and the fed is trying to do more. but there's so many other headwinds besides just what the fed can do. i mean the chairman talked about this in the press conference today. a lot of things that are outside of its ability to change. things like on uncertainty in europe, the fiscal cliff and uncertainty. i think it's very important that the fed make it clear that it is there to take out the risk of de flation or downside risks. but it's a little bit unclear how much help this can be going forward dchblt some help but i don't know how much. >> susie: well, that is the key question, isn't it? will this work? what do you think? >> and so i think as the chairman described in his jackson hole speech looking at the academic research, it does seem like these kinds of policy does help to reduce interest rates. you can see just in today's actions, mortgagebacked security rates started to go down which would lead to lower mortgage rates which will lead to greater affordability of housing, new people coming into the market will be

limit the fed's tools. yes well first week the fed has a mandate but it's a very very modest maximum sustainable employment mean we don't know what it means in this economy it has been so injured and impaired by the cereal bubbles and the massive debt build up we've had for thirty years so the idea that they have to target four percent or six percent or seven percent unemployment is wrong it's not even in the mandate likewise where do they get the idea that two percent inflation is in the mandate the statute doesn't say that in as a matter of fact every thirty years you would cut the purchasing power of the dollar and a half at two percent so they need to get off this mandate jag they need to forget about quantifying these things and then they need to begin to step back let the capital markets breathe and give us a chance to have some free market prices by that i mean free market interest rates i mean let the yield curve perform based on what thousands and and millions of investors think not what twelve peo

recap the fed.e like sunday morning. $40 billion in mortgage guying over the year, $480 billion for the year. let's bring in our fed panel. we begin with steve liesman. leave it here around the horn. quickly, steve usual your final reaction. does this matter? >> yeah, it matter as lot. real quickly some of the details. $85 billion of net long-term money, $40 billion of which is new. i just want to be clear about that with the continuation of twist. secondly, they're giving us an idea how long this will go on for. they're saying it's going go on for a couple of months. couple months on auto pilot. then we come back and revisit it unless the labor market improves substantially. they took some large from a financial paper in jackson hole and say they're going to keep doing this even after the economic recovery strengthens. so this is a very strong statement of continues action by the federal reserve for a while. >> i don't want auto pilot. i want someone flying that plane. i'm a little concerned. do yo

divided fed.nd we see it, we who cover the fed see it in the speeches in the run-up to today's decision. some people said that it was dubious whether qe3 would work. could you comment on former governor mie meyers' suggestion sometimes don't you wish some of the officials who don't support qe3 would keep their fears to themselves? thank you. >> as you know, we are living in a very plex time and dealing with a complex economic situation and a variety of novel and different issues, including new policies that haven't been used in the same way in the past. and so naturally we have a range of views, a range of opinions. i think on the whole that's probably a good thing. it's good to hear different points of view. it is good to make sure that the points of view that are outside the fed are reflected in the discussion around the table, inside the fed. so we have a very collaborative and collegial discussion process that spans a range of views. we were, however, able to come to a pretty good consensus. a

here's one question for the fed. are they going to destroy the dollar and revive consumer commodity inflation and here's a second question for the fed, a tough one. is this a fed gone rogue with massive new pump priming that will manipulate the november election? in other words, folks, politics. first-up, stocks soar on over 200 point gain today. cnbc's own brian shactman joins us now with the rundown. good evening. >> good evening, larry. the rally chock-full of superlatives. you can argue the merits behind it but hard to argue with it. dow higher all three components, had the highest close since december of 2007. we all know what happened in the interim. i will talk about volume at the nysc, the highest since june. look at bernanke. the impact of the fomc. all you have to see, this is when the announcement came out and when bernanke started talking and spikes levels off at the close but 200 plus points on the dow. financials dominated the dow. bank of america usually trades thr 330 million shares. home depot hit a

today the fed -- a cultural segue. the fed gave the stock market what it wanted.pen-ended free money. >> absolutely. with us today to talk more about it, steven gallagher. we are rejoined by rick santelli. you say this move by the fed makes another downgrade of the u.s. more likely. >> yes, it does, for the simple reason that we're not solving the underlying problems. the debt to gdp for the u.s. has increased from about 73% as of four years ago to roughly 104% today. you have to back off and wonder where the injection of additional money in this system really solves the underlying problem, whether it really enhances credit quality. history has shown that injecting money doesn't do it. >> rick, you have got a question. >> well, pretty much my question was, you know, on tuesday they reaffirmed the aa rating in a negative outlook. it's fairly similar to maria's question. we have qe. should we be expecting an evaluation of possibly an actual downgrade soon? >> we are going to be looking at it over the next couple days, possibly even tomorrow and see whether it tips i

fed's independence on the table. we're going to have one of the most powerful republicans on the hill when it comes to monetary policy and fiscal stuff. >>> first though to the floor of the nyse. sue herera, take it away. >> this is where it's all happening, ty. we have a triple-digit advance in the dow jones industrial arch. we are up 112 points on the dow. that is the high of the trading session. the dow now hitting levels not seen since december of '07. the s&p is up almost a full percent. we are at 1,450. significant from a technical sta standpoint because that surpasses some of the optimistic technical forecasts by some of the big names on wall street. we need to hold this level for the bulls. nasdaq composite is up almost a full percent, almost 30 points to the up side. we're seeing levels in the nasdaq we haven't seen since 2000. we had a big spike in the gold market after the announcement, then it retraced a little bit, and it is off to the races again. up $26, that's 1.5% on gold. in terms of brent crude, we

, if the fed acts or not? what do you think? >> we're not short-term traders. we think it's been priced in the market. we're more interested in companies like apple and facebook and so forth. >> mark lehman, what do you think? >> i agree. i think the market has priced in the easing. i also think the market is headed higher. i think you're seeing that over the course of the last few weeks and months. that's the best place to put your capital right now and i don't expect that to change through tend of the year. >> steve liesman, what do you think they're thinking at this point? >> you think, i would pay a couple of bucks for that, to know. i'm really interested in our results from our cnbc survey. we found 90% expecting qe. 60% thinking it won't do anything to lower the unemployment rate. yet the market is up on the news. so we have this increase of asset prices, simply equity asset prices. but then really no sense that it will help out in the real economy. so that's a curious move by both the fed and by investo

cheryl: lots on the fed decision as we wait for a fed chief ben bernanke's news conference just overw. tdd#: 1-800-345-2550 wh i'm trading, i'm totally focused. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab... tdd#: 1-800-345-2550 gives me tools that help me find unities more easily. tdd#: 1-800-345-2550 i can even access it from the cloud and trade on any computer. tdd#: 1-800-345-2550 and with schwab mobile, tdd#: 1-800-345-2550 i can focus on trading anyplace, anytime... tdd#: 1-800-345-2550 until i choose to focus on something else. tdd#: 1-800-345-2550 trade at charles schwab for $8.95 a trade. tdd#: 1-800-345-2550 open an account and trade up to tdd#: 1-800-345-2550 6 months commission-free online equity trading tdd#: 1-800-345-2550 with a $50,000 deposit. tdd#: 1-800-345-2550 call 1-866-751-3261. and what they said is amazing. review 5-hour energy over 73 percent who reviewed 5-hour energy said they would recommend a low calorie energy supplement to their healthy patients who use energy supplements. seventy-three percen

is this all about the fed? >> it's all about the fed.all about monetary policy around the world. really, there's no other fundamentals behind it. we're seeing a good break out. it's a real break out. gold's rallying. it's on good volume. but i just kind of wonder -- i question if it's got legs. i really do. >> i just wonder, where does china factor into the entire commodity story? as hedge funds are growing more bullish, there are many reasons to become more negative on what's happening in terms of china imports on commodities, right? >> absolutely. i mean, you're starting to see it already. i mean, everyone talks about the precious metals rallying. if you look at the industrial metals they're on their lows, multi-year lows. that's because china's in a slowdown and they're not really picking up at this moment. >> of all the commodities you follow which do you think has the most legs? which do you have the most conviction in? >> i like the grains. i like soybeans. i like corn. those are real fundamental rallies. you've got great it sha--

fed. nicole: multi-year highs. looking at the dow jones industrials as soon as it was announced you get everything traders hoped for on a silver platter for bond buying to extending language to highly accommodative. here's a look at the dow up nearly 120 points. new highs as we speak for the dow. the s&p and the nasdaq each higher by one percentage point. the fear in tax, dropped dramatically. no fear here. everybody is buying everything from banks to retailers to drugs and that is what we are seeing. every name on the dow jones industrial average has been in the green other than boeing. find across-the-board. no fear at the moment and media reaction to the fed statement so everyone cheering for the short-term. melissa: thanks so much. the fed new stimulus program has commodity pits rocking as well as go to fox business contributor phil flynn and price futures group. gold and silver on these decisions. phil: absolutely exploding. before the announcement they were down $0.50. it is almost a

official mandates whatever you may think of the fed's true mission the debate is whether u.s. unemployment woes are cyclical so the fed could in theory do something to affect the situation or if there are structural meaning the fed is really just a bystander folks now this was reportedly a debate at the jackson hole central banking conference over the weekend and i couldn't help but have a bit of deja vu when ben bernanke he was quoted as saying this i see little evidence of substantial structural change in recent years following every previous u.s. recession since world war two the unemployment rate has returned close to its pre-recession level now this took me back to what dr bernanke you was saying before the housing crisis when asked about the idea that housing prices could decline nationwide or that the mortgage market was in a bubble take a listen to what is the worst case scenario if in fact we were to city prices come down substantially across the country but i guess i don't buy your premise it's a pretty unlikely possibility we've never had a decline in house prices w

this is directly related to the fed. >> they're downgrading because of the fed. so who's being helped financially from the federal reserve's latest action to support the economy. robert frank breaks it down for us right now. robert. >> thanks, maria. the bank of england recently put out a report that qe in england has added nearly $1 trillion to their stock market, but 40% of those gains went to the wealthiest 5% in britain. it makes sense that qe in england mainly benefitted the british wealthy. the question is whether we'll have the same result here in the u.s. with bernanke's move yesterday, will it be a gift for the rich or a bailout for the broader economy? the top 5% of americans own 60% of all financial assets. they own more than 80% of the stocks. so far the fed's actions have helped stock markets but not homes or jobs. that's why the wealthy recovered much of their wealth while the rest of america is still struggling. bernanke says while focusing on mortgages, he's helping housing. but here many americans aren't able to get loans. i doubt many americans

and what he recommends or eventually supports is for the fed to target nominal g.d.p. what do you think of this and what effect would it have you and i were talking before and you mention the slingshot sure. my back up a little bit before that because when the fed decides to arbitrarily target a metric and this was the original operate and twist in the fifty's or sixty's there's surrendering control of their balance sheet they're saying we're going to put a yield ceiling on long term rates in other words we're going to buy as much paper is necessary to keep those yield ceilings in place but that means that they don't have control over their balance sheet anymore and it's the same thing with nominal g.d.p. targeting although it's really not pointed out in the speech or the text of the that that's what's going on but what i think is interesting is if you read some of the analyses of that it sounded like he was coming out against q.e. but what he could be coming out with is kind of an unlimited q.e. entail it reaches a certain targets right right because q.e. is all about

the fed gave eighty eight billion dollars of profits back to congress so the estimates are the fed is directly probably subsidizing our budget deficit by between one hundred fifty to two hundred fifty billion a year so it's not insignificant in fact it's very substantial becoming one of the biggest line items hot one hundred nice of them you know the deficit needs all the help it can get but i can imagine that this has some impact on distorting markets to put it mildly and possibly some impact on confidence in the u.s. dollar as the reserve currency as the world still currently looks at it to be so what does it have that the fed is it has this large of a controlling stake in the market was the purchaser of sixty one percent of the treasuries that the treasury issued last year according to one figure i saw yes i think it's starting to make people question you know what is the value of treasuries how should we be looking at them and i think you know a lot of people look at historical data and show what's the dividend yield on the s. and p. five hundred versus treasuries and by that meas

it does not make for a good back drop if the fed does qe 3 next months. we have a situation where they are taking money and risk off the table. >> you are willing to take some. beginning with energy transfer partners. etp one of of your new picks. a lot of folks move in with a yelled. -- yield. but the share performance has been negative since the springtime. >> they have made a majoracquis. the stock has not risen with the increase in energy. it offers a good situation for a long term investor. next year they should start incross -- increasing for distribution and you have an 8 and a half percent yield and it should increase next year. >> that is hard to beat. >> you are also looking to theu. exc. one of the largest power companies out there. a difficult -- difficult tend play. we sold some in the mid 40s and we are buying it back in the mid 30s here. five and three quarters difficult and hitting new lows. and the stocks are down and for long term investors it's a good situation that i think can provide good total rush. >> some of these power companiee c

the fed can just do the thing.t as spiderman would say, with great power comes great responsibility. and so the fed is very cautious in the use of its powers. by law, they need to try to keep unemployment and inflation low, but over the last two years or so inflation has been very low and unemployment has been very, very high. and they've not been doing all that much about it. earlier today, however, bernanke said, finally, that the fed has decided to do something big about unemployment. something big enough that it might actually help. he said they were going to buy hundreds of billions of dollars of government and housing bonds and keep buying them for as long as it takes to get the recovery back on solid footing and then keep buying them as long as it takes after that to be sure the recovery is on solid footing. the way their plan works if it works is that by buying all of these bonds, they're going to drive down long-term interest rates which will give businesses and investors more reason to spend the money now

of course, it is fed day. we'll talk with the bank ceo who once served on the bank's 12-member federal advisory counsel. what does he expect to hear from bernanke? "squawk on the street's" back after a break. something very inn common. they have teachers... ...with a deeper knowledge of their subjects. as a result, their students achieve at a higher level. let's develop more stars in education. let's invest in our teachers... ...so they can inspire our students. let's solve this. bob... oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners. in communities ac

i don't think this is a consideration for the fed. i think the fed wants to do what's right for the u.s. economy. >> steve, what affect does the stock market have on the fed's decision-making process right now? we're at 4 1/2-year highs, the dow, s&p, nasdaq has performed, as well. does that take pressure off for the fed to act? >> i think the other way around. i think our survey and i know the fed does its own survey, as well, very similar, some overlap in terms responding. that's responsible for where the market is right now it's not earnings outlooks which have basically been coming down. bernanke sees the market as a major conduit for spreading wealth, and perhaps consumer spending, as well. so he wants to keep asset prices and equity asset prices elevated. so to the extent that he needs to fulfill the market expectation. and if he's right, it's only 50/50 he has more latitude. if the survey is right and it's 90%, you have a lot less latitude. >> joachim, is it possible that others around the world can take, again, some of the onu

this has been telegraphed for a while by the fed. i think that, you know, our barbell strategy to equities works very well. we like a one side of the barbell. the high growth areas. nasdaq, 100. cyclicals like technology and home builders. on the other side, i agree with keith. the high yields work well. high-yield bonds, preferred. all the areas i just talked about benefit from this announcement and will continue to do well in this environment. >> in terms of next hurdles for this market, is it earnings? is it the election? ben, where are you in terms of next moves or catalysts for this market? >> the elections are a couple of months off. i think the third quarter earnings season is starting right around now. texas instruments kamg out with a little bit of a negative preannouncement. i think you'll have that as a head wind. >> if you look at s&p capital iq, they're saying earnings will be negative in the third quarter. >> i don't know if it's going to be that bad, but it's going to be single digit positive with maybe a little disapp

now the fed. but is this more akin to a movement when central bank was propping up global command or more akin to 2010 when it reignited talk about currency wars? >> it certainly could reignite it. if you look at most of the central bank, all the commodity central bank, they've been complaining for quite some time, but they're the most relick tant of all to do anything about it. central banks in scandinavia getting concerned. you obviously can't have everybody needing to devalue their currency to try to get a gain in the export market. and if you look it at the various regions, if you look at europe as opposed to u.s., you would say there's a much greater need for europe to devalue the euro to try to generate some export growth there because they're already in recession. same would apply for the uk, they're much more reliant on external growth than they are domestically. so there isn't that strong a case for the u.s. to need to devalue the dollar. >> what the fed seems to be doing is coming out wi

and till further notice because unlike what the fed has done in the past where it said ok we're going to buy this amount of treasuries or mortgage backed securities it. we're going to start on this date and we're going to end on this date what's different this time is the fed saying we're going to buy forty billion dollars in mortgage backed securities a month and we're going to do this and till we decide not to and ben bernanke in his statements today and in the fed's press release said that this is going to continue until the labor market gets to where they want it and improve significantly but there's no set timeline so that's what really makes it different this time also the fed is targeting mortgage backed securities so it's obviously trying to target the mortgage market in the housing market thereby by directing it specifically to mortgage backed securities as opposed to treasuries in government bonds which have monetize the debt so those are a couple differences in terms of what exactly the fed's program is also the fed some changes that said that it will keep a very accommodat

good news and bad news from what the feds said. the good news is the fed's going to be there. the bad news is the fed needs to be there. finally, we look at this, it could fail. it just might not work. you might get high unemployment. you might get high inflation. then which mandate does ben bernanke choose? >> yeah, that's something rick santelli has been talking about today. what are you expecting next week, rick? >> i think from a data side, i always enjoy when we get a couple housing numbers, existing home sales, starts. that's going to be good. i also want to see how the market digests what happened yesterday with the fed and what is ongoing with regard to europe. i haven't been or wouldn't think that we'd see a big correction in stocks. although, i'll tell you by the behavior today, i'd be a little more cautious. feds and central banks around the world have always tried to leave their imprint on interest rates. i find it fascinating that the market, despite all the ownership that the fed has in terms of inventory of treasuries, for example, to see rates move up as much a

. >> he has some surprising comments on the global economy and, of course, the fed meeting. >> the fed meeting and how long he plans to stay in office, too. i found that very interesting. we'll get to that coming up. i'm bill griffeth. looking forward to that great get. we'll give you a preview of what is a very revealing discussion with mario monti. for the markets, a wait and see day, ahead of everything that's still to come. wednesday's fed meeting, announcement on thursday, this week's european finance ministers, the constitutional court ruling in germany, also on wednesday. so, right now stocks sitting near their four-year highs. let's show you how we stand right now. the dow down 15 points. we were lower, we were higher. now trading at 13,291. the nasdaq at this hour is down 25 points. that's the hardest hit right now, down almost a percent at 3110. the s&p is down four points at 1433. let's get reaction to today's markets. investors may be in the holding pattern but debora calls this a teflon market. she says no matter what negative news we throw at it, it doesn't stick. we'll t

when the fed stops, the dollar gets better. but when they start pumping new dollars in, all right, the currencyfalls. so my point is the most money pumping we've seen. this is not your father's qe. this is a brand new ball game. if the dollar continues to fall and continues to fall, that is the achilles' heel of the whole fed operation. it will bring on inflation, it will bring on a run into other currencies and other countries and other markets and will damage our economy. so my point is the dollar is the achilles' heel of qe-3. and i want you to pay close attention to it. all right. let's just zip through some other stuff. we've got lousy numbers today on industrial production. the whole manufacturing rally has absolutely petered out in recent months. let's hit this one. core retail sales. take out your gasoline bump up and take out some car bump up, and you're seeing really very modest gains. you know what? we'll be lucky to have 2% economic growth in q-3. we'll be lucky to have 2% economic growth in q-3. so the numbers aren

all right everyone is digesting the fed's q.e. infinity and now it's meant still that came out yesterday and of course the other thing we've heard a lot about ben bernanke you talked about it quite to quite an extent yesterday in the press conference about the fiscal cliff and what fiscal policy makers are doing the heavy lifting the fed is doing but can't do alone so so what could fiscal authorities be doing the central planners sitting not at the federal reserve but sitting over in congress or the white house well or what should they not be doing is really the question to joining me to talk about it is edward harrison founder of credit write downs and nice to have you back on the show and we're going to be a long time it has been so let's start with the fed because i do want to touch on q.e. because we haven't had a chance to talk about it now you put this into a broader perspective in your thoughts about q.e. in terms of what central banks all over the world are doing to make up for what you say or what fiscal agents are doing

let's talk about the fed which was the money story. what would you like the fed to do when they meet this month? >> i think they should continue what they have been doing. i heard some of the prior conversation, well, what do we see from 69 to '82. we have more recent set of examples. the federal reserve has been very energyic putting money into the economy in a variety of ways including to help stimulate the european banks to do the same and the results have been all good. all these people have been predicting inflation could not have been more wrong. for several years now the fed has been taking this active role and there has been no increase in inflation. taxpayers made money off it thanks to legislation put through. there are no secret deals. everybody knows what is happening. i think it has helped the situation from being worse. we had this terrible recession that we began the, 2009 with. we have had the terrible problem in europe which is holding us down. the fed played a very important role here and i think time has come and i w

the primary driver is the fed. the central bank pledge to go spend $40 billion a month to buy mortgage bonds for as long as it deems necessary, it plans to keep short term interest rates at record lows. that's right, you heard correct, at least through mid 2015. and that is six months longer than previously planned. ben bernanke says he is ready to try other measures if hiring doesn't pick up, so you're talking about a full court press here. here he is speaking to the financial press yesterday. >> the employment situation, however, remains a grave concern. while the economy appears to be on a path of moderate recovery, it isn't growing fast enough to make significant progress reducing unemployment rate. you fewer than half of the 8 million jobs lost in the recession have been restored. and at 8.1%, the unemployment rate is nearly unchanged since the beginning of the year and is well above normal levels. >> we will talk about the fed this morning, ask what's next if anything, ask if any of these measures are actuall

the fed was trying to fix things in the economy.hey're not an effective tool to do that, but they're trying to increase unemployment. congress isn't really helping on that front. do you believe congress could have a bigger role in supporting and growing employment in this country? >> oh, absolutely. congress is a culprit, and they're allied with the fed, because the congress is always too involved. too much regulations, too much taxes, too much spending. but the spending wouldn't occur if you didn't have the fed. because the members of congress are politicians, and they spend money, and they won't cut, because they're afraid they're going to lose the next election. but if you have the fed standing ready, they are the moral hazard, because they're always ready to buy the debt. so there's no incentive under these circumstances for a politician to spend less. so if you want to be the -- run the american empire around the world, no reason to back off for economic reasons. if you want the welfare state forever, no reason to back off, unt

why didn't the fed do that? if they lowered that rate they get less money for parking money and it might make the more anxious to get money out in the economy. >> don't have a good answer. it should never have been instituted during the recession. it was in play for 20 years before it happened and a great reluctance to take it off. it is a mistake. if we look at the bank reserves relative to deposits they had never been above 4% since 1959 and it has gone to two thirds of 1% in december of 2007 but now bank reserves relative to deposits hovering around 18%. banks are not loaning of the money out as much and we need to do everything we can to encourage them to do that. i personally think one thing we could do is relax real policy and regulations that strangling banks not just from the fed but also from all the other regulatory entities. dodd-frank and so on. it is a difficult environment in which to make a loan. you make a $10 million loan. dave: bar winfrey house or business. lower rate so far have not done much