done. we will move forward on it and work over thanksgiving recess and come back the first week as i understand it. it was a constructive meeting. i feel good about what we were talking about. dagen: it was a very constructive meeting. >> we had a recognition that every person in america knows that we must reach agreement. the speaker spoke about a framework going into next year. i was focusing on the message of confidence to consumers, the market in the short run too. that is to say that we should have a bowl in terms of how mldh

deficit reduction and the deadline to reach our solution. if we do not reach agreement not only will we miss the opportunity to do something good for the economy and lifting spirits in confidence in our country, we will have an economic downturn that must be avoided. we understand our responsibility, it has to be about cuts and revenue, has to be about what has to be about. if we have investments and talk about revenue, we have to do so in a way that for most growth in the future. it was good. i feel confident a solution might be in sight. >> i can only echo the observation of the leaders that

it was a constructive meeting and we all understand where we all are. i can san on the part of my members, understand that you can't save the country until you have entitlement programs fit the demographics of the changing america in coming years. we are prepared to the revenue on the tablelands fix the real problem even though most members without exception believe we are in the dilemma we are not because we tax too little but spent too much. i had a chance to talk to the president about his trip to burma, a country i had a spot -- longstanding interest in and i commend him for going. it is an important step. [talking over each other] dagen: that was positive, wasn't it? you heard from all four of them and it seems the talks were very

constructive. that was one word used, a deal is in sight. according to nancy pelosi, watch the market reversed itself. look at the upward movement in the dow industrials. how often does that happen? lawmakers don't will normally get along and say we are working, we feel great going into the weekend and the dow -- nevertheless, they have got to get something done and they have until the end of the year. all four sound positive, republican and democrat alike, so be it. jamie dimon meantime and his financial giant jpmorgan on the verge of settling with the sec over mortgage-backed securities that the firm was overseeing. charlie gasparino has a lot more. charlie: this is from what we understand a semblance in the neighborhood of $250 million. about half of what goldman sachs paid in its own case of where

the sec alleged violated securities laws and peddling talks and securities, jpmorgan, you have to look at a lot of ways. there has to be jpmorgan specific activity that occurred during the financial crisis that most of the charges from what i understand will be relating to what is going on at bear stearns. jpmorgan took over bear stearns in 2008, first financial firm to collapse in the financial crisis. a lot of stuff involved bear stearns and that is why one of the reasons why it is a lot less. jpmorgan took over bear stearns and asked -- [talking over each other] dagen: down their throats -- charlie: the president of the united states, hank paulson, head of the fed, tim geithner, all the major financial company save please do this and you have two days to do it which is what went down you do it.

and what you are liable for, is part of this. jpmorgan stock down a little bit. the price tag around 250 to 270 or more, the announcement from what i understand that come this afternoon. we will have to wait. you need the full commission to sign off on it. the chairwoman mary schapiro, the last major settlement as chairwoman there will be a change at the sec, that will come later today. it is goldman sachs a couple years ago on the abacus deal, jpmorgan on this one. there could be a few more of these and other stuff they're looking at, mortgage investigations. all the major wall street firms, pretty good banks take these mortgages and package them into securities and sell them to people, how they sold them and

what they were disclosing when they were selling them as the housing market, comprised of mortgages, and when they knew it, if you look at the charges and the complaint and goldman sachs and new york attorney general eric steinman filed against jpmorgan, people particularly at bear stearns knew these were crummy mortgages packaging stuff that was toxic and the investor on the other end which pension funds and mutual funds, hedge funds, the implication was they were hoodwinked into buying them. i would say not quite a good wind. people were making bets. dagen: para lot of major investors back then who would not buy this. you used to be able to go down a deal sheet and a look at the mortgage issuer, mortgages that were in a securities and if there was a certain firm a lot of investors wouldn't buy them. charlie: i think it will be kind of interesting, you will see

bear stearns, people saying this was a crappy mortgage and stuff coming -- ways to get these processing centers and mortgages and other firms bought these and you use them to put a mortgage those mortgages you will see people at bear stearns talking about that. e-mails about that. and when they did a lot of this stuff it was 2006-2007. a lot of people knew that the mortgage market was heading towards collapse but there were people on the other side -- this is not a criminal case but a civil case. dagen: great to see you. charlie gasparino. let's go to nicole petallides. the market turn around. nicole: that is true. completely different sentiment, the fear index is higher and turned into the red. the markets which were obviously dwindling once again and have a

lot of down arrows, take a look, the intraday charge pretty impressive and obviously directly correlated to our lawmakers who talk about potential for solving the fiscal cliff woes. there have been fiscal cliff worries on wall street without a doubt. the dow is up 23 points and the up arrows is not something we have seen much lately. we are down as of this week 7 of 9 weeks and we are hearing ceos talking about the fiscal cliff, talking about clients and people selling, telecoms, paying more taxes and even full locker talking about the fiscal cliff. every ceo on wall street in america is very aware of the fiscal cliff. dagen: is this the death of the twinkie? the company filing -- filing emotion in bankruptcy court to liquidate the company after the union strike halted production.

dennis kneale talked to the ceo about the future of the famous hostess brand and this is what the guy had to say. >> to i of the bran can survive and someone will take in? certainly i do. that is not going to help the people in our plants. all our competitors have too much capacity. they will not buy these plants and even if they did they would not offer a better contract. most nonunion anyway. dagen: dennis joins us with what happens to all those recipes. someone's mike is open. we love when people's mikes are open and there in the greenroom and don't know they are talking. hopefully they were not in the lady's room. [talking over each other] dennis: twinkies have a long shelf life. you better stock up on twinkies, devil dogs, ding dongs, wonder bread because you will be without them for a while. they're closing the plants down and starting operations. 5,000 striking makers have killed the company or help kill

it leading to the loss of 18,000 jobs. chances are someone will buy the twinkie brand name out of bankruptcy at some point. they think it will take a year to make this happen. when that happens maybe twinkies will re-emerge but those 18,000 people won't have their jobs. some say the buyout firm's fault, the case where bain capital went inside and loaded up with debt and sucked out billions in cash? no. ripple putting three types -- trying to save this company hoping to make a lot of money on it and lost every dime and took out a few million may be in management fees. this is a union inspired death in some ways. you are not allowed to deliver bread and suites on the same truck. you have to have separate truck fleets. the company paid $100 million in health-care retiree costs last year. of have of it went to people who never worked for hostess. they work for companies that went and pretend a teamsters

contract with the obligation of the surviving company's so unions helped kill it and when the teamsters, one of the toughest unions in the world decided we will go with your package of cuts because they were offering 12 unions 25% ownership, board representation, $100 million in new hostess that that put them in front of the line of ritter equity holders said no. said yes, even crossed picket lines. and heard of but the bakkers said no and the company's debt. dagen: this is a great case. distributed, these are my personal favorites in the northeast, devil dogs, they are -- dennis: workout artists parachuted to save it and saw the management paid themselves raises and scam that raises in the guise of an working for $1 a year to try to fix the company. dagen: you are not going anywhere. you just have to shift seats and come back in a moment. you guys are all over the bailout the federal housing administration is going to need

to come out. dennis: i bet it is many times that. dagen: bring me some good news next time. dennis: i will do my best. check dagen: dennis kneale the division of with cheryl casone on top of the fha bailout on the horizon. they with us. more markets now.

dennis: news all over. i am dennis kneale. cheryl: i am cheryl casone. a very busy hour here at fox business. they came, they met and they said nice things afterwards but the fall of the fiscal cliff, more up-to-the-minute coverage on talks between the president and congressional leaders. dennis: the middle east on tinderboxes as israel and gaza militants exchanged rocket firings, the officials for and to escalate the conflict.

cheryl: we begin right now with breaking news. the federal housing administration posting a deficit, $16.3 billion. there's fear the agency may require a taxpayer bailout. we are all over the story with you right now. we have rodney anderson, supreme executive director, chief market strategist, residential finance corp. jerry howard of h p, ceo and pinto resident fellow sam can, president and chief economist at shannon economics and susan foster, a professor of real-estate and finance. dennis: peter barnes in washington with breaking details of the f h a bailout. peter: we might hit a trifecta with housing bailout, fannie mae and freddie mac got $187 billion from the treasury so far. now the f h a which insures more than one trillion dollars in mortgages could need help from the treasury as well. an annual audit released today found the agency has a $16.3 billion capital shortfall

because of mortgages going bad but the fha is downplaying the possibility it will ask the treasury for taxpayer funding. expects to add $11 million in new capital from new mortgage insurance businesses in the year and announcing new steps, new changes to try to improve its finances and hopes that these will return its capital reserves into the black within a year. that, the agency says, should reduce the likelihood that it will need to tap its credit line with the treasury. officials say they won't make that announcement until the president releases his 2014 budget in february. cheryl: thank you very much. let's go to our all-star panel. is the fha on its way to needing a bailout? >> the reason being fannie mae and freddie mac, adopted the underwriting policy, fannie mae

and freddie mac, created the demise of a kj, we are going down the same have. fannie and freddie underwriting guidelines, they did a lot of the nonprofit organization loans with downpayment assistance and what they created was the new sub prime years ago when some prime went away they created a new sub prime market. that is what lenders felt. those of been corrected. we need to look forward and i believe at h a is moving in the right steps. dennis: what bothers me about this is these are not the loans from the meltdown of 2008 but new thing the government decided were save enough to write $13 billion they need about, it will get much bigger. >> the funny thing about it is it is not as bad because they have money in their financing account which is their reserve account for bad loans and in 2008 the amount of bad loans

hasn't been able to even use this reserve they have set up so they have excess reserves. the problem is in the capital account below the 2 present requirement and that is why they're on the threshold of asking for a bailout. if they were to move this money on reserve back into their capital account, they would actually be fine. the bad news is if they get this bailout and you follow through and see what happened to fannie mae and freddie mac the requirements for credit scores have gone way up. right now at age a is an important cog in the housing market which drives a lot of the economy. if we take this important piece and make it more restrictive is going to be difficult for housing, difficult for the overall economy. cheryl: let me take that question to you because your membership has a crucial stage in this game. could be an incredibly negative affect. what are they saying? >> our members are saying the fha has done its job.

without the f h a being in the market foreclosures would be worse, housing sector would be worse off. i agree with previous speakers that the took the appropriate steps to ensure they don't need a bailout and taking the appropriate steps to ensure their business going forward is a book of business that will perform. fha has done a great job and helped minimize the devastation of the housing downturn and managers of fha deserve a lot of credit. dennis: ed pinto, let's go to the bigger picture. what troubles me is we're doing the hanover, the hair of the dog that bit me. government subsidies of housing that helped contribute to the meltdown and we are doing it again and these housing guys, prop up the housing market. maybe we should let it fall. >> that is a good point. regarding jerry howard's point, national association is on record one thing at h a to loosen its standards and do more

sub prime lending loans to people with poor credit. that is number one. number 2, fha was really the indy pace car of the sub prime mess starting in nearly 90s and fannie and freddie followed them. with the situation is today is worse. fha today has a negative economic value approaching 30 to $35 billion. the assumption they use to get to this $15 billion number is based on interest rates determined in july. when the fed announced the a qualitative easing, when you look at a deeper hole, what we know about fha today is gap net worth is negative $25 billion and they have $25 billion in cash committed to pay for future losses and probably close to

running out of money in the next four five quarters and one out of six loans, delinquent today. congress has got to address this. cheryl: interesting point about the economy. if you look at what housing has done and what was given to the economy and stock market over the last few months has been less positive, homebuilder stocks of gone crazy. that would tell me they do need out bailout. action has to be taken by the president. >> it is clear we need a strong housing market to drive the economy forward. the challenge in this case, the fha can play its role and continue to extend credit where credit is due. there are clear guidelines for how much it needs to reserve to to protect against losses.

not only perfectly foreseeable, and released a report year ago today anticipating exactly this kind of outcome. release surprising lack of oversight in insuring the f h a continues to reserve appropriately. that is what they haven't done and why we are here. dennis: how big do you think this could get in terms of the hit fha could take, why not get government out of housing? lead people not buy houses? >> one message you heard across the board, completely at this point in time and that would cause a collapse of the housing market and the housing market is recovering. astonishing that for 78 years the f h a has never drawn on treasury for assistance. now it will have to and there will be hard choices ahead because they will also to avert

that and they may have heard that, they may not need to draw on treasurys that raise standards. that will harm the housing recovery. we have fannie and freddie and taxpayers behind fannie and freddie and we need to bring private capital back and restructure this market. cheryl: listen to where this discussion is going. potential collapse of the housing market. go back to 2008, to the financial system, sounds to me like many people are saying we need the f h a to keep housing stable. that means i need a bailout. >> you want to structure that bailout, not to perform the function it is doing now. everyone talks about the housing collapse and the way financing occurred in 2006-2007 and we have problems in 2008-2009 and at h a, they were a player in this space but they were not the key focus for the reason this

happened. this was a bubble that encompassed many different areas and aspects. the fha has made changes and better lending requirements, better standards. their loans are performing better. financing reserves are more than adequate and can take that back on their capital. cheryl: moving numbers around. dennis: i realize this will be an anthem because you are a lender but the average u.s. household has $700,000 cash around they don't have a down payment for buying a house. why do we want government programs to encourage these people to buy a house when they should just rent? i just rent. >> there's a fundamental flaw with in the policies and where these flaws happen is we all want qualified borrowers but the credit reporting systems and the flaws in these systems are causing the housing market collapse. [talking over each other] >> doesn't matter about a credit

report. $7,000 for a credit -- she should not be able to get into a mortgage. i know people who have. let me explain this. with these policies there is a second part. we need to start encouraging 15 year fixed-rate mortgages, lower terms because people with less money down should be forced into lower terms to help them build equity pastor, less risk to the bank, more money for the government because of less tax write-offs and we need to encourage 3% down, 15 your fax, 5% down, 20 year fixed. [talking over each other] cheryl: i want to go back to you because rodney is bringing up the issue of credit and that is something you have been discussing over and over, swell lack of credit and lack of wanting banks to finance those homeowners. the fha debacle change that? >> it doesn't change that.

the fact of the matter is this country has taken as a matter of social and economic policy to encourage home ownership. haven't we got carried away in the past? yes but in the recent past. not since the mid 90s have people put 20% down. and saves $7,000 is fine. a percentage of the overall cost of the house and you have to look not only at how much someone puts down but holistically and a buyer's ability to repay. you want to encourage home ownership and the government said it has since its inception ending courage economic growth you cannot take the government out of housing period. dennis: let's go to ed. how do we get housing off the heroine of government subsidies? how fast can it happen? never? >> i think it can happen. i think fha needs to be made a responsible lender. still doing things that are irresponsible. needs to get the fiscal house in order a new have to start rolling back fannie and freddie and let the private sector come

in. fha is doing a lot in terms of raising guaranteed fees etc.. once that starts happening the private sector will start coming back and we will have lending. the idea to shorten these terms is a great one. you shouldn't be making loans to people with 3% down at the 30-year fixed-rate mortgage. you should say one or the ability director year fixed-rate mortgage and 10% down or you get 3% down with a 20 year term. those are your choices. he should get both because it is irresponsible and that is what gets fha into trouble and the rest of the market in trouble. the common denominator is hud. had has been involved throughout the process. they were the ones that help drive fannie and freddie off the cliff. they're the ones that are driving fha off a cliff. hud is the regulator of fha. they cannot regulate fha with a conflict of interest. cheryl: back to the original

question about the potential. the potential of a bailout of the f h a. he is pointing the thing redhead saying it is a responsible party and all this. the thinkpad will come in and work the numbers that we avoid a taxpayer bailout? >> it is possible over some period that the housing market will improve, materially, to a degree that we won't actually realize these losses but the challenge we have here not that we don't need the fha or doesn't plan important role. it is what is playing the role responsibly and over the last number of years we have seen a big increase in their exposure, insurance, fold but they haven't increase their question, capital reserve. a conscious choice has been made when questions were raised a year ago, hud and fha were very dismissive of the possibility that something like this might happen. so yes, they plan 4 roll. we need a sound housing market but we need to make these choices in a way that is responsible and sustainable. dennis: i can't help but think private lenders are better than

government overseers at figuring this out although the last meltdown undercut that. what do you think about the point about hud has a conflict of interest in trying to regulate the fha? >> if in fact fha and fannie and freddie weren't at the table come back and make those loans we wouldn't be here today. we would be talking about great depression 2.0. the fha stepped up and they are now making more than half of the loans to home purchasers but what we going to do going forward? they are under the gun and that is the key question. it would be -- i am in favor of bringing back private capital, but we have $1 billion of securitized at the top, trillion dollars. it has gone away. private sector has gone away. it was the sector that basically took off all lending controls

and went into lax underwriting completely and broadest where we are, the private sector wants to get back in and we want to bring them in but we need standards for the private sector too. dagen: we will see where this goes. thank you very much. all of you, thank you for your time. really appreciate it. they came, they met and said things afterwards but where are we when it comes to the fiscal cliff discussion? up-to-the-minute coverage on talks between the president and congressional leaders. share dennis: a have a little hope. you heard it here on fox business yesterday. tough-talking ceo of hostess followed through and liquidate the company. is it curtains for the twinkie? cheryl: learning a lesson from general david petraeus's affair, ceo of madison thought, which sells itself as the most famous name in infidelity is here to weigh in on wed general david petraeus went wrong. dennis: and first up, as we do every day, take a look at oil up on fear.

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nicole: i am nicole petallides on the floor of the stock exchange. take a look, we have up arrows on wall street. down 7 of the last nine trading weeks. dow jones industrials are up

1/3% and so are the nasdaq composite and the s&p 500, just over 300 stocks of the s&p 500 have a bear as the banking index and the drug index have a perez as well. those are some of the groups that are helping to move stocks along. cheryl: thank you very much. nancy pelosi saying a deal is in sight which is good news because our next guest says if tax rates are allowed to go up the u.s. will go back into recession. the city chief of u.s. equity strategist is here. a couple things your eyeballs are on. using the payroll tax will be ended but you also believe sequestration will not happen. >> let's deal with that. there are a lot of pieces to the fiscal clipping little alternative minimum tax which packed up the rear. the payroll tax doesn't seem to be a support on either side of the aisle with democrats and

republicans don't like the idea if you want to call it borrow when money from the social security trust fund. cheryl: entitlements are off table. [talking over each other] >> both sides have a lot of mistakes in how they are presenting policies. in terms of the aspect of sequestration which is significant particularly going to defense and discretionary spending but the president says this won't happen. most people talking about the firm and into the future and hopefully by then there will be better options. cheryl: that would be a boost for the defense sector as well. a lot of people saw the defense sector under pressure with boeing saying they are going to pull back in the defense side of the business, we are seeing the effects hitting these companies. this could be extended a little. >> crew but we only give a

little bit away from politics and look at the actual numbers they are still going to be modest growth in defense spending, flat at the very worst and it is more about shifting of defense spending so you will see more defense -- seeing a shift away from things that crawl on the ground, to things that flows and fly. we want a more mobile military that can get to places fast, deal with crises and not put troops on the ground. cheryl: you have been watching the s&p. where is your target for the s&p? >> the target has , 1425 for the s and p. the reason i don't want to buy right this minute is two factors. when we look at the interest talk correlation, the top 15 names in the s&p by market gap and how they trade relative to one another is fairly low. we would like to see a higher suggesting more fear in the market and the other thing we would like to see is the u.s.

economic surprise is pretty high right now. you need to roll over and hit bottom. dennis: cheryl: i watch that closely. thank you very much. dennis: this keeps getting worse. hamas and israel exchanging rocket fire. we are live in israel and at the cme where the oil markets of popping. cheryl: let's stay on the global saying and look at world currencies which are reacting to the middle east flare-up and the u.s. dollar. 4g lte is the fastest. so, which supeast 4g lte service would yochoose, based on this chart ? don't rush into it, i'm not looking for the fastest answer. obviously verizon. okay, i have a different chart. going that way, does that make a difference ? look at verizon. it's so much more than the other ones. so what if we just changed the format altogether ?

isn't at the exact same thing ? it's pretty clear. still sticking with verizon. verizon. more 4g lte coverage than all other networks combined.

cheryl: tensions in the middle east in a feverish hedge. hamas which has control of the gaza strip tinge exchanging rocket fire with israel. cleveland is in the middle of the ball on the gaza border. >> the rocket fire continues, 1 million people in southern israel under attack. hundred the missiles have been fired out of the gaza strip at southern israel since this began and is really air force is pounding away behind us. we went for a drive around the gaza strip and found israel matching dozens of armored personnel carriers, and also armored bulldozers getting ready for a ground invasion. many save could come in the next

24 or 48 hours, the first time israel has headed into gaza on the ground in four years. we are now in day 3 of israeli air strikes to, quote, soften up the gaza strip to try and eliminate as much of hamas's weapons storage facilities as they can kill a number of stop militants. this all began wednesday when a very surgical strike with great intelligence israel killed the chief of hamas military's wing. on the other hand you have hamas responding with their rocket fire into israel. that started this. for many months it was going on, three rockets today and now hundreds of rockets many of which have been intercepted by the iron dome. not all the. three dead so far in israel, dozens getting gaza. some of those being palestinians. on the other side a number of those being militant along with a couple of civilians inside the

gaza strip who have died. live tonight theres left, deserted the place and now strip, israeli citizens have we wait and see. do we go to a cease-fire which looks unlikely or more likely towards the ground invasion which would be right where this barbed wire fence is with tanks heading into gaza? cheryl: careful out there, thank you very much for that report. dennis: let's look at how oil is reacting. phil flynn of price futures group and fox business contributors standing by. what is going on with oil? >> oil traders have been all over the place in this story. a lot of money flowing to the brent crude, most of the focus was on brent crude for most of the day. there have been other developments throughout the day. i know you will ask me about it that caused the spread to reverse and go negative the other way. at one point brent crude was down despite the increasing tension in the middle east.

that is reversing back again and then a mild day when a comes to oil. dennis: i wonder about the coast guard investigating a fire at an oil drilling platform in the there was a concern that this rate would cut out supplies in the gulf of mexico. memories of another drilling moratorium possibility but when more news came in and it was a shallow water rig it would be easily cap, the market's going back and the focus back on the fiscal cliff and geopolitical risk in the weekend. dennis: perfect, thank you so much. cheryl: 45 days until massive spending cuts and tax increases stake in. the president met with congressional leaders about the fiscal cliff. markets seem to like leadership's comment. dennis: will anyone save the twinkie? after the tough-talking ceo of hostess move to liquidate the baker. cheryl: we are going to take a look at today's and the winners and losers. you have pulte and lennar, two

home builders. stick with us on the s&p on the heels of the f h a report. we will be right back.

>> i am nicole petallides live on the floor of the new york stock exchange. looking at a market that has arrows. the dow jones is up .5%. looking to see, 12,815 is where we closed last friday. we are down seven of nine weeks. we will talk about homebuilders. you heard cheryl and dennis talking about fha numbers. here is a look, though, this is

a reason why i think these stocks may be higher. there was ubs presentation today where there was chatter or slight growth that we have seen and housing really could be sustainable. we are seeing names like lennar and pulte leading. each gaining more than 12%. cheryl: after a lot of talk about the fiscal cliff, today is the first day for some action. president obama met with congressional leaders. rich: good afternoon. encouraging talks and meetings at the white house. john boehner said he thought braveheart on the table included revenue and all four congressional leaders say they are optimistic. >> we put revenue on the table.

i believe we can do this and revert the fiscal cliff that is right in front of us today. >> we have a cornerstone on being able to work something out. we both will have to give up some of the things that we know are a problem. rich: cheryl, to note, still a long way to go. democrats did not mention entitlement afterwards. our conference in the senate does not believe that we have a taxing problem, we have a spending problem. not much change in rhetoric here, but at least a sense of optimism. they will meet again after thanksgiving break. cheryl: and entitlement problem. richardson lived at the white house. dennis: down almost 10% since election day.

he still believes a big bowl run on the way. explain yourself, sir. >> thank you for having me on. the fiscal cliff is a non-event. let me just put it real simple: if it ain't broke, don't fix it. raising the debt ceiling and keeping tax rates low is stimulatory to the system. we just looked at europe and the austerity. it is not working. we will raise the debt ceiling, host of the tax increases will not happen. we will keep things the way they are. we may increase medicare for folks that make over $250,000. if it ain't broke, don't fix it. i think we are in a bull market. dennis: you would, on our show in april and said i bet you within a year corporate bonds are ready to get away with paying an even lower interest

rate than government bonds. that is now happening. that means a bonus for the bottom line. >> big bonus for the bottom line. corporations are refinancing five and ten years down the road. they have permanent financing in place. they are extremely cheap rates. that will add almost 310 billion on a go forward basis to earnings. if we refinance almost 10 million global in the last few years, look at that to continue. by the way, as we increase the debt ceiling, look for treasuries to sell off. that means treasury rates will go up, but corporate rates will stay low. corporations are set to go here. dennis: we showed a chart with a very interesting plateau. >> i think that we are looking at and 82 to 2000 run here.

that is the piece of that s&p that could go even beyond that. you want to buy the dips here. i will say this, from an interest rate standpoint, i do think interest rates go up. you want to buy short-term bond funds. get exposure to the large cap stuff. we are in a bull market right now, you just do not know it. dennis: thank you for that little bit of hope today. have a good weekend. >> thank you, dennis. dennis: these could be the last twinkies from hostess that you could see. why they are liquidating. cheryl: the ceo of ashley madison.com was what he said general petraeus did wrong. take a look at the ten year

treasury. unchanged. the local

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i had three kids. and she became the full time mother of three. it was soccer, and ballet, and cheerleading, and baseball. those years were crazy. so, as we go into this next phase, you know, a big part of it for us is that there isn't anything on the schedule. dennis: it is a good thing that these twinkies and other treats have a long shelf life. you better start stocking up. they would shut down the entire company and striking baker's did

not return to work at 5:00 o'clock. they did not and he showed us he was stopped loving. they are liquidating and selling off all assets. >> it will not help the people in our plans. the industry is overcapacity. all of our competitors have too much already. they will not offer a better contract. most of them are non-union anyway. dennis: 5000 strikers have hope to 18,000 jobs. cheryl: such a shame. a new international agency predicts renewable energy -- does that mean the president will send more subsidies toward green energy quest back he says call is not over.

what you make of this report, it seems like it is perfect for the president. if you look back at recent history, the future growth. and in renewables. if you look just at last year alone, global coal consumption increased by 3.9 million barrels of oil equivalent. that is equal to all current contribution from all global solar, all global wind and all global biomass. cheryl: i agree with you in a few the numbers. we are showing the numbers to our viewers. at the same time, you know that this will be perfect for them to push more money into green energy and add more regulation to the industry.

>> it is not just the regulations that are serious. it is also low-cost natural gas. remember about four years ago gas prices were about three dollars higher than they are today. this low that gas prices not only hurting the coal sector, it is also really hard for the renewables sector to justify, especially the wind dies, to justify their product. cheryl: you mentioned natural gas. clean burning coal. is the industry really going in that direction? >> sure. let's look at the newest coal plant that just came online in the last few weeks. it started generating at full capacity. it is in southern illinois. this is a state of the art project. it generates about 1600 megawatts. extremely clean.

remember, it is very expensive. about $4 billion worth of a product. i think all will have a very difficult time in the united states. that cold that is produced here in the united states is being shipped overseas. cheryl: that is a great point. robert, thank you. dennis: we have stocks now every 15 minutes. nicole: i am watching seers. sears is unlike some of the other names that have made a great comeback. that gap has been doing very well. what locker has been doing well. take a look at the stock. down 18.5%. if you are a shareholder with them today, you are disappointed. raising their target price to $20. what are we talking about?

47220. they came out with same-store sales that remain weak. they are seeing weakness in u.s. products. sears is weighing heavily here on a retail index. talks about the fiscal cliff moved us into positive territory. cheryl: thank you very much. we will see you at the top of the hour. dennis: what did he know and when did he know it? david petraeus testifies about the benghazi trial. cheryl: the most famous name in infidelity. we will have his take on the precarious situation. take a look at today's winners over at the nasdaq. the local [ male announcer ] how do you trade?

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dennis: david pretorius -- petraeus in the hot seat today. joining us with details now. catherine. >> they tell fox news that there were significant changes to the cia talking points about the benghazi attacks. specifically the language, using the term al qaeda was removed and replaced. it had the effect of analyzing or downplaying the role of al

qaeda and terrorist groups and that attack. the u.s. intelligence community cannot say for sure who was responsible for these edits, this minimization of al qaeda issue. the talking points were circulated to other agencies. earlier today, lawmakers said that ambassador susan rice who said on the sunday talk show that benghazi was in response to an anti-islam video and a demonstration that spun out of control was simply using the best available intelligence at the time. >> what is very clear is that ambassador rice used the talking points that the intelligence committee had all signed off on. that is very, very clear. she used the unclassified talking points that were signed off on by the entire intelligence committee.

criticisms of her are completely unwarranted. >> critics say that ten days after the attack, director petraeus make clear to lawmakers today that there was absolutely no dow that benghazi was a terrorist attack could after the 21st of september, president obama went on tv and was reluctant to use the word terrorism when he was asked specifically whether benghazi qualified as an attack by al qaeda. cheryl: i have a quick question before we let you go. one of the things with how this handled was appearance. using the underground tunnels. hiding him from the crush of the press. is there any backlash over that

>> there have not been any backlash. you raise a point about this being completely uncharacteristic. he is much more available, if you will, to the media. this was a stark change. i have not seen any backlash. i know that reporters, including myself, would have liked to have heard from him today instead of having to rely on secondhand accounts. dennis: catherine, given that president obama is defending our un ambassador in saying if you have a problem, after me. then he said in the debate that the day after the attacks that he admitted in the rose garden that this was a terrorist attack. how can he have it both ways? >> the essential point, there were so many complex in the timeline. whether it is the stated timeline of the white house, the state department, the defense

department and the cia. there are a lot of complex. if you really feel it back to a couple of issues, first and foremost, they believed almost immediately it was the act of extremists and within ten days, there was no lingering dow that benghazi was terrorism. yet, the president of the united will, refusing to use the terrorism. we now know the talking points were changed once they left the intelligence community. we certainly are putting the focus now to the white house and whether they were changed for political reasons as opposed to intelligence reasons. dennis: thank you very much. the government agency that insures your mortgage running dangerously low on cash.

cheryl: we will be talking more about that during the last hour of markets now. melissa francis and lori rothman are coming up next. ♪

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which isn't rocket science. it's just common sense, from td ameritrade. connell: tgi friday. good afternoon. melissa: fiscal cliff talk today with the president. are we any closer to a teel. lori: the federal housing administration