but i do know we're getting closer and closer all right let me ask you about a comment made by richard fisher he's the president of the dallas fed he called bond traders quote feral dogs likening their reaction recently. a selling bonds to the news of the fed tapering that is to say the fed stopping their quantitative easing he made a comparison to george soros as attack on the pound. so here you have a group of market players that used to be called bond vigilantes and applauded for being bond vigilantes now the richard fisher the president the dallas fed is calling them feral hawgs is that a bit unfair jim i know richard and don't know it but i do know him and he's a smart guy i do know that whenever there's some kind of. comment better or anybody else people react the moment you know that as well as i thought it was nice to be and. if he would get a report about hot go and sell or buy pot based on the report this is the way market work markets work richard knows is this you're going to ankie who's never going to write about anything came out and said x. y. and z. the markets react what is e

charles ploser, richard fisher, esther george and jeffrey locker, george dissending on every fed statement that's come out, and these guys generally way more hawkish, but i want to show you a place where it looks like the market may be ignoring the views of the hawks and that's on their interest rate forecast. take a look at the average of the 51 respondents when we ask where will the fed funds rate be december ber, june, june and december 15, not much gain until next year, and then maybe you get a hike by the end of next year, but more importantly the hikes come december 2015. now, i put this up against the fed's forecast. remember, the fed will give us in its statement of economic projections their own forecasts so there really should be no difference here except there is a big difference. look at december 14, 0.43 for the fed, but 0.28. why is the market more dovish? it actually increases 1.34 for 15 and 0.97, under 1% for the market. why would there be this difference? and now i want to show you the fed statements of where the funds rate should be. take a look at this -- at this foreca

above it described the stock market, in their hair trigger from the fed, dallas fed president richard fisheruote, on the drug, easy money, you have described your threshold as providing guidance to the market but you also qualified this threshold to provide guidance as to where the policy will change once those thresholds have been breached. recent survey of 55 in congress by the wall street journal give the fed the-for the guidance. can you comment on your guidance? and from president fisher's comments? >> certainly, mr. chairman. it is a difficult environment economically, financially and dealing with an president and monetary policy developments. i continue to believe we should do everything we can to of fries markets about the plans and how we expect to move forward with monetary policy. not speaking about these issues would have risked dislocation, moving of market expectations away from expectations of the committee. would increase buildup of leverage for risky positions in the market, the unwinding of that is part of the reason with the volatility we have seen and we communicate as be

. >> what did richard fisher say?other fed people. >> one way to look at this is that for some period of time, bernanke was telling us to ignore the calendar, ignore the calendar, it's all about the data. he re-introduced the calin daer into the conversation. >> he did. he did. >> that blew everything. >> by the way, you were not here for the interview, he came back and said, i don't understand why we talk about that calendar stuff, williams backed off his call for summer rates. he said his forecast is not coming out the way he had planned. >> i think bernanke's bet was he would talk about growth more so on tapering. the market being the market said i have complete certainty on tapering. i have no belief in growth. therefore in the intermediary term, there was a pullback. >> what do you do now with stocks and bonds? do you buy here? do you wait? what do you think? >> first of all, i agree, we had a 10% correction in the spring. we had an 8% correction in the fall. we had a 16% return on the s&p for the year. this was

. >> qe 1 and qe 2, we had richard fisher come in here. he didn't directly say oil prices are up.odity prices were up. now we had 85 billion a month. why are you surprised? >> i don't think that's, i don't thing that's it. but the point is, the most important commodity is oil. if oil prices are up this much, that will feed through to overall headliner inflation. more important, wages for all american employees or private sector employees are up since before the last recession. now, but it's inflation. >> wage growth is picking up, then we don't have a deflation problem, in which case. >> oil is up. >> no i'm not sure about that. i think you might see the strength in the economy, what we see out of the jobs. what we see out of some of the data might have taken some of the inventories went down a little faster than the world expected. with inventories low, with the dollar weak, you will see prices pop. i think the speculative money is all in stocks. >> over all production, boom, renaissance story, people are saying it has not yet flowed through. >> or they haven't needed to. >> you

last week, yesterday described some of these people, i guess richard fisher called them, i don't knowld pigs. i think he meant -- >> feral. >> spoiled brats. did the traders try to get out ahead of short-term moves and don't want to be long or maybe want to try to benefit as it goes down a little? but, geez, just the idea that some day we don't do 85 billion, we go down a couple hundred points and the fed comes back, it says, we're sorry, guys, we didn't mean to spoil your parade, what did you make of all of that? >> it was a pretty sharp move to your point, joe. i think people are just spooked about what happens when the fed, to your point, isn't as accommodative. saw the big backup in rates that killed the home builders, killed anything tied to the consumer, tied to big ticket purchases and people all ran to the other side of the ship and realized maybe they ran a bit too far. that's the big question. can the market handle some sort of resetting of rates and the yield curve. if it can, we'll be fine. if not, my guess is we'll have a lot more sort of junes before we figure this out.

that's the same principle richard fisher had on hour show a month ago.mortgage market because of the fed's purchases as a reflection of how much total supply is out there. they're definitely a big gulp. but here is the point. this is where i disagree with art a bit. the market supposedly is trying to handicap the taper and art says it's like taking your foot off the gas or many say, including the fed, you guys don't understand, this really isn't the same as raising rates. that's where i disagree. i think it's exactly the same. there's flows and there's ownership, okay? now, the ownership as of last wednesday was 3.6 -- no, $3.462 trillion was the fed's balance sheet. here is why it's important. because the reason they do quantitative easing at all is those flows of purchases are to lower rates when you're at 0 interest rate policy. take your foot on the gas, use any analogy you want, the market looks at it like less accommodation, that interest rates may go up because of less flows. they didn't handicap the flows adequately. they may a faux pas. back to